G.R. No. L-10029

Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-10029 July 15, 1918

FAUSTINO LICHAUCO, plaintiff-appellee,
vs.
JOSE DE GUZMAN, TOMAS DEL RIO, JUAN OLABARRIETA, RAMON SORIANO, and GREGORIO OLEGARIO, defendants-appellees.

Gibbs, McDonough & Blanco for appellant.
Gutierrez Repide & Socias and Eusebio Orense for appellees.

TORRES, J.:

The following civil cases were filed in the Court of First Instance of this city:

No. 8883, brought by Faustino Lichauco against Jose de Guzman; No. 9213, by Tomas del Rio and Juan Olabarrieta against Faustino Lichauco; and No. 9217, by Ramon Soriano against Faustino Lichauco.

As a result of the agreement between the parties on February 8, 1912, said three cases Nos. 8883, 9213, and 9217 were joined into a single action.

In case No. 8883 counsel for Faustino Lichauco, by a written complaint filed in the Court of First Instance on August 26, 1911, alleged that the defendant Jose de Guzman, by virtue of a verbal order given by the plaintiff, took charge of the cattle, including carabaos, imported by the latter and intended for the slaughterhouse in Manila and for sale in the provinces; that the accounts which the defendant rendered to the plaintiff showed a balance of P90,000, and that Guzman employed said sum in his private business and refused to deliver it to the plaintiff in spite of the latter's demands made upon him so to do. Plaintiff's counsel therefore asked that judgment be rendered against the defendant for said sum, together with the legal interest thereon and the cost, and that, besides, an attachment be levied on his property.

By an order of November 11, 1911, the judgment in default rendered against the defendant was set aside and he was allowed a period of five days in which to answer the complaint.

The demurrer interposed by the defendant to the complaint having been overruled, on December 2 of the same year he answered the complaint, asking to be absolved therefrom, and, by means of a counterclaim, asked that the plaintiff be ordered to pay him P116,005.85, alleging that he, the defendant Guzman, had been engaged in the purchase and sale of cattle, including carabaos, since the American occupation and for many years prior thereto; that about the beginning of April, 1909, the plaintiff, to avoid his financial ruin, proposed to the defendant Guzman that he (Guzman), Ramon Soriano, Gregorio Olegario, Tomas del Rio and Juan Olabarrieta enter into joint account agreement with the plaintiff, which they did on April 15 of the same year, they having met in the house situated at No. 115 Calle Analoague, Binondo; that said agreement was made under certain conditions among which it was stipulated that the business should be conducted in the name of the plaintiff, Lichauco, under his management and responsibility; that for his personal services the plaintiff was not to be entitled to collect any salary or compensation whatever, except his share of the profits obtained; that the profits derived from the sale of the cattle to be imported in the plaintiff's name and for the account of the joint account partnership should be distributed among the partners in the following proportion; Twenty-five per cent to Faustino Lichauco; 23 per cent to Jose de Guzman; 23 per cent to Ramon Soriano; 19 per cent to Gregorio Olegario; and 10 per cent to Tomas de Rio and Juan Olabarrieta; that from April 14, 1910, when said partnership commenced business, until December 31 of the same year, the sales of cattle, on the hoof or as meat, in the slaughterhouse produced P360,460.75; that from January 1, 1911, to August 15, 1911, the sales of cattle produced P1,500,000, with a profit of P200,000; that, in accordance with the stipulations made of these amounts obtained during said two periods, the defendant was entitled, at the rate of 23 per cent, to the sum of P116,005, which sum the plaintiff, under futile pretext, refused to pay him, notwithstanding the demands made upon him so to do.

In view of the answer and counterclaim presented by counsel for the defendant Jose de Guzman, the plaintiff amended his complaint — an amendment allowed by the court — alleging that during the first days of April, 1909, the plaintiff, Lichauco, in accordance with a verbal contract made with the five defendants, obligated himself to deliver to them for sale, on a net commission of P1.50 per head, all the cattle imported by the plaintiff, the defendants jointly and severally binding themselves to be responsible to the plaintiff for the total price of all cattle delivered to them, after deducting the amount of the commission and the expenses of management; that, pursuant to the contract, the defendants monthly rendered accounts of the business to the plaintiff; that, between April 1909, and August, 1911, inclusive, the plaintiff delivered to the defendants for sale on commission and latter sold, 44,736 head of cattle belonging to him, at the price of P2,637,245.16, after deducting all the expenses of management, as it so appears from the accounts rendered by the defendants; that, notwithstanding the demands made upon them by the plaintiff, the defendants had not settled their accounts and have delivered to the plaintiff only the sum of P2,521,302.52, leaving a balance of P48,838.64, which balance they had appropriated to themselves and consequently was owing to the plaintiffs. The latter, therefore, asked that judgment be rendered whereby the defendants be ordered jointly and severally to pay him said sum of P48,838.64, together with the interest thereon and the costs, and denied each and all of the allegations of the counterclaim made by Guzman, not compatible with the facts above set forth.

Counsel Gregorio Olegario, in answer to the second amended complaint, admitted the first allegation thereof and denied all the others not in conformity with or contrary to the allegations contained in his special defense, counterclaim, or cross-complaint, and set forth that the plaintiff, Lichauco, in order to avoid a ruinous competition in the cattle business, proposed to the defendants, during the first days of April, 1909, that they enter into a joint account agreement with him to carry on the business of the importation of cattle, including carabaos; that this proposition was accepted by the defendants and thus the partnership was formed; that it was stipulated that the competition that there was between them should cease and that they should unite against the powerful competition carried on by Barretto & Co. and Lack & Davis; that each one of the joint account partners was to bring in such amount of capital as he conveniently could, and that if it should be necessary said capital would be furnished by the plaintiff, Lichauco, and the defendant, Soriano; that the plaintiff was to be the manager or administrator of the business and was to receive as remuneration 10 per cent of the profits; that the remaining 90 per cent was to be distributed among the five partners, as follows: 25 per cent to Faustino Lichauco, 23 per cent to Jose de Guzman, 23 per cent to Ramon Soriano, 19 per cent to Gregorio Olegario and 10 per cent to Del Rio and Olabarrieta; that, from April 14, 1909, when the partnership was organized and commenced to do business, until December 31, 1910, said firm obtained profits not less than P360,414.75, Philippine currency; that, from January 1, 1911, to January 31, 1912, the business produced a net profit of P126,729.14, and that, after deducting therefrom the plaintiff's 10 per cent, the defendant Olegario, at the rate of 19 per cent, was entitled to P83,301.60; that as Olegario had received as part of said profit only P54,366.82, there remained a balance in his favor of P28,934.78, which the plaintiff had refused and continued to refuse to pay, and that he also refused to render a proper account of the partnership affairs. Therefore said counsel prayed the court to absolve from the complaint the defendant Olegario, and to order the plaintiff to pay the defendant P28,934.78, with legal interest thereon from the date of the defendant's cross-complaint or counterclaim, and likewise to pay the cost.

Counsel for the other defendant Ramon Soriano made allegations similar to those set forth by Olegario in his answer to the second amended complaint, and added that, after deducting 10 per cent from said profits, 23 per cent thereof, according to the stipulations made, pertained to the defendant, Soriano and amounted to P1,200,838.78; that the latter brought in and delivered to the plaintiff on different occasions, as partnership capital, the sum of P55,800; and that, notwithstanding the stipulation made, the plaintiff refused and continued to refuse to account for, and to deliver to the defendant, Soriano, his share of the profits of the business. Said counsel therefore asked (1) that his client be absolved from the complaint, and (2) that the plaintiff be ordered to pay P156,638.78, the sum of both amounts mentioned in paragraphs 9 and 10 of his answer, together with the legal interest thereon and the costs.

