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MAURO LOZANA, plaintiff-appellee, vs. on November 18, 1955, Judge Pantaleon A.

SERAFIN DEPAKAKIBO, defendant- Pelayo issued an order in said case

appellant. authorizing the sheriff to take possession of
the generator and 70 wooden posts, upon
This is an appeal from a judgment of the plaintiff's filing of a bond in the amount of
Court of First Instance of Iloilo, certified to P16,000 in favor of the defendant (for
us by the Court of Appeals, for the reason subsequent delivery to the plaintiff). On
that only questions of law are involved in December 5, 1955, defendant filed an
said appeal. answer, denying that the generator and the
equipment mentioned in the complaint
The record discloses that on November 16, belong to the plaintiff and alleging that the
1954 plaintiff Mauro Lozana entered into a same had been contributed by the plaintiff
contract with defendant Serafin Depakakibo to the partnership entered into between
wherein they established a partnership them in the same manner that defendant
capitalized at the sum of P30,000, plaintiff had contributed equipments also, and
furnishing 60% thereof and the defendant, therefore that he is not unlawfully detaining
40%, for the purpose of maintaining, them. By way of counterclaim, defendant
operating and distributing electric light and alleged that under the partnership
power in the Municipality of Dumangas, agreement the parties were to contribute
Province of Iloilo, under a franchise issued equipments, plaintiff contributing the
to Mrs. Piadosa Buenaflor. However, the generator and the defendant, the wires for
franchise or certificate of public necessity the purpose of installing the main and
and convenience in favor of the said Mrs. delivery lines; that the plaintiff sold his
Piadosa Buenaflor was cancelled and contribution to the partnership, in violation
revoked by the Public Service Commission of the terms of their agreement. He,
on May 15, 1955. But the decision of the therefore, prayed that the complaint against
Public Service Commission was appealed to him be dismissed; that plaintiff be adjudged
Us on October 21, 1955. A temporary guilty of violating the partnership contract
certificate of public convenience was issued and be ordered to pay the defendant the
in the name of Olimpia D. Decolongon on sum of P3,000, as actual damages, P600.00
December 22, 1955 (Exh. "B"). Evidently as attorney's fees and P2,600 annually as
because of the cancellation of the franchise actual damages; that the court order
in the name of Mrs. Piadosa Buenaflor, dissolution of the partnership, after the
plaintiff herein Mauro Lozana sold a accounting and liquidation of the same.
generator, Buda (diesel), 75 hp. 30 KVA
capacity, Serial No. 479, to the new grantee On September 27, 1956, the defendant filed
Olimpia D. Decolongon, by a deed dated a motion to declare plaintiff in default on his
October 30, 1955 (Exhibit "C"). Defendant counterclaim, but this was denied by the
Serafin Depakakibo, on the other hand, sold court. Hearings on the case were conducted
one Crossly Diesel Engine, 25 h. p., Serial No. on October 25, 1956 and November 5, 1956,
141758, to the spouses Felix Jimenea and and on the latter date the judge entered a
Felina Harder, by a deed dated July 10, decision declaring plaintiff owner of the
1956. equipment and entitled to the possession
thereof, with costs against defendant. It is
On November 15, 1955, plaintiff Mauro against this judgment that the defendant
Lozana brought an action against the has appealed.
defendant, alleging that he is the owner of
the Generator Buda (Diesel), valued at The above judgment of the court was
P8,000 and 70 wooden posts with the wires rendered on a stipulation of facts, which is
connecting the generator to the different as follows:
houses supplied by electric current in the
Municipality of Dumangas, and that he is 1. That on November 16, 1954, in the City of
entitled to the possession thereof, but that Iloilo, the aforementioned plaintiff, and the
the defendant has wrongfully detained them defendant entered into a contract of
as a consequence of which plaintiff suffered Partnership, a copy of which is attached as
damages. Plaintiff prayed that said Annex "A" of defendant's answer and
properties be delivered back to him. Three counterclaim, for the purpose set forth
days after the filing of the complaint, that is

Bus org 1| obligations of partners among themselves | 1

therein and under the national franchise Jimenea and Felisa Harder contributed by
granted to Mrs. Piadosa Buenaflor; him to the partnership for P3,500.00 as per
Deed of Sale executed and ratified before
2. That according to the aforementioned the Notary Public Rodrigo J. Harder in and
Partnership Contract, the plaintiff Mr. for the Province of Iloilo, known as Doc. No.
Mauro Lozana, contributed the amount of 76; Page 94; Book No. V; and Series of 1955,
Eighteen Thousand Pesos (P18,000.00); said a certified copy of which is hereto attached
contributions of both parties being the marked as Annex "A", and made an integral
appraised values of their respective part hereof; (pp, 27-29 ROA).
properties brought into the partnership;
As it appears from the above stipulation of
3. That the said Certificate of Public facts that the plaintiff and the defendant
Convenience and Necessity was revoked and entered into the contract of partnership,
cancelled by order of the Public Service plaintiff contributing the amount of
Commission dated March 15, 1955, P18,000, and as it is not stated therein that
promulgated in case No. 58188, entitled, there bas been a liquidation of the
"Piadosa Buenaflor, applicant", which order partnership assets at the time plaintiff sold
has been appealed to the Supreme Court by the Buda Diesel Engine on October 15, 1955,
Mrs. Buenaflor; and since the court below had found that
the plaintiff had actually contributed one
4. That on October 30, 1955, the plaintiff engine and 70 posts to the partnership, it
sold properties brought into by him to the necessarily follows that the Buda diesel
said partnership in favor of Olimpia engine contributed by the plaintiff had
Decolongon in the amount of P10,000.00 as become the property of the partnership. As
per Deed of Sale dated October 30, 1955 properties of the partnership, the same
executed and ratified before Notary Public, could not be disposed of by the party
Delfin Demaisip, in and for the Municipality contributing the same without the consent
of Dumangas, Iloilo and entered in his or approval of the partnership or of the
Notarial Registry as Doc. No. 832; Page No. other partner. (Clemente vs. Galvan, 67
6; Book No. XIII; and Series of 1955, a copy Phil., 565).
thereof is made as Annex "B" of defendant's
answer and counterclaim; The lower court declared that the contract
of partnership was null and void, because by
5. That there was no liquidation of the contract of partnership, the parties
partnership and that at the time of said Sale thereto have become dummies of the owner
on October 30, 1955, defendant was the of the franchise. The reason for this holding
manager thereof; was the admission by defendant when being
cross-examined by the court that he and the
6. That by virtue of the Order of this plaintiff are dummies. We find that this
Honorable Court dated November 18, 1955, admission by the defendant is an error of
those properties sold were taken by the law, not a statement of a fact. The Anti-
Provincial Sheriff on November 20, 1955 and Dummy law has not been violated as parties
delivered to the plaintiff on November 25, plaintiff and defendant are not aliens but
1955 upon the latter posting the required Filipinos. The Anti-Dummy law refers to
bond executed by himself and the Luzon aliens only (Commonwealth Act 108 as
Surety Co., dated November 17, 1955 and amended).
ratified before the Notary Public, Eleuterio
del Rosario in and for the province of Iloilo Upon examining the contract of partnership,
known as Doc. No. 200; Page 90; Book No. especially the provision thereon wherein the
VII; and Series of 1955; of said Notary Public; parties agreed to maintain, operate and
distribute electric light and power under the
7. That the said properties sold are now in franchise belonging to Mrs. Buenaflor, we
the possession of Olimpia Decolongon, the do not find the agreement to be illegal, or
purchaser, who is presently operating an contrary to law and public policy such as to
electric light plant in Dumangas, Iloilo; make the contract of partnership, null and
void ab initio. The agreement could have
8. That the defendant sold certain been submitted to the Public Service
properties in favor of the spouses, Felix Commission if the rules of the latter require

