Article 1767-1783
While the representation that plaintiff
Evangelista vs CIR: Corporations strictly speaking are distinct and
different from partnership. When our IRC includes “partnerships”
among the entities subject to the tax on “corporations”, it must
allude to organizations which are not necessarily “partnerships” in
the technical sense of the term.
Laguna Transportation vs SSS: Where a corporation was formed by
and consisted of members of a partnership whose business and
property was conveyed and transferred to the corporation for the
purpose of continuing its business, in payment for which corporate
stock was issued, such corporation is presumed to have assumed
partnership debts and is deemed prima facie liable therefor. The
reason is that the members of the partnership may be said to have
simply put on a new coat, or taken on a corporate cloak; and the
corporation is a mere continuation of the partnership.
Tuazon vs Bolanos: There is nothing against one corporation being
represented by another person, natural or juridical, in a suit in court,
for the true rule is that “although a corporation has no power to enter
into a partnership, it may nevertheless enter into a joint venture with
another where the nature of that venture is in line with the business
authorized by its charter.
Woodhouse vs Halili: Agreement to form a partnership cannot be
enforced. Such is an obligation to do, not to give. The law recognizes
the individual’s freedom or liberty to do an act as he promised to do,
or not to do it as he pleases. This is a very personal act of which courts
may not compel compliance, as it is considered as an act of violence
to do so.
In order that fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental(dolo incidente), inducement to
the making of the contract.
had the exclusive franchise did not vitiate defendant’s consent to the
contract, it was used by plaintiff to get form defendant a share of the
30% of net profits. This is dolo incidente. Hence, plaintiff is entitled
to pay damages.
Evangelista vs Abad Santos: ”By 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” does NOT specify the kind of industry that a partner may
thus contribute.
The prohibition against an industrial partner engaging in business for
himself seeks to prevent any conflict of interest between the
industrial partner and the partnership and to insure faithful
compliance by said partner with his prestation.
Being a Judge of one of the branches of the City of Manila can hardly
be characterized as a business hence it cannot be said that such judge
is engaged in any business antagonistic to that of the partnership.
Moran vs CA: Being a contract of partnership, each partner must
share in the profits and losses of the venture. That is the essence of
a partnership. And even with an assurance made by one of the
partners that they would earn a huge amount of profits, in the
absence of fraud, the other partner cannot claim a right to recover
the highly speculative profits. It is a rare business venture guaranteed
to give 100% profits.
Leyte-Samar Sales Co vs CEA: A partner is not a creditor of the
partnership. The partner of a partnership is not a creditor of such
partnership for the amount of his share.
The remedy of the owner of property whose property was wrongfully
sold is to claim the property and not the proceeds of the sale.
Commissioner of Internal Revenue vs Suter: A partnership has a c. And such a community of interest, as far as third persons
distinct and juridical of its own, distinct and separate from that of its are concerned as enables each party to make contract,
partners, the bypassing of the existence of the limited partnership as manage the business and dispose of the whole property.
a taxpayer can only be done by ignoring or disregarding clear
The common ownership of property does not itself create a
statutory mandates and basic principles of law. The limited
partnership between the owners, though they may use it for purpose
partnership’s separate individuality makes it impossible to equate its
of making gains; and they may, without becoming partners, agree
income with that of the component member.
among themselves as to the management and use of such property
A subsequent marriage of a general and limited partner does dissolve and the application of the proceeds therefrom.
the particular partnership they entered into prior the marriage since
The sharing of returns does not in itself establish a partnership
marriage is not one of the causes provided for that purpose. The
whether or not the persons sharing therein have a joint or common
capital contributions of partners were separately owner and
right of interest in the property. There must be clear intent to form
contributed by them before their marriage; and after they were
partnership, the existence of a juridical personality different from the
joined in wedlock, such contributions remained their respective
individual partners, and the freedom of each party to transfer or
separate property.
assign the whole property.
Palting vs San Jose Petroleum: The privilege to utilize, exploit and
Fortis vs Gutierrez Hermanos: In an action against a partnership to
develop the natural resources of the Philippines is granted by Article
recover a debt due from it to the plaintiff, section 383, par 7 of the
XIII of the Constitution to Filipino citizens or to corporations or to
Code of Civil Procedure does not prohibit the plaintiff from testifying
associations 60% of the capital of which is owned by such citizens.
to a conversation between himself and a then partner who had died
Campos Rueda vs Pacific Commercial: In the Philippines, a limited prior to the trial of the action.
partnership duly organized in accordance with law has a personality
Kiel vs Estate of Sabert: The declarations of one partner, not made
distinct from that of its members; and if it commits an act of
in the presence of his copartner, are not competent to prove the
bankruptcy, as may be provided by law, it may be adjudged insolvent
existence of a partnership between them as against such other
on the petition of three of its creditors although its members may not
partner. The existence of a partnership cannot be established by
be insolvent.
general reputation, rumor or hearsay.
Pascual vs CIR: The sharing of returns does not in itself establish a
The intention of the parties as gathered from the facts” and as
partnership. In order to constitute a partnership inter sese there must
ascertained from their language and conduct, should be sought out
be:
and then given effect.
a. Intent to form the same
Agad vs Mabato: How partnership may be constituted—A
b. Generally participating in both profits and losses
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. A contract of partnership is void
whenever immovable property is contributed thereto if inventory of
said properties is not made, signed by the parties and attached to the
public instrument.
If partnership was established to “operate a fishpond” and not
“engage in the fishpond business” it isn’t necessary that a fishpond
or real property was contributed.
Aurbach vs Sanitary Wares Mftg Co: The legal concept of a joint
venture is of common law origin. It has no precise legal definition but
it has been generally understood to mean an organization formed for
some temporary purposes. It is in fact hardly distinguishable from the
partnership, since their elements are similar community of interest
in the business, sharing of profits and losses and a mutual right of
control.
The main distinction (according to authors in the common law
jurisdictions) between the two is that the partnership contemplates
a general business with some degree of continuity while the joint
venture is formed for the execution of a single transaction and is this
