MAXIMO GUIDOTE v.

ROMANA BORJA
GR. No. 28920 | October 24, 1928

The death of one of the partners dissolves the partnership, but the liquidation of its affairs is by law entrusted to the surviving partners, or to
liquidators appointed by them, and not to the executors of the deceased partner.

FACTS:
Maximo Guidote filed a complaint against the administratix of the estate of Narciso Santos which is Romana Borja, herein
defendant. Guidote intends to recover a monetary sum of about 9,000 pesos owing from the net profits from Taller
Sinukuan, a partnership formed by the deceased as the capitalist partner and the plaintiff as the industrialist partner. Borja
admitted the existence of the partnership but likewise prayed for the accounting of the partnership and for the Guidote to
pay the estate 25,000 owed to Narciso Santos.

Guidote complied with such request and accounted the business of the partnership but it was so confusing that much of
it has no probative value. What is clear however is that Maximo Guidote is the sole surviving partner of the partnership
when Narciso Santos died and that the former failed to liquidate the affairs of the partnership and to render an accounting
therof.

Romana Borja presented a different accounting and it was determined that Guidote is indebted to Narciso Santos in the
amount of about 26,000 pesos after the evidence presented by Guidote was discarded by the trial court since the documents
and witnesses are unreliable and deserves scant consideration. Plaintiff was then ordered to pay to the estate of Narciso
Santos the sum of 26,020.89 pesos.

ISSUE:
Whether or not the legal representatives are the ones responsible or the accounting of the partnership upon death of the
partner? (NO)

RULING:
NO. In the case of Wahl v. Donaldson Sim & Co., it was held that the death of one of the partners dissolves the
partnership, but that the liquidation of its affairs is by law entrusted not to the executors of the deceased partner, but to
the surviving partners or to liquidators appointed by them.

JOSUE SONCUYA v. CARMEN DE LUNA

GR. No. 45464 | April 28, 1939
For a partner to be able to claim from another partner who manages the general civil partnership, damages allegedly suffered by him by reason
of the fraudulent administration of the latter, a previous liquidation of said partnership is necessary.

FACTS:
Josue Soncuya filed a complaint against Carmen De Luna, co-administratix of the estate of Librada Avelino, for payment
of damages in the amount of about 700,000 pesos due to the fraudulent administration of Centro Escolar de Senoritas, to
which the three are members thereof.

ISSUE:
Whether or not liquidation of the partnership is proper before the determination or adjudication of damages? (YES)

RULING:
YES. It is necessary that a liquidation of the business be made so that the profits and losses may be known and the causes
of the complaint may be more fleshed out which is the substance of the claim for damages. Such is necessary so that the
liability and accountability of each partner may be equitably determined.

URBANO LOTA v. BENIGNO TOLENTINO

GR. No. L-3518 | February 29, 1952
 The death of one of the partners dissolves the partnership, but the liquidation of its affairs is by law entrusted to the surviving partners, or to
liquidators appointed by them, and not to the executors of the deceased partner.

FACTS:
Urbano Lota filed a motion requesting that his descendants, all surnamed Tolentino be substituted as heirs of the defendant
in this case. Tolentino, the defendant, assailed that such motion is purely personal in character and his cause of action has
already extinguished.

On March 3, 1937, plaintiff filed an action against defendant to order the latter (a) to render an accounting of his
management of their partnership, and (b) to deliver the plaintiff whatever share he may have in the assets of the partnership
after the liquidation has been approved by the Court. The plaintiff died in 1938, and on September 28, 1939, he was
substituted by the administrator of his estate, Solomon Lota.

