PARDO vs. HERCULES LUMBER
Authorities to this effect are too numerous and
FACTS:
- Antonio Pardo, a stockholder in the Hercules
Lumber Company, Inc., seeks by this original
proceeding in the SC to obtain a writ of mandamus
to compel the respondents to permit the plaintiff
and his duly authorized agent and representative
to examine the records and business transactions
of said company.
- The respondents, in their answer, admitted certain
allegations and set forth the facts upon which they
mainly rely as a defense to the petition.
- The petitioner interposed a demurrer.
- According to Section 51 of Act No. 1459, the right
of examination there conceded to the stockholder
may be exercised either by a stockholder in person
or by any duly authorized agent or representative
(Philpotts v. Philippine Manufacturing Co. and
Berry)
- In article 10 of the By-laws of the respondent
corporation it is declared that "Every shareholder
may examine the books of the company and other
documents pertaining to the same upon the days
which the board of directors shall annually fix."
- It is further averred that at the directors’ meeting
of the respondent corporation held on February 16,
1924, the board passed a resolution to the
following effect:
"The board also resolved to call the usual general (meeting
of shareholders) for March 30 of the present year, with
notice to the shareholders that the books of the company
are at their disposition from the 15th to 25th of the same
month for examination, in appropriate hours."
- The contention for the respondent is that this
resolution of the board constitutes a lawful
restriction on the right conferred by statute; and it
is insisted that as the petitioner has not availed
himself of the permission to inspect the books and
transactions of the company within the ten days
thus defined, his right to inspection and
examination is lost, at least for this year.
ISSUE:
WON the right of inspection may be exercised?
RULING:
- We are entirely unable to concur in this
contention. The general right given by the
statute may not be lawfully abridged to the
extent attempted in this resolution. It may be
admitted that the officials in charge of a
corporation may deny inspection when sought at
unusual hours or under other improper conditions;
but neither the executive officers nor the board of
directors have the power to deprive a stockholder
of the right altogether. A by-law unduly restricting
the right of inspection is undoubtedly invalid.
direct to require extended comment.
- Under a statute similar to our own it has been held
that the statutory right of inspection is not affected
by the adoption by the board of directors of a
resolution providing for the closing of transfer
books thirty days before an election.
- It will be noted that our statute declares that the
right of inspection can be exercised "at reasonable
hours." This means at reasonable hours on
business days throughout the year, and not merely
during some arbitrary period of a few days chosen
by the directors.
- The answer of the respondents calls in question the
motive which is supposed to prompt the petitioner
to make inspection; and in this connection it is
alleged that the information which the petitioner
seeks is desired for ulterior purposes in connection
with a competitive firm with which the petitioner
is alleged to be connected. It is also insisted that
one of the purposes of the petitioner is to obtain
evidence preparatory to the institution of an action
which he means to bring against the corporation by
reason of a contract of employment which once
existed between the corporation and himself.
- These suggestions are entirely apart from the issue,
as, generally speaking, the motive of the
shareholder exercising the right is immaterial.
DAN FUE LEUNG vs. HON INTERMEDIATE APPELATE
COURT
FACTS:
- The Sun Wah Panciteria located at Sta. Cruz
Manila was established sometime in Oct. 1955.
- It was registered as a single proprietorship and its
licenses and permits were issued to and in favor of
petitioner Dan Fue Leung as the sole proprietor.
- Respondent Leung Yiu adduced evidence that Sun
Wah Panciteria was actually a partnership and that
he was one of the partners having contributed P4k
to its initial establishment evidenced by a receipt.
- An examination was conducted by the PC Crime
Laboratory on orders of the trial court granting the
private respondents’ motion for examination of
certain documentary exhibits.
- The private respondent received from the
petitioner the amount of P12k covered by the
latter’s Equitable Banking Corporation Check from
the profits of the operation of the restaurant for the
1974.
- The petitioner denied having received the amount
of P4k. He stated that he used his savings from his
salaries as an employee at Camp Stotsenberd and
as waiter at the Toho Restaurant amounting to a
little more than P2k as capital in establishing Sun
Wah. The petitioner presented various government
licenses and permits showing the Sun Wah
Panciteria was and still is a single proprietorship
 solely owned and operated by himself alone. Fue
Leung also flatly denied having issued to the
private respondent the receipt (Exhibit G) and the
Equitable Banking Corporation's Check.
