G.R. No. 955 : March 7, 1903
RAMON CHAVES, plaintiff-appellee, vs. RAMON NERY LINAN, defendant-appellant.

FACTS:
This case involves the liquidation of a dissolved partnership between Ramon Chaves and Ramon Nery Linan. The trial court rendered a judgment ordering, among other things, the exclusion of the sum of $18,712.08 3/4 from the partnership liquidation. This sum represented credits and property pertaining to the extinguished partnership, as acknowledged by both parties. The trial court provided no legal reason for this exclusion. The defendant appealed the judgment.

ISSUE:
Whether the trial court erred in excluding the acknowledged partnership credits and property from the final liquidation, thereby preventing a complete and definitive settlement of the partnership affairs.

RULING:
Yes. The Supreme Court reversed the judgment and ordered a new trial.

The Court held that the credits and property in question undeniably pertained to the dissolved partnership, and each partner had an interest therein. Their exclusion, without legal justification, rendered the liquidation incomplete and the judgment unsustainable, as it failed to definitively resolve the pending matter. For a final settlement, all partnership assets and liabilities must be accounted for to determine the respective shares, profits, and losses of the partners.

The Court reiterated the governing legal principles under the Civil Code:
1. Profits and losses must be divided as stipulated by the partners.
2. If the agreement only covers profit-sharing, losses shall be borne in the same proportion.
3. In the absence of an agreement, the share in profits and losses shall be proportional to each partner’s capital contribution.
4. An industrial partner (one contributing only services) shares in the profits and benefits equal to the partner who contributed the least capital, unless otherwise stipulated, and cannot claim any part of the capital property.

The partition among partners follows the rules on the division of estates among heirs. Since the exclusion of the substantial sum prevented a proper determination of the partnership’s final financial state, the Supreme Court, pursuant to its appellate powers under the Code of Civil Procedure, set aside the judgment and ordered a new trial to conduct a complete liquidation and render a proper final judgment.

Separate Opinion:
Justice Willard, with whom Justice Ladd concurred, dissented. He argued that the bill of exceptions was incomplete, as it did not contain all the evidence and proceedings from the trial court. The appellee’s motions to complete the record were opposed by the appellant and denied. The dissent posited that the reason for the exclusion (e.g., the accounts being uncollectible or a mutual agreement to omit them) might have been apparent in the full record, which could have justified the trial court’s decision. Therefore, the appellant should not benefit from an incomplete record to secure a reversal.