Professional Documents
Culture Documents
Partnership 1 26
Partnership 1 26
IV. OBLIGATIONS OF PARTNERSHIPS/ PARTNERS TO THIRD PERSONS (ART. 1815- 1827) 219
24. Torres v CA & M. Torres................................................219
25. Sharruf & Co. v. Baloise Fire Insurance Co.,........................226
26 In the Matter of the Petition for Authority to Continue Use of Firm Name Sycip, Salazar &Castillo,
233
Prior to his death on June 18, 1923, Henry W. Elser had been
a resident of the City of Manila where he was engaged
during the years with which we are here concerned in
buying, selling, and administering real estate. In several
ventures which he had made in buying and selling property
of this kind the plaintiff, E. S. Lyons, had joined with him,
the profits being shared by the two in equal parts. In April,
1919, Lyons, whose regular vocation was that of a
missionary, or missionary agent, of the Methodist Episcopal
Church, went on leave to the United States and was gone for
nearly a year and a half, returning on September 21, 1920.
On the eve of his departure Elser made a written statements
showing that Lyons was, at that time, half owner with Elser
of 3 particular pieces of real property. Concurrently with this
act Lyons execute in favor of Elser a general power of
attorney empowering him to manage and dispose of said
properties at will and to represent Lyons fully and amply, to
the mutual advantage of both.
During the absence of Lyons two of the pieces of property
above referred to were sold by Elser, leaving in his hands a
single piece of property located at 616-618 Carried Street, in
the City of Manila, containing about 282 square meters of
land, with the improvements thereon.
In the spring of 1920 the attention of Elser was drawn to a
piece of land, containing about 1,500,000 square meters,
near the City of Manila, and he discerned therein a fine
opportunity for the promotion and development of a
4
But before signing the note with Elser and his associates, the
Fidelity & Surety Co. insisted upon having security for the
liability thus assumed by it. To meet this requirements Elser
mortgaged to the Fidelity & Surety Co. the equity of
redemption in the property owned by himself and Lyons on
Carriedo Street.
This mortgage was executed on June 30, 1920, at which
time Elser expected that Lyons would come in on the
purchase of the San Juan Estate. But when he learned from
the letter from Lyons of July 21, 1920, that the latter had
determined not to come into this deal, Elser began to cast
around for means to relieve the Carriedo property of the
encumbrance which he had placed upon it. For this purpose,
on September 9, 1920, he addressed a letter to the Fidelity &
Surety Co., asking it to permit him to substitute a property
owned by himself at 644 M. H. del Pilar Street, Manila, and
1,000 shares of the J. K. Pickering & Company, in lieu of
the Carriedo property, as security. The Fidelity & Surety Co.
agreed to the proposition; and on September 15, 1920, Elser
executed in favor of the Fidelity & Surety Co. a new
mortgage on the M. H. del Pillar property and delivered the
same, with 1,000 shares of J. K. Pickering & Company, to
said company. The latter thereupon in turn executed a
cancellation of the mortgage on the Carriedo property and
delivered it to Elser. But notwithstanding the fact that these
documents were executed and delivered, the new mortgage
and the release of the old were never registered; and on
September 25, 1920, thereafter, Elser returned the
Lyons tells us that he did not know until after Elser's death
that the money obtained from Uy Siuliong in the manner
already explained had been used to held finance the
purchase of the San Juan Estate. He seems to have supposed
that the Carried property had been mortgaged to aid in
putting through another deal, namely, the purchase of a
property referred to in the correspondence as the "Ronquillo
property"; and in this connection a letter of Elser of the latter
part of May, 1920, can be quoted in which he uses this
language:
The case for the plaintiff supposes that, when Elser placed a
mortgage for P50,000 upon the equity of redemption in the
Carriedo property, Lyons, as half owner of said property,
Elser was angling for the Ronquillo property, its price had
gone up, thus introducing a doubt as to whether he could get
it; and the quotation above given shows that the intended use
of the money obtained by mortgaging the Carriedo property
was that only part of the P50,000 thus obtained would be
used in this way, if the deal went through. Naturally, upon
the arrival of Lyons in September, 1920, one of his first
inquiries would have been, if he did not know before, what
was the status of the proposed trade for the Ronquillo
property.
Elser's widow and one of his clerks testified that about June
15, 1920, Elser cabled Lyons something to this effect;: "I
have mortgaged the property on Carriedo Street, secured by
my personal note. You are amply protected. I wish you to
join me in the San Juan Subdivision. Borrow all money you
can." Lyons says that no such cablegram was received by
him, and we consider this point of fact of little moment,
since the proof shows that Lyons knew that the Carriedo
mortgage had been executed, and after his arrival in Manila
he consented for the mortgage to remain on the property
until it was paid off, as shortly occurred. It may well be that
Lyons did not at first clearly understand all the ramifications
of the situation, but he knew enough, we think, to apprise
him of the material factors in the situation, and we concur in
the conclusion of the trial court that Elser did not act in bad
faith and was guilty of no fraud.
Facts:
This is an action to recover possession of registered land
situated in Barrio Tatalon, Quezon City.
The complaint of plaintiff JM Tuason & Co Inc was
amended 3 times with respect to the extent and description
of the land sough to be recovered.
Originally, the land sought to be recovered was said to be
more or less 13 hectares, but it was later amended to 6
hectares, after the defendant had indicated the plaintiff's
surveyors the portion of land claimed and occupied by him.
The second amendment is that the portion of the said land
was covered in another TCT and the 3rd amendment was
made after the defendant' surveyor and a witness, Quirino
Feria testified that the land occupied by the defendant was
about 13 hectares.
Defendant raised the defense of prescription and title thru
"open, continuous, exclusive and public and notorious
possession of land in dispute. He also alleged that the
registration of the land was obtained by plaintiff's
predecessor through fraud or error.
Digest:
10
Issue: W/N the lower court erred in not dismissing the case
on the ground that it was not brought by the real party in
interest? NO
Ratio: What the Rules of Court require is that an action be
brought in the name of, but not necessarily by, the real party
in interest.
In fact the practice is for an attorney-at-law to bring the
action, that is to file the complaint, in the name of the
plaintiff. That practice appears to have been followed in this
case, since the complaint is signed by the law firm of
Araneta and Araneta, "counsel for plaintiff" and commences
with the statement "comes now plaintiff, through its
undersigned counsel."
It is true that the complaint also states that the plaintiff is
"represented herein by its Managing Partner Araneta, Inc.",
another corporation, but there is nothing against one
corporation being represented by another person, natural or
juridical, in a suit in court.