a temporary nature. But this observation is not entirely accurate in
this jurisdiction since under the Civil Code, a partnership may be
particular or universal, and a particular partnership may have for its
object a specific undertaking. It would seem therefore that under
Philippine law, a joint venture is a form of partnership and should
thus be governed by the law of partnerships. The SC has however
recognized a distinction between these 2 businesses forms. It held
that although a corporation cannot enter into a partnership contract,
it may engage in a joint venture with others. Moreover, the usual
rules as regards the construction and operations of contracts
generally apply to a contract of joint ventures.
Articles 1784 to 1809:
Lozana vs Depakakibo: An equipment which was contributed by one
of the partners to the partnership becomes the property of the
partnership and as such cannot be disposed of by the party
contributing the same without the consent or approval of the
partnership or of the other partners.
Sancho vs Lizarraga: A partner’s failure to pay to the partnership the
whole amount which he bound himself to pay, he became indebted
to it for the remainder, with interest and any damages occasioned
thereby. But the other partners does not acquire the right to demand
rescission of the partnership contract under Article 1124 of the Civil
Code. This article cannot be applied to the case because it refers to
the resolution of obligations in general whereas article 1681 and
1682 specifically refer to the contract of partnership in particular. It
is a well-known principle that special provisions prevail over general
provisions.
Note: 1681 here is now 1786. 1682 is now 1788. 1124 is now 1191.
Mora Electric Co vs Matic: A and B which both obligated themselves
to contribute necessary expenses for a business undertaking (which
later failed because it did not yield the expected profit) is a civil
partnership. If B did not contribute, the amount sought is NOT
claimed as profit or loss but as the contribution which B bound itself
to pay. There is no reason for liquidation.
Article 1797:
Torres et al vs Court of Appeals (1999): Failure to prepare an
inventory of the immovable property is contributed, in spite of Article
1773 declaring the partnership void, would not render the
partnership void when:
 a. No third party s involved since Art 1773 is intended for the
protection of 3rd parties
b. The parties have made a claim on the partnership agreement
which is deemed binding between them as any other
contract
Article 1799:
Miguel Cuenco vs Vda de Manguerra (2004): When a client employs
the services of a law firm he does not employ the services of the
lawyer who is assigned to personally handle the case. Rather, he
employs the entire law firm. Hence, lawyers who are in the same law
firm as the lawyer who personally handled the case, but did not
personally take part in the case is entitled to a share in the attorney’s
fees earned by the latter’s undertaking.
Article 1800:
Tai Tong Chuache vs Insurance Comm (1988): A partnership may sue
and be sued in its name or by its duly authorized representative.
Although it is true that an action must be brought in the name of the
real party in interest, it should be noted that when the petitioner is a
partnership, it may sue and be sued its name or by its duly authorized
representative. A managing partner of the partnership may execute
all acts of administration including the right to sue debtors of the
partnership in case of their failure to pay obligations when it became
due and demandable. If not a managing partner, a partner is still an
agent of the partnership hence, being an agent, it is understood that
he acts for and in behalf of the firm.
Article 1801:
Litton vs Hill & Ceron: The dissolution of a commercial association
shall not cause any prejudice to third persons until it has been
recorded in the commercial registry. Thus, the dissolution of a
partnership by the will of the parties which is not registered in the
commercial registry, does not prejudice third persons.
The stipulation in the articles of partnership that any of the two
managing partners may contract and sign in the name of the
partnership with the consent of the other, undoubtedly created an
obligation between the two partners, which consists in asking the
other’s consent before contracting for the partnership. Neither is it
necessary for the third person to ascertain if the managing partner
with whom he contracts has previously obtained the consent of the
other. A third party ay and has the right to presume the partner with
whom he contracts has, in the ordinary and natural course of
business, the consent of his copartner; for otherwise he would not
enter into the contract.
When not only without the consent, but against the will of any of the
managing partners, a contract is entered into with a third person who
acts in good faith, and the transaction is of the kind of business in
which the partnership is engaged, said contract shall not be annulled,
without prejudice to the liability of the guilty partner. The reason for
this is to protect a third person who contracts with one of the
managing partners of the partnership, this avoiding fraud and deceit
to which he may easily fall a victim without this protection.
Article 1804:
Bachrach vs “La Protectora”: While a member of a civil partnership
is not liable in solidum with this fellows for its entire indebtedness,
he is liable with them for his aliquot part thereof.
If several members of a civil partnership execute a document
authorizing one of the members to buy two automobile trucks in the
name and representation of the firm, and the partner given such
authority effected the purchase and signed the name of the
partnership to the purchase money notes and his own name as an
individual thereby assuming himself jointly and severally liable with
the firm, the other partners who emitted the authority were not
liable on the note. Why? Because the document in questioned
contained no authority to bind them personally and in fact, the notes
did not purport to do so. But they were held liable in their capacity
as partners.
Martinez vs Ong Pong Co.: Where two persons receive from another
a sum of money for the establishment of a business, and agree to
share with the latter the profits or losses that may results therefrom,
the said two persons as the apparent administrators of the
partnership, acted as agents for the capitalist partner under the
provisions of Article 1803, rule 1 of the Civil Code, and by virtue
thereof are bound to fulfill the contract which implies the
management of the business.
This is not an obligation in solidum, neither by reason of the general
rules governing the obligations of two or more persons nor by the
special rule governing mandatum. It is simply a contract in severalty,
each person being liable for one half.
If there is a partnership in which there are two administrators or
agents liable for an amount, Article 1207 of Civil Code has been
properly applied, and article 1698 might also be invoked which deals
with the debts of a partnership where the obligation is not a joint
one, as is likewise provided by article 1894 of said code with respect
to a liability of two or more agents with respect to the return of the
money that they received form their principal.
Garcia Ron vs Compania de Minas de Batan: When one of the
partners of a partnership is authorized to receive goods and be
charged personally for expenses incurred form business transactions
with a third party vendor, the partnership shall not be liable for such.
(?)
Si-Boco vs Yap Teng:
Red Men vs Veteran Army:
Goquiolay et al vs Sycip et al:
Article 1809:
Uy vs Puzon
Ornum vs Lasala
Evangelista vs Abad Santos