RTC: ruled in favor of the Leung Yiu
- The private respondent filed a verified motion for
reconsideration in the nature of a motion for new
trial and, as supplement to the said motion, he
requested that the decision rendered should
include the net profit of the Sun Wah Panciteria
which was not specified in the decision, and allow
private respondent to adduce evidence so that the
said decision will be comprehensively adequate
and thus put an end to further litigation.
- The motion was granted. After hearing the trial
court rendered an amended decision (ordering the
latter to pay the former the sum equivalent to 22%
of the net profit of 8K per day from the time of
judicial demand, until fully paid).
- The petitioner appealed. It affirmed the lower
court.
- Both the trial court and the appellate court
found that the private respondent is a partner
of the petitioner in the setting up and
operations of the panciteria. While the
dispositive portions merely ordered the payment
of the respondents share, there is no question from
the factual findings that the respondent invested in
the business as a partner. Hence, the two courts
declared that the private petitioner is entitled to a
share of the annual profits of the restaurant. The
petitioner, however, claims that this factual finding
is erroneous.
- The petitioner argues that the respondent
extended financial assistance only and in return
they will receive a share in the profits of the
restaurant.
ISSUE: WON he is a partner; WON it is already barred by
prescription to demand for accounting
RULING:
- We agree with the appellate court's observation to
the effect that "…given its ordinary meaning,
financial assistance is the giving out of money to
another without the expectation of any returns
therefrom'. It connotes an ex gratia dole out in
favor of someone driven into a state of destitution.
But this circumstance under which the
P4,000.00 was given to the petitioner does not
obtain in this case.'
- The complaint explicitly stated that "as a return for
such financial assistance, plaintiff (private
respondent) would be entitled to twenty-two
percentum (22%) of the annual profit derived from
the operation of the said panciteria.
- The records sufficiently establish that there
was a partnership.
- These allegations, which were proved, make the
private respondent and the petitioner partners in
the establishment of Sun Wah Panciteria because
Article 1767 of the Civil Code provides 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 lower courts did not err in construing the
complaint as one wherein the private respondent
asserted his rights as partner of the petitioner in
the establishment of the Sun Wah Panciteria,
notwithstanding the use of the term financial
assistance therein. SC affirmed appellate court's
decision and ordered the dissolution of the
partnership.
- As stated by the respondent, a partner shares not
only in profits but also in the losses of the firm. If
excellent relations exist among the partners at the
start of business and all the partners are more
interested in seeing the firm grow rather than get
immediate returns, a deferment of sharing in the
profits is perfectly plausible. It would be incorrect
to state that if a partner does not assert his rights
anytime within ten years from the start of
operations, such rights are irretrievably lost. The
private respondent's cause of action is premised
upon the failure of the petitioner to give him the
agreed profits in the operation of Sun Wah
Panciteria. In effect the private respondent was
asking for an accounting of his interests in the
partnership.
- The petitioner raises the issue of prescription. He
argues: The Hon. Respondent Intermediate
Appellate Court gravely erred in not resolving the
issue of prescription in favor of petitioner. The
alleged receipt is dated October 1, 1955 and the
complaint was filed only on July 13, 1978 or after
the lapse of twenty-two (22) years, nine (9)
months and twelve (12) days. From October 1,
1955 to July 13, 1978, no written demands were
ever made by private respondent.
- Regarding the prescriptive period within which
the private respondent may demand an
accounting, Articles 1806, 1807, and 1809 show
that the right to demand an accounting exists as
long as the partnership exists. Prescription
begins to run only upon the dissolution of the
partnership when the final accounting is done.
PANG LIM AND BENITO GALVEZ v. LO SENG
FACTS:
- Lo Seng and Pang Lim (Chinese residents) were
partners under the firm name of Lo Seng and Co.,
in the business of running distillery known as “El
Progreso” in Bulacan.
- The land on which the said distillery is located as
well as the buildings and improvement were the
properties of another Chinaman, who resides in
Hongkong, named Lo Yao who leased the same to
 the firm of Lo Seng and Co. for the term of three
years.
- Upon the expiration of this lease a new written
contract, in the making of which Lo Yao was
represented by one Lo Shui as attorney in fact,
became effective whereby the lease was extended
for fifteen years.