The contention that Gregorio Araneta, Inc. can not act as
managing partner for plaintiff on the theory that it is illegal
for 2 corporations to enter into a partnership is without
merit, for the true rule is that "though a corporation has no
power to enter into a partnership, it may nevertheless enter
into a joint venture with another where the nature of that
venture is in line with the business authorized by its charter."
REYES, J.:
13
Digest: Facts:
Antonio Chua and Peter Yao entered into a contract for the
purchase of fishing nets from the Philippine Fishing Gear
Industries. They claimed that they were engaged in a
business venture with petitioner Lim Tong Lim. The buyers
however failed to pay for the nets and the floats.
Private respondent filed a collection suit against Yao, Chua
and Lim with preliminary attachment. TC :rendered its
decision in favor of Phil. Fishing Gear and that Chua, Yao
and Lim, as general partners were jointly liable to pay
respondents. It based its decision on a compromise
agreement wherein joint liability was presumed from the
equal distribution of the profit and loss. The CA affirmed.
Hence, this petition.
15
e. Cost of suit.
With respect to the joint liability of defendants for the
principal obligation or for the unpaid price of nets and floats
in the amount of P532,045.00 and P68,000.00, respectively,
or for the total amount of P600,045.00, this Court noted that
these items were attached to guarantee any judgment that
may be rendered in favor of the plaintiff but, upon
agreement of the parties, and, to avoid further deterioration
of the nets during the pendency of this case, it was ordered
sold at public auction for not less than P900,000.00 for
which the plaintiff was the sole and winning bidder. The
proceeds of the sale paid for by plaintiff was deposited in
court. In effect, the amount of P900,000.00 replaced the
attached property as a guaranty for any judgment that
plaintiff may be able to secure in this case with the
ownership and possession of the nets and floats awarded and
delivered by the sheriff to plaintiff as the highest bidder in
the public auction sale. It has also been noted that ownership
of the nets [was] retained by the plaintiff until full payment
[was] made as stipulated in the invoices; hence, in effect, the
plaintiff attached its own properties. It [was] for this reason
also that this Court earlier ordered the attachment bond filed
by plaintiff to guaranty damages to defendants to be
cancelled and for the P900,000.00 cash bidded and paid for
by plaintiff to serve as its bond in favor of defendants.
From the foregoing, it would appear therefore that whatever
judgment the plaintiff may be entitled to in this case will
17
[14]
20
(1) That Petitioner Lim Tong Lim requested Peter Yao who
was engaged in commercial fishing to join him, while
Antonio Chua was already Yaos partner;
(2) That after convening for a few times, Lim Chua, and Yao
verbally agreed to acquire two fishing boats, the FB
Lourdes and the FB Nelson for the sum of P3.35 million;
(3) That they borrowed P3.25 million from Jesus Lim,
brother of Petitioner Lim Tong Lim, to finance the venture.
(4) That they bought the boats from CMF Fishing
Corporation, which executed a Deed of Sale over these two
(2) boats in favor of Petitioner Lim Tong Lim only to serve
as security for the loan extended by Jesus Lim;
(5) That Lim, Chua and Yao agreed that the refurbishing , reequipping, repairing, dry docking and other expenses for the
boats would be shouldered by Chua and Yao;
(6) That because of the unavailability of funds, Jesus Lim
again extended a loan to the partnership in the amount of P1
fell under the term common fund under Article 1767. The
contribution to such fund need not be cash or fixed assets; it
could be an intangible like credit or industry. That the parties
agreed that any loss or profit from the sale and operation of
the boats would be divided equally among them also shows
that they had indeed formed a partnership.
Moreover, it is clear that the partnership extended not
only to the purchase of the boat, but also to that of the nets
and the floats. The fishing nets and the floats, both essential
to fishing, were obviously acquired in furtherance of their
business. It would have been inconceivable for Lim to
involve himself so much in buying the boat but not in the
acquisition of the aforesaid equipment, without which the
business could not have proceeded.
Given the preceding facts, it is clear that there was,
among petitioner, Chua and Yao, a partnership engaged in
the fishing business. They purchased the boats, which
constituted the main assets of the partnership, and they
agreed that the proceeds from the sales and operations
thereof would be divided among them.
We stress that under Rule 45, a petition for review like
the present case should involve only questions of law. Thus,
the foregoing factual findings of the RTC and the CA are
binding on this Court, absent any cogent proof that the
present action is embraced by one of the exceptions to the
rule.[16] In assailing the factual findings of the two lower
22
We stress that it is unreasonable indeed, it is absurd -for petitioner to sell his property to pay a debt he did not
incur, if the relationship among the three of them was merely
that of lessor-lessee, instead of partners.
Corporation by Estoppel
4. Litonjua v. Litonjua
G.R. Nos. 166299-300 December 13, 2005
AURELIO K. LITONJUA, JR.,
Petitioner,
- versus
EDUARDO K. LITONJUA, SR.,
ROBERT T. YANG, ANGLO PHILS.
MARITIME, INC., CINEPLEX, INC.,
DDM GARMENTS, INC., EDDIE K.
LITONJUA SHIPPING AGENCY, INC.,
EDDIE K. LITONJUA SHIPPING CO.,
INC., LITONJUA SECURITIES, INC.
(formerly E. K. Litonjua Sec), LUNETA
THEATER, INC., E & L REALTY,
DECISION
GARCIA, J.:
Civil Code.
xxx You will be the only one left with the company,
among us brothers and I will ask you to stay as
I want you to run this office everytime I am
away. I want you to run it the way I am trying
to run it because I will be alone and I will
depend entirely to you, My sons will not be
ready to help me yet until about maybe 15/20
years from now. Whatever is left in the
corporation, I will make sure that you get ONE
MILLION PESOS (P1,000,000.00) or ten
But even assuming in gratia argumenti that Annex A1 partakes of a perfected innominate contract, petitioners
complaint would still be dismissible as against Eduardo and,
more so, against Yang. It cannot be over-emphasized that
petitioner points to Eduardo as the author of Annex A-1.
Withal, even on this consideration alone, petitioners claim
against Yang is doomed from the very start.
As it were, the only portion of Annex A-1 which could
perhaps be remotely regarded as vesting petitioner with a
right to demand from respondent Eduardo the observance of
a determinate conduct, reads:
35
In sum then, the Court rules, as did the CA, that petitioners
complaint for specific performance anchored on an
actionable document of partnership which is legally
inexistent or void or, at best, unenforceable does not state a
cause of action as against respondent Eduardo and the
corporate defendants. And if no of action can successfully be
maintained against respondent Eduardo because no valid
partnership existed between him and petitioner, the Court
cannot see its way clear on how the same action could
plausibly prosper against Yang. Surely, Yang could not have
become a partner in, or could not have had any form of
business relationship with, an inexistent partnership.
