G.R. No. L-16318 October 21, 1921
That all the improvements and betterments which they may
PANG LIM and BENITO GALVEZ, plaintiffs-appellees, vs. LO
SENG, defendant-appellant.
STREET, J.:
For several years prior to June 1, 1916, two of the litigating parties herein,
namely, Lo Seng and Pang Lim, Chinese residents of the City of Manila, were
partners, under the firm name of Lo Seng and Co., in the business of running
a distillery, known as "El Progreso," in the Municipality of Paombong, in the
Province of Bulacan. The land on which said distillery is located as well as the
buildings and improvements originally used in the business were, at the time
to which reference is now made, the property of another Chinaman, who
resides in Hongkong, named Lo Yao, who, in September, 1911, leased the
same to the firm of Lo Seng and Co. for the term of three years.
Upon the expiration of this lease a new written contract, in the making of which
Lo Yao was represented by one Lo Shui as attorney in fact, became effective
whereby the lease was extended for fifteen years. The reason why the contract
was made for so long a period of time appears to have been that the Bureau of
Internal Revenue had required sundry expensive improvements to be made in
the distillery, and it was agreed that these improvements should be effected at
the expense of the lessees. In conformity with this understanding many
thousands of pesos were expended by Lo Seng and Co., and later by Lo Seng
alone, in enlarging and improving the plant.
Among the provisions contained in said lease we note the following:
Know all men by these presents:
xxx xxx xxx
1. That I, Lo Shui, as attorney in fact in charge of the properties
of Mr. Lo Yao of Hongkong, cede by way of lease for fifteen years
more said distillery "El Progreso" to Messrs. Pang Lim and Lo
Seng (doing business under the firm name of Lo Seng and Co.),
after the termination of the previous contract, because of the fact
that they are required, by the Bureau of Internal Revenue, to
rearrange, alter and clean up the distillery.
2.
introduce, such as machinery, apparatus, tanks, pumps, boilers
and buildings which the business may require, shall be, after the
termination of the fifteen years of lease, for the benefit of Mr. Lo
Yao, my principal, the buildings being considered as
improvements.
3. That the monthly rent of said distillery is P200, as agreed upon
in the previous contract of September 11, 1911, acknowledged
before the notary public D. Vicente Santos; and all modifications
and repairs which may be needed shall be paid for by Messrs.
Pang Lim and Lo Seng.
We, Pang Lim and Lo Seng, as partners in said distillery "El
Progreso," which we are at present conducting, hereby accept
this contract in each and all its parts, said contract to be effective
upon the termination of the contract of September 11, 1911.
Neither the original contract of lease nor the agreement extending the same
was inscribed in the property registry, for the reason that the estate which is
the subject of the lease has never at any time been so inscribed.
On June 1, 1916, Pang Lim sold all his interest in the distillery to his partner Lo
Seng, thus placing the latter in the position of sole owner; and on June 28,
1918, Lo Shui, again acting as attorney in fact of Lo Yao, executed and
acknowledged before a notary public a deed purporting to convey to Pang Lim
and another Chinaman named Benito Galvez, the entire distillery plant
including the land used in connection therewith. As in case of the lease this
document also was never recorded in the registry of property. Thereafter Pang
Lim and Benito Galvez demanded possession from Lo Seng, but the latter
refused to yield; and the present action of unlawful detainer was thereupon
initiated by Pang Lim and Benito Galvez in the court of the justice of the peace
of Paombong to recover possession of the premises. From the decision of the
justice of the peace the case was appealed to the Court of First Instance, where
judgment was rendered for the plaintiffs; and the defendant thereupon
appealed to the Supreme Court.
The case for the plaintiffs is rested exclusively on the provisions of article 1571
of the Civil Code, which reads in part as follows:
ART. 1571. The purchaser of a leased estate shall be entitled to terminate any
lease in force at the time of making the sale, unless the contrary is stipulated,
and subject to the provisions of the Mortgage Law.
In considering this provision it may be premised that a contract of lease is
personally binding on all who participate in it regardless of whether it is
recorded or not, though of course the unrecorded lease creates no real charge
upon the land to which it relates. The Mortgage Law was devised for the
protection of third parties, or those who have not participated in the contracts
which are by that law required to be registered; and none of its provisions with
reference to leases interpose any obstacle whatever to the giving of full effect
to the personal obligations incident to such contracts, so far as concerns the
immediate parties thereto. This is rudimentary, and the law appears to be so
understood by all commentators, there being, so far as we are aware, no
authority suggesting the contrary. Thus, in the commentaries of the authors
Galindo and Escosura, on the Mortgage Law, we find the following pertinent
observation: "The Mortgage Law is enacted in aid of and in respect to third
persons only; it does not affect the relations between the contracting parties,
