59577175 Bus Org Compiled Final

7/29/2019 59577175 Bus Org Compiled Final

1/23

Feu Leung vs Intermediate Appellate Court

Facts:

The Sun WahPanciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was

established sometime in October, 1955. It was registered as a single proprietorship and its licenses and

permits were issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent

Leung Yiu adduced evidence during the trial of the case to show that Sun WahPanciteria was actually a

partnership and that he was one of the partners having contributed P4,000.00 to its initial

establishment.

Issue:

whether or not the private respondent is a partner of the petitioner in the establishment of Sun

WahPanciteria.

Held:

private respondent is a partner of the petitioner in Sun WahPanciteria. The requisites of a partnership

which are 1) two or more persons bind themselves to contribute money, property, or industry to a

common fund; and 2) intention on the part of the partners to divide the profits among themselves have

been established. As stated by the respondent, a partner shares not only in profits but also in the losses

of the firm. If excellent relations exist among the partners at the start of business and all the partners

are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing

in the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his

rights anytime within ten years from the start of operations, such rights are irretrievably lost. Theprivate respondent's cause of action is premised upon the failure of the petitioner to give him the

agreed profits in the operation of Sun WahPanciteria. In effect the private respondent was asking for an

accounting of his interests in the partnership.

Heirs of tan engkeevsca

Facts;:


2/23

Following the death of Tan EngKee on September 13, 1984, MatildeAbubo, the common-law

spouse of the decedent, joined by their children Teresita, Nena, Clarita, Carlos, Corazon and Elpidio,

collectively known as herein petitioners HEIRS OF TAN ENG KEE, filed suit against the decedent's brother

TAN ENG LAY on February 19, 1990. The complaint,3

was for accounting, liquidation and winding up of

the alleged partnership formed after World War II between Tan EngKee and Tan Eng Lay. On March 18,

1991, the petitioners filed an amended complaint4

impleading private respondent herein BENGUET

LUMBER COMPANY, as represented by Tan Eng Lay. The amended complaint was admitted by the trial

court in its Order dated May 3, 1991.5

The amended complaint principally alleged that 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, andthe equal division of the net assets of Benguet Lumber.

Issue: whether Tan EngKee and Tan Eng Lay were partners in Benguet Lumber

Held:

In order to constitute a partnership, it must be established that (1) two or more persons bound

themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide

the profits among themselves.15 The agreement need not be formally reduced into writing, sincestatute allows the oral constitution of a partnership, save in two instances: (1) when immovable

property or real rights are contributed,16 and (2) when the partnership has a capital of three thousand

pesos or more.17 In both cases, a public instrument is required.18 An inventory to be signed by the

parties and attached to the public instrument is also indispensable to the validity of the partnership

whenever immovable property is contributed to the partnership.

The best evidence would have been the contract of partnership itself, or the articles of partnership but

there is none. The evidence presented by petitioners falls short of the quantum of proof required to

establish a partnership.

Unfortunately for petitioners, Tan EngKee has passed away. Only he, aside from Tan Eng Lay, could have

expounded on the precise nature of the business relationship between them. 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.

We conclude that Tan EngKee was only an employee, not a partner.


3/23

PascualVs Commissioner of Internal Revenue

Facts:

On June 22, 1965, petitioners bought two (2) parcels of land from Santiago Bernardino, et al. and on

May 28, 1966, they bought another three (3) parcels of land from Juan Roque. The first two parcels of

land were sold by petitioners in 1968 toMarenir Development Corporation, while the three parcels of

land were sold by petitioners to Erlinda Reyes and Maria Samson on March 19,1970. Petitioners realized

a net profit in the sale made in 1968 in the amount of P165,224.70, while they realized a net profit of

P60,000.00 in the sale made in 1970. The corresponding capital gains taxes were paid by petitioners in

1973 and 1974 by availing of the tax amnesties granted in the said years.

However, in a letter dated March 31, 1979 of then Acting BIR Commissioner Efren I. Plana, petitioners

were assessed and required to pay a total amount of P107,101.70 as alleged deficiency corporate

income taxes for the years 1968 and 1970.

Petitioners protested the said assessment in a letter of June 26, 1979 asserting that they had availed of

tax amnesties way back in 1974.

In a reply of August 22, 1979, respondent Commissioner 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 under Section 20(b) and its income was subject to the taxes

prescribed under Section 24, both of the National Internal Revenue Code 1 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

under P.D. No. 23, as amended, by petitioners relieved petitioners of their individual income tax

liabilities but did not relieve them from the tax liability of the unregistered partnership. Hence, the

petitioners were required to pay the deficiency income tax assessed.

Petitioners filed a petition for review with the respondent Court of Tax Appeals docketed as CTA Case

No. 3045. In due course, the respondent court by a majority decision of March 30, 1987, 2 affirmed the

decision and action taken by respondent commissioner with costs against petitioners

Issue:


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distinction between co-ownership and an unregistered partnership or joint venture for income tax

purposes is the issue in this petition.

Held:

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.

The sharing of returns does not in itself establish a partnership whether or not the persons

sharing therein have a joint or common right or interest in the property. There must be a clear

intent to form a partnership, the existence of a juridical personality different from the individual

partners, and the freedom of each party to transfer or assign the whole property.

In the present case, 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.

Evangeslista and Co. vs. Abad Santos

Facts: A co-partnership was formed under the name of Evangelista & Co. Its articles of co-

partnership was later on amended to include Estrella Abad Santos (a judge in a City Court in

Manila) as an industrial partner. She subsequently filed a suit against the partnership to pay her

the share of the profits owing to her. She alleged that the partnership is paying dividends to

the partners except her. The partners denied that Abad Santos was an industrial partner and

that the articles of co-partnership do not express the true agreement of the parties and thatAbad Santos was a mere profit sharer, not a partner.

Issue: W/N Abad Santos is a partner?

