Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

30286 September 12, 1929

M. TEAGUE, plaintiff-appellant, vs. H. MARTIN, J. T. MADDY and L.H. GOLUCKE, defendants-appellees. Abad Santos, Camu and Delgado, for appellant. J.W. Ferrier for appellees. STATEMENT Plaintiff alleges that about December 23, 1926, he and the defendants formed a partnership for the operation of a fish business and similar commercial transactions, which by mutual contest was called "Malangpaya Fish Co," with a capital of P35,000, of which plaintiff paid P25,000, the defendant Martin P5,000, P2,500, and Golucke P2,500. That as such partnership, they agreed to share in the profits and losses of the business in proportion to the amount of capital which each contributed. That the plaintiff was named the general manager to take charge of the business, with full power to do and perform all acts necessary to carry out of the purposes of the partnership. That there was no agreement as to the duration of the partnership. That plaintiff wants to dissolve it, but that the defendants refused to do so. A statement marked Exhibit A, which purports to be a cash book, is made a part of the complaint. That the partnership purchased and now owns a lighter called LapuLapu, and a motorship calledBarracuda, and other properties. That the lighter and the motorship are in the possession of the defendants who are making use of them, to the damage and prejudice of the plaintiff, for any damage which plaintiff may sustain. That it is for the best interest of the parties to have a receiver appointed pending this litigation, to take possession of the properties, and he prays that the Philippine Trust Company be appointed receiver, and for judgment dissolving the partnership, with costs. Each of the defendants filed a separate answer, but the same nature, in which they admit that about December 10, 1926, the plaintiff and the defendants formed a partnership for the purpose of the equipment of the Manila Fish Co., Inc., and the conduct of a fish business. That the terms of the partnership were never evidenced by a truth and in fact, the partnership was formed under a written plan, of which each member received a copy and to which all agreed. That by its terms the amount of the capital was P45,000, of which the plaintiff agreed to contribute P35,000. That P20,000 of the capital was to be used for the purchase of the equipment of the Manila Fish Co., Inc. and the balance placed to the checking account o the new company. It is then alleged that "the new owners agree to duties as follows:

Capt. Maddy will have charger of the Barracuda and the navigating of the same. Salary P300 per month. Mr. Martin will have charge of the southern station, cold stores, commissary and procuring fish. Salary P300 per month. Mr. Teague will have charge of selling fish in Manila and purchasing supplies. No salary until business is on paying basis, then the same as Maddy or Martin. The principal office shall be in Manila, each party doing any business shall keep books showing plainly all transactions, the books shall be available at all time for inspections of any member of the partnership. If Mr. Martin or Mr. Maddy wishes at some future time to repurchase a larger share in the business Teague agrees to sell part of his shares to each on the basis double the amount originally invested by each or ten thousand to Martin and five thousand to Maddy. This offer will expire after two years. That no charge was ever made in the terms of said agreement of copartnership as set forth above except that it was later agreed among the partners that the business of the partnership should be conducted under the trade name "Malangpaya Fish Company." That as shown by the foregoing quoted agreement the agreed capital of the copartnership was P45,000 and not P35,000 as stated in the third paragraph of plaintiff's amended complaint, and the plaintiff herein, M. Teague, bound himself and agreed to contribute to the said copartnership the sum of P35,000 and not the sum of P25,000 as stated in the third paragraph of his said amended complaint. Defendant Martin specificaly denies the "plaintiff was named general manager of the partnership," and alleged "that all the duties and powers of the said plaintiff were specifically set forth in the above quoted written agreement and that no further or additional powers were ever given the said plaintiff." But he admits the purchase of the motorship Barracuda, by the partnership. He denies that Exhibit A is a true or correct statement of the cash received and paid out by or on behalf of the partnership, or that the partnership over purchased or that it now owns the lighter Lapu-Lapu, "And/ or any other properties" as mentioned in said ninth paragraph, except such motorship and a smoke in the house," or that the defendants are making use of any of the properties of the partnership, to the damage and prejudice of the plaintiff, or that they do not have any visible means to answer for any damages, and alleges that at the time of the filing of the complaint, partnership in cold storage, of the value of P6,000, for which he has never accounted on the books of the partnership or mentioned in the complaint, and defendant prays that plaintiff's complaint be dismissed, and that he be ordered and required to render an accounting , and to pay to partnership the balance of his unpaid subscription amounting to P10,000.

In his answer the defendant Maddy claimed and asserted that there is due and owing him from the plaintiff P1,385.53, with legal interest, and in his amended answer, the defendant Martin prays for judgment for P615.49. To all which the plaintiff made a general and specific denial. Upon such issues the lower court on April 30, 1928, rendered the following judgment: In view of the foregoing considerations, the court decrees: That the partnership, existing among the parties in this suit, is hereby declared dissolved; that all the existing properties of the said partnership are ordered to be sold at public auction; and that all the proceeds and other unexpended funds of the partnership be used, first, to pay he P529.48 tax to the Government of the Philippine Islands; second, to pay debts owing to third persons; third, to reimburse the partners for their advances and salaries due; and lastly, to return to the partners the amounts they contributed to the capital of the association and any other remaining such to be distributed proportionately among them as profits: That the plaintiff immediately render a true and proper account of all the money due to and received by him for the partnership. That the barge Lapu-Lapu as well as the Ford truck No. T-3019 and adding machine belong exclusively to the plaintiff, M. Teague, but the said plaintiff must return to and reimburse the partnership the sum of P14,032.26 taken from its funds for the purchase and equipment of the said barge Lapu-Lapu; and also to return the sum of P1,230 and P228 used for buying the Ford truck and adding machine, respectively: That the sum of P,1512.03 be paid to the defendant, J. T. Maddy, and the sum of P615.49 be paid to defendant, H. Martin, for their advances and their unpaid salaries, with legal interest from October 27, 1927, until paid; that the plaintiff pay the costs of this action. So ordered. May 16, 1928, plaintiff filed a motion praying for an order "directing the court's stenographic notes taken by them of the evidence presented in the present case, as soon as possible." This motion was denied on May 19th, and on May 16th, the court denied the plaintiff's motion for reconsideration. To all of which exceptions were duly taken. June 7, 1928, plaintiff filed a petition praying, for the reasons therein stated, that the decision of the court in the case be set aside, and that the parties be permitted to again present their testimony and to have the case decided upon its merits. To which objections were duly made, and on June 28, 1928, the court denied plaintiff's motion for a new trial. To which exceptions were duly taken, and on July 10, 1928, the plaintiff filed a motion in which he prayed that the period for the appeal interposed by the plaintiff be suspended, and that the order of June 28, 1928, be set aside, "and that another be entered ordering the re-

taking of the evidence in this case." To which objections were also filed and later overruled, from all of which the plaintiff appealed and assigns the following errors: I. The trial court erred in not having confined itself, in the determination of this case, to the question as to whether or not it is proper to dissolve the partnership and to liquidate its assets, for all other issues raised by appellees are incidental with the process of liquidation provided for by law. II. The trial court erred in not resolving the primary and most important question at issue in his case, namely, whether or not the appellant M. Teague was the manager of the unregistered partnership Malangpaya Fish Company. III. The trial court erred in holding that the appellant had no authority to buy the Lapu-Lapu, the Ford truck and the adding machine without the consent of his copartners, for in accordance with article 131 of the Code of Commerce the managing partner of a partnership can make purchases for the partnership without the knowledge and/or consent of his copartners. IV. The trial court erred in holding that the Lapu-Lapu, the Ford truck and the adding machine purchased by appellant, as manager of the Malangpaya Fish Company, for and with funds of the partnership, do not form part of the assets of the partnership. V. The trial court erred in requiring the appellant to pay to the partnership the sum of P14,032.26, purchase price, cost of repairs and equipment of the barge Lapu-Lapu; P1,230 purchase price of the adding machine, for these properties were purchased for and they form part of the assets of the partnership. VI. The trial court erred in disapproving appellant's claim for salary and expenses incurred by him for and in connection with the partnership's business. VII. The trial court erred in approving the claims of appellees J.T. Maddy and H. Martin and in requiring the appellant to pay them the sum of P1,512.03 and P615.49 respectively. VIII. The trial court erred in not taking cognizance of appellant's claim for reimbursement for advances made by him for the partnerships, as shown in the statement attached to the complaint marked Exhibit A, in which there is a balance in his favor and against the partnership amounting to over P16,000. X. Lastly, considering the irregularities committed, the disappearance of the stenographic notes for a considerable length of time, during which time changes in the testimonies of the witnesses could have been made and the impossibility of having an accurate and complete transcript of the stenographic notes, the trial court erred in denying appellant's petition for the retaking of the evidence in this case.

JOHNS, J.: By their respective pleadings, all parties agreed that there was a partnership between them, which appears at one time to have done a good business. In legal effect, plaintiff asked for its dissolution and the appointment of a receiver pendente lite. The defendants did not object to the dissolution of the partnership, but prayed for an accounting with the plaintiff. It was upon such issues that the evidence was taken and the case tried. Hence, there is no merit in the first in the first assignment of error. Complaint is made that the lower court did not specifically decide as to whether or not the plaintiff was the manager of the unregistered partnership. But upon that question the lower court, in legal effect, followed and approved the contention of the defendants that the duties of each partners were specified and defined in the "plans for formation of a limited partnership," in which it is stated that Captain Maddy would have charge of the Barracuda and its navigation, with a salary of P300 per month, and that Martin would have charge of the southern station, cold stores, commisary and procuring fish, with a salary of P300 per month, and that the plaintiff would have charge of selling fish in Manila and purchasing supplies, without salary until such time as the business is placed on a paying basis, when his salary would be the same as that of Maddy and Martin, and that the principal office of the partnership "shall keep books showing plainly all transactions," which shall be available at all time for inspection of any of the members. It will thus be noted that the powers and duties of Maddy Martin, and the plaintiff are specifically defined, and that each of them was more or less the general manager in his particular part of the business. That is to say, that Maddy's power and duties are confined and limited to the charge of the Barracuda and its navigation, and Martin's to the southern station, cold stores, commissary and procuring fish, and that plaintiff's powers and duties are confined and limited to "selling fish in Manila and the purchase of supplies." In the selling of fish, plaintiff received a substantial amount of money which he deposited to the credit of the company signed by him as manager, but it appears that was a requirement which the bank made in the ordinary course of business, as to who was authorized to sign checks for the partnership; otherwise, it would not cash the checks. In the final analysis, the important question in this case is the ownership of the Lapu-Lapu, the Ford truck, and the adding machine. The proof is conclusive that they were purchased by the plaintiff and paid for him from and out of the money of the partnership. That at the time of their purchase, the Lapu-Lapu was purchased in the name of the plaintiff, and that he personally had it registered in the customs house in his own name, for which he made an affidavit that he was its owner. After the purchase, he also had the Ford truck registered in his won name. His contention that this was done as a matter of convenience is not tenable. The record shows that when the partnership purchased the Barracuda, it was registered in the customs house in the name of the partnership, and that it was a very simple process to have it so registered. Without making a detailed analysis of the evidence, we agree with the trial court that the Lapu-Lapu, the Ford truck, and the adding machine were purchased by the plaintiff and paid for out of the funds of the partnership, and that by his own actions and conduct, and the taking of the title in his own name, he is now estopped to claim or assert that they are not his property or that they are the property of the company. Again, under his powers and duties as specified in the tentative, unsigned written agreement, his authority was confined

and limited to the "selling of fish in Manila and the purchase of supplies." It must be conceded that, standing alone, the power to sell fish and purchase supplies does not carry with it or imply the authority to purchase the Lapu-Lapu, or the Ford truck, or the adding machine. From which it must follow that he had no authority to purchase the lighter LapuLapu, the Ford truck, or the adding machine, as neither of them can be construed as supplies for the partnership business. While it is true that the tentative agreement was never personally signed by any member of the firm, the trial court found as a fact, and that finding is sustained by the evidence, that this unsigned agreement was acted upon and accepted by all parties as the basis of the partnership. It was upon that theory that the lower court allowed the defendant s Maddy and Martin a salary of P300 per month and the money which each of them paid out and advanced in the discharged of their respective duties, and denied any salary to the plaintiff, for the simple reason that the business was never on a paying basis. Much could be said about this division of powers, and that Maddy and Martin's duties were confined and limited to the catching and procuring of fish, which were then shipped to the plaintiff who sold them on the Manila market and received the proceeds of the sales. In other words, Maddy and Martin were supplying the fish to plaintiff who sold them under an agreement that he would account for the money. Upon the question of accounting, his testimony as to the entries which he made and how he kept the books of the partnership is very interesting: Q. Then this salary does not take into consideration the fact that you claim the company is very badly in debt? A. Q. A. Q. A. Well, I put the salary in there. I am asking you if that is true? I do not think I will decide that, I think it will be decided by the court. I will ask you to answer the question? You asked me my opinion and I said that I am entitled to it. xxx xxx xxx

I am not on trial as a bookkeeper; if my lawyers won't object to the question I will object myself; I am not on trial as a bookkeeper; I keep my books any way I want to, put in what I want to, and I leave out anything I don't choose to put in, xxx Q. xxx xxx

You have your own bookkeeping?

