De la Rosa v Ortega Go‐Cotay No. 24243; 15 January 1926; Gancayco, J. FACTS: 1. Go Lio and Vicente Go‐Sengco formed a society for the purchase and sale of articles of articles of commerce of commerce and opened a store in San Isidro, Nueva Ecija 2. Go Lio went to China and died there leaving a widow and 3 children, one of whom of whom came to the Philippines and filed a petition for the appointment of Ildefonso of Ildefonso de la Rosa (PLAINTIFF) as administrator of the of the intestate estate of his of his deceased father. The petition was granted by the CFI of Nueva of Nueva Ecija 3. Vicente Go‐Sengco also died and his son Enrique Ortega Go Catay (DEFENDANT) took charge of the of the business 4. Enrique Ortega refused to wind up the business and deliver to De la Rosa the portion corresponding to the deceased Go Lio. He alleged that the business is his exclusively 5. This prompted De La Rosa to file a complaint against Enrique Ortega. De La Rosa also prayed that he be appointed as receiver for the property of the of the partnership. Defendant opposed the prayer. 6. The CFI appointed 3 commissioners to make an inventory, liquidate and determine the half belonging half belonging to the plaintiff. The commissioners submitted a report showing that the business showed net profits from 1913‐1917 amounting to P25,038.70 7. August 3, 1918: In order to prevent Justo Cabo‐Chan (one of the of the commissioners) from assuming the position of receiver pursuant to the order of the of the court, the defendant filed a bond in the sum of P10,000. of P10,000. 8. In view of the of the appeal taken by defendant, the parties agreed to suspend the liquidation ordered by the lower court and the defendant was authorized to continue in the possession of the of the property in litigation after giving a P25,000 bond cancelling the P10,000 bond. 9. After trial, the lower court adopted the report made by Justo Cabo‐Chan which showed that the business suffered a net loss amounting to P89,099.22 and rejected the report of the of the two other commissioners. 10. Because of the of the loss, the plaintiff had plaintiff had nothing to recover from defendant as there was no profit to divide. The reports showed the status of the of the business from 1919‐1922 (Loses were incurred 1918 onwards) ISSUE: WON the loss should be borne by the partnership – partnership – NO. The defendant alone should bear the loss HELD: Defendant should pay the plaintiff P30,299.14 plaintiff P30,299.14 as his share before August 3, 1918. RATIO: 1. In August 3, 1918, the defendant assumed complete responsibility for the business when he objected to the appointment of a of a receiver and even giving a bond. a) From that point forward, his acts were no longer that of a of a managing partner binding against the partnership. He became a receiver whose authority is provided for in Section 175 of the of the Code of Civil of Civil Procedure b) According to the Code, a receiver has no right to carry on and conduct a business unless he is authorized or directed by the court to do so. His role is to take and preserve the property. c) Since he was not authorized by the court to continue the business of the of the partnership in liquidation, he is personally liable for the losses that the business had sustained after he became a receiver d) The partnership therefore is not liable for the acts of the of the defendant in connection with the management of the business after August 3, 1918. 2. The court added the Capital of the of the partnership and profits until the first semester of 1918 of 1918 to amount to P60,598.28. One half of half of the the total is P30,299.14 which pertains to the estate of Go of Go Lio.
SIDE NOTES: 3. The assets of the of the partnership, as well as the value of its of its property, could not be determined when making the liquidation because there was no inventory hence it was not possible to determine the capital of the of the partnership. The plaintiff however plaintiff however agreed to consider the initial capital as the capital at the time of winding of winding up of the of the business.
4.
It was also difficult for the court to determine net profits earlier than 1912 because some of the books of account were destroyed by anay. The SC computed the net profits based on the average net profit in 1913 onwards.
