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1.

RAMNANI VS COURT OF APPEALS , 196 SCRA 731 (1991)



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
favor. 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. 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.

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 wr itten 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..

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

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 now

a 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.




















2. Isabelo Moran vs Court of Appeals, (1994)

Business Organization Partnership, Agency, Trust Profit and Loss Sharing
Speculative Damages

In February 1971, Isabelo Moran and Mariano Pecson entered into a partnership agreement where they
agreed to contribute P15k each for the purpose of printing 95k posters of the delegates to the then 1971
Constitutional Commission. Moran shall be in charge in managing the printing of the posters. It was
further agreed that Pecson will receive a commission of P1k a month starting from April 1971 to
December 1971; that the partnership is to be liquidated on December 15, 1971.

Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor of the partnership.
He gave the P10k to Moran as the managing partner. Moran however did not add anything and, instead,
he only used P4k out of the P10k in printing 2,000 posters. He only printed 2,000 posters because he felt
that printing all 95k posters is a losing venture because of the delay by the COMELEC in announcing the
full delegates. All the posters were sold for a total of P10k.

Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of Appeals
affirmed the decision of the trial court but modified the same as it ordered Moran to pay P47.5k for
unrealized profit; P8k for Pecsons monthly commissions; P7k as return of investment because the
venture never took off; plus interest.

ISSUE: Whether or not the CA judgment is correct.

HELD: No. The award of P47.5k for unrealized profit is speculative. There is no evidence whatsoever
that the partnership between the Moran and Pecson would have been a profitable venture (because base
on the circumstances then i.e. the delay of the COMELEC in proclaiming the candidates, profit is highly
unlikely). In fact, it was a failure doomed from the start. There is therefore no basis for the award of
speculative damages in favor of Pecson. Further, there is mutual breach in this case, Pecson only gave
P10k instead of P15k while Moran gave nothing at all.

As for the P8k monthly commission, this is without basis. The agreement does not state the basis of the
commission. The payment of the commission could only have been predicated on relatively extravagant
profits. The parties could not have intended the giving of a commission inspite of loss or failure of the
venture. Since the venture was a failure, Pecson is not entitled to the P8k commission.

As for the P7k award as return for Pecsons investment, the CA erred in his ruling too. Though the
venture failed, it did took off the ground as evidenced by the 2,000 posters printed. Hence, return of
investment is not proper in this case. There are risks in any business venture and the failure of the
undertaking cannot entirely be blamed on the managing partner alone, specially if the latter exercised his
best business judgment, which seems to be true in this case.

Moran must however return the unused P6k of Pecsons contribution to the partnership plus P3k
representing Pecsons profit share in the sale of the printed posters. Computation of P3k profit share is as
follows: (P10k profit from the sale of the 2,000 posters printed) (P4k expense in printing the 2k posters)
= (P6k profit); Profit 2 = P3k each.




3. EMNACE VS. COURT OF APPEALS , 370 SCRA 431 (2001)

Business Organization Partnership, Agency, Trust Dissolution and Winding Up
Prescription

Emilio Emnace, Jacinto Divinagracia and Vicente Tabanao formed a partnership engaged in
the fishing industry. In 1986, Jacinto decided to leave the partnership hence they agreed to
dissolve the partnership. At that time, the partnership has an estimated asset amounting to
P30,000,000.00.

HOWEVER, until the death of Vicente Tabanao in 1994, Emnace never rendered an
accounting either to Vicente or his heirs. Emnace reneged on his promise to turn over
Tabanaos share which is 1/3 of the P30M. The heirs of Tabanao then sued Emnace.
Emnace argued, among others, that the heirs are barred by prescription hence they can no
longer demand an accounting. He contends that the partnership was dissolved in 1986 and
that was the time when Tabanaos (and his heirs) right to inquire into the business affairs
accrued; that said right has expired in 1990 or 4 years after. So beyond 1990, they can no
longer inquire.

ISSUE: Whether or not Emnace is correct.