Held: Yes, Abad Santos is a partner.


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The partners are estopped from denying the articles of partnership because they admitted its

genuiness and due execution. Even if it were erroneous, they failed to assail it for 8 years. Such

failure shows their assent to the said articles.

In addition, the partners alleged that being a judge, she cannot be an industrial partner since

industrial partners aer not allowed to engage in another business or profession. The SC held

that such allegation has no merit because Santos complied with her obligation to the

partnership. The partners also failed to exercise their right of exclusion for 9 years. This shows

that the argument of engaging in another profession is a mere afterthought and that the

partnership actually allowed Santos to exercise her profession.


6/23

CompanaMaritima vs. Munoz

The Maritima brought this action in the CFI of Manila against the partnership of Franciso Muoz

& Sons, and against Francisco Muoz, Emilio Muoz, and Rafael Naval to recover the sum of

P26,828.30, with interest and costs. Judgment was rendered acquitting Emilio Muoz and

Rafael Naval of the complaint, and in favor of the plaintiff and against the defendant

partnership, Francisco Muoz & Sons, and Francisco Muoz form the sum of P26,828.30 with

interest at the rate of 8 per cent per annum from March 31, 1905, and costs. Plaintiff appealed.

On March 31, 1905, the defendants Francisco Muoz, Emilio Muoz, and Rafael Naval formed

on ordinary general mercantile partnership under the name of Francisco Muoz & Sons for the

purpose of carrying on the mercantile business in the Province of Albay which had formerly

been carried on by Francisco Muoz. Francisco was a capitalist partner and Emilio and Naval

were industrial partners.

Issue: W/N Emilio Munoz is liable to third persons?

Held: Yes, he is liable.

It cannot be sustained that Emilio Munoz contributed nothing to the partnership. He

contributed as much as did the other industrial partner, Rafael Naval. Therefore, as stated also

in the articles of the partnership, Emilio is also an industrial partner, thus, also a general

partner.

The law does not make any distinction in the liability of a general partner and an industrial

partner. There is nothing in the code which says that the industrial partners shall be the onlygeneral partners, nor is there anything which says that the capitalist partners shall be the only

general partners.

Article 127 of the Code of Commerce is as follows:

All the members of the general copartnership, be they or be they not managing partners of the

same, are liable personally and in solidum with all their property for the results of the

transactions made in the name and for the account of the partnership, under the signature of

the latter, and by a person authorized to make use thereof.

Industrial partners must be included in the phrase all the partners There is no injustice in

imposing this liability upon the industrial partners. They have a voice in the management of the

business, if no manager has been named in the articles; they share in the profits and as to third

persons it is no more than right that they should share in the obligations. It is admitted that if in

this case there had been a capitalist partner who had contributed only P100 he would be liable

for this entire debt of P26,000.


7/23

Bachrach vs. La Protectora

In 1913, a civil partnership named La Protectora was formed by defendants for the purpose

of engaging in the business of transporting passengers and freight at Laoag, Ilocos Norte.

In order to provide the enterprise with means of transportation, Marcelo Barba, acting asmanager, negotiated the purchase of two automobile trucks from E. M. Bachrach, for the agree

price of P16,500. He paid the sum of 3,000 in cash, and for the balance executed promissory

notes representing the deferred payments.

Before purchase of the trucks, private respondents executed a document declaring they were

members of the firm La Protectora and they grant to its president full authority "in the name

and representation of said partnership to contract for the purchase of two automobiles" in

obedience to the requirements of subsection 2 of article 1697 of the Civil Code, for the purpose

of evidencing the authority of Marcelo Barba to bind the partnership by the purchase. The

document in question was delivered by him to Bachrach at the time the automobiles were

purchased.

Issue: W/N promissory notes were binding against La Protectora and private respondents?

Held: Yes, binding.

The business conducted under the name of "La Protectora" was evidently that of a civil

partnership; The authority of Marcelo Barba to bind the partnership, in the purchase of the

trucks, is fully established by the document executed by appellants upon June 12, 1913. The

transaction by which Barba secured these trucks was in conformity with the tenor of thisdocument. The promissory notes constitute the obligation exclusively of "La Protectora" and of

Marcelo Barba; and they do not in any sense constitute an obligation directly binding on the

four appellants. Their liability is based on the fact that they are members of the civil partnership

and as such are liable for its debts. It is true that article 1698 of the Civil Code declares that a

member of a civil partnership is not liable in solidum with his fellows for its entire indebtedness;

but it results from this article, in connection with article 1137 of the Civil Code, that each is

liable with the others for his aliquot part of such indebtedness.

There is no proof in the record showing what the agreement, if any, was made with regard to

the form of management. Under these circumstances it is declared in article 1695 of the Civil

Code that all the partners are considered agents of the partnership. Barba therefore must be

held to have had authority to incur these expenses. But in addition to this he is shown to have

been in fact the president or manager, and there can be no doubt that he had actual authority

to incur this obligation.


8/23

ELMO MUASQUE

vs.

COURT OF APPEALS,CELESTINO GALAN TROPICAL COMMERCIAL COMPANY and RAMON PONS.

FACTS

Petitioner Elmo Muasque filed a complaint for payment of sum of money and damages against

respondents Celestino Galan, Tropical Commercial, Co., Inc. (Tropical) and Ramon Pons, alleging

that the petitioner entered into a contract with respondent Tropical through its Cebu Branch

Manager Pons for remodelling a portion of its building without exchanging or expecting any

consideration from Galan although the latter was casually named as partner in the contract;

that by virtue of his having introduced the petitioner to the employing company (Tropical).

