Republic of the Philippines The plaintiff, Po Yeng Cheo, is the sole heir of one Po Gui Yao, deceased,
SUPREME COURT and as such Po Yeng Cheo inherited the interest left by Po Gui Yao in a
Manila
EN BANC
G.R. No. L-18707 December 9, 1922
PO YENG CHEO, plaintiff-appellee,
vs.
LIM KA YAM, defendant-appellant.
STREET, J.:
By the amended complaint in this action, the present plaintiff, Po Yeng Cheo,
alleged sole owner of a business formerly conducted in the City of Manila
under the style of Kwong Cheong, as managing partner in said business and
to recover from him its properties and assets. The defendant having died
during the pendency of the cause in the court below and the death suggested
of record, his administrator, one Lim Yock Tock, was required to appear and
make defense.
In a decision dated July 1, 1921, the Honorable C. A. Imperial, presiding in
the court below, found that the plaintiff was entitled to an accounting from
Lim Ka Yam, the original defendant, as manager of the business already
reffered to, and he accordingly required Lim Yock Tock, as administrator, to
present a liquidation of said business within a stated time. This order bore no
substantial fruit, for the reason that Lim Yock Tock personally knew nothing
about the aforesaid business (which had ceased operation more than ten
years previously) and was apparently unable to find any books or documents
that could shed any real light on its transaction. However, he did submit to
the court a paper written by Lim Ka Yam in life purporting to give, with vague
and uncertain details, a history of the formation of the Kwong Cheong Tay
and some account of its disruption and cessation from business in 1910. To
this narrative was appended a statement of assets and liabilities, purporting
to show that after the business was liquidate, it was actually debtor to Lim Ka
Yam to the extent of several thousand pesos. Appreciating the worthlessness
of this so-called statement, and all parties apparently realizing that nothing
more was likely to be discovered by further insisting on an accounting, the
court proceeded, on December 27, 1921, to render final judgment in favor of
the plaintiff.
The decision made on this occasion takes as its basis the fact stated by the
court in its earlier decision of July 1, 1921, which may be briefly set fourth as
follows:lawphil.net
business conducted in Manila under the style of Kwong Cheong Tay. This
business had been in existence in Manila for many years prior to 1903, as a
mercantile partnership, with a capitalization of P160,000, engaged in the
import and export trade; and after the death of Po Gui Yao the following
seven persons were interested therein as partners in the amounts set
opposite their respective names, to wit: Po Yeng Cheo, P60,000; Chua Chi
Yek, P50,000; Lim Ka Yam, P10,000; Lee Kom Chuen, P10,000; Ley Wing
Kwong, P10,000; Chan Liong Chao, P10,000; Lee Ho Yuen, P10,000. The
manager of Kwong Cheong Tay, for many years prior of its complete
cessation from business in 1910, was Lim Ka Yam, the original defendant
herein.
Among the properties pertaining to Kwong Cheong Tay and consisting part of
its assets were ten shares of a total par value of P10,000 in an enterprise
conducted under the name of Yut Siong Chyip Konski and certain shares to
the among of P1,000 in the Manila Electric Railroad and Light Company, of
Manila.
In the year 1910 (exact date unstated) Kwong Cheong Tay ceased to do
business, owing principally to the fact that the plaintiff ceased at that time to
transmit merchandise from Hongkong, where he then resided. Lim Ka Yam
appears at no time to have submitted to the partners any formal liquidation of
the business, though repeated demands to that effect have been made upon
him by the plaintiff.
In view of the facts above stated, the trial judge rendered judgment in favor of
the plaintiff, Po Yeng Cheo, to recover of the defendant Lim Yock Tock, as
administrator of Lim Ka Yam, the sum of sixty thousand pesos (P60,000),
constituting the interest of the plaintiff in the capital of Kwong Cheong Tay,
plus the plaintiff's proportional interest in shares of the Yut Siong Chyip
Konski and Manila Electric Railroad and Light Company, estimated at
P11,000, together with the costs. From this judgment the defendant
appealed.
In beginning our comment on the case, it is to be observed that this court
finds itself strictly circumscribed so far as our power of review is concerned,
to the facts found by the trial judge, for the plaintiff did not appeal from the
decision of the court below in so far as it was unfavorable to him, and the
defendant, as appellant, has not caused a great part of the oral testimony to
be brought up. It results, as stated, that we must accept the facts as found by
the trial judge; and our review must be limited to the error, or errors, if any,
which may be apparent upon the face of the appealed decision, in relation
with the pleadings of record.
Proceeding then to consider the appealed decision in relation with the facts
therein stated and other facts appearing in the orders and proceedings in the
cause, it is quite apparent that the judgment cannot be sustained. In the first
place, it was erroneous in any event to give judgment in favor of the plaintiff
to the extent of his share of the capital of Kwong Cheong Tay. The managing
partner of a mercantile enterprise is not a debtor to the shareholders for the
capital embarked by them in the business; and he can only be made liable
for the capital when, upon liquidation of the business, there are found to be
assets in his hands applicable to capital account. That the sum of one