HELD: No. Prescription has not run in this case, it has never begun. The three final stages
of partnership are: a) dissolution, b) winding up, and c) termination. In this case, Emnace
and his partners dissolved their partnership but such did not perfect the dissolution because
no accounting took place. 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 (or legal representative in this case
the heirs of Tabanao) 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.

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 the heirs are seeking
in their action before the trial court, since Emnace has failed or refused to render an
accounting of the partnerships business and assets. Hence, the said action is not barred
by prescription.






4. MUNASQUE VS. COURT OF APPEALS , 139 SCRA 533 (1985)

G.R. No. L-39780 November 11, 1985

ELMO MUASQUE,
petitioner,
vs.
COURT OF APPEALS,CELESTINO GALAN TROPICAL COMMERCIALCOMPANY and RAMON
PONS, respondents.

GUTTIERREZ, JR.,

Facts: Munasque (petitioner) entered into a partnership with Galan under the registered name Galan and
Associates as Contractor. They entered into a written contract with respondent Tropical for remodeling
the latters Cebu branch building. Under the contract, the project totaled 25,000 to be paid in installments;
7, 000 upon signing and 6, 000 every15 working day.

Tropical made the first payment by check in the name of Munasque. Munasque indorsed the check in
favor of Galan to enable Galan to deposit it in the bank and pay for the materials and labor used in the
project. However, Galan allegedly spent P6, 183.37 for his personal use. When the second check came,
Munasque refused to indorse it again to Galan.

Galan informed Tropical of the misunderstanding between him and Munasque as partners. Hence upon
second payment, Tropical changed the name of the payee on the second check from Munasque to Galan
and Associates which enabled Galan to encash the second check. Meanwhile, the construction was
continued through Munasques sole efforts by incurring debts from various suppliers. The construction
work was finished ahead of schedule withthe total expenditure reaching P 34, 000 (note yung contract nila
25k lang).

Munasque filed a complaint for payment of sum of money and damages against Galan, Tropical, and
Tropicals Cebu branch manager Pons. Cebu Southern Hardware Company and Blue Diamond Glass
Palace intervened in the case for the credit which they extended to the partnership of Munasque and
Galan for the construction project. Both trial court and Court of Appeals absolved respondents Tropical
and its Cebu manager, Pons, from any liability. TC held Galvan and Munasque jointly and severally
liable to its creditors which decision was modified by CA and held them jointly liable.

Issues:Whether the obligation of Munasque and Galan is joint or solidary?

Held: Solidary.

While it is true that under Article 1816 of CC, All partners, including industrial ones, shall be liable pro
rate with all their property and after all the partnership assets have been exhausted, for the contracts which
may be entered into the name and for account of the partnership, under its signature and by a person
authorized to act for the partnership.xxx, this provision should be construed together with Article 1824
which provides that:All partners are liable solidarily with the partnership for everything chargeable to
the partnership under Articles 1822 and 1823. While the liability of the partners are merely joint in
transactions entered into by the partnership, a third person who transacted with said partnership can hold
the partners solidarily liable for the whole obligation if the case of the third person falls under Articles
1822 and 1823.

The obligation is solidary because the law protects him, who in good faith relied upon the authority of a
partner, whether such authority is real or apparent.

Tropical had every reason to believe that a partnership existed between Munasque and Galan and no fault
or error can be imputed against it for making payments to Galan and Associates because as far as it was
concerned, Galan was a true partner with real authority to transact in behalf of the partnership it was
dealing with (because in the first place they entered into a duly registered partnership name and secondly,
Munasque endorsed the first check payment to Galan). This is even more true in the cases of the
intervenors who supplied materials on credit to the partnership. Thus, it is but fair that the consequences
of any wrongful act committed by any of the partners therein should be answered solidarily by all the
partners and the partnership as a whole. However, as between Munasque and Galan, Galan must
reimburse Munasque for the payments made to the intervenors as it was satisfactorily established that
Galan acted in bad faith in his dealings with Munasque as a partner.


