Professional Documents
Culture Documents
(2) Benjamin Yu v. National Labor Relations Commission & Jade Mountain ProductsCo. Ltd., Willy Co, Rhodora
Bendal, Lea Bendal, Chiu Shian Jeng and Chen Ho-Fu
G.R. No. 97212 June 30, 1993
Feliciano, J.
Facts:
Yu ex-Assistant General Manager of the marble quarrying and export business operated by a registered partnership called Jade
Mountain Products Co. Ltd. The partnership was originally organized with Bendals as general partners and Chin Shian Jeng,Chen
Ho-Fu and Yu Chang as limited partners; partnership business consisted of exploiting a marble deposit in Bulacan. Yu, as Assistant
General Manager, had a monthly salary of 4000. Yu, however, actually received only half of his stipulated salary, since he had
accepted the promise of the partners that the balance would be paid when the firm shall have secured additional operating funds
from abroad. Yu actually managed the operations and finances of the business; he had overall supervision of the workers at the
marble quarry in Bulacan and took charge of the preparation of papers relating to the exportation of the firms products.
General partners Bendals sold and transferred their interests in the partnership to Co andEmmanuel Zapanta. The partnership
was constituted solely by Co and Zapanta; it continued to use the old firm name of Jade Mountain. Yu was dismissed by the new
partners
Issues:
1. WON the partnership which had hired Yu as Asst. Gen. Manager had been extinguished and replaced by a new partnership
composed of Co and Zapanta; 2. if indeed anew partnership had come into existence, WON Yu could nonetheless assert his rights
under his employment contract with the old partnership as against the new partnership
Held:
1. Yes. Changes in the membership of the partnership resulted in the dissolution of the old partnership which had hired Yu and the
emergence of a new partnership composed of Co and Zapanta.
Legal bases:
Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on as distinguished from the winding up of the business.
Art. 1830. Dissolution is caused:(1) without violation of the agreement between the partners;(b) by the express will of any
partner, who must act in good faith, when no definite term or particular undertaking is specified;(2) in contravention of the
agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this article,
by the express will of any partner at any time;
No winding up of affairs in this case as contemplated in Art. 1829: on dissolution the partnership is not terminated, but continues
until the winding up of partnership affairs is completed
The new partnership simply took over the business enterprise owned by the oldpartnership, and continued using the old name of
Jade Mountain Products CompanyLimited, without winding up the business affairs of the old partnership, paying off its
debts,liquidating and distributing its net assets, and then re-assembling the said assets or mostof them and opening a new
business enterprise
2. Yes. the new partnership is liable for the debts of the old partnership
Legal basis: Art. 1840 (see codal)
Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating to his employment with the previous
partnership, against the new partnership
But Yu is not entitled to reinstatement. Reason: new partnership was entitled to appoint and hire a new gen. or asst. gen.
manager to run the affairs of the business enterprise take over. An asst. gen. manager belongs to the most senior ranks of
management and anew partnership is entitled to appoint a top manager of its own choice and confidence. The non-retention of
Yu did not constitute unlawful termination.
The new partnership had its own new General Manager, Co, the principal new owner himself. Yus old position thus became
superfluous or redundant.
Yu is entitled to separation pay at the rate of one months pay for each year of service that he had rendered to the old
partnership, a fraction of at least 6 months being considered as a whole year
remaining partnership assets to respondents was precisely the manner of liquidating the partnership and fully settling the latters
share in the partnership.
(7) 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)
MICHAEL C. GUY VS. ATTY. GLENN C. GACOTT
G.R. No. 206147, January 13, 2016
FACTS:
Gacott (Gacott) from Palawan purchased two (2) brand new transreceivers from Quantech Systems Corporation (QSC) in
Manila through its employee due to major defects, Gacott personally returned the transreceivers to QSC and requested that they
be replaced. Medestomas received the returned transreceivers and promised to send him the replacement units within two (2)
weeks from May 10, 1997.Time passed and Gacott did not receive the replacement units as promised. QSC informed him that
there were no available units and that it could not refund the purchased price. Despite several demands, both oral and written,
Gacott was never given a replacement or a refund. The demands caused Gacott to incur expenses in the total amount of
P40,936.44. Thus, Gacott filed a complaint for damages. Summons was served upon QSC and Medestomas, afterwhich they filed
their Answer, verified by Medestomas himself and a certain Elton Ong (Ong). QSC and Medestomas did not present any evidence
during the trial. During the execution stage, Gacott learned that QSC was not a corporation, but was in fact a general partnership
registered with the Securities and Exchange Commission (SEC). In the articles of partnership,9 Guy was appointed as General
Manager of QSC. To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to the main office of the
Department of Transportation and Communications, Land Transportation Office (DOTC-LTO), Quezon City, and verified whether
Medestomas, QSC and Guy had personal properties registered therein. Upon learning that Guy had vehicles registered in his
name, Gacott instructed the sheriff to proceed with the attachment of one of the motor vehicles of Guy based on the certification
issued by the DOTC-LTO.
ISSUE: Whether or not the action of Gacott is proper?
HELD:
No, the court ruled that the partners' obligation with respect to the partnership liabilities is subsidiary in nature. It provides that
the partners shall only be liable with their property after all the partnership assets have been exhausted. To say that one's liability
is subsidiary means that it merely becomes secondary and only arises if the one primarily liable fails to sufficiently satisfy the
obligation. Resort to the properties of a partner may be made only after efforts in exhausting partnership assets have failed or
that such partnership assets are insufficient to cover the entire obligation. The subsidiary nature of the partners' liability with the
partnership is one of the valid defenses against a premature execution of judgment directed to a partner.In this case, had he
been properly impleaded, Guy's liability would only arise after the properties of QSC would have been exhausted. The records,
however, miserably failed to show that the partnership's properties were exhausted. The report of the sheriff showed that the
latter went to the main office of the DOTC-LTO in Quezon City and verified whether Medestomas, QSC and Guy had personal
properties registered therein. Gaeott then instructed the sheriff to proceed with the attachment of one of the motor vehicles of
Guy. The sheriff then served the Notice of Attachment/Levy upon Personalty to the record custodian of the DOTC-LTO of
Mandaluyong City. A similar notice was served to Guy through his housemaid at his residence. Clearly, no genuine efforts were
made to locate the properties of QSC that could have been attached to satisfy the judgment - contrary to the clear mandate of
Article 1816. Being subsidiarily liable, Guy could only be held personally liable if properly impleaded and after all partnership
assets had been exhausted.
(11)
SUNGA-CHAN vs CHUA
G.R. No. 143340
Facts:
Respondent alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution of Shellane Liquefied
Petroleum Gas (LPG) in Manila.
They had an initial capital of P200,000.00
Upon Jacintos death in the later part of 1989, his surviving wife, petitioner Cecilia and particularly his daughter, petitioner
Lilibeth, took over the operations, control, custody, disposition and management of Shellite without respondents consent.
Despite respondents repeated demands upon petitioners for accounting, inventory, appraisal, winding up and restitution of his
net shares in the partnership, petitioners failed to comply. Petitioner Lilibeth allegedly continued the operations of Shellite,
converting to her own use and advantage its properties.
Issue:
Whether or not there existed a partnership considering that there was no written document to show such
partnership.
Ruling:
Yes.
A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which
case a public instrument shall be necessary.
The essential points that must be proven to show that a partnership was agreed upon are (1) mutual contribution to a common
stock, and (2) a joint interest in the profits.
True, Article 1772 of the Civil Code requires that partnerships with a capital of P3,000.00 or more must register
with the SEC, however, this registration requirement is not mandatory. Article 1768 of the Civil Code explicitly
provides that the partnership retains its juridical personality even if it fails to register. The failure to register the
contract of partnership does not invalidate the same as among the partners, so long as the contract has the
essential requisites, because the main purpose of registration is to give notice to third parties, and it can be
assumed that the members themselves knew of the contents of their contract.
Considering that the death of a partner results in the dissolution of the partnership, in this case, it was after Jacintos death that
respondent as the surviving partner had the right to an account of his interest as against petitioners. It bears stressing that while
Jacintos death dissolved the partnership, the dissolution did not immediately terminate the partnership. The Civil Code expressly
provides that upon dissolution, the partnership continues and its legal personality is retained until the complete winding up of its
business, culminating in its termination.
(12)
TOCAO V. CA
G.R. No. 127405; October 4, 2000
FACTS:
Private respondent Nenita A. Anay met petitioner William T. Belo, then the vice-president for operations of Ultra Clean Water
Purifier, through her former employer in Bangkok. Belo introduced Anay to petitioner Marjorie Tocao, who conveyed her desire to
enter into a joint venture with her for the importation and local distribution of kitchen cookwares
Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and Anay as head of the marketing
department and later, vice-president for sales
The parties agreed that Belo's name should not appear in any documents relating to their transactions with West Bend Company.
Anay having secured the distributorship of cookware products from the West Bend Company and organized the administrative
staff and the sales force, the cookware business took off successfully. They operated under the name of Geminesse Enterprise, a
sole proprietorship registered in Marjorie Tocao's name.
The parties agreed further that Anay would be entitled to:
(1) ten percent (10%) of the annual net profits of the business;
(2) overriding commission of six percent (6%) of the overall weekly production;
(3) thirty percent (30%) of the sales she would make; and
(4) two percent (2%) for her demonstration services. The agreement was not reduced to writing on the strength of Belo's
assurances that he was sincere, dependable and honest when it came to financial commitments.
On October 9, 1987, Anay learned that Marjorie Tocao had signed a letter addressed to the Cubao sales office to the effect that
she was no longer the vice-president of Geminesse Enterprise.
Anay attempted to contact Belo. She wrote him twice to demand her overriding commission for the period of January 8, 1988 to
February 5, 1988 and the audit of the company to determine her share in the net profits.
Anay still received her five percent (5%) overriding commission up to December 1987. The following year, 1988, she did not
receive the same commission although the company netted a gross sales of P 13,300,360.00.
On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for sum of money with damages against Marjorie D.
Tocao and William Belo before the Regional Trial Court of Makati, Branch 140
The trial court held that there was indeed an "oral partnership agreement between the plaintiff and the defendants. The Court of
Appeals affirmed the lower courts decision.
ISSUE:
Whether the parties formed a partnership
HELD:
Yes, the parties involved in this case formed a partnership
The Supreme Court held that to be considered a juridical personality, a partnership must fulfill these requisites:
(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. It may be constituted in any form; a public
instrument is necessary only where immovable property or real rights are contributed thereto.
This implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one.
In the case at hand, Belo acted as capitalist while Tocao as president and general manager, and Anay as head of the marketing
department and later, vice-president for sales. Furthermore, Anay was entitled to a percentage of the net profits of the business.
Therefore, the parties formed a partnership.
(15)
PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION VS LAZATIN MAGAT
G.R. No. 167379 June 27, 2006
FACTS:
In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agreement whereby the Lazatins shall
contribute a huge parcel of land and Primelink shall develop the same into a subdivision. For 4 years however, Primelink failed to
develop the said land. So in 1998, the Lazatins filed a complaint to rescind the joint venture agreement with prayer for
preliminary injunction. In said case, Primelink was declared in default or failing to file an answer and for asking multiple motions
for extension. The trial court eventually ruled in favor of the Lazatins and it ordered Primelink to return the possession of said
land to the Lazatins as well as some improvements which Primelink had so far over the property without the Lazatins paying for
said improvements. This decision was affirmed by the Court of Appeals. Primelink is now assailing the order; that turning over
improvements to the Lazatins without reimbursement is unjust; that the Lazatins did not ask the properties to be placed under
their possession but they merely asked for rescission.
ISSUE: Whether or not the improvements made by Primelink should also be turned over under the possession of the Lazatin.
HELD: Yes. In the first place, even though the Lazatins did specifically pray for possession the same (placing of improvements
under their possession) is incidental in the relief they prayed for. They are therefore entitled possession over the parcel of land
plus the improvements made thereon made by Primelink.
In this jurisdiction, joint ventures are governed by the laws of partnership. Under the laws of partnership, when a partnership is
dissolved, as in this case when the trial court rescinded the joint venture agreement, the innocent party has the right to wind up
the partnership affairs.
With the rescission of the JVA on account of petitioners fraudulent acts, all authority of any partner to act for the partnership is
terminated except so far as may be necessary to wind up the partnership affairs or to complete transactions begun but not yet
finished. On dissolution, the partnership is not terminated but continues until the winding up of partnership affairs is
completed. Winding up means the administration of the assets of the partnership for the purpose of terminating the business
and discharging the obligations of the partnership.
It must be stressed, too, that although the Lazatins acquired possession of the lands and the improvements thereon, the said
lands and improvements remained partnership property, subject to the rights and obligations of the parties, inter se, of the
creditors and of third parties and subject to the outcome of the settlement of the accounts between the parties, absent any
agreement of the parties in their JVA to the contrary (here no agreement in the JVA as to winding up). Until the partnership
accounts are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.
The transfer of the possession of the parcels of land and the improvements thereon to respondents was only for a specific
purpose: the winding up of partnership affairs, and the partition and distribution of the net partnership assets as provided by
law.57 After all, Article 1836 of the New Civil Code provides that unless otherwise agreed by the parties in their JVA, respondents
have the right to wind up the partnership affairs:
Art. 1836. Unless otherwise agreed, the partners who have not wrongfully dissolved the partnership or the legal representative of
the last surviving partner, not insolvent, has the right to wind up the partnership affairs, provided, however, that any partner, his
legal representative or his assignee, upon cause shown, may obtain winding up by the court.
It must be stressed, too, that although respondents acquired possession of the lands and the improvements
thereon, the said lands and improvements remained partnership property, subject to the rights and obligations of
the parties, inter se, of the creditors and of third parties under Articles 1837 and 1838 of the New Civil Code, and
subject to the outcome of the settlement of the accounts between the parties as provided in Article 1839 of the
New Civil Code, absent any agreement of the parties in their JVA to the contrary.58 Until the partnership accounts
are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.
It was thus premature for petitioner Primelink to be demanding that it be indemnified for the value of the improvements on the
parcels of land owned by the joint venture/partnership. Notably, the JVA of the parties does not contain any provision designating
any party to wind up the affairs of the partnership.