Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 152262               February 15, 2012

FELIMON MANGUIOB, Petitioner,
vs.
JUDGE PAUL T. ARCANGEL, RTC, BRANCH 12, DAVAO CITY and ALEJANDRA VELASCO, Respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari1 seeking to modify the August 31, 2001 Decision2 and January 25, 2002 Resolution3 of the Court of Appeals in CA-G.R. CV No. 64147, which affirmed with modification the March 5, 1999 Decision4 of the Regional Trial Court (RTC) of Davao City, Branch 12 in Civil Case No. 23,313-94.

On May 3, 1994, Felimon Manguiob (Manguiob) and Alejandra Velasco (Velasco) entered into a partnership under the name of "Baculin Enterprises," for the purchase and sale of agricultural and forest products, and the operation of a general merchandise store at Baculin, Baganga, Davao Oriental.5 Velasco provided the capital requirements of the partnership, including the warehouse and the store needed for the business, while Manguiob, being the industrial partner, managed the partnership's operations.6

On September 14, 1994, the partnership ceased to operate and was considered dissolved for all intents and purposes.7

On December 12, 1994, Velasco filed a Complaint8 for Sum of Money, Accounting, and Damages against Manguiob, before the RTC, Branch 12 of Davao City. Velasco alleged that while Baculin Enterprises appeared to have flourished on record, the actual cash on hand, which was mostly with Manguiob, did not reflect such financial profitability. Thus, Velasco decided to dissolve the partnership, as allowed in their Articles of Partnership,9 and had the records of the partnership audited. Velasco claimed that her fears were confirmed when the audit report showed that Baculin Enterprises made a net profit of at least ₱ 252,673.50 from May 1994 to September 14, 1994. According to Velasco, she was entitled to 60% of this, amounting to ₱ 151,604.10, while Manguiob was entitled to 40%, equivalent to ₱ 101,069.40. Velasco also asked that Manguiob return the amount of ₱ 203,156.30, representing the balance of her ₱ 320,000.00 capital investment, as Manguiob returned only the amount of ₱ 116,843.20 to her. Velasco averred that Manguiob not only refused to return the above amounts, but also refused to make an accounting of his management of Baculin Enterprises. Velasco further alleged that Manguiob, in bad faith, had used the partnership funds to start his own buy and sell business even before their partnership was dissolved. Because of this, Velasco prayed for the trial court to direct Manguiob to do the following:

1. To pay plaintiff the amount of ₱ 354,760.00 as plaintiff's contribution and share in the profits of the partnership;

2. To pay plaintiff the amount of 10% a month of ₱ 354,760.00 as unrealized profit of the partnership;

3. To account for the money of the partnership used for the personal business of the defendant;

4. To pay plaintiff the amount of ₱ 25,000.00 as attorney's fees. 10

Velasco likewise prayed for the trial court to grant her such other relief as may be warranted by the circumstances.11

Manguiob, in his Answer,12 denied having received ₱ 320,000.00 from Velasco and alleged that she only infused the sum of ₱ 200,000.00 into their partnership. He contended that he did not have possession of the partnership's cash, and that it was Velasco who had received the proceeds of the deliveries he made to Interco Davao as shown by the various receipts13 attached to his Answer. Manguiob also averred that if the records of Baculin Enterprises had already been audited, then that audit was not based on the records he had submitted to Velasco. Manguiob further claimed that it was not then known if the partnership had gained profit, that there was no basis for the return of Velasco's capital investment, and that the amount of ₱ 116,843.20 was not part of Velasco's capital investment but was the total amount of the remittances he made to Velasco from the proceeds of his deliveries. Manguiob said Velasco's monetary claim had no basis especially since she was practically in control of the partnership's finances.14

On October 18, 1995, Velasco and Manguiob jointly submitted to the RTC a "Partial Stipulation of Facts and Statement of the Issues,"15 with the pertinent section quoted as follows:

The Facts

1. That, the plaintiff and defendant established a Partnership on May 3, 1994 to engage in the Buy and Sell of Agricultural products and operation of a General Merchandise Store at Baculin, Baganga, Davao Oriental, and for which purpose the parties executed an Articles of Partnership, a copy of which is attached to the complaint as Annex "A" thereof;

2. That, the partnership has ceased to operate and [for] all intents and purposes considered dissolved as of September 14, 1994;

