 It be noted that the lower court’s decision as affirmed by the CA relied mainly on the
EVANGELISTA AND CO vs. ESTRELLA ABAD SANTOS
FACTS:
 A co-partnership was formed under the name of "Evangelista & Co."
 On June 7, 1955 the Articles of Co-partnership were amended so as to include herein
respondent, Estrella Abad Santos, as industrial partner, with herein petitioners Domingo C.
Evangelista, Jr., Leonarda Atienza Abad Santos and Conchita P. Navarro, the original
capitalist partners, remaining in that capacity, with a contribution of P17,500 each.
 The amended Articles provided, inter alia, that "the contribution of Estrella Abad Santos
consists of her industry being an industrial partner;" and that the profits and losses "shall be
divided and distributed among the partners in the proportion of 70% for the first three
partners, Domingo C. Evangelista, Jr., Conchita P. Navarro and Leonarda Atienza Abad
Santos to be divided among them equally; and 30% for the fourth partner, Estrella Abad
Santos.
 Herein respondent (Abad Santos) filed suit against the three other partners in the Court of
First Instance of Manila, alleging that the partnership, which was also made a party-
defendant, had been paying dividends to the partners except to her and notwithstanding
her demands the defendants had refused and continued to refuse to let her examine the
partnership books or to give her information regarding the partnership affairs or to pay her
any share in the dividends declared by the partnership.
 The defendants, in their answer, denied ever having declared dividends or distributed profits
of the partnership; denied likewise that the plaintiff ever demanded that she be allowed to
examine the partnership books
 Defendants also alleged that the amended Articles of Co-partnership did not express the
true agreement of the parties, which was that the plaintiff was not an industrial partner; that
she did not in fact contribute industry to the partnership; and that her share of 30% was to
be based on the profits which might be realized by the partnership only until full payment of
the loan which it had obtained in December, 1955 from the Rehabilitation Finance
Corporation in the sum of P30,000, for which the plaintiff had signed a promissory note as
co-maker and mortgaged her property as security.
ISSUES: W/N PLAINTIFF IS AN INDUSTRIAL PARTNER OR MERELY A PROFIT SHARER ENTITLED TO 30%
OF THE NET PROFITS. - INDUSTRIAL PARTNER
HELD:
 It is not the function of the Supreme Court to analyze or weigh such evidence all over again,
its jurisdiction being limited to reviewing errors of law that might have been committed by the
lower court.
 It should be observed, in this regard, that the Court of Appeals did not hold that the Articles
of Co-partnership was conclusive evidence that the respondent was an industrial partner of
the said company, but considered it together with other factors, consisting of both testimonial
and documentary evidences, in arriving at the factual conclusion
documentary evidence, first, because appellants (herein petitioners) have admitted their
genuineness and due execution, hence they were admitted without objection by the lower
court and, secondly the said evidence indubitably show that the appellee (herein
respondent) is an industrial partner of the company. Petitioners are virtually estopped from
attempting to detract from the probative force of the said documents because they all bear
the imprint of their knowledge and consent, and there is no credible showing that they ever
protested against or opposed their contents prior of the filing of their answer to appellee's
complaint. Petitioners also did nothing to correct the alleged false agreement of the parties.
 Furthermore, petitioners raised the issue that respondent cannot qualify as an industrial
partner because she is one of the judges of the City Court of Manila, thus, devoting all her
time to the performance of the duties of her public office and that she could not lawfully
contribute her full time and industry which is the obligation of an industrial partner pursuant
to Art. 1789 of the Civil Code. Which states that: an industrial partner cannot engage in
business for himself, unless the partnership expressly permits him to do so; and if he should do
so, the capitalist partners may either exclude him from the firm or avail themselves of the
benefits which he may have obtained in violation of this provision, with a right to damages in
either case.
 It is not disputed that 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.
 There is no pretense, however, even on the part of the appellee (herein respondent) is
engaged in any business antagonistic to that of appellant company, since being a Judge of
one of the branches of the City Court of Manila can hardly be characterized as a business.
 That appellee (herein respondent) has faithfully complied with her prestation with respect to
appellants is clearly shown by the fact that it was only after filing of the complaint in this case
and the answer thereto appellants exercised their right of exclusion under the codal article
just mentioned by alleging in their Supplemental Answer dated June 29, 1964 - or after around
nine (9) years from June 7, 1955 - subsequent to the filing of defendants' answer to the
complaint, defendants reached an agreement whereby the herein plaintiff been excluded
from, and deprived of, her alleged share, interests or participation, as an alleged industrial
partner, in the defendant partnership and/or in its net profits or income, on the ground plaintiff
has never contributed her industry to the partnership, instead she has been and still is a judge
of the City Court (formerly Municipal Court) of the City of Manila, devoting her time to
performance of her duties as such judge and enjoying the privilege and emoluments
appertaining to the said office, aside from teaching in law school in Manila, without the
express consent of the herein defendants.
 The real agreement evidenced by Exhibit "A" was to grant the appellee (herein respondent)
a share of 30% of the net profits which the appellant partnership may realize from June 7,
1955, until the mortgage of P30,000.00 obtained from the Rehabilitation Finance Corporal
shall have been fully paid.
 What has gone before persuades us to hold with the lower Court that appellee (herein
respondent) is an industrial partner of appellant company, with the right to demand for a
formal accounting and to receive her share in the net profit that may result from such an
accounting. Our said holding is based on the following article of the New Civil Code
“ART. 1899. Any partner shall have the right to a formal account as to partnership affairs:
(1) If he is wrongfully excluded from the partnership business or possession of its property
by his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807;
(4) Whenever other circumstance render it just and reasonable.”
WOODHOUSE v. HALILI
DOCTRINE: Article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud,
the causal fraud, which may be a ground for the annulment of a contract, and the
incidental deceit, which only renders the party who employs it liable for damages. This
Court had held that in order that fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental (dolo causante), inducement to the making of
the contract.
FACTS:
 On November 29, 1947, the plaintiff entered on a written agreement, Exhibit A, with
the defendant, the most important provisions of which are (1) that they shall
organize a partnership for the bottling and distribution of Mision soft drinks, plaintiff
to act as industrial partner or manager, and the defendant as a capitalist,
furnishing the capital necessary therefor; (2) that the defendant was to decide
matters of general policy regarding the business, while the plaintiff was to attend
to the operation and development of the bottling plant; (3) that the plaintiff was
to secure the Mission Soft Drinks franchise for and in behalf of the proposed
partnership; and (4) that the plaintiff was to receive 30 per cent of the net profits
of the business.
 Prior to the agreement, plaintiff had informed the Mission Dry Corporation that he
had interested a prominent financier who was willing to invest in the bottling and
distribution of the said beverages, and requested, in order that he may close the
deal with him, that the right to bottle and distribute be granted him for a limited
time under the condition that it will finally be transferred to the corporation.
Pursuant to this request, plaintiff was given thirty-day option on exclusive bottling
and distribution rights.
 Plaintiff prayed for the execution of the contract of partnership; accounting of
profits and share thereof of 30 percent with damages. The Defendant on the other
hand claims that the defendant’s consent to the agreement, was secured by false
representation of plaintiff that he was the owner or was about to become owner
of an exclusive bottling franchise. Further, he contended that plaintiff did not
secure the franchise but was given to defendant himself. He also filed a
counterclaim for damages.
