AURELIO K. LITONJUA v. EDUARDO K. LITONJUA, GR NOS.
166299-300, 2005-12-13 Foremost of these are the following provisions of the Civil Code:
Facts:
Petitioner Aurelio K. Litonjua, Jr. (Aurelio) and herein respondent Eduardo K. Litonjua, Sr.
(Eduardo) are brothers. The legal dispute between them started when, on December 4, 2002,
in the Regional Trial Court (RTC) at Pasig City, Aurelio filed a suit against his brother
Eduardo and herein respondent Robert T. Yang (Yang) and several corporations for specific
performance and accounting. In his complaint,[3] docketed as Civil Case No. 69235 and
eventually raffled to Branch 68 of the court,[4] Aurelio... alleged that, since June 1973, he
and Eduardo are into a joint venture/partnership arrangement in the Odeon Theater
business which had expanded thru investment in Cineplex, Inc., LCM Theatrical Enterprises,
Odeon Realty Corporation (operator of Odeon I and II theatres), Avenue
Realty, Inc., owner of lands and buildings, among other corporations. Yang is described in the
complaint as petitioner's and Eduardo's partner in their Odeon Theater investment.
On December 20, 2002, Eduardo and the corporate respondents, as defendants a quo, filed a
joint ANSWER With Compulsory Counterclaim denying under oath the material allegations of
the complaint, more particularly that portion thereof depicting petitioner... and Eduardo as
having entered into a contract of partnership. As affirmative defenses, Eduardo, et al., apart
from raising a jurisdictional matter, alleged that the complaint states no cause of action,
since no cause of action may be derived from the actionable... document, i.e., Annex "A-1",
being void under the terms of Article 1767 in relation to Article 1773 of the Civil Code, infra.
It is further alleged that whatever undertaking Eduardo agreed to do, if any, under
Annex "A-1", are unenforceable under the provisions of the Statute of Frauds.
Earlier, Eduardo and the corporate defendants, on the contention that grave abuse of
discretion and injudicious haste attended the issuance of the trial court's aforementioned
Omnibus Orders dated March 5, and April 2, 2003, sought relief from the CA via similar...
recourse. Their petition for certiorari was docketed as CA G.R. SP No. 76987.
Issues:
When it ruled that there was no partnership created by the actionable document because
this was not a public instrument and immovable properties were contributed to the
partnership.
Ruling:
A partnership exists when two or more persons agree to place their money, effects, labor,
and skill in lawful commerce or business, with the understanding that there shall be a
proportionate sharing of the profits and losses between them.[20] A contract of...
partnership is defined by the Civil Code as one where two or more persons bound
themselves to contribute money, property, or industry to a common fund with the intention
of dividing the profits among themselves.[21] A joint venture, on the other hand, is... hardly
distinguishable from, and may be likened to, a partnership since their elements are similar,
i.e., community of interests in the business and sharing of profits and losses. Being a form of
partnership, a joint venture is generally governed by the law on... partnership.[22]
The underlying issue that necessarily comes to mind in this proceedings is whether or not
petitioner and respondent Eduardo are partners in the theatre, shipping and realty business,
as one claims but which the other denies. And the issue bearing on the first assigned error...
relates to the question of what legal provision is applicable under the premises, petitioner
seeking, as it were, to enforce the actionable document - Annex "A-1" - which he depicts in
his complaint to be the contract of partnership/joint venture between himself and
Eduardo. Clearly, then, a look at the legal provisions determinative of the existence, or
defining the formal requisites, of a partnership is indicated.
Principles:
Art. 1771. A partnership may be constituted in any form, except where immovable property
or real rights are contributed thereto, in which case a public instrument shall be necessary.
Art. 1772. Every contract of partnership having a capital of three thousand pesos or more, in
money or property, shall appear in a public instrument, which must be recorded in the Office
of the Securities and Exchange Commission.
Failure to comply with the requirement of the preceding paragraph shall not affect the
liability of the partnership and the members thereof to third persons.
Art. 1773. A contract of partnership is void, whenever immovable property is contributed
thereto, if an inventory of said property is not made, signed by the parties, and attached to
the public instrument.
AGUILA, JR. v. COURT OF APPEALS 316 SCRA 246(1999)
Facts:
Alfredo N. Aguilar, Jr. (petitioner) is the manager of A.C.Aguila & Sons, Co., a partnership
engaged in lendingactivities. Felicidad S. Vda. de Abrogar (private respondent)and her late
husband, Ruben M. Abrogar, were the registeredowners of a house and lot, covered by
Transfer Certificate ofTitle No. 195101, in Marikina, Metro Manila. On April 18,1991, private
respondent, with the consent of her late husband,and A.C. Aguila & Sons, Co., represented
by petitioner,entered into a Memorandum of Agreement which providedthat A.C. Aguila &
Sons, Co. shall buy the property
from private respondent for P200,000 subject to an option torepurchase for P230,000 (valid
for 90 days), etc. On the sameday, the parties likewise executed a deed of absolute
sale,dated June 11, 1991, wherein private respondent, with theconsent of her late husband,
sold the subject property to A.C.Aguila & Sons, Co., represented by petitioner,
forP200,000,00. In a special power of attorney dated the sameday, April 18, 1991, private
respondent authorized petitioner to cause the cancellation of TCT No. 195101 and the
issuanceof a new certificate of title in the name of A.C. Aguila andSons, Co., in the event she
failed to redeem the subject property as provided in the Memorandum of Agreement.Private
respondent failed to redeem the property. Pursuant tothe special power of attorney
mentioned above, petitionercaused the cancellation of TCT No. 195101 and the issuanceof a
new certificate of title in the name of A.C. Aguila andSons, Co. Private respondent then
received a letter datedAugust 10, 1991 from Atty. Lamberto C. Nanquil, counsel forA.C.
Aguila & Sons, Co., demanding that she vacate
the premises within 15 days after receipt of the letter andsurrender its possession peacefully
to A.C. Aguila & Sons, Co.Otherwise, the latter would bring the appropriate action incourt.
Upon the refusal of private respondent to vacate thesubject premises, A.C. Aguila & Sons, Co.
filed an ejectmentcase against her in the Metropolitan Trial Court, Branch 76,Marikina,
Metro Manila. MeTC, Marikina, MM (April 3,1992): Ruled in favor of A.C. Aguila & Sons, Co.
Privaterespondent appealed to RTC Pasig, CA, and then SC but shestill lost. Private
respondent then filed a petition fordeclaration of nullity of a deed of sale filed by Felicidad
S.Vda. de Abrogar against Alfredo N. Aguila, Jr. She allegedthat the signature of her husband
on the deed of sale was aforgery because he was already dead when the deed wassupposed
to have been executed on June 11,
1991.•RTC,Marikina,MM(April11,1995):Dismissed. •CA(November29,1990):Reversed ruling
of the RTC. Hence,this petition for review on certiorari.Petitioner now contends that: (1) he is
not the real party ininterest but A.C. Aguila & Co., against which this case shouldhave been
brought; (2) the judgment in the ejectment case is a bar to the filing of the complaint for
declaration of nullity of adeed of sale in this case; and (3) the contract between A.C.Aguila &
Sons, Co. and private respondent is a
pacto de retro
sale and not an equitable mortgage as held by the appellatecourt.
Issue:
Whether the real party in interest is A.C. Aguila & Co.and not petitioner. –
YES
Ratio:
Under Art. 1768 of the Civil Code, a partnership "has
a juridical personality separate and distinct from that of each ofthe partners." The partners
cannot be held liable for theobligations of the partnership unless it is shown that the
legalfiction of a different juridical personality is being used forfraudulent, unfair, or illegal
purposes. In this case, privaterespondent has not shown that A.C. Aguila & Sons, Co., as
aseparate juridical entity, is being used for fraudulent, unfair, orillegal purposes. Moreover,
the title to the subject property isin the name of A.C. Aguila & Sons, Co. and the
Memorandumof Agreement was executed between private respondent, withthe consent of
her late husband, and A.C. Aguila & Sons, Co.,represented by petitioner. Hence, it is the
partnership, not itsofficers or agents, which should be impleaded in any litigationinvolving
property registered in its name. A violation of this
VILLAREAL V. RAMIREZ
Facts:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of
P750,000for the operation of a restaurant and catering business. Respondent Ramirez joined
as a partner in the business with the capital contribution of P250,000. In 1987, Jesus Jose
withdrew from the partnership and within the same time, Villareal and Carmelito Jose,
petitioners closed the business without prior knowledge of respondents In March 1987,
respondents wrote a letter to petitioners stating that they were no longer interested in
continuing the partnership and that they were accepting the latter’s offer to return their
capital contribution. This was left unheeded by the petitioners, and by reason of which
respondents filed a complaint in the RTC.RTC ruled that the parties had voluntarily entered
into a partnership, which could be dissolved at any time, and this dissolution was showed by
the fact that petitioners stopped operating the restaurant. On appeal, CA upheld RTC’s
decision that the partnership was dissolved and it added that respondents had no right to
demand the return of their capital contribution. However since petitioners did not give the
proper accounting for the liquidation of the partnership, the CA took it upon itself to compute
their liabilities and the amount that is proper to the respondent. The computation of which
was:(capital of the partnership – outstanding obligation) / remaining partners =amount due to
private respondent
Issue: W/N petitioners are liable to respondents for the latter’s share in the partnership?
Ruling:
No. Respondents have no right to demand from petitioner the return of their equity share. As
found by the court petitioners did not personally hold its equity or assets. “The partnership
has a juridical personality separate and distinct from that of each of the partners.” Since the
capital was contributed to the partnership, not to petitioners, it is the partnership that must
refund the equity of the retiring partners. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated. Therefore, the exact
amount of refund equivalent to respondents’ one-third share in the partnership cannot be
determined until all the partnership assets will have been liquidated and all partnership
creditors have been paid. CA’s computation of the amount to be refunded to respondents as
their share was thus erroneous.
JOSEFINA P. REALUBIT vs. PROSENCIO D. JASO and EDENG JASO
G.R. No. 178782 September 21, 2011
FACTS
Petitioner Josefina Realubit entered into a Joint Venture Agreement with Francis
Eric Amaury Biondo, a French national, for the operation of an ice manufacturing
business. With Josefina as the industrial partner and Biondo as the capitalist partner, the
parties agreed that they would each receive 40% of the net profit, with the remaining 20% to
be used for the payment of the ice making machine which was purchased for the
business. For and in consideration of the sum of P500,000.00, however, Biondo subsequently
executed a Deed of Assignment transferring all his rights and interests in the business in favor
of respondent Eden Jaso, the wife of respondent Prosencio Jaso. With Biondo’s eventual
departure from the country, the Spouses Jaso caused their lawyer to send Josefina a letter
apprising her of their acquisition of said Frenchmans share in the business and formally
demanding an accounting and inventory thereof as well as the remittance of their portion of
its profits.
Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso
commenced the instant suit for specific performance, accounting, examination, audit and
inventory of assets and properties, dissolution of the joint venture, appointment of a receiver
and damages. The said complaint alleged that the Spouses Realubit had no gainful
occupation or business prior to their joint venture with Biondo and that aside from
appropriating for themselves the income of the business, they have fraudulently concealed
the funds and assets thereof thru their relatives, associates or dummies. The Spouses
Realubit claimed that they have been engaged in the tube ice trading business under a single
proprietorship even before their dealings with Biondo.
The RTC rendered its Decision discounting the existence of sufficient evidence from
which the income, assets and the supposed dissolution of the joint venture can be
adequately reckoned. Upon the finding, however, that the Spouses Jaso had been
nevertheless subrogated to Biondos rights in the business in view of their valid acquisition of
the latters share as capitalist partner. On appeal before the CA, the foregoing decision was
set aside
upon the following findings that the Spouses Jaso validly acquired Biondos share in the
business which had been transferred to and continued its operations and not dissolved as
claimed by the Spouses Realubit.
ISSUES
1. Whether there was a valid assignment or rights to the joint venture
2. Whether the joint venture is a contract of partnership
3. Whether Jaso acquired the title of being a partner based on the Deed of Assignment

RULING
1. Yes. As a public document, the Deed of Assignment Biondo executed in favor
of Eden not only enjoys a presumption of regularitybut is also considered prima
facie evidence of the facts therein stated. A party assailing the authenticity and due
execution of a notarized document is, consequently, required to present evidence that is
clear, convincing and more than merely preponderant. In view of the Spouses Realubits
failure to discharge this onus, we find that both the RTC and the CA correctly upheld the
authenticity and validity of said Deed of Assignment upon the combined strength of the
above-discussed disputable presumptions and the testimonies elicited from Eden and Notary
Public Rolando Diaz.

2. Yes. Generally understood to mean an organization formed for some temporary

purpose, a joint venture is likened to a particular partnership or one which has for its object
determinate things, their use or fruits, or a specific undertaking, or the exercise of a
profession or vocation. The rule is settled that joint ventures are governed by the law on
partnerships which are, in turn, based on mutual agency or delectus personae.

3. No. It is evident that the transfer by a partner of his partnership interest does not make
the assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the
management of the partnership business or to receive anything except the assignees
profits. The assignment does not purport to transfer an interest in the partnership, but only a
future contingent right to a portion of the ultimate residue as the assignor may become
entitled to receive by virtue of his proportionate interest in the capital. Since a partner’s
interest in the partnership includes his share in the profits, we find that the CA committed no
reversible error in ruling that the Spouses Jaso are entitled to Biondos share in the profits,
despite Juanitas lack of consent to the assignment of said Frenchmans interest in the joint
venture. Although Eden did not, moreover, become a partner as a consequence of the
assignment and/or acquire the right to require an accounting of the partnership business, the
CA correctly granted her prayer for dissolution of the joint venture conformably with the
right granted to the purchaser of a partner’s interest under Article 1831 of the Civil Code.