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TAI TONG VS.

INSURANCE COMMISSION of complainants for the balance had been paid in the
amount in full, based on the Adjustment Standards
FACTS: Corporation Report.
Complainants acquired from a certain Rolando Gonzales
a parcel of land and a building located at San Rafael Travellers Insurance, on its part, admitted the issuance of
Village. the Policy and alleged as its special and affirmative
defenses the following, to wit: that Fire Policy, covering
Complainants assumed the mortgage of the building in the furniture and building of complainants was secured by
favor of S.S.S., which building was insured with a certain Arsenio Chua, mortgage creditor, for the purpose
respondent S.S.S. Accredited Group of Insurers for of protecting his mortgage credit against the
P25,000.00. complainants; that the said policy was issued in the name
Azucena Palomo obtained a loan from Tai Tong Chuache, of Azucena Palomo, only to indicate that she owns the
Inc. in the amount of P100,000.00. To secure the payment insured premises; that the policy contains an endorsement
of the loan, a mortgage was executed over the land and in favor of Arsenio Chua as his mortgage interest may
the building in favor of Tai Tong Chuache & Co. appear to indicate that insured was Arsenio Chua and the
complainants; that the premiums due on said fire policy
Arsenio Chua, representative of Thai Tong Chuache & was paid by Arsenio Chua; that respondent Travellers is
Co. insured the latter’s interest with Travellers Multi- not liable to pay complainants.
Indemnity Corporation for P100,000.00 (P70,000.00 for
the building and P30,000.00 for the contents thereof) Tai Tong Chuache & Co. filed a complaint in intervention
claiming the proceeds of the fire Insurance Policy, issued
Pedro Palomo secured a Fire Insurance, covering the by respondent Travellers Multi-Indemnity.
building for P50,000.00 with respondent Zenith Insurance
Corporation. Another Fire Insurance Policy was procured Travellers Insurance, in answer to the complaint in
from respondent Philippine British Assurance Company, intervention, alleged that the Intervenor is not entitled to
covering the same building for P50,000,00 and the indemnity under its Fire Insurance Policy for lack of
contents thereof for P70,000.00. insurable interest before the loss of the insured premises
and that the complainants, spouses Pedro and Azucena
Thereafter, the building and the contents were totally Palomo, had already paid in full their mortgage
razed by fire. indebtedness to the intervenor.
Based on the computation of the loss, including the ISSUE:
Travellers Multi-Indemnity, Respondents, Zenith
Insurance, Phil. British Assurance and S.S.S. Accredited W/N the complaint was filed against the real party in
Group of Insurers, paid their corresponding shares of the interest
loss. RULING:
Demand was made from respondent Travellers Multi- Public respondent argues however, that if the civil case
Indemnity for its share in the loss but the same was really stemmed from the loan granted to Azucena Palomo
refused. Hence, complainants demanded from the other by petitioner the same should have been brought by Tai
three (3) respondents the balance of each share in the loss Tong Chuache or by its representative in its own behalf.
based on the computation of the Adjustment Standards From the above premise respondent concluded that the
Report excluding Travellers Multi-Indemnity in the obligation secured by the insured property must have been
amount of P30,894. but the same was refused, hence, this paid.
action.
In their answers, Philippine British Assurance and Zenith The premise is correct but the conclusion is wrong. Citing
Insurance Corporation admitted the material allegations Rule 3, Sec. 2 10 respondent pointed out that the action
in the complaint, but denied liability on the ground that must be brought in the name of the real party in interest.
the claim of the complainants had already been waived, We agree. However, it should be borne in mind that
extinguished or paid. petitioner being a partnership may sue and be sued in its
name or by its duly authorized representative. The fact
that Arsenio Lopez Chua is the representative of
Instead of filing an answer, SSS Accredited Group of petitioner is not questioned. Petitioner’s declaration that
Insurers informed the Commission that the herein claim Arsenio Lopez Chua acts as the managing partner of the
partnership was corroborated by respondent insurance
company. 11 Thus Chua as the managing partner of the
partnership may execute all acts of administration 12
including the right to sue debtors of the partnership in case
of their failure to pay their obligations when it became due
and demandable. Or at the very least, Chua being a partner
of petitioner Tai Tong Chuache & Company is an agent
of the partnership. Being an agent, it is understood that he
acted for and in behalf of the firm. 13 Public respondent’s
allegation that the civil case filed by Arsenio Chua was in
his capacity as personal creditor of spouses Palomo has
no basis.

The respondent insurance company having issued a


policy in favor of herein petitioner which policy was of
legal force and effect at the time of the fire, it is bound by
its terms and conditions. Upon its failure to prove the
allegation of lack of insurable interest on the part of the
petitioner, respondent insurance company is and must be
held liable.

IN VIEW OF THE FOREGOING, the decision appealed


from is hereby SET ASIDE and ANOTHER judgment is
rendered ordering private respondent Travellers Multi-
Indemnity Corporation to pay petitioner the face value of
Insurance Policy No. 599-DV in the amount of
P100,000.00. Costs against said private Respondent.
TEAGUE VS. MARTIN partnership in cold storage, of the value of P6,000, for
which he has never accounted on the books of the
FACTS: partnership or mentioned in the complaint, and defendant
Plaintiff alleges that he and the defendants formed a prays that plaintiff's complaint be dismissed, and that he
partnership for the operation of a fish business and similar be ordered and required to render an accounting , and to
commercial transactions, which by mutual contest was pay to partnership the balance of his unpaid subscription
called "Malangpaya Fish Co," with a capital of P35,000, amounting to P10,000.
of which plaintiff paid P25,000, the defendant Martin
ISSUE:
P5,000, P2,500, and Golucke P2,500.
I. The trial court erred in not having confined itself, in the
That the plaintiff was named the general manager to take
determination of this case, to the question as to whether
charge of the business, with full power to do and perform
or not it is proper to dissolve the partnership and to
all acts necessary to carry out of the purposes of the
liquidate its assets, for all other issues raised by appellees
partnership.
are incidental with the process of liquidation provided for
That there was no agreement as to the duration of the by law.
partnership. That plaintiff wants to dissolve it, but that the
II. The trial court erred in not resolving the primary and
defendants refused to do so. A statement marked Exhibit
most important question at issue in his case, namely,
A, which purports to be a cash book, is made a part of the
whether or not the appellant M. Teague was the manager
complaint.
of the unregistered partnership Malangpaya Fish
That the partnership purchased and now owns a lighter Company.
called Lapu-Lapu, and a motorship called Barracuda, and
III. The trial court erred in holding that the appellant had
other properties. That the lighter and the motorship are in
no authority to buy the Lapu-Lapu, the Ford truck and the
the possession of the defendants who are making use of
adding machine without the consent of his copartners, for
them, to the damage and prejudice of the plaintiff, for any
in accordance with article 131 of the Code of Commerce
damage which plaintiff may sustain. That it is for the best
the managing partner of a partnership can make purchases
interest of the parties to have a receiver appointed pending
for the partnership without the knowledge and/or consent
this litigation, to take possession of the properties, and he
of his copartners.
prays that the Philippine Trust Company be appointed
receiver, and for judgment dissolving the partnership, IV. The trial court erred in holding that the Lapu-Lapu,
with costs. the Ford truck and the adding machine purchased by
appellant, as manager of the Malangpaya Fish Company,
“Mr. Teague will have charge of selling fish in
for and with funds of the partnership, do not form part of
Manila and purchasing supplies. No salary until
the assets of the partnership.
business is on paying basis, then the same as
Maddy or Martin.” V. The trial court erred in requiring the appellant to pay
to the partnership the sum of P14,032.26, purchase price,
Defendant Martin specifically denies the "plaintiff was
cost of repairs and equipment of the barge Lapu-Lapu;
named general manager of the partnership," and alleged
P1,230 purchase price of the adding machine, for these
"that all the duties and powers of the said plaintiff were
properties were purchased for and they form part of the
specifically set forth in the above quoted written
assets of the partnership.
agreement and that no further or additional powers were
ever given the said plaintiff." He denies that Exhibit A is VI. The trial court erred in disapproving appellant's claim
a true or correct statement of the cash received and paid for salary and expenses incurred by him for and in
out by or on behalf of the partnership, or that the connection with the partnership's business.
partnership over purchased or that it now owns the
VII. The trial court erred in approving the claims of
lighter Lapu-Lapu, "And/ or any other properties" as
appellees J.T. Maddy and H. Martin and in requiring the
mentioned in said ninth paragraph, except such motorship
appellant to pay them the sum of P1,512.03 and P615.49
and a smoke in the house," or that the defendants are
respectively.
making use of any of the properties of the partnership, to
the damage and prejudice of the plaintiff, or that they do VIII. The trial court erred in not taking cognizance of
not have any visible means to answer for any damages, appellant's claim for reimbursement for advances made
and alleges that at the time of the filing of the complaint, by him for the partnerships, as shown in the statement
attached to the complaint marked Exhibit A, in which adding machine. The proof is conclusive that they were
there is a balance in his favor and against the partnership purchased by the plaintiff and paid for him from and out
amounting to over P16,000 of the money of the partnership. That at the time of their
purchase, the Lapu-Lapu was purchased in the name of
RULING: the plaintiff, and that he personally had it registered in the
By their respective pleadings, all parties agreed that there customs house in his own name, for which he made an
was a partnership between them, which appears at one affidavit that he was its owner. After the purchase, he also
time to have done a good business. In legal effect, plaintiff had the Ford truck registered in his won name. His
asked for its dissolution and the appointment of a contention that this was done as a matter of convenience
receiver pendente lite. The defendants did not object to is not tenable. The record shows that when the partnership
the dissolution of the partnership, but prayed for an purchased the Barracuda, it was registered in the customs
accounting with the plaintiff. It was upon such issues that house in the name of the partnership, and that it was a very
the evidence was taken and the case tried. Hence, there is simple process to have it so registered.
no merit in the first in the first assignment of error.
Without making a detailed analysis of the evidence, we
Complaint is made that the lower court did not
agree with the trial court that the Lapu-Lapu, the Ford
specifically decide as to whether or not the plaintiff was
truck, and the adding machine were purchased by the
the manager of the unregistered partnership. But upon that
plaintiff and paid for out of the funds of the partnership,
question the lower court, in legal effect, followed and
and that by his own actions and conduct, and the taking of
approved the contention of the defendants that the duties
the title in his own name, he is now estopped to claim or
of each partners were specified and defined in the "plans
assert that they are not his property or that they are the
for formation of a limited partnership," in which it is
property of the company. Again, under his powers and
stated that Captain Maddy would have charge of
duties as specified in the tentative, unsigned written
the Barracuda and its navigation, with a salary of P300
agreement, his authority was confined and limited to the
per month, and that Martin would have charge of the
"selling of fish in Manila and the purchase of supplies." It
southern station, cold stores, commisary and procuring
must be conceded that, standing alone, the power to sell
fish, with a salary of P300 per month, and that the plaintiff
fish and purchase supplies does not carry with it or imply
would have charge of selling fish in Manila and
the authority to purchase the Lapu-Lapu, or the Ford
purchasing supplies, without salary until such time as the
truck, or the adding machine. From which it must follow
business is placed on a paying basis, when his salary
that he had no authority to purchase the lighter Lapu-
would be the same as that of Maddy and Martin, and that
Lapu, the Ford truck, or the adding machine, as neither of
the principal office of the partnership "shall keep books
them can be construed as supplies for the partnership
showing plainly all transactions," which shall be available
business. While it is true that the tentative agreement was
at all time for inspection of any of the members.
never personally signed by any member of the firm, the
It will thus be noted that the powers and duties of Maddy trial court found as a fact, and that finding is sustained by
Martin, and the plaintiff are specifically defined, and that the evidence, that this unsigned agreement was acted upon
each of them was more or less the general manager in his and accepted by all parties as the basis of the partnership.
particular part of the business. That is to say, that Maddy's It was upon that theory that the lower court allowed the
power and duties are confined and limited to the charge defendant s Maddy and Martin a salary of P300 per month
of the Barracuda and its navigation, and Martin's to the and the money which each of them paid out and advanced
southern station, cold stores, commissary and procuring in the discharged of their respective duties, and denied
fish, and that plaintiff's powers and duties are confined any salary to the plaintiff, for the simple reason that the
and limited to "selling fish in Manila and the purchase of business was never on a paying basis.
supplies." In the selling of fish, plaintiff received a
Much could be said about this division of powers, and that
substantial amount of money which he deposited to the
Maddy and Martin's duties were confined and limited to
credit of the company signed by him as manager, but it
the catching and procuring of fish, which were then
appears that was a requirement which the bank made in
shipped to the plaintiff who sold them on the Manila
the ordinary course of business, as to who was authorized
market and received the proceeds of the sales. In other
to sign checks for the partnership; otherwise, it would not
words, Maddy and Martin were supplying the fish to
cash the
plaintiff who sold them under an agreement that he would
In the final analysis, the important question in this case is account for the money.
the ownership of the Lapu-Lapu, the Ford truck, and the
All things considered, we are of the opinion that P2,000
is a reasonable, amount which the plaintiff should receive
for its use.
In all things and respects, the judgment of the lower court
as to the merits is affirmed, with the modification only
that P2,000 shall be deducted from the amount of the
judgment which was awarded against the plaintiff, such
deduction to be made for and on account of such use of
the Lapu-Lapu by the partnership, with costs against the
appellant. So ordered.
FORTIS VS. GUTIERREZ order to determine what the salary of the plaintiff was, to
determine what the profits of the business were, after
FACTS: paying all of the expenses except his, but that
Plaintiff, an employee of defendants during the years determination was not the final determination of the net
1900, 1901, and 1902, brought this action to recover a profits of the business. It was made for the purpose of
balance due him as salary for the year 1902. He alleged fixing the basis upon which his compensation should be
that he was entitled, as salary, to 5 per cent of the net determined.
profits of the business of the defendants for said year. The
complaint also contained a cause of action for the sum of
600 pesos, money expended by plaintiff for the
defendants during the year 1903. The court below, in its
judgment, found that the contract had been made as
claimed by the plaintiff
that the plaintiff had received on account of such salary
12,811.75 pesos, Mexican currency, and ordered
judgment against the defendants for the sum 13,566.93
pesos, Mexican currency, with interest thereon
The court also ordered judgment against the defendants
for the 600 pesos mentioned in the complaint, and intereat
thereon. The total judgment rendered against the
defendants in favor of the plaintiff, reduced to Philippine
currency, amounted to P13,025.40. The defendants
moved for a new trial, which was denied, and they have
brought the case here by bill of exceptions.
ISSUE:
W/N there exists a contract of partnership between the
parties
RULING:
It is claimed by the appellants that the contract alleged in
the complaint made the plaintiff a copartner of the
defendants in the business which they were carrying on.
This contention can not bo sustained. It was a mere
contract of employnent. The plaintiff had no voice nor
vote in the management of the affairs of the company. The
fact that the compensation received by him was to be
determined with reference to the profits made by the
defendants in their business did not in any sense make by
a partner therein. The articles of partnership between the
defendants provided that the profits should be divided
among the partners named in a certain proportion. The
contract made between the plaintiff and the then manager
of the defendant partnership did not in any way vary or
modify this provision of the articles of partnership. The
profits of the business could not be determined until all of
the expenses had been paid. A part of the expenses to be
paid for the year 1902 was the salary of the plaintiff. That
salary had to be deducted before the net profits of the
business, which were to be divided among the partners,
could be ascertained. It was undoubtedly necessary in
MACHUCA VS. CHUIDIAN 25 per cent of D. Vicente Buenaventura’s share in his
father’s account-current, as ascertained when the record
FACTS: was made in the books of the partnership upon the
The defendants are a regular general partnership, partition of the latter’s estate, with interest, less the
organized in Manila as a continuation of a prior liability to which the plaintiff is subject by reason of his
partnership of the same name. The original partners share in the capital; that the necessary liquidation being
constituting the partnership of 1882 were D. Telesforo first had, the partnership pay to the plaintiff the balance
Chuidian, Doña Raymunda Chuidian, Doña Candelaria which may be found to be due him; and that if the
Chuidian, and D. Mariano Buenaventura. The capital was partnership has no funds with which to discharge this
fixed in the Partnership agreement at 160 000 pesos, of obligation an adjudication of bankruptcy be made. He
which the first three partners named contributed 50,000 also asks to recover the damages caused by reason of the
pesos each, and the last named 10,000 pesos, and it was failure of the liquidator to record his credit in the books
stipulated that the liability of the partners should be of the partnership.
"limited to the amounts brought in by them to farewell the
ISSUE:
partnership stock."
The underlying question in the case relates to the
In addition to the amounts contributed by the partners to
construction of clause 19 of the partnership agreement, by
the capital, it appears from the partnership agreement that
which it was stipulated that "upon the dissolution of the
each one of them had advanced money to the preexisting
company, the pending obligations in favor of outside
partnership, which advances were assumed as liabilities
parties should be satisfied, the funds of the minors Jose
by the new partnership. These advances or accounts-
and Francisco Chuidian [it does not appear what their
current aggregated something over 665,000 pesos, of
interest in the partnership was or when or how it was
which sum about 569,000 pesos represented the advances
acquired] should be taken out, and afterwards the
from the Chuidians and the balance that from D. Mariano
resulting balance of the account-current of each of one of
Buenaventura.
those who had put in money (imponentes) should be
Doña Raymunda Chuidian retired from the Partnership. paid."
The partnership went into liquidation, and it does not
RULING:
appear that the liquidation had been terminated when this
actual was brought. Our construction of this clause is that it establishes a basis
for the final adjustment of the affairs of the partnership;
D. Mariano Buenaventura died, his estate passing by will
that that basis is that the liabilities to non partners are to
to his children, among whom was D. Vicente
be first discharged; that the claims of the Chuidian minors
Buenaventura. Upon the partition of the estate the amount
are to be next satisfied; and that what is due to the
of the interest of D. Vicente Buenaventura in his father’s
respective partners on account of their advances to the
account-current and in the capital was ascertained and
firm is to be paid last of all, leaving the ultimate residue,
recorded in the hooks of the firm.
of course, if there be any, to be distributed among the
D. Vicente Buenaventura executed a public instrument in partners in the proportions in which they may be entitled
which for a valuable consideration he "assigns to D. Jose thereto.
Gervasio Garcia . . . a 25 per cent share in all that may be
Although in a sense the partners, being at the same time
obtained by whatever right or in what ever form from the
creditors, were "outside parities" it is clear that a
liquidation of the partnership of Chuidian, Buenaventura
distinction is made in this clause between creditors who
& Co., in the part pertaining to him in said partnership
were partners and creditors who were not partners, and
The plaintiff claims under Garcia by virtue of a that the expression "outside parties" refers to the latter
subsequent assignment, which has been notified to the class. And the words "pending obligations," we think,
liquidator of the partnership. clearly comprehend outstanding obligations of every kind
in favor of such outside parties, and do not refer merely,
The liquidator of the partnership having declined to as claimed by counsel for the plaintiff, to the completion
record in the books of the partnership the plaintiff’s claim of mercantile operations unfinished at the time of the
endow the assignment as a credit due from the concern to dissolution of the partnership, such as consignments of
him this action is brought to compel such record to be goods and the like. As respects the claims of the Chuidian
made, and the plaintiff further asks that he be adjudicated minors, the suggestion of counsel is that the clause in
to be a creditor of the partnership in an amount equal to
question means that their accounts are to be adjusted termination of the liquidation, 25 per cent of D. Vicente’s
before those of the partners but not paid first. Such a resulting interest, both as partner and creditor. The
provision would have been of no practical utility, and the judgment in this case should not affect the plaintiff’s right
language used — that the funds should be "taken out" — to bring another action against the partnership when the
does not admit of such a construction. affairs of the same are finally wound up. The proper
judgment will be that the action be dismissed. The
Such being the basis upon which by agreement of the
judgment of the court below is reversed and the case is
partners the assets of the partnership are to be applied to
remanded to that court with directions to enter a judgment
the discharge of the various classes of the firm’s
of dismissal. So ordered.
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
non partners 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 received 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.
In other words, the assignment does not purport to transfer
an interest in the partnership, but only a future contingent
regulate 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 non-
partner 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.
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
PARDO VS. HERCULES LUMBER CO. deprive a stockholder of the right altogether. A by-law
unduly restricting the right of inspection is undoubtedly
FACTS: invalid. Authorities to this effect are too numerous and
The petitioner, Antonio Pardo, a stockholder in the direct to require extended comment. Under a statute
Hercules Lumber Company, Inc., one of the respondents similar to our own it has been held that the statutory right
seeks by this original proceeding in the Supreme Court to of inspection is not affected by the adoption by the board
obtain a writ of mandamus to compel the respondents to of directors of a resolution providing for the closing of
permit the plaintiff and his duly authorized agent and transfer books thirty days before an election.
representative to examine the records and business
It will be noted that our statute declares that the right of
transactions of said company.
inspection can be exercised "at reasonable hours." This
It is inferentially, if not directly admitted that the means at reasonable hours on business days throughout
petitioner is in fact a stockholder in the Hercules Lumber the year, and not merely during some arbitrary period of
Company, Inc., and that the respondent, Ignacio Ferrer, as a few days chosen by the directors.
acting secretary of the said company, has refused to
In addition to relying upon the by-law, to which reference
permit the petitioner or his agent to inspect the records
is above made, the answer of the respondents calls in
and business transactions of the said Hercules Lumber
question the motive which is supposed to prompt the
Company, Inc., at times desired by the petitioner. No
petitioner to make inspection; and in this connection it is
serious question is of course made as to the right of the
alleged that the information which the petitioner seeks is
petitioner, by himself or proper representative, to exercise
desired for ulterior purposes in connection with a
the right of inspection conferred by section 51 of Act No.
competitive firm with which the petitioner is alleged to be
1459.
connected. It is also insisted that one of the purposes of
The main ground upon which the defense appears to be
the petitioner is to obtain evidence preparatory to the
rested has reference to the time, or times, within which
institution of an action which he means to bring against
the right of inspection may be exercised. In this
the corporation by reason of a contract of employment
connection the answer asserts that in article 10 of the By-
which once existed between the corporation and himself.
laws of the respondent corporation it is declared that
These suggestions are entirely apart from the issue, as,
"Every shareholder may examine the books of the
generally speaking, the motive of the shareholder
company and other documents pertaining to the same
exercising the right is immaterial.
upon the days which the board of directors shall annually
fix." It is further averred that at the directors' meeting of We are of the opinion that, upon the allegations of the
the respondent corporation held on February 16, 1924, the petition and the admissions of the answer, the petitioner
board passed a resolution to the following effect. is entitled to relief. The demurrer is, therefore, sustained;
and the writ of mandamus will issue as prayed, with the
The contention for the respondent is that this resolution of
costs against the respondent. So ordered.
the board constitutes a lawful restriction on the right
conferred by statute; and it is insisted that as the petitioner
has not availed himself of the permission to inspect the
books and transactions of the company within the ten days
thus defined, his right to inspection and examination is
lost, at least for this year.
ISSUE:

RULING:
We are entirely unable to concur in this contention. The
general right given by the statute may not be lawfully
abridged to the extent attempted in this resolution. It may
be admitted that the officials in charge of a corporation
may deny inspection when sought at unusual hours or
under other improper conditions; but neither the executive
officers nor the board of directors have the power to