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Conveyance of real property belonging to the partnership

SANTIAGO SYJUCO, INC., vs. HON. JOSE P. CASTRO, AS PRESIDING


JUDGE OF THE REGIONAL TRIAL COURT OF THE NATIONAL CAPITAL
JUDICIAL REGION, BRANCH LXXXV, QUEZON CITY, THE CITY SHERIFF
OF THE CITY OF MANILA, THE CITY REGISTER OF DEEDS OF THE CITY
OF MANILA, EUGENIO LIM, ARAMIS LIM, MARIO LIM, PAULINO LIM,
LORENZO LIM, NILA LIM and/ or THE PARTNERSHIP OF THE HEIRS OF
HUGO LIM and ATTORNEY PATERNO P. CANLAS
G.R. No. 70403 July 7, 1989
NARVASA, J.:
FACTS: Eugenio Lim, along with his brothers, all hereinafter collectively called the
Lims, borrowed frompetitioner Santiago Syjuco, Inc. (hereinafter, Syjuco only) the
sum of 800,000.00. The loan was given onthe security of a first mortgage on
property registered in the names of said borrowers as owners incommon.
Thereafter, additional loans on the same security were obtained by the Lims from
Syjuco, sothat the aggregate of the loans stood at 2,460,000.00, exclusive of
interest. When the obligation matured,the Lims failed to pay it despite demands
therefor and consequently, Syjuco caused extra-judicialproceedings for the
foreclosure of the mortgage and for the Sheriff of Manila to execute the
scheduledauction sale. The attempt to foreclose triggered off a legal battle that
has dragged on for 20 years,through 5 cases in the courts, one of which the
respondents advocated the theory that the mortgage,which they had individually
constituted, in fact no longer belonged to them, having been earlier deededover
by them to the partnership, Heirs of Hugo Lim, making the said mortgage void
because it wasexecuted by them without authority from the partnership.
Ruling of the lower court: Judgment was rendered by the trial courtdeclaring void
the mortgage in question because it was executed by the Lims without authority
from thepartnership which was and had been the exclusive owner of the
mortgaged property, and makingpermanent an injunction against the foreclosure
sale.
Syjuco filed an instant petition for certiorari, prohibition and mandamus. It
prays in its petition that the default judgment rendered against it by Judge Castro
be annuled on the ground of, among others, estoppel, res judicata, and Article
1819 of the Civil Code.
ISSUE: Whether or not the conveyance of real property belongs to the partnership.
HELD: Yes. The court holds that the respondent partnership was inescapably
chargeable with knowledge of the mortgage executed by all the partners thereof,
and therefore its silence and failure to impugn said mortgage within a reasonable

time, let alone a space of more than 17 years, brought into play the doctrine of
estoppel to preclude any attempt to avoid the mortgage as allegedly
unauthorized. Equally or even more preclusive of the respondent partnerships
claim to the mortgaged property is the last paragraph of Art. 1819 of the Civil
Code, which contemplates a situation similar to the case at bar. It states that
where the title to real property is in the names of all the partners, a conveyance
executed by all the partners passes all their rights in such property.
Consequently, those members' acts, declarations and omissions cannot be
deemed to be simply the individual acts of said members, but infact and in law,
those of the partnership.