THIRD DIVISION

G.R. No. 97212 June 30, 1993

BENJAMIN YU, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN
PRODUCTS COMPANY LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and
CHEN HO-FU, Respondents.

Jose C. Guico for petitioner.chanrobles virtual law library

Wilfredo Cortez for private respondents.

FELICIANO, J.:

Petitioner Benjamin Yu was formerly the Assistant General Manager of the marble quarrying and export business operated by a
registered partnership with the firm name of "Jade Mountain Products Company Limited" ("Jade Mountain"). The partnership
was originally organized on 28 June 1984 with Lea Bendal and Rhodora Bendal as general partners and Chin Shian Jeng, Chen
Ho-Fu and Yu Chang, all citizens of the Republic of China (Taiwan), as limited partners. The partnership business consisted of
exploiting a marble deposit found on land owned by the Sps. Ricardo and Guillerma Cruz, situated in Bulacan Province, under a
Memorandum Agreement dated 26 June 1984 with the Cruz spouses. 1The partnership had its main office in Makati,
Metropolitan Manila.

Benjamin Yu was hired by virtue of a Partnership Resolution dated 14 March 1985, as Assistant General Manager with a
monthly salary of P4,000.00. According to petitioner Yu, however, he actually received only half of his stipulated monthly
salary, since he had accepted the promise of the partners that the balance would be paid when the firm shall have secured
additional operating funds from abroad. Benjamin Yu actually managed the operations and finances of the business; he had
overall supervision of the workers at the marble quarry in Bulacan and took charge of the preparation of papers relating to the
exportation of the firm's products.

Sometime in 1988, without the knowledge of Benjamin Yu, the general partners Lea Bendal and Rhodora Bendal sold and
transferred their interests in the partnership to private respondent Willy Co and to one Emmanuel Zapanta. Mr. Yu Chang, a
limited partner, also sold and transferred his interest in the partnership to Willy Co. Between Mr. Emmanuel Zapanta and
himself, private respondent Willy Co acquired the great bulk of the partnership interest. The partnership now constituted solely
by Willy Co and Emmanuel Zapanta continued to use the old firm name of Jade Mountain, though they moved the firm's main
office from Makati to Mandaluyong, Metropolitan Manila. A Supplement to the Memorandum Agreement relating to the
operation of the marble quarry was entered into with the Cruz spouses in February of 1988. 2The actual operations of the business
enterprise continued as before. All the employees of the partnership continued working in the business, all, save petitioner
Benjamin Yu as it turned out.

On 16 November 1987, having learned of the transfer of the firm's main office from Makati to Mandaluyong, petitioner Benjamin
Yu reported to the Mandaluyong office for work and there met private respondent Willy Co for the first time. Petitioner was
informed by Willy Co that the latter had bought the business from the original partners and that it was for him to decide whether
or not he was responsible for the obligations of the old partnership, including petitioner's unpaid salaries. Petitioner was in fact
not allowed to work anymore in the Jade Mountain business enterprise. His unpaid salaries remained unpaid. 3chanrobles virtual
law library

On 21 December 1988. Benjamin Yu filed a complaint for illegal dismissal and recovery of unpaid salaries accruing from
November 1984 to October 1988, moral and exemplary damages and attorney's fees, against Jade Mountain, Mr. Willy Co and
the other private respondents. The partnership and Willy Co denied petitioner's charges, contending in the main that Benjamin Yu
was never hired as an employee by the present or new partnership. 4chanrobles virtual law library

In due time, Labor Arbiter Nieves Vivar-De Castro rendered a decision holding that petitioner had been illegally dismissed. The
Labor Arbiter decreed his reinstatement and awarded him his claim for unpaid salaries, backwages and attorney's
fees. 5chanrobles virtual law library

On appeal, the National Labor Relations Commission ("NLRC") reversed the decision of the Labor Arbiter and dismissed
petitioner's complaint in a Resolution dated 29 November 1990. The NLRC held that a new partnership consisting of Mr. Willy
Co and Mr. Emmanuel Zapanta had bought the Jade Mountain business, that the new partnership had not retained petitioner Yu
in his original position as Assistant General Manager, and that there was no law requiring the new partnership to absorb the
employees of the old partnership. Benjamin Yu, therefore, had not been illegally dismissed by the new partnership which had
simply declined to retain him in his former managerial position or any other position. Finally, the NLRC held that Benjamin Yu's
claim for unpaid wages should be asserted against the original members of the preceding partnership, but these though impleaded
had, apparently, not been served with summons in the proceedings before the Labor Arbiter. 6chanrobles virtual law library

Petitioner Benjamin Yu is now before the Court on a Petition for Certiorari, asking us to set aside and annul the Resolution of the
NLRC as a product of grave abuse of discretion amounting to lack or excess of jurisdiction.

The basic contention of petitioner is that the NLRC has overlooked the principle that a partnership has a juridical personality
separate and distinct from that of each of its members. Such independent legal personality subsists, petitioner claims,
notwithstanding changes in the identities of the partners. Consequently, the employment contract between Benjamin Yu and the
partnership Jade Mountain could not have been affected by changes in the latter's membership. 7chanrobles virtual law library

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 partnerships composed of Willy Co and
Emmanuel Zapanta; and (2) if indeed a new partnership had come into existence, whether petitioner Yu could nonetheless assert
his rights under his employment contract as against the new partnership.

