MANUEL ORMACHEA TIN-CONGCO, deceased, represented by the CHINAMAN TIU TUSAY,

judicial administrator of his estate, Plaintiff-Appellee, vs. SANTIAGO TRILLANA, Defendant-

Appellant.
G. R. No. 4776. March 18, 1909

An admission made by a partner who was no longer a partner at the time of the declaration is not
admissible evidence against the partnership

FACTS: Ormachea and Luis Vizmanos Ong Queco were engaged in business in the pueblos of Hagonoy,
Malolos, and that in the course thereof the Defendant purchased from them merchandise to the value of
4,000 pesos, that two years prior to that date, a little more or less, the partnership was dissolved and the
business was divided up between the partners, all accounts and debts of the Defendant were allotted to
the Plaintiff, and became the individual property of Ormachea Tin-Congco; the indebtedness is proven by
the documents signed by the Defendant or his agents in favor of Ormachea or of Vizmanos Ong Queco or
their agent named Lawa in charge of the business. .

The Defendant filed a written answer setting forth that he had already settled his accounts and obligations
contracted in the business to which the complaint refers, by means of periodical payments in tuba or the
liquor of the nipa palm. Judgment was rendered ordering the defendant Trillana, to pay.
The record shows that the amounts advanced to the debtor, Santiago Trillana, most of which were
addressed to Lopez Lawa, the manager and owned in partnership by Ormachea and Vizmanos, but that
the money furnished by the manager to Trillana and to the others on account of the tuba or liquor of the
nipa palm which the Defendant had engaged to supply to said distillery, belonged to the two owners of the
same, not to the manager, Jose Lopez Lawa.
It has also been fully proven that, when in June or July, 1901, the aforesaid Ormachea Tin-Congco and
Vizmanos Ong Queco withdrew from the business, Lawa ceased to act as manager of the distillery, and
then, among other things that belonged to the two partners, they divided between them the credits that they
held against third persons, those that stood against Santiago Trillana as evidenced by the said 135 vales,
having gone to Manuel Ormachea Tin-Congco.
Lopez Lawa affirms that he gave the said document marked as “Exhibit A” to the debtor, Santiago Trillana,
because the latter was not indebted to him but to Manuel Ormachea, to whom the credits standing against
Trillana were transferred when Ormachea withdrew from the above-mentioned partnership with Vizmanos
Ong Queco.

ISSUE: Whether or not the document under “Exhibit A” issued by Lawa is valid or not.

RULING: NO. After the close of the business of the distillery owned by Ormachea and Vizmanos, and after
Lawa had ceased for two years to act in the administration and management thereof, he was not authorized
to sign the document marked “A,” made out by the debtor, by which the credit of Ormachea should be
considered as settled, and the obligation contracted by Santiago Trillana, extinguished.
If the business jointly carried on by Ormachea and Vizmanos was dissolved, and its transactions ceased in
1901, Jose Lopez Lawa, who managed the distillery on behalf of the owners of the same, also ceased to
act as such manager in said year, and for said reason the document Exhibit A, which he issued to the
debtor, two years after ceasing to be manager, cannot serve to relieve the debtor from paying what he
owed from the owners of the said distillery; that is to say, as agreed upon by them, the right to recover the
debts of the Defendants still belonged to Ormachea when the business was dissolved, as Lawa was not
authorized by Ormachea to deliver to the debtor an acquittance releasing him from the obligations that he
had contracted.

When Lawa, who then acted as manage of the distillery, had no express authority to issue such a document,
it is not proper nor lawful to admit the said document as possessing a force and effect that would fully
exempt the Defendant from the payment of his obligation, and with greater reason if it is considered that it
has not been shown that Lawa was authorized to liquidate accounts, or to issue an acquittance
releasing the debtor from the payment of his debt. (Art. 1714 and 1719, Civil Code.)
 BENITO LIWANAG and MARIA LIWANAG REYES, petitioners-appellants,
v. WORKMEN'S COMPENSATION COMMISSION, ET AL., respondents-appellees.
G.R. No. L-12164 May 22, 1959

There is solidary liability only when the obligation expressly so states, or when the law or the nature of the
obligation requires solidarity.

FACTS: Appellants are co-owners of Liwanag Auto Supply who employed a commercial guard who while
in line of duty, was skilled by criminal hands. His widow and minor children filed a claim for compensation
with the Workmen's Compensation Commission, which was granted.

