Professional Documents
Culture Documents
Court of Appeals (320 SCRA 428) without its designation and description, they cannot
II. TOPIC: Article 1773 be subject to inscription in the Registry of Property,
and their contribution cannot prejudice third
III. FACTS:
persons. This will result in fraud to those who
Petitioners, sisters Antonia Torres and contract with the partnership in the belief in the
Emeteria Baring, entered into a "joint venture efficacy of the guaranty in which the immovables
agreement" with Respondent Manuel Torres for the may consist. Thus, the contract is declared void by
development of a parcel of land into a the law when no such inventory is made. The case
subdivision. Pursuant to the contract, they executed at bar does not involve third parties who may be
a Deed of Sale covering the said parcel of land in prejudiced. Also, petitioners themselves invoke the
favor of respondent, who then had it registered in allegedly void contract as basis for their claim that
his name. By mortgaging the property, respondent respondent should pay them 60 percent of the
obtained from Equitable Bank a loan which, under value of the property; they cannot in one breath
the Joint Venture Agreement, was to be used for deny the contract and in another recognize it,
the development of the subdivision. All three of depending on what momentarily suits their purpose.
them also agreed to share the proceeds from the In short, the alleged nullity of the partnership will
sale of the subdivided lots. The project did not push not prevent courts from considering the Joint
through, and the land was subsequently foreclosed Venture Agreement an ordinary contract from which
by the bank. Petitioners alleged that the project the parties rights and obligations to each other may
failed because of respondents lack of funds or be inferred and enforced.
means and skills. They add that respondent used
the loan in furtherance of his own company. On the
other hand, respondent alleged that he used the
loan to implement the Agreement. With the said
amount, he was able to effect the survey and the
subdivision of the lots, secured the Lapu Lapu City
Councils approval of the subdivision project which
he advertised in a local newspaper and caused the
construction of roads, curbs and gutters. Also, he
entered into a contract with an engineering firm for
the building of sixty low-cost housing units and
actually even set up a model house on one of the
subdivision lots.
Respondent claimed that the subdivision
project failed, however, because petitioners and
their relatives had separately caused the
annotations of adverse claims on the title to the
land, which eventually scared away prospective
buyers. Despite his requests, petitioners refused to
cause the clearing of the claims, thereby forcing
him to give up on the project.
Subsequently, petitioners filed a criminal
case for estafa against respondent and his wife,
who were however acquitted. Thereafter, they filed
the present civil case which, upon respondent's
motion, was later dismissed by the trial court. In
affirming the trial court, the Court of Appeals held
that petitioners and respondent had formed a
partnership.
Petitioners argue that the Joint Venture
Agreement is void under Article 1773 of the Civil
Code. 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.
IV. ISSUE/S: Whether or not the Partnership
Agreement is void under Article 1773 of the Civil
Code
V. RULING:
NO. Article 1773 was intended primarily to
protect third persons. Thus, Arturo M. Tolentino
states that under the provision which is a
complement of Article 1771, the execution of a
public instrument would be useless if there is no
inventory of the property contributed, because
8. Banatin, Alyssa Monique T. Also, the father of the defendants, was the
I. TITLE: Smith v. Lopez (5 Phil 78) administrator of the property; that having been
II. TOPIC: Article 1775 notified of an order of the Board of Health he took
the necessary steps to comply with the same,
III. FACTS:
calling upon one of the plaintiffs to do the work
Plaintiffs Messrs. Smith and Reyes, as required, and that he made certain payments on
proprietors of the Philippine Gas Light Company, account. Nicasio Lopez did all this as a voluntary
brought this action against the defendant sisters, agent of the actual owners of the house, and,
Jacinta and Ignacia Lopez de Pineda, to recover although there is no proof of an express power of
from them the sum of 3,270 pesos, Mexican attorney, it cannot be denied that there was an
currency, for work performed in connection with the implied power, because the defendants did not
installation of a water system, urinals, closets, object to the work being done on the house, which
shower baths, and drain pipes in their house at the was really benefited and improved by such work.
district of Santa Cruz, the same being the property For this reason it is evidently just that the owners
of the defendants. The plaintiffs alleged that they be held liable for the cost of the work and the value
had complied with the agreement made with the of the material used therein. They cannot now
father, Nicasio Lopez, of the defendants, the allege that there was no contract and that they did
administrator of the property, and that the labor not agree to pay for such labor and material. There
performed and the material used were reasonably was a quasi-contract which created certain
worth the sum of 4,020 pesos, Mexican currency, of reciprocal obligations between them and the
which sum they acknowledged having received 750 plaintiffs. The defendants never objected to the
pesos, and prayed that judgment be entered performance of the necessary work. It therefore
against the defendants and in favor of the plaintiffs must be presumed that they, the defendants,
for the sum of 3,270 pesos, together with accrued approved of the work done upon the house and
interest and costs of proceedings, defendants ratified the action of their father in the premises as
having refused to pay the same as agreed. though he acted under an express power from
Attorney Gregorio Pineda appeared in them. But, even assuming that the defendants did
behalf of the defendants, denied all the facts set out not expressly ratify or approve the action of their
in the complaint, and alleged that it did not appear father, the fact remains that the house was
from the pleadings that plaintiffs had ever entered improved by said work, and, for this reason, the
into a mercantile partnership under the aforesaid owners of the premises are liable for the obligations
name and style, or that any such partnership legally incurred by their agent, Lopez, for their benefit and
existed; that Nicasio Lopez was not the advantage.