In respect of the first issue, we agree with the result reached by the NLRC, that is, that the legal effect of the changes in the
membership of the partnership was the dissolution of the old partnership which had hired petitioner in 1984 and the emergence of
a new firm composed of Willy Co and Emmanuel Zapanta in 1987.

The applicable law in this connection - of which the NLRC seemed quite unaware - is found in the Civil Code provisions relating
to partnerships. Article 1828 of the Civil Code provides as follows:

Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on as distinguished from the winding up of the business. (Emphasis supplied)

Article 1830 of the same Code must also be noted:

Art. 1830. Dissolution is caused:chanrobles virtual law library

(1) without violation of the agreement between the partners;

xxx xxx xxx

(b) by the express will of any partner, who must act in good faith, when no definite term or particular undertaking is specified;

xxx xxx xxx

(2) in contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other
provision of this article, by the express will of any partner at any time;

xxx xxx xxx

(Emphasis supplied)

In the case at bar, just about all of the partners had sold their partnership interests (amounting to 82% of the total partnership
interest) to Mr. Willy Co and Emmanuel Zapanta. The record does not show what happened to the remaining 18% of the original
partnership interest. The acquisition of 82% of the partnership interest by new partners, coupled with the retirement or
withdrawal of the partners who had originally owned such 82% interest, was enough to constitute a new partnership.

The occurrence of events which precipitate the legal consequence of dissolution of a partnership do not, however, automatically
result in the termination of the legal personality of the old partnership. Article 1829 of the Civil Code states that:
[o]n dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed.

In the ordinary course of events, the legal personality of the expiring partnership persists for the limited purpose of winding up
and closing of the affairs of the partnership. In the case at bar, it is important to underscore the fact that the business of the old
partnership was simply continued by the new partners, without the old partnership undergoing the procedures relating to
dissolution and winding up of its business affairs. In other words, the new partnership simply took over the business enterprise
owned by the preceeding partnership, and continued using the old name of Jade Mountain Products Company Limited, without
winding up the business affairs of the old partnership, paying off its debts, liquidating and distributing its net assets, and then re-
assembling the said assets or most of them and opening a new business enterprise. There were, no doubt, powerful tax
considerations which underlay such an informal approach to business on the part of the retiring and the incoming partners. It is
not, however, necessary to inquire into such matters.

What is important for present purposes is that, under the above described situation, not only the retiring partners (Rhodora
Bendal, et al.) but alsothe 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, 8the 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. 9The 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:chanrobles virtual law library

(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;chanrobles virtual law
library

(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;chanrobles virtual law library

(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;chanrobles virtual law library

(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;chanrobles virtual law library

(5) When any partner wrongfully causes a dissolution and remaining partners continue the business under the provisions of
article 1837, second paragraph, No. 2, either alone or with others, and without liquidation of the partnership affairs;chanrobles
virtual law library

(6) When a partner is expelled and the remaining partners continue the business either alone or with others without liquidation of
the partnership affairs;chanrobles virtual law library

The liability of a third person becoming a partner in the partnership continuing the business, under this article, to the creditors of
the dissolved partnership shall be satisfied out of the partnership property only, unless there is a stipulation to the contrary.

When the business of a partnership after dissolution is continued under any conditions set forth in this article the creditors of the
retiring or deceased partner or the representative of the deceased partner, have a prior right to any claim of the retired partner or
the representative of the deceased partner against the person or partnership continuing the business on account of the retired or
deceased partner's interest in the dissolved partnership or on account of any consideration promised for such interest or for his
right in partnership property.

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

xxx xxx xxxchanrobles virtual law library

(Emphasis 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 mare 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 take 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. 10The 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. 11It
follows that petitioner Benjamin Yu is entitled to separation pay at the rate of one month's pay for each year of service that he had
rendered to the old partnership, a fraction of at least six (6) months being considered as a whole year.

While the new Jade Mountain was entitled to decline to retain petitioner Benjamin Yu in its employ, we consider that Benjamin
Yu was very shabbily treated by the new partnership. The old partnership certainly benefitted from the services of Benjamin Yu
who, as noted, previously ran the whole marble quarrying, processing and exporting enterprise. His work constituted value-added
to the business itself and therefore, the new partnership similarly benefitted from the labors of Benjamin Yu. It is worthy of note
that the new partnership did not try to suggest that there was any cause consisting of some blameworthy act or omission on the
part of Mr. Yu which compelled the new partnership to terminate his services. Nonetheless, the new Jade Mountain did not notify
him of the change in ownership of the business, the relocation of the main office of Jade Mountain from Makati to Mandaluyong
and the assumption by Mr. Willy Co of control of operations. The treatment (including the refusal to honor his claim for unpaid
wages) accorded to Assistant General Manager Benjamin Yu was so summary and cavalier as to amount to arbitrary, bad faith
treatment, for which the new Jade Mountain may legitimately be required to respond by paying moral damages. This Court,
exercising its discretion and in view of all the circumstances of this case, believes that an indemnity for moral damages in the
amount of P20,000.00 is proper and reasonable.

