E. WALCH, ASSIGNEE OF THE INSOLVENT ESTATE OF LIM HAI TAO (ALIAS GUAN HOO), PLAINTIFF AND APPELLANT, VS. LIM CHAY SENG, DEFENDANT AND APPELLEE.

On December 26, 1923, a limited copartnership was formed between Lim
Hai Tao and the defendant Lim Chay Seng under the firm name of Lim Hai
Tao, S. en C, and doing business under the Chinese name of Guan Hoo,
which “partnership was duly registered in the Bureau of Commerce and
Industry on January 2, 1924. According to its articles the general
partner was Lim Hai Tao with a capital of P20,000 and the limited
partner was Lim Chay Seng with a capital of P40,000, thereby making the
sum of P60,000 as the total capital of the partnership. The term of the
partnership was for an indefinite period, but it could be dissolved by
agreement of both parties. Lim Hai Tao was the manager of the business
and Lim Chay Seng had no intervention in its management with the
exception of his right to examine the books of the partnership during
the first days of January of each year.

According to the
balance sheet of the partnership for the year ending December 31, 1929,
which was made on January 5, 1930 and duly signed by Lim Hai Tao, its
assets amounted to P130,723.14 after reducing 45 per cent from its
collectible credits, while its obligations totalled P94,435.43. In
pursuance with the same balance sheet, the participation of Lim Chay
Seng in the capital of the partnership was P24,191.81 while his credit
against the partnership was P6,937.46.

At the beginning of
January, 1930, one Liong Kee Ho proposed to buy Lim Chay Seng’s
participation in the business of the partnership. So on January 6,
1930, a written agreement was entered into by and between Lim Hai Tao
and Lim Chay Seng by virtue of which the latter retired and separated
from the partnership effective on the same date, which agreement was
likewise duly filed for registry in the Bureau of Commerce and Industry
on January 9, 1930. Before the execution of this agreement of
separation, Liong Kee Ho delivered to Lim Hai Tao the sum of P31,129.27
to be paid to Lim Chay Seng as purchase price of his participation in
the business of the partnership. This transaction appears in the books
of the partnership as a loan, but this circumstance was explained by
Lim Chay Seng in that at the time of the delivery of the money to Lim
Hai Tao by Liong Kee Ho, the deed of separation had not yet been
formally executed. But when said deed was made, the aforesaid sum of
P31,129.27 was paid to Lim Chay Seng on the same day, January 6, 1930.
Of this amount, P24,191.81 corresponded to the participation of Lim
Chay Seng in the partnership capital and P6,937.36 to his credit
against the partnership. This transaction likewise appears in the books
of the partnership.

On June 14, 1930; an insolvency
proceeding was instituted in the Court of First Instance of Manila by
his creditors named Menzi & Co., Inc., Otto Gmur, Inc., and Pacific
Commercial Co., all of whom were duly represented by Attorney Simeon R.
Cruz, against Lim Hai Tao, “doing Jbusiness individually and under the
name and style of Guan Hoo & Co.” Lim Hai Tao was duly adjudged
insolvent by the court and the plaintiff, E. Walch, was elected by the
creditors as assignee of the insolvent estate. Plaintiff herein, in his
aforesaid capacity as assignee of the insolvent estate of Lim Hai Tao (alias
Guan Hoo), has sued the defendant Lim Chay Seng for the purpose of
recovering from him the sum of P24,191.81 which was part of the money
paid to him by Liong Kee Ho for his participation in the business of
the partnership Lim Hai Tao, S. en C. (alias Guan Hoo).
Plaintiff predicates his case on the theory that the payment of the
aforesaid sum to Lim Chay Seng was in fraud of the creditors of both
the partnership and Lim Hai Tao. To this complaint, the defendant Lim
Chay Seng interposed several defenses.

After trial in the
Court of First Instance of Manila judgment was rendered in favor of
defendant. Plaintiff duly excepted, moved for new trial, and upon said
motion being denied excepted and perfected this appeal.

The
principal defenses relied upon by appellee are the facts that the
copartnership has never been declared insolvent, that the transactions
of the present creditors were actually with the individual Lim Hai Tao
instead of with the copartnership, and that as the money which the
defendant received was paid in by a third party for defendant’s
interest in the copartnership the assets of the copartnership suffered
no diminution and therefore the creditors of the firm were not
injuriously affected by that transaction.

The trial court
based its decision on the first and second grounds. The second ground
is more a question of fact than of law and a proper exposition of the
question would require a lengthy opinion. No matter what conclusion we
might reach on the second defense, we are convinced that recovery can
not be had in view of the first and third defenses above-mentioned. The
judgment appealed from is therefore affirmed with costs against the
appellant. So ordered.

Villamor, Villa-Real, Vickers, and Imperial, JJ., concur.