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NAVARRO V ESCOBIDO

FACTS:
On September 12, 1998, respondent Karen T. Go filed two complaints before the RTC for replevin and/or sum of money with
damages against Roger Navarro.
Karen Go is married to Glenn Go and are residing in Cagayan De Oro City, doing business under the trade name of KARGO
Enterprise which is engaged in the buying and selling of motor vehicles, including hauling of trucks and other heavy equiptments.
The first complaint:
- Identified defendants as; ROGER NAVARRO and a JOHN DOE whose real name and address are at present unknown to plaintiff is
hereby joined as party defendant as he may be the person in whose possession and custody the personal property subject
matter of this suit.
- That on August 8, 1997 Roger leased from plaintiff a motor vehicle ( FUSO WITH MOUNTED CRANE) which is evidenced by a
Lease agreement with option to purchase.
- That Roger delivered 6 PDCs in the amount of P66,333.33.
th
th
- Upon encashment of the 5 and 6 PDCs, the checks were dishonored for insufficiency of funds. 2 checks amounted to
P132,666.66
- Karen made demands both written and oral for the payment or return of the vehicle as provided in the agreement.
The second complaint contained essentially the same allegations as the first complaint, except that the Lease Agreement with
Option to Purchase involved is dated October 1, 1997 and the motor vehicle was described differently, that Navarro delivered 3
PDCs each for the amount of P100,000.0O. the third check was dishonored.
RTC issued writs of replevin for both cases and the Sheriff seized the two vehicles and delivered them to the possession of
Karen Go.
In his Answers, Navarro alleged that there is no cause of action, since Karen Go was not a party to the Lease Agreements
with Option to Purchase as the same was under the KARGO Enterprises Manager Glenn Go.
In May 8, 2000 RTC dismissed the case, however set aside the same order of dismissal on July 26, 2000. Acting on the
presumption that Glenn Gos leasing business is a conjugal property, the RTC held that Karen Go had sufficient interest in his leasing
business to file the action against Navarro. RTC ordered Karen Go to amend her complaint and include Glenn.
CA affirmed RTCs decision.
In his petition to the SC Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises, since it
did not have the requisite juridical personality to sue, the actual parties to the agreement are himself and Glenn Go, thus Karen Go
has no cause of action.
Navarro claims that the lower court gravely abused its discretion when it assumed that the leased vehicles are part of the
conjugal property of Glenn and Karen Go. Since Karen Go is the registered owner of Kargo Enterprises, the vehicles subject of the
complaint are her paraphernal properties and the RTC gravely erred when it ordered the inclusion of Glenn Go as a co-plaintiff.
Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no real interest in the subject of
the complaint, even if the lease agreements were signed only by her husband, Glenn Go; she is the owner of Kargo Enterprises and
Glenn Go signed the lease agreements merely as the manager of Kargo Enterprises. Moreover, Karen Go maintains that Navarros
insistence that Kargo Enterprises is Karen Gos paraphernal property is without basis. Based on the law and jurisprudence on the
matter, all property acquired during the marriage is presumed to be conjugal property.
ISSUES:
W/N Karen Go is a real party in interest
W/N the property is conjugal
HELD:
We find the petition devoid of merit.
I.
II.
Karen Go is the real party-in-interest
Interestingly, although Navarro admits that Karen Go is the registered owner of the business name Kargo Enterprises, he
still insists that Karen Go is not a real party-in-interest in the case. According to Navarro, while the lease contracts were in Kargo
Enterprises name, this was merely a trade name without a juridical personality, so the actual parties to the lease agreements were
Navarro and Glenn Go, to the exclusion of Karen Go.
The Agreement shows:
GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as the LESSORSELLER; representing KARGO ENTERPRISES as its Manager,
Thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go represented. In other words, by the
express terms of this Lease Agreement, Glenn Go did sign the agreement only as the manager of Kargo Enterprises and the
latter is clearly the real party to the lease agreements.
As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a natural person, nor a juridical
person, thus cannot be a party to a civil action.
[17]

In the case of Juasing Hardware v. Mendoza, where we said that sole proprietorships as a form of business organization
conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the
business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship
nor empower it to file or defend an action in court. Thus, the complaint in the court below should have been filed in the name of the
owner of Juasing Hardware.

Section 2, Rule 3 of the Rules, which states:


SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action
must be prosecuted or defended in the name of the real party in interest.
As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit from or be injured by a
judgment in this case.
II. Kargo Enterprises is a conjugal property.
The registration of the trade name in the name of one person, a woman does not necessarily lead to the conclusion that
the trade name as a property is hers alone, particularly when the woman is married. By law, all property acquired during the
marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is
[21]
presumed to be conjugal unless the contrary is proved.
[22]
In Castro v. Miat:
It provides that all property of the marriage is presumed to be conjugal partnership, unless it be prove[n]
that it pertains exclusively to the husband or to the wife. This article does not require proof that the property was
acquired with funds of the partnership. The presumption applies even when the manner in which the property was
acquired does not appear.
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case
of disagreement, the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which
must be availed of within five years from the date of the contract implementing.
This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority in managing their conjugal
property, i.e., Kargo Enterprises. No need exists, therefore, for one to obtain the consent of the other before performing an act of
administration or any act that does not dispose of or encumber their conjugal property.
Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract of partnership. A
rule on partnership applicable to the spouses circumstances is Article 1811 of the Civil Code, which states:
Art. 1811. A partner is a co-owner with the other partners of specific partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right
with his partners to possess specific partnership property for partnership purposes;
Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered
under this name; hence, both have an equal right to seek possession of these properties. Article 487 of the Civil Code allows any of
the co-owners to bring an action in ejectment with respect to the co-owned property.
CLEMENTE V GALVAN
FACTS:
On June 6, 1931, Enrique Clemente v Dionision Galvan organized a civil partnership in the name of "Galvan y Compaia", to
engage in the manufacture and sale of paper and other stationery.
They agreed to invest therein a capital of P100,000, but as a matter of fact they did not cover more than one-fifth thereof,
each contributing P10,000.
Hardly a year after such organization, the Clemente filed a case in court to ask for the dissolution of the partnership and to
compel defendant to whom the management thereof was entrusted to submit an accounting of his administration and to deliver to
him his share as such partner.
In his answer defendant expressed his conformity to the dissolution of the partnership and the liquidation of its affairs; but
by way of counterclaim he asked that, having covered a deficit incurred by the partnership amounting to P4,000 with his own money,
plaintiff reimburse him of one-half of said sum.
Juan Mencarini was appointed as receiver and liquidator to take charge of the properties and business for the partnership
while the same was not yet definitely dissolved.
The court issued an order on May 24, 1933, requiring said receiver to deliver clemente certain machines but authorizing him
to charge their value of P4,500 against the portion which may eventually be due to clemente.
Receiver delivered to plaintiff the keys to the place where the machines were found, which was the same place where
defendant lives. Due to the opposition of Galvan, the court cancelled said order, thus Clemente was not able to get the machines.
Meanwhile, in 2 other separate cases where Clemente was also a party in, the court rendered decisions. In order to avoid
the attachment and subsequent sale of the machines by the sheriff for the satisfaction from the proceeds thereof of the judgments
rendered in the two separate cases, plaintiff agreed with the intervenor, Echeverria (his nephew) to execute a deed of mortgage
encumbering the machines he previously sought to take from Galvan. However the address reflected in the Deed of Mortgage is
different. When the one year agreed upon in the deed of mortgage for the fulfillment by the plaintiff of the obligation had expired,
Echeverria commences a case to collect his mortgage credit.
Echeverria obtained judgment in his favor.
ISSUE:
W/N Machines can be attached
W/N the constructive delivery of the key means possession on the part of Clement
Who is the owner of the Machines?
HELD:
I.
NO it cannot be attached. The machines which the intervenor said were mortgaged to him were then in fact in custodia
legis, as they were under the control of the receiver and liquidator Juan D. Mencarini.

II.

III.

No. it is clear that plaintiff could not obtain possession of the machines in question. The constructive possession deducible
from the fact that he had the keys to the place where the machines were found as they had been delivered to him by the
receiver, does not help him any because the lower court suspended the effects a few days after its issuance.
That when he attempted to take actual possession of the machines, the defendant did not allow him to do so. Consequently,
if he did not have actual possession of the machines, he could not in any manner mortgage them.
Further, the machines to which the mortgage refers to are not the same as those in question because the latter are on Ylaya
Street Nos. 705-707 and the former are on Singalong Street No. 1163.
The evidence of record shows that the machines in contention originally belonged to the Galvan and from him were
transferred to the partnership Galvan y Compania.
This being the case, said machines belong to the partnership and not to Clement, and shall belong to the partnership until
partition is effected according to the result thereof after the liquidation.

Villareal vs Ramirez
FACTS:
Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership for the operation of a restaurant and catering business
under the name of Aquarius Food House and Catering Services. Respondent Donaldo Ramirez joined the partnership which he
contributed money which was paid by his parents, Cesar and Carmelita Ramirez. Jesus Jose withdrew from the partnership and his
capital contribution was refunded to him in cash. The petitioners closed the business due to increases rental. This was done without
the knowledge of the respondents. The restaurant furniture and equipment were deposited in the respondents house for storage.
Respondent spouses wrote a letter to the petitioners that they are no longer interested to become partners with the petitioners and
they request for a return of their capital contribution. Then, they informed the petitioners that the furniture and equipment of the
restaurant are deteriorating. However, such letters wer unheeded.
This was the reason why the respondents filed a complaint in the RTC.
RTC ruled that the parties had voluntarily entered into a partnership, which could be dissolved at any time, and this dissolution was
showed by the fact that petitioners stopped operating the restaurant.
On appeal, CA upheld RTCs decision that the partnership was dissolved and it added that respondents had no right to demand the
return of their capital contribution. However since petitioners did not give the proper accounting for the liquidation of the
partnership, the CA took it upon itself to compute their liabilities and the amount that is proper to the respondent.
Hence this petition.
ISSUES:
1.