- The reason why the contract was made for so long
a period of time appears to have been that the
Bureau of Internal Revenue had required sundry
expensive improvements to be made in the
distillery, and it was agreed that these
improvements should be effected at the expense of
the lessees.
- In conformity with this understanding many
thousands of pesos were expended by Lo Seng and
Co., and later by Lo Seng alone, in enlarging and
improving the plant.
- Neither the original contract of lease nor the
agreement extending the same was inscribed in the
property registry, for the reason that the estate
which is the subject of the lease has never at any
time been so inscribed.
- Pang Lim sold all his interest in the distillery to
his partner Lo Seng, thus placing the latter in
the position of sole owner
- Lo Shui executed and acknowledged before a
notary public a deed purporting to convey to Pang
Lim and another Chinaman named Benito Galvez,
the entire distillery plant including the land used in
connection therewith.
- As in case of the lease this document also was never
recorded in the registry of property. Thereafter
Pang Lim and Benito Galvez demanded
possession from Lo Seng, but the latter refused
to yield.
- Unlawful detainer was thereupon initiated by Pang
Lim and Benito Galvez to recover possession of the
premises.
- Appealed to the Court of First Instance where
judgement was rendered for the plaintiffs and the
defendant appealed to the SC.
ISSUE:
Whether the plaintiffs herein, as purchasers of the estate,
are at liberty to terminate the lease, assuming that it was
originally binding upon all parties participating in it.
RULING:
NO. This is found in the circumstance that the plaintiff Pang
Lim has occupied a double role in the transactions which
gave rise to this litigation, namely, first, as one of the
lessees; and secondly, as one of the purchasers now seeking
to terminate the lease. These two positions are essentially
antagonistic and incompatible. Every competent person is
by law bond to maintain in all good faith the integrity of his
own obligations; and no less certainly is he bound to respect
the rights of any person whom he has placed in his own
shoes as regards any contract previously entered into by
himself.
While yet a partner in the firm of Lo Seng and Co., Pang Lim
participated in the creation of this lease, and when he sold
out his interest in that firm to Lo Seng this operated as a
transfer to Lo Seng of Pang Lim's interest in the firm assets,
including the lease; and Pang Lim cannot now be permitted,
in the guise of a purchaser of the estate, to destroy an
interest derived from himself, and for which he has received
full value.
The bad faith of the plaintiffs in seeking to deprive the
defendant of this lease is strikingly revealed in the
circumstance that prior to the acquisition of this property
Pang Lim had been partner with Lo Seng and Benito Galvez
an employee. Both therefore had been in relations of
confidence with Lo Seng and in that position had
acquired knowledge of the possibilities of the property
and possibly an experience which would have enabled
them, in case they had acquired possession, to exploit
the distillery with profit. On account of his status as
partner in the firm of Lo Seng and Co., Pang Lim knew that
the original lease had been extended for fifteen years; and
he knew the extent of valuable improvements that had been
made thereon. Certainly, as observed in the appellant's
brief, it would be shocking to the moral sense if the
condition of the law were found to be such that Pang Lim,
after profiting by the sale of his interest in a business,
worthless without the lease, could intervene as purchaser
of the property and confiscate for his own benefit the
property which he had sold for a valuable consideration to
Lo Seng. The sense of justice recoils before the mere
possibility of such eventuality.
Above all other persons in business relations, partners are
required to exhibit towards each other the highest degree
of good faith. In fact, the relation between partners is
essentially fiduciary, each being considered in law, as he is
in fact, the confidential agent of the other.
Thus, it has been held that if one partner obtains in his own
name and for his own benefit the renewal of a lease on
property used by the firm, to commence at a date
subsequent to the expiration of the firm's lease, the partner
obtaining the renewal is held to be a constructive trustee of
the firm as to such lease.
From what has been said it is clear that Pang Lim, having
been a participant in the contract of lease now in question,
is not in a position to terminate it: and this is a fatal obstacle
to the maintenance of the action of unlawful detainer by
him. Moreover, it is fatal to the maintenance of the action
brought jointly by Pang Lim and Benito Galvez.
THE DIRECTOR OF LANDS v. ALBA et al.
