Singsong v. Isabela Sawmill

Singsong v. Isabela Sawmill G.R. No. L-27343, February 28, 1979, Fernandez, J.

Facts: In 1951, defendants entered into a contract of partnership under the firm name “Isabela Sawmill”. In 1956 the plaintiff sold to the partnership a motor truck and two tractors. The partnership was not able to pay their whole balance even after demand was made. One of the partners withdrew from the partnership but instead of terminating the said partnership it was continued by the two remaining partners under the same firm name. Plaintiffs also seek the annulment of the assignment of right with chattel mortgage entered into by the withdrawing partner and the remaining partners. The appellants contend that the chattel mortgage may no longer be nullified because it had been judicially approved and said chattel mortgage had been judicially foreclosed.

 

Issue: Whether the withdrawal of one of the partners dissolved the partnership.

 

Ruling:

 

 It does not appear that the withdrawal of the partner was not published in the newspapers. The appellees and the public in general had a right to expect that whatever, credit they extended to the remaining partners could be enforced against the properties of the partnership. The withdrawing partner cannot be relieved from her liability to the creditor of the partnership due to her own fault by not insisting on the liquidation of the partnership. Though she had acted in good faith, the appellees also acted in good faith in extending credit to the partnership. Where one of two innocent persons must suffer, that person who gave occasion for the damages to be caused must bear the consequences. Technically, the partnership was dissolved by the withdrawal of one of the partners. Through her acts of entering into a memorandum with the remaining partners misled the creditors that they were doing business with the partnership. Hence, from the order of the lower court ordering the withdrawing partner to pay the plaintiffs, she is thus entitled for reimbursement from the remaining partners.