Partnership Cases (2)

8/20/2019 Partnership Cases (2)

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1. LIM TONG LIM, petitioner, vs. PHILIPPINE FISHINGGEAR INDUSTRIES, INC., respondent .

A partnership may be deemed to exist among parties whoagree to borrow money to pursue a business and to divide the profts or losses that may arise thererom, even i it is shown

that they have not contributed any capital o their own to a"common und." Their contribution may be in the orm o credit or industry, not necessarily cash or fxed assets. Being partners, they are all liable or debts incurred by or on behal o the partnership. The liability or a contract entered into onbehal o an unincorporated association or ostensiblecorporation may lie in a person who may not have directly transacted on its behal, but reaped benefts rom that contract.

FACTS:- Petitioner Lim Tong Lim requested Peter Yao who was

engaged in commercial shing to join him, while AntonioChua was already Yao’s artner!

- Lim, Chua, and Yao "er#ally agreed to acquire twoshing #oats, the FB ourdes and the FB !elson for thesum of P$!$% million and they #orrowed P$!&% millionfrom 'esus Lim, #rother of Petitioner Lim Tong Lim, tonance the "enture!

- They #ought the #oats from C() )ishing Cororation,which e*ecuted a +eed of ale o"er these two &. #oatsin fa"or of Petitioner Lim Tong Lim only to ser"e assecurity for the loan e*tended #y 'esus Lim! Lim, Chuaand Yao agreed that the refur#ishing, re-equiing,reairing, dry doc/ing and other e*enses for the #oatswould #e shouldered #y Chua and Yao!

- u#sequently, they again #orrowed money for theurchase of shing nets and other shing equiments! Yao and Chua reresented themsel"es as acting in#ehalf of 01cean 2uest )ishing Cororation3 their alleged corporation. and they contracted with Philiine)ishing 4ear 5ndustries P)45. for the urchase of shing

nets amounting to more than P%66/!- 7owe"er, they were una#le to ay P)45 and hence were

sued in their own names as 1cean 2uest )ishingCororation is a non-e*istent cororation as shown #y aCertication from the 8C!

- Chua admitted his lia#ility while Lim Tong Lim refusedsuch lia#ility alleging that Chua and Yao acted withouthis /nowledge and consent in reresenting themsel"esas a cororation!

T95AL C1:9T 9:L5;4<A artnershi among Lim, Chua and Yao e*isted #ased on

-the testimonies of the witnesses resented

- a Comromise Agreement e*ecuted #y the three inCi"il Case which Chua and Yao had #rought againstLim

The Comromise Agreement had re"ealed theirintention to ay the loan with the proceeds o !"es#$e o !"e %esse$s #&d 's"(&) &e!s #&d !od(%(de e*+#$$ #-o&) !"e- !"e ecess or $oss!

C1:9T 1) APP8AL 9:L5;4<- A=rmed trial court’s decision- etitioner was a artner of Chua and Yao in a shing

#usiness and may thus #e held lia#le as a such forthe shing nets and >oats urchased #y and for theuse of the artnershi!


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5t is a#surd for etitioner to sell his roerty to ay a de#the did not incur, if the relationshi among the three of themwas merely that of lessor-lessee, instead of artners!

1. ANTONIA TORRES, #ss(s!ed "er "+s#&d,ANGELO TORRES4 #&d EMETERIA

6ARING, petitioners,vs. COURT OF APPEALS #&d MANUEL

TORRES, respondents.

G.R. No. 17558. Dece-er 8, 1888

FACTS:

isters Antonia Torres and 8meteria Daring entered into a?joint "enture agreement? with (anuel Torres for thede"eloment of a arcel of land into a su#di"ision! Pursuant tothe contract, they e*ecuted a +eed of ale co"ering the saidarcel of land in fa"or of resondent, who then had itregistered in his name! Dy mortgaging the roerty,resondent o#tained from 8quita#le Dan/ a loan of PE6, 666which, under the 'oint enture Agreement, was to #e used forthe de"eloment of the su#di"ision! A$$ !"ree o !"e- #$so#)reed !o s"#re !"e proceeds ro- !"e s#$e o !"es+d(%(ded $o!s.

The roject did not ush through, and the land wassu#sequently foreclosed #y the #an/!

P8T5T51;89< The roject failed #ecause of resondent’s lac/of funds or means and s/ills! They add that resondent usedthe loan not for the de"eloment of the su#di"ision, #ut infurtherance of his own comany, :ni"ersal :m#rellaComany!

98P1;+8;T< 7e used the loan to imlement theAgreement! The roceeds of which were used for the sur"eyand the su#di"ision of the land! 7e de"eloed the roads, thecur#s and the gutters of the su#di"ision and entered into acontract to construct low-cost housing units on the roerty!

9esondent claimed that the su#di"ision roject failed#ecause etitioners and their relati"es had searately causedthe ad"erse claims on the title to the land, which e"entuallyscared away rosecti"e #uyers! +esite his requests,etitioners refused to cause the clearing of the claims,there#y forcing him to gi"e u on the roject!

u#sequently, etitioners led a criminal case for estafaagainst resondent and his wife, who were howe"eracquitted! Thereafter, they led the resent ci"il case whichwas later dismissed #y the trial court! 1n aeal, howe"er,the aellate court remanded the case for furtherroceedings! Thereafter, the 9TC issued its assailed +ecisionwhich was a=rmed #y the CA which held that<

Petitioners and resondent had formed a artnershi forthe de"eloment of the su#di"ision! Thus, they must#ear the loss suFered #y the artnershi in the sameroortion as their share in the rots stiulated in the

contract! +isagreeing with the trial courtsronouncement that losses as well as rots in a joint


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"enture should #e distri#uted equally, the CA in"o/edArticle @G of the Ci"il Code which ro"ides<

The losses and rots shall #e distri#uted inconformity with the agreement! 5f only the shareof each artner in the rots has #een agreeduon, the share of each in the losses shall #e in

the same roortion!

The CA elucidated further<5n the a#sence of stiulation, the share of each artnerin the rots and losses shall #e in roortion to whathe may ha"e contri#uted, #ut the industrial artnershall not #e lia#le for the losses! As for the rots, theindustrial artner shall recei"e such share as may #e just and equita#le under the circumstances! 5f #esideshis ser"ices he has contri#uted caital, he shall alsorecei"e a share in the rots in roortion to his caital

7ence, this PetitionP8T5T51;89s’ contention<

• That the 'oint enture Agreement and the earlier +eedof ale, #oth of which were the #ases of the aellatecourts nding of a artnershi, were "oid!

• That under those "ery same contracts, resondent islia#le for his failure to imlement the roject! Decausethe agreement entitled them to recei"e B6 ercent of the roceeds from the sale of the su#di"ision lots, theyray that resondent ay them damages equi"alent to

B6 ercent of the "alue of the roerty!

ISSUE:

H1; CA erred in concluding that the transaction #etween theetitioners and resondent was that of a joint"entureIartnershi, ignoring outright the ro"ision of Article@BG, and other related ro"isions of the Ci"il Code of thePhiliines!

HELD:;1 The Agreement indu#ita#ly shows the e*istence of aartnershi ursuant to Article @B of the ;ew Ci"il Code,which ro"ides<

Dy the contract of artnershi two or more ersons #indthemsel"es to contri#ute money, roerty, or industryto a common fund, with the intention of di"iding therots among themsel"es!

:nder the Agreement, etitioners would contri#ute roertyto the artnershi in the form of land which was to #e

de"eloed into a su#di"isionJ while resondent would gi"e, inaddition to his industry, the amount needed for generale*enses and other costs! )urthermore, the income from thesaid roject would #e di"ided according to the stiulatedercentage! Clearly, the contract manifested the intention of the arties to form a artnershi

5t should #e stressed that the arties imlemented thecontract! Thus, etitioners transferred the title to the land tofacilitate its use in the name of the resondent! 1n the otherhand, resondent caused the su#ject land to #e mortgaged,the roceeds of which were used for the sur"ey and the

su#di"ision of the land! As noted earlier, he de"eloed theroads, the cur#s and the gutters of the su#di"ision andentered into a contract to construct low-cost housing units onthe roerty!


