Jose Fernandez vs.

Francisco De La Rosa
Gr no. 413, 2 February 1903

Facts:
Fernandez alleged that he entered into a verbal agreement with Dela Rosa to form a partnership
for the purchase of cascoes and for that purpose, each partner must furnish such amount of money as
he could. The profits shall then be divided proportionately.

Fernandez furnished Defendant De la Rosa P300 to purchase a casco which the latter did
purchase for P500 taking the title in his own name. He, yet again, furnished defendant P825 to purchase
another casco which the latter again took the title in his own name.

In April, the parties undertook to draw up article of partnership for the purpose of embodying
the same in an authentic document. However, the defendant proposed a draft different from the terms
of the earlier agreement. Hence, no written agreement was executed.

Since the control and management of the (2) cascoes, the plaintiff made a demand for
accounting upon him which the defendant refused to render denying the existence of the partnership.

The defendant denied that the plaintiff furnished any money for the purchase of the cascoes. He
also alleged that the P300 was a loan from the firm.

Issues:
1. Whether a partnership exists between the parties.
2. Whether such partnership was terminated as a result of the act of the defendant in giving
back the P1, 125

Ruling:
1. Yes, a complete and perfect contract of partnership was entered into by the parties.
This contract, it is true, might have been subject to a suspensive condition, postponing its
operation until an agreement was reached as to the respective participation of the partners and
profits, the character of the partnership as collective or en comandita, and other details, but
although it is asserted by counsel for the defendant that such was the case, there is little or
nothing in the record to support this claim.

The execution of a written agreement was not necessary in order to give efficacy to the verbal
contract of partnership as a civil contract, the contributions of the partners not having been in
the form of immovables or rights in immovables.

2. No. The acceptance of the money by the plaintiff did not have the effect of terminating legal
existence of the partnership by converting it into a societas leonina, as claimed by counsel for
the defendant.
There was no intention on the part of the plaintiff in accepting the money to relinquish his rights as
a partner, nor is there any evidence that by anything that he said or by anything that he omitted to
say he gave the defendant any ground whatever to believe that he intended to relinquished them.
On the contrary he notified the defendant that he waived none of his rights in the partnership.
 Catalino Gallemit vs. Ceferino Tabiliran
Gr. No. 5837, 15 September 1911

Facts:
By mutual agreement, Plaintiff Gallemit and Defendant Tabiliran acquired by purchase
the land concerned from its original owner, Luis Ganong, for the sum of P44. It was
stipulated between the purchasers that they each should pay ½ of the price and that the
property should be divided equally between them.

The vendor testified that the plaintiff paid him the sum of P22 and after 4 months, the
defendant paid his part of the price.

Due to the refusal of the defendant to comply with the stipulations made, the deed of
sale was not executed, nor was a partition effected of the land which they acquired. The
defendant kept all the land which belonged to them in common, in violation of the
stipulations agreed upon, notwithstanding that he paid the vendor only ½ of the price
thereof.

This prompted the plaintiff to file a complaint against the defendant. The defendant
denied all the allegations against him.

The CFI absolved the defendant from the complaint, with the cost against the plaintiff.

Issue:
Whether there is a partnership between the plaintiff and the defendant

Ruling:
No.
Considering the terms of the claim made by the plaintiff and those of the defendant’s
answer, and the relation of facts contained in the judgment appealed from, it does not
appear that any contract of partnership whatever was made between them for the
purposes expressed in Art. 1665 of the CC, for the sole transaction performed by them was
the acquisition jointly by mutual agreement of the land in question, since it wad undivided,
under the condition that they each should pay ½ of the price thereof and that the property
acquired should be divided between the two purchasers.

