Partnership - Case Digests 1

8/12/2019 Partnership - Case Digests 1

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TOCAO VS COURT OF APPEALS

FACTS: William Belo introduced Nenita Anay to his

girlfriend, Marjorie Tocao. The three agreed to form a

joint venture for the sale of cooking wares. Belo wasto contribute P2.5 million; Tocao also contributedsome cash and she shall also act as president andgeneral manager; and Anay shall be in charge of

marketing. Belo and Tocao specifically asked Anaybecause of her experience and connections as a

marketer. They agreed further that Anay shallreceive the following:

10% share of annual net profits6% overriding commission for weekly sales

30% of sales Anay will make herself

2% share for her demo services

They operated under the name GeminesseEnterprise, this name was however registered as asole proprietorship with the Bureau of Domestic

Trade under Tocao. The joint venture agreementwas not reduced to writing because Anay trustedBelos assurances.

The venture succeeded under Anays marketing

prowess.

But then the relationship between Anay and Tocao

soured. One day, Tocao advised one of the branch

managers that Anay was no longer a part of thecompany. Anay then demanded that the company beaudited and her shares be given to her.

ISSUE: Whether or not there is a partnership.HELD: Yes, even though it was not reduced to

writing, for a partnership can be instituted in anyform. The fact that it was registered as a soleproprietorship is of no moment for such registrationwas only for the companys trade name.

Anay was not even an employee because when theyventured into the agreement, they explicitly agreed to

profit sharing this is even though Anay was receivingcommissions because this is only incidental to herefforts as a head marketer.

The Supreme Court also noted that a partner who isexcluded wrongfully from a partnership is an

innocent partner. Hence, the guilty partner must givehim his due upon the dissolution of the partnershipas well as damages or share in the profits realized

from the appropriation of the partnership businessand goodwill. An innocent partner thus possesses

pecuniary interest in every existing contract that was

incomplete and in the trade name of the co-

partnership and assets at the time he was wrongfullyexpelled.


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An unjustified dissolution by a partner can subjecthim to action for damages because by the mutualagency that arises in a partnership, the doctrineof delectus personae allows the partners to have

the power, although not necessarily the right todissolve the partnership.

Tocaos unilateral exclusion of Anay from the

partnership is shown by her memo to the Cubaooffice plainly stating that Anay was, as of October 9,

1987, no longer the vice-president for sales ofGeminesse Enterprise. By that memo, petitionerTocao effected her own withdrawal from the

partnership and considered herself as having ceasedto be associated with the partnership in the carryingon of the business. Nevertheless, the partnershipwas not terminated thereby; it continues until the

winding up of the business.

HEIRS OF TAN ENG KEE VS COURT OF

APPEALS

Facts: The heirs of Tan Eng Kee, composed of his

children and his wife, claims that their father was apartner of Tan Eng Lay in Benguet LumberCompany. Tan Eng Lay is the brother of thepetitioners' father who accordung to them entered

into a partnership with the former after the WWIIwere they both pooled in their money in order torecapitalize the business. Petitioners wants toaccount, liquidate and wind up the partnership as

well as the equal division of the net assets of thecompany. They alleged that since Tan Eng Kee wasconducting the affairs of the company/business withhis brother, Gave orders to the employees, preparedorders for the suppliers, their families beindemployed in the business and that their families livedin the same compound where the Benguet LumberCompany is found then these establishes the

existence of a partnership. They also allege that theirfather was a co-owner of some 80 pieces of G.I.Sheets and that their father was also receivingmoney from the company.

Benguet Lumber Company, represented by Tan EngLay, answered by stating that Tan Eng Kee wasmerely an employee of the said company evidencedby payrolls and the SSS coverage of petitioners'

father. They also showed the registration of thebusiness as that of a proprietorship.

The RTC of Baguio ruled that there was apartnership between the two brothers in the form of a

joint-venture. The CA reversed the decision of theRTC.


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Issue: WON Tan Eng Kee and Tan Eng Lay were

partners in Benguet Lumber?

Held: No partnership was established as the

evidence presented was insufficient. Tan Eng Keewas merely an employee receiving wages. Thepartnership contract is required to be in writing thecapital of which exceeds P3,000 and the findings of

the lower courts reveals the absence of suchcontract. Co-ownership or co-possession is not an

indicium of the existence of a partnership. A demandfor a periodic accounting is evidence of a partnershipwhich was not done by Tan Eng Kee during his

lifetime being his right if ever he was a partner. Thedocuments presented, not validly declared falsifiedby another court, further proves the non-existence ofa partnership relation between the two brothers but

an employer-employee relationship. Furthermore,petitioners did not offer or present evidence that theirfather received amounts pertaining to his share inthe profits of the company. The allegations of

petitioners merely shows that their father was merelyinvolved in the operations of Benguet Lumber butdoes not establish in what capacity.

ONA VS CIR

Facts: Julia Buales died leaving as heirs her

surviving spouse, Lorenzo Oa and her five children.A civil case was instituted for the settlement of herstate, in which Oa was appointed administrator and

later on the guardian of the three heirs who were stillminors when the project for partition was approved.This shows that the heirs have undivided interestin 10 parcels of land, 6 houses and money from theWar Damage Commission.

Although the project of partition was approved by theCourt, no attempt was made to divide the propertiesand they remained under the management of Oa

who used said properties in business by leasing orselling them and investing the income derivedtherefrom and the proceeds from the sales thereof inreal properties and securities. As a result, petitioners

properties and investments gradually increased.Petitioners returned for income tax purposes theirshares in the net income but they did not actuallyreceive their shares because this left with Oa who

invested them.Based on these facts, CIR decided that petitionersformed an unregistered partnership and therefore,subject to the corporate income tax, particularly foryears 1955 and 1956. Petitioners asked forreconsideration, which was denied hence thispetition for review from CTAs decision.


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Issue:

W/N there was a co-ownership or an unregistered

partnership

W/N the petitioners are liable for the deficiencycorporate income tax

Held:

Unregistered partnership. The Tax Court found that

instead of actually distributing the estate of thedeceased among themselves pursuant to the projectof partition, the heirs allowed their properties to

remain under the management of Oa and let himuse their shares as part of the common fund for theirventures, even as they paid corresponding incometaxes on their respective shares.

Yes. For tax purposes, the co-ownership of inheritedproperties is automatically converted into anunregistered partnership the moment the saidcommon properties and/or the incomes derivedtherefrom are used as a common fund with intent to

produce profits for the heirs in proportion to theirrespective shares in the inheritance as determined ina project partition either duly executed in anextrajudicial settlement or approved by the court inthe corresponding testate or intestate proceeding.The reason is simple. From the moment of suchpartition, the heirs are entitled already to their

respective definite shares of the estate and theincomes thereof, for each of them to manage anddispose of as exclusively his own without theintervention of the other heirs, and, accordingly, he

becomes liable individually for all taxes in connectiontherewith. If after such partition, he allows his shareto be held in common with his co-heirs under asingle management to be used with the intent ofmaking profit thereby in proportion to his share, therecan be no doubt that, even if no document orinstrument were executed, for the purpose, for taxpurposes, at least, an unregistered partnership is

formed.For purposes of the tax on corporations, our NationalInternal Revenue Code includes thesepartnerships

The term partnership includes a syndicate, group,

pool, joint venture or other unincorporatedorganization, through or by means of which anybusiness, financial operation, or venture is carried

on (8 Mertens Law of Federal Income Taxation, p.562 Note 63; emphasis ours.)

with the exception only of duly registered generalcopartnerships within the purview of the termcorporation.It is, therefore, clear to our mind that

petitioners herein constitute a partnership, insofar as


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said Code is concerned, and are subject to theincome tax for corporations. Judgment affirmed.

