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PARTNERSHIP

1. Yu v. NLRC, 224 SCRA 75, G.R. No. 97212, June 30, 1993

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 97212 June 30, 1993

BENJAMIN YU, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY LIMITED,
WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HO-FU, respondents.

Jose C. Guico for petitioner.

Wilfredo Cortez for private respondents.

FELICIANO, J.:

Petitioner Benjamin Yu was formerly the Assistant General Manager of the marble quarrying and export business
operated by a registered partnership with the firm name of "Jade Mountain Products Company Limited" ("Jade
Mountain"). The partnership was originally organized on 28 June 1984 with Lea Bendal and Rhodora Bendal as
general partners and Chin Shian Jeng, Chen Ho-Fu and Yu Chang, all citizens of the Republic of China (Taiwan),
as limited partners. The partnership business consisted of exploiting a marble deposit found on land owned by the
Sps. Ricardo and Guillerma Cruz, situated in Bulacan Province, under a Memorandum Agreement dated 26 June
1984 with the Cruz spouses. 1 The partnership had its main office in Makati, Metropolitan Manila.

Benjamin Yu was hired by virtue of a Partnership Resolution dated 14 March 1985, as Assistant General Manager
with a monthly salary of P4,000.00. According to petitioner Yu, however, he actually received only half of his
stipulated monthly salary, since he had accepted the promise of the partners that the balance would be paid when
the firm shall have secured additional operating funds from abroad. Benjamin Yu actually managed the operations
and finances of the business; he had overall supervision of the workers at the marble quarry in Bulacan and took
charge of the preparation of papers relating to the exportation of the firm's products.

Sometime in 1988, without the knowledge of Benjamin Yu, the general partners Lea Bendal and Rhodora Bendal
sold and transferred their interests in the partnership to private respondent Willy Co and to one Emmanuel Zapanta.
Mr. Yu Chang, a limited partner, also sold and transferred his interest in the partnership to Willy Co. Between Mr.
Emmanuel Zapanta and himself, private respondent Willy Co acquired the great bulk of the partnership interest.
The partnership now constituted solely by Willy Co and Emmanuel Zapanta continued to use the old firm name of
Jade Mountain, though they moved the firm's main office from Makati to Mandaluyong, Metropolitan Manila. A
Supplement to the Memorandum Agreement relating to the operation of the marble quarry was entered into with the

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Cruz spouses in February of 1988.2 The actual operations of the business enterprise continued as before. All the
employees of the partnership continued working in the business, all, save petitioner Benjamin Yu as it turned out.

On 16 November 1987, having learned of the transfer of the firm's main office from Makati to Mandaluyong,
petitioner Benjamin Yu reported to the Mandaluyong office for work and there met private respondent Willy Co for
the first time. Petitioner was informed by Willy Co that the latter had bought the business from the original partners
and that it was for him to decide whether or not he was responsible for the obligations of the old partnership,
including petitioner's unpaid salaries. Petitioner was in fact not allowed to work anymore in the Jade Mountain
business enterprise. His unpaid salaries remained unpaid.3

On 21 December 1988. Benjamin Yu filed a complaint for illegal dismissal and recovery of unpaid salaries accruing
from November 1984 to October 1988, moral and exemplary damages and attorney's fees, against Jade Mountain,
Mr. Willy Co and the other private respondents. The partnership and Willy Co denied petitioner's charges,
contending in the main that Benjamin Yu was never hired as an employee by the present or new partnership. 4

In due time, Labor Arbiter Nieves Vivar-De Castro rendered a decision holding that petitioner had been illegally
dismissed. The Labor Arbiter decreed his reinstatement and awarded him his claim for unpaid salaries, backwages
and attorney's fees.5

On appeal, the National Labor Relations Commission ("NLRC") reversed the decision of the Labor Arbiter and
dismissed petitioner's complaint in a Resolution dated 29 November 1990. The NLRC held that a new partnership
consisting of Mr. Willy Co and Mr. Emmanuel Zapanta had bought the Jade Mountain business, that the new
partnership had not retained petitioner Yu in his original position as Assistant General Manager, and that there was
no law requiring the new partnership to absorb the employees of the old partnership. Benjamin Yu, therefore, had
not been illegally dismissed by the new partnership which had simply declined to retain him in his former
managerial position or any other position. Finally, the NLRC held that Benjamin Yu's claim for unpaid wages should
be asserted against the original members of the preceding partnership, but these though impleaded had,
apparently, not been served with summons in the proceedings before the Labor Arbiter. 6

Petitioner Benjamin Yu is now before the Court on a Petition for Certiorari, asking us to set aside and annul the
Resolution of the NLRC as a product of grave abuse of discretion amounting to lack or excess of jurisdiction.

The basic contention of petitioner is that the NLRC has overlooked the principle that a partnership has a juridical
personality separate and distinct from that of each of its members. Such independent legal personality subsists,
petitioner claims, notwithstanding changes in the identities of the partners. Consequently, the employment contract
between Benjamin Yu and the partnership Jade Mountain could not have been affected by changes in the latter's
membership.7

Two (2) main issues are thus posed for our consideration in the case at bar: (1) whether the partnership which had
hired petitioner Yu as Assistant General Manager had been extinguished and replaced by a new partnerships
composed of Willy Co and Emmanuel Zapanta; and (2) if indeed a new partnership had come into existence,
whether petitioner Yu could nonetheless assert his rights under his employment contract as against the new
partnership.

In respect of the first issue, we agree with the result reached by the NLRC, that is, that the legal effect of the
changes in the membership of the partnership was the dissolution of the old partnership which had hired petitioner
in 1984 and the emergence of a new firm composed of Willy Co and Emmanuel Zapanta in 1987.

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The applicable law in this connection — of which the NLRC seemed quite unaware — is found in the Civil Code
provisions relating to partnerships. Article 1828 of the Civil Code provides as follows:

Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by
any partner ceasing to be associated in the carrying on as distinguished from the winding up of the
business. (Emphasis supplied)

Article 1830 of the same Code must also be noted:

Art. 1830. Dissolution is caused:

(1) without violation of the agreement between the partners;

xxx xxx xxx

(b) by the express will of any partner, who must act in good faith,
when no definite term or particular undertaking is specified;

xxx xxx xxx

(2) in contravention of the agreement between the partners, where

the circumstances do not permit a dissolution under any other
provision of this article, by the express will of any partner at any
time;

xxx xxx xxx

(Emphasis supplied)

In the case at bar, just about all of the partners had sold their partnership interests (amounting to 82% of the total
partnership interest) to Mr. Willy Co and Emmanuel Zapanta. The record does not show what happened to the
remaining 18% of the original partnership interest. The acquisition of 82% of the partnership interest by new
partners, coupled with the retirement or withdrawal of the partners who had originally owned such 82% interest,
was enough to constitute a new partnership.