In appealing the case to this Tribunal, appellants claim that, under the Workmen's Compensation Act, the
compensation is divisible, hence the commission erred in ordering appellants to pay jointly and severally the
amount awarded. They argue that there is nothing in the compensation Act which provides that the
obligation of an employer arising from compensable injury or death of an employee should be solidary
obligation, the same should have been specifically provided, and that, in absence of such clear provision,
the responsibility of appellants should not be solidary but merely joint.

ISSUE: Whether or not the partners are liable jointly and solidary.

RULING: Yes. Although the Workmen's Compensation Act does not contain any provision expressly
declaring solidary obligation of business partners like the herein appellants, there are other provisions of
law from which it could be gathered that their liability must be solidary. Arts. 1711 and 1712 of the new Civil
Code provide:

ART. 1711. Owners of enterprises and other employers are obliged to pay compensation for the
death of or injuries to their laborers, workmen, mechanics or other employees, even though the
event may have been purely accidental or entirely due to a fortuitous cause, if the death or personal
injury arose out of and in the course of the employment. . . . .

ART. 1712. If the death or injury is due to the negligence of a fellow-worker, the latter and the
employer shall be solidarily liable for compensation. . . . .

And section 2 of the Workmen's Compensation Act, as amended reads in part as follows:

. . . The right to compensation as provided in this Act shall not be defeated or impaired on the
ground that the death, injury or disease was due to the negligence of a fellow servant or employee,
without prejudice to the right of the employer to proceed against the negligence party.

The provisions of the new Civil Code above quoted taken together with those of Section 2 of the Workmen's
Compensation Act, reasonably indicate that in compensation cases, the liability of business partners, like
appellants, should be solidary; otherwise, the right of the employee may be defeated, or at least crippled.

The Workmen's Compensation Act should be construed fairly, reasonably and liberally in favor of and for
the benefit of the employee and his dependents; that all doubts as to the right of compensation resolved in
his favor; and that it should be interpreted to promote its purpose. Accordingly, the present controversy
should be decided in favor of the appellees.
Moreover, Art. 1207 of the new Civil Code provides:

. . . . There is solidary liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.

Since the Workmen's Compensation Act was enacted to give full protection to the employee, reason
demands that the nature of the obligation of the employers to pay compensation to the heirs of their
employee who died in line of duty, should be solidary; otherwise, the purpose of the law could not be
attained.
 ADRIANO MIRASOL, Plaintiff-Appellants, v.
THE MUNICIPALITY OF TABACO, ALBAY, Defendant-Appellee.
G.R. No. L-17877 July 10, 1922

Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another
to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of
such declaration, act, or omission, be permitted to falsify its.

FACTS: Sometime in the year 1916 the defendant municipality decided to have an artesian well drilled in
the central portion of the town. Three landowners expressed themselves as willing to furnish sites for the
well without compensation; Fausto Ormachea, Sabina Santiago, and the plaintiff. The engineer in charge
of drilling artesian well in the locality was of the opinion that the plaintiff's lot would be the more suitable
site.

A few days thereafter the machinery was taken to the lot in question and installed, but before drilling was
actually begun, the plaintiff apparently suffered a change of mind and objected to the continuation of the
work. The acting president then went to the store of the plaintiff demanded a definite statement from the
plaintiff as to whether he wanted the well to be placed on his lot. The plaintiff, upon hearing that there was
a possibility of the well being bored on the land of someone else, again gave his consent to its being drilled
on his lot and told the president to go ahead with the work. The boring of the well was completed without
any further objections on the part of the plaintiff.

The plaintiff insists that he never agreed to the placing of the well on his land, but consistently maintained
an attitude of opposition.

ISSUES:

(1) Whether or not there has been a valid donation of the property to the municipality.

(2) Whether or not the plaintiff is estopped from withdrawing his consent in making the artesian well
in his property.

RULING:

(1) No, there has been no valid donation of the land to the municipality; according to Santillan's
testimony, the plaintiff, when asked to execute the necessary document, stated that such a
document was unnecessary as he would not be likely to have any disputes with the municipality
over such a small matter. It is therefore clear that the defendant municipality has acquired no
title to the land occupied by the well nor even an easement therein; its interest can only be
regarded as a mere license.

A license is revocable at the pleasure of the licensor, but it has been held in most jurisdictions that where
a license has entered upon land under a license and has with the express or implied consent of the owner
expended money or labor for extensive improvements on the strength of such license, the owner is
estopped from revoking the license.
 (2) Yes. The doctrine of estoppel having its origin in equity and therefore being based on moral
right and natural justice, its applicability to any particular case depends, to a very large extent,
upon the special circumstances of the case.

In the present case the plaintiff is a participant in the benefits of the well in question; he gave his express
consent to the boring of the well upon the premises and thereby led the defendant to believe that the license
would not be revoked.

Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another
to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such
declaration, act, or omission, be permitted to falsify its.

We therefore hold that not only upon the general principles of equity, but also under subsection 1 of section
333 of the Code of Civil Procedure, is the plaintiff estopped from revoking the license in question without
first reimbursing the defendant for the expenditures incurred upon the strength of said license.
 PIONEER INSURANCE & SURETY CORPORATION, petitioner,
v. THE HON. COURT OF APPEALS, BORDER MACHINERY & HEAVY EQUIPMENT, INC.,
(BORMAHECO), CONSTANCIO M. MAGLANA and JACOB S. LIM, respondents.
G.R. No. 84197 July 28, 1989

However, such a relation does not necessarily exist, for ordinarily persons cannot be made to assume the
relation of partners, as between themselves, when their purpose is that no partnership shall exist, and it
should be implied only when necessary to do justice between the parties; thus, one who takes no part
except to subscribe for stock in a proposed corporation which is never legally formed does not become a
partner with other subscribers who engage in business under the name of the pretended corporation, so
as to be liable as such in an action for settlement of the alleged partnership and contribution (Ward v.
Brigham, 127 Mass. 24).

FACTS: Jacob S. Lim was engaged in the airline business as owner-operator of Southern Air Lines (SAL)
a single proprietorship who executed a sales contract with Japan Domestic Airlines (JDA) for the sale and
purchase of two aircrafts and one set of necessary spare parts to be paid in installments.

It appears that Bormaheco, Cervanteses and Constancio Maglana contributed some funds used in the
purchase of the above aircrafts and spare parts and were supposed to be their contributions to a new
corporation proposed by Lim to expand his airline business.

On June 10, 1965, Lim doing business under the name and style of SAL executed in favor of Pioneer as
deed of chattel mortgage and the two aircrafts as security for the latter's suretyship in favor of the former
and defaulted on his subsequent installment payments prompting JDA to request payments from the surety
Pioneer.

Pioneer then filed a petition for the extrajudicial foreclosure of the said chattel mortgage. The Cervanteses
and Maglana, however, filed a third party claim alleging that they are co-owners of the aircrafts and they
also filed cross-claims against Lim alleging that they were not privies to the contracts signed by the latter
and, by way of counterclaim, sought for damages for being exposed to litigation and for recovery of the
sums of money they advanced to Lim for the purchase of the aircrafts in question.

After trial on the merits, a decision was rendered holding Lim liable to pay Pioneer but dismissed Pioneer's
complaint against all other defendants. But the appellate court modified the trial court's decision in that the
plaintiffs’ complaint against all the defendants was dismissed. In all other respects the trial court's decision
was affirmed.

ISSUE: Whether or not can Bormaheco, Cervanteses and Constancio Maglana must share in the loss as
general partners.

RULING: NO. Where persons associate themselves together under articles to purchase property to carry
on a business, and their organization is so defective as to come short of creating a corporation within the
statute, they become in legal effect partners inter se, and their rights as members of the company to the
property acquired by the company will be recognized.

However, such a relation does not necessarily exist, for ordinarily persons cannot be made to assume the
relation of partners, as between themselves, when their purpose is that no partnership shall exist, and it
should be implied only when necessary to do justice between the parties; thus, one who takes no part
except to subscribe for stock in a proposed corporation which is never legally formed does not become a
partner with other subscribers who engage in business under the name of the pretended corporation, so as
to be liable as such in an action for settlement of the alleged partnership and contribution (Ward v. Brigham,
127 Mass. 24).
A partnership relation between certain stockholders and other stockholders, who were also directors, will
not be implied in the absence of an agreement, so as to make the former liable to contribute for payment
of debts illegally contracted by the latter. It is therefore clear that the petitioner never had the intention to
form a corporation with the respondents despite his representations to them.

Applying the principles of law earlier cited to the facts of the case, necessarily, no de facto partnership was
created among the parties which would entitle the petitioner to a reimbursement of the supposed losses of
the proposed corporation. The record shows that the petitioner 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.
 LEONCIA VIUDA DE CHAN DIACO (alias LAO LIONG NAW), Appellee, v. JOSE S. Y. PENG,
assignee, Appellant.
G.R. No. 29182. October 24, 1928

It clearly appears from the record that said partnership, as such, has no visible assets and that, therefore,
the partners individually must, jointly and severally, respond for its debts (Code of Commerce, art. 127).

FACTS: The San Miguel Brewery, Porta Pueo & Co., and Ruiz & Rementeria S. en C. instituted insolvency
proceedings against Leoncia Vda. de Chan Diaco (alias Lao Liong Naw), alleged to be the owner of a
grocery store on Calle Nueva, Binondo, known as the store of "La Viuda de G. G. Chan Diaco."cralaw
virtua1aw library

The petition for the declaration of insolvency was set down for hearing but Leoncia did not appear and the
court declared her insolvent and ordered the sheriff to take possession of her property.

On August 4, 1926, attorney for the insolvent filed a motion asking the court to dismiss the proceedings
against her on the ground that they should have been brought against the partnership "Lao Liong Naw &
Co.," of which she was only a member. The alleged partnership was evidenced by an agreement dated
July 22, 1922, and from which it appeared that on that date Lao Liong Naw (Leoncia), Chan Chiaco Wa,
Cua Yuk, Chan Bun Suy, Chan Bun Le, and Juan Maquitan Chan had formed a partnership.

After several hearings, the referee, rendered a report, in which he found as facts that the alleged partnership
between the insolvent and some of her relatives and employees was only a fictitious organization created
for the purpose of deceiving the Bureau of Customs and enable some of the aforesaid relatives, who were
mere coolies, to come to the Philippines under the status of merchants.

ISSUE: Whether or not Leoncia is liable despite being insolvent.

RULING: YES. It clearly appears from the record that said partnership, it clearly appears from the record
that said partnership, as such, has no visible assets and that, therefore, the partners individually must,
jointly and severally, respond for its debts (Code of Commerce, art. 127). As the appellee is one of the
partners and admits that she is insolvent, we can see no reason for the dismissal of the proceedings against
her. It is further to be noted that both the partnership and the separate partners thereof may be joined in
the same action, though the private property of the latter cannot be taken in payment of the partnership
debts until the common property of the concern is exhausted and, under this rule, it seems clear that the
alleged partnership here in question may, if necessary, be included in the case by amendments to the
insolvency petition.

We also call attention to the fact that the evidence clearly shows that the business, alleged to have been
that of the partnership, was carried on under the name "Leoncia Vda. de Chan Diaco" or "La Vda. de G. G.
Chan Diaco," both of which are names of the appellee, and we think it can be safely held that a partnership
may be adjudged bankrupt in the name of an ostensible partner, when such name is the name under which
the partnership did business.
 BENJAMIN YU, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY
LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HO-
FU, respondents.
G.R. No. 97212 June 30, 1993

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

FACTS: Petitioner Benjamin Yu was formerly the Assistant General Manager of the marble quarrying and
export business operated by a registered partnership with the firm name of "Jade Mountain Products
Company Limited" ("Jade Mountain") and was originally organized with the Bendals as general partners
and Chin Shian Jeng, Chen Ho-Fu and Yu Chang, as limited partners.

Sometime in 1988, without his knowledge, the Bendals sold and transferred their interests in the partnership
and is constituted solely by Willy Co and Emmanuel Zapanta who continued to use the old firm name of
Jade Mountain, though they moved the firm's main office from Makati to Mandaluyong, Metropolitan Manila.
The actual operations of the business enterprise continued as before. All the employees of the partnership
continued working in the business, all, save petitioner Benjamin Yu as it turned out.

Having learned of the transfer of the firm's main office, petitioner Benjamin Yu reported to the Mandaluyong
office for work and there met private respondent for the first time. Petitioner was informed by the latter that
he had bought the business from the original partners and that it was for him to decide whether or not he
was responsible for the obligations of the old partnership, including petitioner's unpaid salaries. Petitioner
was in fact not allowed to work anymore in the Jade Mountain business enterprise.

Benjamin Yu filed a complaint for illegal dismissal against Jade Mountain, Mr. Willy Co and the other private
respondents. The partnership and Willy Co denied petitioner's charges, contending in the main that
Benjamin Yu was never hired as an employee by the present or new partnership. 4

In due time, Labor Arbiter rendered a decision holding that petitioner had been illegally dismissed. On
appeal, the National Labor Relations Commission ("NLRC") reversed the decision of the Labor Arbiter and
dismissed petitioner's complaint. It held that the new partnership had not retained petitioner Yu in his original
position, and that there was no law requiring the new partnership to absorb the employees of the old
partnership.

Petitioner Benjamin Yu is now before the Court on a Petition for Certiorari, asking us to set aside and annul
the Resolution of the NLRC.

The basic contention of petitioner is that the NLRC has overlooked the principle that a partnership has a
juridical personality separate and distinct from that of each of its members.

ISSUES:
(1) Whether the partnership which had hired petitioner Yu had been extinguished and replaced by
a new partnerships composed of Willy Co and Emmanuel Zapanta;
 (2) If indeed a new partnership had come into existence, whether petitioner Yu could nonetheless
assert his rights under his employment contract as against the new partnership.

RULING:
(1) Yes. The applicable law in this connection is found in the Civil Code provisions relating to
partnerships. Article 1828 of the Civil Code provides as follows:

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. (Emphasis supplied)

The acquisition of 82% of the partnership interest by new partners, coupled with the retirement or withdrawal
of the partners who had originally owned such 82% interest, was enough to constitute a new partnership.

the new partnership simply took over the business enterprise owned by the preceeding partnership, and
continued using the old name of Jade Mountain Products Company Limited, without winding up the
business affairs of the old partnership, paying off its debts, liquidating and distributing its net assets, and
then re-assembling the said assets or most of them and opening a new business enterprise. What is
important for present purposes is that, under the above described situation, not only the retiring partners
(Rhodora Bendal, et al.) but also the new partnership itself which continued the business of the old,
dissolved, one, are liable for the debts of the preceding partnership. In Singson, et al. v. Isabela Saw Mill,
et al,8 the Court held that under facts very similar to those in the case at bar, a withdrawing partner remains
liable to a third party creditor of the old partnership. 9

(2) Yes. The liability of the new partnership, upon the other hand, in the set of circumstances obtaining in
the case at bar, is established in Article 1840 of the Civil Code

Under Article 1840 above, creditors of the old Jade Mountain are also creditors of the new Jade Mountain
which continued the business of the old one without liquidation of the partnership affairs. Indeed, a creditor
of the old Jade Mountain, like petitioner Benjamin Yu in respect of his claim for unpaid wages, is entitled to
priority vis-a-vis any claim of any retired or previous partner insofar as such retired partner's interest in the
dissolved partnership is concerned.

While the new Jade Mountain was entitled to decline to retain petitioner Benjamin Yu in its employ, we
consider that Benjamin Yu was very shabbily treated by the new partnership. The old partnership certainly
benefitted from the services of Benjamin Yu who previously ran the whole marble quarrying, processing
and exporting enterprise. His work constituted value-added to the business itself

Nonetheless, the new Jade Mountain did not notify him of the change in ownership of the business, the
relocation of the main office of Jade Mountain from Makati to Mandaluyong and the assumption by Mr. Willy
Co of control of operations. The treatment (including the refusal to honor his claim for unpaid wages) was
so summary and cavalier as to amount to arbitrary, bad faith treatment, for which the new Jade Mountain
may legitimately be required to respond by paying moral damages.
IRMA IDOS, Petitioner, vs. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, Respondents

G.R. No. 110782 September 25, 1998

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. On
dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is
completed.

FACTS: Irma L. Idos, is a businesswoman while the complainant Eddie Alarilla supplied chemicals and
rawhide to the former for her business of manufacturing leather. In 1985, he joined and formed with Irma
Idos a partnership under the style "Tagumpay Manufacturing," with offices in Bulacan and Cebu City.

However, the partnership was short lived. In January, the parties agreed to terminate their partnership.
Upon liquidation of the business the partnership had as of May 1986 receivables and stocks worth
P1,800,000.00. The complainant's share of the assets was P900,000.00 to pay for which the accused-
appellant issued the following postdated checks,

The complainant was able to encash the first, second, and fourth checks, but the third check, was
dishonored for insufficiency of funds. The complainant demanded payment from the accused-appellant but
the latter failed to pay. In a letter, the accused-appellant denied liability.

Complainant then filed his complaint in the Office of the Provincial Fiscal of Bulacan for violation of BP Blg.
22 against Idos. The trial court rendered judgment finding the accused-appellant guilty of the crime charged.

Herein respondent court thereafter affirmed on appeal the decision of the trial court.

During the pendency of this petition, the Solicitor General, and the Reply by petitioner, this case was
deemed submitted for decision.

ISSUE: Did the respondent court err in affirming the trial court's judgment that she violated Batas Pambansa
Blg. 22?

RULING: YES. It could not be denied that though the parties - petitioner and complainant - had agreed to
dissolve the partnership, such agreement did not automatically put an end to the partnership, since they
still had to sell the goods on hand and collect the receivables from debtors. In short, they were still in the
process of "winding up" the affairs of the partnership, when the check in question was issued.

Under the Civil Code, the three final stages of a partnership are (1) dissolution; (2) winding-up; and (3)
termination. These stages are distinguished, to wit:

These final stages in the life of a partnership are recognized under the Civil Code that explicitly declares
that upon dissolution, the partnership is not terminated, to wit:

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. 1829. On dissolution the partnership is not terminated, but continues until the winding up of partnership
affairs is completed. (Emphasis supplied.)

Since the partnership has not been terminated, the petitioner and private complainant remained as co-
partners. The check was thus issued by the petitioner to complainant, as would a partner to another, and
not as payment from a debtor to a creditor.
 TESTATE ESTATE OF LAZARO MOTA, deceased, ET AL., Plaintiffs-Appellants, v. SALVADOR
SERRA, Defendant-Appellee
G.R. No. 22825. February 14, 1925

The provisions of article 1205 which require the consent of the creditor as an indispensable requisite in
this kind of novation and not always that of the debtor and it is based on the simple consideration of
justice that since the consequences of the substitution may be prejudicial to the creditor, but not to the
debtor, the consent of the creditor alone is necessary.

FACTS: The plaintiffs and defendant entered into a contract of partnership, , for the construction and
exploitation of a railroad line from the "San Isidro" and "Palma" centrals to the place known as "Nandong."
The original capital stipulated was P150,000. It was covenanted that the parties should pay this amount in
equal parts and the plaintiffs were entrusted with the administration of the partnership.

The defendant entered into a contract of sale with Concepcion, Whitaker and Luzuriaga, whereby he sold
to the latter the estate and central known as "Palma" with its running business, covering all the property of
the

Before the delivery to the purchasers of the hacienda thus sold, Eusebio R. de Luzuriaga renounced all his
rights under the contract of January 29, 1920, in favor of Messrs. Venancio Concepcion and Phil. C.
Whitaker.

Afterwards, on January 8, 1921, the plaintiffs and Concepcion and Whitaker agreed, that the partnership
"Palma" and "San Isidro," between Serra, Lazaro Mota, and Juan J. Vidaurrazaga should be dissolved upon
the execution of this contract, and that the said partnership agreement should be totally cancelled and of
no force and effect whatever.

So it results that the "Hacienda Palma", with the entire railroad, the subject-matter of the contract of
partnership between plaintiffs and defendant, became the property of Whitaker and Concepcion. Phil. C.
Whitaker and Venancio Concepcion having failed to pay to the defendant a part of the purchase price.

Defendant set up the special defenses: (1) The novation of the contract by the substitution of the debtor
with the conformity of the creditors; (2) the confusion of the rights of the creditor and debtor; and (3) the
extinguishment of the contract.

The court a quo in its decision had that there was a novation of the contract by the substitution of the debtor,
and therefore absolved the defendant from the complaint with costs against the plaintiffs.

ISSUE: Whether there was a novation of the contract by the substitution of the debtor with the consent of
the creditor, as required by article 1205 of the Civil Code.

RULING: NONE. It should be noted that in order to give novation its legal effect, the law requires that the
creditor should consent to the substitution of a new debtor. This consent must be given expressly for the
reason that, since novation extinguishes the personality of the first debtor who is to be substituted by a new
one, it implies on the part of the creditor a waiver of the right that he had before the novation which waiver
must be express under the principle that renuntiatio non praesumitor, recognized by the law in declaring
that a waiver of right may not be performed unless the will to waive is indisputably shown by him who holds
the right.

The fact that Phil. C. Whitaker and Venancio Concepcion were willing to assume the defendant’s obligation
to the plaintiffs is of no avail, if the latter have no expressly consented to the substitution of the first debtor.
Neither can the letter be considered as proof of the consent of the plaintiffs to the substitution of the debtor,
because that exhibit is a letter written by plaintiffs to Phil. C. Whitaker and Venancio Concepcion.

It was but natural that the plaintiffs should have done this. Defendant transferred his hacienda to Messrs.
Phil. C. Whitaker and Venancio Concepcion and made it known to the plaintiffs that the owners would hold
themselves liable for the cost of constructing the said railroad line. The defendant ceased to be a partner
in the said line and the plaintiffs had to take the vendees as their new partners. But in all of this, there was
nothing to show the express consent, the manifest and deliberate intention of the plaintiffs to attempt the
defendant from his obligation and to transfer it to his successors in interest, Messrs. Phil. C. Whitaker and
Venancio Concepcion.

