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PARTNERSHIP OUTLINE PT.

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Obligations of the Partners among Themselves to be so presented. But the fact of furnishing the current to the holder
Articles 1784 to 1809 of the franchise alone, without the previous approval of the Public
Service Commission, does not per se make the contract of
partnership null and void from the beginning and render the
1. MAURO LOZANA VS SERAFIN DEPAKAKIBO partnership entered into by the parties for the purpose also void and
non-existent. Under the circumstances, therefore, the court erred in
Lozana entered into a partnership with Depakakibo wherein they declaring that the contract was illegal from the beginning and that
established a capital of P30,000, Lozana furnishing 60% and parties to the partnership are not bound therefor, such that the
Depakakibo, 40%, for the purpose of maintaining, operating and contribution of the plaintiff to the partnership did not pass to it as its
distributing electric light and power in the Municipality of Dumangas, property. It also follows that the claim of the defendant in his
under a franchise issued to Mrs. Piadosa Buenaflor. However, the counterclaim that the partnership be dissolved and its assets
franchise or certificate of public necessity and convenience in favor of liquidated is the proper remedy, not for each contributing partner to
Buenaflor was cancelled and revoked by the Public Service claim back what he had contributed.
Commission on May 15, 1955. But the decision of the Public Service
Commission was appealed to SC and a temporary certificate of public 2. MAXIMILIANO SANCHO VS SEVERIANO LIZARRAGA
convenience was issued in the name of Olimpia D. Decolongon.
The plaintiff brought an action for the rescission of a partnership
Evidently because of the cancellation of the franchise in the name of contract between himself and the defendant, the reimbursement by
Buenaflor, Lozana sold a generator to Decolongon in 1955. the latter of his 50,000 peso investment therein, with interest at 12
Depakakibo, on the other hand, sold one Crossly Diesel Engine, to the per cent per annum from October 15, 1920.
spouses Felix Jimenea and Felina Harder in 1956.
Lozana brought an action against Serafin, alleging that he is the The defendant denies generally and specifically all the allegations of
owner of the Generator Buda (Diesel), valued at P8,000 and 70 the complaint and asks for the dissolution of the partnership, and the
wooden posts with the wires connecting the generator to the payment to him as its manager and administrator of P500 monthly
different houses supplied by electric current in the municipality, and from October 15, 1920, until the final dissolution, with interest, one-
that he is entitled to the possession thereof, but that Serafin has half of said amount to be charged to the plaintiff.
wrongfully detained them as a consequence of which Lozana suffered
damages. He prayed that said properties be delivered back to him. The CFI of Manila held that the defendant had not contributed all the
Judge Pelayo issued an order in said case authorizing the sheriff to capital he had bound himself to invest, and that the plaintiff had
take possession of the generator and 70 wooden posts, upon demanded that the defendant liquidate the partnership, declared it
plaintiff's filing of a bond in favor of the defendant (for subsequent dissolved on account of the expiration of the period for which it was
delivery to the plaintiff). constituted, and ordered the defendant, as managing partner, to
proceed without delay to liquidate it, submitting to the court the
Serafin denied that the generator and the equipment mentioned in result of the liquidation.
the complaint belong to the plaintiff and alleging that the same had
been contributed by the plaintiff to the partnership entered into Issue: W/N Sancho entitled to rescission of the partnership contract
between them in the same manner that defendant had contributed and to the return of his investment.
equipments also, and therefore that he is not unlawfully detaining Held: No
them. Defendant alleged that under the partnership agreement the
parties were to contribute equipments, plaintiff contributing the Ratio: Counsel for the appellee, says that the appeal is premature.
generator and the defendant, the wires for the purpose of installing The point is based on the contention that inasmuch as the liquidation
the main and delivery lines; that the plaintiff sold his contribution to ordered by the trial court, and the consequent accounts, have not
the partnership, in violation of the terms of their agreement. been made and submitted, the case cannot be deemed terminated in
The judge entered a decision declaring plaintiff owner of the said court and its ruling is not yet appealable.
equipment and entitled to the possession thereof, with costs against
defendant. It is against this judgment that the defendant has This contention is well founded. Until the accounts have been
appealed. rendered as ordered by the trial court, and until they have been
either approved or disapproved, the litigation involved in this action
Issue: W/N Lozana violated the partnership agreement. cannot be considered as completely decided.
Held: Yes.
But even going into the merits of the case, the affirmation of the
Ratio: As it appears that the plaintiff and the defendant entered into judgment appealed from is inevitable. Articles 1681 and 1682 have
the contract of partnership, plaintiff contributing the amount of been properly applied. Owing to the defendant's failure to pay to the
P18,000, and as it is not stated therein that there has been a partnership the whole amount which he bound himself to pay, he
liquidation of the partnership assets at the time plaintiff sold the became indebted to it for the remainder, with interest and any
Buda Diesel Engine on October 15, 1955, and since the court below damages occasioned thereby, but the plaintiff did not thereby acquire
had found that the plaintiff had actually contributed one engine and the right to demand rescission of the partnership contract according
70 posts to the partnership, it necessarily follows that the Buda diesel to Article 1124 of the Code. This article cannot be applied to the case
engine contributed by the plaintiff had become the property of the in question, because it refers to the resolution of obligations in
partnership. As properties of the partnership, the same could not be general, whereas article 1681 and 1682 specifically refer to the
disposed of by the party contributing the same without the consent contract of partnership in particular. And it is a well-known principle
or approval of the partnership or of the other partner. that special provisions prevail over general provisions.

The lower court declared that the contract of partnership was null
and void, because by the contract of partnership, the parties thereto
have become dummies of the owner of the franchise. The Anti- 3. WILLIAM UY vs. BARTOLOME PUZON, substituted by FRANCO
Dummy law has not been violated as parties plaintiff and defendant PUZON
are not aliens but Filipinos.
FACTS: Bartolome Puzon had a contract with the Republic of the
Upon examining the contract of partnership, especially the provision Philippines for the construction of the Ganyangan Bato Section of
thereon wherein the parties agreed to maintain, operate and the Pagadian Zamboanga City Road, province of Zamboanga del
distribute electric light and power under the franchise belonging to Sur and of five (5) bridges in the Malangas-Ganyangan Road.
Mrs. Buenaflor, we do not find the agreement to be illegal, or contrary Finding difficulty in accomplishing both projects, Bartolome Puzon
to law and public policy such as to make the contract of partnership, sought the financial assistance of the plaintiff, William Uy. It
null and void ab initio. The agreement could have been submitted to resulted in the formation of the "U.P. Construction Company"
the Public Service Commission if the rules of the latter require them which was subsequently engaged as subcontractor of the

