CLEMENTE V GALVAN

April 26, 1939| DIAZ, J | Property Rights of a Partner

PETITIONER: Enrique Clemente

RESPONDENTS: Dioniso Galvan, Jose Echevarria

SUMMARY: Clemente and Galvan dissolved their partnership. Pending liquidation of their
assets, the partnership properties were put under receivership. A judgment in another case
was rendered against P Clemente and in order to avoid attachment over certain machines
(which actually belonged to the partnership), he executed a deed of mortgage with the
judgment creditor, Echevarria. After the lapse of the period provided in the deed of
mortgage, Echevarria tried to collect his mortgage credit but it was found that he could
acquire the machine as it was property under the control of the receiver. The SC ruled
against Echavarria and said that property in custodia legis cannot be mortgaged and that in
the first place, it was not Clementes to mortgage as it was property of the partnership.

DOCTRINE: Property transferred to the partnership belong to it until partition is effected in

accordance with the result of the liquidation.

FACTS:
1. Clemente and Galvan organized a civil partnership which they named "Galvan y
Compaia" for the purpose of engaging in the manufacture and sale of paper and
other stationery.
2. A year after such organization, the Clemente filed a case for the dissolution of the
partnership with the CFI and prayed for Galvan to submit an accounting of his
administration and to deliver to him his share as such partner.
3. Galvan expressed his conformity to the dissolution and liquidation but he asked
that, , Clemente reimburse him of one-half of 4k for a deficit incurred by the
partnership which he paid with his own money
4. On petition of the Clemente, Juan Mencarini was appointed a receiver and liquidator
to take charge of the properties for the partnership while the same was not yet
definitely dissolved
a. The court, by motion of Clemente, issued the order requiring Mencarini to
deliver to the former certain machines located in Ylaya St., Manila but
authorizing him to charge their value of P4,500 against the portion which may
eventually be due to said plaintiff.
b. The keys to the place where the machines were found were delivered to
Clemente but before he could take actual possession of said machines, the
court, on motion of Galvan, suspended the effects of its order
5. In the meantime, the judgments rendered in entitled "Philippine Education Co.,
Inc. vs. Enrique Clemente" for the recovery of a sum of money, and "Jose
Echevarria vs. Enrique Clemente", also for the recovery of a sum of money,
respectively, were made executory
a. In order to avoid the attachment and subsequent sale of the machines by the
sheriff, Clemente agreed with the Echavarria, who is his nephew, to execute a
deed of mortgage on the machines which are situated on Singalong St.
(different place from Ylaya St.)
6. After the expiration of the one year period provided in the deed of mortgage,
Echevarria commenced a case for collection of his mortgage credit where judgment
was rendered in his favour.
 7. However, the machines which Echavarria said were mortgaged to him were then in
fact in custodia legis, as they were under the control of the receiver and liquidator
Juan D. Mencarini. It was, therefore, useless for the intervenor to attach the same in
view of the receiver's opposition;
8. Echevarria brought the matter before the CFI
a. CFI declared the mortgage null and void and said that nothing could be done
because the receiver was not a party to the case which the intervenor
instituted to collect his aforesaid credit.
9. Echevarria joined this case as intervenor and appealed to this court

ISSUES/HELD

1. WN the CFI erred in declaring null and void the deed of mortgage over the machines
- NO

RATIO:
1. From the foregoing facts, it is clear that Clemente could not obtain possession of
the machines in question.

a. The constructive possession deducible from the fact that he had the keys
to the place where the machines were found as they had been delivered to
him by the receiver, does not help him any because the lower court
suspended the effects of the other whereby the keys were delivered to him
a few days after its issuance and thereafter revoked it entirely in the
appealed decision.

b. When he attempted to take actual possession of the machines, the Galvan

did not allow him to do so. Consequently, if he did not have actual
possession of the machines, he could not in any manner mortgage them,

c. while it is true that the deed of mortgage was annotated in the registry of
property, it is no less true the machines to which it refers are not the same
as those in question because the latter are on Ylaya Street Nos. 705-707
and the former are on Singalong Street No. 1163.

2. The evidence of record shows that the machines in contention originally belonged
to the defendant and from him were transferred to the partnership Galvan y
Compania.

a. Thus, the machines belong to the partnership and not to him, and shall
belong to it until partition is effected according to the result thereof after
the liquidation.