ISSUE: Whether defendant had falsely represented that he had an exclusive franchise
to bottle Mission beverages. (YES)
Whether this false representation or fraud, if it existed, annuls the agreement to form
the partnership. (NO)
HELD:
 Yes. The plaintiff on this appeal argues, that plaintiff only undertook in the
agreement "to secure the Mission Dry franchise for and in behalf of the proposed
partnership." Also, the final agreement contains in its third paragraph the following:
o . . . and the manager is ready and willing to allow the capitalists to use the
exclusive franchise . . .
 and in paragraph 11 it also expressly states:
o 1. In the event of the dissolution or termination of the partnership, . . . the
franchise from Mission Dry Corporation shall be reassigned to the manager.
 These statements confirm the conclusion that defendant believed, or was made
to believe, that plaintiff was the grantee of an exclusive franchise. Thus it is that it
was also agreed upon that the franchise was to be transferred to the name of the
partnership, and that, upon its dissolution or termination, the same shall be
reassigned to the plaintiff.
 However, this is not the kind of fraud that annuls the agreement to form the
partnership.
 Article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud, the
causal fraud, which may be a ground for the annulment of a contract, and the
incidental deceit, which only renders the party who employs it liable for damages.
This Court had held that in order that fraud may vitiate consent, it must be the
causal (dolo causante), not merely the incidental (dolo causante), inducement to
the making of the contract.
The record abounds with circumstances indicative that the fact that the principal
consideration, the main cause that induced defendant to enter into the partnership
agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to
bottle and distribute for the defendant or for the partnership. The original draft
prepared by defendant's counsel was to the effect that plaintiff obligated himself to
secure a franchise for the defendant. Correction appears in this same original draft,
but the change is made not as to the said obligation but as to the grantee. In the
corrected draft the word "capitalist"(grantee) is changed to "partnership." The contract
in its final form retains the substituted term "partnership." The defendant was, therefore,
led to the belief that plaintiff had the exclusive franchise, but that the same was to be
secured for or transferred to the partnership. The plaintiff no longer had the exclusive
franchise, or the option thereto, at the time the contract was perfected. But while he
had already lost his option thereto (when the contract was entered into), the principal
obligation that he assumed or undertook was to secure said franchise for the
partnership, as the bottler and distributor for the Mission Dry Corporation. We declare,
therefore, that if he was guilty of a false representation, this was not the causal
consideration, or the principal inducement, that led plaintiff to enter into the
partnership agreement.
ANTONIA TORRES v. COURT of APPEALS
DOCTRINES: Article 1767, NCC: a partner may contribute not only money or property,
but also industry.
Article 1773, NCC: “A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the parties,
and attached to the public instrument.”
Article 1773 was intended to primarily protect third persons – the execution of a
public instrument would be useless if there is no inventory of the property contributed,
because without its designation and description, they cannot be subject to inscription
in the Registry of Property, and their contribution cannot prejudice third persons, and
the contract is void when no such inventory is made. However, the case at bar does
not involve third persons who may be prejudiced.
FACTS:
 Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a “joint
venture agreement” with Respondent Manuel Torres for the development of a
parcel of land into a subdivision
 They executed a Deed of Sale covering the said parcel of land in favor of
respondent, who then had it registered in his name
 By mortgaging the property, respondent obtained from Equitable Bank a loan of
Php 40,000.00 which, under the Joint Venture Agreement, was to be used for the
development of the subdivision
 All three of them also agreed to share the proceeds from the sale of the subdivided
lots
 The project did not push through and the land was subsequently foreclosed by the
bank
 According to petitioners, the project failed due to “respondent’s lack of funds or
means and skills”
 That respondent used the loan not for the development of the subdivision, but in
the furtherance of his own company, Universal Umbrella Company
 Respondent alleged that he used the loan to implement the agreement
 That he was able to effect the survey and the subdivision of the lots; he caused the
construction of roads, curbs and gutters; he entered into a contract with an
engineering firm for the building of 60 low-cost housing units and model house
 Respondent claimed that the subdivision project failed because the petitioners
and their relatives had separately caused the annotations of adverse claims on the
title of the land, which scared away prospective buyers
 Petitioners refused to cause the clearing of the claims, thereby forcing him to give
up on the project
 Petitioners filed for criminal case of estafa against respondent and his wife, but
were acquitted; CA remanded the case to the RTC
 CA: petitioners and respondents formed a partnership for the development of the
subdivision; they must bear the loss suffered by the partnership in the same
proportion of their share in the profits stipulated in the contract; disagreed with
RTC’s decision that losses as well profits in a joint venture should be distributed
equally
ISSUE: Whether or not partnership was formed between the parties – YES
HELD:
 Under the parties’ contract, petitioners would contribute property to the
partnership in the form of land which was to be developed into a subdivision; while
respondent would give, in addition to his industry, the amount needed for general
expenses and other costs
 The income from the said project would be divided according the stipulated
percentage
 The contract manifested the intention of the parties to form a partnership
 Respondent caused the subject land to be mortgaged, the proceeds of which
were used for the survey and the subdivision of the land; he developed the curbs
and the gutters of the subdivision and entered into a contract to construct low-
cost housing units on the property – this manifests contribution on his part of the
partnership
 Article 1767, NCC: a partner may contribute not only money or property, but also
industry
 Article 1773, NCC: “A contract of partnership is void, whenever immovable
property is contributed thereto, if an inventory of said property is not made, signed
by the parties, and attached to the public instrument.”
 Article 1773 was intended to primarily protect third persons – the execution of a
public instrument would be useless if there is no inventory of the property
contributed, because without its designation and description, they cannot be
subject to inscription in the Registry of Property, and their contribution cannot
prejudice third persons, and the contract is void when no such inventory is made
 The alleged nullity of the partnership will not prevent courts from considering the
Joint Venture Agreement in an ordinary contract from which the parties’ rights and
obligations to each other may be inferred and enforced
 However, the case at bar does not involve third persons who may be prejudiced
JOSE GATCHALIAN, et. al. vs THE COLLECTOR OF INTERNAL REVENUE protested to the defendant against the payment of said amount and requested
the refund
DOCTRINE: Plaintiffs organized a partnership of a civil nature because each of them  Defendant overruled the protest and denied the refund
put up money to buy a sweepstakes ticket for the sole purpose of dividing equally the
prize which they may win, as they did in fact in the amount of Php 50,000.00. ISSUE: Whether or not the plaintiffs formed a partnership, or merely a community of
property without a personality of its own; in the first case, if a partnership is formed is
FACTS:
liable for the payment of income tax; whereas if there was merely a community of
 The plaintiffs are all residents of Bulacan and defendant is the Collector of Internal
property, they are exempt from such payment – YES [Partnership was formed]
Revenue
 Plaintiffs, in order to enable them to purchase one sweepstakes ticket, subscribed
HELD:
and paid in various amounts
 Based on the stipulation of facts, the plaintiffs organized a partnership of a civil
 Plaintiffs purchased from one of the duly authorized agents of the National Charity
nature because each of them put up money to buy a sweepstakes ticket for the
Sweepstakes Office one ticket for the sum of Php 2.00 and that the said ticket was
sole purpose of dividing equally the prize which they may win, as they did in fact in
registered in the name of Gatchalian and Company
the amount of Php 50,000.00
 As a result of the drawing of the sweepstakes, the above-mentioned ticket won
 The partnership was not only formed, but upon the organization thereof and the
one of the third prizes in the amount of Php 50,000.00 and that the corresponding
winning of the prize, Gatchalian personally appeared in the office of the Philippines
check covering Php 50,000.00 was drawn by the National Charity Sweepstakes
Charity Sweepstakes in his capacity as co-partner, as such collection of the prize,
Office in favor of Gatchalian & Co. against PNB, which heck was cashed by
the office issued the check for Php 50,000.00 in favor of Gatchalian & Co., and the
Gatchalian & Co.
