FIRST DIVISION

[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, Camus & Delgado for appellant.

J. W. Ferrier for appellees.

SYLLABUS

1. WHEN PARTNER MUST ACCOUNT. — Where one party to a partnership,

without any authority, takes and uses the money of the rm in the purchase of property
which he acquired and had registered in his own name, in a suit for the dissolution of
the partnership, he will be required to account to his partners for the money which he
used in such purchase.
2. WHEN PARTNERSHIP SHOULD ACCOUNT. — Where it appears that such
partnership had the use and bene t of such property, it will be required to account to
the owner for the reasonable value of its use.
STATEMENT
Plaintiff alleges that about December 23, 1926, he and the defendants formed a
partnership for the operation of a sh business and similar commercial transactions,
which by mutual consent was called "Malangpaya Fish Co.," with a capital of P35,000, of
which plaintiff paid P25,000, the defendant Martin P5,000, Maddy P2,500, and Golucke
P2,500. That as such partnership, they agreed to share in the pro ts 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 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,
and that the defendants have no visible means to answer 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 led a separate answer, but of the same nature, in which
they admit that about December 10, 1926, the plaintiff and the defendants formed a
partnership for the purchase of the equipment of the Manila Fish Co., Inc., and the
conduct of a sh business. That the terms of the partnership were never evidenced by a
written document signed by each of the members. Yet in truth and in fact, the
partnership was formed under a written plan, of which each member received a copy
and to which agreed. That by its terms the amount of the capital was P45,000, of which
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 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 of the new company. It is then alleged that "the new owners agree
to duties as follows:
"Capt. Maddy will have charge 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 sh in Manila and purchasing
supplies. No salary until business is on paying basis, then the same as Maddy or
Martin.
"The principal o ce shall be in Manila, each party doing any business
shall keep books showing plainly all transactions, these books shall be available
at all time for inspection of any member of the partnership.
"If Mr. Martin or Mr. Maddy wishes at some future time to purchase 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 change 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 copartnership 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 speci cally denies that "plaintiff was named general manager
of the partnership," and alleges "that all the duties and powers of the said plaintiff were
speci cally 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 ever 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 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 ling of
the complaint, plaintiff was in possession of about 7 tons of sh of the 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 of which the plaintiff made a general and specific denial.
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 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 proceeds and other unexpended
funds of the partnership be used, rst, to pay the 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 amount they contributed to the capital of the association and any
other remaining sum to be distributed proportionately among them as profits;
"That the plaintiff immediately render a true and proper account of all the money
due to and received by him for the partnership;
"That the barge Lapu-Lapu as well as the Ford truck No. T-3019 and
adding machine belong exclusively to the plaintiff, M. Teague, but the said
plaintiff must return to and reimburse the partnership the sum of P14,032.26
taken from its funds for the purchase and equipment of the said barge Lapu-
Lapu; and also to return the sum of P1,230 and P228 used for buying the Ford
truck and adding machine, respectively;
"That the sum of P1,512.03 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 led a motion praying for an order "directing the court's
stenographers concerned to transcribe the 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 plaintiff's motion for reconsideration.
To all of which exceptions were duly taken.
June 7, 1928, plaintiff led 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 led
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 objection s were
also led 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
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 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 Ford truck and P228 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 giving any credit to the bias and false
testimonies of the appellees and the framed-up evidence presented by them and in
rendering judgment against the appellant.
"IX. The trial court erred in not taking cognizance of appellant's claim for
reimbursement for advances made by him for the partnership, 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."

