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/ 14
PARTVERSIup
191
same dies, his associates should tay
o settle its affairs; ay '
{0 ete, for damage, ee SPY. claim agate PTOPET
ce ds by Hn eet to the mice HIM, oF
its funds by him for damage sett ™Sappropriate es
ful acts aS Manager, in exeess MUMS fom his wot of
firm assets, should be prosecuted at
administration in the manner prove St Bis
by law,
Villanueva vs,
.D
47 Phil. 799°
Held: The only iss
not an alleged panties of saseeee Solve is whether or
interest in the estate of the decease TS" has such
take part in the approval of the a as to allow her to
right of all the creditors and distributee it 'S the
to the present and, if so disposed, mee of the estate
count of the executor or administrator mest the ac
facie right at the Ume of filing the petty, Only a prima
to entitle the applicant to intervene in the eee esen
the executor or administrator. It is for themes
to determine whether the person seeking tot court
in the proceedings is a person interested panPst®
meaning of the law, or is merely an intent he
should be excluded from any further paris?
‘The determination of this question is dise ebation
the part of the trial court. retionary on
Note that the partners are given the last preference
Art. 1840. In the following cases, cr:
dissolved partnership are also somes ae a on
or partnership continuing the business:
(1) When any new partner is admitted into an ex-
isting partnership, or when any partner retires and
assigns (or the representative of the deceased partner
assigns) his rights in partnership property to two or
more of the partners, or to one or more of the partners
and one or more third persons, if the business is con-
tinued without liquidation of the partnership affairs;
(2) When all but one partner retire and assign (or
the representative of the deceased partner assigns) 192 Parenersiur, AGENCY AND TRUSTS
their rights in partnership property to the rem,
partner, who continues the business without Teting
tion of partnership affairs, either alone or with ot ttle.
(3) When any partner retires or dies and the er
ness of the dissolved partnership is continued agi
set
SENt of
forth in Nos. 1 and 2 of this article, with the con,
‘partners or the representative of the
de.
the retired
t without any assignment of y'
is
ceased partner, but
right in partnership property:
(4) When all the partners or their representat;
assign their rights in partnership property to ‘tives
seers third persons who promise to pay the debts ay"
to continue the business of the dissolved partnership.
(6) When any partner wrongfully causes a disso,
tion and the remaining partner continue the busine,
under the provisions of article 1837, second paragra, e
No. 2, either alone or with others, and without Waniae.
tion of the partnership affairs;
ing
(6) When a partner is expelled and the remainj
business either alone or with
partners continue the
others without liquidation of the partnership affairs,
The liability of a third person becoming a partney
in the partnership continuing the business, under thi,
article, to the creditors of the dissolved partnership
shall be satisfied out of the partnership property only
unless there is a stipulation to the contrary.
When the business of a partnership after dissolu.
tion is continued under any conditions set forth in this
article the creditors of the dissolved partnership, as
against the separate creditors of the retiring partner or
deceased partner or the representative of the deceased
partner, have a prior right to any claim of the retired
partner or the representative of the deceased partner
against the person or partnership continuing the busi-
ness, on account of the retired or deceased partner's
interest in the dissolved partnership or on account of
any consideration promised for such interest or for his
right in partnership property. ‘A
PARTWERSHIP 193
in this article shall be held to modi
oppor to set aside any assignment oA the
snd of fraud.
mehe use BY the person or partnership continuing
Mines of the partnership name, or the name of
une bstased partner as part thereof, shall not be of
she ferake the individual property of the deceased
itself Miable for any debts contracted by such person
eee
source: This is a new provision taken from Section 41
agane Uiform Partnership Act
cOMMENT:
Applicability—The article applies when a partner-
‘fissolved but the remaining partners continue the
S without liquidation or settling its accounts first.
Change In Membership, Cause Of Dissolution —
se articles states six (6) situations where there Is dissolu-
qfon by reason of change in membership caused by any of
ship
pusiness
the following—
(1) admission of new member;
(a). retirement of a partner;
(3). assignment of right:
(4) death of a partner; and
(6) expulsion of a partner.
When there is a change in the membership and the
partnership is simply continued without liquidation, the
Inpaid old creditors of the dissolved partnership becomes
aulomatically creditors of the new partnership.
If this were not so, it is easy to deceived the old credi-
tors by simply causing a change in the membership of the
partnership.
