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Tai Tong Chuache & Co. V.

Insurance Commission

G.R. No. L-55397 February 29, 1988

Lessons Applicable: When Insurable Interest Must Exist (Insurance)

Laws Applicable:


 Azucena Palomo bought a parcel of land and building from Rolando Gonzales and assumed a
mortgage of the building in favor of S.S.S. which was insured with S.S.S. Accredited
Group of Insurers
 April 19, 1975: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the
amount of P100,000 and to secure it, the land and building was mortgaged
 June 11, 1975: Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000
with Zenith Insurance Corporation
 July 16, 1975: another Fire Insurance policy was procured from Philippine British
Assurance Company, covering the same building for P50,000 and the contents
thereof for P70,000
 Before the occurrence of the peril insured against the Palomos had already paid their credit due the
 July 31, 1975: building and the contents were totally razed by fire
 Palomo was able to claim P41,546.79 from Philippine British Assurance Co., P11,877.14
from Zenith Insurance Corporation and P5,936.57 from S.S.S. Group of Accredited
Insurers but Travellers Multi-Indemnity refused so it demanded the balance from the
other three but they refused so they filed against them
 Insurance Commission, CFI: absolved Travellers on the basis that Arsenio Cua was
claiming and NOT Tai Tong Chuache
 Palomo Appealed
 Travellers reasoned that the policy is endorsed to Arsenio Chua, mortgage creditor
 Tai Tong Chuache & Co. filed a complaint in intervention claiming the proceeds of the fire Insurance Policy
issued by travellers
 affirmative defense of lack of insurable interest that before the occurrence of the peril insured
against the Palomos had already paid their credit due the petitioner
ISSUE: W/N Tai Tong Chuache & Co. has insurable interest

HELD: YES. Travellers Multi-Indemnity Corporation to pay Tai Tong Chuache & Co.

 when the creditor is in possession of the document of credit, he need not prove non-payment for it is
 The validity of the insurance policy taken b petitioner was not assailed by private respondent. Moreover,
petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena
Palomo who testified that they are still indebted to herein petitioner
 Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. Being an
agent, it is understood that he acted for and in behalf of the firm
 Upon its failure to prove the allegation of lack of insurable interest on the part of the petitioner, Travellers
must be held liable
 31.) G.R. No. L-55397 February 29, 1988
 FACTS: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of P100,000.00. To
secure the payment of the loan, a mortgage was executed over the land and the building in favor of Tai Tong
Chuache & Co.). Arsenio Chua, representative of Thai Tong Chuache & Co. insured the latter's interest with
Travellers Multi-Indemnity Corporation.
 Pedro Palomo secured a Fire Insurance Policy with Zenith Insurance Corporation, Philippine British Assurance
Co. and S.S.S. Group of Accredited Insurers. The building and the contents were totally razed by fire. Spouses
Palomo claimed the proceeds of the insurance policies from the four insurers. However, Travellers Multi-
Indemnity refused to pay the amount of P30,894.31. Hence, a complaint was filed against Travellers Multi-
Indemnity. Subsequently, petitioner filed a complaint in intervention claiming the proceeds of the insurance
policy issued by respondent.
 Respondent insurance commission dismissed the complaint of spouses Palomos on the ground that the
insurance policy subject of the complaint was taken out by Tai Tong Chuache & Company, petitioner herein,
for its own interest only as mortgagee of the insured property and thus complainant as mortgagors of the
insured property have no right of action against herein respondent. Also, respondent insurance commission
absolved Travellers Mulit-Indemnity from liability on the basis that at the time of the occurrence of the peril,
petitioner as mortgagee had no more insurable interest over the insured property since the credit secured by
the mortgaged property was already paid by the Palomos before the said property was gutted down by fire
and it is Antonio Lopez Chua and not Tai Tong Chuache & Company who is entitled to the insurance proceeds
since he was named as the complainant in the certification issued by the Court of First Instance of Davao.
Petitioner’s motion was denied, hence this appeal.
 It is the contention of the petitioner that respondent erred in ruling that a certain Arsenio Lopez Chua is the
one entitled to the insurance proceeds and not Tai Tong Chuache & Company.Public respondent argued that
the civil case should have been brought by Tai Tong Chuache or by its representative in its own behalf and
since it was filed by Arsenio Chua, he was deemed as the personal creditor of Spouses Palomo.
 ISSUE: WON the civil case was filed by Arsenio Chua in his capacity as personal creditor of spouses.
 RULING: NO. It should be borne in mind that petitioner being a partnership may sue and be sued in its name
or by its duly authorized representative. The fact that Arsenio Lopez Chua is the representative of petitioner
is not questioned. Petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the
partnership was corroborated by respondent insurance company. Thus, Chua as the managing partner of the
partnership may execute all acts of administration including the right to sue debtors of the partnership in case
of their failure to pay their obligations when it became due and demandable. Or at the very least, Chua being
a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. Being an agent, it is
understood that he acted for and in behalf of the firm.
 The record of the case shows that the petitioner to support its claim for the insurance proceeds offered as
evidence the contract of mortgage which has not been cancelled nor released. It has been held in a long line
of cases that when the creditor is in possession of the document of credit, he need not prove non-payment for
it is presumed. The respondent insurance company having issued a policy in favor of herein petitioner which
policy was of legal force and effect at the time of the fire, it is bound by its terms and conditions. Upon its
failure to prove the allegation of lack of insurable interest on the part of the petitioner, respondent insurance
company is and must be held liable.

