#1

TESTATE ESTATE OF LAZARO MOTA, deceased, ET AL., plaintiffs-

appellants, vs. SALVADOR SERRA, defendant-appellee.

FACTS:
On February 1, 1919, plaintiffs and defendant entered into a contract
of partnership for the construction and exploitation of a railroad line from the
"San Isidro" and "Palma" centrals to the place known as "Nandong." The
original capital stipulated was P150,000. It was covenanted that the parties
should pay this amount in equal parts and the plaintiffs were entrusted with
the administration of the partnership.
The agreed capital of P150,000, however, did not prove sufficient, as
the expenses up to May 15, 1920, had reached the amount of P226,092.92.
January 29, 1920. The defendant entered into a contract of sale with
Venancio Concepcion, Phil. C. Whitaker, and Eusebio R. de Luzuriaga,
whereby he sold to the latter the estate and central known as "Palma" with
its running business, as well as all the improvements, machineries and
buildings, real and personal properties, rights, choses in action and interests,
including the sugar plantation of the harvest year of 1920 to 1921, covering
all the property of the vendor.
Before the delivery to the purchasers of the hacienda thus sold,
Eusebio R. de Luzuriaga renounced all his rights under the contract of
January 29, 1920, in favor of Messrs. Venancio Concepcion and Phil. C.
Whitaker. Afterwards, on January 8, 1921, Venancio Concepcion and Phil. C.
Whitaker bought from the plaintiffs the one-half of the railroad line
pertaining to the latter. The price of this sale was P237,722.15, excluding
any amount which the defendant might be owing to the plaintiffs.
Of the purchase price, Venancio Concepcion and Phil. C. Whitaker paid
the sum of P47,544.43 only. Plaintiffs and Concepcion and Whitaker agreed,
among other things, that the partnership "Palma" and "San Isidro," formed
by the agreement of February 1, 1919, between Serra, Lazaro Mota, now
deceased, and Juan J. Vidaurrazaga for himself and in behalf of his brother,
Felix and Dionisio Vidaurrazaga, should be dissolved upon the execution of
this contract, and that the said partnership agreement should be totally
cancelled and of no force and effect whatever.
 So it results that the "Hacienda Palma," with the entire railroad, the
subject-matter of the contract of partnership between plaintiffs and
defendant, became the property of Whitaker and Concepcion. Phil. C.
Whitaker and Venancio Concepcion having failed to pay to the defendant a
part of the purchase price, that is, P750,000, the vendor, the herein
defendant, foreclosed the mortgage upon the said hacienda, which was
adjudicated to him at the public sale held by the sheriff for the amount of
P500,000, and the defendant put in possession thereof, including what was
planted at the time, together with all the improvements made by Messrs.
Phil. C. Whitaker and Venancio Concepcion.
Plaintiffs and Phil. C. Whitaker and Venancio Concepcion, by common
consent, decided to dissolve the partnership between the "Hacienda Palma"
and "Hacienda San Isidro," thus cancelling the contract of partnership of
February 1, 1919. Counsel for appellee in his brief and oral argument
maintains that the plaintiffs cannot enforce any right arising out of that
contract of partnership, which has been annulled, such as the right to claim
now a part of the cost of the construction of the railroad line stipulated in
that contract.

ISSUE: WON the dissolution of the partnership discharge the existing

liabilities of the partners.

RULING: NO.
Defendant's contention signifies that any person, who has contracted a
valid obligation with a partnership, is exempt from complying with his
obligation by the mere fact of the dissolution of the partnership. Defendant's
contention is untenable.
The dissolution of a partnership must not be understood in the
absolute and strict sense so that at the termination of the object for which it
was created the partnership is extinguished, pending the winding up of some
incidents and obligations of the partnership, but in such case, the
partnership will be reputed as existing until the juridical relations arising out
of the contract are dissolved.
A partnership cannot be considered as extinguished until all the
obligations pertaining to it are fulfilled. (11 Manresa, page 312.) The
dissolution of a firm does not relieve any of its members from liability for
existing obligations, although it does save them from new obligations to
which they have not expressly or impliedly assented, and any of them may
be discharged from old obligations by novation of other form of release. It is
often said that a partnership continues, even after dissolution, for the
purpose of winding up its affairs. (30 Cyc., page 659.)