A. Well, I run my business to suit myself, I put in the books what I want to, and I leave out what I want to, and I have a quarter of a million pesos to show for it, xxx xxx xxx

Q. Did you not say that you paid yourself a salary in August because you made a profit? A. Yes. This profit was made counting the stock on hand and equipment on hand, but as far as cash to pay this balance, I did not have it. when I wanted a salary I just took it. I ran things to suit myself. xxx xxx xxx

Q. In other words in going against these partners you are going to tax them for the services of your attorney? A. You are mistaken; I am not against them. I paid this out for filing this complaint and if the honorable court strikes it out, all right. I think it was a just charge. When I want to sue them the Company can pay for my suit. Q. Would you have any objection to their asking for their attorney's fees from the company as partners also in the business? A. Yes.

Q. You would object to your partners having their attorney's fees here paid out of the copartnership like you have had yours paid? A. Yes, that is the way I do my business.

To say the least, this kind of evidence does not appeal to the court. This case has been bitterly contested, and there is much feeling between the parties and even their respective attorneys. Be that as it may, we are clearly of the opinion that the findings of the lower court upon questions of fact are well sustained by the evidence. Plaintiff's case was tried on the theory that the partnership was the owner of the property in question, and no claim was made for the use of the Lapu-Lapu, and it appears that P14,032.26 of the partnership money was used in its purchase, overhauling, expenses and repairs. That in truth and in fact the partnership had the use and benefit of the Lapu-Lapu in its business from sometime in May until the receiver was appointed on November 11, 1927, or a period of about six months, and that the partnership has never paid anything for its use. it is true that there is no testimony as to the value of such use, but the cost of the Lapu-Lapu and the time of its use and the purpose for which it was used, all appear in the record. For such reason, in the interest of justice, plaintiff should be compensated for the reasonable value of the time which the partnership made use of the Lapu-Lapu.

All things considered, we are of the opinion that P2,000 is a reasonable, amount which the plaintiff should receive for its use. In all things and respects, the judgment of the lower court as to the merits is affirmed, with the modification only that P2,000 shall be deducted from the amount of the judgment which was awarded against the plaintiff, such deduction to be made for and on account of such use of the Lapu-Lapu by the partnership, with costs against the appellant. So ordered. Avancea, C.J., Street, Villamor, Romualdez and Villa-Real, JJ. concur. Johnson, J., reserves his vote. G.R. No. L-11624 January 21, 1918

E. M. BACHRACH, plaintiff-appellee, vs. "LA PROTECTORA", ET AL., defendants-appellants. Vicente Foz for appellants. A. J. Burke for appellee. STREET, J.: In the year 1913, the individuals named as defendants in this action formed a civil partnership, called "La Protectora," for the purpose of engaging in the business of transporting passengers and freight at Laoag, Ilocos Norte. In order to provide the enterprise with means of transportation, Marcelo Barba, acting as manager, came to Manila and upon June 23, 1913, negotiated the purchase of two automobile trucks from the plaintiff, E. M. Bachrach, for the agree price of P16,500. He paid the sum of 3,000 in cash, and for the balance executed promissory notes representing the deferred payments. These notes provided for the payment of interest from June 23, 1913, the date of the notes, at the rate of 10 per cent per annum. Provision was also made in the notes for the payment of 25 per cent of the amount due if it should be necessary to place the notes in the hands of an attorney for collection. Three of these notes, for the sum of P3,375 each, have been made the subject of the present action, and there are exhibited with the complaint in the cause. One was signed by Marcelo Barba in the following manner: P. P. La Protectora By Marcelo Barba Marcelo Barba. The other two notes are signed in the same way with the word "By" omitted before the name of Marcelo Barba in the second line of the signature. It is obvious that in thus signing the notes Marcelo Barba intended to bind both the partnership and himself. In the body of the note the word "I" (yo) instead of "we" (nosotros) is used before the words "promise to pay" (prometemos) used in the printed form. It is plain that the singular pronoun here has all the force of the plural.

As preliminary to the purchase of these trucks, the defendants Nicolas Segundo, Antonio Adiarte, Ignacio Flores, and Modesto Serrano, upon June 12, 1913, executed in due form a document in which they declared that they were members of the firm "La Protectora" and that they had granted to its president full authority "in the name and representation of said partnership to contract for the purchase of two automobiles" (en nombre y representacion de la mencionada sociedad contratante la compra de dos automoviles). This document was apparently executed in obedience to the requirements of subsection 2 of article 1697 of the Civil Code, for the purpose of evidencing the authority of Marcelo Barba to bind the partnership by the purchase. The document in question was delivered by him to Bachrach at the time the automobiles were purchased. From time to time after this purchase was made, Marcelo Barba purchased of the plaintiff various automobile effects and accessories to be used in the business of "La Protectora." Upon May 21, 1914, the indebtedness resulting from these additional purchases amounted to the sum of P2,916.57 In May, 1914, the plaintiff foreclosed a chattel mortgage which he had retained on the trucks in order to secure the purchase price. The amount realized from this sale was P1,000. This was credited unpaid. To recover this balance, together with the sum due for additional purchases, the present action was instituted in the Court of First Instance of the city of Manila, upon May 29, 1914, against "La Protectora" and the five individuals Marcelo Barba, Nicolas Segundo, Antonio Adiarte, Ignacio Flores, and Modesto Serrano. No question has been made as to the propriety of impleading "La Protectora" as if it were a legal entity. At the hearing, judgment was rendered against all of the defendants. From this judgment no appeal was taken in behalf either of "La Protectora" or Marcelo Barba; and their liability is not here under consideration. The four individuals who signed the document to which reference has been made, authorizing Barba to purchase the two trucks have, however, appealed and assigned errors. The question here to be determined is whether or not these individuals are liable for the firm debts and if so to what extent. The amount of indebtedness owing to the plaintiff is not in dispute, as the principal of the debt is agreed to be P7,037. Of this amount it must now be assumed, in view of the finding of the trial court, from which no appeal has been taken by the plaintiff, that the unpaid balance of the notes amounts to P4,121, while the remainder (P2,916) represents the amount due for automobile supplies and accessories. The business conducted under the name of "La Protectora" was evidently that of a civil partnership; and the liability of the partners to this association must be determined under the provisions of the Civil Code. The authority of Marcelo Barba to bind the partnership, in the purchase of the trucks, is fully established by the document executed by the four appellants upon June 12, 1913. The transaction by which Barba secured these trucks was in conformity with the tenor of this document. The promissory notes constitute the obligation exclusively of "La Protectora" and of Marcelo Barba; and they do not in any sense constitute an obligation directly binding on the four appellants. Their liability is based on the fact that they are members of the civil partnership and as such are liable for its debts. It is true that article 1698 of the Civil Code declares that a member of a civil partnership is not liable in solidum (solidariamente) with his fellows for its entire indebtedness; but it results from this article, in connection with article 1137 of the Civil Code, that each is liable with the others

(mancomunadamente) for his aliquot part of such indebtedness. And so it has been held by this court. (Co-Pitco vs. Yulo, 8 Phil. Rep., 544.) The Court of First Instance seems to have founded its judgment against the appellants in part upon the idea that the document executed by them constituted an authority for Marcelo Barba to bind them personally, as contemplated in the second clause of article 1698 of the Civil Code. That cause says that no member of the partnership can bind the others by a personal act if they have not given him authority to do so. We think that the document referred to was intended merely as an authority to enable Barba to bind the partnership and that the parties to that instrument did not intend thereby to confer upon Barba an authority to bind them personally. It is obvious that the contract which Barba in fact executed in pursuance of that authority did not by its terms profess to bind the appellants personally at all, but only the partnership and himself. It follows that the four appellants cannot be held to have been personally obligated by that instrument; but, as we have already seen, their liability rests upon the general principles underlying partnership liability. As to so much of the indebtedness as is based upon the claim for automobile supplies and accessories, it is obvious that the document of June 12, 1913, affords no authority for holding the appellants liable. Their liability upon this account is, however, no less obvious than upon the debt incurred by the purchase of the trucks; and such liability is derived from the fact that the debt was lawfully incurred in the prosecution of the partnership enterprise. There is no proof in the record showing what the agreement, if any, was made with regard to the form of management. Under these circumstances it is declared in article 1695 of the Civil Code that all the partners are considered agents of the partnership. Barba therefore must be held to have had authority to incur these expenses. But in addition to this he is shown to have been in fact the president or manager, and there can be no doubt that he had actual authority to incur this obligation. From what has been said it results that the appellants are severally liable for their respective shares of the entire indebtedness found to be due; and the Court of First Instance committed no error in giving judgment against them. The amount for which judgment should be entered is P7,037, to which shall be added (1) interest at 10 per cent per annum from June 23, 1913, to be calculated upon the sum of P4.121; (2) interest at 6 per cent per annum from July 21, 1915, to be calculated upon the sum of P2,961; (3) the further sum of P1,030.25, this being the amount stipulated to be paid by way of attorney's fees. However, it should be noted that any property pertaining to "La Protectora" should first be applied to this indebtedness pursuant to the judgment already entered in this case in the court below; and each of the four appellants shall be liable only for the one-fifth part of the remainder unpaid. Let judgment be entered accordingly, without any express finding of costs of this instance. So ordered. Arellano, C.J., Torres, Araullo, Malcolm, and Avancea, JJ., concur.
May 13, 1903

G.R. No. 1011 JOSE MACHUCA, plaintiff-appellee, vs. CHUIDIAN, BUENAVENTURA & CO., defendants-appellants. Simplicio del Rosario for appellants. Joaquin Rodriguez Serra for appellee. LADD, J.: Most of the allegations of the complaint were admitted by the defendant at the hearing, and the judgment of the court below is based on the state of facts appearing from such admissions, no evidence having been taken. The defendants are a regular general partnership, organized in Manila, December 29, 1882, as a continuation of a prior partnership of the same name. The original partners constituting the partnership of 1882 were D. Telesforo Chuidian, Doa Raymunda Chuidian, Doa Candelaria Chuidian, and D. Mariano Buenaventura. The capital was fixed in the partnership agreement at 16,000 pesos, of which the first three partners named contributed 50,000 pesos each, and the last named 10,000 pesos, and it was stipulated that the liability of the partners should be limited to the amounts brought in by them to form the partnership stock. In addition to the amounts contributed by the partners to the capital, it appears from the partnership agreement that each one of them had advanced money to the preexisting partnership, which advances were assumed or accounts-current aggregated something over 665,000 pesos, of which sum about 569,000 pesos represented the advances from the Chuidians and the balance that balance that from D. Mariano Buenaventura. Doa Raymunda Chuidian retired from the partnership November 4, 1885. On January 1, 1888, the partnership went into liquidation, and it does not appear that the liquidation had been terminated when this action was brought. Down to the time the partnership went into liquidation the accounts-current of D. Telesforo Chuidian and Doa Candelaria Chuidian had been diminished in an amount aggregating about 288,000 pesos, while that of D. Mariano Buenaventura had been increased about 51,000 pesos. During the period from the commencement of the liquidation down to January 1, 1896, the account-current of each of the Chuidians had been still further decreased, while that of D. Mariano Buenaventura had been still further increased. On January 1, 1894, D. Mariano Buenaventura died, his estate passing by will to his children, among whom was D. Vicente Buenaventura. Upon the partition of the estate the amount of the interest of D. Vicente Buenaventura in his fathers account-current and in the capital was ascertained and recorded in the books of the firm.