hundred and sixty thousand pesos (P160,000) was embarked in this
business many years ago reveals nothing as to the condition of the capital
account at the time the concern ceased to do business; and even supposing-
-as the court possibly did--that the capital was intact in 1908, this would not
prove it was intact in 1910 when the business ceased to be a going concern;
for in that precise interval of time the capital may have been diminished or
dissipated from causes in no wise chargeable to the negligence or
misfeasance of the manager.
Again, so far as appears from the appealed decision, the only property
pertaining to Kwong Cheong Tay at the time this action was brought
consisted of shares in the two concerns already mentioned of the total par
value of P11,000. Of course, if these shares had been sold and converted
into money, the proceeds, if not needed to pay debts, would have been
distributable among the various persons in interest, that is, among the
various shareholders, in their respective proportions. But under the
circumstances revealed in this case, it was erroneous to give judgment in
favor of the plaintiff for his aliquot part of the par value of said shares. It is
elementary that one partner, suing alone, cannot recover of the managing
partner the value of such partner's individual interest; and a liquidation of the
business is an essential prerequisite. It is true that in Lichauco vs. Lichauco
(33 Phil., 350), this court permitted one partner to recover of the manager the
plaintiff's aliquot part of the proceeds of the business, then long since closed;
but in that case the affairs of the defunct concern had been actually liquidate
by the manager to the extent that he had apparently converted all its
properties into money and had pocketed the same--which was admitted;--
and nothing remained to be done except to compel him to pay over the
money to the persons in interest. In the present case, the shares referred to--
constituting the only assets of Kwong Cheong Tay--have not been converted
into ready money and doubtless still remain in the name of Kwong Cheong
Tay as owner. Under these circumstances it is impossible to sustain a
judgment in favor of the plaintiff for his aliquot part of the par value of said
shares, which would be equivalent to allowing one of several coowners to
recover from another, without process of division, a part of an undivided
property.
Another condition will be noted as present in this case which in our opinion is
fatal to the maintenance of the appealed judgment. This is that, after the
death of the original defendant, Lim Ka Yam, the trial court allowed the action
to proceed against Lim Yock Tock, as his administrator, and entered
judgment for a sum of money against said administrator as the accounting
party,--notwithstanding the insistence of the attorneys for the latter that the
action should be discontinued in the form in which it was then being
prosecuted. The error of the trial court in so doing can be readily
demonstrated from more than one point of view.
In the first place, it is well settled that when a member of a mercantile
partnership dies, the duty of liquidating its affair devolves upon the surviving
member, or members, of the firm, not upon the legal representative of the
deceased partner. (Wahl vs. Donaldson Sim & Co., 5 Phil., 11; Sugo and
Shibata vs. Green, 6 Phil., 744) And the same rule must be equally
applicable to a civil partnership clothed with the form of a commercial
association (art. 1670, Civil Code; Lichauco vs. Lichauco, 33 Phil., 350) Upon
the death of Lim Ka Yam it therefore became the duty of his surviving
associates to take the proper steps to settle the affairs of the firm, and any
claim against him, or his estate, for a sum of money due to the partnership by
reason of any misappropriation of its funds by him, or for damages resulting
from his wrongful acts as manager, should be prosecuted against his estate
in administration in the manner pointed out in sections 686 to 701, inclusive,
of the Code of Civil Procedure. Moreover, when it appears, as here, that the
property pertaining to Kwong Cheong Tay, like the shares in the Yut Siong
Chyip Konski and the Manila Electric Railroad and Light Company, are in the
possession of the deceased partner, the proper step for the surviving
associates to take would be to make application to the court having charge to
the administration to require the administrator to surrender such property.
But, in the second place, as already indicated, the proceedings in this cause,
considered in the character of an action for an accounting, were futile; and
the court, abandoning entirely the effort to obtain an accounting, gave
judgment against the administrator upon the supposed liability of his intestate
to respond for the plaintiff's proportionate share of the capital and assets. But
of course the action was not maintainable in this aspect after the death of the
defendant; and the motion to discontinue the action as against the
administrator should have been granted.
The judgment must be reversed, and the defendant will be absolved from the
complaint; but it will be understood that this order is without prejudice to any
proceeding which may be undertaken by the proper person or persons in
interest to settle the affairs of Kwong Cheong Tay and in connection
therewith to recover from the administrator of Lim Ka Yam the shares in the
two concerns mentioned above. No special pronouncement will be made as
to costs of either. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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.

