TORRES VS.

CA
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 otherhand, 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.

CUENCO vs. VDA. DE MANGUERRA

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, challenging the August
22, 2001 Decision[2] of the Court of Appeals (CA) in CA-GR CV No. 54852. The assailed Decision
disposed as follows:

WHEREFORE, the decision appealed from is AFFIRMED.[3]

On the other hand, the Regional Trial Court (RTC) Decision affirmed by the CA disposed as follows:

WHEREFORE, considering that this action is essentially one for reconveyance or enforcement of a
trust, judgment is hereby rendered ordering the substituted defendant Marietta Cuenco
Cuyegkeng to reconvey or transfer, in a duly registrable public instrument, Lot No 903-A-6 under
TCT No. 113781 of the Registry of Deeds of Cebu City, of the Banilad Estate with an area of 834
square meters, in favor of plaintiff Concepcion Cuenco Vda. De Manguerra; or should the
substituted defendant, for one reason or another, fail to execute the necessary instrument once
the decision becomes final, the Clerk of Court of this Court (RTC) is hereby instructed, in
accordance with the Rules of Court, to prepare and execute the appropriate and requisite
conveyance and instrument in favor of herein plaintiff which, in either case, shall be registered
with the Office of the Register of Deeds of Cebu City.

Without costs in this instance.[4]

The Facts
The facts were summarized by the appellate court as follows:

On September 19, 1970, the [respondent] filed the initiatory complaint herein for specific
performance against her uncle [Petitioner] Miguel Cuenco which averred, inter alia that her father,
the late Don Mariano Jesus Cuenco (who became Senator) and said [petitioner] formed the
Cuenco and Cuenco Law Offices; that on or around August 4, 1931, the Cuenco and Cuenco Law
Offices served as lawyers in two (2) cases entitled Valeriano Solon versus Zoilo Solon (Civil Case
9037) and Valeriano Solon versus Apolonia Solon (Civil Case 9040) involving a dispute among
relatives over ownership of lot 903 of the Banilad Estate which is near the Cebu Provincial Capitol;
that records of said cases indicate the name of the [petitioner] alone as counsel of record, but in
truth and in fact, the real lawyer behind the success of said cases was the influential Don Mariano
Jesus Cuenco; that after winning said cases, the awardees of Lot 903 subdivided said lot into
three (3) parts as follows:

Lot 903-A: 5,000 [square meters]: Mariano Cuencos attorneys fees

Lot 903-B: 5,000 [square meters]: Miguel Cuencos attorneys fees

Lot 903-C: 54,000 [square meters]: Solons retention

That at the time of distribution of said three (3) lots in Cebu, Mariano Jesus Cuenco was actively
practicing law in Manila, and so he entrusted his share (Lot 903-A) to his brother law partner (the
[petitioner]); that on September 10, 1938, the [petitioner] was able to obtain in his own name a
title for Lot 903-A (Transfer Certificate of Title [TCT] RT-6999 [T-21108]); that he was under the
obligation to hold the title in trust for his brother Marianos children by first marriage; that
sometime in 1947, the Cuenco family was anticipating Marianos second marriage, and so on
February 1, 1947, they partitioned Lot 903-A into six (6) sub-lots (Lots 903-A-1 to 903-A-6) to
correspond to the six (6) children of Marianos first marriage (Teresita, Manuel, Lourdes, Carmen,
Consuelo, and Concepcion); that the [petitioner] did not object nor oppose the partition plan;
that on June 4, 1947, the [petitioner] executed four (4) deeds of donation in favor of Marianos
four (4) children: Teresita, Manuel, Lourdes, and Carmen, pursuant to the partition plan (per
notary documents 183, 184, 185, 186, Book III, Series 1947 of Cebu City Notary Public Candido
Vasquez); that on June 24, 1947, the [petitioner] executed the fifth deed of donation in favor of
Marianos fifth child Consuelo (per notary document 214, Book III, Series 1947 of Cebu City Notary
Public Candido Vasquez) (Exhibits 2 to 5); that said five (5) deeds of donation left out Marianos
sixth child Concepcion who later became the [respondent] in this case; that in 1949, [respondent]
occupied and fenced a portion of Lot 903-A-6 for taxation purposes (Exhibit F, Exhibit 6); that
she also paid the taxes thereon (Exhibit G); that her father died on February 25, 1964 with a Last
Will and Testament; that the pertinent portion of her fathers Last Will and Testament bequeaths
the lot.

near the Cebu provincial capitol, which were my attorneys fees from my clients, Victoria Rallos
and Zoilo Solon, respectively have already long been disposed of, and distributed by me, through
my brother, Miguel, to all my said children in the first marriage;

That on June 3, 1966, the [petitioner] wrote a letter petitioning the Register of Deeds of Cebu to
transfer Lot 903-A-6 to his name on the ground that Lot 903-A-6 is a portion of Lot 903-A; that
on April 6, 1967, the [respondent] requested the Register of Deeds to annotate an affidavit of
adverse claim against the [petitioners] TCT RT-6999 (T-21108) which covers Lot 903-A; that on
June 3, 1967, the Register of Deeds issued TCT 35275 covering Lot 903-A-6 in the name of the
[petitioner] but carrying the earlier annotation of adverse claim; that in 1969, the [petitioner]
tore down the wire fence which the [respondent] constructed on Lot 903-A-6 which compelled
the latter to institute the instant complaint dated August 20, 1970 on September 19, 1970.

On December 5, 1970, the answer with counterclaim dated December 3, 1970 of [petitioner]
Miguel Cuenco was filed where he alleged that he was the absolute owner of Lot 903-A-6; that
this lot was a portion of Lot 903-A which in turn was part of Lot 903 which was the subject matter
of litigation; that he was alone in defending the cases involving Lot 903 without the participation
of his brother Mariano Cuenco; that he donated five (5) of the six (6) portions of Lot 903-A to the
five (5) children of his brother Mariano out of gratitude for the love and care they exhibited to
him (Miguel) during the time of his long sickness; that he did not give or donate any portion of
the lot to the [respondent] because she never visited him nor took care of him during his long
sickness; that he became critically ill on February 11, 1946 and was confined at the Singians
Clinic in Manila and then transferred to Cebu where he nearly died in 1946; that his wife Fara
Remia Ledesma Cuenco had an operation on January 1951 and was confined at the University of
Santo Tomas Hospital and John Hopkins Hospital in the United States; that two of his children
died at the University of Santo Tomas Hospital in 1951 and 1952; and that his wife was blind for
many months due to malignant hypertension but [respondent] never remembered her nor did
she commiserate with him and his wife in their long period of sorrow.

[Petitioner] Miguel Cuenco took the witness stand as early as September 13, 1974. His self-
conducted direct examination lasted until 1985, the last one on November 22, 1985.
Unfortunately, he died[5] before he was able to submit himself for cross-examination and so his
testimony had to be stricken off the record. His only surviving daughter, Marietta Cuyegkeng,
stood as the substitute [petitioner] in this case. She testified that she purchased Lot 903-A-6 (the
property subject matter of this case) from her late father sometime in 1990 and constructed a
house thereon in the same year; that she became aware of this case because her late father used
to commute to Cebu City to attend to this case; and that Lot 903-A-6 is in her name per Transfer
Certificate of Title #113781 of the Registry of Deeds for Cebu.[6]

Ruling of the Court of Appeals

The CA found respondents action not barred by res judicata, because there was no identity of
causes of action between the Petition for cancellation of adverse claim in L.R.C. Records 5988
and the Complaint for specific performance to resolve the issue of ownership in Civil Case No. R-
11891.

The appellate court further found no reason to disturb the findings of the trial court that
respondent has the legal right of ownership over lot 903-A-6. The CA ruled that the subject land
is part of the attorneys fees of Don Mariano Cuenco, predecessor-in-interest of [Respondent]
Concepcion Cuenco vda. de Manguerra and [petitioner] merely holds such property in trust for
[her], his title there[to] notwithstanding.

Finally, the CA held that the right of action of respondent has not yet prescribed as she was in
possession of the lot in dispute and the prescriptive period to file the case commences to run only
from the time she acquired knowledge of an adverse claim over [her] possession.

Hence, this Petition.[7]

The Issues

In her Memorandum, petitioner raises the following issues for our consideration:

I.

On question of law, the Court of Appeals failed to consider facts of substance and significance
which, if considered, will show that the preponderance of evidence is in favor of the petitioner.

II.

On question of law, the Court of Appeals failed to appreciate the proposition that, contrary to the
position taken by the trial court, no constructive or implied trust exists between the parties, and
neither is the action one for reconveyance based upon a constructive or implied trust.

III.

On question of law, the Court of Appeals erred in not finding that even where implied trust is
admitted to exist the respondents action for relief is barred by laches and prescription.
IV.

On question of law, the trial court and the appellate court erred in expunging from the records
the testimony of Miguel Cuenco.[8]

This Courts Ruling

The Petition has no merit.

