G.R. No. 31057.
September 07, 1929 (Case Brief / Digest)
**Case Title:** Adriano Arbes et al. v. Vicente Polistico et al.
**Facts:**
1. **Association Foundation:** The association known as “Turnuhan Polistico & Co.” was
formed with Adriano Arbes and others as members/shareholders. Vicente Polistico and
others held officer positions.
2. **Initial Legal Action:** Plaintiffs filed an action to liquidate the funds and property of
“Turnuhan Polistico & Co.” and held its officers accountable for managing its assets.
3. **First Court Decision:** The trial court sustained defendants’ demurrer, demanding an
amended complaint to include all association members as parties. Plaintiffs appealed.
4. **Supreme Court’s First Ruling (Borlasa vs. Polistico):** The Court ruled against the
necessity of including all association members in an action against its officers for
accounting matters, remanding the case to the trial court.
5. **Commissioner’s Appointment:** In the retrial, both parties amended their pleadings,
and the court appointed Amadeo R. Quintos to audit the association’s financial records and
compile a report.
6. **Commissioner’s Report:** The report depicted total income of P109,620.70 and
expenses of P85,012.90, leaving P24,607.80 cash on hand.
7. **Trial Court’s Judgment:** Agreeing with the commissioner’s findings, the trial court
declared the association illegal and ordered defendants to return P24,607.80 and relevant
documents to plaintiffs and association members.
**Issues:**
1. **Complete Inclusion of Members:** Whether not all individuals with an interest in the
association were required to be included as plaintiffs or defendants.
2. **Acceptance of Commissioner’s Report:** Whether the trial court erred in overruling the
defendants’ objections to the commissioner’s report.
3. **Inclusion of Charitable Institution:** Whether the absence of charitable institutions was
an error in light of Article 1666 of the Civil Code.
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G.R. No. 31057. September 07, 1929 (Case Brief / Digest)
**Court’s Decision:**
1. **Inclusion of Members:** Adhering to its previous decision in Borlasa vs. Polistico, the
Court reiterated that not all members need to be party to the lawsuit when enforcing
accounting against association officers.
2. **Commissioner’s Report:** The Court upheld the trial court’s acceptance of the
commissioner’s report, emphasizing the trial court’s role in thoroughly reviewing evidence
and objections.
3. **Unlawful Partnership Profits:** The Court found “Turnuhan Polistico & Co.” unlawful
but rejected appellants’ claim that charitable institutions should be party to the case, stating
that such entities were unnecessary for determining members’ rights regarding their
contributions.
**Doctrine:**
– **Voluntary Associations Accounting:** Lawsuits against officers of a voluntary association
for winding up its affairs don’t require all members as parties.
– **Unlawful Partnerships:** Contributions to an unlawful partnership can be reclaimed by
the members, but profits are distributed to public charities, as directed in Article 1666 of
the Civil Code.
**Class Notes:**
– **Legal Provisions:** Article 1666, Civil Code – Emphasizes lawfulness of partnership
objectives and redistribution of profits from unlawful partnerships to public charities.
– **Judicial Reviews:** Referee’s report, once approved, is treated like a judge’s findings.
Courts are restrained from overturning unless error is proven.
**Historical Background:**
The case presents a pivotal discussion on the liquidation, accounting, and legal treatment of
funds and assets of associations found to have unlawful operational purposes, under the
legal landscape of the early 20th-century Philippines. Through the lens of this legal context,
“Adriano Arbes v. Vicente Polistico” became instrumental in delineating the procedures for
handling assets of unlawful partnerships and solidified jurisprudence on the necessary
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G.R. No. 31057. September 07, 1929 (Case Brief / Digest)
parties for liquidation and accounting suits.
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