GODINEZ, THERESA T.

MICHAEL C. GUY vs. ATTY. GLENN C. GACOTT

G.R. No. 206147 January 13, 2016

FACTS:

On March 3, 1997, Atty. Glenn Gacott (Gacott) from Palawan purchased two (2) brand
new transreceivers from Quantech Systems Corporation (QSC) in Manila through its
employee Rey Medestomas (Medestomas), amounting to a total of P18,000.00. On May
10, 1997, due to major defects, Gacott personally returned the transreceivers to QSC and
requested that they be replaced. Medestomas received the returned transreceivers and
promised to send him the replacement units within two (2) weeks from May 10, 1997.
Despite several demands, both oral and written, Gacott was never given a replacement
or a refund. Thus, Gacott filed a complaint for damages. Summons was served upon QSC
and Medestomas himself and a certain Elton Ong (Ong).

The decision became final as QSC and Medestomas did not interpose an appeal. Gacott
then secured a Writ of Execution, dated September 26, 2007.

During the execution stage, Gacott learned that QSC was not a corporation, but was in
fact a general partnership registered with the Securities and Exchange
Commission (SEC). In the articles of partnership, Guy was appointed as General
Manager of QSC.

To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to
the main office of the Department of Transportation and Communications, Land
Transportation Office (DOTC-LTO), Quezon City, and verified whether Medestomas,
QSC and Guy had personal properties registered therein Upon learning that Guy had
vehicles registered in his name, Gacott instructed the sheriff to proceed with the
attachment of one of the motor vehicles of Guy based on the certification issued by the
DOTC-LTO.

On March 3, 2009, Sheriff Felizarte attached Guy’s vehicle by virtue of the Notice of
Attachment/Levy upon Personalty served upon the record custodian of the DOTC-LTO of
Mandaluyong City. A similar notice was served to Guy through his housemaid at his
residence.

Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty, arguing that he was
not a judgment debtor and, therefore, his vehicle could not be attached. Gacott filed an
opposition to the motion.

ISSUE:

Whether petitioner Guy is solidarily liable with the partnership

RULING:

NO.
Article 1816 of the Civil Code governs the liability of the partners to third persons, which
states that:

Article 1816. 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.
This provision clearly states that, first, the partners’ obligation with respect to the
partnership liabilities is subsidiary in nature. It provides that the partners shall only be
GODINEZ, THERESA T.

liable with their property after all the partnership assets have been exhausted. To say that
one’s liability is subsidiary means that it merely becomes secondary and only arises if the
one primarily liable fails to sufficiently satisfy the obligation. Resort to the properties of a
partner may be made only after efforts in exhausting partnership assets have failed or
that such partnership assets are insufficient to cover the entire obligation. The subsidiary
nature of the partners’ liability with the partnership is one of the valid defenses against a
premature execution of judgment directed to a partner.

Guy’s liability would only arise after the properties of QSC would have been exhausted.
The records, however, miserably failed to show that the partnership’s properties were
exhausted. The report of the sheriff showed that the latter went to the main office of the
DOTC-LTO in Quezon City and verified whether Medestomas, QSC and Guy had
personal properties registered therein. Gacott then instructed the sheriff to proceed with
the attachment of one of the motor vehicles of Guy. The sheriff then served the Notice of
Attachment/Levy upon Personalty to the record custodian of the DOTC-LTO of
Mandaluyong City. A similar notice was served to Guy through his housemaid at his
residence.

Clearly, no genuine efforts were made to locate the properties of QSC that could have
been attached to satisfy the judgment − contrary to the clear mandate of Article 1816.
Being subsidiarily liable, Guy could only be held personally liable if properly impleaded
and after all partnership assets had been exhausted.

