You are on page 1of 42



Table of Contents
CIR v. William J. Suter................................................................................................................................... 3
Magalona v. Pesayco .................................................................................................................................... 4
Criado v. Gutierrez Hermanos.................................................................................................................... 13
Leung v. IAC ................................................................................................................................................ 31

CIR v. William J. Suter
G.R. No. L-25532, 2/28/1969

Republic of the Philippines
G.R. No. L-25532

February 28, 1969

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R.
Rosete and Special Attorneys B. Gatdula, Jr. and T. Temprosa Jr. for petitioner.
A. S. Monzon, Gutierrez, Farrales and Ong for respondents.
REYES, J.B.L., J.:

A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed on 30
September 1947 by herein respondent William J. Suter as the general partner, and Julia
Spirig and Gustav Carlson, as the limited partners. The partners contributed, respectively,
P20,000.00, P18,000.00 and P2,000.00 to the partnership. On 1 October 1947, the limited
partnership was registered with the Securities and Exchange Commission. The firm engaged,
among other activities, in the importation, marketing, distribution and operation of
automatic phonographs, radios, television sets and amusement machines, their parts and
accessories. It had an office and held itself out as a limited partnership, handling and
carrying merchandise, using invoices, bills and letterheads bearing its trade-name,
maintaining its own books of accounts and bank accounts, and had a quota allocation
with the Central Bank.
In 1948, however, general partner Suter and limited partner Spirig got married and,
thereafter, on 18 December 1948, limited partner Carlson sold his share in the partnership to
Suter and his wife. The sale was duly recorded with the Securities and Exchange Commission
on 20 December 1948.
The limited partnership had been filing its income tax returns as a corporation, without
objection by the herein petitioner, Commissioner of Internal Revenue, until in 1959 when the
latter, in an assessment, consolidated the income of the firm and the individual incomes of
the partners-spouses Suter and Spirig resulting in a determination of a deficiency income tax
against respondent Suter in the amount of P2,678.06 for 1954 and P4,567.00 for 1955.
Respondent Suter protested the assessment, and requested its cancellation and
withdrawal, as not in accordance with law, but his request was denied. Unable to secure a
reconsideration, he appealed to the Court of Tax Appeals, which court, after trial, rendered
a decision, on 11 November 1965, reversing that of the Commissioner of Internal Revenue.
The present case is a petition for review, filed by the Commissioner of Internal Revenue, of
the tax court's aforesaid decision. It raises these issues:

as a limited partnership. Ltd.000. and that since its juridical personality had not been affected and since. 1. Suter and his wife. Julia Spirig Suter actually formed a single taxable unit. that reads as follows: A husband and a wife may not enter into a contract of general copartnership. Gustav Carlson. Ltd.. only one consolidated return for the taxable year shall be filed by either spouse to cover the income of both spouses. Suter "Morcoin" Co. respondent Suter maintains. it is taxable on its income similarly with corporations. whether citizens. Suter "Morcoin" Co. (2 Echaverri 196) It follows that the marriage of partners necessarily brings about the dissolution of a pre-existing partnership. The theory of the petitioner.. The thesis that the limited partnership. (1 Guy de Montella 58) The petitioner-appellant has evidently failed to observe the fact that William J.(a) Whether or not the corporate personality of the William J... page 58.. Suter was not bound to include in his individual return the income of the limited partnership. the fiction of juridical personality of the partnership should be disregarded for income tax purposes because the spouses have exclusive ownership and control of the business. was not a universal partnership. — In the case of married persons. but a particular one. consequently the income tax return of respondent Suter for the years in question should have included his and his wife's individual incomes and that of the limited partnership. respondent William J.00. is that the marriage of Suter and Spirig and their subsequent acquisition of the interests of remaining partner Carlson in the partnership dissolved the limited partnership. In refutation of the foregoing. of his participation of P2. which applies in the absence of express provision in the Code of Commerce.. should be disregarded for income tax purposes. . Vol. which provides as follows: (d) Husband and wife. that his marriage with limited partner Spirig and their acquisition of Carlson's interests in the partnership in 1948 is not a ground for dissolution of the partnership. in accordance with Section 45 (d) of the National Internal Revenue Code. residents or non-residents. We find the Commissioner's appeal unmeritorious. as the Court of Tax Appeals held. Ltd. Suter "Morcoin" Co.00 in the partnership for a nominal amount of P1. Commissioner of Internal Revenue. Suter and Julia Spirig Suter and the subsequent sale to them by the remaining partner. has been dissolved by operation of law because of the marriage of the only general partner.. considering that respondent William J. William J. persons prohibited from making donations to each other are prohibited from entering into universal partnerships. as contra distinguished from a duly registered general partnership. and if they did not. William J. of 1889 (which was the law in force when . because under the Civil Code. Suter to the originally limited partner. either in the Code of Commerce or in the New Civil Code. and (b) Whether or not the partnership was dissolved after the marriage of the partners. As appears from Articles 1674 and 1675 of the Spanish Civil Code.. 4th Ed. Julia Spirig one year after the partnership was organized is rested by the appellant upon the opinion of now Senator Tolentino in Commentaries and Jurisprudence on Commercial Laws of the Philippines.

says with regard to the prohibition contained in the aforesaid Article 1677: Los conyuges. Jose Casan. 1952.000. Volume 4. Suter "Morcoin" Co. P20. Suter and Julia Spirig were separately owned and contributed by them before their marriage. page 546. no pueden celebrar entre si el contrato de sociedad universal. True. distinct and separate from that of its partners (unlike American and English law that does not recognize such separate juridical personality). is equally erroneous. did not become common property of both after their marriage in 1948.00 by Julia Spirig and neither one of them was an industrial partner. the bypassing of the existence of the limited partnership as a taxpayer can only be done by ignoring or disregarding clear statutory mandates and basic principles of our law. y hay que estar a la norma general segun la que toda persona es capaz para contratar mientras no sea declarado incapaz por la ley. 7th Edition. and after they were joined in wedlock. Suter "Morcoin" Co.. such contributions remained their respective separate property under the Spanish Civil Code (Article 1396): The following shall be the exclusive property of each spouse: (a) That which is brought to the marriage as his or her own. The limited partnership's separate individuality makes it impossible to equate its income with that of the component members. section 24 of the Internal Revenue Code merges registered general co-partnerships (compañias colectivas) with the personality of the individual partners for income tax purposes. in his Derecho Civil. Ltd. But this rule is exceptional in its disregard of a cardinal . mas parece cambiar de rumbo en la de 9 de marzo de 1943. Ltd. La jurisprudencia de la Direccion de los Registros fue favorable a esta misma tesis en su resolution de 3 de febrero de 1936. It being a basic tenet of the Spanish and Philippine law that the partnership has a juridical personality of its own. was not such a universal partnership. such marriage not being one of the causes provided for that purpose either by the Spanish Civil Code or the Code of Commerce. the individual interest of each consort in William J. The capital contributions of partners William J.. footnote 1.the subject firm was organized in 1947).. pero o podran constituir sociedad particular? Aunque el punto ha sido muy debatido. D. ya que ningun precepto de nuestro Codigo los prohibe. Thus.000. nos inclinamos a la tesis permisiva de los contratos de sociedad particular entre esposos. as contributed by them to the common fund. Nor could the subsequent marriage of the partners operate to dissolve it. or else "all that the partners may acquire by their industry or work during the existence of the partnership". The former Chief Justice of the Spanish Supreme Court. segun esto. Ltd. Suter "Morcoin" Co.00 by William Suter and P18. since the contributions of the partners were fixed sums of money. It follows that William J... a universal partnership requires either that the object of the association be all the present property of the partners. was not a partnership that spouses were forbidden to enter by Article 1677 of the Civil Code of 1889. that by the marriage of both partners the company became a single proprietorship. The appellant's view.. . William J.

& Juris. As the limited partnership under consideration is taxable on its income. Anno. the code taxes the latter on its income. brought about by the marriage of the partners and their subsequent acquisition of all interest therein. As Amended. not otherwise.n êt But it is argued that the income of the limited partnership is actually or constructively the income of the spouses and forms part of the conjugal partnership of gains.R. and not the firm. law phi1. 77 Phil. merely served as business conduits or alter egos of the stockholders. Vol. and can not be extended by mere implication to limited partnerships. is no ground for withdrawing the partnership from the coverage of Section 24 of the tax code.I. 1Appellant is. This is not wholly correct. in the present case. The rulings cited by the petitioner (Collector of Internal Revenue vs. Regularity. which is not essential to the income taxability of the partnership since the law taxes the income of even joint accounts that have no personality of their own. are taxable in their individual capacities for any dividend or share of the profit derived from the duly registered general partnership (Section 26.. .I. a factor that justified a disregard of their corporate personalities for tax purposes. the corporations were already subject to tax when the fiction of their corporate personality was pierced. when the code plainly differentiates the two. As far as the records show. the fruits of the wife's parapherna become conjugal only when no longer needed to defray the expenses for the administration and preservation of the paraphernal capital of the wife. mistaken in that it assumes that the conjugal partnership of gains is a taxable unit. as their contributions in the business partnership are not the same.]. but not the former. L-13554. the partners did not enter into matrimony and thereafter buy the interests of the remaining partner with the premeditated scheme or design to use the partnership as a business conduit to dodge the tax laws. Inc.. and Koppel [Phil. Yatco. 504) as authority for disregarding the fiction of legal personality of the corporations involved therein are not applicable to the present case. is presumed.C.tenet of our partnership laws. The change in its membership. tax wise. to do so would exempt the limited partnership from income taxation but would throw the tax burden upon the partners-spouses in their individual capacities. University of the Visayas. Molo 50 Phil. requiring it to pay income tax. As pointed out in Agapito vs. of a general copartnership (compañia colectiva) and a limited partnership. pp. and had been filing its own income tax returns as such independent entity. likewise. the limited partnership is not a mere business conduit of the partner-spouses. 88-89). in the cases cited. Here. it would even conflict with what it specifically provides in its Section 24: for the appellant Commissioner's stand results in equal treatment. which it is not. Thus. it was organized for legitimate business purposes. The corporations. Though the amount of income (income of the conjugal partnership vis-a-vis the joint income of husband and wife) may be the same for a given taxable year. Register of Deeds of Manila. it conducted its own dealings with its customers prior to appellee's marriage. on the N. and People's Bank vs. 779. N. their consequences would be different. In fact. vs. to require that income to be included in the individual tax return of respondent Suter is to overstretch the letter and intent of the law. the appellant's argument erroneously confines itself to the question of the legal personality of the limited partnership. because it is in the case of compañias colectivas that the members. In the cited cases. 167. This is not true in the present case. Then again. Resolution of 30 October 1964.C. 60 Phil. 1. Arañas. What is taxable is the "income of both spouses" (Section 45 [d] in their individual capacities.R.

Capistrano and Teehankee. the decision under review is hereby affirmed. 1 http://www. Dizon. Collector vs.J. Evangelists vs. Fernando. Castro. No costs.lawphil.The difference in tax rates between the income of the limited partnership being consolidated with. Footnotes V. FOR THE FOREGOING REASONS. Zaldivar.. 102 Phil 140. Barredo. does not authorize it. Batangas Transportation Co.. Collector of Internal Revenue. concur. Makalintal. J.. 822. C. is not a justification for requiring consolidation. the revenue code. and even bars it by requiring the limited partnership to pay tax on its own income.. Concepcion. 102 Phil. and when split from the income of the spouses. took no part. Sanchez. JJ. as it presently stands.html .net/judjuris/juri1969/feb1969/gr_l-25532_1969.

L-39607.R. Pesayco G. No. 2/6/1934 59 Phil 453 .Magalona v.

formed a partnership for the purpose of catching "semillas de bañgus o aua" in the sea and rivers within the jurisdiction of the municipality of San Jose. was to be the manager in case his bid was accepted. As a deposit of one-fourth of the amount of the bid was required each of the partners put up one third of this amount. Manuel Polido and Pedro V. The defendant.1931. The defendant managed the business from January 1. and with the exception of the two sales above-mentioned. L-39607 February 6. 1931. having had experience in this line.000 to the municipal treasurer of San Jose. that the defendant be ordered to render an account of his management and to pay to the plaintiff their participation in the profits thereof. Antique (Exhibit D). Juan Sermeno. and the defendant. plaintiffs-appellees.R. Jimenez for appellant. vs. The latter entered upon his duties under the contract and gave an account of two sales of "semillas de bañgus". No. on April 21. the plaintiffs. The defendant offered the sum of P5. This telegram reads as follows: "Hemos conseguido plazo hasta esta tarde tenemos aqui cuatrocientos diez gira telegraficamente restante.000 and a receiver was appointed who also put up a bond for the same amount. Exhibit A. J. 1930. GODDARD. ET AL. JUAN PESAYCO. in which it was prayed that a receiver be appointed by the court to take charge of the funds of the partnership and the management of its affairs. the plaintiffs. 1934 ENCARNACION MAGALONA.09 for the year ending December 31." Lutero immediately sent P1. to Tiburcio Lutero as representative of the plaintiff Magalona. 1931. Juan Pesayco. 1931. Antique Province. never gave any account of his catches or sales to his partners. Lutero for sufficient money to complete the payment of the first quarter which was to be paid within the first twenty days of the second quarter of the year 1931. In view of this the herein complaint was filed April 21. that the defendant be required to turn over to the receiver all of the funds of the partnership and that the defendant be condemned to pay the costs. Lutero and Lutero and Ramon Maza for appellee. for the year 1931.550. had on hand only P410 he wired. As the defendant.: In the month of September.Republic of the Philippines SUPREME COURT Manila EN BANC G.. defendant-appellant. . This bid. was accepted by the municipality and the privilege was awarded to the defendant. The plaintiffs put up a bond of P5. Encarnacion Magalona. being the highest. It was agreed that the defendant should put in a bid for this privilege and that the partners should each supply one third of the capital in case the defendant was awarded the desired privilege.

Digest.925 que no dio cuenta ni participacion a sus consocios los demandantes. 561. unless real property or real rights are contributed to the same. the defendant obtained and sold a total of 975. This court has held that if a party permits a contract. en la suma de P2. importe de 975. de que el demandado obtuvo durante su administracion de este negocio. y ordena que entregue esta suma al depositario judicial nombrado. He denies that there was a partnership and depends principally upon the fact that the partnership agreement was not in writing. without objection as to the form of the proof. sin pruebas en contrario. to be proved. 116-119.. Civil Code. Civil Code. 1931. two of whom were Attorneys Lutero and Maza. (Arts. el Juzgado declara al demandado en deber a la sociedad. Civil Code. The partnership was conclusively proven by the oral testimony of the plaintiffs and other witnesses. Que Bentec. it is just as binding as if the statute had been complied with. como fondos de dicha sociedad. 3468. 671. Se sobreseen las contrademandas y se condena en costas al demandado. is that it should be in writing. arts. which the law provides shall be in writing. semillas de bañgus por valor de P2. compuesta por demandantes y demandado. which controls article 1280 of the same Code.925. The defense made no objection to the questions asked with regard to the forming of this partnership. In his two counter-complaints the defendant prays that he be awarded damages in the sum of P34. Article 1667 of the Civil Code provides that "Civil partnerships may be established in any form whatever. At the trial it was proven that before April 20.) The dispositive part of the decision of the trial court reads as follows: Habiendose probado. 1 Phil. Dela Rosa.500 pesetas are involved and can be enforced without bringing action under article 1279.)Thunga Chui vs. 51. Code of Commerce.700. 1667.000 "semillas de bañgus" the market value of which was P3 per thousand. .) A verbal partnership agreement is valid between the parties even though more than 1.925 realized by him on the sales thereof. (4 Phil. (Fernandez vs. The defendant made no report of this nor did he pay the plaintiffs any part of the P2. However.The receiver took over the management and took possession of all the devices and implements used in the catching of "semillas de bañgus"." Articles of partnership are not required to be in writing except in the cases mentioned in article 1667. in which case a public instrument shall be necessary. This was not denied. 1278-1280.000 semillas de bañgus a P3 el millar. to compel execution of a written instrument. Asi se ordena. we cannot agree with the appellant that one of the requisites of a partnership agreement such as the one under consideration. 2 Phil. 1261.. So ordered. http://www.html . Malcolm. Villa-Real.This decision is affirmed with costs in both instances against the defendant-appellant. and Imperial. concur.. JJ.

L-12371. No. 3/23/1918 37 Phil 883 .R.Criado v. Gutierrez Hermanos G.

R. the judge ordered the defendant Gutierrez Hermanos to render within a period of twenty days a detailed account. subject to the liability of 10 per cent contracted toward the defendant in respect to said bills or to such part thereof as should be found to be uncollectible. by which. on September 11. 1915.292. O'Brien for defendant-appellant. sixth. the firm of Gutierrez Hermanos. on May 24. Plaintiff and defendant by mutual consent have filed but a single bill of exceptions and the same was approved. 1912. and fourth causes of action and the crosscomplaint of the defendant of the court sentenced the defendant. L-12371 March 23. and to pay the costs. in addition to other amounts therein specified. GUTIERREZ HERMANOS. J. Eduardo Gutierrez Repide and Felix Socias for plaintiff-appellant. to which both parties excepted. eighth. The original complaint was filed in the Court of First Instance on May 25. supported by vouchers. defendant-appellant. a decision was rendered on March 24. After full trial. 1912. which motion was denied by an order of September 25th of the same year. ninth. 1916. and tenth causes of action.: In the ordinary proceedings prosecuted in the Court of First Instance of Manila by counsel for Leopoldo Criado against the firm of Gutierrez Hermanos for the recovery of a sum of money. Both parties excepted from this judgment and moved for a new trial. From this judgment defendant appealed and moved for a trial. of the share . together with the oral and documentary evidence of record. P54. second. and whereby it was held that plaintiff was entitled to a share of .62 with interest thereon at the rate of 6 per cent per annum from May 25. C. 1912. with legal interest thereon from May 25. vs. Upon answering it. for the reasons therein given.Republic of the Philippines SUPREME COURT Manila EN BANC G. plaintiff-appellant. The motion was denied and defendant excepted and filed the proper bill of exceptions which was forwarded to this court. The proceedings in the Court of First Instance having been reopened upon petition by plaintiff. and after being twice amended was finally filed on January 15. the judgment appealed from was set aside and the record remanded to the court of origin for the proper proceedings. judgment was rendered on July 8. W. third. 1913.34064 per cent on P818. dismissing plaintiff's first. whereby. 1915. the total amount of the unpaid bills. Upon hearing.70. to pay the several sums specified in the fifth. judgment was handed down whereby said firm was ordered to pay. No. with the costs against the defendant. seventh. defendant interposed a cross-complaint. 1918 LEOPOLDO CRIADO.260. TORRES. 1913. and ordered same further to render accounts to the plaintiff for the reason therein stated. certified and forwarded to the clerk of this court.

103-124) certified by the bookkeeper of the firm of Gutierrez Hermanos to on June 3 of the same year. and other documents that might be necessary. both appeals were forwarded in the in the usual manner. and still other false.100 by reason of the contract of loan prevent plaintiff from suing for the recovery of that debt an action against the testate or intestate estate of the . vouchers. and inasmuch as in the judgment the contrary appears with the exception of the first cause of action. other fraudulent. from 2. and notwithstanding the arguments made by the defendant firm. upon receipt of the proper bill of exceptions. After a rehearing of the case and an examination of George B. 1915. on the three specified days of the week. On motion by plaintiff. Counsel for the defendant-appellant assails in general the judgment appealed from because the trial court did not determine the issues raised in the first. to place said books and documents at the disposal of the commissioner for his examination in the office of the clerk of court. formerly one of the general partners and manager of the firm of Gutierrez Hermanos. B. the court will now proceed to examine each of the causes of action referred to in the cross-complaint filed by the latter in its answer. seventh.13 — a balance which had been previously impeached by the affiant as well as the accounts from which said sum is sought to be derived. since he began his connection therewith. Said motion was accompanied by an affidavit in which the plaintiff Leopoldo Criado declared under oath that he had examined the accounts presented by the defendant referring to his capital in that firm and that said accounts were based upon a false debit balance of P26. in order that said liquidation might be made by defendants counsel. in his presence and in that of the parties. authorizing defendant to appoint another expert accountant who. be appointed so that. and in defendant's cross-complaint. counsel for plaintiff moved in writing that the clerk of court. The first cause of action consists in the obligation assumed by Miguel Alonso. the court rendered the judgment aforementioned. 1911. third.which the plaintiff might have in the capital stock of said firm up to that date. on September 11. 1900. defendant presented an account (record. until his separation therefrom. it was provided by another order of the court that said firm should comply with what the court had previously ordered. on December 31. Therefore plaintiff's counsel moved that defendant be ordered to place immediately at the disposal of Commissioner Wicks all the books. the court ruled in conformity therewith. bills. Wherefore he gain assailed them in their totality on the grounds that some of the entries thereof were improper. ninth. pp. This motion was denied. In compliance with this order. In view of the fact that the defendant firm had not complied with the order of the court in respect to the account presented. sixth. G. and. 1916. Wicks. to wit. together with the one already designated. might examine the books and documents aforementioned. on January 1.30 o'clock up every afternoon. McMicking. Wicks was made regarding the contents of the report that he submitted after studying for that purpose the books and other documents placed at his disposal by the defendant — to which report he attached several documents in proof or substantiation of the different items mentioned in said report (Exhibit Z-3) — in view of the result and the evidence adduced by the parties. Wicks might proceed to make true liquidation of plaintiff's said share of the capital stock of the firm of Gutierrez Hermanos. and tenth causes of action. to pay to the plaintiff Leopoldo Criado. and sum P1.349. fourth. by an order of September 2. second. and by the said commissioner's report duly supported by vouchers. accounts. exception was taken. eighth.

the date the complaint was filed.025. 1903. belonged to him. succeeded in concealing such profits. when Alfonso died. Plaintiff also alleged that.26. and that the record does not duly show that this firm. pursuant to a notarial instrument of March 29. 1900. 37 per cent to Don Miguel Gutierrez de Celis. In the same proportion above established for the profits the capitalist partners shall be liable for all losses or damages that may be sustained. until 1912. but that said manager assured him that as soon as the probate proceedings concerning the estate of the decedent Miguel Alfonso should be determined said amount would be refunded although in spite of his efforts said promise has not been fulfilled.86. succeeded in persuading the plaintiff by promising to return said sum to Criado — this not being a strange obligation. or P12. and the last two as industrial partners. 16 per cent to Don Miguel Alfonso y Gutierrez.25 in 1902 and. manager of the firm.410. was a partner in the firm of Gutierrez Hermanos and had a share in the firm's assets.410. and that said document stipulated that the partnership should last for four years from January 1. and 5 per cent to Don Leopoldo Criado y Garcia. to Don Daniel Perez y Alberto. and alleges that. and Don Leopoldo Criado y Garcia. Don Miguel Alonso y Gutierrez.31. though its manager assumed the obligation to reimbursed the sum. yet.801. among other conditions. . A copy of said instrument was presented as Exhibit A and made an integral part of the complaint. he at once protested. All earnings or profits that may be obtained shall be distributed among the partners in the following proportion: 37 per cent shall go to Don Placido Gutierrez de Celis. although the manager Miguel Gutierrez de Celis. thereby injuring him in said amount of P43. Don Miguel Gutierrez de Celis. Eighth. according to the eight clause of the articles of partnership. But the fact is that from 1898. and. by means of false and erroneous entries in the books. in view of the fact that said. the profits obtained amounted to P256. In the second cause of action plaintiff demands the payment of P43. there is no provision of law to warrant us in holding that the firm of Gutierrez Hermanos is obliged to pay the amount claimed by the plaintiff as the subject-matter of his first cause of action. Even on the supposition that at the time of his death the debtor Miguel Alfonso certainly and positively left this debt and that in order to avoid judicial proceedings on the part of the creditor. Therefore the partnership is organized among the parties to this instrument. the other partner Miguel Gutierrez de Celis. his capital was P56. Miguel Gutierrez de Celis subrogated and put himself in the place of the debtor. it contained the following: Second. Don Daniel Perez y Alberto.796. 1900. Plaintiff testified that as soon as he learned of such entries. according to the books of the defendant firm. 5 per cent of which.86. binding himself to pay said amount to plaintiff. such settlement had already been made of the decedent's said share and in spite of the attempts to collect made by the creditor he was unable to recover the loan.debtor who died without having paid his debt. he became a partner of the firm of Gutierrez Hermanos. 5 per cent. the first three as capitalist partners. loan was made as an independent private act. according to the balance had on December 31. Don Placido Gutierrez de Celis. for at the time of his death the deceased debtor Miguel Alfonso. unconnected with the mercantile operations of the firm of Gutierrez Hermanos.

in accordance with the provisions of section 43 of the Code of Civil Procedure. From clause 7 of said contract. or any other sum that might be found to be a remainder of the salary owing him in his capacity of industrial partner during the first period of the firm organized for four years from January. it becomes necessary first too decide whether in fact the plaintiff is in estoppel and unable to oppose any valid objection against said liquidation and balance. and therefore the period for prescription is not the four years fixed by section 43. he gave his assent thereto and without reserve whatsoever he executed a new partnership contract. he protested against the entries therein. Miguel Gutierrez de Celis and Daniel Perez de Celis. 1904. as capitalist. just as an action for damages by reason of fraud. the defendant alleged that.In its answer the defendant firm admitted that plaintiff Criado was an industrial partner entitled to 5 per cent of the profits. 1903.30.129. Finally. of which the sum of P25. that afterwards he learned that said entries had been made in the books through . the obligation on the part of the defendant firm to pay to plaintiff his share of said profits at the rate of 5 per cent is inevitable. it appears that the firm's capital stock amounted to P1. the recovery of personal property. formed the basis of the capital mentioned in the articles of partnership executed before a notary on May 9. although this contract was executed on May 9 of that year. 1903. 1903. by reason of the partnership contract — a contract that produced reciprocal rights and obligation between the partners — and if the record shows as duly proven that there were profits. inasmuch as. 1903. 1900. made on December 31.129. for the prescription of which the lapse of ten years is required — a period which certainly has not elapsed since the last balance was made of the business of the firm of which Leopoldo Criado was a partner. but contrary. in as much as the action brought is founded on a contract in writing and demand is thereby made for the payment of a certain net sum. The purpose of the second cause of action exercised by plaintiff's counsel is to obtain from the defendant the share of the profits earned by the firm from 1900 to December 31. inasmuch as its object.129. paragraph 1 of the Code of Civil Procedure. In order to determine whether — besides the sum of P25. which were in force during the second period from January. or demand damages for fraud. In special defense it alleged that on December 31. but that the manager Guiterrez de Celis assured him that he would lose nothing by those entries made in connection with a serious matter then pending.09 which constituted the capital brought by the plaintiff Leopoldo Criado. It is therefore no proper to assert that the action brought by the plaintiff has for its object the recovery of personal property. there was made a liquidation and balance of the business of the firm — operations which were approved by all the partners with no protest made by the plaintiff before or after said liquidation. but that of ten years. prescribed after four years. belonging to plaintiff.605.497. during the second period of the firm newly organized in 1904 — plaintiff still has a right to demand the sum that is the subject of his complaint in the second cause of action. as provided in paragraph 1 of said section. inasmuch as the sum shown by said liquidation and balance of the business of the firm at the end of December. and according to said inventory of December 31. entered in the books of the firm of Gutierrez Hermanos. according to the inventory of the firm's business. plaintiff Criado's capital on that date was only P25.09. 1904. which was signed by Leopoldo Criado. the sum recorded as his capital in the articles of partnership. 1903. but denied all the other averments of the complaint. this second cause of action had already prescribed. In an affidavit plaintiff stated that when he learned of the contents of the firm's books.09 belonged to Leopoldo Criado. Exhibit O. there appearing no just and legal reason in the record for exempting the defendant from the fulfillment of said obligation.

68. former manger of the partnership. . as a consequence to the complaint made by the plaintiff to the attorney Marple.09 as he believed that Miguel Gutierrez de Celis would reimburse him. as he had promised. Leopoldo Criado's share of the losses being P25. In order to prove the certainty of the protest made by plaintiff and the repeated promises of payment by Miguel Gutierrez de Celis.080. that another reason why said false and erroneous entries were made in the firm's books by Gutierrez de Celis was to show the family of the deceased Miguel Alonso that the losses reported in his letter received during his lifetime from Gutierrez de Celis were due to his poor management of the firm's business (record.57. we have distributed the losses equally among the three principal partners . . 381). by said manager of the firm. 381 and 382). that as. some of these bills being of such a nature that they should be charged to the account of the management as they are contrary to the provisions of the 5th and 10th clauses of the partnership contract . .fear that Jose Fortiz. on which . on meeting the latter. was to blame for these losses. 205) there appears an entry which reads thus: P501. . and that. amount of the bills cancelled in the books in this date which should have been cancelled in previous years on account of difficulty in their collection.129. p. but that he should not worry further as later on the firm would pay him the reduced amount of the forty-three thousand and odd pesos which made up the reduction. p. but did sign the previous one containing the record of a loss of P110. plaintiff as an industrial partner is not liable for said losses. he learned that just then Leopoldo Criado was refusing to sign the instrument setting forth the new articles of partnership for a new period because said manager had not fulfilled his promise to return to plaintiff the aforesaid sum deducted from the capital stock. said Gutierrez de Celis did not fulfill his promise to pay the sums which had been unduly withheld by means of those improper entries. witness. one of the members of the Hartigan law firm. his share of the sums which had been entered as losses in the firm's books. and 5 per cent against each of the industrial partners. according to the contract. It is to be noted that. went to confer with said manager Guiterrez de Celis who after learning of plaintiff's complaint stated to witness that there was then good and sufficient reason for making it appear in the firm's books that the industrial partner Leopoldo Criado had less assets in the firm than in reality he had. sometime afterwards. therefore in this distribution said sum was unduly deducted from his share of the assets.513. pp. plaintiff therefore finally refused to sign the balance sheet for the business of 1909. that in fact Fortiz did bring suit against Gutierrez Hermanos and obtained a favorable judgment not only in the Court of First Instance but also in the Supreme Court which affirmed the judgment of the lower court (record. witness having been called as a friend. Without doubt this entry was made for the purpose of showing that Miguel Alonso. against the acts of the manager of the firm of Gutierrez Hermanos — a proceeding which. in spite of repeated steps taken by plaintiff.000 and also the partnership contract of 1904. but. and not as an attorney. in view of the fact that the author of these irregularities is not living so that compliance with the contract may be demanded of him. as plaintiff stated produced the effect of continually reducing his assets in the firm by order of the said Marple — he. In Exhibit 10 (record. a creditor of 5 per cent of the profits. should claim his share of the profits pertaining to the years 1902 and 1903. Attorney Eduardo Gutierrez Repide was called as witness and testified that. showing his capital to be P25.

sec. that therefore witness. inasmuch as it was not the plaintiff. distributed among the partners. and that said sum would be returned to him. In view of the evidence adduced by plaintiff. who intentionally and deliberately induced Leopoldo Criado to sign said partnership contract of May. plaintiff signed the instrument of 1904 in the belief that the manager of the firm of Gutierrez Hermanos would fulfill the promise he had made not only to the plaintiff but also to the attorney Gutierrez Repide.38. as one of the industrial partners is not liable for the losses which the firm may have sustained according to the eighth clause of the notarial instrument of May 29. causing to appear in said balance and in the books of the firm. who relied upon said repeated promise (Act No.793. as capital of his own. 1903. all amounting to P793.occasion the notary Barrera was there waiting. 1904. Plaintiff assails several entries made in the books of the firm consisting of losses in hemp. The allotment to the industrial partner Leopoldo Criado of the amount of P25. was entitled to collect a greater sum as a part of his capital than that brought into the new partnership and he had an indisputable right to contradict and adduce oral evidence against the contents of said instrument of May 9. in which plaintiff appeared as capitalist partner for the last mentioned sum brought into the general assets of the firm under the repeated promise that he would afterwards be paid the rest of the assets due him up to the aforestated sum of P56.578. that aforementioned sum of P501. the difference between the sum of P56. 1900.793.09.68 of which was charged against the plaintiff as his proportionate loss of the capital. depreciation of steamers. of P501. as well as the net loss estimated at P110. as losses when plaintiff Criado. this amount is sufficiently large when distributed among the partners. nor may it be said that he was not entitled to claim the rest of his assets in the firm during the first period from 1900 to 1903.199. and likewise against the liquidation and balance made at the expiration of the term of the first partnership.25.129. As aforesaid. 285).24.68 as losses suffered by the firm in its business during the years 1900 to 1903 was notoriously illegal. trusting in these words of the manger. inasmuch as the defendant was aware that plaintiff. Miguel Gutierrez de Celis. just as he did. 190. to wit.57. in which it appears that he brought into the new firm. 1904 (Act No. it cannot be held that plaintiff was in estoppel immediately after having signed the partnership contract of May 9.09. being merely an industrial partner. in case the exception of the plaintiff which the defendant denied were based on the contents of that instrument. the capital brought into the new firm. 1904. 190. wherefore. among other entries. P25.080.57. certified to in the document Exhibit 10.080. 333). plaintiff Criado's capital as an industrial partner and said P25. P25129. not rebutted by counsel for the defendant. in order to show the propriety of plaintiff's averments that without any good reason or ground whatever he sustained a loss by the decrease of his capital. and reduction in capital stock belonging to the partners. it is evident that the defendant cannot set up estoppel against the plaintiff.513.25. that then Guiterrez de Celis directed the witness to tell plaintiff not to worry. as an industrial partner. .613. But it suffices our purpose to mention the reduction as losses. was not liable for any loss whatever. the amount of capital standing to his credit at the time of the termination of the previous partnership on December 31. sec. advised plaintiff to sign the instrument. and that witness afterwards learned that these promises had not been fulfilled. inasmuch as he. merchandise. but the manager of the firm.

56. plaintiff's assets were P56. and that the plaintiff. as capital brought into the new company. 1900.875.. Exhibit Z-3. it follows that. the industrial partner should not be held liable. Plaintiff accepts this sum. But if. H. 2 and 8 as well as the report of the commissioner. as a result of the commissioner's examination if the books and papers of the defendant firm.054. on the contrary. together with the documents attached by him to his report. Wicks.25.609. and his liabilities P1. for the purpose of determining the profits that correspond to an industrial partner who shares in the profits from the different transactions carried on by the firm must be added together from which sum must be subtracted that of the losses sustained in its business. the plaintiff is entitled to demand that the firm of Gutierrez Hermanos pay him in the sum of P30.91. in the second and eighth clauses of said articles of partnership of March 29.09. inasmuch as plaintiff admitted that his capital. and taking into account that only sixty-seven thousand and odd pesos could be collected from the credits considered as uncollectible. it should be understood that.25. at the termination of the partnership in 1903. On pages 8 to 12 of Exhibit Z-3 the commissioner Wicks also unduly charged plaintiff 5 per cent of the interests on certain personal accounts that were canceled in the books.793. i. in the sum total of the profits. F. The amount thus unduly charged against plaintiff on account of the said 5 per cent interest aggregates P5. without the debt of P1. P.738. like the principal debts. he unduly awarded plaintiff P6. These charges were improper because the interests on the accounts stricken from the books are. The commissioner.205. consequently. . was the sum aforementioned which appears in the defendant's books. but this court can not accept the commissioner's conclusion in this particular. both amount aggregating P7.17. and in 1903 the firm of Gutierrez Hermanos netted no profits from its business. he has not lost his right to collect the rest of his capital by having signed said instrument.600.660. as an industrial partner.25. and P1. as a part of his capital which he was entitled to collect (Exhibit Z-3). on December 31.129. Furthermore. he was credited with only P25.69. the losses are greater and exceed the profits in said difference the industrial partner should not be liable. Wicks. having examined the documents presented at the trial.56.054. 1904.793.For the practical application and the fulfillment of the stipulations made by the partners.60. according to the articles of partnership. though he demanded more in his complaint. because. 1904. in the instrument of May 9. which the defendant had failed to pay him in the years 1900 to 1902. according to the defendant firm's books amounts to P56. 1902. also losses for which. It is to be observed that plaintiff agrees that his capital in 1903. nor that he condoned and renounced any other assets he might have therein. should not be liable for the losses. as being related to certain other accounts that originated during the period 1900 to 1903. among them Exhibits C.866. and in the difference which represents the net profits — if these are greater than the losses — the industrial partner shares. and on certain sums which appeared on the firm's books as losses pertaining to the years 1904 to 1911. and it is not fair that his copartners should benefit with no just reason and to his prejudice. as a part of his capital. Wherefore.46. awarded plaintiff P32. it is not stated that the amount brought in the plaintiff was the balance and sole asset that he had as an industrial partner in the extinct firm in 1903. according to the articles of partnership. as a part of his assets unduly excluded by the defendant firm from his account of invested capital in 1903.32. for this constitutes a real loss to the firm. but as in the instrument of May. there being in his favor consequently a balance of P55. e.

296. 1916. made an assignment of errors based on the reason set forth in its brief. an amount also unduly paid.87. for the reason stated in the judgment.609. 1912. 1911.147. nor has any error been assigned against it by the plaintiff-appellant in his brief. according to the 8th clause of the articles of partnership. in the subsequent judgment rendered therein on September 11. lawful. just. shows that plaintiff is entitled only to the sum of P30. This latter sum.60. plaintiff's capital was the amount stated. Therefore the complaint is also dismissed with respect to the fourth cause of action. prior to December 29. also mentioned by the commissioner in his report Exhibit Z-3. with legal interest thereon from May 25.85 likewise unduly credited to the plaintiff and which apparently increases his assets. the capital stock of the plaintiff Leopoldo Criado. . and in view of the fact that plaintiff tacitly waived any right he might have had to enforce this claim.866. The plaintiff having impliedly acquiesced in the finding of the trial court with respect to the fifth cause of action. the court abstained from granting the petition made in connection with said third cause of action. which appears to be a copy of plaintiff's stock account. held that the defendant firm was obliged to pay to plaintiff the sum of P51. with the sole difference of one centavo through inaccuracy in the calculations. we shall now proceed merely to inquire whether that court actually committed the errors assigned to the judgment by the defendant-appellant. notwithstanding the agreement contained in the document Exhibit 50. we deem to be mathematically correct. 1911. and in conformity with the stipulations made by and among the partners in said instrument. According to the document Exhibit 7. plaintiff had suffered a loss not only of 5 but 10 per cent. Therefore. and the trial court. By the fifth cause of action counsel for plaintiff demands payment of the sum of P88.265. This finding has not been assailed. before the annotation of the entries assailed as false and fraudulent by plaintiff. a sum which.which sum. In the judgment appealed from. the plaintiff-appellant in his brief made no assignment of error with respect to this matter. ordered in the judgment to pay that sum. leaves a difference of P2. certified as authentic by the defendant's bookkeeper.17. presented by the defendant. notwithstanding. the date of the filing of the complaint. subtracted from said P7. and therefore the defendant should be ordered to pay the same. judging from his conduct in the matter of the collection of the sum of P406. The plaintiffappellant likewise makes no assignment of error against this judicial declaration.99.62. an amount which also appears in the document (Exhibit P) and tends to prove that on December 31. in so far as this cause of action was concerned. was dismissed and upon a reopening of the case. but the defendant-appellant. subtracted from that awarded by the commissioner. the complaint. together with the legal interest thereon from the date of the filing of the complaint. this court dismisses the complaint in so far as said third cause of action is concerned. the trial court holds that the item relative to the shares of stock in the Bataan mines pertained to the losses suffered in 1906 and should have been charged to the account of profits and losses as. was P73. As regards the third cause of action in the previous judgment which was set aside.245.93. nor did he request the court to make any ruling on the petition submitted in connection with said cause of action.

000. cash operations of provincial business. which accounts bear debit balances.34. vessels. various debtors. nor did they amount to the sum fixed by the court. furnitures. Placido Gutierrez de Celis. Notwithstanding these provisions the partners Don Placido and Don Miguel as principal capitalist partners may liquidate the partnership or alienate its rights whenever they deem proper so to do. In case the partnership business should incur such losses as to prevent a continuance of the business or to make a dissolution of the partnership advisable. p. for the reason that same document shows losses of P21. X. 1904. or to make advisable the dissolution of the partnership. the partners shall be liable for the losses that may be incurred. The earnings or profits which may be obtained shall be distributed among the partners in the following proportion: Forty per cent to D. according to the balance sheet (Exhibit P) admitted by the defendant (sten. p.569. as those of the merchandise. 82). which ratified and approved the transactions of the firm of Gutierrez Hermanos from January of that year state the following: Eighth. 45). and to make a comparison between its contents and those of the 1911 inventory. 1908. From the two preinstated clauses of the partnership contract it is deduced that the partners should be liable for all the losses incurred by the partnership in the proportion fixed in the 8th clause.963. consignments. in case such losses should be of so great importance as to prevent a continuation of the partnership business. Sixteenth. 100). plaintiff should be liable at the rate of 10 per cent of the losses sustained. the life of the partnership was extended to another term of four years.38 for general expenses and of P22. Exhibit O (record.41 for the account on its face. not discussed by the litigants. Miguel Gutierrez de Celis.The eighth and sixteenth clauses of the articles of partnership. In order to determine the exact amount of the profits and losses during the year 1911. In the same proportion provided for the profits. The trial judge held that. upon the same bases and conditions (Exh. and rural and urban . Daniel Perez Albertos. it becomes necessary to examine the 1910 inventory. Ten per cent to D. then due action should be taken in conformity with the provisions of said clause 16. Leopoldo Criado Garcia. and the partners should be liable from the losses in a proportion pro rata to their share in the partnership assets. same shall be liquidated. executed in May. each capitalist partner bearing such loss in a pro rata proportion to the capital he represents. p. Having examined various documents stating accounts of several kinds relating to the business of the firm of Gutierrez Hermanos. notes. Forty per cent to D. but a mere reading of this balance sheet shows that the profits were not so much as the plaintiff claims. By a notarial instrument of January 2. even by adding thereto the sum of P30. the profits in 1911 were P120. the expenses necessary for the prosecution of the business being chargeable to the firm as a whole. but that. shares. in consequence whereof.986. and Ten per cent to D.

08. in his account of capital stock.682.671. was collected as the commissioner states in his report. on December 31. 1910.503. and those of slow collection to P75. in justice. According to the entry No. Ramon Madarieta's debt.296.337 because in 1912 the balance of P8.08. and adding thereto the sum of the amounts collected.746. those doubtful amount to P39. the date is. since entry No. it appears that the active capital of the partnership was. deducting from this sum 10 per cent of the P56. According to the inventory Exhibit 51 (record.746.219. compared with the capital that the defendant firm had on December 31.965. shows a loss of P56. the sum which he was entitled to collect from the defendant by this fifth cause of action — although the amount was reduced to P51. there results the difference of P68.685.354. p. therefore the sum of the doubtful credits and those of slow collection should be deducted.125.37 or P5. 1911. it appears that.096. The unpaid accounts aggregate a total of P148.27.534. at the rate of 3.59. We cannot consider as lost the credits of slow collection nor even the doubtful ones.04.65 in 1911.50.66. In his report (Exhibit Z-3) the commissioner classified these credits as uncollectible.716.57. as unpaid accounts from the liabilities which. the result is that plaintiff's true assets. he.141. the liabilities of the partnership were P789.67.716. 120) was P2.091. without being uncollectible or doubtful. according to Exhibit 7 (record. 1911. Exhibit U. in proportion to the total net capital. Therefore.64 as his share of the loss. P2.000 from Tirso Nery against whom the defendant then had an action pending. a balance which constituted his capital on December 31.019.228. Exhibit T. admits that a part of such credits.62 as fixed in the judgment — the payment of which the defendant is obliged in the manner stipulated in the 19th clause of the articles of partnership.22 per cent with legal interest from the date of the filing of the complaint. doubtful and slow collection.40. . a classification we find very just.64 as losses.58. in consequence of a compromise made by advice of the attorneys of the defendant.19.671. the liabilities were only P2. Deducting from this sum that of P2.97. 197). the active capital was reduced on account of the difference in the price of hemp.175. which according to Exhibit Z (record. 1657. is of slow collection. must be P76. The capital which the plaintiff had in the firm in 1911. According to said commissioner's report. amounts to P76. by the sum of P110.864. By the sixth cause of action plaintiff claims the sum of P2.182. the former firm of Del Pan and Ortigas. 1658. making a total of P118.570. in truth and in fact.293. p.58. deducting from the liabilities the excess of P102. consequently. desisted from claiming P8. be considered as lost.000. on December 31. alleging that same was unduly charged against his private account p. the uncollectible credits amount to P33.60 and. an amount which may. as manager of the defendant firm. as there is the hope that they may be collected in the future. 172). an amount that still must be reduced to P662. are reduced to P671. P605. there should be deducted from plaintiff's capital 10 per cent of this sum or P5. there appears a net balance in his favor of P74. Consequently.98 which is charged as a debit against plaintiff. 1910. paid said sum to Leopoldo who for this reason.57. and this sum. in spite of his better right.

the sole reason why plaintiff continued in the firm after December 31. No. considering the remaining P200 as plaintiff's share in the loss suffered by the firm on account of said compromise. 427). but the court. who saw and observed these witnesses while they were testifying. 1912. and that while acting as manager plaintiff took advantage of the opportunity to buy said credit for 25 per cent of its nominal value.The trial court rendered judgment in favor of the plaintiff for P2.000. that he intervened in the preparation of the balance sheets. that. for the evidence as a whole tends to prove that plaintiff told the truth. counsel for the defendant says. with the promise that compensation would be in accordance with the profits obtained.000 per month. p. testified that he had no knowledge of that complaint and of that compromise. until March 30. So therefore plaintiff is entitled to recover from the defendant the sum of P1. 1912. Upon the foregoing evidence the lower court rendered judgment in favor of the plaintiff for the amount claimed and fixed by himself. 1911. The manager. is P1. that therefore De Celis himself drew the check for the payment of Ferrer's claim and ordered plaintiff to go to court in company with the attorney to stipulate a compromise about the matter.800 but must suffer the loss of the remaining P200 as his share of the loss of the credit. Plaintiff testified that Miguel Gutierrez de Celis read the complaint of Leopoldo Ferrer and believed that it was advisable to pay this creditor's claim. 1911.800. and we see no reason whatever for modifying his judgment in this matter. with legal interest thereon. and at the second hearing held that plaintiff should be paid P1. when he left the firm. was estimated on the basis of the work done by him and the profits obtained. was to make the final balance sheets. that plaintiff could not establish his right under this cause of action.000 was paid by Guiterrez Hermanos on the account of Leopoldo Criado. at the first hearing of this case. Miguel Gutierrez de Celis. and basing judgment on the nature of his work and on what he had earned previously as a partner. 9300.000 per month. and alleged that a just and reasonable compensation from December 31. that he therefore demanded of Miguel Gutierrez de Celis the payment of said compensation. but that the latter refused to pay anything (record. The manager Miguel Gutierrez de Celis testified that Leopoldo Criado lodged and boarded in the house of Gutierrez Hermanos during the months of January. as there was no need of buying this credit of Leopoldo Ferrer against Tirso Nery. and that consequently his services were of no value. according to the testimony of the defendant's manager. and that therefore he can . The defendant alleged that its manager's statement shows that this sum of P2. that this value of services. P1. such services being rendered at the request of Miguel Gutierrez de Celis. In trying to prove that the trial court erred in its award in favor of plaintiff for this cause of action. on page 33 of the Spanish brief. In the seventh cause of action plaintiff claims compensation for the services rendered the defendant firm at the instance of Miguel Gutierrez de Celis. and March. that his work consisted solely in being there and seeing that things were accomplished. gave credence to the plaintiff's testimony. February.

as the manager merely said that plaintiff's services were worth nothing. it is just and reasonable that such services should be remunerated. With respect to the amount of that compensation. counsel for the defendant say on the aforecited page of their brief. it is always worth something. and. the same rule favors the plaintiff for. Therefore the defendant ought in justice pay to the plaintiff the amount claimed in this seventh cause of action. that plaintiff testified that his salary ought to be in accordance with the profits that might be obtained but that he did not prove how much he could have earned elsewhere. such an obligation does not appear. therefore. Plaintiff. . a statement that falls by its own weight. there was not only an implied but an express contract that the defendant should pay plaintiff a compensation proportionate to the profits that might be obtained from the business of the firm. should there be no objection on the part of any of the partners. Assuming that the rule cited were applicable in this country. In the eighth cause of action plaintiff claims the sum of P52 as his 10 per cent share of the P520 which La Germinal paid the defendant as dividend obtained in 1911 and corresponding to the shares of stock the defendant held in that company. the persons who managed the common funds shall continue in charge of the liquidation. however insignificant may be the work one person does on behalf of another. with the understanding that his compensation should be in proportion to the profits that might be obtained. In its answer defendant admitted that it collected the dividend mentioned. nor in the law. unless there are special stipulations in the matter of circumstances from which such contractual stipulations may be deducted. alleging that. is there any provision whatever to the effect that plaintiff as a partner was obliged to liquidate the business without compensation. neither in the partnership contract (Exhibit O). for. rendered service to the defendant at the manager's request. it failed to credit him with P52. without being obliged. the sum to which he was entitled. Nor does there appear any reason whatever for modifying the judgment of the trial court in respect to this point. notwithstanding the fact that the defendant collected said amount. in the present case. for. As regards the amount of the compensation we do not find satisfactory rebuttal of plaintiff's testimony in this matter. since among the partner's obligations as prescribed by articles 170 to 174 of the Code of Commerce. and that plaintiff was entitled to the payment of P52. articles 228 and 229 of the said Code provide that in general or limited partnerships.recover nothing for his services because the rule established in various American cases cited is that a liquidator-partner is not entitled to any compensation for his services as such. It is undeniable that plaintiff did render services to the defendant firm when he was not obliged to do so gratuitously. but on the contrary. There is no estimate of his compensation were not received nor do we find his estimate exaggerated.

Dos Hermanos.89 belongs to plaintiff. and although the defendant appealed he from this award of the judgment. as held by the trial court. he is entitled P3. we see that the dates and premiums of the insurance policies mentioned in the judgment.92.16 which the insurers of several of the defendant's steamers paid on account of certain damages suffered by these vessels — said repairs were paid proportionately by all the partners — and that. but admitted that it did receive P9. differs very much from Exhibit 45. thereby diminishing the partners' capital. By the ninth cause of action plaintiff claims the payment of P1. and admits that said sum should be credited to plaintiff's account. 77). of which P95.09. notwithstanding the collection of this sum. The defendant alleges that the premium pertaining to the year 1912 amount to only P958. certified to by the bookkeeper of the defendant firm. p. agree with those given in Exhibit 45 (record. defendant did not pay him his share thereof.Plaintiff testified (record.16.334. By the tenth cause of action plaintiff asks judgment for P3. Therefore said award of the trial court should likewise be affirmed.711. and Magallanes. the defendant firm charged to the account of "Items pending collection" and credited in favor of Movellan and Angulo. Counsel for the defendant admitted that they had no evidence to present in respect to this cause of action.711. We therefore affirm this part of the judgment.11 as his 10 per cent share of the P11. notwithstanding the demand made upon him so to do. and that of said P35. We see no reason whatever for changing or modifying this finding.000 which the defendant's manager failed to pay plaintiff. DEFENDANT'S CROSS-COMPLAINT. The lower court rendered judgment in favor of plaintiff for P1. Defendant denied that is received P11. schedule 28 of Exhibit Z-3. p. that plaintiff was entitled to the amount awarded him in the judgment. p. as aforesaid.22.001.90. for which plaintiff should not be held liable. Therefore plaintiff has an unquestionable right to collect from the defendant the sum of P52. 429) that the books do not show that the sum of P520 was divided among the partners. The court below rendered in favor of plaintiff judgment for P953. and that this sum plaintiff should be credited with P953. no policies of other steamers having been presented. on the contrary. alleging that in 1911. nor did the defendant make any assignment of error in respect thereto. insurers of the defendant's steamers for the year 1912. of Paris. while the report of the commissioner (record.92.032. 297) which is a copy of the insurance policies of the steamers Montañez. Nor do we find anything in the record to show that the trial court erred. from which judgment he did not appeal.97. after he had ceased to be a partner of Gutierrez Hermanos. The defendant asks therein that plaintiff be ordered to pay any amount proved due the partnership.000. and alleges that during the time that plaintiff acted as the official in charge . it was not included in its assignment of errors. for the defendant admitted. from which judgment he did not appeal.171.

and the manager of the defendant firm's business. by reason of his malice.617. were ratified by Miguel Gutierrez de Celis upon his arrival in the Philippines.16. and is of the following tenor: The purpose of the partnership shall be the transaction of business in the purchase and sale of groceries and beverages from Europe and America. in order that the partner at fault may be compelled to pay an indemnity. place. As regards the first question. and that. presented as Exhibit A (record. and domestic merchandise.? (Second. as disclosed by the record.000. in the first. 1911. such as Antonio de la Riva. abuse of powers. 58). This question should therefore be determined in the negative. provided an express or verbal approval or ratification of the act on which the claim is based can not be deduced in any manner whatsoever. he. a loss was found whereby plaintiff owed the defendant more than P26. 1900. in the second place. that his conduct should not have been expressly or impliedly ratified by the other partners or the manager of the partnership. even supposing that plaintiff has violated the stipulations of articles of partnership by giving credit to various persons without taking the security required in the fifth clause of said articles.) Is plaintiff in debt to the defendant in the sum of twenty-six thousand and odd pesos? With respect to the second question we have already shown in discussing the fifth cause of action. without having the security required by the articles of partnership. that his conduct shall have caused some damage to the partnership. 1903. According to this legal provision. The cross-complaint raises two questions. it is indispensable. yet in the cross-complaint no other reasons are alleged by virtue of which he should be held liable for said breach of contract. upon making the balance sheet on December 31. . the defendant is indebted to plaintiff. Article 144 of the Code of Commerce makes a partner liable for the damages suffered by the partnership. or serious negligence. sold and delivered various merchandise and other effects to several debtors. that. The clause to which this cross-complaint refers and which was violated by plaintiff is the fifth of the instrument of March 16. whose account showed a debit balance of P39. for the reason that the transactions. and requires him to indemnify the partnership should the other partners so require. The trial court dismissed this cross-complaint. the credit allowed thereon not to exceed thirty thousand pesos and granted only on the approval of the principal capitalist partners. whose debt had then reached the amount of P88. p.417. and. to wit: (First. knowingly and in contravention of the stipulations contained in the articles of partnership.) Is plaintiff liable for the debts of Antonio de la Riva and of Gerena and Co. and in the advancement of funds on goods under security to companies or to private parties. and Gerena and Co. that therefore plaintiff alone is responsible for losses occasioned through such procedure.96. the responsibility for which the defendant claims to hold plaintiff liable. during the period between May 1 and December 10. to wit.

1903. and that rather did the liability for such harm fall upon the manager Gutierrez de Celis who conscientiously never believed that plaintiff was solely liable for the loss. Miguel Gutierrez de Celis continued to maintain commercial relations with said debtor firm. except the testimony of Miguel Gutierrez de Celis in which the latter claims that the launch was purchased by plaintiff in his own name with money belonging to the firm. violating said fifth clause of the articles of partnership. if the launch were sold to De la Riva and the .. shows that on July 3. by reason of the security of the hemp which this debtor was sending to the firm. which represented P34. plaintiff is liable for all the damage and harm caused. certified to by the defendant's bookkeeper. and notwithstanding that error was discovered by Gutierrez de Celis. 1889 (Exhibit 10. p. and September 5. as he stated.06. a debit balance of P91. the fault being attributed to the deceased Miguel Alfonso. 590) that as security for this debt De la Riva had delivered to the firm of Gutierrez Hermanos a lot of hemp worth P33. So said Entry No. although Miguel Gutierrez de Celis testified (record. No. 565) that upon his arrival in the Philippines. there is no evidence of record in contradiction of the facts. without knowing what it was.218. a power of attorney to collect P26. without the security required in said articles. This testimony appears other corroborated documents and other evidence of record for.000 from the store "Isla de Cuba" in monthly installments of P2.000.000.. Plaintiff Leopoldo Criado testified. and that the plaintiff who gave the money to Gerena and Co.000. that subsequent to his arrival in this country. he allowed an increase in De la Riva's debt. 5. 1903. for. and that. With reference to the insurance of the launch Concha. in order afterwards to sell it to Antonio de la Riva (record. with respect to Gerena and Co. the truth is that the amount of the loss was not charged to Leopoldo Criado. sold and delivered merchandise and other effects to various debtors. for the Entry No. with respect to the power of attorney to collect the sum mentioned from the "Isla de Cuba. and for said reason there is no ground upon which plaintiff may be held liable for the harm occasioned by the non-payment of the debt of Gerena and Co.In the cross-complaint the allegation is made that plaintiff. August 5. and the insurance policy of the launch Concha. neither was a similar charge made in respect to the amount paid to Leopoldo Ferrer of which mention has previously been made herein above. in 1903. 1903. written on December 31. With respect to the account of Antonio de la Riva which shows.. as manager of the partnership. aforecited) contains the statement that the author of such losses no longer exists. nor that De la Riva was the owner of the boat. 1889 of the document Exhibit 10 remained intact. as of December 31. the manager himself Miguel Gutierrez de Celis testified (record.000 and odd pesos. p. which is the account of Antonio de la Riva. 567). because of the large sums which said debtors owe to the partnership. whereby the debt was reduced to P12. amounting to P128. 1903. p. such as Antonio de la Riva and Gerena and Co. so it is that the manager Miguel Gutierrez de Celis continuing said business ratified plaintiff's procedure during the three months and several days that he acted temporarily.035." With respect to the hemp referred to by witness.12. was solvent and could pay its debt. the account of Antonio de la Riva's indebtedness to the partnership was credited with various sums collected from the "Isla de Cuba." the same exhibit. The manager De Celis does not deny that the partnership held said insurance policy on the launch as security. on December 31. plaintiff testified (record. whose debt would have been collected had Gutierrez de Celis followed his (plaintiff's) advice and that of the attorneys of the firm of Gutierrez Hermanos — aside from the fact that the firm of Genera and Co. p. This testimony is in direct contradiction to the evidence contained in the entry aforementioned. 557) that he gave his approval to what had been done.

he divided the amount thereof among all the partners. as stated in the findings on the majority of the causes of action prosecuted by plaintiff. January. in the belief that it was a loss that affected them all. in which it is held that the accounts presented by the defendant are not in accord with the orders given by the Supreme Court in its previous decision. and if afterwards losses had been sustained same were due to the fault of Gutierrez de Celis himself. in view of section 126 of Act No. the defendant should be. For the foregoing reasons. without the defendant having wished to appoint another in use of its right so to do. and to place the same at the disposal of the expert. it is undeniable that the plaintiff Leopoldo Criado. 190. inasmuch as the latter is shown to be his debtor. vouchers and other documents that might be necessary for the settlement of the assets pertaining to plaintiff during the years 1900 to 1911. Starting from the fact that the record shows that the defendant owes plaintiff various sums of greater or lesser importance. might examine the books and papers of the firm of Gutierrez Hermanos. although he was a debtor to the firm of Gutierrez Hermanos for its price and the expenses incurred. to end that. with said Wicks. and it is so held. this business was in very good condition. and was authorized to appoint another expert who. G. it is logical that this court should not find any well-founded or legal reason by virtue of which judgment may be rendered against plaintiff for whatever amount he may be owing the defendant firm. 1915. Wicks. issued in compliance with and in consequence of the decision of this court. in accordance with its true merits and in conformity with the law. This order is perfectly legal and just. without any liability on his part in relation to the bad or uncollectible credits. with the result of the liquidation of the accounts made by the expert appointed. and of whatever sum that in the future may be collected from said collectible accounts or unpaid credits. The last error assigned by the defendant to the judgment of the court below relates to the order of September 2. is entitled to receive 10 per cent of every sum collected from the date on which he ceased to belong to the firm. 1912. in so far as it was directed that the firm of Gutierrez Hermanos should render a new account supported by vouchers to determine exactly plaintiff's share in the firm's assets. B. whereby the errors assigned to the judgment appealed from with respect to the parts thereof discussed in this decision have been refuted. Consequently it is indisputable and beyond all doubt that when plaintiff turned over to Miguel Gutierrez de Celis the management and administration of the business of the firm. as capitalist partner of the partnership organized in May. so it is that. this court may decide this suit equitably. In fact the defendant was ordered immediately to present to the court all its books.proceeds from the sale were charged to the latter's account. we reverse that part of the judgment of the court below whereby such liability for 10 per cent is imposed upon the plaintiff. 1904. Therefore. it is obvious that Antonio de la Riva was the owner of the launch. as it hereby is absolved from the complaint by the first cause of action. By the . As regards the amount of the collectible accounts and of unpaid credits which total sum is stated in the part of this decision relative to the fifth cause of action. Therefore plaintiff should be absolved from the cross-complaint filed by the defendant. together with the expenses occasioned by the trips made by that boat (Exhibit 5). It is an interlocutory order of mere procedure. in canceling in the books the account of Antonio de la Riva.

The plaintiff Leopoldo Criado is absolved from the cross-complaint filed by the defendant Gutierrez Hermanos. So ordered. by the seventh. P1. By the sixth cause of action. the defendant. May. 1912. with legal interest thereon from May 25. by the ninth..J. The judgment appealed from is thus affirmed in so far as it is in accord with this decision. Johnson. http://www. and the defendant two thirds. ordered to pay to plaintiff the sum of P51. P52.22. said complaint is dismissed.000. P953. Araullo.609. and by the tenth. and is reversed in so far as it is not. C. by the eighth. concur.800. That part of the judgment relating to the plaintiff's liability for 10 per cent of the outstanding and the uncollectible bills is reversed. the defendant is likewise ordered to pay P1.html .296. as it hereby is ordered to pay to the plaintiff Leopoldo Criado the sum of P30.60. should with legal interest thereon from the date when the original complaint was filed. In so far as it is based on the third and the fourth causes of action. and the plaintiff must pay said sum in the manner prescribed in the 19th clause of the articles of partnership of 1904.62 fixed in the judgment appealed from..second cause of action the firm of Gutierrez Hermanos. Street.lawphil. the defendant should be. The plaintiff shall pay one-third. and he is reserved his right in the sums collected or which may be collected from same. In accordance with the fifth cause of action. Avanceña and Fisher. JJ. Arellano. 1912. the date of the filing of the complaint. of the costs of both instances. P3. as it hereby is.

IAC G.R. 1/31/1989 . No. L-70926.Leung v.

INTERMEDIATE APPELLATE COURT and LEUNG YIU.R..00 as his contribution to the partnership. HON.: The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-G. 1955. located at Florentino Torres Street. GUTIERREZ. Manila. No.00 to its initial establishment. Cruz. 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. respondents. 1955 from petitioner Dan Fue Leung.Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. the private respondent gave P4. 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. CV-00881 which affirmed the decision of the then Court of First Instance of Manila. Sta.000. J. The receipt was written in Chinese characters so that the trial court commissioned an interpreter in the person of Ms. 70926 January 31. No. The private respondents evidence is summarized as follows: About the time the Sun Wah Panciteria started to become operational. JR. This is evidenced by a receipt identified as Exhibit "A" wherein the petitioner acknowledged his acceptance of the P4. a restaurant.000. was established sometime in October. 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. This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance of Manila. The Sun Wah Panciteria. petitioner. The private respondent . Uy for petitioner. Edgardo F. Florence Yap issued a certification and testified that the translation to the best of her knowledge and belief was correct.000. vs. John L.00 by affixing his signature thereto.R. 1989 DAN FUE LEUNG. Sundiam for private respondent. Florence Yap to translate its contents into English. 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. Branch II in Civil Case No.

Witness Teodulo Diaz. (p. Furthermore. 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. ordering the latter to deliver and pay to the former. said check was returned to the petitioner as the maker thereof. the court ruled in favor of the private respondent. the sum equivalent to 22% of the annual profit derived from the operation of Sun Wah Panciteria from October.00 (Exhibit B). and attorney's fees in the amount of P5. Hence. To bolster his contention that he was the sole owner of the restaurant. the private respondent received from the petitioner the amount of P12. 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. the trial court gave credence to that of the plaintiffs. Fue Leung also flatly denied having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No. Rollo) .000. 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. namely Ah Heng and Maria Wong (Exhibits H. This fact was clearly shown and indicated in the petitioner's statement of account after the check (Exhibit B) was duly cleared.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. As between the conflicting evidence of the parties.000. judgment is hereby rendered in favor of the plaintiff and against the defendant. 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. 13389470-B from the profits of the operation of the restaurant for the year 1974. 125.00 and cost of suit. His evidence is summarized as follows: The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. 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. He contested and impugned the genuineness of the receipt (Exhibit D). H-1 to H-24) showed that the signatures in the two receipts were indeed the signatures of the petitioner.000. Rana further testified that upon clearance of the check and pursuant to normal banking procedure.000.00 as capital in establishing Sun Wah Panciteria.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. until fully paid. 13389470 B in the amount of P12. 1955. The dispositive portion of the decision reads: WHEREFORE. The petitioner denied having received from the private respondent the amount of P4. 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.00.000. 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. the Equitable Banking Corporation.00 covered by the latter's Equitable Banking Corporation Check No.000.

Except as modified. 150. which was granted earlier by the Court. in a resolution. as supplement to the said motion. Similarly. is hereby reiterated and the decision rendered by this Court on September 30. is hereby amended. The questioned decision was further modified by the appellate court. 1980. 2. until fully paid. judgment is hereby rendered. ordering the plaintiff (sic) and against the defendant. ordering the latter to pay to the former the sum equivalent to 22% .00 a day from May 16.00 as and for attorney's fees and costs of suit. The motion was granted over the objections of the petitioner. The dispositive portion of the resolution reads: WHEREFORE. and allow private respondent to adduce evidence so that the said decision will be comprehensively adequate and thus put an end to further litigation. judgment is rendered in favor of the plaintiff and against the defendant. Rollo) Later. the decision of the court a quo is affirmed in all other respects. the dispositive portion of which reads: FOR ALL THE FOREGOING CONSIDERATIONS. Ordering the defendant to pay the plaintiff by way of temperate damages 22% of the net profit of P2. The dispositive portion of the appellate court's decision reads: WHEREFORE.The private respondent filed a verified motion for reconsideration in the nature of a motion for new trial and. the sum equivalent to 22% of the net profit of P8.000.000. 1971 to August 30. 1971.000. the decision appealed from is modified. plus the sum of P5. the appellate court. the dispositive portion thereof reading as follows: a day from judicial demand to May 15. the dispositive portion of the amended judgment of the court a quo reading as follows: WHEREFORE. (p. ordering the latter to pay the former the sum equivalent to 22% of the net profit of P8. 1975. 3. And thereafter until fully paid the sum equivalent to 22% of the net profit of P8. the motion for reconsideration filed by the plaintiff. (p. Rollo) The petitioner appealed the trial court's amended decision to the then Intermediate Appellate Court.00 per day from the time of judicial demand. After hearing the trial court rendered an amended decision. modified its decision and affirmed the lower court's decision. he requested that the decision rendered should include the net profit of the Sun Wah Panciteria which was not specified in the decision.00 a day. The dispositive portion of said decision should read now as follows: WHEREFORE. 102.

which were proved. The same complaint did not claim that private respondent is a partner of the business. 1978. Rollo) The pertinent portions of the complaint state: xxx xxx xxx 2. Philippine Currency. property or industry to a common fund. 11. as a return for such financial assistance. Intermediate Appellate Court to interpret or construe 'financial assistance' to mean the contribution of capital by a partner to a partnership." (p. Thus. in return of which private respondent allegedly will receive a share in the profits of the restaurant. 75. Intermediate Appellate Court to grant a relief not called for by the complaint. (p. the private respondent alleged that when Sun Wah Panciteria was established. 3. The petitioner. the motion for reconsideration filed by petitioner was denied. Rollo) In essence.00).00 as and for attorney's fees and costs of suit. a serious error for the lower court and the Hon. 105-106. .000. That on October 1. Hence. of which copy for the receipt of such amount.of the net profit of P8. is hereby retained in full and affirmed in toto it being understood that the date of judicial demand is July 13. therefore. until fully paid. plaintiff would be entitled to twenty-two percentum (22%) of the annual profit derived from the operation of the said panciteria.000. located in the given address of defendant. duly acknowledged by the defendant is attached hereto as Annex "A". plaintiff delivered to the defendant the sum of four thousand pesos (P4. Rollo). 1955. 1955. plus the sum of P5. claims that this factual finding is erroneous. defendant sought the financial assistance of plaintiff in operating the defendant's eatery known as Sun Wah Panciteria. 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. 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. In the same resolution. he gave P4. however. While the dispositive portions merely ordered the payment of the respondents share. (pp. These allegations. there is no question from the factual findings that the respondent invested in the business as a partner. It was also error for the Hon. That on or about the latter (sic) of September.000. and form an integral part hereof. with the intention of dividing the profits among themselves".00 per day from the time of judicial demand.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. 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. It was.000. the two courts declared that the private petitioner is entitled to a share of the annual profits of the restaurant.

. 1955 and the complaint was filed only on July 13. Inc. Likewise. Respondent Intermediate Appellate Court gravely erred in not resolving the issue of prescription in favor of petitioner. employees of the restaurant. 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. The petitioner raises the issue of prescription. Court of Appeals. "H-1" to "H-24") were presented by the private respondent for marking as exhibits. 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. After the usual examination conducted on the questioned documents. we find no reason why Exhibit "J" should be rejected or ignored. The records sufficiently establish that there was a partnership. It connotes an ex gratia dole out in favor of someone driven into a state of destitution." (De Tavera v. notwithstanding the use of the term financial assistance therein. "H-1" to 'H-24") of Antonio Ah Heng and Maria Wong. We agree with the appellate court's observation to the effect that ".. 135 SCRA 37). The records also show that when the pay envelopes (Exhibits "H". The alleged receipt is dated October 1. Philippine Tuberculosis Society. 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". Under these circumstances. 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. .. Inc. v.00 was given to the petitioner does not obtain in this case. Rollo) The well-settled doctrine is that the '". But this circumstance under which the P4. 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 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. financial assistance is the giving out of money to another without the expectation of any returns therefrom'. the petitioner did not interpose any objection.' (p.Therefore. Rollo) The complaint explicitly stated that "as a return for such financial assistance. 107. 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. nature of the action filed in court is determined by the facts alleged in the complaint as constituting the cause of action. given its ordinary meaning. 99.. 113 SCRA 243.000. plaintiff (private respondent) would be entitled to twenty-two percentum (22%) of the annual profit derived from the operation of the said panciteria.' (p. He argues: The Hon. Alger Electric.. no explanation has been offered for his silence nor was any hint of objection registered for that purpose.

The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract. Article 1842 states: The right to an account of his interest shall accrue to any partner. in relation to Article 1155 thereof which provides: Art. From October 1. The petitioner's argument is based on Article 1144 of the Civil Code which provides: Art. 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. in the absence or any agreement to the contrary. a deferment of sharing in the profits is perfectly plausible. As stated by the respondent. 110)-have been established. and 1809 show that the right to demand an accounting exists as long as the partnership exists. The private respondent is a partner of the petitioner in Sun Wah Panciteria. 1144. Yulo v. and when there is any written acknowledgment of the debt by the debtor. . Articles 1806. 1955 to July 13. such rights are irretrievably lost. It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable. a partner shares not only in profits but also in the losses of the firm. when there is a written extra-judicial demand by the creditor. 106 Phil. Regarding the prescriptive period within which the private respondent may demand an accounting.' The argument is not well-taken. nine (9) months and twelve (12) days. It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations. and 2) intention on the part of the partners to divide the profits among themselves (Article 1767. property. The requisites of a partnership which are — 1) two or more persons bind themselves to contribute money. 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. Civil Code. In effect the private respondent was asking for an accounting of his interests in the partnership. 1978.1978 or after the lapse of twenty-two (22) years. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. 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. 1155. no written demands were ever made by private respondent. The prescription of actions is interrupted when they are filed before the court. 1807. (3) Upon a judgment. or industry to a common fund. Yang Chiao Cheng. (2) Upon an obligation created by law.

Witness. . Mrs. Q Mrs. will you please tell us.000. to testify on the income of the restaurant. 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. Q Now.M. after 11:30 (P. of the money. sir.Finally. Witness. in other words. Sarah L. is that correct? A Yes. in an average day. how much is the gross income of the restaurant? A For regular days. That is excluding the catering outside the place. Dan Fue Leung. you huddle or confer together? A Yes. HIPOLITO (direct examination to Mrs. Mr. if any. I received around P7.) which is the closing time as you said. being the cashier. more or less. We sum it up. the private respondent presented the cashier of Sun Wah Panciteria. Q Now. Licup. you were the one who accepted the money and you gave the change. Q So. Licup). Licup stated: ATTY. after your job. ATTY. is that correct? A Yes. what do you do with the money? A We balance it with the manager.00. HIPOLITO: I see.000. count it all.00 a day during my shift alone and during pay days I receive more than P10. I total it. Q So that every time there is a customer who pays. Mrs. a certain Mrs. you stated that among your duties was that you were in charge of the custody of the cashier's box. Apart from his own testimony and allegations.

to 11:30 P. sometimes two times a month or more. (Rollo. because I am the one who receives the payment also of the catering. xxx xxx xxx Q Now more or less. sir.? A Yes. November 15. pp. Q How much is that? A That ranges from two thousand to six thousand pesos. Per catering. Mrs. in the evening the restaurant grosses an income of P7. Your Honor.N. inclusive. 127-128) The statements of the cashier were not rebutted. pp.1978) xxx xxx xxx COURT: Any cross? ATTY.M. p. 1978). (TSN. will you please tell the Honorable Court how many times a week were there catering services? A Sometimes three times a month.000.S.00 in a regular day? A Yes. 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 .M. (T. 65. Q So in other words. for your shift alone in a single day from 3:30 P. witness.Q What about the catering service. Q Per service? A Per service. 53 to 59. Q And ten thousand pesos during pay day. UY (counsel for defendant): No cross-examination. November 15. do you know the cost of the catering service? A Yes.

defendant instead of presenting the books where the same. 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. were recorded. 5(e) Rule 131). presented witnesses who claimed to have supplied chicken. 1981 and reset them to the later part of the following month. so much so. 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. there being a typhoon prevailing in Manila said date was declared a partial non-working holiday. The Court acting with great concern and understanding reset the hearing to November 17. When a subpoena duces tecum was issued to the petitioner for the production of their records of sale. 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. The petitioner's counsel never produced any books. this time to November 24. the defendant's counsel asked for postponement on the ground that the defendant was sick. On December 7. counsel for defendant promised that he will present the defendant as his last witness. however. journals and for this purpose. counsel is deemed to have waived the presentation of said witness and will submit his case for decision. Seemingly. employed a bookkeeper. egg and other poultry products which. denied said motion and ordered . 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. Notably there were several postponement asked by counsel for the defendant and the last one was on October 1. his counsel voluntarily offered to bring them to court. 1981. To bemuddle the issue. It was however a condition in the order granting the postponement to said date that if the defendant cannot be presented. that was the reason why this case dragged for quite sometime. p. the Court. on motion of defendant's counsel. On said date. did not show the gross sales nor does it prove that the same is the best evidence. 1981 as previously scheduled which hearing was understood as intransferable in character. however. This Court gave warning to the defendant's counsel that if he failed to produce the books.produce pertinent records. 1981 in order to give said defendant another judicial magnanimity and substantial due process. "Evidence willfully suppressed would be adverse if produced. 1981. ledgers. He asked for sufficient time prompting the court to cancel all hearings for January. the same was again reset to December 22. On November 24. shrimps. after much tolerance and judicial magnanimity." (Rollo. 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. the hearing was reset to December 7 and 22. 1981. Again on December 22. the counsel for the defendant who again failed to present the defendant asked for another postponement. meat. 1981. 1981. after presenting several witnesses. etc. 1981.

pp. According to the trial court. The resolution of the Intermediate Appellate Court ordering the payment of the petitioner's obligation shows that the same continues until fully paid. brokers. and people from all walks of life converge and patronize Sun Wah. in part. 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. It is near the corner of Claro M. (4) A partner willfully or persistently commits a breach of the partnership agreement. bank employees. (Rollo. If the respondent court awarded damages only from judicial demand in 1978 and not from the opening of the restaurant in 1955. Recto Street. the Court may decree a dissolution of the partnership under Article 1831 of the Civil Code which. The petitioner was given every opportunity to refute or rebut the respondent's submissions but. after promising to do so. There is more than substantial evidence to support the factual findings of the trial court and the appellate court. . it is in the heart of Chinatown where people who buy and sell jewelries. Cruz. There is no basis in the records to sustain the petitioners contention that the damages awarded are excessive. it is because of the petitioner's contentions that all profits were being plowed back into the expansion of the business. provides: Art. manager. within which to file their simultaneous memoranda. Even if the Court is minded to modify the factual findings of both the trial court and the appellate court. 747 Florentino Torres. 148-150) The restaurant is located at No. it cannot refer to any portion of the records for such modification. 1981. it deliberately failed to present its books and other evidence.that the case be submitted for resolution based on the evidence on record and gave the parties 30 days from December 23. Manila in front of the Republic Supermarket. Sta. Considering the facts of this case. 1831. xxx xxx xxx (6) Other circumstances render a dissolution equitable. 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. 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. businessmen. 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.

Bidin and Cortes. SO shall be a liquidation and winding up of partnership affairs.. The decision of the respondent court is AFFIRMED with a MODIFICATION that as indicated above. Feliciano. C. (Chairman).html . Fernan. http://www. JJ.. concur. WHEREFORE. and other incidents of dissolution because the continuation of the partnership has become inequitable. the petition for review is hereby DISMISSED for lack of merit. the partnership of the parties is ordered dissolved. return of capital.