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Partnership and Agency Digests For Atty Cochingyan
Partnership and Agency Digests For Atty Cochingyan
Cochingyan
TAN SEN GUAN & CO. VS. PHILIPPINE TRUST (2) Exhibit D (the certificate of sale to Roman
CO. Catholic Archbishop) shows that all properties to
Phil Trust as Trustee were included in the sale.
Facts: Plaintiff Tan Sen Guan & Co. secured a The only thing reserved from the sale was the
judgment for a sum of P21,426 against the Mindoro standing crops, and it is reasonable to presume
Sugar Co. of which the Philippine Trust is the trustee. that they had also been sold between the date of
The plaintiff entered into an agreement with the the sale and the institution of this action. Where
defendant Philippine Trust Co. wherein the former the real estate, the personal property including
assigned, transferred, and sold to the latter the full animals, and all the bills receivable are sold, it
amount of said judgment against Mindoro Sugar Co. would be a forced construction of the contract of
together with all its rights thereto and the latter agreement to hold that the assets of the Mindoro
offered satisfactory consideration thereto. The Sugar Company had not been sold.
agreement further stipulated that upon signing of the
agreement, Phil Trust shall pay Tan Sen the sum of
P5000; should the Mindoro Sugar be sold or its
ownership be transferred, an additional P10,000 PHIL. AIR LINES, INC. VS. HEALD LUMBER CO.
pesos will be paid to Tan Sen upon perfection of the
sale; in case any other creditor of Mindoro Sugar Facts: Lepanto Consolidated Mines chartered a
obtains in the payment of his credit a greater helicopter belonging to plaintiff Phil. Air Lines to
proportion than the price paid to Tan Sen, the Phil make a flight from its base at Nichols Field Airport to
Trust shall pay to the latter whatever sum may be the former’s camp at Manyakan Mountain Province.
necessary to be proportioned the claim of the The helicopter, with Capt. Gabriel Hernandez and Lt.
creditor. However, if the Mindoro Sugar is sold to any Rex Imperial on board, failed to reach the destination
person who does not pay anything to the creditors or as it collided with defendant’s tramway steel cables
pay them equal or less than 70 percent of their resulting in its destruction and death of the officers.
claim, or should the creditors obtain from other Plaintiff insured the helicopters and the officers who
sources the payment of their claim equal to or less piloted the same for P80,000 and P20,000
than 70 percent, the Phil Trust will only pay to Tan respectively and as a result of the crash, the
Senthe additional sum of P10,000 upon the sale or insurance companies paid to the plaintiff the total
transfer of the Mindoro Sugar as above stated. The indemnity of P120,000. Plaintiff sustained additional
properties of Mindoro Sugar were later on sold at damages totaling P103,347.82 which were not
public auction to the Roman Catholic Archbishop of recovered by insurance. The plaintiff instituted this
Manila and base on the agreement plaintiff Tan Sen action against defendant Heald Lumber Company to
brought suit against defendant Phil Trust for the sum recover the sum paid by the insurance company to
of P10,000. the plaintiff and the additional damages which was
not recovered from the insurance.
Defendant’s argument: Only a portion of the
Mindoro Sugar’s properties were sold. Defendant’s argument: Plaintiff has no cause of
action against defendant for if anyone should due
CFI: Absolved the defendant on two grounds: (a) in defendant for its recovery, it will only be the
the contract, it was only bound as a trustee and not insurance companies.
as an individual; (b) that it has not been proved that
all the properties of the Mindoro Sugar had been Plaintiff’s argument: It asserts that the claim of
sold. the said amount of P120,000 is on behalf and for the
benefit of the insurers and shall be held by plaintiff in
Issues: trust for the insurers. It is appellant’s theory that,
inasmuch as the loss it has sustained exceeds the
(1) W/N the defendant is not personally amount of the insurance paid to it by the insurers,
responsible for the claim of the plaintiff the right to recover the entire loss from the
based on the deed of assignment because wrongdoer remains with the insured and so the
of having executed the same in its capacity action must be brought in its own name as real party
as trustee of the properties of the Mindoro in interest. To the extent of the amount received by it
Sugar. as indemnity from the insurers, plaintiff would then
(2) W/N all the properties of the Mindoro Sugar be acting as a trustee for them. To support this
were sold at public auction to the Roman contention, appellant cites American authorities.
Catholic Archbishop of Manila.
RTC’s Ruling: The court ordered the plaintiff to
amend its complaint to delete the first allegation that
Held: SC reversed CFI’s ruling. insurance companies have paid a portion of the
plaintiff’s damages, since the Court believes that the
(1) The Phil Trust Company in its individual capacity real parties in interest are the insurance companies
is responsible for the contract as there was no concerned or bring in the insurance companies as
express stipulation that the trust estate and not parties plaintiff. And having manifested plaintiff’s
the trustee should be held liable on the contract decision not to amend the complaint, such move of
in question. Not only is there no express plaintiff amounts to a deletion of the portion objected
stipulation that the trustee should not be held to and so the complaint should be deemed limited to
responsible but the ‘Wherefore’ clause of the the additional damages.
contract states the judgment was expressly
assigned in favor of Phil Trust Company and not Issue:
Phil Trust Company, the trustee. It therefore
follows that appellant had a right to proceed (1) W/N the plaintiff is not the real party in
directly against the Phil Trust on its contract and interest respecting the claim for P120,000.
has no claim against either Mindoro Sugar or the
trust estate.
Partnership & Agency | 2B 2008-2009
PARTNERSHIP Digests Atty. Cochingyan
Held: SC affirmed the appealed judgment. widow, Paulina Cristobal, and the children of Epifanio
Gomez instituted an action for the recovery of the
(1) In this jurisdiction, we have our own legal three parcels of land from Marcelino Gomez.
provision which in substance differs from the
American law. Art. 2207 of the NCC provides Defendant’s argument: Defendant answered with
that if a property is insured and the owner a general denial and claimed to be the owner in his
receives the indemnity from the insurer the own right of all the property which is the subject of
same is deemed subrogated to the rights of the action. He further claimed that the trust
the insured against the wrongdoer and if the agreement was kept secret from Epifanio Gomez, and
amount paid by the insurer does not fully that, having no knowledge of it, he could not have
cover the loss, then the aggrieved party is the accepted it before the stipulation was revoked. And
one entitled to recover the deficiency. Under that he has the benefit of prescription in his favor,
this legal provision, the real party in interest having been in possession of more than 10 years
with regard to the portion of the indemnity under the deed which he acquired the sole right from
paid is the insurer and not the insured. his sister.