In addition, we consider that petitioner Benjamin Yu is entitled to interest at the legal rate of six percent (6%) per annum on the
amount of unpaid wages, and of his separation pay, computed from the date of promulgation of the award of the Labor Arbiter.
Finally, because the new Jade Mountain compelled Benjamin Yu to resort to litigation to protect his rights in the premises, he is
entitled to attorney's fees in the amount of ten percent (10%) of the total amount due from private respondent Jade Mountain.

WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE COURSE, the Comment filed by private
respondents is treated as their Answer to the Petition for Certiorari, and the Decision of the NLRC dated 29 November 1990 is
hereby NULLIFIED and SET ASIDE. A new Decision is hereby ENTERED requiring private respondent Jade Mountain
Products Company Limited to pay to petitioner Benjamin Yu the following amounts:

(a) for unpaid wages which, as found by the Labor Arbiter, shall be computed at the rate of P2,000.00 per month multiplied by
thirty-six (36) months (November 1984 to December 1987) in the total amount of P72,000.00;chanrobles virtual law library

(b) separation pay computed at the rate of P4,000.00 monthly pay multiplied by three (3) years of service or a total of
P12,000.00;chanrobles virtual law library

(c) indemnity for moral damages in the amount of P20,000.00;chanrobles virtual law library

(d) six percent (6%) per annum legal interest computed on items (a) and (b) above, commencing on 26 December 1989 and until
fully paid; andchanrobles virtual law library

(e) ten percent (10%) attorney's fees on the total amount due from private respondent Jade Mountain.

Costs against private respondents. SO ORDERED.

 SECOND DIVISION

G.R. No. 206147, January 13, 2016

MICHAEL C. GUY, Petitioner, v. ATTY. GLENN C. GACOTT, Respondent.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Michael C. Guy
(Guy), assailing the June 25, 2012 Decision1 and the March 5, 2013 Resolution2of the Court of Appeals (CA) in CA-G.R. CV No.
94816, which affirmed the June 28, 20093 and February 19, 20104 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 Personalty5 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:chanRoblesvirtualLawlibrary

WHEREFORE, judgment is hereby rendered in favor of the plaintiff, ordering the defendants to jointly and severally pay plaintiff
the following:chanRoblesvirtualLawlibrary

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.
cralawlawlibrary

The decision became final as QSC and Medestomas did not interpose an appeal. Gacott then secured a Writ of Execution, 8 dated
September 26, 2007.

During the execution stage, Gacott learned that QSC was not a corporation, but was in fact a general partnership registered with
the Securities and Exchange Commission (SEC). In the articles of partnership,9 Guy was appointed as General Manager of QSC.

To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to the main office of the Department of
Transportation and Communications, Land Transportation Office (DOTC-LTO), Quezon City, and verified whether Medestomas,
QSC and Guy had personal properties registered therein.10 Upon learning that Guy had vehicles registered in his name, Gacott
instructed the sheriff to proceed with the attachment of one of the motor vehicles of Guy based on the certification issued by the
DOTC-LTO.11
On March 3, 2009, Sheriff Felizarte attached Guy's vehicle by virtue of the Notice of Attachment/Levy upon Personalty12 served
upon the record custodian of the DOTC-LTO of Mandaluyong City. A similar notice was served to Guy through his housemaid at
his residence.

Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty, arguing that he was not a judgment debtor and, therefore,
his vehicle could not be attached.13 Gacott filed an opposition to the motion.

The RTC Order

On June 28, 2009, the RTC issued an order denying Guy's motion. It explained that considering QSC was not a corporation, but a
registered partnership, Guy should be treated as a general partner pursuant to Section 21 of the Corporation Code, and he may be
held jointly and severally liable with QSC and Medestomas. The trial court wrote:chanRoblesvirtualLawlibrary

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 1823.14cralawlawlibrary

Accordingly, it disposed:chanRoblesvirtualLawlibrary

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.15cralawlawlibrary

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 order17 denying his motion.

The denial prompted Guy to seek relief before the CA.

The CA Ruling

On June 25, 2012, the CA rendered the assailed decision dismissing Guy's appeal for the same reasons given by the trial court. In
addition thereto, the appellate court stated:chanRoblesvirtualLawlibrary

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.18ChanRoblesVirtualawlibrary
cralawlawlibrary

The CA stressed that Guy, being a partner in QSC, was bound by the summons served upon QSC based on Article 1821 of the
Civil Code. The CA further opined that the law did not require a partner to be actually involved in a suit in order for him to be
made liable. He remained "solidarity liable whether he participated or not, whether he ratified it or not, or whether he had
knowledge of the act or omission."19

Aggrieved, Guy filed a motion for reconsideration but it was denied by the CA in its assailed resolution, dated March 5, 2013.

Hence, the present petition raising the following

 ISSUE

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT

PETITIONER GUY IS SOLIDARILY LIABLE WITH THE PARTNERSHIP FOR DAMAGES ARISING FROM THE
BREACH OF THE CONTRACT OF SALE WITH RESPONDENT GACOTT.20ChanRoblesVirtualawlibrary
cralawlawlibrary

Guy argues that he is not solidarity liable with the partnership because the solidary liability of the partners under Articles 1822,
1823 and 1824 of the Civil Code only applies when it stemmed from the act of a partner. In this case, the alleged lapses were not
attributable to any of the partners. Guy further invokes Article 1816 of the Civil Code which states that the liability of the
partners to the partnership is merely joint and subsidiary in nature.