#2

TOCAO V. CA
G.R. No. 127405; October 4, 2000
Ponente: J. Ynares-Santiago

FACTS:
Private respondent Nenita A. Anay met petitioner William T. Belo, then
the vice-president for operations of Ultra Clean Water Purifier, through her
former employer in Bangkok. Belo introduced Anay to petitioner Marjorie
Tocao, who conveyed her desire to enter into a joint venture with her for the
importation and local distribution of kitchen cookwares
Under the joint venture, Belo acted as capitalist, Tocao as president
and general manager, and Anay as head of the marketing department and
later, vice-president for sales
The parties agreed that Belo's name should not appear in any
documents relating to their transactions with West Bend Company. Anay
having secured the distributorship of cookware products from the West Bend
Company and organized the administrative staff and the sales force, the
cookware business took off successfully. They operated under the name of
Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocao's
name.
The parties agreed further that Anay would be entitled to:
(1) ten percent (10%) of the annual net profits of the business;
(2) overriding commission of six percent (6%) of the overall weekly
production;
(3) thirty percent (30%) of the sales she would make; and
(4) two percent (2%) for her demonstration services. The agreement was
not reduced to writing on the strength of Belo's assurances that he was
sincere, dependable and honest when it came to financial commitments.
On October 9, 1987, Anay learned that Marjorie Tocao had signed a
letter addressed to the Cubao sales office to the effect that she was no
longer the vice-president of Geminesse Enterprise.
Anay attempted to contact Belo. She wrote him twice to demand her
overriding commission for the period of January 8, 1988 to February 5, 1988
and the audit of the company to determine her share in the net profits.
Anay still received her five percent (5%) overriding commission up to
December 1987. The following year, 1988, she did not receive the same
commission although the company netted a gross sales of P 13,300,360.00.
On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a
complaint for sum of money with damages against Marjorie D. Tocao and
William Belo before the Regional Trial Court of Makati, Branch 140
The trial court held that there was indeed an "oral partnership
agreement between the plaintiff and the defendants. The trial court finally
held that a partner who is excluded wrongfully from a partnership is an
innocent partner. Hence, the guilty partner must give him his due upon the
dissolution of the partnership as well as damages or share in the profits
“realized from the appropriation of the partnership business and goodwill.”
An innocent partner thus possesses “pecuniary interest in every existing
contract that was incomplete and in the trade name of the co-partnership
and assets at the time he was wrongfully expelled.”
The Court of Appeals affirmed the lower court’s decision.

ISSUE: Whether the parties formed a partnership

HELD: Yes, the parties involved in this case formed a partnership

To be considered a juridical personality, a partnership must fulfill these
requisites:
 (1) two or more persons bind themselves to contribute money,
property or industry to a common fund; and
(2) intention on the part of the partners to divide the profits among
themselves. It may be constituted in any form; a public instrument is
necessary only where immovable property or real rights are
contributed thereto.

This implies that since a contract of partnership is consensual, an oral

contract of partnership is as good as a written one.

Private respondent Anay contributed her expertise in the  business of

distributorship of cookware to the partnership and hence, under the law, she
was the industrial or managing  partner.

Petitioner Belo had an proprietary interest. He presided over meetings

regarding matters affecting the operation of the business. Moreover, his
having authorized in writing giving Anay 37% of the proceeds of her
personal sales, could not be interpreted otherwise than that he had a
proprietary interest in the business. This is inconsistent with his claim that
he merely acted as a guarantor. If indeed he was, he should have  presented
documentary evidence. Also, Art. 2055 requires that a guaranty must be
express and the Statute of Frauds requires that it must be in writing.
Petitioner Tocao was also a capitalist in the partnership. She claimed that
she herself financed the business.

The business venture operated under Geminesse Enterprise did not

result in an employer-employee relationship between petitioners and private
respondent. First, Anay had a voice in the management of the affairs of the
cookware distributorship and second, Tocao admitted that Anay, like her,
received only commissions and transportation and representation allowances
and not a fixed salary. If Anay was an employee, it is difficult to believe that
they recieve the same income. Also, the fact that they operated under the
name of Geminesse Enterprise, a sole proprietorship, is of no moment.
Said  business name was used only for practical reasons - it was utilized as
the common name for petitioner Tocao’s various  business activities, which
included the distributorship of cookware.

The partnership exists until dissolved under the law. Since

the partnership created by petitioners and private respondent has no fixed
term and is therefore a partnership at will predicated on their mutual desire
and consent, it may be dissolved by the will of a partner.

