Leopoldo Criado vs Gutierrez Hermanos

written by Howard

G.R. No. L-12371 – 37 Phil. 883 – Civil Law – Partnership – Share of Losses by an Industrial Partner – Estoppel – Liquidation 

In January 1900, Placido Gutierrez de Celis (37%), Miguel Gutierrez de Celis (37%), Miguel Alfonso (16%), Daniel Perez (5%), and Leopoldo Criado (5%) formed a partnership called Gutierrez Hermanos. Perez and Criado were the industrialist partners while the other three are the capitalist partners. **The percentages after their names denote their share in the profit.

In 1903, with the death of one partner (Alfonso), they agreed to liquidate the partnership. In the liquidation, it was put into record in the partnership’s books that Criado only had a balance of P25,. Criado immediately protested as he claimed that his balance in the partnership should be P55,, but Miguel persuaded Criado not to protest anymore as he made assurances that the difference shall be paid later on by the new partnership that they will be forming. Miguel convinced Criado to make it appear that the partnership has incurred losses from 1900 to 1903 and that his share in the losses, based on Criado’s 5% share in profits is deducted from his actual P55k+ balance. Miguel said they have to do this in order to avoid some creditor claims against them, among others. Incidentally, Alfonso also owe P1k from Criado but Miguel assured that the same shall be paid by the new partnership.

So in 1904, a new partnership was formed involving the remaining 4 original partners. They still called themselves Hermanos Guttierez. This time they are all capitalist partners and Criado contributed his P25, from the first phase of the partnership. The second phase of the partnership went on until such time that Criado got tired of it because Miguel never made good his word to reimburse him of his remaining balance from the first phase of the partnership.

And so a liquidation was made and in December 1911, Criado left the firm. Miguel requested Criado to render service in lieu of the liquidation which Criado complied until the partnership was fully liquidated in March 1912.

ISSUES:

or not Criado is estopped from claiming his balance from the first phase of the partnership considering that he did sign the new partnership agreement which indicated that the remaining balance he’s bringing in to the second phase from the first phase of the partnership was only P25k+.

2. Whether or not Criado is liable for losses.

3. Whether or not Criado should be compensated for his services in the liquidation.

HELD:

  1. No. There is no estoppel. It cannot be held that Criado was in estoppel immediately after having signed the partnership contract of 1904, in which it appears that he brought into the new firm, as capital of his own, P25,, nor may it be said that he was not entitled to claim the rest of his assets in the firm during the first period from 1900 to 1903, to wit, his actual balance P55, less simulated balance in lieu of Miguel’s assurances of P25, = P30,. Criado merely relied on the repeated promises of Miguel hence estoppel cannot be setup against him.
  2. No. He is an industrialist partner. Hence, this reinforces number (1).
  3. Yes. At the time of the last liquidation, Criado was not a managing partner. In the Code of Commerce, managing partners are the ones obliged to be in charge of the liquidation. Criado without being obliged took charge in the liquidation and this was even upon the request of Miguel himself hence, Criado is entitled to compensation (which as he claims is P1k per month).

Gutierrez Hermanos’ Cross Claim

The firm made a cross claim whereby it alleged that at one time when Criado was a managing partner, he delivered goods and provided loans to certain persons without any security for said goods and loans. And because of such, the firm incurred damage.

The above claim by the firm against Criado is bereft of merit. According to the law, in order that the partner at fault may be compelled to pay an indemnity, it is indispensable, in the first, place, that his conduct shall have caused some damage to the partnership, and, in the second place, that his conduct should not have been expressly or impliedly ratified by the other partners or the manager of the partnership. Hermanos was not able to prove such damages by sufficient evidence.

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