You are on page 1of 13


ESCOBIDO Issue: W/N the mortgage between Clemente and his nephew
(intervenor, plaintiff in the case) is valid?
FACTS: Respondent Karen T. Go filed two complaints before the RTC
for replevin and/or sum of money with damages against Navarro. In Rule: No. The machines in contention originally belonged to the
these complaints, Karen Go prayed that the RTC issue writs of replevin defendant and from him were transferred to the partnership Galvan y
for the seizure of two (2) motor vehicles in Navarro’s possession. In his Compania. This being the case, said machines belong to the
Answers, Navarro alleged as a special affirmative defense that the two partnership and not to him, and shall belong to it until partition is
complaints stated no cause of action, since Karen Go was not a party effected according to the result thereof after the liquidation. Also,
to the Lease Agreements with Option to Purchase (collectively, the Clemente did not have actual possession of the machines, he could
lease agreements) — the actionable documents on which the not in any manner mortgage them.
complaints were based. RTC dismissed the case but set aside the
dismissal on the presumption that Glenn Go’s (husband) leasing
business is a conjugal property and thus ordered Karen Go to file a VILLAREAL V. RAMIREZ
motion for the inclusion of Glenn Go as co-plaintiff as per Rule 4,
Section 3 of the Rules of Court. Navarro filed a petition for certiorari
with the CA. According to Navarro, a complaint which failed to state a
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a
cause of action could not be converted into one with a cause of action
partnership with a capital of P750,000for the operation of a restaurant
by mere amendment or supplemental pleading. CA denied petition.
and catering business. Respondent Ramirez joined as a partner in the
business with the capital contribution of P250,000. In 1987, Jesus Jose
ISSUE: Whether or not Karen Go is a real party in interest withdrew from the partnership and within the same time, Villareal and
Carmelito Jose, petitioners closed the business without prior
HELD: YES. Karen Go is the registered owner of the business name knowledge of respondents In March 1987, respondents wrote a letter
Kargo Enterprises, as the registered owner of Kargo Enterprises, to petitioners stating that they were no longer interested in continuing
Karen Go is the party who will directly benefit from or be injured by a the partnership and that they were accepting the latter’s offer to return
judgment in this case. Thus, contrary to Navarro’s contention, Karen their capital contribution. This was left unheeded by the petitioners,
Go is the real party-in-interest, and it is legally incorrect to say that her and by reason of which respondents filed a complaint in the RTC.RTC
Complaint does not state a cause of action because her name did not ruled that the parties had voluntarily entered into a partnership, which
appear in the Lease Agreement that her husband signed in behalf of could be dissolved at any time, and this dissolution was showed by the
Kargo Enterprises. fact that petitioners stopped operating the restaurant. On appeal, CA
upheld RTC’s decision that the partnership was dissolved and it added
Glenn and Karen Go are effectively co-owners of Kargo that respondents had no right to demand the return of their capital
Enterprises and the properties registered under this name; hence, both contribution. However since petitioners did not give the proper
have an equal right to seek possession of these properties. Therefore, accounting for the liquidation of the partnership, the CA took it upon
only one of the co-owners, namely the co-owner who filed the suit for itself to compute their liabilities and the amount that is proper to the
the recovery of the co-owned property, is an indispensable party respondent. The computation of which was:(capital of the partnership –
thereto. The other co-owners are not indispensable parties. They are outstanding obligation) / remaining partners =amount due to private
not even necessary parties, for a complete relief can be accorded in respondent
the suit even without their participation, since the suit is presumed to
have been filed for the benefit of all co-owners. Issue: W/N petitioners are liable to respondents for the latter’s share in
the partnership?
We hold that since Glenn Go is not strictly an indispensable
party in the action to recover possession of the leased vehicles, he Ruling:
only needs to be impleaded as a pro-forma party to the suit, based on
Section 4, Rule 4 of the Rules, which states: No. Respondents have no right to demand from petitioner
Section 4.Spouses as parties. — Husband and wife shall sue or be the return of their equity share. As found by the court petitioners did not
sued jointly, except as provided by law. personally hold its equity or assets. “The partnership has a juridical
Even assuming that Glenn Go is an indispensable party to the action, personality separate and distinct from that of each of the partners.”
misjoinder or non-joinder of indispensable parties in a complaint is not Since the capital was contributed to the partnership, not to petitioners,
a ground for dismissal of action as per Rule 3, Section 11 of the Rules it is the partnership that must refund the equity of the retiring partners.
of Court. However, before the partners can be paid their shares, the creditors of
the partnership must first be compensated. Therefore, the exact
amount of refund equivalent to respondents’ one-third share in the
Clemente vs. Galvan partnership cannot be determined until all the partnership assets will
have been liquidated and all partnership creditors have been paid.
CA’s computation of the amount to be refunded to respondents as their
share was thus erroneous.
 Plaintiff and defendant organized a civil partnership which
they named "Galvan y Compañia" to engage in the
manufacture and sale of paper and other stationery.
 Plaintiff ask for dissolution which the defendant confirm but
with a condition that having covered a deficit incurred by the
G.R. No. 178782 September 21, 2011
partnership amounting to P4,000 with his own money,
plaintiff reimburse him of one-half of said sum.
 Juan D. Mencarini, assigned as receiver and liquidator. Upon Petitioner Josefina Realubit entered into a Joint Venture
acting on his duty, the court ordered him to deliver certain Agreement with Francis Eric Amaury Biondo, a French national, for the
machines which were then at Nos. 705-707 Ylaya Street. operation of an ice manufacturing business. With Josefina as the
 But before he could take actual possession of said industrial partner and Biondo as the capitalist partner, the parties
machines, upon the strong opposition of defendant, the agreed that they would each receive 40% of the net profit, with the
court, on motion of the latter, suspended the effects of its remaining 20% to be used for the payment of the ice making machine
order which was purchased for the business. For and in consideration of the
 In the meantime the judgments rendered in cases Nos. sum of P500,000.00, however, Biondo subsequently executed a Deed
42794 and 43070 ordering Clemente to pay a sum of money. of Assignment transferring all his rights and interests in the business in
 He mortgage the machines with his nephew, the intervenor favor of respondent Eden Jaso, the wife of respondent Prosencio
(plaintiff in the herein case.) For having expired the terms in Jaso. With Biondo’s eventual departure from the country, the Spouses
the mortgage the intervenor commenced case No. 49629 to Jaso caused their lawyer to send Josefina a letter apprising her of their
collect his mortgage credit. acquisition of said Frenchmans share in the business and formally
demanding an accounting and inventory thereof as well as the CASTILLO.”
remittance of their portion of its profits. July 30, 1979

Faulting Josefina with unjustified failure to heed their Facts:

demand, the Spouses Jaso commenced the instant suit for specific
performance, accounting, examination, audit and inventory of assets Petitions were filed by the surviving partners of Atty.
and properties, dissolution of the joint venture, appointment of a Alexander Sycip, who died on May 5, 1975 and by the surviving
receiver and damages. The said complaint alleged that the Spouses partners of Atty. Herminio Ozaeta, who died on February 14, 1976,
Realubit had no gainful occupation or business prior to their joint praying that they be allowed to continue using, in the names of their
venture with Biondo and that aside from appropriating for themselves firms, the names of partners who had passed away. Petitioners
the income of the business, they have fraudulently concealed the funds contend that the continued use of the name of a deceased or former
and assets thereof thru their relatives, associates or dummies. The partner when permissible by local custom, is not unethical but care
Spouses Realubit claimed that they have been engaged in the tube ice should be taken that no imposition or deception is practiced through
trading business under a single proprietorship even before their this use. They also contend that no local custom prohibits the
dealings with Biondo. continued use of a deceased partner’s name in a professional firm’s
name; there is no custom or usage in the Philippines, or at least in the
The RTC rendered its Decision discounting the existence of Greater Manila Area, which recognizes that the name of a law firm
sufficient evidence from which the income, assets and the supposed necessarily identifies the individual members of the firm.
dissolution of the joint venture can be adequately reckoned. Upon the
finding, however, that the Spouses Jaso had been nevertheless Issue:
subrogated to Biondos rights in the business in view of their valid
WON the surviving partners may be allowed by the court to
acquisition of the latters share as capitalist partner. On appeal before
retain the name of the partners who already passed away in the name
the CA, the foregoing decision was set aside
of the firm? NO
upon the following findings that the Spouses Jaso validly acquired
Biondos share in the business which had been transferred to and Held:
continued its operations and not dissolved as claimed by the Spouses
Realubit. In the case of Register of Deeds of Manila vs. China Banking
Corporation, the SC said: The Court believes that, in view of the
ISSUES personal and confidential nature of the relations between attorney and
1. Whether there was a valid assignment or rights to the joint client, and the high standards demanded in the canons of professional
venture ethics, no practice should be allowed which even in a remote degree
2. Whether the joint venture is a contract of partnership could give rise to the possibility of deception. Said attorneys are
3. Whether Jaso acquired the title of being a partner based on the accordingly advised to drop the names of the deceased partners from
Deed of Assignment their firm name.