(2) Before a person can sue for the benefit of
another under a trusteeship, he must be ‘a RTC’s ruling: ruled in favor of plaintiffs and found
trustee of an express trust.’ The right does not that the property in question belongs to the plaintiffs,
exist in cases of implied trust, that is, a trust as co-owners, and ordered the defendant to
which may be inferred merely from the acts of surrender the property to them and execute an
the parties or from other circumstances. Also, appropriate deed of transfer as well as to pay the
to adopt a contrary rule to what is authorized cost of the proceeding.
by the American statues would be splitting a
cause of action or promoting multiplicity of Issue: (1) W/N the dissolution of partnership
suits which should be avoided. Under our between Marcelino and Telesfora destroyed the
rules, both the insurer and the insured may beneficial right of Epifanio Gomez in the property.
join as plaintiffs to press their claims against
the wrongdoer when the same arise out of the (2) W/N the partnership agreement of Marcelino
same transaction or event. This is authorized and Telesfora was a donation in favor of
by section 6, rule 3, of the Rules of Court. Epifanio or an express trust.
(3) W/N Marcelino Gomez acquired the property
through prescription.
Held: SC declared ownership in favor of plaintiffs.
CRISTOBAL VS. GOMEZ
(1) The fact that one of the two individuals who
Facts: Epifanio Gomez owned a property which was have constituted themselves trustees for
sold in a pacto de retro sale to Luis Yangco the purpose above indicated conveys his
redeemable in 5 years, although the period passed interest in the property to his cotrustee does
without redemption, the vendee conceded the not relieve the latter from the obligation to
vendor the privilege of repurchase. Gomez apply to a comply with the trust.
kinsman, Bibiano Bañas, for assistance on a (2) A trust constituted between two contracting
condition that he will let him have the money if his parties for the benefit of a third person is
brother Marcelino Gomez and his sister Telesfora not subject to the rules governing donations
Gomez would make themselves responsible for the of real property. The beneficiary of the trust
loan. The siblings agreed and Bañas advance the may demand performance of the obligation
sum of P7000 which was used to repurchase the without having formally accepted the
property in the names of Marcelino and Telesfora.. A benefit of the trust in a public document,
‘private partnership in participation’ was created upon mere acquiescence in the formation of
between Marcelino and Telesfora and therein agreed the trusts and acceptance under the second
that the capital of the partnership should consist of par. of article 1257 of the CC. Much energy
P7000 of which Marcelino was to supply the amount has been expanded by the attorneys for the
of P1500 and Telesora the sume of P5500. It was appellant in attempting to demonstrate
further agreed that the all the property to be that, if Epifanio at any time had any right in
redeemed shall be named to the two, that Marcelino the property by virtue of the partnership
should be its manager, that all the income, rent, agreement between Marcelino and Telesfora
produce of the property shall be applied exclusively such right could be derived as a donation
to the amortization of the capital employed by the and that, inasmuch as the donation was
two parties with its corresponding interest and other never accepted by Epifanio in a public
incidental expenses and as soon as the capital document, his supposed interest therein is
employed, with its interest and other incidental unenforceable. The partnership should not
expenses, shall have been covered, said properties be viewed in light of an intended donation,
shall be returned to Epifanio Gomez or his legitimate but as an express trust.
children. A year after Epifanio’s death, Telesfora (3) As against the beneficiary, prescription is
wanted to free herself from the responsibility which not effective in favor of a person who is
she had assumed to Bañas and conveyed to acting as a trustee of a continuing and
Marcelino her interest and share in the three subsisting trust. Therefore, Marcelino cannot
properties previously redeemed from Yangco and acquire ownership over the property
both declared dissolved the partnership they created. through prescription.
With Marcelino as the sole debtor, Bañas required
him to execute a contract of sale of the three parcels
with pacto de retro for the purpose of securing the SALAO VS. SALAO
indebtedness. Marcelino later on paid the sum in full
satisfaction of the entire claim and received from Facts: After the death of Valentina Ignacio, her estate
Bañas a reconveyance of the three parcels. The was administered by her daughter Ambrosia. It was
Partnership & Agency | 2B 2008-2009
PARTNERSHIP Digests Atty. Cochingyan
partitioned extrajudically and the deed was signed by never was any intention on the part of Juan,
her four legal heirs namely her 3 children (Alejandra, Ambrosia and Valentin to create any trust.
Juan, and Ambrosia) and Valentin Salao, in There was no constructive trust because the
representation of his deceased father, Patricio. The registration of the 2 fishponds in the names
Calunuran fishpond is the property in contention in of Juan and Ambrosia was not vitiated by
this case. Prior to the death of Valentina Ignacio, her fraud or mistake. This is not a case where to
children Juan and Ambrosia secured a torrens title in satisfy the demands of justice it is
their names a 47 ha. fishpond located at Sitio necessary to consider the Calunuran
Calunuran, Lubao, Pampanga. A decree was also fishpond as being held in trust by the heirs
issued in the names of Juan and Ambrosia for the of Juan Salao Sr. for the heirs of Valentin
Pinanganacan fishpond which adjoins the Calunuran Salao. And even assuming that there was an
fishpond. A year before Ambrosia’s death, she implied trust, plaintiffs’ action is clearly
donated her one-half share in the two fishponds in barred by prescription when it filed an
question to her nephew, Juan Salo Jr. He was already action in 1952 or after the lapse of more
the owner of the other half of the fishponds having than 40 years from the date of registration.
inherited it from his father, Juan Salao Sr. After
Ambrosia died, the heirs of Valentin Salao, Benita
Salao and the children of Victorina Salao, filed a CARANTES VS. CA
complaint against Juan Salao Jr. for the
reconveyance to them of the Canluran fishpond as Facts: A proceeding for expropriation was
Valentin Salao’s supposed one – third share in the commenced by the government for the construction
145 ha. of fishpond registered in the names of Juan of the Loakan Airport and a portion of Lot 44, which
Salao Sr. and Ambrosia Salao. was originally owned by Mateo Carantes, was needed
for the landing field. The lot was subdivided into Lots
Defendant’s argument: Valentin Salao did not Nos. 44-a (the portion which the government sought
have any interest in the two fishponds and that the to expropriate), 44-b, 44-c, 44-d and 44-e.