administrator nor was he empowered by the As to the error relating to the price of the
defendants to make any contract for repairs and work fixed by the court in the judgment, it should be
improvements to and in the said house; that there noticed that when no price has been expressly
was no allegation as to the extent and importance stipulated in a contract of this nature, it is
of the work performed on the premises nor as to understood that the contracting parties have
the quality or quantity of the materials used; that impliedly agreed to pay and receive the usual and
the work was not reasonably worth 4,020 pesos; reasonable value of the services rendered.
and that, assuming that plaintiffs had performed Otherwise it must be presumed that the parties
work in the said house pursuant to an agreement intended that the price be fixed by experts in case
with Nicasio Lopez, without defendants authority, they fail to agree as to the same. Further, a
the defendants set up a counterclaim for 600 contract for services or work to be performed exists
pesos, Mexican currency, for damages caused to not only where a certain and definite compensation
the house as a result of said work. has been expressly agreed upon, but also where
The court entered judgment against the the same can be ascertained from the customs and
defendants and in favor of the complainants. usages of the place in which such services were
rendered.
IV. ISSUE/S: Whether or not the court below erred
in recognizing plaintiffs capacity to sue as a
partnership, there being evidence to show that they
were legally organized as such.
V. RULING:
NO, there was no such error. Messrs. Smith
and Reyes executed the contract in their own
individual capacity and not in the name of any
partnership. They acted as co-owners of the
Philippine Gas Light Company. In their complaint
they sought to enforce a legitime right which they
had as such co-owners. The plaintiffs were not
seeking to enforce a right pertaining to a legal
entity. They were not obliged to register in the
Mercantile Registry. They were merely merchants
having a common interest in the business. They
were under no obligation to register.
9. Banatin, Alyssa Monique T. might be induced to come in with him and supply
I. TITLE: Lyons v. Rosenstock (56 Phil 632) part of the means necessary to carry the enterprise
II. TOPIC: Article 1776-1783 through. It will be remembered that, when Elser
obtained the loan of P50,000 to complete the
III. FACTS:
amount needed for the first payment on the San
Prior to his death, Henry W. Elser had been Juan Estate, the lender, Uy Siuliong, insisted that
a resident of the City of Manila where he was he should procure the signature of the Fidelity &
engaged during the years with which we are here Surety Co. on the note to be given for said loan.
concerned in buying, selling, and administering real But before signing the note with Elser and his
estate. In several ventures which he had made in associates, the Fidelity & Surety Co. insisted upon
buying and selling property of this kind the plaintiff, having security for the liability thus assumed by it.
E. S. Lyons, had joined with him, the profits being To meet this requirements Elser mortgaged to the
shared by the two in equal parts. Lyons, whose Fidelity & Surety Co. the equity of redemption in the
regular vocation was that of a missionary, or property owned by himself and Lyons on Carriedo
missionary agent, of the Methodist Episcopal Street. This mortgage was executed, at which time
Church, went on leave to the United States and Elser expected that Lyons would come in on the
was gone for nearly a year and a half. On the eve purchase of the San Juan Estate. But when he
of his departure Elser made a written statements learned from the letter from Lyons that the latter
showing that Lyons was, at that time, half owner had determined not to come into this deal, Elser
with Elser of three particular pieces of real property. began to cast around for means to relieve the
Concurrently with this act Lyons execute in favor of Carriedo property of the encumbrance. For this
Elser a general power of attorney empowering him purpose, he addressed a letter to the Fidelity &
to manage and dispose of said properties at will Surety Co., asking it to permit him to substitute a
and to represent Lyons fully and amply, to the property owned by himself and 1,000 shares of the
mutual advantage of both. During the absence of J. K. Pickering & Company, in lieu of the Carriedo
Lyons two of the pieces of property above referred property, as security. The Fidelity & Surety Co.
to were sold by Elser, leaving in his hands a single agreed to the proposition. Fidelity & Surety Co.
piece of property located at 616-618 Carriedo thereupon executed a cancellation of the mortgage
Street, in the City of Manila. on the Carriedo property and delivered it to Elser.
