G.R. No.

30286 September 12, 1929

M. TEAGUE, plaintiff-appellant,
vs.
H. MARTIN, J. T. MADDY and L.H. GOLUCKE, defendants-appellees.

Abad Santos, Camu and Delgado, for appellant.

J.W. Ferrier for appellees.

STATEMENT

Plaintiff alleges that about December 23, 1926, he and the defendants formed a partnership for the
operation of a fish business and similar commercial transactions, which by mutual contest was called
"Malangpaya Fish Co," with a capital of P35,000, of which plaintiff paid P25,000, the defendant
Martin P5,000, P2,500, and Golucke P2,500. That as such partnership, they agreed to share in the
profits and losses of the business in proportion to the amount of capital which each contributed. That
the plaintiff was named the general manager to take charge of the business, with full power to do
and perform all acts necessary to carry out of the purposes of the partnership. That there was no
agreement as to the duration of the partnership. That plaintiff wants to dissolve it, but that the
defendants refused to do so. A statement marked Exhibit A, which purports to be a cash book, is
made a part of the complaint. That the partnership purchased and now owns a lighter called Lapu-
Lapu, and a motorship called Barracuda, and other properties. That the lighter and the motorship are
in the possession of the defendants who are making use of them, to the damage and prejudice of
the plaintiff, for any damage which plaintiff may sustain. That it is for the best interest of the parties
to have a receiver appointed pending this litigation, to take possession of the properties, and he
prays that the Philippine Trust Company be appointed receiver, and for judgment dissolving the
partnership, with costs.

Each of the defendants filed a separate answer, but the same nature, in which they admit that about
December 10, 1926, the plaintiff and the defendants formed a partnership for the purpose of the
equipment of the Manila Fish Co., Inc., and the conduct of a fish business. That the terms of the
partnership were never evidenced by a truth and in fact, the partnership was formed under a written
plan, of which each member received a copy and to which all agreed. That by its terms the amount
of the capital was P45,000, of which the plaintiff agreed to contribute P35,000. That P20,000 of the
capital was to be used for the purchase of the equipment of the Manila Fish Co., Inc. and the
balance placed to the checking account o the new company.

It is then alleged that "the new owners agree to duties as follows:

Capt. Maddy will have charger of the Barracuda and the navigating of the same. Salary P300
per month.

Mr. Martin will have charge of the southern station, cold stores, commissary and procuring
fish. Salary P300 per month.

Mr. Teague will have charge of selling fish in Manila and purchasing supplies. No salary until
business is on paying basis, then the same as Maddy or Martin.

The principal office shall be in Manila, each party doing any business shall keep books
showing plainly all transactions, the books shall be available at all time for inspections of any
member of the partnership.
 If Mr. Martin or Mr. Maddy wishes at some future time to repurchase a larger share in the
business Teague agrees to sell part of his shares to each on the basis double the amount
originally invested by each or ten thousand to Martin and five thousand to Maddy.

This offer will expire after two years.

That no charge was ever made in the terms of said agreement of copartnership as set forth
above except that it was later agreed among the partners that the business of the
partnership should be conducted under the trade name "Malangpaya Fish Company."

That as shown by the foregoing quoted agreement the agreed capital of the copartnership
was P45,000 and not P35,000 as stated in the third paragraph of plaintiff's amended
complaint, and the plaintiff herein, M. Teague, bound himself and agreed to contribute to the
said copartnership the sum of P35,000 and not the sum of P25,000 as stated in the third
paragraph of his said amended complaint.

Defendant Martin specificaly denies the "plaintiff was named general manager of the partnership,"
and alleged "that all the duties and powers of the said plaintiff were specifically set forth in the above
quoted written agreement and that no further or additional powers were ever given the said plaintiff."
But he admits the purchase of the motorship Barracuda, by the partnership. He denies that Exhibit A
is a true or correct statement of the cash received and paid out by or on behalf of the partnership, or
that the partnership over purchased or that it now owns the lighter Lapu-Lapu, "And/ or any other
properties" as mentioned in said ninth paragraph, except such motorship and a smoke in the house,"
or that the defendants are making use of any of the properties of the partnership, to the damage and
prejudice of the plaintiff, or that they do not have any visible means to answer for any damages, and
alleges that at the time of the filing of the complaint, partnership in cold storage, of the value of
P6,000, for which he has never accounted on the books of the partnership or mentioned in the
complaint, and defendant prays that plaintiff's complaint be dismissed, and that he be ordered and
required to render an accounting , and to pay to partnership the balance of his unpaid subscription
amounting to P10,000.

In his answer the defendant Maddy claimed and asserted that there is due and owing him from the
plaintiff P1,385.53, with legal interest, and in his amended answer, the defendant Martin prays for
judgment for P615.49.

To all which the plaintiff made a general and specific denial.

Upon such issues the lower court on April 30, 1928, rendered the following judgment:

In view of the foregoing considerations, the court decrees:

That the partnership, existing among the parties in this suit, is hereby declared dissolved;
that all the existing properties of the said partnership are ordered to be sold at public auction;
and that all the proceeds and other unexpended funds of the partnership be used, first, to
pay he P529.48 tax to the Government of the Philippine Islands; second, to pay debts owing
to third persons; third, to reimburse the partners for their advances and salaries due; and
lastly, to return to the partners the amounts they contributed to the capital of the association
and any other remaining such to be distributed proportionately among them as profits:

That the plaintiff immediately render a true and proper account of all the money due to and
received by him for the partnership.
 That the barge Lapu-Lapu as well as the Ford truck No. T-3019 and adding machine belong
exclusively to the plaintiff, M. Teague, but the said plaintiff must return to and reimburse the
partnership the sum of P14,032.26 taken from its funds for the purchase and equipment of
the said barge Lapu-Lapu; and also to return the sum of P1,230 and P228 used for buying
the Ford truck and adding machine, respectively:

That the sum of P,1512.03 be paid to the defendant, J. T. Maddy, and the sum of P615.49
be paid to defendant, H. Martin, for their advances and their unpaid salaries, with legal
interest from October 27, 1927, until paid; that the plaintiff pay the costs of this action.

So ordered.

May 16, 1928, plaintiff filed a motion praying for an order "directing the court's stenographic notes
taken by them of the evidence presented in the present case, as soon as possible." This motion was
denied on May 19th, and on May 16th, the court denied the plaintiff's motion for reconsideration. To
all of which exceptions were duly taken.

June 7, 1928, plaintiff filed a petition praying, for the reasons therein stated, that the decision of the
court in the case be set aside, and that the parties be permitted to again present their testimony and
to have the case decided upon its merits. To which objections were duly made, and on June 28,
1928, the court denied plaintiff's motion for a new trial. To which exceptions were duly taken, and on
July 10, 1928, the plaintiff filed a motion in which he prayed that the period for the appeal interposed
by the plaintiff be suspended, and that the order of June 28, 1928, be set aside, "and that another be
entered ordering the re-taking of the evidence in this case." To which objections were also filed and
later overruled, from all of which the plaintiff appealed and assigns the following errors:

I. The trial court erred in not having confined itself, in the determination of this case, to the
question as to whether or not it is proper to dissolve the partnership and to liquidate its
assets, for all other issues raised by appellees are incidental with the process of liquidation
provided for by law.

II. The trial court erred in not resolving the primary and most important question at issue in
his case, namely, whether or not the appellant M. Teague was the manager of the
unregistered partnership Malangpaya Fish Company.

III. The trial court erred in holding that the appellant had no authority to buy the Lapu-Lapu,
the Ford truck and the adding machine without the consent of his copartners, for in
accordance with article 131 of the Code of Commerce the managing partner of a partnership
can make purchases for the partnership without the knowledge and/or consent of his
copartners.

IV. The trial court erred in holding that the Lapu-Lapu, the Ford truck and the adding machine
purchased by appellant, as manager of the Malangpaya Fish Company, for and with funds of
the partnership, do not form part of the assets of the partnership.

V. The trial court erred in requiring the appellant to pay to the partnership the sum of
P14,032.26, purchase price, cost of repairs and equipment of the barge Lapu-Lapu; P1,230
purchase price of the adding machine, for these properties were purchased for and they form
part of the assets of the partnership.

VI. The trial court erred in disapproving appellant's claim for salary and expenses incurred by
him for and in connection with the partnership's business.
 VII. The trial court erred in approving the claims of appellees J.T. Maddy and H. Martin and
in requiring the appellant to pay them the sum of P1,512.03 and P615.49 respectively.

VIII. The trial court erred in not taking cognizance of appellant's claim for reimbursement for
advances made by him for the partnerships, as shown in the statement attached to the
complaint marked Exhibit A, in which there is a balance in his favor and against the
partnership amounting to over P16,000.

X. Lastly, considering the irregularities committed, the disappearance of the stenographic

notes for a considerable length of time, during which time changes in the testimonies of the
witnesses could have been made and the impossibility of having an accurate and complete
transcript of the stenographic notes, the trial court erred in denying appellant's petition for the
retaking of the evidence in this case.

JOHNS, J.:

By their respective pleadings, all parties agreed that there was a partnership between them, which
appears at one time to have done a good business. In legal effect, plaintiff asked for its dissolution
and the appointment of a receiver pendente lite. The defendants did not object to the dissolution of
the partnership, but prayed for an accounting with the plaintiff. It was upon such issues that the
evidence was taken and the case tried. Hence, there is no merit in the first in the first assignment of
error. Complaint is made that the lower court did not specifically decide as to whether or not the
plaintiff was the manager of the unregistered partnership. But upon that question the lower court, in
legal effect, followed and approved the contention of the defendants that the duties of each partners
were specified and defined in the "plans for formation of a limited partnership," in which it is stated
that Captain Maddy would have charge of the Barracuda and its navigation, with a salary of P300
per month, and that Martin would have charge of the southern station, cold stores, commisary and
procuring fish, with a salary of P300 per month, and that the plaintiff would have charge of selling
fish in Manila and purchasing supplies, without salary until such time as the business is placed on a
paying basis, when his salary would be the same as that of Maddy and Martin, and that the principal
office of the partnership "shall keep books showing plainly all transactions," which shall be available
at all time for inspection of any of the members.

It will thus be noted that the powers and duties of Maddy Martin, and the plaintiff are specifically
defined, and that each of them was more or less the general manager in his particular part of the
business. That is to say, that Maddy's power and duties are confined and limited to the charge of
the Barracuda and its navigation, and Martin's to the southern station, cold stores, commissary and
procuring fish, and that plaintiff's powers and duties are confined and limited to "selling fish in Manila
and the purchase of supplies." In the selling of fish, plaintiff received a substantial amount of money
which he deposited to the credit of the company signed by him as manager, but it appears that was
a requirement which the bank made in the ordinary course of business, as to who was authorized to
sign checks for the partnership; otherwise, it would not cash the checks.

In the final analysis, the important question in this case is the ownership of the Lapu-Lapu, the Ford
truck, and the adding machine. The proof is conclusive that they were purchased by the plaintiff and
paid for him from and out of the money of the partnership. That at the time of their purchase,
the Lapu-Lapu was purchased in the name of the plaintiff, and that he personally had it registered in
the customs house in his own name, for which he made an affidavit that he was its owner. After the
purchase, he also had the Ford truck registered in his won name. His contention that this was done
as a matter of convenience is not tenable. The record shows that when the partnership purchased
the Barracuda, it was registered in the customs house in the name of the partnership, and that it was
a very simple process to have it so registered.

Without making a detailed analysis of the evidence, we agree with the trial court that the Lapu-Lapu,
the Ford truck, and the adding machine were purchased by the plaintiff and paid for out of the funds
of the partnership, and that by his own actions and conduct, and the taking of the title in his own
name, he is now estopped to claim or assert that they are not his property or that they are the
property of the company. Again, under his powers and duties as specified in the tentative, unsigned
written agreement, his authority was confined and limited to the "selling of fish in Manila and the
purchase of supplies." It must be conceded that, standing alone, the power to sell fish and purchase
supplies does not carry with it or imply the authority to purchase the Lapu-Lapu, or the Ford truck, or
the adding machine. From which it must follow that he had no authority to purchase the lighter Lapu-
Lapu, the Ford truck, or the adding machine, as neither of them can be construed as supplies for the
partnership business. While it is true that the tentative agreement was never personally signed by
any member of the firm, the trial court found as a fact, and that finding is sustained by the evidence,
that this unsigned agreement was acted upon and accepted by all parties as the basis of the
partnership. It was upon that theory that the lower court allowed the defendant s Maddy and Martin a
salary of P300 per month and the money which each of them paid out and advanced in the
discharged of their respective duties, and denied any salary to the plaintiff, for the simple reason that
the business was never on a paying basis.

Much could be said about this division of powers, and that Maddy and Martin's duties were confined
and limited to the catching and procuring of fish, which were then shipped to the plaintiff who sold
them on the Manila market and received the proceeds of the sales. In other words, Maddy and
Martin were supplying the fish to plaintiff who sold them under an agreement that he would account
for the money.

Upon the question of accounting, his testimony as to the entries which he made and how he kept the
books of the partnership is very interesting:

Q. Then this salary does not take into consideration the fact that you claim the
company is very badly in debt? —

A. Well, I put the salary in there.

Q. I am asking you if that is true? —

A. I do not think I will decide that, I think it will be decided by the court.

Q. I will ask you to answer the question? —

A. You asked me my opinion and I said that I am entitled to it.

xxx xxx xxx

I am not on trial as a bookkeeper; if my lawyers won't object to the question I will object
myself; I am not on trial as a bookkeeper; I keep my books any way I want to, put in what I
want to, and I leave out anything I don't choose to put in, —

xxx xxx xxx

 Q. You have your own bookkeeping? —

A. Well, I run my business to suit myself, I put in the books what I want to, and
I leave out what I want to, and I have a quarter of a million pesos to show for it, —

xxx xxx xxx

Q. Did you not say that you paid yourself a salary in August because you
made a profit? —

A. Yes. This profit was made counting the stock on hand and equipment on
hand, but as far as cash to pay this balance, I did not have it. when I wanted a salary
I just took it. I ran things to suit myself.

xxx xxx xxx

Q. In other words in going against these partners you are going to tax them for
the services of your attorney? —

A. You are mistaken; I am not against them. I paid this out for filing this
complaint and if the honorable court strikes it out, all right. I think it was a just charge.
When I want to sue them the Company can pay for my suit.

Q. Would you have any objection to their asking for their attorney's fees from
the company as partners also in the business? —

A. Yes.

Q. You would object to your partners having their attorney's fees here paid out
of the copartnership like you have had yours paid? —

A. Yes, that is the way I do my business.

To say the least, this kind of evidence does not appeal to the court. This case has been bitterly
contested, and there is much feeling between the parties and even their respective attorneys. Be
that as it may, we are clearly of the opinion that the findings of the lower court upon questions of fact
are well sustained by the evidence. Plaintiff's case was tried on the theory that the partnership was
the owner of the property in question, and no claim was made for the use of the Lapu-Lapu, and it
appears that P14,032.26 of the partnership money was used in its purchase, overhauling, expenses
and repairs. That in truth and in fact the partnership had the use and benefit of the Lapu-Lapu in its
business from sometime in May until the receiver was appointed on November 11, 1927, or a period
of about six months, and that the partnership has never paid anything for its use. it is true that there
is no testimony as to the value of such use, but the cost of the Lapu-Lapu and the time of its use and
the purpose for which it was used, all appear in the record. For such reason, in the interest of justice,
plaintiff should be compensated for the reasonable value of the time which the partnership made use
of the Lapu-Lapu.