said partner, in the same capacity, collected the said check
 Gatchalian was required by income tax examiner Alfredo David to file the
 All these circumstances repel the idea that the plaintiffs organized and formed a
corresponding income tax return covering the prize won by Jose Gatchalian &
community of property only
Company, and the said return was signed by Gatchalian, a copy of which return
 The said entity is the one bound to pay the income tax
is enclosed and made a part thereof
 There is no merit in plaintiff’s contention that the tax should be prorated among
 The defendant made an assessment against Jose Gatchalian & Co. requesting the
them and paid individually, resulting in its exemption from the tax
payment of sum to the deputy provincial treasurer giving to the company until
January 20, 1935 within which to pay Php 1,499.94
 The plaintiffs, through their attorney, sent a reply and made a part hereof,
requesting exemption from payment of the income tax to which reply there was
enclosed 15 separate individual income tax returns filed separately by each one
of the plaintiffs, copies of which returns were attached and marked
 CIR denied plaintiffs’ request for exemption from the payment of tax and reiterated
his demand for the payment of the sum as income tax and gave plaintiffs until
February 10, 1935 within which to pay the said tax
 In view of the failure of the plaintiffs to pay the amount of tax demanded by the
defendant, a copy of warrant of distraint and levy was filed against the property
of the plaintiffs
 The plaintiffs requested that they may be allowed to pay under protest the balance
of the tax and penalties by monthly installments
 In view of the plaintiffs’ failure to pay the monthly installments in accordance with
the terms and conditions of bond filed by them, the defendant ordered the
municipal treasurer to execute within 5 days the warrant of distraint and levy issued
against the plaintiffs
 To avoid embarrassment arising from the levy of their property, they paid under
protest for the unpaid balance of the income tax and penalties and formally
ARBES v. POLISTICO
DOCTRINE: article 1666 of the Civil Code allows no action for the purpose of obtaining
the earnings made by the unlawful partnership, during its existence, as a result of the
business in which it was engaged; because for that purpose the partner will have to
base his action on the partnership contract which is null and without legal existence
by reason of its unlawful object, and it is self-evident that what does not exist cannot
be a cause of action.
FACTS:
 This case is now brought before the consideration of this court for the second time.
The first time was when the same plaintiifs appealed from the order of the court
below sustaining the the defendants' demurrer, and requiring the former to amend
their complaint within a certain period, so as to include all the members of
"Turnuhan Polistico & Co.," either as plaintiffs or as defendants. This court held then
that in an action against the officers of a voluntary association to wind up its affairs
and to enforce an accounting for money and property in their possession, it is not
necessary that all members of the association be made parties to the action.
 The plaintiffs were members or shareholders, and the defendants were designated
as president-treasurer, directors and secretary of Turnuhan Polistico & Co.
 The court appointed Amadeo R. Quintos, of the Insular Auditor's Office,
commissioner to examine all the books, documents and accounts of "Turnuhan
Polistico & Co.," and to receive whatever evidence the parties might desire to
present.
 The defendants objected to the commissioner's report, but the trial court, having
examined the reasons for the objection, found the same sufficiently explained in
the report and the evidence, and accepting it, rendered judgment, holding that
the association "Turnuhan Polistico & Co." is unlawful, and sentencing the
defendants jointly and severally to return the amount of 24,607.80, as well as the
documents showing the uncollected credits of the association, to the plaintiffs in
this case, and to the rest of the members of said association represented by said
plaintiffs, with costs against the defendants.
ISSUES:
HELD:
 In Tan Diangseng Tan Siu Pic vs. Echauz Tan Siuco (5 Phil., 516), it was held that the
findings of fact made by a referee appointed under the provisions of section 135
of the Code of Civil Procedure stand upon the same basis, when approved by the
court, as findings made by the judge himself.
 There is no question that "Turnuhan Polistico & Co." is an unlawful partnership (U.S .
vs. Baguio, 39 Phil., 962), but the appellants allege that because it is so, some
charitable institution to whom the partnership funds may be ordered to be turned
over, should be included as a party defendant. The appellants refer to article 1666
of the Civil Code, which provides:
o "A partnership must have a lawful object, and must be established for the
common benefit of the partners.
o "When the dissolution of an unlawful partnership is decreed, the profits shall be
given to the charitable institutions of the domicile of the partnership, or, in
default of such, to those of the province."
 The action which may arise from said article, in the case of unlawful partnership, is
that for the recovery of the amounts paid by the member from those in charge of
the administration of said partnership, and it is not necessary for the said parties to
base their action to the existence of the partnership, but on the fact that of having
contributed some money to the partnership capital. And hence, the charitable
institution of the domicile of the partnership, and in the default thereof, those of the
province are not necessary parties in this case. The article cited above permits no
action for the purpose of obtaining the earnings made by the unlawful partnership,
during its existence as result of the business in which it was engaged, because for
the purpose, as Manresa remarks, the partner will have to base his action upon the
partnership contract, which is to annul and without legal existence by reason of its
unlawful object; and it is self evident that what does not exist cannot be a cause
of action. Hence, paragraph 2 of the same article provides that when the
dissolution of the unlawful partnership is decreed, the profits cannot inure to the
benefit of the partners, but must be given to some charitable institution. (Hi sa case
may mahabang discussion si Manresa about dun sa article 1666 pero di ko nlng
nilagay check nyo nlng)
TOCAO vs. COURT OF APPEALS
FACTS:
 Fresh from her stint as marketing adviser of Technolux in Bangkok, Thailand 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
 Belo volunteered to =nance the joint venture and assigned to Anay the job of marketing the
product considering her experience and established relationship with West Bend Company,
a manufacturer of kitchen wares in USA. 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. Anay organized the administrative staff and sales force
while Tocao hired and =red employees, determined commissions and/or salaries of the
employees, and assigned them to different branches.
 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.
 Thereafter, Roger Muencheberg of West Bend Company invited Anay to the
distributor/dealer meeting in West Bend, Wisconsin, U.S.A. Anay accepted the invitation with
the consent of Marjorie Tocao who, as president and general manager of Geminesse
Enterprise, even wrote a letter to the Visa Section of the U.S. Embassy acknowledging Anay
as a business partner.
 Anay arrived in the US and immediately undertook the task of saving the business on account
of the unsatisfactory sales record. she received a plaque of appreciation from the
administrative and sales people for her excellent job performance.
 In the presence of Anay, Belo signed a memo entitling her to a 37% commission for her
personal sales.
 However, 2 days after, Anay learned that Marjorie Tocao had signed a letter addressed 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 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.
 Thereafter, Nenita A. Anay filed a complaint for sum of money with damages against Marjorie
D. Tocao and William Belo before the RTC of Makati.
 In their answer, Marjorie Tocao and Belo asserted that the "alleged agreement" with Anay
that was "neither reduced in writing, nor rati=ed," was "either unenforceable or void or
inexistent." As far as Belo was concerned, his only role was to introduce Anay to Marjorie
Tocao. There could not have been a partnership because, as Anay herself admitted,
Geminesse Enterprise was the sole proprietorship of Marjorie Tocao. Because Anay merely
acted as marketing demonstrator of Geminesse Enterprise for an agreed remuneration, and
her complaint referred to either her compensation or dismissal, such complaint should have
been lodged with the Department of Labor and not with the regular court and that Anay
filed the complain on account of "ill-will and resentment" because Marjorie Tocao did not
allow her to "lord it over in the Geminesse Enterprise." Anay had acted like she owned the
enterprise because of her experience and expertise. Hence, petitioners were the ones who
suffered actual damages.
 BELO ARGUMENT: denied that Anay was supposed to receive a share in the proFIt of the
business. He denied contributing capital to the business or receiving a share in its pro=ts as he
merely served as a guarantor of Marjorie Tocao, who was new in the business. He attended
and/or presided over business meetings of the venture in his capacity as a guarantor but he
never participated in decision-making.