The attention of Elser was drawn to a piece But notwithstanding the fact that these documents
of land near the City of Manila, and he discerned were executed and delivered, the new mortgage
therein a fine opportunity for the promotion and and the release of the old were never registered;
development of a suburban improvement. This and, thereafter, Elser returned the cancellation of
property, which will be herein referred to as the San the mortgage on the Carriedo property and took
Juan Estate. To afford a little time for maturing his back from the Fidelity & Surety Co. the new
plans, Elser purchased an option on this property mortgage on the M. H. del Pilar property, together
and when this option was about to expire, he paid with the 1,000 shares of the J. K. Pickering &
P15,000 more for an extension of the option, with Company which he had delivered to it.
the understanding in both cases that, in case the As the development of the San Juan Estate
option should be exercised, the amounts thus paid was a success from the start, Elser paid the note of
should be credited as part of the first payment. The P50,000 to Uy Siuliong, although it was not due
amounts paid for this option and its extension were until more than five months later. It will thus be
supplied by Elser entirely from his own funds. In the seen that the mortgaging of the Carriedo property
end he was able from his own means, and with the never resulted in damage to Lyons. It is also plain
assistance which he obtained from others, to that no money actually deriving from this mortgage
acquire said estate. The amount required for the was ever applied to the purchase of the San Juan
first payment was P150,000, and it was necessary Estate. What really happened was the Elser merely
to raise the remainder by obtaining a loan for subjected the property to a contingent liability, and
P50,000. This amount was finally obtained from a no actual liability ever resulted therefrom.
Chinese merchant of the city named Uy Siuliong.
The case for the plaintiff supposes that,
This loan was secured through Uy Cho Yee, a son
when Elser placed a mortgage for P50,000 upon
of the lender; and in order to get the money it was
the equity of redemption in the Carriedo property,
necessary for Elser not only to give a personal note
Lyons, as half owner of said property, became, as it
signed by himself and his two associates in the
were, involuntarily the owner of an undivided
projected enterprise, but also by the Fidelity &
interest in the property acquired partly by that
Surety Company. The money thus raised was
money; and it is insisted for him that, in
delivered to Elser by Uy Siuliong. With this money
consideration of this fact, he is entitled to the four
and what he already had in bank Elser purchased
hundred forty-six and two-thirds shares of J. K.
the San Juan Estate. For the purpose of the further
Pickering & Company, with the earnings thereon,
development of the property a limited partnership
as claimed in his complaint.
had, about this time, been organized by Elser and
three associates, under the name of J. K. Pickering IV. ISSUE/S: Whether or not there was a general
& Company; and when the transfer of the property relation of partnership
was effected the deed was made directly to this
V. RULING:
company.
NO, there was clearly no general relation of
While these negotiations were coming to a
partnership, under Article 1678 of the Civil Code. It
head, Elser contemplated and hoped that Lyons
is clear that Elser, in buying the San Juan Estate, 1. Brito, John Patrick T.
was not acting for any partnership composed of I. TITLE: Ortega v CA (245 SCRA 529)
himself and Lyons, and the law cannot be distorted II. TOPIC: Article 1784
into a proposition which would make Lyons a
participant in this deal contrary to his express III. FACTS:
determination. If Elser had used any money
actually belonging to Lyons in this deal, he would The law firm of ROSS, LAWRENCE,
under Article 1724 of the Civil Code and Article 264 SELPH and CARRASCOSO was duly registered in
of the Code of Commerce, be obligated to pay the Mercantile Registry and reconstituted with the
interest upon the money so applied to his own use. Securities and Exchange Commission. The SEC
Under the law prevailing in this jurisdiction a trust records show that there were several subsequent
does not ordinarily attach with respect to property amendments changing the name of the firm
acquired by a person who uses money belonging to eventually leading up to BITO, MISA & LOZADA.
another. Of course, if an actual relation of Partner Misa decided to withdraw and retire from
partnership had existed in the money used, the the firm stating in a letter to the company that "The
case might be different; and much emphasis is laid partnership has ceased to be mutually satisfactory
in the appellant's brief upon the relation of because of the working conditions of our
partnership which, it is claimed, existed. employees including the assistant attorneys.
It seems to be supposed that the doctrines Misa filed with the Securities Investigation
of equity worked out in the jurisprudence of and Clearing Department (SICD) a petition for
England and the United States with reference to dissolution and liquidation of partnership which was
trust supply a basis for this action. The doctrines ruled in favor of respondents stating that Misas
referred to operate, however, only where money withdrawal did not dissolve the partnership. The
belonging to one person is used by another for the said ruling was overturned by SEC upon appeal.
acquisition of property which should belong to both;
and it takes but little discernment to see that the being a partnership at will, the law firm could be
situation here involved is not one for the application dissolved by any partner at any time, such as by his
of that doctrine, for no money belonging to Lyons or withdrawal therefrom, regardless of good faith or
any partnership composed of Elser and Lyons was bad faith, since no partner can be forced to
in fact used by Elser in the purchase of the San continue in the partnership against his will.