WON petitioners are liable to respondents for the latters share in the partnership

HELD:
The court ruled that 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.
Since it is the partnership, as a separate and distinct entity, that must refund the shares of the 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 -- in other words, sold and converted to cash -- and all
partnership creditors, if any, paid.
REALUBIT vs. JASO
FACTS
Petitioner Josefina Realubit entered into a Joint Venture Agreement with Francis Eric Amaury Biondo, a French national, for
the operation of an ice manufacturing business. With Josefina as the industrial partner and Biondo as the capitalist partner, the parties
agreed that they would each receive 40% of the net profit, with the remaining 20% to be used for the payment of the ice making
machine which was purchased for the business. For and in consideration of the sum of P500,000.00, however, Biondo subsequently
executed a Deed of Assignment transferring all his rights and interests in the business in favor of respondent Eden Jaso, the wife of
respondent Prosencio Jaso. With Biondos eventual departure from the country, the Spouses Jaso caused their lawyer to send Josefina
a letter apprising her of their acquisition of said Frenchmans share in the business and formally demanding an accounting and
inventory thereof as well as the remittance of their portion of its profits.

Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso commenced the instant suit for specific
performance, accounting, examination, audit and inventory of assets and properties, dissolution of the joint venture, appointment of
a receiver and damages. The said complaint alleged that the Spouses Realubit had no gainful occupation or business prior to their joint
venture with Biondo and that aside from appropriating for themselves the income of the business, they have fraudulently concealed
the funds and assets thereof thru their relatives, associates or dummies. The Spouses Realubit claimed that they have been engaged
in the tube ice trading business under a single proprietorship even before their dealings with Biondo.
The RTC rendered its Decision discounting the existence of sufficient evidence from which the income, assets and the
supposed dissolution of the joint venture can be adequately reckoned. Upon the finding, however, that the Spouses Jaso had been
nevertheless subrogated to Biondos rights in the business in view of their valid acquisition of the latters share as capitalist partner. On
appeal before the CA, the foregoing decision was set aside
upon the following findings that the Spouses Jaso validly acquired Biondos share in the business which had been transferred to and
continued its operations and not dissolved as claimed by the Spouses Realubit.
ISSUES
1.
Whether there was a valid assignment or rights to the joint venture
2.
Whether the joint venture is a contract of partnership
3.
Whether Jaso acquired the title of being a partner based on the Deed of Assignment
RULING
1.
Yes. As a public document, the Deed of Assignment Biondo executed in favor of Eden not only enjoys a presumption of
regularity but is also considered prima facie evidence of the facts therein stated. A party assailing the authenticity and due execution
of a notarized document is, consequently, required to present evidence that is clear, convincing and more than merely preponderant.
In view of the Spouses Realubits failure to discharge this onus, we find that both the RTC and the CA correctly upheld the authenticity
and validity of said Deed of Assignment upon the combined strength of the above-discussed disputable presumptions and the
testimonies elicited from Edenand Notary Public Rolando Diaz.
2.
Yes. Generally understood to mean an organization formed for some temporary purpose, a joint venture is likened to a
particular partnership or one which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise
of a profession or vocation. The rule is settled that joint ventures are governed by the law on partnerships which are, in turn, based on
mutual agency or delectus personae.
3.
No. It is evident that the transfer by a partner of his partnership interest does not make the assignee of such interest a partner
of the firm, nor entitle the assignee to interfere in the management of the partnership business or to receive anything except the
assignees profits. The assignment does not purport to transfer an interest in the partnership, but only a future contingent right to a
portion of the ultimate residue as the assignor may become entitled to receive by virtue of his proportionate interest in the
capital. Since a partners interest in the partnership includes his share in the profits, we find that the CA committed no reversible error
in ruling that the Spouses Jaso are entitled to Biondos share in the profits, despite Juanitas lack of consent to the assignment of said
Frenchmans interest in the joint venture. Although Eden did not, moreover, become a partner as a consequence of the assignment
and/or acquire the right to require an accounting of the partnership business, the CA correctly granted her prayer for dissolution of
the joint venture conformably with the right granted to the purchaser of a partners interest under Article 1831 of the Civil Code.
IN RE SYCIP SALAZAR
FACTS
Two separate Petitions were filed before this Court 1) by the surviving partners of Atty. Alexander Sycip, who died on May 5,
1975, and 2) by the surviving partners of Atty. Herminio Ozaeta, who died on February 14, 1976, praying that they be allowed to
continue using, in the names of their firms, the names of partners who had passed away. In the Court's Resolution of September 2,
1976, both Petitions were ordered consolidated.
Petitioners base their petitions on the following arguments:
1. Under the law, a partnership is not prohibited from continuing its business under a firm name which includes the name of
a deceased partner; in fact, Article 1840 of the Civil Code explicitly sanctions the practice when it provides in the last paragraph that:
The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner as part
thereof, shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or
partnership. 1
2. In regulating other professions, such as accountancy and engineering, the legislature has authorized the adoption of firm
names without any restriction as to the use, in such firm name, of the name of a deceased partner; 2 the legislative authorization
given to those engaged in the practice of accountancy a profession requiring the same degree of trust and confidence in respect of
clients as that implicit in the relationship of attorney and client to acquire and use a trade name, strongly indicates that there is no
fundamental policy that is offended by the continued use by a firm of professionals of a firm name which includes the name of a
deceased partner, at least where such firm name has acquired the characteristics of a "trade name." 3
3. There is no possibility of imposition or deception because the deaths of their respective deceased partners were wellpublicized in all newspapers of general circulation for several days; the stationeries now being used by them carry new letterheads
indicating the years when their respective deceased partners were connected with the firm; petitioners will notify all leading national
and international law directories of the fact of their respective deceased partners' deaths. 5