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.

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

Johnson, J., reserves his vote.
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.

Torres, Johnson, Carson, and Moreland, JJ., concur.

G.R. No. 85494 May 7, 1991

CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI and MOTI G.

RAMNANI, petitioners,
vs.
COURT OF APPEALS, SPOUSES ISHWAR JETHMAL RAMNANI, SONYA JETHMAL RAMNANI
and OVERSEAS HOLDING CO., LTD., respondents.

G.R. No. 85496 May 7, 1991

SPOUSES ISHWAR JETHMAL RAMNANI AND SONYA JET RAMNANI, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, ORTIGAS & CO., LTD. PARTNERSHIP, and
OVERSEAS HOLDING CO., LTD., respondents.

Quasha, Asperilla Ancheta, Peña and Nolasco for petitioners Ishwar Jethmal Ramnani & Sonya
Ramnani.
Salonga, Andres, Hernandez & Allado for Choithram Jethmal Ramnani, Nirmla Ramnani & Moti
Ramnani.
Rama Law Office for private respondents in collaboration with Salonga, Andres, Hernandez &
Allado.
Eulogio R. Rodriguez for Ortigas & Co., Ltd.

GANCAYCO, J.:

This case involves the bitter quarrel of two brothers over two (2) parcels of land and its
improvements now worth a fortune. The bone of contention is the apparently conflicting factual
findings of the trial court and the appellate court, the resolution of which will materially affect the
result of the contest.

The following facts are not disputed.

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.1

On February 1, 1966 and on May 16, 1966, Choithram, in his capacity as aforesaid attorney-in-fact
of Ishwar, entered into two agreements for the purchase of two parcels of land located in Barrio
Ugong, Pasig, Rizal, from Ortigas & Company, Ltd. Partnership (Ortigas for short) with a total area of
approximately 10,048 square meters.2Per agreement, Choithram paid the down payment and
installments on the lot with his personal checks. A building was constructed thereon by Choithram in
1966 and this was occupied and rented by Jethmal Industries and a wardrobe shop called Eppie's
Creation. 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. The
buildings were leased out by Choithram as attorney-in-fact of Ishwar. Two of these buildings were
later burned.
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.
As a consequence, on February 4, 1971, 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.3 Said notice was also registered with the Securities and Exchange Commission on
March 29, 19714 and was published in the April 2, 1971 issue of The Manila Times for the
information of the general public.5

Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and interests of
Ishwar and Sonya in favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973. Her
husband is Moti, son of Choithram. Upon complete payment of the lots, Ortigas executed the
corresponding deeds of sale in favor of Nirmla.6 Transfer Certificates of Title Nos. 403150 and
403152 of the Register of Deeds of Rizal were issued in her favor.

Thus, on October 6, 1982, Ishwar and Sonya (spouses Ishwar for short) filed a complaint in the
Court of First Instance of Rizal against Choithram and/or spouses Nirmla and Moti (Choithram et al.
for brevity) and Ortigas for reconveyance of said properties or payment of its value and damages. An
amended complaint for damages was thereafter filed by said spouses.

After the issues were joined and the trial on the merits, a decision was rendered by the trial court on
December 3, 1985 dismissing the complaint and counterclaim. A motion for reconsideration thereof
filed by spouses Ishwar was denied on March 3, 1986.

An appeal therefrom was interposed by spouses Ishwar to the Court of Appeals wherein in due
course a decision was promulgated on March 14, 1988, the dispositive part of which reads as
follows:

WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed
decision of the lower court dated December 3, 1985 and the Order dated March 3, 1986
which denied plaintiffs-appellants' Motion for Reconsideration from aforesaid decision. A new
decision is hereby rendered sentencing defendants- appellees Choithram Jethmal Ramnani,
Nirmla V. Ramnani, Moti C. Ramnani, and Ortigas and Company Limited Partnership to pay,
jointly and severally, plaintiffs-appellants the following:

1. Actual or compensatory damages to the extent of the fair market value of the properties in
question and all improvements thereon covered by Transfer Certificate of Title No. 403150
and Transfer Certificate of Title No. 403152 of the Registry of Deeds of Rizal, prevailing at
the time of the satisfaction of the judgment but in no case shall such damages be less than
the value of said properties as appraised by Asian Appraisal, Inc. in its Appraisal Report
dated August 1985 (Exhibits T to T-14, inclusive).

2. All rental incomes paid or ought to be paid for the use and occupancy of the properties in
question and all improvements thereon consisting of buildings, and to be computed as
follows:

a) On Building C occupied by Eppie's Creation and Jethmal Industries from 1967 to

1973, inclusive, based on the 1967 to 1973 monthly rentals paid by Eppie's Creation;

b) Also on Building C above, occupied by Jethmal Industries and Lavine from 1974 to
1978, the rental incomes based on then rates prevailing as shown under Exhibit "P";
and from 1979 to 1981, based on then prevailing rates as indicated under Exhibit
"Q";
 c) On Building A occupied by Transworld Knitting Mills from 1972 to 1978, the rental
incomes based upon then prevailing rates shown under Exhibit "P", and from 1979 to
1981, based on prevailing rates per Exhibit "Q";

d) On the two Bays Buildings occupied by Sigma-Mariwasa from 1972 to 1978, the
rentals based on the Lease Contract, Exhibit "P", and from 1979 to 1980, the rentals
based on the Lease Contract, Exhibit "Q",

and thereafter commencing 1982, to account for and turn over the rental incomes paid or
ought to be paid for the use and occupancy of the properties and all improvements totalling
10,048 sq. m based on the rate per square meter prevailing in 1981 as indicated annually
cumulative up to 1984. Then, commencing 1985 and up to the satisfaction of the judgment,
rentals shall be computed at ten percent (10%) annually of the fair market values of the
properties as appraised by the Asian Appraisal, Inc. in August 1985 (Exhibits T to T-14,
inclusive.)

3. Moral damages in the sum of P200,000.00;

4. Exemplary damages in the sum of P100,000.00;

5. Attorney's fees equivalent to 10% of the award herein made;

6. Legal interest on the total amount awarded computed from first demand in 1967 and until
the full amount is paid and satisfied; and

7. The cost of suit.7

Acting on a motion for reconsideration filed by Choithram, et al. and Ortigas, the appellate court
promulgated an amended decision on October 17, 1988 granting the motion for reconsideration of
Ortigas by affirming the dismissal of the case by the lower court as against Ortigas but denying the
motion for reconsideration of Choithram, et al.8

Choithram, et al. thereafter filed a petition for review of said judgment of the appellate court alleging
the following grounds:

1. The Court of Appeals gravely abused its discretion in making a factual finding not
supported by and contrary, to the evidence presented at the Trial Court.

2. The Court of Appeals acted in excess of jurisdiction in awarding damages based on the
value of the real properties in question where the cause of action of private respondents is
recovery of a sum of money.

ARGUMENTS

THE COURT OF APPEALS ACTED IN GRAVE ABUSE OF ITS DISCRETION IN MAKING A

FACTUAL FINDING THAT PRIVATE RESPONDENT ISHWAR REMITTED THE AMOUNT
OF US $150,000.00 TO PETITIONER CHOITHRAM IN THE ABSENCE OF PROOF OF
SUCH REMITTANCE.
 II

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AND

MANIFEST PARTIALITY IN DISREGARDING THE TRIAL COURTS FINDINGS BASED ON
THE DIRECT DOCUMENTARY AND TESTIMONIAL EVIDENCE PRESENTED BY
CHOITHRAM IN THE TRIAL COURT ESTABLISHING THAT THE PROPERTIES WERE
PURCHASED WITH PERSONAL FUNDS OF PETITIONER CHOITHRAM AND NOT WITH
MONEY ALLEGEDLY REMITTED BY RESPONDENT ISHWAR.

III

THE COURT OF APPEALS ACTED IN EXCESS OF JURISDICTION IN AWARDING

DAMAGES BASED ON THE VALUE OF THE PROPERTIES AND THE FRUITS OF THE
IMPROVEMENTS THEREON.9

Similarly, spouses Ishwar filed a petition for review of said amended decision of the appellate court
exculpating Ortigas of liability based on the following assigned errors

THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR

AND HAS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW
AND/OR WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT—

A) IN PROMULGATING THE QUESTIONED AMENDED DECISION (ANNEX "A")

RELIEVING RESPONDENT ORTIGAS FROM LIABILITY AND DISMISSING
PETITIONERS' AMENDED COMPLAINT IN CIVIL CASE NO. 534-P, AS AGAINST
SAID RESPONDENT ORTIGAS;

B) IN HOLDING IN SAID AMENDED DECISION THAT AT ANY RATE NO ONE

EVER TESTIFIED THAT ORTIGAS WAS A SUBSCRIBER TO THE MANILA TIMES
PUBLICATION OR THAT ANY OF ITS OFFICERS READ THE NOTICE AS
PUBLISHED IN THE MANILA TIMES, THEREBY ERRONEOUSLY CONCLUDING
THAT FOR RESPONDENT ORTIGAS TO BE CONSTRUCTIVELY BOUND BY THE
PUBLISHED NOTICE OF REVOCATION, ORTIGAS AND/OR ANY OF ITS
OFFICERS MUST BE A SUBSCRIBER AND/OR THAT ANY OF ITS OFFICERS
SHOULD READ THE NOTICE AS ACTUALLY PUBLISHED;

C) IN HOLDING IN SAID AMENDED DECISION THAT ORTIGAS COULD NOT BE

HELD LIABLE JOINTLY AND SEVERALLY WITH THE DEFENDANTS-APPELLEES
CHOITHRAM, MOTI AND NIRMLA RAMNANI, AS ORTIGAS RELIED ON THE
WORD OF CHOITHRAM THAT ALL ALONG HE WAS ACTING FOR AND IN
BEHALF OF HIS BROTHER ISHWAR WHEN IT TRANSFERRED THE RIGHTS OF
THE LATTER TO NIRMLA V. RAMNANI;

D) IN IGNORING THE EVIDENCE DULY PRESENTED AND ADMITTED DURING

THE TRIAL THAT ORTIGAS WAS PROPERLY NOTIFIED OF THE NOTICE OF
REVOCATION OF THE GENERAL POWER OF ATTORNEY GIVEN TO
CHOITHRAM, EVIDENCED BY THE PUBLICATION IN THE MANILA TIMES ISSUE
OF APRIL 2, 1971 (EXH. F) WHICH CONSTITUTES NOTICE TO THE WHOLE
WORLD; THE RECEIPT OF THE NOTICE OF SUCH REVOCATION WHICH WAS
SENT TO ORTIGAS ON MAY 22, 1971 BY ATTY. MARIANO P. MARCOS AND
 RECEIVED BY ORTIGAS ON MAY 24, 1971 (EXH. G) AND THE FILING OF THE
NOTICE WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH
29,1971 (EXH. H);

E) IN DISCARDING ITS FINDINGS CONTAINED IN ITS DECISION OF 14 MARCH

1988 (ANNEX B) THAT ORTIGAS WAS DULY NOTIFIED OF THE REVOCATION
OF THE POWER OF ATTORNEY OF CHOITHRAM, HENCE ORTIGAS ACTED IN
BAD FAITH IN EXECUTING THE DEED OF SALE TO THE PROPERTIES IN
QUESTION IN FAVOR OF NIRMLA V. RAMNANI;

F) IN SUSTAINING RESPONDENT ORTIGAS VACUOUS REHASHED

ARGUMENTS IN ITS MOTION FOR RECONSIDERATION THAT IT WOULD NOT
GAIN ONE CENTAVO MORE FROM CHOITHRAM FOR THE SALE OF SAID LOTS
AND THE SUBSEQUENT TRANSFER OF THE SAME TO THE MATTER'S
DAUGHTER-IN-LAW, AND THAT IT WAS IN GOOD FAITH WHEN IT
TRANSFERRED ISHWAR'S RIGHTS TO THE LOTS IN QUESTION.

II

THE RESPONDENT HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED

FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDING WHEN IT
HELD IN THE QUESTIONED AMENDED DECISION OF 17 NOVEMBER 1988 (ANNEX A)
THAT RESPONDENT ORTIGAS & CO., LTD., IS NOT JOINTLY AND SEVERALLY LIABLE
WITH DEFENDANTS-APPELLEES CHOITHRAM, MOTI AND NIRMLA RAMNANI IN SPITE
OF ITS ORIGINAL DECISION OF 14 MARCH 1988 THAT ORTIGAS WAS DULY NOTIFIED
OF THE REVOCATION OF THE POWER OF ATTORNEY OF CHOITHRAM RAMNANI.10

The center of controversy is the testimony of Ishwar that during the latter part of 1965, he sent the
amount of US $150,000.00 to Choithram in two bank drafts of US$65,000.00 and US$85,000.00 for
the purpose of investing the same in real estate in the Philippines. The trial court considered this
lone testimony unworthy of faith and credit. On the other hand, the appellate court found that the trial
court misapprehended the facts in complete disregard of the evidence, documentary and testimonial.

Another crucial issue is the claim of Choithram that because he was then a British citizen, as a
temporary arrangement, he arranged the purchase of the properties in the name of Ishwar who was
an American citizen and who was then qualified to purchase property in the Philippines under the
then Parity Amendment. The trial court believed this account but it was debunked by the appellate
court.

As to the issue of whether of not spouses Ishwar actually sent US$150,000.00 to Choithram
precisely to be used in the real estate business, the trial court made the following disquisition —

After a careful, considered and conscientious examination of the evidence adduced in the
case at bar, plaintiff Ishwar Jethmal Ramanani's main evidence, which centers on the
alleged payment by sending through registered mail from New York two (2) US$ drafts of
$85,000.00 and $65,000.00 in the latter part of 1965 (TSN 28 Feb. 1984, p. 10-11). The
sending of these moneys were before the execution of that General Power of Attorney, which
was dated in New York, on January 24, 1966. Because of these alleged remittances of US
$150,000.00 and the subsequent acquisition of the properties in question, plaintiffs averred
that they constituted a trust in favor of defendant Choithram Jethmal Ramnani. This Court
can be in full agreement if the plaintiffs were only able to prove preponderantly these
remittances. The entire record of this case is bereft of even a shred of proof to that effect. It
 is completely barren. His uncorroborated testimony that he remitted these amounts in the
"later part of 1965" does not engender enough faith and credence. Inadequacy of details of
such remittance on the two (2) US dollar drafts in such big amounts is completely not
positive, credible, probable and entirely not in accord with human experience. This is a
classic situation, plaintiffs not exhibiting any commercial document or any document and/or
paper as regard to these alleged remittances. Plaintiff Ishwar Ramnani is not an ordinary
businessman in the strict sense of the word. Remember his main business is based in New
York, and he should know better how to send these alleged remittances. Worst, plaintiffs did
not present even a scum of proof, that defendant Choithram Ramnani received the alleged
two US dollar drafts. Significantly, he does not know even the bank where these two (2) US
dollar drafts were purchased. Indeed, plaintiff Ishwar Ramnani's lone testimony is unworthy
of faith and credit and, therefore, deserves scant consideration, and since the plaintiffs'
theory is built or based on such testimony, their cause of action collapses or falls with it.