The occurrence of events which precipitate the legal consequence of dissolution of a partnership do not, however,
automatically result in the termination of the legal personality of the old partnership. Article 1829 of the Civil Code
states that:

[o]n dissolution the partnership is not terminated, but continues until the winding up of partnership
affairs is completed.

In the ordinary course of events, the legal personality of the expiring partnership persists for the limited purpose of
winding up and closing of the affairs of the partnership. In the case at bar, it is important to underscore the fact that
the business of the old partnership was simply continued by the new partners, without the old partnership
undergoing the procedures relating to dissolution and winding up of its business affairs. In other words, the new
partnership simply took over the business enterprise owned by the preceeding partnership, and continued using the
old name of Jade Mountain Products Company Limited, without winding up the business affairs of the old
partnership, paying off its debts, liquidating and distributing its net assets, and then re-assembling the said assets

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or most of them and opening a new business enterprise. There were, no doubt, powerful tax considerations which
underlay such an informal approach to business on the part of the retiring and the incoming partners. It is not,
however, necessary to inquire into such matters.

What is important for present purposes is that, under the above described situation, not only the retiring partners
(Rhodora Bendal, et al.) but also the new partnership itself which continued the business of the old, dissolved, one,
are liable for the debts of the preceding partnership. In Singson, et al. v. Isabela Saw Mill, et al,8 the Court held that
under facts very similar to those in the case at bar, a withdrawing partner remains liable to a third party creditor of
the old partnership.9 The liability of the new partnership, upon the other hand, in the set of circumstances obtaining
in the case at bar, is established in Article 1840 of the Civil Code which reads as follows:

Art. 1840. In the following cases creditors of the dissolved partnership are also creditors of the
person or partnership continuing the business:

(1) When any new partner is admitted into an existing partnership, or when any partner retires and
assigns (or the representative of the deceased partner assigns) his rights in partnership property to
two or more of the partners, or to one or more of the partners and one or more third persons, if the
business is continued without liquidation of the partnership affairs;

(2) When all but one partner retire and assign (or the representative of a deceased partner assigns)
their rights in partnership property to the remaining partner, who continues the business without
liquidation of partnership affairs, either alone or with others;

(3) When any Partner retires or dies and the business of the dissolved partnership is continued as
set forth in Nos. 1 and 2 of this Article, with the consent of the retired partners or the representative
of the deceased partner, but without any assignment of his right in partnership property;

(4) When all the partners or their representatives assign their rights in partnership property to one
or more third persons who promise to pay the debts and who continue the business of the
dissolved partnership;

(5) When any partner wrongfully causes a dissolution and remaining partners continue the
business under the provisions of article 1837, second paragraph, No. 2, either alone or with
others, and without liquidation of the partnership affairs;

(6) When a partner is expelled and the remaining partners continue the business either alone or
with others without liquidation of the partnership affairs;

The liability of a third person becoming a partner in the partnership continuing the business, under
this article, to the creditors of the dissolved partnership shall be satisfied out of the partnership
property only, unless there is a stipulation to the contrary.

When the business of a partnership after dissolution is continued under any conditions set forth in
this article the creditors of the retiring or deceased partner or the representative of the deceased
partner, have a prior right to any claim of the retired partner or the representative of the deceased
partner against the person or partnership continuing the business on account of the retired or
deceased partner's interest in the dissolved partnership or on account of any consideration
promised for such interest or for his right in partnership property.

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Nothing in this article shall be held to modify any right of creditors to set assignment on the ground
of fraud.

xxx xxx xxx

(Emphasis supplied)

Under Article 1840 above, creditors of the old Jade Mountain are also creditors of the new Jade Mountain which
continued the business of the old one without liquidation of the partnership affairs. Indeed, a creditor of the old Jade
Mountain, like petitioner Benjamin Yu in respect of his claim for unpaid wages, is entitled to priority vis-a-vis any
claim of any retired or previous partner insofar as such retired partner's interest in the dissolved partnership is
concerned. It is not necessary for the Court to determine under which one or mare of the above six (6) paragraphs,
the case at bar would fall, if only because the facts on record are not detailed with sufficient precision to permit
such determination. It is, however, clear to the Court that under Article 1840 above, Benjamin Yu is entitled to
enforce his claim for unpaid salaries, as well as other claims relating to his employment with the previous
partnership, against the new Jade Mountain.

It is at the same time also evident to the Court that the new partnership was entitled to appoint and hire a new
general or assistant general manager to run the affairs of the business enterprise take over. An assistant general
manager belongs to the most senior ranks of management and a new partnership is entitled to appoint a top
manager of its own choice and confidence. The non-retention of Benjamin Yu as Assistant General Manager did
not therefore constitute unlawful termination, or termination without just or authorized cause. We think that the
precise authorized cause for termination in the case at bar was redundancy. 10 The new partnership had its own
new General Manager, apparently Mr. Willy Co, the principal new owner himself, who personally ran the business
of Jade Mountain. Benjamin Yu's old position as Assistant General Manager thus became superfluous or
redundant. 11It follows that petitioner Benjamin Yu is entitled to separation pay at the rate of one month's pay for
each year of service that he had rendered to the old partnership, a fraction of at least six (6) months being
considered as a whole year.

While the new Jade Mountain was entitled to decline to retain petitioner Benjamin Yu in its employ, we consider
that Benjamin Yu was very shabbily treated by the new partnership. The old partnership certainly benefitted from
the services of Benjamin Yu who, as noted, previously ran the whole marble quarrying, processing and exporting
enterprise. His work constituted value-added to the business itself and therefore, the new partnership similarly
benefitted from the labors of Benjamin Yu. It is worthy of note that the new partnership did not try to suggest that
there was any cause consisting of some blameworthy act or omission on the part of Mr. Yu which compelled the
new partnership to terminate his services. Nonetheless, the new Jade Mountain did not notify him of the change in
ownership of the business, the relocation of the main office of Jade Mountain from Makati to Mandaluyong and the
assumption by Mr. Willy Co of control of operations. The treatment (including the refusal to honor his claim for
unpaid wages) accorded to Assistant General Manager Benjamin Yu was so summary and cavalier as to amount to
arbitrary, bad faith treatment, for which the new Jade Mountain may legitimately be required to respond by paying
moral damages. This Court, exercising its discretion and in view of all the circumstances of this case, believes that
an indemnity for moral damages in the amount of P20,000.00 is proper and reasonable.

In addition, we consider that petitioner Benjamin Yu is entitled to interest at the legal rate of six percent (6%) per
annum on the amount of unpaid wages, and of his separation pay, computed from the date of promulgation of the
award of the Labor Arbiter. Finally, because the new Jade Mountain compelled Benjamin Yu to resort to litigation to
protect his rights in the premises, he is entitled to attorney's fees in the amount of ten percent (10%) of the total
amount due from private respondent Jade Mountain.