RULING The public relations value of the use of an old firm name can
1. Yes. As a public document, the Deed of Assignment Biondo tend to create undue advantages and disadvantages in the practice of
executed in favor of Eden not only enjoys a presumption of the profession. An able lawyer without connections will have to make a
regularitybut is also considered prima facie evidence of the facts name for himself starting from scratch. Another able lawyer, who can
therein stated. A party assailing the authenticity and due execution of join an old firm, can initially ride on that old firm’s reputation
a notarized document is, consequently, required to present evidence established by deceased partners.
that is clear, convincing and more than merely preponderant. In view of
the Spouses Realubits failure to discharge this onus, we find that both The court also made the difference from the law firms and
the RTC and the CA correctly upheld the authenticity and validity of business corporations: A partnership for the practice of law is not a
said Deed of Assignment upon the combined strength of the above- legal entity. It is a mere relationship or association for a particular
discussed disputable presumptions and the testimonies elicited from purpose. … It is not a partnership formed for the purpose of carrying
Eden and Notary Public Rolando Diaz. on trade or business or of holding property.” Thus, it has been stated
that “the use of a nom de plume, assumed or trade name in law
2. Yes. Generally understood to mean an organization formed for practice is improper.
some temporary purpose, a joint venture is likened to a particular
partnership or one which has for its object determinate things, their use We find such proof of the existence of a local custom, and of
or fruits, or a specific undertaking, or the exercise of a profession or the elements requisite to constitute the same, wanting herein. Merely
vocation. The rule is settled that joint ventures are governed by the law because something is done as a matter of practice does not mean that
on partnerships which are, in turn, based on mutual agency Courts can rely on the same for purposes of adjudication as a juridical
or delectus personae. custom.

3. No. It is evident that the transfer by a partner of his partnership Petition suffers legal and ethical impediment.
interest does not make the assignee of such interest a partner of the
2 Jo Chung Cang v. Pacific Commercial Co.
firm, nor entitle the assignee to interfere in the management of the
partnership business or to receive anything except the assignees
profits. The assignment does not purport to transfer an interest in the
partnership, but only a future contingent right to a portion of the  In an insolvency proceedings of petitioner-establishment, “Sociedad
ultimate residue as the assignor may become entitled to receive by Mercantil, Teck Seing & Co., Ltd.”, creditors, Pacific Commercial and
virtue of his proportionate interest in the capital. Since a partner’s others filed a motion with the Court to declare the individual partners
interest in the partnership includes his share in the profits, we find that parties to the proceeding, for each to file an inventory, and for each
the CA committed no reversible error in ruling that the Spouses Jaso to be adjudicated as insolvent debtors.
are entitled to Biondos share in the profits, despite Juanitas lack of  RTC granted the motion but subsequently denied it.
consent to the assignment of said Frenchmans interest in the joint  Hence this appeal.
venture. Although Eden did not, moreover, become a partner as a
consequence of the assignment and/or acquire the right to require an ISSUE
accounting of the partnership business, the CA correctly granted her Whether the nature of the mercantile establishment, Teck Seing & Co.,
prayer for dissolution of the joint venture conformably with the right Ltd. is a limited partnership.
granted to the purchaser of a partner’s interest under Article 1831 of
the Civil Code. HELD

PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM The contract of partnership established a general partnership.
By process of elimination, Teck Seing & Co., Ltd. Is not a corporation When the case was called for hearing, the defendants and their
nor an accidental partnership (joint account association). counsels failed to appear notwithstanding the notices sent to them.
Consequently, the trial court authorized the plaintiff to present its
To establish a limited partnership, there must be, at least, one general evidence ex-parte3 , after which the trial court rendered the decision
partner and the name of at least one of the general partners must appealed from.
appear in the firm name. This requirement has not been fulfilled. Those
who seek to avail themselves of the protection of laws permitting the
creation of limited partnerships must the show a substantially full The defendants Benjamin C. Daco and Noel C. Sim moved to
compliance with such laws. It must be noted that all the requirements reconsider the decision claiming that since there are five (5) general
of the Code have been met w/ the sole exception of that relating to the partners, the joint and subsidiary liability of each partner should not
composition of the firm name. exceed one-fifth (1/5 ) of the obligations of the defendant company. But
the trial court denied the said motion notwithstanding the conformity of
The legal intention deducible from the acts of the parties controls in the plaintiff to limit the liability of the defendants Daco and Sim to only
determining the existence of a partnership. If they intend to do a thing one-fifth (1/5 ) of the obligations of the defendant company. 4 Hence, this
w/c in law constitutes a partnership, they are partners although their appeal.
very purpose was to avoid the creation of such relation. Here the
intention of the persons making up, Teck Seing & Co., Ltd. Was to The only issue for resolution is whether or not the dismissal of the
establish partnership w/c they erroneously denominated as a limited complaint to favor one of the general partners of a partnership
partnership. increases the joint and subsidiary liability of each of the remaining
partners for the obligations of the partnership.
Order appealed from is reversed.

Article 1816 of the Civil Code provides:

ISLAND SALES, INC., plaintiff-appellee,
UNITED PIONEERS GENERAL CONSTRUCTION COMPANY, ET. AL Art. 1816. All partners including industrial ones,
defendants. BENJAMIN C. DACO, defendant-appellant. shall be liable pro rata with all their property and
after all the partnership assets have been
exhausted, for the contracts which may be entered
CONCEPCION JR., J.: into in the name and for the account of the
partnership, under its signature and by a person
This is an appeal interposed by the defendant Benjamin C. Daco from authorized to act for the partnership. However, any
the decision of the Court of First Instance of Manila, Branch XVI, in partner may enter into a separate obligation to
Civil Case No. 50682, the dispositive portion of which reads: perform a partnership contract.

WHEREFORE, the Court sentences defendant In the case of Co-Pitco vs. Yulo (8 Phil. 544) this Court held:
United Pioneer General Construction Company to
pay plaintiff the sum of P7,119.07 with interest at The partnership of Yulo and Palacios was
the rate of 12% per annum until it is fully paid, plus engaged in the operation of a sugar estate in
attorney's fees which the Court fixes in the sum of Negros. It was, therefore, a civil partnership as
Eight Hundred Pesos (P800.00) and costs. distinguished from a mercantile partnership. Being
a civil partnership, by the express provisions of
The defendants Benjamin C. Daco, Daniel A. articles l698 and 1137 of the Civil Code, the
Guizona, Noel C. Sim and Augusto Palisoc are partners are not liable each for the whole debt of
sentenced to pay the plaintiff in this case with the the partnership. The liability is pro rata and in this
understanding that the judgment against these case Pedro Yulo is responsible to plaintiff for only
individual defendants shall be enforced only if the one-half of the debt. The fact that the other
defendant company has no more leviable partner, Jaime Palacios, had left the country
properties with which to satisfy the judgment cannot increase the liability of Pedro Yulo.
against it. .
In the instant case, there were five (5) general partners when the
The individual defendants shall also pay the costs. promissory note in question was executed for and in behalf of the
partnership. Since the liability of the partners is pro rata, the liability of
the appellant Benjamin C. Daco shall be limited to only one-fifth ( 1/5 ) of
On April 22, 1961, the defendant company, a general partnership duly the obligations of the defendant company. The fact that the complaint
registered under the laws of the Philippines, purchased from the against the defendant Romulo B. Lumauig was dismissed, upon
plaintiff a motor vehicle on the installment basis and for this purpose motion of the plaintiff, does not unmake the said Lumauig as a general
executed a promissory note for P9,440.00, payable in twelve (12) partner in the defendant company. In so moving to dismiss the
equal monthly installments of P786.63, the first installment payable on complaint, the plaintiff merely condoned Lumauig's individual liability to
or before May 22, 1961 and the subsequent installments on the 22nd the plaintiff.
day of every month thereafter, until fully paid, with the condition that
failure to pay any of said installments as they fall due would render the
whole unpaid balance immediately due and demandable. WHEREFORE, the appealed decision as thus clarified is hereby
AFFIRMED, without pronouncement as to costs.
Having failed to receive the installment due on July 22, 1961, the
plaintiff sued the defendant company for the unpaid balance amounting SO ORDERED.
to P7,119.07. Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim,
Romulo B. Lumauig, and Augusto Palisoc were included as co- ELMO MUÑASQUE, petitioner,
defendants in their capacity as general partners of the defendant
company. vs.

Daniel A. Guizona failed to file an answer and was consequently COURT OF APPEALS,CELESTINO GALAN TROPICAL
declared in default.1 COMMERCIAL COMPANY and RAMON PONS, respondents.