Juan Estate. Of course, if any damage had been
The death of the two partners, as well as
caused to Lyons by the placing of the mortgage
the admission of new partners, during the
upon the equity of redemption in the Carriedo
pendency of the case with the CA prompted Misa to
property, Elser's estate would be liable for such
renew his application for receivership which was
damage. But it is evident that Lyons was not
again denied by CA as there was no showing that
prejudice by that act.
the assets of the partnership were in danger of
being lost, removed or materially impaired. CA
affirmed the decision of SEC.
IV. ISSUE/S:
a) Whether or not the partnership is a
partnership at will.
b) Whether or not the withdrawal of private
respondent dissolved the partnership regardless of
his good or bad faith
V. RULING:
IV. ISSUE/S:
a) Whether or not appellant is guilty of
breach of contract
b) Whether or not the amount ordered by
trial court for the failure to contribute his share in
the capital of the partnership is proper
3. Brito, John Patrick T. 4. Brito, John Patrick T.
I. TITLE: Liwanag v. CA (281 SCRA 1225) I. TITLE: US v Clarin (17 Phil. 84)
II. TOPIC: Article 1778 II. TOPIC: Article 1788
Liwanag with a certain Thelma Tabligan Larin delivered to Tarug, Clarin and De
went to Rosales and asked her to join them in the Guzman, P172, and made an agreement to buy
business of buying and selling cigarettes. Under and sell mangoes with the four of them dividing
their agreement, Rosales would give the money equally the profits. Tarug, Clarin, and De Guzman
needed to buy the cigarettes while Liwanag and did in fact trade in mangoes and obtained P203
Tabligan would act as her agents. During the first from the business, but did not comply with the
two months, Liwanag and Tabligan made periodic terms of the contract by delivering to Larin his half
visits to Rosales to report on the progress of the of the profits; neither did they render him any
transactions. The visits, however, suddenly account of the capital.
stopped, and all efforts by Rosales to obtain
information regarding their business proved futile. Larin charged them with the crime of estafa,
Alarmed by this development and believing but the provincial fiscal filed an information only
that the amounts she advanced were being against Clarin in which he accused him of
misappropriated, Rosales filed a case of estafa appropriating to himself not only the P172 but also
against Liwanag. the share of the profits that belonged to Larin,
amounting to P15.50.
The trial court was affirmed by the CA in
finding Liwanag guilty as charged and imposing IV. ISSUE/S: Whether or not estafa is the proper
upon her the penalty of prision correccional and action
was ordered to pay sum of P526, 650 to reimburse
the plaintiff. V. RULING:
IV. ISSUE/S: Whether or not the contract that exist NO. The agreement entered into is a
simple loan or partnership or joint venture thereby contract of partnership. The P172 having been
making the non-return of the money of the plaintiff received by the partnership, the action that lies with
purely civil in nature and not criminal. the partner who furnished the capital for the
recovery of his money is not a criminal action
V. RULING: for estafa, but a civil one arising from the
partnership contract for a liquidation of the
NO. Estafa is a crime committed by a partnership and a levy on its assets if there should
person who defrauds another causing him to suffer be any.
damages, by means of unfaithfulness or abuse of
confidence, or of false pretenses of fraudulent acts. Clarin was acquitted. The complaint of
estafa is dismissed without prejudice to the
The elements of estafa are present: institution of a civil action.
(1) that the accused defrauded another by
abuse of confidence or deceit; and (2) that damage
or prejudice capable of pecuniary estimation is
caused to the offended party or third party, and it is
essential that there be a fiduciary relation between
them either in the form of a trust, commission or
administration.
V. RULING:
Josue Soncuya filed a case with the court of Martinez delivered P1500 as his
first instance of Manila and prayed that De Luna be contribution to the partnership with Ong Pong Co
sentenced to pay damages in the amount of P700, and Ong Lay to invest in a store. Martinez filed a
432 which he alleges to have suffered as a partner complaint to compel the defendants to render him
by reason of the supposed fraudulent management an accounting of the partnership or to refund him
of the partnership, Centro Escolar de Seoritas. It the P1, 500. Ong Pong Co admitted the fact of the
is not alleged in the complaint that a liquidation has agreement and the delivery of the money, but
been effected nor is it prayed that it be made. alleged that Ong Lay, who was then deceased, was
the one who had managed the business, and that
IV. ISSUE/S: Whether or not Soncuya may claim nothing had resulted therefrom save the loss of the
damages from De Luna. capital to which loss the plaintiff agreed. CFI
ordered Ong Pong to pay half the capital and half of
V. RULING: the projected profit.
NO. For a partner to be able to claim from IV. ISSUE/S: Whether or not the defendants should
another partner who manages the general co- be liable for the loss suffered by the partnership
partnership, damages allegedly suffered by him by
reason of the fraudulent administration of the latter, V. RULING:
a previous liquidation of said partnership is
necessary. YES. Inasmuch as in this case nothing
appears other than the failure to fulfill an obligation
on the part of a partner who acted as agent in
receiving money for a given purpose, for which he
has rendered no accounting, such agent is
responsible only for the losses which, by a violation
of the provisions of the law, he incurred.