GATCHALIAN VS CIR

Facts: Plaintiffs purchased, in the ordinary course ofbusiness, from one of the duly authorized agents of

the National Charity Sweepstakes Office one ticketfor the sum of two pesos (P2), said ticketwas registered in the name of Jose Gatchalian and

Company. The ticket won one of the third-prizes inthe amount of P50,000.

Jose Gatchalian was required to file thecorresponding income taxreturn covering the prizewon. Defendant-Collector madeanassessment against Jose Gatchalian and Co.requesting the payment of the sum of P1,499.94to the deputy provincial treasurer of Pulilan,Bulacan. Plaintiffs, however through counsel made a

request for exemption. It was denied.

Plaintiffs failed to pay the amount due, hence awarrant of distraint and levy wasissued. Plaintiffs paid under protest a part of the taxand penalties to avoid the effects of the warrant. Arequest that the balance be paid by plaintiffs in

installments was made. This was granted on thecondition that a bond be filed.

Plaintiffs failed in their installment payments. Hence

a request for execution of the warrant of distraint andlevy was made. Plaintiffs paid under protest to avoidthe execution.

A claim for refund was made by the plaintiffs, whichwas dismissed, hence the appeal.

Issue: Whether the plaintiffs formed a partnership

hence liable for income tax.

Held: Yes. According to the stipulation factsthe plaintiffs organized a partnership of a civil naturebecause each of them put up money to buy asweepstakes ticket for the sole purpose of dividing

equally the prize which they may win, as they did infact in the amount of P50,000. The partnership was

not only formed, but upon the organization thereofand the winning of the prize, Jose Gatchalianpersonally appeared in the office of the Philippines

Charity Sweepstakes, in his capacity as co-partner,as such collection the prize, the office issued the

check for P50,000 in favor of Jose Gatchalian andcompany, and the said partner, in the same capacity,

collected the said check. All these circumstancesrepel the idea that the plaintiffs organized and

formed a community of property only.


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LIWANAG VS COURT OF APPEALS

Facts: Liwanag asked Isidora Rosales to join her

and Thelma Tagbilaran in the business of buying andselling cigarettes. Under their agreement, Rosales

would give the money needed tobuy the cigarettes while Liwanag and Tabligan wouldact as her agents, with acorresponding 40%commission to her if the goods are sold; otherwisethe money wouldbe returned to Rosales. Rosalesgave several cash advances amounting to 633,650.

Money was misappropriated. Rosales files acomplaint of estafa against them.

Issue:

1. WON the parties entered into a partnershipagreement;

2. If in the negative, WON the transaction is a simpleloan

Held:

1. No. Even assuming that a contract of partnershipwas indeed entered into by and between the parties,when money or property have been received by apartner for a specific purpose and he latermisappropriated it, such partner is guilty of estafa.

2. No. In a contract of loan once the money isreceived by the debtor, ownership over the same istransferred. Being the owner, the borrower candispose of it for whatever purpose he may deem

proper

EVANGELISTA & CO v. ABAD SANTOS

Doctrine: It is not disputed that the provisionagainst the industrial partner engaging in business

for himself seeks to prevent any conflict of interestbetween the industrial partner and the partnership,

and to insure faithful compliance by said partner withthis prestation.

Facts: On Octorber 09, 1954, a co-partnership was

formed named Evangelista and Co. On June 07,

1955, the Articles of the Co-partnership was

amended in order to include herein respondentEstrella Abad Santos as an industrial partner.Furthermore, in the said amended article, it was

agreed upon that the profits and losses shall bedivided as follows: (1) 70% for the first three (3)

partners; and (2) 30% for respondent Estrella AbadSantos.

On December 17, 1963, herein respondent filed suitagainst the three other partners in the Court of FirstInstance of Manila, alleging that the partnership,


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which was also made a party-defendant, had beenpaying dividends to the partners except to her; andthat notwithstanding her demands the defendantshad refused and continued to refuse and let her

examine the partnership books or to give herinformation regarding the partnership affairs to payher any share in the dividends declared by thepartnership. She therefore prayed that thedefendants be ordered to render accounting to her ofthe partnership business and to pay hercorresponding share in the partnership profits aftersuch accounting, plus attorney's fees and costs.

The defendants, in their answer, alleged thefollowing: (1) the amended Articles of Co-partnershipdid not express the true agreement of the parties,which was that the plaintiff was not an industrial

partner; (2) that she did not in fact contribute industryto the partnership; and (3) that her share of 30% wasto be based on the profits which might be realized bythe partnership only until full payment of the loanwhich it had obtained in December, 1955 from theRehabilitation Finance Corporation in the sum ofP30,000, for which the plaintiff had signed apromissory note as co-maker and mortgaged herproperty as security; and (4) that in any event the

respondent (as a Judge of the City Court ofManila)was lawfully (See Article 1789) excludedfrom, and deprived of, her alleged share, interests

and participation, as an alleged industrial partner, inthe partnership Evangelista & Co., and its profits ornet income.

Issue:1.) Whether or not the respondent Estrella Abad

Santos is an industrial partner or merely a profitsharer (as alleged by petitioners) entitled to 30% ofthe net profits that may be realized by thepartnership from June 07, 1955 until her mortgageloan shall be fully paid?

2.) Whether or not respondent as a Judge of the

City Court of Manila is engaged in business andthereby lawfully excluded and deprived of, heralleged share, interests and participation, as analleged industrial partner, in the partnershipEvangelista & Co., and its profits or net incomepursuant to Article 1789.

Ruling:

1.) The Supreme Court affirmed the facts

concluded by the Court of Appeals that respondentEstrella Santos is an industrial partner because the

Articles of the co-partnership indubitably show therespondent is an industrial partner. Also by the factthat from June 7, 1955 up to the filing of their answerto the complaint on February 8, 1964 or a periodof over eight (8) years appellants did nothing to


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correct the alleged false agreement of the partiescontained in the same.

2.) It is not disputed that the provision

against the industrial partner engaging in businessfor himself seeks to prevent any conflict of interestbetween the industrial partner and the partnership,and to insure faithful compliance by said partner with

this prestation. There is no pretense, however, evenon the part of the appellee is engaged in any

business antagonistic to that of appellantcompany, since being a Judge of one of thebranches of the City Court of Manila can hardly be

characterized as a business.

The Supreme Court further held:

What has gone before persuades us to hold with the

lower Court that appellee is an industrial partner ofappellant company, with the right to demand for aformal accounting and to receive her share in the net

profit that may result from such an accounting, whichright appellants take exception under their secondassigned error. Our said holding is based on thefollowing article of the New Civil Code:

'ART. 1899. Any partner shall have the right to a

formal account as to partnership affairs:

(1) If he is wrongfully excluded from the partnershipbusiness or possession of its property by his co-partners;

(2) If the right exists under the terms of anyagreement;

(3) As provided by article 1807;

(4) Whenever other circumstance render it just andreasonable.

We find no reason in this case to depart from the rulewhich limits this Court's appellate jurisdiction to

reviewing only errors of law, accepting as conclusivethe factual findings of the lower court upon its ownassessment of the evidence.

RAMNANI VS COURT OF APPEALS

FACTS: Ishwar Jethmal Ramnani and his wife

Sonya had their main business based in New York.Ishwar received US $150,000.00 from his father-in-law in Switzerland.

In 1965, Ishwar Jethmal Ramnani sent the amount ofUS $150,000.00 to Choithram in two bank drafts ofUS$65,000.00 and US$85,000.00 for the purpose ofinvesting the same in real estate in the Philippines.


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Subsequently, spouses Ishwar executed a generalpower of attorney appointing Ishwars full blood

brothers Choithram and Navalrai as attorneys-in-fact,empowering them to manage and conduct their

business concerns in the Philippines.

Choithram, as attorney-in-factr, entered into twoagreements for the purchase of two parcels of land

located in Pasig Rizal from Ortigas & Company, Ltd.Partnership (Ortigas Ltd.) with a total area of

approximately 10,048 square meters.

Three buildings were constructed thereon and were

leased out by Choithram as attorney-in-fact ofspouses Ishwar. Two of these buildings were laterburned.

In 1970 Ishwar asked Choithram to account for theincome and expenses relative to these propertiesduring the period 1967 to 1970.

Choithram failed and refused to render suchaccounting which prompted Ishwar to revoke the

general power of attorney.

Choithram and Ortigas Ltd. were duly notified bynotice in writing of such revocation. It was alsoregistered with the Securities and ExchangeCommission and published in The Manila Times.

Nevertheless, Choithram as such attorney-in-fact ofIshwar, transferred all rights and interests of Ishwar

spouses in favor of Nirmla Ramnani, the wife ofChoitrams son, Moti.

Ortigas also executed the corresponding deeds of

sale in favor of Nirmla and the TCT ISSUEd in herfavour..

Thus, spouses Ishwar filed a complaint in the Courtof First Instance of Rizal against Choithram andspouses Nirmla and Moti (Choithram et al.) andOrtigas Ltd. for reconveyance of said properties orpayment of its value and damages.

Trial court dismissed the complaint ruling that the

lone testimony of Ishwar regarding the cashremittance is unworthy of faith and credit becausethe cash remittance was made before the executionof the general power of attorney. Ishwar also failed tocorroborate this lone testimony and did not exhibitany commercial document as regard to the allegedremittances.

It believed the claim of Choitram that he and Ishwar

entered into a temporary arrangement in order toenable Choithram, then a British citizen, to purchase

the properties in the name of Ishwar who was anAmerican citizen and who was then qualified to

purchase property in the Philippines under the thenParity Amendment.


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Upon appeal, the CA reversed the decision and gavecredence to Ishwar.

It upheld the validity of Ishwars testimony and gave

cognizance to a letter written by Choihtram imploringIshwar to renew the power of attorney after it wasrevoked. It states therein that Choithram reassureshis brother that he is not after his money and that the

revocation is hurting the reputation of Ishwar.Choithram also made no mention of his claimed

temporary arrangement in the letter..

The CA ruled that Choithram is also estopped in pais

or by deed from claiming an interest over theproperties. Because of Choitrams admissions from(1) power of attorney, (2) the Agreements, and (3)the Contract of Lease

It furthermore HELD that Choithram's 'temporaryarrangement, by which he claimed purchasing thetwo (2) parcels in question in 1966 and placing them

in the name of Ishwar who is an American citizencircumvents the disqualification provision of aliensacquiring real properties in the Philippines.Upholding the supposed "temporary arrangement"with Ishwar would be sanctioning the perpetration ofan illegal act and culpable violation of theConstitution.

During the pendency of the case, Choithram madeseveral attempts to dispose of his properties by way

of donation and also mortgaged the properties underlitigation for 3 million USD to a shell partnership witha mere capital of 100 USD.

The Supreme Court affirms the findings of the Courtof Appeals.

ISSUE: Whether or not there was a partnershipbetween the brothers Ishwar and Choithram

HELD: Yes, Even without a written agreement, thescenario is clear. Spouses Ishwar supplied the

capital of $150,000.00 for the business. Theyentrusted the money to Choithram to invest in a

profitable business venture in the Philippines. Forthis purpose they appointed Choithram as theirattorney-in-fact.

Choithram in turn decided to invest in the real estatebusiness. He bought the two (2) parcels of land in

question from Ortigas as attorney-in-fact of Ishwar-Instead of paying for the lots in cash, he paid ininstallments and used the balance of the capital

entrusted to him, plus a loan, to build two buildings.Although the buildings were burned later, Choithram

was able to build two other buildings on the property.He rented them out and collected the rentals.

Through the industry and genius of Choithram,Ishwar's property was developed and improved into

what it is nowa valuable asset worth millions ofpesos.


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We have a situation where two brothers engaged ina business venture. One furnished the capital, theother contributed his industry and talent. Justice andequity dictate that the two share equally the fruit of

their joint investment and efforts. Perhaps thisSolomonic solution may pave the way towards theirreconciliation. Both would stand to gain. No onewould end up the loser. After all, blood is thicker thanwater.

However, because of the devious machinations andschemes that Choithram employed he should paymoral and exemplary damages as well as attorney's

fees to spouses Ishwar.

ISSUE: Whether or not Ortigas Ltd. is liable.

HELD: Yes, because Ortigas had several notices

of the revocation. Despite said notices, Ortigasnevertheless acceded to the representation ofChoithram, as alleged attorney-in-fact of Ishwar, to

assign the rights of petitioner Ishwar to Nirmla. Whilethe primary blame should be laid at the doorstep ofChoithram, Ortigas is not entirely without fault. Itshould have required Choithram to secure anotherpower of attorney from Ishwar. For recklesslybelieving the pretension of Choithram that his powerof attorney was still good, it must, therefore, share in

the latter's liability to Ishwar.

PNB VS LO

Facts:

1916Severo Eugenio Lo and Ng Khey Ling

together with J.A. Say Lian Ping, Ko Tiao Hun, OnYem Ke Lam and Co Sieng Peng formed a

commercial partnership under the name of Tai SingCo., with a capital of P40,000 contributed by said

partners.

Articles of Copartnership states that:

Partnership was to last for 5 years from after the

date of its organizationPurpose: to do business in the City of Iloilo or in any

other part of the Philippines the partners mightdesire; purchase and sale of merchandise, goods,and native, as well as Chinese and Japaneseproducts

J.A. Say Lian Ping was appointed general manager

A. Say Lian Ping executed a power of attorney infavor of A. Y. Kelam, authorizing him to act in his

stead as manager and administrator of Tai Sing &

Co. and to obtain a loan of P8,000 in current

account from PNB.

Kelam mortgaged certain personal property of thepartnership.


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The credit was renewed several times and Kelam, asattorney-in-fact of Tai Sing & Co., executed a chattel

mortgage in favor of PNB as security as security fora loan P20,000.

This mortgage was again renewed and Kelam asattorney-in-fact of Tai Sing & Co. executed anotherchattel mortgage for the said sum of P20,000.

1920Yap Seng, Severo Lo, Kelam and Ng KheyLing, the latter represented by M. Pineda Tayenko,executed a power of attorney in favor of Sy Tit.

By virtue of the power of attorney, Sy Tit

representing Tai Sing & Co. obtained a credit ofP20,000 from PNB in 1921 and executed a chattelmortgage on certain personal property belonging tothe partnership.

Defendants had been using this commercial credit in

a current account with the plaintiff bank from 19181922 and as of December 31, 1924 the debitbalance of this account P 20, 239.

PNB claims in the complaint this amount and aninterest of P16, 518.74.

Eugenio Los defense:

Tai Sing & Co. was not a general partnership.

Commercial credit in current account which Tai Sing

& Co. obtained from PNB had not been authorized

by the board nor was the person who subscribedsaid contract authorized under the articles ofcopartnership

Trial Court: in favor of PNBISSUE:

Whether or not Tai Sing & Co. is a general

partnership in that the appellants can be held liableto pay PNB

HELD: Yes. Tai Sing & Co. is a general partnership

RATIO:

Appellants admit and it appears from the articles ofcopartnership that Tai Sing & Co. is a general

partnership and it was registered in the mercantileregister of Iloilo.