In his Comment,21 Gacott countered, among others, that because Guy was a general and managing partner of QSC, he could not
feign ignorance of the transactions undertaken by QSC. Gacott insisted that notice to one partner must be considered as notice to
the whole partnership, which included the pendency of the civil suit against it.

In his Reply,22 Guy contended that jurisdiction over the person of the partnership was not acquired because the summons was
never served upon it or through any of its authorized office. He also reiterated that a partner's liability was joint and subsidiary,
and not solidary.

The Court's Ruling

The petition is meritorious.

The service of summons was

flawed; voluntary appearance
cured the defect�

Jurisdiction over the person, or jurisdiction in personam - the power of the court to render a personal judgment or to subject the
parties in a particular action to the judgment and other rulings rendered in the action - is an element of due process that is
essential in all actions, civil as well as criminal, except in actions in rem or quasi in rem.23 Jurisdiction over the person of the
plaintiff is acquired by the mere filing of the complaint in court. As the initiating party, the plaintiff in a civil action voluntarily
submits himself to the jurisdiction of the court. As to the defendant, the court acquires jurisdiction over his person either by the
proper service of the summons, or by his voluntary appearance in the action. 24

Under Section 11, Rule 14 of the 1997 Revised Rules of Civil Procedure, when the defendant is a corporation, partnership or
association organized under the laws of the Philippines with a juridical personality, the service of summons may be made on the
president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. Jurisprudence is replete with
pronouncements that such provision provides an exclusive enumeration of the persons authorized to receive summons for
juridical entities.25cralawred

The records of this case reveal that QSC was never shown to have been served with the summons through any of the enumerated
authorized persons to receive such, namely: president, managing partner, general manager, corporate secretary, treasurer or in-
house counsel. Service of summons upon persons other than those officers enumerated in Section 11 is invalid. Even
substantial compliance is not sufficient service of summons. The CA was obviously mistaken when it opined that it was
immaterial whether the summons to QSC was served on the theory that it was a corporation. 27

Nevertheless, while proper service of summons is necessary to vest the court jurisdiction over the defendant, the same is merely
procedural in nature and the lack of or defect in the service of summons may be cured by the defendant's subsequent voluntary
submission to the court's jurisdiction through his filing a responsive pleading such as an answer. In this case, it is not disputed
that QSC filed its Answer despite the defective summons. Thus, jurisdiction over its person was acquired through voluntary
appearance.

A partner must be separately

and distinctly impleaded before
he can be bound by a judgment

The next question posed is whether the trial court's jurisdiction over QSC extended to the person of Guy insofar as holding him
solidarity liable with the partnership. After a thorough study of the relevant laws and jurisprudence, the Court answers in the
negative.
Although a partnership is based on delectus personae or mutual agency, whereby any partner can generally represent the
partnership in its business affairs, it is non sequitur that a suit against the partnership is necessarily a suit impleading each and
every partner. It must be remembered that a partnership is a juridical entity that has a distinct and separate personality from the
persons composing it.28

In relation to the rules of civil procedure, it is elementary that a judgment of a court is conclusive and binding only upon the
parties and their successors-in-interest after the commencement of the action in court. 29 A decision rendered on a complaint in a
civil action or proceeding does not bind or prejudice a person not impleaded therein, for no person shall be adversely affected by
the outcome of a civil action or proceeding in which he is not a party. 30 The principle that a person cannot be prejudiced by a
ruling rendered in an action or proceeding in which he has not been made a party conforms to the constitutional guarantee of due
process of law.31

In Mu�oz v. Yabut, Jr.,32 the Court declared that a person not impleaded and given the opportunity to take part in the
proceedings was not bound by the decision declaring as null and void the title from which his title to the property had been
derived. The effect of a judgment could not be extended to non-parties by simply issuing an alias writ of execution against them,
for no man should be prejudiced by any proceeding to which he was a stranger.

In Aguila v. Court of Appeals33 the complainant had a cause of action against the partnership. Nevertheless, it was the partners
themselves that were impleaded in the complaint. The Court dismissed the complaint and held that it was the partnership, not its
partners, officers or agents, which should be impleaded for a cause of action against the partnership itself. The Court added that
the partners could not be held liable for the obligations of the partnership unless it was shown that the legal fiction of a different
juridical personality was being used for fraudulent, unfair, or illegal purposes. 34

Here, Guy was never made a party to the case. He did not have any participation in the entire proceeding until his vehicle was
levied upon and he suddenly became QSC's "co-defendant debtor" during the judgment execution stage. It is a basic principle of
law that money judgments are enforceable only against the property incontrovertibly belonging to the judgment debtor. 35 Indeed,
the power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone.
An execution can be issued only against a party and not against one who did not have his day in court. The duty of the sheriff is
to levy the property of the judgment debtor not that of a third person. For, as the saying goes, one man's goods shall not be sold
for another man's debts.36

In the spirit of fair play, it is a better rule that a partner must first be impleaded before he could be prejudiced by the judgment
against the partnership. As will be discussed later, a partner may raise several defenses during the trial to avoid or mitigate his
obligation to the partnership liability. Necessarily, before he could present evidence during the trial, he must first be impleaded
and informed of the case against him. It would be the height of injustice to rob an innocent partner of his hard-earned personal
belongings without giving him an opportunity to be heard. Without any showing that Guy himself acted maliciously on behalf of
the company, causing damage or injury to the complainant, then he and his personal properties cannot be made directly and
solely accountable for the liability of QSC, the judgment debtor, because he was not a party to the case.

