AURBACH v SANITARY WARES MANUFACTURING CORPORATION

G.R. No. 75875 December 15, 1989

Facts:

ASI, a US-domiciled corporation entered into an Agreement with Saniwares and some Filipino
investors (Lagdameo & Young group) whereby ASI and the Filipino investors in the ownership
of an enterprise which would engage primarily in the business of manufacturing in the
Philippines and selling here and abroad vitreous china and sanitary wares under the name,
“Sanitary Wares Manufacturing Corporation."

The joint enterprise thus entered into by the Filipino investors and the American corporation
prospered. Unfortunately, with the business successes, there came a deterioration of the
initially harmonious relations between the two groups. According to the Filipino group, a basic
disagreement was due to their desire to expand the export operations of the company to which
ASI objected as it apparently had other subsidiaries of joint joint venture groups in the
countries where Philippine exports were contemplated.

Issue:

Whether the the nature of the business established by the parties was that of a joint venture or
a corporation

Held:

The parties established a joint venture. Upon examination of important provisions of the
Agreement as well as the testimonial evidence presented by the Lagdameo and Young Group
shows that the parties agreed to establish a joint venture and not a corporation. The history of
the organization of Saniwares and the unusual arrangements which govern its policy making
body are all consistent with a joint venture and not with an ordinary corporation.

Moreover, ASI in its communications referred to the enterprise as joint venture. Baldwin Young
also testified that Section 16(c) of the Agreement that "Nothing herein contained shall be
construed to constitute any of the parties hereto partners or joint venturers in respect of any
transaction hereunder" was merely to obviate the possibility of the enterprise being treated as
partnership for tax purposes and liabilities to third parties.
Litonjua Jr vs Litonjua Sr

GR Nos. 166299-300 December 13, 2005

Facts:

Aurelio K. Litonjua, Jr. (Aurelio) Eduardo K. Litonjua, Sr. (Eduardo) are brothers. Aurelio
alleged that, since June 1973, he and Eduardo are into a joint venture/partnership
arrangement in the theatre, hipping and realty business.

Aurelio showed as evidence a letter sent to him by Eduardo that the latter is allowing Aurelio to
manage their family business if Eduardo is away and in exchange, Eduardo will be giving
Aurelio P1 million or 10% equity, whichever is higher. The subsequent memorandum made for
the said partnership agreement stated that in exchange of Aurelio, who just got married,
retaining his share in the family business and some other immovable properties, he will be
given P1 Million or 10% equity in all these businesses and those to be subsequently acquired
by them whichever is greater.

The relationship between the brothers went sour. Aurelio thereafter demanded an accounting
and the liquidation of his share in the partnership which Eduardo did not heed

Issue: Whether there exists a partnership

Held:

No, a partnership never existed. The letter allegedly sent by Eduardo in 1973 contains
typewritten entries, personal in tone, but is unsigned and undated. As an unsigned document,
there can be no quibbling that it does not meet the public instrumentation requirements
exacted under Article 1771 of the Civil Code. Moreover, being unsigned and doubtless
referring to a partnership involving more than P3,000.00 in money or property, said
letter cannot be presented for notarization, let alone registered with the Securities and
Exchange Commission (SEC), as called for under the Article 1772 of the Code. And inasmuch
as the inventory requirement under the succeeding Article 1773 goes into the matter of validity
when immovable property is contributed to the partnership, the next logical point of inquiry
turns on the nature of petitioners contribution, if any, to the supposed partnership.
Philex Mining Corp v CIR

G.R. No. 148187

Facts:

Petitioner Philex Mining entered into an agreement with Baguio Gold Mining Company (Baguio
Gold) for the former to manage and operate the latter’s mining claim, known as the Sto. Nino
mine in Atok and Tublay, Benguet Province. The parties' agreement was denominated as
“Power of Attorney” which provided among many others, for the arrangement of transfer of
property and funds of the Sto. Nino project and sharing of profits.

In the course of managing and operating the project, Philex Mining made advances of cash
and property in accordance with paragraph 5 of the agreement. However, the mine suffered
continuing losses over the years which resulted to petitioners withdrawal as manager of the
mine on January 28, 1982 and in the eventual cessation of mine operations on February 20,
1982.

Issue:

Whether a partnership or joint venture exists between Philex Mining and Baguio Gold

Held:

Yes. A contract of partnership exists bewteen the two. An examination of the Power of
Attorney reveals that a partnership or joint venture was indeed intended by the parties. Under
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 the profits among themselves.
While a corporation, like petitioner, cannot generally enter into a contract of partnership unless
authorized by law or its charter, it has been held that it may enter into a joint venture which is
akin to a particular partnership:

Where representation for and in behalf of the principal is merely incidental or necessary for the
proper discharge of ones paramount undertaking under a contract, the latter may not
necessarily be a contract of agency, but some other agreement depending on the ultimate
undertaking of the parties. Article 1769 (4) of the Civil Code explicitly provides that the receipt
by a person of a share in the profits of a business is prima facie evidence that he is a partner in
the business.
J. M. TUASON & CO., INC v BOLAÑOS

G.R. No. L-4935 May 28, 1954

Facts:

The case is an action to recover possession of registered land situated in barrio Tatalon,
Quezon City. The complaint of plaintiff JM Tuason represented by its managing partner,
Gregoria Araneta, Inc was amended 3 times with respect to the extent and description of the
land sought to be recovered.