Further, the rate of exchange that time in 1966 was P4.00 to $1.00. The alleged two US
dollar drafts amounted to $150,000.00 or about P600,000.00. Assuming the cash price of the
two (2) lots was only P530,000.00 (ALTHOUGH he said: "Based on my knowledge I have no
evidence," when asked if he even knows the cash price of the two lots). If he were really the
true and bonafide investor and purchaser for profit as he asserted, he could have paid the
price in full in cash directly and obtained the title in his name and not thru "Contracts To Sell"
in installments paying interest and thru an attorney-in fact (TSN of May 2, 1984, pp. 10-11)
and, again, plaintiff Ishwar Ramnani told this Court that he does not know whether or not his
late father-in-law borrowed the two US dollar drafts from the Swiss Bank or whether or not
his late father-in-law had any debit memo from the Swiss Bank (TSN of May 2, 1984, pp. 9-
10).11

On the other hand, the appellate court, in giving credence to the version of Ishwar, had this to say —

While it is true, that generally the findings of fact of the trial court are binding upon the
appellate courts, said rule admits of exceptions such as when (1) the conclusion is a finding
grounded entirely on speculations, surmises and conjectures; (2) when the inferences made
is manifestly mistaken, absurd and impossible; (3) when there is grave abuse of discretion;
(4) when the judgment is based on a misapprehension of facts and when the court, in
making its findings, went beyond the issues of the case and the same are contrary to the
admissions of both appellant and appellee (Ramos vs. Court of Appeals, 63 SCRA 33;
Philippine American Life Assurance Co. vs. Santamaria, 31 SCRA 798; Aldaba vs. Court of
Appeals, 24 SCRA 189).

The evidence on record shows that the t court acted under a misapprehension of facts and
the inferences made on the evidence palpably a mistake.

The trial court's observation that "the entire records of the case is bereft of even a shred of
proof" that plaintiff-appellants have remitted to defendant-appellee Choithram Ramnani the
amount of US $ 150,000.00 for investment in real estate in the Philippines, is not borne by
the evidence on record and shows the trial court's misapprehension of the facts if not a
complete disregard of the evidence, both documentary and testimonial.

Plaintiff-appellant Ishwar Jethmal Ramnani testifying in his own behalf, declared that during
the latter part of 1965, he sent the amount of US $150,000.00 to his brother Choithram in two
bank drafts of US $65,000.00 and US $85,000.00 for the purpose of investing the same in
real estate in the Philippines. His testimony is as follows:
ATTY. MARAPAO:

Mr. Witness, you said that your attorney-in-fact paid in your behalf. Can you tell this
Honorable Court where your attorney-in-fact got the money to pay this property?

ATTY. CRUZ:

Wait. It is now clear it becomes incompetent or hearsay.

COURT:

Witness can answer.

A I paid through my attorney-in-fact. I am the one who gave him the money.

ATTY. MARAPAO:

Q You gave him the money?

A That's right.

Q How much money did you give him?

A US $ 150,000.00.

Q How was it given then?

A Through Bank drafts. US $65,000.00 and US $85,000.00 bank drafts. The total
amount which is $ 150,000.00 (TSN, 28 February 1984, p. 10; Emphasis supplied.)

xxx xxx xxx

ATTY. CRUZ:

Q The two bank drafts which you sent I assume you bought that from some banks in
New York?

A No, sir.

Q But there is no question those two bank drafts were for the purpose of paying
down payment and installment of the two parcels of land?

A Down payment, installment and to put up the building.

Q I thought you said that the buildings were constructed . . . subject to our continuing
objection from rentals of first building?

ATTY. MARAPAO:

Your Honor, that is misleading.

 COURT;

Witness (may) answer.

A Yes, the first building was immediately put up after the purchase of the two parcels
of land that was in 1966 and the finds were used for the construction of the building
from the US $150,000.00 (TSN, 7 March 1984, page 14; Emphasis supplied.)

xxx xxx xxx

Q These two bank drafts which you mentioned and the use for it you sent them by
registered mail, did you send them from New Your?

A That is right.

Q And the two bank drafts which were put in the registered mail, the registered mail
was addressed to whom?

A Choithram Ramnani. (TSN, 7 March 1984, pp. 14-15).

On cross-examination, the witness reiterated the remittance of the money to his brother
Choithram, which was sent to him by his father-in-law, Rochiram L. Mulchandoni from
Switzerland, a man of immense wealth, which even defendants-appellees' witness Navalrai
Ramnani admits to be so (tsn., p. 16, S. Oct. 13, 1985). Thus, on cross-examination, Ishwar
testified as follows:

Q How did you receive these two bank drafts from the bank the name of which you
cannot remember?

A I got it from my father-in-law.

Q From where did your father- in-law sent these two bank drafts?

A From Switzerland.

Q He was in Switzerland.

A Probably, they sent out these two drafts from Switzerland.

(TSN, 7 March 1984, pp. 16-17; Emphasis supplied.)

This positive and affirmative testimony of plaintiff-appellant that he sent the two (2) bank
drafts totalling US $ 150,000.00 to his brother, is proof of said remittance. Such positive
testimony has greater probative force than defendant-appellee's denial of receipt of said
bank drafts, for a witness who testifies affirmatively that something did happen should be
believed for it is unlikely that a witness will remember what never happened (Underhill's Cr.
Guidance, 5th Ed., Vol. 1, pp. 10-11).

That is not all. Shortly thereafter, plaintiff-appellant Ishwar Ramnani executed a General
Power of Attorney (Exhibit "A") dated January 24, 1966 appointing his brothers, defendants-
 appellees Navalrai and Choithram as attorney-in-fact empowering the latter to conduct and
manage plaintiffs-appellants' business affairs in the Philippines and specifically—

No. 14. To acquire, purchase for us, real estates and improvements for the purpose
of real estate business anywhere in the Philippines and to develop, subdivide,
improve and to resell to buying public (individual, firm or corporation); to enter in any
contract of sale in oar behalf and to enter mortgages between the vendees and the
herein grantors that may be needed to finance the real estate business being
undertaken.

Pursuant thereto, on February 1, 1966 and May 16, 1966, Choithram Jethmal Ramnani
entered into Agreements (Exhibits "B' and "C") with the other defendant. Ortigas and
Company, Ltd., for the purchase of two (2) parcels of land situated at Barrio Ugong, Pasig,
Rizal, with said defendant-appellee signing the Agreements in his capacity as Attorney-in-
fact of Ishwar Jethmal Ramnani.

Again, on January 5, 1972, almost seven (7) years after Ishwar sent the US $ 150,000.00 in
1965, Choithram Ramnani, as attorney-in fact of Ishwar entered into a Contract of Lease with
Sigma-Mariwasa (Exhibit "P") thereby re-affirming the ownership of Ishwar over the disputed
property and the trust relationship between the latter as principal and Choithram as attorney-
in-fact of Ishwar.

All of these facts indicate that if plaintiff-appellant Ishwar had not earlier sent the US $
150,000.00 to his brother, Choithram, there would be no purpose for him to execute a power
of attorney appointing his brothers as s attorney-in-fact in buying real estate in the
Philippines.

As against Choithram's denial that he did not receive the US $150,000.00 remitted by Ishwar
and that the Power of Attorney, as well as the Agreements entered into with Ortigas & Co.,
were only temporary arrangements, Ishwar's testimony that he did send the bank drafts to
Choithram and was received by the latter, is the more credible version since it is natural,
reasonable and probable. It is in accord with the common experience, knowledge and
observation of ordinary men (Gardner vs. Wentors 18 Iowa 533). And in determining where
the superior weight of the evidence on the issues involved lies, the court may consider the
probability or improbability of the testimony of the witness (Sec. 1, Rule 133, Rules of Court).

Contrary, therefore, to the trial court's sweeping observation that 'the entire records of the
case is bereft of even a shred of proof that Choithram received the alleged bank drafts
amounting to US $ 150,000.00, we have not only testimonial evidence but also documentary
and circumstantial evidence proving said remittance of the money and the fiduciary
relationship between the former and Ishwar.12

The Court agrees. The environmental circumstances of this case buttress the claim of Ishwar that he
did entrust the amount of US $ 150,000.00 to his brother, Choithram, which the latter invested in the
real property business subject of this litigation in his capacity as attorney-in-fact of Ishwar.

True it is that there is no receipt whatever in the possession of Ishwar to evidence the same, but it is
not unusual among brothers and close family members to entrust money and valuables to each
other without any formalities or receipt due to the special relationship of trust between them.

And another proof thereof is the fact that Ishwar, out of frustration when Choithram failed to account
for the realty business despite his demands, revoked the general power of attorney he extended to
Choithram and Navalrai. Thereafter, Choithram wrote a letter to Ishwar pleading that the power of
attorney be renewed or another authority to the same effect be extended, which reads as follows:

June 25,1971

MR. ISHWAR JETHMAL

NEW YORK

(1) Send power of Atty. immediately, because the case has been postponed for two
weeks. The same way as it has been send before in favor of both names. Send it
immediately otherwise everything will be lost unnecessarily, and then it will take us in
litigation. Now that we have gone ahead with a case and would like to end it
immediately otherwise squatters will take the entire land. Therefore, send it
immediately.

(2) Ortigas also has sued us because we are holding the installments, because they
have refused to give a rebate of P5.00 per meter which they have to give us as per
contract. They have filed the law suit that since we have not paid the installment they
should get back the land. The hearing of this case is in the month of July. Therefore,
please send the power immediately. In one case DADA (Elder Brother) will represent
and in another one, I shall.

(3) In case if you do not want to give power then make one letter in favor of Dada
and the other one in my favor showing that in any litigation we can represent you and
your wife, and whatever the court decide it will be acceptable by me. You can ask
any lawyer, he will be able to prepare these letters. After that you can have these
letters ratify before P.I. Consulate. It should be dated April 15, 1971.

(4) Try to send the power because it will be more useful. Make it in any manner
whatever way you have confident in it. But please send it immediately.

You have cancelled the power. Therefore, you have lost your reputation everywhere. What can I
further write you about it. I have told everybody that due to certain reasons I have written you to do
this that is why you have done this. This way your reputation have been kept intact. Otherwise if I
want to do something about it, I can show you that inspite of the power you have cancelled you can
not do anything. You can keep this letter because my conscience is clear. I do not have anything in
my mind.

I should not be writing you this, but because my conscience is clear do you know that if I had
predated papers what could you have done? Or do you know that I have many paper signed by you
and if had done anything or do then what can you do about it? It is not necessary to write further
about this. It does not matter if you have cancelled the power. At that time if I had predated and done
something about it what could you have done? You do not know me. I am not after money. I can
earn money anytime. It has been ten months since I have not received a single penny for expenses
from Dada (elder brother). Why there are no expenses? We can not draw a single penny from
knitting (factory). Well I am not going to write you further, nor there is any need for it. This much I am
writing you because of the way you have conducted yourself. But remember, whenever I hale the
money I will not keep it myself Right now I have not got anything at all.

I am not going to write any further.

Keep your business clean with Naru. Otherwise he will discontinue because he likes to keep his
business very clean.13

The said letter was in Sindhi language. It was translated to English by the First Secretary of the
Embassy of Pakistan, which translation was verified correct by the Chairman, Department of Sindhi,
University of Karachi.14

From the foregoing letter what could be gleaned is that—

1. Choithram asked for the issuance of another power of attorney in their favor so they can
continue to represent Ishwar as Ortigas has sued them for unpaid installments. It also
appears therefrom that Ortigas learned of the revocation of the power of attorney so the
request to issue another.

2. Choithram reassured Ishwar to have confidence in him as he was not after money, and
that he was not interested in Ishwar's money.

3. To demonstrate that he can be relied upon, he said that he could have ante-dated the
sales agreement of the Ortigas lots before the issuance of the powers of attorney and
acquired the same in his name, if he wanted to, but he did not do so.

4. He said he had not received a single penny for expenses from Dada (their elder brother
Navalrai). Thus, confirming that if he was not given money by Ishwar to buy the Ortigas lots,
he could not have consummated the sale.

5. It is important to note that in said letter Choithram never claimed ownership of the property
in question. He affirmed the fact that he bought the same as mere agent and in behalf of
Ishwar. Neither did he mention the alleged temporary arrangement whereby Ishwar, being an
American citizen, shall appear to be the buyer of the said property, but that after Choithram
acquires Philippine citizenship, its ownership shall be transferred to Choithram.

This brings us to this temporary arrangement theory of Choithram.

The appellate court disposed of this matter in this wise

Choithram's claim that he purchased the two parcels of land for himself in 1966 but placed it
in the name of his younger brother, Ishwar, who is an American citizen, as a temporary
arrangement,' because as a British subject he is disqualified under the 1935 Constitution to
acquire real property in the Philippines, which is not so with respect to American citizens in
view of the Ordinance Appended to the Constitution granting them parity rights, there is
nothing in the records showing that Ishwar ever agreed to such a temporary arrangement.

During the entire period from 1965, when the US $ 150,000. 00 was transmitted to
Choithram, and until Ishwar filed a complaint against him in 1982, or over 16 years,
Choithram never mentioned of a temporary arrangement nor can he present any
memorandum or writing evidencing such temporary arrangement, prompting plaintiff-
appellant to observe:

The properties in question which are located in a prime industrial site in Ugong,
Pasig, Metro Manila have a present fair market value of no less than P22,364,000.00
(Exhibits T to T-14, inclusive), and yet for such valuable pieces of property,
 Choithram who now belatedly that he purchased the same for himself did not
document in writing or in a memorandum the alleged temporary arrangement with
Ishwar' (pp. 4-41, Appellant's Brief).

Such verbal allegation of a temporary arrangement is simply improbable and inconsistent. It

has repeatedly been held that important contracts made without evidence are highly
improbable.

The improbability of such temporary arrangement is brought to fore when we consider that
Choithram has a son (Haresh Jethmal Ramnani) who is an American citizen under whose
name the properties in question could be registered, both during the time the contracts to sell
were executed and at the time absolute title over the same was to be delivered. At the time
the Agreements were entered into with defendant Ortigas & Co. in 1966, Haresh, was
already 18 years old and consequently, Choithram could have executed the deeds in trust for
his minor son. But, he did not do this. Three (3) years, thereafter, or in 1968 after Haresh had
attained the age of 21, Choithram should have terminated the temporary arrangement with
Ishwar, which according to him would be effective only pending the acquisition of citizenship
papers. Again, he did not do anything.

Evidence to be believed, said Vice Chancellor Van Fleet of New Jersey, must not
only proceed from the mouth of a credible witness, but it must be credible in itself—
such as the common experience and observation of mankind can approve as
probable under the circumstances. We have no test of the truth of human testimony,
except its conformity to our knowledge, observation and experience. Whatever is
repugnant to these belongs to the miraculous and is outside of judicial cognizance.
(Daggers vs. Van Dyek 37 M.J. Eq. 130, 132).

Another factor that can be counted against the temporary arrangement excuse is that upon
the revocation on February 4, 1971 of the Power of attorney dated January 24, 1966 in favor
of Navalrai and Choithram by Ishwar, Choithram wrote (tsn, p. 21, S. July 19, 1985) a letter
dated June 25, 1971 (Exhibits R, R-1, R-2 and R-3) imploring Ishwar to execute a new power
of attorney in their favor. That if he did not want to give power, then Ishwar could make a
letter in favor of Dada and another in his favor so that in any litigation involving the properties
in question, both of them could represent Ishwar and his wife. Choithram tried to convince
Ishwar to issue the power of attorney in whatever manner he may want. In said letter no
mention was made at all of any temporary arrangement.

