SY v CA

GR No. 94285, Aug 31 1999

Facts
During the lifetime of all the partners of the Sy Yong Hu & Sons partnership, Keng Sian
brought an action against the partnership claiming she is entitled of ½ of the properties
and the fruits because she was the common law wife of Sy Yong Hu to which the latter
denied. Marciano Sy, a partner, also filed a petition for declaratory relief against some
of his brothers, who are other partners, praying he be appointed partner to replace the
deceased Jose. In an answer, the partners who claimed to represent the majority
interest sought the dissolution of partnership and appointed Vicente as managing
partner. This answer was approved and the partnership was then dissolved in the
Abello ruling.

In the meantime, the Regional Trial Court appointed Alex Ferrer as special administrator
of the partnership. Ferrer moved to intervene in the proceedings for the partition and
distribution of the assets on behalf of the respondent intestate estate but was denied.
The Intestate Estate appealed to the SEC who upheld the order of dissolution of the
partnership. The parties told the Hearing Officer that during the pendency of the civil
case, they all agreed that there would be no disposition of partnership assets. Hearing
Officer Tongco then placed the partnership under a receivership committee.

Petitioners appealed to the SEC who affirmed the Tongco order. On motion for
reconsideration by private respondents, the Court of Appeals reversed its earlier
decision and remanded the case to the SEC for the formation of a receivership
committee as envisioned in the Tongco Order.

Issue
Whether the CA erred in affirming the SEC Order which deviated from the Abello ruling
which ordered for the dissolution of the partnership

Held
No, there is no error in CA’s ruling.

Petitioners fail to recognize the basic distinctions underlying the principles of dissolution,
winding up and partition or distribution. 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 of its business. The partnership and its legal capacity continues until the
complete winding up of its business culminating in its termination. The dissolution
simply effected a change in the relationship among the partners. The partnership,
although dissolved, continues to exist until its termination, at which time the winding up
of its affairs should have been completed and the net partnership assets are partitioned
and distributed to the partners.

Having agreed with the respondents not to dispose of the partnership assets, petitioners
effectively consented to the suspension of the winding up or, more specifically, the
partition and distribution of subject assets. Petitioners are now estopped from
questioning the order of the Hearing Officer issued in accordance with the said
agreement