EVANGELISTA & CO v. ABAD SANTOS (G.R. No.

31684; June 28, 1973)

FACTS: On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co." On June 7, 1955
the Articles of Co-partnership was amended as to include herein respondent, Estrella Abad Santos, as industrial
partner, with herein petitioners Domingo C. Evangelista, Jr., Leonardo Atienza Abad Santos and Conchita P.
Navarro, the original capitalist partners, remaining in that capacity, with a contribution of P17,500 each. The
amended Articles provided, inter alia, that "the contribution of Estrella Abad Santos consists of her industry being
an industrial partner", and that the profits and losses "shall be divided and distributed among the partners ... in the
proportion of 70% for the first three partners, Domingo C. Evangelista, Jr., Conchita P. Navarro and Leonardo
Atienza Abad Santos to be divided among them equally; and 30% for the fourth partner Estrella Abad Santos."

On December 17, 1963 herein respondent filed suit against the three other partners in the Court of First Instance of
Manila, alleging that the partnership, which was also made a party-defendant, had been paying dividends to the
partners except to her; and that notwithstanding her demands the defendants had refused and continued to refuse and
let her examine the partnership books or to give her information regarding the partnership affairs to pay her any
share in the dividends declared by the partnership. She therefore prayed that the defendants be ordered to render
accounting to her of the partnership business and to pay her corresponding share in the partnership profits after such
accounting, plus attorney's fees and costs.

ISSUE: Whether or not Abad Santos is an industrial partner and is entitled to the shares of the partnership?

HELD: Yes. It is not disputed that the provision against the industrial partner engaging in business for himself seeks
to prevent any conflict of interest between the industrial partner and the partnership, and to insure faithful
compliance by said partner with this prestation. That appellee has faithfully complied with her prestation with
respect to appellants is clearly shown by the fact that it was only after filing of the complaint in this case and the
answer thereto appellants exercised their right of exclusion under the codal art just mentioned by alleging in their
Supplemental Answer, subsequent to the filing of defendants' answer to the complaint, defendants reached an
agreement whereby the herein plaintiff been excluded from, and deprived of, her alleged share, interests or
participation, as an alleged industrial partner, in the defendant partnership and/or in its net profits or income, on the
ground plaintiff has never contributed her industry to the partnership, instead she has been and still is a judge of the
City Court (formerly Municipal Court) of the City of Manila, devoting her time to performance of her duties as such
judge and enjoying the privilege and emoluments appertaining to the said office, aside from teaching in law school
in Manila, without the express consent of the herein defendants'. Having always knows as a appellee as a City judge
even before she joined appellant company as an industrial partner, why did it take appellants many yearn before
excluding her from said company as aforequoted allegations? And how can they reconcile such exclusive with their
main theory that appellee has never been such a partner because "The real agreement was to grant the appellee a
share of 30% of the net profits which the appellant partnership may realize from June 7, 1955, until the mortgage of
P30,000.00 obtained from the Rehabilitation Finance Corporal shall have been fully paid.
Duterte v Rallos (2 P 509)

Facts: Duterte (plaintiff-appellant) claimed that Rallos (defendant), and one Castro were partners in the
management of a cockpit. However, Rallos denied said claim. The court found that no such partnership
existed and ordered judgment in favor with Rallos.

It is undisputed that the plaintiff rendered services in the management of the cockpit, and that the
defendant paid him money on account of the cockpit.

Rallos, after denying that the plaintiff was his partner, testified that the profits were divided. A portion
of which was given to two friends, Duterte and Castro, but not as partners. A portion was given to
Duterte solely because he was a friend who aided and encouraged the cockpit and had no duty to
perform, except when he had to preside at the cockpit. He added that he only paid them for his
pleasure, as friends, Duterte had no legal interest.

Duterte testified that he made a verbal contract of partnership with the Rallos for this business,
uncontradicted evidence that he performed services in connection with it; that Rallos paid him the
money on account thereof and sent him accounts for three months showing his interest to be one-third
of the profits in addition to the $5 each day, and wrote him a letter in which he said that he admitted
the Duterte into the partnership in order to collect what Duterte owed him on another transaction. The
lower court found that no such partnership existed and ordered judgment for the defendant. The
plaintiff moved for a new trial, which was denied.

Issue: Whether or not Duterte and Rallos entered into a contract of partnership.

Held: Yes, Duterte and Rallos entered into a contract of partnership.

The SC have examined the evidence and are of the opinion that the finding of the lower court as to the
existence of the copartnership is manifestly against the evidence. The Court see no other way of
explaining the accounts submitted by the defendant to the plaintiff. The evidence (letters and
testimonies) presented clearly showed than that there was a partnership between them up. That there
was an agreement to share the profits is clearly proved by the accounts submitted. The plaintiff testified
that the profits and losses were to be shared equally. But even omitting this testimony, the case is
covered by article 1689 of the Civil Code, which provides that, in the absence of agreement as to the
losses, they shall be shared as the gains are. Article 1668 of the Civil Code is not applicable to the case.
No real estate was contributed by any member. The partnership did not become the owner of the
cockpit. It is undisputed that this was owned by the defendant and that the partnership paid him ten
dollars a day for the use of it. The finding of fact by the court below, that there was no partnership, at
least to September 1, 1901, was plainly and manifestly against the evidence, and for that reason a new
trial of this case must be had.

Estanislao vs CA Digest
By this petition for certiorari the Court is asked to determine if a partnership exists between members of
the same family arising from their joint ownership of certain properties.

Elijio Estanislao and Remedios Estanislao are brothers and sisters who are co-owners of certain lots at
the corner of Annapolis and Aurora Blvd., QuezonCity which were then being leased to the Shell
Company of the Philippines Limited (SHELL).

They agreed to open and operate a gas station thereat to be known as Estanislao Shell Service Station
with an initial investment of P 15,000.00 to be taken from the advance rentals.

Elijio applied for the dealership (SHELL had a policy that there an only be one dealer.)

Remedios Helped in Managing the business.

parties herein entered into an Additional Cash Pledge Agreement with SHELL wherein it was reiterated
that the P 15,000.00 advance rental shall be deposited with SHELL to cover advances of fuel

a proviso that said agreement "cancels and supersedes the Joint Affidavit dated 11 April 1966 executed
by the co-owners."
Elijio submitted financial statements regarding the business to Remedios but stopped after some time

demand was made on petitioner by Remedios to render an accounting of the profits

Remedios won the case, petitioner ordered to render formal accounting of business, give Remedios her
lawful share in the profits, execute in public instrument embodying all the provisions of the partnership
agreement, and attys fees.

