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PEDRO MARTINEZ, plaintiff-appellee,

ONG PONG CO and ONG LAY, defendants.
ONG PONG CO., appellant.
Fernando de la Cantera for appellant.
O'Brien and DeWitt for appellee.
On the 12th of December, 1900, the plaintiff herein delivered P1,500 to the defendants
who, in a private document, acknowledged that they had received the same with the
agreement, as stated by them, "that we are to invest the amount in a store, the profits or
losses of which we are to divide with the former, in equal shares."
The plaintiff filed a complaint on April 25, 1907, in order to compel the defendants to
render him an accounting of the partnership as agreed to, or else to refund him the
P1,500 that he had given them for the said purpose. Ong Pong Co alone appeared to
answer the complaint; he admitted the fact of the agreement and the delivery to him
and to Ong Lay of the P1,500 for the purpose aforesaid, but he alleged that Ong Lay,
who was then deceased, was the one who had managed the business, and that nothing
had resulted therefrom save the loss of the capital of P1,500, to which loss the plaintiff
The judge of the Court of First Instance of the city of Manila who tried the case ordered
Ong Pong Co to return to the plaintiff one-half of the said capital of P1,500 which,
together with Ong Lay, he had received from the plaintiff, to wit, P750, plus P90 as onehalf of the profits, calculated at the rate of 12 per cent per annum for the six months that
the store was supposed to have been open, both sums in Philippine currency, making a
total of P840, with legal interest thereon at the rate of 6 per cent per annum, from the
12th of June, 1901, when the business terminated and on which date he ought to have
returned the said amount to the plaintiff, until the full payment thereof with costs.
From this judgment Ong Pong Co appealed to this court, and assigned the following
1. For not having taken into consideration the fact that the reason for the closing of
the store was the ejectment from the premises occupied by it.
2. For not having considered the fact that there were losses.
3. For holding that there should have been profits.
4. For having applied article 1138 of the Civil Code.

5. and 6. For holding that the capital ought to have yielded profits, and that the
latter should be calculated 12 per cent per annum; and
7. The findings of the ejectment.
As to the first assignment of error, the fact that the store was closed by virtue of
ejectment proceedings is of no importance for the effects of the suit. The whole action is
based upon the fact that the defendants received certain capital from the plaintiff for the
purpose of organizing a company; they, according to the agreement, were to handle the
said money and invest it in a store which was the object of the association; they, in the
absence of a special agreement vesting in one sole person the management of the
business, were the actual administrators thereof; as such administrators they were the
agent of the company and incurred the liabilities peculiar to every agent, among which is
that of rendering account to the principal of their transactions, and paying him
everything they may have received by virtue of the mandatum. (Arts. 1695 and 1720,
Civil Code.) Neither of them has rendered such account nor proven the losses referred to
by Ong Pong Co; they are therefore obliged to refund the money that they received for
the purpose of establishing the said store the object of the association. This was the
principal pronouncement of the judgment.
With regard to the second and third assignments of error, this court, like the court below,
finds no evidence that the entire capital or any part thereof was lost. It is no evidence of
such loss to aver, without proof, that the effects of the store were ejected. Even though
this were proven, it could not be inferred therefrom that the ejectment was due to the
fact that no rents were paid, and that the rent was not paid on account of the loss of the
capital belonging to the enterprise.
With regard to the possible profits, the finding of the court below are based on the
statements of the defendant Ong Pong Co, to the effect that "there were some profits,
but not large ones." This court, however, does not find that the amount thereof has been
proven, nor deem it possible to estimate them to be a certain sum, and for a given
period of time; hence, it can not admit the estimate, made in the judgment, of 12 per
cent per annum for the period of six months.
Inasmuch as in this case nothing appears other than the failure to fulfill an obligation on
the part of a partner who acted as agent in receiving money for a given purpose, for
which he has rendered no accounting, such agent is responsible only for the losses
which, by a violation of the provisions of the law, he incurred. This being an obligation to
pay in cash, there are no other losses than the legal interest, which interest is not due
except from the time of the judicial demand, or, in the present case, from the filing of the
complaint. (Arts. 1108 and 1100, Civil Code.) We do not consider that article 1688 is
applicable in this case, in so far as it provides "that the partnership is liable to every
partner for the amounts he may have disbursed on account of the same and for the
proper interest," for the reason that no other money than that contributed as is involved.

