6. [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

|||  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, under the Joint Venture Agreement, was to be used for the
development of the subdivision. 4 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 petitioners, the project failed because of "respondent's lack of funds
or means and skills." They add that 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. With the said amount, he was able to effect the survey and the subdivision
of the lots. He secured the Lapu Lapu City Council's approval of the subdivision project
which he advertised in a local newspaper. He also caused the construction of roads,
curbs and gutters. Likewise, he entered into a contract with an engineering firm for the
building of sixty low-cost housing units and actually even set up a model house on one
of the subdivision lots. He did all of these for a total expense of P85,000. 

Respondent claimed that the subdivision project failed, however, because petitioners
and their relatives had separately caused the annotations of adverse claims on the title
to the land, which eventually scared away prospective buyers. Despite his requests,
petitioners refused to cause the clearing of the claims, thereby forcing him to give up
on the project.||| 

Petitioners deny having formed a partnership with respondent. They contend that the
Joint Venture Agreement and the earlier Deed of Sale, both of which were the bases of
the appellate court's finding of a partnership, were void.
 Issue: WON the partnership is void since there is no inventory of the real
property is made.

Held: No. Article 1773 was intended primarily to protect third persons. Thus, the
eminent Arturo M. Tolentino states that under the aforecited provision which is a
complement of Article 1771, "the execution of a public instrument would be useless if
there is no inventory of the property contributed, because without its designation and
description, they cannot be subject to inscription in the Registry of Property, and their
contribution cannot prejudice third persons. This will result in fraud to those who
contract with the partnership in the belief [in] the efficacy of the guaranty in which the
immovables may consist. Thus, the contract is declared void by the law when no such
inventory is made." The case at bar does not involve third parties who may be
prejudiced.||| 

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. As explained by the trial court, "the land was in effect given to the partnership
as [petitioner's] participation therein. . . . There was therefore a consideration for the
sale, the [petitioners] acting in the expectation that, should the venture come into
fruition, they [would] get sixty percent of the net profits."||| 

7. [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: Benguet Lumber has been around even before World War II but during the
war, its stocks were confiscated by the Japanese. After the war, the brothers Tan Eng
Lay and Tan Eng Kee pooled their resources in order to revive the business. In 1981,
Tan Eng Lay caused the conversion of Benguet Lumber into a corporation called
Benguet Lumber and Hardware Company, with him and his family as the incorporators.
In 1983, Tan Eng Kee died. Thereafter, the heirs of Tan Eng Kee demanded for an
accounting and the liquidation of the partnership.
Tan Eng Lay denied that there was a partnership between him and his brother. He said
that Tan Eng Kee was merely an employee of Benguet Lumber. He showed evidence
consisting of Tan Eng Kee’s payroll; his SSS as an employee and Benguet Lumber being
the employee. As a result of the presentation of said evidence, the heirs of Tan Eng Kee
filed a criminal case against Tan Eng Lay for allegedly fabricating those evidence.
Said criminal case was however dismissed for lack of evidence.

ISSUE:  Whether or not Tan Eng Kee is a partner.

HELD: No. There was no certificate of partnership between the brothers. The heirs
were not able to show what was the agreement between the brothers as to the sharing
of profits. All they presented were circumstantial evidence which in no way proved
partnership.
It is obvious that 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.
In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole
proprietorship. He registered the same as such in 1954; that Kee was just an employee
based on the latter’s payroll and SSS coverage, and other records indicating Tan Eng
Lay as the proprietor.
Also, the business definitely amounted to more P3,000.00 hence if there was a
partnership, it should have been made in a public instrument

8. [G.R. No. 164401. June 25, 2008.]

LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners, vs. THE HONORABLE COURT
OF APPEALS; THE HONORABLE PRESIDING JUDGE, Regional Trial Court, Branch 11,
Sindangan, Zamboanga Del Norte; THE REGIONAL TRIAL COURT SHERIFF, Branch 11,
Sindangan, Zamboanga Del Norte; THE CLERK OF COURT OF MANILA, as Ex-Officio
Sheriff; and LAMBERTO T. CHUA, respondents.
 Facts: In 1977, Chua and Jacinto Sunga formed a partnership to engage
in the marketing of liquefied petroleum gas. For convenience, the business, pursued
under the name, Shellite Gas Appliance Center (Shellite), was registered as a sole
proprietorship in the name of Jacinto, albeit the partnership arrangement called for
equal sharing of the net profit.
After Jacinto's death in 1989, his widow, petitioner Cecilia Sunga, and married
daughter, petitioner Lilibeth Sunga-Chan, continued with the business without
Chua's consent. Chua's subsequent repeated demands for accounting and winding
up went unheeded, prompting him to file on June 22, 1992 a Complaint for   Winding
Up of a Partnership Affairs, Accounting, Appraisal and Recovery of Shares and
Damages with Writ of Preliminary Attachment,
After another lengthy proceedings, petitioners, on September 24, 2002, submitted their
own CPA-certified valuation and accounting report. In it, petitioners limited Chua's
entitlement from the winding up of partnership affairs to an aggregate amount of
PhP3,154,736.65 only. 10 Chua, on the other hand, submitted a new
computation, 11 this time applying simple interest on the various items covered by his
claim. Under this methodology, Chua's aggregate claim went down
to PhP8,733,644.75.||| 

Issue: WON the obligation of petitioners is solidary|||.

Held: Yes. the complaint of Chua for winding up of partnership affairs,

accounting, apraisal, and recovery of shares and damages is clearly a suit to enforce a
solidary or joint and several obligation on the part of petitioners. As it were, the
continuance of the business and management of Shellite by petitioners against the will
of Chua gave rise to a solidary obligation, the acts complained of not being severable in
nature. Indeed, it is well-nigh impossible to draw the line between when the liability of
one petitioner ends and the liability of the other starts. In this kind of situation, the law
itself imposes solidary obligation.||| 

Any suggestion that the obligation to undertake an inventory, render an

accounting of partnership assets, and to wind up the partnership affairs is divisible
ought to be dismissed.
For the other, the duty of petitioners to remit to Chua his half interest and
share of the total partnership assets proceeds from petitioners' indivisible obligation
to render an accounting and inventory of such assets. The need for the imposition of
a solidary liability becomes all the m
||| 

9. Vesagas vs. Court of Appeals

[GR 142924, December 5, 2001]

Facts: Spouses Delfino and Helenda Raniel are members in good standing of the Luz
Village Tennis Club, Inc. Teodoro B. Vesagas, who claims to be the club’s
duly elected president, with Wilfred D. Asis, who, in turn, claims to be its
duly elected vice-president and legal counsel, allegedly summarily stripped them of their
lawful membership, without due process of law. Thereafter, the spouses filed a
Complaint with the Securities and Exchange Commission (SEC) on 26 March 1997
against the Vesagas and Asis (SEC Case 03-97-5598). The spouses Raniel asked the
Commission to declare as illegal their expulsion from the club as it was allegedly done
in utter disregard of the provisions of its by-laws as well as the requirements of due
process. They likewise sought the annulment of the amendments to the by-laws made
on 8 December 1996, changing the annual meeting of the club from the last Sunday of
January to November and increasing the number of trustees from nine to fifteen.
Finally, they prayed for the issuance of a Temporary Restraining Order and Writ of
Preliminary Injunction. 

The application for TRO was denied by SEC Hearing Officer Soller in an Order dated 29
April 1997. Before the hearing officer could start proceeding with the case, however,
Vesagas and Asis filed a motion to dismiss on the ground that the SEC lacks jurisdiction
over the subject matter of the case. The motion was denied on 5 August 1997. Their
subsequent move to have the ruling reconsidered was likewise denied. Unperturbed,
they filed a petition for certiorari with the SEC En Banc seeking a review of the hearing
officer’s orders. The petition was again denied for lack of merit, and so was the motion
for its reconsideration in separate orders, dated 14 July 1998 and 17 November 1998,
respectively. Dissatisfied with the verdict, Vesagas and Asis promptly sought relief with
the Court of Appeals contesting the ruling of the Commission en banc. The appellate
court, however, dismissed the petition for lack of merit in a Decision promulgated on 30
July 1999. Then, in a resolution rendered on 16 March 2000, it similarly denied their
motion for reconsideration. Vesagas and Asis filed the petition for review on certiorari. 

Issue: Whether the club has already ceased to be a corporate body. 

Held: The Corporation Code establishes the procedure and other formal requirements a

corporation needs to follow in case it elects to dissolve and terminate its structure
voluntarily and where no rights of creditors may possibly be prejudiced. We note that to
substantiate their claim of dissolution, petitioners submitted only two relevant
documents: the Minutes of the First Board Meeting held on January 5, 1997, and the
board resolution issued on April 14, 1997 which declared "to continue to consider the
club as a non-registered or a non-corporate entity and just a social association of
respectable and respecting individual members who have associated themselves, since
the 1970's for the purpose of playing the sports of tennis . . . ." Obviously, these two
documents will not suffice. The requirements mandated by the Corporation Code should
have been strictly complied with by the members of the club. The records reveal
that no proof was offered by the petitioners with regard to the notice and publication
requirements. Similarly wanting is the proof of the board members' certification. Lastly,
and most important of all, the SEC Order of Dissolution was never submitted as
evidence.

10. 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.
G.R. No. 144214             July 14, 2003
Subject: BusOrg 1
A share in a partnership can be returned only after the completion of the latter’s
dissolution, liquidation and winding up of the business.

Facts:
Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership with a
capital of P750,000 for the operation of a restaurant and catering business under the
name “Aquarius Food House and Catering Services.” Villareal was appointed general
manager and Carmelito Jose, operations manager. Respondent Donaldo Ramirez joined
as a partner on September 5, 1984 with a capital contribution of P250,000  which was
paid by his parents, Respondents Cesar and Carmelita Ramirez. Jesus Jose withdrew
from the partnership and his capital contribution of P250,000 was refunded to him in
cash by agreement of the partners.

In the same month, 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. On March 1, 1987,
respondent spouses wrote petitioners, saying that they were no longer interested in
continuing their partnership or in reopening the restaurant, and that they were
accepting the latter’s offer to return their capital contribution. Respondent wrote
another letter informing petitioners of the deterioration of the restaurant furniture and
equipment stored in their house. She also reiterated the request for the return of their
one-third share in the equity of the partnership. The repeated oral and written requests
were, however, left unheeded.

Respondents filed before the RTC for the collection of a sum of money from petitioners.
Petitioners contended that respondents had expressed a desire to withdraw from the
partnership and had called for its dissolution under Articles 1830 and 1831; that
respondents had been paid, upon the turnover to them of furniture and equipment
worth over P400,000; and that the latter had no right to demand a return of their
equity because their share, together with the rest of the capital of the partnership, had
been spent as a result of irreversible business losses.

In their Reply, respondents alleged that had not received any regular report or
accounting from the latter, who had solely managed the business. Respondents also
alleged that they expected the equipment and the furniture stored in their house to be
removed by petitioners as soon as the latter found a better location for the restaurant.
RTC 17 ruled that the parties had voluntarily entered into a partnership, which could be
dissolved at any time. Petitioners clearly intended to dissolve it when they stopped
operating the restaurant. Hence, the trial court rendered a judgment in favor of
respondents and ordering the petitioners to pay jointly and severally.

Issue: WON petitioners are liable to respondents for the latter’s share in the
partnership
Held:
The Petition has merit. Both the trial and the appellate courts found that a partnership
had indeed existed, and that it was dissolved on March 1, 1987. They found that the
dissolution took place when respondents informed petitioners of the intention to
discontinue. Respondents consequently demanded from petitioners the return of their
one-third equity in the partnership. We hold that respondents have no right to demand
from petitioners the return of their equity share. 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.

The amount to be refunded is necessarily limited to its total resources. In other words,
it can only pay out what it has in its coffers, which consists of all its assets. However,
before the partners can be paid their shares, the creditors of the partnership must first
be compensated. 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.

11.[G.R. No. 177549. June 18, 2009.]

ANTHONY S. YU, ROSITA G. YU and JASON G. YU,  petitioners, vs.

JOSEPH S. YUKAYGUAN, NANCY L. YUKAYGUAN, JERALD
NERWIN L. YUKAYGUAN, and JILL NESLIE L. YUKAYGUAN, [on
 their own behalf and on behalf of] WINCHESTER INDUSTRIAL
SUPPLY, INC., respondents.

Facts: Herein respondents composed the Yukayguan Family, namely, the

father, Joseph S. Yukayguan (Joseph); the wife, Nancy L. Yukayguan (Nancy); and
their children Jerald Nerwin L. Yukayguan (Jerald) and Jill Neslie Yukayguan (Jill).
Petitioner Anthony is the older half-brother of respondent Joseph.
Petitioners and the respondents were all stockholders of Winchester Industrial
Supply, Inc. (Winchester, Inc.), a domestic corporation engaged in the operation of
a general hardware and industrial supply and equipment business.
On 15 October 2002, respondents filed against petitioners a verified
Complaint for Accounting, Inspection of Corporate Books and Damages through
Embezzlement and Falsification of Corporate Records and Accounts 6 before the
RTC of Cebu. The said Complaint was filed by respondents, in their own behalf and
as a derivative suit on behalf of Winchester, Inc., According to respondents, 7
Winchester, Inc. was established and incorporated on 12 September 1977, with
petitioner Anthony as one of the incorporators, holding 1,000 shares of stock worth
P100,000.00. 8 Petitioner Anthony paid for the said shares of stock with respondent
Joseph's money, thus, making the former a mere trustee of the shares for the latter.
On 14 November 1984, petitioner Anthony ceded 800 of his 1,000 shares of stock in
Winchester, Inc. to respondent Joseph, as well as Yu Kay Guan, 9 Siao So Lan, and
John S. Yu. 10 Petitioner Anthony remained as trustee for respondent Joseph of the
200 shares of stock in Winchester, Inc., still in petitioner Anthony's name.

Respondents then alleged that on 30 June 1985, Winchester, Inc. bought

from its incorporators, excluding petitioner Anthony, their accumulated 8,500 shares
in the corporation. 11 Subsequently, on 7 November 1995, Winchester, Inc. sold the
same 8,500 shares to other persons, who included respondents Nancy, Jerald, and
Jill; and petitioners Rosita and Jason.

In amicable settlement of their dispute, the petitioners and respondents agreed to a

division of the stocks in trade, 18 the real properties, and the other assets of
Winchester, Inc. In partial implementation of the afore-mentioned amicable settlement,
the stocks in trade and real properties in the name of Winchester, Inc. were equally
distributed among petitioners and respondents. As a result, the stockholders and
members of the Board of Directors of Winchester, Inc. passed, on 4 January 2003, a
unanimous Resolution 19 dissolving the corporation as of said date||.

Issue: WOFollowing the voluntary or involuntary dissolution of a corporation,

liquidation is the process of settling the affairs of said corporation, which consists of
 adjusting the debts and claims, that is, of collecting all that is due the corporation,
the settlement and adjustment of claims against it and the payment of its just
debts. 44 More particularly, it entails the following:

Held: Winding up the affairs of the corporation means the collection of all
assets, the payment of all its creditors, and the distribution of the remaining
assets, if any among the stockholders thereof in accordance with their contracts,
or if there be no special contract, on the basis of their respective interests. The
manner of liquidation or winding up may be provided for in the corporate by-
laws and this would prevail unless it is inconsistent with law. 45
It may be undertaken by the corporation itself, through its Board of Directors;
or by trustees to whom all corporate assets are conveyed for liquidation; or by a
receiver appointed by the SEC upon its decree dissolving the corporation. 46
Glaringly, a derivative suit is fundamentally distinct and independent from
liquidation proceedings. They are neither part of each other nor the necessary
consequence of the other. There is totally no justification for the Court of Appeals to
convert what was supposedly a derivative suit instituted by respondents, on their
own behalf and on behalf of Winchester, Inc. against petitioners, to a proceeding for
the liquidation of Winchester, Inc.

12.[G.R. No. 70926. January 31, 1989.]

DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE

COURT and LEUNG YIU,  respondents.

Facts: Dan Fue Leung.The Sun Wah Panciteria was registered as a single

proprietorship and its licenses and permits were issued to and in favor of petitioner Dan
Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the
trial of the case to show that Sun Wah Panciteria was actually a partnership and that he
was one of the partners having contributed P4,000.00 to its initial establishment.Lower
court ruled in favor of the private respondent. Petitioner appealed the trial court's
amended decision. However,the questioned decision was further modified and affirmed
by the appellate court. 

Both the trial court and the appellate court declared that the private petitioner is a
partner and is entitled to a share of the annual profits of the restaurant. Hence, an
appeal to the SC. The petitioner argues that private respondent extended 'financial
assistance' to herein petitioner at the time of the establishment of the Sun Wah
Panciteria, in return of which private respondent allegedly will receive a share in the
profits of the restaurant. Petitioner also argued that respondent right to demand
already prescribed.

Issue: WON respondent right to demand already prescribed.

Held: Regarding the prescriptive period within which the private respondent
may demand an accounting, Articles 1806, 1807, and 1809 show that the right to
demand an accounting exists as long as the partnership exists. Prescription begins
to run only upon the dissolution of the partnership when the final accounting is
done.
There shall be a liquidation and winding up of partnership affairs, return of capital,
and other incidents of dissolution because the continuation of the partnership has
become inequitable.

|14  [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.

GR No. L-11840, July 26, 1960

ANTONIO C. GOQUIOLAY v. WASHINGTON Z. SYCIP, 108 Phil 947

FACTS: Tan Sin An and Antonio C. Goquiolay entered into a general commercial
partnership under the partnership name "Tan Sin An and Antonio C. Goquiolay", for the
purpose of dealing in real estate. The partnership had a capital of P30,000.00,
P18,000.00 of which was contributed by Goquiolay and P12,000.00 by Tan Sin An. The
agreement lodged upon Tan Sin An the sole management of the partnership affairs.
The lifetime of the partnership was fixed at ten (10) years.

On May 31, 1940, Antonio Goquiolay executed a general power of attorney to this
effect:

"That besides the powers and duties granted the said Tan Sin An by the articles of co-
partnership of said co-partnership "Tan Sin An and Antonio Goquiolay", the said Tan Sin
An should act as my Manager for said co-partnership for the full period of the term for
which said co-partnership was organized or until the whole period that the said capital
of P30,000.00 of the co-partnership should last..”

The plaintiff partnership "Tan Sin An and Goquiolay" purchased the 3 parcels of land,
known as Lots Nos. 526, 441 and 521 of the Cadastral Survey of Davao, subject-matter
of the instant litigation, assuming the payment of a mortgage obligation of. P25.000.00,
payable to "La Urbana Sociedad Mutua de Construction y Prestamos". Another 46
parcels were purchased by Tan Sin An in his individual capacity, and he assumed
payment of a mortgage debt thereon for P35,000.00, with interest.

The two separate obligations were consolidated in an instrument executed by the

partnership and Tan Sin An, whereby the entire 49 lots were mortgaged in favor of the
"Banco Hipotecario de Filipinas" (as successor to "La Urbana").

Tan Sin An died, leaving as surviving heirs his widow, Kong Chai Pin, and four minor
children. Defendant Kong Chai Pin was appointed administratrix of the intestate estate
of her deceased husband.

In the meantime, repeated demands for payment were made by the Banco Hipotecario
on the partnership and on Tan Sin An. In March, 1944, the defendant Sing Yee and
Cuan, Co., Inc., upon request of defendant Yutivo Sons Hardware Co., paid the
remaining balance of the mortgage debt, and the mortgage was cancelled.

Then in 1946, Yutivo Sons Hardware Co. and Sing Yee and Cuan Co., Inc. filed their
claims in the intestate proceedings of Tan Sin An for P62,415.91 and P54,310.13,
respectively, as alleged obligations of the partnership "Tan Sin An and Antonio C.
Goquiolay" and Tan Sin An, for advances, interests and taxes paid in amortizing and
discharging their obligations to "La Urbana" and the "Banco Hipotecario".

On March 29, 1949, Kong Chai Pin filed a petition with the probate court for authority to
sell all the 49 parcels of land to Washington Z, Sycip and Betty Y. Lee, for the purpose
primarily of settling the aforesaid debts of Tan Sin An and the partnership.

Learning about the sale to Sycip and Lee, the surviving partner Antonio Goquiolay filed
a petition in the intestate proceedings seeking 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.

