G.R. No.

L-3025 November 23, 1906

Si-Boco, plaintiff-appellee,
vs.
Yap Teng, defendant-appellant.

Facts:
For a period of more or less three years the plaintiff had been furnishing
to the defendant native cloth for his store. At first the good furnished on credit.
The defendant had a partner name Yapsuan, manager of the business. Yapteng
introduced him to Sy Boco and told him that Yapsuan has the authority to
receive the cloth and its value should be charged to Yapteng’s account. It
became necessary for Yapsuan to flew back into China and the liquidation of
account between Sy Boco and defendant was made, showing the balance of
1449.95 in favor of the plaintiff, which the defendant expressly undertook to
pay. After the liquidation, defendant continued to buy goods in cash for two
(2) years.

Issue: Whether or not the plaintiff can recover the amount due because of the
liquidation.

Held: YES. the appellant contends that the goods having been furnished to
and receive by the partnership between him and his partner, and the account
of same not having been liquidated, this action should have been brought
against the partnership itself, or against the partner’s jointly, and not against
the defendant was the only one who contracted with the plaintiff that he heard
to received the goods, he instructed the plaintiff to change then to him
personally
G.R. No. 136448 November 3, 1999

Lim Tong Lim, petitioner,

vs.
Philippine Fishing Gear Industries, Inc., respondent.

Facts:
On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and
Peter Yao entered into a Contract dated February 7, 1990, for the purchase of
fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc.
They claimed that they were engaged in a business venture with Petitioner
Lim Tong Lim, who however was not a signatory to the agreement. The total
price of the nets amounted to P532,045. Four hundred pieces of floats worth
P68,000 were also sold to the Corporation.
The buyers, however, failed to pay for the fishing nets and the floats;
hence, private respondents filed a collection suit against Chua, Yao and
Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment.
The suit was brought against the three in their capacities as general partners,
on the allegation that "Ocean Quest Fishing Corporation" was a nonexistent
corporation as shown by a Certification from the Securities and Exchange
Commission.
On September 20, 1990, the lower court issued a Writ of Preliminary
Attachment, which the sheriff enforced by attaching the fishing nets on board
F/B Lourdes. On November 18, 1992, the trial court rendered its Decision,
ruling that Philippine Fishing Gear Industries was entitled to the Writ of
Attachment and that Chua, Yao and Lim, as general partners, were jointly
liable to pay respondent. Lim appealed to the Court of Appeals (CA) which,
as already stated, affirmed the RTC. The CA held that petitioner was a partner
of Chua and Yao in a fishing business and may thus be held liable as a such
for the fishing nets and floats purchased by and for the use of the partnership.
Hence, petitioner brought this recourse before this Court.

Issues:
1. The court of appeals erred in holding, based on a compromise
agreement that Chua, Yao and petitioner Lim entered into in a separate
case, that a partnership agreement existed among them.
2. Since it was only Chua who represented that he was acting for ocean
quest fishing corporation when he bought the nets from Philippine
fishing, the court of appeals was unjustified in imputing liability to
petitioner Lim as well.

Rulings: The Petition is devoid of merit.

1. The Supreme Court are not persuaded by the arguments of petitioner.

The facts as found by the two lower courts clearly showed that there
existed a partnership among Chua, Yao and him, pursuant to Article
1767 of the Civil Code. Specifically, both lower courts ruled that a
partnership among the three existed. From the factual findings of both
lower courts, it is clear that Chua, Yao and Lim had decided to engage
in a fishing business, which they started by buying boats worth P3.35
million, financed by a loan secured from Jesus Lim who was petitioner's
brother. In their Compromise Agreement, they subsequently revealed
their intention to pay the loan with the proceeds of the sale of the boats,
and to divide equally among them the excess or loss. These boats, the
purchase and the repair of which were financed with borrowed money,
fell under the term "common fund" under Article 1767. The
contribution to such fund need not be cash or fixed assets; it could be
an intangible like credit or industry. That the parties agreed that any
loss or profit from the sale and operation of the boats would be divided
equally among them also shows that they had indeed formed a
partnership. Moreover, it is clear that the partnership extended not only to
the purchase of the boat, but also to that of the nets and the floats, both
essential to fishing, were obviously acquired in furtherance of their business.
Both lower courts have done so and have found, correctly, a preexisting
partnership among the parties. In implying that the lower courts have
decided on the basis of one piece of document alone, petitioner fails to
appreciate that the CA and the RTC delved into the history of the
document and explored all the possible consequential combinations in
harmony with law, logic and fairness. Verily, the two lower courts'
factual findings nullified petitioner's argument that the existence of a
partnership was based only on the Compromise Agreement.
Supreme Court are not also convinced by petitioner's argument that he
was merely the lessor of the boats to Chua and Yao, not a partner in the
fishing venture. In effect, he would like the Court to believe that he
consented to the sale of his own boats to pay a debt of Chua and Yao,
with the excess of the proceeds to be divided among the three of them.
No lessor would do what petitioner did. Indeed, his consent to the sale
proved that there was a preexisting partnership among all three. SC
stress that it is unreasonable — indeed, it is absurd — for petitioner to
sell his property to pay a debt he did not incur, if the relationship among
the three of them was merely that of lessor-lessee, instead of partners.
2. Petitioner argues that under the doctrine of corporation by estoppel,
liability can be imputed only to Chua and Yao, and not to him. Again,
SC disagree.
There is no dispute that the respondent, Philippine Fishing Gear
Industries, is entitled to be paid for the nets it sold. The only question
here is whether petitioner should be held jointly liable with Chua and
Yao. Unquestionably, petitioner benefited from the use of the nets
found inside F/B Lourdes, the boat which has earlier been proven to be
an asset of the partnership. He in fact questions the attachment of the
nets, because the Writ has effectively stopped his use of the fishing
vessel. It is difficult to disagree with the RTC and the CA that Lim,
Chua and Yao decided to form a corporation. Although it was never
legally formed for unknown reasons, this fact alone does not preclude
the liabilities of the three as contracting parties in representation of it.
Clearly, under the law on estoppel, those acting on behalf of a
corporation and those benefited by it, knowing it to be without valid
existence, are held liable as general partners.
Technically, it is true that petitioner did not directly act on behalf of the
corporation. However, having reaped the benefits of the contract
entered into by persons with whom he previously had an existing
relationship, he is deemed to be part of said association and is covered
by the scope of the doctrine of corporation by estoppel.
G.R. No. 3186 March 7, 1907

The Great Council of the United States of the Improved Order of Red
Men, plaintiff-appellee,
vs.
The Veteran Army of the Philippines, defendant-appellant.

Facts:
On its first day of March 1903, a contract of lease of parts of certain
building in the city of Manila was signed by trustees of Apache Tribe No.1,
improved order of Red Men, as lessors and Albert E. McCabe, citing for and
on behalf of Lawton Post, Veteran Army of the Philippines as lessee. The
lease was for the term of two years. The Lawton Post occupied the premise
for 13 months and paid the rent for that time. This action was commenced to
recover the rent of unexpired term.

ISSUE: Whether or not Lawton Post No.1 has the authority to enter into the
contract in the name of defendant.

HELD: NO. Article 1695 of the Civil Code provides as follows:

Should no agreement have been made with regard to the form of
management, the following rules shall be observed:
1. All the partners shall be considered as agents, and whatever any one
of them may do by himself shall bind the partnership; but each one
may oppose the act of the others before they may have produced any
legal effect.
One partner, therefore, is empowered to contract in the name of the
partnership only when the articles of partnership make no provision for the
management of the partnership business. The Supreme Court think that the
articles of the Veteran Army of the Philippines do so provide. It is true that an
express disposition to that effect is not found therein, but SC think one may
be fairly deduced from the contents of those articles. In these various
provisions there is nothing said about the power of making contracts, and that
faculty is not expressly given to any officer. SC think that it was, therefore,
reserved to the department as a whole. It is hardly conceivable that the
members who formed this organization should have had the intention of
giving to any one of the sixteen or more persons who composed the
department the power to make any contract relating to the society which that
particular officer saw fit to make, or that a contract when so made without
consultation with, or knowledge of the other members of the department
should bind it.
G.R. No. L-4597 November 23, 1908

Jose Garcia Ron, plaintiff-appellee,

vs.
La Compañia De Minas De Batan, defendant-appellant.