The fact that the partners opt to use Tai Sing & Co.

as the firm name does not affect the liability of thegeneral partners to third parties under Article127 ofthe Code of Commerce. Jurisprudence states that:

The object of article 126 of the Code of Commerce inrequiring a general partnership to transact businessunder the name of all its members, of several ofthem, or of one only, is to protect the public fromimposition and fraud


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It is for the protection of the creditors rather than ofthe partners themselves.

The law must be unlawful and unenforceable only as

between the partners and at the instance of theviolating party, but not in the sense of deprivinginnocent parties of their rights who may have dealtwith the offenders in ignorance of the latter having

violated the law.

Contracts entered into by commercial associationsdefectively organized are valid when voluntarilyexecuted by the parties, and the only question is

whether or not they complied with the agreement.Therefore, the defendants cannot invoke in theirdefense the anomaly in the firm name which theythemselves adopted.

As to the alleged death of the manager, Say LianPing before Kelam executed the contracts ofmortgage with PNB, this would not affect the liability

of the partnership

Kelam was a partner who contracted in the name ofthe partnership and the other partners did not object

Lo, Khey Ling, and Yap Seng appointed Sy Tit asmanager, and he obtained from PNB the credit incurrent account

Trial Court correctly held defendants to be jointly andseverally liable to PNB

This is in accordance with Article 127 of the Code ofCommerce all the members of a general

partnership, be they managing partners thereof ornot, shall be personally and solidarily liable with all

their property, for the results of the transactionsmade in the name and for the account of thepartnership, under the signature of the latter, and bya person authorized to use it.

COMPANIA MARITAMA VS MUNOZ

FACTS: In 1905, Francisco Muoz, Emilio Muoz,

and Rafael Naval formed an ordinary generalmercantile partnership in accordance with the Code

of Commerce. They named the partnershipFrancisco Muoz & Sons. Francisco was the

capitalist partner while the other two were industrialpartners. In the articles of partnership, it was agreedupon by the three that for profits, Francisco shall

have a 3/4th share while the other two would have1/8th each. For losses, only Francisco shall bear it.

Later, the partnership was sued by La CompaiaMartitama for collection of sum of money amountingto P26,828.30. The partnership lost the case andwas ordered to make said payment; that in case the


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partnership cant pay the debt, all the partners

should be liable for it.

The ruling is in accordance with Article 127 of the

Code of Commerce which states: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 theirproperty for the results of the transactions made inthe name and for the account of the partnership,under the signature of the latter, and by a personauthorized to make use thereof. (emphasis supplied)

Francisco now argues that the industrial partnersshould NOT be liable pursuant to Article 141 of theCode of Commerce which states:

Losses shall be charged in the sameproportion among the partners who have contributed

capital, without including those who have not, unlessby special agreement the latter have beenconstituted as participants therein. (emphasis

supplied)

ISSUE: Whether or not the industrial partners are

liable to third parties like La Compaia Martitama.

HELD: Yes. The controlling law is Article 127. There

is no injustice in imposing this liability upon theindustrial partners. They have a voice in themanagement of the business, if no manager has

been named in the articles; they share in the profitsand as to third persons it is no more than right thatthey should share in the obligations. It is admittedthat if in this case there had been a capitalist partnerwho had contributed only P100 he would be liable forthis entire debt of P26,000.

Article 141 relates exclusively to the settlement ofthe partnership affairs among the partners

themselves and has nothing to do with the liability ofthe partners to third persons; that each one of theindustrial partners is liable to third persons for thedebts of the firm; that if he has paid such debts out of

his private property during the life of the partnership,when its affairs are settled he is entitled to credit forthe amount so paid, and if it results that there is notenough property in the partnership to pay him, thenthe capitalist partners must pay him.

In relation to this, the Supreme Court noted thatpartnerships under the Civil Code provides for ascenario where all partners are industrial partners(like when it is a partnership for the exercise of aprofession). In such case, if it is permitted thatindustrial partners are not liable to third persons then


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claim to the mortgagedpropertyis the last paragraph of Art. 1819 of the CivilCode, which contemplates a situation similar to thecase at bar. It states that where the title to real

property is in the names of all the partners, aconveyance executed by all the partners passes alltheir rights in such property. Consequently, those

members' acts, declarations and omissions cannotbe deemed to be simply the individual acts of saidmembers, but in fact and in law, those of thepartnership. Finally, the Court emphasizes that theright of the Lims to assert the existence of thepartnership could have been stressed at the time

they instituted their first action, considering that theactions involved property supposedly belonging to it,and therefore, the partnership was the real party ininterest. What was done by them was to split theircause of action in violation of the well known rulethat only one suit may be instituted for a single causeof action. Hence, the court orders that the assailed

judgment be declared null and void and the

complaint be dismissed from being barred by priorjudgment and estoppel, and for lack of merit.

MUNASQUE VS COURT OF APPEALS

FACTS:

Elmo Muasque, in behalf of Galanand Muasquepartnership as Contractor,entered into a writtencontract with Tropical Commercial Co., through its

branchmanager Ramon Pons, for remodelling of Tropicalsbuilding in Cebu. The consideration for the entireservices is P25,000 to be paid: 30% upon signingof contract, and balance on 3 equal instalments ofP6,000 every 15working days. First payment ofcheck worth P7,000 was payable to Muasque,who indorsed it to Galan for purposes of depositingthe amount and paying the materials already used.

But since Galan allegedly misappropriatedP6,183.37 of the check for personal use, Muasquerefused to indorse the second check worthP6,000. Galan then informed Tropicalof the misunderstandingbetween him and Muasque and this prompted Tropical to change the payee of the second check from Muasque to GalanandAs

sociates(the duly registered name of Galan and Mu

asque partnership).Despite the misappropriation,Muasque alone was able to finish the project. Thetwo remaining checks were properly issued toMuasque. Muasque filed a complaint for paymentof sum of money plus damages against Galan,Tropical and Pons for the amount covered by the firstand second checks.Cebu Southern Hardware Co and Blue Diamond Gla


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ss Palace were allowed as intervenors having legalinterest claiming against Muasue and Galan formaterial sused.

TC:-Muasque and Pons jointly and severally liableto intervenors-Tropical and Pons absolved

CA affirmed with modification:-Muasque and Ponsjointly liable to intervenors

Issue:

1.W/N Muasque and Galan are partners?

2.W/N payment made by Tropical to Galan was

goodpayment?

3.W/N Galan should shoulder exclusively the amounts payable to theintervenors (granting hemisappropriated the amount from the two checks)?

HELD:

1.YES. Tropical had every right to presume theexistence of the partnership:

a.Contract states that agreement was entered into byGalanandMuasque

b.The first check issue in the name of Muasquewas indorsed to Galan The relationship was made toappear as a partnership.

2.YES. Muasque and Galan were partners whenthe debts to the intervenors were incurred, hence,they are also liable to third persons who extendedcredit to their partnership.

DELUAO VS CASTEEL

FACTS: Casteel was the original occupant and

applicant of a fishpond area since before the lastWorld War. He wanted to preclude subsequent

applicants from entering and spreading themselveswithin the area by expanding his occupation thereof

by the construction of dikes and the cultivation ofmarketable fishes.-Thus, he borrowed P27, 000 fromthe Deluaos to finance needed improvements for thefishpond, and was compelled by force of thiscircumstance to enter into the contract ofpartnership, with an agreement to divide the fishpondafter the award. Eventually, Casteel administered the

said property and single-handedly opposed rivalapplicants who occupied portions of the fishpondarea. He relentlessly pursued his claim to the saidarea up to the Office of the DANR Secretary, until itwas finally awarded to him.

Issue: WON the parties can now validly divide thesaid fishpond as agreed upon by them? NO.