FACTS:
 - Eligio Catalan and Ramon Gatchalian, as
partners, mortgaged to Dr. Dionisio Marave two
lots in Tacloban City, including the improvements
thereon, all belonging to the partnership, to secure
the payment of a loan.
- The partnership failed to pay the loan
- The mortgage was foreclosed, and the properties
were sold at public auction to Dr. Marave.
- Catalan redeemed the properties with his private
funds.
- Upon Catalan’s petition, the lower court ordered
the cancellation of the tile in the name of the
partnership and to issue instead another in the
name of Catalan.
ISSUE: WON Catalan became the absolute owner of the
properties in question upon making the redemption
RULING:
NO. A partner is an agent of the partnership. Furthermore,
every partner becomes a trustee for his copartner with
regard to any benefits of profits derived from his act as
partners. Thus, when he redeemed the properties in
question, he became a trustee and held the same in trust for
his copartner Gatchalian, subject to his right to demand
from the latter his contribution to the amount of
redemption.
He 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.
EMNACE v. CA
FACTS:
- Petitioner Emilio Emnace, Vicente Tabanao and Jacinto
Divinagracia were partners in a business concern known as
Ma. Nelma Fishing Industry.
- they decided to dissolve their partnership and executed an
agreement of partition and distribution of the partnership
properties among them, consequent to Jacinto
Divinagracia’s withdrawal from the partnership.
- Among the assets to be distributed were five (5) fishing
boats, six (6) vehicles, two (2) parcels of land located at Sto.
Niño and Talisay, Negros Occidental, and cash deposits in
the local branches of the Bank of the Philippine Islands and
Prudential Bank.
- Consequently, Tabanao’s heirs, respondents herein, filed
against petitioner an action for accounting, payment of
shares, division of assets and damages.
Petitioner filed a motion to dismiss the complaint on the
grounds of improper venue, lack of jurisdiction over the
nature of the action or suit, and lack of capacity of the estate
of Tabanao to sue.
The trial court denied the motion to dismiss. It held that
venue was properly laid because, while realties were
involved, the action was directed against a particular
person on the basis of his personal liability; hence, the
action is not only a personal action but also an action in
personam. As regards petitioner’s argument of lack of
jurisdiction over the action because the prescribed docket
fee was not paid considering the huge amount involved in
the claim, the trial court noted that a request for accounting
was made in order that the exact value of the partnership
may be ascertained and, thus, the correct docket fee may be
paid. Finally, the trial court held that the heirs of Tabanao
had a right to sue in their own names, in view of the
provision of Article 777 of the Civil Code, which states that
the rights to the succession are transmitted from the
moment of the death of the decedent.
The following day, respondents filed an amended
complaint, 7 incorporating the additional prayer that
petitioner be ordered to "sell all (the partnership’s) assets
and thereafter pay/remit/deliver/surrender/yield to the
plaintiffs" their corresponding share in the proceeds
thereof.
On June 15, 1995, the trial court issued an Order, 10 denying
the motion to dismiss inasmuch as the grounds raised
therein were basically the same as the earlier motion to
dismiss which has been denied.
RULING:
petitioner contends that the trial court should have
dismissed the complaint on the ground of prescription,
arguing that respondents’ action prescribed four (4) years
after it accrued in 1986. The trial court and the Court of
Appeals gave scant consideration to petitioner’s hollow
arguments, and rightly so.
The three (3) final stages of a partnership are: (1)
dissolution; (2) winding-up; and (3) termination. 36 The
partnership, although dissolved, continues to exist and its
legal personality is retained, at which time it completes the
winding up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners. 37
For as long as the partnership exists, any of the partners
may demand an accounting of the partnership’s business.
Prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is
done. 38
Contrary to petitioner’s protestations that respondents’
right to inquire into the business affairs of the partnership
accrued in 1986, prescribing four (4) years thereafter,
prescription had not even begun to run in the absence of a
final accounting. Article 1842 of the Civil Code
provides:chanrob1es virtual 1aw library
The right to an account of his interest shall accrue to any
partner, or his legal representative as against the winding
up partners or the surviving partners or the person or
partnership continuing the business, at the date of
dissolution, in the absence of any agreement to the contrary.
