Petition for Authority to Continue Use of the Firm

Name Sycip, Salazar, etc.and In the Matter of the

Petition for Authority to Continue Use of the Firm
NameOzaeta, Romulo, etc.
July 30, 1979
Melencio, Herrera, J.
Doctrine: Firm names, under our custom, identify the more
active and/or more senior members or partners of the law
firm. The possibility of deception upon the public, real or
consequential, where the name of a deceased partner
continues to be used cannot be ruled out. A person in
search of legal counsel might be guided by the familiar ring
of a distinguished name appearing in a firm title.
Background: Court advised a law firm in Cebu to desist
from including in their firm designation the name of C. D.
Johnston, who has long been dead. In another case, the
Court likewise questioned the law firm of Perkins & Ponce
Enrile and why the name of Perkins is still being used
although Atty. E. A. Perkins is already dead.
FACTS:
1. Two separate Petitions were filed by the surviving
partners of Atty. Alexander Sycip and the surviving
partners of Atty. Herminio Ozaeta, who died both
died, praying that they be allowed to continue using,
in the names of their firms, the names of partners
who had passed away.
2. Petitioners contend that:
a. Under the law, partnership is not prohibited from
continuing its business under a firm name which
includes the name of a deceased partner, citing
Art. 1840 CC
b. In other professions like accounting and
engineering, the legislature has authorized the
adoption of firm names without any restriction as
to the use of the name of a deceased partner
c. There is no transgression of Canon of Professional
Ethics

d. There is no possibility of imposition or deception

because the deaths of their respective deceased
partners were well-publicized in all newspapers of
general circulation.
e. No local custom prohibits the continued use of
such name in a professionals firm name and is
allowed by US Courts.
ISSUE:
WON the firms should be allowed continue using the name
of the deceased partners
HELD:
No. According to Art. 1815 CC, names in a firm name of a
partnership must either be those of living partners
and in the case of non-partners, should be living
persons who can be subjected to liability.
Article 1825 of the Civil Code prohibits a third person from
including his name in the firm name under pain of assuming
the liability of a partner. The heirs of a deceased partner in a
law firm cannot be held liable as the old members to the
creditors of a firm particularly where they are non-lawyers.
Accordingly, neither the widow nor the heirs can be held
liable for transactions entered into after the death of their
lawyer-predecessor. There being no benefits accruing, there
can be no corresponding liability.
The use of an old firm name can tend to create undue
advantages and disadvantages in the practice of the
profession.
Art. 1840, as cited by the petitioners, treats more of
a commercial partnership with a good will to protect
rather than of a professional partnership, with no
saleable good will but whose reputation depends on the
personal qualifications of its individual members.
A partnership for the practice of law cannot be likened to
partnerships formed by other professionals or for business.

For one thing, the law on accountancy specifically allows the

use of a trade name in connection with the practice of
accountancy.
Firm names, under our custom, identify the more
active and/or more senior members or partners of
the law firm. The possibility of deception upon the
public, real or consequential, where the name of a
deceased partner continues to be used cannot be
ruled out. A person in search of legal counsel might
be guided by the familiar ring of a distinguished
name appearing in a firm title.

Ortega v. CA
Gregorio Ortega, Tomas Del Castillo, Jr. and Benjamin
Bacorro, petitioners v.
Hon Court of Appeals, Securities and Exchange
Commission and Joaquin Misa, respondents
GR No. 109248
July 3, 1995
Vitug J.
Doctrines: 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. Anyone of the partners may at his sole pleasure
dictate dissolution of the partnership at will.
Nature: Petition for review on certiorari of a decision of the
Court of Appeals

Facts:

The law firm of ROSS, LAWRENCE, SELPH and

CARRASCOSO came from several amendments of its
articles of partnership and changes of firm name,
from BITO, MISA & LOZADA.
In 1980, Joaquin Misa, Jesus Bito and Mariano Lozada
associated themselves, together, as senior partners

with respondents-appellees Gregorio Ortega, Tomas

del Castillo and Benjamin Bacorro, as junior partners.
In 1988, Atty. Misa wrote a letter to respondentsappellees withdrawing and retiring from the firm and
requested a meeting with regards to the mechanics
of liquidation, and particularly, his interest in the two
floors of the building. He said the partnership has
ceased to be mutually satisfactory because of the
working conditions of the employees including the
assistant attorneys.
Atty. Misa filed with the Securities Investigation and
Clearing Department (SICD) of the Securities and
Exchange Commission (SEC) a petition for dissolution
and liquidation of partnership. An opposition was
filed by the respondents-appellees.
The hearing officer rendered a decision and ruled
that the withdrawal from the law firm Bito, Misa &
Lozada did not dissolve the said law partnership.
On appeal, the SEC en banc reversed the decision of
the Hearing Officer and held that the withdrawal of
Atty. Misa had dissolved the partnership, being a
partnership at will, the law firm could be dissolved by
any partner at anytime, such as by withdrawal
therefrom, regardless of good faith or bad faith, since
no partner can be forced to continue in the
partnership against his will.
During the pendency of the case with the Court of
Appeals, Attys. Bito and Lozada died (1991).
The CA affirmed in toto the SEC decision and held
that Atty. Misas withdrawal from the partnership had
changed the relation of the parties and inevitably
caused the dissolution of the partnership; that such
withdrawal was not in bad faith; and that the
liquidation should be to the extent of Atty. Misas
interest or participation.
SC affirmed the decision.

Issue: Did the withdrawal of Atty. Misa dissolved the

partnership? Yes.

Ruling:

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.
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.
Neither would the presence of a period for its specific
duration or the statement of a particular purpose for
its creation prevent the dissolution of any partnership
by an act or will of a partner.
The dissolution of a partnership is the change in the
relation of the parties caused by any partner ceasing
to be associated in the carrying on, as might be
distinguished from the winding up of, the business.
Upon its dissolution, the partnership continues and
its legal personality is retained until the complete
winding up of its business culminating in its
termination.
It would not be right to let any of the partners remain
in the partnership under such an atmosphere of
animosity.
Estanislao, Jr. Vs. Court of Appeals
April 27, 1988, Gancayco, J.
Doctrine: Evidence showing that there was in fact such
partnership agreement. There is no doubt that the parties
hereto formed a partnership when they bound themselves
to contribute money in a common fund with the intention of
dividing the profits among themselves.
Facts:
1. Petitioner and private respondents are brothers and
sisters who are co-owners of lots in Quezon City

which were then leased to the Shell Company of the

Philippines (Shell).
2. They agreed to open and operate a gas station,
Estanislao Shell Service Station with an inital
investment of P15,000.
3. Private respondents agreed to help their brotherpetitioner by allowing him to operate and manage
the gasoline station of the family. Remedios in
particular helped in co-managign the business with
his brother.
4. Parties herein entered into an Additional Cash Pledge
Agreement; P15,000 was reiterated as advance
rental which shall be deposited with shell to cover
advances of fuel to petitioner as dealer.
5. Petitioner submitted financial statements re the
operation of the business to the private respondents.
6. But, thereafter, petitioner failed to render
subsequent accounting. Hence, a demand was made
on petitioner to render an accounting of the profits.
7. Private respondents filed a complaint in CFI Rizal and
after trial, the complaint was dismissedruled in
favour of Estanislao, Jr.
8. Private respondents filed a MR, new judge was
appointed of the same branch; rendered another
decisionruled in favour of the respondents ordering
Estanislao, Jr. to render a formal accounting of the
business operation, pay respondents of their lawful
shares, pay their attorneys fees as well.
9. Estanislao, Jr. appealed to the CA.
10. CA rendered decision affirming in toto the decision of
the lower court in favour of the respondents and
against Estanislao, Jr.
11. Hence this petition for certiorari by Estanislao, Jr.
12. Estanislao, Jr. heavily relies on the provisions of the
two documents: joint affidavit and additional cash
pledge agreement. He contends that because of said
stipulation cancelling and superseding the previous
Joint affidavit, whatever partnership agreement there
was in the previous agreement had thereby been
abrogated.

Issue: Whether or not there was in fact such partnership

agreement between the parties?
Held: Yes, there was. This was attested by the testimonies of
private respondent Remedios Estanislao and Atty. Angeles.
Petitioner submitted to private respondents periodic
accounting of the business. He gave a written authority to
his sister Remedios to examine and audit the books of their
common business. Remedios assisted in running of the
business. There is no doubt that the parties formed a
partnership when they bound themselves to contribute
money to a common fund with the intention of dividing the
profits among themselves. Wherefore, the judgment
appealed from is affirmed in toto with costs against the
petitioner, Estanislao, Jr.
August 28, 1922
INVOLUNTARY INSOLVENCY OF CAMPOS RUEDA & CO.,
S. en C., appellee,
vs.
PACIFIC COMMERCIAL CO., ASIATIC PETROLEUM CO.,
and INTERNATIONAL BANKING
CORPORATION,petitioners-appellants.
Ponente: Romualdez, J.
FACTS
1) The appellants, Campos Rueda & Co. were indebted to
Pacific Commercial, Asiatic Petroleum Co. and International
Banking Corp. in an amount not less than P1000.
2) This amount was not paid and thirty days had passed
already when Campos Rueda filed an application for
involuntary insolvency.
3) The trial court denied the petition on the ground that IT
WAS NOT PROVEN that the members of Campos Rueda were
insolvent at the time the petition was filed. Since the
partners are personally liable for the consequences of the
transactions of the partnership, it cannot be adjudged
insolvent as long as the partners were not proven to be
insolvent. Thus, the petitioners (Campos Rueda) appealed to
the Supreme Court.

ISSUE
Whether or not a limited partnership, if after failing to fulfil
its financial obligation may be adjudged insolvent?
HELD
Yes. In the Philippines, a limited partnership, duly organized
in accordance with law, has a personality distinct from that
of its members. If it commits an act of bankruptcy (such as
failing to pay for more than thirty days its debts) it may be
adjudged insolvent on the petition of three of its members
EVEN THOUGH its members may not be insolvent.
Campos Rueda was declared insolvent and the decision of
the lower court was reversed. The case was remanded to
the CFI of Manila with the instruction that the court should
issue proper decrees and proceed therewith until its final
disposition.
(Note: the decision mentioned that the Philippine law is
different from the law of the United States, wherein
partnerships have no juridical personality separate from that
of its members).

Doctrine: A partnership, duly organized and registered

under the laws of the Philippines, is a legal entity
capable of suing and being sued in the company
name. In bringing an action against such a company,
it... is not necessary to make the partners composing
said company parties defendant.
Facts:
1. On Aug. 19, 1911, an action was begun by Chan
Hang Chiu against the plaintiff in this case as a
mercantile association duly organized under the laws
of the Philippines, to recover a sum of money.
2. The summons and complaint were placed in the
hands of the sheriff, delivering to and leaving with one
Jose Macapinlac personally true copies thereof, he
being the managing agent of said Vargas & Co. at the
time of such service.

3. On July 2, 1912, the justice's court rendered

judgment against Vargas & Co. for the sum of 372.28.
4. It is plaintiff's contention that Vargas & Co. being a
partnership, it is necessary, in bringing an action
against it, to serve the summons on all of the partners,
delivering to each one of them personally a copy
thereof; and that the summons in this case having
been served on the managing agent of the company
only, the service was of no effect as against the
company and the members thereof and the judgment
entered by virtue of such a service was void.
Issue: Whether or not it is indispensable in bringing an
action to a partnership to serve summons to all parties
thereof.
Held: Not indispensable.
Ratio:
1. It has been the universal practice in the Philippines
since American occupation, and was the practice prior
to that time, to treat companies of the class to which
the plaintiff belongs as legal or juridical entities and to
permit them to sue and be sued in the name of the
company, the summons being served solely on the
managing agent or other official of the company
specified by the section of the Code of Civil Procedure
referred to.
The plaintiff brought the action in the company name
and not in the name of the members of the firm.
Actions against companies of the class to which
plaintiff belongs are brought, according to the
uninterrupted practice, against such companies in
their company names and not against the individual
partners constituting the firm.
In case the individual members of the firm must be

separately served with process, the rule also prevails

that they must be parties to the action, either plaintiffs
or defendant, and that the action cannot be brought in
the name of or against the company itself.
2. If it is necessary to serve the partners individually,
they are entitled to be heard individually in the action
and they must, therefore, be made parties thereto so
that they can be heard. It would be idle to serve
process on individual members of a partnership if the
litigation were to be conducted in the name of the
partnership itself and by the duly constituted officials
of the partnership exclusively.
In this case, it is apparent that the plaintiff is acting
contrary to its own contention by bringing the action in
the name of the company. If not served with process,
then the action should be brought in the individual
names of the partners and not in the name of the
company itself.
G.R. No. 78133 October 18, 1988
MARIANO P. PASCUAL and RENATO P. DRAGON,
petitioners,
vs.
THE COMMISSIONER OF INTERNAL REVENUE and
COURT OF TAX APPEALS, respondents.
GANCAYCO, J.:
Doctrine: The sharing of returns does not in itself establish
a partnership whether or not the persons sharing therein
have a joint or common right or interest in the property.
There must be a clear intent to form a partnership, the
existence of a juridical personality different from the
individual partners, and the freedom of each party to
transfer or assign the whole property

FACTS:
1. Petitioners Pascual and Dragon bought several
parcels of land on years 1965 and 1970. After selling
the said lands, they realized net profits.
2. The corresponding capital gains taxes were paid by
petitioners in 1973 and 1974 by availing of the tax
amnesties granted in the said years.
3. (1979) The Acting BIR Commissioner Efren Plana
assessed petitioners and were required to pay a total
amount of P107,101.70 as alleged deficiency
corporate income taxes for the years 1968 and 1970.
4. Petitioners protested the said assessment in a letter
of June 26, 1979 asserting that they had availed of
tax amnesties way back in 1974.
5. Commissioner informed Pascual that:
a. In the years 1968 and 1970, they as co-owners in
the real estate transactions, formed an
unregistered partnership or joint venture taxable
as a corporation under the NIRC.
b. The unregistered partnership was subject to
corporate income tax as distinguished from
profits derived from the partnership by them
which is subject to individual income tax;
c. The availment of tax amnesty relieved petitioners
of their individual income tax liabilities but did
not relieve them from the tax liability of the
unregistered partnership. Hence, the petitioners
were required to pay the deficiency income tax
assessed.
6. CA affirmed CIR decision
(Evangelista case) unregistered partnership was in
fact formed by petitioners which like a corporation
was subject to corporate income tax distinct from
that imposed on the partners.
ISSUE:
WON petitioners formed an unregistered partnership subject
to corporate income tax (partnership or co-ownership)

HELD:
It was just co-ownership.
Article 1769 of the new Civil Code lays down the rule for
determining when a transaction should be deemed a
partnership or a co-ownership. Said article paragraphs 2 and
3, provides;
(2) Co-ownership or co-possession does not itself
establish a partnership, whether such
co-owners or copossessors do or do not share any profits made by the use
of the property;
(3) The sharing of gross returns does not of itself
establish a partnership, whether or not
the persons
sharing them have a joint or common right or interest in any
property from
which the returns are derived;
The sharing of returns does not in itself establish a
partnership whether or not the persons sharing
therein have a joint or common right or interest in
the property. There must be a clear intent to form a
partnership, the existence of a juridical personality
different from the individual partners, and the
freedom of each party to transfer or assign the whole
property.
In the present case, there is clear evidence of coownership between the petitioners. There is no
adequate basis to support the proposition that they thereby
formed an unregistered partnership. The two isolated
transactions where they purchased properties and
sold the same a few years thereafter did not make
them partners. They shared in the gross profits as coowners and paid their capital gains taxes on their net
profits and availed of the tax amnesty.
Under the circumstances, they cannot be considered
to have formed an unregistered partnership which is
thereby liable for corporate income tax, as the
respondent commissioner proposes.

And even assuming for the sake of argument that such

unregistered partnership appears to have been formed,
since there is no such existing unregistered partnership with
a distinct personality nor with assets that can be held liable
for said deficiency corporate income tax, then petitioners
can be held individually liable as partners for this unpaid
obligation of the partnership However, as petitioners have
availed of the benefits of tax amnesty as individual
taxpayers in these transactions, they are thereby relieved of
any further tax liability arising therefrom.