Title
Evangelista and Co. vs. Santos
Case
G.R. No. L-31684
Decision Date
Jun 28, 1973
A partnership dispute arose when Estrella Abad Santos, an industrial partner, sued for her share of profits, claiming exclusion. Courts affirmed her status, ordered accounting, and upheld her entitlement to profits, rejecting claims of insufficient industry contribution.

Case Summary (G.R. No. L-31684)

Procedural History

On December 17, 1963 respondent sued the three partners and the partnership in the Court of First Instance of Manila, alleging that the partnership had paid dividends to the other partners but not to her, that defendants refused her requests to examine the partnership books and to provide information, and she prayed for an accounting and payment of her share of declared partnership profits plus attorney’s fees and costs. Defendants denied the allegations, asserted she was not an industrial partner and that her 30% share was limited to net profits realized until the RFC loan was repaid, and pleaded that she had been paid for services and loans. The trial court ruled for respondent, declaring her an industrial partner, ordering an accounting from June 7, 1955 and payment of her share, awarding P2,000 attorney’s fees and costs. The Court of Appeals affirmed. Petitioners appealed to the Supreme Court, assigning errors focused on factual findings regarding respondent’s status as industrial partner, her capacity to render industry while a judge, alleged payments to her, and the propriety of the accounting and monetary awards.

Principal Issue Presented

Whether respondent was an industrial partner of Evangelista & Co. (entitled to a continuing partnership interest and to demand a formal accounting) or merely a profit sharer entitled to 30% of net profits only up to the full payment of the RFC mortgage loan, and relatedly whether the lower courts correctly found her status and rights despite her judicial office and alleged prior payments.

Evidence, Trial Court and Court of Appeals Findings

The Court of Appeals extensively reviewed documentary exhibits (including the amended Articles of Co-partnership, Exhibits A and others) and voluminous testimonial evidence reproduced in its decision. The appellate court treated the written partnership documents together with corroborating evidence rather than relying on any single exhibit as conclusive. It noted appellants had admitted the genuineness and due execution of the exhibits and had not timely objected to or corrected their contents for over eight years. The CA found that respondent, although a sitting judge, had rendered services that contributed to the partnership’s operations and that there was no showing of business competition or conflict of interest with the partnership’s operations. The court held that being a judge did not per se preclude contribution of industry to a partnership. The CA also found that appellants’ belated claim that Exhibit A did not reflect the true agreement — that respondent was merely a temporary profit sharer until RFC debt repayment — was an afterthought inconsistent with their long delay in asserting exclusion. The appellate court concluded respondent was an industrial partner with the right to a formal accounting.

Legal Provisions Relied Upon and Their Application

The courts applied provisions of the New Civil Code as set out in the record: Article 1767 (partnership contributions may be money, property or industry), Article 1789 (restrictions on an industrial partner engaging in business for himself and remedies for breach), and Article 1899 (a partner’s right to a formal account where wrongfully excluded, if the right exists under agreement, as provided by Article 1807, or whenever circumstances render it just and reasonable). The CA interpreted Article 1767 to allow services rendered by respondent as a legitimate form of industry contributed to the common fund; Article 1789’s restriction against an industrial partner engaging in competing business was inapplicable because a judicial office was not a business antagonistic to the partnership; and Article 1899 justified the remedy of a formal accounting when respondent had been effectively excluded or deprived of partnership participation.

Consideration of the Judicial Office and Alleged Payments

The courts addressed the contention that respondent, as a full-time judge, could not have lawfully contributed her industry. The CA closely examined respondent’s testimony and found that, notwithstanding her judicial duties, she had in fact rendered services material to the partnership’s operations. The court

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