G.R. No. 4236
SANTIAGO TIU FIAN, plaintiff-appellee, vs. HILARIO YAP, defendant-appellant.
September 18, 1909

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FACTS:

Santiago Tiu Fian (plaintiff-appellee) and Hilario Yap (defendant-appellant) were partners cultivating a tract of land, with Yap acting as the managing partner. In November 1905, after a statement of accounts and subsequent disagreements, they agreed that Yap would purchase Tiu Fian’s interest in the property, and the partnership would be dissolved.

On November 20, 1905, Tiu Fian executed a written deed of sale conveying his interest in the land to Yap for P600, with the deed acknowledging receipt of payment and being absolute and unconditional in its terms. The deed was formally acknowledged before a notary public on December 9, 1905.

Tiu Fian testified that, at the time the deed was executed, Yap gave him a promissory note for the P600 purchase price. He claimed he left the deed with the notary public with instructions not to deliver it to Yap until the promissory note was paid. When Yap failed to pay the note, Tiu Fian retrieved the deed on March 22, 1906, and executed a formal instrument declaring that he rescinded, revoked, and annulled the deed of sale due to Yap’s non-payment.

The defendant Yap asserted he had paid the purchase price and received the deed, which was later stolen. The trial judge, however, disregarded Yap’s testimony and instead found that the sale was conditional upon payment of the purchase price. Since payment was not made, the trial court concluded the sale never took effect, the partnership was never dissolved, and Tiu Fian was entitled to an accounting.

ISSUE:

Was the sale of Santiago Tiu Fian’s interest in the partnership property to Hilario Yap an absolute and unconditional sale, thereby dissolving the partnership and extinguishing Tiu Fian’s right to an accounting?

RULING:

Yes, the sale of Santiago Tiu Fian’s interest was an absolute and unconditional sale, which effectively dissolved the partnership and negated his right to an accounting.

The Supreme Court found no evidence in the record to support the trial judge’s conclusion that the sale was conditioned upon payment of the purchase price. On the contrary, the evidence, including Tiu Fian’s own admissions, clearly indicated an absolute and unconditional conveyance:
1. The original deed of sale, executed and presented by Tiu Fian, expressly and explicitly stated that the sale was “absolute and unconditional.”
2. The instrument Tiu Fian executed more than three months later, attempting to rescind the sale, formally recited that the land had been conveyed to Yap “á titulo de dueño absoluto” (with the title of absolute ownership).
3. Tiu Fian admitted accepting a promissory note for the amount of the purchase price at the time the deed was executed. The delivery and acceptance of a promissory note for the purchase price consummate a sale, making it absolute.

Tiu Fian’s instructions to the notary public not to deliver the deed until the promissory note was paid were unilateral and arbitrary. They did not constitute an agreement with Yap and could not alter the absolute nature of the transaction already evidenced by the deed and the acceptance of the promissory note. A vendor cannot unilaterally rescind or annul a contract without the vendee’s consent.

Since the contract of sale of Tiu Fian’s interest was absolute and remained in full force and effect, it effectively terminated the partnership as agreed upon by the parties. This also constituted an agreed settlement of the partners’ respective interests. Therefore, Tiu Fian had no right to an accounting.

The judgment of the trial court was reversed, and the complaint for an accounting was dismissed.