Antonio C. Goquilay, ET AL. vs. Washington Z. Sycip, ET AL.

GR NO. L-11840, December 10, 1963

FACTS:

Tan Sin An and Goquiolay entered into a general commercial

partnership under the partnership name Tan Sin An and
Antonio Goquiolay for the purpose of dealing in real estate.
The agreement lodged upon Tan Sin An the sole management of
the partnership affairs.
The lifetime of the partnership was fixed at ten years and the
Articles of Co-partnership stipulated that in the event of death
of any of the partners before the expiration of the term, the
partnership will not be dissolved but will be continued by the
heirs or assigns of the deceased partner. But the partnership
could be dissolved upon mutual agreement in writing of the
partners.
Goquiolay executed a GPA in favor of Tan Sin An. The plaintiff
partnership purchased 3 parcels of land which was mortgaged
to La Urbana as payment of P25,000. Another 46 parcels of
land were purchased by Tan Sin An in his individual capacity
which he assumed payment of a mortgage debt for P35K. A
downpayment and the amortization were advanced by Yutivo
and Co.
The two obligations were consolidated in an instrument
executed by the partnership and Tan Sin An, whereby the entire
49 lots were mortgaged in favor of Banco Hipotecario
Tan Sin An died leaving his widow, Kong Chai Pin and four minor
children. The widow subsequently became the administratrix of
the estate. Repeated demands were made by Banco Hipotecario
on the partnership and on Tan Sin An.
Kong Chai Pin filed a petition with the probate court for
authority to sell all the 49 parcels of land. She then sold it to
Sycip and Lee in consideration of P37K. Later, Sycip and Lee
executed in favor of Insular Development a deed of transfer
covering the 49 parcels of land.
When Goquiolay learned about the sale to Sycip and Lee, he
filed a petition in the intestate proceedings 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. Probate
court annulled the sale executed by the administratrix w/
respect to the 60% interest of Goquiolay over the properties.

ISSUE/S: Whether or not a widow or substitute can be a general

partner or only a limited partner.

Whether or not the consent of the other partner way necessary to

perfect the sale of the partnership properties.
HELD:
Kong Chai Pin became a mere general partner. By seeking authority
to manage partnership property, Tan Sin Ans widow showed that
she desired to be considered a general partner. By authorizing the
widow to manage partnership property (which a limited partner
could not be authorized to do), Goqulay recognized her as such
partner, and is now in estoppel to deny her position as a general
partner, with authority to administer and alienate partnership
property. The articles did not provide that the heirs of the deceased
would be merely limited partners; 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 assignees.
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
especially 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 actually
contemplated that the heirs would become general partners rather
than limited ones.
It is a well settled rule that third persons are not bound in entering
into a contract with any of the two partners, to ascertain whether or
not the partner with whom the transaction is made has the consent
of the other partner. The public need not make inquiries as to the
agreement had between the partners.
Soncuya v. de Luna G.R. No. L-45464, April 28, 1939, VillaReal, J.
Facts:
Petitioner filed a complaint against respondent for damages as a
result of the fraudulent administration of the partnership, Centro
Escolar de Senoritas of which petitioner and the deceased Avelino
Librada were members. For the purpose of adjudicating to plaintiff
damages which he alleges to have suffered as a partner, it is
necessary that a liquidation of the business be made that the end
profits and losses may be known and the causes of the latter and

the responsibility of the defendant as well as the damages in which

each partner may have suffered, maybe determined.

defendant Saldajeno, they continued the business of said

partnership under the same firm name "Isabela Sawmill".

Issue: Whether the petitioner is entitled to damages.

Ruling:

According to the Supreme Court the complaint is not sufficient to

constitute a cause of action on the part of the plaintiff as member
of the partnership to collect damages from defendant as managing
partner thereof, without previous liquidation. Thus, for a partner to
be able to claim from another partner who manages the general copartnership, allegedly suffered by him by reason of the fraudulent
administration of the latter, a previous liquidation of said
partnership is necessary.

The partnership became indebted to various creditors and the

Sheriff sold the assets of the partnership to Saldajeno and was
subsequently sold to a separate company.

Issue:
Whether or not Isabela Sawmill ceased to be a partnership and that
creditors could no longer demand payment.
Ruling:

Singsong v. Isabela Sawmill

G.R. No. L-27343. February 28, 1979

Facts:

On dissolution, the partnership is not terminated but continues until

the winding up of the business. It does not appear that the
withdrawal of S from the partnership was published in the
newspapers. The Apellees and the public had a right to expect the
public had a right to expect that whatever credit they extended to L
& T doing business in the name of the partnership could be
enforced against the partnership. The judicial foreclosure of the
chattel mortgage executed in the favor of S did not relieve her from
liability to the creditors of the partnership.