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PARTNERSHIP OUTLINE PT. 2
construction projects. given by the appellee are appellee's partial contributions to the
The partners agreed that the capital of the partnership would be partnership capital.
P100,000.00 of which each partner shall contribute the amount of
P50,000.00 in cash. But, as heretofore stated, Puzon was short of Thus, in the receipt for P10,000.00 dated October 24, 1956, 25
cash and he promised to contribute his share in the partnership the appellant stated:
capital as soon as his application for a loan with the Philippine Received from Mr. William Uy the sum of TEN THOUSAND PESOS
National Bank in the amount of P150,000.00 shall have been (P10,000.00) in Check No. SC 423285 Equitable Banking
approved. However, before his loan application could be acted Corporation, dated October 24, 1956, as advance contribution of
upon, he had to clear his collaterals of its incumbrances first. For the share of said William Uy in the partnership to be organized
this purpose, on October 24, 1956, William Uy gave Bartolome between us under the firm name U.P. CONSTRUCTION COMPANY
Puzon the amount of P10,000.00 as advance contribution of his which amount mentioned above will be used by the undersigned
share in the partnership to be organized between them under the to pay his obligations with the Philippine National Bank to effect
firm name U.P. CONSTRUCTION COMPANY which amount the release of his mortgages with the said bank. (Emphasis
mentioned above will be used by Puzon to pay his obligations with supplied)
the Philippine National Bank to effect the release of his mortgages In the receipt for the amount of P30,000.00 dated October 29,
with the said Bank. On October 29, 1956, William Uy again gave 1956, 26 the appellant also said:
Puzon the amount of P30,000.00 as his partial contribution to the Received from William Uy the sum of THIRTY THOUSAND PESOS
proposed partnership and which the said Puzon was to use in (P30,000.00) in Check No. SC423287, of the Equitable Banking
payment of his obligation to the Rehabilitation Finance Corporation, as partial contribution of the share of the said William
Corporation. Puzon promised William Uy that the amount of Uy to the U.P. CONSTRUCTION COMPANY for which the
P150,000.00 would be given to the partnership to be applied undersigned will use the said amount in payment of his obligation
thusly: P40,000.00, as reimbursement of the capital contribution of to the Rehabilitation Finance Corporation. (Emphasis supplied)
William Uy which the said Uy had advanced to clear the title of The findings of the trial court that the appellant misapplied
Puzon's property; P50,000.00, as Puzon's contribution to the partnership funds is, likewise, sustained by competent evidence. It is
partnership; and the balance of P60,000.00 as Puzon's personal of record that the appellant assigned to the Philippine National
loan to the partnership. Bank all the payments to be received on account of the contracts
As time passed and the financial demands of the projects with the Bureau of Public Highways for the construction of the
increased, William Uy, who supervised the said projects, found aforementioned projects to guarantee the repayment of the bank.
difficulty in obtaining the necessary funds with which to pursue the By virtue of the said appellant's personal loan with the said bank
construction projects. William Uy correspondingly called on assignment, the Bureau of Public Highways paid the money due on
Bartolome Puzon to comply with his obligations under the terms of the partial accomplishments on the construction projects in
their partnership agreement and to place, at lest, his capital question to the Philippine National Bank who, in turn, applied
contribution at the disposal of the partnership. Despite several portions of it in payment of the appellant's loan.
promises, Puzon, however, failed to do so. Realizing that his verbal That the assignment to the Philippine National Bank prejudicial to
demands were to no avail, William Uy consequently wrote the partnership cannot be denied. The record show that during the
Bartolome Puzon formal letters of demand, to which Puzon replied period from March, 1957 to September, 1959, the appellant
that he is unable to put in additional capital to continue with the Bartolome Puzon received from the Bureau of Public highways, in
projects. payment of the work accomplished on the construction projects,
the amount of P1,047,181.01, which amount rightfully and legally
Failing to reach an agreement with William Uy, Bartolome Puzon, belongs to the partnership by virtue of the subcontract
as prime contractor of the construction projects, wrote the agreements between the appellant and the U.P. Construction
subcontractor, U.P. Construction Company, on November 20, Company. In view of the assignemt made by Puzon to the
1957, advising the partnership, of which he is also a partner, that Philippine National Bank, the latter withheld and applied the
unless they presented an immediate solution and capacity to amount of P332,539,60 in payment of the appellant's personal
prosecute the work effectively, he would be constrained to loan with the said bank. The balance was deposited in Puzon's
consider the sub-contract terminated and, thereafter, to assume current account and only the amount of P27,820.80 was deposited
all responsibilities in the construction of the projects in accordance in the current account of the partnership. For sure, if the appellant
with his original contract with the Bureau of Public Highways. 20 gave to the partnership all that were earnd and due it under the
On November 27, 1957, Bartolome Puzon again wrote the subcontract agreements, the money would have been used as a
U.P.Construction Company finally terminating their subcontract safe reserve for the discharge of all obligations of the firm and the
agreement as of December 1, 1957. partnership would have been able to successfully and profitably
prosecute the projects it subcontracted.
ISSUE: W/N Puzon is liable to the partnership thus must When did the appellant make the reimbursement claimed by him?
reimburse Uy. YES For the same period, the appellant actually disbursed for the
partnership, in connection with the construction projects, the
HELD: The findings of the trial court that the appellant failed to amount of P952,839.77. 31 Since the appellant received from the
contribute his share in the capital of the partnership is clear Bureau of Public Highways the sum of P1,047,181.01, the
incontrovertible. The record shows that after the appellant's loan appellant has a deficit balance of P94,342.24. The appellant,
the amount of P150,000.00 was approved by the Philippin National therefore, did not make complete restitution.
Bank in November, 1956, he gave the amount P60,000.00 to the The findings of the trial court that the appellee has been ousted
appellee who was then managing the construction projects. Of this from the management of the partnership is also based upon
amount, P40,000.00 was to be applied a reimbursement of the persuasive evidence. The appellee testified that after he had
appellee's contribution to the partnership which was used to clear demanded from the appellant payment of the latter's contribution
the title to the appellant's property, and th balance of P20,000.00, to the partnership capital, the said appellant did not allow him to
as Puzon's contribution to the partnership. Thereafter, the hold office in the U.P. Construction Company and his authority to
appellant failed to make any further contributions the partnership deal with the Bureau of Public Highways was revoked by the
funds as shown in his letters to the appellee wherein he confessed appellant.
his inability to put in additional capital to continue with the Since the defendant appellant was at fault, the trial court properly
projects. ordered him to reimburse the plaintiff-appellee whatever amount
Parenthetically, the claim of the appellant that the appellee is latter had invested in or spent for the partnership on account of
equally guilty of not contributing his share in the partnership construction projects.
capital inasmuch as the amount of P40,000.00, allegedly given to
him in October, 1956 as partial contribution of the appellee is
merely a personal loan of the appellant which he had paid to the
appellee, is plainly untenable. The terms of the receipts signed by
the appellant are clear and unequivocal that the sums of money

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PARTNERSHIP OUTLINE PT. 2
4. THE UNITED STATES vs. EUSEBIO CLARIN o She told her father, who asked Guzman about it.
Guzman wrote Campos a letter, to which he
never replied to.
Pedro Tarug, Eusebio Clarin, and Carlos de Guzman did in fact trade
in mangoes and obtained P203 from the business, but did not comply Guzman filed a complaint for estafa against Campos for
with the terms of the contract by delivering to Larin his half of the misappropriating and converting the goods received by him in trust
profits; neither did they render him any account of the capital. or commission or for administration.

Campos claims that overall, they havent liquidated their partnership


Larin charged them with the crime of estafa, but the provincial fiscal yet because they still have unsettled accounts.
filed an information only against Eusebio Clarin in which he accused
him of appropriating to himself not only the P172 but also the share Before the partnership formed, he already worked the land
of the profits that belonged to Larin, amounting to P15.50. and allegedly spent Php 2,000.00 with half being
shouldered by Guzman
o Guzman hired him to construct a dike for Php
When two or more persons bind themselves to contribute money,
1.20 per cubic meter for this particular land.
property, or industry to a common fund, with the intention of
They had a similar partnership for the agricultural year of
dividing the profits among themselves, a contract is formed which is
1954-1955, leasing the land of Avelino Odollo
called partnership. (Art. 1665, Civil Code.)
For the 2 previous jobs, Guzman made partial settlements
but still has an unpaid balance of Php 1,000.00
When Larin put the P172 into the partnership which he formed with
Tarug, Clarin, and Guzman, he invested his capital in the risks or Trial Court found him guilty of Estafa, sentenced to imprisonment (1
benefits of the business of the purchase and sale of mangoes, and, month & 1 day to 1 year & 1 day) and to indemnify Guzman Php
750.00
even though he had reserved the capital and conveyed only the
usufruct of his money, it would not devolve upon of his three
partners to return his capital to him, but upon the partnership of ISSUE/HELD/RATIO
which he himself formed part, or if it were to be done by one of the
three specifically, it would be Tarug, who, according to the evidence, W/N there was material variance between the information and
was the person who received the money directly from Larin. the evidence? No.

Defense: Information states that the palay should have been


The P172 having been received by the partnership, the business delivered to Guzman when Campos was under obligation to deliver it
commenced and profits accrued, the action that lies with the partner to Alonzo. Campos should not be convicted for estafa with Guzman as
who furnished the capital for the recovery of his money is not a the offended party, it should have been Alonzo.
criminal action for estafa, but a civil one arising from the partnership
contract for a liquidation of the partnership and a levy on its assets if Court: If the palay was not delivered to Alonzo, Guzman will have to
there should be any. pay him Php 750.00. Guzman is the offended party because his
indebtedness for the rent would still subsist of Campos did not
deliver the palay to Alonzo.
For which it would be sufficient to argue that the partnership had
received the money under obligation to return it. W/N Campos is guilty of estafa? Yes.

Defense: The partnership had not yet been liquidated.


We therefore freely acquit Eusebio Clarin, with the costs de oficio.
The complaint for estafa is dismissed without prejudice to the No accounting had been made between them.
institution of a civil action. Guzman still havent fully paid for his share of under the
partnership
The expenses incurred still havent been deducted from
5. PEOPLE VS. CAMPOS, [C.A.] 54 O.G. 681 the 120 cavanes of harvested palay.

Mathias: Segregation of the harvests had already been made, thus


FACTS: Leoncio Campos and Bonifacio Guzman entered into a liquidating the partnership
contract of partnership.
Concepcion: Affirmed that Mathias and Campos went to her and
The contract states that Campos owns a bulldozer and will work the informed her that she can pick-up the palay for the rentals.
fields in Barrio Cambabalo at the rate of Php 55.00 per hectare. The
two of them will share the expenses; Campos will pay for the Court:
bulldozer while Guzman will pay for the oil (not more than 15 1. There had already been liquidation; 75 cavanes of palay
drums), they will share the cost of the seeds. Guzman leased from couldnt have been segregated without some sort
Juan Alonzo for 75 cavans of palay. accounting.
2. Asking Concepcion not to report to Guzman reveals a
February 25, 1955 Campos told Guzman that the harvested palay guilty conscience.
was ready for threshing. Guzman sent his nephew, Manuel Mathias, 3. Even if the partnership had not yet been liquidated, the 75
to observe the threshing with specific instructions to segregate the cavanes of palay no longer belonged to the partnership. He
their of the palay, the share of the tenants and the 75 cavans of palay had a duty of deliver it to Alonzo in payment of their
for rent woth Php 750.00. rentals.
a. A partner is guilty of estafa if he fraudulently
Guzmans share is to be deposited at the warehouse appropriates partnership property delivered to
Payment for rent is to be delivered to Campos for delivery him with specific instructions to apply it to the
to Alonzo. used of the partnership. (People v. Dela Cruz)
o Mathias and Campos fetched Alonzos daughter, b. Campos converted and misappropriated the 75
Concepcion, and advised her to pick it up. She cavanes of palay to his own personal use and
cant make it today and promised to come back benefit, instead of performing his duty.
the next day. But, when she came for the palay,
it was already missing and Campos begged her RULING: AFFIRMED, guilty of estafa beyond reasonable doubt.
not to tell Guzman.
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PARTNERSHIP OUTLINE PT. 2
6. PEDRO MARTINEZ vs. ONG PONG CO & ONG LAY, ONG PONG CO With regard to the possible profits, the findings of the court below
are based on the statements of the defendant Ong Pong Co, to the
effect that "there were some profits, but not large ones." This court,
On the 12th of December, 1900, the plaintiff herein delivered P1,500
however, does not find that the amount thereof has been proven, nor
to the defendants who, in a private document, acknowledged that
deem it possible to estimate them to be a certain sum, and for a given
they had received the same with the agreement, as stated by them,
period of time; hence, it cannot admit the estimate, made in the
"that we are to invest the amount in a store, the profits or losses of
judgment, of 12 per cent per annum for the period of six months.
which we are to divide with the former, in equal shares."