Elijio filed certiorari after CA affirmed decision of lower court. He raised that the court erred In
declaring that a partnership was established by and among the petitioner and the private respondents
as regards the ownership and or operation of the gasoline service station business.
Petitioner contends that because of the said stipulation cancelling and superseding that previous Joint
Affidavit, whatever partnership agreement there was in said previous agreement had thereby been
abrogated.

We find no merit in this argument

Moreover other evidence in the record shows that there was in fact such partnership agreement
between the parties. This is attested by the testimonies of private respondent Remedies Estanislao and
Atty. Angeles. Petitioner submitted to private respondents periodic accounting of the business.

There is no doubt that the parties hereto formed a partnership when they bound themselves to
contribute money to a common fund with the intention of dividing the profits among themselves

WHEREFORE, the judgment appealed from is AFFIRMED

Moran, Jr. v. CA
G.R. No. L-59956 Oct. 31, 1984

Justice Gutierrez, Jr.

Facts:

Pecson and Moran entered into an agreement for the printing of posters featuring the delegates
of the 1971 Constitutional Convention

o That 95k posters were supposed to be printed and sold at P2/each

o That each would contribute P15k

o That Moran will supervise the work, while Pecson would receive a P1k monthly
commission

Pecson gave Moran P10k for which the latter issued a receipt

Only 2k posters were printed, but each was sold for P5

o Moran then executed 2 promissory notes in favor of Pecson

Pecson then filed an action for the recovery of a sum of money for the return of his P10k
contribution, payment of his share in the profits that the partnership would have earned

TC: each party is entitled to rescind the contract since both failed to fulfill their respective
promises (Moran the printing of the 95k posters; Pecson the P15k contribution)
 CA: Moran must pay Pecson, among others, the amount of expected profits and the latters
commission in the partnership

Issue:

WON Moran is obliged to give Pecson the amount of expected profits from their partnership.

Held:

No, he is not.

Rule: when a partner who has undertaken to contribute a sum of money fails to do so, he
becomes a debtor of the partnership for whatever he may have promised to contribute (Art.
1786) and for interests and damages from the time he should have complied with his obligations
(Art. 1788)

Being a contract of partnership, each partner must share in the profits and losses of the venture,
for that is the essence of partnership.

o Even in the assurance of the other partner that they would earn a huge amount of
profits, in the absence of fraud, the other cannot claim a right to recover the highly
speculative profits

o In the present case, the fantastic nature of expected profits is obvious that various
factors need to be considered

o The failure of COMELEC to proclaim all 320 candidates of the Constitutional Convention
on time was a major factor in Morans decision not to go on with the printing of all
95,000 posters

o Hidden risks in any business venture have to be considered

However, as it was shown that Pecson gave money to Moran (P10k) which the latter used to
print the first batch of posters, and since these posters were sold and profits were realized from
such sale, Pecson is entitled to recover his share of such profits

ADRIANO ARBES, ET AL vs. VICENTE POLISTICO, ET AL., G.R. No. 31057 September 7, 1929 VILLAMOR

FACTS:

This is an action to bring about liquidation of the funds and property of the association called
"Turnuhan Polistico & Co." The plaintiffs were members or shareholders, and the defendants were
designated as president-treasurer, directors and secretary of said association. This case is brought for 2
nd time. In the 1 st one, the court court held then that in an action against the officers of a voluntary
association to wind up its affairs and enforce an accounting for money and property in their possessions,
it is not necessary that all members of the association be made parties to the action. The court
appointed commissioner of Insular Auditor's Office, to examine all the books, documents, and accounts
of "Turnuhan Polistico & Co.," and to receive whatever evidence. Commissioner's report show a balance
of P24, 607.80 cash on hand. Despite defendants objection to the report, the trial court rendered
judgment holding said association is unlawful. And sentenced defendants jointly and severally to return
the amount and documents to the plaintiffs and members of the association. The Appellant alleged that
the association being unlawful, some charitable institution to whom the partnership funds may be
ordered to be turned over, should be included, as a party defendant. Referring to article 1666 of the
Civil Code, which provides: A partnership must have a lawful object, and must be established for the
common benefit of the partners. When the dissolution of an unlawful partnership is decreed, the profits
shall be given to charitable institutions of the domicile of the partnership, or, in default of such, to those
of the province.

ISSUE: Whether or not charitable institution is a necessary party to this case.

HELD:

No. No charitable institution is a necessary party in the present case of determination of the rights of
the parties. The action which may arise from said article, in the case of unlawful partnership, is that for
the recovery of the amounts paid by the member from those in charge of the administration of said
partnership, and it is not necessary for the said parties to base their action to the existence of the
partnership, but on the fact that of having contributed some money to the partnership capital. And
hence, the charitable institution of the domicile of the partnership, and in the default thereof, those of
the province are not necessary parties in this case. The article cited above permits no action for the
purpose of obtaining the earnings made by the unlawful partnership, during its existence as result of the
business in which it was engaged, because for the purpose, as Manresa remarks, the partner will have to
base his action upon the partnership contract, which is to annul and without legal existence by reason of
its unlawful object; and it is self evident that what does not exist cannot be a cause of action. Hence,
paragraph 2 of the same article provides that when the dissolution of the unlawful partnership is
decreed, the profits cannot inure to the benefit of the partners, but must be given to some charitable
institution.The profits are so applied, and not the contributions, because this would be an excessive and
unjust sanction for, as we have seen, there is no reason, in such a case, for depriving the partner of the
portion of the capital that he contributed, the circumstances of the two cases being entirely different.
Art. 1807. Every partner must account to the partnership for any benefit, and hold as trustee for it any
profits derived by him without the consent of the other partners from any transaction connected with
the formation, conduct, or liquidation of the partnership or from any use by him of its property.

Evangelista vs. Collector of Internal Revenue

Facts: Petitioners borrowed money from their father and purchased several lands. For several years,
these lands were leased to tenants by the petitioners. In 1954, respondent Collector of Internal Revenue
demanded from petitioners the payment of income tax on corporations, real estate dealer's fixed tax
and corporation residence tax for the years 1945-1949. A letter of demand and
correspondingassessments were delivered to petitioners. Petitioners claim that they should be absolved
from paying said taxes since they are not a corporation.

Issue: Whether petitioners are subject to the tax on corporations provided for in section 24 of
Commonwealth Act. No. 466, otherwise known as the National Internal Revenue Code, as well as to the
residence tax for corporations and the real estate dealers fixed tax.

Held: Yes. Petitioners are subject to the income tax and residence tax for corporation.

As defined in section 84 (b) of the Internal Revenue Code, "the term corporation includes partnerships,
no matter how created or organized." This qualifying expression clearly indicates that a joint venture
need not be undertaken in any of the standard forms, or in conformity with the usual requirements of
the law on partnerships, in order that one could be deemed constituted for purposes of the tax on
corporations. Partnership, as has been defined in the civil code refers to two or more persons
who bind themselves to contribute money, properly, or industry to a common fund, with the intention
of dividing the profits among themselves. Thus, petitioners, being engaged in the real estate
transactions for monetary gain and dividing the same among themselves constitute a partnership so far
as the Code is concerned and are subject to income tax for corporation.

