ESTATE OF MOTA VS. SERRA Case Digest 47 PHIL.

464 FACTS: On February 1, 1919, 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 " andon!"" #he ori!inal capital stipulated was P1$%, %%%" It was co&enanted that the parties should pay this amount in e'ual parts and the plaintiffs were entrusted with the administration of the partnership" #he a!reed capital of P1$%,%%%, howe&er, did not pro&e sufficient, as the expenses up to (ay 1$, 19)%, had reached the amount of P))*,%9)"9), presented by the administrator and O"+",d by the defendant" -anuary )9, 19)%, the defendant entered into a contract of sale with .enancio /oncepcion, Phil" /" 0hitaker, and 1usebio 2" de 3u4uria!a, whereby he sold to the latter the estate and central known as "Palma" with its runnin! business, as well as all the impro&ements, machineries and buildin!s, real and personal properties, ri!hts, choices in action and interests, includin! the su!ar plantation of the har&est year of 19)% to 19)1, co&erin! all the property of the &endor" #his contract was executed before a notary public of Iloilo" 5efore the deli&ery to the purchasers of the hacienda thus sold, 1usebio 2" de 3u4uria!a renounced all his ri!hts under the contract of -anuary )9, 19)%, in fa&or of (essrs" .enancio /oncepcion and Phil" /" 0hitaker" #his !a&e rise to the fact that on -uly 16, 19)%, .enancio /oncepcion and Phil" /" 0hitaker and the herein defendant executed before (r" 7ntonio San4, a notary public in and for the /ity of (anila, another deed of absolute sale of the said "Palma" 1state for the amount of P1,*9$,9*1"9%, of which the &endor recei&ed at the time of executin! the deed the amount of P98$,9*1"9%, and the balance was payable by installments in the form and manner stipulated in the contract" #he purchasers !uaranteed the unpaid balance of the purchase price by a first and special mort!a!e in fa&or of the &endor upon the hacienda and the central with all the impro&ements, buildin!s, machineries, and appurtenances then existin! on the said hacienda" 7fterwards, on -anuary 9, 19)1, .enancio /oncepcion and Phil" /" 0hitaker bou!ht from the plaintiffs the one:half of the railroad line pertainin! to the latter, executin! therefore the document" #he price of this sale was P);6,6))"1$, excludin! any amount which the defendant mi!ht be owin! to the plaintiffs" Of the purchase price, .enancio /oncepcion and Phil" /" 0hitaker paid the sum of P86,$88"8; only" In the <eed, the plaintiffs and /oncepcion and 0hitaker a!reed, amon! other thin!s, that the partnership "Palma" and "San Isidro," formed by the a!reement of February 1, 1919, between Serra, 3a4aro (ota, now deceased, and -uan -" .idaurra4a!a for himself and in behalf of his brother, Felix and <ionisio .idaurra4a!a, should be dissol&ed upon the execution of this contract, and that the said partnership a!reement should be totally cancelled and of no force and effect whate&er" Since the defendant Sal&ador Serra failed to pay one:half of the amount expended by the plaintiffs upon the construction of the railroad line, that is, P11;,%8*"8*, as well as Phil" /" 0hitaker and .enancio /oncepcion, the plaintiffs instituted the present action prayin!= 1> that the deed of February 1, 1919, be declared &alid and bindin!? )> that after the execution of the said document the defendant impro&ed economically so as to be able to pay the plaintiffs the amount owed, but that he refused to pay either in part or in whole the said amount notwithstandin! the se&eral demands made on him for the purpose? and ;> that the defendant be sentenced to pay plaintiffs the aforesaid sum of P11;, %8*"8*, with the stipulated interest at 1% per cent per annum be!innin! -une 8, 19)%, until full payment thereof, with the costs of the present action" <efendant set up three special defenses= 1> the no&ation of the contract by the substitution of the debtor with the conformity of the creditors? )> the confusion of the ri!hts of the creditor and debtor? and ;> the extin!uishment of the contract"

