G.R. No. 24243 - De la Rosa vs. Go-Cotay

During the Spanish regime, two Chinamen, Go-Lio and Vicente Go-Sengco, formed a society for the purchase and sale of articles of commerce.
The partners established a store in the town of San Isidro, Nueva Ecija, which served as the venue for their commercial transactions.

Go-Lio eventually went to China, leaving the day-to-day management partially in the hands of Vicente Go-Sengco.
After Vicente Go-Sengco’s death, his son, Enrique Ortega Go-Cotay, assumed the management and operations of the business.

Go-Lio died in China in October 1916, leaving behind a widow and three children.
One of his children, upon coming to the Philippines, filed a petition for the appointment of Ildefonso de la Rosa as the administrator of Go-Lio’s intestate estate.
The Court of First Instance of Nueva Ecija granted the petition for administrative appointment.

Acting as the administrator of the intestate estate, Ildefonso de la Rosa requested that Enrique Ortega Go-Cotay wind up the partnership business and deliver to him the portion corresponding to Go-Lio’s share.
Enrique Ortega Go-Cotay denied the request on the grounds that the business was exclusively his.
On July 2, 1918, de la Rosa filed a complaint before the Court of First Instance seeking an order for the defendant to deliver one-half of the partnership property and to appoint a receiver for proper liquidation.

On August 3, 1918, the court appointed commissioners—Justo Cabo-Chan, Francisco T. Tantengco, and Go-Tiao—to inventory, liquidate, and determine the share of the plaintiff in the partnership property.
In an attempt to forestall the appointment of a receiver, the defendant filed a bond of P10,000 on August 9, 1918.
The commissioners’ report dated November 15, 1920, covered the net profits from 1913 to 1917, amounting to a total of P25,038.70, broken down by year.

On December 7, 1921, pending an appeal, the parties agreed to suspend the liquidation; the defendant was allowed to continue in possession of the disputed property upon posting a revised bond of P25,000.
The Supreme Court, in case R.G. No. 18919 on October 5, 1922, held that the appeal was premature and remanded the record to the lower court with instructions to enter a final order in accordance with the earlier liquidation report.
With the resignation of two commissioners, the court reappointed Justo Cabo-Chan (suggested by the defendant) and Cua Poco (suggested by the plaintiff). Two conflicting reports emerged: one by Tantengco and Cua Poco and another by Cabo-Chan, the latter showing the business had incurred a net loss.

After trial and the presentation of all evidence, the lower court, on December 13, 1924, disapproved the report of Tantengco and Cua Poco and approved, with minor modifications, that of commissioner Cabo-Chan.
The court determined that the liquidation revealed liabilities amounting to P89,690.45, leaving no profit to be divided, effectively denying the plaintiff’s claim.
Notwithstanding, evidence showed that the partnership capital was P4,779.39, with various profits computed for different periods, including profits until 1906, those from 1906–1912 (averaging based on available data), profits for 1913–1917, and an estimated profit for the first semester of 1918.
The total computed profits of the business amounted to P60,598.28, from which one-half (i.e., P30,299.14) was argued to be the share of Go-Lio’s estate as administered by de la Rosa.

Up to August 3, 1918, the defendant’s actions were that of a managing partner, binding the partnership.
After that date, it was held that his actions were akin to those of a receiver. However, since a receiver must act under explicit court authority, his unauthorized continuation in the business made him personally liable for any ensuing losses.
This divergence in his conduct underlined a critical aspect of the dispute regarding the proper management and liquidation of the partnership.

Whether the liquidation of the partnership's profits, as computed by the appointed commissioners, was accurate and properly reflective of the business operations and losses.

The authenticity and completeness of the business books—alleged to be partly falsified by the defendant—was contested.
The reliability of the conflicting reports of the commissioners raised questions about the correct computation of profits and losses.

Whether the defendant’s transition from acting as a managing partner to assuming the role of a receiver was legally justified.

The legitimacy of the defendant’s actions after August 3, 1918, and whether he possessed proper court authority to continue operating the business during liquidation were in dispute.

Whether the lower court erred in its acceptance and evaluation of the evidences, particularly the books of accounts and testimonies of the commissioners.

The plaintiff contended that the court should have given less credence to the defendant’s exhibits and that the alleged losses were either exaggerated or fictitious.

Whether, despite the lower court’s finding of no profit, the plaintiff was entitled to a computed share based on a proper reconstruction of the partnership’s financial data.

The plaintiff argued for a specific share based on continued profit trends and past performances, notably from the years prior to and including the first half of 1918.

Whether the complaint was timely filed despite the defendant’s assertion that more than ten years had elapsed since the inception of the claim.