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., through
its branchmanager Ramon Pons, for remodelling of Tropical’s building in Cebu.
Theconsideration for the entire services is P25,000 to be paid: 30% upon signing
of contract, and balance on 3 equal instalments of P6,000 every 15working
days.First payment of check worth P7,000 was payable to Muñasque, who
indorsed it toGalan for purposes of depositing the amount and paying the
materials already used.But since Galan allegedly misappropriated P6,183.37 of
the check for personal use,Muñasque refused to indorse the second check worth
P6,000. Galan then informed Tropical of the “misunderstanding” between him
and Muñasque and this prompted Tropical to change the payee of the second
check from Muñasque to “Galan andAssociates” (the duly registered name of
Galan and Muñasque partnership).Despite the misappropriation, Muñasque alone
was able to finish the project. Thetwo remaining checks were properly issued to
Muñasque.Muñasque filed a complaint for payment of sum of money plus
damages againstGalan, Tropical and Pons for the amount covered by the first and
second checks.Cebu Southern Hardware Co and Blue Diamond Glass Palace were
allowed asintervenors having legal interest claiming against Muñasue and Galan
for materialsused. TC:-Muñasque and Pons jointly and severally liable to
intervenors-Tropical and Pons absolvedCA affirmed with modification:-Muñasque
and Pons jointly liable to intervenors
IssueI: 1.W/N Muñasque and Galan are partners?2.W/N payment made by
Tropical to Galan was “good payment”?3.W/N Galan should shoulder exclusively
the amounts payable to theintervenors (granting he misappropriated the amount
from the two checks)?
Held :yes-yes-no!1.YES. Tropical had every right to presume the existence of the
partnership:a.Contract states that agreement was entered into by “Galan
andMuñasque”b.The first check issue in the name of Muñasque was indorsed to
Galan The relationship was made to appear as a partnership.2.YES. Muñasque
and Galan were partners when the debts to the intervenorswere incurred, hence,
they are also liable to third persons who extendedcredit to their partnership
Island Sales v United Pioneers
Facts: United Pioneers General Construction Company is a general partnership
formed by Benjamin Daco, Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo
Lumauig. In 1961, United Pioneers purchased by installment a motor vehicle from
Island Sales, Inc. United Pioneers defaulted in its payment hence it was sued and
the 5 partners were impleaded as co-defendants.
Upon motion of Island Sales, Lumauig was removed as a defendant.
United Pioneers lost the civil case and the trial court rendered judgment ordering
United Pioneers to pay the outstanding balance plus interest and costs. It further
decreed that the remaining 4 co-defendants shall pay Island Sales in case United
Pioneers’ property will not be enough to satisfy its indebtedness to Island Sales.
ISSUE: What is the extent of the liability of the partners considering that one
partner was removed as a co-defendant on motion of Island Sales?
HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is
should be noted that since there were 5 partners when the purchase was made in
behalf of the partnership, the liability of each partner should be 1/5th (of the
company’s obligation) each. The fact that the complaint against Lumauig was
dismissed, upon motion of the Island Sales, does not unmake Lumauig as a
general partner in the company. In so moving to dismiss the complaint, Island
Sales merely condoned Lumauig’s individual liability to them.
LIM Tong Lim v Phil Fishing Gear
Lessons Applicable: Corporation by estoppel doctrine (Corporate Law)
FACTS:
Feb 7 1990: On behalf of "Ocean Quest Fishing Corp.", Antonio Chua and Peter
Yao entered into a purchase of fishing nets of various sizes from Phil. Fishing Gear
Industries Inc. (PFGI) claiming they were engaged in venture with Lim Tong Lim
(NOT a signatory)
Buyers failed to pay
PFGI filed a suit against Chua, Yao and Lim w/ writ of preliminary attachment
Chua: Admitted liability and requested resonable time and turned over nets in his
possession
Yao: Failre to appear in subsequent hearings
Lim: Counterclaim and Crossclaim to life writ of Attachment
CA affirmed RTC: Writ of Attachment & Chua, Yao and Lim as general partners
Chua, Yao and Lim had decided to engage in business w/ Lim's brother Jesus Lim
as financer of a loan = common fund
Compromise Agreement: pay loan w/ the proceeds of boats sale and to divide
equally among them the excess or loss
ISSUE: W/N Doctrine of Estoppel can apply to Lim
HELD: YES. CA affirmed.