Inasmuch as in this case nothing appears other than the failure to


The plaintiff filed a complaint on April 25, 1907, in order to compel
fulfill an obligation on the part of a partner who acted as agent in
the defendants to render him an accounting of the partnership as
receiving money for a given purpose, for which he has rendered no
agreed to, or else to refund him the P1,500 that he had given them for
accounting, such agent is responsible only for the losses which, by a
the said purpose. Ong Pong Co alone appeared to answer the
violation of the provisions of the law, he incurred. This being an
complaint; he admitted the fact of the agreement and the delivery to
obligation to pay in cash, there are no other losses than the legal
him and to Ong Lay of the P1,500 for the purpose aforesaid, but he
interest, which interest is not due except from the time of the judicial
alleged that Ong Lay, who was then deceased, was the one who had
demand, or, in the present case, from the filing of the complaint.
managed the business, and that nothing had resulted therefrom save
(Arts. 1108 and 1100, Civil Code.) We do not consider that Article
the loss of the capital of P1,500, to which loss the plaintiff agreed.
1688 is applicable in this case, in so far as it provides "that the
partnership is liable to every partner for the amounts he may have
The judge of the Court of First Instance of the city of Manila who tried disbursed on account of the same and for the proper interest," for the
the case ordered Ong Pong Co to return to the plaintiff one-half of the reason that no other money than that contributed as is involved.
said capital of P1,500 which, together with Ong Lay, he had received
from the plaintiff, to wit, P750, plus P90 as one-half of the profits,
As in the partnership there were two administrators or agents liable
calculated at the rate of 12 per cent per annum for the six months
for the above-named amount, article 1138 of the Civil Code has been
that the store was supposed to have been open, both sums in
invoked; this latter deals with debts of a partnership where the
Philippine currency, making a total of P840, with legal interest
obligation is not a joint one, as is likewise provided by Article 1723 of
thereon at the rate of 6 per cent per annum, from the 12th of June,
said code with respect to the liability of two or more agents with
1901, when the business terminated and on which date he ought to
respect to the return of the money that they received from their
have returned the said amount to the plaintiff, until the full payment
principal. Therefore, the other errors assigned have not been
thereof with costs.
committed.

From this judgment Ong Pong Co appealed to this court, and assigned
In view of the foregoing judgment appealed from is hereby affirmed,
the following errors:
provided, however, that the defendant Ong Pong Co shall only pay the
plaintiff the sum of P750 with the legal interest thereon at the rate of
1. For not having taken into consideration the fact that the 6 per cent per annum from the time of the filing of the complaint, and
reason for the closing of the store was the ejectment from the the costs, without special ruling as to the costs of this instance. So
premises occupied by it. ordered.
2. For not having considered the fact that there were losses.
3. For holding that there should have been profits.
4. For having applied article 1138 of the Civil Code.
5. and 6. For holding that the capital ought to have yielded
profits, and that the latter should be calculated 12 per cent per
annum; and
7. The findings of the ejectment.

As to the first assignment of error, the fact that the store was closed
by virtue of ejectment proceedings is of no importance for the effects
of the suit. The whole action is based upon the fact that the
defendants received certain capital from the plaintiff for the purpose
of organizing a company; they, according to the agreement, were to
handle the said money and invest it in a store which was the object of
the association; they, in the absence of a special agreement vesting in
one sole person the management of the business, were the actual
administrators thereof; as such administrators they were the agent of
the company and incurred the liabilities peculiar to every agent,
among which is that of rendering account to the principal of their
transactions, and paying him everything they may have received by
virtue of the mandatum. (Arts. 1695 and 1720, Civil Code.) Neither of
them has rendered such account nor proven the losses referred to by
Ong Pong Co; they are therefore obliged to refund the money that
they received for the purpose of establishing the said store the
object of the association. This was the principal pronouncement of
the judgment.

With regard to the second and third assignments of error, this court,
like the court below, finds no evidence that the entire capital or any
part thereof was lost. It is no evidence of such loss to aver, without
proof, that the effects of the store were ejected. Even though this was
proven, it could not be inferred therefrom that the ejectment was due
to the fact that no rents were paid, and that the rent was not paid on
account of the loss of the capital belonging to the enterprise.

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PARTNERSHIP OUTLINE PT. 2
7. RAMNANI v. CA 1971 Constitutional Convention), with Moran actually supervising
the work; that Pecson would receive a commission of P1,000 a month
starting on April 15, 1971 up to December 15, 1971; that on
FACTS: Ishwar, Choithram and Navalrai, all surnamed Jethmal
December 15, 1971, a liquidation of the accounts in the distribution
Ramnani, are brothers of the full blood. Ishwar and his spouse Sonya
and printing of the 95,000 posters would be made, that Pecson gave
had their main business based in New York. Realizing the difficulty of
Moran P10,000 for which the latter issued a receipt; that only a few
managing their investments in the Philippines they executed a
posters were printed; that on or about May 28, 1971, Moran executed
general power of attorney on January 24, 1966 appointing Navalrai
in favor of Pecson a promissory note in the amount of P20,000
and Choithram as attorneys-in-fact, empowering them to manage and
payable in two equal installments (P10,000 payable on or before June
conduct their business concern in the Philippines
15, 1971 and P10,000 payable on or before June 30, 1971), the whole
sum becoming due upon default in the payment of the first
On February 1, 1966 and on May 16, 1966, Choithram entered into installment on the date due, complete with the costs of collection.
two agreements for the purchase of two parcels of land located in
Barrio Ugong, Pasig, Rizal, from Ortigas & Company, Ltd. Partnership.
Pecson filed an action for the recovery of a sum of money (1) on the
A building was constructed thereon by Choithram in 1966. Three
alleged partnership agreement, the return of his contribution of
other buildings were built thereon by Choithram through a loan of
P10,000.00, payment of his share in the profits that the partnership
P100,000.00 obtained from the Merchants Bank as well as the
would have earned, and, payment of unpaid commission; (2) on the
income derived from the first building.
alleged promissory note, payment of the sum of P20,000.00; and, (3)
moral and exemplary damages and attorney's fees.
Sometime in 1970 Ishwar asked Choithram to account for the income
and expenses relative to these properties during the period 1967 to
After the trial, the CFI held that Moran return to plaintiff Pecson the
1970. Choithram failed and refused to render such accounting.
sum of P17,000.00, with interest at the legal rate.
Thereafter, Ishwar revoked the general power of attorney. Choithram
and Ortigas were duly notified of such revocation on April 1, 1971
and May 24, 1971, respectively. Said notice was also registered with From this decision, both parties appealed to the respondent Court of
the Securities and Exchange Commission on March 29, 1971 and was Appeals. The latter likewise rendered a decision against the
published in the April 2, 1971 issue of The Manila Times for the petitioner ordering him to pay Pecson:
information of the general public.
(a) Forty-seven thousand five hundred (P47,500) (the amount
Nevertheless, Choithram, transferred all rights and interests of that could have accrued to Pecson under their agreement);
Ishwar and Sonya in favor of his daughter-in-law, Nirmla Ramnani, (b) Eight thousand (P8,000), (the commission for eight months);
on February 19, 1973. On October 6, 1982, Ishwar and Sonya filed a (c) Seven thousand (P7,000) (as a return of Pecson's investment
complaint against Choitram and/or spouses Nirmla and Moti and for the Veteran's Project);
Ortigas for reconveyance of said properties or payment of its value (d) Legal interest
and damages.
Issue: W/N Pecson is entitled to the amounts stated above.
ISSUE: Whether Ishram can recover the entire properties subject in
the ligitation
Held:

HELD: No, Ishram cannot recover the entire properties subject.


Ratio: The first question raised in this petition refers to the award of
P47,500.00 as the private respondent's share in the unrealized
The Supreme Court held that despite the fact that Choithram, et al., profits of the partnership. The petitioner contends that the award is
have committed acts which demonstrate their bad faith and scheme highly speculative. The petitioner maintains that the respondent
to defraud spouses Ishwar and Sonya of their rightful share in the court did not take into account the great risks involved in the
properties in litigation, the Court cannot ignore the fact that business undertaking.
Choithram must have been motivated by a strong conviction that as
the industrial partner in the acquisition of said assets he has as much
We agree with the petitioner that the award of speculative damages
claim to said properties as Ishwar, the capitalist partner in the joint
has no basis in fact and law.
venture.

