JOSEFINA REALUBIT v. PROSENCIO JASO and EDEN G.

JASO However, Eden did not become a partner and did not acquire
September 21, 2011 right to require an accounting of the partnership business.

DOCTRINE: 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 assignee’s profits.

FACTS: Josefina Realibut entered into a joint venture

agreement with Francis Biondo, who was a French national, for
the operation of an ice manufacturing business. Under the
agreement, Josefina would be an industrial partner while
Biondo would be a capitalist partner.

Subsequently, as Biondo was to leave the Philippines, he

assigned his rights and interests in the business to Eden Jaso.
Eden, together with her husband, through their lawyer,
requested for the accounting and inventory of the business
and the remittance of their portions of profits in light of the
assignment made by Biondo in favor of Eden. Josefina refused
and as a result, the spouses Jaso filed a complaint against
Josefina for the performance, accounting, examination, audit
and inventory of the assets and properties of the joint venture.

The complaint alleged that Josefina with his husband had no

source of income before entering the joint venture and that
they appropriated for themselves solely the profits of the
business. As a result of that, they were able to purchase some
properties.

The Spouses Realubit denied the allegations in the complaint

and argued that the signature of Biondo was forged in the
Deed of Assignment. They added that they were in the ice
business even before the joint venture with Biondo.

The RTC ruled in favor of the Spouses Jaso. The decision of the
RTC was modified by the CA. The CA ruled that through the
assignment, Eden was only entitled to her share of the profits
and that she did not become a partner and thus, she cannot
interfere with the management of the partnership, request for
information and accounting and inspect the books of the
venture.

ISSUE: WON CA erred in its ruling

RULING: NO. A joint venture is likened to a particular

partnership and therefore, governed by the law on
partnerships.

Pursuant to Art. 1813, 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 assignee’s profits.

Thus, the Spouses Jaso are entitled to Biondo’s share in the

profits despite Juanita’s lack of consent to the assignment.
 PHILIPPINE NATIONAL BANK v. SEVERO EUGENIO LO, ET AL
October 5, 1927
DOCTRINE: The anomalous adoption of a firm name by the
defendant partners cannot be set up buy 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.
Furthermore, pursuant to Article 127 of the Code of
Commerce, the defendants are solidarily liable with all their
property, for the results of the transaction 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.

FACTS: Severo Eugenio Lo, Ng Khey Ling, Say Lian Ping, Ko Tiao
Hun, On Yem Ke Lam, and Co Sieng Peng formed a commercial
partnership which they named Tai Sing and Co which was to
engage in purchase and sale of native, Chinese and Japanese
goods. Sa Lian Ping was appointed as the general manager of
the partnership and his powers were specified in the articles of
partnership.

Later, Ping executed a power of attorney authorizing A. Y. Ke

Lam to act in his stead and obtained a loan of P8000 from
Philippine National Bank secured by a mortgage of a personal
property of the partnership.

Aside from that, other partners also executed another power

of attorney in favor of Sy Tit. Sy Tit, representing Tai Sing & Co.,
obtained another loan of P20,000 from Philippine National
Bank secured by a chattel mortgage over certain personal
properties of the partnership.

Now, PNB instituted a collection suit. Eugenio Lo averred that

Tai Sing & Co was not a general partnership and the credit
obtained from PNB was not authorized by the BOD of the
company.

The trial court ruled in favor of PNB. Hence, the current

petition.

ISSUES:
WON the partners are liable to PNB

RULING:
YES. The partnership was registered in the mercantile register
of the Province of Iloilo. The only anomaly was that instead of
adopting a firm name containing the names of the partners,
they agreed upon Tai Sing & Co. The anomalous adoption of a
firm name by the defendant partners cannot be set up buy
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 the Code of
Commerce.