In order temporarily to establish a community of property rights in real estate, which

two or more persons proposed to acquire in order to divide it among themselves
immediately after the purchase, it is not necessary that a partnership be formed between
them for the purposes specified in Art. 1665 of the CC.
 CIR vs. William Suter
Gr. No. L- 25532, 28 February 1969

Facts:
A limited partnership, named “William J. Suter ‘Morcoin’ Co., Ltd.,” was formed by respondent
Suter, as the general partner, and Julia Spirig and Gustav Carlson, as the limited partners. The partners
contributed P20k, P18k, and P2k respectively to the partnership. The firm was registered with the SEC.

In 1948, general partner Suter and limited partner Spirig got married and thereafter, limited
Carlson sold his share in the partnership to Suter and his wife.

The limited partnership had been filing its income tax returns as a corporation, without
objection by petitioner CIR until the latter consolidated the income of the firm and the individual
incomes of the partners-spouses, resulting in a determination of a deficiency income tax against
respondent Suter.

Respondent Suter protested the assessment and requested its cancellation and withdrawal but
his request was denied.

Petitioner alleged that the marriage of Suter and Spirig and their subsequent acquisition of the
interests of remaining partner Carlson in the partnership dissolved the limited partnership, and if they
did not, the fiction of juridical personality of the partnership should be disregarded for income tax
purposes.

CTA reversed the decision of the CIR.

Issue:
1. Whether the spouses were prohibited to enter into a contract of partnership.
2. Whether the partnership was dissolved after the marriage of the partners and the
subsequent sale to them by the remaining partner.

Ruling:
1. No.
The “Marcoin” was not a universal partnership, but a particular one. As appears from Art.
1674-1675 of the Spanish Civil Code of 1889, a universal partnership requires either that the
object of the association be all the present property of the partners, as contributed by them
to the common fund, or else “all the partners may acquire by their industry or work during
the existence of the partnership”.

William J. Suter “Marcoin” Co. Ltd. was not such a universal partnership, since the
contributions of the partners were fixed sums of money. Hence, it was not a partnership
that the spouses were forbidden to enter by Art. 1677 of the Civil Code of 1889.

2. No.
The subsequent marriage of the partners does not operate to dissolve the partnership
because such marriage is not one of the causes provided for that purpose either by the
 Spanish Civil Code or the Code of Commerce. The capital contributions of the partners
William Suter and Julia Spirig were separately owned and contributed by them before their
marriage; and after they were joined in wedlock, such contributions remained respective
separate property under the Spanish Civil Code.

Heirs of Tan Eng Kee vs. CA

Gr. No. 126881, 3 October 2000

Facts:
The heirs of Tan Eng Kee filed a suit against the decedent’s brother Tan Eng Lay for accounting,
liquidation and winding up of the alleged partnership formed between Tan Eng Kee and Tan Eng Lay.

The petitioners filed an amendment complaint impleading private respondent Benguet Lumber.
The amended complaint alleged that the brothers entered into a partnership engaged in the business of
selling lumber and hardware and construction supplies. They named their enterprise “Benguet Lumber”
which they jointly managed until Tan Eng Kee’s death. They claimed that Tan Eng Lay and his children
caused the conversion of the partnership into a corporation called “Benguet Lumber Company”. This
deprived Tan Eng Kee and his heirs of their rightful participation in the profits of the business.

RTC ruled in favor of the petitioners. CA reversed the decision of the RTC. Petitioner’s motion for
reconsideration was denied.

Issue:
Whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber.

Ruling:
No. There was no partnership whatsoever. Except for a firm name, there was no firm account,
no firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits and
losses, and no time fixed for the duration of the partnership.

Arts. 771-772 provides that a partner may be constituted in any form, but when an immovable is
constituted, the execution of a public instrument becomes necessary. This is true if the capitalization
exceeds P3k, in which case a public instrument is also necessary, and which is to be recorded with the
SEC. In this case at bar, the business establishment definitely exceeded P3k, in addition to the
accumulation of real properties and to the fact that it is now a compound. The execution of a public
instrument was never established by the appellees.

