MAXIMILIANO SANCHO VS.

SEVERIANO LIZARRAGA
G.R. No. L-33580, February 6, 1931

FACTS: Sancho and Lizarraga entered into a contract of partnership. Sancho thereafter brought
an action for the rescission of the partnership and prayed for the reimbursement of the P50,000
investment he contributed with interest at 12% per annum against Lizarraga. Lizarraga denied
allegations and asked for the dissolution of their partnership and also asked for payment to him
as manager and administrator of the partnership of P500 monthly from October 15, 1920 until
final dissolution. CFI Manila proceedings proved Lizarraga had not contributed all the capital he
bound himself to invest and that Sancho demanded Lizarraga to liquidate partnership. CFI
declared partnership dissolved on account of the expiration period for which it was constituted
and ordered liquidation of the partnership. The plaintiff appealed from said decision praying for
the rescission of the partnership contract between him and the defendant in accordance with
Article 1124.

ISSUE: Does the plaintiff acquire the right to demand rescission of partnership contract under
Article 1124 of the Civil Code?

RULING: No, The Supreme Court ruled that plaintiff has not acquired the right to demand
rescission of the partnership contract according to Article 1124 of the Civil Code. The Court
ratiocinated that owing to the defendant’s failure to pay to the partnership the whole amount
which he bound himself to pay, he became indebted to the partnership for the remainder, with
interest and any damages occasioned thereby, but the plaintiff did not thereby acquire the right to
demand rescission of the partnership contract according to article 1124 of the Code. Also, it is a
well known principle that special provisions prevail over general provisions. Hence, the Supreme
Court dismissed the appeal left the decision appealed from in full force.