Eligio Catalan, movant and appellee, vs. Ramon Gatchalian, oppositor and appellant.

G.R. No. L-11468 April 22, 1959

James Christian S. Maala

FACTS:

Eligio Catalan (Catalan) and Ramon Gatchalian (Gatchalian) were partners who contributed, among
others, two parcels of land into the partnership. Subsequently, they mortgage the said parcels of land, including
the improvements thereon, to Dr. Dionisio Marave (Marave) as a security for the a loan obtained from the latter.

However, the partnership failed to pay the loan, prompting Marave to foreclose the mortgage. In the
foreclosure sale, Marave was declared the highest bidder. Before the expiration of the one (1) year redemption
period, Catalan, on his own personal capacity and from his own personal funds, redeemed the subject parcels of
land. Thereafter, the Sheriff issued Catalan a certificate of redemption. Also, upon Catalan’s petition, the lower
court ordered the cancellation of the title in the name of the partnership and the issuance of a new one under the
name of Catalan.

ISSUE:

1. Whether or not the properties redeemed by Catalan in his own personal capacity and personal funds can
be validly appropriated to his personal assets notwithstanding him being a partner of Gatchalian.

RULING:

No. Article 1806 of the New Civil Code provides that every partner shall render on demand true and full
information of all things affecting the partnership. Further, under Article 1807, a partner shall hold, as a trustee,
any benefits or profits derived by him without the consent of the other partners from any transaction connected
with the formation, conduct, or liquidation of the partnership. Thus, the act of Catalan in redeeming the properties
once belonging to the firm should inure to the benefit of the partnership. Catalan shall only hold the property in
trust for the partnership subject to his right of reimbursement.

Also, the principle of subrogation cannot be applied because at the time Catalan redeemed the property,
Dr. Marave, the purchaser at public auction, had not yet become the absolute owner of said properties. He never
received the definite and formal certificate of sale constituting muniment of title, for the reason that redemption
was made. Consequently, there was no title to the properties which he could convey to Catalan as redemptioner.
 R. Y. Hanlon, plaintiff – appellee, vs. John W. Haussermann and A. W. Beam, defendants- appellants.
George C. Sellner, intervener.
G.R. No. L-14617 February 18, 1920
James Christian S. Maala

FACTS:

John W. Haussermann (Haussermann) and A. W. Beam (Beam) are businessmen associated with Benguet
Consolidated Mining Company. In the year 1909, the company suffered equipment damages and impairments
leaving it without any working capital.

R. Y. Hanlon (Hanlon) and George C. Sellner (Sellner) then offered Haussermann and Beam a plan to
rebuild the said equipment for the company to be able to continue operations. Upon agreeing to certain terms, a
writer contract was executed by the parties.

Under the said contract, Haussermann and Beam shall be allocated 100,000 shares of stock to be sold and
raise 25,000.00Php. On the other hand, Sellner was allocated 200,000 share to be used to raise the amount of
50,000Php. Further, should any one of the said parties be unable to perform their obligation, the other party shall
be relieved of their obligation as well.

Sellner failed to raise the said 200,000Php. This prompter Hausserman and Beam to seek the help of the
Bank of the Philippine Islands. Through this new agreement, the mining company flourished.

ISSUE:

1. Whether or not a partnership was created and should the answer be in the positive, Hanlon be in a
position to demand an accounting of the partnership funds and share in the profits.

RULING:

No. The contract executed by the parties specifically states that should one of the parties fails to perform
their obligation to raise the amount assigned to them, the others shall be absolved from their duty to do the same.
In this regard, it can be said that such was a resolutory condition of a contract and the happening of which will
terminate the agreement embodied by the contract. Thus, since Sellner failed to raise the 200,000Php due from
him, the other parties shall be then absolved from the contract.

