FERNANDO SANTOS, Petitioner, v. Spouses ARSENIO and NIEVES REYES, Respondents.

Facts:
In June 1986, Fernando Santos, Nieves Reyes and Melton Zabat orally agreed to form a partnership
a lending business. Santos contributed 70% (as financier) while Reyes and Zabat shared 30% (as
industrial partners). Later, Reyes introduced Cesar Gragera whom they would provide loans to
Grageras corporation particularly its employees. In return Gragera shall have a commission based
on the loan payments. The partners decided on August 1986 to have a written agreement but they
found out that Zabat engaged in a competitor venture thus expelled him. The two had Arsenio Reyes
(husband of Nieves) replaced Zabat.
However, Santos accused the Spouses of not remitting the loans payments. He argued that the
couple were only his employees and there was a special arrangement between him and Gragera.
The trial court and the Court of Appeals ruled against Santos.
Issue:
Whether or not there was a partnership formed between Santos and the Spouses Reyes?
Held:
YES. The original partnership with Zabat continued even after the expulsion of the latter from the
partnership because there was no intent to dissolve the (partnership) relationship.

[Respondents] were industrial partners of [petitioner]. . . . Nieves herself provided the initiative in
the lending activities with Monte Maria. In consonance with the agreement between appellant,
Nieves and Zabat (later replaced by Arsenio), [respondents] contributed industry to the common
fund with the intention of sharing in the profits of the partnership. [Respondents] provided services
without which the partnership would not have [had] the wherewithal to carry on the purpose for which
it was organized and as such [were] considered industrial partners (Evangelista v. Abad Santos, 51
SCRA 416 [1973]).
While concededly, the partnership between [petitioner,] Nieves and Zabat was technically
dissolved by the expulsion of Zabat therefrom, the remaining partners simply continued the
business of the partnership without undergoing the procedure relative to dissolution.
Instead, they invited Arsenio to participate as a partner in their operations. There was
therefore, no intent to dissolve the earlier partnership. The partnership between [petitioner,]
Nieves and Arsenio simply took over and continued the business of the former partnership with
Zabat, one of the incidents of which was the lending operations with Monte Maria.

G.R. No. 126881

October 3, 2000

HEIRS OF TAN ENG KEE, petitioners,

vs.
COURT OF APPEALS and BENGUET LUMBER COMPANY, represented by its
President TAN ENG LAY,respondents.
FACTS:
After the second World War, Tan EngKee and Tan Eng Lay, pooling their resources and industry together,
entered into a partnership engaged in the business of selling lumber and hardware and construction
supplies. They named their enterprise "Benguet Lumber" which they jointly managed until Tan EngKee's
death. Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged
partners. However, they claimed 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 EngKee and his heirs of their rightful participation in the profits of the
business. Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and
liquidation thereof, and the equal division of the net assets of Benguet Lumber. The RTC ruled in favor of
petitioners, declaring that Benguet Lumber is a joint venture which is akin to a particular partnership. The
Court of Appeals rendered the assailed decision reversing the judgment of the trial court.
ISSUE: Whether the deceased Tan EngKee and Tan Eng Lay are joint adventurers and/or partners in a
business venture and/or particular partnership called Benguet Lumber and as such should share in the
profits and/or losses of the business venture or particular partnership
RULING:
There was no partnership whatsoever. 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.
Also, the trial court determined that Tan EngKee and Tan Eng Lay had entered into a joint venture, which
it said is akin to a particular partnership. A particular partnership is distinguished from a joint adventure, to
wit:(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. (b) Usually, but not necessarily a
joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful
termination maycontinue for a number of years; a partnership generally relates to a continuing business of
various transactions of a certain kind. A joint venture "presupposes generally a parity of standing between
the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or
property contributed, and where each party exercises equal rights in the conduct of the business. The
evidence presented by petitioners falls short of the quantum of proof required to establish a partnership. In
the absence of evidence, we cannot accept as an established fact that Tan EngKee allegedly contributed
his resources to a common fund for the purpose of establishing a partnership. Besides, it is indeed odd, if
not unnatural, that despite the forty years the partnership was allegedly in existence, Tan EngKee never
asked for an accounting. The essence of a partnership is that the partners share in the profits and losses

.Each has the right to demand an accounting as long as the partnership exists. A demand for periodic
accounting is evidence of a partnership. During his lifetime, Tan EngKee appeared never to have made
any such demand for accounting from his brother, Tang Eng Lay. We conclude that Tan EngKee was only
an employee, not a partner since they did not present and offer evidence that would show that Tan EngKee
received amounts of money allegedly representing his share in the profits of the enterprise. There being no
partnership, it follows that there is no dissolution, winding up or liquidation to speak of.