The second amended complaint in the case at bar prays, among other things, for the
annulment of the sale in favor of Washington Sycip and Betty Lee, and their subsequent
conveyance in favor of the Insular Development Co., Inc., in so far as the three (3) lots
owned by the plaintiff partnership are concerned. The answer averred the validity of the
sale by Kong Chai Pin as successor partner, in lieu of the late Tan Sin An. After hearing,
the complaint was dismissed by the lower court in its decision dated October 30, 1956;
hence, this appeal.

ISSUES:
1. Whether or not Kong Chai Pin succeeded her husband, Tan Sin An, in the sole
management of the partnership, upon the latter's death.
 2. Whether or not the consent of the other partners was necessary to perfect the
sale of the partnership properties to Washington Sycip and Betty Lee.

RULING:
1. No. The Articles of Co-Partnership and the power of attorney executed by Antonio
Goquiolay conferred upon Tan Sin An 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 Sin An; more appropriately, it related to the succession in
the proprietary interest of each partner. The covenant that Antonio Goquiolay shall
have no voice or participation in the management of the partnership, being a limitation
upon his right as a general partner, must be held coextensive only with Tan's right to
manage the affairs, the contrary not being clearly apparent.

Upon the other hand, consonant with the articles of co-partnership providing for the
continuation of the firm notwithstanding the death of one of the partners, the heirs of
the deceased, by never repudiating or refusing to be bound under the said provision in
the articles, became individual partners with Antonio Goquiolay upon Tan's demise. The
validity of like clauses in partnership agreements is expressly sanctioned under Article
222 of the Code of Commerce.

Appellants argue, however, that since the "new" members' liability in the partnership
was limited merely to the value of the share or estate left by the deceased Tan Sin An,
they became no more than limited partners and, as such, were disqualified from the
management of the business under Article 148 of the Code of Commerce.

Kong Chai Pin, who, by her affirmative actions, manifested her intent to be bound by
the partnership agreement not only as a limited but as a general partner. Thus, she
managed and retained possession of the partnership properties and was admittedly
deriving income therefrom up to and until the same were sold to Washington Sycip and
Betty Lee. In fact, by executing the deed of sale of the parcels of land in dispute in the
name of the partnership, she was acting no less than as a managing partner. Having
thus preferred to act as such, she could be held liable for the partnership debts and
liabilities as a general partner, beyond what she might have derived only from the
estate of her deceased husband. By allowing her to retain control of the firm's property
from 1942 to 1949, plaintiff estopped himself to deny her legal representation of the
partnership, with the power to bind it by proper contracts.

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, especially those partners acting with ostensible
authority.
And so, we held in one case:
"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 inquiries as to
the agreements bad between the partners. Its knowledge is enough that it is
contracting with the partnership which is represented by one of the managing partners.

"There is a general presumption that each individual partner is an agent for the firm
and that he has authority to bind the firm in carrying on the partnership transactions.

"The presumption is sufficient to permit third persons to hold the firm liable on
transactions entered into by one of the members of the firm acting apparently in its
behalf and within the scope of his authority.'

We are not unaware of the provision of Article 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."

But this 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, furthermore, he would not
ordinarily act to the prejudice of his co-partners. The regular course of business
procedure does not require that each time a third person contracts with one of the
managing partners, he should inquire as to the latter's authority to do so, or that he
should first ascertain whether or not the other partners had given their consent thereto.
In fact, Article 180 of the same Code of Commerce provides that even if a new
obligation was contracted against the express will of one of the managing partners, "it
shall not be annulled for such reason, and it shall produce its effects without prejudice
to the responsibility of the member or members who contracted it, for the damages
they may have caused to the common fund."

Although the partnership under consideration is a commercial partnership and,

therefore, to be governed by the Code of Commerce, the provisions of the old Civil
Code may give us some light on the right of one partner to bind the partnership. States
Art. 1695 thereof:

"Should no agreement have been made with respect to the form of management, the
following rules shall be observed:
All the partners shall be considered agents, and whatever any one of them may do
individually shall bind, the partnership; but each one may oppose any act of the others
before it has become legally binding."

The records fail to disclose that appellant Goquiolay made any opposition to the sale of
the partnership realty to Washington Z. Sycip and Betty Lee; on the contrary, it appears
that he (Goquiolay) 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.