As may be noted, petitioner has not, in his complaint,
provide the logical nexus that would tie Yang to him as his
partner. In fact, attendant circumstances would indicate the
contrary. Consider:
1. Petitioner asserted in his complaint that his socalled joint venture/partnership with Eduardo was for
the continuation of their family business and common
family funds which were theretofore being mainly
managed by Eduardo. [33] But Yang denies kinship
with the Litonjua family and petitioner has not
disputed the disclaimer.
2. In some detail, petitioner mentioned what he had
contributed to the joint venture/partnership with
Eduardo and what his share in the businesses will be.
No allegation is made whatsoever about what Yang
contributed, if any, let alone his proportional share in
the profits. But such allegation cannot, however, be
made because, as aptly observed by the CA, the
36
DECISION
PANGANIBAN, J.:
41
COLLECTIBLE ===========
to 4/15/79 545,193.60
===========
===========
Compromise penalty-
COLLECTIBLE ===========[8]
Compromise penalty-
43
[18]
48
September 7, 1929
one was when the same plaintiffs appeared from the order of
the court below sustaining the defendant's demurrer, and
requiring the former to amend their complaint within a
period, so as to include all the members of "Turnuhan
Polistico & Co.," either as plaintiffs or as a defendants. This
court held then that in an action against the officers of a
voluntary association to wind up its affairs and enforce an
accounting for money and property in their possessions, it is
not necessary that all members of the association be made
parties to the action. (Borlasa vs. Polistico, 47 Phil., 345.)
The case having been remanded to the court of origin, both
parties amend, respectively, their complaint and their
answer, and by agreement of the parties, the court appointed
Amadeo R. Quintos, of the Insular Auditor's Office,
commissioner to examine all the books, documents, and
accounts of "Turnuhan Polistico & Co.," and to receive
whatever evidence the parties might desire to present.
The commissioner rendered his report, which is attached to
the record, with the following resume:
Income:
VILLAMOR, J.:
This is an action to bring about liquidation of the funds and
property of the association called "Turnuhan Polistico &
Co." The plaintiffs were members or shareholders, and the
defendants were designated as president-treasurer, directors
and secretary of said association.
It is well to remember that this case is now brought before
the consideration of this court for the second time. The first
Member's shares............................
97,263.70
Credits paid................................
6,196.55
Interest received...........................
4,569.45
51
85,012
Miscellaneous...............................
1,891.00
Expenses:
Premiums to members.......................
Loans on real-estate.......................
Salaries....................................
Cash on hand........................................
24,607
Miscellaneous...............................
1,686.10
54
Facts:
Herein petitioners seek a review of CTAs decision holding
them liable for income tax, real estate dealers tax and
residence tax. As stipulated, petitioners borrowed from their
father a certain sum for the purpose of buying real
properties. Within February 1943 to April 1994, they have
bought parcels of land from different persons, the
management of said properties was charged to their brother
Simeon evidenced by a document. These properties were
then leased or rented to various tenants.
On September 1954, CIR demanded the payment of income
tax on corporations, real estate dealers fixed tax, and
corporation residence tax to which the petitioners seek to be
absolved from such payment.
Issue: Whether petitioners are subject to the tax on
corporations.
Ruling: The Court ruled that with respect to the tax on
corporations, the issue hinges on the meaning of the
termscorporation and partnership as used in Section 24
(provides that a tax shall be levied on every corporation no
matter how created / organized except general copartnerships) and 84 (provides that the term corporation
includes among others, partnership) of the NIRC. Pursuant
to Article 1767, NCC (provides for the concept of
partnership), its essential elements are: (a) an agreement to
contribute money, property or industry to a common fund;
and (b) intent to divide the profits among the contracting
parties.
1945
14.84
58
1948
150.00
1946
1,144.71
1949
150.00
1947
10.34
P527.00
1948
1,912.30
RESIDENCE TAXES OF
CORPORATION
1949
1,575.90
1945
P38.75
1946
38.75
1947
38.75
1946
P37.50
1948
38.75
1947
150.00
1949
38.75
59
P193.75
P6,878.34.
Facts:
On June 22, 1965, petitioners Mariano Pascual and Renato
Dragon bought (2) parcels of land from Santiago
GANCAYCO, J.:
Ratio:There is no evidence that petitioners entered into an
agreement to contribute money, property or industry to a
common fund, and that they intended to divide the profits
among themselves.
Respondent commissioner and/ or his reps just assumed
these conditions to be present on the basis of the fact that
petitioners purchased certain parcels of land and became coowners thereof. In Evangelsita , there was a series of
transactions where petitioners purchased (24) lots showing
that the purpose was not limited to the conservation or
preservation of the common fund or even the properties
acquired by them. The character of habituality peculiar to
business transactions engaged in for the purpose of gain
was
present.
Reliance of the lower court to the case of Evangelista v.
Collector is untenable. In order to constitute a partnership
inter sese there must be: (a) An intent to form the same; (b)
generally participating in both profits and losses; (c) and
such a community of interest, as far as third persons are
concerned
as enables each party to make contract, manage the business,
and dispose of the whole property. There is no adequate
basis to support the proposition that they thereby formed an
unregistered partnership. The 2 isolated transactionswhereby
they purchased properties and sold the same a few
- versus -
CORONA, J.,
Chairperson,
VELASCO, JR.,
NACHURA,
DEL CASTILLO,* and
MENDOZA, JJ.
Promulgated:
March 3, 2010
x-----------------------------------------------------------------------------------x
FACTS: Petitioners are the heirs of the late Jose Lim. They
filed a Complaint for Partition, Accounting & Damages
against respondent Juliet Villa Lim (respondent),widow of
the late Elfledo Lim, who was the eldestson of Jose and
Cresencia.
Petitioners alleged that Jose was the liaison officer of
Interwood Sawmill in Quezon. Sometime in 1980, Jose,
together with his friends (Jimmy) and (Norberto), formed a
partnership to engage in the trucking business. Initially, with
a contribution of P50,000.00 each, they purchased a truck to
be used in the hauling and transport of lumber of the
sawmill. Jose managed the operations of this trucking
business until his death on August 15, 1981.
72
Decision[2] dated June 29, 2005, which reversed and set aside
the decision[3] of the Regional Trial Court (RTC)
of Lucena City, dated April 12, 2004.