On December 15, 1898, D. Vicente Buenaventura executed a public instrument in which for a valuable consideration he assigns to D. Jose Gervasio Garcia . . . a 25 per cent share in all that may be obtained by whatever right in whatever form from the liquidation of the partnership of Chuidian, Buenaventura & Co., in the part pertaining to him in said partnership, . . . the assignee, being expressly empowered to do in his own name, and as a part owner, by virtue of this assignment in the assets of the partnership, whatever things may be necessary for the purpose of accelerating the liquidation, and of obtaining on judicially or extrajudicially the payment of the deposits account-current pertaining to the assignor, it being understood that D. Jose Gervasio Garcia is to receive the 25 per cent assigned to him, in the same form in which it may be obtained from said partnership, whether in cash, credits, goods, movables or immovables, and on the date when Messrs. Chuidian, Buenaventura & Co., in liquidation, shall have effected the operations necessary in order to satisfy the credits and the share in the partnership capital hereinbefore mentioned. The plaintiff claims under Garcia by virtue of a subsequent assignment, which has been notified to the liquidator of the partnership. The liquidator of the partnership having declined to record in the books of the partnership the plaintiffs claim under the assignment as a credit due from the concern to him this action is brought to compel such record to be made, and the plaintiff further asks that he be adjudicated to be a creditor of the partnership in an amount equal to 25 per cent of D. Vicente Buenaventuras share in his fathers account-current, as ascertained when the record was made in the books of the partnership upon the partition of the latters estate, with interest, less the liability to which the plaintiff is subject by reason of his share in the capital; that the necessary liquidation being first had, the partnership pay to the plaintiff the balance which may be found to be due him; and that if the partnership has no funds with which to discharge this obligation an adjudication of bankruptcy be made. He also asks to recover the damages caused by reason of the failure of the liquidator to record his credit in the books of partnership. The judgment of the court below goes beyond the relief asked by the plaintiff in the complaint, the plaintiff being held entitled not only to have the credit assigned him recorded in the books of the partnership but also to receive forthwith 25 per cent of an amount representing the share of D. Vicente Buenaventura in the account-current at the time of the partition of his fathers estate, with interest, the payment of the 25 percent of Buenaventuras share in the capital to be postponed till the termination of the liquidation. This point has not, however, been taken by counsel, and we have therefore considered the case upon its merits. The underlying question in the case relates to the construction of clause 19 of the partnership agreement, by which it was stipulated that upon the dissolution of the company, the pending obligations in favor of outside parties should be satisfied, the funds of

the minors Jose and Francisco Chuidian [it does not appear what their interest in the partnership was or when or how it was acquired] should be taken out, and afterwards the resulting balance of the account-current of each one of those who had put in money (imponentes) should be paid. Our construction of this clause is that it establishes a a basis for the final adjustment of the affairs of the partnership; that that basis is that the liabilities to noncompartners are to be first discharged; that the claims of the Chuidian minors are to be next satisfied; and that what is due to the respective partners on account of their advances to the firm is to be paid last of all, leaving the ultimate residue, of course, if there be any, to be distributed, among the partners in the proportions in which they may be entitled thereto. Although in a sense the partners, being at the same time creditors, were outside parties, it is clear that a distinction is made in this clause between creditors who were partners and creditors who were not partners, and that the expression outside parties refers to the latter class. And the words pending obligations, we think, clearly comprehend outstanding obligations of every kind in favor of such outside parties, and do not refer merely, as claimed by counsel for the plaintiff, to the completion of mercantile operations unfinished at the time of the dissolution of the partnership, such as consignments of goods and the like. As respects the claims of the Chuidian minors, the suggestion of counsel is that the clause in question means that their accounts are to be adjusted before those of the partners but not paid first. Such a provision would have been of no practical utility, and the language used that the funds should be taken out (se dedujeran) does not admit of such a construction. Such being the basis upon which by agreement of the partners the assets of the partnership are to be applied to the discharge of the various classes of the firms liabilities, it follows that D. Vicente Buenaventura, whose rights are those of his father, is in no case entitled to receive any part of the assets until the creditors who are nonpartners and the Chuidian minors are paid. Whatever rights he had either as creditor or partner, he could only transfer subject to this condition. And it is clear, from the language of the instrument under which the plaintiff claims, that this conditional interest was all that D. Vicente Buenaventura ever intended to transfer. By that instrument he undertakes to assign to Garcia not a present interest in the assets of the partnership but an interest in whatever may be obtained from the liquidation of the partnership, which Garcia is to receive in the same form in which it may be obtained from said partnership, and on the date when Messrs. Chuidian, Buenaventura & Co., in liquidation, shall have effected the operations necessary in order to satisfy the claims of D. Vicente Buenaventura. Upon this interpretation of the assignment, it becomes unnecessary to inquire whether article 143 of the Code of Commerce, prohibiting a partner from transferring his interest in the partnership without the consent of the other partners, applies to partnerships in liquidation, as contended by the defendant. The assignment by its terms is not to take effect until all the liabilities of the partnership have been discharged and nothing remains to be

done except to distribute the assets, if there should be any, among the partners. Meanwhile the assignor, Buenaventura, is to continue in the enjoyment of the rights and is to remain subject to the liabilities of a partner as though no assignment had been made. In other words, the assignment does not purport to transfer an interest in the partnership, but only a future contingent right to 25 per cent of such portion of the ultimate residue of the partnership property as the assignor may become entitled to receive by virtue of his proportionate interest in the capital. There is nothing in the case to show either that the nonpartner creditors of the partnership have been paid or that the claims of the Chuidian minors have been satisfied. Such rights as the plaintiff has acquired against the partnership under the assignment still remain, therefore, subject to the condition which attached to them in their origin, a condition wholly uncertain of realization, since it may be that the entire assets of the partnership will be exhausted in the payment of the creditors entitled to preference under the partnership agreement, thus extinguishing the plaintiffs right to receive anything from the liquidation. It is contended by the plaintiff that, as the partnership was without authority to enter upon new mercantile operations after the liquidation commenced, the increase in D. Mariano Buenaventuras account-current during that period was the result of a void transaction, and that therefore the plaintiff is entitled to withdraw at once the proportion of such increase to which he is entitled under the assignment. With reference to this contention, it is sufficient to say that it nowhere appears in the case that the increase in D. Mariano Buenaventuras account-current during the period of liquidation was the result of new advances to the firm, and the figures would appear to indicate that it resulted from the accumulation of interest. Counsel for the plaintiff have discussed at length in their brief the meaning of the clause in the partnership agreement limiting the liability of the partners to the amounts respectively brought into the partnership by them, and the effect of this stipulation upon their rights as creditors of the firm. These are questions which relate to the final adjustment of the affairs of the firm, the distribution of the assets remaining after all liabilities have been discharged, or, on the other hand, the apportionment of the losses if the assets should not be sufficient to meet the liabilities. They are in no way involved in the determination of the present case. The plaintiff having acquired no rights under the assignment which are now enforceable against the defendant, this action can not be maintained. The liquidator of the defendant having been notified of the assignment, the plaintiff will be entitled to receive from the assets of the partnership, if any remain, at the termination of the liquidation, 25 per cent of D. Vicentes resulting interest, both as partner and creditor. The judgment in this case should not affect the plaintiffs right to bring another action against the partnership when the affairs of the same are finally wound up. The proper judgment will be that the action be dismissed. The judgment of the court below is reversed and the case is remanded to that court with directions to enter a judgment of dismissal. So ordered.

Arellano, C.J., Torres, Cooper, Willard and Mapa, JJ., concur. McDonough, J., did not sit in this case.

G.R. No. 70926 January 31, 1989 DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents. John L. Uy for petitioner. Edgardo F. Sundiam for private respondent.

GUTIERREZ, JR., J.: The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-G.R. No. CV-00881 which affirmed the decision of the then Court of First Instance of Manila, Branch II in Civil Case No. 116725 declaring private respondent Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah Panciteria and ordering the petitioner to pay to the private respondent his share in the annual profits of the said restaurant. This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the annual profits derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung. The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established sometime in October, 1955. It was registered as a single proprietorship and its licenses and permits were issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial of the case to show that Sun Wah Panciteria was actually a partnership and that he was one of the partners having contributed P4,000.00 to its initial establishment. The private respondents evidence is summarized as follows: About the time the Sun Wah Panciteria started to become operational, the private respondent gave P4,000.00 as his contribution to the partnership. This is evidenced by a receipt identified as Exhibit "A" wherein the petitioner acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. The receipt was written in Chinese characters so that the trial court commissioned an interpreter in the person of Ms. Florence Yap to translate its contents into English. Florence Yap issued a certification and testified that the translation to the best of her knowledge and belief was correct. The private respondent identified the signature on the receipt as that of the petitioner (Exhibit A-3) because it was

affixed by the latter in his (private respondents') presence. Witnesses So Sia and Antonio Ah Heng corroborated the private respondents testimony to the effect that they were both present when the receipt (Exhibit "A") was signed by the petitioner. So Sia further testified that he himself received from the petitioner a similar receipt (Exhibit D) evidencing delivery of his own investment in another amount of P4,000.00 An examination was conducted by the PC Crime Laboratory on orders of the trial court granting the private respondents motion for examination of certain documentary exhibits. The signatures in Exhibits "A" and 'D' when compared to the signature of the petitioner appearing in the pay envelopes of employees of the restaurant, namely Ah Heng and Maria Wong (Exhibits H, H-1 to H-24) showed that the signatures in the two receipts were indeed the signatures of the petitioner. Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's Equitable Banking Corporation Check No. 13389470-B from the profits of the operation of the restaurant for the year 1974. Witness Teodulo Diaz, Chief of the Savings Department of the China Banking Corporation testified that said check (Exhibit B) was deposited by and duly credited to the private respondents savings account with the bank after it was cleared by the drawee bank, the Equitable Banking Corporation. Another witness Elvira Rana of the Equitable Banking Corporation testified that the check in question was in fact and in truth drawn by the petitioner and debited against his own account in said bank. This fact was clearly shown and indicated in the petitioner's statement of account after the check (Exhibit B) was duly cleared. Rana further testified that upon clearance of the check and pursuant to normal banking procedure, said check was returned to the petitioner as the maker thereof. The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and impugned the genuineness of the receipt (Exhibit D). His evidence is summarized as follows: The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. He used his savings from his salaries as an employee at Camp Stotsenberg in Clark Field and later as waiter at the Toho Restaurant amounting to a little more than P2,000.00 as capital in establishing Sun Wah Panciteria. To bolster his contention that he was the sole owner of the restaurant, the petitioner presented various government licenses and permits showing the Sun Wah Panciteria was and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B). As between the conflicting evidence of the parties, the trial court gave credence to that of the plaintiffs. Hence, the court ruled in favor of the private respondent. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to deliver and pay to the former, the sum equivalent to 22% of the annual profit derived from the operation of Sun Wah Panciteria from October, 1955, until fully paid, and attorney's fees in the amount of P5,000.00 and cost of suit. (p. 125, Rollo)

