Case 1 GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR. and BENJAMIN T. BACORRO, petitioners v. HON.

COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION and JOAQUIN L. MISA, respondents.
Doctrine: "dissolution", it is the change in the relation of the parties caused by any partner ceasing to be associated in the carrying on of the business. Facts: 1. Ross, Lawrence, Selph and Carrascoso (formed in 1939) was a law firm partnership that changed its name numerous times, ending with BITO, MISA, and LOZADA by 1980. 2. Atty. Joaquin MISA, one of the name partners and respondent herein, submitted a letter to the other partners declaring his intention to retire from the firm. In the letter, he also instructed the firm's accountants to make the proper liquidation of his share/participation in the firm. 3. He wrote again to the other partners declaring that the reason behind his withdrawal was due to the firm being unsatisfactory and that working conditions of the firm's employees was unacceptable. He cited problems in employee wages, constant dressing down of lawyers that deprived the employees of self respect and all of his efforts to solve these problems were thwarted by the other partners. 4. MISA filed with the SEC to dissolve and liquidate the partnership. The SEC ruled in favor of MISA and held that his withdrawal had dissolved the partnership of Bito, Misa & Lozada. SEC ruled that being a "partnership at will" the law firm could be dissolved by any party at any time. 5. CA affirmed the decision of the SEC and noted further that the liquidation should only pertain to the share/part of Atty. Misa. 6. Extra details: *Atty. Jesus Bito and Atty. Mariano Lozada (other name partners) had already died, and by the writing of this case, the firm has changed its name to: "Bito, Lozada, Ortega & Castillo" Issue: Can Atty. Joaquin Misa (Priv. Respondent) validly withdraw from the partnership? YES Held: A partnership that does not fix its term is a partnership at will. IN this case, the partnership agreement DOES not provide a specific period for the undertaking. The birth and life of a partnership at will is dependent on the mutual desire and consent of the partners. DELECTUS PERSONAE or the right to choose with whom a person wishes to associate himself is the foundation of that partnership. Note further, NEITHER the presence of a period for specific duration or statement of a particular purpose can PREVENT the dissolution of any partnership by an act or will of any partner. Mutual agency arises among partners and delectus personae gives them the power, although not necessarily the right, to dissolve the partnership. An unjustified dissolution by the partner can subject him to a possible action for damages. On defining "dissolution", it is the change in the relation of the parties caused by any partner ceasing to be associated in the carrying on of the business. Upon its dissolution, the partnership continues its legal personality is retained until the

complete winding up of the business culminating in its termination. An agreement of the partners shall primarily govern over the liquidation of the assets of the partnership, otherwise, it shall be the Civil Code. In this case, there was a stipulation in the Articles of Partnership that "retirement" is a viable means to detach a partner from the partnership and to allow proper liquidation to proceed. Retirement is inclusive of "resignation" or "withdrawal". Finally, Atty. Misa did not act in bad faith, as seen by the CA. It would not be right to let any of the partners remain in the partnership under such atmosphere of animosity and not certainly against their will. Dispositive: Petition denied.

CASE 2 TOCAO VS. CA

DOCTRINE: Only those who recieve profit borne of the partnership is a partner. FACTS: Private Respondent, Nenita Anay, met Petitioner William Belo (VP for Operations of Ultra Clean Water Purifier) through her former employer (Technolux) in Bangkok, Thailand. Belo introduced Anay to Petitioner Tocao. Tocao informed Anay her desire to enter into a joint venture with her for the importation and local distribution of kitchen cookware Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and Anay as head of the marketing department (considering her experience and established relationship with West Bend Company, a manufacturer of kitchen wares in Wisconsin, U.S.A) and later, Vice-President for Sales The parties agreed that Belos name should not appear in any documents relating to their transaction with the West Bend Company, and agreed to use Anays name in securing distributorship of cookware from that company. Further, the parties agreed that Anay was entitled to 10% in the annual profit, an overriding commission, a percentage in the sales, and a percentage for her demonstration services The agreement was not reduced to writing on the strength of Belos assurances that he was sincere, dependable and honest when it came to financial commitments The parties operated under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocaos name The business became successful, thanks in large part to Anay. She was invited to the US by the West Bend Company which was approved by Tocao in a letter that recognized Anay as a business partner of the company In October 1987, Anay learned that Tocao signed a letter to the effect that Anay was no longer the VP of Geminesse Enterprise, and later, she received a

letter that she was barred from holding office and conducting demonstrations. Anay attempted to contact Belo which were unanswered, which prompted her to consult her lawyer, who also sent a letter to Belo, which was also unanswered. Anay filed the Civil Case in order to recover her overriding commission and the 10% share in the net profit Petitioners, in their answer, stated that the alleged agreement was not in writing nor was it ratified, and was either void or unenforceable. In addition, there could be no partnership present since Geminesse Enterprise was a sole proprietorship In their testimonies, petitioners admitted that respondent was entitled to commission but denied they agreed that Anay was entitled to 10% share of the net profits RTC held in favor of Anay and ordered the petitioners to submit a formal account in order to determine the 10% share of Anay The RTCs decision was that there was an oral partnership created based on: o (a) There was an intention to create a partnership; o (b) A common fund was established through contributions consisting of money and industry, and o (c) There was a joint interest in the profits. RTC held that it did not matter that the agreement was not in writing because Article 1771 of the Civil Code provides that a partnership may be "constituted in any form." The fact that Geminesse Enterprise was registered in Marjorie Tocaos name is not determinative of whether or not the business was managed and operated by a sole proprietor or a partnership. What was registered with the Bureau of Domestic Trade was merely the business name or style of Geminesse Enterprise. The trial court finally held that a partner who is excluded wrongfully from a partnership is an innocent partner. Hence, the guilty partner must give him his due upon the dissolution of the partnership as well as damages or share in the profits "realized from the appropriation of the partnership business and goodwill." An innocent partner thus possesses "pecuniary interest in every existing contract that was incomplete and in the trade name of the copartnership and assets at the time he was wrongfully expelled." CA dismissed petitioners appeal

