2
In its May 8, 2000 order, the RTC dismissed the case on the
ground that the complaints did not state a cause of action.
In response to the motion for reconsideration Karen Go
filed dated May 26, 2000,11 the RTC issued another order
dated July 26, 2000 setting aside the order of dismissal.
Acting on the presumption that Glenn Gos leasing business
is a conjugal property, the RTC held that Karen Go had
sufficient interest in his leasing business to file the action
against Navarro. However, the RTC held that Karen Go
should have included her husband, Glenn Go, in the
complaint based on Section 4, Rule 3 of the Rules of Court
(Rules).12 Thus, the lower court ordered Karen Go to file a
motion for the inclusion of Glenn Go as coplaintiff.1avvphi1
When the RTC denied Navarros motion for reconsideration
on March 7, 2001, Navarro filed a petition for certiorari
with the CA, essentially contending that the RTC
committed grave abuse of discretion when it reconsidered
the dismissal of the case and directed Karen Go to amend
her complaints by including her husband Glenn Go as coplaintiff. According to Navarro, a complaint which failed to
state a cause of action could not be converted into one
with a cause of action by mere amendment or
supplemental pleading.
On October 16, 2001, the CA denied Navarros petition and
affirmed the RTCs order.13 The CA also denied Navarros
motion for reconsideration in its resolution of May 29,
2002,14 leading to the filing of the present petition.
THE PETITION
Navarro alleges that even if the lease agreements were in
the name of Kargo Enterprises, since it did not have the
requisite juridical personality to sue, the actual parties to
the agreement are himself and Glenn Go. Since it was
Karen Go who filed the complaints and not Glenn Go, she
was not a real party-in-interest and the complaints failed
to state a cause of action.
Navarro posits that the RTC erred when it ordered the
amendment of the complaint to include Glenn Go as a coplaintiff, instead of dismissing the complaint outright
because a complaint which does not state a cause of action
cannot be converted into one with a cause of action by a
mere amendment or a supplemental pleading. In effect,
the lower court created a cause of action for Karen Go
when there was none at the time she filed the complaints.
Even worse, according to Navarro, the inclusion of Glenn
Go as co-plaintiff drastically changed the theory of the
complaints, to his great prejudice. Navarro claims that the
lower court gravely abused its discretion when it assumed
that the leased vehicles are part of the conjugal property
of Glenn and Karen Go. Since Karen Go is the registered
owner of Kargo Enterprises, the vehicles subject of the
complaint are her paraphernal properties and the RTC
gravely erred when it ordered the inclusion of Glenn Go as
a co-plaintiff.
Navarro likewise faults the lower court for setting the trial
of the case in the same order that required Karen Go to
amend her complaints, claiming that by issuing this order,
the trial court violated Rule 10 of the Rules.
Even assuming the complaints stated a cause of action
against him, Navarro maintains that the complaints were
premature because no prior demand was made on him to
comply with the provisions of the lease agreements before
the complaints for replevin were filed.
3
xxx
thus, expressly pointing to KARGO ENTERPRISES as the
principal that Glenn O. Go represented. In other words, by
the express terms of this Lease Agreement, Glenn Go did
sign the agreement only as the manager of Kargo
Enterprises and the latter is clearly the real party to the
lease agreements.
As Navarro correctly points out, Kargo Enterprises is a sole
proprietorship, which is neither a natural person, nor a
juridical person, as defined by Article 44 of the Civil Code:
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public
interest or purpose, created by law; their personality
begins as soon as they have been constituted according to
law;
(3) Corporations, partnerships and associations for private
interest or purpose to which the law grants a juridical
personality, separate and distinct from that of each
shareholder, partner or member.
Thus, pursuant to Section 1, Rule 3 of the Rules,16 Kargo
Enterprises cannot be a party to a civil action. This legal
reality leads to the question: who then is the proper party
to file an action based on a contract in the name of Kargo
Enterprises?
We faced a similar question in Juasing Hardware v.
Mendoza,17 where we said:
Finally, there is no law authorizing sole proprietorships like
petitioner to bring suit in court. The law merely recognizes
the existence of a sole proprietorship as a form of business
organization conducted for profit by a single individual, and
requires the proprietor or owner thereof to secure licenses
and permits, register the business name, and pay taxes to
the national government. It does not vest juridical or legal
personality upon the sole proprietorship nor empower it to
file or defend an action in court.
Thus, the complaint in the court below should have been
filed in the name of the owner of Juasing Hardware. The
allegation in the body of the complaint would show that
the suit is brought by such person as proprietor or owner of
the business conducted under the name and style Juasing
Hardware. The descriptive words "doing business as Juasing
Hardware" may be added to the title of the case, as is
customarily done.18 [Emphasis supplied.]
This conclusion should be read in relation with Section 2,
Rule 3 of the Rules, which states:
SEC. 2. Parties in interest. A real party in interest is the
party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of
the suit. Unless otherwise authorized by law or these Rules,
every action must be prosecuted or defended in the name
of the real party in interest.
As the registered owner of Kargo Enterprises, Karen Go is
the party who will directly benefit from or be injured by a
judgment in this case. Thus, contrary to Navarros
contention, Karen Go is the real party-in-interest, and it is
legally incorrect to say that her Complaint does not state a
cause of action because her name did not appear in the
Lease Agreement that her husband signed in behalf of
Kargo Enterprises. Whether Glenn Go can legally sign the
Lease Agreement in his capacity as a manager of Kargo
4
partnership in all that is not in conflict with what is
expressly determined in this Chapter or by the spouses in
their marriage settlements. In other words, the property
relations of the husband and wife shall be governed
primarily by Chapter 4 on Conjugal Partnership of Gains of
the Family Code and, suppletorily, by the spouses marriage
settlement and by the rules on partnership under the Civil
Code. In the absence of any evidence of a marriage
settlement between the spouses Go, we look at the Civil
Code provision on partnership for guidance.
A rule on partnership applicable to the spouses
circumstances is Article 1811 of the Civil Code, which
states:
Art. 1811. A partner is a co-owner with the other partners
of specific partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to
any agreement between the partners, has an equal right
with his partners to possess specific partnership
property for partnership purposes; xxx
Under this provision, Glenn and Karen Go are effectively
co-owners of Kargo Enterprises and the properties
registered under this name; hence, both have an equal
right to seek possession of these properties. Applying
Article 484 of the Civil Code, which states that "in default
of contracts, or special provisions, co-ownership shall be
governed by the provisions of this Title," we find further
support in Article 487 of the Civil Code that allows any of
the co-owners to bring an action in ejectment with respect
to the co-owned property.
While ejectment is normally associated with actions
involving real property, we find that this rule can be
applied to the circumstances of the present case, following
our ruling in Carandang v. Heirs of De Guzman.24 In this
case, one spouse filed an action for the recovery of credit,
a personal property considered conjugal property, without
including the other spouse in the action. In resolving the
issue of whether the other spouse was required to be
included as a co-plaintiff in the action for the recovery of
the credit, we said:
Milagros de Guzman, being presumed to be a co-owner of
the credits allegedly extended to the spouses Carandang,
seems to be either an indispensable or a necessary party. If
she is an indispensable party, dismissal would be proper. If
she is merely a necessary party, dismissal is not warranted,
whether or not there was an order for her inclusion in the
complaint pursuant to Section 9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by the
rules on the contract of partnership in all that is not in
conflict with what is expressly determined in this Chapter
or by the spouses in their marriage settlements.
This provision is practically the same as the Civil Code
provision it superseded:
Art. 147. The conjugal partnership shall be governed by the
rules on the contract of partnership in all that is not in
conflict with what is expressly determined in this Chapter.
In this connection, Article 1811 of the Civil Code provides
that "[a] partner is a co-owner with the other partners of
specific partnership property." Taken with the presumption
of the conjugal nature of the funds used to finance the four
checks used to pay for petitioners stock subscriptions, and
5
indispensable party at any stage of the action. The court,
either motu proprio or upon the motion of a party, may
order the inclusion of the indispensable party or give the
plaintiff opportunity to amend his complaint in order to
include indispensable parties. If the plaintiff to whom the
order to include the indispensable party is directed refuses
to comply with the order of the court, the complaint may
be dismissed upon motion of the defendant or upon the
court's own motion. Only upon unjustified failure or refusal
to obey the order to include or to amend is the action
dismissed.
In these lights, the RTC Order of July 26, 2000 requiring
plaintiff Karen Go to join her husband as a party plaintiff is
fully in order.
Demand not required prior
to filing of replevin action
In arguing that prior demand is required before an action
for a writ of replevin is filed, Navarro apparently likens a
replevin action to an unlawful detainer.
For a writ of replevin to issue, all that the applicant must
do is to file an affidavit and bond, pursuant to Section 2,
Rule 60 of the Rules, which states:
Sec. 2. Affidavit and bond.
The applicant must show by his own affidavit or that of
some other person who personally knows the facts:
(a) That the applicant is the owner of the
property claimed, particularly describing it, or is entitled
to the possession thereof;
(b) That the property is wrongfully detained by the adverse
party, alleging the cause of detention thereof according to
the best of his knowledge, information, and belief;
(c) That the property has not been distrained or taken for a
tax assessment or a fine pursuant to law, or seized under a
writ of execution or preliminary attachment, or otherwise
placed under custodia legis, or if so seized, that it is
exempt from such seizure or custody; and
(d) The actual market value of the property.
The applicant must also give a bond, executed to the
adverse party in double the value of the property as stated
in the affidavit aforementioned, for the return of the
property to the adverse party if such return be adjudged,
and for the payment to the adverse party of such sum as he
may recover from the applicant in the action.
We see nothing in these provisions which requires the
applicant to make a prior demand on the possessor of the
property before he can file an action for a writ of replevin.
Thus, prior demand is not a condition precedent to an
action for a writ of replevin.
More importantly, Navarro is no longer in the position to
claim that a prior demand is necessary, as he has already
admitted in his Answers that he had received the letters
that Karen Go sent him, demanding that he either pay his
unpaid obligations or return the leased motor vehicles.
Navarros position that a demand is necessary and has not
been made is therefore totally unmeritorious.
WHEREFORE, premises considered, we DENY the petition
for review for lack of merit. Costs against petitioner Roger
V. Navarro.
SO ORDERED.
6
person chosen being Juan D. Mencarini. The latter was
already discharging the duties of his office when the court,
by virtue of a petition ex parte of the plaintiff, issued the
order of May 24, 1933, requiring said receiver to deliver to
him (plaintiff) certain machines which were then at Nos.
705-707 Ylaya Street, Manila but authorizing him to charge
their value of P4,500 against the portion which may
eventually be due to said plaintiff. To comply with said
order, the receiver delivered to plaintiff the keys to the
place where the machines were found, which was the same
place where defendant had his home; but before he could
take actual possession of said machines, upon the strong
opposition of defendant, the court, on motion of the latter,
suspended the effects of its order of May 24, 1933. In the
meantime the judgments rendered in cases Nos. 42794 and
43070 entitled "Philippine Education Co., Inc. vs. Enrique
Clemente" for the recovery of a sum of money, and "Jose
Echevarria vs. Enrique Clemente", also for the recovery of a
sum of money, respectively, were made executory; and in
order to avoid the attachment and subsequent sale of the
machines by the sheriff for the satisfaction from the
proceeds thereof of the judgments rendered in the two
cases aforecited, plaintiff agreed with the intervenor, who
is his nephew, to execute, as he in fact executed in favor of
the latter, a deed of mortgage Exhibit B encumbering the
machines described in said deed in which it is stated that
"they are situated on Singalong Street No. 1163", which is a
place entirely different from the house Nos. 705 and 707 on
Ylaya Street hereinbefore mentioned. The one year agreed
upon in the deed of mortgage for the fulfillment by the
plaintiff of the obligation he had contracted with the
intervenor, having expired, the latter commenced case No.
49629 to collect his mortgage credit. The intervenor, as
plaintiff in the said case, obtained judgment in his favor
because the defendant did not interpose any defense or
objection, and, moreover, admitted being really indebted
to the intervenor in the amount set forth in the deed of
mortgage Exhibit B. The machines which the intervenor
said were mortgaged to him were then in fact in custodia
legis, as they were under the control of the receiver and
liquidator Juan D. Mencarini. It was, therefore, useless for
the intervenor to attach the same in view of the receiver's
opposition; and the question having been brought to court,
it decided that nothing could be done because the receiver
was not a party to the case which the intervenor instituted
to collect his aforesaid credit. (Civil case No. 49629.) The
question ended thus because the intervenor did not take
any other step until he thought of joining in this case as
intervenor.
1. From the foregoing facts, it is clear that plaintiff could
not obtain possession of the machines in question. The
constructive possession deducible from the fact that he had
the keys to the place where the machines were found
(Ylaya Street Nos. 705-707), as they had been delivered to
him by the receiver, does not help him any because the
lower court suspended the effects of the other whereby the
keys were delivered to him a few days after its issuance;
and thereafter revoked it entirely in the appealed decision.
Furthermore, when he attempted to take actual possession
of the machines, the defendant did not allow him to do so.
Consequently, if he did not have actual possession of the
machines, he could not in any manner mortgage them, for
while it is true that the oft-mentioned deed of mortgage
Exhibit B was annotated in the registry of property, it is no
less true the machines to which it refers are not the same
as those in question because the latter are on Ylaya Street
Nos. 705-707 and the former are on Singalong Street No.
1163. It can not be said that Exhibit B-1, allegedly a
supplementary contract between the plaintiff and the
intervenor, shows that the machines referred to in the deed
of mortgage are the same as those in dispute and which are
was
denied
in
the
impugned
The Facts
On July 25, 1984, Luzviminda J. Villareal, Carmelito
Jose and Jesus Jose formed a partnership with a capital
of P750,000 for the operation of a restaurant and catering
business under the name Aquarius Food House and Catering
Services.[5] Villareal was appointed general manager and
Carmelito Jose, operations manager.
7
Respondent Donaldo Efren C. Ramirez joined as a
partner in the business on September 5, 1984. His capital
contribution of P250,000 was paid by his parents,
Respondents Cesar and Carmelita Ramirez.[6]
After Jesus Jose withdrew from the partnership in
January 1987, his capital contribution of P250,000 was
refunded to him in cash by agreement of the partners. [7]
In the same month, without prior knowledge of
respondents, petitioners closed down the restaurant,
allegedly because of increased rental. The restaurant
furniture and equipment were deposited in the respondents
house for storage.[8]
On March 1, 1987, respondent spouses wrote
petitioners, saying that they were no longer interested in
continuing their partnership or in reopening the restaurant,
and that they were accepting the latters offer to return
their capital contribution.[9]
On October 13, 1987, Carmelita Ramirez wrote
another letter informing petitioners of the deterioration of
the restaurant furniture and equipment stored in their
house. She also reiterated the request for the return of
their one-third share in the equity of the partnership. The
repeated oral and written requests were, however, left
unheeded.[10]
Before the Regional Trial Court (RTC) of Makati,
Branch
59,
respondents
subsequently
filed
a
Complaint[11] dated November 10, 1987, for the collection
of a sum of money from petitioners.
In their Answer, petitioners contended that
respondents had expressed a desire to withdraw from the
partnership and had called for its dissolution under Articles
1830 and 1831 of the Civil Code; that respondents had been
paid, upon the turnover to them of furniture and
equipment worth over P400,000; and that the latter had no
right to demand a return of their equity because their
share, together with the rest of the capital of the
partnership, had been spent as a result of irreversible
business losses.[12]
In their Reply, respondents alleged that they did not
know
of
any
loan
encumbrance
on
the
restaurant. According to them, if such allegation were
true, then the loans incurred by petitioners should be
regarded as purely personal and, as such, not chargeable to
the partnership. The former further averred that they had
not received any regular report or accounting from the
latter, who had solely managed the business. Respondents
also alleged that they expected the equipment and the
furniture stored in their house to be removed by petitioners
as soon as the latter found a better location for the
restaurant.[13]
Respondents filed an Urgent Motion for Leave to Sell
or Otherwise Dispose of Restaurant Furniture and
Equipment[14] on July 8, 1988. The furniture and the
equipment stored in their house were inventoried and
appraised at P29,000.[15] The display freezer was sold
for P5,000 and the proceeds were paid to them.[16]
After trial, the RTC[17] ruled that the parties had
voluntarily entered into a partnership, which could be
dissolved at any time. Petitioners clearly intended to
dissolve
it
when
they
stopped
operating
the
submit
the
8
The Petition has merit.
First Issue:
Share in Partnership
Both the trial and the appellate courts found that a
partnership had indeed existed, and that it was dissolved
on March 1, 1987. They found that the dissolution took
place when respondents informed petitioners of the
intention to discontinue it because of the formers
dissatisfaction with, and loss of trust in, the latters
management of the partnership affairs. These findings
were
amply
supported
by
the
evidence
on
record. Respondents
consequently
demanded
from
petitioners the return of their one-third equity in the
partnership.
We hold that respondents have no right to demand
from petitioners the return of their equity share. Except as
managers of the partnership, petitioners did not personally
hold its equity or assets. The partnership has a juridical
personality separate and distinct from that of each of the
partners.[23] Since the capital was contributed to the
partnership, not to petitioners, it is the partnership that
must refund the equity of the retiring partners.[24]
Second Issue:
What Must Be Returned?
Since it is the partnership, as a separate and distinct
entity, that must refund the shares of the partners, the
amount to be refunded is necessarily limited to its total
resources. In other words, it can only pay out what it has in
its coffers, which consists of all its assets. However, before
the partners can be paid their shares, the creditors of the
partnership must first be compensated.[25] After all the
creditors have been paid, whatever is left of the
partnership assets becomes available for the payment of
the partners shares.
Evidently, in the present case, the exact amount of
refund equivalent to respondents one-third share in the
partnership cannot be determined until all the partnership
assets will have been liquidated -- in other words, sold and
converted to cash -- and all partnership creditors, if any,
paid. The CAs computation of the amount to be refunded
to respondents as their share was thus erroneous.
First, it seems that the appellate court was under the
misapprehension that the total capital contribution was
equivalent to the gross assets to be distributed to the
partners at the time of the dissolution of the
partnership. We cannot sustain the underlying idea that the
capital contribution at the beginning of the partnership
remains intact, unimpaired and available for distribution or
return to the partners. Such idea is speculative,
conjectural and totally without factual or legal support.
Generally, in the pursuit of a partnership business, its
capital is either increased by profits earned or decreased
by losses sustained. It does not remain static and
unaffected by the changing fortunes of the business. In the
present case, the financial statements presented before
the trial court showed that the business had made meager
profits.[26] However, notable therefrom is the omission of
any provision for the depreciation[27] of the furniture and
the
equipment. The
amortization
of
the
goodwill[28] (initially valued at P500,000) is not reflected
9
Costs
Section 1, Rule 142, provides:
SECTION 1. Costs ordinarily follow results of suit. Unless
otherwise provided in these rules, costs shall be allowed to
the prevailing party as a matter of course, but the court
shall have power, for special reasons, to adjudge that
either party shall pay the costs of an action, or that the
same be divided, as may be equitable. No costs shall be
allowed against the Republic of the Philippines unless
otherwise provided by law.
Although, as a rule, costs are adjudged against the
losing party, courts have discretion, for special reasons, to
decree otherwise. When a lower court is reversed, the
higher court normally does not award costs, because the
losing party relied on the lower courts judgment which is
presumed to have been issued in good faith, even if found
later on to be erroneous.Unless shown to be patently
capricious, the award shall not be disturbed by a reviewing
tribunal.
WHEREFORE, the Petition is GRANTED, and the
assailed Decision and Resolution SET ASIDE. This disposition
is without prejudice to proper proceedings for the
accounting, the liquidation and the distribution of the
remaining partnership assets, if any. No pronouncement as
to costs.
SO ORDERED.
10
WHEREFORE, defendants are ordered to submit to plaintiffs
a complete accounting and inventory of the assets and
liabilities of the joint venture from its inception to the
present, to allow plaintiffs access to the books and
accounting records of the joint venture, to deliver to
plaintiffs their share in the profits, if any, and to pay the
plaintiffs the amount of P20,000. for moral damages. The
claims for exemplary damages and attorneys fees are
denied for lack of basis.11
On appeal before the CA, the foregoing decision was set
aside in the herein assailed Decision dated 30 April 2007,
upon the following findings and conclusions: (a) the
Spouses Jaso validly acquired Biondos share in the business
which had been transferred to and continued its operations
at 66-C Cenacle Drive, Sanville Subdivision, Project 6,
Quezon City and not dissolved as claimed by the Spouses
Realubit; (b) absent showing of Josefinas knowledge and
consent to the transfer of Biondos share, Eden cannot be
considered as a partner in the business, pursuant to Article
1813 of the Civil Code of the Philippines; (c) while entitled
to Biondos share in the profits of the business, Eden
cannot, however, interfere with the management of the
partnership, require information or account of its
transactions and inspect its books; (d) the partnership
should first be dissolved before Eden can seek an
accounting of its transactions and demand Biondos share in
the business; and, (e) the evidence adduced before the RTC
do not support the award of moral damages in favor of the
Spouses Jaso.12
The Spouses Realubits motion for reconsideration of the
foregoing decision was denied for lack of merit in the CAs
28 June 2007 Resolution,13 hence, this petition.
The Issues
The Spouses Realubit urge the reversal of the assailed
decision upon the negative of the following issues, to wit:
A. WHETHER OR NOT THERE WAS A VALID
ASSIGNMENT OF RIGHTS TO THE JOINT VENTURE.
B. WHETHER THE COURT MAY ORDER PETITIONER
[JOSEFINA REALUBIT] AS PARTNER IN THE JOINT
VENTURE TO RENDER [A]N ACCOUNTING TO ONE
WHO IS NOT A PARTNER IN SAID JOINT VENTURE.
C. WHETHER PRIVATE RESPONDENTS [SPOUSES
JASO] HAVE ANY RIGHT IN THE JOINT VENTURE AND
IN THE SEPARATE ICE BUSINESS OF PETITIONER[S].14
The Courts Ruling
We find the petition bereft of merit.
The Spouses Realubit argue that, in upholding its validity,
both the RTC and the CA inordinately gave premium to the
notarization of the 27 June 1997 Deed of Assignment
executed by Biondo in favor of the Spouses Jaso. Calling
attention to the latters failure to present before the RTC
said assignor or, at the very least, the witnesses to said
document, the Spouses Realubit maintain that the
testimony of Rolando Diaz, the Notary Public before whom
the same was acknowledged, did not suffice to establish its
authenticity and/or validity. They insist that notarization
did not automatically and conclusively confer validity on
said deed, since it is still entirely possible that Biondo did
not execute said deed or, for that matter, appear before
said notary public.15 The dearth of merit in the Spouses
11
proportionate interest in the capital."30 Since a partners
interest in the partnership includes his share in the
profits,31 we find that the CA committed no reversible error
in ruling that the Spouses Jaso are entitled to Biondos
share in the profits, despite Juanitas lack of consent to the
assignment of said Frenchmans interest in the joint
venture. Although Eden did not, moreover, become a
partner as a consequence of the assignment and/or acquire
the right to require an accounting of the partnership
business, the CA correctly granted her prayer for
dissolution of the joint venture conformably with the right
granted to the purchaser of a partners interest under
Article 1831 of the Civil Code.32 1wphi1
Considering that they involve questions of fact, neither are
we inclined to hospitably entertain the Spouses Realubits
insistence on the supposed fact that Josefinas joint
venture with Biondo had already been dissolved and 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
RTC36 and the CA37 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 appeal39 unless the case falls
under any of the following recognized exceptions: (1) when
the conclusion is a finding grounded entirely on
speculation, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd or
impossible; (3) where there is a grave abuse of discretion;
(4) when the judgment is based on a misapprehension of
facts; (5) when the findings of fact are conflicting; (6)
when the CA, in making its findings, went beyond the issues
of the case and the same is contrary to the admissions of
both appellant and appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings of
fact are conclusions without citation of specific evidence
on which they are based; (9) when the facts set forth in the
petition as well as in the petitioners' main and reply briefs
are not disputed by the respondents; and, (10) when the
findings of fact of the CA are premised on the supposed
absence of evidence and contradicted by the evidence on
record.40 Unfortunately for the Spouses Realubits cause,
not one of the foregoing exceptions applies to the case.
WHEREFORE, the petition is DENIED for lack of merit and
the assailed CA Decision dated 30 April 2007 is, accordingly,
AFFIRMED in toto.
SO ORDERED.
12
unethical but care should be taken that
no imposition or deception is practiced
through this use. ... 4
4. There is no possibility of imposition or deception
because the deaths of their respective deceased partners
were well-publicized in all newspapers of general
circulation for several days; the stationeries now being
used by them carry new letterheads indicating the years
when their respective deceased partners were connected
with the firm; petitioners will notify all leading national
and international law directories of the fact of their
respective deceased partners' deaths. 5
5. No local custom prohibits the continued use of a
deceased partner's name in a professional firm's
name; 6 there is no custom or usage in the Philippines, or at
least in the Greater Manila Area, which recognizes that the
name of a law firm necessarily Identifies the individual
members of the firm. 7
6. The continued use of a deceased partner's name in the
firm name of law partnerships has been consistently
allowed by U.S. Courts and is an accepted practice in the
legal profession of most countries in the world. 8
The question involved in these Petitions first came under
consideration by this Court in 1953 when a law firm in Cebu
(the Deen case) continued its practice of including in its
firm name that of a deceased partner, C.D. Johnston. The
matter was resolved with this Court advising the firm to
desist from including in their firm designation the name of
C. D. Johnston, who has long been dead."
The same issue was raised before this Court in 1958 as an
incident in G. R. No. L-11964, entitled Register of Deeds of
Manila vs. China Banking Corporation. The law firm of
Perkins & Ponce Enrile moved to intervene asamicus
curiae. Before acting thereon, the Court, in a Resolution of
April 15, 1957, stated that it "would like to be informed
why the name of Perkins is still being used although Atty. E.
A. Perkins is already dead." In a Manifestation dated May
21, 1957, the law firm of Perkins and Ponce Enrile, raising
substantially the same arguments as those now being
raised by petitioners, prayed that the continued use of the
firm name "Perkins & Ponce Enrile" be held proper.
On June 16, 1958, this Court resolved: t.hqw
After carefully considering the reasons
given by Attorneys Alfonso Ponce Enrile
and Associates for their continued use of
the name of the deceased E. G. Perkins,
the Court found no reason to depart from
the policy it adopted in June 1953 when
it required Attorneys Alfred P. Deen and
Eddy A. Deen of Cebu City to desist from
including in their firm designation, the
name of C. D. Johnston, deceased. The
Court believes that, in view of the
personal and confidential nature of the
relations between attorney and client,
and the high standards demanded in the
canons of professional ethics, no practice
should be allowed which even in a remote
degree could give rise to the possibility of
deception. Said attorneys are accordingly
advised to drop the name "PERKINS" from
their firm name.
13
held that a saleable goodwill can exist only in a commercial
partnership and cannot arise in a professional partnership
consisting of lawyers. 9t.hqw
As a general rule, upon the dissolution of
a commercial partnership the succeeding
partners or parties have the right to carry
on the business under the old name, in
the absence of a stipulation forbidding it,
(s)ince the name of a commercial
partnership is a partnership asset
inseparable from the good will of the
firm. ... (60 Am Jur 2d, s 204, p. 115)
(Emphasis supplied)
On the other hand, t.hqw
... a professional partnership the
reputation of which depends or; the
individual skill of the members, such as
partnerships of attorneys or physicians,
has no good win to be distributed as a
firm asset on its dissolution, however
intrinsically valuable such skill and
reputation may be, especially where
there is no provision in the partnership
agreement relating to good will as an
asset. ... (ibid, s 203, p. 115) (Emphasis
supplied)
C. A partnership for the practice of law cannot be likened
to partnerships formed by other professionals or for
business. For one thing, the law on accountancy specifically
allows the use of a trade name in connection with the
practice of accountancy. 10 t.hqw
A partnership for the practice of law is
not a legal entity. It is a mere relationship
or association for a particular purpose. ...
It is not a partnership formed for the
purpose of carrying on trade or business
or of holding property." 11 Thus, it has
been stated that "the use of a nom de
plume, assumed or trade name in law
practice is improper. 12
The usual reason given for different
standards of conduct being applicable to
the practice of law from those pertaining
to business is that the law is a profession.
Dean Pound, in his recently published
contribution to the Survey of the Legal
Profession, (The Lawyer from Antiquity
to Modern Times, p. 5) defines a
profession as "a group of men pursuing a
learned art as a common calling in the
spirit of public service, no less a public
service because it may incidentally be a
means of livelihood."
14
the firm name of law partnerships. But that is so because it
is sanctioned by custom.
Separate Opinions
15
view, as explained in the plurality opinion of Justice
Ameurfina Melencio-Herrera. It is out of delicadeza that
the undersigned did not participate in the disposition of
these petitions, as the law office of Sycip, Salazar,
Feliciano, Hernandez and Castillo started with the
partnership of Quisumbing, Sycip, and Quisumbing, the
senior partner, the late Ramon Quisumbing, being the
father-in-law of the undersigned, and the most junior
partner then, Norberto J. Quisumbing, being his brotherin-law. For the record, the undersigned wishes to invite the
attention of all concerned, and not only of petitioners, to
the last sentence of the opinion of Justice Ameurfina
Melencio-Herrera: 'Those names [Sycip and Ozaeta] may,
however, be included in the listing of individuals wtes
AQUINO, J., dissenting:
I dissent. The fourteen members of the law firm, Sycip,
Salazar, Feliciano, Hernandez & Castillo, in their petition of
June 10, 1975, prayed for authority to continue the use of
that firm name, notwithstanding the death of Attorney
Alexander Sycip on May 5, 1975 (May he rest in peace). He
was the founder of the firm which was originally known as
the Sycip Law Office.
On the other hand, the seven surviving partners of the law
firm, Ozaeta, Romulo, De Leon, Mabanta & Reyes, in their
petition of August 13, 1976, prayed that they be allowed to
continue using the said firm name notwithstanding the
death of two partners, former Justice Roman Ozaeta and
his son, Herminio, on May 1, 1972 and February 14, 1976,
respectively.
They alleged that the said law firm was a continuation of
the Ozaeta Law Office which was established in 1957 by
Justice Ozaeta and his son and that, as to the said law
firm, the name Ozaeta has acquired an institutional and
secondary connotation.
Article 1840 of the Civil Code, which speaks of the use by
the partnership of the name of a deceased partner as part
of the partnership name, is cited to justify the petitions.
Also invoked is the canon that the continued use by a law
firm of the name of a deceased partner, "when permissible
by local custom, is not unethical" as long as "no imposition
or deception is practised through this use" (Canon 33 of the
Canons of Legal Ethics).
I am of the opinion that the petition may be granted with
the condition that it be indicated in the letterheads of the
two firms (as the case may be) that Alexander Sycip,
former Justice Ozaeta and Herminio Ozaeta are dead or the
period when they served as partners should be stated
therein.
Obviously, the purpose of the two firms in continuing the
use of the names of their deceased founders is to retain the
clients who had customarily sought the legal services of
Attorneys Sycip and Ozaeta and to benefit from the
goodwill attached to the names of those respected and
esteemed law practitioners. That is a legitimate
motivation.
The retention of their names is not illegal per se. That
practice was followed before the war by the law firm of
James Ross. Notwithstanding the death of Judge Ross the
founder of the law firm of Ross, Lawrence, Selph and
Carrascoso, his name was retained in the firm name with
an indication of the year when he died. No one complained
# Separate Opinions
FERNANDO, C.J., concurring:
The petitions are denied, as there are only four votes for
granting them, seven of the Justices being of the contrary
view, as explained in the plurality opinion of Justice
Ameurfina Melencio-Herrera. It is out of delicadeza that
the undersigned did not participate in the disposition of
these petitions, as the law office of Sycip, Salazar,
Feliciano, Hernandez and Castillo started with the
partnership of Quisumbing, Sycip, and Quisumbing, the
senior partner, the late Ramon Quisumbing, being the
father-in-law of the undersigned, and the most junior
partner then, Norberto J. Quisumbing, being his brotherin-law. For the record, the undersigned wishes to invite the
attention of all concerned, and not only of petitioners, to
the last sentence of the opinion of Justice Ameurfina
Melencio-Herrera: 'Those names [Sycip and Ozaeta] may,
however, be included in the listing of individuals wtes
AQUINO, J., dissenting:
I dissent. The fourteen members of the law firm, Sycip,
Salazar, Feliciano, Hernandez & Castillo, in their petition of
June 10, 1975, prayed for authority to continue the use of
that firm name, notwithstanding the death of Attorney
Alexander Sycip on May 5, 1975 (May he rest in peace). He
was the founder of the firm which was originally known as
the Sycip Law Office.
On the other hand, the seven surviving partners of the law
firm, Ozaeta, Romulo, De Leon, Mabanta & Reyes, in their
petition of August 13, 1976, prayed that they be allowed to
continue using the said firm name notwithstanding the
death of two partners, former Justice Roman Ozaeta and
his son, Herminio, on May 1, 1972 and February 14, 1976,
respectively.
They alleged that the said law firm was a continuation of
the Ozaeta Law Office which was established in 1957 by
Justice Ozaeta and his son and that, as to the said law
firm, the name Ozaeta has acquired an institutional and
secondary connotation.
Article 1840 of the Civil Code, which speaks of the use by
the partnership of the name of a deceased partner as part
of the partnership name, is cited to justify the petitions.
Also invoked is the canon that the continued use by a law
firm of the name of a deceased partner, "when permissible
by local custom, is not unethical" as long as "no imposition
or deception is practised through this use" (Canon 33 of the
Canons of Legal Ethics).
I am of the opinion that the petition may be granted with
the condition that it be indicated in the letterheads of the
two firms (as the case may be) that Alexander Sycip,
former Justice Ozaeta and Herminio Ozaeta are dead or the
period when they served as partners should be stated
therein.
Obviously, the purpose of the two firms in continuing the
use of the names of their deceased founders is to retain the
clients who had customarily sought the legal services of
Attorneys Sycip and Ozaeta and to benefit from the
16
goodwill attached to the names of those respected and
esteemed law practitioners. That is a legitimate
motivation.
The retention of their names is not illegal per se. That
practice was followed before the war by the law firm of
James Ross. Notwithstanding the death of Judge Ross the
founder of the law firm of Ross, Lawrence, Selph and
Carrascoso, his name was retained in the firm name with
an indication of the year when he died. No one complained
that the retention of the name of Judge Ross in the firm
name was illegal or unethical.
G.R. No. 19892
September 6, 1923
Go Tayco . . . . . . . . . . . . . . . . . . . . . . . . . .
Yap Gueco . . . . . . . . . . . . . . . . . . . . . . . .
Jo Ybec . . . . . . . . . . . . . . . . . . . . . . . . . . .
MALCOLM, J.:
Lim Yogsing . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .
17
cantidad que intenen disponer o extraer de dicha
sociedad.
El accionista Sr. Lim Yogsing tendra a su cargo, en
union del Sr. Vicente Jocson Jo, la administracion
de la Compaia, quienes podran usar
indistintamente la firma social, quedando por
consiguiente autorizados amobs para hacer en
nombre de ella toda calse de operaciones,
negocios y especulaciones mercantiles,
practicando judicial y extra-judicialment cuantos
actos se requieran para el bien de la sociedad,
nombrar procuradores o abogados para
reclamaciones y cobro de creditos y proponer ante
los tribunales las demandas, convenios,
transacciones y excepciones procdentes. En caso
de ausencia, enfermedad o cualquier otro
impedimento del accionista administrador Sr. Lim
Yogsing, este podra conferir poder general o
especial al accionista que crea conveniente para
que en union del administrador auxiliar Sr. Vicente
Jocson Jo, pudieran ambos administrar
convenientemente los negocios de la sociedad.
Que los administradores podran tener los
empleados necesarios para el mejor que debieran
percibir dichos empleados por servicios rendidos a
la sociedad.
Que ambos administradores podran disponer
de mil discientos pesos (P1,200) moneda filipina,
anualmente, para sus gastos particulares, siendo
dicha cantidad de P1,200 la que corresponde a
cada uno de dichos administradores, como
emolumentos o salarios que se les asigna a cas
uno, por sus trabajos en la administracion de la
sociedad. Entendiendose, que, los accionistas
podran disponer cada fin de aola gratificacion
quese concedera a cada administrador, si los
negocios del ao fueran boyantes y justifiquen la
concesion de una gratificacion especial, aparte del
salario aqui dispuesto y especificado.
Que pasado el termino de seis aos, y es de la
conveniencia de los accionistas la continuacion del
negocio de esta sociedad, dicho termino sera
prorrogado por igual numero de aos, sin
necesidas del otorgamiento de ulteriores
escrituras, quedando la presente en vigor hasta el
termino dispuesto por todos los accionistas.
Que las diferencias que pudieran suscitarse entre
los accionistas, bien sea por razon de lo estipulado
en esta en ella comprendidos, se procurara
arreglar entre los mismos amistosa y
extrajudicialmente, y si no se consiguiere un
arreglo de este modo, dichos accionistas
nombraran un arbitro, cuya resolucion estan todos
obligados y por la presente se comprometen y se
obligan a acatarla en todas sus partes,
renunciando ulteriores recursos.
En cuyos terminos dejamos formalizada esta
escritura de sociedad mercantillimitada, y
prometemos cumplirla fiel y estrictamente segun
los pactos que hemos establecido.
En testimonio de todo lo cual, firmamos en la
Ciudad de Cebu, Provincia de Cebu, Islas Filipinas,
hoy 31 de octubre de mil novecientos diez y
nueve.
(Fdo.) "F.V.ARIAS
"Notario Publico
"Hasta el 1. de enero de 1920
18
contended by any one that Teck Seing & Co., Ltd., is
accidental partnership denominated cuenta en
participacion (joint account association).
Counsel for the petitioner and appellee described his client
in once place in his opposition to the motion of the
creditors as "una verdadera sociedad anonima" (a
true sociedad anonima). The provisions of the Code of
Commerce relating to sociedades anonimas were, however,
repealed by section 191 of the Corporation Law (Act No.
1459), with the exceptions the sociedades
anonimas lawfully organized at the time of the passage of
the Corporation Law were recognized, which is not our
case.
The document providing for the partnership contract
purported to form "una sociedad mercantil limitada," and
counsel for the petitioner's first contention was that Teck
Seing & Co., Ltd., was not "una sociedad regular colectiva,
ni siquiera comanditaria, sino una sociedad mercantil
limitada." Let us see if the partnership contract created a
"sociedad en comandita," or, as it is known in English, and
will hereafter be spoken of, "a limited partnership."
To establish a limited partnership there must be, at least,
one general partner and the name of the least one of the
general partners must appear in the firm name. (Code of
Commerce, arts. 122 [2], 146, 148.) But neither of these
requirements have been fulfilled. The general rule is, that
those who seek to avail themselves of the protection of
laws permitting the creation of limited partnerships must
show a substantially full compliance with such laws. A
limited partnership that has not complied with the law of
its creation is not considered a limited partnership at all,
but a general partnership in which all the members are
liable. (Mechem, Elements of Partnership, p. 412; Gilmore,
Partnership, pp. 499, 595; 20 R C. L. 1064.)
The contention of the creditors and appellants is that the
partnership contract established a general partnership.
Article 125 of the Code of Commerce provides that the
articles of general copartnership must estate the names,
surnames, and domiciles of the partners; the firm name;
the names, and surnames of the partners to whom the
management of the firm and the use of its signature is
instrusted; the capital which each partner contributes in
cash, credits, or property, stating the value given the latter
or the basis on which their appraisement is to be made; the
duration of the copartnership; and the amounts which, in a
proper case, are to be given to each managing partner
annually for his private expenses, while the succeeding
article of the Code provides that the general copartnership
must transact business under the name of all its members,
of several of them, or of one only. Turning to the document
before us, it will be noted that all of the requirements of
the Code have been met, with the sole exception of that
relating to the composition of the firm name. We leave
consideration of this phase of the case for later discussion.
The remaining possibility is the revised contention of
counsel for the petitioners to the effect that Teck Seing &
Co., Ltd., is "una sociedad mercantil "de facto"
solamente" (only a de facto commercial association), and
that the decision of the Supreme court in the case of HungMan-Yoc vs. Kieng-Chiong-Seng [1906], 6 Phil., 498), is
controlling. It was this argument which convinced the trial
judge, who gave effect to his understanding of the case
last cited and which here must be given serious attention.
The decision in Hung-Man-Yoc vs. Kieng-Chiong-Seng, supra,
discloses that the firm Kieng-Chiong-Seng was not
organized by means of any public document; that the
partnership had not been recorded in the mercantile
registry; and that Kieng-Chiong-Seng was not proven to be
the firm name, but rather the designation of the
partnership. The conclusion then was, that the partnership
in question was merely de facto and that, therefore, giving
effect to the provisions of article 120 of the Code of
19
violation thereof a misdemeanor. The supreme Court of
Michigan said:
The one object of the act is manifestly to protect
the public against imposition and fraud,
prohibiting persons from concealing their identity
by doing business under an assumed name, making
it unlawful to use other than their real names in
transacting business without a public record of
who they are, available for use in courts, and to
punish those who violate the prohibition. The
object of this act is not limited to facilitating the
collection of debts, or the protection of those
giving credit to persons doing business under an
assumed name. It is not unilateral in its
application. It applies to debtor and creditor,
contractor and contractee, alike. Parties doing
business with those acting under an assumed
name, whether they buy or sell, have a right,
under the law, to know who they are, and who to
hold responsible, in case the question of damages
for failure to perform or breach of warranty should
arise.
The general rule is well settled that, where
statutes enacted to protect the public against
fraud or imposition, or to safeguard the public
health or morals, contain a prohibition and impose
a penalty, all contracts in violation thereof are
void. . . .
As this act involves purely business transactions,
and affects only money interests, we think it
should be construed as rendering contracts made
in violation of it unlawful and unforceable at the
instance of the offending party only, but not as
designed to take away the rights of innocent
parties who may have dealt with the offenders in
ignorance of their having violated the statute.
(Cashin vs. Pliter [1912], 168 Mich., 386; Ann. Cas.
[1913-C, 697.)
The early decision of our Supreme Court in the case of
Prautch Scholes & Co. vs. Hernandez [1903], 1 Phil., 705),
contains the following pertinent observations:
Another case may be supposed. A partnership is
organized for commercial purposes. It fails to
comply with the requirements of article 119. A
creditor sues the partnership for a debt contracted
by it, claiming to hold the partners severally. They
answer that their failure to comply with the Code
of Commerce makes them a civil partnership and
that they are in accordance with article 1698 of
the Civil Code only liable jointly. To allow such
liberty of action would be to permit the parties by
a violation of the Code to escape a liability which
the law has seen fit to impose upon persons who
organized commercial partnership; "Because it
would be contrary to all legal principles that the
nonperformance of a duty should redound to the
benefit of the person in default either intentional
or unintentional." (Mercantile Law, Eixala, fourth
ed., p. 145.)" (See also Lichauco vs. Lichauco
[1916], 33 Phil., 350, 360.)
Dr. Jose de Echavarri y Vivanco, in his Codigo de Comercio,
includes the following comment after articles 121 and 126
of the Code:
From the decisions cited in this and in the previous
comments, the following is deduced: 1st. Defects
in the organization cannot affect relations with
third persons. 2d. Members who contract with
other persons before the association is lawfully
organized are liable to these persons. 3d. The
intention to form an association is necessary, so
that if the intention of mutual participation in the
profits and losses in a particular business is
proved, and there are no articles of association,
xxx
xxx
20
because the mere fact that a person uses a name
not his own does not prevent him from being
bound in a contract or an obligation he voluntarily
entered into; second, because such a requirement
of the law is merely a formal and not necessarily
an essential one to the existence of the
partnership, and as long as the name adopted
sufficiently identity the firm or partnership
intended to use it, the acts and contracts done
and entered into under such a name bind the firm
to third persons; and third, because the failure of
the partners herein to adopt the correct name
prescribed by law cannot shield them from their
personal liabilities, as neither law nor equity will
permit them to utilize their own mistake in order
to put the blame on third persons, and much less,
on the firm creditors in order to avoid their
personal possibility.
The legal intention deducible from the acts of the parties
controls in determining the existence of a partnership. If
they intend to do a thing which in law constitutes a
partnership, they are partners, although their purpose was
to avoid the creation of such relation. Here, the intention
of the persons making up Teck Seing & co., Ltd. was to
establish a partnership which they erroneously
denominated a limited partnership. If this was their
purpose, all subterfuges resorted to in order to evade
liability for possible losses, while assuming their enjoyment
of the advantages to be derived from the relation, must be
disregarded. The partners who have disguised their identity
under a designation distinct from that of any of the
members of the firm should be penalized, and not the
creditors who presumably have dealt with the partnership
in good faith.
Articles 127 and 237 of the Code of Commerce make all the
members of the general copartnership liable personally
and in solidum with all their property for the results of the
transactions made in the name and for the account of the
partnership. Section 51 of the Insolvency Law, likewise,
makes all the property of the partnership and also all the
separate property of each of the partners liable. In other
words, if a firm be insolvent, but one or more partners
thereof are solvent, the creditors may proceed both against
the firm and against the solvent partner or partners, first
exhausting the assets of the firm before seizing the
property of the partners. (Brandenburg of Bankcruptcy,
sec. 108; De los Reyes vs. Lukban and Borja [1916], 35
Phil., 757; Involuntary Insolvency of Campos Rueda &
Co. vs. Pacific Commercial Co. [1922], 44 Phil., 916).
We reach the conclusion that the contract of partnership
found in the document hereinbefore quoted established a
general partnership or, to be more exact, a partnership as
this word is used in the Insolvency Law.
Wherefore, the order appealed from is reversed, and the
record shall be returned to the court of origin for further
proceedings pursuant to the motion presented by the
creditors, in conformity with the provisions of the
Insolvency Law. Without special findings as to the costs in
this instance, it is ordered.
Araullo, C.J., Johnson, Street, Avancea, Villamor, Johns
and Romualdez, JJ., concur.