ELMO MUÑASQUE
vs.
COURT OF APPEALS
Facts:
Petitioner Muñasque filed a complaint for
payment of sum of money and damages
against respondents Galan, Tropical
Commercial, Co., Inc. (Tropical) and 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 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;
Tropical 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; when the second check for P6,000.00
was due, petitioner refused to indorse said cheek
presented to him by Galan but through later
manipulations, respondent Pons succeeded in
changing the payee's name from Muñasque to
Galan and Associates, thus enabling Galan to
cash the same. That because of 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.
RTC: During the pre-trial conference, the
petitioners and respondents agreed that the issues
to be resolved are:
(1) Whether or not there existed a partners
between Celestino Galan and Elmo Muñasque;
and
(2) Whether or not there existed a justifiable
cause on the part of respondent Tropical to
disburse money to respondent Galan.
The business firms Cebu Southern Hardware
Company and Blue Diamond Glass Palace were
allowed to intervene, both having legal interest in
the matter in litigation.
After trial, the court rendered judgment, the
dispositive portion of which states:
(1) ordering plaintiff Muñasque and
defendant Galan to pay jointly and severally
the intervenors.
(2) absolving the defendants Tropical and Pons
from any liability,
CA: AFFIRMED, but changed liability with
intervenors into “JOINTLY”
ISSUE:
(1) Whether or not the appellate court erred in
holding that a partnership existed between
petitioner and respondent Galan.
(2) Assuming that there was such a partnership,
whether or not the court erred in not finding
Galan guilty of malversing the P13,000.00
covered by the first and second checks
(3) Whether or not the court committed grave
abuse of discretion in holding that the payment
made by Tropical through its manager Pons to
Galan was "good payment,
RULING:
NO, records will show that the petitioner entered
into a con-tract with Tropical for the renovation
of the latter's building on behalf of the partnership
of "Galan and Muñasque."
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.
Likewise, when Muñasque received the first
payment of Tropical in the amount of
P7,000.00 with a check made out in his
name, he indorsed the check in favor of
Galan. Respondent Tropical therefore, had
every right to presume that the petitioner and
Galan were true partners. If they were not
partners as petitioner claims, then he has only
himself to blame for making the relationship
appear otherwise, not only to Tropical but to their
other creditors as well. The payments made to the
partnership were, therefore, valid payments.
No error was committed by the appellate court in
holding that the payment made by Tropical to
Galan was a good payment which binds both
Galan and the petitioner. Since the two were
partners when the debts were incurred, they, are
also both liable to third persons who extended
credit to their partnership
Petitioner also maintains that the appellate court
committed grave abuse of discretion in not
holding Galan liable for the amounts which he
"malversed" to the prejudice of the petitioner. He
adds that although this was not one of the issues
agreed upon by the parties during the pretrial, he,
nevertheless, alleged the same in his amended
complaint which was, duly admitted by the court.
When the petitioner amended his complaint, it
was only for the purpose of impleading Ramon
Pons in his personal capacity. Although the
petitioner made allegations as to the alleged
malversations of Galan, these were the same
allegations in his original complaint. The
malversation by one partner was not an issue
actually raised in the amended complaint but the
alleged connivance of Pons with Galan as a
means to serve the latter's personal purposes.
While it is true that under Article 1816 of the
Civil Code,"All partners, including industrial
ones, shall be liable prorate with all their property
and after all the partnership assets have been
exhausted, for the contracts which may be entered
into the name and fm the account cd the
partnership, under its signature and by a person
authorized to act for the partner-ship. ...". this
provision should be construed together with
Article 1824 which provides that: "All partners
are liable solidarily with the partnership for
everything chargeable to the partnership under
Articles 1822 and 1823." In short, while the
liability of the partners are merely joint in
transactions entered into by the partnership, a
third person who transacted with said partnership
can hold the partners solidarily liable for the
whole obligation if the case of the third person
falls under Articles 1822 or 1823.
The obligation is solidary, because the law
protects him, who in good faith relied upon the
authority of a partner, whether such authority is
real or apparent. That is why under Article 1824
of the Civil Code all partners, whether innocent
or guilty, as well as the legal entity which is the
partnership, are solidarily liable.
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.
ANTONIO C. GOQUIOLAY and THE
PARTNERSHIP "TAN SIN AN and
ANTONIO C. GOQUIOLAY,
vs.