nor their capacity to contract. Any question affecting the former will be
determined by the dispositions of the special law [i.e., the Mortgage Law],
while any question affecting the latter will be determined by the general law."
(Galindo y Escosura, Comentarios a la Legislacion Hipotecaria, vol. I, p. 461.)
Although it is thus manifest that, under the Mortgage Law, as regards the
personal obligations expressed therein, the lease in question was from the
beginning, and has remained, binding upon all the parties thereto among
whom is to be numbered Pang Lim, then a member of the firm of Lo Seng and
Co. this does not really solve the problem now before us, which is, whether
the plaintiffs herein, as purchasers of the estate, are at liberty to terminate the
lease, assuming that it was originally binding upon all parties participating in it.
Upon this point the plaintiffs are undoubtedly supported, prima facie, by the
letter of article 1571 of the Civil Code; and the position of the defendant
derives no assistance from the mere circumstance that the lease was
admittedly binding as between the parties thereto. 1awph!l.net
The words "subject to the provisions of the Mortgage Law," contained in article
1571, express a qualification which evidently has reference to the familiar
proposition that recorded instruments are effective against third persons from
the date of registration (Co-Tiongco vs. Co-Guia, 1 Phil., 210); from whence it
follows that a recorded lease must be respected by any purchaser of the estate
whomsoever. But there is nothing in the Mortgage Law which, so far as we now
see, would prevent a purchaser from exercising the precise power conferred in
article 1571 of the Civil Code, namely, of terminating any lease which is
unrecorded; nothing in that law that can be considered as arresting the force of
article 1571 as applied to the lease now before us.
Article 1549 of the Civil Code has also been cited by the attorneys for the
appellant as supplying authority for the proposition that the lease in question
cannot be terminated by one who, like Pang Lim, has taken part in the contract.
That provision is practically identical in terms with the first paragraph of article
23 of the Mortgage Law, being to the effect that unrecorded leases shall be of
no effect as against third persons; and the same observation will suffice to
dispose of it that was made by us above in discussing the Mortgage Law,
namely, that while it recognizes the fact that an unrecorded lease is binding on
all persons who participate therein, this does not determine the question
whether, admitting the lease to be so binding, it can be terminated by the
plaintiffs under article 1571.
Having thus disposed of the considerations which arise in relation with the
Mortgage Law, as well as article 1549 of the Civil Coded all of which, as we
have seen, are undecisive we are brought to consider the aspect of the case
which seems to us conclusive. This is found in the circumstance that the
plaintiff Pang Lim has occupied a double role in the transactions which gave
rise to this litigation, namely, first, as one of the lessees; and secondly, as one
of the purchasers now seeking to terminate the lease. These two positions are
essentially antagonistic and incompatible. Every competent person is by law
bond to maintain in all good faith the integrity of his own obligations; and no
less certainly is he bound to respect the rights of any person whom he has
placed in his own shoes as regards any contract previously entered into by
himself.
While yet a partner in the firm of Lo Seng and Co., Pang Lim participated in the
creation of this lease, and when he sold out his interest in that firm to Lo Seng
this operated as a transfer to Lo Seng of Pang Lim's interest in the firm assets,
including the lease; and Pang Lim cannot now be permitted, in the guise of a
purchaser of the estate, to destroy an interest derived from himself, and for
which he has received full value.
The bad faith of the plaintiffs in seeking to deprive the defendant of this lease
is strikingly revealed in the circumstance that prior to the acquisition of this
property Pang Lim had been partner with Lo Seng and Benito Galvez an
employee. Both therefore had been in relations of confidence with Lo Seng and
in that position had acquired knowledge of the possibilities of the property and
possibly an experience which would have enabled them, in case they had
acquired possession, to exploit the distillery with profit. On account of his
status as partner in the firm of Lo Seng and Co., Pang Lim knew that the
original lease had been extended for fifteen years; and he knew the extent of
valuable improvements that had been made thereon. Certainly, as observed in
the appellant's brief, it would be shocking to the moral sense if the condition of
the law were found to be such that Pang Lim, after profiting by the sale of his
interest in a business, worthless without the lease, could intervene as
purchaser of the property and confiscate for his own benefit the property which
he had sold for a valuable consideration to Lo Seng. The sense of justice recoils
before the mere possibility of such eventuality.
Above all other persons in business relations, partners are required to exhibit
towards each other the highest degree of good faith. In fact the relation
between partners is essentially fiduciary, each being considered in law, as he is