 G.R. No. 159333 July 31, 2006

 ARSENIO T. MENDIOLA, petitioner,
RESOURCES, PHILS., INC. and/or CELLMARK AB, respondents.
 PUNO, J.:

 Facts:
 Petitioner Mendiola (ATM) entered into a Side Agreement with Pacfor (USA) who will set up a
representative office in the Philippines. They named said office as Pacfor Phils in which petitioner is
president. In the agreement, petitioner’s base salary and the company’s overhead expenditures shall be
borne by the representative office and shall be funded by Pacfor/ATM being equally owned on 50-50
equity by ATM and Pacfor-USA.

 The Side Agreement was later amended through a Revised Operating and Profit Sharing Agreement
where petitioner’s salary was increased. However, both agreements show that the operational expenses
will be borne by the representative office and funded by all parties “as equal partners,” while the profits
and commissions will be shared among them.

 Years later, petitioner wrote Pacfor’s VP for Asia seeking confirmation of his 50% equity of Pacfor Phils
to which Pacfor’s President replied that petitioner is not a part-owner, his office being just a representative
office, a “theoretical company with the purpose of dividing the income 50-50.” He even stressed that the
petitioner knew of this arrangement from beginning, having been the one to propose to them the setting
up of a representative office, instead of a branch office, to save on taxes.

 Issue:
 Whether or not a partnership or co-ownership exists between the parties.

 Held:
 Petitioner is an employee of Pacfor and no partnership or co-ownership exists between the parties.
 In a partnership, the members become co-owners of what is contributed to the firm capital and of all
property that may be acquired thereby and through the efforts of the members. The property or stock of
the partnership forms a community of goods, a common fund, in which each party has a proprietary
interest. In fact, the New Civil Code regards a partner as a co-owner of specific partnership property.
Each partner possesses a joint interest in the whole of partnership property. If the relation does not have
this feature, it is not one of partnership.
 This essential element, the community of interest, or co-ownership of, or joint interest in partnership
property is absent in the relations between petitioner and private respondent Pacfor. Petitioner is not a
part-owner of Pacfor Phils. Pacfor's President established this fact when he said that Pacfor Phils. is
simply a "theoretical company" for the purpose of dividing the income 50-50. He stressed that petitioner
knew of this arrangement from the very start, having been the one to propose to private respondent
Pacfor the setting up of a representative office, and "not a branch office" in the Philippines to save on
taxes. Thus, the parties in this case, merely shared profits. This alone does not make a partnership.
 Besides, a corporation cannot become a member of a partnership in the absence of express authorization
by statute or charter. This doctrine is based on the following considerations: (1) that the mutual agency
between the partners, whereby the corporation would be bound by the acts of persons who are not its
duly appointed and authorized agents and officers, would be inconsistent with the policy of the law that
the corporation shall manage its own affairs separately and exclusively; and, (2) that such an
arrangement would improperly allow corporate property to become subject to risks not contemplated by
the stockholders when they originally invested in the corporation. No such authorization has been proved
in the case at bar.