#he court a 'uo in its decision held that there was a no&ation of the contract by the substitution of the debtor, and therefore absol&ed the defendant from the complaint with costs a!ainst the plaintiffs" 0ith re!ard to the prayer that the said contract be declared &alid and bindin!, the court held that there was no way of re&i&in! the contract which the parties themsel&es in interest had spontaneously and &oluntarily extin!uished" ISSUES: 1" 0hether or not there was a no&ation of the contract by the substitution of the debtor with the consent of the creditor, as re'uired by 7rticle 1)%$ of the /i&il /ode? and )" 0hether or not there was a mer!er of ri!hts of debtor and creditor under 7rticle 119) of the /i&il /ode" RULING: 1" O, there was no no&ation of the contract" It should be noted that in order to !i&e no&ation its le!al effect, the law re'uires that the creditor should consent to the substitution of a new debtor" #his consent must be !i&en expressly for the reason that, since no&ation extin!uishes the personality of the first debtor who is to be substituted by new one, it implies on the part of the creditor a wai&er of the ri!ht that he had before the no&ation which wai&er must be express under the principle that renuntiatio non praesumitur, reco!ni4ed by the law in declarin! that a wai&er of ri!ht may not be performed unless the will to wai&e is indisputably shown by him who holds the ri!ht" #he fact that Phil" /" 0hitaker and .enancio /oncepcion were willin! to assume the defendant,s obli!ation to the plaintiffs is of no a&ail, if the latter ha&e not expressly consented to the substitution of the first debtor" 7s has been said, in all contracts of no&ation consistin! in the chan!e of the debtor, the consent of the creditor is indispensable, pursuant to 7rticle 1)%$ of the /i&il /ode which reads as follows= o&ation which consists in the substitution of a new debtor in the place of the ori!inal one may be made without the knowled!e of the latter, but not without the consent of the creditor" )" O, there was no mer!er of 2i!hts" 7nother defense ur!ed by the defendant is the mer!er of the ri!hts of debtor and creditor, whereby under 7rticle 119) of the /i&il /ode, the obli!ation, the fulfillment of which is demanded in the complaint, became extin!uished" It is maintained in appellee,s brief that the debt of the defendant was transferred to Phil" /" 0hitaker and .enancio /oncepcion by the document" #hese in turn ac'uired the credit of the plaintiffs by &irtue of the debt? thus, the ri!hts of the debtor and creditor were mer!ed in one person" #he ar!ument would at first seem to be incontro&ertible, but if we bear in mind that the ri!hts and titles which the plaintiffs sold to Phil" /" 0hitaker and .enancio /oncepcion refer only to one:half of the railroad line in 'uestion, it will be seen that the credit which they had a!ainst the defendant for the amount of one:half of the cost of construction of the said line was not included in the sale" #hat the plaintiffs sold their ri!hts and titles o&er one:half of the line" #he purchasers, Phil" /" 0hitaker and .enancio /oncepcion, to secure the payment of the price, executed a mort!a!e in fa&or of the plaintiffs on the same ri!hts and titles that they had bou!ht and also upon what they had purchased from (r" Sal&ador Serra" In other words, Phil" /" 0hitaker and .enancio /oncepcion mort!a!ed unto the plaintiffs what they had bou!ht from the plaintiffs and also what they had bou!ht from Sal&ador Serra" If (essrs" Phil" /" 0hitaker and .enancio /oncepcion had purchased somethin! from (r" Sal&ador Serra, the herein defendant, re!ardin! the railroad line, it was undoubtedly the one:half thereof pertainin! to (r" Sal&ador Serra" #his clearly shows that the ri!hts and titles transferred by the plaintiffs to Phil" /" 0hitaker and .enancio /oncepcion were only those they had o&er the other half of the railroad line" #herefore, as already stated, since there was no no&ation of the contract between the plaintiffs and the defendant, as re!ards the obli!ation of the latter to pay the former one:half of the cost of the construction of the said railroad line, and since the plaintiffs did not include in the sale, the credit that they had a!ainst the defendant, the alle!ation that the obli!ation of the defendant became extin!uished by the mer!er of the ri!hts of creditor and debtor by the purchase of (essrs" Phil" /" 0hitaker and .enancio /oncepcion is wholly untenable"