Counsel for the defendants, Tomas del Rio and Juan Olabarrieta, answering the second amended complaint, made statements and allegations similar to those set forth by the other defendants. He added, however, that his clients had organized a mercantile firm, domiciled at No. 824 Calle Anloague and engaged in the importation of cattle from China and Borneo; that, from April 14, 1909, to December 31, 1910, the business of the sale of cattle, as meat or on the hoof, in the slaughterhouse, produced the sum of P2,782.685 with a profit of P360,414.75; that from January 1, 1911, to December 31 of the same year, a net profit of P126,729.14 was obtained; that after deducting from this profit the plaintiff's 10 per cent share, there was owing to the defendants Del Rio and Olabarrieta 10 per cent of the balance, or P43,842.95 which sum these defendants had not received, and the plaintiff had been delaying its payment. Therefore counsel for Del Rio and Olabarrieta asked that his clients be absolved from the complaint, and that the plaintiff be ordered to pay the said sum of P43,842.95, with legal interest thereon from the date of their cross-complaint, and the costs.

The defendant Jose de Guzman, in answer to the second amended complaint, made statements and allegations similar to those advanced by his co-defendants, and also added that, in accordance with the stipulations entered into, he was entitled, at the rate of 23 per cent of the profits obtained, to the sum of P100,838.78, and that, as he had received as part of said profits only the sum of P25,616.37, there still remained a balance in his favor of P75,222.41 which the plaintiff Lichauco had refused and continued to refuse to pay the defendant, notwithstanding the demands made upon him. Jose de Guzman therefore asked that he be absolved from the complaint, and that by his counterclaim the plaintiff be ordered to pay him P75,222.41, with legal interest thereon from the date of the defendants cross-complaint, and the costs.

Counsel for the defendant Jose de Guzman asked permission of the court to amend paragraphs 4 and 7 of his preceding answer, so that it should read as follows:

On April 14, 1909, having met in the house situated at No. 115 Calle Anloague, the plaintiff Lichauco and the defendants Soriano, Guzman, Olegario, and Del Rio, the latter for himself and as the representative of Olabarrieta, organized a joint account partnership and stipulated that they should all contribute to the joint business their respective customers and cattle importation business their respective customers and cattle importation business and likewise the personal services that might be assigned to each partner, in order to sell here the largest possible number of cattle, including carabaos, and also for the purpose of ending the competition between them and unite against the competition carried on jointly by the powerful firms of Barreto and Lack & Davis; that, from April 14, 1909, when the partnership commenced business, until December 31, of the same year, the sales of cattle, as meat or on the hoof, produced the sum of P2,782,685 which left a net profit of P360,414.65.

Counsel stated that the preceding amendment was based on the evidence; and notwithstanding the plaintiff's opposition, it was, with exception, admitted by an order of August 23, 1913.

The plaintiff, in turn, asked by motion that he be permitted to amend the second amended complaint so as to make it conform to the facts proven at the trial. This motion was objected to by counsel for the defendants, and was denied by an order of October 14th of the same year. Exception to this ruling was taken by plaintiff's counsel.

Upon a hearing of the case, after a joinder of cases Nos. 8883, 9213, and 9217, as stated in the beginning of this decision, evidence was adduced by the parties and, in accordance therewith, on February 13, 1914, judgment was rendered in which — holding that there existed between the plaintiff and the defendants a joint account partnership for the business of the purchase, importation, and sale of cattle, including carabaos, in the manner and conditions set forth by the defendants — the plaintiff, Faustino Lichauco, was ordered to pay to Ramon Soriano the sum of P36,800, with interest thereon at the rate of 6 per cent per annum from February 5, 1913; to pay severally P37,608.73 to the defendants Tomas del Rio and Juan Olbarrieta, likewise with interest thereon from December 21, 1911; to pay P14,499.56 to the other defendant, Jose de Guzman, with like interest from December 5, 1911; and likewise to pay P81,024.87 to the other defendants, Ramon Soriano and Gregorio Olegario, with like interest from December 22, 1911, without special finding as to costs. This judgment was modified by another of March 17, of the same year, 1914 in the sense that Faustino Lichauco was ordered to pay Ramon Soriano the sum of P20,000 with interest at 6 per cent per annum from February 5, 1913. The plaintiff was also ordered to pay to said Ramon Soriano and Gregorio Olegario the sum of P69,990.87, with interest at 6 per cent per annum from December 22, 1911. In this second judgment were reiterated the other findings contained in the previous one adverse to the plaintiff and favorable to the defendants, Del Rio, Olabarrieta, Guzman, and no special finding was made as to costs. Counsel for the plaintiff excepted to these judgments and moved for a new trial. His motion was denied, exception was entered by him, and upon the filing of the proper bill of exceptions, the same was approved, certified, and forwarded to the clerk of this court.

The questions submitted to the decision of this court are three: The first consists in determining whether or not it is true that there was executed by and between the plaintiff and the defendants a joint account partnership contract in the form and conditions as stated by the latter, and whether this contract, notwithstanding that it was not set forth in any private or public instrument, was carried into effect and was observed by the parties from April 14, 1909, to August, 1911. Second. Whether or not it is true that the defendant Ramon Soriano, as a joint account partner, brought into the partnership and delivered to the plaintiff, Lichauco, in partial amounts, the sum of P55,800 according to the documents signed by the plaintiff, Exhibits 42 to 51. Third. Whether or not it is true that the sale of cattle, effected by some of the defendants, was made by them on a commission basis of P1.50 per head.

The plaintiff, Faustino Lichauco, denies that he executed with the defendants said contract organizing by common agreement the joint account partnership, and that any such contract existed during said period of two years and five months. He alleged that, as absolute owner of all the cattle the importation and sale of which during those years was the object of the business in which he was engaged, he merely delivered this stock, in various shares, to the defendants Jose de Guzman, Ramon Soriano, and Gregorio Olegario in order that they might sell the same on a commission basis of P1.50 per head of the animals sold; that the number of cattle belonging to him so sold on commission between the months of April, 1909, and August, 1911, amounted to 45,144, at a total price of P2,656,328.49 after deducting all the expenses incurred from the time the defendants received the cattle until the latter were sold, as shown by the monthly accounts rendered to the plaintiff by the defendants.

From the documentary and oral evidence, as a whole, adduced during the trial by the defendants who are at the same time the plaintiffs in the counterclaim or cross-complaint, it is concluded that satisfactory proof has not been produced to show the existence of the alleged joint account partnership said to have been formed between the defendants and the plaintiff.

In fact, the defendant, Ramon Soriano, testified that on April 14, 1909, immediately after they had agreed upon the organization of said joint account partnership, in the meeting held by them on the date aforementioned, witness made a memorandum of the stipulations made and resolutions adopted by those present, although afterwards the plaintiff, Lichauco, would not sign it, saying that it would be dangerous to do so, inasmuch as witness was interested in the partnership which he, Soriano, and the other defendants had contracted with Lack & Davis.

If for this sole circumstance said memorandum was never signed and the partnership contract was never reduced to writing in even so much as a private instrument, there is of course ample reason to assert that the reason given by Soriano in his testimony is not true, because on April 14, 1909, the partnership agreed upon by the defendants with Lack & Davis was not yet in existence, and was stipulated and formed only on the 21st of May of that year; besides, Faustino Lichauco was not then, nor at any other time, a member of that partnership. So it is that the other defendant, Tomas del Rio, testified that the refusal of Lichauco to sign the partnership contract between himself and the defendants had nothing to do with the subsequent partnership formed with Lack & Davis, which testimony contradicts the statements made by Soriano.

