On October 25, 1956, Pahamotang, Maglana and
EUFRACIO D. ROJAS, Plaintiff-Appellant,
vs. CONSTANCIO B. MAGLANA,Defendant-
Appellee.
Facts:
On January 14, 1955, Maglana and Rojas executed
their Articles of Co-Partnership called Eastcoast
Development Enterprises (EDE) with only the two of
them as partners. The partnership EDE with an
indefinite term of existence was duly registered. One
of the purposes of the duly-registered partnership
was to "apply or secure timber and/or minor forests
products licenses and concessions over public
and/or private forest lands and to operate, develop
and promote such forests rights and concessions."
A duly registered Articles of Co-Partnership was
filed together with an application for a timber
concession covering the area located at Cateel and
Baganga, Davao with the Bureau of Forestry which
was approved and a timber license was duly issued
and became the basis of subsequent renewals made
for and in behalf of the duly registered partnership
EDE.
Under the said Articles of Co-Partnership, appellee
Maglana shall manage the business affairs of the
partnership, including marketing and handling of
cash and is authorized to sign all papers and
instruments relating to the partnership, while
appellant Rojas shall be the logging superintendent
and shall manage the logging operations of the
partnership. It is also provided in the said articles of
co-partnership that all profits and losses of the
partnership shall be divided share and share alike
between the partners.
During the period from January 14, 1955 to April
30, 1956, there was no operation of said partnership
Because of the difficulties encountered, Rojas and
Maglana decided to avail of the services of
Pahamotang as industrial partner.
On March 4, 1956, Maglana, Rojas and Agustin
Pahamotang executed their Articles of Co-
Partnership under the firm name EASTCOAST
DEVELOPMENT ENTERPRISES (EDE). Aside from
the slight difference in the purpose of the second
partnership which is to hold and secure renewal of
timber license instead of to secure the license as in
the first partnership and the term of the second
partnership is fixed to thirty (30) years, everything
else is the same.
The partnership formed by Maglana, Pahamotang
and Rojas started operation on May 1, 1956, and
was able to ship logs and realize profits. An income
was derived from the proceeds of the logs in the sum
of P643,633.07.
Rojas executed a document entitled "CONDITIONAL
SALE OF INTEREST IN THE PARTNERSHIP,
EASTCOAST DEVELOPMENT ENTERPRISE"
(Exhibits "C" and "D") agreeing among themselves
that Maglana and Rojas shall purchase the interest,
share and participation in the Partnership of
Pahamotang assessed in the amount of P31,501.12.
It was also agreed in the said instrument that after
payment of the sum of P31,501.12 to Pahamotang
including the amount of loan secured by
Pahamotang in favor of the partnership, the two
(Maglana and Rojas) shall become the owners of all
equipment contributed by Pahamotang and the
EASTCOAST DEVELOPMENT ENTERPRISES, the
name also given to the second partnership, be
dissolved. Pahamotang was paid in fun on August
31, 1957. No other rights and obligations accrued in
the name of the second partnership (R.A. 921).
After the withdrawal of Pahamotang, the
partnership was continued by Maglana and Rojas
without the benefit of any written agreement or
reconstitution of their written Articles of
Partnership (Decision, R.A. 948)
On January 28, 1957, Rojas entered into a
management contract with another logging
enterprise, the CMS Estate, Inc. He left and
abandoned the partnership (Decision, R.A. 947).
On February 4, 1957, Rojas withdrew his equipment
from the partnership for use in the newly acquired
area.
The equipment withdrawn were his supposed
contributions to the first partnership and was
transferred to CMS Estate, Inc. by way of chattel
mortgage (Decision, R.A. p. 948).
On March 17, 1957, Maglana wrote Rojas reminding
the latter of his obligation to contribute, either in
cash or in equipment, to the capital investments of
the partnership as well as his obligation to perform
his duties as logging superintendent.
