partnership 9.28

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G.R. No. L-12164 May 22, 1959

BENITO LIWANAG and MARIA LIWANAG REYES, petitioners-appellants,vs.WORKMEN'S OM!ENSATION OMMISSION, ET AL., respondents-appellees.

J. de Guia for appellants.Estanislao R. Bayot for appellees.

EN"ENIA, J .#

Appellants Benito Liwanag and Maria Liwanag Reyes are co-owners of Liwanag Auto Supply, acommercial guard who while in line of duty, was skilled y criminal hands. !is widow "iriaca#da. de Balderama and minor children $enara, "arlos and Leogardo, all surnamed Balderama,in due time filed a claim for compensation with the %orkmen&s "ompensation "ommission,which was granted in an award worded as follows'

%!(R()*R(, the order of the referee under consideration should e, as it is herey,affirmed and respondents Benito Liwanag and Maria Liwanag Reyes, ordered.

+. o pay jointly and severally the amount of three thousand )our !undred inety )our and/0+// 123,4./5 2esos to the claimants in lump sum6 and

o pay to the %orkmen&s "ompensation )unds the sum of 2.// 1including 27.// for thisreview5 as fees, pursuant to Section 77 of the Act.

8n appealing the case to this riunal, appellants do not 9uestion the right of appellees tocompensation nor the amount awarded. hey only claim that, under the %orkmen&s"ompensation Act, the compensation is divisile, hence the commission erred in ordering

appellants to pay jointly and severally the amount awarded. hey argue that there is nothing inthe compensation Act which provides that the oligation of an employer arising fromcompensale in:ury or death of an employee should e solidary oligation, the same shouldhave een specifically provided, and that, in asence of such clear provision, the responsiilityof appellants should not e solidary ut merely :oint.

At first lush appellants& contention would seem to e well, for ordinarily, the liaility of thepartners in a partnership is not solidary6 ut the law governing the liaility of partners is notapplicale to the case at ar wherein a claim for compensation y dependents of an employeewho died in line of duty is involved. And although the %orkmen&s "ompensation Act does notcontain any provision e;pressly declaring solidary oligation of usiness partners like the hereinappellants, there are other provisions of law from which it could e gathered that their liaility

must e solidary. Arts. +<++ and +<+= of the new "ivil "ode provide'

AR. +<++. *wners of enterprises and other employers are oliged to pay compensation forthe death of or in:uries to their laorers, workmen, mechanics or other employees, eventhough the event may have een purely accidental or entirely due to a fortuitous cause, if thedeath or personal in:ury arose out of and in the course of the employment. . . . .

AR. +<+=. 8f the death or in:ury is due to the negligence of a fellow-worker, the latter and theemployer shall e solidarily liale for compensation. . . . .



And section = of the %orkmen&s "ompensation Act, as amended reads in part as follows'

. . . he right to compensation as provided in this Act shall not be defeated or impaired on theground that the death, in:ury or disease was due to the negligence of a fellow servant oremployee, without pre:udice to the right of the employer to proceed against the negligenceparty.

he provisions of the new "ivil "ode aove 9uoted taken together with those of Section = of the%orkmen&s "ompensation Act, reasonaly indicate that in compensation cases, the liaility ofusiness partners, like appellants, should e solidary6 otherwise, the right of the employee maye defeated, or at least crippled. 8f the responsiility of appellants were to e merely :oint andsolidary, and one of them happens to e insolvent, the amount awarded to the appellees wouldonly e partially satisfied, which is evidently contrary to the intent and purposes of the Act. 8n theprevious cases we have already held that the %orkmen&s "ompensation Act should econstrued fairly, reasonaly and lierally in favor of and for the enefit of the employee and hisdependents6 that all douts as to the right of compensation resolved in his favor6 and that itshould e interpreted to promote its purpose. Accordingly, the present controversy should edecided in favor of the appellees.

Moreover, Art. +=/< of the new "ivil "ode provides'

. . . . here is solidary liability only when the oligation e;pressly so states, or when the lawor the nature of the obligation requires solidarity.

Since the %orkmen&s "ompensation Act was enacted to give full protection to the employee,reason demands that the nature of the oligation of the employers to pay compensation to theheirs of their employee who died in line of duty, should e solidary6 otherwise, the purpose ofthe law could not e attained.

%herefore, finding no error in the award appealed from, the same is herey affirmed, with costsagainst appellants.

Paras, C. J., Bengon, Padilla, !ontemayor, Bautista "ngelo, #abrador, and Con$ep$ion,JJ., concur.

S$%a&a$ O%(n(on)

REYES, A., J., dissenting'

%hether the defendants herein e regarded as co-partners or as mere co-owners, their liailityfor the indemnity due their deceased employee would not e solidary ut only pro rata 1Arts.>7 and +>+7, new "ivil "ode5. he %orkmen&s "ompensation Act does not change the natureof that liaility either e;pressly or y intendment. o hold that it does, is to read into the Actsomething that is not there. )or this "ourt, therefore, to declare that under the said Act thedefendants herein are liale solidarily is to play the role of legislator.



he in:ustice of the rule sought to e estalished in the ma:ority opinion may readily e madeovious with an e;ample. Suppose that one of two co-partners or co-owners owns 44 percent of the usiness while his co-partner or co-owners own only + percent. o hold that in such case thelatter&s liaility may run up to +// percent although his interest is only + percent would not onlye illogical ut also ine9uitale.

)or the foregoing reasons, 8 have no choice ut to dissent.

G.R. No. L-*9+ No$/0$& 11, 195

ELMO MAS3E, petitioner,vs.ORT O A!!EALS,ELESTINO GALAN TRO!IAL OMMERIAL OM!ANY and RAMON!ONS,respondents.

John %. Borromeo for petitioner.

Juan &. "stete for respondent C. Galan.

Paul Gornes for respondent R. Pons.

'iu !onte$illo for respondent %ropi$al.

Paterno P. (atinga for )ntervenor Blue &iamond Glass Pala$e.

GTTIERRE, R., J.:

8n this petition for certiorari, the petitioner seeks to annul and set added the decision of the "ourt of Appeals affirming the e;istence of a partnership etween petitioner and one of the respondents,"elestino $alan and holding oth of them liale to the two intervenors which e;tended credit to theirpartnership. he petitioner wants to e e;cluded from the liailities of the partnership.

2etitioner (lmo Mu?as9ue filed a complaint for payment of sum of money and damages againstrespondents "elestino $alan, ropical "ommercial, "o., 8nc. 1ropical5 and Ramon 2ons, allegingthat the petitioner entered into a contract with respondent ropical through its "eu Branch Manager 2ons for remodelling a portion of its uilding without e;changing or e;pecting any consideration from$alan although the latter was casually named as partner in the contract6 that y virtue of his havingintroduced the petitioner to the employing company 1ropical5. $alan would receive some kind ofcompensation in the form of some percentages or commission6 that ropical, under the terms of thecontract, agreed to give petitioner the amount of 2<,///.// soon after the construction egan andthereafter, the amount of 2@,///.// every fifteen 1+75 days during the construction to make a totalsum of 2=7,///.//6 that on anuary 4, +4@<, ropical and0or 2ons delivered a check for 2<,///.//not to the plaintiff ut to a stranger to the contract, $alan, who succeeded in getting petitioner&sindorsement on the same check persuading the latter that the same e deposited in a :oint account6that on anuary =@, +4@< when the second check for 2@,///.// was due, petitioner refused to



indorse said cheek presented to him y $alan ut through later manipulations, respondent 2onssucceeded in changing the payee&s name from (lmo Mu?as9ue to $alan and Associates, thusenaling $alan to cash the same at the "eu Branch of the 2hilippine "ommercial and 8ndustrialBank 12"8B5 placing the petitioner in great financial difficulty in his construction usiness andsu:ecting him to demands of creditors to pay& for construction materials, the payment of whichshould have een made from the 2+3,///.// received y $alan6 that petitioner undertook the

construction at his own e;pense completing it prior to the March +@, +4@< deadline6that ecause ofthe unauthoried disursement y respondents ropical and 2ons of the sum of 2+3,///.// to$alan petitioner demanded that said amount e paid to him y respondents under the terms of thewritten contract etween the petitioner and respondent company.

he respondents answered the complaint y denying some and admitting some of the materialaverments and setting up counterclaims.

Curing the pre-trial conference, the petitioners and respondents agreed that the issues to eresolved are'

1+5 %hether or not there e;isted a partners etween "elestino $alan and (lmo

Mu?as9ue6 and

1=5 %hether or not there e;isted a :ustifiale cause on the part of respondent ropicalto disurse money to respondent $alan.

he usiness firms "eu Southern !ardware "ompany and Blue Ciamond $lass 2alace wereallowed to intervene, oth having legal interest in the matter in litigation.

After trial, the court rendered :udgment, the dispositive portion of which states'

8 #8(% %!(R(*), udgment is herey rendered'

1+5 ordering plaintiff Mu?as9ue and defendant $alan to pay :ointly and severally theintervenors "eu and Southern !ardware "ompany and Blue Ciamond $lass2alace the amount of 2@,==4.3 and 2=,=+3.7+, respectively6

1=5 asolving the defendants ropical "ommercial "ompany and Ramon 2ons fromany liaility,

o damages awarded whatsoever.

he petitioner and intervenor "eu Southern "ompany and its proprietor, an Siu filed motions forreconsideration.

