Article 1789 provides that ‘An industrial partner cannot engage in business for
PARTNERSHIP himself, unless the partnership expressly permits him to do so; and if he should do
Evangelista & Co. et.al. v. Estrella Abad Santos
FACTS:
On October 9, 1954, a co-partnership with herein petitioners as capitalist partners
was formed under the name “Evangelista & Co.” The Articles of Co-partnership
was, however, amended on June 7, 1955 so as to include herein respondent,
Estrella Abad Santos, as an industrial partner.
Consequently, on December 17, 1963, Abad Santos filed suit against the three
(3) capitalist partners, alleging that the partnership, which was also made a party-
defendant, had been paying dividends to the partners except to her. It was further
alleged that despite her requests that she be allowed to examine partnership
books, to give her information regarding the partnership affairs and to receive her
share in the dividends declared by the partnership, the petitioners refused and
continued to refuse. She therefore prayed that the petitioners be ordered to
render an accounting of the partnership business and to pay her the corresponding
share in the dividends.
ISSUE:
Whether or not the Articles of Co-partnership shall be considered as a conclusive
evidence of respondent’s status as a limited partner?
HELD:
NO. The Court held that despite the genuineness of the Articles of Co-partnership
the same did not express the true intent and agreement of the parties, however, as
the subsequent events and testimonial evidences indicate otherwise, the Court
upheld that respondent is an industrial partner of the company.
so, the capitalist partners may either exclude him from the firm or avail themselves
of the benefits which he may have obtained in violation of this provision, with a
right to damages in either case.’ Since 1954 and until after the promulgation of the
decision of the appellate court, Abad Santos has served as a judge of the City Court
of Manila and had been paid for services rendered allegedly contributed by her to
the partnership. Though being a judge of the City Court of Manila cannot be
characterized a business and/or may be considered an antagonistic business to the
partnership, the petitioners, subsequent of petitioners’ answer to the complaint,
petitioners reached the decision that respondent be excluded from and deprived of
her alleged share in the interest or participation as an alleged industrial partner in
the net profits or income of the partnership.
Having always known the respondent is a City Judge even before she joined the
partnership, why did it take petitioners so many years before excluding her from
said company? Furthermore, the act of exclusion is premised on the ground that
respondent has always been a partner, an industrial partner. In addition, the Court
further held that with the consideration of Article 1767 that ‘By a contract of
partnership two or more persons bind themselves, to contribute money, property,
or industry to a common fund, with the intention of dividing profits among
themselves’, the services rendered by respondent may legitimately be considered
the respondent’s contribution to the common fund.
TOCAO V. CA
G.R. No. 127405; October 4, 2000
Ponente: J. Ynares-Santiago
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 court’s 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.
VILLAREAL V. RAMIREZ
Facts:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital
of P750,000for the operation of a restaurant and catering business. Respondent
Ramirez joined as a partner in the business with the capital contribution of
P250,000. In 1987, Jesus Jose withdrew from the partnership and within the same
time, Villareal and Carmelito Jose, petitioners closed the business without prior
knowledge of respondents In March 1987, respondents wrote a letter to
petitioners stating that they were no longer interested in continuing the
partnership and that they were accepting the latter’s offer to return their capital
contribution. This was left unheeded by the petitioners, and by reason of which
respondents filed a complaint in the RTC.RTC ruled that the parties had voluntarily
entered into a partnership, which could be dissolved at any time, and this
dissolution was showed by the fact that petitioners stopped operating the
restaurant. On appeal, CA upheld RTC’s decision that the partnership was dissolved
and it added that respondents had no right to demand the return of their capital
contribution. However since petitioners did not give the proper accounting for the
liquidation of the partnership, the CA took it upon itself to compute their liabilities
and the amount that is proper to the respondent. The computation of which
was:(capital of the partnership – outstanding obligation) / remaining partners
=amount due to private respondent
Issue: W/N petitioners are liable to respondents for the latter’s share in the
partnership?

