AGENCY TRUST AND PARTNERSHIP | LICHAUCO VS. LICHAUCO, 33 PHIL. 350, JANUARY 31, 1916

LICHAUCO VS. LICHAUCO,

33 PHIL. 350, JANUARY 31, 1916

 

TOPIC/DOCTRINE

It would be absurd and unreasonable to hold that the partnership could never be dissolved and liquidated without the consent of two-thirds of its partners notwithstanding that it had lost all its capital, or had become bankrupt, or that the enterprise for which it had been organized had been concluded or utterly abandoned.

 

FACTS

In October, 1901, a notarial instrument was executed in Manila, by the terms of which a partnership was duly organized for the purpose of carrying on a rice-cleaning business at Dagupan, and for the purchase and sale of "palay" and rice. The articles of association, which were not recorded in the mercantile registry, contain, among others, the following provisions:

xxxx

"3.The association cannot be dissolved except by the consent and agreement of two-thirds of its partners and in the event of the death of any of the latter, the heirs of the deceased, if they be minors or otherwise incapacitated, shall be represented in the association by their legal representatives or if two-thirds of the surviving partners agree thereto, the participation of the deceased partner may be liquidated.

xxx

The business thus organized was carried on until May, 1904, when it was found to be unprofitable and discontinued by the defendant manager (gestor) ; and, thereafter, the machinery of the rice mill was dismantled by his orders, and offered for sale.

 

ISSUE

Whether the partnership can only be dissolved by the consent and agreement of two-thirds of the partners as stipulated in the articles of association.

 

RULING

No.

The court ruled that a provision of articles of partnership, which prohibits the dissolution of the partnership except by the consent and agreement of two-thirds of the partners, denies the right of a less number of the partners. to effect a dissolution of the partnership through judicial intervention or otherwise; but it in no wise limits or restricts the rights of the individual partners in the event that the dissolution of the partnership is effected, not by any act of theirs, but by the express mandate of law. It would be absurd and unreasonable to hold that the partnership could never be dissolved and liquidated without the consent of two-thirds of its partners notwithstanding that it had lost all its capital, or had become bankrupt, or that the enterprise for which it had been organized had been concluded or utterly abandoned. Upon the dissolution of the association in 1904 it became the duty of the defendant to liquidate its affairs and account to his associates for their respective shares in the capital invested—this not merely from the very nature of his relation to the enterprise and of his duties to those associated with him as partners, but also by the express mandate of the law.







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