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WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE COURSE, the Comment filed by
private respondents is treated as their Answer to the Petition for Certiorari, and the Decision of the NLRC dated 29
November 1990 is hereby NULLIFIED and SET ASIDE. A new Decision is hereby ENTERED requiring private
respondent Jade Mountain Products Company Limited to pay to petitioner Benjamin Yu the following amounts:

(a) for unpaid wages which, as found by the Labor Arbiter, shall be computed at
the rate of P2,000.00 per month multiplied by thirty-six (36) months (November
1984 to December 1987) in the total amount of P72,000.00;

(b) separation pay computed at the rate of P4,000.00 monthly pay multiplied by
three (3) years of service or a total of P12,000.00;

(c) indemnity for moral damages in the amount of P20,000.00;

(d) six percent (6%) per annum legal interest computed on items (a) and (b) above,
commencing on 26 December 1989 and until fully paid; and

(e) ten percent (10%) attorney's fees on the total amount due from private
respondent Jade Mountain.

Costs against private respondents.

SO ORDERED.

2. Guy v. Gacott, G.R. No. 206147, January 13, 2016

SECOND DIVISION

January 13, 2016

G.R. No. 206147

MICHAEL C. GUY, Petitioner,

vs.
ATTY. GLENN C. GACOTT, Respondent.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Michael
C. Guy (Guy), assailing the June 25, 2012 Decision1 and the March 5, 2013 Resolution2 of the Court of
Appeals (CA) in CA-G.R. CV No. 94816, which affirmed the June 28, 20093 and February 19, 20104 Orders of the
Regional Trial Court, Branch 52, Puerto Princesa City, Palawan (RTC), in Civil Case No. 3108, a case for
damages. The assailed RTC orders denied Guy's Motion to Lift Attachment Upon Personalty5 on the ground that he
was not a judgment debtor.

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The Facts

It appears from the records that on March 3, 1997, Atty. Glenn Gacott (Gacott) from Palawan purchased two (2)
brand new transreceivers from Quantech Systems Corporation (QSC) in Manila through its employee Rey
Medestomas (Medestomas), amounting to a total of P18,000.00. On May 10, 1997, due to major defects, Gacott
personally returned the transreceivers to QSC and requested that they be replaced. Medestomas received the
returned transreceivers and promised to send him the replacement units within two (2) weeks from May 10, 1997.

Time passed and Gacott did not receive the replacement units as promised. QSC informed him that there were no
available units and that it could not refund the purchased price. Despite several demands, both oral and written,
Gacott was never given a replacement or a refund. The demands caused Gacott to incur expenses in the total
amount of P40,936.44. Thus, Gacott filed a complaint for damages. Summons was served upon QSC and
Medestomas, afterwhich they filed their Answer, verified by Medestomas himself and a certain Elton Ong (Ong).
QSC and Medestomas did not present any evidence during the trial.6

In a Decision,7 dated March 16, 2007, the RTC found that the two (2) transreceivers were defective and that QSC
and Medestomas failed to replace the same or return Gacott's money. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff, ordering the defendants to jointly and severally
pay plaintiff the following:
1. Purchase price plus 6% per annum from March 3, P
1997 up to and until fully paid ------------ 18,000.00
2. Actual Damages ----------------------------------- 40,000.00
3. Moral Damages ----------------------------------- 75,000.00
4. Corrective Damages ------------------------------- 100,000.00
5. Attorney’s Fees ------------------------------------ 60,000.00
6. Costs.

SO ORDERED.

The decision became final as QSC and Medestomas did not interpose an appeal. Gacott then secured a Writ of
Execution,8 dated September 26, 2007.

During the execution stage, Gacott learned that QSC was not a corporation, but was in fact a general partnership
registered with the Securities and Exchange Commission (SEC). In the articles of partnership,9 Guy was appointed
as General Manager of QSC.

To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to the main office of the
Department of Transportation and Communications, Land Transportation Office (DOTC-LTO), Quezon City, and
verified whether Medestomas, QSC and Guy had personal properties registered therein. 10 Upon learning that Guy
had vehicles registered in his name, Gacott instructed the sheriff to proceed with the attachment of one of the motor
vehicles of Guy based on the certification issued by the DOTC-LTO.11

On March 3, 2009, Sheriff Felizarte attached Guy’s vehicle by virtue of the Notice of Attachment/Levy upon
Personalty12 served upon the record custodian of the DOTC-LTO of Mandaluyong City. A similar notice was served
to Guy through his housemaid at his residence.

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Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty, arguing that he was not a judgment debtor
and, therefore, his vehicle could not be attached.13 Gacott filed an opposition to the motion.

The RTC Order

On June 28, 2009, the RTC issued an order denying Guy’s motion. It explained that considering QSC was not a
corporation, but a registered partnership, Guy should be treated as a general partner pursuant to Section 21 of the
Corporation Code, and he may be held jointly and severally liable with QSC and Medestomas. The trial court wrote:

All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general
partners for all debts, liabilities and damages incurred or arising as a result thereof x x x. Where, by any wrongful
act or omission of any partner acting in the ordinary course of the business of the partnership x x x, loss or injury is
caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable
therefore to the same extent as the partner so acting or omitting to act. All partners are liable solidarily with the
partnership for everything chargeable to the partnership under Article 1822 and 1823. 14

Accordingly, it disposed:

WHEREFORE, with the ample discussion of the matter, this Court finds and so holds that the property of movant
Michael Guy may be validly attached in satisfaction of the liabilities adjudged by this Court against Quantech Co.,
the latter being an ostensible Corporation and the movant being considered by this Court as a general partner
therein in accordance with the order of this court impressed in its decision to this case imposing joint and several
liability to the defendants. The Motion to Lift Attachment Upon Personalty submitted by the movant is therefore
DENIED for lack of merit.

SO ORDERED.15

Not satisfied, Guy moved for reconsideration of the denial of his motion. He argued that he was neither impleaded
as a defendant nor validly served with summons and, thus, the trial court did not acquire jurisdiction over his
person; that under Article 1824 of the Civil Code, the partners were only solidarily liable for the partnership liability
under exceptional circumstances; and that in order for a partner to be liable for the debts of the partnership, it must
be shown that all partnership assets had first been exhausted.16

On February 19, 2010, the RTC issued an order17denying his motion.

The denial prompted Guy to seek relief before the CA.