8. Brito, John Patrick T. 9. Brito, John Patrick T.
I. TITLE: Agustin Et.al. v Inocencio (9 Phil. 134) I. TITLE: Ramnani v CA (196 SCRA 731)
II. TOPIC: Article 1796 II. TOPIC: Article 1797]
V. RULING:
Based on the computation of the loss, The respondent insurance company having
including the Travellers Multi- Indemnity, issued a policy in favor of herein petitioner which
respondents, Zenith Insurance, Phil. British policy was of legal force and effect at the time of
Assurance and S.S.S. Accredited Group of the fire, it is bound by its terms and conditions.
Insurers, paid their corresponding shares of the Upon its failure to prove the allegation of lack of
loss. Complainants were paid the following: insurable interest on the part of the petitioner,
P41,546.79 by Philippine British Assurance Co., respondent insurance company is and must be held
P11,877.14 by Zenith Insurance Corporation, and liable.
P5,936.57 by S.S.S. Group of Accredited Insurers.
Demand was made from respondent Travellers
Multi-Indemnity for its share in the loss but the
same was refused. Hence, complainants
demanded from the other three (3) respondents the
balance of each share in the loss based on the
computation of the Adjustment Standards Report
excluding Travellers Multi-Indemnity in the amount
of P30,894.31 (P5,732.79-Zenith Insurance:
P22,294.62, Phil. British: and P2,866.90, SSS
Accredited) but the same was refused, hence an
action was filed.
V. RULING:
V. RULING:
II. TOPIC: Article 1806 II. TOPIC: Accounting of shares in the profits of the
partnership
III. FACTS:
III. FACTS:
Catalan and Gatchalian are partners. They
mortgaged two lots to Dr. Marave together with the An action was instituted by Hanlon to
improvements thereon to secure a credit from the compel Haussermann and Beam to account for the
latter. The partnership failed to pay the obligation. share in profits gained in rehabilitating the plant of
The properties were sold to Dr. Marave at a public Benguet Mining and compel them to surrender to
auction. Catalan redeemed the property and he the plaintiff 50000 shares of stock of said company
contends that title should be cancelled and a new with dividends paid thereon. Later, Sellner was
one must be issued in his name. permitted to intervene in like interest with Hanlon
and case was conducted as if Hanlon and Sellner
IV. ISSUE/S: Whether or not Catalans redemption were co-plaintiffs.
of the properties make him the absolute owner of
the lands Beam and Hausermann were shareholders
in said mining company and members of the board
V. RULING: of directors. The contract entered into a contract
with Hanlon. It is known to the parties that Hanlon
NO, Catalans redemption of the properties was personally without the financial resources
did not make him the absolute owner of the lands. necessary to enable him to contribute P75,000
towards the project indicated in the contract and he
The right of redemption pertains to the was compelled to seek the assistance of others.
owner of the property; as it was the partnership Haussermann and Beam, agreed to find P25,000 of
which owned the property, in this case, it was only the necessary capital, and for the remainder the
the partnership which could properly exercise the plaintiff relied upon G. C. Sellner, a business man
right of redemption. of the city of Manila, who, upon being approached,
agreed to advance P50,000. A verbal
Under Article 1807 of the New Civil Code understanding with reference to his matter had
provides that every partner becomes a trustee for been attained by the four parties to this litigation
his co-partner with regard to any benefits or profits before the contract Exhibit B between Hanlon and
derived from his act as a partner. Consequently, the mining company had been formally executed,
when Catalan redeemed the properties in question, and this agreement was in fact reduced to writing
he became a trustee and held the same in trust for and signed on November 5, 1913, one day prior to
his co-partner Gatchalian, subject to his right to the execution of the contract between Hanlon and
demand from the latter his contribution to the the mining company.
amount of redemption.
IV. ISSUE/S: WON Hanlon is entitled to an
accounting for his share in the profits of the
company
V. RULING:
V. RULING:
II. TOPIC: Dissolution of the partnership The approval was an event which made it
unlawful for the members to carry it on in
III. FACTS: partnership. Moreover, subsequent events likewise
reveal the intent of both parties to terminate the
Casteel unsuccessfully registered a partnership because each refused to share the
fishpond in a big tract of swampy land, Padada, fishpond with the other.
Davao for 3 consecutive times because the Bureau
of Fisheries did not act upon his previous
applications.