sole owners thereof were his father and his aunt Negotiations were also under way for the purchase
Ambrosia, as shown in the Torrens titles and that he by the government of lots 44-b and 44-c. When
was the donee of Ambrosia’s one-half share. Mateo Carantes died, his son Maximino Carantes was
appointed administrator of the estate and filed a
Plaintiff’s argument: Their action is to enforce a project of partition of the remaining portion of Lot 44
trust which defendant Juan Salao Jr. allegedly wherein he listed as the heirs of Mateo Carantes who
violated. The existence of trust was not definitely were entitled to inherit the estate, himself and his
alleged in the plaintiff’s complaint but in their brothers and sisters. An ‘Assignment of Right to
appellant’s brief. Inheritance’ was executed by the children of Mateo
and the heirs of Apung Carantes in favor of Maximino
RTC’s Ruling: There was no community of property Carantes for a consideration of P1. Maximino sold to
among Juan, Ambrosia and Valentin when the the government lots nos. 44-b and 44-c and divided
Calunuran and the Pinanganacan lands were the proceeds of the sale among himself and the
acquired; that co – ownership over the real properties other heirs of Mateo. The assignment of right to
of Valentina Ignacio existed among her heirs after inheritance was registered by Maximino and the TCT
her death in 1914; that the co – ownership was in the names of the heirs was cancelled and a new
administered by Ambrosia and that it subsisted up to one was issued in the name of Maximino Carantes as
1918 when her estate was partitioned among her the sole owner of the remaining portions of lot 44. A
three children and her grandson, Valentin Salao. It complaint was instituted by the three children of
rationalized that Valentin’s omission during his Mateo and the heirs of Apung Carantes against
lifetime to assail the Torrens titles of Juan and Maximino praying that the deed of assignment be
Ambrosia signified that he was not a co-owner of the declared null and void and that the remaining
fishponds. It did not give credence to the testimonies portions of lot 44 be ordered partitioned into six
of plaintiffs’ witnesses because their memories could equal shares and Maximino be accordingly ordered to
not be trusted and because no strong evidence execute the necessary deed of conveyance in favor
supported the declarations. Moreover, the parties of the other heirs.
involved in the alleged trust were already dead.
Plaintiffs’ argument: They executed the deed of
Judgment appealed to CA but the amounts involved assignment only because they were made to believe
exceeded two hundred thousand pesos, the CA by Maximino that the said instrument embodied the
elevated the case to the SC. understanding among parties that it merely
authorized the defendant Maximino to convey
Issue: portions of lot 44 to the government in their behalf to
minimize expenses and facilitate the transaction and
(1) W/N plaintiffs’ massive oral evidence it was only when they secured a copy of the deed
sufficient to prove an implied trust, resulting that they came to know that the same purported to
or constructive, regarding the two assign in favor of Maximino their rights to inheritance
fishponds. from Mateo Carantes.
Held: SC affirmed lower court’s decision.
Defendant’s argument: Filed a motion to dismiss.
(1) Plaintiff’s pleading and evidence cannot be The plaintiffs’ cause of action is barred by the statute
relied upon to prove an implied trust. The of limitations because the deed of assignment was
trial court’s firm conclusion that there was recorded in the Registry of Property and that
no community of property during the ownership over the property became vested in him
lifetime of Valentina Ignacio or before 1914 by acquisitive prescription ten years from its
is substantiated by defendant’s registration in his name of Feb. 21, 1947.
documentary evidence. There was no
resulting trust in this case because there
Partnership & Agency | 2B 2008-2009
PARTNERSHIP Digests Atty. Cochingyan
RTC’s ruling: Ruled in favor of defendant Maximino September 4, 1958, the same in barred by
Carantes stating that since an action based on fraud extinctive prescription.
prescribes in four years from the discovery of the
fraud, and in this case the fraud allegedly
perpetrated by defendant must deemed to have
been discovered on march 16, 1940 when the deed MUNICIPALITY OF VICTORIAS VS. CA
of assignment was registered, the plaintiff’s right of
action had already prescribed when they filed the Facts: Norma Leuenberger, respondent, inherited a
action in 1958. And even assuming co-ownership parcel of land from her grandmother, Simeona Vda.
existed, the same was completely repudiated by the de Ditching in 1941. In 1963, she discovered that a
said defendant by performance pf several acts such part of the parcel of land was being used by
as the execution of deed of sale in favor of the petitioner Municipality of Victorias as a cemetery. By
government in 1939, hence ownership had vested in reason of the discovery, respondent wrote a letter to
the defendant by acquisitive prescription. the Mayor of Victorias demanding payment of past
rentals over the land used a cemetery and
CA reversed. requesting delivery of the illegally occupied land by
the petitioner. The Mayor replied that the
Issue: municipality bought the land but however refused to
show the papers concerning the sale. Apparently, the
(1) W/N the deed of assignment is void ab initio municipality failed to register the Deed of Sale of the
on the ground of fraud and the action to lot in dispute.
annul it has prescribed.
(2) W/N a constructive trust exist making an Respondent filed a complaint in the Court of
action for reconveyance based on First Instance of Negros Occidental for recovery of
constructive trust imprescriptable. possession of the parcel of land occupied by the
municipal cemetery. In its answer, petitioner
Municipality alleged ownership of the lot having
Held: SC dismissed the complaint and set aside CA’s bought it from Simeona Vda. de Ditching sometime in
decision. 1934. The lower court decided in favor of the
petitioner municipality.
(1) When the consent to a contract was
fraudulently obtained, the contract is On appeal, petitioner presented an entry in
voidable. Fraud or deceit does not render a the notarial register form the Bureau of Records
contract void ab initio, and can only be a Management in Manila of a notary public of a sale
ground for rendering the contract voidable purporting to be that of the disputed parcel of land.
or annullable pursuant to article 1390 of the Included within it are the parties to the sale, Vda. de
NCC by a proper action in court. The present Ditching, as the vendor and the Municipal Mayor of
action being one to annul a contract on the Victorias in 1934, as vendee. The Court of Appeals
ground of fraud, its prescriptive period is 4 however claimed that this evidence is not a sufficient
years from the time of discovery of fraud. Deed of Sale. It therefore reversed the ruling of the
The weight og authorities is the effect that CFI and ordered the petitioner to deliver the
the registration of an instrument in the possession of the land in question to respondents.
