Litonjua, Jr. v. Litonjua, Sr.
(Bam ℅ Nikki V) SC said that it did not because of non-compliance with the formalities set forth by
13 December 2005 | Garcia, J. | Formal Requirements for Partnerships the law
PETITIONER: Aurelio K. Litonjua, Jr. DOCTRINE:
RESPONDENTS: Eduardo K. Litonjua, Sr., Robert T. Yang, ANGLO PHILS. A partnership may be constituted in any form, save when immovable property or
MARITIME, INC., CINEPLEX, INC., DDM GARMENTS, INC., EDDIE K. real rights are contributed thereto or when the partnership has a capital of at least
LITONJUA SHIPPING AGENCY, INC., EDDIE K. LITONJUA SHIPPING Php3,000, in which case a public instrument shall be necessary. Moreover, an
CO., INC., LITONJUA SECURITIES, INC. (formerly E. K. Litonjua Sec), inventory signed by the parties and attached to the public instrument is also
LUNETA THEATER, INC., E & L REALTY, (formerly E & L INTL SHIPPING indispensable to the validity of the partnership whenever immovable property is
CORP.), FNP CO., INC., HOME ENTERPRISES, INC., BEAUMONT DEV. contributed to it.
REALTY CO., INC., GLOED LAND CORP., EQUITY TRADING CO., INC., FACTS:
3D CORP., L DEV. CORP, LCM THEATRICAL ENTERPRISES, INC., 1. Petitioner AURELIO and respondent EDUARDO are brothers. Aurelio
LITONJUA SHIPPING CO. INC., MACOIL INC., ODEON REALTY CORP., filed a complaint against Eduardo, Yang, and several other corporations
SARATOGA REALTY, INC., ACT THEATER INC. (formerly General for specific performance and accounting.
Theatrical & Film Exchange, INC.), AVENUE REALTY, INC., AVENUE 2. The material allegations in the complaint were:
THEATER, INC. and LVF PHILIPPINES, INC., (Formerly VF PHILIPPINES) a. Aurelio and Eduardo are in a joint venture/partnership
arrangement in the Odeon Theater business for the continuation
SUMMARY: of their family business and common family funds (Yang
Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that Eduardo entered described in the complaint as a partner also).
into a contract of partnership with him as evidenced by a letter sent to him by b. This joint venture/partnership agreement was contained in a
Eduardo that the latter is allowing Aurelio to manage their family business (if memorandum supposedly made by Eduardo.
Eduardo’s away) and in exchange thereof he will be giving Aurelio P1 million or c. In the said memorandum, it was agreed upon that Aurelio [in
10% equity, whichever is higher. A memorandum was subsequently made for the consideration of Aurelio’s retaining his share in the remaining
supposed partnership agreement. The memorandum stated that in exchange of family business and contributing his industry to the continued
Aurelio retaining his share in the family business (movie theatres, shipping and operation of these businesses] will be given Php1M or 10%
land development) and some other immovable properties, he will be given P1 equity in all businesses and those to be acquired by them
Million or 10% equity in all these businesses and those to be subsequently whichever is greater.
acquired by them whichever is greater. d. In a span of 28 years, Aurelio and Eduardo accumulated in their
joint venture/partnership various assets. There were also other
In 1992 however, the relationship between the brothers went sour. And so Aurelio assets which Eduardo caused to be registered in the name of other
demanded an accounting and the liquidation of his share in the partnership. parties (Aurelio alleged that this was done to defraud him).
Eduardo did not heed and so Aurelio sued Eduardo. The main issue is WON the e. Sometime in 1992, the relations between Aurelio and Eduardo
memorandum created a partnership agreement between Aurelio and Eduardo. The became sour so Aurelio requested for an accounting and
liquidation of his share in the joint venture/partnership (but these determinative of the existence, or defining the formal requisites, of a
demands were not heeded). partnership is indicated.
2. Art. 1771. A partnership may be constituted in any form, except where
3. Eduardo denied these allegations and raised the main defense of lack of immovable property or real rights are contributed thereto, in which
cause of action. In sum, Eduardo alleged that the complaint states no cause case a public instrument shall be necessary.
of action since no cause of action may be derived from the actionable The memorandum, on its face, contains typewritten entries, personal in
document (memorandum) for being void under the terms of Art. 1767 in tone, but is unsigned and undated. As such, it does not meet the public
relation to Art. 1773 of the Civil Code. Moreover, whatever it is that instrumentation requirements under Art. 1771
Eduardo agreed to do, if any, is unenforceable under the provisions of the 3. Art. 1772. Every contract of partnership having a capital of three
Statute of Frauds. thousand pesos or more, in money or property, shall appear in a
4. As regards Yang, he said that Aurelio has no cause of action against him public instrument, which must be recorded in the Office of the
and that the complaint does not even state any. In short, bat ba ko Securities and Exchange Commission.
nadamay dito. Failure to comply with the requirement of the preceding paragraph
5. The trial court ruled in favor of Aurelio. Eduardo appealed and won in the shall not affect the liability of the partnership and the members
CA. Hence, this petition. thereof to third persons.