V. RULING:
YES, the reinstatement of Casteel dissolved
his partnership with Deluao.
This is a suit for damages by LESSCO and The surviving parters of Atty. Herminio
Raymond Tomassi against FELCO, Arnold Hall, Ozaeta filed a petition praying that they be allowed
Fred Brown and Jean Roxas, whereby judgment to continue using, in the name of their firm, the
against defendants jointly and severally for the names of their partner who passed away. One of
amount of P31,589.14 plus costs was rendered. the petitioners arguments stated that no local
The Court of Appeals confirmed the award in custom prohibits the continued use of a deceased
November 1950, minus P2,000 representing partners name in a professional firms name in so
attorney's fees mistakenly included. far as Greater Manila Area is concerned. No
custom exists which recognizes that the name of a
The decision having become final, the law firm necessarily identifies the individual
sheriff sold at auction on June 9, 1951 to Dorfe and members of the firm. They also stated that the
Asturias "all the rights, interests, titles and continued use of a deceased partners name in the
participation" of the defendants in certain buildings firm name of law partnerships has been
and properties described in the certificate, for a consistently allowed by U.S. Courts and is an
total price of eight thousand and one hundred accepted practice in the legal profession of most
pesos. countries in the world.
But on June 4, 1951, Lastrilla filed in the IV. ISSUE/S: Whether or not the law firm Ozaeta,
case a motion, wherein he claimed to be the owner Romulo, De Leon, Mabanta & Reyes is allowed to
by purchase on September 29, 1949, of all the sustain the name of their deceased partner,
"shares and interests" of defendant Fred Brown in
the FELCO, and requested "under the law of V. RULING:
preference of credits" that the sheriff be required to
retain in his possession so much of the deeds of NO. Inasmuch as "Sycip, Salazar, Feliciano,
the auction sale as may be necessary "to pay his Hernandez and Castillo" and "Ozaeta, Romulo, De
right". Over the plaintiffs' objection the judge in his Leon, Mabanta and Reyes" are partnerships, the
order of June 13, 1951, granted Lastrilla's motion use in their partnership names of the names of
by requiring the sheriff to retain 17 per cent of the deceased partners will run counter to Article 1815
money "for delivery to the assignee, administrator of the Civil Code which provides:
or receiver" of the FELCO.
Art. 1815. Every partnership shall
IV. ISSUE/S: WON Lastrilla may recover the operate under a firm name, which may or may not
shares and interest of Fred Brown. include the name of one or more of the partners.
V. RULING: Those who, not being members of the
partnership, include their names in the firm name,
NO, since he was not a creditor of FELCO. shall be subject to the liability, of a partner. It is
That is too elementary to need elaboration. The clearly tacit in the above provision that names in a
properties sold at auction actually belonged to the firm name of a partnership must either be those of
FELCO partnership and the partners. When the living partners and. in the case of non-partners,
sale was effected of the properties of FELCO to should be living persons who can be subjected to
Roberto Dorfe and Pepito Asturias, Lastilla was liability. In fact, Article 1825 of the Civil Code
already a partner of FELCO. Now, does Lastrilla prohibits a third person from including his name in
have any proper claim to the proceeds of the sale? the firm name under pain of assuming the liability of
If he was a creditor of the FELCO, perhaps or a partner. The heirs of a deceased partner in a law
maybe. But he was no. The partner of a partnership firm cannot be held liable as the old members to
is not a creditor of such partnership for the amount the creditors of a firm particularly where they are
of his shares. That is too elementary to need non-lawyers. Thus, Canon 34 of the Canons of
elaboration. 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 lawyer's 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 lawyer-predecessor. There being no Garcia, Charlotte Yris C.
benefits accruing, there ran be no corresponding I. TITLE: Teck Seing and Co., Ltd. (petitioner-
liability. Prescinding the law, there could be appellee) Santiago Jo Chung Cang et al.
practical objections to allowing the use by law firms (partners) vs. Pacific Commercial Company, et
of the names of deceased partners. The public al. (creditors-appellants) (45 Phil. 142)
relations value of the use of an old firm name can
tend to create undue advantages and II. TOPIC: Limited Partnership (Article 1815)
disadvantages in the practice of the profession. An
able lawyer without connections will have to make a III. FACTS:
name for himself starting from scratch. Another
able lawyer, who can join an old firm, can initially In the insolvency proceedings of Sociedad
ride on that old firm's reputation established by Mercantil, Teck Seing & Co., Ltd. creditors Pacific
deceased partners. Commercial Company, Piol & Company, Riu
Hermanos, and W.H. Anderson & Company filed a
motion praying for the following:
V. RULING:
V. RULING:
V. RULING:
V. RULING:
There were five general partners when the IV. ISSUE/S: Whether or not Muasque is solidarily
promissory note was executed for and in behalf of the liable with respondent Galan.