On the contrary, said letter recognize(s) the existence of principal and attorney-in-fact
relationship between Ishwar and himself. Choithram wrote: . . . do you know that if I had
predated papers what could you have done? Or do you know that I have many papers
signed by you and if I had done anything or do then what can you do about it?' Choithram
was saying that he could have repudiated the trust and ran away with the properties of
Ishwar by predating documents and Ishwar would be entirely helpless. He was bitter as a
result of Ishwar's revocation of the power of attorney but no mention was made of any
temporary arrangement or a claim of ownership over the properties in question nor was he
able to present any memorandum or document to prove the existence of such temporary
arrangement.

Choithram is also estopped in pais or by deed from claiming an interest over the properties in
question adverse to that of Ishwar. Section 3(a) of Rule 131 of the Rules of Court states that
whenever a party has, by his own declaration, act, or omission intentionally and deliberately
led another to believe a particular thing true and act upon such belief, he cannot in any
litigation arising out of such declaration, act or omission be permitted to falsify it.' While
estoppel by deed is a bar which precludes a party to a deed and his privies from asserting as
against the other and his privies any right of title in derogation of the deed, or from denying
the truth of any material fact asserted in it (31 C.J.S. 195; 19 Am. Jur. 603).

Thus, defendants-appellees are not permitted to repudiate their admissions and

representations or to assert any right or title in derogation of the deeds or from denying the
truth of any material fact asserted in the (1) power of attorney dated January 24, 1966
(Exhibit A); (2) the Agreements of February 1, 1966 and May 16, 1966 (Exhibits B and
C); and (3) the Contract of Lease dated January 5, 1972 (Exhibit P).

. . . The doctrine of estoppel is based upon the grounds of public policy, fair dealing,
good faith and justice, and its purpose is to forbid one to speak against his own act,
representations, or commitments to the injury of one to whom they were directed and
who reasonably relied thereon. The doctrine of estoppel springs from equitable
principles and the equities in the case. It is designed to aid the law in the
administration of justice where without its aid injustice might result. It has been
applied by court wherever and whenever special circumstances of a case so
demands' (Philippine National Bank vs. Court of Appeals, 94 SCRA 357, 368 [1979]).

It was only after the services of counsel has been obtained that Choithram alleged for the
first time in his Answer that the General Power of attorney (Annex A) with the Contracts to
Sell (Annexes B and C) were made only for the sole purpose of assuring defendants'
acquisition and ownership of the lots described thereon in due time under the law; that said
instruments do not reflect the true intention of the parties (par. 2, Answer dated May 30,
1983), seventeen (17) long years from the time he received the money transmitted to him by
his brother, Ishwar.

Moreover, Choithram's 'temporary arrangement,' by which he claimed purchasing the two (2)
parcels in question in 1966 and placing them in the name of Ishwar who is an American
citizen, to circumvent the disqualification provision of aliens acquiring real properties in the
Philippines under the 1935 Philippine Constitution, as Choithram was then a British subject,
show a palpable disregard of the law of the land and to sustain the supposed "temporary
arrangement" with Ishwar would be sanctioning the perpetration of an illegal act and culpable
violation of the Constitution.

Defendants-appellees likewise violated the Anti-Dummy Law (Commonwealth Act 108, as

amended), which provides in Section 1 thereof that:

In all cases in which any constitutional or legal provision requires Philippine or any
other specific citizenship as a requisite for the exercise or enjoyment of a right,
franchise or privilege, . . . any alien or foreigner profiting thereby, shall be punished .
. . by imprisonment . . . and of a fine of not less than the value of the right, franchise
or privileges, which is enjoyed or acquired in violation of the provisions hereof . . .

Having come to court with unclean hands, Choithram must not be permitted foist his
'temporary arrangement' scheme as a defense before this court. Being in delicto, he does
not have any right whatsoever being shielded from his own wrong-doing, which is not so with
respect to Ishwar, who was not a party to such an arrangement.

The falsity of Choithram's defense is further aggravated by the material inconsistencies and
contradictions in his testimony. While on January 23, 1985 he testified that he purchased the
 land in question on his own behalf (tsn, p. 4, S. Jan. 23, 1985), in the July 18, 1985 hearing,
forgetting probably what he stated before, Choithram testified that he was only an attorney-
in-fact of Ishwar (tsn, p. 5, S. July 18, 1985). Also in the hearing of January 23, 1985,
Choithram declared that nobody rented the building that was constructed on the parcels of
land in question (tsn, pp. 5 and 6), only to admit in the hearing of October 30, 1985, that he
was in fact renting the building for P12,000. 00 per annum (tsn, p. 3). Again, in the hearing of
July 19, 1985, Choithram testified that he had no knowledge of the revocation of the Power
of Attorney (tsn, pp. 20- 21), only to backtrack when confronted with the letter of June 25,
1971 (Exhibits R to R-3), which he admitted to be in "his own writing," indicating knowledge
of the revocation of the Power of Attorney.

These inconsistencies are not minor but go into the entire credibility of the testimony of
Choithram and the rule is that contradictions on a very crucial point by a witness, renders s
testimony incredible People vs. Rafallo, 80 Phil. 22). Not only this the doctrine of falsus in
uno, falsus in omnibus is fully applicable as far as the testimony of Choithram is concerned.
The cardinal rule, which has served in all ages, and has been applied to all conditions of
men, is that a witness willfully falsifying the truth in one particular, when upon oath, ought
never to be believed upon the strength of his own testimony, whatever he may assert (U.S.
vs. Osgood 27 Feb. Case No. 15971-a, p. 364); Gonzales vs. Mauricio, 52 Phil, 728), for
what ground of judicial relief can there be left when the party has shown such gross
insensibility to the difference between right and wrong, between truth and falsehood? (The
Santisima Trinidad, 7 Wheat, 283, 5 U.S. [L. ed.] 454).

True, that Choithram's testimony finds corroboration from the testimony of his brother,
Navalrai, but the same would not be of much help to Choithram. Not only is Navalrai an
interested and biased witness, having admitted his close relationship with Choithram and
that whenever he or Choithram had problems, they ran to each other (tsn, pp. 17-18, S.
Sept. 20, 1985), Navalrai has a pecuniary interest in the success of Choithram in the case in
question. Both he and Choithram are business partners in Jethmal and Sons and/or Jethmal
Industries, wherein he owns 60% of the company and Choithram, 40% (p. 62, Appellant's
Brief). Since the acquisition of the properties in question in 1966, Navalrai was occupying
1,200 square meters thereof as a factory site plus the fact that his son (Navalrais) was
occupying the apartment on top of the factory with his family rent free except the amount of P
l,000.00 a month to pay for taxes on said properties (tsn, p. 17, S. Oct. 3, 1985).

Inherent contradictions also marked Navalrai testimony. "While the latter was very
meticulous in keeping a receipt for the P 10,000.00 that he paid Ishwar as settlement in
Jethmal Industries, yet in the alleged payment of P 100,000.00 to Ishwar, no receipt or
voucher was ever issued by him (tsn, p. 17, S. Oct. 3, 1983).15

We concur.
The foregoing findings of facts of the Court of Appeals which are supported by the evidence is
conclusive on this Court. The Court finds that Ishwar entrusted US$150,000.00 to Choithram in 1965
for investment in the realty business. Soon thereafter, a general power of attorney was executed by
Ishwar in favor of both Navalrai and Choithram. If it is true that the purpose only is to enable
Choithram to purchase realty temporarily in the name of Ishwar, why the inclusion of their elder
brother Navalrai as an attorney-in-fact?

Then, acting as attorney-in-fact of Ishwar, Choithram purchased two parcels of land located in Barrio
Ugong Pasig, Rizal, from Ortigas in 1966. With the balance of the money of Ishwar, Choithram
erected a building on said lot. Subsequently, with a loan obtained from a bank and the income of the
said property, Choithram constructed three other buildings thereon. He managed the business and
collected the rentals. Due to their relationship of confidence it was only in 1970 when Ishwar
demanded for an accounting from Choithram. And even as Ishwar revoked the general power of
attorney on February 4, 1971, of which Choithram was duly notified, Choithram wrote to Ishwar on
June 25, 1971 requesting that he execute a new power of attorney in their favor.16 When Ishwar did
not respond thereto, Choithram nevertheless proceeded as such attorney-in-fact to assign all the
rights and interest of Ishwar to his daughter-in-law Nirmla in 1973 without the knowledge and
consent of Ishwar. Ortigas in turn executed the corresponding deeds of sale in favor of Nirmla after
full payment of the purchase accomplice of the lots.

In the prefatory statement of their petition, Choithram pictured Ishwar to be so motivated by greed
and ungratefulness, who squandered the family business in New York, who had to turn to his wife for
support, accustomed to living in ostentation and who resorted to blackmail in filing several criminal
and civil suits against them. These statements find no support and should be stricken from the
records. Indeed, they are irrelevant to the proceeding.

Moreover, assuming Ishwar is of such a low character as Choithram proposes to make this Court to
believe, why is it that of all persons, under his temporary arrangement theory, Choithram opted to
entrust the purchase of valuable real estate and built four buildings thereon all in the name of
Ishwar? Is it not an unconscious emergence of the truth that this otherwise wayward brother of theirs
was on the contrary able to raise enough capital through the generosity of his father-in-law for the
purchase of the very properties in question? As the appellate court aptly observed if truly this
temporary arrangement story is the only motivation, why Ishwar of all people? Why not the own son
of Choithram, Haresh who is also an American citizen and who was already 18 years old at the time
of purchase in 1966? The Court agrees with the observation that this theory is an afterthought which
surfaced only when Choithram, Nirmla and Moti filed their answer.

When Ishwar asked for an accounting in 1970 and revoked the general power of attorney in 1971,
Choithram had a total change of heart. He decided to claim the property as his. He caused the
transfer of the rights and interest of Ishwar to Nirmla. On his representation, Ortigas executed the
deeds of sale of the properties in favor of Nirmla. Choithram obviously surmised Ishwar cannot stake
a valid claim over the property by so doing.

Clearly, this transfer to Nirmla is fictitious and, as admitted by Choithram, was intended only to place
the property in her name until Choithram acquires Philippine citizenship.17 What appears certain is
that it appears to be a scheme of Choithram to place the property beyond the reach of Ishwar should
he successfully claim the same. Thus, it must be struck down.

Worse still, on September 27, 1990 spouses Ishwar filed an urgent motion for the issuance of a writ
of preliminary attachment and to require Choithram, et al. to submit certain documents, inviting the
attention of this Court to the following:

a) Donation by Choithram of his 2,500 shares of stock in General Garments Corporation in

favor of his children on December 29, 1989;18

b) Sale on August 2, 1990 by Choithram of his 100 shares in Biflex (Phils.), Inc., in favor of
his children;19 and

c) Mortgage on June 20, 1989 by Nirmla through her attorney-in-fact, Choithram, of the
properties subject of this litigation, for the amount of $3 Million in favor of Overseas Holding,
Co. Ltd., (Overseas for brevity), a corporation which appears to be organized and existing
under and by virtue of the laws of Cayman Islands, with a capital of only $100.00 divided into
 100 shares of $1.00 each, and with address at P.O. Box 1790, Grand Cayman, Cayman
Islands.20

An opposition thereto was filed by Choithram, et al. but no documents were produced. A
manifestation and reply to the opposition was filed by spouses Ishwar.

All these acts of Choithram, et al. appear to be fraudulent attempts to remove these properties to the
detriment of spouses Ishwar should the latter prevail in this litigation.

On December 10, 1990 the court issued a resolution that substantially reads as follows:

Considering the allegations of petitioners Ishwar Jethmal Ramnani and Sonya Ramnani that
respondents Choithram Jethmal Ramnani, Nirmla Ramnani and Moti G. Ramnani have
fraudulently executed a simulated mortgage of the properties subject of this litigation dated
June 20, 1989, in favor of Overseas Holding Co., Ltd. which appears to be a corporation
organized in Cayman Islands, for the amount of $ 3,000,000.00, which is much more than
the value of the properties in litigation; that said alleged mortgagee appears to be a "shell"
corporation with a capital of only $100.00; and that this alleged transaction appears to be
intended to defraud petitioners Ishwar and Sonya Jethmal Ramnani of any favorable
judgment that this Court may render in this case;

Wherefore the Court Resolved to issue a writ of preliminary injunction enjoining and
prohibiting said respondents Choithram Jethmal Ramnani, Nirmla V. Ramnani, Moti G.
Ramnani and the Overseas Holding Co., Ltd. from encumbering, selling or otherwise
disposing of the properties and improvements subject of this litigation until further orders of
the Court. Petitioners Ishwar and Sonya Jethmal Ramnani are hereby required to post a
bond of P 100,000.00 to answer for any damages d respondents may suffer by way of this
injunction if the Court finally decides the said petitioners are not entitled thereto.

The Overseas Holding Co., Ltd. with address at P.O. Box 1790 Grand Cayman, Cayman
Islands, is hereby IMPLEADED as a respondent in these cases, and is hereby required to
SUBMIT its comment on the Urgent Motion for the Issuance of a Writ of Preliminary
Attachment and Motion for Production of Documents, the Manifestation and the Reply to the
Opposition filed by said petitioners, within Sixty (60) days after service by publication on it in
accordance with the provisions of Section 17, Rule 14 of the Rules of Court, at the expense
of petitioners Ishwar and Sonya Jethmal Ramnani.

Let copies of this resolution be served on the Register of Deeds of Pasig, Rizal, and the
Provincial Assessor of Pasig, Rizal, both in Metro Manila, for its annotation on the transfer
Certificates of Titles Nos. 403150 and 403152 registered in the name of respondent Nirmla
V. Ramnani, and on the tax declarations of the said properties and its improvements subject
of this litigation.21

The required injunction bond in the amount of P 100,000.00 was filed by the spouses Ishwar which
was approved by the Court. The above resolution of the Court was published in the Manila Bulletin
issue of December 17, 1990 at the expense of said spouses.22 On December 19, 1990 the said
resolution and petition for review with annexes in G.R. Nos. 85494 and 85496 were transmitted to
respondent Overseas, Grand Cayman Islands at its address c/o Cayman Overseas Trust Co. Ltd.,
through the United Parcel Services Bill of Lading23 and it was actually delivered to said company on
January 23, 1991.24
On January 22, 1991, Choithram, et al., filed a motion to dissolve the writ of preliminary injunction
alleging that there is no basis therefor as in the amended complaint what is sought is actual
damages and not a reconveyance of the property, that there is no reason for its issuance, and that
acts already executed cannot be enjoined. They also offered to file a counterbond to dissolve the
writ.

A comment/opposition thereto was filed by spouses Ishwar that there is basis for the injunction as
the alleged mortgage of the property is simulated and the other donations of the shares of Choithram
to his children are fraudulent schemes to negate any judgment the Court may render for petitioners.

No comment or answer was filed by Overseas despite due notice, thus it is and must be considered
to be in default and to have lost the right to contest the representations of spouses Ishwar to declare
the aforesaid alleged mortgage nun and void.