Secondly, since there was no contract to speak of in the first place, Hanlon cannot demand from
Haussermann and Beam an accounting of the firm’s book and a share in its profit.
 Dan Fue Leung, petitioner, vs. Hon. Intermediate Appellate Court and Leung Yiu, respondents.
G.R. No. 70926 January 31, 1989
James Christian S. Maala

FACTS:

Dan Fue Leung (Leung) is a businessman and owner of Sun Wah Panciteria. A complaint was filed by Leung
Yiu (Yiu) with the then Court of First Instance of Manila to recover the sum equivalent to twenty-two percent
(22%) of the annual profits derived from the operation of Sun Wah Panciteria since October 1955 from petitioner
Leung.

Yiu claims that he contributed to the capital of Sun Wah Panciteria during its establishment and was
promised a 22% return based on its annual profits. Subsequently, Yiu produced a receipt of four thousand pesos
(4,000.00Php) from Leung as evidence to bolster his claim. Further, a check amounting to twelve thousand pesos
(12,000.00Php) was also admitted. The said check represents the share of Yiu in the annual profit of the business.

Leung, on the other hand, denied that the 4,000Php given by Yiu is a contribution to the partnership but
rather just merely a financial assistance. Leung also contested the authenticity of the receipts evidencing the
4,000.00Php contribution. Moreover, he presented various government licenses and permits showing that Sun
Wah Panciteria is a sole proprietorship sole owned by Leung.

RTC ruled in favor of Yiu and such ruling was affirmed with modifications by the CA.

ISSUES:

1. Whether or not there exists a partnership between Leung and Yiu.

2. Whether or not the cause of action of Yiu has prescribed.

RULING:

1. Yes. Article 1767 of the Civil Code proveds that by the contract of partnership, two or more persons bind
themselves to contribute money, property or industry to a common fund, with the intention of dividing
the profits among themselves. Therefore, the courts did not err in ruling that the parties are partners
notwithstanding the use of the term “financial assistance” therein
2. No. Leung, in his argument, invoked Article 1144 of the Civil Code which provides that causes of action
arising from a written contract, an obligation written by law, or a judgment must be brought to court
within ten (10) years from the time the right of action accrues. This provision, however, is not applicable
to this case. Since Yiu is considered a partner, his right to demand an accounting of the firm’s funds shall
not cease until such partnership is terminated. Here, Yiu’s cause of action is based on the said right. Hence,
for as long as the partnership continues, Yiu’s cause of action based on his right to demand an accounting
shall also continue.
 Sergio V. Sison, plaintiff-appellant, vs. Helen J. McQuiad, defendant-appellee.
G.R. No. L-6304 December 29, 1953
James Christian S. Maala

FACTS:

Sergio V. Sison (Sison), plaintiff-appellant, loaned various sums of money to Helen J. McQuiad (McQuaid),
defendant-appellee, to enable the latter to pay her obligation to the Bureau of Forestry and to add to her capital
in her lumber business. However, McQuaid failed to pay her indebtedness to Sison. McQuaid then offered Sison
a share in her business as a partner instead of repaying him the she borrowed. Sison acceded to McQuiad’s
proposal and formed a partnership with the latter in a fifty-fifty arrangement.

Subsequently, the partnership sold to the United States Army two hundred and thirty thousand (230,000)
board feet of lumber for thirteen thousand eight hundred thousand pesos (13,800Php), for the collection of which
sum, defendant, as manager of the partnership, filed the corresponding claim with said army after the war. Having
been paid the said amount, Sison demanded his share of the proceeds amounting to six thousand nine hundred
pesos (6,900,00Php) which McQuad refused to deliver. Prompting Sison to file the instant case.

RTC dismissed the case due to prescription and the lack of cause of action. CA affirmed the said decision.

ISSUE:

1. Whether or not the complaint states a valid cause of action

RULING:

No. The complaint does not show why he should be entitled to the sum he claims. Nowhere in his
complaint shows any signs of the liquidation of the partnership business and the said sum has been found to be
due him as his share of the profits. The proceeds from the sale of lumber cannot be considered profits unless and
until costs and expenses have been deducted. Further, the profits of the business cannot be determined by taking
into account the result of one particular transaction instead of all the transactions had. Therefore, before a partner
may validly claim his specific share in the profits of the partnership, a proper general liquidation is needed.
 Jose Fernandez, plaintiff-appellant, vs. Francisco De La Rosa, defendant-appellee
G.R. No. 413 February 02, 1903
James Christian S. Maala

FACTS:

Jose Fernandez (Fernandez), plaintiff-appellant, alleged that sometime in January, 1900, he and Francisco
De La Rosa (De La Rosa), defendant-appellee, entered into a verbal agreement to form a partnership for the
purchase of cascoes and having the same be rented in Manila. De La Rosa, as alleged, was the one agreed upon
to procure the cascoes. Further, each partner is to furnish, for that purpose, such amount of money and that the
profits earned is to be divided proportionately among themselves.

In the same month, Fernandez claims that he furnished De La Rosa Php300.00 to purchase a casco
designated as No. 1515. De La Rosa purchased the said casco for Php500.00 from Doña Isabel Vales under his own
name. Fernandez then gave De La Rosa another Php300.00 for the repairs on this casco. On the fifth of the
following March, Fernandez yet again furnished the defendant Php825.00 to purchase another casco designated
as No. 2089. The second casco costs Php1,000.00 and was purchased from Luis R. Yangco under De La Rosa own
name.

However, in April of the same year, when the parties decided to draw up their Articles of Partnership for
the purpose of embodying the same in an authentic document, De La Rosa proposed a draft that differed
materially from the terms of the earlier verbal agreement. De La Rosa also refused to include casco No. 2089 in
the partnership. This resulted to the partners’ inability to come to an understanding and no written agreement
was executed. Subsequently, the defendant returned to Fernandez the total amount of Php1,125.00 which was
received with reservation on his part of all his right as a partner. De La Rosa remained in control of the cascoes
and Fernandez made a demand for an accounting from the latter, which De La Rosa also refused to render.
Moreover, De La Rosa denied the existence of the partnership altogether.

The defendant, on his part, admitted that the parties discussed between themselves and one Marcos
Angulo, partner of the plaintiff in his bakery business, the possibility of entering into a partnership among
themselves; but such agreement did not materialize. De La Rosa also denied that the plaintiff gave him any money
in January 1900; that the money given to De La Rosa was a loan on his own account from the bakery firm the
plaintiff had. However, the defendant admitted that he received the amount of PHP825.00 from the plaintiff for
the purchase of casco No. 2089.

ISSUE:

1. Whether or not the partnership was terminated as a result of the act of the plaintiff receiving back the
PHP1,125.00 thus relieving the defendant from his duty to render an accounting.

RULING:

No. The court ruled that the amount returned to the plaintiff was insufficient since it did not include the
Php300.00 given to De La Rosa for the repairs of casco no. 1515. Further, it was also possible that a profit was
realized since the cascoes were put for hire in Manila; and such profit still remained in the hands of the defendant.
Thus, such acceptance of the money by the plaintiff did not terminate the partnership. Moreover, since the
plaintiff did not, in any way, waived his right to the partnership by his act of receiving the reimbursement money.
Hence, the plaintiff is still entitled to an accounting of the defendant’s administration of the partnership property,
and of profits derived therefrom.
 Jose Garrido, plaintiff-appellant, vs. Agustin Asencio, defendant-appellee
G.R. No. L-5963 May 20, 1953
James Christian S. Maala

FACTS:

Jose Garrido (Garrido) and Agustin Asencio (Asencio) formed a partnership, Asencio y Cia. However, the
business of the partnership did not prosper and it was later on dissolved by mutual agreement of the parties.
Subsequently, Garrido demanded the return of the capital he invested in the said partnership from Asencio, the
one who was in charge of the books and the funds of the firm. Asencio, on the other hand, denied that there was
anything due to Garrido because of the business losses suffered by their partnership business. As a result, Garrido
filed an action to recover the said capital from Asencio. The latter also filed a cross complaint wherein he prayed
for a judgment against Garrido for a certain amount which he alleged to be due by the plaintiff under the articles
of partnership on account of plaintiff’s share of the said losses.

ISSUE:

1. Whether or not the losses need be proved by Asencio, him being the one in charge of the books and funds
of the firm.

RULING:

No. The Court, upon investigation, determined that, although the books and funds are in the hands of
Asencio, Garrido likewise had access to the same. Moreover, certain line items therein were even corrected by
the latter. Hence, since the firm’s ledgers were available to the plaintiff-appellant, and upon the court’s scrutiny
of such documents, it was ruled that the losses declared were accurate and need no further proving.
 Jose Ornum and Emerenciana Ornum, petitioners, vs. Mariano, Lasala, et al., respondent
G.R. No. L-47823 July 26, 1943
James Christian S. Maala

FACTS:

In 1908, Pedro Lasala (Pedro), father of respondents, formed a partnership with Emerenciana Ornum
(Emerenciana) in Romblon wherein the former will be the capitalist partner, investing one thousand pesos
(1,000.00Php), and the latter being the industrial partner. Thereafter, Emerenciana, following the wishes of his
wife, asked for the dissolution of the partnership. Emerenciana then asked Jose Ornum (Jose) to replace him in
the partnership for a consideration of five hundred five pesos and fifty four centavos (505.55Php).

Upon Pedro’s death, his children, the respondents herein, succeeded him in all his rights and interests in
the partnership. The partners never knew each other personally nor any formal partnership agreement been
executed between them.

The financial statements were periodically prepared by the petitioner and sent to the respondents who
invariably did not object anything thereto. However, on May 27, 1932, the date of the last statement of accounts,
the respondents communicated their desire to dissolve the partnership. Because of the request, Jose remitted
the total amount due to the respondents but the same was not signed by them (respondents).

Subsequently, the respondents filed a complaint praying for an accounting and final liquidation of the
assets of the partnership.

CFI of Manila ruled in favor of the petitioners stating that the respondents lost their right to a further
accounting the moment they received and accepted their shares. However, the CA reversed the judgment on the
basis that the statement of account sent to the respondents remained unsigned

ISSUE:

1. Whether or not the respondents accepted the statement of accounts sent by the petitioner thus
precluding them from a further accounting of partnership funds.

RULING:

Yes. The Supreme Court held that the last and final statement of accounts were tacitly approved by the
respondents due to the failure of said respondents to object to the statement and their promise to sign thereon
as soon as they receive their share in the partnership. After the respondents received their share in the
partnership, the approval of the statement was virtually confirmed and its signing thereby became a mere
formality to be complied with solely by the respondents. This act of refusal precluded the respondents from
demanding any further accounting from the petitioners unless such approval was attended to with fraud, deceit,
error or mistake.
 Inocencia Deluao and Felipe Deluao, plaintiffs-appellee, vs. Nicanor Casteel and Juan Depra, defendants,
Nicanor Casteel, defendant-appellant.
G.R. No. L-21906 December 24, 1968
James Christian S. Maala

FACTS:

Nicanor Casteel (Casteel), in 1940, tried several times to obtain a fishpond permit in vain because the
bureau of fisheries continuously denied his application. Not losing interest, Casteel filed a motion for
reconsideration. However, while the said motion was pending resolution, Casteel was advised that no further
action would be taken on his motion unless he filed a new application. Meanwhile, several applications were
submitted by other persons for the portions of the area covered by Casteel’s application. Because of the surge of
applications, Casteel realized the urgent necessity of expanding his occupation in order to prevent old and new
squatters from usurping the land. To finance such construction, Casteel sought the help of his uncle, Felipe Deluao
(Felipe). Moreover, upon learning that portions of the land Casteel applied for were already occupied by his rival,
Casteel immediately filed a protest and applications but despite the improvements introduced thereon, the
Director of Fisheries nevertheless rejected the said applications. This prompted Casteel to appeal to the Secretary
of Agriculture and Natural Resources.

Meanwhile, Inocencia Deluao (Inocencia) and Casteel entered into a contract of service whereby it
provides that Inocencia will be the administrator of the said fishpond and that Casteel will be the Manager and
sole buyer of all the produce of the fishpond.