Galan would receive some kind of compensation in the form of some percentages or

commission; that Tropical, under the terms of the contract, agreed to give petitioner the

amount of P7,000.00 soon after the construction began and thereafter, the amount of

P6,000.00 every fifteen (15) days during the construction to make a total sum of P25,000.00;

that on January 9, 1967, Tropical and/or Pons delivered a check for P7,000.00 not to theplaintiff but to a stranger to the contract, Galan, who succeeded in getting petitioner's

indorsement on the same check persuading the latter that the same be deposited in a joint

account. Petitioner undertook the construction at his own expense completing it prior to the

March 16, 1967 deadline;that because of the unauthorized disbursement by respondents

Tropical and Pons of the sum of P13,000.00 to Galan petitioner demanded that said amount be

paid to him by respondents under the terms of the written contract between the petitioner and

respondent company. The trial court rendered judgment in favor of defendant. On appeal, the

Court of Appeals affirmed the judgment of the trial court with modifications as to amount.

ISSUE

Whether or not there existed a partnership between Celestino Galan and Elmo Muasque

HELD

While it is true that under Article 1816 of the Civil Code,"All partners, including industrial ones, shall be liable

prorate with all their property and after all the partnership assets have been exhausted, for the contracts which

may be entered into the name and fm the account cd the partnership, under its signature and by a person

authorized to act for the partner-ship. ...". this provision should be construed together with Article 1824 which

provides that: "All partners are liable solidarily with the partnership for everything chargeable to the partnership

under Articles 1822 and 1823." In short, while the liability of the partners are merely joint in transactions entered

into by the partnership, a third person who transacted with said partnership can hold the partners solidarily liablefor the whole obligation if the case of the third person falls under Articles 1822 or 1823.

The obligation is solidary, because the law protects him, who in good faith relied upon the authority of a partner,

whether such authority is real or apparent. That is why under Article 1824 of the Civil Code all partners, whether

innocent or guilty, as well as the legal entity which is the partnership, aresolidarily liable.

In the case at bar the respondent Tropical had every reason to believe that a partnership existed between the

petitioner and Galan and no fault or error can be imputed against it for making payments to "Galan and


9/23

Associates" and delivering the same to Galan because as far as it was concerned, Galan was a true partner with

real authority to transact on behalf of the partnership with which it was dealing. This is even more true in the cases

of Cebu Southern Hardware and Blue Diamond Glass Palace who supplied materials on credit to the partnership.

Thus, it is but fair that the consequences of any wrongful act committed by any of the partners therein should be

answered solidarily by all the partners and the partnership as a whole

However. as between the partners Muasque and Galan,justice also dictates that Muasque be reimbursed byGalan for the payments made by the former representing the liability of their partnership to herein intervenors, as

it was satisfactorily established that Galan acted in bad faith in his dealings with Muasque as a partner.

LIM TONG LIM

vs

PHILIPPINE FISHING GEAR INDUSTRIES, INC.

FACTS

On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract datedFebruary 7, 1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc.

(herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim,

who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four

hundred pieces of floats worth P68,000 were also sold to the Corporation.4

The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a collection

suit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment. The suit was

brought against the three in their capacities as general partners, on the allegation that "Ocean Quest Fishing

Corporation" was a nonexistent corporation as shown by a Certification from the Securities and Exchange

Commission.5

On September 20, 1990, the lower court issued a Writ of Preliminary Attachment, which the sheriff

enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries Port, Navotas,

Metro Manila.

On November 18, 1992, the trial court rendered its Decision, ruling that Philippine Fishing Gear Industries was

entitled to the Writ of Attachment and that Chua, Yao and Lim, as general partners, were jointly liable to pay

respondent.

In affirming the trial court, the CA held that petitioner was a partner of Chua and Yao in a fishing business and may

thus be held liable as a such for the fishing nets and floats purchased by and for the use of the partnership.

ISSUE

Whether by their acts, Lim, Chua and Yao could be deemed to have entered into a partnership.

HELD

The facts as found by the two lower courts clearly showed that there existed a partnership among Chua, Yao and

him, pursuant to Article 1767 of the Civil Code.

From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had decided to engage in a fishing

business, which they started by buying boats worth P3.35 million, financed by a loan secured from Jesus Lim who

was petitioner's brother. In their Compromise Agreement, they subsequently revealed their intention to pay the

loan with the proceeds of the sale of the boats, and to divide equally among them the excess or loss. These boats,


10/23

the purchase and the repair of which were financed with borrowed money, fell under the term "common fund"

under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangible like

credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would be

divided equally among them also shows that they had indeed formed a partnership.

Moreover, it is clear that the partnership extended not only to the purchase of the boat, but also to that of the

nets and the floats. The fishing nets and the floats, both essential to fishing, were obviously acquired infurtherance of their business. It would have been inconceivable for Lim to involve himself so much in buying the

boat but not in the acquisition of the aforesaid equipment, without which the business could not have proceeded.

Given the preceding facts, it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in the

fishing business. They purchased the boats, which constituted the main assets of the partnership, and they agreed

that the proceeds from the sales and operations thereof would be divided among them.

ANTONIO C. GOQUIOLAY, ET AL. vs.WASHINGTON Z. SYCIP, ET AL.

G.R. No. L-11840, December 10, 1963

REYES, J.B.L., J.

FACTS:

Tan Sin An and Antonio Goquiolay enteredinto a general commercial partnership which was tolast for 10

years for the purpose of dealing in realestate. The agreement lodged upon Tan Sin An thesole

management of the partnership affairs and hisco partner, Goquiolay, has no voice or participationin

the management of the affairs of the co partnership. They further agreed upon that in the event of the

death of any of the partners at any timebefore the expiration of the term, the co partnership shall notbe dissolved but will have to becontinued and the deceased partner shall berepresented by his heirs or

assigns in the said co partnership. A general power of attorney (GPA) was executed by Goquiolay in

favor of Tan Sin An whichincluded buy, sell, alienate and convey properties ofthe partnership as well as

obtain loans as he maydeem advisable for the best interest of the co partnership. With the authority of

the GPA, thepartnership through Tan Sin An purchased 3 parcelsof land which was mortgaged to La

