Escolar Documentos
Profissional Documentos
Cultura Documentos
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Business Organization 1
Atty. Catherine Guerzo-Barrion
Same Only Filipinos may engage in retail business Rep.
Act 1180 applicable to existing partnership.The State
through Congress had the right to enact Republic Act No.
1180 providing that only Filipinos may engage in the retail
business and such provision was intended to apply to
partnership owned by foreigners already existing at the
time of its enactment giving them the right to continue
engaging in their retail business until the expiration of their
term of life.
Same Amendment of articles of partnership to extend
term after enactment of the law.The agreement in the
articles of partnership to extend the term of its life is not a
property right and it must be deemed subject to the law
existing at the time when the partners came to agree
regarding the extension. In the case at bar, when the
partners amended the articles of partnership, the
provisions of Republic Act 1180 were already in force, and
there can be not the slightest doubt that the right claimed
by appellants to extend the original term of their
partnership to another five years would be in violation of
the clear intent and purpose of said Act.
JOSE P. OBILLOS, JR., SARAH P. OBILLOS, ROMEO
P. OBILLOS and REMEDIOS P. OBILLOS, brothers
and sisters, petitioners, vs. COMMISSIONER OF
INTERNAL REVENUE and COURT OF TAX
APPEALS, respondents.
Taxation The dictum that the power to tax involves the
power to destroy should be obviated.To regard the
petitioners as having formed a taxable unregistered
partnership would result in oppressive taxation and
confirm the dictum that the power to tax involves the
power to destroy. That eventuality should be obviated.
Same Partnership Coownership Where the father sold
his rights over two parcels of land to his four children so
they can build their residence, but the latter after one (1)
year sold them and paid the capital gains, they should not
be treated to have formed an unregistered partnership
and taxed corporate income tax on the sale and dividend
income tax on their shares of the profit's from the sale.
Their original purpose was to divide the lots for residential
purposes. If later on they found it not feasible to build their
residences on the lots because of the high cost of
construction, then they had no choice but to resell the
same to dissolve the coownership. The division of the
profit was merely incidental to the dissolution of the
coownership which was in the nature of things a
temporary state. It had to be terminated sooner or later.
Same Same Same Mere sharing of gross income from
an isolated transaction does not establish a
partnership.Article 1769(3) of' the Civil Code provides
that ''the sharing of gross returns does not of itself
establish a partnership, whether or not the persons
sharing them have a j oint or common right or interest in
any property from which the returns are derived". There
must be an unmistakable intention to form a partnership
or joint venture.
LIM TONG LIM, petitioner, vs. PHILIPPINE FISHING
GEAR INDUSTRIES, INC., respondent.
Partnerships A partnership may be deemed to exist
among parties who agree to borrow money to pursue a
business and to divide the profits or losses that may arise
therefrom, even if it is shown that they have not
contributed any capital of their own to a common fund,
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Atty. Catherine Guerzo-Barrion
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Atty. Catherine Guerzo-Barrion
Taxation Partnership When coownership converted to
copartnership.For tax purposes, the coownership of
inherited properties is automatically converted into an
unregistered partnership the moment the said common
properties and/or the incomes derived therefrom are used
as a common fund with intent to produce profits for the
heirs in proportion to their respective shares in the
inheritance as determined in a project partition either duly
executed in an extrajudicial settlement or approved by the
court in the corresponding testate or intestate proceeding.
The reason is simple. From the moment of such partition,
the heirs are entitled already to their respective definite
shares of the estate and the incomes thereof, for each of
them to manage and dispose of as exclusively his own
without the intervention of the other heirs, and,
accordingly, he becomes liable individually for all taxes in
connection therewith. If after such partition, he allows his
share to be held in common with his coheirs under a
single management to be used with the intent of making
profit thereby in proportion to his share, there can be no
doubt that, even if no document or instrument were
executed for the purpose, for tax purposes, at least, an
unregistered partnership is formed.
Same Same Corporation Partnerships considered
corporation for tax purposes.For purposes of the tax on
corporations, the National Internal Revenue Code,
includes partnershipswith the exception only of duly
registered general copartnershipswithin the purview of
the term corporation.
Same Same When income derived from inherited
properties deemed part of partnership income.The
income derived from inherited properties may be
considered as individual income of the respective heirs
only so long as the inheritance or estate is not distributed
or, at least, partitioned, but the moment their respective
known shares are used as part of the common assets of
the heirs to be used in making profits, it is but proper that
the income of such shares should be considered as part
of the taxable income of an unregistered partnership.
Same Same Ef ect on unregistered partnership profits of
individual income tax paid.The partnership profits
distributable to the partners should be reduced by the
amounts of income tax assessed against the partnership.
Consequently, each of the petioners in his individual
capacity overpaid his income tax for the years in question.
But as the individual income tax liabilities of petitioners
are not in issue in the instant proceeding, it is not proper
for the Court to pass upon the same. Same Same Where
right to refund of overpaid individual income tax has
prescribed.A taxpayer who did not pay the tax due on
the income from an unregistered partnership, of which he
is a partner, due to an erroneous belief that no
partnership, but only a coownership, existed between him
and his coheirs, and who due to the payment of the
individual income tax corresponding to his share in the
unregistered partnership profits, on the balance, overpaid
his income tax has the right to be reimbursed what he has
erroneously paid. However, the law is very clear that the
claim and action for such reimbursement are subject to
the bar of prescription.
NOBIO SARDANE, petitioner, vs. THE COURT OF
APPEALS and ROMEO J. ACOJEDO, respondents,
Remedial Law Evidence Parol Evidence Rule The
exceptions provided in Sec. 7, Rule 130 of the Rules of
Court do not apply in the case at bar as there is no
ambiguity in the writings in question.As correctly
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admission of genuineness and due execution may be
waived by a party but only if he acts in a manner indicative
of either an express or tacit waiver thereof. Petitioner,
however, either over looked or ignored the fact that, as
held in Yu Chuck, and the same is true in other cases of
identical factual settings, such a finding of waiver is proper
where a case has been tried in complete disregard of the
rule and the plaintiff having pleaded a document by copy,
presents oral evidence to prove the due execution of the
document and no objections are made to the defendant's
evidence in refutation. This situation does not obtain in the
present case hence said doctrine is obviously
inapplicable.
Same Same Same Same Failure of private respondent
to crossexamine the petitioner in his surrebuttal testimony
does not constitute a waiver of the implied admission of
the actionable documents.Neither did the failure of
herein private respondent to crossexamine herein
petitioner on the latter's surrebuttal testimony constitute a
waiver of the aforesaid implied admission. As found by the
respondent Court, said surrebuttal testimony consisted
solely of the denial of the testimony of herein private
respondent and 110 new or additional matter was
introduced in that surrebuttal testimony to exonerate
herein petitioner from his obligations under the aforesaid
promissory notes.
Same Same Appeals Petition for Review The
requirement of af irmance in full of the inferior court's
decision as a condition sine qua non for a petition for
review to the Court of Appeals, as provided in RA 296,
was not adopted or reproduced in RA 6031.At any rate,
it will be noted that petitioner anchors his said objection
on the provisions of Section 29, Republic Act 296 as
amended by Republic Act 5433 effective September
9,1968. Subsequently, the procedure for appeal to the
Court of Appeals from decisions of the then courts of first
instance in the exercise of their appellate jurisdiction over
cases originating from the municipal courts was provided
for by Republic Act 6031, amending Section 45 of the
Judiciary Act effective August 4,1969. The requirement
for affirmance in full of the inferior court's decision was not
adopted or reproduced in Republic Act 6031. Also, since
Republic Act 6031 failed to provide for the procedure or
mode of appeal in the cases therein contemplated, the
Court of Appeals en banc provided therefor in its
Resolution of August 12, 1971, by requiring a petition for
review but which also did not require for its availability that
the judgment of the court of first instance had affirmed in
full that of the lower court. Said mode of appeal and the
procedural requirements thereof governed the appeal
taken in this case from the aforesaid Court of First
Instance to the Court of Appeals in 1977. Herein
petitioner's plaint on this issue is, therefore, devoid of
merit.
ADRIANO ARBES ET AL., plaintiffs and appellees,
vs. VICENTE POLISTICO ET AL., defendants and
appellants.
UNLAWFUL
PARTNERSHIPS
"TURNUHAN
POLISTICO & Co." CHARITABLE INSTITUTIONS.
The partnership "Turnuhan Polistico & Co." is an unlawful
partnership (U. S. vs. Baguio, 39 Phil., 962). According to
paragraph 2 of article 1666 of the Civil Code, when an
unlawful partnership is judicially dissolved, the earnings
shall not be disposed of as profits, but shall be given to
charitable institutions. But in a case like the one at bar,
whose object is to determine the rights of the parties, and
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Atty. Catherine Guerzo-Barrion
application of the Dead Mans Statute to this case. First,
petitioners filed a compulsory counterclaim against
respondent in their answer before the trial court, and with
the filing of their counterclaim, petitioners themselves
effectively removed this case from the ambit of the Dead
Mans Statute. Well entrenched is the rule that when it is
the executor or administrator or representatives of the
estate that sets up the counterclaim, the plaintiff, herein
respondent, may testify to occurrences before the death
of the deceased to defeat the counterclaim. Moreover, as
defendant in the counterclaim, respondent is not
disqualified from testifying as to matters of fact occurring
before the death of the deceased, said action not having
been brought against but by the estate or representatives
of the deceased.