 Republic of the Philippines business based in New York. Realizing the difficulty of managing their
SUPREME COURT investments in the Philippines they executed a general power of attorney on
Manila January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact,
empowering them to manage and conduct their business concern in the
FIRST DIVISION Philippines.1

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
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
I WAS A SUBSCRIBER TO THE MANILA TIMES
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
I AND EXCHANGE COMMISSION ON MARCH 29,1971
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
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
(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 A I paid through my attorney-in-fact. I am the one who gave
binding upon the appellate courts, said rule admits of exceptions him the money.
such as when (1) the conclusion is a finding grounded entirely on
speculations, surmises and conjectures; (2) when the inferences ATTY. MARAPAO:
made is manifestly mistaken, absurd and impossible; (3) when there
is grave abuse of discretion; (4) when the judgment is based on a Q You gave him the money?
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 A That's right.
Appeals, 63 SCRA 33; Philippine American Life Assurance Co. vs.
Santamaria, 31 SCRA 798; Aldaba vs. Court of Appeals, 24 SCRA Q How much money did you give him?
189).
A US $ 150,000.00.
The evidence on record shows that the t court acted under a
misapprehension of facts and the inferences made on the evidence Q How was it given then?
palpably a mistake.
A Through Bank drafts. US $65,000.00 and US $85,000.00
The trial court's observation that "the entire records of the case is bank drafts. The total amount which is $ 150,000.00 (TSN,
bereft of even a shred of proof" that plaintiff-appellants have remitted 28 February 1984, p. 10; Emphasis supplied.)
to defendant-appellee Choithram Ramnani the amount of US $
150,000.00 for investment in real estate in the Philippines, is not xxx xxx xxx
borne by the evidence on record and shows the trial court's
misapprehension of the facts if not a complete disregard of the
ATTY. CRUZ:
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:
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?

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:
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?

Wait. It is now clear it becomes incompetent or hearsay. ATTY. MARAPAO:

COURT: Your Honor, that is misleading.

Witness can answer. 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.1âwphi1 They 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.)
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.

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.
 DIVISION Adjustment Standard Corporation submitted a report as follow:

[ GR No. 55397, Feb 29, 1988 ] xxx

x x x Thus the apportioned share of each company is as follows:

TAI TONG CHUACHE v. INSURANCE COMMISSION +
Policy No. Company Risk Insures Pays
DECISION
MIRO/ Zenith Building P50, 000 P 7,610.93
F-02500 Insurance
Corp.
GANCAYCO, J.: F-84590 Phil. Household 70,000 24,655.31
This petition for review on certiorari seeks the reversal of the decision of the
Insurance Commission in IC Case #367[1] dismissing the complaint[2] for British
recovery of the alleged unpaid balance of the proceeds of the Fire Insurance Assco. Co.
Policies issued by herein respondent insurance company in favor of Inc. FFF & F5 50,000 39, 186. 10
petitioner-intervenor.
FIC-15381 SSS
The facts of the case as found by respondent Insurance Commission are as Accredited
follows: Group of
Insurers Building P25, 000 P8, 805.47
"Complainants acquired from a certain Rolando Gonzales a parcel of land Totals P195, 000 P 90, 257.81
and a building located at San Rafael Village, Davao City. Complainants We are showing hereunder another apportionment of the loss which includes
assumed the mortgage of the building in favor of S.S.S., which building was the Travellers Multi?Indemnity policy for reference purposes.
insured with respondent S.S.S. Accredited Group of Insurers for P25,000.00.
Policy No. Company Risk Insures Pays
On April 19, 1975, Azucena Palomo obtained a loan from Tai Tong Chuache,
Inc. in the amount of P100,000.00. To secure the payment of the loan, a MIRO/ Zenith
mortgage was executed over the land and the building in favor of Tai Tong F-02500 Insurance
Chuache & Co. (Exhibit "1" and "1-A"). On April 25, 1975, Arsenio Chua, Corp. Building P50, 000 P 11, 877.14
representative of Thai Tong Chuache & Co. insured the latter's interest with
Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for the F-84590 Phil.
building and P30,000.00 for the contents thereof) (Exhibit "A-a", contents British
thereof) (Exhibit "A-a"). Assco. Co. I-Buliding 70, 000 16, 628.00
II-Building
On June 11, 1975, Pedro Palomo secured a Fire Insurance Policy No. F- FFF & P.E. 50, 000 24, 918. 79
02500 (Exhibit "A"), covering the building for P50,000.00 with respondent
Zenith Insurance Corporation. On July 16, 1975, another Fire Insurance PVC-15181 SSS
Policy No. 8459 (Exhibit "B") was procured from respondent Philippine British Accredited
Assurance Company, covering the same building for P50,000.00 and the Group of Building 25,000 5, 938.50
contents thereof for P70,000.00. Insurers

On July 31, 1975, the building and the contents were totally razed by fire. F-599 DV Insurers 1-Ref 30,000 14,467.31
Multi II-Building 70,000 16,628.00

