G.R. No. 143340 August 15, 2001 LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners, vs. LAMBERTO T. CHUA, respondent.

G.R. No. 143340       August 15, 2001

LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners, 
vs.
LAMBERTO T. CHUA, respondent.

FACTS

            Lamberto Chua alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution of Shellane LPG.  For business convenience, Lamberto and Jacinto allegedly agreed to register the business name of their partnership, SHELLITE GAS APPLIANCE CENTER, under the name of Jacinto as a sole proprietorship.  Both Lamberto and Jacinto contributed P100,000.00 to the partnership, with the intention that the profits would be equally divided between them.

            The partnership allegedly had Jacinto as manager, assisted by Josephine Sy, sister-in-law of Lamberto.  Upon Jacinto’s death in the later part of 1989, his daughter, Lilibeth took over the operations of Shellite without Lamberto’s consent.  Despite Lamberto’s repeated demands for accounting, she failed to comply.

            On June 22m 1992, Lamberto filed a complaint against Lilibeth with the RTC.  RTC decided in favor of Lamberto.

            Lilibeth questions the correctness of the finding that a partnership existed between Lamberto and Jacinto.  In the absence of any written document to show such partnership between Lamberto and Jacinto, Lilibeth argues that these courts were proscribed from hearing the testimonies of Lamberto and his witness, Josephine, to prove the alleged partnership three (3) years after Jacinto’s death.

            To support the argument, Lilibeth invokes the “DEAD MAN’S STATUTE OR SURVIVORSHIP RULE” under Sec. 23, Rule 130.  Lilibeth thus implores this Court to rule that the testimonies of Lamberto and his alter ego, Josephine, should not have been admitted to prove certain claims against a deceased person (Jacinto).

ISSUE

            Whether or not the “DEAD MAN’S STATUTE” applies to this case so as to render inadmissible Lamberto’s testimony and that if his witness, Josephine.

HELD

            No. 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 contradicted and unexplained account of the transaction.

Lilibeth filed a compulsory counterclaim against Lamberto in their answer before the RTC, and with the filing of their counterclaim, Lilibeth herself effectively removed this case from the ambit of the “Dead Man’s Statute”.  Well entrenched is the rule that when it is the executor or administrator or representatives of the estate that sets up the counterclaim, Lamberto, may testify to occurrences before the death of the deceased to defeat the counterclaim.  Moreover, as defendant in the counterclaim, Lamberto is not disqualified from testifying as to matters of fact occurring before the death of the deceased, said action not having been bought against but by the estate or representatives of the deceased.

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”.  Lamberto offered the testimony of Josephine to establish the existence of the partnership between Lamberto and Jacinto.  Lilibeth’s insistence that Josephine is the alter ego of Lamberto does not make her an assignor because of 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”.  Plainly then, Josephine is merely a witness of Lamberto, latter being the plaintiff.

Lilibeth’s reliance alone on the “Dead Man’s Statue” to defeat Lamberto’s claim cannot prevail over the factual findings that a partnership was established between Lamberto and Jacinto.  Based not only on the testimonial evidence, but the documentary evidence as well, they considered the evidence for Lamberto as sufficient to prove the formation of a partnership, albeit an informal one.