WASHINGTON Z. SYCIP
FACTS: Tan Sin An and Goquiolay", entered into
a general commercial partnership for the purpose
in dealing in real state. The agreement lodge upon
Tan Sin An the sole management of the
partnership affairs, stipulating that —
IV. The affairs of co-partnership shall be
managed exclusively by the managing and
partner
In the event of the death of any of the partners at
any time before the expiration of said term, the
co-partnership shall not be dissolved but will
have to be continued and the deceased partner
shall be represented by his heirs or assigns in said
co-partnership.
Goquiolay executed a general power of attorney
to this effect:
That besides the powers and duties granted it also
has the power, to buy real or personal properties
for cash or upon such terms as he may deem
advisable, and to sell personal or real properties.
Partnership "Tan Sin An and Goquiolay"
purchased the three (3) parcels of land, another 46
parcels were purchased by Tan Sin An in his
individual capacity, and he assumed payment of
a mortgage debt thereon. An instrument executed
by the partnership and Tan Sin An, whereby the
entire 49 lots were mortgaged in favor of the
"Banco Hipotecario de Filipinas" The
downpayment and the amortization were
advanced by Yutivo and Co., for the account of
the purchasers.
Tan Sin An died, leaving as surviving heirs his
widow, Kong Chai Pin, and four minor children
In the meantime, repeated demands for payment
were made by the Banco Hipotecario on the
partnership and on Tan Sin An
Yutivo Sons Hardware Co. and Sing Yee and
Cuan Co., Inc. filed their claims in the intestate
proceedings of Tan Sin An for payment, as
alleged obligations of the partnership "Tan Sin
An and Goquiolay" and Tan Sin An, for
advances, interest and taxes paid in amortizing
and discharging their obligations to "La Urbana"
and the "Banco Hipotecario"
Kong Chai Pin(Administratrix) filed a petition
with the probate court for authority to sell all the
49 parcels of land to Sycip for the purpose
preliminary of settling the aforesaid debts of Tan
Sin An and the partnership. Granted, Sycip and
Betty Lee executed in favor of the Insular
Development Co., Inc. a deed of transfer covering
the said 49 parcels of land.
Learning about the sale to Sycip and Lee, the
surviving partner Goquiolay filed a petition in the
intestate proceedings seeking to set aside the
order of the probate court approving the sale.
In its order of the probate court annulled the sale
executed by the administratrix.
The amended complaint in the case at bar prays,
among other things, for the annulment of the sale
in favor of Sycip and Betty Lee, and their
subsequent conveyance in favor of Insular
Development Co., Inc., in so far as the three (3)
lots owned by the plaintiff partnership are
concerned. The answer averred the validity of the
sale by Kong Chai Pin as successor partner, in
lieu of the late Tan Sin An. After hearing, the
complaint was dismissed by the lower court
Plaintiffs stated errors of the lower court:
I — The lower court erred in holding that
Kong Chai Pin became the managing partner
of the partnership upon the death of her
husband, Tan Sin An, by virtue of the articles of
Partnership executed between Tan Sin An and
Antonio Goquiolay, and the general power of
attorney granted by Antonio Goquiolay.
II — The lower court erred in holding that
Kong Chai Pin could act alone as sole managing
partner in view of the minority of the other heirs.
However court said Articles of co-partnership
providing for the continuation of the firm
notwithstanding the death of one of the partners,
the heirs of the deceased, by never repudiating or
refusing to be bound under the said provision in
the articles, became individual partners with
Antonio Goquiolay upon Tan's demise. Minority
of the heirs is not a bar to the application of that
clause in the articles of co-partnership
Appellants argue, however, that since the "new"
members' liability in the partnership was limited
merely to the value of the share or estate left by
the deceased Tan Sin An, they became no more
than limited partners and, as such, were
disqualified from the management of the
business.Although ordinarily, this effect follows
from the continuance of the heirs in the
partnership,3 it was not so with respect to the
widow Kong Chai Pin, who, by her affirmative
actions, manifested her intent to be bound by the
partnership agreement not only as a limited but as
a general partner. Thus, she managed and retained
possession of the partnership properties and was
admittedly deriving income therefrom up to and
until the same were sold to Washington Sycip and
Betty Lee. In fact, by executing the deed of sale
of the parcels of land in dispute in the name of the
partnership, she was acting no less than as a
managing partner. Having thus preferred to act as
such, she could be held liable for the partnership
debts and liabilities as a general partner, beyond
what she might have derived only from the estate
of her deceased husband. By allowing her to
retain control of the firm's property from 1942 to
1949, plaintiff estopped himself to deny her legal
representation of the partnership, with the power
to bind it by the proper contracts.
