PHILIPPINE LAW SCHOOL Page |1

AGENCY, TRUST & PARTNERSHIP LAW

GLENN M. PINEDA
ALPHA PHI OMEGA

PARTNERSHIP

TITLE J.M. TUASON & CO., INC., represented by its Managing PARTNER, GREGORIO
ARANETA, INC., Plaintiff-Appellee, v. QUIRINO BOLAÑOS G.R. No. L-4935.
May 28, 1954

FACTS The original complaint described the land as a portion of a lot registered in
plaintiff’s name under Transfer Certificate of Title No. 37686 of the land record of
Rizal Province and as containing an area of 13 hectares more or less.

Defendant, in his answer, sets up prescription and title under claim of

ownership, adverse to the entire world by defendant and his predecessors in
interest. The answer further alleges that registration of the land in dispute was
obtained by plaintiff or its predecessors in interest thru "fraud or error and
without knowledge (of) or notice either personal or thru publication to defendant

After trial, the lower court rendered judgment for plaintiff, declaring
defendant to be without any right to the land in question and ordering him to
restore possession to plaintiff.
ISSUE WHETHER OR NOT business transaction J.M Tuason and Gregorio Araneta,
Inc. entered into is a Corporation.
RULING CORPORATION AS PARTY MAY BE REPRESENTED BY ANOTHER PERSON.
NATURAL OR JUDICIAL. — There is nothing against one corporation being
represented by another person, natural or juridical, in a suit in court, for the true rule is
that "although a corporation has no power to enter into a partnership, it may nevertheless
enter into a joint venture with another where the nature of that venture is in line with the
business authorized by its charter." There is nothing in the record to indicate that the
venture in which plaintiff is represented by Gregorio Araneta, Inc. as "its
managing partner" is not in line with the corporate business of either of them.
In fact the practice is for an attorney-at-law to bring the action, that is to file the
complaint, in the name of the plaintiff.
That practice appears to have been followed in this case, since the complaint is
signed by the law firm of Araneta & Araneta, "counsel for plaintiff" and
commences with the statement "Comes now plaintiff, through its undersigned
counsel."
It is true that the complaint also states that the plaintiff is "represented herein by
its Managing Partner Gregorio Araneta, Inc.", another corporation, but there is
nothing against one corporation being represented by another person, natural or
juridical, in a suit in court.

Civil Code of the Philippines Art. 1768

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Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

“Article 1768. The 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. (n)”

DETERMINING FACTOR IN THE EXISTENCE OF PARTNERSHIP.

TITLE G.R. No. L-9996. October 15, 1957.]

EUFEMIA EVANGELISTA, et. al., Petitioner, vs. THE COLLECTOR OF
INTERNAL REVENUE and THE COURT OF TAX APPEALS, Respondents.

FACTS Petitioners borrowed from their father the sum of P59,140.00 and from this
investment the petitioners brought properties the same rented or leased to
various tenants.

On August 16, 1945, they appointed their brother Simeon Evangelista to

‘manage their properties with full power to lease; to collect and receive rents; to
issue receipts therefor; in default of such payment, to bring suits against the
defaulting tenant; to sign all letters, contracts, etc., for and in their behalf, and to
endorse and deposit all notes and checks for them.

That in 1948 they realized a gross rental income of P17,453.00 out of the which
amount was deducted the sum of P4,837.65 as expenses, thereby leaving them a
net rental income of P12,615.35

On September 24, 19a4, respondent Collector of Internal Revenue demanded

the payment of income tax on corporations, real estate dealer’s fixed tax and
corporation residence tax for the years 1945-1949. The letter of demand and
correspondence assessments were delivered to petitioner on December 3, 1954,
whereupon they instituted the present case in the Court of Tax Appeals, with a
prayer that “ the decision of the respondent contained in his letter of demand
dated September 24, 1954” be reversed, and they be absolved from the payment
of taxes in question. CTA denied their petition and Subsequent MR

