G.R. No. 136448 November 3, 1999 LIM TONG LIM, petitioner, vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC.

, respondent.
Facts: Chua and Yao entered into a contract with Philippine Fishing gear Industries for the purchase fishing nets and floats. It was claimed that Lim was engaged in a business venture with the respondent but he was not a signatory to the contract. Chua and Yao failed to pay the items purchased and respondent filed a collection suit against them and including Lim as general partner. A writ of preliminary attachment was issued by the court. Chua filed a Manifestation admitting his liability and requesting a reasonable time within which to pay. Yao filed an answer and Lim filed an answer with a crossclaim and a counterclaim and moved to lift the writ of attachment. Trial court maintained the writ of attachment and respondent won in the public auction. Trial court ruled that a partnership among Chua, Yao and Lim exist and held them liable to respondent based on the testimonies of the witnesses and the compromise agreement they executed. Lim appealed to the CA but the court affirmed the decision of RTC. Issue: Whether or not there exist a partnership between Lim, Chua and Yao

Ruling: Yes. A partnership may be deemed to exist among parties who agree to borrow money to pursue a business and to divide the profits or losses that may arise therefrom, even if it is shown that they have not contributed any capital of their own to a "common fund." Their contribution may be in the form of credit or industry, not necessarily cash or fixed assets. Being partner, they are all liable for debts incurred by or on behalf of the partnership. The liability for a contract entered into on behalf of an unincorporated association or ostensible corporation may lie in a person who may not have directly transacted on its behalf, but reaped benefits from that contract.
From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started by buying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's brother.

Given the preceding facts, it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in the fishing business. They purchased the boats, which constituted the main assets of the partnership, and they agreed that the proceeds from the sales and operations thereof would be divided among them.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

G.R. No. 97212 June 30, 1993 BENJAMIN YU, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HO-FU, respondents.
Facts: Yu is the is the former assistant general manager of the partnership under the firm name Jade Mountain. Private respondents who are Taiwanese nationals are limited partners of the firm. It was alleged that Yu only receives half of his salary as a general partner because he accepted the promise of the partners that the balance will be paid when they have secured an additional fund from the board. Without the knowledge of you, the limited partners transferred their interest to Willy Co and Emmanuel Zapanta. Co and Zapanta continued the use of the old firm name but moved its main office to Mandaluyong. Yu was not allowed to work anymore prompting him to file an illegal dismissal case. Co contends that the new partnership did not hire Yu. Labor Arbiter decided that Yu was illegally dismissed. NLRC reversed the decision of the Labor Arbiter. Issue: whether the partnership which had hired petitioner Yu as Assistant General Manager had been extinguished and replaced by a new partnerships composed of Willy Co and Emmanuel Zapanta Ruling: No. Art. 1828. of the Civil Code provides: 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.

In the ordinary course of events, the legal personality of the expiring partnership persists for the limited purpose of winding up and closing of the affairs of the partnership. In the case at bar, it is important to underscore the fact that the business of the old partnership was simply continued by the new partners, without the old partnership undergoing the procedures relating to dissolution and winding up of its business affairs. In other words, the new partnership simply took over the business enterprise owned by the preceeding partnership, and continued using the old name of Jade Mountain Products Company Limited, 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 most of them and opening a new business enterprise.
What is important for present purposes is that, under the above described situation, not only the retiring partners (Rhodora Bendal, et al.) but also the new partnership itself which continued the business of the old, dissolved, one, are liable for the debts of the preceding partnership. WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE COURSE

G.R. No. 70926 January 31, 1989 DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.
Facts: It was alleged that Sun Wah Panciteria is a sole proprietorship registered in the name of the petitioner. Respondent contends that the restaurant was a partnership and that he contributed in its establishment P4,000. Yiu further contend that he receives profit from the operation of the restaurant. Leung denied that he received such amount from Liu and contested the validity of the receipt evidencing profit sharing. Leung presented various government licenses evidencing that he was the sole owner of the Panciteria. Trial court ruled in favor of Lueng. Yiu filed a motion for reconsideration which was granted ordering Leung to pay 22% of the net profit of the Panciteria to Yiu. Appellate court Affirmed the decision of the trial court appeal. Leung contends that the erred in accepting the evidence of profit sharing despite the fact that it is barred by prescription being contested 22years after its execution. Issue: Whether or not Yiu has the right to demand the accounting of the partnership Ruling: 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. As stated by the respondent, a partner shares not only in profits but also in the losses of the firm. 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. [Fue Leung vs. Intermediate Appellate Court, 169 SCRA 746(1989)] WHEREFORE, the petition for review is hereby DISMISSED for lack of merit.