 MARJORIE ARGUMENT: denied having entered into an oral partnership agreement with Anay.
However, she admitted that Anay was an expert in the cookware business and hence, they
agreed to grant her commissions. Marjorie claimed that she got the capital for the business
out of the sale of the sewing machines used in her garments business and from Peter Lo a
Singaporean friend-financier who loaned her the funds with interest. Because she treated
Anay as her "co-equal," Marjorie received the same amounts of commissions as heR.
 The trial court held that there was indeed an "oral partnership agreement between the
plaintiff and the defendants. Upon Appeal, Court of Appeals dismissed the case. MR was also
denied for lack of merit. Hence this petition.
ISSUES:
HELD:
 The issue is a factual matter which are within the exclusive domain of both the trial and
appellate courts. In this case, both the trial court and the Court of Appeals are one in ruling
that petitioners and private respondent established a business partnership. This Court finds no
reason to rule otherwise.
 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. Where no
immovable property or real rights are involved, what matters is that the parties have complied
with the requisites of a partnership. The fact that there appears to be no record in the
Securities and Exchange Commission of a public instrument embodying the partnership
agreement pursuant to Article 1772 of the Civil Code did not cause the nullification of the
partnership.
 Petitioners admit that private respondent had the expertise to engage in the business of
distributorship of cookware. Private respondent contributed such expertise to the partnership
and hence, under the law, she was the industrial or managing partner. It was through her
reputation with the West Bend Company that the partnership was able to open the business
of distributorship of that company's cookware products; it was through the same efforts that
the business was propelled to financial success. Petitioner Tocao herself admitted private
respondent's indispensable role in putting up the business when, upon being asked if private
respondent held the positions of marketing manager and vice-president for sales.
 By the set-up of the business, third persons were made to believe that a partnership had
indeed been forged between petitioners and private respondents. Thus, the communication
of Missy Jagler of West Bend Company to Roger Muencheberg of the same company states:
"Marge Tocao is president of Geminesse Enterprises. Geminesse will finance the operations.
Marge does not have cookware experience. Nita Anay has started to gather former
managers, Lina Torda and Dory Vista. She has also gathered former demonstrators, Betty
Bantilan, Eloisa Lamela, Menchu Javier. They will continue to gather other key people and
build up the organization. All they need is the finance and the products to sell.”
 Petitioner Belo's denial that he financed the partnership rings hollow in the face of the
established fact that he presided over meetings regarding matters affecting the operation
of the business. His claim that he was merely a guarantor is belied by that personal act of
proprietorship in the business. Moreover, if he was indeed a guarantor of future debts of
petitioner Tocao, he should have presented documentary evidence therefor.
 Tocao, a former ramp model, was also a capitalist in the partnership. She claimed that she
herself financed the business. Her and petitioner Belo's roles as both capitalists to the
partnership with private respondent are buttressed by petitioner Tocao's admissions that
petitioner Belo was her boyfriend and that the partnership was not their only business venture
together. They also established a firm that they called "Wiji," the combination of petitioner
Belo's first name, William, and her nickname, Jiji. The special relationship between them
dovetails with petitioner Belo's claim that he was acting in behalf of petitioner Tocao. The
inevitable conclusion, therefore, was that petitioners merged their respective capital and
infused the amount into the partnership of distributing cookware with private respondent as
the managing partner.
 The business venture operated under Geminesse Enterprise did not result in an employer-
employee relationship between petitioners and private respondent. While it is true that the
receipt of a percentage of net profits constitutes only prima facie evidence that the recipient
is a partner in the business. evidence in the case at bar controverts an employer-employee
relationship between the parties. private respondent had a voice in the management of the
affairs of the cookware distributorship. If indeed petitioner Tocao was private respondent's
employer, it is difficult to believe that they shall receive the same income in the business. In a
partnership, each partner must share in the profits and losses of the venture, except that the
industrial partner shall not be liable for the losses. As an industrial partner, private respondent
had the right to demand for a formal accounting of the business and to receive her share in
the net profit.
 Undoubtedly, petitioner Tocao unilaterally excluded private respondent from the partnership
to reap for herself and/or for petitioner Belo financial gains resulting from private respondent's
efforts to make the business venture a success. Thus, as petitioner Tocao became adept in
the business operation, she started to assert herself to the extent that she would even shout
at private respondent in front of other people. 38 Her instruction to Lina Torda Cruz, marketing
manager, not to allow private respondent to hold office in both the Makati and Cubao sales
offices concretely spoke of her perception that private respondent was no longer necessary
in the business operation, and resulted in a falling out between the two. However, a mere
falling out or misunderstanding between partners does not convert the partnership into a
sham organization. 40 The partnership exists until dissolved under the law. Since the
partnership created by petitioners and private respondent has no fixed term and is therefore
a partnership at will predicated on their mutual desire and consent, it may be dissolved by
the will of a partner.
 An unjustified dissolution by a partner can subject him to action for damages because by the
mutual agency that arises in a partnership, the doctrine of delectus personae allows the
partners to have the power, although not necessarily the right to dissolve the partnership.
Tocao's unilateral exclusion of Nenita from the partnership is shown by her memo to the Cubao
office. By that memo, petitioner Tocao affected her own withdrawal from the partnership and
considered herself as having ceased to be associated with the partnership in the carrying on of
the business. Nevertheless, the partnership was not terminated thereby; it continues until the
winding up of the business
HEIRS of JOSE LIM v. LIM
DOCTRINES: PARTNERSHIP- A PARTNERSHIP exist when two or more persons agree to
place their money, effects, and labor, skills in a lawful commerce or business with the
understanding that there shall be a proportionate sharing of the profits and losses
among them.
Civil code definition- two or more persons bind themselves to contribute money,
property or industry to a common fund with the intention to divide profits among
themselves.
EVIDENCE OF PARTNERSHIP- As stated n the case of heirs vs tan kee- a demand for
periodic accounting is evidence of partnership.
FACTS:
 Petitioners are heirs of Jose Lim(JOSE): Jose’s widow Cresencia Palad and their
children Elenito, Evelia. Imelda, Edelyna and Edison all surnamed Lim- they are
represented by ELENITO
 Respondent- Juliet Villa Lim, the widow of Elfredo Lim who was the eldest son of
Jose and Crecencia
 PETITIONER’S ALLEGATION
o JOSE was the liason officer of Interwood Sawmill in Quezon.
o Sometime in 1980, Jose, together with his friends, JIMMY and NORBERTO
formed a partnership to engage in the trucking business.
o Initially they contributed P50,000 each, they purchased a truck to be used in
the hauling and transport of lumber of the sawmill.
o Jose was the one who managed the operations of the trucking business until
his death. Jose’s heirs including ELFREDO and partners agreed to continue the
business under the management of ELFREDO.
 o The shares in the partnership profits and income that formed part of the estate
of JOSE were held in trust by ELFREDO with the authority of the petitioner that
ELFREDO shall use such funds to purchase and acquire properties
o According to the petitioner, there was no partnership with ELFREDO- for he
merely supervised the purchase of additional trucks using the income from the
trucking business of the partners.
o By the time the partnership ceased- it had 9 trucks which were all registered in
ELFREDO’S name. They also alleged that ELFREDO was able to purchase real
properties using the funds they gave.
o After ELFREDO died, his wife JULIET took over the administration of the
properties which belonged to the estate of JOSE without the petioner’s
consent and approval
o Since the respondent was claiming that they are co owners of the properties,
petitioner required respondent to submit an accounting of all income profits,
rentals received from the estate of ELFREDO and surrender the administration
thereof.