The CA Ruling

On June 25, 2012, the CA rendered the assailed decision dismissing Guy’s appeal for the same reasons given by
the trial court. In addition thereto, the appellate court stated:

We hold that Michael Guy, being listed as a general partner of QSC during that time, cannot feign ignorance of the
existence of the court summons. The verified Answer filed by one of the partners, Elton Ong, binds him as a partner
because the Rules of Court does not require that summons be served on all the partners. It is sufficient that service
be made on the "president, managing partner, general manager, corporate secretary, treasurer or in-house
counsel." To Our mind, it is immaterial whether the summons to QSC was served on the theory that it was a
corporation. What is important is that the summons was served on QSC’s authorized officer xxx. 18

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The CA stressed that Guy, being a partner in QSC, was bound by the summons served upon QSC based on Article
1821 of the Civil Code. The CA further opined that the law did not require a partner to be actually involved in a suit
in order for him to be made liable. He remained “solidarily liable whether he participated or not, whether he ratified it
or not, or whether he had knowledge of the act or omission.”19

Aggrieved, Guy filed a motion for reconsideration but it was denied by the CA in its assailed resolution, dated
March 5, 2013.

Hence, the present petition raising the following

ISSUE

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT

PETITIONER GUY IS SOLIDARILY LIABLE WITH THE PARTNERSHIP FOR DAMAGES ARISING FROM THE
BREACH OF THE CONTRACT OF SALE WITH RESPONDENT GACOTT.20

Guy argues that he is not solidarily liable with the partnership because the solidary liability of the partners under
Articles 1822, 1823 and 1824 of the Civil Code only applies when it stemmed from the act of a partner. In this case,
the alleged lapses were not attributable to any of the partners. Guy further invokes Article 1816 of the Civil Code
which states that the liability of the partners to the partnership is merely joint and subsidiary in nature.

In his Comment,21 Gacott countered, among others, that because Guy was a general and managing partner of
QSC, he could not feign ignorance of the transactions undertaken by QSC. Gacott insisted that notice to one
partner must be considered as notice to the whole partnership, which included the pendency of the civil suit against
it.

In his Reply,22 Guy contended that jurisdiction over the person of the partnership was not acquired because the
summons was never served upon it or through any of its authorized office. He also reiterated that a partner’s
liability was joint and subsidiary, and not solidary.

The Court’s Ruling

The petition is meritorious.

The service of summons was flawed; voluntary appearance cured the defect

Jurisdiction over the person, or jurisdiction in personam – the power of the court to render a personal judgment or
to subject the parties in a particular action to the judgment and other rulings rendered in the action – is an element
of due process that is essential in all actions, civil as well as criminal, except in actions in rem or quasi in
rem.23Jurisdiction over the person of the plaintiff is acquired by the mere filing of the complaint in court. As the
initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court. As to the
defendant, the court acquires jurisdiction over his person either by the proper service of the summons, or by his
voluntary appearance in the action.24

Under Section 11, Rule 14 of the 1997 Revised Rules of Civil Procedure, when the defendant is a corporation,
partnership or association organized under the laws of the Philippines with a juridical personality, the service of
summons may be made on the president, managing partner, general manager, corporate secretary, treasurer, or
in-house counsel. Jurisprudence is replete with pronouncements that such provision provides an exclusive
enumeration of the persons authorized to receive summons for juridical entities.25

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The records of this case reveal that QSC was never shown to have been served with the summons through any of
the enumerated authorized persons to receive such, namely: president, managing partner, general manager,
corporate secretary, treasurer or in-house counsel. Service of summons upon persons other than those officers
enumerated in Section 11 is invalid. Even substantial compliance is not sufficient service of summons.26 The CA
was obviously mistaken when it opined that it was immaterial whether the summons to QSC was served on the
theory that it was a corporation.27

Nevertheless, while proper service of summons is necessary to vest the court jurisdiction over the defendant, the
same is merely procedural in nature and the lack of or defect in the service of summons may be cured by the
defendant’s subsequent voluntary submission to the court’s jurisdiction through his filing a responsive pleading
such as an answer. In this case, it is not disputed that QSC filed its Answer despite the defective summons. Thus,
jurisdiction over its person was acquired through voluntary appearance.

A partner must be separately and distinctly impleaded before he can be bound by a judgment

The next question posed is whether the trial court’s jurisdiction over QSC extended to the person of Guy insofar as
holding him solidarily liable with the partnership. After a thorough study of the relevant laws and jurisprudence, the
Court answers in the negative.

Although a partnership is based on delectus personae or mutual agency, whereby any partner can generally
represent the partnership in its business affairs, it is non sequitur that a suit against the partnership is necessarily a
suit impleading each and every partner. It must be remembered that a partnership is a juridical entity that has a
distinct and separate personality from the persons composing it. 28

In relation to the rules of civil procedure, it is elementary that a judgment of a court is conclusive and binding only
upon the parties and their successors-in-interest after the commencement of the action in court.29 A decision
rendered on a complaint in a civil action or proceeding does not bind or prejudice a person not impleaded therein,
for no person shall be adversely affected by the outcome of a civil action or proceeding in which he is not a
party.30The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he
has not been made a party conforms to the constitutional guarantee of due process of law.31

In Muñoz v. Yabut, Jr.,32 the Court declared that a person not impleaded and given the opportunity to take part in
the proceedings was not bound by the decision declaring as null and void the title from which his title to the
property had been derived. The effect of a judgment could not be extended to non-parties by simply issuing an alias
writ of execution against them, for no man should be prejudiced by any proceeding to which he was a stranger.

In Aguila v. Court of Appeals,33 the complainant had a cause of action against the partnership. Nevertheless, it was
the partners themselves that were impleaded in the complaint. The Court dismissed the complaint and held that it
was the partnership, not its partners, officers or agents, which should be impleaded for a cause of action against
the partnership itself. The Court added that the partners could not be held liable for the obligations of the
partnership unless it was shown that the legal fiction of a different juridical personality was being used for
fraudulent, unfair, or illegal purposes.34

Here, Guy was never made a party to the case. He did not have any participation in the entire proceeding until his
vehicle was levied upon and he suddenly became QSC’s “co-defendant debtor” during the judgment execution
stage. It is a basic principle of law that money judgments are enforceable only against the property incontrovertibly
belonging to the judgment debtor.35 Indeed, the power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone. An execution can be issued only against a party
and not against one who did not have his day in court. The duty of the sheriff is to levy the property of the judgment

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debtor not that of a third person. For, as the saying goes, one man's goods shall not be sold for another man's
debts.36

In the spirit of fair play, it is a better rule that a partner must first be impleaded before he could be prejudiced by the
judgment against the partnership. As will be discussed later, a partner may raise several defenses during the trial to
avoid or mitigate his obligation to the partnership liability. Necessarily, before he could present evidence during the
trial, he must first be impleaded and informed of the case against him. It would be the height of injustice to rob an
innocent partner of his hard-earned personal belongings without giving him an opportunity to be heard. Without any
showing that Guy himself acted maliciously on behalf of the company, causing damage or injury to the complainant,
then he and his personal properties cannot be made directly and solely accountable for the liability of QSC, the
judgment debtor, because he was not a party to the case.