Further, Article 1821 of the Civil Code does not state that there is no need to implead a partner in order to be bound by the
partnership liability. It provides that:chanRoblesvirtualLawlibrary

Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in the
particular matter, acquired while a partner or then present to his mind, and the knowledge of any other partner who reasonably
could and should have communicated it to the acting partner, operate as notice to or knowledge of the partnership, except in
the case of fraud on the partnership, committed by or with the consent of that partner.

[Emphases and Underscoring Supplied]

cralawlawlibrary

A careful reading of the provision shows that notice to any partner, under certain circumstances, operates as notice to or
knowledge to the partnership only. Evidently, it does not provide for the reverse situation, or that notice to the partnership is
notice to the partners. Unless there is an unequivocal law which states that a partner is automatically charged in a complaint
against the partnership, the constitutional right to due process takes precedence and a partner must first be impleaded before he
can be considered as a judgment debtor. To rule otherwise would be a dangerous precedent, harping in favor of the deprivation of
property without ample notice and hearing, which the Court certainly cannot countenance.

Partners' liability is subsidiary

and generally joint; immediate levy
upon the property of a partner
cannot be made
Granting that Guy was properly impleaded in the complaint, the execution of judgment would be improper. Article 1816 of the
Civil Code governs the liability of the partners to third persons, which states that:chanRoblesvirtualLawlibrary

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]
cralawlawlibrary

This provision clearly states that, first, the partners' obligation with respect to the partnership liabilities is subsidiary in nature. It
provides that the partners shall only be liable with their property after all the partnership assets have been exhausted. To say that
one's liability is subsidiary means that it merely becomes secondary and only arises if the one primarily liable fails to sufficiently
satisfy the obligation. Resort to the properties of a partner may be made only after efforts in exhausting partnership assets have
failed or that such partnership assets are insufficient to cover the entire obligation. The subsidiary nature of the partners' liability
with the partnership is one of the valid defenses against a premature execution of judgment directed to a partner.

In this case, had he been properly impleaded, Guy's liability would only arise after the properties of QSC would have been
exhausted. The records, however, miserably failed to show that the partnership's properties were exhausted. The report 37 of the
sheriff showed that the latter went to the main office of the DOTC-LTO in Quezon City and verified whether Medestomas, QSC
and Guy had personal properties registered therein. Gaeott then instructed the sheriff to proceed with the attachment of one of the
motor vehicles of Guy.38 The sheriff then served the Notice of Attachment/Levy upon Personalty to the record custodian of the
DOTC-LTO of Mandaluyong City. A similar notice was served to Guy through his housemaid at his residence.

Clearly, no genuine efforts were made to locate the properties of QSC that could have been attached to satisfy the judgment -
contrary to the clear mandate of Article 1816. Being subsidiarily liable, Guy could only be held personally liable if properly
impleaded and after all partnership assets had been exhausted.

Second, Article 1816 provides that the partners' obligation to third persons with respect to the partnership liability is pro rata or
joint. Liability is joint when a debtor is liable only for the payment of only a proportionate part of the debt. In contrast,
a solidary liability makes a debtor liable for the payment of the entire debt. In the same vein, Article 1207 does not presume
solidary liability unless: 1) the obligation expressly so states; or 2) the law or nature requires solidarity. With regard to
partnerships, ordinarily, the liability of the partners is not solidary. 39 The joint liability of the partners is a defense that can be
raised by a partner impleaded in a complaint against the partnership.

In other words, only in exceptional circumstances shall the partners' liability be solidary in nature. Articles 1822, 1823 and 1824
of the Civil Code provide for these exceptional conditions, to wit:chanRoblesvirtualLawlibrary

Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the
partnership or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership,
or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.

Article 1823. The partnership is bound to make good the loss:chanRoblesvirtualLawlibrary

(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]
cralawlawlibrary

In essence, these provisions articulate that it is the act of a partner which caused loss or injury to a third person that makes all
other partners solidarity liable with the partnership because of the words "any wrongful act or omission of any partner acting in
the ordinary course of the business, " "one partneracting within the scope of his apparent authority" and "misapplied by any
partner while it is in the custody of the partnership." The obligation is solidary because the law protects the third person, who in
good faith relied upon the authority of a partner, whether such authority is real or apparent.40

In the case at bench, it was not shown that Guy or the other partners did a wrongful act or misapplied the money or property he or
the partnership received from Gacott. A third person who transacted with said partnership can hold the partners solidarity liable
for the whole obligation if the case of the third person falls under Articles 1822 or 1823.41 Gacott's claim stemmed from the
alleged defective transreceivers he bought from QSC, through the latter's employee, Medestomas. It was for a breach of warranty
in a contractual obligation entered into in the name and for the account of QSC, not due to the acts of any of the partners. For said
reason, it is the general rule under Article 1816 that governs the joint liability of such breach, and not the exceptions under
Articles 1822 to 1824. Thus, it was improper to hold Guy solidarity liable for the obligation of the partnership.