Applied in relation to Articles 1807 and 1809, which also
deal with the duty to account, the above-cited provision
states that the right to demand an accounting accrues at the
date of dissolution in the absence of any agreement to the
contrary. When a final accounting is made, it is only then
that prescription begins to run. In the case at bar, no final
accounting has been made, and that is precisely what
respondents are seeking in their action before the trial
court, since petitioner has failed or refused to render an
accounting of the partnership’s business and assets. Hence,
the said action is not barred by prescription.
petitioner contends that the trial court should have
dismissed the complaint on the ground of prescription,
arguing that respondents’ action prescribed four (4) years
after it accrued in 1986. The trial court and the Court of
Appeals gave scant consideration to petitioner’s hollow
arguments, and rightly so.
The three (3) final stages of a partnership are: (1)
dissolution; (2) winding-up; and (3) termination. 36 The
partnership, although dissolved, continues to exist and its
legal personality is retained, at which time it completes the
winding up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners. 37
For as long as the partnership exists, any of the partners
may demand an accounting of the partnership’s business.
Prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is
done. 38
Contrary to petitioner’s protestations that respondents’
right to inquire into the business affairs of the partnership
accrued in 1986, prescribing four (4) years thereafter,
prescription had not even begun to run in the absence of a
final accounting. Article 1842 of the Civil Code
provides:chanrob1es virtual 1aw library
The right to an account of his interest shall accrue to any
partner, or his legal representative as against the winding
up partners or the surviving partners or the person or
partnership continuing the business, at the date of
dissolution, in the absence of any agreement to the contrary.
Applied in relation to Articles 1807 and 1809, which also
deal with the duty to account, the above-cited provision
states that the right to demand an accounting accrues at the
date of dissolution in the absence of any agreement to the
contrary. When a final accounting is made, it is only then
that prescription begins to run. In the case at bar, no final
accounting has been made, and that is precisely what
respondents are seeking in their action before the trial
court, since petitioner has failed or refused to render an
accounting of the partnership’s business and assets. Hence,
the said action is not barred by prescription.
FERNANDEZ v. DELA ROSA
FACTS:
- The plaintiff alleges that he entered into a verbal
agreement with the defendant to form a
partnership for the purchase of cascoes and the
carrying on of the business of letting the same for
hire in Manila, the defendant to buy the cascoes and
each partner to furnish for the purpose such
amount of money as he could, the profits to be
divided proportionately.
- The plaintiff furnished the defendant 300 pesos to
purchase a casco which the defendant did purchase
for 500 pesos of Dona Isabel Vales, taking the title
in his own name. The plaintiff furnished further
sums aggregating about 300 pesos for repairs on
this casco.
- He furnished the defendant 825 pesos to purchase
another casco designated as No. 2089, which the
defendant did purchase for 1,000 pesos of Luis R.
Yangco, taking the title to this casco also in his own
name.
- the parties undertook to draw up articles of
partnership for the purpose of embodying the same
in an authentic document, but that the defendant
having proposed a draft of such articles which
differed materially from the terms of the earlier
verbal agreement, and being unwillingly to include
ond casco in the partnership, they were unable to
come to any understanding and no written
agreement was executed.
- The defendant having in the meantime had the
control and management of the two cascoes, the
plaintiff made a demand for an accounting upon
him, which the defendant refused to render,
denying the existence of the partnership
altogether.
- The defendant admits that the project of forming a
partnership in the casco business in which he was
already engaged to some extent individually was
discussed, but he denies that any agreement was
ever consummated.
- He denies that the plaintiff furnished any money in
January, 1900, for the purchase of casco No. 1515,
or for repairs on the same, but claims that he
borrowed 300 pesos on his individual account in
January from the bakery firm, consisting of the
plaintiff, Marcos Angulo, and Antonio Angulo.
- The 825 pesos, which he admits he received from
the plaintiff March 5, he claims was for the
purchase of casco No. 1515, which he alleged was
bought March 12, and he alleges that he never
received anything from the defendant toward the
purchase of casco No. 2089. He claims to have paid,
exclusive of repairs, 1,200 pesos for the first casco
and 2,000 pesos for the second one.