Respondent’s allegation:
o ELFREDO was a partner- sometime in 1980, JOSE gave ELFREDO P50,000 as the
latter’s capital in an informal partnership with Jimmy and Norberto.
o The partnership originally only has one truck, but through the efforts of ELFREDO the
business flourished.
o Respondent alleged that she has the right to refuse to render an accounting for
the income or profits of their own business- all the properties involved in this case
were purchased and acquired through her and her husbands joint effort and
hardwork and without any participation from the petitioner and JOSE hence she
should not be allowed to render accounting.
ISSUES: Whether or not a contract of partnership exist between ELFREDO and the
petitioners.
RULING:
 Yes. The court is not persuaded the petitioner fell short of the quantum of proof to
establish that Jose was the partner and not ELFREDO and that all the properties of
ELFREDO and the respondent form part of the estate of JOSE having been derived
from the partnership.
 As stated under art 1769 of the civil code, the following rules shall apply to
determine whether partnership exist.
1. Except as provided by article 1825, persons who are not partners 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 do or do not share any profits made by the use of the
property
3. The sharing of the 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 of the business, but no such inference shall be
drawing if such profits were received as payment in the following:
a. As debt by installments or otherwise
b. As wages of an employee or rent to the 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 consideration from the sale of a goodwill of a business or other property
by installments or otherwise.
 The following circumstance prove that ELFREDO was a partner
1. Cresencia testified that Jose gave Elfredo P50,000 As a share in the partnership on
a date that coincided with the payment of the initial capital in the partnership
2. Elfredo Ran the affairs of the partnership, wielding absolute control, power and
authority without any intervention or opposition whatsoever from the petitioners
3. All the properties, particularly the nine trucks were registered in ELFREDO’S name
4. ELFREDO did not receive wages and salaries. What he received was that of profits
of the business
5. None of the petitioners as heirs demanded periodic accounting from ELFREDO
during his lifetime.
 As stated, in the case of heirs vs tan kee- a demand for periodic accounting is
evidence of partnership.
6. It was readily apparent that the other partners only contributed in the initial capital
but had no say thereafter on how the business was ran. It was through Elfredo’s
efforts and hard work that the business flourished.
7. Whatever properties that ELFREDO acquired is not an evidence that he is not a
partner- it simply means that he did not limit himself to the business of their
partnership but engaged in other lines of business as well.
AGAD vs. MABATO
FACTS:
Plaintiff Agad prayed in his complaint against defendant Mabato and Mabato &
Agad Company, that Mabato be sentenced to pay him (Agad) the sum of P14,000,
as his share in the profits of the partnership, in addition to P1,000 as attorney's fees, and
ordering the dissolution of the partnership, as well as the winding up of its affairs by a
receiver to be appointed therefor. Agad alleged that he and Mabato are partners in
a fishpond business pursuant to a public instrument (Annex "A"), to the capital of which
Agad contributed P1,000, with the right to receive 50% of the profits; that from 1952 up
to and including 1956, Mabato who handled the partnership funds, had yearly
rendered accounts of the operations of the partnership; and that, despite repeated
demands, Mabato had failed and refused to render accounts for the years 1957 to
1963.
Mabato admitted the formal allegations of the complaint and denied the existence
of said partnership, upon the ground that the contract therefor had not been
perfected because Agad had allegedly failed to give his P1,000 contribution to the
partnership capital. Mabato prayed that Annex "A" be declared void ab initio; and
that Agad be sentenced to pay actual, moral and exemplary damages, as well as
attorney's fees. Subsequently, Mabato filed a motion to dismiss.
were limited to the sum of P1,000 each. “That the capital of the said partnership is
P2,000, of which P1,000.00 has been contributed by Mabato and P1,000 has been
contributed by Agad.
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
The Angeles spouses filed a criminal complaint for estafa against their brother-in-law Mercado, claiming
that Mercado convinced them to enter into a contract of antichresis in 1992 covering eight parcels of
land owned by Suazo, which was to last for five years with ₱210,000 as consideration. After three years,
the Angeles spouses asked for an accounting from Mercado when he did not give one in 1995, upon
which they discovered that Mercado transferred the antichresis to his and his spouse’s name. They allege
that the contract for antichresis executed in the name of the Mercado spouses proves Mercado’s
misappropriation of their ₱210,000. They likewise claim that there was no partnership, relying on
Articles 1771 to 1773.
ANGELES vs. SOJ

The Court granted the motion to dismiss for failure to state a cause of action. This
Mercado denied such and claimed that there exists an industrial partnership between
conclusion was predicated upon the theory that the contract of partnership, Annex
him and his spouse as industrial partners and the Angeles spouses as the financiers
"A", is null and void, pursuant to Art. 1773 of our Civil Code, because an inventory of
since 1991. He used his and his spouse’s earnings as part of the capital in the business
the fishpond referred in said instrument had not been attached thereto. A
transactions which he entered into in behalf of the Angeles spouses. It was their
reconsideration of this order having been denied, Agad brought the matter to us for
practice to enter into business transactions with other people under the name of
review by record on appeal.
Mercado because the Angeles spouses did not want to be identified as the financiers.
Mercado attached bank receipts showing deposits in behalf of Emerita Angeles and
ISSUE/S:
contracts under his name for the Angeles spouses. Mercado also attached the minutes
WON "immovable property or real rights" have been contributed to the partnership,
of the barangay conciliation proceedings wherein Oscar Angeles stated that there
and if so, the partnership is void under Art. 1773? – NO, THEREFORE ART. 1773 IS NOT
was a written sosyo industrial agreement: capital would come from the Angeles
APPLICABLE
spouses while the profit would be divided evenly between Mercado and the Angeles
spouses.
RULING:
Mabato alleged and the lower court held that the answer should be in the affirmative,
Provincial Prosecution Office: Issued an amended resolution dismissing the Angeles
because "it is really inconceivable how a partnership engaged in the fishpond business
spouses’ complaint for estafa against Mercado, stating that the subject of the
could exist without said fishpond property (being) contributed to the partnership." It
complaint hinges on a partnership gone sour.
should be noted, however, that, as stated in Annex "A" the partnership was established
"to operate a fishpond", not to "engage in a fishpond business". Moreover, none of the
partners contributed either a fishpond or a real right to any fishpond. Their contributions
Secretary of Justice: Held that the indictment of Mercado for the crime of estafa
cannot be sustained. Under the circumstances, we are inclined to believe that [the
Angeles spouses] knew from the very start that the questioned document was not
really in their names. In addition, we are convinced that a partnership truly existed
between the [Angeles spouses] and [Mercado]. The formation of a partnership was
clear from the fact that they contributed money to a common fund and divided the
profits among themselves. Although the legal formalities for the formation of a
partnership were not adhered to, the partnership relationship is evident in this case.
Consequently, there is no estafa where money is delivered by a partner to his co-
partner on the latter’s representation that the amount shall be applied to the business
of their partnership. In case of misapplication or conversion of the money received, the
co-partner’s liability is civil in nature
ISSUE/S:
1) WON a partnership existed? – YES
2) WON there was misappropriation by Mercado, assuming that there was a
partnership? – NONE
RULING:
1) The Angeles spouses’ position that there is no partnership because of the lack of a
public instrument indicating the same and a lack of registration with the Securities and
Exchange Commission ("SEC") holds no water. First, the Angeles spouses contributed
money to the partnership and not immovable property. Second, mere failure to
register the contract of partnership with the SEC does not invalidate a contract that
has the essential requisites of a partnership. The purpose of registration of the contract
of partnership is to give notice to third parties. Failure to register the contract of
partnership does not affect the liability of the partnership and of the partners to third
persons. Neither does such failure to register affect the partnership’s juridical
personality. A partnership may exist even if the partners do not use the words "partner"
or "partnership."