‘The purpose of the article is to maintain the preferen-
tal rights of the old creditors to the partnership property
partnership property; ™
194 PARTNERSHIP. AGENCY AND Tru:
sts
of the partnership whose b
canes p ustness Is continued by,
The occurrence of events whi rat
events which
solution of a partnership does not, however sit t!
result in the termination of the legal persons atitomatigg
partnership (Yu vs. NLRC, 224 SORA 76). NY &f the gf
F ol
‘Yu vs. NLRC
224 SCRA 76
Held: In the ordinary course of ev
pereowulty of the expiring partnership pert re
Feiited purpose of winding up and closing of the tt
fairs of the partnership. In the ease at bar, itis impor
sane or underscore the fact that the business of the oi
[atinership was simply continued by the new part
Par heat the old partnership undergoing the pr.
aan eee wating to dissolution and winding up of ts
business affairs. In other words, the new partnershi
simply took over the business enterprise owned by ae
preceding partnership, and continued using the old
Fime of Jade Mountain Products Company Limited,
iithout winding up the business affairs of the old
partnership, paying off its debts, liquidating and dis-
Exbuting its net assets, and then re-assembling the
said assets or most of them and opening a new busi-
ness enterprise.
What is important for the present purpose is
that, under the above described situation, not only the
retiring partners (Rhodora Benda, et al.) but also the
new partnership itself which continued the business
of the old, dissolved, one, are liable for the debts of the
preceding partnership. In Singson, et. al. v. Isabela
ey Mill, ct al.(88 SCRA 623) the Court held that un-
der facts very similar to those of the case at bar, a
withdrawing partner remains liable to a third party
creditor of the old partnership.
Under Article 1840 above, creditors of the old
Jade Mountains are also creditors of the new Jade
Mountain which continued the business of the old ont
without liquidation of the partnership affairs Indeed,
wereditor of the old Jade Mountain, like petitioner Partensire
195,
jenjamin Yu in respect o 5
(ecniled (0 priority sok MS Satin for
or preston Darin i oo at a Wage,
interest in the dissolv as suet . :
E Soled partnership 1 eted partner
poth justice and busy eerie
11 creditors of the businese® OVEnience ry
Jroupings of the owners at the "uMtesPective: of quire that
jad thelr origin, Should be regia a Fespecting cextet
‘al claim on the proper, ©, all bet laims
(gab & Martin, op. cit., 265), “™PArked in, one ea an
Liability Of A New Partner _, oe
nability of a third person becoming UNF the arti
nership continuing the business tg 4 art.
aissolved partnership shall be satisheg ,Tators of the
ship property only, unless there is ned of
contrary. It 18 not fair to make his Privat
Continuation OF A Partner
“shi;
tion. — 'P BY A Corpora.
Laguna Transportation Co., Ing. a
Social Security System hae
107 Phil. 33
Held: The weight of authori
that where a corporation was
sisted of members of a partner
and property was conveyed and transferred to the cor.
poration for the purpose of Continuing its business, in
payment of which corporate capital stock was issued,
such corporation is presumed to have assumed Z
nership debts, and is prima facie liable therefor,
(Stowell vs. Garden City News Corps. 57 P. 24 12:
Chicago Smelting & Refining Corp. vs. Sullivan, 246
Ill. App. 539; Ball vs. Bros., 83 June 19, N.Y. Supp.
The reason for the rule is that the members of
692.)
the partnership may be said to have simply put on a
new coat, or taken on a corporate cloak, and the cor-
poration is a mere continuation of the partnership (8
Fletcher Cyclopedia Corporation [Perm. Ed.] 402-411).
ty supports the view
formed by, and con.
ship whose business gine, AGENCY AND TRUSTS
BR
196 PartNE!
Inc. vs- Balinguit
|, Airlines,
phil, itl’ 99 Phil. 486
vases, when one company bj
ld: cases, WI ene
Held: Ip MContinues the business of the lathe!
be said to assume the obli
company, the buyer AY o assum ia
a ofthe company bought out when said obligations
Considerable amount OF value, specially
rdinary course of trade, and
when incurred in the o
when the business of the latter company is continued.
id obligation is of extraordinary
However, when sa
value, as in the casé at bar, and the company was
bought out not to continue iS business but to stop its
tition, it cannot be
operation, in order to eliminate compet
cred that the vendee assumed al the obligations of the
rival company.
In some
Bernardo vs. Pascual, et al., and the WCC
109 Phil. 936
Held: A partner in a lumber concession who
acquires the interests of his co-partners becomes the
ar oncessionaire and becomes liable to all creditors
of the partnership.
Use Of Partnership Name.—The use by the person
or partnership continuing the business of the partnership
name, or the name of the deceased partner as part thereof,
name, Or ‘py itself make the individual property of the
deceased partner liable for any debts contracted by such
person or partnership.
The above provision treats more of a commercial part-
nership with saleable goodwill rather than of a
1 rofessi
partnership (like of lawyers and doctors) with pe ee
eee mos reputation depends on the Se
fications of its individual members (In
t w
the Petition for Authority to Continue oe . hae ie
ime
“Sycip, Salazar, etc.”, 92 SCRA 1). PARTNERSHIP tm
Matter of the Petition for Author
In th Continue Use of the Firm Name? ‘©
“Ozaeta, Romulo, ete."
92 SCRA 1
Held: Itis true that Canon
yrethical the continued use o
as Med of former partner in the
ceattership when suich practice is
arom but the Canon wams
a
33 does not consider
f the name of a de.
firm name of a law
Permissible by local
that care should be
ed use of a deceased or former:
cgay names of law partnerships, Firm names, un-
int our custom, identify the more active and/or mone
Chior members of partners of the ka firm. A glimpse
the history of the firms of petitioners and of other
fav finms in this county would show how their firm
er es have evolved and changed from time to time as
the composition of the partnership changed. The pos-
sibility of deception upon the public, real or cones,
ential, where the name of a deceased partner tons
finues to be used cannot be ruled eae Pe Person in
Search of legal counsel might be guided by the familiar
Sng of a distinguished name appearing in the firm ti.
tle.
's partner's name in
Rule On Choice Of Name Of A Law Firm. —The
code of Professional Responsibility provides
Rule 3.02—In the choice of a fi
false, misleading or assumed name shall be tsed, ‘The
continued use of the name of the deceased partner is
permissible provided that the firm indic
icates in all its
communications that the said partner is deceased,
im name, no
Art. 1841. When any partner retires or dies, and
the business is continued under any of the conditions
set forth in the preceding article, or in article 1837,
second paragraph, No. 2, without any settlement of
accounts as between him or his estate and the person
or partnership continuing the business, unless other- ™
198, Parinensinr, AGENCY AND Trusts
wise agreed, he or his legal representative ay
such person or partnership may have the varnHina,
interest at the date of dissolution ascertained vo,°" hs
sh
secelve as an ordinary creditor an amount equat’ *haly
value of his interest in the dissolved partnetony t® the
ption of iP With
interest, or at his option or at the o;
representative, in lieu of interest, the profits ats ieee
ribut.
able to the use of his right in the property of i
solved partnership: provided that the creditors" 4
dissolved partnership as against the separate erect,
or the representative of the retired or deceaseatt™®,
ner, shall have priority on any claim arising uae?
article, as provided by Article 1840, third Paragrar®
(a)
Source: This is a new provision taken from Section 4
of the Uniform Partnership Act. 2
COMMENT:
Applicability—The article applies when a
retires or dies and the business of the Partner;
continued without any settlement of accounts.
greement made
Partner
Ship is
Exception.—However, if there is an a
ner to continue
before the retirement or death of the part
the business despite the intervention of retirement or
death of a partner, no liquidation is necessary.
Bonnevie vs. Hernandez
95 Phil. 175
Held: As a general rule, when a partner retires
from the partnership, he is entitled to the payment of
what may be due him after a liquidation. But no liqui-
dation is necessary where there is already a settlement
or an agreement as to what the retiring partner shall
receive, and the latter was in fact reimbursed pursu-
ant to the agreement.
Effect If There Is No Agreement.—No specific
amounts or properties may be adjudicated to the heirs of Partwensinp
deceased partner without ir
ey partnership affairs (ne Tana te°tP 8 Nauta,
5) What controls is the law on Partnerap 2!
san agreement 28 to what wi en netship
Jy deceased. Such agreement ts binding ae CY
by law.
Legal Capacity Of Heirs 79 Sue,
Emnace ys. Court
870 sca 4gqPPeHs
Held: On the thira
ie sing sponse of Ue ei ters
e he decedent. Whatever claima
and rights Vicente Tabanao had against ihe Partner-
ship and petitioner were transmitted to
the respon-
den*s daingnarationsata, more particularly by suc-
. Which is a mode sf
of acquisition by virtue of
which the property, rights and obligations to the en
tent of the value of the inheritance of a person cs
transmitted. Moreover, respondents became owners of
their respective hereditary shares from the moment
Vicente Tabanao died.
heirs to.
a 2g sue. AS successors who
stepped into the shoes of their decedent upon his
death, they can commence any action originally per-
taining to the decedent. From the moment of his.
death, his rights as a partner and to demand fulfill- 200 PARTNERSHIP, AGENCY AND Thus
“s obligations as. outlined
ment of petition
dissolution agreement were transmitted qa thelr
dents. They, therefore, had the capacity to TSPon-
seck the court's Intervention to compel’ peuse®, ha
loner ta
fulfil his obligations.