Subsequently, on motion of the plaintiff, the complaint was dismissed
insofar as the defendant Romulo B. Lumauig is concerned.2
Munasque (petitioner) entered into a partnership with Galan under the Philippine National Bank vs Lo et al
registered name “Galan and Associates” as Contractor. They entered
into a written contract with respondent Tropical for remodeling the In September 1916, Severo Eugenio Lo and Ling, together with Ping,
latter’s Cebu branch building. Under the contract, the project totaled Hun, Lam and Peng formed a commercial partnership under the name
25,000 to be paid in installments; 7, 000 upon signing and 6, 000 every of “Tai Sing and Co.,” with a capital of P40,000 contributed by said
15 working days. partners. The firm name was registered in the mercantile registrar in
the Province of Iloilo. Ping, in the articles of partnership, was assigned
Tropical made the first payment by check in the name of Munasque. as the general manager. However, in 1917, he executed a special
Munasque indorsed the check in favor of Galan to enable Galan to power of attorney in favor of Lam to act in his behalf as the manager of
deposit it in the bank and pay for the materials and labor used in the the firm. Subsequently, Lam obtained a loan from PNB – the loan was
project. However, Galan allegedly spent P6, 183.37 for his personal under the firm’s name. In the same year, Ping died in China. From
use. When the second check came, Munasque refused to indorse it 1918 to 1920, the firm, via GM Lam, incurred other loans from PNB.
again to Galan. The loans were not objected by any of the partners. Later, PNB sued
the firm for non-payment. Lo, in his defense, argued that he cannot be
Galan informed Tropical of the misunderstanding between him and liable as a partner because the partnership, according to him, is void;
Munasque as partners. Hence upon second payment, Tropical that it is void because the firm’s name did not comply with the
changed the name of the payee on the second check from Munasque requirement of the Code of Commerce that a firm name should contain
to “Galan and Associates” which enabled Galan to encash the second the “names of all of the partners, of several of them, or only one of
check. them”. Lo also argued that the acts of Lam after the death of Ping is
not binding upon the other partners because the special power of
Meanwhile, the construction was continued through Munasque’s sole attorney shall have already ceased.
efforts by incurring debts from various suppliers. The construction work
was finished ahead of schedule with the total expenditure reaching P ISSUE: Whether or not Lo is correct in both arguments.
34, 000 (note yung contract nila 25k lang). HELD: No. The anomalous adoption of the firm name above noted
does not affect the liability of the general partners to third parties under
Munasque filed a complaint for payment of sum of money and
Article 127 of the Code of Commerce. The object of the Code of
damages against Galan, Tropical, and Tropical’s Cebu branch
Commerce in requiring a general partnership to transact business
manager Pons. Cebu Southern Hardware Company and Blue Diamond
under the name of all its members, of several of them, or of one only, is
Glass Palace intervened in the case for the credit which they extended
to protect the public from imposition and fraud; it is for the protection of
to the partnership of Munasque and Galan for the construction project.
the creditors rather than of the partners themselves. It is unenforceable
Both trial court and Court of Appeals absolved respondents Tropical as between the partners and at the instance of the violating party, but
and its Cebu manager, Pons, from any liability. TC held Galvan and not in the sense of depriving innocent parties of their rights who may
Munasque “jointly and severally” liable to its creditors which decision have dealt with the offenders in ignorance of the latter having violated
was modified by CA and held them “jointly” liable. the law; and that contracts entered into by a partnership firm
defectively organized are valid when voluntarily executed by the
Issues: parties, and the only question is whether or not they complied with the
agreement. Therefore, Lo cannot invoke in his defense the anomaly in
Whether the obligation of Munasque and Galan is joint or solidary? the firm name which they themselves adopted. Lo was not able to
prove his second argument. But even assuming arguendo, his second
Held: contention does not deserve merit because (a) Lam, in acting as a GM,
is also a partner and his actions were never objected

While it is true that under Article 1816 of CC, “All partners, including
industrial ones, shall be liable pro rate with all their property and after MENDOZA V. ENGR. EDUARDO PAULE
all the partnership assets have been exhausted, for the contracts
which may be entered into the name and for account of the G.R. No. 175885
partnership, under its signature and by a person authorized to act for
Ynares-Santiago, J.
the partnership. xxx”, this provision should be construed together with
Article 1824 which provides that: “All partners are liable solidarily with Facts
the partnership for everything chargeable to the partnership under
Articles 1822 and 1823.” While the liability of the partners are merely Engineer Eduardo M. Paule (PAULE) is the proprietor of
joint in transactions entered into by the partnership, a third person who E.M. Paule Construction and Trading (EMPCT). On May 24, 1999,
transacted with said partnership can hold the partners solidarily liable PAULE executed a special power of attorney (SPA) authorizing
for the whole obligation if the case of the third person falls under Zenaida G. Mendoza (MENDOZA) to participate in the pre-qualification
Articles 1822 and 1823. and bidding of a National Irrigation Administration (NIA) project and
represent him in all transactions related thereto. EMPCT, through
The obligation is solidary because the law protects him, who in good Mendoza, participated in the bidding of the NIA-Casecnan Multi-
faith relied upon the authority of a partner, whether such authority is Purpose Irrigation and Power Project (NIA -CMIPP) and was awarded
real or apparent. several packages. When Manuel Dela Cruz learned that Mendoza is in
need of heavy equipment for the NIA project, he met up with him in
Tropical had every reason to believe that a partnership existed
Muñoz, Nueva Ecija, in an apartment where the latter was holding
between Munasque and Galan and no fault or error can be imputed
office under an EMPCT signboard. On April 27, 2000, Paule revoked
against it for making payments to “Galan and Associates” because as
the SPA he previously issued in favor of Mendoza; consequently, NIA
far as it was concerned, Galan was a true partner with real authority to
refused to make payment to Mendoza on her billings. Dela Cruz,
transact in behalf of the partnership it was dealing with (because in the
therefore, could not be paid for the rent of the equipment. Upon advice
first place they entered into a duly registered partnership name and
of Mendoza, Dela Cruz addressed his demands for payment of lease
secondly, Munasque endorsed the first check payment to Galan). This
rentals directly to NIA but the latter refused to acknowledge the same
is even more true in the cases of the intervenors who supplied
and informed him that it would be remitting payment only to EMPCT as
materials on credit to the partnership. Thus, it is but fair that the
the winning contractor for the project. However, without resolving
consequences of any wrongful act committed by any of the partners
Mendoza’s motion to declare Paule non-suited, and without granting
therein should be answered solidarily by all the partners and the
her opportunity to present their evidence ex parte, the trial court
partnership as a whole.
rendered its decision holding Paule liable. Mendoza was duly
However, as between Munasque and Galan, Galan must reimburse constituted as EMPCT’s agent for purposes of the NIA project and that
Munasque for the payments made to the intervenors as it was Mendoza validly contracted with Dela Cruz for the rental of heavy
satisfactorily established that Galan acted in bad faith in his dealings equipment that was to be used therefore. It found unavailing Paule's
with Munasque as a partner. assertion that Mendoza merely borrowed and used his contractor's
license in exchange for a consideration of 3% of the aggregate amount
of the project. The trial court held that through the SPA she executed, court for authority to sell all the 49 parcels of land. She then sold it to
Paule clothed Mendoza with apparent authority and held her out to the Sycip and Lee in consideration of P37K and of the vendees assuming
public as his agent; as principal, PAULE must comply with the payment of the claims filed by Yutivo Sons and Sing Yee. Later, Sycip
obligations which Mendoza contracted within the scope of her authority and Lee executed in favor of Insular Development a deed of transfer
and for his benefit. Furthermore, Paule knew of the transactions which covering the 49 parcels of land.When Goquiolay learned about the sale
Mendoza entered into since at various times when she and Dela Cruz to Sycip and Lee, he filed a petition in the intestate proceedings to set
met at the EMPCT office, Paule was present and offered no objections. aside the order of the probate court approving the sale in so far as his
The trial court declared that it would be unfair to allow Paule to enrich interest over the parcels of land sold was concerned. Probate court
himself and disown his acts at the expense of Dela Cruz 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
Issue complaint prays for the annulment of the sale in favor of Sycip and Lee
and their subsequent conveyance to Insular Development. The
Whether or not the revocation of Mendoza’s SPA valid
complaint was dismissed by the lower court hence this appeal.
ISSUE/S: Whether or not a widow or substitute become also a general
The Supreme Court held that Records show that Paule and partner or only a limited partner. Whether or not the lower court err in
Mendoza had entered into a partnership in regard to the NIA project. holding that the widow succeeded her husband Tan Sin An in the sole
Paule's contribution thereto is his contractor’s license and expertise, management of the partnership upon Tan’s death Whether or not the
while Mendoza would provide and secure the needed funds for labor, consent of the other partners was necessary to perfect the sale of the
materials and services; deal with the suppliers and sub-contractors; partnership properties to Sycip and Lee?
and in general and together with Paule, oversee the effective
implementation of the project. For this, Paule would receive as his
share three per cent (3%) of the project cost while the rest of the profits HELD:
shall go to Mendoza. There was no valid reason for Paule to revoke
Mendoza’s Spa’s. Since Mendoza took care of the funding and Kong Chai Pin became a mere general partner. By seeking authority to
sourcing of labor, materials and equipment for the project, it is only manage partnership property, Tan Sin An’s widow showed that she
logical that she controls the finances, which means that the Spa’s desired to be considered a general partner. By authorizing the widow
issued to her were necessary for the proper performance of her role in to manage partnership property (which a limited partner could not be
the partnership, and to discharge the obligations she had already authorized to do), Goqulay recognized her as such partner, and is now
contracted prior to revocation. Without the Spa’s, she could not collect in estoppel to deny her position as a general partner, with authority to
from NIA, because as far as it is concerned, EMPCT and not the administer and alienate partnership property. The articles did not
Paule-Mendoza partnership is the entity it had contracted with. Without provide that the heirs of the deceased would be merely limited
these payments from NIA, there would be no source of funds to partners; on the contrary, they expressly stipulated that in case of
complete the project and to pay off obligations incurred. As Mendoza death of either partner, “the co partnership will have to be continued”
correctly argues, an agency cannot be revoked if a bilateral contract with the heirs or assignees. It certainly could not be continued if it were
depends upon it, or if it is the means of fulfilling an obligation already to be converted from a general partnership into a limited partnership
contracted, or if a partner is appointed manager of a partnership in the since the difference between the two kinds of associations is
contract of partnership and his removal from the management is fundamental, and specially because the conversion into a limited
unjustifiable. 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.
Antonio C. Goquilay, ET AL. vs. Washington Z. Sycip, ET AL. GR
NO. L-11840, December 10, 1963

The private respondents, Eugenio Lim, et al., borrowed from
Tan Sin An and Goquiolay entered into a general commercial petitioner Santiago Syjuco, Inc., the sum of P800,000.00. The loan was
partnership under the partnership name “Tan Sin An and Antonio given on the security of a first mortgage on property registered in the
Goquiolay” for the purpose of dealing in real estate. The agreement names of said borrowers as owners in common under Transfer
lodged upon Tan Sin An the sole management of the partnership Certificates of Title Numbered 75413 and 75415 of the Registry of
affairs. The lifetime of the partnership was fixed at ten years and the Deeds of Manila. Thereafter, additional loans on the same security
Articles of Co-partnership stipulated that in the event of death of any of were obtained by the private respondents from Syjuco, so that as of
the partners before the expiration of the term, the partnership will not May 8, 1967, the aggregate of the loans stood at P2,460,000.00,
be dissolved but will be continued by the heirs or assigns of the exclusive of interest, and the security had been augmented by bringing
deceased partner. But the partnership could be dissolved upon mutual into the mortgage other property, also registered as owned pro indiviso
agreement in writing of the partners. Goquiolay executed a GPA in by the private respondents under two titles: TCT Nos. 75416 and
favor of Tan Sin An. The plaintiff partnership purchased 3 parcels of 75418 of the Manila Registry.
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 The private respondents failed to pay it despite demands
individual capacity which he assumed payment of a mortgage debt for therefore; that Syjuco consequently caused extra-judicial proceedings
P35K. A downpayment and the amortization were advanced by Yutivo for the foreclosure of the mortgage to be commenced by the Sheriff of
and Co. The two obligations were consolidated in an instrument Manila; and that the latter scheduled the auction sale of the mortgaged
executed by the partnership and Tan Sin An, whereby the entire 49 lots property on December 27, 1968. The attempt to foreclose triggered off
were mortgaged in favor of “Banco Hipotecario”Tan Sin An died leaving a legal battle that has dragged on for more than twenty years now,
his widow, Kong Chai Pin and four minor children. The widow fought through five (5) cases in the trial courts, two (2) in the Court of
subsequently became the administratrix of the estate. Repeated Appeals, and three (3) more in the Supreme Court.
demands were made by Banco Hipotecario on the partnership and on
Tan Sin An. Defendant Sing Yee, upon request of defendant Yutivo One of the complaints filed by the private respondents was filed
Sons , paid the remaining balance of the mortgage debt, the mortgage not in their individual names, but in the name of a partnership of which
was cancelled Yutivo Sons and Sing Yee filed their claim in the they themselves were the only partners: "Heirs of Hugo Lim." The
intestate proceedings of Tan Sin An for advances, interest and taxes complaint advocated the theory that the mortgage which they, together
paid in amortizing and discharging their obligations to “La Urbana” and with their mother, had individually constituted (and thereafter amended
“Banco Hipotecario.” Kong Chai Pin filed a petition with the probate during the period from 1964 to 1967) over lands standing in their
names in the Property Registry as owners pro indiviso, in fact no XPNs: Only in exceptional circumstances shall the partners’
longer belonged to them at that time, having been earlier deeded over liability be solidary in nature. Articles 1822, 1823 and 1824 of the
by them to the partnership, "Heirs of Hugo Lim," more precisely, on Civil Code provide for these exceptional conditions. It is the act of
March 30, 1959, hence, said mortgage was void because executed by a partner which caused loss or injury to a third person that makes
them without authority from the partnership. Syjuco filed an instant all other partners solidarily liable with the partnership
petition for certiorari, prohibition and mandamus. It prays in its petition
that the default judgment rendered against it by Judge Castro be FACTS:
annulled on the ground of, among others, estoppel, res judicata, and
Article 1819 of the Civil Code. Gacott purchased two (2) brand new transreceivers from Quantech
Systems Corp (QSC) through its employee Rey Medestomas. Due to
Issue: major defects, Gacott returned the items to QSC and requested for
replacement. However, despite several demands, Gacott was never
Whether or not the private respondents are estopped to avoid the given a replacement or a refund. Thus, Gacott filed a complaint for
aforementioned mortgage. damages. Summons was served upon QSC and Medestomas,
afterwhich they filed their Answer.
RTC’s decision ordered the defendants to jointly and severally pay
Yes. The Supreme Court ruled that the respondent partnership was plaintiff. The decision became final as QSC and Medestomas did not
inescapably chargeable with knowledge of the mortgage executed by interpose an appeal. Gacott then secured a Writ of Execution. During
all the partners thereof, its silence and failure to impugn said mortgage the execution stage, Gacott learned that QSC was not a corporation,
within a reasonable time, let alone a space of more than 17 years, but was in fact a general partnership. In the articles of partnership, Guy
brought into play the doctrine of estoppel to preclude any attempt to was appointed as General Manager of QSC. The sheriff attached
avoid the mortgage as allegedly unauthorized. Equally or even more Guy’s vehicle. Guy filed his Motion to Lift Attachment Upon Personalty,
preclusive of the respondent partnership’s claim to the mortgaged arguing that he was not a judgment debtor and, therefore, his vehicle
property is the last paragraph of Art. 1819 of the Civil Code, which could not be attached. On June 28, 2009, the RTC issued an order
contemplates a situation similar to the case at bar. It states that ‘where denying Guy’s motion and his subsequent motion for reconsideration.
the title to real property is in the names of all the partners, a RTC’s ratio: All partners are liable solidarily with the partnership for
conveyance executed by the entire partners pass all their rights in such everything chargeable to the partnership under Article 1822 and 1823.
property. Consequently, those members' acts, declarations and Guy to seek relief before the CA. The CA dismissed Guy’s appeal for
omissions cannot be deemed to be simply the individual acts of said the same reasons given by the trial court. Guy filed a motion for
members, but in fact and in law, those of the partnership. Finally, the reconsideration but it was denied by the CA.
Supreme Court emphasizes that the right of the private respondents to
assert the existence of the partnership could have been stressed at the Guy arguments:
time they instituted their first action, considering that the actions
involved property supposedly belonging to it, and therefore, the 1. That jurisdiction over the person of the partnership (QSC)
partnership was the real party in interest. What was done by them was was not acquired because the summons was never served
to split their cause of action in violation of the well-known rule that only upon it or through any of its authorized officer;
one suit may be instituted for a single cause of action. 2. Article 1816 of the Civil Code which states that the liability of
the partners to the partnership is merely joint and subsidiary
TITLE OF THE CASE: MICHAEL C. GUY, Petitioner, vs. ATTY. in nature. And he is not solidarily liable with the partnership
GLENN C. GACOTT, Respondent. because the solidary liability of the partners under Articles
1822, 1823 and 1824 of the Civil Code only applies when it
G.R. No. 206147 stemmed from the act of a partner. In this case, the alleged
lapses were not attributable to any of the partners.
DATE OF PROMULGATION: (January 13, 2016)
ISSUE 1a: WON the service of summons to QSC was flawed.
PONENTE: Mendoza
HELD: YES, however, voluntary appearance cured the
NATURE OF THE CASE: Petition for Review on Certiorari under Rule defect.
CASE BRIEF: Before this Court is a petition for review on certiorari
Under Section 11, Rule 14 of the 1997 Revised
under Rule 45 of the Rules of Court filed by petitioner Michael C. Guy
Rules of Civil Procedure, when the defendant is a
(Guy), assailing the June 25, 2012 Decision1 and the March 5, 2013
corporation, partnership or association organized
Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 94816,
under the laws of the Philippines with a juridical
which affirmed the June 28, 2009 and February 19, 2010 Orders of the
personality, the service of summons may be made
Regional Trial Court, Branch 52, Puerto Princesa City, Palawan (RTC),
on the president, managing partner, general
in Civil Case No. 3108, a case for damages. The assailed RTC orders
manager, corporate secretary, treasurer, or in-
denied Guy's Motion to Lift Attachment Upon Personalty on the ground
house counsel.
that he was not a judgment debtor.
Jurisprudence is replete with pronouncements that
such provision provides an exclusive
ACTIONS IN THE LOWER COURTS: enumeration of the persons authorized to receive
summons for juridical entities.
SC: Reversed and set aside
In this case, QSC was not served with the
CA: Affirmed the RTC’s denial of the order summons through any of the enumerated
authorized persons to receive such, namely:
RTC: Denied Guy's Motion to Lift Attachment Upon Personalty president, managing partner, general manager,
corporate secretary, treasurer or in-house counsel.
DOCTRINE LAID DOWN (if any): Service of summons upon persons other than
those officers enumerated in Section 11 is
1. Notice to any partner operates as notice to or knowledge to the invalid. Even substantial compliance is not
partnership only. Evidently, it does not provide for the reverse sufficient service of summons. Nevertheless, while
situation, or that notice to the partnership is notice to the proper service of summons is necessary to vest
partners. the court jurisdiction over the defendant, the same
is merely procedural in nature and the lack of or
2. With regard to partnerships, ordinarily, the liability of the defect in the service of summons may be cured by
partners is not solidary. the defendant’s subsequent voluntary submission
to the court’s jurisdiction through his filing a contrast, a solidary liability makes a debtor liable for the
responsive pleading such as an answer. In this payment of the entire debt. In the same vein, Article 1207
case, it is not disputed that QSC filed its Answer does not presume solidary liability unless: 1) the obligation
despite the defective summons. Thus, jurisdiction expressly so states; or 2) the law or nature
over its person was acquired through voluntary requires solidarity. With regard to partnerships, ordinarily,
appearance. the liability of the partners is not solidary. The joint liability of
the partners is a defense that can be raised by a partner
ISSUE 1b: WON whether the trial court’s jurisdiction over QSC impleaded in a complaint against the partnership.
extended to the person of Guy insofar as holding him solidarily liable
with the partnership. In other words, only in exceptional circumstances shall the
partners’ liability be solidary in nature. Articles 1822, 1823
HELD: NO. and 1824 of the Civil Code provide for these exceptional
conditions, to wit:
Article 1822. Where, by any wrongful act or
Although a partnership is based on delectus personae or omission of any partner acting in the ordinary
mutual agency, whereby any partner can generally represent course of the business of the partnership or with
the partnership in its business affairs, it is non sequitur that a the authority of his co-partners, loss or injury is
suit against the partnership is necessarily a suit impleading caused to any person, not being a partner in the
each and every partner. It must be remembered that a partnership, or any penalty is incurred, the
partnership is a juridical entity that has a distinct and partnership is liable therefor to the same extent as
separate personality from the persons composing it. the partner so acting or omitting to act.
A decision rendered on a complaint in a civil action or Article 1823. The partnership is bound to make
proceeding does not bind or prejudice a person not good the loss:
impleaded therein, for no person shall be adversely affected
by the outcome of a civil action or proceeding in which he is (1) Where one partner acting within the
not a party. scope of his apparent authority receives
money or property of a third person and
Here, Guy was never made a party to the case. He did not misapplies it; and
have any participation in the entire proceeding until his
vehicle was levied upon and he suddenly became QSC’s
“co-defendant debtor” during the judgment execution stage.
It is a basic principle of law that money judgments are (2) Where the partnership in the course
enforceable only against the property incontrovertibly of its business receives money or
belonging to the judgment debtor. property of a third person and the
money or property so received is
ISSUE 2a: misapplied by any partner while it is in
the custody of the partnership.
WON a partners’ liability is subsidiary and generally joint and
WON immediate levy upon the property of a partner can be
Article 1824. All partners are liable solidarily with
HELD. the partnership for everything chargeable to the
partnership under Articles 1822 and 1823.
NO partner’s liability is not subsidiary and generally joint and
the partner’s property cannot be immediately levied. In essence, these provisions articulate that it is the act of a
partner which caused loss or injury to a third person that
makes all other partners solidarily liable with the partnership
because of the words "any wrongful act or omission of any
SC RATIO: partner acting in the ordinary course of the business," "one
partner acting within the scope of his apparent
Article 1816. All partners, including industrial ones, shall be
authority" and "misapplied by any partner while it is in the
liable pro rata with all their property and after all the
custody of the partnership." The obligation is solidary
partnership assets have been exhausted, for the
because the law protects the third person, who in good faith
contracts which may be entered into in the name and for the
relied upon the authority of a partner, whether such authority
account of the partnership, under its signature and by a
is real or apparent.40
person authorized to act for the partnership. However, any
partner may enter into a separate obligation to perform a In the case at bench, it was not shown that Guy or the other
partnership contract. partners did a wrongful act or misapplied the money or
property he or the partnership received from Gacott. A third
This provision clearly states that, first, the partners’
person who transacted with said partnership can hold the
obligation with respect to the partnership liabilities is
partners solidarily liable for the whole obligation if the case
subsidiary in nature. To say that one’s liability is subsidiary
of the third person falls under Articles 1822 or
means that it merely becomes secondary and only arises if
1823.41 Gacott’s claim stemmed from the alleged defective
the one primarily liable fails to sufficiently satisfy the
transreceivers he bought from QSC, through the latter's
employee, Medestomas. It was for a breach of warranty in a
In this case, Guy’s liability would only arise after the contractual obligation entered into in the name and for the
properties of QSC would have been exhausted. The records, account of QSC, not due to the acts of any of the partners.
however, miserably failed to show that the partnership’s For said reason, it is the general rule under Article 1816 that
properties were exhausted. Clearly, no genuine efforts were governs the joint liability of such breach, and not the
made to locate the properties of QSC that could have been exceptions under Articles 1822 to 1824. Thus, it was
attached to satisfy the judgment − contrary to the clear improper to hold Guy solidarily liable for the obligation of the
mandate of Article 1816. partnership.

Second, Article 1816 provides that the partners’ obligation to ISSUE 2b:
third persons with respect to the partnership liability is pro
WON it is necessary to implead a partner in order to be
rata or joint. Liability is joint when a debtor is liable only for
bound by the partnership liability.
the payment of only a proportionate part of the debt. In
HELD: YES. It is necessary to implead a partner. Ruling:

SC RATIO: It does not appear that the withdrawal of the partner was not
published in the newspapers. The appellees and the public in general
Under Article 1821, notice to any partner of any matter had a right to expect that whatever, credit they extended to the
relating to partnership affairs, and the knowledge of the remaining partners could be enforced against the properties of the
partner acting in the particular matter, acquired while a partnership. The withdrawing partner cannot be relieved from her
partner or then present to his mind, and the knowledge of liability to the creditor of the partnership due to her own fault by not
any other partner who reasonably could and should have insisting on the liquidation of the partnership. Though she had acted in
communicated it to the acting partner, operate as notice to good faith, the appellees also acted in good faith in extending credit to
or knowledge of the partnership, except in the case of the partnership. Where one of two innocent persons must suffer, that
fraud on the partnership, committed by or with the consent of person who gave occasion for the damages to be caused must bear
that partner. the consequences. Technically, the partnership was dissolved by the
withdrawal of one of the partners. Through her acts of entering into a
A careful reading of the provision shows that notice to any memorandum with the remaining partners misled the creditors that
partner operates as notice to or knowledge to the they were doing business with the partnership. Hence, from the order
partnership only. Evidently, it does not provide for the of the lower court ordering the withdrawing partner to pay the plaintiffs,
reverse situation, or that notice to the partnership is notice to she is thus entitled for reimbursement from the remaining partners.
the partners.