Bus org 1| obligations of partners among themselves | 2

them to be so presented. But the fact of delay to liquidate it, submitting to the court the result
furnishing the current to the holder of the of the liquidation together with the accounts and
vouchers within the period of thirty days from receipt
franchise alone, without the previous of notice of said judgment, without costs.
approval of the Public Service Commission,
does not per se make the contract of The plaintiff appealed from said decision making the
partnership null and void from the beginning following assignments of error:
and render the partnership entered into by
the parties for the purpose also void and 1. In holding that the plaintiff and appellant is not
non-existent. Under the circumstances, entitled to the rescission of the partnership contract,
Exhibit A, and that article 1124 of the Civil Code is not
therefore, the court erred in declaring that applicable to the present case.
the contract was illegal from the beginning
and that parties to the partnership are not 2. In failing to order the defendant to return the sum
bound therefor, such that the contribution of P50,000 to the plaintiff with interest from October
of the plaintiff to the partnership did not 15, 1920, until fully paid.
pass to it as its property. It also follows that
the claim of the defendant in his 3. In denying the motion for a new trial.
counterclaim that the partnership be
In the brief filed by counsel for the appellee, a
dissolved and its assets liquidated is the preliminary question is raised purporting to show that
proper remedy, not for each contributing this appeal is premature and therefore will not lie. The
partner to claim back what he had point is based on the contention that inasmuch as the
contributed. liquidation ordered by the trial court, and the
consequent accounts, have not been made and
submitted, the case cannot be deemed terminated in
For the foregoing considerations, the said court and its ruling is not yet appealable. In
judgment appealed from as well as the support of this contention counsel cites section 123 of
order of the court for the taking of the the Code of Civil Procedure, and the decision of this
property into custody by the sheriff must be, court in the case of Natividad vs. Villarica (31 Phil.,
as they hereby are set aside and the case
remanded to the court below for further This contention is well founded. Until the accounts
proceedings in accordance with law. have been rendered as ordered by the trial court, and
until they have been either approved or disapproved,
----------------------------------------------------------- the litigation involved in this action cannot be
G.R. No. L-33580 February 6, considered as completely decided; and, as it was held
1931MAXIMILIANO SANCHO, plaintiff-appellant, in said case of Natividad vs .Villarica, also with
reference to an appeal taken from a decision ordering
the rendition of accounts following the dissolution of
Vs .SEVERIANO LIZARRAGA, defendant-appellee. partnership, the appeal in the instant case must be
deemed premature.
The plaintiff brought an action for the rescission of a
partnership contract between himself and the But even going into the merits of the case, the
defendant, entered into on October 15, 1920, the affirmation of the judgment appealed from is
reimbursement by the latter of his 50,000 peso inevitable. In view of the lower court's findings
investment therein, with interest at 12 per cent per referred to above, which we cannot revise because
annum form October 15, 1920, with costs, and any the parol evidence has not been forwarded to this
other just and equitable remedy against said court, articles 1681 and 1682 of the Civil Code have
defendant. been properly applied. Owing to the defendant's
failure to pay to the partnership the whole amount
The defendant denies generally and specifically all the which he bound himself to pay, he became indebted
allegations of the complaint which are incompatible to it for the remainder, with interest and any damages
with his special defenses, cross-complaint and occasioned thereby, but the plaintiff did not thereby
counterclaim, setting up the latter and asking for the acquire the right to demand rescission of the
dissolution of the partnership, and the payment to partnership contract according to article 1124 of the
him as its manager and administrator of P500 monthly Code. This article cannot be applied to the case in
from October 15, 1920, until the final dissolution, with question, because it refers to the resolution of
interest, one-half of said amount to be charged to the obligations in general, whereas article 1681 and 1682
plaintiff. He also prays for any other just and equitable specifically refer to the contract of partnership in
remedy. particular. And it is a well known principle that special
provisions prevail over general provisions.
The Court of First Instance of Manila, having heard the
cause, and finding it duly proved that the defendant By virtue of the foregoing, this appeal is hereby
had not contributed all the capital he had bound dismissed, leaving the decision appealed from in full
himself to invest, and that the plaintiff had demanded force, without special pronouncement of costs. So
that the defendant liquidate the partnership, declared ordered.
it dissolved on account of the expiration of the period
for which it was constituted, and ordered the
defendant, as managing partner, to proceed without
Bus org 1| obligations of partners among themselves | 3
Uy Vs. Puzon Thereafter, Uy was not allowed to hold
office in the UP Construction Company and
Facts: his authority to negotiate with the Bureau
was revoked by Puzon.
Bartolome Puzon had two contracts with the
government for the construction of roads Uy clamied that Puzon had violated the
and bridges. (Bureau of Public Highways) terms of their partnership agreement. He
sought for the dissolution of the partnership
He sought the financial assistance of William with damages.
Uy, so he proposed that they create a
partnership which would be the sub- The lower court ruled in favor of Uy.
contractor of the projects.
Issue: WON Puzon failed to comply with his
They also agreed that the profits will be obligation of paying the capital contribution
divided among themselves. to the company. YES