Office of the Register of Deeds constitutes a
constructive notice to the whole world, and, Issue: W/N the notary public of sale is sufficient to
therefore, discovery of fraud is deemed to substantiate the municipality’s claim that it acquired
have taken place at the time of the the disputed land by means of a Deed of Sale. Yes.
registration. In this case, the deed of
assignment was registered on March 16, Held: The fact that the notary public of sale showed
1940. The 4 years period within which the the nature of the instrument, the subject of the sale,
private respondents could have filed the the parties of the contract, the consideration and the
present action consequently commenced on date of sale, the Court held that it was a sufficient
march 16, 1940, and since they filed it only evidence of the Deed of Sale.
in September 4, 1958, it follows that the
same is barred by the statute of limitations. Thus, when Norma inherited the land from
(2) No express trust was created in favor of the her grandmother, a portion of it has already been
private respondents. If trust there was, it sold by the latter to the Municipality of Victorias in
could only be a constructive trust, which is 1934. Her registration of the parcel of land did not
imposed by law. In constructive trusts there therefore transfer ownership but merely confirmed it.
is neither promise nor fiduciary relation; the As the civil code provides, where the land is decreed
so called trustee does not recognize any in the name of a person through fraud or mistake,
trust and has no intent to hold the property such person is by operation of law considered a
for the beneficiary. An action for trustee of an implied trust for the benefit of the
reconveyance based on implied or persons from whom the property comes.
constructive trust is prescriptable and Consequently, she only held the land in dispute in
prescribes in 10 years. In this case, the ten – trust for the petitioner hence private respondent is in
year prescriptive period began on march 16, equity bound to reconvey the subject land to the
1940, when the petitioner registered the cestui que trust, the Municipality of Victorias.
deed of assignment and secured the
cancellation of the certificate of title in the
joint names of the heirs of Mateo Carantes
and, in lieu thereof, the issuance of a new
title exclusively in his name. Since the MARIANO VS. DE VEGA
present action was commenced only on
1. Kilayco never laid a claim to the property; CA: Resolved in favor of respondents, declaring that
2. The two lots covered by the certificate were the sale to intervenor-petitioners did not terminate
mistakenly registered in the name of the trust relationship between the appellants and the
Kilayco; and appellees. The sale in favor of petitioners shall be
3. The court did not have jurisdiction to enforced against the ¼ share of respondents as heirs
confirm the title of the two lots for the of Fausto.
reason that no petition for title was filed, no
trial was held, no evidence was presented, Issue: Was the disputed land held in trust by Fausto
and no judgment was rendered regarding Soy for his sisters, Emilia, Cornelia and Anastacia
these two lots in the land registration (mothers of herein respondents)?
proceedings.
Ruling: CA decision reversed, order for partition
Kilayco was, in effect, merely holding the title of the dismissed.
property in trust of Laureano. The creditors of
Kilayco could acquire no higher or better right than Fausto, being predecessor-in-interest, had appeared
Kilayco had in the property, which, in this case, was to be the registered owner of the lot for more than 30
nothing. Hence, Laureano can rightfully recover the years and his dominical rights can no longer be
two parcels of land included in the title of Kilayco challenged. Any insinuation as to the existence of an
through mistake. implied or constructive trust should not be allowed.
April 1965, Respondents Rosita Lopez, Gavino Respondents had literally slept on their rights
Cayabyab, Agueda and Felipa Ubando, Pedro Soriano, presuming they had any and can no longer dispute
Teosidia Lopez and Federico Ballesteros (nieces and the conclusive and incontrovertible character of
nephews of Fausto) filed the instant complaint for Fausto’s title as they are deemed to have acquiesced
partition against Fausto Soy. On the same day they therein.
filed a notice of lis pendens and had it annotated on
the OCT. Fausto answered and contested plaintiffs
claims, asserting exclusive title in his name. Fausto
countered that the questioned land was never ADAZA V. CA
registered in the names of his parents Eugenio and
Ambrosia, and that he had been the registered owner Facts: In 1953, Victor Adaza Sr. executed a Deed of
of the premises since 1932. Donation, covering the disputed land in this case,
located in Sinonok, Zamboanga del Norte in favor of
On the basis of evidence adduced ex-parte, the Trial Respondent Violeta. The land being disposable public
Court held that respondents and Fausto were co- land had been held and cultivated by Victor, Sr. With
owners of the lot and ordered the partition thereof. the help of her brother, Horacio, Violeta filed a
Parties were enjoined to partition amongst homestead application over the land and a free
themselves and were to submit the same to the patent was issued in 1956. An OCT was issued in
lower court for confirmation. Upon execution, the 1960. In 1962, Violeta and husband, Lino obtained a
sheriff was unable to effect apportionment due to a loan from PNB by executing a mortgage on the land,
3rd party claim of Juanito and Coronacion Gonzales, while Homero Adaza, brother of Violeta remained
stating that they were registered owners of 480 sq. administrator of the same.
m. of the disputed land. The sheriff noted the various
improvements petitioners had introduced In 1971, Horacio invited his brothers and sisters for a
(apartment, residential house and piggery). Trial family gathering where he asked Violeta to sign a
Partnership & Agency | 2B 2008-2009
PARTNERSHIP Digests Atty. Cochingyan
Deed of Waiver with respect to the property in Facts: This case involves an action for reconveyance
Sinonok. The Deed stated that the land was owned in or for the declaration of an implied trust on Lot No.
common by Violeta and Horacio even though the 974 and for damages.
OCT was in her name only. The Deed also provided
for the waiver, transfer and conveyance of Violeta to The disputed land was the subject of 2 Patent
Horacio of ½ of the property and its improvements. Applications: (1) Free patent filed by Defendant on
Violeta and Horacio signed the Deed with Homero as Aug 1 1958, issued Jul 1961, OCT issued Feb 1962
a witness. and (2) Homestead Patent filed by Plaintiff on Jul 7
1959, approved Jan 1964.
A few months later, Violeta and husband Lino filed a
complaint for annulment of the Deed of waiver and Plaintiff Armamento alleges that he is the possessor-
for damages against Horacio and wife Felisa. The actual occupant of and Homestead applicant over the
complaint alleged that (1) she was absolute owner of disputed lot. Upon following up his application, he
the land by virtue of an unconditional donation was shocked to discover that Defendant Guerrero,
executed by her father in her favor; (2) she was through fraud and misrepresentation obtained a Free
registered owner; (3) she signed the Deed of waiver Patent over the same land, by falsely stating that he
because of fraud, misrepresentation and undue had continuously possessed the lot since July 1945 or
influence; and (4) because of such malicious acts, prior thereto, when in truth defendant was never in
she is entitled to damages from Horacio. possession.
Trial Court: Declared Deed of Waiver as valid and In his Answer, Guerrero denies that he was not in
binding upon Violeta, that Horacio was co-owner of possession claiming that he had been in occupation
½ of the land, and odering Violeta to pay Horacion of said lot and even authorized a certain Macario
the proceeds of his share. Caangay to administer the same while he was
termporarily away for missionary work in Cagayan de
CA: Reversed Trial court decision, declaring that Oro.
though the deed was signed voluntarily, such Deed
was without consideration or cause because the land Trial Court: Dismissed the case on the following
had been unconditionally donated to Violeta alone. grounds: (a) Plaintiff has no personality to file the
action for reconveyance—the proper party being the
Issue: Who owns the disputed parcel of land? Republic of the Philippines; (b) Plaintiff has no cause
Ruling: Petition granted. of action in the absence of privity of contract
between parties; (c) defendant’s title has become
Deed of donation had a crossed-out provision: That indefeasible and cannot be cancelled; and (d) even
the donee shall share ½ of the entire property with if based on fraud, the action has prescribed.
one of her brothers and sisters after the death of the
donor. Issues: Is plaintiff’s action for reconveyance
justified? Was there a trust created?
The record is bereft of any indication of any evil
intent or malice on the part of Homero, Victor, Jr. and Ruling: After the lapse of one year, a decree of
Teresita (siblings of Violeta) that would suggest registration is no longer open to review or attack,
deliberate collusion against Violeta. Their father had although its issuance is attended with fraud.
executed the Deed of Donation with the However, an action for reconveyance is still available
understanding that the same would be divided for the aggrieved party if the property has not yet
between Horacio and Violeta and that Violeta had passed to an innocent purchaser for value. This is
signed the Deed of Waiver freely and voluntarily. exactly what plaintiff has done.
Victor Adaza, Sr. left 4 parcels of land divided among Plaintiff has not been able to prove fraud and
the 6 children through the practice of having the misrepresentation because of the trial court
lands acquired by him titled to the name of one of his dismissal. While plaintiff is not the “owner” of the
children. land, so that, strictly speaking, he has no personality
to file this application, he pleads for equity and
The property involved in the instant case is owned in invokes the doctrine of implied trust under Art. 1456
common by Violeta and brother, Horacio even though of the Civil Code: If property is acquired through
the OCT was only in her name. She held half of the mistake or fraud, the person obtaining it is, by force
land in trust for petitioner Horacio—implied trust of law, considered a trustee of an implied trust for
based on Article 1449 of the Civil Code: the benefit of the person from whom the property
comes.
There is also an implied trust when a donation is
made to person but It appears that although the The doctrine of implied trust may be made to
legal estate is transmitted to the donee, he operate in plaintiff’s favor, assuming that he can
nevertheless is either to have no beneficial interest prove his allegation that defendant had acquired
of only a part thereof. legal title by fraud.
The doctrine of laces is not to be applied A constructive trust is a trust raised by construction
mechanically as between near relatives. of law or arising by operation of law. If a person
obtains legal title to property by fraud or
concealment, courts of equity will impress upon the
title a so-called constructive trust in favor of the
defrauded part.
ARMAMENTO V. GUERRERO
Action for reconveyance has not prescribed—the
prescriptive period being 10 years. (Title obtained
1962, Suit commenced 1967)
Partnership & Agency | 2B 2008-2009
PARTNERSHIP Digests Atty. Cochingyan
Case is remanded to CFI Cotobato. SC: The plaintiffs have not proven any express trusts
neither have they specified the kind of implied trust
contemplated in their action. Either way, such action
may be barred by laches.
RAMOS v RAMOS
In the cadastral proceedings, Jose and wife claimed
Facts: Spouses Martin Ramos and Candida were the 8 lots of the plaintiffs. After the death of Jose, the
survived by three legitimate children: Jose, Agustin said lots were adjudicated to his widow and daughter.
and Granada. Martin was also survived by 7 natural In 1932 Gregoria leased the said lots to Yulo, who in
children. A special proceeding was instituted for the 1934 transferred his lease rights over Hacienda
settlement of the estate of said spouses. Rafael, Calazato to Bonin and Olmedo, husband of plaintiff
brother of Martin was appointed administrator. A Atanacia. Bonin and Olmedo in 1935 sold their lease
project of partition was submitted and the conjugal rights over Hacienda Calaza to Consing.
hereditary estate was appraised at P74,984.93. It
consisted of 18 parcels of land, some head cattle and Those transactions prove that the heirs of Jose had
advances to the legitimate children. It was agreed in repudiated any trust which was supposedly
the project of partition that Jose and Agustin would constituted over Hacienda Calaza in favor of the
pay the cash adjudications to their natural siblings. plaintiffs.
Only the sum of P 37, 492.46 of the P74k
represented the estate of Martin. 1/3 thereof was the The period of extinctive prescription is 10 years.
free portion out of which the shares of the natural Atanacia, Modesto and Manuel, could have brought
children were to be taken: each would get P1,785.35. the action to annul the partition. Maria and Emiliano
The project of partition as well as the intervention of were both born in 1896. They reached the age of 21
Timoteo as guardian of the five minor heirs was in 1917 and could have brought the action from that
approved by the court. Later on, Judge Nepomuceno year.
asked the administrator to submit a report showing
that the shares have been delivered to the heirs as The instant action was filed only in 1957. As to
required which the siblings acknowledged in a Atanacia, Modesto and Manuel, the action was filed
manifestation. The Himalayan cadastre (8 lots) 43 years after it accrued and, as to Maria and
involved in this case were registed in equal shares in Emiliano, the action was filed 40 years after it
the names of Jose’s widow, Gregoria and her accrued. The delay was inexcusable. The instant
daughter Granada. action is unquestionably barred by prescription and
res judicata.
The Plaintiff’s (natural children) contend that while
they were growing up, they had been well supported It was anomalous that the manifestation should
by Jose and Agustin as they had been receiving their recite that they received their shares from their
shares from the produce of the Haciendas in varied administrator, when in the project of partition it was
amounts over the years. Even after the death of Jose, indicated that said shares shall be received in cash
Gregoria had continued giving them money but had from brothers Jose and Agustin. Thus due to this
stopped in 1951 by reason that lessee Lacson was irregularities as well as those of the intestate
not able to pay the lease rental. No accounting had proceedings, the plaintiffs contend that the partition
ever been made to them by Jose nor Gregoria. Upon was not binding on them (except for Timoteo who
the survey of the land, they did not intervene, as Jose considered himself bound by the partition). They ask
and Agustin promised that said lands shall be that the case be remanded to the lower court for the
registered in the names of the heirs. They did not determination and adjudication of their rightful
know that the intestate proceedings were instituted shares.
for the distribution of the estate of their father.
Neither did they have any knowledge that a guardian However, due to the fact that the plaintiffs slept on
was assigned to represent their minor siblings, their rights, the courts can no longer afford them
considering that Modesto and Miguel who were relief
claimed to be such were no longer minors at the time
of the partition. They never received their share in
the estate of their father. Plaintiffs later on
discovered that the property had a Torrens title in the VARSITY HILLS, INC v NAVARRO
name of Gregoria and her daughter when Modesto’s
children had inquired from the Register of Deeds. Facts: The present action began from a previous civil
Petitioners now bring the present suit for the case wherein a petition was filed by herein
reconveyance of the subject parcels of land in their respondents Mejia as heirs of Quintin Mejia and by
favor. Elpidio Tiburcio as assignee of a portion of the estate
left by the latter as plaintiff against petitioners
Petitioners claim that in effect, Gregoria and Tuason et. al. The complaint alleged that Quintin
daughter are holding their shares in trust which was Mejia had obtained a Spanish title to the land and
denied by defendants. Defendants alledge res that he and his successors in interest had occupied
judicata and prescription. the land without interruption until they were forcibly
rejected therefrom and their houses demolished in
LOWER COURT: Dismissed the complaint on the 1934 through a writ of execution. In 1914, the
basis of res judicata as their shares were already defendants Tuason had obtained a decree of
settled in the intestate proceedings. No deed of trust registration covering 35,403 hectares and that they
was alledged and proven. had fraudulently and insidiously included plaintiff’s
land in the area covered by the Certificate of Transfer
Plaintiff’s appealed saying that they were grievously by inserting fake and false technical descriptions. UP
prejudiced by the partition and thus res judicata et al. as subsequent acquirers whose titles are
should not bar their action.
Facts: Petitioner Gerona heirs are the legitimate Francisco and Delfin attained the age of majority in
children of Domingo Gerona and Placida de Guzman. 1952 and 1954, thus had 2 years after removal of
Placida was a legitimate daughter of Marcelo de “legal incapacity” within which to commence their
Guzman and his first wife Teodora de la Cruz. After action.
the death of Teodora, Marcelo married Camila Ramos.
YULO V. YANG CHIAO SENG Ruling: Dismissal. The agreement was a sublease not
a partnership. The following are the requisites of
Facts: Yang Chiao Seng proposed to form a partnership: (1) two or more persons who bind
partnership with Rosario Yulo to run and operate a themselves to contribute money, property or
theatre on the premises occupied by Cine Oro, Plaza industry to a common fund; (2) the intention on
Sta. Cruz, Manila, the principal conditions of the offer the part of the partners to divide the profits among
being (1) Yang guarantees Yulo a monthly themselves (Article 1761, CC)
participation of P3,000 (2) partnership shall be for a
period of 2 years and 6 months with the condition Plaintiff did not furnish the supposed P20,000 capital
that if the land is expropriated, rendered nor did she furnish any help or intervention in the
impracticable for business, owner constructs a management of the theatre. Neither has she
permanent building, then Yulo’s right to lease and demanded from defendant any accounting of the
partnership even if period agreed upon has not yet expenses and earnings of the business. She was
expired; (3) Yulo is authorized to personally conduct absolutely silent with respect to any of the acts that
business in the lobby of the building; and (4) after a partner should have done; all she did was to
Dec 31, 1947, all improvements placed by receive her share of P3,000 a month which cannot be
partnership shall belong to Yulo but if partnership is interpreted in any manner than a payment for the
terminated before lapse of 1 and ½ years, Yang shall use of premises which she had leased from the
have right to remove improvements. Parties owners.
established, “Yang and Co. Ltd.”, to exist from July 1,
1945 – Dec 31, 1947.
In June 1946, they executed a supplementary ESTANISLAO, JR. VS. COURT OF APPEALS
agreement extending the partnership for 3 years
beginning Jan 1, 1948 to Dec 31, 1950. Facts: The petitioner and private respondents are
brothers and sisters who are co-owners of certain lots
The land on which the theater was constructed was at the in Quezon City which were then being leased
leased by Yulo from owners, Emilia Carrion and Maria to SHELL. They agreed to open and operate a gas
Carrion Santa Marina for an indefinite period but that station thereat to be known as Estanislao Shell
after 1 year, such lease may be cancelled by either Service Station with an initial investment of
party upon 90-day notice. In Apr 1949, the owners PhP15,000.00 to be taken from the advance rentals
notified Yulo of their desire to cancel the lease due to them from SHELL for the occupancy of the
contract come July. Yulo and husband brought a civil said lots owned in common by them. A joint affidavit
action to declare the lease for a indefinite period. was executed by them on April 11, 1966. The
Owners brought their own civil action for ejectment respondents agreed to help their brother, petitioner
upon Yulo and Yang. therein, by allowing him to operate and manage the
gasoline service station of the family. In order not to
CFI: Two cases were heard jointly; Complaint of Yulo run counter to the company’s policy of appointing
and Yang dismissed declaring contract of lease only one dealer, it was agreed that petitioner would
terminated. apply for the dealership. Respondent Remedios
helped in co-managing the business with petitioner
CA: Affirmed the judgment. from May 1966 up to February 1967.
In 1950, Yulo demanded from Yang her share in the On May 1966, the parties entered into an Additional
profits of the business. Yang answered saying he had Cash Pledge Agreement with SHELL wherein it was
to suspend payment because of pending ejectment reiterated that the P15,000.00 advance rental shall
suit. be deposited with SHELL to cover advances of fuel to
petitioner as dealer with a proviso that said
Yulo filed present action in 1954, alleging the agreement “cancels and supersedes the Joint
existence of a partnership between them and that Affidavit.”
Yang has refused to pay her shares.
For sometime, the petitioner submitted financial
Defendant’s Position: The real agreement between statement regarding the operation of the business to
plaintiff and defendant was one of lease and not of the private respondents, but thereafter petitioner
partnership; that the partnership was adopted as a failed to render subsequent accounting. Hence , the
subterfuge to get around the prohibition contained in private respondents filed a complaint against the
SC: The A spouses contributed money to the ISSUE: Should the partnership be declared void?
partnership and not to the land. Mere failure to
register the contract of partnership with SEC does SC: Petition Denied. CA Affirmed.
not invalidate it as long as it has the essential
requisites of a contract. Registration is mere notice to The Agreement indubitably shows the existence of a
third parties. A spouses admit to facts that prove partnership pursuant to Art. 1767. Petitioners would
existence of a partnership: a contract showing an contribute land, respondents would provide the
industrial partnership, contribution of money and industry and expenses and the income would be
industry to a common fund, and division of profits divided.
between A spouses and M.
Contracts bind the parties to the stipulations and
M satisfactorily explained that the documents were in necessary consequences. Courts are not authorized
his name as the A spouses do not want to be the extricate parties from the consequences of their
revealed as financiers. A spouses were not able to acts should the stipulations turn out to be financially
prove that there was deceit or false representation disadvantageous.
on his part for them to part with their money.
Art 1773 was intended primarily to protect 3rd
Accounting of proceeds not proper subject in this persons who may be defrauded when contracting
case. SOJ did not abuse his discretion in dismissing with the partnership. The case at bar does not
the appeal of the A spouses. involve 3rd parties who may be prejudiced.
Therefore, it having been proven that the partnership 1. He is not the real party in interest but A.C.
Campos Rueda & Co. failed for more than 30 days to Aguila & Sons, Co.;
pay its obligations to the herein respondents, the 2. The judgment in the ejectment case is a bar
partnership have the right to a judicial decree to the filing of the complaint for declaration
declaring the involuntary insolvency of said of nullity of a deed of sale in this case; and
partnership. 3. The contract between the parties is a pacto
de retro sale and not an equitable
mortgage.