@A .S" Facts=

32/

@u was formerly the 7ssistant Beneral (ana!er of a re!istered partnership, -ade (ountain" #he partnership was ori!inally composed of 5endal siblin!s as !eneral partners and others who were limited partners" #he partnership business consisted of exploitin! marble deposit found on the land of the /ru4 spouses by &irtue of a memorandum a!reement" @u was hired by &irtue of a Partnership 2esolution as 7ssistant Beneral (ana!er with a monthly salary" Ce, howe&er, only recei&ed half of his monthly salary since he had accepted the promise of the partners that the balance would be paid when the firm shall ha&e secured additional operatin! funds from abroad" @u mana!ed the operations and finances of the business, had o&erall super&ision of the workers at the marble 'uarry and took char!e of the preparation of papers relation to the exportation of the firmDs products "0ithout knowled!e of @u, the !eneral partners transferred their interests while some of the limited partners sold and transferred their interests in the partnership to respondents /o and Eapanta" 2espondents continued to use the old firm name but mo&ed the firmDs main office" 7 supplement to the memorandum a!reement relatin! to the operation of the marble 'uarry was entered into with the /ru4 spouses" #he actual operations of the business continued as before" 7ll the employees continued workin! in the business" @u, howe&er, was informed by /o that he had bou!ht the business from the ori!inal partners and that it was up to him to decide whether or not he was responsible for the obli!ations of the old partnership includin! @uDs salary" @u was no lon!er allowed to work for the business and his salary remained unpaid" @u filed a complaint for ille!al dismissal and reco&ery of unpaid salary a!ainst the partnership, /o and other partners" <efendants contended that the new partnership ne&er hired @u as an employee" #he labor arbiter found in fa&or of @u and decreed his reinstatement and payment of unpaid salaries as well as backwa!es" #he 32/ re&ersed the decision, rulin! that the new partnership had not retained @u in his ori!inal position and there was no law re'uirin! the new partnership to absorb the employees of the old partnership" #he claim for unpaid wa!es must be asserted a!ainst the old partners but they ha&e not been ser&ed with summons" Issues= 0hether the old partnership had been extin!uished and replaced by a new partnership" If a new partnership was created could @u assert his ri!hts under his employment contract as a!ainst itF S/= #he ac'uisition by the new partners of 9)G of the partnership interest was enou!h to constitute a new partnership" Cowe&er, dissolution does not automatically result in the termination of the le!al personality of the old partnership" #he le!al personality of the expirin! partnership persists for the limited purpose of windin! up and closin! of the affairs of the partnership" #he new partnerships imply took o&er the business enterprise owned by the precedin! partnership and continued usin! the old name without windin! up the business affairs of the latter, payin! off its debts, li'uidatin! and distributin! its assets and the re:assemblin! the assets and openin! a new business enterprise" #herefore, not only the retirin! partners but also the new partnership itself which continued the business of the old, dissol&ed one are liable for the debts of the precedin! partnership" #he creditors of the old partnership are also the creditors of the new" @u is entitled to enforce his claim for unpaid salaries, as well as other claims relatin! to his employment with the pre&ious partnership, a!ainst the new one" #he non:retention of @u did not constitute unlawful or unHust termination as the new partnership is entitled to hire new mana!ers" #he new partnership had /o as its own new mana!er and the basis for @uDs termination was redundancy" @u is entitled to his unpaid wa!es and separation pay"

2O-7S .S" (7B37 7F7/#S= (a!lana and 2oHas executed their 7rticles of /o:partnership called I1ast coast <e&elopment 1nterpisesJ which had an indefinite term of existence and was re!istered with the S1/ and had a #imber 3icense" One of the 1<1Ds purposes was to apply or secure timber andKor pri&ate forest lands and too perate, de&elop and promote such forests ri!hts and concessions" ( shall mana!e the business affairs while 2 shall be the lo!!in! superintendent" 7ll profits and losses shall be di&ided share and share alike between them" 3ater on, the two a&ailed the ser&ices of Pahamotan! as industrial partner and executed another articles of co:partnership with the latter" #he purpose of this second partnership was to hold and secure renewal of timber license and the term of which was fixed to;% years" Still later on, the three executed a conditional sale of interest in the partnership wherein ( and 2 shall purchase the interest, share and participation in the partnership of P" It was also a!reed that after payment of such includin! amount of loan secured by P in fa&or of the partnership, the two shall become owners of all e'uipment contributed by P" 7fter this, the two continued the partnership without any written a!reement or reconstitution of their articles of partnership" Subse'uently, 2 entered into a mana!ement contract with /(S 1state Inc" ( wrote him re= his contribution to the capital in&estments as well as his duties as lo!!in! superintendent" 2 replied that he will not be able to comply with both" ( then told 2 that the latterDs share will Hust be )%G of the net profits" Such was the sharin! from 19$6 to 19$9 without complaint or dispute" 2 took funds from the partnership more than his contribution" ( notified 2 that he dissol&ed the partnership" 2 filed an action a!ainst ( for the reco&ery of properties and accountin! of the partnership and dama!es" /FI= the partnership of ( and 2 is after P retired is one of de facto and at will? the sharin! of profits and losses is on the basis of actual contributions? there is no e&idence these properties were ac'uired by the partnership funds thus it should not belon! to it? neither is entitled to dama!es? the letter of ( in effect dissol&ed the partnership? sale of forest concession is &alid and bindin! and should be considered as (Ds contribution? 2 must pay or turno&er to the partnership the profits he recei&ed from /(S and pay his personal account to the partnership? ( must be paid 9$k which he shouldD&e recei&ed but was not paid to him and must be considered as his contribution" ISSA1= what is the nature of the partnership and le!al relationship of (:2 after P retired from the second partnershipF (ay ( unilaterally dissol&e the partnershipF S/= #here was no intention to dissol&e the first partnership upon the constitution of the second as e&erythin! else was the same except for the fact that they took in an industrial partner= they pursued the same purposes, the capital contributions call for the same amounts, all subse'uent renewals of #imber 3icense were secured in fa&or of the first partnership, all businesses were carried out under the re!istered articles" ( and 2 a!reed to purchase the interest, share and participation of P and after, they became owners of the e'uipment contributed by P" 5oth considered themsel&es as partners as per their letters" It is not apartnership de facto or at will as it was existin! and duly re!istered" #he letter of ( dissol&in! thepartnership is in effect a notice of withdrawal and may be done by expressly withdrawin! e&en before

expiration of the period with or without Hustifiable cause" 7s to the li'uidation of the partnership it shall be di&ided Ishare and share alikeJ after an accountin! has been made" 2 is not entitled to any profits as he failed to !i&e the amount he had undertaken to contribute thus, had become a debtor of the partnership" ( cannot be liable for dama!es as 2 abandoned the partnership thru his acts and also took funds in an amount more than his contribution"

#ocao and 5elo &s /ourt of 7ppeals and 7nay 5usiness Or!ani4ation L Partnership, 7!ency, #rust L <issolution of the Partnership 0illiam 5elo introduced enita 7nay to his !irlfriend, (arHorie #ocao" #he three a!reed to form a Hoint &enture for the sale of cookin! wares" 5elo was to contribute P)"$ million? #ocao also contributed some cash and she shall also act as president and !eneral mana!er? and 7nay shall be in char!e of marketin!" 5elo and #ocao specifically asked 7nay because of her experience and connections as a marketer" #hey a!reed further that 7nay shall recei&e the followin!=

1%G share of annual net profits *G o&erridin! commission for weekly sales ;%G of sales 7nay will make herself )G share for her demo ser&ices #hey operated under the name Beminesse 1nterprise, this name was howe&er re!istered as a sole proprietorship with the 5ureau of <omestic #rade under #ocao" #he Hoint &enture a!reement was not reduced to writin! because 7nay trusted 5eloDs assurances" #he &enture succeeded under 7nayDs marketin! prowess" 5ut then the relationship between 7nay and #ocao soured" One day, #ocao ad&ised one of the branch mana!ers that 7nay was no lon!er a part of the company" 7nay then demanded that the company be audited and her shares be !i&en to her"

ISSA1= 0hether or not there is a partnership"

C13<= @es, e&en thou!h it was not reduced to writin!, for a partnership can be instituted in any form" #he fact that it was re!istered as a sole proprietorship is of no moment for such re!istration was only for the companyDs trade name"

7nay was not e&en an employee because when they &entured into the a!reement, they explicitly a!reed to profit sharin! this is e&en thou!h 7nay was recei&in! commissions because this is only incidental to her efforts as a head marketer"

#he Supreme /ourt also noted that a partner who is excluded wron!fully from a partnership is an innocent partner" Cence, the !uilty partner must !i&e him his due upon the dissolution of the partnership as well as dama!es or share in the profits Ireali4ed from the appropriation of the partnership business and !oodwill"J 7n innocent partner thus possesses Ipecuniary interest in e&ery existin! contract that was incomplete and in the trade name of the co:partnership and assets at the time he was wron!fully expelled"J

7n unHustified dissolution by a partner can subHect him to action for dama!es because by the mutual a!ency that arises in a partnership, the doctrine of delectus personae allows the partners to ha&e the power, althou!h not necessarily the ri!ht to dissol&e the partnership"

#ocaoDs unilateral exclusion of 7nay from the partnership is shown by her memo to the /ubao office plainly statin! that 7nay was, as of October 9, 1996, no lon!er the &ice:president for sales of Beminesse 1nterprise" 5y that memo, petitioner #ocao effected her own withdrawal from the partnership and considered herself as ha&in! ceased to be associated with the partnership in the carryin! on of the business" e&ertheless, the partnership was not terminated thereby? it continues until the windin! up of the business"

O#1= (otion for 2econsideration filed by #ocao and 5elo decided by the S/ on September )%, )%%1" 5elo is not a partner" 7nay was not able to pro&e that 5elo in fact recei&ed profits from the company" 5elo merely acted as a !uarantor" Cis participation in the business meetin!s was not as a partner but as a !uarantor" Ce in fact had only limited partnership" #ocao also testified that 5elo recei&ed nothin! from the profits" #he Supreme /ourt also noted that the partnership was yet to be re!istered in the Securities and 1xchan!e /ommission" 7s such, it was understandable that 5elo, who was after all petitioner #ocaoDs !ood friend and confidante, would occasionally participate in the affairs of the business, althou!h ne&er in a formal or official capacity"

Primelink Properties and <e&elopment /orporation &s (a" /larita 3a4atin:(a!at on 7u!ust ;%, )%1) 5usiness Or!ani4ation L Partnership, 7!ency, #rust L <issolution and 0indin! Ap L -oint .enture 7!reement L 2i!hts of Innocent Party

In 1998, Primelink Properties and the 3a4atin siblin!s entered into a Hoint &enture a!reement whereby the 3a4atins shall contribute a hu!e parcel of land and Primelink shall de&elop the same into a subdi&ision" For 8 years howe&er, Primelink failed to de&elop the said land" So in 1999, the 3a4atins filed a complaint to rescind the Hoint &enture a!reement with prayer for preliminary inHunction" In said case, Primelink was declared in default or failin! to file an answer and for askin! multiple motions for extension" #he trial court

e&entually ruled in fa&or of the 3a4atins and it ordered Primelink to return the possession of said land to the 3a4atins as well as some impro&ements which Primelink had so far o&er the property without the 3a4atins payin! for said impro&ements" #his decision was affirmed by the /ourt of 7ppeals" Primelink is now assailin! the order? that turnin! o&er impro&ements to the 3a4atins without reimbursement is unHust? that the 3a4atins did not ask the properties to be placed under their possession but they merely asked for rescission"

ISSA1= 0hether or not the impro&ements made by Primelink should also be turned o&er under the possession of the 3a4atins"

C13<= @es" In the first place, e&en thou!h the 3a4atins did specifically pray for possession the same Mplacin! of impro&ements under their possession> is incidental in the relief they prayed for" #hey are therefore entitled possession o&er the parcel of land plus the impro&ements made thereon made by Primelink"

In this Hurisdiction, Hoint &entures are !o&erned by the laws of partnership" Ander the laws of partnership, when a partnership is dissol&ed, as in this case when the trial court rescinded the Hoint &enture a!reement, the innocent party has the ri!ht to wind up the partnership affairs"

0ith the rescission of the -.7 on account of petitionersD fraudulent acts, all authority of any partner to act for the partnership is terminated except so far as may be necessary to wind up the partnership affairs or to complete transactions be!un but not yet finished" On dissolution, the partnership is not terminated but continues until the windin! up of partnership affairs is completed" 0indin! up means the administration of the assets of the partnership for the purpose of terminatin! the business and dischar!in! the obli!ations of the partnership"

It must be stressed, too, that althou!h the 3a4atins ac'uired possession of the lands and the impro&ements thereon, the said lands and impro&ements remained partnership property, subHect to the ri!hts and obli!ations of the parties, inter se, of the creditors and of third parties and subHect to the outcome of the settlement of the accounts between the parties, absent any a!reement of the parties in their -.7 to the contrary Mhere no a!reement in the -.7 as to windin! up>" Antil the partnership accounts are determined, it cannot be ascertained how much any of the parties is entitled to, if at all"

1milio 1mnace &s /ourt of 7ppeals 5usiness Or!ani4ation L Partnership, 7!ency, #rust L <issolution and 0indin! Ap L Prescription

1milio 1mnace, -acinto <i&ina!racia and .icente #abanao formed a partnership en!a!ed in the fishin! industry" In 199*, -acinto decided to lea&e the partnership hence they a!reed to dissol&e the partnership" 7t that time, the partnership has an estimated asset amountin! to P;%,%%%,%%%"%%"

CO01.12, until the death of .icente #abanao in 1998, 1mnace ne&er rendered an accountin! either to .icente or his heirs" 1mnace rene!ed on his promise to turn o&er #abanaoDs share which is 1K; of the P;%(" #he heirs of #abanao then sued 1mnace" 1mnace ar!ued, amon! others, that the heirs are barred by prescription hence they can no lon!er demand an accountin!" Ce contends that the partnership was dissol&ed in 199* and that was the time when #abanaoDs Mand his heirsD> ri!ht to in'uire into the business affairs accrued? that said ri!ht has expired in 199% or 8 years after" So beyond 199%, they can no lon!er in'uire"

ISSA1= 0hether or not 1mnace is correct"

C13<= o" Prescription has not run in this case, it has ne&er be!un" #he three final sta!es of partnership are= a> dissolution, b> windin! up, and c> termination" In this case, 1mnace and his partners dissol&ed their partnership but such did not perfect the dissolution because no accountin! took place" #he partnership, althou!h dissol&ed, continues to exist and its le!al personality is retained, at which time it completes the windin! up of its affairs, includin! the partitionin! and distribution of the net partnership assets to the partners" For as lon! as the partnership exists, any of the partners Mor le!al representati&e L in this case the heirs of #abanao> may demand an accountin! of the partnershipDs business" Prescription of the said ri!ht starts to run only upon the dissolution of the partnership when the final accountin! is done"

0hen a final accountin! is made, it is only then that prescription be!ins to run" In the case at bar, no final accountin! has been made, and that is precisely what the heirs are seekin! in their action before the trial court, since 1mnace has failed or refused to render an accountin! of the partnershipDs business and assets" Cence, the said action is not barred by prescription O#1= Ander 7rticle 19%9 of the /i&il /ode, ri!ht to demand an accountin! may also be in&oked under certain a!reements L these are Hust one of the exceptions" Beneral 2ule= 7ccountin! only when there is dissolution" 1xception= 7rticle 19%6 and 19%9"

<O(I BO 5172 1E7, plaintiff:appelle,&s" 5735I O <1NAI337, defendant:appellant"Facts= : In the year 19%;, 5albino <e'uilla, the herein defendant, and Perpetua 5earne4a formed apartnership for the purpose of exploitin! a fish pond with Perpetua obli!atin! herself to contributeto the payment of the expenses of the business, which obli!ation she made !ood, and botha!reein! to di&ide the profits between themsel&es, which they had been doin! until the death of the said Perpetua in the year 191): #he deceased left a will in one of the clauses of which she appointed <omin!o 5earne4, the hereinplaintiff, as her heir to succeed to all her ri!hts and interests in the fish pond in 'uestion:<omin!o 5earne4 then instituted an action to reco&er a part of the fish pond belon!in! to thedecedent, includin! O of the profits recei&ed by the defendant from the years 191;:1919 : #he defendant alle!es that "the formation of the supposed partnership between the plaintiff andthe defendant for the exploitation of the aforesaid fish pond was not carried into effect, on accountof the plaintiff ha&in! refused to defray the expenses of reconstruction and exploitation of said fishpond"" and further a&erred that the ri!ht of the plaintiff had already prescribed : -ud!ment was then rendered declarin! the plaintiff owner of one:half of the fish pond but withoutmay awardin! him any dama!es:From this Hud!ment the defendant appealsIssueKCeld= : 0K the plaintiff has any ri!ht to maintain an action for reco&ery of the said one:half of the fishpond K O 1

2atio= : #he partnership formed was a particular partnership, it ha&in! had for its subHect:matter a specifiedthin!, the exploitation of the aforementioned fish pond:7lthou!h, as the trial court says in its decision, the defendant, in his letters to Perpetua or herhusband, makes reference to the fish pond, callin! it "our," or "your fish pond," this referencecannot be held to include the land on which the said fish pond was built:It has not been pro&en that 5earne4a participated in the ownership of the said land

#herefore, the land on which the fish pond was constructed did not constitute part of thesubHect:matter of the partnership

: #his partnership was dissol&ed by the death of Perpetua 5earne4a

either 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 e&er beenmade by her and the defendant:#he partnership ha&in! been dissol&ed by the death of Perpetua 5earne4a, its subse'uent le!alstatus was that of a partnership in li'uidation, and the only ri!hts inherited by her testamentaryheir, the herein plaintiff, were those resultin! from the said li'uidation in fa&or of the deceasedpartner, and nothin! more

<7

FA1 31A B,

petitioner, &s" CO " I #12(1<I7#1 7PP1337#1 /OA2# and 31A B @IA, respondents" B"2" o" 6%9)* -anuary ;1, 1999BA#I1221E, -2", -"= F7/#S= #he petitioner asks for the re&ersal of the decision of the then Intermediate 7ppellate /ourt in 7/:B"2" o" /.:%%991 which affirmed the decision of the then /ourt of First Instance of (anila, 5ranch II in /i&il /ase o" 11*6)$ declarin! pri&ate respondent 3eun! @iu a partner of petitioner <an Fue 3eun! in the business of Sun 0ah Panciteria and orderin! the petitioner to pay to the pri&ate respondent his share in the annual profits of the said restaurant" #his case ori!inated from a complaint filed by respondent 3eun! @iu with the then /ourt of First Instance of (anila, 5ranchII to reco&er the sum e'ui&alent to twenty:two percent M))G> of the annual profits deri&ed from the operation of Sun 0ah Panciteria since October, 19$$ from petitioner <an Fue 3eun!" #he Sun 0ah Panciteria, a restaurant, located at Florentino #orres Street, Sta" /ru4, (anila, was established sometime in October, 19$$" It was re!istered as a sin!le proprietorship and its licenses and permits were issued to and in fa&or of petitioner <an Fue 3eun! as the sole proprietor" 2espondent 3eun! @iu adduced e&idence durin! the trial of the case to show that Sun 0ah Panciteria was actually a partnership and that he was one of the partners ha&in! contributed P8,%%%"%%to its initial establishment" #he pri&ate respondents e&idence is summari4ed as follows= 7bout the time the Sun 0ah Panciteria started to become operational, the pri&ate respondent !a&e P8,%%%"%% as his contribution to the partnership" #his is e&idenced by a receipt wherein the petitioner acknowled!ed his acceptance of theP8,%%%"%% by affixin! his si!nature thereto" Furthermore, the pri&ate respondent recei&ed from the petitioner the amount of P1),%%%"%% co&ered by the latter,s 1'uitable 5ankin! /orporation /heck from the profits of the operation of the restaurant for the year 1968#he petitioner denied ha&in! recei&ed from the pri&ate respondent the amount of P8,%%%"%%" Ce contested and impu!nedthe !enuineness of the receipt" Cis e&idence is summari4ed as follows= #he petitioner did not recei&e any contribution at the time he started the Sun 0ah Panciteria" Ce used his sa&in!s from hissalaries as an employee at /amp Stotsenber! in /lark Field and later as waiter at the #oho

2estaurant amountin! to a little more than P),%%%"%% as capital in establishin! Sun 0ah Panciteria" Petitioner presented &arious !o&ernment licenses and permits showin! the Sun 0ah Panciteria was and still is a sin!le proprietorship solely owned and operated by himself alone" Fue 3eun! also flatly denied ha&in! issued to the pri&ate respondent the receipt M1xhibit B> and the 1'uitable 5ankin! /orporation,s /heck o" 1;;9986% 5 in the amount of P1),%%%"%% M1xhibit 5>" ISSA1= 0O C13<= #he pri&ate respondent is a partner of the petitioner in Sun 0ah Panciteria" #he re'uisites of a partnership which are 1>two or more persons bind themsel&es to contribute money, property, or industry to a common fund? and )> intention on the part of the partners to di&ide the profits amon! themsel&es M7rticle 16*6, /i&il /ode? @ulo &" @an! /hiao /hen!, 1%* Phil"11%>:ha&e been established" 7s stated by the respondent, a partner shares not only in profits but also in the losses of the firm" If excellent relations exist amon! the partners at the start of business and all the partners are more interested in seein! the firm !row rather than !et immediate returns, a deferment of sharin! in the profits is perfectly plausible" It would be incorrect to state that if a partner does not assert his ri!hts anytime within ten years from the start of operations, such ri!hts are irretrie&ably lost" #he pri&ate respondent,s cause of action is premised upon the failure of the petitioner to !i&e him the a!reed profits in the operation of Sun 0ah Panciteria" In effect the pri&ate respondent was askin! for an accountin! of his interests in the partnership Pri&ate respondent is a partner of the petitioner in Sun 0ah PanciteriaF