In the case of Lilibeth Sunga-Chan and Cecilia Sunga vs. The Honorable Court of Appeals, the Supreme Court addressed the proper computation of claims following the dissolution of a partnership. The Court clarified that while interest is applicable on unremitted profits from a partnership’s operations, interest on the value of partnership assets is only applicable once the exact share is reasonably determined through an accounting process. This decision provides guidelines on how to calculate what a partner is owed upon dissolution, specifically when assets are not easily valued.

Shellite Saga: How Do You Divide a Partnership When Trust Divides?

This case originated from a partnership formed in 1977 between Lamberto T. Chua and Jacinto Sunga to operate a liquefied petroleum gas business under the name Shellite Gas Appliance Center. While registered as a sole proprietorship under Jacinto Sunga, the agreement stipulated an equal division of net profits. Upon Jacinto’s death in 1989, his widow, Cecilia Sunga, and daughter, Lilibeth Sunga-Chan, continued the business without Chua’s consent, leading to a dispute over the winding up of the partnership affairs.

After repeated demands for accounting and winding up were ignored, Chua filed a complaint in 1992, seeking the accounting, appraisal, and recovery of his shares. The Regional Trial Court (RTC) ruled in favor of Chua, ordering the Sungas to provide an accounting of Shellite’s properties, assets, income, and profits since Jacinto’s death. The RTC’s decision was affirmed by the Court of Appeals (CA) and the Supreme Court (SC). However, disputes arose during the execution of the judgment, particularly regarding the calculation of Chua’s claims, including interest on various assets and profits.

The primary contention centered around whether the claims were liquidated or unliquidated. The petitioners argued that claims like goodwill and monthly profits could not have interest imposed. The court distinguished between loans or forbearance of money, where a 12% interest rate is applicable, and transactions involving indemnities for damages, where a 6% interest rate applies. The SC clarified the concept of forbearance, defining it as a contractual obligation where a lender refrains from requiring repayment of a debt.

The court turned to Eastern Shipping Lines, Inc. v. Court of Appeals, a landmark case, synthesized rules on imposing interest: 12% per annum applies only to loans and forbearance. For breach of obligations, where damages are applicable, it is 6% per annum. Importantly, for obligations with unliquidated claims, like the value of partnership assets in this case, interest does not accrue until the claim can be established with reasonable certainty. Only after the RTC’s resolution approving the assets inventory and accounting report can Chua’s share be seen as liquidated and ready to impose interest. For claims such as earned but unremitted profits, a 6% interest applied from the date of the RTC decision until its finality, then 12% until full payment.

Concerning the petitioners’ liability, the SC determined that their obligation to Chua was solidary due to the nature of their actions. The continued operation and management of Shellite against Chua’s wishes created a situation where their liabilities were inseparable. Article 1207 of the Civil Code reinforces this, stating that solidary liability exists when the law or the nature of the obligation requires it. Furthermore, since Lilibeth Sunga-Chan’s auctioned property sold for more than what the court declared as legitimate claims, Chua was required to pay the difference of PhP 2,470,607.48 to petitioner Sunga-Chan.

The SC also addressed the issue of community property, noting that spouses Lilibeth Sunga-Chan and Norberto Chan married after the Family Code took effect. Therefore, their absolute community property could be liable for obligations contracted by either spouse if the family benefited from the obligations. The ruling serves as a guide for determining how to wind up partnership assets and what can happen if there is commingling of funds between partnerships and marriages.

FAQs

What was the key issue in this case?	The main issue was whether the lower court properly computed the claims and imposed interest following the dissolution of a partnership, specifically concerning unliquidated claims like the value of partnership assets.
What is the difference between liquidated and unliquidated claims?	A liquidated claim is an amount that is fixed, determined, or easily ascertainable, while an unliquidated claim is not yet determined or cannot be easily computed until an accounting or appraisal is done.
When does interest begin to accrue on unliquidated claims?	Interest on unliquidated claims begins to accrue only when the demand can be established with reasonable certainty, typically from the date of the court’s judgment quantifying the damages.
What interest rate applies to loans or forbearance of money?	The legal interest rate for loans or forbearance of money is 12% per annum, as per Central Bank Circular No. 416, and applies to judgments involving such loans or forbearance.
What interest rate applies to breaches of obligations not constituting loans?	For breaches of obligations not involving loans or forbearance of money, the interest rate is 6% per annum, as provided by Article 2209 of the Civil Code.
What is the meaning of solidary liability in this case?	Solidary liability means that each of the debtors (the petitioners) is responsible for the entire obligation, so the creditor (Chua) can demand full payment from any one of them.
Can the community property of spouses be held liable for one spouse’s obligations?	Yes, under the Family Code, the absolute community property of spouses can be held liable for obligations contracted by either spouse, especially if the family benefited from those obligations.
What was the final computation of claims approved by the Supreme Court?	The Supreme Court adjusted the approved claim of respondent Chua to an aggregate amount of PhP 5,529,392.52, taking into account proper interest computations.

In summary, the Supreme Court’s decision in Lilibeth Sunga-Chan and Cecilia Sunga vs. The Honorable Court of Appeals offers an incisive exploration of how partnership claims are calculated and enforced in a situation of dissolution. The judgment delineates critical points of interest calculation and responsibility in managing partnership resources. A clear awareness of these rules promotes responsible fiscal governance and ensures the just dissolution of partnerships within the Philippine legal system.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Lilibeth Sunga-Chan and Cecilia Sunga vs. The Honorable Court of Appeals; G.R. No. 164401, June 25, 2008