THIRD DIVISION
G.R. No. 143340 August 15, 2001LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners,
vs.
LAMBERTO T. CHUA, respondent.
GONZAGA-REYES, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision1
of the Court of Appeals dated January 31, 2000 in the case entitled
"Lamberto T. Chua vs. Lilibeth Sunga Chan and Cecilia Sunga" and of the
Resolution dated May 23, 2000 denying the motion for reconsideration of
herein petitioners Lilibeth Sunga and Cecilia Sunga (hereafter
collectively referred to as petitioners).
The pertinent facts of this case are as follows:
On June 22, 1992, Lamberto T. Chua (hereafter
respondent) filed a complaint against Lilibeth Sunga Chan (hereafter
petitioner Lilibeth) and Cecilia Sunga (hereafter petitioner Cecilia),
daughter and wife, respectively of the deceased Jacinto L. Sunga
(hereafter Jacinto), for "Winding Up of Partnership Affairs, Accounting,
Appraisal and Recovery of Shares and Damages with Writ of Preliminary
Attachment" with the Regional Trial Court, Branch 11, Sindangan,
Zamboanga del Norte.
Respondent alleged that in 1977, he verbally entered
into a partnership with Jacinto in the distribution of Shellane
Liquefied Petroleum Gas (LPG) in Manila. For business convenience,
respondent and Jacinto allegedly agreed to register the business name of
their partnership, SHELLITE GAS APPLIANCE CENTER (hereafter Shellite),
under the name of Jacinto as a sole proprietorship. Respondent allegedly
delivered his initial capital contribution of P100,000.00 to Jacinto
while the latter in turn produced P100,000.00 as his counterpart
contribution, with the intention that the profits would be equally
divided between them. The partnership allegedly had Jacinto as manager,
assisted by Josephine Sy (hereafter Josephine), a sister of the wife
respondent, Erlinda Sy. As compensation, Jacinto would receive a
manager's fee or remuneration of 10% of the gross profit and Josephine
would receive 10% of the net profits, in addition to her wages and other
remuneration from the business.
Allegedly, from the time that Shellite opened for
business on July 8, 1977, its business operation went quite and was
profitable. Respondent claimed that he could attest to success of their
business because of the volume of orders and deliveries of filled
Shellane cylinder tanks supplied by Pilipinas Shell Petroleum
Corporation. While Jacinto furnished respondent with the merchandise
inventories, balance sheets and net worth of Shellite from 1977 to 1989,
respondent however suspected that the amount indicated in these
documents were understated and undervalued by Jacinto and Josephine for
their own selfish reasons and for tax avoidance.
Upon Jacinto's death in the later part of 1989, his
surviving wife, petitioner Cecilia and particularly his daughter,
petitioner Lilibeth, took over the operations, control, custody,
disposition and management of Shellite without respondent's consent.
Despite respondent's repeated demands upon petitioners for accounting,
inventory, appraisal, winding up and restitution of his net shares in
the partnership, petitioners failed to comply. Petitioner Lilibeth
allegedly continued the operations of Shellite, converting to her own
use and advantage its properties.
On March 31, 1991, respondent claimed that after
petitioner Lilibeth ran out the alibis and reasons to evade respondent's
demands, she disbursed out of the partnership funds the amount of
P200,000.00 and partially paid the same to respondent. Petitioner
Lilibeth allegedly informed respondent that the P200,000.00 represented
partial payment of the latter's share in the partnership, with a promise
that the former would make the complete inventory and winding up of the
properties of the business establishment. Despite such commitment,
petitioners allegedly failed to comply with their duty to account, and
continued to benefit from the assets and income of Shellite to the
damage and prejudice of respondent.
On December 19, 1992, petitioners filed a Motion to
Dismiss on the ground that the Securities and Exchange Commission (SEC)
in Manila, not the Regional Trial Court in Zamboanga del Norte had
jurisdiction over the action. Respondent opposed the motion to dismiss.
On January 12, 1993, the trial court finding the complaint sufficient in from and substance denied the motion to dismiss.
On January 30, 1993, petitioners filed their Answer
with Compulsory Counter-claims, contending that they are not liable for
partnership shares, unreceived income/profits, interests, damages and
attorney's fees, that respondent does not have a cause of action against
them, and that the trial court has no jurisdiction over the nature of
the action, the SEC being the agency that has original and exclusive
jurisdiction over the case. As counterclaim, petitioner sought
attorney's fees and expenses of litigation.
On August 2, 1993, petitioner filed a second Motion
to Dismiss this time on the ground that the claim for winding up of
partnership affairs, accounting and recovery of shares in partnership
affairs, accounting and recovery of shares in partnership
assets/properties should be dismissed and prosecuted against the estate
of deceased Jacinto in a probate or intestate proceeding.