Elmo Muasque vs CA

Facts:Elmo Muasque, in behalf of Galan and Muasque partnership as Contractor,entered into a
written contract with Tropical Commercial Co., through its branchmanager Ramon Pons, for remodelling
of Tropicals building in Cebu. Theconsideration for the entire services is P25,000 to be paid: 30% upon
signing of contract, and balance on 3 equal instalments of P6,000 every 15working days.

First payment of check worth P7,000 was payable to Muasque, who indorsed it to Galan for purposes of
depositing the amount and paying the materials already used. But since Galan allegedly misappropriated
P6,183.37 of the check for personal use, Muasque refused to indorse the second check worth P6,000.
Galan then informed Tropical of the misunderstanding between him and Muasque and this prompted
Tropical to change the payee of the second check from Muasque to Galan and Associates (the duly
registered name of Galan and Muasque partnership).Despite the misappropriation, Muasque alone was
able to finish the project. The two remaining checks were properly issued to Muasque. Muasque filed a
complaint for payment of sum of money plus damages against Galan, Tropical and Pons for the amount
covered by the first and second checks. Cebu Southern Hardware Co and Blue Diamond Glass Palace
were allowed as intervenors having legal interest claiming against Muasue and Galan for materials used.

TC:
-Muasque and Pons jointly and severally liable to intervenors
-Tropical and Pons absolved

CA affirmed with modification:
-Muasque and Pons jointly liable to intervenors

Issue:
1.W/N Muasque and Galan are partners?
2.W/N payment made by Tropical to Galan was good payment?
3.W/N Galan should shoulder exclusively the amounts payable to the intervenors (granting he
misappropriated the amount from the two checks)?

Held:yes-yes-no!

1.YES. Tropical had every right to presume the existence of the partnership:a.Contract states that
agreement was entered into by Galan andMuasqueb.The first check issue in the name of Muasque
was indorsed to Galan The relationship was made to appear as a partnership.
2.YES. Muasque and Galan were partners when the debts to the intervenors were incurred, hence, they
are also liable to third persons who extended credit to their partnership.

There is a general presumption that each individual partner is an authorized agent for the firm and that he
has authority to bind the firm in carrying on the partnership transactions. The presumption is sufficient to
permit third persons to hold the firm liable on transactions entered into by one of the members of the firm
acting apparently in its behalf and within the scope of his authority

3.NO. Article 1816 BUT construed together with Article 1824.

Art. 1816. All partners, including industrial ones, shall be liable pro rata x xx for the contracts which
may be entered into the name and for the account of the partnership, under its signature and by a person
authorized x x x

Art. 1824. All partners are liable solidarily with the partnership for everything chargeable to the
partnership under Articles 1822 and 1823

Art. 1822. Where, by any wrongful act or omission of any partner acting inthe ordinary course of the
business x x x or with the authority of his co-partners, loss or injury is caused to any person x x x

Art. 1823. The partnership is bound to make good the loss:
(1)Where one partner acting within the scope of his apparent authority receives money or property of a
third person and misapplies it, and
(2)Where the partnership in the course of its business receives money or property of a third person x x x is
misapplied by any partner while it is in the custody of the partnership.

GR: In transactions entered into by the partnership, the liability of the partners is merely joint

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


















5. Luzviminda Villareal vs Donaldo Efren Ramirez

Business Organization Partnership, Agency, Trust Dissolution and Winding Up Need for
Accounting Proceedings to Determine Partners Share

Facts : In 1984, Villareal, Carmelito Jose and Jesus Jose, formed a partnership for the purpose of
operating a restaurant. Each contributed P250,000.00. In 1984, Ramirez was added as a partner after he
contributed P250,000.00. In 1987, Jesus withdrew from the partnership and his capital share of P250k
was returned to him as agreed upon by the other partners.

Thereafter, the restaurant suffered losses. Without informing Ramirez, Villareal and Carmelito shut
down the restaurant. They then turned over the restaurant equipments to Ramirez. Later, Ramirez sent a
letter to Villareal and Carmelito telling them hes no longer interested in being a partner and that hes
demanding his shares in the partnership. Villareal and Carmelito ignored the request of Ramirez hence
the latter sued them.

In their defense, Villareal and Carmelito said that the restaurant equipments served as payment to
Ramirez when they were delivered to them; that Ramirez cannot ask for share in equity because the
restaurant incurred debts (P240,658.00) and irreversible business losses. Ramirez argued by saying that
the equipments were merely placed in their house for storage as the two partners allegedly searched for a
better restaurant location; that he was not aware of any losses or any indebtedness because he never took
part in the management of the restaurant.

The trial court ruled in favor of Ramirez. The Court of Appeals affirmed the trial court and it further
ordered Villareal and Carmelito to pay Ramirez P253,114.00. The computation was done as follows:
(Original Partnership Capital Partnership Debt = Partnership Asset) Number of partners; hence:
(P1,000,000.00 P240,658.00 = P759,342.00) 3 = P253,114.00.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: No. It is impossible that the said P1,000,000.00 original capital did not fluctuate. It could not
have remained stagnant. Further, the Court of Appeals missed to note that one partner left and his
contribution was returned (Jesus Jose). Generally, in the pursuit of a partnership business, its capital is
either increased by profits earned or decreased by losses sustained. It does not remain static and
unaffected by the changing fortunes of the business.

The Supreme Court also noted that Ramirez cannot demand his equity shares from Villareal and
Carmelito because it should be the partnership the partners and the partnership has a separate and
distinct personality.

In determining Ramirez share in the equity, losses must be accounted for. He cannot ask for an amount
equivalent to his capital contribution especially in this case where the partnership incurred debts and
losses. At any rate, Ramirez share is 1/3 of whatever assets the partnership still has after debts and
losses are deducted. Hence there is a need for a proper proceeding for the accounting, liquidation, and
distribution of the remaining partnership assets. A share in a partnership can be returned only after the
completion of the latters dissolution, liquidation and winding up of the business.

On the issue of whether or not the turning over of the restaurant equipments to Ramirez served as
payment of the latters share, it is wrong for Villarreal and Carmelito to assert that it served as a
payment. Ramirez was merely made to believe that said equipments are being stored in his place and not
being given to him as payment.

6. Yu vs. NLRC
GR No. 97212 | June 30, 1993 | Feliciano | Pet forCertiorari to ReviewPetitioner:Benjamin
YuRespondents:N:RC, Jade Mountain Products CompanyLtd., Willy Co, Rhodor Bendal, Lea
Bendal, ChiuShian Jeng & Chen Ho-Fu

Quick Summary:
Facts: Benjamin Yu used to be the Assistant General Manager of Jade Mountain, a partnership
engaged in marble quarryingand export business. The majority of the founding partners sold their
interests in said partnership to Willy Co and Emmanuel Zapanta without Yus knowledge. Said new
partnership continued operating under the same name and continued the businesss operations.
However, it transferred its main office from Makati to Mandaluyong. said new partnership did not
anymore availed of the services of Yu. Thus, he filed a complaint for illegal dismissal, recovery of
unpaid wages and damages.

Held: The legal effect of the changes in the membership of the partnership was the dissolution of the
old partnership which had hired Yu in 1984 and the emergence of a new firm composed of Willy Co
and Emmanuel Zapanta in 1987. The new partnership simply took over the business enterprise owned
by the preceeding partnership, and continued usingthe old name of Jade Mountain Products Company
Limited, without winding up the business affairs of the old partnership, paying off its debts,
liquidating and distributing its net assets,and then re-assembling the said assets or most of them and
opening a new business enterprise. Not only the retiring partners but also the new partnership itself
which continued the business of the old, dissolved, one, are liable for the debts of the preceding
partnership

6.Yu vs. NLRC
GR No. 97212 | June 30, 1993 | Feliciano | Petition for Certiorari
Petitioner: Benjamin Yu
Respondents:N:RC, Jade Mountain Products Company Ltd., Willy Co, Rhodor Bendal, Lea Bendal,
ChiuShian Jeng & Chen Ho-Fu
Quick Summary:
Facts:
Benjamin Yu used to be the Assistant General Managerof Jade Mountain, a partnership engaged in
marble quarrying and export business. The majority of the founding partners sold their interests in
said partnership to Willy Co and Emmanuel Zapanta without Yus knowledge. Said new partnership
continued operating under the same name andcontinued the businesss operations. However, it
transferred its main office from Makati to Mandaluyong. said new partnership did not anymore
availed of the services of Yu. Thus, he filed a complaint for illegal dismissal, recovery of unpaid
wages and damages.
Held:
The legal effect of the changes in the membership of the partnership was the dissolution of the old
partnershipwhich had hired Yu in 1984 and the emergence of a new firmcomposed of Willy Co and
Emmanuel Zapanta in 1987. Thenew partnership simply took over the business enterpriseowned by
the preceeding partnership, and continued using the old name of Jade Mountain Products Company
Limited, without winding up the business affairs of the old partnership, paying off its debts,
liquidating and distributing its net assets, and then re-assembling the said assets or most of them and
opening a new business enterprise. Not only the retiring partners but also the new partnership itself
which continued the business of the old, dissolved, one, are liable for the debts of the preceding
partnership.



Facts:
June 28, 1984 - Jade Mountain ProductsCompany Limited is a registered partnership thatis engaged
in marble quarrying and export business.It was originally organized with the
followingcomposition:1.Lea Bendal as general partner2.Rhodora Bendal as general partner3.Chiu
Shian Jeng as limited partner4.Yu Chang as limited partners It had its main office in Makati.

Said partnership entered into a Memorandum Agreement with the Spouses Ricardo and Guillermo
Cruz since the partnership exploited the marble deposit found on landowned by the Spouses Cruz.

March 14, 1985 - by virtue of a Partnership Resolution, Benjamin Yu was hired as
AssistantGeneral Manager of Jade Mountain with a P4,000monthly salary. According to Benjamin
Yu, he only received half of the stipulated monthly salary since he apparently accepted the promise of
the partnersthat the balance would be paid when the firm shall have secured additional operating
fundsfrom abroad.

Benjamin Yu performed the following functions:
1. manage the operations and finances of the business
2. overall supervision of the workers atthe marble quarry in Bulacan
3.in charge of the preparation of papers relating to the exportation of the firm's products

Sometime in 1988 - without Benjamin Yus knowledge, the general partners Lea Bendal and
Rhodora Bendal sold and transferred their interests in the partnership to private Willy Co and
Emmanuel Zapanta. Yu Chang, a limited partner, also sold and transferred his interest in the
partnership to Willy Co. Thus, 82% of the old partnership is now owned by Co and Zapanta, with Co
having acquired a great bulk of the partnership.

This new partnership continued to use the old firm name of Jade Mountain. However, they moved
the firms main office from Makati to Mandaluyong. They also executed a Supplement to the
Memorandum Agreement with the Spouses Cruz. The actual operations of the business enterprise
continued as before. All the employees of the partnership continued working in the business, all,
except Benjamin Yu as it turned out.

November 16, 1987 - having learned of the transfer of the main office, Benjamin Yu reported to the
Mandaluyong office for work andthere he met Co for the 1
st
time. Yu was informed by Willy Co that
the latter had bought the business from the original partners and that it was for him to decide whether
or not he was responsible for the obligations of the old partnership, including Yu's unpaid salaries. Yu
was in fact not allowed to work anymore in the Jade Mountain business enterprise. His unpaid
salaries still remained unpaid.

December 21, 1988 - Benjamin Yu filed a complaint for illegal dismissal and recovery of unpaid
salaries accruing from November 1984 to October 1988, moral and exemplary damages and attorney's
fees, against Jade Mountain, Mr.Willy Co and the former partners of Jade Mountain.

The new Jade Mountain and Willy Co denied Yus charges contending that Yu was never hired as
an employee by the new partnership.

LA: ruled that Yu was illegally dismissed. It decreed his reinstatement and awarded him his claim
for unpaid salaries, backwages and attorneys fees

NLRC: reversed the LAs decision & dismissed Yus complaint. It ruled that here was no law
requiring the new partnership to absorb the employees of the old partnership. Benjamin Yu's claim for
unpaid wages should be asserted against the original members of the preceding partnership, but these
though impleaded had, apparently, not been served with summons in the proceedings before the
Labor Arbiter.

Yus contention

NLRC has overlooked the principle that apartnership has a juridical personality separate and
distinct from that of each of its members. Such independent legal personality subsists notwithstanding
changes in the identities of the partners

Issues:
1. WON the old partnership had been extinguished and replaced by the new partnership [YES)
2. WON Yu could still claim his unpaid wages against the new partnership [YES]

Ratio:
1.The legal effect of the changes in the membership of the partnership was the dissolution of the old
partnership which had hired Yu in 1984 and the emergence of a new firm composed of Willy Co and
Emmanuel Zapanta in1987.

The applicable laws to this case areArticles 1828 and 1830

The acquisition of 82% of the partnership interest by new partners, coupled with the retirement or
withdrawal of the partners who had originally owned such82% interest, was enough to constitute
anew partnership.

The occurrence of events which precipitate the legal consequence of dissolution of a partnership do
not, however, automatically result in the termination of the legal personality of the old partnership in
line with Article 1829

In the ordinary course of events, the legal personality of the expiring partnership persists for the
limited purpose of winding up and closing of the affairs of the partnership.

However, in this case, the business of the old partnership was simply continued bythe new
partners, without the old partnership undergoing the procedures relating to dissolution and winding up
of its business affairs.

The new partnership simply took over the business enterprise owned by the preceeding
partnership, and continued using the old name of Jade Mountain Products Company Limited, without
winding up the business affairs of the old partnership, paying off its debts, liquidating and distributing
its net assets, and then re-assembling the said assets or most of them and opening a new business
enterprise.

2. Not only the retiring partners (Rhodora Bendal, et al.) but also the new partnership itself which
continued the business of the old, dissolved, one, are liable for the debts of the preceding partnership.
The SC held in Singsong et al., vs. Isabela Saw Mill et al., that withdrawing partner remains liable
to a third party creditor of the old partnership.

Under Article 1840 ,creditors of the old Jade Mountain are also creditors of the new Jade Mountain
which continued the business of the old one without liquidation of the partnership affairs. Indeed, a
creditor of the old Jade Mountain, like petitioner Benjamin Yu in respect of his claim for unpaid
wages, is entitled to priority vis-a-vis any claim of any retired or previous partner insofar as such
retired partner's interest in the dissolved partnership is concerned.

Benjamin Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating to
his employment with the previous partnership, against the new Jade Mountain.

Even though the new partnership is liable to Yu, it is entitled to appoint and hire anew general or
assistant general manager to run the affairs of the business enterprise takeover. An assistant general
manager belongs to the most senior ranks of management anda new partnership is entitled to appoint
a top manager of its own choice and confidence.

The non-retention of Benjamin Yu as Assistant General Manager did not therefore constitute
unlawful termination, or termination without just or authorized cause. It appears that Yus former
position had become superfluous and redundant since Willy Co now personally runs the business.

Dispositive:
NLRC decision nullified and set aside.