Since Sec 2 of the Code in defining corporations also includes joint-stock company, partnership, joint
account, association or insurance company, no matter how created or organized, it follows that
petitioners, regardless of how their partnership was created is also subject to the residence tax for
corporations.

Fortis vs. Hermanos

Facts:

Plaintiff Fortis is an employee of defendant Gutierrez Hermanos. Theformer brought an action to

recover a balance due him as salary forthe year 1902. He also alleged that he was entitled, as
salary, to 5 percent of the net profits of the business of the defendants for said year. The complaint
also contained a cause of action for the sum of 600pesos, money expended by plaintiff for the
defendants during the year1903. The lower court ruled in favor of the plaintiff. The total
judgmentrendered amounted to P13, 025.40, which was reduced to Philippinecurrency. The
defendants moved for new trial but were denied. They brought the case in the SC thru bill of
exceptions; the appellants(defendants) alleged that that the contract made the plaintiff acopartner of
the defendants in the business, which they were carrying on.

Issue: WON the plaintiff is a co-partner of the defendants in the business.

Ruling:

NO. It was a mere contract of employment. The plaintiff had neithervoice nor vote in the
management of the affairs of the company. Thefact that the compensation received by him was to
be determined withreference to the profits made by the defendants in their business didnot in any
sense make by a partner therein. The articles of partnershipbetween the defendants provided that
the profits should be dividedamong the partners named in a certain proportion. The contract
madebetween the plaintiff and the then manager of the defendantpartnership did not in any way vary
or modify this provision of thearticles of partnership.

Pastor vs. Gaspar

Facts:

On November 1900, Macario Nicasio and the defendant Gaspar entered into a contract of
partnership under the name Nicasio and Gaspar.
The said partnership owned the steam launch Luisa, and its only business was relating to this
launch.
On November 24, 1900, with the desire to enlarge their business, a contract was made between
the firm of Nicasio and Gaspar on the one side, and on the other side the plaintiff and 4 others
from whom N and G secured a sum of P28, 000 in order to finance the purchase of 6 additional
launches.
 In the contract, N and G undertakes to return the amount loaned to the plaintiff within a period
of ten years from the date of the instrument and to guarantee the fulfillment of the said
payment they pledge to the same parties the 6 launches.
Barely 7 months after the execution of the contract, it was terminated and was sold by mutual
consent.
The plaintiff brought action alleging that the contract was one of partnership, and that the
consent of his agent to terminate the contract and the sale of the launches was obtained by
fraud and the dissolution of the partnership was null and void.

Issue: WON the transaction between the parties a loan or a contract of partnership.

Ruling: It was a LOAN in view of the ff. features contained in the contract as found by the SC:

(a) It is twice stated positively that N and G are the only partners and the only persons interested in the
partnership of N and G, to which statements Pastor and his associates assented to when he signed the
document;

(b) It is stated, also distinctly and positively, that the money has been furnished as a loan;

(c) N and G bind themselves in the contract to repay the amount something that they would not be
bound to do were the contract one of partnership;

(d) In the contract, N and G create in favor of Pastor and his associates a right of pledge over the
launches, a thing inconsistent with the idea of partnership;

(e) N and G are to be considered as consignees only as long as they do not pay the debt. This indicates
that they had a right to pay it;

(f) They bind themselves not to alienate the launches until they had paid the debt indicating clearly that
by paying the debt they could do so, a thing inconsistent with the idea of a partnership; and

(g) It is also stated that the launch Luisa is not included in the contract.

It was also ruled that, the fact that Pastor et. al., was to share in the profits and losses of the business
and that N and G should answer for the payment of the debt only with the launches and not with their
property, indicate that the petitioner was a partner. But these provisions are not conclusive. The rights
of third persons are not concerned. The parties could, in making the contract, if they choose, take some
provisions from the law of partnership and others from the law of loans. Loans with a right to receive a
part of the profits in lieu of interests are not uncommon. As between the parties, such a contract is not
one of a partnership.

Alfredo Aguila Jr vs Court of Appeals et al

Business Organization Partnership, Agency, Trust Identity Separate and Distinct
In April 1991, the spouses Ruben and Felicidad Abrogar entered into a loan agreement with a lending
firm called A.C. Aguila & Sons, Co., a partnership. The loan was for P200k. To secure the loan, the
spouses mortgaged their house and lot located in a subdivision. The terms of the loan further stipulates
that in case of non-payment, the property shall be automatically appropriated to the partnership and a
deed of sale be readily executed in favor of the partnership. She does have a 90 day redemption period.

Ruben died, and Felicidad failed to make payment. She refused to turn over the property and so the firm
filed an ejectment case against her (wherein she lost). She also failed to redeem the property within the
period stipulated. She then filed a civil case against Alfredo Aguila, manager of the firm, seeking for the
declaration of nullity of the deed of sale. The RTC retained the validity of the deed of sale. The Court of
Appeals reversed the RTC. The CA ruled that the sale is void for it is a pactum commissorium sale which
is prohibited under Art. 2088 of the Civil Code (note the disparity of the purchase price, which is the loan
amount, with the actual value of the property which is after all located in a subdivision).

ISSUE: Whether or not the case filed by Felicidad shall prosper.

HELD: No. Unfortunately, the civil case was filed not against the real party in interest. As pointed out by
Aguila, he is not the real party in interest but rather it was the partnership A.C. Aguila & Sons, Co. The
Rules of Court provide that every action must be prosecuted and defended in the name of the real
party in interest. A real party in interest is one who would be benefited or injured by the judgment, or
who is entitled to the avails of the suit. Any decision rendered against a person who is not a real party in
interest in the case cannot be executed. Hence, a complaint filed against such a person should be
dismissed for failure to state a cause of action, as in the case at bar.

Under Art. 1768 of the Civil Code, a partnership has a juridical personality separate and distinct from
that of each of the partners. The partners cannot be held liable for the obligations of the partnership
unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent,
unfair, or illegal purposes. In this case, Felicidad has not shown that A.C. Aguila & Sons, Co., as a
separate juridical entity, is being used for fraudulent, unfair, or illegal purposes. Moreover, the title to
the subject property is in the name of A.C. Aguila & Sons, Co. It is the partnership, not its officers or
agents, which should be impleaded in any litigation involving property registered in its name. A violation
of this rule will result in the dismissal of the complaint.

