Transcript
1 (DIONNE)||D2014
Contents
AGADv.MABATO........................................................................................................................................2 TUASONv.BOLANOS..............................................................................................................................18 TORRESv.CA.................................................................................................................................................2 HEIRSOFTANGENGKEEv.CA..........................................................................................................18 ARBESv.POLISTICO...................................................................................................................................4 AURBACHv.SANITARYWARES............ AURBACHv.SANITARYWARES ............ ........... ............ ............ ............ ........... ............ ............ ...........19 TOCAOv.CA...................................................................................................................................................6 LITONJUAv.LITONJUA..........................................................................................................................23 HEIRSOFJOSELIM,representedbyElenitoLimv.JULIETVILLALIM...............................7 BOURNSv.CARMAN........... ........... ............ ............ ........... ............ ............ ............ ............ ........... ............ ...........23 AGUILAv.CA..................................................................................................................................................9 SEVILLAv.CA.............................................................................................................................................24 TANv.DELROSARIO.................................................................................................................................9 PHILEXv.MININGCORP.......................................................................................................................26 MENDIOLAv.CA.......................................................................................................................................10 ORTEGAv.CA.............................................................................................................................................27 ANGELESv.SECRETARYOFJUSTICE..............................................................................................13
GATCHALIANv.CIR.................................................................................................................................15
PASCUALv.CIR..........................................................................................................................................15
OBILLOSv.CIR...........................................................................................................................................16
RIVERAv.PEOPLE’SBANK...................................................................................................................17 RIVERAv.PEOPLE’SBANK ...................................................................................................................17
2 (DIONNE)||D2014 determinationofrightsoverpubliclands.Afterduehearing,thecourt issuedtheorderappealedfrom,grantingthemotiontodismissthe complaintforfailuretostateacauseofaction.Thisconclusionwas predicateduponthetheorythatthecontractofpartnershipisnullandvoid, pursuanttoArt.1773ofourCivilCode,becauseaninventoryofthe fishpondreferredinsaidinstrumenthadnotbeenattachedthereto.
THELAWONPARTNERSHIP I.NATURE;CREATION A.DEFINITION;ES SENTIALFEATU RES B.CREATION AGADv.MABATO
(June28,1968) DOCTRINE: Apartnershipmaybeconstitutedinanyform,exceptwhereimmovable propertyorrealrightsarecontributedthereto,inwhichcaseapublicinstrument shallbenecessary.Acontractofpartnershipisvoid,wheneverimmovableproperty iscontributedthereto,ifinventoryofsaidpropertyisnotmade,signedbythe parties,andattachedtothepublicinstrument. NATURE: Appeal,takenbyplaintiffMauricioAgad,fromanorderofdismissalofthe CourtofFirstInstanceofDavao,wearecalledupontodeterminetheapplicabilityof Article1773ofourCivilCodetothecontractofpartnershiponwhichthecomplaint hereinisbased.
ISSUES:
Theissuehingesonwhetherornot"immovablepropertyorrealrights"havebeen contributed tothepartnershipunderconsideration. tothepartnershipunderconsideration. HELD: NO.(Mabatoallegedandthelowercourtheldthattheanswershouldbeinthe affirmative,because"itisreallyinconceivablehowapartnershipengagedinthe fishpondbusiness couldexistwithoutsaidfishpondproperty(being)contributedto thepartnership."But...) RATIO/RULING:
PONENTE:Concepcion, C.J.
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FACTS:
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PlaintiffallegesthatheanddefendantSeverinoMabatoare— pursuanttoapublicinstrumentdatedAugust29,1952"—partnersin afishpondbusiness, tothecapitalofwhichAgadcontributedP1,000,with therighttoreceive50%oftheprofits. Thatfrom1952uptoandincluding1956, Mabatowhohandledthe partnershipfunds,hadyearlyrenderedaccountsoftheoperationsof thepartnership;andthat,despiterepeateddemands,Mabatohad failedandrefusedtorenderaccounts fortheyears1957to1963. AgadprayedinhiscomplaintagainstMabatoandMabato&AgadCompany, filedonJune9,1964,that judgmentberenderedsentencingMabatoto payhim(Agad)thesumofP14,000,ashisshareintheprofitsofthe partnership fortheperiodfrom1957to1963,inadditiontoP1,000as attorney'sfees,andorderingthedissolutionofthepartnership,aswellas thewindingupofitsaffairsbyareceivertobeappointed. Inhisanswer, Mabatoadmittedtheformalallegationsofthecomplaint anddeniedtheexistenceofsaidpartnership,uponthegroundthatthe contractthereforhadnotbeenperfected, despitetheexecutionofAnnex "A",becauseAgadhadallegedlyfailedtogivehisP1,000contributiontothe partnershipcapital.Mabatoprayed,therefore,thatthecomplaintbe dismissed;thatAnnex"A"bedeclaredvoid abinitio;andthatAgadbe sentencedtopayactual,moralandexemplarydamages,aswellas attorney'sfees. Mabatofiledamotiontodismiss,uponthegroundthatthecomplaint statesnocauseofactionandthatthelowercourthadnojurisdiction overthesubjectmatterofthecase ,becauseitinvolvesprincipallythe
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TheCourt saidthatitshouldbenoted,however,that,asstatedin Annex"A"thepa rtnershipwas established"to operateafishpond",not operateafishpond",not to"engageinafishpondbusiness". Moreover,noneofthepartners contributedeitherafishpondorarealrighttoanyfishpond.Their contributionswerelimitedtothesumofP1,000each. TheoperationofthefishpondmentionedinAnnex"A"wasthepurposeof thepartnership.Neithersaidfishpondnorarealrighttheretowas contributedtothepartnershiporbecamepartofthecapitalthereof,evenif afishpondorarealrighttheretocouldbecomepartofitsassets.
DISPOSITION:
WHEREFORE,wefindthatsaidArticle1773oftheCivilCodeisnotinpointandthat, theorderappealedfromshouldbe,asitisherebysetasideandthecaseremandedto thelowercourtforfurtherproceedings,withthecostsofthisinstanceagainst defendant-appellee,SeverinoMabato.Itissoordered. VOTE:Reyes,J.B.L.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando, VOTE:Reyes,J.B.L.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando, JJ.,concur. CONCURRING/DISSENTINGOPINION:None. ADDITIONALNOT ES:
TORRESv.CA
(December9,1999)
3 (DIONNE)||D2014 DOCTRINE: Courtsmay not extricate parties fromthe necessary consequences of theiracts.Thatthetermsofacontractturnouttobefinanciallydisadvantageousto themwillnotrelievethemoftheirobligationstherein.Thelackofaninventoryof real property will notipso factorelease the contracting partners from their respective obligationstoeachother arisingfrom actsexecuted in accordance with theiragreement. NATURE: PetitionforreviewoncertiorariaCAdecisiondenyingMR PONENTE:Panganiban, J. FACTS: -Sisters Antonia Torres and Emeteria Baring, petitioners, entered into a "joint ventureagreement"withRespondentManuelTorresforthedevelopmentofaparcel oflandintoa subdivision.Pursuantto the contract,theyexecuteda Deedof Sale coveringthesaidparceloflandinfavorofrespondent,whothenhaditregisteredin hisname.Bymortgagingtheproperty,respondentobtainedfromEquitableBanka loanofP40,000which,undertheJointVentureAgreement,wastobeusedforthe developmentofthesubdivision.Allthreeofthemalsoagreedtosharetheproceeds fromthesaleofthesubdividedlots. -Theprojectdidnotpushthrough,andthelandwassubsequentlyforeclosedbythe bank. Petitioners:theprojectfailedbecauseof“respondent’slackoffundsormeansand skills.” They add that respondent used the loan not for the development of the subdivision,butinfurtheranceofhisowncompany,UniversalUmbrellaCompany. Respondent: alleged thathe usedthe loanto implement the Agreement.With the said amount,he wasable toeffect the surveyand thesubdivisionof thelots.He securedtheLapuLapuCityCouncil’sapprovalofthesubdivisionprojectwhichhe advertisedinalocalnewspaper.Healsocausedtheconstructionofroads,curbsand gutters.Likewise, he entered into a contract with an engineering firm for the buildingofsixtylow-costhousingunitsandactuallyevensetupamodelhouseon one of the subdivision lots.He did all of these for a total expense ofP85,000. Respondentclaimedthatthesubdivisionprojectfailed,however,becausepetitioners andtheirrelativeshadseparatelycausedtheannotationsofadverseclaimsonthe title to the land, which eventually scared away prospective buyers.Despite his requests,petitionersrefusedtocausetheclearingoftheclaims,therebyforcinghim togiveupontheproject. -petitionersfiledacriminalcaseforestafaagainstrespondentandhiswife,whowere howeveracquitted. -Thereafter,theyfiledthepresentcivilcasewhich,uponrespondent'smotion,was laterdismissedbythetrialcourtinanOrderdatedSeptember6,1982. - On a pp ea l, h ow ev er , t he a pp el la te c ou rt r em an de d t he c as e f or f ur th er proceedings.Thereafter, the RTC issued its assailed Decision, which, as earlier stated,wasaffirmedbytheCA. CAruling:petitionersandrespondentsformedapartnershipforthedevelopmentof the subdivision. Thus, they must bear the loss suffered bythe partnershipin the same proportion astheirsharein the profitsstipulated in thecontract.CA cited Article1979whichsaid“Thelossesandprofitsshallbedistributedinconformity withtheagreement.Ifonlytheshareofeachpartnerintheprofitshasbeenagreed upon,theshareofeachinthelossesshallbeinthesameproportion.”
CAalsosaid:“Intheabsenceofstipulation,theshareofeachpartnerintheprofits andlossesshallbeinproportiontowhathemayhavecontributed,buttheindustrial partnershallnot beliable forthe losses.Asfor theprofits, theindustrialpartner shallreceivesuch shareas maybe justand equitable underthe circumstances.If besideshisserviceshehascontributedcapital,heshallalsoreceiveashareinthe profitsinproportiontohiscapital.” Petitioners claimCA erredin concluding thatthe transaction betweenthe parties wasajointventure/partnership. ISSUES: WONapartnershiprelationshipexistedbetweentheparties? HELD: Yes. RATIO/RULING: ExistenceofPartnership: Petitionersdeny havingformeda partnershipwith respondent.They contendthat theJointVentureAgreementandtheearlierDeedofSalewerevoid. In thesame breath, however, they assertthat under those very same contracts, respondentisliableforhisfailuretoimplementtheproject.Becausetheagreement entitledthemtoreceive60percentoftheproceedsfromthesaleofthesubdivision lots,theypray thatrespondentpay themdamagesequivalentto 60percent ofthe valueoftheproperty. ThepertinentportionsoftheJointVentureAgreementreadasfollows: “That, whereas, the SECOND PARTY, voluntarily offered the FIRST PARTY, this propertylocatedatLapu-LapuCity,IslandofMactan,underLotNo.1368covering TCTNo.T-0184withatotalareaof17,009squaremeters,tobesub-dividedbythe FIRSTPARTY; “Whereas,the FIRST PARTYhad giventhe SECONDPARTY,the sumof:TWENTY THOUSAND (P20,000.00) Pesos, Philippine Currency, upon the execution of this contractforthepropertyentrustedbytheSECONDPARTY,forsub-divisionprojects anddevelopmentpurposes; “NOWTHEREFORE,for andin considerationof theabovecovenantsand promises herein contained therespective parties heretodo hereby stipulate and agree as follows: “ONE:ThattheSECONDPARTYsignedanabsoluteDeedofSalexxxdatedMarch5, 1969, in theamount ofTWENTYFIVE THOUSAND FIVE HUNDRED THIRTEEN & FIFTY CTVS. (P25,513.50) Philippine Currency, for 1,700 square meters at ONE [PESO]&FIFTYCTVS.(P1.50)PhilippineCurrency,infavoroftheFIRSTPARTY,but theSECONDPARTYdidnotactuallyreceivethepayment. xxx “FIFTH:That the sales of the sub-divided lots will be divided into SIXTY PERCENTUM 60%for theSECOND PARTY andFORTYPERCENTUM40% forthe FIRSTPARTY,andadditionalprofitsorwhateverincomederivingfromthesaleswill bedividedequallyaccordingtothexxxpercentage[agreedupon]bybothparties. xxx AreadingofthetermsembodiedintheAgreementindubitablyshowstheexistence ofapartnershippursuanttoArticle1767oftheCivilCode,whichprovides: “ART.1767.Bythecontractofpartnershiptwoormorepersonsbindthemselvesto contributemoney, property, orindustryto acommonfund,with the intention of dividingtheprofitsamongthemselves.”
4 (DIONNE)||D2014 Underthe above-quotedAgreement,petitioners wouldcontribute property to the partnershipintheformoflandwhichwastobedevelopedintoasubdivision;while respondentwouldgive,inadditiontohisindustry,theamountneededforgeneral expensesandothercosts.Furthermore,theincomefromthesaidprojectwouldbe dividedaccordingtothe stipulatedpercentage.Clearly,thecontractmanifestedthe intentionofthepartiestoformapartnership. It shouldbe stressed thatthe parties implemented thecontract.Thus,petitioners transferredthetitletothelandinthenameoftherespondent.Ontheotherhand, respondentcausedthesubjectlandto bemortgaged, the proceedsof whichwere usedforthesurveyandthesubdivisionoftheland.Asnotedearlier,hedeveloped theroads,thecurbsandtheguttersofthesubdivisionandenteredintoacontractto constructlow-costhousingunitsontheproperty. Respondent’s actions clearly belie petitioners’ contention that he made no contributiontothepartnership.UnderArticle1767oftheCivilCode,apartnermay contributenotonlymoneyorproperty,butalsoindustry.
whichthelandwasintendedtobeused.Asexplainedbythetrialcourt,“theland was in effectgiven to the partnershipas [petitioner’s] participationtherein.xx x There was therefore a consideration for the sale, the [petitioners] acting inthe expectation that, should the venture come into fruition, they [would] get sixty percentofthenetprofits.” DISPOSITION: Petitiondenied.CAaffirmed. VOTE:3rdDivision.Melo,Vitug,Purisima,andGonzaga-Reyes concur CONCURRING/DISSENTINGOPINION: none
ARBESv.POLISTICO (September7,1929 ) ADRIANOARBES,ETAL.,plaintiffs-appellees,vs.VICENTEPOLISTICO,ETAL., defendants-appellants.
PetitionersBoundbyTermsofContract
Courtsarenot authorizedto extricateparties fromthe necessaryconsequencesof theiracts,andthefactthatthecontractualstipulationsmayturnouttobefinancially disadvantageous will not relieve parties thereto of their obligations.They cannot nowdisavow therelationshipformedfrom suchagreementdue totheir supposed misunderstandingofitsterms. AllegedNullityofthePartnershipAgreement
PetitionersarguethattheJointVentureAgreementisvoidunderArticle1773ofthe CivilCode,whichprovides: “ART. 1773.A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is notmade, signed by the parties,andattachedtothepublicinstrument.” They contend that since the parties did not make, sign or attach to the public instrumentaninventoryoftherealpropertycontributed,thepartnershipisvoid. We clarify.First , Arti cle 1 773 was int end ed p rim arily to pro tec t thi rd persons.S econd , petitionersthemselvesinvokethe allegedlyvoid contractas basis fortheir claim that respondent shouldpay them 60 percent of thevalue of the property.Theycannotinonebreathdenythecontractandinanotherrecognizeit, depending on what momentarily suits their purpose.Parties cannot adopt inconsistentpositionsinregardtoa contractandcourtswillnottolerate,muchless approve,suchpractice. PartnershipAgreementNottheResultofanEarlierIllegalContract
Petitioners also contend that the Joint Venture Agreement is void under Article 1422oftheCivil Code,becauseit isthedirect resultofan earlierillegalcontract, whichwasforthesaleofthelandwithoutvalidconsideration. Thisargumentispuerile.TheJointVentureAgreementclearlystatesthatthe consideration for the sale was the expectation of profits from the subdivision project.Itsfirststipulationstatesthatpetitionersdidnotactuallyreceivepayment fortheparceloflandsoldtorespondent.Consideration,moreproperlydenominated ascause,can take differentforms, such astheprestationor promise ofa thingor servicebyanother. Inthiscase,thecauseofthecontractofsaleconsistednotinthestatedpeso valueoftheland,butintheexpectationofprofitsfromthesubdivisionproject,for
DOCTRINE: Hencethedistinctionmadeinthesecondparagraphofthisarticle[inthepresent case1666butundertheNCC1770]ofthisCode,providingthattheprofitsobtained byunlawfulmeansshallnotenrichthepartners,butshalluponthedissolutionofthe partnership,begiventothecharitableinstitutionsofthedomicileofthepartnership, or,indefaultofsuch,tothoseoftheprovince.