CONSORTIUM, respondents.

[G.R. No. 159139. January 13, 2004]


Petitioners were participating bidders questioning the identity and eligibility of the awarded contractor Mega Pacific
Consortium (MPC) where the competing bidder is Mega Pacific eSolutions, Inc. (MPEI) as signed by Mr. Willy Yu of the
latter. Private respondent claims that MPEI is the lead partner tied up with other companies like SK C&C, WeSolv,
Election.com and ePLDT. Respondent COMELEC obtained copies of Memorandum of Agreements and Teaming


Whether or not there was an existence of a consortium.


NO. There was no documentary or other basis for Comelec to conclude that a consortium had actually been formed
amongst MPEI, SK C&C and WeSolv, along with Election.com and ePLDT. The president of MPEI signing for allegedly in
behalf of MPC without any further proof, did not by itself prove the existence of the consortium. It did not show that
MPEI or its president have been duly pre-authorized by the other members of the putative consortium to represent
them, to bid on their collective behalf and, more important, to commit them jointly and severally to the bid
undertakings. The letter is purely self-serving and uncorroborated.

ITF VS. COMELEC G.R. No. 159139. January 13, 2004.


Facts: On June 7, 1995, Congress passed Republic Act 8046, which authorized Comelec to conduct a nationwide demonstration of a
computerized election system and allowed the poll body to pilot-test the system in the March 1996 elections in the Autonomous Region
in Muslim Mindanao (ARMM).

On October 29, 2002, Comelec adopted in its Resolution 02-0170 a modernization program for the 2004 elections. It resolved to
conduct biddings for the three (3) phases of its Automated Election System; namely, Phase I — Voter Registration and Validation
System; Phase II — Automated Counting and Canvassing System; and Phase III — Electronic Transmission.

On January 24, 2003, President Gloria Macapagal-Arroyo issued Executive Order No. 172, which allocated the sum of P2.5 billion to
fund the AES for the May 10, 2004 elections. Upon the request of Comelec, she authorized the release of an additional P500 million.

On January 28, 2003, the Commission issued an "Invitation to Apply for Eligibility and to Bid".

On May 29, 2003, five individuals and entities (including the herein Petitioners Information Technology Foundation of the Philippines,
represented by its president, Alfredo M. Torres; and Ma. Corazon Akol) wrote a letter to Comelec Chairman Benjamin Abalos Sr. They
protested the award of the Contract to Respondent MPC "due to glaring irregularities in the manner in which the bidding process had
been conducted." Citing therein the noncompliance with eligibility as well as technical and procedural requirements (many of which
have been discussed at length in the Petition), they sought a re-bidding.

Issue: Whether the bidding process was unconstitutional;

Whether the awarding of the contract was unconstitutional;
Whether the petitioner has standing; and
Whether the petition is premature.

Held: WHEREFORE, the Petition is GRANTED. The Court hereby declares NULL and VOID Comelec Resolution No. 6074 awarding
the contract for Phase II of the CAES to Mega Pacific Consortium (MPC). Also declared null and void is the subject Contract executed
between Comelec and Mega Pacific eSolutions (MPEI). 55 Comelec is further ORDERED to refrain from implementing any other
contract or agreement entered into with regard to this project.

Ratio: Comelec awarded this billion-peso undertaking with inexplicable haste, without adequately checking and observing mandatory
financial, technical and legal requirements. It also accepted the proferred computer hardware and software even if, at the time of the
award, they had undeniably failed to pass eight critical requirements designed to safeguard the integrity of elections:
1. Awarded the Contract to MPC though it did not even participate in the bidding
2. Allowed MPEI to participate in the bidding despite its failure to meet the mandatory eligibility requirements
3. Issued its Resolution of April 15, 2003 awarding the Contract to MPC despite the issuance by the BAC of its Report, which
formed the basis of the assailed Resolution, only on April 21, 2003 31
4. Awarded the Contract, notwithstanding the fact that during the bidding process, there were violations of the mandatory
requirements of RA 8436 as well as those set forth in Comelec's own Request for Proposal on the automated election system IHaECA
5. Refused to declare a failed bidding and to conduct a re-bidding despite the failure of the bidders to pass the technical tests
conducted by the Department of Science and Technology
6. Failed to follow strictly the provisions of RA 8436 in the conduct of the bidding for the automated counting machines
After reviewing the slew of pleadings as well as the matters raised during the Oral Argument, the Court deems it sufficient to focus
discussion on the following major areas of concern that impinge on the issue of grave abuse of discretion:
A. Matters pertaining to the identity, existence and eligibility of MPC as a bidder
B. Failure of the automated counting machines (ACMs) to pass the DOST technical tests
C. Remedial measures and re-testings undertaken by Comelec and DOST after the award, and their effect on the present controversy

In view of the bidding process

Unfortunately, the Certifications from DOST fail to divulge in what manner and by what standards or criteria the condition,
performance and/or readiness of the machines were re-evaluated and re-appraised and thereafter given the passing mark.

The Automated Counting and Canvassing Project involves not only the manufacturing of the ACM hardware but also the
development of three (3) types of software, which are intended for use in the following:
1. Evaluation of Technical Bids
2. Testing and Acceptance Procedures
3. Election Day Use."

In short, Comelec claims that it evaluated the bids and made the decision to award the Contract to the "winning" bidder partly on the
basis of the operation of the ACMs running a "base" software. That software was therefore nothing but a sample or "demo" software,
which would not be the actual one that would be used on election day.

What then was the point of conducting the bidding, when the software that was the subject of the Contract was still to be created and
could conceivably undergo innumerable changes before being considered as being in final form?

In view of awarding of contract

The public bidding system designed by Comelec under its RFP (Request for Proposal for the Automation of the 2004 Election)
mandated the use of a two-envelope, two-stage system. A bidder's first envelope (Eligibility Envelope) was meant to establish its
eligibility to bid and its qualifications and capacity to perform the contract if its bid was accepted, while the second envelope would be
the Bid Envelope itself.

The Eligibility Envelope was to contain legal documents such as articles of incorporation, business registrations, licenses and
permits, mayor's permit, VAT certification, and so forth; technical documents containing documentary evidence to establish the track
record of the bidder and its technical and production capabilities to perform the contract; and financial documents, including audited
financial statements for the last three years, to establish the bidder's financial capacity.

However, there is no sign whatsoever of any joint venture agreement, consortium agreement, memorandum of agreement, or
business plan executed among the members of the purported consortium.So, it necessarily follows that, during the bidding process,
Comelec had no basis at all for determining that the alleged consortium really existed and was eligible and qualified; and that the
arrangements among the members were satisfactory and sufficient to ensure delivery on the Contract and to protect the government's

In view of standing
On the other hand, petitioners — suing in their capacities as taxpayers, registered voters and concerned citizens — respond that
the issues central to this case are "of transcendental importance and of national interest." Allegedly, Comelec's flawed bidding and
questionable award of the Contract to an unqualified entity would impact directly on the success or the failure of the electoral process.
Thus, any taint on the sanctity of the ballot as the expression of the will of the people would inevitably affect their faith in the democratic
system of government. Petitioners further argue that the award of any contract for automation involves disbursement of public funds in
gargantuan amounts; therefore, public interest requires that the laws governing the transaction must be followed strictly.

Moreover, this Court has held that taxpayers are allowed to sue when there is a claim of "illegal disbursement of public funds," 22 or
if public money is being "deflected to any improper purpose"; 23 or when petitioners seek to restrain respondent from "wasting public
funds through the enforcement of an invalid or unconstitutional law."

In view of prematurity
The letter addressed to Chairman Benjamin Abalos Sr. dated May 29, 2003 28 serves to eliminate the prematurity issue as it was an
actual written protest against the decision of the poll body to award the Contract. The letter was signed by/for, inter alia, two of herein
petitioners: the Information Technology Foundation of the Philippines, represented by its president, Alfredo M. Torres; and Ma. Corazon
Akol. Such letter-protest is sufficient compliance with the requirement to exhaust administrative remedies particularly because it hews
closely to the procedure outlined in Section 55 of RA 9184.

Paat v. Court of Appeals enumerates the instances when the rule on exhaustion of administrative remedies may be disregarded, as
"(1) when there is a violation of due process,
(2) when the issue involved is purely a legal question,
(3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction,
(4) when there is estoppel on the part of the administrative agency concerned,
(5) when there is irreparable injury,
(6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed
approval of the latter,
(7) when to require exhaustion of administrative remedies would be unreasonable,
(8) when it would amount to a nullification of a claim,
(9) when the subject matter is a private land in land case proceedings,
(10) when the rule does not provide a plain, speedy and adequate remedy, and
(11) when there are circumstances indicating the urgency of judicial intervention."

(G.R. No. 40457 May 8, 1992)

FACTS: The partnership La Mallorca, through its partner Miguel Enriquez, entered into a sales agreement to purchase gasoline on credit with Mobil Oil Philippines.
But because the mentioned purchase remained unpaid, Mobil Oil filed a complaint in the Court of First Instance of Rizal against La Mallorca and its general partners,
which included private respondents.

Subsequently, Mobil Oil filed an Amended Complaint impleading the heirs of the deceased partners as defendants.

After Mobil Oil had presented its evidence, the counsel of the defendant successfully bargained for a compromise agreement. The defense agreed to submit the case
for decision solely on the basis of evidence adduced by plaintiff Mobil Oil but past interest in the amount of P150,000.00 shall be excluded and that only nominal
attorney's fees shall be awarded.

Consequently, a Decision was rendered in favor of the Mobil Oil and against defendants. However, defendants filed a Petition to Modify Decision and/or Petition for
Reconsideration, averring that (1) that there was no stipulation or agreement of the parties on the award of attorney's fees; (2) that Miguel Enriquez, not being a
general partner, could not bind the partnership in the Sales Agreement he signed with Mobil Oil; and (3) that defendant Geminiano Yabut already withdrew as
partner and president of La Mallorca as of September 14, 1972.

Thereafter, the CFI ISSUEd an order declaring its previous decision favouring Mobil Oil as null and void. The ground for the decision is that there was no evidence to
show that the counsel for the defendants had been duly authorized by the partnership to enter into a stipulation of FACTS, a compromise agreement or a confession
judgment with Mobil Oil. Mobil Oil filed a Motion for Reconsideration and Clarification but it was denied. Hence, this petition.

ISSUE: Whether or not the sales agreement with Mobil Oil which was signed by Miguel Enriquez can bind the partnership.

HELD: Yes, because Miguel Enriquez is a general partner of La Mallorca. He automatically became a general partner of the partnership for being one of the heirs of
the deceased general partner Mariano Enriquez. Article IV of the Articles of Co-Partnership of La Mallorca provides that:

“If during the existence of this co-partnership, any of the herein partners should die, the co-partnership shall continue to exist amongst the surviving partners and the
heir or heirs of the deceased partner or partners.”

ISSUE: Whether or not the withdrawal of Yabut from the partnership will exempt him from liability.

HELD: No, the debt was incurred long before his withdrawal as partner and his resignation as President of La Mallorca on September 14, 1972. Respondent
Geminiano Yabut could not just withdraw unilaterally from the partnership to avoid his liability as a general partner to third persons like the petitioner in the instant

ISSUE: Does non-active participation in the partnership exempt a partner from liability?

HELD: No, the alleged non-active participation of respondent Agueda Yabut in the partnership cannot exempt her from the obligation. Active participation in a
partnership is not a condition precedent for membership in a partnership so as to be entitled to its profits or be burdened with its liabilities.

ISSUE: Was there a stipulation of FACTS, a compromise agreement or a confession of judgement?

HELD: Respondent court ISSUEd the following Order:

Calling this case for hearing today, the parties pray the Court that they are submitting the case for decision on the basis of the evidence thus presented but to exclude
past interest in the amount of about P150,000.00 and to award nominal attorney's fees.

Finding the said motion in order, let judgment be rendered in accordance with the evidence so far presented.

The foregoing Order is not a stipulation of FACTS nor a confession of judgment. If at all, there has been a mutual waiver by the parties of the right to present evidence
in court on the part of the defendants on one hand, and waiver of interest in the amount of P150,000.00 and the stipulated attorney's fees of 25% of the principal
amount on the part of the plaintiff, except a nominal one.

The counsels of the parties in this case had the implied authority to do all acts necessary or incidental to the prosecution and management of the suit in behalf of
their clients who were all present and never objected to the disputed order of the respondent court. Parties are bound by the acts and mistakes of their counsel in
procedural matters. Mistakes of counsel as to the relevancy or irrelevancy of certain evidence or mistakes in the proper defense, in the introduction of certain
evidence, or in argumentation are, among others all mistakes of procedure, and they bind the clients, as in the instant case.


FACTS: On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract dated February 7, 1990, for the purchase of fishing nets
of various sizes from the Philippine Fishing Gear Industries, Inc. (herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim
Tong Lim, who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four hundred pieces of floats worth P68,000 were
also sold to the Corporation.

The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim
with a prayer for a writ of preliminary attachment. The suit was brought against the three in their capacities as general partners, on the allegation that "Ocean Quest
Fishing Corporation" was a nonexistent corporation as shown by a Certification from the Securities and Exchange Commission. On September 20, 1990, the lower
court ISSUEd a Writ of Preliminary Attachment, which the sheriff enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries
Port, Navotas, Metro Manila.

ISSUE: Whether or not there was a partnership?

HELD: Yes. it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started by buying boats worth P3.35 million, financed by a loan
secured from Jesus Lim who was petitioner's brother. These boats, the purchase and the repair of which were financed with borrowed money, fell under the term
"common fund" under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangible like credit or industry. That the parties
agreed that any loss or profit from the sale and operation of the boats would be divided equally among them also shows that they had indeed formed a partnership.
Given the preceding FACTS, it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in the fishing business. They purchased the boats, which
constituted the main assets of the partnership, and they agreed that the proceeds from the sales and operations thereof would be divided among them.

Ortega vs. CA

F: Petitioner filed a MR for the decision of the SEC en banc which dissolved the partnership of “Bito, Misa & Lozada” upon withdrawal of Atty. Joaquin L. Misa. He also
asked for an appointment of a receiver to take over the assets of the dissolved partnership and to take charge of the winding up of its affairs.

I: W/N the CA erred in holding that the withdrawal of private respondent dissolved the partnership regardless of his good or bad faith.

 The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The right to choose with whom a person wishes to
associate himself is the foundation and essence of partnership.
 Its continued existence is, in turn, dependent on the mutual resolve, along with each partner’s capability to give it, and the absence of a cause for dissolution
provided by law itself. Verily, any one of the partners may, at his sole pleasure, dictate dissolution of the partnership at will. He must however, act in good
faith not that the attendance of bad faith can prevent the dissolution of the partnership at will.

In the matter of the Petition for Authority To Continue use of the firm name “Ozaeta, Romulo, etc.

F: 2 separate petitions were filed by the surviving partners of Atty. Alexander Sycip and the surviving partners of Herminiano Ozaeta, praying that they be allowed to
continue using, in the name of their firms, the names of partners who passed away.
1. Under the law, a partnership is not prohibited from continuing its business under a firm name which includes the name of the deceased partner.( Art. 1840
of the Civil Code )
2. In regulating other professions, such as accountancy and engineering, the legislature has authorized the adoption of firm names without any restriction as
to the use, in such firm name, of the deceased partner.
3. The Canons of Professional Ethics are not transgressed because as adopted by American Bar Association: “the continued use of the name of a deceased or
former partner when permissible by local custom is not unethical, but care should be taken that no imposition or deception is practiced through this use.”
4. The deaths of the partners were well-publicized.
5. No local custom prohibits the continued use of the partner’s name in a professional firm’s name.
6. The continued use of the deceased partner’s name in the firm name of law partnerships has been consistently allowed by US Courts.
I: W/N the names of the deceased partners should be allowed to continue in use in the firm name.

 “Art. 1815. Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners.”
“Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner.”
(partners should be living persons who can be subjected to liability)
 Art. 1840 treats more of a commercial partnership with a good will to protect rather than a professional partnership, with no sealable good will but
whose reputation depends on the personal qualifications of its individual members.
 The partnership for the practice of law cannot be likened to partnerships formed by other professionals or for business. The practice of law is also a
special privilege, highly personal and partaking of the nature of a public trust.
 Firm names, under local customs, identify the more active and more senior members or partners of the law firm.
 The possibility of deception upon the public, real, or consequential, where the name of a deceased partner continues to be used cannot be ruled out.
NB: Rule 3.02 of the CPR approved and promulgated by the SC on June 21,1988 in effect abandoned the ruling in the Sycip case. (see Art. 1815 Civil Code)


FACTS: This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance of Manila, Branch II to recover the sum equivalent to
twenty-two percent (22%) of the annual profits derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung.

The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established sometime in October, 1955. It was registered as a single
proprietorship and its licenses and permits were ISSUEd to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence
during the trial of the case to show that Sun Wah Panciteria was actually a partnership and that he was one of the partners having contributed P4,000.00 to its initial
The private respondent's evidence is summarized as follows:

About the time the Sun Wah Panciteria started to become operational, the private respondent gave P4,000.00 as his contribution to the partnership. This is
evidenced by a receipt identified as Exhibit "A" wherein the petitioner acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. The private
respondent identified the signature on the receipt as that of the petitioner (Exhibit A-3) because it was affixed by the latter in his (private respondents's) presence.
Witnesses So Sia and Antonio Ah Heng corroborated the private respondent's testimony to the effect that they were both present when the receipt (Exhibit "A") was
signed by the petitioner. So Sia further testified that he himself received from the petitioner a similar receipt (Exhibit D) evidencing delivery of his own investment in
another amount of P4,000.00. An examination was conducted by the PC Crime Laboratory on orders of the trial court granting the private respondent's motion for
examination of certain documentary exhibits. The signatures in Exhibits "A" and "D" when compared to the signature of the petitioner appearing in the pay envelopes
of employees of the restaurant, namely Ah Heng and Maria Wong (Exhibits H, H-1 to H-24) showed that the signatures in the two receipts were indeed the signatures
of the petitioner. llcd

Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's Equitable Banking Corporation Check No.
13389470-B from the profits of the operation of the restaurant for the year 1974. Witness Teodulo Diaz, Chief of the Savings Department of the China Banking
Corporation testified that said check (Exhibit B) was deposited by and duly credited to the private respondent's savings account with the bank after it was cleared by
the drawee bank, the Equitable Banking Corporation.

The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and impugned the genuineness of the receipt (Exhibit D).
His evidence is summarized as follows: The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. He used his savings from his
salaries as an employee at Camp Stotsenberg in Clark Field and later as waiter at the Toho Restaurant amounting to a little more than P2,000.00 as capital in
establishing Sun Wah Panciteria. To bolster his contention that he was the sole owner of the restaurant, the petitioner presented various government licenses and
permits showing the Sun Wah Panciteria was and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied having
ISSUEd to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B).

As between the conflicting evidence of the parties, the trial court gave credence to that of the plaintiff's. Hence, the court ruled in favor of the private respondent.

Plaintiff also asked for a motion for reconsideration which was granted by the court the pertinent portion reads as follows: "FOR ALL THE FOREGOING
CONSIDERATIONS, the motion for reconsideration filed by the plaintiff, which was granted earlier by the Court, is hereby reiterated and the decision rendered by this
Court on September 30, 1980, is hereby amended. The dispositive portion of said decision should read now as follows:

"WHEREFORE, judgment is hereby rendered, ordering the plaintiff (sic) and against the defendant, ordering the latter to pay the former the sum equivalent to 22% of
the net profit of P8,000.00 per day from the time of judicial demand, until fully paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit." (p. 150,

The petitioner appealed the trial court's amended decision to the then Intermediate Appellate Court. The modified resolution of the appellate court is as follows:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to the former the sum equivalent to 22% of the net
profit of P8,000.00 per day from the time of judicial demand, until fully 'paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit'.

is hereby retained in full and affirmed in toto it being understood that the date of judicial demand is July 13, 1978." (pp. 105-106, Rollo).

In the same resolution, the motion for reconsideration filed by petitioner was denied.

Both the trial court and the appellate court found that the private respondent is a partner of the petitioner in the setting up and operations of the panciteria. While
the dispositive portions merely ordered the payment of the respondent's share, there is no question from the factual findings that the respondent invested in the
business as a partner. Hence, the two courts declared that the private petitioner is entitled to a share of the annual profits of the restaurant. The petitioner, however,
claims that this factual finding is erroneous.

ISSUE: Whether or not private respondent Leung Yiu is a partner of petitioner Dan Fue Leung in the establishment of the Sun Wah Panciteria and therefore should be
entitled to 22% of the annual income of the restaurant as averred by the former

HELD: In essence, the private respondent alleged that when Sun Wah Panciteria was established, he gave P4,000.00 to the petitioner with the understanding that he
would be entitled to twenty-two percent (22%) of the annual profit derived from the operation of the said panciteria. These allegations, which were proved, make the
private respondent and the petitioner partners in the establishment of Sun Wah Panciteria because Article 1767 of the Civil Code provides that "By the 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

Therefore, the lower courts did not err in construing the complaint as one wherein the private respondent asserted his rights as partner of the petitioner in the
establishment of the Sun Wah Panciteria, notwithstanding the use of the term financial assistance therein.

We agree with the appellate court's observation to the effect that ". . . given its ordinary meaning, financial assistance 'is the giving out of money to another without
the expectation of any returns therefrom'. It connotes an ex gratia dole out in favor of someone driven into a state of destitution. But this circumstance under which
the P4,000.00 was given to the petitioner does not obtain in this case." (p. 99, Rollo) The complaint explicitly stated that "as a return for such financial assistance,
plaintiff (private respondent) would be entitled to twenty-two percentum (22%) of the annual profit derived from the operation of the said panciteria." (p. 107, Rollo)
The well-settled doctrine is that the ". . . nature of the action filed in court is determined by the FACTS alleged in the complaint as constituting the cause of action."
(De Tavera v. Philippine Tuberculosis Society, Inc., 113 SCRA 243; Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37).

The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are — 1) two or more persons bind themselves to
contribute money, property, or industry to a common fund; and 2) intention on the part of the partners to divide the profits among themselves (Article 1767, Civil
Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110) — have been established. As stated by the respondent, a partner shares not only in profits but also in the losses of the
firm. If excellent relations exist among the partners at the start of business and all the partners are more interested in seeing the firm grow rather than get immediate
returns, a deferment of sharing in the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his rights anytime within ten years
from the start of operations, such rights are irretrievably lost. The private respondent's cause of action is premised upon the failure of the petitioner to give him the
agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership.


Business Organization – Partnership, Agency, Trust – Dissolution and Winding Up – Prescription

Emilio Emnace, Jacinto Divinagracia and Vicente Tabanao formed a partnership engaged in the fishing industry. In 1986, Jacinto decided to leave the partnership hence

they agreed to dissolve the partnership. At that time, the partnership has an estimated asset amounting to P30,000,000.00.

HOWEVER, until the death of Vicente Tabanao in 1994, Emnace never rendered an accounting either to Vicente or his heirs. Emnace reneged on his promise to turn

over Tabanao’s share which is 1/3 of the P30M. The heirs of Tabanao then sued Emnace. Emnace argued, among others, that the heirs are barred by prescription hence

they can no longer demand an accounting. He contends that the partnership was dissolved in 1986 and that was the time when Tabanao’s (and his heirs’) right to

inquire into the business affairs accrued; that said right has expired in 1990 or 4 years after. So beyond 1990, they can no longer inquire.

ISSUE: Whether or not Emnace is correct.

HELD: No. Prescription has not run in this case, it has never begun. The three final stages of partnership are: a) dissolution, b) winding up, and c) termination. In this

case, Emnace and his partners dissolved their partnership but such did not perfect the dissolution because no accounting took place. The partnership, although

dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distribution of

the net partnership assets to the partners. For as long as the partnership exists, any of the partners (or legal representative – in this case the heirs of Tabanao) may

demand an accounting of the partnership’s business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accounting

is done.

When a final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made, and that is precisely what the

heirs are seeking in their action before the trial court, since Emnace has failed or refused to render an accounting of the partnership’s business and assets. Hence, the

said action is not barred by prescription.

NOTE: Under Article 1809 of the Civil Code, right to demand an accounting may also be invoked under certain agreements – these are just one of the exceptions.

General Rule: Accounting only when there is dissolution. Exception: Article 1807 and 1809.