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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 28920 October 24, 1928

MAXIMO GUIDOTE, plaintiff-appellant,

vs.
ROMANA BORJA, as administratrix of the estate of Narciso Santos, deceased, defendant-appellee.

Francisco, Lualhati and Lopez for appellant.

M. G. Goyena for appellee.

OSTRAND, J.:

On March 4, 1921, the plaintiff brought an action against the administratrix of the estate of Narciso Santos,
deceased, to recover the sum of P9,534.14, a part of which was alleged to be the net profits due the plaintiff in a
partnership business conducted under the name of "Taller Sinukuan," in which the deceased was the capitalist
partner and the plaintiff the industrial partner, the rest of the sum consisting of advances alleged to have been made
to said partnership by the plaintiff. The defendant in her answer admitted the existence of the partnership and in a
cross-complaint and counter-claim prayed that the plaintiff be ordered to render an accounting of the partnership
business and to pay to the estate of the deceased the sum of P25,000 as net profits, credits, and property pertaining
to said deceased.

In the first trial of the case the plaintiff called several witnesses and introduced a so-called accounting and a mass of
documentary evidence consisting of books, bills, and alleged vouchers, which documentary evidence was so
hopelessly and inextricably confused that the court, as stated in its decision, could not consider it of much probative
value. It was, however, fund as facts that the aforesaid partnership had been formed, on or about June 15, 1918;
that Narciso Santos died on April 6, 1920, leaving the plaintiff as the surviving partner; and that plaintiff failed to
liquidate the affairs of the partnership and to render an account thereof to the administratrix of Santos' estate. The
court, therefore, dismissed the plaintiff's complaint and absolved the defendant therefrom, and ordered the plaintiff
to render a full and complete accounting, verified by vouchers, of the partnership business from June 15, 1918, until
September 1, 1922. To this decision and order the plaintiff duly excepted.

The plaintiff thereupon rendered an account prepared by one Tomas Alfonso, a public accountant. Numerous
objections to said account were presented by the defendant, and the court, upon hearing, disapproved the account
and ordered that the defendant submit to the court an accounting of the partnership business from the date of the
commencement of the partnership, June 15, 1918, up to the time the business was closed. 1awph!l.net

On January 25, 1924, the defendant presented an account and liquidation prepared by a public accountant,
Santiago A. Lindaya, showing a balance of P29,088.95 in favor of the defendant. The account was set down for
hearing upon the question of its approval or disapproval by the court, at which hearing the defendant introduced the
public accountant Jose Turiano Santiago to testify as to the results of an audit made by him of the accounts of the
partnership. Santiago testified that he had been a public accountant for over 20 years, having appeared in court as
such on several occasions; that he had examined the exhibits offered in evidence of the case by both parties; that
he had prepared a separate accounting or liquidation similar in results to that prepared by Lindaya, but with a few
differences in the sums total; and that according to his examination, the financial status of the partnership was as
follows:

Narciso Santos is a creditor of the Taller

Sinukuan in the sum of P26,020.89 consisting as
follows:
For his capital .................................. P12,588.53
For his credit ................................... 10,348.30
For his share of the profits ............ 3,068.06
 Total ................................................... 26,020.89
Maximo Guidote is a debtor to the Taller
Sinukuan in the sum of P20,020.89, consisting as
follows:
For his debt (debito) ......................... P29,088.95
Less his share of the profits ........... 3,068.06

Total balance ...................................... 26.020.89

In order to contradict the conclusions of Lindaya and Jose Turiano Santiago, the plaintiff presented Tomas Alfonso
and the bookkeeper, Pio Gaudier, as witnesses in his favor. In regard to the character of the testimony of these
witnesses, His Honor, the trial judge, says:

The testimony of these two witnesses is so unreliable that the court can place no reliance thereon. Mr. Tomas
Alfonso is the same public accountant who filed the liquidation Exhibit O on behalf of the plaintiff, in relation to
the partnership business, which liquidation was disapproved by this court in its decision of August 20, 1923. It
is also to be noted that Mr. Alfonso would have this court believe the proposition that the plaintiff, a mere
industrial partner, notwithstanding his having received the sum of P21,649.61 on the various jobs and
contracts of the "Taller Sinukuan," had actually expended and paid out the sum of P63,360.27, of P44,710.66
in excess of the gross receipts of the business. This proposition is not only improbable on its face, but it
materially contradicts the allegations of plaintiff's complaint to the effect that the advances made by the
plaintiff only the amount to P2,017.50.

Mr. Pio Gaudier is the same bookkeeper who prepared three entirely separate and distinct liquidation for the
same partnership business all of which were repeated by the court in its decisions of September 1, 1922 and
the court finds that the testimony given by him at the last hearing is confusing, contradictory and unreliable. 1awph!l.net

As to the other witnesses for the plaintiff His Honor further says:

The testimony of the other witnesses for the plaintiff deserves but scant consideration as evidence to
overcome the testimony of Mr. Santiago, as a whole particularly that of the witness Chua Chak, who, after
identifying and testifying as to a certain exhibit shown him by counsel for plaintiff, showed that he could
neither read nor write English, Spanish, or Tagalog, and that of the witness Mr. Claro Reyes, who, after
positively assuring the court that a certain exhibit tendered him for identification was an original document,
was forced to admit that it was but a mere copy.

The court therefore, found that the conclusions reached by Santiago A. Lindaya as modified by Jose Turinao
Santiago were just and correct and ordered the plaintiff to pay the defendant the sum of P26,020.89, Philippine
currency, with legal interest thereon from April 2, 1921, the date of the defendant's answer, and to pay the costs.
From this judgment the plaintiff appealed to this court and presents the following assignments of error:

(1) That the court erred in dismissing the plaintiff's complaint and ordering him to present a liquidation of the
operations and accounts of the partnership formed with the deceased Narciso Santos, from the beginning of
the partnership until September 1, 1922.

(2) That the court erred in approving the liquidation made by the public accountant Santiago A. Lindaya, with
the modification introduced by the witness Jose Turiano Santiago.

(3) That the court erred in ordering the plaintiff and appellant to pay to the defendant and appellee the sum of
P26,020.89.

As to the first assignment of error there may be some merit in the appellant's contention that the dismissal of his
complaint was premature. The better practise would, perhaps, have been to let the complaint stand until the result of
the liquidation of the partnership affairs was known. But under the circumstances of this case no harm was done by
the dismissal of the complaint, and the error, if any there be, is not reversible.

Under the same assignment of error the plaintiff argues that as the deceased up to the time of his death generally
took care of the payments and collections of the partnership, his legal representatives were under the obligation to
render accounts of the operations of the partnership, notwithstanding the fact that the plaintiff was in charge of the
business subsequent to the death of Santos. This argument is without merit. In the case of Wahl vs. Donaldson Sim
& Co. (5 Phil., 11, 14), it was held that the death of one of the partners dissolves the partnership, but that the
liquidation of its affairs is by law intrusted, not to the executors of the deceased partner, but to the surviving partners
or the liquidators appointed by them (citing article 229 of the Code of Commerce and secs. 664 and 665 of the Code
of Civil Procedure). The same rule is laid down by the Supreme Court of Spain in sentence of October 12, 1870.

The other assignments of error have reference only to questions of fact in regard to which the findings of the court
below seem to be as nearly correct as possible upon the evidence presented. There may be errors in the
interpretation of the accounts, and it is possible that the amount of P26,020.89 charged against the plaintiff is
excessive, but the evidence presented by him is so confusing and unreliable as to be practically of no weight and
cannot serve as a basis for a readjustment of the accounts prepared by the accountant Lindaya and the apparently
reliable witness, Jose Turiano Santiago.

We should, perhaps, have been more inclined to question the conclusions of Lindaya and Santiago if the plaintiff
had shown a disposition to render an honest account of the business and to effect a fair liquidation of the
partnership but instead of doing so, he has by means of very questionable, and apparently false, evidence sought to
mulct his deceased partner's estate to the extent of over P9,000. The rule for the conduct of a surviving partner is
thus stated in 20 R. C. L., 1003:

In equity surviving partners are treated as trustees of the representatives of the deceased partner, in regard to
the interest of the deceased partner in the firm. As a consequence of this trusteeship, surviving partners are
held in their dealings with the firm assets and the representatives of the deceased to that nicety of dealing
and that strictness of accountability required of and incident to the position of one occupying a confidential
relation. It is the duty of surviving partners to render an account of the performance of their trust to the
personal representatives of the deceased partner, and to pay over to them the share of such deceased
member in the surplus of firm property, whether it consists of real or personal assets.

The appellant has completely failed to observe the rule quoted, and he is not in position to complain if his testimony
and that of his witnesses is discredited.

The appealed judgment is affirmed with the costs against the appellant. So ordered.

Avanceña, C. J., Johnson, Street, Malcolm, Villamor, Romualdez, and Villa-Real, JJ., concur.

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