2) The Secretary of Justice adequately explained the alleged misappropriation by
Mercado: "The document alone, which was in the name of [Mercado and his spouse],
failed to convince us that there was deceit or false representation on the part of
[Mercado] that induced the [Angeles spouses] to part with their money. [Mercado]
satisfactorily explained that the [Angeles spouses] do not want to be revealed as the
financiers." Furthermore, accounting of the proceeds is not a proper subject for the
present case. For these reasons, we hold that the Secretary of Justice did not abuse his
discretion in dismissing the appeal of the Angeles spouses.
LITONJUA, Jr. v. LITONJUA, Sr.
DOCTRINE: A partnership may be constituted in any form, save when immovable
property or real rights are contributed thereto or when the partnership has a capital of
at least P3,000.00, in which case a public instrument shall be necessary. And if only to
stress what has repeatedly been articulated, an inventory to be signed by the parties
and attached to the public instrument is also indispensable to the validity of the
partnership whenever immovable property is contributed to it.
FACTS:
 Petitioner Aurelio K. Litonjua, Jr. (Aurelio) and herein respondent Eduardo K.
Litonjua, Sr. (Eduardo) are brothers.
 Aurelio filed a suit against his brother Eduardo and herein respondent Robert T.
Yang (Yang) and several corporations for specific performance and accounting.
 Aurelio alleged that, since June 1973, he and Eduardo are into a joint
venture/partnership arrangement in the Odeon Theater business which had
expanded thru investment in Cineplex, Inc., LCM Theatrical Enterprises, Odeon
Realty Corporation (operator of Odeon I and II theatres), Avenue Realty, Inc.,
owner of lands and buildings, among other corporations. Yang is described in the
complaint as petitioner's and Eduardo's partner in their Odeon Theater investment.
 The same complaint also contained the following material averments:
o 3.01.1 This joint venture/[partnership] agreement was contained in a
memorandum addressed by Eduardo to his siblings, parents and other relatives.
o Copy of this memorandum is attached hereto and made an integral part as
Annex "A" and the portion referring to [Aurelio] submarked as Annex "A-1".
o 3.02 It was then agreed upon between [Aurelio] and Eduardo that in
consideration of [Aurelio's] retaining his share in the remaining family businesses
(mostly, movie theaters, shipping and land development) and contributing his
industry to the continued operation of these businesses, [Aurelio] will be given
P1 Million or 10% equity in all these businesses and those to be subsequently
acquired by them whichever is greater.
 "For ease of reference, Annex 'A-1 of the complaint, which petitioner asserts to
have been meant for him by his brother Eduardo, pertinently reads:
o 10) JR. (AKL) [Referring to petitioner Aurelio K. Litonjua]:
o You have now your own life to live after having been married. '.
o Because you will need a place to stay, I will arrange to give you first ONE
HUNDRED THOUSANDS PESOS: (P100, 000.00) in cash or asset, like Lt. Artiaga so
you can live better there. The rest I will give you in form of stocks which you can
keep. This stock I assure you is good and saleable. I will also gladly give you the
share of Wack-Wack 'and Valley Golf ' because you have been good. The rest
will be in stocks from all the corporations which I repeat, ten percent (10%)
equity."
 Eduardo and the corporate respondents, as defendants a quo, filed a joint
ANSWER With Compulsory Counterclaim denying under oath the material
 allegations of the complaint, more particularly that portion thereof depicting
petitioner and Eduardo as having entered into a contract of partnership. As
affirmative defenses, Eduardo, et al., apart from raising a jurisdictional matter,
alleged that the complaint states no cause of action, since no cause of action
may be derived from the actionable document, i.e., Annex "A-1" , being void under
the terms of Article 1767 in relation to Article 1773 of the Civil Code, infra. It is further
alleged that whatever undertaking Eduardo agreed to do, if any, under Annex "A-
1" , are unenforceable under the provisions of the Statute of Frauds.
ISSUE: WON the contract of partnership is valid? NO
HELD:
 Petitioner's demand is for delivery of payment to him as Eduardo's and Yang's
partner, of his partnership/joint venture share, after an accounting has been duly
conducted of what he deems to be partnership/joint venture property.
 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 between them. A contract
of partnership is defined by the Civil Code as one where two or more persons
bound themselves to contribute money, property, or industry to a common fund
with the intention of dividing the profits among themselves. A joint venture, on the
other hand, is hardly distinguishable from, and may be likened to, a partnership
since their elements are similar, i.e., community of interests in the business and
sharing of profits and losses. Being a form of partnership, a joint venture is generally
governed by the law on partnership.
 Annex ' A-1 ', on its face, contains typewritten entries, personal in tone, but is
unsigned and undated. As an unsigned document, there can be no quibbling that
Annex ' A-1 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, Annex ' A-1
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 petitioner's
contribution, if any, to the supposed partnership.
 A further examination of the allegations in the complaint would show that
[petitioner's ] contribution to the so-called 'partnership/joint venture was his
supposed share in the family business that is consisting of movie theaters, shipping
and land development under paragraph 3.02 of the complaint. In other words, his
contribution as a partner in the alleged partnership/joint venture consisted of
immovable properties and real rights. '
 Significantly enough, petitioner matter-of-factly concurred with the appellate
court's observation that, prescinding from what he himself alleged in his basic
complaint, his contribution to the partnership consisted of his share in the Litonjua
family businesses which owned variable immovable properties. Petitioner's
assertion in his motion for reconsideration [24] of the CA's decision, that 'what was
to be contributed to the business [of the partnership] was [petitioner's ] industry and
his share in the family [theatre and land development] business' leaves no room for
speculation as to what petitioner contributed to the perceived partnership.
 CA wrote that: Lest it be overlooked, the contract-validating inventory requirement
under Article 1773 of the Civil Code applies as long real property or real rights are
initially brought into the partnership. In short, it is really of no moment which of the
partners, or, in this case, who between petitioner and his brother Eduardo,
contributed immovables. In context, the more important consideration is that real
property was contributed, in which case an inventory of the contributed property
duly signed by the parties should be attached to the public instrument, else there
is legally no partnership to speak of.
 Petitioner, in an obvious bid to evade the application of Article 1773, argues that
the immovables in question were not contributed, but were acquired after the
formation of the supposed partnership. Needless to stress, the Court cannot accord
cogency to this specious argument. For, as earlier stated, petitioner himself
admitted contributing his share in the supposed shipping, movie theatres and realty
development family businesses which already owned immovables even before
Annex "A-1" was allegedly executed.
 A partnership may be constituted in any form, save when immovable property or
real rights are contributed thereto or when the partnership has a capital of at least
P3,000.00, in which case a public instrument shall be necessary. And if only to stress
what has repeatedly been articulated, an inventory to be signed by the parties
and attached to the public instrument is also indispensable to the validity of the
partnership whenever immovable property is contributed to it.
 The Memorandum which purports to establish the said "partnership/joint venture" is
NOT a public instrument and there was NO inventory of the immovable property
duly signed by the parties. As such, the said "Memorandum" . . . is null and void for
purposes of establishing the existence of a valid contract of partnership. Indeed,
because of the failure to comply with the essential formalities of a valid contract,
the purported "partnership/joint venture" is legally inexistent and it produces no
effect whatsoever. Necessarily, a void or legally inexistent contract cannot be the
source of any contractual or legal right. Accordingly, the allegations in the
complaint, including the actionable document attached thereto, clearly
demonstrates that [petitioner] has NO valid contractual or legal right which could
be violated by the [individual respondents] herein. As a consequence, [petitioner's]
complaint does NOT state a valid cause of action because NOT all the essential
elements of a cause of action are present.