Ruling:


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Spouses Deluaos statement that thebeneficial rightover the fishpond in question is the "specificpartnership property" contemplated by art. 1811 ofthe Civil Code is incorrect. A reading of the said

provision will show that what is meant is tangibleproperty, such as a car, truck or a piece of land, butnot an intangible thing such as the beneficial right toa fishpond. If what they have in mind is the fishponditself, they are grossly in error. A fishpond of thepublic domain can neve rbe considered a specificpartnership property because only its use andenjoyment never its title or ownership isgranted to specific private persons.-Since we held as

illegal the second part of the contract of partnershipbetween the parties to divide the fishpond betweenthem after the award, a fortiori, no rights orobligations could have arisen therefrom.Inescapably, no trust could have resulted becausetrust is founded on equity and can never result froman act violative of the law. Art. 1452 of the Civil Code

does not support the appellees' stand because it

contemplates an agreement between two or morepersons to purchase property capable of privateownership the legal title of which is to be takenin the name of one of them for the benefitof all. In thecase at bar, the parties did not agree to purchase thefishpond, and even if they did, such is prohibited bylaw, a fishpond of the public domain not beingsusceptible of private ownership.-It must be

observed that, despite the decisions of the DANRSecretary in DANR cases 353 and 353-B awardingthe area to Casteel, and despite the latter's proposalthat they divide the fishpond between them,

the Deluaos unequivocally expressed in theiraforequoted letter their decision not to share thefishpond with Casteel. This produced the dissolutionof the entire contract of partnership (to jointlyadminister and to divide the fishpond after theaward) between the parties, not to mention itsautomatic dissolution for being contrary to law.PetItioners final proposition that only by giving effect

to the confirmed intention of the parties may the

cause of equity and justice be served, we muststate that since the contract of service is contrary tolaw and, therefore, null and void, it is not and cannever be considered as the law between the parties.

LIM TANHU VS RAMOLETE

FACTS:

Private respondent Tan Put alleged that she is the

widow of Tee Hoon Lim Po Chuan, who was a

partner and practically the owner who has controlling

interest of Glory Commercial Company and a

Chinese Citizen until his death. Defendant Antonio


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Lim Tanhu and Alfonso Leonardo Ng Sua were

partners in name but they were mere employees of

Po Chuan and were naturalized Filipino

Citizens. Tan Put filed complaint against spouses-

petitoner Lim Tanhu and Dy Ochay including their

son Tech Chuan and the other spouses-petitoner Ng

Sua and Co Oyo including also their son Eng Chong

Leonardo, that through fraud and machination took

actual and active management of the partnership

and that she alleged entitlement to share not only in

the capital and profits of the partnership but also in

the other assets, both real and personal, acquired by

the partnership with funds of the latter during its

lifetime."

According to the petitioners, Ang Siok Tin is the

legitimate wife, still living, and with whom Tee Hoon

had four legitimate children, a twin born in 1942, and

two others born in 1949 and 1965, all presently

residing in Hong Kong. Tee Hoon died in 1966 and

as a result of which the partnership was dissolved

and what corresponded to him were all given to his

legitimate wife and children.

Tan Put prior of her alleged marriage with Tee Hoon

on 1949, was engaged in the drugstore business;

that not long after her marriage, upon the suggestion

of the latter sold her drugstore for P125,000.00

which amount she gave to her husband as

investment in Glory Commercial Co. sometime in

1950; that after the investment of the above-stated

amount in the partnership its business flourished and

it embarked in the import business and also engaged

in the wholesale and retail trade of cement and GI

sheets and under huge profits.

Defendants interpose that Tan Put knew and was

are that she was merely the common-law wife of Tee

Hoon. Tan Put and Tee Hoon were childless but the

former had a foster child, Antonio Nunez.

ISSUE: Whether Tan Put, as she alleged being

married with Tee Hoon, can claim from the company

of the latters share.

HELD:

Under Article 55 of the Civil Code, the declaration of

the contracting parties that they take each other as

husband and wife "shall be set forth in an instrument"

signed by the parties as well as by their witnesses and

the person solemnizing the marriage. Accordingly, the

primary evidence of a marriage must be an authentic


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copy of the marriage contract. While a marriage may

also be proved by other competent evidence, the

absence of the contract must first be satisfactorily

explained. Surely, the certification of the person who

allegedly solemnized a marriage is not admissible

evidence of such marriage unless proof of loss of the

contract or of any other satisfactory reason for its non-

production is first presented to the court. In the case

at bar, the purported certification issued by a Mons.

Jose M. Recoleto, Bishop, Philippine Independent

Church, Cebu City, is not, therefore, competent

evidence, there being absolutely no showing as to

unavailability of the marriage contract and, indeed, as

to the authenticity of the signature of said certifier, the

jurat allegedly signed by a second assistant provincial

fiscal not being authorized by law, since it is not part

of the functions of his office. Besides, inasmuch as the

bishop did not testify, the same is hearsay.

An agreement with Tee Hoon was shown and signed

by Tan Put that she received P40,000 for hersubsistence when they terminated their relationship of

common-law marriage and promised not to interfere

with each others affairs since they are incompatible

and not in the position to keep living together

permanently. Hence, this document not only proves

that her relation was that of a common-law wife but

had also settled property interests in the payment of

P40,000.

IN VIEW OF ALL THE FOREGOING, the petition is

granted. All proceedings held in respondent court inits Civil Case No. 12328 subsequent to the order of

dismissal of October 21, 1974 are hereby annulled

and set aside, particularly the ex-parteproceedings

against petitioners and the decision on December 20,

1974. Respondent court is hereby ordered to enter an

order extending the effects of its order of dismissal of

the action dated October 21, 1974 to herein

petitioners Antonio Lim Tanhu, Dy Ochay, AlfonsoLeonardo Ng Sua and Co Oyo. And respondent court

is hereby permanently enjoined from taking any

further action in said civil case gave and except as

herein indicated. Costs against private respondent.

EUROTECH INDUSTRIAL VS CUIZON

FACTS:Eurotech is engaged in the business ofimportation and distribution of various Europeanindustrial equipment. It has as one of its customersImpact Systems Sales which is a sole proprietorshipowned by Erwin Cuizon.

Eurotechsold to Impact Systems various products allegedly a


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mounting to P91,338.00. Cuizonssought to buy fromEurotech 1 unit of sludge pump valued atP250,000.00 with Cuizons making a down paymentof P50,000.00. When the sludge pump arrived from

the United Kingdom, Eurotech refused to deliver thesame to Cuizonswithout their having fully settled their indebtedness toEurotech. Thus, Edwin Cuizon and Alberto de Jesus,general manager of Eurotech, executed a Deed of

Assignment of receivables in favor of Eurotech.

Cuizons, despite the existence of the Deed ofAssignment, proceeded to collect from Toledo PowerCompany the amount of P365,135.29. Eurotechmade several demands upon Cuizons to pay theirobligations. As a result, Cuizons were able to makepartial payments to Eurotech. Cuizons totalobligations stood at P295,000.00 excluding interestsand attorneys fees.

Edwin Cuizon alleged that he is not a real party ininterest in this case. According to him, he was acting

as mere agent of his principal, which was the ImpactSystems, in his transaction with Eurotech and the

latter was very much aware of this fact.

ISSUE:

WON Edwin exceeded his authority when he signedthe Deed of Assignment thereby binding himselfpersonally to pay the obligations to Eurotech

HELD:No.

Edwin insists that he was a mere agent of ImpactSystems which is owned by Erwin and that his statusas such is known even to Eurotech as it is alleged inthe Complaint that he is being sued in his capacity

as the sales manager of the said business venture.Likewise, Edwin points to the Deed of Assignment

which clearly states that he was acting as arepresentative of Impact Systems in said transaction.

Art. 1897. The agent who acts as such is not

personally liable to the party with whom he contracts,unless he expressly binds himself or exceeds the

limits of his authority without giving such partysufficient notice of his powers.

In a contract of agency , a person binds himself to

render some service or to do something inrepresentation or on behalf of another withthe latters consent.Its purpose is to extend thepersonality of the principal or the party for whomanother acts and from whom he or she derives theauthority to act. The basis of agency isrepresentation, that is, the agent acts for and on


22/34

behalf of the principal on matters within the scope ofhis authority and said acts have the same legal effectas if they were personally executed by the principal.

Elements of the contract of agency: (1) consent,express or implied, of the parties to establish therelationship; (2) the object is the execution of a

juridical act in relation to a third person; (3) the

agent acts as a representative and not for himself;(4) the agent acts within the scope of his authority

An agent, who acts as such, is not personally liableto the party with whom he contracts. There are2instances when an agent becomes personally liableto a third person. The first is when he expresslybinds himself to the obligation and the second iswhen he exceeds his authority. In the last instance,the agent can be held liable if he does not give thethird party sufficient notice of his powers. Edwin doesnot fall within any of the exceptions contained in Art.1897.

In the absence of an agreement to the contrary, amanaging agent may enter into any contracts thathe deems reasonably necessary or requisite forthe protection of the interests of his principalentrusted to his management.

Edwin Cuizon acted well-within his authority when he

signed the Deed of Assignment. Eurotech refused todeliver the 1 unit of sludge pump unless it received,

in full, the payment for Impact Systemsindebtedness. Impact Systems desperately neededthe sludge pump for its business since after it paidthe amount of P50,000.00 as down payment it still

persisted in negotiating with Eurotech whichculminated in the execution of the Deed of

Assignment of its receivables from Toledo PowerCompany. The significant amount of time spent onthe negotiation for the sale of the sludge pumpunderscores Impact Systems perseverance to get

hold of the said equipment. Edwins participationinthe Deed of Assignment was reasonably necessary

or was required in order for him to protect the

business of his principal

BALATAZAR VS OMBUDSMAN

FACTS: Paciencia Regala owns a seven (7)-hectare

fishpond located at Sasmuan, Pampanga. HerAttorney-in-Fact Faustino R. Mercado leased thefishpond to Eduardo Lapid for a three (3)-year

period. Lessee Eduardo Lapid in turn sub-leased thefishpond to Rafael Lopez during the last seven(7) months of the original lease. Ernesto Salengawas hired by EduardoLapid as fishpond watchman

(bante-encargado). In the sub-lease, Rafael Lopezrehired respondent Salenga. Ernesto Salenga, sentthe demand letter to Rafael Lopez and LourdesLapid for unpaid salaries and non-payment of the


23/34

10% share in the harvest. Salenga was promted tofile a Complaintbefore the Provincial Agrarian Reform AdjudicationBoard (PARAB), Region III, San Fernando,

Pampanga docketed as DARAB Case No. 552-P93entitled Ernesto R. Salenga v. Rafael L. Lopez andLourdes L. Lapid for Maintenance of PeacefulPossession, Collection of Sum of Money andSupervision of Harvest. Pending resolution of theagrarian case, the instant case was instituted bypetitioner Antonio Baltazar, an allegednephew of Faustino Mercado, through a Complaint-

Affidavit against private respondents

before the Office of theOmbudsman which wasdocketed as OMB-1-94-3425 entitled Antonio B.Baltazar v. Eulogio Mariano, Jose Jimenez,Jr.,Toribio Ilao, Jr. and Ernesto Salenga for violationof RA 3019.

Petitioner maintains that respondent Ilao, Jr. hadno jurisdiction to hear and act on DARAB Case No.552-P93 filed byrespondent Salenga as there wasno tenancy relation between respondent Salengaand Rafael L. Lopez, and thus, the complaint wasdismissible on its face.

ISSUE: Whether or not the petitioner has legalstanding to pursue the instant petition? Whether ornot the Ombudsman likewise erred in reversing hisown resolution where it was resolved that accused

as Provincial Agrarian Adjudicator has no jurisdictionover a complaint where there exist no tenancyrelationship?

HELD: The "real-party-in interest" is "the party whostands to be benefited or injured by the judgment inthe suit or the party entitled to the avails of the suit.The Complaint-Affidavit filed before the Office of the

Ombudsman, there is no question on his authorityand legal standing. The Ombudsman can act on

anonymous complaints and motu proprio inquire intoalleged improper official acts or omissions fromwhatever source, e.g., a newspaper. Faustino

Mercado, is an agent himself and as such cannotfurther delegate his agency to another. An agentcannot delegate to another the same agency. Re-delegation of the agency would be detrimental to the

principal as the second agent has no privity ofcontract with the former. In the instant case,petitioner has no privity of contract with PacienciaRegala, owner of the fishpond and principal ofFaustino Mercado. The facts clearly show that it wasnot the Ombudsman through the OSP who allowedrespondent Ilao, Jr. to submit his Counter-Affidavit. Itwas the Sandiganbayan who granted the prayed forre-investigation and ordered the OSP to conduct

the re investigation . The OSP simply followed thegraft courts directive to conduct the re-investigationafter the Counter-Affidavit of respondent Ilao, Jr. was


24/34

filed. Indeed, petitioner did not contest nor questionthe August 29,1997 Order of the graft court.Moreover, petitioner did not file any reply-affidavit inthe re-investigation despite notice.

The nature of the case is determined by the settledrule that jurisdiction over the subject matter isdetermined by the allegations of the complaint. The

nature of an action is determined by the materialaverments in the complaint and the character of the

relief sought not by the defenses asserted in theanswer or motion to dismiss. Respondent Salengascomplaint and its attachment clearly spells out the

jurisdictional allegations that he is an agriculturaltenant in possession of the fishpond and is about tobe ejected from it, clearly, respondent Ilao, Jr. couldnot be faulted in assuming jurisdiction as said

allegations characterize an agricultural dispute.

Besides, whatever defense asserted in an answer ormotion to dismiss is not to be considered in resolvingthe issue on jurisdiction as it cannot be made

dependent upon the allegations of the defendant.

ONG VS COURT OF APPEALS

Facts: Petitioner Jaime Ong and Respondent

spouses Robles an Agreement of Purchase and

Sale (Nota Bene: Contract to Sell) with regards two

parcels of land with a rice mill and piggery situated atQuezon for P2M. As part of the terms and

conditions, petitioner shall advance downpayment of

300K, shall pay the loan of the spouses of the bank,

and will pay the balance of the purchase price

quarterly.

Petitioner was able to pay the downpayment and

subsequently occupied the property. However, hegave the spouses postdated checks which were

dishonored due to insufficient funds. To make it

worse, he was not able to fully pay the loan of the

spouses in the bank.

The bank threatened to foreclose the mortgage, so

what the spouses did was to sell three of the

transformers of the rice mill in order to satisfy theloan obligation.

Respondents now want to rescind the contract on

account of Ongs non-fulfillment of obligation and

seek to recover the property with damages.


25/34


26/34

is a principal action which is based on breach of a

party, while rescission under Article 1381 is a

subsidiary action limited to cases of rescissible

contracts.

SUNANCE INTERNATIONAL VS NLRC

FACTS: There is an implied revocation of an agency

relationship when after the termination of the

original employment contract, the foreign principal

directly negotiated with the employee and entered intoa new and separate employment contract.

Respondent Divina Montehermozo is a domestic

helper deployed to Taiwan by Sunace

International Management Services (Sunace) under a

12-month contract. Such employment was made with

the assistance of Taiwanese broker Edmund Wang.

After the expiration of the contract, Montehermozocontinued her employment with her Taiwanese

employer for another 2 years.

When Montehermozo returned to the Philippines, she

filed a complaint against Sunace, Wang, and her

Taiwanese employer before the National Labor

Relations Commission (NLRC). She alleges that she

was underpaid and was jailed for three months in

Taiwan. She further alleges that the 2-

year extension of her employment contract was withthe consent and knowledge of Sunace. Sunace, on

the other hand, denied all the allegations.

The Labor Arbiter ruled in favor of Montehermozo and

found Sunace liable thereof. The National Labor

Relations Commission and Court of Appeals affirmed

the labor arbiters decision. Hence, the filing of this

appeal.

ISSUE:

Whether or not the 2-year extension of

Montehermozos employment was made with the

knowledge and consent of Sunace

HELD:

Contrary to the Court of Appeals finding, the alleged

continuous communication was with the Taiwanesebroker Wang, not with the foreign employer.

The finding of the Court of Appeals solely on the basis

of the telefax message written by Wang to Sunace,

that Sunace continually communicated with the

foreign principal (sic) and therefore was aware of


27/34

and had consented to the execution of

the extension of the contract is misplaced. The

message does not provide evidence that Sunace was

privy to the new contract executed after the expirationon February 1, 1998 of the original contract. That

Sunace and the Taiwanese broker communicated

regarding Montehermozos allegedly withheld savings

does not necessarily mean that Sunace ratified

the extension of the contract.

As can be seen from that letter communication, it was

just an information given to Sunace thatMontehermozo had taken already her savings from

her foreign employer and that no deduction was made

on her salary. It contains nothing about

the extension or Sunaces consent thereto.

Parenthetically, since the telefax message is dated

February 21, 2000, it is safe to assume that it was sent

to enlighten Sunace who had been directed, bySummons issued on February 15, 2000, to appear on

February 28, 2000 for a mandatory conference

following Montehermozos filing of the complaint on

February 14, 2000.

Respecting the decision of Court of Appeals following

as agent of its foreign principal, [Sunace] cannot

profess ignorance of such an extension as obviously,

the act of itsprincipal extending [Montehermozos] employment

contract necessarily bound it, it too is a

misapplication, a misapplication of the theory of

imputed knowledge.

The theory of imputed knowledge ascribes

the knowledge of the agent, Sunace, to the principal,

employer, not the other way around. The knowledgeof the principal-foreign employer cannot, therefore, be

imputed to its agent Sunace.

There being no substantial proof that Sunace knew of

and consented to be bound under the 2-

year employment contract extension, it cannot be said

to be privy thereto. As such, it and its owner cannot

be held solidarily liable for any of Montehermozosclaims arising from the 2-year employment extension.

As the New Civil Code provides, Contracts take effect

only between the parties, their assigns, and heirs,

except in case where the rights and obligations arising

from the contract are not transmissible by their nature,

or by stipulation or by provision of law.


28/34

Furthermore, as Sunace correctly points out, there

was an implied revocation of its agency relationship

with its foreign principal when, after

the termination of the originalemployment contract,the foreign principal directly negotiated with

Montehermozo and entered into a new and

separate employment contract in Taiwan. Article

1924 of the New Civil Code states that the agency is

revoked if the principal directly manages the

business entrusted to the agent, dealing directly with

third persons.

SEVILLA VS CA

Facts: The petitioners invoke the provisions onhuman relations of the Civil Code in this appeal bycertiorari. Mrs. Segundina Noguera, party of the firstpart; the Tourist World Service, Inc., represented byMr. Eliseo Canilao as party of the second part, and

hereinafter referred to as appellants, the TouristWorld Service, Inc. leased the premises belonging tothe party of the first part at Mabini St., Manila for theformer-s use as a branch office. In the said contractthe party of the third part held herself solidarily liablewith the party of the part for the prompt payment ofthe monthly rental agreed on. When the branch

office was opened, the same was run by the hereinappellant Una 0. Sevilla payable to Tourist WorldService Inc. by any airline for any fare brought in onthe efforts of Mrs. Lina Sevilla, 4% was to go to Lina

Sevilla and 3% was to be withheld by the TouristWorld Service, Inc.

On November 24, 1961 the Tourist World Service,Inc. appears to have been informed that Lina Sevillawas connected with a rival firm, the Philippine TravelBureau, and, since the branch office was anyhowlosing, the Tourist World Service considered closingdown its office.

On June 17,1963, appellant Lina Sevilla refiled hercase against the herein appellees and after theissues were joined, the reinstated counterclaim ofSegundina Noguera and the new complaint ofappellant Lina Sevilla were jointly heard followingwhich the court ordered both cases dismiss for lack

of merit.

In her appeal, Lina Sevilla claims that a jointbussiness venture was entered into by and betweenher and appellee TWS with offices at the Ermitabranch office and that she was not an employee ofthe TWS to the end that her relationship with TWSwas one of a joint business venture appellant madedeclarations.


29/34

Issue:

Whether or not the padlocking of the premises by the

Tourist World Service, Inc. without the knowledgeand consent of the appellant Lina Sevilla entitled thelatter to the relief of damages prayed for and whetheror not the evidence for the said appellant supportsthe contention that the appellee Tourist WorldService, Inc. unilaterally and without the consent ofthe appellant disconnected the telephone lines of theErmita branch office of the appellee Tourist WorldService, Inc.?

Held:

The trial court held for the private respondent on thepremise that the private respondent, Tourist WorldService, Inc., being the true lessee, it was within itsprerogative to terminate the lease and padlock the

premises. It likewise found the petitioner, Lina

Sevilla, to be a mere employee of said Tourist WorldService, Inc. and as such, she was bound by theacts of her employer. The respondent Court of

Appeal rendered an affirmance.

In this jurisdiction, there has been no uniform test todetermine the evidence of an employer-employeerelation. In general, we have relied on the so-called

right of control test, "where the person for whom theservices are performed reserves a right to control notonly the end to be achieved but also the means to beused in reaching such end." Subsequently, however,

we have considered, in addition to the standard ofright-of control, the existing economic conditionsprevailing between the parties, like the inclusion ofthe employee in the payrolls, in determining theexistence of an employer-employee relationship.

the Decision promulgated on January 23, 1975 aswell as the Resolution issued on July 31, 1975, bythe respondent Court of Appeals is hereby

REVERSED and SET ASIDE. The privaterespondent, Tourist World Service, Inc., and EliseoCanilao, are ORDERED jointly and severally toindemnify the petitioner, Lina Sevilla, the sum of25,00.00 as and for moral damages, the sum ofP10,000.00, as and for exemplary damages, and thesum of P5,000.00, as and for nominal and/or

temperate damages.

HAHN VS COURT OF APPEALS

Facts:

1.Alfred Hahn is a Filipino citizendoing business under the name and style "Hahn-Manila."


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2.Bayerische Motoren Werke Aktiengesellschaft (BMW) is a nonresident foreign corporation existingunder the laws of the former Federal Republic ofGermany, with principal office at Munich, Germany.

3.In 1963, Hahn executed in favor of BMW a Deed ofAssignment with Special Power of Attorney whichessentially, makes Hahn as the exclusive dealerof BMW in the Philippines. Moreover, it stated therethat Hahn and BMW shall continue businessrelations as has been usual in the past without aformal contract."4.In 1993, BMW and Columbia Motors Corp (CMC)had a meeting which would grant CMC exclusivedealership of BMW cars.5.Hahn was informed later that BMW wasdissatisfied with how it carrying its business.However, BMW expressed willingness to continuebusiness relations with the petitioner on the basis ofa "standard BMW importer" contract, otherwise, itsaid, if this was not acceptable to petitioner, BMWwould have no alternative but to terminatepetitioner's exclusive dealership effective June 30,1993.

6.Hahn protested alleging that such termination is abreach of the Deed of Assignment. Hahn insistedthat as long as the assignment of its trademark anddevice subsisted, he remained BMW's exclusivedealer in the Philippines because the assignmentwas made inconsideration of the exclusivedealership.

