MOBIL OIL PHILIPPINES, INC., petitioner, vs.

COURT OF FIRST INSTANCE OF RIZAL, BRANCH VI,

GEMINIANO F. YABUT and AGUEDA ENRIQUEZ YABUT, respondents (G.R. No. 40457 May 8, 1992)
FACTS: The partnership La Mallorca, through its partner Miguel Enriquez, entered into a sales agreement to
purchase gasoline on credit with Mobil Oil Philippines. But because the mentioned purchase remained unpaid, Mobil
Oil filed a complaint in the Court of First Instance of Rizal against La Mallorca and its general partners, which
included private respondents.
Subsequently, Mobil Oil filed an Amended Complaint impleading the heirs of the deceased partners as defendants.
After Mobil Oil had presented its evidence, the counsel of the defendant successfully bargained for a compromise
agreement. The defense agreed to submit the case for decision solely on the basis of evidence adduced by plaintiff
Mobil Oil but past interest in the amount of P150,000.00 shall be excluded and that only nominal attorney's fees
shall be awarded.
Consequently, a Decision was rendered in favor of the Mobil Oil and against defendants. However, defendants filed
a Petition to Modify Decision and/or Petition for Reconsideration, averring that (1) that there was no stipulation or
agreement of the parties on the award of attorney's fees; (2) that Miguel Enriquez, not being a general partner,
could not bind the partnership in the Sales Agreement he signed with Mobil Oil; and (3) that defendant Geminiano
Yabut already withdrew as partner and president of La Mallorca as of September 14, 1972.
Thereafter, the CFI ISSUEd an order declaring its previous decision favouring Mobil Oil as null and void. The ground
for the decision is that there was no evidence to show that the counsel for the defendants had been duly authorized
by the partnership to enter into a stipulation of FACTS, a compromise agreement or a confession judgment with
Mobil Oil. Mobil Oil filed a Motion for Reconsideration and Clarification but it was denied. Hence, this petition.
ISSUE: Whether or not the sales agreement with Mobil Oil which was signed by Miguel Enriquez can bind the
partnership.
HELD: Yes, because Miguel Enriquez is a general partner of La Mallorca. He automatically became a general partner
of the partnership for being one of the heirs of the deceased general partner Mariano Enriquez. Article IV of the
Articles of Co-Partnership of La Mallorca provides that:
If during the existence of this co-partnership, any of the herein partners should die, the co-partnership shall
continue to exist amongst the surviving partners and the heir or heirs of the deceased partner or partners.
ISSUE: Whether or not the withdrawal of Yabut from the partnership will exempt him from liability.
HELD: No, the debt was incurred long before his withdrawal as partner and his resignation as President of La
Mallorca on September 14, 1972. Respondent Geminiano Yabut could not just withdraw unilaterally from the
partnership to avoid his liability as a general partner to third persons like the petitioner in the instant case.
ISSUE: Does non-active participation in the partnership exempt a partner from liability?
HELD: No, the alleged non-active participation of respondent Agueda Yabut in the partnership cannot exempt her
from the obligation. Active participation in a partnership is not a condition precedent for membership in a
partnership so as to be entitled to its profits or be burdened with its liabilities.
ISSUE: Was there a stipulation of FACTS, a compromise agreement or a confession of judgement?
HELD: Respondent court ISSUEd the following Order:
Calling this case for hearing today, the parties pray the Court that they are submitting the case for decision on the
basis of the evidence thus presented but to exclude past interest in the amount of about P150,000.00 and to award
nominal attorney's fees.
Finding the said motion in order, let judgment be rendered in accordance with the evidence so far presented.
The foregoing Order is not a stipulation of FACTS nor a confession of judgment. If at all, there has been a mutual
waiver by the parties of the right to present evidence in court on the part of the defendants on one hand, and

waiver of interest in the amount of P150,000.00 and the stipulated attorney's fees of 25% of the principal amount
on the part of the plaintiff, except a nominal one.
The counsels of the parties in this case had the implied authority to do all acts necessary or incidental to the
prosecution and management of the suit in behalf of their clients who were all present and never objected to the
disputed order of the respondent court. Parties are bound by the acts and mistakes of their counsel in procedural
matters. Mistakes of counsel as to the relevancy or irrelevancy of certain evidence or mistakes in the proper
defense, in the introduction of certain evidence, or in argumentation are, among others all mistakes of procedure,
and they bind the clients, as in the instant case.

LIM TONG LIM v. PHILIPPINE FISHING GEAR INDUSTRIES INC (G.R. No. 136448; November 3, 1999)

FACTS: On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract dated
February 7, 1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc.
(herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim, who
however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four hundred
pieces of floats worth P68,000 were also sold to the Corporation.
The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a collection
suit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment. The suit was
brought against the three in their capacities as general partners, on the allegation that "Ocean Quest Fishing
Corporation" was a nonexistent corporation as shown by a Certification from the Securities and Exchange
Commission. On September 20, 1990, the lower court ISSUEd a Writ of Preliminary Attachment, which the sheriff
enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries Port, Navotas,
Metro Manila.
ISSUE: Whether or not there was a partnership?
HELD: Yes. it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started by
buying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's brother. These
boats, the purchase and the repair of which were financed with borrowed money, fell under the term "common
fund" under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangible
like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would
be divided equally among them also shows that they had indeed formed a partnership. Given the preceding FACTS,
it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in the fishing business. They
purchased the boats, which constituted the main assets of the partnership, and they agreed that the proceeds from
the sales and operations thereof would be divided among them.

DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.
FACTS: This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance of
Manila, Branch II 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 P4,000.00 to its initial establishment.
The private respondent's 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 identified as Exhibit "A" wherein the petitioner
acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. The private respondent identified

the signature on the receipt as that of the petitioner (Exhibit A-3) because it was affixed by the latter in his (private
respondents's) presence. Witnesses So Sia and Antonio Ah Heng corroborated the private respondent's testimony to
the effect that they were both present when the receipt (Exhibit "A") was signed by the petitioner. So Sia further
testified that he himself received from the petitioner a similar receipt (Exhibit D) evidencing delivery of his own
investment in another amount of P4,000.00. An examination was conducted by the PC Crime Laboratory on orders
of the trial court granting the private respondent's motion for examination of certain documentary exhibits. The
signatures in Exhibits "A" and "D" when compared to the signature of the petitioner appearing in the pay envelopes
of employees of the restaurant, namely Ah Heng and Maria Wong (Exhibits H, H-1 to H-24) showed that the
signatures in the two receipts were indeed the signatures of the petitioner. llcd
Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's
Equitable Banking Corporation Check No. 13389470-B from the profits of the operation of the restaurant for the
year 1974. Witness Teodulo Diaz, Chief of the Savings Department of the China Banking Corporation testified that
said check (Exhibit B) was deposited by and duly credited to the private respondent's savings account with the bank
after it was cleared by the drawee bank, the Equitable Banking Corporation.
The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and
impugned the genuineness of the receipt (Exhibit D). 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. To bolster his contention that he was the sole owner of
the restaurant, the petitioner presented various government licenses and permits 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).
As between the conflicting evidence of the parties, the trial court gave credence to that of the plaintiff's. Hence, the
court ruled in favor of the private respondent.
Plaintiff also asked for a motion for reconsideration which was granted by the court the pertinent portion reads as
follows: "FOR ALL THE FOREGOING CONSIDERATIONS, the motion for reconsideration filed by the plaintiff, which was
granted earlier by the Court, is hereby reiterated and the decision rendered by this Court on September 30, 1980, is
hereby amended. The dispositive portion of said decision should read now as follows:
"WHEREFORE, judgment is hereby rendered, ordering the plaintiff (sic) and against the defendant, ordering the
latter to pay the former the sum equivalent to 22% of the net profit of P8,000.00 per day from the time of judicial
demand, until fully paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit." (p. 150, Rollo)
The petitioner appealed the trial court's amended decision to the then Intermediate Appellate Court. The modified
resolution of the appellate court is as follows:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to
the former the sum equivalent to 22% of the net profit of P8,000.00 per day from the time of judicial demand, until
fully 'paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit'.
is hereby retained in full and affirmed in toto it being understood that the date of judicial demand is July 13, 1978."
(pp. 105-106, Rollo).
In the same resolution, the motion for reconsideration filed by petitioner was denied.
Both the trial court and the appellate court found that the private respondent is a partner of the petitioner in the
setting up and operations of the panciteria. While the dispositive portions merely ordered the payment of the
respondent's share, there is no question from the factual findings that the respondent invested in the business as a
partner. Hence, the two courts declared that the private petitioner is entitled to a share of the annual profits of the
restaurant. The petitioner, however, claims that this factual finding is erroneous.
ISSUE: Whether or not private respondent Leung Yiu is a partner of petitioner Dan Fue Leung in the establishment
of the Sun Wah Panciteria and therefore should be entitled to 22% of the annual income of the restaurant as
averred by the former

HELD: In essence, the private respondent alleged that when Sun Wah Panciteria was established, he gave
P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-two percent (22%) of the
annual profit derived from the operation of the said panciteria. These allegations, which were proved, make the
private respondent and the petitioner partners in the establishment of Sun Wah Panciteria because Article 1767 of
the Civil Code provides that "By the contract of partnership two or more persons bind themselves to contribute
money, property or industry to a common fund, with the intention of dividing the profits among themselves".
Therefore, the lower courts did not err in construing the complaint as one wherein the private respondent asserted
his rights as partner of the petitioner in the establishment of the Sun Wah Panciteria, notwithstanding the use of the
term financial assistance therein.
We agree with the appellate court's observation to the effect that ". . . given its ordinary meaning, financial
assistance 'is the giving out of money to another without the expectation of any returns therefrom'. It connotes an
ex gratia dole out in favor of someone driven into a state of destitution. But this circumstance under which the
P4,000.00 was given to the petitioner does not obtain in this case." (p. 99, Rollo) The complaint explicitly stated
that "as a return for such financial assistance, plaintiff (private respondent) would be entitled to twenty-two
percentum (22%) of the annual profit derived from the operation of the said panciteria." (p. 107, Rollo) The wellsettled doctrine is that the ". . . nature of the action filed in court is determined by the FACTS alleged in the
complaint as constituting the cause of action." (De Tavera v. Philippine Tuberculosis Society, Inc., 113 SCRA 243;
Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37).
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.
Ortega vs. CA
F: Petitioner filed a MR for the decision of the SEC en banc which dissolved the partnership of Bito, Misa & Lozada
upon withdrawal of Atty. Joaquin L. Misa. He also asked for an appointment of a receiver to take over the assets of
the dissolved partnership and to take charge of the winding up of its affairs.
I: W/N the CA erred in holding that the withdrawal of private respondent dissolved the partnership regardless of his
good or bad faith.
H:

The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners.
The right to choose with whom a person wishes to associate himself is the foundation and essence of
partnership.
Its continued existence is, in turn, dependent on the mutual resolve, along with each partners capability to
give it, and the absence of a cause for dissolution provided by law itself. Verily, any one of the partners
may, at his sole pleasure, dictate dissolution of the partnership at will. He must however, act in good faith
not that the attendance of bad faith can prevent the dissolution of the partnership at will.

In the matter of the Petition for Authority To Continue use of the firm name Ozaeta, Romulo, etc.
F: 2 separate petitions were filed by the surviving partners of Atty. Alexander Sycip and the surviving partners of
Herminiano Ozaeta, praying that they be allowed to continue using, in the name of their firms, the names of
partners who passed away.
Arguments:
1. Under the law, a partnership is not prohibited from continuing its business under a firm name which
includes the name of the deceased partner.( Art. 1840 of the Civil Code )
2. In regulating other professions, such as accountancy and engineering, the legislature has authorized the
adoption of firm names without any restriction as to the use, in such firm name, of the deceased partner.

3.

4.
5.
6.

The Canons of Professional Ethics are not transgressed because as adopted by American Bar Association:
the continued use of the name of a deceased or former partner when permissible by local custom is not
unethical, but care should be taken that no imposition or deception is practiced through this use.
The deaths of the partners were well-publicized.
No local custom prohibits the continued use of the partners name in a professional firms name.
The continued use of the deceased partners name in the firm name of law partnerships has been
consistently allowed by US Courts.

I: W/N the names of the deceased partners should be allowed to continue in use in the firm name.
H:

Art. 1815. Every partnership shall operate under a firm name, which may or may not include the
name of one or more of the partners.
Those who, not being members of the partnership, include their names in the firm name, shall be
subject to the liability of a partner.
(partners should be living persons who can be subjected to liability)

Art. 1840 treats more of a commercial partnership with a good will to protect rather than a
professional partnership, with no sealable good will but whose reputation depends on the personal
qualifications of its individual members.

The partnership for the practice of law cannot be likened to partnerships formed by other
professionals or for business. The practice of law is also a special privilege, highly personal and
partaking of the nature of a public trust.

Firm names, under local customs, identify the more active and more senior members or partners of
the law firm.

The possibility of deception upon the public, real, or consequential, where the name of a deceased
partner continues to be used cannot be ruled out.
NB: Rule 3.02 of the CPR approved and promulgated by the SC on June 21,1988 in effect abandoned the ruling in
the Sycip case. (see Art. 1815 Civil Code)
EMNACE VS CA

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.

NOTE: Under Article 1809 of the Civil Code, right to demand an accounting may also be invoked under certain
agreements these are just one of the exceptions. General Rule: Accounting only when there is dissolution.
Exception: Article 1807 and 1809.

Rojas v. Maglana
Facts:
Maglana and Rojas executed their Articles of Co-Partnership called Eastcoast Development Enterprises (EDE). It was
a partnership with an indefinite term of existence. Maglana shall manage the business affairs while Rojas shall be
the logging superintendant and shall manage the logging operation. They shall share in all profits and loss equally.
Due to difficulties encountered they decided to avail of the sources of Pahamatong as industrial partners. They
again executed their Articles of Co-Partnership under EDE. The term is 30 years. After sometime Pamahatong sold
his interest to Maglana and Rojas including equipment contributed. After withdrawal of Pamahatong, Maglana and
Rojas continued the partnership. After 3 months, Rojas entered into a management contract with another logging
enterprise. He left and abandoned the partnership. He even withdrew his equipment from the partnership and was
transferred to CMS. He never told Maglana that he will not be able to comply with the promised contributions and
he will not work as logging superintendent. Maglana then told Rojas that the latter share will just be 20% of the net
profits. Rojas took funds from the partnership more than his contribution. Thus, Maglana notified Rojas that he
dissolved the partnership.
Issue: What is the nature of the partnership and legal relationship of Maglana and Rojas after Pahamatong retired
from the second partnership
Ruling:
It was not the intention of the partners to dissolve the first partnership, upon the constitution of the second one,
which they unmistakably called additional agreement. Otherwise stated even during the existence of the second
partnership, all business transactions were carried out under the duly registered articles. No rights and obligations
accrued in the name of the second partnership except in favor of Pahamatong which was fully paid by the duly
registered partnership.