*n anuary +7, +4< +, the trial court issued &another order amending its :udgment to make it read asfollows'

8 #8(% %!(R(*), udgment is herey rendered'

1+5 ordering plaintiff Mu?as9ue and defendant $alan to pay :ointly and severally theintervenors "eu Southern !ardware "ompany and Blue Ciamond $lass 2alace theamount of 2@,==4.3 and 2=,=+3.7+, respectively,



1=5 ordering plaintiff and defendant $alan to pay 8ntervenor "eu Southern !ardware"ompany and an Siu :ointly and severally interest at +=D per annum of the sum of2@,==4.3 until the amount is fully paid6

135 ordering plaintiff and defendant $alan to pay 27//.// representing attorney&sfees :ointly and severally to 8ntervenor "eu Southern !ardware "ompany'

15 asolving the defendants ropical "ommercial "ompany and Ramon 2ons fromany liaility,

o damages awarded whatsoever.

*n appeal, the "ourt of Appeals affirmed the :udgment of the trial court with the sole modificationthat the liaility imposed in the dispositive part of the decision on the credit of "eu Southern!ardware and Blue Ciamond $lass 2alace was changed from E:ointly and severallyE to E:ointly.E

ot satisfied, Mr. Mu?as9ue filed this petition.

he present controversy egan when petitioner Mu?as9ue in ehalf of the partnership of E$alan andMu?as9ueE as "ontractor entered into a written contract with respondent ropical for remodelling therespondent&s "eu ranch uilding. A total amount of 2=7,///.// was to e paid under the contractfor the entire services of the "ontractor. he terms of payment were as follows' thirty percent 13/D5of the whole amount upon the signing of the contract and the alance thereof divided into threee9ual installments at the lute of Si; housand 2esos 12@,///.//5 every fifteen 1+75 working days.

he first payment made y respondent ropical was in the form of a check for 2<,///.// in thename of the petitioner.2etitioner, however, indorsed the check in favor of respondent $alan toenale the latter to deposit it in the ank and pay for the materials and laor used in the pro:ect.

2etitioner alleged that $alan spent 2@,+>3.3< out of the 2<,///.// for his personal use so that when

the second check in the amount of 2@,///.// came and $alan asked the petitioner to indorse itagain, the petitioner refused.

he check was withheld from the petitioner. Since $alan informed the "eu ranch of ropical thatthere was aEmisunderstandingE etween him and petitioner, respondent ropical changed the nameof the payee in the second check from Mu?as9ue to E$alan and AssociatesE which was the dulyregistered name of the partnership etween $alan and petitioner and under which name a permit todo construction usiness was issued y the mayor of "eu "ity. his enaled $alan to encash thesecond check.

Meanwhile, as alleged y the petitioner, the construction continued through his sole efforts. !estated that he orrowed some 2+=,///.// from his friend, Mr. (spina and although the e;penses

had reached the amount of 2=4,///.// ecause of the failure of $alan to pay what was partly duethe laorers and partly due for the materials, the construction work was finished ahead of schedulewith the total e;penditure reaching 23,///.//.

he two remaining checks, each in the amount of 2@,///.//,were suse9uently given to thepetitioner alone with the last check eing given pursuant to a court order.

As stated earlier, the petitioner filed a complaint for payment of sum of money and damages againstthe respondents,seeking to recover the following' the amounts covered y the first and second



checks which fell into the hands of respondent $alan, the additional e;penses that the petitionerincurred in the construction, moral and e;emplary damages, and attorney&s fees.

Both the trial and appellate courts not only asolved respondents ropical and its "eu Manager,2ons, from any liaility ut they also held the petitioner together with respondent $alan, hale to theintervenors "eu Southern !ardware "ompany and Blue Ciamond $lass 2alace for the credit which

the intervenors e;tended to the partnership of petitioner and $alan

8n this petition the legal 9uestions raised y the petitioner are as follows' 1+5 %hether or not theappellate court erred in holding that a partnership e;isted etween petitioner and respondent $alan.1=5 Assuming that there was such a partnership, whether or not the court erred in not finding $alanguilty of malversing the 2+3,///.// covered y the first and second checks and therefore,accountale to the petitioner for the said amount6 and 135 %hether or not the court committed graveause of discretion in holding that the payment made y ropical through its manager 2ons to $alanwas Egood payment, E

2etitioner contends that the appellate court erred in holding that he and respondent $alan werepartners, the truth eing that $alan was a sham and a perfidious partner who misappropriated the

amount of 2+3,///.// due to the petitioner.2etitioner also contends that the appellate courtcommitted grave ause of discretion in holding that the payment made y ropical to $alan wasEgoodE payment when the same gave occasion for the latter to misappropriate the proceeds of suchpayment.

he contentions are without merit.

he records will show that the petitioner entered into a con-tract with ropical for the renovation ofthe latter&s uilding on ehalf of the partnership of E$alan and Mu?as9ue.E his is readily seen in thefirst paragraph of the contract where it states'

his agreement made this =/th day of Cecemer in the year +4@@ y $alan and

Mu?as9ue hereinafter called the "ontractor, and ropical "ommercial "o., 8nc.,hereinafter called the owner do herey for and in consideration agree on thefollowing' ... .

here is nothing in the records to indicate that the partner-ship organied y the two men was not agenuine one. 8f there was a falling out or misunderstanding etween the partners, such does notconvert the partnership into a sham organiation.

Likewise, when Mu?as9ue received the first payment of ropical in the amount of 2<,///.// with acheck made out in his name, he indorsed the check in favor of $alan. Respondent ropicaltherefore, had every right to presume that the petitioner and $alan were true partners. 8f they werenot partners as petitioner claims, then he has only himself to lame for making the relationshipappear otherwise, not only to ropical ut to their other creditors as well. he payments made to the

partnership were, therefore, valid payments.

8n the case of *ingsong v. )sabela *a+mill 1>> S"RA @35,we ruled'

Although it may e presumed that Margarita $. Salda:eno had acted in good faith,the appellees also acted in good faith in e;tending credit to the partnership. %hereone of two innocent persons must suffer, that person who gave occasion for thedamages to e caused must ear the conse9uences.



o error was committed y the appellate court in holding that the payment made y ropical to$alan was a good payment which inds oth $alan and the petitioner. Since the two were partnerswhen the dets were incurred, they, are also oth liale to third persons who e;tended credit to theirpartnership. 8n the case of George #itton v. ill and Ceron, et al , 1@< 2hil. 7+3, 7+5, we ruled'

here is a general presumption that each individual partner is an authoried agent for

the firm and that he has authority to ind the firm in carrying on the partnershiptransactions. 1Mills vs. Riggle,++= 2an, @+<5.

he presumption is sufficient to permit third persons to hold the firm liale ontransactions entered into y one of memers of the firm acting apparently in itsehalf and within the scope of his authority. 1Le Roy vs. ohnson, < F.S. 1Law. ed.5,34+.5

2etitioner also maintains that the appellate court committed grave ause of discretion in not holding$alan liale for the amounts which he EmalversedE to the pre:udice of the petitioner. !e adds thatalthough this was not one of the issues agreed upon y the parties during the pretrial, he,nevertheless, alleged the same in his amended complaint which was, duly admitted y the court.

%hen the petitioner amended his complaint, it was only for the purpose of impleading Ramon 2onsin his personal capacity. Although the petitioner made allegations as to the alleged malversations of$alan, these were the same allegations in his original complaint. he malversation y one partnerwas not an issue actually raised in the amended complaint ut the alleged connivance of 2ons with$alan as a means to serve the latter&s personal purposes.

he petitioner, therefore, should e ound y the delimitation of the issues during the pre-trialecause he himself agreed to the same. 8n Permanent Con$rete Produ$ts, )n$. v. %eodoro, 1=@S"RA 33@5, we ruled'

;;; ;;; ;;;

... he appellant is ound y the delimitation of the issues contained in the trialcourt&s order issued on the very day the pre-trial conference was held. Such an order controls the suse9uent course of the action, unless modified efore trial to preventmanifest in:ustice.8n the case at ar, modification of the pre-trial order was neversought at the instance of any party.

2etitioner could have asked at least for a modification of the issues if he really wanted to include thedetermination of $alan&s personal liaility to their partnership ut he chose not to do so, as hevehemently denied the e;istence of the partnership. At any rate, the issue raised in this petition isthe contention of Mu?as9ue that the amounts payale to the intervenors should e shoulderede;clusively y $alan. %e note that the petitioner is not solely urdened y the oligations of theirillstarred partnership. he records show that there is an e;isting :udgment against respondent $alan,

holding him liale for the total amount of 2<,///.// in favor of (den !ardware which e;tended creditto the partnership aside from the 2=, ///. // he already paid to Fniversal Lumer.

%e, however, take e;ception to the ruling of the appellate court that the trial court&s orderingpetitioner and $alan to pay the credits of Blue Ciamond and "eu Southern !ardwareE:ointly andseverallyE is plain error since the liaility of partners under the law to third persons for contractse;ecuted inconnection with partnership usiness is only pro rata under Art. +>+@, of the "ivil "ode.



%hile it is true that under Article +>+@ of the "ivil "ode,EAll partners, including industrial ones, shalle liale prorate with all their property and after all the partnership assets have een e;hausted, forthe contracts which may e entered into the name and fm the account cd the partnership, under itssignature and y a person authoried to act for the partner-ship. ...E. this provision should econstrued together with Article +>= which provides that' EAll partners are liale solidarily with thepartnership for everything chargeale to the partnership under Articles +>== and +>=3.E 8n short,

while the liaility of the partners are merely :oint in transactions entered into y the partnership, athird person who transacted with said partnership can hold the partners solidarily liale for the wholeoligation if the case of the third person falls under Articles +>== or +>=3.

Articles +>== and +>=3 of the "ivil "ode provide'

Art. +>==. %here, y any wrongful act or omission of any partner acting in theordinary course of the usiness of the partner-ship or with the authority of his co-partners, loss or in:ury is caused to any person, not eing a partner in the partnershipor any penalty is incurred, the partnership is liale therefor to the same e;tent as thepartner so acting or omitting to act.