As in the partnership there were two administrators or agents liable for the above-named
amount, article 1138 of the Civil Code has been invoked; this latter deals with debts of a
partnership where the obligation is not a joint one, as is likewise provided by article 1723
of said code with respect to the liability of two or more agents with respect to the return
of the money that they received from their principal. Therefore, the other errors assigned
have not been committed.
In view of the foregoing judgment appealed from is hereby affirmed, provided, however,
that the defendant Ong Pong Co shall only pay the plaintiff the sum of P750 with the
legal interest thereon at the rate of 6 per cent per annum from the time of the filing of
the complaint, and the costs, without special ruling as to the costs of this instance. So
Torres, Johnson, Carson, and Moreland, JJ., concur.


VICENTE POLISTICO, ET AL., defendants-appellants.
Sumulong & Lavides for appellees.



AL., plaintiffs-appellees,




This is an action to bring about liquidation of the funds and property of the association
called "Turnuhan Polistico & Co." The plaintiffs were members or shareholders, and the
defendants were designated as president-treasurer, directors and secretary of said
It is well to remember that this case is now brought before the consideration of this court
for the second time. The first one was when the same plaintiffs appeared from the order
of the court below sustaining the defendant's demurrer, and requiring the former to
amend their complaint within a period, so as to include all the members of "Turnuhan
Polistico & Co.," either as plaintiffs or as a defendants. This court held then that in an
action against the officers of a voluntary association to wind up its affairs and enforce an
accounting for money and property in their possessions, it is not necessary that all
members of the association be made parties to the action. (Borlasa vs. Polistico, 47 Phil.,
345.) The case having been remanded to the court of origin, both parties amend,
respectively, their complaint and their answer, and by agreement of the parties, the
court appointed Amadeo R. Quintos, of the Insular Auditor's Office, commissioner to
examine all the books, documents, and accounts of "Turnuhan Polistico & Co.," and to
receive whatever evidence the parties might desire to present.
The commissioner rendered his report, which is attached to the record, with the following

Member's shares............................


Credits paid................................


Interest received...........................


Premiums to members....................... 68,146.2
Loans on real-estate.......................


Loans on promissory notes..............






The defendants objected to the commissioner's report, but the trial court, having
examined the reasons for the objection, found the same sufficiently explained in the
report and the evidence, and accepting it, rendered judgment, holding that the
association "Turnuhan Polistico & Co." is unlawful, and sentencing the defendants jointly
and severally to return the amount of P24,607.80, as well as the documents showing the
uncollected credits of the association, to the plaintiffs in this case, and to the rest of the
members of the said association represented by said plaintiffs, with costs against the
The defendants assigned several errors as grounds for their appeal, but we believe they
can all be reduced to two points, to wit: (1) That not all persons having an interest in this
association are included as plaintiffs or defendants; (2) that the objection to the
commissioner's report should have been admitted by the court below.
As to the first point, the decision on the case of Borlasa vs. Polistico, supra, must be
With regard to the second point, despite the praiseworthy efforts of the attorney of the
defendants, we are of opinion that, the trial court having examined all the evidence

