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B1: Deluao VS Casteel (Property Rights of Partners)

Casteel was the original occupant and applicant of a fishpond area since before the last World War. He wanted to preclude subsequent applicants from entering and spreading themselves within the area by expanding his occupation thereof by the construction of dikes and the cultivation of marketable fishes. Thus, he borrowed P27, 000 from the Deluaos to finance needed improvements for the fishpond, and was compelled by force of this circumstance to enter into the contract of partnership, with an agreement to divide the fishpond after the award. Eventually, Casteel administered the said property and single-handedly opposed rival applicants who occupied portions of the fishpond area. He relentlessly pursued his claim to the said area up to the Office of the DANR Secretary, until it was finally awarded to him.

Issue: WON the parties can now validly divide the said fishpond as agreed upon by them? NO. Ruling: Spouses Deluaos statement that the beneficial right over the fishpond in question is the "specific partnership property" contemplated by art. 1811 of the Civil Code is incorrect. A reading of the said provision will show that what is meant is tangible property, such as a car, truck or a piece of land, but not an intangible thing such as the beneficial right to a fishpond. If what they have in mind is the fishpond itself, they are grossly in error. A fishpond of the public domain can never be considered a specific partnership property because only its use and enjoyment never its title or ownership is granted to specific private persons. Since we held as illegal the second part of the contract of partnership between the parties to divide the fishpond between them after the award, a fortiori, no rights or obligations could have arisen therefrom. Inescapably, no trust could have resulted because trust is founded on equity and can never result from an act violative of the law. Art. 1452 of the Civil Code does not support the appellees' stand because it contemplates an agreement between two or more persons to purchase property capable of private ownership the legal title of which is to be taken in the name of one of them for the benefit of all. In the case at bar, the parties did not agree to purchase the fishpond, and even if they did, such is prohibited by law, a fishpond of the public domain not being susceptible of private ownership. It must be observed that, despite the decisions of the DANR Secretary in DANR cases 353 and 353-B awarding the area to Casteel, and despite the latter's proposal that they divide the fishpond between them, the Deluaos unequivocally expressed in their aforequoted letter their decision not to share the fishpond with Casteel. This produced the dissolution of the entire contract of partnership (to jointly administer and to divide the fishpond after the award) between the parties, not to mention its automatic dissolution for being contrary to law. Pettioners final proposition that only by giving effect to the confirmed intention of the parties may the cause of equity and justice be served, we must state that since the contract of service is contrary to law and, therefore, null and void, it is not and can never be considered as the law between the parties.

C3: PNB VS Lo (Obligations of the Partners towards Third Persons) Facts: Severo Eugenio Lo and Ng Khey Ling, together with J. A. Say Lian Ping, Ko Tiao Hun, On Yem Ke Lam and Co Sieng Peng formed a commercial partnership under the name of "Tai Sing and Co.," with a capital of P40, 000 contributed by said partners. J. A. Say Lian Ping was appointed general manager of the partnership, with powers specified in the partnerships articles of copartnership. Subsequently, Lian Ping executed a power of attorney in favor of A. Y. Kelam, authorizing him to act in his stead as manager and administrator of "Tai Sing & Co., The latter then obtained a loan of P8, 000 in current account from PNB. As security for said loan, he mortgaged certain personal property of "Tai Sing & Co. Such credit was renewed several times. Yap Seng, Severo Eugenio Lo, A. Y. Kelam and Ng Khey Ling, the latter represented by M. Pineda Tayenko, then executed a power of attorney in favor of Sy Tit by virtue of which Sy Tit, representing "Tai Sing & Co., obtained a credit of P20, 000 from PNB, executing a chattel mortgage on certain personal property belonging to "Tai Sing & Co. PNB now claims a total amount of P20, 239.00, together with interest on the P16, 518.74 debt, at 9 per cent per annum from January 1, 1925 until fully paid, with the costs of the trial. Respondent Eugenio Lo sets up, as a general defense, that "Tai Sing & Co. was not a general partnership , and that the commercial credit in current account which "Tai Sing & Co. obtained from the petitioner had not been authorized by the board of directors of the company, nor was the person who subscribed said contract authorized to make the same, under the article of copartnership. The other defendants, Yap Sing and Ng Khey Ling, answered the complaint denying each and every one of the allegations contained therein. Respondents now faulted the court when it held that the death of J. A. Say Lian Ping cannot extinguish the defendants' obligation to the plaintiff bank, because the last debt incurred by the commercial partnership "Tai Sing & Co., was that signed by Sy Tit as attorney-in-fact of the members of "Tai Sing & Co.

Issue: WON the partnership can be held liable for the said obligation? Yes. Ruling: Art. 1815 of the NCC provides: Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners. Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner. The association formed by the defendants is a general partnership, as defined in article 126 of the Code Commerce. This partnership was registered in the mercantile register of the Province of Iloilo. The only anomaly noted in its organization is that instead of adopting for their firm name the names of all of the partners, of several of them, or only one of them, to be followed in the last two cases, by the words "and to be followed in the last two cases, by the words "and company" the partners agreed upon "Tai Sing & Co." as the firm name. As to the alleged death of the manager of the company, Say Lian Ping, before the attorney-in-fact Ou Yong Kelam made the loans, the trial court did not find this fact proven at the hearing. But even supposing that the court had erred, such an error would not justify the reversal of the judgment, for two reasons at least: (1) Because Ou Yong Kelam was a partner who contracted in the name of the partnership, without any objection of the other partners; and (2) because it appears in the record that the appellant-partners appointed Sy Tit as manager, and the latter obtained from PNB the credit in current account, the debit balance of which is sought to be recovered in this action. Defendants also assign error to the action of the trial court in ordering them to pay plaintiff, jointly and severally, the sums claimed with 9 per cent interest on P16, 518.74, owing from them. Such judgment against the appellants is in accordance with article 127 of the Code of Commerce which provides that all the members of a general partnership, be they managing partners thereof or not, shall be personally and solidarily liable with all their property, for the results of the transactions made in the name and for the account of the partnership, under the signature of the latter, and by a person authorized to use it.