Heirs of Lim v.

Lim

G.R. No. 172690; March 3, 2010 

FACTS:
Jose, together with Jimmy Yu and Norberto Yu formed a partnership
to engage in a trucking business. After a year, Jose died leaving the
heirs of Jose including Elfledo Lim, wherein the latter continued with
the management of the trucking business. It was agreed by the
partners that Elfledo will be the one who will handle the trucking
business. Yet, by the time that Lim died, the petitioner filed a
complaint against its surviving heir which is Juliet Villa Lim.
Respondent opposed to it stating that (On the paper)
Eventually, Lim died. Thus, the heirs of Jose filed a complaint for
their share in the profits as heirs of Jose and the proper accounting of
the partnership from when Jose died and Elfledo handled the
partnership. They aver, based on the testimony of the only surviving
partner of the business, Jimmy Yu, that Elfledo was not a partner in
the business.
However, Elfledo contended that he was indeed a partner on the
following basis:

1. Jose himself gave Elfledo P50,000.00 as a share in the

partnership;
2. Elfledo ran the affairs of the partnership, wielding absolute
control, power, and authority, without any intervention or
opposition whatsoever from any of the petitioners;
3. Elfledo did not receive any wages or salaries;
 4. that the heirs failed to demand periodic accounting from Elfledo
during his lifetime; and
5. all the properties of the business were registered under the
name of Elfledo.

ISSUE:
Was Elfledo a partner in the business?

HELD:
Yes. The Court held that Elfledo was indeed a partner in the business.
The Court had the view that the sole testimony of Jimmy Yu that
Elfledo was a not a partner cannot establish such fact in the absence of
any other evidence.

The Court must apply the rule on preponderance of evidence (Rule

133, Section 1) and Art. 1769 of the NCC. The Court agreed with all
of the facts raised by Elfledo in establishing that he is a partner.
Furthermore, the Court maintains that demand for periodic accounting
is evidence of partnership.

HEIRS OF JOSE LIM, represented by ELENITO LIM vs.

JULIET VILLA LIM
G.R. No. 172690           March 3, 2010

FACTS
Petitioners are the heirs of the late Jose Lim. Sometime in 1980, Jose, together with his friends
Jimmy Yu and Norberto Uy, formed a partnership to engage in the trucking business. Initially, with a
contribution of P50,000.00 each, they purchased a truck to be used in the hauling and transport of lumber
of the sawmill. Jose managed the operations of this trucking business until his death. Thereafter, Jose's
heirs, including Elfledo, and partners agreed to continue the business under the management of
Elfledo. The shares in the partnership profits and income that formed part of the estate of Jose were held
in trust by Elfledo, with petitioners' authority for Elfledo to use, purchase or acquire properties using said
funds. Petitioners alleged that, at that time, Elfledo was a fresh commerce graduate serving as his fathers
driver in the trucking business. He was never a partner or an investor in the business and merely
supervised the purchase of additional trucks using the income from the trucking business of the
partners. By the time the partnership ceased, it had nine trucks, which were all registered in Elfledo's
name. Petitioners asseverated that it was also through Elfledos management of the partnership that he was
able to purchase numerous real properties by using the profits derived therefrom, all of which were
registered in his name and that of respondent. In addition to the nine trucks, Elfledo also acquired five
other motor vehicles.

Elfledo died, leaving respondent as his sole surviving heir. Petitioners claimed that respondent
took over the administration of the aforementioned properties, which belonged to the estate of Jose,
without their consent and approval. Claiming that they are co-owners of the properties, petitioners
required respondent to submit an accounting of all income, profits and rentals received from the estate of
Elfledo, and to surrender the administration thereof. Respondent refused; thus, the filing of this case.
Respondent traversed petitioners' allegations and claimed that Elfledo was himself a partner of
Norberto and Jimmy. Respondent also stressed that Jose left no properties that Elfledo could have held in
trust. Respondent maintained that all the properties involved in this case were purchased and acquired
through her and her husbands joint efforts and hard work, and without any participation or contribution
from petitioners or from Jose. Respondent submitted that these are conjugal partnership properties; and
thus, she had the right to refuse to render an accounting for the income or profits of their own business.

ISSUE
Whether or not Elfledo is a partner

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 among them. However, a careful review of the records persuades us that the
evidence presented by petitioners falls short of the quantum of proof required to establish that: (1) Jose
was the partner and not Elfledo; and (2) all the properties acquired by Elfledo and respondent form part of
the estate of Jose, having been derived from the alleged partnership.

Therein, the Court cited Article 1769 of the Civil Code. Applying the legal provision to the facts
of this case, the following circumstances tend to prove that Elfledo was himself the partner of Jimmy and
Norberto: 1) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the partnership, on a date
that coincided with the payment of the initial capital in the partnership; (2) Elfledo ran the affairs of the
partnership, wielding absolute control, power and authority, without any intervention or opposition
whatsoever from any of petitioners herein; (3) all of the properties, particularly the nine trucks of the
partnership, were registered in the name of Elfledo; (4) Jimmy testified that Elfledo did not receive wages
or salaries from the partnership, indicating that what he actually received were shares of the profits of the
business; and (5) none of the petitioners, as heirs of Jose, the alleged partner, demanded periodic
accounting from Elfledo during his lifetime. Furthermore, petitioners failed to adduce any evidence to
show that the real and personal properties acquired and registered in the names of Elfledo and respondent
formed part of the estate of Jose, having been derived from Jose's alleged partnership with Jimmy and
Norberto. 

PETITION FOR AUTHORITY TO CONTINUE USE OF

THE FIRM NAME “SYCIP, SALAZAR, FELICIANO,
HERNANDEZ & CASTILLO".
PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME “SYCIP, SALAZAR,
FELICIANO, HERNANDEZ & CASTILLO.”
July 30, 1979

Facts:
Petitions were filed by the surviving partners of Atty. Alexander Sycip, who died on May 5, 1975
and by the surviving partners of Atty. Herminio Ozaeta, who died on February 14, 1976, praying
that they be allowed to continue using, in the names of their firms, the names of partners who
had passed away.
Petitioners contend that the continued use of the name of a deceased or former partner when
permissible by local custom, is not unethical but care should be taken that no imposition or
deception is practiced through this use. They also contend that no local custom prohibits the
continued use of a deceased partner’s name in a professional firm’s name; there is no custom
or usage in the Philippines, or at least in the Greater Manila Area, which recognizes that the
name of a law firm necessarily identifies the individual members of the firm.
Issue:
WON the surviving partners may be allowed by the court to retain the name of the partners who
already passed away in the name of the firm? NO

Held:
In the case of Register of Deeds of Manila vs. China Banking Corporation, the SC said:
The Court believes that, in view of the personal and confidential nature of the relations between
attorney and client, and the high standards demanded in the canons of professional ethics, no
practice should be allowed which even in a remote degree could give rise to the possibility of
deception. Said attorneys are accordingly advised to drop the names of the deceased partners
from their firm name.
The public relations value of the use of an old firm name can tend to create undue advantages
and disadvantages in the practice of the profession. An able lawyer without connections will
have to make a name for himself starting from scratch. Another able lawyer, who can join an old
firm, can initially ride on that old firm’s reputation established by deceased partners.
The court also made the difference from the law firms and business corporations:
A partnership for the practice of law is not a legal entity. It is a mere relationship or association
for a particular purpose. … It is not a partnership formed for the purpose of carrying on trade or
business or of holding property.” Thus, it has been stated that “the use of a nom de plume,
assumed or trade name in law practice is improper. 
We find such proof of the existence of a local custom, and of the elements requisite to constitute
the same, wanting herein. Merely because something is done as a matter of practice does not
mean that Courts can rely on the same for purposes of adjudication as a juridical custom.
Petition suffers legal and ethical impediment.

FACTS:

      Two separate petitions were filed before this Court; 1)by the surviving
partners of Atty. Alexander Sycip, and 2)by the surviving partners of Atty.
Herminio Ozaeta, praying that they be allowed to continue using, in the names
of their firms, the names of partners who had passed away.

      Petitioners base their petitions on the following arguments: 1) A

partnership is not prohibited from continuing its business under a firm name
which includes the name of a deceased partner as under Art. 1840 of the Civil
Code; 2) In regulating other professions, such as accountancy and
engineering, the legislature has authorized the adoption of firm names without
any restriction as to the use, in such firm name, of the name of a deceased
partner; 3) The Canons of Professional Ethics transgressed by the continued
use of the name of a deceased partner in the firm name of a law partnership.
Canon 33: The continued use of the name of a deceased or former partner
when permissible by local custom, is not unethical but care should be taken
that no imposition or deception is practiced through this use; 4) No possibility
of imposition or deception because the deaths of their respective deceased
partners were well-publicized in all newspapers of general circulation for
several days; 5) No local custom prohibits the continued use of a deceased
partner’s name in a professional firm name; 6) Continued use of a deceased
partner’s name in the firm name of law partnerships has been consistently
allowed by US Courts.

ISSUE:

      Whether or not the firms may continue to use the partnership name
despite the death of a partner.

RULING:
      No. The public relations value of the use of an old firm name can tend to
create undue advantages and disadvantages in the practice of the profession.
An able lawyer without connections will have to make a name for himself
starting from scratch. Another able lawyer, who can join an old firm, can
initially ride on that old firm’s reputations established by deceased partners.

      Secondly, Art. 1840 of the Civil Code treats more of a commercial

partnership with a good will to protect rather than of a professional
partnership.

      In the Philippines, no local custom permits or allows the continued use of a

deceased former partner’s name in the firm names of law partnerships. Firm
names, under our custom, identify the more creative and/or more senior
partners or members of the law firm.

TACAO VS. COURT OF APPEALS

G.R. No. 127405
Ynares-Santiago, J.

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 was
to contribute P2.5 million; Tocao also contributed some cash and she shall
also act as president and general manager; and Anay shall be in charge
of marketing. Belo and Tocao specifically asked Anay because of her
experience and connections as a marketer. They agreed further that Anay
shall receive the following:
1. 10% share of annual net profits
2. 6% overriding commission for weekly sales
3. 30% of sales Anay will make herself
4. 2% share for her demo services
They operated under the name Geminesse Enterprise, this name was
however registered as a sole proprietorship with the Bureau of Domestic
Trade under Tocao. The joint venture agreement was not reduced to
writing because Anay trusted Belo’s assurances.The venture succeeded
under Anay’s 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 the company. Anay then demanded that
the company be audited 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 any form. The fact that it was registered as a sole
proprietorship is of no moment for such registration was only for the
company’s trade name. Anay was not even an employee because when
they ventured into the agreement, they explicitly agreed to profit sharing
this is even though Anay was receiving commissions because this is only
incidental to her efforts as a head marketer.
The Supreme Court also noted that a partner who is excluded wrongfully
from a partnership is an innocent partner. Hence, the guilty partner must
give him his due upon the dissolution of the partnership as well as
damages or share in the profits “realized from the appropriation of the
partnership business and 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 wrongfully
expelled.”
 ANTONIA TORRES, assisted by her husband, ANGELO TORRES;
and EMETERIA
BARING, petitioners, vs. COURT OF APPEALS and MANUEL
G.R. No. 134559. December 9, 1999

FACTS:
Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint
venture agreement" with Respondent Manuel 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 Manuel, who then had it registered in his name and obtained from Equitable
Bank a loan of P40,000 which, under the Joint Venture Agreement, was to be used for the
development of the subdivision through mortgage of said property. All three of them also
agreed to share the proceeds from the sale of the subdivided lots. The project failed and
the property was foreclosed. Petitioner alleged that it was due to Manuels s lack of funds
or means and skills. And
also alleged that the latter misappropriate the amount loaned to his
own company.

On the other hand, respondent alleged that he used the loan to implement the Agreement,
which incurred P85,000 expenses. And further avers that failure of project was due to
petitioners and their relatives had separately caused the annotations of adverse claims on
the title to the land, which eventually scared away prospective buyers, forcing him to give
up on the project. Subsequently, petitioners filed a criminal case for estafa against
respondent and his wife, but were acquitted. They filed a civil case, but was dismissed by
trial court and affirmed by Court of Appeals.
Hence, this petition.

ISSUE:
1. Whether the petitioners have formed partnership with the respondent and if they do,
whether or not it was void.
2. Whether or not respondent shall be held liable to the failure of the project.

HELD:
1. A reading of the terms embodied in the Agreement indubitably shows the existence of
a partnership pursuant to Article 1767 of the Civil Code, which provides: 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.

Under 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. There is manifestation of intent to form
partnership. It should be stressed that the parties implemented the contract. Thus,
petitioners transferred the title to the land to facilitate it’s use in the name of the
respondent. On the other hand, respondent caused the subject land to be mortgaged, the
proceeds of which were used for the survey and the subdivision of the land. As noted
earlier, he developed the roads, the curbs and the gutters of the subdivision and entered
into a contract to construct low-cost housing units on the property. Respondents actions
clearly belie petitioner’s contention that he made no contribution to the partnership.
Under Article 1767 of the Civil Code, a partner may contribute not only money or
property, but also industry.

Further, under 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. This was intended primarily to protect third
persons the execution of a public instrument would be useless if there is no inventory of
the property contributed, because without its designation and description, they cannot be
subject to inscription in the Registry of Property, and their contribution cannot prejudice
third persons. This will result in fraud to those who contract with the partnership in the
belief [in] the efficacy of the guaranty in
which the immovables may consist. Thus, the contract is declared void by the law when
no such inventory is made. The case at bar does not involve third parties who may be
prejudiced.

2. The Court of Appeals held that petitioners’ acts were not the cause of the failure of the
project. But it also ruled that neither was respondent responsible therefor. In imputing the
blame solely to him, petitioners failed to give any reason why we should disregard the
factual findings of the appellate court relieving him of fault.
Verily, factual issues cannot be resolved in a petition for review under Rule 45, as in this
case. Petitioners have not alleged, not to say shown, that their Petition constitutes one of
the exceptions to this doctrine. Accordingly, we find no reversible error in the CA's
ruling that petitioners are not entitled to damages.

Litonjua v. Litonjua

G.R. No. 166299-300; December 13, 2005 

FACTS:
Aurelio Litonjua and Eduardo Litonjua executed a private document
entering into a partnership with Yang for the formation of a Cineplex
business. To this, Aurelio Litonjua would act as an industrial partner
and contribute his shares in the Litonjua family businesses (theatres,
shipping land development).

After the relationship between the two brothers became sour, Aurelio
filed with the court for specific performance of accounting for his
share in the business and the payment to him of such. Eduardo
contended that Aurelio had no cause of action such that the agreement
forming the partnership had not been a public instrument, and as such,
is void for violating the provisions of Art. 1771, Art. 1772, Art. 1773
of the NCC.

ISSUES:
1. Is the partnership void?
2. May Aurelio demand specific performance of his share in the
partnership?

HELD:
1. Yes. The Court held that the partnership is void precisely because
of the legal provisions raised. Aurelio contributed real rights to
immovable properties, which should be executed in a public
instrument. Moreover, the contributions exceeded P3,000.00, which
should also be in a public instrument and recorded with SEC.
Moreover, an inventory had to be made and hereby attached to the
public instrument. Furthermore, the Court gave notice of the fact that
Aurelio cannot contend that the contributions of real property were
only made after the formation of the partnership as evidence proves
otherwise.

2. No. The Court held that the partnership is void, and as such, Aurelio
has no cause of action to which to enforce specific performance.