Further, Article 1821 of the Civil Code does not state that there is no need to implead a partner in order to be
bound by the partnership liability. It provides that:

Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting
in the particular matter, acquired while a partner or then present to his mind, and the knowledge of any other
partner who reasonably could and should have communicated it to the acting partner, operate as notice to or
knowledge of the partnership, except in the case of fraud on the partnership, committed by or with the consent of
that partner.

[Emphases and Underscoring Supplied]

A careful reading of the provision shows that notice to any partner, under certain circumstances, operates as notice
to or knowledge to the partnership only. Evidently, it does not provide for the reverse situation, or that notice to the
partnership is notice to the partners. Unless there is an unequivocal law which states that a partner is automatically
charged in a complaint against the partnership, the constitutional right to due process takes precedence and a
partner must first be impleaded before he can be considered as a judgment debtor. To rule otherwise would be a
dangerous precedent, harping in favor of the deprivation of property without ample notice and hearing, which the
Court certainly cannot countenance.

Partners’ liability is subsidiary and generally joint; immediate levy upon the property of a partner cannot be made

Granting that Guy was properly impleaded in the complaint, the execution of judgment would be improper. Article
1816 of the Civil Code governs the liability of the partners to third persons, which states that:

Article 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the
partnership assets have been exhausted, for the contracts which may be entered into in the name and for the
account of the partnership, under its signature and by a person authorized to act for the partnership. However, any
partner may enter into a separate obligation to perform a partnership contract.

[Emphasis Supplied]

This provision clearly states that, first, the partners’ obligation with respect to the partnership liabilities is subsidiary
in nature. It provides that the partners shall only be liable with their property after all the partnership assets have
been exhausted. To say that one’s liability is subsidiary means that it merely becomes secondary and only arises if
the one primarily liable fails to sufficiently satisfy the obligation. Resort to the properties of a partner may be made
only after efforts in exhausting partnership assets have failed or that such partnership assets are insufficient to

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 Page 12 of 21

cover the entire obligation. The subsidiary nature of the partners’ liability with the partnership is one of the valid
defenses against a premature execution of judgment directed to a partner.

In this case, had he been properly impleaded, Guy’s liability would only arise after the properties of QSC would
have been exhausted. The records, however, miserably failed to show that the partnership’s properties were
exhausted. The report37 of the sheriff showed that the latter went to the main office of the DOTC-LTO in Quezon
City and verified whether Medestomas, QSC and Guy had personal properties registered therein. Gacott then
instructed the sheriff to proceed with the attachment of one of the motor vehicles of Guy.38 The sheriff then served
the Notice of Attachment/Levy upon Personalty to the record custodian of the DOTC-LTO of Mandaluyong City. A
similar notice was served to Guy through his housemaid at his residence.

Clearly, no genuine efforts were made to locate the properties of QSC that could have been attached to satisfy the
judgment − contrary to the clear mandate of Article 1816. Being subsidiarily liable, Guy could only be held
personally liable if properly impleaded and after all partnership assets had been exhausted.

Second, Article 1816 provides that the partners’ obligation to third persons with respect to the partnership liability
is pro rata or joint.1âwphi1 Liability is joint when a debtor is liable only for the payment of only a proportionate part
of the debt. In contrast, a solidary liability makes a debtor liable for the payment of the entire debt. In the same vein,
Article 1207 does not presume solidary liability unless: 1) the obligation expressly so states; or 2) the law or
nature requires solidarity. With regard to partnerships, ordinarily, the liability of the partners is not solidary. 39 The
joint liability of the partners is a defense that can be raised by a partner impleaded in a complaint against the
partnership.

In other words, only in exceptional circumstances shall the partners’ liability be solidary in nature. Articles 1822,
1823 and 1824 of the Civil Code provide for these exceptional conditions, to wit:

Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of
the partnership or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in
the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so
acting or omitting to act.

Article 1823. The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his apparent authority receives money or property of a
third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or property of a third person and
the money or property so received is misapplied by any partner while it is in the custody of the partnership.

Article 1824. All partners are liable solidarily with the partnership for everything chargeable to the
partnership under Articles 1822 and 1823.

[Emphases Supplied]

In essence, these provisions articulate that it is the act of a partner which caused loss or injury to a third person
that makes all other partners solidarily liable with the partnership because of the words "any wrongful act or
omission of any partner acting in the ordinary course of the business," "one partner acting within the scope of his
apparent authority" and "misapplied by any partner while it is in the custody of the partnership." The obligation is

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 Page 13 of 21

solidary because the law protects the third person, who in good faith relied upon the authority of a partner, whether
such authority is real or apparent.40

In the case at bench, it was not shown that Guy or the other partners did a wrongful act or misapplied the money or
property he or the partnership received from Gacott. A third person who transacted with said partnership can hold
the partners solidarily liable for the whole obligation if the case of the third person falls under Articles 1822 or
1823.41 Gacott’s claim stemmed from the alleged defective transreceivers he bought from QSC, through the latter's
employee, Medestomas. It was for a breach of warranty in a contractual obligation entered into in the name and for
the account of QSC, not due to the acts of any of the partners. For said reason, it is the general rule under Article
1816 that governs the joint liability of such breach, and not the exceptions under Articles 1822 to 1824. Thus, it was
improper to hold Guy solidarily liable for the obligation of the partnership.

Finally, Section 21 of the Corporation Code,42 as invoked by the RTC, cannot be applied to sustain Guy's liability.
The said provision states that a general partner shall be liable for all debts, liabilities and damages incurred by an
ostensible corporation. It must be read, however, in conjunction with Article 1816 of the Civil Code, which governs
the liabilities of partners against third persons. Accordingly, whether QSC was an alleged ostensible corporation or
a duly registered partnership, the liability of Guy, if any, would remain to be joint and subsidiary because, as
previously stated, all partners shall be liable pro rata with all their property and after all the partnership assets have
been exhausted for the contracts which may be entered into in the name and for the account of the partnership.

WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the March 5, 2013 Resolution of the
Court of Appeals in CA-G.R. CV No. 94816 are hereby REVERSED and SET ASIDE. Accordingly, the Regional
Trial Court, Branch 52, Puerto Princesa City, is ORDERED TO RELEASE Michael C. Guy's Suzuki Grand Vitara
subject of the Notice of Levy/ Attachment upon Personalty.

SO ORDERED.

3. Soncuya v. De Luna, 67 Phil 172, G.R. No. L-45464, April 28, 1939

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-45464 April 28, 1939

JOSUE SONCUYA, plaintiff-appellant,

vs.
CARMEN DE LUNA, defendant-appellee.

Josue Soncuya in his own behalf.

Conrado V. Sanchez and Jesus de Veyra for appellee.

