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

Campos, Rueda & Co., a limited partnership, is indebted to the
appellants: Pacific Commercial Co. , Asiatic Petroleum Co, and
International Banking Corporation amounting to not less than
P1,000.00 (which were not paid more than 30 days prior to the date
of the filing by petitioners of the application for voluntary
The trial court denied their petition on the ground that it was not
proven, nor alleged, that the members of the firm were insolvent at
the time the application was filed. It also held that the partners are
personally and solidarily liable for the consequences of the
transactions of the partnership.
Whether or not a limited partnership may be held to have
committed an act of insolvency.
Yes. A limited partnerships juridical personality is different from
the personality of its members. On general principle, the limited
partnership must answer for and suffer the consequence of its acts.
Under our Insolvency Law, one of the acts of bankruptcy upon w/c
an adjudication of involuntary insolvency can be predicated is the
failure to pay obligations.
The failure of Campos, Rueda & Co., to pay its obligations
constitutes an act w/c is specifically provided for in the Insolvency
Law for declaration of involuntary insolvency. The petitioners have
a right to a judicial decree declaring the involuntary insolvency of
said partnership.


26 SCRA 475
Nicanor Casteel filed a fishpond application for a big tract of
swampy land in the then Sitio of Malalag
(now the Municipality of Malalag), Municipality of Padada,
Davao for three times since 1940 but no
action was taken thereon by the authorities concerned.
Despite the said rejection, Casteel did not lose
interest. Meanwhile, several applications were submitted by
other persons for portions of the area covered
by Casteel's application, one of them was Felipe Deluao,
uncle of Casteel.

Because of the threat poised upon his position by the above

applicants who entered upon and spread
themselves within the area, Casteel sought financial aid from
his uncle Deluao with which to finance the
needed improvements on the fishpond. Hence, a wide
productive fishpond was built. But despite the
improvements introduced, Casteels application was still
rejected. He then appealed the rejection made
with the Secretary of Agriculture and Natural Resources.
Pending appeal, Inocencia Deluao (wife of Felipe Deluao) and
Nicanor Casteel executed a contract
denominated as contract of service whereby Deluao hires
and employs the Casteel. The latter will be
the Manager and sole buyer of all the produce of the fish that
will be produced from said fishpond while
the former will be the administrator of the same she having
financed the construction and improvement of
said fishpond. At the same time, Inocencia Deluao executed a
special power of attorney in favor of Jesus
Donesa, extending to the latter the authority to represent her
in the administration of the fishpond.
Meanwhile, the Secretary of Agriculture and Natural
Resources issued a decision stating that Nicanor
Casteel should be, as hereby it is, reinstated and given due
course for the area applied for. Nicanor Casteel
then forbade Inocencia Deluao from further
administering the fishpond, and ejected the latter's
representative, Donesa, from the premises.
Alleging violation of the contract of service entered into
between Deluao and Casteel, Deluao filed an
action in the CFI for specific performance and damages
against Casteel and one Juan Depra (who, they
alleged, instigated Casteel to violate his contract).
Whether or not the agreement made by the parties created a
contract of co-ownership,
The reinstatement of Casteel over the subject land
constitute a dissolution of the partnership between him and

The evidence preponderates in favor of the view that the

initial intention of the parties was not to form a
co-ownership but to establish a partnership Inocencia
Deluao as capitalist partner and Casteel as
industrial partner the ultimate undertaking of which was to
divide into two equal parts such portion of
the fishpond as might have been developed by the amount
extended by the plaintiffs-appellees, with the
further provision that Casteel should reimburse the expenses
incurred by the appellees over one-half of
the fishpond that would pertain to him. This can be gleaned,
among others, from the letter of Casteel to
Felipe Deluao showing the intention to divide the fishpond.
Petitioner Sardane is the owner of a Sardane Trucking Services. One day Sardane
borrowed money from the other guy by making promises and issuing several
promissory notes. On the due date the other guy wanted his money back but instead
of paying Sardane apologized for his failure to pay on time, and he promised the
other guy that he would pay him next time. After so many failed attempts to collect
his money the other guy got mad and finally decided to seek the intervention of the
court. Now after so many failed attempts to collect the promised payment, the other
guy, Mr.Acojedo (Private Respondent), with so much hate on his heart, finally filed a
collection case against Sardane. Even during the scheduled date of the trial, Sardane,
as usual he did not show up. On motion by the petitioner(herein private respondent),
the Court issued an order declaring the Sardane in default and eventually after
presentation of evidence ex parte, the court rendered judgment by default in
favor of the petitioner. Sardane then appealed to the CFI, and he claimed that the
promissory notes were his contribution to the partnership; and that there is no
contract of loan; thus he is not indebted to the other guy. The CFI, believing the
arguments of Sardane, ruled on his favor thereby reversing the decision of the lower
court by dismissing the complaint and ordered the plaintiff-appellee Acojedo to pay
said defendant-appellant P500.00 for moral damages
whether or not a partnership existed
NONE .The fact that he had received 50% of the net profits does not conclusively
establish that he was a partner of the private respondent herein. Article 1769(4) of the
Civil Code is explicit that while the receipt by a person of a share of the profits of a
business is prima facie evidence that he is a partner in the business, no such
inference shall be drawn if such profits were received in payment as wages of an
employee. Furthermore, herein petitioner had no voice in the management of the

affairs of the basnig. Under similar facts, this Court in the early case of Fortis vs.
Gutierrez Hermanos, denied the claim of the plaintiff therein that he was a partner in
the business of the defendant. The same rule was reiterated in Bastida vs. Menzi &
Co., Inc., et al. which involved the same factual and legal milieu.
Business Organization Partnership, Agency, Trust Partner
Periodic Accounting Profit Sharing
In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a
partnership agreement with Jimmy Yu and Norberto Uy. The three
contributed P50,000.00 each and used the funds to purchase a
truck to start their trucking business. A year later however, Jose
Lim died. The eldest son of Jose Lim, Elfledo Lim, took over the
trucking business and under his management, the trucking
business prospered. Elfledo was able to but real properties in his
name. From one truck, he increased it to 9 trucks, all trucks were in
his name however. He also acquired other motor vehicles in his
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart
attack. Elfledos wife, Juliet Lim, took over the properties but she
intimated to Jimmy and the heirs of Norberto that she could not go
on with the business. So the properties in the partnership were
divided among them.
Now the other heirs of Jose Lim, represented by Elenito Lim,
required Juliet to do an accounting of all income, profits, and
properties from the estate of Elfledo Lim as they claimed that they
are co-owners thereof. Juliet refused hence they sued her.
The heirs of Jose Lim argued that Elfledo Lim acquired his
properties from the partnership that Jose Lim formed with Norberto
and Jimmy. In court, Jimmy Yu testified that Jose Lim was the
partner and not Elfledo Lim. The heirs testified that Elfledo was
merely the driver of Jose Lim.
ISSUE: Who is the partner between Jose Lim and Elfledo Lim?
HELD: It is Elfledo Lim based on the evidence presented regardless
of Jimmy Yus testimony in court that Jose Lim was the partner. If
Jose Lim was the partner, then the partnership would have been
dissolved upon his death (in fact, though the SC did not say so, I
believe it should have been dissolved upon Norbertos death in
1993). A partnership is dissolved upon the death of the partner.
Further, no evidence was presented as to the articles of partnership
or contract of partnership between Jose, Norberto and Jimmy.
Unfortunately, there is none in this case, because the alleged
partnership was never formally organized.
But at any rate, the Supreme Court noted that based on the
functions performed by Elfledo, he is the actual partner.
The following circumstances tend to prove that Elfledo was himself
the partner of Jimmy and Norberto:

1.) Cresencia testified that Jose gave Elfledo P50,000.00, as share

in the partnership, on a date that coincided with the payment of
the initial capital in the partnership;
2.) Elfledo ran the affairs of the partnership, wielding absolute
control, power and authority, without any intervention or opposition
whatsoever from any of petitioners herein;
3.) all of the properties, particularly the nine trucks of the
partnership, were registered in the name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or salaries
from the partnership, indicating that what he actually received
were shares of the profits of the business; and
5.) none of the heirs of Jose, the alleged partner, demanded
periodic accounting from Elfledo during his lifetime. As repeatedly
stressed in the case of Heirs of Tan Eng Kee, a demand for periodic
accounting is evidence of a partnership.
Furthermore, petitioners failed to adduce any evidence to show that
the real and personal properties acquired and registered in the
names of Elfledo and Juliet formed part of the estate of Jose, having
been derived from Joses alleged partnership with Jimmy and
Elfledo was not just a hired help but one of the partners in the
trucking business, active and visible in the running of its affairs
from day one until this ceased operations upon his demise. The
extent of his control, administration and management of the
partnership and its business, the fact that its properties were
placed in his name, and that he was not paid salary or other
compensation by the partners, are indicative of the fact that Elfledo
was a partner and a controlling one at that. It is apparent that the
other partners only contributed in the initial capital but had no say
thereafter on how the business was ran. Evidently it was through
Elfredos efforts and hard work that the partnership was able to
acquire more trucks and otherwise prosper. Even the appellant
participated in the affairs of the partnership by acting as the
bookkeeper sans salary.

ung case digest dapat brief lg daw, dont copy whats written on the scra
nor the exact words of the justices, summarize in ur own words daw. one
paragraph lg ang facts, one paragraph lg dn ang held.. ang issue dapat
magstart sa word "WON", not pde whether or large size notebook
ilagay, dapat same ang order ng mga cases. straight ang indention n
margins ng paragraphs lastly and im not sure, parang long hand/cursive
gusto nya