in fact, the confidential agent of the other. It is therefore accepted as
fundamental in equity jurisprudence that one partner cannot, to the detriment
of another, apply exclusively to his own benefit the results of the knowledge
and information gained in the character of partner. Thus, it has been held that
if one partner obtains in his own name and for his own benefit the renewal of
a lease on property used by the firm, to commence at a date subsequent to the
expiration of the firm's lease, the partner obtaining the renewal is held to be a
constructive trustee of the firm as to such lease. (20 R. C. L., 878-882.) And
this rule has even been applied to a renewal taken in the name of one partner
after the dissolution of the firm and pending its liquidation. (16 R. C. L., 906;
Knapp vs. Reed, 88 Neb., 754; 32 L. R. A. [N. S.], 869; Mitchell vs. Reed 61 N.
Y., 123; 19 Am. Rep., 252.)
An additional consideration showing that the position of the plaintiff Pang Lim
in this case is untenable is deducible from articles 1461 and 1474 of the Civil
Code, which declare that every person who sells anything is bound to deliver
and warrant the subject-matter of the sale and is responsible to the vendee for
the legal and lawful possession of the thing sold. The pertinence of these
provisions to the case now under consideration is undeniable, for among the
assets of the partnership which Pang Lim transferred to Lo Seng, upon selling
out his interest in the firm to the latter, was this very lease; and while it cannot
be supposed that the obligation to warrant recognized in the articles cited
would nullify article 1571, if the latter article had actually conferred on the
plaintiffs the right to terminate this lease, nevertheless said articles (1461,
1474), in relation with other considerations, reveal the basis of an estoppel
which in our opinion precludes Pang Lim from setting up his interest as
purchaser of the estate to the detriment of Lo Seng.
It will not escape observation that the doctrine thus applied is analogous to the
doctrine recognized in courts of common law under the head of estoppel by
deed, in accordance with which it is held that if a person, having no title to land,
conveys the same to another by some one or another of the recognized modes
of conveyance at common law, any title afterwards acquired by the vendor will
pass to the purchaser; and the vendor is estopped as against such purchaser
from asserting such after-acquired title. The indenture of lease, it may be
further noted, was recognized as one of the modes of conveyance at common
law which created this estoppel. (8 R. C. L., 1058, 1059.)
From what has been said it is clear that Pang Lim, having been a participant in
the contract of lease now in question, is not in a position to terminate it: and
this is a fatal obstacle to the maintenance of the action of unlawful detainer by
him. Moreover, it is fatal to the maintenance of the action brought jointly by
Pang Lim and Benito Galvez. The reason is that in the action of unlawful
detainer, under section 80 of the Code of Civil Procedure, the only question
that can be adjudicated is the right to possession; and in order to maintain the
action, in the form in which it is here presented, the proof must show that
occupant's possession is unlawful, i. e., that he is unlawfully withholding
possession after the determination of the right to hold possession. In the case
before us quite the contrary appears; for, even admitting that Pang Lim and
Benito Galvez have purchased the estate from Lo Yao, the original landlord,
they are, as between themselves, in the position of tenants in common or
owners pro indiviso, according to the proportion of their respective
contribution to the purchase price. But it is well recognized that one tenant in
common cannot maintain a possessory action against his cotenant, since one
is as much entitled to have possession as the other. The remedy is ordinarily
by an action for partition. (Cornista vs. Ticson, 27 Phil., 80.) It follows that as
Lo Seng is vested with the possessory right as against Pang Lim, he cannot be
ousted either by Pang Lim or Benito Galvez. Having lawful possession as
against one cotenant, he is entitled to retain it against both. Furthermore, it is
obvious that partition proceedings could not be maintained at the instance of
Benito Galvez as against Lo Seng, since partition can only be effected where
the partitioners are cotenants, that is, have an interest of an identical
character as among themselves. (30 Cyc., 178-180.) The practical result is
that both Pang Lim and Benito Galvez are bound to respect Lo Seng's lease, at
least in so far as the present action is concerned.
We have assumed in the course of the preceding discussion that the deed of
sale under which the plaintiffs acquired the right of Lo Yao, the owner of the fee,
is competent proof in behalf of the plaintiffs. It is, however, earnestly insisted
by the attorney for Lo Seng that this document, having never been recorded in
the property registry, cannot under article 389 of the Mortgage Law, be used in
court against him because as to said instrument he is a third party. The
important question thus raised is not absolutely necessary to the decision of
this case, and we are inclined to pass it without decision, not only because the
question does not seem to have been ventilated in the Court of First Instance
but for the further reason that we have not had the benefit of any written brief
in this case in behalf of the appellees.