First Issue:

Evaluation of Evidence

Petitioner asks us to appreciate and weigh the evidence offered in support of the finding that Lot
903-A-6 constituted a part of Mariano Cuencos share in the attorneys fees. In other words, she
seeks to involve us in a reevaluation of the veracity and probative value of the evidence submitted
to the lower court. What she wants us to do is contrary to the dictates of Rule 45 that only
questions of law may be raised and resolved in a petition for review. Absent any whimsical or
capricious exercise of judgment, and unless the lack of any basis for the conclusions made by the
lower courts be amply demonstrated, the Supreme Court will not disturb such factual findings.[9]

As a rule, findings of fact of the Court of Appeals affirming those of the trial court are binding and
conclusive. Normally, such factual findings are not disturbed by this Court, to which only questions
of law may be raised in an appeal by certiorari.[10] This Court has consistently ruled that these
questions must involve no examination of the probative value of the evidence presented by the
litigants or any of them.[11] Emphasizing the difference between the two types of question, it
has explained that there is a question of law in a given case when the doubt or difference arises
as to what the law is pertaining to a certain state of facts, and there is a question of fact when
the doubt arises as the truth or the falsity of alleged facts.[12]

Indeed, after going over the records of the present case, we are not inclined to disturb the factual
findings of the trial and the appellate courts, just because of the insistent claim of petitioner. His
witnesses allegedly testified that Civil Case No. 9040 involving Lot 903 had not been handled by
Mariano for defendants therein -- Apolonia Solon, Zoilo Solon, et al. It has sufficiently been
proven, however, that these defendants were represented by the Cuenco and Cuenco Law Office,
composed of Partners Mariano Cuenco and Miguel Cuenco.

Given as attorneys fees was one hectare of Lot 903, of which two five-thousand square meter
portions were identified as Lot 903-A and Lot 903-B. That only Miguel handled Civil Case No. 9040
does not mean that he alone is entitled to the attorneys fees in the said cases. When a client
employs the services of a law firm, he does not employ the services of the lawyer who is assigned
to personally handle the case. Rather, he employs the entire law firm.[13] Being a partner in the
law firm, Mariano -- like Miguel -- was likewise entitled[14] to a share in the attorneys fees from
the firms clients. Hence, the lower courts finding that Lot 903-A was a part of Mariano Cuencos
attorneys fees has ample support.

Second Issue:

Implied Trust

Petitioner then contends that no constructive or implied trust exists between the parties.

A trust is a legal relationship between one having an equitable ownership in a property and
another having legal title to it.[15]

Trust relations between parties may either be express or implied.[16] Express trusts are created
by the direct and positive acts of the parties, indicated through some writing, deed, will, or words
evidencing an intention to create a trust.[17] On the other hand, implied trusts are those that,
without being express, are deducible from the nature of the transaction as matters of intent[;] or
which are superinduced on the transaction by operation of law as a matter of equity,
independently of the particular intention of the parties. Implied trusts may either be resulting or
constructive trusts, both coming into being by operation of law.[18]

Resulting trusts are presumed to have been contemplated by the parties and are based on the
equitable doctrine that valuable consideration, not legal title, determines the equitable title or
interest.[19] These trusts arise from the nature of or the circumstances involved in a
transaction,[20] whereby legal title becomes vested in one person, who is obligated in equity to
hold that title for the benefit of another.

Constructive trusts are created by the construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud,
duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.[21]

A review of the records shows that indeed there is an implied trust between the parties.

Although Lot 903-A was titled in Miguels name, the circumstances surrounding the acquisition
and the subsequent partial dispositions of this property eloquently speak of the intent that the
equitable or beneficial ownership of the property should belong to Mariano and his heirs.

First, Lot 903-A was one half of the one-hectare portion of Lot 903 given as attorneys fees by a
client of the law firm of Partners Miguel and Mariano Cuenco. It constituted the latters share in
the attorneys fees and thus equitably belonged to him, as correctly found by the CA. That Lot
903-A had been titled in the name of Miguel gave rise to an implied trust between him and
Mariano, specifically, the former holds the property in trust for the latter. In the present case, it
is of no moment that the implied trust arose from the circumstance -- a share in the attorneys
fees -- that does not categorically fall under Articles 1448 to 1456 of the Civil Code. The cases of
implied trust enumerated therein does not exclude others established by the general law of
trust.[22]

Second, from the time it was titled in his name in 1938,[23] Lot 903-A remained undivided and
untouched[24] by Miguel. Only on February 3, 1947, did Lourdes Cuenco,[25] upon the
instruction of Mariano, have it surveyed and subdivided into six almost equal portions -- 903-A-
1 to 903-A-6. Each portion was specifically allocated to each of the six children of Mariano with
his first wife.[26]

Third, Miguel readily surrendered his Certificate of Title[27] and interposed no objection[28] to
the subdivision and the allocation of the property to Marianos six children, including Concepcion.

Fourth, Marianos children, including Concepcion,[29] were the ones who shouldered the expenses
incurred for the subdivision of the property.

Fifth, after the subdivision of the property, Marianos children -- including Concepcion[30] -- took
possession of their respective portions thereof.

Sixth, the legal titles to five portions of the property were transferred via a gratuitous deed of
conveyance to Marianos five children, following the allocations specified in the subdivision plan
prepared for Lourdes Cuenco.[31]

With respect to Lot 903-A-6 in particular, the existence of Concepcions equitable ownership
thereof is bolstered, not just by the above circumstances, but also by the fact that respondent
fenced the portion allocated to her and planted trees thereon.[32]

More significantly, she also paid real property taxes on Lot 903-A-6 yearly, from 1956 until
1969[33] -- the year when she was dispossessed of the property. Although tax declarations or
realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are
good indicia of possession in the concept of owner, for no one in his right mind would be paying
taxes for a property that is not in his actual or at least constructive possession.[34] Such realty
tax payments constitute proof that the holder has a claim of title over the property.
Tellingly, Miguel started paying real property taxes on Lot 903-A-6 only on April 4, 1964,[35]
after the death of Mariano.[36] This fact shows that it was only in that year that he was
emboldened to claim the property as his own and to stop recognizing Marianos, and subsequently
Concepcions, ownership rights over it. It was only by then that the one who could have easily
refuted his claim had already been silenced by death. Such a situation cannot be permitted to
arise, as will be explained below.

Estoppel

From the time Lot 903-A was subdivided and Marianos six children -- including Concepcion -- took
possession as owners of their respective portions, no whimper of protest from petitioner was
heard until 1963. By his acts as well as by his omissions, Miguel led Mariano and the latters heirs,
including Concepcion, to believe that Petitioner Cuenco respected the ownership rights of
respondent over Lot 903-A-6. That Mariano acted and relied on Miguels tacit recognition of his
ownership thereof is evident from his will, executed in 1963, which states:

I hereby make it known and declare that x x x all properties which my first wife and I had brought
to, or acquired during our marriage, or which I had acquired during the years I was a widower
including jewelry, war damage compensation, and two other lots also located at Cebu City, one
near the South-Western University and the other near the Cebu provincial capitol, which were my
attorneys fees from my clients, Victoria Rallos and Zoilo Solon, respectively have already long
been disposed of, and distributed by me, through my brother, Miguel, to all my said six children
in the first marriage.[37] (emphasis supplied)

Indeed, as early as 1947, long before Mariano made his will in 1963, Lot 903-A -- situated along
Juana Osmea Extension, Kamputhaw, Cebu City,[38] near the Cebu Provincial Capitol -- had been
subdivided and distributed to his six children in his first marriage. Having induced him and his
heirs to believe that Lot 903-A-6 had already been distributed to Concepcion as her own,
petitioner is estopped from asserting the contrary and claiming ownership thereof.

The principle of estoppel in pais applies when -- by ones acts, representations, admissions, or
silence when there is a need to speak out -- one, intentionally or through culpable negligence,
induces another to believe certain facts to exist; and the latter rightfully relies and acts on such
belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.[39]

Third Issue:

Laches

Petitioner claims that respondents action is already barred by laches.

We are not persuaded. Laches is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to it has either abandoned or declined to
assert it.[40] In the present case, respondent has persistently asserted her right to Lot 903-A-6
against petitioner.

Concepcion was in possession as owner of the property from 1949 to 1969.[41] When Miguel took
steps to have it separately titled in his name, despite the fact that she had the owners duplicate
copy of TCT No. RT-6999 -- the title covering the entire Lot 903-A -- she had her adverse claim
annotated on the title in 1967. When petitioner ousted her from her possession of the lot by
tearing down her wire fence in 1969,[42] she commenced the present action on September 19,
1970,[43] to protect and assert her rights to the property. We find that she cannot be held guilty
of laches, as she did not sleep on her rights.

Fourth Issue:

Expunging of Testimony

Petitioner Cuyegkeng questions the expunging of the direct testimony of Miguel Cuenco.
Respondent points out that this issue was not raised before the CA. Neither had petitioner asked
the trial court to reconsider its Order expunging the testimony. Hence, this issue cannot for the
first time be raised at this point of the appeal. Issues, arguments and errors not adequately and
seriously brought below cannot be raised for the first time on appeal.[44] Basic considerations of
due process impel this rule.[45]

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against
petitioner.

SO ORDERED.

CHUACHE vs. INSURANCE COMMISSION

This petition for review on certiorari seeks the reversal of the decision of the Insurance Commission in IC Case #367 1 dismissing the complaint 2 for recovery
of the alleged unpaid balance of the proceeds of the Fire Insurance Policies issued by herein respondent insurance company in favor of petitioner-intervenor.

The facts of the case as found by respondent Insurance Commission are as follows:

Complainants acquired from a certain Rolando Gonzales a parcel of land and a building located
at San Rafael Village, Davao City. Complainants assumed the mortgage of the building in favor
of S.S.S., which building was insured with respondent S.S.S. Accredited Group of Insurers for
P25,000.00.

On April 19, 1975, Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount
of P100,000.00. To secure the payment of the loan, a mortgage was executed over the land and
the building in favor of Tai Tong Chuache & Co. (Exhibit "1" and "1-A"). On April 25, 1975,
Arsenio Chua, representative of Thai Tong Chuache & Co. insured the latter's interest with
Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for the building and
P30,000.00 for the contents thereof) (Exhibit "A-a," contents thereof) (Exhibit "A-a").