ISSUE: WON Kong Chai Pin, widow of the
deceased partner Tan Sin An, never became more
than a limited partner, incapacitated by law to
manage the affairs of the partnership.
RULING:
No, Suffice it to point out that appellant
Goquiolay himself admitted that —
Mr. Yu Eng Lai asked me if I can just let Mrs.
Kong Chai Pin continue to manage the properties
(as) she had no other means of income. Then I
said, because I wanted to help Mrs. Kong Chai
Pin, she could just do it and besides I am not
interested in agricultural lands. I allowed her to
take care of the properties in order to help her and
because I believe in God and I wanted to help her.
Goquiolay did not merely rely on reports from
Lim and Young; he actually manifested his
willingness that the widow should manage the
partnership properties. Whether or not she
complied with this authority is a question
between her and the appellant, and is not here
involved. But the authority was given, and she did
have it when she made the questioned sale,
because it has never revoked.
It is argued that the authority given by Goquiolay
to the widow Kong Chai Pin was only
to manage the property, and that it did not include
the power to alienate, citing Article 1713 of the
Civil Code of 1889. What this argument
overlooks is that the widow was not a mere agent,
because she had become a partner upon her
husband's death, as expressly provided by the
articles of co-partnership. Even more, granting
that by succession to her husband, Tan Sin An,
the widow only a became
the limited partner, Goquiolay's authorization to
manage the partnership property was proof that
he considered and recognized her has general
partner, at least since 1945. The reason is plain:
Under the law (Article 148, last paragraph, Code
of Commerce), appellant could not empower the
widow, if she were only a limited partner, to
administer the properties of the firm, even as a
mere agent:
Limited partners may not perform any act
of administration with respect to the
interests of the co-partnership, not even
in the capacity agents of the managing
partners.(Emphasis supplied)
By seeking authority to manage partnership
property, Tan Sin An's 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), Goquiolay 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.
Besides, as we pointed out in our main decision,
the heir ordinarily (and we did not
say "necessarily") becomes a limited partner for
his own protection, because he would normally
prefer to avoid any liability in excess of the value
of the estate inherited so as not to jeopardize his
personal assets. But this statutory limitation of
responsibility being designed to protect the heir,
the latter may disregard it and instead elect to
become a collective or general partner, with all
the rights and privileges of one, and answering for
the debts of the firm not only with the inheritance
bud also with the heir's personal fortune. This
choice pertains exclusively to the heir, and does
not require the assent of the surviving partner.
The Articles did not provide that the heirs of the
deceased would be merely limited partner; 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 assigns. 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.
Now, in determining what kind of partner the
widow of partner Tan Sin An had elected to
become, strangers had to be guided by her
conduct and actuations and those of appellant
Goquiolay. Knowing that by law a limited partner
is barred from managing the partnership business
or property, third parties (like the purchasers)
who found the widow possessing and managing
the firm property with the acquiescense (or at
least without apparent opposition) of the
surviving partners were perfectly justified in
assuming that she had become a general partner,
and, therefore, in negotiating with her as such a
partner, having authority to act for, and in behalf
of, the firm. This belief, be it noted, was shared
even by the probate court that approved the sale
by the widow of the real property standing in the
partnership name. That belief was fostered by the
very inaction of appellant Goquiolay. Note that
for seven long years, from partner Tan Sin An's
death in 1942 to the sale in 1949, there was more
than ample time for Goquiolay to take up the
management of these properties, or at least
ascertain how its affairs stood. For seven years
Goquiolay could have asserted his alleged rights,
and by suitable notice in the commercial registry
could have warned strangers that they must deal
with him alone, as sole general partner. But he did
nothing of the sort, because he was not interested
(supra), and he did not even take steps to pay, or
settle, the firm debts that were overdue since
before the outbreak of the last war. He did not
even take steps, after Tan Sin An died, to cancel,
or modify, the provisions of the partnership
articles that he (Goquiolay) would have no
intervention in the management of the
partnership. This laches certainly contributed to
confirm the view that the widow of Tan Sin An
had, or was given, authority to manage and deal
with the firm's properties, apart from the
presumption that a general partner dealing with
partnership property has the requisite authority
from his co-partners
MANUEL G. SINGSONG
vs.