VILLA-REAL, J.:

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 Page 14 of 21

On September 11, 1936, plaintiff Josue Soncuya filed with the Court of First Instance of Manila and amended
complaint against Carmen de Luna in her own name and as co-administratrix of the intestate estate, of Librada
Avelino, in which, upon the facts therein alleged, he prayed that defendant be sentenced to pay him the sum of
P700,432 as damages and costs.

To the aforesaid amended complaint defendant Carmen de Luna interposed a demurrer based on the following
grounds: (1) That the complaint does not contain facts sufficient to constitute a cause of action; and (2) that the
complaint is ambiguous, unintelligible and vague.

Trial on the demurrer having been held and the parties heard, the court found the same well-founded and sustained
it, ordering the plaintiff to amend his complaint within a period of ten days from receipt of notice of the order.

Plaintiff having manifested that he would prefer not to amend his amended complaint, the attorney for the
defendant, Carmen de Luna, filed a motion praying that the amended complaint be dismissed with costs against the
plaintiff. Said motion was granted by The Court of First Instance of Manila which ordered the dismissal of the
aforesaid amended complaint, with costs against the plaintiff.

From this order of dismissal, the appellant took an appeal, assigning twenty alleged errors committed by the lower
court in its order referred to.

The demurrer interposed by defendant to the amended complaint filed by plaintiff having been sustained on the
grounds that the facts alleged in said complaint are not sufficient to constitute a cause of action and that the
complaint is ambiguous, unintelligible and vague, the only questions which may be raised and considered in the
present appeal are those which refer to said grounds.

In the amended complaint it is prayed that defendant Carmen de Luna be sentenced to pay plaintiff damages in the
sum of P700,432 as a result of the administration, said to be fraudulent, of he partnership, "Centro Escolar de
Señoritas", of which plaintiff, defendant and the deceased Librada Avelino were members. For the purpose of
adjudicating to plaintiff damages which he alleges to have suffered as a partner by reason of the supposed
fraudulent management of he partnership referred to, it is first necessary that a liquidation of the business thereof
be made to the end that the profits and losses may be known and the causes of the latter and the responsibility of
the defendant as well as the damages which each partner may have suffered, may be determined. It is not alleged
in the complaint that such a liquidation has been effected nor is it prayed that it be made. Consequently, there is no
reason or cause for plaintiff to institute the action for damages which he claims from the managing partner Carmen
de Luna (Po Yeng Cheo vs. Lim Ka Yam, 44 Phil., 172).

Having reached the conclusion that the facts alleged in the complaint are not sufficient to constitute a cause of
action on the part of plaintiff as member of the partnership "Centro Escolar de Señoritas" to collect damages from
defendant as managing partner thereof, without a previous liquidation, we do not deem it necessary to discuss the
remaining question of whether or not the complaint is ambiguous, unintelligible and vague.

In view of the foregoing considerations, we are of the opinion and so hold that for a partner to be able to claim from
another partner who manages the general copartnership, damages allegedly suffered by him by reason of the
fraudulent administration of the latter, a previous liquidation of said partnership is necessary.

Wherefore, finding no error in the order appealed from the same is affirmed in all its parts, with costs against the
appellant. So ordered.

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4. Magdusa v. Albaran, G.R. No. L-17526, June 30, 1962

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-17526 June 30, 1962

GREGORIO MAGDUSA, ET AL., petitioners,

vs.
GERUNDIO ALBARAN, ET AL., respondents.

Montenegro, Madayag, Viola and Hernandez, Olimpio R. Epis, David C. Ocangas and Bonifacio M. Belderol for
petitioners.
Lozano, Soria, Muana, Ruiz and Morales for respondents.

REYES, J.B.L., J.:

Appeal from a decision of the Court of Appeals (G.R. No. 24248-R) reversing a judgment of the Court of First
Instance of Bohol and ordering appellant Gregorio Magdusa to pay to appellees, by way of refund of their shares as
partners, the following amounts: Gerundio Albaran, P8,979.10; Pascual Albaran, P5,394.78; Zosimo Albaran,
P1,979.28; and Telesforo Bebero, P3,020.27; plus legal interests from the filing of the complaint, and costs.

The Court of Appeals found that appellant and appellees, together with various other persons, had verbally formed
a partnership de facto, for the sale of general merchandise in Surigao, Surigao, to which appellant contributed
P2,000 as capital, and the others contributed their labor, under the condition that out of the net profits of the
business 25% would be added to the original capital, and the remaining 75% would be divided among the members
in proportion to the length of service of each. Sometime in 1953 and 1954, the appellees expressed their desire to
withdraw from the partnership, and appellant thereupon made a computation to determine the value of the partners'
shares to that date. The results of the computation were embodied in the document Exhibit "C", drawn in the
handwriting of appellant. Appellees thereafter made demands upon appellant for payment, but appellant having
refused, they filed the initial complaint in the court below. Appellant defended by denying any partnership with
appellees, whom he claimed to be mere employees of his.

The Court of First Instance of Bohol refused to give credence to Exhibit "C", and dismissed the complaint on the
ground that the other were indispensable parties but hid not been impleaded. Upon appeal, the Court of Appeals
reversed, with the result noted at the start of this opinion.

Gregorio Magdusa then petitioned for a review of the decision, and we gave it due course.1äwphï1.ñët

The main argument of appellant is that the appellees' action can not be entertained, because in the distribution of
all or part of a partnership's assets, all the partners have no interest and are indispensable parties without whose
intervention no decree of distribution can be validly entered. This argument was considered and answered by the
Court of Appeals in the following words:

We now come to the last issue involved. While finding that some amounts are due the plaintiffs, the lower
court withheld an award in their favor, reasoning that a judgment ordering the defendant to pay might affect
the rights of other partners who were not made parties in this case. The reason cited by the lower court
does not constitute a legal impediment to a judgment for the plaintiffs in this case. This is not an action for a
dissolution of a partnership and winding up of its affairs or liquidation of its assets in which the interest of

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other partners who are not brought into the case may be affected. The action of the plaintiffs is one for the
recovery of a sum of money with Gregorio Magdusa as the principal defendant. The partnership, with
Gregorio Magdusa as managing partner, was brought into the case as an alternative defendant only.
Plaintiffs' action was based on the allegation, substantiated in evidence, that Gregorio Magdusa, having
taken delivery of their shares, failed and refused and still fails and refuses to pay them their claims. The
liability, therefore, is personal to Gregorio Magdusa, and the judgment should be against his sole interest,
not against the partnership's although the judgment creditors may satisfy the judgment against the interest
of Gregorio Magdusa in the partnership subject to the condition imposed by Article 1814 of the Civil Code.

We do not find the preceding reasoning tenable. A partner's share can not be returned without first dissolving and
liquidating the partnership (Po Yeng Cheo vs. Lim Ka Yam, 44 Phil. 177), for the return is dependent on the
discharge of the creditors, whose claims enjoy preference over those of the partners; and it is self-evident that all
members of the partnership are interested in his assets and business, and are entitled to be heard in the matter of
the firm's liquidation and the distribution of its property. The liquidation Exhibit "C" is not signed by the other
members of the partnership besides appellees and appellant; it does not appear that they have approved,
authorized, or ratified the same, and, therefore, it is not binding upon them. At the very least, they are entitled to be
heard upon its correctness.

In addition, unless a proper accounting and liquidation of the partnership affairs is first had, the capital shares of the
appellees, as retiring partners, can not be repaid, for the firm's outside creditors have preference over the assets of
the enterprise (Civ. Code, Art. 1839), and the firm's property can not be diminished to their prejudice. Finally, the
appellant can not be held liable in his personal capacity for the payment of partners' shares for he does not hold
them except as manager of, or trustee for, the partnership. It is the latter that must refund their shares to the retiring
partners. Since not all the members of the partnership have been impleaded, no judgment for refund can be
rendered, and the action should have been dismissed.

IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is reversed and the action ordered dismissed,
without prejudice to a proper proceeding for the dissolution and liquidation of the common enterprise. Costs against
appellees.

5. Realubit v. Jaso, G.R. No. 178782, September 21, 2011

SECOND DIVISION

JOSEFINA P. REALUBIT, G.R. No. 178782

Petitioner,

Present:

- versus - VELASCO, JR.,* J.,

BRION,**
Acting Chairperson,
ABAD,***
PEREZ, and
SERENO, JJ.

PROSENCIO D. JASO and EDENG. JASO, Promulgated:

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 Page 17 of 21

Respondents.
September 21, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

PEREZ, J.:

The validity as well as the consequences of an assignment of rights in a joint venture are at issue in this
petition for review filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure,[1] assailing the 30 April 2007
Decision[2] rendered by the Court of Appeals (CA) then Twelfth Division in CA-G.R. CV No. 73861,[3] the dispositive
portion of which states:

WHEREFORE, the Decision appealed from is SET ASIDE and we order the dissolution of the joint
venture between defendant-appellant Josefina Realubit and Francis Eric Amaury Biondo and the
subsequent conduct of accounting, liquidation of assets and division of shares of the joint venture
business.

Let a copy hereof and the records of the case be remanded to the trial court for appropriate
proceedings.[4]

The Facts

On 17 March 1994, petitioner Josefina Realubit (Josefina) entered into a Joint Venture Agreement with Francis Eric
Amaury Biondo (Biondo), a French national, for the operation of an ice manufacturing business. With Josefina as
the industrial partner and Biondo as the capitalist partner, the parties agreed that they would each receive 40% of
the net profit, with the remaining 20% to be used for the payment of the ice making machine which was purchased
for the business.[5] For and in consideration of the sum of P500,000.00, however, Biondo subsequently executed
a Deed of Assignment dated 27 June 1997, transferring all his rights and interests in the business in favor of
respondent Eden Jaso (Eden), the wife of respondent Prosencio Jaso. [6] With Biondos eventual departure from the
country, the Spouses Jaso caused their lawyer to send Josefina a letter dated 19 February 1998, apprising her of
their acquisition of said Frenchmans share in the business and formally demanding an accounting and inventory
thereof as well as the remittance of their portion of its profits.[7]

Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso commenced the instant
suit with the filing of their 3 August 1998 Complaint against Josefina, her husband, Ike Realubit (Ike), and their
alleged dummies, for specific performance, accounting, examination, audit and inventory of assets and properties,
dissolution of the joint venture, appointment of a receiver and damages.Docketed as Civil Case No. 98-0331 before
respondent Branch 257 of the Regional Trial Court (RTC) of Paraaque City, said complaint alleged, among other
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matters, that the Spouses Realubit had no gainful occupation or business prior to their joint venture with Biondo;
that with the income of the business which earned not less than P3,000.00 per day, they were, however, able to
acquire the two-storey building as well as the land on which the joint ventures ice plant stands, another building
which they used as their office and/or residence and six (6) delivery vans; and, that aside from appropriating for
themselves the income of the business, the Spouses Realubit have fraudulently concealed the funds and assets
thereof thru their relatives, associates or dummies.[8]

Served with summons, the Spouses Realubit filed their Answer dated 21 October 1998, specifically
denying the material allegations of the foregoing complaint. Claiming that they have been engaged in the tube ice
trading business under a single proprietorship even before their dealings with Biondo, the Spouses Realubit, in
turn, averred that their said business partner had left the country in May 1997 and could not have executed
the Deed of Assignment which bears a signature markedly different from that which he affixed on their Joint
Venture Agreement; that they refused the Spouses Jasos demand in view of the dubious circumstances
surrounding their acquisition of Biondos share in the business which was established at Don Antonio Heights,
Commonwealth Avenue, Quezon City; that said business had already stopped operations on 13 January 1996
when its plant shut down after its power supply was disconnected by MERALCO for non-payment of utility bills;
and, that it was their own tube ice trading business which had been moved to 66-C Cenacle Drive, Sanville
Subdivision, Project 6, Quezon City that the Spouses Jaso mistook for the ice manufacturing business established
in partnership with Biondo.[9]

The issues thus joined and the mandatory pre-trial conference subsequently terminated, the RTC went on
to try the case on its merits and, thereafter, to render its Decision dated 17 September 2001, discounting the
existence of sufficient evidence from which the income, assets and the supposed dissolution of the joint venture
can be adequately reckoned. Upon the finding, however, that the Spouses Jaso had been nevertheless subrogated
to Biondos rights in the business in view of their valid acquisition of the latters share as capitalist partner, [10]the RTC
disposed of the case in the following wise:

WHEREFORE, defendants are ordered to submit to plaintiffs a complete accounting and inventory
of the assets and liabilities of the joint venture from its inception to the present, to allow plaintiffs
access to the books and accounting records of the joint venture, to deliver to plaintiffs their share in
the profits, if any, and to pay the plaintiffs the amount of P20,000. for moral damages. The claims
for exemplary damages and attorneys fees are denied for lack of basis.[11]

On appeal before the CA, the foregoing decision was set aside in the herein assailed Decision dated 30
April 2007, upon the following findings and conclusions: (a) the Spouses Jaso validly acquired Biondos share in the
business which had been transferred to and continued its operations at 66-C Cenacle Drive, Sanville Subdivision,
Project 6, Quezon City and not dissolved as claimed by the Spouses Realubit; (b) absent showing of Josefinas
knowledge and consent to the transfer of Biondos share, Eden cannot be considered as a partner in the business,
pursuant to Article 1813 of the Civil Code of the Philippines; (c) while entitled to Biondos share in the profits of the
business, Eden cannot, however, interfere with the management of the partnership, require information or account
of its transactions and inspect its books; (d) the partnership should first be dissolved before Eden can seek an
accounting of its transactions and demand Biondos share in the business; and, (e) the evidence adduced before
the RTC do not support the award of moral damages in favor of the Spouses Jaso.[12]

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The Spouses Realubits motion for reconsideration of the foregoing decision was denied for lack of merit in
the CAs 28 June 2007 Resolution,[13] hence, this petition.