touching the grounds for the objection and having found that they had been explained
away in the commissioner's report, the conclusion reached by the court below, accepting
and adopting the findings of fact contained in said report, and especially those referring
to the disposition of the association's money, should not be disturbed.
In Tan Dianseng Tan Siu Pic vs. Echauz Tan Siuco (5 Phil., 516), it was held that the
findings of facts made by a referee appointed under the provisions of section 135 of the
Code of Civil Procedure stand upon the same basis, when approved by the Court, as
findings made by the judge himself. And in Kriedt vs. E. C. McCullogh & Co.(37 Phil., 474),
the court held: "Under section 140 of the Code of Civil Procedure it is made the duty of
the court to render judgment in accordance with the report of the referee unless the
court shall unless for cause shown set aside the report or recommit it to the referee. This
provision places upon the litigant parties of the duty of discovering and exhibiting to the
court any error that may be contained therein." The appellants stated the grounds for
their objection. The trial examined the evidence and the commissioner's report, and
accepted the findings of fact made in the report. We find no convincing arguments on
the appellant's brief to justify a reversal of the trial court's conclusion admitting the
commissioner's findings.
There is no question that "Turnuhan Polistico & Co." is an unlawful partnership (U.S. vs.
Baguio, 39 Phil., 962), but the appellants allege that because it is so, some charitable
institution to whom the partnership funds may be ordered to be turned over, should be
included, as a party defendant. The appellants refer to article 1666 of the Civil Code,
which provides:
A partnership must have a lawful object, and must be established for the common
benefit of the partners.
When the dissolution of an unlawful partnership is decreed, the profits shall be
given to charitable institutions of the domicile of the partnership, or, in default of
such, to those of the province.
Appellant's contention on this point is untenable. According to said article, no charitable
institution is a necessary party in the present case of determination of the rights of the
parties. The action which may arise from said article, in the case of unlawful partnership,
is that for the recovery of the amounts paid by the member from those in charge of the
administration of said partnership, and it is not necessary for the said parties to base
their action to the existence of the partnership, but on the fact that of having contributed
some money to the partnership capital. And hence, the charitable institution of the
domicile of the partnership, and in the default thereof, those of the province are not
necessary parties in this case. The article cited above permits no action for the purpose
of obtaining the earnings made by the unlawful partnership, during its existence as result
of the business in which it was engaged, because for the purpose, as Manresa remarks,
the partner will have to base his action upon the partnership contract, which is to annul
and without legal existence by reason of its unlawful object; and it is self evident that
what does not exist cannot be a cause of action. Hence, paragraph 2 of the same article
provides that when the dissolution of the unlawful partnership is decreed, the profits
cannot inure to the benefit of the partners, but must be given to some charitable

We deem in pertinent to quote Manresa's commentaries on article 1666 at length, as a

clear explanation of the scope and spirit of the provision of the Civil Code which we are
concerned. Commenting on said article Manresa, among other things says:
When the subscriptions of the members have been paid to the management of the
partnership, and employed by the latter in transactions consistent with the
purposes of the partnership may the former demand the return of the
reimbursement thereof from the manager or administrator withholding them?
Apropos of this, it is asserted: If the partnership has no valid existence, if it is
considered juridically non-existent, the contract entered into can have no legal
effect; and in that case, how can it give rise to an action in favor of the partners to
judicially demand from the manager or the administrator of the partnership capital,
each one's contribution?
The authors discuss this point at great length, but Ricci decides the matter quite
clearly, dispelling all doubts thereon. He holds that the partner who limits himself
to demanding only the amount contributed by him need not resort to the
partnership contract on which to base his action. And he adds in explanation that
the partner makes his contribution, which passes to the managing partner for the
purpose of carrying on the business or industry which is the object of the
partnership; or in other words, to breathe the breath of life into a partnership
contract with an objection forbidden by law. And as said contrast does not exist in
the eyes of the law, the purpose from which the contribution was made has not
come into existence, and the administrator of the partnership holding said
contribution retains what belongs to others, without any consideration; for which
reason he is not bound to return it and he who has paid in his share is entitled to
recover it.
But this is not the case with regard to profits earned in the course of the
partnership, because they do not constitute or represent the partner's contribution
but are the result of the industry, business or speculation which is the object of the
partnership, and therefor, in order to demand the proportional part of the said
profits, the partner would have to base his action on the contract which is null and
void, since this partition or distribution of the profits is one of the juridical effects
thereof. Wherefore considering this contract asnon-existent, by reason of its illicit
object, it cannot give rise to the necessary action, which must be the basis of the
judicial complaint. Furthermore, it would be immoral and unjust for the law to
permit a profit from an industry prohibited by it.
Hence the distinction made in the second paragraph of this article of this Code,
providing that the profits obtained by unlawful means shall not enrich the partners,
but shall upon the dissolution of the partnership, be given to the charitable
institutions of the domicile of the partnership, or, in default of such, to those of the
This is a new rule, unprecedented by our law, introduced to supply an obvious
deficiency of the former law, which did not describe the purpose to which those
profits denied the partners were to be applied, nor state what to be done with