ISABELA SAWMILL
FACTS:
Defendants Leon Garibay, Margarita G.
Saldejeno, and Timoteo Tubungbanua entered
into a Contract of Partnership under the firm
name "Isabela Sawmill"
Plaintiff Oppen, Esteban, Inc. sold a Motor Truck
and two Tractors to the partnership Isabela
Sawmill. In order to pay the said purcahse price,
the said partnership agreed to make arrangements
with the International Harvester Company at
Bacolod City so that the latter would sell farm
machinery to Oppen, Esteban, Inc. with the
understanding that the price was to be paid by the
partnership.
defendants LeonGaribay, Timoteo Tubungbanua
and Margarita G. Saldajeno entered into a
"Memorandum Agreement"
which later on executed a document entitled
"Assignment of Rights with Chattel Mortgage"
thereafter the defendants Leon Garibay and
Timoteo Tubungbanua did not divide the assets
and properties of the "Isabela Sawmill" between
them, but they continued the business of said
partnership under the same firm name "Isabela
Sawmill".
Provincial Sheriff of Negros Occidental
published two (2) notices that he would sell at
public auction on June 5, 1959 at Isabela, Negros
Occidental certain trucks, tractors, machinery,
office equipment and other things that were
involved in the case
Provincial Sheriff of Negros Occidental executed
a Certificate ofSale in favor of the defendant
Margarita G. Saldajeno, as a result of the sale.
Defendant Margarita G. Saldajeno executed a
deed of sale in favor of the Pan Oriental Lumber
Company transfering to the latter for the sum of
P45,000.00 the trucks, tractors, machinery, and
other things that she had purchashed at a public
auction
Petitioners therefore filed a complaint for
payment and that the so-called Chattel Mortgage
executed by the defendant Leon Garibay and
Timoteo Tubungbanua in favor of the defendant
Margarita G. Saldajeno onbe declared null and
void being in fraud of creditors of the defendant
partnership
But as a defense the appellants states that this
Honorable Court has no jurisdiction over the
claims of the plaintiffs Oppen, Esteban, Inc.,
Agustin R. Tonsay, Jose L. Espinos, and the
Bacolod Southern Lumber Yard, it appearing that
the amounts sought to be recovered by them in
this action is less than P2,000.00 each, exclusive
of interests;
ISSUE: (1)WON the CFI of Negros Occidental
has no jurisdiction over the Case because the
plaintiffs sought to collect sums of money, the
biggest amount of which was less than P2,000.00
and, therefore, within the jurisdiction of the
municipal court.
(2) WON the withdrawal of Margarita G.
Saldajeno lead to the termination of the
partnership and the creditors can no longer
demand payment.
(3) WON chattel mortgage may no longer be
annulled because it had been judicially approved
by the Court of First Instance of Negros
Occidental and said chattel mortgage had been
ordered foreclosed by the same court.
RULING:
1.)NO, contention is devoid of merit because all
the plaintiffs also asked for the nullity of the
assignment of right with chattel mortgage entered
into by and between Margarita G. Saldajeno and
her former partners Leon Garibay and Timoteo
Tubungbanua. This cause of action is not capable
of pecuniary estimation and falls under the
jurisdiction of the Court of First Instnace. Where
the basic issue is something more than the right to
recover a sum of money and where the money
claim is purely incidental to or a consequence of
the principal relief sought, the action is as a case
where the subject of the litigation is not capable
of pecuniary estimation and is cognizable
exclusively by the Court of First Instance.
2.) NO, it is true that the dissolution of a
partnership is caused by any partner ceasing to be
associated in the carrying on of the
business. 18 However, on dissolution, the
partnershop is not terminated but continuous until
the winding up to the business. 19
The remaining partners did not terminate the
business of the partnership "Isabela Sawmill".
Instead of winding up the business of the
partnership, they continued the business still in
the name of said partnership. It is expressly
stipulated in the memorandum-agreement that the
remaining partners had constituted themselves as
the partnership entity, the "Isabela Sawmill". 20
There was no liquidation of the assets of the
partnership. The remaining partners, Leon
Garibay and Timoteo Tubungbanua, continued
doing the business of the partnership in the name
of "Isabela Sawmill". They used the properties of
said partnership.
The properties mortgaged to Margarita G.
Saldajeno by the remaining partners, Leon
Garibay and Timoteo Tubungbanua, belonged to
the partnership "Isabela Sawmill." The appellant,
Margarita G. Saldajeno, was correctly held liable
by the trial court because she purchased at public
auction the properties of the partnership which
were mortgaged to her.
It does not appear that the withdrawal of
Margarita G. Saldajeno from the partnership was
published in the newspapers. The appellees and
the public in general had a right to expect that
whatever, credit they extended to Leon Garibay
and Timoteo Tubungbanua doing the business in
the name of the partnership "Isabela Sawmill"
could be enforced against the proeprties of said
partnership. The judicial foreclosure of the chattel
mortgage executed in favor of Margarita G.
Saldajeno did not relieve her from liability to the
creditors of the partnership.
The appellant, margrita G. Saldajeno, cannot
complain. She is partly to blame for not insisting
on the liquidaiton of the assets of the partnership.
She even agreed to let Leon Garibay and Timoteo
Tubungbanua continue doing the business of the
partnership "Isabela Sawmill" by entering into the
memorandum-agreement with them.
Although it may be presumed that Margarita G.
Saldajeno had action in good faith, the appellees
aslo acted in good faith in extending credit to the
partnership. Where one of two innocent persons
must suffer, that person who gave occasion for
the damages to be caused must bear the
consequences. Had Margarita G. Saldajeno not
entered into the memorandum-agreement
allowing Leon Garibay and Timoteo
Tubungbanua to continue doing the business of
the aprtnership, the applees would not have been
misled into thinking that they were still dealing
with the partnership "Isabela Sawmill". Under the
facts, it is of no moment that technically speaking
the partnership "Isabela Sawmill" was dissolved
by the withdrawal therefrom of Margarita G.
Saldajeno. The partnership was not terminated
and it continued doping business through the two
remaining partners
3.)NO, On the question of whether a court may
nullify a final judgment of another court of co-
equal, concurrent and coordinate jusridiction, this
Court originally ruled that:
As a rule, a contract cannot be assailed by one
who is not a party thereto. However, when a
contract prejudices the rights of a third person, he
may file an action to annul the contract.
This Court has held that a person, who is not a
party obliged principally or subsidiarily under a
contract, may exercised an action for nullity of
the contract if he is prejudiced in his rights with
respect to one of the contracting parties, and can
show detriment which would positively result to
him from the contract in which he has no
intervention. 21
The plaintiffs-appellees were prejudiced in their
rights by the execution of the chattel mortgage
over the properties of the partnership "Isabela
Sawmill" in favopr of Margarita G. Saldajeno by
the remaining partners, Leon Garibay and
Timoteo Tubungbanua. Hence, said appelees
have a right to file the action to nullify the chattel
mortgage in question.
CRISTOBAL BONNEVIE, ET AL., vs.
JAIME HERNANDEZ
FACTS: plaintiffs with other associates formed a
syndicate or secret partnership for the purpose of
acquiring the plants, franchises and other
properties of the Manila Electric Co. —
hereinafter called the Meralco — in the
provinces of Camarines Sur, Albay, and
Sorsogon, with the idea of continuing that
company's business in that region. No formal
articles were drawn for it was the purpose of the
members to incorporate once the deal had been
consummated. But in the meantime they elected
Pedro Serranzana as general manager
Negotiation for the purchase was commenced,
but as it made no headway, defendant was taken
in as a member of the partnership so that he could
push the deal through, and to that end he was
given the necessary power of attorney. Using
partnership funds, defendant was able to buy the
Meralco properties. Although defendant was the
one named vendee in the deed of sale, there is no
question that the transaction was in penalty made
for the partnership so that the latter assumed
control of the business the day following the sale.