On June 11, 1975, Pedro Palomo secured a Fire Insurance Policy No. F- 02500 (Exhibit "A"),
covering the building for P50,000.00 with respondent Zenith Insurance Corporation. On July 16,
1975, another Fire Insurance Policy No. 8459 (Exhibit "B") was procured from respondent
Philippine British Assurance Company, covering the same building for P50,000.00 and the
contents thereof for P70,000.00.

On July 31, 1975, the building and the contents were totally razed by fire.

Adjustment Standard Corporation submitted a report as follow

xxx xxx xxx

... Thus the apportioned share of each company is as follows:

We are showing hereunder another apportionment of the loss which includes the Travellers
Multi-Indemnity policy for reference purposes.

Based on the computation of the loss, including the Travellers Multi- Indemnity, respondents,
Zenith Insurance, Phil. British Assurance and S.S.S. Accredited Group of Insurers, paid their
corresponding shares of the loss. Complainants were paid the following: P41,546.79 by
Philippine British Assurance Co., P11,877.14 by Zenith Insurance Corporation, and P5,936.57 by
S.S.S. Group of Accredited Insurers (Par. 6. Amended Complaint). Demand was made from
respondent Travellers Multi-Indemnity for its share in the loss but the same was refused. Hence,
complainants demanded from the other three (3) respondents the balance of each share in the
loss based on the computation of the Adjustment Standards Report excluding Travellers Multi-
Indemnity in the amount of P30,894.31 (P5,732.79-Zenith Insurance: P22,294.62, Phil. British:
and P2,866.90, SSS Accredited) but the same was refused, hence, this action.
 In their answers, Philippine British Assurance and Zenith Insurance Corporation admitted the
material allegations in the complaint, but denied liability on the ground that the claim of the
complainants had already been waived, extinguished or paid. Both companies set up
counterclaim in the total amount of P 91,546.79.

Instead of filing an answer, SSS Accredited Group of Insurers informed the Commission in its
letter of July 22, 1977 that the herein claim of complainants for the balance had been paid in the
amount of P 5,938.57 in full, based on the Adjustment Standards Corporation Report of
September 22, 1975.

Travellers Insurance, on its part, admitted the issuance of the Policy No. 599 DV and alleged as
its special and affirmative defenses the following, to wit: that Fire Policy No. 599 DV, covering the
furniture and building of complainants was secured by a certain Arsenio Chua, mortgage creditor,
for the purpose of protecting his mortgage credit against the complainants; that the said policy
was issued in the name of Azucena Palomo, only to indicate that she owns the insured premises;
that the policy contains an endorsement in favor of Arsenio Chua as his mortgage interest may
appear to indicate that insured was Arsenio Chua and the complainants; that the premium due
on said fire policy was paid by Arsenio Chua; that respondent Travellers is not liable to pay
complainants.

On May 31, 1977, Tai Tong Chuache & Co. filed a complaint in intervention claiming the
proceeds of the fire Insurance Policy No. F-559 DV, issued by respondent Travellers Multi-
Indemnity.

Travellers Insurance, in answer to the complaint in intervention, alleged that the Intervenor is not
entitled to indemnity under its Fire Insurance Policy for lack of insurable interest before the loss
of the insured premises and that the complainants, spouses Pedro and Azucena Palomo, had
already paid in full their mortgage indebtedness to the intervenor. 3

As adverted to above respondent Insurance Commission dismissed spouses Palomos' complaint on the ground
that the insurance policy subject of the complaint was taken out by Tai Tong Chuache & Company, petitioner
herein, for its own interest only as mortgagee of the insured property and thus complainant as mortgagors of the
insured property have no right of action against herein respondent. It likewise dismissed petitioner's complaint in
intervention in the following words:

We move on the issue of liability of respondent Travellers Multi-Indemnity to the Intervenor-

mortgagee. The complainant testified that she was still indebted to Intervenor in the amount of
P100,000.00. Such allegation has not however, been sufficiently proven by documentary
evidence. The certification (Exhibit 'E-e') issued by the Court of First Instance of Davao, Branch
11, indicate that the complainant was Antonio Lopez Chua and not Tai Tong Chuache &
Company. 4

From the above decision, only intervenor Tai Tong Chuache filed a motion for reconsideration but it was likewise
denied hence, the present petition.

It is the contention of the petitioner that respondent Insurance Commission decided an issue not raised in the
pleadings of the parties in that it ruled that a certain Arsenio Lopez Chua is the one entitled to the insurance
proceeds and not Tai Tong Chuache & Company.

This Court cannot fault petitioner for the above erroneous interpretation of the decision appealed from
considering the manner it was written. 5 As correctly pointed out by respondent insurance commission in their
comment, the decision did not pronounce that it was Arsenio Lopez Chua who has insurable interest over the
insured property. Perusal of the decision reveals however that it readily absolved respondent insurance
company from liability on the basis of the commissioner's conclusion that at the time of the occurrence of the
peril insured against petitioner as mortgagee had no more insurable interest over the insured property. It was
based on the inference that the credit secured by the mortgaged property was already paid by the Palomos
before the said property was gutted down by fire. The foregoing conclusion was arrived at on the basis of the
certification issued by the then Court of First Instance of Davao, Branch II that in a certain civil action against the
Palomos, Antonio Lopez Chua stands as the complainant and not petitioner Tai Tong Chuache & Company.
We find the petition to be impressed with merit. It is a well known postulate that the case of a party is constituted
by his own affirmative allegations. Under Section 1, Rule 1316 each party must prove his own affirmative
allegations by the amount of evidence required by law which in civil cases as in the present case is
preponderance of evidence. The party, whether plaintiff or defendant, who asserts the affirmative of the issue
has the burden of presenting at the trial such amount of evidence as required by law to obtain favorable
judgment.7 Thus, petitioner who is claiming a right over the insurance must prove its case. Likewise, respondent
insurance company to avoid liability under the policy by setting up an affirmative defense of lack of insurable
interest on the part of the petitioner must prove its own affirmative allegations.

It will be recalled that respondent insurance company did not assail the validity of the insurance policy taken out
by petitioner over the mortgaged property. Neither did it deny that the said property was totally razed by fire
within the period covered by the insurance. Respondent, as mentioned earlier advanced an affirmative defense
of lack of insurable interest on the part of the petitioner that before the occurrence of the peril insured against the
Palomos had already paid their credit due the petitioner. Respondent having admitted the material allegations in
the complaint, has the burden of proof to show that petitioner has no insurable interest over the insured property
at the time the contingency took place. Upon that point, there is a failure of proof. Respondent, it will be noted,
exerted no effort to present any evidence to substantiate its claim, while petitioner did. For said respondent's
failure, the decision must be adverse to it.

However, as adverted to earlier, respondent Insurance Commission absolved respondent insurance company
from liability on the basis of the certification issued by the then Court of First Instance of Davao, Branch II, that in
a certain civil action against the Palomos, Arsenio Lopez Chua stands as the complainant and not Tai Tong
Chuache. From said evidence respondent commission inferred that the credit extended by herein petitioner to
the Palomos secured by the insured property must have been paid. Such is a glaring error which this Court
cannot sanction. Respondent Commission's findings are based upon a mere inference.

The record of the case shows that the petitioner to support its claim for the insurance proceeds offered as
evidence the contract of mortgage (Exh. 1) which has not been cancelled nor released. It has been held in a
long line of cases that when the creditor is in possession of the document of credit, he need not prove non-
payment for it is presumed. 8 The validity of the insurance policy taken b petitioner was not assailed by private
respondent. Moreover, petitioner's claim that the loan extended to the Palomos has not yet been paid was
corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner. 9

Public respondent argues however, that if the civil case really stemmed from the loan granted to Azucena
Palomo by petitioner the same should have been brought by Tai Tong Chuache or by its representative in its
own behalf. From the above premise respondent concluded that the obligation secured by the insured property
must have been paid.

The premise is correct but the conclusion is wrong. Citing Rule 3, Sec. 2 10 respondent pointed out that the action
must be brought in the name of the real party in interest. We agree. However, it should be borne in mind that
petitioner being a partnership may sue and be sued in its name or by its duly authorized representative. The fact
that Arsenio Lopez Chua is the representative of petitioner is not questioned. Petitioner's declaration that
Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by respondent insurance
company. 11 Thus Chua as the managing partner of the partnership may execute all acts of
administration 12 including the right to sue debtors of the partnership in case of their failure to pay their
obligations when it became due and demandable. Or at the very least, Chua being a partner of petitioner Tai
Tong Chuache & Company is an agent of the partnership. Being an agent, it is understood that he acted for and
in behalf of the firm.13 Public respondent's allegation that the civil case flied by Arsenio Chua was in his capacity
as personal creditor of spouses Palomo has no basis.

The respondent insurance company having issued a policy in favor of herein petitioner which policy was of legal
force and effect at the time of the fire, it is bound by its terms and conditions. Upon its failure to prove the
allegation of lack of insurable interest on the part of the petitioner, respondent insurance company is and must
be held liable.

IN VIEW OF THE FOREGOING, the decision appealed from is hereby SET ASIDE and ANOTHER judgment is
rendered order private respondent Travellers Multi-Indemnity Corporation to pay petitioner the face value of
Insurance Policy No. 599-DV in the amount of P100,000.00. Costs against said private respondent.
LITTON vs. HILL & CERON
FACTS: Litton sold and delivered to Ceron, one of the managing partners of Hill & Ceron, a certain
number of mining claims. By virtue of said transaction, Ceron delivered to plaintiff a document
(receipt) acknowledging that he received from Litton certain share certificates of Big Wedge
Mining Company totalingP1870.Ceron paid to Litton P1, 150 leaving a balance of P720. Litton was
unable to collect the unpaid balance from Hill & Ceron or from its surety. Litton filed a complaint
against the defendants for the recovery of the balance. The court ordered Ceron to personally
pay the amount claimed and absolved the partnership, Hill and the surety.CA affirmed the decision
of the court.

