Bonnevie s. Hernandez, 95 Phil. 175

FACTS:

·         Complaint to recover P115,312.50 with interests as their alleged share in the profits of partnership

·         Plaintiffs with other associates formed a secret partnership for the purpose of acquiring the plants and other properties of Meralco.

·         No formal articles were drawn for it was the purpose of the members to incorporate once the deal had been consummated.

·         Negotiations for the purchase was commenced, but the results were not good.

·         Defendant was taken in as a member of the partnership so that he could push the deal through, and to that end he was given the necessary power of attorney.

·         Using partnership funds, defendant was able to buy the Meralco properties for P122,000. P40,000 was paid as initial investment. The remaining P82,000 will be paid in two installments on July 31, 1947 and Jan 31, 1948

·         A penal clause was included that in case of default the initial payment will be forfeited in favor of Meralco.

·         They formed a corporation named “Bicol Electric Company”.

·         Before the incorporation Judge Reyes (not a party) and the plaintiffs withdrew from the partnership. The withdrawing partners were given their original investments right after.

·         Following the dissolution of the partnership, the members who preferred to remain in the business went ahead with the formation of the corporation, taking in new associates as stockholders.

·         Hernandez, in fulfillment of his trust, made a formal assignment of the Meralco properties to the treasurer of the corporation, giving them a book value of P365,000, in return for which the corporation issued, to the various subscribers to its capital stock, shares of stock of the total face value of P225,000 and assumed the obligation of paying what was still due the Meralco on the purchase price.

·         On its first year, the company was losing money but the business became profitable eventually.

·         Two years from their withdrawal from the partnership, plaintiffs brought the present suit against Jaime Hernandez, claiming a share in the profit the latter is supposed to have made from the assignment of the Meralco properties to the corporation, estimated by plaintiffs to be P225,000 and their share of it to be P115,312.50.

·         Defendant's answer denies that he has made any profit out of the assignment in question and alleges that in any event plaintiffs, after their withdrawal from the partnership, ceased to have any further interest in the subsequent transactions of the remaining members.

Issues:

1.       WON the partnership had realized profit out of the Meralco properties made by the defendant to the corporation. No.

2.       If there was indeed a profit, WON the plaintiffs are entitled for their share out of such profit. No.

 Held:

1.   

·         It is true that the value set for those properties in the deed of assignment was P365,000 when the acquisition price was only P122,000.

·         The difference between the two sums was really made out of the transaction, for the assignment was not made for cash but in payment for subscriptions to shares of stock in the assignee, and while those shares had a total face value of P225,000 this is not necessarily their real worth.

 2.  

·         Assuming that the assignment actually brought profit to the partnership, it plaintiffs were still not entitled to receive from the profit.

·         Plaintiffs maintain that the latter should be held liable for damages caused to them, consisting of the loss of their share of the profits, due to defendant's failure to perform his duty as a liquidator of the dissolved partnership

·         On the theory that as managing partner, it was defendant's duty to liquidate its affairs upon its dissolutions.

·         Plaintiffs never asked for liquidation during the dissolution.

·         No liquidation was called for because when plaintiffs withdrew from the partnership the understanding was that after they had been reimbursed their investment, they were no longer to have any further interest in the partnership or its assets and liabilities.

·         As a general rule, when a partner retires from the firm, he is entitled to the payment of what may be due him after liquidation. But certainly no liquidation is necessary where there is already a settlement or an agreement as to what the retiring partner shall receive.

·         A settlement was agreed upon on the very day the partnership was dissolved.

·         When plaintiffs and Judge Jaime Reyes withdrew from the partnership, the only condition was that they were to be repaid their contributions or investments within three days from said date.

·         Condition was fulfilled when on the following day they were reimbursed the respective amounts due them pursuant to the agreement.

·         SC: acceptance by the withdrawing partners of their investment was understood and intended by all the parties as a final settlement of their rights or claim the withdrawing partners might have in the dissolved partnership. Such being the case they are now precluded from claiming any share in the alleged profits, should there be any, at the time of the dissolution.