Undoubtedly, petitioner Tocao unilaterally excluded private respondent from

the partnership to reap for herself and/or for petitioner Belo financial gains
resulting from private respondent’s efforts to make the business venture a
success. Thus, as petitioner Tocao became adept in the business operation,
she started to assert herself to the extent that she would even shout at
private respondent in front of other people. Her instruction to Lina Torda
Cruz, marketing manager, not to allow private respondent to hold office in
both the Makati and Cubao sales offices concretely spoke of her perception
that private respondent was no longer necessary in the business operation,
and resulted in a falling out between the two. However, a mere falling out or
misunderstanding between partners does not convert the partnership into a
sham organization. The partnership exists until dissolved under the law.

Petitioners Tocao’s unilateral exclusion of private respondent from the

partnership is shown by her memo to the Cubao office plainly stating that
private respondent was, as of October 9, 1987, no longer the vice-president
for sales of Geminesse Enterprise. By that memo, petitioner Tocao effected
her own withdrawal from the partnership and considered herself as having
ceased to be associated with the  partnership in the carrying on of the
business. Nevertheless, the partnership was not terminated thereby; it
continues until the winding up of the business.

The partnership among petitioners and private respondent is ordered

dissolved, and the parties are ordered to effect the winding up and
liquidation of the partnership pursuant to the  pertinent provisions of the
Civil Code. Petitioners are ordered to pay Anay’s 10% share in the profits,
after accounting, 5% overriding commission for the 150 cookware sets
available for disposition since the time private respondent was wrongfully
excluded from the partnership by petitioner, overriding commission on the
total production, as well as moral and exemplary damages, and attorney’s
fees

#3
Rojas v. Maglana
G.R. No. 30616; December 10, 1990

FACTS:
Maglana and Rojas executed Articles of Co-Partnership called Eastcoast
Development Enterprises (EDE) with two of them as partners for the purpose
of applying and securing timber licenses and to operate, develop and
promote such forests’ rights and concessions. Their sharing basis was in
proportion to share and share alike.
Maglana managed the business affairs while Rojas acted as
superintendent. Eventually, they availed the services of Pahamotang as
industrial partner. Thereafter, they executed their own Articles of Co-
Partnership under the same firm name with virtually the same purpose. After
some time, the two bought the interest of Pahamotang and the two returned
to being the sole partners and continued the partnership without any written
agreement or reconstitution of written Articles of Partnership.
Consequently, Rojas entered into a management contract with another
logging enterprise in the name of CMS, withdrew his equipment from EDE for
use in CMS, and abandoned the partnership altogether. Maglana wrote Rojas
reminding him of his contributions to the capital investments and to perform
his duties as logging superintended. However, Rojas informed Maglanathat
he will not be able to comply with the contribution and he will no longer
work as superintendent. Thus, Maglana told Rojas that the latter’s share will
just be 20% of the net profits. Rojas took funds more than his contribution.
Thus, Maglana notified Rojas that he dissolved the partnership. Thereafter,
Rojas filed an action for the recovery of his share in the profits and for
damages for sudden withdrawal of the partnership.
For such claim, he argues that the first partnership between him and
Maglana had not been dissolved. Thus, based on the sharing basis of share
and share alike as in the first partnership, which is still subsisting and
undissolved after the second partnership with Pahamotang, he should be
entitled to profits as computed. However, the trial court dismissed his claim
for profits and maintained that the partnership subsequent to the second
partnership one of a de facto and at will. Thus, the sharing should be based
on their verbal agreements which is on actual contribution.

ISSUES: (1) What is the nature of the partnership and legal relationship of
the Maglana-Rojas after Pahamotang retired from the second partnership.
(2) Whether or not Maglana can unilaterally dissolve the partnership.
(3) Whether Maglana can be held liable for damages.
HELD:
(1) Under the circumstances, the relationship of Rojas and Maglana after the
withdrawal of Pahamotang can neither be considered as a De Facto
Partnership, nor a Partnership at Will, for as stressed, there is an existing
partnership, duly registered.
After a careful study of the records as against the conflicting claims of
Rojas and Maglana, it appears evident that it was not the intention of the
partners to Dissolve the first partnership, upon the constitution of the
second one, which they unmistakably called an “Additional Agreement”. To
all intents and purposes therefore, the First Articles of Partnership were only
amended, in the form of Supplementary Articles of CoPartnership which was
never registered. Otherwise stated, even during the existence of the second
partnership, all business transactions were carried out under the duly
registered articles. As found by the trial court, it is an admitted fact that
even up to now, there are still subsisting obligations and contracts of the
latter. No rights and obligations accrued in the name of the second
partnership except in favor of Pahamotang which was fully paid by the duly
registered partnership.

(2) YES, Maglana can unilaterally dissolve the partnership. 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. It is a settled rule that when a partner who has
undertaken to contribute a sum of money fails to do so, he becomes a
debtor of the partnership for whatever he may have promised to contribute
(Article 1786, Civil Code) and for interests and damages from the time he
should have complied with his obligation (Article 1788, Civil Code) Being a
contract of partnership, each partner must share in the profits and losses of
the venture. That is the essence of a partnership.
 (3) NO, Maglana is not liable for damages for his withdrawal. It will be
recalled that after the withdrawal of Pahamotang, Rojas entered into a
management contract with another logging enterprise, the CMS Estate, Inc.,
a company engaged in the same business as the partnership. He withdrew
his equipment, refused to contribute either in cash or in equipment 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.

#4
Goquiolay et.al. v. Sycip et.al. (G.R. L11840)
CASE SUMMARY

Antonio Goquiolay (Antonio) and Tan Sin An (Tan) entered into a partnership
wherein Tan was the managing partner and Antonio was the co-partner. The
managing partner managed the partnership exclusively while the co-partner did not
have any voice or participation but may examine the partnership accounts once
every six months. It was also indicated that in case of death of either partner, the
partnership will continue and the deceased partner will be represented by his heirs
or assigns. When Tan died, his widow Kong Chai Pin (Kong) was appointed the
administratrix of his estate. Kong sold the 49 lots mortgaged by the partnership to
Sycip and Lee. Learning about this, Antonio filed a petition in the intestate
proceedings to set aside the order of the probate court in approving the sale in so
far as his interest over the lots was concerned. The probate court annulled the sale
with respect to the 60% interest of Antonio, however, when Kong appealed said
decision, it was certified to the SC which in turn set aside the orders of the probate
court for failure to include indispensable parties. New pleadings were filed but was
denied by the lower court, hence Antonio appealed to the SC. The SC decided in
favour of Kong, holding that while Kong did not automatically replace Tan as the
managing general partner in the partnership, her affirmative actions manifested her
intent to be bound as a general partner, and more importantly, by allowing Kong to
retain control of the firm’s property from 1942 to 1949, Antonio estopped himself to
deny her legal representation of the partnership, with the power to bind it. Finally,
the SC held that the consent of the other partners were not needed to perfect the
sale since strangers dealing with a partnership have the right to assume that every
general partner has power to bind the partnership.
DOCTRINES
• The right of exclusive management conferred upon Tan Sin An,
being premised upon trust and confidence, was a mere personal right
that terminated upon Tan's demise.
• The provision in the Articles of Copartnership stating that "in the
event of death of any one of the partners within the 10year 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 relates to the succession in the proprietary
interest of each partner.
• General Rule: Consonant with the articles of copartnership
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 said provision, became individual
partners with Antonio Goquiolay upon Tan's demise. Minority of the
heirs is not a bar to the application of that clause in the articles of
copartnership. Heirs liability in the partnership being limited to the
value of their importance, they become no more than limited
partners, when they manifest their intent to be bound as general partners.
• Exception: Although the heir of a partner ordinarily becomes a
limited partner for his own protection, yet the heir may disregard it
and instead elect to become a collective or general partner, with all
the rights and obligations of one. This choice pertains exclusively to the
heir, and does not require the assent of the surviving partner.
• As to whether or not the consent of the other partners was
necessary to perfect the sale of the partnership properties, the Court
believes that it is not. 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. A third person has the right to presume that a general
partner dealing with partnership property has the requisite authority
from his copartners.
• By allowing defendant Kong Chai Pin to retain control of the
partnership properties from 1942 to 1949, plaintiff Goquiolay estopped
himself from denying her (Kong Chai Pin's) legal representation of the
partnership, with the power to bind it by proper contracts.
• By authorizing the widow of the managing partner to manage
partnership property (which a limited partner could not be authorized
to do), the other general partner recognized her as a general
partner, and is now in estoppel to deny her position as a general
partner, with authority to administer and alienate partnership property.
• Where the express and avowed purpose of the partnership is to
buy and sell real estate (as in the present case), the immovables
thus acquired by the firm form part of its stockintrade, and the sale
thereof is in pursuance of partnership purposes, hence within the ordinary
powers of the partner.

IMPORTANT PEOPLE
Antonio Goquiolay (Antonio) – co-partner; plaintiff
Tan Sin An (Tan) – managing partner; deceased, left Kong Chai pin as
administratrix of estate
Kong Chai Pin (Kong) – widow of Tan; administratrix of estate of husband
Yutivo Sons and Co. (Yutivo)– advanced money for Tan to be able to down
payment of the 3 lots he bought (in addition to the 46 lots bought by the
partnership) and amortization
Sing Yee and Cuan Co. (Sing Yee) – paid a part of the obligation of Tan
(supposedly to be covered by Yutivo, but it seems Yutivo’s funds weren’t
enough and so asked the help of Sing Yee)
La Urbana Sociedad Mutua (succeeded by Banco Hipotecario de Filipinas) (La
Urbana/ Banco Hipotecario) – mortgagees of the 49 (46+3) lots

FACTS
1. Antonio Goquiolay (Antonio) and Tan Sin An (Tan) entered into a
general commercial partnership under the name of Tan Sin An and Antonio
C. Goquiolay with the following details for the purpose of dealing with real
estate :
a. Partnership had a capital of PHP 30,000 (PHP 18K given by Antonio,
and PHP 12K given by Tan)
b. Tan is the sole managing partner, while Antonio is the co-partner
 c. The affairs of the partnership shall be exclusively managed by the
managing partner or by his authorized agent
d. The co-partner shall have no voice/ participation in the
management of the partnership but shall be able to examine the
accounts every 6 months
e. Lifetime is fixed at 10 years
f. In the event that one of the partners dies before the lifetime of the
partnership ends, the deceased partner shall be represented by his
heirs or assigns in said co-partnership
g. The partnership can be dissolved and affairs liquidated at any time
upon mutual agreement in writing of the partners.
2. Antonio also executed a general power of attorney which stated that:
a. Besides the powers and duties granted by the partnership to Tan,
Tan shall also act as Antonio’s manager for the partnership for the
period of the 10 year term or until the PHP 30,000 shall last
b. To do most acts for Antonio, which included “to sell personal or
real properties, such as land's and buildings of the copartnership
in any manner he may deem advisable for the best interest of said
copartnership,”
3. The partnership purchased 3 parcels of land assuming a mortgage
obligation (PHP 25K) payable to La Urbana for a period of 10 years, 10%
interest p.a.
4. Another 46 lots were purchased by Tan in his individual capacity and he
assumed a payment of mortgage debt for PHP 35K with interest. The down
payment and the amortization were advanced by Yutivo and Co. for the
account of the purchasers.
5. The two separate obligations were consolidated in one instrument where
the entire 49 lots were mortgaged in favour of La Urbana’s successor, Banco
Hipotecario de Filipinas. The covenators bound themselves to pay solidarily
the remaining balance of their unpaid accounts within 8 years with 8% p.a.
6. Tan died, leaving his widow Kong Chai Pin (Kong) and four minor children.
Kong was appointed as administratrix of the intestate estate of Tan.
7. Banco Hipotecario demanded payments from the partnership and upon
the request of Yutivo Sons Hardware, Sing Yee and Cuan paid the remaining
balance of the mortaged debt and thus the mortgage cancelled.
8. Now, we have Yutivo Sons Co. and Sing Yee and Cuan Co. claiming on the
intestate proceedings of Tan as alleged obligations of the partnership since
they effectively discharged the partnership’s obligations to La Urbana and
Banco Hipotecario.
9. Kong filed a petition with the probate court for her to be able to sell the
49 parcels of land to Washington Sycip and Betty Lee to settle the debts of
Tan and the partnership. The court approved the same and Kong executed a
Deed of Sale in favour of Sycip and Lee.
10. Sycip and Lee eventually transferred the lots to Insular Development Co.
11. Learning about this sale of the 49 lots, Antonio 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.
12. The probate court annulled the sale with respect to the 60% interest of
Antonio, however, Kong appealed to the CA which certified the same to the
SC.
13. The SC set aside the decision of the probate court for failure to implead
indispensable parties.
14. New pleadings were filed and Antonio filed a second amended complaint
for the annulment of the sale and the conveyance to Insular Co. This was
dismissed by the lower court, hence petitioner Antonio appealed directly to
the SC.

ISSUES:
1. Whether or not kong chai pin became the managing partner of the
parntership upon the death of her husband. NO
2. Whether or not the consent of the other partners was necessary to
perfect the sale to sycip and lee. NO.
3. Whether or not the sale of the partnership properties was only a device to
ease out antonio from the partnership. NO

1. No. The general rule is that heirs become limited partners upon the death
of Tan, unless otherwise repudiated by the heirs. In this case however,
Kong, through her affirmative actions, manifested her intent to be bound by
the partnership not only as a limited partner but as a general partner.
• The Articles of CoPartnership 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 10year 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 heirs of the deceased, by never repudiating or refusing to
be bound under the said provision in the articles, became individual
limited partners with Antonio Goquiolay upon Tan's demise.
• However, in this case, Kong’s acts manifested her intent to be bound
as a general partner.
o 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.
o 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.
• Antonio, by allowing her to retain control of the firm's property
from 1942 to 1949, 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 copartnership agreement, that
every general partner has power to bind the partnership, especially
those partners acting with ostensible authority.
• Third persons, 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.
• 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 provision of Article 129 of the Code of Commerce is an obligation
that is 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 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 130 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:
o "Should no agreement have been made with respect to the form of
management, the following rules shall be observed: (1) 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. xxx"
o The records fail to disclose that Antonio made any opposition to
the sale to Sycip and Lee and only interposed these objections after
the deed of conveyance was executed and approved by the probate
court.

3. NO. There is complete failure of proof, moreover, that the price

for which the properties were sold was unreasonably low, or in any
way unfair, since appellants presented no evidence of the market
value of the lots as of the time of their sale to appellees Sycip and
Lee.
• The alleged value of P31,056.58 in May of 1955 is no proof of
the market value in 1949, specially because in the interval, the new
owners appear to have converted the land into a subdivision, which
they could not do without improving the property at their expense.
• Kong Chai Pin hardly had any choice but to execute the
questioned sale, as it appears that the partnership had neither cash
nor other properties with which to pay its obligations.

#5
PRIMELINK PROPERTIES AND DEVT CORP V. LAZATIN-MAGAT, G.R. O
167379 (2006)

FACTS:
Primelink is a domestic corporation engaged in real estate
development while respondents Lazatin are co-owners of 2 parcels of land in
Tagaytay. In 1994, Primelink, represented by Lopez (President) and the
Lazatins entered into a joint venture agreement (JVA) for the development
of the subject property into a residential subdivision
1. Under the JVA, the Lazatins obliged themselves to contribute the
subject property as their share and for its part, Primelink undertook to
contribute, money, labor personnel, machineries, equipment, etc
2. For 4 years however, Primelink failed to develop the said land. As
such, the Lazatins filed a complaint to rescind the JVA
3. The trial court ruled in favor of the Lazatins and ordered Primelink to
return the possession of the property without the Lazatins paying for said
improvements.On appeal, CA affirmed the same.
4. Primelink assaidled the order that turning over improvements to the
Lazatins without reimbursement is unjust; that Lazatin did not ask the
properties to be placed under their possession but merely asked for
rescission of the JVA

ISSUE: whether respondents are entitled to the possession of the parcels of

land covered by the JVA and the improvements thereon introduced by
petitioners as their contribution to the JVA

RULING: Yes. The order of the court for Primelink to return possession of
the real estate property belonging to Lazatin including all improvements
thereon was not a judgment that was different in kind that what was prayed
for by the Lazatins; it was just a necessary consequence to the order of
rescission.
As a general rule, the relation of the parties in joint ventures is
government by their agreement. When the agreement is silent on any
particular issue, the general principles of partnership may be resorted to.
The legal concept of a joint venture is of common law origin. It has
generally been understood to mean an organization formed for some
temporary purpose. It is, in fact, hardly distinguishable from partnership
since elements are similar—community of interest in the business, sharing of
profits and losses, and a mutual right of control. The main distinction is that
partnership contemplates a general business with some degree of continuity,
while a joint venture is formed for the execution of a single transaction, and
is thus of a temporary nature.
With the rescission of the JVA on account of petitioner’s fraudulent
acts, all authority of any partner to act for the partnership is terminated
except insofar as may be necessary to wind up the partnership affairs or to
complete transactions begun but not yet finished. On dissolution, the
partnership is not terminated but continues until the winding up of
partnership affairs is completed. Winding up means the administration of the
assets of the partnership for the purpose of terminating the partnership and
discharging the obligations of the partnership.
It must be stressed that although respondents acquired possession of
the lands and the improvements thereon, the said lands and improvements
remained partnership property, subject to the rights and obligations of the
parties under Art 1837 and 1838 NCC, and subject to the outcome of the
settlement of the accounts between the parties as provided in Art 1839,
absent any agreement of the parties in their JVA to the contrary. Until the
partnership accounts are determined, it cannot be ascertained how much
any of the parties is entitled, if at all.

#6
Yu v. NLRC and Jade Mountain
G.R. No. 97212; June 30, 1993

FACTS:
Lea Bendal and Rhodora Bendal (as general partners), and Jeng, Chen
Ho-Fu and Yu Chang as limited partners, operated a registered partnership
in the name of Jade Mountain engaged in the business of quarrying and
exporting marble. Yu was the Assistant General Manager who had a monthly
salary of P4, 000.00 – with only half of his salary being paid so far.
After some time, all the said partners sold their shares to Co and
Zapanta. Unfortunately, Yu remained to be unpaid and was not retained by
Co and Zapanta. Thus, he approached the two to be reinstated and to be
paid salary. However, the two averred that they were not obliged to either
reinstate nor pay Yu since a new partnership was formed. Thus, Yu filed for
illegal dismissal and recovery of unpaid salaries.
The Labor Arbiter approved his claim. However, the NLRC reversed the
decision holding that a new partnership was indeed formed and that due to
the new partnership, Jade Mountain was not obliged to retain Yu, and that
the latter should seek payment from the old partners.

ISSUES: Was the old partnership dissolved?

HELD: NO.
1. The old partnership was not dissolved. The Court held that Art. 1828
provides that a partnership may be dissolved by a change in partners in
relation to the rules of Art. 1830. However, Art. 1828 provides that the legal
personality of the expiring partnership persists for the limited purpose of
winding up and closing of the affairs of the partnership – such as the
payment of its debts, liquidation, and distribution of the new assets, and the
assets being reassembled to open a new business enterprise. In this case,
the debt Jade Mountain owed to Yu was still unpaid. Thus, the legal
personality of the old partnership is not terminated. The business of the old
partnership was simply continued by the new partners, without the old
partnership undergoing procedures relating to the dissolution and winding up
of its business affairs.
Yu may still recover his unpaid salary from the new partners. The
Court held that under Art. 1840, the creditors of the old Jade Mountain are
also the creditors of the new Jade Mountain which continued the business of
the old one without liquidation of the partnership affairs. Thus, Yu may claim
from the new Jade Mountain. Furthermore, he may also claim from the old
creditors as well.
Yu may not be reinstated under the new partnership. The Court held
that the new partnership was entitled to appoint another manager in place of
Yu to run the affairs of the business. The non-retention of Yu cannot be
considered unlawful termination or termination without just cause.

#7
EMNACE v. COURT OF APPEALS

FACTS:
Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia
were partners in a business known as Ma. Nelma Fishing Industry. In 1986,
they decided to dissolve their partnership and executed an agreement of
partition and distribution of the partnership properties among them,
consequent to Jacinto Divinagracia's withdrawal from the partnership.
When petitioner failed to comply with the terms of the agreement and
also on his promise to turn over to Tabanao's heirs the deceased's 1/3 share
in the total assets of the partnership, amounting to P30,000,000.00,
respondents, Tabanao's heirs, filed an action for accounting, payment of
shares, division of assets and damages against petitioner.
Petitioner filed a motion to dismiss the complaint and argued that the
trial court did not acquire jurisdiction over the action because the prescribed
docket fee was not paid considering the huge amount involved in the claim.
The trial court, however, noted that a request for accounting was
made in order that the exact value of the partnership may be ascertained
and, thus, the correct docket fee may be paid. Petitioner questioned the
order of dismissal through a petition for certiorari before the Court of
Appeals.
The appellate court rendered the assailed decision dismissing the
petition for certiorari, upon a finding that no grave abuse of discretion
amounting to lack or excess of jurisdiction was committed by the trial court
in issuing the questioned orders denying petitioner's motions to dismiss.

ISSUE: WON the partnership was terminated due to prescription

HELD: NO.
Petitioner contends that the trial court should have dismissed the
complaint on the ground of prescription, arguing that respondents' action
prescribed four (4) years after it accrued in 1986. The trial court and the
Court of Appeals gave scant consideration to petitioner's hollow arguments,
and rightly so.
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. 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. Applied in relation to Articles 1807 and 1809, which
also deal with the duty to account, the above-cited provision states that the right to
demand an accounting accrues at the date of dissolution in the absence of any
agreement to the contrary. 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.