partnership. Since the liability of the partners is pro
rata, the liability of appellant Daco shall be limited to V. RULING:
only one-fifth of the obligations of the defendant
company. The fact that the complaint against Lumauig YES. While it is true that under Article 1816
was dismissed, upon motion of the Island Sales, does of the Civil Code, "All partners, including industrial
not unmake Lumauig as a general partner in the ones, shall be liable prorate with all their property and
company. In so moving to dismiss the complaint, Island after all the partnership assets have been exhausted,
Sales merely condoned Lumauigs individual liability to for the contracts which may be entered into the name
them. and for the account of the partnership, under its
signature and by a person authorized to act for the
partnership..." this provision should be construed
together with Article 1824 which provides that: "All
partners are liable solidarily with the partnership for
everything chargeable to the partnership under Articles
1822 and 1823." In short, while the liability of the
partners are merely joint in transactions entered into by
the partnership, a third person who transacted with said
partnership can hold the partners solidarily liable for the Garcia, Charlotte Yris C.
whole obligation if the case of the third person falls I. TITLE: Ildefonso de la Rosa, administrator of
under Articles 1822 or 1823. the intestate estate of the deceased Go-Lio
(plaintiff-appellant) vs. Enrique Ortega Go-
The respondent Tropical had every reason Cotay (defendant-appellant) (48 Phil. 605)
to believe that a partnership existed between the II. TOPIC: Liability of the Partnership (Article 1818)
petitioner and Galan and no fault or error can be
imputed against it for making payments to "Galan and III. FACTS:
Associates" and delivering the same to Galan because
as far as it was concerned, Galan was a true partner Go-Lio and Go-Sengco formed a society for
with real authority to transact on behalf of the the purchase and sale of articles of commerce, and for
partnership with which it was dealing. this purpose they opened a store in the town of San
Isidro, Nueva Ecija. Defendant-appellant took charge of
Justice also dictates that Muasque be the business when his father, Go-Sengco, died and
reimbursed by Galan for the payments made by the Go-Lio went to China.
former representing the liability of their partnership to
herein intervenors, as it was satisfactorily established Go-Lio died and one of his children went to
that Galan acted in bad faith in his dealings with the Philippines to file a petition for appointment of
Muasque as a partner. plaintiff as administrator which was granted by the CFI.
Plaintiff de la Rosa requested Enrique to wind up the
business and to deliver to him the portion
corresponding Go-Lio, which Enrique denied alleging
that the business is his exclusively.
V. RULING:
The plaintiff, George Litton, sold and Robert Hill insists that Litton had not
delivered to Carlos Ceron, one of the managing established that Carlos Ceron had his (Hill) consent
partners of Hill & Ceron, a certain number of mining to enter with the appellant into the contract whose
claims. By virtue of said transaction, the defendant breach gave rise to the complaint. It is argued that,
Carlos Ceron delivered to the plaintiff a document it being is stipulated in the articles of partnership
providing that Ceron received from Litton three (3) that either Hill or Ceron may contract and sign for
share certificates with a total of 17, 000 shares of the partnership with the consent of the other; the
Big Wedge Mining Company for P1,870.00, with consent therefore of Hill was necessary for the
Hill & Ceron indicated therein before the signature validity of the contract.
of Carlos Ceron. The document reads as follows:
The stipulation in the articles of partnership
"Feb. 14, 1934 that any of the two managing partners may contract
and sign in the name of the partnership with the
"Received from Mr. George Litton share consent of the other, undoubtedly creates an
certificates Nos. 4428, 4429 and 6699 for obligation between the two partners, which consists
5,000, 5,000 and 7,000 shares respectively in asking the other's consent before contracting for
total 17,000 shares of Big Wedge Mining the partnership. This obligation of course is not
Company, which we have sold at P0.11 imposed upon a third person who contracts with the
(eleven centavos) per share or P1,870.00 partnership. Neither is it necessary for the third
less 1/2 per cent brokerage. person to ascertain if the managing partner with
whom he contracts has previously obtained the
"Hill & Ceron consent of the other. A third person may and has a
right to presume that the partner with whom he
"By: (Sgd.) Carlos Ceron" contracts has, in the ordinary and natural course of
business, the consent of his copartner; for
Ceron paid to the plaintiff the sum of P1,150 otherwise he would not enter into the contract.
leaving an unpaid balance of P720, and unable to
collect this sum either from Hill & Ceron or from its Wherefore, unless the contrary is shown,
surety Visayan Surety & Insurance Corporation, namely, that one of the partners did not consent to
Litton filed a complaint in the CFI Manila against his copartner entering into a contract with a third
the said defendants for the recovery of the said person, and that the latter with knowledge thereof
balance. entered into said contract, the aforesaid
presumption with all its force and legal effects
The court, after trial, ordered Carlos Ceron should be taken into account.
personally to pay the amount claimed and absolved
the partnership Hill & Ceron, Robert Hill and the There is nothing in the case at bar which
Visayan Surety & Insurance Corporation. On destroys this presumption; the only thing appearing
appeal to the Court of Appeals, the latter affirmed in the findings of fact of the Court of Appeals is that
the decision of the court, having reached the the plaintiff "has failed to prove that Hill had
conclusion that Ceron did not intend to represent consented to such contract". Defendants are
and did not act for the firm Hill & Ceron in the ordered to pay to the plaintiff, jointly and severally
transaction. the sum of P720 with legal interest.
V. RULING:
The Supreme Court held that the
transaction made by Ceron with the plaintiff should
2. Landayan, Mary Mercedita R. absolved respondents Tropical and its Cebu
I. TITLE: Muasque vs. CA (139 SCRA 533) Manager, Pons, from any liability but they also held
the petitioner together with respondent Galan, liable
II. TOPIC: Article 1818 to the intervenors Cebu Southern Hardware
(Existence of partnership despite Company and Blue Diamond Glass Palace for the
feud between the partners) credit which the intervenors extended to the
partnership of petitioner and Galan.
III. FACTS:
IV. ISSUES:
Petitioner Muasque in behalf of the
partnership of "Galan and Muasque" as (1) Whether or not the appellate court erred in
Contractor entered into a written contract with holding that a partnership existed between
respondent Tropical for remodelling the petitioner and respondent Galan;
respondent's Cebu branch building. A total amount
of P25,000.00 was to be paid under the contract for (2) Assuming that there was such a
the entire services of the Contractor. The terms of partnership, whether or not the court erred
payment were as follows: thirty percent (30%) of in not finding Galan accountable to the
the whole amount upon the signing of the contract petitioner for the P13,000.00 covered by the
and the balance thereof divided into three equal first and second checks; and
installments at the lute of Six Thousand Pesos
(P6,000.00) every fifteen (15) working days. (3) Whether or not the court committed grave
abuse of discretion in holding that the
The first payment made by respondent payment made by Tropical through its
Tropical was in the form of a check for P7,000.00 in manager Pons to Galan was "good
the name of the petitioner. Petitioner, however, payment "
indorsed the check in favor of respondent Galan to
enable the latter to deposit it in the bank and pay V. RULING:
for the materials and labor used in the project.
Petitioner alleged that Galan spent P6,183.37 out There is nothing in the records to indicate
of the P7,000.00 for his personal use so that when that the partnership organized by the two men was
the second check in the amount of P6,000.00 came not a genuine one. If there was a falling out or
and Galan asked the petitioner to indorse it again, misunderstanding between the partners, such does
the petitioner refused. The check was withheld from not convert the partnership into a sham
the petitioner. organization.
Since Galan informed the Cebu branch of Likewise, when Muasque received the first
Tropical that there was a "misunderstanding" payment of Tropical in the amount of P7,000.00
between him and petitioner, respondent Tropical with a check made out in his name, he indorsed the
changed the name of the payee in the second check in favor of Galan. Respondent Tropical
check from Muasque to "Galan and Associates" therefore, had every right to presume that the
which was the duly registered name of the petitioner and Galan were true partners. If they
partnership between Galan and petitioner and were not partners as petitioner claims, then he has
under which name a permit to do construction only himself to blame for making the relationship
business was issued by the mayor of Cebu City. appear otherwise, not only to Tropical but to their
This enabled Galan to encash the second check. other creditors as well. The payments made to the
partnership were, therefore, valid payments.
Meanwhile, as alleged by the petitioner, the
construction continued through his sole efforts and Since the two were partners when the debts
although Galan failed to pay what was partly due were incurred, they are also both liable to third
the laborers and partly due for the materials, the persons who extended credit to their partnership.
construction work was finished ahead of schedule
with the total expenditure reaching P34,000.00. While the liability of partners are merely joint
in transactions entered into by the partnership, the
The two remaining checks, each in the parties are liable to third persons solidarily for the
amount of P6,000.00, were subsequently given to whole obligation if the case involves loss or injury
the petitioner alone with the last check being given caused to any person not a partner in the
pursuant to a court order. partnership, and misapplication of money or
property of a third person received by a partner of
The petitioner filed a complaint for payment the partnership. The reason is that the law protects
of sum of money and damages against the him, who in good faith relied upon the authority of a
respondents, seeking to recover the following: the partner, whether such authority is real or apparent.
amounts covered by the first and second checks
which fell into the hands of respondent Galan, the In the case at bar, the respondent Tropical
additional expenses that the petitioner incurred in had every reason to believe that a partnership
the construction, moral and exemplary damages, existed between the petitioner and Galan and no
and attorney's fees. fault or error can be imputed against it for making
payments to "Galan and Associates" and delivering
Both the trial and appellate courts not only 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.