Defendants Leon Garibay, Margarita G. Saldejeno, and Timoteo

Tubungbanua had entered into a Contract of Partnership under
the firm name "Isabela Sawmill.

It may be presumed S acted in good faith, the apellees also acted

in good faith in extending credit to the partnership. Where one of
the two innocent persons must suffer, the person who gave
occasion for the damages to be caused must bear the
consequences.

Upn dissolution of the partnership, an "Assignment of Rights

with Chattel Mortgage" was executed.

Magdusa v. Albaran

5 SCRA 511

Facts:

Thereafter, the defendants Leon Garibay and Timoteo

Tubungbanua did not divide the assets and properties of the
"Isabela Sawmill" between them, despite the withdrawal of

Appellant and appellees, together with various other persons,

had verbally formed a partnership de facto, for the sale of
general merchandise in Surigao, Surigao, to which appellant
contributed P2,000 as capital, and the others contributed their
labor, under the condition that out of the net profits of the

business 25% would be added to the original capital, and the

remaining 75% would be divided among the members in
proportion to the length of service of each.
The appellees expressed their desire to withdraw from the
partnership, and appellant thereupon made a computation to
determine the value of the partners' shares to that date.
Appellees thereafter made demands upon appellant for
payment, but appellant having refused, they filed the initial
complaint in the court below.
Appellant defended by denying any partnership with appellees,
whom he claimed to be mere employees of his.
The CFI Bohol dismissed the complaint on the ground that the
others were indispensable parties but had not been impleaded.
On appeal, the CA reversed the decision, ruling that it is not an
action for dissolution of a partnership and winding up of its
affairs or liquidation of its assets in which the interest of other
partners who are not brought into the case may be affected.
The action of the plaintiffs is one for the recovery of a sum of
money with Gregorio Magdusa as the principal defendant. The
partnership, with GM as managing partner, was brought into the
case as an alternative defendant only.

liquidation of the partnership affairs is first had, the capital shares

of the appellees, as retiring partners, cannot be repaid, for the
firms outside creditors have preference over the assets of the
enterprise, and the firms property cannot be diminished to their
prejudice. Finally, the appellant cannot be held liable in his personal
capacity for the payment of partners& shares for he does not hold
them except as manager of, or trustee for, the partnership. It is the
latter that must refund their shares to the retiring partners. Since
not all the members of the partnership have been impleaded, no
judgment for refund can be rendered.

Bonnevie vs. Hernandez

Facts:

Issue:
Whether or not appellees & action can be entertained, because in
the distribution of all or part of a partnerships assets, all the
partners have no interest and are indispensable parties without
whose intervention no decree of distribution can be validly entered.

Ruling:
It cannot be entertained. A partners share cannot be returned
without first dissolving and liquidating the partnership, for the
return is dependent on the discharge of the creditors, whose claims
preference over those of the partners and it is self-evident that all
members of the partnership are interested in his assets and
business, and are entitled to be heard in the matter of the firms
liquidation and the distribution of its property. The liquidation drawn
by appellant is not signed by the other members of the partnership
besides appellees and appellant; it does not appear that they have
approved, authorized, or ratified the same, and, therefore, it is not
binding upon them. At the very least, they are entitled to be heard
upon its correctness. In addition, unless a proper accounting and

Plaintiffs with other associates formed a syndicate or secret

partnership for the purpose of acquiring the plants, franchises
and other properties of the Manila Electric Co. hereinafter
called the Meralco.
No formal articles were drawn for it was the purpose of the
members to incorporate once the deal had been consummated.
Negotiation for the purchase was commenced, but as it made
no headway, defendant was taken in as a member of the
partnership so that he could push the deal through, and to that
end he was given the necessary power of attorney.
Using partnership funds, defendant was able to buy the Meralco
properties.
Although defendant was the one named vendee in the deed of
sale, there is no question that the transaction was in penalty
made for the partnership so that the latter assumed control of
the business the day following the sale.
About the latter half of the following month the members of the
partnership proceeded with the formation of the proposed
corporation, apportioning among themselves its shares of stock
in proportion to their respective contributions to the capital of
the partnership and their individual efforts in bringing about the
acquisition of the Meralco properties.
But before the incorporation, judge Reyes and the plaintiffs
withdrew from the partnership for the reason that the business
was not going well, and, as admitted by both parties, the
partnership was then dissolved. In accordance with the terms of
the resolution, the withdrawing partners.

