Case Digest (G.R. No. 198994)
Facts:
Faustino Lichauco, the plaintiff and appellant in this case, filed three civil actions in the Court of First Instance of Manila: Case No. 8883 against Jose de Guzman, Case No. 9213 against Tomas del Rio and Juan Olabarrieta, and Case No. 9217 against Ramon Soriano. The cases were consolidated due to an agreement between the parties on February 8, 1912. The primary issue arose from a verbal arrangement that led to disputes over the importation and sale of cattle and related financial transactions.
The plaintiff alleged that Guzman, upon Lichauco’s verbal direction, managed imported cattle for sale but refused to remit a balance of ₱90,000 owed to Lichauco. In response, Guzman filed a counterclaim, arguing that he was entitled to ₱116,005.85 due to profits from their joint business of cattle buying and selling. The partnership allegedly included Guzman, Soriano, Olegario, Del Rio, and Olabarrieta, with specific profit-sharing proportions established.
As the trial unfolded, Lichau
Case Digest (G.R. No. 198994)
Facts:
- Consolidation of Cases and Parties Involved
- The consolidated cases include:
- Case No. 8883: Faustino Lichauco (plaintiff/appellant) versus Jose de Guzman.
- Case No. 9213: Tomas del Rio and Juan Olabarrieta (defendants/appellees) versus Faustino Lichauco.
- Case No. 9217: Ramon Soriano (defendant/appellee) versus Faustino Lichauco.
- The parties are:
- Plaintiff: Faustino Lichauco, a prominent cattle dealer.
- Defendants: Jose de Guzman, Tomas del Rio, Juan Olabarrieta, Ramon Soriano, and Gregorio Olegario, all engaged in the cattle importation and sale business.
- Allegations and Origin of the Dispute
- In the original complaint filed on August 26, 1911:
- Lichauco alleged that by a verbal order he had given, defendant Guzman took charge of cattle (including carabaos) imported for sale.
- The accounts rendered by Guzman reportedly showed a balance of P90,000 which he allegedly misappropriated for his private business.
- Lichauco sought judgment against Guzman for the said sum, legal interest, and costs, and requested an attachment on Guzman’s property.
- Counterclaims by Defendants
- Guzman, in his answer, denied the complaint and counterclaimed for P116,005.85 based on an alleged joint account partnership established in early 1909 among Lichauco, Soriano, Olegario, Guzman, Del Rio, and Olabarrieta.
- The counterclaims alleged that the partnership was organized on April 15, 1909, to import and sell cattle, with agreed profit-sharing ratios:
- 25% to Lichauco; 23% to Guzman; 23% to Soriano; 19% to Olegario; and 10% to Del Rio and Olabarrieta.
- Other defendants (Olegario, Soriano, Del Rio, and Olabarrieta) also asserted that Lichauco had neglected—under pretext—to account for and remit their due shares, whether in form of the commission of “P1.50 per head” or the additional 10% of net profits.
- The Nature of the Business Arrangement
- Alleged Formation of a Joint Account Partnership
- The defendants claimed that during early April 1909, Lichauco, to avoid financial ruin, agreed by a verbal contract (later supplemented by an attempted memorandum) to form a joint account partnership for their cattle business.
- According to the defendants, the arrangement included:
- The business being conducted under Lichauco’s name and management.
- A non-salary compensation for Lichauco limited to his share of profits.
- Fixed distribution of the net profits accrued from the sale of cattle.
- However, Lichauco maintained that he merely gave his cattle on commission to the defendants to sell at a rate of P1.50 per head.
- Evidence and Documents Adduced
- Numerous exhibits and account books were presented, including ledgers, vouchers, and memorandum drafts (e.g., Exhibits A, A-1, A-6, A-7, and others).
- Testimonies revealed details regarding:
- The number of cattle sold.
- The commission arrangement (P1.50 per head).
- Additional claims for 10% of the net profits derived from such sales.
- A notable discrepancy arose from the unsanctioned memorandum allegedly summarizing the joint account agreement, which Lichauco refused to sign.
- Accounting Details and Transactions
- Detailed extracts from the defendants’ account books indicated:
- The sums received and turned over by each defendant.
- Specific references to cattle sale proceeds and commission entries.
- For instance, the records showed separate columns for:
- Commission earnings based on head counts.
- Additional percentages claimed from net profits.
- An inconsistency was noted regarding funds delivered by Soriano (aggregating P55,800) which, after adjustment, led to disputes over whether these were contributions as capital or proceeds from sales.
- Trial Court Proceedings and Evidence
- Evidence at Trial
- Oral testimonies by the defendants (including those by Soriano, Olegario, Del Rio, and Guzman) contested Lichauco’s version.
- Documentary evidence (account ledgers, chits, and correspondence) was used by both sides to support their respective narratives.
- The Central Factual Dispute
- Whether the arrangement between Lichauco and the defendants was a joint account partnership with shared profits or a commission-based agency where Lichauco remained the sole owner of the cattle.
Issues:
- Existence of a Joint Account Partnership
- Whether a valid joint account partnership was executed between Faustino Lichauco and the defendants as alleged by the latter.
- Whether the partnership, not reduced to writing and evidenced only by inconsistent memoranda and oral testimony, satisfies the legal requirement for contracts exceeding the statutory monetary threshold (as required by Article 51 of the Code of Commerce and Article 1280 of the Civil Code).
- Characterization of the Business Relationship
- Whether the parties’ conduct indicates a true partnership (cuentas en participación) or merely an agency/commission arrangement.
- How the absence of a written instrument affects the credibility of the claims of joint account partnership.
- Accounting and Distribution of Proceeds
- Whether the payments made by the defendants, particularly the sums delivered by Ramon Soriano, were contributions to partnership capital or payments from proceeds of sale.
- How to apportion the proceeds from the sale of cattle, considering:
- A commission of P1.50 per head.
- An additional entitlement of 10% of the net profits for the defendants acting as commission agents.
- Issues on the Evidentiary Basis
- Whether the documentary evidence (exhibits, ledgers, vouchers) and oral evidence are sufficient to establish the existence and terms of the alleged partnership.
- Whether the trial court properly weighed the evidence considering the requirement for writings in contracts involving large sums.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)