Defendant raised the defense of prescription and title thru "open, continuous, exclusive and
public and notorious possession" of the land in dispute. He also alleged that the registration of
the land was obtained by plaintiff's predecessor through fraud or error.

Issue:

Whether the case was brought by the real party in interest.

Held:

Yes, the case was brought by the real party in interest

What the Rules of Court require is that an action be brought in the name of, but not
necessarily by, the real party in interest.It is true that the complaint also states that the plaintiff
is "represented herein by its Managing Partner Gregorio Araneta, Inc.", another corporation,
but there is nothing against one corporation being represented by another person, natural or
juridical, in a suit in court. The contention that Gregorio Araneta, Inc. can not act as managing
partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership
is without merit, for the true rule is that "though 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." (Wyoming-Indiana Oil Gas Co. vs.
Weston, 80 A. L. R., 1043, citing 2 Fletcher Cyc. of Corp., 1082.)
ORTEGA v CA

G.R. No. 109248 July 3, 1995

Facts:

The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in the
Mercantile Registry on 4 January 1937 and reconstituted with the Securities and Exchange
Commission on 4 August 1948. The SEC records show that there were several subsequent
amendments to the articles of partnership.

On February 17, 1988, one of the partners, petitioner-appellant, Atty Misa, wrote the
respondents-appellees a letter stating his withdrawal and retirement from from the firm of Bito,
Misa and Lozada due to the working conditions of their employees including the assistant
attorneys.

Petitioner filed with this Commission's Securities Investigation and Clearing Department (SICD)
a petition for dissolution and liquidation of partnership

Issue/s:

1. Whether the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo) is a
partnership at will;
2. Whether the the withdrawal of Atty MIsa dissolved the partnership regardless of his good or
bad faith; and

Held:

1. Yes, The said partnership is a partnership at will. The partnership agreement does not
provide for a specified period or undertaking. The birth and life of a partnership at will is
predicated on the mutual desire and consent of the partners. The right to choose with whom a
person wishes to associate himself is the very foundation and essence of that partnership. Its
continued existence is, in turn, dependent on the constancy of that mutual resolve, along with
each partner's capability to give it, and the absence of a cause for dissolution provided by the
law itself.

2. Yes, the withdrawal of Atty Misa dissolved the partnership. Any one of the partners may, at
his sole pleasure, dictate a dissolution of the partnership at will. 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. Among partners, mutual agency arises and the doctrine
of delectus personae allows them to have the power, although not necessarily the right, to
dissolve the partnership.
FERNANDEZ v DELA ROSA

G.R. No. 413 February 2, 1903

Facts:

The plaintiff alleges that in January, 1900, he entered into a verbal agreement with the
defendant to form a partnership for the purchase of cascoes and the carrying on of the
business of letting the same for hire in Manila, the defendant to buy the cascoes and each
partner to furnish for that purpose such amount of money as he could, the profits to be divided
proportionately.

In April 1900 in an attempt to draw up articles of partnership but that the defendant having
proposed a draft of such articles which differed materially from the terms of the earlier verbal
agreement, and being unwillingly to include casco No. 2089 in the partnership, they were
unable to come to any understanding and no written agreement was executed.

The defendant having in the meantime had the control and management of the two cascoes,
the plaintiff made a demand for an accounting upon him, which the defendant refused to
render, denying the existence of the partnership altogether.

At some time subsequently to the failure of the attempt to agree upon partnership articles and
after the defendant had been operating the cascoes for some time, the defendant returned to
the plaintiff 1,125 pesos, in two different sums, one of 300 and one of 825 pesos.

Issue/s:

(1) Whether a partnership exist between the parties?

(2) If such partnership existed, was it terminated as a result of the act of the defendant in
receiving back the 1,125 pesos?

Held:

(1) Yes. The essential points upon which the minds of the parties must meet in a contract of
partnership are, therefore, (a) mutual contribution to a common stock, and (b) a joint interest in
the profits

The SC found as a fact that money was furnished by the plaintiff and received by the
defendant with the understanding that it was to be used for the purchase of the cascoes in
question. This establishes the first element of the contract, namely, mutual contribution to a
common stock. The second element, namely, the intention to share profits, appears to be an
unavoidable deduction from the fact of the purchase of the cascoes in common, in the
absence of any other explanation of the object of the parties in making the purchase in that
form, and, it may be added, in view of the admitted fact that prior to the purchase of the first
casco the formation of a partnership had been a subject of negotiation between them.

(2) No. There was no intention on the part of the plaintiff in accepting the money to relinquish
his rights as a partner, nor is there any evidence that by anything that he said or by anything
that he omitted to say he gave the defendant any ground whatever to believe that he intended
to relinquish them. On the contrary he notified the defendant that he waived none of his rights
in the partnership. Nor was the acceptance of the money an act which was in itself inconsistent
with the continuance of the partnership relation, as would have been the case had the plaintiff
withdrawn his entire interest in the partnership. There is, therefore, nothing upon which a
waiver, either express or implied, can be predicated.