DECISION

JOHNS , J : p

By their respective pleadings, all parties agreed that there was a partnership
between them, which appears at one time to have done a good business. In legal effect,
plaintiff asked for its dissolution and the appointment of a receiver pendente lite. The
defendants did not object to the dissolution of the partnership, but prayed for an
accounting with the plaintiff. It was upon such issues that the evidence was taken and
the case tried. Hence, there is no merit in the rst assignment of error. Complaint is
made that the lower court did not speci cally 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 partner were speci ed and de ned 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
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 have charge of the southern station, cold stores, commissary and procuring sh, with a
salary of P300 per month, and that the plaintiff would have charge of selling sh 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 o ce of the partnership shall be in Manila, and that each party doing
business with 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 speci cally de ned, 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
con ned and limited to the charge of the Barracuda and its navigation, and Martin's to
the southern station, cold stores, commissary and procuring sh, and that plaintiff's
powers and duties are con ned and limited to selling sh in Manila and the purchase of
supplies. Under this agreement, plaintiff's powers and duties were con ned and limited
to "selling sh in Manila and the purchase of supplies." In the selling of sh, plaintiff
received a substantial amount of money which he deposited to the credit of the
company and paid out by checks 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 nal 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 by 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 a davit that he was its owner. After the purchase,
he also had the Ford truck registered in his own 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 speci ed in the tentative, unsigned written
agreement, his authority was con ned and limited to the "selling of sh in Manila and
the purchase of supplies." It must be conceded that, standing alone, the power to sell
sh 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 rm, the trial court found as a fact, and that nding 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
defendants Maddy and Martin a salary of P300 per month and the money which each of
them paid out and advanced in the discharge of their respective duties, and denied any
salary to the plaintiff, for the simple reason that the business was never on a paying
basis.
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 Much could be said about this division of powers, and that Maddy and Martin's
duties were con ned and limited to the catching and procuring of sh, 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 sh to plaintiff who
sold them under an agreement that he would account for the money.
Upon the question of accounting, his testimony as to the entries which he made
and how he kept the books of the partnership is very interesting:
"Q. Then this salary does not take into consideration the fact that you
claim the company is very badly in debt? — A. Well, I put the salary in there.
"Q. I am asking you if that is true? — A. I do not think I will decide that, I
think it will be decided by the court.
"Q. I will ask you to answer the question? — A. You asked me my
opinion and I said that I am entitled to it.
xxx xxx xxx
"I am not on trial as a bookkeeper; if my lawyers won't object to the
question I will object myself; I am not on trial as a bookkeeper; I keep my books
any way I want to, put in what I want to, and I leave out anything I don't choose to
put in, —
xxx xxx xxx
"Q. You have your own bookkeeping? — A. Well, I run my business to
suit myself, I put in the books what I want to, and I leave out what I want to, and I
have a quarter of a million pesos to show for it, —
xxx xxx xxx
"Q. Did you not say that you paid yourself a salary in August because
you made a profit? — A. Yes. This profit was made counting the stock on hand
and equipment on hand, but as far as cash to pay this balance, I did not have it.
When I wanted a salary I just took it. I ran things to suit myself.
xxx xxx xxx
"Q. In other words in going against these partners you are going to tax
them for the services of your attorney? — A. You are mistaken; I am not against
them. I paid this out for filing this complaint and if the honorable court strikes it
out, all right. I think it was a just charge. When I want to sue them the company
can pay for my suit.
"Q. Would you have any objection to their asking for their attorney's
fees from the company as partners also in the business? — A. Yes.
"Q. You would object to your partners having their attorney's fees here
paid out of the copartnership like you have had yours paid? — A. Yes, that is the
way I do my business."
To say the least, this kind of evidence does not appeal to the court. This case has
been bitterly contested, and there is much feeling between the parties and even their
respective attorneys. Be that as it may, we are clearly of the opinion that the ndings of
the lower court upon questions of fact are well sustained by the evidence. Plaintiff's
case was tried on the theory that the partnership was the owner of the property in
question, and no claim was made for the use of the Lapu-Lapu, and it appears that
P14,032.26 of the partnership money was used in its purchase, overhauling, expenses
and repairs. That in truth and in fact the partnership had the use and benefit of the Lapu-
Lapu in its business from sometime in May until the receiver was appointed on
November 11, 1927, or a period of about six months, and that the partnership has never
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 paid anything for its use. It is true that there is no testimony as to the value of such use,
but the cost of the Lapu-Lapu and the time of its use and the purpose for which it was
used, all appear in the record. For such reasons, in the interest of justice, plaintiff should
be compensated for the reasonable value of the time which the partnership made use
of the Lapu-Lapu.
All things considered, we are of the opinion that P2,000 is a reasonable, amount
which the plaintiff should receive for its use.
In all things and respects, the judgment of the lower court as to the merits is
a rmed, with the modi cation only that P2,000 shall be deducted from the amount of
the judgment which was awarded against the plaintiff, such deduction to be made for
and on account of such use of the Lapu-Lapu by the partnership, with costs against the
appellant. So ordered.
Avanceña, C. J., Street, Villamor, Romualdez and Villa-Real, JJ., concur.
Johnson, J., reserves his vote.

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