Being unsigned and doubtless referring to a partnership involving more
ISSUES: than P3,000.00 in money or property, the memorandum cannot be
1. WON there is a valid partnership agreement between Aurelio and Eduardo presented for notarization, let alone registered with the Securities and
– NO because the memorandum failed to comply with the formalities Exchange Commission (SEC), as called for under the Article 1772 of the
required by partnership law. Code.
2. WON the memorandum created a demandable right in favor of petitioner 4. Art. 1773. A contract of partnership is void, whenever immovable
– NO property is contributed thereto, if an inventory of said property is not
3. WON there is a cause of action against Yang – NO made, signed by the parties, and attached to the public instrument.
And inasmuch as the inventory requirement under Article 1773 goes into
RULING: WHEREFORE, the instant petition is DENIED and the impugned the matter of validity when immovable property is contributed to the
Decision and Resolution of the Court of Appeals AFFIRMED. partnership, the next logical point of inquiry turns on the nature of
petitioners contribution, if any, to the supposed partnership. A further
RATIO: examination of the allegations in the complaint would show that Aurelio’s
Memorandum is void and legally inexistent as a partnership agreement contribution to the so-called partnership/joint venture was his supposed
1. The issue bearing on the first assigned error relates to the question of what share in the family business that is consisting of movie theaters, shipping
legal provision is applicable under the premises, petitioner seeking, as it and land development under paragraph 3.02 of the complaint. In other
were, to enforce the actionable document - memorandum - which he words, his contribution as a partner in the alleged partnership/joint venture
depicts in his complaint to be the contract of partnership/joint venture consisted of immovable properties and real rights.
between himself and Eduardo. Clearly, then, a look at the legal provisions
5. The Memorandum which purports to establish the said partnership/joint sufficiently established in his complaint the legal vinculum whence he
venture is NOT a public instrument and there was NO inventory of the sourced his right to drag Yang into the fray.
immovable property duly signed by the parties. As such, said
Memorandum is null and void for purposes of establishing the existence CONCLUSION
of a valid contract of partnership. Indeed, because of the failure to comply The void memorandum, as an actionable document of partnership, would strip
with the essential formalities of a valid contract, the purported Aurelio of a cause of action. A complaint for delivery and accounting of partnership
partnership/joint venture is legally inexistent and it produces no effect property based on such void or legally non-existent actionable document is
whatsoever. Necessarily, a void or legally inexistent contract cannot be the dismissible for failure to state cause of action.
source of any contractual or legal right. Accordingly, the allegations in
the complaint, including the actionable document attached thereto, DOCTRINE IN THE SYLLABUS
clearly demonstrates that Aurelio has NO valid contractual or legal An instrument purporting to be the contract of partnership which is unsigned and
right which could be violated by the Eduardo and Yang (individual undated, does not meet the public instrumentation requirements exacted under
respondents herein). As a consequence, Aurelio’s complaint does NOT Article 1771, not even registrable with the SEC as called for under Article 1772,
state a valid cause of action because NOT all the essential elements of a and which also does not meet the inventory requirement under Article 1773 since
cause of action are present. the claims involve contributions of immovable properties, does not warrant a
finding that a contract of partnership or joint venture exist.
No demandable right
1. Aurelio posits that assuming the memorandum was indeed inefficacious SEPARATE OPINIONS: None.
or null as a partnership agreement, it still created demandable rights in his
favor by virtue of an innominate contract.
2. After the CA ruled against Aurelio by stating that the alleged partnership
is inexistent, petitioner took a different track. Springing surprises on the
opposing party is offensive to the sporting idea of fair play.
No cause of action against Yang
1. Aurelio, has not, in his complaint, provide the legal nexus that would tie
Yang to him as a partner. Yang denies kinship with the Litonjua family
and petitioner has not disputed the disclaimer.
2. No allegation is made whatsoever about what Yang contributed, if any, let
alone his proportional share in the profits.
3. [Ito pinakafunny] How, indeed, could a person be considered a partner
when the document purporting to establish the partnership contract
did not even mention his name. Needless to say, Aurelio has not
