Lee Tee vs. Ching Chiong, [C.A.] No.

14712-R, July 7, 1958

A partner questions the right of another to withdraw from the partnership.
Facts:
A brought an action for withdrawal of his capital contribution from the partnership formed by
him and B, which would mean its dissolution because the partnership was for a definite term
Issue:
In impugning As right to maintain the suit, B cited Articles 1808 and 1830 and As alleged bad
faith.
Held:
Article 1808 only requires the capitalist partner (who violates the prohibition against engaging
for his own account in any operation which is of the kind of business in which the partnership is
engaged) to bring to the common fund of the partnership, profits he might have realized. (2nd
par.) It does not prevent him from withdrawing from the partnership.

G.R. No. L-21906

December 24, 1968

INOCENCIA DELUAO and FELIPE DELUAO plaintiffs-appellees,

vs.
NICANOR CASTEEL and JUAN DEPRA, defendants,
NICANOR CASTEEL, defendant-appellant.
FACTS:
In 1940 Nicanor Casteel unsuccessfully registered a fishpond in a big tract of swampy land,
178.76 hectares, in the then sitio of Malalag, municipality of Padada, Davao for 3 consecutive
times because the Bureau of Fisheries did not act upon his previous applications.
Despite the said rejection, Casteel did not lose interest. Because of the threat poised upon his
position by the other applicants who entered upon and spread themselves within the area, Casteel
realized the urgent necessity of expanding his occupation thereof by constructing dikes and
cultivating marketable fishes. But lacking financial resources at that time, he sought financial aid
from his uncle Felipe Deluao.
Moreover, upon learning that portions of the area applied for by him were already occupied by
rival applicants, Casteel immediately filed a protest. Consequently, two administrative cases
ensued involving the area in question.
However, despite the finding made in the investigation of the above administrative cases, the
Director of Fisheries nevertheless rejected Casteel's application on October 25, 1949, required
him to remove all the improvements which he had introduced on the land, and ordered that the
land be leased through public auction
On November 25, 1949 Inocencia Deluao (wife of Felipe Deluao) as party of the first part, and
Nicanor Casteel as party of the second part, executed a contract denominated a "contract of
service". On the same date the above contract was entered into, Inocencia Deluao executed a
special power of attorney in favor of Jesus Donesa
On November 29, 1949 the Director of Fisheries rejected the application filed by Felipe Deluao
on November 17, 1948. Unfazed by this rejection, Deluao reiterated his claim over the same area
in the two administrative cases and asked for reinvestigation of the application of Nicanor
Casteel over the subject fishpond.

The Secretary of Agriculture and Natural Resources rendered a decision ordering Casteel to be
reinstated in the area and that he shall pay for the improvement made thereupon.
Sometime in January 1951 Nicanor Casteel forbade Inocencia Deluao from further
administering the fishpond, and ejected the latter's representative (encargado), Jesus Donesa,
from the premises.

ISSUE:
Whether the reinstatement of Casteel over the subject land constitute a dissolution of the
partnership between him and Deluao
HELD:
Yes, the reinstatement of Casteel dissolved his partnership with Deluao.
The Supreme Court ruled that the arrangement under the so-called "contract of service"
continued until the decision both dated Sept. 15, 1950 were issued by the Secretary of
Agriculture and Natural Resources in DANR Cases 353 and 353-B.
This development, by itself, brought about the dissolution of the partnership. Since the
partnership had for its object the division into two equal parts of the fishpond between the
appellees and the appellant after it shall have been awarded to the latter, and therefore it
envisaged the unauthorized transfer of one half thereof to parties other than the applicant Casteel,
it was dissolved by the approval of his application and the award to him of the fishpond.
The approval was an event which made it unlawful for the members to carry it on in partnership.
Moreover, subsequent events likewise reveal the intent of both parties to terminate the
partnership because each refused to share the fishpond with the other.

G.R. No. L-11840

December 10, 1963

ANTONIO C. GOQUIOLAY, ET AL., plaintiffs-appellants,

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

decision of probate court was set aside for failure to include the indispensable parties. New
pleadings were filed. The second amended complaint prays for the annulment of the sale in favor
of Sycip and Lee and their subsequent conveyance to Insular Development. The complaint was
dismissed by the lower court hence this appeal.
ISSUE/S:
Whether or not a widow or substitute become also a general partner or only a limited partner.
Whether or not the lower court err in holding that the widow succeeded her husband Tan Sin An
in the sole management of the partnership upon Tans death Whether or not the consent of the
other partners was necessary to perfect the sale of the partnership properties to Sycip and Lee?
HELD:
Kong Chai Pin became a mere general partner. By seeking authority to manage partnership
property, Tan Sin Ans widow showed that she desired to be considered a general partner. By
authorizing the widow to manage partnership property (which a limited partner could not be
authorized to do), Goqulay recognized her as such partner, and is now in estoppel to deny her
position as a general partner, with authority to administer and alienate partnership property. The
articles did not provide that the heirs of the deceased would be merely limited partners; on the
contrary, they expressly stipulated that in case of death of either partner, the co partnership will
have to be continued with the heirs or assignees. It certainly could not be continued if it were to
be converted from a general partnership into a limited partnership since the difference between
the two kinds of associations is fundamental, and specially because the conversion into a limited
association would leave the heirs of the deceased partner without a share in the management.
Hence, the contractual stipulation actually contemplated that the heirs would become general
partners rather than limited ones.

G.R. No. L-45464

April 28, 1939

JOSUE SONCUYA, plaintiff-appellant,

vs.
CARMEN DE LUNA, defendant-appellee.
FACTS:
Josue SONCUYA, Carmen DE LUNA and Librado Avelino in the business called "Centro
Escolar de Seoritas." DELUNA was its managing partner
Claiming fraudulent administration of the partnership, SONCUYA filed with the CFI Manila an
amended complaint against DE LUNA in her own name and as administratrix of the estate of the
deceased partner Avelino, in which he prayed that DE LUNA be sentenced to pay him the sum of
P700,432 as damages and costs
DE LUNA interposed a demurrer based on the following grounds:(1) no cause of action; and (2)
that the complaint is ambiguous, unintelligible and vague
CFI sustained DE LUNAs demurrer and ordered SONCUYA
To amend his amended complaint. SONCUYA refused, thus, DE LUNA filed a motion to dismiss
which the CFI granted. From this order of dismissal, SONCUYA filed this appeal
ISSUE:
WON SONCUYAs amended complaint states a cause of action
HELD:
NO, it does not state a cause of action. The order of dismissal is AFFIRMED.
PARTNERSHIP ISSUE: Whether the petitioner is entitled to damages?
For the purpose of adjudicating SONCUYAs claim to damages
which he alleges to have suffered as a partner by reason of the supposed fraudulent management
of the partnership by DELUNA, it is first necessary that a liquidation of the business thereof be
made so that the profits and losses may be known and the liabilities of DE LUNA as well as the
damages which each partner may have suffered, may be determined

It is not alleged in the complaint that such a liquidation has been effected nor is it prayed that it
be made. Consequently, there is no reason or cause for SONCUYA to institute the action for
damages which he claims from the managing partner DE LUNA
For a partner to be able to claim from another partner who manages the general copartnership, damages allegedly suffered by him by reason of the fraudulent administration
of the latter, a previous liquidation of said partnership is necessary.

G.R. No. L-27343 February 28, 1979

MANUEL G. SINGSONG, JOSE BELZUNCE, AGUSTIN E. TONSAY, JOSE L.
ESPINOS, BACOLOD SOUTHERN LUMBER YARD, and OPPEN, ESTEBAN,
INC., plaintiffs-appellees,
vs.
ISABELA SAWMILL, MARGARITA G. SALDAJENO and her husband CECILIO
SALDAJENO LEON GARIBAY, TIMOTEO TUBUNGBANUA, and THE PROVINCIAL
SHERIFF OF NEGROS OCCIDENTAL, defendants, MARGARITA G. SALDAJENO and
her husband CECILIO SALDAJENO, defendants-appellants.
Fernandez, J.:
FACTS:
Isabela Sawmill was formed by partners Saldajeno, Lon and Timoteo. S withdrew from the
partnership and after dissolution, Lon and Timoteo continued the business still under the name
Isabela Sawmill. The partnership is indebted to various creditors and that Sheriff sold the assets
of Isabela Sawmill to Saldajeno and was subsequently sold to a separate company.
ISSUE:
Whether or not Isabela Sawmill ceased to be a partnership and that creditors could no longer
demand payment.
RULING:
On dissolution, the partnership is not terminated but continues until the winding up of the
business. It does not appear that the withdrawal of Saldajeno from the partnership was published
in the newspapers. The appellee and the public had a right to expect that whatever credit they
extended to Lon and Timoteo doing business in the name of Isabela Sawmill could be enforced
against the properties of said partnership. The judicial foreclosure of the chattel mortgage
executed in favor of S did not relieve her from liability to the creditors of the partnership.
It may be presumed that Saldajeno acted in good faith, the appellees also acted in good faith in
extending credit to the partnership. Where one of the 2 innocent persons must suffer, that person
who gave occasion for the damages to be caused must bear the consequences.