G.R. No. 5165
GERVASIO UNSON, plaintiff-appellee, vs. SEGUNDO ABRERA, defendant-appellant.
September 15, 1909

FACTS:
In 1897, Gervasio Unson (capitalist, 2/3 profits) and Segundo Abrera (industrial partner, kept books) formed a partnership for buying and selling copra. The business operated successfully until 1899 when it suspended due to war, though the partnership was never formally dissolved.

Unson retrieved the cashbook from Abrera, which showed entries for December 23, 1898: debit P52,562.09, credit P48,135.97, with a balance of P4,426.12 (including P2,884.63 in bills receivable). Unson also claimed Abrera received P1,133.82 in merchandise in January 1899. Unson alleged an agreement that no credit should be extended without Abrera’s account or guarantee.

Unson repeatedly requested Abrera to liquidate the partnership accounts, but Abrera refused. Unson sued for P4,559.94 (alleged capital in Abrera’s possession) plus interest.

Abrera demurred to the complaint, which was overruled. Unson moved for default due to Abrera’s failure to answer within the prescribed period. Abrera countered that his counsel was not notified by the plaintiff of the demurrer’s overruling, and the 5-day period to answer (per Section 9 of the Rules of CFI) should count from such notification. Abrera eventually filed an answer, admitting the partnership’s existence but disputing the profit-sharing ratio (claiming 2/3 for himself) and denying other allegations. As special defenses, Abrera claimed the action had prescribed and that the partnership had been “satisfactorily liquidated” in January 1899.

ISSUE:
Was there sufficient evidence presented at trial to properly liquidate the partnership accounts and render a final judgment on the plaintiff’s claim, or should a new trial be held?

RULING:
The Supreme Court ruled that the evidence presented was insufficient to enable a final judgment on the liquidation of the partnership accounts.

The Court noted:
1. Lack of Written Contract: No written partnership contract was presented.
2. Insufficient Supporting Evidence: The plaintiff’s claim relied heavily on the cashbook (kept by the defendant) and his own testimony.
3. Disputed Terms: The defendant denied key aspects, such as the agreement on credit guarantees and the profit-sharing ratio.
4. Unproduced Records: The plaintiff failed to produce his own books, which should have existed for transactions conducted in Manila.
5. Incomplete Liquidation: The Court pointed out that credits and stock on hand existed, and without a proper liquidation, all partnership assets (cash, stock, bills receivable) belonged to the partnership.

Regarding the procedural issue, the Court noted that while Section 9 of the Rules of CFI outlined a notification process, Section 110 in conjunction with Section 2 of the Code of Civil Procedure grants the trial judge discretion to allow an answer even after the prescribed period. Given that an answer was eventually filed and the case was appealed, the lower court retains discretion to allow the defendant to participate in a new trial.

Therefore, the judgment appealed from was set aside, and the case was remanded to the lower court for a new trial to allow for the submission of additional evidence necessary for a proper liquidation of the partnership accounts and to render a just final judgment.