27. Sy v.

CA, GR 94285, August 31, 1999

SY V. CA
GR 94285, AUGUST 31, 1999

FACTS:
Sy Yong Hu & Sons is a partnership. In September, 1977, Keng Sian, Sy Yong Hu’s common-
law wife sued the partnership for the reconveyance of ½ of its properties and the fruits thereof.
During the pendency of the suit, one of the partners. Marciano Sy filed a petition against his
partners with the SEC asking that he be appointed managing partner to replace Jose Sy who
earlier died. SC hearing officer Sison dismissed the petition and declared the partnership
dissolved and named one of the remaining partners as the managing partner. The SEC en banc
affirmed Sison’s decision, ordering the distribution and partition of partnership assets.
However, before the same can be implemented, Keng Sian’s children with Sy Yong Hu were
allowed by the SEC to intervene. The intervenors contend that their civil suit against the
partnership is still pending and that no petition for distribution should be commenced.
SEC Hearing Officer Tongco who replaced Sison placed the partnership under receivership
thereby preventing the partition and distribution of partnership assets. This was affirmed by the
SEC en banc.
The remaining partners of the firm appealed. The CA ultimately affirmed the Tongco ruling.

Years later, pe77oner

wrote Pacfor’s VP for
Asia seeking
confirma7on of his
50% equity of Pacfor
Phils to which
Pacfor’s President
replied that pe77oner
is not a part
- owner, his office
being just a
representa7ve office,
a “theore7cal
company with the
purpose of
dividing the income
50-50.” He even
stressed that
the pe77oner knew of
this arrangement from
beginning, having
been the one to
propose to them
the sesng up of a
representa7ve office,
instead of
a branch office, to
save on taxes.
ISSUE:
 Difference between winding up and dissolution

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, as might
be distinguished from the winding up, of its 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. The dissolution of the partnership did not mean that the juridical
entity was immediately terminated and that the distribution of the assets to its partners should
perfunctorily follow. On the contrary, 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. It ruled that although the Abello Decision
was, indeed, final and executory, it did not pose any obstacle to the hearing officer to issue
orders not inconsistent therewith because from the time a dissolution is ordered until the actual
termination of the partnership.