Same Same Words and Phrases Assignor of a party
means assignor of a cause of action which has arisen,
and not the assignor of a right assigned before any cause
of action has arisen.The testimony of Josephine is not
covered by the Dead Mans Statute for the simple
reason that she is not a party or assignor of a party to a
case or persons in whose behalf a case is prosecuted.
Records show that respondent offered the testimony of
Josephine to establish the existence of the partnership
between respondent and Jacinto. Petitioners insistence
that Josephine is the alter ego of respondent does not
make her an assignor because the term assignor of a
party means assignor of a cause of action which has
arisen, and not the assignor of a right assigned before any
cause of action has arisen. Plainly then, Josephine is
merely a witness of respondent, the latter being the party
plaintiff.
Same Dissolution The Civil Code expressly provides that
upon dissolution, the partnership continues and its legal
personality is retained until the complete winding up of its
business culminating in its termination. With regard to
petitioners insistence that laches and/or prescription
should have extinguished respondents claim, we agree
with the trial court and the Court of Appeals that the action
for accounting filed by respondent three (3) years after
Jacintos death was well within the prescribed period. The
Civil Code provides that an action to enforce an oral
contract prescribes in six (6) years while the right to
demand an accounting for a partners interest as against
the person continuing the business accrues at the date of
dissolution, in the absence of any contrary agreement.
Considering that the death of a partner results in the
dissolution of the partnership, in this case, it was after
Jacintos death that respondent as the surviving partner
had the right to an account of his interest as against
petitioners. It bears stressing that while Jacintos death
dissolved the partnership, the dissolution did not
immediately terminate the partnership. The Civil Code
expressly provides that upon dissolution, the partnership
continues and its legal personality is retained until the
complete winding up of its business, culminating in its
termination.
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was not such a universal partnership, since the
contributions of the partners were fixed sums of money
and neither one of them was an industrial partner. It
follows that respondent company was not a partnership
that spouses were forbidden to enter by Article 1677 of
the Civil Code of 1889. Nor could the subsequent
marriage of the partners operate to dissolve it, such
marriage not being one of the causes provided for that
purpose either by the Spanish Civil Code or the Code of
Commerce.
Same Where marriage of partners does not make the
company a single
proprietorship.The capital
contributions of re spondentspartners were separately
owned and contributed by them before their marriage and
after they were joined in wedlock, such contributions
remained their respective separate property under the
Spanish Civil Code.
Same Partnership has distinct and separate personality
from that of its partners Section 24 of Internal Revenue
Code is exception to the rule. The basic tenet of ,the
Spanish and Philippine law is that the partnership has a
juridical personality of its own, distinct and separate from
that of its partners, the bypassing of the existence of the
limited partnership as a taxpayer can only be done by
ignoring or disregarding clear statutory mandates and
basic principles of our law. The limited partnerships
separate individuality makes it impossible to equate its
income with that of the component members. True,
section 24 of the Internal Revenue Code merges
registered general copartnerships with the personality of
the individual partners for income tax purposes. But this
rule is exceptional in its disregard of a cardinal tenet of
our partnership laws, and can not be extended by mere
implication to limited partnerships.
Same Taxation Change in membership does not remove
partnership from coverage of section 24.The limited
partnership is not a mere business conduit of the partnerspouses it was organized for legitimate business
purposes it conducted its own dealings with its customers
prior to appellees marriage, and had been filing its own
income tax returns as such independent entity. The
change in its membership, brought about by the marriage
of the partners and their subsequent acquisition of all
interest therein. is no ground for withdrawing the
partnership from the coverage of Section 24 of the tax
code, requiring it to pay income tax. As far as the records
show, the partners did not enter into matrimony and
thereafter buy the interests of the remaining partner with
the premeditated scheme or design to use the partnership
as a business conduit to dodge the to laws. Regularity,
not otherwise, is presumed. The limited partnership is
taxable on its income and to require that income to be
included in the indiviual tax return of respondent is to
overstretch the letter and intent of the law.
Same Same Members and not firm are taxable in case
of compaias colectivas.In fact, it would even conflict
with what it specifically provides in its Section 24: for the
appellants stand results in equal treatment, taxwise, of a
general copartnership (compania colectiva) and a limited
partnership, when the code plainly differentiates the two.
Thus, the code taxes the latter on its income, but not the
former, because it is in the case of compaias colectivas
that the members, and not the firm, are taxable in their
individual capacities for any dividend or share of the profit
derived from the duly registered general partnership
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Atty. Catherine Guerzo-Barrion
the issues of the case, and such findings are contrary to
the admissions of both appellant and appellee (6) when
the judgment of the Court of Appeals is premised on a
misapprehension of facts (7) when the Court of Appeals
fails to notice certain relevant facts which, if properly
considered, will justify a different conclusion (8) when the
findings of fact are themselves conflicting (9) when the
findings of fact are conclusions without citation of the
specific evidence on which they are based and (10) when
the findings of fact of the Court of Appeals are premised
on the absence of evidence but such findings are
contradicted by the evidence on record.
Partnerships Words and Phrases In order to constitute a
partnership, it must be established that (1) two or more
persons bound themselves to contribute money, property
or industry to a common fund, and (2) they intended to
divide the profits among themselves.The primordial
issue here is whether Tan Eng Kee and Tan Eng Lay were
partners in Benguet Lumber. A contract of partnership is
defined by law as one where: x x x two or more persons
bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing
the profits among themselves. Two or more persons may
also form a partnership for the exercise of a profession.
Thus, in order to constitute a partnership, it must be
established that (1) two or more persons bound
themselves to contribute money, property, or industry to
a common fund, and (2) they intend to divide the profits
among themselves. The agreement need not be formally
reduced into writing, since statute allows the oral
constitution of a partnership, save in two instances: (1)
when immovable property or real rights are contributed,
and (2) when the partnership has a capital of three
thousand pesos or more. In both cases, a public
instrument is required. An inventory to be signed by the
parties and attached to the public instrument is also
indispensable to the validity of the partnership whenever
immovable property is contributed to the partnership.
Same Same Joint Ventures Partnership and Joint
Venture, Distinguished.The trial court determined that
Tan Eng Kee and Tan Eng Lay had entered into a joint
venture, which it said is akin to a particular partnership. A
particular partnership is distinguished from a joint
adventure, to wit: (a) A joint adventure (an American
concept similar to our joint accounts ) is a sort of informal
partnership, with no firm name and no legal personality.
In a joint account, the participating merchants can
transact business under their own name, and can be
individually liable therefor, (b) Usually, but not necessarily
a joint adventure is limited to a SINGLE TRANSACTION,
although the business of pursuing to a successful
termination may continue for a number of years a
partnership generally relates to a continuing business of
various transactions of a certain kind. Same
Same Same Same A joint venture may be likened to a
particular partnership The legal concept of a joint venture
is of common law origin and has no precise legal
definition, but it has been generally understood to mean
an organization formed for some temporary purpose. A
joint venture presupposes generally a parity of standing
between the joint coventures or partners, in which each
party has an equal proprietary interest in the capital or
property contributed, and where each party exercises
equal rights in the conduct of the business. Nonetheless,
in Aurbach, et al. v. Sanitary Wares Manufacturing
Corporation, et al., we expressed the view that a joint
venture may be likened to a particular partnership, thus:
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Atty. Catherine Guerzo-Barrion
Kee appeared never to have made any such demand for
accounting from his brother, Tang Eng Lay.
Same Where circumstances taken singly may be
inadequate to prove the intent to form a partnership,
nevertheless, the collective ef ect of these circumstances
may be such as to support a finding of the existence of
the parties intent.In the instant case, we find private
respondents arguments to be welltaken. Where
circumstances taken singly may be inadequate to prove
the intent to form a partnership, nevertheless, the
collective effect of these circumstances may be such as
to support a finding of the existence of the parties intent.
Yet, in the case at bench, even the aforesaid
circumstances when taken together are not persuasive
indicia of a partnership. They only tend to show that Tan
Eng Kee was involved in the operations of Benguet
Lumber, but in what capacity is unclear. We cannot
discount the likelihood that as a member of the family, he
occupied a niche above the rankandfile employees. He
would have enjoyed liberties otherwise unavailable were
he not kin, such as his residence in the Benguet Lumber
Company compound. He would have moral, if not actual,
superiority over his fellow employees, thereby entitling
him to exercise powers of supervision. It may even be that
among his duties is to place orders with suppliers. Again,
the circumstances proffered by petitioners do not provide
a logical nexus to the conclusion desired these are not
inconsistent with the powers and duties of a manager,
even in a business organized and run as informally as
Benguet Lumber Company.
Obligations of the Partners
A. Among themselves
GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO,
JR., and BENJAMIN T. BACORRO, petitioners, vs.
HON. COURT OF APPEALS, SECURITIES AND
EXCHANGE COMMISSION and JOAQUIN L. MISA,
respondents.