The judgment appealed from will be reversed, and the defendant will be
absolved from the complaint. It is so ordered, without express adjudication as
to costs.

Johnson, Araullo, Avancea and Villamor, JJ., concur.

G.R. No. L-55397 February 29, 1988 xxx xxx xxx

TAI TONG CHUACHE & CO., petitioner, vs.THE INSURANCE ... Thus the apportioned share of each company is as follows:
COMMISSION and TRAVELLERS MULTI-INDEMNITY
CORPORATION, respondents.
Policy No.. Company Risk Insures Pays
GANCAYCO, J.: MIRO Zenith Building P50,000 P17,610.93

This petition for review on certiorari seeks the reversal of the decision of the F-02500 Insurance
Insurance Commission in IC Case #367 1dismissing the complaint 2 for
recovery of the alleged unpaid balance of the proceeds of the Fire Insurance Corp.
Policies issued by herein respondent insurance company in favor of
F-84590 Phil. Household 70,000 24,655.31
petitioner-intervenor.
British
The facts of the case as found by respondent Insurance Commission are as
follows: Assco. Co.

Complainants acquired from a certain Rolando Gonzales a parcel of land and a Inc. FFF & F5 50,000 39,186.10
building located at San Rafael Village, Davao City. Complainants assumed the
Policy No. Company Risk Insures Pays
mortgage of the building in favor of S.S.S., which building was insured with
respondent S.S.S. Accredited Group of Insurers for P25,000.00. FIC-15381 SSSAccre

On April 19, 1975, Azucena Palomo obtained a loan from Tai Tong Chuache dited Group
Inc. in the amount of P100,000.00. To secure the payment of the loan, a
mortgage was executed over the land and the building in favor of Tai Tong of Insurers Building P25,000 P8,805.47
Chuache & Co. (Exhibit "1" and "1-A"). On April 25, 1975, Arsenio
Chua, representative of Thai Tong Chuache & Co. insured the latter's interest Totals P195,000 P90,257.81
with Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for
the building and P30,000.00 for the contents thereof) (Exhibit "A-a," contents We are showing hereunder another apportionment of the loss which includes
thereof) (Exhibit "A-a"). the Travellers Multi-Indemnity policy for reference purposes.

On June 11, 1975, Pedro Palomo secured a Fire Insurance Policy No. F- 02500
Policy No. Company Risk Injures Pays
(Exhibit "A"), covering the building for P50,000.00 with respondent Zenith
Insurance Corporation. On July 16, 1975, another Fire Insurance Policy No. MIRO/ Zenith
8459 (Exhibit "B") was procured from respondent Philippine British Assurance
Company, covering the same building for P50,000.00 and the contents thereof F-02500 Insurance
for P70,000.00.
Corp. Building P50,000 P11,877.14
On July 31, 1975, the building and the contents were totally razed by fire.
F-84590 Phil.
Adjustment Standard Corporation submitted a report as follow British
 Assco. Co. I-Building 70,000 16,628.00 Travellers Insurance, on its part, admitted the issuance of the Policy No. 599
DV and alleged as its special and affirmative defenses the following, to wit:
II-Building that Fire Policy No. 599 DV, covering the furniture and building of
complainants was secured by a certain Arsenio Chua, mortgage creditor, for
FFF & PE 50,000 24,918.79 the purpose of protecting his mortgage credit against the complainants; that
the said policy was issued in the name of Azucena Palomo, only to indicate that
PVC-15181 SSS Accredited she owns the insured premises; that the policy contains an endorsement in
favor of Arsenio Chua as his mortgage interest may appear to indicate that
Group of
insured was Arsenio Chua and the complainants; that the premium due on said
Insurers Building 25,000 5,938.50 fire policy was paid by Arsenio Chua; that respondent Travellers is not liable to
pay complainants.
F-599 DV Insurers I-Ref 30,000 14,467.31
On May 31, 1977, Tai Tong Chuache & Co. filed a complaint in intervention
Multi II-Building 70,000 16,628.00 claiming the proceeds of the fire Insurance Policy No. F-559 DV, issued by
respondent Travellers Multi-Indemnity.
Totals P295.000 P90,257.81
Travellers Insurance, in answer to the complaint in intervention, alleged that
Based on the computation of the loss, including the Travellers Multi- Indemnity, the Intervenor is not entitled to indemnity under its Fire Insurance Policy for
respondents, Zenith Insurance, Phil. British Assurance and S.S.S. Accredited lack of insurable interest before the loss of the insured premises and that the
Group of Insurers, paid their corresponding shares of the loss. Complainants complainants, spouses Pedro and Azucena Palomo, had already paid in full
were paid the following: P41,546.79 by Philippine British Assurance Co., their mortgage indebtedness to the intervenor. 3
P11,877.14 by Zenith Insurance Corporation, and P5,936.57 by S.S.S. Group
of Accredited Insurers (Par. 6. Amended Complaint). Demand was made from As adverted to above respondent Insurance Commission dismissed spouses
respondent Travellers Multi-Indemnity for its share in the loss but the same Palomos' complaint on the ground that the insurance policy subject of the
was refused. Hence, complainants demanded from the other three (3) complaint was taken out by Tai Tong Chuache & Company, petitioner herein,
respondents the balance of each share in the loss based on the computation of for its own interest only as mortgagee of the insured property and thus
the Adjustment Standards Report excluding Travellers Multi-Indemnity in the complainant as mortgagors of the insured property have no right of action
amount of P30,894.31 (P5,732.79-Zenith Insurance: P22,294.62, Phil. British: against herein respondent. It likewise dismissed petitioner's complaint in
and P2,866.90, SSS Accredited) but the same was refused, hence, this action. intervention in the following words:

In their answers, Philippine British Assurance and Zenith Insurance
Corporation admitted the material allegations in the complaint, but denied
liability on the ground that the claim of the complainants had already been
waived, extinguished or paid. Both companies set up counterclaim in the total
amount of P 91,546.79.
Instead of filing an answer, SSS Accredited Group of Insurers informed the
Commission in its letter of July 22, 1977 that the herein claim of complainants
for the balance had been paid in the amount of P 5,938.57 in full, based on the
Adjustment Standards Corporation Report of September 22, 1975.
We move on the issue of liability of respondent Travellers Multi-Indemnity to
the Intervenor-mortgagee. The complainant testified that she was still
indebted to Intervenor in the amount of P100,000.00. Such allegation has not
however, been sufficiently proven by documentary evidence. The certification
(Exhibit 'E-e') issued by the Court of First Instance of Davao, Branch 11,
indicate that the complainant was Antonio Lopez Chua and not Tai Tong
Chuache & Company. 4
From the above decision, only intervenor Tai Tong Chuache filed a motion for
reconsideration but it was likewise denied hence, the present petition.
It is the contention of the petitioner that respondent Insurance Commission
decided an issue not raised in the pleadings of the parties in that it ruled that
a certain Arsenio Lopez Chua is the one entitled to the insurance proceeds and
not Tai Tong Chuache & Company.
This Court cannot fault petitioner for the above erroneous interpretation of the
decision appealed from considering the manner it was written. 5 As correctly
pointed out by respondent insurance commission in their comment, the
decision did not pronounce that it was Arsenio Lopez Chua who has insurable
interest over the insured property. Perusal of the decision reveals however
that it readily absolved respondent insurance company from liability on the
basis of the commissioner's conclusion that at the time of the occurrence of the
peril insured against petitioner as mortgagee had no more insurable interest
over the insured property. It was based on the inference that the credit
secured by the mortgaged property was already paid by the Palomos before
the said property was gutted down by fire. The foregoing conclusion was
arrived at on the basis of the certification issued by the then Court of First
Instance of Davao, Branch II that in a certain civil action against the Palomos,
Antonio Lopez Chua stands as the complainant and not petitioner Tai Tong
Chuache & Company.
We find the petition to be impressed with merit. It is a well known postulate
that the case of a party is constituted by his own affirmative allegations. Under
Section 1, Rule 131 6 each party must prove his own affirmative allegations by
the amount of evidence required by law which in civil cases as in the present
case is preponderance of evidence. The party, whether plaintiff or defendant,
who asserts the affirmative of the issue has the burden of presenting at the
trial such amount of evidence as required by law to obtain favorable
judgment. 7 Thus, petitioner who is claiming a right over the insurance must
prove its case. Likewise, respondent insurance company to avoid liability
under the policy by setting up an affirmative defense of lack of insurable
interest on the part of the petitioner must prove its own affirmative
allegations.
It will be recalled that respondent insurance company did not assail the validity
of the insurance policy taken out by petitioner over the mortgaged property.
Neither did it deny that the said property was totally razed by fire within the
period covered by the insurance. Respondent, as mentioned earlier advanced
an affirmative defense of lack of insurable interest on the part of the petitioner
that before the occurrence of the peril insured against the Palomos had already
paid their credit due the petitioner. Respondent having admitted the material
allegations in the complaint, has the burden of proof to show that petitioner
has no insurable interest over the insured property at the time the contingency
took place. Upon that point, there is a failure of proof. Respondent, it will be
noted, exerted no effort to present any evidence to substantiate its claim,
while petitioner did. For said respondent's failure, the decision must be
adverse to it.
However, as adverted to earlier, respondent Insurance Commission absolved
respondent insurance company from liability on the basis of the certification
issued by the then Court of First Instance of Davao, Branch II, that in a certain
civil action against the Palomos, Arsenio Lopez Chua stands as the complainant
and not Tai Tong Chuache. From said evidence respondent commission
inferred that the credit extended by herein petitioner to the Palomos secured
by the insured property must have been paid. Such is a glaring error which this
Court cannot sanction. Respondent Commission's findings are based upon a
mere inference.
The record of the case shows that the petitioner to support its claim for the
insurance proceeds offered as evidence the contract of mortgage (Exh. 1)
which has not been cancelled nor released. It has been held in a long line of
cases that when the creditor is in possession of the document of credit, he
need not prove non-payment for it is presumed. 8 The validity of the insurance
policy taken b petitioner was not assailed by private respondent. Moreover,
petitioner's claim that the loan extended to the Palomos has not yet been paid
was corroborated by Azucena Palomo who testified that they are still indebted
to herein petitioner. 9
Public respondent argues however, that if the civil case really stemmed from
the loan granted to Azucena Palomo by petitioner the same should have been
brought by Tai Tong Chuache or by its representative in its own behalf. From
the above premise respondent concluded that the obligation secured by the
insured property must have been paid.
The premise is correct but the conclusion is wrong. Citing Rule 3, Sec.
2 10 respondent pointed out that the action must be brought in the name of the
real party in interest. We agree. However, it should be borne in mind that
petitioner being a partnership may sue and be sued in its name or by its duly
authorized representative. The fact that Arsenio Lopez Chua is the
representative of petitioner is not questioned. Petitioner's declaration that
Arsenio Lopez Chua acts as the managing partner of the partnership was
corroborated by respondent insurance company. 11 Thus Chua as the
managing partner of the partnership may execute all acts of
administration 12 including the right to sue debtors of the partnership in case
of their failure to pay their obligations when it became due and demandable. Or
at the very least, Chua being a partner of petitioner Tai Tong Chuache &
Company is an agent of the partnership. Being an agent, it is understood that
he acted for and in behalf of the firm. 13 Public respondent's allegation that the
civil case flied by Arsenio Chua was in his capacity as personal creditor of
spouses Palomo has no basis.

The respondent insurance company having issued a policy in favor of herein

petitioner which policy was of legal force and effect at the time of the fire, it is
bound by its terms and conditions. Upon its failure to prove the allegation of
lack of insurable interest on the part of the petitioner, respondent insurance
company is and must be held liable.

IN VIEW OF THE FOREGOING, the decision appealed from is hereby SET ASIDE
and ANOTHER judgment is rendered order private respondent Travellers
Multi-Indemnity Corporation to pay petitioner the face value of Insurance
Policy No. 599-DV in the amount of P100,000.00. Costs against said private
respondent.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Grio-Aquino, JJ., concur.


JOSEFINA P. REALUBIT, G.R. No. 178782
Petitioner,
Promulgated:
- versus -
September 21, 2011
PROSENCIO D. JASO and EDENG.
JASO,
Respondents.
PEREZ, J.:
The validity as well as the consequences of an assignment of rights in a joint
venture are at issue in this petition for review filed pursuant to Rule 45 of
the 1997 Rules of Civil Procedure,[1] assailing the 30 April 2007
Decision[2] rendered by the Court of Appeals (CA) then Twelfth Division in
CA-G.R. CV No. 73861,[3] the dispositive portion of which states:
WHEREFORE, the Decision appealed from is SET ASIDE and we
order the dissolution of the joint venture between
defendant-appellant Josefina Realubit and Francis Eric Amaury
Biondo and the subsequent conduct of accounting, liquidation of
assets and division of shares of the joint venture business.
Let a copy hereof and the records of the case be remanded to the
trial court for appropriate proceedings.[4]
The Facts
On 17 March 1994, petitioner Josefina Realubit (Josefina) entered into a Joint
Venture Agreement with Francis Eric Amaury Biondo (Biondo), a French
national, for the operation of an ice manufacturing business. With Josefina as
the industrial partner and Biondo as the capitalist partner, the parties agreed
that they would each receive 40% of the net profit, with the remaining 20% to
be used for the payment of the ice making machine which was purchased for
the business.[5] For and in consideration of the sum of P500,000.00, however,
Biondo subsequently executed a Deed of Assignment dated 27 June 1997,
transferring all his rights and interests in the business in favor of respondent
Eden Jaso (Eden), the wife of respondent Prosencio Jaso.[6] With Biondos
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 Frenchmans 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 Paraaque
City, said complaint alleged, among other matters, that the Spouses Realubit
had no gainful occupation or business prior to their joint venture with Biondo;
that with the income of the business which earned not less than P3,000.00 per
day, they were, however, able to acquire the two-storey building as well as the
land on which the joint ventures 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 Jasos
demand in view of the dubious circumstances surrounding their acquisition of
Biondos 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 A. WHETHER OR NOT THERE WAS A
existence of sufficient evidence from which the income, assets and the VALID ASSIGNMENT OF RIGHTS TO THE JOINT
supposed dissolution of the joint venture can be adequately reckoned. Upon VENTURE.
the finding, however, that the Spouses Jaso had been nevertheless subrogated
to Biondos rights in the business in view of their valid acquisition of the latters B. WHETHER THE COURT MAY ORDER PETITIONER
share as capitalist partner,[10] the RTC disposed of the case in the following [JOSEFINA REALUBIT] AS PARTNER IN THE JOINT
wise: VENTURE TO RENDER [A]N ACCOUNTING TO ONE
WHO IS NOT A PARTNER IN SAID JOINT VENTURE.
WHEREFORE, defendants are ordered to submit to plaintiffs a
complete accounting and inventory of the assets and liabilities of C. WHETHER PRIVATE RESPONDENTS [SPOUSES JASO]
the joint venture from its inception to the present, to allow HAVE ANY RIGHT IN THE JOINT VENTURE AND IN
plaintiffs access to the books and accounting records of the joint THE SEPARATE ICE BUSINESS OF
venture, to deliver to plaintiffs their share in the profits, if any, PETITIONER[S].[14]

and to pay the plaintiffs the amount of P20,000. for moral

damages. The claims for exemplary damages and attorneys fees The Courts Ruling
are denied for lack of basis.[11]
We find the petition bereft of merit.

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 Biondosshare 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 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 Realubits 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]

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. It cannot be gainsaid that, as a public document, the Deed of
Assignment Biondo executed in favor of Eden not only enjoys a presumption
The Issues of regularity[17] but is also considered prima facie evidence of the facts therein
stated.[18] A party assailing the authenticity and due execution of a notarized
The Spouses Realubit urge the reversal of the assailed decision upon the document is, consequently, required to present evidence that is clear,
negative of the following issues, to wit: convincing and more than merely preponderant.[19] In view of the Spouses
Realubits failure to discharge this onus, we find that both the RTC and the CA
correctly upheld the authenticity and validity of said Deed of Assignment upon
the combined strength of the above-discussed disputable presumptions and
the testimonies elicited from Eden[20] and Notary Public Rolando Diaz.[21] As for
the Spouses Realubits bare assertion that Biondos 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 Biondos signatures on the Joint Venture Agreement[24] and
the Deed of Assignment,[25] said forgery is, moreover debunked by Biondos
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 partners
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 assignors 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 assignees
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 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]
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
bycertiorari under Rule 45 of the Rules of Court as this mode of appeal is
confined to questions of law.[33] Upon the principle that this Court is not a trier
of facts, we are not duty bound to examine the evidence introduced by the
parties below to determine if the trial and the appellate courts correctly
assessed and evaluated the evidence on record.[34] Absent showing that the
factual findings complained of are devoid of support by the evidence on record
or the assailed judgment is based on misapprehension of facts, the Court will
limit itself to reviewing only errors of law.[35]
Based on the evidence on record, moreover, both the RTC[36] and the
CA[37]
ruled out the dissolution of the joint venture and concluded that the ice
manufacturing business at the aforesaid address was the same one
established by Juanita and Biondo. As a rule, findings of fact of the CA are
binding and conclusive upon this Court,[38] and will not be reviewed or
disturbed on appeal[39] unless the case falls under any of the following
recognized exceptions: (1) when the conclusion is a finding grounded entirely
on speculation, surmises and conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) where there is a grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5)
when the findings of fact are conflicting; (6) when the CA, in making its
findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; (7) when the findings are contrary
to those of the trial court; (8) when the findings of fact are conclusions without
citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioners' main and reply briefs are not
disputed by the respondents; and, (10) when the findings of fact of the CA are
premised on the supposed absence of evidence and contradicted by the
evidence on record.[40] Unfortunately for the Spouses 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.