The private respondent filed a verified motion for reconsideration in the nature of a motion for new trial and, as supplement to the said motion, he requested that the decision rendered should include the net profit of the Sun Wah Panciteria which was not specified in the decision, and allow private respondent to adduce evidence so that the said decision will be comprehensively adequate and thus put an end to further litigation. The motion was granted over the objections of the petitioner. After hearing the trial court rendered an amended decision, the dispositive portion of which reads: FOR ALL THE FOREGOING CONSIDERATIONS, the motion for reconsideration filed by the plaintiff, which was granted earlier by the Court, is hereby reiterated and the decision rendered by this Court on September 30, 1980, is hereby amended. The dispositive portion of said decision should read now as follows: WHEREFORE, judgment is hereby rendered, ordering the plaintiff (sic) and against the defendant, ordering the latter to pay the former the sum equivalent to 22% of the net profit of P8,000.00 per day from the time of judicial demand, until fully paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit. (p. 150, Rollo) The petitioner appealed the trial court's amended decision to the then Intermediate Appellate Court. The questioned decision was further modified by the appellate court. The dispositive portion of the appellate court's decision reads: WHEREFORE, the decision appealed from is modified, the dispositive portion thereof reading as follows: 1. Ordering the defendant to pay the plaintiff by way of temperate damages 22% of the net profit of P2,000.00 a day from judicial demand to May 15, 1971; 2. Similarly, the sum equivalent to 22% of the net profit of P8,000.00 a day from May 16, 1971 to August 30, 1975; 3. And thereafter until fully paid the sum equivalent to 22% of the net profit of P8,000.00 a day. Except as modified, the decision of the court a quo is affirmed in all other respects. (p. 102, Rollo) Later, the appellate court, in a resolution, modified its decision and affirmed the lower court's decision. The dispositive portion of the resolution reads: WHEREFORE, the dispositive portion of the amended judgment of the court a quo reading as follows:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to the former the sum equivalent to 22% of the net profit of P8,000.00 per day from the time of judicial demand, until fully paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit. is hereby retained in full and affirmed in toto it being understood that the date of judicial demand is July 13, 1978. (pp. 105-106, Rollo). In the same resolution, the motion for reconsideration filed by petitioner was denied. Both the trial court and the appellate court found that the private respondent is a partner of the petitioner in the setting up and operations of the panciteria. While the dispositive portions merely ordered the payment of the respondents share, there is no question from the factual findings that the respondent invested in the business as a partner. Hence, the two courts declared that the private petitioner is entitled to a share of the annual profits of the restaurant. The petitioner, however, claims that this factual finding is erroneous. Thus, the petitioner argues: "The complaint avers that private respondent extended 'financial assistance' to herein petitioner at the time of the establishment of the Sun Wah Panciteria, in return of which private respondent allegedly will receive a share in the profits of the restaurant. The same complaint did not claim that private respondent is a partner of the business. It was, therefore, a serious error for the lower court and the Hon. Intermediate Appellate Court to grant a relief not called for by the complaint. It was also error for the Hon. Intermediate Appellate Court to interpret or construe 'financial assistance' to mean the contribution of capital by a partner to a partnership;" (p. 75, Rollo) The pertinent portions of the complaint state: xxx xxx xxx 2. That on or about the latter (sic) of September, 1955, defendant sought the financial assistance of plaintiff in operating the defendant's eatery known as Sun Wah Panciteria, located in the given address of defendant; as a return for such financial assistance. plaintiff would be entitled to twenty-two percentum (22%) of the annual profit derived from the operation of the said panciteria; 3. That on October 1, 1955, plaintiff delivered to the defendant the sum of four thousand pesos (P4,000.00), Philippine Currency, of which copy for the receipt of such amount, duly acknowledged by the defendant is attached hereto as Annex "A", and form an integral part hereof; (p. 11, Rollo) In essence, the private respondent alleged that when Sun Wah Panciteria was established, he gave P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-two percent (22%) of the annual profit derived from the operation of the said panciteria. These allegations, which were proved, make the private respondent and the petitioner partners in the establishment of Sun Wah Panciteria because Article 1767 of the Civil Code provides that "By the contract of partnership two or more persons bind

themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves". Therefore, the lower courts did not err in construing the complaint as one wherein the private respondent asserted his rights as partner of the petitioner in the establishment of the Sun Wah Panciteria, notwithstanding the use of the term financial assistance therein. We agree with the appellate court's observation to the effect that "... given its ordinary meaning, financial assistance is the giving out of money to another without the expectation of any returns therefrom'. It connotes an ex gratia dole out in favor of someone driven into a state of destitution. But this circumstance under which the P4,000.00 was given to the petitioner does not obtain in this case.' (p. 99, Rollo) The complaint explicitly stated that "as a return for such financial assistance, plaintiff (private respondent) would be entitled to twenty-two percentum (22%) of the annual profit derived from the operation of the said panciteria.' (p. 107, Rollo) The well-settled doctrine is that the '"... nature of the action filed in court is determined by the facts alleged in the complaint as constituting the cause of action." (De Tavera v. Philippine Tuberculosis Society, Inc., 113 SCRA 243; Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37). The appellate court did not err in declaring that the main issue in the instant case was whether or not the private respondent is a partner of the petitioner in the establishment of Sun Wah Panciteria. The petitioner also contends that the respondent court gravely erred in giving probative value to the PC Crime Laboratory Report (Exhibit "J") on the ground that the alleged standards or specimens used by the PC Crime Laboratory in arriving at the conclusion were never testified to by any witness nor has any witness identified the handwriting in the standards or specimens belonging to the petitioner. The supposed standards or specimens of handwriting were marked as Exhibits "H" "H-1" to "H-24" and admitted as evidence for the private respondent over the vigorous objection of the petitioner's counsel. The records show that the PC Crime Laboratory upon orders of the lower court examined the signatures in the two receipts issued separately by the petitioner to the private respondent and So Sia (Exhibits "A" and "D") and compared the signatures on them with the signatures of the petitioner on the various pay envelopes (Exhibits "H", "H-1" to 'H-24") of Antonio Ah Heng and Maria Wong, employees of the restaurant. After the usual examination conducted on the questioned documents, the PC Crime Laboratory submitted its findings (Exhibit J) attesting that the signatures appearing in both receipts (Exhibits "A" and "D") were the signatures of the petitioner. The records also show that when the pay envelopes (Exhibits "H", "H-1" to "H-24") were presented by the private respondent for marking as exhibits, the petitioner did not interpose any objection. Neither did the petitioner file an opposition to the motion of the private respondent to have these exhibits together with the two receipts examined by the PC Crime Laboratory despite due notice to him. Likewise, no explanation has been offered for his silence nor was any hint of objection registered for that purpose. Under these circumstances, we find no reason why Exhibit "J" should be rejected or ignored. The records sufficiently establish that there was a partnership.

The petitioner raises the issue of prescription. He argues: The Hon. Respondent Intermediate Appellate Court gravely erred in not resolving the issue of prescription in favor of petitioner. The alleged receipt is dated October 1, 1955 and the complaint was filed only on July 13, 1978 or after the lapse of twenty-two (22) years, nine (9) months and twelve (12) days. From October 1, 1955 to July 13, 1978, no written demands were ever made by private respondent. The petitioner's argument is based on Article 1144 of the Civil Code which provides: Art. 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment. in relation to Article 1155 thereof which provides: Art. 1155. The prescription of actions is interrupted when they are filed before the court, when there is a written extra-judicial demand by the creditor, and when there is any written acknowledgment of the debt by the debtor.' The argument is not well-taken. The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are 1) two or more persons bind themselves to contribute money, property, or industry to a common fund; and 2) intention on the part of the partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110)-have been established. As stated by the respondent, a partner shares not only in profits but also in the losses of the firm. If excellent relations exist among the partners at the start of business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations, such rights are irretrievably lost. The private respondent's cause of action is premised upon the failure of the petitioner to give him the agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership. It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable. Article 1842 states: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence or any agreement to the contrary.

Regarding the prescriptive period within which the private respondent may demand an accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Finally, the petitioner assails the appellate court's monetary awards in favor of the private respondent for being excessive and unconscionable and above the claim of private respondent as embodied in his complaint and testimonial evidence presented by said private respondent to support his claim in the complaint. Apart from his own testimony and allegations, the private respondent presented the cashier of Sun Wah Panciteria, a certain Mrs. Sarah L. Licup, to testify on the income of the restaurant. Mrs. Licup stated: ATTY. HIPOLITO (direct examination to Mrs. Licup). Q Mrs. Witness, you stated that among your duties was that you were in charge of the custody of the cashier's box, of the money, being the cashier, is that correct? A Yes, sir. Q So that every time there is a customer who pays, you were the one who accepted the money and you gave the change, if any, is that correct? A Yes. Q Now, after 11:30 (P.M.) which is the closing time as you said, what do you do with the money? A We balance it with the manager, Mr. Dan Fue Leung. ATTY. HIPOLITO: I see. Q So, in other words, after your job, you huddle or confer together? A Yes, count it all. I total it. We sum it up. Q Now, Mrs. Witness, in an average day, more or less, will you please tell us, how much is the gross income of the restaurant?