Urbana Sociedadand another 46 parcels of land which whichwerepurchased by Tan Sin An in his

individual capacity,and assumed mortgaged debt thereon. The downpaymentfor the 46 parcels of land

was advanced by Yutivo and Co. The two separate obligations were consolidated in an

instrumentexecuted by the partnership and Tan Sin An,whereby the entire 49 lots were mortgaged in

favorof the BancoHipotecario de Filipinas (as successor toLa Urbana). Repeated demandsforpayment

were made by BancoHipotecario on thepartnership and on Tan Sin An which was initiallypaid by Yutivo

and Co. and Sing Yee Cuan and Co.The mortgage waseventually cancelled. Now Yutivo and Sing Yee


11/23

CuanCompany filed their claims in the intestateproceedings of Tan Sin An. Kong Chai Pin filed apetition

with the probate court for authority to sell allthe 49 parcels of land to Washington Sycip and BettyLee

for the purpose primarily of settling the aforesaiddebts of her husband and the partnership. The court

ordered the execution of deed of sale in favor of Sycip and Lee in consideration of P37,000.00 and

assuming payment of the claims filed by Yutivo&Co.and Sing Yee Co. Later, Sycip and Lee executed

infavor of the Insular Devt. Co. a deed of transfercovering said 49 parcels of land.Upon learning the sale,

the surviving partner Goquiolay filed a petition to set aside thedecision of the probate court and annul

the sale ofthe parcels of land by Kong Chai Pin in favor of Sycipand Lee and their subsequent conveyance

in favor ofInsularDevt. Co. in so far as the 3 lots owned by thepartnership is concerned. Kong Chai Pin

averred thevalidity of the sale as successor partner, in lieu of thelate Tan Sin An. The complaint was

dismissed by thelower court and appeal was directly taken to the SCbyGoquiolay.

ISSUE:1.Whether or not Kong Chai Pin acquired the managerialrights of her late husband Tan Sin An

2. Whether or not there was a valid sale of property to Sycip andLee

HELD:

1. The right of exclusive managementconferred upon Tan Sin An, being premised upontrust and

confidence, was a mere personal right thatterminated upon Tans demise. The provision in thearticles of

partnership stating that the deceasedpartner shall be represented by his heirs could nothave referred to

the managerial rights given to TanSin An but it more appropriately relates to thesuccession in the

propriety interest of each partner(heir becomes limited partner only).

2. However, consonant with the articles of co partnership providing for the continuation of the

firmnotwithstanding the death of one of the partners, theheir of the deceased, by never repudiating

orrefusing to be bound under said provision, becameindividual partner with Goquiolay upon Tans

demise.By allowing Kong Chai Pin to retain control of thepartnership properties from 1942 to 1949,

Goquiolayis estopped from denying her legal representation ofthe partnership, with the power to bind it

with propercontracts. By authorizing the widow of the managingpartner to manage partnership

property (which alimited partner could not be authorized to do), theother general partner recognized

her as a generalpartner, and is now in estoppel to deny her positionas a general partner, with authority

to administerand alienate partnership property.

MARJORIE TOCAO and WILLIAM T. BELO vs. COURT OF APPEALS and NENITA A. ANAY

G.R. No. 127405, October 4, 2000


12/23

YNARES-SANTIAGO, J.

FACTS:

Private respondent Nenita A. Anay, as marketing adviser of Technolux in Bangkok, Thailand met

petitioner William T. Belo, then the vice-president for operations of Ultra Clean Water Purifier, through

her former employer in Bangkok. Belo introduced Anay to petitioner Marjorie Tocao, who conveyed her

desire to enter into a joint venture with her for the importation and local distribution of kitchen

cookwares. Belo volunteered to finance the joint venture and assigned to Anay the job of marketing the

product considering her experience and established relationship with West Bend Company, a

manufacturer of kitchen wares in Wisconsin, U.S.A. Under the joint venture, Belo acted as capitalist,

Tocao as president and general manager, and Anay as head of the marketing department and later, vice-

president for sales. Anay organized the administrative staff and sales force while Tocao hired and fired

employees, determined commissions and/or salaries of the employees, and assigned them to differentbranches. The parties agreed that Belos name should not appear in any documents relating to their

transactions with West Bend Company. Instead, they agreed to use Anays name in securing

distributorship of cookware from that company. The cookware business took off successfully. They

operated under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocaos

name. On October 7, 1987, in the presence of Anay, Belo signed a memo entitling her to a (37%)

commission for her personal sales "up Dec 31/87. Belo explained to her that said commission was apart

from her (10%) share in the profits. On October 9, 1987, Anay learned that Marjorie Tocao had signed a

letter addressed to the Cubao sales office to the effect that she was no longer the vice-president

ofGeminesse Enterprise. The following day, she received a note from Lina T. Cruz, marketing manager,

that Marjorie Tocao had barred her from holding office and conducting demonstrations in both Makati

and Cubao offices. The following year, 1988, she did not receive the same commission although the

company netted a gross sales of P13,300,360.00. Hence, Nenita A. Anay filed a complaint for sum of

money with damages against Marjorie D. Tocao and

William Belo before the RTC of Makat

ISSUE:

Whether or not the plaintiff was an employee or partner of Marjorie Tocao and Belo

HELD:


13/23

Petitioners admit that private respondent had the expertise to engage in the business of distributorship

of cookware. Private respondent contributed such expertise to the partnership and hence, under the

law, she was the industrial or managing partner.

AGENCY

VICTORIAS MILLING CO., INC. vs. COURT OF APPEALS and CONSOLIDATED SUGAR CORPORATION

G.R. No. 117356, June 19, 2000

QUISUMBING, J.

FACTS:

St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co.,

Inc., (VMC). In the course of their dealings, petitioner issued several Shipping List/Delivery Receipts

(SLDRs) to STM as proof of purchases. Among these was 25,000 bags of sugar. On October 25, 1989,STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights to the said bags of sugar.

