G.R. No. 94285, 31 August 1999
FACTS:
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 because 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 dismissed the petition, and dissolved the partnership. The 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.
RULING:
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.
*Case digest by Bryne Angelo M. Brillantes, LLB IV, Andres Bonifacio College – School of Law, SY 2019-2020