ISSUE: W?N the transaction bind the partnership or Ceron only?

HELD: While the transaction was entered into by Ceron, it bound the partnership. Robert Hill had
the same power to buy and sell; that in said partnership Hillas well as Ceron made the transaction
as partners in equal parts; that on the date of the transaction, February 14, 1934, the partnership
between Hill and Ceron was in existence. After this date, or on February 19th, Hill &Ceron sold
shares of the Big Wedge; and when the transaction was entered into with Litton, it was neither
published in the newspapers nor stated in the commercial registry that the partnership Hill &
Ceron had been dissolved. The SC dissented from the view of the CA that for one of the partner’s
tobind the partnership the consent of the other is necessary.

Third persons, like the plaintiff, are not bound in entering into a contract with any of the two
partners, to ascertain whether or not this partner with whom the transaction is made has the
consent of the other partner. The public need not make inquires as to the agreements had
between the partners. Its knowledge is enough that it is contracting with the partnership which
is represented by one of the managing partners. The second paragraph of the articles of
partnership of Hill & Ceron reads inpart: Second: That the purpose or object for which this co-
partnership is organized is to engage in the business of brokerage in general, such as stock and
bond brokers, real brokers, investment security brokers, shipping brokers, and other activities
pertaining to the business of brokers in general. The kind of business in which the partnership Hill
& Ceron is to engage being thus determined, none of the two partners, under article 130 of the
Code of Commerce, may legally engage in the business of brokerage in general as stock brokers,
security brokers and other activities pertaining to the business of the partnership.

Ceron, therefore, could not have entered into the contract of sale of shares with Litton as a private
individual, but as a managing partner of Hill & Ceron The stipulation in the articles of partnership
that any of the two managing partners may contract and sign in the name of the partnership with
the consent of the other, undoubtedly creates an obligation between the two partners, which
consists in asking the other's consent before contracting for the partnership. This obligation of
course is not imposed upon a third person who contracts with the partnership. Neither is it
necessary for the third person to ascertain if the managing partner with whom he contracts has
previously obtained the consent of the other. A third person may and has a right to presume that
the partner with whom he contracts has, in the ordinary and natural course of business, the
consent of his co-partner; for otherwise he would not enter into the contract. The third person
would naturally not presume that the partner with whom he enters into the transaction is violating
the articles of partnership but, on the contrary, is4By Joy Co

Acting in accordance therewith. And this finds support in the legal presumption that the ordinary
course of business has been followed. If we are to interpret the articles of partnership in question
by holding that it is the obligation of the third person to inquire whether the managing co-partner
of the one with whom he contracts has given his consent to said contract, which is practically
casting upon him the obligation to get such consent, this interpretation would, in similar cases,
operate to hinder effectively the transactions, a thing not desirable and contrary to the nature of
business which requires promptness and dispatch one the basis of good faith and honesty which
are always presumed.

BACHRACH vs. LA PROTECTORAl

FACTS: Nicolas Segundo, Antonio Adiarte, Ignacio Flores and Modesto Serrano (defendants)
formed a civil partnership called “La Protectora” for the purpose of engaging in the business of
transporting passengers and freight at Laoag, Ilocos Norte. Marcelo Barba, acting as manager,
negotiated for the purchase of 2 automobile trucks from E. M. Bachrach for P16,500. Barba paid
P3,000 in cash and for the balance executed promissory notes.
One of these promissory notes was signed in the following manner:
“P.P La Protectora, By Marcelo Barba Marcelo Barba”

The other 2 notes were signed in the same way but the word “by” was omitted. It was obvious
that in signing the notes, Barba intended to bind both the partnership and himself.
The defendants executed a document in which they declared that they were members of La
Protectora and that they had granted to its president full authority to contract for the purchase
of the 2 automobiles. The document was delivered by Barba to Bachrach at the time the vehicles
were purchased.

Barba incurred a debt amounting to P2,617.57 and Bachrach foreclosed a chattel mortgage on
the trucks but there was still balance. To recover the balance, action was instituted against the
defendants. Judgment was rendered against the defendants.

ISSUE: Whether or not Barba had authority to incur expenses for the partnership?

HELD:
Yes, Under Art 1804, every partner may associate another person with him in his share. All
partners are considered agents of the partnership. Barba must be held to have authority to incur
these expenses. He is shown to have been in fact the president/manager, and there can be no
doubt that he had actual authority to incur obligation.

MARTINEZ vs. ONG PONG CO;

MARTINEZ delivered to Ong Pong Co and Ong Lay (ONGS) thesum of P1,500. The ONGS, in a
private document, acknowledgedthat they had received the money with the agreement that
theywill invest it in a store, and the profits or losses therefrom was tobe divided with MARTINEZ
in equal shares

Later, MARTINEZ filed a complaint in order to compel the ONGSto render him an accounting of
the partnership, or else to refundhim the P1,500 that he had given them

Ong Pong Co alone appeared to answer the complaint. Headmitted the fact of the agreement,
but he alleged that Ong Lay(deceased) was the one who had managed the business, and that
nothing had resulted therefrom except the loss of the capital of P1,500, to which loss MARTINEZ
agreed to bear

CFI rendered decision ordering Ong Pong Co to return toMARTINEZ one-half of the capital of
P1,500 (P750) plus P90 asone-half of the profits, calculated at the rate of 12% per annumfor the
six months that the store was supposed to have been open(total of P840) with legal interest of
6% until the full payment,with costs. Hence, this appeal by Ong Pong Co

ISSUE: WON MARTINEZ is entitled to the capital hecontributed to the partnership

HELD: YES. The ONGS failed to fulfill their obligation as partners who, acting as MARTINEZ’s
agents in receiving money, did not render proper accounting therefor. Such renders them jointly
liable for the losses, solidarity not having been established.CFI decision is AFFRIMED in this regard
but REVERSED inasmuchas it found that the capital invested earned profits. Thus, the CFIruling
awarding MARTINEZ another P840 is DELETED. Ong PongCo is only liable to pay MARTINEZ half
of the capital, or P750, representing half of the loss which both ONGS should jointly bear due to
their omission, to earn legal interest of 6% from time of filing this complaint, and costs

RATIO: In his defense, Ong Pong Co raised the issue of the closure/failureof the store by virtue
of ejectment proceedings instituted against them. THIS, however, has no real significance in the
determination of the merits of this case
 To be sure, the whole action is based upon the fact that the ONGS received capital from
MARTINEZ for the purpose of organizing a store. The ONGS, according to the agreement, were
to handle the said money and invest it in a store which was the object of the association

The ONGS had no special agreement vesting in one sole person the management of the
business. Thus, both ONGS were the actual administrators thereof; and as such administrators,
they were the agents of the company and incurred the liabilities peculiar to every agent, among
which is that of rendering account to the principal of their transactions, and paying him everything
they may have received by virtue of the mandatum

Since neither of them has rendered such account nor proven the losses, they are therefore
obliged to refund the money that they received for the purpose of establishing the said store

There is no evidence presented that the entire capital or any part thereof was lost. Without
proof, the allegation that the effects of the store were ejected is, as earlier mentioned, of no
moment. Even if we assume this to be true, it could still not be inferred that the ejectment was
due to the fact that no rents were paid, and that the rent was not paid on account of the loss of
the capital belonging to the partnership.

GARCIA RON vs. COMPANIA DE MINAS DE BATAAN;

This was an action brought by the plaintiff to recover from the defendant the sum of 9,558 1/3 Spanish pesetas
for services rendered. The trial judge found, and the evidence of record fully sustains his finding, that the plaintiff
was employed as foreman or capataz by one Genaro Ansuategui, the local manager of certain mines of the
defendant company, situated on the Islands of Bataan; and that this employment continued from November 1,
1903; until August 4, 1904. The trial judge found further that, while the plaintiff failed to establish satisfactorily his
claim that the salary promised him by the company's manager was 1,000 pesestas per month, nevertheless he
is entitled to reasonable compensation for the services rendered which were fixed at P5 per day, or P150 per
month, the record disclosing that the plaintiff had worked for the defendant company as foreman or capataz and
received compensation that the rate a short time prior to his employment under his contract with Ansuategui.

The defendant comply alleged that it had never received such services of the plaintiff and denied the fact of the
employment, but us we have said, the evidence of record affirmatively establishes the finding of the trial judge
that the services were rendered, and that they were rendered under contract of employment between the plaintiff
and one Ansuategui, the local manager of the defendant company; the only evidence introduced by the
defendant in this connection being the testimony of the general manager of the company, who lived in Manila, to
the effect that it does not appear from the books of the company that the plaintiff was employed by the
defendants, or that any record of the employment was forwarded to the central office in Manila.

Counsel for the defendant company insists, however, that, granting that the plaintiff did in fact work in the mines
of the defendant company and was employed by its local manager, nevertheless, defendant is not indebted to
the plaintiff for these service, because the local manager at the mines was not authorized to enter into the
alleged contract of employment, such authority not having been granted to him under his letter of instructions, a
copy of which appears in the record.

It is not necessary for us to discuss the question of the liability of the defendant company to the plaintiff for the
value of the services rendered, if it in fact appeared that the manager at the mines was not expressly authorized
to employ the plaintiff and to contract for his services, because we are of opinion that the authority to contract for
the employment of the plaintiff was clearly conferred upon Ansuategui by the terms of this letter of instructions.