That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar on the

latters behalf. Private respondent CSC surrendered SLDR to the petitioner's NAWACO warehouse and

was allowed to withdraw sugar. However, after 2,000 bags had been released, petitioner refused to

allow further withdrawals of sugar CSC thus inquired when it would be allowed to withdraw the

remaining 23,000 bags. Petitioner replied that it could not allow any further withdrawals of sugar

because STM had already dwithdrawn all the sugar covered by the cleared checks. CSC filed a complaint

for specific performance. The lower court ruled in favor of CSC.

ISSUE:

Whether or not the transaction between petitioner and STM was a separate, independent, and single

transaction

HELD:

The purchase of sugar covered by SLDR No. 1214M was a separate and independent transaction; it was

not a serial part of a single transaction or of one account contrary to petitioner's insistence. Evidence on

record shows, without being rebutted, that petitioner had been paid for the sugar purchased under

SLDR No. 1214M. Petitioner clearly had the obligation to deliver said commodity to STM or its assignee.

Since said sugar had been fully paid for, petitioner and CSC, as assignee of STM, were not mutually

creditors and debtors of each other.


14/23

LAVIA vs CA

Facts:

On April 6, 1983, Maria Carmen Gabriel y Paterno executed a donation mortis causa in favor ofher widowed sister-in-law, Josefina C. Gabriel over a parcel of land with improvements inSampaloc, Manila. The donation was thumbmarked by Carmen before Notary Public and wasaccepted by the donee in the same instrument.

Four months later, Carmen, who was already gravely ill with breast cancer, executed a Last WillAnd Testament in which she bequeathed the same Sampaloc property to her cousin andcompanion, Remedios C. Muyot, and willed a small 240-square-meter lot in Antipolo, Rizal toJosefina. She named a friend, Concepcion M. De Garcia, as executrix of her will. Carmen

executed a General Power of Attorney appointing Remedios M. Muyot, as her attomey-in-fact.

Josefina registered an adverse claim on the title of the Sampaloc property based on thedonation made in her favor. The next day, RemediosMuyot, as Carmen's attorney- in-fact, hired

Atty. Celso D. Lavia, as Carmen's counsel, on a 30% contingent fee basis.

Carmen thumbmarked an "AFFIDAVITOF DENIAL" repudiating the donation of the Sampalocproperty to Josefina alleging that it was procured through fraud and trickery.On the sameoccasion, she thumbmarked a "REVOCATION OF DONATION" before Notary Public.

However, RemediosMuyot, as Carmen's attorney-in-fact, sold the Sampaloc property to VirgilioD. Cebrero. On November 29, 1983, Carmen passed away and the "REVOCATION OF

DONATION" was registered. Josefina filed a complaint in the RTC of Manila against Carmen'sestate and the Register of Deeds of Manila to annul the Deed of Revocation of alleging that thedeed of revocation, made only ten (10) days before Carmen's death, was false and fictitious. OnJanuary 24, 1984, the Cebreros registered the sale of the Sampaloc property to them andobtained TCT No. 158305 in their names and Josefina filed a third party complaint to theCebrero spouses.

Atty. Lavia filed an Answer for the Estate and Muyot. Thereupon, Josefina filed a motion todisqualify him on the ground that his authority as counsel for Carmen was extinguished uponher death, however, RTC denied her motion.

Issue: WON Attorney CelsoLavia's authority as counsel for Carmen P. Gabriel was

extinguished upon her death.

Ruling: YES. The estate of a dead person may only be summoned through the executor oradministrator of his estate for it is the executor or administratorwho may sue or be sued andwho may bring or defend actions for the recovery or protection of the property or rights of thedeceased. The general power of attorney appointing Remedios as Carmen's agent or attorney-in- fact was extinguished upon Carmen's demise as provided in Art. 1919[3], Civil Code.Thereafter, Remedios was bereft of authority to represent Carmen.


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Carmen's death likewise divested Attorney Lavia of authority to represent her as counsel. Adead client has no personality and cannot be represented by an attorney.

LVN Pictures vs Phil. Musicians Guild

Facts:

Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc. seek a review bycertiorariof an order of the Court of Industrial Relations thereof, certifying the PhilippineMusicians Guild (FFW), as the sole and exclusive bargaining agency of all musiciansworking with said companies, as well as with the Premiere Productions, Inc., which has notappealed.

Issue: WON the Guild has the sole and exclusive bargaining agency of all musicians

Ruling:

The musical directors referred to have no such control over the musicians involved in thepresent case. Said musical directors control neither the music to be played, nor themusicians playing it. The film companies summon the musicians to work, through themusical directors. The film companies, through the musical directors, fix the date, the timeand the place of work. The film companies, not the musical directors, provide thetransportation to and from the studio. The film companies furnish meal at dinner time.

It is well settled that "an employer-employee relationship exists where the person for whomthe services are performed reserves a right to control not only the endto be achieved butalso the means to be used in reaching such end. The decisive nature of said control overthe "means to be used", in which, by reason of said control, the employer-employeerelationship was held to exist between the management and the workers, notwithstandingthe intervention of an alleged independent contractor, who had, and exercise, the power tohire and fire said workers. The aforementioned control over the means to be used" inreading the desired end is possessed and exercised by the film companies over themusicians in the cases before us.

WHEREFORE, the order appealed from is hereby affirmed, with costs against petitionersherein. It is so ordered.

GreenValleyvs IAC

Facts:


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On November 3, 1969, Squibb and GreenValley entered into a letter agreement which E.R.Squibb & Sons Philippine Corporation is pleased to appoint Green Valley Poultry & AlliedProducts, Inc. as a non-exclusive distributor for Squibb Veterinary Products. As adistributor, Green Valley Poultry & Allied Products, Inc. will be entitled to a discount

Prices are subject to change without notice. For goods delivered to GreenValley but unpaid,Squibb filed suit to collect. The trial court as aforesaid gave judgment in favor of Squibbwhich was affirmed by the Court of Appeals. Hence, this appeal.

