ESTATE OF THE DECEASED LAZARO MOTA, ET AL vs.

SALVADOR SERRA
Facts: Lazaro Mota,owner of San Isidro Central and Salvador Serra, owner of
Palma Central, entered into a partnership to construct several kilometers of
railroad in the in order to facilitate the transportation of sugar cane to their
respective sugar centrals. In said agreement, they stipulated that expenses will
be borne by both parties 50-50 although expenses will be initially for the account
of Mota.
Subsequently however, Serra sold Palma to Whitaker & Concepcion, the latter
expressing awareness of above contract and willingness to subrogate
themselves into the obligations therefor. Thereafter, Concepcion & Whitaker also
bought from Mota et al. the of the railroad line and they agreed that the
partnership "Palma" and "San Isidro," formed between Serra & Mota et al, should
be dissolved upon the execution of the contract. Serra being unable to pay his
obligation under the contract of partnership (1/2 of the expenses), Mota et. al.
instituted an action for collection. As defense, Serra alleged that at the
termination of the partnership between them, his obligation therein has been
extinguished.
Issue: Whether Serra cannot be held liable to pay Mota et. al. a part of the cost
of the construction of the railroad line stipulated in the contract of partnership by
reason of the dissolution of the partnership?
Held: NO, Serra is liable. The dissolution of a partnership does not relieve any of
its members from liability for existing obligations, although it does save them from
new obligations to which they have not expressly or impliedly assented, and any
of them may be discharged from old obligations by novation or other form of
release. A partnership continues, even after dissolution, for the purpose of
winding up its affairs. At the termination of the object for which it was created the
partnership is extinguished, pending the winding up of some incidents and
obligations of the partnership, but in such case, the partnership will be reputed as
existing until the juridical relations arising out of the contract are dissolved. A
partnership cannot be considered as extinguished until all the obligations
pertaining to it are fulfilled.