Moran v.

CA

Case Summary: On February 1971, Isabelo Moran and Mariano Pecson entered into a
partnership agreement where they agreed to contribute P15k each for the purpose of printing
95k posters of the delegates to the then 1971 Constitutional Commission. Moran shall be in
charge in managing the printing of the posters. It was further agreed that Pecson will receive a
commission of P1k a month starting from April 1971 to December 1971; that the partnership is
to be liquidated on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor of the
partnership. He gave the P10k to Moran as the managing partner. Moran however did not add
anything and, instead, he only used P4k out of the P10k in printing 2,000 posters. He only
printed 2,000 posters because he felt that printing all 95k posters is a losing venture because of
the delay by the COMELEC in announcing the full delegates. All the posters were sold for a total
of P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of
Appeals affirmed the decision of the trial court but modified the same as it ordered Moran to pay
P47.5k for unrealized profit; P8k for Pecsons monthly commissions; P7k as return of
investment because the venture never took off; plus interest.

Issue: 1) WON the Mariano Pecson is entitled to the P47,500 supposed expected profit due to
him.
2) WON Mariano Pecson is entitled to the P8,000 commission arising out of Pecsons
investment.
3) WON Mariano Pecson is entitled to the net profit of P6,000.00.

Law Applicable: Art: 2200.Indemnification for damages shall comprehend not only the value of
the loss suffered, but also that of the profits which the oblige failed to obtain.

Article 1797.The losses and profits shall be distributed in conformity with the agreement. If only
the share of each partner in the profits has been agreed upon, the share of each in the losses
shall be in the same proportion.

Decision: 1) No, Mariano Pecson is not entitled to the supposed P47, 500 expected income.
The court in Uy v. Puzon interpreted Art. 2200. The court awarded P2M compensatory damages
in the Uy case because there was a finding that the constructing business is a profitable one
and that the UP construction company derived some profits from its contractors in the
construction of roads and bridges despite its deficient capital. The profits on two government
contracts worth P2,327,335.76 were not speculative. In the instant case, there is no
evidence whatsoever that the partnership between the Peson and Moran would have been a
profitable venture. In fact, it was a failure doomed from the start. There is therefore no basis for
the award of speculative damages in favor of the private respondent.

2) No, The partnership agreement stipulated that the petitioner would give the private
respondent a monthly commission of Pl,000.00 from April 15, 1971 to December 15, 1971 for a
total of eight (8) monthly commissions. The agreement does not state the basis of the
commission. The payment of the commission could only have been predicated on relatively
extravagant profits. The parties could not have intended the giving of a commission in spite of
loss or failure of the venture. Since the venture was a failure, the private respondent is not
entitled to the P8,000.00 commission.

3) Yes, applying Art. 1797 the profit earned from the sale of the printed magazine should be
divided between the two partners. Since the business venture earned the net profit of
P6,000.00, both partners should receive P3,000. Furthermore, since Pecson contributed P10k
to the partnership but P4k was only used in printing, Moran should return the P6k.

Opinion: I agree with the courts decision in this case. It was able to deliver justice to both the
parties. An award of P47, 500 compensatory damages to Pecson would have been to
unconscionable on the part of Moran, since the profit was only speculative; Bearing in mind that
a magazine which features the delegates of the 1971 Constitutional Commission would have
not been so profitable. 1970s is a period in our history when the economy was in rescission and
the Philippines was slowly sinking in foreign debts. The purchasing power of the Filipinos then
were low and it would be very unlikely for them to consider buying this magazine, since they
would have likely prioritized spending their money on food, daily needs and necessities of their
family.
 Evangelista & Co. v. Abad Santos

Case Summary: On October 9, 1954 a co-partnership was formed under the name of
"Evangelista & Co." On June 7, 1955 the Articles of Co-partnership were amended so as to
include herein respondent, Estrella Abad Santos, as industrial partner, with herein petitioners
Domingo C. Evangelista, Jr., Leonarda Atienza Abad Santos and Conchita P. Navarro, the
original capitalist partners, remaining in that capacity, with a contribution of P17,500 each