It is to be noted that long before April 14, 1909, the date of the alleged partnership, Soriano and Lichauco had formed between themselves a joint account partnership which they took good care to have appear in a written contract, as well as the business in which they were to engage and the conditions of the contract, as may be seen by the document Exhibit A-13. In the books and documents presented during the hearing of this case, the defendants Soriano always required of the plaintiff receipts or chits for even the unimportant sums which, on various occasions, he delivered to the latter. It is, therefore, very strange that, it being a question of the organization of a joint account partnership for the importation and sale of cattle the value thereof amounted to more than two and a half million pesos, the defendants should not have endeavored to have the conditions of the contract set forth, if not a notarial document, at least in a private instrument. The aformentioned memorandum mentioned by Soriano, which, was as he stated, contained the agreement made, together with the details and conditions of the joint account partnership contracted between themselves, was not presented or exhibited during the course of this suit.

Although all the cattle that were the subject matter of the business belonged to the plaintiff, Lichauco, nevertheless, in view of the great importance which, in case of success, it was expected the business would assume to the benefit of the partners, and of the considerable value of the cattle the sale of which the plaintiff managed, as shown by the respective claims and counterclaims made during the course of these proceedings, it is at first sight inexplicable why and for what reason the partnership contract was not made to appear in any kind of document whatever.

It was reasonable and just that from May 21, 1909, the defendants should have feared to violate said clause 18 of the partnership contract made with Lack & Davis; but after this partnership had ceased to exist, toward the end of the year 1910, it is not understood why and for what reason the existence of the other alleged partnership was not, together with the conditions stipulated, recorded in any document whatsoever, from January to August, 1911.

The plaintiff absolutely denied the existence of the joint account partnership on which the defendants' counterclaims and cross-complaints are founded, and the conditions and other particulars concerning this alleged partnership are known only by the averments of the defendants themselves, in so far as regards the distribution of the profits, although there are some contradictions in respect to the remuneration which the manager was to receive, and to the amount of the capital which the defendants were to furnish.

Where it true that a joint account partnership had been covenanted between the plaintiff and the defendants, and that this suit should be decided on such a hypothesis, still no explanation whatsoever is found in the record as to why and for what reason it is stated in the very books kept by the defendants, Soriano, Olegario, and Guzman, that the cattle which they had been selling on commission from April, 1909, to August, 1911, belonged absolutely to the plaintiff Lichauco, while, were it true that the alleged partnership contract existed between the plaintiff and the defendants, and that the business belonged to this partnership, record should have been made in its books that the cattle sold by the defendants likewise belonged to the partnership.

It is a fact justified by the record that the defendants tried to establish an agency for the purchase and acquisition of cattle from Pnom Penh, Cochin China, for the purpose of entering into competition with the business managed by the plaintiff, Lichauco, as the competitive agency shipped to these Islands, on the steamship Binthuan, a lot of cattle consigned to the defendant Jose de Guzman, and if the latter, after Lichauco had discovered the fact, was obliged to turn over this shipment to Lichauco, and if the plaintiff took charge of the same, it was all due to the energetic action displayed by the plaintiff and to his threat to bring charges against Guzman, who was then owing the plaintiff a considerable sum which this defendant had employed in said purchase of cattle. In fact, in the Exhibit 55 ½ — Lichauco's account in Olegario's book — the sales of cattle, effected by the latter, were recorded on the "credit" side of the book, and the receipts on the "debit" side of the same, the expenses and losses being charged against Lichauco. Such procedure indicates that the defendants, as mere industrial commission agents, had nothing to do with said expenses and losses. The contents of the exhibits 63 and A-7 show that Soriano and Guzman made similar entries in their respective books, in which latter, as well as in the one kept by Olegario, there is not the slightest indication that there was any such joint account partnership between them. Said exhibits also show that the defendant commission merchants rendered accounts of the cattle sold and of the proceeds thereby obtained.

For the purpose of further proving the existence of the alleged joint account partnership, other evidence was taken, with the following result:

In Lichauco's ledger, the word vacunos (cattle) appears in the title of the account of Jose de Guzman, and counsel for the defendants contend that in the space where that word and another were written there had previously been written the words "sociedad nueva" (new partnership); but the plaintiff stated that, according to his cashier, Tolentino, there was written in the title: "Jose Guzman, cuenta matanzas" (Jose Guzman, slaughter account), and that this last word was erased so as to make the title agree with the daybook. The expert chemist who examined said ledger testified that the result of the experiment he had made with the substance he had with him at the trial showed that no word at all appeared to have been written in ink in the space of the erasure on the paper, immediately following on the same line the written word vacunos. An assay was also made to ascertain whether the space occupied by the word vacunos could contain the words sociedad nueva, written in letters of the same size. The result was negative; it was found that these last two words could not be written in the space indicated.

Clarke, the expert, testified that from Lichauco's books it was not impossible to learn the number of cattle delivered by the latter to the defendants, because, although sometimes the number of head was not set forth in the plaintiff's books, it was specified in a majority of cases; that, in Guzman's account, the number of cattle received was stated, except in one entry; that he had prepared an extract of the profits (Exhibit A-4) from the ledger and day book and the vouchers (Exhibits A to X, and Y to KKK); that the defendants gave Lichauco receipts for the cattle delivered by him to them, said receipts being Exhibits A to X, and Y to KKK; and that, in Lichauco's books, the commissions do not appear to have been credited, except in 1911 and 1912, and comprise those from April 14, 1909, to date. (sten. notes, pp. 824-828).

He also testified that, in his opinion, the Exhibits A to X and Y to KKK were accounts of the sales of cattle sold by Guzman and Olegario (sten. notes, p. 59), and that, from the accounts rendered and from Lichauco's books, he could estimate the number of cattle received and sold by Ramon Soriano, Gregorio Olegario, and Jose de Guzman. (Sten. notes, pp. 61-62.)

The witness Gregorio Tolentino, Lichauco's cashier and attorney in fact and also auditor of his account books, testified that the Exhibits A to X were received from Guzman, and the Exhibits Y to KKK, from Olegario. (Sten. notes, pp. 3-5.) Lichauco gave the same testimony. (Sten. notes, p. 775.) Tolentino further testified that the result shown in said exhibits, or that of the accounts rendered by the defendants, was entered in the books, that is to say, in the respective accounts.

All the foregoing testimony shows that there was no such partnership, but an agency to sell on commission.

So, then, it is evident that conclusive proof was not adduced of the existence of the alleged joint account partnership, the basis of the defendants' unfounded claims against the plaintiff. In order that the existence of a joint account partnership may be admitted, the laws in force require, besides other proofs recognized by statute, that the agreement made between the parties must be reduced to writing, pursuant to the provisions of article 51 of the Code of Commerce, cited in article 240 of the same code, which deals with the herein alleged partnership, inasmuch as article 51 provides that the declaration of witnesses shall not in itself be sufficient to prove the existence of a contract the consideration of which exceeds 1,500 pesetas or P300, but that it must be corroborated by other evidence in writing — a principle in conformity with article 1280 of the Civil Code, the last paragraph of which prescribes that contracts, in which the amount of the prestations of one of the two contracting parties exceeds 1,500 pesetas, must be reduced to writing, though they be private.

So then, the record does not show that the existence of the alleged joint account partnership was proven by any documentary or oral evidence; neither does it show that the accounts drawn up by the expert Clarke were challenged by the defendants.

In order to prove the existence of the alleged joint account partnership, and notwithstanding that the majority of the partners brought no capital whatever into the partnership funds, it was nevertheless alleged by the defendant Ramon Soriano that he delivered to the plaintiff, Lichauco, in partial amounts, the sum of P55,800 (Exhibits 42 to 51), and that he brought it as capital stock for himself and in the name of the other defendants.