CIR VS. SUTER

FACTS:

A limited partnership named William J. Suter 'Morcoin' Co., Ltd was formed 30September 1947 by
William J. Suter as the general partner, and Julia Spirig andG u s t a v C a r l s o n . T h e y c o n t r i b
u t e d , r e s p e c t i v e l y , P 2 0 , 0 0 0 . 0 0 , P 1 8 , 0 0 0 . 0 0 a n d P2,000.00. it was also duly
registered with the SEC. On 1948 Suter and Spirig got m a r r i e d a nd i n effect Carlson sold his
share to the couple, the same was a l s o registered with the SEC. T h e l i m i t e d p a r t n e r s h i p
h a d b e e n f i l i n g i t s i n c o m e t a x r e t u r n s a s a corporation, without objection by the
herein petitioner, Commissioner of InternalRevenue, until in 1959 when the latter, in an
assessment, consolidated the incomeof the firm and the individual incomes of the partners-spouses
Suter and Spirigresulting in a determination of a deficiency income tax against respondent Suter
inthe amount of P2,678.06 for 1954 and P4,567.00 for 1955.

ISSUE:

Whether or not the limited partnership has been dissolved after the marriageof Suter and Spirig
and buying the interest of limited partner Carlson.

RULING:

No, the limited partnership was not dissolved . A h u s b a n d a n d a w i f e m a y n o t e n t e r i n t o

a c o n t r a c t o f g e n e r a l copartnership, because u nder the Civil Code, which applies in the
absence of expre ss provision in the Code of Commerce, persons prohibited f r o m m a k i n g
donations to each other are prohibited from entering into universal partnerships. (2Echaverri 196)
It follows that the marriage of partners necessarily brings about thedissolution of a pre-existing
partnership. W h a t t h e l a w p r o h i b i t s w a s w h e n t h e s p o u s e s e n t e r e d i n t o a g e n
e r a l partnership. In the case at bar, the partnership was limited

PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME SYCIP, SALAZAR, FELICIANO,
HERNANDEZ & CASTILLO".

Facts:
Petitions were filed by the surviving partners of Atty. Alexander Sycip, who died on May 5, 1975 and by
the surviving partners of Atty. Herminio Ozaeta, who died on February 14, 1976, praying that they be
allowed to continue using, in the names of their firms, the names of partners who had passed away.
Petitioners contend that 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. They also contend that no local custom prohibits the continued use of a
deceased partners name in a professional firms name; there is no custom or usage in the Philippines,
or at least in the Greater Manila Area, which recognizes that the name of a law firm necessarily
identifies the individual members of the firm.

Issue:
WON the surviving partners may be allowed by the court to retain the name of the partners who already
passed away in the name of the firm? NO
Held:
In the case of Register of Deeds of Manila vs. China Banking Corporation, the SC said:
The Court believes that, in view of the personal and confidential nature of the relations between
attorney and client, and the high standards demanded in the canons of professional ethics, no practice
should be allowed which even in a remote degree could give rise to the possibility of deception. Said
attorneys are accordingly advised to drop the names of the deceased partners from their firm name.
The public relations value of the use of an old firm name can tend to create undue advantages and
disadvantages in the practice of the profession. An able lawyer without connections will have to make a
name for himself starting from scratch. Another able lawyer, who can join an old firm, can initially ride
on that old firms reputation established by deceased partners.
The court also made the difference from the law firms and business corporations:
A partnership for the practice of law is not a legal entity. It is a mere relationship or association for a
particular purpose. It is not a partnership formed for the purpose of carrying on trade or business or
of holding property. Thus, it has been stated that the use of a nom de plume, assumed or trade name
in law practice is improper.
We find such proof of the existence of a local custom, and of the elements requisite to constitute the
same, wanting herein. Merely because something is done as a matter of practice does not mean that
Courts can rely on the same for purposes of adjudication as a juridical custom.
Petition suffers legal and ethical impediment.

Ortega vs. CA

FACTS:

On December 19, 1980, respondent Misa associated himself together, as senior partner with petitioners
Ortega, del Castillo, Jr., and Bacorro, as junior partners. On Feb. 17, 1988, respondent Misa wrote a
letter stating that he is withdrawing and retiring from the firm and asking for a meeting with the
petitioners to discuss the mechanics of the liquidation. On June 30, 1988, petitioner filed a petition to
the Commision's Securities Investigation and Clearing Department for the formal dissolution and
liquidation of the partnership. On March 31, 1989, the hearing officer rendered a decision ruling that the
withdrawal of the petitioner has not dissolved the partnership. On appeal, the SEC en banc reversed the
decision and was affirmed by the Court of Appeals. Hence, this petition.

ISSUE:

Whether or not the Court of Appeals has erred in holding that the partnership is a partnership at will
and whether or not the Court of Appeals has erred in holding that the withdrawal of private respondent
dissolved the partnership regardless of his good or bad faith

HELD:
No. The SC upheld the ruling of the CA regarding the nature of the partnership. The SC further stated
that a partnership that does not fix its term is a partnership at will. The birth and life of a partnership at
will is predicated on the mutual desire and consent of the partners. The right to choose with whom a
person wishes to associate himself is the very foundation and essence of that partnership. Its continued
existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner's
capability to give it, and the absence of a cause for dissolution provided by the 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 but that it can result in a liability for damages.

Eligio Estanislao, Jr. v. Court of Appeals ,REMEDIOS ESTANISLAO, EMILIO and LEOCADIO
SANTIAGO

FACTS:

Petitioner and private respondents are brothers and sisters who are co-owners of certain lots at the
corner of Annapolis and Aurora Blvd., Quezon City which were then being leased to the Shell Company
of the Philippines Limited (SHELL). They agreed to open and operate a gas station thereat to be known
as Estanislao Shell Service Station with an initial investment of P15,000.00 to be taken from the advance
rentals due to them from SHELL for the occupancy of the said lots owned in common by them.

On May 26, 1966, the parties herein entered into an Additional Agreement with a proviso that said
agreement cancels and supersedes the original agreement executed by the co-owners.

For sometime, the petitioner submitted financial statements regarding the operation of the business to
private respondents, but thereafter petitioner failed to render subsequent accounting.

A demand was made on petitioner:

to render an accounting of the profits;

to execute a public document embodying all the provisions of the partnership agreement;

to pay the plaintiffs their lawful shares and participation in the net profits of the business.

ISSUE: IS A PARTNERSHIP a FORMED WHERE MEMBERS OF THE SAME FAMILY BIND THEMSELVES TO
CONTRIBUTE MONEY TO A COMMON FUND WITH THE INTENTION OF DIVIDING THE PROFITS AMONG
THEMSELVES?
HELD:

YES. The Joint Affidavit of April 11, 1966 (Exhibit A), clearly stipulated by the members of the same
family that the P15,000.00 advance rental due to them from SHELL shall augment their "capital
investment" in the operation of the gasoline station.

other evidence in the record:

Petitioner submitted to private respondents periodic accounting of the business.