Art. +>=3. he partnership is ound to make good'

1+5 %here one partner acting within the scope of his apparent authority receivesmoney or property of a third person and misapplies it6 and

1=5 %here the partnership in the course of its usiness receives money or property of a third person and t he money or property so received is misapplied y any partnerwhile it is in the custody of the partnership.

he oligation is solidary, ecause the law protects him, who in good faith relied upon the authorityof a partner, whether such authority is real or apparent. hat is why under Article +>= of the "ivil"ode all partners, whether innocent or guilty, as well as the legal entity which is the partnership, are

solidarily liale.

8n the case at ar the respondent ropical had every reason to elieve that a partnership e;istedetween the petitioner and $alan and no fault or error can e imputed against it for makingpayments to E$alan and AssociatesE and delivering the same to $alan ecause as far as it wasconcerned, $alan was a true partner with real authority to transact on ehalf of the partnership withwhich it was dealing. his is even more true in the cases of "eu Southern !ardware and BlueCiamond $lass 2alace who supplied materials on credit to the partnership. hus, it is ut fair that theconse9uences of any wrongful act committed y any of the partners therein should e answeredsolidarily y all the partners and the partnership as a whole

!owever. as etween the partners Mu?as9ue and $alan,:ustice also dictates that Mu?as9ue ereimursed y $alan for the payments made y the former representing the liaility of their

partnership to herein intervenors, as it was satisfactorily estalished that $alan acted in ad faith inhis dealings with Mu?as9ue as a partner.

%!(R()*R(, the decision appealed from is herey A))8RM(C with the M*C8)8"A8* that theliaility of petitioner and respondent $alan to intervenors Blue Ciamond $lass and "eu Southern!ardware is declared to e :oint and solidary. 2etitioner may recover from respondent $alan anyamount that he pays, in his capacity as a partner, to the aove intervenors,



S* *RC(R(C.

Elmo Muñasque vs CA

Facts:Elmo Muñasque, in behalf of “Galan and Muñasque” partnership as Contractor,

entered into a written contract with Tropical Commercial Co, throu!h its branchmana!er "amon #ons, for remodellin! of Tropical$s buildin! in Cebu Theconsideration for the entire ser%ices is #&',((( to be paid: )(* upon si!nin! of contract, and balance on ) equal instalments of #+,((( e%er -'wor.in! das

First pament of chec. worth #/,((( was paable to Muñasque, who indorsed it toGalan for purposes of depositin! the amount and pain! the materials alread used0ut since Galan alle!edl misappropriated #+,-1))/ of the chec. for personal use,Muñasque refused to indorse the second chec. worth #+,((( Galan then informed

Tropical of the “misunderstandin!” between him and Muñasque and this prompted Tropical to chan!e the paee of the second chec. from Muñasque to “Galan and2ssociates” 3the dul re!istered name of Galan and Muñasque partnership4

5espite the misappropriation, Muñasque alone was able to 6nish the pro7ect Thetwo remainin! chec.s were properl issued to Muñasque

Muñasque 6led a complaint for pament of sum of mone plus dama!es a!ainstGalan, Tropical and #ons for the amount co%ered b the 6rst and second chec.sCebu 8outhern 9ardware Co and 0lue 5iamond Glass #alace were allowed asinter%enors ha%in! le!al interest claimin! a!ainst Muñasue and Galan for materialsused

TC: Muñasque and #ons 7ointl and se%erall liable to inter%enors Tropical and #ons absol%ed

C2 a;rmed with modi6cation: Muñasque and #ons 7ointl liable to inter%enors

<ssue:- =>? Muñasque and Galan are partners@& =>? pament made b Tropical to Galan was “!ood pament”@) =>? Galan should shoulder eAclusi%el the amounts paable to the

inter%enors 3!rantin! he misappropriated the amount from the two chec.s4@

9eld:esesnoB

- E8 Tropical had e%er ri!ht to presume the eAistence of the partnership:a Contract states that a!reement was entered into b “Galan and

Muñasque”b The 6rst chec. issue in the name of Muñasque was indorsed to Galan

The relationship was made to appear as a partnership



& E8 Muñasque and Galan were partners when the debts to the inter%enorswere incurred, hence, the are also liable to third persons who eAtendedcredit to their partnership

There is a !eneral presumption that each indi%idual partner is an authoriDeda!ent for the 6rm and that he has authorit to bind the 6rm in carrin! on the

partnership transactions The presumption is su;cient to permit thirdpersons to hold the 6rm liable on transactions entered into b one of themembers of the 6rm actin! apparentl in its behalf and within the scope of his authorit

) ? 2rticle -1-+ 0T construed to!ether with 2rticle -1&

2rt -1-+ “2ll partners, includin! industrial ones, shall be liable pro rata A A Afor the contracts which ma be entered into the name and for the account of the partnership, under its si!nature and b a person authoriDed A A A”

2rt -1& “2ll partners are liable solidaril with the partnership for e%erthin!

char!eable to the partnership under 2rticles -1&& and -1&)”

2rt -1&& “=here, b an wron!ful act or omission of an partner actin! inthe ordinar course of the business A A A or with the authorit of his copartners, loss or in7ur is caused to an person A A A”

2rt -1&) “The partnership is bound to ma.e !ood the loss:

3-4 =here one partner actin! within the scope of his apparent authoritrecei%es mone or propert of a third person and misapplies it, and

3&4 =here the partnership in the course of its business recei%es moneor propert of a third person A A A is misapplied b an partner

while it is in the custod of the partnership”

G": <n transactions entered into b the partnership, the liabilit of thepartners is merel 7oint

EAception: <n transactions in%ol%in! third persons fallin! under 2rticles -1&&and -1&), such third person ma hold an partner solidaril liable for thewhole obli!ation with the partnership

"eason for eAception: the law protects him, who in !ood faith relied upon theauthorit if a partner, whether real or apparent

9owe%er, as between Muñasque and Galan, 7ustice also dictatesreimbursement in fa%our of Muñasque as Galan was pro%en to be in bad faithin his dealin!s with his partner

G.R. No. 12+45 S$%$/0$& 2, 21



MARORIE TOAO and WILLIAM T. BELO, petitioners,vs.ORT O A!!EALS and NENITA A. ANAY, respondent.

R E S O L T I O N

YNARES-SANTIAGO, J .#

he inherent powers of a "ourt to amend and control its processes and orders so as to makethem conformale to law and :ustice includes the right to reverse itself, especially when in itshonest opinion it has committed an error or mistake in :udgment, and that to adhere to itsdecision will cause in:ustice to a party litigant.+

*n ovemer +, =//+, petitioners Mar:orie ocao and %illiam . Belo filed a Motion forReconsideration of our Cecision dated *ctoer , =///. hey maintain that there was nopartnership etween petitioner Belo, on the one hand, and respondent enita A. Anay, on theother hand6 and that the latter eing merely an employee of petitioner ocao.

After a careful review of the evidence presented, we are convinced that, indeed, petitioner Beloacted merely as guarantor of $eminesse (nterprise. his was categorically affirmed yrespondent&s own witness, (liaeth Bantilan, during her cross-e;amination. )urthermore,Bantilan testified that it was 2eter Lo who was the company&s financier. hus'

G - Hou mentioned a while ago the name %illiam Belo. ow, what is the role of %illiamBelo with $eminesse (nterpriseI

A - %illiam Belo is the friend of Mar:orie ocao and he was the guarantor of thecompany.

G - %hat do you mean y guarantorI

A - !e guarantees the stocks that she owes someody who is 2eter Lo and he acts asguarantor for us. %e can orrow money from him.

G - Hou mentioned a certain 2eter Lo. %ho is this 2eter LoI

A - 2eter Lo is ased in Singapore.

G - %hat is the role of 2eter Lo in the $eminesse (nterpriseI

A - !e is the one fi;ing our orders that open the L0".

G - Hou mean 2eter Lo is the financierI

A - Hes, he is the financier.

G - And the defendant %illiam Belo is merely the guarantor of $eminesse (nterprise,am 8 correctI

A - Hes, sir =



he foregoing was neither refuted nor contradicted y respondent&s evidence. 8t should erecalled that the usiness relationship created etween petitioner ocao and respondent Anaywas an informal partnership, which was not even recorded with the Securities and (;change"ommission. As such, it was understandale that Belo, who was after all petitioner ocao&sgood friend and confidante, would occasionally participate in the affairs of the usiness,although never in a formal or official capacity.3 Again, respondent&s witness, (liaeth Bantilan,

confirmed that petitioner Belo&s presence in $eminesse (nterprise&s meetings was merely asguarantor of the company and to help petitioner ocao.

)urthermore, no evidence was presented to show that petitioner Belo participated in the profitsof the usiness enterprise. Respondent herself professed lack of knowledge that petitioner Beloreceived any share in the net income of the partnership.7 *n the other hand, petitioner ocaodeclared that petitioner Belo was not entitled to any share in the profits of $eminesse(nterprise.@ %ith no participation in the profits, petitioner Belo cannot e deemed a partnersince the essence of a partnership is that the partners share in the profits and losses.<

"onse9uently, inasmuch as petitioner Belo was not a partner in $eminesse (nterprise,respondent had no cause of action against him and her complaint against him should

accordingly e dismissed.

As regards the award of damages, petitioners argue that respondent should e deemed in adfaith for failing to account for stocks of $eminesse (nterprise amounting to 2=/>,=7/.// andthat, accordingly, her claim for damages should e arred to that e;tent. %e do not agree.$iven the circumstances surrounding private respondent&s sudden ouster from the partnershipy petitioner ocao, her act of withholding whatever stocks were in her possession and controlwas :ustified, if only to serve as security for her claims against the partnership. !owever, whilewe do not agree that the same renders private respondent in ad faith and should ar her claimfor damages, we find that the said sum of 2=/>,=7/.// should e deducted from whateveramount is finally ad:udged in her favor on the asis of the formal account of the partnershipaffairs to e sumitted to the Regional rial "ourt.