The record shows that when Soriano delivered the sums that finally aggregated the amount of P55,800, both he and the defendant Olegario, especially the latter, had received and sold cattle the value of which was greater than the amount of money they turned in. For this reason it can not be affirmed that the sums so delivered to the owner of the cattle constituted contributions by the defendants to the capital of the partnership, as will be seen hereinafter.

From said sum of P55,800 received by the plaintiff, first of all, there must be excluded the sum of P16,000, because Lichauco received it as a loan and not as a share of capital brought into the alleged partnership, nor as part of the price of the cattle sold by Soriano and Olegario, and it so appears in the document, the plaintiff's Exhibit A-6, and this is further confirmed by the Exhibit A-7, which is a copy of the pertinent parts of Soriano's own book in which the following entry appears: "caja su vale" without reference whatever to any share in the cattle business, such as it is shown was made by Soriano himself in the same Exhibit-A-7 when he received sums for the joint account partnership which he and Lichauco had formed between themselves only, long before April 14, 1909, according to the notarial document Exhibit A-13. This joint account partnership for the cattle business was established only by Soriano and Lichauco and none of the other defendants appeared therein; it was, therefore, a partnership very different from the one alleged as a basis of the claims presented against Lichauco.

It is to be noted that the sum received as loan by Lichauco from Soriano appears, by said Exhibit A-7, to have been paid, and that this document further shows the latter to be the former's debtor.

The remaining sum of P39,800 was delivered to Lichauco as a part of the value or price of the cattle that belonged to the plaintiff and were sold by Olegario, chiefly, and by Soriano; this is proven by Exhibits A, A-1, Y, KKK 55 ½.

In fact, according to Exhibit A-1, on June 4, 1909, Lichauco received from Soriano, chargeable to the cattle account, the sum of P6,000; but this same exhibit also shows that Soriano had obtained from the sales made of the plaintiff's cattle, from April 28, to May 16, 1909, the sum of P8,064.27. (See also Exhibit A.) According to the Exhibit A-1, on June 22, 1909, Soriano delivered P8,000, chargeable to the cattle account; but according to Lichauco's Y, Olegario had obtained from the sales made of Lichauco's cattle from the 2nd to the 21st of the same month of June the sum of P12,038, and had not yet turned in any part whatever of the amounts in his possession as the price of the cattle previously sold. (See also Exhibit 55 ½, the account kept by Olegario.) A careful examination of the exhibits Y to KKK, and 55 ½ and A-1, shows most unquestionably that the other sums delivered by Soriano to Lichauco were a part of the price of the cattle belonging to Lichauco that were sold by Soriano and Olegario.

Del Rio and Olabarrieta had no interest in the business, either as commission merchants or as industrial partners, because they did not sell any of Lichauco's cattle.

In discussing in another part of this decision the fact that the defendants Soriano, Olegario, and Guzman engaged in the sale of the cattle they received from the plaintiff, by virtue of an agency, we commenced by stating that the defendants did so without reference whatsoever to the alleged joint account partnership. The plaintiff having positively affirmed that these defendants proceeded to sell, on a commission of P1.50 for each animal sold, the cattle he had imported from abroad, the defendants' counsel, notwithstanding their claim that their clients did so by virtue of a joint account partnership contract, finally admitted that in fact said three defendants made such sales in consideration of the commission alleged by the plaintiff. This admission had to be made, for the defendants had made the same admission in their respective sworn testimonies, although their counsel pleaded that said sales on commission are not incompatible with the existence of the joint account partnership that is the basis of their claims, and therefore argue that the defendants were at the same time joint account partners and commission agents of the owner of the cattle, the plaintiff Lichauco.

This court having held that such a joint account partnership did not exist, for lack of evidence to support plaintiff's denial that it did, it is entirely useless to discuss whether the commission contract is or is not compatible with a partnership that never existed, and the only fact proven, which recognized and admitted by the defendants and their counsel, is that relative to the defendants having been engaged in the sale of cattle belonging to the plaintiff, on a commission of P1.50 per head.

It is true that the plaintiff, in an official letter addressed to the Collector of Internal Revenue in connection with a matter concerning taxes, and also in several letters which he signed and addressed to different persons, calls some of the plaintiffs his partners in the cattle business, and in said letter to the Collector of Internal Revenue he names them as industrial partners. However, this appellation or denomination of partners was due to the fact that the owner of the cattle the sale of which was the object of the business had made the assignment and perhaps agreed with the defendants commission merchants that, besides the commission of one peso and a half per head, they were entitled to collect 10 per cent of the net profits derived from their sales of the cattle. The plaintiff explicitly states so in his letter, Exhibit 41, addressed to the Collector of Internal Revenue, in answer to the questions which the Collector had asked him in the matter of the investigation of certain data that concerned his Bureau. It cannot be believed that the plaintiff did not tell the truth in said official letter; it is therefore unquestionable that the defendant commission merchants were entitled, besides, to collect 10 per cent of the net profits of the commission business in question. This point was not brought up nor discussed at the trial, and it is to be believed that counsel for the defendants tacitly waived claim to said 10 per cent of the net profits because they preferred to demand a certain percentage of a larger sum by virtue of the alleged joint account partnership; and in view of such procedure and the silence of the defendant commission merchants, the plaintiff in turn deemed it more suitable to his interest to keep silent and not even mention the 10 per cent referred to in his letter to the Collector of Internal Revenue.

As a result of the foregoing statements, justice requires that we hold that the defendants Soriano, Olegario, and Guzman, besides the commission of P1.50 per head of cattle sold by them, are entitled to collect 10 per cent of the profits derived from the proceeds realized from their sales of Lichauco's cattle.

In ordered to be able to separate the sums that correspond to each one of the defendants as payment of the P1.50 for each head of cattle sold from those due them by reason of the 10 per cent of the net profits, it is indispensable to determine the number of cattle sold by each defendant, the amounts turned in on account, the value of the sale made, the total amounts derived from the P1.50 commission and the 10 per cent of profits, and the credit or debit balance with respect to each of them. These details are given in the following extract. Attention is invited to the fact that the expenses are included in the accounts of each one of the parties interested:

Extract of accounts.

SORIANO.

Debit

Credit

For 291 head of cattle sold by him

P17,812.74

As receipts

P39,800.00

His commission at P1.50 per head on 291 head

436.50

His 10 per cent of profits on P21,341.6

2,134.16

Final balance in his favor

24,557.92

42,370.66

42,370.66

OLEGARIO.

For 16,019 head of cattle sold by him

P949,531.15

As amounts turned in by him

P843,872.65

His commission at P1.50 on 16,019

24,028.50

His 10 per cent of profits

2,134.16

Balance in his favor in extract A-3 on sale of 7,356 head of cattle, amounts turned in on account and his commission

6,729.47

Final Balance in favor of Lichauco and against Olegario

72,766.37

949,531.15

949,531.15

GUZMAN.