Totals P295, 000 P90, 257. 81

Based on the computation of the loss, including the Travellers Multi-
Indemnity, respondents, Zenith Insurance, Phil. British Assurance and S.S.S.
Accredited Group of Insurers, paid their corresponding shares of the loss.
Complainants were paid the following: P41,546.79 by Philippine British
Assurance Co., P11,877.14 by Zenith Insurance Corporation, and P5,936.57
by S.S.S. Group of Accredited Insurers (Par. 6, Amended Complaint).
Demand was made from respondent Travellers Multi-Indemnity for its share
in the loss but the same was refused. Hence, complainants demanded from
the other three (3) respondents the balance of each share in the loss based
on the computation of the Adjustment Standards Report excluding Travellers
Multi-Indemnity in the amount of P30,894.31 (P5,732.79 - Zenith Insurance:
P22,294.62, Phil. British: and P2,866.90, SSS Accredited) but the same was
refused, hence, this action.
In their answers, Philippine British and Zenith Insurance Corporation
admitted the material allegations in the complaint, but denied liability on the
ground that the claim of the complainants had already been waived,
extinguished or paid. Both companies set up counterclaim in the total amount
of P91,546.79.
Instead of filing an answer, SSS Accredited Group of Insurers informed the
Commission in its letter of July 22, 1977 that the herein claim of
complainants for the balance had been paid in the amount of P5,938.57 in
full, based on the Adjustment Standards Corporation Report of September
22, 1975.
Travellers Insurance, on its part, admitted the issuance of the Policy No. 599
DV and alleged as its special and affirmative defenses the following, to wit:
that Fire Policy No. 599 DV, covering the furniture and building of
complainants was secured by a certain Arsenio Chua, mortgage creditor, for
the purpose of protecting his mortgage credit against the complainants; that
the said policy was issued in the name of Azucena Palomo, only to indicate
that she owns the insured premises; that the policy contains an endorsement
in favor of Arsenio Chua as his mortgage interest may appear to indicate that
insured was Arsenio Chua and the complainants; that the premiums due on
said fire policy was paid by Arsenio Chua; that respondent Travellers is not
liable to pay complainants.
On May 31, 1977, Tai Tong Chuache & Co. filed a complaint in intervention
claiming the proceeds of the fire Insurance Policy No. F-559 DV, issued by
respondent Travellers Multi-Indemnity.
Travellers Insurance, in answer to the complaint in intervention, alleged that
the Intervenor is not entitled to indemnity under its Fire Insurance Policy for
lack of insurable interest before the loss of the insured premises and that the
complainants, spouses Pedro and Azucena Palomo, had already paid in full
their mortgage indebtedness to the intervenor."[3]
As adverted to above respondent Insurance Commission dismissed spouses
Palomos' complaint on the ground that the insurance policy subject of the
complaint was taken out by Tai Tong Chuache & Company, petitioner herein,
for its own interest only as mortgagee of the insured property and thus
complainants as mortgagors of the insured property have no right of action
against herein respondent. It likewise dismissed petitioner's complaint in
intervention in the following words:
"We move on the issue of liability of respondent Travellers Multi-Indemnity to
the Intervenor-mortgagee. The complainant testified that she was still
indebted to Intervenor in the amount of P100,000.00. Such allegation has not
however, been sufficiently proven by documentary evidence. The certification
(Exhibit 'E-e') issued by the Court of First Instance of Davao, Branch 11,
indicate that the complainant was Antonio Lopez Chua and not Tai Tong
Chuache & Company."[4]
From the above decision, only intervenor Tai Tong Chuache filed a motion
for reconsideration but it was likewise denied hence, the present petition.
It is the contention of the petitioner that respondent Insurance Commission
decided an issue not raised in the pleadings of the parties in that it ruled that
a certain Arsenio Lopez Chua is the one entitled to the insurance proceeds
and not Tai Tong Chuache & Company.
This Court cannot fault petitioner for the above erroneous interpretation of
the decision appealed from considering the manner it was written.[5] As
correctly pointed out by respondent insurance commission in their comment,
the decision did not pronounce that it was Arsenio Lopez Chua who has
insurable interest over the insured property. Perusal of the decision reveals
however that it readily absolved respondent insurance company from liability
on the basis of the commissioner's conclusion that at the time of the
occurrence of the peril insured against petitioner as mortgagee had no more
insurable interest over the insured property. It was based on the inference
that the credit secured by the mortgaged property was already paid by the
Palomos before the said property was gutted down by fire. The foregoing
conclusion was arrived at on the basis of the certification issued by the then
Court of First Instance of Davao, Branch II that in a certain civil action against
the Palomos, Antonio Lopez Chua stands as the complainant and not
petitioner Tai Tong Chuache & Company.
We find the petition to be impressed with merit. It is a well known postulate
that the case of a party is constituted by his own affirmative allegations.