This purported mortgage of the subject properties in litigation appears to be fraudulent and
simulated. The stated amount of $3 Million for which it was mortgaged is much more than the value
of the mortgaged properties and its improvements. The alleged mortgagee-company (Overseas)
was organized only on June 26,1989 but the mortgage was executed much earlier, on June 20,
1989, that is six (6) days before Overseas was organized. Overseas is a "shelf" company worth only
$100.00.25 In the manifestation of spouses Ishwar dated April 1, 1991, the Court was informed that
this matter was brought to the attention of the Central Bank (CB) for investigation, and that in a letter
of March 20, 1991, the CB informed counsel for spouses Ishwar that said alleged foreign loan of
Choithram, et al. from Overseas has not been previously approved/registered with the CB.26

Obviously, this is another ploy of Choithram, et al. to place these properties beyond the reach of
spouses Ishwar should they obtain a favorable judgment in this case. The Court finds and so
declares that this alleged mortgage should be as it is hereby declared null and void.

All these contemporaneous and subsequent acts of Choithram, et al., betray the weakness of their
cause so they had to take an steps, even as the case was already pending in Court, to render
ineffective any judgment that may be rendered against them.

The problem is compounded in that respondent Ortigas is caught in the web of this bitter fight. It had
all the time been dealing with Choithram as attorney-in-fact of Ishwar. However, evidence had been
adduced that notice in writing had been served not only on Choithram, but also on Ortigas, of the
revocation of Choithram's power of attorney by Ishwar's lawyer, on May 24, 1971.27 A publication of
said notice was made in the April 2, 1971 issue of The Manila Times for the information of the
general public.28 Such notice of revocation in a newspaper of general circulation is sufficient warning
to third persons including Ortigas.29 A notice of revocation was also registered with the Securities and
Exchange Commission on March 29, 1 971.30

Indeed in the letter of Choithram to Ishwar of June 25, 1971, Choithram was pleading that Ishwar
execute another power of attorney to be shown to Ortigas who apparently learned of the revocation
of Choithram's power of attorney.31 Despite said notices, Ortigas nevertheless acceded to the
representation of Choithram, as alleged attorney-in-fact of Ishwar, to assign the rights of petitioner
Ishwar to Nirmla. While the primary blame should be laid at the doorstep of Choithram, Ortigas is not
entirely without fault. It should have required Choithram to secure another power of attorney from
Ishwar. For recklessly believing the pretension of Choithram that his power of attorney was still
good, it must, therefore, share in the latter's liability to Ishwar.

In the original complaint, the spouses Ishwar asked for a reconveyance of the properties and/or
payment of its present value and damages.32 In the amended complaint they asked, among others,
for actual damages of not less than the present value of the real properties in litigation, moral and
exemplary damages, attorneys fees, costs of the suit and further prayed for "such other reliefs as
may be deemed just and equitable in the premises .33 The amended complaint contain the following
positive allegations:

7. Defendant Choithram Ramnani, in evident bad faith and despite due notice of the
revocation of the General Power of Attorney, Annex 'D" hereof, caused the transfer of the
rights over the said parcels of land to his daughter-in-law, defendant Nirmla Ramnani in
connivance with defendant Ortigas & Co., the latter having agreed to the said transfer
despite receiving a letter from plaintiffs' lawyer informing them of the said revocation; copy of
the letter is hereto attached and made an integral part hereof as Annex "H";

8. Defendant Nirmla Ramnani having acquired the aforesaid property by fraud is, by force of
law, considered a trustee of an implied trust for the benefit of plaintiff and is obliged to return
the same to the latter:

9. Several efforts were made to settle the matter within the family but defendants (Choithram
Ramnani, Nirmla Ramnani and Moti Ramnani) refused and up to now fail and still refuse to
cooperate and respond to the same; thus, the present case;

10. In addition to having been deprived of their rights over the properties (described in par. 3
hereof), plaintiffs, by reason of defendants' fraudulent act, suffered actual damages by way
of lost rental on the property which defendants (Choithram Ramnani, Nirmla Ramnani and
Moti Ramnani have collected for themselves;34

In said amended complaint, spouses Ishwar, among others, pray for payment of actual damages in
an amount no less than the value of the properties in litigation instead of a reconveyance as sought
in the original complaint. Apparently they opted not to insist on a reconveyance as they are
American citizens as alleged in the amended complaint.

The allegations of the amended complaint above reproduced clearly spelled out that the transfer of
the property to Nirmla was fraudulent and that it should be considered to be held in trust by Nirmla
for spouses Ishwar. As above-discussed, this allegation is well-taken and the transfer of the property
to Nirmla should be considered to have created an implied trust by Nirmla as trustee of the property
for the benefit of spouses Ishwar.35

The motion to dissolve the writ of preliminary injunction filed by Choithram, et al. should be denied.
Its issuance by this Court is proper and warranted under the circumstances of the case. Under
Section 3(c) Rule 58 of the Rules of Court, a writ of preliminary injunction may be granted at any
time after commencement of the action and before judgment when it is established:

(c) that the defendant is doing, threatens, or is about to do, or is procuring or suffering to be
done, some act probably in violation of plaintiffs's rights respecting the subject of the action,
and tending to render the judgment ineffectual.

As above extensively discussed, Choithram, et al. have committed and threaten to commit further
acts of disposition of the properties in litigation as well as the other assets of Choithram, apparently
designed to render ineffective any judgment the Court may render favorable to spouses Ishwar.

The purpose of the provisional remedy of preliminary injunction is to preserve the status quo of the
things subject of the litigation and to protect the rights of the spouses Ishwar respecting the subject
of the action during the pendency of the Suit36 and not to obstruct the administration of justice or
prejudice the adverse party.37 In this case for damages, should Choithram, et al. continue to commit
acts of disposition of the properties subject of the litigation, an award of damages to spouses Ishwar
would thereby be rendered ineffectual and meaningless.38

Consequently, if only to protect the interest of spouses Ishwar, the Court hereby finds and holds that
the motion for the issuance of a writ of preliminary attachment filed by spouses Ishwar should be
granted covering the properties subject of this litigation.

Section 1, Rule 57 of the Rules of Court provides that at the commencement of an action or at any
time thereafter, the plaintiff or any proper party may have the property of the adverse party attached
as security for the satisfaction of any judgment that may be recovered, in, among others, the
following cases:

(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought;

(e) In an action against a party who has removed or disposed of his property, or is about to
do so, with intent to defraud his creditors; . . .

Verily, the acts of Choithram, et al. of disposing the properties subject of the litigation disclose a
scheme to defraud spouses Ishwar so they may not be able to recover at all given a judgment in
their favor, the requiring the issuance of the writ of attachment in this instance.

Nevertheless, under the peculiar circumstances of this case and 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.

The scenario is clear. Spouses Ishwar supplied the capital of $150,000.00 for the business. They1âw phi 1

entrusted the money to Choithram to invest in a profitable business venture in the Philippines. For
this purpose they appointed Choithram as their attorney-in-fact.

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—a valuable asset
worth millions of pesos. As of the last estimate in 1985, while the case was pending before the trial
court, the market value of the properties is no less than P22,304,000.00.39 It should be worth much
more today.

We have a situation where two brothers engaged in a business venture. One furnished the capital,
the other contributed his industry and talent. 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.
However, the Court cannot just close its eyes to the devious machinations and schemes that
Choithram employed in attempting to dispose of, if not dissipate, the properties to deprive spouses
Ishwar of any possible means to recover any award the Court may grant in their favor. Since
Choithram, et al. acted with evident bad faith and malice, they should pay moral and exemplary
damages as well as attorney's fees to spouses Ishwar.

WHEREFORE, the petition in G.R. No. 85494 is DENIED, while the petition in G.R. No. 85496 is
hereby given due course and GRANTED. The judgment of the Court of Appeals dated October 18,
1988 is hereby modified as follows:

1. Dividing equally between respondents spouses Ishwar, on the one hand, and petitioner Choithram
Ramnani, on the other, (in G.R. No. 85494) the two parcels of land subject of this litigation, including
all the improvements thereon, presently covered by transfer Certificates of Title Nos. 403150 and
403152 of the Registry of Deeds, as well as the rental income of the property from 1967 to the
present.

2. Petitioner Choithram Jethmal Ramnani, Nirmla V. Ramnani, Moti C. Ramnani and respondent
Ortigas and Company, Limited Partnership (in G.R. No. 85496) are ordered solidarily to pay in cash
the value of said one-half (1/2) share in the said land and improvements pertaining to respondents
spouses Ishwar and Sonya at their fair market value at the time of the satisfaction of this judgment
but in no case less than their value as appraised by the Asian Appraisal, Inc. in its Appraisal Report
dated August 1985 (Exhibits T to T-14, inclusive).

3. Petitioners Choithram, Nirmla and Moti Ramnani and respondent Ortigas & Co., Ltd. Partnership
shall also be jointly and severally liable to pay to said respondents spouses Ishwar and Sonya
Ramnani one-half (1/2) of the total rental income of said properties and improvements from 1967 up
to the date of satisfaction of the judgment to be computed as follows:

a. On Building C occupied by Eppie's Creation and Jethmal Industries from 1967 to

1973, inclusive, based on the 1967 to 1973 monthly rentals paid by Eppie's Creation;

b. Also on Building C above, occupied by Jethmal Industries and Lavine from 1974 to
1978, the rental incomes based on then rates prevailing as shown under Exhibit "P";
and from 1979 to 1981, based on then prevailing rates as indicated under Exhibit
"Q";

c. On Building A occupied by Transworld Knitting Mills from 1972 to 1978, the rental
incomes based upon then prevailing rates shown under Exhibit "P", and from 1979 to
1981, based on prevailing rates per Exhibit "Q";

d. On the two Bays Buildings occupied by Sigma-Mariwasa from 1972 to 1978, the
rentals based on the Lease Contract, Exhibit "P", and from 1979 to 1980, the rentals
based on the Lease Contract, Exhibit "Q".

and thereafter commencing 1982, to account for and turn over the rental incomes paid or ought to be
paid for the use and occupancy of the properties and all improvements totalling 10,048 sq. m., based
on the rate per square meter prevailing in 1981 as indicated annually cumulative up to 1984. Then,
commencing 1985 and up to the satisfaction of the judgment, rentals shall be computed at ten
percent (10%) annually of the fair market values of the properties as appraised by the Asian
Appraisals, Inc. in August 1985. (Exhibits T to T-14, inclusive.)
4. To determine the market value of the properties at the time of the satisfaction of this judgment and
the total rental incomes thereof, the trial court is hereby directed to hold a hearing with deliberate
dispatch for this purpose only and to have the judgment immediately executed after such
determination.

5. Petitioners Choithram, Nirmla and Moti, all surnamed Ramnani, are also jointly and severally
liable to pay respondents Ishwar and Sonya Ramnani the amount of P500,000.00 as moral
damages, P200,000.00 as exemplary damages and attorney's fees equal to 10% of the total award.
to said respondents spouses.

6. The motion to dissolve the writ of preliminary injunction dated December 10, 1990 filed by
petitioners Choithram, Nirmla and Moti, all surnamed Ramnani, is hereby DENIED and the said
injunction is hereby made permanent. Let a writ of attachment be issued and levied against the
properties and improvements subject of this litigation to secure the payment of the above awards to
spouses Ishwar and Sonya.

7. The mortgage constituted on the subject property dated June 20, 1989 by petitioners Choithram
and Nirmla, both surnamed Ramnani in favor of respondent Overseas Holding, Co. Ltd. (in G.R. No.
85496) for the amount of $3-M is hereby declared null and void. The Register of Deeds of Pasig,
Rizal, is directed to cancel the annotation of d mortgage on the titles of the properties in question.

8. Should respondent Ortigas Co., Ltd. Partnership pay the awards to Ishwar and Sonya Ramnani
under this judgment, it shall be entitled to reimbursement from petitioners Choithram, Nirmla and
Moti, all surnamed Ramnani.

9. The above awards shag bear legal rate of interest of six percent (6%) per annum from the time
this judgment becomes final until they are fully paid by petitioners Choithram Ramnani, Nirmla V.
Ramnani, Moti C. Ramnani and Ortigas, Co., Ltd. Partnership. Said petitioners Choithram, et al. and
respondent Ortigas shall also pay the costs.

SO ORDERED.

Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1
Exhibit A.

2
Exhibits B and C.

3
Exhibit 3.

4
Exhibit H.

5
Exhibit F.

6
Exhibits and J.
7
Pages 80 to 82, Rollo of G.R. No. 85496; pages 55 to 57, G.R. No. 85494; Associate
Justice Rodolfo A- Nocon was the ponente, concurred in separate opinion by Justices
Ricardo P. Tensuan and Manuel C. Herrera. Justices Felipe B. Kalalo and Venancio D.
Aldecoa Jr., both dissented in separate the opinions and voted to affirm the decision of the
trial court.

8
The five justices wrote separate opinions.

9
Pages 15 and 16, Rollo, G.R. No. 85494.

10
Pages 23 to 24, Rollo, G.R. No. 85496.

11
Pages 117 to 119, Rollo, G.R. No. 85496.

12
Pages 41 to 45, Rollo, G.R. No. 85494.

13
Exhibit R-1; emphasis supplied.

14
See Exhibit R to R-3.

15
Pages 45 to 50, Rollo, G.R. No. 85494; emphasis supplied.

16
Exhibits R to R-3.

17
TSN, July 18, 1985, page 12; and July 19, 1985, pages 8 to 9.

18
Annex A to Urgent Motion, etc. pages 438 to 450, Rollo, G.R. No. 85494.

19
Annex B, supra; page 451, supra.

20
Annex C, supra; pages 452 to 456, supra.

21
Pages 438 to 442, rollo, G.R. No. 85496; pages 413 to 417, rollo, G.R. No. 85494.

22
Page 450, rollo, G.R. No. 85496.

Annexes C, C-1 and C-2 to Manifestation and Complaint of petitioners Ishwar & Sonya filed
23

on January 26, 1991.

24
Annex D to Manifestation, etc.

Annex A to Reply to Opposition filed by petitioners on December 7, 1990; Pages 383 to

25

384, Rollo; See also Manifestation of petitioners, December 11, 1990, pages 438 to
443 rollo, G.R. 85494.

26
See pages to of Rollo.

27
Exhibit B.

28
Exhibit F.
29
Article 1922, Civil Code.

30
Exhibit H.

31
Exhibit R-1; supra.

32
Annex C to Petition in G.R. No. 85494; pages 88 to 92, rollo.

33
Annex D, supra; Pages 93 to 97, Rollo.

34
Supra, pages 95 to 96, Rollo; emphasis supplied.

35
Annex C to Petition in G.R. No. 85494; pages 88 to 92, Rollo.

Calo vs. Roldan, 76 Phil. 445 (1946); De los Reyes v. Elepaño, G.R. L-5282, May 29,
36

1959; De la Cruz vs. Tan Torres, G.R. L-14925, April 30, 1960,

37
Yu Tiong Tay vs. Barrios, 79 Phil. 597 (1947).

38
Calo vs. Roldan supra.

39
Exhibits T to T-14.
G.R. No. L-59956 October 31, 1984

ISABELO MORAN, JR., petitioner,

vs.
THE HON. COURT OF APPEALS and MARIANO E. PECSON, respondents.

GUTIERREZ, JR., J.: ñé+.£ªwph! 1

This is a petition for review on certiorari of the decision of the respondent Court of Appeals which
ordered petitioner Isabelo Moran, Jr. to pay damages to respondent Mariano E, Pecson.

As found by the respondent Court of Appeals, the undisputed facts indicate that: têñ.£îhqwâ£

xxx xxx xxx

... on February 22, 1971 Pecson and Moran entered into an agreement whereby both
would contribute P15,000 each for the purpose of printing 95,000 posters (featuring
the delegates to the 1971 Constitutional Convention), with Moran actually
supervising the work; that Pecson would receive a commission of P l,000 a month
starting on April 15, 1971 up to December 15, 1971; that on December 15, 1971, a
liquidation of the accounts in the distribution and printing of the 95,000 posters would
be made, that Pecson gave Moran P10,000 for which the latter issued a receipt; that
only a few posters were printed; that on or about May 28, 1971, Moran executed in
favor of Pecson a promissory note in the amount of P20,000 payable in two equal
installments (P10,000 payable on or before June 15, 1971 and P10,000 payable on
or before June 30, 1971), the whole sum becoming due upon default in the payment
of the first installment on the date due, complete with the costs of collection.

Private respondent Pecson filed with the Court of First Instance of Manila an action for the recovery
of a sum of money and alleged in his complaint three (3) causes of action, namely: (1) on the alleged
partnership agreement, the return of his contribution of P10,000.00, payment of his share in the
profits that the partnership would have earned, and, payment of unpaid commission; (2) on the
alleged promissory note, payment of the sum of P20,000.00; and, (3) moral and exemplary damages
and attorney's fees.

After the trial, the Court of First Instance held that: têñ.£îhqw â£

From the evidence presented it is clear in the mind of the court that by virtue of the
partnership agreement entered into by the parties-plaintiff and defendant the plaintiff
did contribute P10,000.00, and another sum of P7,000.00 for the Voice of the
Veteran or Delegate Magazine. Of the expected 95,000 copies of the posters, the
defendant was able to print 2,000 copies only authorized of which, however, were
sold at P5.00 each. Nothing more was done after this and it can be said that the
venture did not really get off the ground. On the other hand, the plaintiff failed to give
his full contribution of P15,000.00. Thus, each party is entitled to rescind the contract
which right is implied in reciprocal obligations under Article 1385 of the Civil Code
whereunder 'rescission creates the obligation to return the things which were the
object of the contract ...
 WHEREFORE, the court hereby renders judgment ordering defendant Isabelo C.
Moran, Jr. to return to plaintiff Mariano E. Pecson the sum of P17,000.00, with
interest at the legal rate from the filing of the complaint on June 19, 1972, and the
costs of the suit.

For insufficiency of evidence, the counterclaim is hereby dismissed.

From this decision, both parties appealed to the respondent Court of Appeals. The latter likewise
rendered a decision against the petitioner. The dispositive portion of the decision reads: têñ.£îhqwâ£

PREMISES CONSIDERED, the decision appealed from is hereby SET ASIDE, and a
new one is hereby rendered, ordering defendant-appellant Isabelo C. Moran, Jr. to
pay plaintiff- appellant Mariano E. Pecson:

(a) Forty-seven thousand five hundred (P47,500) (the amount that could have
accrued to Pecson under their agreement);

(b) Eight thousand (P8,000), (the commission for eight months);

(c) Seven thousand (P7,000) (as a return of Pecson's investment for the Veteran's
Project);

(d) Legal interest on (a), (b) and (c) from the date the complaint was filed (up to the
time payment is made)

The petitioner contends that the respondent Court of Appeals decided questions of substance in a
way not in accord with law and with Supreme Court decisions when it committed the following errors:

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING PETITIONER

ISABELO C. MORAN, JR. LIABLE TO RESPONDENT MARIANO E. PECSON IN THE SUM OF
P47,500 AS THE SUPPOSED EXPECTED PROFITS DUE HIM.

II

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING PETITIONER

ISABELO C. MORAN, JR. LIABLE TO RESPONDENT MARIANO E. PECSON IN THE SUM OF
P8,000, AS SUPPOSED COMMISSION IN THE PARTNERSHIP ARISING OUT OF PECSON'S
INVESTMENT.

III

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING PETITIONER

ISABELO C. MORAN, JR. LIABLE TO RESPONDENT MARIANO E. PECSON IN THE SUM OF
P7,000 AS A SUPPOSED RETURN OF INVESTMENT IN A MAGAZINE VENTURE.

IV
ASSUMING WITHOUT ADMITTING THAT PETITIONER IS AT ALL LIABLE FOR ANY AMOUNT,
THE HONORABLE COURT OF APPEALS DID NOT EVEN OFFSET PAYMENTS ADMITTEDLY
RECEIVED BY PECSON FROM MORAN.

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT GRANTING THE

PETITIONER'S COMPULSORY COUNTERCLAIM FOR DAMAGES.

The first question raised in this petition refers to the award of P47,500.00 as the private respondent's
share in the unrealized profits of the partnership. The petitioner contends that the award is highly
speculative. The petitioner maintains that the respondent court did not take into account the great
risks involved in the business undertaking.

We agree with the petitioner that the award of speculative damages has no basis in fact and law.

There is no dispute over the nature of the agreement between the petitioner and the private
respondent. It is a contract of partnership. The latter in his complaint alleged that he was induced by
the petitioner to enter into a partnership with him under the following terms and conditions: têñ.£îhqwâ£

1. That the partnership will print colored posters of the delegates to the Constitutional
Convention;

2. That they will invest the amount of Fifteen Thousand Pesos (P15,000.00) each;

3. That they will print Ninety Five Thousand (95,000) copies of the said posters;

4. That plaintiff will receive a commission of One Thousand Pesos (P1,000.00) a

month starting April 15, 1971 up to December 15, 1971;

5. That upon the termination of the partnership on December 15, 1971, a liquidation
of the account pertaining to the distribution and printing of the said 95,000 posters
shall be made.

The petitioner on the other hand admitted in his answer the existence of the partnership.

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 partnership for whatever he may have promised to contribute (Art. 1786,
Civil Code) and for interests and damages from the time he should have complied with his obligation
(Art. 1788, Civil Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted Art. 2200 of the Civil
Code of the Philippines, we allowed a total of P200,000.00 compensatory damages in favor of the
appellee because the appellant therein was remiss in his obligations as a partner and as prime
contractor of the construction projects in question. This case was decided on a particular set of facts.
We awarded compensatory damages in the Uy case because there was a finding that the
constructing business is a profitable one and 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 to December 31, 1957 and from January 1, 1958 up to September 30, 1959. The profits on two
government contracts worth P2,327,335.76 were not speculative. In the instant case, there is no
evidence whatsoever that the partnership between the petitioner and the private respondent would
have been a profitable venture. In fact, it was a failure doomed from the start. There is therefore no
basis for the award of 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 expected of him. In this case, however, there was mutual breach. Private
respondent failed to give his entire contribution in the amount of P15,000.00. He contributed only
P10,000.00. The petitioner likewise failed to give any of the amount expected of him. He further
failed to comply with the agreement to print 95,000 copies of the posters. Instead, he printed only
2,000 copies.

Article 1797 of the Civil Code provides: têñ.£îhqwâ£

The losses and profits shall be distributed in conformity with the agreement. If only
the share of each partner in the profits has been agreed upon, the share of each in
the losses shall be in the same proportion.

Being a contract of partnership, each partner must share in the profits and losses of the venture.
That is the essence of a partnership. And even with an assurance made by one of the partners that
they would earn a huge amount of profits, in the absence of fraud, the other partner cannot claim a
right to recover the highly speculative profits. It is a rare business venture guaranteed to give 100%
profits. In this case, on an investment of P15,000.00, the respondent was supposed to earn a
guaranteed P1,000.00 a month for eight months and around P142,500.00 on 95,000 posters costing
P2.00 each but 2,000 of which were sold at P5.00 each. The fantastic nature of expected profits is
obvious. We have to take various factors into account. The failure of the Commission on Elections to
proclaim all the 320 candidates of the Constitutional Convention on time was a major factor. The
petitioner undesirable his best business judgment and felt that it would be a losing venture to go on
with the printing of the agreed 95,000 copies of the posters. Hidden risks in any business venture
have to be considered.

It does not follow however that the private respondent is not entitled to recover any amount from the
petitioner. The records show that the private respondent gave P10,000.00 to the petitioner. The
latter used this amount for the printing of 2,000 posters at a cost of P2.00 per poster or a total
printing cost of P4,000.00. The records further show that the 2,000 copies were sold at P5.00 each.
The gross income therefore was P10,000.00. Deducting the printing costs of P4,000.00 from the
gross income of P10,000.00 and with no evidence on the cost of distribution, the net profits amount
to only P6,000.00. This net profit of P6,000.00 should be divided between the petitioner and the
private respondent. And since only P4,000.00 was undesirable by the petitioner in printing the 2,000
copies, the remaining P6,000.00 should therefore be returned to the private respondent.

Relative to the second alleged error, the petitioner submits that the award of P8,000.00 as Pecson's
supposed commission has no justifiable basis in law.

Again, we agree with the petitioner.

The partnership agreement stipulated that the petitioner would give the private respondent a monthly
commission of Pl,000.00 from April 15, 1971 to December 15, 1971 for a total of eight (8) monthly
commissions. 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, the private respondent is not entitled to the P8,000.00 commission.
Anent the third assigned error, the petitioner maintains that the respondent Court of Appeals erred in
holding him liable to the private respondent in the sum of P7,000.00 as a supposed return of
investment in a magazine venture.

In awarding P7,000.00 to the private respondent as his supposed return of investment in the "Voice
of the Veterans" magazine venture, the respondent court ruled that: têñ.£îhqw â£

xxx xxx xxx

... Moran admittedly signed the promissory note of P20,000 in favor of Pecson.
Moran does not question the due execution of said note. Must Moran therefore pay
the amount of P20,000? The evidence indicates that the P20,000 was assigned by
Moran to cover the following: têñ.£îhqw â£

(a) P 7,000 — the amount of the PNB check given by

Pecson to Moran representing Pecson's investment in
Moran's other project (the publication and printing of
the 'Voice of the Veterans');

(b) P10,000 — to cover the return of Pecson's

contribution in the project of the Posters;

(c) P3,000 — representing Pecson's commission for

three months (April, May, June, 1971).

Of said P20,000 Moran has to pay P7,000 (as a return of Pecson's investment for the
Veterans' project, for this project never left the ground) ...

As a rule, the findings of facts of the Court of Appeals are final and conclusive and cannot be
reviewed on appeal to this Court (Amigo v. Teves, 96 Phil. 252), provided they are borne out by the
record or are based on substantial evidence (Alsua-Betts v. Court of Appeals, 92 SCRA 332).
However, this rule admits of certain exceptions. Thus, in Carolina Industries Inc. v. CMS Stock
Brokerage, Inc., et al., (97 SCRA 734), we held that this Court retains the power to review and rectify
the findings of fact of the Court of Appeals when (1) the conclusion is a finding grounded entirely on
speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken absurd
and impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; and (5) when the court, in making its findings, went beyond the issues of
the case and the same are contrary to the admissions of both the appellant and the appellee.

In this case, there is misapprehension of facts. The evidence of the private respondent himself
shows that his investment in the "Voice of Veterans" project amounted to only P3,000.00. The
remaining P4,000.00 was the amount of profit that the private respondent expected to receive.

The records show the following exhibits- têñ.£îhqw â£

E — Xerox copy of PNB Manager's Check No. 234265 dated March 22, 1971 in favor
of defendant. Defendant admitted the authenticity of this check and of his receipt of
the proceeds thereof (t.s.n., pp. 3-4, Nov. 29, 1972). This exhibit is being offered for
the purpose of showing plaintiff's capital investment in the printing of the "Voice of
the Veterans" for which he was promised a fixed profit of P8,000. This investment of
P6,000.00 and the promised profit of P8,000 are covered by defendant's promissory
 note for P14,000 dated March 31, 1971 marked by defendant as Exhibit 2 (t.s.n., pp.
20-21, Nov. 29, 1972), and by plaintiff as Exhibit P. Later, defendant returned
P3,000.00 of the P6,000.00 investment thereby proportionately reducing the
promised profit to P4,000. With the balance of P3,000 (capital) and P4,000 (promised
profit), defendant signed and executed the promissory note for P7,000 marked
Exhibit 3 for the defendant and Exhibit M for plaintiff. Of this P7,000, defendant paid
P4,000 representing full return of the capital investment and P1,000 partial payment
of the promised profit. The P3,000 balance of the promised profit was made part
consideration of the P20,000 promissory note (t.s.n., pp. 22-24, Nov. 29, 1972). It is,
therefore, being presented to show the consideration for the P20,000 promissory
note.

F — Xerox copy of PNB Manager's check dated May 29, 1971 for P7,000 in favor of
defendant. The authenticity of the check and his receipt of the proceeds thereof were
admitted by the defendant (t.s.n., pp. 3-4, Nov. 29, 1972). This P 7,000 is part
consideration, and in cash, of the P20,000 promissory note (t.s.n., p. 25, Nov. 29,
1972), and it is being presented to show the consideration for the P20,000 note and
the existence and validity of the obligation.

xxx xxx xxx

L-Book entitled "Voice of the Veterans" which is being offered for the purpose of
showing the subject matter of the other partnership agreement and in which plaintiff
invested the P6,000 (Exhibit E) which, together with the promised profit of P8,000
made up for the consideration of the P14,000 promissory note (Exhibit 2; Exhibit P).
As explained in connection with Exhibit E. the P3,000 balance of the promised profit
was later made part consideration of the P20,000 promissory note.

M-Promissory note for P7,000 dated March 30, 1971. This is also defendant's Exhibit
E. This document is being offered for the purpose of further showing the transaction
as explained in connection with Exhibits E and L.

N-Receipt of plaintiff dated March 30, 1971 for the return of his P3,000 out of his
capital investment of P6,000 (Exh. E) in the P14,000 promissory note (Exh. 2; P).
This is also defendant's Exhibit 4. This document is being offered in support of
plaintiff's explanation in connection with Exhibits E, L, and M to show the transaction
mentioned therein.

xxx xxx xxx

P-Promissory note for P14,000.00. This is also defendant's Exhibit 2. It is being

offered for the purpose of showing the transaction as explained in connection with
Exhibits E, L, M, and N above.

Explaining the above-quoted exhibits, respondent Pecson testified that: têñ.£îhqw â£

Q During the pre-trial of this case, Mr. Pecson, the defendant

presented a promissory note in the amount of P14,000.00 which has
been marked as Exhibit 2. Do you know this promissory note?

A Yes, sir.
Q What is this promissory note, in connection with your transaction
with the defendant?

A This promissory note is for the printing of the "Voice of the

Veterans".

Q What is this "Voice of the Veterans", Mr. Pecson?

A It is a book. têñ.£îhqw â£

(T.S.N., p. 19, Nov. 29, 1972)

Q And what does the amount of P14,000.00 indicated in the

promissory note, Exhibit 2, represent?

A It represents the P6,000.00 cash which I gave to Mr. Moran, as

evidenced by the Philippine National Bank Manager's check and the
P8,000.00 profit assured me by Mr. Moran which I will derive from the
printing of this "Voice of the Veterans" book.

