G.R. No. L-13680 April 27, 1960 P3,000, as actual damages, P600.

P3,000, as actual damages, P600.00 as attorney's fees and P2,600 annually as actual damages; that the
court order dissolution of the partnership, after the accounting and liquidation of the same.
MAURO LOZANA, plaintiff-appellee,
vs. On September 27, 1956, the defendant filed a motion to declare plaintiff in default on his counterclaim, but
SERAFIN DEPAKAKIBO, defendant-appellant. this was denied by the court. Hearings on the case were conducted on October 25, 1956 and November 5,
1956, and on the latter date the judge entered a decision declaring plaintiff owner of the equipment and
entitled to the possession thereof, with costs against defendant. It is against this judgment that the
ISSUE: W/N the partners could sell the objects contributed by them in the partnership? NO.
defendant has appealed.

DOCTRINE: As properties of the partnership, the same could not be disposed of by the party
The above judgment of the court was rendered on a stipulation of facts, which is as follows:
contributing the same without the consent or approval of the partnership or of the other partner.

1. That on November 16, 1954, in the City of Iloilo, the aforementioned plaintiff, and the defendant
This is an appeal from a judgment of the Court of First Instance of Iloilo, certified to us by the Court of
entered into a contract of Partnership, a copy of which is attached as Annex "A" of defendant's
Appeals, for the reason that only questions of law are involved in said appeal.
answer and counterclaim, for the purpose set forth therein and under the national franchise granted
to Mrs. Piadosa Buenaflor;
The record discloses that on November 16, 1954 plaintiff Mauro Lozana entered into a contract with
defendant Serafin Depakakibo wherein they established a partnership capitalized at the sum of P30,000,
2. That according to the aforementioned Partnership Contract, the plaintiff Mr. Mauro Lozana,
plaintiff furnishing 60% thereof and the defendant, 40%, for the purpose of maintaining, operating and
contributed the amount of Eighteen Thousand Pesos (P18,000.00); said contributions of both parties
distributing electric light and power in the Municipality of Dumangas, Province of Iloilo, under a franchise
being the appraised values of their respective properties brought into the partnership;
issued to Mrs. Piadosa Buenaflor. However, the franchise or certificate of public necessity and convenience
in favor of the said Mrs. Piadosa Buenaflor was cancelled and revoked by the Public Service Commission
on May 15, 1955. But the decision of the Public Service Commission was appealed to Us on October 21, 3. That the said Certificate of Public Convenience and Necessity was revoked and cancelled by order
1955. A temporary certificate of public convenience was issued in the name of Olimpia D. Decolongon on of the Public Service Commission dated March 15, 1955, promulgated in case No. 58188, entitled,
December 22, 1955 (Exh. "B"). Evidently because of the cancellation of the franchise in the name of Mrs. "Piadosa Buenaflor, applicant", which order has been appealed to the Supreme Court by Mrs.
Piadosa Buenaflor, plaintiff herein Mauro Lozana sold a generator, Buda (diesel), 75 hp. 30 KVA capacity, Buenaflor;
Serial No. 479, to the new grantee Olimpia D. Decolongon, by a deed dated October 30, 1955 (Exhibit "C").
Defendant Serafin Depakakibo, on the other hand, sold one Crossly Diesel Engine, 25 h. p., Serial No.
4. That on October 30, 1955, the plaintiff sold properties brought into by him to the said
141758, to the spouses Felix Jimenea and Felina Harder, by a deed dated July 10, 1956.
partnership in favor of Olimpia Decolongon in the amount of P10,000.00 as per Deed of Sale
dated October 30, 1955 executed and ratified before Notary Public, Delfin Demaisip, in and for the
LOZANA: plaintiff Mauro Lozana brought an action against the defendant, alleging that he is the owner Municipality of Dumangas, Iloilo and entered in his Notarial Registry as Doc. No. 832; Page No. 6;
of the Generator Buda (Diesel), valued at P8,000 and 70 wooden posts with the wires connecting the Book No. XIII; and Series of 1955, a copy thereof is made as Annex "B" of defendant's answer and
generator to the different houses supplied by electric current in the Municipality of Dumangas, and that he counterclaim;
is entitled to the possession thereof, but that the defendant has wrongfully detained them as a
consequence of which plaintiff suffered damages. Plaintiff prayed that said properties be delivered back to
5. That there was no liquidation of partnership and that at the time of said Sale on October 30,
him.
1955, defendant was the manager thereof;

Three days after the filing of the complaint, that is on November 18, 1955, Judge Pantaleon A. Pelayo
6. That by virtue of the Order of this Honorable Court dated November 18, 1955, those properties
issued an order in said case authorizing the sheriff to take possession of the generator and 70
sold were taken by the Provincial Sheriff on November 20, 1955 and delivered to the plaintiff on
wooden posts, upon plaintiff's filing of a bond in the amount of P16,000 in favor of the defendant (for
November 25, 1955 upon the latter posting the required bond executed by himself and the Luzon
subsequent delivery to the plaintiff).
Surety Co., dated November 17, 1955 and ratified before the Notary Public, Eleuterio del Rosario in
and for the province of Iloilo known as Doc. No. 200; Page 90; Book No. VII; and Series of 1955; of
DEPAKAKIBO: defendant filed an answer, denying that the generator and the equipment mentioned in said Notary Public;
the complaint belong to the plaintiff and alleging that the same had been contributed by the plaintiff to
the partnership entered into between them in the same manner that defendant had contributed
7. That the said properties sold are now in the possession of Olimpia Decolongon, the purchaser,
equipments also, and therefore that he is not unlawfully detaining them. By way of counterclaim,
who is presently operating an electric light plant in Dumangas, Iloilo;
defendant alleged that under the partnership agreement the parties were to contribute equipments, plaintiff
contributing the generator and the defendant, the wires for the purpose of installing the main and delivery
lines; that the plaintiff sold his contribution to the partnership, in violation of the terms of their 8. That the defendant (Lozana) sold certain properties in favor of the spouses, Felix Jimenea
agreement. He, therefore, prayed that the complaint against him be dismissed; that plaintiff be and Felisa Harder contributed by him to the partnership for P3,500.00 as per Deed of Sale
adjudged guilty of violating the partnership contract and be ordered to pay the defendant the sum of executed and ratified before the Notary Public Rodrigo J. Harder in and for the Province of Iloilo,
 known as Doc. No. 76; Page 94; Book No. V; and Series of 1955, a certified copy of which is hereto
attached marked as Annex "A", and made an integral part hereof; (pp, 27-29 ROA).
As it appears from the above stipulation of facts that the plaintiff and the defendant entered into the
contract of partnership, plaintiff contributing the amount of P18,000, and as it is not stated therein that there
bas been a liquidation of the partnership assets at the time plaintiff sold the Buda Diesel Engine on October
15, 1955, and since the court below had found that the plaintiff had actually contributed one engine and 70
posts to the partnership, it necessarily follows that the Buda diesel engine contributed by the plaintiff
had become the property of the partnership. As properties of the partnership, the same could not
be disposed of by the party contributing the same without the consent or approval of the
partnership or of the other partner. (Clemente vs. Galvan, 67 Phil., 565).
ANTI DUMMY LAW: The lower court declared that the contract of partnership was null and void, because
by the contract of partnership, the parties thereto have become dummies of the owner of the franchise. The
reason for this holding was the admission by defendant when being cross-examined by the court that he
and the plaintiff are dummies. We find that this admission by the defendant is an error of law, not a
statement of a fact. The Anti-Dummy law has not been violated as parties plaintiff and defendant are
not aliens but Filipinos. The Anti-Dummy law refers to aliens only (Commonwealth Act 108 as
amended).
Upon examining the contract of partnership, especially the provision thereon wherein the parties agreed to
maintain, operate and distribute electric light and power under the franchise belonging to Mrs. Buenaflor,
we do not find the agreement to be illegal, or contrary to law and public policy such as to make the contract
of partnership, null and void ab initio. The agreement could have been submitted to the Public Service
Commission if the rules of the latter require them to be so presented. But the fact of furnishing the
current to the holder of the franchise alone, without the previous approval of the Public Service
Commission, does not per se make the contract of partnership null and void from the beginning
and render the partnership entered into by the parties for the purpose also void and non-existent.
Under the circumstances, therefore, the court erred in declaring that the contract was illegal from the
beginning and that parties to the partnership are not bound therefor, such that the contribution of the
plaintiff to the partnership did not pass to it as its property. It also follows that the claim of the defendant in
his counterclaim that the partnership be dissolved and its assets liquidated is the proper remedy, not for
each contributing partner to claim back what he had contributed.
For the foregoing considerations, the judgment appealed from as well as the order of the court for the
taking of the property into custody by the sheriff must be, as they hereby are set aside and the case
remanded to the court below for further proceedings in accordance with law.
Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Concepcion, Endencia, Barrera and Gutierrez David,
JJ., concur.
MAXIMILIANO SANCHO, vs. SEVERIANO LIZARRAGA
G.R.No. L-33580 February 6, 1931
Doctrine: Article 1124 cannot be applied to the case in question, because it refers to the resolution of
obligations in general, whereas articles 1681 and 1682 specifically refer to the contract of
partnership in particular. And it is a well known principle that special provisions prevail over general
provisions.
FACTS:
The plaintiff brought an action for the rescission of the partnership contract between himself and
the defendant and the reimbursement of his investment worth 50,000php with interest at 12 per cent
per annum form October 15, 1920, with costs, and any other just and equitable remedy against said
defendant.
LIZARAGA: The defendant denies generally and specifically all the allegations of the complaint and
asked for the dissolution of the partnership, and the payment to him as its manager and administrator
P500 monthly from October 15, 1920 until the final dissolution with interest.
CFI: The CFI found that the defendant had not contributed all the capital he had bound himself to
invest hence it demanded that the defendant liquidate the partnership, declared it dissolved on
account of the expiration of the period for which it was constituted, and ordered the defendant, as
managing partner, to proceed without delay to liquidate it, submitting to the court the result of the
liquidation together with the accounts and vouchers within the period of thirty days from receipt of notice of
said judgment.
SANCHO: The plaintiff appealed from said decision praying for the rescission of the partnership
contract between him and the defendant in accordance with Art. 1124.
ISSUE: WON plaintiff acquired the right to demand rescission of the partnership contract according to
article 1124 of the Civil Code. NO
HELD:
The SC ruled that owing to the defendants failure to pay to the partnership the whole amount which
he bound himself to pay, he became indebted to the partnership for the remainder, with interest and
any damages occasioned thereby, but the plaintiff did not thereby acquire the right to demand
rescission of the partnership contract according to article 1124 of the Code.
Article 1124 cannot be applied to the case in question, because it refers to the resolution of obligations in
general, whereas articles 1681 and 1682 specifically refer to the contract of partnership in
particular. And it is a well known principle that special provisions prevail over general provisions.
Hence, SC dismissed the appeal left the decision appealed from in full force.
UY vs PUZON
Facts:
Bartolome Puzon had two contracts with the government for the construction of roads and
bridges. (Bureau of Public Highways)
He sought the financial assistance of William Uy, so he proposed that they create a
partnership which would be the sub-contractor of the projects.
They also agreed that the profits will be divided among themselves.
William Uy agreed to the formation of the partnership "U.P. Construction Company". They
agreed to contribute P50,000 each. (Note: P40,000 was advanced by William Uy while Puzon
was waiting for the approval of his P150,000 PNB Loan. Upon release of the loan, he promised
to reimburse William Uy of the P40,000; pay his share of P50,000 and loan P60,000 to the
partnership).
Loan was approved by November 1956.( Note: At the end of 1957, Uy contributed a total of
P115k,)
The partnership agreement was signed in 1957 (January 18) although the work for the
projects began as early as 1956 (October 1).
Since Puzon was busy with other projects, Uy was the one who managed the partnership.
In order to guarantee the PNB Loan, Puzon, without the knowledge of Uy, assigned the
payments to the payments to be received from the projects to PNB.
Due to the financial demands of the projects, Uy demanded that Puzon comply with his
obligation to place his capital contribution in the company.
However, Puzon failed to comply even after formal demand letters were sent to him.
Thereafter, Puzon (as the primary contractor of the projects) terminated the subcontract
agreement with the partnership to which he is also a partner. (November 27, 1957)
Thereafter, Uy was not allowed to hold office in the UP Construction Company and his
authority to negotiate with the Bureau was revoked by Puzon.
Uy clamied that Puzon had violated the terms of their partnership agreement. He sought
for the dissolution of the partnership with damages.
The lower court ruled in favor of Uy.
Issue: WON Puzon failed to comply with his obligation of paying the capital contribution to the company.
YES
Ruling:YES
According to the court, there was failure on the part of Puzon to contribute capital to the partnership.
When his loan with PNB was approved, he only gave P60,000 to Uy; P40,000 was for reimbursement
to the payments made by Uy and the other P20,000 was for the capital contribution. Thereafter,
Puzon never made additional contribution.
ASSIGNMENT TO PNB: Also, it was found by the SC that Puzon misapplied partnership funds by
assigning all payments for the projects to PNB. Such assignment was prejudicial to the partnership
since the partnership only received a small share from the total payments made by the Bureau of
Public Highways. As a result, the partnership was unable to discharge its obligations.
Here, the Court ordered Puzon to reimburse whatever amount Uy had invested in or spent for the
partnership on account of construction projects. The amount P200,000 as compensatory damages
was also awarded in favor of Uy.
Had the appellant not been remiss in his obligations as partner and as prime contractor of the construction
projects in question as he was bound to perform pursuant to the partnership and subcontract agreements,
and considering the fact that the total contract amount of these two projects is P2,327,335.76, it is
reasonable to expect that the partnership would have earned much more than the P334,255.61 We have
hereinabove indicated. The award, therefore, made by the trial court of the amount of P200,000.00, as
compensatory damages, is not speculative, but based on reasonable estimate.
G.R. No. 5840 September 17, 1910
THE UNITED STATES, plaintiff-appellee,
vs.
EUSEBIO CLARIN, defendant-appellant.
ISSUE: W/N the action of Larin in charging Tarug, Clarin, and De Guzman of ESTAFA is proper? NO.
It should be an action for the liquidation of the partnership.
Doctrine: The P172 having been received by the partnership, the business commenced and profits
accrued, the action that lies with the partner who furnished the capital for the recovery of his money is not a
criminal action for estafa, but a civil one arising from the partnership contract for a liquidation of the
partnership and a levy on its assets if there should be any.
Pedro Larin delivered to Pedro Tarug P172, in order that the latter, in company with Eusebio Clarin
and Carlos de Guzman, might buy and sell mangoes, and, believing that he could make some
money in this business, the said Larin made an agreement with the three men by which the profits
were to be divided equally between him and them.
Pedro Tarug, Eusebio Clarin, and Carlos de Guzman did in fact trade in mangoes and obtained P203
from the business, but did not comply with the terms of the contract by delivering to Larin his half of
the profits; neither did they render him any account of the capital.

Larin charged them with the crime of estafa, but the provincial fiscal filed an information only
against Eusebio Clarin in which he accused him of appropriating to himself not only the P172 but also the
share of the profits that belonged to Larin, amounting to P15.50.

Pedro Tarug and Carlos de Guzman appeared in the case as witnesses and assumed that the facts Martinez v. Ong Pong Co
presented concerned the defendant and themselves together.
Facts:
TC: The trial court, that of First Instance of Pampanga, sentenced the defendant, Eusebio Clarin, to six
Martinez delivered P1,500 to Ong Pong Co and Ong Lay to invest in a store . They agreed that the
months' arresto mayor, to suffer the accessory penalties, and to return to Pedro Larin P172, besides
profits and losses would be equally shared by all of them. Martinez was demanding for the two Ongs to
P30.50 as his share of the profits, or to subsidiary imprisonment in case of insolvency, and to pay the
render an accounting or to refund him the P1,500.
costs. The defendant appealed, and in deciding his appeal we arrive at the following conclusions:
Defendants: Ong Pong Co alleged that Ong Lay, now deceased, was the one who managed the
SC: What was entered into by the partners was a PARTNERSHIP. business, and the capita of P1,500 resulted in a loss so that he should not be made liable

When 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, a contract is formed which is called partnership.
(Art. 1665, Civil Code.)
When Larin put the P172 into the partnership which he formed with Tarug, Clarin, and Guzman, he
invested his capital in the risks or benefits of the business of the purchase and sale of mangoes,
and, even though he had reserved the capital and conveyed only the usufruct of his money, it would not
devolve upon of his three partners to return his capital to him, but upon the partnership of which he
himself formed part, or if it were to be done by one of the three specifically, it would be Tarug, who,
according to the evidence, was the person who received the money directly from Larin.
Issue: WON Ong Pong Co is liable? YES What is the extent of his liability? joint
Held: The 2 partners (Ongs) were the administrators/managers and are obliged to render
accounting. Since neither of them rendered an account, nor proved the alleged losses, they are
obliged to return the capital to Martinez.
Where two partners receive from another a sum of money for the establishment of a business, and
agree to share with the latter the profits or losses that may result therefrom, the said two persons,
as the apparent administrators of the partnership, acted as agents for the capitalist partner, and by
virtue thereof are bound to fulfill the contract which implies the management of the business.

The P172 having been received by the partnership, the business commenced and profits accrued, Article 1796 is not applicable because no other money than that contributed as capital was
the action that lies with the partner who furnished the capital for the recovery of his money is not a involved. The liability of the partners is joint. Ong Pong Co shall only pay P750 to Martinez.
criminal action for estafa, but a civil one arising from the partnership contract for a liquidation of
the partnership and a levy on its assets if there should be any.

No. 5 of article 535 of the Penal Code, according to which those are guilty of estafa"who, to the prejudice of
another, shall appropriate or misapply any money, goods, or any kind of personal property which they may
have received as a deposit on commission for administration or in any other character producing the
obligation to deliver or return the same," (as, for example, in commodatum, precarium, and other unilateral
contracts which require the return of the same thing received) does not include money received for a
partnership; otherwise the result would be that, if the partnership, instead of obtaining profits, suffered
losses, as it could not be held liable civilly for the share of the capitalist partner who reserved the
ownership of the money brought in by him, it would have to answer to the charge of estafa, for which it
would be sufficient to argue that the partnership had received the money under obligation to return it.

We therefore freely acquit Eusebio Clarin, with the costs de oficio. The complaint for estafais dismissed
without prejudice to the institution of a civil action.
RAMNANI VS COURT OF APPEALS
DOCTRINE: We have a situation where two brothers engaged in a business venture. One furnished the
capital, the other contributed his industry and talent. Justice and equity dictate that the two share equally
the fruit of their joint investment and efforts. However, because of the devious machinations and schemes
that Choithram employed he should pay moral and exemplary damages as well as attorney's fees to
spouses Ishwar.
FACTS: Ishwar Jethmal Ramnani and his wife Sonya had their main business based in New York.
Ishwar received US $150,000.00 from his father-in-law in Switzerland.
In 1965, Ishwar Jethmal Ramnani sent the amount of US $150,000.00 to Choithram in two bank drafts
of US$65,000.00 and US$85,000.00 for the purpose of investing the same in real estate in the
Philippines.
Subsequently, spouses Ishwar executed a general power of attorney appointing Ishwars full blood
brothers Choithram and Navalrai as attorneys-in-fact, empowering them to manage and conduct
their business concerns in the Philippines.
Choithram, as attorney-in-factr, entered into two agreements for the purchase of two parcels of land
located in Pasig Rizal from Ortigas & Company, Ltd. Partnership (Ortigas Ltd.) with a total area of
approximately 10,048 square meters.
Three buildings were constructed thereon and were leased out by Choithram as attorney-in-fact of
spouses Ishwar. Two of these buildings were later burned.
In 1970 Ishwar asked Choithram to account for the income and expenses relative to these
properties during the period 1967 to 1970.
Choithram failed and refused to render such accounting which prompted Ishwar to revoke the
general power of attorney.
Choithram and Ortigas Ltd. were duly notified by notice in writing of such revocation. It was also registered
with the Securities and Exchange Commission and published in The Manila Times.
Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and interests of
Ishwar spouses in favor of Nirmla Ramnani, the wife of Choitrams son, Moti.
Ortigas also executed the corresponding deeds of sale in favor of Nirmla and the TCT ISSUEd in her
favour..
Spouses Ishwar: Thus, spouses Ishwar filed a complaint in the Court of First Instance of Rizal
against Choithram and spouses Nirmla and Moti (Choithram et al.) and Ortigas Ltd. for reconveyance
of said properties or payment of its value and damages.
TC: Trial court dismissed the complaint ruling that the lone testimony of Ishwar regarding the cash
remittance is unworthy of faith and credit because the cash remittance was made before the execution
of the general power of attorney. Ishwar also failed to corroborate this lone testimony and did not exhibit
any commercial document as regard to the alleged remittances. It believed the claim of Choitram that he
and Ishwar entered into a temporary arrangement in order to enable Choithram, then a British
citizen, to purchase the properties in the name of Ishwar who was an American citizen and who was
then qualified to purchase property in the Philippines under the then Parity Amendment.
CA: Upon appeal, the CA reversed the decision and gave credence to Ishwar. It upheld the validity of
Ishwars testimony and gave cognizance to a letter written by Choihtram imploring Ishwar to renew the
power of attorney after it was revoked. It states therein that Choithram reassures his brother that he is not
after his money and that the revocation is hurting the reputation of Ishwar. Choithram also made no
mention of his claimed temporary arrangement in the letter..
CA: The CA ruled that Choithram is also estopped in pais or by deed from claiming an interest over
the properties. Because of Choitrams admissions from (1) power of attorney, (2) the Agreements,
and (3) the Contract of Lease
It furthermore HELD that Choithram's 'temporary arrangement, by which he claimed purchasing the two (2)
parcels in question in 1966 and placing them in the name of Ishwar who is an American citizen circumvents
the disqualification provision of aliens acquiring real properties in the Philippines. Upholding the supposed
"temporary arrangement" with Ishwar would be sanctioning the perpetration of an illegal act and culpable
violation of the Constitution.
During the pendency of the case, Choithram made several attempts to dispose of his properties by way of
donation and also mortgaged the properties under litigation for 3 million USD to a shell partnership with a
mere capital of 100 USD.
The Supreme Court affirms the findings of the Court of Appeals.
ISSUE: Whether or not there was a partnership between the brothers Ishwar and Choithram YES
HELD: Yes, Even without a written agreement, the scenario is clear. Spouses Ishwar supplied the
capital of $150,000.00 for the business. They entrusted the money to Choithram to invest in a profitable
business venture in the Philippines. For this purpose they appointed Choithram as their attorney-in-fact.
Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land
in question from Ortigas as attorney-in-fact of Ishwar- Instead of paying for the lots in cash, he paid in
installments and used the balance of the capital entrusted to him, plus a loan, to build two buildings.
Although the buildings were burned later, Choithram was able to build two other buildings on the property.
He rented them out and collected the rentals. Through the industry and genius of Choithram, Ishwar's
property was developed and improved into what it is nowa valuable asset worth millions of pesos.
We have a situation where two brothers engaged in a business venture. One furnished the capital,
the other contributed his industry and talent. Justice and equity dictate that the two share equally
the fruit of their joint investment and efforts. Perhaps this Solomonic solution may pave the way
towards their reconciliation. Both would stand to gain. No one would end up the loser. After all, blood is
thicker than water.
However, because of the devious machinations and schemes that Choithram employed he should
pay moral and exemplary damages as well as attorney's fees to spouses Ishwar.
ISSUE: Whether or not Ortigas Ltd. is liable.
HELD: Yes, because Ortigas had several notices of the revocation. Despite said notices, Ortigas
nevertheless acceded to the representation of Choithram, as alleged attorney-in-fact of Ishwar, to assign
the rights of petitioner Ishwar to Nirmla. While the primary blame should be laid at the doorstep of
Choithram, Ortigas is not entirely without fault. It should have required Choithram to secure another power
of attorney from Ishwar. For recklessly believing the pretension of Choithram that his power of attorney was
still good, it must, therefore, share in the latter's liability to Ishwar.
Moran, Jr. v. CA
Facts:
Pecson and Moran entered into an agreement for the printing of posters featuring the
delegates of the 1971 Constitutional Convention
o That 95k posters were supposed to be printed and sold at P2/each
o That each would contribute P15k
o That Moran will supervise the work, while Pecson would receive a P1k monthly
commission
Pecson gave Moran P10k for which the latter issued a receipt
Only 2k posters were printed, but each was sold for P5
o Moran then executed 2 promissory notes in favor of Pecson
Pecson then filed an action for the recovery of a sum of money for the return of his P10k
contribution, payment of his share in the profits that the partnership would have earned
TC: each party is entitled to rescind the contract since both failed to fulfill their respective
promises (Moran the printing of the 95k posters; Pecson the P15k contribution)
CA: Moran must pay Pecson, among others, the amount of expected profits and the latters
commission in the partnership
Issue:
WON Moran is obliged to give Pecson the amount of expected profits from their partnership.
NO.
Held:
No, he is not.
Rule: when a partner who has undertaken to contribute a sum of money fails to do so, he
becomes a debtor of the partnership for whatever he may have promised to contribute
(Art. 1786) and for interests and damages from the time he should have complied with his
obligations (Art. 1788)
Being a contract of partnership, each partner must share in the profits and losses of the
venture, for that is the essence of partnership.
o Even in the assurance of the other partner that they would earn a huge amount
of profits, in the absence of fraud, the other cannot claim a right to recover the
highly speculative profits
o In the present case, the fantastic nature of expected profits is obvious that various
factors need to be considered
o The failure of COMELEC to proclaim all 320 candidates of the Constitutional
Convention on time was a major factor in Morans decision not to go on with the
printing of all 95,000 posters
o Hidden risks in any business venture have to be considered
However, as it was shown that Pecson gave money to Moran (P10k) which the latter used to print
the first batch of posters, and since these posters were sold and profits were realized from such
sale, Pecson is entitled to recover his share of profits.
NG YA vs. SUGBU COMMERCIAL
Facts:
Ng Ya was a chinese merchant who owned a store in Surigao while Sugbu Commercial Company
was a partnership doing business is Cebu. Ng Ya ordered from Sugbu Commercial galvanized iron and
aluminum sheets. The latter promised that the items were to be shipped in a weeks time. But Ng Ya has
not received her orders on the promised date.
On February 28, 1950, Ng Ya went again to Cebu City inquire from Sugbu about her order. At that
time she had with her Php 4, 000 which she intended to buy some cigarretes for resale in Surigao. Upon
learning Ng Ya's other purpose in coming to Cebu, Pow Sun Gee informed her that the company had an
order for cigarettes and that as soon as they arrive they would sell the same at a low price provided
payment therefor would be deposited. At the same time she was made to understand that the cigarettes
were of "Virginia and "Red Crown" brands which were not then for sale in Cebu. Attracted by this
proposition, she yielded to Pow Sun Gee's offer. Thus, she delivered to the company the P4,000. In making
the deposit with the Sugbu Commercial Company, the receipt for the deposit was issued in the name of
Lana Bakery, to whom Ng Ya borrowed the money.
As Sugbu keeps on reneging on their obligation and the owner of Lara Bakery to whom Ng Ya loaned
the money, the latter had no other choice but to file a complaint against Sugbu.
In order to escape liability, Sugbu alleges that it has already been terminated and that they are
existing only for liquidating and settlement of the business. Also, one of their defenses is that Pow Sun Gee
is not authorized to issue receipts.
ISSUE: WON the defense of Sugbu that Pow Sun Gee is not authorized to issue receipts is valid
RULING: NO.
As manager, Pow Sun Gee, can be presumed to have all the incidental powers to carry out the object of the
partnership in the transaction of business. Of course we are not unaware of the exception to this general
rule, that is, when the powers of a manager are specifically restricted he could not exercise the powers
expressly limited from him. But when the articles of association do not specify the powers of the manager, it
is admitted on principle that a manager has the power of a general agent, and even more. When the object
of the company is determine, the manager has all the power necessary for the attainment of such object.
Appellant did not even dare to present the articles of co-partnership that would show any limitation upon the
powders of its manager an indication that there was none. For this reason, we hold and declare that the
minor power of issuing official receipts is included in the general powers of the manager.
TEAGUE vs MARTIN
DOCTRINE: Although paid for by the partnership funds, are owned by petitioner for it was registered in his
own name. He is estopped from claiming otherwise. The purchase of the properties in question are not
within the scope of plaintiffs authority. It is but right that the plaintiff reimburse the partnership for
the use of its funds.
FACTS:
It was alleged, by the plaintiff (TEAGUE) that he and the defendants formed a partnership for the
operation of a fish business and similar commercial transactions, which by mutual consent was called
"Malangpaya Fish Co.," with a capital of P35,000, of which plaintiff paid P25,000, the defendants
Martin P5,000, Maddy P2,500, and Golucke P2,500; that he was named the general partner; that the
share in the profits and losses is in proportion to the amount of contributed capital; that there was no
agreement as to the duration of the partnership; that he wants to dissolve it, but the defendants
refused to do so; that the partnership purchased and owns a lighter (Lapu-Lapu), a motorship
(Barracuda), and other properties, which are in the possession of the defendants who are making
use of them. It was alleged that it is the best interest of the parties to have a receiver appointed pending
this litigation, to take possession of the properties, and he prays that the Philippine Trust Company be
appointed receiver, and for judgment dissolving the partnership, with costs.
Each of the defendants filed a separate answer, but of the same nature. It is then alleged that Maddy
will have charge of the Barracuda and the navigating of the same, salary P300 per month; Martin will
have charge of the southern station, cold stores, commissary and procuring fish, salary P300 per
month; Teague will have charge of selling fish in Manila and purchasing supplies. No salary until
business is on paying basis.
CFI: The CFI issued a decision: (1) dissolving the partnership and liquidating its assets; (2) that the
barge Lapu-Lapu as well as the Ford truck and adding machine belong exclusively to Teague, but
he must return to and reimburse the partnership the amount which was taken from its funds for the
purchase of the Lapu-Lapu and the Ford truck.
CA: Upon appeal, the plaintiff further contended that he is the managing partner of the partnership
and the three properties (Lapu-Lapu, Barracuda & Ford truck) are properties of the partnership
since they were paid from the profits of the partnership thus do not belong to him.
ISSUES:
WON the plaintiff was the manager of the unregistered partnership of Malangpaya Fish Company. YES
WON the three properties are owned by the partnership. NO.
RULING:
Yes, the powers and duties of the three partners are specifically defined, and that each of them was more
or less the general manager in his particular part of the business. The plaintiffs powers and duties were
confined and limited to "selling fish in Manila and the purchase of supplies."
No, the Lapu-Lapu, Barracuda, and the adding machine, although paid for by the partnership funds, are
owned by petitioner for it was registered in his own name. He is estopped from claiming otherwise. The
purchase of the properties in question are not within the scope of plaintiffs authority. It is but right
that the plaintiff reimburse the partnership for the use of its funds. However, it noted that the
partnership also made use of the Lapu-Lapu. In the interest of justice, the plaintiff should be
compensated for such use.
Bachrach vs. La Protectora,
Doctrine: Promissory notes constitute the obligation exclusively of La Protectora and Barba. They do not
constitute an obligation directly binding the defendants. Their liability is based on the principles of
partnership liability. A member is not liable in solidum with his fellows for the entire indebtedness but is
liable with them or his aliquot part.
Facts:
Nicolas Segundo, Antonio Adiarte, Ignacio Flores and Modesto Serrano (defendants) formed a civil
partnership called La Protectora for the purpose of engaging in the business of transporting
passengers and freight at Laoag, Ilocos Norte. Marcelo Barba, acting as manager, negotiated for the
purchase of 2 automobile trucks from E. M. Bachrach for P16,500. Barba paid P3,000 in cash and for
the balance executed promissory notes.
One of these promissory notes was signed in the following manner: P.P La Protectora, By Marcelo
Barba Marcelo Barba The other 2 notes were signed in the same way but the word by was
omitted. It was obvious that in signing the notes, Barba intended to bind both the partnership and
himself.
The defendants executed a document in which they declared that they were members of La
Protectora and that they had granted to its president full authority to contract for the purchase of
the 2 automobiles. The document was delivered by Barba to Bachrach at the time the vehicles were
purchased.
Barba incurred a debt amounting to P2,617.57 and Bachrach foreclosed a chattel mortgage on the
trucks but there was still balance. To recover the balance, action was instituted against the
defendants. Judgment was rendered against the defendants.
Issue:
a.Whether or not the defendants are PERSONALLY liable for the firm debts. NO.
b.Whether or not Barba had authority to incur expenses for the partnership (relevant issue) YES
Held: a.No. Promissory notes constitute the obligation exclusively of La Protectora and Barba. They
do not constitute an obligation directly binding the defendants. Their liability is based on the
principles of partnership liability. A member is not liable in solidum with his fellows for the entire
indebtedness but is liable with them or his aliquot part.
The authority of Marcelo Barba to bind the partnership, in the purchase of the trucks, is fully established by
the document executed by the four appellants. The transaction by which Barba secured these trucks was in
conformity with the tenor of this document. The promissory notes constitute the obligation exclusively of "La
Protectora" and of Marcelo Barba; and they do not in any sense constitute an obligation directly binding on
the four appellants. Their liability is based on the fact that they are members of the civil partnership and as
such are liable for its debts. It is true that article 1698 of the Civil Code declares that a member of a civil
partnership is not liable in solidum (solidariamente) with his fellows for its entire indebtedness; but it results
from this article, in connection with article 1137 of the Civil Code, that each is liable with the others
(mancomunadamente) for his aliquot part of such indebtedness. And so it has been held by this court.
The SC ruled that the document referred to was intended merely as an authority to enable Barba to bind
the partnership and that the parties to that instrument did not intend thereby to confer upon Barba an
authority to bind them personally. It is obvious that the contract which Barba in fact executed in pursuance
of that authority did not by its terms profess to bind the appellants personally at all, but only the partnership
and himself. It follows that the four appellants cannot be held to have been personally obligated by that
instrument; but, as we have already seen, their liability rests upon the general principles underlying
partnership liability.
b. Yes. Under Art 1804, every partner may associate another person with him in his share. All partners
are considered agents of the partnership. Barba must be held to have authority to incur these
expenses. He is shown to have been in fact the president/manager, and there can be no doubt that
he had actual authority to incur obligation.
Machuca v Chuidian (1903, Ladd)
Parties: Jose Machuca (Plaintiff-Appellee), Chuidian Buenaventura & Co. (Defendant-Appellant)
Partners: D. Telesforo Chuidian, Doa Raymunda Chuidian, Doa Candelaria Chuidian, and D.
Mariano Buenaventura
DOCTRINE:
The assignment by its terms is not to take effect until all the liabilities of the partnership have been
discharged and nothing remains to be done except to distribute the assets, if there should be any,
among the partners. Meanwhile the assignor is to continue in the enjoyment of the rights and is to remain
subject to the liabilities of a partner as though no assignment had been made. The assignment does not
purport to transfer an interest in the partnership, but only a future contingent right to such portion
of the ultimate residue of the partnership property as the assignor may become entitled to receive
by virtue of his proportionate interest in the capital.
FACTS:
Chuidian Buenaventura & Co. is regular general partnership, organized in Manila, December 29, 1882,
as a continuation of a prior partnership of the same name. The original partners constituting the
partnership of 1882 were D. Telesforo Chuidian, Doa Raymunda Chuidian, Doa Candelaria Chuidian,
and D. Mariano Buenaventura.
Doa Raymunda Chuidian retired from the partnership November 4, 1885. On January 1, 1888, the
partnership went into liquidation, and it does not appear that the liquidation had been terminated
when this action was brought.
On January 1, 1894, D. Mariano Buenaventura died, his estate passing by will to his children, among
whom was D. Vicente Buenaventura. Upon the partition of the estate the amount of the interest of D.
Vicente Buenaventura in his father's account-current and in the capital was ascertained and recorded
in the books of the firm.
On December 15, 1898, D. Vicente Buenaventura executed a public instrument in which for a valuable
consideration he "assigns to D. Jose Gervasio Garcia . . . a 25 per cent share in all that may be
obtained by whatever right in whatever form from the liquidation of the partnership of Chuidian,
Buenaventura & Co., in the part pertaining to him in said partnership
A subsequent assignment was made by D. Jose Gervasio Garcia in favour of Jose Machuca
(Plaintiff-Appellee), which has been notified to the liquidator of the partnership.
Trial Court Brought by Jose Machuca against Chuidian Buenaventura & Co.. Action was for
specific performance to compel the liquidator of the partnership to record in the books Machucas
claim under the assignment as a credit due, and the he further asks that he be adjudicated to be a
creditor of the partnership in an amount equal to 25 per cent of D. Vicente Buenaventura's share in his
father's account-current. That the necessary liquidation being first had, the partnership pay to the plaintiff
the balance which may be found to be due him; and that if the partnership has no funds with which to
discharge this obligation an adjudication of bankruptcy be made. He also asks to recover the
damages caused by reason of the failure of the liquidator to record his credit in the books of partnership.
Court ruled in favor of the plaintiff.
ISSUE(s):
WON Machuca is entitled to the relief prayed pending the liquidation of the partnership? NO.
HELD/RATIO: NO
Clause 19 of the partnership agreement stipulates that: "upon the dissolution of the company, the
pending obligations in favor of outside parties should be satisfied, the funds of the minors Jose
and Francisco Chuidian should be taken out, and afterwards the resulting balance of the account-
current of each one of those who had put in money (imponentes) should be paid."
A construction of this clause establishes that the liabilities to non-partners are to be first
discharged; that the claims of the Chuidian minors are to be next satisfied; and that what is due to
the respective partners on account of their advances to the firm is to be paid last of all, leaving the
ultimate residue, if there be any, to be distributed, among the partners in the proportions in which
they may be entitled thereto. A distinction is made in this clause between creditors who were
partners and creditors who were not partners, and that the expression "outside parties" refers to
the latter class.
Thus, it follows that D. Vicente Buenaventura, whose rights are those of his father, is in no case
entitled to receive any part of the assets until the creditors who are nonpartners and the Chuidian
minors are paid. Whatever rights he had either as creditor or partner, he could only transfer subject
to this condition.
It is clear, from the language of the instrument, that this conditional interest was all that D. Vicente
Buenaventura ever intended to transfer. By that instrument he undertakes to assign to Garcia not a
present interest in the assets of the partnership but an interest in whatever "may be obtained from the
liquidation of the partnership," which Garcia is to receive "in the same form in which it may be obtained
from said partnership," and "on the date when Messrs. Chuidian, Buenaventura & Co., in liquidation, shall
have effected the operations necessary in order to satisfy" the claims of D. Vicente Buenaventura.
The assignment by its terms is not to take effect until all the liabilities of the partnership have been
discharged and nothing remains to be done except to distribute the assets, if there should be any,
among the partners. Meanwhile the assignor, Buenaventura, is to continue in the enjoyment of the
rights and is to remain subject to the liabilities of a partner as though no assignment had been
made. The assignment does not purport to transfer an interest in the partnership, but only a future
contingent right to 25 per cent of such portion of the ultimate residue of the partnership property as
the assignor may become entitled to receive by virtue of his proportionate interest in the capital.
There is nothing in the case to show either that the nonpartner creditors of the partnership have been paid
or that the claims of the Chuidian minors have been satisfied. Thus, Machuca is not yet entitled to the relief.
DISPOSITIVE:
The plaintiff having acquired no rights under the assignment which are now enforceable against the
defendant, this action can not be maintained. The liquidator of the defendant having been notified
of the assignment, the plaintiff will be entitled to receive from the assets of the partnership, if any
remain, at the termination of the liquidation, 25 per cent of D. Vicente's resulting interest, both as
partner and creditor. The judgment in this case should not affect the plaintiff's right to bring another action
against the partnership when the affairs of the same are finally wound up. The proper judgment will be that
the action be dismissed. The judgment of the court below is reversed and the case is remanded to that
court with directions to enter a judgment of dismissal. So ordered.
DAN FUE LEUNG, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.
DOCTRINE: Regarding the prescriptive period within which the private respondent may demand an
accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as
the partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final
accounting is done.
FACTS:
The petitioner asks for the reversal of the decision of the Appellate Court in which affirmed the decision of
the lower court declaring private respondent Leung Yiu a partner of petitioner Dan Fue Leung in the
business of Sun Wah Panciteria and ordering the petitioner to pay to the private respondent his share in
the annual profits of the said restaurant.
This case originated from a complaint filed by respondent Leung Yiu with the lower court to recover
the sum equivalent to twenty-two percent (22%) of the annual profits derived from the operation of
Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung.
The Sun Wah Panciteria was registered as a single proprietorship and its licenses and permits were
issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu
adduced evidence during the trial of the case to show that Sun Wah Panciteria was actually a
partnership and that he was one of the partners having contributed P4,000.00 to its initial
establishment.
TRIAL COURT: Lower court ruled in favor of the private respondent. Petitioner appealed the trial court's
amended decision.
CA: However, the questioned decision was further modified and affirmed by the appellate court. Both the
trial court and the appellate court declared that the private petitioner is a partner and is entitled to a
share of the annual profits of the restaurant. Hence, an appeal to the SC.
The petitioner argues that private respondent extended 'financial assistance' to herein petitioner at
the time of the establishment of the Sun Wah Panciteria, in return of which private respondent
allegedly will receive a share in the profits of the restaurant. It was, therefore, error for the
Appellate Court to interpret or construe 'financial assistance' to mean the contribution of capital by
a partner to a partnership.
ISSUE:
1. WON the private respondent is a partner of the petitioner in the establishment of Sun Wah Panciteria.
YES.
2. W/N the right of the private respondent to demand accounting has already prescribed? NO. Art 1842 is
applicable.
HELD:
In essence, the private respondent alleged that when Sun Wah Panciteria was established, he gave
P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-two percent
(22%) of the annual profit derived from the operation of the said panciteria. These allegations, which
were proved, make the private respondent and the petitioner partners in the establishment of Sun
Wah Panciteria because Article 1767 of the Civil Code provides that "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".
Therefore, the lower courts did not err in construing the complaint as one wherein the private respondent
asserted his rights as partner of the petitioner in the establishment of the Sun Wah Panciteria,
notwithstanding the use of the term financial assistance therein.
SC affirmed appellate courts decision and ordered the dissolution of the partnership.
2nd issue:
Petitioner raises the issue of prescription. According to the petitioner, no written demands for his share and
for accounting were ever made by private respondent.
The petitioner's argument is based on Article 1144 of the Civil Code which provides:
Art. 1144. The following actions must be brought within ten years from the time the right of action
accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
in relation to Article 1155 thereof which provides:
Art. 1155. The prescription of actions is interrupted when they are filed before the court, when there
is a written extra-judicial demand by the creditor, and when there is any written acknowledgment of the
debt by the debtor.'
SC: It would be incorrect to state that if a partner does not assert his rights anytime within ten years
from the start of operations, such rights are irretrievably lost. The private respondent's cause of
action is premised upon the failure of the petitioner to give him the agreed profits in the operation of
Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the
partnership.
It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable.
Article 1842 states:
The right to an account of his interest shall accrue to any partner, or his legal representative as
against the winding up partners or the surviving partners or the person or partnership continuing the
business, at the date of dissolution, in the absence or any agreement to the contrary.
Regarding the prescriptive period within which the private respondent may demand an accounting,
Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the
partnership exists. Prescription begins to run only upon the dissolution of the partnership when the
final accounting is done.
Sison v. Helen McQuaid
December 29, 1953
DOCTRINE: Liquidation shall happen before a partner may claim his share of profit from the partnership.
Facts:
Plaintiff brought an action in the CFI against defendant. According to the plaintiff, the defendant
borrowed from him money (P 2,210) to enable her to pay her obligations and to add to her capital in
her lumber business. She could not pay so she proposed to take plaintiff as a partner in her
business, plaintiff to contribute the P 2,210 due him from defendant.
Before the last World War, the partnership sold 230,000board ft. of lumber to the US Army for P
13,800.00. Defendant refused to deliver of it (P 6,900.00) to plaintiff despite his repeated
demands. Plaintiff filed an action to compel defendant to pay him his half of the profit from the
partnership.
Defendant: Helen McQuaid filed a motion to dismiss on the ground that the action had already prescribed
and that the complaint states no cause of action.
TRIAL COURT: The case was dismissed upon the ground of prescription.
Issue: Whether or not plaintiff is entitled to the sum he claims
Held: NO.
Order of dismissal was affirmed, but on the ground that the complaint states no cause of action.
It is not clear from the complaint just when the cause of action accrued. Thus the dismissal of the case is
erroneous. However order should be retained on the ground that the complaint has no cause of
action. Plaintiff seeks to recover from defendant one-half of the purchase price of lumber sold by
the partnership to the United States Army. But his complaint does not show why he should be
entitled to the sum he claims. It does not allege that there has been a liquidation of the partnership
business and the said sum has been found to be due him as his share of the profits.
The proceeds from the sale of a certain amount of lumber cannot be considered profits until costs
and expenses have been deducted. Moreover, the profits of the business cannot be determined by taking
into account the result of one particular transaction instead of all the transactions had. Hence, the need
for a general liquidation before a member of a partnership may claim a specific sum as his share of
the profits.
ORNUM v. LASALA
DOCTRINE: After such shares had been paid by the petitioners and accepted by the respondents without
any reservation, the approval of the statement of accounts was virtually confirmed and its signing
thereby became a mere formality to be complied with by the respondents exclusively. Their refusal to
sign, after receiving their shares, amounted to a waiver to that formality in favor of the petitioners who has
already performed their obligation.
FACTS:
1. In 1908 Pedro Lasala, father of the respondents, and Emerenciano Ornum formed a partnership
2. Lasala as capitalist while Ornum will be the industrial partner
3. Lasala delivered the sum of P1,000 to Ornum who will conducta business at his place of residence in
Romblon.
4. In 1912, when the assets of the partnership consisted of outstanding accounts and old stock of
merchandise,Emerenciano Ornum, following the wishes of his wife, asked for the dissolution of the
partnership Lasala, Emerenciano
5. Ornum looked for some one who could take his place and hesuggested the names of the
petitioners who accordinglybecame the new partners.
6. Upon joining the business, the petitioners, contributed P505.54as their capital
7. the new partnership Pedro Lasala had a capital of P1,000,appraised value of the assets of the former
partnership, plusthe said P505.54 invested by the petitioners who, as industrialpartners, were to run the
business in Romblon.
8. After the death of Pedro Lasala, his children (the respondents)succeeded to all his rights and
interest in the partnership
.9. The partners never knew each other personally
.10. No formal partnership agreement was ever executed.
11. The petitioners, as managing partners, received one-half of the net gains, and the other half was
to be divided between them and the Lasala group in proportion to the capital put in by each group.
12. During the course divided, but the partners were given the election, as evidenced by the statements of
accounts referred to in the decision of the Court of Appeals, to invest the irrespective shares in such profits
as additional capital.
13. The petitioners accordingly let a greater part of their profits as additional investment in the
partnership.
14. After twenty years the business had grown to such an extent that is total value, including profits,
amounted toP44,618.67.
15. Statements of accounts were periodically prepared by the petitioners and sent to the respondents who
invariably did not make any objection thereto.
 16. Before the last statement of accounts was made, the respondents had received P5,387.29 by way of
profits.
17. The last and final statement of accounts, dated May 27,1932, and prepared by the petitioners
after the respondents had announced their desire to dissolve the partnership,
18. Pursuant to the request contained in this letter, the petitioners remitted and paid to the
respondents the total amount corresponding to them under the above-quoted statement of
accounts which, however, was not signed by the latter.
19. Thereafter the complaint in this case was filed by the respondents, praying for an accounting
and final liquidation of the assets of the partnership.
20. CFI: The Court of First Instance of Manila held that the last and final statement of accounts
prepared by the petitioners was tacitly approved and accepted by the respondents who, by virtue of
the above-quoted letter of Father Mariano Lasala, lost their right to a further accounting from the
moment they received and accepted their shares as itemized in said statement
.21. CA: This judgment was reversed by the Court of Appeals principally on the ground that as the
final statement of accounts remains unsigned by the respondents, the same stands disapproved.
22. The decision appealed by the petitioners
ISSUES:(1) WoN the accounting stated in the letter including the last andfinal statement of account was
tacitly accepted by the petitioners as the final liquidation and accounting of the assets of the partnership?
YES
(2) Are there really mistakes and misrepresentations made in the statement of accounts made? NO
Petitioners contention: To support a plea of a stated account so as to conclude the parties in relation to
all dealings between them, the accounting must be shown to have been final. (1 Cyc. 366.) All the first nine
statements which the defendants sent the plaintiffs were partial settlements, while the last, although
intended to be final, has not been signed.
HELD FOR ISSUE NO. 1: YES.
SC stated that the last and final statement of accounts herein above quoted, had been approved by
the respondents.
This approval resulted, by virtue of the letter of Father Mariano Lasala of July 19, 1932, quoted in part
in the appealed decision from the failure of the respondents to object to the statement and from their
promise to sign the same as soon as they received their shares as shown in said statement.
After such shares had been paid by the petitioners and accepted by the respondents without any
reservation, the approval of the statement of accounts was virtually confirmed and its signing
thereby became a mere formality to be complied with by the respondents exclusively. Their refusal
to sign, after receiving their shares, amounted to a waiver to that formality in favor of the
petitioners who has already performed their obligation.
This approval precludes any right on the part of the respondents to a further liquidation, unless the
latter can show that there was fraud, deceit, error or mistake in said approval.(Pastor ,vs .Nicasio, 6
Phil., 152; Aldecoa & Co.,vs. Warner, Barnes & Co., 16 Phil., 423; Gonsalez vs. Harty, 32 Phil. 328.)The
Court of Appeals did not make any findings that there was fraud, and on the matter of error or mistake it
merely said
HELD FOR ISSUE NO. 2: NO.
The pronouncement that the evidence tends to prove that there were mistakes in the petitioners'
statements of accounts, without specifying the mistakes, merely intimates as suspicion and is not
such a positive and unmistakable finding of fact as to justify a revision, especially because the
Court of Appeals has relied on the bare allegations of the parties,
Moreover, as the petitioners did not appeal from the decision of the Court abandoned such allegation in the
Court of Appeals. no justifiable reason (fraud, deceit, error or mistake) has been positively and
unmistakably found by the Court of Appeals so as to warrant the liquidations sought by the respondents.
In justice to the petitioners. It should be borne in mind that this case has been pending for nearly nine years
and that, if another accounting is ordered, a costly action or proceeding may arise which may not
bedisposed of within a similar period, it is not improbable that theintended relief may in fact be the
respondents' funeral.
PABALAN vs VELEZ
Doctrine:
Facts:
Pabalan owned two lots, a rural real estate devoted to agricultural purposes and an urban lot. In his
desire to put the two lots to productive use, he agreed to enter into a regular mercantile partnership
with Walter Fitton.
The agreement stipulates that they form a partnership known by the name of AM Pabalan and
Company with a capital stock at P9,000; that Pabalan would contribute P3,000 in cash while Fitton
would contribute P6,000 in real property; that Pabalan would sell his two lots to Fitton for P6,000;
that Pabalan would receive P3,000 of the purchase price while the remaining will be his contribution
to the capital; and that Fitton would contribute the said two lots as his agreed capital contribution.
Pabalan received P3,000 of the purchase price. When Fitton died, he failed to pay into the partnership
funds the remaining P3,000. Owing to the failure of Fitton to comply with his obligation, the
properties in question had been entirely unproductive, resulting in losses and damages to Pabalan.
Plaintiff prayed for the rescission of the double contract (partnership and sale) entered into.
Defendant Velez is the administrator of Fittons estate.
ISSUE: WON rescission is the proper remedy. YES
RULING:
Yes, in bilateral contracts, when one of the parties fails to comply with his engagements, the party
prejudiced is entitled to choose between enforcement of the obligation or a rescission of the
contract, with the payment of damages and interest in either case. In the case at bar, enforcement
cannot be had because the defaulting partner is already dead. Justice requires the dissolution of
the company and the rescission of the said sale.
It was duly proved at the trial of this case, that the partner Walter A. Fitton failed to observe the
stipulations of the two aforesaid contracts; that he did not pay any part of the price of the sale of
the two parcels of land which he had purchased from his partner, Antonio M. Pabalan, and,
consequently, did not turn into the company funds, as capital of the said Pabala n, the sum of which
the said price consisted; it is therefore unquestionable that he did not comply with his two principal
obligations, assumed in the said double contract wherein he expressly agreed that the said P3,000, a part
of the price of the two pieces of land that he purchased from Pabalan, would be by him turned into the fund
of the general partnership which they had formed, as capital of the partner Pabalan.
In case one of the parties to a contract does not fulfill his obligation as stipulated therein, the other
contracting party, by the provisions of the above-quoted article 1124 of the Civil Code, is entitled to
demand the rescission of the contract, as such obligations are mutual, and the court must order
the rescission demanded. The partner, Walter A. Fitton, came within such a case, since he failed to pay
any part of the price of the two properties which he had acquired and did not turn into the company fund,
as capital of the vendor partner, the sum representing such sale, and therefore justice requires the
dissolution of the aforementioned company and the rescission of the said sale, in conformity with the
finding contained in the judgment appealed from the prayer rightfully and lawfully made by the partner who
did not violate his obligations as set forth in the said contract.
ILDEFONSO DE LA ROSA vs. ENRIQUE ORTEGA GO-COTAY
G.R. No. L-24243, January 15, 1926
DOCTRINE:
FACTS
Chinamen Go-Lio and Vicente Go-Sengco formed a partnership of purchase and sale of article
of commerce in Nueva Ecija, during Spanish Regime. Go-Lio went to China, where he later on died,
leaving a widow and three children. When Vicente Go-Sengco died his son, defendant Enrique
Ortega Go-Cotay took charge of the business. Plaintiff Ildefonso dela Rosa was appointed as
administrator of the estate of Go-Sengco here in the Philippines. As administrator, he requested for
the winding up of the partnership which was refused by defendant.
Plaintiff filed a complaint for the delivery of the one half of all the property of the partnership
and his appointment as receiver of the property. The Court appointed three commissioners to make an
inventory and liquidate all of the property in question. In order to prevent commissioner Cabo-Chan
from assuming the office of receiver, the defendant filed a bond. The court later on adopted the report
submitted by commissioner Cabo-Chan, wherein it was stated that the partnership incurred losses
in the amount of P89,099.22, in view of which the plaintiff has nothing to recover, as their was no
profit to divide.
ISSUE
Should the partnership bear the losses incurred under the management of defendant? NO.
RULING
No. Defendant Ortega Go-Cotay assumed complete responsibility for the business by
objecting to the appointment of a receiver as prayed for by plaintiff dela Rosa, and by giving bond
therefore. He ceases to be a managing partner at that time in order to become a receiver and while
before that date the property was liable for his acts, yet that is not the case with his subsequent
acts. Without judicial authority he cannot continue the business of partnership, being personally
liable for the losses.
The defendant assumed complete responsibility for the business by objecting to the appointment
of a receiver as prayed for by plaintiff, and giving a bond therefor. Until that date his acts were
those of a managing partner, binding against the partnership; but thereafter his acts were those of
a receiver whose authority is contained in section 175 of the Code of Civil Procedure.
A receiver has no right to carry on and conduct a business unless he is authorized or directed by the court
to do some, and such authority is not derived from an order of appointment to take and preserve the
property (34 Cyc., 283; 23 R. C. L., 73). It does not appear that the defendant as a receiver was
authorized by the court to continue the business of the partnership in liquidation. This being so, he
is personally liable for the losses that the business amy have sustained. (34 Cyc., 296.) The
partnership must not, therefore, be liable for the acts of the defendant in connection with the management
of the business until August 3, 1918, the date when he ceased to be a member and manager in order to
become receiver.
SC reversed the judgment appealed from, and sentenced the defendant to pay the plaintiff the sum of
P30,299.14 with legal interest at the rate of 6 per cent per annum from July 1, 1918, until fully paid, with
costs
Soncuya v. de Luna
G.R. No. L-45464, April 28, 1939, Villa-Real, J.
Doctrine: for a partner to be able to claim damages from another partner who manages the general co-
partnership, allegedly suffered by him by reason of the fraudulent administration of the latter, a previous
liquidation of said partnership is necessary.
Facts:
Petitioner filed a complaint against respondent for damages as a result of the fraudulent
administration of the partnership, Centro Escolar de Senoritas of which petitioner and the deceased
Avelino Librada were members.
DEFENDANT: defendant Carmen de Luna interposed a demurrer based on the following grounds: (1) That
the complaint does not contain facts sufficient to constitute a cause of action; and (2) that the
complaint is ambiguous, unintelligible and vague.
T In the amended complaint it is prayed that defendant Carmen de Luna be sentenced to pay plaintiff
damages in the sum of P700,432 as a result of the administration, said to be fraudulent, of he partnership,
"Centro Escolar de Seoritas", of which plaintiff, defendant and the deceased Librada Avelino were
members.
Issue: Whethehis was sustained by the lower court, and the petitioner filed his amended complaint.r
the petitioner is entitled to damages.
Ruling:
According to the Supreme Court the complaint is not sufficient to constitute a cause of action on the
part of the plaintiff as member of the partnership to collect damages from defendant as managing
partner thereof, without previous liquidation.
Thus, for a partner to be able to claim from another partner who manages the general co-
partnership, allegedly suffered by him by reason of the fraudulent administration of the latter, a
previous liquidation of said partnership is necessary.
GOQUIOLAY vs SYCIP
Doctrine: 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.
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.
PLAINTIFFS ARGUMENTS: The plaintiffs in their complaint challenged the authority of Kong Chai
Pin to sell the partnership properties on the ground that she had no authority to sell because even
granting that she became a partner upon the death of Tan Sin An the power of attorney granted in
favor of the latter expired after his death.
DEFENDANTS ARGUMENTS: The defendants defended the validity of the sale on the theory that
she succeeded to all the rights and prerogatives of Tan Sin An as managing partner.
DECISIONS OF --
LOWER COURT: The trial court sustained the validity of the sale on the ground that under the
provisions of the articles of partnership allowing the heirs of the deceased partner to represent him
in the partnership after his death Kong Chai Pin became a managing partner, this being the capacity
held by Tan Sin An when he died.
CA:
ISSUE/S:
Whether or not a widow or substitute become also a general partner or only a limited partner. YES. A
general 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:
1st issue: 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. Petitioner contends that the trial court should have dismissed the complaint on the ground of prescription,
Hence, the contractual stipulation actually contemplated that the heirs would become general partners arguing that respondents action prescribed four (4) years after it accrued in 1986. The trial court and the
rather than limited ones. Court of Appeals gave scant consideration to petitioners hollow arguments, and rightly so.

2nd issue: NO. Consent is not necessary. Strangers dealing with a partnership have the right to assume, in
the absence of restrictive clauses in the co-partnership agreement, that every general partner has power to
bind the partnership, specially those partners acting with ostensible authority.
The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination. The
partnership, although dissolved, continues to exist and its legal personality is retained, at which time it
completes the winding up of its affairs, including the partitioning and distribution of the net partnership
assets to the partners. For as long as the partnership exists, any of the partners may demand an
accounting of the partnerships business. Prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is done.

EMILIO EMNACE vs. COURT OF APPEALS
Doctrine: The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3)
termination. The partnership, although dissolved, continues to exist and its legal personality is
retained, at which time it completes the winding up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners. For as long as the partnership exists, any of
the partners may demand an accounting of the partnerships business. Prescription of the said right
starts to run only upon the dissolution of the partnership when the final accounting is done.
Contrary to petitioners protestations that respondents right to inquire into the business affairs of the
partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to
run in the absence of a final accounting.
When a final accounting is made, it is only then that prescription begins to run. In the case at bar,
no final accounting has been made, and that is precisely what respondents are seeking in their
action before the trial court, since petitioner has failed or refused to render an accounting of the
partnerships business and assets. Hence, the said action is not barred by prescription.
Petition denied.

Facts:

Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business
concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986, they decided to
dissolve their partnership and executed an agreement of partition and distribution of the
partnership properties among them, consequent to Jacinto Divinagracias withdrawal from the
partnership.[1] Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2)
parcels of land located and cash deposits.

Throughout the existence of the partnership, and even after Vicente Tabanaos untimely demise in
1994, petitioner failed to submit to Tabanaos heirs any statement of assets and liabilities of the
partnership, and to render an accounting of the partnerships finances. Petitioner also reneged on
his promise to turn over to Tabanaos heirs the deceaseds 1/3 share in the total assets of the
partnership, despite formal demand for payment thereof.

Respondents: Consequently, Tabanaos heirs, respondents herein, filed against petitioner an action
for accounting, payment of shares, division of assets and damages.

Emnace: Petitioner also raised prescription as one of the grounds warranting the outright dismissal
of the complaint.

TC: The trial court issued an Order, denying the motion to dismiss.

CA: The Court of Appeals rendered the assailed decision, dismissing the petition for certiorari of
petitioner. Hence, this appeal.

Issue:

Whether or not the court should have dismissed the complaint on the ground of prescription NO

Held:No.
PROPERTY RIGHTS OF A PARTNER CASES 1810 - 1814
Clemente vs. Galvan
Facts:
Plaintiff and defendant organized a civil partnership which they named "Galvan y Compaia" to engage in
the manufacture and sale of paper and other stationery. they agreed to invest therein a capital of
P100,000, but as a matter of fact they did not cover more than one-fifth thereof, each contributing P10,000.
Hardly a year after such organization, the plaintiff commenced an action to ask for the dissolution
of the partnership and to compel defendant to whom the management thereof was entrusted to submit an
accounting of his administration and to deliver to him his share as such partner.
Defendant: defendant expressed his conformity to the dissolution of the partnership and the
liquidation of its affairs; but by way of counterclaim he asked that, having covered a deficit incurred
by the partnership amounting to P4,000 with his own money, plaintiff reimburse him of one-half of
said sum.
Petitioner: On petition of the plaintiff a receiver and liquidator to take charge of the properties and
business for the partnership while the same was not yet definitely dissolved, was appointed.
To comply with the courts order, the receiver delivered to plaintiff the keys to the place where the machines
were found, which was the same place where defendant had his home; but before he could take actual
possession of said machines, upon the strong opposition of defendant, the court, on motion of the latter,
suspended the effects of its order.
Subsequently, 2 civil cases involving Clemente were decided against him. In order to avoid the
attachment of the machines, he mortgaged the said properties to his nephew,Jose Echevarria.
Issue: W/N the mortgage between Clemente and his nephew is valid? NO
Held:
The evidence of record shows that the machines in contention originally belonged to the defendant
and from him were transferred to the partnership Galvan y Compania. This being the case, said
machines belong to the partnership and not to him, and shall belong to it until partition is effected
according to the result thereof after the liquidation.
It is clear that plaintiff could not obtain possession of the machines in question. The constructive
possession deducible from the fact that he had the keys to the place where the machines were found does
not help him any because the lower court suspended the effects of the other whereby the keys were
delivered to him a few days after its issuance; and thereafter revoked it entirely in the appealed decision.
Furthermore, when he attempted to take actual possession of the machines, the defendant did not allow
him to do so. Consequently, if he did not have actual possession of the machines, he could not in any
manner mortgage them
THE LEYTE-SAMAR SALES CO., and RAYMUNDO TOMASSI, petitioners, vs.SULPICIO V. CEA, in his
capacity as Judge of the Court of First Instance of Leyte and OLEGARIO LASTRILLA, respondents.
FACTS: In civil case No. 193 of the Court of First Instance of Leyte, which is a suit for damages by the
Leyte-Samar Sales Co. (hereinafter called LESSCO) and Raymond Tomassi against the Far Eastern
Lumber & Commercial Co. (unregistered commercial partnership hereinafter called FELCO), Arnold
Hall, Fred Brown and Jean Roxas, rendered judgment against defendants jointly and severally for the
amount of P31,589 plus cost on october 29, 1948.
The Court of Appeals confirmed the award in November 1950, minus P2,000 representing attorney's
fees mistakenly included. The decision having become final, the sheriff sold at auction on June 9, 1951
to Robert Dorfe and Pepito Asturias "all the rights, interests, titles and participation" of the defendants
in certain buildings and properties described in the certificate, for a total price of eight thousand and
one hundred pesos.
On June 4, 1951 Olegario Lastrilla filed in the case a motion, wherein he claimed to be the owner by
purchase of all the "shares and interests" of defendant Fred Brown in the FELCO.
TC: Over the plaintiffs' objection the judge in his order of June 13, 1951, granted Lastrilla's motion by
requiring the sheriff to retain 17 per cent of the money And on motion of Lastrilla, the court on August
14, 1951, modified its order of delivery and merely declared that Lastrilla was entitled to 17 per cent of
the properties sold.
Hence, this petition for "Certiorari and Prohibition with preliminary Injunction" praying for the
additional writ of mandamus.
issue:
(a) whether or not Lastrilla is a partner of FELCO, having purchased the share and interest of defendant
Fred Brown, and if so can he claim the proceeds of the sale? He is a partner but he cannot claim the
proceeds of the sale.
(b) whether or not there was grave abuse of discretion on the part of the judge in granting lastrilla's
motion and ordering the delivery to him of the 17% of the properties.
ruling:
(a) In the situation it we can conclude that on June 9, 1951 when the sale was effected of the
properties of FELCO to Roberto Dorfe and Pepito Asturias, Lastilla was already a partner of FELCO. Now,
does Lastrilla have any proper claim to the proceeds of the sale? If he was a creditor of the FELCO,
perhaps or maybe. But he was not. The partner of a partnership is not a creditor of such partnership for
the amount of his shares. That is too elementary to need elaboration.
FROM FT:
Lastrilla's theory, and the lower court's seems to be: inasmuch as Lastrilla had acquired the shares of
Brown is September, 1949, i.e.,before the auction sale and he was not a party to the litigation, such
shares could not have been transferred to Dorfe and Austrilla.
Granting arguendothat the auction sale and not included the interest or portion of the FELCO properties
corresponding to the shares of Lastrilla in the same partnership (17%), the resulting situation would be
at most that the purchasers Dorfe and Austrias will have to recognized dominion of Lastrillas over
17 per cent of the properties awarded to them.2 So Lastrilla acquired no right to demand any part of
the money paid by Dorfe and Austrias to he sheriff any part of the money paid by Dorfe and Austrias to
the sheriff for the benefit of FELCO and Tomassi, the plaintiffs in that case, for the reason that, as he
says, his shares (acquired from Brown) could not have been and were not auctioned off to Dorfe and
Austrias.
Supposing however that Lastrillas shares have been actually (but unlawfully) sold by the sheriff (at the
instance of plaintiffs) to Dorfe and Austrias, what is his remedy? Section 15, Rule 39 furnishes the
answer.
Precisely, respondents argue, Lastrilla vindicated his claim by proper action, i.e.,motion in the case. We
ruled once that "action" in this section means action as defined in section 1, Rule 2.3 Anyway his
remedy is to claim "the property", not the proceeds of the sale, which the sheriff is directed by section
14, Rule 39 to deliver unto the judgment creditors.
In other words, the owner of property wrongfully sold may not voluntarily come to court, and insist, "I
approve the sale, therefore give me the proceeds because I am the owner". The reason is that the sale
was made for the judgment creditor (who paid for the fees and notices), and not for anybody else
(c) On this score the respondent judge's action on Lastrilla's motion should be declared as in excess of
jurisdiction, which even amounted to want of jurisdiction, considering specially that Dorfe and Austrias,
and the defendants themselves, had undoubtedly the right to be heardbut they were not
notified.4Varied interest of necessity make Dorfe, Asturias and the defendants indispensable parties to
the motion of Lastrilla.A valid judgment cannot be rendered where there is a want of necessary parties,
and a court cannot properly adjudicate matters involved in a suit when necessary and indispensable
parties to the proceedings are not before it. In view of the foregoing, it is our opinion, and we so hold,
that all orders of the respondents judge requiring delivery of 17 per cent of the proceeds of the auction
sale to respondent Olegario Lastrilla are null and void.
EVANGELISTA & CO. v. ABAD SANTOS
G.R. No. L-31684; June 28, 1973
Ponente: J. Makalintal
FACTS:
On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co." On
June 7, 1955 the Articles of Co-partnership were amended so as to include herein respondent,
Estrella Abad Santos, as industrial partner, with herein petitioners Domingo C. Evangelista, Jr.,
Leonarda Atienza Abad Santos and Conchita P. Navarro, the original capitalist partners, remaining
in that capacity, with a contribution of P17,500 each
Defendant: herein respondent filed suit against the three other partners, alleging that the
partnership,had been paying dividends to the partners except to her; and that notwithstanding her
demands the defendants had refused and continued to refuse to let her examine the partnership
books or to give her information regarding the partnership affairs or to pay her any share in the
dividends declared by the partnership
Petitioners: in their answer, they denied ever having declared dividends or distributed profits
of the partnership; denied likewise that the plaintiff ever demanded that she be allowed to examine
the partnership books; and by way of affirmative defense alleged that the amended Articles of Co-
partnership did not express the true agreement of the parties, which was that the plaintiff was not
an industrial partner; that she did not in fact contribute industry to the partnership.
ISSUE:
Whether Abad Santos is entitled to see the partnership books because she is an industrial partner in the
partnership YES
HELD:
Yes, Abad Santos is entitled to see the partnership books.
The Supreme Court ruled that according to
ART. 1299. Any partner shall have the right to a formal account as to partnership affairs:
(1)If he is wrongfully excluded from the partnership business or possession of its property by his co-
partners;
(2)If the right exists under the terms of any agreement;
(3)As provided by article 1807;
(4)Whenever other circumstances render it just and reasonable."
In the case at hand, the company is estopped from denying Abad Santos as an industrial partner
because it has been 8 years and the company never corrected their agreement in order to show
their true intentions. The company never bothered to correct those up until Abad Santos filed a
complaint.