Title
Sunga-Chan vs. Chua
Case
G.R. No. 143340
Decision Date
Aug 15, 2001
Verbal partnership formed in 1977 for LPG distribution; respondent sought accounting and restitution after Jacinto’s death. SC affirmed partnership’s existence, rejected Dead Man’s Statute defense, and ruled claim timely.

Case Summary (G.R. No. 159699)

Initiation of Legal Proceedings and Trial Court Ruling

After Jacinto’s death in late 1989, petitioners assumed control of Shellite without respondent’s consent. Respondent’s repeated demands for accounting were ignored, prompting his June 22, 1992 complaint for winding up, accounting, appraisal, recovery of shares, damages, and preliminary attachment in RTC Sindangan, Zamboanga del Norte. He received partial payment of ₱200,000 on March 31, 1991. The trial court found petitioners waived presentation of evidence, credited respondent’s proofs, and on October 7, 1997 ordered: detailed accounting, restitution of misapplied assets, delivery of respondent’s 1/2 share or its value, payment of unreceived income (₱35,000 monthly with interest), winding up of the partnership, damages (₱50,000 moral/exemplary), and attorney’s fees/litigation expenses (₱50,000).

Issues on Evidence and the Dead Man’s Statute

Petitioners invoked the “Dead Man’s Statute” (Rule 130 § 23) to bar testimony about pre-death facts from respondent and Josephine Sy. The Supreme Court held (1) petitioners filed a compulsory counterclaim, thereby removing the case from the statute’s ambit and allowing respondent to testify; (2) Josephine was not an assignor or party representative prohibited from testifying; and (3) relationship alone does not discredit her testimony. Petitioners failed to object at trial and did not present contrary evidence, so factual findings stand.

Existence of Partnership and Judicial Deference

Relying on Civil Code Arts. 1768 (verbal partnership valid) and 1830 (partner’s death dissolves partnership), the Supreme Court affirmed that mutual contribution and joint profit interest sufficed to establish an informal partnership. Credibility and weight of evidence are factual matters beyond Supreme Court re-examination on certiorari.

Prescription and Laches

The Court held the action for accounting, filed three years after Jacinto’s death, was timely under the six-year prescription for oral contracts (Civil Code § 11, No. 1) and Art. 1842, which grants a partner the right to an account upon dissolution. Jacinto’s death dissolved but did not terminate the partnership (Arts. 1828–1829), preser

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