Clemente vs Galvan

Facts: plaintiff and defendant organized a civil partnership. Hardly a

year after such organization, the plaintiff commenced the present
case to ask for the dissolution of the partnership. On petition of the
plaintiff a receiver and liquidator to take charge of the properties and
business for the partnership while the same was not yet definitely
dissolved, was appointed, the person chosen being Juan D.
Mencarini. The latter was already discharging the duties of his office
when the court, by virtue of a petition ex parte of the plaintiff, issued
the order requiring said receiver to deliver to him (plaintiff) certain
machines which were then at Nos. 705-707 Ylaya Street, Manila. To
comply with said order, the receiver delivered to plaintiff the keys to
the place where the machines were found, which was the same
place where defendant had his home; but before he could take
actual possession of said machines, upon the strong opposition of
defendant, the court, on motion of the latter, suspended the effects of
its order. In the meantime the judgment rendered in another case
entitle Jose Echevarria vs. Enrique Clemente, for the recovery of a
sum of money were made executor; and in order to avoid the
attachment and subsequent sale of the machines by the sheriff for
the satisfaction from the proceeds thereof of the judgments rendered
in the case aforcited, plaintiff agreed with the intervenor to execute,
as he in fact executed in favor of the latter, a deed of mortgage
encumbering the machines described in said deed in which it is
stated that "they are situated on Singalong Street No. 1163", which is
a place entirely different from the house Nos. 705 and 707 on Ylaya
Street hereinbefore mentioned. The one year agreed upon in the
deed of mortgage for the fulfillment by the plaintiff of the obligation he
had contracted with the intervenor, having expired, the latter
commenced his to collect his mortgage credit. The intervenor, as
plaintiff in the said case, obtained judgment in his favor because the
defendant did not interpose any defense or objection. The machines
which the intervenor said were mortgaged to him were then in factin
custodia legis, as they were under the control of the receiver and

liquidator Juan D. Mencarini. It was, therefore, useless for the

intervenor to attach the same in view of the receiver's opposition;
and the question having been brought to court, it decided that
nothing could be done because the receiver was not a party to the
case which the intervenor instituted to collect his aforesaid credit.
The question ended thus because the intervenor did not take any
other step until he thought of joining in this case as intervenor.
___________________
Issue: WON plaintiff was able to take possession of the machines
subject to the deed of mortgage?/ WON the mortgage valid? /Owner
of the property (machines)?
___________________
Ruling: No. From the foregoing facts, it is clear that plaintiff could not
obtain possession of the machines in question. The constructive
possession deducible from the fact that he had the keys to the place
where the machines were found, as they had been delivered to him
by the receiver, does not help him in any way because the lower
court suspended the effects of the other whereby the keys were
delivered to him a few days after its issuance; and thereafter revoked
it entirely in the appealed decision. Furthermore, when he attempted
to take actual possession of the machines, the defendant did not
allow him to do so. Consequently, if he did not have actual
possession of the machines, he could not in any manner mortgage
them, for while it is true that the oft-mentioned deed of mortgage was
annotated in the registry of property, it is no less true the machines to
which it refers are not the same as those in question because the
latter are on Ylaya Street Nos. 705-707 and the former are on
Singalong Street No. 1163. It cannot be said that Exhibit B-1,
allegedly a supplementary contract between the plaintiff and the
intervenor, shows that the machines referred to in the deed of
mortgage are the same as those in dispute and which are found on
Ylaya Street because said exhibit being merely a private document,
the same cannot vary or alter the terms of a public document which

is Exhibit B or the deed of mortgage.

_____________________
Nevertheless, the evidence of record shows that the machines in
contention originally belonged to the defendant and from him were
transferred to the partnership Galvan y Compania. This being the
case, said machines belongs to the partnership and not to him, and
shall belong to it until partition is effected according to the result
thereof after the liquidation.
US V CLARIN
Pedro Larin (complainant) delivered to Tarug a sum of money for the
purpose of engaging in the buy and sell business of mangoes
conducted by the latter and 2 others (Clarin and de Guzman). All of
them agreed that the profits were to be divided equally between him
and them. The business profited but Larin did not receive his share in
the profits and the three men did not render account of the capital.
Larin then filed a complaint for estafa and information was
subsequently issued against Clarin which then brought about his
conviction in the CFI. Hence, the instant appeal.
Issue: Is the criminal action the proper recourse for the aggrieved
party?
Ruling:
No. The P172.00 having been received by the partnership, the
business commenced and profits accrued, the action that lies with
the partner who furnished the capital for the recovery of his money is
not a criminal action for estafa, but a civil one arising from the
partnership contract for a liquidation of the partnership and a levy on
its assets if there should be any.
The then Penal Code provides that those who are guilty of estafa are
those who, to the prejudice of another, shall appropriate or misapply
any money, goods, or any kind of personal property which they may
have received as a deposit on commission for administration or in
any other producing the obligation to deliver or return the same, (as,
for example, in commodatum, precarium, and other unilateral
contracts which require the return of the same thing received) does

not include money received for a partnership; otherwise the result

would be that, if the partnership, instead of obtaining profits, suffered
losses, as it could not be held liable civilly for the share of the
capitalist partner who reserved the ownership of the money brought
in by him, it would have to answer to the charge of estafa, for which it
would be sufficient to argue that the partnership had received the
money under obligation to return it.
In the Matter of the Petition for Authority to Continue Use of the Firm
Name Ozaeta, Romulo, etc (1979)
Facts: Petition was filed by surviving partners of Atty. Sycip and Atty.
Ozaeta praying that they be allowed to continue using the names of
the partners who passed away for their respective firms. Petitioners
contend that the continued use of the name of the deceased or
former partner when permissible by local custom, is not unethical but
care should be taken that no imposition or deception is practiced
through this use. They also contend that no local custom prohibits
the continued use of the deceased partners name in a professional
firms name. There is no custom or usage in the Philippines, or at
least in the Greater Manila Area, which recognizes that the name of
a firm necessarily identifies the individual members of the firm.
Issue: Whether the surviving partners may be allowed by the court to
retain the name of the partners who already passed away in the
name of the firm?
Ruling: No! Inasmuch as Sycip, Salazar, Feliciano, Hernandez and
Castillo and Ozaeta, Romulo, De Leon, Mabanta and Reyes are
partnerships, the use in their partnership names of the names of
deceased partners will run counter to Article 1815 of the Civil Code
which provides:
Art. 1815. Every partnership shall operate under a firm name, which
may or may not include the name of one or more of the partners.
Those who, not being members of the partnership, include their
names in the firm name, shall be subject to the liability of a partner.
It is clearly tacit in the above provision that names in a firm name of
a partnership must either be those of living partners and, in the case

of non-partners, should be living persons who can be subjected to

liability. In fact, Article 1825 of the Civil Code prohibits a third person
from including his name in the firm name under pain of assuming the
liability of a partner. The heirs of a deceased partner in a law firm
cannot he held liable as the old members to the creditors of a firm
particularly where they are non-lawyers.
GREGORIO MAGDUSA, ET AL., petitioners,vs.
GERUNDIO ALBARAN, ET AL., respondents.
Facts:
Appellant and appellees, together with various other persons, had
verbally formed a partnership
de facto, for the sale of general merchandise to which appellant
contributed P2,000 as capital, and the others contributed their labor,
under the condition that out of the net profits of the business, 25%
would be added to the original capital, and the remaining 75% would
be divided among the members in proportion to the length of service
of each. Sometime in 1953 and 1954, the appellees expressed their
desire to withdraw from the partnership, and appellant thereupon
made a computation to determine the value of the partners & shares
to that date. The results of the computation were embodied in the
document drawn in the handwriting of appellant. Appellees thereafter
made demands upon appellant for payment, but appellant having
refused, they filed the initial complaint in the court below.
Appellant defended by denying any partnership with appellees,
whom he claimed to be mere employees of his.
The Court of First Instance of Bohol dismissed the complaint on the
ground that the others were indispensable parties but had not been
impleaded.
Upon appeal, the Court of Appeals reversed the decision, ruling that
it is not an action for dissolution of a partnership and winding up of its
affairs or liquidation of its assets in which the interest of other
partners who are not brought into the case may be affected. The
action of the plaintiffs is one for the recovery of a sum of money with
Gregorio Magdusa as the principal defendant. The partnership, with

Gregorio Magdusa as managing partner, was brought into the case

as an alternative defendant only.
Issue
Whether or not appellees & action can be entertained, because in
the distribution of all or part of a partnerships assets, all the partners
have no interest and are indispensable parties without whose
intervention no decree of distribution can be validly entered.
Held:
It cannot be entertained. A partners share cannot be returned
without first dissolving and liquidating the partnership, for the return
is dependent on the discharge of the creditors, whose claims enjoy
preference over those of the partners; and it is self-evident that all
members of the partnership are interested in his assets and
business, and are entitled to be heard in the matter of the firms
liquidation and the distribution of its property. The liquidation drawn
by appellant is not signed by the other members of the partnership
besides appellees and appellant; it does not appear that they have
approved, authorized, or ratified the same, and, therefore, it is not
binding upon them. At the very least, they are entitled to be heard
upon its correctness.
In addition, unless a proper accounting and liquidation of the
partnership affairs is first had, the capital shares of the appellees, as
retiring partners, cannot be repaid, for the firms outside creditors
have preference over the assets of the enterprise, and the firms
property cant be diminished to their prejudice. Finally, the appellant
cannot be held liable in his personal capacity for the payment of
partners shares for he does not hold them except as manager of, or
trustee for, the partnership. It is the latter that must refund their
shares to the retiring partners. Since not all the members of the
partnership have been impleaded, no judgment for refund can be
rendered.

MACDONALD vs. NATIONAL CITY BANK OF NEW YORK

Facts:
Stasikinocey is a partnership formed by da Costa,Gorcey, Kusik and
Gavino. It was denied registration by the SEC due to confusion
between the partnership and Cardinal Rattan. Cardinal Rattan is the
business name or style used byStasikinocey. Da Costa and Gorcey
are the general partners of Cardinal Rattan. Moreover, Da Costa is
the managing partner of Cardinal Rattan. Stasikinocey had an
overdraft account with National City Bank, which was later converted
into an ordinary loan due the partnerships failure in paying its
obligation.
The ordinary loan was secured by a chattel mortgage over 3vehicles.
During the subsistence of the loan, the vehicles were sold to
MacDonald and later on, MacDonald sold 2 of the 3vehicles to
Gonzales. The bank brought an action for recovery of its credit and
foreclosure of the chattel mortgage upon learning of these
transactions.
Issue: Since an unregistered commercial partnership unquestionably
has no juridical personality, can it have a domicile so that the
registration of a chattel mortgage therein is notice to the world?
Held:
Yes. While an unregistered commercial partnership has no juridical
personality, nevertheless, where two or more persons attempt to
create a partnership failing to comply with all the legal formalities, the
law considers them as partners and the association is a partnership
in so far as it is a favorable to third persons, by reason of the
equitable principle of estoppel. Where a partnership not duly
organized has been recognizedas such in its dealings with certain
persons, it shall be considered as partnership by estoppel and the
persons dealing with it are estopped from denying its partnership
existence.

Island Sales, Inc. vs. United Pioneers Gen. Construction Co., 65

SCRA 544

Application of Art. 1816 of CC

Facts:
The defendant company, a general partnership, purchased from the
plaintiff a motor vehicle on the installment basis under the condition
that failure to pay any of said installments as they fall due would
render the whole unpaid balance immediately due and demandable.
Having failed to receive the installment due, the plaintiff sued the
defendant company for the unpaid balance. The general partners
were included as co-defendants. Lumauig, a general partner, failed
to answer the complaint. However, defendant Lumauig was
dismissed by the motion of the plaintiff. The rest of defendants failed
to appear at the hearing and were declared in default. Judgment was
rendered against the partnership and the four partners. Partner A
moved to reconsider, saying that since there were five general
partners, the joint and subsidiary liability of each partner should not
exceed one-fifth of the obligations of the company. The lower court
denied the motion, hence the appeal.
Issue:
Should the four partners be held liable for the obligation of the
company in view of the dismissal of the complaint with respect to
Partner Lumauig?
Ruling:
No. There were 5 general partners when the promissory note in
question was executed for and in behalf of the partnership. Since the
liability of the partners are pro rata, the liability of each partner shall
be limited to only one fifth of the obligations of the company. The fact
that the complaint against Partner Lumauig was dismissed, upon
motion of plaintiff, does not unmake Lumauig as a general partner in
the defendant company.
Santiago Syjuco, Inc. vs. Castro