The facts of the case are as follows:
Petitioners are the heirs of the late Jose Lim (Jose),
namely: Jose's widow Cresencia Palad (Cresencia); and their
children Elenito, Evelia, Imelda, Edelyna and Edison, all
surnamed Lim (petitioners), represented by Elenito Lim
(Elenito). They filed a Complaint[4] for Partition, Accounting
and Damages against respondent Juliet Villa Lim
(respondent), widow of the late Elfledo Lim (Elfledo), who
was the eldest son of Jose and Cresencia.
Petitioners alleged that Jose was the liaison officer of
Interwood Sawmill in Cagsiay, Mauban, Quezon. Sometime
in 1980, Jose, together with his friends Jimmy Yu (Jimmy)
and Norberto Uy (Norberto), formed a partnership to engage
in the trucking business. Initially, with a contribution
of P50,000.00 each, they purchased a truck to be used in the
hauling and transport of lumber of the sawmill. Jose
managed the operations of this trucking business until his
death on August 15, 1981. Thereafter, Jose's heirs, including
Elfledo, and partners agreed to continue the business under
the management of Elfledo. The shares in the partnership
profits and income that formed part of the estate of Jose
were held in trust by Elfledo, with petitioners' authority for
Elfledo to use, purchase or acquire properties using said
funds.
83
Ruling:
The SC ruled that the nature of the business established by
the parties was a joint venture and neither a corporation nor
a partnership. Joint venture has no precise legal definition.
However, the main distinction cited by most opinions in
common law jurisdictions is that the partnership
contemplates a general business with some degree of
continuity, while the joint venture is formed for the
execution of a single transaction, and is thus of a temporary
nature
GUTIERREZ, JR., J.:
These consolidated petitions seek the review of the amended
decision of the Court of Appeals in CA-G.R. SP Nos. 05604
and 05617 which set aside the earlier decision dated June 5,
1986, of the then Intermediate Appellate Court and directed
that in all subsequent elections for directors of Sanitary
Wares Manufacturing Corporation (Saniwares), American
Standard Inc. (ASI) cannot nominate more than three (3)
directors; that the Filipino stockholders shall not interfere in
ASI's choice of its three (3) nominees; that, on the other
hand, the Filipino stockholders can nominate only six (6)
candidates and in the event they cannot agree on the six (6)
nominees, they shall vote only among themselves to
determine who the six (6) nominees will be, with cumulative
voting to be allowed but without interference from ASI.
The antecedent facts can be summarized as follows:
94
110
x-------------------------------------------------x
13 . J. Tiosejo VInvestment v. Spouses Ang, G.R. No.
174149, September 8, 2010
Principle: a joint venture is considered in this jurisdiction as
a form of partnership and is, accordingly, governed by the
law of partnerships.[54]
The Fact petitioner entered into a (JVA) with Primetown
Property Group, Inc. (PPGI) for the development of a
residential condominium project to be known asThe
Meditel on the petitioner's property. With petitioner
contributing the same property to the joint venture and PPGI
undertaking to develop the condominium, the JVA provided,
among other terms and conditions, that the developed units
shall be shared by the Pet and the PPGI at a ratio of 17%83%, respectively.[4] While both parties were allowed, at
their own individual responsibility, to pre-sell the units
pertaining to them,[5] PPGI further undertook to use all
111
So ordered.[18]
With the denial of its MR of the foregoing decision,
[19]
petitioner filed a Notice of Appeal dated 28 February
2005 which was docketed before the Office of the President
(OP) as O.P. Case No. 05-B-072.[20] On 3 March 2005, the
OP issued an order directing petitioner to submit its appeal
memorandum within 15 days from receipt thereof.[21] Acting
on the motion therefor filed, the OP also issued another
order on the same date, granting petitioner a period of 15
days from 28 February 2005 or until 15 March 2005 within
which to file its appeal memorandum.[22] In view of
petitioners filing of a second motion for extension dated 15
March 2005,[23] the OP issued the 18 March 2005 order
granting the former an additional 10 days from 15 March
2005 or until 25 March 2005 within which to file its appeal
memorandum, provided no further extension shall be
allowed.[24] Claiming to have received the aforesaid 3 March
2005 order only on 16 March 2005, however, petitioner filed
its 31 March 2005 motion seeking yet another extension of
10 days or until 10 April 2005 within which to file its appeal
memorandum.[25]
On 7 April 2005, respondents filed their opposition to the 31
March 2005 motion for extension of petitioner[26] which
eventually filed its appeal memorandum by registered mail
on 11 April 2005 in view of the fact that 10 April 2005 fell
on a Sunday.[27] On 25 October 2005, the OP rendered a
decision dismissing petitioners appeal on the ground that the
latters appeal memorandum was filed out of time and that
the HLURB Board committed no grave abuse of discretion
in rendering the appealed decision.[28] Aggrieved by the
115
dismissing its petition for review for having been filed out of
time. Acting on the 29 March 2006 motion filed for the
purpose, after all, the CA had already granted petitioner an
inextendible period of 15 days from 31 March 2006 or until
15 April 2006 within which to file its petition for
review. Sec. 4, Rule 43 of the 1997 Rules of Civil
Procedure provides as follows:
Sec. 4. Period of appeal. The appeal shall be
taken within fifteen (15) days from notice of the
award, judgment, final order or resolution, or
from the date of its last publication, if
publication is required by law for its effectivity,
or of the denial of petitioners motion for new
trial or reconsideration duly filed in accordance
with the governing law of the court or agency a
quo. Only one (1) motion for reconsideration
shall be allowed.Upon proper motion and
payment of the full amount of the docket fee
before the expiration of the reglementary
period, the Court of Appeals may grant an
additional period of fifteen (15) days only
within which to file the petition for review. No
further extension shall be granted except for the
most compelling reason and in no case to
exceed fifteen (15) days. (Underscoring
supplied)
The record shows that, having been granted the 15-day
extension sought in its first motion, petitioner filed a second
motion for extension praying for an additional 10 days from
117
SO ORDERED.
IMPERIAL, J.:
P0.1
121
Gatchalian ...................................................................
8
.................................
2. Gregoria
Cristobal ..................................................................... .18
..........................
3. Saturnina
Silva ............................................................................ .08
........................
4. Guillermo
Tapia ........................................................................... .13
........................
5. Jesus
Legaspi ....................................................................... .15
...............................
6. Jose
Silva ............................................................................ .07
.................................
7. Tomasa
Mercado ...................................................................... .08
..........................
8. Julio
Gatchalian ................................................................... .13
................................
9. Emiliana
Santiago ...................................................................... .13
..........................
10. Maria C.
.16
Legaspi .......................................................................
........................
11. Francisco
Cabral ......................................................................... .13
......................
12. Gonzalo
Javier .......................................................................... .14
..........................
13. Maria
Santiago ...................................................................... .17
.............................
14. Buenaventura
Guzman ...................................................................... .13
................
15. Mariano
Santos ......................................................................... .14
........................
Total ............................................................................
2.00
............................
3. That immediately thereafter but prior to December
15, 1934, plaintiffs purchased, in the ordinary course
of business, from one of the duly authorized agents of
the National Charity Sweepstakes Office one ticket
bearing No. 178637 for the sum of two pesos (P2) and
that the said ticket was registered in the name of Jose
Gatchalian and Company;
4. That as a result of the drawing of the sweepstakes
on December 15, 1934, the above-mentioned ticket
bearing No. 178637 won one of the third prizes in the
122
...
10. Tomasa
Mercado .......................................
Purchaser
Amount Address
1. Mariano
Santos ...........................................
P0.14
2. Buenaventura
Guzman ...............................
.13
3. Maria
.17
Santiago ............................................
Pulilan,
Bulacan.
- Do - Do -
4. Gonzalo
Javier ..............................................
.14
- Do -
5. Francisco
Cabral ..........................................
.13
- Do -
6. Maria C.
Legaspi ..........................................
.16
- Do -
7. Emiliana
Santiago .........................................
.13
- Do -
8. Julio
Gatchalian .......................................... .13
..
- Do -
.08
- Do -
11. Jesus
.15
Legaspi .............................................
- Do -
12. Guillermo
Tapia ...........................................
.13
- Do -
13. Saturnina
Silva ............................................
.08
- Do -
14. Gregoria
Cristobal .......................................
.18
- Do -
15. Jose
Gatchalian .......................................... .18
..
- Do -
2.00
Total cost
of said
9. Jose
.07
Silva ...................................................
- Do -
Santiago ....................
..................
65
Net
priz
e
10. Maria C.
Legaspi ...................... D-10 .16
................
4,10
960
0
3,1
40
P0.18
P4,4
P 480
25
3,9
45
11. Francisco
Cabral ........................ D-11 .13
..............
3,32
360
5
2,9
65
.18
4,57
2,000
5
2,5
75
12. Gonzalo
Javier ......................... D-12 .14
.................
3,32
360
5
2,9
65
.08
1,87
360
5
1,5
15
13. Maria
Santiago .................... D-13 .17
......................
4,35
360
0
3,9
90
.13
3,32
360
5
2,9
65
14. Buenaventura
Guzman ..................... D-14 .13
......
3,32
360
5
2,9
65
5. Jesus Legaspi by
D-5
Maria Cristobal .........
.15
3,82
720
5
3,1
05
3,32
360
5
2,9
65
6. Jose
Silva .......................... D-6
..........................
15. Mariano
Santos ........................ D-15 .14
................
.08
1,87
360
5
1,5
15
7. Tomasa
Mercado .................... D-7
...................
.07
1,87
360
5
1,5
15
8. Julio Gatchalian by
D-8
Beatriz Guzman .......
.13
3,15
240
0
2,9
10
9. Emiliana
.13
3,32 360
2,9
Name
1. Jose
Gatchalian ................. D-1
.........................
2. Gregoria
Cristobal .................... D-2
..................
3. Saturnina
Silva .......................... D-3
...................
4. Guillermo
Tapia ......................... D-4
.................
D-9
2.00
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The legal questions raised in plaintiffs-appellants' five
assigned errors may properly be reduced to the two
following: (1) Whether the plaintiffs formed a partnership,
or merely a community of property without a personality of
its own; in the first case it is admitted that the partnership
thus formed is liable for the payment of income tax, whereas
if there was merely a community of property, they are
exempt from such payment; and (2) whether they should pay
the tax collectively or whether the latter should be prorated
among them and paid individually.
The Collector of Internal Revenue collected the tax under
section 10 of Act No. 2833, as last amended by section 2 of
Act No. 3761, reading as follows:
SEC. 10. (a) There shall be levied, assessed, collected,
and paid annually upon the total net income received
in the preceding calendar year from all sources by
every corporation, joint-stock company, partnership,
joint account (cuenta en participacion), association or
insurance company, organized in the Philippine
Islands, no matter how created or organized, but not
including duly registered general copartnership
the letter saying that upon the advice of his counsel he had
to suspend the payment (of the rentals) because of the
pendency of the ejectment suit by the owners of the land
against Mrs. Yulo. In this letter Yang alleges that inasmuch
as he is a sublessee and inasmuch as Mrs. Yulo has not paid
to the lessors the rentals from August, 1949, he was
retaining the rentals to make good to the landowners the
rentals due from Mrs. Yulo in arrears (Exh. "E").
In view of the refusal of Yang to pay her the amount agreed
upon, Mrs. Yulo instituted this action alleging the existence
of a partnership and that the defendant Seng has refused to
pay her share from December, 1949 to December, xx, and
Plaintiff sought for damages and Attorney's fees.
In answer - alleges that the real agreement between the
plaintiff and the defendant was one of lease and not of
partnership; that the partnership was adopted as a subterfuge
to get around the prohibition contained in the contract of
lease between the owners and the plaintiff against the
sublease of the said property.
Issue: W/N the lower court erred in holding that the written
contracts between plaintiff and defendant, are one of lease
and not of partnership.
We fully agree with the conclusion of the trial court that the
agreement was a sublease, not a partnership. The following
are the requisites of partnership: (1) two or more persons
who bind themselves to contribute money, property, or
129
paragraph (2), then Yang Chiao Seng shall have the right to
remove and take away all improvements that the partnership
may place in the premises.
But on April 12, 1949, the attorney for the owners notified
Mrs. Yulo of the owner's desire to cancel the contract of
lease on July 31, 1949.
133
But in this case, it was shown that Lim did not have
the intent to form a corporation with Maglana et al. This can
be inferred from acts of unilaterally taking out a surety from
Pioneer Insurance and not using the funds he got from
Maglana et al. The record shows that Lim was acting on his
own and not in behalf of his other would-be incorporators in
transacting the sale of the airplanes and spare parts.
149
152
undertaking is
specified;
xxx xxx xxx
(2) in contravention
of the agreement
between the partners,
where the
circumstances do not
permit a dissolution
under any other
provision of this
article, by the express
will of any partner at
any time;
xxx xxx xxx
(Emphasis supplied)
In the case at bar, just about all of the partners had sold their
partnership interests (amounting to 82% of the total
partnership interest) to Mr. Willy Co and Emmanuel
Zapanta. The record does not show what happened to the
remaining 18% of the original partnership interest. The
acquisition of 82% of the partnership interest by new
partners, coupled with the retirement or withdrawal of the
partners who had originally owned such 82% interest, was
enough to constitute a new partnership.