Facts:
Garcia Ron was employed as foreman by Genaro Ansuatequi, the local
manager of certain mines of defendant company. He worked for 9 months,
entitled for reasonable compensation for the services rendered.
Defendant denied that it had never received such services and the said
employment. Moreover, the said employment does not appear from the books
of the company. Counsel for the defendant company insists that they were not
indebted to the plaintiff for the value of service rendered because the local
manager at the mines was not authorized to enter into the alleged contract of
employment, such authority not having been granted to him under his letter
of instructions.

Issue: Whether or not the local manager was authorized for the contract of
employment.

Held: YES. SC think that there can be no doubt that Genaro Ansuategui was
fully and expressly authorized by the terms of the letter of instructions to enter
into the alleged contract of employment with the plaintiff on behalf of the
defendant company; and the evidence of record establishing the fact that he
did so, and that the plaintiff worked for the company for the period set out in
the findings of the trial court.
G.R. No. L-45624 April 25, 1939
George Litton, petitioner-appellant,
vs.
Hill & Ceron, et al., respondents-appellees.
Facts:
This is a petition to review on certiorari the decision of the Court of
Appeals. On February 14, 1934, Litton sold and delivered to Carlos Ceron,
who is one of the managing partners of Hill & Ceron, a certain number of
mining claims, and by virtue of said transaction, Ceron delivered to plaintiff
a document (receipt) acknowledging that he received from Litton certain share
certificates of Big Wedge Mining Company totaling P1870. Ceron paid to the
plaintiff the sum or P1,150 leaving an unpaid balance of P720, and unable to
collect this sum either from Hill & Ceron or from its surety Visayan Surety &
Insurance Corporation, Litton filed a complaint in the Court of First Instance
of Manila against the said defendants for the recovery of the said balance.
The lower court, after trial, ordered Carlos Ceron personally to pay the
amount claimed and absolved the partnership Hill & Ceron, Robert Hill and
the Visayan Surety & Insurance Corporation. On appeal to the CA, the latter
affirmed the decision of the lower court, having reached the conclusion that
Ceron did not intend to represent and did not act for the firm Hill & Ceron in
the transaction involved in this litigation.

Issue: Whether or not the act of Ceron binds the partnership.

Held: YES. The Supreme Court reach the conclusion that the transaction
made by Ceron with the plaintiff should be understood in law as effected by
Hill & Ceron and binding upon it.
 In the first place, it is an admitted fact by Robert Hill when he testified
at the trial that he and Ceron, during the partnership, had the same power to
buy and sell; that in said partnership Hill as well as Ceron made the transaction
as partners in equal parts; that on the date of the transaction, February 14,
1934, the partnership between Hill and Ceron was in existence.
According to the articles of co-partnership of ‘Hill & Ceron,’ a written
contract of the firm can only be signed by one of the partners if the other
partner consented. Without the consent of one partner, the other cannot bind
the firm by a written contract. Now, assuming for the moment that Ceron
attempted to represent the firm in this contract with the plaintiff (the plaintiff
conceded that the firm name was not mentioned at that time), the latter has
failed to prove that Hill had consented to such contract. Also, third persons,
like the plaintiff, are not bound in entering into a contract with any of the two
partners, to ascertain whether or not this partner with whom the transaction is
made has the consent of the other partner. The public need not make inquires
as to the agreements had between the partners. Its knowledge, is enough that
it is contracting with the partnership which is represented by one of the
managing partners.
The respondent argues in its brief that even admitting that one of the
partners could not, in his individual capacity, engage in a transaction similar
to that in which the partnership is engaged without binding the latter,
nevertheless there is no law which prohibits a partner in the stock brokerage
business for engaging in other transactions different from those of the
partnership, as it happens in the present case, because the transaction made by
Ceron is a mere personal loan, and this argument, so it is said, is corroborated
by the Court of Appeals. The Supreme Court do not find this alleged
corroboration because the only finding of fact made by the Court of Appeals
is to the effect that the transaction made by Ceron with the plaintiff was in his
individual capacity.
The appealed decision is reversed and the defendants are ordered to pay
to the plaintiff, jointly and severally, the sum of P720, with legal interest, from
the date of the filing of the complaint, minus the commission of one-half per
cent (½%) from the original price of P1,870, with the costs to the respondents.
G.R. No. L-5236 January 10, 1910

Pedro Martinez, plaintiff-appellee,

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

Issue: Up to what extent are partners liable?

Held: The partners are liable jointly. The defendants acted as administrators
and as such, they were obliged to render an accounting of the business. Since
both failed in this aspect, they are obliged to return the capital. Article 1688
of the Civil Code (Article 1796 of the New Civil Code) which provides “that
the partnership is liable to every partner for the amounts he may have
disbursed on account of the same and for the proper interest” does not apply
to the case at bar since no other money than the one contributed by the plaintiff
was involved. The court ruled that Ong Pong Co should pay Pedro Martinez
the sum of Php.750.00 with the legal interest thereon, being liable jointly.
G.R. No. L-11840 July 26, 1960
Antonio C. Goquiolay and the Partnership "Tan Sin An and
Antonio C. Goquiolay, plaintiffs-appellants,
vs.
Washington Z. Sycip, et al., defendants-appellees
Facts:
Tan Sin An and Goquiolay entered into a general commercial
partnership under the partnership name “Tan Sin An and Antonio Goquiolay”
for the purpose of dealing in real estate. The agreement lodged upon Tan Sin
An the sole management of the partnership affairs. The lifetime of the
partnership was fixed at ten years and the Articles of Co-partnership stipulated
that in the event of death of any of the partners before the expiration of the
term, the partnership will not be dissolved but will be continued by the heirs
or assigns of the deceased partner. But the partnership could be dissolved upon
mutual agreement in writing of the partners. Goquiolay executed a GPA in
favor of Tan Sin An. The plaintiff partnership purchased 3 parcels of 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 individual capacity which
he assumed payment of a mortgage debt for P35K. A down payment and the
amortization were advanced by Yutivo and Co. The two obligations were
consolidated in an instrument executed by the partnership and Tan Sin An,
whereby the entire 49 lots were mortgaged in favor of “Banco Hipotecario”
Tan Sin An died leaving his widow, Kong Chai Pin and four minor children.
The widow subsequently became the administratrix of the estate. Repeated
demands were made by Banco Hipotecario on the partnership and on Tan Sin
An. Defendant Sing Yee, upon request of defendant Yutivo Sons , paid the
remaining balance of the mortgage debt, the mortgage was cancelled Yutivo
Sons and Sing Yee filed their claim in the intestate proceedings of Tan Sin An
for advances, interest and taxes paid in amortizing and discharging their
obligations to “La Urbana” and “Banco Hipotecario.” Kong Chai Pin filed a
petition with the probate court for authority to sell all the 49 parcels of land.
She then sold it to Sycip and Lee in consideration of P37K and of the vendees
assuming payment of the claims filed by Yutivo Sons and Sing Yee. Later,
Sycip and Lee executed in favor of Insular Development a deed of transfer
covering the 49 parcels of land. When Goquiolay learned about the sale to
Sycip and Lee, he filed a petition in the intestate proceedings to set aside the
order of the probate court approving the sale in so far as his interest over the
parcels of land sold was concerned. Probate court 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 complaint prays for the annulment of the sale in
favor of Sycip and Lee and their subsequent conveyance to Insular
Development. The complaint was dismissed by the lower court hence this
appeal.

Issues: 1. Did the lower court err in holding that the widow succeeded her
husband Tan Sin An in the sole management of the partnership upon Tan’s
death?
2. Whether or not the consent of the other partners was necessary to
perfect the sale of the partnership properties to Sycip and Lee?

