Paulino v. Tiu

[SEC-SICD * CASE NO. 01-95-4965. May 30, 1996.] NESTOR PAULINO y LIM , petitioner , vs . ELADIO TIU, ET AL. , respondents . D E C I S I O N Petitioner, in his petition, alleges that as early in 1970's he and respondent Eladio Tiu established a business venture for the purpose of profit in the business of sauna bath operation and other related enterprises and by contributing P50,000.00 each, they were able to buy 50% interest of Alladin Sauna Bath. Because of the success of their business venture, petitioner and respondent Eladio Tiu, with the use of their profit were able to acquire other business establishments like the Universal Sauna Bath, Sampaguita Sauna Bath, Luneta Sauna Bath and several other business establishments of the same nature of business and then they decided to formalize their business association. LLphil In October 1990, they registered their partnership with this Commission under the name Paulino and Tiu Company and do business under the style of: (1) Empress Health Palace (2) New Honey Health Palace and (3) Spring Health Palace. Aside from the business mentioned in the articles of partnership, the partnership was also able to establish and operate Accoustic Sauna Bath in Novaliches, Quezon City, and Alexandria Inn in Manila. Sometime in the year 1994 the Spring Health Palace was sold by the partnership and the proceeds of the sale was equally divided between the partners (petitioner and respondent Eladio Tiu). Earlier, when there was a change of administration in the City of Manila, the incumbent Mayor ordered the stoppage of the operation of all sauna bath establishments in the City of Manila which caused the stoppage of the operation of the Alexandria Inn, New Honey Health Palace, Accoustic Sing Along and Accoustic Sauna Bath. The petitioner discovered that there was mismanagement by respondent Eladio Tiu in handling partnership funds, and as such, he demanded the former to straighten out and make in order all records of the partnership more particularly its income and disbursements and to produce the same for proper accounting, review and counter-checking. However, instead of straightening out the records and acceding to his request for production, respondent Eladio Tiu, sometime in December 1994, took and carted away the record of New Honey Sauna Bath, Accoustic Sing Along and Alexandria Inn and, to make matters worst for the partnership, respondent Eladio Tiu, on February 5, 1995, at about 9:30 in the afternoon together with his brother Ramon Tiu and seven (7) other men, thru intimidation and display of force destroyed and disconnected the lighting and telephone facilities, removed and took away equipments and furnitures of Accoustic Sauna Bath, thus, rendering it inoperational. Simultaneously, respondent Eladio Tiu ordered the security guards he posted at the Accoustic Sauna Bath, New Honey Sauna Bath, Accoustic Sing Along and Alexandria Inn not to allow the petitioner to enter the premises, despite the undesirable attitude of respondent, the petitioner still exerted efforts to talk to the respondent Eladio Tiu under amicable atmosphere to save the partnership but to no avail. Since the attitude, actions and actuations of the said respondent have become inequitable, petitioner no longer desires to continue carrying the business, necessitating for the judicial dissolution of the partnership and that respondent be required to produce or submit records of the partnership's assets and funds or to render proper accounting and inventory of records/assets and liabilities of the partnership. In his answer, respondent Eladio Tiu A.K.A. Tony Tiu made both specific admissions and denials. Respondent admitted that he got associated in the business of operating saunas but denies that the petitioner had contributed P50,000.00 to buy 50% interest in the Alladin Sauna Bath for what the petitioner paid was only P10,000.00 and it was he (respondent who shouldered P90,000.00 and Jose Tan P50,000.00. He admits that for a while, their sauna business was successful and earning profit, but it is not true that with the profits of their business, they had acquired such establishments like, Universal Sauna Bath, Sampaguita Sauna Bath and Luneta Sauna Bath for they never came to own the said establishments but only managed and/or operated them. He admits that in October 1990, the partnership Paulino and Tiu Company was registered with this Commission. However, while ostensively the partnership was registered for business purposes and capitalized at P1,000,000.00 with respondent and the petitioner contributing P500,000.00 each, it actually was a business partnership on paper only; that the real intention and agreement between the partners was only to borrow money from the bank to buy a specific property, and neither partners contributed any amount as capitalization of the partnership. So that when the loan application was disapproved by the bank the partners agreed to cancel and/or dissolve the partnership. Respondent denies that it was the partnership Paulino and Tiu Company which acquired the use by way of lease the building in Novaliches, Quezon City, where the Accoustic Sauna Bath is located, and of the building in Manila known as Alexandria Inn, because it was respondent and the petitioner, in their individual capacity, who had leased the said buildings from their owners. He admits that they managed and operated the Alexandria Inn, New Honey Health Palace, Accoustic Sing Along and Accoustic Sauna Bath until their authority to do so was revoked by the respective owners of the said establishments because of loss of confidence due to mismanagement by the petitioner. It is not true that he mismanaged the partnership funds or it was the petitioner who mismanaged the same by making unauthorized withdrawal from the said funds; that is not also true that in December 1994, he took and carried away the records of New Honey Health Palace, Accoustic Sing Along and Alexandria Inn because even before that date they ceased to manage the said establishments. LLphil On March 15, 1996, an Order was issued by Hearing Officer Rogelio Sescon submitting this case for decision. In view of his transfer to the other government office, this case was re-raffled to the undersigned Hearing Officer. The issues to be resolved in this case are the following: 1. Whether or not a ground for the dissolution of the partnership Paulino and Tiu company exists; 2. Whether or not respondent Eladio Tiu A.K.A. Tony Tiu should render an accounting to petitioner; 3. Who are entitled to moral and exemplary damages and attorney's fees. The grounds or causes for the dissolution of a partnership are expressly defined in the Civil Code and the specific provisions of the said code that deal with the same subject are embodied in Article 1830 which states: ARTICLE 1830. Dissolution is caused: (1) Without violation of the agreement by the partners: xxx xxx xxx c. By the express will of all the partners who have not assigned interests or suffered them to be charged for their separate debts, either before or after the termination of any specified term or particular undertaking; xxx xxx xxx Conformably with the aforequoted provision of law and coupled with the fact that the desire of the parties to have the partnership dissolved it appearing that the parties no longer trust each other, there is in effect a dissolution of the partnership by implied mutual consent. Partnership is based on mutual confidence. Thus, it has been held that even if the firm still has three years to run, a letter received by it from one partner withdrawing from the firm served to dissolve the firm. . . . (Lichauco et al., vs. Soriano, G.R. No. 8450, January 29, 1914, 26 Phil. 593). Anent the issue of accounting, the duty to account is based on the fiduciary relations between the partners of trust and confidence which must not be abused or used to personal advantage. Under the law, the right to demand the accounting accrues at the date of the dissolution of the partnership in the absence of any contrary agreement. In the instant case, the accounting and inventory have already been rendered by the respondent (Exh. I-L), hence this issue is now academic. As regards the claim for damages and attorney's fees, we find no compelling reason to award the same. Awards of attorney's fees and damages are left to the sound discretion of the court . . . (PAL vs. CA, G.R. No. 50504-05, August 13, 1990). WHEREFORE, considering the foregoing, judgment is hereby rendered ordering the dissolution of the partnership Paulino Tiu and Company. For this purpose, of winding up the affairs of the partnership of Paulino and Tiu Company, respondent Eladio Tiu A.K.A. Tony Tiu is hereby appointed as liquidator. Let copy of this decision be furnished the Records Division of the Administrative and Finance Department for inclusion in the partnership file of Paulino and Tiu Company. LLphil NO COSTS. SO ORDERED. (SGD.) ENRIQUE L. FLORES, JR. Hearing Officer