Following the dissolution of the partnership, the members who

preferred to remain in the business went ahead with the
formation of the corporation, taking in new associates as
stockholders.
And defendant, on his part, in fulfillment of his trust, made a
formal assignment of the Meralco properties to the treasurer of
the corporation, giving them a book value of P365,000, in return
for which the corporation issued, to the various subscribers to
its capital stock, shares of stock of the total face value of
P225,000 and assumed the obligation of paying what was still
due the Meralco on the purchase price.
Two years from their withdrawal from the partnership, when the
corporate business was already in a prosperous condition,
plaintiffs brought the present suit against Jaime Hernandez,
claiming a share in the profit the latter is supposed to have
made from the assignment of the Meralco properties to the
corporation, estimated by plaintiffs to be P225,000 and their
share of it to be P115,312.50.
Defendant's answer denies that he has made any profit out of
the assignment in question and alleges that in any event
plaintiffs, after their withdrawal from the partnership, ceased to
have any further interest in the subsequent transactions of the
remaining members.
Issues:
1. WON the partnership had realized profit out of the Meralco
properties made by the defendant to the corporation. No.
2. If there was indeed a profit, WON the plaintiffs are entitled for
their share out of such profit. No.
Ruling:
1. No. the profit alleged to have been realized from the
assignment of the Meralco properties to the new corporation,
the Bicol Electric Company, is more apparent than real. It is true
that the value set for those properties in the deed of
assignment was P365,000 when the acquisition price was only
P122,000. But one should not jump to the conclusion that a
profit, consisting of the difference between the two sums was
really made out of the transaction, for the assignment was not
made for cash but in payment for subscriptions to shares of
stock in the assignee, and while those shares had a total face
value of P225,000, this is not necessarily their real worth.

2. No. Assuming that the assignment actually brought profit to

the partnership, it is hard to see how defendant could be made
to answer for plaintiffs' alleged share thereof. In the case at bar,
the defendant did not receive the consideration for the
assignment for, as already stated, the assignment was made in
payment for subscriptions of various persons to the capital
stock of the new corporation. Plaintiffs, in order to give color of
legality to their claim against defendant, maintain that the
latter should be held liable for damages caused to them,
consisting of the loss of their share of the profits, due to
defendant's failure properly to perform his duty as a liquidator
of the dissolved partnership, this on the theory that as
managing partner of the partnership, it was defendant's duty to
liquidate its affairs upon its dissolutions. However, it does not
appear that plaintiffs have ever asked for liquidation, and as will
presently be explained no liquidation was called for because
when
plaintiffs
withdrew
from
the
partnership
the
understanding was that after they had been reimbursed their
investment, they were no longer to have any further interest in
the partnership or its assets and liabilities. As a general rule,
when a partner retires from the firm, he is entitled to the
payment of what may be due him after liquidation. But certainly
no liquidation is necessary where there is already a settlement
or an agreement as to what the retiring partner shall receive. In
the instant case, it appears that a settlement was agreed upon
on the very day the partnership was dissolved. For when
plaintiffs and Judge Jaime Reyes withdrew from the partnership
on that day they did so as agreed to by all the partners, subject
to the only condition that they were to be repaid their
contributions or investments within three days from said date.
And this condition was fulfilled when on the following day they
were reimbursed the respective amounts due them pursuant to
the agreement. The SC therefore, found that, the acceptance by
the withdrawing partners, including the plaintiffs, of their
investment in the instant case was understood and intended by
all the parties as a final settlement of whatever rights or claim
the withdrawing partners might have in the dissolved
partnership. Such being the case they are now precluded from
claiming any share in the alleged profits, should there be any,
at the time of the dissolution.

Ornum v. Lasala 74 Phil 242

Facts:

Is the respondent entitled to a further liquidation?

Ornum submitted a statement of accounts to respondents, his
copartner. Instead of objecting to said statement, respondent
Lasala promised to sign the same as soon as he received his
shares as shown in said statement. After said shares had been
paid by Ornum and accepted by respondents without
reservation, the latter refused to sign the statement. Lasala
demanded a new liquidation, claiming that he was entitled to
more than what the statement of account shows.
Issue:

Held:
No. After accepting his shares without any reservation,
respondent virtually confirmed his approval of the statement of
accounts, and its signing thereby became a mere formality to
be complied with by Lasala exclusively. His refusal to sign, after
receiving the shares, amounted to a waiver of that formality in
favor of Ornum who had already performed his obligation. This
approval precludes any right on the part of respondent to a
further liquidation, unless he can show there was fraud or
mistake in said approval.