The plaintiffs were not a party to the document. Neither in this document, nor in others in the record, do we
find any stipulation whereby the obligation of the defendant was novated with the consent of the creditor,
and as it has been held in the case of Martinez v. Cavives (25 Phil., 581), the oral evidence tending to prove
such a fact as this is not in law sufficient.

As has been said, in all contracts of novation consisting in the change of the debtor, the consent of the
creditor indispensable, pursuant to article 1205 of the Civil Code.

"The provisions of article 1205 which require the consent of the creditor as an indispensable requisite in
this kind of novation and not always that of the debtor and it is based on the simple consideration of justice
that since the consequences of the substitution may be prejudicial to the creditor, but not to the debtor, the
consent of the creditor alone is necessary.
 JESUS SY, JAIME SY, ESTATE OF JOSE SY, ESTATE OF VICENTE SY,
HEIR OF MARCIANO SY represented by JUSTINA VDA. DE SY and WILLIE SY, petitioners,
vs.
THE COURT OF APPEALS, INTESTATE ESTATE OF SY YONG HU,
SEC. HEARING OFFICER FELIPE TONGCO, SECURITIES AND EXCHANGE
COMMISSION, respondents.

G.R. No. 94285 August 31, 1999

The dissolution of a partnership is the change in the relation of the parties caused by any partner ceasing
to be associated in the carrying on, as might be distinguished from the winding up, of its business. Upon
its dissolution, the partnership continues and its legal personality is retained until the complete winding up
of its business culminating in its termination

FACTS: Sy Yong Hu & Sons is a partnership of Sy Yong Hu and his sons, registered with the SEC on
March 29, 1962, with Jose Sy as managing partner. Partners Sy Yong Hu, Jose Sy, Vicente Sy, and
Marciano Sy died respectively.6

Sometime in September, 1977, during the lifetime of all the partners, Keng Sian brought an action, against
the partnership as well as against the individual partners for accounting of all the properties allegedly owned
in common by Sy Yong Hu and the plaintiff (Keng Sian), and for the delivery or reconveyance of her one-
half (1/2) share in said properties and in the fruits thereof.

In their answer the defendants, including Sy Yong Hu himself, countered that Keng Sian is only a house
helper of Sy Yong Hu and his wife, subject properties "are exclusively owned by defendant partnership,
and plaintiff has absolutely no right to or interest therein."10

During the pendency of said civil case, Marciano Sy filed a petition for declaratory relief against partners
Vicente Sy, Jesus Sy and Jayme Sy, praying that he be appointed managing partner of the partnership, to
replace Jose Sy who died. Answering the petition they sought the dissolution of the partnership and the
appointment of Vicente Sy as managing partner. In due time, a decision came out dismissing the petition,
dissolving the partnership and naming Jesus Sy, in lieu of Vicente Sy who had died earlier, as the managing
partner in charge of winding the affairs of the partnership.

In the meantime, Branch 43 of the Regional Trial Court of Negros Occidental appointed one Felix Ferrer as
a Special Administrator for the Intestate Estate of Sy Yong Hu.

It appears that Special Administrator Ferrer filed an Amended Complaint on behalf of respondent Intestate
Estate, wherein he joined Keng Sian as plaintiff and adopted the theory of Keng Sian that the assets of the
partnership belong to Keng Sian and Sy Yong Hu (now represented by the Estate of Sy Yong Hu) in co-
ownership, which assets were wrongfully diverted in favor of the defendants.17

The said decision of the SEC en banc reiterated that the order of dissolution of the partnership, had long
become final and executory. With the denial of their Motion for Reconsideration,25 petitioners filed a special
civil action for certiorari with the Court of Appeals.

The Court of Appeals granted the petition ordering the partition and distribution of the partnership
properties. However, it reversed its Decision and remanded the case to the SEC.
ISSUE: Whether or not the Court of Appeals erred in deciding that there has been no dissolution.

RULING: The contentions are untenable. The dissolution of a partnership is the change in the relation of
the parties caused by any partner ceasing to be associated in the carrying on, as might be distinguished
from the winding up, of its business. Upon its dissolution, the partnership continues and its legal personality
is retained until the complete winding up of its business culminating in its termination. 46

The dissolution of the partnership did not mean that the juridical entity was immediately terminated and that
the distribution of the assets to its partners should perfunctorily follow, it simply effected a change in the
relationship among the partners. The partnership, although dissolved, continues to exist until its termination,
at which time the winding up of its affairs should have been completed and the net partnership assets are
partitioned and distributed to the partners.47

From the time a dissolution is ordered until the actual termination of the partnership, the SEC retained
jurisdiction to adjudicate all incidents relative thereto. Neither did it suspend the dissolution of the
partnership.

Furthermore, having agreed with the respondents not to dispose of the partnership assets, petitioners
effectively consented to the suspension of the winding up or, more specifically, the partition and distribution
of subject assets. Petitioners are now estopped from questioning the order of the Hearing Officer issued in
accordance with the said agreement.48
 DOMINGO BEARNEZA, plaintiff-appellee,
vs. BALBINO DEQUILLA, defendant-appellant.

G.R. No. 17024 March 24, 1922

Neither can it be maintained that the partnership continued to exist after the death of Perpetua, inasmuch
as it does not appear that any stipulation to that effect has ever been made by her and the defendant,
pursuant to the provisions of article 1704 of the Code last cited.

FACTS: In the year 1903, Balbino Dequilla, the herein defendant, and Perpetua Bearneza formed a
partnership for the purpose of exploiting a fish pond situated in the barrio of Talisay, Province of Iloilo.
Perpetua obligating herself to contribute to the payment of the expenses of the business, which obligation
she made good, and both agreeing to divide the profits between themselves, which they had been doing
until the death of the said Perpetua in the year 1912.

The deceased left a will in one of the clauses of which she appointed Domingo Bearneza, the herein plaintiff,
as her heir to succeed to all her rights and interests in the fish pond in question.

Domingo Bearneza brought this action to recover said part of the fish pond belonging to his decedent. In
his answer, the defendant denies and alleges, as special defense, that "the formation of the supposed
partnership between the plaintiff and the defendant for the exploitation of the aforesaid fish pond was not
carried into effect, on account of the plaintiff having refused to defray the expenses of reconstruction and
exploitation of said fish pond." And the time for bringing the same had already elapsed.

The court below rendered judgment, declaring the plaintiff owner of one-half of the fish pond. From this
judgment the defendant appeals, making various assignments of error.

ISSUE: Whether or not the plaintiff has any right to maintain an action for the recovery of one-half of the
said fish pond.

RULING: None. From the evidence is that the land on which the fish pond was constructed did not constitute
a part of the subject- matter of the aforesaid partnership. Neither can it be maintained that the partnership
continued to exist after the death of Perpetua, inasmuch as it does not appear that any stipulation to that
effect has ever been made by her and the defendant, pursuant to the provisions of article 1704 of the Code
last cited.

Neither can it be said that the partnership continued between the plaintiff and the defendant. It is true that
the latter's act in requiring the heirs of Perpetua to contribute to the payment of the expenses of exploitation
of the aforesaid fishing industry was an attempt to continue the partnership, but it is also true that neither
the said heirs collectively, nor the plaintiff individually, took any action in response to that requirement, nor
made any promise to that effect, and therefore no new contract of partnership existed.

We find that the plaintiff has not sufficiently shown his right of action.
 ANTONIO C. GOQUIOLAY, ET AL., plaintiffs-appellants,
vs. WASHINGTON Z. SYCIP, ET AL., defendants-appellees.
G.R. No. L-11840 December 10, 1963

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 (Art. XII, Articles of Co-Partnership).

FACTS: Appellant Goquiolay, in his motion for reconsideration, insist that, contrary to our holding, 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 partnership; and that, in any event, the sale should be set
aside because it was executed with the intent to defraud appellant of his share in the properties sold.

It is first averred that there is "not one iota of evidence" that Kong Chai Pin managed and retained
possession of the partnership properties. Again, the disputed sale by the widow took place in 1949. That
Kong Chai Pin carried out no acts of management during the Japanese occupation (1942-1944) does not
mean that she did not do so from 1945 to 1949.

We thus find that Goquiolay did not merely rely on reports from Lim and Young; he actually manifested his
willingness that the widow should manage the partnership properties. But the authority was given, and she
did have it when she made the questioned sale, because it was never revoked.

ISSUE: Whether or not widow Kong Chai Pin was a general partner and not limited.

RULING: Yes. 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. 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, Goquiolay's authorization to manage the
partnership property was proof that he considered and recognized her as 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
copartnership, not even in the capacity of 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. It must be remembered that the articles of co-partnership
here involved expressly stipulated that:
 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 (Art. XII, Articles of Co-Partnership).

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 assigns. It certainly could not be continued if it were to be converted from a
general partnership into a limited partnership. Hence, the contractual stipulation does actually contemplate
that the heirs would become general partners rather than limited ones.