The Issues

The Spouses Realubit urge the reversal of the assailed decision upon the negative of the following issues,
to wit:

A. WHETHER OR NOT THERE WAS A VALID ASSIGNMENT OF RIGHTS TO THE

JOINT VENTURE.

B. WHETHER THE COURT MAY ORDER PETITIONER [JOSEFINA REALUBIT] AS PARTNER

IN THE JOINT VENTURE TO RENDER [A]N ACCOUNTING TO ONE WHO IS NOT A
PARTNER IN SAID JOINT VENTURE.

C. WHETHER PRIVATE RESPONDENTS [SPOUSES JASO] HAVE ANY RIGHT IN THE JOINT
VENTURE AND IN THE SEPARATE ICE BUSINESS OF PETITIONER[S].[14]

The Courts Ruling

We find the petition bereft of merit.

The Spouses Realubit argue that, in upholding its validity, both the RTC and the CA inordinately gave
premium to the notarization of the 27 June 1997 Deed of Assignment executed by Biondo in favor of the Spouses
Jaso. Calling attention to the latters failure to present before the RTC said assignor or, at the very least, the
witnesses to said document, the Spouses Realubit maintain that the testimony of Rolando Diaz, the Notary Public
before whom the same was acknowledged, did not suffice to establish its authenticity and/or validity. They insist
that notarization did not automatically and conclusively confer validity on said deed, since it is still entirely possible
that Biondo did not execute said deed or, for that matter, appear before said notary public. [15] The dearth of merit in
the Spouses Realubits position is, however, immediately evident from the settled rule that documents
acknowledged before notaries public are public documents which are admissible in evidence without necessity of
preliminary proof as to their authenticity and due execution.[16]

It cannot be gainsaid that, as a public document, the Deed of Assignment Biondo executed in favor
of Eden not only enjoys a presumption of regularity[17] but is also considered prima facie evidence of the facts
therein stated.[18] A party assailing the authenticity and due execution of a notarized document is, consequently,

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required to present evidence that is clear, convincing and more than merely preponderant.[19] In view of the
Spouses Realubits failure to discharge this onus, we find that both the RTC and the CA correctly upheld the
authenticity and validity of said Deed of Assignment upon the combined strength of the above-discussed disputable
presumptions and the testimonies elicited from Eden[20] and Notary Public Rolando Diaz.[21] As for the Spouses
Realubits bare assertion that Biondos signature on the same document appears to be forged, suffice it to say that,
like fraud,[22] forgery is never presumed and must likewise be proved by clear and convincing evidence by the party
alleging the same.[23] Aside from not being borne out by a comparison of Biondos signatures on the Joint Venture
Agreement[24] and the Deed of Assignment,[25] said forgery is, moreover debunked by Biondos duly authenticated
certification dated 17 November 1998, confirming the transfer of his interest in the business in favor of Eden. [26]

Generally understood to mean an organization formed for some temporary purpose, a joint venture is
likened to a particular partnership or one which has for its object determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation.[27] The rule is settled that joint ventures are governed by
the law on partnerships[28] which are, in turn, based on mutual agency or delectus personae.[29] Insofar as a
partners conveyance of the entirety of his interest in the partnership is concerned, Article 1813 of the Civil Code
provides as follows:

Art. 1813. A conveyance by a partner of his whole interest in the partnership does not itself
dissolve the partnership, or, as against the other partners in the absence of agreement, entitle the
assignee, during the continuance of the partnership, to interfere in the management or
administration of the partnership business or affairs, or to require any information or account of
partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to
receive in accordance with his contracts the profits to which the assigning partners would otherwise
be entitled. However, in case of fraud in the management of the partnership, the assignee may
avail himself of the usual remedies.

In the case of a dissolution of the partnership, the assignee is entitled to receive his assignors
interest and may require an account from the date only of the last account agreed to by all the
partners.

From the foregoing provision, it is evident that (t)he transfer by a partner of his partnership interest does not
make the assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the management of
the partnership business or to receive anything except the assignees profits. The assignment does not purport to
transfer an interest in the partnership, but only a future contingent right to a portion of the ultimate residue as the
assignor may become entitled to receive by virtue of his proportionate interest in the capital. [30] Since a partners
interest in the partnership includes his share in the profits,[31] we find that the CA committed no reversible error in
ruling that the Spouses Jaso are entitled to Biondos share in the profits, despite Juanitas lack of consent to the
assignment of said Frenchmans interest in the joint venture. Although Eden did not, moreover, become a partner as
a consequence of the assignment and/or acquire the right to require an accounting of the partnership business, the
CA correctly granted her prayer for dissolution of the joint venture conformably with the right granted to the
purchaser of a partners interest under Article 1831 of the Civil Code.[32]

Considering that they involve questions of fact, neither are we inclined to hospitably entertain the Spouses
Realubits insistence on the supposed fact that Josefinas joint venture with Biondo had already been dissolved and
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that the ice manufacturing business at 66-C Cenacle Drive, Sanville Subdivision, Project 6, Quezon City was
merely a continuation of the same business they previously operated under a single proprietorship. It is well-
entrenched doctrine that questions of fact are not proper subjects of appeal by certiorari under Rule 45 of the Rules
of Court as this mode of appeal is confined to questions of law. [33] Upon the principle that this Court is not a trier of
facts, we are not duty bound to examine the evidence introduced by the parties below to determine if the trial and
the appellate courts correctly assessed and evaluated the evidence on record.[34] Absent showing that the factual
findings complained of are devoid of support by the evidence on record or the assailed judgment is based on
misapprehension of facts, the Court will limit itself to reviewing only errors of law. [35]

Based on the evidence on record, moreover, both the RTC[36] and the CA[37] ruled out the dissolution of the
joint venture and concluded that the ice manufacturing business at the aforesaid address was the same one
established by Juanita and Biondo. As a rule, findings of fact of the CA are binding and conclusive upon this
Court,[38] and will not be reviewed or disturbed on appeal[39] unless the case falls under any of the following
recognized exceptions: (1) when the conclusion is a finding grounded entirely on speculation, surmises and
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is a grave
abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to
the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8)
when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the
respondents; and, (10) when the findings of fact of the CA are premised on the supposed absence of evidence and
contradicted by the evidence on record.[40] Unfortunately for the Spouses Realubits cause, not one of the foregoing
exceptions applies to the case.

WHEREFORE, the petition is DENIED for lack of merit and the assailed CA Decision dated 30 April 2007
is, accordingly, AFFIRMED in toto.

SO ORDERED.

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