4. Mendiola vs. CA ( issue in this case, was whether Mendiola did become a partner.

The ratio here is, the

commonality of the property, which essentially determines the existence of the partnership)
 FACTS:
o Pacfor corporation organized and existing under the laws of California. Pacfor
entered into a "Side Agreement on Representative Office known as Pacific Forest
Resources (Phils.), Inc." with Arsenio T. Mendiola.
o Private respondent (Pacfor) will establish a Pacfor representative office in the
Philippines, to be known as Pacfor Phils, and Mendiola will be its President.
o Mendiola wrote Pacfor seeking confirmation of his 50% equity of Pacfor Phils.
Pacfor replied that Mendiola is not a part-owner of Pacfor Phils. because the latter
is merely Pacfor-USA's representative office and not an entity separate and distinct
from Pacfor-USA
 DOCTRINE:
o In a partnership, the members become co-owners of what is contributed to the firm
capital and of all property that may be acquired thereby and through the efforts of
the members. The property or stock of the partnership forms a community of goods,
a common fund, in which each party has a proprietary interest. In fact, the New Civil
Code regards a partner as a co-owner of specific partnership property. Each partner
possesses a joint interest in the whole of partnership property. If the relation does
not have this feature, it is not one of partnership.
o Besides, a corporation cannot become a member of a partnership in the absence
of express authorization by statute or charter. This doctrine is based on the
following considerations: (1) that the mutual agency between the partners, whereby
the corporation would be bound by the acts of persons who are not its duly
appointed and authorized agents and officers, would be inconsistent with the policy
of the law that the corporation shall manage its own affairs separately and
exclusively; and, (2) that such an arrangement would improperly allow corporate
property to become subject to risks not contemplated by the stockholders when
they originally invested in the corporation. No such authorization has been proved
in the case at bar.
 RULING:
o We hold that petitioner is an employee of private respondent Pacfor and that no partnership
or co-ownership exists between the parties.

9. Ona vs. CIR (in this case, at first, upon succession, the heirs were just mere co-owners of the property they
inherited, and does not automatically becomes partnership. However, when they used these property owned
in common for furtherance of profit, it becomes an unregistered partnership)

 FACTS:
o Julia Buñ ales died leaving as heirs her surviving spouse and her five children. The
surviving spouse, Ona, was appointed administrator of the estate of said deceased.
o The project of partition shows that the heirs have undivided 1/2 interest in ten
parcels of land
o Although the project of partition was approved by the Court, no attempt was made
to divide the properties. Instead, the properties remained under the management
of Lorenzo T. Oñ a who used said properties in business by leasing or selling
them and investing the income derived therefrom and the proceeds from the
sales in real properties and securities.
o The incomes are recorded in the books of account kept by Ona
 DOCTRINE:
 o From the moment petitioners allowed not only the incomes from their respective
shares of the inheritance but even the inherited properties themselves to be used by
Lorenzo T. Oñ a as a common fund in undertaking several transactions or in
business, with the intention of deriving profit to be shared by them proportionally,
such act was tantamonut to actually contributing such incomes to a common fund
and, in effect, they thereby formed an unregistered partnership.
o Before the partition and distribution of the estate of the deceased, all the income
thereof does belong commonly to all the heirs, obviously, without them becoming
thereby unregistered co-partners, but it does not necessarily follow that such status
as co-owners continues until the inheritance is actually and physically distributed
among the heirs.
o For tax purposes, the co-ownership of inherited properties is automatically converted into
an unregistered partnership the moment the said common properties and/or the incomes
derived therefrom are used as a common fund with intent to produce profits for the heirs in
proportion to their respective shares in the inheritance as determined in a project partition.
o When income derived from inherited properties deemed part of partnership income.—
The income derived from inherited properties may be considered as individual income
of the respective heirs only so long as the inheritance or estate is not distributed or, at
least, partitioned, but the moment their respective known shares are used as part of the
common assets of the heirs to be used in making profits, it is but proper that the income
of such shares should be considered as part of the taxable income of an unregistered
partnership
 RULING:
o It is incontrovertible that petitioners did not merely limit themselves to holding the
properties inherited by them. It is admitted that during the material years involved,
some of the said properties were sold at considerable profit, and that with said
profit, petitioners engaged, thru Lorenzo T. Oñ a, in the purchase and sale of
corporate securities. All the profits from these ventures were divided among
petitioners proportionately in accordance with their respective shares in the
inheritance.

14. Ortega vs. CA (the main issue of the case was the partnership being a partnership at will “no period and
specific undertaking”, and the contention that Misa, the withdrawing partner, who caused the dissolution of
the partnership was tainted with bad faith)

 FACTS:
o Misa, appellees Jesus B. Bito and Mariano M. Lozada associated themselves together,
as senior partners with respondents-appellees Gregorio F. Ortega, Tomas O. del
Castillo, Jr., and Benjamin Bacorro, as junior partners.
o Misa wrote the respondents-appellees a letter stating that he is retiring and wants a proper
liquidation of his participation in the firm.
o Subsequently, petitioner filed a petition for dissolution and liquidation of partnership.
 DOCTRINE:
o The birth and life of a partnership at will is predicated on the mutual desire and consent
of the partners. The right to choose with whom a person wishes to associate himself is
the very foundation and essence of that partnership. Its continued existence is, in turn,
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.
o Neither would the presence of a period for its specific duration or the statement of a
particular purpose for its creation prevent the dissolution of any partnership by an act or
will of a partner. 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.
o 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.
o The dissolution of a partnership is the change in the relation of the parties caused by
any partner ceasing to be associated in the carrying on, as might be distinguished
from the winding up of, the business. Upon its dissolution, the partnership continues
and its legal personality is retained until the complete winding up of its business
culminating in its termination.
 RULING:
o We 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. Indeed, for as long as the reason
for withdrawal of a partner is not contrary to the dictates of justice and fairness, nor for the
purpose of unduly visiting harm and damage upon the partnership, bad faith cannot be said
to characterize the act. Bad faith, in the context here used, is no different from its normal
concept of a conscious and intentional design to do a wrongful act for a dishonest purpose or
moral obliquity.

19. Po Yeng Cheo vs. Lim Ka Yam

 FACTS:
o The plaintiff, Po Yeng Cheo, is the sole heir of Po Gui Yao, and as such Po Yeng Cheo
inherited the interest left by Po Gui Yao in a business conducted in Manila under the
style Kwong Cheong Tay.
o The manager of Kwong Cheong Tay, prior to its complete cessation from business in
1910, was Lim Ka Yam
o Kwong Cheong Tay ceased to do business. Lim Ka Yam failed to submit to the partners any
formal liquidation of the business even after repeated demands to that effect have been
made upon him by the plaintiff.
o The RTC rendered judgment in favor of the plaintiff to recover from defendant Lim
Yock Tock, as administrator of Lim Ka Yam

 DOCTRINE:
o Though the manager of a mercantile partnership which has ceased to do business is
accountable to his associates for any assets of the concern in his hands, judgment
cannot be rendered against him for the proportionate share of the capital claimed by
one of the partners in an action brought by such partner alone, where the concern has
 not been liquidated and there is no proof showing the existence of assets applicable to
capital account.
o Action by single partner.—Where the only assets in the hands of the manager of a
defunct partnership consists of shares in other companies, the true value of which is not
proved, it is error, in an action for an accounting brought against him by one of the
partners, to give judgment in favor of the plaintiff for a sum of money equivalent to his
aliquot part of the par value of such shares. A single partner cannot recover from
another, without process of liquidation or division, a part of the undivided property of
the partnership.
o When the manager of a mercantile partnership dies the duty of liquidating it devolves
upon the surviving member, or members, of the firm and not upon the legal
representative of the deceased member.
o When the manager of a mercantile partnership who is charged with the duty of
liquidating the same dies, his associates should take the proper steps to settle its affairs;
and any claim against him, or his estate, for damages incident to the misappropriation
of its funds by him or for damage resulting from his wrongful acts as manager, in excess
of his interest in the firm assets, should be prosecuted against his estate in
administration in the manner provided by law.
o When the manager of a defunct partnership who is named defendant in an action for an
accounting of its affairs and against whom judgment is sought for mismanagement or
misappropriation of its funds dies, the action should be discontinued, upon motion to
that effect by his personal representative, and the claim for damages should be
presented to the committee on claims in the administration of his estate. It is error to
prosecute such an action to judgment over the objection of the administrator.
 RULING:
o It was erroneous to give judgment in favor of the plaintiff to the extent of his share of the
capital of Kwong Cheong Tay. The managing partner of a mercantile enterprise is not a
debtor to the shareholders for the capital embarked by the in the business; and he can only
be made liable for the capital when, upon liquidation of the business, there are found to be
assets in his hands applicable to capital account.

24. Pardo vs. Hercules Lumber Co., (A by law of a corporation cannot contravene, the express right granted by
the New Civil Code – the right to inspect the records and business transcations of the partnership by a
partner)

 FACTS:
o Pardo stockholder in the Hercules Lumber Company, Inc. Respondent, Ignacio
Ferrer, is the acting secretary of the said company. It appears that Ferrer has
refused to permit the Pardo or his agent to inspect the records and business
transactions of the said Hercules Lumber Company, Inc., at times desired by the
petitioner.
o In this connection the article 10 of the By-laws of the respondent corporation it is declared
that "Every shareholder may examine the books of the company and other documents
pertaining to the same upon the days which the board of directors shall annually fix."
 DOCTRINE:
o The general right given by the statute may not be lawfully abridged to the extent attempted
in this resolution. It may be admitted that the officials in charge of a corporation may deny
inspection when sought at unusual hours or under other improper conditions; but neither
the executive officers nor the board of directors have the power to deprive a stockholder of
the right altogether. The right of inspection can be exercised "at reasonable hours." This
 means at reasonable hours on business days throughout the year, and not merely during
some arbitrary period of a few days chosen by the directors. Thus, the writ of mandamus
was issued.
 RULING:
o A by-law unduly restricting the right of inspection is undoubtedly invalid.

29. Emnace vs. CA (The right to accounting by a partner prescribes only upon the dissolution of the
partnership when the final accounting is done)

 FACTS:
o Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a
business known as Ma. Nelma Fishing Industry. The partnership was dissolved caused by
Divinagracia’s withdrawal. They executed an agreement of partition and distribution of the
partnership properties among them.
o The respondents, heirs of Tabanao, filed an action for accounting, payment of
shares, division of assets and damages against petitioner Emnace before the RTC.
o Respondent heirs alleged that throughout the existence of the partnership and even
after Tabanao’s death, petitioner Emnace failed to submit to them any statement of
assets and liabilities of the partnership, and to render an accounting of the
partnership’s finances. Petitioner sought dismissal of the complaint by prescription
 DOCTRINE:
o The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3)
termination. The partnership, although dissolved, continues to exist and its legal personality
is retained, at which time it completes the winding up of its affairs, including the partitioning
and distribution of the net partnership assets to the partners. For as long as the partnership
exists, any of the partners may demand an accounting of the partnership’s business.
Prescription of the said right starts to run only upon the dissolution of the partnership when
the final accounting is done.
o An action for accounting, payment of partnership shares, division of assets and damages
is a personal action which, under the Rules, may be commenced and tried where the
defendant resides or may be found, or where the plaintiffs reside, at the election of the
latter.
o The heirs, as successors who stepped into the shoes of their decedent upon his death,
can commence any action originally pertaining to the decedent .— A prior settlement of
the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix,
is not necessary for any of the heirs to acquire legal capacity to sue. As successors who
stepped into the shoes of their decedent upon his death, they can commence any action
originally pertaining to the decedent. From the moment of his death, his rights as a
partner and to demand fulfillment of petitioner’s obligations as outlined in their
dissolution agreement were transmitted to respondents. They, therefore, had the
capacity to sue and seek the court’s intervention to compel petitioner to fulfill his
obligations.
 RULING:
o Contrary to petitioner’s protestations that respondents’ right to inquire into the business
affairs of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription
had not even begun to run in the absence of a final accounting. Article 1842 of the Civil Code
provides: The right to an account of his interest shall accrue to any partner, or his legal
 representative as against the winding up partners or the surviving partners or the person or
partnership continuing the business, at the date of dissolution, in the absence of any
agreement to the contrary.
o When a final accounting is made, it is only then that prescription begins to run. In the case at
bar, no final accounting has been made, and that is precisely what respondents are seeking
in their action before the trial court, since petitioner has failed or refused to render an
accounting of the partnership’s business and assets. Hence, the said action is not barred by
prescription.

34. Navarro vs. Karen Go (The main ratio of this case is, the property here presumably belonging to the
conjugal regime. Likewise, we note that conjugal property relation is the same with partnership (co-
ownership) with regard to the property relation.

 FACTS:
o Karen Go filed two complaints before the RTC for replevin and/or sum of money
against Navarro.
o Navarro alleges that even if the lease agreements were in the name of Kargo
Enterprises, since it did not have the requisite juridical personality to sue, the actual
parties to the agreement are himself and Glenn Go (Husband of Karen Go). she was
not a real party-in-interest and the complaints failed to state a cause of action.
 DOCTRINE:
o In this connection, Article 1811 of the Civil Code provides that “[a] partner is a co-owner
with the other partners of specific partnership property.” In this connection, Article
1811 of the Civil Code provides that “[a] partner is a co-owner with the other partners of
specific partnership property.”
o Only one of the co-owners, namely the coowner who filed the suit for the recovery of
the co-owned property, is an indispensable party thereto. The other coowners are not
indispensable partners. They are not even necessary parties, for a complete relief can be
accorded in a suit even without their participation, since the suit is presumed to have
been filed for the benefit of all co-owners.—In sum, in suits to recover properties, all co-
owners are real parties in interest. However, pursuant to Article 487 of the Civil Code
and relevant jurisprudence, any one of them may bring an action, any kind of action, for
the recovery of co-owned properties. Therefore, only one of the co-owners, namely the
co-owner who filed the suit for the recovery of the co-owned property, is an
indispensable party thereto. The other co-owners are not indispensable parties. They
are not even necessary parties, for a complete relief can be accorded in the suit even
without their participation, since the suit is presumed to have been filed for the benefit
of all co-owners.
 RULING:
o As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit
from or be injured by a judgment in this case. Thus, contrary to Navarro's contention,
Karen Go is the real party-in-interest, and it is legally incorrect to say that her
Complaint does not state a cause of action because her name did not appear in the
Lease Agreement that her husband signed in behalf of Kargo Enterprises.
39. Island Sales Inc. vs. United Pioneers General Construction (the prorate liability of the partnership is not
affected by condonation of the creditor to one of the partners liability)

 FACTS:
o United Pioneers General Construction Company is a general partnership formed by
Benjamin Daco, Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo Lumauig.
o United Pioneers purchased by installment a motor vehicle from Island Sales, Inc and
executed a promissory note for said payments. Due to United Pioneers default in
payment, Island Sales sued the company and Daco, Guizona, Sim, Lumauig and
Palisoc where included as co-defendants in their capacity as general partners of the
company.
o Upon the motion of Island Sales, the complaint against Lumauig was dismissed and
he was removed as defendant. Daco and Sim moved to reconsider the decision
claiming that since there are 5 general partners, the joint and subsidiary liability of
each partner should not exceed 1/5 of the obligations of the defendant company.
The trial court, however, denied the motion.
 DOCTRINE:
o Under Article 1816 of the Civil Code “all partners including industrial ones, shall be liable
pro rata with all their property and after all the partnership assets have been exhausted, for
the contracts which may be entered into in the name and for the account of the partnership,
under its signature and by a person authorized to act for the partnership. However, any
partner may enter into a separate obligation to perform a partnership contract.”
o Condonation by creditor of share in partnerships debt of one partner does not increase
pro rata liability of other partners.
 RULING:
o No. In the case of Co-Pitco v. Yulo the Court ruled that being a civil partnership, by the
express provisions of articles l698 and 1137 of the Civil Code, the partners are not liable
each for the whole debt of the partnership. The liability is pro rata.
o In this case, the promissory note was executed when there was 5 general partners and in
behalf of the partnership. Given that the liability of the partner is pro rata, the liability of
Daco shall be limited only to 1/5 of the obligations of the company. The dismissal of the case
against Lumauig does not absolve him of his liability as a general partner of the company.
Island Sales merely condoned Lumauig’s individual liability.

44. Santiago Syjuco Inc. vs. Castro (Atty. Par commended the lawyer of the lims here. They used the alleged
existence of the partnership to make void the chattel mortgage they executed in their personal capacity)

 FACTS:
o Eugenio Lim all hereinafter collectively called the Lims, borrowed from petitioner
Santiago Syjuco, Inc. the aggregate of the loans stood at P2,460,000.00 and the
security had been augmented by bringing into the mortgage other property, also
registered as owned pro indiviso by the Lims.
o The attempt to foreclose triggered off a legal battle that has dragged on for more
than twenty years.
oThe complaint advocated the theory that 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.
 DOCTRINE:
 o The principle of estoppel is used in this case. An estoppel may arise from silence as well as
from words. 'Estoppel by silence' arises where a person, who by force of circumstances is
under a duty to another to speak, refrains from doing so and thereby leads the other to
believe in the existence of a state of facts in reliance on which he acts to his prejudice.
o Where the title to real property is in the names of all the partners a conveyance
executed by all the partners passes all their rights in such property.
o It could very well have been put forth by the partnership itself, as co-plaintiff in the
corresponding complaints, considering that the actions involved property
supposedly belonging to it and were being prosecuted by the entire membership
of the partnership, and therefore, the partnership was in actuality, the real
party in interest.
 RULING:
o The record shows that the respondent partnership is composed exclusively of the
individual Lims in whose name all the cases herein referred to, with the sole
exception of Civil Case No. Q-36485, were brought and prosecuted, their
contribution to the partnership consisting chiefly, if not solely, of the property
subject of the Syjuco mortgage. It is also a fact that despite its having been
contributed to the partnership, allegedly on March 30, 1959, the property was never
registered with the Register of Deeds in the name of the partnership, but to this date
remains registered in the names of the Lims as owners in common.

49. Dojas vs. Maglana (Withdrawal of a partner without liquidation)

 FACTS:
o Maglana and Rojas executed their Articles of Co-Partnership called Eastcoast
Development Enterprises (EDE) The partnership EDE with an indefinite term of
existence was duly registered with the Securities and Exchange Commission.
o Because of the difficulties encountered, Rojas and Maglana decided to avail of the services of
Pahamotang as industrial partner. Pahamotang, Maglana and Rojas executed a
document agreeing among themselves that Maglana and Rojas shall purchase the
interest, share and participation in the Partnership of Pahamotang.
o After the withdrawal of Pahamotang, the partnership was continued by Maglana and Rojas.
On January 28, 1957, Rojas entered into a management contract with another logging
enterprise, the CMS Estate, Inc. He left and abandoned the partnership.
 DOCTRINE:
o Withdrawing partner is liable for damages if the cause of withdrawal is not justified or
no cause was given but in no case can he be compelled to be in the firm.
o A party who has undertaken to contribute a sum of money fails to do so, he becomes a
debtor of the partnership for whatever he promised to contribute.
 RULING:
o YES. Under Article 1830, par. 2 of the Civil Code, even if there is a specified term, one partner
can cause its dissolution by expressly withdrawing even before the expiration of the period,
with or without justifiable cause. Of course, if the cause is not justified or no cause was given,
the withdrawing partner is liable for damages but in no case can he be compelled to remain
in the firm. With his withdrawal, the number of members is decreased, hence, the
dissolution. And in whatever way he may view the situation, the conclusion is inevitable that
Rojas and Maglana shall be guided in the liquidation of the partnership by the provisions of
its duly registered Articles of Co-Partnership; that is, all profits and losses of the partnership
shall be divided "share and share alike" between the partners.
o As to whether Maglana is liable for damages because of such withdrawal, it will be recalled
that after the withdrawal of Pahamotang, Rojas entered into a management contract with
CMS Estate, Inc., a company engaged in the same business as the partnership. He withdrew
his equipment, refused to contribute to the capital investment and to perform his duties as
logging superintendent, as stipulated in their partnership agreement. The records also show
that Rojas not only abandoned the partnership but also took funds in an amount more than
his contribution. In the given situation, Maglana cannot be said to be in bad faith nor can he
be liable for damages.