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Petitioners Bound by Terms of Contract

A9T! @$@%! Contracts are erfected #y mere consent, and fromthat moment the arties are #ound not only to the fulllmentof what has #een e*ressly stiulated #ut also to all theconsequences which, according to their nature, may #e in/eeing with good faith, usage and law!

5t is undisuted that etitioners are educated thus resumedto ha"e understood the terms of the contract they "oluntarilysigned! 5f it was not in consonance with their e*ectations,they should ha"e o#jected to it and insisted on the ro"isionsthey wanted!

Co+r!s #re &o! #+!"or(9ed !o e!r(c#!e p#r!(es ro- !"e&ecess#r co&se*+e&ces o !"e(r #c!s, #&d !"e #c! !"#!!"e co&!r#c!+#$ s!(p+$#!(o&s -# !+r& o+! !o e'&c(#$$ d(s#d%#&!#)eo+s ($$ &o! re$(e%e p#r!(es

!"ere!o o !"e(r o$()#!(o&s. T"e c#&&o! &o d(s#%o!"e re$#!(o&s"(p or-ed ro- s+c" #)ree-e&! d+e !o!"e(r s+pposed -(s+&ders!#&d(&) o (!s !er-s.

Alleed !ullity of the Partnership Areement

Petitioners argue that the 'oint enture Agreement is "oidunder Article @$ of the Ci"il Code, which ro"ides<

A contract of artnershi is "oid, whene"er immo"a#leroerty is contri#uted thereto, if an in"entory of saidroerty is not made, signed #y the arties, andattached to the u#lic instrument!

They contend that since the arties did not ma/e, sign orattach to the u#lic instrument an in"entory of the real

roerty contri#uted, the artnershi is "oid! 71H889, courtheld that<

@! Article @$ was intended rimarily to rotect thirdersons! :nder the ro"ision which is a comlement of Article @@, the e*ecution of a u#lic instrument would#e useless if there is no in"entory of the roertycontri#uted, #ecause without its designation anddescrition, they cannot #e su#ject to inscrition in the9egistry of Proerty, and their contri#ution cannotrejudice third ersons! Thus, the contract is declared"oid #y the law when no such in"entory is made! Thecase at #ar does not in"ol"e third arties who may #erejudiced!

Partnership Areement !ot the "esult of an #arlier $lleal Contract

Petitioners also contend that the 'oint enture Agreement is"oid under Article @E&& of the Ci"il Code, #ecause it is thedirect result of an earlier illegal contract, which was for the

sale of the land without "alid consideration!

This argument is tri"ial! The 'oint enture Agreement clearlystates that the consideration for the sale was the e*ectationof rots from the su#di"ision roject! 5ts rst stiulationstates that etitioners did not actually recei"e ayment forthe arcel of land sold to resondent! Consideration, moreroerly denominated as cause, can ta/e diFerent forms, suchas the restation or romise of a thing or ser"ice #y another!

5n this case, the cause of the contract of sale consisted not inthe stated eso "alue of the land, #ut in the e*ectation of rots from the su#di"ision roject, for which the land wasintended to #e used!


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%iability of the Parties

Claiming that resondent was solely resonsi#le for the failureof the su#di"ision roject, etitioners maintain that he should#e made to ay damages equi"alent to B6K of the "alue of the roerty, which was their share in the rots under the 'oint enture Agreement!

He are not ersuaded! True, the CA held that etitioners’ actswere not the cause of the failure of the roject! Dut it alsoruled that neither was resondent resonsi#le therefor! 5nimuting the #lame solely to him, etitioners failed to gi"eany reason why we should disregard the factual ndings of the aellate court relie"ing him of fault!

COURT DECISION:

The Petition is here#y $%!&%$ and the challenged+ecision AFF&'(%$!

&. 6ENITO LI0ANAG #&d MARIA LI0ANAG RE3ES,pe!(!(o&ers;#ppe$$#&!s, %s. 0OR


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H1; (unasque and 4alan are artners!H1; (unasque shall #e lia#le to ay the inter"enors!

C +8C551;< Yes, for #oth issues!

The records will show that (unasque entered into a contractwith Troical for the reno"ation of the latter’s #uilding on#ehalf of the artnershi of ?4alan and (uMasque?! Hhen(uMasque recei"ed the rst ayment of Troical in theamount of P,666!66 with a chec/ made out in his name, heindorsed the chec/ in fa"or of 4alan! The lia#ility of artnersunder the law to third ersons for contracts e*ecuted inconnection with artnershi #usiness is only ro rata underArt! @N@B, of the Ci"il Code!

Hhile the lia#ility of the artners are merely joint intransactions entered into #y the artnershi, a third ersonwho transacted with said artnershi can hold the artnerssolidarily lia#le for the whole o#ligation in the case of the thirderson!

As #etween the artners (uMasque and 4alan, justice also

dictates that (uMasque #e reim#ursed #y 4alan for the

ayments made #y the former reresenting the lia#ility of

their artnershi to herein inter"enors, as it was satisfactorily

esta#lished that 4alan acted in #ad faith in his dealings with(uMasque as a artner!

5. LEONCIA IUDA DE CHAN DIACO ALIAS LAOLIONG NA0 S. OSE S. 3. PENG, G.R. NO. L;2812, OCTO6ER 27, 182 ;

FACTS:Leoncia da! de Chan +iaco Lao Liong ;aw.,owner of agrocery store La iuda de 4! 4! Chan +iaco.,formed a

artnershi Lao Liong ;aw O Co!. with her relati"es Chan

Chiaco Ha, Cua Yu/, Chan Dun uy, Cahn Dun Le, and 'uan

(aquitan Chan! an (iguel Drewery, Porta Pueco O Co!, and

9ui O 9ementaria ! en C! instituted insol"ency roceeding

sagainst da! de Chan +iaco, alleging that the latter was

inde#ted to them!

The court declared da! de Chan +iaco insol"ent and

ordered the sheriF to ta/e ossession of her roerty,

consisting of some merchandise! 'udge imlicio del 9osario

aointed 9icardo ummers, as referee, authoriing him to

ta/e further e"idence! ummers recommended that da! de

Chan +iaco deli"er to 'ose ! Y! Peng, assignee of (D, PPC

and 99C, a certain sum of money, accounts recei"a#le, and

#oo/s of account! 'udge del 9osario aro"ed ummers

’recommendation and ordered the merchants Cua 5co, Chan

Qee, and imon A! Chan Dona to show cause why they

should not return the merchandise allegedly deli"ered to them

#y da! de Chan +iaco, together with P%,666 in cash,

allegedly recei"ed from da! de Chan +iaco #y 5co!


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Attorney for da! de Chan +iaco led a motion to

dismiss the roceedings, alleging that it should ha"e #een

#rought against LL;C! 'udge del 9osario susended his

re"ious order, aointing ummers as referee! ummers

found that LL;C was only a ctitious organiation created for

the urose of decei"ing the Dureau of Customs and ena#ling

some of the artner-relati"es to come to the Philiines under

the status of merchants! 'udge )rancisco Randueta, who

temorarily relaced 'udge del 9osario, disaro"ed

ummers’ recommendation, a=rmed the susension of 'udge

del 9osario’s re"ious order, dismissed the insol"ency

roceedings, ordered the return of all the roerties of da!

de Chan +iaco, and ro"ided for lea"e of Peng to le a new

etition for insol"ency against LL;C!

ISSUE:Hhether or not da! de Chan +iaco may #e held lia#le for the

de#t allegedly contracted #y LL;C!

HELD: Y8! LL;C has no "isi#le assets!

The artners, indi"idually, must jointly and se"erally

resond for its de#ts Art! @&, Code of Commerce.! As da!

de Chan +iaco is one of the artners and admits that she is

insol"ent, there is no reason for the dismissal of the

roceedings against her! Doth the artnershi and the

searate artners thereof may #e joined in the same action,though the ri"ate roerty of the latter cannot #e ta/en in

ayment of the artnershi de#ts until the common roerty

of the concern is e*hausted

He also call attention to the fact that the e"idence

clearly s"os !"#! !"e +s(&ess, #$$e)ed !o "#%e ee&!"#! o !"e p#r!&ers"(p, #s c#rr(ed o& +&der !"e -eLeo&c(# d#. de C"#& D(#co or L# d#. de G. G. C"#&D(#co, o!" o "(c" #re -es o !"e #ppe$$ee, #&de !"(&/ (! c#& e s#e$ "e$d !"#! # p#r!&ers"(p -#e #d+d)ed #&/r+p! (& !"e -e o #& os!e&s($ep#r!&er, "e& s+c" -e (s !"e -e +&der "(c" !"ep#r!&ers"(p d(d +s(&ess.

. EUFRACIO D. ROAS S. CONSTANCIO 6.MAGLANA, G.R. NO. B1, DECEM6ER 1B,

188B )ACT

1n 'anuary @E, @G%%, (aglana and 9ojas e*ecuted theirArticles of Co-Partnershi 8*hi#it ?A?. called 8astcoast+e"eloment 8nterrises 8+8. with only the two of them asartners! The artnershi 8+8 with an indenite term of e*istence was duly registered on 'anuary &@, @G%% with theecurities and 8*change Commission! 1ne of the uroses of the duly-registered artnershi was to ?aly or secure tim#erandIor minor forests roducts licenses and concessions o"er

u#lic andIor ri"ate forest lands and to oerate, de"elo andromote such forests rights and concessions!?


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:nder the said Articles of Co-Partnershi, aellee (aglanashall manage the #usiness aFairs of the artnershi, includingmar/eting and handling of cash and is authoried to sign allaers and instruments relating to the artnershi, whileaellant 9ojas shall #e the logging suerintendent and shallmanage the logging oerations of the artnershi! 5t is also

ro"ided in the said articles of co-artnershi that all rotsand losses of the artnershi shall #e di"ided share and shareali/e #etween the artners!

+uring the eriod from 'anuary @E, @G%% to Aril $6, @G%B,there was no oeration of said artnershi! Decause of thedi=culties encountered, 9ojas and (aglana decided to a"ail of the ser"ices of Pahamotang as industrial artner!

1n (arch E, @G%B, (aglana, 9ojas and Agustin Pahamotange*ecuted their Articles of Co-Partnershi 8*hi#it ?D? and8*hi#it ?C?. under the rm name 8ATC1AT +88L1P(8;T8;T89P958 8+8.! Aside from the slight diFerence in theurose of the second artnershi which is to hold and securerenewal of tim#er license instead of to secure the license as inthe rst artnershi and the term of the second artnershi is*ed to thirty $6. years, e"erything else is the same!

The artnershi formed #y (aglana, Pahamotang and 9ojasstarted oeration on (ay @, @G%B! 1n 1cto#er &%, @G%B,Pahamotang, (aglana and 9ojas e*ecuted a documententitled ?C1;+5T51;AL AL8 1) 5;T898T 5; T78PA9T;8975P, 8ATC1AT +88L1P(8;T 8;T89P958?8*hi#its ?C? and ?+?. agreeing among themsel"es that(aglana and 9ojas shall urchase the interest, share andarticiation in the Partnershi of Pahamotang, the two(aglana and 9ojas. shall #ecome the owners of allequiment contri#uted #y Pahamotang and the 8ATC1AT

+88L1P(8;T 8;T89P958, the name also gi"en to thesecond artnershi, #e dissol"ed!

After the withdrawal of Pahamotang, the artnershi wascontinued #y (aglana and 9ojas without the #enet of anywritten agreement or reconstitution of their written Articles of Partnershi

1n 'anuary &N, @G%, 9ojas entered into a managementcontract with another logging enterrise, the C( 8state, 5nc!7e left and a#andoned the artnershi!

1n )e#ruary E, @G%, 9ojas withdrew his equiment from theartnershi for use in the newly acquired area! The equimentwithdrawn were his suosed contri#utions to the rstartnershi and was transferred to C( 8state, 5nc! #y way of chattel mortgage!

1n (arch @, @G%, (aglana wrote 9ojas reminding the latter

of his o#ligation to contri#ute, either in cash or in equiment,to the caital in"estments of the artnershi as well as hiso#ligation to erform his duties as logging suerintendent!

Two wee/s after (arch @, @G%, 9ojas told (aglana that hewill not #e a#le to comly with the romised contri#utions andhe will not wor/ as logging suerintendent! (eanwhile, 9ojastoo/ funds from the artnershi more than his contri#ution!

5:8

@! Hhether or not the econd Partnershi formed #y 9ojas,(aglana and Pamatong suerseded the )irst

Partnershi!


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&! Hhether or not after the dissolution of the econdPartnershi a de facto artnershi was formed #etween(aglana and 9ojas!

$! Hhether or not (aglana can unilaterally dissol"e theartnershi!Please note that since the )irst Partnershi was not

suerseded, no de facto was formed and was still ineFect, so this $rd question ertains only #etween(aglana and 9ojas.

78L+

@! No! The econd Partnershi did not suersede the )irstPartnershi!

After a careful study of the records as against thecon>icting claims of 9ojas and (aglana, it aears e"identthat (! #s &o! !"e (&!e&!(o& o !"e p#r!&ers !od(sso$%e !"e 'rs! p#r!&ers"(p, +po& !"e co&s!(!+!(o&

o !"e seco&d o&e! 8*cet for the fact that they too/ inone industrial artnerJ ga"e him an equal share in therots and *ed the term of the second artnershi tothirty $6. years, e"erything else was the same! Thus, theyadoted the same name, 8ATC1AT +88L1P(8;T8;T89P958, they ursued the same uroses and thecaital contri#utions of 9ojas and (aglana as stiulated in#oth artnershis call for the same amounts! 'ust asimortant is the fact that all su#sequent renewals of Tim#er License ;o! $%-$B were secured in fa"or of the )irstPartnershi, the original licensee! To #$$ (&!e&!s #&dp+rposes !"ereore, !"e F(rs! Ar!(c$es o P#r!&ers"(pere o&$ #-e&ded, in the form of ulementaryArticles of Co-Partnershi 8*hi#it ?C?. which was ne"erregistered! 1therwise stated, e"en during the e*istence of

the second artnershi, all #usiness transactions werecarried out under the duly registered articles referring tothe )irst Partnershi.! As found #y the trial court, it is anadmitted fact that e"en u to now, there are still su#sistingo#ligations and contracts of the rst artnershi! Nor()"!s #&d o$()#!(o&s #ccr+ed (& !"e -e o !"e

seco&d p#r!&ers"(p ecep! (& #%or o P#"#-o!#&)"(c" #s +$$ p#(d !"e d+$ re)(s!eredp#r!&ers"(p! +uly registered artnershi of 8astcoast+e"eloment 8nterrises )irst Partnershi. continued toe*ist until liquidated and that the sharing #asis of theartners should #e on share and share ali/e!

&! No! There was no formation of a de facto or at willartnershi #etween (aglana and 9ojas after theyurchased the share of Pamatong leading to the secondartnershi’s dissolution!

T"e re)(s!ered p#r!&ers"(p +&der !"e 'r- -e o E#s!co#s! De%e$op-e&! E&!erpr(ses EDE e%(de&ced !"e Ar!(c$es o Co;P#r!&ers"(p E"((! A "#s&o! ee& &o%#!ed, s+perseded #&dJor d(sso$%ed #ythe unregistered articles of co-artnershi amongaellant 9ojas, aellee (aglana and AgustinPahamotang, 8*hi#it ?C?. and accordingly, the terms andstiulations of said registered Articles of Co-Partnershi8*hi#it ?A?. should go"ern the relations #etween him and(aglana! :on withdrawal of Agustin Pahamotang from theunregistered artnershi 8*hi#it ?C?., !"e $e)#$$co&s!(!+!ed p#r!&ers"(p EDE E"((! A co&!(&+es

!o )o%er& !"e re$#!(o&s e!ee& !"e- #&d (! #s$e)#$ error !o co&s(der # de #c!o p#r!&ers"(pe!ee& s#(d !o p#r!&ers or # p#r!&ers"(p #! ($$.


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$! 3es! (aglana can unilaterally dissol"e the artnershi!

7ence, as there are only two arties when (aglana notied9ojas that he dissol"ed the artnershi, it is in eFect anotice of withdrawal!

:nder Ar!(c$e 1B, p#r. 2 o !"e C(%($ Code , e"en if

there is a secied term, one artner can cause itsdissolution #y e*ressly withdrawing e"en #efore thee*iration of the eriod, with or without justia#le cause!1f course, if the cause is not justied or no cause wasgi"en, the withdrawing artner is lia#le for damages #ut inno case can he #e comelled to remain in the rm! Hith hiswithdrawal, the num#er of mem#ers is decreased, hence,the dissolution! And in whate"er way he may "iew thesituation, the conclusion is ine"ita#le that 9ojas and(aglana shall #e guided in the liquidation of theartnershi #y the ro"isions of its duly registered Articlesof Co-PartnershiJ that is, all rots and losses of the

artnershi shall #e di"ided ?share and share ali/e?#etween the artners!

As !o "e!"er M#)$# (s $(#$e or d#-#)esec#+se o s+c" (!"dr##$, (! ($$ e rec#$$ed !"#!#!er !"e (!"dr##$ o P#"#-o!#&), Ro#s e&!ered(&!o # -#)e-e&! co&!r#c! (!" #&o!"er $o))(&)e&!erpr(se, !"e CMS Es!#!e, I&c., # co-p#&e&)#)ed (& !"e s#-e +s(&ess #s !"e p#r!&ers"(p.7e withdrew his equiment, refused to contri#ute either incash or in equiment to the caital in"estment and toerform his duties as logging suerintendent, as stiulated

in their artnershi agreement! The records also show that9ojas not only a#andoned the artnershi #ut also too/funds in an amount more than his contri#ution! I& !"e

)(%e& s(!+#!(o& M#)$# c#&&o! e s#(d !o e (& #d#(!" &or c#& "e e $(#$e or d#-#)es.

>. MARORIE TOCAO #&d 0ILLIAM T. 6ELO v COURT OF

APPEALS #&d NENITA A. ANA3. G.R. No. 12>7B5,Oc!oer 7, 2BBB

FACTS:

• Tocao, Delo, and Anay entered into a joint "entureagreement for the imortation and local distri#ution of /itchen coo/wares! Their #usiness name S4eminiesse8nterrises’ was registered sole proprietorship under Tocao’s name

• Delo was named caitalist, Tocao-President and 4eneral(anager, while Anay as 7ead of (ar/eting +eartment!

Anay was later aointed as ice-President for ales!• They agreed that Delo’s name will not aear in their

transactions to Hest Dend Co! their sulier.! 5nstead,they used Anay’s name in their transactions with HestDend! Anay has a strong and esta#lished connectionwith Hest Dend Co!

• They agreed that Anay will #e entitled to @6K of the netrots of the #usiness oerations! The agreement wasnot reduced to writing!

• Anay was in"ited in"ited to a distri#utorIdealer’smeeting with Hest Dend Co! Tocao consented and in her

letter to the 8m#assy, she declared that Anay is a#usiness artner of 4eminesse 8nts!


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• Later, Tacao signed a letter saying that no longer is P-ales of 4eminesse 8nts!, and that she is no longerallowed to hold o=ce in their #usiness!

• Anay cannot contact Delo desite attemts! Anaywanted to get her commission and share of rots! DeloO Tacao contend that since their agreement was

reduced in writing, their agreement is unenforcea#le,"oid, and ine*istent! They considered that there was noartnershi #etween them and that Anay as only anemloyee and not a artner in their joint "entureagreement!

ISSUE:• H1; Anay was a mere emloyee or a artner in

4eminesse 8nts!

RULING:• Partnershi is a consensual contract and an oral

contract is as good as a written one!• Though the artnershi was not registered with 8C, the

artnershi is not nullied!

• Anay was an industrial artner who contri#uted hise*ertise to the artnershi!

• The #usiness "enture did not result to emloyer-emloyee relationshi! Hhile it is true that receit of ercentage of net rots constitute only prima aciee"idence of #eing a artner, Anay has a "oice in themanagement of the #usiness aFairs! 5f Anay was only anemloyee, it is di=cult to #elie"e that they all recei"e

same income!• Though 4eminesse 8nts! was registered as a sole

rorietorshi in D+T, what was registered was only the

name of the enterrise! 5ndu#ita#ly, the name was onlyused for ractical reasons!

• ince it was Tacao who caused the dissolution of theartnershi, she and Delo are jointly and se"erally lia#lefor damages!

8. MAKIMO GUIDOTE %s. ROMANA 6ORA, #s#d-(&(s!r#!r( o !"e es!#!e o N#rc(so S#&!os, G.R. No.

L;282B, Oc!oer 27, 182

FACTS:

(a*imo 4uidote and ;arciso antos formed in @G@N a

artnershi #usiness under the name of 0Taller inu/uan,3 in

which S#&!os #s !"e c#p(!#$(s! p#r!&er and G+(do!e#s !"e (&d+s!r(#$ p#r!&er! antos died in @G&6! 4uidotefailed to liquidate the aFairs of the artnershi and to render

an account thereof to Dorja, the administratri* of antos’

estate!

G+(do!e ro+)"! #& #c!(o& #)#(&s! 6or# !oreco%er # s+- o -o&e G/U, a art of which was allegedto #e the net rots from the #usiness due 4uidote, and the

rest of the sum consisting of ad"ances allegedly made #y

4uidote! 6or# #d-(!!ed !"e p#r!&ers"(ps e(s!e&ce #&dpr#ed !"#! G+(do!e e ordered !o re&der #&#cco+&!(&) #&d !o p# !"e es!#!e 25/ #s &e! pro'!s,

cred(!s, #&d proper! per!#(&(&) !o S#&!os.


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G+(do!e c#$$ed se%er#$ (!&esses #&d (&!rod+ced #so;c#$$ed #cco+&!(&) #&d # -#ss o doc+-e&!#re%(de&ce, which was so hoelessly and ine*trica#ly confusingthat the court could not consider it of much ro#ati"e "alue!

T"e co+r! d(s-(ssed G+(do!es co-p$#(&! #&d #so$%ed6or#. 4uidote was ordered to render a full and comleteaccounting, "eried #y "ouchers, of the artnershi #usiness!

G+(do!e re&dered #& #cco+&! prep#red o&eTo-#s A$o&so, # p+$(c #cco+&!#&!. ;umerous o#jectionswere resented #y Dorja! T"e co+r! d(s#ppro%ed !"e#cco+&! #&d ordered !"#! 6or# s+-(! #& #cco+&!(&)from the date of the commencement of the artnershiu to

the time the #usiness was closed!

6or# prese&!ed #& #cco+&! #&d $(*+(d#!(o&prep#red # p+$(c #cco+&!#&!, S#&!(#)o A. L(&d##,s"o(&) # #$#&ce o P28/ (& 6or#s S#&!os es!#!e#%or. At the hearing, Dorja introduced the u#lic accountant 'ose Turiano antiago to testify as to the results of an audit

made #y him of the artnershi accounts! antiago testied

that he had reared a searate accounting or liquidation

similar in results to that reared #y Lindaya, #ut with a few

diFerences in the sums total! Co-p+!#!(o&: antos is acreditor of the Taller inu/uan in the sum of P&B/! 4uidote is a

de#tor to the Taller inu/uan in the sum of P&6/!U

I& order !o co&!r#d(c! !"e co&c$+s(o&s o !"e !op+$(c #cco+&!#&!s, G+(do!e prese&!ed To-#s A$o&so#&d !"e oo//eeper, P(o G#+d(er, #s (!&esses.T"e !r(#$

co+r! +d)e s#(d !"#! !"e !es!(-o&(es o !"ese(!&esses #re +&re$(#$e.

• To-#s A$o&so is the same u#lic accountant wholed the liquidation 8*hi#it 1 on #ehalf of 4uidote, inrelation to the artnershi #usiness, which liquidation

was disaro"ed #y this court in a decision! The judge did not #elie"e Alfonso’s roosition that4uidote, a mere industrial artner, notwithstandinghis ha"ing recei"ed &@/ on the "arious jo#s andcontracts of the #usiness had actually e*ended andaid out B$/, of EE/ in e*cess of the gross receits of the #usiness! 5t materially contradicts 4uidote’sallegations to the eFect that the ad"ances that he4uidoteU made amounted only to &/!

• P(o G#+d(er is the same #oo//eeer who rearedthree entirely searate and distinct liquidation for thesame artnershi #usiness, and the court found that

the testimony gi"en #y him at the last hearing isconfusing, contradictory and unrelia#le!

• O!"er (!&esses ere )(%e& sc#&!co&s(der#!(o&VChua Cha/ can neither read norwrite 8nglish, anish, or TagalogJ Claro 9eyes wasforced to admit that a certain e*hi#it was not theoriginal!

T"e co+r! )#%e crede&ce !o !"e co&c$+s(o&sre#c"ed !"e p+$(c #cco+&!#&!s prese&!ed 6or#.

G+(do!e #s ordered !o p# P2/ !o 6or#, (!" $e)#$(&!eres!, p$+s cos!s.


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ISSUE HOLDING: H1; the trial court is correct in ordering4uidote to ay P&B/ to Dorja!

RATIO: 3ES. There may #e some merit in 4uidote’scontention that the dismissal of his comlaint was remature!

The #etter ractice would #een to let the comlaint standuntil the result of the liquidation of the artnershi aFairs was

/nown! Dut under the circumstances, no harm was done #y

the dismissal of 4uidote’s comlaint!

GUIDOTES ARGUMENT

ince antos, u to the time of his death, generally too/ care

of the artnershi’s ayments and collections, his legal

reresentati"es were under the o#ligation to render accounts

of the oerations, notwithstanding the fact that 4uidote was

in charge of the #usiness su#sequent to the death of antos!

GUIDOTES ARGUMENT IS UNAAILING

0#"$ %. Do$dso& S(- Co.

The death of one of the artners dissol"es the artnershi,

#ut that the liquidation of its aFairs is #y law entrusted, not to

the e*ecutors of the deceased artner, #ut to the sur"i"ing

artners or the liquidators aointed #y them!

T"e r+$e or !"e co&d+c! o # s+r%(%(&) p#r!&er

5n equity, sur"i"ing artners are treated as !r+s!ees of thereresentati"es of the deceased artner, with regard to the

interest of the deceased artner in the rm! As a consequence

of this trusteeshi, sur"i"ing artners are held in their

dealings with the rm assets and the reresentati"es of the

deceased to that nicety of dealing and that strictness of

accounta#ility required of and incident to the osition of one

occuying a condential relation! 5t is the duty of sur"i"ing

artners to render an account of the erformance of their

trust to the ersonal reresentati"es of the deceased artner,

and to ay o"er to them the share of such deceased mem#er

in the surlus of rm roerty, whether it consists of real or

ersonal assets!

4uidote failed to o#ser"e this rule, and he is not in osition to

comlain if his testimony and that of his witnesses is

discredited! The appealed )udgment is AFF&'(%$.

1B. MANUEL G. SINGSONG ET AL % ISA6ELA SA0MILL

F#c!s: W 'anuary $6, @G%@ - the defendants entered into a Contract

of Partnershi under the rm name ?5sa#ela awmill!?W Aril &%, @G%N - an action to dissol"e the artnershi was

led #y the souses Cecilio aldajeno against 5sa#ela awmill,

Leon 4ari#ay, and Timoteo Tu#ung#anua W Aril &, @G%N - the defendants Leon 4ari#ay, Timoteo

Tu#ung#anua and (argarita 4! aldajeno entered into a

?(emorandum of Agreement3 W (ay &B, @G%N - the defendants Leon 4ari#ay, Timoteo

Tu#ung#anua and (argarita 4! aldajeno e*ecuted a


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document entitled ?Assignment of 9ights with Chattel

(ortgage? in fa"or of s! aldejano W The defendants Leon 4ari#ay and Timoteo Tu#ung#anua did

not di"ide the artnershi’s assets #etween them, #ut they

continued the #usiness under the same name ?5sa#ela

awmill?!

W The chattel mortgage was later foreclosedW (ay @N, @G%G - the Pro"incial heriF of ;egros 1ccidentalu#lished two &. notices that he would sell at u#lic auctionon 'une %, @G%G at 5sa#ela, ;egros 1ccidental certain truc/s,tractors, machinery, o=ce equiment and other things-

W 1cto#er @%, @GBG X a Certicate of ale was e*ecuted #y thePro"incial heriF of ;egros 1ccidental in fa"or of thedefendant (argarita 4! aldajeno

W 1cto#er &6, @G%G - the defendant (argarita 4! aldajenoe*ecuted a deed of sale in fa"or of the Pan 1riental Lum#erComany transferring to the latter for the sum of PE%,666!66the truc/s, tractors, machinery, and other things that she hadurchased at a u#lic auction- PlaintiFs herein are creditors of the defendant artnershi! They sued the defendants toreco"er the sums of money they ha"e ad"anced to theartnershi, and as/ed for the nullity of the chattel mortgage!-

W C)5 of ;egros 1ccidental ruled in fa"or of laintiFs, sayingthat laintiFs, as creditors of the defendant artnershi, ha"ea referred right o"er the assets of the said artnershi, and

o"er the roceeds of their sale at the u#lic auction!-aldejanos aealed- CA certied the case to C consideringthat the resolution of aeal in"ol"es urely questions of law

ISSUE: Hhether or not 5sa#ela awmill ceased to #e aartnershi and that creditors could no longer demandayment!

RULING:1n dissolution, the artnershi is not terminated #utcontinues until the winding u of the #usiness! 5t does notaear that the withdrawal of aldajeno from the artnershiwas u#lished in the newsaers! T"e #ppe$$ee #&d !"ep+$(c "#d # r()"! !o epec! !"#! "#!e%er cred(! !"ee!e&ded !o Leo& G#r(# #&d T+o&)#&+# do(&)+s(&ess (& !"e -e o Is#e$# S#-($$ co+$d ee&orced #)#(&s! !"e proper!(es o s#(d p#r!&ers"(p! The judicial foreclosure of the chattel mortgage e*ecuted infa"or of aldajeno did not relie"e her from lia#ility to thecreditors of the artnershi!

5t may #e resumed that aldajeno acted in good faith,the aellees also acted in good faith in e*tending credit tothe artnershi! Hhere one of the & innocent ersons mustsuFer, that erson who ga"e occasion for the damages to #ecaused must #ear the consequences!

11. GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, R.,

#&d 6ENAMIN T. 6ACORRO%s. HON. COURT OF

APPEALS, SECURITIES AND EKCHANGE COMMISSION

#&d OA@UIN L. MISA,


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Page 1> of 25

G.R. No. 1B827+$ , 1885

FACTS: The law rm of 91, LAH98;C8, 8LP7 and

CA99AC11 was duly registered in the (ercantile 9egistry

on E 'anuary @G$ and reconstituted with the ecurities and8*change Commission on E August @GEN!

The 8C records show that there were se"eral

su#sequent amendments to the articles of artnershi

on @N etem#er @G%N, to change the rm nameU to

91, 8LP7 and CA99AC11J on B 'uly @GB% ! ! ! to

91, 8LP7, ALC8+1, +8L 91A951, D5T1 O (5AJ on

@N Aril @G& to ALC8+1, +8L 91A951, D5T1, (5A O

L1RA+AJ on E +ecem#er @G& to ALC8+1, +8L

91A951, D5T1, (5A O L1RA+AJ on @@ (arch @G to

+8L 91A951, D5T1, (5A O L1RA+AJ on 'une @G to

D5T1, (5A O L1RA+A! 1n @G +ecem#er @GN6, 'oaquin

L! (isaU aellees 'esus D! Dito and (ariano (! Loada

associated themsel"es together, as senior artners with

resondents-aellees 4regorio )! 1rtega, Tomas 1! del

Castillo, 'r!, and Denjamin Dacorro, as junior artners!

1n @GNN, Atty! 'oaquin L! (isa withdrew from the rm

stating that the artnershi has ceased to #e mutually

satisfactory #eacuse of the wor/ing conditions of the

emloyees including the assistant attorneys! 7e led with

Commission’s ecurities 5n"estigation and Clearing

+eartment a etition for the dissolution and liquidation of

artnershi!

1n @$ 'uly @GNN, resondents-aellees led their

oosition to the etition!

1n @$ 'uly @GNN, etitioner led his 9ely to the

1osition! 1n $@ (arch @GNG, the hearing o=cer rendered a

decision ruling that< ?PUetitioners withdrawal from the lawrm Dito, (isa O Loada did not dissol"e the said law

artnershi! Accordingly, the etitioner and resondents are

here#y enjoined to a#ide #y the ro"isions of the Agreement

relati"e to the matter go"erning the liquidation of the shares

of any retiring or withdrawing artner in the artnershi

interest!?

1n aeal, the 8C en #anc re"ersed the decision of the

7earing 1=cer and held that the withdrawal of Attorney

'oaquin L! (isa had dissol"ed the artnershi of ?Dito, (isa O


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Loada!? The Commission ruled that, #eing a artnershi at

will, the law rm could #e dissol"ed #y any artner at

anytime, such as #y his withdrawal therefrom, regardless of

good faith or #ad faith, since no artner can #e forced to

continue in the artnershi against his will!

The Court of Aeals, nding no re"ersi#le error on the

art of resondent Commission, A))59(8+ in toto the 8C

decision and order aealed from! 5n ne, the aellate court

held, er its decision of &B )e#ruary @GG$, a. that Atty! (isas

withdrawal from the artnershi had changed the relation of

the arties and ine"ita#ly caused the dissolution of the

artnershiJ #. that such withdrawal was not in #ad faithJ c.that the liquidation should #e to the e*tent of Attorney (isas

interest or articiation in the artnershi which could #e

comuted and aid in the manner stiulated in the

artnershi agreementJ d. that the case should #e remanded

to the 8C 7earing 1=cer for the corresonding

determination of the "alue of Attorney (isas share in the

artnershi assetsJ and e. that the aointment of a recei"er

was unnecessary as no su=cient roof had #een shown to

indicate that the artnershi assets were in any such danger

of #eing lost, remo"ed or materially imaired!

ISSUES:

@! Hhether or not the Court of Aeals has erred in holding

that the artnershi of Dito, (isa O Loada now Dito, Loada,

1rtega O Castillo. is a artnershi at willJ

&! Hhether or not the Court of Aeals has erred in holding

that the withdrawal of ri"ate resondent dissol"ed the

artnershi regardless of his good or #ad faithJ and

$! Hhether or not the Court of Aeals has erred in holding

that ri"ate resondents demand for the dissolution of the

artnershi so that he can get a hysical artition of artnershi was not made in #ad faithJ

RULING:

FIRST ISSUE

Y8, the law rm is a artnershi at will! A artnershi that

does not * its term is a artnershi at will! The arthershi

agreement states that ?the artnershi shall continue so long

as mutually satisfactory and uon the death or legal

incaacity of one of the artners, shall #e continued #y the

sur"i"ing artners!?


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Page 18 of 25

SECOND ISSUE

Y8, any one of the artners may, at his sole leasure,

dictate a dissolution of the artnershi at will Art!@N$6 @.U!

7e must, howe"er, act in good faith, not that the attendance

of #ad faith can re"ent the dissolution of the artnershi #ut

that it can result in a lia#ility for damages Art!@GU! The #irth

and life of a artnershi at will is redicated on the mutual

desire and consent of the artners! The right to choose with

whom a erson wishes to associate himself is the "ery

foundation and essence of that artnershi! 5ts continued

e*istence is, in turn, deendent on the constancy of that

mutual resol"e, along with each artners caa#ility to gi"e it,and the a#sence of a cause for dissolution ro"ided #y the law

itself! Among artners, mutual agency arises and the doctrine

of delectus ersonae allows them to ha"e the ower, although

not necessarily the right, to dissol"e the artnershi! An

unjustied dissolution #y the artner can su#ject him to a

ossi#le action for damages!

THIRD ISSUE

1n the third and nal issue, we accord due resect to

the aellate court and resondent Commission on their

common factual nding, i!e!, that Attorney (isa did not act in

#ad faith! Pu#lic resondents "iewed his withdrawal to ha"e

#een surred #y ?interersonal con>ict? among the artners!

5t would not #e right, we agree, to let any of the artners

remain in the artnershi under such an atmoshere of

animosityJ certainly, not against their will! 5ndeed, for as long

as the reason for withdrawal of a artner is not contrary to the

dictates of justice and fairness, nor for the urose of unduly

"isiting harm and damage uon the artnershi, #ad faith

cannot #e said to characterie the act! Dad faith, in the

conte*t here used, is no diFerent from its normal concet of a

conscious and intentional design to do a wrongful act for adishonest urose or moral o#liquity!

0HEREFORE, !"e dec(s(o& #ppe#$ed ro- (s AFFIRMED.

No pro&o+&ce-e&! o& cos!s.

12. ILLAREAL . RAMIREQG.R. No. 177217, +$ 17, 2BB


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Page 2B of 25

A share in a partnership can be returned only ater thecompletion o the latters dissolution, li*uidation and windingup o the business.

)ACT<

Lu"iminda '! illareal, Carmelito 'ose and 'esus 'oseformed a artnershi with a caital of P%6,666 to oerate arestaurant and catering #usiness under the name Aquarius)ood 7ouse and Catering er"ices! illareal was aointedgeneral manager and Carmelito 'ose, oerations manager!

9esondent 9amire joined as a artner in the #usiness!7is caital contri#ution of P&%6,666 was aid #y his arents,9esondents Cesar and Carmelita 9amire!

After 'esus 'ose withdrew from the artnershi, hiscaital contri#ution of P&%6,666 was refunded to him in cash#y agreement of the artners! 5n the same month, withoutrior /nowledge of resondents, etitioners closed down the

restaurant, allegedly #ecause of increased rental! Therestaurant furniture and equiment were deosited in theresondents house for storage

9esondent souses wrote etitioners, saying that theywere no longer interested in continuing their artnershi or inreoening the restaurant, and that they were acceting thelatters oFer to return their caital contri#ution!