On August 16, 1993, the trial denied the second motion to dismiss for lack of merit.
On November 26, 1993, petitioners filed their
Petition for Certiorari, Prohibition and Mandamus with the Court of
Appeals docketed as CA-G.R. SP No. 32499 questioning the denial of the
motion to dismiss.
On November 29, 1993, petitioners filed with the trial court a Motion to Suspend Pre-trial Conference.
On December 13, 1993, the trial court granted the motion to suspend pre-trial conference.
On November 15, 1994, the Court of Appeals denied the petition for lack of merit.
On January 16, 1995, this Court denied the petition
for review on certiorari filed by petitioner, "as petitioners failed to
show that a reversible error was committed by the appellate court."2
On February 20, 1995, entry of judgment was made by
the Clerk of Court and the case was remanded to the trial court on April
26, 1995.
On September 25, 1995, the trial court terminated the
pre-trial conference and set the hearing of the case of January 17,
1996. Respondent presented his evidence while petitioners were
considered to have waived their right to present evidence for their
failure to attend the scheduled date for reception of evidence despite
notice.
On October 7, 1997, the trial court rendered its Decision ruling for respondent. The dispositive of the Decision reads:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, as follows:
(1) DIRECTING them to render an accounting in
acceptable form under accounting procedures and standards of the
properties, assets, income and profits of the Shellite Gas Appliance
Center Since the time of death of Jacinto L. Sunga, from whom they
continued the business operations including all businesses derived from
Shellite Gas Appliance Center, submit an inventory, and appraisal of all
these properties, assets, income, profits etc. to the Court and to
plaintiff for approval or disapproval;
(2) ORDERING them to return and restitute to the
partnership any and all properties, assets, income and profits they
misapplied and converted to their own use and advantage the legally
pertain to the plaintiff and account for the properties mentioned in
pars. A and B on pages 4-5 of this petition as basis;
(3) DIRECTING them to restitute and pay to the
plaintiff ½ shares and interest of the plaintiff in the partnership of
the listed properties, assets and good will (sic) in schedules A, B and
C, on pages 4-5 of the petition;
(4) ORDERING them to pay the plaintiff earned but
unreceived income and profits from the partnership from 1988 to May 30,
1992, when the plaintiff learned of the closure of the store the sum of
P35,000.00 per month, with legal rate of interest until fully paid;
(5) ORDERING them to wind up the affairs of the
partnership and terminate its business activities pursuant to law, after
delivering to the plaintiff all the ½ interest, shares, participation
and equity in the partnership, or the value thereof in money or money's
worth, if the properties are not physically divisible;
(6) FINDING them especially Lilibeth Sunga-Chan
guilty of breach of trust and in bad faith and hold them liable to the
plaintiff the sum of P50,000.00 as moral and exemplary damages; and,
(7) DIRECTING them to reimburse and pay the sum of P25,000.00 as attorney's (sic) and P25,000.00 as litigation expenses.
NO special pronouncements as to COSTS.
SO ORDERED."3
On October 28, 1997, petitioners filed a Notice of Appeal with the trial court, appealing the case to the Court of Appeals.
On January 31, 2000, the Court of Appeals dismissed the appeal. The dispositive portion of the Decision reads:
"WHEREFORE, the instant appeal is dismissed. The appealed decision is AFFIRMED in all respects."4
On May 23, 2000, the Court of Appeals denied the motion for reconsideration filed by petitioner.
Hence, this petition wherein petitioner relies upon following grounds:
"1. The Court of Appeals erred in making a legal
conclusion that there existed a partnership between respondent Lamberto
T. Chua and the late Jacinto L. Sunga upon the latter'' invitation and
offer and that upon his death the partnership assets and business were
taken over by petitioners.
2. The Court of Appeals erred in making the legal conclusion that laches and/or prescription did not apply in the instant case.
3. The Court of Appeals erred in making the legal
conclusion that there was competent and credible evidence to warrant the
finding of a partnership, and assuming arguendo that indeed there was a partnership, the finding of highly exaggerated amounts or values in the partnership assets and profits."5
Petitioners question the correctness of the finding
of the trial court and the Court of Appeals that a partnership existed
between respondent and Jacinto from 1977 until Jacinto's death. In the
absence of any written document to show such partnership between
respondent and Jacinto, petitioners argues that these courts were
proscribes from hearing the testimonies of respondent and his witness,
Josephine, to prove the alleged partnership three years after Jacinto's
death. To support this argument, petitioners invoke the "Dead Man's
Statute' or "Survivorship Rule" under Section 23, Rule 130 of the Rules
of Court that provides:
"SEC. 23. Disqualification by reason of death or insanity of adverse party. –
Parties or assignors of parties to a case, or persons in whose behalf a
case is prosecuted, against an executor or administrator or other
representative of a deceased person, or against a person of unsound
mind, upon a claim or demand against the estate of such deceased person,
or against such person of unsound mind, cannot testify as to any matter
of fact occurring before the death of such deceased person or before
such person became of unsound mind."