Commercial Law Partnership A partnership that does not
fix its term is a partnership at will.A partnership that
does not fix its term is a partnership at will. That the law
firm Bito, Misa & Lozada, and now Bito, Lozada, Ortega
and Castillo, is indeed such a partnership need not be
unduly belabored. We quote, with approval, like did the
appellate court, the findings and disquisition of
respondent SEC on this matter.
Same Same The birth and life of a partnership at will is
predicated on the mutual desire and consent of the
partners.The birth and life of a partnership at will is
predicated on the mutual desire and consent of the
partners. The right to choose with whom a person wishes
to associate himself is the very foundation and essence
of that partnership. Its continued existence is, in turn,
dependent on the constancy of that mutual resolve, along
with each partners capability to give it, and the absence
of a cause for dissolution provided by the law itself. Verily,
any one of the partners may, at his sole pleasure, dictate
a dissolution of the partnership at will. He must, however,
act in good faith, not that the attendance of bad faith can
prevent the dissolution of the partnership but that it can
result in a liability for damages.
Same Same Neither would the presence of a period for
its specific duration or the statement of a particular
purpose for its creation prevent the dissolution of any
partnership by an act or will of a partner.In passing,
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Same Same Indemnification for damages includes
losses suf ered and profits obligee failed to obtain.
Regarding the award of P200,000.00 as his share in the
unrealized profits of the partnership, the appellant
contends that the findings of the trial court that the amount
of P400,000.00 as reasonable profits of the partnership
venture is without any basis and is not supported by the
evidence. The appellant maintains that the lower court, in
making its determination, did not take into consideration
the great risks involved in business operations involving
as it does the completion of the projects within a definite
period of time, in the face of adverse and often
unpredictable circumstances, as well as the fact that the
appellee, who was in charge of the projects in the field,
contributed in a large measure to the failure of the
partnership to realize such profits by his field
management. This argument must be overruled in the
light of the law and evidence on the matter. Under Article
2200 of the Civil Code, indemnification for damages shall
comprehend not only the value of the loss suffered, but
also that of the profits which the obligee failed to obtain.
In other words lucrum cessans is also a basis for
indemnification.
Same Same Award of compensatory damages being
reasonable and not speculative is upheld.Had the
appellant not been remiss in his obligations as partner
and as prime contractor of the construction projects in
question as he was bound to perform pursuant to the
partnership
and
subcontract
agreements,
and
considering the fact that the total contract amount of these
two projects is P2,327,335.76, it is reasonable to expect
that the partnership would have earned much more than
the P334,225.61 We have hereinabove indicated. The
award, therefore, made by the trial court of the amount of
P200,000.00, as compensatory damages, is not
speculative, but based on reasonable estimate.
ISABELO MORAN, JR., petitioner, vs. THE HON.
COURT OF APPEALS and MARIANO E. PECSON,
respondents.
Damages Partnership There is no factual or legal basis
for award of speculative damages for likely partnership
profits.The first question raised in this petition refers to
the award of P47,500.00 as the private respondents
share in the unrealized profits of the partnership. The
petitioner contends that the award is highly speculative.
The petitioner maintains that the respondent court did not
take into account the great risks involved in the business
undertaking. We agree with the petitioner that the award
of speculative damages has no basis in fact and law.
Same Same Partner who promises to contribute to
partnership becomes promissory debtor of latter.The
rule is, when a partner who has undertaken to contribute
a sum of money fails to do so, he becomes a debtor of the
partnership for whatever he may have promised to
contribute (Art. 1786, Civil Code) and for interests and
damages from the time he should have complied with his
obligation (Art. 1788, Civil Code).
Same Same Essence of partnership is that partners
share in profits and losses.Being a contract of
partnership, each partner must share in the profits and
losses of the venture. That is the essence of a
partnership. And even with an assurance made by one of
the partners that they would earn a huge amount of
profits, in the absence of fraud, the other partner cannot
claim a right to recover the highly speculative profits. It is
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Same C.A. erred in its factual finding in the case at bar.
In this case, there is misapprehension of facts. The
evidence of the private respondent himself shows that his
investment in the Voice of Veterans project amounted to
only P3,000.00. The remaining P4,000.00 was the
amount of profit that the private respondent expected to
receive.
Same Partnership Damages Factual finding of C.A. that
venture never left the ground and on this basis decreed
full return of respondents investment is erroneous.The
respondent court erred when it concluded that the project
never left the ground because the project did take place.
Only it failed. It was the private respondent himself who
presented a copy of the book entitled Voice of the
Veterans in the lower court as Exhibit L. Therefore, it
would be error to state that the project never took place
and on this basis decree the return of the private
respondents investment.
EVANGELISTA & Co., DOMINGO C.
EVANGELISTA,JR., CONCHITA B. NAVARRO and
LEONARDA ATIENZA ABAD SANTOS, petitioners,
vs. ESTRELLA ABAD SANTOS, respondent.
Remedial Law Appeals Supreme Court will not review
finding of facts of the Court of Appeals.It is not the
function of the Supreme Court to analyze or weigh such
evidence all over again, its jurisdiction being limited to
reviewing errors of law that might have been committed
by the lower court. It should be observed, in this regard,
that the Court of Appeals did not hold that the Articles of
Co partnership, identified in the record as Exhibit "A", was
conclusive evidence that the respondent was an industrial
partner of the said company, but considered it together
with other factors, consisting of both testimonial and
documentary evidences, in arriving at the factual
conclusion expressed in the decision.
PEDRO MARTINEZ, plaintiff and appellee, vs.
ONG PONG Co and ONG LAY, defendants.ONG
PONG Co, appellant.
PARTNERSHIP
LIABILITY
OF
MANAGING
PARTNERS. Where two persons receive from another
a sum of money for the establishment of a business, and
agree to share with the latter the profits or losses that may
result therefrom, the said two persons, as the apparent
administrators of the partnership, acted as agents for the
capitalist partner under the provisions of article 1695, rule
1, of the Civil Code, and by virtue thereof are bound to
fulfill the contract which implies the management of the
business.
ID. ID. CONTRACT OF "MANDATUM."A contract of
mandatum requires that agents shall account to the
principal for all their transactions and pay him whatever
sum they received by virtue thereof. By not accounting for
it, or otherwise justifying the investment of the money
received and administered, the parties who received it
become debtors and are under obligation to make
restitution of the money to the person who entrusted it to
them.
ID. ID. ID.The above obligation is not in solidum,
neither by reason of the general rules governing the
obligations of two or more persons, nor by the special rule
governing contracts of partnership or of mandatum it is
simply a contract in severalty, each person being liable for
one half.
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present any evidence to substantiate its claim, while
petitioner did. For said respondent's failure, the decision
must be adverse to it.
Same Same Court cannot sanction respondent
Commission's findings based upon a mere inference.
However, as adverted to earlier, respondent Insurance
Commission absolved respondent insurance company
from liability on the basis of the certification issued by the
then Court of First Instance of Davao, Branch II, that in a
certain civil action against the Palomos, Arsenio Lopez
Chua stands as the complainant and not Tai Tong
Chuache. From said evidence respondent commission
inferred that the credit extended by herein petitioner to the
Palomos secured by the insured property must have been
paid. Such is a glaring error which this Court cannot
sanction. Respondent Commission's findings are based
upon a mere inference.
Same Insurance company bound by the term s and
conditions of the policy which is of legal force and ef ect
at the time of the fire.The respondent insurance
company having issued a policy in favor of herein
petitioner which policy was of legal force and effect at the
time of the fire, it is bound by its terms and conditions.
Upon its failure to prove the allegation of lack of insurable
interest on the part of the petitioner, respondent insurance
company is and must be held liable.
Civil Law Loan Presumption of nonpayment when
creditor is in possession of the document of credit.The
record of the case shows that the petitioner to support its
claim for the insurance proceeds offered as evidence the
contract of mortgage (Exh. 1) which has not been
cancelled nor released. It has been held in a long line of
cases that when the creditor is in possession of the
document of credit, he need not prove nonpayment for it
is presumed. The validity of the insurance policy taken by
petitioner was not assailed by private respondent.
Moreover, petitioner's claim that the loan extended to the
Palomos has not yet been paid was corroborated by
Azucena Palomo who testified that they are still indebted
to herein petitioner.
Civil Procedure Party in interest Actions Partnership
Action must be brought in the name of the real party in
interest A partnership may sue and be sued in its name
or by its duly authorized representative Public
respondent argues however, that if the civil case really
stemmed from the loan granted to Azucena Palomo by
petitioner the same should have been brought by Tai
Tong Chuache or by its representative in its own behalf.