A For regular days, I received around P7,000.00 a day during my shift alone and during pay days I receive more than P10,000.00. That is excluding the catering outside the place. Q What about the catering service, will you please tell the Honorable Court how many times a week were there catering services? A Sometimes three times a month; sometimes two times a month or more. xxx xxx xxx Q Now more or less, do you know the cost of the catering service? A Yes, because I am the one who receives the payment also of the catering. Q How much is that? A That ranges from two thousand to six thousand pesos, sir. Q Per service? A Per service, Per catering. Q So in other words, Mrs. witness, for your shift alone in a single day from 3:30 P.M. to 11:30 P.M. in the evening the restaurant grosses an income of P7,000.00 in a regular day? A Yes. Q And ten thousand pesos during pay day.? A Yes. (TSN, pp. 53 to 59, inclusive, November 15,1978) xxx xxx xxx COURT: Any cross? ATTY. UY (counsel for defendant):

No cross-examination, Your Honor. (T.S.N. p. 65, November 15, 1978). (Rollo, pp. 127-128) The statements of the cashier were not rebutted. Not only did the petitioner's counsel waive the cross-examination on the matter of income but he failed to comply with his promise to produce pertinent records. When a subpoenaduces tecum was issued to the petitioner for the production of their records of sale, his counsel voluntarily offered to bring them to court. He asked for sufficient time prompting the court to cancel all hearings for January, 1981 and reset them to the later part of the following month. The petitioner's counsel never produced any books, prompting the trial court to state: Counsel for the defendant admitted that the sales of Sun Wah were registered or recorded in the daily sales book. ledgers, journals and for this purpose, employed a bookkeeper. This inspired the Court to ask counsel for the defendant to bring said records and counsel for the defendant promised to bring those that were available. Seemingly, that was the reason why this case dragged for quite sometime. To bemuddle the issue, defendant instead of presenting the books where the same, etc. were recorded, presented witnesses who claimed to have supplied chicken, meat, shrimps, egg and other poultry products which, however, did not show the gross sales nor does it prove that the same is the best evidence. This Court gave warning to the defendant's counsel that if he failed to produce the books, the same will be considered a waiver on the part of the defendant to produce the said books inimitably showing decisive records on the income of the eatery pursuant to the Rules of Court (Sec. 5(e) Rule 131). "Evidence willfully suppressed would be adverse if produced." (Rollo, p. 145) The records show that the trial court went out of its way to accord due process to the petitioner. The defendant was given all the chance to present all conceivable witnesses, after the plaintiff has rested his case on February 25, 1981, however, after presenting several witnesses, counsel for defendant promised that he will present the defendant as his last witness. Notably there were several postponement asked by counsel for the defendant and the last one was on October 1, 1981 when he asked that this case be postponed for 45 days because said defendant was then in Hongkong and he (defendant) will be back after said period. The Court acting with great concern and understanding reset the hearing to November 17, 1981. On said date, the counsel for the defendant who again failed to present the defendant asked for another postponement, this time to November 24, 1981 in order to give said defendant another judicial magnanimity and substantial due process. It was however a condition in the order granting the postponement to said date that if the defendant cannot be presented, counsel is deemed to have waived the presentation of said witness and will submit his case for decision. On November 24, 1981, there being a typhoon prevailing in Manila said date was declared a partial non-working holiday, so much so, the hearing was

reset to December 7 and 22, 1981. On December 7, 1981, on motion of defendant's counsel, the same was again reset to December 22, 1981 as previously scheduled which hearing was understood as intransferable in character. Again on December 22, 1981, the defendant's counsel asked for postponement on the ground that the defendant was sick. the Court, after much tolerance and judicial magnanimity, denied said motion and ordered that the case be submitted for resolution based on the evidence on record and gave the parties 30 days from December 23, 1981, within which to file their simultaneous memoranda. (Rollo, pp. 148-150) The restaurant is located at No. 747 Florentino Torres, Sta. Cruz, Manila in front of the Republic Supermarket. It is near the corner of Claro M. Recto Street. According to the trial court, it is in the heart of Chinatown where people who buy and sell jewelries, businessmen, brokers, manager, bank employees, and people from all walks of life converge and patronize Sun Wah. There is more than substantial evidence to support the factual findings of the trial court and the appellate court. If the respondent court awarded damages only from judicial demand in 1978 and not from the opening of the restaurant in 1955, it is because of the petitioner's contentions that all profits were being plowed back into the expansion of the business. There is no basis in the records to sustain the petitioners contention that the damages awarded are excessive. Even if the Court is minded to modify the factual findings of both the trial court and the appellate court, it cannot refer to any portion of the records for such modification. There is no basis in the records for this Court to change or set aside the factual findings of the trial court and the appellate court. The petitioner was given every opportunity to refute or rebut the respondent's submissions but, after promising to do so, it deliberately failed to present its books and other evidence. The resolution of the Intermediate Appellate Court ordering the payment of the petitioner's obligation shows that the same continues until fully paid. The question now arises as to whether or not the payment of a share of profits shall continue into the future with no fixed ending date. Considering the facts of this case, the Court may decree a dissolution of the partnership under Article 1831 of the Civil Code which, in part, provides: Art. 1831. On application by or for a partner the court shall decree a dissolution whenever: xxx xxx xxx (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business; (4) A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him;

xxx xxx xxx (6) Other circumstances render a dissolution equitable. There shall be a liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution because the continuation of the partnership has become inequitable. WHEREFORE, the petition for review is hereby DISMISSED for lack of merit. The decision of the respondent court is AFFIRMED with a MODIFICATION that as indicated above, the partnership of the parties is ordered dissolved. SO ORDERED.
Republic of the Philippines SUPREME COURT Manila EN BANC DECISION December 29, 1953 G.R. No. L-6304 SERGIO V. SISON, plaintiff-appellant, vs. HELEN J. MCQUAID, defendant-appellee. Manansala and Manansala for appellant. J.C. Orendain for appllee. , J.: On March 28, 1951, plaintiff brought an action in the Court of First Instance of Manila against defendant, alleging that during the year 1938 the latter borrowed from him various sums of money, aggregating P2,210, to enable her to pay her obligation to the Bureau of Forestry and to add to her capital in her lumber business, receipt of the amounts advanced being acknowledged in a document, Exhibit A, executed by her on November 10, 1938 and attached to the complaint; that as defendant was not able to pay the loan in 1938, as she had promised, she proposed to take in plaintiff as a partner in her lumber business, plaintiff to contribute to the partnership the said sum of P2,210 due him from defendant in addition to his personal services; that plaintiff agreed to defendants proposal and, as a result, there was formed between them, under the provisions of the Civil Code, a partnership in which they were to share alike in the income or profits of the business, each to get one-half thereof; that in accordance with said contract, plaintiff, together with defendant, rendered services to the partnership without compensation from June 15, 1938 to December, 1941; that before the last World War, the partnership sold to the United States Army 230,000

board feet of lumber for P13,800, for the collection of which sum defendant, as manager of the partnership, filed the corresponding claim with the said army after the war; that the claim was finally approved and the full amount paid the complaint does not say when but defendant has persistently refused to deliver one-half of it, or P6,900, to plaintiff notwithstanding repeated demands, investing the whole sum of P13,800 for her own benefit. Plaintiff, therefore, prays for judgment declaring the existence of the alleged partnership and requiring the defendant to pay him the said sum of P6,900, in addition to damages and costs. Notified of the action, defendant filed a motion to dismiss on the grounds that plaintiffs action had already prescribed, that plaintiffs claim was not provable under the Statute of Frauds, and that the complaint stated no cause of action. Sustaining the first ground, the court dismissed the case, whereupon, plaintiff appealed to the Court of Appeals; but that court has certified the case here on the ground that the appeal involved only questions of law. It is not clear from the allegations of the complaint just when plaintiffs cause of action accrued. Consequently, it cannot be determined with certainty whether that action has already prescribed or not. Such being the case, the defense of prescription can not be sustained on a mere motion to dismiss based on what appears on the face of the complaint. But though the reason given for the order of dismissal be untenable, we find that the said order should be upheld on the ground that the complaint states no cause of action, which is also one of the grounds on which defendants motion to dismiss was based. Plaintiff seeks to recover from defendant one-half of the purchase price of lumber sold by the partnership to the United States Army. But his complaint does not show why he should be entitled to the sum he claims. It does not allege that there has been a liquidation of the partnership business and the said sum has been found to be due him as his share of the profits. The proceeds from the sale of a certain amount of lumber cannot be considered profits until costs and expenses have been deducted. Moreover, the profits of the business cannot be determined by taking into account the result of one particular transaction instead of all the transactions had. Hence, the need for a general liquidation before a member of a partnership may claim a specific sum as his share of the profits. In view of the foregoing, the order of dismissal is affirmed, but on the ground that the complaint states no cause of action and without prejudice to the filing of an action for accounting or liquidation should that be what plaintiff really wants. Without costs in this instance. Paras, C.J., Pablo, Bengzon, Padilla, Tuason, Jugo, Bautista Angelo and Labrador, JJ., concur.

G.R. No. L-47823

July 26, 1943

JOSE ORNUM and EMERENCIANA ORNUM, petitioners, vs. MARIANO, LASALA, et al., respondent. Marcelino Lontok for petitioners. Duran, Lim and Bausa and Augusto Francisco for respondents. PARAS, J.: The following facts are practically admitted in the pleadings and briefs of the parties: The respondents (plaintiffs below) are natives of Taal, Batangas, and resided therein or in Manila. The petitioners (defendants below) are also natives of Taal, but resided in the barrio of Tan-agan, municipality of Tablas, Province of Romblon. In 1908 Pedro Lasala, father of the respondents, and Emerenciano Ornum formed a partnership, whereby the former, as capitalist, delivered the sum of P1,000 to the latter who, as industrial partner, was to conduct a business at his place of residence in Romblon. In 1912, when the assets of the partnership consisted of outstanding accounts and old stock of merchandise, Emerenciano Ornum, following the wishes of his wife, asked for the dissolution of the Lasala, Emerenciano Ornum looked for some one who could take his place and he suggested the names of the petitioners who accordingly became the new partners. Upon joining the business, the petitioners, contributed P505.54 as their capital, with the result that in the new partnership Pedro Lasala had a capital of P1,000, appraised value of the assets of the former partnership, plus the said P505.54 invested by the petitioners who, as industrial partners, were to run the business in Romblon. After the death of Pedro Lasala, his children (the respondents) succeeded to all his rights and interest in the partnership. The partners never knew each other personally. No formal partnership agreement was ever executed. The petitioners, as managing partners, were received one-half of the net gains, and the other half was to be divided between them and the Lasala group in proportion to the capital put in by each group. During the course divided, but the partners were given the election, as evidenced by the statements of accounts referred to in the decision of the Court of Appeals, to invest their respective shares in such profits as additional capital. The petitioners accordingly let a greater part of their profits as additional investment in the partnership. After twenty years the business had grown to such an extent that is total value, including profits, amounted to P44,618.67. Statements of accounts were periodically prepared by the petitioners and sent to the respondents who invariably did not make any objection thereto. Before the last statement of accounts was made, the respondents had received P5,387.29 by way of profits. The last and final statement of accounts, dated May 27, 1932, and prepared by the petitioners after the respondents had announced their desire to dissolve the partnership, read as follows: Ganancia total desde el ultimo balance hasta la fecha Participacion del capital de los hermanos Lasala en la ganancia Participacion del capital de Jose Ornum en el ganancia Participacion de Jose Ornum como socio industrial P575.45 P55.39 125.79 143.96

Participacion del capital de Emerenciana Ornum en la ganancia Participacion de Emerenciana Ornum como socia industrial

106.54 143.86

Siendo este el balance final lo siguiente es la cantidad que debe corresponder a cada socio: Capital de los hermanos Lasala segun el ultimo balance Ganancia de este capital Pero se debe deducir la cantidad tomada por los hermanos Lasala Cantidad nota que debe corresponder a los hermanos Lasala Capital de Jose Ornum segun el ultimo balance Ganancia de este capital Participacion de Jose Ornum como socio industrial Pero se debe deducir la cantidad tomada por Jose Ornum Cantidad neta que debe corresponder a Jose Ornum Capital de Emerenciana Ornum segun el ultimo balance Ganancia de este capital Participacion de Emerenciana Ornum como socia industrial Pero se debe deducir la cantidad tomada por Emerenciana Ornum Cantidad neta que debe corresponder a Emerenciana Ornum P8,448.00 106.54 143.86 P8,698.40 1,850.00 P9,975.13 125.79 143.86 P10,244.65 1,650.00 P8,594.65

P4,393.08 55.39 P4,448.47 1,730.00

P2,718.47

P6,848.40

After the receipt of the foregoing statement of accounts, Father Mariano Lasala, spokesman for the respondents, wrote the following letter to the petitioners on July 19, 1932: Ya te manifestamos francamente aqui, como consocio, y te autorizamos tambien para que lo repitas a tu hermana Mering, viuda, que el motivo porque recogemos el capital y utilidades de nuestra sociedad en todo nuestro negocio que esta al cuidado vosotros dos, es que tenemos un grande compromiso que casi no podemos evitarlo.