Petitioner gave a written authority to private respondent Remedios Estanislao, his sister, to
examine and audit the books of their "common business" (aming negosyo).

Respondent Remedios assisted in the running of the business.

Campos Rueda & Co v Pacific Commercial (44 Phil 916)

Facts:

Campos, Rueda & Co., a limited partnership, is indebted to the appellants: Pacific Commercial Co. ,
Asiatic Petroleum Co, and International Banking Corporation amounting to not less than P1,000.00
(which were not paid more than 30 days prior to the date of the filing by petitioners of the application
for voluntary insolvency).

The trial court denied their petition on the ground that it was not proven, nor alleged, that the members
of the firm were insolvent at the time the application was filed. It also held that the partners are
personally and solidarily liable for the consequences of the transactions of the partnership.

Issue:

Whether or not a limited partnership may be held to have committed an act of insolvency.

Held:

Yes. A limited partnerships juridical personality is different from the personality of its members. On
general principle, the limited partnership must answer for and suffer the consequence of its acts. Under
our Insolvency Law, one of the acts of bankruptcy upon w/c an adjudication of involuntary insolvency
can be predicated is the failure to pay obligations.
The failure of Campos, Rueda & Co., to pay its obligations constitutes an act w/c is specifically provided
for in the Insolvency Law for declaration of involuntary insolvency. The petitioners have a right to a
judicial decree declaring the involuntary insolvency of said partnership.

VARGAS and COMPANY, plaintiff-appellee, vs. CHAN HANG CHIU, ET AL., defendants-appellants.

Facts: On the 19th day of August, 1911, an action was begun by Chan Hang Chiu against the plaintiff in
this case as a mercantile association duly organized under the laws of the Philippine Islands, to recover a
sum of money. The summons and complaint were placed in the hands of the sheriff, delivering to and
leaving with one Jose Macapinlac personally true copies thereof, he being the managing agent of said
Vargas & Co. at the time of such service. On July 2, 1912, the justice's court rendered judgment against
Vargas & Co. for the sum of 372.28. It is plaintiffs contention that Vargas & Co. being a partnership, it is
necessary, in bringing an action against it, to serve the summons on all of the partners, delivering to
each one of them personally a copy thereof; and that the summons in this case having been served on
the managing agent of the company only, the service was of no effect as against the company and the
members thereof and the judgment entered by virtue of such a service was void.

Issue:

Whether or not it is indispensable in bringing an action to a partnership to serve summons to all parties
thereof.

Held:

No, it is dispensable.

Reasons: 1. It has been the universal practice in the Philippine Islands since American occupation, and
was the practice prior to that time, to treat companies of the class to which the plaintiff belongs as legal
or juridical entities and to permit them to sue and be sued in the name of the company, the summons
being served solely on the managing agent or other official of the company specified by the section of
the Code of Civil Procedure referred to. The plaintiff brings this action in the company name and not in
the name of the members of the firm. Actions against companies of the class to which plaintiff belongs
are brought, according to the uninterrupted practice, against such companies in their company names
and not against the individual partners constituting the firm. In case the individual members of the firm
must be separately served with process, the rule also prevails that they must be parties to the action,
either plaintiffs or defendant, and that the action cannot be brought in the name of or against the
company itself. 2. If it is necessary to serve the partners individually, they are entitled to be heard
individually in the action and they must, therefore, be made parties thereto so that they can be heard. It
would be idle to serve process on individual members of a partnership if the litigation were to be
conducted in the name of the partnership itself and by the duly constituted officials of the partnership
exclusively. In this case, is apparent that the plaintiff is acting contrary to its own contention by bringing
the action in the name of the company. If not served with process, then the action should be brought in
the individual names of the partners and not in the name of the company itself.

NGO TIAN TEK & NGO HAY, PETITIONER, VS. PHILIPPINE EDUCATION CO., INC., RESPONDENT.
DECISION

PARAS, J.: The plaintiff, Philippine Education Co., Inc., instituted in the Court of First Instance of Manila
an action against the defendants, Vicente Tan alias Chan Sy and the partnership of Ngo Tian Tek and Ngo
Hay, for the recovery of some P16,070.14, unpaid cost of merchandise purchased by Lee Guan Box
Factory from the plaintiff and five other corporate entities which, though not parties to the action, had
previously assigned their credits to the plaintiff, together with attorney's fees, interest and costs. By
agreement of the parties, the case was heard before a referee, Attorney Francisco Dalupan, who in due
time submitted his report holding the defendants jointly and severally liable to the plaintiff for the sum
of P16,070.14, plus attorney's fees and interest at the rates specified in the report. On March 6, 1939,
the Court of First Instance of Manila rendered judgment in accordance with said report, except as to
attorney's fees which were reduced to a total of P1,596.39. This judgment was affirmed by the Court of
Appeals in its decision of January 31, 1941, now the subject of our review at the instance of the
partnership Ngo Tian Tek and Ngo Hay, petitioner herein. "It appears that," quoting from the decision of
the Court of Appeals whose findings of fact are conclusive, "as far back as the year 1925, the Modern
Box Factory was established at 603 Magdalena Street, Manila. It was at first owned by Ngo Hay, who
three years later was joined by Ngo Tian Tek as a junior partner. The Modern Box Factory dealt in paper
and similar merchandise and purchased goods from the plaintiff and its assignors in the names of the
Modern Box Factory, Ngo Hay and Co., Go Hay Box Factory, or merely Go Hay. Then about the year
1930, the Lee Guan Box Factory was established a few meters from the Modern Box Factory, under the
management of Vicente Tan. When that concern, through Vicente Tan, sought credit with the plaintiff
and its assignors, Ngo Hay, in conversations and interviews withe their officers and employees,
represented that he was the principal owner of such factory, that the Lee Guan Box Factory and the
Modern Box Factory belonged to the same owner, and that the Lee Guan Box Factory was a subsidiary
of the Modern Box Factory.