ANICETO G. SALUDO, JR. vs. PHILIPPINE NATIONAL BAN

G.R. No. 193138 August 20, 2018

FACTS:

On June 11, 1998, SAFA Law Office entered into a Contract of Lease5 with PNB, whereby
the latter agreed to lease 632 square meters of the second floor of the PNB Financial
Center Building in Quezon City for a period of three years and for a monthly rental fee of
₱l89,600.00. The rental fee is subject to a yearly escalation rate of 10%. SAFA Law Office
then occupied the leased premises and paid advance rental fees and security deposit in
the total amount of ₱l,137,600.00.
On August 1, 2001, the Contract of Lease expired. According to PNB, SAFA Law Office
continued to occupy the leased premises until February 2005, but discontinued paying its
monthly rental obligations after December 2002. Consequently, PNB sent a demand
letter dated July 17, 2003 for SAFA Law Office to pay its outstanding unpaid rents in the
amount of ₱4,648,086.34. PNB sent another letter demanding the payment of unpaid
rents in the amount of ₱5,856,803.53 which was received by SAFA Law Office on
November 10, 2003.
In a letter to PNB dated June 9, 2004, SAFA Law Office expressed its intention to
negotiate. It claimed that it was enticed by the former management of PNB into renting
the leased premises by promising to: (1) give it a special rate due to the large area of the
place; (2) endorse PNB's cases to the firm with rents to be paid out of attorney's fees;
and (3) retain the firm as one of PNB's external counsels. When new management took
over, it allegedly agreed to uphold this agreement to facilitate rental payments. However,
not a single case of significance was referred to the firm. SAFA Law Office then asked
PNB to review and discuss its billings, evaluate the improvements in the area and agree
on a compensatory sum to be applied to the unpaid rents, make good its commitment to
endorse or refer cases to SAFA Law Office under the intended terms and conditions, and
book the rental payments due as receivables payable every time attorney's fees are due
from the bank on the cases it referred
In February 2005, SAFA Law Office vacated the leased premises. PNB sent a demand
letter dated July 7, 2005 requiring the firm to pay its rental arrears in the total amount of
₱l0,951,948.32. In response, SAFA Law Office sent a letter dated June 8, 2006,
proposing a settlement by providing a range of suggested computations of its outstanding
GODINEZ, THERESA T.

rental obligations, with deductions for the value of improvements it introduced in the
premises, professional fees due from Macroasia Corporation, and the 50% discount
allegedly promised by Dr. Lucio Tan. PNB, however, declined the settlement proposal in
a letter dated July 17, 2006, stating that it was not amenable to the settlement's terms.
Besides, PNB also claimed that it cannot assume the liabilities of Macroasia Corporation
to SAFA Law Office as Macroasia Corporation has a personality distinct and separate
from the bank. PNB then made a final demand for SAFA Law Office to pay its outstanding
rental obligations in the amount of ₱25,587,838.09.

ISSUE/S:
1) Whether or not SAFA Law office is a partnership.
2) Whether or not it is a juridical entity.

RULING:

1. SAFA Law Office is a partnership and not a single proprietorship.

Article 1767 of the Civil Code provides that by a contract of partnership, two or more
persons bind themselves to contribute money, property, or industry to a common fund,
with the intention of dividing the profits among themselves. Two or more persons may
also form a partnership for the exercise of a profession. Article 1771 also provides that a
partnership may be constituted in any form, except where immovable property or real
rights are contributed thereto, in which case a public instrument shall be necessary.
Article 1784, on the other hand, provides that a partnership begins from the moment of
the execution of the contract, unless it is otherwise stipulated. Here, absent evidence of
an earlier agreement, SAFA Law Office was constituted as a partnership at the time its
partners signed the Articles of Partnership wherein they bound themselves to establish a
partnership for the practice of law, contribute capital and industry for the purpose, and
receive compensation and benefits in the course of its operation.

The subsequent registration of the Articles of Partnership with the SEC, on the other hand,
was made in compliance with Article 1772 of the Civil Code, since the initial capital of the
partnership was P500,000.00. Said provision states: Art. 1772. Every contract of
partnership having a capital of Three thousand pesos or more, in money or property, shall
appear in a public instrument, which must be recorded in the Office of the Securities and
Exchange Commission. Constantly use of words partner and partnership. MOU does not
convert SAFA law office to single proprietorship.

2. It acquired juridical personality by operation of law.

Having settled that SAFA Law Office is a partnership, we hold that it acquired juridical
personality by operation of law. The perfection and validity of a contract of partnership
brings about the creation of a juridical person separate and distinct from the individuals
comprising the partnership. Thus, Article 1768 of the Civil Code provides thw partnership
has a juridical personality separate and distinct from that of each of the partners, even in
case of failure to comply with the requirements of Article 1772, first paragraph. Article 44
of the Civil Code likewise provides that partnerships are juridical persons. It is this juridical
personality that allows a partnership to enter into business transactions to fulfill its
purposes. Article 46 of the Civil Code provides that "[j]uridical persons may acquire and
possess property of all kinds, as well as incur obligations and bring civil or criminal
actions, in conformity with the laws and regulations of their organization."
GODINEZ, THERESA T.

SAFA Law Office entered into a contract of lease with PNB as a juridical person to pursue
the objectives of the partnership. The terms of the contract and the manner in which the
parties implemented it are a glaring recognition of SAFA Law Office's juridical personality.
Thus, the contract stated that it is being executed by PNB as the lessor and "SALUDO
AGPALO FERNANDEZ & AQUINO, a partnership organized and existing under the laws
of the Republic of the Philippines," as the lessee. It also provided that the lessee, i.e.,
SAFA Law Office, shall be liable in case of default. Furthermore, subsequent
communications between the parties have always been made for or on behalf of PNB
and SAFA Law Office, respectively.

MERIAN B. SANTIAGO vs. SPOUSES EDNA L. GARCIA AND BAYANI GARCIA

G.R. No. 228356 March 09, 2020

FACTS:

In November 2000, petitioner Merian B. Santiago (Merian) was enticed by respondent

Edna L. Garcia (Edna) to invest money in the latter's lending business with a promise of
a high return in terms of monthly interest ranging from 5% to 8%. The parties agreed that
monthly interest shall be remitted by Edna to Merian and that the principal amount
invested shall be returned to Merian upon demand.

Merian began investing several amounts from November 15, 2000 to June 30, 2003,
reaching an aggregate amount of P1,569,000.00.5 Edna had remitted to Merian the
amount of P877,000.00 as interest on said amounts. However, in December 2003, Edna
defaulted in remitting to Merian the interest due from said investments. Despite demands,
Edna failed to remit the interest to Merian.

Consequently, Merian, through her lawyer, sent a letter dated January 20, 2004 to Edna
demanding for the return of Merian's total investment of P1,569,000.00.6 Merian also
went to Edna's house where the latter agreed to pay the principal amount invested on a
"pay when able" basis.

Because Merian learned that several other persons were likewise taken advantage of by
Edna, Merian filed the complaint a quo on February 12, 2004, for sum of money with
prayer for the issuance of a writ of preliminary attachment against spouses Edna L. Garcia
and Bayani Garcia (spouses Garcia).

ISSUE:

Whether or not the contractual relation between Merian and Edna is one of investment
which entails the assumption of business risk.

RULING:

There is merit in the petition.

The contention lies as to whether Edna is obligated to return the principal amount to
Merian upon demand. In resolving the issue in the negative, the RTC held that a
partnership was formed between Merian and Edna; while the CA held that the contractual
relation between the parties was neither a partnership nor a contract of loan but was an
investment that entailed business risk.

A partnership, a simple contract of loan, and an investment contract carry peculiar

definitions and are governed by pertinent laws. The existence of a partnership, simple
loan, or an investment contract should not, therefore, be inferred lightly, especially where
any of its requisite elements are lacking. The Court cannot subscribe to the view that
GODINEZ, THERESA T.

Merian and Edna formed a partnership. By the contract of partnership two or more
persons bind themselves to contribute money, property, or industry to a common fund,
with the intention of dividing the profits among themselves. Partnership is essentially a
result of an agreement or a contract, either express or implied, oral or in writing, between
two or more persons. Here, there was neither allegation nor proof that Merian and Edna
agreed to enter into a partnership for purposes of carrying out the lending business.

There was likewise no agreement for the sharing of profits, only that Merian expects to
receive remittance of monthly interest from the amount she invested. At any rate, the
receipt by a person of a share of the profits, or of a payment of a contingent amount in
case of profits earned, is not a conclusive evidence of partnership. Article (Art.) 1769(3)
of the Civil Code provides that "the sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or common right or
interest in any property from which the returns are derived".

The facts therefore demonstrate that Edna was engaged in the business of lending and
that she solicited funds from Merian which Edna then used to grant loans to other persons.
Having established that the transaction between Merian and Edna is one of investment
in a lending business, the question to be addressed is whether Edna is contractually
bound to return Merian's capital. Investment is ordinarily defined as the placement of
capital or lay out of money in a way intended to secure income or profit from its
employment. As in all contractual relations, an investment contract is largely governed by
the stipulations, clauses, terms, and conditions as the parties may deem convenient,
which shall be respected as long as it is not contrary to law, morals, good customs, public
order, or public policy.Thus, the parties are free to agree that the investment shall entail
the sharing of profits and losses, or otherwise.

Even assuming that the agreement between the parties was that Merian shall bear the
risk of losing the principal amount she invested, in case of business loss, there was no
allegation nor proof presented that, indeed, Edna's lending business suffered business
loss. The ruling, therefore, that the principal amount should no longer be returned
because of Merian's assumption of risk lacks factual basis.

JOSEFINA P. REALUBIT vs. PROSENCIO D. JASO

G.R. No. 178782 September 21, 2011

FACTS:

On 17 March 1994, petitioner Josefina Realubit (Josefina) entered into a Joint Venture
Agreement with Francis Eric Amaury Biondo (Biondo), a French national, for the operation
of an ice manufacturing business. With Josefina as the industrial partner and Biondo as
the capitalist partner, the parties agreed that they would each receive 40% of the net
profit, with the remaining 20% to be used for the payment of the ice making machine
which was purchased for the business. Biondo subsequently executed a Deed of
Assignment transferring all his rights and interests in the business in favor of respondent
Eden Jaso (Eden), the wife of respondent Prosencio Jaso. With Biondo’s eventual
departure from the country, the Spouses Jaso caused their lawyer to send Josefina a
letter apprising her of their acquisition of said Frenchman’s share in the business and
formally demanding an accounting and inventory thereof as well as the remittance of their
portion of its profits.

Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso
commenced the instant suit with the filing of their Complaint against Josefina, her
husband, Ike Realubit (Ike), and their alleged dummies, for specific performance,
accounting, examination, audit and inventory of assets and properties, dissolution of the
joint venture, appointment of a receiver and damages. Served with summons, the
Spouses Realubit filed their Answer specifically denying the material allegations of the
GODINEZ, THERESA T.

foregoing complaint. Claiming that they have been engaged in the tube ice trading
business under a single proprietorship even before their dealings with Biondo, the
Spouses Realubit, in turn, averred that their said business partner had left the country in
May 1997 and could not have executed the Deed of Assignment which bears a signature
markedly different from that which he affixed on their Joint Venture Agreement;

RTC in its Decision ordered the defendants to submit to plaintiffs a complete accounting
and inventory of the assets and liabilities of the joint venture from its inception to the
present, to allow plaintiffs access to the books and accounting records of the joint venture,
to deliver to plaintiffs their share in the profits, if any, and to pay the plaintiffs the amount
of ₱20,000. for moral damages. On appeal before the CA, the foregoing decision was set
aside in the herein assailed Decision.

ISSUE:

Whether or not there was a valid assignment of rights to the joint venture.
Whether the court may order petitioner as partner in the joint venture to render an
accounting to one who is not a partner in said joint venture.
Whether private respondents have any right in the joint venture and in the separate ice
business of petitioner[s].

RULING:

We find the petition bereft of merit.

It cannot be gainsaid that, as a public document, the Deed of Assignment Biondo

executed in favor of Eden not only enjoys a presumption of regularity but is also
considered prima facie evidence of the facts therein stated. A party assailing the
authenticity and due execution of a notarized document is, consequently, required to
present evidence that is clear, convincing and more than merely preponderant. In view of
the Spouses Realubit’s failure to discharge this onus, we find that both the RTC and the
CA correctly upheld the authenticity and validity of said Deed of Assignment upon the
combined strength of the above-discussed disputable presumptions and the testimonies
elicited from Eden and Notary Public Rolando Diaz. As for the Spouses’ Realubit’s bare
assertion that Biondo’s signature on the same document appears to be forged, suffice it
to say that, like fraud, forgery is never presumed and must likewise be proved by clear
and convincing evidence by the party alleging the same. Aside from not being borne out
by a comparison of Biondo’s signatures on the Joint Venture Agreement and the Deed of
Assignment, said forgery is, moreover debunked by Biondo’s duly authenticated
certification confirming the transfer of his interest in the business in favor of Eden.

Generally understood to mean an organization formed for some temporary purpose, a

joint venture is likened to a particular partnership or one which "has for its object
determinate things, their use or fruits, or a specific undertaking, or the exercise of a
profession or vocation. "The rule is settled that joint ventures are governed by the law on
partnerships which are, in turn, based on mutual agency or delectus personae. Insofar as
a partner’s conveyance of the entirety of his interest in the partnership is concerned,
Article 1813 of the Civil Code provides that a conveyance by a partner of his whole interest
in the partnership does not itself dissolve the partnership, or, as against the other partners
in the absence of agreement, entitle the assignee, during the continuance of the
partnership, to interfere in the management or administration of the partnership business
or affairs, or to require any information or account of partnership transactions, or to inspect
the partnership books; but it merely entitles the assignee to receive in accordance with
his contracts the profits to which the assigning partners would otherwise be entitled.
However, in case of fraud in the management of the partnership, the assignee may avail
himself of the usual remedies.
GODINEZ, THERESA T.

In the case of a dissolution of the partnership, the assignee is entitled to receive his
assignor’s interest and may require an account from the date only of the last account
agreed to by all the partners. From the foregoing provision, it is evident that "(t)he transfer
by a partner of his partnership interest does not make the assignee of such interest a
partner of the firm, nor entitle the assignee to interfere in the management of the
partnership business or to receive anything except the assignee’s profits. The assignment
does not purport to transfer an interest in the partnership, but only a future contingent
right to a portion of the ultimate residue as the assignor may become entitled to receive
by virtue of his proportionate interest in the capital." Although Eden did not, moreover,
become a partner as a consequence of the assignment and/or acquire the right to require
an accounting of the partnership business, the CA correctly granted her prayer for
dissolution of the joint venture conformably with the right granted to the purchaser of a
partner’s interest under Article 1831 of the Civil Code.

LUZVIMINDA J. VILLAREAL, et. al., vs. DONALDO EFREN C. RAMIREZ

G.R. No. 144214 July 14, 2003

FACTS:

On July 25, 1984, Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a
partnership with a capital of P750,000 for the operation of a restaurant and catering
business under the name "Aquarius Food House and Catering Services." Villareal was
appointed general manager and Carmelito Jose, operations manager. Respondent
Donaldo Efren C. Ramirez joined as a partner in the business on September 5, 1984. His
capital contribution of P250,000 was paid by his parents, Respondents Cesar and
Carmelita Ramirez. After Jesus Jose withdrew from the partnership in January 1987, his
capital contribution of P250,000 was refunded to him in cash by agreement of the
partners. In the same month, without prior knowledge of respondents, petitioners closed
down the restaurant, allegedly because of increased rental. The restaurant furniture and
equipment were deposited in the respondents' house for storage. On March 1, 1987,
respondent spouses wrote petitioners, saying that they were no longer interested in
continuing their partnership or in reopening the restaurant, and that they were accepting
the latter's offer to return their capital contribution. On October 13, 1987, Carmelita
Ramirez wrote another letter informing petitioners of the deterioration of the restaurant
furniture and equipment stored in their house. She also reiterated the request for the
return of their one-third share in the equity of the partnership. The repeated oral and
written requests were, however, left unheeded.

Before the Regional Trial Court (RTC) of Makati, Branch 59, respondents subsequently
filed a Complaint for the collection of a sum of money from petitioners. In their Answer,
petitioners contended that respondents had expressed a desire to withdraw from the
partnership and had called for its dissolution under Articles 1830 and 1831 of the Civil
Code. In their Reply, respondents alleged that they did not know of any loan encumbrance
on the restaurant. According to them, if such allegation were true, then the loans incurred
by petitioners should be regarded as purely personal and, as such, not chargeable to the
partnership. Respondents filed an Urgent Motion for Leave to Sell or Otherwise Dispose
of Restaurant Furniture and Equipment on July 8, 1988. The furniture and the equipment
stored in their house were inventoried and appraised at P29,000. The display freezer was
sold for P5,000 and the proceeds were paid to them.

After trial, the RTC 17 ruled that the parties had voluntarily entered into a partnership,
which could be dissolved at any time. The CA held that, although respondents had no
right to demand the return of their capital contribution, the partnership was nonetheless
dissolved when petitioners lost interest in continuing the restaurant business with them.
GODINEZ, THERESA T.

