Facts:

When Spouses Sanchez died intestate, their Heirs executed a deed of

extrajudicial partition over a lot of which owners copy of the OCT is
missing. Since they cannot register the Deed without the OCT, they
sought for the reconstitution, pursuant to RA 26, of the said OCT. They
alleged in their petition that OCT 45361 covers a lot that was issued in
the name of their predecessors-in-interest Spouses Sanchez
pursuant to Decree 418121 which was in relation to a court decision in
1930. Among the evidences presented are: (1) a certification from the
RD that the copies of the OCT and the decree which issued it cannot be
found among its records, (2) the court decision in 1930 adjudicating the
lot in the name of spouses Sanchez, and (3) certified true copy of the
Registrars Index Card containing the notation that the OTC was listed
under the name of one of the spouse Sanchez. Since there is no copy of
the OCT in the RD records, there was no certification from the RD that
the OCT was either lost or destroyed.

Issue 1: W/N reconstitution of OCT 45361 should be granted

No. Under RA 26, a petition for reconstitution of lost or destroyed title
requires, as a condition precedent, that a certificate of title has indeed
been issued. Here, the court decision and the Registrars Index Card
containing the notation on OCT No. 45361 do not cite nor mention that
Decree No. 418121 was issued to support the issuance of the said OCT.
Since there was no clear and convincing evidence adduced to prove the
existence of the OTC, RA 26 cannot apply.
For obvious reasons, reconstitution cannot be made on a title that never
existed in the first place.
Issue 2: W/N reconstitution of OCT is proper when the only evidences
presented to support its existence are derivative titles
No. Assuming that there was sufficient evidence to prove the existence
of the OCT considering the totality of evidence presented, still,
reconstitution of the OCT is not warranted. Under Sec 15 of RA 26,
before a certificate of title which has been lost or destroyed may be
reconstituted, it must first be proved by the claimants that the certificate
of title was still in force at the time it was lost or destroyed, among
others.
First, the mere existence of the derivative titles which contain the
notations that the name of the registered owner of OCT 45361 is not
available as per certification of the RD clearly shows that the OCT
which the Heirs seek to be reconstituted is no longer in force, rendering
the procedure, if granted, a mere superfluity

Second, the necessary certification from the RD that said OCT was in
force at the time it was lost or destroyed is lacking. The presentation of
alleged derivative titles will not suffice to replace this certification
because the titles do not authenticate the issuance of OCT No. 45361
having been issued by the RD without any basis from its official records.
Hence, the OCT cannot be reconstituted because clearly it was no
longer in force.

Notes:
The proper procedure when seeking the reconstitution of an Original
Certificate of Title is to file a petition for the cancellation of the decree,
re-issuance of the decree and issuance of OCT pursuant to the re-
issued decree.
[ G.R. NO. 167320, January 30, 2007 ]

HEIRS OF SALVADOR HERMOSILLA, NAMELY: ADELAIDA H. DOLLETON, et al

VS. SPOUSES JAIME REMOQUILLO AND LUZ REMOQUILLO

FACTS:

Subject of the issue is a portion of a lot located in Poblacion, San Pedro, Laguna. The
Republic of the Philippines acquired through purchase the San Pedro Tunasan
Homesite. Apolinario Hermosilla, who was occupying a lot in the said homesite until his
death in 1964, caused the subdivision of this lot into two, Lot 12 and Lot 19. He
transferred Lot 19 to his grandson Jaime Remoquillo and Lot 12 to his son Salvador
Hermosilla. In 1972, Jaime and Salvador made a Kasunduan whereby Jaime
transferred ownership of the 65 sq.m. in Lot 19 in favor of Salvador. In 1986, the
National Housing Authority awarded Lot 19 to Jaime, for which he and his wife were
issued a title.

The petitioners, heirs of Salvador, filed an action for annulment of the title on the ground
of fraud with damages against Jaime and his spouse, alleging that by the virtue of
the Kasunduan, the lot in controversy was already conveyed to Salvador.