The profits are so applied, and not the contributions, because this would be an
excessive and unjust sanction for, as we have seen, there is no reason, in such a
case, for depriving the partner of the portion of the capital that he contributed, the
circumstances of the two cases being entirely different.
Our Code does not state whether, upon the dissolution of the unlawful partnership,
the amounts contributed are to be returned by the partners, because it only deals
with the disposition of the profits; but the fact that said contributions are not
included in the disposal prescribed profits, shows that in consequences of said
exclusion, the general law must be followed, and hence the partners should
reimburse the amount of their respective contributions. Any other solution is
immoral, and the law will not consent to the latter remaining in the possession of
the manager or administrator who has refused to return them, by denying to the
partners the action to demand them. (Manresa, Commentaries on the Spanish Civil
Code, vol. XI, pp. 262-264)
The judgment appealed from, being in accordance with law, should be, as it is hereby,
affirmed with costs against the appellants; provided, however, the defendants shall pay
the legal interest on the sum of P24,607.80 from the date of the decision of the court,
and provided, further, that the defendants shall deposit this sum of money and other
documents evidencing uncollected credits in the office of the clerk of the trial court, in
order that said court may distribute them among the members of said association, upon
being duly identified in the manner that it may deem proper. So ordered.
Avancea, C.J., Johnson, Street, Johns, Romualdez, and Villa-Real, JJ., concur.
SEVERIANO LIZARRAGA, defendant-appellee.
Celso B. Jamora and Antonio Gonzalez for appellee.

SANCHO, plaintiff-appellant,




The plaintiff brought an action for the rescission of a partnership contract between
himself and the defendant, entered into on October 15, 1920, the reimbursement by the
latter of his 50,000 peso investment therein, with interest at 12 per cent per annum form
October 15, 1920, with costs, and any other just and equitable remedy against said
The defendant denies generally and specifically all the allegations of the complaint which
are incompatible with his special defenses, cross-complaint and counterclaim, setting up
the latter and asking for the dissolution of the partnership, and the payment to him as its
manager and administrator of P500 monthly from October 15, 1920, until the final

dissolution, with interest, one-half of said amount to be charged to the plaintiff. He also
prays for any other just and equitable remedy.
The Court of First Instance of Manila, having heard the cause, and finding it duly proved
that the defendant had not contributed all the capital he had bound himself to invest,
and that the plaintiff had demanded that the defendant liquidate the partnership,
declared it dissolved on account of the expiration of the period for which it was
constituted, and ordered the defendant, as managing partner, to proceed without delay
to liquidate it, submitting to the court the result of the liquidation together with the
accounts and vouchers within the period of thirty days from receipt of notice of said
judgment, without costs.
The plaintiff appealed from said decision making the following assignments of error:
1. In holding that the plaintiff and appellant is not entitled to the rescission of the
partnership contract, Exhibit A, and that article 1124 of the Civil Code is not
applicable to the present case.
2. In failing to order the defendant to return the sum of P50,000 to the plaintiff with
interest from October 15, 1920, until fully paid.
3. In denying the motion for a new trial.
In the brief filed by counsel for the appellee, a preliminary question is raised purporting
to show that this appeal is premature and therefore will not lie. The point is based on the
contention that inasmuch as the liquidation ordered by the trial court, and the
consequent accounts, have not been made and submitted, the case cannot be deemed
terminated in said court and its ruling is not yet appealable. In support of this contention
counsel cites section 123 of the Code of Civil Procedure, and the decision of this court in
the case of Natividad vs. Villarica (31 Phil., 172).
This contention is well founded. Until the accounts have been rendered as ordered by the
trial court, and until they have been either approved or disapproved, the litigation
involved in this action cannot be considered as completely decided; and, as it was held in
said case of Natividad vs .Villarica, also with reference to an appeal taken from a decision
ordering the rendition of accounts following the dissolution of partnership, the appeal in
the instant case must be deemed premature.
But even going into the merits of the case, the affirmation of the judgment appealed
from is inevitable. In view of the lower court's findings referred to above, which we
cannot revise because the parol evidence has not been forwarded to this court, articles
1681 and 1682 of the Civil Code have been properly applied. Owing to the defendant's
failure to pay to the partnership the whole amount which he bound himself to pay, he
became indebted to it for the remainder, with interest and any damages occasioned
thereby, but the plaintiff did not thereby acquire the right to demand rescission of the

