Dissolution of partnership

INOCENCIA DELUAO and FELIPE DELUAO vs. NICANOR CASTEEL

and JUAN DEPRA G.R. No. L-21906August 29, 1969
Castro, J.:

FACTS: Casteel is the original occupant and applicant of a fishpond area since
before the last World War. He wanted to preclude subsequent applicants from
entering and spreading themselves within the area by expanding his occupation
thereof by the construction of dikes and the cultivation of marketable fishes. Thus,
he borrowed P27,000 from the Deluaos to finance needed improvements for the
fishpond, and was completed by force of this circumstance to enter into the
contract of partnership, with an agreement to divide the fishpond after award.
Eventually, Casteel administered the said property and single-handedly opposed
rival applicants who occupied portions of the fishpond area. He relentlessly
pursued his claim to the said area up to the Office of the DANR Secretary, until it
was finally awarded to him.

ISSUE: Whether or not the parties can now validly divide the said fishpond as
agreed upon by them?

HELD: NO. A partnership formed to divide a fishpond into equalparts is null and
void as being against public policy. A partnership cannot be formed for an illegal
purpose because it is against several prohibitory laws. And since the contract is
null and void, the party cannot be made to execute a formal transfer of one-half of
the fishpond and to secure approval of the same as agreed upon. A contract of
partnership to exploit a fishpond pending its award to any qualified party or
applicant is VALID BUT a contract of partnership to divide the fishpond after such
award is ILLEGAL. one of the causes of dissolution is – any event which make it
unlawful for the business of the partnership to be carried on or for the members
to carry it on in partnership.