Under Section 1, Rule 131[6] each party must prove his own affirmative
allegations by the amount of evidence required by law which in civil cases as
in the present case is preponderance of evidence. The party, whether plaintiff
or defendant, who asserts the affirmative of the issue has the burden of
presenting at the trial such amount of evidence as required by law to obtain a
favorable judgment.[7] Thus, petitioner who is claiming a right over the
insurance must prove its case. Likewise, respondent insurance company to
avoid liability under the policy by setting up an affirmative defense of lack of
insurable interest on the part of the petitioner must prove its own affirmative
allegations.
It will be recalled that respondent insurance company did not assail the
validity of the insurance policy taken out by petitioner over the mortgaged
property. Neither did it deny that the said property was totally razed by fire
within the period covered by the insurance. Respondent, as mentioned
earlier advanced an affirmative defense of lack of insurable interest on the
part of the petitioner alleging that before the occurrence of the peril insured
against the Palomos had already paid their credit due the petitioner.
Respondent having admitted the material allegations in the complaint, has
the burden of proof to show that petitioner has no insurable interest over the
insured property at the time the contingency took place. Upon that point,
there is a failure of proof. Respondent, it will be noted, exerted no effort to
present any evidence to substantiate its claim, while petitioner did. For said
respondent's failure, the decision must be adverse to it.
However, as adverted to earlier, respondent Insurance Commission absolved
respondent insurance company from liability on the basis of the certification
issued by the then Court of First Instance of Davao, Branch II, that in a
certain civil action against the Palomos, Arsenio Lopez Chua stands as the
complainant and not Tai Tong Chuache. From said evidence respondent
commission inferred that the credit extended by herein petitioner to the
Palomos secured by the insured property must have been paid. Such is a
glaring error which this Court cannot sanction. Respondent Commission's
findings are based upon a mere inference.
The record of the case shows that the petitioner to support its claim for the
insurance proceeds offered as evidence the contract of mortgage (Exh. 1)
which has not been cancelled nor released. It has been held in a long line of
cases that when the creditor is in possession of the document of credit, he
need not prove non-payment for it is presumed.[8] The validity of the
insurance policy taken by petitioner was not assailed by private respondent.
Moreover, petitioner's claim that the loan extended to the Palomos has not
yet been paid was corroborated by Azucena Palomo who testified that they
are still indebted to herein petitioner.[9]
Public respondent argues however, that if the civil case really stemmed from
the loan granted to Azucena Palomo by petitioner the same should have
been brought by Tai Tong Chuache or by its representative in its own behalf.
From the above premise respondent concluded that the obligation secured
by the insured property must have been paid.
The premise is correct but the conclusion is wrong. Citing Rule 3, Sec.
2[10]respondent pointed out that the action must be brought in the name of the
real party in interest. We agree. However, it should be borne in mind that
petitioner being a partnership may sue and be sued in its name or by its duly
authorized representative. The fact that Arsenio Lopez Chua is the
representative of petitioner is not questioned. Petitioner's declaration that
Arsenio Lopez Chua acts as the managing partner of the partnership was
corroborated by respondent insurance company.[11] Thus Chua as the
managing partner of the partnership may execute all acts of
administration[12] including the right to sue debtors of the partnership in case
of their failure to pay their obligations when it became due and demandable.
Or at the very least, Chua being a partner of petitioner Tai Tong Chuache &
Company is an agent of the partnership. Being an agent, it is understood that
he acted for and in behalf of the firm.[13] Public respondent's allegation that
the civil case filed by Arsenio Chua was in his capacity as personal creditor
of spouses Palomo has no basis.
The respondent insurance company having issued a policy in favor of herein
petitioner which policy was of legal force and effect at the time of the fire, it is
bound by its terms and conditions. Upon its failure to prove the allegation of
lack of insurable interest on the part of the petitioner, respondent insurance
company is and must be held liable.
IN VIEW OF THE FOREGOING, the decision appealed from is hereby SET
ASIDE and ANOTHER judgment is rendered ordering private respondent
Travellers Multi-Indemnity Corporation to pay petitioner the face value of
Insurance Policy No. 599-DV in the amount of P100,000.00. Costs against
said private respondent.
SO ORDERED.
 EN BANC
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-Lapuas 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
receiverpendente 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 Q. Did you not say that you paid yourself a salary in August because
that the business was never on a paying basis. you made a profit? -