Por esto volvemos a rogarles que por cualquier medio antes de terminar este mes de julio, 1932, nosotros esperamos vuestra consideracion. Gracias. En cuanto hayamos recibido esto, entonces firmaremos el balance que habeis hecho alli, cuya copia has dejado aqui. Recuerdos a todos alli y mandar. Pursuant to the request contained in this letter, the petitioners remitted and paid to the respondents the total amount corresponding to them under the above-quoted statement of accounts which, however, was not signed by the latter. Thereafter the complaint in this case was filed by the respondents, praying for an accounting and final liquidation of the assets of the partnership. The Court of First Instance of Manila held that the last and final statement of accounts prepared by the petitioners was tacitly approved and accepted by the respondents who, by virtue of the above-quoted letter of Father Mariano Lasala, lost their right to a further accounting from the moment they received and accepted their shares as itemized in said statement. This judgment was reversed by the Court of Appeals principally on the ground that as the final statement of accounts remains unsigned by the respondents, the same stands disapproved. The decision appealed by the petitioners thus said: To support a plea of a stated account so as to conclude the parties in relation to all dealings between them, the accounting must be shown to have been final. (1 Cyc. 366.) All the first nine statements which the defendants sent the plaintiffs were partial settlements, while the last, although intended to be final, has not been signed. We hold that the last and final statement of accounts hereinabove quoted, had been approved by the respondents. This approval resulted, by virtue of the letter of Father Mariano Lasala of July 19, 1932, quoted in part in the appealed decision from the failure of the respondents to object to the statement and from their promise to sign the same as soon as they received their shares as shown in said statement. After such shares had been paid by the petitioners and accepted by the respondents without any reservation, the approval of the statement of accounts was virtually confirmed and its signing thereby became a mere formality to be complied with by the respondents exclusively. Their refusal to sign, after receiving their shares, amounted to a waiver to that formality in favor of the petitioners who has already performed their obligation. This approval precludes any right on the part of the respondents to a further liquidation, unless the latter can show that there was fraud, deceit, error or mistake in said approval. (Pastor, vs. Nicasio, 6 Phil., 152; Aldecoa & Co., vs. Warner, Barnes & Co., 16 Phil., 423; Gonsalez vs. Harty, 32 Phil. 328.) The Court of Appeals did not make any findings that there was fraud, and on the matter of error or mistake it merely said: The question, then is, have mistakes, been committed in the statements sent appellants? Not only do plaintiffs so allege, and not only does not evidence so tend to prove, but the charge is seconded by the defendants themselves when in their counterclaims they said:

"(a) Que recientemente se ha hecho una acabada revision de las cuentas y libros del negocio, y, se ha descubierto que los demandados cometieron un error al hacer las entregas de las varias cantidades en efectivo a los demandantes, entregando en total mayor cantidades a la que tenian derecho estos por su participacion y ganancias en dicho negocio; "(b) Que el exceso entregado a los demandantes, asciende a la suma de quinientos setenta y cinco pesos con doce centimos (P575.12), y que los demandados reclaman ahora de aquellos su devolucion o pago en la presente contrademanda;" In our opinion, the pronouncement that the evidence tends to prove that there were mistakes in the petitioners' statements of accounts, without specifying the mistakes, merely intimates as suspicion and is not such a positive and unmistakable finding of fact (Cf. Concepcion vs. People, G.R. No. 48169, promulgated December 28, 1942) as to justify a revision, especially because the Court of Appeals has relied on the bare allegations of the parties, Even admitting that, as alleged by the petitioners in their counterclaim, they overpaid the respondents in the sum of P575.12, this error is essentially fatal to the latter's theory what the statement of accounts shows, and is therefore not the kind of error that calls for another accounting which will serve the purpose of the respondent's suit. Moreover, as the petitioners did not appeal from the decision of the Court abandoned such allegation in the Court of Appeals. If the liquidation is ordered in the absence of any particular error, found as a fact, simply because no damage will be suffered by the petitioners in case the latter's final statement of the accounts proves to be correct, we shall be assuming a fundamentally inconsistent position. If there is not mistake, the only reason for a new accounting disappears. The petitioners may not be prejudiced in the sense that they will be required to pay anything to the respondents, but they will have to go to the trouble of itemizing accounts covering a period of twenty years mostly from memory, its appearing that no regular books of accounts were kept. Stated more emphatically, they will be told to do what seems to be hardly possible. When it is borne in mind that this case has been pending for nearly nine years and that, if another accounting is ordered, a costly action or proceeding may arise which may not be disposed of within a similar period, it is not improbable that the intended relief may in fact be the respondents' funeral. We are reversing the appealed decision on the legal ground that the petitioners' final statement of accounts had been approved by the respondents and no justifiable reason (fraud, deceit, error or mistake) has been positively and unmistakably found by the Court of Appeals so as to warrant the liquidations sought by the respondents. In justice to the petitioners, however, we may add that, considering that they ran the business of the partnership for about twenty years at a place far from the residence of the respondents and without the latter's intervention; that the partners did not even know each other personally; that no formal partnership agreement was entered into which bound the petitioners under specific conditions; that the petitioners could have easily and freely alleged that the business became partial, or even a total, loss for any plausible reason which they could have concocted, it appearing that the partnership engaged in such uncertain ventures as agriculture, cattle raising and operation of rice mill, and the petitioners did not keep any regular books of accounts; that the petitioners were still frank enough to disclose that the

original capital of P1,505.54 amounted, as of the date of the dissolution of the partnership, to P44,618.67; and that the respondents had received a total of P8,105.76 out of their capital of P1,000, without any effort on their part, we are reluctant even to make the conjecture that the petitioners had ever intended to, or actually did, take undue advantage of the absence and confidence of the respondents. Indeed, we feel justified in stating that the petitioners have here given a remarkable demonstration of the legendary honesty, good faith and industry with which the natives of Taal pursue business arrangements similar to the partnership in question, and we would hate, in the absence of any sufficient reason, to let such a beautiful legend have a distateful ending. The appealed decision is hereby reversed and the petitioners (defendants below) absolved from the complaints of the respondents (plaintiffs below), with costs against the latter. Yulo, C.J., and Hontiveros, J., concur.

Separate Opinions OZAETA J., concurring: Let us record here the mental processes by which I arrived at my vote for the reversal of the judgment of the Court of Appeals. After the respondents had announced their desire to withdraw from the "partnership," the petitioners rendered a final statement of account dated May 27, 1932, which is set forth in the opinion written by Mr. Justice Paras and which was accepted as correct by the respondents, who them asked from the payment to them in cash of their participation in the capital and profits of the business as shown by said statement. It must be borne in mind that the assets reflected in said statement of account did not consist of cash but of merchandise, credits, land, large cattle, and a rice mill. To gratify the respondent wish the petitioners raised money and paid respondents' total participation. After their interest and participation in the business had thus been liquidated, the respondents, apparently believing that they might be entitled to more money than they had accepted and received, sought to have the books and records examined by a representative of theirs. The petitioners regarded such conduct of the respondents not only as a violation of their agreement to consider the "partnership" dissolved upon the payment of respondents' participation therein but as an unwarranted reflections upon their honesty and good faith. Hence they refused to allow the examination or proposed reliquidation. On November 20, 1933, the complaint in this case was filed by the respondents, praying for an accounting and final liquidation of the assets of the "partnership." The trial lasted off and on from September 26, 1934, to March 23, 1937, involving a transcript of 815 pages of oral testimony. The Court of First Instance of Manila rendered its decision on December 29, 1937, in which it found that there was no proof whatever to the effect that the defendants acted in bad faith in the preparation of the periodical statements of account by not including

merchandise or money to defraud the plaintiffs. Judge Rovira analyzed the main aspect of the case as follows: Pasado ahora a considerar la cuestion de las cuentas, los demandantes sostienen que los demandados deben rendir nueva cuenta porque, segun ellos, estos, como socios industriales y capitalistas, no podian incluir su participacion como capital, pues por este procedimiento los demandantes fueron absorbidos y los demandados obtuvieron mayor participacion en las ganancias. Resulta de las pruebas que los demandados, al hacer cada balance, separaban la ganancia del capital, asi como la ganancia que correspondia a los socios industriales, y despues la participacion proporcional que corresponde al capital y la que los correspondia como socios industriales, aumentando asi su capital en la sociedad. Esto mismo hacian en relacion con las gananciales del capital de Pedro Lasala. El primer balance sometido por los demandados a los demandantes, despues de la muerte de Pedro Lasala esta fechado el 28 de diciembre de 1913, los demandantes no protestaron contra este balance; al contrario, recibieron su participacion de P103, y no existe prueba alguna que desvirtue la anotacion que aparece a pagina 4 del Exhibit S, de que Jose Ornum entrego esta cantidad a los demandantes. En los aos subsiguientes, o sea en los aos de 1914, 1915, 1917, 1919, 1920, 1922, 1924 y 1929 y ultimamente el ao de 1932, los demandados han estado sometiendo los balances del negocio. Contra ninguno de los balances presentados por los demandados se ha presentado protesta alguna; al contrario, en 1929, cuando los demandantes deseaban separarse del negoci, Dionisia Lasala escribio la carta Exhibit 1, en donde, entre otras, se hizo constar que el capital 'esta en buenas manos, produce ganancias y ademas estoy contenta de los balances que me habeis estado enviando. Por otra parte, el mismo Mariano Lasala, en carta de fecha 19 de julio de 1932, Exhibit 2, dijo que 'en cuanto hayamos recibido todo (refiriendose indudablemente al capital y ganancia) entonces firmaremos el balance que habeis hecho alli, cuya copia has dejado aqui.' Si los demandantes no estaban conformes con el procedimiento adoptado por los demandados, por que no protestaron desde el principio? Cuando los demandados les enviaban los balances, era la oportunidad para ellos de expresar sus quejas o sus agravios, pero se callaron; expresaron su conformidad, y ahora vienen a pedir otra nueva liquidacion. Es mas; segun las pruebas despues del balance del ao de 1932, los demandantes han enviado cartas y telegramas pidiendo su participacion de acuerdo con dicho balance. Cayetano Montenegro, por ordenes del demandado Jose Ornum, entrego a los demandantes las respectivas cantidades que les correspondia, sin ninguna protesta. Segun el Exhibit 3, de fecha 20 de octubre de 1932. Dionisia Lasala recibio