- It was concluded by the court that, at some time
subsequently to the failure of the attempt to agree
upon partnership articles and after the defendant
had been operating the cascoes for some time, the
defendant returned to the plaintiff 1,125 pesos, in
 two different sums, one of 300 and one of 825
pesos. The only evidence in the record as to the
circumstances under which the plaintiff received
these sums is contained in his answer to the
interrogatories proposed to him by the defendant,
and the whole of his statement on this point may
properly be considered in determining the fact as
being in the nature of an indivisible admission. He
states that both sums were received with an
express reservation on his part of all his rights as a
partner. We find this to be the fact.
ISSUE:
Did the return of the money effect a waiver by him of his
right to an accounting of the profits already realized by the
partnership as well as a termination of the partnership?
RULING:
In this case, there is a complete and perfect contract of
partnership entered into by the parties. The fact that money
was furnished by the plaintiff and received by the defendant
with the understanding that it was to be used for the
purchase of the cascoes in question. This establishes the
first element of the contract, namely, mutual contribution to
a common stock. The second element, namely, the intention
to share profits, appears to be an unavoidable deduction
from the fact of the purchase of the cascoes in common, in
the absence of any other explanation of the object of the
parties in making the purchase in that form, and, it may be
added, in view of the admitted fact that prior to the
purchase of the first casco the formation of a partnership
had been a subject of negotiation between them.
The execution of a written agreement was not necessary in
order to give efficacy to the verbal contract of partnership
as a civil contract, the contributions of the partners not
having been in the form of immovables or rights in
immovables.
There was no intention on the part of the plaintiff in
accepting the money to relinquish his rights as a partner,
nor is there any evidence that by anything that he said or by
anything that he omitted to say he gave the defendant any
ground whatever to believe that he intended to relinquish
them. On the contrary he notified the defendant that he
waived none of his rights in the partnership. Nor was the
acceptance of the money an act which was in itself
inconsistent with the continuance of the partnership
relation, as would have been the case had the plaintiff
withdrawn his entire interest in the partnership. There is,
therefore, nothing upon which a waiver, either express or
implied, can be predicated. The defendant might have
himself terminated the partnership relation at any time, if
he had chosen to do so, by recognizing the plaintiff's right in
the partnership property and in the profits. Having failed to
do this he can not be permitted to force a dissolution upon
his co-partner upon terms which the latter is unwilling to
accept. We see nothing in the case which can give the
transaction in question any other aspect than that of the
withdrawal by one partner with the consent of the other of
a portion of the common capital. Hence, the plaintiff is
entitled to an accounting of the defendant's administration
of such property, and of the profits derived therefrom.
EVANGELISTA v. ABAD SANTOS
FACTS:
- A co-partnership was formed under the name of
“Evangelist & Co.”
- The Articles of Co-partnership was amended as to
include, Estrella Abad Santos, as industrial partner,
with herein petitioners with a contribution of P17,
500 each.
- The amended Articles provided that the
contribution of Estrella Abad Santos consists of her
industry being an industrial partner and that the
profits and losses shall be divided and distributed
among the partners in the proportion of 70% for
the first three partners and 30% for the Estrella.
- Estrella filed suit against the three other partners
in the Court of First Instance of Manila, alleging that
the partnership, which was also made a party-
defendant, had been paying dividends to the
partners except to her and that notwithstanding
her demands the defendants had refused and
continued to refuse and let her examine the
partnership books or to give her information
regarding the partnership affairs to pay her any
share in the dividends declared by the partnership.
- She therefore prayed that the defendants be
ordered to render accounting to her of the
partnership business and to pay her corresponding
share in the partnership profits after such
accounting, plus attorney's fees and costs.
- CFI and CA: the plaintiff is an industrial partner of
Evangelista & Co
ISSUE:
WON Estrella has the right to demand for a formal
accounting
RULING:
It is not disputed that the provision against the industrial
partner engaging in business for himself seeks to prevent
any conflict of interest between the industrial partner and
the partnership, and to insure faithful compliance by said
partner with this prestation.
That appellee has faithfully complied with her prestation
with respect to appellants is clearly shown by the fact that
it was only after filing of the complaint in this case and the
answer thereto appellants exercised their right of exercised
their right to exclusion by alleging in their supplemental
answer dated July 29, 1964 — or after around nine (9) years
from June 7, 1955 — subsequent to the filing of defendants'
answer to the complaint, defendants reached an agreement
whereby the herein plaintiff been excluded from, and
deprived of, her alleged share, interests or participation, as
an alleged industrial partner, in the defendant partnership
and/or in its net profits or income, on the ground plaintiff
has never contributed her industry to the partnership,
instead she has been and still is a judge of the City Court
(formerly Municipal Court) of the City of Manila, devoting
her time to performance of her duties as such judge and
enjoying the privilege and emoluments appertaining to the
said office, aside from teaching in law school in Manila,
without the express consent of the herein defendants'
(Record On Appeal, pp. 24-25).