that there appears to be no record in the Securities and Exchange Commission of a public instrument embodying the partnership agreement pursuant to Article 1772 of the Civil Code did not cause the nullification of the partnership. Art. 1768 states that: The partnership has a juridical personality separate and distinct from that of each of the partners, even in case of failure to comply with the requirements of article 1772, first paragraph. Petitioners admit that private respondent had the expertise to engage in the business of distributorship of cookware. Private respondent contributed such expertise to the partnership and hence, under the law, she was the industrial or managing partner In addition, by the set-up of the business, third persons were made to believe that a partnership had indeed been forged between petitioners and private respondents. The business venture operated under Geminesse Enterprise did not result in an employer-employee relationship between petitioners and private respondent. While it is true that the receipt of a percentage of net profits constitutes only prima facie evidence that the recipient is a partner in the business, the evidence in the case at bar controverts an employer-employee relationship between the parties o Private respondent had a voice in the management of the affairs of the cookware distributorship, including selection of people who would constitute the administrative staff and the sales force o Petitioner Tocaos admissions militate against an employer-employee relationship. She admitted that, like her who owned Geminesse Enterprise, private respondent received only commissions and transportation and representation allowances and not a fixed salary. If indeed petitioner Tocao was private respondents employer, it is difficult to believe that they shall receive the same income in the business. In a partnership, each partner must share in the profits and losses of the venture, except that the industrial partner shall not be liable for the losses. As an industrial partner, private respondent had the right to demand for a formal accounting of the business and to receive her share in the net profit. Any one of the partners may, at his sole pleasure, dictate a 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 An unjustified dissolution by a partner can subject him to action for damages because by the mutual agency that arises in a partnership, the doctrine of delectus personae allows the partners to have the power, although not necessarily the right to dissolve the partnership Thus, petitioners are entitled to petitioner for damages, and the commissions and share in profit they agreed upon.

Recon Decision: There still exist a partnership, however Belo is not partner but merely a guarantor. No evidence was presented to show that petitioner Belo participated in the profits of the business enterprise. Anay herself professed lack of knowledge that petitioner Belo received any share in the net income of the partnership. On cross examination, during trial, Tacao's own witness testified that Belo is only acting as guarantor to all transactions. Specifically with transactions coordinated by or with one Peter Lo who opens the letter of credit in Singapore to secure payment (kaya nsabi na Financier si Lo). On the other hand, petitioner Tocao declared that petitioner Belo was not entitled to any share in the profits of Geminesse Enterprise. With no participation in the profits, petitioner Belo cannot be deemed a partner since the essence of a

ISSUE: W/N A PARTNERSHIP WAS CONSTITUTED BETWEEN THE PARTIES HELD: YES Requisites of Partnership: o (1) two or more persons bind themselves to contribute money, property or industry to a common fund; and o (2) intention on the part of the partners to divide the profits among themselves. A Partnership may be constituted in any form; a public instrument is necessary only where immovable property or real rights are contributed thereto This implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one. The fact

partnership is that the partners share in the profits and losses. What is the effect? respondent had no cause of action against him and her complaint against him should accordingly be dismissed.

The trial court, in determining the nature of the partnership and the legal relations of Maglana and Roxas after the dissolution of the second partnership, took notice of the absence of a written agreement between the two. The trial court held that their partnership is one of a de facto and at will. Issues: (1) Whether the trial court is correct in its analysis and determination of the nature of partnership and legal relationship of Maglana and Rojas after Agustin retired from the second partnership. (2) Whether Maglana can unilaterally dissolve the partnership? If so, is he liable for damages? Held: (1) No, the trial court is wrong. The trial court is of view that the second partnership superseded the first. On the other hand, Rojas insists that the registered partnership had not been novated, superseded, or dissolved by the unregistered articles of co-partnership. After careful study, the Supreme Court found it evident that the intention of the partners was not to dissolve the first partnership upon the constitution of the second one. Except for the fact that they took in one industrial partner and gave him an equal share in the profits, and fixed the term to thirty years, everything else was the same, including the name. Further, all subsequent renewals of timber license were secured in favor of the first partnership, the original licensee. All business transactions were carried out under the duly registered articles. Obligations are contracted under the registered articles. The unregistered articles, for all intents, merely served as supplementary to the registered articles. The dissolution of the second partnership, did not affect the first partnership which continued to exist. The relationship of Maglana and Rojas can neither be considered a de facto partnership not a partnership at will, for as stressed, there is an existing partnership, duly registered. (2) Yes, when Maglana notified Rojas that he dissolved the partnership, it is in effect a notice of withdrawal. Even if there is a specified term, one partner can cause its dissolution by expressly withdrawing even before the expiration of the period with or without justifiable cause. No, he is not liable for damages. It can be recalled that after the withdrawal of Agustin, Rojas entered into a management contract with another logging enterprise, the CMS Estate. He withdrew his equipment, and refused to contribute to the capital and to perform his duties as logging superintendent. The records show that Rojas not only abandoned the partnership but also took funds in an amount more than his contribution. In the given situation, Maglana cannot be said to be in bad faith. He is not liable for damages. Dispositive: MODIFIED the decision of the trial court in the sense that the registered partnership is deemed continued to exist until liquidated. All other respects, AFFIRM.

CASE NO. 3 EUFRACIO ROJAS, plaintiff-appellant, vs CONSTANCIO MAGLANA, defendant-appellee

Doctrine: Withdrawing partner is liable for damages if the cause of withdrawal is not justified or no cause of was given but in no case he can be compelled to be in the firm. Facts: Maglana and Rojas agreed to form a partnership with a name Eastcoast Development Enterprises (EDE) and had it registered with SEC with an indefinite term of existence. The purpose of the partnership was to secure timber/forest products licenses and to develop and operate such forest rights and concessions. The Bureau of Forestry in Davao approved their application for timber concession and a timber license was issued to in their favor. It was agreed that Maglana shall handle marketing and administration management, while Rojas shall supervise and manage the logging operations. They agreed to divide the profits and losses share and share alike (equally and fairly). Because of difficulties, they decided to admit Agustin as an industrial partner. They executed their Article of CoPartnership which is substantially the same with the former, same name and capitalization, except that they agreed to fix the term to thirty years. The new partnership (second partnership) was not registered with SEC. The partnership was able to ship logs and realized profits. But after five months, the old partners agreed to purchase the share of the industrial partner. Agustin was paid in full. After the withdrawal, the partnership was continued by the old partners but without the benefit of a written agreement or reconstitution of their old (original) articles of partnership. Later, Rojas entered into a management contract with another logging enterprise, the CMS Estate. He left and abandoned the partnership. He withdrew his equipment from the partnership and transferred it to CMS Estate. Maglana wrote Rojas reminding him of his obligation to contribute to the capital investment of the partnership and to perform his duties as a logging superintendent in their partnership. Rojas told Maglana that we will not be able to comply with the promised contributions and will not work as logging superintendent. Maglana told Rojas that his share will be just 20% of the net profits. However, Rojas took funds from the partnership more than his contribution. Maglana notified Rojas that he dissolved the partnership. An Action was filed by Rojas for the recovery of properties, receivership, and accounting. The Judge appointed commissioners to examine the accounts of the partnership.