For 21,484 head of cattle sold by him

P1,246,511.24

His commission of 21,484

P32,226.00

Amounts turned in by him

1,167,510.74

His 10 per cent of profits

2,134.16

Final balance against him

44,640.34

1,246,511.24

1,246,51.24

From the preceding extracts it appears that, notwithstanding the sums delivered by Soriano to the plaintiff Lichauco were, as a general rule, derived from the proceeds of the sale of the cattle which the former had received from the latter, the value of the cattle received was less than the sum of P39,800 which Soriano had turned in; so that deducting the value of said cattle sold, their owner still should return to Soriano the sum of P24,557.92, and therefore Soriano delivered more money to the plaintiff than the total sum realized by this defendant from his sales of cattle. In trying to explain this excess, and after a careful examination of the books and accounts presented at the trial, we are confronted with the following dilemma: Either Soriano delivered to Lichauco P39,800, partly on account of the value of the cattle he (Soriano) had sold; and partly — making up the sum just mentioned — as money loaned to Lichauco at the latter's request, or he turned in — on account of the cattle which both he and Gregorio Olegario had received for sale on commission and he had sold on his own account and in the name of Olegario — various sums as the proceeds of such sales, but with such confusion that Soriano himself had no exact knowledge of the amount that he turned in for himself and in Olegario's name; for, in the books which we have examined, we find sums entered by Lichauco, in Soriano's name, as having been received from Olegario; and, in order to obtain some explanation such as is required for the purpose of this decision, we proceeded to separate in so far as we possible, the sums turned over to Lichauco by Soriano and Olegario, respectively; the results is the foregoing extracts of accounts.

With respect to the interest that may have accrued on said amounts, this court holds that its payment shall be due only from the time these latter shall have been settled by this decision. In the case of Montilla vs. Corporacion de PP. Agustinos (25 Phil. Rep., 447), it was held that:

The obligation to pay interest on a sum fixed in a judgment exists from the date of the sentence, when so declared; for until the net amount of the debtor's liability has been determined he cannot be considered delinquent in the fulfillment of his obligation to pay the debt with interest thereon. (Art. 1108 of the Civil Code, and decision of the supreme court of Spain, on November 19, 1869, February 27, 1901, and July 13, 1904.)

For the foregoing reasons, reversing the judgment appealed from, we should as we do hereby order the defendant Gregorio Olegario to pay to the plaintiff, Faustino Lichauco, the sum of P72,766.37, and the defendant, Jose de Guzman, likewise to pay to the plaintiff Lichauco the sum of P44,640.34. The other defendants, Ramon Soriano, Tomas de Rio, and Juan Olabarrieta, are absolved from the complaint. The plaintiff, Faustino Lichauco, is likewise ordered to pay and return to Ramon Soriano the sum of P24,557.92. Each of the defendants, Olegario and Guzman, and the plaintiff, Lichauco, shall pay interest at the rate of 6 per cent per annum on the amounts which they are respectively obliged to pay, from the date of this decision until said amounts shall have been paid.

The plaintiff, Lichauco, is absolved from the counterclaims and cross-complaints filed against him.

No special finding is made as to the costs of both instances. So ordered.

Arellano, C.J., Street and Avanceña, JJ., concur.

Separate Opinions

CARSON, J., concurring:

I very reluctantly concur with the decision of the foregoing case.

With respect to the question of the real nature of the agreement, by virtue of which the litigating parties carried on their business in the various transactions which have been tried in the lower court, I find it very difficult to accept the opinion of the majority of this court. But, as this question is principally one of fact, over which there is a certain degree of contradiction in the evidence, I have finally come to the conclusion of assenting to the opinion of the majority in so far as this necessary to decide this case on appeal.

I would prefer to reserve my vote, but, as three of the Justices of this court can not take part in this case, there exists no reasonable ground whatever to foretell that such an act would effect the final decision of this case, and it would surely postpone indefinitely the final decision of an appeal that has been pending in our docket for a long time.

MALCOLM, J., dissenting:

Three exists for this appeal to pass out of this court were available. The court could affirm the judgment of the trial court — instead, scant courtesy has been paid to the careful findings of the judge of First Instance. The court could hold with the appellant that there was an agreement in restraint of trade — instead the point is not mentioned. Or the court could decide that the findings of the trial court were contrary to the proof and reverse the judgment. Through this portal has the case been graciously ushered by a revision of the facts, after having been awakened from a judicial sleep extending over a period of four years.

With this disposition of the case, I cannot bring myself to agree. A conscientious study of the record, including the multitudinous exhibits, and a rereading of the so-called briefs leaves me firmly convinced that the judgment of the trial court was correct in so far as the facts were concerned; that this court has committed a grievous error in reversing this judgment, and that serious consideration should be given to the assignment of error dealing with possible restraint of trade by the parties to this action. I proceed to elucidate my point of view succincty as possible.

In an endeavor to live up to the purpose just announced, many moves in the lower court and many side issues in this court need to be discussed. To begin with, cases Nos. 9213, 9217, and 8883 of the Court of First Instance of Manila; were by stipulation consolidated, tried together, and one judgment entered for all.

Plaintiff in his second amended complaint sues the defendants jointly and severally for P99,251.27, alleged to be due from them out of the proceeds of the sale of plaintiff's cattle on commission. Following somewhat the language of plaintiff's brief in order to do justice to his contention, plaintiff endeavored to show by his books of account, supported by vouchers, synthesized in a statement prepared by an expert accountant, that the defendant sold 45,144 head of plaintiff's cattle for P2,625,328.49 on a commission of P1.50 net per head; that deducting the total amount paid in by the defendants to the plaintiff from the total net proceeds of the sale made by the defendants of the plaintiff's cattle, there remained a gross balance with defendants of P166,973.27; that deducting the defendant's commission amounting to P67,725, there remained a balance in their hands of P99,251.27, the amount sued for in this action. Somewhat more in detail, plaintiff's story is that in March, 1909, an agreement between the defendant Soriano, the plaintiff, and the firm of Lack & Davis having come to an end, the plaintiff met some of the defendants in the office of Soriano for the purpose of discussing the formation of a joint account association for the importation and sale of cows. About the 1st of April, the plaintiff notified the defendants to reduce the association agreement to writing; they replied that they were unable to raise the money to put into the business and consequently could not go on with its organization. Thereupon, this proposition fell through. A few days later, the defendants, having learned that the plaintiff was to receive a cargo of cattle from Pnom Penh, proposed to him that they would sell as many of his cattle as they could handle, at a net commission of P1.50 per head, which proposition was accepted by the plaintiff. On May 21, 1909, the defendants began selling the cattle of the plaintiff on commission. The defendants neither them, nor at any other time, contributed capital or credit to the plaintiff's cattle business. To substantiate these facts, plaintiff's cattle business. To substantiate these facts, plaintiff relies on case No. 6708 of the Court of First Instance of Manila. In this case, Soriano, the defendant, swore positively and the trial judge in his decision so found that the only relation which he, Soriano, had with Lichauco consisted of an agreement to sell cattle belonging to Lichauco on commission. In another action, No. 7625 of the Court of First Instance of Manila, brought by Messrs. Lack & Davis for an account a short time subsequent to case No. 6708, the defendant Olegario also swore that the cattle of Lichauco were sold on commission. Of course, plaintiff's contention then is that as the decision in these two cases was provoked by the defendants and was rendered on their own construction of the contract, they are now bound by their judicial declarations.

