To Sebastian Martinez 1,056
To Julio Martinez 1,121
To heirs of Inocente Martinez 1,320
To heirs of Apolonio Martinez 696
To Isidro Martinez 920
To Benedicto Martinez 976
To Eleutierio Martinez 460
The foregoing figures are in conformity with the tabulated statements printed on pages 184-150, inclusive, of the appellee’s brief, with the single exception that we have added four trees to the number ascribed in said brief to the heirs of Apolonio Martinez, there having been evidently a clerical error on the part of the copyrist in failing to note four tress in bearing on a lot segregated from parcel A. The total of these items, properly summed up, comprises 6,549 trees, instead of 5,225 as erroneously shown in the appellee’s brief. In the statements contained in the partition we find it stated the several of the parcels contain young trees not taken into account in the partition. If we bear in mind the fact that partition was effected in 1915 and that the appellee was appointed receiver in 1921, it is reasonable to suppose that at the inception of the receivership a considerable number of trees were in bearing which were too young to be counted in 1915. In fact the data above supplied shows a regular increase in the number of trees from 5,567 in 1909 to 6,549 in 1915, and 7,000 in 1921. The statement of Julio Martinez to the effect that the groves contained 7,000 bearing trees during the period covered by the receivership must therefore be accepted as true, especially in view of the fact that the appellate admitted that he had not counted the trees and did not expect to be questioned as to their number.
With respect to the quality and character of the trees in these groves, we are likewise not left in doubt, since we are told by Porfirio Reyes and Maurocio Ticzon, owners of adjacent groves, that the Martinez groves produce equally well as their own groves which are in good condition. The proof also shows that the groves in question are in the care of a sufficient number of shares (aparceros) whose duty it is to look after the groves, keep the ground clear of hurtful growth and guard the trees and fruit against depredation. For this service the shares receive a part of the crop, which, by universal custom in the Province of Laguna, is fixed at one-seventh of the produce. In the four years covered by these accounts there has been no storm, drought, or other catastrophe, such as would cause a marked diminution in the harvest; and on the contrary the amount of fruit taken from coconut trees in this vicinity has been all that could be expected under favorable conditions. There is not a word of proof in the record tending to show that the Martinez groves are in any way inferior to other groves.
We now come to the question of the amount of the income that ought to be obtained by a person of ordinary diligence having the care of these groves. Porfirio Reyes testified that his grove of 1,000 trees is adjacent to those that have been in the hands of the appellee and that his trees produce a net average income of P1, or more, per tree annually. As corroborative of the statements of the witness on this point, he produced an old memorandum book in which he and his children had for years been entering complete statements of the income obtained from time to time from their coconut trees. In the pages of this book we note that in 1922 the 1,000 trees belonging to this witness produced 51,074 nuts; in 1923, 51439; in 1924, 60,235; and in 1925, 46,356. This gives an annual average of 52,276 nuts, with a resulting net income, after deduction of all expenses, for the same years as follows: In 1922, P1,013.79; in 1923, P1,272.92; in 1924, P1,551.12; and ion 1925, P1,656.84, or an annual average of P1,373.67 from one thousand trees. At this rate of production the Martinez groves should have produced, during the four years of the receivership, a net income of more than P38,000.
The witness Mauricio Ticzon testified that he has a grove containing 1,700 coconut trees in the barrio of San Lorenzo located near the groves compromised in the receivership, and that he obtains from his grove an annual average income of about P1, per tree. But this witness converts his nuts into copra on his own place and his income is more than it would be if the nuts were sold in the crude state. The results of Ticzon’s operations show a less favorable result than that obtained by Porfirio Reyes, since the latter gets an average annual profit of more than one peso per tree from the sale of crude nuts only.
There is also direct evidence corroborative of the inferences drawn from the testimony of Porfirio Reyes and Mauricio Ticzon as to the productive capacity of the groves in question. This is found in the testimony of Julio Martinez in relation with Exhibit 11 of the plaintiffs. In this connection it appears that after hostility developed in early 1922 between Estanislao Reyes and the Martinez heirs, Julio Matinez, as representative of the heirs, was advised by his attorney that it was important to obtain and preserve exact information as to the number of coconuts produced on the groves in the hands of the receiver. In order to comply with these instructions Julio Martinez availed himself of information procured from time to time from Pedro Barilla, a worker in the copra kilns of the receiver. This individual assisted in counting the nuts as they came in from the groves, and from information thus procured he made regular reports to Martinez. From these reports Julio Martinez made the entries in the memorandum book (Exhibit 11), showing in detail the results of the different harvest. According to this showing the Martinez groves produced in 1922 (last five months) a total of 184,906 nuts; in 1923, a total of 309,492 nuts; in 1924, a total of 385,923 nuts; in 1925, a total of 339,985 nuts; and in 1926 (to August only 194,910 nuts making altogether a grand total of 1,415,216 nuts. Applying to these figures the lowest values indicated in the receiver’s own account for the respective years, the total gross income for the whole period would be in excess of P42,000.