The present appellant is Solomon Lota, in his capacity as administrator of the estate of Urbano Lota, original plaintiff,
who died in l938. The decisive question that arises is whether or not, after the death of the defendant Benigno Tolentino
on November 22, 1939, plaintiff's action for accounting and liquidation of the partnership formed in l918 between Urbano
Lota and Benigno Tolentino, of which the latter was the industrial and managing partner, may be continued against the
heirs of Benigno Tolentino. This question was decided adversely to the appellant by the lower court and, in our opinion,
correctly.
ISSUE:
Whether or not after the death of the defendant Benigno Tolentino, plaintiff's action for accounting and liquidation of the
partnership formed in 1918 between Urbano Lota and Benigno Tolentino, may be continued against the heirs of Benigno
Tolentino

RULING:
NO. If the plaintiff was genuinely interested in substituting the proper party, assuming that plaintiff's action may still be
pursued after Tolentino's death, he should have taken timely measures to have the administratrix appointed on August 8,
1941, qualify or, in case of her failure or refusal, to procure the appointment of another administrator; because the plaintiff
could have availed himself of section 6, Rule 80, of the Rules of Court, providing that "letters of administration may be
granted to any qualified applicant, though it appears that there are other competent persons having better right to the
administration, if such persons fail to appear when notified and claim the issuance of letters to themselves." Certainly,
inaction for almost eight years (after the issuance of letters of administration) on the part of the appellant, sufficiently
implies indifference to or desistance from its suit.

The theory of the appellant is that the heirs may properly be substituted for the deceased Benigno Tolentino, because they
are in possession of property allegedly belonging to the partnership in question, and the appellant seeks the recovery
thereof. Apart from the fact that said allegation seems to refer to cause of action foreign to the claim for accounting and
liquidation against Tolentino, and should have been made in proper pleading to duly admitted by the lower court, the filing
of appellant's motion for substitution more than twelve years after the institution of the complaint came too late and
already called for the prosecution. It is immaterial that, before the appealed resolution was issued by the lower court, the
appellant attempted to have the deceased defendant had not yet been properly substituted.
 SINGSONG v. ISABELLA SAWMILL
GR. No. L-27343 | February 28, 1979

When the partnership is dissolved, the partnership is not terminated but continues until winding up of business. While the dissolution is caused
by a partner ceasing to be associated in the carrying on of the business, the partnership is not terminated but continuous until the winding up of
the business.

FACTS:
In 1951, defendants entered into a contract of partnership under the firm name “Isabela Sawmill”. In 1956 the plaintiff
sold to the partnership a motor truck and two tractors. The partnership was not able to pay their whole balance even after
demand was made. One of the partners withdrew from the partnership but instead of terminating the said partnership it
was continued by the two remaining partners under the same firm name. Plaintiffs also seek the annulment of the
assignment of right with chattel mortgage entered into by the withdrawing partner and the remaining partners. The
appellants contend that the chattel mortgage may no longer be nullified because it had been judicially approved and said
chattel mortgage had been judicially foreclosed.

ISSUE:
Whether the withdrawal of one of the partners dissolved the partnership. (NO)

RULING:
NO. It does not appear that the withdrawal of the partner was not published in the newspapers. The appellees and the
public in general had a right to expect that whatever, credit they extended to the remaining partners could be enforced
against the properties of the partnership. The withdrawing partner cannot be relieved from her liability to the creditor of
the partnership due to her own fault by not insisting on the liquidation of the partnership. Though she had acted in good
faith, the appellees also acted in good faith in extending credit to the partnership. Where one of two innocent persons
must suffer, that person who gave occasion for the damages to be caused must bear the consequences. Technically, the
partnership was dissolved by the withdrawal of one of the partners. Through her acts of entering into a memorandum
with the remaining partners misled the creditors that they were doing business with the partnership. Hence, from the order
of the lower court ordering the withdrawing partner to pay the plaintiffs, she is thus entitled for reimbursement from the
remaining partners.
 DR. SIMEON CLARIDADES v. VICENTE MERCADER
GR. No. L-27343 | February 28, 1979

An action for the liquidation personal one, which may be brought in the place of the residence of the plaintiff or the defendant.

FACTS:
Dr. Simeon Claridades filed an action against Vicente Mercader and Perfecto Fernandez in the Court of First Instance in
Bulacan for the dissolution of their partnership and an accounting of the operation such business, specifically a fishpond
in Marinduque which is the main asset of the partnership.

The defendants admitted the existence of the partnership which was unproductive. It was subject of a delinquency sale
owing to the unpaid taxes and charges. Other parties sought to intervene in the case since they have an interest in the
outcome of the case.

ISSUE:
Whether or not the action for the dissolution of the partnership should have been instituted in Marinduque where the fish
pond is located. (NO)

RULING:
NO. The petition prayed for seeks the liquidation of the partnership which is obviously a personal action. Thus, being a
personal action, it may be filed in the residence of either the plaintiff or the defendants. The fact that the plaintiff prays
for the sale of the assets of the partnership does not change the nature and character of the action, since it is merely
incidental to the liquidation of the partnership which is part of the process of dissolution.
 SERGIO SISON v. HELEN MCQUAID
GR. No. L-6304 | December 29, 1953

The profits of a business cannot be determined by taking into account the result of one particular transaction instead of all the transactions
had. There is a need for a general liquidation before a member of a partnership may claim a specific sum as his share of the profits.

FACTS:
Sergio Sison filed a sum for collection of money which stems from a debt owed by Helen McQuaid. McQuaid borrowed
from Sison an amount aggregating to about 2,200 pesos in order for the former to pay her obligation to the Bureau of
Forestry and to add to her capital in the lumber business.

McQuaid was unable to pay the obligation to Sison but offered the alternative that he be included in her partnership in
the lumber business in the amount owed to him and he be entitled to half of the profits of the business. The partnership
was able to sell lumber to the United States Army during the war and was paid for it. It is for this reason that Sison claims
the half of the amount from McQuaid but the latter re-invested such amount and did not gave to the plaintiff the amount
being collected.

McQuaid claimed that Sison’s action has already prescribed to which the court agreed and that it was unenforceable under
the Statute of Frauds.

ISSUE:
Whether the filing of the action by Sison was proper. (NO)

RULING:
NO. The profits of a business cannot be determined by taking into account the result of one particular transaction instead
of all the transactions had. There is a need for a general liquidation before a member of a partnership may claim a specific
sum as his share of the profits.
 JOSE VILLANUEVA v. ROBERTA DE LEON
GR. No. 23726 | August 27, 1925

An alleged partner of a deceased person has such interest in the estate of the deceased as to allow him to take part in the approval of the
accounts.

FACTS:
Domingo Florentino died at Ilocos Sur wherein Jose Villanueva was named executor by the court. Roberta de Leon
presented a motion so that she be allowed to intervene in the proceedings where she alleged that she and the deceased had
been living together as husband and wife since 1988.

She claims that she and Florentino formed a partnership to which they each contributed 1,000 pesos each and the death
of the latter caused the partnership to be dissolved without any liquidation. Roberta also filed another motion where she
alleges that the property of the deceased was worth more than what has been accounted for by the executor and
subsequently prayed that the inventory be corrected.

ISSUE:
Whether or not an alleged partner of a deceased person has such interest in the estate of the deceased so as to allow her
to take part in the approval of the accounts. (YES)

RULING:
YES. An alleged partner of a deceased person has such interest in the estate of the deceased as to allow him to take part
in the approval of the accounts.
 PO YENG CHEO v. LIM KA YAM
GR. No. 18707 | December 9, 1922

Though the manager of a mercantile partnership which has ceased to do business is accountable to his associates for any assets of the concern,
judgment cannot be rendered against him for the proportionate share of the capital claimed by one of the partners in an action brought by such
partner alone, where the concern has not been liquidated and there is no proof showing the existence of assets applicable to capital account.

FACTS:

The plaintiff, Po Yeng Cheo, is the sole heir of one Po Gui Yao, deceased, and he inherited the interest left by Po Gui
Yao in a business conducted in Manila under the style of Kwong Cheong Tay which is a mercantile partnership engaged
in the import and export trade. After the death of Po Gui Yao, seven persons also became partners in said partnership.
The manager of Kwong Cheong Tay, for many years prior of its complete cessation from business in 1910, was Lim Ka
Yam, the original defendant herein.

Among the properties pertaining to Kwong Cheong Tay and consisting part of its assets were ten shares of a total par
value of P10,000 in an enterprise conducted under the name of Yut Siong Chyip Konski and certain shares to the among
of P1,000 in the Manila Electric Railroad and Light Company, of Manila.

In the year 1910, Kwong Cheong Tay ceased to do business since it ceased to transmit merchandise from Hong Kong.
Lim Ka Yam appears at no time to have submitted to the partners any formal liquidation of the business, though repeated
demands to that effect have been made upon him by the plaintiff.

Po Yeng Cheo, as managing partner in said business, filed a case to recover from Lim Ka Yam its properties and assets.
The defendant, Lim Ka Yam, died during the pendency of the case and his administrator, one Lim Yock Tock, was required
to appear and make defense.

In view of the facts, the trial judge rendered judgment in favor of the plaintiff, Po Yeng Cheo, to recover of the defendant
Lim Yock Tock, as administrator of Lim Ka Yam, the sum of sixty thousand pesos, constituting the interest of the plaintiff
in the capital of Kwong Cheong Tay, plus the plaintiff's proportional interest in shares of the Yut Siong Chyip Konski and
Manila Electric Railroad and Light Company, estimated at P11, 000, together with the costs. From this judgment the
defendant appealed. But the Court of Appeals found that the plaintiff was entitled to an accounting from Lim Ka Yam,
the original defendant, as manager of the business already referred to, and he accordingly required Lim Yock Tock, as
administrator, to present a liquidation of said business within a stated time.

Since Lim Yock Tock cannot be held to make an accounting since he personally knew nothing about the said and was
apparently unable to find any books or documents that could shed any real light on its transaction. However, he did submit
to the court a paper written by Lim Ka Yam in life purporting to give, with vague and uncertain details, a history of the
formation of the Kwong Cheong Tay and some account of its disruption and cessation from business in 1910. To this
narrative was appended a statement of assets and liabilities, purporting to show that after the business was liquidate, it was
actually a debtor to Lim Ka Yam to the extent of several thousand pesos.

Appreciating the worthlessness of this so-called statement, and all parties apparently realizing that nothing more was likely
to be discovered by further insisting on an accounting, the court proceeded, on December 27, 1921, to render final
judgment in favor of the plaintiff.

ISSUE:
Whether or not the Lim Ka Yam is obligated to pay the plaintiff (NO)

RULING:
It was erroneous to give judgment in favor of the plaintiff for his aliquot part of the par value of said shares. It is elementary
that one partner, suing alone, cannot recover of the managing partner the value of such partner's individual interest and a
liquidation of the business is an essential prerequisite. Under these circumstances it is impossible to sustain a judgment in
favor of the plaintiff for his aliquot part of the par value of said shares, which would be equivalent to allowing one of
several co-owners to recover from another, without process of division, a part of an undivided property.
 BENJAMIN YU v. NATIONAL LABOR RELATIONS COMMISSION
GR. No. 97212 | June 30, 1993

An alleged partner of a deceased person has such interest in the estate of the deceased as to allow him to take part in the approval of the
accounts.

FACTS:

Benjamin Yu was the Assistant General Manager of the marble quarrying and export business operated by a registered
partnership with the firm name of "Jade Mountain Products Company Limited". The partnership was organized by Lea
and Rhodora Bendal as general partners and Jeng, Ho-Fu and Chang, all citizens of the Taiwan, as limited partners. The
partnership business consisted of exploiting a marble deposit in Bulacan. Its main office is in Makati, Metropolitan Manila.