Having always knows as a appellee as a City judge even
before she joined appellant company on June 7, 1955 as an
industrial partner, it took the appellants so many years
before excluding her from said company. There was no
pretense even on the part of the appellants that Estrella
engaged in any business antagonistic to that of appellant
company. Furthermore, the theory that Estrella has never
been an industrial partner cannot be reconciled with the
agreement evidenced by the amended articles of
partnership.
As an industrial partner, Estrella has the right under Article
1809 for a formal accounting and to receive her share in the
net profit that may result from such an accounting.
CLEMENTE v. GALVAN
FACTS:
- Plaintiff and defendant organized a civil
partnership which they name “Galvan y Compañia”
to engage in the manufacture and sale of paper and
other stationery.
- They agreed to invest therein a capital of P100,000,
but as a matter of fact they did not cover more than
one-fifth thereof, each contributing P10,000.
- After a year, the plaintiff commenced the present
case to ask for the dissolution of the partnership
and to compel defendant to whom the management
thereof was entrusted to submit an accounting of
his administration and to deliver to him his share
as such partner.
- In his answer, the defendant expressed his
conformity to the dissolution of the partnership
and the liquidation of its affairs but by way of
counterclaim he asked that, having covered a
deficit incurred by the partnership amounting to
P4,000 with his own money, plaintiff reimburse
him of one-half of said sum.
- On petition of the plaintiff a receiver and liquidator
to take charge of the properties and business of 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 of May 24,
1933, requiring said receiver to deliver to him
(plaintiff) certain machines which were then at
Nos. 705-707 Ylaya Street, Manila, but authorizing
him to charge their value of P4,500 against the
portion which may eventually be due to said
plaintiff.
- 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 of May 24, 1933.
- 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 two cases aforecited,
plaintiff agreed with the intervenor, who is his
nephew, to execute, as he in fact executed in favor
of the latter, a deed of mortgage Exhibit B
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.
RULING:
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 (Ylaya
Street Nos. 705-707), as they had been delivered to him by
the receiver, does not help him any because the lower court
suspended the effects of the order 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
Exhibit B was annotated in the registry of property, it is no
less true that 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.
LEYTE SAMAR SALES v. CEA
FACTS:
NAVARRO vs. KAREN GO
FACTS:
- respondent Karen T. Go filed two complaints before
the RTC for replevin and/or sum of money with
damages against Navarro. She prayed that the RTC
 issue writs of replevin for the seizure of 2 motor
vehicles in Navarro’s possession.
- The cause of action against defendant Navarro is on
the basis of a leased from plaintiff a certain motor
vehicle.
- The first complaint states that Navarro delivered
unto plaintiff 6 post-dated checks each in the
amount of P63.333.33 which were supposedly in
payment of the agreed rentals which were
dishonored and/or retuned by the drawee bank for
the common reason that the current deposit
account did not have sufficient funds. That the total
amount of two checks therefore represents the
principal liability of defendant Navarro unto
plaintiff on the basis of the provisions of Lease
Agreement.
- The second complaint also alleged that Navarro
delivered 3 post-dated checks, each for the amount
of P100K to Karen Go in payment of the agreed
rentals. However, the 3rd check was dishonored
when presented for payment.
- The RTC issued writs of replevin and as a result the
Sheriff seized the two vehicles and delivered them
to the possession of Karen Go.
- In his Answer, Navarro alleged as a special
affirmative defense that the two complaints stated
no cause of action, since Karen Go was not a party
to the Lease Agreements.
- RTC dismissed the case on the ground that the
complaints did not state a cause of action.
- the RTC issued another order dated July 26, 2000
setting aside the order of dismissal. Acting on the
presumption that Glenn Go's leasing business is a
conjugal property, the RTC held that Karen Go had
sufficient interest in his leasing business to file the
action against Navarro.

RULING: