Topic: Obligations of Partners; Loyalty/Fiduciary Duty; Art 1807

Lim Tanhu vs. Ramolete

No. L-40098. August 29, 1975
Barredo J.

Petitioners: ANTONIO LIM TANHU, DY OCHAY, ALFONSO LEONARDO

NG SUA and CO OYO,
Respondents: HON. JOSE R. RAMOLETE, as Presiding Judge, CFI-Cebu and
TAN PUT

Facts:
 Defendants and Po Chuan were partners in the commercial partnership,
Glory Commercial Company, which was dissolved upon Po Chuan’s death.

 Respondent Tan alleged that she was the widow of Tee Hoon Lim Po Chuan
(Po Chuan) and that during the lifetime of Po Chuan, defendants Lim Tanhu
and Ng Sua managed to use huge amounts of the funds and assets of the
partnership for personal purposes. (Where problem started)

 Also, Tan claimed that after Po Chuan’s death, defendants, without

liquidation continued the partnership by purportedly organizing a
corporation, Glory Commercial Company, Incorporated, and acquired lands
using the money and assets of the partnership.

 Tan sued the defendants and prayed for judgment ordering defendants to
render an accounting of the properties of Glory Commercial Company and
to deliver to Tan 1/3 of the total value of the partnership.

 Defendants answered that they acquired the lands using their personal fund
and it would be impossible to use such huge amount from the partnership’s
funds without other partners knowing. Also, that if such amount would be
withdrawn, the partnership would have become insolvent.

 It appeared that Po Chuan, Lim Tanhu and Ng Sua were brothers, and
partners in the business but it was Po Chuan who had the controlling interest
as he was the one who actively managed the business of the partnership.

Issue: Whether Tan was entitled to an accounting of the partnership?

Ruling:
No.

Article 1807 of the NCC refers to a mandatory accounting of the partnership

where profits of the partnership were used by some partners without the consent of
the other partners.

In the present case, Article 1807 is not applicable since it was impossible for
the defendants to take partnership funds when Po Chuan was in control of the
affairs of the company. It is hard to believe that defendants could have defrauded
Po Chuan of the amounts Tan was claiming. The more logical inference is that if
defendants had obtained the funds, Po Chuan would have known and consented.
Thus, there was no violation of trust in the part of the defendants that would have
demanded them for the accounting that Tan prayed.
Accordingly, defendants have no obligation to account to anyone for such
acquisitions that were transferred in their names long after the dissolution of the
partnership, in the absence of clear proof that they had violated the trust of Po
Chuan during the existence of the partnership.

Doctrine:
A partner has no obligation to account to anyone for properties acquired
after dissolution of partnership in absence of proof he violated trust of
deceased partner during existence of partnership.