These transactions, which were introduced into the record, were dated in Manila, May 23, 1903, and among
other provisions contain the following:

Es tambien derroche los sueldos que dicen pagan a los faginantes y el exceso de gente para poco
trabajo; debe tenerse la gente necesaria y pagar lo razonable, y al que no le convenga que se marche.
Deben hacer por contrata el corte de trozos y maderas de todas clases, y a sueldo le gente que se
 emplea para hacer los barracones y otros trabajos que su criterio le dicte, pero no permitiendo por
ningun concepto que abusen.

(The salaries which it is said are paid to the faginantes and the excess of employees for little work is also
a waste. The necessary employees should be kept and paid reasonably, and he who is not needed
[satisfied], let him go. The cutting of logs and wood of all kinds ought to be done by contract, and the
persons employed in digging the barracones and other work at wages which your good judgment may
dictate, but on account permitting abuses.)

And at the conclusion of the letter of instructions, we find the following:

Lo que aqui no va anotado, esperamos lo subsane Vd. con su buen criterio, y le recomendamos por
ultimo nos tenga al corriente de todo.

(We trust you to correct and supply (subsanar) anything which is not noted herein, in accordance with
your good judgment, and finally we urgently request that you keep us informed of everything.)

Other provisions of the letter of instructions expressly authorized Ansuategui, as the local manager of the
defendant company at the mines, to discharge employees who did not prove satisfactory, and leave no room for
doubt that he was duly authorized to represent the company at the mines so far as this was necessary for their
proper local management. lawphil.net

Taking into consideration the fact that the mines of the defendant company are located upon an island some two
days' distance by steamer from the office of the company at Manila, that the only communication therewith was
by mail a few times per month, and that in the very nature of the enterprise, it was necessary, in order that the
local manager might successfully perform his duties, to confer upon him wide scope in the employment and
discharge of labor, we think that there can be no doubt that Genaro Ansuategui was fully and expressly
authorized by the terms of this letter of instructions to enter into the alleged contract of employment with the
plaintiff on behalf of the defendant company; and the evidence of record establishing the fact that he did so, and
that the plaintiff worked for the company for the period set out in the findings of the trial court, we are of opinion
that the trial court properly rendered judgment in favor of the plaintiff and against the defendant for the value of
the services rendered.

The plaintiff not having appealed from the judgment of the trial court denying him the alleged contract value of
the services rendered, and the evidence of record fully sustaining the findings as to the reasonable value of
these services, the judgment of the trial court should be and is hereby affirmed, with the costs of this instance
against the defendant. So ordered.

SY-BOCO vs. YAP TENG;

This is an action by the plaintiff to recover from the defendant the sum of P1,442.95, alleged to be due him from
the latter. The court below rendered judgment in favor of the plaintiff for the aforesaid sum and legal interest
thereon at the rate of 6 per cent per annum from the 25th of March, 1905, with costs against the defendant, who
excepted to the said judgment, made a motion for a new trial on the ground that the findings of fact contained in
the said judgment were plainly and manifestly against the weight of the evidence, and has brought the case to
this court by a bill of exceptions.

The evidence shows that for a period of three years, more or less, the plaintiff had been furnishing to the
defendant native cloth for the latter's store in the city of Manila. The goods were at first furnished on credit, but
the business relations of the parties caused entirely in 1904. The defendant had a partner by the name of
Yapsuan, who was the manager of the business. The defendant introduced him to the plaintiff as such manager,
and told him that Yapsuan had authority from him to receive the cloth, and that the value thereof should be
charged to his, the defendant's account, and in fact the cloth was, as a rule, received by Yapsuan from the
plaintiff. It became necessary for Yapsuan to return to China in 1902 on account of ill health and a liquidation of
the accounts between the plaintiff and the defendant was made in December of the said year, showing a
balance of P1,444.95 in favor of the plaintiff, which the defendant expressly undertook to pay. This was proved
not only by the testimony of the plaintiff himself, but by that of two witnesses who were present. After the
liquidation was made the defendant continued to buy the goods from the plaintiff for cash until the year 1904,
when, as already stated, the business relations between the parties ceased.

The defendant has failed to show that he had paid the aforesaid balance of P1,444.95 or an part thereof.
Consequently the judgment of the court below is just and legal and should be affirmed. There is a difference of
P2 between the said balance and the amount of the judgment but, as the court properly said, the plaintiff is not
entitled to receive more than he prays for in his complaint, and the amount stated in the judgment is all that is
sought to be recovered.

It is contented by the appellant that the court below erred in not finding that, the only indebtedness of the
defendant being P1,442.95 according to the liquidation made in December, 1902, he having thereafter paid the
sum of P1,810.87 as alleged in the complaint, and in default of proof as to the value of the goods furnished to
the defendant, after that date, the plaintiff could not maintain an action to recover the said sum. There is, in fact,
no evidence in the record upon this last point. It was not necessary, however, to offer such evidence. The action
was not for the recovery of the value of the goods furnished to the defendant after the liquidation of 1902. The
plaintiff himself testified that the defendant had paid cash for such goods, but alleged that the latter had paid
nothing on account of the balance due after the said liquidation. His testimony upon this point has not been
contradicted in any way and it is apparent from such testimony that the P1,810.87 represented the value of the
goods for which the defendant paid cash. If this amount was mentioned at all in the complaint, it was for the
purpose of comparing the same with the total value of the goods furnished the defendant up to the year 1904,
which, according to the complaint, amounted to P3,235.75. It should be borne in mind that the plaintiff continued
to furnish goods to the defendant after the liquidation until the year 1904. There is no evidence that the aforesaid
amount was paid on account of the balance due because of the liquidation and not on account of the value of
the said goods. The plaintiff testified without contradiction, that absolutely nothing had been paid on the balance
due from the said liquidation.

It is further alleged by the appellant that there is nothing to show that after the year 1902 he continued to
purchase goods from the plaintiff, paying cash therefor, as was erroneously found by the court below. The
positive and uncontradicted statement of the plaintiff to the contrary is sufficient, however, to justify the finding of
the court below upon that point. That court, therefore, committed no error in this respect. 1âw phil.net

The appellant finally contends that the goods having been furnished to and received by the partnership between
himself and Yapsuan, and the accounts of the same not having been liquidated, this action should have been
brought against the partnership itself, or against the partners jointly, and not against the defendant only.
However that may be, the fact remains that the defendant in this case was the only one who contradicted with
the plaintiff in his own name, as appears from the latter's testimony. When the defendant told the plaintiff that he
had authorized Yapsuan to receive the goods, he instructed the plaintiff to charge them to him (the defendant)
personally. The defendant, moreover, undertook personally to pay the balance due the plaintiff, after the
liquidation made in December, 1902, such as being the sum sought to be recovered in this case, as appears
from the testimony of the plaintiff and that of the two witnesses who took part in the said liquidation.
Consequently the court below properly allowed the plaintiff to maintain this action against the defendant. The
judgment appealed from is accordingly affirmed with the costs of this instance against the appellant. After
expiration of twenty days let judgment be entered in accordance herewith and in due time let the record be
remanded to the court below for execution. So ordered.

RED MEN vs. VETERAN ARMY;

Article 3 of the Constitution of the Veteran Army of the Philippines provides as follows:

The object of this association shall be to perpetuate the spirit of patriotism and fraternity those men who
upheld the Stars and Stripes in the Philippine Islands during the Spanish war and the Philippine
insurrection, and to promote the welfare of its members in every just and honorable way; to assist the
sick and afflicted and to bury the dead, to maintain among its members in time of peace the same union
and harmony with which they served their country in times of war and insurrection.

Article 5 provides that:

This association shall be composed of —

 (a) A department.

(b) Two or more posts.

It is provided in article 6 that the department shall be composed of a department commander, fourteen officers,
and the commander of each post, or some member of the post appointed by him. Six members of the
department constitute a quorum for the transaction of business.

The Constitution also provides for the organization of posts. Among the posts thus organized is the General
Henry W. Lawton Post, No. 1. On the 1st day of March, 1903, a contract of lease of parts of a certain buildings in
the city of Manila was signed by W.W. Lewis, E.C. Stovall, and V.O., Hayes, as trustees of the Apache Tribe,
No. 1, Improved Order of Red Men, as lessors, and Albert E. McCabe, citing for and on behalf of Lawton Post,
Veteran Army of the Philippines as lessee. The lease was for the term of two years commencing February 1,
903, and ending February 28, 1905. The Lawton Post occupied the premises in controversy for thirteen months,
and paid the rent for that time. It them abandoned them and this action was commenced to recover the rent for
the unexpired term. Judgment was rendered in the court below on favor of the defendant McCabe, acquitting
him of the complaint. Judgment was rendered also against the Veteran Army of the Philippines for P1,738.50,
and the costs. From this judgment, the last named defendant has appealed. The plaintiff did not appeal from the
judgment acquitting defendant McCabe of the complaint.

It is claimed by the appellant that the action can not be maintained by the plaintiff, The Great Council of the
United States of the Improved Order of Red Men, as this organization did not make the contract of lease.

It is also claimed that the action can not be maintained against the Veteran Army of the Philippines because it
never contradicted, either with the plaintiff or with Apach Tribe, No. 1, and never authorized anyone to so
contract in its name.

We do not find it necessary to consider the first point because we think the contention of the appellant on the
second point must be sustained.

It is difficult to determine the exact nature of the defendant organization. It is of course not a mercantile
partnership. There is some doubt as to whether it is a civil partnership, in view of the definition of the term in
article 1665 of the Civil Code. That article is as follows:

Partnership is a contract by which 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.