Q You said that the P6,000.00 of this P14,000.00 is covered by, a

Manager's check. I show you Exhibit E, is this the Manager's check
that mentioned?

A Yes, sir.

Q What happened to this promissory note of P14,000.00 which you

said represented P6,000.00 of your investment and P8,000.00
promised profits?

A Latter, Mr. Moran returned to me P3,000.00 which represented

one-half (1/2) of the P6,000.00 capital I gave to him.

Q As a consequence of the return by Mr. Moran of one-half (1/2) of

the P6,000.00 capital you gave to him, what happened to the
promised profit of P8,000.00?

A It was reduced to one-half (1/2) which is P4,000.00.

Q Was there any document executed by Mr. Moran in connection

with the Balance of P3,000.00 of your capital investment and the
P4,000.00 promised profits?

A Yes, sir, he executed a promissory note.

Q I show you a promissory note in the amount of P7,000.00 dated

March 30, 1971 which for purposes of Identification I request the
same to be marked as Exhibit M. . .

Court têñ.£îhqw â£
 Mark it as Exhibit M.

Q (continuing) is this the promissory note which you said was

executed by Mr. Moran in connection with your transaction regarding
the printing of the "Voice of the Veterans"?

A Yes, sir. (T.S.N., pp. 20-22, Nov. 29, 1972).

Q What happened to this promissory note executed by Mr. Moran,

Mr. Pecson?

A Mr. Moran paid me P4,000.00 out of the P7,000.00 as shown by

the promissory note.

Q Was there a receipt issued by you covering this payment of

P4,000.00 in favor of Mr. Moran?

A Yes, sir.

(T.S.N., p. 23, Nov. 29, 1972).

Q You stated that Mr. Moran paid the amount of P4,000.00 on

account of the P7,000.00 covered by the promissory note, Exhibit M.
What does this P4,000.00 covered by Exhibit N represent?

A This P4,000.00 represents the P3,000.00 which he has returned of

my P6,000.00 capital investment and the P1,000.00 represents
partial payment of the P4,000.00 profit that was promised to me by
Mr. Moran.

Q And what happened to the balance of P3,000.00 under the

promissory note, Exhibit M?

A The balance of P3,000.00 and the rest of the profit was applied as
part of the consideration of the promissory note of P20,000.00.

(T.S.N., pp. 23-24, Nov. 29, 1972).

The respondent court erred when it concluded that the project never left the ground because the
project did take place. Only it failed. It was the private respondent himself who presented a copy of
the book entitled "Voice of the Veterans" in the lower court as Exhibit "L". Therefore, it would be error
to state that the project never took place and on this basis decree the return of the private
respondent's investment.

As already mentioned, 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. In view of the foregoing, there is no reason
to pass upon the fourth and fifth assignments of errors raised by the petitioner. We likewise find no
valid basis for the grant of the counterclaim.
WHEREFORE, the petition is GRANTED. The decision of the respondent Court of Appeals (now
Intermediate Appellate Court) is hereby SET ASIDE and a new one is rendered ordering the
petitioner Isabelo Moran, Jr., to pay private respondent Mariano Pecson SIX THOUSAND
(P6,000.00) PESOS representing the amount of the private respondent's contribution to the
partnership but which remained unused; and THREE THOUSAND (P3,000.00) PESOS representing
one half (1/2) of the net profits gained by the partnership in the sale of the two thousand (2,000)
copies of the posters, with interests at the legal rate on both amounts from the date the complaint
was filed until full payment is made.

SO ORDERED. 1äw phï1.ñët

Teehankee (Chairman), Melencio-Herrera, Plana and Relova, JJ., concur.

De la Fuente J., took no part.

G.R. No. L-11624 January 21, 1918

E. M. BACHRACH, plaintiff-appellee,
vs.
"LA PROTECTORA", ET AL., defendants-appellants.

Vicente Foz for appellants.

A. J. Burke for appellee.

STREET, J.:

In the year 1913, the individuals named as defendants in this action formed a civil partnership, called
"La Protectora," for the purpose of engaging in the business of transporting passengers and freight
at Laoag, Ilocos Norte. In order to provide the enterprise with means of transportation, Marcelo
Barba, acting as manager, came to Manila and upon June 23, 1913, negotiated the purchase of two
automobile trucks from the plaintiff, E. M. Bachrach, for the agree price of P16,500. He paid the sum
of 3,000 in cash, and for the balance executed promissory notes representing the deferred
payments. These notes provided for the payment of interest from June 23, 1913, the date of the
notes, at the rate of 10 per cent per annum. Provision was also made in the notes for the payment of
25 per cent of the amount due if it should be necessary to place the notes in the hands of an
attorney for collection. Three of these notes, for the sum of P3,375 each, have been made the
subject of the present action, and there are exhibited with the complaint in the cause. One was
signed by Marcelo Barba in the following manner:

P. P. La Protectora
By Marcelo Barba
Marcelo Barba.

The other two notes are signed in the same way with the word "By" omitted before the name of
Marcelo Barba in the second line of the signature. It is obvious that in thus signing the notes Marcelo
Barba intended to bind both the partnership and himself. In the body of the note the word "I" (yo)
instead of "we" (nosotros) is used before the words "promise to pay" (prometemos) used in the
printed form. It is plain that the singular pronoun here has all the force of the plural.

As preliminary to the purchase of these trucks, the defendants Nicolas Segundo, Antonio Adiarte,
Ignacio Flores, and Modesto Serrano, upon June 12, 1913, executed in due form a document in
which they declared that they were members of the firm "La Protectora" and that they had granted to
its president full authority "in the name and representation of said partnership to contract for the
purchase of two automobiles" (en nombre y representacion de la mencionada sociedad contratante
la compra de dos automoviles). This document was apparently executed in obedience to the
requirements of subsection 2 of article 1697 of the Civil Code, for the purpose of evidencing the
authority of Marcelo Barba to bind the partnership by the purchase. The document in question was
delivered by him to Bachrach at the time the automobiles were purchased.

From time to time after this purchase was made, Marcelo Barba purchased of the plaintiff various
automobile effects and accessories to be used in the business of "La Protectora." Upon May 21,
1914, the indebtedness resulting from these additional purchases amounted to the sum of P2,916.57

In May, 1914, the plaintiff foreclosed a chattel mortgage which he had retained on the trucks in order
to secure the purchase price. The amount realized from this sale was P1,000. This was credited
unpaid. To recover this balance, together with the sum due for additional purchases, the present
action was instituted in the Court of First Instance of the city of Manila, upon May 29, 1914, against
"La Protectora" and the five individuals Marcelo Barba, Nicolas Segundo, Antonio Adiarte, Ignacio
Flores, and Modesto Serrano. No question has been made as to the propriety of impleading "La
Protectora" as if it were a legal entity. At the hearing, judgment was rendered against all of the
defendants. From this judgment no appeal was taken in behalf either of "La Protectora" or Marcelo
Barba; and their liability is not here under consideration. The four individuals who signed the
document to which reference has been made, authorizing Barba to purchase the two trucks have,
however, appealed and assigned errors. The question here to be determined is whether or not these
individuals are liable for the firm debts and if so to what extent.

The amount of indebtedness owing to the plaintiff is not in dispute, as the principal of the debt is
agreed to be P7,037. Of this amount it must now be assumed, in view of the finding of the trial court,
from which no appeal has been taken by the plaintiff, that the unpaid balance of the notes amounts
to P4,121, while the remainder (P2,916) represents the amount due for automobile supplies and
accessories.

The business conducted under the name of "La Protectora" was evidently that of a civil partnership;
and the liability of the partners to this association must be determined under the provisions of the
Civil Code. The authority of Marcelo Barba to bind the partnership, in the purchase of the trucks, is
fully established by the document executed by the four appellants upon June 12, 1913. The
transaction by which Barba secured these trucks was in conformity with the tenor of this document.
The promissory notes constitute the obligation exclusively of "La Protectora" and of Marcelo Barba;
and they do not in any sense constitute an obligation directly binding on the four appellants. Their
liability is based on the fact that they are members of the civil partnership and as such are liable for
its debts. It is true that article 1698 of the Civil Code declares that a member of a civil partnership is
not liable in solidum(solidariamente) with his fellows for its entire indebtedness; but it results from
this article, in connection with article 1137 of the Civil Code, that each is liable with the others
(mancomunadamente) for his aliquot part of such indebtedness. And so it has been held by this
court. (Co-Pitco vs. Yulo, 8 Phil. Rep., 544.)

The Court of First Instance seems to have founded its judgment against the appellants in part upon
the idea that the document executed by them constituted an authority for Marcelo Barba to bind
them personally, as contemplated in the second clause of article 1698 of the Civil Code. That cause
says that no member of the partnership can bind the others by a personal act if they have not given
him authority to do so. We think that the document referred to was intended merely as an authority
to enable Barba to bind the partnership and that the parties to that instrument did not intend thereby
to confer upon Barba an authority to bind them personally. It is obvious that the contract which Barba
in fact executed in pursuance of that authority did not by its terms profess to bind the appellants
personally at all, but only the partnership and himself. It follows that the four appellants cannot be
held to have been personally obligated by that instrument; but, as we have already seen, their
liability rests upon the general principles underlying partnership liability.

As to so much of the indebtedness as is based upon the claim for automobile supplies and
accessories, it is obvious that the document of June 12, 1913, affords no authority for holding the
appellants liable. Their liability upon this account is, however, no less obvious than upon the debt
incurred by the purchase of the trucks; and such liability is derived from the fact that the debt was
lawfully incurred in the prosecution of the partnership enterprise.

There is no proof in the record showing what the agreement, if any, was made with regard to the
form of management. Under these circumstances it is declared in article 1695 of the Civil Code that
all the partners are considered agents of the partnership. Barba therefore must be held to have had
authority to incur these expenses. But in addition to this he is shown to have been in fact the
president or manager, and there can be no doubt that he had actual authority to incur this obligation.
From what has been said it results that the appellants are severally liable for their respective shares
of the entire indebtedness found to be due; and the Court of First Instance committed no error in
giving judgment against them. The amount for which judgment should be entered is P7,037, to which
shall be added (1) interest at 10 per cent per annum from June 23, 1913, to be calculated upon the
sum of P4.121; (2) interest at 6 per cent per annum from July 21, 1915, to be calculated upon the
sum of P2,961; (3) the further sum of P1,030.25, this being the amount stipulated to be paid by way
of attorney's fees. However, it should be noted that any property pertaining to "La Protectora" should
first be applied to this indebtedness pursuant to the judgment already entered in this case in the
court below; and each of the four appellants shall be liable only for the one-fifth part of the remainder
unpaid.

Let judgment be entered accordingly, without any express finding of costs of this instance. So
ordered.

Arellano, C.J., Torres, Araullo, Malcolm, and Avanceña, JJ., concur.

G.R. No. 70926 January 31, 1989

DAN FUE LEUNG, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.

John L. Uy for petitioner.

Edgardo F. Sundiam for private respondent.

GUTIERREZ, JR., J.:

The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-
G.R. No. CV-00881 which affirmed the decision of the then Court of First Instance of Manila, Branch
II in Civil Case No. 116725 declaring private respondent Leung Yiu a partner of petitioner Dan Fue
Leung in the business of Sun Wah Panciteria and ordering the petitioner to pay to the private
respondent his share in the annual profits of the said restaurant.

This case originated from a complaint filed by respondent Leung Yiu with the then Court of First
Instance of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the
annual profits derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner
Dan Fue Leung.

The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was
established sometime in October, 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 to show that Sun Wah
Panciteria was actually a partnership and that he was one of the partners having contributed
P4,000.00 to 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 his contribution to the partnership. This is evidenced by a receipt identified as Exhibit
"A" wherein the petitioner acknowledged his acceptance of the P4,000.00 by affixing his signature
thereto. The receipt was written in Chinese characters so that the trial court commissioned an
interpreter in the person of Ms. Florence Yap to translate its contents into English. Florence Yap
issued a certification and testified that the translation to the best of her knowledge and belief was
correct. The private respondent identified the signature on the receipt as that of the petitioner
(Exhibit A-3) because it was affixed by the latter in his (private respondents') presence. Witnesses
So Sia and Antonio Ah Heng corroborated the private respondents testimony to the effect that they
were both present when the receipt (Exhibit "A") was signed by the petitioner. So Sia further testified
that he himself received from the petitioner a similar receipt (Exhibit D) evidencing delivery of his
own investment in another amount of P4,000.00 An examination was conducted by the PC Crime
Laboratory on orders of the trial court granting the private respondents motion for examination of
certain documentary exhibits. The signatures in Exhibits "A" and 'D' when compared to the signature
of the petitioner appearing in the pay envelopes of employees of the restaurant, namely Ah Heng
and Maria Wong (Exhibits H, H-1 to H-24) showed that the signatures in the two receipts were
indeed the signatures of the petitioner.
Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered
by the latter's Equitable Banking Corporation Check No. 13389470-B from the profits of the
operation of the restaurant for the year 1974. Witness Teodulo Diaz, Chief of the Savings
Department of the China Banking Corporation testified that said check (Exhibit B) was deposited by
and duly credited to the private respondents savings account with the bank after it was cleared by
the drawee bank, the Equitable Banking Corporation. Another witness Elvira Rana of the Equitable
Banking Corporation testified that the check in question was in fact and in truth drawn by the
petitioner and debited against his own account in said bank. This fact was clearly shown and
indicated in the petitioner's statement of account after the check (Exhibit B) was duly cleared. Rana
further testified that upon clearance of the check and pursuant to normal banking procedure, said
check was returned to the petitioner as the maker thereof.

The petitioner denied having received from the private respondent the amount of P4,000.00. He
contested and impugned the genuineness of the receipt (Exhibit D). 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 his salaries as an employee at Camp Stotsenberg in Clark Field and later as
waiter at the Toho Restaurant amounting to a little more than P2,000.00 as capital in establishing
Sun Wah Panciteria. To bolster his contention that he was the sole owner of the restaurant, the
petitioner presented various government licenses and permits showing the Sun Wah Panciteria was
and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly
denied having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking
Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B).

As between the conflicting evidence of the parties, the trial court gave credence to that of the
plaintiffs. Hence, the court ruled in favor of the private respondent. The dispositive portion of the
decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering the latter to deliver and pay to the former, the sum equivalent to
22% of the annual profit derived from the operation of Sun Wah Panciteria from
October, 1955, until fully paid, and attorney's fees in the amount of P5,000.00 and
cost of suit. (p. 125, Rollo)

The private respondent filed a verified motion for reconsideration in the nature of a motion for new
trial and, as supplement to the said motion, he requested that the decision rendered should include
the net profit of the Sun Wah Panciteria which was not specified in the decision, and allow private
respondent to adduce evidence so that the said decision will be comprehensively adequate and thus
put an end to further litigation.

The motion was granted over the objections of the petitioner. After hearing the trial court rendered
an amended decision, the dispositive portion of which reads:

FOR ALL THE FOREGOING CONSIDERATIONS, the motion for reconsideration

filed by the plaintiff, which was granted earlier by the Court, is hereby reiterated and
the decision rendered by this Court on September 30, 1980, is hereby amended. The
dispositive portion of said decision should read now as follows:

WHEREFORE, judgment is hereby rendered, ordering the plaintiff (sic) and against
the defendant, ordering the latter to pay the former the sum equivalent to 22% of the
 net profit of P8,000.00 per day from the time of judicial demand, until fully paid, plus
the sum of P5,000.00 as and for attorney's fees and costs of suit. (p. 150, Rollo)

The petitioner appealed the trial court's amended decision to the then Intermediate Appellate Court.
The questioned decision was further modified by the appellate court. The dispositive portion of the
appellate court's decision reads:

WHEREFORE, the decision appealed from is modified, the dispositive portion

thereof reading as follows:

1. Ordering the defendant to pay the plaintiff by way of temperate damages 22% of
the net profit of P2,000.00 a day from judicial demand to May 15, 1971;

2. Similarly, the sum equivalent to 22% of the net profit of P8,000.00 a day from May
16, 1971 to August 30, 1975;

3. And thereafter until fully paid the sum equivalent to 22% of the net profit of
P8,000.00 a day.

Except as modified, the decision of the court a quo is affirmed in all other respects.
(p. 102, Rollo)

Later, the appellate court, in a resolution, modified its decision and affirmed the lower court's
decision. The dispositive portion of the resolution reads:

WHEREFORE, the dispositive portion of the amended judgment of the court a

quo reading as follows:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the

defendant, ordering the latter to pay to the former the sum equivalent to 22% of the
net profit of P8,000.00 per day from the time of judicial demand, until fully paid, plus
the sum of P5,000.00 as and for attorney's fees and costs of suit.

is hereby retained in full and affirmed in toto it being understood that the date of judicial demand is
July 13, 1978. (pp. 105-106, Rollo).

In the same resolution, the motion for reconsideration filed by petitioner was denied.

Both the trial court and the appellate court found that the private respondent is a partner of the
petitioner in the setting up and operations of the panciteria. While the dispositive portions merely
ordered the payment of the respondents share, there is no question from the factual findings that the
respondent invested in the business as a partner. Hence, the two courts declared that the private
petitioner is entitled to a share of the annual profits of the restaurant. The petitioner, however, claims
that this factual finding is erroneous. Thus, the petitioner argues: "The complaint avers that private
respondent extended 'financial assistance' to herein petitioner at the time of the establishment of the
Sun Wah Panciteria, in return of which private respondent allegedly will receive a share in the profits
of the restaurant. The same complaint did not claim that private respondent is a partner of the
business. It was, therefore, a serious error for the lower court and the Hon. Intermediate Appellate
Court to grant a relief not called for by the complaint. It was also error for the Hon. Intermediate
Appellate Court to interpret or construe 'financial assistance' to mean the contribution of capital by a
partner to a partnership;" (p. 75, Rollo)
The pertinent portions of the complaint state:

xxx xxx xxx

2. That on or about the latter (sic) of September, 1955, defendant sought

the financial assistance of plaintiff in operating the defendant's eatery known as Sun
Wah Panciteria, located in the given address of defendant; as a return for
such financial assistance. plaintiff would be entitled to twenty-two percentum (22%)
of the annual profit derived from the operation of the said panciteria;

3. That on October 1, 1955, plaintiff delivered to the defendant the sum of four
thousand pesos (P4,000.00), Philippine Currency, of which copy for the receipt of
such amount, duly acknowledged by the defendant is attached hereto as Annex "A",
and form an integral part hereof; (p. 11, Rollo)

In essence, the private respondent alleged that when Sun Wah Panciteria was established, he gave
P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-two percent
(22%) of the annual profit derived from the operation of the said panciteria. These allegations, which
were proved, make the private respondent and the petitioner partners in the establishment of Sun
Wah Panciteria because Article 1767 of the Civil Code provides that "By the contract of partnership
two or more persons bind themselves to contribute money, property or industry to a common fund,
with the intention of dividing the profits among themselves".

Therefore, the lower courts did not err in construing the complaint as one wherein the private
respondent asserted his rights as partner of the petitioner in the establishment of the Sun Wah
Panciteria, notwithstanding the use of the term financial assistance therein. We agree with the
appellate court's observation to the effect that "... given its ordinary meaning, financial assistance is
the giving out of money to another without the expectation of any returns therefrom'. It connotes
an ex gratia dole out in favor of someone driven into a state of destitution. But this circumstance
under which the P4,000.00 was given to the petitioner does not obtain in this case.' (p. 99, Rollo)
The complaint explicitly stated that "as a return for such financial assistance, plaintiff (private
respondent) would be entitled to twenty-two percentum (22%) of the annual profit derived from the
operation of the said panciteria.' (p. 107, Rollo) The well-settled doctrine is that the '"... nature of the
action filed in court is determined by the facts alleged in the complaint as constituting the cause of
action." (De Tavera v. Philippine Tuberculosis Society, Inc., 113 SCRA 243; Alger Electric, Inc. v.
Court of Appeals, 135 SCRA 37).

The appellate court did not err in declaring that the main issue in the instant case was whether or not
the private respondent is a partner of the petitioner in the establishment of Sun Wah Panciteria.

The petitioner also contends that the respondent court gravely erred in giving probative value to the
PC Crime Laboratory Report (Exhibit "J") on the ground that the alleged standards or specimens
used by the PC Crime Laboratory in arriving at the conclusion were never testified to by any witness
nor has any witness identified the handwriting in the standards or specimens belonging to the
petitioner. The supposed standards or specimens of handwriting were marked as Exhibits "H" "H-1"
to "H-24" and admitted as evidence for the private respondent over the vigorous objection of the
petitioner's counsel.

The records show that the PC Crime Laboratory upon orders of the lower court examined the
signatures in the two receipts issued separately by the petitioner to the private respondent and So
Sia (Exhibits "A" and "D") and compared the signatures on them with the signatures of the petitioner
on the various pay envelopes (Exhibits "H", "H-1" to 'H-24") of Antonio Ah Heng and Maria Wong,
employees of the restaurant. After the usual examination conducted on the questioned documents,
the PC Crime Laboratory submitted its findings (Exhibit J) attesting that the signatures appearing in
both receipts (Exhibits "A" and "D") were the signatures of the petitioner.

The records also show that when the pay envelopes (Exhibits "H", "H-1" to "H-24") were presented
by the private respondent for marking as exhibits, the petitioner did not interpose any objection.
Neither did the petitioner file an opposition to the motion of the private respondent to have these
exhibits together with the two receipts examined by the PC Crime Laboratory despite due notice to
him. Likewise, no explanation has been offered for his silence nor was any hint of objection
registered for that purpose.

Under these circumstances, we find no reason why Exhibit "J" should be rejected or ignored. The
records sufficiently establish that there was a partnership.

The petitioner raises the issue of prescription. He argues: The Hon. Respondent Intermediate
Appellate Court gravely erred in not resolving the issue of prescription in favor of petitioner. The
alleged receipt is dated October 1, 1955 and the complaint was filed only on July 13, 1978 or after
the lapse of twenty-two (22) years, nine (9) months and twelve (12) days. From October 1, 1955 to
July 13, 1978, no written demands were ever made by private respondent.

The petitioner's argument is based on Article 1144 of the Civil Code which provides:

Art. 1144. The following actions must be brought within ten years from the time the
right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

in relation to Article 1155 thereof which provides:

Art. 1155. The prescription of actions is interrupted when they are filed before the
court, when there is a written extra-judicial demand by the creditor, and when there is
any written acknowledgment of the debt by the debtor.'

The argument is not well-taken.

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 the part 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
the firm. If excellent relations exist among the partners at the start of business and all the partners
are more interested in seeing the firm grow rather than get immediate returns, a deferment of
sharing in the profits is perfectly plausible. It would be incorrect to state that if a partner does not
assert his rights anytime within ten years from the start of operations, such rights are irretrievably
lost. The private respondent's cause of action is premised upon the failure of the petitioner to give
him the agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was
asking for an accounting of his interests in the partnership.
It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable.
Article 1842 states:

The right to an account of his interest shall accrue to any partner, or his legal
representative as against the winding up partners or the surviving partners or the
person or partnership continuing the business, at the date of dissolution, in the
absence or any agreement to the contrary.

Regarding the prescriptive period within which the private respondent may demand an accounting,
Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the
partnership exists. Prescription begins to run only upon the dissolution of the partnership when the
final accounting is done.

Finally, the petitioner assails the appellate court's monetary awards in favor of the private
respondent for being excessive and unconscionable and above the claim of private respondent as
embodied in his complaint and testimonial evidence presented by said private respondent to support
his claim in the complaint.

Apart from his own testimony and allegations, the private respondent presented the cashier of Sun
Wah Panciteria, a certain Mrs. Sarah L. Licup, to testify on the income of the restaurant.

Mrs. Licup stated:

ATTY. HIPOLITO (direct examination to Mrs. Licup).

Q Mrs. Witness, you stated that among your duties was that you were
in charge of the custody of the cashier's box, of the money, being the
cashier, is that correct?

A Yes, sir.

Q So that every time there is a customer who pays, you were the one
who accepted the money and you gave the change, if any, is that
correct?

A Yes.

Q Now, after 11:30 (P.M.) which is the closing time as you said, what
do you do with the money?

A We balance it with the manager, Mr. Dan Fue Leung.

ATTY. HIPOLITO:

I see.

Q So, in other words, after your job, you huddle or confer together?

A Yes, count it all. I total it. We sum it up.

 Q Now, Mrs. Witness, in an average day, more or less, will you
please tell us, how much is the gross income of the restaurant?

A For regular days, I received around P7,000.00 a day during my shift

alone and during pay days I receive more than P10,000.00. That is
excluding the catering outside the place.

Q What about the catering service, will you please tell the Honorable
Court how many times a week were there catering services?

A Sometimes three times a month; sometimes two times a month or

more.

xxx xxx xxx

Q Now more or less, do you know the cost of the catering service?

A Yes, because I am the one who receives the payment also of the
catering.

Q How much is that?

A That ranges from two thousand to six thousand pesos, sir.

Q Per service?

A Per service, Per catering.

Q So in other words, Mrs. witness, for your shift alone in a single day
from 3:30 P.M. to 11:30 P.M. in the evening the restaurant grosses
an income of P7,000.00 in a regular day?

A Yes.

Q And ten thousand pesos during pay day.?

A Yes.

(TSN, pp. 53 to 59, inclusive, November 15,1978)

xxx xxx xxx

COURT:

Any cross?

ATTY. UY (counsel for defendant):

No cross-examination, Your Honor. (T.S.N. p. 65, November 15,

1978). (Rollo, pp. 127-128)
The statements of the cashier were not rebutted. Not only did the petitioner's counsel waive the
cross-examination on the matter of income but he failed to comply with his promise to produce
pertinent records. When a subpoena duces tecum was issued to the petitioner for the production of
their records of sale, his counsel voluntarily offered to bring them to court. He asked for sufficient
time prompting the court to cancel all hearings for January, 1981 and reset them to the later part of
the following month. The petitioner's counsel never produced any books, prompting the trial court to
state:

Counsel for the defendant admitted that the sales of Sun Wah were registered or
recorded in the daily sales book. ledgers, journals and for this purpose, employed a
bookkeeper. This inspired the Court to ask counsel for the defendant to bring said
records and counsel for the defendant promised to bring those that were available.
Seemingly, that was the reason why this case dragged for quite sometime. To
bemuddle the issue, defendant instead of presenting the books where the same, etc.
were recorded, presented witnesses who claimed to have supplied chicken, meat,
shrimps, egg and other poultry products which, however, did not show the gross
sales nor does it prove that the same is the best evidence. This Court gave warning
to the defendant's counsel that if he failed to produce the books, the same will be
considered a waiver on the part of the defendant to produce the said books inimitably
showing decisive records on the income of the eatery pursuant to the Rules of Court
(Sec. 5(e) Rule 131). "Evidence willfully suppressed would be adverse if produced."
(Rollo, p. 145)

The records show that the trial court went out of its way to accord due process to the petitioner.

The defendant was given all the chance to present all conceivable witnesses, after
the plaintiff has rested his case on February 25, 1981, however, after presenting
several witnesses, counsel for defendant promised that he will present the defendant
as his last witness. Notably there were several postponement asked by counsel for
the defendant and the last one was on October 1, 1981 when he asked that this case
be postponed for 45 days because said defendant was then in Hongkong and he
(defendant) will be back after said period. The Court acting with great concern and
understanding reset the hearing to November 17, 1981. On said date, the counsel for
the defendant who again failed to present the defendant asked for another
postponement, this time to November 24, 1981 in order to give said defendant
another judicial magnanimity and substantial due process. It was however a
condition in the order granting the postponement to said date that if the defendant
cannot be presented, counsel is deemed to have waived the presentation of said
witness and will submit his case for decision.

On November 24, 1981, there being a typhoon prevailing in Manila said date was
declared a partial non-working holiday, so much so, the hearing was reset to
December 7 and 22, 1981. On December 7, 1981, on motion of defendant's counsel,
the same was again reset to December 22, 1981 as previously scheduled which
hearing was understood as intransferable in character. Again on December 22, 1981,
the defendant's counsel asked for postponement on the ground that the defendant
was sick. the Court, after much tolerance and judicial magnanimity, denied said
motion and ordered that the case be submitted for resolution based on the evidence
on record and gave the parties 30 days from December 23, 1981, within which to file
their simultaneous memoranda. (Rollo, pp. 148-150)
The restaurant is located at No. 747 Florentino Torres, Sta. Cruz, Manila in front of the Republic
Supermarket. It is near the corner of Claro M. Recto Street. According to the trial court, it is in the
heart of Chinatown where people who buy and sell jewelries, businessmen, brokers, manager, bank
employees, and people from all walks of life converge and patronize Sun Wah.

There is more than substantial evidence to support the factual findings of the trial court and the
appellate court. If the respondent court awarded damages only from judicial demand in 1978 and not
from the opening of the restaurant in 1955, it is because of the petitioner's contentions that all profits
were being plowed back into the expansion of the business. There is no basis in the records to
sustain the petitioners contention that the damages awarded are excessive. Even if the Court is
minded to modify the factual findings of both the trial court and the appellate court, it cannot refer to
any portion of the records for such modification. There is no basis in the records for this Court to
change or set aside the factual findings of the trial court and the appellate court. The petitioner was
given every opportunity to refute or rebut the respondent's submissions but, after promising to do so,
it deliberately failed to present its books and other evidence.

The resolution of the Intermediate Appellate Court ordering the payment of the petitioner's obligation
shows that the same continues until fully paid. The question now arises as to whether or not the
payment of a share of profits shall continue into the future with no fixed ending date.

Considering the facts of this case, the Court may decree a dissolution of the partnership under
Article 1831 of the Civil Code which, in part, provides:

Art. 1831. On application by or for a partner the court shall decree a dissolution
whenever:

xxx xxx xxx

(3) A partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business;

(4) A partner willfully or persistently commits a breach of the partnership agreement,

or otherwise so conducts himself in matters relating to the partnership business that
it is not reasonably practicable to carry on the business in partnership with him;

xxx xxx xxx

(6) Other circumstances render a dissolution equitable.

There shall be a liquidation and winding up of partnership affairs, return of capital, and other
incidents of dissolution because the continuation of the partnership has become inequitable.

WHEREFORE, the petition for review is hereby DISMISSED for lack of merit. The decision of the
respondent court is AFFIRMED with a MODIFICATION that as indicated above, the partnership of
the parties is ordered dissolved.

SO ORDERED.

Fernan, C.J., (Chairman), Feliciano, Bidin and Cortes, JJ., concur.