partnership contract according to article 1124 of the Code. This article cannot be applied
to the case in question, because it refers to the resolution of obligations in general,
whereas article 1681 and 1682 specifically refer to the contract of partnership in
particular. And it is a well known principle that special provisions prevail over general
By virtue of the foregoing, this appeal is hereby dismissed, leaving the decision appealed
from in full force, without special pronouncement of costs. So ordered.
Avancea, C.J., Johnson, Street, Malcolm, Villamor, Ostrand, Johns and Villa-Real, JJ.,
CARMEN DE LUNA, defendant-appellee.
Conrado V. Sanchez and Jesus de Veyra for appellee.

SONCUYA, plaintiff-appellant,



On September 11, 1936, plaintiff Josue Soncuya filed with the Court of First Instance of
Manila and amended complaint against Carmen de Luna in her own name and as coadministratrix of the intestate estate, of Librada Avelino, in which, upon the facts therein
alleged, he prayed that defendant be sentenced to pay him the sum of P700,432 as
damages and costs.
To the aforesaid amended complaint defendant Carmen de Luna interposed a demurrer
based on the following grounds: (1) That the complaint does not contain facts sufficient
to constitute a cause of action; and (2) that the complaint is ambiguous, unintelligible
and vague.
Trial on the demurrer having been held and the parties heard, the court found the same
well-founded and sustained it, ordering the plaintiff to amend his complaint within a
period of ten days from receipt of notice of the order.
Plaintiff having manifested that he would prefer not to amend his amended complaint,
the attorney for the defendant, Carmen de Luna, filed a motion praying that the
amended complaint be dismissed with costs against the plaintiff. Said motion was
granted by The Court of First Instance of Manila which ordered the dismissal of the
aforesaid amended complaint, with costs against the plaintiff.

From this order of dismissal, the appellant took an appeal, assigning twenty alleged
errors committed by the lower court in its order referred to.
The demurrer interposed by defendant to the amended complaint filed by plaintiff having
been sustained on the grounds that the facts alleged in said complaint are not sufficient
to constitute a cause of action and that the complaint is ambiguous, unintelligible and
vague, the only questions which may be raised and considered in the present appeal are
those which refer to said grounds.
In the amended complaint it is prayed that defendant Carmen de Luna be sentenced to
pay plaintiff damages in the sum of P700,432 as a result of the administration, said to be
fraudulent, of he partnership, "Centro Escolar de Seoritas", of which plaintiff, defendant
and the deceased Librada Avelino were members. For the purpose of adjudicating to
plaintiff damages which he alleges to have suffered as a partner by reason of the
supposed fraudulent management of he partnership referred to, it is first necessary that
a liquidation of the business thereof be made to the end that the profits and losses may
be known and the causes of the latter and the responsibility of the defendant as well as
the damages which each partner may have suffered, may be determined. It is not
alleged in the complaint that such a liquidation has been effected nor is it prayed that it
be made. Consequently, there is no reason or cause for plaintiff to institute the action for
damages which he claims from the managing partner Carmen de Luna (Po Yeng Cheo vs.
Lim Ka Yam, 44 Phil., 172).
Having reached the conclusion that the facts alleged in the complaint are not sufficient
to constitute a cause of action on the part of plaintiff as member of the partnership
"Centro Escolar de Seoritas" to collect damages from defendant as managing partner
thereof, without a previous liquidation, we do not deem it necessary to discuss the
remaining question of whether or not the complaint is ambiguous, unintelligible and
In view of the foregoing considerations, we are of the opinion and so hold that for a
partner to be able to claim from another partner who manages the general
copartnership, damages allegedly suffered by him by reason of the fraudulent
administration of the latter, a previous liquidation of said partnership is necessary.
Wherefore, finding no error in the order appealed from the same is affirmed in all its
parts, with costs against the appellant. So ordered.
Avancea, C. J., Imperial, Diaz, Laurel, Concepcion, and Moran, JJ., concur.