SUPREME COURT RULING: WHEREFORE, the petition G.R. No. L-23232 June 17, 1970
is GRANTED. The June 25, 2012 Decision and the March 5, 2013
Resolution of the Court of Appeals in CA-G.R. CV No. 94816 are VICENTE DIRA, plaintiff-appellant,
hereby REVERSED and SET ASIDE. Accordingly, the Regional Trial vs.
Court, Branch 52, Puerto Princesa City, is ORDERED TO PABLO D. TAÑEGA, defendant-appellee.
RELEASE Michael C. Guy's Suzuki Grand Vitara subject of the Notice
of Levy/ Attachment upon Personalty.
Direct appeal by plaintiff-appellant Vicente Dira from a decision of the
Court of First Instance of Leyte, dated February 13, 1964, dismissing,
on the grounds of prescription and laches, the complaint in its Civil
Yu v. NLRC GR No. 97212, June 30, 1993 Case No. 2886, an action for accounting of a share in an alleged
partnership, payment of salaries and other money claims, without
Facts: pronouncement as to costs.
Benjamin Yu used to be the Assistant General Manager of
Jade Mountain, a partnership engaged in marble quarrying and export The material facts as found by the trial judge are as follows:
business. The majority of the founding partners sold their interests in
said partnership to Willy Co and Emmanuel Zapanta without Yu’s
That sometime in March 1946, plaintiff and
knowledge. Said new partnership continued operating under the same
defendant together with Francisco Pagulayan
name and continued the business’s operations. However, it transferred
entered into a partnership for the purpose of
its main office from Makati to Mandaluyong. Said new partnership did
engaging in the printing business in the City of
not anymore availed of the services of Yu. Thus, he filed a complaint
Tacloban and that the terms of the said
for illegal dismissal, recovery of unpaid wages and damages.
partnership was for a period of five (5) years from
Ruling : the organization thereof; that this fact was
admitted by the defendant in his answer; that, in
The legal effect of the changes in the membership of the the articles of co-partnership, the plaintiff was
partnership was the dissolution of the old partnership which had hired designated as President and his salary as such
Yu in 1984 and the emergence of a new firm composed of Willy Co was P150.00 a month, that, during his incumbency
and Emmanuel Zapanta in 1987. The new partnership simply took over as President until the expiration of the period, the
the business enterprise owned by the preceeding partnership, and defendant who was the manager-treasurer of the
continued using the old name of Jade Mountain Products Company partnership never paid him his salary; that at the
Limited, without winding up the business affairs of the old partnership, time the plaintiff was also the editor of the Leyte-
paying off its debts, liquidating and distributing its net assets, and then Samar Tribune and in accordance with their
re-assembling the said assets or most of them and opening a new Articles of Partnership established the said
business enterprise. Not only the retiring partners but also the new periodicals, the plaintiff as editor was to receive a
partnership itself which continued the business of the old, dissolved, salary of P100.00 a month; that this salary and the
one, are liable for the debts of the preceding partnership. accrued amount therein was not also paid by the
defendant, who was the business manager of the
Singsong v. Isabela Sawmill G.R. No. L-27343, February 28, 1979, enterprise; that the capital of the said partnership
Fernandez, J. was P5,000.00 equally divided among the
partners; that this amount was used by the
Facts: partnership to purchase printing equipment from
the 64th Naval Construction Battalion, U.S.N. and
In 1951, defendants entered into a contract of partnership which printing equipment are in the possession of
under the firm name “Isabela Sawmill”. In 1956 the plaintiff sold to the the defendant up to now; that, before the purchase
partnership a motor truck and two tractors. The partnership was not by the three of them of the printing equipment, the
able to pay their whole balance even after demand was made. One of plaintiff obtained a personal loan from Francisco
the partners withdrew from the partnership but instead of terminating Pagulayan in the amount of P1,100.00 and he
the said partnership it was continued by the two remaining partners pledged his share in the said equipment to pay the
under the same firm name. Plaintiffs also seek the annulment of the same; that upon the request of the plaintiff, the
assignment of right with chattel mortgage entered into by the defendant paid the said amount to Francisco
withdrawing partner and the remaining partners. The appellants Pagulayan and this time plaintiff used his share in
contend that the chattel mortgage may no longer be nullified because it the partnership as guarantee for the defendant's
had been judicially approved and said chattel mortgage had been payment; that on June 3, 1946, Francisco
judicially foreclosed. Pagulayan sold his share of the partnership to the
defendant and who by virtue thereof became 2/3
Issue: Whether the withdrawal of one of the partners dissolved the owner of the business; that the defendant
partnership. presented Exhibit "5" which purports to be a letter
of demand to plaintiff asking him to settle his P1,100 he had requested appellee to pay to Pagulayan, as security for
account, but due to his failure to do so, he the payment of which, he had pledge his said share to appellee; that
(defendant) assumed full ownership of the since 1947, the place of the business was transferred by him, he had
business, he changed the name from the Leyte- its name changed to Tañega Press and he had always been operating
Samar Press to Tañega Press; that from the time openly and publicly the said printing business from 1947 without any
the partnership was organized and went into intervention or participation of appellant and without said appellant
business, the defendant as Manager-Treasurer making any claim of any kind in connection therewith until the filing of
never rendered any accounting of the business the complaint on February 10, 1961, hence, all the claims and causes
operations, or paid the share of the plaintiff in the of action of the appellant had already prescribed.
profits; and that the present action of partnership
accounting and sum of money was only filed in
Upon the facts found by His Honor quoted above, We agree with His
Court by the plaintiff against the defendant on
Honor in upholding appellee's defense of prescription. From any angle
February 10, 1961, that is after a lapse of 9 years,
that this case may be viewed, it is obvious that appellant's causes of
10 months and 11 days after the expiration of the
action barred by the statute of limitations.
contract of partnership, Exhibit 'A' on February 28,
1951. (Pp. 49-51, R. on A.)
Appellee took exclusive control of the partnership affairs since 1947,
publicly and openly and after having notified appellant that he would do
xxx xxx xxx
so should the latter fail to comply with his letter of demand, Exhibit "5",
dated April 19, 1947. Nowhere in the facts found by the trial judge does
It is undisputed that the defendant had been in the it appear that appellant did anything about said demand or that he ever
exclusive possession of all the printing equipment contested the action of the appellee of transferring the place of
since 1946. Plaintiff himself admitted that the business and changing its name to Tañega Press. There is nothing to
defendant conducted himself as absolute owner of show that he had taken any move for the payment to him of his unpaid
the printing equipment. He testified that defendant salaries both as President of the business and as editor of the Leyte-
changed location of the printing press which place Samar Tribune.
he (Dira) did not know. According to defendant
himself, he believed in good faith and acted
Under these circumstances, it would be giving premium to inaction and
accordingly since 1947 that he was the sole owner
indifference to still hold that appellant could sue appellee, almost
of the printing press, after the refusal of the
fourteen years after the latter, with prior notice to the former, had
plaintiff to pay his indebtedness of P1,100.00 to
openly and publicly taken over exclusive control of the partnership
him. From the above facts, it can be deduced that
business as if it were his own and only a little short of ten years after
defendant had acquired ownership of the printing
the expiration of the stipulated term of partnership. His claims for
equipment and accessories in question as Article
salaries accrued after each month they were unpaid. Whether we
1132 of the Civil Code provides that the ownership
assume that these claims lost basis in 1947 when appellee took over
of movables prescribes through uninterrupted
the businesses of the printing press and the newspaper or in 1951,
possession of eight years, without need of any
upon the expiration of the term of the agreements, by all standards,
condition. Surely 1946 or 1947 to 1961, more than
these claims had already prescribed when the present suit was filed.
four and/or eight years had elapsed.
On the other hand, under Article 1153 of the Civil Code, a demand for
"accounting runs from the day the persons who should render the
Plaintiff stated that defendant ignored him and did same ceases in their functions," which in this case as in 1947, when
not give him any participation, since 1947, in the the appellee began to operate the businesses as exclusively his own.
business, yet he did not demand an immediate Again, inasmuch as the longest period in the chapter on prescription of
accounting of the business. For his failure to the Civil Code is ten years, it is evident that appellant's action for
demand accounting five years before February 10, accounting is already barred. The same is true with the claim for
1961, from the defendant, he had forfeited his right rentals and recovery of proportional ownership of the printing
by prescription. In support, Article 1153 of the Civil equipment and accessories, as to which, appellant's period to bring his
Code, among other things, provides that the actions accrued also in 1947, fourteen years before this suit was filed.
period for prescription of actions to demand
accounting runs from the day the persons who
As a matter of fact, appellant impliedly admits the correctness of this
should render same cease in their functions, and
position, since in this appeal his only contention is that both as his
Article 1149 of the Civil Code provides that "all
partner and as pledgee of his share, the appellee became his trustee,
other actions whose periods are not fixed in this
in legal contemplation, or that, in the eyes of the law, a relationship of
Code or in other laws within five years from the
trusteeship arose between him and appellee, hence his actions against
time the right of action accrues."
him are imprescriptible. Appellant's pose is without merit. In bad faith or
in good faith, after eight years of actual adverse possession, appellee
It is an incontrovertible fact that the plaintiff had acquired clear ownership of appellant's share by acquisitive
filed this action against the defendant on February prescription. According to Art. 1132 of the Civil Code, "the ownership of
10, 1961, nearly ten years after the expiration of personal property also prescribes through uninterrupted possession for
the contract of partnership between them on eight years, without need of any other condition." So, appellee became
March, 1951. ... (Pp, 56-57, R. on A.) undisputed owner of appellant's share since 1955 or six years before
this action was filed and since said year the allegation of trusteeship
had already lost any basis whatsoever. Under Article 1140 of same
In his complaint, plaintiff-appellant prayed for payment of his salaries
Code, "Actions to recover movables shall prescribe eight years from
not only as President of the partnership but also as editor of the Leyte-
the time the possession thereof is lost, unless the possessor has
Samar Tribune which admittedly he had not been paid from the start,
acquired the ownership by prescription for a less period" or for an
for accounting of the partnership affairs, for payment of his alleged
equal period, in which latter case, the right to sue prescribes together
share in the rental value of the printing equipment and accessories
with the title.
used by the partnership, of which he also claimed part-ownership
proportionally to his share in the partnership, and for damages,
attorney's fees and costs. The defendant-appellee admitted practically Equally untenable is appellant's reliance on the theory that as a
all the material allegations of the complaint about the organization of member of the partnership, appellee continued as a trustee even after
the partnership and the terms thereof as well as the non-payment of 1947, when said appellee took the business for himself and even after
the salaries claimed by appellant, but, in defense, he alleged that the 1951, the expiry date of the agreements. The provisions of Article 1785
whole business of the partnership became his alone in 1947 after he to the effect that: .
had acquired by purchase the share of Francisco Pagulayan and had
taken over the share of appellant, since the latter failed to pay the
When a partnership for a fixed term or particular six (6) years while the right to demand an accounting for a partner’s
undertaking is continued after the termination of interest as against the person continuing the business accrues at the
such term or particular undertaking without any date of dissolution, in the absence of any contrary agreement.
express agreement, the rights and duties of the Considering that the death of a partner results in the dissolution of the
partners remain the same as they were at such partnership, in this case, it was after Jacinto’s death that Chua as the
termination, so far as is consistent with a surviving partner had the right to an account of his interest as against
partnership at will. Lilibeth. It bears stressing that while Jacinto’s death dissolved the
partnership, the dissolution did not immediately terminate the
partnership. The Civil Code expressly provides that upon dissolution,
A continuation of the business by the partners or
the partnership continues and its legal personality is retained until the
such of them as habitually acted therein during the
complete winding up of its business, culminating in its termination.
term, without any settlement or liquidation of the
partnership affairs, is prima facie evidence of a
continuation of the partnership.