From the above premise respondent concluded that the
obligation secured by the insured property must have
been paid. The premise is correct but the conclusion is
wrong. Citing Rule 3, Sec. 2 respondent pointed out that
the action must be brought in the name of the real party
in interest. We agree. However, it should be borne in mind
that petitioner being a partnership may sue and be sued
in its name or by its duly authorized representative. The
fact that Arsenio Lopez Chua is the representative of
petitioner is not questioned. Petitioner s declaration that
Ar senio Lopez Chua acts as the managing partner of the
partnership was corroborated by respondent insurance
company. Thus Chua as the managing partner of the
partnership may execute all acts of administration
including the right to sue debtors of the partnership in
case of their failure to pay their obligations when it
became due and demandable. Or at the very least, Chua
being a partner of petitioner Tai Tong Chuache &
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Civil procedure Rules of procedure should not be used
as tool for denial of substantial justice.Petitioners
should be granted relief, if only to stress emphatically
once more that the rules of procedure may not be
misused and abused as instruments for the denial of
substantial justice. A review of the record of this case
immediately discloses that here is another demonstrative
instance of how some members of the bar availing of their
proficiency in invoking the letter of the rules without regard
to their real spirit and intent, succeed in inducing courts to
act contrary to the dictates of justice and equity, and, in
some instances, to wittingly or unwittingly abet unfair
advantage by ironically camouflaging their actuations as
earnest efforts to satisfy the public clamor for speedy
disposition of litigations, forgetting all the while that the
plain injunction of Section 2 of Rule 1 is that the rules
shall be liberally construed in order to promote their object
and to assist the parties in obtaining not only speedy but
more imperatively, just . . . and inexpensive
determination of every action and proceeding.
Same Default When motion to lift order of default is
under both, contains the reasons for failure to answer and
as well as the facts constituting prospective defense, a
formal verification or separate af idavit of merit is not
necessary.When a motion to lift order of default
contains the reasons for the failure to answer as well as
the facts constituting the prospective defense of the
defendant and it is sworn to by said defendant, neither a
formal verification nor a separate affidavit of merit is
necessary.
Same Same Jurisdiction A motion to lift order of default
on ground summons was not served is in order and is in
essence an attack on jurisdiction of the court.A motion
to lift an order of default on the ground that service of
summons has not been made in accordance with the
rules is in order and is in essence verily an attack against
the jurisdiction of the court over the person of the
defendant, no less than if it were worded in a manner
specifically embodying such a direct challenge.
Same Motions Dismissal of action Defendants are
entitled to 3 day prior notice of motion to drop them as
parties.According to Chief Justice Moran, three days
at least must intervene between the date of service of
notice and the date set for the hearing, otherwise the court
may not validly act on the motion. Such is the correct
construction of Section 4 of Rule 15.
Same Counterclaim When a counterclaim is
compulsory: Defendants counterclaim is compulsory,
not only because the same evidence to sustain it will also
refute the cause or causes of action alleged in plaintiffs
complaint, but also because from its very nature, it is
obvious that the same cannot remain pending for
independent adjudication by the court. (Section 2, Rule
17).
Same Motions to Dismiss Actions A motion to dismiss
an action against nondefaulted defendants should not be
granted when such defendants and those declared in
default are all indispensable parties to the action.As the
plaintiffs complaint has been framed, all the six
defendants are charged with having actually taken part in
a conspiracy to misappropriate, conceal and convert to
their own benefit the profits, properties and all other
assets of the partnership Glory Commercial Company, to
the extent that they have allegedly organized a
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it that any judgment against him must be in accordance
with law.
Same Evidence Defaults Reception of evidence by clerk
of court after declaration of defendants default is wrong
in principle and orientation and has no basis in any rule.
It should
be
discontinued.Incidentally,
these
considerations argue against the present widespread
practice of trial judges, as was done by His Honor in this
case, of delegating to their clerks of court the reception of
the plaintiffs evidence when the defendant is in default.
Such a practice is wrong in principle and orientation. It has
no basis in any rule. x x The clerk of court would not be in
a position much less have the authority to act in the
premises in the manner demanded by the rules of fair play
and as contemplated in the law, considering his
comparably limited area of discretion and his presumably
inferior preparation for the functions of a judge. Besides,
the default of the defendant is no excuse for the court to
renounce the opportunity to closely observe the
demeanor and conduct of the witnesses of the plaintiff,
the better to appreciate their truthfulness and credibility.
We therefore declare as a matter of judicial policy that
there being no imperative reason for judges to do
otherwise, the practice should be discontinued.
Same Same Same Trial court should leave enough
opportunity open for possible lifting of default order.It is
preferable to leave enough opportunity open for possible
lifting of the order of default before proceeding with the
reception of the plaintiffs evidence and the rendition of
the decision. x x x The gain in time and dispatched should
the court immediately try the case on the very day of or
shortly after the declaration of default is far outweighed by
the inconvenience and complications involved in having
to undo everything already done in the event the
defendant should justify his omission to answer on time
Same Same Same: Where a common cause of action is
averred against several defendants some of whom are
declared in default, the latter have a right to own the
defenses interposed by answering defendants and to
expect a result of the litigation totally common with them
in kind and amount.In all instances where a common
cause of action is alleged against several defendants
some of whom answer and the others do not, the latter or
those in default acquire a vested right not only to own the
defense interposed in the answer of their codefendant or
codefendants not in default but also to expect a result of
the litigation totally common with them in kind and in
amount whether favorable or unfavorable. The
defendants is carried through to its adjective phase as
ineluctably demanded by the homogeneity and
indivisibility of justice itself. Indeed, since the singleness
of the cause of action also inevitably implies that all the
defendants are indispensable parties, the courts power
to act is integral and cannot be split such that it cannot
relieve any of them and at the same time render judgment
against the rest. x x x Of course, he has to suffer the
consequences of whatever the answering defendant may
do or fail to do, regardless of possible adverse
consequences, but if the complaint has to be dismissed in
so far as the answering defendant is concerned, it
becomes his inalienable right that the same be dismissed
also as to him. It does not matter that the dismissal is upon
the evidence presented by the plaintiff or upon the latters
desistance, for in both contingencies, the lack of sufficient
legal basis must be the cause.
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hand that prompt action is needed to restore order in the
entangled situation created by the series of plainly illegal
orders it had issued. The essential purpose of certiorari is
to keep the proceedings in lower judicial courts and
tribunals within legal bounds, so that due process and the
rule of law may prevail at all times and arbitrariness,
whimsicality and unfairness which justice abhors may
immediately be stamped out before graver injury, juridical
and otherwise, ensues.
Civil procedure Pretrial Trial court should consider
evidence adduced at pretrial in arriving at its judgment on
the merits of an action. The fundamental purpose of
pretrial, aside from affording the parties every opportunity
to compromise or settle their differences, is for the court
to be apprised of the unsettled issues between the parties
and of their respective evidence relative thereto, to the
end that it may take corresponding measures that would
abbreviate the trial as much as possible and the judge
may be able to ascertain the facts with the least
observance of technical rules. x x x In brief, the pretrial
constitutes part and parcel of the proceedings, and hence,
matters dealt with therein may not be disregarded in the
process of decisionmaking. Otherwise, the real essence
of compulsory pretrial would be insignificant and
worthless.
Civil law Evidence Primary evidence of a marriage is
marriage contract.The primary evidence of a marriage
must be an authentic copy of the marriage contract. While
a marriage may also be proved by other competent
evidence, the absence of the contract must first be
satisfactorily explained. Surely, the certification of the
person who allegedly solemnized a marriage is not
admissible evidence of such marriage unless proof of loss
of the contract or of any other satisfactory reason for its
nonproduction is first presented to the court.
Partnership A partner has no obligation to account to
anyone for properties acquired after dissolution of
partnership in absence of proof he violated trust of
deceased partner during existence of partnership.
Defendants have no obligation to account to anyone for
such acquisitions (long after the partnership had been
automatically dissolved as a result of the death of Po
Chuan) in the absence of clear proof that they had
violated the trust of Po Chuan during the existence of the
partnership.
Same Succession No funds or property may be
adjudicated to her or representative of deceased partner
without liquidation of partnership being first terminated.
No specific amounts or properties may be adjudicated to
the heir or legal representative of the deceased partner
without the liquidation being first terminated.
DAN FUE LEUNG, petitioner, vs. HON.
INTERMEDIATE APPELLATE COURT and LEUNG
YIU, respondents.
Remedial Law Civil Procedure Pleadings Complaint
The nature of the action may be determined from the facts
alleged in the complaint as constituting the cause of
action.Therefore, the lower courts did not err in
construing the complaint as one wherein the private
respondent asserted his right as partner of the petitioner
in the establishment of the Sun Wah Panciteria,
notwithstanding the use of the term financial assistance
therein. We agree with the appellate courts observation
to the effect that x x x given its ordinary meaning,
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they expect to collect from the partnership, particularly
from petitioner, in order to determine the proper amount
of docket and other fees. It is thus imperative for
respondents to pay the corresponding docket fees in
order that the trial court may acquire jurisdiction over the
action.
Same Same Pauper Litigants A party cannot invoke the
third paragraph of Section 16, Rule 141 of the Rules of
Court which allows that the legal fees shall be a lien on
the monetary or property judgment that may be rendered
in favor of such party if he is not a pauperlitigant.
Petitioner, however, argues that the trial court and the
Court of Appeals erred in condoning the nonpayment of
the proper legal fees and in allowing the same to become
a lien on the monetary or property judgment that may be
rendered in favor of respondents. There is merit in
petitioners assertion. The third paragraph of Section 16,
Rule 141 of the Rules of Court states that: The legal fees
shall be a lien on the monetary or property judgment in
favor of the pauperlitigant. Respondents cannot invoke
the above provision in their favor because it specifically
applies to pauperlitigantsNowhere in the records does it
appear that respondents are litigating as paupers, and as
such are exempted from the payment of court fees.