Issue: WON the Court of Appeals erred in ruling in favor of Squibb for suit of collection

Ruling:

Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley isindubitable. Adopting GreenValley's theory that the contract is an agency to sell, it is liablebecause it sold on credit without authority from its principal. The Civil Code has a provisionexactly in point. It reads:

Art. 1905. The commission agent cannot, without the express or implied consent of theprincipal, sell on credit. Should he do so, the principal may demand from him payment incash, but the commission agent shall be entitled to any interest or benefit, which may resultfrom such sale.

WHEREFORE, the petition is hereby dismissed; the judgment of the defunct Court ofAppeals is affirmed with costs against the petitioner. chanroblesvirtualawlibrarychanroblesvi rtual lawlibrary

SOORDERED.

Amigo vsTeves

Facts:

Amigo and Cagalitan executed in favor of their son, Marcelino Amigo, a power of attorneygranting to the latter, among others, the power "to lease, let, bargain, transfer, convey andsell, remise, release, mortgage and hypothecate, part or any of the properties . . . uponsuch terms and conditions, and under such covenants as he shall think fit."

Marcelino Amigo, in his capacity as attorney-in-fact, executed a deed of sale of a parcel ofland in favor of SerafinTeves stipulating that the vendors could repurchase the land within aperiod of 18 months from the date of the sale and that the vendors would remain inpossession of the land as lessees for a period of 18 months subject to the such terms andconditions.


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The spouses Amigo and Cagalitan then donated to their sons Justino and Pastor Amigoseveral parcels of land including their right to repurchase the land in litigation. The vendors-lessees paid the rental corresponding to the first six months, but not the rental for thesubsequent semester, and so on. SerafinTeves, the vendee-lessor, executed an "Affidavitof Consolidation ofTitle" in view of the failure of the lessees to pay the rentals. Justino andPastor Amigo, as donees of the right to repurchase the land in question, offered torepurchase the land from SerafinTeves but the latter refused on the ground that theownership had already been consolidated in him as purchasera retro. Hence, the doneesinstituted the present action.

Issue:

WON the lease covenant contained in the deed of sale withexecuted by Marcelino Amigo as

attorney-in-fact is not germane to, nor within the purview of, the powers granted to said attorney-

in-fact and, therefore, is ultra vires and null and void

Ruling:

No. Where the power granted to the agent is so broad that it practically covers the celebration of

any contract and the conclusion of any covenant or stipulation, the agent can act in the manner

and with the same breath and latitude as the principal could concerning the property. The fact

that the agent has acted in accordance with the wish of his principals can be inferred from their

attitude in donating to the herein petitioners the right to redeem the land under the terms and

conditions appearing in the deed of sale executed by their agent. In the case at bar, the SC find

nothing unusual in the lease covenant embodied in the deed of sale for such is common in

contracts involving sales of land withpacto de retro. The lease that a vendor executes on theproperty may be considered as a means of delivery or by constitutumpossessorium. Therefore

that this covenant regarding the lease of the land sold is germane to the contract of sale with

pacto de retro.

Escayvs Court of Appeals

Facts:

Emilio and Jose Escay, now both deceased, were brothers. In his lifetime, Emilio mortgagedhis properties now in question to PNB. He died before he could pay his obligation with the

bank which had mounted. The bank then filed a foreclosure suit against the estate of Emiliorepresented by the administrator, Atty. Arboleda. Pending the said suit, a contract hereafterreferred to as original contractwas entered among the PNB, Jose Escay, Sr., and Atty.

Arboleda, under which Jose assumed the mortgage indebtedness of his deceased brother.This was agreed to by widow of Emilio, in her own behalf and as guardian ad litem of their

children. When it was discovered that the original contract failed to state the transfer of theownership of the properties in question to Jose Escay, Sr., a supplementary contractwasentered into among the Philippine National Bank, the administrator and Jose Escay, Sr.,


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which was approved by the probate court. The widow of Emilio, Roberto and the otherchildren filed a complaint against Jose Escay, Sr. and Atty. Arboleda for the recovery of theownership and possession of the properties in question. Which the CA provisionallydismissed the petition, hence this appeal.

Issue:

WON the holding of the propertied is implied or express trust for the heirs of Emilio Escay

Ruling:

Petitioners contend that since the titles over the properties in question were transferred tothe name of Jose Escay, Sr., by fraudulent means, an implied trust was created betweenthe testate estate of Emilio and Jose Escay, Sr., and the latter became the trustee of theproperties in question in favor of the heirs of Emilio Escay as the cestuique trust; and therespondents are duty bound to reconvey the properties whose right to recover theproperties does not prescribe. Petitioners also argue that the original contract and the

supplementary contract created in their favor an express trust and since an action based onan express trust does not prescribe the right of petitioners to recover the properties inquestion. However, in the case at bar, there was no fraud proven. The evidence is clear thatthe original and supplementary contracts were the result of a series of negotiations by thetestate estate of Emilio Escay through its Judicial Administrator and legal representative; itscreditor, the Philippine National Bank; the heirs represented by their guardian ad litem.Since there was no fraud, there was no trust relation that arose.

In any case, an express trust concerning an immovable cannot be proved by paroleevidence, and actions based on express trust also prescribe and the property held in trustmay be acquired by adverse possession from the moment the trust is repudiated by the

trustee.

The defense of extinctive prescription is available to the respondents to defend themselvesagainst the action for reconveyance brought by the petitioners.

The prescriptibility of an action for reconveyance based on implied or constructive trust, isnow a settled question in this jurisdiction. Express trusts prescribe 10 years from therepudiation of the trust. In conclusion, the SC voted to dismiss the petitioners' petition forcertiorari, and deny their motion for reconsideration.