and Article 1829 thus: Lilibeth Sunga-Chan vs Lamberto Chua

In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership
On dissolution the partnership is not terminated,
for the sale and distribution of Shellane LPGs. Their business was very
but continues until the winding up of partnership
profitable but in 1989 Jacinto died. Upon Jacinto’s death, his daughter
affairs is completed.
Lilibeth took over the business as well as the business assets. Chua
then demanded for an accounting but Lilibeth kept on evading him. In
are clearly inapplicable here, for the simple reason 1992 however, Lilibeth gave Chua P200k. She said that the same
that those articles are premised on a continuation represents a partial payment; that the rest will come after she finally
of the partnership as such, which is not our case, made an accounting. She never made an accounting so in 1992, Chua
because here appellee repudiated the partnership filed a complaint for “Winding Up of Partnership Affairs, Accounting,
as early as 1947 with either actual or presumed Appraisal and Recovery of Shares and Damages with Writ of
knowledge of the appellant. By analogy, at least, Preliminary Attachment” against Lilibeth.
with the rule as to a co-ownership, which a
partnership essentially is, prescription does not Lilibeth in her defense argued among others that Chua’s action has
run in favor of any of the co-owners only as long prescribed.
as the co-owner claiming against the others ISSUE: Whether or not Chua’s claim is barred by prescription.
"expressly or impliedly recognizes the co-
ownership," a circumstance irreconcilably HELD: No. The action for accounting filed by Chua three (3) years
inconsistent with appellee's conduct of transferring after Jacinto’s death was well within the prescribed period. The Civil
the place of business, changing its name and not Code provides that an action to enforce an oral contract prescribes in
paying appellant any of the salaries agreed upon six (6) years while the right to demand an accounting for a partner’s
in the articles of partnership. interest as against the person continuing the business accrues at the
date of dissolution, in the absence of any contrary agreement.
Considering that the death of a partner results in the dissolution of the
What is more, this case may well be decided on the basis of laches as partnership, in this case, it was after Jacinto’s death that Chua as the
was done by the trial judge. In other words, even if prescription were surviving partner had the right to an account of his interest as against
not properly applicable, We could still hold that under the facts proven Lilibeth. It bears stressing that while Jacinto’s death dissolved the
in the record and found by the lower court, appellant has been guilty of partnership, the dissolution did not immediately terminate the
laches and his stale demands may not gain the ears of the court. We partnership. The Civil Code expressly provides that upon dissolution,
note, however, that in his answer, the appellee limit his defense the partnership continues and its legal personality is retained until the
specifically to prescription which is a separate defense from laches. complete winding up of its business, culminating in its termination.
Not that such particularity of appellee's defense is fatal, because, after
all, it does not appear that the evidence proving laches were objected
to by appellant, (Section 5, Rule 10, Rules of Court) but We do not feel
that in this case We need to go beyond the specific defense expressly DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE
invoked by the appellant. This is mentioned only, lest appellant may APPELLATE COURT and LEUNG YIU, respondents.
still entertain any hope regarding this case.
G.R. No. 70926 January 31, 1989

WHEREFORE, the judgment of the lower court is affirmed, with costs

against appellant. FACTS:

Lilibeth Sunga-Chan vs Lamberto Chua The petitioner asks for the reversal of the decision of the then
Intermediate Appellate Court in AC-G.R. No. CV-00881 which affirmed
In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership the decision of the then Court of First Instance of Manila, Branch II in
for the sale and distribution of Shellane LPGs. Their business was very Civil Case No. 116725 declaring private respondent Leung Yiu a
profitable but in 1989 Jacinto died. Upon Jacinto’s death, his daughter partner of petitioner Dan Fue Leung in the business of Sun Wah
Lilibeth took over the business as well as the business assets. Chua Panciteria and ordering the petitioner to pay to the private respondent
then demanded for an accounting but Lilibeth kept on evading him. In his share in the annual profits of the said restaurant.
1992 however, Lilibeth gave Chua P200k. She said that the same
represents a partial payment; that the rest will come after she finally
made an accounting. She never made an accounting so in 1992, Chua This case originated from a complaint filed by respondent Leung Yiu
filed a complaint for “Winding Up of Partnership Affairs, Accounting, with the then Court of First Instance of Manila, Branch II to recover the
Appraisal and Recovery of Shares and Damages with Writ of sum equivalent to twenty-two percent (22%) of the annual profits
Preliminary Attachment” against Lilibeth. derived from the operation of Sun Wah Panciteria since October, 1955
from petitioner Dan Fue Leung.
Lilibeth in her defense argued among others that Chua’s action has
The Sun Wah Panciteria, a restaurant, located at Florentino Torres
ISSUE: Whether or not Chua’s claim is barred by prescription. Street, Sta. Cruz, Manila, was established sometime in October, 1955.
It was registered as a single proprietorship and its licenses and permits
HELD: No. The action for accounting filed by Chua three (3) years were issued to and in favor of petitioner Dan Fue Leung as the sole
after Jacinto’s death was well within the prescribed period. The Civil proprietor. Respondent Leung Yiu adduced evidence during the trial of
Code provides that an action to enforce an oral contract prescribes in
the case to show that Sun Wah Panciteria was actually a partnership Considering the facts of this case, the Court may decree a dissolution
and that he was one of the partners having contributed P4,000.00 to its of the partnership under Article 1831 of the Civil Code which, in part,
initial establishment. provides:

The private respondents evidence is summarized as follows: Art. 1831. On application by or for a partner the
court shall decree a dissolution whenever:
About the time the Sun Wah Panciteria started to become operational,
the private respondent gave P4,000.00 as his contribution to the xxx xxx xxx
partnership. This is evidenced by a receipt wherein the petitioner
acknowledged his acceptance of the P4,000.00 by affixing his
(3) A partner has been guilty of such conduct as
signature thereto. Furthermore, the private respondent received from
tends to affect prejudicially the carrying on of the
the petitioner the amount of P12,000.00 covered by the latter's
Equitable Banking Corporation Check from the profits of the operation
of the restaurant for the year 1974
(4) A partner willfully or persistently commits a
breach of the partnership agreement, or otherwise
The petitioner denied having received from the private respondent the
so conducts himself in matters relating to the
amount of P4,000.00. He contested and impugned the genuineness of
partnership business that it is not reasonably
the receipt. His evidence is summarized as follows:
practicable to carry on the business in partnership
with him;
The petitioner did not receive any contribution at the time he started
the Sun Wah Panciteria. He used his savings from his salaries as an
xxx xxx xxx
employee at Camp Stotsenberg in Clark Field and later as waiter at the
Toho Restaurant amounting to a little more than P2,000.00 as capital in
establishing Sun Wah Panciteria. Petitioner presented various (6) Other circumstances render a dissolution
government licenses and permits showing the Sun Wah Panciteria was equitable.
and still is a single proprietorship solely owned and operated by
himself alone. Fue Leung also flatly denied having issued to the private
There shall be a liquidation and winding up of partnership affairs,
respondent the receipt (Exhibit G) and the Equitable Banking
return of capital, and other incidents of dissolution because the
Corporation's Check No. 13389470 B in the amount of P12,000.00
continuation of the partnership has become inequitable.
(Exhibit B).

