Case 41

G.R. No. 70403 July 7, 1989

SANTIAGO SYJUCO, INC., petitioner, 

vs.

HON. JOSE P. CASTRO, AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF

THE NATIONAL CAPITAL JUDICIAL REGION, BRANCH LXXXV, QUEZON CITY, THE
CITY SHERIFF OF THE CITY OF MANILA, THE CITY REGISTER OF DEEDS OF THE CITY
OF MANILA, EUGENIO LIM, ARAMIS LIM, MARIO LIM, PAULINO LIM, LORENZO
LIM, NILA LIM and/ or THE PARTNERSHIP OF THE HEIRS OF HUGO LIM and
ATTORNEY PATERNO P. CANLAS, respondents.

Back in November 1964, the Lims, borrowed from petitioner Santiago Syjuco, Inc.,
the sum of P800,000.00. The loan was given on the security of a first mortgage on
property registered in the names of said borrowers as owners in common under
Transfer Certificates of Title Numbered 75413 and 75415 of the Registry of Deeds
of Manila. Afterwards am additional loan on the same security procured by the
Lims from Syjuco so that as of May 8, 1967, the sum of the loans stood at
P2,460,000.00, exclusive of interest, and the security had been augmented by
bringing into the mortgage other property, also registered as owned pro indiviso
by the Lims under two titles: TCT Nos. 75416 and 75418 of the Manila Registry.

On November 8, 1967, the Lims failed to pay it despite demands therefore; that
Syjuco consequently decided to go through extra-judicial proceedings for the
foreclosure of the mortgage to be commenced by the Sheriff of Manila; and that
the latter scheduled the auction sale of the mortgaged property on December 27,
1968.

The attempt to foreclose triggered off a legal battle that has dragged on for more
than twenty years now, fought through five (5) cases in the trial courts, two (2) in
the Court of Appeals, and three (3) more in the Supreme Court.

One of the complaints filed by the Lims was filed not in their individual names, but
in the name of a partnership of which they themselves were the only partners:
"Heirs of Hugo Lim." The complaint advocated the theory that the mortgage
which they, together with their mother, had individually established (and
thereafter amended during the period from 1964 to 1967) over lands using their
names in the Property Registry as owners pro indiviso, which is actually no
longerbelonged to them at that time, having been earlier deeded over by them to
the partnership, "Heirs of Hugo Lim," more precisely, on March 30, 1959, hence,
said mortgage was void because executed by them without authority from the
partnership.

ISSUE:

Whether the mortgage executed by the Lims be attributable to their

partnership

HELD:

Yes, the mortgage executed by the Lims is attributable to their partnership.

The Supreme Court held that the legal fiction of a separate juridical personality
and existence will not forbid it from the conclusion of having such knowledge
which naturally and irresistibly flows from the undenied facts. It would violate all
precepts of reason, ordinary experience and common sense to propose that a
partnership, as such, cannot be held accountable with knowledge of matters
commonly known to all the partners or of acts in which all of the latter, without
exception, have taken part, where such matters or acts affect property claimed as
its own by said partnership.

The silence and failure of the partnership to impugn said mortgage within a
reasonable time, let alone a space of more than seventeen years,brought into
play the doctrine of estoppel to prevent any attempt to avoid the mortgage as
allegedly unauthorized.

Despite the concealment of the existence of the partnership, for all intents and
purposes and consistently with the Lims' own theory, it was that partnership
which was the real party in interest in all the actions; it was in fact represented it
was actually represented in said actions by all the individual members thereof,
and as a result, those members' acts, cannot be considered to be simply the
individual acts of said members, but in fact and in law, those of the partnership.

Case 42

G.R. No. 126881             October 3, 2000

HEIRS OF TAN ENG KEE, petitioners, 

vs.

COURT OF APPEALS and BENGUET LUMBER COMPANY, represented by its

President TAN ENG LAY, respondents.
After the second World War, Tan EngKee and Tan Eng Lay, combined their
resources and industry together, entered into a partnership engaged in the
business of selling lumber and hardware and construction supplies. They named
their business "Benguet Lumber" which both of them jointly managed until Tan
EngKee's death. Petitio ers herein asserted that the business thrived due to the
hard work and thrift of the alleged partners. However, in 1981, they claimed that
Tan Eng Lay and his children caused the conversion of the partnership "Benguet
Lumber" into a corporation called "Benguet Lumber Corporation". The
incorporation was purportedly a ruse to deprive Tan EngKee and his heirs of their
rightful participation in the profits of the business. Petitoners hoped for
accounting of the partnership assets, and the dissolution, winding up and
liquidation thereof, and the equal division of the net assets of Benguet Lumber.
The Regional Trial Court ruled in favor of petitioners, declaring that Benguet
Lumber is a joint venture which is related to a particular partnership. The Court of
Appeals rendered the assailed decision reversing the judgment of the trial court.

ISSUE:

Whether the deceased Tan EngKee and Tan Eng Lay are joint adventurers and/or
partners in a business venture and/or particular partnership called Benguet
Lumber and as such should share in the profits and/or losses of the business
venture or particular partnership.