Members of the partnership proceeded with the
formation of the proposed corporation But before
the incorporation papers could be perfected,
several partners, not satisfied with the way
matters were being run and there was a possibility
of their being assessed more than their original
investments when the time came to meet the two
installments of the unpaid purchase price due the
Meralco, expressed their desire to withdraw from
the partnership and get back the money they had
invested therein. In accordance with this wish,
one of them, Judge Reyes, presented a resolution
to the effect that those partners who did not want
to remain in the association should be allowed to
withdraw and get back their contributions. The
resolution was approved, with the herein
plaintiffs voting affirmatively, and on that same
day plaintiffs and Judge Reyes withdrew from the
partnership, the partnership was then dissolved.
The withdrawing partners were, on the following
day, reimbursed their respective contributions to
the partnership fund.
Following the dissolution of the partnership, the
members who preferred to remain in the business
went ahead with the formation of the corporation,
taking in new associates as stockholders. And
defendant, on his part, in fulfillment of his trust,
made a formal assignment of the Meralco
properties to the treasurer of the corporation, The
new corporation was named "Bicol Electric
Company."
Two years from their withdrawal from the
partnership, when the corporate business was
already in a prosperous condition, plaintiffs
brought the present suit against Jaime Hernandez,
claiming a share in the profit the latter is supposed
to have made from the assignment of the Meralco
properties to the corporation,
Defendant's answer denies that he has made any
profit out of the assignment in question and
alleges that in any event plaintiffs, after their
withdrawal from the partnership, ceased to have
any further interest in the subsequent transactions
of the remaining members.
ISSUE:
(1) WON the partnership realized profit from
the Meralco properties made by the
defendant to the corporation
(2) If there was indeed profit, WON the
plaintiffs are entitled for their share of the
profits.
RULING:
1.)NO, the profit alleged to have been realized
from the assignment of the Meralco properties to
the new corporation, the Bicol Electric Company,
is more apparent than real. It is true that the value
set for those properties in the deed of assignment
was P365,000 when the acquisition price was
only P122,000. But one should not jump to the
conclusion that a profit, consisting of the
difference between the two sums was really made
out of the transaction, for the assignment was not
made for cash but in payment for subscriptions to
shares of stock in the assignee, and while those
shares had a total face value of P225,000, this is
not necessarily their real worth. Needless to say,
the real value of the shares of stock of a
corporation depends upon the value of its assets
over and above its liabilities. It does not appear
that the Bicol Electric Company had any assets
other than those acquired from the Meralco, and
according to the evidence the company, aside
from owing the Meralco, P82,000 was, in the
language of the court below, actually "in the red."
2.)NO, assuming that the assignment actually
brought profit to the partnership, it is hard to see
how defendant could be made to answer for
plaintiffs' alleged share thereof. As stated in the
decision below, defendant did not receive the
consideration for the assignment for, as already
stated, the assignment was made in payment for
subscriptions of various persons to the capital
stock of the new corporation. Plaintiffs, in order
to give color of legality to their claim against
defendant, maintain that the latter should be held
liable for damages caused to them, consisting of
the loss of their share of the profits, due to
defendant's failure properly to perform his duty as
a liquidator of the dissolved partnership, this on
the theory that as managing partner of the
partnership, it was defendant's duty to liquidate
its affairs upon its dissolutions. But it does not
appear that plaintiffs have ever asked for a
liquidation, and as will presently be explained no
liquidation was called for because when plaintiffs
withdrew from the partnership the understanding
was that after they had been reimbursed their
investment, they were no longer to have any
further interest in the partnership or its assets and
liabilities.
As a general rule, when a partner retires from the
firm, he is entitled to the payment of what may be
due him after a liquidation. But certainly no
liquidation is necessary where there is already a
settlement or an agreement as to what the retiring
partner shall receive. In the instant case, it appears
that a settlement was agreed upon on the very day
the partnership was dissolved. For when plaintiffs
and Judge Jaime Reyes withdrew from the
partnership on that day they did so as agreed to by
all the partners, subject to the only condition that
they were to be repaid their contributions or
investments within three days from said date.
And this condition was fulfilled when on the
following day they were reimbursed the
respective amounts due them pursuant to the
agreement.

It is, therefore, our conclusion that the acceptance

by the withdrawing partners, including the
plaintiffs, of their investment in the instant case
was understood and intended by all the parties as
a final settlement of whatever rights or claim the
withdrawing partners might have in the dissolved
partnership. Such being the case they are now
precluded from claiming any share in the alleged
profits, should there be any, at the time of the
dissolution.