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On October 25, 1956, Pahamotang, Maglana and

EUFRACIO D. ROJAS, Plaintiff-Appellant,


Rojas executed a document entitled
vs. CONSTANCIO B. MAGLANA,Defendant-
"CONDITIONAL SALE OF INTEREST IN THE
Appellee.
PARTNERSHIP, EASTCOAST DEVELOPMENT
ENTERPRISE" (Exhibits "C" and "D") agreeing
among themselves that Maglana and Rojas shall
Facts:
purchase the interest, share and participation in
On January 14, 1955, Maglana and Rojas executed the Partnership of Pahamotang assessed in the
their Articles of Co-Partnership called Eastcoast amount of P31,501.12. It was also agreed in the
Development Enterprises (EDE) with only the two said instrument that after payment of the sum of
of them as partners. The partnership EDE with an P31,501.12 to Pahamotang including the amount
indefinite term of existence was duly registered. of loan secured by Pahamotang in favor of the
One of the purposes of the duly-registered partnership, the two (Maglana and Rojas) shall
partnership was to "apply or secure timber and/or become the owners of all equipment contributed by
minor forests products licenses and concessions Pahamotang and the EASTCOAST DEVELOPMENT
over public and/or private forest lands and to ENTERPRISES, the name also given to the second
operate, develop and promote such forests rights partnership, be dissolved. Pahamotang was paid in
and concessions." fun on August 31, 1957. No other rights and
obligations accrued in the name of the second
A duly registered Articles of Co-Partnership was
partnership (R.A. 921).
filed together with an application for a timber
concession covering the area located at Cateel and After the withdrawal of Pahamotang, the
Baganga, Davao with the Bureau of Forestry which partnership was continued by Maglana and Rojas
was approved and a timber license was duly issued without the benefit of any written agreement or
and became the basis of subsequent renewals reconstitution of their written Articles of
made for and in behalf of the duly registered Partnership (Decision, R.A. 948)
partnership EDE.
On January 28, 1957, Rojas entered into a
Under the said Articles of Co-Partnership, appellee management contract with another logging
Maglana shall manage the business affairs of the enterprise, the CMS Estate, Inc. He left and
partnership, including marketing and handling of abandoned the partnership (Decision, R.A. 947).
cash and is authorized to sign all papers and
On February 4, 1957, Rojas withdrew his
instruments relating to the partnership, while
equipment from the partnership for use in the
appellant Rojas shall be the logging superintendent
newly acquired area.
and shall manage the logging operations of the
partnership. It is also provided in the said articles The equipment withdrawn were his supposed
of co-partnership that all profits and losses of the contributions to the first partnership and was
partnership shall be divided share and share alike transferred to CMS Estate, Inc. by way of chattel
between the partners. mortgage (Decision, R.A. p. 948).
During the period from January 14, 1955 to April On March 17, 1957, Maglana wrote Rojas
30, 1956, there was no operation of said reminding the latter of his obligation to contribute,
partnership either in cash or in equipment, to the capital
investments of the partnership as well as his
Because of the difficulties encountered, Rojas and
obligation to perform his duties as logging
Maglana decided to avail of the services of
superintendent.
Pahamotang as industrial partner.
Two weeks after March 17, 1957, Rojas told
On March 4, 1956, Maglana, Rojas and Agustin
Maglana that he will not be able to comply with the
Pahamotang executed their Articles of Co-
promised contributions and he will not work as
Partnership under the firm name EASTCOAST
logging superintendent. Maglana then told Rojas
DEVELOPMENT ENTERPRISES (EDE). Aside from
that the latter's share will just be 20% of the net
the slight difference in the purpose of the second
profits. Such was the sharing from 1957 to 1959
partnership which is to hold and secure renewal of
without complaint or dispute.
timber license instead of to secure the license as in
the first partnership and the term of the second Meanwhile, Rojas took funds from the partnership
partnership is fixed to thirty (30) years, everything more than his contribution. Thus, in a letter dated
else is the same. February 21, 1961 Maglana notified Rojas that he
dissolved the partnership (R.A. 949).
The partnership formed by Maglana, Pahamotang
and Rojas started operation on May 1, 1956, and On April 7, 1961, Rojas filed an action before the
was able to ship logs and realize profits. An income Court of First Instance of Davao against Maglana
was derived from the proceeds of the logs in the for the recovery of properties, accounting,
sum of P643,633.07.
receivership and damages, Rojas' petition for and to the sharing profits between them of "share
appointment of a receiver was denied (R.A. 894). and share alike" as stipulated in the registered
Articles of Co-Partnership.
Upon motion of Rojas on May 23, 1961, Judge
Romero appointed commissioners to examine the
long and voluminous accounts of the Eastcoast
ISSUES: 1. The main issue in this case is the
Development Enterprises.
nature of the partnership and legal relationship of
The motion to dismiss the complaint filed by the Maglana-Rojas after Pahamotang retired from
Maglana on June 21, 1961 was denied by Judge the second partnership.
Romero for want of merit. Judge Romero also
2. whether or not Maglana can unilaterally dissolve
required the inclusion of the entire year 1961 in
the partnership
the report to be submitted by the commissioners.
Accordingly, the commissioners started examining RULING:
the records and supporting papers of the
1. After a careful study of the records as against
partnership as well as the information furnished
the conflicting claims of Rojas and Maglana, it
them by the parties, which were compiled in three
appears evident that it was not the intention of the
(3) volumes.
partners to dissolve the first partnership, upon the
On May 11, 1964, Maglana filed his motion for constitution of the second one, which they
leave of court to amend his answer with unmistakably called an "Additional Agreement".
counterclaim, attaching thereto the amended Except for the fact that they took in one industrial
answer (Ibid., pp. 26-336), which was granted on partner; gave him an equal share in the profits and
May 22, 1964qhich was approved. fixed the term of the second partnership to thirty
(30) years, everything else was the same. Thus,
On June 29, 1965, Rojas filed his motion for
they adopted the same name, EASTCOAST
reconsideration but it was denied.
DEVELOPMENT ENTERPRISES, they pursued the
RTC: The lower court is of the view that the second same purposes and the capital contributions of
partnership superseded the first, so that when the Rojas and Maglana as stipulated in both
second partnership was dissolved there was no partnerships call for the same amounts. Just as
written contract of co-partnership; there was no important is the fact that all subsequent renewals
reconstitution as provided for in the Maglana, of Timber License No. 35-36 were secured in favor
Rojas and Pahamotang partnership contract. of the First Partnership, the original licensee. To all
Hence, the partnership which was carried on by intents and purposes therefore, the First Articles of
Rojas and Maglana after the dissolution of the Partnership were only amended, in the form of
second partnership was a de facto partnership and Supplementary Articles of Co-Partnership which
at will. It was considered as a partnership at will was never registered. Otherwise stated, even
because there was no term, express or implied; no during the existence of the second partnership, all
period was fixed, expressly or impliedly business transactions were carried out under the
duly registered articles. As found by the trial court,
On the other hand, Rojas insists that the
it is an admitted fact that even up to now, there
registered partnership under the firm name of
are still subsisting obligations and contracts of the
Eastcoast Development Enterprises (EDE)
latter. No rights and obligations accrued in the
evidenced by the Articles of Co-Partnership dated
name of the second partnership except in favor of
has not been novated, superseded and/or
Pahamotang which was fully paid by the duly
dissolved by the unregistered articles of co-
registered partnership.
partnership among appellant Rojas, appellee
Maglana and Agustin Pahamotang, and On the other hand, there is no dispute that the
accordingly, the terms and stipulations of said second partnership was dissolved by common
registered Articles of Co-Partnership should govern consent. Said dissolution did not affect the first
the relations between him and Maglana. Upon partnership which continued to exist. Significantly,
withdrawal of Agustin Pahamotang from the Maglana and Rojas agreed to purchase the
unregistered partnership, the legally constituted interest, share and participation in the second
partnership EDE continues to govern the relations partnership of Pahamotang and that thereafter, the
between them and it was legal error to consider a two (Maglana and Rojas) became the owners of
de facto partnership between said two partners or equipment contributed by Pahamotang. Even more
a partnership at will. Hence, the letter of appellee convincing, is the fact that Maglana, wrote Rojas,
Maglana dated, did not legally dissolve the reminding the latter of his obligation to contribute
registered partnership between them, being in either in cash or in equipment, to the capital
contravention of the partnership agreement agreed investment of the partnership as well as his
upon and stipulated in their Articles of Co- obligation to perform his duties as logging
Partnership. Rather, appellant is entitled to the superintendent. This reminder cannot refer to any
rights enumerated in Article 1837 of the Civil Code other but to the provisions of the duly registered
Articles of Co-Partnership. As earlier stated, Rojas connections as a marketer. They agreed
replied that he will not be able to comply with the further that Anay shall receive the following:
promised contributions and he will not work as
logging superintendent. By such statements, it is 10% share of annual net profits
obvious that Roxas understood what Maglana was
referring to and left no room for doubt that both 6% overriding commission for weekly sales
considered themselves governed by the articles of
the duly registered partnership. 30% of sales Anay will make herself
Under the circumstances, the relationship of Rojas 2% share for her demo services
and Maglana after the withdrawal of Pahamotang
can neither be considered as a De Facto They operated under the name Geminesse
Partnership, nor a Partnership at Will, for as Enterprise, this name was however registered
stressed, there is an existing partnership, duly
as a sole proprietorship with the Bureau of
registered.
Domestic Trade under Tocao. The joint
2. As to the question of whether or not Maglana venture agreement was not reduced to writing
can unilaterally dissolve the partnership in the
because Anay trusted Belo’s assurances.
case at bar, the answer is in the affirmative.
Hence, as there are only two parties when Maglana The venture succeeded under Anay’s
notified Rojas that he dissolved the partnership, it marketing prowess.
is in effect a notice of withdrawal.
But then the relationship between Anay and
Under Article 1830, par. 2 of the Civil Code, even if
there is a specified term, one partner can cause its Tocao soured. One day, Tocao advised one of
dissolution by expressly withdrawing even before the branch managers that Anay was no longer
the expiration of the period, with or without a part of the company. Anay then demanded
justifiable cause. Of course, if the cause is not that the company be audited and her shares
justified or no cause was given, the withdrawing be given to her.
partner is liable for damages but in no case can he
be compelled to remain in the firm. With his ISSUE: Whether or not there is a partnership.
withdrawal, the number of members is decreased,
hence, the dissolution. And in whatever way he HELD: Yes, even though it was not reduced to
may view the situation, the conclusion is inevitable writing, for a partnership can be instituted in