Thisisanewrule,unprecedentedbyourlaw,introducedtosupplyanobvious deficiencyoftheformerlaw,whichdidnotdescribethepurposetowhichthose profitsdeniedthepartnersweretobeapplied,norstatewhattobedonewith them.Theprofitsaresoapplied,andnotthecontributions,becausethiswouldbean excessiveandunjustsanctionfor,aswehaveseen,thereisnoreason,insuchacase, fordeprivingthepartneroftheportionofthecapitalthathecontributed,the circumstancesofthetwocasesbeingentirelydifferent.
NATURE:AppealfromajudgmentofCFI PONENTE:VILLAMOR,J.: FACTS: •
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Thisisanactiontobringaboutliquidationofthefundsandpropertyofthe associationcalled"TurnuhanPolistico&Co."Theplaintiffsweremembers orshareholders,andthedefendantsweredesignatedaspresidenttreasurer,directorsandsecretaryofsaidassociation. Itiswelltorememberthatthiscaseisnowbroughtbeforethe considerationofthiscourtforthesecondtime.Thefirstonewaswhenthe sameplaintiffsappearedfromtheorderofthecourtbelowsustainingthe defendant'sdemurrer,andrequiringtheformertoamendtheircomplaint withinaperiod,soastoincludeallthemembersof"TurnuhanPolistico& Co.,"eitherasplaintiffsorasadefendants.
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Thiscourtheldthenthatinanactionagainsttheofficersofavoluntary associationtowindupitsaffairsandenforceanaccountingformoneyand propertyintheirpossessions,itisnotnecessarythatallmembersofthe associationbemadepartiestotheaction.Thecasehavingbeenremandedto thecourtoforigin,bothpartiesamend,respectively,theircomplaintand theiranswer,andbyagreementoftheparties,thecourtappointedAmadeo R.Quintos,oftheInsularAuditor'sOffice,commissionertoexamineallthe books,documents,andaccountsof"TurnuhanPolistico&Co.,"andto receivewhateverevidencethepartiesmightdesiretopresent. Thecommissionerrenderedhisreport. Thedefendantsobjectedtothecommissioner'sreport,butthetrialcourt, havingexaminedthereasonsfortheobjection,foundthesamesufficiently explainedinthereportandtheevidence,andacceptingit,rendered judgment,holding thattheassociation"TurnuhanPolistico&Co."is unlawful,andsentencingthedefendantsjointlyandseverallyto returntheamountofP24,607.80totheplaintiffsinthiscase,andto therestofthemembers ofthesaidassociation
Whenthedissolutionofanunlawfulpartnershipisdecreed,the profitsshallbegiventocharitableinstitutionsofthedomicileof thepartnership,or,indefaultofsuch,tothoseoftheprovince. Appellant'scontentiononthispointisuntenable. o Accordingtosaidarticle,nocharitableinstitutionisanecessary partyinthepresentcaseofdeterminationoftherightsofthe parties. o Theactionwhichmayarisefromsaidarticle,inthecaseof unlawfulpartnership,isthatfortherecoveryoftheamountspaid bythememberfromthoseinchargeoftheadministrationofsaid partnership,anditisnotnecessaryforthesaidpartiestobase theiractiontotheexistenceofthepartnership,butonthefactthat ofhavingcontributedsomemoneytothepartnershipcapital.And hence,thecharitableinstitutionofthedomicileofthepartnership, andinthedefaultthereof,thoseoftheprovincearenotnecessary partiesinthiscase. Thearticlecitedabovepermitsnoactionforthepurposeofobtainingthe earningsmadebytheunlawfulpartnership,duringitsexistenceasresultof thebusinessinwhichitwasengaged,becauseforthepurpose,asManresa remarks,thepartnerwillhavetobasehisactionuponthepartnership contract,whichistoannulandwithoutlegalexistencebyreasonofits unlawfulobject;anditisselfevidentthatwhatdoesnotexistcannotbea causeofaction. o Hence,paragraph2ofthesamearticleprovidesthatwhenthe dissolutionoftheunlawfulpartnershipisdecreed,theprofits cannotinuretothebenefitofthepartners,butmustbegivento somecharitableinstitution. Petitioner'scontention: Ifthepartnershiphasnovalidexistence,ifitisconsideredjuridicallynonexistent,thecontractenteredintocanhavenolegaleffect;andinthatcase, howcanitgiverisetoanactioninfavorofthepartnerstojudicially demandfromthemanagerortheadministratorofthepartnershipcapital, eachone'scontribution? •
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ISSUES: Whetherthelowercourterredinorderingthereturnofthetheamountof P24,607.80totheplaintiffsinthiscase,andtotherestofthemembersofthesaid associationratherthanorderittobegiventocharitableinstitutions. HELD: No.Theamountshouldbereturnedtothemembersofthesaidassociation becausetheypertaintotheircontributionsandnottoprofitsderivedfromsuch unlawfulpartnership. RATIO/RULING: Petitioner'scontention: becausethepartnershipisanunlawfulpartnership,somecharitable institutiontowhomthepartnershipfundsmaybeorderedtobeturned over,shouldbeincluded,asapartydefendant Ifthepartnershiphasnovalidexistence,ifitisconsideredjuridicallynonexistent,thecontractenteredintocanhavenolegaleffect;andinthatcase, howcanitgiverisetoanactioninfavorofthepartnerstojudicially demandfromthemanagerortheadministratorofthepartnershipcapital, eachone'scontribution? •
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COURT: •
Theappellantsallegethatthenecessaryparty,i.e.Charitableinstitution, wasnotimpleaded.Theappellantsrefertoarticle1666oftheCivilCode, whichprovides: "Apartnershipmusthavealawfulobject,andmustbeestablished forthecommonbenefitofthepartners.
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COURT: •
Ricci:Thepartnerwholimitshimselftodemandingonlytheamount contributedbyhimneednotresorttothepartnershipcontractonwhichto basehisaction. o thatthepartnermakeshiscontribution,whichpassestothe managingpartnerforthepurposeofcarryingonthebusinessor industrywhichistheobjectofthepartnership;orinotherwords, tobreathethebreathoflifeintoapartnershipcontractwithan objectionforbiddenbylaw. o Andassaidcontrastdoesnotexistintheeyesofthelaw,the purposefromwhichthecontributionwasmadehasnotcomeinto existence,andtheadministratorofthepartnershipholdingsaid contributionretainswhatbelongstoothers,withoutany
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consideration;forwhichreasonheisnotboundtoreturnitandhe whohaspaidinhisshareisentitledtorecoverit. Butthisisnotthecasewithregardtoprofitsearnedinthecourseofthe partnership,becausetheydonotconstituteorrepresentthepartner's contributionbutaretheresultoftheindustry,businessorspeculation whichistheobjectofthepartnership o therefor,inordertodemandtheproportionalpartofthesaid profits,thepartnerwouldhavetobasehisactiononthecontract whichisnullandvoid,sincethispartitionordistributionofthe profitsisoneofthejuridicaleffectsthereof. Whereforeconsideringthiscontractasnon-existent,byreasonof o itsillicitobject,itcannotgiverisetothenecessaryaction,which mustbethebasisofthejudicialcomplaint.Furthermore,itwould beimmoralandunjustforthelawtopermitaprofitfroman industryprohibitedbyit. Hencethedistinctionmadeinthesecondparagraphofthisarticleofthis Code,providingthattheprofitsobtainedbyunlawfulmeansshallnot enrichthepartners,butshalluponthedissolutionofthepartnership,be giventothecharitableinstitutionsofthedomicileofthepartnership,or,in defaultofsuch,tothoseoftheprovince. Thisisanewrule,unprecedentedbyourlaw,introducedtosupplyan obviousdeficiencyoftheformerlaw,whichdidnotdescribethepurposeto whichthoseprofitsdeniedthepartnersweretobeapplied,norstatewhat tobedonewiththem. Theprofitsaresoapplied,andnotthecontributions,becausethis o wouldbeanexcessiveandunjustsanctionfor,aswehaveseen, thereisnoreason,insuchacase,fordeprivingthepartnerofthe portionofthecapitalthathecontributed,thecircumstancesofthe twocasesbeingentirelydifferent. OurCodedoesnotstatewhether,uponthedissolutionoftheunlawful partnership,theamountscontributedaretobereturnedbythepartners, becauseitonlydealswiththedispositionoftheprofits;butthefactthat saidcontributionsarenotincludedinthedisposalprescribedprofits,shows thatinconsequencesofsaidexclusion,thegenerallawmustbefollowed, andhencethepartnersshouldreimbursetheamountoftheirrespective contributions.
DISPOSITION: Thejudgmentappealedfrom,beinginaccordancewithlaw,should be,asitishereby,affirmedwithcostsagainsttheappellants;provided,however,the defendantsshallpaythelegalinterestonthesumofP24,607.80fromthedateofthe decisionofthecourt,andprovided,further,thatthedefendantsshalldepositthis sumofmoneyandotherdocumentsevidencinguncollectedcreditsintheofficeofthe clerkofthetrialcourt,inorderthatsaidcourtmaydistributethemamongthe membersofsaidassociation,uponbeingdulyidentifiedinthemannerthatitmay deemproper.Soordered. VOTE:ENBANC;Avanceña,C.J.,Johnson,Street,Johns,Romualdez,andVilla-Real,JJ., concur..
TOCAOv.CA
(October4,2000 ) DOCTRINE: Itmaybeconstitutedinanyform;apublicinstrumentisnecessaryonly whereimmovablepropertyorrealrightsarecontributedthereto.
Thisimpliesthatsinceacontractofpartnershipisconsensual,anoralcontractof partnershipisasgoodasawrittenone.Wherenoimmovablepropertyorrealrights areinvolved,whatmattersisthatthepartieshavecompliedwiththerequisitesofa partnership. NATURE:Petitionforreviewoncertiorari PONENTE:YNARES-SANTIAGO , J. FACTS:
PetitionerWilliamBelointroducedrespondentNenitaAnaytopetitioner MarjorieTocao,whoconveyedherdesiretoenterintoajointventurewithherforthe importationandlocaldistributionofkitchencookwares.Underthejointventure, Beloactedascapitalist,Tocaoaspresidentandgeneralmanager,andAnayasheadof themarketingdepartmentandlater,vice-presidentforsales.Thepartiesagreedto useAnay'snameinsecuringdistributorshipofcookwarefromWestBendCompany,a manufacturerofkitchencookwaresinWisconsin,U.S.A.Thepartiesagreedfurther thatAnaywouldbeentitledto:(1)tenpercent(10%)oftheannualnetprofitsofthe business;(2)overridingcommissionofsixpercent(6%)oftheoverallweekly production;(3)thirtypercent(30%)ofthesalesshewouldmake;and(4)two percent(2%)forherdemonstrationservices.Theagreementwasnotreducedto writingonthestrengthofBelo'sassurancesthathewassincere,dependableand honestwhenitcametofinancialcommitments.Anayhavingsecuredthe distributorshipofcookwareproductsfromtheWestBendCompanyandorganized theadministrativestaffandthesalesforce,thecookwarebusinesstookoff successfully.TheyoperatedunderthenameofGeminesseEnterprise,asole proprietorshipregisteredinMarjorieTocao'sname,withofficeat712Rufino Building,AyalaAvenue,MakatiCity.Belomadegoodhismonetarycommitmentsto Anay.OnOctober9,1987,AnaylearnedthatMarjorieTocaohadsigneda letteraddressedtotheCubaosalesofficetotheeffectthatshewasnolongerthevicepresidentofGeminesseEnterprise.Thefollowingday,October10,shereceivedanote fromLinaT.Cruz,marketingmanager,thatMarjorieTocaohadbarredherfrom holdingofficeandconductingdemonstrationsinbothMakatiandCubaooffices. AnayattemptedtocontactBelo.Shewrotehimtwicetodemandher overridingcommissionfortheperiodofJanuary8,1988toFebruary5,1988andthe auditofthecompanytodeterminehershareinthenetprofits.Whenherletterswere notanswered,Anayconsultedherlawyer,who,inturn,wroteBeloaletter.Still,that letterwasnotanswered.Anaystillreceivedherfivepercent(5%)overriding commissionuptoDecember1987.Thefollowingyear,1988,shedidnotreceivethe samecommissionalthoughthecompanynettedagrosssalesofP13,300,360.00.On April5,1988,NenitaA.AnayfiledCivilCaseNo.88-509,acomplaintforsumof
7 (DIONNE)||D2014 moneywithdamagesagainstMarjorieD.TocaoandWilliamBelobeforetheRegional TrialCourtofMakati,Branch140.Thetrialcourtheldthattherewasindeedanoral partnershipagreementbetweentheplaintiffandthedefendants,basedonthe following:(a)therewasanintentiontocreateapartnership;(b)acommonfundwas establishedthroughcontributionsconsistingofmoneyandindustry,and(c)there wasajointinterestintheprofits.PetitionersappealtotheCourtofAppealswas dismissed.TheirMotionforReconsiderationwasdeniedbytheCourtofAppealsfor lackofmerit. ISSUES: Whetherornotapartnershipexists
HELD&RATIO/RULING:
Yes.Theissueofwhetherornotapartnershipexistsisafactualmatter whichiswithintheexclusivedomainofboththetrialandappellatecourts.ThisCourt cannotsetasidefactualfindingsofsuchcourtsabsentanyshowingthatthereisno evidencetosupporttheconclusiondrawnbythecourtaquo. Inthiscase,boththetrialcourtandtheCourtofAppealsareoneinruling thatpetitionersandprivaterespondentestablishedabusinesspartnership.This Courtfindsnoreasontoruleotherwise.Tobeconsideredajuridicalpersonality, apartnershipmustfulfilltheserequisites:(1)twoormorepersonsbindthemselves tocontributemoney,propertyorindustrytoacommonfund;and(2)intentiononthe partofthepartnerstodividetheprofitsamongthemselves. Itmaybeconstitutedinanyform;apublicinstrumentisnecessaryonly whereimmovablepropertyorrealrightsarecontributedthereto. Thisimpliesthatsinceacontractofpartnershipisconsensual,anoralcontract ofpartnershipisasgoodasawrittenone.Wherenoimmovablepropertyorreal rightsareinvolved,whatmattersisthatthepartieshavecompliedwiththerequisites ofapartnership.ThefactthatthereappearstobenorecordintheSecuritiesand ExchangeCommissionofapublicinstrumentembodyingthepartnershipagreement pursuanttoArticle1772oftheCivilCodedidnotcausethenullificationofthe partnership.ThepertinentprovisionoftheCivilCodeonthematterstates:Art.1768. Thepartnershiphasajuridicalpersonalityseparateanddistinctfromthatofeachof thepartners,evenincaseoffailuretocomplywiththerequirementsofarticle1772, firstparagraph.
1.PetitionersareorderedtosubmittotheRegionalTrialCourtaformalaccountof thepartnershipaffairsfortheyears1987and1988,pursuanttoArticle1809ofthe CivilCode,inordertodetermineprivaterespondent’stenpercent(10%)shareinthe netprofitsofthepartnership; 2.Petitionersareordered,jointlyandseverally,topayprivaterespondentfive percent(5%)overridingcommissionfortheonehundredandfifty(150)cookware setsavailablefordispositionsincethetimeprivaterespondentwaswrongfully excludedfromthepartnershipbypetitioners; 3.Petitionersareordered,jointlyandseverally,topayprivaterespondentoverriding commissiononthetotalproductionwhich,fortheperiodcoveringJanuary8,1988to February5,1988,amountedtoP32,000.00; 4.Petitionersareordered,jointlyandseverally,topayprivaterespondentmoral damagesintheamountofP50,000.00,exemplarydamagesintheamountof P50,000.00andattorney’sfeesintheamountofP25,000.00. VOTE:1st division. Davide,Jr.,C.J.,(Chairman),Puno,Kapunan, andPardo,JJ.,concur. HEIRSOFJOSELIM,representedbyElenitoLimv.JULIETVILLALIM
(March3,2010) DOCTRINE:Ademandforperiodicaccountingisevidenceofapartnership. NATURE: Petition for Review on Certiorariunder Rule 45 of the Rules of Civil Procedure,assailingtheCourtofAppeals(CA)DecisiondatedJune29,2005,which reversedandsetasidethedecisionoftheRegionalTrialCourt(RTC)ofLucenaCity, datedApril12,2004. PONENTE:Nachura,J. FACTS: 1.
2. DISPOSITION: WHEREFORE , the instant petition for review on certiorariis DENIED.The partnershipamongpetitionersandprivaterespondentisordereddissolved,andthe parties are ordered to effect the winding up and liquidation of the partnership pursuanttothepertinentprovisionsoftheCivilCode.Thiscaseisremandedtothe RegionalTrialCourtforproperproceedingsrelativetosaiddissolution.Theappealed decisionsoftheRegionalTrialCourtandtheCourtofAppealsareAFFIRMEDwith MODIFICATIONS,asfollows---
PetitionersaretheheirsofthelateJoseLim.representedbyElenitoLim. They filed a Complaint for Partition, Accounting and Damages against respondentJuliet VillaLim (respondent), widow ofthe late Elfledo Lim, whowastheeldestsonofJoseandCresencia. Petitionersallegedthat Josewas theliaisonofficer ofInterwoodSawmill. Jose, together with his friends Jimmy Yu and Norberto Uy formed a partnership to engage in the trucking business. Jose managed the operationsofthistruckingbusinessuntilhisdeath.Thereafter,Jose'sheirs, includingElfledo,andpartnersagreedtocontinuethebusinessunderthe managementofElfledo.Thesharesinthepartnershipprofitsandincome that formedpartoftheestate ofJosewere heldin trustby Elfledo,with petitioners' authority forElfledo to use, purchase or acquire properties usingsaidfunds.
8 (DIONNE)||D2014 3.
4.
5.
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8. 9.
Petitionersallegedthat Elfledo wasnever a partneror aninvestorin the businessandmerelysupervisedthepurchaseofadditionaltrucksusingthe income from the trucking business of the partners. By the time the partnershipceased,ithadninetrucks,whichwereallregisteredinElfledo's name. Elfledo died, leaving respondent as his sole surviving heir. Petitioners claimed that respondenttook over the administration of theproperties, whichbelongedto theestateof Jose,withouttheirconsent andapproval. Claiming that they are co-owners of the properties,petitioners required respondent to submit an accounting of all income, profits and rentals received from theestate of Elfledo, andto surrender theadministration thereof.Respondentrefused;thus,thefilingofthiscase. Respondent traversed petitioners' allegations and claimed that ElfledowashimselfapartnerofNorbertoandJimmy.Respondentalso claimed that per testimony of Cresencia,Jose gave Elfledocapital in an informal partnership with Jimmy and Norberto. When Elfledo and respondentgot married, thepartnershiponlyhad onetruck; butthrough theeffortsofElfledo,thebusinessflourished. WhenNorbertowasambushedandkilled,thetruckingbusinessstartedto falter.WhenElfledodiedduetoaheartattack,respondenttalkedtoJimmy andtotheheirsofNorberto,asshecouldnolongerrunthebusiness.Jimmy suggestedthatthree outoftheninetrucksbegiven tohimas hisshare, whiletheotherthree trucksbegiventotheheirsofNorberto.However, Norberto'swife, Paquita Uy,was notinterestedin thevehicles.Thus, she soldthesametorespondent,whopaidforthemininstallments. RespondentalsoallegedthatwhenJosedied,heleftnoknownassets, andthepartnershipwithJimmyandNorbertoceaseduponhisdemise. Respondent also stressed that Jose left no properties that Elfledo c ou ld h av e h el d i n t ru st . R es po nd en t m ai nt ai ne d t ha t a ll t he propertiesinvolvedinthiscasewerepurchasedandacquiredthrough herandherhusband’sjointeffortsandhardwork,andwithoutany p ar ti ci pa ti on o r c on tr ib ut io n f ro m p et it io ne rs o r f ro m J os e. Respondentsubmittedthattheseareconjugalpartnershipproperties; andthus,shehadtherighttorefusetorenderanaccountingfortheincome orprofitsoftheirownbusiness. TC:favouredpetitioners CA:reversedthedecisionofTC
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ISSUES:WONElfledoLimwasapartnerinthebusiness HELD: 1.
Yes
RATIO/RULING: 1.
A partnership exists when two or more persons agree to place their money,effects,labor,andskillinlawfulcommerceorbusiness,with theunderstandingthatthereshallbeaproportionatesharingofthe profitsandlossesamongthem .
9.
The best evidence would have been the contract of partnership or the articlesofpartnership.Unfortunately,thereisnoneinthiscase,becausethe allegedpartnershipwasneverformallyorganized. SCaffirmstheCAdecision.Theevidencepresentedbypetitionersfalls shortofthequantumofproofrequiredtoestablishthat:(1)Josewas thepartner andnot Elfledo; and(2) all thepropertiesacquired by Elfledo and respondentformpart ofthe estateof Jose,havingbeen derivedfromtheallegedpartnership. PetitionersheavilyrelyonJimmy'stestimony.Butthattestimonyisjustone pieceofevidenceagainstrespondent.Itmustbeconsideredandweighed along with petitioners' other evidence vis-à-vis respondent's contrary evidence. At this juncture, the SC’s ruling in Heirs of Tan Eng Kee v. Court of Appealsisenlightening.Therein,wecitedArticle1769oftheCivilCode. Applying the legal provision to the facts of this case, the following circumstancestendto provethat Elfledo washimselfthepartner of JimmyandNorberto : a. Cresenciatestifiedthat JosegaveElfledoP50,000.00,as sharein thepartnership,onadatethatcoincidedwiththepaymentofthe initialcapitalinthepartnership; b. Elfledo ran the affairs of the partnership, wielding absolute control, power and authority, without any intervention or oppositionwhatsoeverfromanyofpetitionersherein; c. A ll o f t he p ro pe rt ie s, p ar ti cu la rl y t he n in e t ru ck s o f t he partnership,wereregisteredinthenameofElfledo; d. JimmytestifiedthatElfledodidnotreceivewagesorsalariesfrom thepartnership, indicatingthat what heactuallyreceivedwere sharesoftheprofitsofthebusiness; e. None of the petitioners, as heirs of Jose, the alleged partner, demandedperiodicaccountingfromElfledoduringhislifetime. As repeatedlystressed inHeirsof TanEng Kee, a demandfor periodicaccountingisevidenceofapartnership. Furthermore, petitioners failedto adduceany evidence toshowthatthe real and personal properties acquired and registered in the names of Elfledo and respondent formed part of the estate of Jose, having been derivedfromJose'sallegedpartnershipwithJimmyandNorberto. SCagreeswithCA’sfindingsthatthetestimonitiesprovethatElfledowas notjustahiredhelpbutoneofthepartnersinthetruckingbusiness,active and visible inthe running ofits affairs fromday one until this ceased operations upon his demise. The extentof his control, administration andmanagementofthepartnershipanditsbusiness,thefactthatits propertieswereplacedinhisname,andthathewasnotpaidsalaryor other compensation by thepartners, areindicative of thefact that Elfledowasapartnerandacontrollingoneatthat . NotabletoothatJoseLimdiedwhenthepartnershipwasbarelyayearold, andthepartnershipanditsbusinessnotonlycontinuedbutalsoflourished. Ifitweretruethatit wasJoseLimandnotElfledowhowasthepartner, thenuponhisdeaththepartnershipshouldhave
9 (DIONNE)||D2014 personwhoisnotarealpartyininterestinthecasecannotbeexecuted. Hence, a complaint filed against such a person should be dismissed for failuretostateacauseofaction.
DISPOSITION: WHEREFORE, theinstant Petition isDENIED. TheassailedCourt of AppealsDecisiondatedJune29,2005isAFFIRMED.Costsagainstpetitioners. VOTE:Allconcur
Ø
Art. 1768 of the Civil Code, a partnership has a juridical personality separateanddistinctfromthatofeachpartner.Thepartnerscannotbeheld liablefortheobligationsofthepartnershipunlessitisshownthatthelegal fiction of a different juridical personality is being used for fraudulent, unfair,orillegalpurposes.
Ø
Inthiscase,privaterespondenthasnotshownthatA.C.Aguila&Sons,Co., asaseparatejuridicalentity,isbeingusedforfraudulent,unfair,orillegal purposes.Moreover,thetitletothesubjectpropertyisinthenameofA.C. Aguila & Sons, Co. and the Memorandum of Agreement was executed betweenprivaterespondent,withtheconsentofherlatehusband,andA.C. Aguila&Sons,Co.,representedbypetitioner.Hence,itisthepartnership, not its officers or agents, which should be impleaded in any litigation involvingpropertyregisteredinitsname.Aviolationofthisrulewillresult inthedismissalofthecomplaint.
C.SEPARATEJURIDICALPERSONALITY AGUILAv.CA FACTS: Ø
PetitioneristhemanagerofA.C.Aguila&Sons,Co,apartnershipengagedin lendingactivities.
Ø
PrivaterespondentFelicidadAbrogarenteredintoaMOAw/A.C.Aquila& Sonsinvolvingapactoderetrosaleofahouse&lot.
Ø
Asprivaterespondentfailedtoredeemthepropertywithintheprescribed period,petitionercausedthe cancellationof TCTand theissuance of the newcertificateoftitleinthenameofthepartnership.
Ø
Private respondentfileda petition fora declaration ofthe nullity ofthe deedofsaleandacriminalcomplaintforforgeryagainstpetitioneralleging thatthe signatureof her husband wasa forgery because hewasalready deadwhenthedeedwassupposedtohavebeenexecuted.
Ø
Petitionernowcontendsthatheis nottherealparty ininterestbutA.C. Aguila&Co.,againstwhichthiscaseshouldhavebeenbrought.
ISSUE :
WONthepetitioneristherealpartyininterest. HELD :
TANv.DELROSARIO
(October3,1994) DOCTRINE:(seenotesbelow) NATURE:Consolidatedcase.Twospecialcivilactionsforprohibition PONENTE:Vitug, J. FACTS: ThisisaconsolidatedcaseinvolvingtheconstitutionalityofRA7496orthe Ø SimplifiedNetIncomeTaxation (SNIT)scheme. Petitionersclaimtobetaxpayersadverselyaffectedbythecontinued Ø implementationoftheSNIT. Ø
Inthe1stcase, theycontendedthattheHouseBillwhicheventually becameRA7496isamisnomerordeficientbecauseitwasnamedas “SimplifiedNetIncomeTaxationSchemefortheSelf-Employedand ProfessionalsEngagedinthePracticeoftheirProfession”whiletheactual titlecontainsthesaidwordswiththeadditionalphrase,“…Amending Section21and29oftheNationalInternalRevenueCode.”
Ø
TheyallegedthatthistitlewasindirectviolationofSection26(1)and28 (1)inArticleVIofthe1987Constitution.Thepetitioneralsostressedthatit violatestheequalprotectionclauseasitonlyimposedtaxesupononewho
No. Ø
Rule3,Section2oftheRulesofCourtof1964,underwhichthecomplaint inthiscasewasfiled,providedthat"everyactionmustbeprosecutedand defendedinthenameoftherealpartyininterest."Arealpartyininterestis onewhowouldbebenefitedorinjuredbythejudgment,orwhoisentitled totheavailsofthesuit.ThisrulingisnowembodiedinRule3,Section2of the1997RevisedRulesofCivilProcedure.Anydecisionrenderedagainsta
10 (DIONNE)||D2014 practicehisprofessionaloneandnottothosewhoareengagedtosingle proprietorship. Ø
Ø
Inthe2ndcase, theyarguedthat respondentshaveexceededtheirrulemakingauthorityinapplyingSNITtogeneralprofessional partnerships byissuingRevenueRegulation2-93tocarryouttheRA.This isanchoredontheadministrativeinterpretationofpublicrespondentsthat wouldapplySNITtopartnersingeneralprofessionalpartnerships.- PetitionerscitedthedeliberationsintheHORregardingthe implementationofthesaidruleinwhichitwasshownthatframersdidnot intendforthebilltobeapplicabletobusinesscorporationsorpartnerships
ISSUE: 1. WONRA7496isunconstitutional(G.R.No.109289). NO 2. WONinRA7496,theSNITappliestopartnersingeneralprofessional partnerships.(G.R.No.109446).YES HELD: 1. ConstitutionalityofRA7496 o
o
o
o
2.
TheSCruledinthenegative.Thesaidlawisnotarbitrary;itis germanetothepurposeofthelawand;appliestoallthingsof equalconditionsandofsameclass. Itisneitherviolativeofequalprotectionclauseduetothe existenceofsubstantialdifferencebetweenonewhopracticehis professionaloneandonewhoisengagedtoproprietorship. Further,theSCsaidthatRA7496isjustanamendatoryprovision ofthecodeoftaxpayerswhereitclassifiestaxpayersintofour maingroups:Individuals,Corporations,EstateunderJudicial SettlementandIrrevocableTrust. Thecourtwouldhaveappreciatedthecontentionofthepetitioner ifRA7496wasanindependentlaw.Butsinceitisattachedtoa lawthathasalreadyclassifiedtaxpayers,thereisnoviolationof equalprotectionclause.
returnmainlyforadministrationanddata),thepartners themselvesareliableforthepaymentofincometaxintheir individualcapacitycomputedontheirrespectiveanddistributive sharesofprofits.
NOTES: Differencesbetweengeneralprofessionalpartnershipsandordinarybusiness partnerships: a. Ageneralprofessionalp artnership 1,unlikean ordinarybusiness partnership(whichistreatedasacorporationforincometax purposesandsosubjecttothecorporateincometax ),isnotitselfan incometaxpayer. Theincometaxisimposednotontheprofessional partnership,whichistaxexempt,butonthepartnersthemselvesin theirindividualcapacity computedontheirdistributivesharesof partnershipprofits. b. Ordinarybusinesspartnerships,nomatterhowcreatedororganized,are “taxablepartnerships .”Generalprofessionalpartnershipsare“ exempt partnerships .”UndertheTaxCodeonincometaxation,thegeneral professionalpartnershipisdeemedtobenomorethanameremechanism oraflow-throughentityinthegenerationofincomeby,andtheultimate distributionofsuchincometo,respectively,eachoftheindividualpartners. DISPOSITIVE: WHEREFORE,thepetitionsareDISMISSED.Nospecial pronouncementoncosts. VOTING:Narvasa,C.J.,Cruz,Feliciano,Regalado,Davide,Jr.,Romero,Bellosillo,Melo, Quiason,Puno,KapunanandMendoza,JJ., concur. PadillaandBidin,JJ., areonleave.
MENDIOLAv.CA
ApplicationofSNITt opartnersingener alprofessionalpart nerships o
o
o
Thereisnodistinctioninincometaxliabilitybetweenaperson whopracticeshisprofessionaloneorindividuallyandonewho doesitthroughapartnership(whetherregisteredornot)with othersintheexerciseofacommonprofession. Underthepresentincometaxsystem,allindividualsderiving incomefromanysourcewhatsoeveraretreatedinalmost invariablythesamemannerandunderacommonsetofrules. Althoughthegeneralprofessionalpartnershipisexemptfromthe paymentoftaxes(butitstillhasanobligationtofileanincometax
1
A general professional partnership, in this context, must be formed for the sole purpose of exercising a common profession, no part of the income of which is derived from its engaging in any trade business; otherwise, it is subject to tax as an ordinary business partnership or, which is to say, as a corporation and thereby subject to the corporate income tax. The only other exempt partnership is a joint venture for undertaking construction projects or engaging in petroleum operations pursuant to an operating agreement under a service contract with the government (see Sections 20, 23 and 24, National Internal Revenue Code).
11 (DIONNE)||D2014 ARSENIOT.MENDIOLAvs.COURTOFAPPEALS,NATIONALLABORRELATIONS COMMISSION,PACIFICFORESTRESOURCES,PHILS.,INC.and/orCELLMARKAB (July31,2006) DOCTRINE: Inapartnership,themembersbecomeco-ownersofwhatiscontributed tothefirmcapitalandofallpropertythatmaybeacquiredtherebyandthroughthe effortsofthemembers.Thepropertyorstockofthepartnershipformsacommunity ofgoods,acommonfund,inwhicheachpartyhasaproprietaryinterest.Infact,the NewCivilCoderegardsapartnerasaco-ownerofspecificpartnershipproperty. Eachpartnerpossessesajointinterestinthewholeofpartnershipproperty.Ifthe relationdoesnothavethisfeature,itisnotoneofpartnership.Thisessential element,thecommunityofinterest,orco-ownershipof,orjointinterestin partnershippropertyisabsentintherelationsbetweenpetitionerandprivate respondentPacfor.xxxthepartiesinthiscase,merelysharedprofits.Thisalonedoes notmakeapartnership.
Besides,acorporationcannotbecomeamemberofapartnershipintheabsenceof expressauthorizationbystatuteorcharter.Thisdoctrineisbasedonthefollowing considerations:(1)thatthemutualagencybetweenthepartners,wherebythe corporationwouldbeboundbytheactsofpersonswhoarenotitsdulyappointed andauthorizedagentsandofficers,wouldbeinconsistentwiththepolicyofthelaw thatthecorporationshallmanageitsownaffairsseparatelyandexclusively;and,(2) thatsuchanarrangementwouldimproperlyallowcorporatepropertytobecome subjecttorisksnotcontemplatedbythestockholderswhentheyoriginallyinvested inthecorporation. PONENTE:Puno,J. FACTS:
PrivaterespondentPacificForestResources,Phils.,Inc.(Pacfor)isacorporation organizedandexistingunderthelawsofCalifornia,USA.Itisasubsidiaryof CelluloseMarketingInternational(organizedinSweden) PrivaterespondentPacforenteredintoa"SideAgreementonRepresentativeOffice knownasPacificForestResources(Phils.),Inc."withpetitionerArsenioT.Mendiola (ATM).TheSideAgreementoutlinesthebusinessrelationshipofthepartieswith regardtothePhilippineoperationsofPacfor.Privaterespondentwillestablisha PacforrepresentativeofficeinthePhilippines,tobeknownasPacforPhils,and petitionerATMwillbeitsPresident.Petitioner'sbasesalaryandtheoverhead expendituresofthecompanyshallbebornebytherepresentativeofficeandfunded byPacfor/ATM,sincePacforPhils.isequallyownedona50-50equitybyATMand Pacfor-usa.
Initsapplication(totheSEC),privaterespondentPacforproposedtoestablishits representativeofficeinthePhilippines.Italsodesignatedpetitionerasitsresident agentinthePhilippines,authorizedtoacceptsummonsandprocessesinalllegal proceedings,andallnoticesaffectingthecorporation. TheSideAgreementwasamendedthrougha"RevisedOperatingandProfitSharing AgreementfortheRepresentativeOfficeKnownasPacificForestResources (Philippines),"wherethesalaryofpetitionerwasincreasedto$78,000perannum. Bothagreementsshowthattheoperationalexpenseswillbebornebythe representativeofficeandfundedbyallparties"asequalpartners,"whiletheprofits andcommissionswillbesharedamongthem. InJuly2000,petitionerwrotetheVicePresidentforAsiaofPacfor,seeking confirmationofhis50%equityofPacforPhils.PrivaterespondentPacfor,through itsPresident,repliedthatpetitionerisnotapart-ownerofPacforPhils.becausethe latterismerelyPacfor-USA'srepresentativeofficeandnotanentityseparateand distinctfromPacfor-USA."It'ssimplya 'theoreticalcompany'withthepurposeof dividingtheincome50-50." 11Petitionerpresumablyknewofthisarrangement fromthestart,havingbeentheonetoproposetoprivaterespondentPacforthe settingupofarepresentativeoffice,and"notabranchoffice"inthePhilippinesto saveontaxes. Petitionerclaimedthathewasallalongmadetobelievethathewasinajointventure withthem;thathewouldhavebeenbetteroffremainingasanindependentagentor representativeofPacfor-USAasATMMarketingCorp.Petitionerraisedotherissues, suchastherentalsofofficefurniture,salaryoftheemployees,companycar,aswell ascommissionsallegedlyduehim.Theissueswerenotresolved,hence,inOctober 2000,petitionerwrotePacfor-USAdemandingpaymentofunpaidcommissionsand officefurnitureandequipmentrentals. PrivatrerespondentPacforthroughcounselorderedpetitionertoturnovertoitall papers,documents,files,records,andothermaterialsinhisorATMMarketing Corporation'spossessionthatbelongtoPacfororPacforPhilsthentoremitmore than300kxmasgiveawayfundforclientsofPacforPhilandfinallyPacforwithdraw allitsoffersofsettlementandorderedpetitionertotransfertitleandturnovertoit possessionoftheservicecar. 18 PrivaterespondentPacforlikewisesentletterstoitsclientsinthePhilippines, advisingthemnottodealwithPacforPhils. Petitionerconstruedthesedirectivesasaseveranceofthe"unregistered partnership"betweenhimandPacfor,andtheterminationofhisemploymentas residentmanagerofPacforPhils. Onthebasisofthe"SideAgreement,"petitionerinsistedthatheandPacfor equallyownPacforPhils .Thus,itfollowsthatheandPacforlikewiseown,ona
12 (DIONNE)||D2014 50/50basis,PacforPhils.'officefurnitureandequipmentandtheservicecar.Healso reiteratedhisdemandforunpaidcommissions,andproposedtooffsetthesewiththe remainingChristmasgiveawayfundinhispossession.Furthermore,hedidnot renewtheleasecontractwithPulpandPaper,Inc.,thelessoroftheofficepremisesof PacforPhils.,whereinhewasthesignatorytotheleaseagreement.
MRdenied.
PrivaterespondentPacforplacedpetitioneronpreventivesuspensionandordered himtoshowcausewhynodisciplinaryactionshouldbetakenagainsthim.Private respondentPacforchargedpetitionerwithwillfuldisobedienceandserious misconductforhisrefusaltoturnovertheservicecarandtheChristmasgiveaway fundwhichheappliedtohisallegedunpaidcommissions.Privaterespondentalso allegedlossofconfidenceandgrossneglectofdutyonthepartofpetitionerfor allegedlyallowinganothercorporationownedbypetitioner'srelatives,HighEnd Products,Inc.(HEPI),tousethesametelephoneandfacsimilenumbersofPacfor,to possiblystealanddivertthesalesandbusinessofprivaterespondent.
MRdenied
CA:Affirmedholdingthat"thelegalbasisofthecomplaintisnotemploymentbut perhapspartnership,co-ownership,orindependentcontractorship."Hence,the LaborCodecannotapply.
Issues:Wasthereanemployer-employeerelationshiporapartnership?Canboth existatthesametime?Therewasanemployeremployeerelationshipbutno partnership
Washeconstructivelydismissed?(Notimportantsoomitted)YES. Ratio:
Petitionerdeniedthecharges.HereiteratedthatheconsideredtheimportofPacfor President’slettersasa"cessationofhispositionandoftheexistenceofPacforPhils." HelikewiseinformedprivaterespondentPacforthatATMMarketingCorp.now occupiesPacforPhils.'officepremises,anddemandedpaymentofhisseparation pay. Petitionerfiledhiscomplaintforillegaldismissal,recoveryofseparationpay,and paymentofattorney'sfeeswiththeNLRC. Privaterespondentdirectedpetitionertoexplainwhyheshouldnotbedisciplined forseriousmisconductandconflictofinterest;chargedpetitioneranewwithserious misconductforthelatter'sallegedactoffraudandmisrepresentationinauthorizing thereleaseofanadditionalpesosalaryforhimself,besidesthedollarsalaryagreed uponbytheparties.Privaterespondentalsoaccusedpetitionerofdisloyaltyand representationofconflictinginterestsforhavingcontinuedusingthePacforPhils.' officeforoperationsofHEPI LA:ruledinfavorofpetitioner,findingtherewasconstructivedismissal.By directingpetitionertoturnoverallofficerecordsandmaterials,regardlessof whetherhemayhaveretainedcopies,privaterespondentPacforvirtuallydeprived petitionerofhisjobbythegradualdiminutionofhisauthorityasresidentmanager. Petitioner'spositionasresidentmanagerwhoseduty,amongothers,wastomaintain thesecurityofitsbusinesstransactionsandcommunicationswasrendered meaningless. NLRC:infavorofPrivaterespondentPacfor.HesetasidetheJuly30,2001decision ofthelaborarbiter,forlackofjurisdictionandlackofmerit .Itheldtherewasno employer-employeerelationshipbetweentheparties.Basedonthetwo agreementsbetweentheparties,itconcludedthatpetitionerisnotan employeeofprivaterespondentPacfor,butafullco-owner(50/50equity).
Petitionerarguesthatheisanindustrialpartnerofthepartnershipheformedwith privaterespondentPacfor,andalsoanemployeeofthepartnership.Petitionerinsists thatanindustrialpartnermayatthesametimebeanemployeeofthepartnership, providedthereissuchanagreement,which,inthiscase,isthe"SideAgreement"and the"RevisedOperatingandProfitSharingAgreement."Weholdthatpetitionerisan employeeofprivaterespondentPacforandthatnopartnershiporco-ownership existsbetweentheparties. Inapartnership,themembersbecomeco-ownersofwhatiscontributedtothefirm capitalandofallpropertythatmaybeacquiredtherebyandthroughtheeffortsof themembers.Thepropertyorstockofthepartnershipformsacommunityofgoods, acommonfund,inwhicheachpartyhasaproprietaryinterest.Infact,theNewCivil Coderegardsapartnerasaco-ownerofspecificpartnershipproperty.Eachpartner possessesajointinterestinthewholeofpartnershipproperty.Iftherelationdoes nothavethisfeature,itisnotoneofpartnership.Thisessentialelement,the communityofinterest,orco-ownershipof,orjointinterestinpartnershipproperty isabsentintherelationsbetweenpetitionerandprivaterespondentPacfor. Petitionerisnotapart-ownerofPacforPhils.WilliamGleason,privaterespondent Pacfor'sPresidentestablishedthisfactwhenhesaidthatPacforPhils.issimplya "theoreticalcompany"forthepurposeofdividingtheincome50-50.Hestressedthat petitionerknewofthisarrangementfromtheverystart,havingbeentheoneto proposetoprivaterespondentPacforthesettingupofarepresentativeoffice,and "notabranchoffice"inthePhilippinestosaveontaxes.Thus,thepartiesinthiscase, merelysharedprofits.Thisalonedoesnotmakeapartnership. Besides,acorporationcannotbecomeamemberofapartnershipintheabsenceof expressauthorizationbystatuteorcharter.Thisdoctrineisbasedonthefollowing considerations:(1)thatthemutualagencybetweenthepartners,wherebythe corporationwouldbeboundbytheactsofpersonswhoarenotitsdulyappointed
13 (DIONNE)||D2014 andauthorizedagentsandofficers,wouldbeinconsistentwiththepolicyofthelaw thatthecorporationshallmanageitsownaffairsseparatelyandexclusively;and,(2) thatsuchanarrangementwouldimproperlyallowcorporatepropertytobecome subjecttorisksnotcontemplatedbythestockholderswhentheyoriginallyinvested inthecorporation.Nosuchauthorizationhasbeenprovedinthecaseatbar. (Thispartgoesintotheemployer-employeerelationshipbit,Idon’tthinkit’s importantbutIincludeditnadinifevermagtanongre:paanonaggingemployee) Bethatasitmay,weholdthatonthebasisoftheevidence,anemployer-employee relationshipispresentinthecaseatbar.Theelementstodeterminetheexistenceof anemploymentrelationshipare:(a)theselectionandengagementoftheemployee; (b)thepaymentofwages;(c)thepowerofdismissal;and(d)theemployer'spower tocontroltheemployee'sconduct.Themostimportantelementistheemployer's controloftheemployee'sconduct,notonlyastotheresultoftheworktobedone, butalsoastothemeansandmethodstoaccomplishit. 43
oftheservicecar.ItwasalsoduringthisperiodwhenprivaterespondentPacforsent letterstoitsclientsinthePhilippines,particularlyIntercontinentalPaperIndustries, Inc.andDAVCOR,advisingthemnottodealwithpetitionerand/orPacforPhils.Inits lettertoDAVCOR,privaterespondentPacforrepliedtotheclient'srequestforan invoicepaymentextension,andformulatedarevisedpaymentprogramforDAVCOR. ThisisoneunmistakableproofthatprivaterespondentPacforexercisescontrolover thepetitioner. DISPOSITIVE: INVIEWWHEREOF ,thepetitionis GRANTED.TheCourtofAppeals' January30,2003DecisioninCA-G.R.SPNo.71028andJuly30,2003Resolution, affirmingtheDecember20,2001DecisionoftheNationalLaborRelations Commission,are ANNULED andSETASIDE .TheJuly30,2001DecisionoftheLabor Arbiteris REINSTATED withthe MODIFICATION thattheamountofP250,000.00 representinganallegedincreaseinpetitioner'ssalaryshallbedeductedfromthe grantofseparationpayforlackofevidence. SOORDERED .
Intheinstantcase,alltheforegoingelementsarepresent.First,itwasprivate respondentPacforwhichselectedandengagedtheservicesofpetitionerasits residentagentinthePhilippines.Second,asstipulatedintheirSideAgreement, privaterespondentPacforpayspetitionerhissalaryamountingto$65,000per annumwhichwaslaterincreasedto$78,000.Third,privaterespondentPacforholds thepowerofdismissal,asmaybegleanedthroughthevariousmemorandaitissued againstpetitioner,placingthelatteronpreventivesuspensionwhilecharginghim withvariousoffenses,includingwillfuldisobedience,seriousmisconduct,andgross neglectofduty,andorderinghimtoshowcausewhynodisciplinaryactionshouldbe takenagainsthim. Lastlyandmostimportant,privaterespondentPacforhasthepowerofcontrolover themeansandmethodofpetitionerinaccomplishinghiswork. Thepowerofcontrolrefersmerelytotheexistenceofthepower,andnottothe actualexercisethereof.Theprincipalconsiderationiswhethertheemployerhasthe righttocontrolthemannerofdoingthework,anditisnottheactualexerciseofthe rightbyinterferingwiththework,buttherighttocontrol,whichconstitutesthetest oftheexistenceofanemployer-employeerelationship. 44Inthecaseatbar,private respondentPacfor,asemployer,clearlypossessessuchrightofcontrol.Petitioner,as privaterespondentPacfor'sresidentagentinthePhilippines,is,exactlyso,onlyan agentofthecorporation,arepresentativeofPacfor,whotransactsbusiness,and acceptsserviceonitsbehalf. ThisrightofcontrolwasexercisedbyprivaterespondentPacforduringtheperiodof NovembertoDecember2000,whenitdirectedpetitionertoturnovertoitall recordsofPacforPhils.;whenitorderedpetitionertoremittheChristmasgiveaway fundintendedforclientsofPacforPhils.;and,whenitwithdrewallitsoffersof settlementandorderedpetitionertotransfertitleandturnovertoitthepossession
VOTE:Sandoval-Gutierrez,Corona,Azcuna,Garcia,J.J., concur
ANGELESv.SECRE TARYOFJUSTICE
(July29,2005) OscarAngelesandEmeritaAngeles, petitioners,v. TheHon.SecretaryofJusticeand FelinoMercado, respondents DOCTRINE: ThepurposeofregistrationofthecontractofpartnershipwiththeSECis togivenoticetothirdparties.Failuretoregisterthecontractofpartnershipdoesnot affecttheliabilityofthepartnershipandofthepartnerstothirdpersons,nordoesit affectthepartnership’sjuridicalpersonality.Apartnershipmayexistevenifthe partnersdonotusethewords“partner”or“partnership.” NATURE:Specialcivilaction.Certiorari. PONENTE:Carpio, J. FACTS: •
AngelesspousesfiledacriminalcomplaintforestafaagainstMercado,their brother-in-law ClaimedthatMercadoconvincedthemtoenterintoacontractofantichresis, o tolastfor5years,covering8parcelsoflandplantedwithfruit-bearing lanzonestreesinNagcarlan,LagunaandownedbyJuanSanzo o ThepartiesagreedthatMercadowouldadministertheandsandcompletethe necessarypaperwork
14 (DIONNE)||D2014 After3years,theAngelesspousesaskedforanaccountingfromMercado,and theyclaimthatonlyafterthisdemandforanaccountingdidthydiscoverthat Mercadohadputthecontractofantichresisoverthesubjectlandunder Mercadoandhisspouse’snames MercadodeniedtheAngelesspouses’allegations o Claimedthatthereexistsan industrialpartnership, colloquiallyknownas sosyoindustrial, betweenhimandhisspouseasindustrialpartnersandthe Angelesspousesasfinanciers,andthatthishadexistedsince1991,beforethe contractofantichresisoverthesubjectland Mercadousedhisandhisspouse’searningsaspartofthecapitalinthe o businesstransactionswhichheenteredintoinbehalfoftheAngelesspouses. Itwastheirpracticetoenterintobusinesstransactionswithotherpeople underthenameofMercadobecausetheAngelesspousesdidnotwanttobe identifiedasthefinanciers o AttachedbankreceiptsshowingdepositsinbehalfofEmeritaAngelesand contractsunderhisnamefortheAngelesspouses Duringthebarangayconciliationproceedings,OscarAngelesstatedthatthere wasawritten sosyoindustrial agreement:capitalwouldcomefromtheAngeles spouseswhiletheprofitwouldbedividedevenlybetweenMercadoandthe Angelesspouses ProvincialProsecutionOffice: firstrecommendedthefilingofacriminal informationforestafa,butafterMercadofiledhiscounter-affidavitandmovedfor reconsideration,issuedanamendedresolutiondismissingthecomplaint AngelesspousesappealedtoSec.ofJustice,sayingthatthedocumentevidencing thecontractofantichresisexecutedinthenameoftheMercadospouses,instead oftheAngelesspouses,andthatsuchdocumentaloneprovesMercado’s misappropriationoftheirP210,000 Sec.ofJustice: dismissedtheappeal AngelesspousesfailedtoshowsufficientproofthatMercadodeliberately o deceivedtheminthetransaction o MercadosatisfactorilyexplainedthattheAngelesspousesdonotwanttobe revealedasthefinanciers o Underthecircumstances,itwasmorelikelythattheAngelesspousesknew fromtheverystartthatthequestioneddocumentwasnotreallyintheir names ApartnershiptrulyexistedbetweentheAngelesspousesandMercado,which o wasclearfromthefactthattheycontributedmoneytoacommonfundand dividedtheprofitsamongthemselves. o Angelesspousesacknowledgedtheirjointbusinessventureinthebarangay conciliationproceedingsalthoughtheyassailedthemannerthebusinesswas conducted Althoughthelegalformalitiesfortheformationwerenotadheredto,the o partnershiprelationshipwasevident. Thereisnoestafawheremoneyisdeliveredbyapartnertohisco-partneron o thelatter’srepresentationthattheamountshallbeappliedtothebusinessof theirpartnership.Incaseofthemoneyreceived,theco-partner’sliabilityis civilinnature o
•
•
•
•
•
ISSUES/HELD:
1. 2. 3.
W/NtheSec.ofJusticecommittedgraveabuseofdiscretionindismissing theappeal-No W/NapartnershipexistedbetweenMercadoandtheAngelesspouses-Yes W/NtherewasmisappropriationbyMercado–No
RATIO/RULING:
1.AngelesspousesfailtoconvincethattheSecretaryofJusticecommittedgrave abuseofdiscretionwhenhedismissedtheirappeal.Moreover,theycommitteda proceduralerrorwhentheyfailedtofileamotionforreconsiderationoftheSec.of Justice’sresolution,whichisalreadyenoughreasontodismissthecase. 2.AngelesspousesallegethattheyhadnopartnershipwithMercado,relyingonArts. 1771to1773oftheCivilCode. •
•
•
TheAngelesspouses’positionthatthereisnopartnershipbecauseofthelackofa publicinstrumentindicatingthesameandalackofregistrationwiththeSEC holdsnowater TheAngelesspousescontributedmoneytothepartnershipandnot o immovableproperty o MerefailuretoregisterthecontractofpartnershipwiththeSECdoesnot invalidateacontractthathastheessentialrequisitesofapartnership.The purposeofregistrationistogivenoticetothirdparties. Failuretoregisterdoesnotaffecttheliabilityofthepartnershipandofthe partnerstothirdpersons,nordoesitaffectthepartnership’sjuridicalpersonality TheAngelesspousesadmittofactsthatprovetheexistenceofapartnership o Acontractshowinga sosyoindustrial orindustrialpartnership Contributionofmoney&industrytoacommonfund o DivisionofprofitsbetweentheAngelesspousesandMercado o
3.MercadosatisfactorilyexplainedthattheAngelesspousesdonotwanttobe revealedasthefinanciers,thusthedocumentwhichwasinthenameofMercadoand hisspousefailtoconvincethattherewasdeceitorfalserepresentationthatinduced theAngelesspousestopartwiththeirmoney •
•
EventheRTCofSta.Cruz,Laguna,whichhandledthecivilcasefiledbythe AngelesspousesagainstMercadoandLeoCeraybanstatedthatitwasthe practicetohavethecontractssecuredinMercado’snameastheAngelesspouses fearbeingkidnappedbytheNPAorbeingquestionedbytheBIRasOscarAngeles wasworkingwiththegovernment. Accountingoftheproceedsisnotapropersubjectforthepresentcase.
DISPOSITION: Petitionforcertioraridismissed.DecisionofSec.ofJusticeaffirmed. VOTE:1st Division,allconcur.
15 (DIONNE)||D2014 Thepartnershipwasnotonlyformed,butupontheorganization thereofandthewinningoftheprize,JoseGatchalianpersonally appearedintheofficeofthePhilippinesCharitySweepstakes,in hiscapacityasco-partner,assuchcollectiontheprize,theoffice issuedthecheckforP50,000infavorofJoseGatchalianand company,andthesaidpartner,inthesamecapacity,collectedthe saidcheck. Allthesecircumstancesrepeltheideathattheplaintiffsorganized andformedacommunityofpropertyonly. Havingorganizedandconstitutedapartnershipofacivilnature,thesaid entityistheoneboundtopaytheincometaxwhichthedefendantcollected undertheaforesaidsection10( a)ofActNo.2833,asamendedbysection2 ofActNo.3761. •
D.MUTUALAGENCY E.DISTINGUISHFROM 1.Co-ownership;Co-possession
•
2.Tenancyincommon;jointtenancy 2.
3.JointVentures 4.JointAdventures 5.Jointaccounts
PASCUALv.CIR
6.CuentasenParticipacion
(October18,1988)
7.Agency GATCHALIANv.CIR April29,1939
DOCTRINE: Theremustbeaclearintenttoformapartnership,theexistenceofa juridicalpersonalitydifferentfromtheindividualpartners,andthefreedomofeach partytotransferorassignthewholeproperty.
PONENTE:Imperial,J. FACTS: The15plaintiffareallresidentsofthemunicipalityofPulilan,Bulacan, purchasedonesweepstakesticketvaluedattwopesos(P2),dividedinvarious amountsamongthemselves. thesaidticketwasregisteredinthenameofJoseGatchalianand o Company; o Theticketwon50,000pesos. Plaintiffsubmitted15incometaxreturnsforexemptionfromthe1,499taxon thelotterywinnings,askingthatthetaxbedividedaccordingtotheamountpaid byeachplaintiff; o CIRdeniedtheplaintiff’srequestforexemption,statingthatthe plaintiffsareapartnership; •
NATURE:PetitionforreviewoncertiorariofthedecisionoftheCourtofTaxAppeals (CTA)affirmingthedecisionoftheCommissionerofInternalRevenue. PONENTE:Gancayo, J. FACTS:
PetitionersMarianoPascualandRenatoP.Dragonaresiblings. 1 965 – Bo ught 2 Parc els of Lan d
•
ISSUE: 1. Whethertheplaintiffsformedapartnership,ormerelyacommunityof propertywithoutapersonalityofitsown; Formedapartnershipofacivil nature. 2. Whethertheyshouldpaythetaxcollectivelyorwhetherthelattershould beproratedamongthemandpaidindividually; Collectively. HELD: 1.
Accordingtothestipulationfactstheplaintiffsorganizedapartnershipofa civilnaturebecauseeachofthemputupmoneytobuyasweepstakesticket forthesolepurposeofdividingequallytheprizewhichtheymaywin , astheydidinfactintheamountofP50,000;
1 96 6 – Bo ug ht a no th er 3 P ar ce ls o f La nd 1 96 8 – So ld t he f ir st t o Pa rc el s of L an d 1 970 – So ld t he rem ain in g 3 Parc els. TheyrealizedatotalofP60,000.00profit,andpaidthecorrespondingcapitalgains byavailingofthetaxamnestyintheyears1973–74. BIRCommissionerassessedthatthesiblingsowedP107,101.70forcorporateincome taxbeinganunregisteredpartnership. Petitionersassertthattheyarenotapartnership,butareco-ownerswhohavepaid theircorrespondingcapitalgainsin‘73and‘74. ISSUES:
W/NtheSiblingswereanunregisteredpartnershipwhichwasliabletopay corporatetax?
16 (DIONNE)||D2014 HELD:
NATURE:PetitiontoreviewthedecisionoftheCourtofTaxAppeals
No,theywereco-owners.
PONENTE:Aquino, J.
RATIO/RULING:
FACTS:
TheCTAanchoredtheirrulingonanearliercaseofEvangelista.Whichheldthatthe requisiteforapartnershipisa)anagreementtocontributemoney,propertyor industryinacommonfund,andb)intenttodividetheprofitsamongthecontracting parties.
Foratleast one yearaftertheirreceiptof twoparcelsof landfromtheir father,petitionersresoldsaidlotstotheWalledCitySecuritiesCorporationandOlga Cruz Canda,forwhich theyearnedaprofitofP134,341.88or P33,584 foreach of them.Theytreatedtheprofitasa capitalgainandpaidanincometaxon one-half thereoforofP16,792. One day before the expiration of the five-year prescriptive period, the CommissionerofInternalRevenue,Commissioneractingonthetheorythatthefour petitionershad formedan unregisteredpartnershipor jointventure, required the four petitioners to paycorporate income tax on the total profit of P134,336 in additiontoindividualincometaxontheirsharesthereof,a50%fraudsurchargeand a42%accumulatedinterest.Further,theCommissionerconsideredtheshareofthe profits ofeachpetitionerin thesumofP33,584 asa "taxablein full (not amere capitalgainofwhichistaxable)andrequiredthemtopaydeficiencyincometaxes aggregating P56,707.20 including the 50% fraud surcharge andthe accumulated interest. Thepetitionerscontestedthe assessments.Two Judgesof theTaxCourt sustainedthesame.JudgeRoaquindissented.Hence,theinstantappeal.
Inthepresentcase,thereisnoevidencethatpetitionersenteredintoanagreement tocontributemoney,propertyorindustrytoacommonfundandthattheyintended todividetheprofitsamongthemselves.Commissionermerelyassumedthepresence oftheseelements. Also,theearlierrulingin Evangelista showedthattherewereseveraltransactions, whichshowedthecharacterof habituallypeculiar tobusinesstransactionsengaged inforthepurposeofgainwaspresent. Thecommonownershipofpropertydoesnotinitselfcreateapartnershipbetween theowners,thoughtheymayuseitforpurposeofmakinggains;andtheymay, withoutbecomingpartners,agreeamongthemselvesastothemanagement,anduse ofsuchpropertyandapplicationsoftheproceedstherefrom. Thesharingofreturnsdoesnotinitselfestablishapartnershipwhetherornotthe personssharingthereinhaveajointorcommonrightorinterestintheproperty. Theremustbeaclearintenttoformapartnership,theexistenceofajuridical personalitydifferentfromtheindividualpartners,andthefreedomofeachpartyto transferorassignthewholeproperty. TheremustbeintenttocreateaPARTNERSHIPwithadistinctjuridicalpersonality tothatofthepartners. DISPOSITION: Petitionis GRANTEDdecisionoftheCTAis REVERSED andSET ASIDE VOTE:3rdDivision.Cruz,Grino-Aquino,Medialdea,JJ. Concur
Narvasa,J.Tooknopart OBILLOSv.CIR
(October29,1985) DOCTRINE: The sharing of gross returns does not of itself establish a partnership,whether ornotthe personssharing themhave ajointor commonrightor interest in any property from which the returns are derived. There must be an unmistakableintentiontoformapartnershiporjointventure.
ISSUES: Whether or not petitioners have indeed formed a partnership or joint ventureandthus,liableforcorporateincometax. HELD&RATIO/RULING: Weholdthatitiserrortoconsiderthepetitioners ashavingformedapartnershipunderarticle1767oftheCivilCodesimplybecause they allegedlycontributed P178,708.12to buythe twolots,resold thesameand dividedtheprofitamongthemselves. To regard the petitioners as having formed a taxable unregistered partnershipwouldresult in oppressive taxation andconfirm thedictum that the powertotaxinvolvesthepowertodestroy.Thateventualityshouldbeobviated. AstestifiedbyJoseObillos,Jr.,theyhadnosuchintention.Theywerecoowners pure and simple. To consider them as partners would obliterate the distinctionbetween a co-ownership anda partnership. The petitioners were not engagedinanyjointventurebyreasonofthatisolatedtransaction. Article1769(3)oftheCivilCodeprovidesthat"thesharingofgrossreturns doesnotofitselfestablishapartnership,whetherornotthepersonssharingthem haveajointorcommonrightorinterestinanypropertyfromwhichthereturnsare derived".Theremustbean unmistakableintentiontoforma partnershiporjoint venture. DISPOSITION: WHEREFORE,thejudgmentoftheTaxCourtisreversedandsetaside. Theassessmentsarecancelled.Nocosts.
17 (DIONNE)||D2014 VOTE:2ndDivision. AbadSantos,Escolin,Cuevas,Alampay concur.ConcepcionJr.on leave.
2. 3.
No Yes
RATIO/RULING: RIVERAv.PEOPLE’SBANK
(April7,1942) DOCTRINE: Intheabsenceofclearproofofthecontrary,theSCgivesfullfaithand credittothecertificateofdeposit,whichrecitesineffectthatthefundsinquestion belongedtopersonsAandB;thattheywere jointownersandthateitherofthem couldwithdrawanypartorthewholeofsaidaccountduringthelifetimeofboth,and thebalance,ifany,uponthedeathofeither,belongedtothesurvivor. NATURE: The question raised in this appeal is the validity of the survivorship agreementmadebyandbetweenEdgarStephenson,nowdeceased,andAnaRivera, appellantherein
FirstIssue 1.
2.
PONENTE:Ozaeta,J. FACTS:
AnaRiverawasemployedbyEdgarStephensonashousekeeper.Stephensonopened anaccountinhisnamewiththedefendantPeoplesBank. WhentherewasabalanceofP2,072insaidaccount,thesurvivorshipagreementin questionwasexecutedandthesaidaccountwastransferredtothenameof"Edgar Stephensonand/orAnaRivera."AtthetimeofStephenson'sdeathAnaRiveraheld the depositbook,and therewasa balance insaidaccountof P701.43, whichAna Riveraclaimedbutwhichthebankrefusedtopaytoheruponadviceofitsattorneys whogavetheopinionthatthesurvivorshipagreementwasofdoubtfulvalidity. AnaRiverainstitutedthe present actionagainstthe bank,and MinnieStephenson, administratixoftheestateofthedeceased,intervenedandclaimedtheamountfor theestate,allegingthatthemoneydepositedinsaidaccountwasandistheexclusive propertyofthedeceased. TC:heldthattheagreementinquestion,viewedfromitseffectduringthelivesofthe parties, was a mere power of attorney authorizing Ana Rivera to withdraw the deposit,whichpowerterminateduponthedeathoftheprincipal,EdgarStephenson; butthat,viewedfromitseffectafterthedeathofeitheroftheparties,theagreement wasadonationmortiscausa withreferencetothebalanceremainingatthedeathof oneofthem,which,nothavingbeenexecutedwiththeformalitiesofatestamentary dispositionasrequiredbytheCivilCode,wasofnolegaleffect.
3.
Secondissue: 1.
2.
ISSUES: 1.WONthesurvivorshipagreementwasamerepowerofattorneyfromStephenson toAnaRivera,orthatitisagiftmortiscausaofthebankaccountinquestionfrom himtoher.
2.WONthesurvivorshipagreementisvalid HELD:
TheTC’sconclusionispredicatedontheassumptionthatStephensonwas theexclusiveownerofthefundsdepositedinthebank,whichassumption wasinturnbasedonthefacts(1)thattheaccountwasoriginallyopenedin thename of Stephensonalone and(2) that Ana Rivera "served only as housemaidofthedeceased." Butitnotinfrequentlyhappensthatapersondepositsmoneyinthe bankin thenameof another;andin theinstantcaseit alsoappears thatAna Riveraservedher masterfor aboutnineteenyears without actually receiving her salary from him. The fact that subsequently Stephensontransferredtheaccounttothenameofhimselfand/orAna Rivera andexecuted with thelatter the survivorship agreement in questionalthoughtherewasnorelationofkinshipbetweenthembut only that of master and servant, nullifies the assumption that Stephensonwastheexclusiveownerofthebankaccount. Intheabsenceofclearproofofthecontrary,theSCgivesfullfaithand credittothecertificateofdeposit,whichrecitesineffectthatthefunds inquestionbelongedtoEdgarStephensonandAnaRivera;thatthey werejointownersandthateitherofthemcouldwithdrawanypartor thewholeofsaidaccountduringthelifetimeofboth,andthebalance, ifany,uponthedeathofeither,belongedtothesurvivor.
3.
Primafacie,SCthinksitisvalid. Itisanaleatorycontractsupportedby law a lawful consideration — t he m ut ua l a gr ee me nt o f t he j oi nt depositorspermittingeitherofthemtowithdrawthewholedepositduring theirlifetime,andtransferringthebalancetothesurvivoruponthedeathof oneofthem.ThetrialcourtsaidthattheCivilCode"containsnoprovisions sanctioningsuchanagreement"SCthinksitiscoveredbyarticle1790of theCivilCode. Furthermore, "it is well established that a bank accountmay be so createdthattwo persons shallbe joint ownersthereof duringtheir mutual lives,and the survivortake the whole on the deathof the other.Therighttomakesuchjointdepositshasgenerallybeenheldnotto be done with by statutes abolishing joint tenancy and survivorship generallyastheyexistedatcommonlaw." Although the survivorship agreement ispersenotcontrarytolaw,its operation oreffect maybe violativeof thelaw. For instance,if it be shownin a given case that such agreementis a mere cloak tohide an
18 (DIONNE)||D2014 inofficiousdonation,totransferpropertyinfraudofcreditors,ortodefeat the legitime ofa forcedheir,it may beassailed andannulleduponsuch grounds. Nosuchvicehas been imputedandestablished againstthe agreementinvolvedinthecase. Ø
DISPOSITION: Theagreementappealedfromisreversedandanotherjudgmentwill beenteredinfavoroftheplaintifforderingthedefendantbanktopaytoherthesum ofP701.43,withlegalinterestthereonfromthedateofthecomplaint,andthecosts inbothinstances.Soordered. VOTE:Allconcur
partnership, it mayneverthelessenter intoa jointventure with another where the nature of that venture is in line with the businessauthorizedbyitscharter(Wyoming-IndianaOilGasCo.vs. Weston,80A.L.R.,1043,citing2FletcherCyc.ofCorp.,1082.) Thereis nothingin the recordto indicate that the ventureinwhich plaintiff is represented by Gregorio Araneta, Inc. as "its managing partner"isnotinlinewiththecorporatebusinessofeitherofthem.
HEIRSOFTANGENGKEEv.CA TUASONv.BOLANOS
FACTS:
October3,2000 FACTS: Thecommon-lawspouseandchildrenofTANENGKEE(theplaintiffs)filedsuit againstthedecedent'sbrotherTANENGLAYforaccounting,liquidationand windingupofthe allegedpartnershipformedafterWorldWarIIbetween TanEngKeeandTanEngLay; o AfterthesecondWorldWar,TanEngKeeandTanEngLay,pooling theirresourcesandindustrytogether,enteredintoapartnership engagedinthebusinessofsellinglumberandhardwareand constructionsuppliesnamed"BenguetLumber"whichtheyjointly manageduntilTanEngKee'sdeath. o Petitionersclaimthatin1981,TanEngLayandhischildrencausedthe conversionofthepartnership"BenguetLumber"intoacorporation called"BenguetLumberCompany."Theincorporationwaspurportedly arusetodepriveTanEngKeeandhisheirsoftheirrightful participationintheprofitsofthebusiness. •
ThiswasanactiontorecoverpossesionofregisteredlandsituatedinbarrioTatalon, QuezonCity. Theplaintiffwasrepresentedbyacorporation,thelawfirmAraneta&Araneta. ISSUE :
WONthecaseshouldbedismissedonthegroundthatthecasewasnotbroughtby therealpropertyininterest HELD :
No. Ø
Ø
Ø Ø
There is nothing to the contention that the present action is not broughtbytherealpartyininterest,thatis,byJ.M.TuasonandCo., Inc.WhattheRulesofCourtrequireisthatanactionbebroughtinthe nameof, butnot necessarily by ,the realpartyin interest.(Section 2, Rule2.) The complaint is signed by the law firm of Araneta and Araneta, "counselforplaintiff"andcommenceswiththestatement"comesnow plaintiff,throughitsundersignedcounsel."Itistruethatthecomplaint also states that theplaintiffis "represented hereinby its Managing PartnerGregorioAraneta,Inc.",anothercorporation. There is nothingagainst one corporation being representedby anotherperson,naturalorjuridical,inasuitincourt. ThecontentionthatGregorioAranetaInc.cannotactasmanaging partner for plaintiff on the theory that it is illegal for two corporationstoenterintoapartnershipiswithoutmerit,forthe true rule is that though a corporation has no power into a
RTCgrantedthepetitionerforaccoutinganddeterminedthatTanEngKeeand TanEngLayhadenteredintoajointventure,buttheCAreversedsuchdecision, hencethepresentpetition. ISSUE: WasthereapartnershipbetweenTanEngKeeandTanEngLay? No. HELD: PLAINTIFFSCLAIMTHATbecauseofthepoolingofresources,thepost-war BenguetLumberwaseventuallyestablished.Thatthefatheroftheplaintiffsand Laywerepartners,isobviousfromthefactthat:(1)theyconductedtheaffairsof thebusinessduringKee'slifetime,jointly,(2)theyweretheonesgivingorders totheemployees,(3)theyweretheonespreparingordersfromthesuppliers, (4)theirfamiliesstayedtogetherattheBenguetLumbercompound,and(5)all theirchildrenwereemployedinthebusinessindifferentcapacities. HOWEVER: Thesearenotevidences supportingtheexistenceofa o partnership .Therewasnopartnershipwhatsoever .Exceptfora firmname,therewasnofirmaccount,nofirmletterheadssubmittedas evidence,nocertificateofpartnership,noagreementastoprofitsand •
•
19 (DIONNE)||D2014 losses,andnotimefixedforthedurationofthepartnership.Therewas evennoattempttosubmitanaccountingcorrespondingtotheperiod afterthewaruntilKee'sdeathin1984.Ithadnobusinessbook,no writtenaccountnoranymemorandumforthatmatterandnolicense mentioningtheexistenceofapartnership. Onprofitsearned: TanEngKeewasonlyanemployee,notapartner.Evenifthe payrollsasevidencewerediscarded,petitionerswouldstillbebacktosquareone,so tospeak,sincetheydidnotpresentandofferevidencethatwouldshowthatTanEng Keereceivedamountsofmoneyallegedlyrepresentinghisshareintheprofitsofthe enterprise.Petitionersfailedtoshowhowmuchtheirfather,TanEngKee,received,if any,ashisshareintheprofitsofBenguetLumberCompanyforanyparticularperiod. Hence,theyfailedtoprovethatTanEngKeeandTanEngLayintendedtodividethe profitsofthebusinessbetweenthemselves,whichisoneoftheessentialfeaturesofa partnership.
suchinferenceshallbedrawnifsuchprofitswerereceivedin payment: (a) Asadebtbyinstallmentorotherwise; (b) Aswagesofanemployeeorrenttoalandlord; (c) Asanannuitytoawidoworrepresentativeofadeceased partner; (d) Asinterestonaloan,thoughtheamountofpayment varywiththeprofitsofthebusiness; (e) Astheconsiderationforthesaleofagoodwillofa businessorotherpropertybyinstallmentsorotherwise. DISPOSITIVE: Therebeingnopartnership,itfollowsthatthereisnodissolution, windinguporliquidationtospeakof.Hence,thepetitionmustfail. AURBACHv.SANITARY WARES
(December15,1989)
Onpowertogiveorders: evenameresupervisorinacompany,factoryorstore givesordersanddirectionstohissubordinates.Solong,therefore,thatan employee'spositionishigherinrank,itisnotunusualthatheordersaroundthose lowerinrank.
DOCTRINE: Theruleisthatwhetherthepartiestoaparticularcontracthavethereby establishedamongthemselvesajointventureorsomeotherrelationdependsupon theiractualintentionwhichisdeterminedinaccordancewiththerulesgoverningthe interpretationandconstructionofcontracts.
Onpreparingsupplyorders: evenamessengerorothertrustedemployee,over whomconfidenceisreposedbytheowner,canordermaterialsfromsuppliersfor andinbehalfofBenguetLumber.Furthermore,evenapartnerdoesnotnecessarily havetoperformthisparticulartask.Itis,thus,notanindicationthatTanEngKee wasapartner.
NATURE:Consolidatedpetitionsseekthereviewoftheamendeddecisionofthe CourtofAppealsinCA-G.R.SPNos.05604and05617whichsetasidetheearlier decisiondatedJune5,1986,ofthethenIntermediateAppellateCourt PONENTE:Gutierrez,Jr., J. FACTS:
OnstayinginthepremisesofBenguetLumber: althoughTanEngKee,together withhisfamily,livedinthelumbercompoundandthisprivilegewasnotaccordedto otheremployees,theundisputedfactremainsthat TanEngKeeisthebrotherofTan EngLay .Naturally,closepersonalrelationsexistedbetweenthem.Whatever privilegesTanEngLaygavehisbrother,andwhichwerenotgiventheother employees,onlyprovesthekindnessandgenerosityofTanEngLaytowardsablood relative. •
Indeterminingwhetherapartnershipexists,theserulesshallapply: (1) ExceptasprovidedbyArticle1825,personswhoarenotpartners astoeachotherarenotpartnersastothirdpersons; (2) Co-ownershiporco-possessiondoesnotofitselfestablisha partnership,whethersuchco-ownersorco-possessorsdoordo notshareanyprofitsmadebytheuseoftheproperty; (3) Thesharingofgrossreturnsdoesnotofitselfestablisha partnership,whetherornotthepersonssharingthemhaveajoint orcommonrightorinterestinanypropertywhichthereturnsare derived; (4) Thereceiptbyapersonofashareoftheprofitsofabusinessis a primafacieevidencethatheisapartnerinthebusiness,butno
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In1961,Saniwares,adomesticcorporationwasincorporatedforthe primarypurposeofmanufacturingandmarketingsanitarywares .One oftheincorporators,Mr.BaldwinYoungwentabroadtolookforforeign partners,EuropeanorAmericanwhocouldhelpinitsexpansionplans.On August15,1962,ASI,aforeigncorporationdomiciledinDelaware,United StatesenteredintoanAgreementwithSaniwaresandsomeFilipino investorswherebyASIandtheFilipinoinvestorsagreedtoparticipatein theownershipofanenterprisewhichwouldengageprimarilyinthe businessofmanufacturinginthePhilippinesandsellinghereandabroad vitreouschinaandsanitarywares. Thepartiesagreedthatthebusiness operationsinthePhilippinesshallbecarriedonbyanincorporated enterprise andthatthenameofthecorporationshallinitiallybe"Sanitary WaresManufacturingCorporation."
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3. ArticlesofIncorporation (a)TheArticlesofIncorporationoftheCorporationshallbesubstantiallyin theformannexedheretoasExhibitAand,insofaraspermittedunder Philippinelaw,shallspecificallyprovidefor (1)Cumulativevotingfordirectors: xxxxxxxxx
20 (DIONNE)||D2014 5.Management (a)ThemanagementoftheCorporationshallbevestedinaBoardof Directors,whichshallconsistofnineindividuals.AslongasAmericanStandardshallownatleast30%oftheoutstandingstockofthe Corporation,threeoftheninedirectorsshallbedesignatedbyAmericanStandard,andtheothersixshallbedesignatedbytheotherstockholdersof theCorporation.
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Theagreementcontainedprovisionsdesignedtoprotectitasa minoritygroup ,includingthegrantofvetopowersoveranumberof corporateactsandtherighttodesignatecertainofficers,suchasamember oftheExecutiveCommitteewhosevotewasrequiredforimportant corporatetransactions. ThejointenterprisethusenteredintobytheFilipinoinvestorsandthe Americancorporationprospered. Unfortunately,withthebusiness successes,therecameadeteriorationoftheinitiallyharmonious relationsbetweenthetwogroups.AccordingtotheFilipinogroup,a basicdisagreementwasduetotheirdesiretoexpandtheexport operationsofthecompanytowhichASIobjectedasitapparentlyhad othersubsidiariesofjointjointventuregroupsinthecountrieswhere Philippineexportswerecontemplated .OnMarch8,1983,theannual stockholders'meetingwasheld . TheASIgroupnominatedthreepersonsnamely;WolfgangAurbach,John GriffinandDavidP.Whittingham.ThePhilippineinvestorsnominatedsix, namely;ErnestoLagdameo,Sr.,RaulA.Boncan,ErnestoR.Lagdameo,Jr., GeorgeF.Lee,andBaldwinYoung.Mr.EduardoR,Cenizathennominated Mr.LucianoE.Salazar,whointurnnominatedMr.CharlesChamsay.The chairman,BaldwinYoungruledthelasttwonominationsoutoforderon thebasisofsection5(a)oftheAgreement,theconsistentpracticeofthe partiesduringthepastannualstockholders'meetingstonominateonly ninepersonsasnomineesforthenine-memberboardofdirectors,andthe legaladviceofSaniwares'legalcounsel. TherewereprotestsagainsttheactionoftheChairmanandheated argumentsensued.AnappealwasmadebytheASIrepresentativetothe bodyofstockholderspresentthatavotebetakenontherulingofthe Chairman.Aseriesofeventsthenensuedthatculminatedintheeventual adjournmentofthemeetingandwheretheASIGroup,LucianoE.Salazar andotherstockholders,allegedlyrepresenting53or54%ofthesharesof Saniwares,decidedtocontinuethemeetingattheelevatorlobbyofthe AmericanStandardBuilding.Thecontinuedmeetingwaspresidedby LucianoE.Salazar,whileAndresGatmaitanactedasSecretary.Onthebasis ofthecumulativevotescastearlierinthemeeting,theASIGroup nominateditsfournominees;WolfgangAurbach,JohnGriffin,David WhittinghamandCharlesChamsay.LucianoE.Salazarvotedforhimself, thusthesaidfivedirectorswerecertifiedaselecteddirectorsbytheActing Secretary,AndresGatmaitan,withtheexplanationthattherewasatie
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amongtheothersix(6)nomineesforthefour(4)remainingpositionsof directorsandthatthebodydecidednottobreakthetie. Theseincidentstriggeredoffthefilingofseparatepetitionsbythe partieswiththeSecuritiesandExchangeCommission(SEC). Thetwo petitionswereconsolidatedandtriedjointlybyahearingofficerwho renderedadecisionupholdingtheelectionoftheLagdameoGroup anddismissingthequowarrantopetitionofSalazarandChamsay.The ASIGroupandSa lazarappealed thedecisiontotheSECenbancwhich affirmedthehearingofficer'sdecision. TheSECdecisionledtothefilingoftwoseparateappealswiththe IntermediateAppellateCourtbyWolfgangAurbach,JohnGriffin,David WhittinghamandCharlesChamsay(docketedasAC-G.R.SPNo.05604)and byLucianoE.Salazar(docketedasAC-G.R.SPNo.05617).Thepetitions wereconsolidatedandtheappellatecourtinitsdecisionorderedthe remandofthecasetotheSecuritiesandExchangeCommissionwiththe directivethatanewstockholders'meetingofSaniwaresbeordered convokedassoonaspossible,underthesupervisionoftheCommission. Uponamotionforreconsiderationfiledbytheappellees(Lagdameo Group)theappellatecourt(CourtofAppeals)renderedthe questionedamendeddecision. PetitionersWolfgangAurbach,John Griffin,DavidP.WhittinghamandCharlesChamsayinG.R.No.75875assign thefollowingerrors: I.THECOURTOFAPPEALS,INEFFECT,UPHELDTHEALLEGEDELECTION OFPRIVATERESPONDENTSASMEMBERSOFTHEBOARDOFDIRECTORS OFSANIWARESWHENINFACTTHEREWASNOELECTIONATALL. II.THECOURTOFAPPEALSPROHIBITSTHESTOCKHOLDERSFROM EXERCISINGTHEIRFULLVOTINGRIGHTSREPRESENTEDBYTHE NUMBEROFSHARESINSANIWARES,THUSDEPRIVINGPETITIONERSAND THECORPORATIONTHEYREPRESENTOFTHEIRPROPERTYRIGHTS WITHOUTDUEPROCESSOFLAW. PetitionerLucianoE.SalazarinG.R.Nos.75975-76assailstheamended decisiononthefollowinggrounds: 11.1.ThatAmendedDecisionwouldsanctiontheCA'sdisregardofbinding contractualagreementsenteredintobystockholdersandthereplacement oftheconditionsofsuchagreementswithtermsnevercontemplatedbythe stockholdersbutmerelydictatedbytheCA. 11.2.TheAmendeddecisionwouldlikewisesanctionthedeprivationofthe propertyrightsofstockholderswithoutdueprocessoflawinorderthata favoredgroupofstockholdersmaybeillegallybenefittedandguaranteeda continuingmonopolyofthecontrolofacorporation.(pp.14-15,Rollo75975-76) Ontheotherhand,thepetitionersinG.R.No.75951contendthat: THEAMENDEDDECISIONOFTHERESPONDENTCOURT,WHILE RECOGNIZINGTHATTHESTOCKHOLDERSOFSANIWARESAREDIVIDED INTOTWOBLOCKS,FAILSTOFULLYENFORCETHEBASICINTENTOFTHE AGREEMENTANDTHELAW.
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THEAMENDEDDECISIONDOESNOTCATEGORICALLYRULETHAT PRIVATEPETITIONERSHEREINWERETHEDULYELECTEDDIRECTORS DURINGTHE8MARCH1983ANNUALSTOCKHOLDERSMEETINGOF SANTWARES.(P.24,Rollo-75951)
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ISSUES:
ThemainissuehingesonwhowerethedulyelecteddirectorsofSaniwaresforthe year1983duringitsannualstockholders'meetingheldonMarch8,1983.Toanswer thisquestionthefollowingfactorsshouldbedetermined: (1)thenatureofthe businessestablishedbythepartieswhetheritwasajointventureora corporationand (2)whetherornottheASIGroupmayvotetheiradditional10% equityduringelectionsofSaniwares'boardofdirectors.
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HELD: Intheinstantcases,ourexaminationofimportantprovisionsoftheAgreement aswellasthetestimonialevidencepresentedbytheLagdameoandYoung Groupshowsthatthepartiesagreedtoestablishajointventureandnota corporation.
RATIO/RULING:
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Therearetwogroupsinthiscase,theLagdameogroupcomposedof FilipinoinvestorsandtheAmericanStandardInc.composedofforeign investors.TheASIGroupandpetitionerSalazarcontendthattheactual intentionofthepartiesshouldbeviewedstrictlyonthe“Agreement”dated August15,1962whereinitstatedtheparties’intentionwastoforma corporationandnotajointventure. TheASIGroupandpetitionerSalazar(G.R.Nos.75975-76)contendthatthe actualintentionofthepartiesshouldbeviewedstrictlyonthe"Agreement" datedAugust15,1962whereinitisclearlystatedthattheparties'intention wastoformacorporationandnotajointventure. Theyspecificallymentionnumber16under MiscellaneousProvisions which states: xxxxxxxxx c)nothinghereincontainedshallbeconstruedtoconstituteanyofthe partiesheretopartnersorjointventurersinrespectofanytransaction hereunder.(AtP.66,Rollo-GRNo.75875) Theyobjecttotheadmissionofotherevidencewhichtendstoshowthat theparties'agreementwastoestablishajointventurepresentedbythe LagdameoandYoungGrouponthegroundthatitcontravenestheparol evidenceruleundersection7,Rule130oftheRevisedRulesofCourt. Intheinstantcases,ourexaminationofimportantprovisionsofthe Agreementasw ellasthetestim onialevidencepresented bythe LagdameoandYoungGroupshowsthatthepartiesagreedtoestablish ajointventureandnotacorporation. Thehistoryoftheorganizationof Saniwaresandtheunusualarrangementswhichgovernitspolicymaking
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bodyareallconsistentwithajointventureandnotwithanordinary corporation.AsstatedbytheSEC: AccordingtotheunrebuttedtestimonyofMr.BaldwinYoung,henegotiated theAgreementwithASIinbehalfofthePhilippinenationals.Hetestified thatASIagreedtoaccepttheroleofminorityvis-a-visthePhilippine Nationalgroupofinvestors,ontheconditionthattheAgreementshould containprovisionstoprotectASIastheminority. Anexaminationofthe Agreementshow sthatcertainp rovisionswere includedtoprotecttheinterestsofASIastheminority. Forexample,the voteof7outof9directorsisrequiredincertainenumeratedcorporateacts. ASIiscontractuallyentitledtodesignateamemberoftheExecutive Committeeandthevoteofthismemberisrequiredforcertaintransactions. TheAgreementalsorequiresa75%super-majorityvoteforthe amendmentofthearticlesandby-lawsofSaniwares.ASIisalsogiventhe righttodesignatethepresidentandplantmanager.TheAgreementfurther providesthatthesalespolicyofSaniwaresshallbethatwhichisnormally followedbyASIandthatSaniwaresshouldnotexport"Standard"products otherwisethanthroughASI'sExportMarketingServices.Underthe Agreement,ASIagreedtoprovidetechnologyandknow-howtoSaniwares andthelatterpaidroyaltiesforthesame. ItispertinenttonotethattheprovisionsoftheAgreementrequiringa7out of9votesoftheboardofdirectorsforcertainactions,ineffectgaveASI (whichdesignates3directorsundertheAgreement)aneffectiveveto power.Furthermore,thegranttoASIoftherighttodesignatecertain officersofthecorporation;thesuper-majorityvotingrequirementsfor amendmentsofthearticlesandby-laws;andmostsignificantlytotheissues oftmscase,theprovisionthatASIshalldesignate3outofthe9directors andtheotherstockholdersshalldesignatetheother6,clearlyindicatethat therearetwodistinctgroupsinSaniwares,namelyASI,whichowns40%of thecapitalstockandthePhilippineNationalstockholderswhoownthe balanceof60%,andthat2)ASIisgivencertainprotectionsastheminority stockholder. Premisesconsidered,webelievethatundertheAgreementtherearetwo groupsofstockholderswhoestablishedacorporationwithprovisionsfora specialcontractualrelationshipbetweentheparties,i.e.,ASIandtheother stockholders.(pp.4-5) Section5(a)ofthe agreementusestheword"designated"andnot "nominated"or"elected"intheselectionoftheninedirectorsonasix tothreeratio.Eachgroupisassuredofafixednumberofdirectors in theboard. Moreover, ASIinitscommunicati onsreferredtoth eenterpriseas joint venture. BaldwinYoungalsotestifiedthatSection16(c)oftheAgreement that"Nothinghereincontainedshallbeconstruedtoconstituteanyofthe partiesheretopartnersorjointventurersinrespectofanytransaction hereunder"wasmerelytoobviatethepossibilityoftheenterprisebeing treatedaspartnershipfortaxpurposesandliabilitiestothirdparties. Quiteoften,Filipinoentrepreneursintheirdesiretodevelopthe industrialandmanufacturingcapacitiesofalocalfirmareconstrained
22 (DIONNE)||D2014
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toseekthetechnologyandmarketingassistanceofhugemultinational corporationsofthedevelopedworld. Arrangementsareformalized whereaforeigngroupbecomesaminorityownerofafirminexchangefor itsmanufacturingexpertise,useofitsbrandnames,andothersuch assistance.However,thereisalwaysadangerfromsucharrangements.The foreigngroupmay,fromthestart,intendtoestablishitsownsoleor monopolisticoperationsandmerelyusesthejointventurearrangementto gainafootholdortestthePhilippinewaters,sotospeak.Orthe covetousnessmaycomelater.AsthePhilippinefirmenlargesitsoperations andbecomesprofitable,theforeigngroupunderminesthelocalmajority ownershipandactivelytriestocompletelyorpredominantlytakeoverthe entirecompany. Thisunderminingofjointventuresisnotconsistent withfairdealingtosaytheleast.Totheextentthatsuchsubversive actionscanbelawfullyprevented,thecourtsshouldextendprotection especiallyinindustrieswhereconstitutionalandlegalrequirements reservecontrollingownershiptoFilipinocitizens. TheLagdameoGroupstatedintheirappellees'briefintheCourtofAppeal: Infact, thePhilippineCorporationCodeitselfrecognizestherightof stockholderstoenterintoagreementsregardingtheexerciseoftheir votingrights .
Sec.100.Agreementsbystockholders.- xxxxxxxxx 2.Anagreementbetweentwoormorestockholders,ifinwritingandsigned bythepartiesthereto,mayprovidethatinexercisinganyvotingrights,the sharesheldbythemshallbevotedasthereinprovided,orastheymay agree,orasdeterminedinaccordancewithaprocedureagreeduponby them. AppellantscontendthattheaboveprovisionisincludedintheCorporation Code'schapteronclosecorporationsandSaniwarescannotbeaclose corporationbecauseithas95stockholders.Firstly,althoughSaniwareshad 95stockholdersatthetimeofthedisputedstockholdersmeeting,these95 stockholdersarenotseparatefromeachotherbutaredivisibleintogroups representingasingleIdentifiableinterest.Forexample,ASI,itsnominees andlawyerscountfor13ofthe95stockholders.TheYoungYutivofamily countforanother13stockholders,theChamsayfamilyfor8stockholders, theSantosfamilyfor9stockholders,theDyfamilyfor7stockholders,etc.If themembersofonefamilyand/orbusinessorinterestgroupare consideredasone(which,itisrespectfullysubmitted,theyshouldbefor purposesofdetermininghowcloselyheldSaniwaresistherewereasof8 March1983,practicallyonly17stockholdersofSaniwares.(Pleasereferto discussioninpp.5to6ofappellees'RejoinderMemorandumdated11 December1984andAnnex"A"thereof).
Secondly,evenassumingthatSaniwaresistechnicallynotaclose corporationbecauseithasmorethan20stockholders,theundeniablefact isthatitisa close-held corporation.Surely,appellantscannothonestlyclaim thatSaniwaresisapublicissueorawidelyheldcorporation.
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Ascorrectlyheld bytheSECHearing Officer: Itissaidthatparticipantsinajointventure,inorganizingthejoint venturedeviatefromthetraditionalpatternofcorporation management.Anotedauthorityhaspointedoutthatjustasinclose corporations,shareholders'agreementsinjointventurecorporations oftencontainprovisionswhichdooneormoreofthefollowing :(1) requiregreaterthanmajorityvoteforshareholderanddirectoraction;(2) givecertainshareholdersorgroupsofshareholderspowertoselecta specifiednumberofdirectors;(3)givetotheshareholderscontroloverthe selectionandretentionofemployees;and(4)setupaprocedureforthe settlementofdisputesbyarbitration. Thirdlyparagraph2ofSec.100oftheCorporationCodedoesnot necessarilyimplythatagreementsregardingtheexerciseofvotingrights areallowedonlyinclosecorporations.AsCamposandLopez-Campos explain: Paragraph2referstopoolingandvotingagreementsinparticular. Itis submittedthatthereisnoreasonfordenyingstockholdersof corporationsotherthancloseonestherighttoenterintonotvotingor poolingagreementstoprotecttheirinterests,aslongastheydonot intendtocommitanywrong,orfraudontheotherstockholdersnot partiestotheagreement. Ofcourse,votingorpoolingagreementsare perhapsmoreusefulandmoreoftenresortedtoinclosecorporations.But theymayalsobefoundnecessaryeveninwidelyheldcorporations. Moreover,sincetheCodelimitsthelegalmeaningofclosecorporationsto thosewhichcomplywiththerequisiteslaiddownbysection96,itis entirelypossiblethatacorporationwhichisinfactaclosecorporationwill notcomewithinthedefinition.Insuchcase,itsstockholdersshouldnotbe precludedfromenteringintocontractslikevotingagreementsiftheseare otherwisevalid. Inshort,evenassumingthatsec.5(a)oftheAgreement relatingtothedesignationornominationofdirectorsrestrictsthe rightoftheAgreement'ssignatoriestovotefordirectors,such contractualprovision,ascorrectlyheldbytheSEC,isvalidandbinding uponthesignatoriesthereto,whichincludeappellants.
DISPOSITION: WHEREFORE,thepetitionsinG.R.Nos.75975-76andG.R.No.75875areDISMISSED andthepetitioninG.R.No.75951ispartlyGRANTED.Theamendeddecisionofthe CourtofAppealsisMODIFIEDinthatMessrs.WolfgangAurbachJohnGriffin,David WhittinghamEmestoV.Lagdameo,BaldwinYoung,RaulA.Boncan,ErnestoR. Lagdameo,Jr.,EnriqueLagdameo,andGeorgeF.Leearedeclaredasthedulyelected directorsofSaniwaresattheMarch8,1983annualstockholders'meeting.Inallother
23 (DIONNE)||D2014 respects,thequestioneddecisionisAFFIRMED.CostsagainstthepetitionersinG.R. Nos.75975-76andG.R.No.75875.SOORDERED.
Thesupposedcontractisvoid,forbeingcontrarytoArticles1771,1772,and1773of theCivilCode.
VOTE:3rdDivision. Fernan,C.J.,(Chairman),BidinandCortes,JJ.,concur.Feliciano,J., tooknopart. CONCURRING/DISSENTINGOPINION:None. ADDITIONALNOT ES:Sorrymahabaatmagulo.Essentiallyjustreadthedoctrine andtheunderlinedportionssaratio.Yungdoctrinelangnamanangimportante,the restofthediscussionsshowtheHOWandWHYofthedoctrinenajointventurenga yungintent.
Thememorandum,onitsface,containstypewrittenentries,personalintone,butis unsignedandundated.Asanunsigneddocument,therecanbenoquibblingthat 1)Thememorandumdoesnotmeetthepublicinstrumentation requirementsexactedunderArticle1771oftheCivilCode. 2)Moreover,beingunsignedanddoubtlessreferringtoapartnership involvingmorethanP3,000.00inmoneyorproperty,The Memorandumcannotbepresentedfornotarization,letaloneregistered withtheSecuritiesandExchangeCommission(SEC),ascalledforunderthe Article1772oftheCode.
LITONJUAv.LITONJUA
(Dec13,2005) DOCTRINE:
APartnershipmustbeinapublicdocumentif: 1)
2)
3)Andinasmuchastheinventoryrequirementunderthesucceeding Article1773goesintothematterofvaliditywhenimmovablepropertyis contributedtothepartnership,thenextlogicalpointofinquiryturnsonthe natureofpetitioner’scontribution,ifany,tothesupposedpartnership.
ImmoveablePropertyandRealRightscontributedtoit. a. Ifitinvolvesimmoveableproperty,inventoryofsuchisneeded signedbythepartners.(elseVOID) ItinvolvescapitalP3,000(mustbefiledintheSEC)
NATURE: Petitionforreviewoncertiorari PONENTE:Garcia, J. FACTS:
Aurelio(Petitioner)andEduardoLitonjuaarebrothers. AurelioallegesthathehadapartnershipwithhisbrotherEduardoevidencedbya privatememorandum(unsigned)executedbyEduardowhichsaidhewasgiving 10%oftheequityor1millionpesos,andthattheywouldworktogetherin maintainingthefamilybusiness. AthirdpersonYangwasalsoallegedtobeamemberinthejointventureand partnership. HereAureliofilesforanactionofSpecificPerformanceagainsthispartners,to renderanaccountingandgivehimhisshareoftheprofits. ISSUES: W/NthereisaValidPartnership? HELD: No,thecontractwasvoidoratmostunenforceable. RATIO/RULING:
Thesupposedcontractofpartnershipwasevidencedbyaprivatememorandum (unsigned),inwhichEduardoexpressedhisdesiretotrainhisbrother,and promisinghima10%shareor1millionpesos.
Petitioner,thengoesontoallegethat,assumingarguendo,thatthecontractwasnot oneofpartnershipthatthesameactuallyestablishedaninnominatecontractand wasasourceofactionablerights. Courtruledevenasainnominatecontract,itwouldbevoidasinviolationofthe statuteoffrauds.(Beingit’sperformancewastobedone1yearafterperfectionof thecontract.) DISPOSITION: Petitionis DENIED rulingoftheCA AFFIRMED VOTE:1st Division. Panganiban,Sandoval-Gutierrez,Corona,Carpio-Morales concur BOURNSv.CARMAN (December4,1906 ) FRANKS.BOURNS,Plaintiff-Appellee,vs.D.M.CARMAN,ETAL.,DefendantsAppellants. DOCTRINE: Apartnership,theexistenceofwhichwasonlyknowntothosewhohadaninterestin thesame,beingnomutualagreementsbetweenthepartnersandwithoutacorporate nameindicatingtothepublicinsomewaythattherewereotherpeoplebesidesthe onewhoostensiblymanagedandconductedthebusiness,isexactlytheaccidental partnershipofcuentasenparticipaciondefinedinarticle239oftheCodeof Commerce. Thosewhocontractwiththepersonunderwhosenamethebusinessof suchpartnershipofcuentasenparticipacionisconducted,shallhaveonlya •
24 (DIONNE)||D2014 rightofactionagainstsuchpersonandnotagainsttheotherpersons interested,andthelatter,ontheotherhand,shallhavenorightofaction againstthethirdpersonwhocontractedwiththemanagerunlesssuch managerformallytransfershisrighttothem.(Art242ofthecodeOf Commerce.)Itfollows,thereforethattheplaintiffhasnorighttodemand fromtheappellantsthepaymentoftheamountclaimedinthecomplaint,as Lo-Chim-Limwastheonlyonewhocontractedwithhim.
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NATURE: AppealfromajudgmentoftheCFI PONENTE:MAPA,J.: FACTS: •
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Thosewhocontractwiththepersonunderwhosenamethebusinessof suchpartnershipofcuentasenparticipacionisconducted,shallhaveonlya rightofactionagainstsuchpersonandnotagainsttheotherpersons interested,andthelatter,ontheotherhand,shallhavenorightofaction againstthethirdpersonwhocontractedwiththemanagerunlesssuch managerformallytransfershisrighttothem.(Art242ofthecodeOf Commerce.)Itfollows,thereforethattheplaintiffhasnorighttodemand fromtheappellantsthepaymentoftheamountclaimedinthecomplaint,as Lo-Chim-Limwastheonlyonewhocontractedwithhim.
RATIO/RULING: ItseemsthattheallegedpartnershipbetweenLo-Chim-Limandthe appellantswasformedbyverbalagreementonly.Atleastthereisno evidencetendingtoshowthatthesaidagreementwasreducedtowriting, orthatitwaseverrecordedinapublicinstrument. Moreover,thatpartnershiphadnocorporatename.Theplaintiffhimself allegesinhiscomplaintthatthepartnershipwasengagedinbusinessunder thenameandstyleofLo-Chim-Limonly,whichaccordingtotheevidence wasthenameofoneofthedefendants. Ontheotherhand,itdoesnotappearthattherewasanymutual agreement,betweentheparties,andiftherewereany,ithasnotbeen shownwhattheagreementwas.Asfarastheevidenceshowsitseemsthat thebusinesswasconductedbyLo-Chim-Liminhisownname,althoughhe gavetotheappellantsasharewashasbeenshownwithcertainty. o ThecontractsmadewiththeplaintiffweremadebyLo-Chim-Lim individuallyinhisownname,andthereisnoevidencethatthe partnershipovercontractedinanyotherform. Undersuchcircumstanceswefindnothinguponwhichtoconsiderthis partnershipotherthanasapartnershipofcuentasenparticipacion.Itmay bethat,asamatteroffact,itissomethingdifferent,butasimplebusiness conductedbyLo-Chim-Limexclusively,inhisownname,thenamesofother personsinterestedintheprofitsandlossesofthebusinessnowhere appearing. Apartnershipconstitutedinsuchamanner,theexistenceofwhichwasonly knowntothosewhohadaninterestinthesame,beingnomutual agreementsbetweenthepartnersandwithoutacorporatenameindicating tothepublicinsomewaythattherewereotherpeoplebesidestheonewho ostensiblymanagedandconductedthebusiness,isexactlytheaccidental partnershipofcuentasenparticipaciondefinedinarticle239oftheCodeof Commerce. •
Theplaintiffinthisactionseekstorecoverthesumof$437.50,balancedue onacontractforthesawingoflumberforthelumberyardofLo-Chim-Lim. ThecontractrelatingtothesaidworkwasenteredintobythesaidLoChim-Lim,actingasinhisownnamewiththeplaintiff,anditappearsthat thesaidLo-Chim-Limpersonallyagreedtopayfortheworkhimself. Theplaintiff,however,hasbroughtthisactionagainstLo-Chim-Limandhis codefendantsjointly,allegingthat, o atthetimethecontractwasmade,theywerethejointproprietors andoperatorsofthesaidlumberyardengagedinthepurchase andsaleoflumberunderthenameandstyleofLo-Chim-Lim. o thattheotherdefendantswerethepartnersofLo-Chim-Liminthe saidlumber-yardbusiness. ThecourtbelowdismissedtheactionastothedefendantsD.M.Carman andFulgencioTan-Tongcoonthegroundthattheywerenotthepartnersof Lo-Chim-Lim,VicentePalancaandGo-Taucoonlyexceptedtothesaid judgment,movedforanewtrial,andhavebroughtthecasetothiscourtby billofexceptions. Theevidenceofrecordshows,accordingtothejudgmentofthecourt,"That Lo-Chim-LimhadacertainlumberyardinCalleLemeryofthecityof Manila,andthathewasthemanagerofthesame,havingorderedthe plaintifftodosomeworkforhimathissawmillinthecityofManila;and thatVicentePalancawashispartner,andhadaninterestinthesaid businessaswellasintheprofitsandlossesthereof...,"andthatGo-Tuaco receivedpartoftheearningsofthelumberyardinthemanagementof whichhewasinterested. CFI:"Lo-Chim-Lim,VicentePalanca,Go-TuacohadalumberyardinCalle LemmeryofthecityofManilaintheyear1904,andparticipatedinthe profitsandlossesofbusinessandthatLo-Chim-Limwasmanagingpartner ofthesaidlumberyard."Inotherwords,coparticipantswiththesaidLoChim-Liminthebusinessinquestion.
ISSUES: Whatisthereallegalnatureoftheparticipationwhichtheappellantshadin Lo-Chim-Lim'slumberyardandconsequentlytheirliabilitytowardtheplaintiff? HELD: Thepartnershipisapartnershipofcuentasenparticipacion.
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DISPOSITION: Thejudgmentappealedfromthisherebyreversedandtheappellants areabsolvedofthecomplaintwithoutexpressprovisionsastothecostsofboth instances. VOTE:ENBANC;Arellano,C.J.,Torres,Johnson,Carson,WillardandTracey,JJ., concur SEVILLAv.CA
25 (DIONNE)||D2014 (April16,1988) DOCTRINE:Ajointventure,includingapartnership,presupposesgenerallya ofstandingbetweenthejointco-venturersorpartners,inwhicheachpartyhas anequalproprietaryinterestinthecapitalorpropertycontributedandwhere eachpartyexercisesequalrightsintheconductofthebusiness .
ISSUES:WONtherewasapartnershipbetweenTouristWorldServiceandLina Sevilla HELD:NO RATIO/RULING: 1.
NATURE: Appealbycertiorari PONENTE:Sarmiento,J. FACTS: 1.
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5.
OnthestrengthofacontractenteredintobyandbetweenMrs.Segundina Noguera and the Tourist World Service, Inc., represented by Mr. Eliseo Canilao, theTourist WorldService,Inc. leased thepremises belonging to NogueraatMabiniSt.,Manilafortheformer’suseasabranchoffice.When the branchofficewas opened,thesamewasrunby thehereinappellant LinaSevilla. The TouristWorldService,Inc.appearsto havebeeninformedthatLina Sevillawasconnectedwitharivalfirm,thePhilippineTravelBureau,and, since the branch office was anyhow losing, the Tourist World Service consideredclosingdownitsoffice.Thiswasfirmedupbytworesolutionsof theboardofdirectorsofTouristWorldService,Inc.thefirstabolishingthe officeofthemanagerandvice-presidentoftheTouristWorldService,Inc., Ermita Branch, and the second, authorizing the corporate secretary to receivethepropertiesoftheTouristWorldServicethenlocatedatthesaid branchoffice.TocomplywiththemandateoftheTouristWorldService,the corporate secretary GabinoCanilao went over to the branch office,and, findingthe premises locked,and, beingunable tocontact LinaSevilla,he padlocked the premises on June 4, 1962 to protectthe interests of the TouristWorldService. When neither theappellant Lina Sevilla noranyof her employeescould enter the locked premises, a c om pla in t w as f il ed b y t he h er ei n appellants against the appellees with a prayer for the issuance of mandatory preliminary injunction. Both appellees answered with counterclaims. Forapparent lack ofinterest of theparties therein, the trialcourtorderedthedismissalofthecasewithoutprejudice. The appellee Segundina Noguera sought reconsideration of the order dismissinghercounterclaimwhichthecourtaquo,inanorderdatedJune 8, 1963, granted permitting her to present evidence in support of her counterclaim. AppellantLinaSevillarefiledhercaseagainstthehereinappelleesandafter theissueswerejoined,thereinstatedcounterclaimofSegundinaNoguera and the new complaint of appellant Lina Sevilla were jointly heard followingwhichthecourtaquoorderedbothcasesdismissforlackofmerit
2.
3.
4.
5.
TheCourtisaskedtodeclarethetruenatureoftherelationbetweenLina Sevilla andTourist WorldService,Inc. TherespondentCourt ofsee fitto ruleonthequestion,thecrucialissue,initsopinionbeing"whetherornot thepadlockingofthepremisesbytheTouristWorldService,Inc.without theknowledgeandconsentoftheappellantLinaSevillaentitledthelatter tothereliefofdamagesprayedforand whetherornottheevidencefor the saidappellantsupports the contentionthat the appellee Tourist World Service, Inc. unilaterally and without the consent of the appellantdisconnectedthetelephonelinesoftheErmitabranchoffice oftheappelleeTouristWorldService,Inc. Tourist World Service, Inc., insists, on the other hand, that Lina SEVILLAwasamereemployee,being"branchmanager"ofitsErmita "branch" office and that inferentially, she had no say on the lease executedwiththeprivaterespondent,SegundinaNoguera. Thepetitionerscontend,however,thatrelationbetweenthebetween partieswasoneofjointventure ,butconcedethat "whatevermighthave been the true relationship between Sevilla and Tourist World Service," the RuleofLawenjoinedTouristWorldServiceandCanilaofromtakingthelaw intotheirownhands, inreferencetothepadlockingnowquestioned. TheCourtfindstheresolutionof the issuematerial,for if,astheprivate respondent, Tourist World Service, Inc., maintains, that the relation betweenthe parties wasin thecharacterof employer andemployee,the courtswouldhavebeenwithoutjurisdictiontotrythecase,labordisputes beingthe exclusivedomain of theCourt ofIndustrialRelations,later,the BureauOfLaborRelations,pursuanttostatutestheninforce. Therecordswillshowthatthepetitioner,LinaSevilla,wasnotsubject tocontrolbytheprivaterespondentTouristWorldService,Inc.,either asto the resultof theenterprise oras tothe meansusedin connection therewith. a. Inthefirstplace,underthecontractofleasecoveringtheTourist WorldsErmitaoffice,shehadboundherselfinsolidum asandfor rentalpayments, anarrangementthatwould belikeclaimsof a master-servant relationship. True the respondent Court would later minimize her participation in the lease as one of mere guaranty,thatdoesnotmakeheranemployeeofTouristWorld, sinceinanycase,atrueemployeecannotbemadetopartwithhis ownmoneyinpursuanceofhisemployer'sbusiness,orotherwise, assumeany liabilitythereof. In that event,the parties must be boundbysomeotherrelation,butcertainlynotemployment. b. Inthesecondplace,andasfoundbytheAppellateCourt,'[w]hen thebranch officewas opened, thesamewas runby the herein
26 (DIONNE)||D2014 appellantLinaO.SevillapayabletoTouristWorldService,Inc.by anyairlineforanyfarebroughtinontheeffortofMrs.LinaSevilla. Under these circumstances, it cannot be said that Sevilla was underthecontrolofTouristWorldService,Inc."astothemeans used."Sevillain pursuing thebusiness, obviouslyrelied on her owngiftsandcapabilities. 6. ItisfurtheradmittedthatSevillawasnotinthecompany'spayroll.For herefforts,sheretained4%incommissionsfromairlinebookings,the remaining3%goingtoTouristWorld.Unlikeanemployeethen,who earnsa fixedsalaryusually, sheearned compensationin fluctuating amountsdependingonherbookingsuccesses . 7. ThefactthatSevillahadbeendesignated'branchmanager"doesnotmake herTouristWorld'semployee.Aswesaid, employmentisdeterminedby theright-of-controltestandcertaineconomicparameters. 8. InrejectingTouristWorldService,Inc.'sargumentshowever,weare not, asa consequence,acceptingLinaSevilla'sown,that is,thatthe partieshadembarkedonajointventureorotherwise,apartnership. Andappar ently,Sevilla herselfdid not recognizeth eexistence ofsuch a relation. In her letterof November28, 1961, sheexpressly 'concedes your [Tourist World Service, Inc.'s] right to stop the operation of your branchofficeineffect,acceptingTouristWorldService,Inc.'scontrolover themannerinwhichthebusinesswasrun. A joint venture, including a partnership,presupposesgenerallyaofstandingbetweenthejointcoventurers orpartners,in whicheach partyhas anequal proprietary interestinthecapitalorpropertycontributedandwhereeachparty exercisesequalrightsintheconductofthebusiness . 9. Furthermore, thepartiesdidnotholdthemselvesoutaspartners,and the building itself was embellished with the electric sign "Tourist WorldService,Inc.inlieuofadistinctpartnershipname. 10. Itis the Court's consideredopinion, when the petitioner, Lina Sevilla, agreed to (wo)man the private respondent, Tourist World Service, Inc.'sErmitaoffice,shemusthavedonesopursuant toacontractof agency .Itistheessenceofthiscontractthattheagentrendersservices"in representationoronbehalfofanother. Inthecaseatbar,Sevillasolicited airlinefares,butshedidsoforandonbehalfofherprincipal,TouristWorld Service, Inc. As compensation, she received 4% of the proceeds in the conceptofcommissions.Andaswesaid,Sevillaherselfbasedonherletter ofNovember28,1961,pre-assumedherprincipal'sauthorityasownerof the business undertaking. W e a re c on vi nc ed , c on si de ri ng t he circumstancesand from therespondent Court'srecitalof facts,that thetieshadcontemplatedaprincipalagentrelationship,ratherthana jointmanagamentorapartnership. 11. Butunlikesimplegrantsofapowerofattorney,theagencythatwehereby declaretobecompatiblewiththeintentoftheparties,cannotberevokedat will.Thereasonisthatitisonecoupledwithaninterest,theagencyhaving beencreatedformutualinterest,oftheagentandtheprincipal.Itappears that Lina Sevilla isa bonafide travel agent herself,and assuch,she had acquired an interest in thebusiness entrusted to her.Moreover,she had
assumed a personal obligationfor theoperation thereof, holdingherself solidarily liable for thepayment of rentals. She continued the business, usingherownname,afterTouristWorldhadstoppedfurtheroperations. Herinterest,obviously,isnottothecommissionssheearnedasaresultof herbusinesstransactions,butonethatextendstotheverysubjectmatterof thepowerofmanagementdelegatedtoher.Itisanagencythat,aswesaid, cannot be revoked at the pleasure of the principal. Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to damages. DISPOSITION: WHEREFORE,theDecisionpromulgatedonJanuary23,1975aswell asthe Resolution issuedon July 31,1975, bythe respondentCourt ofAppealsis herebyREVERSED andSET ASIDE.The private respondent,Tourist WorldService, Inc., and Eliseo Canilao, are ORDERED jointly and severally to indemnify the petitioner,Lina Sevilla,the sumof 25,00.00asand formoral damages, thesum of P10,000.00,as andforexemplary damages, andthesum ofP5,000.00, asand for nominaland/ortemperatedamages. VOTE:Allconcur PHILEXv.MININGCORP. FACTS:
PetitionerPhilexMiningCorp. enteredintoanagreementwithBaguioGold,where theformeragreedtomanagetheminingoperationsofthelatter. Theagreementwasevidencedbya“PowerofAttorney”. Ø
It wasindicatedin thesaid document, that BaguioGold would contribute P11Munderitsowner'saccountplusanyofits income thatisleftintheproject,inadditiontoits actualminingclaim .
Ø
Meanwhile, petitioner's contribution would consist of its expertiseinthemanagement andoperationofmines,andofthe manager'saccountwhichiscomprisedof P11Minfunds.
Ø
ThecompensationoftheMANAGERshallbefiftypercent(50%) ofthenetprofitoftheprojectbeforeincometax.
Theminingsufferedseriousloseswhichendedbusinessofbothpartiesevidencedby theirexecutionofa“compromiseagreement.” TheCIRassessedPhilexMiningfortaxdeficiencies.ItstressedthatPhilexentered intoapartnershipwithBaguioGold.
27 (DIONNE)||D2014 Petitionerdeniedthe allegations of theCIR and maintained that itsadvances of moneyandpropertytoBaguioGoldwereinanatureofaloanasevidencedbythe “compromiseagreement”.
held that itmay enter into a joint venturewhichis akin toa particular partnership: o
ISSUE:
WONthepartiesenteredintoacontractofagencycoupledwithaninterestwhichis notrevocableatwill
II.KINDSOFPARTNERSHIP
HELD:
A.UNIVERSAL
No.An examinationof the“Power of Attorney” reveals thata partnershipor joint venturewasindeedintendedbytheparties.
B.PARTICULAR
•
•
•
•
•
Inanagencycoupledwithinterest,itistheagencythatcannotberevoked or withdrawn by the principal due toan interest of a third party that dependsuponit,orthemutualinterestofbothprincipalandagent.Inthis case,thenon-revocationornon-withdrawalunderparagraph5(c)applies totheadvancesmadebypetitionerwhoissupposedlytheagentandnotthe principal under the contract. Thus, it cannot be inferred from the stipulationthattheparties’relationundertheagreementisoneofagency coupledwithaninterestandnotapartnership. Neithercanparagraph16oftheagreementbetakenasanindicationthat the relationshipof the parties was oneof agencyandnot apartnership. Although the saidprovision statesthat “thisAgency shallbe irrevocable while any obligation of the PRINCIPAL in favor of the MANAGERS is outstanding,inclusiveoftheMANAGERS’account,”itdoesnotnecessarily followthatthe parties entered into anagencycontract coupledwithan interestthatcannotbewithdrawnbyBaguioGold. Themainobjectof the“PowerofAttorney”wasnottoconfera powerin favorofpetitionertocontractwiththirdpersonsonbehalfofBaguioGold buttocreateabusinessrelationshipbetweenpetitionerandBaguioGold,in whichtheformerwastomanageandoperatethelatter’sminethroughthe parties’ mutual contribution of material resources and industry. The essenceofanagency,evenonethatiscoupledwithinterest,istheagent’s ability to represent his principal and bring about business relations betweenthelatterandthirdpersons. ThestrongestindicationthatpetitionerwasapartnerintheSto.NinoMine isthefactthatitwouldreceive50%ofthenetprofitsas“compensation” under paragraph 12 of the agreement. The entirety of the parties’ contractual stipulations simply leads to no other conclusion than that petitioner’s“compensation”isactuallyitsshareintheincomeofthejoint venture. Article 1769 (4) of the Civil Code explicitly provides that the “receiptbya personofa shareintheprofitsof abusinessisprimafacie evidencethatheisapartnerinthebusiness.” While a corporation, like the petitioner, cannot generally enter into a contractofpartnershipunlessauthorizedbylaworitscharter,ithasbeen
underPhilippinelaw,ajointventureisaformofpartnershipand shouldbegovernedbythelawofpartnerships
C.GENERAL D.LIMITED E.ATWILL F.FORATERMORUNDERTAKING G.COMMERCIAL H.PROFESSIONAL I.BYESTOPPELAPPARENT ORTEGAv.CA (errwalangnakaassignditto?) III.KINDSOFPARTNER A.INDUSTRIAL B.CAPITALIST C.MANAGING D.BYESTOPPEL