On December 17, 1963 herein respondent filed suit against the three other partners, alleging
that the partnership, which was also made a party-defendant, had been paying dividends to the
partners except to her; and that notwithstanding her demands the defendants had refused and
continued to refuse to let her examine the partnership books or to give her information regarding
the partnership affairs or to pay her any share in the dividends declared by the partnership

The defendants, in their answer, denied ever having declared dividends or distributed profits of
the partnership; denied likewise that the plaintiff ever demanded that she be allowed to examine
the partnership books; and by way of affirmative defense alleged that the amended Articles of
Co-partnership did not express the true agreement of the parties, which was that the plaintiff
was not an industrial partner; that she did not in fact contribute industry to the partnership.

Issues: WON Abad Santos is an industrial partner

WON Abad Santos is entitled to see partnership books

Law Applicable: ART. 1789. An industrial partner cannot engage in business for himself,
unless the partnership expressly permits him to do so; and if he should do so, the capitalist
partners may either exclude him from the firm or avail themselves of the benefits which he may
have obtained in violation of this provision, with a right to damages in either case.

ART. 1899. Any partner shall have the right to a formal account as to partnership affairs:

(1) If he is wrongfully excluded from the partnership business or possession of its property
by his co-partners;

(2) If the right exists under the terms of any agreement;

(3) As provided by article 1807;

(4) Whenever other circumstance render it just and reasonable.

Decision of the Case: 1) Yes, she is an industrial partner, she has rendered services for
appellants without which they would not have had the wherewithal to operate the business for
which appellant company was organized. Article 1767 of the New Civil Code which provides that
"By contract of partnership two or more persons bind themselves, to contribute money, property,
or industry to a common fund, with the intention of dividing the profits among themselves, 'does
not specify the kind of industry that a partner may thus contribute, hence the said services may
legitimately be considered as appellee's contribution to the common fund.
2) Yes, as an industrial partner Abad Santos is entitled to see the partnership books. The
Supreme Court ruled that according to:

ART. 1299. Any partner shall have the right to a formal account as to partnership affairs:

(1)If he is wrongfully excluded from the partnership business or possession of its property by his
co-partners;

(2)If the right exists under the terms of any agreement;

(3)As provided by article 1807;

(4)Whenever other circumstances render it just and reasonable."

Opinion: The Supreme Court correctly ruled that Abad Santos is an industrial partner. A deeper
perusal of the case reveals that it has been 8 years since, and the partners never even bothered
to correct the agreement. In that 8 years Abad Santos has been rendering his legal service for
the partnership, without which the business would have not took off. The long lapse of time had
already estopped them from denying that Abad Santos is an industrial partner. As one of the
bundle of rights of a partner in a partnership, Abad Santos must be allowed to see the
partnership books to ascertain whether the business had been paying dividends to the partners
except to her. The decision is just and right.
Deluao v. Casteel

Case Summary: In 1940 Nicanor Casteel unsuccessfully registered a fishpond in a big tract of
swampy land, 178.76 hectares, in the then sitio of Malalag, municipality of Padada, Davao for 3
consecutive times because the Bureau of Fisheries did not act upon his previous applications.
Despite the said rejection, Casteel did not lose interest. Because of the threat poised upon his
position by the other applicants who entered upon and spread themselves within the area,
Casteel realized the urgent necessity of expanding his occupation thereof by constructing dikes
and cultivating marketable fishes. But lacking financial resources at that time, he sought
financial aid from his uncle Felipe Deluao. Moreover, upon learning that portions of the area
applied for by him were already occupied by rival applicants, Casteel immediately filed a protest.
Consequently, two administrative cases ensued involving the area in question. However,
despite the finding made in the investigation of the above administrative cases, the Director of
Fisheries nevertheless rejected Casteel's application on October 25, 1949, required him to
remove all the improvements which he had introduced on the land, and ordered that the land be
leased through public auction

On November 25, 1949 Inocencia Deluao (wife of Felipe Deluao) as party of the first part, and
Nicanor Casteel as party of the second part, executed a contract denominated a "contract of
service". On the same date the above contract was entered into, Inocencia Deluao executed a
special power of attorney in favor of Jesus Donesa. On November 29, 1949 the Director of
Fisheries rejected the application filed by Felipe Deluao on November 17, 1948. Unfazed by this
rejection, Deluao reiterated his claim over the same area in the two administrative cases and
asked for reinvestigation of the application of Nicanor Casteel over the subject fishpond. The
Secretary of Agriculture and Natural Resources rendered a decision ordering Casteel to be
reinstated in the area and that he shall pay for the improvement made thereupon. Sometime in
January 1951 Nicanor Casteel forbade Inocencia Deluao from further administering the
fishpond, and ejected the latter's representative (encargado), Jesus Donesa, from the premises.

Issue: WON the reinstatement of Casteel over the subject land constitute a dissolution of the
partnership between him and Deluao

Law Applicable: Article 1830. Dissolution is caused:

(1) Without violation of the agreement between the partners:

(a) By the termination of the definite term or particular undertaking specified in the agreement;

(b) By the express will of any partner, who must act in good faith, when no definite term or
particular is specified;

Decision: Yes, the reinstatement of Casteel dissolved his partnership with Deluao.
The Supreme Court ruled that the arrangement under the so-called "contract of service"
continued until the decision both dated Sept. 15, 1950 were issued by the Secretary of
Agriculture and Natural Resources in DANR Cases 353 and 353-B. This development, by itself,
brought about the dissolution of the partnership. Since the partnership had for its object the
division into two equal parts of the fishpond between the appellees and the appellant after it
shall have been awarded to the latter, and therefore it envisaged the unauthorized transfer of
one half thereof to parties other than the applicant Casteel, it was dissolved by the approval of
his application and the award to him of the fishpond.

The approval was an event which made it unlawful for the members to carry it on in partnership.
Moreover, subsequent events likewise reveal the intent of both parties to terminate the
partnership because each refused to share the fishpond with the other.

Opinion: The agreement between Casteel and Deluao was an agreement to form a
partnership. Inocencia Deluao as capitalist partner and Casteel as industrial partner the
ultimate undertaking of which was to divide into two equal parts such portion of the fishpond as
might have been developed by the amount extended by the plaintiffs-appellees, with the further
provision that Casteel should reimburse the expenses incurred by the appellees over one-half of
the fishpond that would pertain to him. The Civil code provides that a partnership can be
dissolved by reason of the termination of the definite term or particular undertaking specified in
the agreement and since the fishpond in finally awarded to Casteel. The partnership will be
terminated since the partnership had for its object the division into two equal parts of the
fishpond between the appellees and the appellant after it shall have been awarded to the latter,
and therefore it envisaged the unauthorized transfer of one half thereof to parties other than the
applicant Casteel. The main purpose of the partnership has finally been rendered untenable
hence the partnership is extinguished.
 MUASQUE v. CA

Case Summary: Elmo Muasque filed a complaint for payment of sum of money and damages
against respondents Celestino Galan, Tropical Commercial, Co., Inc. (Tropical) and Ramon
Pons, alleging that the petitioner entered into a contract with respondent Tropical through its
Cebu Branch Manager Pons for remodeling a portion of its building without exchanging or
expecting any consideration from Galan although the latter was casually named as partner in
the contract; that by virtue of his having introduced the petitioner to the employing company
(Tropical), Galan would receive some kind of compensation in the form of some percentages or
commission. Tropical agreed to give petitioner the amount of P7,000.00 soon after the
construction began and thereafter the amount of P6,000.00 every fifteen (15) days during the
construction to make a total sum of P25,000.00. On January 9, 1967, Tropical and/or Pons
delivered a check for P7,000.00 not to the plaintiff but to a stranger to the contract, Galan, who
succeeded in getting petitioner's indorsement on the same check persuading the latter that the
same be deposited in a joint account.

On January 26, 1967, when the second check for P6,000.00 was due, petitioner refused to
indorse said check presented to him by Galan but through later manipulations, respondent Pons
succeeded in changing the payee's name to Galan and Associates, thus enabling Galan to cash
the same at the Cebu Branch of the Philippine Commercial and Industrial Bank (PCIB) placing
the petitioner in great financial difficulty in his construction business and subjecting him to
demands of creditors to pay for construction materials, the payment of which should have been
made from the P13,000.00 received by Galan. Due to the unauthorized disbursement by
respondents Tropical and Pons of the sum of P13,000.00 to Galan, petitioner demanded that
said amount be paid to him by respondents under the terms of the written contract between the
petitioner and respondent company.

Issues: WON the partnership between Galan and Munasque was terminated because of the
acts of Galan

WON there was a breach of trust when Tropical disbursed the money to Galan instead of
Muasque

Law Applicable: Article 1794. Every partner is responsible to the partnership for damages
suffered by it through his fault, and he cannot compensate them with the profits and benefits
which he may have earned for the partnership by his industry. However, the courts may
equitably lessen this responsibility if through the partner's extraordinary efforts in other activities
of the partnership, unusual profits have been realized.

Decision: 1) No, there is nothing in the records to indicate that the partner-ship organized by
the two men was not a genuine one. If there was a falling out or misunderstanding between the
partners, such does not convert the partnership into a sham organization.

2) No, there was no breach of trust when Tropical disbursed the money to Galan instead of
Muasque. In the case at bar the respondent Tropical had every reason to believe that a
partnership existed between the petitioner and Galan and no fault or error can be imputed
against it for making payments to "Galan and Associates" and delivering 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.

Opinion: The court ruled fairly in this case. A simple falling out cannot be used as a basis to
conclude that the partnership formed by Munasque and Galan has been extinguished. It will be
the height of injustice to say that Tropical Commercial, Co., Inc. committed an error in paying
only Galan. In fact the Civil code provides that a partner is an agent of the partnership and in the
case payment to Galan is valid since he is a partner. Tropical has no reason to believe that the
partnership between Galan and Munasque has been terminated.
Pioneer Insurance & Surety Corporation vs Court of Appeals

Case Summary: Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In
1965, Lim convinced Constancio Maglana, Modesto Cervantes, Francisco Cervantes, and
Border Machinery and Heavy Equipment Company (BORMAHECO) to contribute funds and to
buy two aircrafts which would form part a corporation which will be the expansion of Southern
Air Lines. Maglana et al then contributed and delivered money to Lim, But instead of using the
money given to him to pay in full the aircrafts, Lim, without the knowledge of Maglana et al,
made an agreement with Pioneer Insurance for the latter to insure the two aircrafts which were
brought in installment from Japan Domestic Airlines (JDA) using said aircrafts as security. So
when Lim defaulted from paying JDA, the two aircrafts were foreclosed by Pioneer Insurance.
It was established that no corporation was formally formed between Lim and Maglana et al.
Issue: WON Maglana et al must share in the loss as general partners.

Law Applicable: Art. 2207. If the plaintiffs property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract. If the amount paid by the
insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled
to recover the deficiency from the person causing the loss or injury.

Decision: No. There was no de facto partnership. Ordinarily, when co-investors agreed to do
business through a corporation but failed to incorporate, a de facto partnership would have been
formed, and as such, all must share in the losses and/or gains of the venture in proportion to
their contribution. But in this case, it was shown that Lim did not have the intent to form a
corporation with Maglana et al. This can be inferred from acts of unilaterally taking out a surety
from Pioneer Insurance and not using the funds he got from Maglana et al. The record shows
that Lim was acting on his own and not in behalf of his other would-be incorporators in
transacting the sale of the airplanes and spare parts.

Opinion: I concur with the ruling of the case. Jacob Lim defrauded his would be incorporators in
the case by convincing them to contribute funds and promised them that a corporation will be
eventually set up only to use the aircrafts as a security to a loan without the consent of the
contributors. Worst Jacob Lim did not set up or even made preparations at the very least to set
up a corporation. What happen in this case was Jacob Lim defrauded people and wanted them
to be share the burden of paying the insurance company, had the ruling been otherwise the
court would have not served justice.
 Claridades v. Mercader

Case Summary: Claridades brought the present action against Mercader and Fernandez for
the dissolution of a partnership allegedly existing between them and an accounting of the
operation of the partnership, particularly a fishpond located in Sta. Cruz, Marinduque, which was
the main asset of the partnership, from September 1954, as well as to recover moral and
exemplary damages, in addition to attorney's fees and costs. On the other hand, defendants
admit the existence of the partnership and that it had been so far unproductive, averring further
that there is an impending auction sale of said fishpond due to delinquency in the payment of
taxes owing to lack of funds and plaintiff's failure to contribute what is due from him.
Subsequently, Reyes was allowed to intervene for the purpose of recovering a sum of money
allegedly due him for services rendered as foreman of said fishpond, plus damages. Later,
Asuncion succeeded in intervening as the alleged assignee of the interest of Mercader in said
partnership and fishpond. Thereafter, the lower court appointed a receiver of the fishpond. Upon
the other hand, Alfredo Zulueta and his wife Yap sought permission to intervene, still later,
alleging that they are the owners of said fishpond, having bought of it from Regencia, who, in
turn, had acquired it from Asuncion, who had purchased the fishpond from defendant Mercader,
and the other half having been assigned to him directly by Asuncion. Despite plaintiff's
opposition thereto, said permission was granted in an order dated Feb. 8,1962, which, likewise
gave the Zuluetas ten days within which to file such pleading as they may deem necessary for
the protection of their rights. On Feb. 12, 1962, the Zuluetas filed a motion to dismiss upon the
ground that the complaint states no cause of action; that venue has been improperly laid; and
that plaintiff complaint is moot and academic. Acting upon the motion, on March 2, 1962, the
lower court granted the same upon the ground of improper venue ratiocinating that that the
subject matter of this case is the possession of said fishpond, because plaintiff prays in the
complaint that the assets of the partnership, including said fishpond be sold, that the proceeds
of the sale be applied to the payment of the debts of the partnership, and that the residue be
distributed equally among the partners and since the fishpond is located in Marinduque, the
complaint should have been lodged there.

Issue: WON the present action should have been instituted, not in the CFI of Bulacan, but in
that of Marinduque, where the disputed fishpond is located

Decision: No, the present action was correctly instituted in the CFI of Bulacan. Plaintiff's
complaintmerely seeks the liquidation of his partnership with defendants Fernandez and
Mercader. This isobviously a personal action, which may be brought in the place of residence of
either the plaintiff or thedefendants. Since plaintiff is a resident of Bulacan, he had the right to
bring the action in the court of firstinstance of that province.

What is more, although defendants Fernandez and Mercader reside in Marinduque, they did not
object to the venue. In other words, they waived whatever rights they had, if any, to question it.
The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond in
question, did not change the nature or character of action, such sale being merely a necessary
incident of the liquidation of the partnership, which should precede and/or is part of its process
of dissolution. Neither plaintiff's complaint nor the answer filed by defendants Fernandez and
Mercader questioned the title to said property or the possession thereof. The situation was not
changed materiallyby the Intervention either of Asuncion or of the Zuluetas, for, as alleged
successors to the interest Mercader in the fishpond, they, at best, stepped into his shoes.

Opinion: The case has been ruled correctly, this case is a simple partnership liquidation case,
where the venue is the place of residence of the partners. The place of the fishpond is not an
issue here, since the case is not over the res. Had the plaintiff acquired the services of a
competent lawyer this useless suit could have been avoided.
BENJAMIN YU v. NLRC

Facts:Yu ex-Assistant General Manager of the marble quarrying and export business
operated by a registered partnership called Jade Mountain Products Co. Ltd.partnership was
originally organized with Bendals as general partners and Chin Shian Jeng ,Chen Ho-Fu and Yu
Chang as limited partners; partnership business consisted of exploiting a marble deposit in
Bulacan. Yu, as Assistant General Manager, had a monthly salary of 4000. Yu, however,
actually received only half of his stipulated salary, since he had accepted the promise of the
partners that the balance would be paid when the firm shall have secured additional operating
funds from abroad. Yu actually managed the operations and finances of the business; he had
overall supervision of the workers at the marble quarry in Bulacan and took charge of the
preparation of papers relating to the exportation of the firms products. General partners
Bendals sold and transferred their interests in the partnership to Co and Emmanuel Zapanta
partnership was constituted solely by Co and Zapanta; it continued to use the old firm name of
Jade Mountain. Yu dismissed by the new partners.

Issue: WON the original partnership that hired Yu was extinguished by the new partnership
composed of Co and Zapanta

WON Yu can still assert his right over the new partnership on his claims over the old partnership

Law Applicable: Art. 1828. The dissolution of a partnership is the change in the relation of the
partners caused by any partner ceasing to be associated in the carrying on as distinguished
from the winding up of the business.

Art. 1830. Dissolution is caused: (1) without violation of the agreement between the partners;(b)
by the express will of any partner, who must act in good faith, when no definite term or particular
undertaking is specified;(2) in contravention of the agreement between the partners, where the
circumstances do not permit a dissolution under any other provision of this article, by the
express will of any partner at any time

Decision: 1) Yes. Changes in the membership of the partnership resulted in the dissolution of
the old partnership which had hired Yu and the emergence of a new partnership composed of
Co and Zapanta

2) Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating
to his employment with the previous partnership, against the new partnership But Yu is
not entitled to reinstatement. Reason: new partnership was entitled to appoint and hire a new
gen. or asst. gen. manager to run the affairs of the business enterprise take over. An asst. gen.
manager belongs to the most senior ranks of management and anew partnership is entitled to
appoint a top manager of its own choice and confidence. The non-retention of Yu did not
constitute unlawful termination.

The new partnership had its own new General Manager, Co, the principal new owner himself.
Yus old position thus became superfluous or redundant.
Opinion: The ruling of the court in this case is just. The Supreme Court was able to balanced
the right of the worker and the prerogatives of the employers, the new partners in this case. It is
just that Yu will be able to enforce his claim of unpaid wages as well as other money claims
against the new partnership. The right of the new partnership was also protected since the court
ruled that they have no obligation to reinstate Yu and their right to choose a new employee has
been uphold.
Goquilay v. Sycip

Case Summary: Tan Sin An and Goquiolay entered into a general commercial partnership
under the partnership name Tan Sin An and Antonio Goquiolay for the purpose of dealing in
real estate. The agreement lodged upon Tan Sin An the sole management of the partnership
affairs. The lifetime of the partnership was fixed at ten years and the Articles of Co-partnership
stipulated that in the event of death of any of the partners before the expiration of the term, the
partnership will not be dissolved but will be continued by the heirs or assigns of the deceased
partner. But the partnership could be dissolved upon mutual agreement in writing of the
partners. Goquiolay executed a GPA in favor of Tan Sin An. The plaintiff partnership purchased
3 parcels of land which was mortgaged to La Urbana as payment of P25,000. Another 46
parcels of land were purchased by Tan Sin An in his individual capacity which he assumed
payment of a mortgage debt for P35K. A downpayment and the amortization were advanced by
Yutivo and Co. The two obligations were consolidated in an instrument executed by the
partnership and Tan Sin An, whereby the entire 49 lots were mortgaged in favor of Banco
HipotecarioTan Sin An died leaving his widow, Kong Chai Pin and four minor children. The
widow subsequently became the administratrix of the estate. Repeated demands were made by
Banco Hipotecario on the partnership and on Tan Sin An. Defendant Sing Yee, upon request
of defendant Yutivo Sons , paid the remaining balance of the mortgage debt, the mortgage was
cancelled Yutivo Sons and Sing Yee filed their claim in the intestate proceedings of Tan Sin An
for advances, interest and taxes paid in amortizing and discharging their obligations to La
Urbana and Banco Hipotecario. Kong Chai Pin filed a petition with the probate court for
authority to sell all the 49 parcels of land. She then sold it to Sycip and Lee in consideration of
P37K and of the vendees assuming payment of the claims filed by Yutivo Sons and Sing Yee.
Later, Sycip and Lee executed in favor of Insular Development a deed of transfer covering the
49 parcels of land.When Goquiolay learned about the sale to Sycip and Lee, he filed a petition
in the intestate proceedings to set aside the order of the probate court approving the sale in so
far as his interest over the parcels of land sold was concerned. Probate court annulled the sale
executed by the administratrix w/ respect to the 60% interest of Goquiolay over the properties
Administratrix appealed.The decision of probate court was set aside for failure to include the
indispensable parties. New pleadings were filed. The second amended complaint prays for the
annulment of the sale in favor of Sycip and Lee and their subsequent conveyance to Insular
Development. The complaint was dismissed by the lower court hence this appeal.

Issues: WON a widow or substitute become also a general partner or only a limited partner.

Law Applicable: Article 1848. A limited partner shall not become liable as a general partner unless, in
addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the
business.

Article 1850. A general partner shall have all the rights and powers and be subject to all the
restrictions and liabilities of a partner in a partnership without limited partners. However, without
the written consent or ratification of the specific act by all the limited partners, a general partner
or all of the general partners have no authority to:
(1) Do any act in contravention of the certificate;

(2) Do any act which would make it impossible to carry on the ordinary business of the
partnership;

(3) Confess a judgment against the partnership;

(4) Possess partnership property, or assign their rights in specific partnership property, for other
than a partnership purpose;

(5) Admit a person as a general partner;

(6) Admit a person as a limited partner, unless the right so to do is given in the certificate;

(7) Continue the business with partnership property on the death, retirement, insanity, civil
interdiction or insolvency of a general partner, unless the right so to do is given in the certificate.

Decision: Kong Chai Pin became a mere general partner. By seeking authority to manage partnership
property, Tan Sin Ans widow showed that she desired to be considered a general partner. By
authorizing the widow to manage partnership property (which a limited partner could not be authorized
to do), Goqulay recognized her as such partner, and is now in estoppel to deny her position as a general
partner, with authority to administer and alienate partnership property.

The articles did not provide that the heirs of the deceased would be merely limited partners; on the
contrary, they expressly stipulated that in case of death of either partner, the co partnership will have
to be continued with the heirs or assignees. It certainly could not be continued if it were to be
converted from a general partnership into a limited partnership since the difference between the two
kinds of associations is fundamental, and specially because the conversion into a limited association
would leave the heirs of the deceased partner without a share in the management. Hence, the
contractual stipulation actually contemplated that the heirs would become general partners rather than
limited ones.

Opinion: The intention of the partners was to continue the partnership even in the case one of
them expires. Since the party intended this it is right to make Kong Chai Pin a general partner
since the partnership is a general partnership. Kong Chai Pin being a general partner hence she
enjoyed power relating to such position.