CUAYCONG v. CUAYCONG

G.R. No. L-21616 December 11, 1967

FACTS:

Eduardo Cuaycong died on June 21, 1936 without issue but with three brothers and a sister

surviving him. Upon his death, his properties were distributed to his heirs as he willed except two


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haciendas devoted to sugar and other cropsthe Hacienda Sta. Cruz and Pusod both known as

Hacienda Bacayan. Hacienda Bacayan is comprised of eight lots in the name of Luis Cuaycong, son of

Justo Cuaycong.

LinoCuaycong died and was survived with his children. PraxedsCuaycong, married to Jose Betia,

is already deceased and is survived by her children Jose Jr., Jesus, etc., all surnamed Betia.

AnastacioCuaycong, also deceased is survived by his children, all surnamed Cuaycong.

Meltion and Basilisa died without any issue.

The surviving children of LinoCuaycong filed as pauper litigants, a suit against Justo, Luis and

Benjamin Cuaycong for conveyance of inheritance and accounting before the CFI of Negros Occidental.

LuidCuaycong moved to dismiss the complaint on the grounds of unenforceability of the claim

under statute of frauds. CFI ruled that the trust alleged refers to an immovable under Article 1443 of the

Civil Code may not be proved by parole evidence. Plaintiff manifested that the claim was based on an

implied trust and that there being no written instrument of trust; they could not amend the complaint

to include such instrument.

ISSUE:

Whether or not the trust is express or implied.

HELD:

There is an express trust. The civil code defines an express trust as one created by the intention

of the trustor or of the parties, and an implied trust as one that comes into being by operation of law.

Express trusts are those created by direct and positive acts of the parties, by some writing or deed or

will or by words evidencing an intention to create a trust.

Implied trust on the other hand are those which, without being expressed are deducible from

the nature of the transaction by operation of law as matters of equity, independently of the particular

intention of the parties.

If the intention to establish a trust is clear, the trust is express. The trustor told the defendants

of his intention to establish the trust.

BELCODERO VS CA

FACTS: Alayo D. Bosing, married Juliana Oday on 27 July 1927, with whom he had threechildrenIn 1946, he left the conjugal home, started to live with Josefa Rivera with whom he laterbegot one child, Josephine BosingBalcobero.


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On 23 August 1949, Alayo purchased a parcel of land on installment basis from the MagdalenaEstate, Inc. In the deed, he indicated his civil status as, "married to Josefa R. Bosing," thecommon-law wife. In a letter, dated 06 October 1959, which he addressed to Magdalena Estate,Inc., he authorized the latter to transfer the lot in the name of his "wife Josefa R. Bosing." Thefinal deed of sale was executed by Magdalena Estate, Inc., on 24 October 1959. A few dayslater, Transfer Certificate ofTitle No. 48790 was issued in the name of "Josefa R. Bosing

On 06 June 1958, Alayo married Josefa even while his prior marriage with Juliana was stillsubsisting. Alayo died on 11 march 1967. On 17 September 1970, Josefa and Josephineexecuted a document of extrajudicial partition and sale of the lot in question, which was theredescribed as "conjugal property" of Josefa and deceased Alayo. In this deed, Josefa's supposed1/2 interest as surviving spouse of Alayo, as well as her one-fourth (1/4) interest as heir, wasconveyed to Josephine for a P10,000.00 consideration, thereby completing for herself, alongwith her 1/4 interest as the surviving child of Alayo, a full "ownership" of the property. The noticeof extrajudicial partition was published on 04-06 November 1970 in the Evening Post; theinheritance and estate taxes were paid; and a new Transfer Certificate ofTitle was issued on 06June 1974 in the name of Josephine.

On 30 October 1980, Juliana (deceased Alayo's real widow) and her 3 legitimate children filedwith the court a quo an action for reconveyance of the property. The trial court ruled in favor ofthe plaintiffs. The defendants went to the CA and affirmed the decision of the court orderingJosephine Bosing to execute a deed of reconveyance of the property granting the same to thelegal heirs of the deceased Alayo D. Bosing.

Issue: WHETHER THE RESPONDENT COURT ERRED IN FINDING THAT, THE ACTIONFOR RECONVEYANCE IS BASED UPON AN IMPLIED OR CONSTRUCTIVE trust.

Ruling: The property remained as belonging to the conjugal partnership of Alayo and hislegitimate wife Juliana. Under both the new Civil Code (Article 160) and the old Civil Code(Article 1407), "all propertyof the marriage is presumed to belong to the conjugal partnership,unless it be proved that it pertains exclusively to the husband or to the wife." This presumptionhas not been convincingly

It cannot be seriously contended that, simply because the property was titled in the name ofJosefa at Alayo's request, she should thereby be deemed to be its owner. The propertyunquestionably was acquired by Alayo. Alayo's letter, dated 06 October 1959, to MagdalenaEstate, Inc., merely authorized the latter to have title to the property transferred to her name.More importantly, she implicitly recognized Alayo's ownership when, three years after the deathof Alayo, she and Josephine executed the deed of extrajudicial partition and sale in which sheasserted a one-half (1/2) interest in the property in what may be described as her share in the"conjugal partnership" with Alayo, plus another one-fourth (1/4) interest as "surviving widow,"the last one-fourth (1/4) going to Josephine as the issue of the deceased. Observe that theabove adjudication would have exactly conformed with a partition in intestacy had they been thesole and and legitimate heirs of the decedent

It was at the time that 'the adjudication of ownership was made following Alayo's demise (notwhen Alayo merely allowed the property to be titled in Josefa's name which clearly was notintended to be adversarial to Alayo's interest), that a constructive trust was deemed to havebeen created by operation of law under the provisions of Article 1456 of the Civil Code.


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Article 1456. If the property is acquired through mistake or fraud, the person obtaining it is, byforce of law, considered a trustee of an implied trust for the benefit of the person from whom theproperty comes.