%!(R()*R(, ased on the foregoing, the Motion for Reconsideration of petitioners is2AR8ALLH $RA(C. he Regional rial "ourt of Makati is herey ordered to C8SM8SS thecomplaint, docketed as "ivil "ase o. >>-7/4, as against petitioner %illiam . Belo only. hesum of 2=/>,=7/.// shall e deducted from whatever amount petitioner Mar:orie ocao shall eheld liale to pay respondent after the normal accounting of the partnership affairs.

S* *RC(R(C.

TC2 H C2

G" ?o -&/('I ctober , &(((

#onente: J nares8antia!o



F2CT8:

#ri%ate respondent ?enita 2 2na met petitioner =illiam T 0elo, then the %icepresident for operations of ltra Clean =ater #uri6er, throu!h her former emploer

in 0an!.o. 0elo introduced 2na to petitioner Mar7orie Tocao, who con%eed her

desire to enter into a 7oint %enture with her for the importation and local distribution

of .itchen coo.wares

nder the 7oint %enture, 0elo acted as capitalist, Tocao as president and !eneral

mana!er, and 2na as head of the mar.etin! department and later, %icepresident

for sales

The parties a!reed that 0eloKs name should not appear in an documents relatin! to

their transactions with =est 0end Compan 2na ha%in! secured the

distributorship of coo.ware products from the =est 0end Compan and or!aniDed

the administrati%e staL and the sales force, the coo.ware business too. oL

successfull The operated under the name of Geminesse Enterprise, a sole

proprietorship re!istered in Mar7orie TocaoKs name

The parties a!reed further that 2na would be entitled to:

3-4 ten percent 3-(*4 of the annual net pro6ts of the businessI

3&4 o%erridin! commission of siA percent 3+*4 of the o%erall wee.l productionI

3)4 thirt percent 3)(*4 of the sales she would ma.eI and

34 two percent 3&*4 for her demonstration ser%ices The a!reement was not

reduced to writin! on the stren!th of 0eloKs assurances that he was sincere,

dependable and honest when it came to 6nancial commitments

n ctober , -1/, 2na learned that Mar7orie Tocao had si!ned a letter addressed

to the Cubao sales o;ce to the eLect that she was no lon!er the %icepresident of

Geminesse Enterprise



2na attempted to contact 0elo 8he wrote him twice to demand her o%erridin!

commission for the period of Januar 1, -11 to Februar ', -11 and the audit of

the compan to determine her share in the net pro6ts

2na still recei%ed her 6%e percent 3'*4 o%erridin! commission up to 5ecember

-1/ The followin! ear, -11, she did not recei%e the same commission althou!h

the compan netted a !ross sales of # -),)((,)+(((

n 2pril ', -11, ?enita 2 2na 6led Ci%il Case ?o 11'(, a complaint for sum of

mone with dama!es a!ainst Mar7orie 5 Tocao and =illiam 0elo before the

"e!ional Trial Court of Ma.ati, 0ranch -(

The trial court held that there was indeed an Noral partnership a!reement between

the plaintiL and the defendants The Court of 2ppeals a;rmed the lower court$s

decision

<88E:

=hether the parties formed a partnership

9EO5:

es, the parties in%ol%ed in this case formed a partnership

The 8upreme Court held that to be considered a 7uridical personalit, a partnership

must ful6ll these requisites:

3-4 two or more persons bind themsel%es to contribute mone, propert or industr

to a common fundI and



3&4 intention on the part of the partners to di%ide the pro6ts amon! themsel%es <t

ma be constituted in an formI a public instrument is necessar onl where

immo%able propert or real ri!hts are contributed thereto

This implies that since a contract of partnership is consensual, an oral contract of

partnership is as !ood as a written one

<n the case at hand, 0elo acted as capitalist while Tocao as president and !eneral

mana!er, and 2na as head of the mar.etin! department and later, %icepresident

for sales Furthermore, 2na was entitled to a percenta!e of the net pro6ts of the

business

Therefore, the parties formed a partnership

G.R. No. L-292 O7o0$& 24, 192

MA8IMO GI"OTE, plaintiff-appellant,vs.ROMANA BORA, a) ad/(n()&a&( o: ;$ $)a$ o: Na&7()o Sano), d$7$a)$d, defendant-appellee.

-ran$is$o, #ualhati and #ope for appellant.!. G. Goyena for appellee.

OSTRAN", J.:

*n March , +4=+, the plaintiff rought an action against the administratri; of the estate ofarciso Santos, deceased, to recover the sum of 24,73.+, a part of which was alleged to ethe net profits due the plaintiff in a partnership usiness conducted under the name of EallerSinukuan,E in which the deceased was the capitalist partner and the plaintiff the industrialpartner, the rest of the sum consisting of advances alleged to have een made to saidpartnership y the plaintiff. he defendant in her answer admitted the e;istence of thepartnership and in a cross-complaint and counter-claim prayed that the plaintiff e ordered torender an accounting of the partnership usiness and to pay to the estate of the deceased thesum of 2=7,/// as net profits, credits, and property pertaining to said deceased.

8n the first trial of the case the plaintiff called several witnesses and introduced a so-calledaccounting and a mass of documentary evidence consisting of ooks, ills, and allegedvouchers, which documentary evidence was so hopelessly and ine;tricaly confused that thecourt, as stated in its decision, could not consider it of much proative value. 8t was, however,fund as facts that the aforesaid partnership had een formed, on or aout une +7, +4+>6 that



arciso Santos died on April @, +4=/, leaving the plaintiff as the surviving partner6 and thatplaintiff failed to li9uidate the affairs of the partnership and to render an account thereof to theadministratri; of Santos& estate. he court, therefore, dismissed the plaintiff&s complaint andasolved the defendant therefrom, and ordered the plaintiff to render a full and completeaccounting, verified y vouchers, of the partnership usiness from une +7, +4+>, untilSeptemer +, +4==. o this decision and order the plaintiff duly e;cepted.

he plaintiff thereupon rendered an account prepared y one omas Alfonso, a pulicaccountant. umerous o:ections to said account were presented y the defendant, and thecourt, upon hearing, disapproved the account and ordered that the defendant sumit to thecourt an accounting of the partnership usiness from the date of the commencement of thepartnership, une +7, +4+>, up to the time the usiness was closed. a+ph/l.net

*n anuary =7, +4=, the defendant presented an account and li9uidation prepared y a pulicaccountant, Santiago A. Lindaya, showing a alance of 2=4,/>>.47 in favor of the defendant.he account was set down for hearing upon the 9uestion of its approval or disapproval y thecourt, at which hearing the defendant introduced the pulic accountant ose uriano Santiago totestify as to the results of an audit made y him of the accounts of the partnership. Santiago

testified that he had een a pulic accountant for over =/ years, having appeared in court assuch on several occasions6 that he had e;amined the e;hiits offered in evidence of the case yoth parties6 that he had prepared a separate accounting or li9uidation similar in results to thatprepared y Lindaya, ut with a few differences in the sums total6 and that according to hise;amination, the financial status of the partnership was as follows'

(ar$iso *antos is a $reditor of the %aller*inu0uan in the sum of P12,313.45 $onsistingas follo+s6

JrJtdKEEJ0rJ

)or his capital .................................. 2+=,7>>.73

)or his credit ................................... +/,3>.3/)or his share of the profits ............ 3,/@>./@

otal ................................................... =@,/=/.>4

!a7imo Guidote is a debtor to the %aller*inu0uan in the sum of P13,313.45, $onsistingas follo+s6

)or his det 1deito5 ......................... 2=4,/>>.47

Less his share of the profits ........... 3,/@>./@

otal alance ...................................... =@./=/.>4

8n order to contradict the conclusions of Lindaya and ose uriano Santiago, the plaintiffpresented omas Alfonso and the ookkeeper, 2io $audier, as witnesses in his favor. 8n regardto the character of the testimony of these witnesses, !is !onor, the trial :udge, says'

he testimony of these two witnesses is so unreliale that the court can place no reliancethereon. Mr. omas Alfonso is the same pulic accountant who filed the li9uidation (;hiit *



on ehalf of the plaintiff, in relation to the partnership usiness, which li9uidation wasdisapproved y this court in its decision of August =/, +4=3. 8t is also to e noted that Mr.

Alfonso would have this court elieve the proposition that the plaintiff, a mere industrialpartner, notwithstanding his having received the sum of 2=+,@4.@+ on the various :os andcontracts of the Ealler Sinukuan,E had actually e;pended and paid out the sum of2@3,3@/.=<, of 2,<+/.@@ in e;cess of the gross receipts of the usiness. his proposition

is not only improale on its face, ut it materially contradicts the allegations of plaintiff&scomplaint to the effect that the advances made y the plaintiff only the amount to 2=,/+<.7/.

Mr. 2io $audier is the same ookkeeper who prepared three entirely separate and distinctli9uidation for the same partnership usiness all of which were repeated y the court in itsdecisions of Septemer +, +4== and the court finds that the testimony given y him at thelast hearing is confusing, contradictory and unreliale. a+ph/l.net

As to the other witnesses for the plaintiff !is !onor further says'

he testimony of the other witnesses for the plaintiff deserves ut scant consideration asevidence to overcome the testimony of Mr. Santiago, as a whole particularly that of the

witness "hua "hak, who, after identifying and testifying as to a certain e;hiit shown him ycounsel for plaintiff, showed that he could neither read nor write (nglish, Spanish, oragalog, and that of the witness Mr. "laro Reyes, who, after positively assuring the court thata certain e;hiit tendered him for identification was an original document, was forced toadmit that it was ut a mere copy.

he court therefore, found that the conclusions reached y Santiago A. Lindaya as modified yose urinao Santiago were :ust and correct and ordered the plaintiff to pay the defendant thesum of 2=@,/=/.>4, 2hilippine currency, with legal interest thereon from April =, +4=+, the dateof the defendant&s answer, and to pay the costs. )rom this :udgment the plaintiff appealed to thiscourt and presents the following assignments of error'

1+5 hat the court erred in dismissing the plaintiff&s complaint and ordering him to present ali9uidation of the operations and accounts of the partnership formed with the deceasedarciso Santos, from the eginning of the partnership until Septemer +, +4==.

