C. Property Rights of a partner partner.

In his answer defendant expressed his conformity to

the dissolution of the partnership and the liquidation of its
1. G.R. No. L-45662 April 26, 1939 affairs; but by way of counterclaim he asked that, having
covered a deficit incurred by the partnership amounting to
ENRIQUE CLEMENTE, plaintiff-appellee, P4,000 with his own money, plaintiff reimburse him of one-half
vs. of said sum. On petition of the plaintiff a receiver and
DIONISIO GALVAN, defendant-appellee. liquidator to take charge of the properties and business for the
JOSE ECHEVARRIA, intervenor-appellant. partnership while the same was not yet definitely dissolved,
was appointed, the person chosen being Juan D. Mencarini.
The latter was already discharging the duties of his office when
The intervenor Jose Echevarria having lost in the Court of First the court, by virtue of a petition ex parte of the plaintiff, issued
Instance of manila which rendered judgment against him, the the order of May 24, 1933, requiring said receiver to deliver to
pertinent portion of which reads: "and with respect to the him (plaintiff) certain machines which were then at Nos. 705-
complaint of the intervenor, the mortgage executed in his 707 Ylaya Street, Manila but authorizing him to charge their
favor by plaintiff is declared null and void, and said complaint value of P4,500 against the portion which may eventually be
in intervention, as well as the counterclaim filed by the due to said plaintiff. To comply with said order, the receiver
defendant against the intervenor, is dismissed, without delivered to plaintiff the keys to the place where the machines
pronouncement as to costs," he appealed to this court on the were found, which was the same place where defendant had
ground that, according to him, the lower court committed the his home; but before he could take actual possession of said
errors assigned in his brief as follows: machines, upon the strong opposition of defendant, the court,
on motion of the latter, suspended the effects of its order of
I. The court a quo erred in finding in the appealed decision that May 24, 1933. In the meantime the judgments rendered in
plaintiff was unable to take possession of the machines subject cases Nos. 42794 and 43070 entitled "Philippine Education Co.,
of the deed of mortgage Exhibit B either before or after the Inc. vs. Enrique Clemente" for the recovery of a sum of money,
execution thereof. and "Jose Echevarria vs. Enrique Clemente", also for the
recovery of a sum of money, respectively, were made
II. The court a quo likewise erred in deciding the present case executory; and in order to avoid the attachment and
against the intervenor-appellant, on the ground, among subsequent sale of the machines by the sheriff for the
others, that "plaintiff has not adduced any evidence nor has he satisfaction from the proceeds thereof of the judgments
testified to show that the machines mortgaged by him to the rendered in the two cases aforecited, plaintiff agreed with the
intervenor have ever belonged to him, notwithstanding that intervenor, who is his nephew, to execute, as he in fact
said intervenor is his close relative.". executed in favor of the latter, a deed of mortgage Exhibit B
encumbering the machines described in said deed in which it
III. The lower court also erred in declaring null and void the is stated that "they are situated on Singalong Street No. 1163",
mortgage executed by plaintiff in favor of the intervenor and, which is a place entirely different from the house Nos. 705 and
thereby, dismissing the complaint in intervention. 707 on Ylaya Street hereinbefore mentioned. The one year
agreed upon in the deed of mortgage for the fulfillment by the
IV. The lower court lastly erred in ordering the receiver J. D. plaintiff of the obligation he had contracted with the
Mencarini to deliver to the defendant the aforesaid machines intervenor, having expired, the latter commenced case No.
upon petition of the plaintiff. 49629 to collect his mortgage credit. The intervenor, as
plaintiff in the said case, obtained judgment in his favor
In order to have a clear idea of the question, it is proper to because the defendant did not interpose any defense or
state the facts bearing on the case as they appear in the objection, and, moreover, admitted being really indebted to
decision and judgment of the lower court and in the the intervenor in the amount set forth in the deed of mortgage
documents which constitute all the evidence adduced by the Exhibit B. The machines which the intervenor said were
parties during the trial. mortgaged to him were then in fact in custodia legis, as they
were under the control of the receiver and liquidator Juan D.
On June 6, 1931, plaintiff and defendant organized a civil Mencarini. It was, therefore, useless for the intervenor to
partnership which they named "Galvan y Compaia" to engage attach the same in view of the receiver's opposition; and the
in the manufacture and sale of paper and other stationery. question having been brought to court, it decided that nothing
they agreed to invest therein a capital of P100,000, but as a could be done because the receiver was not a party to the case
matter of fact they did not cover more than one-fifth thereof, which the intervenor instituted to collect his aforesaid credit.
each contributing P10,000. Hardly a year after such (Civil case No. 49629.) The question ended thus because the
organization, the plaintiff commenced the present case in the intervenor did not take any other step until he thought of
above-mentioned court to ask for the dissolution of the joining in this case as intervenor.
partnership and to compel defendant to whom the
management thereof was entrusted to submit an accounting 1. From the foregoing facts, it is clear that plaintiff could not
of his administration and to deliver to him his share as such 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 found on Ylaya Street because said exhibit being merely a
private document, the same cannot vary or alter the terms of
a public document which is Exhibit B or the deed of mortgage.

2. The second error attributed to the lower court is baseless.

The evidence of record shows that the machines in contention
originally belonged to the defendant and from him were
transferred to the partnership Galvan y Compania. This being
the case, said machines belong to the partnership and not to
him, and shall belong to it until partition is effected according
to the result thereof after the liquidation.

3. The last two errors attributed by the appellant to the lower

court have already been disposed of by the considerations
above set forth. they are as baseless as the previous ones.

In view of all the foregoing, the judgment appealed from is

affirmed, with costs against the appellant. So ordered.
G.R. No. L-5963 May 20, 1953 Eastern Lumber & Commercial Co., Inc., et al." pero esto no
quiere decir que su vlor no esta sujeto a las fluctuaciones del
2. THE LEYTE-SAMAR SALES CO., and RAYMUNDO negocio donde las invirtio.
TOMASSI, petitioners,
vs. Se vendieron propiedades de la corporacion "Far Eastern
SULPICIO V. CEA, in his capacity as Judge of the Court of First Lumber & Co. Inc.," y de la venta solamente se obtuvo la
Instance of Leyte and OLEGARIO LASTRILLA, respondents. cantidad de P8,100.

"En su virtud, se declara que el 17 por ciento de las

Labaled "Certiorari and Prohibition with preliminary propiedades vendidas en publica subasta pretenece al Sr. O
Injunction" this petition prays for the additional writ of Lastrilla y este tiene derecho a dicha porcion pero con la
mandamus to compel the respondent judge to give due course obligacion de pagar el 17 por ciento de los gastos for la
to petitioners' appeal from his order taxing costs. However, conservacion de dichas propriedades por parte del Sheriff; . . .
inasmuch as according to the answer, petitioners through their . (Annex K)
attorney withdrew their cash appeal bond of P60 after the
record on appeal bond of P60 after the record on appeal had It is from this declaration and the subsequent orders to
been rejected, the matter of mandamus may be summarily be enforce it1 that the petitioners seek relief by certiorari, their
dropped without further comment. position being the such orders were null and void for lack of
jurisdiction. At their request a writ of preliminary injunction
From the pleadings it appears that, was issued here.

In civil case No. 193 of the Court of First Instance of Leyte, The record is not very clear, but there are indications, and we
which is a suit for damages by the Leyte-Samar Sales Co. shall assume for the moment, that Fred Brown (like Arnold Hall
(hereinafter called LESSCO) and Raymond Tomassi against the and Jean Roxas) was a partner of the FELCO, was defendant in
Far Eastern Lumber & Commercial Co. (unregistered Civil Case No. 193 as such partner, and that the properties sold
commercial partnership hereinafter called FELCO), Arnold Hall, at auction actually belonged to the FELCO partnership and the
Fred Brown and Jean Roxas, judgment against defendants partners. We shall also assume that the sale made to Lastrilla
jointly and severally for the amount of P31,589.14 plus costs on September 29, 1949, of all the shares of Fred Brown in the
was rendered on October 29, 1948. The Court of Appeals FELCO was valid. (Remember that judgment in this case was
confirmed the award in November 1950, minus P2,000 entered in the court of first instance a year before.)
representing attorney's fees mistakenly included. The decision
having become final, the sheriff sold at auction on June 9, 1951 The result then, is that on June 9, 1951 when the sale was
to Robert Dorfe and Pepito Asturias "all the rights, interests, effected of the properties of FELCO to Roberto Dorfe and
titles and participation" of the defendants in certain buildings Pepito Asturias, Lastilla was already a partner of FELCO.
and properties described in the certificate, for a total price of
eight thousand and one hundred pesos. But on June 4, 1951 Now, does Lastrilla have any proper claim to the proceeds of
Olegario Lastrilla filed in the case a motion, wherein he claimed the sale? If he was a creditor of the FELCO, perhaps or maybe.
to be the owner by purchase on September 29, 1949, of all the But he was no. The partner of a partnership is not a creditor of
"shares and interests" of defendant Fred Brown in the FELCO, such partnership for the amount of his shares. That is too
and requested "under the law of preference of credits" that elementary to need elaboration.
the sheriff be required to retain in his possession so much of
the deeds of the auction sale as may be necessary "to pay his Lastrilla's theory, and the lower court's seems to be: inasmuch
right". Over the plaintiffs' objection the judge in his order of as Lastrilla had acquired the shares of Brown is September,
June 13, 1951, granted Lastrilla's motion by requiring the 1949, i.e., before the auction sale and he was not a party to
sheriff to retain 17 per cent of the money "for delivery to the the litigation, such shares could not have been transferred to
assignee, administrator or receiver" of the FELCO. And on Dorfe and Austrilla.
motion of Lastrilla, the court on August 14, 1951, modified its
order of delivery and merely declared that Lastrilla was Granting arguendo that the auction sale and not included the
entitled to 17 per cent of the properties sold, saying in part: interest or portion of the FELCO properties corresponding to
the shares of Lastrilla in the same partnership (17%), the
. . . el Juzgado ha encontrado que no se han respetado los resulting situation would be at most that the purchasers
derechos del Sr. Lastrilla en lo que se refiere a su adquiscicion Dorfe and Austrias will have to recognized dominion of
de las acciones de C. Arnold Hall (Fred Brown) en la Far Eastern Lastrillas over 17 per cent of the properties awarded to them.2
Lumber & Lumber Commercial C. porque la mismas han sido So Lastrilla acquired no right to demand any part of the money
incluidas en la subasta. paid by Dorfe and Austrias to he sheriff any part of the money
paid by Dorfe and Austrias to the sheriff for the benefit of
Es vedad que las acciones adquiridas por el Sr. Lastilla FELCO and Tomassi, the plaintiffs in that case, for the reason
representan el 17 por ciento del capital de la sociedad "Far
that, as he says, his shares (acquired from Brown) could not
have been and were not auctioned off to Dorfe and Austrias. A valid judgment cannot be rendered where there is a want of
necessary parties, and a court cannot properly adjudicate
Supposing however that Lastrillas shares have been actually matters involved in a suit when necessary and indispensable
(but unlawfully) sold by the sheriff (at the instance of plaintiffs) parties to the proceedings are not before it. (49 C.J.S., 67.)
to Dorfe and Austrias, what is his remedy? Section 15, Rule 39
furnishes the answer. Indispensable parties are those without whom the action
cannot be finally determined. In a case for recovery of real
Precisely, respondents argue, Lastrilla vindicated his claim by property, the defendant alleged in his answer that he was
proper action, i.e., motion in the case. We ruled once that occupying the property as a tenant of a third person. This third
"action" in this section means action as defined in section 1, person is an indispensable party, for, without him, any
Rule 2.3 Anyway his remedy is to claim "the property", not the judgment which the plaintiff might obtain against the tenant
proceeds of the sale, which the sheriff is directed by section would have no effectiveness, for it would not be binding upon,
14, Rule 39 to deliver unto the judgment creditors. and cannot be executed against, the defendant's landlord,
against whom the plaintiff has to file another action if he
In other words, the owner of property wrongfully sold may not desires to recover the property effectively. In an action for
voluntarily come to court, and insist, "I approve the sale, partition of property, each co-owner is an indispensable party.
therefore give me the proceeds because I am the owner". The (Moran, Comments, 1952 ed. Vol. I, p. 56.) (Emphasis
reason is that the sale was made for the judgment creditor supplied.)
(who paid for the fees and notices), and not for anybody else.
Wherefore, the orders of the court recognizing Lastrilla's right
On this score the respondent judge's action on Lastrilla's and ordering payment to him of a part of the proceeds were
motion should be declared as in excess of jurisdiction, which patently erroneous, because promulgated in excess or outside
even amounted to want of jurisdiction, which even amounted of its jurisdiction. For this reason the respondents' argument
to want of jurisdiction, considering specially that Dorfe and resting on plaintiffs' failure to appeal from the orders on time,
Austrias, and the defendants themselves, had undoubtedly the although ordinarily decisive, carries no persuasive force in this
right to be heardbut they were not notified.4 instance.

Why was it necessary to hear them on the merits of Lastrilla's For as the former Chief Justice Dr. Moran has summarized in
motion? his Comments, 1952 ed. Vol. II, p. 168

Because Dorfe and Austrillas might be unwilling to recognized . . . And in those instances wherein the lower court has acted
the validity of Lastrilla's purchase, or, if valid, they may want without jurisdiction over the subject-matter, or where the
him not to forsake the partnership that might have some order or judgment complained of is a patent nullity, courts
obligations in connection with the partnership properties. And have gone even as far as to disregard completely the questions
what is more important, if the motion is granted, when the of petitioner's fault, the reason being, undoubtedly, that acts
time for redemptioner seventeen per cent (178%) less than performed with absolute want of jurisdiction over the subject-
amount they had paid for the same properties. matter are void ab initio and cannot be validated by consent,
express or implied, of the parties. Thus, the Supreme Court
The defendants Arnold Hall and Jean Roxas, eyeing Lastrilla's granted a petition for certiorari and set aside an order
financial assets, might also oppose the substitution by Lastrilla reopening a cadastral case five years after the judgment
of Fred Brown, the judgment against them being joint and rendered therein had become final. In another case, the Court
several. They might entertain misgivings about Brown's set aside an order amending a judgment acquired a definitive
slipping out of their common predicament through the character. And still in another case, an order granting a review
disposal of his shares. of a decree of registration issued more than a year ago had
been declared null void. In all these case the existence of the
Lastly, all the defendants would have reasonable motives to right to appeal has been recitals was rendered without any trial
object to the delivery of 17 per cent of the proceeds to Lustrial, or hearing, and the Supreme Court, in granting certiorari, said
because it is so much money deducted, and for which the that the judgment was by its own recitals a patent nullity,
plaintiffs might as another levy on their other holdings or which should be set aside though an appeal was available but
resources. Supposing of course, there was no fraudulent was not availed of. . . .
collusion among them.
Invoking our ruling in Melocotones vs. Court of First Instance,
Now, these varied interest of necessity make Dorfe, Asturias (57 Phil., 144), wherein we applied the theory of laches to
and the defendants indispensable parties to the motion of petitioners' 3-years delay in requesting certiorari, respondents
Lastrilla granting it was step allowable under our regulations point out that whereas the orders complained of herein were
on execution. Yet these parties were not notified, and issued in June 13, 1951 and August 14, 1951 this special civil
obviously took no part in the proceedings on the motion. action was not filed until August 1952. It should be observed
that the order of June 13 was superseded by that of August 14,
1951. The last order merely declared "que el 17 por ciento de
la propiedades vendidas en publica subasta pertenece at Sr.
Lastrilla y este tiene derecho a dicha porcion." This does not
necessarily mean that 17 per cent of the money had to be
delivered to him. It could mean, as hereinbefore indicated,
that the purchasers of the property (Dorfe and Asturias) had
to recognize Lastrilla's ownership. It was only on April 16, 1952
(Annex N) that the court issued an order directing the sheriff
"to tun over" to Lastrilla "17 per cent of the total proceeds of
the auction sale". There is the order that actually prejudiced
the petitioners herein, and they fought it until the last order of
July 10,. 1952 (Annex Q). Surely a month's delay may not be
regarded as laches.

In view of the foregoing, it is our opinion, and we so hold, that

all orders of the respondents judge requiring delivery of 17 per
cent of the proceeds of the auction sale to respondent
Olegario Lastrilla are null and void; and the costs of this suit
shall be taxed against the latter. The preliminary injunction
heretofore issued is made permanent. So ordered.