1 | Page

20. Lozana vs Depakakibo

- 1786
21. Sancho vs Lizaraga
1786
22. Uy vs Puzon
1788
23. U.S. vs Clarin
1788
24. People vs Campos
1788
25. Martinez vs Ong Pong Co
1796
26. Ramnani vs CA
- 1797
27. Moran cs CA
1797
28. Ng Ya vs Sugbu COmm.
1800

29. Teague vs Martin

- 1800
30. Santos vs Villanueva
- 1800
31. Bachrach vs La Protectora
- 1804
32. Machuca vs Chuidian
- 1804
33. Fue Leung vs IAC
- 1809
34. Sison vs McQuaid
1809
35. Ornum vs Lasala
- 1809
36. Clemente vs Galvan
1811
37. Leyte-SamarSales vs Cea 1812

2 | Page

20. Lozana vs Depakakibo

- Art. 1786

The money or property contributed by a partner becomes the property of the

partnership. It necessarily follows that the same cannot be withdrawn or
disposed of by the contributing partner without the consent or approval of
the partnership or of the other partners. (Lozana vs. Depakakibo, 107 Phil.
728 [1960].)
21. Sancho vs Lizaraga

- Art. 1786

Under this article, the remedy of the other partner or the partnership is not
rescission but an action for specific performance (to collect what is owing)
with damages and interest from the defaulting partner from the time he
should have complied with his obligation. (Art. 1788.) Article 1191, which
refers to resolution of reciprocal obligations in general, is not applicable.
Articles 1786 and 1788 specifically refer to the contract of partnership in
particular; and it is a well-known principle that special provisions prevail over
general provisions.
22. Uy vs Puzon

- Art. 1788

In a case, a partner in a construction venture, who, contrary to the terms of

the partnership, failed to contribute his share in the capital of the
partnership, was ordered by the court to reimburse his co-partner whatever
amount the latter invested in or spent for the partnership on account of the
construction projects. (Uy vs. Puzon, 79 SCRA 598 [1977]; Under Article 2200
of the Civil Code, indemnification for damages shall comprehend not only the
value of the loss suffered, but also that of the profits which the obligee failed
to obtain. In other words, lucrum lessans is also a basis for indemnifi cation.
(Uy vs. Puzon, 79 SCRA 598 [1977].)
23. U.S. vs Clarin

- Art. 1788

Where there was mere failure to return. The mere failure on the part of an
industrial partner to return to the capitalist partner the capital brought by
him into the partnership is not an act constituting the crime of estafa. The
money having been received by the partnership, the business commenced
and profits accrued, the action that lies with the partner who furnished
capital for the recovery of his money is 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. (U.S. vs. Clarin, 17 Phil. 84 [1910];
24. People vs Campos

- Art. 1788

3 | Page

In this case, there was mere failure on the part of the industrial partner to
liquidate partnership affairs and to account to persons interested the
amounts respectively due them. A partner is guilty of estafa if he
fraudulently appropriates partnership property delivered to him, with specific
directions to apply it to partnership purposes. (People vs. Campos, supra.)
25. Martinez vs Ong Pong Co

- Art.1796

A partner seeks an accounting from the other partners who received from
him money to be invested by them in a business.
Facts: A delivered P1,500.00 to B and C who, in a private document,
acknowledged the receipt of the money with the agreement that we are to
invest the amount in a store, the profits and losses of which we are to divide
with the former in equal shares. A filed a complaint to compel B and C to
render an accounting of the partnership as agreed to.
Issue: From what date should the payment of interest be counted?
Held: Inasmuch as in this case nothing appears other than the failure to fulfill
an obligation on the part of a partner who acted as agent in receiving money
for a given purpose, for which he has rendered no accounting, such agent is
responsible only for the losses which, by a violation of the law, he incurred.
This being an obligation to pay in cash, there are no other losses than the
legal interest which interest is not due except from the case, from the filing
of the complaint. Article 1796 is not applicable insofar as it provides that
the partnership shall be responsible to every partner for the amounts he
may have disbursed on behalf of the partnership and for the corresponding
interest from the time the expenses are made, for the reason that no other
money than that contributed as capital is involved. (Martinez vs. Ong Pong
Co., 14 Phil. 726 [1909].)
26. Ramnani vs CA

- Art.1797

In a case, where two brothers engaged in a business venture, with one

furnishing the capital and the other contributing his industry, the Supreme
Court ruled that Justice and equity dictate that the two share equally the
fruit of their joint investment and efforts, because it was through the
industry and geniuses of the industrial partner that the property of the
venture was developed and improved into a valuable asset worth more than
P22 million. (Ramnani vs. Court of Appeals, 196 SCRA 731 [1991].)

27. Moran cs CA

- Art. 1797

4 | Page

A partner is entitled to receive only his share of the profits actually realized
by the venture. Even when an assurance was made by a partner that they
would earn a huge amount of profits, in the absence of fraud, the other
partner cannot claim a right to recover the profits promised where the
business was highly speculative and turned out to be a failure. Hidden risks
in any business venture have to be considered. (Moran, Jr. vs. Court of
Appeals, 133 SCRA 88 [1984].)
28. Ng Ya vs Sugbu Comm.

- Art. 1800

Hence, unless expressly withheld, the minor power to issue receipts is

included in the general powers of the manager, as this is in keeping with
present day business dealings. (Ng Ya vs. Sugbu Commercial Co., [C.A.] 50
O.G. 4913.)
29. Teague vs Martin

- Art. 1800

But a partner designated as one of the managers to take charge of selling

fish in Manila and the purchase of supplies has no authority to purchase for
the partnership a barge, a truck and an adding machine, inasmuch as
neither of these properties could be considered as supplies for the
partnership business (Teague vs. Martin, 53 Phil. 504 [1929].)
30. Santos vs Villanueva

- Art. 1800

Nor can the managing partner of a partnership formed for the purpose of
operating a tailoring shop sell or convey the tailoring shop which is
partnership property without the consent of all the partners. (Santos vs.
Villanueva, [C.A.] 50 O.G. 175.)
31. Bachrach vs La Protectora

- Art. 1804

A contract was entered into by a partner without the consent of the others,
there being no agreement with regard to the manner of management.
Facts: A, B, and C organized a partnership for the purpose of engaging in the
transportation business. Without a previous express authority, A contracted
an indebtedness for automobile supplies and accessories.
Issue: Are the partnership and the partners liable for said indebtedness?
Held: Yes. There being no agreement with regard to the manner of
management, all the partners are considered agents of the partnership. A
must be deemed to have authority to contract the indebtedness in question
inasmuch as it was incurred in the prosecution of the partnership business.
(Bachrach vs. La Protectora, 37 Phil. 441 [1918].)

5 | Page

32. Machuca vs Chuidian

- Art.1804

A, B, and C are partners. A may contract with D, whereby the latter will
participate in his (As) share in the profits of the partnership. This A can do
independently of the partnership
and in accordance with the principle of freedom to contract.
The original contract of partnership between A, B, and C is not in any manner
altered. D is considered merely a creditor of A who associated him in his
share. Consequently, D has no right to intervene in the partnership to which
he is a mere stranger. Like an assignee, D cannot interfere in the
management or administration of the partnership business, require
information or account, or inspect partnership books. (Art. 1813.)
A continues in the enjoyment of the rights and remains subject to the
liabilities of a partner as though no contract has been made by him with D.
D does not become a partner nor is he liable for the partnership debts even if
the agreement between A and D is with the knowledge and assent of B and
C. D is an investor. (see Machuca vs. Chuidian, 2 Phil. 210 [1903].)
33. Fue Leung vs IAC

- Art. 1809

The obligation to account is one which rests especially on the shoulders of a

managing or active partner, and is one of the special tasks of a liquidating or
surviving partner. (40 Am. Jur. 333.) Articles 1806, 1807, and 1809 show that
the right to demand accounting exists as long as the partnership lasts.
Prescription begins to run only upon the dissolution of the partnership when
the fi nal accounting is done. (Fue Leung vs. Intermediate Appellate Court,
169 SCRA 746 [1989]
34. Sison vs McQuaid

- Art. 1809

A partner seeks to recover 1/2 of the proceeds of a partnership transaction

without liquidation of the business.
Facts: A seeks to recover from B 1/2 of the purchase price of lumber sold by
the partnership to the United States Army. As complaint does not show why
he should be entitled to the sum he claims. It does not allege that there has
been a liquidation of the partnership business and the said sum has been
found to be due him as his share of the profits.
Issue: Should the proceeds from the sale of the lumber be considered profits?
Held: They cannot be considered profits until costs and expenses have been
deducted. Moreover, the profits of a business cannot be determined by
taking into account the result of one particular transaction instead of all the

6 | Page

transactions had. Hence, the need for a general liquidation before a member
of a partnership may claim a specific sum as his share of the profits. (Sison
vs. H. McQuaid, 94 Phil. 201 [1953].)
35. Ornum vs Lasala

- Art. 1809

Without objecting to a statement of accounts, a partner promised to sign the

same after receiving his shares, and after he has been paid, refused to sign
and instead demanded a liquidation.
Facts: A submitted a statement of accounts to B, his copartner. Instead of
objecting to said statement, B promised to sign the same as soon as he
received his shares as shown in said statement. After said shares had been
paid by A and accepted by B without reservation, the latter refused to sign
the statement. B demanded a new liquidation, claiming that he was entitled
to more than what the statement of account shows.
Issue: Is B entitled to a further liquidation?
Held: No. After accepting his shares without any reservation, B virtually
confirmed his approval of the statement of accounts, and its signing thereby
became a mere formality to be complied with by B exclusively. His refusal to
sign, after receiving the shares, amounted to a waiver of that formality in
favor of A who had already performed his obligation. This approval precludes
any right on the part of B to a further liquidation, unless he can show there
was fraud or mistake in said approval. (Ornum vs. Lasala, 74 Phil. 241
[1943].)
36. Clemente vs Galvan

- Art. 1811

A partner cannot separately assign his right to specific partnership property

but all of them can assign their rights in the same property.
(a) A partners right in specific partnership property is not assignable
because it is impossible to determine the extent of his beneficial interest in
the property until after the liquidation of partnership affairs. As property of
the partnership, the same could not be disposed of or mortgaged even by
the partner who contributed the same without the consent or approval of the
partnership or of the other partners. (Clemente vs. Galvan, 67 Phil. 565
[1939]
37. Leyte-SamarSales vs Cea

- Art. 1812

Partners interest not a debt due from partnership. A partner is not a

creditor of the partnership for the amount of his share. (The Leyte-Samar
Sales and K. Tomassi vs. S. Cea and O. Castrilla, 93 Phil. 100 [1953].)

7 | Page