Defendants in their several answers and counter-complaints to plaintiff's second amended complaints, first enter a general denial and then as a special defense set up the following: Prior to the year 1909 they were engaged in the buying and selling of cattle in the Philippine Islands and also in importing them from foreign ports. At the beginning of the year 1909, there were engaged in this business the plaintiff, the defendants, Barretto & Co., and Lack & Davis. On April 14, 1909, in order to secure the greatest possible economy and to put an end to the competition existing, the plaintiff, and the defendants held a meeting at the office of the defendant, Ramon Soriano. They then agreed to form and in fact did form a joint account company. The agreement was not reduced to writing for fear of Lack & Davis bearing of it. It was stipulated that all those present, Faustino Lichauco, Ramon Soriano, Jose de Guzman, Gregorio Olegario, and Del Rio and Olabarrieta should contribute their respective customers and their respective cattle importation business, together with their personal services and labor for the benefit of the common business, while the plaintiff was also to contribute the needed capital without prejudice to the defendants contributing the capital which they could afford. The business was to be carried on in the name of Faustino Lichauco as manager of the same. The plaintiff was to receive 10 per cent of the profits realized in renumeration for his services as manager. The balance of 90 per cent was to be divided between the other members of the company in the following proportions: 25 per cent for Lichauco; 23 per cent for De Guzman; 23 per cent for Soriano; 19 per cent for Olegario and 10 per cent for Del Rio and Olabarrieta. The joint account company began importing cattle from foreign ports in the name of the plaintiff as manager. The profits on the sale of said cattle from April 14, 1909, to December 31, 1911, amounted to P487,143.89. Of this De Guzman asks for P75,222.41; Olegario, for P28,934.78; Soriano, for P156,638.78, and Del Rio and Olabarrieta for P43,842.95. The defendants corroborate their pleadings by their own evidence, the evidence of other witnesses, and various documents.

The trial judge in his corrected judgment found in favor of the defendant Ramon Soriano and against the plaintiff Faustino Lichauco in the sum of P20,000, together with interest thereon at 6 per cent per annum from February 5, 1913; in favor of the defendants Tomas del Rio and Juan Olabarrieta jointly and against the plaintiff in the sum of P37,608.73, together with interest thereon at 6 per cent per annum from December 31, 1911; in favor of the defendant Jose de Guzman and against the plaintiff in the sum of P14,499.56, together with interest thereon at 6 per cent per annum from December 5, 1911, and in favor of the defendants Ramon Soriano and Gregorio Olegario jointly and against the plaintiff in the sum of P69,990.87, together with interest thereon at the rate of 6 per cent per annum from December 22, 1911. No costs were taxed.

Appellants make twenty-five assignments of error.

The first question at issue is whether, as claimed by the defendants intervened in the business of the plaintiff as commission agents, or whether as claimed by the defendants the plaintiff and the defendants formed a joint account association (cuentas en participacion).

The trial court's finding was that from a great preponderance of the evidence a cuentas en participacion existed.

The court propounds these rhetorical questions:

If there was no agreement of association between these persons promising to give their services, why did Oligario go to China and Singapore, and Olabarrieta and Del Rio to Pnom Penh, under the orders of Lichauco in the interest of the association and spend much time without compensation for their services? If there was no agreement, why did Del Rio and Olabarrieta give up their established business and turn it in to that conducted by Lichauco and by Soriano, and place themselves practically in the ranks of the unemployed? If there was no agreement, why did De Guzman give up the partnership which existed between him and Lichaudo by which he received 50 per cent of the profits and take, as Lichauco claims, the small pittance of P1.50 per head for selling cattle? If there was no agreement, why did Soriano, on many occasions when Lichauco was absent or ill, take over the management of its business without compensation, and why also did Olegario move into Lichauco's office and at times manage the business without pay, and why did all the persons interested at times when necessary, perform the services which they did without any compensation whatever? If there was no agreement of partnership, why did Lichauco give Del Rio and Olabarrieta letters of introduction as his partners when sending them to Pnom Penh and also practically do the same thing with Olegario when sending him to Singapore?

The conclusion of the trial court follow:

I therefore conclude that the 'cuentas en participacion' existed between the plaintiff and the defendants for the carrying on of the cattle business, which included the purchase, importation, and sale of cattle and carabao, whereby Lichauco was to receive 10 per cent of the profits for his compensation as manager of the business and 25 per cent of the remainder; that Soriano was to receive 23 per cent Jose de Guzman 23 per cent; Gregorio Olegario 19 per cent; and Del Rio and Olabarrieta 10 per cent.

I further find that the profits as appear from Lichauco's books as shown by the account presented in evidence to be the sum of P350,149.71, to which should be added the sum of P67,725 charged by Lichauco to sales expense as commissions due defendants for the sale of cattle, making a total of P417,787.47, for his services as manager, leaving a remainder of P376,037.24, of which Lichauco is entitled to P94,021.81, De Guzman P86,500.06, Soriano P86,500.06, Olegario P71,466.58, and Del Rio and Olabarrieta P37,608.73, from which should be deducted from the Soriano credit P83,671.24, his debit on the account current with Lichauco, leaving a balance of P2,828.83, and from the De Guzman credit the sum of P72,000.50, his debit to Lichauco on the account current, leaving a balance due him of P14,499.56; that there should be deducted from the Olegario credit the sum of P4,304.53, leaving a balance due him of P67,162.05.

From the evidence presented, defendant's Exhibits 41 to 52, inclusive, I find that Soriano advanced money to Lichauco from time to time amounting to P55,800, and that Lichauco has given credit, according to his account with Soriano (see plaintiff's Exhibit A-1), for the sums of P6,000, P8,000, P5,000 and P800, corresponding to defendant's Exhibits 46, 47, and 42, and that he has credited Soriano upon his personal account other than the 'cuentas en participacion' for the sums of P6,000, P5,000, and P5,000, corresponding to defendant's Exhibits 43, 44, and 45, leaving a balance of P20,000 unaccounted for and for which Lichauco is indebted to Soriano which added to the balance above mentioned of P2,828.82 makes a total amount due Soriano of P22,828.82.

Accepting the accounts Exhibits A-1 to A-5, presented by plaintiff through an expert accountant, which I have as correct, the evidence discloses that the above findings are not probably correct as to the accounts of Olegario and Soriano inasmuch as cattle delivered to Olegario were charged to Soriano, but from the evidence it is impossible to determine just what amount should be transferred from the charges made against Soriano to Olegario, so for the purposes of this action their accounts in relation to cattle and payments therefor are made joint, with the result that the amount due them jointly from Lichauco is P69,990.87, and to Soriano personally the sum of P20,000, though a portion of this latter amount may be money belonging to some of the other defendants, but that is a matter for adjustment between them and is not considered in these actions.

The conclusions are that there is justly due from the plaintiff Faustino Lichauco to the defendant Ramon Soriano P20,000 with legal interest thereon from the 5th day of February, 1913, the date of the filing of the complaint in relation thereto; to Tomas del Rio and Juan Olabarrieta jointly in the sum of P37,608.73, with legal interest thereon from December 21, 1911, the date of the filing of the complaint; to Jose de Guzman the sum of P14,494.56, with legal interest thereon since December 5, 1911, the date of this defendant's filing claim therefor, and to Ramn Soriano and Gregorio Olegario jointly the sum of P69,990.87, with legal interest thereon from December 22, 1911, the date of filing of the complaint in relation to their claims.

Among the prominent facts which tend to corroborate the findings of the trial court are these: The defendants all testify that on April 14, 1909, at a meeting at which the plaintiff was present, there was formulated and consummated a contract for a joint account company for the purpose of exploiting the cattle business. This testimony is fortified by the testimony of other witnesses, by letters written by the plaintiff himself, in which he acknowledges that the defendants are his partners, and by the liquidation of the Pnom Penh business delivered by the plaintiff to the defendant De Guzman as an accounting. Thus Francisco Ortigas, a gentleman of spotless integrity, told how he had attempted to bring the parties together, but that Lichauco had refused his proposition because of the fact that the defendants had not paid in the capital or labor agreed upon. Thus, also, Agustin Guevara told of the meeting at the office of Soriano and of admissions which Lichauco made to him as to who were the members of the partnership. Thus, also, Luis Elzingre Dumas told of how Lichauco had admitted the existence of the association among the cattlemen. Thus, also, plaintiff writes introducing "his partner," of "our business," etc.; the plaintiff even does this in an official letter addressed to the Collector of Internal Revenue. Thus, also, there is satisfactory evidence, even assented to in part by plaintiff, that De Guzman was a sort of a joint manager of the venture, that all the defendants performed services for the company, and that none of them received any compensation — something most unusual, if no association existed.