DR. SIMEON S. CLARIDADES, plaintiff and appellant,

ISSUE: WON Private respondent is a partner of the petitioner in
Sun Wah Panciteria?
and appellees,
HELD: GUILLERMO REYES, intervenor and appellant,
ARMANDO H. ASUNCION, intervenor and appellee,
ALFREDO J. ZULUETA and YAP LEDING, intervenors and appellees.
The private respondent is a partner of the petitioner in Sun Wah
Panciteria. The requisites of a partnership which are — 1) two or more
persons bind themselves to contribute money, property, or industry to a CONCEPCION, J.:
common fund; and 2) intention on the part of the partners to divide the
profits among themselves (Article 1767, Civil Code; Yulo v. Yang Chiao
Appeal from an order of dismissal of the Court of First Instance of
Cheng, 106 Phil. 110)-have been established. As stated by the
Bulacan based upon the ground that venue had been improperly laid.
respondent, a partner shares not only in profits but also in the losses of
the firm. If excellent relations exist among the partners at the start of
business and all the partners are more interested in seeing the firm Petitioner, Dr. Simeon S. Claridades brought this action against
grow rather than get immediate returns, a deferment of sharing in the Vicente C. Mercader and Perfecto Fernandez for the dissolution of a
profits is perfectly plausible. It would be incorrect to state that if a partnership allegedly existing between them and an accounting of the
partner does not assert his rights anytime within ten years from the operation of the partnership, particularly a fishpond located in Sta.
start of operations, such rights are irretrievably lost. The private Cruz, Marinduque, which was the main asset of the partnership, from
respondent's cause of action is premised upon the failure of the September 1954, as well as to recover moral and exemplary damages,
petitioner to give him the agreed profits in the operation of Sun Wah in addition to attorney's fees and costs.
Panciteria. In effect the private respondent was asking for an
accounting of his interests in the partnership.
In their answer the defendants admitted the existence of the
partnership and alleged that its operation had been so far
It is Article 1842 of the Civil Code in conjunction with Articles 1144 and unproductive. By way of special defense, they alleged, also, that there
1155 which is applicable. Article 1842 states: is an impending auction sale of said fishpond due to delinquency in the
payment of taxes owing to lack of funds and plaintiff's failure to
contribute what is due from him. Defendants, likewise, set up a
The right to an account of his interest shall accrue
counter-claim for damages, by reason of the institution of this action,
to any partner, or his legal representative as
and for attorney's fees and costs.
against the winding up partners or the surviving
partners or the person or partnership continuing
the business, at the date of dissolution, in the Subsequently, Guillermo Reyes was allowed to intervene for the
absence or any agreement to the contrary. purpose of recovering a sum of money allegedly due him for services
rendered as foreman of said fishpond, plus damages. Later, one
Armando Asuncion succeeded in intervening as the alleged assignee
Regarding the prescriptive period within which the private respondent
of the interest of defendant. Mercader in said partnership and fishpond.
may demand an accounting, Articles 1806, 1807, and 1809 show that
Thereafter, on plaintiff's motion, the lower court appointed a receiver of
the right to demand an accounting exists as long as the partnership
the fishpond. Upon the other hand, Alfredo Zulueta and his wife Yap
exists. Prescription begins to run only upon the dissolution of the
Leding sought permission to intervene, still later, alleging that they are
partnership when the final accounting is done.
the owners of said fishpond, having bought one-half (½)of it from
Benito Regencia, who, in turn, had acquired it from Asuncion, who had
purchased the fishpond from defendant Mercader, and the other half
having been assigned to him directly by Asuncion.
Despite plaintiff's opposition thereto, said permission was granted in an en banc reversed the decision and was affirmed by the Court of
order dated February 8, 1962, which, likewise gave the Zuluetas ten Appeals. Hence, this petition.
(10) days within which to file such pleading as they may deem
necessary for the protection of their rights. Soon thereafter, or on ISSUE:
February 12, 1962, the Zuluetas filed a motion to dismiss upon the
ground that the complaint states no cause of action; that venue has Whether or not the Court of Appeals has erred in holding that
been improperly laid; and that plaintiff complaint is moot and academic. the partnership is a partnership at will and whether or not the Court of
Acting upon the motion, on March 2, 1962, the lower court granted the Appeals has erred in holding that the withdrawal of private respondent
same upon the ground of improper venue. A reconsideration of this dissolved the partnership regardless of his good or bad faith
order having been denied, plaintiff and intervenor Reyes have
interposed the present appeal. HELD:

No. The SC upheld the ruling of the CA regarding the nature

The only question for determination before us is whether or not this of the partnership. The SC further stated that a partnership that does
action should have been instituted, not in the Court of First Instance of not fix its term is a partnership at will. The birth and life of a partnership
Bulacan, but in that of Marinduque, where the aforementioned fishpond at will is predicated on the mutual desire and consent of the partners.
is located. The lower court answered this question in the affirmative, The right to choose with whom a person wishes to associate himself is
upon the ground that the subject matter of this case is the possessor of the very foundation and essence of that partnership. Its continued
said fishpond, because plaintiff prays in the complaint that the assets existence is, in turn, dependent on the constancy of that mutual
of the partnership, including said fishpond be sold, that the proceeds of resolve, along with each partner's capability to give it, and the absence
the sale be applied to the payment of the debts of the partnership, and of a cause for dissolution provided by the law itself. Verily, any one of
that the residue be distributed equally among the partners; that, as the partners may, at his sole pleasure, dictate a dissolution of the
intervenor, Asuncion claims to have an interest in said fishpond; that partnership at will. He must, however, act in good faith, not that the
the same has been placed under a receivership; and that the Zuluetas attendance of bad faith can prevent the dissolution of the partnership
claim to be the exclusive owners of the fishpond aforementioned. but that it can result in a liability for damages.

Primelink Properties and Development Corporation vs Ma. Clarita

The conclusion drawn from these premises is erroneous. Plaintiff's Lazatin-Magat
complaint merely seeks the liquidation of his partnership with
defendants Fernandez and Mercader. This is obviously a personal Business Organization – Partnership, Agency, Trust – Dissolution and
action, which may be brought in the place of residence of either the Winding Up – Joint Venture Agreement – Rights of Innocent Party
plaintiff or the defendants. Since plaintiff is a resident of Bulacan, he
had the right to bring the action in the court of first instance of that In 1994, Primelink Properties and the Lazatin siblings entered into a
province.1 What is more, although defendants Fernandez and joint venture agreement whereby the Lazatins shall contribute a huge
Mercader reside in Marinduque, they did not object to the venue. In parcel of land and Primelink shall develop the same into a subdivision.
other words, they waived whatever rights they had, if any, to question For 4 years however, Primelink failed to develop the said land. So in
it.2 1998, the Lazatins filed a complaint to rescind the joint venture
agreement with prayer for preliminary injunction. In said case,
Primelink was declared in default or failing to file an answer and for
The fact that plaintiff prays for the sale of the assets of the partnership, asking multiple motions for extension. The trial court eventually ruled in
including the fishpond in question, did not change the nature or favor of the Lazatins and it ordered Primelink to return the possession
character of action, such sale being merely a necessary incident of the of said land to the Lazatins as well as some improvements which
liquidation of the partnership, which should precede and/or is part of its Primelink had so far over the property without the Lazatins paying for
process of dissolution. Neither plaintiff's complaint nor the answer filed said improvements. This decision was affirmed by the Court of
by defendants Fernandez and Mercader questioned the title to said Appeals. Primelink is now assailing the order; that turning over
property or the possession thereof. improvements to the Lazatins without reimbursement is unjust; that the
Lazatins did not ask the properties to be placed under their possession
but they merely asked for rescission.
Again, the situation was not changed materially by the Intervention
either of Asuncion or of the Zuluetas, for, as alleged successors to the ISSUE: Whether or not the improvements made by Primelink should
interest Mercader in the fishpond, they, at best, stepped into his shoes. also be turned over under the possession of the Lazatins.
Again, the nature of an action is determined by the allegations of the
complaint.3 At any rate, since the venue was properly laid when the HELD: Yes. In the first place, even though the Lazatins did specifically
complaint was filed, said venue cannot, subsequently, become pray for possession the same (placing of improvements under their
improper in consequence of issues later raised by any of the possession) is incidental in the relief they prayed for. They are
intervenors. The court having legally acquired authority to hear and therefore entitled possession over the parcel of land plus the
decide the case, it can not be divested of that authority by said improvements made thereon made by Primelink.
intervenors. "An intervention cannot alter the nature of the action and
In this jurisdiction, joint ventures are governed by the laws of
the issues joined by the original parties thereto."4
partnership. Under the laws of partnership, when a partnership is
dissolved, as in this case when the trial court rescinded the joint
Wherefore, the order appealed from should be as it is hereby set aside venture agreement, the innocent party has the right to wind up the
and the case remanded to the lower court for further proceedings, with partnership affairs.
costs against intervenors appellees, Armando H. Asuncion and Mr. and
Mrs. Alfredo J. Zulueta. It is so ordered. With the rescission of the JVA on account of petitioners’ fraudulent
acts, all authority of any partner to act for the partnership is terminated
except so far as may be necessary to wind up the partnership affairs or
Ortega vs. CA to complete transactions begun but not yet finished. On dissolution,
the partnership is not terminated but continues until the winding up of
FACTS: partnership affairs is completed. Winding up means the administration
of the assets of the partnership for the purpose of terminating the
On December 19, 1980, respondent Misa associated himself business and discharging the obligations of the partnership.
together, as senior partner with petitioners Ortega, del Castillo, Jr., and
Bacorro, as junior partners. On Feb. 17, 1988, respondent Misa wrote It must be stressed, too, that although the Lazatins acquired
a letter stating that he is withdrawing and retiring from the firm and possession of the lands and the improvements thereon, the said lands
asking for a meeting with the petitioners to discuss the mechanics of and improvements remained partnership property, subject to the rights
the liquidation. On June 30, 1988, petitioner filed a petition to the and obligations of the parties, inter se, of the creditors and of third
Commision's Securities Investigation and Clearing Department for the parties and subject to the outcome of the settlement of the accounts
formal dissolution and liquidation of the partnership. On March 31, between the parties, absent any agreement of the parties in their JVA
1989, the hearing officer rendered a decision ruling that the withdrawal to the contrary (here no agreement in the JVA as to winding up). Until
of the petitioner has not dissolved the partnership. On appeal, the SEC
the partnership accounts are determined, it cannot be ascertained how
much any of the parties is entitled to, if at all.