Yu’s monthly salary was P4, 000.00 but received only half since he had accepted the promise of the partners that the
balance would be paid when the firm shall have secured additional operating funds from abroad.
Later, without Yu’s knowledge, the general and limited partners sold and transferred their interest to Willy Co and Zapanta.
The actual operations of the business enterprise continued as before. All the employees of the partnership continued
working in the business, except for Yu, who was not allowed to work anymore. His unpaid salaries remained unpaid. He
then filed a complaint for illegal dismissal and recovery of unpaid salaries.

Yu contended that a partnership has a juridical personality separate and distinct from that of each of its members. Such
independent legal personality subsists, notwithstanding changes in the identities of the partners. His employment contract
could not have been affected by changes of the partnership.

ISSUE:
Whether or not the old partnership had been extinguished and replaced by a new partnership. (YES)

RULING:
Yes. The legal effect of the changes in the membership of the partnership was the dissolution of the old partnership.
Article 1828 of the Civil Code provides that:
The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on as distinguished from the winding up of the business.

Article 1830 of the same Code must also be noted:

Dissolution is caused:

(1) Without violation of the agreement between the partners;

b) By the express will of any partner, who must act in good faith, when no definite term or particular undertaking is
specified;

(2) In contravention of the agreement between the partners, where the circumstances do not permit a dissolution
under any other provision of this article, by the express will of any partner at any time;

The occurrence of events which precipitate the legal consequence of dissolution of a partnership do not, however,
automatically result in the termination of the legal personality of the old partnership.

In the case at bar, the new partnership simply took over the business enterprise owned by the preceding partnership, and
continued using the old name, without winding up the business affairs of the old partnership, paying off its debts,
liquidating and distributing its net assets, and then re-assembling the said assets or most of them and opening a new
business enterprise.

The court ruled that not only the retiring partners but also the new partnership itself which continued the business of the old, are liable
for the debts of the preceding partnership.
Moreover, the non-retention of Benjamin Yu as Assistant General Manager did not constitute unlawful termination since
the new partnership is entitled to appoint a top manager of its own choice and confidence. However, the new partnership’s
treatment to him amount to arbitrary, bad faith treatment for which the new Jade Mountain may legitimately be required
to respond by paying moral damages.
 LAGUNA TRANSPORTATION Co., v. SOCIAL SECURITY SYSTEM
GR. No. L-14606 | April 28, 1960

Where a corporation was formed by, and consisted of members of a partnership whose business and property was conveyed and transferred to
the corporation for the purpose of continuing its business, in payment for which corporate capital stock was issued, such corporation is presumed
to have assumed partnership debts, and is prima facie liable therefor.

FACTS:
Petitioner Laguna Transportation Company filed a petition before the Court of First Instance that an order be issued that
it is not required to register as a member of the Social Security System.

Laguna Transportation Company is a domestic corporation wherein it is sent by letter by the SSS to register as a member
and to remit premiums due to it. Sometime in 1949, Binan Transportation Company sold its equipment to Gonzalo
Mercado, Artemio Mercado, Florentino Mata, and Dominador Vera Cruz.

After such sale, the buyers formed an unregistered partnership thus named Laguna Transportation Company which
continued to operate the lines and equipment bought from Binan Transportation Company. Subsequently thereafter, the
original partners with the addition of two new members formed a corporation known as Laguna Transportation Company
Inc.,

The corporation requested an exemption from coverage from the System since it started operations only when it registered
with the SEC but the SSS reasserted its claim since it has been in actual operation for at least two years as mandated under
Section 9 of the Social Security Act

ISSUE:
Whether or not the corporation is obliged to become a member of the System. (YES)

RULING:
YES. Where a corporation was formed by, and consisted of members of a partnership whose business and property was
conveyed and transferred to the corporation for the purpose of continuing its business, in payment for which corporate
capital stock was issued, such corporation is presumed to have assumed partnership debts, and is prima facie liable
therefor.
 PHILIPPINE AIR LINES, INC., v. ANTONIO BALANGUIT, ET AL.,
GR. No. L-8715 | June 30, 1956

When said obligation is of extraordinary value, and the company was bought out not to continue its business but to stop its operation in order
to eliminate competition, it cannot be said that the vendee assumed all the obligations of the rival company.

FACTS:
Philippine Air Lines (PAL) purchased and acquired a majority of the shares of Far Eastern Air Transport Inc. (FEATI).
A wrinkle in such acquisition was the retention of employees wherein they provisionally agreed that PAL would absorb
70% of FEATI employees and that such employees would work for PAL under the same terms and conditions they agreed
upon with FEATI.

The Collective Bargaining Agreement (CBA) in which the FEATI employees are bound gave them certain privileges which
includes vacation and sick leave with pay every year which may be cumulative.

Sometime thereafter PAL reached a “definite understanding: with the Public Utilities Employees Association (PUEA)
wherein it cancelled the above CBA and declared them to have no legal force and effect with the addition that all of the
FEATI employees would be laid off wherein they would be entitled to just separation pay.

Six years after they were laid off, PUEA filed a petition before the Court of Industrial Relations (CIR) praying that PAL
be ordered to pay them twelve vacation and twelve sick day leaves with pay. PAL countered that it is not a party to such
agreement and that it is only liable to pay merely 100,000 pesos even if the CIR directed it to pay the aggrieved employees

ISSUE:
Whether or not PAL is legally liable for the payment of such amount. (NO)

RULING:
NO. In some cases, when one company buys out another and continues the business of the latter company, the buyer
may be said to assume the obligations of the company bought out when said obligations are not of considerable amount
or value, specially when incurred in the ordinary course of trade, and when the business of the latter company is
continued.

When said obligation is of extraordinary value, and the company was bought out not to continue its business but to stop
its operation in order to eliminate competition, it cannot be said that the vendee assumed all the obligations of the rival
company.
 LINO BERNARDO v. EUFEMIA PASCUAL and WORKMEN’S COMPENSATION COMMISSION
GR. No. L-13260 | October 31, 1960

When said obligation is of extraordinary value, and the company was bought out not to continue its business but to stop its operation in order
to eliminate competition, it cannot be said that the vendee assumed all the obligations of the rival company.

FACTS:
Philippine Air Lines (PAL) purchased and acquired a majority of the shares of Far Eastern Air Transport Inc. (FEATI).
A wrinkle in such acquisition was the retention of employees wherein they provisionally agreed that PAL would absorb
70% of FEATI employees and that such employees would work for PAL under the same terms and conditions they agreed
upon with FEATI.

The Collective Bargaining Agreement (CBA) in which the FEATI employees are bound gave them certain privileges which
includes vacation and sick leave with pay every year which may be cumulative.

Sometime thereafter PAL reached a “definite understanding: with the Public Utilities Employees Association (PUEA)
wherein it cancelled the above CBA and declared them to have no legal force and effect with the addition that all of the
FEATI employees would be laid off wherein they would be entitled to just separation pay.

Six years after they were laid off, PUEA filed a petition before the Court of Industrial Relations (CIR) praying that PAL
be ordered to pay them twelve vacation and twelve sick day leaves with pay. PAL countered that it is not a party to such
agreement and that it is only liable to pay merely 100,000 pesos even if the CIR directed it to pay the aggrieved employees

ISSUE:
Whether or not PAL is legally liable for the payment of such amount. (NO)

RULING:
NO. In some cases, when one company buys out another and continues the business of the latter company, the buyer
may be said to assume the obligations of the company bought out when said obligations are not of considerable amount
or value, specially when incurred in the ordinary course of trade, and when the business of the latter company is
continued.

When said obligation is of extraordinary value, and the company was bought out not to continue its business but to stop
its operation in order to eliminate competition, it cannot be said that the vendee assumed all the obligations of the rival
company.