It seems to be the opinion of the commentators that where the society is not constituted for the purpose of gain.
it does not fall within this article of the Civil Code. Such an organization is fully covered by the Law of
Associations of 1887, but that law was never extended to the Philippine Islands. According to some
commentators it would be governed by the provisions relating to the community of property. However, the
questions thus presented we do not find necessary to , and to not resolve. The view most favorable to the
appellee is the one that makes the appellant a civil partnership. Assuming that is such, and is covered by the
provisions of title 8, book 4 of the Civil Code, it is necessary for the appellee to prove that the contract in
question was executed by some authorized to so by the Veteran Army of the Philippines.

Article 1695 of the Civil Code provides as follows:

Should no agreement have been made with regard to the form of management, the following rules shall
be observed:

1 All the partners shall be considered as agents, and whatever any one of them may do by himself shall
bind the partnership; but each one may oppose the act of the others before they may have produced any
legal effect.

One partner, therefore, is empowered to contract in the name of the partnership only when the articles of
partnership make no provision for the management of the partnership business. In the case at bar we think that
the articles of the Veteran Army of the Philippines do so provide. It is true that an express disposition to that
effect is not found therein, but we think one may be fairly deduced from the contents of those articles. They
declare what the duties of the several officers are. In these various provisions there is nothing said about the
power of making contracts, and that faculty is not expressly given to any officer. We think that it was, therefore,
reserved to the department as a whole; that is, that in any case not covered expressly by the rules prescribing
the duties of the officers, the department were present. It is hardly conceivable that the members who formed
this organization should have had the intention of giving to any one of the sixteen or more persons who
composed the department the power to make any contract relating to the society which that particular officer saw
fit to make, or that a contract when so made without consultation with, or knowledge of the other members of the
department should bind it. We therefore, hold, that no contract, such as the one in question, is binding on the
Veteran Army of the Philippines unless it was authorized at a meeting of the department. No evidence was
offered to show that the department had never taken any such action. In fact, the proof shows that the
transaction in question was entirely between Apache Tribe, No. 1, and the Lawton Post, and there is nothing to
show that any member of the department ever knew anything about it, or had anything to do with it. The liability
of the Lawton Post is not presented in this appeal.

Judgment against the appellant is reversed, and the Veteran Army of the Philippines is acquitted of the
complaint. No costs will be allowed to either party in this court. After the expiration of twenty days let judgment
be rendered in accordance to the lower court for proper action. So ordered.

GOQUIOLAY ET AL vs. SYCIP;

FACTS: Tan Sin An and Goquiolay entered into a general commercial partnership under the
partnership name “Tan Sin An and Antonio Goquiolay” for the purpose of dealing in real estate.
The agreement lodged upon Tan Sin An the sole management of the partnership affairs. The
lifetime of the partnership was fixed at ten years and the Articles of Co-partnership stipulated
that in the event of death of any of the partners before the expiration of the term, the partnership
will not be dissolved but will be continued by the heirs or assigns of the deceased partner. But
the partnership could be dissolved upon mutual agreement in writing of the partners. Goquiolay
executed a GPA in favor of Tan Sin An. The plaintiff partnership purchased 3 parcels of land which
was mortgaged to “La Urbana” as payment of P25,000. Another 46 parcels of land were purchased
by Tan Sin An in his individual capacity which he assumed payment of a mortgage debt for P35K.
A downpayment and the amortization were advanced by Yutivo and Co.

The two obligations were consolidated in an instrument executed by the partnership and Tan Sin
An, whereby the entire 49 lots were mortgaged in favor of “Banco Hipotecario”
 Tan Sin An died
leaving his widow, Kong Chai Pin and four minor children. The widow subsequently became the
administratrix of the estate. Repeated demands were made by Banco Hipotecario on the
partnership and on Tan Sin An.
 Defendant Sing Yee, upon request of defendant Yutivo Sons , paid
the remaining balance of the mortgage debt, the mortgage was cancelled Yutivo Sons and Sing
Yee filed their claim in the intestate proceedings of Tan Sin An for advances, interest and taxes
paid in amortizing and discharging their obligations to “La Urbana” and “Banco Hipotecario.” Kong
Chai Pin filed a petition with the probate court for authority to sell all the 49 parcels of land. She
then sold it to Sycip and Lee in consideration of P37K and of the vendees assuming payment of
the claims filed by Yutivo Sons and Sing Yee. Later, Sycip and Lee executed in favor of Insular
Development a deed of transfer covering the 49 parcels of land.
 When Goquiolay learned about
the sale to Sycip and Lee, he filed a petition in the intestate proceedings to set aside the order of
the probate court approving the sale in so far as his interest over the parcels of land sold was
concerned. Probate court annulled the sale executed by the administratrix w/ respect to the 60%
interest of Goquiolay over the properties Administratrix appealed.
 The decision of probate court
was set aside for failure to include the indispensable parties. New pleadings were filed. The second
amended complaint prays for the annulment of the sale in favor of Sycip and Lee and their
subsequent conveyance to Insular Development. The complaint was dismissed by the lower court
hence this appeal.

ISSUE: Whether or not a widow or substitute become also a general partner or only a limited
partner. Whether or not the lower court err in holding that the widow succeeded her husband Tan
Sin An in the sole management of the partnership upon Tan’s death Whether or not the consent
of the other partners was necessary to perfect the sale of the partnership properties to Sycip and
Lee?
HELD:
Kong Chai Pin became a mere general partner. By seeking authority to manage partnership
property, Tan Sin An’s widow showed that she desired to be considered a general partner. By
authorizing the widow to manage partnership property (which a limited partner could not be
authorized to do), Goqulay recognized her as such partner, and is now in estoppel to deny her
position as a general partner, with authority to administer and alienate partnership property. The
articles did not provide that the heirs of the deceased would be merely limited partners; on the
contrary, they expressly stipulated that in case of death of either partner, “the co partnership will
have to be continued” with the heirs or assignees. It certainly could not be continued if it were to
be converted from a general partnership into a limited partnership since the difference between
the two kinds of associations is fundamental, and specially because the conversion into a limited
association would leave the heirs of the deceased partner without a share in the management.
Hence, the contractual stipulation actually contemplated that the heirs would become general
partners rather than limited ones.

UY vs. PUZON;
FACTS: Bartolome Puzon had two contracts with the government for the construction of roads
and bridges. (Bureau of Public Highways)

He sought the financial assistance of William Uy, so he proposed that they create a partnership
which would be the sub-contractor of the projects.

They also agreed that the profits will be divided among themselves.

William Uy agreed to the formation of the partnership "U.P. Construction Company". They agreed
to contribute P50,000 each. (Note: P40,000 was advanced by William Uy while Puzon was waiting
for the approval of his P150,000 PNB Loan. Upon release of the loan, he promised to reimburse
William Uy of the P40,000; pay his share of P50,000 and loan P60,000 to the partnership).

Loan was approved by November 1956. Note: At the end of 1957, Uy contributed a total of P115,
The partnership agreement was signed in 1957 (January 18) although the work for the projects
began as early as 1956 (October 1).

Since Puzon was busy with other projects, Uy was the one who managed the partnership.
In order to guarantee the PNB Loan, Puzon, without the knowledge of Uy, assigned the payments
to the payments to be received from the projects to PNB.

Due to the financial demands of the projects, Uy demanded that Puzon comply with his obligation
to place his capital contribution in the company.

However, Puzon failed to comply even after formal demand letters were sent to him.
Thereafter, Puzon (as the primary contractor of the projects) wrote terminated the subcontract
agreement with the partnership to which he is also a partner. (November 27, 1957)
Thereafter, Uy was not allowed to hold office in the UP Construction Company and his authority
to negotiate with the Bureau was revoked by Puzon.

Uy clamied that Puzon had violated the terms of their partnership agreement. He sought for the
dissolution of the partnership with damages.
The lower court ruled in favor of Uy.

ISSUE: WON Puzon failed to comply with his obligation of paying the capital contribution to the
company. YES

HELD:
YES, According to the court, there was failure on the part of Puzon to contribute capital to the
partnership. When his load with PNB was approved, he only gave P60,000 to Uy; P40,000 was
for reimbursement to the payments made by Uy and the other P20,000 was for the capital
contribution. Thereafter, Puzon never made additional contribution.
Also, it was found by the SC that Puzon misapplied partnership funds by assigning all payments
for the projects to PNB.

Such assignment was prejudicial to the partnership since the partnership only received a small
share from the total payments made by the Bureau of Public Highways. As a result, the
partnership was unable to discharge its obligations.

Here, the Court ordered Puzon to reimburse whatever amount Uy had invested in or spent for the
partnership on account of construction projects. The amount P200,000 as compensatory damages
was also awarded in favor of Uy.

Had the appellant not been remiss in his obligations as partner and as prime contractor of the
construction projects in question as he was bound to perform pursuant to the partnership and
subcontract agreements, and considering the fact that the total contract amount of these two
projects is P2,327,335.76, it is reasonable to expect that the partnership would have earned much
more than the P334,255.61 We have hereinabove indicated. The award, therefore, made by the
trial court of the amount of P200,000.00, as compensatory damages, is not speculative, but based
on reasonable estimate.

WHEREFORE, finding no error in the decision appealed from, the said decision is hereby affirmed
with costs against the appellant, it being understood that the liability mentioned herein shall be
home by the estate of the deceased Bartolome Puzon, represented in this instance by the
administrator thereof, Franco Puzon.

ORNUM vs. LASALA

FACTS: In 1908 Pedro Lasala, father of the respondents, andEmerenciano Ornum formed a
partnership.
2. Lasala as capitalist while Ornum will be the industrial partner.
3. Lasala delivered the sum of P1,000 to Ornum who will conducta business at his place of
residence in Romblon.
4. In 1912, when the assets of the partnership consisted ofoutstanding accounts and old stock of
merchandise,Emerenciano Ornum, following the wishes of his wife, asked forthe dissolution of the
Lasala, Emerenciano.
5. Ornum looked for some one who could take his place and hesuggested the names of the
petitioners who accordinglybecame the new partners.
6. Upon joining the business, the petitioners, contributed P505.54as their capital.
7. the new partnership Pedro Lasala had a capital of P1,000,appraised value of the assets of the
former partnership, plusthe said P505.54 invested by the petitioners who, as industrialpartners,
were to run the business in Romblon.
8. After the death of Pedro Lasala, his children (the respondents)succeeded to all his rights and
interest in the partnership.
.9. The partners never knew each other personally.
.10. No formal partnership agreement was ever executed.
11. The petitioners, as managing partners, were receivedone-half of the net gains, and the other
half was to be dividedbetween them and the Lasala group in proportion to the capitalput in by
each group.
12. During the course divided, but the partners were given theelection, as evidenced by the
statements of accounts referredto in the decision of the Court of Appeals, to invest theirrespective
shares in such profits as additional capital.
13. The petitioners accordingly let a greater part of theirprofits as additional investment in the
partnership.
14. After twenty years the business had grown to such anextent that is total value, including
profits, amounted toP44,618.67.
15. Statements of accounts were periodically prepared by thepetitioners and sent to the
respondents who invariably did notmake any objection thereto.
16. Before the last statement of accounts was made, therespondents had received P5,387.29 by
way of profits.
17. The last and final statement of accounts, dated May 27,1932, and prepared by the petitioners
after the respondentshad announced their desire to dissolve the partnership,
18. Pursuant to the request contained in this letter, thepetitioners remitted and paid to the
respondents the totalamount corresponding to them under the above-quotedstatement of
accounts which, however, was not signed by thelatter.
19. Thereafter the complaint in this case was filed by therespondents, praying for an accounting
and final liquidation ofthe assets of the partnership.
20. The Court of First Instance of Manila held that the lastand final statement of accounts prepared
by the petitioners wastacitly approved and accepted by the respondents who, byvirtue of the
above-quoted letter of Father Mariano Lasala, losttheir right to a further accounting from the
moment theyreceived and accepted their shares as itemized in saidstatement
.21. This judgment was reversed by the Court of Appealsprincipally on the ground that as the
final statement of accountsremains unsigned by the respondents, the same standsdisapproved.
22. The decision appealed by the petitioners

ISSUES:(1) WoN the accounting stated in the letter including the last andfinal statement of
account was tacitly accepted by the petitioners as the final liquidation and accounting of the assets
of the partnership?(2) Are there really mistakes and misrepresentations made in the statement
of accounts made?

Petitioners’ contention:
To support a plea of a stated account so as t oconclude the parties in relation to all dealings
between them, the accounting must be shown to have been final. (1 Cyc. 366.) All the first nine
statements which the defendants sent the plaintiffs werepartial settlements, while the last,
although intended to be final, has not been signed.

HELD FOR ISSUE NO. 1: YES. SC stated that the last and final statement of accounts
hereinabove quoted, had been approved bythe respondents.
This approval resulted, by virtue of the letter of Father MarianoLasala of July 19, 1932, quoted in
part in the appealed decisionfrom the failure of the respondents to object to the statementand
from their promise to sign the same as soon as theyreceived their shares as shown in said
statement.

After such shares had been paid by the petitioners andaccepted by the respondents without any
reservation, theapproval of the statement of accounts was virtually confirmedand its signing
thereby became a mere formality to be compliedwith by the respondents exclusively. Their refusal
to sign, afterreceiving their shares, amounted to a waiver to that formality infavor of the
petitioners who has already performed theirobligation.
This approval precludes any right on the part of therespondents to a further liquidation, unless
the latter can showthat there was fraud, deceit, error or mistake in said approval.(Pastor ,vs
.Nicasio, 6 Phil., 152; Aldecoa & Co.,vs. Warner, Barnes & Co., 16 Phil., 423; Gonsalez vs. Harty,
32 Phil. 328.)The Court of Appeals did not make any findings that there wasfraud, and on the
matter of error or mistake it merely said

HELD FOR ISSUE NO. 2: the pronouncement that the evidencetends to prove that there were
mistakes in the petitioners' statementsof accounts, without specifying the mistakes, merely
intimates assuspicion and is not such a positive and unmistakable finding of factas to justify a
revision, especially because the Court of Appeals hasrelied on the bare allegations of the parties,
Moreover, as thepetitioners did not appeal from the decision of the Court abandonedsuch
allegation in the Court of Appeals. no justifiable reason (fraud, deceit, error or mistake) has
beenpositively and unmistakably found by the Court of Appeals soas to warrant the liquidations
sought by the respondents. In justice to the petitioners. It should be borne in mind that this case
has been pending fornearly nine years and that, if another accounting is ordered, acostly action
or proceeding may arise which may not bedisposed of within a similar period, it is not improbable
that theintended relief may in fact be the respondents' funeral.

EVANGELISTA vs. ABAD SANTOS;

On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co." On June 7, 1955 the
Articles of Co-partnership was amended as to include herein respondent, Estrella Abad Santos, as industrial
partner, with herein petitioners Domingo C. Evangelista, Jr., Leonardo Atienza Abad Santos and Conchita P.
Navarro, the original capitalist partners, remaining in that capacity, with a contribution of P17,500 each. The
amended Articles provided, inter alia, that "the contribution of Estrella Abad Santos consists of her industry being
an industrial partner", and that the profits and losses "shall be divided and distributed among the partners ... in
the proportion of 70% for the first three partners, Domingo C. Evangelista, Jr., Conchita P. Navarro and
Leonardo Atienza Abad Santos to be divided among them equally; and 30% for the fourth partner Estrella Abad
Santos."

On December 17, 1963 herein respondent filed suit against the three other partners in the Court of First Instance
of Manila, alleging that the partnership, which was also made a party-defendant, had been paying dividends to
the partners except to her; and that notwithstanding her demands the defendants had refused and continued to
refuse and let her examine the partnership books or to give her information regarding the partnership affairs to
pay her any share in the dividends declared by the partnership. She therefore prayed that the defendants be
ordered to render accounting to her of the partnership business and to pay her corresponding share in the
partnership profits after such accounting, plus attorney's fees and costs.

The defendants, in their answer, denied ever having declared dividends or distributed profits of the partnership;
denied likewise that the plaintiff ever demanded that she be allowed to examine the partnership books; and
byway of affirmative defense alleged that the amended Articles of Co-partnership did not express the true
agreement of the parties, which was that the plaintiff was not an industrial partner; that she did not in fact
contribute industry to the partnership; and that her share of 30% was to be based on the profits which might be
realized by the partnership only until full payment of the loan which it had obtained in December, 1955 from the
Rehabilitation Finance Corporation in the sum of P30,000, for which the plaintiff had signed a promisory note as
co-maker and mortgaged her property as security.

The parties are in agreement that the main issue in this case is "whether the plaintiff-appellee (respondent here)
is an industrial partner as claimed by her or merely a profit sharer entitled to 30% of the net profits that may be
realized by the partnership from June 7, 1955 until the mortgage loan from the Rehabilitation Finance
Corporation shall be fully paid, as claimed by appellants (herein petitioners)." On that issue the Court of First
Instance found for the plaintiff and rendered judgement "declaring her an industrial partner of Evangelista & Co.;
ordering the defendants to render an accounting of the business operations of the (said) partnership ... from
June 7, 1955; to pay the plaintiff such amounts as may be due as her share in the partnership profits and/or
dividends after such an accounting has been properly made; to pay plaintiff attorney's fees in the sum of
P2,000.00 and the costs of this suit."

The defendants appealed to the Court of Appeals, which thereafter affirmed judgments of the court a quo.

In the petition before Us the petitioners have assigned the following errors:

I. The Court of Appeals erred in the finding that the respondent is an industrial partner of
Evangelista & Co., notwithstanding the admitted fact that since 1954 and until after promulgation
of the decision of the appellate court the said respondent was one of the judges of the City Court
of Manila, and despite its findings that respondent had been paid for services allegedly
contributed by her to the partnership. In this connection the Court of Appeals erred:

(A) In finding that the "amended Articles of Co-partnership," Exhibit "A" is

conclusive evidence that respondent was in fact made an industrial partner of
Evangelista & Co.

(B) In not finding that a portion of respondent's testimony quoted in the decision
proves that said respondent did not bind herself to contribute her industry, and
she could not, and in fact did not, because she was one of the judges of the City
Court of Manila since 1954.

(C) In finding that respondent did not in fact contribute her industry, despite the
appellate court's own finding that she has been paid for the services allegedly
rendered by her, as well as for the loans of money made by her to the
partnership.
 II. The lower court erred in not finding that in any event the respondent was lawfully excluded
from, and deprived of, her alleged share, interests and participation, as an alleged industrial
partner, in the partnership Evangelista & Co., and its profits or net income.

III. The Court of Appeals erred in affirming in toto the decision of the trial court whereby
respondent was declared an industrial partner of the petitioner, and petitioners were ordered to
render an accounting of the business operation of the partnership from June 7, 1955, and to pay
the respondent her alleged share in the net profits of the partnership plus the sum of P2,000.00
as attorney's fees and the costs of the suit, instead of dismissing respondent's complaint, with
costs, against the respondent.