EVANGELISTA & CO. VS. ABAD SANTOS (Note Art. 1818 [par.1]: Every partner is an agent
of the partnership for the purpose of its business,
Facts: A co - partnership was formed under the and the act of every partner, including the execution
name of ‘Evangelista & Co.’ Its articles of co- in the partnership name of any instrument, for
partnership was later on amended to include Estrella apparently carrying on in the usual way the business
Abad Santos (a judge in a City Court in Manila) as an of the partnership of which he is a member binds the
industrial partner. She subsequently filed a suit partnership, unless the partner so acting has in fact
against the partnership to pay her the share of the no authority to act for the partnership in the
profits owing to her. She alleged that the partnership particular matter, and the person with whom he is
is paying dividends to the partners except her. The dealing has knowledge of the fact that he has no
partners denied that Abad Santos was an industrial such authority.)
partner and that the articles of co – partnership do
not express the true agreement of the parties and
that Abad Santos was a mere profit sharer, not a
partner. GOQUIOLAY, ET. AL. VS. SYCIP, ET. AL.
Issue: W/N Abad Santos is a partner. Facts: Tan Sin An and Antonio Goquiolay entered
into a general commercial partnership which was to
Held: Yes, Abad Santos is a partner. last for 10 years for the purpose of dealing in real
estate. The agreement lodged upon Tan Sin An the
The partners are estopped from denying the sole management of the partnership affairs and his
articles of partnership because they admitted its co – partner, Goquiolay, has no voice or participation
genuiness and due execution. Even if it were in the management of the affairs of the co –
erroneous, they failed to assail it for 8 years. Such partnership. They further agreed upon that in the
failure shows their assent to the said articles. event of the death of any of the partners at any time
before the expiration of the term, the co –
In addition, the partners alleged that being partnership shall not be dissolved but will have to be
a judge, she cannot be an industrial partner since continued and the deceased partner shall be
industrial partners are not allowed to engage in represented by his heirs or assigns in the said co –
another business or profession. The SC held that partnership. A general power of attorney (GPA) was
such allegation has no merit because Abad Santos executed by Goquiolay in favor of Tan Sin An which
complied with her obligation to the partnership. The included buy, sell, alienate and convey properties of
partners also failed to exercise their right of the partnership as well as obtain loans as he may
exclusion for 9 years. This shows that the argument deem advisable for the best interest of the co –
of engaging in another profession is a mere partnership. With the authority of the GPA, the
afterthought and that the partnership actually partnership through Tan Sin An purchased 3 parcels
allowed Abad Santos to exercise her profession. of land which was mortgaged to La Urbana Sociedad
and another 46 parcels of land which which were
(Please take note of Art. 1789 of Civil Code: An purchased by Tan Sin An in his individual capacity,
industrial partner cannot engage in business for and assumed mortgaged debt thereon. The
himself, unless the partnership expressly permits him downpayment for the 46 parcels of land was
to do so; and if he should do so, the capitalist advanced by Yutivo and Co. The two separate
partners may either exclude him from the firm or obligations were consolidated in an instrument
avail themselves of the benefits which he may have executed by the partnership and Tan Sin An, whereby
obtained in violation of this provision, with a right to the entire 49 lots were mortgaged in favor of the
damages in either case.) Banco Hipotecario de Filipinas (as successor to La
Urbana). When Tan Sin An died, his wife Kong Chia
Pin was appointed administratix of the intestate
estate of her deceased husband. Repeated demands
for payment were made by Banco Hipotecario on the
LITTON VS. HILL partnership and on Tan Sin An which was initially paid
by Yutivo and Co. and Sing Yee Cuan and Co. (at the
Facts: Litton sold to Ceron, a partner in a request of Yutivo and Co.) The mortgage was
partnership called ‘Hill & Ceron,’ lumber mining eventually cancelled. Now Yutivo and Sing Yee Cuan
claims for P1870 less half percent proliferage. Litton Company filed their claims in the intestate
received only P720 leaving a balance of P1150. He proceedings of Tan Sin An. Kong Chai Pin filed a
then sued the partnership. The partnership now petition with the probate court for authority to sell all
contends that it is not bound by Ceron’s acts because the 49 parcels of land to Washington Sycip and Betty
the other partners did not consent to such sale. It Lee for the purpose primarily of settling the aforesaid
was stated in the articles of co – partnership that a debts of her husband and the partnership. The court
contract can be signed by only one partner, provided ordered the execution of deed of sale in favor of
that other partners consented to it. Sycip and Lee in consideration of P37,000.00 and
assuming payment of the claims filed by Yutivo & Co.
Issue: W/N the partnership is bound by Ceron’s acts? and Sing Yee Co. Later, Sycip and Lee executed in
favor of the Insular Dev’t. Co. a deed of transfer
Held: Yes. It is true that Ceron needs consent of the covering said 49 parcels of land.
partners to bind the partnership. But such agreement
between partners does not affect third persons who, Upon learning the sale, the surviving
acting in good faith, had no knowledge of it. The SC partner Goquiolay filed a petition to set aside the
Partnership & Agency | 2B 2008-2009
PARTNERSHIP Digests Atty. Cochingyan
decision of the probate court and annul the sale of deposited until the stocks have been sold. This was
the parcels of land by Kong Chai Pin in favor of Sycip refuted by Alarilla and subsequently Idos was
and Lee and their subsequent conveyance in favor of convicted by the trial court of the offense charged.
Insular Devt. Co. in so far as the 3 lots owned by the The CA affirmed the decision of the trial court.
partnership is concerned. Kong Chai Pin averred the
validity of the sale as successor partner, in lieu of the
late Tan Sin An. The complaint was dismissed by the
lower court and appeal was directly taken to the SC Issue: W/N Idos violated BP 22? No
by Goquiolay.
Held: One of the elements of the offense penalized
Issue: 1. W/N Kong Chai Pin acquired the managerial under BP 22 is “the making, drawing and issuance of
rights of her late husband Tan Sin An – NO. any check to apply for any account or for value.” In
2. W/N there was a valid sale of property to Sycip and this case Idos showed enough evidence that the
Lee – YES. check was to be funded from receivables to be
3. W/N the consent of the other partner was collected and goods to be sold by the partnership.
necessary to perfect the sale of the partnership First, only one of the fours check were not encashed
properties to Sycip and Betty – NO. and second, even Alarilla himself admitted that there
was no consideration for the issuance of the check.