Two weeks after March 17, 1957, Rojas told
Maglana that he will not be able to comply with the
promised contributions and he will not work as
logging superintendent. Maglana then told Rojas
that the latter's share will just be 20% of the net
profits. Such was the sharing from 1957 to 1959
without complaint or dispute.
Meanwhile, Rojas took funds from the partnership
more than his contribution. Thus, in a letter dated
February 21, 1961 Maglana notified Rojas that he
dissolved the partnership (R.A. 949).
On April 7, 1961, Rojas filed an action before the
Court of First Instance of Davao against Maglana for
the recovery of properties, accounting, receivership
and damages, Rojas' petition for appointment of a
receiver was denied (R.A. 894).
Upon motion of Rojas on May 23, 1961, Judge
Romero appointed commissioners to examine the
long and voluminous accounts of the Eastcoast
Development Enterprises.
The motion to dismiss the complaint filed by
Maglana on June 21, 1961 was denied by Judge
Romero for want of merit. Judge Romero also
required the inclusion of the entire year 1961 in the
report to be submitted by the commissioners.
Accordingly, the commissioners started examining
the records and supporting papers of the
partnership as well as the information furnished
them by the parties, which were compiled in three
(3) volumes.
On May 11, 1964, Maglana filed his motion for leave
of court to amend his answer with counterclaim,
attaching thereto the amended answer (Ibid., pp.
26-336), which was granted on May 22, 1964qhich
was approved.
On June 29, 1965, Rojas filed his motion for
reconsideration but it was denied.
RTC: The lower court is of the view that the second
partnership superseded the first, so that when the
second partnership was dissolved there was no
written contract of co-partnership; there was no
reconstitution as provided for in the Maglana, Rojas
and Pahamotang partnership contract. Hence, the
partnership which was carried on by Rojas and
Maglana after the dissolution of the second
partnership was a de facto partnership and at will.
It was considered as a partnership at will because
there was no term, express or implied; no period was
fixed, expressly or impliedly
On the other hand, Rojas insists that the registered
partnership under the firm name of Eastcoast
Development Enterprises (EDE) evidenced by the
Articles of Co-Partnership dated has not been
novated, superseded and/or dissolved by the
unregistered articles of co-partnership among
appellant Rojas, appellee Maglana and Agustin
Pahamotang, and accordingly, the terms and
stipulations of said registered Articles of Co-
Partnership should govern the relations between
him and Maglana. Upon withdrawal of Agustin
Pahamotang from the unregistered partnership, the
legally constituted partnership EDE continues to
govern the relations between them and it was legal
error to consider a de facto partnership between
said two partners or a partnership at will. Hence,
the letter of appellee Maglana dated, did not legally
dissolve the registered partnership between them,
being in contravention of the partnership agreement
agreed upon and stipulated in their Articles of Co-
Partnership. Rather, appellant is entitled to the
rights enumerated in Article 1837 of the Civil Code
and to the sharing profits between them of "share
and share alike" as stipulated in the registered
Articles of Co-Partnership.
ISSUES: 1. The main issue in this case is the nature
of the partnership and legal relationship of the
Maglana-Rojas after Pahamotang retired from the
second partnership.
2. whether or not Maglana can unilaterally dissolve
the partnership
RULING:
1. After a careful study of the records as against the
conflicting claims of Rojas and Maglana, it appears
evident that it was not the intention of the partners
to dissolve the first partnership, upon the
constitution of the second one, which they
unmistakably called an "Additional Agreement".
Except for the fact that they took in one industrial
partner; gave him an equal share in the profits and
fixed the term of the second partnership to thirty
(30) years, everything else was the same. Thus, they
adopted the same name, EASTCOAST
DEVELOPMENT ENTERPRISES, they pursued the
same purposes and the capital contributions of
Rojas and Maglana as stipulated in both
partnerships call for the same amounts. Just as
important is the fact that all subsequent renewals
of Timber License No. 35-36 were secured in favor
of the First Partnership, the original licensee. To all
intents and purposes therefore, the First Articles of
Partnership were only amended, in the form of
Supplementary Articles of Co-Partnership which
was never registered. Otherwise stated, even during
the existence of the second partnership, all business
transactions were carried out under the duly
registered articles. As found by the trial court, it is
an admitted fact that even up to now, there are still
subsisting obligations and contracts of the latter. No
rights and obligations accrued in the name of the
second partnership except in favor of Pahamotang
which was fully paid by the duly registered
partnership.
On the other hand, there is no dispute that the
second partnership was dissolved by common
consent. Said dissolution did not affect the first
partnership which continued to exist. Significantly,
Maglana and Rojas agreed to purchase the interest,
share and participation in the second partnership of
Pahamotang and that thereafter, the two (Maglana
and Rojas) became the owners of equipment
contributed by Pahamotang. Even more convincing,
is the fact that Maglana, wrote Rojas, reminding the
latter of his obligation to contribute either in cash
or in equipment, to the capital investment of the
partnership as well as his obligation to perform his
duties as logging superintendent. This reminder
cannot refer to any other but to the provisions of the
duly registered Articles of Co-Partnership. As earlier
stated, Rojas replied that he will not be able to
comply with the promised contributions and he will
not work as logging superintendent. By such
statements, it is obvious that Roxas understood
what Maglana was referring to and left no room for
doubt that both considered themselves governed by
the articles of the duly registered partnership.
Under the circumstances, the relationship of Rojas
and Maglana after the withdrawal of Pahamotang
can neither be considered as a De Facto
Partnership, nor a Partnership at Will, for as
stressed, there is an existing partnership, duly
registered.
2. As to the question of whether or not Maglana can
unilaterally dissolve the partnership in the case at
bar, the answer is in the affirmative.
Hence, as there are only two parties when Maglana
notified Rojas that he dissolved the partnership, it
is in effect a notice of withdrawal.
Under Article 1830, par. 2 of the Civil Code, even if
there is a specified term, one partner can cause its
dissolution by expressly withdrawing even before
the expiration of the period, with or without
justifiable cause. Of course, if the cause is not
justified or no cause was given, the withdrawing
partner is liable for damages but in no case can he
be compelled to remain in the firm. With his
withdrawal, the number of members is decreased,
hence, the dissolution. And in whatever way he may
view the situation, the conclusion is inevitable that
Rojas and Maglana shall be guided in the liquidation
of the partnership by the provisions of its duly
registered Articles of Co-Partnership; that is, all
profits and losses of the partnership shall be divided
"share and share alike" between the partners.
But an accounting must first be made and which in
fact was ordered by the trial court and accomplished
by the commissioners appointed for the purpose.
Primelink Properties and Development Corp vs.
Lazatin-Magat
FACTS: Primelink Properties and Development
Corporation (Primelink for brevity) is a domestic
corporation engaged in real estate development. In
1994, Primelink Properties and the Lazatin siblings
entered into a joint venture agreement for the
development of a property into a residential
subdivision to be known as "Tagaytay Garden
Villas." Under the JVA, the Lazatin siblings obliged
themselves to contribute two parcels of land as their
share in the joint venture. For its part, Primelink
undertook to contribute money, labor, personnel,
machineries, equipment, contractor’s pool,
marketing activities, managerial expertise and other
needed resources to develop the property and
construct therein the units for sale to the
public. The Lazatins agreed to subject the title over
the subject property to an escrow agreement.
Conformably with the escrow agreement, the
owner’s duplicate of the title was deposited with the
China Banking Corporation.11 However, Primelink
failed to immediately secure a Development Permit
from Tagaytay City, and applied the permit only on
August 30, 1995. On October 12, 1995, the City
issued a Development Permit to Primelink. For 4
years however, Primelink failed to develop the said
land. So in 1998, the Lazatins filed a complaint to
rescind the joint venture agreement with prayer for
preliminary injunction. In said case, Primelink was
declared in default or failing to file an answer and
for asking multiple motions for extension. The trial
court eventually ruled in favor of the Lazatins and it
ordered Primelink to return the possession of said
land to the Lazatins as well as some improvements
which Primelink had so far over the property
without the Lazatins paying for said improvements.
This decision was affirmed by the Court of Appeals.
Primelink is now assailing the order; that turning
over improvements to the Lazatins without
reimbursement is unjust; that the Lazatins did not
ask the properties to be placed under their
possession but they merely asked for rescission.
ISSUES: 1. whether respondents are entitled to the
possession of the parcels of land covered by the JVA
and the improvements thereon introduced by
petitioners as their contribution to the JVA;
2. whether petitioners are entitled to reimbursement
for the value of the improvements on the parcels of
land.
HELD:
1. Yes.
We agree with petitioners that respondents did not
specifically pray in their complaint below that
possession of the improvements on the parcels of
land which they contributed to the JVA be
transferred to them. Respondents made a specific
prayer in their complaint that, upon the rescission
of the JVA, they be placed in possession of the
parcels of land subject of the agreement, and for
other "reliefs and such other remedies as are just
and equitable in the premises." However, the trial
court was not precluded from awarding possession
of the improvements on the parcels of land to
respondents in its decision. Section 2(c), Rule 7 of
the Rules of Court provides that a pleading shall
specify the relief sought but it may add as general
prayer for such further or other relief as may be
deemed just and equitable. Even without the prayer
for a specific remedy, proper relief may be granted
by the court if the facts alleged in the complaint and
the evidence introduced so warrant.50 The court
shall grant relief warranted by the allegations and
the proof even if no such relief is prayed for.51 The
prayer in the complaint for other reliefs equitable
and just in the premises justifies the grant of a relief
not otherwise specifically prayed for.52
The trial court was not proscribed from placing
respondents in possession of the parcels of land and
the improvements on the said parcels of land. It
bears stressing that the parcels of land, as well as
the improvements made thereon, were contributed
by the parties to the joint venture under the JVA,
hence, formed part of the assets of the joint
venture.53 The trial court declared that respondents
were entitled to the possession not only of the
parcels of land but also of the improvements thereon
as a consequence of its finding that petitioners
breached their agreement and defrauded
respondents of the net income under the JVA.
2. No.
We agree with the CA ruling that petitioner
Primelink and respondents entered into a joint
venture as evidenced by their JVA which, under the
Court’s ruling in Aurbach, is a form of partnership,
and as such is to be governed by the laws on
partnership.
When the RTC rescinded the JVA on complaint of
respondents based on the evidence on record that
petitioners willfully and persistently committed a
breach of the JVA, the court thereby
dissolved/cancelled the partnership.54With the
rescission of the JVA on account of petitioners’
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 begun but not yet
finished.55 On dissolution, the partnership is not
terminated but continues until the winding up of
partnership affairs is completed.56 Winding up
means the administration of the assets of the
partnership for the purpose of terminating the
business and discharging the obligations of the
partnership.
The transfer of the possession of the parcels of land
and the improvements thereon to respondents was
only for a specific purpose: the winding up of
partnership affairs, and the partition and
distribution of the net partnership assets as
provided by law.57 After all, Article 1836 of the New
Civil Code provides that unless otherwise agreed by
the parties in their JVA, respondents have the right
to wind up the partnership affairs:
Art. 1836. Unless otherwise agreed, the partners
who have not wrongfully dissolved the partnership
or the legal representative of the last surviving
partner, not insolvent, has the right to wind up the
partnership affairs, provided, however, that any
partner, his legal representative or his assignee,
upon cause shown, may obtain winding up by the
court.
It must be stressed, too, that although respondents
acquired possession of the lands and the
improvements thereon, the said lands and
improvements remained partnership property,
subject to the rights and obligations of the parties,
inter se, of the creditors and of third parties under
Articles 1837 and 1838 of the New Civil Code, and
subject to the outcome of the settlement of the
accounts between the parties as provided in Article
1839 of the New Civil Code, absent any agreement
of the parties in their JVA to the contrary.58 Until
the partnership accounts are determined, it cannot
be ascertained how much any of the parties is
entitled to, if at all.
It was thus premature for petitioner Primelink to be
demanding that it be indemnified for the value of the
improvements on the parcels of land owned by the
joint venture/partnership. Notably, the JVA of the
parties does not contain any provision designating
any party to wind up the affairs of the partnership.
TECK SEING AND CO., LTD., petitioner-
appellee.
SANTIAGO JO CHUNG, ET AL., partners,
vs.
PACIFIC COMMERCIAL COMPANY, ET AL.,
FACTS: Following the presentation of an application
to be adjudged an insolvent by the "Sociedad
Mercantil, Teck Seing & Co., Ltd.," the creditors, the
Pacific Commercial Company, Piñol & Company,
Riu Hermanos, and W. H. Anderson & Company,
filed a motion in which the Court was prayed to
enter an order: "(A) Declaring the individual
partners as described in paragraph 5 parties to this
proceeding; (B) to require each of said partners to
file an inventory of his property in the manner
required by section 51 of Act No. 1956; and (C) that
each of said partners be adjudicated insolvent
debtors in this proceeding." The trial judge first
granted the motion, but, subsequently, on
opposition being renewed, denied it. It is from this
last order that an appeal was taken in accordance
with section 82 of the Insolvency Law.
ISSUE: WON the partnership contract created a
limited partnership.
RULING: NO
To establish a limited partnership there must be, at
least, one general partner and the name of the least
one of the general partners must appear in the firm
name. (Code of Commerce, arts. 122 [2], 146, 148.)
But neither of these requirements have been
fulfilled. The general rule is, that those who seek to
avail themselves of the protection of laws permitting
the creation of limited partnerships must show a
substantially full compliance with such laws. A
limited partnership that has not complied with the
law of its creation is not considered a limited
partnership at all, but a general partnership in
which all the members are liable.
Article 125 of the Code of Commerce provides that
the articles of general copartnership must estate the
names, surnames, and domiciles of the partners;
the firm name; the names, and surnames of the
partners to whom the management of the firm and
the use of its signature is instrusted; the capital
which each partner contributes in cash, credits, or
property, stating the value given the latter or the
basis on which their appraisement is to be made;
the duration of the copartnership; and the amounts
which, in a proper case, are to be given to each
managing partner annually for his private expenses,
while the succeeding article of the Code provides
that the general copartnership must transact
business under the name of all its members, of
several of them, or of one only. Turning to the
document before us, it will be noted that all of the
requirements of the Code have been met, with the
sole exception of that relating to the composition of
the firm name. We leave consideration of this phase
of the case for later discussion.
The remaining possibility is the revised contention
of counsel for the petitioners to the effect that Teck
Seing & Co., Ltd., is "una sociedad mercantil "de
facto" solamente" (only a de facto commercial
association), and that the decision of the Supreme
court in the case of Hung-Man-Yoc vs. Kieng-
Chiong-Seng [1906], 6 Phil., 498), is controlling. It
was this argument which convinced the trial judge,
who gave effect to his understanding of the case last
cited and which here must be given serious
attention.
The decision in Hung-Man-Yoc vs. Kieng-Chiong-
Seng, supra, discloses that the firm Kieng-Chiong-
Seng was not organized by means of any public
document; that the partnership had not been
recorded in the mercantile registry; and that Kieng-
Chiong-Seng was not proven to be the firm name,
but rather the designation of the partnership. The
conclusion then was, that the partnership in
question was merely de facto and that, therefore,
giving effect to the provisions of article 120 of the
Code of Commerce, the right of action was against
the persons in charge of the management of the
association.