G.R. No. 78133 October 18, 1988 MARIANO P. PASCUAL and RENATO P. DRAGON, petitioners, vs. THE COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS, respondents.
Facts: Pascual and Dragon bought two parcels of land to Bernardino which was later sold to Marenir Development Corporation and three parcels of land to Roque which was later sold to Reyes and Samson. Capital gains taxes were paid by the Petitioners by availing of the tax amnesties granted in 1973 and 1974. BIR notified the petitioners that they have deficiency corporate taxes in the year 1968 and 1970 due to their formation of unregistered partnership. Petitioners contend that they have availed tax amnesty. Petitioners filed a petition for before CTA and the court ruled in favor of the BIR anchoring their decision in the Evangelista doctrine. Issue: Whether or not Partnership exist between Pascual and Dragon Ruling: NO. In the present case, there is no evidence that petitioners entered into an agreement to contribute money, property or industry to a common fund, and that they intended to divide the profits among themselves. Respondent commissioner and/ or his representative just assumed these conditions to be present on the basis of the fact that petitioners purchased certain parcels of land and became co-owners thereof. In Evangelista, there was a series of transactions where petitioners purchased twenty-four (24) lots showing that the purpose was not limited to the conservation or preservation of the common fund or even the properties acquired by them. The character of habituality peculiar to business transactions engaged in for the purpose of gain was present. [Pascual vs. Commissioner of Internal Revenue, 166 SCRA 560(1988)] he common ownership of property does not itself create a partnership between the owners, though they may use it for purpose of making gains; and they may, without becoming partners, agree among themselves as to the management and use of such property and the application of the proceeds therefrom.(Spurlock vs. Wilson, 142 S. W. 363, 160 No. App. 14.) The sharing of returns does not in itself establish a partnership whether or not the persons sharing therein have a joint or common right of interest in the property. There must be clear intent to form a partnership, the existence of a juridical personality different from the individual partners, and the freedom of each party to transfer or assign the whole property. [Pascual vs. Commissioner of Internal Revenue, 166 SCRA 560(1988)]

WHEREFROM, the petition is hereby GRANTED and the decision of the respondent Court of Tax Appeals of March 30, 1987 is hereby REVERSED and SET ASIDE and another decision is hereby rendered relieving petitioners of the corporate income tax liability in this case, without pronouncement as to costs.

G.R. No. L-39780 November 11, 1985 ELMO MUASQUE, petitioner, vs. COURT OF APPEALS,CELESTINO GALAN TROPICAL COMMERCIAL COMPANY and RAMON PONS, respondents.

Munasque filed a complaint for payment of sum of money against the private respondents for the remodeling of a building without receiving any compensation from Galan who was named a partner in the contract. The contract provides that tropical will be paying Munasque in the form of checks to be delivered by Galan. It appears that Galan succeeded in convincing Munasque that the payment will be deposited in a joint account in their names. When the second check was issued Munasque refused to endorse the check in the name of the joint account but Galan changed the name of the payee of the checks in his name and deposited it to a joint account through the help of Pons. Munasque continued the project at his own expense. Respondents answered the complaint by the denying its material allegations. The trial court ruled in favor of the existence of partnership between Munasque and Galan and were ordered the pay the intervenors, hardware companies. Court of appeals affirmed the decision of the trial court upon appeal. Issue: Whether or not a partnership exist between Munasque and Galan making them liable to third persons Ruling: Yes. here is nothing in the records to indicate that the partnership organized by the two men was not a genuine one. If there was a falling out or misunderstanding between the partners, such does not convert the partnership into a sham organization. Likewise, when Muasque received the first payment of Tropical in the amount of P7,000.00 with a check made out in his name, he indorsed the check in favor of Galan. Respondent Tropical therefore, had every right to presume that the petitioner and Galan were true partners. If they were not partners as petitioner claims, then he has only himself to blame for making the relationship appear otherwise, not only to Tropical but to their other creditors as well. The payments made to the partnership were, therefore, valid payments. While the liability of partners are merely joint in transactions entered into by the partnership, the partners are liable to third persons solidarily for the whole obligation if the case involves loss or injury caused to any person not a partner in the partnership, and misapplication of money or property of a third person received by a partner or the partnership. The obligation is solidary because the law protects him, who in good faith relied upon the authority of a partner, whether such authority is real or apparent. That is why under Article 1824 of the Civil Code all partners, whether innocent or guilty, as well as the legal entity which is the partnership, are solidarily liable. [Muasque vs. Court of Appeals, 139 SCRA 533(1985)]
WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that the liability of petitioner and respondent Galan to intervenors Blue Diamond Glass and Cebu Southern Hardware is declared to be joint and solidary. Petitioner may recover from respondent Galan any amount that he pays, in his capacity as a partner, to the above intervenors,