3. That, as per records submitted by the defendant, from May 8, 1994 to September 9, 1994 the amount of copra purchased is ₱ 1,261,418.45 as shown in the statement, a copy of which is hereto attached or Annex "A" hereof;

4. That, from May 31, 1994 up to September 10, 1994, the total copra sales amounted to ₱ 1,430,904.40, net of hauling expenses, as shown in the statement attached hereto and marked as Annex "B" hereof;

5. That, from May 1994 to September 14, 1994 the total sales of General Merchandise as per records of defendant is ₱ 930,640.50 as shown in the statement hereto attached as Annex "C" hereof;

The Issues

1. How much was the capital contribution of plaintiff in the Partnership?

2. How much of the proceeds from the sales of copra from May 31, 1994 to August 24, 1994 were returned by plaintiff to defendant[?]

3. How much net profit, if any, was realized by the Partnership during its operation from May 1994 up to September 14, 1994[?]

4. Are the parties entitled to their respective claims for [damages][?]

On March 5, 1999, the RTC rendered its Decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to the former the sum of ₱ 498,245.52, as the principal account; plus interest thereon at the rate of 12% per annum from September 15, 1994 until the full account is paid, the sum of ₱ 25,000.00 as attorney's fees and the costs of suit.

The other claims of the parties are hereby denied.16

The RTC found that the capital contributed by Velasco to the partnership was ₱ 400,000.00, as established by clear, convincing, and competent evidence.17 Anent the second issue, the RTC averred that while Velasco may have received the proceeds of the sales of copra from May 31, 1994 to August 24, 1994, such proceeds were returned to Manguiob to be used in the purchase of more copra and other merchandise for their business, as evidenced by receipts18 signed by Manguiob or his wife. Thus, the RTC said that "except for the proceeds of the sales of copra on September 10, 1994, in the amount of ₱ 116,954.40, all the proceeds of the sales of copra were either retained by, or returned to, [Manguiob]."19 As for the net profit earned by the partnership, the RTC proclaimed that it was ₱ 191,999.98, as declared by Manguiob's own accountant. Thus, the RTC ruled that Velasco was entitled to the amount of ₱ 498,245.52 representing her capital contribution less the proceeds from the copra sales made on September 10, 1994, which she retained, plus her 60% share in the net profit.20

Manguiob appealed this decision to the Court of Appeals, assigning the following errors:

I. THAT THE LOWER COURT GRAVELY ERRED IN ORDERING DEFENDANT TO PAY PLAINTIFF THE SUM OF ₱ 498,245.52 AS THE PROCEEDS OF COPRA SALES WHICH THE PLAINTIFF HAD TAKEN FROM DEFENDANT AMOUNTED TO ₱ 453,859.10 AND THAT THE NET INCOME OF THE PARTNERSHIP OF THE PLAINTIFF AND DEFENDANT AMOUNTED TO ₱ 191,999.88 TO WHICH PLAINTIFF'S SHARE IS 60% AND THE SHARE OF THE DEFENDANT FROM SAID NET INCOME IS 40% AND, FURTHERMORE, THE TOTAL ASSETS IN THE POSSESSION OF THE PLAINTIFF AT THE CLOSURE OF THE BUSINESS OF PLAINTIFF AND DEFENDANT, THE BACULIN MARKETING AS OF SEPTEMBER 14, 1994 AND AVAILABLE FOR DISTRIBUTION, AMOUNTED TO ₱ 215,559.06;

II. THAT THE LOWER COURT GRAVELY ERRED IN ORDERING DEFENDANT TO PAY PLAINTIFF THE INTEREST ON THE ALLEGED PRINCIPAL ACCOUNT OF ₱ 498,245.52 AT THE RATE OF 12% PER ANNUM FROM SEPTEMBER 15, 1994 UNTIL THE FULL ACCOUNT IS PAID, AS THERE IS NO WRITTEN STIPULATION AS TO THE PAYMENT OF INTEREST IN ACCORDANCE WITH ARTICLE 1956 OF THE NEW CIVIL CODE OF THE PHILIPPINES; AND

III. THAT THE LOWER COURT GRAVELY ERRED IN ORDERING DEFENDANT TO PAY PLAINTIFF THE [AMOUNT] OF ₱ 25,000.00 AS ATTORNEY'S FEES, AS NO RIGHT TO SUCH FEE ACCRUE IN THE CASE AT BAR IN ACCORDANCE WITH ART. 2208 OF THE NEW CIVIL CODE OF THE PHILIPPINES.21