Carmelita 9amire wrote another letter informingetitioners of the deterioration of the restaurant furniture andequiment stored in their house! S"e #$so re(!er#!ed !"ere*+es! or !"e re!+r& o !"e(r o&e;!"(rd s"#re (& !"ee*+(! o !"e p#r!&ers"(p. The reeated oral and written

requests were, howe"er, left unheeded! 9esondentssu#sequently led a Comlaint for the collection of a sum ofmoney from etitioners!

P8T5T51;89’ C1;T8;T51;<

1. resondents had e*ressed a desire to withdrawfrom the artnershi and had called for its dissolution

2. resondents had #een aid, uon the turno"er tothem of furniture and equiment worth o"er PE66,666Jand

. that respo&de&!s "#%e &o r()"! !o de-#&d #re!+r& o !"e(r e*+(! ec#+se !"e(r s"#re,!o)e!"er (!" !"e res! o !"e c#p(!#$ o !"ep#r!&ers"(p, "#d ee& spe&! #s # res+$! o(rre%ers($e +s(&ess $osses.

98P1;+8;T’ C1;T8;T51;<

@!. They did not /now of any loan encum#rance on the

restaurant! And if such were true, the loans incurred #yetitioners should #e regarded as urely ersonal andthus, not chargea#le to the artnershi!

&!. They had not recei"ed any regular reort or accountingfrom the latter, who had solely managed the #usiness!

$!. They e*ected the equiment and the furniture storedin their house to #e remo"ed #y etitioners as soon asthe latter found a #etter location for the restaurant!

5:8<@. whether etitioners are lia#le to resondents for the

latters share in the artnershiJ&. whether the CAs comutation of P&%$,@@E as resondentsshare is correct


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Page 21 of 25

78L+<

The Petition has merit!

)irst 5ssue<+hare in artnership

Doth courts found that a artnershi had indeed e*istedand was dissol"ed! +issolution too/ lace when resondentsinformed etitioners of the intention to discontinue it #ecauseof the formers dissatisfaction with, and loss of trust in, thelatter’s management of the artnershi aFairs!

He hold that respo&de&!s "#%e &o r()"! !o de-#&dro- pe!(!(o&ers !"e re!+r& o !"e(r e*+(! s"#re ! 8*cetas managers of the artnershi, etitioners did not ersonallyhold its equity or assets! The artnershi has a juridicalersonality searate and distinct from that of each of theartners! ince the caital was contri#uted to the artnershi,

not to etitioners, it is the artnershi that must refund theequity of the retiring artners!

econd 5ssue<-hat (ust Be 'eturned

ince it is the p#r!&ers"(p, #s # sep#r#!e #&dd(s!(&c! e&!(!, !"#! -+s! re+&d !"e s"#res o !"ep#r!&ers, !"e #-o+&! !o e re+&ded (s &ecess#r($$(-(!ed !o (!s !o!#$ reso+rces. 5n other words, it can onlyay out what it has in its coFers, which consists of all itsassets! 7owe"er, #efore the artners can #e aid their shares,the creditors of the artnershi must rst #e comensated!

After all the creditors ha"e #een aid, whate"er is left of theartnershi assets #ecomes a"aila#le for the ayment of theartners shares!

5n the resent case, the e*act amount of refundequi"alent to resondents one-third share in the artnershicannot #e determined until all the artnershi assets will ha"e#een liquidated and all artnershi creditors are aid! The CAscomutation of the amount to #e refunded to resondents astheir share was thus erroneous!

First , it seems that the aellate court misarehendthat the total caital contri#ution was equi"alent to the grossassets to #e distri#uted to the artners at the time of thedissolution of the artnershi! 4enerally its caital does notremain static and unaFected #y the changing fortunes of the#usiness! 5n the resent case, there were omissions of anyro"ision for the dereciation of the furniture and theequiment and amortiation of the goodwill!Proerly ta/ingthese non-cash items into account will show that theartnershi was actually sustaining su#stantial losses, whichconsequently decreased the caital of the artnershi! Lowercourts recognied the decrease of the artnershi assets #ut

CA failed to recognie the corresonding decrease of thecaital!+econd, the CAs nding that the artnershi had an

outstanding o#ligation was not suorted #y e"idence!Third, the CA failed to reduce the caitaliation #y

P&%6,666, which was the amount aid #y the artnershi to 'esus 'ose when he withdrew from the artnershi!Decause ofthe a#o"e-mentioned transactions, the artnershi caitalwas actually reduced! The original amount of P&%6,666 whichthey had in"ested could no longer #e returned to them,#ecause one third of the artnershi roerties at the time ofdissolution did not amount to that much!

Petitioners argue that the turno"er of the remainingartnershi assets to resondents was recisely the mannerof liquidating the artnershi and fully settling the latter’s


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share in the artnershi!He disagree! T"e de$(%er o !"es!ore +r&(!+re #&d e*+(p-e&! !o pr(%#!e respo&de&!s#s or !"e p+rpose o s!or#)e. They were unaware thatthe restaurant would no longer #e reoened #y etitioners!7ence, the former cannot #e faulted for not disosing of thestored items to reco"er their caital in"estment!

1. 3+ %. NLRC GR No. 8>212, +&e B, 188

1riginal Partners - Lea Dendal and 9hodora Dendal as general

artners and Chin hian 'eng, Chen 7o-)u and Yu Chan, as

limited artners

)ACT

Denjamin Yu used to #e the Assistant 4eneral (anager of 'ade

(ountain, a artnershi'ade (ountain Products Comany

Limited. engaged in mar#le quarrying and e*ort #usiness!

The -#or(! of the founding artners Lea Dendal, 9hodoraDendal and (r! Yu Chang. sold their interests in said

artnershi to Hilly Co and 8mmanuel Raanta without Yu’s

/nowledge! aid new artnershi continued oerating under

the same name and continued the #usiness’s oerations!

7owe"er, it transferred its main o=ce from (a/ati to

(andaluyong! aid new artnershi did not anymore a"ailed

of the ser"ices of Yu! Thus, he led a comlaint for illegal

dismissal, reco"ery of unaid wages and damages!

Denjamin Yu was hired #y "irtue of a Partnershi 9esolution,

as Assistant 4eneral (anager with a monthly salary of

PE,666!66! According to etitioner Yu, howe"er, he actually

recei"ed only half of his stiulated monthly salary, since he

had acceted the romise of the artners that the #alance

would #e aid when the rm shall ha"e secured additional

oerating funds from a#road! Denjamin Yu actually managedthe oerations and nances of the #usinessJ he had o"erall

suer"ision of the wor/ers at the mar#le quarry in Dulacan

and too/ charge of the rearation of aers relating to the

e*ortation of the rms roducts!

5:8

@. whether the artnershi which had hired etitioner Yu as

Assistant 4eneral (anager had #een e*tinguished and

relaced #y a new artnershi comosed of Hilly Co and

8mmanuel RaantaJ and &. if indeed a new artnershi hadcome into e*istence, whether etitioner Yu could nonetheless

assert his rights under his emloyment contract as against

the new artnershi!

9:L5;4

@st court: L#or Ar(!er ;ie"es i"ar-+e Castro rendered adecision holding that etitioner had #een illegally dismissed!

The La#or Ar#iter decreed his reinstatement and awarded him

his claim for unaid salaries, #ac/wages and attorneys fees!


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1n aeal, the N#!(o$ L#or Re$#!(o&s Co--(ss(o&NLRC re"ersed the decision of the La#or Ar#iter anddismissed etitioners comlaint in a 9esolution dated &G

;o"em#er @GG6! The ;L9C held that a new artnershi

consisting of (r! Hilly Co and (r! 8mmanuel Raanta had

#ought the 'ade (ountain #usiness, that the new artnershi

had not retained etitioner Yu in his original osition asAssistant 4eneral (anager, and that there was no law

requiring the new artnershi to a#sor# the emloyees of the

old artnershi! Denjamin Yu, therefore, had not #een illegally

dismissed #y the new artnershi which had simly declined

to retain him in his former managerial osition or any other

osition! )inally, the ;L9C held that Denjamin Yus claim for

unaid wages should #e asserted against the original

mem#ers of the receding artnershi, #ut these though

imleaded had, aarently, not #een ser"ed with summons in

the roceedings #efore the La#or Ar#iter!