Held: 1. YES. While in the Articles of Co-Partnership and the power of

attorney executed by Goquiolay conferred upon Tan the exclusive
management of the business, such power premised as it is upon trust and
confidence, was a mere personal right that terminated upon Tan’s demise. The
provision in the articles stating that “in the event of death of any one of the
partners within the 10 year term of the partnership, the deceased partner shall
be represented by his heirs” could not have referred to the managerial right
given to Tan. The heirs of the deceased, by never repudiating or refusing to
be bound under the said provision in the articles became individual partners
with Goquiolay upon Tan’s demise. This is sanctioned under Article 222
under the Code of Commerce.
2. NO. Strangers dealing with a partnership have the right to assume, in the
absence of restrictive clauses in the co-partnership agreement that every
general partner has power to bind the partnership specially those acting with
ostensible authority. Also, inspite of the provision of Art 129 of the Code of
Commerce to the effect that “if the management of the general partnership has
not been limited by special agreement to any of the members, all shall have
the power to take part in the direction and management of the common
business, and the members present shall come to an agreement for all contracts
or obligations which may concern the association,” such obligation is one
imposed by law on the partners among themselves, that does not necessarily
affect the validity of the acts of a partner while acting within the scope of the
ordinary course of business of the partnership as regards third persons without
notice. The latter may rightfully assume that the contracting partner was duly
authorized to contract for and in behalf of the firm and that he would not
ordinarily act to the prejudice of his co-partners. Also, the records fail to
disclose that Goquiolay made any opposition to the sale of the partnership
realty to Sycip and Lee. On the contrary, it appears that he only interposed his
objections after the deed of conveyance was executed and approved by the
probate court, and consequently, his opposition came too late to be effective.
G.R. No. 70403 July 7, 1989
Santiago Syjuco, Inc., petitioner,
vs.
Hon. Jose P. Castro, respondents.
Facts:
The Lims loaned from Syjuco 80k, secured by two titles thereof. Lims
defaulted despite numerous demands issued by Syjuco. Syjuco then attempted
to extra-judicially foreclose the properties. Lims opposed the moved and the
legal battle for 20 years began. Lims lawyers claimed that the mortgage was
void, being usurious for stipulating interest of 23% on top of 11 % that they
had been required to pay as "kickback." Also, the mortgage which they,
together with their mother, had individually constituted (and thereafter
amended during the period from 1964 to 1967) over lands standing in their
names in the Property Registry as owners pro indiviso, in fact no longer
belonged 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. Judge Castro issued a restraining order to the foreclosure of the
properties. Syjuco, embattled, opposed the same claiming that judge Castro
never acted on his motions.

Issue: Whether or not the private respondents are estopped to avoid the
aforementioned mortgage.

Held: Yes. The Supreme Court ruled that the respondent partnership was
inescapably chargeable with knowledge of the mortgage executed by all the
partners thereof, its silence and failure to impugn said mortgage within a
reasonable time, let alone a space of more than 17 years, brought into play the
doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly
unauthorized. Equally or even more preclusive of the respondent partnership’s
claim to the mortgaged property is the last paragraph of Art. 1819 of the Civil
Code, which contemplates a situation similar to the case at bar. It states that
‘where the title to real property is in the names of all the partners, a
conveyance executed by the entire partners pass all their rights in such
property. Consequently, those members' acts, declarations and omissions
cannot be deemed to be simply the individual acts of said members, but in fact
and in law, those of the partnership. Finally, the Supreme Court emphasizes
that the right of the private respondents to assert the existence of the
partnership could have been stressed at the time they instituted their first
action, considering that the actions involved property supposedly belonging
to it, and therefore, the partnership was the real party in interest. What was
done by them was to split their cause of action in violation of the well-known
rule that only one suit may be instituted for a single cause of action.
G.R. No. L-39780 November 11, 1985
Elmo Muñasque, petitioner,
vs.
Court of Appeals, Celestino Galan Tropical Commercial Company
and Ramon Pons, respondents.
Facts:
Elmo Muñasque filed a complaint for payment of sum of money and
damages against respondents Celestino Galan, Tropical Commercial, Co., Inc.
(Tropical) and Ramon Pons, alleging that the petitioner entered into a contract
with respondent Tropical through its Cebu Branch Manager Pons for
remodeling a portion of its building without exchanging or expecting any
consideration from Galan although the latter was casually named as partner in
the contract; that by virtue of his having introduced the petitioner to the
employing company (Tropical), Galan would receive some kind of
compensation in the form of some percentages or commission.
Tropical agreed to give petitioner the amount of P7,000.00 soon after
the construction began and thereafter the amount of P6,000.00 every fifteen
(15) days during the construction to make a total sum of P25,000.00.
On January 9, 1967, Tropical and/or Pons delivered a check for
P7,000.00 not to the plaintiff but to a stranger to the contract, Galan, who
succeeded in getting petitioner's indorsement on the same check persuading
the latter that the same be deposited in a joint account. On January 26, 1967,
when the second check for P6,000.00 was due, petitioner refused to indorse
said check presented to him by Galan but through later manipulations,
respondent Pons succeeded in changing the payee's name to Galan and
Associates, thus enabling Galan to cash the same at the Cebu Branch of the
Philippine Commercial and Industrial Bank (PCIB) placing the petitioner in
great financial difficulty in his construction business and subjecting him to
demands of creditors to pay for construction materials, the payment of which
should have been made from the P13,000.00 received by Galan.
Due to the unauthorized disbursement by respondents Tropical and
Pons of the sum of P13,000.00 to Galan, petitioner demanded that said amount
be paid to him by respondents under the terms of the written contract between
the petitioner and respondent company.

Issues: Whether or not:

1. There was a partnership between Muñasque and Galan,
2. Petitioner Muñasque solidarily or jointly liable with respondent
Galab to pay the credits of intervenors Blue Diamond Glass and Cebu
Southern Hardware.

Held:
1. YES. Muñasque entered into a contract with TCCI, for the renovation of
the latter's building, on behalf of the partnership of "Galan and Muñasque, as
evidenced by the first paragraph of the contract. Likewise, when Muñasque
received the first check, he indorsed the same in favor of Galan. TCCI,
therefore, had every right to presume that Muñasque and Galan were true
partners. If they were not partners, Muñasque has only himself to blame for
making the relationship appear otherwise, not only to TCCI but to their other
creditors as well. The payments made to the partnership were, therefore, valid
payments. Since Muñasque and Galan were partners when the debts were
incurred, they, are also both liable to third persons who extended credit to their
partnership.
2. YES. petitioner is solidarily liable with respondent Galan to pay the credits
of two intervenors. Therefore, petitioner may recover from respondent Galan
any amount that he pays, in his capacity as a partner, to the above intervenors.
Art. 1816 should be construed together with the Article 1824 which provides
that: “All partners are liable solidarily with the partnership for everything
chargeable to the partnership under Articles 1822 and 1823”. The obligation
is solidary because the law protects him, who in good faith relied upon the
authority of a partner, whether such authority is real or apparent. That is why
under Article 1824 of the Civil Code all partners, whether innocent or guilty,
as well as the legal entity which is the partnership, are solidarily liable. In this
case, the Tropical, Blue Diamond and Cebu Hardware had every reason to
believe that partnership existed between petitioner and Galan, thus, it is fair
that consequences of any wrongful act committed by any of the partners
therein should be answered solidarily by all the partners and the partnership
as a whole. As between petitioner Muñasque and Galan, justice so dictates
that Muñasque be reimbursed by Galan for the payments made by the former
as it was satisfactorily established that Galan acted in bad faith in his dealings
with Muñasque as a partner.
 Petition for Authority to Continue Use of the Firm Name "Sycip,
Salazar, Feliciano, Hernandez & Castillo."

Facts:
Petitions were filed by the surviving partners of Atty. Alexander Sycip,
who died on May 5, 1975 and by the surviving partners of Atty. Herminio
Ozaeta, who died on February 14, 1976, praying that they be allowed to
continue using, in the names of their firms, the names of partners who had
passed away. Petitioners contend that the continued use of the name of a
deceased or former partner when permissible by local custom, is not unethical
but care should be taken that no imposition or deception is practiced through
this use. They also contend that no local custom prohibits the 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 Greater Manila Area, which
recognizes that the name of a law firm necessarily identifies the individual
members of the firm.

Issue: Whether or not the surviving partners may be allowed by the court to
retain the name of the partners who already passed away in the name of the
firm.
Held: NO. Inasmuch as "Sycip, Salazar, Feliciano, Hernandez and Castillo"
and "Ozaeta, Romulo, De Leon, Mabanta and Reyes" are partnerships, the use
in their partnership names of the names of deceased partners will run counter
to Article 1815 of the Civil Code which provides:
Art. 1815. Every partnership shall operate under a firm name, which
may or may not include the name of one or more of the partners.

Those who, not being members of the partnership, include their names
in the firm name, shall be subject to the liability, of a partner.
It is clearly tacit in the above provision that names in a firm name of a
partnership must either be those of living partners and. in the case of non-
partners, should be living persons who can be subjected to liability. In fact,
Article 1825 of the Civil Code prohibits a third person from including his
name in the firm name under pain of assuming the liability of a partner. The
heirs of a deceased partner in a law firm cannot be held liable as the old
members to the creditors of a firm particularly where they are non-lawyers.
Thus, Canon 34 of the Canons of Professional Ethics "prohibits an agreement
for the payment to the widow and heirs of a deceased lawyer of a percentage,
either gross or net, of the fees received from the future business of the
deceased lawyer's clients, both because the recipients of such division are not
lawyers and because such payments will not represent service or
responsibility on the part of the recipient. " Accordingly, neither the widow
nor the heirs can be held liable for transactions entered into after the death of
their lawyer-predecessor. There being no benefits accruing, there can be no
corresponding liability. Prescinding the law, there could be practical
objections to allowing the use by law firms of the names of deceased partners.
The public relations value of the use of an old firm name can tend to create
undue advantages and disadvantages in the practice of the profession. An able
lawyer without connections will have to make a name for himself starting
from scratch. Another able lawyer, who can join an old firm, can initially ride
on that old firm's reputation established by deceased partners.
G.R. No. L-11624 January 21, 1918
E. M. Bachrach, plaintiff-appellee,
vs.
"La Protectora", Et Al., defendants-appellants.
Facts:
The individuals named as defendants in this action formed a civil
partnership, called “La Protectora” for the purpose of engaging in the business
of transporting passengers and freight at Laoaag, Ilocos Norte. Marcelo Barba,
acting as manager and has the authority to brought truck, negotiated the
purchase of two automobile trucks from EM. Bachrach, plaintiff, at the price
of P 16500. Barba paid the sum of P 3000 in cash and executed promissory
notes representing the deferred payments. Three of the notes, P 3375 each, is
the subject of present action. One of these notes was signed by Marcelo Barba
in the manner: “PP La Protectora, By Marcelo Barba, Marcelo Barba” while
the other two are signed in the same with the word “By” omitted before the
name of Marcelo Barba. It indicates that Marcelo Barba wants to bind the
Partnership and himself. From time to time after the said purchase, Barba
purchased on account various automobile effects and accessories from
Bachrach to be used in the Partnership.
Issue: WON the partners of “La Protectora” are liable for the firm debts.
Held: Yes. Promissory notes constitute the obligation exclusively of La
Protectora and Barba. They do not constitute an obligation directly binding
the defendants. Their liability is based on the fact that they are members of
Civil Partnership and as such are liable for its debts. No member of the
partnership can bind the others by a personal act if they have not given
authority to do so. Each of the appellants shall be liable only for the 1/5 part
of the remainder unpaid. They were not liable on the note itself but liable as
partners.
G.R. No. L-19819 October 26, 1977
William Uy, plaintiff-appellee,
vs.
Bartolome Puzon, substituted by Franco Puzon, defendant-
appellant.
Facts:
Puzon entered into a contract with the Republic of the Philippines for
the construction of a road and 5 bridges. However, Puzon found difficulty in
accomplishing both projects, so he established a partnership with Uy as sub-
contractor of the projects for financial assistance and the profits shall be
divided equally between them; the resulting partnership is “UP Construction
Company”. The partners agreed to contribute P50, 000 each as capital.
However, Puzon failed to pay but promised to contribute his share as soon as
his application of loan with the PNB shall be approved. Uy gave Puzon
advance contribution of his share in partnership for Puzon top pay his
obligations with PNB.
Uy was entrusted with the management of the project since Puzon is
busy with his other projects; whatever expense Uy may incur shall be
considered part of his contribution. Upon approval of Puzon’s loan with the
PNB, he gave Uy P60, 000 for reimbursement of Uy’s contribution and
Puzon’s contribution to the partnership capital. To guarantee the payment of
the loan, Puzon assigned to PNB all payments to be received on account of
the contracts with the Bureau of Public Highways for the construction; this
was done without the knowledge and consent of Uy. Financial demands of the
project increased, thus, Uy called on Puzon to place his capital contribution;
Puzon failed to do so. Uy thereafter sent letters of demand to which Puzon
replied that he’s not capable of putting additional capital. Puzon wrote UP
Construction Company terminating their subcontract agreement. Uy was then
not allowed in the office of UP Construction Company and his authority to
deal with BPH was revoked. Hence, he instituted an action against Puzon
seeking the dissolution of the partnership and payment of damages for the
violation of the latter of the terms of their partnership agreement.
RTC found that Puzon failed to contribute his share in the capital of the
partnership and caused the failure of partnershipto realize expected profits.
The court ordered the dissolution of the partnership and Puzon to pay Uy a
certain sum. Franco Puzon substituted Bartolome Puzon on the appeal of the
case before the Supreme Court.
Issue: Whether or not the amount of money ordered by the trial court for the
failure to contribute his share in the capital of the partnership is proper.
Held: YES. The award of P200,000.00 as his share in the unrealized profits
of the partnership is proper. Under Article 2200 of the Civil Code,
indemnification for damages shall comprehend not only the value of the loss
suffered, but also that of the profits which the obligee failed to obtain. In other
word lucrum cessans is also a basis for indemnification. There is no doubt Uy
failed to make profits because of Puzon's breach of contract. The partnership
showed some profits even though the profit and loss statement showed net
loss; it may be due to error in accounting.
Had the appellant not been remiss in his obligations as partner and as
prime contractor of the construction projects in question as he was bound to
perform pursuant to the partnership and subcontract agreements, and
considering the fact that the total contract amount of these two projects is
P2,327,335.76, it is reasonable to expect that the partnership would have
earned much more than the P334,255.61 We have hereinabove indicated. The
award, therefore, made by the trial court of the amount of P200,000.00, as
compensatory damages, is not speculative, but based on reasonable estimate.
G.R. No. L-47823 July 26, 1943

Jose Ornum and Emerenciana Ornum, petitioners,

vs.
Mariano, Lasala, et al., respondent
Facts:
Plaintiffs and defendants are natives of Taal, Batangas but the
defendants resided in Romblon. In 1908, Pedro Lasala and Emerenciano
Ornum formed a partnership. Lasala, as capitalist, delivered P1,000 to Ornum,
the industrial partner. Ornum would conduct a business in Romblon. In 1912,
Ornum asked for the dissolution of the partnership and suggested present
petitioners, to become the new partners in his place. Pedro Lasala died and his
children succeeded to the rights and interest in the partnership. The partners
never knew each other personally and no formal partnership agreement was
ever executed. Petitioners, as managing partners, received ½ of the net gains,
while the other ½ was divided between them and the Lasala group in
proportion to the capital put in by each group. After 20 years, the business
grew to the value of P44,618.67 Subsequently, respondents announced their
desire to dissolve the partnership. Respondents filed a CMP, praying for an
accounting and final liquidation of the assets of the partnership. According to
petitioners, they already remitted and paid to respondents the total amount
corresponding to them under the last statement of accounts, which however,
was not signed by respondents. According to petitioners, respondents tacitly
approved and accepted the final statement of accounts, thereby losing their
right to a further accounting, from the moment they accepted their shares
without objection. CFI ruled in favor of petitioners. CA reversed on the
ground that the final statement of accounts was unsigned and stand
disapproved.
Issue: Whether or not respondents may request for further accounting and
liquidation in dissolving the partnership.

Held: NO. respondents were already given the final statement of accounts,
which they tacitly approved. Supreme Court hold that the last and final
statement of accounts, had been approved by the respondents. This approval
resulted, by virtue of the letter of Father Mariano Lasala of July 19, 1932,
quoted in part in the appealed decision from the failure of the respondents to
object to the statement and from their promise to sign the same as soon as they
received their shares as shown in said statement. After such shares had been
paid by the petitioners and accepted by the respondents without any
reservation, the approval of the statement of accounts was virtually confirmed
and its signing thereby became a mere formality to be complied with by the
respondents exclusively. Their refusal to sign, after receiving their shares,
amounted to a waiver to that formality in favor of the petitioners who has
already performed their obligation. This approval precludes any right on the
part of the respondents to a further liquidation, unless the latter can show that
there was fraud, deceit, error or mistake in said approval. In our opinion, the
pronouncement that the evidence tends to prove that there were mistakes in
the petitioners' statements of accounts, without specifying the mistakes,
merely intimates as suspicion and is not such a positive and unmistakable
finding of fact as to justify a revision, especially because the CA has relied on
the bare allegations of the parties.
SC reversed the CA decision on the legal ground that the petitioners' final
statement of accounts had been approved by the respondents and no justifiable
reason (fraud, deceit, error or mistake) has been positively and unmistakably
found by the CA so as to warrant the liquidations sought by the respondents.
G.R. No. L-40504 July 29, 1983

Fortunato Recentes, Benjamin De Gracia and Ramona

Merced, petitioners,
vs.
Court of First Instance of Zamboanga Del Norte, Branch I,
Presided by Hon. Dimalanes E. Buissan, And Concepcion V.
Zosa, respondents.

Facts:
Concepcion V. Zosa is a partner of Fortunato Recentes, Benjamin de
Gracia and Ramona Merced in Zamboanga Ports Terminal and Arrastre
Service. She filed a complaint for the accounting and payment of money
alleged to be due to her as their partner. The answer alleged that proper
accounting and payment had already been made.
The court, appointed Merced as receiver and she qualified as per Zosa
request. Subsequently, Fortunato Recentes and Benjamin de Gracia filed a
motion to annul and dissolve the receivership which granted by Judge Rafael
T. Mendoza. However, Judge Dimalanes B. Buissan who succeeded Judge
Mendoza reconsidered the latter's action by reinstating the receivership for the
reason that after the termination of the ten-year period from January 1967,
Recentes and de Gracia and the treasurer of the partnership never rendered an
accounting for the purpose of dissolving the partnership even up to the
present, so that ordinarily the partnership still continuously exists as usual.
Petition to set aside several orders issued of the defunct Court of First
Instance of Zamboanga del Norte, namely the orders of June 13, 1974, July 5,
1974, January 9, 1975, February 21, 1975 and March 31, 1975

Issue: Was there lack of jurisdiction or grave abuse of discretion in the

issuance of the questioned orders?
Held: NO. Art. 1829. On dissolution the partnership is terminated, but
continues until the winding up of partnership affairs is completed. Obviously,
all the questioned orders are intended to wind up the partnership affairs in an
orderly manner and to protect the interest of the plaintiff who is the private
respondent in this case. The respondent judge not only had jurisdiction to issue
the orders, he also acted prudently in the premises.
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:

Joaquin L. Misa, respondent, is a senior partner in the law firm Bito,

Misa & Lozada with petitioner Gregorio F. Ortega, Tomas O. del Castillo, Jr.,
and Benjamin Bacorro, as junior partners. On February 17, 1988 he withdrew
in a said firm and would like to have a meeting with all of the partner with
regard to the mechanics of liquidation, and more particularly, my interest in
the two floors of this building.

Misa filed with this Commission's Securities Investigation and Clearing

Department (SICD) a petition for dissolution and liquidation of partnership
and the hearing officer rendered a decision ruling that his withdrawal from the
law firm Bito, Misa & Lozada did not dissolve the said law partnership.
On appeal, the SEC en banc reversed the decision of the Hearing Officer and
held that the withdrawal of Misa had dissolved the partnership for the reason
that being a partnership at will, the law firm could be dissolved by any partner
at any time, regardless of good faith or bad faith, since no partner can be forced
to continue in the partnership against his will.

The petitioners seek a review of the decision rendered by the Court of

Appeals, dated 26 February 1993.
Issues: Whether or not the Court of Appeals has erred in holding:
1. That the partnership of Bito, Misa & Lozada (now Bito, Lozada,
Ortega & Castillo) is a partnership at will;
2. That the withdrawal of private respondent dissolved the partnership
regardless of his good or bad faith; and
3. That private respondent's demand for the dissolution of the
partnership so that he can get a physical partition of partnership was not
made in bad faith;

Held:

1. NO. 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. The partnership agreement does not provide for a specified
period or undertaking. The "purpose" of the partnership is not the
specific undertaking referred to in the law. Otherwise, all partnerships,
which necessarily must have a purpose, would all be considered as
partnerships for a definite undertaking. There would therefore be no
need to provide for articles on partnership at will as none would so
exist. Apparently, what the law contemplates, is a specific undertaking
or "project" which has a definite or definable period of completion.

2. NO. The birth and life of a partnership at will is predicated on the

mutual desire and consent of the partners. Its continued existence is
dependent on the constancy of that mutual resolve, along with each
partner's capability to give it, and the absence of a cause for dissolution
provided by the law itself. Verily, any one of the partners may, at his
 sole pleasure, dictate a 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. Among partners, mutual agency arises and the
doctrine of delectus personae allows them to have the power, although
not necessarily the right, to dissolve the partnership. An unjustified
dissolution by the partner can subject him to a possible action for
damages.

3. NO. The liquidation of the assets of the partnership following its

dissolution is governed by various provisions of the Civil Code;
however, an agreement of the partners, like any other contract, is
binding among them and normally takes precedence to the extent
applicable over the Code's general provisions. Supreme Court accord
due respect to the appellate court and respondent Commission on their
common factual finding, i.e., that Attorney Misa did not act in bad faith.
Public respondents viewed his withdrawal to have been spurred by
"interpersonal conflict" among the partners. It would not be right, we
agree, to let any of the partners remain in the partnership under such an
atmosphere of animosity; certainly, not against their will.
G.R. No. 97212 June 30, 1993

Benjamin Yu, petitioner,

vs.
National Labor Relations Commission and Jade Mountain
Products Company Limited, Willy Co, Rhodora D. Bendal, Lea
Bendal, Chiu Shian Jeng and Chen Ho-Fu, respondents.

Facts:

Benjamin Yu, Assistant General Manager of a Jade Mountain Products

Company, main office in Makati, has a monthly salary of P4,000.00 and
actually received only half of his stipulated monthly salary, since he had
accepted the promise of the partners that the balance would be paid when the
firm shall have secured additional operating funds from abroad. He had
overall supervision of the workers at the marble quarry in Bulacan and took
charge of the preparation of papers relating to the exportation of the firm's
products.

The majority of the founding partners sold their interests in said

partnership to Willy Co and Emmanuel Zapanta without Yu’s knowledge.
Said new partnership continued operating under the same name and continued
the business’s operations. However, it transferred its main office from Makati
to Mandaluyong. Said new partnership did not anymore availed of the services
of Yu. Thus, he filed a complaint for illegal dismissal, recovery of unpaid
wages and damages.
Issues:

1. Whether the partnership which had hired petitioner Yu as Assistant

General Manager had been extinguished and replaced by a new
partnership composed of Willy Co and Emmanuel Zapanta.
2. If indeed a new partnership had come into existence, whether petitioner
Yu could nonetheless assert his rights under his employment contract
as against the new partnership.

Held:

1. YES. The legal effect of the changes in the membership of the

partnership was the dissolution of the old partnership which had hired
petitioner in 1984 and the emergence of a new firm composed of Willy
Co and Emmanuel Zapanta in 1987. Based on the provision under:

Art. 1828. The dissolution of a partnership is the change in the relation

of the partners caused by any partner ceasing to be associated in the
carrying on as distinguished from the winding up of the business.

Art. 1830. Dissolution is caused:

(1) without violation of the agreement between the partners;
(b) by the express will of any partner, who must act in good faith,
when no definite term or particular undertaking is specified;
(2) in contravention of the agreement between the partners,
where the circumstances do not permit a dissolution under any
other provision of this article, by the express will of any partner
at any time;
The occurrence of events which precipitate the legal consequence of
dissolution of a partnership do not, however, automatically result in the
termination of the legal personality of the old partnership. According to
the Article 1829 on dissolution the partnership is not terminated, but
continues until the winding up of partnership affairs is completed. Not only
the retiring partners but also the new partnership itself which continued the
business of the old, dissolved, one, are liable for the debts of the preceding
partnership.

2. YES. Under Article 1840, creditors of the old partnership are also
creditors of the new partnership which continued the business of the old
one without liquidation of the partnership affairs. It is, however, clear
to the Court that under Article 1840, Benjamin Yu is entitled to enforce
his claim for unpaid salaries, as well as other claims relating to his
employment with the previous partnership, against the new Jade
Mountain. The non-retention of Benjamin Yu as Assistant General
Manager did not therefore constitute unlawful termination, or
termination without just or authorized cause. The old partnership
certainly benefitted from the services of Benjamin Yu who, as noted,
previously ran the whole marble quarrying, processing and exporting
enterprise. His work constituted value-added to the business itself and
therefore, the new partnership similarly benefitted from the labors of
Benjamin Yu.
G.R. No. 110782 September 25, 1998

Irma Idos, petitioner,

vs.
Court of Appeals and People of the Philippines, respondents.

Facts:

Irma Idos and Eddie Alarilla formed a partnership under the style
"Tagumpay Manufacturing," with offices in Bulacan and Cebu City. After not
more that 1 year both parties agreed to terminate their partnership. Upon
liquidation the partnership has receivables and stocks which remain
unrealizable. Idos issued 4 post-dated checks which Alarilla able to encash the
first, second, and fourth checks, but the third check is NSF check the she
claimed that the said NSF check is only for an assurance of his the assets of
the partnership and that it was not supposed to be deposited until the stocks
had been sold. He filed an information for violation of BP Blg. 22 against Idos
in which she is found guilty by the trial court. She filed an appeal for the
decision but denied by the respondent court that makes the petitioner appealed
at this court.

Issue: Did the Honorable Court of Appeals has confused and merged into one
the legal concepts of dissolution, liquidation and termination of a partnership?

Held: YES. The party’s agreement did not automatically put an end to the
partnership, since they still had to sell the goods on hand and collect the
receivables from debtors. In short, they were still in the process of "winding
up" the affairs of the partnership, when the check in question was issued.

The best evidence of the existence of the partnership, which was not yet
terminated were the unsold goods and uncollected receivables. Since the
partnership has not been terminated, the petitioner and private complainant
remained as co-partners. The check was thus issued by the petitioner to
complainant, as would a partner to another, and not as payment from a debtor
to a creditor. The more tenable view, one in favor of the accused, is that the
check was issued merely to evidence the complainant's share in the
partnership property, or to assure the latter that he would receive in time his
due share therein. Absent the first element of the offense penalized under B.P.
22 petitioner's issuance of the subject check was not an act contemplated in
nor made punishable by the statute.
G.R. No. 143340 August 15, 2001

Lilibeth Sunga-Chan and Cecilia Sunga, petitioners,

vs.
Lamberto T. Chua, respondent.

Facts:
In 1977 Chua allegedly verbally entered into a partnership with Jacinto
in the distribution of LPG in Manila both contributed P100,000.00 each with
the intention of dividing the profits equally and had Jacinto a manager. For
the convenience both parties allegedly agreed to register the business under
the name of Jacinto as a sole proprietorship.
Respondent claimed that the business became successful however he
suspected that the amount indicated on the balance sheet were understated and
undervalued by Jacinto and Josephine for their own selfish reasons and for tax
avoidance.
Subsequently, Jacinto died and his surviving wife and daughter, Cecilia
and Lilibeth respectively, took over the operations, control, custody,
disposition and management of the partnership business without the consent
of Chua. Despite respondent's repeated demands upon petitioners for
accounting, inventory, appraisal, winding up and restitution of his net shares
in the partnership, petitioners failed to comply.
Respondent claimed that after petitioner Lilibeth ran out the alibis and
reasons to evade respondent's demands, she disbursed out of the partnership
funds the amount of P200,000.00 and partially paid the same to respondent.
Petitioner Lilibeth allegedly informed respondent that the P200,000.00
represented partial payment of the latter's share in the partnership, with a
promise that the former would make the complete inventory and winding up
of the properties of the business establishment. Despite such commitment,
petitioners allegedly failed to comply with their duty to account, and
continued to benefit from the assets and income of Shellite to the damage and
prejudice of respondent.
Issues:
1. Whether or not Lamberto Chua and Jacinto Sunga entered into a
partnership.
2. Whether the partnership is invalid on the ground that it was not
registered to SEC

Held:
1. YES. A partnership may be constituted in any form, except where
immovable property of real rights are contributed thereto, in which case
a public instrument shall necessary.6 Hence, based on the intention of
the parties, as gathered from the facts and ascertained from their
language and conduct, a verbal contract of partnership may arise. 7 The
essential profits that must be proven to that a partnership was agreed
upon are (1) mutual contribution to a common stock, and (2) a joint
interest in the profits. Understandably so, in view of the absence of the
written contract of partnership between respondent and Jacinto,
respondent resorted to the introduction of documentary and testimonial
evidence to prove said partnership. The "Dead Man's Statute" was
applied by the petitioner to this case so as to render inadmissible
respondent's testimony and that of his witness, Josephine. However,
petitioners' reliance alone on such cannot prevail over the factual
findings of the trial court and the Court of Appeals that a partnership
was established between respondent and Jacinto.
2. NO. Petitioners maintain that said partnership that had initial capital of
P200,000.00 should have been registered with the Securities and
Exchange Commission (SEC) since registration is mandated by the
Civil Code, True, Article 1772 of the Civil Code requires that
partnerships with a capital of P3,000.00 or more must register with the
SEC, however, this registration requirement is not mandatory. Article
1768 of the Civil Code explicitly provides that the partnership retains
its juridical personality even if it fails to register. The failure to register
the contract of partnership does not invalidate the same as among the
partners, so long as the contract has the essential requisites, because the
main purpose of registration is to give notice to third parties, and it can
be assumed that the members themselves knew of the contents of their
contract. In the case at bar, non-compliance with this directory
provision of the law will not invalidate the partnership considering that
the totality of the evidence proves that respondent and Jacinto indeed
forged the partnership in question.
G.R. No. 144214 July 14, 2003

Luzviminda J. Villareal, Diogenes Villareal And Carmelito

Jose, petitioners,
vs.
Donaldo Efren C. Ramirez and Spouses Cesar G. Ramirez Jr. and
Carmelita C. Ramirez, respondents.

Facts:
Donaldo Efren C. Ramirez joined as a partner with a capital
contribution of P250,000, paid by his parents, Cesar and Carmelita Ramirez,
in an existing partnership of Villareal, Carmelito Jose and Jesus Jose with
Villareal as appointed Gen. Manager and Carmelito Jose as Operations
Manager.
Subsequently, Jesus Jose withdrew from the partnership and his capital
contribution of P250,000 was refunded to him in cash by agreement of the
partners. Without prior knowledge of respondents, petitioners closed down
the restaurant, allegedly because of increased rental. The restaurant furniture
and equipment were deposited in the respondents' house for storage.
Respondents wrote several letters for being uninterested in continuing the
business, accepting the offer to return the capital contribution and informing
the petitioners of the deterioration of the restaurant furniture and equipment
stored in their house. The repeated oral and written requests were, however,
left unheeded.
The RTC and CA ruled that the petitioners are jointly and severally
liable to pay the damages and
Hence, this Petition.
Issues:
1. Whether petitioners are liable to respondents for the latter's share in the
partnership;
 2. Whether the CA's computation of P253,114 as respondents' share is
correct
Held:
1. NO. Except as managers of the partnership, 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.
2. NO. Since it is the partnership, as a separate and distinct entity it can
only pay out what it has in its coffers, which consists of all its assets.
After all the creditors have been paid, whatever is left of the partnership
assets becomes available for the payment of the partners' shares.
Evidently, in the present case, 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, if any, paid. The CA's computation of the amount
to be refunded to respondents as their share was thus erroneous.
Reasons…
a. Properly taking the non-cash items into account will show that the
partnership was actually sustaining substantial losses, which
consequently decreased the capital of the partnership. Both the trial
and the appellate courts in fact recognized the decrease of the
partnership assets to almost nil, but the latter failed to recognize the
consequent corresponding decrease of the capital.
b. The CA's finding that the partnership had an outstanding obligation
in the amount of P240,658 was not supported by evidence.
 c. The CA failed to reduce the capitalization by P250,000, which was
the amount paid by the partnership to Jesus Jose when he withdrew
from the partnership.
Because of the above-mentioned transactions, the partnership capital was
actually reduced. When petitioners and respondents ventured into business
together, they should have prepared for the fact that their investment would
either grow or shrink. In the present case, the investment of respondents
substantially dwindled. The original amount of P250,000 which they had
invested could no longer be returned to them, because one third of the
partnership properties at the time of dissolution did not amount to that much.
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.
Facts:
Following the death of Tan Eng Kee on September 13, 1984, Matilde
Abubo, the common-law spouse of the decedent, joined by their children
Teresita, Nena, Clarita, Carlos, Corazon and Elpidio, collectively known as
herein petitioners HEIRS OF TAN ENG KEE, filed suit against the decedent's
brother TAN ENG LAY on February 19, 1990.
Allegedly after the second World War, Tan Eng Kee and Tan Eng Lay,
pooling their resources and industry together, entered into a partnership
engaged in the business of selling lumber and hardware and construction
supplies. They named their enterprise "Benguet Lumber" which they jointly
managed until Tan Eng Kee's death. Petitioners herein averred that the
business prospered due to the hard work and thrift of the alleged partners.
However, they claimed that in 1981, Tan Eng Lay and his children caused the
conversion of the partnership "Benguet Lumber" into a corporation called
"Benguet Lumber Company." The incorporation was purportedly a ruse to
deprive Tan Eng Kee and his heirs of their rightful participation in the profits
of the business. Petitioners prayed 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.
Issue: Whether or not the deceased Tan Eng Kee 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: NO. 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 may continue 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 falls short of the quantum of proof required to
establish 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.
Each has the right to demand an accounting as long as the partnership exists.
A demand for periodic accounting is evidence of a partnership. During his
lifetime, Tan EngKee appeared never to have made any such demand for
accounting from his brother, Tang Eng Lay. We 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.
G.R. No. L-22493 July 31, 1975

Island Sales, Inc., plaintiff-appellee,

vs.
United Pioneers General Construction Company, Et. Al Defendants.
Benjamin C. Daco, defendant-appellant.

Facts:

On April 22, 1961, the defendant company, a general partnership duly

registered under the laws of the Philippines, purchased from the plaintiff a
motor vehicle on the installment basis and for this purpose executed a
promissory note for P9,440.00, payable in twelve (12) equal monthly
installments of P786.63, the first installment payable on or before May 22,
1961 and the subsequent installments on the 22nd 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.

Having failed to receive the installment due on July 22, 1961, the
plaintiff sued the defendant company for the unpaid balance amounting to
P7,119.07. Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B.
Lumauig, and Augusto Palisoc were included as co-defendants in their
capacity as general partners of the defendant company. Hence, this petition.

Issue: Whether or not the dismissal of the complaint to favor one of the
general partners of a partnership increases the joint and subsidiary liability of
each of the remaining partners for the obligations of the partnership.

Held: NO. With the provisions of article 1816 of Civil Code, in the instant
case, there were five (5) general partners when the 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 the obligations of the defendant company.
The fact that the complaint against the defendant Romulo B. Lumauig was
dismissed, upon motion of the plaintiff, does not unmake the said Lumauig as
a general partner in the defendant company. In so moving to dismiss the
complaint, the plaintiff merely condoned Lumauig's individual liability to the
plaintiff.
G.R. No. 149844 October 13, 2004

Miguel Cuenco, Substituted by Marietta C. Cuyegkeng, petitioner,

vs.
Concepcion Cuenco Vda. De Manguerra, respondent.

Facts:

Miguel Cuenco and his brother Don Mariano Jesus Cuenco, father of
the respondent, formed the ‘Cuenco and Cuenco Law Offices’. On or around
August 4, 1931, the Cuenco and Cuenco Law Offices served as lawyers in two
(2) cases entitled involving a dispute among relatives over ownership of lot
903 of the Banilad Estate which is near the Cebu Provincial Capitol; that
records of said cases indicate the name of the petitioner alone as counsel of
record, but in truth and in fact, the real lawyer behind the success of said cases
was the influential Don Mariano Jesus Cuenco; that after winning said cases,
the awardees of Lot 903 subdivided said lot into three (3) parts wherein the
two (2) parts was for Mariano Cuenco’s attorney’s fees. These lots were
entrusted to his brother law partner, petitioner which obtained a title lot 903 –
A and under the obligation to hold the title in trust for his brother Mariano’s
children by first marriage.

The Lot 903-A were partitioned into 6 sublots to correspond to the six
(6) children of Mariano’s first marriage, without objection or opposition by
petitioner. Five out of six children were given deed of donation by Miguel
Cuenco for the said lot. Nevertheless, Concepcion, sixth child, occupied and
fenced the Lot 903-A-6 given to her. She also paid the taxes of the said land.

Until the last breath of Miguel Cuenco, he’s claiming the ownership of
Lot 903-A-6. His only surviving daughter, Marietta Cuyegkeng, stood as the
substitute petitioner in this case. She testified that she purchased the said land
from her late father sometime in 1990 and constructed a house thereon in the
same year; that she became aware of this case and that Lot 903-A-6 is in her
name per Transfer Certificate of Title #113781 of the Registry of Deeds.

Issues:

1. Whether or not Miguel Cuenco is the sole owner of Lot 903-A as his
share in the case completed.
2. Whether or not there is no constructive or implied trust exists between
the parties, and neither is the action one for reconveyance based upon
a constructive or implied trust.

Held:

1. NO. Given as attorney’s fees was one hectare of Lot 903, of which two
five-thousand square meter portions were identified as Lot 903-A and
Lot 903-B. That only Miguel handled Civil Case No. 9040 does not
mean that he alone is entitled to the attorney’s fees in the said cases.
"When a client employs the services of a law firm, he does not employ
the services of the lawyer who is assigned to personally handle the case.
Rather, he employs the entire law firm." Being a partner in the law firm,
Mariano -- like Miguel -- was likewise entitled to a share in the
attorney’s fees from the firm’s clients. Hence, the lower courts’ finding
that Lot 903-A was a part of Mariano Cuenco’s attorney’s fees has
ample support.
2. NO. A trust is a legal relationship between one having an equitable
ownership in a property and another having legal title to it. Trust
relations between parties may either be express or implied. Although
Lot 903-A was titled in Miguel’s name, the circumstances surrounding
the acquisition and the subsequent partial dispositions of this property
eloquently speak of the intent that the equitable or beneficial ownership
of the property should belong to Mariano and his heirs. With respect to
Lot 903-A-6 in particular, the existence of Concepcion’s equitable
ownership thereof is bolstered, not just by the above circumstances, but
also by the fact that respondent fenced the portion allocated to her and
planted trees thereon. More significantly, she also paid real property
taxes on Lot 903-A-6 yearly, from 1956 until 196933 -- the year when
she was dispossessed of the property. Such realty tax payments
constitute proof that the holder has a claim of title over the property.

From the time Lot 903-A was subdivided and Mariano’s six children -
- including Concepcion -- took possession as owners of their respective
portions, no whimper of protest from petitioner was heard until 1963.
By his acts as well as by his omissions, Miguel led Mariano and the
latter’s heirs, including Concepcion, to believe that Petitioner Cuenco
respected the ownership rights of respondent over Lot 903-A-6.
G.R. No. L-33580 February 6, 1931

Maximiliano Sancho, Plaintiff-Appellant,

vs.
Severiano Lizarraga, Defendant-Appellee.

FACTS:
The plaintiff brought an action for the rescission of a partnership
contract between himself and the defendant, entered into on October 15, 1920,
the reimbursement by the latter of his 50,000 peso investment therein, with
interest at 12 per cent per annum from October 15, 1920, with costs.
The defendant denies generally and specifically all the allegations of the
complaint and asking for the dissolution of the partnership, and the payment
to him as its manager and administrator of P500 monthly from October 15,
1920, until the final dissolution, with interest, one-half of said amount to be
charged to the plaintiff.
The CFI of Manila, finding it duly proved that the defendant had not
contributed all the capital he had bound himself to invest, and the plaintiff had
demanded that the defendant liquidate the partnership, declared it dissolved
on account of the expiration of the period for which it was constituted, and
ordered the defendant, as managing partner, to proceed without delay to
liquidate the partnership.
The plaintiff appealed from said decision.

Issue: Whether or not the Plaintiff has the right to demand rescission of the
partnership contract.
Held: No. Owing to the defendant's failure to pay to the partnership the whole
amount which he bound himself to pay, he became indebted to it for the
remainder, with interest and any damages occasioned thereby, but the plaintiff
did not thereby acquire the right to demand rescission of the partnership
contract according to article 1124 of the Code. This article cannot be applied
to the case in question, because it refers to the resolution of obligations in
general, whereas article 1681 and 1682 specifically refer to the contract of
partnership in particular. And it is a well-known principle that special
provisions prevail over general provisions. The appeal is hereby dismissed,
leaving the decision appealed from in full force.
G.R. No. L-45441 June 26, 1939
Mora Electric Co., Inc., Petitioner,
vs.
Paulino Matic and Benita Quiogue Viuda De Del Rosario, Respondents.

Facts:
Paulino Matic obtained from the City of Manila the concession to
provide the lighting system of the Manila North and South Cemeteries on All
Saint's Day in 1934, for the amount of P8,733, the payment of which was
guaranteed by Luzon Surety Co. Matic then authorized Benita Quiogue to
enter into a contract with Mora Electric Co., Inc., each party binding itself to
contribute the necessary labor and material and dividing the profits between
them after deducting therefrom all the necessary expenses, both parties also
binding themselves, for this purpose, to report the expenses which each might
have incurred. When the business failed because it did not yield the expected
profit, Luzon Surety Co. had to pay the city of the amount P8733 and filed
and action to Matic and Quiogue and in return filed an action against Mora
Electric Co., Inc to recover from the latter the amount of P8,773.

Issue: Whether or not Mora Electric Co., Inc is the only liable to pay to the
City of Manila under the agreement, civil partnership, with Matic and
Quiogue.

Held: Yes. The agreement pertains to the liquidation of the partnership and
the distribution of the profits and losses, which are not here at issue. The
amount now sought to be recovered is not claimed as loss or profit, but as the
contribution which Mora Electric Co., Inc., bound itself to make to the
partnership and which it was under a duty to pay, although it was paid instead
by Matic and Quiogue. The liquidation of the partnership is not now sought.
Indeed, there is no reason for such liquidation. While it is mentioned in the
appealed decision that the business produced P9,636.40, it does not appear
that the parties have made a report, as they have agreed to do, of the expenses
incurred by each, and it is not possible to determine whether there was a profit
or loss and what is the extent thereof and the measure of the respective liability
or benefit.
G.R. No. 134559 December 9, 1999
Antonia Torres assisted by her husband, Angelo Torres; and
Emeteria Baring, petitioners,
vs.
Court of Appeals and Manuel Torres, respondents.

Facts:
Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered
into a "joint venture agreement" with Respondent Manuel Torres for the
development of a parcel of land into a subdivision. Pursuant to the contract,
they executed a Deed of Sale covering the said parcel of land in favor of
respondent, who then had it registered in his name. By mortgaging the
property, respondent obtained from Equitable Bank a loan of P40,000 which,
was to be used for the development of the subdivision. All three of them also
agreed to share the proceeds from the sale of the subdivided lots. The project
did not push through, and the land was subsequently foreclosed by the bank.
According to the petitioners, the respondent used the loan not for the
development of the subdivision, but in furtherance of his own company,
Universal Umbrella Company. On the other hand, respondent alleged that he
used the loan to implement the Agreement for a total expense of P85,000.
Subsequently, petitioners filed a criminal case for estafa against respondent
and his wife, who were however acquitted. Thereafter, they filed the present
civil case. Hence, this Petition.

Issues:

1. Whether or not the transaction between the petitioners and respondent

was that of a joint venture/partnership.
 2. Whether or not the alleged partnership is null and void under the
provision of article 1422 and article 1773 and the petitioners are entitled
to the 60% value of sold land.
3. Whether or not the respondent is liable for the failure of subdivision
project.

Held:
1. Yes. The petitioners would contribute property to the partnership in the
form of land which was to be developed into a subdivision; while
respondent would give, in addition to his industry, the amount needed
for general expenses and other costs. Furthermore, the income from the
said project would be divided according to the stipulated percentage.
Clearly, the contract manifested the intention of the parties to form a
partnership. Respondent's actions clearly belie petitioners' contention
that he made no contribution to the partnership. Under Article 1767 of
the Civil Code, a partner may contribute not only money or property,
but also industry.
2. No. Supreme court clarify, Article 1773 was intended primarily to
protect third persons. The present case does not involve third parties
who may be prejudiced. Furthermore, petitioners themselves invoke the
allegedly void contract as basis for their claim that respondent should
pay them 60 percent of the value of the property. They cannot in one
breath deny the contract and in another recognize it, depending on what
momentarily suits their purpose. Parties cannot adopt inconsistent
positions in regard to a contract and courts will not tolerate, much less
approve, such practice. In short, the alleged nullity of the partnership
will not prevent courts from considering the Joint Venture Agreement
 an ordinary contract from which the parties' rights and obligations to
each other may be inferred and enforced. Moreover, the Joint Venture
Agreement clearly states that the consideration for the sale was the
expectation of profits from the subdivision project. Its first stipulation
states that petitioners did not actually receive payment for the parcel of
land sold to respondent. Consideration, more properly denominated as
cause, can take different forms, such as the prestation or promise of a
thing or service by another. In this case, the cause of the contract of sale
consisted not in the stated peso value of the land, but in the expectation
of profits from the subdivision project, for which the land was intended
to be used.
3. No. The Supreme court are not persuaded. True, the Court of Appeals
held that petitioners' acts were not the cause of the failure of the project.
But it also ruled that neither was respondent responsible therefor. In
imputing the blame solely to him, petitioners failed to give any reason
why we should disregard the factual findings of the appellate court
relieving him of fault. Verily, factual issues cannot be resolved in a
petition for review under Rule 45, as in this case. Petitioners have not
alleged, not to say shown, that their Petition constitutes one of the
exceptions to this doctrine. Accordingly, SC find no reversible error in
the CA's ruling that petitioners are not entitled to damages.