A contract of mandatum requires that agents shall account to the Article 1810:
principal for all their transactions and pay him whatever sum they Deluao et al vs Casteel (1969)
received by virtue thereof. By not accounting for it, or otherwise
justifying the investment of the money received and administered, Article 1815
the parties who received it become debtors under obligation to make
In re: Petition for authority etc:
restitution of the money to the person who entrusted it to them.
Article 1816:
Elmo Munasque vs CA(1985) Article 1843 (Limited Partnership)
Isalnd Sales vs United Pioneers (1975) Involuntary Insolvency of Campos Rueda (1922)
Article 1817:
Santiago Syjuco Inc vs Jose Gastro (1989)

STOP HERE ON TUESDAY. Continue on Friday morning

Article 1825:
Heirs of Tan Eng Kee vs CA (2000)

Lim vs Phil Fishing Gear (1999) (Vitug Opinion):

Article 1826:
Villareal vs Ramirez(2003)

Article 1828:
Sunga Chan vs Chua (2001)

Idos vs CA (1998):

Benjamin Yu vs NLRC (1993):

Ortega vs CA (1995):

Recentes vs CFI Zamboanga (1983):

Article 1829-1840:
Villareal vs Ramirez (2003):

Benjamin YU vs NLRC (1993):

Primelink Properties vs Lazatin-Magat (2006):