ISSUE WHETHER OR NOT business transaction J.M Tuason and Gregorio Araneta,
Inc. entered into is a Corporation.
RULING CORPORATION AS PARTY MAY BE REPRESENTED BY ANOTHER PERSON.
NATURAL OR JUDICIAL. — There is nothing against one corporation being
represented by another person, natural or juridical, in a suit in court, for the true rule is
that "although a corporation has no power to enter into a partnership, it may nevertheless
enter into a joint venture with another where the nature of that venture is in line with the
business authorized by its charter." There is nothing in the record to indicate that the
venture in which plaintiff is represented by Gregorio Araneta, Inc. as "its
managing partner" is not in line with the corporate business of either of them.
In fact the practice is for an attorney-at-law to bring the action, that is to file the
complaint, in the name of the plaintiff.
That practice appears to have been followed in this case, since the complaint is
signed by the law firm of Araneta & Araneta, "counsel for plaintiff" and
commences with the statement "Comes now plaintiff, through its undersigned
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Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

counsel."
It is true that the complaint also states that the plaintiff is "represented herein by
its Managing Partner Gregorio Araneta, Inc.", another corporation, but there is
nothing against one corporation being represented by another person, natural or
juridical, in a suit in court.

FACTS

"1. That the petitioners borrowed from their father the sum of P59,140.00 which amount together
with their personal monies was used by them for the purpose of buying real properties;

"2. That on February 2, 1943 they bought from Mrs. Josefina Florentino a lot with an area of 3,713.40
sq. m. including improvements thereon for the sum of P100,000.00; this property has an assessed
value of P57,517.00 as of 1948;

"3. That on April 3, 1944 they purchased from Mrs. Josefa Oppus parcels of land ;

"4. That on April 23, 1944 they purchased from the Insular Investments, Inc., a lot of 4,358 sq. m.
including improvements thereon for P108,825.00.

"5. That on April 28, 1944 they bought from Mrs. Valentin Afable a lot of 8,371 sq. m.;

"6. That in a document dated August 16, 1945, they appointed their brother Simeon Evangelista to
‘manage their properties with full power to lease; to collect and receive rents; to issue receipts
therefor; in default of such payment, to bring suits against the defaulting tenant; to sign all letters,
contracts, etc., for and in their behalf, and to endorse and deposit all notes and checks for them;

"7. That after having bought the above-mentioned real properties, the petitioners had the same rented
or leased to various tenants;

"8. That from the month of March, 1945 up to and including December, 1945, the total amount
collected a net rental income of P5,948.33;

"9. That in 1946, a net rental income of P7,498.13;

"10. That in 1948 they realized a gross rental income of P17,453.00 out of the which amount was
deducted the sum of P4,837.65 as expenses, thereby leaving them a net rental income of
P12,615.35."cralaw virtua1aw library

On September 24, 19a4, respondent Collector of Internal Revenue demanded the payment of income
tax on corporations, real estate dealer’s fixed tax and corporation residence tax for the years 1945-
1949. The letter of demand and correspondence assessments were delivered to petitioner on
December 3, 1954, whereupon they instituted the present case in the Court of Tax Appeals, with a
prayer that “ the decision of the respondent contained in his letter of demand dated September 24,
1954” be reversed, and they be absolved from the payment of taxes in question. CTA denied their
petition and Subsequent MR
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AGENCY, TRUST & PARTNERSHIP LAW
Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

ISSUE
Whether or not there is an existence of partnership .

DECISION

Yes. A Contract of Partnership existence between the Petitioners, hence

Article 1767 of the Civil Code of the Philippines provides

"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."

Pursuant to this article, the essential elements of a partnership are two, namely: (a) an
agreement to contribute money, property or industry to a common fund; and (b) intent to divide the
profits among the contracting parties. The first element is undoubtedly present in the case at bar, for,
admittedly, petitioners have agreed to, and did, contribute money and property to a common fund.
Hence, the issue narrows down to their intent in acting as they did. Upon consideration of all the
facts and circumstances surrounding the case, we are fully satisfied that their purpose was to engage
in real estate transactions for monetary gain and then divide the same among themselves, because:

1. Said common fund was not something they found already in existence. It was not a property
inherited by them pro indiviso. They created it purposely. What is more they jointly borrowed a
substantial portion thereof in order to establish said common fund.

2. They invested the same, not merely in one transaction, but in a series of transactions. On
February 2, 1943, they bought a lot for P100,000.00. On April 3, 1944, they purchased 21 lots for
P18,000.000. This was soon followed, on April 23, 1944, by the acquisition of another real estate for
P108,825.00. Five (5) days later (April 28, 1944), they got a fourth lot for P237,234.14. The number of
lots (24) acquired and transactions undertaken, as well as the brief interregnum between each,
particularly the last three purchases, is strongly indicative of a pattern or common design that was
not limited to the conservation and preservation of the aforementioned common fund or even of the
property acquired by petitioners in February, 1943. In other words, one cannot but perceive a
character of habituality peculiar to business transactions engaged in for purposes of gain.

3. The aforesaid lots were not devoted to residential purposes, or to other personal uses, of petitioners
herein. The properties were leased separately to several persons, who, from 1945 to 1948 inclusive,
paid the total sum of P70,068.30 by way of rentals. Seemingly, the lots are still being so let, for
petitioners do not even suggest that there has been any change in the utilization thereof.
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AGENCY, TRUST & PARTNERSHIP LAW
Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

OBLIGATION OF THE PARTNERSHIP AMONG THEMSELVES.

No. 13

G.R. No. 124293. September 24, 2003

JG SUMMIT HOLDINGS, INC., Petitioner, vs. COURT OF APPEALS, COMMITTEE ON

PRIVATIZATION, its Chairman and Members; ASSET PRIVATIZATION TRUST and
PHILYARDS HOLDINGS, INC., respondents.

RESOLUTION

PUNO, J.:

FACTS

The facts are undisputed and can be summarized briefly as follows:

On January 27, 1977, the National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of
Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National
Shipyard, Inc. (SNS) which subsequently became the Philippine Shipyard and Engineering
Corporation (PHILSECO). Under the JVA, the NIDC and KAWASAKI will contribute P330 million
for the capitalization of PHILSECO in the proportion of 60%-40% respectively. 1 One of its salient
features is the grant to the parties of the right of first refusal should either of them decide to sell,
assign or transfer its interest in the joint venture, 

NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB)
PNB's interest in PHILSECO was transferred to the National Government.
President Corazon C. Aquino issued Proclamation No. 50 establishing the Committee on
Privatization (COP) and the Asset Privatization Trust (APT)... the APT by virtue of which the latter
was named the trustee of the National Government's share in PHILSECO... as a result of a quasi-
reorganization of
PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in
PHILSECO increased to 97.41% thereby reducing Kawasaki's shareholdings to 2.59%.
the COP and the APT deemed it in the best interest of the national economy and the government to
privatize PHILSECO by selling 87.67% of its total outstanding capital stock to private entities. After a
series of negotiations between the APT and
Kasawaki, they agreed that the latter's right of first refusal under the JVA be "exchanged" for the right
to top by five percent (5%) the highest bid for said shares.
Kawasaki would be entitled to name a company in which it was a stockholder, which could... exercise
the right to top. On September 7, 1990, Kawasaki informed APT that Philyards Holdings, Inc. (PHI)
would exercise its right to top by 5%.
The provisions of the ASBR were explained to the interested bidders who were notified that bidding
would be held on December 2, 1993

...
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Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

consortium composed of petitioner JG Summit Holdings, Inc., Sembawang Shipyard Ltd. of

Singapore (Sembawang), and Jurong Shipyard Limited of Malaysia (Jurong), was declared the
highest bidder at P2.03 billion.
The following day, December3, 1993, the COP approved the sale of 87.67% National Government
shares of stock in PHILSECO to said consortium. It notified petitioner of said approval "subject to the
right of Kawasaki Heavy Industries, Inc./Philyards Holdings, Inc. to top JGSMI's (petitioner's) bid by
5% as... specified in the bidding rules."... petitioner informed the APT that it was protesting the offer
of PHI to top its bid on the grounds that: (a) the Kawasaki/PHI consortium composed of Kawasaki,
Philyards, Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last
four(4) companies were the losing bidders (for P1.528 billion) thereby circumventing the law and
prejudicing the weak winning bidder; (b) only Kawasaki could exercise the right to top; (c) giving the
same option to top to PHI constituted unwarranted benefit to a third party; (d) no... right of first
refusal can be exercised in a public bidding or auction sale, and (e) the JG Summit Consortium was
not estopped from questioning the proceedings.
PHI had fully paid the balance of the purchase price of the subject bidding. On February 7, 1994, the
APT notified petitioner that PHI had exercised its option to top the highest bid and that the COP had
approved the same.
On January 6, 1994. On February 24, 1994, the APT and PHI executed a Stock Purchase Agreement.
petitioner filed with this Court a petition for mandamus.

Court of Appeals "denied" for lack of merit the petition for mandamus. Citing Guanio v. Fernandez,
[3] it held that mandamus is not the proper remedy to "compel the undoing of an act already done or
the correction... of a wrong already perpetuated, even though the action taken was clearly illegal."

ISSUE

Whether or not the right of first refusal lawfully exercise by the parties.

RULING

The parties likewise agreed to arm themselves with protective mechanisms to preserve their
respective interests in the partnership in the event that (a) one party decides to sell its shares to third
parties; and (b) new Philseco shares are issued. Anent the first situation, the non-selling party is given
the right of first refusal under section 1.4 to have a preferential right to buy or to refuse the selling
partys shares.

The right of first refusal is meant to protect the original or remaining joint venturer(s) or
shareholder(s) from the entry of third persons who are not acceptable to it as co-venturer(s) or co-
shareholder(s). The joint venture between the Philippine Government and KAWASAKI is in the
nature of a partnership36 which, unlike an ordinary corporation, is based on delectus personae.37 No one
can become a member of the partnership association without the consent of all the other associates.
The right of first refusal thus ensures that the parties are given control over who may become a new
partner in substitution of or in addition to the original partners. Should the selling partner decide to
dispose all its shares, the non-selling partner may acquire all these shares and terminate the
partnership. No person or corporation can be compelled to remain or to continue the partnership. Of
course, this presupposes that there are no other restrictions in the maximum allowable share that the
non-selling partner may acquire such as the constitutional restriction on foreign ownership in public
utility. The theory that KAWASAKI can acquire, as a maximum, only 40% of PHILSECOs shares is
correct only if a shipyard is a public utility. In such instance, the non-selling partner who is an alien
can acquire only a maximum of 40% of the total capitalization of a public utility despite the grant of
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Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

first refusal. The partners cannot, by mere agreement, avoid the constitutional proscription. But as
afore-discussed, PHILSECO is not a public utility and no other restriction is present that would limit
the right of KAWASAKI to purchase the Governments share to 40% of Philsecos total capitalization.

Furthermore, the phrase under the same terms in section 1.4 cannot be given an interpretation that
would limit the right of KAWASAKI to purchase PHILSECO shares only to the extent of its original
proportionate contribution of 40% to the total capitalization of the PHILSECO. Taken together with
the whole of section 1.4, the phrase under the same terms means that a partner to the joint venture
that decides to sell its shares to a third party shall make a similar offer to the non-selling partner.
The selling partner cannot make a different or a more onerous offer to the non-selling partner.

The exercise of first refusal presupposes that the non-selling partner is aware of the terms of the
conditions attendant to the sale for it to have a guided choice. While the right of first refusal
protects the non-selling partner from the entry of third persons, it cannot also deprive the other
partner the right to sell its shares to third persons if, under the same offer, it does not buy the
shares.

Apart from the right of first refusal, the parties also have preemptive rights under section 1.5 in the
unissued shares of Philseco. Unlike the former, this situation does not contemplate transfer of a
partners shares to third parties but the issuance of new Philseco shares. The grant of preemptive
rights preserves the proportionate shares of the original partners so as not to dilute their respective
interests with the issuance of the new shares. Unlike the right of first refusal, a preemptive right gives
a partner a preferential right over the newly issued shares only to the extent that it retains its original
proportionate share in the joint venture.

The case at bar does not concern the issuance of new shares but the transfer of a partners share in the
joint venture. Verily, the operative protective mechanism is the right of first refusal which does not
impose any limitation in the maximum shares that the non-selling partner may acquire.
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Glenn M. Pineda
ALPHA PHI OMEGA

PARTNERSHIP

DISSOLUTION AND WINDING UP

No. 18

G.R. No. 94285. August 31, 1999]

JESUS SY, JAIME SY, ESTATE OF JOSE SY, ESTATE OF VICENTE SY, HEIR OF MARCIANO
SY represented by JUSTINA VDA. DE SY and WILLIE SY, Petitioners, v. THE COURT OF
APPEALS, INTESTATE ESTATE OF SY YONG HU, SEC. HEARING OFFICER FELIPE
TONGCO, SECURITIES AND EXCHANGE COMMISSION, Respondents.

[G.R. No. 100313. August 31, 1999]

SY YONG HU & SONS, JOHN TAN, BACOLOD CANVAS AND UPHOLSTERY SUPPLY CO.,
AND NEGROS ISUZU SALES, Petitioners, v. HONORABLE COURT OF APPEALS (11th
Division), INTESTATE ESTATE OF THE LATE SY YONG HU, JOSE FALSIS, JR., AND HON.
BETHEL KATALBAS-MOSCARDON, RTC OF NEGROS OCCIDENTAL, Branch
51,  Respondents.

D E CI S I O N

PURISIMA, J.:

THE FACTS

Sy Yong Hu & Sons is a partnership of Sy Yong Hu and his sons, Jose Sy, Jayme Sy, Marciano Sy,
Willie Sy, Vicente Sy, and Jesus Sy, registered with the SEC on March 29, 1962, with Jose Sy as
managing partner. The partners and their respective shares are reflected in the
Amended Articles of Partnership
Partners Sy Yong Hu, Jose Sy, Vicente Sy, and Marciano Sy died on May 18, 1978, August 12, 1978,
December 30, 1979 and August 7, 1987, respectively. At present, the partnership has valuable assets
such as tracts of lands planted to sugar cane and... commercial lots in the business district of Bacolod
City.
Sometime in September, 1977, during the lifetime of all the partners, Keng Sian brought an action,
docketed as Civil Case No. 13388 before the then Court of First Instance of Negros Occidental, against
the partnership as well as against the individual... partners for accounting of all the properties
allegedly owned in common by Sy Yong Hu and the plaintiff (Keng Sian), and for the delivery or
reconveyance of her one-half (1/2) share in said properties and in the fruits thereof. Keng Sian
averred that she was the common law wife... of partner Sy Yong Hu, that Sy Yong Hu, together with
his children, who were partners in the partnership, connived to deprive her of her share in the
properties acquired during her cohabitation with Sy Yong Hu, by diverting such properties to the...
partnership.... n their answer dated November 3, 1977, the defendants, including Sy Yong Hu
himself, countered that Keng Sian is only a house helper of Sy Yong Hu and his wife, subject
properties "are exclusively owned by defendant partnership, and plaintiff has absolutely no right to
or... interest therein."
On September 20, 1978, during the pendency of said civil case, Marciano Sy filed a petition for
declaratory relief against partners Vicente Sy, Jesus Sy and Jayme Sy, docketed as SEC Case No. 1648,
praying that he be appointed managing partner of the partnership, to replace Jose
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ALPHA PHI OMEGA

PARTNERSHIP

Sy who died on August 12, 1978. Answering the petition, Vicente Sy, Jesus Sy and Jaime Sy, who
claim to represent the majority interest in the partnership, sought the dissolution of the partnership
and the appointment of Vicente Sy as managing partner. In due time, Hearing
Officer Emmanuel Sison came out with a decision (Sison Decision) dismissing the petition, dissolving
the partnership and naming Jesus Sy, in lieu of Vicente Sy who had died earlier, as the managing
partner in charge of winding the affairs of the... partnership.
SEC Decision
On the basis of the above decision of the SEC en banc, Hearing Officer Sison approved a partial
partition of certain partnership assets in an order dated December 2, 1986. Therefrom, respondents
seasonably appealed.
In 1982, the children of Keng Sian with Sy Yong Hu, namely, John Keng Seng, Carlos Keng Seng, Tita
Sy, Yolanda Sy and Lolita Sy, filed a petition, docketed as SEC Case No 2338, to revoke the certificate
of registration of Sy Yong Hu & Sons, and to have its assets reverted to... the estate of the late Sy Yong
Hu. After hearings, the petition was dismissed by Hearing Officer Bernardo T. Espejo in an Order,
dated January 11, 1984, which Order became final since no appeal was taken therefrom.... fter the
dismissal of SEC Case No. 2338, the children of Keng Sian sought to intervene in SEC Case No. 1648
but their motion to so intervene was denied in an Order dated May 9, 1985. There was no appeal
from said order. of Sy Yong Hu in Civil Case No. 13388. Then, on August 30, 1985, Alex Ferrer moved
to intervene in the proceedings in SEC
Case No. 1648, for the partition and distribution of the partnership assets, on behalf of the respondent
Intestate Estate. In its decision (Sulit decision) on the aforesaid appeal from the Order dated May 9,
1986, and the Order dated December 2, 1986, the SEC en banc ruled:
The said decision of the SEC en banc reiterated that the Abello decision of June 8, 1982, which upheld
the order of dissolution of the partnership, had long become final and executory. No further appeal
was taken from the Sulit Decision.
During the continuation of the proceedings in SEC Case No. 1648, now presided over by Hearing
Officer Felipe S. Tongco who had substituted Hearing Officer Sison, the propriety of placing the
Partnership under receivership was taken up. The parties brought to the attention of the
Hearing Officer the fact of existence of Civil Case No. 903 (formerly Civil Case No. 13388) pending
before the Regional Trial Court of Negros Occidental. They also agreed that during the pendency of
the aforesaid court case, there will be no disposition of the partnership... assets.On October 5, 1988,
Hearing Officer Tongco came out with an Order (Tongco Order) incorporating the above
submissions of the parties and placing the partnership under a receivership committee,... explaining
that "it is the most equitable fair and just manner to preserve the assets of the partnership during the
pendency of the civil case in the Regional Trial Court of Bacolod City."
G. R. No. 100313 came about in view of the dismissal by the Court of Appeals of the Petition for
Certiorari with a Prayer for Preliminary Injunction, docketed as CA-G. R. SP No. 24189, seeking to
annul and set aside the orders, dated January 24,... 1991 and April 19, 1989, respectively, in Civil Case
No. 5326 before the Regional Trial Court of Bacolod City.
From the records on hand, it can be gleaned that the Tongco Order, dated October 5, 1988, in SEC
Case No. 1648, had, among others, denied a similar petition of the intervenors therein (now private
respondents) for a restraining order and/or injunction... to enjoin the reconstruction of the same
building. However, on October 10, 1988, respondent Intestate Estate sent a letter to the City Engineer
claiming that Jesus Sy is not authorized to act for petitioners Sy Yong Hu & Sons with respect to the
reconstruction or renovation... of the property of the partnership. This was followed by a letter dated
November 11, 1988, requesting the revocation of Building Permit No.
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ALPHA PHI OMEGA

PARTNERSHIP

In reply, Jesus Sy informed the City Engineer that the Tongco Order had been elevated to the SEC en
banc, making him still the authorized manager of the partnership. He then requested that an
occupancy permit be issued as Sy Yong Hu & Sons had complied with the... requirements of the City
Engineer's Office and the National Building Code.

On the two (2) issues raised in G. R. No. 94285, the Court rules for Respondents.

Court of Appeals Decision

Petitioners fault the Court of Appeals for affirming the 1989 Decision of the SEC which approved the
appointment of a receivership committee as ordered by Hearing Officer Felipe Tongco. They theorize
that the 1988 Tongco Decision varied the 1982 Abello Decision affirming the dissolution of the
partnership, contrary to the final and executory tenor of the said judgment. To buttress their theory,
petitioners offer the 1988 Sulit Decision which, among others, expressly confirmed the finality of the
Abello Decision.

On the same premise, petitioners aver that when Hearing Officer Tongco took over from Hearing
Officer Sison, he was left with no course of action as far as the proceedings in the SEC Case were
concerned other than to continue with the partition and distribution of the partnership assets. Thus,
the Order placing the partnership under a receivership committee was erroneous and tainted with
excess of jurisdiction.

The contentions are untenable. 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. cräläwviualibräry

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.47cräläwvirtualibräry

The error, therefore, ascribed to the Court of Appeals is devoid of any sustainable basis. The Abello
Decision though, indeed, final and executory, did not pose any obstacle to the Hearing Officer to
issue orders not inconsistent therewith. From the time a dissolution is ordered until the actual
termination of the partnership, the SEC retained jurisdiction to adjudicate all incidents relative
thereto. Thus, the disputed order placing the partnership under a receivership committee cannot be
said to have varied the final order of dissolution. Neither did it suspend the dissolution of the
partnership. If at all, it only suspended the partition and distribution of the partnership assets
pending disposition of Civil Case No. 903 on the basis of the agreement by the parties and under the
circumstances of the case. It bears stressing that, like the appointment of a manager in charge of the
winding up of the affairs of the partnership, said appointment of a receiver during the pendency of
the dissolution is interlocutory in nature, well within the jurisdiction of the SEC.