There is no dispute over the nature of the agreement between the


Choithram in turn decided to invest in the real estate business. He
petitioner and the private respondent. It is a contract of partnership.
bought the two (2) parcels of land in question from Ortigas as
The latter in his complaint alleged that he was induced by the
attorney-in-fact of Ishwar. Instead of paying for the lots in cash, he
petitioner to enter into a partnership with him. The petitioner on the
paid in installments and used the balance of the capital entrusted to
other hand admitted in his answer the existence of the partnership.
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 The rule is, when a partner who has undertaken to contribute a sum
industry and genius of Choithram, Ishwar's property was developed of money fails to do so, he becomes a debtor of the partnership for
and improved into what it is now. whatever he may have promised to contribute (Art. 1786, Civil Code)
and for interests and damages from the time he should have
complied with his obligation (Art. 1788, Civil Code). Thus in Uy v.
Justice and equity dictate that the two share equally the fruit of their
Puzon (79 SCRA 598), which interpreted Art. 2200 of the Civil Code of
joint investment and efforts. Perhaps this Solomonic solution may
the Philippines, we allowed a total of P200,000.00 compensatory
pave the way towards their reconciliation. Both would stand to gain.
damages in favor of the appellee because the appellant therein was
No one would end up the loser. After all, blood is thicker than water.
remiss in his obligations as a partner and as prime contractor of the
construction projects in question. We awarded compensatory
damages in the Uy case because there was a finding that the
8. ISABELO MORAN, JR. VS THE HON. COURT OF APPEALS and constructing business is a profitable one and that the UP construction
MARIANO E. PECSON company derived some profits from its contractors. In the instant
case, there is no evidence whatsoever that the partnership between
the petitioner and the private respondent would have been a
Facts : On February 22, 1971 Pecson and Moran entered into an
profitable venture. In fact, it was a failure doomed from the start.
agreement whereby both would contribute P15,000 each for the
purpose of printing 95,000 posters (featuring the delegates to the

5
PARTNERSHIP OUTLINE PT. 2
There is therefore no basis for the award of speculative damages in evidence indicates that the P20,000 was assigned by Moran to
favor of the private respondent. cover the following:

Furthermore, in the Uy case, only Puzon failed to give his full (a) P 7,000 the amount of the PNB check given by Pecson to
contribution while Uy contributed much more than what was Moran representing Pecson's investment in Moran's other
expected of him. In this case, however, there was mutual breach. project (the publication and printing of the 'Voice of the
Private respondent failed to give his entire contribution in the Veterans');
amount of P15,000.00. He contributed only P10,000.00. The
petitioner likewise failed to give any of the amount expected of him.
(b) P10,000 to cover the return of Pecson's contribution in
He further failed to comply with the agreement to print 95,000 copies
the project of the Posters;
of the posters. Instead, he printed only 2,000 copies.

(c) P3,000 representing Pecson's commission for three


Article 1797 of the Civil Code provides: The losses and profits shall
months (April, May, June, 1971).
be distributed in conformity with the agreement. If only the share of
each partner in the profits has been agreed upon, the share of each in
the losses shall be in the same proportion. Of said P20,000 Moran has to pay P7,000 (as a return of Pecson's
investment for the Veterans' project, for this project never left the
ground) ...
Being a contract of partnership, each partner must share in the
profits and losses of the venture. That is the essence of a partnership.
And even with an assurance made by one of the partners that they In this case, there is misapprehension of facts. The evidence of the
would earn a huge amount of profits, in the absence of fraud, the private respondent himself shows that his investment in the "Voice of
other partner cannot claim a right to recover the highly speculative Veterans" project amounted to only P3,000.00. The remaining
profits. It is a rare business venture guaranteed to give 100% profits. P4,000.00 was the amount of profit that the private respondent
In this case, on an investment of P15,000.00, the respondent was expected to receive.
supposed to earn a guaranteed P1,000.00 a month for eight months
and around P142,500.00 on 95,000 posters costing P2.00 each but
The records show the following exhibits-
2,000 of which were sold at P5.00 each.

E Xerox copy of PNB Manager's Check No. 234265 dated March


It does not follow however that the private respondent is not entitled
22, 1971 in favor of defendant. Defendant admitted the
to recover any amount from the petitioner. The records show that the
authenticity of this check and of his receipt of the proceeds
private respondent gave P10,000.00 to the petitioner. The latter used
thereof. This exhibit is being offered for the purpose of showing
this amount for the printing of 2,000 posters at a cost of P2.00 per
plaintiff's capital investment in the printing of the "Voice of the
poster or a total printing cost of P4,000.00. The records further show
Veterans" for which he was promised a fixed profit of P8,000. This
that the 2,000 copies were sold at P5.00 each. The gross income
investment of P6,000.00 and the promised profit of P8,000 are
therefore was P10,000.00. Deducting the printing costs of P4,000.00
covered by defendant's promissory note for P14,000 dated March
from the gross income of P10,000.00 and with no evidence on the
31, 1971 marked by defendant as Exhibit 2 and by plaintiff as
cost of distribution, the net profits amount to only P6,000.00. This net
Exhibit P. Later, defendant returned P3,000.00 of the P6,000.00
profit of P6,000.00 should be divided between the petitioner and the
investment thereby proportionately reducing the promised profit
private respondent. And since only P4,000.00 was undesirable by the
to P4,000. With the balance of P3,000 (capital) and P4,000
petitioner in printing the 2,000 copies, the remaining P6,000.00
(promised profit), defendant signed and executed the promissory
should therefore be returned to the private respondent.
note for P7,000 marked Exhibit 3 for the defendant and Exhibit M
for plaintiff. Of this P7,000, defendant paid P4,000 representing
Relative to the second alleged error, the petitioner submits that the full return of the capital investment and P1,000 partial payment of
award of P8,000.00 as Pecson's supposed commission has no the promised profit. The P3,000 balance of the promised profit
justifiable basis in law. was made part consideration of the P20,000 promissory note. It is,
therefore, being presented to show the consideration for the
P20,000 promissory note.
Again, we agree with the petitioner.

F Xerox copy of PNB Manager's check dated May 29, 1971 for
The partnership agreement stipulated that the petitioner would give
P7,000 in favor of defendant. The authenticity of the check and his
the private respondent a monthly commission of Pl,000.00 from April
receipt of the proceeds thereof were admitted by the defendant.
15, 1971 to December 15, 1971 for a total of eight (8) monthly
This P 7,000 is part consideration, and in cash, of the P20,000
commissions. The agreement does not state the basis of the
promissory note and it is being presented to show the
commission. The payment of the commission could only have been
consideration for the P20,000 note and the existence and validity
predicated on relatively extravagant profits. The parties could not
of the obligation.
have intended the giving of a commission inspite of loss or failure of
the venture. Since the venture was a failure, the private respondent is
not entitled to the P8,000.00 commission. L-Book entitled "Voice of the Veterans" which is being offered for
the purpose of showing the subject matter of the other partnership
agreement and in which plaintiff invested the P6,000 which,
Anent the third assigned error, the petitioner maintains that the
together with the promised profit of P8,000 made up for the
respondent Court of Appeals erred in holding him liable to the
consideration of the P14,000 promissory note. As explained in
private respondent in the sum of P7,000.00 as a supposed return of
connection with Exhibit E. the P3,000 balance of the promised
investment in a magazine venture.
profit was later made part consideration of the P20,000
promissory note.
In awarding P7,000.00 to the private respondent as his supposed
return of investment in the "Voice of the Veterans" magazine venture,
M-Promissory note for P7,000 dated March 30, 1971. This is also
the respondent court ruled that:
defendant's Exhibit E. This document is being offered for the
purpose of further showing the transaction as explained in
... Moran admittedly signed the promissory note of P20,000 in connection with Exhibits E and L.
favor of Pecson. Moran does not question the due execution of said
note. Must Moran therefore pay the amount of P20,000? The
N-Receipt of plaintiff dated March 30, 1971 for the return of his
P3,000 out of his capital investment of P6,000 in the P14,000

6
PARTNERSHIP OUTLINE PT. 2
promissory note. This is also defendant's Exhibit 4. This document * Ng Ya finally filed a complaint with the CFI Cebu.
is being offered in support of plaintiff's explanation in connection
with Exhibits E, L, and M to show the transaction mentioned * Sugbu Commercial then filed a 3rd-party complaint against Pow Sun
therein. Gee, alleging that the latter received the amounts of P5,400 and
P4,000 in his capacity as manager of Sugbu Commercial when he
was not authorized to issue official receipts and that only his co-
P-Promissory note for P14,000.00. This is also defendant's Exhibit
partner Shih Tiong Chu, who was most of the time in Manila, could do
2. It is being offered for the purpose of showing the transaction as
so. In this regard, Sugbu Commercial prayed that Pow Sun gee be
explained in connection with Exhibits E, L, M, and N above.
ordered to indemnify Sugbu Commercial for whatever is adjudged
against the latter in favor of plaintiff Ng Ya.
The respondent court erred when it concluded that the project never
left the ground because the project did take place. Only it failed. It * TC decided in favor of Ng Ya and sentenced Sugbu to pay plaintiff
was the private respondent himself who presented a copy of the book the sum of P9,400 and condemning Pow Sun Gee to reimburse Sugbu
entitled "Voice of the Veterans" in the lower court. Therefore, it Commercial Company.
would be error to state that the project never took place and on this
basis decree the return of the private respondent's investment. * Sugbu Commercial appealed.

As already mentioned, there are risks in any business venture and the Issue W/N Sugbu Commercial should not be held liable because Pow
failure of the undertaking cannot entirely be blamed on the managing Sun Gee, as the one who received the payments and issued receipts to
partner alone, especially if the latter exercised his best business Ng Ya, is not authorized to do so.
judgment, which seems to be true in this case. In view of the
foregoing, there is no reason to pass upon the fourth and fifth Holding: No.
assignments of errors raised by the petitioner. We likewise find no
valid basis for the grant of the counterclaim. Ratio Decidendi: A manager of a partnership is presumed to
have all the incidental powers to carry out the object of the
partnership in the transaction of the business. There is of course
WHEREFORE, the petition is GRANTED. The decision of the
an exception to the general rule: when the powers of a manager are
respondent Court of Appeals (now Intermediate Appellate Court) is
specifically restricted, he could not exercise the powers expressly
hereby SET ASIDE and a new one is rendered ordering the petitioner
limited of him. But when the articles of association do not specify
Isabelo Moran, Jr., to pay private respondent Mariano Pecson SIX
the powers of the manager, it is admitted on principle that a
THOUSAND (P6,000.00) PESOS representing the amount of the
manager has the powers of a general agent, and even more. When
private respondent's contribution to the partnership but which
the object of the company is determined, the manager has all the
remained unused; and THREE THOUSAND (P3,000.00) PESOS powers necessary for the attainment of such object.
representing one half (1/2) of the net profits gained by the
partnership in the sale of the two thousand (2,000) copies of the
Reasoning: Sugbu Commercial was not able to present articles of co-
posters, with interests at the legal rate on both amounts from the
partnership that would show any limitation upon the powers of the
date the complaint was filed until full payment is made. SO
manager an indication that there was none. For this reason, we hold
ORDERED.
and declare that the minor power of issuing official receipt is
included in the general powers of the manager.

9. NG YA VS. SUGBU COMMERCIAL CO., [C.A.] 50 O.G. 4913 Indeed, it would be quite queer that the manager of any juridical
entity would not be authorized to issue official receipts for amounts
delivered to that entity through said manager, and that only his co-
Facts * Ng Ya, a Chinese merchant based in Surigao, Surigao ordered partner Shih Tiong Chu, who was most of the time in Manila, could do
from Sugbu Commercial (based in Cebu) 1,000 galvanized iron and so. This is not in keeping with the present day business dealings, for
aluminium sheets. It was agreed that the goods would be delivered in it is slow and inconvenient to those who transact with the company.
a weeks time, or on or before January 5, 1950. The amount of these
goods is P5,400, which appears to have been paid by Ng Ya in full. 10..M. TEAGUE vs. H. MARTIN, J. T. MADDY and L.H. GOLUCKE

* However, the said goods were not delivered on the said date. And as Facts:
Ng Ya kept on inquiring from Sugbu Commercial Co. about the status Plaintiff alleges that about December 23, 1926, he and the
of the goods, the latter failed to deliver the same but kept promising defendants formed a partnership for the operation of a fish
that the said goods would be delivered at some future time. business and similar commercial transactions, which by mutual
contest was called "Malangpaya Fish Co," with a capital of
* Sugbu Commercial later found out that Ng Ya is also in need of P35,000, of which plaintiff paid P25,000, the defendant Martin
cigarettes that she will sell on resale in Surigao. The former then P5,000, P2,500, and Golucke P2,500. That as such partnership,
offered the latter cigarettes. Ng Ya was enticed by the offer and then they agreed to share in the profits and losses of the business in
entered into another contract of sale with Sugbu. proportion to the amount of capital which each contributed.
That the plaintiff was named the general manager to take
* She paid the amount of the cigarettes worth P4,000 with the help of charge of the business, with full power to do and perform all
Lana Bakery, with whom she had an understanding of splitting the acts necessary to carry out of the purposes of the partnership.
profits she hoped to realize from the buy and sell of cigarettes. That there was no agreement as to the duration of the
partnership. That plaintiff wants to dissolve it, but that the
* However, after a couple of months, in July, neither the cigarettes nor defendants refused to do so.
the galvanized iron and aluminium sheets reached Ng Ya. That the partnership purchased and now owns a lighter called
Consequently, Tan Chun Pia of Lana Bakery, from whom she obtained Lapu-Lapu, and a motorship called Barracuda, and other
the P4,000 got angry with her and, for this reason, Ng Ya was forced properties. That the lighter and the motorship are in the
to reimburse him of the amount. possession of the defendants who are making use of them, to the
damage and prejudice of the plaintiff, for any damage which
* She then kept coming back to Sugbu to demand either the delivery plaintiff may sustain.
of the goods she ordered or the payment of P 9,400. Unfortunately, "Plans for formation of a limited partnership,"
every time she dropped there, poor Ng Ya was challenged by Shih Captain Maddy would have charge of the Barracuda and its
Tiong Chu to file a complaint, and she had to seek the help of the navigation, with a salary of P300 per month
Chinese Chamber of Commerce for the settlement of her claim. Martin would have charge of the southern station, cold
stores, commisary and procuring fish, with a salary of P300
per month,
7
PARTNERSHIP OUTLINE PT. 2
Teague (plaintiff) would have charge of selling fish in Manila the Code of Commerce which gives us that "no partner can
and purchasing supplies, without salary until such time as transfer to another person the interest he may have in the co-
the business is placed on a paying basis, when his salary partnership
would be the same as that of Maddy and Martin, and that the Defense of Cenon Villanueva and Corazon del Rosario
principal office of the partnership "shall keep books The licenses awarded to the tailoring shop was under the name of
showing plainly all transactions," which shall be available at Emiliano del Rosario
all time for inspection of any of the members. At the office of SEC, they found no partnership operating as a
CFI: dissolved the partnership and liquidated its assets tailoring shop and registered under the name of Esquire
The barge Lapu-Lapu as well as the Ford truck No. T-3019 and CFI ruled there is a partnership
adding machine belong exclusively to the plaintiff, M. Teague, Esquire is owned in common by the 3 partners hence the sale is
but the said plaintiff must return to and reimburse the null and void for it was done without the consent & knowledge of
partnership the sum of P14,032.26 taken from its funds for the the other partner
purchase and equipment of the said barge Lapu-Lapu; and also
to return the sum of P1,230 and P228 used for buying the Ford Issue: 1.) Whether a partnership is formed
truck and adding machine, respectively 2.) Whether the defendants are buyers in good faith
Plaintiff appeals the ruling of the Trial Court
Plaintiff contends that he is managing partner of the Held/Ratio:
partnership and the three properties (Lapu-Lapu, Barracuda & 1.) YES.
Ford truck) are properties of the partnership since they were In Emiliano's application for the registration of the firm name
paid from the profits of the partnership thus do not belong to "Esquire" in the Bureau of Commerce, wherein he not only
him. named his partners in the business but expressly stated there
shares in the partnership as well.
Issue: 2.) NO.
1.) Whether the plaintiff is a managing partner of a partnership At the time of the perfection of the contract of sale, the
(Thus can make purchases for the partnership without the defendants knew that Emiliano does not solely owns the tailor
knowledge and/or consent of his copartners) shop by himself as evidenced by the registration of the firm
2.) Whether the three properties are owned by the partnership name "Esquire" in the Bureau of Commerce.
Decision: CFI ruling affirmed.
Held/Ratio:
1.) YES. All three of the partners are general managers in their 12. BACHRACH VS. LA PROTECTORA,
particular part of business
It will thus be noted that the powers and duties of Maddy FACTS: In the year 1913, the individuals named as defendants in this
Martin, and the plaintiff are specifically defined, and that each of action formed a civil partnership, called "La Protectora," for the
them was more or less the general manager in his particular purpose of engaging in the business of transporting passengers and
part of the business. That is to say, that Maddy's power and freight at Laoag, Ilocos Norte. In order to provide the enterprise with
duties are confined and limited to the charge of the Barracuda means of transportation, Marcelo Barba, acting as manager, came to
and its navigation, and Martin's to the southern station, cold Manila and upon June 23, 1913, negotiated the purchase of two
stores, commissary and procuring fish, and that plaintiff's automobile trucks from the plaintiff, E. M. Bachrach, for the agree
powers and duties are confined and limited to "selling fish in price of P16,500. He paid the sum of 3,000 in cash, and for the
Manila and the purchase of supplies." balance executed promissory notes representing the deferred
2.) NO. payments. These notes provided for the payment of interest from
The Lapu-Lapu, the Ford truck, and the adding machine were June 23, 1913, the date of the notes, at the rate of 10 per cent per
purchased by the plaintiff and paid for out of the funds of the annum. Provision was also made in the notes for the payment of 25
partnership, and that by his own actions and conduct, and the per cent of the amount due if it should be necessary to place the notes
taking of the title in his own name, he is now estopped to claim in the hands of an attorney for collection. Three of these notes, for the
or assert that they are not his property or that they are the sum of P3,375 each, have been made the subject of the present action,
property of the company. and there are exhibited with the complaint in the cause. One was
The plaintiff's authority was confined and limited to the "selling signed by Marcelo Barba in the following manner:
of fish in Manila and the purchase of supplies." It must be
conceded that, standing alone, the power to sell fish and
P. P. La Protectora
purchase supplies does not carry with it or imply the authority
By Marcelo Barba
to purchase the Lapu-Lapu, or the Ford truck, or the adding
Marcelo Barba.
machine. From which it must follow that he had no authority to
purchase the lighter Lapu-Lapu, the Ford truck, or the adding
machine, as neither of them can be construed as supplies for the The other two notes are signed in the same way with the word "By"
partnership business. omitted before the name of Marcelo Barba in the second line of the
Plaintiff must be compensated for the partnership's use of the Lapu- signature. It is obvious that in thus signing the notes Marcelo Barba
Lapu (a lighter; a type of flat-bottomed barge) intended to bind both the partnership and himself. In the body of the
Court ruled he is entitled for P2,000 note the word "I" (yo) instead of "we" (nosotros) is used before the
Decision: CFI ruling affirmed. words "promise to pay" (prometemos) used in the printed form. It is
plain that the singular pronoun here has all the force of the plural.
11. GAVINO SANTOS vs. CENON VILLANUEVA
Facts: As preliminary to the purchase of these trucks, the defendants
Santos filed a recission of the sale of a tailoring shop (named Nicolas Segundo, Antonio Adiarte, Ignacio Flores, and Modesto
Esquire) executed between defendants Emiliano del Rosario Serrano, upon June 12, 1913, executed in due form a document in
(vendor) and Cenon Villanueva and/or Corazon del Rosario which they declared that they were members of the firm "La
(vendee) Protectora" and that they had granted to its president full authority
Santos contends that the tailoring shop is owned in common by 3 "in the name and representation of said partnership to contract for
partners, namely, himself, Luisito del Rosario, and defendant the purchase of two automobiles" (en nombre y representacion de la
Emiliano del Rosario; although the contract was not reduced in mencionada sociedad contratante la compra de dos automoviles). This
writing because they were brothers but each partner contributed document was apparently executed in obedience to the requirements
P5,000 to the common fund, and Emiliano, being the one of subsection 2 of article 1697 of the Civil Code, for the purpose of
managing the tailor shop, registered such business evidencing the authority of Marcelo Barba to bind the partnership by
Plaintiff also contends that and the sale made by Cenon the purchase. The document in question was delivered by him to
Villanueva and/or Corazon del Rosario was w/o the knowledge Bachrach at the time the automobiles were purchased.
and consent of the other partners hence void under Art. 143 of

8
PARTNERSHIP OUTLINE PT. 2
From time to time after this purchase was made, Marcelo Barba 13. MACHUCA VS. CHUIDIAN
purchased of the plaintiff various automobile effects and accessories
to be used in the business of "La Protectora." Upon May 21, 1914, the
FACTS: CHUIDIAN, BUENAVENTURA & CO (defendants) is a regular
indebtedness resulting from these additional purchases amounted to
general partnership. The original partners were D. Telesforo
the sum of P2,916.57
Chuidian, Doa Raymunda Chuidian, Doa Candelaria Chuidian, and
D. Mariano Buenaventura. The partners each contributed a certain
In May, 1914, the plaintiff foreclosed a chattel mortgage which he had amount of money to the partnership.
retained on the trucks in order to secure the purchase price. The
amount realized from this sale was P1,000. This was credited unpaid.
Dona Raymunda retired from the partnership on November 1885.
To recover this balance, together with the sum due for additional
The partnership subsequently went into liquidation (it does not
purchases, the present action was instituted in the Court of First
appear that the liquidation has been terminated when this action was
Instance of the city of Manila, upon May 29, 1914, against "La
brought).
Protectora" and the five individuals Marcelo Barba, Nicolas Segundo,
Antonio Adiarte, Ignacio Flores, and Modesto Serrano. No question
has been made as to the propriety of impleading "La Protectora" as if On January 1894, D. Mariano Buenaventura died, his estate passing
it were a legal entity. At the hearing, judgment was rendered against by will to his children, including D. Vicente Buenaventura. In 1898,
all of the defendants. From this judgment no appeal was taken in D. Vicente Buenaventura executed a public instrument in which for
behalf either of "La Protectora" or Marcelo Barba; and their liability is a valuable consideration he assigns to D. Jose Gervasio Garcia . . . a
not here under consideration. The four individuals who signed the 25 per cent share in all that may be obtained by whatever right in
document to which reference has been made, authorizing Barba to whatever form from the liquidation of the partnership of Chuidian,
purchase the two trucks have, however, appealed and assigned Buenaventura & Co., in the part pertaining to him in said partnership.
errors. The question here to be determined is whether or not these
individuals are liable for the firm debts and if so to what extent.
A subsequent assignment was made by Garcia in favor of Jose
Machuca (now plaintiff), which has been notified to the liquidator of
The amount of indebtedness owing to the plaintiff is not in dispute, as the partnership. The liquidator, however, declined to record in the
the principal of the debt is agreed to be P7,037. Of this amount it books of the partnership Machucas claim under the assignment as a
must now be assumed, in view of the finding of the trial court, from credit due to him. Hence, Machuca filed an action to compel such
which no appeal has been taken by the plaintiff, that the unpaid record to be made, and he further asks that he be adjudicated to be a
balance of the notes amounts to P4,121, while the remainder creditor of the partnership in an amount equal to 25% of D. Vicente
(P2,916) represents the amount due for automobile supplies and Buenaventuras share (that he be immediately given the 25% share).
accessories.
ISSUE: WON Machuca is entitled to 25% of D. Vicente Buenaventuras
ISSUE: WON Barba has the authority to bind the partnership? share in the partnership NO

HELD: The business conducted under the name of "La Protectora" HELD: According to clause 19 of the partnership agreement: "upon
was evidently that of a civil partnership; and the liability of the the dissolution of the company, the pending obligations in favor of
partners to this association must be determined under the provisions outside parties should be satisfied, the funds of the minors Jose and
of the Civil Code. The authority of Marcelo Barba to bind the Francisco Chuidian should be taken out, and afterwards the resulting
partnership, in the purchase of the trucks, is fully established by the balance of the account-current of each one of those who had put in
document executed by the four appellants upon June 12, 1913. The money should be paid."
transaction by which Barba secured these trucks was in conformity
with the tenor of this document. The promissory notes constitute the
Our construction of this clause is that it establishes a a basis for the
obligation exclusively of "La Protectora" and of Marcelo Barba; and
final adjustment of the affairs of the partnership; that that basis is
they do not in any sense constitute an obligation directly binding on
that the liabilities to noncompartners are to be first discharged; that
the four appellants. Their liability is based on the fact that they are
the claims of the Chuidian minors are to be next satisfied; and that
members of the civil partnership and as such are liable for its debts. It
what is due to the respective partners on account of their advances to
is true that article 1698 of the Civil Code declares that a member of a
the firm is to be paid last of all, leaving the ultimate residue, of
civil partnership is not liable in solidum (solidariamente) with his
course, if there be any, to be distributed, among the partners in the
fellows for its entire indebtedness; but it results from this article, in
proportions in which they may be entitled thereto.
connection with article 1137 of the Civil Code, that each is liable with
the others (mancomunadamente) for his aliquot part of such
indebtedness. And so it has been held by this court. (Co-Pitco vs. Yulo, Hence, it follows that D. Vicente Buenaventura, whose rights are
8 Phil. Rep., 544.) those of his father, is in no case entitled to receive any part of the
assets until the creditors, who are nonpartners, and the Chuidian
minors are paid. Whatever rights he had, he could only transfer
As to so much of the indebtedness as is based upon the claim for
subject to this condition. It is clear, from the language of the
automobile supplies and accessories, it is obvious that the document
instrument under which plaintiff claims, that this conditional interest
of June 12, 1913, affords no authority for holding the appellants
was all that Vicente ever intended to transfer.
liable. Their liability upon this account is, however, no less obvious
than upon the debt incurred by the purchase of the trucks; and such
liability is derived from the fact that the debt was lawfully incurred in
the prosecution of the partnership enterprise. 14. FUE LEUNG VS. INTERMEDIATE APPELLATE COURT

There is no proof in the record showing what the agreement, if any, FACTS: The petitioner asks for the reversal of the decision of the then
was made with regard to the form of management. Under these Intermediate Appellate Court in AC-G.R. No. CV-00881 which
circumstances it is declared in article 1695 of the Civil Code that all affirmed the decision of the then Court of First Instance of Manila,
the partners are considered agents of the partnership. Barba Branch II in Civil Case No. 116725 declaring private respondent
therefore must be held to have had authority to incur these expenses. Leung Yiu a partner of petitioner Dan Fue Leung in the business of
But in addition to this he is shown to have been in fact the president Sun Wah Panciteria and ordering the petitioner to pay to the private
or manager, and there can be no doubt that he had actual authority to respondent his share in the annual profits of the said restaurant.
incur this obligation.
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

9
PARTNERSHIP OUTLINE PT. 2
profits derived from the operation of Sun Wah Panciteria since Regarding the prescriptive period within which the private
October, 1955 from petitioner Dan Fue Leung. respondent may demand an accounting, Articles 1806, 1807, and
1809 show that the right to demand an accounting exists as long as
the partnership exists. Prescription begins to run only upon the
The Sun Wah Panciteria, a restaurant, located at Florentino Torres
dissolution of the partnership when the final accounting is done.
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 Considering the facts of this case, the Court may decree a dissolution
the sole proprietor. Respondent Leung Yiu adduced evidence during of the partnership under Article 1831 of the Civil Code which, in part,
the trial of the case to show that Sun Wah Panciteria was actually a provides:
partnership and that he was one of the partners having contributed
P4,000.00 to its initial establishment.
Art. 1831. On application by or for a partner the court shall
decree a dissolution whenever: xxx xxx xxx
The private respondents evidence is summarized as follows:
(3) A partner has been guilty of such conduct as tends to affect
About the time the Sun Wah Panciteria started to become prejudicially the carrying on of the business;
operational, the private respondent gave P4,000.00 as his
contribution to the partnership. This is evidenced by a receipt
(4) A partner willfully or persistently commits a breach of the
wherein the petitioner acknowledged his acceptance of the P4,000.00
partnership agreement, or otherwise so conducts himself in
by affixing his signature thereto. Furthermore, the private
matters relating to the partnership business that it is not
respondent received from the petitioner the amount of P12,000.00
reasonably practicable to carry on the business in partnership
covered by the latter's Equitable Banking Corporation Check from the
with him; xxx xxx xxx
profits of the operation of the restaurant for the year 1974

(6) Other circumstances render a dissolution equitable.