that Rojas and Maglana shall be guided in the
any form. The fact that it was registered as a
liquidation of the partnership by the provisions of
its duly registered Articles of Co-Partnership; that sole proprietorship is of no moment for such
is, all profits and losses of the partnership shall be registration was only for the company’s trade
divided "share and share alike" between the name.
partners.
Anay was not even an employee because when
But an accounting must first be made and which
in fact was ordered by the trial court and they ventured into the agreement, they
accomplished by the commissioners appointed for explicitly agreed to profit sharing this is even
the purpose. though Anay was receiving commissions
because this is only incidental to her efforts as
a head marketer.
Tocao vs CA
The Supreme Court also noted that a partner
Facts: who is excluded wrongfully from a partnership
William Belo introduced Nenita Anay to his is an innocent partner. Hence, the guilty
girlfriend, Marjorie Tocao. The three agreed to partner must give him his due upon the
form a joint venture for the sale of cooking dissolution of the partnership as well as
wares. Belo was to contribute P2.5 million; damages or share in the profits “realized from
Tocao also contributed some cash and she the appropriation of the partnership business
shall also act as president and general and goodwill.” An innocent partner thus
manager; and Anay shall be in charge of possesses “pecuniary interest in every existing
marketing. Belo and Tocao specifically asked contract that was incomplete and in the trade
Anay because of her experience and name of the co-partnership and assets at the
time he was wrongfully expelled.”
of lands planted to sugar cane and commercial lots
in the business district of Bacolod City.
An unjustified dissolution by a partner can
subject him to action for damages because by Sometime during the lifetime of all the partners,
the mutual agency that arises in a Keng Sian brought an action (Civil Case No.
partnership, the doctrine of delectus personae 13388), against the partnership as well as against
allows the partners to have the power, the individual partners for accounting of all the
although not necessarily the right to dissolve properties allegedly owned in common by Sy Yong
the partnership. Hu and the plaintiff (Keng Sian), and for the
delivery or reconveyance of her one-half (1/2)
Tocao’s unilateral exclusion of Anay from the share in said properties and in the fruits thereof.
partnership is shown by her memo to the Keng Sian averred that she was the common law
Cubao office plainly stating that Anay was, as wife of partner Sy Yong Hu, that Sy Yong Hu,
of October 9, 1987, no longer the vice- together with his children,8 who were partners in
the partnership, connived to deprive her of her
president for sales of Geminesse Enterprise.
share in the properties acquired during her
By that memo, petitioner Tocao effected her
cohabitation with Sy Yong Hu, by diverting such
own withdrawal from the partnership and properties to the partnership.
considered herself as having ceased to be
associated with the partnership in the Defendants countered that Keng Sian is only a
carrying on of the business. Nevertheless, the house helper of Sy Yong Hu and his wife, subject
properties "are exclusively owned by defendant
partnership was not terminated thereby; it
partnership, and plaintiff has absolutely no right to
continues until the winding up of the
or interest therein."10
business.
During the pendency of said civil case, Marciano
NOTE: Motion for Reconsideration filed by Sy filed a petition for declaratory relief (SEC Case
Tocao and Belo decided by the SC on No. 1648) against partners Vicente Sy, Jesus Sy
September 20, 2001. and Jayme Sy, praying that he be appointed
managing partner of the partnership, to replace
Belo is not a partner. Anay was not able to Jose Sy who died. Answering the petition, Vicente
prove that Belo in fact received profits from Sy, Jesus Sy and Jaime Sy, who claim to represent
the company. Belo merely acted as a the majority interest in the partnership, sought the
guarantor. His participation in the business dissolution of the partnership and the appointment
meetings was not as a partner but as a of Vicente Sy as managing partner. In due time,
guarantor. He in fact had only limited Hearing Officer Sison came out with a
partnership. Tocao also testified that Belo decision11 dismissing the petition, dissolving the
received nothing from the profits. The partnership and naming Jesus Sy, in lieu of
Vicente Sy who had died earlier, as the managing
Supreme Court also noted that the
partner in charge of winding the affairs of the
partnership was yet to be registered in the
partnership.
Securities and Exchange Commission. As
such, it was understandable that Belo, who The Sison decision was affirmed in toto by the
was after all petitioner Tocao’s good friend and SEC en banc in a decision
confidante, would occasionally participate in In 1982, the children of Keng Sian with Sy Yong
the affairs of the business, although never in a Hu, filed a petition, to revoke the certificate of
formal or official capacity. registration of Sy Yong Hu & Sons, and to have its
assets reverted to the estate of the late Sy Yong
SY VS CA
Hu. After hearings, the petition was dismissed by
FACTS: Hearing Officer Espejo in an Order, which Order
became final since no appeal was taken therefrom.
Sy Yong Hu & Sons is a partnership of Sy Yong Hu In the meantime, Branch 43 of the Regional Trial
and his 6 sons registered with the SEC with Jose Court of Negros Occidental appointed one Felix
Sy as managing partner.Partners Sy Yong Hu, Jose Ferrer as a Special Administrator for the Intestate
Sy, Vicente Sy, and Marciano Sy died. At present, Estate of Sy Yong Then, Alex Ferrer moved to
the partnership has valuable assets such as tracts intervene in the proceedings in SEC Case No.
1648, for the partition and distribution of the (1) WON lacing the partnership under a
partnership assets, on behalf of the respondent receivership committee was erroneous and
Intestate Estate. tainted with excess of jurisdiction.

Special Administrator Ferrer adopted the theory of (2) WON the appointment of a receivership
Keng Sian that the assets of the partnership belong committee is valid.
to Keng Sian and Sy Yong Hu (now represented by
the Estate of Sy Yong Hu) in co-ownership, which HELD: (1) NO, Petitioners fail to recognize the
assets were wrongfully diverted in favor of the basic distinctions underlying the principles of
defendants. dissolution, winding up and partition or
distribution. The dissolution of a partnership is the
The motion to intervene in was denied by Hearing change in the relation of the parties caused by any
Officer Sison. Private respondent Intestate Estate partner ceasing to be associated in the carrying on,
of Sy Yong Hu appealed to the Commission en as might be distinguished from the winding up, of
banc. its business. Upon its dissolution, the partnership
continues and its legal personality is retained until
In its decision (Sulit decision) the SEC en the complete winding up of its business
banc18 ruled: Reversing the decision in SEC Case culminating in its termination.46
No. 1648. instant case is hereby remanded to the
hearing officer below for further proceeding on the The dissolution of the partnership did not mean
aspect of partition and/or distribution of that the juridical entity was immediately
partnership assets. terminated and that the distribution of the assets
to its partners should perfunctorily follow. On the
During the continuation of the proceedings in SEC contrary, the dissolution simply effected a change
Case No. 1648, now presided over by Hearing in the relationship among the partners. The
Officer Felipe S. Tongco who had substituted partnership, although dissolved, continues to exist
Hearing Officer Sison, the propriety of placing the until its termination, at which time the winding up
Partnership under receivership was taken up. The of its affairs should have been completed and the
parties brought to the attention of the Hearing net partnership assets are partitioned and
Officer the fact of existence of Civil Case No. 13388 distributed to the partners.
pending before the Regional Trial Court of Negros
Occidental. They also agreed that during the The Abello Decision though, indeed, final and
pendency of the aforesaid court case, there will be executory, did not pose any obstacle to the Hearing
no disposition of the partnership assets. Hearing Officer to issue orders not inconsistent therewith.
Officer Tongco came out with an Order From the time a dissolution is ordered until the
incorporating the above submissions of the parties actual termination of the partnership, the SEC
and placing the partnership under a receivership retained jurisdiction to adjudicate all incidents
committee, explaining that "it is the most equitable relative thereto. Thus, the disputed order placing
fair and just manner to preserve the assets of the the partnership under a receivership committee
partnership during the pendency of the civil case cannot be said to have varied the final order of
in the Regional Trial Court of Bacolod City." dissolution. Neither did it suspend the dissolution
of the partnership. If at all, it only suspended the
On October 22, 1988, a joint Notice of Appeal to partition and distribution of the partnership
the SEC en banc was filed by herein by the assets
children of Sy Yong Hu against the Intervenor. In
an order, the SEC en banc24 affirmed the Tongco Furthermore, having agreed with the respondents
Order. not to dispose of the partnership assets, petitioners
effectively consented to the suspension of the
On January 15, 1990, the Court of Appeals winding up or, more specifically, the partition and
granted the petition and set aside the Tongco and distribution of subject assets. Petitioners are now
Lopez Orders but later on reversing its Decision estopped from questioning the order of the Hearing
remanding the case to the SEC for the formation of Officer issued in accordance with the said
a receivership committee, as envisioned in the agreement
Tongco Order.

ISSUE:
(2) YES, Petitioners also assail the propriety of the FACTS: Primelink Properties and Development
receivership theorizing that there was no necessity Corporation (Primelink for brevity) is a domestic
therefor, and that such remedy should be granted corporation engaged in real estate development. In
only in extreme cases, with respondent being duty- 1994, Primelink Properties and the Lazatin siblings
bound to adduce evidence of the grave and entered into a joint venture agreement for the
irremediable loss or damage which it would suffer development of a property into a residential
if the same was not granted. It is further theorized subdivision to be known as "Tagaytay Garden
that, at any rate, the rights of respondent Intestate Villas." Under the JVA, the Lazatin siblings obliged
Estate are adequately protected since notices of lis themselves to contribute two parcels of land as
pendens of the aforesaid civil case have been their share in the joint venture. For its part,
annotated on the real properties of the partnership Primelink undertook to contribute money, labor,
personnel, machineries, equipment, contractor’s
A review of the records reveal that certain pool, marketing activities, managerial expertise
properties in question have already been sold and other needed resources to develop the property
executed by Jesus. To ensure that no further and construct therein the units for sale to the
disposition shall be made of the questioned assets public. The Lazatins agreed to subject the title over
and in view of the pending civil case in the lower the subject property to an escrow agreement.
court, there is a compelling necessity to place all Conformably with the escrow agreement, the
these properties and assets under the management owner’s duplicate of the title was deposited with
of a receivership committee. the China Banking Corporation.11 However,
Receivership, which is admittedly a harsh remedy, Primelink failed to immediately secure a
should be granted with extreme caution.52 Sound Development Permit from Tagaytay City, and
bases therefor must appear on record, and there applied the permit only on August 30, 1995. On
should be a clear showing of its necessity. 53 The October 12, 1995, the City issued a Development
need for a receivership in the case under Permit to Primelink. For 4 years however,
consideration can be gleaned from the aforecited Primelink failed to develop the said land. So in
disquisition by the Court of Appeals finding that 1998, the Lazatins filed a complaint to rescind the
the properties of the partnership were in danger of joint venture agreement with prayer for preliminary
being damaged or lost on account of certain acts of injunction. In said case, Primelink was declared in
the appointed manager in liquidation. default or failing to file an answer and for asking
multiple motions for extension. The trial court
The dispositions of certain properties by the said eventually ruled in favor of the Lazatins and it
manager, on the basis of an order of partial ordered Primelink to return the possession of said
partition, dated December 2, 1986, by Hearing land to the Lazatins as well as some improvements
Officer Sison, which was not yet final and which Primelink had so far over the property
executory, indicated that the feared irreparable without the Lazatins paying for said improvements.
injury to the properties of the partnership might This decision was affirmed by the Court of Appeals.
happen again. So also, the failure of the manager Primelink is now assailing the order; that turning
in liquidation to submit to the SEC an accounting over improvements to the Lazatins without
of all the partnership assets as required in its reimbursement is unjust; that the Lazatins did not
order of April 29, 1988, justified the SEC in placing ask the properties to be placed under their
the subject assets under receivership. possession but they merely asked for rescission.
Moreover, it has been held by this Court that an ISSUES: 1. whether respondents are entitled to the
order placing the partnership under receivership so possession of the parcels of land covered by the
as to wind up its affairs in an orderly manner and JVA and the improvements thereon introduced by
to protect the interest of the plaintiff (herein private petitioners as their contribution to the JVA;
respondent) was not tainted with grave abuse of
discretion. The allegation that respondents' rights 2. whether petitioners are entitled to
are adequately protected by the notices of lis reimbursement for the value of the improvements
pendens in Civil Case 903 is inaccurate. on the parcels of land.

HELD:

1. Yes.

Primelink Properties and Development Corp vs. We agree with petitioners that respondents did not
Lazatin-Magat specifically pray in their complaint below that
possession of the improvements on the parcels of affairs or to complete transactions begun but not
land which they contributed to the JVA be yet finished.55 On dissolution, the partnership is
transferred to them. Respondents made a specific not terminated but continues until the winding up
prayer in their complaint that, upon the rescission of partnership affairs is completed.56 Winding up
of the JVA, they be placed in possession of the means the administration of the assets of the
parcels of land subject of the agreement, and for partnership for the purpose of terminating the
other "reliefs and such other remedies as are just business and discharging the obligations of the
and equitable in the premises." However, the trial partnership.
court was not precluded from awarding possession
of the improvements on the parcels of land to The transfer of the possession of the parcels of
respondents in its decision. Section 2(c), Rule 7 of land and the improvements thereon to respondents
the Rules of Court provides that a pleading shall was only for a specific purpose: the winding up of
specify the relief sought but it may add as general partnership affairs, and the partition and
prayer for such further or other relief as may be distribution of the net partnership assets as
deemed just and equitable. Even without the provided by law.57 After all, Article 1836 of the New
prayer for a specific remedy, proper relief may be Civil Code provides that unless otherwise agreed by
granted by the court if the facts alleged in the the parties in their JVA, respondents have the
complaint and the evidence introduced so right to wind up the partnership affairs:
warrant.50 The court shall grant relief warranted by Art. 1836. Unless otherwise agreed, the partners
the allegations and the proof even if no such relief who have not wrongfully dissolved the partnership
is prayed for.51 The prayer in the complaint for or the legal representative of the last surviving
other reliefs equitable and just in the premises partner, not insolvent, has the right to wind up the
justifies the grant of a relief not otherwise partnership affairs, provided, however, that any
specifically prayed for.52 partner, his legal representative or his assignee,
The trial court was not proscribed from placing upon cause shown, may obtain winding up by the
respondents in possession of the parcels of land court.
and the improvements on the said parcels of land. It must be stressed, too, that although respondents
It bears stressing that the parcels of land, as well acquired possession of the lands and the
as the improvements made thereon, were improvements thereon, the said lands and
contributed by the parties to the joint venture improvements remained partnership property,
under the JVA, hence, formed part of the assets of subject to the rights and obligations of the parties,
the joint venture.53 The trial court declared that inter se, of the creditors and of third parties under
respondents were entitled to the possession not Articles 1837 and 1838 of the New Civil Code, and
only of the parcels of land but also of the subject to the outcome of the settlement of the
improvements thereon as a consequence of its accounts between the parties as provided in Article
finding that petitioners breached their agreement 1839 of the New Civil Code, absent any agreement
and defrauded respondents of the net income of the parties in their JVA to the contrary.58 Until
under the JVA. the partnership accounts are determined, it cannot
2. No. be ascertained how much any of the parties is
entitled to, if at all.
We agree with the CA ruling that petitioner
Primelink and respondents entered into a joint It was thus premature for petitioner Primelink to
venture as evidenced by their JVA which, under be demanding that it be indemnified for the value
the Court’s ruling in Aurbach, is a form of of the improvements on the parcels of land owned
partnership, and as such is to be governed by the by the joint venture/partnership. Notably, the JVA
laws on partnership. of the parties does not contain any provision
designating any party to wind up the affairs of the
When the RTC rescinded the JVA on complaint of partnership.
respondents based on the evidence on record that
petitioners willfully and persistently committed a Guidote vs Borja
breach of the JVA, the court thereby
FACTS
dissolved/cancelled the partnership.54With the
rescission of the JVA on account of petitioners’ Maximo Guidote and Narciso Santos formed in
fraudulent acts, all authority of any partner to act 1918 a partnership business under the name
for the partnership is terminated except so far as of “Taller Sinukuan,” in which Santos was the
may be necessary to wind up the partnership
capitalist partner and Guidote was the In order to contradict the conclusions of the
industrial partner. Santos died in 1920. two public accountants, Guidote presented
Guidote failed to liquidate the affairs of the Tomas Alfonso and the bookkeeper, Pio
partnership and to render an account thereof Gaudier, as witnesses. The trial court judge
to Borja, the administratrix of Santos’ estate. said that the testimonies of these witnesses
are unreliable.
Guidote brought an action against Borja to
recover a sum of money [9k~], a part of which Tomas Alfonso is the same public accountant
was alleged to be the net profits from the who filed the liquidation Exhibit O on behalf of
business due Guidote, and the rest of the sum Guidote, in relation to the partnership
consisting of advances allegedly made by business, which liquidation was disapproved
Guidote. Borja admitted the partnership’s by this court in a decision. The judge did not
existence and prayed that Guidote be ordered believe Alfonso’s proposition that Guidote, a
to render an accounting and to pay the estate mere industrial partner, notwithstanding his
25k as net profits, credits, and property having received 21k on the various jobs and
pertaining to Santos. contracts of the business had actually
expended and paid out 63k, of 44k in excess
Guidote called several witnesses and
of the gross receipts of the business. It
introduced a so-called accounting and a mass
materially contradicts Guidote’s allegations to
of documentary evidence, which was so
the effect that the advances that he [Guidote]
hopelessly and inextricably confused that the
made amounted only to 2k.
court could not consider it of much probative
value. The court dismissed Guidote’s Pio Gaudier is the same bookkeeper who
complaint and absolved Borja. Guidote was prepared three entirely separate and distinct
ordered to render a full and complete liquidation for the same partnership business,
accounting, verified by vouchers, of the and the court found that the testimony given
partnership business. by him at the last hearing is confusing,
contradictory and unreliable.
Guidote rendered an account prepared by one
Tomas Alfonso, a public accountant. Other witnesses were given scant
Numerous objections were presented by Borja. consideration—Chua Chak can neither read
The court disapproved the account and nor write English, Spanish, or Tagalog; Claro
ordered that Borja submit an accounting from Reyes was forced to admit that a certain
the date of the commencement of the exhibit was not the original.
partnership up to the time the business was
The court gave credence to the conclusions
closed.
reached by the public accountants presented
Borja presented an account and liquidation by Borja. Guidote was ordered to pay P26k to
prepared by a public accountant, Santiago A. Borja, with legal interest, plus costs.
Lindaya, showing a balance of P29k~ in
Borja’s [Santos’ estate] favor. At the hearing,
Borja introduced the public accountant Jose ISSUE : WON the trial court is correct in
Turiano Santiago to testify as to the results of ordering Guidote to pay P26k to Borja. YES
an audit made by him of the partnership
accounts. Santiago testified that he had
prepared a separate accounting or liquidation HELD:
similar in results to that prepared by Lindaya,
but with a few differences in the sums total. There may be some merit in Guidote’s
[Computation: Santos is a creditor of the contention that the dismissal of his complaint
Taller Sinukuan in the sum of P26k. Guidote was premature. The better practice would
is a debtor to the Taller Sinukuan in the sum been to let the complaint stand until the
of P20k.] result of the liquidation of the partnership
affairs was known. But under the
circumstances, no harm was done by the FACTS: Benjamin Yu was formerly the Assistant
dismissal of Guidote’s complaint. Gen. Manager of the marble quarrying and export
business operated by a registered partnership with
the firm name of "Jade Mountain Products
Company Limited. The partnership had its main
GUIDOTE’S ARGUMENT office in Makati.
Since Santos, up to the time of his death, According to petitioner Yu he actually received only
generally took care of the partnership’s half of his stipulated monthly salary, since he had
payments and collections, his legal accepted the promise of the partners that the
representatives were under the obligation to balance would be paid when the firm shall have
render accounts of the operations, secured additional operating funds from abroad.
notwithstanding the fact that Guidote was in Yu actually managed the operations and finances
charge of the business subsequent to the of the business.
death of Santos. Sometime without the knowledge of Yu, the general
partners sold and transferred their interests in the
GUIDOTE’S ARGUMENT IS UNAVAILING
partnership to private respondent Willy Co and to
Wahl v. Donaldson Sim & Co. one Emmanuel Zapanta. Mr. Yu Chang, a limited
partner, also sold and transferred his interest in
The death of one of the partners dissolves the the partnership to Willy Co. Between Mr.
partnership, but that the liquidation of its Emmanuel Zapanta and himself, private
affairs is by law entrusted, not to the respondent Willy Co acquired the great bulk of the
executors of the deceased partner, but to the partnership interest. The partnership now
constituted solely by Willy Co and Emmanuel
surviving partners or the liquidators
Zapanta continued to use the old firm name of
appointed by them.
Jade Mountain, though they moved the firm's main
The rule for the conduct of a surviving partner office from Makati to Mandaluyong. The actual
operations of the business enterprise continued as
In equity, surviving partners are treated as before. All the employees of the partnership
trustees of the representatives of the deceased continued working in the business, all, save
partner, with regard to the interest of the petitioner Benjamin Yu as it turned out.
deceased partner in the firm. As a Having learned of the transfer of the firm's main
consequence of this trusteeship, surviving office from Makati to Mandaluyong, Yu reported to
partners are held in their dealings with the the Mandaluyong office for work and there met
firm assets and the representatives of the private respondent Willy Co for the first time.
deceased to that nicety of dealing and that Petitioner was informed by Willy Co that the latter
strictness of accountability required of and had bought the business from the original partners
incident to the position of one occupying a and that it was for him to decide whether or not he
confidential relation. It is the duty of surviving was responsible for the obligations of the old
partnership, including petitioner's unpaid salaries.
partners to render an account of the
Petitioner was in fact not allowed to work anymore
performance of their trust to the personal
in the Jade Mountain business enterprise. His
representatives of the deceased partner, and unpaid salaries remained unpaid.3
to pay over to them the share of such
deceased member in the surplus of firm Benjamin Yu filed a complaint for illegal dismissal
property, whether it consists of real or and recovery of unpaid salaries against Jade
Mountain, Mr. Willy Co and the other private
personal assets.
respondents. The partnership and Willy Co denied
Guidote failed to observe this rule, and he is petitioner's charges, contending in the main that
not in position to complain if his testimony Benjamin Yu was never hired as an employee by
and that of his witnesses is discredited. the present or new partnership.

In due time, Labor Arbiter De Castro rendered a


The appealed judgment is AFFIRMED.
decision holding that petitioner had been illegally
YU VS. NLRC dismissed. On appeal, ("NLRC") reversed the
decision of the Labor Arbiter and dismissed
petitioner's complaint.The NLRC held that a new In the case at bar, just about all of the partners
partnership consisting of Mr. Willy Co and Mr. had sold their partnership interests (amounting to
Emmanuel Zapanta had bought the Jade 82% of the total partnership interest) to Mr. Willy
Mountain business, that the new partnership had Co and Emmanuel Zapanta. The record does not
not retained petitioner Yu in his original position show what happened to the remaining 18% of the
as Assistant General Manager, and that there was original partnership interest. The acquisition of
no law requiring the new partnership to absorb the 82% of the partnership interest by new partners,
employees of the old partnership. Benjamin Yu, coupled with the retirement or withdrawal of the
therefore, had not been illegally dismissed by the partners who had originally owned such 82%
new partnership which had simply declined to interest, was enough to constitute a new
retain him in his former managerial position or any partnership.
other position. Finally, the NLRC held that
Benjamin Yu's claim for unpaid wages should be
asserted against the original members of the (2)YES, the new partnership itself which continued
preceding partnership, but these though impleaded the business of the old, dissolved, one, are liable
had, apparently, not been served with summons in for the debts of the preceding partnership. The
the proceedings before the Labor Arbiter liability of the new partnership, is established in
Petitioner Benjamin Yu is now before the Court on Article 1840 of the Civil Code. it is important to
a Petition for Certiorari, asking us to set aside and underscore the fact that the business of the old
annul the Resolution of the NLRC as a product of partnership was simply continued by the new
grave abuse of discretion amounting to lack or partners, without the old partnership undergoing
excess of jurisdiction. the procedures relating to dissolution and winding
up of its business affairs. In other words, the new
The basic contention of petitioner is that the NLRC partnership simply took over the business
has overlooked the principle that a partnership has enterprise owned by the preceeding partnership,
a juridical personality separate and distinct from and continued using the old name of Jade
that of each of its members. Such independent Mountain Products Company Limited, without
legal personality subsists, petitioner claims, winding up the business affairs of the old
notwithstanding changes in the identities of the partnership, paying off its debts, liquidating and
partners. Consequently, the employment contract distributing its net assets, and then re-assembling
between Benjamin Yu and the partnership Jade the said assets or most of them and opening a new
Mountain could not have been affected by changes business enterprise.
in the latter's membership.

ISSUE:

(1) WON the partnership which had hired


petitioner Yu as Assistant General Manager had It is, clear to the Court that Benjamin Yu is
been extinguished and replaced by a new entitled to enforce his claim for unpaid salaries, as
partnerships composed of Willy Co and well as other claims relating to his employment
Emmanuel Zapanta. with the previous partnership, against the new
Jade Mountain.

The new partnership was entitled to appoint and


(2) WON petitioner Yu could nonetheless assert hire a new general or assistant general manager to
his rights under his employment contract as run the affairs of the business enterprise take over.
against the new partnership. An assistant general manager belongs to the most
senior ranks of management and a new
partnership is entitled to appoint a top manager of
HELD:(1)YES, Art. 1828. The dissolution of a its own choice and confidence. The non-retention
partnership is the change in the relation of the of Benjamin Yu as Assistant General Manager did
partners caused by any partner ceasing to be not therefore constitute unlawful termination, or
associated in the carrying on as distinguished from termination without just or authorized cause. We
the winding up of the business. think that the precise authorized cause for
termination in the case at bar
was redundancy. The new partnership had its own
new General Manager, apparently Mr. Willy Co, the
principal new owner himself, who personally ran
the business of Jade Mountain. Benjamin Yu's old judge first granted the motion, but, subsequently,
position as Assistant General Manager thus on opposition being renewed, denied it. It is from
became superfluous or redundant. 11It follows that this last order that an appeal was taken in
petitioner Benjamin Yu is entitled to separation accordance with section 82 of the Insolvency Law.
pay at the rate of one month's pay for each year of
service that he had rendered to the old ISSUE: WON the partnership contract created a
partnership, a fraction of at least six (6) months limited partnership.
being considered as a whole year. RULING: NO
While the new Jade Mountain was entitled to To establish a limited partnership there must be,
decline to retain petitioner Yu in its employ, we at least, one general partner and the name of the
consider that Yu was very shabbily treated by the least one of the general partners must appear in
new partnership. The old partnership certainly the firm name. (Code of Commerce, arts. 122 [2],
benefitted from the services of Benjamin Yu who, 146, 148.) But neither of these requirements have
previously ran the whole marble quarrying, been fulfilled. The general rule is, that those who
processing and exporting enterprise. His work seek to avail themselves of the protection of laws
constituted value-added to the business itself and permitting the creation of limited partnerships
therefore, the new partnership similarly benefitted must show a substantially full compliance with
from the labors of Benjamin Yu. It is worthy of note such laws. A limited partnership that has not
that the new partnership did not try to suggest complied with the law of its creation is not
that there was any cause consisting of some considered a limited partnership at all, but a
blameworthy act or omission on the part of Mr. Yu general partnership in which all the members are
which compelled the new partnership to terminate liable.
his services. Nonetheless, the new Jade Mountain
did not notify him of the change in ownership of Article 125 of the Code of Commerce provides that
the business, the relocation of the main office of the articles of general copartnership must estate
Jade Mountain from Makati to Mandaluyong and the names, surnames, and domiciles of the
the assumption by Mr. Willy Co of control of partners; the firm name; the names, and surnames
operations. The treatment accorded to Yu was so of the partners to whom the management of the
summary and cavalier as to amount to arbitrary, firm and the use of its signature is instrusted; the
bad faith treatment, for which the new Jade capital which each partner contributes in cash,
Mountain may legitimately be required to respond credits, or property, stating the value given the
by paying moral damages. latter or the basis on which their appraisement is
to be made; the duration of the copartnership; and
In addition, we consider that petitioner Benjamin the amounts which, in a proper case, are to be
Yu is entitled to interest at the legal rate of six given to each managing partner annually for his
percent (6%) per annum on the amount of unpaid private expenses, while the succeeding article of
wages, and of his separation pay. the Code provides that the general copartnership
TECK SEING AND CO., LTD., petitioner- must transact business under the name of all its
appellee. members, of several of them, or of one only.
SANTIAGO JO CHUNG, ET AL., partners, Turning to the document before us, it will be noted
vs. that all of the requirements of the Code have been
PACIFIC COMMERCIAL COMPANY, ET AL., met, with the sole exception of that relating to the
composition of the firm name. We leave
FACTS: Following the presentation of an consideration of this phase of the case for later
application to be adjudged an insolvent by the discussion.
"Sociedad Mercantil, Teck Seing & Co., Ltd.," the
creditors, the Pacific Commercial Company, Piñol The remaining possibility is the revised contention
& Company, Riu Hermanos, and W. H. Anderson & of counsel for the petitioners to the effect that Teck
Company, filed a motion in which the Court was Seing & Co., Ltd., is "una sociedad mercantil "de
prayed to enter an order: "(A) Declaring the facto" solamente" (only a de facto commercial
individual partners as described in paragraph 5 association), and that the decision of the Supreme
parties to this proceeding; (B) to require each of court in the case of Hung-Man-Yoc vs. Kieng-
said partners to file an inventory of his property in Chiong-Seng [1906], 6 Phil., 498), is controlling. It
the manner required by section 51 of Act No. 1956; was this argument which convinced the trial judge,
and (C) that each of said partners be adjudicated who gave effect to his understanding of the case
insolvent debtors in this proceeding." The trial
last cited and which here must be given serious What is said in article 126 of the Code of
attention. Commerce relating to the general copartnership
transacting business under the name of all its
The decision in Hung-Man-Yoc vs. Kieng-Chiong- members or of several of them or of one only, is
Seng, supra, discloses that the firm Kieng-Chiong- wisely included in our commercial law. It would
Seng was not organized by means of any public appear, however, that this provision was inserted
document; that the partnership had not been more for the protection of the creditors than of the
recorded in the mercantile registry; and that Kieng- partners themselves. A distinction could well be
Chiong-Seng was not proven to be the firm name, drawn between the right of the alleged partnership
but rather the designation of the partnership. The to institute action when failing to live up to the
conclusion then was, that the partnership in provisions of the law, or even the rights of the
question was merely de facto and that, therefore, partners as among themselves, and the right of a
giving effect to the provisions of article 120 of the third person to hold responsible a general
Code of Commerce, the right of action was against copartnership which merely lacks a legal firm
the persons in charge of the management of the name in order to make it a partnership de jure.
association.
The civil law and the common law alike seem to
Laying the facts of the case of Hung-Man-Yoc vs. point to a difference between the rights of the
Kieng-Chiong-Seng, supra, side by side with the partners who have failed to comply with the law
facts before us, a marked difference is at once and the rights of third persons who have dealt with
disclosed. In the cited case, the organization of the the partnership.
partnership was not evidenced by any public
document; here, it is by a public document. In the The supreme court of Spain has repeatedly held
cited case, the partnership naturally could not that notwithstanding the obligation of the members
present a public instrument for record in the to register the articles of association in the
mercantile registry; here, the contract of commercial registry, agreements containing all the
partnership has been duly registered. But the two essential requisites are valid as between the
cases are similar in that the firm name failed to contracting parties, whatever the form adopted,
include the name of any of the partners. and that, while the failure to register in the
commercial registry necessarily precludes the
We come then to the ultimate question, which is, members from enforcing rights acquired by them
whether we should follow the decision in Hung- against third persons, such failure cannot
Man-Yoc vs. Kieng-Chiong-Seng, supra, or whether prejudice the rights of third persons. (See decisions
we should differentiate the two cases, holding Teck of December 6, 1887, January 25, 1888, November
Seing & Co., Ltd., a general copartnership, 10, 1890, and January 26, 1900.) The same
notwithstanding the failure of the firm name to reasoning would be applicable to the less formal
include the name of one of the partners. Let us requisite pertaining to the firm name.
now notice this decisive point in the case.
The common law is to the same effect. The State of
Article 119 of the Code of Commerce requires every Michigan had a statute prohibiting the transaction
commercial association before beginning its of business under an assumed name or any other
business to state its article, agreements, and than the real name of the individual conducting
conditions in a public instrument, which shall be the same, unless such person shall file with the
presented for record in the mercantile registry. county clerk a certificate setting forth the name
Article 120, next following, provides that the under which the business is to be conducted and
persons in charge of the management of the the real name of each of the partners, with their
association who violate the provisions of the residences and post-office addresses, and making a
foregoing article shall be responsible in solidum to violation thereof a misdemeanor.
the persons not members of the association with
whom they may have transacted business in the The legal intention deducible from the acts of the
name of the association. Applied to the facts before parties controls in determining the existence of a
us, it would seem that Teck Seing & Co., Ltd. has partnership. If they intend to do a thing which in
fulfilled the provisions of article 119. Moreover, to law constitutes a partnership, they are partners,
permit the creditors only to look to the person in although their purpose was to avoid the creation of
charge of the management of the association, the such relation. Here, the intention of the persons
partner Lim Yogsing, would not prove very helpful making up Teck Seing & co., Ltd. was to establish
to them. a partnership which they erroneously denominated
a limited partnership. If this was their purpose, all
subterfuges resorted to in order to evade liability
for possible losses, while assuming their enjoyment
of the advantages to be derived from the relation,
must be disregarded. The partners who have
disguised their identity under a designation
distinct from that of any of the members of the firm
should be penalized, and not the creditors who
presumably have dealt with the partnership in
good faith.

We reach the conclusion that the contract of


partnership found in the document hereinbefore
quoted established a general partnership or, to be
more exact, a partnership as this word is used in
the Insolvency Law.

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