1=5 hat the court erred in approving the li9uidation made y the pulic accountant Santiago A. Lindaya, with the modification introduced y the witness ose uriano Santiago.

135 hat the court erred in ordering the plaintiff and appellant to pay to the defendant andappellee the sum of 2=@,/=/.>4.

As to the first assignment of error there may e some merit in the appellant&s contention that thedismissal of his complaint was premature. he etter practise would, perhaps, have een to let

the complaint stand until the result of the li9uidation of the partnership affairs was known. Butunder the circumstances of this case no harm was done y the dismissal of the complaint, andthe error, if any there e, is not reversile.

Fnder the same assignment of error the plaintiff argues that as the deceased up to the time ofhis death generally took care of the payments and collections of the partnership, his legalrepresentatives were under the oligation to render accounts of the operations of thepartnership, notwithstanding the fact that the plaintiff was in charge of the usiness suse9uentto the death of Santos. his argument is without merit. 8n the case of %ahl vs. Conaldson Sim



"o. 17 2hil., ++, +5, it was held that the death of one of the partners dissolves the partnership,ut that the li9uidation of its affairs is y law intrusted, not to the e;ecutors of the deceasedpartner, ut to the surviving partners or the li9uidators appointed y them 1citing article ==4 ofthe "ode of "ommerce and secs. @@ and @@7 of the "ode of "ivil 2rocedure5. he same ruleis laid down y the Supreme "ourt of Spain in sentence of *ctoer +=, +></.

he other assignments of error have reference only to 9uestions of fact in regard to which thefindings of the court elow seem to e as nearly correct as possile upon the evidencepresented. here may e errors in the interpretation of the accounts, and it is possile that theamount of 2=@,/=/.>4 charged against the plaintiff is e;cessive, ut the evidence presented yhim is so confusing and unreliale as to e practically of no weight and cannot serve as a asisfor a read:ustment of the accounts prepared y the accountant Lindaya and the apparentlyreliale witness, ose uriano Santiago.

%e should, perhaps, have een more inclined to 9uestion the conclusions of Lindaya andSantiago if the plaintiff had shown a disposition to render an honest account of the usiness andto effect a fair li9uidation of the partnership ut instead of doing so, he has y means of very9uestionale, and apparently false, evidence sought to mulct his deceased partner&s estate to

the e;tent of over 24,///. he rule for the conduct of a surviving partner is thus stated in =/ R.". L., +//3'

8n e9uity surviving partners are treated as trustees of the representatives of the deceasedpartner, in regard to the interest of the deceased partner in the firm. As a conse9uence ofthis trusteeship, surviving partners are held in their dealings with the firm assets and therepresentatives of the deceased to that nicety of dealing and that strictness of accountailityre9uired of and incident to the position of one occupying a confidential relation. 8t is the dutyof surviving partners to render an account of the performance of their trust to the personalrepresentatives of the deceased partner, and to pay over to them the share of suchdeceased memer in the surplus of firm property, whether it consists of real or personalassets.

he appellant has completely failed to oserve the rule 9uoted, and he is not in position tocomplain if his testimony and that of his witnesses is discredited.

he appealed :udgment is affirmed with the costs against the appellant. So ordered.

MAXIMO GUIDOTE v. ROMANA BORJA 3administratriA of the estate of ?arciso 8antos4

-&1 > strand

FACTS

MaAimo Guidote and ?arciso 8antos formed in --1 a partnership business under the name of “Taller 8inu.uan,” in

which 8antos was the capitalist partner and Guidote was the industrial partner 8antos died in -&( Guidote failed

to liquidate the aLairs of the partnership and to render an account thereof to 0or7a, the administratriA of 8antos$

estate

Guidoe !"ou#$ a% a&io% a#ai%s Bo"'a o "e&ove" a sum o( mo%e) P.QR, a part of which was

alle!ed to be the net pro6ts from the business due Guidote, and the rest of the sum consistin! of ad%ances



alle!edl made b Guidote Bo"'a admied $e *a"%e"s$i*+s e,ise%&e a%d *"a)ed $a Guidoe !e

o"de"ed o "e%de" a% a&&ou%i%# a%d o *a) $e esae -/ as %e *"o0s1 &"edis1 a%d *"o*e")

*e"ai%i%# o Sa%os.

Guidoe &alled seve"al 2i%esses a%d i%"odu&ed a so3&alled a&&ou%i%# a%d a mass o(

do&ume%a") evide%&e, which was so hopelessl and ineAtricabl confused that the court could not consider it of

much probati%e %alue T$e &ou" dismissed Guidoe’s &om*lai% a%d a!solved Bo"'a. Guidote was ordered to

render a full and complete accountin!, %eri6ed b %ouchers, of the partnership business

Guidoe "e%de"ed a% a&&ou% *"e*a"ed !) o%e Tomas Al(o%so1 a *u!li& a&&ou%a%. ?umerous

ob7ections were presented b 0or7a T$e &ou" disa**"oved $e a&&ou% a%d o"de"ed $a Bo"'a su!mi a%

a&&ou%i%# from the date of the commencement of the partnership up to the time the business was closed

Bo"'a *"ese%ed a% a&&ou% a%d liquidaio% *"e*a"ed !) a *u!li& a&&ou%a%1 Sa%ia#o A.

4i%da)a1 s$o2i%# a !ala%&e o( 5-6/7 i% Bo"'a+s 8Sa%os+ esae9 (avo". 2t the hearin!, 0or7a introduced the

public accountant Jose Turiano 8antia!o to testif as to the results of an audit made b him of the partnership

accounts 8antia!o testi6ed that he had prepared a separate accountin! or liquidation similar in results to that

prepared b Oindaa, but with a few diLerences in the sums total PCom*uaio%: 8antos is a creditor of the Taller

8inu.uan in the sum of #&+. Guidote is a debtor to the Taller 8inu.uan in the sum of #&(.R

I% o"de" o &o%"adi& $e &o%&lusio%s o( $e 2o *u!li& a&&ou%a%s1 Guidoe *"ese%ed Tomas

Al(o%so a%d $e !oo//ee*e"1 5io Gaudie"1 as 2i%esses. T$e "ial &ou" 'ud#e said $a $e esimo%ies

o( $ese 2i%esses a"e u%"elia!le.

• Tomas Alfonso is the same public accountant who filed the liquidation Exhibit O on behalf of Guidote, in relation to

the partnership business, which liquidation was disapproved by this court in a decision. The judge did not believe

Alfonso’s proposition that Guidote, a mere industrial partner, notwithstanding his having received 21k on the various

jobs and contracts of the business had actually expended and paid out 63k, of 44k in excess of the gross receipts of

the business. It materially contradicts Guidote’s allegations to the effect that the advances that he [Guidote] made

amounted only to 2k.

• Pio Gaudieris the same bookkeeper who prepared three entirely separate and distinct liquidation for the same

partnership business, and the court found that the testimony given by him at the last hearing is confusing,

contradictory and unreliable.

• Other witnesses were given scant consideration—Chua Chak can neither read nor write English, Spanish, or

Tagalog; Claro Reyes was forced to admit that a certain exhibit was not the original.T$e &ou" #ave &"ede%&e o $e &o%&lusio%s "ea&$ed !) $e *u!li& a&&ou%a%s *"ese%ed !)

Bo"'a. Guidoe 2as o"de"ed o *a) 5-;/ o Bo"'a1 2i$ le#al i%e"es1 *lus &oss.

ISSUE < =O4DING

=? the trial court is correct in orderin! Guidote to pa #&+. to 0or7a >ES

RATIO

There ma be some merit in Guidote$s contention that the dismissal of his complaint was premature The better

practice would been to let the complaint stand until the result of the liquidation of the partnership aLairs was

.nown 0ut under the circumstances, no harm was done b the dismissal of Guidote$s complaint

GUIDOTE+S ARGUMENT

8ince 8antos, up to the time of his death, !enerall too. care of the partnership$s paments and collections, his

le!al representati%es were under the obli!ation to render accounts of the operations, notwithstandin! the fact that

Guidote was in char!e of the business subsequent to the death of 8antos



GUIDOTE+S ARGUMENT IS UNA?AI4ING

@a$l v. Do%aldso% Sim < Co.

The death of one of the partners dissol%es the partnership, but that the liquidation of its aLairs is b law entrusted,

not to the eAecutors of the deceased partner, but to the sur%i%in! partners or the liquidators appointed b them

T$e "ule (o" $e &o%du& o( a su"vivi%# *a"%e"

<n equit, sur%i%in! partners are treated as "usees of the representati%es of the deceased partner, with re!ard to

the interest of the deceased partner in the 6rm 2s a consequence of this trusteeship, sur%i%in! partners are held in

their dealin!s with the 6rm assets and the representati%es of the deceased to that nicet of dealin! and that

strictness of accountabilit required of and incident to the position of one occupin! a con6dential relation <t is the

dut of sur%i%in! partners to render an account of the performance of their trust to the personal representati%es of

the deceased partner, and to pa o%er to them the share of such deceased member in the surplus of 6rm propert,

whether it consists of real or personal assets

Guidote failed to obser%e this rule, and he is not in position to complain if his testimon and that of his witnesses is

discredited

The appealed judgment is AFFIRMED.

[G.R. No. 30616 : December 10, 1990.]

192 SCRA 110

EUFRACIO D. ROJAS, Plaintiff-Appellant , !. CONS"ANCIO #.

$AG%ANA,Defendant-Appellee.

D E C I S I O N

&ARAS, J.:

This is a direct appeal to this Court from a decision ** of the then Court of First Instance of

Davao, Seventh Judicial District, Branch III, in Civil Case No. 3!", dismissin# appellant$scomplaint.

%s found &' the trial court, the antecedent facts of the case are as follo(s)

n Januar' !+, !, -a#lana and o/as e0ecuted their %rticles of Co12artnership 40hi&it

5%56 called 4astcoast Development 4nterprises 4D46 (ith onl' the t(o of them as partners.The partnership 4D4 (ith an indefinite term of e0istence (as dul' re#istered on Januar' 7!,

! (ith the Securities and 40chan#e Commission.

ne of the purposes of the dul'1re#istered partnership (as to 5appl' or secure tim&er

and8or minor forests products licenses and concessions over pu&lic and8or private forestlands and to operate, develop and promote such forests ri#hts and concessions.5 ollo, p.

!!+6.

% dul' re#istered %rticles of Co12artnership (as filed to#ether (ith an application for a

tim&er concession coverin# the area located at Cateel and Ba#an#a, Davao (ith the Bureauof Forestr' (hich (as approved and Tim&er 9icense No. 31: (as dul' issued and &ecame

the &asis of su&se;uent rene(als made for and in &ehalf of the dul' re#istered partnership4D4.



<nder the said %rticles of Co12artnership, appellee -a#lana shall mana#e the &usinessaffairs of the partnership, includin# mar=etin# and handlin# of cash and is authori>ed to si#n

all papers and instruments relatin# to the partnership, (hile appellant o/as shall &e thelo##in# superintendent and shall mana#e the lo##in# operations of the partnership. It is

also provided in the said articles of co1partnership that all profits and losses of thepartnership shall &e divided share and share ali=e &et(een the partners.

Durin# the period from Januar' !+, ! to %pril 3?, !:, there (as no operation of saidpartnership ecord on %ppeal @.%.A p. +:6.

Because of the difficulties encountered, o/as and -a#lana decided to avail of the servicesof 2ahamotan# as industrial partner.

n -arch +, !:, -a#lana, o/as and %#ustin 2ahamotan# e0ecuted their %rticles of Co12artnership 40hi&it 5B5 and 40hi&it 5C56 under the firm name 4%STC%ST D4492-4NT

4NT42IS4S 4D46. %side from the sli#ht difference in the purpose of the secondpartnership (hich is to hold and secure rene(al of tim&er license instead of to secure the

license as in the first partnership and the term of the second partnership is fi0ed to thirt'3?6 'ears, ever'thin# else is the same.

The partnership formed &' -a#lana, 2ahamotan# and o/as started operation on -a' !,

!:, and (as a&le to ship lo#s and reali>e profits. %n income (as derived from theproceeds of the lo#s in the sum of 2:+3,:33.? Decision, .%. !6.

n cto&er 7, !:, 2ahamotan#, -a#lana and o/as e0ecuted a document entitled

5CNDITIN%9 S%94 F INT44ST IN T4 2%TN4SI2, 4%STC%ST D4492-4NT4NT42IS45 40hi&its 5C5 and 5D56 a#reein# amon# themselves that -a#lana and o/as

shall purchase the interest, share and participation in the 2artnership of 2ahamotan#assessed in the amount of 23!,?!.!7. It (as also a#reed in the said instrument that after

pa'ment of the sum of 23!,?!.!7 to 2ahamotan# includin# the amount of loan secured &'2ahamotan# in favor of the partnership, the t(o -a#lana and o/as6 shall &ecome the

o(ners of all e;uipment contri&uted &' 2ahamotan# and the 4%STC%ST D4492-4NT4NT42IS4S, the name also #iven to the second partnership, &e dissolved. 2ahamotan#

(as paid in fun on %u#ust 3!, !. No other ri#hts and o&li#ations accrued in the name of

the second partnership .%. 7!6.

%fter the (ithdra(al of 2ahamotan#, the partnership (as continued &' -a#lana and o/as(ithout the &enefit of an' (ritten a#reement or reconstitution of their (ritten %rticles of

2artnership Decision, .%. +"6.

n Januar' 7", !, o/as entered into a mana#ement contract (ith another lo##in#

enterprise, the C-S 4state, Inc. e left and a&andoned the partnership Decision, .%.+6.

n Fe&ruar' +, !, o/as (ithdre( his e;uipment from the partnership for use in thene(l' ac;uired area Decision, .%. +"6.

The e;uipment (ithdra(n (ere his supposed contri&utions to the first partnership and (as

transferred to C-S 4state, Inc. &' (a' of chattel mort#a#e Decision, .%. p. +"6.n -arch !, !, -a#lana (rote o/as remindin# the latter of his o&li#ation to contri&ute,either in cash or in e;uipment, to the capital investments of the partnership as (ell as his

o&li#ation to perform his duties as lo##in# superintendent.

T(o (ee=s after -arch !, !, o/as told -a#lana that he (ill not &e a&le to compl' (ith

the promised contri&utions and he (ill not (or= as lo##in# superintendent. -a#lana thentold o/as that the latter$s share (ill /ust &e 7?E of the net profits. Such (as the sharin#

from ! to ! (ithout complaint or dispute Decision, .%. +6. )nad



-ean(hile, o/as too= funds from the partnership more than his contri&ution. Thus, in aletter dated Fe&ruar' 7!, !:! 40hi&it 5!?56 -a#lana notified o/as that he dissolved the

partnership .%. +6.

n %pril , !:!, o/as filed an action &efore the Court of First Instance of Davao a#ainst

-a#lana for the recover' of properties, accountin#, receivership and dama#es, doc=eted asCivil Case No. 3!" ecord on %ppeal, pp. !17:6.

o/as$ petition for appointment of a receiver (as denied .%. "+6.

<pon motion of o/as on -a' 73, !:!, Jud#e omero appointed commissioners to e0amine

the lon# and voluminous accounts of the 4astcoast Development 4nterprises I&id., pp. "+1"6.

The motion to dismiss the complaint filed &' -a#lana on June 7!, !:! I&id., pp. !?71!!+6

(as denied &' Jud#e omero for (ant of merit I&id., p. !76. Jud#e omero also re;uiredthe inclusion of the entire 'ear !:! in the report to &e su&mitted &' the commissioners

I&id., pp. !3"1!+36. %ccordin#l', the commissioners started e0aminin# the records and

supportin# papers of the partnership as (ell as the information furnished them &' theparties, (hich (ere compiled in three 36 volumes.

n -a' !!, !:+, -a#lana filed his motion for leave of court to amend his ans(er (ithcounterclaim, attachin# thereto the amended ans(er I&id., pp. 7:133:6, (hich (as #ranted

on -a' 77, !:+ I&id., p. 33:6.

n -a' 7, !:+, Jud#e -.. e'es approved the su&mitted Commissioners$ eport I&id.,

p. 336.

n June 7, !:, o/as filed his motion for reconsideration of the order dated -a' 7,!:+ approvin# the report of the commissioners (hich (as opposed &' the appellee.

n Septem&er !, !:+, appellant$s motion for reconsideration (as denied I&id., pp. ++:1

+!6.

% mandator' pre1trial (as conducted on Septem&er " and , !:+ and the follo(in# issues

(ere a#reed upon to &e su&mitted to the trial court)

a6 The nature of partnership and the le#al relations of -a#lana and o/as after the

dissolution of the second partnershipG

&6 Their sharin# &asis) (hether in proportion to their contri&ution or share and

share ali=eG

c6 The o(nership of properties &ou#ht &' -a#lana in his (ife$s nameG

d6 The dama#es suffered and (ho should &e lia&le for themG and

e6 The le#al effect of the letter dated Fe&ruar' 73, !:! of -a#lana dissolvin# thepartnership Decision, .%. pp. "1":6.1 nad

%fter trial, the lo(er court rendered its decision on -arch !!, !:", the dispositive portion

of (hich reads as follo(s)5H44F4, the a&ove facts and issues dul' considered, /ud#ment is here&'

rendered &' the Court declarin# that)

5!. The nature of the partnership and the le#al relations of -a#lana and o/as after

2ahamotan# retired from the second partnership, that is, after %u#ust 3!, !,(hen 2ahamotan# (as finall' paid his share the partnership of the defendant and

the plaintiff is one of a de facto and at (illG



57. Hhether the sharin# of partnership profits should &e on the &asis of computation,that is the ratio and proportion of their respective contri&utions, or on the &asis of

share and share ali=e this covered &' actual contri&utions of the plaintiff and thedefendant and &' their ver&al a#reementG that the sharin# of profits and losses is on

the &asis of actual contri&utionsG that from ! to !, the sharin# is on the &asisof "?E for the defendant and 7?E for the plaintiff of the profits, &ut from !:? to

the date of dissolution, Fe&ruar' 73, !:!, the plaintiff$s share (ill &e on the &asis of his actual contri&ution and, considerin# his inde&tedness to the partnership, theplaintiff is not entitled to an' share in the profits of the said partnershipG

53. %s to (hether the properties (hich (ere &ou#ht &' the defendant and placed in

his or in his (ife$s name (ere ac;uired (ith partnership funds or (ith funds of thedefendant and the Court declares that there is no evidence that these properties

(ere ac;uired &' the partnership funds, and therefore the same should not &elon# tothe partnershipG

5+. %s to (hether dama#es (ere suffered and, if so, ho( much, and (ho causedthem and (ho should &e lia&le for them the Court declares that neither parties is

entitled to dama#es, for as alread' stated a&ove it is not a (ise polic' to place aprice on the ri#ht of a person to liti#ate and8or to come to Court for the assertion of

the ri#hts the' &elieve the' are entitled toG

5. %s to (hat is the le#al effect of the letter of defendant to the plaintiff dated

Fe&ruar' 73, !:!G did it dissolve the partnership or not the Court declares thatthe letter of the defendant to the plaintiff dated Fe&ruar' 73, !:!, in effect

dissolved the partnershipG

5:. Further, the Court relative to the canteen, (hich sells foodstuffs, supplies, and

other merchandise to the la&orers and emplo'ees of the 4astcoast Development4nterprises, the C<T D4C9%4S T4 S%-4 %S NT B49NIN T T4

2%TN4SI2G

5. That the alle#ed sale of forest concession 40hi&it 1B, e0ecuted &' 2a&lo %n#eles

David is %9ID %ND BINDIN <2N T4 2%TI4S %ND S<9D B4 CNSID44D

%S 2%T F -%9%N%$S CNTIB<TIN T T4 2%TN4SI2G

5". Further, the Court orders and directs plaintiff o/as to pa' or turn over to thepartnership the amount of 2:,???.?? the profits he received from the C-S 4state,

Inc. operated &' himG

5. The claim that plaintiff o/as should &e ordered to pa' the further sum of

2",???.?? (hich accordin# to him he is still entitled to receive from the C-S 4state,Inc. is here&' denied considerin# that it has not 'et &een actuall' received, and

further the receipt is merel' &ased upon an e0pectanc' and8or still speculativeG

5!?. The Court also directs and orders plaintiff o/as to pa' the sum of 2:7,"".!

his personal account to the partnershipG

5!!. The Court also credits the defendant the amount of 2",???.?? the amount heshould have received as lo##in# superintendent, and (hich (as not paid to him, andthis should &e considered as part of -a#lana$s contri&ution li=e(ise to the

partnershipG and

5!7. The complaint is here&' dismissed (ith costs a#ainst the plaintiff.) rd

5S D44D.5 Decision, ecord on %ppeal, pp. "1"6.

o/as interposed the instant appeal.



The main issue in this case is the nature of the partnership and le#al relationship of the-a#lana1o/as after 2ahamotan# retired from the second partnership.

The lo(er court is of the vie( that the second partnership superseded the first, so that

(hen the second partnership (as dissolved there (as no (ritten contract of co1partnershipG

there (as no reconstitution as provided for in the -a#lana, o/as and 2ahamotan#partnership contract. ence, the partnership (hich (as carried on &' o/as and -a#lana

after the dissolution of the second partnership (as a de facto partnership and at (ill. It (asconsidered as a partnership at (ill &ecause there (as no term, e0press or impliedG no

period (as fi0ed, e0pressl' or impliedl' Decision, .%. pp. :71:36.

n the other hand, o/as insists that the re#istered partnership under the firm name of

4astcoast Development 4nterprises 4D46 evidenced &' the %rticles of Co12artnership datedJanuar' !+, ! 40hi&it 5%56 has not &een novated, superseded and8or dissolved &' the

unre#istered articles of co1partnership amon# appellant o/as, appellee -a#lana and%#ustin 2ahamotan#, dated -arch +, !: 40hi&it 5C56 and accordin#l', the terms and

stipulations of said re#istered %rticles of Co12artnership 40hi&it 5%56 should #overn therelations &et(een him and -a#lana. <pon (ithdra(al of %#ustin 2ahamotan# from the

unre#istered partnership 40hi&it 5C56, the le#all' constituted partnership 4D4 40hi&it 5%56continues to #overn the relations &et(een them and it (as le#al error to consider a de facto

partnership &et(een said t(o partners or a partnership at (ill. ence, the letter of appellee-a#lana dated Fe&ruar' 73, !:!, did not le#all' dissolve the re#istered partnership

&et(een them, &ein# in contravention of the partnership a#reement a#reed upon and

stipulated in their %rticles of Co12artnership 40hi&it 5%56. ather, appellant is entitled to theri#hts enumerated in %rticle !"3 of the Civil Code and to the sharin# profits &et(een them

of 5share and share ali=e5 as stipulated in the re#istered %rticles of Co12artnership 40hi&it5%56.

%fter a careful stud' of the records as a#ainst the conflictin# claims of o/as and -a#lana, it

appears evident that it (as not the intention of the partners to dissolve the first partnership,upon the constitution of the second one, (hich the' unmista=a&l' called an 5%dditional

%#reement5 40hi&it 51B56 Brief for Defendant1%ppellee, pp. 7+176. 40cept for the factthat the' too= in one industrial partnerG #ave him an e;ual share in the profits and fi0ed the

term of the second partnership to thirt' 3?6 'ears, ever'thin# else (as the same. Thus,the' adopted the same name, 4%STC%ST D4492-4NT 4NT42IS4S, the' pursued the

same purposes and the capital contri&utions of o/as and -a#lana as stipulated in &othpartnerships call for the same amounts. Just as important is the fact that all su&se;uent

rene(als of Tim&er 9icense No. 313: (ere secured in favor of the First 2artnership, theori#inal licensee. To all intents and purposes therefore, the First %rticles of 2artnership (ere

onl' amended, in the form of Supplementar' %rticles of Co12artnership 40hi&it 5C56 (hich(as never re#istered Brief for 2laintiff1%ppellant, p. 6. ther(ise stated, even durin# the

e0istence of the second partnership, all &usiness transactions (ere carried out under thedul' re#istered articles. %s found &' the trial court, it is an admitted fact that even up to

no(, there are still su&sistin# o&li#ations and contracts of the latter Decision, .%. pp. ?16. No ri#hts and o&li#ations accrued in the name of the second partnership e0cept in

favor of 2ahamotan# (hich (as full' paid &' the dul' re#istered partnership Decision, .%.,pp. !17!6.

n the other hand, there is no dispute that the second partnership (as dissolved &'common consent. Said dissolution did not affect the first partnership (hich continued to

e0ist. Si#nificantl', -a#lana and o/as a#reed to purchase the interest, share andparticipation in the second partnership of 2ahamotan# and that thereafter, the t(o -a#lana

and o/as6 &ecame the o(ners of e;uipment contri&uted &' 2ahamotan#. 4ven moreconvincin#, is the fact that -a#lana on -arch !, !, (rote o/as, remindin# the latter of

his o&li#ation to contri&ute either in cash or in e;uipment, to the capital investment of the



partnership as (ell as his o&li#ation to perform his duties as lo##in# superintendent. Thisreminder cannot refer to an' other &ut to the provisions of the dul' re#istered %rticles of

Co12artnership. %s earlier stated, o/as replied that he (ill not &e a&le to compl' (ith thepromised contri&utions and he (ill not (or= as lo##in# superintendent. B' such statements,

it is o&vious that o0as understood (hat -a#lana (as referrin# to and left no room fordou&t that &oth considered themselves #overned &' the articles of the dul' re#istered

partnership.

<nder the circumstances, the relationship of o/as and -a#lana after the (ithdra(al of

2ahamotan# can neither &e considered as a De Facto 2artnership, nor a 2artnership at Hill,for as stressed, there is an e0istin# partnership, dul' re#istered.

%s to the ;uestion of (hether or not -a#lana can unilaterall' dissolve the partnership in thecase at &ar, the ans(er is in the affirmative.

ence, as there are onl' t(o parties (hen -a#lana notified o/as that he dissolved thepartnership, it is in effect a notice of (ithdra(al.

<nder %rticle !"3?, par. 7 of the Civil Code, even if there is a specified term, one partnercan cause its dissolution &' e0pressl' (ithdra(in# even &efore the e0piration of the period,

(ith or (ithout /ustifia&le cause. f course, if the cause is not /ustified or no cause (as

#iven, the (ithdra(in# partner is lia&le for dama#es &ut in no case can he &e compelled toremain in the firm. Hith his (ithdra(al, the num&er of mem&ers is decreased, hence, thedissolution. %nd in (hatever (a' he ma' vie( the situation, the conclusion is inevita&le that

o/as and -a#lana shall &e #uided in the li;uidation of the partnership &' the provisions of its dul' re#istered %rticles of Co12artnershipG that is, all profits and losses of the partnership

shall &e divided 5share and share ali=e5 &et(een the partners.

But an accountin# must first &e made and (hich in fact (as ordered &' the trial court and

accomplished &' the commissioners appointed for the purpose.

n the &asis of the Commissioners$ eport, the correspondin# contri&ution of the partnersfrom !:1!:! are as follo(s) 4ufracio o/as (ho should have contri&uted 2!",!".??,

contri&uted onl' 2!",?.?? (hile -a#lana (ho should have contri&uted 2!:?,"+.??,

contri&uted 27:,+!.++ Decision, .%. p. :6. It is a settled rule that (hen a partner(ho has underta=en to contri&ute a sum of mone' fails to do so, he &ecomes a de&tor of

the partnership for (hatever he ma' have promised to contri&ute %rticle !":, Civil Code6and for interests and dama#es from the time he should have complied (ith his o&li#ation

%rticle !"", Civil Code6 -oran, Jr. v. Court of %ppeals, !33 SC% + @!"+A6. Bein# acontract of partnership, each partner must share in the profits and losses of the venture.

That is the essence of a partnership I&id., p. 6.

Thus, as reported in the Commissioners$ eport, o/as is not entitled to an' profits. In their

voluminous reports (hich (as approved &' the trial court, the' sho(ed that on ?1?E&asis, o/as (ill &e lia&le in the amount of 2!3!,!::.??G on "?17?E, he (ill &e lia&le for

2+?,?7.: and finall' on the &asis of actual capital contri&ution, he (ill &e lia&le for27,?+?.3!.

Conse;uentl', e0cept as to the le#al relationship of the partners after the (ithdra(al of 2ahamotan# (hich is un;uestiona&l' a continuation of the dul' re#istered partnership andthe sharin# of profits and losses (hich should &e on the &asis of share and share ali=e as

provided for in the dul' re#istered %rticles of Co12artnership, no plausi&le reason could &e

found to distur& the findin#s and conclusions of the trial court.) nad

%s to (hether -a#lana is lia&le for dama#es &ecause of such (ithdra(al, it (ill &e recalled

that after the (ithdra(al of 2ahamotan#, o/as entered into a mana#ement contract (ithanother lo##in# enterprise, the C-S 4state, Inc., a compan' en#a#ed in the same &usiness



as the partnership. e (ithdre( his e;uipment, refused to contri&ute either in cash or ine;uipment to the capital investment and to perform his duties as lo##in# superintendent, as

stipulated in their partnership a#reement. The records also sho( that o/as not onl'a&andoned the partnership &ut also too= funds in an amount more than his contri&ution

Decision, .%., p. +6.

In the #iven situation -a#lana cannot &e said to &e in &ad faith nor can he &e lia&le for

dama#es.

24-IS4S CNSID44D, the assailed decision of the Court of First Instance of Davao,

Branch III, is here&' -DIFI4D in the sense that the dul' re#istered partnership of 4astcoast Development 4nterprises continued to e0ist until li;uidated and that the sharin#

&asis of the partners should &e on share and share ali=e as provided for in its %rticles of 2artnership, in accordance (ith the computation of the commissioners. He also here&'

%FFI- the decision of the trial court in all other respects.) nad

S D44D.

ROJAS ?. MAG4ANADecember 10, 1990aras, !.".

Ra#eses, R$bert$ Miguel

SUMMAR>: Ma!lana and "o7as eAecuted their articles of copartnership called E5E <t had aninde6nite term, was re!istered with the 8EC, and had a Timer Oicense Oater, 2!ustin #ahamitan!became an industrial partner and another articles of copartnership was eAecuted The term of thesecond copartnership was 6Aed to )( ears 2fter some time, the three eAecuted a conditional saleof interest in the partnership where Ma!alana and "o7as shall purchase the interest, share, andparticipation of #ahamotan! <t was a!reed that, after pament of such includin! the loan secured b#ahamotan!, the two shall become owners of all equipment contributed b #ahamotan! The twocontinued the partnership without an written a!reement or reconstitution of the articles of partnership 8ubsequentl, "o7as entered into a contarct with CM8 Estate Ma!lana reminded him of

his contribution to the capital in%estments and his duties to the partnership "o7as said he would notbe able to compl Ma!lana told "o7as that the latter is onl entitled to &(* of the pro6ts, which wasthe sharin! from -'/-' without dispute "o7as too. funds from the partnership which was morethan his share Ma!lana noti6ed "o7as that he had dissol%ed the partnership "o7as 6led an actiona!ainst Ma!allana The CF< ruled that the partnership of the two after #ahamotan! left was one defacto and at will The 8C said that it was not, considerin! that the 6rst partnership was ne%erdissol%ed =ith re!ard to the issue of unilateral dissolution, the 8C held that Ma!lana had the powerto do so

DOCTRINE: nder 2rticle -1)(, par & of the Ci%il Code, e%en if there is a speci6ed term, one partnercan cause its dissolution b eApressl withdrawin! e%en before the eApiration of the period, with orwithout 7usti6able cause f course, if the cause is not 7usti6ed or no cause was !i%en, thewithdrawin! partner is liable for dama!es but in no case can he be compelled to remain in the 6rm=ith his withdrawal, the number of members is decreased, hence, the dissolution 2nd in whate%erwa he ma %iew the situation, the conclusion is ine%itable that "o7as and Ma!lana shall be !uided in

the liquidation of the partnership b the pro%isions of its dul re!istered 2rticles of Co#artnershipIthat is, all pro6ts and losses of the partnership shall be di%ided Nshare and share ali.eN between thepartners

FACTS: Ma!lana and "o7as eAecuted their 2rticles of Copartnership called “Eastcoast 5e%elopmentEnterpises” 3E5E4 which had an inde6nite term of eAistence and was re!istered with the 8EC and had a Timber Oicense ne of the E5E$s purposes was to appl or secure timber and>or pri%ate forest landsand to operate, de%elop and promote such forests ri!hts and concessions Ma!lana shall mana!e thebusiness aLairs while "o7as shall be the lo!!in! superintendent 2ll pro6ts and losses shall be di%idedshare and share ali.e between them



Oater on, the two a%ailed the ser%ices of 2!ustin #ahamotan! as industrial partner and eAecutedanother articles of copartnership with the latter The purpose of this second partnership was to holdand secure renewal of timber license and the term of which was 6Aed to )( ears

8till later on, the three eAecuted a conditional sale of interest in the partnership wherein Ma!lana and"o7as shall purchase the interest, share and participation in the partnership of #ahamotan! <t was also

a!reed that after pament of such includin! amount of loan secured b #ahamotan! in fa%or of theipartnership, the two shall become owners of all equipment contributed b #ahamotan! 2fter this, thetwo continued the partnership without an written a!reement or reconstitution of their articles of partnership

8ubsequentl, "o7as entered into a mana!ement contract with CM8 Estate <nc Ma!lana wrote himre!ardin! his contribution to the capital in%estments as well as his duties as lo!!in! superintendent"o7as replied that he will not be able to compl with both Ma!lana then told "o7as that the latter$sshare will 7ust be &(* of the net pro6ts 8uch was the sharin! from -'/ to -' without complaint ordispute "o7as too. funds from the partnership more than his contribution Ma!lana noti6ed "o7as thathe dissol%ed the partnership "o7as 6led an action a!ainst Ma!lana for the reco%er of properties andaccountin! of the partnership and dama!es

CFI RU4ING:- The partnership of Ma!lana and "o7as after #ahamotan! retired is one of de facto and at willI

the sharin! of pro6ts and losses is on the basis of actual contributionsI& there is no e%idence these properties were acquired b the partnership funds thus it should not

belon! to itI) neither is entitled to dama!esI the letter of Ma!lana in eLect dissol%ed the partnershipI sale of forest concession is %alid and bindin! and should be considered as Ma!lana$s

contributionI' "o7as must pa or turn o%er to the partnership the pro6ts he recei%ed from CM8 and pa his

personal account to the partnershipI+ Ma!lana must be paid 1'. which he should$%e recei%ed but was not paid to him and must be

considered as his contribution

ACTION AND 5RA>ER: ?>2

ISSUE:

. =? the partnership carried on after the second partnership was a de facto partnership and atwill-. =? Ma!alana ma unilaterall dissol%e the partnership

=E4D:. No.-. >es.

RATIO:- There was no intention to dissol%e the 6rst partnership upon the constitution of the second as

e%erthin! else was the same eAcept for the fact that the too. in an industrial partner: thepursued the same purposes, the capital contributions call for the same amounts, allsubsequent renewals of Timber Oicense were secured in fa%or of the 6rst partnership, allbusinesses were carried out under the re!istered articles To all intents and purposes therefore,the First 2rticles of #artnership were onl amended, in the form of 8upplementar 2rticles of

Co#artnership

n the other hand, there is no dispute that the second partnership was dissol%ed b commonconsent 8aid dissolution did not aLect the 6rst partnership which continued to eAist8i!ni6cantl, Ma!lana and "o7as a!reed to purchase the interest, share and participation in thesecond partnership of #ahamotan! and that thereafter, the two 3Ma!lana and "o7as4 becamethe owners of equipment contributed b #ahamotan! Ma!lana e%en reminded "o7as of hisobli!ation to contribute either in cash or in equipment, to the capital in%estment of thepartnership as well as his obli!ation to perform his duties as lo!!in! superintendent Thisreminder cannot refer to an other but to the pro%isions of the dul re!istered 2rticles of Co



#artnership

& 2s there are onl two parties when Ma!lana noti6ed "o7as that he dissol%ed the partnership, itis in eLect a notice of withdrawal

nder 2rticle -1)(, par & of the Ci%il Code, eve% i( $e"e is a s*e&i0ed e"m1 o%e *a"%e"

&a% &ause is dissoluio% !) e,*"essl) 2i$d"a2i%# eve% !e(o"e $e e,*i"aio% o( $e*e"iod1 2i$ o" 2i$ou 'usi0a!le &ause. f course, if the cause is not 7usti6ed or nocause was !i%en, the withdrawin! partner is liable for dama!es but in no case can he becompelled to remain in the 6rm =ith his withdrawal, the number of members is decreased,hence, the dissolution 2nd in whate%er wa he ma %iew the situation, the conclusion isine%itable that "o7as and Ma!lana shall be !uided in the liquidation of the partnership b thepro%isions of its dul re!istered 2rticles of Co#artnershipI that is, all pro6ts and losses of thepartnership shall be di%ided Nshare and share ali.eN between the partners

0ut an accountin! must 6rst be made and which in fact was ordered b the trial court andaccomplished b the commissioners appointed for the purpose

2ccordin! to the Commissioners$ report, "o7as is not entitled to an pro6ts as he failed to !i%ethe amount he had underta.en to contribute thus, had become a debtor of the partnershipMa!lana cannot be liable for dama!es as "o7as abandoned the partnership thru his acts and

also too. funds in an amount more than his contribution

DIS5OSITI?E: #"EM<8E8 C?8<5E"E5, the assailed decision of the Court of First <nstance of 5a%ao,0ranch <<<, is hereb M5<F<E5 in the sense that the dul re!istered partnership of Eastcoast5e%elopment Enterprises continued to eAist until liquidated and that the sharin! basis of the partnersshould be on share and share ali.e as pro%ided for in its 2rticles of #artnership, in accordance with thecomputation of the commissioners =e also hereb 2FF<"M the decision of the trial court in all otherrespects

partnership 9.28

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