William Uy agreed to the formation of the Ruling: YES

partnership "U.P. Construction Company".
They agreed to contribute P50,000 each. According to the court, there was failure on
(Note: P40,000 was advanced by William Uy the part of Puzon to contribute capital to
while Puzon was waiting for the approval of the partnership. When his load with PNB
his P150,000 PNB Loan. Upon release of the was approved, he only gave P60,000 to Uy;
loan, he promised to reimburse William Uy P40,000 was for reimbursement to the
of the P40,000; pay his share of P50,000 and payments made by Uy and the other
loan P60,000 to the partnership). P20,000 was for the capital contribution.
Thereafter, Puzon never made additional
Loan was approved by November 1956. contribution.
Note: At the end of 1957, Uy contributed a
total of P115, Also, it was found by the SC that Puzon
misapplied partnership funds by assigning all
The partnership agreement was signed in payments for the projects to PNB.
1957 (January 18) although the work for the
projects began as early as 1956 (October 1). Such assignment was prejudicial to the
partnership since the partnership only
Since Puzon was busy with other projects, received a small share from the total
Uy was the one who managed the payments made by the Bureau of Public
partnership. Highways. As a result, the partnership was
unable to discharge its obligations.
In order to guarantee the PNB Loan, Puzon,
without the knowledge of Uy, assigned the Here, the Court ordered Puzon to reimburse
payments to the payments to be received whatever amount Uy had invested in or
from the projects to PNB. spent for the partnership on account of
construction projects. The amount P200,000
Due to the financial demands of the as compensatory damages was also
projects, Uy demanded that Puzon comply awarded in favor of Uy.
with his obligation to place his capital
contribution in the company. RULING:

However, Puzon failed to comply even after Had the appellant not been remiss in his
formal demand letters were sent to him. obligations as partner and as prime
contractor of the construction projects in
Thereafter, Puzon (as the primary contractor question as he was bound to perform
of the projects) wrote terminated the pursuant to the partnership and subcontract
subcontract agreement with the partnership agreements, and considering the fact that
to which he is also a partner. (November 27, the total contract amount of these two
1957) projects is P2,327,335.76, it is reasonable to
expect that the partnership would have
earned much more than the P334,255.61

Bus org 1| obligations of partners among themselves | 4

We have hereinabove indicated. The award, to suffer the accessory penalties, and to
therefore, made by the trial court of the return to Pedro Larin P172, besides P30.50
amount of P200,000.00, as compensatory as his share of the profits, or to subsidiary
damages, is not speculative, but based on imprisonment in case of insolvency, and to
reasonable estimate. pay the costs. The defendant appealed, and
in deciding his appeal we arrive at the
WHEREFORE, finding no error in the decision following conclusions:
appealed from, the said decision is hereby
affirmed with costs against the appellant, it When two or more persons bind themselves
being understood that the liability to contribute money, property, or industry
mentioned herein shall be home by the to a common fund, with the intention of
estate of the deceased Bartolome Puzon, dividing the profits among themselves, a
represented in this instance by the contract is formed which is called
administrator thereof, Franco Puzon. partnership. (Art. 1665, Civil Code.)

------------------------------------------------------- When Larin put the P172 into the

partnership which he formed with Tarug,
G.R. No. 5840 September 17, 1910 Clarin, and Guzman, he invested his capital
in the risks or benefits of the business of the
THE UNITED STATES, plaintiff-appellee, purchase and sale of mangoes, and, even
vs. though he had reserved the capital and
EUSEBIO CLARIN, defendant-appellant. conveyed only the usufruct of his money, it
would not devolve upon of his three
ARELLANO, C.J.: partners to return his capital to him, but
upon the partnership of which he himself
Pedro Larin delivered to Pedro Tarug P172, formed part, or if it were to be done by one
in order that the latter, in company with of the three specifically, it would be Tarug,
Eusebio Clarin and Carlos de Guzman, might who, according to the evidence, was the
buy and sell mangoes, and, believing that he person who received the money directly
could make some money in this business, from Larin.
the said Larin made an agreement with the
three men by which the profits were to be The P172 having been received by the
divided equally between him and them. partnership, the business commenced and
profits accrued, the action that lies with the
Pedro Tarug, Eusebio Clarin, and Carlos de partner who furnished the capital for the
Guzman did in fact trade in mangoes and recovery of his money is not a criminal
obtained P203 from the business, but did action for estafa, but a civil one arising from
not comply with the terms of the contract the partnership contract for a liquidation of
by delivering to Larin his half of the profits; the partnership and a levy on its assets if
neither did they render him any account of there should be any.
the capital.
No. 5 of article 535 of the Penal Code,
Larin charged them with the crime of estafa, according to which those are guilty
but the provincial fiscal filed an information of estafa "who, to the prejudice of another,
only against Eusebio Clarin in which he shall appropriate or misapply any money,
accused him of appropriating to himself not goods, or any kind of personal property
only the P172 but also the share of the which they may have received as a deposit
profits that belonged to Larin, amounting to on commission for administration or in any
P15.50. other character producing the obligation to
deliver or return the same," (as, for
Pedro Tarug and Carlos de Guzman example, in commodatum, precarium, and
appeared in the case as witnesses and other unilateral contracts which require the
assumed that the facts presented concerned return of the same thing received) does not
the defendant and themselves together. include money received for a partnership;
otherwise the result would be that, if the
The trial court, that of First Instance of partnership, instead of obtaining profits,
Pampanga, sentenced the defendant, suffered losses, as it could not be held liable
Eusebio Clarin, to six months' arresto mayor, civilly for the share of the capitalist partner