Classifications of partnership.
(1) As to the extent of its subject matter. — A partnership may
be:
(a) Universal partnership or one which refers to all the present property or to all
profits. (Art. 1777.) There are thus two kinds of universal partnership, to wit:
(1) Universal partnership of all present property. This is defined in Article
1778; and
(2) Universal partnership of profits. This is defined in Article 1780;
(b) Particular partnership. — This is defined in Article
(2) As to liability of the partners. — It may be:
(a) General partnership or one consisting of general partners who are liable pro
rata and subsidiarily (Art. 1816.) and sometimes solidarily (Arts. 1822-1824.) with
their separate property for partnership debts; or
(b) Limited partnership or one formed by two or more persons having as
members one or more general partners and one or more limited partners, the
latter not being personally liable for the obligations of the partnership. (Art.
1843.)
(3) As to its duration. — It is either:
(a) Partnership at will or one in which no time is specifi ed and is not formed for
a particular undertaking or venture and which may be terminated at anytime
by mutual agreement of the partners, or by the will of any one partner alone;
or one for a fi xed term or particular undertaking which is continued by the
partners after the termination of such term or particular undertaking without
express agreement (see Art. 1785.); or
(b) Partnership with a fi xed term or one in which the term for which the
partnership is to exist is fixed or agreed upon or one formed for a particular
undertaking, and upon the expiration of the term or completion of the
particular enterprise, the partnership is dissolved, unless continued by the
partners. (Ibid.)
(4) As to the legality of its existence. — It may be:
(a) De jure partnership or one which has complied with all the legal
requirements for its establishment (see Arts. 1772, par. 2; 1773.); or
(b) De facto partnership or one which has failed to comply with all the legal
requirements for its establishment. (Ibid.)
(5) As to representation to others. — It may be:
(a) Ordinary or real partnership or one which actually exists among the partners
and also as to third persons; or
(b) Ostensible partnership or partnership by estoppel or one which in reality is
not a partnership, but is considered a partnership only in relation to those who,
by their conduct or admission, are precluded to deny or disprove its existence.
ORTEGA v. COURT of APPEALS
DOCTRINES: A partnership that does not fix its term is a partnership at will. 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. Verily, 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.
FACTS:
 The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in
the Mercantile Registry and reconstituted with the SEC. The SEC records show that
there were several subsequent amendments to the articles of partnership to
change the firm , the last being on 7 June 1977 to BITO, MISA & LOZADA. [Joaquin
L. Misa] Appellees Jesus B. Bito and Mariano M. Lozada associated themselves
together, as senior partners with respondents-appellees Gregorio F. Ortega, Tomas
O. del Castillo, Jr., and Benjamin Bacorro, as junior partners. On February 17, 1988,
petitioner-appellant wrote the respondents-appellees a letter stating that he is
withdrawing and retiring from the firm effective on the same month and that he
trust that the accountants will be instructed to make the proper liquidation of his
participation in the firm.
 Petitioner-appellant then wrote to respondents-appellees another letter on the
same day stating that he would like to have a meeting with all of the partners with
regards to the mechanics of liquidation and his interest in the 2 floors of the building.
 2 days after, he wrote another letter stating that “The partnership has ceased to be
mutually satisfactory of the working conditions of our employees including the
assistant attorneys. All my efforts to ameliorate the below subsistence level of the
pay scale of our employees have been thwarted by the other partners. Not only
have they refused to give meaningful increases to the employees, even attorneys,
are dressed down publicly in a loud voice in a manner that deprived them of their
self-respect. The result of such policies is the formation of the union, including the
assistant attorneys.”
 Petitioner filed with this Commission's Securities Investigation and Clearing
Department (SICD) a petition for dissolution and liquidation of partnership. The
hearing officer rendered a decision ruling that petitioner's withdrawal from the law
firm did not dissolve the said partnership.
 On appeal, the SEC en banc reversed the decision of the Hearing Officer and held
that the withdrawal of Attorney Joaquin L. Misa had dissolved the partnership of
"Bito, Misa & Lozada." The Commission ruled that, being a partnership at will, the
law firm could be dissolved by any partner at anytime, such as by his withdrawal
 therefrom, regardless of good faith or bad faith, since no partner can be forced to
continue in the partnership against his will.
 The parties sought reconsideration of the above decision which was denied. The
parties filed with the appellate court separate appeals. During the pendency of
the case with the CA, 2 of the partners, Atty. Bito and Lozada died. The death of 2
partners, as well as the admission of new partners in the law firm prompted atty.
Misa to renew his application for receivership and expressed concern over the
need to preserve and care for the partnership assets which was opposed by the
other partners.
 CA, AFFIRMED in toto the SEC decision and order appealed from. Hence, this
petition.
ISSUE:
1. Whether or not CA has erred in holding that the partnership of Bito, Misa & Lozada
is a partnership at will; - YES
2. Whether or not CA has erred in holding that the withdrawal of private respondent
dissolved the partnership regardless of his good or bad faith - NO
3. Whether or not CA has erred in holding that private respondent's demand for the
dissolution of the partnership so that he can get a physical partition of partnership
was not made in bad faith. - NO
HELD: YES.
 A partnership that does not fix its term is a partnership at will. That the law firm "Bito,
Misa & Lozada," and now "Bito, Lozada, Ortega and Castillo," is indeed such a
partnership need not be unduly belabored.
 "The 'purpose' of the partnership is not the specific undertaking referred to in the
law. Otherwise, all partnerships, which necessarily must have a purpose, would all
be considered as partnerships for a definite undertaking. There would therefore be
no need to provide for articles on partnership at will as none would so exist.
Apparently what the law contemplates, is a specific undertaking or 'project' which
has a definite or definable period of completion." "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. Verily, 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.
 In passing, neither would the presence of a period for its specific duration or the
statement of a particular purpose for its creation prevent the dissolution of any
partnership by an act or will of a partner. 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. An unjustified dissolution by the
partner can subject him to a possible action for damages.
 The dissolution of a partnership is the change in the relation of the parties caused
by any partner ceasing to be associated in the carrying on, as might be
distinguished from the winding up of, the business. Upon its dissolution, the
partnership continues, and its legal personality is retained until the complete
winding up of its business culminating in its termination.
 The liquidation of the assets of the partnership following its dissolution is governed
by various provisions of the Civil Code; however, an agreement of the partners, like
any other contract, is binding among them and normally takes precedence to the
extent applicable over the Code's general provisions
 The term "retirement" must have been used in the articles, as we so hold, in a
generic sense to mean the dissociation by a partner, inclusive of resignation or
withdrawal, from the partnership that thereby dissolves it.
2 & 3 - NO
 The Court we accord to the CA and the respondent Commission on their common
factual finding, that Attorney Misa did not act in bad faith. Public respondents
viewed his withdrawal to have been spurred by "interpersonal conflict" among the
partners. It would not be right to let any of the partners remain in the partnership
under such an atmosphere of animosity; certainly, not against their will. For as long
as the reason for withdrawal of a partner is not contrary to the dictates of justice
and fairness, nor for the purpose of unduly visiting harm and damage upon the
partnership, bad faith cannot be said to characterize the act.
Partnership, a juridical person. Partnership, a juridical person. A partnership is
sometimes referred to as a “firm’’ or a “company,’’ terms that connote an entity
separate from its aggregate individual partners.
Effect of failure to comply with statutory requirements. (1) Under Article 1772. — This
article makes it clear that even in case of failure to comply with the requirements of
Article 1772, with reference to the execution of a public instrument and registration of
the same with the Securities and Exchange Commission in cases when the partnership
capital exceeds P3,000.00, such partnership acquires juridical personality. (see Art.
