Lim Tanhu vs.

Ramolete

Issue: Is Tan entitled to accounting?
Held: No. Article 1807 os not applicable. If Po Chuan was in control of the affairs and the running of the
partnership, how could the defendants have defrauded him of such huge amounts as plaintiff had made
his Honor believe? Upon the other hand, since Po Chuan was in control of the affairs of the partnershi p,
the more logical inference is that if defendants had obtained any portion of the funds of the partnership
for themselves, it must have been with the knowledge and consent of Po Chuan, for which reason no
accounting could be demanded from them therefor, considering that Article 1807 of the Civil Code refers
only to what is taken by a partner without the consent of the other partner or partners.
Moreover, it is very significant that according to the very tax declarations and land titles listed in the
decision, most if not all of the properties supposed to have been acquired by the defendants Lim Tanhu
and Ng Sua with funds of the partnership appear to have been transferred to their names only in 1969 or
later, that is, long after the partnership had been automatically dissolved as a result of the death of Po
Chuan. Accordingly, defendants have no obligation to account to anyone for such acquisitions in the
absence of clear proof that they had violated the trust of Po Chuan during the existence of the partnership.
Evangelista vs. Abad
Issue: WON Abad Santos is covered by the prohibition under Art. 1789 of the NCC.
Held: No.
'ART. 1789. An industrial partner cannot engage in business for himself, unless the
partnership expressly permits him to do so; and if he should do so, the capitalist partners
may either exclude him from the firm or avail themselves of the benefits which he may
have obtained in violation of this provision, with a right to damages in either case.'
The prohibition is absolute and applies whether the industrial partner is to engage in the same business
in which the partnership is engaged or in any kind of business. It is clear that the reason for the prohibition
exists in both cases, which is to prevent any conflict of interest between the industrial partner and the
partnership and to insure faithful compliance by said partner with his prestation.
It is not disputed that the provision against the industrial partner engaging in business for himself seeks
to prevent any conflict of interest between the industrial partner and the partnership, and to insure
faithful compliance by said partner with this prestation. There is no pretense, however, even on the part
of the appellee is engaged in any business antagonistic to that of appellant company, since being a Judge
of one of the branches of the City Court of Manila can hardly be characterized as a business.