Case Digest: Filomeno Negado, Narciso Rocha, and Juan Guirindola

vs GonzaloMakabenta
54 OG 408228 February 1958
Facts:
Plaintiffs filed a suit against the defendant for the recovery of possession and
management of Liberty Theater located in Leyte and for an accounting of all money and
property pertainingthereto.The plaintiffs allege that the theater is owned and operated by
a partnership known as HemaroguiCompany composed of the plaintiffs and defendant.
Conversely, the defendant alleges that he isthe sole and exclusive owner of the theater
while the plaintiffs are merely creditor.The trial court held that no partnership exists and
the oral and material evidence (books,accounts, and papers) presented by the plaintiffs
are incompetent to establish existence of the partnership.
Issue:
Whether or not a partnership exists among Negado, Rocha, Guirindola and Makabenta
Decision:
There exists a partnership. In determining whether or not a particular transaction
constitutes partnership, the intention as disclosed by the entire transaction, and as
gathered from the factsand from the language employed by the parties as well as their
conduct. A partnership may becreated without any definite intention to create it, the
intention of the parties being inferred fromtheir conduct and dealings with each other. For
the purpose of showing the existence of a partnership, books, papers, accounts and
similar writings are admissible as evidence providedthat the party against whom they
are offered is shown to have authorized or ratified them

YULO V. YANG CHIAO SENG

Facts:
Yang Chiao Seng proposed to form a partnership with Rosario Yulo to run and operate a theatre on the premises
occupied by Cine Oro, Plaza Sta. Cruz, Manila, the principal conditions of the offer being (1) Yang guarantees Yulo a
monthly participation of P3,000 (2) partnership shall be for a period of 2 years and 6 months with the condition that if
the land is expropriated, rendered impracticable for business, owner constructs a permanent building, then Yulos right
to lease and partnership even if period agreed upon has not yet expired; (3) Yulo is authorized to personally conduct
business in the lobby of the building; and (4) after Dec 31, 1947, all improvements placed by partnership shall belong
to Yulo but if partnership is terminated before lapse of 1 and years, Yang shall have right to remove improvements.
Parties established, Yang and Co. Ltd., to exist from July 1, 1945 Dec 31, 1947.
In June 1946, they executed a supplementary agreement extending the partnership for 3 years beginning Jan 1, 1948 to
Dec 31, 1950.
The land on which the theater was constructed was leased by Yulo from owners, Emilia Carrion and Maria Carrion Santa
Marina for an indefinite period but that after 1 year, such lease may be cancelled by either party upon 90-day notice. In
Apr 1949, the owners notified Yulo of their desire to cancel the lease contract come July. Yulo and husband brought a
civil action to declare the lease for a indefinite period. Owners brought their own civil action for ejectment upon Yulo
and Yang.
CFI: Two cases were heard jointly; Complaint of Yulo and Yang dismissed declaring contract of lease terminated.
CA: Affirmed the judgment.
In 1950, Yulo demanded from Yang her share in the profits of the business. Yang answered saying he had to suspend
payment because of pending ejectment suit.
Yulo filed present action in 1954, alleging the existence of a partnership between them and that Yang has refused to
pay her shares.
Defendants Position: The real agreement between plaintiff and defendant was one of lease and not of partnership;
that the partnership was adopted as a subterfuge to get around the prohibition contained in the contract of lease
between the owners and the plaintiff against the sublease of the property.
Trial Court: Dismissal. It is not true that a partnership was created between them because defendant has not actually
contributed the sum mentioned in the Articles of Partnership or any other amount. The agreement is a lease because
plaintiff didnt share either in the profits or in the losses of the business as required by Art 1769 (CC) and because
plaintiff was granted a guaranteed participation in the profits belies the supposed existence of a partnership.
Issue: Was the agreement a contract a lease or a partnership?
Ruling: Dismissal. The agreement was a sublease not a partnership. The following are the requisites of partnership:
(1) two or more persons who bind themselves to contribute money, property or industry to a common fund; (2) the
intention on the part of the partners to divide the profits among themselves (Article 1761, CC)
Plaintiff did not furnish the supposed P20,000 capital nor did she furnish any help or intervention in the management
of the theatre. Neither has she demanded from defendant any accounting of the expenses and earnings of the business.
She was absolutely silent with respect to any of the acts that a partner should have done; all she did was to receive her
share of P3,000 a month which cannot be interpreted in any manner than a payment for the use of premises which she
had leased from the owners.

ORTEGA VS CA
FACTS: The law firm of R,L,S and C was duly registered in the Mercantile Registry and reconstituted with the SEC. There
were several amendments to its articles of partnership. Respondent-Appellees senior and junior partners associated
themselves together. Ortega informed them through a letter that he is retiring from the firm of Bito, Misa and Lozada
regarding the liquidation of his participation in it. He later on filed with the SICD a petition for dissolution and
liquidation of partnership.
Hearing Officer: said withdrawal of O did not dissolve the law partnership and both parties to the case are enjoined to
abide by the provisions of the Agreement re: the liquidation of the shares of any retiring or withdrawing partner.
SEC: reversed the decision ruling that the withdrawal had in fact dissolved the partnership of BML as a partnership at
will, the law firm can be dissolved by any partner at anytime by his withdrawal regardless of good faith or bad faith.
Remanded the case to the HO to determine rights and obligations of parties.
CA: affirmed in toto the SEC decision and that there is no need for the appointment of a receiver as no sufficient proof
had been shown to indicate that the partnership assets were in any such danger of being lost, removed or materially
impaired.
ISSUES: whether it was a partnership at will; whether Ms withdrawal dissolved the partnership; whether such withdrawal
was made in bad faith.
SC: It was a partnership at will as it had not fixed a specified period for its undertaking.
It may be dissolved at will by any of the partners but if it was done in bad faith, such partner shall be liable for
damages. Upon dissolution, the partnership continues and its legal personality is retained until the complete winding
up of its business culminating in its termination. The liquidation of assets is governed by the CC but an agreement
between parties is binding upon them.
It was not done out of bad faith as it was spurred by an interpersonal conflict among the partners.