On August 31, 2001, the Court of Appeals modified the RTC's decision with respect to the amount due Velasco, the rate of interest imposable, and the award of attorney's fees, to wit:

IN THE LIGHT OF ALL THE FOREGOING, the Decision appealed from is AFFIRMED with the following modifications:

(1) The Appellant is obliged to pay to Appellee the amount of ₱ 401,640.97 with interest thereon at the rate of 6% per annum computed from the time the Court a quo's Decision and, an interest at the rate of 12 per annum from the time of the finality of this Decision up to the time that the obligation of the Appellant to pay Appellee is paid in full:

(2) The award of attorney's fees is deleted.22

The Court of Appeals, after analyzing the records, concluded that while Velasco withheld the total net amount of ₱ 113,558.95, Manguiob received and retained a total of ₱ 432,067.05, inclusive of the ₱ 400,000.00 capital infused by Velasco. The Court of Appeals agreed with the findings of the RTC that the partnership generated a profit of ₱ 191,999.98, and from this, held that Velasco was entitled to 60% or ₱ 115,199.92, according to her agreement with Manguiob. The Court of Appeals said that since Velasco retained ₱ 113,558.95 out of the ₱ 115,199.92 due her, Manguiob should only remit to her the difference of ₱ 1,640.97, in addition to her ₱ 400,000.00 capital investment.23

On October 11, 2001, Manguiob moved24 for the Court of Appeals to reconsider its Decision. This, however, was denied in a Resolution dated January 25, 2002, to wit:

After due consideration of the "Motion for Reconsideration" of the Appellant and the "Comment" thereon of the Appellee, We find said motion barren of merit and hereby deny the same.25

Manguiob is now positing the following assignment of errors:

(1)

THE HONORABLE 13th DIVISION OF THE COURT OF APPEALS GRAVELY AND SERIOUSLY ERRED IN NOT CORRECTLY CONSIDERING IN THE ASSAILED DECISION, THE NON-CASH ASSETS OF BACULIN ( MARKETING ) ENTERPRISE AS OF SEPTEMBER 14, 1994 AND THE JOINT VALUATION IN THE AMOUNT OF ₱ 215,559.06 PLACED ON THE SAID NON-CASH ASSETS BY THE CERTIFIED PUBLIC ACCOUNTANTS OF THE PETITIONER AND THE PRIVATE RESPONDENT WHICH WERE DETERMINED BY BOTH ACCOUNTANTS IN COMPLIANCE WITH ORDERS OF THE HONORABLE COURT A QUO, THE REGIONAL TRIAL COURT, 11th JUDICIAL REGION, BRANCH 12, DAVAO CITY.

(2)

THE HONORABLE 13th DIVISION OF THE COURT OF APPEALS SERIOUSLY ERRED IN NOT CONSIDERING THE NON-CASH ASSETS OF BACULIN ( MARKETING ) ENTERPRISE VALUED AT ₱ 215,559.06 WHICH HAS BEEN IN THE CUSTODY AND CONTROL OF THE PRIVATE RESPONDENT SINCE SEPTEMBER 14, 1994 AS RETAINED BY THE PRIVATE RESPONDENT HERSELF.26

Manguiob says he does not wish to further challenge the Court of Appeals' computation, but asks that the value of the non-cash assets, as determined by the parties' accountants, pursuant to the RTC's orders,27 be deducted from the amount he is obligated to return to Velasco, to wit:

Obligation of the petitioner per
Court of Appeals Decision		 ₱ 401,640.97
Less: Non Cash assets in the custody
and control of Alejandra Velasco		 ₱ 215,559.06
Obligations to be paid by the petitioner to
private respondent as sought by this petition		 ₱ 186,081.9128

Velasco, in her Comment,29 says that this petition is without merit and should be dismissed. She avers that while Manguiob claims that he is before us on a question of law, i.e., the construction or interpretation of the documentary evidence submitted before the RTC, he is in fact referring to matters of fact, which he was unable to establish with competent proof during the trial of the case. Velasco further argues that the rulings of the lower courts are with respect to her capital contribution and no evidence was presented to prove the existence of any asset aside from the partnership's net income of ₱ 191,999.98.