Facts: Back in November 1964, Eugenio Lim, for and in his own
behalf and as attorney-in-fact of his mother, the widow Maria Moreno
(now deceased) and of his brother Lorenzo, together with his other
brothers, Aramis, Mario and Paulino, and his sister, Nila, all
hereinafter collectively called the Lims, borrowed from petitioner
Santiago Syjuco, Inc. (hereinafter, Syjuco only) the sum of
P800,000.00. The loan was given on the security of a first mortgage
on property registered in the names of said borrowers as owners in
common under Transfer Certificates of Title Numbered 75413 and
75415 of the Registry of Deeds of Manila. Thereafter additional loans
on the same security were obtained by the Lims from Syjuco, so that
as of May 8, 1967, the aggregate of the loans stood at
P2,460,000.00, exclusive of interest, and the security had been
augmented by bringing into the mortgage other property, also
registered as owned pro indiviso by the Lims under two titles: TCT
Nos. 75416 and 75418 of the Manila Registry.
There is no dispute about these facts, nor about the additional
circumstance that as stipulated in the mortgage deed the obligation
matured on November 8, 1967; that the Lims failed to pay it despite
demands therefor; that Syjuco consequently caused extra-judicial
proceedings for the foreclosure of the mortgage to be commenced
by the Sheriff of Manila; and that the latter scheduled the auction
sale of the mortgaged property on December 27, 1968. The attempt
to foreclose triggered off a legal battle that has dragged on for more
than twenty years now, fought through five (5) cases in the trial
courts, two (2) in the Court of Appeals, and three (3) more in this
Court, with the end only now in sight.
To stop the foreclosure, the Lims filed cases every time petitioner
would schedule the effect of the mortgage. In one of these cases a
complaint was presented, not in their individual names, but in the
name of a partnership of which they themselves were the only
partners: "Heirs of Hugo Lim." The complaint advocated the theory
that the mortgage which they, together with their mother, had

individually constituted (and thereafter amended during the period

from 1964 to 1967) over lands standing in their names in the
Property Registry as owners pro indiviso, in fact no longer belonged
to them at that time, having been earlier deeded over by them to the
partnership, "Heirs of Hugo Lim", more precisely, on March 30, 1959,
hence, said mortgage was void because executed by them without
authority from the partnership.
____________
Issue: Can rights of the mortgage property transfer to a third person?
(Art. 1819)
____________
Ruling: Yes. It is a fact that despite its having been contributed to the
partnership, allegedly on March 30, 1959, the property was never
registered with the Register of Deeds in the name of the partnership,
but to this date remains registered in the names of the Lims as
owners in common. The original mortgage deed of November 14,
1964 was executed by the Lims as such owners, as were all
subsequent amendments of the mortgage. Preclusive of the
respondent partnership's claim to the mortgaged property is the last
paragraph of Article 1819 of the Civil Code, which contemplates a
situation duplicating the circumstances that attended the execution of
the mortgage in favor of Syjuco and therefore applies foursquare
thereto:
Where the title to real property is in the names of all the partners a
conveyance executed by all the partners passes all their rights in
such property.
The term "conveyance" used in said provision, which is taken from
Section 10 of the American Uniform Partnership Act, includes a
mortgage.
Interpreting Sec. 10 of the Uniform Partnership Act, it has been held

that the right to mortgage is included in the right to convey. This is

different from the rule in agency that a special power to sell excludes
the power to mortgage (Art. 1879).