TAN, ROLAN VINCENT S.

LLB 3
Agency & Partnership – Case Digest Assignment

1. ISLAND SALES, INC., vs. UNITED PIONEERS GENERAL

CONSTRUCTION COMPANY, ET. AL (65 SCRA 544)
FACTS:
The defendant company, a general partnership duly registered under the laws of the Philippines,
purchased from the plaintiff a motor vehicle on the installment basis and for this purpose executed
a promissory note for P9,440.00, payable in twelve equal monthly installments of P786.63, the
first installment payable on or before May 22, 1961 and the subsequent installments on the 22nd
day of every month thereafter, until fully paid, with the condition that failure to pay any of said
installments as they fall due would render the whole unpaid balance immediately due and
demandable. Having failed to receive the installment due on July 22, 1961, the plaintiff sued the
defendant company for the unpaid balance amounting to P7,119.07. Benjamin C. Daco, Daniel A.
Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto Palisoc were included as co-defendants
in their capacity as general partners of the defendant company. Daniel A. Guizona failed to file an
answer and was consequently declared in default. Subsequently, on motion of the plaintiff, the
complaint was dismissed insofar as the defendant Romulo B. Lumauig is concerned.
When the case was called for hearing, the defendants and their counsels failed to appear.
Consequently, the trial court authorized the plaintiff to present its evidence ex-parte. The
defendants Benjamin C. Daco and Noel C. Sim moved to reconsider the decision claiming that
since there are five general partners, the joint and subsidiary liability of each partner should not
exceed one-fifth ( 1/ 5 ) of the obligations of the defendant company. The trial court denied the
said motion notwithstanding the conformity of the plaintiff to limit the liability of the defendants
Daco and Sim to only one-fifth ( 1/ 5 ) of the obligations of the defendant company.

ISSUE:
Is the dismissal of the complaint to favor one of the general partners of a partnership increases the
joint and subsidiary liability of each of the remaining partners for the obligations of the partnership.
RULING:
Condonation by creditor or share in partnership debt of one partner does not increase pro-rata
liability of other partner.
In the instant case, there were five general partners when the promissory note in question was
executed for and in behalf of the partnership. Since the liability of the partners is pro rata, the
liability of the appellant Benjamin C. Daco shall be limited to only one-fifth ( 1/ 5 ) of the
obligations of the defendant company. The fact that the complaint against the defendant Romulo
B. Lumauig was dismissed, upon motion of the plaintiff, does not unmake the said Lumauig as a
general partner in the defendant company. In so moving to dismiss the complaint, the plaintiff
merely condoned Lumauig’s individual liability to the plaintiff.
The appealed decision as thus clarified was AFFIRMED.

2. HEIRS OF JOSE LIM v. JULIET VILLA LIM, GR No. 172690, 2010-03-03

Facts:
Petitioners are the heirs of the late Jose Lim (Jose)
Jose's widow Cresencia Palad (Cresencia); and their children Elenito, Evelia, Imelda, Edelyna and
Edison
They filed a Complaint[4] for Partition, Accounting and Damages against respondent Juliet Villa
Lim (respondent)... widow of the late Elfledo Lim (Elfledo), who was the eldest son of Jose and
Cresencia.
Petitioners alleged that
Sometime in 1980, Jose, together with his friends Jimmy Yu (Jimmy) and Norberto Uy (Norberto),
formed a partnership to engage in the trucking business.
hey purchased a truck to be used in the hauling and transport of lumber of the sawmill.
Jose managed the operations of this trucking business until his death
Thereafter, Jose's heirs, including Elfledo, and partners agreed to... continue the business under
the management of Elfledo.
Petitioners also alleged that
Elfledo... was never a partner or an investor in the business and merely supervised the purchase of
additional trucks using the income from the... trucking business of the partners.
Elfledo died, leaving respondent as his sole surviving heir
Petitioners claimed that respondent took over the administration of the aforementioned properties,
which belonged to the estate of Jose, without their consent and approval.
Respondent traversed petitioners' allegations and claimed that Elfledo was himself a partner of
Norberto and Jimmy.
Respondent also stressed that Jose left no properties that Elfledo could have held in trust.
Respondent maintained that all the... properties involved in this case were purchased and acquired
through her and her husband's joint efforts and hard work, and without any participation or
contribution from petitioners or from Jose.
Respondent submitted that these are conjugal partnership properties; and thus, she... had the right
to refuse to render an accounting for the income or profits of their own business.
RTC rendered its decision in favor of petitioners... to submit an accounting of all incomes, profits
and rentals received by her from said properties
Aggrieved, respondent appealed to the CA.
he CA reversed and set aside the RTC's decision, dismissing petitioners' complaint for lack of
merit.
petitioners argue that according to the testimony of Jimmy, the sole surviving partner, Elfledo was
not a partner; and that he and Norberto entered into a partnership with Jose.
Issues:
Who between Jose and Elfledo... was the "partner" in the trucking business.

Ruling:
A partnership exists when two or more persons agree to place their money, effects, labor, and skill
in lawful commerce or business, with the understanding that there shall be a proportionate sharing
of the profits and losses among them. A contract of partnership is defined by... the Civil Code as
one where 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.
Art. 1769. 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 from which the returns are
derived;
(4) The receipt by a person of a share of the profits of a business is a 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 installments 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.
the following circumstances tend to prove that Elfledo was himself the partner of Jimmy and
Norberto: 1) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the partnership, on
a date that coincided with the... payment of the initial capital in the partnership;[15] (2) Elfledo
ran the affairs of the partnership, wielding absolute control, power and authority, without any
intervention or opposition whatsoever from any of petitioners herein;[16] (3) all of the properties,
particularly the nine trucks of the partnership, were registered in the name of Elfledo; (4) Jimmy
testified that Elfledo did not receive wages or salaries from the partnership, indicating that what
he actually received were shares of... the profits of the business;[17] and (5) none of the petitioners,
as heirs of Jose, the alleged partner, demanded periodic accounting from Elfledo during his
lifetime.
Principles:
Heirs of Tan Eng Kee,[18] a demand... for periodic accounting is evidence of a partnership.
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 letteraddressed 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.