1.

MIRANDA, Clarisse Ann

MARIANO P. PASCUAL and RENATO P. DRAGON vs. THE COMMISSIONER OF INTERNAL
REVENUE and COURT OF TAX APPEALS
G.R. No. 78133 October 18, 1988

FACTS :

On June 1965, petitioners bought two (2) parcels of land from Bernardino, et al. and on May 1966, they
bought another three (3) parcels of land from Roque. The first two parcels of land were sold by petitioners
in 1968 to Marenir Development Corporation, while the three parcels of land were sold by petitioners to
Erlinda Reyes and Maria Samson on March 1970.

Petitioners realized a net profit in the sale made in 1968 in the amount of P165,224.70, while they
realized a net profit of P60,000.00 in the sale made in 1970. The corresponding capital gains taxes were
paid by petitioners in 1973 and 1974 by availing of the tax amnesties granted in the said years.

However, in a letter dated March 31, 1979 of then Acting BIR Commissioner Efren I. Plana, petitioners
were assessed and required to pay a total amount of P107,101.70 as alleged deficiency corporate income
taxes for the years 1968 and 1970.

Petitioners protested the said assessment in a letter of June 26, 1979 asserting that they had availed of
tax amnesties way back in 1974.

In a reply of August 1979, respondent Commissioner informed petitioners that in the years 1968 and
1970, petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint
venture taxable as a corporation under Section 20(b) and its income was subject to the taxes prescribed
under Section 24, both of the National Internal Revenue Code; that the unregistered partnership was
subject to corporate income tax as distinguished from profits derived from the partnership by them which
is subject to individual income tax; and that the availment of tax amnesty under P.D. No. 23, as amended,
by petitioners relieved petitioners of their individual income tax liabilities but did not relieve them from the
tax liability of the unregistered partnership. Hence, the petitioners were required to pay the deficiency
income tax assessed.

ISSUE :
Whether or not petitioners formed an unregistered partnership subject to corporate tax?

HELD :

1.

Article 1769 of the new Civil Code lays down the rule for determining when a transaction should be

deemed a partnership or a co-ownership. Said article paragraphs 2 and 3, provides;

a.

Co-ownership or co-possession does not itself establish a partnership, whether such co-owners

or co-possessors do or do not share any profits made by the use of the property;
b.

The sharing of gross returns does not of itself establish a partnership, whether or not the persons

sharing them have a joint or common right or interest in any property from which the returns are derived

2.

Those who agree to form a co- ownership share or do not share any profits made by the use of the

property held in common does not convert their venture into a partnership
a.

Or the sharing of the gross returns does not of itself establish a partnership whether or not the

persons sharing therein have a joint or common right or interest in the property.
b.

Aside from the circumstance of profit, the presence of other elements constituting partnership is

necessary such as the :

i.
ii.
iii.

clear intent to form a partnership

the existence of a juridical personality different from that of the individual partners
the freedom to transfer or assign any interest in the property by one with the

consent of the others

3.

It is evident that an isolated transaction whereby two or more persons contribute funds to buy

certain real estate for profit in the absence of other circumstances showing a contrary intention cannot be
considered a partnership.

4.

A joint purchase of land, by two, does not constitute a co-partnership in respect thereto; nor does an

agreement to share the profits and losses on the sale of land create a partnership; the parties are only
tenants in common.

2. LIMBO, Robbe Millicent

ELIGIO ESTANISLAO, JR.,vs. THE HONORABLE COURT OF APPEALS, REMEDIOS ESTANISLAO,
EMILIO and LEOCADIO SANTIAGO,
G.R. No. L-49982 April 27, 1988
FACTS: Eligio Estanislao, Jr.(Petitioner) and Remedios estanislao,Emilio and Leocadio Santiago (Private
respondents) are brothers and sisters who are co-owners of certain lots at Quezon City which were then
being leased to the Shell Company of the Philippines Limited (SHELL). They agreed to open and operate
a gas station thereat to be known as Estanislao Shell Service Station A joint affidavit was executed by
them on April 11, 1966 . They agreed to help their brother, petitioner herein, by allowing him to operate
and manage the gasoline service station of the family. They negotiated with SHELL. For practical
purposes and in order not to run counter to the company's policy of appointing only one dealer, it was
agreed that petitioner would apply for the dealership.
Later, the parties herein entered into an Additional Cash Pledge Agreement with SHELL wherein
it was reiterated that the P 15,000.00 advance rental shall be deposited with SHELL to cover advances of
fuel to petitioner as dealer with a proviso that said agreement "cancels and supersedes the Joint Affidavit
dated 11 April 1966 executed by the co-owners." For sometime, the petitioner submitted financial
statements regarding the operation of the business to private respondents, but therafter petitioner failed to
render subsequent accounting. Hence, a demand was made on Eligio to render an accounting of the
profits.
The trial judge dismissed the complaint. The next judge who took over the case from the first
judge set aside the aforesaid decision and rendered a decision in favor of the brothers and sisters of
Eligio. The CA affirmed the decision of the second judge. Eligio contends that whatever partnership
agreement there was in the previous joint affidavit had been superseded by the additional cash pledge
agreement.
ISSUE: WON a partnership exists
HELD: YES. Petitioner contends that because of the stipulation cancelling and superseding that previous
Joint Affidavit, whatever partnership agreement there was in said previous agreement had thereby been
abrogated. SC find no merit in this argument. Said cancelling provision was necessary for the Joint
Affidavit speaks of P 15,000.00 advance rentals starting May 25, 1966 while the latter agreement also
refers to advance rentals of the same amount starting May 24, 1966. There is, therefore, a duplication of
reference to the P 15,000.00 hence the need to provide in the subsequent document that it "cancels and
supersedes" the previous one. True it is that in the latter document, it is silent as to the statement in the
Joint Affidavit that the P 15,000.00 represents the "capital investment" of the parties in the gasoline station
business and it speaks of Eligio as the sole dealer, but this is as it should be for in the latter document
SHELL was a signatory and it would be against its policy if in the agreement it should be stated that the
business is a partnership with private respondents and not a sole proprietorship of Eligio.
Moreover other evidence in the record shows that there was in fact such partnership agreement
between the parties. Petitioner submitted to private respondents periodic accounting of the business.
Petitioner gave a written authority to private respondent Remedies Estanislao, his sister, to examine and
audit the books of their "common business' aming negosyo).Respondent Remedios assisted in the
running of the business. There is no doubt that the parties hereto formed a partnership when they bound
themselves to contribute money to a common fund with the intention of dividing the profits among
themselves. The sole dealership by the petitioner and the issuance of all government permits and
licenses in the name of petitioner was in compliance with the afore-stated policy of SHELL and the
understanding of the parties of having only one dealer of the SHELL products.

3. ZAPATOS, Zari Charisamor V.

Dan Fue Leung v. Intermediate Appellate Court, G.R. No. 70926, January 31, 1989
FACTS:
This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance
of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the annual profits
derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung.
The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was
established sometime in October, 1955. It was registered as a single proprietorship and its licenses and
permits were issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung
Yiu adduced evidence during the trial of the case to show that Sun Wah Panciteria was actually a
partnership and that he was one of the partners having contributed P4,000.00 to its initial establishment.
The private respondent's cause of action is premised upon the failure of the petitioner to give him the
agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an
accounting of his interests in the partnership. The petitioner raises the issue of prescription. The alleged
receipt is dated October 1, 1955 and the complaint was filed only on July 13, 1978 or after the lapse of
twenty-two (22) years, nine (9) months and twelve (12) days. From October 1, 1955 to duly 13, 1978, no
written demands were ever made by private respondent.
The petitioner's argument is based on Article 1144 of the Civil Code which provides:
Art. 1144. The following actions must be brought within ten years from the time the right of section
accrues:
"(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment."
in relation to Article 1155 thereof which provides:
"Art. 1155. The prescription of actions is interrupted when they are filed before the court, when there is a
written extra-judicial demand by the creditor, and when there is any written acknowledgment of the debt
by the debtor."
ISSUES:
1.

Whether or not Yiu is a partner of Sun Wah Panciteria.

2.

Whether or not Yiu no longer has the right to demand an accounting due to prescription.

3.

Whether or not there should be liquidation and winding up of the partnership.

HELD:
1. Yes. The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a
partnership which are 1) two or more persons bind themselves to contribute money, property, or

industry to a common fund; and 2) intention on the part of the partners to divide the profits among
themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110) have been established.
2. Regarding the prescriptive period within which the private respondent may demand an accounting,
Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the
partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final
accounting is done.
3. There shall be a liquidation and winding up of partnership affairs, return of capital, and other incidents
of dissolution because the continuation of the partnership has become inequitable.

4. Galicha, Franz Gerhart

HEIRS OF TAN ENG KEE vs CA
FACTS: Benguet Lumber has been around even before World War II but during the war, its stocks were
confiscated by the Japanese. After the war, the brothers Tan Eng Lay and Tan Eng Kee pooled their
resources in order to revive the business. In 1981, Tan Eng Lay caused the conversion of Benguet
Lumber into a corporation called Benguet Lumber and Hardware Company, with him and his family as the
incorporators. In 1983, Tan Eng Kee died. Thereafter, the heirs of Tan Eng Kee demanded for an
accounting and the liquidation of the partnership.Tan Eng Lay denied that there was a partnership
between him and his brother. He said that Tan Eng Kee was merely an employee of Benguet Lumber. He
showed evidence consisting of Tan Eng Kees payroll; his SSS as an employee and Benguet Lumber
being the employee. As a result of the presentation of said evidence, the heirs of Tan Eng Kee filed a
criminal case against Tan Eng Lay for allegedly fabricating those evidence. Said criminal case was
however dismissed for lack of evidence.
ISSUE: Whether or not Tan Eng Kee is a partner.
HELD: No. There was no certificate of partnership between the brothers. The heirs were not able to show
what was the agreement between the brothers as to the sharing of profits. All they presented were
circumstantial evidence which in no way proved partnership.
It is obvious that there was no partnership whatsoever. Except for a firm name, there was no firm
account, no firm letterheads submitted as evidence, no certificate of partnership, no agreement as to
profits and losses, and no time fixed for the duration of the partnership. There was even no attempt to
submit an accounting corresponding to the period after the war until Kees death in 1984. It had no
business book, no written account nor any memorandum for that matter and no license mentioning the
existence of a partnership. In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole
proprietorship. He registered the same as such in 1954; that Kee was just an employee based on the
latters payroll and SSS coverage, and other records indicating Tan Eng Lay as the proprietor. Also, the
business definitely amounted to more P3,000.00 hence if there was a partnership, it should have been
made in a public instrument.
But the business was started after the war (1945) prior to the publication of the New Civil Code in 1950?
Even so, nothing prevented the parties from complying with this requirement.
Also, the Supreme Court emphasized that for 40 years, Tan Eng Kee never asked for an accounting. The
essence of a partnership is that the partners share in the profits and losses. Each has the right to demand
an accounting as long as the partnership exists. Even if it can be speculated that a scenario wherein if
excellent relations exist among the partners at the start of the business and all the partners are more
interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits
is perfectly plausible. But in the situation in the case at bar, the deferment, if any, had gone on too long to
be plausible. A person is presumed to take ordinary care of his concerns. A demand for periodic
accounting is evidence of a partnership which Kee never did.
The Supreme Court also noted:
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as
to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or
co-possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons
sharing them have a joint or common right or interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a
partner in the business, but no such inference shall be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of the business;
(e) As the consideration for the sale of a goodwill of a business or other property by installments or
otherwise.

________________________
4. REAMICO, KRIZIA MAE P.
HEIRS OF TAN ENG KEE vs.CA
341 SCRA 740, G.R. No. 126881, October 3, 2000

FACTS:
After the second World War, Tan EngKee and Tan Eng Lay, pooling their resources and industry
together, entered into a partnership engaged in the business of selling lumber and hardware
and construction supplies. They named their enterprise "Benguet Lumber" which they jointly
managed until Tan EngKee's death. Petitioners herein averred that the business prospered due
to the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan Eng
Lay and his children caused the conversion of the partnership "Benguet Lumber" into a
corporation called "Benguet Lumber Company." The incorporation was purportedly a ruse to
deprive Tan EngKee and his heirs of their rightful participation in the profits of the business.
Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and
liquidation thereof, and the equal division of the net assets of Benguet Lumber. The RTC ruled
in favor of petitioners, declaring that Benguet Lumber is a joint venture which is akin to a
particular partnership. The Court of Appeals rendered the assailed decision reversing the
judgment of the trial court.
ISSUE: Whether the deceased Tan EngKee and Tan Eng Lay are joint adventurers and/or
partners in a business venture and/or particular partnership called Benguet Lumber and as such
should share in the profits and/or losses of the business venture or particular partnership
RULING:
There was no partnership whatsoever. Except for a firm name, there was no firm account, no
firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits

and losses, and no time fixed for the duration of the partnership. There was even no attempt to
submit an accounting corresponding to the period after the war until Kee's death in 1984. It had
no business book, no written account nor any memorandum for that matter and no license
mentioning the existence of a partnership. Also, the trial court determined that Tan EngKee and
Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership. A
particular partnership is distinguished from a joint adventure, to wit:(a) A joint adventure (an
American concept similar to our joint accounts) is a sort of informal partnership, with no firm
name and no legal personality. In a joint account, the participating merchants can transact
business under their own name, and can be individually liable therefor. (b) Usually, but not
necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of
pursuing to a successful termination maycontinue for a number of years; a partnership generally
relates to a continuing business of various transactions of a certain kind. A joint venture
"presupposes generally a parity of standing between the joint co-ventures or partners, in which
each party has an equal proprietary interest in the capital or property contributed, and where
each party exercises equal rights in the conduct of the business. The evidence presented by
petitioners falls short of the quantum of proof required to establish a partnership. In the absence
of evidence, we cannot accept as an established fact that Tan EngKee allegedly contributed his
resources to a common fund for the purpose of establishing a partnership. Besides, it is indeed
odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan
EngKee never asked for an accounting. The essence of a partnership is that the partners share
in the profits and losses .Each has the right to demand an accounting as long as the partnership
exists. A demand for periodic accounting is evidence of a partnership. During his lifetime, Tan
EngKee appeared never to have made any such demand for accounting from his brother, Tang
Eng Lay. We conclude that Tan EngKee was only an employee, not a partner since they did not
present and offer evidence that would show that Tan EngKee received amounts of money
allegedly representing his share in the profits of the enterprise. There being no partnership, it
follows that there is no dissolution, winding up or liquidation to speak of.

5. Carvajal, Kim Apple S.

SARDANE VS. COURT OF APPEALS
G.R. No. L-47045, November 22, 1988

FACTS:
In this case, private respondent Acojedo brought an action in the City Court of Dipolog for the
collection of a sum of money which was based on promissory notes executed by the herein
petitioner Nobio Sardane in his favor. In his oral testimony, Sardane argued that the promissory

notes were merely receipts for the contributions in the said partnership. It has been established
in the trial court that on many occasions, that the petitioner demanded the payment of the total
amount of P5,217.25. The failure of the private respondent to pay the said amount prompted the
petitioner to seek the services of lawyer who made a letter formally demanding the return of the
sum loaned. Because of the failure of the private respondent to heed the demands
extrajudicially made by the petitioner, the latter was constrained to bring an action for collection
of sum of money.
ISSUE:
Whether or not a partnership existed between the parties
RULING:
None.
As manager of the basnig Sarcado naturally some degree of control over the operations and
maintenance thereof had to be exercised by herein petitioner. The fact that he had received
50% of the net profits does not conclusively establish that he was a partner of the private
respondent herein.
Article 1769(4) of the Civil Code is explicit that while the receipt by a person of a share of the
profits of a business is prima facie evidence that he is a partner in the business, no such
inference shall be drawn if such profits were received in payment as wages of an employee.
Furthermore, herein petitioner had no voice in the management of the affairs of the basnig.

7. Nanadiego, Yvette Marie Y.

TOCAO v CA
FACTS: William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed
to form a joint venture for the sale of cooking wares. Belo was to contribute P2.5 million; Tocao
also contributed some cash and she shall also act as president and general manager; and Anay
shall be in charge of marketing. Belo and Tocao specifically asked Anay because of her
experience and connections as a marketer. They agreed further that Anay shall receive the
following:
1. 10% share of annual net profits
2. 6% overriding commission for weekly sales
3. 30% of sales Anay will make herself
4. 2% share for her demo services
They operated under the name Geminesse Enterprise, this name was however registered as a
sole proprietorship with the Bureau of Domestic Trade under Tocao. The joint venture
agreement was not reduced to writing because Anay trusted Belos assurances.
The venture succeeded under Anays marketing prowess.
But then the relationship between Anay and Tocao soured. One day, Tocao advised one of the
branch managers that Anay was no longer a part of the company. Anay then demanded that the
company be audited and her shares be given to her.
ISSUE: Whether or not there is a partnership.
HELD: Yes, even though it was not reduced to writing, for a partnership can be instituted in any
form. The fact that it was registered as a sole proprietorship is of no moment for such
registration was only for the companys trade name. Anay was not even an employee because
when they ventured into the agreement, they explicitly agreed to profit sharing this is even
though Anay was receiving commissions because this is only incidental to her efforts as a head
marketer.
The Supreme Court also noted that a partner who is excluded wrongfully from a partnership is
an innocent partner.
Hence, the guilty partner must give him his due upon the dissolution of the partnership as well
as damages or share in the profits realized from the appropriation of the partnership business

and goodwill. An innocent partner thus possesses pecuniary interest in every existing contract
that was incomplete and in the trade name of the co-partnership and assets at the time he was
wrongfully expelled.
An unjustified dissolution by a partner can subject him to 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.
Tocaos unilateral exclusion of Anay from the partnership is shown by her memo to the Cubao
office plainly stating that Anay was, as of October 9, 1987, no longer the vice-president for sales
of Geminesse Enterprise. By that memo, petitioner Tocao effected her own withdrawal from the
partnership and considered herself as having ceased to be associated with the partnership in
the carrying on of the business. Nevertheless, the partnership was not terminated thereby; it
continues until the winding up of the business.

8. SORIANO, MIKHAIL JOSEF P.

CASE NO. 8
ANTONIA TORRES VS. COURT OF APPEALS
(G.R. NO. 134559. December 9, 1999)

FACTS:
Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint venture
agreement" with Respondent Manuel Torres for the development of a parcel of land into a
subdivision. By mortgaging the property, respondent obtained from Equitable Bank a loan of P40,000
which, under the Joint Venture Agreement, was to be used for the development of the subdivision.
The project did not push through, and the land was subsequently foreclosed by the bank.
According to petitioners, the project failed because of respondents lack of funds or means and
skills. They add that respondent used the loan not for the development of the subdivision, but in
furtherance of his own company, Universal Umbrella Company.
Respondent claimed that the subdivision project failed, however, because petitioners and their relatives
had separately caused the annotations of adverse claims on the title to the land, which eventually scared
away prospective buyers. Despite his requests, petitioners refused to cause the clearing of the claims,
thereby forcing him to give up on the project. With the loan secured, he was able to effect the survey and
the subdivision of the lots. He secured the Lapu Lapu City Councils approval of the subdivision project
which he advertised in a local newspaper. He also caused the construction of roads, curbs and gutters.
Likewise, he entered into a contract with an engineering firm for the building of sixty low-cost housing
unit
Thereafter, they filed the present civil case which, upon respondent's motion, was later dismissed by the
trial court in an Order dated September 6, 1982. On appeal, however, the appellate court remanded the
case for further proceedings.
ISSUE/S
1.
Whether or not there is a partnership formed
2.
Whether or not the Joint Venture Agreement is void under Article 1773 of the Civil Code since the
parties did not make, sign or attach to the public instrument an inventory of the real property contributed
HELD:
1.
YES. Under the above-quoted Agreement, petitioners would contribute property to the
partnership in the form of land which was to be developed into a subdivision; while respondent
would give, in addition to his industry, the amount needed for general expenses and other costs.
Furthermore, the income from the said project would be divided according to the stipulated
percentage. Clearly, the contract manifested the intention of the parties to form a partnership.
ART. 1767. By the contract of partnership two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing the profits among
themselves.
Respondents actions clearly belie petitioners contention that he made no contribution to the
partnership. Under Article 1767 of the Civil Code, a partner may contribute not only money or
property, but also industry.

ART. 1315. Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and
law.
2.
The Joint Venture is valid
We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent
Arturo M. Tolentino states that under the aforecited provision which is a complement of Article
1771, the execution of a public instrument would be useless if there is no inventory of
the property contributed, because without its designation and description, they cannot
be subject to inscription in the Registry of Property, and their contribution cannot
prejudice third persons. This will result in fraud to those who contract with the
partnership in the belief [in] the efficacy of the guaranty in which the immovables may
consist. Thus, the contract is declared void by the law when no such inventory is made. The
case at bar does not involve third parties who may be prejudiced.
Second, petitioners themselves invoke the allegedly void contract as basis for their claim that respondent
should pay them 60 percent of the value of the property. They cannot in one breath deny the contract and
in another recognize it, depending on what momentarily suits their purpose

9.Magdaraog, Jethro C.

Lim vs. Philippine Fishing Gear Industries Inc. [GR 136448, 3 November 1999]
FACTS: Lim Tong Lim requested Peter Yao and Antonio Chuato engage in commercial fishing
with him. The three agreed to purchase two fishing boats but since they do not have the money
they borrowed from one Jesus Lim the brother of Lim Tong Lim. Subsequently, they again
borrowed money for the purchase of fishing nets and other fishing equipments. Yao and Chua
represented themselves as acting in behalf of Ocean Quest Fishing Corporation (OQFC) and
they contracted with Philippine Fishing Gear Industries (PFGI) for the purchase of fishing nets
amounting to more than P500k. However, they were unable to pay PFGI and hence were sued
in their own names as Ocean Quest Fishing Corporation is a non-existent corporation. Chua
admitted his liability while Lim Tong Lim refused such liability alleging that Chua and Yao acted
without his knowledge and consent in representing themselves as a corporation.

ISSUE: Whether Lim Tong Lim is liable as a partner

HELD:Yes. It is apparent from the factual milieu that the three decided to engage in a fishing
business. Moreover, their Compromise Agreement had revealed their intention to pay the loan
with the proceeds of the sale and to divide equally among them the excess or loss. The boats
and equipment used for their business entails their common fund. The contribution to such fund
need not be cash or fixed assets; it could be an intangible like credit or industry. That the parties

agreed that any loss or profit from the sale and operation of the boats would be divided equally
among them also shows that they had indeed formed a partnership. The principle of corporation
by estoppel cannot apply in the case as Lim Tong Lim also benefited from the use of the nets in
the boat, which was an asset of the partnership. Under the law on estoppel, those acting in
behalf of a corporation and those benefited by it, knowing it to be without valid existence are
held liable as general partners. Hence, the question as to whether such was legally formed for
unknown reasons is immaterial to the case.

10. Aonuevo, Grean V.

EVANGELISTA & CO v. ABAD SANTOS

51 SCRA 416, G.R. No. 31684; June 28, 1973
FACTS:
On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co."
On June 7, 1955 the Articles of Co-partnership was amended as to include herein respondent,
Estrella Abad Santos, as industrial partner, with herein petitioners Domingo C. Evangelista, Jr.,
Leonardo Atienza Abad Santos and Conchita P. Navarro, the original capitalist partners,
remaining in that capacity, with a contribution of P17,500 each. The amended Articles provided,
inter alia, that "the contribution of Estrella Abad Santos consists of her industry being an
industrial partner", and that the profits and losses "shall be divided and distributed among the
partners ... in the proportion of 70% for the first three partners, Domingo C. Evangelista, Jr.,
Conchita P. Navarro and Leonardo Atienza Santos to be divided among them equally; and 30%
for the fourth partner Estrella Abad Santos. "On December 17, 1963 herein respondent filed suit
against the three other partners in the Court of First Instance of Manila, alleging that the
partnership, which was also made a party-defendant, had been paying dividends to the partners
except to her; and that notwithstanding her demands the defendants had refused and continued
to refuse and let her examine the partnership books or to give her information regarding the
partnership affairs to pay her any share in the dividends declared by the partnership. She
therefore prayed that the defendants be ordered to render accounting to her of the partnership
business and to pay her corresponding share in the partnership profits after such accounting,
plus attorney's fees and costs.
ISSUE: Whether or not Abad Santos is entitled to the shares of the partnership and to examine
the partnership books being an industrial partner?
HELD:
Yes, Abad Santos is entitled to see the partnership books. The Supreme Court ruled that
according to:
ART. 1299. Any partner shall have the right to a formal account as to partnership affairs:
(1) If he is wrongfully excluded from the partnership business or possession of its property by
his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807;
(4) Whenever other circumstances render it just and reasonable."

In the case at hand, the company is estopped from denying Abad Santos as an industrial
partner because it has been 8 years and the company never corrected their agreement in order
to show their true intentions. The company never bothered to correct those up until Abad Santos
filed a complaint.