01FEDERICO JARANTILLA, JR. vs. ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE, SUBSTITUTED BY CYNTHIA REMOTIGUE, DOROTEO JARANTILLA and TOMAS JARANTILLA (2010)

Under Article 1767 of the Civil Code, there are two essential elements in a contract of partnership: (a) an agreement to contribute money, property or industry to a common fund; and (b) intent to divide the profits among the contracting parties. The first element is undoubtedly present in the case at bar, for, admittedly, all the parties in this case have agreed to, and did, contribute money and property to a common fund. Hence, the issue narrows down to their intent in acting as they did. And in the present case, there was no intent to form a partnership.

Facts:1. In 1948, the eight (8) Jarantilla heirs extrajudicially partitioned the real properties of their deceased parents, Andres and Felisa. (Some produce went to fund the studies of Rafael and Antonieta Jarantilla).2. In the same year, the spouses Rosita Jarantilla and Vivencio Deocampo entered into a Joint Business Relationship agreement with the spouses Conchita Jarantilla and Buenaventura Remotigue.3. This business relationship became successful and spawned other businesses, including acquiring buildings and other real properties subject of this case.4. In 1973, the partners agreed to dissolve their "joint business relationship/arrangement." 5. Before this, on 1957, the spouses Remotigue executed a document wherein they acknowledged that while registered only in Buenaventura Remotigue's name, they were not the only owners of the capital of the businesses Manila Athletic Supply (712 Raon Street, Manila), Remotigue Trading (Calle Real, Iloilo City) and Remotigue Trading (Cotabato City). 6. In this same "Acknowledgement of Participating Capital," they stated the participating capital of their co-owners as of the year 1952, with Antonieta Jarantilla's stated as eight thousand pesos (P8,000.00) and Federico Jarantilla, Jr.'s as five thousand pesos (P5,000.00).7. In 1987, Antonieta (aunt of the petitioner) filed a case against Buenaventura Remotigue, Cynthia Remotigue, Federico Jarantilla, Jr.(grandchild of the Andres and who later joined his aunt as petitioner), Doroteo Jarantilla and Tomas Jarantilla (brothers of Federico, Jr.), for the accounting of the assets and income of the co-ownership, for its partition and the delivery of her share corresponding to eight percent (8%), and for damages. 8. Antonieta claimed that the initial contribution of property and money came from the heirs' inheritance. She also claimed co-ownership of certain properties (QC, Rizal and Cotabato), since the only way the defendants could have purchased these properties were through the partnership as they had no other source of income.9. DEFENSE: No partnership. In 1946, Antonieta was still in school and the proceeds of a certain land was used to pay for her schooling. If she helped Conchita in the business, she was paid a salary. The 8% share was limited to the businesses enumerated in the Acknowledgement of Participating Capital, not to all their businesses.10. Federico entered into a Compromise Agreement with Antonieta and also demanded 6% of the share in the companies and real estate.

RTC: ifo Antonieta. There was partnership. To deliver 8% of assets, income and worth of real properties of the partnership based on present market value to Antonieta, plus P50k moral and P50k attys fees. Jarantillas appeal, aside from Federico who also appealed for his share of 6% which was not included in the judgement.CA: ifo of Remotigue et al. RTC decision set aside. There was no partnership. Antonieta to be paid 8% and Federico 6% for their share in the following businesses only: Manila Athletic Supply, Remotigue Trading in Iloilo City and Remotigue Trading in Cotabato City. Motion for Partial Reconsideration denied by CA.

Antonieta files petition for review at the SC late, so it was denied. The present petition for certiorari is filed only by Federico.

Issue/s: WON there is a partnership agreement between Federico and the Remotigue spouses, et al., as shown by the Acknowledgement of Participating Capital? NO. WON Federico is part owner of the subject properties in QC, Rizal and Cotabato? NO. Only those mentioned in the said 1957 document.

Held/Ratio: CA decision affirmed. 1. There is a co-ownership when an undivided thing or right belongs to different persons. It is a partnership when two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.2. Art. 1797. The losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion.In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the industrial partner shall receive such share as may be just and equitable under the circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital. (Emphases supplied.)3. Federico is not a partner. He is a co-owner but only to those properties enumerated in the Acknowledgement of Participating Capital. Since there was a clear agreement that the capital the partners contributed went to the three businesses, then there is no reason to deviate from such agreement and go beyond the stipulations in the document.4. Petitioner has not presented evidence, other than unsubstantiated testimonies, to prove that the respondents did not have the means to fund their other businesses and real properties without the partnership's income. On the other hand, the respondents presented preponderant proof on how they acquired and funded such properties in addition to tax receipts and tax declarations.NOT QUITE RELEVANT:5. The petitioner has failed to prove that there exists a trust over the subject real properties. Aside from his bare allegations, he has failed to show that the respondents used the partnership's money to purchase the said properties. Even assuming arguendo that some partnership income was used to acquire these properties, the petitioner should have successfully shown that these funds came from his share in the partnership profits. After all, by his own admission, and as stated in the Acknowledgement of Participating Capital, he owned a mere 6% equity in the partnership. 6. Moreover, this action never really was for partition of a co-ownership, and to permit petitioner's claim on these properties is to allow a collateral, indirect attack on respondents' admitted titles, which is prohibited under Section 48 of Presidential Decree No. 1529, the Property Registration Decree.

Petition for certiorari is denied.

Digest by: Arnel Abeleda

02G.R. No. 144214 July 14, 2003LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, petitioners, vs. DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA C. RAMIREZ, respondents.PANGANIBAN, J.:cvfloresShort Version:Facts: Managers of the partnership closed the business. When one partner asked for the return of his capital, the managers refused to pay. The managers based their refusal due to business losses and that they have delivered furniture and equipment to the partner as settlement for his capital. The partner filed a case against the managers.Held: It is the partnership not the managers that must refund the equity of the retiring partners. The exact amount of refund for the capital contribution cannot determined until (a) all the partnership assets have been liquidated in other words, sold and converted to cash (b) all the creditors have been paid; and (c) whatever is left of the assets becomes available for the payment of the partners' shares.Facts: Luzviminda Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of P750,000 to operate a restaurant business under the name "Aquarius Food House and Catering Services." Villareal was appointed general manager and Carmelito Jose, operations manager. Donaldo Ramirez joined as partner with P250,000 capital contribution which was paid by his parents, Cesar and Carmelita Ramirez. Jesus Jose withdrew from the partnership and was refunded P250,000 for his capital contribution Villareal and Carmelito closed down the restaurant without prior knowledge of Ramirez, allegedly because of increased rental. The restaurant furniture and equipment were deposited in the house of Ramirez for storage. The parents of Ramirez wrote petitioners, saying that they were no longer interested in continuing their partnership and they were accepting the offer to return their capital contribution. Due to the petitioners failure to return the capital contribution, Ramirez filed a complaint before the RTC for the collection of a sum of money Petitioners contended that: Ramirez had been paid, upon the turnover of furniture and equipment worth over P400k The partnerships capital, including Ramirezshare had been spent as a result of irreversible business losses. Ramirez alleged that they expected the equipment and the furniture stored in their house to be removed by petitioners as soon as the latter found a better location for the restaurant. they did not know of any loan encumbrance and if there was, the loans incurred by petitioners should be regarded as purely personal and not chargeable to the partnership. they had not received any regular report or accounting from the petitioners Ramirez filed an Urgent Motion for Leave to Sell or Otherwise Dispose of Restaurant Furniture and Equipment. The furniture and the equipment stored in their house were appraised at P29,000. The display freezer was sold for P5,000 and the proceeds were paid to them. RTC ruled in favour of Ramirez and held that petitioners intended to dissolve the partnership when they stopped operating the restaurant. RTC ordered petitioners to pay P250,000 as actual damages, P30,000 as attys fees, and costs of suit The CA ruled that although Ramirez had no right to demand the return of their capital, the partnership was nonetheless dissolved when they lost interest in continuing the restaurant business. Since the petitioners never gave a proper accounting of the partnership accounts, the CA computed the liability amounting to P253,114, as follows: (P1,000,000- P240,658)/3 = P253,114 Where 1M =remaining capitalization; P240,658 = outstanding obligation of the partnership; and 3 = number of partners (Ramirez, Villareal and Carmelito Jose) Issue:(1) whether petitioners are liable to respondents for the latter's share in the partnership; (2) whether the CA's computation of P253,114 as respondents' share is correct; and (3) whether the CA was likewise correct in not assessing costs.

Ruling:(1) Villareal and Jose are not liable. It is the partnership not the managers that must refund the equity of the retiring partners. The partnership has a juridical personality separate and distinct from that of each of the partners. Except as managers of the partnership, petitioners did not personally hold its equity or assets. The dissolution took place when Ramirez informed petitioners of the intention to discontinue because of dissatisfaction with, and loss of trust in, the management of the partnership affairs.(2) The exact amount of refund for the capital contribution cannot determined until a. all the partnership assets have been liquidated in other words, sold and converted to cashb. all the creditors have been paidc. whatever is left of the assets becomes available for the payment of the partners' sharesThe CA computation was erroneous. Total capital contribution is not equivalent to the gross assets to be distributed to the partners at the time of the dissolution of the partnership. Capital is either increased by profits earned or decreased by losses sustained. In the present case, there should be a decrease in capital. The financial statements showed that the business had made meager profits. Said profits should be decreased for the depreciation of the furniture and equipment and amortization of goodwill which were not reflected in the financial statements. The outstanding obligation in the amount of P240,658 was not supported by evidence. The balance sheet does not reveal the total loan. CA failed to consider Joses withdrawal of his capital amounting to P250,000The delivery of the store furniture and equipment to Ramirez was for the purpose of storage and not for the settlement of their capital contribution.(3) SC made no pronouncement as to costs. Although, as a rule, costs are adjudged against the losing party, courts have discretion, "for special reasons," to decree otherwise. When a lower court is reversed, the higher court normally does not award costs, because the losing party relied on the lower court's judgment which is presumed to have been issued in good faith, even if found later on to be erroneous.

SC granted the petition but without prejudice to proper proceedings for the accounting, the liquidation and the distribution of the remaining partnership assets, if any.03ELIGIO ESTANISLAO, JR. vs. CA, REMEDIOS ESTANISLAO, EMILIO and LEOCADIO SANTIAGOGANCAYCO, J.: G.R. No. L-49982 April 27, 1988cvfloresShort Version:Facts: Estanislao siblings were the owners of certain lots in QC leased to Shell. The siblings wanted to open a gas station so they negotiated with Shell. In a joint affidavit, the siblings, as co-owners, asked Shell for advance rentals up to P15k. However said joint affidavit was cancelled in a subsequent document where the siblings waived in favour of their brother, Eligio the rentals due to them from Shell. Eligio then assigned the rentals to Shell which was supposed to be applied by Shell as Eligios additional security. At first, Eligio submitted financial statements to his other siblings but therafter failed to render subsequent accounting. The other siblings then filed a suit. Eligio contended that there was no partnership.Held: There was a partnership. Eligio was named sole dealer only because of Shells policy of appointing only 1 dealer. Eligio submitted periodic accounting of the business. He gave a written authority to his sister, to examine and audit the books of their "common business. His sister also assisted in the running of the business.Facts: The parties to this case are brothers and sisters. They are co-owners of certain lots at the corner of Annapolis and Aurora Blvd., Quezon City. The lots were leased to Shell Company of the Philippines Limited (Shell). They agreed to open and operate a gas station to be known as Estanislao Shell Service Station. To help their brother, Eligio, the other siblings allowed him to manage the gasoline service station. They negotiated with Shell. For practical purposes and in order not to run counter to the Shell's policy of appointing only one dealer, it was agreed that only Eligio would apply for the dealership. In April 11, 1966, the siblings executed a joint affidavit in favour of shell. It provides that: They have requested from Shell, advance rentals in the amount of P15,000 to augment their capital investment. Shell, out of its benevolence, agreed to give P15,000. The advance rentals shall be applied to the monthly rentals starting on May 25, 1966 until such time that the said of P 15,000.00 be applicable. In May 20, 1966, the parties, as co-owners, entered into an Additional Cash Pledge Agreement with Shell. The agreement provided that: Eligio, the dealer, shall deposit with Shell additional P10,000 to secure his purchases. Eligios siblings waive in his favour the monthly rentals due to them to increase his existing cash deposit to Shell, from P10,000 to P25,000. For this purpose the co-owners with the dealer assigned to Shell the monthly rental of P3,382.29 starting May 24, 1966 until such time that the monthly rentals accumulated, shall be equal to P15,000. Shell shall treat the accumulated monthly rentals as additional cash deposit by Eligio as dealer, thereby increasing his credit limit from P 10,000 to P 25,000. This Additional Cash Pledge Agreement cancels and supersedes the Joint Affidavit dated 11 April 1966 executed by the co-owners. From 1966 to 1967, one of the siblings, Remedios Estanislao, also helped in managing the business. For sometime, Eligio submitted financial statements to his other siblings, but therafter he failed to render subsequent accounting. Hence, the other sibilings demanded Eligio to render an accounting of the profits. The financial report showed that the business realized profits of P87,293.79 and P150,000 for the years 1968 and 1969, respectively. Thus a complaint was filed against Eligio praying among others that Eligio be ordered to: Execute a public document embodying the provisions of the partnership agreement as provided in Art. 1771 of the Civil Code. Render a formal accounting of the business for 1966 up to the time the order is issued. Pay the plaintiffs their lawful shares and participation in the net profits in the amount of no less than P150,000 with interest. Pay P10,000 as attys fees and cost of suit. After trial on the merits, Judge Anover, who was then the temporary presiding judge dismissed the complaint. However upon MR, Judge Tensuan, the newly appointed presiding judge of the branch, rendered a judgment against Eligio. Judge Tensuan ordered Eligio to execeute a public document, render an accounting, pay the plaintiffs their just share and to cost of the suit. CA affirmed RTCs ruling. Eligio filed a petition for certiorari with SC. He contended that there is no partnership. He argued that the Additional Cash Pledge Agreement of 1966 cancels and supersedes the previous joint affidavit. That whatever partnership agreement there was in said previous agreement had thereby been abrogated.

Issue: Whether there is an existing partnership between Eligio and his siblings. Yes.Dispositive: Judgment affirmed.Ruling:In the Joint Affidavit it was clearly stipulated that the P15,000 advance rental due to the co owners shall augment their "capital investment." In the subsequent Additional Cash Pledge Agreement, it was provided that such agreement cancels and supersedes the Joint Affidavit. However, said cancellation was necessary since both agreements refer to advance rentals of the same amount and for the same period which starts at May 1966. There is, therefore, a duplication of reference. Hence the need to provide in the subsequent document that it "cancels and supersedes" the previous one. Further although the subsequent document refers to Eligio as the sole dealer, it was only because Shell was also a signatory thereto and that Shell has a policy of appointing only one dealer. It would be against Shells policy if it is stated there that the business is a partnership and not a sole proprietorship.Moreover there are other pieces of evidence in the record that show that there was in fact a partnership agreement between the parties. The following were the evidence in record: Eligio submitted periodic accounting of the business. Eligio gave a written authority to Remedios , to examine and audit the books of their "common business (aming negosyo). Remedios assisted in the running of the business.

There is no doubt that the parties hereto formed a partnership when they bound themselves to contribute money to a common fund with the intention of dividing the profits among themselves.The sole dealership by Eligio and the issuance of all government permits and licenses in his name was in compliance with the aforestated policy of Shell and the understanding of the parties of having only one dealer of the Shell products.04. LITONJUA vs LITONJUAAURELIO K. LITONJUA, JR.,Petitioner, vs. EDUARDO K. LITONJUA, SR., ROBERT T. YANG, ANGLO PHILS. MARITIME, INC., CINEPLEX, INC., DDM GARMENTS, INC., EDDIE K. LITONJUA SHIPPING AGENCY, INC., EDDIE K. LITONJUA SHIPPING CO., INC., LITONJUA SECURITIES, INC. (formerly E. K. Litonjua Sec), LUNETA THEATER, INC., E & L REALTY, (formerly E & L INTL SHIPPING CORP.), FNP CO., INC., HOME ENTERPRISES, INC., BEAUMONT DEV. REALTY CO., INC., GLOED LAND CORP., EQUITY TRADING CO., INC., 3D CORP., L DEV. CORP, LCM THEATRICAL ENTERPRISES, INC., LITONJUA SHIPPING CO. INC., MACOIL INC., ODEON REALTY CORP., SARATOGA REALTY, INC., ACT THEATER INC. (formerly General Theatrical & Film Exchange, INC.), AVENUE REALTY, INC., AVENUE THEATER, INC. and LVF PHILIPPINES, INC., (Formerly VF PHILIPPINES),Respondents.December 13, 2005GARCIA,J.Petition for Review of a Decision of the CA

FACTS: Aurelio and Eduardo are brothers. Yang and the other corporations just got involved because they are allegedly holdings and/or members of the partnership.In 1973, Aurelio alleged thatEduardo entered into a contract of partnership with him. Aurelio showed as evidence a letter sent to him by Eduardo (Annex A) that the latter is allowing Aurelio to manage their family business (if Eduardos away) and in exchange thereof he will be giving Aurelio P1 million or 10% equity, whichever is higher. A memorandum was subsequently made for the said partnership agreement. The memorandum this time stated that in exchange of Aurelio, who just got married, retaining his share in the family business (movie theatres, shipping and land development) and some other immovable properties, he will be given P1 Million or 10% equity in all these businesses and those to be subsequently acquired by them whichever is greater.In 1992 however, the relationship between the brothers went sour. And so Aurelio demanded an accounting and the liquidation of his share in the partnership. Eduardo did not heed and so Aurelio sued Eduardo to render an accounting and annotate on the titles of these real properties a notice oflis pendens. Aurelio alleges that Eduardo and the other partners are transferring various real properties of the corporations belonging to the joint venture/partnership to other parties in fraud of Aurelio.