Petitioners thus implore this Court to rule that the
testimonies of respondent and his alter ego, Josephine, should not have
been admitted to prove certain claims against a deceased person
(Jacinto), now represented by petitioners.
We are not persuaded.
A partnership may be constituted in any form, except
where immovable property of real rights are contributed thereto, in
which case a public instrument shall necessary.6
Hence, based on the intention of the parties, as gathered from the
facts and ascertained from their language and conduct, a verbal contract
of partnership may arise.7
The essential profits that must be proven to that a partnership was
agreed upon are (1) mutual contribution to a common stock, and (2) a
joint interest in the profits.8
Understandably so, in view of the absence of the written contract of
partnership between respondent and Jacinto, respondent resorted to the
introduction of documentary and testimonial evidence to prove said
partnership. The crucial issue to settle then is to whether or not the
"Dead Man's Statute" applies to this case so as to render inadmissible
respondent's testimony and that of his witness, Josephine.
The "Dead Man's Statute" provides that if one party
to the alleged transaction is precluded from testifying by death,
insanity, or other mental disabilities, the surviving party is not
entitled to the undue advantage of giving his own uncontradicted and
unexplained account of the transaction.9 But before this rule can be successfully invoked to bar the introduction of testimonial evidence, it is necessary that:
"1. The witness is a party or assignor of a party to case or persons in whose behalf a case in prosecuted.
2. The action is against an executor or administrator or other representative of a deceased person or a person of unsound mind;
3. The subject-matter of the action is a claim or
demand against the estate of such deceased person or against person of
unsound mind;
4. His testimony refers to any matter of fact of
which occurred before the death of such deceased person or before such
person became of unsound mind."10
Two reasons forestall the application of the "Dead Man's Statute" to this case.
First, petitioners filed a compulsory counterclaim11
against respondents in their answer before the trial court, and with
the filing of their counterclaim, petitioners themselves effectively
removed this case from the ambit of the "Dead Man's Statute".12
Well entrenched is the rule that when it is the executor or
administrator or representatives of the estates that sets up the
counterclaim, the plaintiff, herein respondent, may testify to
occurrences before the death of the deceased to defeat the counterclaim.13
Moreover, as defendant in the counterclaim, respondent is not
disqualified from testifying as to matters of facts occurring before the
death of the deceased, said action not having been brought against but
by the estate or representatives of the deceased.14
Second, the testimony of Josephine is not covered by
the "Dead Man's Statute" for the simple reason that she is not "a party
or assignor of a party to a case or persons in whose behalf a case is
prosecuted." Records show that respondent offered the testimony of
Josephine to establish the existence of the partnership between
respondent and Jacinto. Petitioners' insistence that Josephine is the
alter ego of respondent does not make her an assignor because the term
"assignor" of a party means "assignor of a cause of action which has
arisen, and not the assignor of a right assigned before any cause of
action has arisen."15 Plainly then, Josephine is merely a witness of respondent, the latter being the party plaintiff.
We are not convinced by petitioners' allegation that
Josephine's testimony lacks probative value because she was allegedly
coerced coerced by respondent, her brother-in-law, to testify in his
favor, Josephine merely declared in court that she was requested by
respondent to testify and that if she were not requested to do so she
would not have testified. We fail to see how we can conclude from this
candid admission that Josephine's testimony is involuntary when she did
not in any way categorically say that she was forced to be a witness of
respondent.
Also, the fact that Josephine is the sister of the
wife of respondent does not diminish the value of her testimony since
relationship per se, without more, does not affect the credibility of witnesses.16
Petitioners' reliance alone on the "Dead Man's
Statute" to defeat respondent's claim cannot prevail over the factual
findings of the trial court and the Court of Appeals that a partnership
was established between respondent and Jacinto. Based not only on the
testimonial evidence, but the documentary evidence as well, the trial
court and the Court of Appeals considered the evidence for respondent as
sufficient to prove the formation of partnership, albeit an informal
one.