Discussion

The crux of the present controversy boils down to the role of the value of the non-cash assets in the determination of how much Manguiob should return to Velasco.

Both the RTC and the Court of Appeals found that a partnership had indeed existed between Manguiob and Velasco, and that it was dissolved, upon Velasco's option, on September 14, 1994. The lower courts ordered Manguiob to return to Velasco her capital contribution of ₱ 400,000.00, as established during the trial and evidenced by receipts signed by Manguiob or his wife; and the amount of ₱ 115,199.92, representing her 60% share in the net profits, based on the income statement prepared by the parties' accountants, to wit:

BACULIN MARKETING
AMENDED INCOME STATEMENT
For the Period May 8, 1994 to
September 14, 1994

Exh. "B"

-----------------

Sales:

Copra (Net of Hauling), Sch. 4 ₱ 1,430,904.40

General Merchandise, Sch. 7 930,640.50

Charcoal -
--------------------
T o t a l ₱ 2,361,544.90
Less: Cost of Sales:
Purchases:

Copra, Sch. 2 ₱ 1,261,418.45

Gen. Mdse., Sch. 5 880,243.08

Charcoal 21,143.60
-----------------
Total Goods Available 2,162,805.13
Less: Inventory, end

Gen. Mdse. ₱ 41,120.71

Charcoal 21,143.60
-----------------		 62,264.31
-----------------		 2,100,540.82
-----------------
Gross Profit ₱ 261,004.08
Less: Operating Expenses: (see sch. 5)

Subsistence ₱ 9,083.00

Miscellaneous 13,503.50

Truck repairs 21,894.20

Freight & other expenses 7,332.50

Salaries and wages 12,550.00

Inauguration expenses 4,641.00
-----------------		 69,004.02
-----------------
Net Income, to capital ₱ 191,999.88
===============		30

Aside from the foregoing, the parties' accountants also submitted to the RTC a list of the non-cash assets of the partnership as of September 14, 1994, its date of dissolution:

BACULIN MARKETING
LIST OF NON-CASH ASSETS
(F. Manguiob's Report)

Sch. 8

Particulars Amount
Accounts Receivable ₱ 88,340.50
Inventories:

General Mdse. ₱ 41,120.71

Charcoal 21,143.60 62,264.31
-----------------
Refundable deposit 30,265.00
Bodega equipment and facilities 34,689.25
-----------------
Total ₱ 215,559.06
===========		31

Neither party questions the figures jointly prepared by their respective accountants. Manguiob, nonetheless, insists that the value of the non-cash assets, as determined by their accountants, should be deducted from the amount he was adjudged to pay Velasco. The lower courts, however, did not rule on how these non-cash assets should be distributed between Velasco and Manguiob.

The issue raised by Manguiob is clearly a question of fact, which not only requires a review of the evidence already presented, but a reception of new evidence as well. A perusal of the records of the case shows that no evidence was introduced or received for the purpose of ascertaining the actual status of the non-cash assets despite the parties' admission of their existence, and their conformity to the values assigned to them by their accountants. A proper resolution on the distribution of the non-cash assets obviously necessitates, inter alia, a determination of the proceeds or whereabouts of these non-cash assets.

This issue, unfortunately, is factual matter, which is beyond the province of a Rule 45 petition, as expressed under the version of Section 1, Rule 45 in force at the time Manguiob filed this petition to wit:

Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.32

The distinction between a question of law and one of fact has long been settled. In Binay v. Odeña33 we said:

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.34

Thus, since this Court is required to review and evaluate the evidence on record, and even receive new evidence to decide the issue of whether the value of the non-cash assets should be deducted from what Manguiob was adjudged to pay Velasco, the issue then is definitely one of fact, 35 and one that is impermissible, as this Court is not a trier of facts.

