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MAXIMILIANO SANCHO, vs.

SEVERIANO LIZARRAGA
G.R.No. L-33580 February 6, 1931
Subject: BusOrg 1
FACTS:
The plaintiff brought an action for the rescission of the partnership contract between himself and
the defendant and the reimbursement of his investment worth 50,000php with interest at 12 per
cent per annum form October 15, 1920, with costs, and any other just and equitable remedy
against said defendant. The defendant denies generally and specifically all the allegations of the
complaint and asked for the dissolution of the partnership, and the payment to him as its manager
and administrator P500 monthly from October 15, 1920 until the final dissolution with interest.

The CFI found that the defendant had not contributed all the capital he had bound himself to
invest hence it demanded that the defendant liquidate the partnership, declared it dissolved on
account of the expiration of the period for which it was constituted, and ordered the defendant, as
managing partner, to proceed without delay to liquidate it, submitting to the court the result of
the liquidation together with the accounts and vouchers within the period of thirty days from
receipt of notice of said judgment. The plaintiff appealed from said decision praying for the
rescission of the partnership contract between him and the defendant in accordance with Art.
1124.

ISSUE:
WON plaintiff acquired the right to demand rescission of the partnership contract according to
article 1124 of the Civil Code.

HELD:
The SC ruled that owing to the defendants failure to pay to the partnership the whole
amount which he bound himself to pay, he became indebted to the partnership for the
remainder, with interest and any damages occasioned thereby, but the plaintiff did not
thereby acquire the right to demand rescission of the partnership contract according to
article 1124 of the Code. Article 1124 cannot be applied to the case in question, because it
refers to the resolution of obligations in general, whereas articles 1681 and 1682
specifically refer to the contract of partnership in particular. And it is a well known
principle that special provisions prevail over general provisions. Hence, SC dismissed the
appeal left the decision appealed from in full force.

Teague vs. Martin, 53 Phil. 504

It was alleged, among others, by the plaintiff that he and the defendants formed a partnership for the operation of
a fish business and similar commercial transactions, which by mutual consent was called "Malangpaya Fish Co.," with
a capital of P35,000, of which plaintiff paid P25,000, the defendants Martin P5,000, Maddy P2,500, and Golucke
P2,500; that he was named the general partner; that the share in the profits and losses is in proportion to the amount
of contributed capital; that there was no agreement as to the duration of the partnership; that he wants to dissolve
it, but the defendants refused to do so; that the partnership purchased and owns a lighter (Lapu-Lapu), a motorship
(Barracuda), and other properties, which are in the possession of the defendants who are making use of them. It
was alleged that it is the best interest of the parties to have a receiver appointed pending this litigation, to take
possession of the properties, and he prays that the Philippine Trust Company be appointed receiver, and for judgment
dissolving the partnership, with costs.

Each of the defendants filed a separate answer, but of the same nature. It is then alleged, among others, that Maddy
will have charge of the Barracuda and the navigating of the same, salary P300 per month; Martin will have charge
of the southern station, cold stores, commissary and procuring fish, salary P300 per month; Teague will have charge
of selling fish in Manila and purchasing supplies. No salary until business is on paying basis.

The CFI issued a decision: (1) dissolving the partnership and liquidating its assets; (2) that the barge Lapu-Lapu as
well as the Ford truck and adding machine belong exclusively to Teague, but he must return to and reimburse the
partnership the amount which was taken from its funds for the purchase of the Lapu-Lapu and the Ford truck.

Upon appeal, the plaintiff further contended that he is the managing partner of the partnership and the three
properties (Lapu-Lapu, Barracuda & Ford truck) are properties of the partnership since they were paid from the
profits of the partnership thus do not belong to him.

ISSUES:

WON the plaintiff was the manager of the unregistered partnership of Malangpaya Fish Company.

WON the three properties are owned by the partnership.

RULING:

Yes, the powers and duties of the three partners are specifically defined, and that each of them was more or less the
general manager in his particular part of the business. The plaintiffs powers and duties were confined and limited to
"selling fish in Manila and the purchase of supplies."

No, the Lapu-Lapu, Barracuda, and the adding machine, although paid for by the partnership funds, are owned by
petitioner for it was registered in his own name. He is estopped from claiming otherwise. The purchase of the
properties in question are not within the scope of plaintiffs authority. It is but right that the plaintiff reimburse the
partnership for the use of its funds. However, it noted that the partnership also made use of the Lapu-Lapu. In the
interest of justice, the plaintiff should be compensated for such use.