Everything pertinent and trustworthy that we can find in the record points to a productivity of the Martinez groves such as is above indicated. For instance, going back to a period atendating the receivership, we find it stated by Eulogio Diuño, that he gathered the nuts from these trees at four consecutive harvest beginning in August, 1918, and that upon these occasions he obtained: From the first gathering, 81,000 nuts; from the second gathering, 75,00 nuts; from the third gathering, 66,000 nuts; and from the fourth gathering, 64,000 nuts, or an average of 66,500 nuts at each gathering. If the trees continued to produce at this rate — and we see nothing that would justify an inference to the contrary — they should have produced during the period covered by the accounts now before us a total of more than one and a half million nuts.
Turning now to the testimony submitted by the receiver in support of his accounts relating to the administration of these groves, we are confronted with the extraordinary fact that receiver has not offered in evidence any scrap of paper in the nature of a voucher for money paid out or memorandum of any sort showing the quality of nuts produced. This is not only s dereliction of legal duty but is an absolute violation of the sixth clause of his contract of march 5, 1921, with the Martinez heirs, whereby he obligated himself to present annually an exact statement of all items of income obtained and expenses paid out. The receiver admits that he kept no accounts contemporaneously with the transaction, and the "Addendas to the Accounts" submitted in this cause as Exhibits A, B, C, D and E, purporting to show the details of the administration, are shown to have been made out by him after the decision requiring him to submit accounts was rendered in this court.
It appears that the receiver has maintained at different places on the groves in his charge a number of kilns, or ovens for drying copra. here he has caused the nuts taken from the groves to be for the most part converted into copra. As this work was accomplished the copra was conveyed to the bodegas of the receiver, who is a merchant in San Pablo, from whence the copra has been marketed by him. A small portion of the produce of the groves has apparently been sold from time to time in the crude form, but the general has been that the nuts have been converted into copra before being sold. The receiver admits that the expenses which he has charged in connection with the administration of the nuts include the costs of converting the nuts into copra. Yet the credits allowed from the sales indicate only receipts from the sale of unconverted nuts. Moreover, there are two items of expense amounting all together to P5,533 which cannot be allowed. These are the salaries of manager and watchman between 1922 and 1926. These expenses were, in our opinion, either unnecessary or merely incidental to the management of the ovens. A brother-in-law of the receiver, one Crispino Briones, appears from the proof of the appellants to have been occupying the lot containing the one thousand coconut trees which was set aside for Estanislao Reyes in the original contract of March 5, 1921. Reyes claims that he has paid Briones a monthly salary of P90, for overseeing the business, But no receipt was offered in evidence to prove any such payments; and although Briones himself was called to the stand as a witness, he was not asked by the appellee whether any such payments had in fact been made to him. Our conclusion is that Briones probably did not receive the salary which is charged in the accounts as having been paid to him, and that if he was so paid, the expense was unnecessary. The groves were in the possession of shares (aparceros) chosen by Reyes himself, and the oversight of these workers was ample for the protection of the groves.
Much less justifiable is the salary of P50 per month which the receiver claims to have paid a watchman, one Julian Diuño; for the testimony of Diuño shows that his duties were confined to working around the ovens during the daytime. It is evident that the inclusion of this item as a charge against the receivership is merely in keeping with the appellee’s policy of charging to receivership with all the expenses of converting the nuts into copra.
The receiver claims that the employment of a manager and watchman was made necessary by thefts and depredations committed by the plaintiffs from time to time in taking fruit from the lands in charge of the receiver. This, in our opinion, is merely an exaggerated version of an incident which occurred in 1924 when Clemencia Graño and Julio Martinez, taking occasion from the release of their lots from the mortgage to El Hogar Filipino, attempted to repossess themselves of the property, an attempt which was frustrated by the receiver.
Our analysis of the "Addendas to the Accounts" with respect both to the income and expenses of the administration leads of the conclusion that they grossly inexact both as to income and expenses. In order to prove this it is enough to state that according to the appellee’s showing the net income of the groves for the whole period covered by the accounts was the sum of P2,929.42. This cannot be true and cannot be accepted by the court. It is unreasonable and impossible that a coconut grove containing 7,000 trees in bearing, and valued at from P60,000 to P70,000, should have produced so little return during the four consecutive years covered by these accounts, and if the receiver did not get more, it must have been due to his own lack of diligence.
The proof in the record with respect to the cost of harvesting and marketing coconuts points to the conclusion that the expenses which might have been legitimately incurred by the receiver, supposing him to have taken from the groves the number of coconuts which they ought to have produced, should be in the neighborhood of P11,000. Subtracting this amount from the sum of P42,000 which, as stated above, is the gross income that ought to have been received, we have a net balance of about P31,000, as the amount that should have been received by the receiver from the produced of the groves in his charge. This estimate is nearly 20 percent lower than what would have been received if the groves had been administered as economically and as effectually as the grove of Porfirio Reyes; but we assume that the last named individual may be taken to have been exceptionally efficient, and something should be conceded to the receiver in view of the fact that the trees concerned in this receivership were not under his personal supervision.
In fixing the amount for which the receiver should be held liable upon his administration account, we are not so much concerned with what he actually received as with what he should have received in the exercise of reasonable diligence, and it is idle to pretend that exact figures are attainable; but the receiver himself is to blame for the obscurity in which the subject is enveloped, and the court cannot be deterred from attempting to accomplish the ends of justice in the light of the best information available. With these considerations in view we have come to the conclusion that by the time the receiver surrendered the possession of the groves in his charge as receiver (except the one thousand trees reserved for himself) he had received, or should have received from the trees in his charge a net profit of something more than P31,000, or in round numbers, an amount of about P8,000 in excess of P23,033.27, which, as stated above, is his true credit balance against the receivership. It results, therefore, that instead of being a creditor of the receivership to the extent of P25,321.21, as found by the trial court, he is actually a debtor thereto in the amount of P8,000.
In the appealed decision the trial court ordered that the land subject to this receivership, except the one thousand trees assigned to Estanislao Reyes, should be sold for the payment of the balance which the court found to be due to the receiver; and the appellants, in their sixth assignment of error, maintain that it was error on the part of the lower court thus in effect to adjudicate said one thousand trees to Reyes. This point may possibly be said to be academic in view of the fact that, under this decision, no sale of the groves will be effected; but if we may be permitted to say a word prompted by a desired to see a conclusion of this protracted litigation, we would suggest that the claim of Reyes to said thousand trees be respected, subject of course to the mortgage in favor of El Hogar Filipino; and after the entire property shall have been clear of the mortgage lien the Martinez heirs should, by amicable arrangement among themselves, equitably compensate the former owners of the thousand trees thus awarded to Reyes.
From the discussion contained in the briefs, it may be collected that the appellants entertain a belief that the property which Reyes acquired by purchased under execution against Clemencia Graño, as already stated in this opinion, ought to be adjudged to the receivership. It is true that in testifying as a witness in this case Reyes repeatedly insisted that his operations against Graño were conducted in behalf of the owners of the receivership property. But as we have already shown, he actually acquired title to those lands in his individual right; and in charging him with the credit of P5,215.89 which he used in purchasing said property, we have gone on the assumption that he had acquired a good individual title. The appellants must therefore leave that property to him, and in fact they will hereafter be estopped from questioning his right thereto.
In view of the conclusions stated in the foregoing opinion, it becomes necessary to reverse, as we hereby reverse, the appealed judgment; and judgment will be entered for the plaintiff to recover of the appellee, Estanislao Reyes, the sum of P8,000, without liability on his part for any additional income that may have been received by him from the groves between the last day covered by his accounts and the date when he surrendered possession; but the income obtained by the receiver now in possession as successor to Reyes, if such there be, will of course pertain to the receivership and should be applied by the courts to any lawful charges against the property. Without pronouncement as to costs. So ordered.
Avanceña, C.J., Johnson, Malcolm, Villamor, Johns and Villa-Real, JJ., concur.
1. Martines v. Graño, 49 Phil., 214.
2. Reyes v. Graño, not reported.