1784.) The law recognizes that in the Philippines, most partnerships are created with
very small capital to engage in small business and it would be impractical to require
that they appear in a public instrument and be registered as provided in Article 1772.
(2) Under Articles 1773 and 1775. — However, in the case contemplated in Article 1773,
the partnership shall not acquire any juridical personality because the contract itself is
void. This is also true regarding secret associations or societies which do not acquire
juridical personality under Article 1775.
AGUILA, JR v. COURT of APPEALS
DOCTRINE: Under Art. 1768 of the Civil Code, a partnership "has a juridical personality
separate and distinct from that of each of the partners." The partners cannot be held
liable for the obligations of the partnership unless it is shown that the legal fiction of a
different juridical personality is being used for fraudulent, unfair, or illegal purposes.
FACTS:
 Petitioner is the manager of A.C. Aguila & Sons, Co., a partnership engaged in
lending activities.
 Private respondent and her late husband, Ruben M. Abrogar, were the registered
owners of a house and lot, covered by Transfer Certificate of Title No. 195101, in
Marikina, Metro Manila. On April 18, 1991, private respondent, with the consent of
her late husband, and A.C. Aguila & Sons, Co., represented by petitioner, entered
into a Memorandum of Agreement.
 On the same day, April 18, 1991, the parties likewise executed a deed of absolute
sale, 3 dated June 11, 1991, wherein private respondent, with the consent of her
late husband, sold the subject property to A.C. Aguila & Sons, Co., represented by
petitioner, for P200,000.00.
 In a special power of attorney dated the same day, April 18, 1991, private
respondent authorized petitioner to cause the cancellation of TCT No. 195101 and
the issuance of a new certificate of title in the name of A.C. Aguila and Sons, Co.,
in the event she failed to redeem the subject property as provided in the
Memorandum of Agreement.
 Private respondent failed to redeem the property within the 90-day period as
provided int hte MOA. Hence, pursuant to the SPA, petitioner caused the
cancellation of TCT No 195101 and the issuane of a new certificate of title in the
name of AC Aguila and Sons, Co.
 Private respondent then recieved a letter demanding them to vacate the premises
and surrender its possession peacfully to the corporation.
 Private respondents then refuse to vacate the subject premises ans AC Aguila &
Sons, Co. filed an ejectment case against her.
 It appears, however, that private respondent had filed a criminal complaint for
falsifcation against petitioner with the Office of the Prosecutor of Quezon City. She
alleged that the signature of her husband on the deed of sale was a forgerey since
he was already dead when the dead had supposed to have been executed.
 Petitioner now contends that he is not the real party in interest but A.C. Aguila &
Co., against which this case should have been brought.
ISSUES: WON Aguila Jr, is a real party in interest.
HELD:
 Rule 3, §2 of the Rules of Court of 1964, under which the complaint in this case was
filed, provided that "every action must be prosecuted and defended in the name
of the real party in interest." A real party in interest is one who would be benefited
or injured by the judgment, or who is entitled to the avails of the suit.
 Any decision rendered against a person who is not a real party in interest in the
case cannot be executed. Hence, a complaint filed against such a person should
be dismissed for failure to state a cause of action.
 Under Art. 1768 of the Civil Code, a partnership "has a juridical personality separate
and distinct from that of each of the partners." The partners cannot be held liable
for the obligations of the partnership unless it is shown that the legal fiction of a
different juridical personality is being used for fraudulent, unfair, or illegal purposes.
 In this case, private respondent has not shown that A.C. Aguila & Sons, Co., as a
separate juridical entity, is being used for fraudulent, unfair, or illegal purposes.
Moreover, the title to the subject property is in the name of A.C. Aguila & Sons, Co.
and the Memorandum of Agreement was executed between private respondent,
with the consent of her late husband, and A.C. Aguila & Sons, Co., represented by
petitioner. Hence, it is the partnership, not its officers or
 agents, which should be impleaded in any litigation involving property registered
in its name. A violation of this rule will result in the dismissal of the complaint.
CAMPOS RUEDA & CO. v. PACIFIC COMMERCIAL & CO.
DOCTRINE: INVOLUNTARY INSOLVENCY; LIMITED PARTNERSHIP; ACT OF BANKRUPTCY;
SOLVENCY OF PARTNERS. — In the Philippines a limited partnership duly organized in
accordance with law has a personality distinct from that of its members; and if it
commits an act of bankruptcy, such as that of failing for more than thirty days to pay
debts amounting to P1,000 or more, it may be adjudged insolvent on the petition of
three of its creditors although its members may not be insolvent.
"Proof that a man was insolvent on a certain day does not justify an inference that
he was on a day sometime prior thereto. Many contingencies, such as unwise
investments, losing contracts, misfortune, or accident, might happen to reduce a
person from a state of solvency within a short space of time."
FACTS:
 The record of this proceeding having been transmitted to this court by virtue of an
appeal taken herein, a motion was presented by the appellants praying this court
that this case be considered purely a moot question now, for the reason that
subsequent to the decision appealed from, the partnership Campos Rueda & Co.,
voluntarily filed an application for a judicial decree adjudging itself insolvent, which
is just what the herein petitioners and appellants tried to obtain from the lower court
in this proceeding.
 It is an undisputed fact that this limited partnership was, and is indebted to the
appellants in various sums amounting to not less than P1,000, payable in the
Philippines, which were not paid more than thirty days prior to the date of the filing
 by the petitioners of the application for involuntary insolvency now before the
Court.
 The trial court denied the petition on the ground that it was not proven, nor alleged,
that the members of the aforesaid firm were insolvent at the time the application
was filed; and that as said partners are personally and solidarily liable for the
consequences of the transactions of the partnership, it cannot be adjudged
insolvent so long as the partners are not alleged and proven to be insolvent. From
this judgment the petitioners appeal to this court, on the ground that this finding of
the lower court is erroneous.
ISSUE: Whether or not a limited partnership, such as the appellee, which has failed to
pay its obligations with three creditors for more than thirty days, may be held to have
committed an act of insolvency, and thereby be adjudged insolvent against its will?

RULING:
 A decree of insolvency begins to operate on the date it is issued. It is one thing to
adjudge Campos Rueda & Co. insolvent in December 1921, as prayed for in this
case and another to declare it insolvent in July 1922, stated in the motion.
 Philippine statues consider a limited partnership as a juridical entity for all intents
and purposes, which personality is recognized in all its acts and contracts (art. 116,
Code of Commerce). This being so and the juridical personality of a limited
partnership being different from that of its members, it must, on general principle,
answer for, and suffer, the subject of rights and obligations. If, as in the instant case,
the limited partnership of Campos Rueda & Co. failed to pay its obligations with
three creditors for a period of more than thirty days, which failure constitutes, under
our Insolvency Law, one of the acts of bankrupt upon which an adjudication of
involuntary insolvency can be predicated, this partnership must suffer the
consequences of such a failure, and must be adjudged insolvent.
 The juridical personality of limited partnerships being recognized by our statutes
from their formation in all their acts and contracts. The decisions of American courts
on this point can have no application in this jurisdiction, nor do we see any reason
why these partnerships cannot be adjudges bankrupt irrespective of the solvency
or insolvency of their members, provided the partnership has, as such, committed
some of the acts of insolvency provided in our law.
 Therefore, it having been proven that the partnership Campos Rueda & Co. failed
for more than thirty days to pay its obligations to the petitioners, the Pacific
Commercial Co., the Asiatic Petroleum Co., and the International Banking
Corporation, the case comes under paragraph 11 of section 20 of Act No. 1956,
and consequently the petitioners have the right to a judicial decree declaring the
involuntary insolvency of said partnership.