Furthermore, records show that this issue was not even submitted by the parties during the trial of the case despite their conflicting allegations on these assets' condition. In Keng Hua Paper Products Co., Inc. v. Court of Appeals36 this Court held:

[A]n issue raised for the first time on appeal and not raised timely in the proceedings in the lower court is barred by estoppel. Questions raised on appeal must be within the issues framed by the parties and, consequently, issues not raised in the trial court cannot be raised for the first time on appeal.37

It is settled that issues not raised timely in the proceedings before the trial court cannot be considered on review or appeal as to do so would be to trample on the basic rules of fair play, justice, and due process.38

However, this Court noticed that while both lower courts agreed on the values and figures the parties' accountants submitted to the RTC, they differed in the amount supposedly retained by Velasco, and thus eventually deducted from the capital investment Manguiob was ordered to return to her. This Court is inclined to agree with the RTC's computation, except for the total amount, which is erroneously higher by ₱ 100,000.00, to wit:

60% of ₱ 191,999.88 is ₱ 115,199.92
Capital Contribution ---- ₱ 400,000.00
Total ---- ₱ 515,199.92
Less Money in Plaintiff's
hands for sale of copra
on September 10, 1994 ----		 ₱ 116,954.40
Net amount due to ----
₱ 498,245.52		 39

Plaintiff

The above values and figures, save for the erroneous total, were amply supported by the evidence on record. Moreover, Velasco herself, on several occasions, admitted that she retained the amount of ₱ 116,954.40, contrary to the Court of Appeals' finding that she only withheld the amount of ₱ 113,558.95.40

Exhibit C, Velasco's own documentary evidence which she verified and signed, showed that she had retained the amount of ₱ 116,954.40.

There is likewise an admission in Velasco's memorandum submitted to the RTC that she had in her possession the amount of ₱ 116,954.40.

Thus, using the same figures that were definitely determined during the trial, the amount due Velasco, from her capital contribution and share in the net profits should be computed as follows:

₱ 400,000.00 Velasco's capital contribution
+ ₱ 115,199.92 Velasco's 60% share in the net income
- ₱ 116,954.40 the proceeds of the sales of copra on September 10, 1994, which Velasco retained (₱ 56,362.40 + ₱ 60,592.00)
= ₱ 398,245.52		 Amount due Velasco

As for the unchallenged rulings of the Court of Appeals, including the deletion of the award of attorney's fees, we find no reason to disturb the same.1âwphi1

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 64147 is hereby AFFIRMED with the MODIFICATION that petitioner is obliged to pay private respondent the amount of ₱ 398,245.52 representing the balance of the latter's capital contribution plus her 60% share in the net profits of Baculin Enterprises.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

LUCAS P. BERSAMIN
Associate Justice		 MARIANO C. DEL CASTILLO
Associate Justice

MARTIN S. VILLARAMA, JR.
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

RENATO C. CORONA
Chief Justice


Footnotes

1 Under Rule 45 of the 1997 Rules of Court.

2 Rollo, pp. 50-62; penned by Associate Justice Romeo J. Callejo, Sr. with Associate Justices Renato C. Dacudao and Perlita J. Tria Tirona, concurring.

3 Id. at 64.

4 Id. at 40-49.

5 Id. at 79.

6 Id. at 50.

7 Id. at 79.

8 Id. at 65-71.

9 Records, pp. 84-85.

10 Rollo, p. 68.

11 Id.

12 Id. at 72-76.

13 Records, pp. 20-33.

14 Rollo, pp. 72-75.

15 Id. at 79-80.

16 Id. at 49.

17 Id. at 45.

18 Records, pp. 91-95.

19 Rollo, p. 47.

20 Id. at 46-49.

21 CA rollo, pp. 23-24.

22 Rollo, p. 62.

23 Id. at 60.

24 CA rollo, pp. 80-83.

25 Rollo, p. 64.

26 Id. at 24.

27 Id. at 77-78.

28 Id. at 23.

29 Id. at 114-120.

30 Id. at 82.

31 Id. at 91.

32 Although Section 1 of Rule 45 has been amended under A.M. No. 07-7-12-SC, effective December 4, 2007, the new text still requires that the petition shall only raise questions of law, viz:

Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition may include an application for a writ of preliminary injunction or other provisional remedies and shall raise only questions of law, which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified motion filed in the same action or proceeding at any time during its pendency.

33 G.R. No. 163683, June 8, 2007, 524 SCRA 248.

34 Id. at 255-256.

35 Hko Ah Pao v. Ting, G.R. No. 153476, September 27, 2006, 503 SCRA 551, 559.

36 349 Phil. 925 (1998).

37 Id. at 937.

38 Cruz v. Fernando, 513 Phil. 280, 291 (2005).

39 Records, pp. 177-178.

40 See TSN, February 12, 1996, pp. 27-29.
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