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: 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.
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 15. SERGIO V. SISON vs. HELEN J. MCQUAID
the Toho Restaurant amounting to a little more than P2,000.00 as
capital in establishing Sun Wah Panciteria. Petitioner presented
Facts: During the year 1938 Helen borrowed from Sison various
various government licenses and permits showing the Sun Wah
sums of money, aggregating P2,210, to enable her to pay her
Panciteria was and still is a single proprietorship solely owned and
obligation to the Bureau of Forestry and to add to her capital in her
operated by himself alone. Fue Leung also flatly denied having issued
lumber business.
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). Helen was not able to pay the loan, as she had promised, she
proposed to take in Sison as a partner in her lumber business, Sison
to contribute to the partnership the said sum of P2,210 due him from
ISSUE: WON Private respondent is a partner of the petitioner in
Helen in addition to his personal services.
Sun Wah Panciteria?

Sison agreed to Helen's proposal and, as a result, a partnership was


HELD: The private respondent is a partner of the petitioner in Sun
formed in which they were to share 50-50 in the income or profits of
Wah Panciteria. The requisites of a partnership which are 1) two
the business.
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 In accordance with said contract, plaintiff, together with defendant,
Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110)-have been rendered services to the partnership without compensation from
established. As stated by the respondent, a partner shares not only in June 15, 1938 to December, 1941.
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
Before the last World War, the partnership sold to the US Army
more interested in seeing the firm grow rather than get immediate
230,000 board feet of lumber for P13,800. When the claim was
returns, a deferment of sharing in the profits is perfectly plausible. It
"finally" approved and the full amount paid, defendant has
would be incorrect to state that if a partner does not assert his rights
persistently refused to deliver one-half of it, or P6,900, to plaintiff
anytime within ten years from the start of operations, such rights are
notwithstanding repeated demands, investing the whole sum of
irretrievably lost. The private respondent's cause of action is
P13,800 for her own benefit. Plaintiff, therefore, prays for judgment
premised upon the failure of the petitioner to give him the agreed
declaring the existence of the alleged partnership and requiring the
profits in the operation of Sun Wah Panciteria. In effect the private
defendant to pay him the said sum of P6,900, in addition to damages
respondent was asking for an accounting of his interests in the
and costs.
partnership.

Notified of the action, defendant filed a motion to dismiss on the


It is Article 1842 of the Civil Code in conjunction with Articles 1144
grounds that plaintiff's action had already prescribed, that plaintiff's
and 1155 which is applicable. Article 1842 states:
claim was not provable under the Statute of Frauds, and that the
complaint stated no cause of action. Sustaining the first ground, the
The right to an account of his interest shall accrue to any court dismissed the case.
partner, or his legal representative as against the winding up
partners or the surviving partners or the person or partnership
Issue: W/N Sison is entitled to one half of the proceeds from the sale
continuing the business, at the date of dissolution, in the
of board feet to the US Army.
absence or any agreement to the contrary.
Held: No.

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PARTNERSHIP OUTLINE PT. 2
Ratio: It is not clear from the allegations of the complaint just when in the appealed decision from the failure of the respondents to
plaintiff's cause of action accrued. Consequently, it cannot be object to the statement and from their promise to sign the same
determined with certainty whether that action has already as soon as they received their shares as shown in said statement.
prescribed or not. Such being the case, the defense of prescription After such shares had been paid by the petitioners and accepted
cannot be sustained on a mere motion to dismiss based on what by the respondents without any reservation, the approval of the
appears on the face of the complaint. statement of accounts was virtually confirmed and its signing
thereby became a mere formality to be complied with by the
respondents exclusively.
But though the reason given for the order of dismissal be untenable,
Their refusal to sign, after receiving their shares, amounted to a
we find that the said order should be upheld on the ground that the
waiver to that formality in favor of the petitioners who has already
complaint states no cause of action.
performed their obligation.
This approval precludes any right on the part of the respondents
Plaintiff seeks to recover from defendant one-half of the purchase to a further liquidation, unless the latter can show that there was
price of lumber sold by the partnership to the United States Army. fraud, deceit, error or mistake in said approval.
But his complaint does not show why he should be entitled to the In our opinion, the pronouncement that the evidence tends to
sum he claims. It does not allege that there has been a liquidation of prove that there were mistakes in the petitioners' statements of
the partnership business and the said sum has been found to be due accounts, without specifying the mistakes, merely intimates as
him as his share of the profits. The proceeds from the sale of a certain suspicion and is not such a positive and unmistakable finding of
amount of lumber cannot be considered profits until costs and fact as to justify a revision, especially because the CA has relied on
expenses have been deducted. Moreover, the profits of the business the bare allegations of the parties.
cannot be determined by taking into account the result of one SC reversed the CA decision decision on the legal ground that
particular transaction instead of all the transactions had. Hence, the the petitioners' final statement of accounts had been approved by
need for a general liquidation before a member of a partnership may the respondents and no justifiable reason (fraud, deceit, error or
claim a specific sum as his share of the profits. mistake) has been positively and unmistakably found by the CA so
as to warrant the liquidations sought by the respondents.
16. ORNUM VS. LASALA

FACTS: Plaintiffs and defendants are natives of Taal, Batangas but


the defendants resided in Romblon.

In 1908, Pedro Lasala and Emerenciano Ornum formed a

partnership. Lasala, as capitalist, delivered P1,000 to Ornum, the


industrial partner. Ornum would conduct a business in Romblon.
In 1912, Ornum asked for the dissolution of the partnership and
suggested present petitioners, to become the new partners in his
place.
Pedro Lasala died and his children succeeded to the rights and
interest in the partnership. The partners never knew each other
personally and no formal partnership agreement was ever
executed.

Petitioners, as managing partners, received of the net gains,


while the other was divided between them and the Lasala
group in proportion to the capital put in by each group.
After 20 years, the business grew to the value of P44,618.67.
Subsequently, respondents announced their desire to dissolve
the partnership.
Respondents filed a CMP, praying for an accounting and final
liquidation of the assets of the partnership.
According to petitioners, they already remitted and paid to
respondents the total amount corresponding to them under the
last statement of accounts, which however, was not signed by
respondents.
According to petitioners, respondents tacitly approved and
accepted the final statement of accounts, thereby losing their right
to a further accounting, from the moment they accepted their
shares without objection.
CFI ruled in favor of petitioners. CA reversed on the ground that
the final statement of accounts was unsigned and stand
disapproved.

ISSUE:
WON respondents may request for further accounting and
liquidation in dissolving the partnership? NO.

HELD:
NO. respondents were already given the final statement of
accounts, which they tacitly approved.
We hold that the last and final statement of accounts, had been
approved by the respondents. This approval resulted, by virtue of
the letter of Father Mariano Lasala of July 19, 1932, quoted in part

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PARTNERSHIP OUTLINE PT. 2
Property Rights of a Partner Articles 1810 - 1814 So Lastrilla acquired no right to demand any part of the money paid
by Dorfe and Austrias to he sheriff any part of the money paid by
CLEMENTE VS. GALVAN, 67 Phil. 565. G.R. No. 45662. April 26, 1939. Dorfe and Austrias to the sheriff for the benefit of FELCO and
Tomassi, the plaintiffs in that case, for the reason that, as he says, his
Facts:
shares (acquired from Brown) could not have been and were not
auctioned off to Dorfe and Austrias.
Plaintiff and defendant organized a civil partnership which
they named "Galvan y Compaia" to engage in the
Wherefore, the orders of the court recognizing Lastrilla's right and
manufacture and sale of paper and other stationery. ordering payment to him of a part of the proceeds were patently
Plaintiff ask for dissolution which the defendant confirm erroneous, because promulgated in excess or outside of its
but with a condition that having covered a deficit incurred jurisdiction. For this reason the respondents' argument resting on
by the partnership amounting to P4,000 with his own plaintiffs' failure to appeal from the orders on time, although
money, plaintiff reimburse him of one-half of said sum. ordinarily decisive, carries no persuasive force in this instance.
Juan D. Mencarini, assigned as receiver and liquidator.
Upon acting on his duty, the court ordered him to deliver
certain machines which were then at Nos. 705-707 Ylaya
Street.
But before he could take actual possession of said
machines, upon the strong opposition of defendant, the
court, on motion of the latter, suspended the effects of its
order
In the meantime the judgments rendered in cases Nos.
42794 and 43070 ordering Clemente to pay a sum of
money.
He mortgage the machines with his nephew, the
intervenor (plaintiff in the herein case.) For having expired
the terms in the mortgage the intervenor commenced case
No. 49629 to collect his mortgage credit.
Issue:
W/N the mortgage between Clemente and his nephew (intervenor,
plaintiff in the case) is valid?
Rule:
No. The machines in contention originally belonged to the defendant
and from him were transferred to the partnership Galvan y
Compania. This being the case, said machines belong to the
partnership and not to him, and shall belong to it until partition is
effected according to the result thereof after the liquidation. Also,
Clemente did not have actual possession of the machines, he could
not in any manner mortgage them

LEYTE-SAMAR SALES CO VS CFI MAY 20, 1953 GR NO L-5963

FACTS: LEYTE SAMAR SALES (LSS) and Raymond Tomassi are


claiming damages against Far Eastern Lumber (FELCO), Hall, Brown,
and Roxas.

CFI awarded P31.589.14+costs of damages to LSS and Tomassi, CA


confirmed this but removed the P2,000 Attys fees erroneously
included

The sheriff sold FLECO et. als buildings and properties to Dorfe and
Asturias forP8,100.

4 Jun 1951 Lastrilla filed a claim on the sold property because he


supposedly bought the shares and interests of Brown on 29 Sep1949

13Jun1951 Lastrillas claim was granted and the sheriff was required
to retain for him 17% of the money

14Aug1951 Lastrilla was declared entilted to the 17% share

ISSUES: Does Lastrilla have a claim on the proceeds of the sale? NO

RATIO:

If he was a creditor of the FELCO, perhaps or maybe. But he was no.


The partner of a partnership is not a creditor of such partnership for
the amount of his shares.

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PARTNERSHIP OUTLINE PT. 2
Obligations of the Partners to Third Persons Articles 1815 to fourths thereof for the capitalist partner Francisco Muoz de Bustillo
1827 and one-eighth thereof for the industrial partner Emilio Muoz de
Bustillo y Carpiso, and the remaining one-eighth thereof for the
partner Rafael Naval y Garcia. If, in lieu of profits, losses should result
in the winding up of the partnership, the same shall be for the sole
Phil. National Bank vs. Lo, 50 Phil. 803. G.R. No. 26937. October 5, and exclusive account of the capitalist partner Francisco Muoz de
1927. Bustillo, without either of the two industrial partners participating in
such losses.
Co-Pitco vs. Yulo, 8 Phil. 544. G.R. No. L-3146. September 14, 1907.
On the other hand, Article 127 of the Code of Commerce is as follows:
Island Sales, Inc. vs. United Pioneers Gen. Construction Co., 65 SCRA
544. G.R. No. L-22493. July 31, 1975.
All the members of the general copartnership, be they or be they not
managing partners of the same, are liable personally and in
Compania Maritima vs. Muoz, 9 Phil. 326
solidum with all their property for the results of the transactions
LA COMPANIA MARITIMA V. FRANCISCO MUNOZ ET AL (1907)
made in the name and for the account of the partnership, under the
signature of the latter, and by a person authorized to make use
Facts: thereof.

March, 1905 - Francisco Muoz, Emilio Muoz, and Rafael


Naval formed on ordinary general mercantile partnership
under the name of Francisco Muoz & Sons for the
In a general partnership, all members are
purpose of carrying on a mercantile business in the
general partners. The fact that some may be
Province of Albay
industrial and some capitalist partners do not
make a difference. Whether capitalist or
Francisco Muoz was a capitalist partner and Emilio industrial, both retain the right to participate in
Muoz and Rafael Naval were industrial partners the management of the partnership, examine its
books, use the firm name and among others, be
Against the partnership, La Compania Maritima is seeking obligated to pay the liabilities of the partnership
to recover the sum of P26,828.30 with their private property after exhaustion of
the partnerships property.
CFI Manila, acting on the complaint, ruled against the
defendant partnership, Francisco Muoz & Sons, and To bolster the Courts position, and to
Francisco Muoz de Bustillo, but acquitted Emilio Muoz disprove the seeming conflict presented by
de Bustillo and Rafael Naval, discharging them from the Articles aforequoted, the Court notes that
liability the Civil Code has distinct sections treating of
the obligations of the partners between
themselves and the liability of the partners as to
Issue:
third persons. The partitioning of the burden of
losses among the partners and the
WON ordinary general partnership was indeed formed responsibility of the partners toward third
persons are therefore distinct and different.
the nature of the involvement of Emilio and Rafael in the
partnership and their corresponding liability, if any, to the Also, if indeed it was intended by the law that
plaintiff industrial partners be excluded from
responsibility towards third persons, what
Held/Ratio: would happen then to the creditors of the
partnership if the partnership consisted of only
industrial partners?
the articles of partnership, duly recorded in the mercantile
registry in Albay, evidenced the fact of formation by the
defendants of an ordinary general partnership; the claim Thus, neither on principle nor on authority can
that no such partnership was formed is not supported by the industrial partner be relieved from liability
any evidence to third persons for the debts of the partnership.

as to the participation of Emilio in the partnership, neither Thus, the judgment of the lower court is reversed and all the
the fact that he would receive his 1/8 share of the profits defendants are ordered to pay the sum of P26,828.30, with interest
after only five years nor the fact that he is excluded from thereon at the rate of 8 per cent per annum. Following Article 237 of
its management do not preclude his membership in the the Code of Commerce, however, the execution of such judgment
said partnership (such set-up was as agreed upon by the shall not issue against the private property of the defendants
parties when they signed the articles of partnership, with Francisco Muoz, Emilio Muoz, or Rafael Naval until the property of
Emilio as one of its industrial partners); Emilio is, in fact, a the defendant Francisco Muoz & Sons is exhausted.
general partner

as to the liability of Emilio and Rafael, the Court


Dietrich vs. Freeman, 18 Phil. 341. G.R. No. L-6252. January 28, 1911.
ratiocinated as follows:
DIETRICH V. FREEMAN (1911)

Paragraph 12 of the articles of partnership


Facts:
states:

George Dietrich employed by the Manila Steam Laundry


Twelfth. All profits arising from mercantile transactions carried on,
on 9 January, 1907, when the steam laundry was owned
as well as such as may be obtained from the sale of property and
and operated by Freeman and Pierce.
other assets which constitute the corporate capital, shall be
distributed, on completion of the term of five years agreed to for the
continuation of the partnership, in the following manner: Three-

13
PARTNERSHIP OUTLINE PT. 2
Pierce, on the 18th of January, 1907, sold all of his right, By the express provisions of articles 1698 and 1137 of the
title, and interest in the said laundry to Whitcomb, who, Civil Code the partners are not liable individually for the
together with Freeman, then became the owners of this entire amount due the plaintiff. The liability is pro rata and
laundry and continued to operate the same as long as the in this case the appellant is responsible to the plaintiff for
plaintiff was employed. only one-half of the debt

Dietrich is seeking to recover the sum of P952 alleged to Judgment of the court below is reversed and judgment
be the balance due to him for services performed during entered in favor of the plaintiff and against the defendant
the period from January 9, 1907, to December 31, 1908. Whitcomb for the sum of P376, with interest as fixed by
the court below.
Lower court rendered judgment in favor of the plaintiff
and against Freeman and Whitcomb, jointly and severally,
for the sum of P752, with interest. The complaint as to Santiago Syjuco, Inc. vs. Castro, 175 SCRA 171. G.R. No. 70403. July 7,
Pierce was dismissed, Whitcomb alone appealing. 1989.

Issue: Liwanag and Reyes vs. Workmens Compensation Commission, 105


Phil. 741
WON Whitcomb liable to the plaintiff McDonald vs. National City Bank of New York, 99 Phil. 156

Pioneer Insurance & Security Corporation vs. Court of Appeals, 175


SCRA 668
Held/Ratio:
Viuda de Chan vs. Pen, 53 Phil. 906
It appears from the record that Whitcomb never knew the
Dissolution and Winding Up Articles 1828 to 1842
plaintiff, never had anything to do with personally, and
that the plaintiff's contract was with Freeman, the
Yu vs. National Labor Relations Commission, 224 SCRA 75
managing partner of the laundry. It further appears from
the record that Pierce, after he sold his interest in this
Testate Estate of Mota vs. Serra, 47 Phil. 464 [1926]
laundry to Whitcomb, continued to look after Whitcomb's
interest by authority of the latter.
Bearneza vs. Dequilla, 43 Phil. 237

Also, Freeman and Whitcombs organization of the Lota vs. Tolentino, 90 Phil. 829
partnership were not compliant with the provisions of the
Code of Commerce*; that is, no formal partnership was Goquiolay vs. Sycip, 108 Phil. 947
ever entered into by them, notwithstanding the fact that
they were engaged in the operation of this laundry. Goquiolay vs. Sycip, 9 SCRA 663, Resolution of Motion for
Reconsideration
*(Art. 17. The record in the commercial registry shall be optional for
private merchants and compulsory for associations established in Ng Cho Cio vs. Ng Diong, 1 SCRA 275
accordance with this code or with special laws, and for vessels.
Lichauco vs. Lichauco, 33 Phil. 350
Art. 119. Every commercial association before beginning business
Soncuya vs. De Luna, 67 Phil. 646
shall be obliged to record its establishment, agreements, and
conditions in a public instrument, which shall be presented for
Singsong vs. Isabela Sawmill, 88 SCRA 623
record in the commercial registry, in accordance with the provisions
of article 17.)
Po Yeng Cheo vs. Lim Ka Yan, 44 Phil. 172

The purpose for which this partnership was entered into Laguna Transportation Co., Inc. vs. Social Security System, 107 Phil.
by Freeman and Whitcomb show clearly that such 833
partnership was not a commercial one; hence the
provisions of the Civil Code and not the Code of Commerce Sison vs. McQuaid, 94 Phil. 201
must govern in determining the liability of the partners.
De La Rosa vs. Ortega Go-Cotay, 48 Phil. 605
Moreover, although the partnership was not organized
according to the provisions of the Code Commerce, it could Magdusa vs. Albaran, 5 SCRA 511
not be deemed as a cuentas en participacion where
because it is constituted in such a manner that its existence Lim Tanhu vs. Remolete, 66 SCRA 425
is only known to those who had an interest in the same,
there being no mutual agreement between the partners, Bonnevie s. Hernandez, 95 Phil. 175
and without a corporate name indicating to the public in
some way that there were other people besides the one Limited Partnership Articles 1843 to 1867
who ostensibly managed and conducted the business
right of action can only be taken against such person in
whose name the business is being conducted, and not
against other persons interested in the partnership. In
fact, in the case at bar, the plaintiff was employed by and
performed services for the Manila Steam Laundry and was
not employed by nor did he perform services for Freeman
alone. The public did not deal with Freeman and
Whitcomb personally, but with the Manila Steam Laundry.

14