One additional fact of present interest is that Ramon Soriano testified that he turned over to Lichauco P55,800 to be used in the "cuentas en participacion." This testimony is nowhere disproved. The majority in explanation, both specious and unreasonable, lay the blame to Soriano's carelessness as a business man. Again, the majority forced to the conclusion that defendants were only to receive P1.50 per hand for each animal sold — a stipend out of all proportion to the work — relieves the weight on their conscience by awarding defendants 10 per cent of the profits, although neither plaintiff nor defendants relied on this fact.

As undermining the judgment of the trial court, is the evidence of the plaintiff and of clerk in his office; the evidence in case No. 6708 of the Court of First Instance of Manila; the purchase of cattle by Del Rio in Pnom Penh by which he entered into competition with the combination; and the delivery of P15,000 by the defendant De Guzman to the plaintiff after the complaint had been filed. For everyone of these contentions defendants have ready a reasonable explanation.

Paraphrasing slightly the language of Justice Mapa in another case concerning a cuentas en participacion (Bourns vs. Carman [1906], 7 Phil., 117), although the evidence upon this point is not entirely satisfactory and although we could find fault with the findings in some respects, it cannot be said, however, that the findings are plainly and manifestly in conflict with the evidence. Such findings should, therefore, be sustained.

Before closing a discussion of the facts, it will do no harm to mention that there is a rule, which has become the corner stone of decisions of the Supreme Court of the Philippine Islands and has even been recognized as such by the Supreme Court of the United States, to this effect: Unless the Supreme Court of the Philippine Islands can fairly say that the findings of the trial court are plainly and manifestly against and contrary to the proof and not supported thereby, such findings will not be reversed. Merely as examples of literally hundreds of decisions which enunciate this principle, let the following be noted:

In Casalla vs. Enage ([1906], 6 Phil., 475) Justice Willard begins the opinion with these words: "We cannot say that the findings of fact contained in the judgment of the court below are plainly and manifestly against the weight of the evidence, and the judgment based upon such findings can not, therefore, be reversed by us." In Santiago vs. Felix, ([1913], 24 Phil., 378) Justice Torres, speaking for the court, said: "Unless the findings of the court below with respect to the facts alleged and proved at the trial are manifestly contrary to the evidence, the appellate court usually accepts the opinion of the trial judge on the questions of fact and does not reverse the judgment appealed from. Such procedure has become established by repeated decisions of this court." In Lim Soco vs. Roxas ([1914], 26 Phil., 609) Justice Moreland presents the principle in this language: "If, where the evidence of the parties is conflicting, the court accepts as true the testimony of the plaintiff and his witness, the finding based thereon is not reversible unless appellants show to the satisfaction of this court that the trial court erred in making the finding. Under such circumstances, where there is nothing in the record which demonstrates that the evidence thus accepted by the trial court as true is unreasonable, or that it is false, or that it suffers from any other legal defects, the findings of that trial court thereon will not be disregarded by us, it having been passed upon and accepted by the court who saw the witnesses, carefully observed their manner of testifying, watched their expression and conduct, and from these observations made up the finding complained of. Such evidence may properly be used to make up the fair preponderance which the law requires as a basis of a judgment upon the facts." (Syllabus). In Baltazar vs. Alberto ([1916] 33 Phil., 336) Justice Trent said: "This court will not reverse a finding of fact by the trial court made upon conflicting testimony and depending largely upon the credibility of witnesses who testified in the presence of the court, unless the court failed to take into consideration some material fact or circumstance or to weigh accurately all of the material facts and circumstances presented to it for consideration." (Syllabus). In De la Rama vs. De la Rama ([1906], 201 U.S., 303) Justice Brown, in handing down the judgment of the United States Supreme Court, said: "There was a difference of opinion between the trial court and the Supreme Court as to the adultery of the plaintiff. This is the principal contested fact in the case. The question really is, whether the finding of the Court of First Instance, that the plaintiff had not committed adultery was so manifestly against the weight of the evidence that the Supreme Court was justified in reversing it. . . .

We have reached the conclusion that there is no such preponderance of evidence in favor of the theory of the plaintiff's guilt, as authorized the Supreme Court to set aside the conclusions of the court below upon the ground that these findings were plainly and manifestly against the weight of the evidence. In this connection it is proper to bear in mind that the trial judge had all these witnesses before him, and doubtless formed his conclusion largely from their appearance on the stand, their manner of giving testimony and their apparent credibility. Under the circumstances we think the Supreme Court should have affirmed rather than reversed the action of the lower court.

The reasons for the rule, as above suggested, are obvious. The trial judge sees and hears the witnesses testify and can observe their manner and demeanor on the witness stand; the appellate court has no such opportunity. The trial judge can minimize, by his own notes and observations, the mistakes caused by the constant necessity for an interpreter to translate from a dialect into English or Spanish, or from one of these languages into the other, with possibly an inaccurate transcription by careless stenographers.

Notwithstanding all this, although a correct judgment of the case at bar depends principally on the credibility of witnesses, and although the appellate court, with only the dry record before it and with the personal equation entirely lacking, must assume that the trial court acted fairly, lawfully, and justly, not the slightest attention is paid in the majority decision to the painstaking findings of an experienced trial judge. One has only to delve into this extensive record for a short time to realize that either the witnesses for the plaintiff are not telling the truth or that the witnesses for the defendants are not telling the truth. It certainly is not proper under these circumstances, for a re-trial of the case to be conducted in the Supreme Court. To repeat, therefore, it is impossible to hold that the findings of the trial court are plainly and manifestly in conflict with the evidence. On the contrary, I find these findings finally supported by proof both oral and documentary.

The trial court did not discuss the legal question surrounding this possible agreement as to a cuentas en participacion. The first question is whether in contemplation of law such a joint account association was formed.

Joint accounts are treated of in a separate title of the Code of Commerce. (Title 2, book 2.) The first article of this title. article 239, provides: "Merchants may have an interest in the transactions of other merchants, contributing thereto the amount of capital they may agree upon, and participating in the favorable or unfavorable results of said transactions in the proportion which may be fixed." Under this article it is believed that the "capital," which a member of a joint account association can bring to the same, may consist of money, of business, of service, or clientage, etc. The law does not require for the contract to be valid that capital in money alone be invested. (Art. 239 in connection with arts. 125, 145, 151, Code of Commerce, and Blanco, Derecho Mercantil, in his commentaries on the latter articles; decision, supreme court of Spain, July 1, 1870.) Here we have the defendants bringing in their customers, rendering personal service, and contributing money. This is substantial compliance with the provisions of the cited article.

The succeeding article, 240 of this title, provides: "Joint accounts shall not be subject, with regard to their formation, to any formality, and may be privately contracted by word or in writing, and their existence may be proved by any of the means accepted in law, in accordance with the provisions of article 51." Article 240 originated from article 355 of the Code of Commerce of 1829. The provisions of the old article were carried forward into the new article with the addition of the concluding clause. Except for this concluding clause, both the old and the new articles merely state in statutory form a rule recognized by the Common Law and the Civil Law to the effect that no particular form of contract is necessary to the creation of a valid partnership or association; it can be oral or written. (Arts. 117,240, Code of Commerce; Fernandez vs. De la Rosa [1903], 1 Phil., 671; Thunga Chui vs. Que Bentec [1903], 2 Phil., 561; Blanco, Derecho Mercantil, Vol. II, p. 440; Poignand vs. Livermore [1827], 5 Mart. N. S. (La.), 324; Buffon vs. Buffon [1861], 49 Me., 108; Sanger vs. French [1898], 157 N. Y., 213.) But the authors of the existing Code of Commerce deemed it of special moment to limit the liberality of the previous Code by connecting article 240 with article 51 of the Code. Article 51 provides:

Commercial contracts shall be valid and serve as the basis of an obligation and cause of action in suits, whatever may be the form or in whatever foreign language they are executed, the class to which they correspond, and the amount involved, provided their existence is proven by some of the means established by the civil law. However, the declaration of witnesses shall not in itself be sufficient to prove the existence of a contract the consideration of which exceeds 1,500 pesetas if no other evidence is adduced.