7.BMW, however, went on to terminate its dealershipwith Hahn.8.Hahn filed a complaint forspecific performance and damages in the RTC. RTC

issued a writ preliminary injunction.9.BMW appealed to the CA. CA reversed on theground that Hahn is not an agent of BMW and thatBMW is not doing business in the Phils. By virtue ofthe latter, the writ of preliminary injunction should nothave been issued since RTC did not have jurisdictionover it.

Issue

W/N Hahn is agent or a distributor (or broker) in thePhilippines of BMW.

HELD:

There is nothing to support the appellatecourt's finding that Hahn solicited orders alone andfor his own account and without "interference from,let alone direction of, BMW. To the contrary, Hahnclaimed he took orders for BMW carsand transmitted them to BMW.

Upon receipt of the orders, BMW fixed the downpayment and pricing charges, notified Hahn of the

scheduled production month for the orders, andreconfirmed the orders by signing and returning toHahn the acceptance sheets. Payment was made by


31/34

the buyer directly to BMW. Title to cars purchasedpassed directly to the buyer and Hahn never paid forthe purchase price of BMW cars sold in thePhilippines. Hahn was credited with a commission

equal to 14% of the purchase price upon theinvoicing of a vehicle order by BMW.

Upon confirmation in writing that the vehicles had

been registered in the Philippines and serviced byhim, Hahn received an additional 3% of the full

purchase price. Hahn performed after-sale services,including, warranty services, for which he receivedreimbursement from BMW. All orders were on

invoices and forms of BMW.

UYTENGU VS BADUEL

FACTS: Complainant is one of the heirs of Tirso

Uytengsu, Jr. He and his co-heirs had a pendingpatent application. He alleges that sometime in

December 1998 respondent requested him to sign aspecial power of attorney (SPA) authorizing LuisWee (Wee) and/or Thomas Jacobo (Jacobo) toclaim, demand, acknowledge and receive on hisbehalf the certificates of title from the Register ofDeeds, General Santos City, Department ofEnvironment and Natural Resources and from any

government office or agency due to complainant andhis co-heirs by reason of their application forHomestead Patent. Complainant refused to sign theSPA as he wanted to obtain the documents

personally. The respondent argues that theallegations of complainant are purely hearsay. Hestresses that complaint was instituted to harass himbecause he was the counsel of an opposing litigantagainst complainants corporation in an ejectment

case entitled General Milling Corporation v.

Cebu Autometic Motors, Inc. and Tirso Uytengsu III.Complainant charges that respondent committed an

act meriting disbarment when the latter caused tohave a special power of attorney, which the formerreused to sign earlier, executed by Mrs. ConnieKokseng, former guardian of complainant and his co-

heirs, authorizing certain individuals to secure therelease from the Register of Deeds and othergovernment offices in General Santos City, titles andother documents pertaining to complainants and his

co-heirs homestead application.

ISSUE: Whether or not the respondent has the

authority to represent the complainant intheir homestead patent application.

HELD: The relation of attorney and client is in many

respects one of agency and the general rules ofordinary agency apply to such relation. The extent of


32/34

authority of a lawyer, when acting on behalf of hisclient outside of court, is measured by the same testas that which is applied to an ordinary agent. Suchbeing the case, even respondent himself can acquire

the certificates of title and other documents withoutneed of an SPA from complainant and his co-heirs.In addition, the Court agrees with the investigatingcommissioner that the allegations of complainantconstitutes mere hearsay evidence and may not beadmissible in any proceeding. It was proven that thecase at bar is without merit and that evidences areweak and proved to be just hearsay

J-PHIL MARINE VS NLRC

FACTS: Worked as a cook on aboard vessels plyingoverseas, Warlito E. Dumalaog was employed as acook on board vessels plying overseas. He filed a pro-forma complaint on March 4,2002 before the NationalLabor Relations Commission (NLRC) against J-PhilMarine, Inc., its then president Jesus Candava, and

its foreign principal Norman Shipping Services.

The Labor Arbiter dismissed the complaint for lack ofmerit. On appeal, the NLRC reversed the decision ofthe Labor Arbiter. The Court of Appeals affirmed thedismissal for failure to attach to the petition all materialdocuments and for defective verification and

certification. Consequently, a petition was filed beforethe Court of Appeals.

While the case was pending in the Supreme Court,

the respondent entered into a compromise agreementand signed Quitclaims and Release. The same hasbeen subscribed and sworn to before the Labor

Arbiter. Accordingly, the case was dismissed.

ISSUES:Whether or not the compromise agreemententered into by the respondent, without his counsel, isvalid

HELD:A compromise agreement is valid as long asthe consideration is reasonable and the employeesigned the waiver voluntarily, with a full understandingof what he was entering into.

A compromise agreement is valid as long as theconsideration is reasonable and the employee signedthe waiver voluntarily, with a full understanding ofwhat he was entering into. All that is required for thecompromise to be deemed voluntarily entered into is

personal and specific individual consent. Thus,contrary to Dumalaoag's contention, the employee'scounsel need not be present at the time of the signingof the compromise agreement.

The relation of attorney and client is in many respectsone of agency, and the general rules of agency applyto such relation. The acts of an agent are deemed the


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acts of the principal only if the agent acts within thescope of his authority. The circumstances of this caseindicate that Dumalaoag's counsel is acting beyondthe scope of his authority in questioning the

compromise agreement.

LIM VS SABAN

Facts: Ybez, owner of a lot entered into an Agency

agreement with Saban authorizing the latter to lookfor a buyer of the Lot, with 200k as selling pricewhich he can mark up to cover commission and

transfer expenses. Saban sold the lot to Lim in theamount of 600k. Lim issued four checks to Sabanbut Ybaez asked Lim to cancel said checks and paythe remaining amount directly to Ybaez. Saban fileda case against Ybaez and Lim. Pending case,Ybaez died without being substituted. RTCdismissed Sabans complaint, the four checks issuedby Lim were stale and non-negotiable and the Latter

was absolved. CA reversed the decision.

ISSUE:Whether or not as agent, Saban is entitled to receivehis commission and Lim should pay the same.

RULING:The court affirms the CAs finding that agency was

not revoked since Ybaez requested that Lim stoppayment of the checks payable to Saban only afterthe consummation of the sale. At that time, Sabanhad already performed his obligation as agent when

the Deed of Absolute Sale was executed. To depriveSaban of his commission subsequent to the salewhich was consummated through his efforts wouldbe a breach of his contract of agency.

The logical conclusion of Court is that Lim changedher mind in agreeing to purchase the lot at 600k aftertalking to Ybaez and realizing that Sabans

commission was higher than the share of the owner.It was sufficient to conclude Ybaez and Limconnived to deprive Saban of his commission bydealing with each other directly and reducing the

price and leaving nothing to compensate Saban forhis effort.

VELOSO VS COURT OF APPEALS

Applicable Provision: Art. 1878

Facts: Petitioner Francisco Veloso was the soleowner of a registered parcel of land in Tondo,Manila, which he acquired in 1957. His wife Irma,armed with a general power of attorney, sold said lotto the respondent spouses Escario in 1987.


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Petitioner filed an action for annulment of the deed ofsale and reconveyance of property

Issue: Whether a general power of attorney mayauthorize an agent to sell real property.

Held/Ratio: Yes. Although sale of real property

requires a special power of attorney, if a generalpower of attorney expressly grants the power to sellto the agent, there is no need to execute a separatespecial power of attorney. The assailed power ofattorney had the following provision: To buy or sellland, more specifically TCT No. 49138 Thus, saidpower of attorney sufficiently authorized the wife tosell the property. Therefore, the sale is valid

Documents

Partnership - Case Digests 1