Held: 1. The right of exclusive management Hence the check in question was not issued for any
conferred upon Tan Sin An, being premised upon debt of or any account due and payable by the
trust and confidence, was a mere personal right that petitioner.
terminated upon Tan’s demise. The provision in the
articles of partnership stating that the deceased Moreover, Idos and Alarilla were still in the
partner shall be represented by his heirs could not “winding up” of the affairs of the partnership hen the
have referred to the managerial rights given to Tan check was issued as evidenced by the fact that they
Sin An but it more appropriately relates to the still had to sell the goods on hand and collect the
succession in the propriety interest of each partner receivables from debtors. As provided by the Civil
(heir becomes limited partner only). Code: winding-up is the process of settling business
affairs after dissolution, i.e. collecting of assets
2. However, consonant with the articles of co – previously demandable; termination is the point in
partnership providing for the continuation of the firm time after all the partnership affairs have been
notwithstanding the death of one of the partners, the wound up. Thus, since that partnership has not been
heir of the deceased, by never repudiating or terminated, the petitioner and private complainant
refusing to be bound under said provision, became remained as co-partners. The check was thus issued
individual partner with Goquiolay upon Tan’s demise. by the petitioner to complainant as would a partner
By allowing Kong Chai Pin to retain control of the to another and not as payment from a debtor to a
partnership properties from 1942 to 1949, Goquiolay creditor. Idos did not violate BP 22.
is estopped from denying her legal representation of
the partnership, with the power to bind it with proper
contracts. By authorizing the widow of the managing
partner to manage partnership property (which a
VILLAREAL VS. RAMIREZ
limited partner could not be authorized to do), the
other general partner recognized her as a general
Facts:
partner, and is now in estoppel to deny her position
as a general partner, with authority to administer
and alienate partnership property. In 1984, Villareal, Carmelito Jose and Jesus
Jose formed a partnership with a capital of P750,000
for the operation of a restaurant and catering
3. Strangers dealing with a partnership have the
business. Respondent Ramirez joined as a partner in
right to assume, in the absence of restrictive clauses
the business with the capital contribution of
in the co – partnership agreement, that every general
P250,000. In 1987, Jesus Jose withdrew from the
partner has the power to bind the partnership and
partnership and within the same time, Villareal and
has the requisite authority from his co – partners.
Carmelito Jose, petitioners closed the business
without prior knowledge of respondents.
Issue: W/N petitioners are liable to respondents for SINGSONG v ISABELLA SAWMILL
the latter’s share in the partnership? Nope.
Facts: Defendants Garibay, Margarita Saldajeno and
Held: Respondents have no right to demand from Tubungbanua entered into a contract of partnership
petitioner the return of their equity share. As found under the firm name ‘Isabela Sawmill’. Said
by the court petitioners did not personally hold its partnership owed unpaid balances to plaintiffs.
equity or assets. “The partnership has a juridical
personality separate and distinct from that of each of A civil case for the dissolution was filed by the
the partners.” Since the capital was contributed to spouses Saldajeno against Isabela Sawmill, Garibay
the partnership, not to petitioners, it is the and Tubungbanua. Later on said parties entered into
partnership that must refund the equity of the a memorandum agreement wherein Garibay and
retiring partners. However, before the partners can Tubungbanua have bound themselves to answer for
be paid their shares, the creditors of the partnership any and all obligations of the defunct partnership to
must first be compensated. Therefore, the exact its creditors and third persons. Defendants Garibay
amount of refund equivalent to respondents’ one- and Tubungbanua did not divide the assets and
third share in the partnership cannot be determined properties of the “Isabella Sawmill” between them,
until all the partnership assets will have been but they continued the business of said partnership
liquidated and all partnership creditors have been under the same firm name.
paid.
The remaining partners executed an “Assignment of
CA’s computation of the amount to be Rights with Chattel Mortgage” in favor of Saldajeno
refunded to respondents as their share was thus in order to secure the performance of their
erroneous. obligations. However, since they defaulted in their
payment a judgment was rendered in favor of
Saldejano which caused the foreclosure of the CM.
The Provincial Sheriff published notices that he would
CLAUDIO VS. ZANDUETA sell at a public auction certain properties (of the
partnership) mortgaged by Garibay and
Facts: Petitioners Claudio, Goyena and Flores Tubungbanua in favor of Saldejano and later on
organized the “Cotabato & Cagayan Mining executed a sale in the latter’s favor, selling for 38K
Association” (Association) together with the the assets of the partnership. Saldejano in turn sold
respondents Neuffer, Meyer, Skiles, Araneta and to Pan Oriental lumber company for 45K part of the
Cowper. The respondents in this case filed in CFI a said properties she had bought at the public auction.
civil case no. 51510 for the dissolution of the
Association. One of their prayers was for the court to The plaintiffs, in a civil action, sought to restrain the
appoint a receiver to take charge of the properties of Sheriff from proceeding with the sales and to have
the association after its dissolution. The court thrugh the chattel mortgage declared null and void in fraud
Judge Zandueta granted the prayer of the of creditors. Defendant M. Saldajeno claims that all
respondents in civil case 51510 and appointed J.C. the plaintiffs save for Oppan are creditors of Garibay
Cowper as a receiver even if the latter was not made and Tubungbanua and not of the defunct partnership
a party to the case. and that said creditors had knowledge and notice
that the former partnership had been dissolved.
Issue: Whether or not Judge Zandueta exceeded his
jurisdiction and abused his discretion when he The trial court ruled in favor of the plaintiffs thus, the
appointed the receiver in civil case 51510? No. herein defendants appealed. The court ruled that
there was no CM over the properties as such were
Held: In order that a receiver may be appointed in a owned by the partnership and that the plaintiffs have
case, an application under oath must be filed, a preferred right over it as against Saldejano. As
alleging all the facts necessary to convince the court such, the latter must pay the plaintiffs the respective
to grant the same, for the purpose of preserving the amounts for which the partnership is indebted to
property which is the subject of litigation and them. Garibay and Tubungbanua are also liable to
protecting thereby the rights of all the parties pay to the plaintiffs whatever amount that they may
interested therein. Moreover the consequences or not collect from Saldajeno. The defendants appealed
effects of such appointment should be considered in to the CA but the latter transferred the records of the
order to avoid causing irreparable injustice or injury. case to the SC.
In the complaint for the application of the SC: The remaining partners did not terminate the
appointment of the receiver, it was evident that the business of the partnership. It is expressly stipulated
plaintiff did not include the 279 members of the in the memorandum agreement that the remaining
Association nor did they show that they were acting partners had constituted themselves as the
on behalf of the interest of the Association. Therefore partnership entity, the “Isabella Sawmill”. There was
the judge exceeded his jurisdiction and abused his no liquidation of the assets of the partnership. The
discretion because he should have required the remaining partners continued doing business of the