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. 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.

A. Well, I put the salary in there. Q. Would you have any objection to their asking for their attorney's
fees from the company as partners also in the business?
Q. I am asking you if that is true? -
A. Yes.
A. I do not think I will decide that, I think it will be decided by the court.
Q. You would object to your partners having their attorney's fees here
Q. I will ask you to answer the question? paid out of the copartnership like you have had yours paid?

A. You asked me my opinion and I said that I am entitled to it. A. Yes, that is the way I do my business.

xxx xxx xxx 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
I am not on trial as a bookkeeper; if my lawyers won't object to the question I and even their respective attorneys. Be that as it may, we are clearly of the
will object myself; I am not on trial as a bookkeeper; I keep my books any opinion that the findings of the lower court upon questions of fact are well
way I want to, put in what I want to, and I leave out anything I don't choose to sustained by the evidence. Plaintiff's case was tried on the theory that the
put in, - 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
xxx xxx xxx 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
Q. You have your own bookkeeping? - 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
A. Well, I run my business to suit myself, I put in the books what I testimony as to the value of such use, but the cost of the Lapu-Lapuand the
want to, and I leave out what I want to, and I have a quarter of a million time of its use and the purpose for which it was used, all appear in the
pesos to show for it, - record. For such reason, in the interest of justice, plaintiff should be
compensated for the reasonable value of the time which the partnership
xxx xxx xxx 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.
 EN BANC
[G.R. No. 1011. May 13, 1903. ]
JOSE MACHUCA, Plaintiff-Appellee, v. CHUIDIAN, BUENAVENTURA &
CO., Defendants-Appellants.
Simplicio del Rosario for Appellants.
Joaquin Rodriguez Serra for Appellee.
SYLLABUS
1. COPARTNERSHIP; LIQUIDATION. — Where the articles of copartnership
provide that upon liquidation the claims of outside persons shall first be
satisfied before those of the partners, the assignment of a partner’s interest
pending liquidation is the assignment of a future interest which can not be
enforced until the termination of the liquidation.
DECISION
LADD, J. :
Most of the allegations of the complaint were admitted by the defendant at
the hearing, and the judgment of the court below is based on the state of
court below is based from such admissions, no evidence having been taken.
The defendants are a regular general partnership, organized in Manila,
December 29, 1882, as a continuation of a prior partnership of the same
name. The original partners constituting the partnership of 1882 were D.
Telesforo Chuidian, Doña Raymunda Chuidian, Doña Candelaria Chuidian,
and D. Mariano Buenaventura. The capital was fixed in the Partnership
agreement at 160 000 pesos, of which the first three partners named
contributed 50,000 pesos each, and the last named 10,000 pesos, and it was
stipulated that the liability of the partners should be "limited to the amounts
brought in by them to farewell the partnership stock."
In addition to the amounts contributed by the partners to the capital, it
appears from the partnership agreement that each one of them had
advanced money to the preexisting partnership, which advances were
assumed as liabilities by the new partnership. These advances or accounts-
current aggregated something over 665,000 pesos, of which sum about
569,000 pesos represented the advances from the Chuidians and the
balance that from D. Mariano Buenaventura.
Doña Raymunda Chuidian retired from the Partnership November 4, 1885
On January 1 1888, the partnership went into liquidation, and it does not
appear that the liquidation had been terminated when this actual was
brought.
Down to the time the partnership went into liquidation the accounts-current of
D. Telesforo Chuidian and Doña Candelaria Chuidian had been diminished in
an amount aggregating about 288,000 pesos, while that of D. Mariano
Buenaventura had been increased about 51,000 pesos. During the period
from the commencement of the liquidation down to January 1, 1896, the
account-current of each of the Chuidians had been still further decreased,
while that of D. Mariano Buenaventura had been still further increased.
On January 1,1894, D. Mariano Buenaventura died, his estate passing by will
to his children, among whom was D. Vicente Buenaventura. Upon the
partition of the estate the amount of the interest of D. Vicente Buenaventura
in his father’s account-current and in the capital was ascertained and
recorded in the hooks of the firm.
On December 16, 1898, D. Vicente Buenaventura executed a public
instrument in which for a valuable consideration he "assigns to D. Jose
Gervasio Garcia . . . a 25 per cent share in all that may be obtained by
whatever right or in what ever form from the liquidation of the partnership of
Chuidian, Buenaventura & Co., in the part pertaining to him in said
partnership, . . . the assignee, being expressly empowered to do in his own
name, and as a part owner, by virtue of this assignment in the assets of the
partnership, whatever things may be necessary for the purpose of
accelerating the liquidation, and of obtaining judicially or extra judicially the
payment of the deposits on account-current pertaining to the assignor, it
being understood that D. Jose Gervasio Garcia is to receive the 25 per cent
assigned to him, in the same form in which it may be obtained from said
partnership, whether in cash, credits, goods, movables or immovables, and
on the date when Messrs. Chuidian, Buenaventura & Co., in liquidation, shall
have effected the operations necessary in order to satisfy the credits and the
share in the partnership capital herein before mentioned."
The plaintiff claims under Garcia by virtue of a subsequent assignment,
which has been notified to the liquidator of the partnership.
The liquidator of the partnership having declined to record in the books of the
partnership the plaintiff’s claim endow the assignment as a credit due from
the concern to him this action is brought to compel such record to be made,
and the plaintiff further asks that he be adjudicated to be a creditor of the
partnership in an amount equal to 25 per cent of D. Vicente Buenaventura’s
share in his father’s account-current, as ascertained when the record was
made in the books of the partnership upon the partition of the latter’s estate,
with interest, less the liability to which the plaintiff is subject by reason of his
