L-24670 Ortigas & Co.

Vs Feati bank Facts: On March 4, 1952, Ortigas sold Lot 5 and 6, Block 31 of the Highway Hills Subdivision at Mandaluyong to Augusto Padilla y Angeles and Natividad Angeles. The latter transferred their rights in favour of Emma Chavez, upon completion of payment a deed was executed with stipulations, one of which is that the use of the lots are to be exclusive for residential purposes only. This was annotated in the Transfer Certificate of Titles No. 101509 and 101511. Feati then acquired Lot 5 directly from Emma Chavez and Lot 6 from Republic Flour Mills. On May 5, 1963, Feati started construction of a building on both lots to be devoted for banking purposes but could also be for residential use. Ortigas sent a written demand to stop construction but Feati continued contending that the building was being constructed according to the zoning regulations as stated in Municipal Resolution 27 declaring the area along the West part of EDSA to be a commercial and industrial zone. Civil case No. 7706 was made and decided in favour of Feati. Issue: Whether or not Resolution number 27 declaring Lot 5 and 6 to be part of an industrial and commercial zone is valid considering the contract stipulation in the Transfer Certificate of Titles. Held: Resolution No. 27 prevails over the contract stipulations. Section 3 of RA 2264 of the Local Autonomy Act empowers a Municipal Council to adopt zoning and subdivision ordinances or regulations for the Municipality. Section 12 or RA 2264 states that implied power of the municipality should be liberally construed in its favour, to give more power to the local government in promoting economic conditions,

social welfare, and material progress in the community. This is found in the General Welfare Clause of the said act. Although nonimpairment of contracts is constitutionally guaranteed, it is not absolute since it has to be reconciled with the legitimate exercise of police power, e.g. the power to promote health, morals, peace, education, good order or safety and general welfare of the people. Resolution No. 27 was obviously passed in exercise of police power to safeguard health, safety, peace and order and the general welfare of the people in the locality as it would not be a conducive residential area considering the amount of traffic, pollution, and noise which results in the surrounding industrial and commercial establishments. Decision dismissing the complaint of Ortigas is AFFIRMED. G.R 129822 ORTIGAS VS CA FACTS: Ortigas & Co. sold to Emilia Hermoso a parcel of land located in Greenhills Subdivision, San Juan with several restrictions in the contract of sale that said lot be used exclusively for residential purposes, among others, until December 31, 2025. Later, a zoning ordinance was issued by MMC (now MMDA) reclassifying the area as commercial. Private respondent (Ismael Mathay III) leased the subject lot from Hermoso and built a single storey building for Greenhills Autohaus, Inc., a car sales company. Ortigas & Co. filed a petition a complaint which sought the demolition of the constructed car sales company to against Hermoso as it violated the terms and conditions of the Deed of Sale. Trial court ruled in favor of Ortigas & Co. Mathay raised the issue to the Court of Appeals from which he sought favorable ruling. Hence, the instant petition. ISSUE:

Whether or not the zoning ordinance may impair contracts entered prior to its effectivity. HELD: Yes. The zoning ordinance, as a valid exercise of police power may be given effect over any standing contract. Hence, petition is denied. RATIO: A law enacted in the exercise of police power to regulate or govern certain activities or transactions could be given retroactive effect and may reasonably impair vested rights or contracts. Police power legislation is applicable not only to future contracts, but equally to those already in existence. Non-impairment of contracts or vested rights clauses will have to yield to the superior and legitimate exercise by the State of police power to promote the health, morals, peace, education, good order, safety, and general welfare of the people. Moreover, statutes in exercise of valid police power must be read into every contract. Noteworthy, in Sangalang vs. Intermediate Appellate Court, the measure. Supreme Court already upheld subject ordinance as a legitimate police power

partners; partnership business consisted of exploiting marble deposit in Bulacan Yu, as Assistant General Manager, had a monthly salary of 4000. Yu, however, actually r e c e i v e d o n l y h a l f o f h i s 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 and Emmanuel Zapanta Partnership was constituted solely by Co and Zapanta; it continued to use the old firm name of Jade Mountain Yu dismissed by the new partners Issues: 1. W ON the partnership which had hired Yu as A s s t . G e n . M a n a g e r h a d b e e n extinguish ed and replaced by a new partnership composed of Co and Zapanta; 2. if indeed a new 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 i n t h e r e l a t i o n o f t h e partners caused by any partner ceasing t o be associated in the carrying o n a s distinguished from the winding up of the business.

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 operatedby a registered partnership called Jade Mountain Products Co. Ltd. Partnership was originally organized with Bendals as general partners and Chin Shian Jeng,Chen Ho-Fu and Yu Chang as limited

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 termor 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 ow n e d b y t h e o l d partnership, and con tinued using the old name of Jade M o u n t a i n P r o d u c t s C o m p a n y Limited, without winding up the business affairs of the old partnership, paying off its debts, liquidating and distributing its net assets, and then reassembling the said assets or most of 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 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

Jesus Sy Vs CA

Heirs of Tan Eng Kee vs CA - GR126881 Business Organization Partnership, Agency, Trust Periodic Accounting Profit Sharing 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

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 a new partnership is entitled to appoint a top manager of its own choice and confidence. The nonretention 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.

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.