Although petitioner did not directly act on behalf of the corp., having reaped the
benefits of the contract entered into by persons w/ whom he previously had an
existing rel., he is deemed to be part of said assoc. and covered by the doctrine of
estoppel
SANTIAGO SYJUCO, INC. VS CASTRO
Facts: The private respondents, Eugenio Lim, et al., borrowed from petitioner
Santiago Syjuco, Inc., the sum of P800,000.00. The loan was given on the security
of a first mortgage on property registered in the names of said borrowers as
owners in common under Transfer Certificates of Title Numbered 75413 and
75415 of the Registry of Deeds of Manila. Thereafter, additional loans on the
same security were obtained by the private respondents from Syjuco, so that as
of May 8, 1967, the aggregate of the loans stood at P2,460,000.00, exclusive of
interest, and the security had been augmented by bringing into the mortgage
other property, also registered as owned pro indiviso by the private respondents
under two titles: TCT Nos. 75416 and 75418 of the Manila Registry.
The private respondents failed to pay it despite demands therefore; that Syjuco
consequently caused extra-judicial proceedings for the foreclosure of the
mortgage to be commenced by the Sheriff of Manila; and that the latter
scheduled the auction sale of the mortgaged property on December 27, 1968. The
attempt to foreclose triggered off a legal battle that has dragged on for more than
twenty years now, fought through five (5) cases in the trial courts, two (2) in the
Court of Appeals, and three (3) more in the Supreme Court.
One of the complaints filed by the private respondents was filed not in their
individual names, but in the name of a partnership of which they themselves
were the only partners: "Heirs of Hugo Lim." The complaint advocated the theory
that the mortgage which they, together with their mother, had individually
constituted (and thereafter amended during the period from 1964 to 1967) over
lands standing in their names in the Property Registry as owners pro indiviso, in
fact no longer belonged to them at that time, having been earlier deeded over by
them to the partnership, "Heirs of Hugo Lim," more precisely, on March 30, 1959,
hence, said mortgage was void because executed by them without authority from
the partnership. Syjuco filed an instant petition for certiorari, prohibition and
mandamus. It prays in its petition that the default judgment rendered against it
by Judge Castro be annulled on the ground of, among others, estoppel, res
judicata, and Article 1819 of the Civil Code.
Issue: Whether or not the private respondents are estopped to avoid the
aforementioned mortgage.
Held: Yes. The Supreme Court ruled that the respondent partnership was
inescapably chargeable with knowledge of the mortgage executed by all the
partners thereof, its silence and failure to impugn said mortgage within a
reasonable time, let alone a space of more than 17 years, brought into play the
doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly
unauthorized. Equally or even more preclusive of the respondent partnership’s
claim to the mortgaged property is the last paragraph of Art. 1819 of the Civil
Code, which contemplates a situation similar to the case at bar. It states that
‘where the title to real property is in the names of all the partners, a conveyance
executed by the entire partners pass all their rights in such property.
Consequently, those members' acts, declarations and omissions cannot be
deemed to be simply the individual acts of said members, but in fact and in law,
those of the partnership. Finally, the Supreme Court emphasizes that the right of
the private respondents to assert the existence of the partnership could have
been stressed at the time they instituted their first action, considering that the
actions involved property supposedly belonging to it, and therefore, the
partnership was the real party in interest. What was done by them was to split
their cause of action in violation of the well-known rule that only one suit may be
instituted for a single cause of action.
Heirs of tan Eng Kee V Ca
employee based on the latter’s payroll and SSS coverage, and other records
indicating Tan Eng Lay as the proprietor.
Also, the business definitely amounted to more P3,000.00 hence if there was a
partnership, it should have been made in a public instrument.

FACTS: Benguet Lumber has been around even before World War II but during But the business was started after the war (1945) prior to the publication of the
the war, its stocks were confiscated by the Japanese. After the war, the brothers New Civil Code in 1950?