Yu is entitled to the following:
1.P72,000 unpaid wages2.P12,000 separation pay since his employment was terminated due to
redundancy3.P20,000 moral damages due to the shabby treatment Yu got from the new partnership.
Such summary and cavalier treatment amounted to arbitrary, bad faith treatment.4.6% legal interest
on his unpaid wages and separation pay5.10% attorneys fees on the total amount due from jade
Mountain






















7. DAN FUE LEUNG,petitioner,
vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.
G.R. No. 70926 January 31, 1989GUTIERREZ,

FACTS:

The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-
G.R. No. CV-00881 which affirmed the decision of the then Court of First Instance of Manila, Branch
II in Civil Case No. 116725 declaring privater espondent 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 then Court of First
Instance of Manila, BranchII 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, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was
established sometime in October, 1955. It 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 P4,000.00to its
initial establishment.

The private respondents evidence is summarized as follows:

About the time the Sun Wah Panciteria started to become operational, the private respondent gave
P4,000.00 as his contribution to the partnership. This is evidenced by a receipt wherein the petitioner
acknowledged his acceptance of theP4,000.00 by affixing his signature thereto. Furthermore, the
private respondent received from the petitioner the amount of P12,000.00 covered by the latter's
Equitable Banking Corporation Check from the profits of the operation of the restaurant for the year
1974.

The petitioner denied having received from the private respondent the amount of P4,000.00. He
contested and impugned the genuineness of the receipt. His evidence is summarized as follows:

The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. He used
his savings from his salaries as an employee at Camp Stotsenberg in Clark Field and later as waiter at
the Toho Restaurant amounting to a little more than P2,000.00 as capital in establishing Sun Wah
Panciteria. Petitioner presented various government licenses andpermits showing the Sun Wah
Panciteria was and still is a single proprietorship solely owned and operated by himself alone. Fue
Leung also flatly denied having issued to the private respondent the receipt (Exhibit G) and the
Equitable Banking Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B).

ISSUE: WON Private respondent is a partner of the petitioner in Sun Wah Panciteria?

HELD: The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a
partnership which are 1)two or more persons bind themselves to contribute money, property, or
industry to a common fund; and 2) intention on the part of the partners to divide the profits among
themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil.110)-have been
established. As stated by the respondent, a partner shares not only in profits but also in the losses of
the firm. If excellent relations exist among the partners at the start of business and all the partners are
more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in
the profits is perfectly plausible. 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, atthe 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, and1809 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.

Considering the facts of this case, the Court may decree a dissolution of the partnership under Article
1831 of the Civil Code which, in part, provides:

Art. 1831. On application by or for a partner the court shall decree a dissolution
whenever:
xxx xxx xxx
(3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying
on of the business;
(4) A partner willfully or persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the partnership business that it is not
reasonably practicable tocarry on the business in partnership with him;
xxx xxx xxx
(6) Other circumstances render a dissolution equitable

There shall be a liquidation and winding up of partnership affairs, return of capital, and other
incidents of dissolution because the continuation of the partnership has become inequitable.















8. Antonio C. Goquilay, ET AL. plaintiffs-appellants vs.
Washington Z. Sycip, ET AL. defendants-appellees
GR NO. L-11840
DATE: December 10, 1963

FACTS:
Tan Sin An and Goquiolay entered into a general commercial partnership under the partnership
name Tan Sin An and Antonio Goquiolay for the purpose of dealing in real estate.
The agreement lodged upon Tan Sin An the sole management of the partnership affairs.
The lifetime of the partnership was fixed at ten years and the Articles of Co-partnership
stipulated that in the event of death of any of the partners before the expiration of the term, the
partnership will not be dissolved but will be continued by the heirs or assigns of the deceased
partner. But the partnership could be dissolved upon mutual agreement in writing of the partners.
Goquiolay executed a GPA in favor of Tan Sin An.
The plaintiff partnership purchased 3 parcels of land which was mortgaged to La Urbana as
payment of P25,000. Another 46 parcels of land were purchased by Tan Sin An in his individual
capacity which he assumed payment of a mortgage debt for P35K. A down payment 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 infavor of Banco HipotecarioTan Sin An died
leaving his widow, Kong Chai Pinand 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.

ISSUE/S:
1. Whether or not a widow or substitute become also a general partner or only a limited partner?
2. 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?
3. Whether or not the consent of the other partners was necessary to perfect the saleof the
partnership properties to Sycip and Lee?

HELD:
Kong Chai Pin became a mere general partner. By seeking authority to manage partnership
property, Tan Sin Ans widow showed that she desired to be considered a general partner. By
authorizing the widow to manage partnership property (which a limited partner could not be
authorized to do), Goqulay recognized her as such partner, and is now in estoppel to deny her
position as a general partner, with authority to administer and alienate partnership property.

The articles did not provide that the heirs of the deceased would be merely limited partners; on
the contrary, they expressly stipulated that in case of death of either partner, the co partnership
will have to be continued with the heirs or assignees. It certainly could not be continued if it
were to be converted from a general partnership into a limited partnership since the difference
between the two kinds of associations is fundamental, and specially because the conversion into a
limited association would leave the heirs of the deceased partner without a share in the
management. Hence, the contractual stipulation actually contemplated that the heirs would
become general partners rather than limited ones.

Separate Opinion: Justice Angelo Bautista

The court affirmed the decision but on different grounds, among which are: (1)there is no
sufficient factual basis to conclude that Kong Chai Pin executed acts of management to give her
the character of general manager of the partnership, or to serve as basis for estoppel that may
benefit the purchasers of the partnership properties; (2) the alleged acts of management, even if
proven, could not give Kong Chai Pin the character of general manager for the same is contrary to
law and well-known authorities; (3) even if Kong Chai Pin acted as general manager she has no
authority to sell the partnership properties as to make it legal and valid; and (4)Kong Chai Pin had
no necessity to sell the properties to pay the obligation of thepartnership and if she did so it was
merely to favor the purchasers who were close relatives to the prejudice of Goquiolay.

The sale of the partnership properties by Kong Chai Pin cannot be upheld on the ground of
estoppel, first, because the alleged acts of management have not been clearly proven. Moreover,
mere acceptance of the inheritance does not make the heir of a general partner a general partner
himself. He emphasized that heir must declare that he is entering the partnership as a general
partner unless the deceased partner has made it an express condition in his will that the heir
accepts the condition of entering the partnership as a prerequisite of inheritance, in which case
acceptance of the inheritance is enough. But here Tan Sin An died intestate.

Kong Chai Pin cannot be deemed to have declared her intention to become a general partner by
exercising acts of management because as a general rule the heirs of a deceased partner succeed
as limited partners only by operation of law, itis obvious that the heir, upon entering the
partnership, must make a declaration of his character, otherwise he should be deemed as having
succeeded as limited partner by the mere acceptance of the inheritance. And here Kong Chai Pin
did not make such declaration. Being then a limited partner upon the death of Tan Sin Anby
operation of law, the peremptory prohibition contained in Article 148 of the Code of Commerce
became binding upon her and as a result she could not change her status by violating its
provisions not only under the general principle that prohibited acts cannot produce any legal
effect, but also because under the provisions of Article 147 of the same Code she was precluded
from acquiring more rights than those pertaining to her as a limited partner. The alleged acts of
management, therefore, did not give Kong Chai Pin the character of general manager to authorize
her to bind the partnership.

Kong Chain Pin could not sell the partnership properties without authority from the other
partners. the relationship between a managing partner and the partnership is substantially the
same as that of the agent and his principal, the extent of the power of Kong Chai Pin must,
therefore, be determined under the general principles governing agency. And, on this point, the
law says that an agency created in general terms includes only acts of administration, but with
regard to the power to compromise, sell mortgage, and other acts of strict ownership, an express
power of attorney is required. Here Kong Chai Pin did not have such power when she told the
properties of the partnership.

Since Kong Chai Pin sold the partnership properties not in line with the business of the
partnership but to pay its obligation without first obtaining the consent of the other partners the
sale is invalid being in excess of her authority.

Upon the strength of the foregoing considerations, the court grant the motion for reconsideration.