The essence of a partnership is that the partners share in the profits and losses. Each has the
right to demand an accounting as long as the partnership exists. A demand for periodic accounting is
evidence of a partnership. During his lifetime, Kee, appeared never to have made any such demand for
accounting from his brother, Lay.
 M. Teague vs. H. Martin, et. Al
Gr no. 30286, 12 September 1929

Facts:
Plaintiff alleged that he and the defendants formed a partnership for the operation of a fish
business and similar transactions, which by mutual consent was called “Malangpaya Fish Co.,” with a
capital of P35,000, of which plaintiff paid P25,000, Martin P5000, Maddy P2500, and Golucke P2500.
They agreed to share in the profits snd losses of the business in proportion to the amount of capital
which each contributed.

Plaintiff also alleged that he was named the general manager.

Plaintiff asked for the dissolution of the partnership and the appointment of a receiver
pendente lite. The defendants did not object to the dissolution, but prayed for an accounting with the
plaintiff.

Defendants denied naming the plaintiff as the general manager . They contended that the duties
of each partner were specified and defined in the “plans for formation of a limited partnership”.

The lower court declared the partnership dissolved and that the existing properties of the said
partnership are ordered to be sold at public auction; and that all proceeds and other unexpended funds
of the partnership be used, first to pay tax to the Government; 2nd, to pay debts owing to 3rd persons;
3rd, to reimburse the partners for their advances and salaries due; and lastly, to return to the partners
the amounts they contributed to the capital of the association and any other remaining sum to be
distributed proportionately among them as profits.

Defendant Martin admits the purchase of Barracuda, by the partnership. He denies, however,
that the partnership purchased or that it now owns the lighter Lapu- Lapu, “and other properties except
such motorship and a smoke house or that they are making use of any of the properties of the
partnership to the damage and prejudice of the plaintiff.

Issues:
Whether the plaintiff has the authority to purchase the Lapu-Lapu, the Ford truck and the
adding machine.

Ruling:
No.
They were purchased by the plaintiff and paid for by him from and out of the money of the
partnership. At the time of the purchase, the Lapu-Lapu was purchased in the name of the plaintiff, and
that he personally had it registered in the customs house in his own name, for which he made an
affidavit that he was the owner . By his own actions and conduct, and the taking of the title in his own
name, he is now estopped to claim or assert that they are not his property or that they are the property
of the company.
By the said division of powers, the plaintiff had no authority to purchase the lighter Lapu-Lapu, the Ford
truck, or the adding machine, as neither of them can be construed ad supplies for the partnership
business.
 The cost of the Lapu-Lapu and the time of its use and the purpose for which it was used, all
appear in the record. For such reasons, plaintiff should be compensated for the reasonable value of the
time which the partnership made use of the Lapu-Lapu.

George Litton vs. Hill & Ceron et al.

Gr. No. 45624, 25 April 1939

Facts:
Plaintiff sold and delivered to Carlos Cero , who is one of the managing partners of Hill & Ceron,
a certain number of mining claims. Ceron paid to the plaintiff the sum of P1,150, leaving an unpaid
balance of P720.

Unable to collect the unpaid balance, Litton filed a complaint in the CFI against the defendants
for the recovery of the said balance. CFI ordered Ceron personally to pay the amount claimed and
absolved the partnership Hill & Ceron, Robert Hill and the Visayan Surety & Insurance Corportation.

Ceron objected to make the firm responsible to him. .

Hill testified that he and Ceron, during the partnership, had the same power to buy and sell; that
in the said partnership Hill as well as Ceron made the transaction as partners in equal parts. He alleged
that a few days before February 14, he advised the plaintiff not to deliver shares for sale or on
commission to Ceron because the partnership was about to be dissolved.

CA affirmed the CFI’s decision having reached the conclusion that Ceron did not intend to
represent and did not act for the firm Hill & Ceron in the transaction involved.
The appealed decision was then reversed and the defendants are ordered to pay to the plaintiff,
jointly and severally.

Issue:
1. Whether the transaction made by Ceron with the plaintiff was effected by Hill &
Ceron and binding upon it.

Ruling:
Yes.
The stipulation in the articles of partnership that any of the two managing partners may
contract and sign in the name of the partnership with the consent of the other, undoubtedly
creates an obligation between the two partners, which consists in asking the other’s consent
before contracting for the partnership. This obligation is not imposed upon a third person who
contracts with the partnership. Neither is it necessary for the 3rd person to ascertain if the
managing partner with whom he contracts has previously obtained the consent of the other. A
3rd person may and has a right to presume that the partner with whom he contracts has, in the
ordinary and natural course of business, the consent of his copartner; for otherwise, he would
not enter into the contract.

There is nothing in the case which destroys this presumption. Had Ceron in any way
stated to the appellant at the time of the execution of the contract, or if it could be inferred by
his conduct, that he had the consent of Hill, and should it turn out later that he did not have
such consent, this alone would not annul the contract judging from the provisions of Art.130 of
the Code of Commerce.

Under the aforequoted provisions, when, not only without the consent but against the
will of any of the managing partners, a contract is entered into with a 3 rd person who acts in
good faith, and the transaction is of the kind of business in which the partnership is engaged, as
in the present case, said contract shall not be annulled, without prejudice to the liability of the
guilty partner.

Antonio Goquiolay vs. Washington Sycip, et. Al

Gr no. L- 11840, 26 July 1960

Facts:
In 1940, Tan Sin An and Antonio Goquiolay entered into a general commercial
partnership for the purpose of dealing in real estate. The partnership had a capital of P30,000,
P18k of which was contributed by Goquiolay and P12k by Tan Sin An. The agreement lodged
upon Tan Sin An the sole management of the partnership affairs.

The lifetime of the partnership was fixed at 10 years. They also agreed that in the event
of the death of any of the partners at any time before the expiration of the said term, the co-
partnership shall not be dissolved but will have to be continued and the deceased partner shall
be represented by his heirs or assigns.

However, the partnership could be dissolved anytime upon mutual agreement in writing
of the partners.

On May 1940, the partnership purchased 3 parcels of land. Another 46 parcels were
purchased by Tan Sin An in his individual capacity, and he assumed payment of mortgage debt
thereon for P35k with interest.

On September 1940, the two separate obligations were consolidated in an instrument

executed by the partnership and Tan Sin An, whereby the entire 49 lots were mortgaged in
favor of the Banco Hipotecario de Filipinas and the two were bound to pay solidarily, the
remaining balance of their unpaid accounts.
 On June 1942, Tan Sin An died. Kong Chai Pin, wife of the deceased, was appointed as
administratrix of the intestate estate of Tan Sin An.

Repeated demands for payment were made by the Banco Hipotecario on the
partnership and and on Tin San An.

To cancel the mortgage, Defendants Sing Yee and Cuan, Co., Inc paid the remaining
balance of the mortgage debt. The defendants then filed their claims in the intestate
proceedings of Tan Sin An for the alleged obligations of the partnership and Tan Sin An.

Kong Chai Pin filed a petition with the probate court for authority to sell all the 49
parcels of land to defendants Sycip and Lee for the purpose of settling the debts of Tan Sin An
and the partnership.

With this sale, the surviving partner, Goquiolay, opposed the order of the probate court
in approving the sale in so far as his interest over the 3 parcels of land sold was concerned. The
probate court then annulled the sale with respect to the 60% interest of Goquiolay. The Court
set aside the decision of the probate court and remanded the case for new trial, due to the
non-inclusion of indispensable parties.

Appellants argue that the new members became no more than limited partners and, as
such were disqualified from the management of the business.

Issue:
1. Whether Kong Chai Pin became the managing partner of the partnership upon the
death of her husband, Tan Sin An, by virtue of the articles of Partnership executed
between Tan Sin An and Goquiolay.
2. Whether the consent of the other partners were necessary to perfect the sale of the
partnership properties to Sycip and Lee.
3. Whether Kong Chai Pin is a general partner.

Ruling:
1. No.
The Articles of Co-partnership and the power of attorney executed by Goquiolay
conferred upon Tan Sin An the exclusive management of the business, such power,
premised as it is upon trust and confidence, was a mere personal right that
terminated upon Tan’s demise.

The provision in the articles stating that “in the event of death of any one of the
partners within the 10- year term of the partnership, the deceased partner shall be
represented by his heirs”, could not have referred to the managerial right given to
Tan; it related to the succession in the proprietary interest of each partner.

2. No.
 Strangers dealing with a partnership have the right to assume, in the absence of
restrictive clauses in the co-partnership agreement, that every general partner
acting with ostensible authority. The 3rd persons may rightfully assume that the
contracting partner was duly authorized to contract for and in behalf of the firm and
that, furthermore, he would not ordinarily act to the prejudice of his co-partners.
3. Yes.
By authorizing the widow of the managing partner to manage partnership property
(which a limited partner could not be authorized to do), the other general partner
recognized her as a general partner, and is now in estoppel to deny her position as a
general partner, with authority to administer and alienate partnership property.

Island Sales, Inc. vs. United Pioneers General Construction Company, et al

Gr no. L- 22493, 31 July 1975

Facts:
The defendant company, a general partnership, purchased from the plaintiff a motor
vehicle on the installment basis and for this purpose executed a promissory note for P9,440,
payable in (12) equal monthly installments with the condition that failure to pay any said
installments as they fall due would render the whole unpaid balance immediately due and
demandable.

The defendant company failed to render one installment. This prompted the plaintiff to
sue the defendant company for the unpaid balance. The co-defendants were included in their
capacity as general partners of the defendant company.

During hearing, the defendants and their counsel failed to appear notwithstanding the
notices sent to them. The trial court authorized the plaintiff to present its evidence ex parte,
after which the trial court rendered the decision appealed from.

The defendants moved to reconsider the decision claiming that since there are (5)
general partners, the solidary liability of each partner should not exceed 1/5 of the obligations
of the defendant company. The trial court, however, denied the said motion.

Issue:
Whether the dismissal of the complaint to favor one of the general partners of a
partnership increases the solidary liability of each of the remaining partners for the obligations
of the partnership.

Ruling:
No.
 Art. 1816. All partners including industrial ones, shall be liable pro rats with all their property and
after all the partnership assets have been exhausted, for the contracts which may be entered into in the
name and for the account of the partnership, under its signature and by a person authorized to act for
the partnership. However, any partner may enter into a separate obligation to perform a partnership
contract.

In the instant case, there were (5) general partners when the promissory note in
question was executed for and in behalf of the partnership. Since the liability of the partners is
pro rata, the liability of the appellant Daco shall be limited only 1/5 of the obligations of the
defendant company. The fact that the complaint against the defendant Lumauig was dismissed,
upon motion of plaintiff, does not unmake the said Lumauig as a general partner in the
defendant company. In so moving to dismiss the complaint, the plaintiff merely condoned
Lumauig’s individual liability to the plaintiff.

Pacific Commercial Co. vs. Aboitiz & Martinez, et al

Gr no. 25007, 2 March 1926

Facts:
In 1919, De Silva, Guillermo and Vidal Aboitiz and Martinez formed “a regular, collective,
mercantile partnership” with a capital of P40,000 of which each of the partners Aboitiz and De
Silva furnished 1/3. Partner Martinez was an industrial partner and furnished no capital.

It was provided in the partnership article that Martinez was to receive 30 per cent of the
profits and that his responsibility for losses should not exceed the amount of the profits
received by him.

In 1922, the partnership executed a promissory note in favor of the plaintiff, the Pacific
Commercial Company. As security for the payment of the note, the partnership executed a
chattel mortgage in favor of the plaintiff on certain personal property.

The partnership failed to pay the debt, thus, the chattel mortgage was foreclosed, the
mortgaged property sold and the proceeds of the sale was paid over to the plaintiff. No further
payment on the note appears to have been made which prompted the plaintiff to brought an
action for the recovery of the unpaid balance with interest.

The court decided in favor of the plaintiff and against the partnership. The judgment
further provided that execution should first issue against the property of the partnership
Aboitiz & Martinez and that in the event of the insolvency of the partnership, it might issue
against the property of the partners De Silva and Aboitiz, and in the event of their insolvency
partner Martinez.
 Martinez appealed and maintains that as an industrial partner, he cannot be held
responsible for the partnership’s debt.

Issue:
Whether Martinez, an industrial partner, be held to pay for the partnership’s debt.

Ruling:
Yes.
Art. 127 of the Code of Commerce provides: “All the members of the general copartnership, be
they or be they not managing partners of the same, are liable personally and in solidum with all their
property for the results of the transactions made in the name and for the account of the partnership,
under the signature of the later, and by a person authorized to make use thereof.”

Art. 141, upon which the appellant relies and which provides that “losses shall be
computed in the same proportion among the capitalist partners without including the industrial
partners, unless by special agreement the latter have been constituted as participants therein,” is
susceptible of two different interpretations of which that given it in the Companñia Maritima
case, that it relates merely to the distribution of losses among the partners themselves in the
settlement of the partnership affairs and has no reference to partnership obligations to third
parties.

There is a marked distinction between a liability and a loss, and the inability of a
partnership to pay a debt to a 3rd party at a particular time does not necessarily mean that the
partnership business, as a whole, has been operated at a loss.

Luzviminda Villareal, et al vs. Donaldo Ramirez, et al.

Gr no. 144214, 14 July 2003

Facts:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of
P750,000 for the operation of a restaurant and catering business. Villareal was appointed as the
general manager and Carmelito Jose as operations manager.

On 5 September 1984, Donaldo Ramirez joined as a partner in the business and

contributed P250,000.

Jesus Jose withdrew from the partnership and his capital contribution was refunded to
him in cash by agreement of the partners.
 Without prior knowledge of respondents, petitioners closed down the restaurant,
allegedly because of increased rent and the restaurant furniture and equipment were
deposited in the respondents’ house for storage.

In 1987, respondent spouse wrote petitioners saying that they were no longer
interested in continuing their partnership and that they were accepting the latter’s offer to
return their capital contribution.

Ramirez wrote another letter informing the petitioners of the deterioration of the
restaurant furniture and equipment. She also reiterated the request for the return of their 1/3
share in the equity of the partnership. Despite the repeated requests, petitioners did not heed
them.

Respondents then filed a complaint for the collection of a sum of money from
petitioners.

Petitioners contended that respondents had expressed a desire to withdraw from the
partnership and had called for its dissolution. They also alleged that the respondents had been
paid, upon the turnover to them of furniture and equipment worth over P400,000; and that the
latter had no right to demand a return of their equity because their share, together with the
rest of the capital of the partnership, had been spend as a result of irreversible business losses.

Respondents alleged that they did not know of any loan encumbrance on the
restaurant. If that is the case, then the loans incurred by petitioners should be regarded as
purely personal and not chargeable to the partnership.

Respondents filed an urgent motion for leave to sell or otherwise dispose of restaurant
furniture and equipment. The furniture and the equipment stored in their house were
inventoried and appraised.

After trial, the RTC ruled that the parties had voluntarily entered into a partnership,
which could be dissolved anytime. Petitioners clearly intended to dissolve it when they stopped
operating the restaurant.

CA held that, although respondents had no right to demand the return of their capital
contribution, the partnership was nonetheless dissolved when petitioners lost interest in
continuing the restaurant business with them.

Issues:
1. Whether the respondents have the right to demand from petitioners the return of
their equity share.
2. Whether the CA’s decision ordering the distribution of the capital contribution,
instead of the net capital after the dissolution and liquidation of the partnership is in
accordance with the law.
Ruling:

1. No.
The respondents have no right to demand from petitioners the return of their equity
share. Except as managers of the partnership, petitioners did not personally hold its
equity or assets.

“The partnership has a juridical personality separate and distinct from that of each
of the partners.” Since the capital was contributed to the partnership, not to
petitioners, it is the partnership that must refund the equity of the retiring partners.

2. No.
The exact amount of refund equivalent to respondents’ 1/3 share in the partnership
cannot be determined until all the partnership assets will have been liquidated- in
other words, sold and converted to cash- and all partnership creditors, if any, paid.

In the pursuit of a partnership business, its capital is either increased by profits

earned or decreased by losses sustained.

The CA failed to reduce the capitalization by P250,000, which was the amount paid
by the partnership to Jesus Jose when he withdrew from the partnership.

Because of the above-mentioned transactions, the partnership capital was actually

reduced. When petitioners and respondents ventured into business together they
should have prepared for the fact that their investment would either grow or shrink.
The original P250,000, which they had invested could no longer be returned to
them, because 1/3 of the partnership properties at the time of the dissolution did
not amount to that much.
 Lilibeth Sunga-Chan and Cecilia Sunga vs. Lamberto Chua
Gr. No. 143340, 15 August 2001

Facts:
Respondent Chua alleged that in 1977, he verbally entered into a partnership with
Jacinto Sunga in the distribution of Shellane LPG in Manila. They allegedly registered the
business name, Shellite Gas Appliance Center, under the name of Jacinto as sole propietorship.

The intention was that the profits would be equally delivered between them. Jacinto
was made the manager, assisted by Josephine Sy. They were both compensated.

While Jacinto furnished respondent with merchandise inventories, balance sheets and
net worth of Shellite, respondent however suspected that the amount indicated were
understated by Jacinto and Josephine for their own selfish gain and for tax avoidance.

Upon Jacinto’s death, petitioners took over the operations, control, custody, disposition
and management of Shellite without respondent’s consent. Despite repeated demands of
respondent for accounting, inventory, appraisal and winding up and restitution of his net
shares, petitioner failed to comply.

Respondent also claimed that he was paid P200,000 informing him that such
represented the partial payment of the his share in the partnership with the promise that she,
Lilibeth, would make the complete inventory and winding up which she failed to comply.

Aggrieved, respondent filed a complaint against the petitioners. Petitioner filed 2

motion to dismiss which were denied by the trial court. The trial court rendered its decision in
favor of the plaintiff. CA affirmed the trial court’s decision.

Issues:
1. Whether there is a partnership between Lamberto and Jacinto
2. Whether the failure of the partnership to be registered tantamount to invalidation
of the said partnership.
3. Whether laches and/or prescription should have extinguished respondent’s claim.

Ruling:
1. Yes.
A partnership may be constituted in any form, except where immovable property of
real rights are contributed thereto, in which case a public instrument shall be
necessary. Hence, based in the intention of the parties, a verbal contract of
partnership may arise.

2. No.
 Art. 1772 of the CC requires that partnership with a capital of P3,000 or must
register with SEC, however, this registration requirement is not mandatory. Art.
1768 of the CC provides that the partnership retains its juridical personality even if it
fails to register. The failure to register the contract of partnership does not
invalidate the same as among the partners, so long as the contract has the essential
requisites, because the main purpose of registration is to give notice to 3rd parties.

3. No.
The action for accounting filed by respondents three (3) years after Jacinto's death
was well within the prescribed period. The Civil Code provides that an action to
enforce an oral contract prescribes in six (6) years while the right to demand an
accounting for a partner's interest as against the person continuing the business
accrues at the date of dissolution, in the absence of any contrary agreement.
Considering that the death of a partner results in the dissolution of the partnership,
in this case, it was Jacinto's death that respondent as the surviving partner had the
right to an account of his interest as against petitioners. It bears stressing that while
Jacinto's death dissolved the partnership, the dissolution did not immediately
terminate the partnership. The Civil Code expressly provides that upon dissolution,
the partnership continues and its legal personality is retained until the complete
winding up of its business, culminating in its termination.