Tan Eng Lay and Tan Eng Kee pooled their resources in order to revive the
Even so, nothing prevented the parties from complying with this requirement.
business. In 1981, Tan Eng Lay caused the conversion of Benguet Lumber into a
corporation called Benguet Lumber and Hardware Company, with him and his Also, the Supreme Court emphasized that for 40 years, Tan Eng Kee never asked
family as the incorporators. In 1983, Tan Eng Kee died. Thereafter, the heirs of for an accounting. The essence of a partnership is that the partners share in the
Tan Eng Kee demanded for an accounting and the liquidation of the partnership. profits and losses. Each has the right to demand an accounting as long as the
partnership exists. Even if it can be speculated that a scenario wherein “if
Tan Eng Lay denied that there was a partnership between him and his brother. He
excellent relations exist among the partners at the start of the business and all
said that Tan Eng Kee was merely an employee of Benguet Lumber. He showed
the partners are more interested in seeing the firm grow rather than get
evidence consisting of Tan Eng Kee’s payroll; his SSS as an employee and Benguet
immediate returns, a deferment of sharing in the profits is perfectly plausible.”
Lumber being the employee. As a result of the presentation of said evidence, the
But in the situation in the case at bar, the deferment, if any, had gone on too long
heirs of Tan Eng Kee filed a criminal case against Tan Eng Lay for allegedly
to be plausible. A person is presumed to take ordinary care of his concerns. A
fabricating those evidence. Said criminal case was however dismissed for lack of
demand for periodic accounting is evidence of a partnership which Kee never did.
evidence.
The Supreme Court also noted:In determining whether a partnership exists, these
ISSUE: Whether or not Tan Eng Kee is a partner.
rules shall apply:
HELD: No. There was no certificate of partnership between the brothers. The
(1) Except as provided by Article 1825, persons who are not partners as to each
heirs were not able to show what was the agreement between the brothers as to
other are not partners as to third persons;
the sharing of profits. All they presented were circumstantial evidence which in
no way proved partnership. (2) Co-ownership or co-possession does not of itself establish a partnership,
whether such co-owners or co-possessors do or do not share any profits made by
It is obvious that there was no partnership whatsoever. Except for a firm name,
the use of the property;
there was no firm account, no firm letterheads submitted as evidence, no
certificate of partnership, no agreement as to profits and losses, and no time (3) The sharing of gross returns does not of itself establish a partnership, whether
fixed for the duration of the partnership. There was even no attempt to submit or not the persons sharing them have a joint or common right or interest in any
an accounting corresponding to the period after the war until Kee’s death in property which the returns are derived;
1984. It had no business book, no written account nor any memorandum for that
matter and no license mentioning the existence of a partnership.

In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole
proprietorship. He registered the same as such in 1954; that Kee was just an
(4) The receipt by a person of a share of the profits of a business is prima facie
evidence that he is a partner in the business, but no such inference shall be drawn
if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of
the business;
(e) As the consideration for the sale of a goodwill of a business or other property
by installments or otherwise.
SUNGA CHAN V CHUA
Business Organization – Partnership, Agency, Trust – Prescription – Demand for
an accounting – Oral Partnership
In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership for the sale
and distribution of Shellane LPGs. Their business was very profitable but in 1989
Jacinto died. Upon Jacinto’s death, his daughter Lilibeth took over the business as
well as the business assets. Chua then demanded for an accounting but Lilibeth
kept on evading him. In 1992 however, Lilibeth gave Chua P200k. She said that
the same represents a partial payment; that the rest will come after she finally
made an accounting. She never made an accounting so in 1992, Chua filed a
complaint for “Winding Up of Partnership Affairs, Accounting, Appraisal and
Recovery of Shares and Damages with Writ of Preliminary Attachment” against
Lilibeth.
Lilibeth in her defense argued among others that Chua’s action has prescribed.
ISSUE: Whether or not Chua’s claim is barred by prescription.
HELD: No. The action for accounting filed by Chua three (3) years after Jacinto’s
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 partner’s 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 Jacinto’s death that Chua as the surviving
partner had the right to an account of his interest as against Lilibeth. It bears
stressing that while Jacinto’s 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.
Idos v. CA
Facts: In 1985, Eddie Alarilla and Irma Idos formed a partnership which they
decided to terminate after a year. To pay Alarilla’s share of the asset, Idos issued
4 post dated checks. Alarilla was able to encash the first, second and fourth
checks but the third was dishonored for insufficiency of funds. He demanded
payment but Idos failed to pay. She claimed that the checks were issued as
assurance of Alarilla’s share in the assets of the partnership and that it was
supposed to be deposited until the stocks were sold. He filed an information for
violation of BP blg. 22 against Idos in which she was found guilty by the trial court.
Issue: Did the court confused and merged into one the legal concepts of
dissolution, liquidation and termination of a partnership?
Ruling: The partners agreement to terminate the partnership did not
automatically dissolved the partnership. They were in the process of winding-up
when the check in question was issued. The best evidenceof the existence of the
partnership, which was not yet terminated were the unsold goods and
uncollected receivables which were presented to the trial court. Article 1829 of
the Civil Code provides that “on dissolution the partnership is not terminated but
continues until the winding-up of partnership affairs is completed. Since the
partnership has not been terminated, Idos and Alarilla remained co-partners. The
check was issued by petitioner to respondent as would a partner to another and
not as a payment by debtor to creditor. Thus, absent the first element of the
complained offense, the act is not punishable by the statute.
Benjamin Yu v. National Labor Relations Commission & Jade Mountain
ProductsCo. Ltd., Willy Co, Rhodora Bendal, Lea Bendal, Chiu Shian Jeng and Chen
Ho-Fu
Facts: Yu – ex-Assistant General Manager of the marble quarrying and export
business operatedby a registered partnership called Jade Mountain Products Co.
Ltd.
partnership was originally organized with Bendals as general partners and Chin
Shian Jeng,Chen Ho-Fu and Yu Chang as limited partners; partnership business
consisted of exploitinga marble deposit in Bulacan
Yu, as Assistant General Manager, had a monthly salary of 4000. Yu, however,
actuallyreceived only half of his stipulated salary, since he had accepted the
promise of thepartners that the balance would be paid when the firm shall have
secured additionaloperating funds from abroad. Yu actually managed the
operations and finances of thebusiness; he had overall supervision of the workers
at the marble quarry in Bulacan andtook charge of the preparation of papers
relating to the exportation of the firm’s products.
general partners Bendals sold and transferred their interests in the partnership to
Co andEmmanuel Zapanta
partnership was constituted solely by Co and Zapanta; it continued to use the old
firmname of Jade Mountain
Yu – dismissed by the new partners
Issues:
1. WON the partnership which had hired Yu as Asst. Gen. Manager had
beenextinguished and replaced by a new partnership composed of Co and
Zapanta; 2. if indeed anew partnership had come into existence, WON Yu could
nonetheless assert his rights underhis employment contract with the old
partnership as against the new partnership
Held:
1. Yes. Changes in the membership of the partnership resulted in the dissolution
of the old partnership which had hired Yu and the emergence of a new
partnership composedof Co and Zapanta.
Legal bases:
Art. 1828. The dissolution of a partnership is the change in the relation of
thepartners caused by any partner ceasing to be associated in the carrying on
asdistinguished from the winding up of the business.
Art. 1830. Dissolution is caused:(1) without violation of the agreement between
the partners;(b) by the express will of any partner, who must act in good faith,
when no definite termor particular undertaking is specified;(2) in contravention of
the agreement between the partners, where the circumstances donot permit a
dissolution under any other provision of this article, by the express will of
anypartner at any time;
No winding up of affairs in this case as contemplated in Art. 1829: on dissolution
thepartnership is not terminated, but continues until the winding up of
partnership affairs iscompleted
the new partnership simply took over the business enterprise owned by the
oldpartnership, and continued using the old name of Jade Mountain Products
CompanyLimited, without winding up the business affairs of the old partnership,
paying off its debts,liquidating and distributing its net assets, and then re-
assembling the said assets or mostof them and opening a new business enterprise
2. Yes. the new partnership is liable for the debts of the old partnership
Legal basis: Art. 1840 (see codal)
Yu is entitled to enforce his claim for unpaid salaries, as well as other claims
relating to hisemployment with the previous partnership, against the new
partnership
But Yu is not entitled to reinstatement. Reason: new partnership was entitled to
appointand hire a new gen. or asst. gen. manager to run the affairs of the
business enterprisetake over. An asst. gen. manager belongs to the most senior
ranks of management and anew partnership is entitled to appoint a top manager
of its own choice and confidence. Thenon-retention of Yu did not constitute
unlawful termination.
The new partnership had itsown new General Manager, Co, the principal new
owner himself. Yu’s old position thusbecame superfluous or redundant.
Yu is entitled to separation pay at the rate of one month’s pay for each year of
service thathe had rendered to the old partnership, a fraction of at least 6 months
being considered asa whole year.
Ortega vs. CA
FACTS: On December 19, 1980, respondent Misa associated himself together, as
senior partner with petitioners Ortega, del Castillo, Jr., and Bacorro, as junior
partners. On Feb. 17, 1988, respondent Misa wrote a letter stating that he is
withdrawing and retiring from the firm and asking for a meeting with the
petitioners to discuss the mechanics of the liquidation. On June 30, 1988,
petitioner filed a petition to the Commision's Securities Investigation and Clearing
Department for the formal dissolution and liquidation of the partnership. On
March 31, 1989, the hearing officer rendered a decision ruling that the
withdrawal of the petitioner has not dissolved the partnership. On appeal, the
SEC en banc reversed the decision and was affirmed by the Court of Appeals.
Hence, this petition.
ISSUE: Whether or not the Court of Appeals has erred in holding that the
partnership is a partnership at will and whether or not the Court of Appeals has
erred in holding that the withdrawal of private respondent dissolved the
partnership regardless of his good or bad faith
HELD: No. The SC upheld the ruling of the CA regarding the nature of the
partnership. The SC further stated that a partnership that does not fix its term is a
partnership at will. 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 partner's 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.
RECENTES V CFI
FACTS: Fortunato Recentes, Benjamin de Gracia, and Ramona Merced v. CFI and
Concepcion Zosa (1983) Abad Santos, J. Zosa filed a complaint in the CFI
against Recentes, de Gracia, and Merced for accounting and payment of money
alleged to be due to her as partner in the Ports and Arrastre Service. o The
defendants answered that accounting and payment had already been made. 2 yrs
later, the case was still not terminated. Zosa asked the court to appoint Merced
as the receiver of the partnership alleging that assets of the partnership were
being squandered by mismanagement. Merced was appointed receiver.
Subsequently, Recentes and de Gracia filed a motion to annul and dissolve the
receivership because the partnership no longer exists because its 10-yr term
provided in the partnership agreement had already expired Judge Mendoza
granted this motion but Judge Buissan, who succeeded Judge Mendoza,
reconsidered and reinstated the receivership. o This was premised on the fact
that partnership was automatically dissolved after 10 yrs. o Ordinarily, since
defendants never rendered an accounting for the purpose of dissolving, the
partnership still continuously exists. However, defendants de Gracia and Recentes
formed another partnership and continued the business that was conducted by
the former partnership. o The new partnership is doing business with the
clientele of the old partnership. o Only plaintiff Concepcion Zosa was not included
in the new partnership. The order of the of the judge directed that the
management of the partnership remain with the officers and that Merced as
receiver will only receive the net profit of the partnership and to keep each
income, account for them when required by this court until such time as the same
win be distributed to those who may be entitled to it. o Also directed receiver to
submit an accounting of the partnership affairs
Issue/Held: (Can the judge do this?--- YES) W/N there was GAD in the issuance of
the orders? --- NO Ratio: NCC 1829 says: On dissolution the partnership is
terminated, but continues until the winding up of partnership affairs is
completed. Obviously, all the questioned orders are intended to wind up the
partnership affairs in an orderly manner and to protect the interest of the plaintiff
(herein respondent). The judge not only had jurisdiction to issue the orders, he
also acted prudently in the premises. Petition denied.