Telegraphic correspondence shall only be the basis of an obligation between contracting parties who have previously admitted this medium in a written contract, and provided the telegrams fulfill the conventional conditions or tokens which may have been previously fixed by the contracting parties if they agreed thereto.

This article is still in force, except that it must be considered in relation with section 335 of the Code of Civil Procedure. In the present case the joint account exceeds 1,500 pesetas (P300). Its existence is proved by the word of the defendants and by other written evidence. This written evidence consists of various letters written by the plaintiff to the defendants and by certain account books. And, lastly, it should be remembered that the rights of third persons are in no way involved.

In the case of Bourns vs. Carman ([1906], 7 Phil., 117) in a decision which has since been repeatedly followed, a unanimous court held that a partnership constituted in such a manner that its existence was only known to those who had an interest in the same, there being no mutual agreement between the partners, and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business, is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. How do our instant facts plump with this rule? Exactly, with the sole exception that while in Bourns vs. Carman there was no mutual agreement between the partners, in the case at bar there was such as agreement. Otherwise stated, the facts before us make out a stronger case to show a cuentas en participacion than in the decision above cited.

The agreement entered into between the defendants and the plaintiff with reference to the cattle business is therefore found to be the accidental partnership denominated cuentas en participacion and to conform in all respects to the requirements of the law.

What has been said could have no other result than confirmation of the judgment of the lower court. However, admitting that the facts are as found by the trial court and that the law is as just stated, there is nevertheless left to determine whether or not as between the parties to this suit the joint account agreement is valid and enforceable.

A general rule of the Common Law is that if an agreement binds the parties or either of them to do, or if the consideration is to do something opposed to public policy, it is illegal and void. "Public policy" here means that no one can lawfully do that which has a tendency to be injurious to the public. The attitude of the law is above all to give first consideration to the public welfare.

The Civil Law, while not nearly so full in its provisions concerning the protection of trade, is not greatly different in effect. Article 1255 of the Civil Code reads: "The contracting parties may establish any agreements, terms and conditions they may deem advisable, provided they are not contrary to law, morals, or public order." The term "public order," as here used, "does not mean the actual keeping of the peace, but signifies the public weal." (Manresa, Comentarios al Codigo Civil, vol. 8, p. 574.) The nearest equivalent is the Common Law term of "public policy." The manager provisions of our civil law on the subject of commerce, framed for a country still not menaced by the spectre of trusts, and which, with the customary civil law attitude, sanctions the inviolability of practically all contracts should now, after adoption of modern mercantile laws impregnated with American jurisprudence, be amplified by vigorous judicial construction.

The rule in its application invalidates contracts, the purpose of which is to lessen competition or to raise the price of commodities. From the earliest times, it has been considered a serious matter for several to combine to control trade or enhance prices whether or not the conspiracy was carried out or individuals were harmed. A common type of combination has been that of a pool. Here the participants agree to stifle competition between themselves to some extent. Complete monopoly is not essential. In consequence, all arrangements in whatever form which are designed to suppress competition are in restraint of trade. In consequence again, an agreement in unreasonable restraint of trade is void. And since the law does not favor contracts in restraint of trade, the courts must construe them strictly.

The effect of illegality is expressed in the maxims — Ex dolo malo non oritur actio, and In pari delicto potior est conditio defendentis. The law will not aid either party to an illegal contract; it leaves the parties where it finds them. The courts will not act in the division of the spoils in an illegal transaction between associates. A court in such instances does not give validity to the transaction, but merely refuses its aid to undo what the parties have done.

These are, I might say, universal rules, sanctioned alike by the Common Law and the Civil Law, and bulwarked with a multitude of precedents. (See Corpus Juris, pp. 425, 480, 490; 9 Cyc., pp. 523, 546, 559; 27 Cyc., pp. 890 et seq., all citing numerous authorities; Armstrong vs. Toler [1826], 11 Wheat., 258; Chicago etc. Coal Co. vs. People [1905], 214 Ill., 421; U.S. vs. Chesapeake & O. Fuel Co. [1900], 105 Fed., 93; article 1255, Civil Code; article 53, Code of Commerce; decision of the supreme court of Spain, January 15, 1894, etc.)

At bar we have the plaintiff, Faustino Lichauco, a prominent cattle dealer, manager of the cuentas en participacion. As defendants, was have Jose de Guzman, Ramon Soriano, Tomas del Rio, Juan Olabarrietam, and Gregorio Olegario, likewise prominent cattle dealers. This was the combination. Apparently, the only dealers outside the agreement were Barretto & Co. and Lack & Davis. This combination entered into in secrecy was intended to freeze out Barretto & Co. and Lack & Davis. Its purpose was to get a virtual monopoly of the importation and sale of cattle, a prime necessity to the people of these Islands. To accomplish this purpose, the business of the five firms was to be pooled under one head and competition was to be eliminated. That this is the truth is disclosed in unmistakable language by the judgment of the trial court, by the counter-complaints of the defendants, and by the evidence. In the counter-complaints of the defendants it is recited in substance that the defendants and the plaintiff were engaged in separate competitive businesses, and that they combined these enterprises under the form of the joint account association for the purpose of avoiding competition among themselves and to compete against Barretto & Co. and Lack & Davis. The evidence is to the same effect. The defendant Olegario was asked "What was the purpose of the combination?" He answered, "To avoid competition, which was ruinous and to derive profits from the business." The defendant Del Rio was asked, "And the purpose of this contract of April 14 was to avoid competition?" He answered, "To avoid competition and to improve the business." The defendant Soriano, referring to the independent agency established at Pnom Penh by the defendant, stated: "There were really two reasons why we wished to establish this agency in Pnom Penh. The first was in order to avoid the murmurs to the effect that there was a real conspiracy between the cattlemen. In the second place, in order to compare the progress of that agency with the one which we were about to establish. I call it a conspiracy a kind of union between all the cattlemen, which was believed to be for the purpose of 'squeezing' the public, and there was no such purpose, because the meat was sold at reasonable prices. A trust, a combination of all the cattlemen which had for its purpose to raise the prices. And we wished to make the public understand that there was no such thing, not only, in Manila but also abroad, because there was no foundation for believing it to be so, because the meat was sold at a very reasonable price." The witness Dumas in telling of a conversation with plaintiff Lichauco said that Lichauco told him "that it was all right, and associated as all the cattlemen were, competition was not possible." In short, both plaintiffs' and defendants' causes of action are grounded on an agreement in restraint of trade which interferes gravely with the interests of the public, and is, therefore, unreasonable. Now, having fallen out among themselves, these men come to the courts of justice to settle their disputes and to adjudged equity out of illegality. We must refuse. Right on the threshold of monopolistic spoliation, the courts must stand sentinel to guard the rights of the people. As a side remark we can venture the assertion that this leaves the parties in just about the situation in which they should be left.

On the line of discussion followed by the majority, judgment should be affirmed. On the line of discussion just completed, judgment should be entered directing that the plaintiff take nothing from his complaint and that the defendants take nothing from their counter-complaints, without special findings as to costs. I hold to the last view.

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