de Jose Ornum P1,600, de los cuales P1,000 habian sido recibidos por dicha Dionisia Lasala en 2 de junio del mismo ao. Tambien Rafaela Lasala, por el Exhibit 6, recibio de Jose Ornum, por conducto de Cipriano Montenegro, la cantidad de P368.47, y, segun la nota que aparece al pie de dicho Exhibit 6, el resto de la deuda de P400 fue recibido por Mariano Lasala segun los Exhibits 12, 13 y 14. Todo lo cual demuestra que los demandantes estaban conformes con los balances presentados, incluyendo el ultimo balance del ao de 1932. El Juzgado es de opinio de que no procede ordenar a los demandados que presenten una nueva liquidacion. Ademas, segun las pruebas los demandados no llevaban otros libros fuera de los Exhibits S y T. Es verdad que la ley require que los demandados lleven algunos libros, y el contador de los demandantes declaro que, por la falta de dichos libros, no ha podido verificar un balance mas corecto, pues solo tuvo por base de la liquidacion presentada los libros presentados como exhibits S y T. Las deficiencias notadas y las conclusiones de dicho contador no pueden, en manera alguna, cambiar el aspecto de la cuestion. No existe prueba alguna de que los demandados llevaban otros libros. Lo unico que se probo es que segun la ley, los demandados debian haber llevado otros libros, pero no se ha probado que estos en alguna ocasion hayan existido y que dichos demandados, para defraudar a los demandantes, no han querido presentar dichos libros. Tampoco existe prueba alguna de que, en la preparacion de los balances que obran en los Exhibits S y T, los demandados procedieron de mala fe, no incluyendo mercaderias o dinero para defraudar a los demandantes. Bajo estas circunstancias, no podemos dar al Exhibit U de los demandantes, que se relaciona con los Exhibits S y T, el valor que pretenden los demandantes por cuanto resultan incompletos los datos sobre los cuales descansa dicho report. Es principio generalmente reconocido que la ley no puede amparar al que duerme, y siendo esto asi, no acertamos a comprender por que desde el ao de 1913, en que se presento el primer balance, despues de la muerte de Pedro Lasala y los sucesivos balances hasta 1929 y, ultimamente, el correspondiente al ao de 1932, solamente el 20 de noviembre de 1933 se inicia la presente accion para exigir una rendicion de cuentas a los demandados, en esta causa. Con una contalibidad tan deficiente, de una parte, de otra, con balances anteriores ya aceptados, y, finalmente, con el recibo de cantidades resultantes del ultimo balance de 1932 de parte de los demandados, no vemos camino legal y expedito para sostener la accion de los demandantes en el presente asunto, y somos, por tanto, de opinion de que los demandados, despues de presentada su liquidacion de 1932 y entregados a los demandantes sus saldos, segun queda dicho, no pueden ahora ser obligados a una rendicion de cuentas. Por todas las consideraciones expuestas, dclaramos que no procede ordenar que los demandados rindan nuevas cuentas y, en su consecuencia, se absuelve a los demandados de la demanda, sin especial pronunciamiento en cuanto a las costas.

The Court of Appeals reversed that judgment and ordered the defendants "to render an accounting of all the assets of the partnership and of all its profits and losses from the time of its organization to the date of plaintiffs' withdrawal." This is an unfortunate and unnecessary lawsuit, engendered by suspicion and misunderstanding on the part of the respondents and abetted by pride and amor propio on the part of their opponents. It is unfortunate from two viewpoints sentimental and material: (1) Friendship that for twenty years united the parties for the sake of business and of their common birthplace has become but a program memory to them, it having been dethroned from their hearts and replaced by ill will and lacerated sentiments. (2) The fruit of more than twenty years of toil that should entitle the petitioners to enjoy competence and comfort in their declining years is being squandered by them in their defense of this protracted litigation. This lawsuit is unnecessary because once the smoke of passion and misunderstanding has vanished, the parties would or should see that there is no real cause for quarrel between them. The judgment of the trial court which would, once and for all, put an end to this unnecessary lawsuit, achieves practical justice; that of the Court of Appeals which would prolong it, pursues theoretical justice. Our own verdict is not difficult to make. Let us pour oil on troubled waters. First. The suspicions entertained by the respondents against the good faith of their erstwhile friends, the petitioners, finds expression in the allegation of paragraph 8 of their complaint: 8. That the said defendants, in order to defraud and deprive the plaintiffs of their just share in the business have caused properties, which rightfully belong to the business of which they were and are the managers, to be inscribed in their own joint names or in their individual names, by virtue of which said defendants now appears to be the sole and exclusive owners of said properties and their fruits. Such suspicion is unjustified. There is nothing irregular or improper in the act of the petitioners of putting the properties and the business in their own names. The association of the parties was not a general copartnership under articles 125-144 of the Code of Commerce but one of joint accounts governed by articles 239-243 of the same Code. The respondents acquired an interest in the transactions of the petitioners by contributing thereto merchandise and accounts receivable valued at P1,000 (Article 239.) No formality was observed in the formation of the association. (Article 240.) No commercial name, common to all the participants was adopted, and the petitioners transacted and managed the business in their own individual names and under their individual liability. (Article 241.) The respondents had no reason to expect the petitioners to put the business and properties in the name of the "partnership" because they knew that from the beginning no firm name had been adopted for it. The respondents were silent partners. Second. An apparent misunderstanding on the part of the respondents is reflected in the allegation of paragraph 10 of their complaint: 10. That the defendants have fraudulently withdrawn from the funds of the said partnership large amounts of money, which they applied for their personal use and

benefit to which withdrawals they were not legally entitled, thereby impairing seriously the capital of the partnership and hampering its orderly and efficient administration. Such unkind words uttered against long-trusted business associates can only be attributed to a serious misunderstanding in view of the fact that neither the trial court nor the Court of Appeals found any indicia of bad faith on the part of the petitioners. The aspersion was wholly unwarranted. Third. The respondents have apparently been misled by the public accountant they employed, who advanced a different method of computing the participations of the parties in the profits. As noted by the trial court in its decision and as urged by the respondents in their brief, they claim that the petitioners, "as industrial and capitalist partners, could not include their participation in the profits as capital because by such procedure the plaintiffs [respondents] were absorbed and the defendants [petitioners] obtained greater participation in the profits. Following the hint of their "expert" accountant, the respondent contend in their brief that the original profit-sharing agreement of 50 per cent to the industrial partner and the balance to be distributed among the partners in proportion to their capital, namely 66.67 per cent to the respondents for their capital of P1,000 and 33.33 per cent to the petitioners for their capital of P500, should be maintained notwithstanding the increase of the capital of the petitioners through the accumulation of unwithdrawn profits. This contention does not impress us as being either fair or sound. Throughout the twenty years of have by common consent followed the same method of distributing the profits in party was permitted to put in as much capital as he wanted and to share in the profits accordingly. Up to the time the respondents received the last centavo of their participation in the capital and profits of the business, they had tacitly and repeatedly approved, the same procedure of dividing the profits. They must have found it to be fair, as indeed it was, for why should not one's share of the profits increase in proportions to one's capital? It is true that the original capital of respondents and petitioners were P1,000 and P505.54 respectively, or, roughly, a proportion of two to one be maintained after the capital of the petitioners has increased through the accumulation of unwithdrawn profits? In any event, as the trial court held, the respondents are now estopped from insisting on a fixed and invariable two-to-one division of the profits regardless of the amount of the capital of each of the parties in a given year. Fourth. If, as we have seen, there is no reasons for a new division of the profits as contended by the respondents, it seems to us that no useful purpose would be attained by remanding the case to the trial court with an order to the petitioners to render a new account. As we have noted, respondents' allegation of fraud and bad faith on the part of the petitioners in the preparation of the statements of account submitted by them to the respondents and tacitly approved by the latter, was not found proven by the Court of Appeals. All that the Court of Appeals intimated was that the plaintiffs alleged that mistakes had been committed and that the evidence so tended to prove. But the mistake pointed out by the respondents consisted principally in the mode or procedure of dividing the profits and in petitioners' having caused the properties "to be inscribed in their own joint names or in their individual names"; and as we have seen, such alleged mistakes are unfounded. During the trial of this case, which off and on lasted nearly three years, the petitioners and their witnesses, who had to come from the Province of Romblon to Manila, presented the

only books they kept to the business (Exhibits S and T). which respondents' expert accountants audited and found to be incorrect as to the mode of dividing the profits. Of course, the auditor of the respondents also demanded vouchers, ledgers, and other books. But the business having been run for twenty years without employing a bookkeeper, it seems too late now to do so after the "partnership" has been dissolved. In the absence of any finding of fraud or prejudicial error committed by the petitioners in the rendition of their accounts, which were tacitly, approved by their respondents, who asked for and received their participation in accordance with the liquidation, we think it would only occasion unnecessary trouble and expense to both parties to require further accounting and remand the case to the trial court for further proceedings. Nine years of litigation in three instances should be enough to afford the parties in this case their day in court. It would be scandalous to prolong it under the circumstances. After all, it's only a tempest in a teapot.

MORAN, J., dissenting: The decision of the majority, ultimately analyzed, suggests the query: May this Court, in an appeal by certiorari from a judgment of the Court of Appeals, make its own finding of fact in disregard of the findings of the latter Court of Appeals, make its own findings of fact in disregard to the findings of the latter Court and reverse the appealed judgment accordingly? The rule is settled that this Court cannot, and that, on the contrary, in every such appeal "everything necessary to uphold the jurisdiction" of the Court of Appeals "and the correctness of its proceedings and decision will be presumed, in the absence of a clear showing to the contrary". (4 C.J., 1082.) The essential facts of the case, as found by the Court of Appeals, are as follows: Petitioners and respondents were members of a commercial partnership, the former being the managers of the business and the latter having "no hand whatsoever in the conduct of it." From December 23, 1913 to May 27, 1932, petitioners had made ten balance statements and sent copies thereof to respondents together with the latter's shares in the profits. No question arose between the parties as to the correctness of the balance statements until the tenth statement was made, respondents had made known to petitioners their desire to withdraw from the partnership and had requested for the remittance of their capital and profits. On July 9, 1932, after the tenth statement was received by them, respondent reiterated their desire for withdrawal, adding that "en cuanto hayamos recibido todo, entonces firmaremos el balance que habeis hecho alli, cuya copia has dejado aqui." The amount which purported to be their entire capital and profits was received by respondents but they refused to sign the statement of final liquidation because they had an agreement with petition to the effect that before they sign it, "they would send some one to Tablas to examine the partnership books, but that afterwards the defendants (petitioners here) declined to allow plaintiffs' (respondents here) representative to see said books." And the evidence tends to prove, so the Court of Appeals concluded, that there were mistakes in petitioners statements of account sent to respondents, as corroborated by petitioners themselves in their counterclaims.

Upon these facts, the majority reversed the decision of the Court of Appeals and sustained the petitioners plea of concluded accounting upon the following grounds. 1. That as respondents have promised to sign the final statement of accounts upon their receipt of their entire capital and profits, their acceptance without reservation of said capital and profits, constitutes virtual approval of the final liquidation and their signing the same becomes a mere formality to be subsequently complied with and which was waived by their refusal to do so; 2. That while re-examination of accounts is authorized upon proof of fraud or gross error, in the instant case, the Court's finding as to mistake is not positive and its pronouncement that "the evidence tends to prove that there was mistake in the statement of accounts is not a definite conclusion sufficient to justify a further accounting"; 3. That as this case has been pending for nearly nine years, "if another accounting is ordered, a costly action or proceedings may arise which may not be disposed of within a similar period," and that accordingly "it is not improbable that the intended relief may prove to be the respondents' funeral"; and 4. That, in a nutshell, the circumstances of the case attest remarkably to the honesty of petitioners in their dealings with respondents. I propose to take up these grounds seriatim. "An account stated" has been defined as "an agreement that the balance and all items of an account representing the previous monetary transaction of the parties thereto are correct, together with the promise to pay such balance." (1 C. J.S., p. 693.) In the present case, was there such an agreement? Respondents, it is true, had promised to sign the balance statement upon receiving their capital and share in the profits, but they actually had never signed such statement and a promise to sign is not equivalent to signing. The fact that respondents have never signed the statement only indicates that they could not agree with petitioners thereon. And if there is no agreement there is no account stated. Indeed, it has been held that "in stating as account, as in making any other agreement, the minds of the parties must meet." (1 C.J., pp. 684-685.) Here, there has been no meeting of minds as to the true balance. Besides, respondents' promise to sign the statement of final liquidation upon receipts of their entire capital and profits was not absolute. It was subject to the agreement with petitioners that before respondents "sign the final settlement they would send some one to Tablas to examine the partnership books." This is a fact supported by proof expressly mentioned by the Court of Appeals which the majority has utterly ignored and if considered would have been decidedly fatal to the conclusion it has reached. As respondents "to whom the accounts were rendered had no knowledge of all the circumstances relating to the business and had to rely upon the good faith of their partners" (words of the Court of Appeals), the examination of the partnership books becomes to them a matter of capital important which, for purposes of final liquidation, cannot lightly be dismissed. When petitioners declined to allow respondents' representative to see said books in violation of

the agreement, respondents must be deemed legally exempted from their promise and are, therefore, entirely justified in refusing to sign the final settlement. Even if it be conceded that the final settlement had been acquiesced in by the respondent, a reopening of accounts, as the majority itself admits, is authorized upon a showing of fraud or mistake. The rule is that "an account stated being only prima facie evidence of its correctness, does not work an estoppel and is subject to impeachment for fraud or mistake; and if fraud or mistake exists it is immaterial that the parties agreed that the account shall not be opened for error after a fixed period, that it was signed by the party charged, or that evidence of indebtedness, receipt in full, or releases were given." (1 C.J.S., pp. 728-729.) In the instant case, does there exist evidence of such mistake? The Court of Appeals, putting up the same question, categorically stated: The question then is, have mistakes been committed in the statements sent appellants? Not only do plaintiffs so allege, and not only does the evidence so tend to prove, but the charged is seconded by the defendant themselves when in their counterclaims they said: (a) Que recientemente se ha hecho una acabada revision de las cuentas y libros del negocio, y, se ha descubierto que los demandados cometieron un error al hacer las entregas de las varias cantidades en efectivo a los demandantes, entregando en total mayores cantidades a la que tenian derecho estos por su participacion y ganancias en dicho negocio. But the majority averred that this does not constitute a positive findings of mistake and that "the pronouncement of the Court of Appeals that the evidence tends to prove that there was a mistake in the statement of accounts is not a definite conclusion in a sense sufficient to justify a further accounting." As a general rule when the grant or refusal of a legal relief sought in this Court depends upon the existence of findings of fact by the Court of Appeals, the test for the grant or refusal of such relief is not whether its finding is positive or not, but whether such findings actually exists and is sufficient for the purpose. The reason is, in the language of the majority itself, "we are not here authorized to review the evidence and determine the existence" of any matter of fact. In the closely analogue case of Zubiri vs. Quijano, G.R. No. 48696. November 28, 1942, this Court held: Under the second assignment, the petitioners alleged that the Court of Appeals erred in not finding that she had paid to the respondent usurious interest amounting (as found by the Court of the First Instance of Mindoro) to P950. The pronouncements of the Court of Appeals to wit, "pero rechazamos la pretension de la demandada, aceptada por el Tribunal a quo, de que el demandante percibio intereses usurarios" and "con respecto a la alegacion sobre usura, la misma nos parece insostenible", being conclusions, of fact, must be accepted for the purposes of the present appeal, since we cannot make contrary findings without reexamining the evidence, and we are not authorized to do this. In the instant case, the Court of Appeals made a general conclusion of fact as to the existence of mistake and, on the authority of the case cited, this general conclusion must be deemed sufficient. When the Court of Appeals went further and fortified its general

conclusion of fact by a specific instance of such mistake, are we to reject the finding as less sufficient because more specific? But it is said that the Court of Appeals merely stated that the evidence so tend to prove" the existence of mistake. The use, however, of the verb "tend" in no way imports ex necessitate rei indefiniteness or ambiguity of the evidence upon which the Court of Appeals rested its conclusion of mistake. Doubtless, the verb was used advisedly because, the action being merely to compel accounting, the Court cannot and is not actually passing finally upon the correctness of the accounts. Its pronouncement as to mistake cannot accordingly be couched with finality, much as the majority wishes it to be, but should merely be worded as to indicate that a ground exists for the accounting prayed for. And as to the specific mistake found by the Court of Appeals to have been admitted in petitioners' counterclaim, the majority argues that such mistake consists in overpayment of respondents of what is due to them, and therefore, the error was not to their prejudice. This argument entirely misses the point. Whether the mistake be favorable or unfavorable to respondents, the fact remains that a mistake exists and this is sufficient to authorize a reopening even of a concluded account. Indeed, if the mistake be one prejudicial to the interest of the party who made the statement, it is all the worse. When a person makes a mistake against himself when he is presumed to have taken special care for the protection of his interest, he may in all probability be presumed to have made more mistakes against others whose interests he is less concerned with, if at all. But assuming that the Court's finding as to mistake is insufficient, is the majority justified in closing the case upon that ground? To foreclose accounting, under the circumstances, is to make, in effect, a contrary finding that there is no mistake and to presume that petitioners' accountings is correct. This is both unauthorized and faulty. Unauthorized, because when the finding of the Court of Appeals is here deemed insufficient, the remedy is not for this Court to make contrary findings but to supply the deficiency by remanding the case to the Court of Appeals for further findings, as we did in Ofiana vs. People (40 Off. Gaz., 2293), and Bautista vs. Victoriano G.R. No. 46879, April 3, 1940. Faulty, because when the majority presumes that petitioners accounting is correct, it takes for granted precisely the basic issue of the case. And the presumption becomes the more faulty when we considered that it militates against positive findings of mistake by the Court of Appeals. The existence of such findings, whether or not they are insufficient, constitutes a solemn warning against reliance upon a mere presumption, specially if there exists a contrary presumption to the effect that everything necessary to uphold the correctness of the decision appealed from shall be deemed present in the record, in the absence of a clear showing to the contrary. And here, there is absolutely no showing that the supposedly insufficient findings are erroneous. The majority expresses the fear that, as this case has been pending for nearly, nine years, if another accounting is ordered a costly action or proceedings may arise which may not be disposed of within a similar period. I cannot understand how this Court would haphazardly close a case only upon bare fear or delay. What the law abhors is unnecessary delay in the administration of justice. Delays necessary for the ascertainment of truth are welcomed. Hurried justice is certainly not to be less deplored than delayed justice. Dispatch in the disposal of cases is, indeed, in every system of law, a beautiful ideal to be devoutly wished

for; but, like every other ideal, its beauty or utility ends with its abuse. We owe it to the paramount interests of justice that in every litigation we are called upon to decide, we should strive thoroughly and judiciously to ascertain the truth and not to hurriedly pull down the curtain on the case until we are reasonably certain that all efforts to the end have been exhausted. The majority adds that if the accounting prayed for the permitted, it is not improbable that the intended relief may prove to be the respondents' funeral. I take this statement to mean that the majority hazards the conjecture that if a new accounting is ordered, respondents will probably come out to be less entitled that what they have received. I do not think this Court should, in propriety, hazard any guess on the probable outcome of any suit specially where the guess is made on the basis of factual evidence about which it cannot speak with authority. And, neither is the guess good, for if we remand the case to the Court of Appeals for more specific findings, the likelihood is that more specific mistakes will be shown as to render it inevitable for this Court to order a new accounting. This probability is founded not on mere conjecture but on the presumption of law above mentioned that the conclusions of fact of the Court of Appeals are in accordance with the evidence. Furthermore, respondents in asking for an accounting are of course ready and willing to abide by any result, whether it be favorable or unfavorable to them. There being just grounds therefor, it should not be denied by this Court because such accounting may be disastrous to respondents. The majority concluded its decision thus: Considering that they (petitioners) ran the business of the partnership for about twenty years at a place far from the residence of the respondents and without the latter's intervention; that the partners did not even know each other personally; that no formal partnership agreement was entered into which bound the petitioners under specific conditions; that the petitioners could have easily and freely alleged that the business became a partial, or even a total, loss for any plausible reason which they could have concocted, it appearing that the partnership engaged in such uncertain ventures as agriculture, cattle raising, and the operation of rice mill, and the petitioners did not keep any regular books of accounts; that the petitioners were still frank enough to disclose that the original capital of P1,505.54 amounted, as of the date of the dissolution of the partnership to P44,618.67; and that the respondents had received a total of P3,105.76 out of their capital of P1,000, without any effort on their part, we are reluctant even to make the conjecture that the petitioners had ever intended to, or actually did, take undue advantage of the absence and confidence of the respondents. Indeed, we feel justified in stating that the petitioners have here given a remarkable demonstration of the legendary honesty, good faith and industry with which the natives of Taal pursue business arrangements similar to the partnership in question, and we would hate in the absence of any sufficient reason to let such a beautiful legend have a distateful ending. Too much, I fear, has here been assumed by the majority. They assumed that the figures cited are correct when they are in question; they assumed that petitioners have not taken advantage of the confidence of the respondents when this yet remains to be seen; they assumed that petitioners' accounting is correct when this is precisely the question between the parties; and, finally, they held that because petitioners did not keep any regular books of

account, they should not be compelled to an accounting because they may not be able to do so, which is in effect offering a premium for negligence. This mode of ratiocination is, to my regret, without authority and without parallel. True petitioners ran the business of the partnership without intervention whatever on the part of respondents who relied entirely on the good faith of the former. This indicates that the relation between the parties is manifestly fiduciary and it has been held that "when a a fiduciary relationship exists between the parties stating an account in will be more readily reopened than when the parties had been dealing with each other at arm's length." (1 C.J.S. p. 729.) I wish I could share with the majority in the abundance of their admirations for what they called the "legendary honesty, good faith and industry with which the natives of Taal pursue business arrangements similar to the partnership in question to let "such a beautiful legend have a distasteful ending." But I fell loath to pose a set of men as paragons of virtue and otherwise reflect, without cause or reason, upon the integrity of the rest of their kind. I fell even more loath to rest the judgment of this Court upon a mere legend, no matter how beautiful that legend may be, and would prefer to adjudicate every case upon what the evidence and the law alone may direct. Facts, not fancy, are still the chosen tools with which the courts perform their solemn function of dispensing justice of litigants. After this dissent had been written, Brother Justice Ozaeta gave out his concurring opinion predicated fundamentally upon facts not appearing in the findings of the Court of Appeals. We have held time and again that in appeals by certiorari from the Court of Appeals and in cases like the present one, only questions of law may be considered, question of fact requiring examination of evidence being without our jurisdiction. (Rule 46, sec. 2; Guico vs. Mayuga, 63 Phil., 328; Mateo vs. Collector of Customs, 63 Phil., 470; Mamuyac vs. Abena, 38 Off. Gaz., 34, Meneses vs. Com. of the Philippines, 40 Off, Gaz., 7th Sup. 41; Diaz vs. People, 40 Off. Gaz. 3d Sup. 22.) I abstain, therefore, from dealing on matters that are forbidden to us by our own Rules. Doubtless, the concurring opinion is impelled by the commendable desire to do "practical," not "theoretical," justice. Regrettably, however, we cannot fulfill this end at the risk of transcending the limits of this Court's jurisdictions. Beyond that jurisdiction all our pronouncements have no judicial value for they may be regarded as made out of court and do not constitute due process of law. And, what is worse is that the concurring opinion takes the decision of the Court of First Instance wholly or in part as a basis for reversing the decision of the Court of Appeals. This mode of procedure is unprecedented and amazing. The law considers the Court of Appeals as superior to a Court of First Instance specially on matters of fact, and yet the reverse is implied in the concurring opinion. I vote, therefore, to affirm the judgment of the Court of Appeals. Bocobo and Imperial, JJ., also dissenting: