Rojas vs Maglana, G.R. No. 30616, December 10, 1990

Rojas vs Maglana, G.R. No. 30616, December 10, 1990

NATURE: Direct appeal from the decision of the CFI of Davao

Summary: In  Jan 1955, Maglana & Rojas executed their Articles of Co-Partnership called Eastcoast Development Enterprises (EDE) with only the two of them as partners. The partnership EDE which was registered with SEC had an indefinite term of existence.  One of the purposes of the partnership was to apply/secure timber/minor forest products licenses and concession over public or private forest lands and to operate, develop, and promote such forests rights and concessions. A duly registered article of co-partnership was filed together with an application for timber concession covering certain areas in Davao with the Bureau of Forestry. It was then approved and a timber license was issued. Under their article of co-partnership, appellee Maglana  was tasked to manage, market, handle cash, and be the authorized signatory for the partnership. Appellant Rojas, on the other hand, is the logging superintended tasked to manage logging operations of the partnership. It also stated in the articles that all profits & losses shall be divided share and share alike between partners. During Jan 14 1955 – Apr 30 1956, there was no operation of the said partnership. Due to difficulties, Rojas and Maglana decided to avail the services of Pahamatong as industrial partner. On March 1956, the 3 executed their articles of co-partnership under the firm name EDE. Everything was the same except for the purpose which was to hold and secure renewal of timber license and the term was fixed for 30 years.

The new partnership was able to ship logs and acquire profits and was able to get a proceed of 643,633.07. On Oct 23, 1956, The 3 executed a document, “Conditional Sale of interest in the partnership EDE” agreeing among themselves that Maglana and Rojas shall purchase the interest, share, participation in the partnership of pahamoting in the assessed value of 31,501.12. It was also agreed that after payment of the sum to Pahamotang including the loan secured by the latter in favor of the partnership, the two original partners shall become owners of all equipment contributed by Pahamatong and that the name of the second partnership be dissolved upon fulfillment of the condition. After the withdrawal of Pahamotang, the partnership was continued by the original partners without any written agreement or reconstitution of their written articles of partnership.

Problem arose when Rojas abandoned the partnership due to joining with another logging enterprise, and withdrew his equipment from the partnership. Maglana reminded Rojas of his obligation in their partnership but Rojas said he wouldn’t comply. He then took funds from the partnership more than his contribution. Thus, Maglana notified Rojas that he dissolved the partnership. Rojas then filed for recovery of properties, accounting, receivership, and damages against Maglana.

Issue:

1.       WON the nature of partnership of Maglana and Rojas after dissolution of the second partnership is de facto and at will.

2.       WON the sharing of partnership profits should be on the basis of contribution or ratio/proportion of their respective contributions.

Held:

1.       No. Under the circumstances, the relationship of Rojas and Maglana after the withdrawal of Pahamotang can neither be considered as a De Facto Partnership, nor a Partnership At Will, for as stressed, there is an existing partnership, duly registered. The dissolution of the second partnership does not affect the first partnership which continued to exist. The fact that Maglana wrote Rojas for the fulfillment of his obligation in the partnership and Rojas subsequent reply further stressed that both considered themselves governed by the articles of the duly registered partnership. Hence, as there are only two parties when Maglana notified Rojas that he dissolved the partnership, it is in effect a notice of withdrawal.

Under Article 1830, par. 2 of the Civil Code, even if there is a specified term, one partner can cause its dissolution by expressly withdrawing even before the expiration of the period, with or without justifiable cause. Of course, if the cause is not justified or no cause was given, the withdrawing partner is liable for damages but in no case can he be compelled to remain in the firm. With his withdrawal, the number of members is decreased, hence, the dissolution. And in whatever way he may view the situation, the conclusion is inevitable that Rojas and Maglana shall be guided in the liquidation of the partnership by the provisions of its duly registered Articles of Co-Partnership; that is, all profits and losses of the partnership shall be divided "share and share alike" between the partners.

2.       YES. On the basis of the Commissioners' Report, the corresponding contribution of the partners from 19561961 are as follows: Eufracio Rojas who should have contributed P158,158.00, contributed only P18,750.00 while Maglana who should have contributed P160,984.00, contributed P267,541.44 (Decision, R.A. p. 976). It is a settled rule that when a partner who has undertaken to contribute a sum of money fails to do so, he becomes a debtor of the partnership for whatever he may have promised to contribute (Article 1786, Civil Code) and for interests and damages from the time he should have complied with his obligation (Article 1788, Civil Code) (Moran, Jr. v. Court of Appeals, 133 SCRA 94 [1984]). Being a contract of partnership, each partner must share in the profits and losses of the venture. That is the essence of a partnership (Ibid., p. 95).

Sy vs. Court of Appeals, GR. No. 94285, August 31, 1999

Parties:

Petitioners - Jesus Sy, Jaime Sy, Estate Of Jose Sy, Estate Of Vicente Sy, Heir Of Marciano Sy Represented By Justina Vda. De Sy And Willie Sy

Respondents - The Court Of Appeals, Intestate Estate Of Sy Yong Hu, Sec. Hearing Officer Felipe Tongco, Securities And Exchange Commission

Nature: PETITIONS for review on certiorari of a decision of the Court of Appeals.

Summary:  Sy Yong Hu & Sons is a partnership between Sy Yong Hu and his sons. Their shares as reflected in the Amended articles of partnership are as follows:  Sy Yong Hu (31k), Jose Sy (205k), Jayme Sy (112k), Marciano Sy (143k), Willie Sy (85k), Vicente Sy (85k), and Jesus Sy (88k), with Jose Sy as managing partner. The partnership was registered with SEC on March 29, 1962. In 1978, 1979, & 1987, Partners Sy Yong Hu and Jose Sy, Vicent Sy, &Marciano Sy died respectively. At present, the partnership has valuable assets in the business district of Bacolod.

In Sept 1977, during the lifetime of all the partners, Keng Sian brought an action against the partnership claiming she is entitled of ½ of the properties and the fruits bec she was the common law wife of Sy Yong Hu which the latter denied.

During the pendency of the case, Marciano Sy filed a petition for declaratory relief against Vicente, Jesus, and Jayme, praying he be appointed partner to replace the deceased Jose. In an answer, Vicente, Jesus, Jayme, who claimed to represent the majority interest sought the dissolution of partnership and appointed Vicente as managing partner.

The Hearing Officer, in a decision (Sison Decision) dismissed the petition, and dissolved the partnership. The Sison Decision was affirmed by the SEC En Banc. In the meantime the Regional Trial Court appointed one Alex Ferrer as Special Administrator. Thereafter, Alex Ferrer moved to intervene in the proceedings in for the partition and distribution of the of the partnership assets on behalf of the respondent intestate estate but was denied. The Intestate Estate appealed to the SEC en banc. In its decision, the SEC en banc reiterated that the Abello decision, which upheld the order of dissolution of the partnership, had long become final and executory. No further appeal was taken from said decision. During the continuation of SEC Case, the parties brought to the attention of the Hearing Officer the fact of existence of a Civil Case pending before the RTC. They also agreed that during the pendency of said case, there would be no disposition of partnership assets. Hearing Officer Tongco in an order placed the partnership under a receivership committee. Petitioners appealed to the SEC en banc. In an order (Lopez Order), the SEC en banc affirmed the Tongco order. Then they filed a special civil action for certiorari with the Court of Appeals. The appellate court granted the petition and remanded the case for further execution of the Decisions, ordering partition and distribution of partnership properties. On motion for reconsideration by private respondents, the Court of Appeals reversed its earlier decision and remanded the case to the SEC for the formation of a receivership committee as envisioned in the Tongco Order. Hence the present petition.

 ISSUE: What is there is a difference between winding up and dissolution

HELD: Petitioners fail to recognize the basic distinctions underlying the principles of dissolution, winding up and partition or distribution. The dissolution of a partnership is the change in the relation of the parties caused by any partner ceasing to be associated in the carrying on, as might be distinguished from the winding up, of its business. Upon its dissolution, the partnership continues and its legal personality is retained until the complete winding up of its business culminating in its termination. The dissolution of the partnership did not mean that the juridical entity was immediately terminated and that the distribution of the assets to its partners should perfunctorily follow. On the contrary, the dissolution simply effected a change in the relationship among the partners. The partnership, although dissolved, continues to exist until its termination, at which time the winding up of its affairs should have been completed and the net partnership assets are partitioned and distributed to the partners. It ruled that although the Abello Decision was, indeed, final and executory, it did not pose any obstacle to the hearing officer to issue orders not inconsistent therewith because from the time a dissolution is ordered until the actual termination of the partnership.

SAME SAME

Partnerships; Dissolutions; Words and Phrases; Dissolution of a partnership is the change in the relation of the parties caused by any partner ceasing to be associated in the carrying on, as might be distinguished from the winding up, of its business.—The contentions are untenable. Petitioners fail to recognize the basic distinctions underlying the principles of dissolution, winding up and partition or distribution. The dissolution of a partnership is the change in the relation of the parties caused by any partner ceasing to be associated in the carrying on, as might be distinguished from the winding up, of its business. Upon its dissolution, the partnership continues and its legal personality is retained until the complete winding up of its business culminating in its termination.

Same; Same; The partnership, although dissolved, continues to exist until its termination, at which time the winding up of its affairs should have been completed and the net partnership assets are partitioned and distributed to the partners.—The dissolution of the partnership did not mean that the juridical entity was immediately

terminated and that the distribution of the assets to its partners should perfunctorily follow. On the contrary, the dissolution simply effected a change in the relationship among the partners. The partnership, although dissolved, continues to exist until its termination, at which time the winding up of its affairs should have been completed and the net partnership assets are partitioned and distributed to the partners.

Same; Same; Securities and Exchange Commission; Jurisdiction; From the time a dissolution is ordered until the actual termination of the partnership, the Securities and Exchange Commission retains jurisdiction to adjudicate all incidents relative thereto; Like the appointment of a manager in charge of the winding up of the affairs of the partnership, the appointment of a receiver during the pendency of the dissolution is interlocutory in nature, well within the jurisdiction of the Securities and Exchange Commission.—The error, therefore, ascribed to the Court of Appeals is devoid of any sustainable basis. The Abello Decision though, indeed, final and executory, did not pose any obstacle to the Hearing Officer to issue orders not inconsistent therewith. From the time a dissolution is ordered until the actual termination of the partnership, the SEC retained jurisdiction to adjudicate all incidents relative thereto. Thus, the disputed order placing the partnership under a receivership committee cannot be said to have varied the final order of dissolution. Neither did it suspend the dissolution of the partnership. If at all, it only suspended the partition and distribution of the partnership assets pending disposition of Civil Case No. 903 on the basis of the agreement by the parties and under the circumstances of the case. It bears stressing that, like the appointment of a manager in charge of the winding up of the affairs of the partnership, said appointment of a receiver during the pendency of the dissolution is interlocutory in nature, well within the jurisdiction of the SEC.