VILLAREAL V.

RAMIREZ

Facts:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a
partnership with a capital of P750,000for the operation of a
restaurant and catering business. Respondent Ramirez joined as a
partner in the business with the capital contribution of P250,000. In
1987, Jesus Jose withdrew from the partnership and within the same
time, Villareal and Carmelito Jose, petitioners closed the business
without prior knowledge of respondents In March 1987, respondents
wrote a letter to petitioners stating that they were no longer
interested in continuing the partnership and that they were accepting
the latters offer to return their capital contribution. This was left
unheeded by the petitioners, and by reason of which respondents
filed a complaint in the RTC.RTC ruled that the parties had
voluntarily entered into a partnership, which could be dissolved at
any time, and this dissolution was showed by the fact that petitioners
stopped operating the restaurant. On appeal, CA upheld RTCs
decision that the partnership was dissolved and it added that
respondents had no right to demand the return of their capital
contribution. However since petitioners did not give the proper
accounting for the liquidation of the partnership, the CA took it upon
itself to compute their liabilities and the amount that is proper to the
respondent. The computation of which was:(capital of the partnership
outstanding obligation) / remaining partners =amount due to private
respondent
Issue: W/N petitioners are liable to respondents for the latters share
in the partnership?
Ruling:

No. Respondents have no right to demand from petitioner the return

of their equity share. As found by the court petitioners did not
personally hold its equity or assets. The partnership has a juridical
personality separate and distinct from that of each of the partners.
Since the capital was contributed to the partnership, not to
petitioners, it is the partnership that must refund the equity of the
retiring partners. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated.
Therefore, the exact amount of refund equivalent to respondents
one-third share in the partnership cannot be determined until all the
partnership assets will have been liquidated and all partnership
creditors have been paid. CAs computation of the amount to be
refunded to respondents as their share was thus erroneous.

Singsong v. Isabela Sawmill G.R. No. L-27343, February 28,

1979, Fernandez, J.

Facts: In 1951, defendants entered into a contract of partnership

under the firm name Isabela Sawmill. In 1956 the plaintiff sold to
the partnership a motor truck and two tractors. The partnership was
not able to pay their whole balance even after demand was made.
One of the partners withdrew from the partnership but instead of
terminating the said partnership it was continued by the two
remaining partners under the same firm name. Plaintiffs also seek
the annulment of the assignment of right with chattel mortgage
entered into by the withdrawing partner and the remaining partners.
The appellants contend that the chattel mortgage may no longer be
nullified because it had been judicially approved and said chattel
mortgage had been judicially foreclosed.

Yu v. NLRC GR No. 97212, June 30, 1993

Issue: Whether the withdrawal of one of the partners dissolved the
partnership.
Ruling:
It does not appear that the withdrawal of the partner was not
published in the newspapers. The appellees and the public in
general had a right to expect that whatever, credit they extended to
the remaining partners could be enforced against the properties of
the partnership. The withdrawing partner cannot be relieved from her
liability to the creditor of the partnership due to her own fault by not
insisting on the liquidation of the partnership. Though she had acted
in good faith, the appellees also acted in good faith in extending
credit to the partnership. Where one of two innocent persons must
suffer, that person who gave occasion for the damages to be caused
must bear the consequences. Technically, the partnership was
dissolved by the withdrawal of one of the partners. Through her acts
of entering into a memorandum with the remaining partners misled
the creditors that they were doing business with the partnership.
Hence, from the order of the lower court ordering the withdrawing
partner to pay the plaintiffs, she is thus entitled for reimbursement
from the remaining partners.

Facts:
Benjamin Yu used to be the Assistant General Manager of Jade
Mountain, a partnership engaged in marble quarrying and export
business. The majority of the founding partners sold their interests in
said partnership to Willy Co and Emmanuel Zapanta without Yus
knowledge. Said new partnership continued operating under the
same name and continued the businesss operations. However, it
transferred its main office from Makati to Mandaluyong. Said new
partnership did not anymore availed of the services of Yu. Thus, he
filed a complaint for illegal dismissal, recovery of unpaid wages and
damages.
Ruling :
The legal effect of the changes in the membership of the partnership
was the dissolution of the old partnership which had hired Yu in 1984
and the emergence of a new firm composed of Willy Co and
Emmanuel Zapanta in 1987. The new partnership simply took over
the business enterprise owned by the preceeding partnership, and
continued using the old name of Jade Mountain Products Company
Limited, without winding up the business affairs of the old
partnership, paying off its debts, liquidating and distributing its net
assets, and then re-assembling the said assets or most of them and
opening a new business enterprise. Not only the retiring partners but
also the new partnership itself which continued the business of the
old, dissolved, one, are liable for the debts of the preceding
partnership.

Antonio C. Goquilay, ET AL. vs. Washington Z. Sycip, ET AL. GR

NO. L-11840, December 10, 1963

FACTS:
Tan Sin An and Goquiolay entered into a general commercial
partnership under the partnership name Tan Sin An and Antonio
Goquiolay for the purpose of dealing in real estate. The agreement
lodged upon Tan Sin An the sole management of the partnership
affairs. The lifetime of the partnership was fixed at ten years and the
Articles of Co-partnership stipulated that in the event of death of any
of the partners before the expiration of the term, the partnership will
not be dissolved but will be continued by the heirs or assigns of the
deceased partner. But the partnership could be dissolved upon
mutual agreement in writing of the partners. Goquiolay executed a
GPA in favor of Tan Sin An. The plaintiff partnership purchased 3
parcels of land which was mortgaged to La Urbana as payment of
P25,000. Another 46 parcels of land were purchased by Tan Sin An
in his individual capacity which he assumed payment of a mortgage
debt for P35K. A downpayment and the amortization were advanced
by Yutivo and Co. The two obligations were consolidated in an
instrument executed by the partnership and Tan Sin An, whereby the
entire 49 lots were mortgaged in favor of Banco HipotecarioTan Sin
An died leaving his widow, Kong Chai Pin and four minor children.
The widow subsequently became the administratrix of the estate.
Repeated demands were made by Banco Hipotecario on the
partnership and on Tan Sin An. Defendant Sing Yee, upon request of
defendant Yutivo Sons , paid the remaining balance of the mortgage
debt, the mortgage was cancelled Yutivo Sons and Sing Yee filed
their claim in the intestate proceedings of Tan Sin An for advances,
interest and taxes paid in amortizing and discharging their obligations
to La Urbana and Banco Hipotecario. Kong Chai Pin filed a
petition with the probate court for authority to sell all the 49 parcels of
land. She then sold it to Sycip and Lee in consideration of P37K and
of the vendees assuming payment of the claims filed by Yutivo Sons

and Sing Yee. Later, Sycip and Lee executed in favor of Insular
Development a deed of transfer covering the 49 parcels of land.
When Goquiolay learned about the sale to Sycip and Lee, he filed a
petition in the intestate proceedings to set aside the order of the
probate court approving the sale in so far as his interest over the
parcels of land sold was concerned. Probate court annulled the sale
executed by the administratrix w/ respect to the 60% interest of
Goquiolay over the properties Administratrix appealed.The decision
of probate court was set aside for failure to include the indispensable
parties. New pleadings were filed. The second amended complaint
prays for the annulment of the sale in favor of Sycip and Lee and
their subsequent conveyance to Insular Development. The complaint
was dismissed by the lower court hence this appeal.
ISSUE/S: Whether or not a widow or substitute become also a
general partner or only a limited partner. Whether or not the lower
court err in holding that the widow succeeded her husband Tan Sin
An in the sole management of the partnership upon Tans death
Whether or not the consent of the other partners was necessary to
perfect the sale of the partnership properties to Sycip and Lee?

HELD:
Kong Chai Pin became a mere general partner. By seeking authority
to manage partnership property, Tan Sin Ans widow showed that she
desired to be considered a general partner. By authorizing the widow
to manage partnership property (which a limited partner could not be
authorized to do), Goqulay recognized her as such partner, and is
now in estoppel to deny her position as a general partner, with
authority to administer and alienate partnership property. The articles
did not provide that the heirs of the deceased would be merely
limited partners; on the contrary, they expressly stipulated that in
case of death of either partner, the co partnership will have to be

continued with the heirs or assignees. It certainly could not be

continued if it were to be converted from a general partnership into a
limited partnership since the difference between the two kinds of
associations is fundamental, and specially because the conversion
into a limited association would leave the heirs of the deceased
partner without a share in the management. Hence, the contractual
stipulation actually contemplated that the heirs would become
general partners rather than limited ones.

agreement was not reduced to writing because Anay trusted

Belos assurances.
The venture succeeded under Anays 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.
ISSUE:
Whether or not there is a partnership.

MARJORIE TOCAO and WILLIAM T.

BELO vs. CA and NENITA A. ANAY
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

HELD:
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 companys 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.
Tocaos 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.
Motion for Reconsideration filed by Tocao and Belo decided
by the SC on September 20, 2001.
Belo is not a partner. Anay was not able to prove that Belo in
fact received profits from the company. Belo merely acted as a
guarantor. His participation in the business meetings was not as
a partner but as a guarantor. He in fact had only limited
partnership. Tocao also testified that Belo received nothing
from the profits. The Supreme Court also noted that the
partnership was yet to be registered in the Securities and
Exchange Commission. As such, it was understandable that
Belo, who was after all petitioner Tocaos good friend and
confidante, would occasionally participate in the affairs of the
business, although never in a formal or official capacity.
Elmo Muasque vs CA
Facts:
Elmo Muasque, in behalf of Galan and Muasque
partnership as Contractor, entered into a written

contract with Tropical Commercial Co., through its

branch manager Ramon Pons, for remodelling of
Tropicals building in Cebu. The consideration for the
entire services is P25,000 to be paid: 30% upon
signing of contract, and balance on 3 equal
instalments of P6,000 every 15working days.
First payment of check worth P7,000 was payable to
Muasque, who indorsed it to Galan for purposes of
depositing the amount and paying the materials
already
used.
But
since
Galan
allegedly
misappropriated P6,183.37 of the check for personal
use, Muasque refused to indorse the second check
worth P6,000. Galan then informed Tropical of the
misunderstanding between him and Muasque and
this prompted Tropical to change the payee of the
second check from Muasque to Galan and
Associates (the duly registered name of Galan and
Muasque partnership). Despite the misappropriation,
Muasque alone was able to finish the project. The
two remaining checks were properly issued to
Muasque.
Muasque filed a complaint for payment of sum of
money plus damages against Galan, Tropical and Pons
for the amount covered by the first and second checks.
Cebu Southern Hardware Co and Blue Diamond Glass
Palace were allowed as intervenors having legal
interest claiming against Muasue and Galan for
materials used.
TC:
-

Muasque and Pons jointly and severally liable

to intervenors
- Tropical and Pons absolved
CA affirmed with modification:

Muasque and Pons jointly liable to intervenors

Issue:
1. W/N Muasque and Galan are partners?
2. W/N payment made by Tropical to Galan was
good payment?
3. W/N Galan should shoulder exclusively the
amounts payable to the intervenors (granting he
misappropriated the amount from the two
checks)?
Held:
yes-yes-no!
1. YES. Tropical had every right to presume the
existence of the partnership:
a. Contract states that agreement was entered
into by Galan and Muasque
b. The first check issue in the name of
Muasque was indorsed to Galan
The relationship was made to appear as a
partnership.
2. YES. Muasque and Galan were partners when
the debts to the intervenors were incurred,
hence, they are also liable to third persons who
extended credit to their partnership.
There is a general presumption that each
individual partner is an authorized agent for the
firm and that he has authority to bind the firm in
carrying on the partnership transactions. The
presumption is sufficient to permit third persons
to hold the firm liable on transactions entered
into by one of the members of the firm acting

apparently in its behalf and within the scope of

his authority
3. NO. Article 1816 BUT construed together with
Article 1824.
Art. 1816. All partners, including industrial
ones, shall be liable pro rata x x x for the
contracts which may be entered into the name
and for the account of the partnership, under its
signature and by a person authorized x x x
Art. 1824. All partners are liable solidarily with
the partnership for everything chargeable to the
partnership under Articles 1822 and 1823
Art. 1822. Where, by any wrongful act or
omission of any partner acting in the ordinary
course of the business x x x or with the
authority of his co-partners, loss or injury is
caused to any person x x x
Art. 1823. The partnership is bound to make
good the loss:
(1) Where one partner acting within the
scope of his apparent authority
receives money or property of a third
person and misapplies it, and
(2) Where the partnership in the course of
its business receives money or
property of a third person x x x is
misapplied by any partner while it is in
the custody of the partnership.

GR: In transactions entered into by the

partnership, the liability of the partners is merely joint
Exception: In transactions involving third
persons falling under Articles 1822 and 1823,
such third person may hold any partner
solidarily liable for the whole obligation with the
partnership.
Reason for exception: the law protects him, who
in good faith relied upon the authority if a
partner, whether real or apparent.
However, as between Muasque and Galan,
justice also dictates reimbursement in favour of
Muasque as Galan was proven to be in bad
faith in his dealings with his partner.

Jr., and Bacorro, as junior partners. On Feb. 17, 1988,

respondent Misa wrote a letter stating that he is withdrawing
and retiring from the firm and asking for a meeting with the
petitioners to discuss the mechanics of the liquidation. On June
30, 1988, petitioner filed a petition to the Commision's
Securities Investigation and Clearing Department for the
formal dissolution and liquidation of the partnership. On March
31, 1989, the hearing officer rendered a decision ruling that the
withdrawal of the petitioner has not dissolved the partnership.
On appeal, the SEC en banc reversed the decision and was
affirmed by the Court of Appeals. Hence, this petition.

Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin

Bacorro v. CA, SEC and Joaquin Misa
G.R. No. 109248 July 3, 1995
Vitug, J.

ISSUE:
Whether or not the Court of Appeals has erred in holding that

FACTS:

the partnership is a partnership at will and whether or not the

Court of Appeals has erred in holding that the withdrawal of

On December 19, 1980, respondent Misa associated himself

private respondent dissolved the partnership regardless of his

together, as senior partner with petitioners Ortega, del Castillo,

good or bad faith

HELD:
No. The SC upheld the ruling of the CA regarding the nature of
the partnership. The SC further stated that a partnership that
does not fix its term is a partnership at will. The birth and life
of a partnership at will is predicated on the mutual desire and
consent of the partners. The right to choose with whom a
person wishes to associate himself is the very foundation and
essence of that partnership. Its continued existence is, in turn,
dependent on the constancy of that mutual resolve, along with
each partner's capability to give it, and the absence of a cause
for dissolution provided by the law itself. Verily, any one of the
partners may, at his sole pleasure, dictate a dissolution of the
partnership at will. He must, however, act in good faith, not
that the attendance of bad faith can prevent the dissolution of
the partnership but that it can result in a liability for damages.