Under the Code of Commerce, general partnerships also are

required to transact under the name of all its members, of
several of them, or only one. This is to protect the public from
fraud. Specifically, such provision is for the protection of the
creditors and not of the partners. Thus, the defendants cannot
invoke as defense the anomaly in the firm name.
 PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM
NAME
July 30, 1979
DOCTIRINE: Names in a firm name of a partnership must be
living partners.
FACTS: This case involves two consolidate petitions of two law
firms praying that they be allowed to continue using in their
firm names the names of deceased partners.
The petitioners have the following arguments:
1. A partnership is not prohibited from continuing its
business under a firm name which included the name
of a deceased partner under Art. 1840 the Civil Code
which provides that the continued use of the name of
a deceased partner does not make the individual
property of the deceased partner liable for any debts
contracted by such person on the partnership.
2. In regulating other professions, the legislature has
allowed the continued use of the name of the
deceased partner.
3. 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.
4. There is possibility of imposition or deception
because the deaths of their respective deceased
partners were well-publicized.
5. No local custom prohibits the continued use of a
deceased partner’s name in a professional firm’s
name.
6. The continued use of the names of a deceased
partners is consistently allowed by the US Courts.
saleable good will but whose reputation depends on the
personal qualifications of its individual member.
Next, a partnership for the practice of law cannot be likened to
partnerships formed by other professionals or for business. 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.
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. 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. Firm names, under our custom, Identify
the more active and/or more senior members or partners of the
law firm. A glimpse at the history of the firms of petitioners
and of other law firms in this country would show how their
firm names have evolved and changed from time to time as the
composition of the partnership changed.
Last, the US Courts allowed such practice because it was
sanctioned by customs.

ISSUE: WON the firms can retain the name of the deceased
partners in their firm name

RULING: NO. The use in their partnership name of the names

of deceased partners will run counter to Article 1815 of the
Civil Code which clearly implied that names in a firm name of
the partnership must either be those of living partners and in
case of non-partners, should be living persons who can be
subjected to liability.

The public relations value of the use of an old firm name can
tend to create undue advantages and disadvantages in the
practice of the profession. An able lawyer without connections
will have to make a name for himself starting from scratch.
Another able lawyer, who can join an old firm, can initially ride
on that old firm's reputation established by deceased partners.

Furthermore, Art. 1840 is not applicable. The said provision is

under the chapter on Dissolution and Winding Up. It
contemplates a hold-over situation preparatory to formal
reorganization. It also treats more of a commercial partnership
with a good will rather than a professional partnership with no
 PACIFIC COMMERCIAL COMPANY v. ABOITIZ & MARTINEZ,
ET AL
March 2, 1926
DOCTRINE: All members of a general partnership are liable
with all their property for the results of the duly authorized
transactions made in the name and for the account of the
partnership.
but which eventually may be realized upon and yield profits
more than sufficient to cover all losses. Bearing this in mind it
will be found that there in reality is no conflict between the
two articles quoted; one speaks of liabilities, the other of
losses.

FACTS: Arnaldo F. de Silva, Guillermo Aboitiz, Vidal Aboitiz and

Jose Martinez formed a regular collective mercantile
partnership. In the said partnership de Silva and the Aboitiz
were the capitalist partners while Martinez was an industrial
partner.

Later, Guillermo, as a representative of the partnership,

executed a promissory note in favor of Pacific Commercial
Company. It was secured by a chattel mortgage over certain
personal property.

The partnership failed to pay and the mortgage was

foreclosed. After applying the proceeds of the foreclosure of
the mortgage, there remained unpaid balances to which no
further payments were made. As a result, Pacific Commercial
Company filed a suit against the partnership and the trial court
ruled in favor of Pacific. The judgment provided that the e
xecution should first issue against the property of the
partnership. If the partnership is insolvent, it might issue
against the property of the partners De Silva and Aboitiz and in
the event of their insolvency, then against the property of the
industrial partner Jose Martinez.

Because of this judgment, Martinez filed an appeal arguing

that as a mere industrial partner, he cannot be held
responsible for the partnership’s debt.

ISSUE: WON Martinez can be held liable

RULING: YES. Pursuant to Art. 127 of the Code of Commerce,

all members of a general copartnership are liable with all their
property for the results of the duly authorized transactions
made in the name and for the account of the partnership.

Martinez cannot rely on Art. 141 of the Code of Commerce

which provides that losses shall be computed in the same
proportion among the capitalist partners without including the
industrial partners, unless by special agreement the latter have
been constituted as participants therein. This article relates
merely to the distribution of losses among the partners
themselves in the settlement of the partnership affairs and has
no reference to partnership obligations to third parties.