There is evidence that many goods purchased in the name of the Lee Guan Box Factory were delivered
to the Modern Box Factory by the employees of the plaintiff and its assignors upon the express direction
of Vicente Tan. There is also evidence that the collectors of the sellers were requested by Vicente Tan to
collectand did collectfrom the Modern Box Factory the bills against the Lee Guan Box Factory. In
fact the record shows many checks signed by Ngo Hay or Ngo Tian Tek in payment of accounts of the Lee
Guan box Factory. Furthermore,and this seems to be conclusiveNgo Hay, testifying for the defense,
admitted that 'he' was the owner of the Lee Guan Box Factory in and before the year 1934, but that in
January, 1935, 'he' sold it, by the contract of sale Exhibit 7, to Vicente Tan, who had been his manager of
the business. Tan declared also that before January, 1935, the Lee Guan Box Factory pertained to Ngo
Hay and Ngo Tian Tek. The contract Exhibit 7 was found by the referee to be untrue and simulated, for
various convincing reasons that need no repetition here. And the quoted statements serve effectively to
confirm the evidence for the plaintiff that it was Ngo Hay's representations of ownership of, and
responsibility for, Lee Guan Box Factory that induced them to open credit for that concern. It must be
stated in this connectionto answer appellant's fitting observationthat the plaintiff and the assignors
have considered Ngo Hay, the Modern Box Factory and Ngo Hay and Co. as one and the same, through
the acts of the partners themselves, and that the proof as to Ngo Hay's statements regarding the
ownership of Lee Guan Box Factory must be taken in that view. Ngo Hay was wont to say 'he' owned the
Modern Box Factory, meaning that he was the principal owner, his other partner being Ngo Tian Tek.
Now, it needs no demonstrationfor appellant does not deny itthat the obligations of the Lee Guan
Box Factory must rest upon its known owner. And that owner is Ngo Tian Tek and Ngo Hay."

We must overrule petitioner's contention that the Court of Appeals erred in holding that Lee Guan Box
Factory was a subsidiary of the Modern Box Factory and in disregarding the fact that the contracts
evidencing the debts in question were signed by Vicente Tan alias Chan Sy, without any indication that
tended to involve the Modern Box Factory or the petitioner. In the first place, we are concluded by the
finding of the Court of Appeals regarding the ownership by the petitioner of Lee Guan Box Factory.
Secondly, the circumstance that Vicente Tan alias Chan Sy acted in his own name cannot save the
petitioner, in view of said ownership, and because contracts entered into by a factor of a commercial
establishment known to belong to a well-known enterprise or association, shall be understood as made
for the account of the owner of such enterprise or association, even when the factor has not so stated at
the time of executing the same, provided that such contracts involve objects comprised in the line and
business of the establishment. (Article 286, Code of Commerce.) The fact that Vicente Tan did not have
any recorded power of attorney executed by the petitioner will not operate to prejudice third persons,
like the respondent Philippine Education Co., Inc., and its assignors. (3 Echavarri, 133.) Another defense
set up by the petitioner is that prior to the transactions which gave rise to this suit, Vicente Tan had
purchased Lee Guan Box Factory from Ngo Hay under the contract, Exhibit 7; and the petitioner assails,
under the second assignment of error, the conclusion of the court of Appeals that said contract is
simulated. This contention is purely factual and must also be overruled. The petitioner questions the
right of the respondent Philippine Education Co., Inc., to sue for the credits assigned by the five entities
with which Lee Guan Box Factory originally contracted, it being argued that the assignment, intended
only for purposes of collection, did not make said respondent the real party in interest. The
petitioner has cited 5 Corpus Juris, section 144, page 958, which points out that "under statutes
authorizing only a bona fide assignee of choses in action to sue thereon in his own name, an assignee for
collection merely is not entitled to sue in his own name." The finding of the Court of Appeals that there
is nothing "simulated in the assignment," precludes us from ruling that the respondent company is not a
bona fide assignee. Even assuming, however, that said assignment was only for collection, we are not
prepared to say that, under section 114 of the Code of Civil Procedure, in force at the time this action
was instituted, ours is not one of those jurisdictions following the rule that "when a chose, capable of
legal assignment, is assigned absolutely to one, but the assignment is made for purpose of collection,
the legal title thereto vests in the assignee, and it is no concern of the debtor that the equitable title is in
another, and payment to the assignee discharges the debtor." (5 C. J., section 144, p. 958.) No
substantial right of the petitioner could indeed be prejudiced by such assignment, because section 114
of the Code of Civil Procedure reserves to it "any set-off or other defense existing at the time of or
before notice of the assignment.' " Petitioner's allegations that "fraud in the inception of the debt is
personal to the contracting parties and does not follow assignment," and that the contracts assigned to
the respondent company "are immoral and against public policy and therefore void," constitute
defenses on the merits, but do not affect the efficacy of the assignment. It is obvious that, apart from
the fact that the petitioner cannot invoke fraud of its authorship to evade liability, the appealed decision
is founded on an obligation arising, not from fraud, but from the very contracts under which
merchandise had been purchased by Lee Guan Box Factory, a subsidiary of petitioner's Modern Box
Factory. The fourth and fifth assignments of error relate to the refusal of the court of Appeals to hold
that the writ of attachment issued at the commencement of this action by the Court of First Instance is
illegal, and to award in favor of the petitioner damages for such wrongful attachment. For us to sustain
petitioner's contention will amount to an unauthorized reversal of the following conclusion of fact of the
Court of Appeals: "The stereotyped manner in which defendants obtained goods on credit from the six
companies, Vicente Tan's sudden disappearance, the execution of the fake sale Exhibit 7 to throw the
whole responsibility upon the absent or otherwise insolvent Tan, defendant's mercurial and
unbelievable theories as tolthe ownership of the Modern Box Factory and" Lee Guan Box Factory
obviously adopted in a vain effort to meet or explain away the evidentiary force of plaintiff's
documentary evidenceare much too significant to permit a declaration that the attachment was not
justified." Regarding the suggestion in petitioner's memorandum that this case should be dismissed
because of the death of Ngo Hay, it is sufficient to state that the petitioner Ngo Tian Tek and Ngo Hay is
sued as a partnership possessing a personality distinct from any of the partners.

The appealed decision is affirmed, with costs against the petitioner. So ordered. Moran, C.J., Pablo,
Perfecto, Hilado, Briones, Hontiveros, and Tuason, JJ., concur.
ANG PUE & COMPANY, ET AL., vs SECRETARY OF COMMERCE AND INDUSTRY

Facts:

On May 1, 1953, Ang Pue and Tan Siong, both Chinese citizens, organized the partnership Ang Pue &
Company for aterm of five years. Prior to the expiration of the five-year term, the partners amended the
original articles of partnership soas to extend the term of life of the partnership to another five years.
However, when the amended articles were presentedfor registration in the Office of the SEC,
registration was refused upon the ground that the extension was in violation of RA1180 an act
prohibiting the extension of the term of a partnership not wholly formed by Filipinos.

Law:

On June 19, 1954 Republic Act No. 1180 was enacted to regulate the retail business. It provided, among
other things,that, after its enactment, a partnership not wholly formed by Filipinos could continue to
engage in the retail business untilthe expiration of its term.

Ruling:

To organize a corporation or a partnership that could claim a juridical personality of its own and
transact business assuch, is not a matter of absolute right but a privilege which may be enjoyed only
under such terms as the State may deem necessary to impose.

PASCUAL v. Commissioner of InternalRevenue

FACTS:

On June 22, 1965, petitioners bought two (2)parcels of land from Santiago Bernardino, et al.and on May
28, 1966, they bought anotherthree (3) parcels of land from Juan Roque. Thefirst two parcels of land
were sold by petitionersin 1968 to Marenir Development Corporation,while the three parcels of land
were sold bypetitioners to Erlinda Reyes and Maria Samsonon March 19,1970. Petitioner realized a
netprofit in the sale made in 1968 in the amount of P165, 224.70, while they realized a net profit
of P60,000 in the sale made in 1970. Thecorresponding capital gains taxes were paid bypetitioners in
1973 and 1974 .Respondent Commissioner informed petitionersthat in the years 1968 and 1970,
petitioners asco-owners in the real estate transactions formedan unregistered partnership or joint
venturetaxable as a corporation under Section 20(b)and its income was subject to the taxesprescribed
under Section 24, both of theNational Internal Revenue Code; that theunregistered partnership was
subject tocorporate income tax as distinguished fromprofits derived from the partnership by themwhich
is subject to individual income tax.

ISSUE:
Whether petitioners formed an unregisteredpartnership subject to corporate income tax(partnership vs.
co-ownership)

RULING:

Article 1769 of the new Civil Code lays down therule for determining when a transaction shouldbe
deemed a partnership or a co-ownership.Said article paragraphs 2 and 3, provides:(2) Co-ownership or
co-possession does not itself establish a partnership, whether such co-ownersor co-possessors do or do
not share any profits

LORENZO OA V CIR

Facts:

Julia Buales died leaving as heirs her surviving spouse, Lorenzo Oa and her five children. A civil case
was instituted for the settlement of her state, in which Oa was appointed administrator and later on
the guardian of the three heirs who were still minors when the project for partition was approved. This
shows that the heirs have undivided interest in 10 parcels of land, 6 houses and money from the War
Damage Commission.

Although the project of partition was approved by the Court, no attempt was made to divide the
properties and they remained under the management of Oa who used said properties in business by
leasing or selling them and investing the income derived therefrom and the proceeds from the sales
thereof in real properties and securities. As a result, petitioners properties and investments gradually
increased. Petitioners returned for income tax purposes their shares in the net income but they did not
actually receive their shares because this left with Oa who invested them.

Based on these facts, CIR decided that petitioners formed an unregistered partnership and therefore,
subject to the corporate income tax, particularly for years 1955 and 1956. Petitioners asked for
reconsideration, which was denied hence this petition for review from CTAs decision.

Issue:

W/N there was a co-ownership or an unregistered partnership

W/N the petitioners are liable for the deficiency corporate income tax

Held:

Unregistered partnership. The Tax Court found that instead of actually distributing the estate of the
deceased among themselves pursuant to the project of partition, the heirs allowed their properties to
remain under the management of Oa and let him use their shares as part of the common fund for their
ventures, even as they paid corresponding income taxes on their respective shares.
Yes. For tax purposes, the co-ownership of inherited properties is automatically converted into an
unregistered partnership the moment the said common properties and/or the incomes derived
therefrom are used as a common fund with intent to produce profits for the heirs in proportion to their
respective shares in the inheritance as determined in a project partition either duly executed in an
extrajudicial settlement or approved by the court in the corresponding testate or intestate proceeding.
The reason is simple. From the moment of such partition, the heirs are entitled already to their
respective definite shares of the estate and the incomes thereof, for each of them to manage and
dispose of as exclusively his own without the intervention of the other heirs, and, accordingly, he
becomes liable individually for all taxes in connection therewith. If after such partition, he allows his
share to be held in common with his co-heirs under a single management to be used with the intent of
making profit thereby in proportion to his share, there can be no doubt that, even if no document or
instrument were executed, for the purpose, for tax purposes, at least, an unregistered partnership is
formed.

For purposes of the tax on corporations, our National Internal Revenue Code includes these
partnerships

The term partnership includes a syndicate, group, pool, joint venture or other unincorporated
organization, through or by means of which any business, financial operation, or venture is carried on
(8 Mertens Law of Federal Income Taxation, p. 562 Note 63; emphasis ours.)

with the exception only of duly registered general copartnerships within the purview of the term
corporation. It is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar
as said Code is concerned, and are subject to the income tax for corporations. Judgment affirmed.

Gatchalian vs.Collector of Internal Revenue

GR L-45425

FACTS:

Jose Gatchalian along with 14 others bonded together to purchase a sweeptakes ticket in the amount of
Ps 2.00 and registered the same as Jose Gatchalian and Co. This ticket has eventually won 3rd prize
amounting to Ps 50,000.00 which theydivided in accordance with their aliquot share in the cost of the
ticket. Gatchalianreceiving Ps 4425 for his Ps .18 cost.

A month after winning the ticket they were assessed by the Collector of Internal Revenue for the
payment of Income Tax of their unregistered partnership requesting them to pay Ps 1,499.94. They
replied that that they merely formed a co-ownership not Partnership and requested the CIR that they be
exempted from paying such assessed income tax. They also submitted evidence of payment of income
tax by each of them for their corresponding individual taxable pertaining to their share in the winnings.
However it was denied by the CIR. Demand letter ensued until it resulted to the issuance of Warrant of
distraint and levy on the property of the petitioner. Through the the 2 co-owner of Gatchalian they paid
a portion of the tax assessed amounting to Ps 602.51 to avoid the embargo of the property and
promised to pay the balance in installments guaranteed by 2 solvent persons as required by the CIR. The
payment was made under protest and petitioner filed for request for refund at the same time. The
protest was overruled and the demand for refund was denied.

Another warrant for distraint and levy on the property was issued for failure to pay the monthly
installments. Finally the balance was paid Ps 1,260.93 which includes legal interest and penalties. Again
a formal protest and request for refund was filed and was denied.

Petitioners elevated the matter to SC requesting refund of amount of Ps 1,863.44and legal interest
hereon.

ISSUE:

Whether or not Petitioners formed Co-Ownership or Unregistered Partnership when they purchased the
winning sweepstakes ticket?

RULING:

SC ruled that when they bonded together and contributed to the cost of the ticket they formed an
Unregistered Partnership. For they contributed money or property into a common fund which they
invest in the ticket and when it won, they divided the profit among themselves.

SARDANE VS. COURT OF APPEALS

FACTS:

Petitioner Sardane is the owner of a Sardane Trucking Services. One day Sardane borrowed money from
the other guy by making promises and issuing several promissory notes. On the due date the other guy
wanted his money back but instead of paying Sardane apologized for his failure to pay on time, and he
promised the other guy that he would pay him next time. After so many failed attempts to collect his
money the other guy got mad and finally decided to seek the intervention of the court. Now after so
many failed attempts to collect the promised payment, the other guy, Mr.Acojedo (Private Respondent),
with so much hate on his heart, finally filed a collection case against Sardane. Even during the scheduled
date of the trial, Sardane, as usual he did not show up. On motion by the petitioner(herein private
respondent), the Court issued an order declaring the Sardane in default and eventually after
presentation of evidence ex parte, the court rendered judgment by default in favor of the petitioner.
Sardane then appealed to the CFI, and he claimed that the promissory notes were his contribution to
the partnership; and that there is no contract of loan; thus he is not indebted to the other guy. The CFI,
believing the arguments of Sardane, ruled on his favor thereby reversing the decision of the lower court
by dismissing the complaint and ordered the plaintiff-appellee Acojedo to pay said defendant-appellant
P500.00 for moral damages

ISSUE:

whether or not a partnership existed?

HELD:

NONE .The fact that he had received 50% of the net profits does not conclusively establish that he was a
partner of the private respondent herein. Article 1769(4) of the Civil Code is explicit that while the
receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in
the business, no such inference shall be drawn if such profits were received in payment as wages of an
employee. Furthermore, herein petitioner had no voice in the management of the
affairs of the basnig. Under similar facts, this Court in the early case of Fortis vs. Gutierrez Hermanos,
denied the claim of the plaintiff therein that he was a partner in the business of the defendant. The
same rule was reiterated in Bastida vs. Menzi & Co., Inc., et al. which involved the same factual and legal
milieu.

DELUAO v. CASTEEL

FACTS:

In 1940 Nicanor Casteel unsuccessfully registered a fishpond in a big tract of swampy land, 178.76
hectares, in the then sitio of Malalag, municipality of Padada, Davao for 3 consecutive times because the
Bureau of Fisheries did not act upon his previous applications.
Despite the said rejection, Casteel did not lose interest. Because of the threat poised upon his position
by the other applicants who entered upon and spread themselves within the area, Casteel realized the
urgent necessity of expanding his occupation thereof by constructing dikes and cultivating marketable
fishes. But lacking financial resources at that time, he sought financial aid from his uncle Felipe Deluao.
Moreover, upon learning that portions of the area applied for by him were already occupied by rival
applicants, Casteel immediately filed a protest. Consequently, two administrative cases ensued involving
the area in question.
However, despite the finding made in the investigation of the above administrative cases, the Director
of Fisheries nevertheless rejected Casteel's application on October 25, 1949, required him to remove all
the improvements which he had introduced on the land, and ordered that the land be leased through
public auction

On November 25, 1949 Inocencia Deluao (wife of Felipe Deluao) as party of the first part, and Nicanor
Casteel as party of the second part, executed a contract denominated a "contract of service". On the
same date the above contract was entered into, Inocencia Deluao executed a special power of attorney
in favor of Jesus Donesa

On November 29, 1949 the Director of Fisheries rejected the application filed by Felipe Deluao on
November 17, 1948. Unfazed by this rejection, Deluao reiterated his claim over the same area in the two
administrative cases and asked for reinvestigation of the application of Nicanor Casteel over the subject
fishpond.

The Secretary of Agriculture and Natural Resources rendered a decision ordering Casteel to be
reinstated in the area and that he shall pay for the improvement made thereupon.
Sometime in January 1951 Nicanor Casteel forbade Inocencia Deluao from further administering the
fishpond, and ejected the latter's representative (encargado), Jesus Donesa, from the premises.

ISSUE:
Whether the reinstatement of Casteel over the subject land constitute a dissolution of the partnership
between him and Deluao

HELD:

Yes, the reinstatement of Casteel dissolved his partnership with Deluao.

The Supreme Court ruled that the arrangement under the so-called "contract of service" continued until
the decision both dated Sept. 15, 1950 were issued by the Secretary of Agriculture and Natural
Resources in DANR Cases 353 and 353-B.

This development, by itself, brought about the dissolution of the partnership. Since the partnership had
for its object the division into two equal parts of the fishpond between the appellees and the appellant
after it shall have been awarded to the latter, and therefore it envisaged the unauthorized transfer of
one half thereof to parties other than the applicant Casteel, it was dissolved by the approval of his
application and the award to him of the fishpond.

The approval was an event which made it unlawful for the members to carry it on in partnership.
Moreover, subsequent events likewise reveal the intent of both parties to terminate the partnership
because each refused to share the fishpond with the other.
main assets of the partnership, and they agreed that the proceeds from the sales and operations thereof
would be divided among them. Petitioners argument that he was merely the lessor of the boats to Chua
and Yao, not a partner is baseless. He consented to the sale of his own boats to pay a debt of Chua and
Yao, with the excess of the proceeds to be divided among the three of them. No lessor would do what
petitioner did. Indeed, his consent to the sale proved that there was a preexisting partnership among all
three. G.R. No. L-27343 February 28, 1979 MANUEL G. SINGSONG, JOSE BELZUNCE, AGUSTIN E. TONSAY,
JOSE L. ESPINOS, BACOLOD SOUTHERN LUMBER YARD, and OPPEN, ESTEBAN, INC., plaintiffs-appellees,
vs. ISABELA SAWMILL, MARGARITA G. SALDAJENO and her husband CECILIO SALDAJENO LEON GARIBAY,
TIMOTEO TUBUNGBANUA, and THE PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL, defendants,
MARGARITA G. SALDAJENO and her husband CECILIO SALDAJENO, defendants-appellants. Facts: Isabela
Sawmill was formed by partners Saldajeno, Lon and Timoteo. Saldajeno withdrew from the partnership
and after dissolution; Leon and Timoteo continued the business still under the name Isabela Sawmill.
The partnership is indebted to various creditors and that Sheriff sold the assets of Isabela Sawmill to
Saldajeno and was subsequently sold to a separate company. Issue: Whether or not Isabela Sawmill
ceased to be a partnership and that creditors could no longer demand payment. Held: On dissolution,
the partnership is not terminated but continues until the winding up of the business. It does not appear
that the withdrawal of Saldajeno from the partnership was published in the newspapers. The appellee
and the public had a right to expect that whatever credit they extended to Leon and Timoteo doing
business in the name of Isabela Sawmill could be enforced against the properties of said partnership.
The judicial foreclosure of the chattel mortgage executed in favor of Saldajeno did not relieve her from
liability to the creditors of the partnership. It may be presumed that Saldajeno acted in good faith, the
appellees also acted in good faith in extending credit to the partnership. Where one of the 2 innocent
persons must suffer, that person who gave occasion for the damages to be caused must bear the
consequences.

-emiLy
G.R. No. L-19819 October 26, 1977 WILLIAM UY, Plaintiff-Appellee, vs. BARTOLOME PUZON, substituted
by FRANCO PUZON, Defendant-Appellant.

-emiLy