G.R. No. L-40504 July 29, 1983
FORTUNATO RECENTES, BENJAMIN DE GRACIA and RAMONA MERCED, petitioners, vs. COURT OF FIRST INSTANCE OF ZAMBOANGA DEL NORTE, BRANCH I, PRESIDED BY HON. DIMALANES E. BUISSAN, and CONCEPCION V. ZOSA, respondents.

FACTS

Concepcion V. Zosa filed a complaint for accounting and payment of money against petitioners Fortunato Recentes, Benjamin de Gracia, and Ramona Merced, claiming a share in the Zamboanga Ports Terminal and Arrastre Service partnership. After issues were joined, Zosa successfully moved for the appointment of Ramona Merced as receiver, alleging mismanagement and squandering of partnership assets. Subsequently, Recentes and de Gracia moved to dissolve the receivership, arguing the partnership had automatically dissolved upon the expiration of its ten-year term in 1967. Judge Rafael T. Mendoza granted this motion.
However, Judge Dimalanes B. Buissan, who succeeded Judge Mendoza, reinstated the receivership. He reasoned that despite the term’s expiration, the partnership continued to exist for winding up purposes because no final accounting or liquidation had been performed. He noted that Recentes and de Gracia had formed a new partnership, excluding Zosa, which continued the business with the old clientele. Judge Buissan issued subsequent orders affirming the receivership, directing that management remain with the officers but that net profits be received and held by the receiver, and requiring the submission of partnership accountings.

ISSUE

Whether the respondent judge acted without jurisdiction or with grave abuse of discretion in issuing the orders reinstating and maintaining the receivership over the partnership.

RULING

The Supreme Court ruled that the respondent judge acted within his jurisdiction and without grave abuse of discretion. The legal logic is anchored on Article 1829 of the Civil Code, which provides that upon dissolution, a partnership is not immediately extinguished but continues until the winding up of its affairs is completed. The Court found that the expiration of the partnership’s fixed term in 1967 effected a dissolution, but it did not terminate the partnership’s legal existence for the purpose of liquidating its assets and settling accounts. Since the petitioners, as managing partners, had failed to render a final accounting and liquidate the partnership, its affairs remained unsettled. The questioned orders, which aimed to secure the partnership’s profits and compel an accounting through a receivership, were precisely tools to facilitate this statutorily mandated winding-up process. Therefore, the judge’s actions were a prudent and valid exercise of judicial power to protect the interest of the excluded partner, Zosa, during the liquidation period. The petition was denied for lack of merit.