It is quite obvious that the questions raised in the first assigned errors refer to the facts as found by the Court of
Appeals. The evidence presented by the parties as the trial in support of their respective positions on the issue
of whether or not the respondent was an industrial partner was thoroughly analyzed by the Court of Appeals on
its decision, to the extent of reproducing verbatim therein the lengthy testimony of the witnesses.

It is not the function of the Supreme Court to analyze or weigh such evidence all over again, its jurisdiction being
limited to reviewing errors of law that might have been commited by the lower court. It should be observed, in
this regard, that the Court of Appeals did not hold that the Articles of Co-partnership, identified in the record as
Exhibit "A", was conclusive evidence that the respondent was an industrial partner of the said company, but
considered it together with other factors, consisting of both testimonial and documentary evidences, in arriving at
the factual conclusion expressed in the decision.

The findings of the Court of Appeals on the various points raised in the first assignment of error are hereunder
reproduced if only to demonstrate that the same were made after a through analysis of then evidence, and
hence are beyond this Court's power of review.

The aforequoted findings of the lower Court are assailed under Appellants' first assigned error,
wherein it is pointed out that "Appellee's documentary evidence does not conclusively prove that
appellee was in fact admitted by appellants as industrial partner of Evangelista & Co." and that
"The grounds relied upon by the lower Court are untenable" (Pages 21 and 26, Appellant's Brief).

The first point refers to Exhibit A, B, C, K, K-1, J, N and S, appellants' complaint being that "In
finding that the appellee is an industrial partner of appellant Evangelista & Co., herein referred to
as the partnership — the lower court relied mainly on the appellee's documentary evidence,
entirely disregarding facts and circumstances established by appellants" evidence which
contradict the said finding' (Page 21, Appellants' Brief). The lower court could not have done
otherwise but rely on the exhibits just mentioned, first, because appellants have admitted their
genuineness and due execution, hence they were admitted without objection by the lower court
when appellee rested her case and, secondly the said exhibits indubitably show the appellee is
an industrial partner of appellant company. Appellants are virtually estopped from attempting to
detract from the probative force of the said exhibits because they all bear the imprint of their
knowledge and consent, and there is no credible showing that they ever protested against or
opposed their contents prior of the filing of their answer to appellee's complaint. As a matter of
fact, all the appellant Evangelista, Jr., would have us believe — as against the cumulative force
of appellee's aforesaid documentary evidence — is the appellee's Exhibit "A", as confirmed and
corroborated by the other exhibits already mentioned, does not express the true intent and
agreement of the parties thereto, the real understanding between them being the appellee would
be merely a profit sharer entitled to 30% of the net profits that may be realized between the
partners from June 7, 1955, until the mortgage loan of P30,000.00 to be obtained from the RFC
shall have been fully paid. This version, however, is discredited not only by the aforesaid
documentary evidence brought forward by the appellee, but also by the fact that from June 7,
1955 up to the filing of their answer to the complaint on February 8, 1964 — or a period of over
eight (8) years — appellants did nothing to correct the alleged false agreement of the parties
contained in Exhibit "A". It is thus reasonable to suppose that, had appellee not filed the present
action, appellants would not have advanced this obvious afterthought that Exhibit "A" does not
express the true intent and agreement of the parties thereto.
 At pages 32-33 of appellants' brief, they also make much of the argument that 'there is an
overriding fact which proves that the parties to the Amended Articles of Partnership, Exhibit "A",
did not contemplate to make the appellee Estrella Abad Santos, an industrial partner of
Evangelista & Co. It is an admitted fact that since before the execution of the amended articles of
partnership, Exhibit "A", the appellee Estrella Abad Santos has been, and up to the present time
still is, one of the judges of the City Court of Manila, devoting all her time to the performance of
the duties of her public office. This fact proves beyond peradventure that it was never
contemplated between the parties, for she could not lawfully contribute her full time and industry
which is the obligation of an industrial partner pursuant to Art. 1789 of the Civil Code.

The Court of Appeals then proceeded to consider appellee's testimony on this point, quoting it in the decision,
and then concluded as follows:

One cannot read appellee's testimony just quoted without gaining the very definite impression
that, even as she was and still is a Judge of the City Court of Manila, she has rendered services
for appellants without which they would not have had the wherewithal to operate the business for
which appellant company was organized. Article 1767 of the New Civil Code which provides that
"By 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, 'does
not specify the kind of industry that a partner may thus contribute, hence the said services may
legitimately be considered as appellee's contribution to the common fund. Another article of the
same Code relied upon appellants reads:

'ART. 1789. An industrial partner cannot engage in business for himself, unless
the partnership expressly permits him to do so; and if he should do so, the
capitalist partners may either exclude him from the firm or avail themselves of the
benefits which he may have obtained in violation of this provision, with a right to
damages in either case.'

It is not disputed that the provision against the industrial partner engaging in business for himself
seeks to prevent any conflict of interest between the industrial partner and the partnership, and to
insure faithful compliance by said partner with this prestation. There is no pretense, however,
even on the part of the appellee is engaged in any business antagonistic to that of appellant
company, since being a Judge of one of the branches of the City Court of Manila can hardly be
characterized as a business. That appellee has faithfully complied with her prestation with
respect to appellants is clearly shown by the fact that it was only after filing of the complaint in
this case and the answer thereto appellants exercised their right of exclusion under the codal art
just mentioned by alleging in their Supplemental Answer dated June 29, 1964 — or after around
nine (9) years from June 7, 1955 — subsequent to the filing of defendants' answer to the
complaint, defendants reached an agreement whereby the herein plaintiff been excluded from,
and deprived of, her alleged share, interests or participation, as an alleged industrial partner, in
the defendant partnership and/or in its net profits or income, on the ground plaintiff has never
contributed her industry to the partnership, instead she has been and still is a judge of the City
Court (formerly Municipal Court) of the City of Manila, devoting her time to performance of her
duties as such judge and enjoying the privilege and emoluments appertaining to the said office,
aside from teaching in law school in Manila, without the express consent of the herein
defendants' (Record On Appeal, pp. 24-25). Having always knows as a appellee as a City judge
even before she joined appellant company on June 7, 1955 as an industrial partner, why did it
take appellants many yearn before excluding her from said company as aforequoted allegations?
And how can they reconcile such exclusive with their main theory that appellee has never been
such a partner because "The real agreement evidenced by Exhibit "A" was to grant the appellee
a share of 30% of the net profits which the appellant partnership may realize from June 7, 1955,
until the mortgage of P30,000.00 obtained from the Rehabilitation Finance Corporal shall have
been fully paid." (Appellants Brief, p. 38).

What has gone before persuades us to hold with the lower Court that appellee is an industrial
partner of appellant company, with the right to demand for a formal accounting and to receive her
share in the net profit that may result from such an accounting, which right appellants take
 exception under their second assigned error. Our said holding is based on the following 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 partnership business or possession of its property by his
co-partners;

(2) If the right exists under the terms of any agreement;

(3) As provided by article 1807;

(4) Whenever other circumstance render it just and reasonable.

We find no reason in this case to depart from the rule which limits this Court's appellate jurisdiction to reviewing
only errors of law, accepting as conclusive the factual findings of the lower court upon its own assessment of the
evidence.

The judgment appealed from is affirmed, with costs.

DELUAO vs. CASTEEL;

FACTS: Casteel was the original occupant and applicant of a fishpond area since before the last
World War. He wanted to preclude subsequent applicants from entering and spreading themselves
within the area by expanding his occupation thereof by the construction of dikes and the
cultivation of marketable fishes.

Thus, he borrowed P27, 000 from the Deluaos to finance needed improvements for the fishpond,
and was compelled by force of this circumstance to enter into the contract of partnership, with
an agreement to divide the fishpond after the award. Eventually, Casteel administered the said
property and single-handedly opposed rival applicants who occupied portions of the fishpond area.
He relentlessly pursued his claim to the said area up to the Office of the DANR Secretary, until it
was finally awarded to him.

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

HELD:
Spouses Deluaos’ statement that the beneficial right over the fishpond in question is the "specific
partnership property" contemplated by art. 1811 of the Civil Code is incorrect. A reading of the
said provision will show that what is meant is tangible property, such as a car, truck or a piece of
land, but not an intangible thing such as the beneficial right to a fishpond. If what they have in
mind is the fishpond itself, they are grossly in error. A fishpond of the public domain can never
be considered a specific partnership property because only its use and enjoyment — never its
title or ownership — is granted to specific private persons.

Since we held as illegal the second part of the contract of partnership between the parties to
divide the fishpond between them after the award, a fortiori, no rights or obligations could have
arisen therefrom. Inescapably, no trust could have resulted because trust is founded on equity
and can never result from an act violative of the law. Art. 1452 of the Civil Code does not support
the appellees' stand because it contemplates an agreement between two or more persons to
purchase property — capable of private ownership — the legal title of which is to be taken in the
name of one of them for the benefit of all. In the case at bar, the parties did not agree to purchase
the fishpond, and even if they did, such is prohibited by law, a fishpond of the public domain not
being susceptible of private ownership.

It must be observed that, despite the decisions of the DANR Secretary in DANR cases 353 and
353-B awarding the area to Casteel, and despite the latter's proposal that they divide the fishpond
between them, the Deluaos unequivocally expressed in their aforequoted letter their decision not
to share the fishpond with Casteel. This produced the dissolution of the entire contract of
partnership (to jointly administer and to divide the fishpond after the award) between the parties,
not to mention its automatic dissolution for being contrary to law.

Pettioner’s final proposition that only by giving effect to the confirmed intention of the parties
may the cause of equity and justice be served, we must state that since the contract of service
is contrary to law and, therefore, null and void, it is not and can never be considered as the law
between the parties.