share in the capital; that the necessary liquidation being first had, the
partnership pay to the plaintiff the balance which may be found to be due
him; and that if the partnership has no funds with which to discharge this
obligation an adjudication of bankruptcy be made. He also asks to recover
the damages caused by reason of the failure of the liquidator to record his
credit in the books of the partnership.
The judgment of the court below goes beyond the relief asked by the plaintiff
in the complaint, the plaintiff being held entitled not only to have the credit
assigned him recorded in the books of the partnership but also to receive
forthwith 25 per cent of an amount representing the share of D. Vicente
Buenaventura in the account-current at the time of the partition of his father’s
estate, with interest, the payment of the 25 per cent of Buenaventura’s share
in the capital to be postponed till the termination of the liquidation. This point
has not, however, been taken by counsel, and we have therefore considered
the case upon its merits.
The underlying question in the case relates to the construction of clause 19
of the partnership agreement, by which it was stipulated that "upon the
dissolution of the company, the pending obligations in favor of outside parties
should be satisfied, the funds of the minors Jose and Francisco Chuidian [it
does not appear what their interest in the partnership was or when or how it
was acquired] should be taken out, and afterwards the resulting balance of
the account-current of each of one of those who had put in money
(imponentes) should be paid."
Our construction of this clause is that it establishes a basis for the final
adjustment of the affairs of the partnership; that that basis is that the liabilities
to non partners are to be first discharged; that the claims of the Chuidian
minors are to be next satisfied; and that what is due to the respective
partners on account of their advances to the firm is to be paid last of all,
leaving the ultimate residue, of course, if there be any, to be distributed
among the partners in the proportions in which they may be entitled thereto.
Although in a sense the partners, being at the same time creditors, were
"outside parities" it is clear that a distinction is made in this clause between
creditors who were partners and creditors who were not partners, and that
the expression "outside parties" refers to the latter class. And the words
"pending obligations," we think, clearly comprehend outstanding obligations
of every kind in favor of such outside parties, and do not refer merely, as
claimed by counsel for the plaintiff, to the completion of mercantile operations
unfinished at the time of the dissolution of the partnership, such as
consignments of goods and the like. As respects the claims of the Chuidian
minors, the suggestion of counsel is that the clause in question means that
their accounts are to be adjusted before those of the partners but not paid
first. Such a provision would have been of no practical utility, and the
language used — that the funds should be "taken out" — (se dedujeran)
does not admit of such a construction.
Such being the basis upon which by agreement of the partners the assets of
the partnership are to be applied to the discharge of the various classes of
the firm’s liabilities, it follows that D. Vicente Buenaventura, whose rights are
those of his father, is in no case entitled to receive any part of the assets until
the creditors who are non partners and the Chuidian minors are paid.
Whatever rights he had either as creditor or partner, he could only transfer
subject to this condition. And it is clear, from the language of the instrument
under which the plaintiff claims, that this conditional interest was all that D.
Vicente Buenaventura ever intended to transfer. By that instrument he
undertakes to assign to Garcia not a present interest in the assets of the
partnership but an interest in whatever "may be obtained from the liquidation
of the partnership," which Garcia is to received in the same form in which it
may be obtained from said partnership,’’ and "on the date when Messrs.
Chuidian, Buenaventura & Co., in liquidation, shall have effected the
operations necessary in order to satisfy" the claims of D. Vicente
Buenaventura.
Upon this interpretation of the assignment, it becomes unnecessary to
inquire whether article 143 of the Code of Commerce, prohibiting a partner
from transferring his interest in the partnership without the consent of the
other partners, applies to partnerships in liquidation, as contended by the
defendant. The assignment by its tearless is not to take effect until all the
liabilities of the partnership have been discharged and nothing remains to be
done except to distribute the assets, if there should be any, among the
partners. Meanwhile the assignor, Buenaventura, is to continue in the
enjoyment of the rights and is to remain subject to the liabilities of a partner
as though no assignment had been made. In other words, the assignment
does not purport to transfer an interest in the partnership, but only a future
contingent regulate to 25 per cent of such portion of the ultimate residue of
the partnership property as the assignor may become entitled to receive by
virtue of his proportionate interest in the capital.
There is nothing in the case to show either that the non-partner creditors of
the partnership have been paid or that the claims of the Chuidian minors
have been satisfied. Such rights as the plaintiff has acquired against the
partnership under the assignment still remain, therefore, subject to the
condition which attached to them in their origin, a condition wholly uncertain
of realization, since it may be that the entire assets of the partnership will be
exhausted in the payment of the creditors entitled to preference under the
partnership agreement, thus extinguishing the plaintiff’s right to receive
anything from the liquidation.

It is contended by the plaintiff that, as the partnership was without authority to

enter upon new mercantile operations after the liquidation commenced, the
increase in D. Mariano Buenaventura’s account-current during that period
was the result of a void transaction, and that therefore the plaintiff is entitled
to withdraw at once the proportion of such increase to which he is entitled
under the assignment. With reference to this contention, it is sufficient to say
that it nowhere appears in the case that the increase in D. Mariano
Buenaventura’s account-current during the period of liquidation was the
result of new advances to the firm, and the figures would appear to indicate
that it resulted from the accumulation of interest.

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

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