Ruling:
No. Respondents have no right to demand from petitioner the return of their
equity share. As found by the court petitioners did not personally hold its equity or
assets. “The partnership has a juridical personality separate and distinct from that
of each of the partners.” Since the capital was contributed to the partnership, not
to petitioners, it is the partnership that must refund the equity of the retiring
partners. However, before the partners can be paid their shares, the creditors of
the partnership must first be compensated. Therefore, the exact amount of refund
equivalent to respondents’ one-third share in the partnership cannot be
determined until all the partnership assets will have been liquidated and all
partnership creditors have been paid. CA’s computation of the amount to be
refunded to respondents as their share was thus erroneous.
AGENCY
Genevieve Lim v. Florencio Saban
G.R. No. 163720 December 16, 2004
Tinga, J.
FACTS:
 Eduardo Ybañez, owner of a 1,000-square meter lot in Cebu City,
entered into an Agreement and Authority to Negotiate and Sell
with Florencio Saban. Under the Agency Agreement, Ybañez
authorized Saban to look for a buyer of the lot for P200,000.00
and to mark up the selling price to include the amounts needed
for payment of taxes, transfer of title and other expenses
incident to the sale, as well as Saban’s commission for the sale.
 Through Saban’s efforts, Ybañez and his wife were able to sell
the lot to Genevieve Lim and the spouses Benjamin and Lourdes
Lim. The price of the lot as indicated in the Deed of Absolute
Sale is P200,000.00. The vendees agreed to purchase the lot at
the price of P600,000.00, inclusive of taxes and other incidental
expenses of the sale. After the sale, Lim remitted to Saban the
amounts of P113,257.00 for payment of taxes due on the
transaction as well as P50,000.00 as broker’s commission.
 Saban received checks in payment of his commission but all of
them were dishonored upon presentment. Thus, he filed a
complaint for collection of sum of money and damages against
Ybañez and Lim. Saban alleged that Ybañez told Lim that he
(Saban) was not entitled to any commission for the sale since he
concealed the actual selling price of the lot from Ybañez and
because he was not a licensed real estate broker.
ISSUES: (1) WON Saban is entitled to receive his commission from
the sale; (2) if in the affirmative, WON it is Lim who is liable to pay
Saban his sales commission
HELD: (1) Yes.
 The agency was not revoked since Ybañez requested that Lim
make stop payment orders for the checks payable to Saban only
after the consummation of the sale. At that time, Saban had
already performed his obligation as Ybañez’s agent when,
through his (Saban’s) efforts, Ybañez executed the Deed of
Absolute Sale of the lot with Lim and the Spouses Lim.
 To deprive Saban of his commission subsequent to the sale
which was consummated through his efforts would be a breach
of his contract of agency with Ybañez which expressly states
that Saban would be entitled to any excess in the purchase price
after deducting the P200,000.00 due to Ybañez and the transfer
taxes and other incidental expenses of the sale.
 Saban’s agency was not one coupled with an interest. an agency
is deemed as one coupled with an interest where it is
established for the mutual benefit of the principal and of the
agent, or for the interest of the principal and of third persons,
and it cannot be revoked by the principal so long as the interest
of the agent or of a third person subsists. In an agency coupled
with an interest, the agent’s interest must be in the subject
matter of the power conferred and not merely an interest in the
exercise of the power because it entitles him to compensation.
When an agent’s interest is confined to earning his agreed
compensation, the agency is not one coupled with an interest,
since an agent’s interest in obtaining his compensation as such
agent is an ordinary incident of the agency relationship. (See
Art. 1927)
HELD: (2) Yes. It is just and proper for Lim to pay Saban the
balance of P200,000.00. Furthermore, since Ybañez received a
total of P230,000.00 from Lim, or an excess of P30,000.00 from
his asking price of P200,000.00, Saban may claim such excess
from Ybañez’s estate, if that remedy is still available, in view of
the trial court’s dismissal of Saban’s complaint as against Ybañez,
with Saban’s express consent, due to the latter’s demise when the
case was still pending.