SABTOS, petitioners,
Leonardo Abola for petitioners.
Baisas, Alberto & Associates for respondent.

On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co."
On June 7, 1955 the Articles of Co-partnership was amended as to include herein
respondent, Estrella Abad Santos, as industrial partner, with herein petitioners Domingo
C. Evangelista, Jr., Leonardo Atienza Abad Santos and Conchita P. Navarro, the original
capitalist partners, remaining in that capacity, with a contribution of P17,500 each. The
amended Articles provided, inter alia, that "the contribution of Estrella Abad Santos
consists of her industry being an industrial partner", and that the profits and losses "shall
be divided and distributed among the partners ... in the proportion of 70% for the first
three partners, Domingo C. Evangelista, Jr., Conchita P. Navarro and Leonardo Atienza
Abad Santos to be divided among them equally; and 30% for the fourth partner Estrella
Abad Santos."
On December 17, 1963 herein respondent filed suit against the three other partners in
the Court of First Instance of Manila, alleging that the partnership, which was also made
a party-defendant, had been paying dividends to the partners except to her; and that
notwithstanding her demands the defendants had refused and continued to refuse and
let her examine the partnership books or to give her information regarding the
partnership affairs to pay her any share in the dividends declared by the partnership.
She therefore prayed that the defendants be ordered to render accounting to her of the
partnership business and to pay her corresponding share in the partnership profits after
such accounting, plus attorney's fees and costs.
The defendants, in their answer, denied ever having declared dividends or distributed
profits of the partnership; denied likewise that the plaintiff ever demanded that she be
allowed to examine the partnership books; and byway of affirmative defense alleged that
the amended Articles of Co-partnership did not express the true agreement of the
parties, which was that the plaintiff was not an industrial partner; that she did not in fact
contribute industry to the partnership; and that her share of 30% was to be based on the
profits which might be realized by the partnership only until full payment of the loan
which it had obtained in December, 1955 from the Rehabilitation Finance Corporation in
the sum of P30,000, for which the plaintiff had signed a promisory note as co-maker and
mortgaged her property as security.

The parties are in agreement that the main issue in this case is "whether the plaintiffappellee (respondent here) is an industrial partner as claimed by her or merely a profit
sharer entitled to 30% of the net profits that may be realized by the partnership from
June 7, 1955 until the mortgage loan from the Rehabilitation Finance Corporation shall be
fully paid, as claimed by appellants (herein petitioners)." On that issue the Court of First
Instance found for the plaintiff and rendered judgement "declaring her an industrial
partner of Evangelista & Co.; ordering the defendants to render an accounting of the
business operations of the (said) partnership ... from June 7, 1955; to pay the plaintiff
such amounts as may be due as her share in the partnership profits and/or dividends
after such an accounting has been properly made; to pay plaintiff attorney's fees in the
sum of P2,000.00 and the costs of this suit."
The defendants appealed to the Court of Appeals, which thereafter affirmed judgments
of the court a quo.
In the petition before Us the petitioners have assigned the following errors:
I. The Court of Appeals erred in the finding that the respondent is an
industrial partner of Evangelista & Co., notwithstanding the admitted fact
that since 1954 and until after promulgation of the decision of the appellate
court the said respondent was one of the judges of the City Court of Manila,
and despite its findings that respondent had been paid for services allegedly
contributed by her to the partnership. In this connection the Court of Appeals
(A) In finding that the "amended Articles of Co-partnership,"
Exhibit "A" is conclusive evidence that respondent was in fact
made an industrial partner of Evangelista & Co.
(B) In not finding that a portion of respondent's testimony quoted
in the decision proves that said respondent did not bind herself
to contribute her industry, and she could not, and in fact did not,
because she was one of the judges of the City Court of Manila
since 1954.
(C) In finding that respondent did not in fact contribute her
industry, despite the appellate court's own finding that she has
been paid for the services allegedly rendered by her, as well as
for the loans of money made by her to the partnership.
II. The lower court erred in not finding that in any event the respondent was
lawfully excluded from, and deprived of, her alleged share, interests and
participation, as an alleged industrial partner, in the partnership Evangelista
& Co., and its profits or net income.

III. The Court of Appeals erred in affirming in toto the decision of the trial
court whereby respondent was declared an industrial partner of the
petitioner, and petitioners were ordered to render an accounting of the
business operation of the partnership from June 7, 1955, and to pay the
respondent her alleged share in the net profits of the partnership plus the
sum of P2,000.00 as attorney's fees and the costs of the suit, instead of
dismissing respondent's complaint, with costs, against the respondent.
It is quite obvious that the questions raised in the first assigned errors refer to the facts
as found by the Court of Appeals. The evidence presented by the parties as the trial in
support of their respective positions on the issue of whether or not the respondent was
an industrial partner was thoroughly analyzed by the Court of Appeals on its decision, to
the extent of reproducing verbatim therein the lengthy testimony of the witnesses.
It is not the function of the Supreme Court to analyze or weigh such evidence all over
again, its jurisdiction being limited to reviewing errors of law that might have been
commited by the lower court. It should be observed, in this regard, that the Court of
Appeals did not hold that the Articles of Co-partnership, identified in the record as Exhibit
"A", was conclusive evidence that the respondent was an industrial partner of the said
company, but considered it together with other factors, consisting of both testimonial
and documentary evidences, in arriving at the factual conclusion expressed in the
The findings of the Court of Appeals on the various points raised in the first assignment
of error are hereunder reproduced if only to demonstrate that the same were made after
a through analysis of then evidence, and hence are beyond this Court's power of review.
The aforequoted findings of the lower Court are assailed under Appellants'
first assigned error, wherein it is pointed out that "Appellee's documentary
evidence does not conclusively prove that appellee was in fact admitted by
appellants as industrial partner of Evangelista & Co." and that "The grounds
relied upon by the lower Court are untenable" (Pages 21 and 26, Appellant's
The first point refers to Exhibit A, B, C, K, K-1, J, N and S, appellants'
complaint being that "In finding that the appellee is an industrial partner of
appellant Evangelista & Co., herein referred to as the partnership the
lower court relied mainly on the appellee's documentary evidence, entirely
disregarding facts and circumstances established by appellants" evidence
which contradict the said finding' (Page 21, Appellants' Brief). The lower
court could not have done otherwise but rely on the exhibits just mentioned,
first, because appellants have admitted their genuineness and due
execution, hence they were admitted without objection by the lower court
when appellee rested her case and, secondly the said exhibits indubitably
show the appellee is an industrial partner of appellant company. Appellants

are virtually estopped from attempting to detract from the probative force of
the said exhibits because they all bear the imprint of their knowledge and
consent, and there is no credible showing that they ever protested against or
opposed their contents prior of the filing of their answer to appellee's
complaint. As a matter of fact, all the appellant Evangelista, Jr., would have
us believe as against the cumulative force of appellee's aforesaid
documentary evidence is the appellee's Exhibit "A", as confirmed and
corroborated by the other exhibits already mentioned, does not express the
true intent and agreement of the parties thereto, the real understanding
between them being the appellee would be merely a profit sharer entitled to
30% of the net profits that may be realized between the partners from June
7, 1955, until the mortgage loan of P30,000.00 to be obtained from the RFC
shall have been fully paid. This version, however, is discredited not only by
the aforesaid documentary evidence brought forward by the appellee, but
also by the fact that from June 7, 1955 up to the filing of their answer to the
complaint on February 8, 1964 or a period of over eight (8) years
appellants did nothing to correct the alleged false agreement of the parties
contained in Exhibit "A". It is thus reasonable to suppose that, had appellee
not filed the present action, appellants would not have advanced this
obvious afterthought that Exhibit "A" does not express the true intent and
agreement of the parties thereto.
At pages 32-33 of appellants' brief, they also make much of the argument
that 'there is an overriding fact which proves that the parties to the Amended
Articles of Partnership, Exhibit "A", did not contemplate to make the appellee
Estrella Abad Santos, an industrial partner of Evangelista & Co. It is an
admitted fact that since before the execution of the amended articles of
partnership, Exhibit "A", the appellee Estrella Abad Santos has been, and up
to the present time still is, one of the judges of the City Court of Manila,
devoting all her time to the performance of the duties of her public office.
This fact proves beyond peradventure that it was never contemplated
between the parties, for she could not lawfully contribute her full time and
industry which is the obligation of an industrial partner pursuant to Art. 1789
of the Civil Code.
The Court of Appeals then proceeded to consider appellee's testimony on this point,
quoting it in the decision, and then concluded as follows:
One cannot read appellee's testimony just quoted without gaining the very
definite impression that, even as she was and still is a Judge of the City Court
of Manila, she has rendered services for appellants without which they would
not have had the wherewithal to operate the business for which appellant
company was organized. Article 1767 of the New Civil Code which provides
that "By 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, 'does not specify the kind of
industry that a partner may thus contribute, hence the said services may
legitimately be considered as appellee's contribution to the common fund.
Another article of the same Code relied upon appellants reads:
'ART. 1789. An industrial partner cannot engage in business for
himself, unless the partnership expressly permits him to do so;
and if he should do so, the capitalist partners may either exclude
him from the firm or avail themselves of the benefits which he
may have obtained in violation of this provision, with a right to
damages in either case.'
It is not disputed that the provision against the industrial partner engaging in
business for himself seeks to prevent any conflict of interest between the
industrial partner and the partnership, and to insure faithful compliance by
said partner with this prestation. There is no pretense, however, even on the
part of the appellee is engaged in any business antagonistic to that of
appellant company, since being a Judge of one of the branches of the City
Court of Manila can hardly be characterized as a business. That appellee has
faithfully complied with her prestation with respect to appellants is clearly
shown by the fact that it was only after filing of the complaint in this case
and the answer thereto appellants exercised their right of exclusion under
the codal art just mentioned by alleging in their Supplemental Answer dated
June 29, 1964 or after around nine (9) years from June 7, 1955
subsequent to the filing of defendants' answer to the complaint, defendants
reached an agreement whereby the herein plaintiff been excluded from, and
deprived of, her alleged share, interests or participation, as an alleged
industrial partner, in the defendant partnership and/or in its net profits or
income, on the ground plaintiff has never contributed her industry to the
partnership, instead she has been and still is a judge of the City Court
(formerly Municipal Court) of the City of Manila, devoting her time to
performance of her duties as such judge and enjoying the privilege and
emoluments appertaining to the said office, aside from teaching in law
school in Manila, without the express consent of the herein defendants'
(Record On Appeal, pp. 24-25). Having always knows as a appellee as a City
judge even before she joined appellant company on June 7, 1955 as an
industrial partner, why did it take appellants many yearn before excluding
her from said company as aforequoted allegations? And how can they
reconcile such exclusive with their main theory that appellee has never been
such a partner because "The real agreement evidenced by Exhibit "A" was to
grant the appellee a share of 30% of the net profits which the appellant
partnership may realize from June 7, 1955, until the mortgage of P30,000.00
obtained from the Rehabilitation Finance Corporal shall have been fully paid."
(Appellants Brief, p. 38).

What has gone before persuades us to hold with the lower Court that
appellee is an industrial partner of appellant company, with the right to
demand for a formal accounting and to receive her share in the net profit
that may result from such an accounting, which right appellants take
exception under their second assigned error. Our said holding is based on the
following article of the New Civil Code:
'ART. 1899. Any partner shall have the right to a formal account
as to partnership affairs:
(1) If he is wrongfully excluded from the partnership business or possession
of its property by his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807;
(4) Whenever other circumstance render it just and reasonable.
We find no reason in this case to depart from the rule which limits this Court's appellate
jurisdiction to reviewing only errors of law, accepting as conclusive the factual findings of
the lower court upon its own assessment of the evidence.
The judgment appealed from is affirmed, with costs.
Zaldivar, Castro, Fernando, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ.,