Same Same The provision of the third paragraph of
Section 5(a), Rule 141 of the Rules of Court clearly
contemplates an initial payment of the filing fees
corresponding to the estimated amount of the claim
subject to adjustment as to what later may be proved.
The rule applicable to the case at bar is Section 5(a) of
Rule 141 of the Rules of Court, which defines the two
kinds of claims as: (1) those which are immediately
ascertainable and (2) those which cannot be immediately
ascertained as to the exact amount. This second class of
claims, where the exact amount still has to be finally
determined by the courts based on evidence presented,
falls squarely under the third paragraph of said Section
5(a), which provides: In case the value of the property or
estate or the sum claimed is less or more in accordance
with the appraisal of the court, the dif erence of fee shall
be refunded or paid as the case may be. (Italics ours) In
Pilipinas Shell Petroleum Corporation v. Court of Appeals,
this Court pronounced that the abovequoted provision
clearly contemplates an initial payment of the filing fees
corresponding to the estimated amount of the claim
subject to adjustment as to what later may be proved.
Moreover, we reiterated therein the principle that the
payment of filing fees cannot be made contingent or
dependent on the result of the case. Thus, an initial
payment of the docket fees based on an estimated
amount must be paid simultaneous with the filing of the
complaint. Otherwise, the court would stand to lose the
filing fees should the judgment later turn out to be adverse
to any claim of the respondent heirs.
Same Same The matter of payment of docket fees is not
a mere trivialitythe payment of docket fees cannot be
made dependent on the outcome of the case, except
when the claimant is a pauperlitigant.The matter of
payment of docket fees is not a mere triviality. These fees
are necessary to defray court expenses in the handling of
cases. Consequently, in order to avoid tremendous losses
to the judiciary, and to the government as well, the
payment of docket fees cannot be made dependent on
the outcome of the case, except when the claimant is a
pauperlitigant.
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upon the substance or merits of the case. As it is, venue
in this case was properly laid and the trial court correctly
ruled so.
Same Parties Succession The surviving spouse does
not need to be appointed as executrix or administratrix of
the estate before she can file an action based on the rights
of her deceased husbandshe and her children are
complainants in their own right as successors, the
deceaseds rights being transmitted to his heirs from the
moment of death.On the third issue, petitioner asserts
that the surviving spouse of Vicente Tabanao has no legal
capacity to sue since she was never appointed as
administratrix or executrix of his estate. Petitioners
objection in this regard is misplaced. The surviving
spouse does not need to be appointed as executrix or
administratrix of the estate before she can file the action.
She and her children are complainants in their own right
as successors of Vicente Tabanao. From the very
moment of Vicente Tabanaos death, his rights insofar as
the partnership was concerned were transmitted to his
heirs, for rights to the succession are transmitted from the
moment of death of the decedent. Whatever claims and
rights Vicente Tabanao had against the partnership and
petitioner were transmitted to respondents by operation of
law, more particularly by succession, which is a mode of
acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance of
a person are transmitted. Moreover, respondents became
owners of their respective hereditary shares from the
moment Vicente Tabanao died.
Same Same Same The heirs, as successors who
stepped into the shoes of their decedent upon his death,
can commence any action originally pertaining to the
decedent.A prior settlement of the estate, or even the
appointment of Salvacion Tabanao as executrix or
administratrix, is not necessary for any of the heirs to
acquire legal capacity to sue. As successors who stepped
into the shoes of their decedent upon his death, they can
commence any action originally pertaining to the
decedent. From the moment of his death, his rights as a
partner and to demand fulfillment of petitioners
obligations as outlined in their dissolution agreement were
transmitted to respondents. They, therefore, had the
capacity to sue and seek the courts intervention to
compel petitioner to fulfill his obligations.
Same Partnerships Accounting Prescription For as
long as the partnership exists, any of the partners may
demand an accounting of the partnerships business, and
prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is
done. The three (3) final stages of a partnership are: (1)
dissolution (2) windingup and (3) termination. The
partnership, although dissolved, continues to exist and its
legal personality is retained, at which time it completes the
winding up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners.
For as long as the partnership exists, any of the partners
may demand an accounting of the partnerships business.
Prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is
done. Contrary to petitioners protestations that
respondents right to inquire into the business affairs of
the partnership accrued in 1986, prescribing four (4) years
thereafter, prescription had not even begun to run in the
absence of a final accounting.
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theory that they are entitled to more than what the
statement of accounts shows, and is therefore not the
kind of error that calls for another accounting which will
serve the purpose of the respondents' suit. Moreover, as
the petitioners did not appeal from the decision of the
Court of First Instance.
PROPERTY RIGHTS OF PARTNERS
INOCENCIA DELUAO and FELIPE DELUAO,
plaintiffsappellees, vs.
NICANOR CASTEEL and JUAN DEPRA, defendants,
NICANOR CASTEEL, defendantappellant.
Political law Administrative law Rulemaking power
Fisheries Act Fisheries Administrative Order 14 sec 7
prohibiting transfer or subletting of fishponds.Fisheries
Administrative Order 14, sec. 7 prohibiting the transfer or
subletting of fishponds covered by permits or lease
agreements is not inconsistent with the Fisheries Act.
Sec. 63 of the Fisheries Act allows only holders of permits
or leases issued or executed by the Secretary of
Agriculture and Natural Resources (DANR Secretary) to
exercise the acts of entering the land and construct a
fishpond therein. Therefore, only a holder of a permit or
lease and no one else may enjoy the benefits allowed by
the law. In declaring null and void a sublease or transfer
of the whole or part of a fishpond and/or its improvements
unless. previously approved by the Director
(Commissioner) of Fisheries, sec. 37 (a) of Fisheries
Administrative Order 14 does no more than carry into
effect the will of the legislature as expressed in the
Fisheries Act. It is a valid administrative order issued
under the authority conferred by sec. 4 of the Fisheries
Act on the DANR Secretary to "issue instructions, orders,
rules and regulations consistent with this Act, as may be
necessary to carry into effect the provisions thereof." It
surely cannot be considered an act of legislation.
Civil law Partnership Contract to divide or transfer a
fishpond.A partnership formed to divide a fishpond into
equal parts is null and void as being against public policy.
A partnership cannot be formed for an illegal purpose
because it is against several prohibitory laws. And since
the contract is null and void, the party cannot be made to
execute a formal transfer of onehalf of the fishpond and
to secure official approval of the same as agreed upon.
Political law Administrative law Judicial review When
not allowed. Purely administrative and discretionary
functions of administrative agencies of the government
may not be interfered with by the courts especially in a
case where the agency is not even a party.
Civil law Contracts Fisheries Act Where equitable
grounds cannot be advanced to secure approval of
prohibited contract.The nullity of a prohibited contract
of transfer of a fishpond under the Fisheries Act cannot
be cured by equitable considerations unlike other rulings
of the Supreme Court in analogous cases. Firstly, the
subjectmatter in the Zamboanga case is private property
while the one at bar is public property. Secondly, in this
case there is a clear prohibition ,that without the approval
of the DANR Secretary any sublease or transfer is null
and void. Thus, the maxim "equity regards that as done
which should have been done" does not apply. Lastly, the
Lacuesta ruling does not apply where there is no showing
that the parties to the contract would not have succeeded
in securing the approval of the fishpond application were
it not for the indispensable aid both material and
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conclusion that the trade name as a property is hers
alone, particularly when the woman is married. By law, all
property acquired during the marriage, whether the
acquisition appears to have been made, contracted or
registered in the name of one or both spouses, is
presumed to be conjugal unless the contrary is proved.
Same Same The conjugal partnership is governed by
the rules on the contract of partnership in all that is not in
conflict with what is expressly determined in this chapter
or by spouses in their marriage settlement. In other words,
the property relations of the husband and wife shall be
governed primarily by Chapter 4 on Conjugal Partnership
of Gains of the Family Code and, suppletorily, by the
spouses marriage settlement and by the rules on
partnership under the Civil Code.Under Article 108 of
the Family Code, the conjugal partnership is governed by
the rules on the contract of partnership in all that is not in
conflict with what is expressly determined in this Chapter
or by the spouses in their marriage settlements. In other
words, the property relations of the husband and wife
shall be governed primarily by Chapter 4 on Conjugal
Partnership of Gains of the Family Code and, suppletorily,
by the spouses marriage settlement and by the rules on
partnership under the Civil Code. In the absence of any
evidence of a marriage settlement between the spouses
Go, we look at the Civil Code provision on partnership for
guidance
Same Partnership In this connection, Article 1811 of the
Civil Code provides that [a] partner is a coowner with the
other partners of specific partnership property. Taken
with the presumption of the conjugal nature of the funds
used to finance the four checks used to pay for the
petitioners stocks subscription, and with the presumption
that the credits themselves are part of the conjugal
funds.In this connection, Article 1811 of the Civil Code
provides that [a] partner is a coowner with the other
partners of specific partnership property. Taken with the
presumption of the conjugal nature of the funds used to
finance the four checks used to pay for petitioners stock
subscriptions, and with the presumption that the credits
themselves are part of conjugal funds, Article 1811 makes
Quirino and Milagros de Guzman coowners of the alleged
credit.
Same Same Only one of the coowners, namely the coowner who filed the suit for the recovery of the coowned
property, is an indispensable party thereto. The other coowners are not indispensable partners. They are not even
necessary parties, for a complete relief can be accorded
in a suit even without their participation, since the suit is
presumed to have been filed for the benefit of all coowners.In sum, in suits to recover properties, all
coowners are real parties in interest. However, pursuant
to Article 487 of the Civil Code and relevant jurisprudence,
any one of them may bring an action, any kind of action,
for the recovery of coowned properties. Therefore, only
one of the coowners, namely the coowner who filed the
suit for the recovery of the coowned property, is an
indispensable party thereto. The other coowners are not
indispensable parties. They are not even necessary
parties, for a complete relief can be accorded in the suit
even without their participation, since the suit is presumed
to have been filed for the benefit of all coowners. Civil
Law Property Replevin We see nothing in these
provisions which requires the applicant to make a prior
demand on the possessor of the property before he can
file an action for a writ of replevin. Thus, prior demand is
not a condition precedent to an action for a writ of
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any choice on his part except to resign from such
employment.
JOSEFINA P. REALUBIT, petitioner, vs. PROSENCIO
D. JASO and EDEN G. JASO, respondents.
Evidence Public Documents Notarial Law It is a settled
rule that documents acknowledged before notaries public
are public documents which are admissible in evidence
without necessity of preliminary proof as to their
authenticity and due execution.The Spouses Realubit
argue that, in upholding its validity, both the RTC and the
CA inordinately gave premium to the notarization of the
27 June 1997 Deed of Assignment executed by Biondo in
favor of the Spouses Jaso. Calling attention to the latters
failure to present before the RTC said assignor or, at the
very least, the witnesses to said document, the Spouses
Realubit maintain that the testimony of Rolando Diaz, the
Notary Public before whom the same was acknowledged,
did not suffice to establish its authenticity and/or validity.
They insist that notarization did not automatically and
conclusively confer validity on said deed, since it is still
entirely possible that Biondo did not execute said deed or,
for that matter, appear before said notary public. The
dearth of merit in the Spouses Realubits position is,
however, immediately evident from the settled rule that
documents acknowledged before notaries public are
public documents which are admissible in evidence
without necessity of preliminary proof as to their
authenticity and due execution.
Same Same Same A public document not only enjoys
a presumption of regularity but is also considered prima
facie evidence of the facts therein stateda party
assailing the authenticity and due execution of a notarized
document is, consequently, required to present evidence
that is clear, convincing and more than merely
preponderant.It cannot be gainsaid that, as a public
document, the Deed of Assignment Biondo executed in
favor of Eden not only enjoys a presumption of regularity
but is also considered prima facie evidence of the facts
therein stated. A party assailing the authenticity and due
execution of a notarized document is, consequently,
required to present evidence that is clear, convincing and
more than merely preponderant. In view of the Spouses
Realubits failure to discharge this onus, we find that both
the RTC and the CA correctly upheld the authenticity and
validity of said Deed of Assignment upon the combined
strength of the abovediscussed disputable presumptions
and the testimonies elicited from Eden and Notary Public
Rolando Diaz.
Joint Ventures Partnership Agency Words and Phrases
Generally understood to mean an organization formed for
some temporary purpose, a joint venture is likened to a
particular partnership or one which has for its object
determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation
The rule is settled that joint ventures are governed by the
law on partnerships which are, in turn, based on mutual
agency or delectus personae.Generally understood to
mean an organization formed for some temporary
purpose, a joint venture is likened to a particular
partnership or one which has for its object determinate
things, their use or fruits, or a specific undertaking, or the
exercise of a profession or vocation. The rule is settled
that joint ventures are governed by the law on
partnerships which are, in turn, based on mutual agency
or delectus personae. Insofar as a partners conveyance
of the entirety of his interest in the partnership is
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the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the
respondents and, (10) when the findings of fact of the CA
are premised on the supposed absence of evidence and
contradicted by the evidence on record. Unfortunately for
the Spouses Realubits cause, not one of the foregoing
exceptions applies to the case.
OBLIGATIONS OF PARTNERS
WITH REGARD TO THIRD PERSON
PETITION FOR AUTHORITY TO CONTINUE USE OF
THE FIRM NAME SYCIP, SALAZAR, FELICIANO,
HERNANDEZ & CASTILLO.
Civil Law Partnership Firm Name Use in the partnership
name of the names of deceased partners contrary to Art.
1815 of the Civil Code Names in a firm name of a
partnership must be living partners Reasons.
Inasmuch as Sycip, Salazar, Feliciano, Hernandez and
Castillo and Ozaeta, Romulo, De Leon, Mabanta and
Reyes are partnerships, the use in their partnership
names of the names of deceased partners will run counter
to Article 1815 of the Civil Code. x x x It is clearly tacit in
the above provision that names in a firm name of a
partnership must either be those of living partners and, in
the case of nonpartners, should be living persons who can
be subjected to liability. In fact, Article 1825 of the Civil
Code prohibits a third person from including his name in
the firm name under pain of assuming the liability of a
partner. The heirs of a deceased partner in a law firm
cannot be held liable as the old members to the creditors
of a firm particularly where they are nonlawyers. Thus,
Canon 34 of the Canons of Professional Ethics prohibits
an agreement for the payment to the widow and heirs of
a deceased lawyer of a percentage, either gross or net, of
the fees received from the future business of the
deceased lawyers clients, both because the recipients of
such division are not lawyers and because such
payments will not represent service or responsibility on
the part of the recipient. Accordingly, neither the widow
nor the heirs can be held liable for transactions entered
into after the death of their lawyerpredecessor. There
being no benefits accruing, there can be no
corresponding liability.
Same Same Same Commercial Partnership Art. 1840
refers to commercial partnership with goodwill, not
professional partnerships Goodwill cannot arise in a
professional partnership.Secondly, Article 1840 treats
more of a commercial partnership with a good will to
protect rather than of a professional partnership, with no
saleable good, will but whose reputation depends on the
personal qualifications of its individual members. Thus, it
has been held that a saleable goodwill can exist only in a
commercial partnership and cannot arise in a professional
partnership consisting of lawyers.
Same Same Same Practice of Law Partnership for the
practice of law, nature of.A partnership for the practice
of law cannot be likened to partnerships formed by other
professionals or for business. For one thing, the law on
accountancy specifically allows the use of a trade name
in connection with the practice of accountancy. A
partnership for the practice of law is not a legal entity. It is
a mere relationship or association for a particular
purpose. x x x It is not a partnership formed for the
purpose of carrying on a trade or business or of holding
property. Thus, it has been stated that the use of a nom
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ID. ID. ID.All the members of a general partnership,
be they managing partners of the same or not, shall be
personally and solidarily liable with all their property for
the results of the transactions made in the name and for
the account of the partnership, under the signature of the
latter and by a person authorized to use it. (Sec. 127,
Code of Commerce.)
NICOLAS CO-PITCO, plaintiff and appellee, vs.
PEDRO YULO, defendant and appellant.
1.REVIEW; EVIDENCE; CERTIFICATE.In order that
this court may consider the evidence upon review, it must
be accompanied by a certificate of the clerk or the
stenographer to the effect that it is the evidence which
was taken in the case.
2.CIVIL PARTNERSHIP.Each member of a civil
partnership is not bound to pay all the debts of the
concern, but simply his pro rata, share.
3.ID.A partnership formed to operate a sugar plantation
is a civil and not a mercantile partnership. Co-Pitco vs.
Yulo., 8 Phil. 544, No. 3146 September 14, 1907
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be imputed against it for making payments to "Galan and
Associates" and delivering the same to Galan because as
far as it was concerned, Galan was a true partner with real
authority to transact on behalf of the partnership with
which it was dealing. This is even more true in the cases
of Cebu Southern Hardware and Blue Diamond Glass
Palace who supplied materials on credit to the
partnership. Thus, it is but fair that the consequences of
any wrongful act committed by any of the partners therein
should be answered solidarily by all the partners and the
partnership as a whole.
J. TIOSEJO INVESTMENT CORP., petitioner, vs.
SPOUSES BENJAMIN AND ELEANOR ANG,
respondents.
Remedial Law Appeals The perfection of an appeal in
the manner and within the period prescribed by law is not
only mandatory but jurisdictional Considering that they
are requirements which cannot be trifled with as mere
technicality to suit the interest of a party, failure to perfect
an appeal in the prescribed manner has the ef ect of
rendering the judgment final and executory.While the
dismissal of an appeal on purely technical grounds is
concededly frowned upon, it bears emphasizing that the
procedural requirements of the rules on appeal are not
harmless and trivial technicalities that litigants can just
discard and disregard at will. Neither being a natural right
nor a part of due process, the rule is settled that the right
to appeal is merely a statutory privilege which may be
exercised only in the manner and in accordance with the
provisions of the law. The perfection of an appeal in the
manner and within the period prescribed by law is, in fact,
not only mandatory but jurisdictional. Considering that
they are requirements which cannot be trifled with as
mere technicality to suit the interest of a party, failure to
perfect an appeal in the prescribed manner has the effect
of rendering the judgment final and executory.
Same Same Rules prescribing the time for doing specific
acts or for taking certain proceedings are considered
absolutely indispensable to prevent needless delays and
to orderly and promptly discharge judicial business.The
record shows that, having been granted the 15day
extension sought in its first motion, petitioner filed a
second motion for extension praying for an additional 10
days from 17 April 2006 within which to file its petition for
review, on the ground that pressures of work and the
demands posed by equally important cases prevented its
counsel from finalizing the same. As correctly ruled by the
CA, however, heavy workload cannot be considered as a
valid justification to sidestep the reglementary period
since to do so would only serve to encourage needless
delays and interminable litigations. Indeed, rules
prescribing the time for doing specific acts or for taking
certain proceedings are considered absolutely
indispensable to prevent needless delays and to orderly
and promptly discharge judicial business. Corollary to the
principle that the allowance or denial of a motion for
extension of time is addressed to the sound discretion of
the court, moreover, lawyers cannot expect that their
motions for extension or postponement will be granted as
a matter of course.
Contracts Joint Ventures By the express terms of the
Joint Venture Agreement (JVA), it appears that petitioner
not only retained ownership of the property pending
completion of the condominium project but had also
bound itself to answer liabilities proceeding from contracts
entered into by PPGI with third parties.Even
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does not involve a debt of or any account due and payable
by the drawer.In the present case, with regard to the
first issue, evidence on record would show that the
subject check was to be funded from receivables to be
collected and goods to be sold by the partnership, and
only when such collection and sale were realized. Thus,
there is sufficient basis for the assertion that the petitioner
issued the subject check (Metrobank Check No.
103115490 dated October 30, 1986, in the amount of
P135,828.87) to evidence only complainants share or
interest in the partnership, or at best, to show her
commitment that when receivables are collected and
goods are sold, she would give to private complainant the
net amount due him representing his interest in the
partnership. It did not involve a debt of or any account due
and payable by the petitioner.
Partnerships Final Stages of a Partnership.Under the
Civil Code, the three final stages of a partnership are (1)
dissolution (2) windingup and (3) termination. These
stages are distinguished, to wit: (1) Dissolution Defined
Dissolution is the change in the relation of the partners
caused by any partner ceasing to be associated in the
carrying on of the business (Art. 1828). It is that point of
time the partners cease to carry on the business together.
[Citation omitted] (2) Winding Up DefinedWinding up is
the process of settling business af airs after dissolution.
(NOTE: Examples of winding up: the paying of previous
obligations the collecting of assets previously
demandable even new business if needed to wind up, as
the contracting with a demolition company for the
demolition of the garage used in a used car partnership.)
(3) Termination DefinedTermination is the point in time
after all the partnership af airs have been wound up.
[Citation omitted] (Italics supplied.)
Criminal Law Bouncing Checks Law (Batas Pambansa
Blg. 22) Where the check was issued merely to evidence
a partners share in the partnership, it should be deemed
as having been drawn without consideration at the time of
issue.For there is nothing on record which even slightly
suggests that petitioner ever became interested in
acquiring, much less keeping, the shares of the
complainant. What is very clear therefrom is that the
petitioner exerted her best efforts to sell the remaining
goods and to collect the receivables of the partnership, in
order to come up with the amount necessary to satisfy the
value of complainants interest in the partnership at the
dissolution thereof. To go by accepted custom of the
trade, we are more inclined to the view that the subject
check was issued merely to evidence complainants
interest in the partnership. Thus, we are persuaded that
the check was not intended to apply on account or for
value rather it should be deemed as having been drawn
without consideration at the time of issue.
Same Same Absent the first elementthe making,
drawing and issuance of any check to apply on account
or for valuea persons issuance of a check is not an act
contemplated in nor made punishable by Batas
Pambansa Blg. 22.Absent the first element of the
offense penalized under B.P. 22, which is the making,
drawing and issuance of any check to apply on account
or for value, petitioners issuance of the subject check
was not an act contemplated in nor made punishable by
said statute.
Same Same Presumptions The prima facie
presumption arising from the fact of drawing, issuing or
making a check, the payment of which was subsequently
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dishonor be actually sent to and received by her to afford
her the opportunity to avert prosecution under B.P. 22.
Same Same The fact that the drawer repeatedly notified
the payee of the insuf iciency of funds militates strongly
against the prosecutions stand. What militates strongly
against public respondents stand is the fact that petitioner
repeatedly notified the complainant of the insufficiency of
funds. Instructive is the following pronouncement of this
Court in Magno v. Court of Appeals: Furthermore, the
element of knowing at the time of issue that he does not
have sufficient funds in or credit with the drawee bank for
the payment of such check in full upon its presentment,
which check is subsequently dishonored by the drawee
bank for insufficiency of funds or credit or would have
been dishonored for the same reason x x x is inversely
applied in this case. From the very beginning, petitioner
never hid the fact that he did not have the funds with which
to put up the warranty deposit and as a matter of fact, he
openly intimated this to the vital conduit of the transaction,
Joey Gomez, to whom petitioner was introduced by Mrs.
Teng. It would have been different if this predicament was
not communicated to all the parties he dealt with
regarding the lease agreement the financing of which was
covered by L.S. Finance Management.
TESTATE ESTATE OF LAZARO MOTA, deceased, ET
AL., plaintiffs and appellants, vs. SALVADOR
SERRA, defendant and appellee.
OBLIGATIONS CONTRACTS NOVATION CONSENT
OF CREDITOR.In order that there may be a novation
of a contract by the substitution of the debtor, the express
consent of the creditor is necessary.
ID. ID. ID. ID. TIME AND FORM OF CONSENT.It is
not necessary that the creditor should give his consent
simultaneously with the execution of the new contract. He
may do so afterwards, provided it is given in an
indubitable manner.
ID. ID. ID. ID. EVIDENCE.The mere fact that the
creditor has dealt with the person who is alleged to have
been substituted in the place of the original debtor on
matters different from the obligation incurred does not
prove that said creditor has consented to the substitution
so as to liberate the original debtor from his obligations, it
not appearing that the creditor has taken part in the
agreement of substitution or that he has waived his right
against the original debtor.
ID. ID. CONFUSION.The rights of creditor and debtor
are not merged in one same person by the fact that the
things pertaining to said creditor and debtor which were
the subject of the obligation were transferred to him where
said transfer did not include, among the rights and
obligations transferred, the credit that the creditor had
against the debtor.
ID. ID. PARTNERSHIP DISSOLUTION EFFECTS
OF.The dissolution of a partnership does not extinguish
its obligations already incurred, and the partnership
continues until they are liquidated, although it may not
incur new obligations.
ID. ID. ID. ID. ID. PERIOD.Obligations contracted by
a partner with his copartners, for the fulfillment of which a
period was fixed, become pure obligations upon the
immediate dissolution of the partnership by agreement of
the members, and the partner entitled to enforce them
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1403, the Statute of Frauds, requires that a special
promise to answer for the debt, default or miscarriage of
another be in writing.
Same EmployerEmployee Relationship While it is true
that the receipt of a percentage of net profits constitutes
only prima facie evidence that the recipient is a partner in
the business, the evidence in the instant case at bar
controverts an employeremployee relationship between
the parties.The business venture operated under
Geminesse Enterprise did not result in an employeremployee relationship between petitioners and private
respondent. While it is true that the receipt of a
percentage of net profits constitutes only prima facie
evidence that the recipient is a partner in the business,
the evidence in the case at bar controverts an employeremployee relationship between the parties. In the first
place, private respondent had a voice in the management
of the affairs of the cookware distributorship, including
selection of people who would constitute the
administrative staff and the sales force. Secondly,
petitioner Tocaos admissions militate against an
employeremployee relationship. She admitted that, like
her who owned Geminesse Enterprise, private
respondent
received
only
commissions
and
transportation and representation allowances and not a
fixed salary.
Same Same If indeed a person is employed by another,
it is dif icult to believe that the former and the latter shall
receive the same income in the business.If indeed
petitioner Tocao was private respondents employer, it is
difficult to believe that they shall receive the same income
in the business. In a partnership, each partner must share
in the profits and losses of the venture, except that the
industrial partner shall not be liable for the losses. As an
industrial partner, private respondent had the right to
demand for a formal accounting of the business and to
receive her share in the net profit.
Same The best evidence of the existence of the
partnership, which is not yet terminated (though in the
winding up stage), are the unsold goods and uncollected
receivables.Petitioners underscore the fact that the
Court of Appeals did not return the unaccounted and
unremitted stocks of Geminesse Enterprise amounting to
P208,250.00. Obviously a ploy to offset the damages
awarded to private respondent, that claim, more than
anything else, proves the existence of a partnership
between them. In Idos v. Court of Appeals, this Court said:
The best evidence of the existence of the partnership,
which was not yet terminated (though in the winding up
stage), were the unsold goods and uncollected
receivables, which were presented to the trial court. Since
the partnership has not been terminated, the petitioner
and private complainant remained as copartners. x x x.
Same Dissolution of Partnerships A mere falling out or
misunderstanding between partners does not convert the
partnership into a sham organizationthe partnership
exists until dissolved under the law. Undoubtedly,
petitioner Tocao unilaterally excluded private respondent
from the partnership to reap for herself and/or for
petitioner Belo financial gains resulting from private
respondents efforts to make the business venture a
success. Thus, as petitioner Tocao became adept in the
business operation, she started to assert herself to the
extent that she would even shout at private respondent in
front of other people. Her instruction to Lina Torda Cruz,
marketing manager, not to allow private respondent to
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10year term of the partnership, the deceased partner shall
be represented by his heirs", could not have referred to
the managerial right given to Tan Sin An more
appropriately, it relates to the succession in the
proprietary interest of each partner.
ID. ID. EFFECT OF HEIRS' FAILURE TO REPUDIATE
HEIRS BECOME INDIVIDUAL PARTNERS MINORITY
OF HEIRS.Consonant with the articles of copartnership
providing for the continuation of the firm notwithstanding
the death of one of the partners, the heirs of the
deceased, by never repudiating or refusing to be bound
under said provision, became individual partners with
Antonio Goquiolay upon Tan's demise. Minority of the
heirs is not a bar to the application of that clause in the
articles of copartnership. Heirs liability in the partnership
being limited to the value of their importance, they
become no more than limited partners, when they
manifest their intent to be bound as general partners.
ID. SALE OF PARTNERSHIP PROPERTIES
CONSENT OF ALL PARTNERS UNNECESSARY
STRANGERS DEALING WITH PARTNERSHIPS
POWER TO BIND PARTNERSHIP. As to whether or
not the consent of the other partners was necessary to
perfect the sale of the partnership properties, the Court
believes that it is not. Strangers dealing with a partnership
have the right to assume, in the absence of restrictive
clauses in the copartnership agreement, that every
general partner has power to bind the partnership.
ID. ID. ESTOPPEL.By allowing defendant Kong Chai
Pin to retain control of the partnership properties from
1942 to 1949, plaintiff Goquiolay estopped himself from
denying her (Kong Chai Pin's) legal representation of the
partnership, with the power to bind it by proper contracts.
PARTNERSHIP GENERAL PARTNER BY ESTOPPEL
WIDOW OF MANAGING PARTNER AUTHORIZED BY
OTHER PARTNER TO MANAGE PARTNERSHIP.By
authorizing the widow of the managing partner to manage
partnership property (which a limited partner could not be
authorized to do), the other general partner recognized
her as a general partner, and is now in estoppel to deny
her position as a general partner, with authority to
administer and alienate partnership property.
ID. HEIR OF PARTNER STATUS ORDINARILY AS
LIMITED PARTNER BUT MAY WAIVE IT AND BECOME
A GENERAL PARTNER.Although the heir of a partner
ordinarily becomes a limited partner for his own
protection, yet the heir may disregard it and instead elect
to become a collective or general partner, with all the
rights and obligations of one. This choice pertains
exclusively to the heir, and does not require the assent of
the surviving partner.
ID. PRESUMPTIONS AUTHORITY OF PARTNER TO
DEAL WITH PROPERTY.A third person has the right
to presume that a general partner dealing with partnership
property has the requisite authority from his copartners.
ID. PROPERTY OF PARTNERSHIP SALE OF
IMMOVABLES, WHEN CONSIDERED WlTHIN THE
ORDINARY POWERS OF A GENERAL PARTNER.
Where the express and avowed purpose of the
partnership is to buy and sell real estate (as in the present
case), the immovables thus acquired by the firm form part
of its stockintrade, and the sale thereof is in pursuance of
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for an inadequate price, is a mere speculation which has
no place in our judicial system. Since every claim must be
substantiated by sufficient evidence, such a conjectural
pretension cannot be entertained.
Appeals Mortgage Prescription Issues cannot be raised
for the first time on appeal.The claim, that an action for
foreclosure of a mortgage has already prescribed, cannot
be raised for the first time on appeal. Same When
reconveyance of properties to partnership is not proper.
The claim, that the trial court should have adjudicated
to the partnership the properties which Julian Go bought
from C.N. Hodges, is not tenable because that claim was
not raised in the pleadings and because there is no
evidence that Go promised to reconvey them to the
partnership.
PRIMELINK PROPERTIES AND DEVELOPMENT
CORPORATION and RAFAELITO W. LOPEZ,
petitioners, vs. MA. CLARITA T. LAZATINMAGAT,
JOSE SERAFIN T. LAZATIN, JAIME TEODORO T.
LAZATIN and JOSE MARCOS T. LAZATIN,
respondents.
Actions Pleadings and Practice A pleading may add as
general prayer for such further or other relief as may be
deemed just and equitable the prayer in the complaint
for other reliefs equitable and just in the premises justifies
the grant of a relief not otherwise specifically prayed for.
We agree with petitioners that respondents did not
specifically pray in their complaint below that possession
of the improvements on the parcels of land which they
contributed to the JVA be transferred to them.
Respondents made a specific prayer in their complaint
that, upon the rescission of the JVA, they be placed in
possession of the parcels of land subject of the
agreement, and for other reliefs and such other remedies
as are just and equitable in the premises. However, the
trial court was not precluded from awarding possession of
the improvements on the parcels of land to respondents
in its decision. Section 2(c), Rule 7 of the Rules of Court
provides that a pleading shall specify the relief sought but
it may add as general prayer for such further or other relief
as may be deemed just and equitable. Even without the
prayer for a specific remedy, proper relief may be granted
by the court if the facts alleged in the complaint and the
evidence introduced so warrant. The court shall grant
relief warranted by the allegations and the proof even if
no such relief is prayed for. The prayer in the complaint
for other reliefs equitable and just in the premises justifies
the grant of a relief not otherwise specifically prayed for.
Partnerships Joint Venture Agreements (JVAs) A JVA is
a form of partnership, and as such is to be governed by
the laws on partnership.We agree with the CA ruling
that petitioner Primelink and respondents entered into a
joint venture as evidenced by their JVA which, under the
Courts ruling in Aurbach, is a form of partnership, and as
such is to be governed by the laws on partnership.
Same Same Dissolution of Partnerships On dissolution,
the partnership is not terminated but continues until the
winding up of partnership af airs is completed.When the
RTC rescinded the JVA on complaint of respondents
based on the evidence on record that petitioners willfully
and persistently committed a breach of the JVA, the court
thereby dissolved/cancelled the partnership. With the
rescission of the JVA on account of petitioners fraudulent
acts, all authority of any partner to act for the partnership
is terminated except so far as may be necessary to wind
up the partnership affairs or to complete transactions
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shares, for he does not hold them except as manager of,
or trustee for, the partnership. It is the latter who must
refund their shares to the retiring partners.
BENJAMIN YU, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and JADE MOUNTAIN
PRODUCTS COMPANY LIMITED, WILLY CO,
RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN
JENG and CHEN HOFU, respondents.
Labor Law Corporation Law Partnership Court agrees
with the result reached by the NLRC that the legal ef ect
of the changes in the membership of the partnership was
the dissolution of the old partnership. In respect of the
first issue, we agree with the result reached by the NLRC,
that is, that the legal effect of the changes in the
membership of the partnership was the dissolution of the
old partnership which had hired petitioner in 1984 and the
emergence of a new firm composed of Willy Co and
Emmanuel Zapanta in 1987.
Same Same Same Occurrence of events which
precipitate the legal consequence of dissolution of a
partnership do not automatically result in the termination
of the legal personality of the old partnership.The
occurrence of events which precipitate the legal
consequence of dissolution of a partnership do not,
however, automatically result in the termination of the
legal personality of the old partnership.
Same Same Same The legal personality of the expiring
partnership persists for the limited purpose of winding up
and closing of the af airs of the partnership.In the
ordinary course of events, the legal personality of the
expiring partnership persists for the limited purpose of
winding up and closing of the affairs of the partnership. In
the case at bar, it is important to underscore the fact that
the business of the old partnership was simply continued
by the new partners, without the old partnership
undergoing the procedures relating to dissolution and
winding up of its business affairs. In other words, the new
partnership simply took over the business enterprise
owned by the preceding partnership, and continued using
the old name of Jade Mountain Products Company
Limited, without winding up the business affairs of the old
partnership, paying off its debts, liquidating and
distributing its net assets, and then reassembling the said
assets or most of them and opening a new business
enterprise.
Same Same Same A withdrawing partner remains liable
to a third party creditor of the old partnership.What is
important for present purposes is that, under the above
described situation, not only the retiring partners
(Rhodora Bendal, et al.) but also the new partnership itself
which continued the business of the old, dissolved, one,
are liable for the debts of the preceding partnership. In
Singson, et al. v. Isabela Saw Mill, et al, the Court held
that under facts very similar to those in the case at bar, a
withdrawing partner remains liable to a third party creditor
of the old partnership.
Same Same Same Creditors of the old Jade Mountain
are also creditors of the New Jade Mountain which
continued the business of the old one without liquidation
of the partnership af airs.Under Article 1840 above,
creditors of the old Jade Mountain are also creditors of the
new Jade Mountain which continued the business of the
old one without liquidation of the partnership affairs.
Indeed, a creditor of the old Jade Mountain, like petitioner
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