Aeal naud - Certiorari on C ruling<

s"or! %ers(o& T"e $e)#$ eec! o !"e c"#&)es (& !"e -e-ers"(p o!"e p#r!&ers"(p #s !"e d(sso$+!(o& o !"e o$dp#r!&ers"(p "(c" "#d "(red 3+ (& 187 #&d !"ee-er)e&ce o # &e 'r- co-posed o 0($$ Co #&dE--#&+e$ Q#p#&!# (& 18>. T"e &e p#r!&ers"(ps(-p$ !oo/ o%er !"e +s(&ess e&!erpr(se o&ed !"epreceed(&) p#r!&ers"(p, #&d co&!(&+ed +s(&) !"e o$d-e o #de Mo+&!#(& Prod+c!s Co-p#& L(-(!ed,

(!"o+! (&d(&) +p !"e +s(&ess ##(rs o !"e o$dp#r!&ers"(p, p#(&) o (!s de!s, $(*+(d#!(&) #&dd(s!r(+!(&) (!s &e! #sse!s, #&d !"e& re;#sse-$(&) !"es#(d #sse!s or -os! o !"e- #&d ope&(&) # &e+s(&ess e&!erpr(se. No! o&$ !"e re!(r(&) p#r!&ers +!#$so !"e &e p#r!&ers"(p (!se$ "(c" co&!(&+ed !"e

+s(&ess o !"e o$d, d(sso$%ed, o&e, #re $(#$e or !"ede!s o !"e preced(&) p#r!&ers"(p.

@st issue legal #asis< The alica#le law in this connection V of which the ;L9C seemed quite unaware V is found in the Ci"ilCode ro"isions relating to artnershis! Article @N&N of theCi"il Code ro"ides as follows<

Art! @N&N! The dissolution of a artnershi is thechange in the relation of the artners caused byany partner ceasing to be associated in the

carrying on as distinguished from the windingu o the business! 8mhasis sulied.

Article @N$6 of the same Code must also #e noted<

Art! @N$6! +issolution is caused<

@. without "iolation of the agreement #etweenthe artnersJ

*** *** ***

#. by the express will oany partner, who must act in good aith, when no


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defnite term or particularunderta/ing is specifedJ

*** *** ***

&. in contra"ention of theagreement #etween the

artners, where thecircumstances do notermit a dissolution underany other ro"ision of thisarticle, by the express willo any partner at anytimeJ

&nd issue legal #asis< 5n +ingson, et al. v. &sabela +aw (ill, et

al, the Court held that under facts "ery similar to those in thecase at #ar, a withdrawing artner remains lia#le to a third

arty creditor of the old artnershi! 8 The lia#ility of the newartnershi, uon the other hand, in the set of circumstances

o#taining in the case at #ar, is esta#lished in Article @NE6 of

the Ci"il Code

:nder Article @NE6 a#o"e, creditors of the old 'ade (ountain

are also creditors of the new 'ade (ountain which continued

the #usiness of the old one without liquidation of the

artnershi aFairs! 5ndeed, a creditor of the old 'ade

(ountain, li/e etitioner Denjamin Yu in resect of his claim

for unaid wages, is entitled to riority vis0a0vis any claim of

any retired or re"ious artner insofar as such retired

artners interest in the dissol"ed artnershi is concerned! 5t

is not necessary for the Court to determine under which one

or mare of the a#o"e si* B. aragrahs, the case at #ar

would fall, if only #ecause the facts on record are not detailed

with su=cient recision to ermit such determination! 5t is,

howe"er, clear to the Court that under Article @NE6 a#o"e,

Denjamin Yu is entitled to enforce his claim for unaid

salaries, as well as other claims relating to his emloymentwith the re"ious artnershi, against the new 'ade (ountain!

17. PHILIPPINE AIR LINES, INC., Petitioner , %s.ANTONIO 6ALANGUIT, ET AL., PU6LIC UTILITIES

EMPLO3EES ASSOCIATION FEATI CHAPTER #&d THECOURT OF INDUSTRIAL RELATIONS,"espondents.

G.R. No. L;>15. +&e B, 185.

F#c!s:

@! (ay &@, @GE, the Philiine Air Lines, 5nc! referred to asPAL. urchased and acquired a majority of the shares of the)ar 8astern Air Transort, 5nc! referred to as )8AT5.! Theurchase ga"e rise to the ro#lem of what to do with the)8AT5 emloyees! After some negotiations #etween thereresentati"es of the )8AT5 8mloyees Association and thePAL, the arties nally reached an agreement on (ay &@,@GE, where#y the PAL agreed to a#sor# some 6 er cent of the )8AT5 emloyees, and the said emloyees agreed to wor/for PAL under the same terms and conditions as they wor/edfor the )8AT5!

&! August @, @GEB, the Collecti"e Dargaining Agreement withthe )8AT5 granted the said emloyees certain ri"ileges,among which wereJ the "acation and sic/ Lea"e! V The


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emloyees will #e entitled to twel"e @&. days "acation lea"eand twel"e @&. days sic/ lea"e with ay e"ery year, whichmay #e cumulati"e!

$! 1n 'uly G, @GE, the PAL and the Pu#lic :tilities 8mloyeesAssociation entered into an agreement cancelling theagreements of (ay &@, @GE and August @, @GEB, and

declaring them S"oid and of no further force and eFect!’ 5t alsoro"ided for the laying oF of all the )8AT5 emloyees as of 'une @%, @GE and the ayment to them of one and a half month’s searation ay which amounted, roughly toP@%6,666!66!

Respo&de&!s Co&!e&!(o&:

E! Almost B years from the time they were laid oF, the Pu#lic:tilities 8mloyees Association led a etition with the Courtof 5ndustrial 9elations C59. raying that the PAL #e ordered toay them the twel"e @&. days "acation lea"e and twel"e @&.days sic/ lea"e with ay, from August @, @GEB, which had

already accrued at the time they were laid oF on 'une @%,@GE!

Pe!(!(o&ers Co&!e&!(o&:

The PAL denied the lia#ility, alleging that it was not a arty tothe Agreement of August @, @GEB! The said emloyees werea#sor#ed #y the PAL only on (ay &@, @GE and were laid oF on 'une @%, @GE!

Dec(s(o& o !"e CIR:

The Court of 5ndustrial 9elations, through Associate 'udge ! 'imene Yanson, issued an 1rder requiring the PAL to ay the

said emloyees the money "alue of whate"er "acation andsic/ lea"e might ha"e accrued to the said emloyees fromAugust @, @GEB to 'une @%, @GE!

ISSUE:

Hhether or not the PAL is legally lia#le for the ayment of themoney equi"alent of the sic/ and "acation lea"e

RULINGS: The order of the C59 and the resolution of the C59 en #anc areset aside, and the comlaint of the emloyees Association.against the PAL was dismissed! Hhen one comany #uys outanother and continues the #usiness of the latter comany, the#uyer may #e said to assume the o#ligations of the comany#ought out when said o#ligations are not of considera#leamount or "alue, secially when incurred in the ordinarycourse of trade, and when the #usiness of the latter comanyis continued! 7owe"er, when said o#ligation is of e*traordinary "alue, as in this case, amounting to a#out

P@66,666, and the )8AT5 was #ought out not to continue its#usiness #ut to sto its oeration in order to eliminatecometition, as shown #y the fact that all the emloyees of the )8AT5 were laid-oF, we cannot say that the "endeeassumed all the o#ligations of the ri"al airline!

Partnership Cases (2)

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