Notably, petitioners did not present any evidence in
their favor during trial. By the weight of judicial precedents, a
factual matter like the finding of the existence of a partnership
between respondent and Jacinto cannot be inquired into by this Court on
review.17
This Court can no longer be tasked to go over the proofs presented by
the parties and analyze, assess and weigh them to ascertain if the trial
court and the appellate court were correct in according superior credit
to this or that piece of evidence of one party or the other.18
It must be also pointed out that petitioners failed to attend the
presentation of evidence of respondent. Petitioners cannot now turn to
this Court to question the admissibility and authenticity of the
documentary evidence of respondent when petitioners failed to object to
the admissibility of the evidence at the time that such evidence was
offered.19
With regard to petitioners' insistence that laches
and/or prescription should have extinguished respondent's claim, we
agree with the trial court and the Court of Appeals that the action for
accounting filed by respondents three (3) years after Jacinto's death
was well within the prescribed period. The Civil Code provides that an
action to enforce an oral contract prescribes in six (6) years20
while the right to demand an accounting for a partner's interest as
against the person continuing the business accrues at the date of
dissolution, in the absence of any contrary agreement.21 Considering that the death of a partner results in the dissolution of the partnership22,
in this case, it was Jacinto's death that respondent as the surviving
partner had the right to an account of his interest as against
petitioners. It bears stressing that while Jacinto's death dissolved the
partnership, the dissolution did not immediately terminate the
partnership. The Civil Code23
expressly provides that upon dissolution, the partnership continues and
its legal personality is retained until the complete winding up of its
business, culminating in its termination.24
In a desperate bid to cast doubt on the validity of
the oral partnership between respondent and Jacinto, petitioners
maintain that said partnership that had initial capital of P200,000.00
should have been registered with the Securities and Exchange Commission
(SEC) since registration is mandated by the Civil Code, True, Article
1772 of the Civil Code requires that partnerships with a capital of
P3,000.00 or more must register with the SEC, however, this registration
requirement is not mandatory. Article 1768 of the Civil Code25
explicitly provides that the partnership retains its juridical
personality even if it fails to register. The failure to register the
contract of partnership does not invalidate the same as among the
partners, so long as the contract has the essential requisites, because
the main purpose of registration is to give notice to third parties, and
it can be assumed that the members themselves knew of the contents of
their contract.26
In the case at bar, non-compliance with this directory provision of the
law will not invalidate the partnership considering that the totality
of the evidence proves that respondent and Jacinto indeed forged the
partnership in question.
WHEREFORE, in view of the foregoing, the petition is DENIED and the appealed decision is AFFIRMED.
SO ORDERED.1âwphi1.nêt
Melo, Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.
Footnotes:
1 Per Associate Justice Delilah
Vidallon-Magtolis and concurred in by Associate Justices Bernardo P.
Abesamis and Mercedes Gozo-Dadole, Court of Appeals, Fourteenth
Division.
2 Rollo, p. 185.
3 Records, pp. 75-76; Decision, pp. 25-26.
4 Rollo, p. 46; Decision, p. 11.
5 Rollo, pp. 13-14; Petition, pp. 6-7.
6 JOSE C. VITUG, COMPENDIUM OF CIVIL LAW AND JURISPRUDENCE, REV. ED. (1993), p. 712.
7 RAMON C. AQUINO AND CAROLINA C. GRIÑO-AQUINO, THE CIVIL CODE OF THE PHILIPPINES, VOL. 3 (1990), p. 295.
8 ARTURO M. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES, VOLUME 5 (1997), p. 320.
9 Tan vs. Court of Appeals, 295 SCRA 247 (1998), p. 258.
10 OSCAR M. HERRERA, REMEDIAL LAW, REVISED RULES ON EVIDENCE, VOL. V (1999), pp. 308-309.
11 Records, pp. 47-51.
12 See Goni vs. Court of Appeals, 144 SCRA 222 (1986).
13 HERRERA, supra, p. 310.
14 Goni vs. Court of Appeals, supra, p. 233.
15 RICARDO J. FRANCISCO, EVIDENCE, THIRD EDITION (1996), p. 135.
16 People vs. Nang, 289 SCRA 16 (1998), p. 32.
17 Alicbusan vs. Court of Appeals, 269 SCRA 336, p. 341.
18 Ibid.
19 See Chua vs. Court of Appeals, 301 SCRA 356 (1999).
20 "The following actions must be commenced within six years:
(1) Upon an oral contract; and
(2) Upon a quasi-contract."
21 Art. 1842, Civil Code:
"The right to an account of his interest shall accrue
to any partner, or his legal representative as against the winding up
partners or the surviving partners or the person or partnership
continuing the business, at the date of dissolution, in the absence of
any agreement to the contrary."
22 Article 1830, Civil Code.
23 Art. 1828. The dissolution of a partnership
is the change in the relation of the partnership is the change in the
relation of the partners caused by any partner ceasing to be associated
in the carrying on as distinguished from the winding up of the business.
Art. 1829. On dissolution the partnership is not
terminated, but continues until the winding up of partnership affairs is
completed.
24 Sy vs. Court of Appeals, 313 SCRA 328 (1999), p. 347.
25 "The partnership has a juridical personality
separate and distinct from that of each of the partners, even in case of
failure to comply with the requirements of article 1772, first
paragraph."
26 TOLENTINO, supra, p. 325.
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