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DECISION
FELICIANO, J.:
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:
(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.
"[o]n dissolution the partnership is not terminated, but continues until the
winding up of partnership affairs is completed."
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;
(6) When a partner is expelled and the remaining partners continue the
business either alone or with others without liquidation of the partnership
affairs;
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.
(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;
(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 ]
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:
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.
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.
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 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.
ISSUE
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.
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]
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 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.
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.
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.
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.
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.
(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 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.
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.
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.
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.
DECISION
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.
DECISION
PEREZ, J.:
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
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 Issues
The Spouses Realubit urge the reversal of the assailed decision upon the
negative of the following issues, to wit:
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]
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.