[ 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.

DECISION

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 Chiu
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
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 partnership
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.

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 x x x"

(Emphases 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
preceding 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 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.

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

(Emphases 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 more 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 taken 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.[11] It 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.
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 October 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.
[ G.R. No. 206147, January 13, 2016 ]

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 Decision[1] and the March 5, 2013 Resolution[2] of the Court of
Appeals (CA) in CA-G.R. CV No. 94816, which affirmed the June 28,
2009[3] and February 19, 2010[4] 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 Personalty[5] on the ground that he was not a judgment debtor.

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 PI 8,000.00. 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 3,1997 up to and until fully
paid -------------------------------------------------------- P 18,000.00
2. Actual Damages ----------------------------------- 40,936.44
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 Personalty[12] 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.

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 solidarity 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 order[17] denying 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]

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 "solidarity 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 solidarity 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.[23] Jurisdiction 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]

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.
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 solidarity 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.[30] The 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 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 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 report[37] 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.
Gaeott 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. 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 solidarity 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
solidarity 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 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 solidarity 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 solidarity 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.
[ G.R. No. 45464, April 28, 1939 ]

JOSUE SONCUYA, PLAINTIFF AND APPELLANT, VS. CARMEN DE LUNA,

DEFENDANT AND APPELLEE.

DECISION

VILLA-REAL, J.:

On September 11, 1936, plaintiff Josue Soncuya filed with the Court of First
Instance of Manila an 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 the partnership, "Centro Escolar de
Senoritas", 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 the 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 Senoritas" 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.
[ G. R. No. L-17526, June 30, 1962 ]

GREGORIO MAGDUSA, ET AL., PETITIONERS, VS. GERUNDIO ALBARAN, ET AL.,

RESPONDENTS.

DECISION

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

Appeal from a decision of the Court of Appeals (R.G. 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, P8,223.10; Pascual
Albaran, P5,394,78; Zosimo Albaran, 11,979.28; and Telesforo Bebero,
P3,020.24, 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 partners were
indispensable parties but had 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.

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 an 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 ail 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 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 conditions
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 its 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.
[ G.R. No. 178782, September 21, 2011 ]

JOSEFINA P. REALUBIT, PETITIONER, VS. PROSENCIO D. JASO AND EDEN G.

JASO, RESPONDENTS.

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 Biondo's 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 Frenchman's
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
Parañaque City, said complaint alleged, among other 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 venture's 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 Jaso's demand in view of the dubious circumstances
surrounding their acquisition of Biondo's 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 Biondo's rights in the business in view of their valid acquisition of the
latter's 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 attorney's 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 Biondo's 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 Josefina's
knowledge and consent to the transfer of Biondo's 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 Biondo's 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 Biondo's 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]

The Spouses Realubit's motion for reconsideration of the foregoing decision

was denied for lack of merit in the CA's 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 Court's 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 latter's 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
Realubit's 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, required to present evidence that is
clear, convincing and more than merely preponderant.[19] In view of the
Spouses Realubit's 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' Realubit's bare assertion that
Biondo's 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 Biondo's
signatures on the Joint Venture Agreement[24] and the Deed of
Assignment,[25] said forgery is, moreover debunked by Biondo's 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 partner's 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 assignor's 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 assignee's
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 partner's 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
Biondo's share in the profits, despite Juanita's lack of consent to the
assignment of said Frenchman's 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 partner's
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 Realubit's insistence on the supposed fact
that Josefina's joint venture with Biondo had already been dissolved and
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 Realubit's 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.