Bus org 1| obligations of partners among themselves | 5

who reserved the ownership of the money been open, both sums in Philippine
brought in by him, it would have to answer currency, making a total of P840, with legal
to the charge of estafa, for which it would interest thereon at the rate of 6 per cent per
be sufficient to argue that the partnership
annum, from the 12th of June, 1901, when
had received the money under obligation to
return it. the business terminated and on which date
he ought to have returned the said amount
We therefore freely acquit Eusebio Clarin, to the plaintiff, until the full payment
with the costs de oficio. The complaint thereof with costs.
for estafa is dismissed without prejudice to
the institution of a civil action. From this judgment Ong Pong Co appealed
to this court, and assigned the following
G.R. No. L-5236 January 10, 1910 errors:

PEDRO MARTINEZ, plaintiff-appellee, 1. For not having taken into consideration

vs.ONG PONG CO and ONG LAY, defendants. the fact that the reason for the closing of
ONG PONG CO., appellant. the store was the ejectment from the
premises occupied by it.

2. For not having considered the fact that

On the 12th of December, 1900, the plaintiff there were losses.
herein delivered P1,500 to the defendants
who, in a private document, acknowledged 3. For holding that there should have been
that they had received the same with the profits.
agreement, as stated by them, "that we are
4. For having applied article 1138 of the Civil
to invest the amount in a store, the profits
or losses of which we are to divide with the
former, in equal shares." 5. and 6. For holding that the capital ought
to have yielded profits, and that the latter
The plaintiff filed a complaint on April 25,
should be calculated 12 per cent per annum;
1907, in order to compel the defendants to
render him an accounting of the partnership
as agreed to, or else to refund him the 7. The findings of the ejectment.
P1,500 that he had given them for the said
purpose. Ong Pong Co alone appeared to As to the first assignment of error, the fact
answer the complaint; he admitted the fact that the store was closed by virtue of
of the agreement and the delivery to him ejectment proceedings is of no importance
and to Ong Lay of the P1,500 for the for the effects of the suit. The whole action
purpose aforesaid, but he alleged that Ong is based upon the fact that the defendants
Lay, who was then deceased, was the one received certain capital from the plaintiff for
who had managed the business, and that the purpose of organizing a company; they,
nothing had resulted therefrom save the according to the agreement, were to handle
loss of the capital of P1,500, to which loss the said money and invest it in a store which
the plaintiff agreed. was the object of the association; they, in
the absence of a special agreement vesting
The judge of the Court of First Instance of in one sole person the management of the
the city of Manila who tried the case business, were the actual administrators
ordered Ong Pong Co to return to the thereof; as such administrators they were
plaintiff one-half of the said capital of the agent of the company and incurred the
P1,500 which, together with Ong Lay, he had liabilities peculiar to every agent, among
received from the plaintiff, to wit, P750, plus which is that of rendering account to the
P90 as one-half of the profits, calculated at principal of their transactions, and paying
the rate of 12 per cent per annum for the six him everything they may have received by
months that the store was supposed to have virtue of the mandatum. (Arts. 1695 and
Bus org 1| obligations of partners among themselves | 6
1720, Civil Code.) Neither of them has disbursed on account of the same and for
rendered such account nor proven the the proper interest," for the reason that no
losses referred to by Ong Pong Co; they are other money than that contributed as is
therefore obliged to refund the money that involved.
they received for the purpose of establishing
the said store the object of the As in the partnership there were two
association. This was the principal administrators or agents liable for the
above-named amount, article 1138 of the
pronouncement of the judgment.
Civil Code has been invoked; this latter deals
With regard to the second and third with debts of a partnership where the
assignments of error, this court, like the obligation is not a joint one, as is likewise
court below, finds no evidence that the provided by article 1723 of said code with
entire capital or any part thereof was lost. It respect to the liability of two or more agents
is no evidence of such loss to aver, without with respect to the return of the money that
proof, that the effects of the store were they received from their principal.
ejected. Even though this were proven, it Therefore, the other errors assigned have
could not be inferred therefrom that the not been committed.
ejectment was due to the fact that no rents
were paid, and that the rent was not paid on In view of the foregoing judgment appealed
from is hereby affirmed, provided, however,
account of the loss of the capital belonging
to the enterprise. that the defendant Ong Pong Co shall only
pay the plaintiff the sum of P750 with the
With regard to the possible profits, the legal interest thereon at the rate of 6 per
finding of the court below are based on the cent per annum from the time of the filing
statements of the defendant Ong Pong Co, of the complaint, and the costs, without
to the effect that "there were some profits, special ruling as to the costs of this instance.
but not large ones." This court, however, So ordered.
does not find that the amount thereof has
been proven, nor deem it possible to -----------------------------------------------------------
estimate them to be a certain sum, and for a CHOITHRAM JETHMAL RAMNANI et.al. vs CA
given period of time; hence, it can not admit
the estimate, made in the judgment, of 12 FACTS: Ishwar Jethmal Ramnani and his
per cent per annum for the period of six wife Sonya had their main business based in
months. New York. Ishwar received US $150,000.00
from his father-in-law in Switzerland. In
Inasmuch as in this case nothing appears 1965, Ishwar Jethmal Ramnani sent the
other than the failure to fulfill an obligation amount of US $150,000.00 to Choithram in
on the part of a partner who acted as agent two bank drafts of US$65,000.00 and
in receiving money for a given purpose, for US$85,000.00 for the purpose of investing
which he has rendered no accounting, such the same in real estate in the Philippines.
agent is responsible only for the losses Subsequently, spouses Ishwar executed a
which, by a violation of the provisions of the general power of attorney appointing
law, he incurred. This being an obligation to Ishwars full blood brothers Choithram and
pay in cash, there are no other losses than Navalrai as attorneys-in-fact, empowering
the legal interest, which interest is not due them to manage and conduct their business
except from the time of the judicial demand, concerns in the Philippines. Choithram, as
or, in the present case, from the filing of the attorney-in-factr, entered into two
complaint. (Arts. 1108 and 1100, Civil Code.) agreements for the purchase of two parcels
We do not consider that article 1688 is of land located in Pasig Rizal from Ortigas &
applicable in this case, in so far as it provides Company, Ltd. Partnership (Ortigas Ltd.)
"that the partnership is liable to every with a total area of approximately 10,048
partner for the amounts he may have square meters. Three buildings were
Bus org 1| obligations of partners among themselves | 7
constructed thereon and were leased out by
Choithram as attorney-in-fact of spouses
Ishwar. Two of these buildings were later

In 1970 Ishwar asked Choithram to account ----------------------------------------------------------

for the income and expenses relative to
these properties during the period 1967 to Machuca v Chuidian (1903, Ladd)
1970. Choithram failed and refused to
Parties: Jose Machuca (Plaintiff-Appellee),
render such accounting which prompted
Chuidian Buenaventura & Co. (Defendant-
Ishwar to revoke the general power of
attorney. Choithram and Ortigas Ltd. were
duly notified by notice in writing of such Partners: D. Telesforo Chuidian, Doa
revocation. It was also registered with the Raymunda Chuidian, Doa Candelaria
Securities and Exchange Commission and Chuidian, and D. Mariano Buenaventura
published in The Manila Times.
Nevertheless, Choithram as such attorney- DOCTRINE:
in-fact of Ishwar, transferred all rights and
The assignment by its terms is not to take
interests of Ishwar spouses in favor of
effect until all the liabilities of the
Nirmla Ramnani, the wife of Choitrams son,
partnership have been discharged and
Moti. Ortigas also executed the
nothing remains to be done except to
corresponding deeds of sale in favor of
distribute the assets, if there should be any,
Nirmla and the TCT ISSUEd in her favour.
among the partners. Meanwhile the
Thus, spouses Ishwar filed a complaint in the
assignor is to continue in the enjoyment of
Court of First Instance of Rizal against
the rights and is to remain subject to the
Choithram and spouses Nirmla and Moti
liabilities of a partner as though no
(Choithram et al.) and Ortigas Ltd. for
assignment had been made. The assignment
reconveyance of said properties or payment
does not purport to transfer an interest in
of its value and damages.
the partnership, but only a future
contingent right to such portion of the
ultimate residue of the partnership property
Issue: Whether a partnership was formed? as the assignor may become entitled to
receive by virtue of his proportionate
Held: The Court held that there was a
interest in the capital.
partnership formed. Even without a written
agreement, the scenario is clear. Spouses FACTS:
Ishwar supplied the capital of $150,000.00
for the business. They entrusted the money Chuidian Buenaventura & Co. is regular
to Choithram to invest in a profitable general partnership, organized in Manila,
business venture in the Philippines. For this December 29, 1882, as a continuation of a
purpose they appointed Choithram as their prior partnership of the same name. The
attorney-in-fact. We have a situation where original partners constituting the
two brothers engaged in a business venture. partnership of 1882 were D. Telesforo
One furnished the capital, the other Chuidian, Doa Raymunda Chuidian, Doa
contributed his industry and talent. Justice Candelaria Chuidian, and D. Mariano
and equity dictate that the two share Buenaventura.
equally the fruit of their joint investment
Doa Raymunda Chuidian retired from the
and efforts.
partnership November 4, 1885. On January
1, 1888, the partnership went into
liquidation, and it does not appear that the

Bus org 1| obligations of partners among themselves | 8

liquidation had been terminated when this ISSUE(s): WON Machuca is entitled to
action was brought. the relief prayed pending the liquidation of
the partnership?
On January 1, 1894, D. Mariano
Buenaventura died, his estate passing by will HELD/RATIO: NO
to his children, among whom was D. Vicente
Buenaventura. Upon the partition of the Clause 19 of the partnership agreement
estate the amount of the interest of D. stipulates that:
Vicente Buenaventura in his father's "upon the dissolution of the company, the
account-current and in the capital was pending obligations in favor of outside
ascertained and recorded in the books of parties should be satisfied, the funds of the
the firm. minors Jose and Francisco Chuidian should
On December 15, 1898, D. Vicente be taken out, and afterwards the resulting
Buenaventura executed a public instrument balance of the account-current of each one
in which for a valuable consideration he of those who had put in money
"assigns to D. Jose Gervasio Garcia . . . a 25 (imponentes) should be paid."
per cent share in all that may be obtained by A construction of this clause establishes
whatever right in whatever form from the that the liabilities to noncompartners are to
liquidation of the partnership of Chuidian, be first discharged; that the claims of the
Buenaventura & Co., in the part pertaining Chuidian minors are to be next satisfied; and
to him in said partnership that what is due to the respective partners
A subsequent assignment was made by D. on account of their advances to the firm is
Jose Gervasio Garcia in favour of Jose to be paid last of all, leaving the ultimate
Machuca (Plaintiff-Appellee), which has residue, of course, if there be any, to be
been notified to the liquidator of the distributed, among the partners in the
partnership. proportions in which they may be entitled
thereto. A distinction is made in this clause
Trial Court Brought by Jose Machuca between creditors who were partners and
against Chuidian Buenaventura & Co.. Action creditors who were not partners, and that
was for specific performance to compel the the expression "outside parties" refers to
liquidator of the partnership to record in the the latter class.
books Machucas claim under the
assignment as a credit due, and the he Thus, it follows that D. Vicente
further asks that he be adjudicated to be a Buenaventura, whose rights are those of his
creditor of the partnership in an amount father, is in no case entitled to receive any
equal to 25 per cent of D. Vicente part of the assets until the creditors who are
Buenaventura's share in his father's nonpartners and the Chuidian minors are
account-current. That the necessary paid. Whatever rights he had either as
liquidation being first had, the partnership creditor or partner, he could only transfer
pay to the plaintiff the balance which may subject to this condition.
be found to be due him; and that if the It is clear, from the language of the
partnership has no funds with which to instrument, that this conditional interest
discharge this obligation an adjudication of was all that D. Vicente Buenaventura ever
bankruptcy be made. He also asks to recover intended to transfer. By that instrument he
the damages caused by reason of the failure undertakes to assign to Garcia not a present
of the liquidator to record his credit in the interest in the assets of the partnership but
books of partnership. Court ruled in favor of an interest in whatever "may be obtained
the plaintiff. from the liquidation of the partnership,"
which Garcia is to receive "in the same form
in which it may be obtained from said

Bus org 1| obligations of partners among themselves | 9

partnership," and "on the date when Principle: Liquidation shall happen before a
Messrs. Chuidian, Buenaventura & Co., in partner may claim his share of profit from
liquidation, shall have effected the the partnership.
operations necessary in order to satisfy" the
Facts: Plaintiff brought an action in the CFI
claims of D. Vicente Buenaventura.
against defendant. Defendant borrowed
The assignment by its terms is not to take from him money (P 2,210) to enable her to
effect until all the liabilities of the pay her obligations and to add to her capital
partnership have been discharged and in her lumber business. She could not pay so
nothing remains to be done except to she proposed to take plaintiff as a partner in
distribute the assets, if there should be any, her business, plaintiff to contribute the P
among the partners. Meanwhile the 2,210 due him from defendant. Before
assignor, Buenaventura, is to continue in the last World War, the partnership sold
the enjoyment of the rights and is to 230,000boardft. of lumber to the US Army
remain subject to the liabilities of a partner for P 13,800.00. Defendant refused to
as though no assignment had been made. deliver of it (P 6,900.00) to plaintiff
The assignment does not purport to despite his repeated demands. Plaintiff filed
transfer an interest in the partnership, but an action to compel defendant to pay him
only a future contingent right to 25 per his half of the profit from the partnership.
cent of such portion of the ultimate residue The case was dismissed upon the ground of
of the partnership property as the assignor prescription.
may become entitled to receive by virtue of
Issue: Whether or not plaintiff is entitled to
his proportionate interest in the capital.
the sum he claims
There is nothing in the case to show either
that the nonpartner creditors of the Held: NO. Order of dismissal was affirmed,
partnership have been paid or that the but on the ground that the complaint states
claims of the Chuidian minors have been no cause of action.
satisfied. Thus, Machuca is not yet entitled Ratio: It is not clear from the complaint just
to the relief. when the cause of action accrued. Thus the
DISPOSITIVE: dismissal of the case is erroneous. However
order should be retained on the ground that
The plaintiff having acquired no rights under the complaint has no cause of
the assignment which are now enforceable action. Plaintiff seeks to recover from
against the defendant, this action can not be defendant one-half of the purchase price of
maintained. The liquidator of the defendant lumber sold by the partnership to the United
having been notified of the assignment, the States Army. But his complaint does not
plaintiff will be entitled to receive from the show why he should be entitled to the sum
assets of the partnership, if any remain, at he claims. It does not allege that there has
the termination of the liquidation, 25 per been a liquidation of the partnership
cent of D. Vicente's resulting interest, both business and the said sum has been found
as partner and creditor. The judgment in this to be due him as his share of the profits. The
case should not affect the plaintiff's right to proceeds from the sale of a certain amount
bring another action against the partnership of lumber cannot be considered profits until
when the affairs of the same are finally costs and expenses have been deducted.
wound up. The proper judgment will be that Moreover, the profits of the business cannot
the action be dismissed. The judgment of be determined by taking into account the
the court below is reversed and the case is result of one particular transaction instead
remanded to that court with directions to of all the transactions had. Hence, the need
enter a judgment of dismissal. So ordered. for a general liquidation before a member of

Sison v. Helen McQuaid December 29, 1953

Bus org 1| obligations of partners among themselves | 10
a partnership may claim a specific sum as his the defendant was authorized to continue in
share of the profits. the possession of the property in litigation
after giving a P25,000 bond cancelling the
De la Rosa v Ortega GoCotay No. 24243; 15 P10,000 bond.
January 1926; Gancayco, J.
9. After trial, the lower court adopted the
FACTS: report made by Justo CaboChan which
showed that the business suffered a net loss
1. Go Lio and Vicente GoSengco formed a
amounting to P89,099.22 and rejected the
society for the purchase and sale of articles
report of the two other commissioners.
of commerce and opened a store in San
Isidro, Nueva Ecija 10. Because of the loss, the plaintiff had
nothing to recover from defendant as there
2. Go Lio went to China and died there
was no profit to divide. The reports showed
leaving a widow and 3 children, one of
the status of the business from 19191922
whom came to the Philippines and filed a
(Loses were incurred 1918 onwards)
petition for the appointment of Ildefonso de
la Rosa (PLAINTIFF) as administrator of the ISSUE: WON the loss should be borne by the
intestate estate of his deceased father. The partnership NO. The defendant alone
petition was granted by the CFI of Nueva should bear the loss
HELD: Defendant should pay the plaintiff
3. Vicente GoSengco also died and his son P30,299.14 as his share before August 3,
Enrique Ortega Go Catay (DEFENDANT) took 1918.
charge of the business
RATIO: 1. In August 3, 1918, the defendant
4. Enrique Ortega refused to wind up the assumed complete responsibility for the
business and deliver to De la Rosa the business when he objected to the
portion corresponding to the deceased Go appointment of a receiver and even giving a
Lio. He alleged that the business is his bond. a) From that point forward, his acts
exclusively were no longer that of a managing partner
binding against the partnership. He became
5. This prompted De La Rosa to file a
a receiver whose authority is provided for in
complaint against Enrique Ortega. De La
Section 175 of the Code of Civil Procedure b)
Rosa also prayed that he be appointed as
According to the Code, a receiver has no
receiver for the property of the partnership.
right to carry on and conduct a business
Defendant opposed the prayer.
unless he is authorized or directed by the
6. The CFI appointed 3 commissioners to court to do so. His role is to take and
make an inventory, liquidate and determine preserve the property. c) Since he was not
the half belonging to the plaintiff. The authorized by the court to continue the
commissioners submitted a report showing business of the partnership in liquidation, he
that the business showed net profits from is personally liable for the losses that the
19131917 amounting to P25,038.70 business had sustained after he became a
receiver d) The partnership therefore is not
7. August 3, 1918: In order to prevent Justo liable for the acts of the defendant in
CaboChan (one of the commissioners) from connection with the management of the
assuming the position of receiver pursuant business after August 3, 1918.
to the order of the court, the defendant
filed a bond in the sum of P10,000. 2. The court added the Capital of the
partnership and profits until the first
8. In view of the appeal taken by defendant, semester of 1918 to amount to P60,598.28.
the parties agreed to suspend the One half of the total is P30,299.14 which
liquidation ordered by the lower court and pertains to the estate of Go Lio.

Bus org 1| obligations of partners among themselves | 11

SIDE NOTES: that the partnership should not be
liquidated until the sale of a piece of real
3. The assets of the partnership, as well as estate in which the firm had become
the value of its property, could not be interested should be effected with profit.
determined when making the liquidation The property to which reference was thus
because there was no inventory hence it made consisted of a farm in the municipality
was not possible to determine the capital of of Murcia, in the Province of Tarlac, known
the partnership. The plaintiff however
as the "Hacienda de Guitan."
agreed to consider the initial capital as the
capital at the time of winding up of the This farm had been formerly owned by the
business. 4. It was also difficult for the court spouses Loni Diangco and Epifania Torres;
to determine net profits earlier than 1912 and long before the firm of Abelido and Co.
because some of the books of account were had come into existence Antonio David y
destroyed by anay. The SC computed the Abelido had been their creditor by reason of
net profits based on the average net profit certain sums of money from time to time
in 1913 onwards. loaned them. After the death of Lino
Diangco in 1890 still other sums of money
G.R. No. L-12151 January 19, 1918 were advanced by David to the widow,
Epifania Torres, in behalf of herself and her
minor son Pablo Diangco. Upon July 10,
DEZOLLIER, palintiff- appellant,
1906, Epifania agreed to convey the
Hacienda de Guitan to Abelido and
Buenaventura for a consideration stated at
P2,050 (Exhibit C). The purpose of the
STREET, J.: transaction was to settle the debt of several
thousand pesos owing by her and her son to
By an agreement effective from April 20, Antonio David y Abelido. The conveyance by
1906, a partnership was formed by Antonio which this contract was finally carried into
David y Abelido and Adriano Buenaventura y effect was executed upon January 30, 1908.
Dezollier for the conduct of the business of The grantee named in the deed was Antonio
real estate brokers in the city of Manila, David y Abelido; and no reference was made
under the firm name "Abelido and Co." The in this instrument to the firm of Abelido and
first named party was the capitalist member Co., or to Buenaventura as a partner
of the firm and its manager., while the last therein. Buenaventura was present at the
named was the industrial member and time of the execution of this deed and
bookkeeper. The firm maintained a feeble signed as a subscribing witness. The total
external existence for a few months, during consideration for the conveyance was
which period the capitalist associate placed P7,170, of which the sum of P5,870 was
P209.86 in the enterprise. This was consumed in satisfying the old indebtedness
consumed in office rent and other incidental due to David. The balance (according to the
expenses. Only two profitable transactions recitals of the deed) was paid by him to
were ever accomplished by the firm of Epifania Torres. It further appears that
Abelido and Co. during its existence. These Antonio David y Abelido proceeded to
produced a total income of P42, which sum procure the registration of the hacienda in
was noted on the credit side of the his own name and a Torrens title was in due
company's ledger. course issued to him.
It was agreed in the articles that the Upon the same day that the above-
partnership should be liquidated upon April mentioned deed was executed by Epifania
20, 1907, in the absence of any agreement Torres to Antonio David, a declaration was
for the extension of its life; but upon drawn up and ratified by Antonio David and
February 1, 1908, it was agreed in writing Adiano Buenaventura in which it was stated
Bus org 1| obligations of partners among themselves | 12
that Epifania Torres had sold the estate as might seem to the court just and
above mentioned to Antonio David for the equitable.
sum of P7,170 and that of this amount the
sum of P3,370 had been advanced by At the hearing the court entered a judgment
Abelido & Co., while P3,800 had been paid declaring that the partnership of Abelido
by David individually. It was then said that and Co. was dissolved and denying all other
the firm thereby became the owner of the relief sought in the complaint. From this
judgment the plaintiff Buenaventura has
property in the proportion of the value
satisfied by it; and this was followed by an appealed.
obscure clause meaning, probably, that the As regards the Hacienda de Guitan, it is in
right of the firm to acquire this participation our opinion clear upon the oral testimony
was dependent on the reimbursement of and other proof adduced in the cause that
David for the outlay made by him with every cent of the consideration for the
respect to such share. A further statement purchase of this property was supplied by
was added to the effect that Buenaventura David; and it consisted, as we have seen,
should have the option to advance half of mostly of money previously loaned.
the sum paid out by Antonio David y Buenaventura had no resources, and it was
Abelido, to wit, the sum of P1,900, in the evidently quite beyond his power to raise
event Buenaventura should desire to have a the funds necessary to participate in a
half interest in the property in his own business transaction of the size of that in
name. question. His pretension that he supplied
P1,025 or half of the consideration named in
From the date of the conveyance above
mentioned David exercised all the rights of the original contract (Exhibit C) was rightly
an owner over the property. Upon one rejected by the court. Furthermore it
occasion he mortgaged it for the sum of appears that the firm of Abelido and Co., as
P5,000 and Buenaventura was paid P300 for distinguished from the individual David
assisting in the securing of this loan. At Abelido, never in fact advanced a single
another time David mortgaged the property peso in the transaction, although the
for the sum of P15,000 and applied the "declaration" of January 30, 1908, states
money thus secured to his own use. that the firm advanced P3,370. That
declaration constitutes an admission which
Upon February 18, 1915, or more than entitles it to weight but its recital as to the
seven years after the day upon which the money paid or received may be explained
deed to the property had been executed to and even contradicted, as in case of a simple
David, Buenaventura filed the complaint in receipt. David's explanation is that the
this action. In this proceeding he seeks relief plaintiff, as bookkeeper, had made it appear
embracing the following features: (1) a in the firm books that the firm was debtor to
dissolution of the partnership of Abelido and David in the amount of P3,370 in respect to
Co.; (2) judgment for a balance of some this transaction and that the plaintiff had
P2,344.85. alleged to be due as arrears upon requested David to sign the declaration
salary account; (3) a transfer of the title of showing the firm to be a participant.
the Hacienda de Guitan to Abelido and Co.; Throughout this affair David exhibited
(4) and accounting for, and division of all considerable complaisance in signing papers
money, property and other effects of the at Buenaventura's request. He apparently
firm; and especially an accounting for profits considered Buenaventura an amiable old
alleged to have been made by the friend and was willing to indulge the latter's
defendant David from investments of fancy with the idea that he was party to an
money derived from the hacienda, which important transaction, well knowing that he
profits were alleged to amount to the sum could never put up the necessary money to
of P5,190; (5) a judgment for damages in the enable him to share in the deal. Whatever
sum of P10,000; (6) such and further relief may be the explanation of David's
Bus org 1| obligations of partners among themselves | 13
imprudence in allowing himself to be thus establishing the right of Abelido and Co. The
drawn into an admission showing that the reply is that by the terms of that instrument
firm participated in the deal, it is quite clear Buenaventura's personal right was
that he supplied all the money for the dependent upon the advancement of money
purchase in question. by him which was in fact never supplied, and
as to the statement contained in that
The situation then, as regards the title to the declaration that Abelido and Co. had
hacienda is this: David, who supplied all the
advanced a certain sum, it clearly appears
funds, has obtained the legal title in his own that this is not true; and we hold that the
individual name. This was accomplished defendant is not precluded, or estopped, by
with knowledge on the part of that admission from showing the actual
Buenaventura. Furthermore he has
registered his title by means of legal
proceedings which were probably known to Furthermore, it is evident that the plaintiff's
Buenaventura. Still later, the latter is seen case is adversely affected by his long delay
acting as broker for David in securing a loan in bringing this action. Undue delay in the
on the hacienda and receives a fee for his enforcement of a right is strongly persuasive
services. Meanwhile the original partnership of a lack of merit in the claim, since it is
enterprise is abandoned. Finally more than human nature for a person to assert his
seven years after the day when rights most strongly when they are
Buenaventura stood by and signed as a threatened or invaded. It is hard to believe
witness the deed conveying the property to that, if the plaintiff had been convinced of
David, he comes into court and seeks to the justice of his contention, he would have
reach this property through the ghost of the failed to assert his right to a division at the
firm of Abelido and Co. and bring the time when the defendant was pocketing the
defendant to account for the profits which proceeds of the loans obtained upon the
he has obtained from the investments of its security of the Hacienda de Guitan. The
proceeds in various enterprises. probabilities are that Buenaventura realized
at the time that his hopes of sharing in this
The purpose of the action is to impress a investment were doomed to
trust on the property in favor of Abelido and disappointment and that with full
Co., to divest the title out of the present knowledge of all the facts he decided to
owner, and to have it, or its proceeds, abandon the claim, or not assert it.
liquidated and administered as firm assets. However, the documents which appear on
We are of the opinion that there is no merit their face to establish his right to a
in the plaintiff's contention. It is true that a participation in this property remained in
court will not hesitate, under certain existence; and in course of time said claim
circumstances, to divest a title out of the was made the basis of this action. The
holder and impress a trust upon it in favor of
assertion of doubtful claims, after long
another, or to require the holder of the title delay, can not be favored by the courts.
to administer the property for the true Time inevitably tends to obliterate
owner (Uy Aloc vs. Cho Jan Ling, 19 Phil. occurrences from the memory of witnesses,
Rep., 202); yet this will not be done in the and even where the recollection appears to
absence of a sufficient contract, an express be entirely clear, the true clue to the
trust, or other strong equitable solution of a case may be hopelessly lost.
circumstances requiring the intervention of These consideration constitute one of the
equity. No such relief can be granted, upon pillars of the doctrine long familiar in equity
purely equitable grounds, against a party jurisprudence to the effect that laches or
who has himself paid the entire purchase unreasonable delay on the part of a plaintiff
price in favor of one who advanced nothing. in seeking to enforce a right is not only
But the declaration of January 30, 1908, is
persuasive of a want of merit but may,
relied upon as evidence of a contract
Bus org 1| obligations of partners among themselves | 14
according to the circumstances, be
destructive of the right itself. Vigilantibus
non dormientibus equitas subvenit.

The decision of the main issue relative to the

hacienda renders unnecessary any
discussion of other features of the case
presented in the appellant's brief. Upon the
whole it is our opinion that there was no
error prejudicial to the plaintiff in the action
of the court below and the judgment is
therefore affirmed, with costs against the

Bus org 1| obligations of partners among themselves | 15