(Emphasis supplied)
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 Benjamin Yu in respect of his
claim for unpaid wages, is entitled to priority vis-a-visany
claim of any retired or previous partner insofar as such
retired partner's interest in the dissolved partnership is
concerned. It is not necessary for the Court to determine
under which one or mare of the above six (6) paragraphs, the
case at bar would fall, if only because the facts on record are
not detailed with sufficient precision to permit such
determination. It is, however, clear to the Court that under
Article 1840 above, Benjamin Yu is entitled to enforce his
claim for unpaid salaries, as well as other claims relating to
his employment with the previous partnership, against the
new Jade Mountain.
It is at the same time also evident to the Court that the new
partnership was entitled to appoint and hire a new general or
assistant general manager to run the affairs of the business
enterprise take over. An assistant general manager belongs to
the most senior ranks of management and a new partnership
is entitled to appoint a top manager of its own choice and
confidence. The non-retention of Benjamin Yu as Assistant
General Manager did not therefore constitute unlawful
termination, or termination without just or authorized cause.
156
158
with interests at the legal rate on both amounts from the date
the complaint was filed until full payment is made.
GUTIERREZ, JR.,
This is a petition for review on certiorari of the decision of
the respondent Court of Appeals which ordered petitioner
Isabelo Moran, Jr. to pay damages to respondent Mariano E,
Pecson.
As found by the respondent Court of Appeals, the
undisputed facts indicate that: t.hqw
xxx xxx xxx
... on February 22, 1971 Pecson and Moran
entered into an agreement whereby both would
contribute P15,000 each for the purpose of
printing 95,000 posters (featuring the delegates
to the 1971 Constitutional Convention), with
Moran actually supervising the work; that
Pecson would receive a commission of P l,000
a month starting on April 15, 1971 up to
December 15, 1971; that on December 15,
1971, a liquidation of the accounts in the
distribution and printing of the 95,000 posters
would be made, that Pecson gave Moran
P10,000 for which the latter issued a receipt;
that only a few posters were printed; that on or
159
162
163
A Yes, sir.
Q What is this promissory note, in
connection with your transaction
with the defendant?
A This promissory note is for the
printing of the "Voice of the
Veterans".
Q What is this "Voice of the
Veterans", Mr. Pecson?
A It is a book.t.hqw
(T.S.N., p. 19, Nov.
29, 1972)
Q And what does the amount of
P14,000.00 indicated in the
promissory note, Exhibit 2,
represent?
A It represents the P6,000.00 cash
which I gave to Mr. Moran, as
evidenced by the Philippine
National Bank Manager's check
and the P8,000.00 profit assured
me by Mr. Moran which I will
derive from the printing of this
"Voice of the Veterans" book.
the logging operation. They shall share in all profits and loss
equally.
Due to difficulties encountered they decided to avail of the
sources of Pahamatong as industrial partners. They again
executed their Articles of Co-Partnership under EDE. The
term is 30 years. After sometime Pamahatong sold his
interest to Maglana and Rojas including equipment
contributed. After withdrawal of Pamahatong, Maglana and
Rojas continued the partnership. After 3 months, Rojas
entered into a management contract with another logging
enterprise. He left and abandoned the partnership. He even
withdrew his equipment from the partnership and was
transferred to CMS. He never told Maglana that he will not
be able to comply with the promised contributions and he
will not work as logging superintendent. Maglana then told
Rojas that the Rojas' share will just be 20% of the net
profits. Rojas took funds from the partnership more than his
contribution. Thus, Maglana notified Rojas that he dissolved
the partnership.
Issue: What is the nature of the partnership and legal
relationship of Maglana and Rojas after Pahamatong
retired from the second partnership
Ruling:It was not the intention of the partners to dissolve
the first partnership, upon the constitution of the second one,
which they unmistakably called additional agreement.
Otherwise stated even during the existence of the second
partnership, all business transactions were carried out under
the duly registered articles. No rights and obligations
accrued in the name of the second partnership except in
favor of Pahamatong which was fully paid by the duly
registered partnership.
DECISION
PARAS, J.:
This is a direct appeal to this Court from a decision ** of
the then Court of First Instance of Davao, Seventh Judicial
District, Branch III, in Civil Case No. 3518, dismissing
appellant's complaint.
As found by the trial court, the antecedent facts of the case
are as follows:
On January 14, 1955, Maglana and Rojas executed their
Articles of Co-Partnership (Exhibit "A") called Eastcoast
Development Enterprises (EDE) with only the two of them
as partners. The partnership EDE with an indefinite term of
existence was duly registered on January 21, 1955 with the
Securities and Exchange Commission.
One of the purposes of the duly-registered partnership was
to "apply or secure timber and/or minor forests products
licenses and concessions over public and/or private forest
lands and to operate, develop and promote such forests
rights and concessions." (Rollo, p. 114).
A duly registered Articles of Co-Partnership was filed
together with an application for a timber concession
covering the area located at Cateel and Baganga, Davao with
the Bureau of Forestry which was approved and Timber
License No. 35-56 was duly issued and became the basis of
subsequent renewals made for and in behalf of the duly
registered partnership EDE.
Under the said Articles of Co-Partnership, appellee Maglana
shall manage the business affairs of the partnership,
170
Two weeks after March 17, 1957, Rojas told Maglana that
he will not be able to comply with the promised
contributions and he will not work as logging
superintendent. Maglana then told Rojas that the latter's
share will just be 20% of the net profits. Such was the
sharing from 1957 to 1959 without complaint or dispute
(Decision, R.A. 949).: nad
175
20. Aldecoa and Co. v. Warner, Barnes and Co., 30 Phil 153
(1910)
G.R. No. L-5242
August 6, 1910
ALDECOA &
CO., plaintiff-appellant, WARNER, BARNES & CO.,
LTD., defendant-appellee.
Facts: This litigation concerns the rendering of accounts
pertaining to the management of the business of a jointaccount partnership formed between the 2 litigants
companies.
through verbal agreement, a joint-account partnership was
established, whereby they should share equally the profits
and losses of the business of gathering and storing hemp in
Albay and selling it in Manila for exportation, and that the
commercial firm of Warner, Barnes and Co., Ltd., was the
manager of the said joint-account partnership.
With respect to the liquidation of the business, the
operations having been closed on December 31, 1903,
Warner, Barnes and Co., Ltd., the defendant, has not realized
upon the assets of the firm by selling the property which
constitutes its capital; that the persons who were the
managers and general partners of Warner, Barnes and Co.,
Ltd., and are the managers and directors of that firm in the
Philippine Islands and are the ones who, under the previous
firm name of Warner, Barnes and Co., admitted Aldecoa and
Co. as a participant in one-half of the said business, on the
1st day of December, 1898; that the said directors of the
defendant company, unlawfully, maliciously, and criminally
conspired with the persons who were managing the
commercial firm of Aldecoa and Co. during the years 1899,
1900, 1901, 1902, and 1903, to defraud the latter of its
interest in the said joint-account partnership for a total sum
of P86,500. Of the 12 allegations provided by plaintiff,
defendant Warner, Barnes and Co. admitted only the first
three. It denies all the other allegations contained in the said
paragraphs. For its first special defense, the defendant
alleges that during the period that the said joint-account
partnership existed, the manager thereof, the defendant,
rendered to the plaintiff just and true accounts of its
transaction as manager of the said partnership, which
accounts have been approved by the plaintiff, with the
exception of those relating to the year 1903. As its second
special defense, the defendant alleges that more than four
years have expired between the time the alleged right of
action accrued to the plaintiff and the date of the filing of the
complaint. For all the reasons set forth in this amended
answer, the defendant prayed that it be absolved from the
complaint, with the costs against the plaintiff.
Issues: W/N in the management of the said business,
fraudulent acts were committed to the plaintiff's injury.
W/N the partnership property should be included in the
liquidation of the said business and in the accounts
appertaining to the year 1903, when the existence of the
partnership came to an end.
177
179
216,633
bales .................................................. 298,168.25 20
loose.
216,653 bales.
is ...................................................... 24,870.56
belongs to the plaintiffs.
(g) In 1900, there is unduly included an item of net account
which should be stricken out, as it does not pertain to this
business. This item is the following:
1900
June 30. To Miguel Estela. For transfer made to his
account
of 5 per cent commission on his hemp, which should
not be paid according to
agreement ..................................... P870.75
Half of this sum, P435.37, must be credited to the plaintiffs.
(h) On the date of December 26, 1899, Messrs. Warner,
Barnes and Co., Ltd., deduct from the profits which they
show as belonging to Aldecoa and Co., the sum of P7,400,
under the appearance of the insurance premium, and they
delivered that sum to the plaintiffs' managers with whom
they conspired, for the purposes of the collusion alleged in
Paragraph VII of the complaint, in the manner failing to
observe the truth in their statement of the facts. Aldecoa and
Co., therefore, claim for themselves this amount, P7,400.
(i) On December 31, 1903, on a capital of P50,000 brought
in by Aldecoa and Co., and to whom it should bear 5 per
FACTS: Tan alleged that she is the widow of Tee Hoon Lim
Po Chuan, who was a partner in the commercial partnership,
Glory Commercial Company with Antonio Lim Tanhu and
Alfonso Ng Sua".
193
196
date set for the hearing, otherwise the court may not validly
act on the motion." (Comments on the Rules of Court by
Moran, Vol. 1, 1970 ed. p. 474.) Such is the correct
construction of Section 4 of Rule 15. And in the instant case,
there can be no question that the notices to the non-defaulted
defendants were short of the requirement of said provision.
We can understand the over-anxiety of counsel for plaintiff,
but what is incomprehensible is the seeming inattention of
respondent judge to the explicit mandate of the pertinent
rule, not to speak of the imperatives of fairness, considering
he should have realized the far-reaching implications,
specially from the point of view he subsequently adopted,
albeit erroneously, of his favorably acting on it. Actually, he
was aware of said consequences, for simultaneously with his
order of dismissal, he immediately set the case for the exparte hearing of the evidence against the defaulted
defendants, which, incidentally, from the tenor of his order
which We have quoted above, appears to have been done by
him motu propio As a matter of fact, plaintiff's motion also
quoted above did not pray for it.
Withal, respondent court's twin actions of October 21, 1974
further ignores or is inconsistent with a number of known
juridical principles concerning defaults, which We will here
take occasion to reiterate and further elucidate on, if only to
avoid a repetition of the unfortunate errors committed in this
case. Perhaps some of these principles have not been amply
projected and elaborated before, and such paucity of
203
appear to the Court that the appeals court had upheld the
legality and validity of the actuations of the trial court being
questioned, when as a matter of indisputable fact, the
dismissal of the petition was based solely and exclusively on
its being premature without in any manner delving into its
merits. The Court must and does admonish counsel that such
manner of pleading, being deceptive and lacking in candor,
has no place in any court, much less in the Supreme Court,
and if We are adopting a passive attitude in the premises, it
is due only to the fact that this is counsel's first offense. But
similar conduct on his part in the future will definitely be
dealt with more severely. Parties and counsel would be well
advised to avoid such attempts to befuddle the issues as
invariably then will be exposed for what they are, certainly
unethical and degrading to the dignity of the law profession.
Moreover, almost always they only betray the inherent
weakness of the cause of the party resorting to them.
2
Coming now to the matter itself of default, it is quite
apparent that the impugned orders must have proceeded
from inadequate apprehension of the fundamental precepts
governing such procedure under the Rules of Court. It is
time indeed that the concept of this procedural device were
fully understood by the bench and bar, instead of being
merely taken for granted as being that of a simple expedient
of not allowing the offending party to take part in the
proceedings, so that after his adversary shall have presented
208
214
will be seen later in this opinion, the record does not show to
be invulnerable, both in their factual and legal aspects,
taking into consideration the tenor of the pleadings and the
probative value of the competent evidence which were
before the trial court when it rendered its assailed decision
where all the defendants are indispensable parties, for which
reason the absence of any of them in the case would result in
the court losing its competency to act validly, any
compromise that the plaintiff might wish to make with any
of them must, as a matter of correct procedure, have to await
until after the rendition of the judgment, at which stage the
plaintiff may then treat the matter of its execution and the
satisfaction of his claim as variably as he might please.
Accordingly, in the case now before Us together with the
dismissal of the complaint against the non-defaulted
defendants, the court should have ordered also the dismissal
thereof as to petitioners.
Indeed, there is more reason to apply here the principle of
unity and indivisibility of the action just discussed because
all the defendants here have already joined genuine issues
with plaintiff. Their default was only at the pre-trial. And as
to such absence of petitioners at the pre-trial, the same could
be attributed to the fact that they might not have considered
it necessary anymore to be present, since their respective
children Lim and Leonardo, with whom they have common
defenses, could take care of their defenses as well. Anything
that might have had to be done by them at such pre-trial
could have been done for them by their children, at least
219
Indeed, only time and the fear that this decision would be
much more extended than it is already prevent us from
232
The then Penal Code provides that those who are guilty of
estafa are those who, to the prejudice of another, shall
appropriate or misapply any money, goods, or any kind of
personal property which they may have received as a deposit
on commission for administration or in any other producing
the obligation to deliver or return the same, (as, for
example, in commodatum, precarium, and other unilateral
contracts which require the return of the same thing
received) does not include money received for a partnership;
otherwise the result would be that, if the partnership, instead
of obtaining profits, suffered losses, as it could not be held
liable civilly for the share of the capitalist partner who
reserved the ownership of the money brought in by him, it
would have to answer to the charge of estafa, for which it
would be sufficient to argue that the partnership had
received the money under obligation to return it.
ARELLANO, C.J.:
Pedro Larin delivered to Pedro Tarug P172, in order that the
latter, in company with Eusebio Clarin and Carlos de
Guzman, might buy and sell mangoes, and, believing that he
could make some money in this business, the said Larin
made an agreement with the three men by which the profits
were to be divided equally between him and them.
Pedro Tarug, Eusebio Clarin, and Carlos de Guzman did in
fact trade in mangoes and obtained P203 from the business,
but did not comply with the terms of the contract by
delivering to Larin his half of the profits; neither did they
render him any account of the capital.
233
234
Under the abovestated facts, both the trial court and the CA
found that that there was proof beyond reasonable doubt that
the act committed by the petitioner constitutes the crime of
estafa defined and punished under Article 315, 2(a) of the
Revised Penal Code, to wit:
Art. 315. Swindling (estafa). Any person who shall
defraud another by any of the means mentioned hereinbelow
shall be punished by:xxx xxx xxx
PANGANIBAN, J.:
Courts may not extricate parties from the necessary
consequences of their acts. That the terms of a contract turn
out to be financially disadvantageous to them will not
relieve them of their obligations therein. The lack of an
inventory of real property will not ipso facto release the
contracting partners from their respective obligations to
each other arising from acts executed in accordance with
their agreement.
The Case
WHEREFORE, for all the foregoing considerations, the Court, finding for
the defendant and against the plaintiffs, orders the dismissal of the plaintiffs
241
242
W I T N E S S E T H:
That, whereas, the SECOND PARTY, voluntarily offered the FIRST
PARTY, this property located at Lapu-Lapu City, Island of Mactan,
under Lot No. 1368 covering TCT No. T-0184 with a total area of
17,009 square meters, to be sub-divided by the FIRST PARTY;
Whereas, the FIRST PARTY had given the SECOND PARTY, the sum
of: (P20,000.00) Pesos, Philippine Currency, upon the execution of
this contract for the property entrusted by the SECOND PARTY, for
sub-division projects and development purposes;
FOURTH: That all general expense[s] and all cost[s] involved in the
sub-division project should be paid by the FIRST PARTY, exclusively
and all the expenses will not be deducted from the sales after the
development of the sub-division project.
FIFTH: That the sales of the sub-divided lots will be divided into 60%
for the SECOND PARTY 40% for the FIRST PARTY, and additional
profits or whatever income deriving from the sales will be divided
equally according to the x x x percentage [agreed upon] by both
parties.
SIXTH: That the intended sub-division project of the property
involved will start the work and all improvements upon the adjacent
lots will be negotiated in both parties['] favor and all sales shall [be]
decided by both parties.
SECOND: That the SECOND PARTY, had received from the FIRST
PARTY, the necessary amount of (P20,000.00) pesos, Philippine
currency, for their personal obligations and this particular amount will
serve as an advance payment from the FIRST PARTY for the property
mentioned to be sub-divided and to be deducted from the sales.
THIRD: That the FIRST PARTY, will not collect from the SECOND
PARTY, the interest and the principal amount involving the amount of
(P20,000.00) Pesos, Philippine Currency, until the sub-division project
is terminated and ready for sale to any interested parties, and the
amount of (P20,000.00) pesos, Philippine currency, will be deducted
accordingly.
244
ART. 1315. Contracts are perfected by mere consent, and from that moment
the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law.
Under Article 1315 of the Civil Code, contracts bind the parties not only
to what has been expressly stipulated, but also to all necessary consequences
thereof, as follows:
245
They contend that since the parties did not make, sign or
attach to the public instrument an inventory of the real
property contributed, the partnership is void.
2. The lower court erred in holding, that the fire that broke out
in the premises at Nos. 299-301 Muelle de la Industria of this
city, occupied by the alleged plaintiffs, was not of incendiary
origin.
VILLA-REAL, J.:
4. The lower court erred in holding, that the claim of loss filed
by the alleged plaintiffs was not fraudulent, but merely
inaccurate, due to the peculiar circumstances of the case,
253
who can join an old firm, can initially ride on that old
firms reputation established by the deceased partners.
RELEVANT ARGUMENTS:
Argument #1
Under the Civil Code in Article 1840 which is
within Chapter 3 of the Title IX entitled Dissolution
and Winding Up, it primarily deals with the
exemption from liability in cases of a dissolved
partnership, of the individual property of the decreed
partner for the debts contracted by person or
partnership, which continues the business using the
partnership name or the name of the deceased partner
as part thereof. What the law contemplates therein is
the hold-over situation preparatory to formal
reorganization.
Secondly, NCC 1840 treats more of a
commercial partnership with a good will to protect
rather than of a professional partnership (with no
sealable goodwill but whose reputation depends on
the personal qualifications of its individual members).
256
Argument #2
A partnership for practice of law cannot be
likened to partnership formed by other professionals
or for business. The law on accountancy specifically
allows the use of 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. It is not a partnership formed to
carry on trade or business or of holding property. The
use of nom de plume, assumed or trade name in law
practice is improper.
Argument #3
Canon 33 does not consider an unethical the
continued use of the name of a deceased or former
partner when such a practice is permissible by local
custom but the Canon warns that care should be taken
that no imposition or deception is practices.
In the Philippines, no local custom permits or
allows the continued use of the deceased or former
partners name. Firm names, under our custom,
identify the more active and/or more senior members
or partners of a law firm.
The possibility of deception upon the public,
real or consequential, where the name of a deceased
partner continued to be used cannot be ruled out. A
person in search of legal counsel might be guided by
the familiar ring of a distinguished name appearing in
the firm title.
Argument #6
U.S Courts have allowed the continued use of a
deceased partners name because it is sanctioned by
custom. Not so in this jurisdiction where there is no
local custom that sanctions that practice.
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