Art. 1842. The right to an account of his j
shall accrue to any partner, or his legal represent fest
as against the winding up partners or the equttive
partners or the person or partnership continuim:¥Mg
business, at the date of dissolution, in the abses®,the
© of
any agreement to the contrary. (n)
Source: This ts a new provision taken from Sec
of the Uniform Partnership Act. ton 43
COMMENT:
Right To Demand Accounting Of Partner's mee,
est.—The right to demand accounting of a partner's inten
est shall be reckoned from the date of dissolution of thre
partnership unless there is a contrary agreement. In othe:
words, if the partners have previously agreed as to when
the accounting shall be done, that agreement shall he
followed. Thus, if they agreed that there shall be a yearty
accounting, that will prevail.
The provision did not state the period of prescription,
although it mentions when it begins to run. Hence, the
general law on prescription of actions shall apply.
Prescriptive Period For A Demand For Account.
ing.—The three final stages of a partnership are: (1) disso.
Junon: (2) winding-up; (3) termination. The partnership,
although dissolved, continues to exist and its legal per-
sonality is retained, at which time it completes the wind-
including the partitioning and the
f its affairs,
ing up on of the net partnership assets to the partners,
distribution Of he partnership exists, any of the partners
may demand an accounting of the partnership's business,
iption of the said right starts fo run only upon the
ion of the partnership when the final accounting is ot 20)
», Contrary to petitioner, :
aone
s right to inquire intg pPFtestation,
den@ership accrued in ggg" business amet Fespon.
paleatter. Prescription had not escribing mts of the
ered aaa Not even } four (4)
geence OF 8 Anal accounting spe? Peun to nt) Years
abs©370 SCRA 435). “TOMBS 98 Godt a the
: nt of Ap
Fue Leung vs. Interme,
i
169 SCRA ypgPPetlate Court « yrs
Held: The petitioner int
scriptions He argues: Mey BES the tbe written
ate Appellate Court gravely erreq eo
issue of Prescription in f
ceipt is dated
ba filed only onduly 1
al ona the complaint
twenty-twWo (22) years, nin
1
© 19) month: e
days. From October 1, 1955 to say Ty nee (12)
fon demands were ever made by private aoe
‘The petitioner's argum,
dent.
1144 of the Civil Code which
lent is based on Article
The following actions must be brought
Gfhin ten _vear® from the time the right of action
Provides:
crues=
OF Ypona written contract; 7
Upon an obligation created by law; <
(gy Upon a judgment.” “
in relation to“AFtiGI@MI55 thereof which pro-
vides:
“art. 1155. The prescription of actions is inter-
d when they are filed before the court, when
rupted Wh yritten extra-judicial demand by th(cred
there id when there is any written acknowledgment of
a ”
we ‘jebt of the debtor.
; debt of the de
The argument is fot well-taken)
e private respondent is a partner 0! the peti-
The P! Pi
i i pat
in Sun Wah Pangieria. The requisites of a part:
bind
tioner two or more persons
nership which are7 202 Partwersip, AGENCY AND Trusts
Ge 1767, Civil Code: Yulo vs. Yang Chiao Cheng tt
spond
If excellent relations ex
exist
=
rather than get immediate returns,
sl its is perfectly plausible. It we
Sean rar ia partner oes Dot Sea he
rights anytime within ten years from the start of ae
citions, such rights are irretrievably lost, The private
Craton a of action 1a. premiaed upon
Fabee of the petitioner €0 give him the agreed profits
fale ot sibn of Sun Wah Panciteria. In eflet tne
private respondent was asking for an accounting of his
Pierests inthe partners.
Arti.
cle 1842 states:
sdhesrightetorar-accountofshisICTeSe SHANI:
oe
“agreement tothe contrary.”
Regarding the prescriptive period within which
the private respondent may demand an accounting,
809 show that the right to
Articles 1806, 1807 and 1
ists as long as the partner-
demand an accounting exis
ship cxists.iPrescription: begins: tosrunsonlysisponsthie~
a ‘Sunga-Chan vs. Chua
363 SCRA 251
Held: Wit)-regard to petitioner's insistence that
and/or (presen Should have extinguished Parmvensiy
203
espondent’s claim, we agree with
The court of Appeals that the nqw® Mal court and
fiied_by respondents three (3) enon for_ accounting
s well within the pres
a8 ; 7