Case

Ortega vs
CA,
SEC
and Misa

Related
rule and
law

Doctrines/Lessons

Facts (2-3 Sentence)

Issue (Corollary
to the PAT)

Ruling

Partnership that does not fix

its term is a partnership at
will. The birth and life of a
partnership
at
will
is
predicated on the mutual
desire and consent of the
partners.
The
right
to
choose with whom a person
wishes to associate himself
is the very foundation and
essence of that partnership.
Its continued existence is in
turn dependent on the
constancy of that mutual
resolve, along with each
partners capability to give
it, and the absence of a
cause
for
dissolution
provided by the law itself.
Verily, any one of the
partners may, at his sole
pleasure,
dictate
a
dissolution
of
the
partnership at will. He must,
however act in good faith,
not that the attendance of
bad faith can prevent the
dissolution
of
the
partnership but it can result
in a liability for damages.

This involves the dissolution of the

law firm Bito, Misa and Lozada.
The dissolution was brought about
by Atty. Misa through a letter.
Upon applying the request for
dissolution at the SEC, the hearing
officer held that the withdrawal of
Atty. Misa did not dissolve the
partnership on the justifications
that the partnership has a specific
undertaking as stated in their
articles of partnership and thus
not a partnership at will

Whether
partnership
dissolved

The
partnership
was
dissolved because it is a
partnership at will, the
dissolution
of
which
begins
upon
the
withdrawal of a partner in
a
partnership.
Neither

Neither would the presence

of a period for its specific
duration or statement of a
particular purpose for its
creation
prevent
the
dissolution
of
any

the
was

would the presence of a

period
for
its
specific
duration or statement of a
particular purpose for its
creation
prevent
the
dissolution of any partnership
by an act or will of a partner.
The
purpose
of
the
partnership in the articles of
partnership is not the specific
undertaking referred to in the
law.
What
the
law
contemplates is a specific
undertaking or project which
has a definite or definable
period of completion. Among
partners,
mutual
agency
arises and the doctrine of
delectus personae allows
them to have the power,
although not necessarily the
right
to
dissolve
the
partnership.

partnership by an act or will

of a partner.
Among partners, mutual
agency arises and the
doctrine
of
delectus
personae allows them to
have the power, although
not necessarily the right to
dissolve the partnership.

Tacao
CA

vs

Proof of partnership (1)

Voice in the management of
the affairs of the business
(2) Share in the profits
An industrial partner had the
right to demand for a formal
accounting of the business
and to receive her share in
the net profit
Unaccounted stock proves
the
existence
of
a
partnership
A mere falling out or
misunderstanding between
partners does not convert
the partnership into a sham
organization.
The
partnership
exists
until
dissolved under the law.
A partnership with not fixed
terms is a partner at will and
can be dissolved by the will
of a partner
An unjustified dissolution by
a partner can subject him to

The
issue
stems
from
the
operation
of
the
business
Geminise Enterprises a business
involved in the distribution of
cookwares. In the business, Belo
acted as capitalist, Tacao as
President and General Manager,
and Anay as Head of Marketing
and VP for Sales. Facts show that
Anay
had
a
say
in
the
management of the business
including the organization of the
sales force and was entitled to
receive annual profits for her
services. After a fallout, Anay was
expelled from the business. The
case refers to a complaint by Anay
sum of money against Tocao and
Bello. The case was filed at the
RTC. Tacao and Bello sought for
dismissal
claiming
that
the
complaint should be lodged at the
Department of Labor claiming it
was an employer-employee issue.

Whether Anay was a

partner and not an
employee

The Court held that Anay

was a partner and not an
employee. In this case,
the court held that she
was an industrial partner
who
contributes
her
expertise in distribution to
the business. The court
further held that the proof
of her being a partner is
from the fact that (1) she
had
a
say
on
the
management
of
the
business and (2) she was
not entitled to any salary
except for representation
and
transportation
allowances and that she
was entitled to a division
of the profits.

action for damages because

by the mutual agency that
arises in a partnership, the
doctrine
of
delectus
personae
allows
the
partners to have the power,
although not necessarily the
right
to
dissolve
the
partnership
A unilateral exclusion of one
partner is an effective
withdrawal

Agency Cases
Lim
vs
People

Lourdes Valerio Lim is a

businesswoman. She went to the house
of Maria Ayroso and proposed to sell
Ayrosos tobacco. Ayroso agreed that
Lim would sell 615 kilos at P1.30 per
kilo and that Lim could receive the overprice from the selling. A document was
executed to certify the receipt of the
tobacco leaves. Lim brought a jeep to
Ayrosos house, then collected the
P799.50 worth of tobacco leaves. After
sometime, demands for payment has
been made persistently by Ayrosos
sister, Salud Bantug, but even if the
camarin was empty (meaning, theres no
more tobacco), Lim did not pay. Lim
wrote a letter explaining her
delinquencies: that she was having a
hard time collecting, and eventually
paid P240 in three instalments. Due to
the inability of Lim to pay for the
balance, Ayroso then filed a complaint
for estafa, which Lim was convicted for
and such conviction was affirmed by the
Court of Appeals.

Was the receipt a

contract of agency to sell
or a contract of sale of
the subject tobacco
between petitioner and
complainant? (The latter
would preclude the
criminal liability of Lim)

Lim was acting as Ayrosos

agent. Lims theory was
backed up by the fact that she
did not receive commissions,
therefore, it was not a
contract of agency and
ultimately, she should not be
held criminally liable. The
Supreme Court denied this,
affirming the explanation of
the Court of Appeals stating
that since Lim was a
businesswoman and she took
the efforts of collecting the
tobacco from Ayrosos house,
it is more likely she was acting
as an agent, rather than doing
a favour for a friend, because
if it were a favour, then it
would be Ayroso who would
have dropped off the leaves to
Lims house. There was no
transfer of ownership and the
agreement clearly considered
Lim as an agent with the
obligation to return the
tobacco if the same was not

sold.

Gonzalo
Puyat vs
ARCO

In 1929, Arco Amusement

Company (formerly known as
Teatro Arco) was engaged in
the business of operating
cinematographs.

Around 1930, Arco

Amusement approached
Gonzalo Puyat & Sons, Inc.,
the exclusive agents in the

WON the contract

between Gonzalo Puyat
and Arco Amusement is
an Agency to merit Arco
Amusement a
reimbursement or is an
Outright Purchase and
Sale Contract that would
absolve Gonzalo Puyat of
the case

The contract between

Gonzalo Puyat and Arco
Amusement is an Outright
Purchase and Sale Contract
The contract is the
law between the parties and
should include all the things
they are supposed to have

Phils of the Starr Piano

agreed upon. The letters, by

Company (of Richmond,

which Arco accepted the

Indiana, USA) to negotiate with

prices of $1,700 and S1,600

them their intent to buy sound

plus the commission and

reproducing equipment from

other expenses for the sound

Starr Piano through Gonzalo

reproducing equipment are

Puyat & Sons.

clear in their terms and admit

After some negotiations, the

of no other interpretation than

parties agreed that Gonzalo

that Arco agreed to purchase

Puyat & Sons would order the

from Gonzalo Puyat the

equipment from Starr Piano

equipment in question at the

and Arco Amusement would

prices indicated which are

pay Gonzalo Puyat, in addition

fixed and determinate. Arco

to the price of the equipment,

admitted in its complaint filed

a 10% commission, plus

with the CFI that Gonzalo

expenses, such as freight,

Puyat agreed to sell to it the

insurance, banking charges,

first sound reproducing

cables etc.

equipment and machinery.

In ordering the equipment,

Whatever unforeseen

Gonzalo Puyat & Sons was

events might have taken place

able to get a discounted price

unfavorable to Arco, such as

from Starr Piano. However,

change in prices, mistake in

Gonzalo Puyat did not inform

their quotation, or failure of

Arco Amusement of the

Starr Piano to properly fill the

discounted price, and still

orders as per specifications,

billed them the list price of $

Gonzalo Puyat might still

1,700 plus the 10%

legally hold Arco to the prices

commission and the expenses

fixed. This is incompatible

incurred in ordering the

with the pretended relation

equipment.
-

Arco Amusement paid the bills

and then placed another order
for a second sound
reproducing equipment, which
was quoted at $1,600 plus
commission and other
expenses. Arco paid the
amount assessed by Gonzalo
Puyat.

3 years later, Arco Amusement

discovered that the price
quoted to them by Gonzalo
Puyat was not the net price
but was rather the list price
and that Gonzalo Puyat
obtained a discount from Starr
Piano.

They sought for

reimbursement of what they
have paid Gonzalo Puyat by
filing a case for
reimbursement.

CFI of Manila held that the

contract between the petitioner
and the respondent was one of
outright purchase and sale,
and absolved Gonzalo Puyat
from the complaint.

CA reversed the decision of the

CFI, holding that the relation
between Gonzalo Puyat and

of agency between the

petitioner and the
respondent, because in
agency, the agent is exempted
from all liability in the
discharge of his commission
provided that he acts in
accordance with the
instructions received from his
principal and the principal
must indemnify the agent for
all damages which the latter
may incur in carrying out the
agency without fault or
imprudence on his part.
To hold the petitioner
an agent of the respondent in
the purchase of the
equipment from Starr Piano is
incompatible with the fact
that the petitioner is the
exclusive agent of the same
company in the Phils. It is out
of the ordinary for one to be
the agent of both the vendor
and the vendee.
It follows that
Gonzalo Puyat as a vendor is
not bound to reimburse Arco
as vendee for any difference
between the cost price and the

Green
Valley vs.
IAC

In an agency to sell, the

agent is liable to pay the
principal for the goods
sold by the agent without
the principals consent

Arco Amusement was that of

sales price which represents

an agent and a principal, and

the profit realized by the

sentenced Gonzalo Puyat to

vendor out of the transaction.

reimburse Arco Amusement of

This is the very essence of

all the alleged overpayments in

commerce without which

the total sum of $1,335.52 or

merchants or middlemen

Php 2,671.04

would not exist.

Green valley sold on credit on a product

of Squibb. They contend that they are
not liable to pay on the sale contact
because they are an agent.

Whether or not green

valley is laible

Yes because they sold on

credit for which they
require principals consent.

Pacific Commercial engaged in business

as a merchant and sold for Victoria
Milling Co. refined sugar for the total
value of P1,126,135.96 and received a
commission of P29,534.29. Such
transactions were made in either of two
ways:
1. Ex-ship: Pacific looks for
buyers of the sugar, receives
the bill of lading, and hands
over the bill of lading to the
buyer and collects the price.
The buyer collects the sugar

Was there double

taxation in:
(1) transactions
ex-warehouse
(subsequently,
was that a
transaction
involving a
commission
merchant)?
(2) transactions
ex-ship
(subsequently,

There was only double

taxation as to the
transactions ex-ship. The
majority relied heavily on the
doctrine in Gil Hermanos v.
Hord where there is no double
taxation after a merchant sold
for commission Gil
Hermanoss abaca and both
merchant and Hermano were
taxed. This is because what
was being taxed for the
merchant was the occupation

The commission agent

cannot without express
or implied consent sell on
credit. Should he do so,
the
principal
may
demand
from
him
payment in cash, but the
commission agent shall
be
entitled
to
any
interest or benefit, which
may result from the sale
Pacific vs
YATCO

2.

from the point of delivery. In

this case, Pacific acts as a
broker for Victoria and the
buyer.
Ex-warehouse: Sugar is
deposited first in Pacifics
warehouse before delivery to
the potential buyer is done.
Here, Pacific acts as a
commission merchant.

Victoria Milling paid P16,994.90 to the

Collector of Internal Revenue as
merchant sales tax in its capacity as
manufacturer and owner of the sugar
sold. Notwithstanding such payment,
Pacific was also made to pay the same
tax. Pacific then went to the CFI to
address the issue on double taxation.
The CFI decided that defendant (I
assume Yatco is the CIR) return the
taxes paid under the first type of
transaction (ex-ship) ONLY, but the
taxes imposed on Pacific for the
transactions ex-warehouse were valid.

was that a
transaction
involving a
broker)?

or the industry, not the

property sold itself, the
property was just the basis on
how much tax the transaction
should cost. The Court found
a parallelism to the facts of
the case and applied the case
squarely on the transactions
ex-warehouse.
There is no doubt in their
mind that transactions exwarehouse had Pacific acting
as commission merchants. A
commission merchant is one
engaged in the purchase or
sale for another of personal
property, which, for this
purpose, is placed in his
possession and at his
disposal. The relationship of
the merchant is not only with
the principal, but also to the
property that is the subject
matter of the transaction. The
receipt and depositing in the
warehouse of Pacific attests to
this relationship. After taking
the sugar until it is sold,
Pacific had the sugar in its
possession and at its own
risk.
However, there should be no
tax over the transaction if it
was done ex-ship. This was
because Pacific was merely
acting as a broker. A broker,
unlike a commission
merchant, has no relation to
the thing he sells or buys. He

is merely an intermediary
between the buyer and the
seller and never acquires
possession over the property.
The appealed decision was
affirmed.