Lozana vs.

Depakakibo
Case Digest

FACTS:
Lozana and Depakakibo established a partnership for the purpose of maintaining, operating, and
distributing electric light and power in the Municipality of Dumangas. The partnership is capitalized at the sum of
P30, 000.00 where Lozana agreed to furnish 60% while Depakakibo, 40%.
However, the franchise for venture in favor of Buenaflor was cancelled and revoked by the Public Service
Commission. Lozana thereafter sold Generator Buda [Lozanas contribution to the partnership; no liquidation
made] to Decologon. When the decision was appealed, a temporary certificate of public convenience was issued in
the name of Decolongon. Depakakibo sold one Crossly Diesel Engine [Depakakibos contribution to the
partnership] to Spouses Jimenea and Harder.
Lozana brought action against Depakakibo alleging the latter wrongfully detained the Generator Buda and
wooden posts to which he is entitled to the possession of. Lozano prayed the properties be delivered back to him.
CFI ordered sheriff to take possession of the properties and the delivery thereof to Lozano. Depakakibo
alleged properties have been contributed to the partnership and therefor he is not unlawfully detaining them. In
addition, Lozano sold his contribution to partnership in violation of terms of their agreement.
CFI declared Lozano owner of and entitled to the equipment. Depakakibo appealed decision to the
Supreme Court.
ISSUE:
W/N partnership is void or the act of the partnership in furnishing electric current to the franchise holder without
previous approval of Public Service Commission render the partnership void?
W/N disposal of contribution of parties is allowed.
RULING:
Validity of the Partnership. Partnership is valid. The fact of furnishing the current to the holder of the
franchise alone, without the previous approval of the Public Service Commission, does not per se make the
contract of partnership null and void from the beginning and render the partnership entered into by the parties for
the purpose also void and non-existent
Disposal of Contributed Property to the Partnership. Facts show that parties entered into the contract of
partnership, Lozana contributing the amount of P18, 000, and there has not been liquidation prior to the sale of
the contributed properties: Buda Diesel Engine and 70 posts. It necessarily follows that the Buda diesel engine
contributed by the plaintiff had become the property of the partnership. As properties of the partnership, the
same could not be disposed of by the party contributing the same without the consent or approval of the
partnership or of the other partner. (Clemente vs. Galvan, 67 Phil., 565)