Partnership

2017
[G.R. No. 217777. August 16, 2017.]
PRISCILLA Z. ORBE, petitioner, vs. LEONORA O. MIARAL, respondent.

FACTS: On 6 March 1996, respondent agreed to engage in the garment

exportation business with her sister, petitioner and executed a partnership agreement
where they agreed to contribute P250,000.00 each to Toppy Co., Inc. and Miaral
Enterprises, and to equally divide the profits they may earn.
Petitioner initially invested the amount of P183,999.00 and subsequently tendered the
amount of P20,000.00 for the payment of salaries of the workers at the factory.
Subsequently, petitioner was also convinced by respondent to pay for the plane tickets
of respondent and others joining a trip to US amounting to US$2,071.00 and promise to
pay petitioner once they arrive in US. Upon arrival, respondent issued three (3) checks
drawn in a bank in the US as payment but one was dishonored for having been drawn
against insufficient funds. Petitioner likewise discovered that there was no exportation of
garments to the United States or any other transactions in the United States that took
place.
Petitioner demanded from respondent her initial investment, along with the ticket
reimbursement but respondent failed to return the money. In 2011, petitioner filed a
complaint for estafa against respondent before the Office of the City Prosecutor (OCP)
of Quezon City. OCP found that no probable cause existed against respondent for the
commission of the crime of estafa. Relying mainly on the case of United States v.
Clarin, the OCP found that there was a partnership agreement between the parties, thus
resolving that the failure of a partner to account for partnership funds may only give rise
to a civil obligation, not a criminal case for estafa.
On 30 October 2013, petitioner filed her corresponding comment, contending that the
alleged partnership entered into by the parties merely existed on paper. In fact,
respondent deceived her into contributing substantial sums of money for a sham
investment.
ISSUE: Whether or not a partnership between petitioner and respondent
existed
HELD: NO. In this case, the OCP erred gravely when it based its conclusion on
the Clarin case. Liwanag applies to the partnership agreement executed between
petitioner and respondent. Petitioner's initial contributions of P183,999.00 and
P20,000.00 were all for specific purposes: for the buying and selling of garments and for
the salaries of the factory workers, respectively. When respondent failed to account for
these amounts or to return these amounts to petitioner upon demand, there is probable
cause to hold that respondent misappropriated the amounts and had not used them for
their intended purposes. The Information for estafa should thus proceed.
From the evidence adduced by the parties, the Court finds that there is probable cause
that the crime charged was committed by the accused when they convinced the
complainant to invest money in a business partnership which appears to be non-
existent. It was not controverted that Leonora received the total amount of P183,999.00
from the complainant. Accused failed to present evidence to show the existence of a
business partnership apart from relying on the Agreement dated March 6, 1996. Neither
was there any evidence presented showing that complainant's money was used to
purchase garments to be sold abroad. Basic is the rule that one who alleges must
prove. In this case, the accused failed to establish, by clear and convincing evidence,
their defense of partnership.

[G.R. No. 194464. October 11, 2017.]

PREMIUM WASH LAUNDRY and ELMER C. ESPIRITU, petitioners, vs. MA.
TERESA P. ESGUERRA, respondent.
(Premium Wash Laundry v. Esguerra, G.R. No. 194464 (Notice), [October 11,
2017])

FACTS: Sometime in September 2005, private respondent Ma. Teresa P. Esguerra

filed a complaint before the labor arbiter against petitioners, Premium Wash Laundry
(PWL), and Elmer C. Espiritu for illegal dismissal. She alleged that she was a stay-in
employee of PWL, receiving a weekly salary of P2,000.00 and rendered services 12
hours a day six days a week. On September 24, 2005, petitioner Espiritu closed the
laundry shop without prior notice to its employees and also the Department of Labor
and Employment (DOLE). Private respondent avers that the workers were given
P2,000.00 each only. Private respondent, however, refused to receive the said amount
and instead filed a complaint before the Labor Arbiter.
Petitioner Elmer C. Espiritu, on the other hand, contends that PWL was not a sole
proprietorship but an unregistered partnership with him as partner financier and private
respondent as industrial partner. Allegedly, private respondent had full control and
management of the operations of PWL and that it was their mutual decision to close
PWL. In fact, both of them informed the lessor of the premises, Antonia Dizon, that they
would cease laundry operations upon expiration of the lease contract in July 2005.
Private respondent left on October 9, 2005, and took with her PWL's records.
Thereafter, she filed a complaint before the labor arbiter.
In November 21, 2006, the LA declared the respondent's termination as invalid upon
finding that contrary to the petitioners' insistence, she had been an employee because
there had been no evidence to prove her being an industrial partner. On appeal, the
NLRC affirmed the LA but modified the grant of monetary rewards.
Petitioners filed a petition for certiorari but dismissed by CA, and upheld the ruling of the
NLRC on the employment status of the respondent. It rejected the petitioners'
contention that she had been an industrial partner considering that they had not
presented any competent evidence to prove such allegation; and that she had not been
shown to have received a share of the profits from the supposed partnership.
ISSUE: Whether or not partnership had existed between petitioner Espiritu
and the respondent.
HELD: NO. It was held that the respondent received P2,000.00 did not ipso facto
prove the existence of the partnership between her and petitioner Espiritu. The
petitioners did not substantiate their claim that the respondent was an industrial partner.
Her having managed the business did not make her a partner because an employee
enjoying managerial rank could take care of the day to day operations of her employer's
business, but her doing so did not vest upon her the position of a partner. Also, in a
partnership, the partners not only contribute to a common fund but also share in the
profits. As the CA correctly observed, the P2,000.00 given to the respondent could not
be considered as her share of the profits of the partnership but as wage for her
performance of work.

2020
[G.R. No. 228356. March 9, 2020.]
MERIAN B. SANTIAGO, petitioner, vs. SPOUSES EDNA L. GARCIA AND BAYANI
GARCIA, respondents.
(Santiago v. Spouses Garcia, G.R. No. 228356, [March 9, 2020]

FACTS: In November 2000, petitioner (Merian) was enticed by respondent

(Edna) to invest money in the latter's lending business with a promise of a high
return in terms of monthly interest. The parties agreed that monthly interest shall
be remitted by Edna to Merian and that the principal amount invested shall be
returned to Merian upon demand. Neither of the parties, however, presented
evidence to show that such agreement was reduced in writing.
Merian began investing several amounts from November 15, 2000 to June 30,
2003, reaching an aggregate amount of P1,569,000.00. Edna had remitted to
Merian the amount of P877,000.00 as interest on said amounts. However, in
December 2003, Edna defaulted in remitting to Merian the interest due from said
investments. Despite demands, Edna failed to remit the interest to Merian.
Merian learned then that several other persons were likewise taken advantage of
by Edna, Merian filed the complaint a quo on February 12, 2004, for sum of
money with prayer for the issuance of a writ of preliminary attachment against
spouses Edna and Bayani Garcia (spouses Garcia). In their Answer, spouses
Garcia admitted the facts that Merian was enticed by Edna to invest in her
lending business that will yield a high return in terms of monthly interest, and that
under said investment proposal, it was agreed that the interest earned shall be
remitted by Edna to Merian on a monthly basis, while the principal amount shall
be returned upon Merian's demand but sought for the dismissal of the complaint
 for lack of cause of action since the amounts given by Merian were investments,
not loans.
RTC rendered its decision finding that a partnership was formed between Merian and
Edna — the former as capitalist partner and the latter as industrial partner. It ruled that a
person who invested in a business which incurred losses cannot convert such
investment into a loan. As such, the RTC dismissed Merian's complaint.

ISSUE: Whether or not partnership was formed between Merian and Edna

HELD: NO. SC cannot subscribe to the view that Merian and Edna formed a
partnership. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing
the profits among themselves. Partnership is essentially a result of an agreement or a
contract, either express or implied, oral or in writing, between two or more persons.
Here, there was neither allegation nor proof that Merian and Edna agreed to enter into a
partnership for purposes of carrying out the lending business.
There was likewise no agreement for the sharing of profits, only that Merian expects to
receive remittance of monthly interest from the amount she invested. At any rate, the
receipt by a person of a share of the profits, or of a payment of a contingent amount in
case of profits earned, is not a conclusive evidence of partnership. Article (Art.) 1769 (3)
of the Civil Code provides that "the sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or common right or
interest in any property from which the returns are derived." There must be an
unmistakable intention to form a partnership which is lacking in this case. Most
importantly, the facts do not disclose that there is mutual agency between Merian and
Edna, that is, neither party alleged that she can bind by her acts the other, and can be
bound by the acts of the other in the ordinary course of business.

Idos v. Court of Appeals

G.R. No. 110782, 25 September 1998

FACTS: Irma L. Idos (Idos), is a businesswoman engaged in leather tanning was

accused by the complainant, Eddie Alarilla (Alarilla) her erstwhile supplier and business
partner for violation of B.P. 22. The complainant Eddie Alarilla supplied chemicals and
rawhide to Idos for use in the latter’s business of manufacturing leather. He joined Idos
business and formed with her the short-lived partnership under the style “Tagumpay
Manufacturing which was dissolved by agreement of the parties.

Upon liquidation of the business, the partnership had as of May 1986 receivables and
stocks worth P1,800,000.00. The complainant’s share of the assets was P900,000.00
and to pay such share for accused-appellant issued four (4) postdated checks where
one of the checks bounced. The complainant demanded payment from the accused-
appellant but the latter failed to pay. In a letter reply, the accused-appellant denied
liability. She claimed that the check had been given upon demand of complainant in
May 1986 only as “assurance” of his share in the assets of the partnership and that it
was not supposed to be deposited until the stocks had been sold. Complainant then
filed an action before the court for violating BP 22 against petitioner.

Accused-appellant insisted that the complainant had known that the checks were to be
funded from the proceeds of the sale of the stocks and the collection of receivables.
She claimed that the complainant himself asked for the checks because he did not want
to continue in the tannery business and had no use for a share of the stocks.

ISSUE: Whether or not the agreement between the petitioner and complainant to
dissolve the partnership automatically terminated the partnership in question.

HELD: NO. SC held that it could not be deemed that though the parties — petitioner
and complainant — had agreed to dissolve the partnership, such agreement did not
automatically put an end to the partnership, since they still had to sell the goods on
hand and collect the receivables from debtors. In short, they were still in the process of
"winding up" the affairs of the partnership, when the check in question was issued.
Under the Civil Code, the three final stages of a partnership are (1) dissolution; (2)
winding-up, and (3) termination. These final stages in the life of a partnership are
recognized under the Civil Code that explicitly declares that upon dissolution, the
partnership is not terminated. to wit:
"Art. 1828. The dissolution of a partnership is the change in the relation of the partners
caused by any partner ceasing to be associated in the carrying on as distinguished from
the winding up of the business.
Art. 1829. On dissolution the partnership is not terminated, but continues until the
winding up of partnership affairs is completed."
The best evidence of the existence of the partnership, which was not yet terminated
(though in the winding up stage), were the unsold goods and uncollected receivables,
which were presented to the trial court. Since the partnership has not been terminated,
the petitioner and private complainant remained as co-partners. The check was thus
issued by the petitioner to complainant, as would a partner to another, and not as
payment from a debtor to a creditor.

G.R. No. 101847 May 27, 1993 NAVARRO vs. COURT OF APPEALS

FACTS: Private respondent Olivia V. Yanson and Petitioner Lourdes Navarro were
engaged in the business of Air Freight Service Agency. Pursuant to the Agreement
which they entered, they agreed to operate the said Agency; it is the Private
Respondent Olivia Yanson who supplies the necessary equipment and money used in
the operation of the agency. Her brother in the person of Atty. Rodolfo Villaflores was
the manager thereof while petitioner Lourdes Navarro was the Cashier; In compliance to
her obligation as stated in their agreement, private respondent brought into their
business certain chattels or movables or personal properties. However, those personal
properties remain to be registered in her name; Among the provisions stipulated in their
agreement is the equal sharing of whatever proceeds realized from their business;
However, sometime on July 23, 1976, private respondent Olivia V. Yanson, in order for
her to recovery the above mentioned personal properties which she brought into their
business, filed a complaint against petitioner Lourdes Navarro for "Delivery of Personal
Properties With Damages and with an application for a writ of replevin.
For her defense, petitioner Navarro argue that she and private respondent Yanson
actually formed a verbal partnership which was engaged in the business of Air Freight
Service Agency. She contended that the decision sustaining the writ of replevin is void
since the properties belonging to the partnership do not actually belong to any of the
parties until the final disposition and winding up of the partnership.

ISSUE: Whether or not there was a partnership that existed between the
parties.

HELD: Article 1767 of the New Civil Code defines the contract of partnership: Art. 1767.
By the contract of partnership two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing the
proceeds among themselves.
A cursory examination of the evidences presented no proof that a partnership, whether
oral or written had been constituted. In fact, those movables brought by the plaintiff for
the use in the operation of the business remain registered in her name. While there may
have been co-ownership or co-possession of some items and/or any sharing of
proceeds by way of advances received by both plaintiff and the defendant, these are not
indicative and supportive of the existence of any partnership between them. Art. 1769
par. 2 provides: Co-ownership or co-possession does not of itself establish a
partnership, whether such co-owners or co-possessors do or do not share any profits
made by the use of the property” Besides, the alleged profit was a difference found after
evaluating the assets and not arising from the real operation of the business. In
accounting procedures, strictly, this could not be profit but a net worth.
 G.R. No. 134559 December 9, 1999
ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and EMETERIA
BARING, petitioners,
vs. COURT OF APPEALS and MANUEL TORRES, respondents.
FACTS: Petitioners Torres and Baring entered into a “joint venture agreement” with
Respondent Torres for the development of a parcel of land into a subdivision. They
executed a Deed of Sale covering the said parcel of land in favor of respondent Manual
Torres, who then had it registered in his name. By mortgaging the property, respondent
Manuel Torres obtained from Equitable Bank a loan of P40,000, which was supposed to
be used for the development of subdivision as per the JVA. However, the project did not
push through and the land was subsequently foreclosed by the bank.
Petitioners Antonia Torres alleged that it was due to respondent’s lack of funds/skills
that caused the project to fail, and that respondent use the loan in the furtherance of his
own company. On the other hand, respondent Manuel Torres alleged that he used the
loan to implement the JVA – surveying and subdivision of lots, approval of the project,
advertisement, and construction of roads and the likes, and that he did all of these for a
total of P85,000.
Petitioners filed a case for estafa against respondent but failed. They then instituted a
civil case. CA held that the two parties formed a partnership for the development of
subdivision and as such, they must bear the loss suffered by the partnership in the
same proportion as their share in profits. Hence, the petition.

ISSUE: Whether or not the transaction between petitioner and respondent

was that of joint venture/partnership.

HELD: Yes. There formed a partnership between the two on the basis of joint-venture
agreement and deed of sale. A reading of the terms of agreement shows the existence
of partnership pursuant to Art 1767 of Civil Code, which states “By the contract of
partnership two or more persons bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing the profits among themselves.”
In the agreement, petitioners would contribute property to the partnership in the form of
land which was to be developed into a subdivision; while respondent would give, in
addition to his industry, the amount needed for general expenses and other costs.
Furthermore, the income from the said project would be divided according to the
stipulated percentage. Clearly, the contract manifested the intention of the parties to
form a partnership.