G.R. No. 28920 , October 24, 1928
MAXIMO GUIDOTE, plaintiff-appellant, vs. ROMANA BORJA, as administratrix of the estate of Narciso Santos, deceased, defendant-appellee.

FACTS

Maximo Guidote (industrial partner) and Narciso Santos (capitalist partner) formed a partnership called “Taller Sinukuan” on June 15, 1918. Santos died on April 6, 1920. Guidote, as the surviving partner, failed to liquidate the partnership affairs and render an account to the administratrix of Santos’ estate, Romana Borja. Guidote instead filed a complaint to recover P9,534.14 from the estate, alleging it represented his share of net profits and his advances to the partnership. The defendant, in her answer and cross-complaint, admitted the partnership but prayed that Guidote be ordered to render an accounting and to pay the estate P25,000 as net profits and credits pertaining to Santos.

The trial court found Guidote’s presented evidence (books, bills, vouchers) to be hopelessly confused and of little probative value. It dismissed Guidote’s complaint and ordered him to render a proper accounting. Guidote submitted an account prepared by public accountant Tomas Alfonso, which the court disapproved. The defendant then submitted an accounting prepared by public accountant Santiago A. Lindaya, later corroborated by the testimony of another experienced public accountant, Jose Turiano Santiago. Their audit concluded that the partnership owed Santos’s estate P26,020.89, and that Guidote was a debtor to the partnership for that amount after deducting his share of profits. The trial court found the testimony of Guidote’s witnesses (Alfonso and his bookkeeper Pio Gaudier) unreliable and contradictory, and approved the liquidation as presented by the defendant. It ordered Guidote to pay the estate P26,020.89 with interest. Guidote appealed.

ISSUE

1. Whether the trial court erred in dismissing Guidote’s complaint and ordering him to liquidate the partnership.
2. Whether the trial court erred in approving the liquidation presented by the defendant’s accountants.
3. Whether the trial court erred in ordering Guidote to pay the sum of P26,020.89 to the estate.

RULING

The Supreme Court AFFIRMED the trial court’s judgment.

1. On the first issue, the Court found that while dismissing the complaint before liquidation was complete might have been procedurally premature, it caused no reversible harm under the circumstances. The Court rejected Guidote’s argument that the administratrix of the deceased partner had the duty to render accounts. Citing *Wahl vs. Donaldson Sim & Co.* and Spanish jurisprudence, the Court held that the death of a partner dissolves the partnership, and the duty to liquidate its affairs is entrusted by law to the surviving partner, not to the executors or administrators of the deceased partner.

2. & 3. On the second and third issues, the Court ruled that they involved questions of fact. The trial court’s findings, based on its assessment of the credibility of witnesses and evidence, were entitled to respect. The Court noted that the evidence presented by Guidote was “confusing and unreliable as to be practically of no weight,” while the defendant’s evidence from credible public accountants appeared reliable. The Court emphasized that a surviving partner occupies a fiduciary, quasi-trustee position regarding the interest of the deceased partner and is held to a strict standard of accountability. Guidote failed to meet this duty and instead attempted to defraud the estate with false evidence. Therefore, he was not in a position to credibly challenge the liquidation approved by the trial court. Any possible errors in the accounting were deemed insufficient to overturn the judgment, given the state of the evidence.

DOCTRINE:
Upon the death of a partner, the partnership is dissolved. The duty to liquidate the partnership affairs is vested by law in the surviving partner(s), not in the legal representatives of the deceased partner. The surviving partner occupies a fiduciary or quasi-trustee position in relation to the interest of the deceased partner in the partnership assets and is held to a strict standard of accountability and must render a true and complete account.