CASE 4
July 30, 1979 PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME "SYCIP, SALAZAR, FELICIANO, HERNANDEZ & CASTILLO." LUCIANO E. SALAZAR, FLORENTINO P. FELICIANO, BENILDO G. HERNANDEZ. GREGORIO R. CASTILLO. ALBERTO P. SAN JUAN, JUAN C. REYES. JR., ANDRES G. GATMAITAN, JUSTINO H. CACANINDIN, NOEL A. LAMAN, ETHELWOLDO E. FERNANDEZ, ANGELITO C. IMPERIO, EDUARDO R. CENIZA, TRISTAN A. CATINDIG, ANCHETA K. TAN, and ALICE V. PESIGAN, petitioners. IN THE MATTER OF THE PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME "OZAETA, ROMULO, DE LEON, MABANTA & REYES." RICARDO J. ROMULO, BENJAMIN M. DE LEON, ROMAN MABANTA, JR., JOSE MA, REYES, JESUS S. J. SAYOC, EDUARDO DE LOS ANGELES, and JOSE F. BUENAVENTURA, petitioners. Doctrine: Article 1840 treats more of a commercial partnership with a good will to protect rather than of a professional partnership, with no saleable good will but whose reputation depends on the personal qualifications of its individual members. Thus, it has been held that a saleable goodwill can exist only in a commercial partnership and cannot arise in a professional partnership consisting of lawyers. As a general rule, upon the dissolution of a commercial partnership the succeeding partners or parties have the right to carry on the business under the old name, in the absence of a stipulation forbidding it, (s)ince the name of a commercial partnership is a partnership asset inseparable from the good will of the firm. On the other hand, a professional partnership the reputation of which depends or; the individual skill of the members, such as partnerships of attorneys or physicians, has no good win to be distributed as a firm asset on its dissolution, however intrinsically valuable such skill and reputation may be, especially where there is no provision in the partnership agreement relating to good will as an asset. Facts: The case involves two petitions. The first was filed by thesurviving partners of Atty. Alexander Sycip who died on May 5, 1975 and the other by the surviving partners of Atty. Herminio Ozaeta who died on February 14, 1976 praying that they be allowed to continueusing in the name of their firms the names of their deceased partners who had passed away. The petitioner anchored their petitions on the following: 1)that under the law, a partnership is not prohibited from continuing its business under a firm name which includes the name of a deceased partner; 2) that in regulating other professions, such as accountancy and engineering, the legislature has authorized the adoption of firm names without any restriction as to the use, in such firm name, of the name of a deceased partner; 3)that the Canons of Professional Ethics are not transgressed by the continued use of the name of a deceased partner in the firm name of a law partnership because Canon 33 of the

Canons of Professional Ethics adopted by the American Bar Association declares 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; 4) that there is no possibility of imposition or deception because the deaths of their respective deceased partners were well-publicized in all newspapers of general circulation for several days; the stationeries now being used by them carry new letterheadsindicating the years when their respective deceased partners were connected with the firm and; 5) that no local custom prohibits the continued use of a deceased partner's name in a professional firm's name. Issue/s: 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: The court ruled in the negative. The court cited the following reasons. First is that Article. 1815 of the Civil Code provides that Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners. Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability, of a partner thus it is clearly tacit in the above provision that names in a firm name of a partnership must either be those of living partners and. in the case of non-partners, should be living persons who can be subjected to liability. Second, the courts said that a partnership for the practice of law cannot be likened to partnerships formed by other professionals or for business. For one thing, the law on accountancy specifically allows the use of a trade name in connection with the practice of accountancy. 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. And lastly while the court admits that it is true that Canon 33 does not consider as unethical the continued use of the name of a deceased or former partner in the firm name of a law partnership when such a practice is permissible by local custom but the Canon warns that care should be taken that no imposition or deception is practiced through this use. It must be conceded that in the Philippines, no local custom permits or allows the continued use of a deceased or former partner's name in the firm names of law partnerships. Article 1840 treats more of a commercial partnership with a good will to protect rather than of a professional partnership, with no saleable good will but whose reputation depends on the personal qualifications of its individual members. Thus, it has been held that a saleable goodwill can exist only in a commercial partnership and cannot arise in a professional partnership consisting of lawyers. As a general rule, upon the dissolution of a commercial partnership the succeeding partners or parties have the right to carry on the business under the old name, in the absence of a stipulation forbidding it, (s)ince the name of a commercial partnership is a partnership asset inseparable from the good will of the firm.

On the other hand, a professional partnership the reputation of which depends or; the individual skill of the members, such as partnerships of attorneys or physicians, has no good win to be distributed as a firm asset on its dissolution, however intrinsically valuable such skill and reputation may be, especially where there is no provision in the partnership agreement relating to good will as an asset. Dispositive: Petition Denied. Dissent (Aquino, J.): He believes that petitions should be granted on the condition that they indicate in their letterheads that the deceased partners are dead or the period when they served as partners. Its obvious that they want to do this to retain the clients who had customarily sought the legal services of deceased partners & to benefit from the goodwill attached to these names. He believes that these are legitimate motivations.

annual profits of the said restaurant. >>> summary nito LOWER COURT RULED THAT they are partners This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the annual profits derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung. The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established sometime in October, 1955. It was registered as a single proprietorship and its licenses and permits were issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial of the case to show that Sun Wah Panciteria was actually a partnership and that he was one of the partners having contributed P4,000.00to its initial establishment. The private respondents evidence is summarized as follows: About the time the Sun Wah Panciteria started to become operational, the private respondent gave P4,000.00 as his contribution to the partnership. This is evidenced by a receipt wherein the petitioner acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's Equitable Banking Corporation Check from the profits of the operation of the restaurant for the year 1974. The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and impugned the genuineness of the receipt. His evidence is summarized as follows: The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. He used his savings from his salaries as an employee at Camp Stotsenberg in Clark Field and later as waiter at the Toho Restaurant amounting to a little more than P2,000.00 as capital in establishing Sun Wah Panciteria. Petitioner presented various government licenses and permits showing the Sun Wah Panciteria was and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B). ISSUE: WON Private respondent is a partner of the petitioner in Sun Wah Panciteria? HELD: YES RATIO: The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are: 1) two or more persons bind themselves to contribute money, property, or industry to a common fund; and 2) intention on the part of the partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil.110)-have been established. As stated by

CASE 5 LEUNG VS IAC

Petitioner / defendant in the Lower court: DAN FUE LEUNG RESPONDENT / plaintiff LEUNG YIU DOCTRINE: Article 1842 states: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence or any agreement to the contrary. Art. 1831. On application by or for a partner the court shall decree dissolution whenever: xxx xxx xxx (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business ; (4) A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him xxx xxx xxx (6) Other circumstances render a dissolution equitable . RULING: There shall be a liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution because the continuation of the partnership has become inequitable. FACTS: The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-G.R. No. CV-00881 which affirmed the decision of the then Court of First Instance of Manila, Branch II in Civil Case No. 116725 declaring private respondent Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah Panciteria and ordering the petitioner to pay to the private respondent his share in the

the respondent, a partner shares not only in profits but also in the losses of the firm. If excellent relations exist among the partners at the start of business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations, such rights are irretrievably lost. The private respondent's cause of action is premised upon the failure of the petitioner to give him the agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership. It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable. Article 1842 states: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence or any agreement to the contrary. Regarding the prescriptive period within which the private respondent may demand an accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Considering the facts of this case, the Court may decree a dissolution of the partnership under Article 1831 of the Civil Code which, in part, provides: Art. 1831. On application by or for a partner the court shall decree a dissolution whenever: xxx xxx xxx (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of thebusiness; (4) A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him; xxx xxx xxx (6) Other circumstances render a dissolution equitable. There shall be a liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution because the continuation of the partnership has become inequitable. SC affirmed the decision of the lower courts. OTHER ISSUES: The petitioner raises the issue of prescription. He argues: The Hon. Respondent Intermediate Appellate Court gravely erred in not resolving the issue of prescription in favor of petitioner. The alleged receipt is dated October 1, 1955 and the complaint was filed only on July 13, 1978 or after the lapse of twenty-two (22) years, nine (9) months and twelve (12) days. From October 1, 1955 to July 13, 1978, no written demands were ever made by private respondent.

HELD: UNG NAKABOLD SA TAAS Other facts: trial court went out of its way to accord due process to the petitioner there were several postponement asked by counsel for the defendant On November 24, 1981, there being a typhoon prevailing in Manila said date was declared a partial non-working holiday, so much so, the hearing was reset to December 7 and 22, 1981 Again on December 22, 1981, the defendant's counsel asked for postponement on the ground that the defendant was sick . RECEIPT presented as evidence was written in Chinese characters, kumuha pa ng interpreter ang court. The restaurant is located at No. 747 Florentino Torres, Sta. Cruz, Manila in front of the Republic Supermarket . It is near the corner of Claro M. Recto Street. According to the trial court, it is in the heart of Chinatown where people who buy and sell jewelries, businessmen, brokers, manager, bank employees, and people from all walks of life converge and patronize Sun Wah.

CASE 6 Magdusa vs Albaran

Facts: appellant and appellees, together with various other persons, had verbally formed a partnership de facto, for the sale of general merchandise to which appellant contributed P2,000 as capital, and the others contributed their labor Sometime in 1953 and 1954, the appellees expressed their desire to withdraw from the partnership, and appellant thereupon made a computation to determine the value of the partners' shares to that date. The results of the computation were embodied in the document Exhibit "C", drawn in the handwriting of appellant. Appellees thereafter made demands upon appellant for payment, but appellant having refused, they filed the initial complaint in the court. The Court of First Instance of Bohol dismissed the complaint on the ground that the other were indispensable parties but was not been impleaded. Upon appeal, the Court of Appeals reversed.CA ordered appellant to pay Albaran et al. the refund of their shares. The main argument of appellant is that the appellees' action can not be entertained, because in the distribution of all or part of a partnership's assets, all the partners have an interest and are indispensable parties without whose intervention no decree of distribution can be validly entered. CA said The reason cited by the lower court does not constitute a legal impediment to a judgment for the plaintiffs in this case because this is not an action for a dissolution of a partnership and winding up of its affairs or liquidation of its assets in which the interest of other partners who are not brought into the case may be affected. This action of the plaintiffs is one for the recovery of a sum of money with Gregorio Magdusa as the principal defendant. The partnership, with Gregorio Magdusa as managing partner, was brought into the case as an alternative defendant only. Plaintiffs'(appellees herein) action was based on the

allegation that Gregorio Magdusa, having taken their shares, failed and refused and still fails and refuses to pay them their claims. The liability, therefore, is personal to Gregorio Magdusa, and the judgment should be against his sole interest. Issue:w/n petitioner should pay Held:no Ratio: A partner's share can not be returned without first dissolving and liquidating the partnership ,for the return is dependent on the discharge of the creditors, whose claims enjoy preference over those of the partners; and it is self-evident that all members of the partnership are interested in his assets and business, and are entitled to be heard in the matter of the firm's liquidation and the distribution of its property. The liquidation Exhibit "C" is not signed by the other members of the partnership besides appellees and appellant; it does not appear that they have approved the same and therefore not binding upon them In addition, unless a proper accounting and liquidation of the partnership affairs is first had, the capital shares of the appellees, as retiring partners, can not be repaid, for the firm's outside creditors have preference over the assets of the enterprise (Civ. Code, Art. 1839), and the firm's property can not be diminished to their prejudice. Finally, the appellant can not be held liable in his personal capacity for the payment of partners' shares for he does not hold them except as manager of, or trustee for, the partnership. It is the latter that must refund their shares to the retiring partners. Since not all the members of the partnership have been impleaded, no judgment for refund can be rendered, and the action should have been dismissed.

the collection of which sum defendant, as manager of the partnership, filed the corresponding claim with the said army after the war. The claim was finally approved and the full amount paid the complaint does not say when but defendant has persistently refused to deliver one-half of it, or P6,900, to plaintiff notwithstanding repeated demands, investing the whole sum of P13,800 for her own benefit. Issue: whether or not plaintiff has cause of action and therefore entitled to the proceeds of the sale. Held: NO CAUSE OF ACTION. Plaintiff seeks to recover from defendant one-half of the purchase price of lumber sold by the partnership to the United States Army. But his complaint does not show why he should be entitled to the sum he claims. It does not allege that there has been a liquidation of the partnership business and the said sum has been found to be due him as his share of the profits. The proceeds from the sale of a certain amount of lumber cannot be considered profits until costs and expenses have been deducted. Moreover, the profits of the business cannot be determined by taking into account the result of one particular transaction instead of all the transactions had. Hence, the need for a general liquidation before a member of a partnership may claim a specific sum as his share of the profits. Dispositive: the order of dismissal is affirmed, but on the ground that the complaint states no cause of action and without prejudice to the filing of an action for accounting or liquidation should that be what plaintiff really wants.

CASE 8 SONCUYA V. DE LUNA

DOCTRINE: For a partner to be able to claim from another partner who manages the general co-partnership, damages allegedly suffered by him by reason of the fraudulent administration of the latter, a previous liquidation of said partnership is necessary FACTS: Plaintiff, Josue Soncuya, alleges in a complaint he filed in the CFI that Defendant, Carmen De Luna, committed fraud in her administration of the partnership Centro Escolar de Seoritas, of which Plaintiff, Defendant and Librado Avelino (deceased) were partners. Plaintiff, in his complaint, prays for damages in the amount of P700,432. Defendant then interposed a demurrer, arguing that the complaint did not contain facts sufficient to constitute a cause of action and that it was ambiguous, unintelligible, and vague. Demurrer was granted, ordering plaintiff to amend his complaint. Plaintiff refused to amend his complaint. Thus, the case was dismissed. Plaintiff then appealed.

Sison vs. McQuaid

Doctrine:the profits of the business cannot be determined by taking into account the result of one particular transaction instead of all the transactions had. Hence, the need for a general liquidation before a member of a partnership may claim a specific sum as his share of the profits. Facts: -plaintiff brought an action in the Court of First Instance of Manila against defendant, alleging that during the year 1938 the latter borrowed from him various sums of money, aggregating P2,210, to enable her to pay her obligation to the Bureau of Forestry and to add to her capital in her lumber business -receipt of the amounts advanced being acknowledged in a document was executed by her on November 10, 1938 and attached to the complaint -defendant was not able to pay the loan in 1938, as she had promised, so she proposed to take in plaintiff as a partner in her lumber business, plaintiff to contribute to the partnership the said sum of P2,210 due him from defendant in addition to his personal services -plaintiff agreed to defendant's proposal and, as a result, there was formed between them, under the provisions of the Civil Code, a partnership in which they were to share alike in the income or profits of the business, each to get one-half thereof -in accordance with said contract, plaintiff, together with defendant, rendered services to the partnership without compensation from June 15, 1938 to December, 1941 -before the last World War, the partnership sold to the United States Army 230,000 board feet of lumber for P13,800, for

ISSUE: W/N PLAINTIFF IS ENTITLED TO DAMAGES HELD: NO Plaintiffs filing for damages, he alleges to have suffered as a partner due to the fraudulent management of Defendant, is premature. It is first necessary that a liquidation of the business be made to a point that profits and losses are known. In order to determine the causes of Plaintiff and the responsibility of the Defendant. Moreso, it is

necessary in order to determine the damages suffered by each partner In the complaint, it did not allege that liquidation has been effected, neither did it pray that such liquidation be effected Thus, there is no cause of action for Plaintiff

affairs is by law INTRUSTED, not to the executors of the deceased partner, but TO the surviving partners or liquidators appointed by them. Why? Because in equity, surviving partners are treated as TRUSTEES of the representatives of the deceased partner, in regard to the interest of the deceased partner. As a consequence of the trusteeship, surviving partners partners are held in their dealings with the firm assets and representatives of the deceased to that nicety of dealing and strictness of accountability required of and incident to the position of one occupying the confidential relation. Duty of the surviving partner to render an account of the performance of their trust to the personal representatives of the deceased partner, and to pay over them the share of such deceased person in the surpuls of firm property. Dispositive: Petition denied. Judgment of lower court affirmed

DISPOSITIVE PORTION: Wherefore, finding no error in the order appealed from the same is affirmed in all its parts, with costs against the appellant. So ordered

Case 9 MAXIMO GUIDOTE, plaintiff and appellant, v. ROMANA BORJA, as administratrix of Narciso Santos, deceased, defendant and appellee.
Doctrine: By law, the obligation to render an accounting of the partnership lies with the surviving partner as trustee, and the estate of the deceased partner as beneficiary. Facts: In summary: GUIDOTE and NARCISO SANTOS formed a partnership called "Taller Sinukuan" (industry/business not mentioned). SANTOS died and GUIDOTE, as plaintiff, filed a suit against the estate of SANTOS, as represented by BORJA, the administratrix, for recovery of net profits. Courts ruled in favor of the respondent. 1.)On June 15, 1918, Taller Sinukuan was formed by GUIDOTE and SANTOS. SANTOS died on April 6, 1920, and evidence shows that GUIDOTE failed to liquidate the affairs of the partnership and to render an account to the administratrix of SANTOS' estate. 2.) GUIDOTE claims to be just an industrial partner and SANTOS as capitalist partner. 3.) BORJA the administratrix, admitted the existence of the partnership, but prayed that the plaintiff should be the one to render the accounting of the partnership and to pay the defendant the sum of P25,000 4.) BORJA presented 2 public accountants to provide an accounting and liquidation of the partnership business. The first, Santiago LINDAYA showed the balance of P29,088; and the second, Jose Turiano SANTIAGO supported the same finding. 5.) GUIDOTE presented Tomas ALFONSO to refute the findings, together with Pio GAUDIER, the latter's bookkeeper. TC disfavored these witnesses and their testimonies for being unreliable. ALFONSO claimed that GUIDOTE was merely an industrial partner, but the Court found out that even latter advanced capital, making him also a capitalist partner. GAUDIER's testimonies where thrown out for being confusing, contradictory and unreliable. 6.) TC ordered that plaintiff liquidate and render an account of the partnership, and for him to pay the sum P26,020.89. Hence this recourse. Issue: Who is mandated to render the account of the partnership? The surviving partner or the estate of the decedent? Held: It should be the surviving partner. THE JURISPRUDENCE IS CLEAR! The case of Wahl v. Donaldson Sim and Co. held that the death of one of the partners dissolves the partnership BUT the liquidation of its

CASE 10 PO YENG CHEO, plaintiff-appellee, vs. LIM KA YAM, defendant-appellant.

1. Po Yeng Cheo, alleged sole owner of a business formerly conducted in the City of Manila under Kwong Cheong, as managing partner. 2. This business had been in existence in Manila for many years prior to 1903, as a mercantile partnership, with a capitalization of P160,000, engaged in the import and export trade 3. Kwong Cheong Tay ceased to do business, owing principally to the fact that the plaintiff ceased at that time to transmit merchandise from Hongkong, where he then resided. 4. Lim Ka Yam appears at no time to have submitted to the partners any formal liquidation of the business, though repeated demands to that effect have been made upon him by the plaintiff. 5. Po Yeng Cheo demanded accounting from Lim Ka Yam 6. Lim Ka Yam died so the demand was given to his administrator, Lim Yock Tock. 7. This order bore no substantial fruit, for the reason that Lim Yock Tock personally knew nothing about the aforesaid business and was apparently unable to find any books or documents that could shed any real light on its transaction 8. vague and uncertain details, a history of the formation of the Kwong Cheong Tay and some account of its disruption and cessation from business in 1910 purporting to show that after the business was liquidate, it was actually debtor to Lim Ka Yam to the extent of several thousand pesos 9. Lower Court: the trial judge rendered judgment in favor of the, Po Yeng Cheo, to recover from Lim Yock Tock, as administrator of Lim Ka Yam, the sum of

sixty thousand pesos (P60,000), constituting the interest of the plaintiff in the capital of Kwong Cheong Tay, plus the plaintiff's proportional interest in shares of the Yut Siong Chyip Konski and Manila Electric Railroad and Light Company, estimated at P11,000, together with the costs. Issue: 1. Liability, to what extent? 2. Who bears responsibility to accounting when a partner dies? Held: 1. Proportionate share to interest in the partnership It was erroneous in any event to give judgment in favor of the plaintiff to the extent of his share of the capital of Kwong Cheong Tay. The managing partner of a mercantile enterprise is not a debtor to the shareholders for the capital embarked by them in the business; and he can only be made liable for the capital when, upon liquidation of the business, there are found to be assets in his hands applicable to capital account Only property pertaining to Kwong Cheong Tay at the time this action was brought consisted of shares in the two concerns already mentioned of the total par value of P11,000. The proceeds, if not needed to pay debts, would have been distributable among the various persons in interest, that is, among the various shareholders, in their respective proportions. But under the circumstances revealed in this case, it was erroneous to give judgment in favor of the plaintiff for his aliquot part of the par value of said shares. It is elementary that one partner, suing alone, cannot recover of the managing partner the value of such partner's individual interest; and a liquidation of the business is an essential prerequisite. Except in the case of Lichauco vs. Lichauco because in this case the partner liquidated all assets. in this case the assets of the partnership except for the money is still unliquidated and restrained. 2. The surviving partners to the partnership When a member of a mercantile partnership dies, the duty of liquidating its affair devolves upon the surviving member, or members, of the firm, not upon the legal representative of the deceased partner The proper step for the surviving associates to take would be to make application to the court having charge to the administration to require the administrator to surrender such property. Upon the death of lim ka yam it therefore became the duty of his surviving associates to take the proper steps to settle the affairs of the firm, and any claim against him, or his estate, for a sum of money due to the partnership by reason of any misappropriation of its funds by him, or for damages resulting from his wrongful acts as manager, should be prosecuted against his estate in administration

CASE NO. 11 DR. SIMEON CLARIDADES, plaintiff, vs VICENTE MERCADER and PERFECTO FERNADEZ, defendants GUILLERMO REYES, ARMANDO ASUNCION, ALFREDO ZULUETA, YAP LEDING, intervenors
Doctrine: An action for the liquidation of a partnership is a personal one, which may be brought in the place of residence of either the plaintiff or the defendant. A venue, which was properly laid when the complaint was filed cannot, subsequently, become improper in the consequence of issues later raised by any of the intervenors. Facts: Simeon, Vicente, and Perfecto were partners operating a fishpond in Sta. Cruz, Marinduque. Simeon brought an action for dissolution of partnership and an accounting of the operation against his two partners. The defendants alleged that its operation had been so far unproductive, and they allege also that there is an impending auction sale of the fishpond due to delinquency in the payment of taxes owing to lack of funds and Simeons failure to contribute what is due from him. Likewise, the defendant partners set up a counterclaim. Subsequently, the following intervenors were allowed to intervene in the case: Guillermo Reyes for the purpose of recovering a sum of money due to him for services rendered as foreman of the fishpond. Armando Asuncion as an assignee of the interest in the partnership of defendant Vicente Mercader. Alfredo Zulueta and his wife Yap Leding alleging that they are the owners of the said fishpond.

Intervenor Zulueta filed a motion to dismiss on the grounds of: (1) no cause of action; (2) the venue has been improperly laid; and (3) that the complaint is moot and academic. The court granted the motion to dismiss the case on the ground of improper venue. The Fishpond was located in Marinduque, but the present case was originally filed in CFI Bulacan. The trial court of Bulacan stated that because the plaintiff prays that the assets of the partnership be sold, including the said fishpond, and that the proceeds of the sale be applied to the payment of the debts of the partnership, and that the residue be distributed among the partners, and that the property is located in Marinduque, hence, the case should be filed in Marinduque. Moreover, intervenor Asuncion claims to have interest in the fishpond, and intervener Zulueta claims to be the exclusive owner of the fishpond, and again, the fishpond is located in Marinduque. Issue: Whether the present action should be instituted not in CFI Bulacan but in CFI Marinduque? Held: No, not necessarily. The plaintiff merely seeks the liquidation of his partnership with the defendant partners. This is a personal action, which may be bought in the residence of either the plaintiff or the defendants. Since plaintiff is a resident of Bulacan, he had the right to bring the action in CFI

 Bulacan. Furthermore, the defendants, although residents of Marinduque, did not object in the venue, thus, effectively waiving their rights to question the venue. The fact that the plaintiff prays for the sale of the assets of the partnership, including the fishpond, did not change the nature or character of action (action for dissolution of the partnership). Such sale is just a necessary incident in the liquidation of the partnership which is part of the process of dissolution. Dispositive: The order appealed is SET ASIDE and the case is REMANDED to the lower court for further proceedings.

In their Reply, respondents alleged that had not received any regular report or accounting from the latter, who had solely managed the business. Respondents also alleged that they expected the equipment and the furniture stored in their house to be removed by petitioners as soon as the latter found a better location for the restaurant. RTC 17 ruled that the parties had voluntarily entered into a partnership, which could be dissolved at any time. Petitioners clearly intended to dissolve it when they stopped operating the restaurant. Hence, the trial court rendered a judgment in favor of respondents and ordering the petitioners to pay jointly and severally. Issue/s: WON petitioners are liable to respondents for the latters share in the partnership Held: The Petition has merit. Both the trial and the appellate courts found that a partnership had indeed existed, and that it was dissolved on March 1, 1987. They found that the dissolution took place when respondents informed petitioners of the intention to discontinue. Respondents consequently demanded from petitioners the return of their one-third equity in the partnership. We hold that 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. The amount to be refunded is necessarily limited to its total resources. In other words, it can only pay out what it has in its coffers, which consists of all its assets. However, before the partners can be paid their shares, the creditors of the partnership must first be compensated. After all the creditors have been paid, whatever is left of the partnership assets becomes available for the payment of the partners shares. Evidently, in the present case, the exact amount of refund equivalent to respondents one-third share in the partnership cannot be determined until all the partnership assets will have been liquidated. Dispositive: WHEREFORE, the Petition is GRANTED, and the assailed Decision and Resolution SET ASIDE. This disposition is without prejudice to proper proceedings for the accounting, the liquidation and the distribution of the remaining partnership assets, if any. No pronouncement as to costs. SO ORDERED. CASE 13 LAGUNA TRANSPORTATION CO., INC. VS SSS DOCTRINE: where a corporation was formed by, and consisted of members of a partnership whose business and property was conveyed and transferred to the corporation for the purpose of continuing its business, in payment for which corporate capital stock was issued, such corporation is presumed to have assumed partnership debts, and is prima facie liable therefor FACTS: Sometime in 1949 the Binan Transportation Co sold part of the lines and equipment it operates to Gonzalo Mercado, Artemio Mercado, Florentino Mata and Dominador Vera Cruz.

CASE 12 LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, petitioners, vs. DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA C. RAMIREZ, respondents.
Doctrine: A share in a partnership can be returned only after the completion of the latters dissolution, liquidation and winding up of the business. Facts: Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of P750,000 for the operation of a restaurant and catering business under the name Aquarius Food House and Catering Services. Villareal was appointed general manager and Carmelito Jose, operations manager. Respondent Donaldo Ramirez joined as a partner on September 5, 1984 with a capital contribution of P250,000 which was paid by his parents, Respondents Cesar and Carmelita Ramirez. Jesus Jose withdrew from the partnership and his capital contribution of P250,000 was refunded to him in cash by agreement of the partners. In the same month, without prior knowledge of respondents, petitioners closed down the restaurant, allegedly because of increased rental. The restaurant furniture and equipment were deposited in the respondents house for storage. On March 1, 1987, respondent spouses wrote petitioners, saying that they were no longer interested in continuing their partnership or in reopening the restaurant, and that they were accepting the latters offer to return their capital contribution. Respondent wrote another letter informing petitioners of the deterioration of the restaurant furniture and equipment stored in their house. She also reiterated the request for the return of their one-third share in the equity of the partnership. The repeated oral and written requests were, however, left unheeded. Respondents filed before the RTC 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 under Articles 1830 and 1831; that 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 spent as a result of irreversible business losses.

After this sale, the vendees formed an unregistered partnership under the name of Laguna Transportation Company which continued to operate the lines and equipment bought from Binan Transpo Company. The original partners with an additional two members, organized a corporation known as the Laguna Transportation Company, Inc which was registered with the SEC. the petitioner corporation filed this case praying that an order be issued by the court declaring that it is not bound to register as a member of respondent SSS and that they are not obliged to pay the latter the contributions required under the Social Security Act. It is worthy to note that the corporation continued the same transportation business of the unregistered partnership. The corporation was claiming exemption from coverage for it only started its business on June 20, 1956 but Nov. 11 1957 the SSS notified it that it was within the coverage of the Social Security Act. ISSUE: WON the plaintiff is within the coverage of the Social Security Act already? YES. HELD: Section 9 of the Social Security Act, in part, provides: SEC. 9 Compulsory Coverage. Coverage in the System shall be compulsory upon all employees between the ages of sixteen and sixty years, inclusive, if they have been for at least six months in the service of an employer who is a member of the System. Provided, That the Commission may not compel any employer to become a member of the System unless he shall have been in operation for at least two years . . . . (Italics supplied.). The partnership Laguna Transportation Company commenced its business as a common carrier in 1949. When it filed to be formed as a corporation, it only added the word Inc to indicate that it was now duly incorporated under existing laws. Since it continued the same business like the unregistered partnership, there was only a change in form. where a corporation was formed by, and consisted of members of a partnership whose business and property was conveyed and transferred to the corporation for the purpose of continuing its business, in payment for which corporate capital stock was issued, such corporation is presumed to have assumed partnership debts, and is prima facie liable therefor. The reason for the rule is that the members of the partnership may be said to have simply put on a new coat, or taken on a corporate cloak, and the corporation is a mere continuation of the partnership. Hence, there was really no need to exempt them for it has been operating already for more than six years by continuing with the business of the partnership.

14. 14. Yu vs NLRC

Doctrine: naka bold Facts: registered partnership with the firm name of "Jade Mountain Products Company Limited" ("Jade Mountain") operates the marble quarrying and export business.The partnership was originally organized on 28 June 1984 with Lea Bendal and Rhodora Bendal as general partners and Chin Shian Jeng, Chen Ho-Fu and Yu Chang.The partnership business consisted of exploiting a marble deposit found on land owned by the Sps. Ricardo and Guillerma Cruz Benjamin Yu was hired as Assistant General Manager with a monthly salary of P4,000.00. According to petitioner Yu, however, he actually received only half of his stipulated monthly salary, since he had accepted the promise of the partners that the balance would be paid when the firm shall have secured additional operating funds from abroad.

general partners Lea Bendal and Rhodora Bendal and the limited partners sold and transferred their interests in the partnership to private respondent Willy Co and to one Emmanuel Zapanta. private respondent Willy Co acquired the great bulk of the partnership interest. The partnership now constituted solely by Willy Co and Emmanuel Zapanta continued to use the old firm name of Jade Mountain and continued The actual operations of the business enterprise continued as before Petitioner was informed by Willy Co that the latter had bought the business. He wasnt allowed to work and his unpaid salaries remain unpaid. Benjamin Yu filed a complaint for illegal dismissal and recovery of unpaid salaries against Jade Mountain and Mr. Willy Co. National Labor Relations Commission ("NLRC") dismissed petitioner's complaint. The NLRC held that the new partnership had not retained petitioner Yu in his original position as Assistant General Manager, and that there was no law requiring the new partnership to absorb the employees of the old partnership. the NLRC held that Benjamin Yu's claim for unpaid wages should be asserted against the original members of the preceding partnership. Petitioner filed certiorari w/ sc w/n he should be paid his unpaid salaries Yes with the partnerships capital w/n he should be reinstated as asst. general manager No Ratio: 1. the legal effect of the changes in the membership of the partnership was the dissolution of the old partnership which had hired petitioner in 1984 and the emergence of a new firm composed of Willy Co and Emmanuel Zapanta. Art. 1828 states Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. (Emphasis supplied)

Art. 1830. Dissolution is caused: Xxx (2) in contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this article, by the express will of any partner at any time; In the case at bar, just about all of the partners had sold their partnership interests (amounting to 82% of the total partnership interest) to Mr. Willy Co and Emmanuel Zapanta.. The acquisition of 82% of the partnership interest by new partners, coupled with the retirement or withdrawal of the partners who had originally owned such 82% interest, was enough to constitute a new partnership. The occurrence of events which precipitate the legal consequence of dissolution of a partnership do not, however, automatically result in the termination of the legal personality of the old partnership. it is important to underscore the fact that the business of the old partnership was simply continued by the new partners, without the old partnership undergoing the procedures relating to dissolution and winding up of its business affairs. the new partnership simply took over the business enterprise owned by the preceeding partnership, and continued using the old name of Jade Mountain Products Company Limited, without winding up the business affairs of the old partnership, paying off its debts, liquidating and distributing its net assets, and then re-assembling the said assets and opening a new business enterprise. under the above described situation, not only the retiring partners but also the new partnership itself which continued the business of the old, dissolved, one, are liable for the debts of the preceding partnership. a withdrawing partner remains liable to a third party creditor of the old partnership. The liability of the new partnership is established in Article 1840 of the Civil Code which reads as follows: Art. 1840. In the following cases creditors of the dissolved partnership are also creditors of the person or partnership continuing the business: Xxx The liability of a third person becoming a partner in the partnership continuing the business, under this article, to the creditors of the dissolved partnership shall be satisfied out of the partnership property only, unless there isastipulation to the contrary. Under Article 1840 above, creditors of the old Jade Mountain are also creditors of the new Jade Mountain which continued the business of the old one without liquidation of the partnership affairs. Hene, a creditor of the old Jade Mountain, like petitioner Benjamin Yu in respect of his claim for unpaid wages, is entitled to priority vis-avisany claim of any retired or previous partner insofar as such retired partner's interest in the dissolved partnership is concerned. It is clear to the Court that under Article 1840 above, Benjamin Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating to his employment with the previous partnership, against the new Jade Mountain. It is at the same time also evident to the Court that the new partnership was entitled to appoint and hire a new general or assistant general manager to run the affairs of the business enterprise take over. An assistant general manager belongs to the most senior ranks of management and a new partnership is entitled to appoint a top manager of its own choice and confidence. The non-retention of Benjamin Yu as

Assistant General Manager did not therefore constitute unlawful termination, or termination without just or authorized cause. We think that the precise authorized cause for 10 termination in the case at bar was redundancy. The new partnership had its own new General Manager, apparently Mr. Willy Co, Disposition: moral damages, unpaid salary with 6% interest,atty fee

15th case. Bearneza vs. Dequilla

Doctrine: partnership is dissolved by the death of any of the members unless there is a stipulation to the contrary Facts: -In the year 1903, Balbino Dequilla, the herein defendant, and Perpetua Bearneza formed a partnership for the purpose of exploiting a fish pond situated in the barrio of Talisay, municipality of Barotac Nuevo, Province of Iloilo, Perpetua obligating herself to contribute to the payment of the expenses of the business, which obligation she made good, and both agreeing to divide the profits between themselves, which they had been doing until the death of the said Perpetua in the year 1912. -The deceased left a will in one of the clauses of which she appointed Domingo Bearnez, the herein plaintiff, as her heir to succeed to all her rights and interests in the fish pond in question. -Demand having been made upon Balbino Dequilla by Domingo Bearneza for the delivery of the part of the fish pond belonging to his decedent, Perpetua, and delivery having been refused, Domingo Bearneza brought this action to recover said part of the fish pond belonging to his decedent, Perpetua, and delivery having been refused, Domingo Bearneza brought this action recover said part of the fish pond and one-half of the profits received by the defendant from the fish pond. Lower court: plaintiff owner of one-half of the fish pond, which was composed of the portions known as "Alimango" and "Dalusan". Not entitled to damages. Hence, this appeal. Issue: whether or not the plaintiff has any right to maintain an action for the recovery of one-half of the said fish pond. Held: NO. The partnership not having been organized in the form of a mercantile partnership, and, therefore, the provisions of the Code of Commerce not being applicable thereto (article 1670 of the Civil Code), it was dissolved by the death of Perpetua Bearneza, and falls under the provisions of article 1700, subsection 3, of the same Code, and not under the exception established in the last paragraph of said article 1700 of the Civil Code. Neither can it be maintained that the partnership continued to exist after the death of Perpetua, inasmuch as it does not appear that any stipulation to that effect has ever been made by her and the defendant, pursuant to the provisions of article 1704 of the Code last cited. The partnership having been dissolved by the death of Perpetua Bearneza, its subsequent legal status was that of a partnership in liquidation, and the only rights inherited by her testamentary heir, the herein plaintiff, were those resulting from the said liquidation in favor of the deceased partner, and nothing more. Before this liquidation is made, which up to the

present has not been effected, it is impossible to determine what rights or interests, if any, the deceased had, the partnership bond having been dissolved. There is no sufficient ground for holding that a community of property existed between the plaintiff and the defendant, it not being known whether the deceased still had any interest in the partnership property which could have been transmitted by will to the plaintiff. Dispositive: The judgment appealed from is modified, the same being affirmed insofar as it denies the plaintiff's claim for damages, and reversed insofar as it declares the said plaintiff owner of one-half of the fish pond, "Alimango" and "Dalusan," here in dispute.

Lower court held in favor of defendant, finding that the partnership did not make any profit; and even if it did, they were no longer entitled to profits after their withdrawal

ISSUES: W/N THE PLAINTIFFS ARE ENTITLED TO PROFIT, IF THERE WAS ANY HELD: NO Assuming that the assignment actually brought profit to the partnership, plaintiffs were still not entitled to receive from the profit. Plaintiffs maintain that the latter should be held liable for damages caused to them, consisting of the loss of their share of the profits, due to defendant's failure to perform his duty as a liquidator of the dissolved partnership On the theory that as managing partner, it was defendant's duty to liquidate its affairs upon its dissolutions. Plaintiffs never asked for liquidation during the dissolution. No liquidation was called for because when plaintiffs withdrew from the partnership the understanding was that after they had been reimbursed their investment, they were no longer to have any further interest in the partnership or its assets and liabilities. As a general rule, when a partner retires from the firm, he is entitled to the payment of what may be due him after liquidation. But certainly no liquidation is necessary where there is already a settlement or an agreement as to what the retiring partner shall receive. A settlement was agreed upon on the very day the partnership was dissolved. When plaintiffs and Judge Jaime Reyes withdrew from the partnership, the only condition was that they were to be repaid their contributions or investments within three days from said date. Condition was fulfilled when on the following day they were reimbursed the respective amounts due them pursuant to the agreement. Acceptance by the withdrawing partners of their investment was understood and intended by all the parties as a final settlement of their rights or claim the withdrawing partners might have in the dissolved partnership. Such being the case they are now precluded from claiming any share in the alleged profits, should there be any, at the time of the dissolution.

CASE 16 BONNEVIE V. HERNANDEZ

DOCTRINE: FACTS: Complaint to recover P115,312.50 with interests as their alleged share in the profits of partnership Plaintiffs with other associates formed a secret partnership for the purpose of acquiring the plants and other properties of Meralco. No formal articles were drawn for it was the purpose of the members to incorporate once the deal had been consummated. Negotiations for the purchase were commenced, but the results were not good. Defendant was taken in as a member of the partnership so that he could push the deal through, and to that end he was given the necessary power of attorney. Using partnership funds, defendant was able to buy the Meralco properties, to be paid in installments. A penal clause was included that in case of default the initial payment will be forfeited in favor of Meralco. They formed a corporation named Bicol Electric Company. However, before the incorporation Judge Reyes (not a party) and the plaintiffs withdrew from the partnership. The withdrawing partners were given their original investments right after. Following the dissolution of the partnership, the members who preferred to remain in the business went ahead with the formation of the corporation, taking in new associates as stockholders. On its first year, the company was losing money but the business became profitable eventually. Two years from their withdrawal from the partnership, plaintiffs brought the present suit against Jaime Hernandez, claiming a share in the profit the latter is supposed to have made from the assignment of the Meralco properties to the corporation Defendant's answer denies that he has made any profit out of the assignment in question and alleges that in any event plaintiffs, after their withdrawal from the partnership, ceased to have any further interest in the subsequent transactions of the remaining members.

DISPOSITIVE PORTION: In view of the foregoing, we find plaintiffs' claim against defendant to be without legal basis so that the judgment of dismissal rendered by the court below should be, as it is hereby, affirmed, with costs against the appellants