Eduardo filed an answer with affirmative defenses. He denies ever having gone into a partnership with Aurelio and argues that there is no cause of action since one cannot be derived from the actionable document. (Referring to Annex A, in that it does not show the existence of a partnership.) He argues that the contents are void under the terms of Article 1767 in relation to Article 1773 of the Civil Code further alleges that whatever undertaking Eduardo agreed to do under Annex Aare unenforceable under the provisions of the Statute of Frauds.

In an Omnibus Order, the trial court denied the affirmative defenses and later denied the MR as well. Yang filed an MTD which was dismissed. Yang filed an answer reserving his right to file for reconsideration on the dismissal of his MTD. Eduardo filed a petition for certiorari with the CA assailing the omnibus order on the contention that grave abuse of discretion and injudicious haste attended the issuance of the trial courts aforementioned Omnibus Orders. Yang also filed a petition for certiorari on the dismissal of his MTD. The CA consolidated both petitions and reversed the trial court, dismissing the complaint of Aurelio.

ISSUE:Whether or not there exists a partnership. (NO)

RATIO: A partnership exists when two or more persons agree to place their money, effects, labor, and skill in lawful commerce or business, with the understanding that there shall be a proportionate sharing of the profits and losses between them.A contract of partnership is defined by the Civil Code as one where two or more persons bound themselves to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves.A joint venture, on the other hand, is hardly distinguishable from, and may be likened to, a partnership since their elements are similar,i.e., community of interests in the business and sharing of profits and losses. Being a form of partnership, a joint venture is generally governed by the law on partnership.

Given the foregoing perspective, what the CA said about the probative value and legal effect of Annex Acommends itself for concurrence:Considering that the allegations in the complaint showed that Aurelio contributed immovable properties to the alleged partnership, the Memorandum (Annex A) which purports to establish the said partnership/joint venture is NOT a public instrument and there was NO inventory of the immovable property duly signed by the parties. As such, said Memorandum is null and void for purposes of establishing the existence of a valid contract of partnership. Indeed, because of the failure to comply with the essential formalities of a valid contract, the purported partnership/joint venture is legally inexistent and it produces no effect whatsoever. Necessarily, a void or legally inexistent contract cannot be the source of any contractual or legal right. Accordingly, the allegations in the complaint, including the actionable document attached thereto, clearly demonstrates that Aurelio has NO valid contractual or legal right which could be violated by Eduardo or Yang.As a consequence, Aurelios complaint does NOT state a valid cause of action because NOT all the essential elements of a cause of action are present.The documentary evidence presented by Aurelio, i.e. the letter from Eduardo and the Memorandum, did not prove partnership.

The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but is unsigned and undated. As an unsigned document, there can be no quibbling that said letter does not meet the public instrumentation requirements exacted under Article 1771 (how partnership is constituted) of the Civil Code. Moreover, being unsigned and doubtless referring to a partnership involving more than P3,000.00 in money or property, said lettercannot be presented for notarization, let alone registered with the Securities and Exchange Commission (SEC), as called for under the Article 1772 (capitalization of a partnership) of the Code. And inasmuch as the inventory requirement under the succeeding Article 1773 goes into the matter of validity when immovable property is contributed to the partnership, the next logical point of inquiry turns on the nature of Aurelios contribution, if any, to the supposed partnership.

It is at once apparent that what Eduardo imposed upon himself under the above passage, if he indeed wrote Annex A, is a promise which is not to be performed within one year from contract execution on June 22, 1973. Accordingly, the agreement covered by the Statute of Frauds andergo unenforceable for non-compliance therewith. By force of the statute of frauds, an agreement that by its terms is not to be performed within a year from the making thereof shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing andsubscribedby the party charged. Corollarily, no action can be proved unless the requirement exacted by the statute of frauds is complied with.

The Memorandum is also not a proof of the partnership for the same is not a public instrument and again, no inventory was made of the immovable property and no inventory was attached to the Memorandum. Article 1773 of the Civil Code requires that if immovable property is contributed to the partnership an inventory shall be had and attached to the contract.

Per the Courts own count, Aurelio used in his complaint the mixed words joint venture/partnership nineteen (19) times and the term partner four (4) times. He made reference to the law of joint venture/partnership [being applicable] to the business relationship between [him], Eduardo and Bobby [Yang]and to hisrights in all specific properties of their joint venture/partnership. Given this consideration, Aurelios right of action against Eduardo and Yang doubtless pivots on the existence of the partnership between the three of them, as purportedly evidenced by the undated and unsigned Annex A. A void Annex A, as an actionable document of partnership, would strip petitioner of a cause of action under the premises. A complaint for delivery and accounting of partnership property based on such void or legally non-existent actionable document is dismissible for failure to state of action. So, in gist, said the Court of Appeals. The Court agrees.

DISPOSITIVE: Petition is DENIED; Decision of the CA is AFFIRMED.-Mike

05Pascual v. CIR (G.R. No. 78133, 18 October 1988)Full Title: Mariano P. Pascual and Renato P. Dragon vs. The Commissioner of Internal Revenue and Court of Tax Appeals.Topic: Partnership distinguished from other contractual relationships/juridical entities; Co-Ownership.Ponente: Gancayco, J.Nature: BIR - Assessment; CTA Petition for Review; SC Petition for ReviewDoctrine: In order to constitute a partnership inter sese there must be: (a) An intent to form the same; (b) generally participating in both profits and losses; (c) and such a community of interest, as far as third persons are concerned as enables each party to make contract, manage the business, and dispose of the whole property.An isolated transaction whereby two or more persons contribute funds to buy certain real estate for profit in the absence of other circumstances showing a contrary intention cannot be considered a partnership.The fact that those who agree to form a co- ownership share or do not share any profits made by the use of the property held in common does not convert their venture into a partnership. Or the sharing of the gross returns does not of itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. This only means that, aside from the circumstance of profit, the presence of other elements constituting partnership is necessary, such as the clear intent to form a partnership, the existence of a juridical personality different from that of the individual partners, and the freedom to transfer or assign any interest in the property by one with the consent of the others.Facts: On June 22, 1965, petitioners bought two (2) parcels of land. on May 28, 1966, they bought another three (3) parcels of land. The first two parcels of land were sold by petitioners in 1968 at a profit of P165,224.70, while the three parcels of land were sold in 1970 at a profit of P60,000.00. Petitioners paid the corresponding capital gains taxes in 1973 and 1974 by availing of the tax amnesties.However, in 1979 then Acting BIR Commissioner Efren I. Plana assessed and required petitioners to pay a total amount of P107,101.70 as deficiency corporate income taxes. Petitioners protested, asserting that they had availed of tax amnesties. The Commissioner replied and informed petitioners that in the years 1968 and 1970, petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture taxable as a corporation; that the unregistered partnership was subject to corporate income tax as distinguished from profits derived from the partnership by them which is subject to individual income tax; and that the availment of tax amnesty relieved petitioners of their individual income tax liabilities but not from the tax liability of the unregistered partnership. Petitioners filed a petition for review with CTA, which affirmed the decision and action by the CIR.Issue: W/N petitioners formed a partnership, which would make them liable for corporate income tax.Held: NORatio: In the present case, there is no evidence that petitioners entered into an agreement to contribute money, property or industry to a common fund, and that they intended to divide the profits among themselves. Respondent commissioner and/ or his representative just assumed these conditions to be present on the basis of the fact that petitioners purchased certain parcels of land and became co-owners thereof.There is clear evidence of co-ownership between the petitioners. There is no adequate basis to support the proposition that they thereby formed an unregistered partnership. The two isolated transactions whereby they purchased properties and sold the same a few years thereafter did not thereby make them partners. They shared in the gross profits as co-owners and paid their capital gains taxes on their net profits and availed of the tax amnesty thereby. Under the circumstances, they cannot be considered to have formed an unregistered partnership which is thereby liable for corporate income tax, as the respondent commissioner proposes.In order to constitute a partnership inter sese there must be: (a) An intent to form the same; (b) generally participating in both profits and losses; (c) and such a community of interest, as far as third persons are concerned as enables each party to make contract, manage the business, and dispose of the whole property. Article 1769 of the new Civil Code lays down the rule for determining when a transaction should be deemed a partnership or a co-ownership. Said article paragraphs 2 and 3, provides: (2)Co-ownership or co-possession does not itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the use of the property;(3)The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derivedFrom the above it appears that the fact that those who agree to form a co- ownership share or do not share any profits made by the use of the property held in common does not convert their venture into a partnership. Or the sharing of the gross returns does not of itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. This only means that, aside from the circumstance of profit, the presence of other elements constituting partnership is necessary, such as the clear intent to form a partnership, the existence of a juridical personality different from that of the individual partners, and the freedom to transfer or assign any interest in the property by one with the consent of the others.An isolated transaction whereby two or more persons contribute funds to buy certain real estate for profit in the absence of other circumstances showing a contrary intention cannot be considered a partnership.[The SC relied heavily on Evangelista v. Collector (G.R. No. 9996, Oct. 15,1957,102 Phil. 140), by comparing it with the instant case. In Evangelista, Petitioners contributed to a common fund to buy real properties rented or leased to various tenants for several years, with the intention to earn profits. The SC found them to have formed a partnership liable for corporate income tax because: (1) said common fund was not something they found already in existence; (2) they invested the same, not merely in one transaction, but in a series of transactions; (3) The lots were not devoted to residential purposes or to other personal uses of petitioners but were leased separately to several persons; (4) the properties have been under the management of one person, with full power to lease, to collect rents, to issue receipts, to bring suits, to sign letters and contracts, and to indorse and deposit notes and checks, and thus, the affairs relative to said properties have been handled as if the same belonged to a corporation or business enterprise operated for profit; (5) there was a series of transactions where petitioners purchased twenty-four (24) lots showing that the purpose was not limited to the conservation or preservation of the common fund or even the properties acquired by them, the character of habituality peculiar to business transactions engaged in for the purpose of gain was present.]SC Petition granted, CTA Decision reversed and set aside, relieved Petitioner of corporate income tax liability.06CASE: Arsenio T. Mendiola v Court of Appeals, National Labor Relations Commission, Pacific Forest Resources, Phils., Inc and/or Cellmark ABDATE: July 31, 2006PONENTE: Puno, J.

Topic in syllabus: Partnership distinguished from other contractual relationships/juridical entities

FACTS: Pacific Forest Resources, Phils., Inc. (Pacfor) is a corporation organized and existing under the laws of California, USA. It is a subsidiary of Cellulose Marketing International, a corporation duly organized under the law of Sweden, with principal office in Gothenburg, Sweden. Pacfor entered into a Side Agreement on Representative Office known as Pacific Resources (Phils.) Inc. with petitioner Arsenio T. Mendiola effective May 1, 1995, assuming that Pacor-Phils. is already approved by the SEC on the said ate. The Side Agreement outlined the business relationship of the parties with regard to the Philippine operations of Pacfor. Pacfor will establish a representative office in the Philippines, to be known as Pacfor Phils., and Mendiola will be its President. His base salary and overhead expenditures of the company shall be borne by Pacfor Phils. and funded by Pacfor/Mendiola since Pacfor Phils. is equally owned on a 50-50 basis by Mendiola and Pacfor USA. July 14, 1995: SEC granted the application of Pacfor for a license to transact business in the Philippines under the name of Pacfor or Pacfor Phils. Pacfor designated Mendiola as its resident agent in the Philippines, authorized to accept summons and processes in all legal proceedings, and all notices affecting the corporation. March 1997: The Side Agreement was amended through a Revised Operating and Profit Sharing Agreement for the Representative Office Known as Pacific Forest Resources (Philippines), where the salary of petitioner was increased to $78,000 per annum. Both agreements show that the operational expenses will be borne by the representative office and funded by all parties as equal partners, while the profits and commissions will be shared among them. July 2000: Mendiola wrote Kevin Daley, VP for Asia of Pacfor, seeking confirmation of his 50% equity of Pacfor Phils. Private respondent Pacfor, through William Gleason, its President, replied that petitioner is not a part-owner of Pacfor Phils. because the latter is merely Pacfor USAs representative office and not an entity separate and distinct from Pacfor USA. Its simply a theoretical company with the purpose of dividing the income 50-50. Mendiola presumably knew of this arrangement from the start, having been the one to propose to Pacfor the setting up of a representative office and not a branch office to save on taxes. Mendiola claimed he was all along made to believe that he was in a joint venture with them and alleged that he would have been better off remaining as an independent agent or representative of Pacfor USA as ATM Marketing Corp. Had he known that no joint venture existed, he would not have allowed Pacfor to take the profitable business of his own company. He also raised other issues, such as rentals of office furniture, salary of the employees, company car, as well as commissions allegedly due him. The issues were not resolved and so on October 2000, Mendiola wrote to Pacfor USA demanding payment of unpaid commissions and office furniture and equipment rentals, amounting to more than one million dollars. November 27, 2000: Pacfor, through counsel, ordered Mendiola to turn over to it all papers, documents, files, records, and other materials in his or ATM Marketings possession that belonged to Pacfor or Pacfor Phils. December 18, 2000: Pacfor also required Mendiola to remit more than P300,000 Christmas giveaway fund for clients of Pacfor Phils. Pacfor also withdrew all its offers of settlement and ordered petitioner to transfer title and turn over to its possession of the service car. Pacfor also sent letters to its clients in the Philippines, advising them not to deal with Pacfor Phils. To International Paper Industries Inc. To Pacific Forest Resources Philippines, telling said client to please communicate directly with us on any further questions associated with these payments or any future business. Do not communicate with [Pacfor] and/or [ATM]. Mendiola took these directives as severance of the unregistered partnership between him and Pacfor and the termination of his employment as resident manager of Pacfor Phils. On the basis of the Side Agreement, Mendiola insisted that he and Pacfor equally own Pacfor Phils. Thus, it follows that he and Pacfor likewise own, on a 50/50 basis, Pacfor Phils. office furniture and equipment and service car. He also reiterated his demand for unpaid commissions and proposed to offset these with the remaining Christmas giveaway fund in his possession. He also did not renew the lease contract with the lessor of the office premises of Pacfor Phils. February 2, 2001: Pacfor placed Mendiola on preventive suspension and ordered him to show cause why no disciplinary action should be taken against him. It charged Mendiola with willful disobedience and serious misconduct, as well as alleged loss of confidence and gross neglect of duty. Mendiola denied the charges and reiterated that he considered the import of Pacfor President Gleasons letter as a cessation of his position and the existence of Pacfor Phils. Pacfor lodged fresh charges against the petitioner. LA: ruled in favor of petitioner, finding that there was constructive dismissal. Pacfor appealed to the NLRC which ruled in its favor. NLRC denied MR. Petitioners appeal to the CA was unsuccessful. Ruling of the NLRC upheld.ISSUE/ISSUES: Was there an employer-employee relationship between the parties?RATIO: YES, there was. The court held that Mendiola was an employee of Pacfor and there was no partnership or co-ownership that existed between the parties. n a partnership, the members become co-owners of what is contributed to the firm capital and of all property that may be acquired thereby and through the efforts of the members.The property or stock of the partnership forms a community of goods, a common fund, in which each party has a proprietary interest.In fact, the New Civil Code regards a partner as a co-owner of specific partnership property.Each partner possesses a joint interest in the whole of partnership property. If the relation does not have this feature, it is not one of partnership.This essential element, the community of interest, or co-ownership of, or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. Mendiola is not a part-owner of Pacfor Phils. William Gleason, private respondent Pacfor's President established this fact when he said that Pacfor Phils. is simply a "theoretical company" for the purpose of dividing the income 50-50. He stressed that petitioner knew of this arrangement from the very start, having been the one to propose to private respondent Pacfor the setting up of a representative office, and "not a branch office" in the Philippines to save on taxes. Thus, the parties in this case, merely shared profits. This alone does not make a partnership. Besides, a corporation cannot become a member of a partnership in the absence of express authorization by statute or charter. This doctrine is based on the following considerations: (1) that the mutual agency between the partners, whereby the corporation would be bound by the acts of persons who are not its duly appointed and authorized agents and officers, would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively; and, (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders when they originally invested in the corporation. No such authorization has been proved in the case at bar. An employer-employee relationship is present in the case at bar. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. The most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. In the instant case, all the foregoing elements are present. First, it was private respondent Pacfor which selected and engaged the services of petitioner as its resident agent in the Philippines. Second, as stipulated in their Side Agreement, private respondent Pacfor pays petitioner his salary amounting to $65,000 per annum which was later increased to $78,000. Third, private respondent Pacfor holds the power of dismissal, as may be gleaned through the various memoranda it issued against petitioner, placing the latter on preventive suspension while charging him with various offenses, including willful disobedience, serious misconduct, and gross neglect of duty, and ordering him to show cause why no disciplinary action should be taken against him. Lastly and most important, private respondent Pacfor has the power of control over the means and method of petitioner in accomplishing his work.HELD: IN VIEW WHEREOF, the petition isGRANTED. The Court of Appeals' January 30, 2003 Decision in CA-G.R. SP No. 71028 and July 30, 2003 Resolution, affirming the December 20, 2001 Decision of the National Labor Relations Commission, areANNULEDandSET ASIDE. The July 30, 2001 Decision of the Labor Arbiter isREINSTATEDwith theMODIFICATIONthat the amount ofP250,000.00 representing an alleged increase in petitioner's salary shall be deducted from the grant of separation pay for lack of evidence.kitty 07J.M. Tuason& Co., Inc., represented by its Managing Partner, Gregorio Araneta, Inc., plaintiff-appellee vs. QuirinoBolanos, defendant-appelantReyes, J. May 28, 1954SV: A petition for recovery of possession was filed before the CFI Rizal, QC Branch. The case was brought in the name of JM Tuason& Co, represented by its Managing Partner, Gregorio Araneta, Inc. The defendant therein, Bolanos, objected on the ground that a partnership cannot be formed between two corporations. The Supreme Court held that the suit can still be brought because two corporations can enter into a joint venture with one another.FACTS:- This was originally an action brought in the CFI Rizal, QC Branch, to recover possession of registered land situated in barrio Tatalon, Quezon City.- The complaint by plaintiffs JM Tuason, represented by Gregorio Araneta, Inc. was amended three times with respect to the description of the land sought to be recovered throughout the trial.- Defendant set up prescriptive acquisition through open, continuous, exclusive, public and notorious possession by him and his predecessor in interest from time in-memorial. - Trial court rendered judgment in favor of plaintiff, declaring defendant to be without any right to the land in question. CFI Rizal also ordered Bolanos to pay rentals. Bolanos appealed directly to SC.ISSUES:1) WON the trial court erred in not dismissing the case on the ground that the case was not brought by the real party in interest. NO, it did not err.2) WON the trial court erred in admitting the third amended complaint. NO, it did not.3) WON the trial court erred in not finding that the defendant is the true and lawful owner of the land. NO, it did not.REASONING: 1) There is nothing to the contention that the present action is not brought by the real party in interest: that is, by JM Tuason and Co., Inc.The ROC merely requires that the action be brought in the name of, but not necessarily by, the real party in interest (then Sec. 2, Rule 2). In fact the practice is for an attorney-at-law to bring the action, that is, to file the complaint, in the name of the plaintiff.Here, that practice is followed, since the complaint is signed by the law firm of Araneta and Araneta and commences with the statement comes now plaintiff, through its undersigned counsel.It is true that the complaint also states that the plaintiff is represented herein by its Managing Partner, Gregorio Araneta, Inc., another corporation, but there is nothing against one corporation being represented by another person, natural or juridical, in a suit in court.Petitioner argues that Gregorio Araneta, Inc., cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership. This is without merit, for the true rule is that: though a corporation has no power to enter into a partnership, it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter. (Wyoming-Indiana Oil Gas Co. v. Weston).2) Amendment is not even necessary for the purpose of rendering judgment on an issue proved but not alleged according to (then) Sec. 4 Rule 17 ROC:Sec. 4.Amendment to conform to evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall be so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.3) The land in question was proven to be covered by plaintiffs certificate of title. The land in dispute is covered by plaintiffs Torrens certificate of title which was registered in 1914 and which can no longer be impugned on the ground of fraud, error, or lack of notice to defendant, as more than one year has already elapsed from the issuance and entry of the decree.Adverse, notorious and continuous possession unde claim of ownership for the period fixed by law is ineffective against a Torrens title (Valiente v. Judge of CFI Tarlac).4) The reasonable compensation was stipulated at the hearing and there is no reason to suppose that defendant has been paying rents, for he has been asserting all along that the premises in question are theirs.Judgement appealed from AFFIRMED, costs against plaintiff.@ajmlegs08Primelink Properties and Development Corporation and Rafaelito W. Lopez, petitioners, v. Ma. Clarita Lazatin-Magat, Jose Serafin T. Lazatin, Jaime Teodoro T. Lazatin, and Jose Marcos T. LazatinDate: June 27, 2006Ponente: Callejo, Sr.Digested by: Mandee

The case in a nutshell: In 1994, petitioner Primelink Properties and Development Corporation, represented by its President, Lopez, entered into a Joint Venture Agreement with the respondents, the Lazatin siblings, for the development of 2 adjoining parcels of land in Tagaytay, owned by the Lazatins, into a residential subdivision. One of the stipulations in the JVA was that both parties would share in the profits from the joint venture (net revenue/income after deducting land development and marketing expenses), 60% for Primelink and 40% for the Lazatins. In 1997, the Lazatins informed Primelink (via letter) that they were rescinding the JVA. The Lazatins filed a complaint for rescission, accounting and damages, with prayer for TRO and/or preliminary injunction, against Primelink and Lopez before the Tagaytay RTC. RTC ruled in favor of the Lazatins and ordered Primelink to return possession, including all improvements therein, of the Lazatins property. CA and SC affirmed. The Lazatins are entitled to the possession of the parcels of land covered by the JVA and the improvements thereon introduced by Primelink as their contribution to the JVA. These formed part of the assets of the joint venture. The Lazatins were entitled to the possession not only of the parcels of land, but also of the improvements thereon, as a consequence of the RTCs finding that Primelink breached their agreement and defrauded the Lazatins of their share of the net income under the JVA. The parties entered into a joint venture as evidenced by their JVA which, under the Aurbach ruling, is a form of partnership, and as such is to be governed by the laws on partnership. However, it was premature for Primelink to demand that it be indemnified for the value of the improvements on the parcels of land owned by the joint venture/partnership. Until the partnership accounts are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.

Facts: Primelink Properties and Development Corporation is a domestic corporation engaged in real estate development. Rafaelito W. Lopez is its President and CEO. Respondents Ma. Clara T. Lazatin-Magat and her brothers, Jose Serafin T. Lazatin, Jaime T. Lazatin, and Jose Marcos T. Lazatin are co-owners of 2 adjoining parcels of land (combined area = 30,000 square meters) in Tagaytay City, covered by TCTs in the Register of Deeds of Tagaytay City. On March 10, 1994, the Lazatins and Primelink, represented by Lopez in his capacity as President, entered into a Joint Venture Agreement for the development of the aforementioned property into a residential subdivision to be known as Tagaytay Garden Villas. Under the JVA The Lazatins obliged themselves to contribute the 2 parcels of land as their share in the joint venture. Primelink undertook to contribute money, labor, personnel, machineries, equipment, contractors pool, marketing activities, managerial expertise and other needed resources to develop the property and construct therein the units for sale to the public. Both parties were entitled to draw advances/allowances from the net revenue/income. For the first 2 years, max of 20% (60% for Primelink, 40% for the Lazatins) for the first 2 years, then after 2 years, up to the total net revenue/income. They would share in the profits from the joint venture (net revenue/income after deducting land development and marketing expenses), 60% for Primelink and 40% for the Lazatins. Primelink submitted its Projection of the Sales-Income-Cost of the project. Any conflicts regarding the interpretation, enforcement, and implementation of any provision of the JVA would be referred to Voluntary Arbitration in accordance with the Arbitration Law. The Lazatins agreed to subject the title over the property to an Escrow Agreement, and accordingly deposited the owners duplicate of the title with Chinabank. Primelink failed to immediately secure a Development Permit from Tagaytay City, and applied for the permit only on August 30, 1995. On October 12, 1995, the City issued a Development Permit to Primelink. In a letter dated April 10, 1997, the Lazatins, through counsel, demanded that Primelink comply with its obligations under the JVA, otherwise the appropriate action would be filed against the company. Primelinks officers met with the Lazatins, who reviewed the companys business records/papers. In another letter dated October 22, 1997, the Lazatins informed Primelink that they had decided to rescind the JVA. They demanded that Primelink cease and desist from further developing the property. On January 19, 1998, the Lazatins filed with the Tagaytay City RTC a complaint for rescission, accounting and damages, with prayer for TRO and/or preliminary injunction, against Primelink and Lopez. Despite the lapse of almost 4 years from the execution of the JVA and the delivery of the title and possession of the land to defendants, the land development aspect of the project had not yet been completed, and no progress had been made on the construction of the housing units. Phase I: out of the 50 housing units programmed for the phase, only a total of 10 had been built (some complete, some unfinished). Phase II: all that Primelink had done was to grade the area The units so far constructed had been the object of numerous complaints by their owners/purchasers for poor workmanship and the use of sub-standard materials in their construction, undermining the projects marketability. Primelink had, without justifiable reason, completely disregarded previously agreed-upon accounting and auditing procedures, checks and balances system installed for the mutual protection of both parties, and the scheduled regular meetings were seldom held. Primelink refused to heed the Lazatins letter-demands for compliance with the JVA, so the Lazatins sent a final letter formally rescinding the JVA. Based on the Sales-Income-Cost projection, the Lazatins stood to receive the amount of Php70,218,296.00 as their net share in the joint venture project. But after almost 4 years and despite the undertaking in the JVA that they would shall initially get 20% of the agreed net revenue during the first 2 years (on the basis of the 60%-40% sharing) and their full 40% share thereafter, Primelink had yet to deliver these shares to them. The RTC ruled in favor of the Lazatins. Found that based on the evidence... Primelink had committed patent violations of the JVAs stipulations, not just against the Lazatins, but also some of the unit buyers, who had also complained. Primelink had a scheme to reduce and eventually blot out the net revenue/income generated from sales of housing units by Primelink. Its net revenue/income was drastically reduced in subsequent financial reports, and the income statements and balance sheets it submitted indicated net loss. By declaring net loss, Primelink was able to avoid giving the Lazatins their share of the net revenue/income. Ordered the rescission of the JVA, and ordered Primelink to Return possession, including all improvements therein, of the Lazatins property Turn over all documents, records, or papers that had been executed, prepared, and retained in connection with any contract to sell or deed of sale of all lots/units sold during the effectivity of the JVA Pay the Lazatins their share of the net income as of September 30, 1995, as stipulated in the JVA, plus attorneys fees and costs On appeal, the CA affirmed the RTCs decision with modification. It ordered the release of the TCT held for safekeeping by Chinabank pursuant to the Escrow Agreement for return to the Lazatins, and the cancellation by the Register of Deeds of Tagaytay City of whatever annotation was made on it by virtue of the JVA. Aurbach v. Sanitary Wares Manufacturing Corporation: under Philippine law, a joint venture is a form of partnership and is to be governed by the laws of partnership. Primelink filed a petition for review on certiorari before the SC.

Issues:1. WON the Lazatins are entitled to the possession of the parcels of land covered by the JVA and the improvements thereon introduced by Primelink and Lopez as their contribution to the JVA2. WON Primelink and Lopez entitled to reimbursement for the value of the improvements on the parcels of land.

Held: Petition DENIED. CA Decision and Resolution AFFIRMED.

Ratio:(NOTE: In the interest of brevity, the many Civil Cases cited in the case are not quoted in full.)1. The Lazatins are entitled to the possession of the parcels of land covered by the JVA and the improvements thereon introduced by Primelink and Lopez as their contribution to the JVA.a. Although the Lazatins did not specifically pray in their complaint that possession of the improvements on the parcels of land which they contributed to the JVA be transferred to them (they prayed that upon the rescission of the JVA, they be placed in possession of the parcels of land subject of the agreement, and for other reliefs and such other remedies as are just and equitable in the premises), the RTC was not precluded from awarding them possession of the improvements.i. Sec. 2(c), Rule 7, Rules of Court: A pleading shall specify the relief sought but it may add as general prayer for such further or other relief as may be deemed just and equitable.1. Eugenio v. Velez: Even without the prayer for a specific remedy, proper relief may be granted by the court if the facts alleged in the complaint and the evidence introduced so warrant2. Arroyo, Jr. v. Taduran: The prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief not otherwise specifically prayed for.b. The parcels of land, as well as the improvements made thereon, were contributed by the parties to the joint venture under the JVA, and thus formed part of the assets of the joint venture. The Lazatins were entitled to the possession not only of the parcels of land, but also of the improvements thereon, as a consequence of the RTCs finding that Primelink and Lopez breached their agreement and defrauded the Lazatins of their share of the net income under the JVA.2. Primelink and the Lazatins entered into a joint venture as evidenced by their JVA which, under the Aurbach ruling, is a form of partnership, and as such is to be governed by the laws on partnership.a. Aurbach v. Sanitary Wares Manufacturing Corporation on joint ventures vis--vis partnerships:i. Joint venture an organization formed for some temporary purpose (Gates v. Megargel)ii. Joint ventures and partnerships share similar elements: community of interest in the business, sharing of profits and losses, and a mutual right of control (Blackner v. McDermott, etc.)iii. Common law distinction between joint ventures and partnerships: a partnership contemplates a general business with some degree of continuity, while a joint venture is formed for the execution of a single transaction, and is thus of a temporary nature1. Not really applicable in the Philippines a partnership may be particular or universal, and a particular partnership may have for its object a specific undertaking (Art. 1783, Civil Code)iv. Philippine SC distinction between joint ventures and partnerships: although a corporation cannot enter into a partnership contract, it may, however, engage in a joint venture with others (Tuazon v. Bolanos)b. Aurbach, again: under Philippine law, a joint venture is a form of partnership and is to be governed by the laws of partnership.i. When the RTC rescinded the JVA after finding that Primelink was guilty of committing a breach thereof, the court thereby dissolved/cancelled the partnership.ii. With the rescission of the JVA on account of petitioners fraudulent acts, all authority of any partner to act for the partnership is terminated except so far as may be necessary to wind up the partnership affairs or to complete transactions begun but not yet finished (Art. 1832 in relation to Art. 1834).iii. On dissolution, the partnership is not terminated but continues until the winding up of partnership affairs (administration of the partnerships assets for the purpose of terminating the business and discharging the obligations of the partnership) is completed (Art. 1829).iv. The transfer of the possession of the parcels of land and the improvements thereon to the Lazatins was only for a specific purpose: the winding up of partnership affairs, and the partition and distribution of the net partnership assets as provided by law. Unless otherwise agreed by the parties in their JVA, the Lazatins have the right to wind up the partnership affairs (Art. 1836).c. It was premature for Primelink to demand that it be indemnified for the value of the improvements on the parcels of land owned by the joint venture/partnership. Until the partnership accounts are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.i. Although the Lazatins acquired possession of the parcels of land and the improvements thereon, these remained partnership property, subject to the rights and obligations of the parties, inter se, of the creditors, and of third parties (Art. 1837 and 1838), and subject to the outcome of the settlement of the accounts between the parties (Art. 1839), absent any agreement of the parties in their JVA to the contrary. The JVA doesnt contain any provision designating any party to wind up the partnership affairs.

09Heirs of Tan EngKeev.CA and Benguet Lumber Company, represented by its President Tan Eng Lay De Leon, Jr., J. 3 October 2000

SV: Tan EngKees Heirs allege that the deceased and his brother, Tan EngLay entered into a partnership to sell lumber and hardware supplies. They filed suit to cause the accounting, liquidation and winding up of such alleged partnership. The RTC ruled that Kee and Lay entered into a joint venture which was akin to a partnership. The CA reversed such ruling. The SC agreed with the CA and declared that there was no partnership in this case.FACTS:The common-law spouse and children of TAN ENG KEE (the plaintiffs) filed suit against the decedent's brother TAN ENG LAY for accounting, liquidation and winding up of the alleged partnership formed after World War II between Tan EngKee and Tan Eng Lay.After the second World War,Tan Eng Keeand Tan Eng Lay allegedly entered into a partnership engaged in the business of selling lumber and hardware and construction supplies named "BenguetLumber" which they jointly managed until Tan Eng Kee's death.Petitioners claim that in 1981, Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business.They filed an amended complaint impleading Benguet Lumber Company. RTC granted the petition for accounting and determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said was akin to a partnership. The CA reversed such decision,hence the present petition (Rule 45 appeal.ISSUE:WON there a partnership between Tan Eng Kee and Tan Eng Lay. NO, there was none. REASONING:1) The CA correctly noted that the trial court over extended the issue because it went so far as to justify the existence of a joint adventure when all the plaintiffs alleged was the existence of a partnership.The legal concept of joint adventure is of common law origin, hardly distinguishable from partnership. The Court distinguished partnership from joint adventure thus:a)A joint adventure (an American concept similar to our joint accounts) is a sort of informal partnership, with no firm name and no legal personality.In a joint account, the participating merchants can transact business under their own name, and can be individually liable therefor.(May be likened to a particular partnership).(b)Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful termination may continue for a number of years; a partnership generally relates to a continuing business of various transactions of a certain kind. (In this jurisdiction, the main difference is that corporations cannot enter into a partnership contract but it may engage in a joint adventure.2) The best evidence would have been the contract of partnership itself or the articles of partnership but there were none. The Court thus made a determination that they are being asked to determine the existence of a partnership based purely on circumstantial evidence (outlined below).Plaintiffs claim that because of the pooling of resources, the post-war Benguet Lumber was eventually established. They further claim that the fact that the father of the plaintiffs and Lay were partners is obvious from the fact that:(a)they conducted the affairs of the business during Kee's lifetime, jointly,- BUTLay was the only registered owner of Benguet Lumber and Hardware as evidenced by his application for registration. Kee was merely an employee, on the basis of his SSS coverage and the fact that he was on the payroll listing.(b)they were the ones giving orders to the employees,- BUT even a mere supervisor in a company, factory or store gives orders and directions to his subordinates. So long, therefore, that an employee's position is higher in rank, it is not unusual that he orders around those lower in rank.(c)they were the ones preparing orders from the suppliers,- BUT even a messenger or other trusted employee, overwhom confidence is reposed by the owner, can order materials from suppliers for and in behalf of Benguet Lumber. Furthermore, even a partner does not necessarily have to perform this particular task. It is, thus, not an indication that Tan Eng Kee was apartner.(d)their families stayed together at the Benguet Lumber compound,and- BUT, although Tan Eng Kee, together with his family,lived in the lumber compound and this privilege was not accorded to other employees, the undisputed fact remains that Kee was Lays brother. Whatever privileges Tan Eng Lay gave his brother, and which were not given the other employees, only proves the kindness and generosity of Tan Eng Lay towards a blood relative.However, these are not evidencessupporting the existence of a partnership. There was no partnership whatsoever. These only support the establishment of a proprietorship.Except for a firm name, there was no firm account, no firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits and losses, and no time fixed for the duration of the partnership.There was even no attempt to submit an accounting corresponding to the period after the war until Kee's death in 1984. It had no business book, no written account nor any memorandum for that matter and no license mentioning the existence of a partnership.3) In order to constitute a partnership, it must be established that:a) 2 or more persons bound themselves to contribute money, property, or industry to a common fund, and b) they intend to divide the profits among themselves. The agreement need not be formally reduced in writing, since oral constitution of partnerships are allowed except when:a) when immovable property or real rights are contributed andb) when the partnership has a capital of P3,000 or more. 4) Art. 1769 CC.Indeterminingwhetherapartnershipexists,theserulesshallapply:(1)Except as provided by Article1825,persons who are not partners as to each other are not partners as to third persons;(2)Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the use of theproperty;(3)The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived;(4)The receipt by a person of a share of the profits of a businesss is a prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:(a)As a debt by installment or otherwise;(b)As wages of an employee or rent to a landlord;(c)As an annuity to a widow or representative of a deceased partner;(d)As interest on a loan ,though the amount of payment vary with the profits of the business;(e)As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.PETITION DENIED, decision of CA AFFIRMED in toto.@ajmlegs

10JOSEFINA P. REALUBIT vs. PROSENCIO D. JASO and EDEN G. JASO (2011)

"The transfer by a partner of his partnership interest does not make the assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the management of the partnership business or to receive anything except the assignee's profits. The assignment does not purport to transfer an interest in the partnership, but only a future contingent right to a portion of the ultimate residue as the assignor may become entitled to receive by virtue of his proportionate interest in the capital."Since a partner's interest in the partnership includes his share in the profits, the Spouses Jaso are entitled to Biondo'sshare in the profits, despite Juanita's lack of consent to the assignment of [Biondos] interest in the joint venture.

Facts:11. In 1994, petitioner Josefina Realubit (Josefina) entered into aJoint Venture Agreementwith Francis Eric Amaury Biondo (Biondo), a French national, for the operation of an ice manufacturing business. 12. Josefina is the industrial partner and Biondo is the capitalist partner. They agreed that they would each receive 40% of the net profit, with the remaining 20% to be used for the payment of the ice making machine13. In 1997, Biondo executed aDeed of Assignment transferring all his rights and interests in the business in favor of respondent Eden Jaso (Eden), the wife of respondent Prosencio Jaso for Php500k. Biondo then left the country.14. The Spouses Jaso informed Josefina and formally demanded an accounting and inventory, as well as the remittance of their portion of its profits. 15. Josefina ignored the demand, and was sued for specific performance, accounting, examination, audit and inventory of assets and properties, dissolution of the joint venture, appointment of a receiver and damages in Paranaque RTC.16. DEFENSE: a. Spouses Realubit claimed that they have been engaged in the tube ice trading business under a single proprietorship even before their dealings with Biondo, b. theDeed of Assignmentwhich bears a signature markedly different from that which he affixed on theirJoint Venture Agreement; c. that they refused the Spouses Jaso's demand in view of the dubious circumstances surrounding their acquisition of Biondo's share in the business which was established at Don Antonio Heights, Commonwealth Avenue, Quezon City; d. that said business had already stopped operations on January 1996 when its plant shut down after its power supply was disconnected by MERALCO for non-payment of utility bills; ande. They now have their own tube ice trading business in Sanville Subdivision, Project 6, Quezon City that the Spouses Jaso mistook for the ice manufacturing business established in partnership with Biondo.

RTC: ifo Sps Jaso. Sps. Jaso has been subrogated to the rights of Biondo. There is partnership. Sps. Realubit to submit complete accounting and inventory of the assets and liabilities of the joint venture from its inception to the present, to allow plaintiffs access to the books and accounting records of the joint venture, to deliver to plaintiffs their share in the profits, if any, plus P20k for moral damages.CA: ifo of Sps Jaso. RTC decision set aside. There was no partnership. The business continued its operation in Sanville Subd.; Eden cannot be considered as a partner in the business, pursuant to Article 1813 of theCivil Code of the Philippines; while entitled to Biondo'sshare in the profitsof the business, Eden cannot, however, interfere with the management of the partnership, require information or account of its transactions and inspect its books; the partnership should first be dissolved before Eden can seek an accounting of its transactions and demand Biondo'sshare in the business; and no moral damages to be awarded. MR denied.Issue: WON there is a partnership agreement between Josefina Realubit and the Eden Jaso, the assignee of his former partner? NO.

Held/Ratio: CA decision affirmed. 7. Joint venture is likened to a particular partnership or one which "has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation."8. The rule is settled that joint ventures are governed by the law on partnershipswhich are, in turn, based on mutual agency ordelectus personae.9. Art. 1813.A conveyance by a partner of his whole interest in the partnership does not itself dissolve the partnership, or, as against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his contracts the profits to which the assigning partners would otherwise be entitled. However, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies.

In the case of a dissolution of the partnership, the assignee is entitled to receive his assignor's interest and may require an account from the date only of the last account agreed to by all the partners.(emphasis mine)10. A partner's interest in the partnership includes his share in the profits,thus the Spouses Jaso are entitled to Biondo'sshare in the profits.11. Although Eden Jaso did not, become a partner as a consequence of the assignment and/or acquire the right to require an accounting of the partnership business, the CA correctly granted her prayer for dissolution of the joint venture conformably with the right granted to the purchaser of a partner's interest under Article 1831 of theCivil Code.NOT QUITE RELEVANT:12. A party assailing the authenticity and due execution of a notarized document is, consequently, required to present evidence that is clear, convincing and more than merely preponderant. This, the Sps. Realubit failed to do. (Note: Eden Jaso and the notary public testified) 13. Also, forgery is never presumed and must likewise be proved by clear and convincing evidence by the party alleging the same.Said forgery is debunked by Biondo's duly authenticated certification dated 17 November 1998, confirming the transfer of his interest in the business in favor of Eden.14. Both the RTCand the CAruled out the dissolution of the joint venture and concluded that the ice manufacturing business at the aforesaid address was the same one established by Juanita and Biondo. As a rule, findings of fact of the CA are binding and conclusive upon the SC.

Petition for certiorari is denied.

Digest by: Arnel Abeleda

11Vicente Sy, Trinidad Paulino, 6Bs Trucking Corp., and SBT Trucking Corp., petitionersv.Court of Appeals and Jaime Sahot.

GR No. 142293 February 27, 2003Quisumbing, J.SV: Sahot has been serving the trucking company as a truck helper and later as a truck driver. At 59, he got sick and was not able to report back to work despite the demand of the trucking corporation to return. Because of this, the trucking corp dismissed him. He filed a complaint for illegal dismissal before the LA. LA ruled that he was an industrial partner before 1994 and there was no illegal dismissal, this was however reversed by the NLRC and such reversal was affirmed by the CASC: SAhot is not an industrial partner, there was no written agreement; he did not contribute to the common fund; no proof that he was receiving shares in the profits; and no proof that he was participating in the management, administration and adoption of policies of the business. There was no valid dismissal although the labor code allows dismissal on the ground of disease since the trucking corp did not comply with the requirements. Sahot was illegally dismissed and entitled to separation pay.

1. 1958. Jaime Sahot started working as a truck helper for Vicente Sy Trucking 2. 1965. He became a truck driver of the same family business, renamed T. Paulino Trucking Service and later 6Bs Trucking Corporation in 1985 and renamed again and now known as SBT trucking Corp. throughout the name changes, Sahot served the trucking business3. April 1994, Sahot, 59 years old at the time had been incurring absences due to various ailments (pain in left thigh which affected his task as a driver). 4. He inquired with SSS about medical and retirement benefits but discovered that his premium payments had not been remitted by his employer5. Sahot filed a week-long leave in May 1994 and before the end of the month he was medically examined and treated for various illnesses. SBT through its manager told him to file a formal extension of leave. He applied for extension of his leave for the whole month of June 6. It was at this point when Petitioners allegedly threatened to terminate his employment should he refuse to go back7. He could not retire because his SSS premiums were not paid correctly (hence, no pension) but he could neither go back to work because of his thigh. But the trucking corp helped him with his dilemma when they dismissed him from work (june 30, 1994)8. He filed for illegal dismissal against Sy, 6Bs Trucking and SBT Trucking et al. a. Sy et al: Sahot was not illegally dismissed because he was an industrial partner until 1994, the year Sahot became adriver (SBT trucking corp was established that year and Sahot became part of it as a driver/employee)b. That from the expiration of the extended leave, Sahot never came back to work and instead filed the case9. LA ruled in favor of SY and held that there was no illegal dismissal since Sahot failed to report to work. LA also ruled that Sahot was an industrial partner before 199410. NRLC: Sahot was an employee since the start. He did not abandon his job 11. CA affirmed NLRC decision ISSUES: 1. (Relevant ISSUE) Whether or not an employer-employee relationship existed between Sy and Sahot. YES The elements to determine the existence of an employment relationshipi. Selection and engagement of the employeeii. Payment of wagesiii. Power of dismissaliv. Employers power to control the employees conduct1. Most important. Control not only as to the result of the work to be done but also as to the means and methods to accomplish it Sy et al owned and operated a trucking business since the 1950s and they determined Sahots wages and rest day. Sahot did not have the freedom to determine where he would go, what he would do and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his wages. He worked as a truck helper and a truck driver not for his own pleasure but under the control of Sy et al. Art. 1767: in a contract of partnership two or more persons bind themselves to contribute money property or industry to a common fund with the intention of dividing the profits among themselvesi. (Not one is present in this case)ii. No written agreement to prove the partnershipiii. Sahot did not contribute money, property or industry for the purpose of engaging in the supposed business.iv. No proof that he was receiving a share in the profits as a matter of course during the period when the trucking business was operatingv. No proof that he actively participated in the management, administration and adoption of policies of the business If doubt exists between the evidence presented by the employer and the employee, the sacles of justice must be tilted in favor of the latter

2. Whether or not there was valid dismissal. NO NLRC and CA: though SAhot didnt intend to come back to work due to his illness, this was not abandonment. It should fall under the just causes of terminating an employment. The fact that they offered a different job did not change the scenario Art.294 of the labor code allows an employer to terminate employment of an employee on the ground of disease but there is a requirement under the omnibus implementing Rule of the Labor code which requires the employer obtain a certification by competent public health authority that the disease of such nature or at such a stage that it cannot be cured within a period of 6 months even with proper medical treatment. The trucking corp didnt comply with this. It is incumbent on the trucking corp to prove that it complied with the requisites for a valid dismissal. Also the requirement of sending 2 notices (one to the employee informing him of the acts or omissions for which his dismissal is sought and second to the employee informing him of his dismissal after giving him reasonable opportunity to answer and to heard on his defense) Clearly it was an invalid dismissal

3. Whether or not Sahot is entitled to separation pay. YES One month salary or to one-half month salary for every year of service P2080 x 36 years = P74, 880

Petition DENIED. CA decision AFFIRMEDJustin Benedict A. Moreto12CESAR C. LIRIO, doing business under the name and style of CELKOR AD SONICMIX, vs. WILMER D. GENOVIA (G.R. No. 169757, November 23, 2011)Topic: Partnership distinguished from Contract of EmploymentPonente: Peralta, J.Nature: NLRC Illegal Dismissal; CA ; SC Petition for CertiorariDoctrine:Quick Facts:Facts:July 9, 2002: Respondent Genovia filed a complaint against Petitioner Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of moral and exemplary damages.- In his Position Paper, respondent Genovia alleged, among others, that on August 15, 2001, he was hired as studio manager by petitioner Lirio. He was employed to manage and operate Celkor and to promote and sell the recording studio's services to music enthusiasts and other prospective clients. He received a monthly salary of P7k. They also agreed that he was entitled to an additional commission of P100 per hour as recording technician whenever a client uses the studio for recording, editing or any related work.- Respondent stated that a few days after he started working as a studio manager, petitioner approached him and told him about his project to produce an album for his 15y.o. daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such services. As agreed upon, the additional services that respondent would render included composing and arranging musical scores only, while the technical aspect in producing the album, such as digital editing, mixing and sound engineering would be performed by respondent in his capacity as studio manager for which he was paid on a monthly basis. Respondent then started making the album.- Genovia alleged that before the end of Sept 2001, he reminded petitioner about his compensation as composer and arranger of the album. Petitioner Lirio verbally assured him that he would be duly compensated. On Feb 26, 2002 (after the carrier single was already aired in over the radio on Feb 22), respondent Genovia again reminded petitioner about the contract on his compensation as composer and arranger of the album. Petitioner told respondent that since he was practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a high compensation, and he should be thankful that he was given a job to feed his family (kapal ng mukha!). Petitioner Lirio informed respondent Genovia that he was entitled only to 20% of the net profit, and not of the gross sales of the album, and that the salaries he received and would continue to receive as studio manager of Celkor would be deducted from the said 20% net profit share.- Respondent Genovia objected and insisted that he be properly compensated. On March 14, 2002, petitioner verbally terminated respondents services, and he was instructed not to report for work.- Respondent Genovia then filed a case for illegal dismissal before the NLRC, which assigned his case to LA Hernandez. Respondent Genovia asserts that he was illegally dismissed as he was terminated without any valid grounds, and no hearing was conducted before he was terminated, in violation of his constitutional right to due process. Having worked for more than six months, he was already a regular employee. Although he was a so called studio manager, he had no managerial powers, but was merely an ordinary employee.- Lirio stated in his Position Paper that respondent was not hired as studio manager, composer, technician or as an employee in any other capacity of Celkor. Respondent could not have been hired as a studio manager, since the recording studio has no personnel except petitioner. He decided to produce an album for his daughter and established a recording studio, which he named Celkor Ad Sonicmix Recording Studio. He looked for a composer/arranger who would compose the songs for the said album found Genovia. Respondent verbally agreed with petitioner to co-produce the album based on the following terms and conditions: (1) petitioner shall provide all the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer and arranger of all the lyrics and the music of the five songs he already composed and the revival songs; (4) petitioner shall have exclusive right to market the album; (5) petitioner was entitled to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his share of the net profits and only until such time that the album has been produced. Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is one of an informal partnership under Article 1767 of NCC, since they agreed to contribute money, property or industry to a common fund with the intention of dividing the profits