G.R. No. 200555 - Dusol vs. Lazo

The defendants were the sole members of the mercantile partnership “Nicasio & Gaspar.”
The partnership intended to purchase six vessels valued at 46,500 pesos but had only 18,500 pesos available.
To finance the purchase, the partnership borrowed amounts as follows:

These loans, totaling 28,000 pesos, were memorialized in a public instrument dated November 24, 1900.
The instrument specified that the partnership bound itself to return the 28,000 pesos after ten years and established a mortgage over certain vessels (lorchas) as security.
The collateral included proportionate shares in the vessels’ products, profits, and earnings, with the management retained by the executors until full payment was made.

On July 22, 1901, the plaintiff executed a power of attorney in favor of Macario Nicasio, authorizing him to manage his property, collect credits, and transact on his behalf.
The plaintiff subsequently left the country, and Nicasio acted as his agent.
Due to competition, business stagnation, and high repair costs noted in meetings held on June 20, June 25, and July 9, 1901, the parties agreed to sell the lorchas.
The sale was finalized on July 12, 1901, to the defendant Manuel Gaspar for 30,000 pesos.
A public instrument executed on July 22, 1901, recorded that, to settle repair costs, the credits of the interested parties would be adjusted by deducting their corresponding shares based on the selling price.
In the instrument’s clause 6, Nicasio, acting as attorney in fact for the plaintiff, acknowledged receiving 5,483.87 pesos on behalf of Pastor after deducting 3,016.63 pesos, his estimated share of the selling price.

The plaintiff later contested Nicasio’s actions, claiming his dual capacity as both a member of the partnership indebted to him (8,500 pesos) and his role as his agent created a conflict of interest.
The plaintiff asserted that, since only 5,483.87 pesos were received on his behalf (instead of his full share), the agent had acted to the detriment of his principal.
Despite the objection, evidence showed that:

The plaintiff had been informed of all meetings and transactions.
He received copies of the minutes from the meetings held on June 20, June 25, July 9, and July 12, 1901.
In a letter dated September 11, 1901, the plaintiff expressed approval of the sale arrangement and acknowledged the settlement to his satisfaction.
The plaintiff later confirmed his receipt of the credited amount in his current account statement and in his letter dated October 4, 1901.

The plaintiff’s further behavior (accepting a statement showing a balance in his favor and not objecting for a period of about two years) reinforced his apparent ratification of his agent’s acts.

A subsequent cause of action involved the alleged failure of the defendants to render a complete account of the earnings from the lorchas.
Evidence demonstrated that:

On March 18, 1901, earnings from the lorchas (up to February 28, 1901) were distributed among the interested parties.
The plaintiff received a dividend amounting to 2,020.95 pesos and signed a receipt confirming the correctness of the distributed earnings.
An account statement dated July 1901 showed a current balance of 4,850.94 pesos in the plaintiff’s favor.

The plaintiff’s acceptance of the current account statement without any reservation, along with his subsequent receptions of funds, supported the conclusion that he had approved the accounting.

Whether Macario Nicasio, acting in dual capacities as both a member of the partnership and as attorney in fact for the plaintiff, breached his fiduciary duty by executing the sale of the lorchas.

Examination of the potential conflict of interest arising from his dual role.
Consideration of whether the agent’s act prejudiced the plaintiff by charging or accepting an adjusted amount.

Whether the plaintiff, by his subsequent conduct and ratification, effectively approved the acts and accounts rendered by his agent.

Analysis of the evidence showing the plaintiff’s knowledge of the minutes and transactions.
Evaluation of the plaintiff’s acceptance and eventual acknowledgment of the credited amounts.

Whether the claim for a further 1,000 pesos, representing additional earnings from the lorchas, is justified based on the records and accounts.

Determination of the sufficiency and correctness of the distribution of the selling price and earnings.
The need for additional accounting after the dissolution of the partnership.