Heirs of joseolvigavsca

petition to review the decision of the Court of Appeals in affirming the decision of the RTC ofCalauag, Quezon ordering the defendants, heirs of Jose Olviga, to reconvey the land in disputeto the plaintiffs, heirs of Cornelia Glor

the land in question was, in 1950, still forest land when EutiquioPureza and his father clearedand cultivated it and introduced improvements to the land. When the area was released fordisposition, the Bureau of Lands surveyed the same in 1956 in the name of Eutiquio. Sincethen, the land has been known as Lot 13, Pls-84 of the Guinayangan Public Land Subdivision.GodofredoOlviga, a son of Jose Olviga then living with the latter, protested the survey butwithout respect to a 1/2-ha. This protest is of public record in the Bureau of Lands. In saiddocument, GodofredoOlviga expressly admitted that the lot belonged to Eutiquio, except the 1/2hectare portion claimed by him (Godofredo) which was included in the survey of Pureza's Lot13.

n 1960, Eutiquio filed a homestead application over Lot 13. Without his application having beenacted upon, he transferred his rights in said lot to Cornelia Glor in 1961. Neither the homesteadapplication of Eutiquio nor the proposed transfer of his rights to Cornelio Glor was acted uponby the Director of Lands for reasons that the records of the Bureau of Lands do not disclose.

In 1967, Jose Olviga obtained a registered title for said lot in a cadastral proceeding, in fraud ofthe rights of Pureza and his transferee, Cornelio Glor and his family who were the real and

actual occupants of the land.

Issue: whether their cause of action should be counted from the date of the issuance of the lateJose Olviga's title over said lot in 1967 and has, therefore, already prescribed, or whether theprescriptive period should be counted from the date plaintiffs acquired knowledge of said titlesometime in 1988.

RULING:

this Court has ruled a number of times before an action for reconveyance of a parcel of landbased on implied or constructive trust prescribes in ten years, the point of reference being thedate of registration of the deed of the date of the issuance of the certificate of title over the

property. But this rule applies only when the plaintiff is not in possession of the property, since ifa person claiming to be the owner thereof is in actual possession of the property, the right toseek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.

n the case at bar, private respondents and their predecessors-in-interest were in actualpossession of the property since 1950. Their undisturbed possession gave them the continuingright to seek the aid of a court of equity to determine the nature of the adverse claim ofpetitioners, who in 1988 disturbed their possession.


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Deluao vs. Casteel

FACTS:

Nicanor Casteel filed a total of 4 fishpond applications for a big tract of swampy land inDavao.

After the first three having been unsuccessful, he filed a motion for reconsideration from the

denial of the 3rd one, and while this was pending, he filed a fourth application following the

district forester of the Bureau of Lands advise to do so.

Casteel was the original occupant and applicant since before the last World War. He wanted topreclude subsequent applicants from entering and spreading themselves within the area appliedfor by him, by expanding his occupation thereof by the construction of dikes and the cultivationof marketable fishes. Thus, he borrowed money from the Deluaos to finance neededimprovements for the fishpond, and was compelled by force of this circumstance to enter intothe contract of partnership to divide the fishpond after the award (see letter dated November 15,1949 of Casteel to Felipe Deluao quoted inter alia on page 4 of our Decision). This, however,was all that the appellee spouses did. The appellant single-handedly opposed rival applicants

who occupied portions of the fishpond area, and relentlessly pursued his claim to the said areaup to the Office of the DANR Secretary, until it was finally awarded to him. There is here neitherallegation nor proof that, without the financial aid given by the Deluaos in the amount ofP27,000, the area would not have been awarded nor adjudicated to Casteel. This explains,perhaps, why the DANR Secretary did not find it equitable to award one-half of the fishpond tothe appellee spouses despite their many appeals and motions for reconsideration.

IV. The appellees submit as their fourth proposition that there being no prohibition againstjoint applicants for a fishpond permit, the fact that Casteel and Deluao agreed to acquire thefishpond in question in the name of Casteel alone resulted in a trust by operation of law (citingart. 1452, Civil Code) in favor of the appellees as regards their one-half interest.

ISSUE: won the agreement between casteel and deluao to acquire the fishpond in questionresulted in a trust by operation of law

RULING: A trust is the right, enforceable in equity, to the beneficial enjoyment of property thelegal title to which is in another. However, since we held as illegal the second part of thecontract of partnership between the parties to divide the fishpond between them after the award,a fortiori, no rights or obligations could have arisen therefrom. Inescapably, no trust could haveresulted because trust is founded on equity and can never result from an act violative of the law.

Art. 1452 of the Civil Code does not support the appellees' stand because it contemplates anagreement between two or more persons to purchase property capable of private ownership the legal title of which is to be taken in the name of one of them for the benefit of all. In thecase at bar, the parties did not agree to purchase the fishpond, and even if they did, such is

prohibited by law, a fishpond of the public domain not being susceptible of private ownership.The foregoing is also one reason why Gauiran vs. Sahagun (93 Phil. 227) is inapplicable to thecase at bar. The subject matter in the said case is a homestead which, unlike a fishpond of thepublic domain the title to which remains in the Government, is capable of being privately owned.It is also noteworthy that in the said case, the Bureau of Lands was not apprised of the jointtenancy between the parties and of their agreement to divide the homestead between them,leading this Court to state the possibility of nullification of said agreement if the Director of landsfinds out that material facts set out in the application were not true, such as the statement in theapplication that it "is made for the exclusive benefit of the applicant and not, either directly or


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indirectly, for the benefit of any other person or persons, corporations, associations orpartnerships." In the case at bar, despite the presumed knowledge acquired by DANRadministrative officials of the partnership to divide the fishpond between the parties, due largelyto the reports made by the Deluaos, the latter's numerous appeals, motion for intervention andmotions for reconsideration of the DANR Secretary's decisions in DANR cases 353 and 353-B,were all disregarded and denied.

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