5. No local custom prohibits the continued use of a deceased partner's name in a professional firm's name; 6 there is no
custom or usage in the Philippines, or at least in the Greater Manila Area, which recognizes that the name of a law firm necessarily
Identifies the individual members of the firm. 7
6. The continued use of a deceased partner's name in the firm name of law partnerships has been consistently allowed by
U.S. Courts and is an accepted practice in the legal profession of most countries in the world. 8
ISSUES
WON law firms are entitle to continue using the name or including the name of their deceased partner.
RULING
The Court finds no sufficient reason to depart from the rulings thus laid down.
A. Inasmuch as "Sycip, Salazar, Feliciano, Hernandez and Castillo" and "Ozaeta, Romulo, De Leon, Mabanta and Reyes" are
partnerships, the use in their partnership names of the names of deceased partners will run counter to Article 1815 of the Civil Code
which provides:
Art. 1815. Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners.
Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability, of a partner.
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. In fact, Article 1825 of the Civil Code prohibits a
third person from including his name in the firm name under pain of assuming the liability of a partner. The heirs of a deceased
partner in a law firm cannot be held liable as the old members to the creditors of a firm particularly where they are non-lawyers.
.
In regards to the last paragraph of Article 1840 of the Civil Code cited by petitioners, supra, the first factor to consider is that
it is within Chapter 3 of Title IX of the Code entitled "Dissolution and Winding Up." The Article primarily deals with the exemption from
liability in cases of a dissolved partnership, of the individual property of the deceased partner for debts contracted by the person or
partnership which continues the business using the partnership name or the name of the deceased partner as part thereof. What the
law contemplates therein is a hold-over situation preparatory to formal reorganization., Article 1840 treats more of a commercial
partnership with a good will to protect rather than of aprofessional 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.
Jo Chung Cang vs Pacific Commercial Co., 45 phil. 142
Facts:
Following the presentation of an application to be adjudged an insolvent by the "SociedadMercantil, Teck Seing & Co., Ltd.," the
creditors, the Pacific Commercial Company, Piol &Company, Riu Hermanos, and W. H. Anderson & Company, filed a motion in which
the Courtwas prayed to enter an order: "(A) Declaring the individual partners as described in paragraph 5 parties to this proceeding;
(B) to require each of said partners to file an inventory of his propertyin the manner required by section 51 of Act No. 1956; and (C)
that each of said partners be adjudicated insolvent debtors in this proceeding."
The trial judge first granted the motion, but, subsequently, on opposition being renewed, denied it. It is from this last order that an
appeal was taken in accordance with section 82 of the Insolvency Law.
Issue:
WON the partnership contract created a limited partnership.
Ruling:
No.The contract created was not a limited partnership but a general partnership even if Ltd. Was used in the firms name to avoid
liability for possible losses.
The general rule is, that those who seek to avail themselves of the protection of laws permitting the creation of limited partnerships
must show a substantially full compliance with such laws. A limited partnership that has NOT complied with the law of its creation is
not considered a limited partnership at all, but a GENERAL partnership in which all the members are liable.
To establish a limited partnership there must be, at least, one general partner and the name ofthe least one of the general partners
must appear in the firm name. (Code of Commerce, arts.122 [2], 146, 148.) But NEITHER of these requirements have been fulfilled.
Article 125 of the Code of Commerce provides that the articles of general co partnership must estate the names, surnames, and
domiciles of the partners; the firm name; the names, and surnames of the partners to whom the management of the firm and the use
of its signature is in trusted; the capital; the duration of the copartnership; and the amounts which, in a proper case, are to be given to
each managing partner annually for his private expenses, while the succeeding article of the Code provides that the general co
partnership must transact business under the name of all its members, of several of them, or of one only. Turning to the document
before us, it will be noted that all of the requirements of the Code have been met, with the sole EXCEPTION of that relating to the
composition of the firm name.

ISLAND SALES, INC., vs. UNITED PIONEERS GENERAL CONSTRUCTION COMPANY, ET AL, BENJAMIN C. DACO
FACTS:
Defendant company United Pioneers General Construction Company is a general partnership with 5 partners. The company purchased
from Island Sales, Inc. a motor vehicle, executing for that purpose a promissory note for the entire price, payable in twelve monthly
installments. Having failed to receive the third installment, Island Sales sued the company, including its general partners as codefendants. On motion of plaintiff, the complaint was later dismissed insofar as one of the partners (Romulo B. Lumaig) was
concerned. After trial, the lower court rendered judgment sentencing the defendant to pay the sum due, with interest, and expressly
stating that the four of the five partners would pay in case the company has no properties with which to satisfy judgment. Benjamin
Daco, one of the partners, appealed claiming that the liability of each partner should not exceed 1/5 of the obligation due inasmuch as
there are five partners in the company.
ISSUE:
WON the dismissal of the complaint to favor one of the general partners of a partnership increases the joint and subsidiary liability of
each of the remaining partners for the obligations of the partnership.
RULING:
The Supreme Court ruled that under Art. 1816 of the Civil Code, the liability of partners shall be pro-rata; that the dismissal of the
complaint to favor one of the general partners results in the condonation of the debt of that partner's individual share and that
appellant's share in the obligation shall not be increased thereby but shall be limited to 1/5 of the obligation of defendant company.
Decision affirmed as clarified.
SYLLABUS
1. OBLIGATIONS AND CONTRACTS; LIABILITY OF GENERAL PARTNERS, PRO-RATA ; CONDONATION OF INDIVIDUAL LIABILITY
DOES NOT AFFECT THE OTHER'S SHARE IN THE OBLIGATION. Where there was five general partners when the promissory
note in question executed for and in behalf of the partnership, and the complaint against one of them was dismissed upon
motion of the plaintiff, the general partner's share in the obligation remains limited to only 1/5 of the amount due and
demandable, their liability being pro-rata.
PHILIPPINE NATIONAL BANK vs. SEVERO EUGENIO LO ET AL. defendants. SEVERO EUGENIO LO, NG KHEY LING and YEP SENG, appellants
FACTS:
The appellants Severo Eugenio Lo and Ng Khey Ling, together with J. A. Say Lian Ping, Ko Tiao Hun, On Yem Ke Lam and Co Sieng Peng
formed a commercial partnership under the name of "Tai Sing & Co.," with a capital of P40,000 contributed by said partners. The
partnership was to last for five years from and after the date of its organization, and that its purpose was to do business in the City of
Iloilo, or in any other part of the Philippine Islands the partners might desire, for the purchase and sale of merchandise, goods, and
native, as well as Chinese and Japanese products. One of the partners, J. A. Say Lian Ping was appointed general manager of the
partnership, with the powers specified in said articles of co-partnership.
GM J.A. Say Lian Ping executed a power of attorney on June 4, 1917, in favor of A. Y. Kelam, authorizing him to act in his stead as
manager and administrator of "Tai Sing & Co." and acting under such power of attorney, Kelam applied for, and obtained a loan of
P8,000 in current account from the plaintiff bank mortgaging certain personal properties of Tai Sing & Co as security for said loan.
This credit was renewed several times and the defendants had been using this commercial credit in a current account with the
plaintiff bank, from the year 1918 to May 22, 1921, where the debit balance with interest to December 31, 1924 totaled to
P20,239.60 which is the sum claimed in the complaint filed by plaintiff bank at 9% per annum from January 1, 1925 until fully paid,
with the costs of trial.
Defendant Eugenio Lo sets up, as a general defense, that Tai Sing & Co., was not a general partnership, and that the commercial credit
in current account which Tai Sing & Co. obtained from the plaintiff bank had not been authorized by the board of directors of the
company, nor was the person who subscribed said contract authorized to make the same, under the articles of co-partnership. The
lower court, after the hearing found:
(1) That defendants Severo Eugenio Lo, Ng Khey Ling and Yap Seng & Co., Sieng Peng are indebted to plaintiff Philippine
National Bank in the sum of P22,595.26 to July 29, 1926 with a daily interest of P4.14 on the balance on account of the
partnership Tai Sing & Co. for the sum of P16,518.74 until September 9, 1922;
(2) Said defendants are ordered jointly and severally to pay the Philippine National Bank the sum of P22,727.74 up to
August 31, 1926, and from that date, P4.14 daily interest on the principal; and
(3) The defendants are furthermore ordered to pay the costs of the action.

ISSUES:
I.
II.
III.
IV.

The trial court erred in finding that article 126 of the Code of Commerce at present in force is not mandatory.
The trial court erred in finding that the partnership agreement of Tai Sing & Co. (Exhibit A), is in accordance with
the requirements of article 125 of the Code of Commerce for the organization of a regular partnership.
The trial court erred in not admitting J.A. Sai Lian Ping's death in China in November, 1917, as a proven fact.
The trial court erred in finding that the death of J.A. Sai Lian Ping cannot extinguish the defendants' obligation to
the plaintiff bank, because the last debt incurred by the commercial partnership Tai Sing & Co. was that evidenced
by Exhibit F, signed by Sy Tit as attorney-in-fact of the members of Tai Sing & Co., by virtue of Exhibit G.

V.

VI.

VII.

VIII.

The trial court erred in not finding that plaintiff bank was not able to collect its credit from the goods of Tai Sing &
Co. given as security therefor through its own fault and negligence; and that the action brought by plaintiff is a
manifest violation of article 237 of the present Code of Commerce.
The trial court erred in finding that the current account of Tai Sing & Co. with plaintiff bank shows a debit balance
of P16,518.74, which in addition to interest at 9 per cent per annum from July 29, 1926, amounts to P16,595.26,
with a daily interest of P4.14 on the sum of P16,518.74.
The trial court erred in ordering the defendants-appellants to pay jointly and severally to the Philippine National
Bank the sum of P22,727.74 up to August 31, 1926, and interest on P16,518.74 from that date until fully paid, with
the costs of the action.
The trial court erred in denying the motion for a new trial filed by defendants-appellants

RULING:
The judgment appealed from is in accordance with the law, and must therefore be, as it is hereby, affirmed with costs against the
appellants.
1. GENERAL PARTNERSHIPS; LIABILITY. The anomalous adoption of a firm name by the defendant partners cannot be set up by
them as a defense so as to evade a liability contracted by them, inasmuch as such anomaly does not affect the liability of the general
partners to third persons under article 127 of the Code of Commerce
2. The object of article 126 of the Code of Commerce in requiring a general partnership to transact business under the name of all its
members, of several of them, or of one only, is to protect the public from imposition and fraud. The provision of said article 126 is for
the protection of the creditors rather than of the partners themselves. The doctrine formerly enunciated by this court is that the law
must be construed as rendering contracts made in violation of it, unlawful and unenforceable only as between the partners and at the
instance of the infringer, but not in the sense of depriving innocent parties of their rights, who may have dealt with the guilty parties
in ignorance of the latter's having violated the law; and that contracts entered into by mercantile associations defectively organized
are valid when voluntarily executed by the parties and the only question is whether or not they complied with the agreement.
3. Appellants' contention that such parts of their property as are not included in the partnership assets cannot be levied upon for the
payment of the partnership obligations, except after the partnership property has been exhausted is untenable, for the partnership
property described in the mortgage no longer existed at the time of the filing of the herein complaint, nor has its existence been
proved, nor was it offered to the plaintiff for sale. Hence article 237 of the Code of Commerce invoked by the appellants can in no way
be applicable to this case.
4. All the members of a general partnership, be they managing partners of the same or not, shall be personally and solidarily liable
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 latter and by a person authorized to use it. (Sec. 127, Code of Commerce.)
Munasque vs. CA

Elmo Muasque, in behalf of Galan and Muasque partnership as Contractor, entered into a written contract with Tropical
Commercial Co., through its branch manager Ramon Pons, for remodelling of Tropicals building in Cebu. The consideration
for the entire services is P25,000 to be paid: 30% upon signing of contract, and balance on 3 equal instalments of P6,000
every 15working days.

First payment of check worth P7,000 was payable to Muasque, who indorsed it to Galan for purposes of depositing the
amount and paying the materials already used. But since Galan allegedly misappropriated P6,183.37 of the check for
personal use, Muasque refused to indorse the second check worth P6,000. Galan then informed Tropical of the
misunderstanding between him and Muasque and this prompted Tropical to change the payee of the second check from
Muasque to Galan and Associates (the duly registered name of Galan and Muasque partnership). Despite the
misappropriation, Muasque alone was able to finish the project. The two remaining checks were properly issued to
Muasque.

Muasque filed a complaint for payment of sum of money plus damages against Galan, Tropical and Pons for the amount
covered by the first and second checks. Cebu Southern Hardware Co and Blue Diamond Glass Palace were allowed as
intervenors having legal interest claiming against Muasue and Galan for materials used.

Issue:
1.
2.

Held:
1.

WON Muasque and Galan are partners?


WON Galan should shoulder exclusively the amounts payable to the intervenors (granting he misappropriated the amount
from the two checks)?

Yes. The records will show that the petitioner entered into a con-tract with Tropical for the renovation of the latter's building
on behalf of th partnership of "Galan and Muasque." This is readily seen in the first paragraph of the contract where it
states:
This agreement made this 20th day of December in the year 1966 by Galan and Muasque hereinafter called the Contractor,
and Tropical Commercial Co., Inc., hereinafter called the owner do hereby for and in consideration agree on the following: ... .

Also, The first check issue in the name of Muasque was indorsed to Galan. The relationship was made to appear as a partnership.
There is nothing in the records to indicate that the partner-ship organized by the two men was not a genuine one. If there
was a falling out or misunderstanding between the partners, such does not convert the partnership into a sham organization.
2. No. While it is true that under Article 1816 of the Civil Code,"All partners, including industrial ones, shall be liable prorate with all
their property and after all the partnership assets have been exhausted, for the contracts which may be entered into the name
and fm the account cd the partnership, under its signature and by a person authorized to act for the partner-ship. ...". this
provision should be construed together with Article 1824 which provides that: "All partners are liable solidarily with the
partnership for everything chargeable to the partnership under Articles 1822 and 1823." In short, while the liability of the
partners are merely joint in transactions entered into by the partnership, a third person who transacted with said partnership can
hold the partners solidarily liable for the whole obligation if the case of the third person falls under Articles 1822 or 1823.
Art. 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partner-ship or
with the authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership or any penalty is
incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.
Art. 1823. The partnership is bound to make good:
(1) Where one partner acting within the scope of his apparent authority receives money or property of a third person and
misapplies it; and
(2) Where the partnership in the course of its business receives money or property of a third person and t he money or property so
received is misapplied by any partner while it is in the custody of the partnership.
The obligation is solidary, because the law protects him, who in good faith relied upon the authority of a partner, whether such
authority is real or apparent. That is why under Article 1824 of the Civil Code all partners, whether innocent or guilty, as well as the
legal entity which is the partnership, are solidarily liable.
In the case at bar the respondent Tropical had every reason to believe that a partnership existed between the petitioner and Galan
and no fault or error can be imputed against it for making payments to "Galan and Associates" and delivering the same to Galan
because as far as it was concerned, Galan was a true partner with real authority to transact on behalf of the partnership with which it
was dealing. Thus, it is but fair that the consequences of any wrongful act committed by any of the partners therein should be
answered solidarily by all the partners and the partnership as a whole.
However. as between the partners Muasque and Galan,justice also dictates that Muasque be reimbursed by Galan for the
payments made by the former representing the liability of their partnership to herein intervenors, as it was satisfactorily established
that Galan acted in bad faith in his dealings with Muasque as a partner.
Zenaida Mendoza vs Engr. Eduardo Paule
Facts:
Engr. Eduardo Paule is the proprietor of E.M. Paule Construction and Trading (EMPCT). Paule executed a SPA in favor of Zenaida
Mendoza to participate in the pre-qualification and bidding of a NIA project and to represent him in all transactions related thereto: all
transactions with NIA; participate in the bidding, secure bid bonds and other documents; receive and collect payment; to do and
perform such acts and things that may be necessary and/or required to make the herein authority effective.
Manuel de la Cruz met up with Mendoza to offer his heavy equipment for lease. A series of meetings ensued thereafter among Paule,
Mendoza and Cruz. On December 2 and 20, 1999, Mendoza and Cruz signed two Job Orders/Agreements for the lease of latters
heavy equipment to EMPCT.
On April 27, 2000, Paule revoked the SPA he issued in favor of Mendoza. NIA refused to make payment to Mendoza on her billings. In
turn, Cruz could not be paid for the rent of the equipment. Mendoza advised Cruz to address his demands to NIA but the latter
refused to acknowledge the billings and informed Cruz that it would be remitting payment only to EMPTC as the winning contractor
for the project.
Cruz instituted an action for collection of sum of money with damages and a prayer for the issuance of a writ of preliminary injunction
against Paule, Coloma and NIA. Paule filed a third-party complaint against Mendoza, who filed her answer thereto, with a cross-claim
against Paule.
Ruling of RTC: Held Paule liable and found that Mendoza was duly instituted as EMPCTs agent for purposes of the NIA project and
that Mendoza validly contracted with Cruz for the rental of heavy equipment that was to be used therefor. The RTC held that through
SPAs he executed, Paule clothed Mendoza with apparent authority and held her out to the public as his agent.
Ruling of CA: Rendered the assailed Decision which dismissed Cruzs complaint, as well as Mendozas complaint. The CA held that the
SPAs issued in favor of Mendoza did not grant the latter the authority to enter into contract with Cruz for hauling services; the SPAs
limit Mendozas authority to only represent EMPCT in its business transactions with NIA. The CA declared that Paule (principal) may
not be bound by the acts of Mendoza (agent) where Cruz (third person) transacting with the agent knew that the latter was acting
beyond the scope of her power or authority under the agency.
Ruling of SC: Records show that Paule (EMPCT) and Mendoza had entered into a partnership in regard to the NIA project. Paules
contribution to the partnership is his contractors license and expertise, while Mendoza would provide and secure the needed funds
for labor, materials and services. Although the SPAs limit Mendozas authority to such acts as representing EMPCT in its business

transactions with NIA, participating in the bidding of the project, receiving and collecting payment in behalf of EMPCT, and performing
other acts in furtherance thereof, the evidence shows that when Mendoza and Cruz met and discussed the lease of the latters heavy
equipment for use in the project, Paule was present and did not object to Mendozas actuations.
Every partner is an agent of the partnership for the purposes of its business; each one may separately execute all acts of
administration, unless a specification of their respective duties has been agreed upon, or else it is stipulated that any one of them
shall not act without the consent of all the others.
There was no valid reason for Paule to revoke Mendozas SPAs. The SPAs were necessary for the proper performance of her role in the
partnership, and to discharge the obligations she had already contracted prior to revocation. Without the SPAs, she could not collect
from NIA because EMPCT is the entity it had contracted with. An agency cannot be revoked if a bilateral contract depends upon it, or
if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of
partnership and his removal from the management is unjustifiable.
Paules revocation of the SPAs was done in evident bad faith. He committed a willful and deliberate breach of his contractual duty to
his partner and those with whom the partnership had contracted. Thus, Paule should be made liable for moral damages; civilly liable
for abandoning the partnership.
Thus, the RTC erred in disregarding and dismissing Mendozas cross-claim against Paule, just as the appellate court erred in sustaining
it on the justification that Paules revocation of the SPAs was within the bounds of his discretion under Article 1920.
Antonio C. Goquiolay and the Partnership Tan Sin An and Antonio C. Goquiolay vs. Washington Z. Sycip, et al.
Facts:
On May 29, 1940, Tan Sin An and Goquiolay entered into a general commercial partnership under the partnership name Tan Sin An
and Antonio C. Goquiolay, for the purpose of dealing in real estate. The articles of partnership designated Tan Sin An as the general
manager of the partnership.
x x x
IX. The co-partner shall have no voice or participation in the management of the affairs of the co-partnership; but he may examine its
accounts once every 6 months at any time during ordinary business hours, and in accordance with the provisions of the Code of
Commerce.
The lifetime of the partnership was fixed at 10 years and also that
In the even of the death of any of the partners ay any time before the expiration of 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 in said co-partnership.
On May 31, 1940, Goquiolay executed a General Power of Attorney designating Tan Sin An as his Manager for said co-partnership for
the entire duration that the partnership is organized.
On June 26, 1942, Tan Sin An died, leaving as surviving heirs his widow Kong Chai Pin and four minor children. On March 29, 1949,
Kong Chai Pin filed a petition with the probate court for authority to sell all the 49 parcels of land to Washington Z. Sycip and Betty Y.
Lee, for the purpose primarily of settling the debts of the partnership. Pursuant to a court order of April 2, 1949, the administratrix
executed on April 4, 1949, a deed of sale of the 49 parcels of land to the defendants Washington Sycip and Betty Lee.
On July 25, 1949, Goquiolay filed a petition in the intestate proceedings seeking to set aside the order of the probate court approving
the sale in so far as his interest over the parcels of land sold was concerned. The probate court annulled the sale executed by Kong
Chai Pin with respect to the 60% interest of Goquiolay over the properties.
On June 30, 1953, the SC rendered a decision setting aside the orders of the probate court and remanding the case for new trial, due
to the non-inclusion of indispensable parties.
There is merit in the contention that the lower court erred in holding that Kong Chai Pin, succeeded her husband in the sole
management of the partnership. The Articles of Co-Partnership and the General Power of Attorney executed by Goquiolay conferred
upon Tan Sin An the exclusive management of the business was a mere personal right that terminated upon Tans death. The
provision in the articles stating that in the event of death of any one of the partners within the 10-year terms of the partnership, the
deceased partner shall be represented by his heirs, could not have referred to the managerial right given to Tan Sin An; it related to
the succession in the proprietary interest of each partner. Failure of Tan Sin Ans heirs to repudiate or refuse to be bound under the
said provision in the articles made them individual partners with Goquiolay upon Tan Sin Ans death.
Kong Chai Pins act of executing the deed of sale over the properties in the name of the partnership clearly shows that she was acting
no less than as a managing partner. Acting as such, she could be held liable for the partnership debts and liabilities as a general
partner, more than what she might have derived from the estate of the deceased. The plaintiff estopped himself to deny her legal
representation of the partnership by allowing Kong Chai Pin to control the firms properties from 1942 to 1949.
The question now arises as to whether or not the consent of the other partners was necessary to perfect the sale of the partnership
properties to Washington Sycip and Betty Lee. The answer is in the negative.
The records fail to disclose that Goquiolay made any opposition to the sale of the properties to Sycip and Lee. It appears that he only

interposed his objections after the deed of conveyance was executed and approved by the probate court, and his opposition came too
late to be effective.
Appellants also question the validity of the sale covering the entire firm realty, on that ground that it threw the partnership into
dissolution which requires the consent of all the partners. This view is untenable. Sale of the real property which the partnership
originally had will not work its dissolution because the firm was not organized to exploit these lots but to engage in buying and selling
real estate, and in general real estate agency and brokerage business.
SANTIAGO SYJUCO, INC. VS CASTRO
Facts:
The private respondents, Eugenio Lim, et al., borrowed from petitioner Santiago Syjuco, Inc., the sum of P800,000.00. The loan
was given on the security of a first mortgage on property registered in the names of said borrowers as owners in common under
Transfer Certificates of Title Numbered 75413 and 75415 of the Registry of Deeds of Manila. Thereafter, additional loans on the same
security were obtained by the private respondents from Syjuco, so that as of May 8, 1967, the aggregate of the loans stood at
P2,460,000.00, exclusive of interest, and the security had been augmented by bringing into the mortgage other property, also
registered as owned pro indiviso by the private respondents under two titles: TCT Nos. 75416 and 75418 of the Manila Registry.
The private respondents failed to pay it despite demands therefore; that Syjuco consequently caused extra-judicial proceedings
for the foreclosure of the mortgage to be commenced by the Sheriff of Manila; and that the latter scheduled the auction sale of the
mortgaged property on December 27, 1968. The attempt to foreclose triggered off a legal battle that has dragged on for more than
twenty years now, fought through five (5) cases in the trial courts, two (2) in the Court of Appeals, and three (3) more in the Supreme
Court.
One of the complaints filed by the private respondents was filed not in their individual names, but in the name of a partnership of
which they themselves were the only partners: "Heirs of Hugo Lim." The complaint advocated the theory that the mortgage which
they, together with their mother, had individually constituted (and thereafter amended during the period from 1964 to 1967) over
lands standing in their names in the Property Registry as owners pro indiviso, in fact no longer belonged to them at that time, having
been earlier deeded over by them to the partnership, "Heirs of Hugo Lim," more precisely, on March 30, 1959, hence, said mortgage
was void because executed by them without authority from the partnership. Syjuco filed an instant petition for certiorari, prohibition
and mandamus. It prays in its petition that the default judgment rendered against it by Judge Castro be annulled on the ground of,
among others, estoppel, res judicata, and Article 1819 of the Civil Code.
Issue:
Whether or not the private respondents are estopped to avoid the aforementioned mortgage.
Held:
Yes. The Supreme Court ruled that the respondent partnership was inescapably chargeable with knowledge of the mortgage executed
by all the partners thereof, its silence and failure to impugn said mortgage within a reasonable time, let alone a space of more than 17
years, brought into play the doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly unauthorized. Equally or
even more preclusive of the respondent partnerships claim to the mortgaged property is the last paragraph of Art. 1819 of the Civil
Code, which contemplates a situation similar to the case at bar. It states that where the title to real property is in the names of all the
partners, a conveyance executed by the entire partners pass all their rights in such property. Consequently, those members' acts,
declarations and omissions cannot be deemed to be simply the individual acts of said members, but in fact and in law, those of the
partnership. Finally, the Supreme Court emphasizes that the right of the private respondents to assert the existence of the partnership
could have been stressed at the time they instituted their first action, considering that the actions involved property supposedly
belonging to it, and therefore, the partnership was the real party in interest. What was done by them was to split their cause of action
in violation of the well-known rule that only one suit may be instituted for a single cause of action.