Finally, Section 21 of the Corporation Code,42 as invoked by the RTC, cannot be applied to sustain Guy's liability. The said
provision states that a general partner shall be liable for all debts, liabilities and damages incurred by an ostensible corporation. It
must be read, however, in conjunction with Article 1816 of the Civil Code, which governs the liabilities of partners against third
persons. Accordingly, whether QSC was an alleged ostensible corporation or a duly registered partnership, the liability of Guy, if
any, would remain to be joint and subsidiary because, as previously stated, all partners shall be liable pro rata with all their
property and after all the partnership assets have been exhausted for the contracts which may be entered into in the name and for
the account of the partnership.

WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the March 5, 2013 Resolution of the Court of
Appeals in CA-G.R. CV No. 94816 are hereby REVERSED and SET ASIDE. Accordingly, the Regional Trial Court, Branch
52, Puerto Princesa City, is ORDERED TO RELEASE Michael C. Guy's Suzuki Grand Vitara subject of the Notice of
Levy/Attachment upon Personalty.

SO ORDERED.
 EN BANC

G.R. No. L-45464 April 28, 1939

JOSUE SONCUYA, plaintiff-appellant,

vs.
CARMEN DE LUNA, defendant-appellee.

Josue Soncuya in his own behalf.

Conrado V. Sanchez and Jesus de Veyra for appellee.

VILLA-REAL, J.:

On September 11, 1936, plaintiff Josue Soncuya filed with the Court of First Instance of Manila and amended complaint against
Carmen de Luna in her own name and as co-administratrix of the intestate estate, of Librada Avelino, in which, upon the facts
therein alleged, he prayed that defendant be sentenced to pay him the sum of P700,432 as damages and costs.

To the aforesaid amended complaint defendant Carmen de Luna interposed a demurrer based on the following grounds: (1) That
the complaint does not contain facts sufficient to constitute a cause of action; and (2) that the complaint is ambiguous,
unintelligible and vague.

Trial on the demurrer having been held and the parties heard, the court found the same well-founded and sustained it, ordering
the plaintiff to amend his complaint within a period of ten days from receipt of notice of the order.

Plaintiff having manifested that he would prefer not to amend his amended complaint, the attorney for the defendant, Carmen de
Luna, filed a motion praying that the amended complaint be dismissed with costs against the plaintiff. Said motion was granted
by The Court of First Instance of Manila which ordered the dismissal of the aforesaid amended complaint, with costs against the
plaintiff.

From this order of dismissal, the appellant took an appeal, assigning twenty alleged errors committed by the lower court in its
order referred to.

The demurrer interposed by defendant to the amended complaint filed by plaintiff having been sustained on the grounds that the
facts alleged in said complaint are not sufficient to constitute a cause of action and that the complaint is ambiguous, unintelligible
and vague, the only questions which may be raised and considered in the present appeal are those which refer to said grounds.

In the amended complaint it is prayed that defendant Carmen de Luna be sentenced to pay plaintiff damages in the sum of
P700,432 as a result of the administration, said to be fraudulent, of he partnership, "Centro Escolar de Señoritas", of which
plaintiff, defendant and the deceased Librada Avelino were members. For the purpose of adjudicating to plaintiff damages which
he alleges to have suffered as a partner by reason of the supposed fraudulent management of he partnership referred to, it is first
necessary that a liquidation of the business thereof be made to the end that the profits and losses may be known and the causes of
the latter and the responsibility of the defendant as well as the damages which each partner may have suffered, may be
determined. It is not alleged in the complaint that such a liquidation has been effected nor is it prayed that it be made.
Consequently, there is no reason or cause for plaintiff to institute the action for damages which he claims from the managing
partner Carmen de Luna (Po Yeng Cheo vs. Lim Ka Yam, 44 Phil., 172).

Having reached the conclusion that the facts alleged in the complaint are not sufficient to constitute a cause of action on the part
of plaintiff as member of the partnership "Centro Escolar de Señoritas" to collect damages from defendant as managing partner
thereof, without a previous liquidation, we do not deem it necessary to discuss the remaining question of whether or not the
complaint is ambiguous, unintelligible and vague.

In view of the foregoing considerations, we are of the opinion and so hold that for a partner to be able to claim from another
partner who manages the general copartnership, damages allegedly suffered by him by reason of the fraudulent administration of
the latter, a previous liquidation of said partnership is necessary.

Wherefore, finding no error in the order appealed from the same is affirmed in all its parts, with costs against the appellant. So
ordered.
 EN BANC

G.R. No. L-17526 June 30, 1962

GREGORIO MAGDUSA, ET AL., petitioners,

vs.
GERUNDIO ALBARAN, ET AL., respondents.

Montenegro, Madayag, Viola and Hernandez, Olimpio R. Epis, David C. Ocangas and Bonifacio M. Belderol for petitioners.
Lozano, Soria, Muana, Ruiz and Morales for respondents.

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

Appeal from a decision of the Court of Appeals (G.R. 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, P8,979.10; Pascual Albaran, P5,394.78; Zosimo Albaran, P1,979.28; and Telesforo Bebero,
P3,020.27; 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 were indispensable parties but hid 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.1äwphï1.ñët

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 no 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 an 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 condition 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 his
assets and business, and are entitled to be heard in the matter of the firm's liquidation and the distribution of its property. The
liquidation Exhibit "C" is not signed by the other members of the partnership besides appellees and appellant; it does not appear
that they have approved, authorized, or ratified the same, and, therefore, it is not binding upon them. At the very least, they are
entitled to be heard upon its correctness.
In addition, unless a proper accounting and liquidation of the partnership affairs is first had, the capital shares of the appellees, as
retiring partners, can not be repaid, for the firm's outside creditors have preference over the assets of the enterprise (Civ. Code,
Art. 1839), and the firm's property can not be diminished to their prejudice. Finally, the appellant can not be held liable in his
personal capacity for the payment of partners' shares for he does not hold them except as manager of, or trustee for, the
partnership. It is the latter that must refund their shares to the retiring partners. Since not all the members of the partnership have
been impleaded, no judgment for refund can be rendered, and the action should have been dismissed.

IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is reversed and the action ordered dismissed, without
prejudice to a proper proceeding for the dissolution and liquidation of the common enterprise. Costs against appellees.
 SECOND DIVISION

G.R. No. 178782 September 21, 2011

JOSEFINA P. REALUBIT, Petitioner,

vs.
PROSENCIO D. JASO and EDEN G. JASO, Respondents.

DECISION

PEREZ, J.:

The validity as well as the consequences of an assignment of rights in a joint venture are at issue in this petition for review filed
pursuant to Rule 45 of the 1997 Rules of Civil Procedure, 1 assailing the 30 April 2007 Decision2rendered by the Court of
Appeals’ (CA) then Twelfth Division in CA-G.R. CV No. 73861,3 the dispositive portion of which states:

WHEREFORE, the Decision appealed from is SET ASIDE and we order the dissolution of the joint venture between defendant-
appellant Josefina Realubit and Francis Eric Amaury Biondo and the subsequent conduct of accounting, liquidation of assets and
division of shares of the joint venture business.

Let a copy hereof and the records of the case be remanded to the trial court for appropriate proceedings. 4

The Facts

On 17 March 1994, petitioner Josefina Realubit (Josefina) entered into a Joint Venture Agreement with Francis Eric Amaury
Biondo (Biondo), a French national, for the operation of an ice manufacturing business. With Josefina as the industrial partner
and Biondo as the capitalist partner, the parties agreed that they would each receive 40% of the net profit, with the remaining
20% to be used for the payment of the ice making machine which was purchased for the business. 5 For and in consideration of
the sum of ₱500,000.00, however, Biondo subsequently executed a Deed of Assignment dated 27 June 1997, transferring all his
rights and interests in the business in favor of respondent Eden Jaso (Eden), the wife of respondent Prosencio Jaso. 6 With
Biondo’s eventual departure from the country, the Spouses Jaso caused their lawyer to send Josefina a letter dated 19 February
1998, apprising her of their acquisition of said Frenchman’s share in the business and formally demanding an accounting and
inventory thereof as well as the remittance of their portion of its profits.7

Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso commenced the instant suit with the filing of
their 3 August 1998 Complaint against Josefina, her husband, Ike Realubit (Ike), and their alleged dummies, for specific
performance, accounting, examination, audit and inventory of assets and properties, dissolution of the joint venture, appointment
of a receiver and damages. Docketed as Civil Case No. 98-0331 before respondent Branch 257 of the Regional Trial Court (RTC)
of Parañaque City, said complaint alleged, among other matters, that the Spouses Realubit had no gainful occupation or business
prior to their joint venture with Biondo; that with the income of the business which earned not less than ₱3,000.00 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 ₱20,000. for moral
damages. The claims for exemplary damages and attorney’s fees are denied for lack of basis. 11

On appeal before the CA, the foregoing decision was set aside in the herein assailed Decision dated 30 April 2007, upon the
following findings and conclusions: (a) the Spouses Jaso validly acquired Biondo’s share in the business which had been
transferred to and continued its operations at 66-C Cenacle Drive, Sanville Subdivision, Project 6, Quezon City and not dissolved
as claimed by the Spouses Realubit; (b) absent showing of Josefina’s knowledge and consent to the transfer of Biondo’s share,
Eden cannot be considered as a partner in the business, pursuant to Article 1813 of the Civil Code of the Philippines; (c) while
entitled to Biondo’s share in the profits of the business, Eden cannot, however, interfere with the management of the partnership,
require information or account of its transactions and inspect its books; (d) the partnership should first be dissolved before Eden
can seek an accounting of its transactions and demand Biondo’s share in the business; and, (e) the evidence adduced before the
RTC do not support the award of moral damages in favor of the Spouses Jaso. 12

The Spouses Realubit’s motion for reconsideration of the foregoing decision was denied for lack of merit in the CA’s 28 June
2007 Resolution,13 hence, this petition.

The Issues

The Spouses Realubit urge the reversal of the assailed decision upon the negative of the following issues, to wit:

A. WHETHER OR NOT THERE WAS A VALID ASSIGNMENT OF RIGHTS TO THE JOINT VENTURE.

B. WHETHER THE COURT MAY ORDER PETITIONER [JOSEFINA REALUBIT] AS PARTNER IN THE JOINT
VENTURE TO RENDER [A]N ACCOUNTING TO ONE WHO IS NOT A PARTNER IN SAID JOINT VENTURE.

C. WHETHER PRIVATE RESPONDENTS [SPOUSES JASO] HAVE ANY RIGHT IN THE JOINT VENTURE
AND IN THE SEPARATE ICE BUSINESS OF PETITIONER[S].14

The Court’s Ruling

We find the petition bereft of merit.

The Spouses Realubit argue that, in upholding its validity, both the RTC and the CA inordinately gave premium to the
notarization of the 27 June 1997 Deed of Assignment executed by Biondo in favor of the Spouses Jaso. Calling attention to the
latter’s failure to present before the RTC said assignor or, at the very least, the witnesses to said document, the Spouses Realubit
maintain that the testimony of Rolando Diaz, the Notary Public before whom the same was acknowledged, did not suffice to
establish its authenticity and/or validity. They insist that notarization did not automatically and conclusively confer validity on
said deed, since it is still entirely possible that Biondo did not execute said deed or, for that matter, appear before said notary
public.15 The dearth of merit in the Spouses Realubit’s position is, however, immediately evident from the settled rule that
documents acknowledged before notaries public are public documents which are admissible in evidence without necessity of
preliminary proof as to their authenticity and due execution. 16

It cannot be gainsaid that, as a public document, the Deed of Assignment Biondo executed in favor of Eden not only enjoys a
presumption of regularity17 but is also considered prima facie evidence of the facts therein stated. 18 A party assailing the
authenticity and due execution of a notarized document is, consequently, required to present evidence that is clear, convincing
and more than merely preponderant.19 In view of the Spouses Realubit’s failure to discharge this onus, we find that both the RTC
and the CA correctly upheld the authenticity and validity of said Deed of Assignment upon the combined strength of the above-
discussed disputable presumptions and the testimonies elicited from Eden20 and Notary Public Rolando Diaz.21 As for the
Spouses’ Realubit’s bare assertion that Biondo’s signature on the same document appears to be forged, suffice it to say that, like
fraud,22 forgery is never presumed and must likewise be proved by clear and convincing evidence by the party alleging the
same.23 Aside from not being borne out by a comparison of Biondo’s signatures on the Joint Venture Agreement24 and the Deed
of Assignment,25 said forgery is, moreover debunked by Biondo’s duly authenticated certification dated 17 November 1998,
confirming the transfer of his interest in the business in favor of Eden. 26

Generally understood to mean an organization formed for some temporary purpose, a joint venture is likened to a particular
partnership or one which "has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a
profession or vocation."27 The rule is settled that joint ventures are governed by the law on partnerships 28 which are, in turn,
based on mutual agency or delectus personae.29 Insofar as a partner’s conveyance of the entirety of his interest in the partnership
is concerned, Article 1813 of the Civil Code provides as follows:

Art. 1813. A conveyance by a partner of his whole interest in the partnership does not itself dissolve the partnership, or, as
against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere
in the management or administration of the partnership business or affairs, or to require any information or account of partnership
transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his contracts the
profits to which the assigning partners would otherwise be entitled. However, in case of fraud in the management of the
partnership, the assignee may avail himself of the usual remedies.

In the case of a dissolution of the partnership, the assignee is entitled to receive his assignor’s interest and may require an account
from the date only of the last account agreed to by all the partners.

From the foregoing provision, it is evident that "(t)he transfer by a partner of his partnership interest does not make the assignee
of such interest a partner of the firm, nor entitle the assignee to interfere in the management of the partnership business or to
receive anything except the assignee’s profits. The assignment does not purport to transfer an interest in the partnership, but only
a future contingent right to a portion of the ultimate residue as the assignor may become entitled to receive by virtue of his
proportionate interest in the capital."30 Since a partner’s interest in the partnership includes his share in the profits,31 we find that
the CA committed no reversible error in ruling that the Spouses Jaso are entitled to Biondo’s share in the profits, despite Juanita’s
lack of consent to the assignment of said Frenchman’s interest in the joint venture. Although Eden did not, moreover, become a
partner as a consequence of the assignment and/or acquire the right to require an accounting of the partnership business, the CA
correctly granted her prayer for dissolution of the joint venture conformably with the right granted to the purchaser of a partner’s
interest under Article 1831 of the Civil Code.32 1âwphi1

Considering that they involve questions of fact, neither are we inclined to hospitably entertain the Spouses Realubit’s insistence
on the supposed fact that Josefina’s joint venture with Biondo had already been dissolved and that the ice manufacturing business
at 66-C Cenacle Drive, Sanville Subdivision, Project 6, Quezon City was merely a continuation of the same business they
previously operated under a single proprietorship. It is well-entrenched doctrine that questions of fact are not proper subjects of
appeal by certiorari under Rule 45 of the Rules of Court as this mode of appeal is confined to questions of law. 33 Upon the
principle that this Court is not a trier of facts, we are not duty bound to examine the evidence introduced by the parties below to
determine if the trial and the appellate courts correctly assessed and evaluated the evidence on record.34 Absent showing that the
factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on
misapprehension of facts, the Court will limit itself to reviewing only errors of law. 35

Based on the evidence on record, moreover, both the 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. 40Unfortunately 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.

SO ORDERED.