July 30, 1979 IN THE MATTER OF THE PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME "OZAETA, ROMULO, DE LEON, MABANTA & REYES." RICARDO J. ROMULO, BENJAMIN M. DE LEON, ROMAN MABANTA, JR., JOSE MA, REYES, JESUS S. J. SAYOC, EDUARDO DE LOS ANGELES, and JOSE F. BUENAVENTURA, petitioners.
In the matter of the Petition for Authority To Continue use of the firm name Ozaeta, Romulo, etc. F: 2 separate petitions were filed by the surviving partners of Atty. Alexander Sycip and the surviving partners of Herminiano Ozaeta, praying that they be allowed to continue using, in the name of their firms, the names of partners who passed away. Arguments: 1. Under the law, a partnership is not prohibited from continuing its business under a firm name which includes the name of the deceased partner.( Art. 1840 of the Civil Code ) 2. In regulating other professions, such as accountancy and engineering, the legislature has authorized the adoption of firm names without any restriction as to the use, in such firm name, of the deceased partner. 3. The Canons of Professional Ethics are not transgressed because as adopted by American Bar Association: the continued use of the name of a deceased or former partner when permissible by local custom is not unethical, but care should be taken that no imposition or deception is practiced through this use. 4. The deaths of the partners were well-publicized. 5. No local custom prohibits the continued use of the partners name in a professional firms name. 6. The continued use of the deceased partners name in the firm name of law partnerships has been consistently allowed by US Courts. I: W/N the names of the deceased partners should be allowed to continue in use in the firm name. H: Art. 1815. Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners. Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner. (partners should be living persons who can be subjected to liability) Art. 1840 treats more of a commercial partnership with a good will to protect rather than a professional partnership, with no sealable good will but whose reputation depends on the personal qualifications of its individual members. The partnership for the practice of law cannot be likened to partnerships formed by other professionals or for business. The practice of law is also a special privilege, highly personal and partaking of the nature of a public trust.

Firm names, under local customs, identify the more active and more senior members or partners of the law firm. The possibility of deception upon the public, real, or consequential, where the name of a deceased partner continues to be used cannot be ruled out. NB: Rule 3.02 of the CPR approved and promulgated by the SC on June 21,1988 in effect abandoned the ruling in the Sycip case. (see Art. 1815 Civil Code)

G.R. No. L-24193

June 28, 1968

MAURICIO AGAD, plaintiff-appellant, vs. SEVERINO MABATO and MABATO and AGAD COMPANY, defendants-appellees.
It was alleged that Agad and Mabato were partners in a fishpond business evidenced by a public instrument the capital of which was contributed by Agad and was entitled to 50% of the profit. Despite demands of Agad, Mabato failed to produce the accounting of the partnership from 1957 to 1963. A complaint was filed against Mabato and Agad Company and the court ruled in favor of Agad ordering the company to pay his share of profit and the dissolution of the partnership. In his answer Mabato denied the existence of the partnership for failure of Agad to give his contribution upon the establishment of the partnership. Mbato filed a motion to diamiss. Issue: whether or not a partnership exist between Agad and Mabato Ruling: 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 (Art. 1771, Civil Code). A contract of partnership is void, whenever immovable property is contributed thereto, if inventory of said property is not made, signed by the parties, and attached to the public instrument (Art. 1773, Id.).

The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership. Neither said fishpond nor a real right thereto was contributed to the partnership or became part of the capital thereof, even if a fishpond or a real right thereto could become part of its assets. WHEREFORE, we find that said Article 1773 of the Civil Code is not in point and that, the order appealed from should be, as it is hereby set aside and the case remanded to the lower court for further proceedings, with the costs of this instance against defendant-appellee, Severino Mabato. It is so ordered.