Laying the facts of the case of Hung-Man-Yoc vs.
Kieng-Chiong-Seng, supra, side by side with the
facts before us, a marked difference is at once
disclosed. In the cited case, the organization of the
partnership was not evidenced by any public
document; here, it is by a public document. In the
cited case, the partnership naturally could not
present a public instrument for record in the
mercantile registry; here, the contract of
partnership has been duly registered. But the two
cases are similar in that the firm name failed to
include the name of any of the partners.
We come then to the ultimate question, which is,
whether we should follow the decision in Hung-
Man-Yoc vs. Kieng-Chiong-Seng, supra, or whether
we should differentiate the two cases, holding Teck
Seing & Co., Ltd., a general copartnership,
notwithstanding the failure of the firm name to
include the name of one of the partners. Let us now
notice this decisive point in the case.
Article 119 of the Code of Commerce requires every
commercial association before beginning its
business to state its article, agreements, and
conditions in a public instrument, which shall be
presented for record in the mercantile registry.
Article 120, next following, provides that the
persons in charge of the management of the
association who violate the provisions of the
foregoing article shall be responsible in solidum to
the persons not members of the association with
whom they may have transacted business in the
name of the association. Applied to the facts before
us, it would seem that Teck Seing & Co., Ltd. has
fulfilled the provisions of article 119. Moreover, to
permit the creditors only to look to the person in
charge of the management of the association, the
partner Lim Yogsing, would not prove very helpful
to them.
What is said in article 126 of the Code of Commerce
relating to the general copartnership transacting
business under the name of all its members or of
several of them or of one only, is wisely included in
our commercial law. It would appear, however, that
this provision was inserted more for the protection
of the creditors than of the partners themselves. A
distinction could well be drawn between the right of
the alleged partnership to institute action when
failing to live up to the provisions of the law, or even
the rights of the partners as among themselves, and
the right of a third person to hold responsible a
general copartnership which merely lacks a legal
firm name in order to make it a partnership de jure.

The civil law and the common law alike seem to

point to a difference between the rights of the
partners who have failed to comply with the law and
the rights of third persons who have dealt with the
partnership.

The supreme court of Spain has repeatedly held that

notwithstanding the obligation of the members to
register the articles of association in the commercial
registry, agreements containing all the essential
requisites are valid as between the contracting
parties, whatever the form adopted, and that, while
the failure to register in the commercial registry
necessarily precludes the members from enforcing
rights acquired by them against third persons, such
failure cannot prejudice the rights of third persons.
(See decisions of December 6, 1887, January 25,
1888, November 10, 1890, and January 26, 1900.)
The same reasoning would be applicable to the less
formal requisite pertaining to the firm name.

The common law is to the same effect. The State of

Michigan had a statute prohibiting the transaction
of business under an assumed name or any other
than the real name of the individual conducting the
same, unless such person shall file with the county
clerk a certificate setting forth the name under
which the business is to be conducted and the real
name of each of the partners, with their residences
and post-office addresses, and making a violation
thereof a misdemeanor.

The legal intention deducible from the acts of the

parties controls in determining the existence of a
partnership. If they intend to do a thing which in
law constitutes a partnership, they are partners,
although their purpose was to avoid the creation of
such relation. Here, the intention of the persons
making up Teck Seing & co., Ltd. was to establish a
partnership which they erroneously denominated a
limited partnership. If this was their purpose, all
subterfuges resorted to in order to evade liability for
possible losses, while assuming their enjoyment of
the advantages to be derived from the relation, must
be disregarded. The partners who have disguised
their identity under a designation distinct from that
of any of the members of the firm should be
penalized, and not the creditors who presumably
have dealt with the partnership in good faith.

We reach the conclusion that the contract of

partnership found in the document hereinbefore
quoted established a general partnership or, to be
more exact, a partnership as this word is used in
the Insolvency Law.