There is a marked distinction between a liability and a loss and

the inability of a partnership to pay a debt to a third party at a
particular time does not necessarily mean that the partnership
business as a whole, has been operated at a loss. The
partnership may have outstanding credits which for the
moment may have be unavailable for the payment of debts,
 ISLAND SALES, INC. v. UNITED PIONEERS GENERAL
CONSTRUCTION COMPANY, ET AL
July 31, 1975

DOCTRINE: All partners including industrial ones, shall be

liable pro rata with all their property and after all the
partnership assets have been exhausted, for the contracts
which may be entered into in the name and for the account of
the partnership, under its signature and by a person
authorized to act for the partnership. However, any partner
may enter into a separate obligation to perform a partnership
contract.

FACTS: United Pioneers General Construction Company

(respondent) was a general partnership. It brought a motor
vehicle from Island Sales, Inc. (partnership) and for this
purpose, it executed a promissory note payable in 12 monthly
installments and that the failure to pay any of said installments
would render the whole unpaid balance immediately due and
demandable.

United Pioneers failed to pay the installment due on July 1960.

As a result, Island Sales filed a suit against United Pioneers
including its partners as a defendant company.

The defendants failed to appear and so Island Sales was

allowed to present evidence ex parte. From this, the trial court
ruled in favor of Island Sales and held the partners as
subsidiarily liable in case of insolvency of the partnership.

The defendant partners moved to reconsider the said decision

arguing that since there were 5 general partners, each
partner’s liability should not exceed 1/5 of the obligation of the
partnership. The trial court denied the said motion. Hence, this
appeal.

ISSUE: WON the liability of each partner is limited to 1/5 of the

total obligation

RULING: YES. Art. 1816 provides that all partners including

industrial ones, shall be liable pro rata with all their property
and after all the partnership assets have been exhausted, for
the contracts which may be entered into in the name and for
the account of the partnership, under its signature and by a
person authorized to act for the partnership.

In the instant case, there were five (5) general partners when
the promissory note in question was executed for and in behalf
of the partnership. Since the liability of the partners is pro rata,
the liability of the appellant Benjamin C. Daco shall be limited
to only one-fifth (1/5 ) of the obligations of the defendant
company. The fact that the complaint against the defendant
Romulo B. Lumauig was dismissed, upon motion of the
plaintiff, does not unmake the said Lumauig as a general
partner in the defendant company. In so moving to dismiss the
complaint, the plaintiff merely condoned Lumauig's individual
liability to the plaintiff.
 ELMO MUNASQUE v. CA
November 11, 1985
DOCTRINE: While the liability of partners is merely joint in
transactions entered into by the partnership, the partners are
liable to third persons solidarily for the whole obligation if the
case involves loss or injury caused to any person not a partner
in the partnership and misapplication of money or property of
a third person received by a partner or the partnership.
FACTS: Elmo Munasque in behalf of the partnership of Galan
and Munasque entered into a written contract with Tropical
Commercial Co and Ramon Pons as branch manager of Tropical
for the remodeling a portion of its building. Under the contract,
the terms of payment were as follows: thirty percent (30%) of
the whole amount upon the signing of the contract and the
balance thereof divided into three equal installments at the
lute of Six Thousand Pesos (P6,000.00) every fifteen (15)
working days.
The first payment made by respondent Tropical was in the
form of a check for P7,000.00 in the name of Munasque.
However, Munasque indorsed the check in favor of
respondent Galan to enable the latter to deposit it in the bank
and pay for the materials and labor used in the project.
Tropical issued the second check in the name of Munasque
again. Galan asked Munasque to have the check indorsed to
him but the latter refused. Galan informed the Cebu branch of
Tropical that there was a "misunderstanding" between him
and petitioner, respondent Tropical changed the name of the
payee in the second check from Muñasque to "Galan and
Associates" which was the duly registered name of the
partnership between Galan and petitioner and under which
name a permit to do construction business was issued by the
mayor of Cebu City. This enabled Galan to encash the second
check.
The contraction continued through the sole efforts of
Munasque and he was able to finish the project. To recover the
amount he used, he filed a complaint against Galan, Tropical
and Pons. Under the said complaint, he alleged that Tropical
delivered the first check to Galan who was as stranger to his
contract with Tropical. He added that when the second check
was issued it was issued in his name until Pons succeeded in
changing it to Elmo Munasque and Associates allowing Galan
to encash the said check.
Cebu Southern Hardware Company and Blue Diamond Glass
Palace were allowed to intervene, both having legal interest in
the matter in litigation.
The trial court ruled Munasque and Galan to be solidarily liable
to Cebu Southern and Blue Diamond and absolved Tropical and
Pons. The CA affirmed the decision of the lower court with
modification ruling that Munasque and Galan were only jointly
liable and not solidarily liable.
ISSUE: WON Munasque and Galan are solidarily liable
RULING: YES. There is nothing in the records to indicate that
the partnership 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. If they were not partners as petitioner
claims, then he has only himself to blame for making the
relationship appear otherwise, not only to Tropical but to their
other creditors as well. The payments made to the partnership
were, therefore, valid payments.
Since the two were partners when the debts were incurred,
they, are also both liable to third persons who extended credit
to their partnership.
However, the CA erred in ruling that they were merely jointly
liable. While the liability of partners is merely joint in
transactions entered into by the partnership, the partners are
liable to third persons solidarily for the whole obligation if the
case involves loss or injury caused to any person not a partner
in the partnership and misapplication of money or property of
a third person received by a partner or the partnership.
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. This is even more true
in the cases of Cebu Southern Hardware and Blue Diamond
Glass Palace who supplied materials on credit to the
partnership. 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 Muñasque and Galan,
justice also dictates that Muñasque 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
Muñasque as a partner.
 LEONCIA VIUDA DE CHAN DIACO v. JOSE S. Y. PENG alleged partnership here in question may, if necessary, be
October 24, 1928 included in the case by amendments to the insolvency petition.

DOCTRINE: Where a partnership has no viable assets, the
partners individually must jointly and severally respond for its
debts.
FACTS: San Miguel Brewery, Porta Pueco & Co., and Ruiz &
Rementaria S. en C. instituted insolvency proceedings against
Leoncia Vda. de Chan Diaco (alias Lao Liong Naw), alleged to
be the owner of a grocery store on Calle Nueva, Binondo,
known as the store of "La Viuda de G. G. Chan Diaco. These
firms alleged that Leonci was indebted to them.
Lastly, evidence clearly shows that the business, alleged to
have been that of the partnership, was carried on under the
name "Leoncia Vda. de Chan Diaco" or "La Vda. de G. G. Chan
Diaco," both of which are names of the appellee, and we think
it can be safely held that a partnership may be adjudged
bankrupt in the name of an ostensible partner, when such
name is the name under which the partnership did business.

During the hearing for the declaration of insolvency, Leoncia

did not appear. The court declared her insolvent and ordered
the sheriff to take possession of her property, the visible part
of which at that time consisting of some merchandise,
afterwards sold at public auction for P3,300.

Later, the attorney of Leoncia filed a motion asking the court

to dismiss the proceedings against her on the ground that they
should have been brought against the partnership "Lao Liong
Naw & Co.," of which she was only a member. Thus, the judge
suspended its previous decisions and appointed Summers as a
referee.

After several hearings, Summers rendered a report finding that

the alleged partnership between the insolvent and some of her
relatives and employees was only a fictitious organization
created for the purpose of deceiving the Bureau of Customs
and enable some of the aforesaid relatives, who were mere
coolies, to come to the Philippines under the status of
merchants. Thus, Summers recommended the dismissal of the
motion to dismiss.

During the hearing for the report, Judge Del Rosario was
absent and it was Judge Zandueta who heard the case. He
dismissed the report of Summers and ordered the assignees to
return to the sheriff all the property of Leoncia. He added that
a new complaint may be filed against the partnership.

ISSUE: WON Judge Zandueta erred in his decision

RULING: YES. The evidence appearing in the record fully

supports the findings of the referee and his report should have
been approved by the court below.

Furthermore, conceding for the sake of the argument that the

debts in question were incurred by the alleged partnership, it
clearly appears from the record that said partnership, as such,
has no visible assets that, therefore, the partners individually
must, jointly and severally, respond for its debts. It is further
to be noted that both the partnership and the separate
partners thereof may be joined in the same action, though the
private property of the latter cannot be taken in payment of
the partnership debts until the common property of the
concern is exhausted. Under this rule, it seems clear that the
 J. TIOSEJO INVESTMENT CORP v. SPOUSES BENJAMIN AND or with the authority of his co-partners. Whether innocent or
ELEANOR ANG guilty, all the partners are solidarily liable with the partnership
September 8, 2010 itself.

DOCTRINE: Under Article 1824 of the Civil Code of the

Philippines, all partners are solidarily liable with the
partnership for everything chargeable to the partnership,
including loss or injury caused to a third person or penalties
incurred due to any wrongful act or omission of any partner
acting in the ordinary course of the business of the partnership
or with the authority of his co-partners. Whether innocent or
guilty, all the partners are solidarily liable with the partnership
itself.

FACTS: J. Tiosejo Investment Corp. entered into a joint venture

agreement with Primetown Property Group, Inc. (PPGI)
wherein Tiosejo would be contributing its property in
Mandaluyong while Primetown would develop the property
into a condominium called The Meditel. Under the agreement,
Tiosejo would have 17% of the developed units while PPGI
would have 83%. Both parties were allowed to presell the units
pertaining to them.

Later, PPGI entered into a Contract to Sell with the Spouses

Ang. Due to PPGI’s failure to complete the project within the
time it promised to the Spouses Ang, the spouses filed a
complaint for recission of the Contract to Sell against Tiosejo
and PPGI. before the HLURB. PPGI alleged that the delay was
caused by a force majeure, specifically, the economic crisis
which affected the Philippines. On the other hand, Tiosejo
argued that it was not a privy in the contract to sell; hence, the
action could not be maintained against it. The HLU Arbiter
ruled in favor of the spouses and ordered both Tiosejo and
PPGI to pay the spouses.

Tiosejo filed an appeal before the HLURB Board of

Commissioners which denied its appeal. It later filed a notice
of appeal before the Office of the President which denied its
appeal for being filed late. In the CA, the petition of Tiosejo was
also dismissed for being filed late. Hence, the petition before
the Supreme Court.

ISSUE: WON Tiosejo is also liable to the Spouses Ang

RULING: YES. By the express terms of the JVA, it appears that

petitioner not only retained ownership of the property
pending completion of the condominium project but had also
bound itself to answer liabilities proceeding from contracts
entered into by PPGI with third parties.

Moreover, a joint venture is considered in this jurisdiction as a

form of partnership and is, accordingly, governed by the law of
partnerships. Under Article 1824 of the Civil Code of the
Philippines, all partners are solidarily liable with the
partnership for everything chargeable to the partnership,
including loss or injury caused to a third person or penalties
incurred due to any wrongful act or omission of any partner
acting in the ordinary course of the business of the partnership
ANTONIO GOQUIOLAY and THE PARTNERSHIP “TAN SIN AN
and ANTONIO GOQUIOLAY” v. WASHINGTON SYCIP ET AL
December 10, 1963
DOCTRINE: By authorizing the widow of the managing partner
to manage partnership property, the other general partner
recognized her as a general partner, and is no in estoppel to
deny her position as a general partner, with authority to
administer and alienate partnership property.
FACTS: The matter pending before the Court is a motion for
reconsideration filed by Goquiolay regarding the previous
decision of the court that upheld the validity of the sale of the
lands owned by the partnership Goquiolay & Tan Sin An by the
widow of the managing partner.
Goquiolay alleged that Kong Chai Pin, who was the widow of
Tan Sin An, who in turn was the managing partner, never
became more than a limited partner, incapacitated by law to
manage the affairs of the partnership.
(Original Case: Goquiolay and Tan Sin An entered into a
partnership engaged in the buy and sell of real properties
wherein Tan Sin An was appointed as the managing partner.
Under the partnership, if one partner dies, the partnership
shall not be dissolved and the deceased partner shall be
represented by his heirs. The partnership bought 49 parcels of
land on credit. Tan Sin An died. The creditors of the partnership
filed their claims from the estate of Tan Sin An. His widow
asked authority from the probate court to sell the parcels of
land which was allowed by the court. Thus, Kong Chai Pin sold
the land to Washington Sycip and Betty Ang. Goquiolay now
questions the authority of Kong Chai Pin to sell the parcels of
land.)
ISSUE: WON Kong Chai Pin has the authority to sell the parcels
of land.
RULING: YES. Based on his testimonies, Goquiolay actually
manifested his willingness that the widow should manage the
partnership properties. The authority was given, and she did
have it when she made the questioned sale, because it has
never revoked.
The widow was not a mere agent, because she had become a
partner upon her husband's death, as expressly provided by
the articles of co-partnership. Even more, granting that by
succession to her husband, Tan Sin An, the widow only a
became the limited partner, Goquiolay's authorization to
manage the partnership property was proof that he
considered and recognized her has general partner, at least
since 1945.
The heir ordinarily becomes a limited partner for his own
protection, because he would normally prefer to avoid any
liability in excess of the value of the estate inherited so as not
to jeopardize his personal assets. But this statutory limitation
of responsibility being designed to protect the heir, the latter
may disregard it and instead elect to become a collective or
general partner, with all the rights and privileges of one, and
answering for the debts of the firm not only with the
inheritance bud also with the heir's personal fortune. This
choice pertains exclusively to the heir, and does not require
the assent of the surviving partner.
Furthermore, the Articles did not provide that the heirs of the
deceased would be merely limited partner; on the contrary
they expressly stipulated that in case of death of either partner
"the co-partnership ... will have to be continued" with the heirs
or assigns. It certainly could not be continued if it were to be
converted from a general partnership into a
limited partnership, since the difference between the two
kinds of associations is fundamental; and specially because the
conversion into a limited association would leave the heirs of
the deceased partner without a share in the management.
Hence, the contractual stipulation does actually contemplate
that the heirs would become general partners rather than
limited ones.
Aside from that, a third person may and has a right to presume
that the partner with whom he contracts has, in the ordinary
and natural course of business, the consent of his co-
partner; for otherwise he would not enter into the contract. In
this case, third parties (like the purchasers) who found the
widow possessing and managing the firm property with the
acquiescense (or at least without apparent opposition) of the
surviving partners were perfectly justified in assuming that she
had become a general partner, and, therefore, in negotiating
with her as such a partner, having authority to act for, and in
behalf of, the firm. This belief, be it noted, was shared even by
the probate court that approved the sale by the widow of the
real property standing in the partnership name. That belief was
fostered by the very inaction of appellant Goquiolay. Note that
for seven long years, from partner Tan Sin An's death in 1942
to the sale in 1949, there was more than ample time for
Goquiolay to take up the management of these properties, or
at least ascertain how its affairs stood.
Lastly, since the sale by the widow was in conformity with the
express objective of the partnership, "to engage * * * in buying
and selling real estate" (Art IV, No. 1, Articles of
Copartnership), it can not be maintained that the sale was
made in excess of her powers as general partner.
 SANTIAGO SYJUCO, INC. v. HON JOSE CASTRO, et al mortgage as it was taken from the American Uniform
July 7, 1989 Partnership Act.

DOCTRINE: Where the title to real property is in the names of
all partners, a conveyance executed by all partners passes all
their rights in such property.
FACTS: Eugenio Lim, in behalf of his deceased mother and his
brothers and sister, borrowed from Santiago Syjuco, Inc.
secured by a mortgage. Subsequently the Lims obtained
additional loans secured by the same mortgaged property. The
Lims failed to pay for the loans. As a result, Syjuco caused the
extrajudicial foreclosure of the mortgaged property. 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) in the Supreme Court.
Given the foregoing, there is thus no reason to distinguish
between the Lims, as individuals, and the partnership itself,
since the former constituted the entire membership of the
latter. In other words, despite the concealment of the
existence of the partnership, for all intents and purposes and
consistently with the Lims' own theory, it was that partnership
which was the real party in interest in all the actions; it was
actually represented in said actions by all the individual
members thereof, and 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.

Initially, the Lims argued that the contract of loan was void for
being usurious which the SC denied. When Syjuco continued
the foreclosure proceedings, the Lims and their lawyer, Atty.
Canlas, obtained two TROs. First, they filed a petition arguing
that the notice of foreclosure was not republished. Second,
Atty. Canlas argued that the mortgage was void because at the
time of the mortgage, the property was owned by the
partnership, Heirs of Hugo Lim. Hence, it cannot be mortgaged
by the Lims.

ISSUE: WON there was a valid mortgage

RULING: YES. The record shows that the respondent

partnership is composed exclusively of the individual Lims.
Their contribution to the partnership consisting chiefly, if not
solely, of the property subject of the Syjuco mortgage. the
property was never registered with the Register of Deeds in
the name of the partnership, but to this date remains
registered in the names of the Lims as owners in common. The
original mortgage deed of November 14,1964 was executed by
the Lims as such owners, as were all subsequent amendments
of the mortgage. There can be no dispute that in those
circumstances, the respondent partnership was chargeable
with knowledge of the mortgage from the moment of its
execution.

Therefore, 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 seventeen years, brought into play the doctrine of
estoppel to preclude any attempt to avoid the mortgage as
allegedly unauthorized.

Furthermore, pursuant to Art. 1819 of the Civil Code, it did not

matter whether or not the partnership is real party in interest.
Undert Art. 1819, where the title to real property is in the
names of all partners, a conveyance executed by all partners
passes all their rights in such property. Conveyance includes
 MANUEL SINGSONG v. ISABELA SAWMILL court because she purchased at public auction the properties
February 28, 1979 of the partnership which were mortgaged to her.

DOCTRINE: Partnership is dissolved but unliquidated
properties which were mortgaged, judicially foreclosed and
then sold at public auction to the partner who had withdrawn
still belong to partnership and the said properties as well as of
the withdrawn partners are answerable to liabilities of
partnership and to innocent third persons.
FACTS: The petitioners filed a complaint against Isabela
Sawmill, Margarita Saldajero and her husband, Leon Garibay
and Timoteo Tubungbanua. The complaint prayed for the
issuance of a writ of preliminary injunection from proceeding
with the sale at public auction and the chattel mortgage
executed by Garibay and Tubungbanua in favor of Saldajero be
declared null and void being in fraud of the creditors of the
defendant partnership, Isabela Sawmill.
Saldajero and her husband argued that the petitioners were
creditors of Garibay and Tubungbanua only and not the
defunct Isabela Sawmill. Hence, there was no cause of action
against them. Saldajero added that the claims totaled P2000
and therefore, not within the jurisdiction of the Court of First
Instance.
The CFI ruled in favor of the petitioners. On appeal, the CA
certified the records of the case to the SC considering that the
resolution of the appeal involves purely question of law over
which the CA has no jurisdiction.
ISSUE: WON Saldajero be held liable
It does not appear that the withdrawal of Margarita G.
Saldajeno from the partnership was published in the
newspapers. The appellees and the public in general had a
right to expect that whatever, credit they extended to Leon
Garibay and Timoteo Tubungbanua doing the business in the
name of the partnership "Isabela Sawmill" could be enforced
against the properties of said partnership. The judicial
foreclosure of the chattel mortgage executed in favor of
Margarita G. Saldajeno did not relieve her from liability to the
creditors of the partnership.
She is partly to blame for not insisting on the liquidation of the
assets of the partnership. She even agreed to let Leon Garibay
and Timoteo Tubungbanua continue doing the business of the
partnership "Isabela Sawmill" by entering into the
memorandum-agreement with them.
Although it may be presumed that Margarita G. Saldajeno had
action in good faith, the appellees also acted in good faith in
extending credit to the partnership. Where one of two
innocent persons must suffer, that person who gave occasion
for the damages to be caused must bear the consequences.
Had Margarita G. Saldajeno not entered into the
memorandum-agreement allowing Leon Garibay and Timoteo
Tubungbanua to continue doing the business of the
partnership, the appellee would not have been misled into
thinking that they were still dealing with the partnership
"Isabela Sawmill".

RULING:
YES. It is true that the dissolution of a partnership is caused by
any partner ceasing to be associated in the carrying on of the
business. However, on dissolution, the partnership is not
terminated but continuous until the winding up to the
business.

The remaining partners did not terminate the business of the

partnership "Isabela Sawmill". Instead of winding up the
business of the partnership, they continued the business still
in the name of said partnership. It is expressly stipulated in the
memorandum-agreement that the remaining partners had
constituted themselves as the partnership entity, the "Isabela
Sawmill".

There was no liquidation of the assets of the partnership. The

remaining partners, Leon Garibay and Timoteo Tubungbanua,
continued doing the business of the partnership in the name
of "Isabela Sawmill". They used the properties of said
partnership.

The properties mortgaged to Margarita G. Saldajeno by the

remaining partners, Leon Garibay and Timoteo Tubungbanua,
belonged to the partnership "Isabela Sawmill." The appellant,
Margarita G. Saldajeno, was correctly held liable by the trial
 PIONEER INSURANCE & SURETY CORPORATION v. CA
July 28, 1989
DOCTRINE: Persons who attempt but fail to form a corporation
and who carry on business under the corporate name occupy
the position of partners inter se. Such a relation does not
necessarily exist however for ordinarily persons cannot be
made to assume the relation of partners as between
themselves when their purpose is that no partnership shall
exist.
FACTS: Jacob Lim was engaged in the airline business as owner-
operator of Southern Air Lines, a single proprietorship. Lim
bought aircrafts and spare parts from Japan Domestic Airlines.
Pioneer Insurance executed a surety bond in favor of JDA.
cannot be made to assume the relation of partners as between
themselves when their purpose is that no partnership shall
exist.
In the instant case, it is to be noted that the petitioner was
declared non-suited for his failure to appear during the pretrial
despite notification. In his answer, the petitioner denied
having received any amount from respondents Bormaheco,
the Cervanteses and Maglana. The trial court and the appellate
court, however, found through Exhibit 58, that the petitioner
received the amount of P151,000.00 representing the
participation of Bormaheco and Atty. Constancio B. Maglana in
the ownership of the subject airplanes and spare parts. The
record shows that defendant Maglana gave P75,000.00 to
petitioner Jacob Lim thru the Cervanteses.

It appears that Bormaheco, the Cervanteses and Maglana
contributed some funds used in the above-mentioned
purchase. They executed 2 separate indemnity agreements in
favor of Pioneer. Lim, doing business under SAL, also executed
a deed of chattel mortgage in favor of Pioneer.
Lim defaulted on his payments to JDA. Pioneer paid for Lim.
Pioneer then filed a petition for extrajudicial foreclosure of
chattel mortgage over the two aircrafts. Bormaheco,
Cervanteses and Maglana filed a third-party claim alleging that
they co-owners of the aircrafts.
Pioneer filed an action for judicial foreclosure with an
application for a writ of preliminary attachment against Lim
and respondents, the Cervanteses, Bormaheco and Maglana.
In their Answers, Maglana, Bormaheco and the Cervanteses
filed cross-claims against Lim alleging that they were not
privies to the contracts signed by Lim and, by way of
counterclaim, sought for damages for being exposed to
litigation and for recovery of the sums of money they advanced
to Lim for the purchase of the aircrafts in question.
It is therefore clear that the petitioner never had the intention
to form a corporation with the respondents despite his
representations to them. This gives credence to the cross-
claims of the respondents to the effect that they were induced
and lured by the petitioner to make contributions to a
proposed corporation which was never formed because the
petitioner reneged on their agreement.
Applying therefore the principles of law earlier cited to the
facts of the case, necessarily, no de facto partnership was
created among the parties which would entitle the petitioner
to a reimbursement of the supposed losses of the proposed
corporation. The record shows that the petitioner was acting
on his own and not in behalf of his other would-be
incorporators in transacting the sale of the airplanes and spare
parts.

After trial on the merits, a decision was rendered holding Lim

liable to pay Pioneer but dismissed Pioneer's complaint against
all other defendants. The CA modified the decision of the lower
court ruling that plaintiff’s complaint against all the defendants
was dismissed.

Lim argues that as a result of the failure of respondents

Bormaheco, Spouses Cervantes, Constancio Maglana and
petitioner Lim to incorporate, a de facto partnership among
them was created, and that as a consequence of such
relationship all must share in the losses and/or gains of the
venture in proportion to their contribution.

ISSUE: WON a de facto partnership was created

RULING: NO. Persons who attempt but fail to form a

corporation and who carry on business under the corporate
name occupy the position of partners inter se. Such a relation
does not necessarily exist however for ordinarily persons