Uy-vs.docx

Uy vs. Puzon Facts:    

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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Uy was not allowed to hold office in the UP Construction Company and his authority to negotiate with the Bureau was revoked by Puzon.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 Ruling: 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. RULING: 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.

PEDRO MARTINEZ VS. ONG PONG CO AND ONG LAY G.R. No. L-5236, January 10, 1910

FACTS: Pedro Martinez (plaintiff) delivered Php.1,500.00 to Ong Pong Co and Ong Lay (defendants). Said amount was reflected in a private instrument where the plaintiff and defendants agreed that “they are to invest the amount in a store, the profits or losses of which we are to divide with the former, in equal shares.” The store business was a failure and the plaintiff demanded from the defendants either to render an accounting of the partnership as agreed to, or to refund him the Php.1,500.00. Ong Pong Co alleged in his defense that his co-defendant Ong Lay, now deceased, was the one who managed the business. He also alleged that nothing had resulted from the business venture save the loss of the capital of Php.1,500.00, to which the plaintiff agreed.

ISSUE: Upto what extent are partners liable?

HELD: The partners are liable jointly. The defendants acted as administrators and as such, they were obliged to render an accounting of the business. Since both failed in this aspect, they are obliged to return the capital. Article 1688 of the Civil Code (Article 1796 of the New Civil Code) which provides“that the partnership is liable to every partner for the amounts he may have disbursed on account ofthe same and for the proper interest” does not apply to the case at bar since no other money than the one contributed by the plaintiff was involved. The court ruled that Ong Pong Co should pay Pedro Martinez the sum of Php.750.00 with the legal interest thereon, being liable jointly.

RAMNANI v. CA 196 scra 731; May 7, 1991 Ponente: J. Gancayco FACTS: Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the full blood. Ishwar and his spouse Sonya had their main business based in New York. Realizing the difficulty of managing their investments in the Philippines they executed a general power of attorney on January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact, empowering them to manage and conduct their business concern in the Philippines On February 1, 1966 and on May 16, 1966, Choithram entered into two agreements for the purchase of two parcels of land located in Barrio Ugong, Pasig, Rizal, from Ortigas & Company, Ltd. Partnership. A building was constructed thereon by Choithram in 1966. Three other buildings were built thereon by Choithram through a loan of P100,000.00 obtained from the Merchants Bank as well as the income derived from the first building. Sometime in 1970 Ishwar asked Choithram to account for the income and expenses relative to these properties during the period 1967 to 1970. Choithram failed and refused to render such accounting. Thereafter, Ishwar revoked the general power of attorney. Choithram and Ortigas were duly notified of such revocation on April 1, 1971 and May 24, 1971, respectively. Said notice was also registered with the Securities and Exchange Commission on March 29, 1971 and was published in the April 2, 1971 issue of The Manila Times for the information of the general public. Nevertheless, Choithram, transferred all rights and interests of Ishwar and Sonya in favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973. On October 6, 1982, Ishwar and Sonya filed a complaint against Choitram and/or spouses Nirmla and Moti and Ortigas for reconveyance of said properties or payment of its value and damages. ISSUE: Whether Ishram can recover the entire properties subject in the ligitation HELD: No, Ishram cannot recover the entire properties subject. The Supreme Court held that despite the fact that Choithram, et al., have committed acts which demonstrate their bad faith and scheme to defraud spouses Ishwar

and Sonya of their rightful share in the properties in litigation, the Court cannot ignore the fact that Choithram must have been motivated by a strong conviction that as the industrial partner in the acquisition of said assets he has as much claim to said properties as Ishwar, the capitalist partner in the joint venture. Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land in question from Ortigas as attorney-in-fact of Ishwar. Instead of paying for the lots in cash, he paid in installments and used the balance of the capital entrusted to him, plus a loan, to build two buildings. Although the buildings were burned later, Choithram was able to build two other buildings on the property. He rented them out and collected the rentals. Through the industry and genius of Choithram, Ishwar's property was developed and improved into what it is now. Justice and equity dictate that the two share equally the fruit of their joint investment and efforts. Perhaps this Solomonic solution may pave the way towards their reconciliation. Both would stand to gain. No one would end up the loser. After all, blood is thicker than water.