Litunjua vs Litunjua GR166299300 VILLAREAL VS. RAMIREZ G.R. No. 144214 July 14, 2003 FACTS: Villareal, C. Jose and J. Jose formed a partnership for the operation of a restaurant and catering business under the name Aquarius Food House and Catering Services, each contributing 250K. Ramirez was later added, contributing 250K as well. After some time, one of them (J. Jose) withdrew from the partnership; his capital contribution was refunded to him in cash by agreement of the partners. Without prior knowledge of respondents, petitioners closed down the restaurant, allegedly because of increased rental. On March 1, 1987, The respondent spouses wrote petitioners, saying that they were no longer interested in continuing their partnership or in reopening the restaurant, and that they were accepting the latters offer to return their capital contribution. The repeated oral and written requests were, however, left unheeded

Before the RTC, respondents subsequently filed a Complaint for the collection of a sum of money from petitioners. the RTC ruled in favor of the respondents, ordering petitioners to pay damages and AF and costs.

changing fortunes of the business. In the computation of the amount to be refunded to respondents, The CA did not consider: 1. The omission of any provision for the depreciation of the furniture and the equipment. 2. The amortization of the goodwill is not reflected

The CA sustained the lower courts decision, and made a computation on the petitioners liability to respondents:

3. The capitalization amount paid by the partnership to J. Jose when he withdrew from the partnership. Because of the above-mentioned transactions, the partnership capital was actually reduced. But the disposition is without prejudice to proper proceedings for the accounting, the liquidation and the distribution of the remaining partnership assets, if any GR70403

Capital, at dissolution: **P1,000,000.00 Less: liability to creditors 240,658.00 Amount to be distributed to partners 759,342.00 Over: Number of partners 3 Each partners share at dissolution 253,114.00

Syjuco vs. Castro, G.R. No. 70403. Ponente: Justice NarvasaFACTS: Eugenio Lim, along with his brothers, all hereinafter collectively called the Lims, borrowed from petitioner Santiago Syjuco, Inc. (hereinafter, Syjuco only) the sum of 800,000.00. The loan was given on the security of a first mortg age on property registered in the names of said borrowers as owners in common. Thereafter, additional loans on the same security were obtained by the Lims from Syjuco, sothat the aggregate of the loans stood at 2,460,000.00, exclusive of interest. When the obligation matured, the Lims failed to pay it despite dem ands therefor and consequently, Syj u c o c a u s e d e x t r a - j u d i c i a l proceedings for the foreclosure of the mortgage and for the Sheriff of Manila to execute the scheduled auction sale. The attempt to foreclose triggered off a legal battle that has dragged on for 20 years, through 5 cases in the courts, one of which the respondents advocated the theory that the mortgage,which they had individually constituted, in fact no longer belonged to them, having been earlier deeded over by

** which is erroneous, as this is the capital at the BEGINNING of the partnership

Hence this petition.

ISSUE: WON the CA computation was erroneous HELD: We hold that respondents have no right to demand from petitioners the return of their equity share. YES Generally, in the pursuit of a partnership business, its capital is either increased by profits earned or decreased by losses sustained. It does not remain static and unaffected by the

them to the partnership, Heirs of Hugo Lim, making the said mortgage void because it was executed by them without authority from the partnership. Judgment was rendered by the trial court declaring void the mortgage in question because it was executed by the Lims without authority from the partnership which was and had been the exclusive owner of the m ortgaged property, and m aking permanent an injunction against the foreclosure sale. Syjuco filed an instant petition for certiorari, prohibition and mandamus. It prays in its petition that the default judgment rendered against it by Judge Castro be annu lled on the ground of, among others, estoppel, res judicata, and Article 1819 of the Civil Code. ISSUE: Whether or not the lower court erred in deciding the case. HELD: Yes. The court holds that the respondent partnership was inescapably chargeable with knowledge of the mortgage executed by all the partners thereof, and therefore its silence and failure to impugn said m o r t g a g e w i t h i n a reasonable time, let alone a space of m ore than 17 years, brought into p l a y t h e doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly unauthorized. Equally or even more preclusive of the respondent partnerships claim to the mortgaged propertyi s t h e l a s t p a r a g r a p h o f A r t. 1819 of the Civil Code, which contemplates a s i t u a t i o n s i m i l a r t o t h e cae at bar. It states that where the title to real property is in the name of all the partners, a conveyance executed by all the partners passes all their rights in such property. Consequently, those members' acts, declarations and omissions cannot be deemed to be simply the individual acts of said members, but in fact and in law, those of the partnership. Finally, the Court emphasizes that the right of the Lims to assert the existence of the partnership could have been stressed at the time they instituted their first action, considering that the actions involved property supposedly belonging to it, and therefore, the partnership was the real party in interest. W hat was done by them was to split their cause of action in violation of the well

known rule that only one suit may be instituted for a single cause of action. Hence, the court orders that the assailed judgment be d e c l a r e d n u l l a n d v o i d and the complaint be dismissed from being barred by prior judgment and esstoppel, and for lack of merit.

Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin Bacorro v. CA, SEC and Joaquin Misa G.R. No. 109248 July 3, 1995 Vitug, J. Facts: Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew in said firm. He filed with SEC a petition for dissolution and liquidation of partnership. SEC en banc ruled that withdrawal of Misa from the firm had dissolved the partnership. Reason: since it is partnership at will, the law firm could be dissolved by any partner at anytime, such as by withdrawal there from, regardless of good faith or bad faith, since no partner can be forced to continue in the partnership against his will. Issue: 1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo)is a partnership at will; 2. WON the withdrawal of Misa dissolved the partnership regardless of his good or bad faith; Held: 1. Yes. The partnership agreement of the firm provides that [t]he partnership shall continue so long as mutually satisfactory and upon the death or legal incapacity of one of the partners, shall be continued by the surviving partners.2 . Yes. An y one of the partners m ay, at his sole pleasure, dictate a d i s s o l u t i o n o f t h e partnership at will (e.g. by way of withdrawal of a partner). He must, however, act in good faith, not that the attendance of bad faith can prevent the dissolution of the partnership but that it can result in a liability for damages