Thereafter, the Secretary of Agriculture and Natural Resources rendered a decision reinstating Casteel’s
application of a fishpond permit and subsequently revoking other fishpond permits within Casteel’s area with
costs against Casteel. Then sometime in January 1951, Casteel forbade Inocencia from further administering the
fishpond.

Alleging a violation in their service contract, Inocencia filed a complaint against Casteel. The lower court
ruled in favor of Inocencia which was appealed by Casteel.

ISSUE:

1. Whether or not the reinstatement of Casteel terminated the partnership between him and Deluao

RULING:

Yes. The reinstatement of Casteel dissolved the partnership between him and Deluao. The arrangement
under the contract of service remained in force until the decision of the Secretary of Agriculture and Natural
Resources was issued with regard to Casteel’s case. This development, by itself, brought about the dissolution of
the partnership. Since the partnership had for its object the division into two equal parts of the fishpond between
the appellees and the appellant after it shall have been awarded to the latter, and therefore it envisaged the
unauthorized transfer of one half thereof to parties other than the applicant Casteel, it was dissolved by the
approval of his application and the award to him of the fishpond.
 The Leyte-Samar Sales Co., and Raymundo Tomassi, petitioners, vs. Sulpicio V. Cea, in his capacity as
Judge of the Court of First Instance of Leyte and Olegario Lastrilla, respondents.
G.R. No. L-5963 May 20, 1953
James Christian S. Maala

FACTS:

This cases originated from a suit for damages by the plaintiffs, Leyte-Samar Sales Co. (LESSCO) and
Raymundo Tomassi (Tomassi) against the Far Eastern Lumber & Commercial Co. (FELCO), Arnold Hall, Fred Brown
and Jean Roxas. Judgment was rendered in favor of LESSCO and Tomassi ordering the other party to pay the
former. The CA confirmed the said judgment. The decision having become final, the Sheriff sold at auction all the
rights, interests, titles and participation of the defendants in certain buildings and properties described in the
certificate to Robert Dorfe and Pepito Asturias.

However, Olegario Lastrilla (Lastrilla) filed in the case a motion wherein he claimed to be the owner by
purchase prior to the auction sale from Fred Brown. Further, he asked the court that the Sheriff be required to
retain in his possession so much of the deeds of the auction as may be necessary to pay his right. Over the
objection of the petitioners, the judge granted Lastrilla’s request. Subsequently, the court modified its order of
delivery and merely declared that Lastrilla was entitled to seventeen percent (17%) of the properties sold.

ISSUE:

1. Whether or not Lastrilla is a partner in LESSCO and, as such, may validly claim his share in the proceeds of
the auction sale.

RULING:

No. Assuming arguendo that Lastrilla was indeed a partner in LESSCO, having received the shares of Fred
Brown, the remedy available to a partner who was not implicated in a civil suit against his partners is to claim the
property, and not the proceeds of the sale. The reason is that the auction sale was made for the judgment creditor
and not anybody else.
 PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM
NAME "SYCIP, SALAZAR, FELICIANO, HERNANDEZ & CASTILLO." LUCIANO E. SALAZAR, FLORENTINO P.
FELICIANO, BENILDO G. HERNANDEZ. GREGORIO R. CASTILLO. ALBERTO P. SAN JUAN, JUAN C. REYES. JR.,
ANDRES G. GATMAITAN, JUSTINO H. CACANINDIN, NOEL A. LAMAN, ETHELWOLDO E. FERNANDEZ, ANGELITO
C. IMPERIO, EDUARDO R. CENIZA, TRISTAN A. CATINDIG, ANCHETA K. TAN, and ALICE V. PESIGAN, petitioners.

IN THE MATTER OF THE PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME "OZAETA,
ROMULO, DE LEON, MABANTA & REYES." RICARDO J. ROMULO, BENJAMIN M. DE LEON, ROMAN MABANTA,
JR., JOSE MA, REYES, JESUS S. J. SAYOC, EDUARDO DE LOS ANGELES, and JOSE F. BUENAVENTURA, petitioners.

July 30, 1979

James Christian S. Maala

FACTS:

ISSUE:

RULING: