i

s Lozana vs. Depakakibo

Case Digest
FACTS:

o Lozana and Depakakibo established a partnership for the purpose of maintaining,

operating, anddistributing electric light and power in the Municipality
of Dumangas. The partnership is capitalized at the sum ofP30, 000.00 where

n
Lozana agreed to furnish 60% while Depakakibo, 40%.However, the franchise for
venture in favor of Buenaflor was cancelled and revoked by the Public
ServiceCommission. Lozana thereafter sold Generator Buda [Lozana's contribution
to the partnership; no liquidationmade] to Decologon. When the decision was
appealed, a temporary certificate of public convenience was issued inthe name of
Decolongon. Depakakibo sold one Crossly Diesel Engine [Depakakibo's
contribution to thepartnership] to Spouses Jimenea and Harder.Lozana brought
action against Depakakibo alleging the latter wrongfully detained the Generator

v Buda andwooden posts to which he is entitled to the possession of. Lozano prayed
the properties be delivered back to him.CFI ordered sheriff to take possession of
the properties and the delivery thereof to Lozano. Depakakiboalleged properties

.
have been contributed to the partnership and therefor he is not unlawfully
detaining them. Inaddition, Lozano sold his contribution to partnership in violation
of terms of their agreement.CFI declared Lozano owner of and entitled to the
equipment. Depakakibo appealed decision to theSupreme Court.

ISSUE:
W/N partnership is void or the act of the partnership in furnishing electric current

H
to the franchise holder withoutprevious approval of Public Service Commission
render the partnership void?W/N disposal of contribution of parties is allowed.

RULING:

e
Validity of the Partnership
. Partnership is valid. The fact of furnishing the current to the holder of
thefranchise alone, without the previous approval of the Public Service
Commission, does not per se make thecontract of partnership null and void from

l the beginning and render the partnership entered into by the parties forthe
purpose also void and non-existent
Disposal of Contributed Property to the Partnership.

e
Facts show that parties entered into the contract ofpartnership, Lozana
contributing the amount of P18, 000, and there has not been liquidation prior to
the sale ofthe contributed properties: Buda Diesel Engine and 70 posts. It
necessarily follows that the Buda diesel enginecontributed by the plaintiff had

n become the property of the partnership. As properties of the partnership, thesame

could not be disposed of by the party contributing the same without the consent
or approval of thepartnership or of the other partner. (Clemente vs. Galvan, 67
Phil., 565)

Sancho vs. Lizarraga

Case Digest

M FACTS:
Sancho and Lizarraga entered into a contract of partnership. Sancho thereafter
brought an action for therescission of the partnership and prayed for
the reimbursement of the P 50, 000 investment he contributed withinterest at
12% per annum against Lizarraga.Lizarraga denied allegations and asked for the
dissolution of their partnership and payment to him asmanager and administrator
of the partnership of P500 monthly from October 15, 1920 [the day the contract
wasentered into] until final dissolution.CFI Manila proceedings proved Lizarraga
had not contributed all the capital he bound himself to investand that Sancho
demanded Lizarraga to liquidate partnership. CFI declared partnership dissolved
on account of theexpiration period for which it was constituted and ordered
liquidation of the partnership.The plaintiff appealed from said decision praying for
the rescission of the partnership contract betweenhim and the defendant in
accordance with Art. 1124.

ISSUE/S:
W/N plaintiff acquired the right to demand rescission of the partnership contract
according to article 1124 of theCivil Code.

RULING:
RIGHT TO DEMAND RESCISSION OF THE PARTNERSHIP CONTRACT
. The Supreme Court ruled that plaintiffhas not acquired the right to demand
rescission of the partnership contract according to Article 1124 of the CivilCode.
The Court ratiocinated that
owing to the defendant’s failure to pay to the partnership the whole amount
which he bound himself to pay, he became indebted to the partnership for the
remainder, with interest and anydamages occasioned thereby, but the plaintiff did
not thereby acquire the right to demand rescission of thepartnership contract
according to article 1124 of the Code. Article 1124 cannot be applied to the case
in question,because it refers to the resolution of obligations in general, whereas
articles 1681 and 1682 [of Old Civil Code]specifically refer to the contract of
partnership in particular. And it is a well known principle that special
provisionsprevail over general provisions. Hence, SC dismissed the appeal left
the decision appealed from in full force.
ART. 1786
. Every partner is a debtor of the partnership for whatever he may have promised to
contribute thereto.He shall also be bound for warranty in case of eviction with regard to
specifi c and determinate things whichhe may have contributed to the partnership, in the
same cases and in the same manner as the vendor is boundwith respect to the vendee.
He shall also be liable for the fruits thereof from the time they should have
beendelivered, without the need of any demand. (1681a)
ART. 1788
. A partner who has undertaken to contribute a sum of money and fails to do so becomes a
debtor forthe interest and damages from the time he should have complied with
his obligation.The same rule applies to any amount he may have taken from the
partnership coffers, and his liability shallbegin from the time he converted the amount to his
own use. (1682)

Uy vs. Puzon
Case Digest
FACTS:
Puzon entered into a contract with the Republic of the Philippines for the
construction of a road and 5 bridges. However,Puzon found difficulty in
accomplishing both projects, so he established a partnership with Uy as sub-
contractor of the projectsfor f
inancial assistance and the profits shall be divided equally between them; the
resulting partnership is “UP ConstructionCompany”.
The partners agreed to contribute P50, 000 each as capital. However, Puzon failed
to pay but promised to contribute hisshare as soon as his application of loan with
the PNB shall be approved. Uy gave Puzon advance contribution of his share
inpartnership for Puzon top pay his obligations with PNB.Uy was entrusted with
the management of the project since Puzon is busy with his other projects;
whatever expense Uy
may incur shall be considered part of his contribution. Upon approval of Puzon’s
loan with t
he PNB, he gave Uy P60, 000 for
reimbursement of Uy’s contribution and Puzon’s contribution to the partnership
capital.
To guarantee the payment of the loan,Puzon assigned to PNB all payments to be
received on account of the contracts with the Bureau of Public Highways for
theconstruction; this was done without the knowledge and consent of Uy.Financial
demands of the project increased, thus, Uy called on Puzon to place his capital
contribution; Puzon failed to do
so. Uy thereafter sent letters of demand to which Puzon replied that he’s not
capable of putting additional capital.
Puzon wroteUP Construction Company terminating their subcontract
agreement.Uy was then not allowed in the office of UP Construction Company and
his authority to deal with BPH was revoked. Hence,he instituted an action against
Puzon seeking the dissolution of the partnership and payment of damages for the
violation ofthe latter of the terms of their partnership agreement.RTC found that
Puzon failed to contribute his share in the capital of the partnership and caused
the failure of partnershipto realize expected profits. The court ordered the
dissolution of the partnership and Puzon to pay Uy a certain sum. FrancoPuzon
substituted Bartolome Puzon on the appeal of the case before the Supreme Court.

ISSUE/S:
W/N the amount of money ordered by the trial court for the failure to contribute
his share in the capital of thepartnership is proper.
RULING:

The award of P200,000.00 as his share in the unrealized profits of the partnership
is proper. Under Article 2200 of the CivilCode, indemnification for damages shall
comprehend not only the value of the loss suffered, but also that of the profits
whichthe obligee failed to obtain. In other words lucrum cessans is also a basis for
indemnification. There is no doubt Uy failed tomake profits because of Puzon's
breach of contract. The partnership showed some profits even though the profit
and lossstatement showed net loss; it may be due to error in accounting.Had the
appellant not been remiss in his obligations as partner and as prime contractor of
the construction projects inquestion as he was bound to perform pursuant to the
partnership and subcontract agreements, and considering the fact thatthe total
contract amount of these two projects is P2,327,335.76, it is reasonable to expect
that the partnership would haveearned much more than the P334,255.61 We have
hereinabove indicated. The award, therefore, made by the trial court of
theamount of P200,000.00, as compensatory damages, is not speculative, but
based on reasonable estimate.
As cited in
Moran vs. CA
:
The rule is, when a partner who has undertaken to contribute a sum of money
fails to do so, he becomes a debtor of the partnershipfor whatever he may have
promised to contribute (Art. 1786, Civil Code) and for interests and damages from the time he
should havecomplied with his obligation (Art. 1788, Civil Code). Thus in
Uy v. Puzo
n (79 SCRA 598), which interpreted Art. 2200 of the Civil Code of thePhilippines, we
allowed a total of P200,000.00 compensatory damages in favor of the appellee
because the appellant therein was remiss inhis obligations as a partner and as
prime contractor of the construction projects in question. This case was decided
on a particular set offacts. We awarded compensatory damages in the
Uy
case because there was a finding that the constructing business is a profitable oneand that
the UP construction company derived some profits from its contractors in the
construction of roads and bridges despite its
deficient capital.” Besides, there was evidence to show that the partnership made
some profits during the periods from July 2
, 1956 toDecember 31, 1957 and from January 1, 1958 up to September 30, 1959. The
profits on two government contracts worth P2,327,335.76were not speculative. In the
instant case, there is no evidence whatsoever that the partnership between the
petitioner and the privaterespondent would have been a profitable venture. In
fact, it was a failure doomed from the start. There is therefore no basis for the
awardof speculative damages in favor of the private respondent.Furthermore,
in the
Uy
case, only Puzon failed to give his full contribution while Uy

contributed much more than what was expectedof him.

United States vs Eusebio Clarin

7 Phil 504 – Business Organization – Partnership, Agency, Trust – Co-Partner’s Liability –
Misappropriation

Sometime before 1910, Pedro Larin formed a partnership with Pedro Tarug, Eusebio
Clarin and Carlos de Guzman. Larin, being the capitalist, agreed to contribute P172.00
to the partnership and the three others shall use said fund to trade mangoes. The three
industrial partners bought mangoes and sell them and they earned P203.00 but they
failed to give Larin’s share of the profits. Larin charged them with the crime of estafa,
but the provincial fiscal filed an information only against Eusebio Clarin in which he
accused him of appropriating to himself not only the P172 but also the share of the
profits that belonged to Larin, amounting to P15.50. Clarin was eventually convicted.
ISSUE: Whether or not the conviction is correct.
HELD: No. The P172.00 having been received by the partnership, the business
commenced and profits accrued, the action that lies with the partner who furnished the
capital for the recovery of his money is not a criminal action for estafa, but a civil one
arising from the partnership contract for a liquidation of the partnership and a levy on
its assets if there should be any.
The then Penal Code provides that those who are guilty of estafa are those “who, to the
prejudice of another, shall appropriate or misapply any money, goods, or any kind of
personal property which they may have received as a deposit on commission for
administration or in any other producing the obligation to deliver or return the same,”
(as, for example, in commodatum, precarium, and other unilateral contracts which
require the return of the same thing received) does not include money received for a
partnership; otherwise the result would be that, if the partnership, instead of obtaining
profits, suffered losses, as it could not be held liable civilly for the share of the capitalist
partner who reserved the ownership of the money brought in by him, it would have to
answer to the charge of estafa, for which it would be sufficient to argue that the
partnership had received the money under obligation to return it.

RAMNANI v. CA
RAMNANI v. CA
196 scra 731; May 7, 1991
Ponente: J. Gancayco

FACTS:

Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the
full blood. Ishwar and his spouse Sonya had their main business based in New York. Realizing
the difficulty of managing their investments in the Philippines they executed a general power
of attorney on January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact,
empowering them to manage and conduct their business concern in the Philippines
 On February 1, 1966 and on May 16, 1966, Choithram entered into two agreements
for the purchase of two parcels of land located in Barrio Ugong, Pasig, Rizal, from Ortigas &
Company, Ltd. Partnership. A building was constructed thereon by Choithram in 1966. Three
other buildings were built thereon by Choithram through a loan of P100,000.00 obtained from
the Merchants Bank as well as the income derived from the first building.

Sometime in 1970 Ishwar asked Choithram to account for the income and expenses
relative to these properties during the period 1967 to 1970. Choithram failed and refused to
render such accounting. Thereafter, Ishwar revoked the general power of attorney.
Choithram and Ortigas were duly notified of such revocation on April 1, 1971 and May 24,
1971, respectively. Said notice was also registered with the Securities and Exchange
Commission on March 29, 1971 and was published in the April 2, 1971 issue of The Manila
Times for the information of the general public.

Nevertheless, Choithram, transferred all rights and interests of Ishwar and Sonya in
favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973.

On October 6, 1982, Ishwar and Sonya filed a complaint against Choitram and/or
spouses Nirmla and Moti and Ortigas for reconveyance of said properties or payment of its
value and damages.

ISSUE:

Whether Ishram can recover the entire properties subject in the ligitation

HELD:

No, Ishram cannot recover the entire properties subject.

The Supreme Court held that despite the fact that Choithram, et al., have committed
acts which demonstrate their bad faith and scheme to defraud spouses Ishwar and Sonya of
their rightful share in the properties in litigation, the Court cannot ignore the fact that
Choithram must have been motivated by a strong conviction that as the industrial partner in
the acquisition of said assets he has as much claim to said properties as Ishwar, the capitalist
partner in the joint venture.

Choithram in turn decided to invest in the real estate business. He bought the two (2)
parcels of land in question from Ortigas as attorney-in-fact of Ishwar. Instead of paying for
the lots in cash, he paid in installments and used the balance of the capital entrusted to him,
plus a loan, to build two buildings. Although the buildings were burned later, Choithram was
able to build two other buildings on the property. He rented them out and collected the
rentals. Through the industry and genius of Choithram, Ishwar's property was developed and
improved into what it is now.

Justice and equity dictate that the two share equally the fruit of their joint investment
and efforts. Perhaps this Solomonic solution may pave the way towards their reconciliation.
Both would stand to gain. No one would end up the loser. After all, blood is thicker than
water.

G.R. No. L-5236 January 10, 1910

PEDRO MARTINEZ, plaintiff-appellee,

vs.
ONG PONG CO and ONG LAY, defendants.
ONG PONG CO., appellant.

Fernando de la Cantera for appellant.

O'Brien and DeWitt for appellee.

ARELLANO, C.J.:

On the 12th of December, 1900, the plaintiff herein delivered P1,500 to the defendants who, in a private
document, acknowledged that they had received the same with the agreement, as stated by them, "that we
are to invest the amount in a store, the profits or losses of which we are to divide with the former, in equal
shares."

The plaintiff filed a complaint on April 25, 1907, in order to compel the defendants to render him an
accounting of the partnership as agreed to, or else to refund him the P1,500 that he had given them for the
said purpose. Ong Pong Co alone appeared to answer the complaint; he admitted the fact of the
agreement and the delivery to him and to Ong Lay of the P1,500 for the purpose aforesaid, but he alleged
that Ong Lay, who was then deceased, was the one who had managed the business, and that nothing had
resulted therefrom save the loss of the capital of P1,500, to which loss the plaintiff agreed.

The judge of the Court of First Instance of the city of Manila who tried the case ordered Ong Pong Co to
return to the plaintiff one-half of the said capital of P1,500 which, together with Ong Lay, he had received
from the plaintiff, to wit, P750, plus P90 as one-half of the profits, calculated at the rate of 12 per cent per
annum for the six months that the store was supposed to have been open, both sums in Philippine
currency, making a total of P840, with legal interest thereon at the rate of 6 per cent per annum, from the
12th of June, 1901, when the business terminated and on which date he ought to have returned the said
amount to the plaintiff, until the full payment thereof with costs.

From this judgment Ong Pong Co appealed to this court, and assigned the following errors:

1. For not having taken into consideration the fact that the reason for the closing of the store was
the ejectment from the premises occupied by it.

2. For not having considered the fact that there were losses.

3. For holding that there should have been profits.

4. For having applied article 1138 of the Civil Code.

5. and 6. For holding that the capital ought to have yielded profits, and that the latter should be
calculated 12 per cent per annum; and

7. The findings of the ejectment.

As to the first assignment of error, the fact that the store was closed by virtue of ejectment proceedings is of
no importance for the effects of the suit. The whole action is based upon the fact that the defendants
received certain capital from the plaintiff for the purpose of organizing a company; they, according to the
agreement, were to handle the said money and invest it in a store which was the object of the association;
they, in the absence of a special agreement vesting in one sole person the management of the business,
were the actual administrators thereof; as such administrators they were the agent of the company and
incurred the liabilities peculiar to every agent, among which is that of rendering account to the principal of
their transactions, and paying him everything they may have received by virtue of the mandatum. (Arts.
1695 and 1720, Civil Code.) Neither of them has rendered such account nor proven the losses referred to
by Ong Pong Co; they are therefore obliged to refund the money that they received for the purpose of
establishing the said store — the object of the association. This was the principal pronouncement of the
judgment.

With regard to the second and third assignments of error, this court, like the court below, finds no evidence
that the entire capital or any part thereof was lost. It is no evidence of such loss to aver, without proof, that
the effects of the store were ejected. Even though this were proven, it could not be inferred therefrom that
the ejectment was due to the fact that no rents were paid, and that the rent was not paid on account of the
loss of the capital belonging to the enterprise.

With regard to the possible profits, the finding of the court below are based on the statements of the
defendant Ong Pong Co, to the effect that "there were some profits, but not large ones." This court,
however, does not find that the amount thereof has been proven, nor deem it possible to estimate them to
be a certain sum, and for a given period of time; hence, it can not admit the estimate, made in the
judgment, of 12 per cent per annum for the period of six months.

Inasmuch as in this case nothing appears other than the failure to fulfill an obligation on the part of a
partner who acted as agent in receiving money for a given purpose, for which he has rendered no
accounting, such agent is responsible only for the losses which, by a violation of the provisions of the law,
he incurred. This being an obligation to pay in cash, there are no other losses than the legal interest, which
interest is not due except from the time of the judicial demand, or, in the present case, from the filing of the
complaint. (Arts. 1108 and 1100, Civil Code.) We do not consider that article 1688 is applicable in this case,
in so far as it provides "that the partnership is liable to every partner for the amounts he may have
disbursed on account of the same and for the proper interest," for the reason that no other money than that
contributed as is involved.

As in the partnership there were two administrators or agents liable for the above-named amount, article
1138 of the Civil Code has been invoked; this latter deals with debts of a partnership where the obligation is
not a joint one, as is likewise provided by article 1723 of said code with respect to the liability of two or
more agents with respect to the return of the money that they received from their principal. Therefore, the
other errors assigned have not been committed.

In view of the foregoing judgment appealed from is hereby affirmed, provided, however, that the defendant
Ong Pong Co shall only pay the plaintiff the sum of P750 with the legal interest thereon at the rate of 6 per
cent per annum from the time of the filing of the complaint, and the costs, without special ruling as to the
costs of this instance. So ordered.

Isabelo Moran vs Court of Appeals

Business Organization – Partnership, Agency, Trust – Profit and Loss Sharing –
Speculative Damages

In February 1971, Isabelo Moran and Mariano Pecson entered into a partnership
agreement where they agreed to contribute P15k each for the purpose of printing 95k
posters of the delegates to the then 1971 Constitutional Commission. Moran shall be in
charge in managing the printing of the posters. It was further agreed that Pecson will
receive a commission of P1k a month starting from April 1971 to December 1971; that
the partnership is to be liquidated on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor
of the partnership. He gave the P10k to Moran as the managing partner. Moran
however did not add anything and, instead, he only used P4k out of the P10k in printing
2,000 posters. He only printed 2,000 posters because he felt that printing all 95k
posters is a losing venture because of the delay by the COMELEC in announcing the full
delegates. All the posters were sold for a total of P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of
Appeals affirmed the decision of the trial court but modified the same as it ordered
Moran to pay P47.5k for unrealized profit; P8k for Pecson’s monthly commissions; P7k
as return of investment because the venture never took off; plus interest.
ISSUE: Whether or not the CA judgment is correct.
HELD: No. The award of P47.5k for unrealized profit is speculative. There is no
evidence whatsoever that the partnership between the Moran and Pecson would have
been a profitable venture (because base on the circumstances then i.e. the delay of the
COMELEC in proclaiming the candidates, profit is highly unlikely). In fact, it was a failure
doomed from the start. There is therefore no basis for the award of speculative
damages in favor of Pecson. Further, there is mutual breach in this case, Pecson only
gave P10k instead of P15k while Moran gave nothing at all.
As for the P8k monthly commission, this is without basis. The agreement does not state
the basis of the commission. The payment of the commission could only have been
predicated on relatively extravagant profits. The parties could not have intended the
giving of a commission inspite of loss or failure of the venture. Since the venture was a
failure, Pecson is not entitled to the P8k commission.
As for the P7k award as return for Pecson’s investment, the CA erred in his ruling too.
Though the venture failed, it did took off the ground as evidenced by the 2,000 posters
printed. Hence, return of investment is not proper in this case. There are risks in any
business venture and the failure of the undertaking cannot entirely be blamed on the
managing partner alone, specially if the latter exercised his best business judgment,
which seems to be true in this case.
Moran must however return the unused P6k of Pecson’s contribution to the partnership
plus P3k representing Pecson’s profit share in the sale of the printed posters.
Computation of P3k profit share is as follows: (P10k profit from the sale of the 2,000
posters printed) – (P4k expense in printing the 2k posters) = (P6k profit); Profit ÷ 2 =
P3k each.

TEAGUE V. MARTIN
•
De COURCY, J.

The plaintiff, while riding a bicycle in Powder House Square, Somerville,

was struck by a motor truck owned by both defendants as copartners,
and driven at the time by the defendant Clark. No dispute arises as to
the plaintiff's due care or Clark's negligence. The question of Martin's
liability is raised by his exceptions to the judge's refusal to give the
rulings requested by him numbered one, two, three and ten.
There was evidence which warranted the submission of that issue to the
jury. The truck was owned by the partners, used for partnership business,
registered in the firm name, and had "Martin Clark" inscribed thereon.
One of the partners was operating it at the time of the accident. All of
the business of the firm on that day consisted of two roofing jobs in
Watertown and Newton, and a gang of six men had been sent to do the
work under the exclusive direction of a foreman. The defendant Martin
was in New Hampshire on his vacation. Clark, who never had used the
truck except on firm business, on his own testimony had been out with it
for more than two hours, and was returning to his place of business from
the direction of Newton when the collision occurred. There was testimony
that there were kegs in the truck at the time. The jury well might
discredit his statement that he was using this business truck solely for
pleasure driving, and had driven only six or seven miles; and could infer
from the facts in evidence that he was returning from an inspection of
one or both of the partnership jobs, made in the absence of his
copartner. Heywood v. Ogasapian, 224 Mass. 203. These four requests
were denied rightly.
The fourth request was: "If the defendant Clark without the knowledge or
consent of the defendant Martin, took the auto truck and went for a ride
on his own personal account and in no way on account of the business of
the firm, and while so engaged collided with the plaintiff's bicycle, the
defendant Martin will not be liable." The judge gave this, but added,
against the objection of the defendant, "unless he had authorized such
use for general purposes of pleasure." Martin's exception to this
modification of his request was well taken. He would be liable for a tort
committed by Clark in the course and within the scope of the business of
the firm. This is on the principle that partners are the general agents of
each other while so transacting the partnership
business. Moreton v. Hardern, 4 B. C. 223; S.C. 6 Dowl. Ry.
275. Linton v. Hurley, 14 Gray, 191. Fennell v. Peterson, 225 Mass. 598.
But in committing a tortious act which is outside of the agency or common business a partner acts only
1
for himself, and he alone is responsible for the consequences. And the mere fact that an agent, while
using the motor car of his principal for his own pleasure, is doing so with the permission of said owner,
does not make that owner liable for the wrongful acts committed by the agent. A loan of the machine
does not carry with it a responsibility for the negligent conduct of the borrower. Herlihyv. Smith, 116
Mass. 265. Marsal v. Hickey, 225 Mass. 170. See Reynolds v. Denholm, 213 Mass. 576.

We cannot say that the error in thus modifying the fourth request was a
harmless one. It permitted the jury to find Martin responsible for Clark's
negligent operation of the car, even if they credited Clark's story that he
was indulging in a pleasure drive and was using the truck for a purpose
in which his copartner had no interest. This exception must be sustained,
and it is
So ordered.
Bachrach v La Protectora
Facts:
Nicolas Segundo, Antonio Adiarte, Ignacio Flores and Modesto Serrano (defendants) formed a civil partnership
called “La Protectora” for the purpose of engaging in the business of transporting passengers and freight at Laoag,
Ilocos Norte. Marcelo Barba, acting as manager, negotiated for the purchase of 2 automobile trucks from E. M.
Bachrach for P16,500. Barba paid P3,000 in cash and for the balance executed promissory notes.
One of these promissory notes was signed in the following manner:
“P.P La Protectora, By Marcelo Barba Marcelo Barba”
The other 2 notes were signed in the same way but the word “by” was omitted. It was obvious that in signing the
notes, Barba intended to bind both the partnership and himself.
The defendants executed a document in which they declared that they were members of La Protectora and that
they had granted to its president full authority to contract for the purchase of the 2 automobiles. The document was
delivered by Barba to Bachrach at the time the vehicles were purchased.
Barba incurred a debt amounting to P2,617.57 and Bachrach foreclosed a chattel mortgage on the trucks but there
was still balance. To recover the balance, action was instituted against the defendants. Judgment was rendered
against the defendants.

Issue:
a.Whether or not the defendants are liable for the firm debts.
b.Whether or not Barba had authority to incur expenses for the partnership (relevant issue)

Held:
a.Yes. Promissory notes constitute the obligation exclusively of La Protectora and Barba. They do not constitute an
obligation directly binding the defendants. Their liability is based on the principles of partnership liability. A member
is not liable in solidum with his fellows for the entire indebtedness but is liable with them or his aliquot part.
SC obiter: the document was intended merely as an authority to enable Barba to bind the partnership and that the
parties to the instrument did not intend to confer upon Barba an authority to bind them personally.
b. Yes. Under Art 1804, every partner may associate another person with him in his share. All partners are
considered agents of the partnership. Barba must be held to have authority to incur these expenses. He is shown
to have been in fact the president/manager, and there can be no doubt that he had actual authority to incur
obligation.

Machuca v Chuidian (1903, Ladd)PARTIES:

Jose Machuca (Plaintiff-Appellee), Chuidian Buenaventura & Co. (Defendant-
Appellant)
Partners:
D. Telesforo Chuidian, Doña Raymunda Chuidian, Doña Candelaria Chuidian, andD.
Mariano Buenaventura
DOCTRINE:
The assignment by its terms is not to take effect until all the liabilities
of the partnershiphave been discharged and nothing remains to be done
except to distribute the assets, if there should be any, among the
partners. Meanwhile the assignor is to continue in the enjoyment of the
rights and is to remain subject to the liabilities of a partner as though
noassignment had been made. The assignment does not purport to transfer an
interest in thepartnership, but only a future contingent right to such portion of the
ultimate residue of
thep a r t n e r s h i p p r o p e r t y a s t h e a s s i g n o r m a y b e c o m e e n t i t l e d t o re
c e i v e b y v i r t u e o f h i s proportionate interest in the capital.
FACTS:

•
C h u i d i a n B u e n a v e n t u r a & C o. i s re g u l a r g e n e r a l p a r t n e r s h i p , o r g a
n i z e d i n M a n i l a , December 29, 1882, as a continuation of a prior
partnership of the same name. The original partners constituting the
partnership of 1882 were D. Telesforo Chuidian, DoñaRaymunda Chuidian, Doña
Candelaria Chuidian, and
D. Mariano Buenaventura
.
•
Doña Raymunda Chuidian retired from the partnership November 4, 1885. On
January 1,1888, the partnership went into liquidation, and it
does not appear that the liquidationhad been terminated when this action
was brought.
•
On January 1, 1894, D. Mariano Buenaventura died, his estate passing by
will to hischildren, among whom was
D. Vicente Buenaventura
. Upon the partition of the estatethe amount of the interest of D. Vicente
Buenaventura in his father's account-current and in the capital was
ascertained and recorded in the books of the firm.
•
On December 15, 1898, D. Vicente Buenaventura executed a public instrument in
whichfor a valuable consideration he "assigns to
D. Jose Gervasio Garcia
. . . a 25 per centshare in all that may be obtained by whatever right in
whatever form from the liquidationof the partnership of Chuidian, Buenaventura &
Co., in the part pertaining to him in saidpartnership
•
A s u b s e q u e n t a s s i g n m e n t w a s m a d e b y D . J o s e G e r v a s i o G a rc i a
in favour of
JoseMachuca
( P l a i n t i ff - A p p e l l e e ) , w h i c h h a s b e e n n o t i fi e d t o t h e
l i q u i d a t o r o f t h e partnership.
•
 Trial Court – Brought by Jose Machuca against Chuidian Buenaventura & Co..
Action wasfor specifi c performance to compel the liquidator of the
partnership to record in thebooks Machuca’s claim under the assignment
as a credit due, and the he further asks that he be adjudicated to be a
creditor of the partnership in an amount equal to 25
perc e n t o f D . Vi c e n t e B u e n a v e n t u r a ' s s h a re i n h i s f a t h e r ' s a c c o u n t -
c u rr e n t . T h a t t h e necessary liquidation being fi rst had, the partnership
pay to the plaintiff the balancewhich may be found to be due him; and that if
the partnership has no funds with whichto discharge this obligation an
adjudication of bankruptcy be made. He also asks to recover the damages
caused by reason of the failure of the liq
.) DAN FUE LEUNG,
petitioner, vs.
HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU,
respondents.
G.R. No. 70926 January 31, 1989GUTIERREZ,
JR., J.:
FACTS:
The petitioner asks for the reversal of the decision of the then Intermediate
Appellate Court in AC-G.R. No. CV-00881 whichaffirmed the decision of the then
Court of First Instance of Manila, Branch II in Civil Case No. 116725 declaring
privaterespondent Leung Yiu a partner of petitioner Dan Fue Leung in the business
of Sun Wah Panciteria and ordering thepetitioner to pay to the private respondent
his share in the annual profits of the said restaurant.This case originated from a
complaint filed by respondent Leung Yiu with the then Court of First Instance of
Manila, BranchII to recover the sum equivalent to twenty-two percent (22%) of the
annual profits derived from the operation of Sun WahPanciteria since October,
1955 from petitioner Dan Fue Leung.The Sun Wah Panciteria, a restaurant, located
at Florentino Torres Street, Sta. Cruz, Manila, was established sometime
inOctober, 1955. It was registered as a single proprietorship and its licenses and
permits were issued to and in favor of petitioner Dan Fue Leung as the sole
proprietor. Respondent Leung Yiu adduced evidence during the trial of the case
toshow that Sun Wah Panciteria was actually a partnership and that he was one of
the partners having contributed P4,000.00to its initial establishment.The private
respondents evidence is summarized as follows:About the time the Sun Wah
Panciteria started to become operational, the private respondent gave P4,000.00
as hiscontribution to the partnership. This is evidenced by a receipt wherein the
petitioner acknowledged his acceptance of theP4,000.00 by affixing his signature
thereto. Furthermore, the private respondent received from the petitioner the
amount of P12,000.00 covered by the latter's Equitable Banking Corporation
Check from the profits of the operation of the restaurantfor the year 1974The
petitioner denied having received from the private respondent the amount of
P4,000.00. He contested and impugnedthe genuineness of the receipt. His
evidence is summarized as follows:The petitioner did not receive any contribution
at the time he started the Sun Wah Panciteria. He used his savings from
hissalaries as an employee at Camp Stotsenberg in Clark Field and later as waiter
at the Toho Restaurant amounting to a littlemore than P2,000.00 as capital in
establishing Sun Wah Panciteria. Petitioner presented various government licenses
andpermits showing the Sun Wah Panciteria was and still is a single proprietorship
solely owned and operated by himself alone.Fue Leung also flatly denied having
issued to the private respondent the receipt (Exhibit G) and the Equitable
BankingCorporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit
B).

ISSUE: WON Private respondent is a partner of the petitioner in Sun Wah

Panciteria?

HELD:
The private respondent is a partner of the petitioner in Sun Wah Panciteria. The
requisites of a partnership which are  1)two or more persons bind themselves to
contribute money, property, or industry to a common fund; and 2) intention on
thepart of the partners to divide the profits among themselves (Article 1767, Civil
Code; Yulo v. Yang Chiao Cheng, 106 Phil.110)-have been established. As stated
by the respondent, a partner shares not only in profits but also in the losses of
thefirm. If excellent relations exist among the partners at the start of business and
all the partners are more interested in seeingthe firm grow rather than get
immediate returns, a deferment of sharing in the profits is perfectly plausible. It
would beincorrect to state that if a partner does not assert his rights anytime
within ten years from the start of operations, such rightsare irretrievably lost. The
private respondent's cause of action is premised upon the failure of the petitioner
to give him theagreed profits in the operation of Sun Wah Panciteria. In effect the
private respondent was asking for an accounting of hisinterests in the partnership.

G.R. No. 1011 May 13, 1903

JOSE MACHUCA, plaintiff-appellee,

vs.
CHUIDIAN, BUENAVENTURA & CO., defendants-appellants.

Simplicio del Rosario for appellants.

Joaquin Rodriguez Serra for appellee.

LADD, J.:

Most of the allegations of the complaint were admitted by the defendant at the hearing, and the judgment of
the court below is based on the state of facts appearing from such admissions, no evidence having been
taken.

The defendants are a regular general partnership, organized in Manila, December 29, 1882, as a
continuation of a prior partnership of the same name. The original partners constituting the partnership of
1882 were D. Telesforo Chuidian, Doña Raymunda Chuidian, Doña Candelaria Chuidian, and D. Mariano
Buenaventura. The capital was fixed in the partnership agreement at 16,000 pesos, of which the first three
partners named contributed 50,000 pesos each, and the last named 10,000 pesos, and it was stipulated
that the liability of the partners should be "limited to the amounts brought in by them to form the partnership
stock."

In addition to the amounts contributed by the partners to the capital, it appears from the partnership
agreement that each one of them had advanced money to the preexisting partnership, which advances
were assumed or accounts-current aggregated something over 665,000 pesos, of which sum about
569,000 pesos represented the advances from the Chuidians and the balance that balance that from D.
Mariano Buenaventura.

Doña Raymunda Chuidian retired from the partnership November 4, 1885. On January 1, 1888, the
partnership went into liquidation, and it does not appear that the liquidation had been terminated when this
action was brought.

Down to the time the partnership went into liquidation the accounts-current of D. Telesforo Chuidian and
Doña Candelaria Chuidian had been diminished in an amount aggregating about 288,000 pesos, while that
of D. Mariano Buenaventura had been increased about 51,000 pesos. During the period from the
commencement of the liquidation down to January 1, 1896, the account-current of each of the Chuidians
had been still further decreased, while that of D. Mariano Buenaventura had been still further increased.

On January 1, 1894, D. Mariano Buenaventura died, his estate passing by will to his children, among whom
was D. Vicente Buenaventura. Upon the partition of the estate the amount of the interest of D. Vicente
Buenaventura in his father's account-current and in the capital was ascertained and recorded in the books
of the firm.

On December 15, 1898, D. Vicente Buenaventura executed a public instrument in which for a valuable
consideration he "assigns to D. Jose Gervasio Garcia . . . a 25 per cent share in all that may be obtained
by whatever right in whatever form from the liquidation of the partnership of Chuidian, Buenaventura & Co.,
in the part pertaining to him in said partnership, . . . the assignee, being expressly empowered to do in his
own name, and as a part owner, by virtue of this assignment in the assets of the partnership, whatever
things may be necessary for the purpose of accelerating the liquidation, and of obtaining on judicially or
extrajudicially the payment of the deposits account-current pertaining to the assignor, it being understood
that D. Jose Gervasio Garcia is to receive the 25 per cent assigned to him, in the same form in which it
may be obtained from said partnership, whether in cash, credits, goods, movables or immovables, and on
the date when Messrs. Chuidian, Buenaventura & Co., in liquidation, shall have effected the operations
necessary in order to satisfy the credits and the share in the partnership capital hereinbefore mentioned."

The plaintiff claims under Garcia by virtue of a subsequent assignment, which has been notified to the
liquidator of the partnership.

The liquidator of the partnership having declined to record in the books of the partnership the plaintiff's
claim under the assignment as a credit due from the concern to him this action is brought to compel such
record to be made, and the plaintiff further asks that he be adjudicated to be a creditor of the partnership in
an amount equal to 25 per cent of D. Vicente Buenaventura's share in his father's account-current, as
ascertained when the record was made in the books of the partnership upon the partition of the latters
estate, with interest, less the liability to which the plaintiff is subject by reason of his share in the capital;
that the necessary liquidation being first had, the partnership pay to the plaintiff the balance which may be
found to be due him; and that if the partnership has no funds with which to discharge this obligation an
adjudication of bankruptcy be made. He also asks to recover the damages caused by reason of the failure
of the liquidator to record his credit in the books of partnership.

The judgment of the court below goes beyond the relief asked by the plaintiff in the complaint, the plaintiff
being held entitled not only to have the credit assigned him recorded in the books of the partnership but
also to receive forthwith 25 per cent of an amount representing the share of D. Vicente Buenaventura in the
account-current at the time of the partition of his father's estate, with interest, the payment of the 25 percent
of Buenaventura's share in the capital to be postponed till the termination of the liquidation. This point has
not, however, been taken by counsel, and we have therefore considered the case upon its merits.

The underlying question in the case relates to the construction of clause 19 of the partnership agreement,
by which it was stipulated that "upon the dissolution of the company, the pending obligations in favor of
outside parties should be satisfied, the funds of the minors Jose and Francisco Chuidian [it does not
appear what their interest in the partnership was or when or how it was acquired] should be taken out, and
afterwards the resulting balance of the account-current of each one of those who had put in money
(imponentes) should be paid."

Our construction of this clause is that it establishes a a basis for the final adjustment of the affairs of the
partnership; that that basis is that the liabilities to noncompartners are to be first discharged; that the claims
of the Chuidian minors are to be next satisfied; and that what is due to the respective partners on account
of their advances to the firm is to be paid last of all, leaving the ultimate residue, of course, if there be any,
to be distributed, among the partners in the proportions in which they may be entitled thereto.

Although in a sense the partners, being at the same time creditors, were "outside parties," it is clear that a
distinction is made in this clause between creditors who were partners and creditors who were not partners,
and that the expression "outside parties" refers to the latter class. And the words "pending obligations," we
think, clearly comprehend outstanding obligations of every kind in favor of such outside parties, and do not
refer merely, as claimed by counsel for the plaintiff, to the completion of mercantile operations unfinished at
the time of the dissolution of the partnership, such as consignments of goods and the like. As respects the
claims of the Chuidian minors, the suggestion of counsel is that the clause in question means that their
accounts are to be adjusted before those of the partners but not paid first. Such a provision would have
been of no practical utility, and the language used — that the funds should be "taken out" — (se dedujeran)
does not admit of such a construction.

Such being the basis upon which by agreement of the partners the assets of the partnership are to be
applied to the discharge of the various classes of the firm's liabilities, it follows that D. Vicente
Buenaventura, whose rights are those of his father, is in no case entitled to receive any part of the assets
until the creditors who are nonpartners and the Chuidian minors are paid. Whatever rights he had either
as creditor or partner, he could only transfer subject to this condition. And it is clear, from the language
of the instrument under which the plaintiff claims, that this conditional interest was all that D. Vicente
Buenaventura ever intended to transfer. By that instrument he undertakes to assign to Garcia not a
present interest in the assets of the partnership but an interest in whatever "may be obtained from the
liquidation of the partnership," which Garcia is to receive "in the same form in which it may be
obtained from said partnership," and "on the date when Messrs. Chuidian, Buenaventura & Co., in
liquidation, shall have effected the operations necessary in order to satisfy" the claims of D. Vicente
Buenaventura.
Upon this interpretation of the assignment, it becomes unnecessary to inquire whether article 143 of the
Code of Commerce, prohibiting a partner from transferring his interest in the partnership without the
consent of the other partners, applies to partnerships in liquidation, as contended by the defendant. The
assignment by its terms is not to take effect until all the liabilities of the partnership have been discharged
and nothing remains to be done except to distribute the assets, if there should be any, among the partners.
Meanwhile the assignor, Buenaventura, is to continue in the enjoyment of the rights and is to remain
subject to the liabilities of a partner as though no assignment had been made. In other words, the
assignment does not purport to transfer an interest in the partnership, but only a future contingent right to
25 per cent of such portion of the ultimate residue of the partnership property as the assignor may become
entitled to receive by virtue of his proportionate interest in the capital.
There is nothing in the case to show either that the nonpartner creditors of the partnership have been paid
or that the claims of the Chuidian minors have been satisfied. Such rights as the plaintiff has acquired
against the partnership under the assignment still remain, therefore, subject to the condition which attached
to them in their origin, a condition wholly uncertain of realization, since it may be that the entire assets of
the partnership will be exhausted in the payment of the creditors entitled to preference under the
partnership agreement, thus extinguishing the plaintiff's right to receive anything from the liquidation.

It is contended by the plaintiff that, as the partnership was without authority to enter upon new mercantile
operations after the liquidation commenced, the increase in D. Mariano Buenaventura's account-current
during that period was the result of a void transaction, and that therefore the plaintiff is entitled to withdraw
at once the proportion of such increase to which he is entitled under the assignment. With reference to this
contention, it is sufficient to say that it nowhere appears in the case that the increase in D. Mariano
Buenaventura's account-current during the period of liquidation was the result of new advances to the firm,
and the figures would appear to indicate that it resulted from the accumulation of interest.

Counsel for the plaintiff have discussed at length in their brief the meaning of the clause in the partnership
agreement limiting the liability of the partners to the amounts respectively brought into the partnership by
them, and the effect of this stipulation upon their rights as creditors of the firm. These are questions which
relate to the final adjustment of the affairs of the firm, the distribution of the assets remaining after all
liabilities have been discharged, or, on the other hand, the apportionment of the losses if the assets should
not be sufficient to meet the liabilities. They are in no way involved in the determination of the present case.

The plaintiff having acquired no rights under the assignment which are now enforceable against the
defendant, this action can not be maintained. The liquidator of the defendant having been notified of the
assignment, the plaintiff will be entitled to receive from the assets of the partnership, if any remain, at the
termination of the liquidation, 25 per cent of D. Vicente's resulting interest, both as partner and creditor. The
judgment in this case should not affect the plaintiff's right to bring another action against the partnership
when the affairs of the same are finally wound up. The proper judgment will be that the action be
dismissed. The judgment of the court below is reversed and the case is remanded to that court with
directions to enter a judgment of dismissal. So ordered.

Arellano, C.J., Torres, Cooper, Willard and Mapa, JJ., concur.

McDonough, J., did not sit in this case.

Sison v. Helen McQuaid

December 29, 1953Principle: Liquidation shall happen before a partner may claim
his share of profit from the partnership.Facts:Plaintiff brought an action in the CFI
against defendant. Defendant borrowed from him money (P 2,210) to enable her
to payher obligations and to add to her capital in her lumber business. She could
not pay so she proposed to take plaintiff as apartner in her business, plaintiff to
contribute the P 2,210 due him from defendant.Before the last World War,
the partnership sold
230,000‐board
ft. of lumbe rto the US Army for P 13,800.00. Defendantrefused to deliver ½ of it
(P 6,900.00) to plaintiff despite his repeated demands. Plaintiff filed an action to
compel defendant topay him his half of the profit from the partnership.The case
was dismissed upon the ground of prescription.
Issue: Whether or not plaintiff is entitled to the sum he claims

Held:NO. Order of dismissal was affirmed, but on the ground that the
complaint states no cause of action.Ratio: It is not clear from the complaint just
when the cause of action accrued. Thus the dismissal of the case is
erroneous.However order should be retained on the ground that the complaint has
no cause of action. Plaintiff seeks to recover fromdefendant one-half of the
purchase price of lumber sold by the partnership to the United States Army. But
his complaint doesnot show why he should be entitled to the sum he claims. It
does not allege that there has been a liquidation of the partnershipbusiness and
the said sum has been found to be due him as his share of the profits. The
proceeds from the sale of a certainamount of lumber cannot be considered profits
until costs and expenses have been deducted. Moreover, the profits of
thebusiness cannot be determined by taking into account the result of one
particular transaction instead of all the transactionshad. Hence, the need for a
general liquidation before a member of a partnership may claim a specific sum as
his share of the profits.
G.R. No. L-47823 July 26, 1943
JOSE ORNUM and EMERENCIANA ORNUM, petitioners,
vs.
MARIANO, LASALA, et al., respondent.

Marcelino Lontok for petitioners.

Duran, Lim and Bausa and Augusto Francisco for respondents.

PARAS, J.:

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

Ganancia total desde el ultimo balance hasta la fecha

Participacion del capital de los hermanos Lasala en la ganancia

Participacion del capital de Jose Ornum en el ganancia

Participacion de Jose Ornum como socio industrial

Participacion del capital de Emerenciana Ornum en la ganancia

Participacion de Emerenciana Ornum como socia industrial

Siendo este el balance final lo siguiente es la cantidad que debe corresponder a cada socio:

Capital de los hermanos Lasala segun el ultimo balance

Ganancia de este capital

Pero se debe deducir la cantidad tomada por los hermanos Lasala

Cantidad nota que debe corresponder a los hermanos Lasala

Capital de Jose Ornum segun el ultimo balance

Ganancia de este capital

Participacion de Jose Ornum como socio industrial

Pero se debe deducir la cantidad tomada por Jose Ornum

Cantidad neta que debe corresponder a Jose Ornum

Capital de Emerenciana Ornum segun el ultimo balance

Ganancia de este capital

Participacion de Emerenciana Ornum como socia industrial

 Pero se debe deducir la cantidad tomada por Emerenciana Ornum

Cantidad neta que debe corresponder a Emerenciana Ornum

After the receipt of the foregoing statement of accounts, Father Mariano Lasala, spokesman for the
respondents, wrote the following letter to the petitioners on July 19, 1932:

Ya te manifestamos francamente aqui, como consocio, y te autorizamos tambien para que lo

repitas a tu hermana Mering, viuda, que el motivo porque recogemos el capital y utilidades de
nuestra sociedad en todo nuestro negocio que esta al cuidado vosotros dos, es que tenemos un
grande compromiso que casi no podemos evitarlo. Por esto volvemos a rogarles que por cualquier
medio antes de terminar este mes de julio, 1932, nosotros esperamos vuestra consideracion.
Gracias.

En cuanto hayamos recibido esto, entonces firmaremos el balance que habeis hecho alli, cuya
copia has dejado aqui.

Recuerdos a todos alli y mandar.

Pursuant to the request contained in this letter, the petitioners remitted and paid to the respondents the
total amount corresponding to them under the above-quoted statement of accounts which, however, was
not signed by the latter. Thereafter the complaint in this case was filed by the respondents, praying for an
accounting and final liquidation of the assets of the partnership. The Court of First Instance of Manila held
that the last and final statement of accounts prepared by the petitioners was tacitly approved and accepted
by the respondents who, by virtue of the above-quoted letter of Father Mariano Lasala, lost their right to a
further accounting from the moment they received and accepted their shares as itemized in said statement.
This judgment was reversed by the Court of Appeals principally on the ground that as the final statement of
accounts remains unsigned by the respondents, the same stands disapproved. The decision appealed by
the petitioners thus said:

To support a plea of a stated account so as to conclude the parties in relation to all dealings
between them, the accounting must be shown to have been final. (1 Cyc. 366.) All the first nine
statements which the defendants sent the plaintiffs were partial settlements, while the last, although
intended to be final, has not been signed.

We hold that the last and final statement of accounts hereinabove quoted, had been approved by the
respondents. This approval resulted, by virtue of the letter of Father Mariano Lasala of July 19, 1932,
quoted in part in the appealed decision from the failure of the respondents to object to the statement and
from their promise to sign the same as soon as they received their shares as shown in said statement. After
such shares had been paid by the petitioners and accepted by the respondents without any reservation,
the approval of the statement of accounts was virtually confirmed and its signing thereby became a mere
formality to be complied with by the respondents exclusively. Their refusal to sign, after receiving their
shares, amounted to a waiver to that formality in favor of the petitioners who has already performed their
obligation.

This approval precludes any right on the part of the respondents to a further liquidation, unless the latter
can show that there was fraud, deceit, error or mistake in said approval. (Pastor, vs. Nicasio, 6 Phil., 152;
Aldecoa & Co., vs.Warner, Barnes & Co., 16 Phil., 423; Gonsalez vs. Harty, 32 Phil. 328.) The Court of
Appeals did not make any findings that there was fraud, and on the matter of error or mistake it merely
said:
 The question, then is, have mistakes, been committed in the statements sent appellants? Not only
do plaintiffs so allege, and not only does not evidence so tend to prove, but the charge is seconded
by the defendants themselves when in their counterclaims they said:

"(a) Que recientemente se ha hecho una acabada revision de las cuentas y libros del negocio, y, se
ha descubierto que los demandados cometieron un error al hacer las entregas de las varias
cantidades en efectivo a los demandantes, entregando en total mayor cantidades a la que tenian
derecho estos por su participacion y ganancias en dicho negocio;

"(b) Que el exceso entregado a los demandantes, asciende a la suma de quinientos setenta y cinco
pesos con doce centimos (P575.12), y que los demandados reclaman ahora de aquellos su
devolucion o pago en la presente contrademanda;"

In our opinion, the pronouncement that the evidence tends to prove that there were mistakes in the
petitioners' statements of accounts, without specifying the mistakes, merely intimates as suspicion and is
not such a positive and unmistakable finding of fact (Cf. Concepcion vs. People, G.R. No. 48169,
promulgated December 28, 1942) as to justify a revision, especially because the Court of Appeals has
relied on the bare allegations of the parties, Even admitting that, as alleged by the petitioners in their
counterclaim, they overpaid the respondents in the sum of P575.12, this error is essentially fatal to the
latter's theory what the statement of accounts shows, and is therefore not the kind of error that calls for
another accounting which will serve the purpose of the respondent's suit. Moreover, as the petitioners did
not appeal from the decision of the Court abandoned such allegation in the Court of Appeals.

If the liquidation is ordered in the absence of any particular error, found as a fact, simply because no
damage will be suffered by the petitioners in case the latter's final statement of the accounts proves to be
correct, we shall be assuming a fundamentally inconsistent position. If there is not mistake, the only reason
for a new accounting disappears. The petitioners may not be prejudiced in the sense that they will be
required to pay anything to the respondents, but they will have to go to the trouble of itemizing accounts
covering a period of twenty years mostly from memory, its appearing that no regular books of accounts
were kept. Stated more emphatically, they will be told to do what seems to be hardly possible. When it is
borne in mind that this case has been pending for nearly nine years and that, if another accounting is
ordered, a costly action or proceeding may arise which may not be disposed of within a similar period, it is
not improbable that the intended relief may in fact be the respondents' funeral.

We are reversing the appealed decision on the legal ground that the petitioners' final statement of accounts
had been approved by the respondents and no justifiable reason (fraud, deceit, error or mistake) has been
positively and unmistakably found by the Court of Appeals so as to warrant the liquidations sought by the
respondents. In justice to the petitioners, however, we may add that, considering that they ran the business
of the partnership for about twenty years at a place far from the residence of the respondents and without
the latter's intervention; that the partners did not even know each other personally; that no formal
partnership agreement was entered into which bound the petitioners under specific conditions; that the
petitioners could have easily and freely alleged that the business became partial, or even a total, loss for
any plausible reason which they could have concocted, it appearing that the partnership engaged in such
uncertain ventures as agriculture, cattle raising and operation of rice mill, and the petitioners did not keep
any regular books of accounts; that the petitioners were still frank enough to disclose that the original
capital of P1,505.54 amounted, as of the date of the dissolution of the partnership, to P44,618.67; and that
the respondents had received a total of P8,105.76 out of their capital of P1,000, without any effort on their
part, we are reluctant even to make the conjecture that the petitioners had ever intended to, or actually did,
take undue advantage of the absence and confidence of the respondents. Indeed, we feel justified in
stating that the petitioners have here given a remarkable demonstration of the legendary honesty, good
faith and industry with which the natives of Taal pursue business arrangements similar to the partnership in
question, and we would hate, in the absence of any sufficient reason, to let such a beautiful legend have a
distateful ending.

The appealed decision is hereby reversed and the petitioners (defendants below) absolved from the
complaints of the respondents (plaintiffs below), with costs against the latter.

Yulo, C.J., and Hontiveros, J., concur.

Separate Opinions

OZAETA J., concurring:

Let us record here the mental processes by which I arrived at my vote for the reversal of the judgment of
the Court of Appeals.

After the respondents had announced their desire to withdraw from the "partnership," the petitioners
rendered a final statement of account dated May 27, 1932, which is set forth in the opinion written by Mr.
Justice Paras and which was accepted as correct by the respondents, who them asked from the payment
to them in cash of their participation in the capital and profits of the business as shown by said statement. It
must be borne in mind that the assets reflected in said statement of account did not consist of cash but of
merchandise, credits, land, large cattle, and a rice mill. To gratify the respondent wish the petitioners raised
money and paid respondents' total participation. After their interest and participation in the business had
thus been liquidated, the respondents, apparently believing that they might be entitled to more money than
they had accepted and received, sought to have the books and records examined by a representative of
theirs. The petitioners regarded such conduct of the respondents not only as a violation of their agreement
to consider the "partnership" dissolved upon the payment of respondents' participation therein but as an
unwarranted reflections upon their honesty and good faith. Hence they refused to allow the examination or
proposed reliquidation.

On November 20, 1933, the complaint in this case was filed by the respondents, praying for an accounting
and final liquidation of the assets of the "partnership." The trial lasted off and on from September 26, 1934,
to March 23, 1937, involving a transcript of 815 pages of oral testimony. The Court of First Instance of
Manila rendered its decision on December 29, 1937, in which it found that there was no proof whatever to
the effect that the defendants acted in bad faith in the preparation of the periodical statements of account
by not including merchandise or money to defraud the plaintiffs. Judge Rovira analyzed the main aspect of
the case as follows:

Pasado ahora a considerar la cuestion de las cuentas, los demandantes sostienen que los
demandados deben rendir nueva cuenta porque, segun ellos, estos, como socios industriales y
capitalistas, no podian incluir su participacion como capital, pues por este procedimiento los
demandantes fueron absorbidos y los demandados obtuvieron mayor participacion en las
ganancias.

Resulta de las pruebas que los demandados, al hacer cada balance, separaban la ganancia del
capital, asi como la ganancia que correspondia a los socios industriales, y despues la participacion
proporcional que corresponde al capital y la que los correspondia como socios industriales,
aumentando asi su capital en la sociedad. Esto mismo hacian en relacion con las gananciales del
capital de Pedro Lasala.

El primer balance sometido por los demandados a los demandantes, despues de la muerte de
Pedro Lasala esta fechado el 28 de diciembre de 1913, los demandantes no protestaron contra
este balance; al contrario, recibieron su participacion de P103, y no existe prueba alguna que
desvirtue la anotacion que aparece a pagina 4 del Exhibit S, de que Jose Ornum entrego esta
cantidad a los demandantes.

En los años subsiguientes, o sea en los años de 1914, 1915, 1917, 1919, 1920, 1922, 1924 y 1929
y ultimamente el año de 1932, los demandados han estado sometiendo los balances del negocio.

Contra ninguno de los balances presentados por los demandados se ha presentado protesta
alguna; al contrario, en 1929, cuando los demandantes deseaban separarse del negoci, Dionisia
Lasala escribio la carta Exhibit 1, en donde, entre otras, se hizo constar que el capital 'esta en
buenas manos, produce ganancias y ademas estoy contenta de los balances que me habeis
estado enviando.

Por otra parte, el mismo Mariano Lasala, en carta de fecha 19 de julio de 1932, Exhibit 2, dijo que
'en cuanto hayamos recibido todo (refiriendose indudablemente al capital y ganancia) entonces
firmaremos el balance que habeis hecho alli, cuya copia has dejado aqui.'

Si los demandantes no estaban conformes con el procedimiento adoptado por los demandados,
¿por que no protestaron desde el principio? Cuando los demandados les enviaban los balances,
era la oportunidad para ellos de expresar sus quejas o sus agravios, pero se callaron; expresaron
su conformidad, y ahora vienen a pedir otra nueva liquidacion.

Es mas; segun las pruebas despues del balance del año de 1932, los demandantes han enviado
cartas y telegramas pidiendo su participacion de acuerdo con dicho balance. Cayetano
Montenegro, por ordenes del demandado Jose Ornum, entrego a los demandantes las respectivas
cantidades que les correspondia, sin ninguna protesta. Segun el Exhibit 3, de fecha 20 de octubre
de 1932. Dionisia Lasala recibio de Jose Ornum P1,600, de los cuales P1,000 habian sido
recibidos por dicha Dionisia Lasala en 2 de junio del mismo año. Tambien Rafaela Lasala, por el
Exhibit 6, recibio de Jose Ornum, por conducto de Cipriano Montenegro, la cantidad de P368.47, y,
segun la nota que aparece al pie de dicho Exhibit 6, el resto de la deuda de P400 fue recibido por
Mariano Lasala segun los Exhibits 12, 13 y 14. Todo lo cual demuestra que los demandantes
estaban conformes con los balances presentados, incluyendo el ultimo balance del año de 1932.

El Juzgado es de opinio de que no procede ordenar a los demandados que presenten una nueva
liquidacion. Ademas, segun las pruebas los demandados no llevaban otros libros fuera de los
Exhibits S y T. Es verdad que la ley require que los demandados lleven algunos libros, y el
contador de los demandantes declaro que, por la falta de dichos libros, no ha podido verificar un
balance mas corecto, pues solo tuvo por base de la liquidacion presentada los libros presentados
como exhibits S y T. Las deficiencias notadas y las conclusiones de dicho contador no pueden, en
manera alguna, cambiar el aspecto de la cuestion.

No existe prueba alguna de que los demandados llevaban otros libros. Lo unico que se probo es
que segun la ley, los demandados debian haber llevado otros libros, pero no se ha probado que
estos en alguna ocasion hayan existido y que dichos demandados, para defraudar a los
demandantes, no han querido presentar dichos libros. Tampoco existe prueba alguna de que, en la
preparacion de los balances que obran en los Exhibits S y T, los demandados procedieron de mala
 fe, no incluyendo mercaderias o dinero para defraudar a los demandantes. Bajo estas
circunstancias, no podemos dar al Exhibit U de los demandantes, que se relaciona con los Exhibits
S y T, el valor que pretenden los demandantes por cuanto resultan incompletos los datos sobre los
cuales descansa dicho report.

Es principio generalmente reconocido que la ley no puede amparar al que duerme, y siendo esto
asi, no acertamos a comprender por que desde el año de 1913, en que se presento el primer
balance, despues de la muerte de Pedro Lasala y los sucesivos balances hasta 1929 y,
ultimamente, el correspondiente al año de 1932, solamente el 20 de noviembre de 1933 se inicia la
presente accion para exigir una rendicion de cuentas a los demandados, en esta causa. Con una
contalibidad tan deficiente, de una parte, de otra, con balances anteriores ya aceptados, y,
finalmente, con el recibo de cantidades resultantes del ultimo balance de 1932 de parte de los
demandados, no vemos camino legal y expedito para sostener la accion de los demandantes en el
presente asunto, y somos, por tanto, de opinion de que los demandados, despues de presentada
su liquidacion de 1932 y entregados a los demandantes sus saldos, segun queda dicho, no pueden
ahora ser obligados a una rendicion de cuentas.

Por todas las consideraciones expuestas, dclaramos que no procede ordenar que los demandados
rindan nuevas cuentas y, en su consecuencia, se absuelve a los demandados de la demanda, sin
especial pronunciamiento en cuanto a las costas.

The Court of Appeals reversed that judgment and ordered the defendants "to render an accounting of all
the assets of the partnership and of all its profits and losses from the time of its organization to the date of
plaintiffs' withdrawal."

This is an unfortunate and unnecessary lawsuit, engendered by suspicion and misunderstanding on the
part of the respondents and abetted by pride and amor propio on the part of their opponents. It is
unfortunate from two viewpoints — sentimental and material: (1) Friendship that for twenty years united the
parties for the sake of business and of their common birthplace has become but a program memory to
them, it having been dethroned from their hearts and replaced by ill will and lacerated sentiments. (2) The
fruit of more than twenty years of toil that should entitle the petitioners to enjoy competence and comfort in
their declining years is being squandered by them in their defense of this protracted litigation. This lawsuit
is unnecessary because once the smoke of passion and misunderstanding has vanished, the parties would
or should see that there is no real cause for quarrel between them.

The judgment of the trial court which would, once and for all, put an end to this unnecessary lawsuit,
achieves practical justice; that of the Court of Appeals which would prolong it, pursues theoretical justice.
Our own verdict is not difficult to make. Let us pour oil on troubled waters.

First. The suspicions entertained by the respondents against the good faith of their erstwhile friends, the
petitioners, finds expression in the allegation of paragraph 8 of their complaint:

8. That the said defendants, in order to defraud and deprive the plaintiffs of their just share in the
business have caused properties, which rightfully belong to the business of which they were and
are the managers, to be inscribed in their own joint names or in their individual names, by virtue of
which said defendants now appears to be the sole and exclusive owners of said properties and
their fruits.

Such suspicion is unjustified. There is nothing irregular or improper in the act of the petitioners of putting
the properties and the business in their own names. The association of the parties was not a general
copartnership under articles 125-144 of the Code of Commerce but one of joint accounts governed by
articles 239-243 of the same Code. The respondents acquired an interest in the transactions of the
petitioners by contributing thereto merchandise and accounts receivable valued at P1,000 (Article 239.) No
formality was observed in the formation of the association. (Article 240.) No commercial name, common to
all the participants was adopted, and the petitioners transacted and managed the business in their own
individual names and under their individual liability. (Article 241.) The respondents had no reason to expect
the petitioners to put the business and properties in the name of the "partnership" because they knew that
from the beginning no firm name had been adopted for it. The respondents were silent partners.

Second. An apparent misunderstanding on the part of the respondents is reflected in the allegation of
paragraph 10 of their complaint:

10. That the defendants have fraudulently withdrawn from the funds of the said partnership large
amounts of money, which they applied for their personal use and benefit to which withdrawals they
were not legally entitled, thereby impairing seriously the capital of the partnership and hampering its
orderly and efficient administration.

Such unkind words uttered against long-trusted business associates can only be attributed to a serious
misunderstanding in view of the fact that neither the trial court nor the Court of Appeals found any indicia of
bad faith on the part of the petitioners. The aspersion was wholly unwarranted.

Third. The respondents have apparently been misled by the public accountant they employed, who
advanced a different method of computing the participations of the parties in the profits. As noted by the
trial court in its decision and as urged by the respondents in their brief, they claim that the petitioners, "as
industrial and capitalist partners, could not include their participation in the profits as capital because by
such procedure the plaintiffs [respondents] were absorbed and the defendants [petitioners] obtained
greater participation in the profits. Following the hint of their "expert" accountant, the respondent contend in
their brief that the original profit-sharing agreement of 50 per cent to the industrial partner and the balance
to be distributed among the partners in proportion to their capital, namely 66.67 per cent to the respondents
for their capital of P1,000 and 33.33 per cent to the petitioners for their capital of P500, should be
maintained notwithstanding the increase of the capital of the petitioners through the accumulation of
unwithdrawn profits. This contention does not impress us as being either fair or sound. Throughout the
twenty years of have by common consent followed the same method of distributing the profits in party was
permitted to put in as much capital as he wanted and to share in the profits accordingly. Up to the time the
respondents received the last centavo of their participation in the capital and profits of the business, they
had tacitly and repeatedly approved, the same procedure of dividing the profits. They must have found it to
be fair, as indeed it was, for why should not one's share of the profits increase in proportions to one's
capital? It is true that the original capital of respondents and petitioners were P1,000 and P505.54
respectively, or, roughly, a proportion of two to one be maintained after the capital of the petitioners has
increased through the accumulation of unwithdrawn profits? In any event, as the trial court held, the
respondents are now estopped from insisting on a fixed and invariable two-to-one division of the profits
regardless of the amount of the capital of each of the parties in a given year.

Fourth. If, as we have seen, there is no reasons for a new division of the profits as contended by the
respondents, it seems to us that no useful purpose would be attained by remanding the case to the trial
court with an order to the petitioners to render a new account. As we have noted, respondents' allegation of
fraud and bad faith on the part of the petitioners in the preparation of the statements of account submitted
by them to the respondents and tacitly approved by the latter, was not found proven by the Court of
Appeals. All that the Court of Appeals intimated was that the plaintiffs alleged that mistakes had been
committed and that the evidence so tended to prove. But the mistake pointed out by the respondents
consisted principally in the mode or procedure of dividing the profits and in petitioners' having caused the
properties "to be inscribed in their own joint names or in their individual names"; and as we have seen,
such alleged mistakes are unfounded.

During the trial of this case, which off and on lasted nearly three years, the petitioners and their witnesses,
who had to come from the Province of Romblon to Manila, presented the only books they kept to the
business (Exhibits S and T). which respondents' expert accountants audited and found to be incorrect as to
the mode of dividing the profits. Of course, the auditor of the respondents also demanded vouchers,
ledgers, and other books. But the business having been run for twenty years without employing a
bookkeeper, it seems too late now to do so after the "partnership" has been dissolved.

In the absence of any finding of fraud or prejudicial error committed by the petitioners in the rendition of
their accounts, which were tacitly, approved by their respondents, who asked for and received their
participation in accordance with the liquidation, we think it would only occasion unnecessary trouble and
expense to both parties to require further accounting and remand the case to the trial court for further
proceedings. Nine years of litigation in three instances should be enough to afford the parties in this case
their day in court. It would be scandalous to prolong it under the circumstances. After all, it's only a tempest
in a teapot.

MORAN, J., dissenting:

The decision of the majority, ultimately analyzed, suggests the query: May this Court, in an appeal by
certiorari from a judgment of the Court of Appeals, make its own finding of fact in disregard of the findings
of the latter Court of Appeals, make its own findings of fact in disregard to the findings of the latter Court
and reverse the appealed judgment accordingly? The rule is settled that this Court cannot, and that, on the
contrary, in every such appeal "everything necessary to uphold the jurisdiction" of the Court of Appeals
"and the correctness of its proceedings and decision will be presumed, in the absence of a clear showing to
the contrary". (4 C.J., 1082.)

The essential facts of the case, as found by the Court of Appeals, are as follows: Petitioners and
respondents were members of a commercial partnership, the former being the managers of the business
and the latter having "no hand whatsoever in the conduct of it." From December 23, 1913 to May 27, 1932,
petitioners had made ten balance statements and sent copies thereof to respondents together with the
latter's shares in the profits. No question arose between the parties as to the correctness of the balance
statements until the tenth statement was made, respondents had made known to petitioners their desire to
withdraw from the partnership and had requested for the remittance of their capital and profits. On July 9,
1932, after the tenth statement was received by them, respondent reiterated their desire for withdrawal,
adding that "en cuanto hayamos recibido todo, entonces firmaremos el balance que habeis hecho alli, cuya
copia has dejado aqui." The amount which purported to be their entire capital and profits was received by
respondents but they refused to sign the statement of final liquidation because they had an agreement with
petition to the effect that before they sign it, "they would send some one to Tablas to examine the
partnership books, but that afterwards the defendants (petitioners here) declined to allow plaintiffs'
(respondents here) representative to see said books." And the evidence tends to prove, so the Court of
Appeals concluded, that there were mistakes in petitioners statements of account sent to respondents, as
corroborated by petitioners themselves in their counterclaims.

Upon these facts, the majority reversed the decision of the Court of Appeals and sustained the petitioners
plea of concluded accounting upon the following grounds.
1. That as respondents have promised to sign the final statement of accounts upon their receipt of their
entire capital and profits, their acceptance without reservation of said capital and profits, constitutes virtual
approval of the final liquidation and their signing the same becomes a mere formality to be subsequently
complied with and which was waived by their refusal to do so;

2. That while re-examination of accounts is authorized upon proof of fraud or gross error, in the instant
case, the Court's finding as to mistake is not positive and its pronouncement that "the evidence tends to
prove that there was mistake in the statement of accounts is not a definite conclusion sufficient to justify a
further accounting";

3. That as this case has been pending for nearly nine years, "if another accounting is ordered, a costly
action or proceedings may arise which may not be disposed of within a similar period," and that accordingly
"it is not improbable that the intended relief may prove to be the respondents' funeral"; and

4. That, in a nutshell, the circumstances of the case attest remarkably to the honesty of petitioners in their
dealings with respondents.

I propose to take up these grounds seriatim.

"An account stated" has been defined as "an agreement that the balance and all items of an
account representing the previous monetary transaction of the parties thereto are correct, together
with the promise to pay such balance." (1 C. J.S., p. 693.) In the present case, was there such an
agreement? Respondents, it is true, had promised to sign the balance statement upon receiving
their capital and share in the profits, but they actually had never signed such statement and a
promise to sign is not equivalent to signing. The fact that respondents have never signed the
statement only indicates that they could not agree with petitioners thereon. And if there is no
agreement there is no account stated. Indeed, it has been held that "in stating as account, as in
making any other agreement, the minds of the parties must meet." (1 C.J., pp. 684-685.) Here,
there has been no meeting of minds as to the true balance.

Besides, respondents' promise to sign the statement of final liquidation upon receipts of their entire capital
and profits was not absolute. It was subject to the agreement with petitioners that before respondents "sign
the final settlement they would send some one to Tablas to examine the partnership books." This is a fact
supported by proof expressly mentioned by the Court of Appeals which the majority has utterly ignored and
if considered would have been decidedly fatal to the conclusion it has reached. As respondents "to whom
the accounts were rendered had no knowledge of all the circumstances relating to the business and had to
rely upon the good faith of their partners" (words of the Court of Appeals), the examination of the
partnership books becomes to them a matter of capital important which, for purposes of final liquidation,
cannot lightly be dismissed. When petitioners declined to allow respondents' representative to see said
books in violation of the agreement, respondents must be deemed legally exempted from their promise and
are, therefore, entirely justified in refusing to sign the final settlement.

Even if it be conceded that the final settlement had been acquiesced in by the respondent, a reopening of
accounts, as the majority itself admits, is authorized upon a showing of fraud or mistake. The rule is that
"an account stated being only prima facie evidence of its correctness, does not work an estoppel and is
subject to impeachment for fraud or mistake; and if fraud or mistake exists it is immaterial that the parties
agreed that the account shall not be opened for error after a fixed period, that it was signed by the party
charged, or that evidence of indebtedness, receipt in full, or releases were given." (1 C.J.S., pp. 728-729.)
In the instant case, does there exist evidence of such mistake? The Court of Appeals, putting up the same
question, categorically stated:
 The question then is, have mistakes been committed in the statements sent appellants? Not only
do plaintiffs so allege, and not only does the evidence so tend to prove, but the charged is
seconded by the defendant themselves when in their counterclaims they said:

(a) Que recientemente se ha hecho una acabada revision de las cuentas y libros del negocio, y, se
ha descubierto que los demandados cometieron un error al hacer las entregas de las varias
cantidades en efectivo a los demandantes, entregando en total mayores cantidades a la que tenian
derecho estos por su participacion y ganancias en dicho negocio.

But the majority averred that this does not constitute a positive findings of mistake and that "the
pronouncement of the Court of Appeals that the evidence tends to prove that there was a mistake in the
statement of accounts is not a definite conclusion in a sense sufficient to justify a further accounting." As a
general rule when the grant or refusal of a legal relief sought in this Court depends upon the existence of
findings of fact by the Court of Appeals, the test for the grant or refusal of such relief is not whether its
finding is positive or not, but whether such findings actually exists and is sufficient for the purpose. The
reason is, in the language of the majority itself, "we are not here authorized to review the evidence and
determine the existence" of any matter of fact. In the closely analogue case of Zubiri vs. Quijano, G.R. No.
48696. November 28, 1942, this Court held:

Under the second assignment, the petitioners alleged that the Court of Appeals erred in not finding
that she had paid to the respondent usurious interest amounting (as found by the Court of the First
Instance of Mindoro) to P950. The pronouncements of the Court of Appeals to wit, "pero
rechazamos la pretension de la demandada, aceptada por el Tribunal a quo, de que el demandante
percibio intereses usurarios" and "con respecto a la alegacion sobre usura, la misma nos parece
insostenible", being conclusions, of fact, must be accepted for the purposes of the present appeal,
since we cannot make contrary findings without reexamining the evidence, and we are not
authorized to do this.

In the instant case, the Court of Appeals made a general conclusion of fact as to the existence of mistake
and, on the authority of the case cited, this general conclusion must be deemed sufficient. When the Court
of Appeals went further and fortified its general conclusion of fact by a specific instance of such mistake,
are we to reject the finding as less sufficient because more specific?

But it is said that the Court of Appeals merely stated that the evidence so tend to prove" the existence of
mistake. The use, however, of the verb "tend" in no way imports ex necessitate rei indefiniteness or
ambiguity of the evidence upon which the Court of Appeals rested its conclusion of mistake. Doubtless, the
verb was used advisedly because, the action being merely to compel accounting, the Court cannot and is
not actually passing finally upon the correctness of the accounts. Its pronouncement as to mistake cannot
accordingly be couched with finality, much as the majority wishes it to be, but should merely be worded as
to indicate that a ground exists for the accounting prayed for.

And as to the specific mistake found by the Court of Appeals to have been admitted in petitioners'
counterclaim, the majority argues that such mistake consists in overpayment of respondents of what is due
to them, and therefore, the error was not to their prejudice. This argument entirely misses the point.
Whether the mistake be favorable or unfavorable to respondents, the fact remains that a mistake exists and
this is sufficient to authorize a reopening even of a concluded account. Indeed, if the mistake be one
prejudicial to the interest of the party who made the statement, it is all the worse. When a person makes a
mistake against himself when he is presumed to have taken special care for the protection of his interest,
he may in all probability be presumed to have made more mistakes against others whose interests he is
less concerned with, if at all.
But assuming that the Court's finding as to mistake is insufficient, is the majority justified in closing the case
upon that ground? To foreclose accounting, under the circumstances, is to make, in effect, a contrary
finding that there is no mistake and to presume that petitioners' accountings is correct. This is both
unauthorized and faulty. Unauthorized, because when the finding of the Court of Appeals is here deemed
insufficient, the remedy is not for this Court to make contrary findings but to supply the deficiency by
remanding the case to the Court of Appeals for further findings, as we did in Ofiana vs. People (40 Off.
Gaz., 2293), and Bautista vs. Victoriano G.R. No. 46879, April 3, 1940. Faulty, because when the majority
presumes that petitioners accounting is correct, it takes for granted precisely the basic issue of the case.
And the presumption becomes the more faulty when we considered that it militates against positive findings
of mistake by the Court of Appeals. The existence of such findings, whether or not they are insufficient,
constitutes a solemn warning against reliance upon a mere presumption, specially if there exists a contrary
presumption to the effect that everything necessary to uphold the correctness of the decision appealed
from shall be deemed present in the record, in the absence of a clear showing to the contrary. And here,
there is absolutely no showing that the supposedly insufficient findings are erroneous.

The majority expresses the fear that, as this case has been pending for nearly, nine years, if another
accounting is ordered a costly action or proceedings may arise which may not be disposed of within a
similar period. I cannot understand how this Court would haphazardly close a case only upon bare fear or
delay. What the law abhors is unnecessary delay in the administration of justice. Delays necessary for the
ascertainment of truth are welcomed. Hurried justice is certainly not to be less deplored than delayed
justice. Dispatch in the disposal of cases is, indeed, in every system of law, a beautiful ideal to be devoutly
wished for; but, like every other ideal, its beauty or utility ends with its abuse. We owe it to the paramount
interests of justice that in every litigation we are called upon to decide, we should strive thoroughly and
judiciously to ascertain the truth and not to hurriedly pull down the curtain on the case until we are
reasonably certain that all efforts to the end have been exhausted.

The majority adds that if the accounting prayed for the permitted, it is not improbable that the intended relief
may prove to be the respondents' funeral. I take this statement to mean that the majority hazards the
conjecture that if a new accounting is ordered, respondents will probably come out to be less entitled that
what they have received. I do not think this Court should, in propriety, hazard any guess on the probable
outcome of any suit specially where the guess is made on the basis of factual evidence about which it
cannot speak with authority. And, neither is the guess good, for if we remand the case to the Court of
Appeals for more specific findings, the likelihood is that more specific mistakes will be shown as to render it
inevitable for this Court to order a new accounting. This probability is founded not on mere conjecture but
on the presumption of law above mentioned that the conclusions of fact of the Court of Appeals are in
accordance with the evidence. Furthermore, respondents in asking for an accounting are of course ready
and willing to abide by any result, whether it be favorable or unfavorable to them. There being just grounds
therefor, it should not be denied by this Court because such accounting may be disastrous to respondents.

The majority concluded its decision thus:

Considering that they (petitioners) ran the business of the partnership for about twenty years at a
place far from the residence of the respondents and without the latter's intervention; that the
partners did not even know each other personally; that no formal partnership agreement was
entered into which bound the petitioners under specific conditions; that the petitioners could have
easily and freely alleged that the business became a partial, or even a total, loss for any plausible
reason which they could have concocted, it appearing that the partnership engaged in such
uncertain ventures as agriculture, cattle raising, and the operation of rice mill, and the petitioners
did not keep any regular books of accounts; that the petitioners were still frank enough to disclose
 that the original capital of P1,505.54 amounted, as of the date of the dissolution of the partnership
to P44,618.67; and that the respondents had received a total of P3,105.76 out of their capital of
P1,000, without any effort on their part, we are reluctant even to make the conjecture that the
petitioners had ever intended to, or actually did, take undue advantage of the absence and
confidence of the respondents. Indeed, we feel justified in stating that the petitioners have here
given a remarkable demonstration of the legendary honesty, good faith and industry with which the
natives of Taal pursue business arrangements similar to the partnership in question, and we would
hate in the absence of any sufficient reason to let such a beautiful legend have a distateful ending.

Too much, I fear, has here been assumed by the majority. They assumed that the figures cited are correct
when they are in question; they assumed that petitioners have not taken advantage of the confidence of
the respondents when this yet remains to be seen; they assumed that petitioners' accounting is correct
when this is precisely the question between the parties; and, finally, they held that because petitioners did
not keep any regular books of account, they should not be compelled to an accounting because they may
not be able to do so, which is in effect offering a premium for negligence. This mode of ratiocination is, to
my regret, without authority and without parallel. True petitioners ran the business of the partnership
without intervention whatever on the part of respondents who relied entirely on the good faith of the former.
This indicates that the relation between the parties is manifestly fiduciary and it has been held that "when a
a fiduciary relationship exists between the parties stating an account in will be more readily reopened than
when the parties had been dealing with each other at arm's length." (1 C.J.S. p. 729.)

I wish I could share with the majority in the abundance of their admirations for what they called the
"legendary honesty, good faith and industry with which the natives of Taal pursue business arrangements
similar to the partnership in question to let "such a beautiful legend have a distasteful ending." But I fell
loath to pose a set of men as paragons of virtue and otherwise reflect, without cause or reason, upon the
integrity of the rest of their kind. I fell even more loath to rest the judgment of this Court upon a mere
legend, no matter how beautiful that legend may be, and would prefer to adjudicate every case upon what
the evidence and the law alone may direct. Facts, not fancy, are still the chosen tools with which the courts
perform their solemn function of dispensing justice of litigants.

After this dissent had been written, Brother Justice Ozaeta gave out his concurring opinion predicated
fundamentally upon facts not appearing in the findings of the Court of Appeals. We have held time and
again that in appeals by certiorari from the Court of Appeals and in cases like the present one, only
questions of law may be considered, question of fact requiring examination of evidence being without our
jurisdiction. (Rule 46, sec. 2; Guico vs. Mayuga, 63 Phil., 328; Mateo vs. Collector of Customs, 63 Phil.,
470; Mamuyac vs. Abena, 38 Off. Gaz., 34, Meneses vs.Com. of the Philippines, 40 Off, Gaz., 7th Sup. 41;
Diaz vs. People, 40 Off. Gaz. 3d Sup. 22.) I abstain, therefore, from dealing on matters that are forbidden
to us by our own Rules. Doubtless, the concurring opinion is impelled by the commendable desire to do
"practical," not "theoretical," justice. Regrettably, however, we cannot fulfill this end at the risk of
transcending the limits of this Court's jurisdictions. Beyond that jurisdiction all our pronouncements have no
judicial value for they may be regarded as made out of court and do not constitute due process of law. And,
what is worse is that the concurring opinion takes the decision of the Court of First Instance wholly or in
part as a basis for reversing the decision of the Court of Appeals. This mode of procedure is unprecedented
and amazing. The law considers the Court of Appeals as superior to a Court of First Instance specially on
matters of fact, and yet the reverse is implied in the concurring opinion.

I vote, therefore, to affirm the judgment of the Court of Appeals.