ISSUES:
Whether petitioners are liable to respondents for the latter's share in the partnership.
Whether the CA's computation of P253,114 as respondents' share is correct.

RULING:

The Petition has merit.

First Issue:
Share in Partnership

Both the trial and the appellate courts found that a partnership had indeed existed, and
that it was dissolved on March 1, 1987. They found that the dissolution took place when
respondents informed petitioners of the intention to discontinue it because of the former's
dissatisfaction with, and loss of trust in, the latter's management of the partnership affairs.
These findings were amply supported by the evidence on record. Respondents
consequently demanded from petitioners the return of their one-third equity in the
partnership.

We hold that respondents have no right to demand from petitioners the return of their
equity share. Except as managers of the partnership, petitioners did not personally hold
its equity or assets. "The partnership has a juridical personality separate and distinct from
that of each of the partners."23 Since the capital was contributed to the partnership, not
to petitioners, it is the partnership that must refund the equity of the retiring partners.24

Second Issue:
What Must Be Returned?

Since it is the partnership, as a separate and distinct entity, that must refund the shares
of the partners, the amount to be refunded is necessarily limited to its total resources. In
other words, it can only pay out what it has in its coffers, which consists of all its assets.
However, before the partners can be paid their shares, the creditors of the partnership
must first be compensated. After all the creditors have been paid, whatever is left of the
partnership assets becomes available for the payment of the partners' shares.

Evidently, in the present case, the exact amount of refund equivalent to respondents' one-
third share in the partnership cannot be determined until all the partnership assets will
have been liquidated — in other words, sold and converted to cash — and all partnership
creditors, if any, paid. The CA's computation of the amount to be refunded to respondents
as their share was thus erroneous.

First, it seems that the appellate court was under the misapprehension that the total
capital contribution was equivalent to the gross assets to be distributed to the partners at
the time of the dissolution of the partnership. Generally, in the pursuit of a partnership
business, its capital is either increased by profits earned or decreased by losses
sustained. It does not remain static and unaffected by the changing fortunes of the
business. In the present case, the financial statements presented before the trial court
showed that the business had made meager profits. However, notable therefrom is the
omission of any provision for the depreciation of the furniture and the equipment. The
amortization of the goodwill (initially valued at P500,000) is not reflected either. Properly
taking these non-cash items into account will show that the partnership was actually
sustaining substantial losses, which consequently decreased the capital of the
partnership. Both the trial and the appellate courts in fact recognized the decrease of the
partnership assets to almost nil, but the latter failed to recognize the consequent
corresponding decrease of the capital.
GODINEZ, THERESA T.

Second, the CA's finding that the partnership had an outstanding obligation in the amount
of P240,658 was not supported by evidence. We sustain the contrary finding of the RTC,
which had rejected the contention that the obligation belonged to the partnership.

Third, the CA failed to reduce the capitalization by P250,000, which was the amount paid
by the partnership to Jesus Jose when he withdrew from the partnership.

Because of the above-mentioned transactions, the partnership capital was actually

reduced. When petitioners and respondents ventured into business together, they should
have prepared for the fact that their investment would either grow or shrink. In the present
case, the investment of respondents substantially dwindled. The original amount of
P250,000 which they had invested could no longer be returned to them, because one
third of the partnership properties at the time of dissolution did not amount to that much.

It is a long established doctrine that the law does not relieve parties from the effects of
unwise, foolish or disastrous contracts they have entered into with all the required
formalities and with full awareness of what they were doing. Courts have no power to
relieve them from obligations they have voluntarily assumed, simply because their
contracts turn out to be disastrous deals or unwise investments.

Petitioners further argue that respondents acted negligently by permitting the partnership
assets in their custody to deteriorate to the point of being almost worthless. Supposedly,
the latter should have liquidated these sole tangible assets of the partnership and
considered the proceeds as payment of their net capital. Hence, petitioners argue that
the turnover of the remaining partnership assets to respondents was precisely the manner
of liquidating the partnership and fully settling the latter's share in the partnership.

We disagree. The delivery of the store furniture and equipment to private respondents
was for the purpose of storage. They were unaware that the restaurant would no longer
be reopened by petitioners. Hence, the former cannot be faulted for not disposing of the
stored items to recover their capital investment.