HELD:

There was no partnership whatsoever. Except for a firm name, there was no firm
account, no firm letterheads submitted as evidence, no certificate of partnership,
no agreement as to profits and losses, and no time fixed for the duration of the
partnership. There was even no attempt to submit an accounting corresponding
to the period after the war until Kee's death in 1984. It had no business book, no
written account nor any memorandum for that matter and no license mentioning
the existence of a partnership.
Also, the trial court determined that Tan EngKee and Tan Eng Lay had entered
into a joint venture, which it said is akin to a particular partnership. A particular
partnership is distinguished from a joint adventure, to wit:

a). A joint adventure (an American concept similar to our joint accounts) is a sort
of informal partnership, with no firm name and no legal personality. In a joint
account, the participating merchants can transact business under their own
name, and can be individually liable therefor.

b) Usually, but not necessarily a joint adventure is limited to a SINGLE

TRANSACTION, although the business of pursuing to a successful termination
maycontinue for a number of years; a partnership generally relates to a
continuing business of various transactions of a certain kind. A joint venture
"presupposes generally a parity of standing between the joint co-ventures or
partners, in which each party has an equal proprietary interest in the capital or
property contributed, and where each party exercises equal rights in the conduct
of the business.

The evidence presented by petitioners was not enough to provide a sufficient

proof required to established a partnership. In the absence of evidence, we
cannot accept as an established fact that Tan EngKee allegedly contributed his
resources to a common fund for the purpose of establishing a partnership.
Besides, it is indeed odd, if not unnatural, that despite the forty years the
partnership was allegedly in existence, Tan EngKee never asked for an accounting.
The essence of a partnership is that the partners share in the profits and losses.
Both of them has the right to demand an accounting as long as the partnership
exists. During his lifetime, Tan EngKee appeared never to have made any such
demand for accounting from his brother, Tang Eng Lay. We therefore conclude
that Tan EngKee was only an employee, not a partner since they did not present
and offer evidence that would show that Tan EngKee received amounts of money
allegedly representing his share in the profits of the enterprise. There being no
partnership, it follows that there is no dissolution, winding up or liquidation to
speak of.
Case 43

G.R. No. 144214. July 14, 2003]

LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO

JOSE, Petitioners, v. DONALDO EFREN C. RAMIREZ and Spouses CESAR G.
RAMIREZ JR. and CARMELITA C. RAMIREZ, Respondents.

FACTS:

In 1984, Villareal, Carmelito Jose and Jesus Jose formed a partnership with a
capital of P750,000for the operation of a restaurant and catering business.
Respondent Ramirez joined as a partner in the business with the capital
contribution of P250,000. In 1987, Jesus Jose withdrew from the partnership and
within the same time, Villareal and Carmelito Jose, petitioners closed the business
without prior knowledge of respondents. In March 1987, respondents wrote a
letter to petitioners stating that they were no longer interested in continuing the
partnership and that they were accepting the latter’s offer to return their capital
contribution. Petitioners left the letter unnoticed which is why respondents filed a
complaint in the Regional Trial Court. The Regional Trial Court ruled that the
parties had voluntarily entered into a partnership, which could be dissolved at any
time, and this dissolution was showed by the fact that petitioners stopped
operating the restaurant. On appeal, CA upheld RTC’s decision that the
partnership was dissolved and it included that respondents had no right to
demand the return of their capital contribution. However since petitioners did not
give the proper accounting for the liquidation of the partnership, the CA took it
upon itself to compute their liabilities and the amount that is proper to the
respondent. The computation of which was:(capital of the partnership –
outstanding obligation) / remaining partners =amount due to private respondent.

ISSUE:

Whether or not petitioners are liable to respondents for the latter’s share in the
partnership.

HELD:
No. Respondents have no right to demand from petitioner the return of their
equity share. As found by the court petitioners did not personally hold its equity
or assets. “The partnership has a juridical personality separate and distinct from
that of each of the partners.”Since the capital was contributed to the partnership,
not to petitioners, it is the partnership that must refund the equity of the retiring
partners. 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 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.
Case 47

G.R. No. 109248 July 3, 1995

GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR., and BENJAMIN T. BACORRO,

petitioners,

vs.

HON. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION and

JOAQUIN L. MISA, respondents.

FACTS:

On February 17, 1988 Gregorio Ortega, a petitioner, wrote the respondents a

letter stating his intention to withdraw from the firm of Bito, Misa and Lozada. On
the 30th of June 1988, petitioner filed with this Commission's Securities
Investigation and Clearing Department (SICD) a petition for dissolution and
liquidation of partnership. The hearing officer rendered a decision ruling that:
"Petitioner's withdrawal from the law firm Bito, Misa & Lozada did not dissolve
with the said law of the partnership. Accordingly, the petitioner and respondents
are hereby enjoined to abide by the provisions of the Agreement relative to the
matter governing the liquidation of the shares of any retiring or withdrawing
partner in the partnership interest."

On appeal, the SEC en banc reversed the decision of the Hearing Officer and held
that the withdrawal of Attorney Joaquin L. Misa had dissolved the partnership of
"Bito, Misa & Lozada."

The Commission ruled that, being a partnership at will, the law firm could be
dissolved by any partner at any time, such as by his withdrawal therefrom, in spite
of being in good faith or bad faith, since no partner can be forced to continue in
the partnership against his will.

ISSUES:

1. Whether or not the partnership of Bito, Misa & Lozada (now Bito, Lozada,
Ortega & Castillo) is a partnership at will, and
2. Whether or not the withdrawal of Misa dissolved the partnership regardless of
his good or bad faith.

DECISION:

1.Yes. The partnership agreement provides that the partnership shall continue so
long as mutually satisfactory and upon the death or legal incapacity of one of the
partners, shall be continued by the surviving partners. A partnership that does not
fix its term is a partnership at will.

That the law firm "Bito, Misa & Lozada," and now "Bito, Lozada, Ortega and
Castillo," is indeed such a partnership need not be unduly belabored.

2.Yes. The withdrawal of Atty. Misa has dissolved the partnership, any one of the
partners may, at his sole pleasure, dictate dissolution of the partnership at will.
He must, however, act in good faith, not that the attendance of bad faith can
prevent the dissolution of the partnership but that it can result in a liability for
damages.