Applying Article 1842 of the Civil Code to the instant case,

respondents have a specific claim — 1/3 of the value of all the partnership
assets — but they did not allege a specific amount. They did, however,
estimate the partnership's total assets to be worth Thirty Million Pesos
(P30,000,000.00), in a letter addressed to petitioner. Respondents cannot
now say that they are unable to make an estimate, for the said letter and
the admissions therein form part of the records of this case. They cannot
avoid paying the initial docket fees by conveniently omitting the said amount
in their amended complaint. This estimate can be made the basis for the
initial docket fees that respondents should pay. Even if it were later
established that the amount proved was less or more than the amount
alleged or estimated, Rule 141, Section 5(a) of the Rules of Court specifically
provides that the court may refund the excess or exact additional fees
should the initial payment be insufficient. It is clear that it is only the
difference between the amount finally awarded and the fees paid upon filing
of this complaint that is subject to adjustment and which may be subjected
to a lien.

#8
DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE
COURT and LEUNG YIU, respondents.
G.R. No. 70926 January 31, 1989
GUTIERREZ, JR., J.:
Facts:
This case originated from a complaint filed by respondent Leung Yiu
with the then Court of First Instance of Manila to recover the sum equivalent
to 22% of the annual profits derived from the operation of Sun Wah
Panciteria since October, 1955 from petitioner Dan Fue Leung.
The Sun Wah Panciteria, a restaurant, located at Florentino Torres
Street, Sta. Cruz, Manila, was established sometime in October, 1955. It
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.
Both the trial court and the appellate court found that the private
respondent is a partner of the petitioner in the setting up and operations of
the panciteria. While the dispositive portions merely ordered the payment of
the respondents share, there is no question from the factual findings that
the respondent invested in the business as a partner. Hence, the two courts
declared that the private petitioner is entitled to a share of the annual profits
of the restaurant.

ISSUE: 1. Whether a partnershipexists between Dan Fue Leung and Leung

Yiu. – YES.
2. Whether Leung Yiu's cause of action has prescribed, given that 22
years have passed before the instant complaint was filed. – NO.
3. Whether the Court may decree the dissolution of the partnership. –
YES.

HELD:
1. YES. There is no question from the factual findings that Yeung Liu
invested in the panciteria as a partner. His monetary contribution of P4,000
was sufficiently proven by the pieces of evidence and testimonies presented
during the trial, which evidence were not controverted by Dan Fue Liung.
 Dan Fue Leung's contention that the P4,000 monetary contribution
was a mere "financial assistance" – i.e., an ex gratia dole out in favor of
someone driven into a state of destitution – does not avail in the instant
case. This is because in Leung Yiu's actual complaint, it was explicitly stated
that as a return for such financial assistance, Leung Yiu would be entitled to
22% of the annual profit derived from the operation of the panciteria.

The well-settled doctrine is that the nature of the action filed in court
is determined by the facts alleged in the complaint as constituting the cause
of action.

2. NO. Art. 1144 of the CC, which states that an action upon a written
contract must be brought within 10 years from the time the right of action
accrues, does not apply in the instant case, where the existence of a
partnership has been sufficiently established. A partner shares not only in
profits but also in the losses of the firm. If excellent relations exist among
the partners at the start of business and all the partners are more interested
in seeing the firm grow rather than get immediate returns, a deferment of
sharing in the profits is perfectly plausible. Therefore, it would be incorrect
to state that if a partner does not assert his rights anytime within 10 years
from the start of operations, such rights are irretrievably lost.
Besides, Leung Yiu's cause of action is premised upon Dan Fue Leung's
failure to give him the agreed profits in the operation of the subject
panciteria. In effect, Leung Yiu is asking for an accounting of his interests in
the partnership.
Given the foregoing, the applicable provision is Article 1842 of the CC,
which states: "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 or any agreement to the contrary."
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.

3. YES. Considering the facts of this case, the Court may decree a
dissolution of the partnership under Article 1831 of the CC. Said dissolution
may be decreed on application by or for a partner, or when a partner has
been guilty of such conduct as tends to affect prejudicially the carrying on of
the business, or when a partner willfully or persistently commits a breach of
the partnership agreement, or otherwise so conducts himself in matters
relating to the partnership business that it is not reasonably practicable to
carry on the business in partnership with him, or when other circumstances
exist as to render a dissolution equitable.
In the present case, the continuation of the partnership has become
inequitable. Therefore, the Court decrees the liquidation and winding up of
partnership affairs, return of capital, and other incidents of dissolution.