[G.R. No. 143340. August 15, 2001.

LILIBETH SUNGA-CHAN and CECILIA SUNGA,

petitioners,vs.LAMBERTO T. CHUA, respondent.

Facts:

Respondent Lamberto Chua alleged that in 1977, he verbally entered into a partnership
with Jacinto in the distribution of Shellane Liquefied Petroleum Gas (LPG). Respondent
and Jacinto allegedly agreed to register the business name of their partnership, Shellite
Gas Appliance Center, under the name of Jacinto as a sole proprietorship. Respondent
delivered his initial capital contribution of P100,000.00 to Jacinto while the latter in turn
produced P100,000.00, with the intention that the profits would be equally divided
between them.

Upon Jacinto's death in 1989, his wife Cecilia and his daughter Lilibeth Sunga, took
over the operations, control, custody, disposition and management of Shellite without
respondent's consent. Despite respondent's repeated demands upon petitioners for
accounting, inventory, appraisal, winding up and restitution, petitioners failed to comply.

Subsequently, Lilibeth gave P200,000.00 to the respondent representing the latter's

share in the partnership. Still, petitioners failed to comply with their duty to account, and
continued to benefit from Shellite.

On June 22, 1992, respondent filed a complaint against Lilibeth Sunga Chan and
Cecilia Sunga for "Winding Up of Partnership Affairs, Accounting, Appraisal and
Recovery of Shares and Damages with Writ of Preliminary Attachment" with the
Regional Trial Court.

Decision of the Lower Court:

The trial court rendered its Decision ruling for respondent. The court direct the
petitioners to render an accounting, submit an inventory, and appraisal; order them to
return and restitute to the partnership and the plaintiff; order them to wind up the affairs
of the partnership and terminate its business activities pursuant to law; finding them
especially Lilibeth Sunga-Chan guilty of breach of trust and in bad faith, and hold them
liable for moral and exemplary damages, attorney's fees and litigation expenses.

Decision of the Court of Appeals:

The Court of Appeals dismissed the appeal. The decision is AFFIRMED in all respects.
ISSUES:
1. Whether or not the non-registration of the contract of partnership invalidate the
partnership.
2. Whether or not the laches and/or prescription have extinguished respondent's claim.

RULING:
1. Petitioners maintain that said partnership had an initial capital of P200,000.00 should
have been registered with the Securities and Exchange Commission (SEC) since
registration is mandated by the Civil Code. True, Article 1772 of the Civil Code requires
that partnerships with a capital of P3,000.00 or more must register with the SEC,
however, this registration requirement is not mandatory. Article 1768 of the Civil Code
explicitly provides that the partnership retains its juridical personality even if it fails to
register. The failure to register the contract of partnership does not invalidate the same
as among the partners, so long as the contract has the essential requisites, because the
main purpose of registration is to give notice to third parties, and it can be assumed that
the members themselves knew of the contents of their contract. In the case at bar,
noncompliance with this directory provision of the law will not invalidate the partnership
considering that the totality of the evidence proves that respondent and Jacinto indeed
forged the partnership in question.

2. SC agreed with the trial court and the Court of Appeals that the action for accounting
filed by respondent three (3) years after Jacinto's death was within the prescribed
period. The Civil Code provides that an action to enforce an oral contract prescribes in
six (6) years while the right to demand an accounting for a partner's interest as against
the person continuing the business accrues at the date of dissolution, in the absence of
any contrary agreement. Considering that the death of a partner results in the
dissolution of the partnership, in this case, it was after Jacinto's death that respondent
as the surviving partner had the right to an account of his interest as against petitioners.
It bears stressing that while Jacinto's death dissolved the partnership, the dissolution did
not immediately terminate the partnership. The Civil Code expressly provides that upon
dissolution, the partnership continues and its legal personality is retained until the
complete winding up of its business, culminating in its termination.

Importance of the case:

Partnership retains its juridical personality even if it fails to register because registration
merely gives notice to third parties.

MARJORIE TOCAO and WILLIAM T. BELO vs. CA and NENITA A. ANAY

342 SCRA 20

FACTS:

William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed
to form a joint venture for the sale of cooking wares. Belo was to contribute P2.5 million;
Tocao also contributed some cash and she shall also act as president and general
manager; and Anay shall be in charge of marketing. Belo and Tocao specifically asked
Anay because of her experience and connections as a marketer. They agreed further
that Anay shall receive the following:

● 10% share of annual net profits

● 6% overriding commission for weekly sales
● 30% of sales Anay will make herself
● 2% share for her demo services

They operated under the name Geminesse Enterprise, this name was however
registered as a sole proprietorship with the Bureau of Domestic Trade under Tocao. The
joint venture agreement was not reduced to writing because Anay trusted Belo’s
assurances.
The venture succeeded under Anay’s marketing prowess.
But then the relationship between Anay and Tocao soured. One day, Tocao advised
one of the branch managers that Anay was no longer a part of the company. Anay then
demanded that the company be audited and her shares be given to her.

ISSUES:
1. Whether or not there is a partnership.
2. Whether or not Belo acted as a guarantor.

RULING:
Yes, even though it was not reduced to writing, for a partnership can be instituted
in any form. The fact that it was registered as a sole proprietorship is of no moment for
such registration was only for the company’s trade name.
Anay was not even an employee because when they ventured into the agreement, they
explicitly agreed to profit sharing this is even though Anay was receiving commissions
because this is only incidental to her efforts as a head marketer.
The Supreme Court also noted 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.”
An unjustified dissolution by a partner can subject him to action for damages because
by the mutual agency that arises in a partnership, the doctrine of delectus
personaeallows the partners to have the power, although not necessarily the right to
dissolve the partnership.
Tocao’s unilateral exclusion of Anay from the partnership is shown by her memo to the
Cubao office plainly stating that Anay 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.

EMILIO EMNACE, petitioner,

vs.

COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO,

VICENTE WILLIAM TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY
TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents.

G.R. No. 126334 November 23, 2001

Facts:

Petitioners Emnace, Tabanao and Divigranacia were partners in a business known as

Ma. Nelma Fishing Industry. In January 1986, they decided to dissolve their partnership
and executed an agreement of partition and distribution. Throughout the existence of
the partnership, and even after Tabanao’s death, petitioner failed to submit to
Tabanao’s heirs any financial statements. Petitioner also reneged on his promise to turn
over the 1/3 share in the total assets of the partnership to the heirs. Private respondents
filed an action for accounting, payment of shares, division of assets and damages.
Petitioner filed a motion to dismiss the complaint on the grounds of improper venue,
lack of jurisdiction and lack of capacity of the estate of Tabanao to sue. The trial court
denied the motion to dismiss. The trial court held that the heirs of Tabanao had a right
to sue in their own names.

Issue: Whether or not the private respondents have the legal capacity to sue.

Ruling: Yes. The surviving spouse and her children are complainants in their own right
as successors of Vicente Tabanao. From the very moment of Vicente Tabanao’s death,
his rights insofar as the partnership was concerned were transmitted to his heirs, for
rights to the succession are transmitted from the moment of death of the decedent.
Whatever claims and rights Vicente Tabanao had against the partnership and petitioner
were transmitted to respondents by operation of law, more particularly by succession. A
prior settlement of the estate, or even the appointment of Salvacion Tabanao as
executrix or administratrix, is not necessary for any of the heirs to acquire legal capacity
to sue. As successors who stepped into the shoes of their decedent upon his death,
they can commence any action originally pertaining to the decedent.