The trial court found the Kasunduan a perfected contract of sale, declared the
petitioners as co-owners of the subject property.

The CA, however, reversed the trial courts decision, rendering the Kasunduan void
because at the time of its execution , the lot was still owned by the Republic of the
Philippines. No right was transferred to both Jaime and Salvador. The CA held that the
action had prescribed.

ISSUE:

Can the petitioners seek the reconveyance of the property based on fraud?
HELD:
No. It is true that petitioners houses occupy property. Since there was no actual
need to reconvey the property as petitioners remained in possession of the
property, the action took the nature of a suit for quieting of title, it having been
filed to enforce an alleged implied trust after Jaime refused to segregate title over
Lot 19. One who is in actual possession of a piece of land claiming to be the
owner thereof may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right. From the body of the complaint, this type
of action denotes imprescriptibility.

The lots can not be transferred to both Jaime and Salvador since the Lots is owned by
The Republic of The Philippines. Nemo dat quod non habet. Nobody can give what he
does not possess. Jaime could not thus have transferred anything to Salvador.

Moreover, since the property was previously a public land, petitioners have no
personality to impute fraud or misrepresentation against the State or violation of the law.

Also, for an action for reconveyance based on fraud to prosper, the petitioners must
prove by clear and convincing evidence not only his title to the property but also the fact
of fraud. Fraud is never presumed. Intentional acts to deceive and deprive another of
his right, or in some manner injure him must be specifically alleged and proved by the
petitioners by clear and convincing evidence. Petitioners failed to discharge this burden.
[ G.R. No. 155716, October 02, 2009 ]

ROCKVILLE EXCEL INTERNATIONAL EXIM CORPORATION, PETITIONER, VS.

SPOUSES OLIGARIO CULLA AND BERNARDITA MIRANDA, RESPONDENTS.

FACTS:

The spouses Culla are the registered owners of a parcel of land.They mortgaged this
property to PS Bank to secure a loan of P1,400,000.00. To prevent the foreclosure,
Husband approached ROCKVILLE for financial assistance. Rockville extended him total
loan amount of P2,000,000.00. Husband failed to pay his indebtedness, so they agreed,
both parties to settle the debt is to sell another property of the Culla's to ROCKVILLE.
The parties agreed to fix the purchase price at P3,500,000.00 since a survey revealed
that the property is worth more than the P2,000,000.00 loan.

ROCKVILLE and Husband executed a Deed of Absolute Sale over the property with an
agreement that the former would pay the additional P1,500,000.00 after Wife affixes her
signature to the Deed of Absolute Sale since the land is a conjugal property.
ROCKVILLE filed a complaint for Specific Performance and Damages since the Wife
refused to sign, insisting that the transaction was an absolute sale by way of dacion en
pago.(dation in payment)

ISSUE:

Whether the transaction entered by the parties is therefore an absolute sale or an

equitable mortgage.

HELD:

The transaction between the parties was in reality an equitable mortgage, not an
absolute sale. First, the Culla's retained possession of the property. Second,
ROCKVILLE kept a part of the purchase price. Third, ROCKVILLE continued to give the
Culla's extensions on the period to repay their loan even after the parties allegedly
agreed to a dacion en pago. Fourth,different testimonies of the Culla's that the purpose
of the Deed of Absolute Sale was merely to guarantee their loan.

In determining the nature of a contract, courts are not bound by the title or name given
by the parties. The decisive factor in evaluating an agreement is the intention of the
parties, as shown, not necessarily by the name given used in the contract but, by the
intention they shown prior to, during and immediately after executing the agreement.
After all an equitable mortgage has been defined as one which although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, there
being no impossibility nor anything contrary to law in this intent.
G.R. NO. 124242, January 21, 2005

SAN LORENZO DEVELOPMENT CORPORATION VS. CA

FACTS:
The Spouses Lu purportedly sold the two parcels of land to respondent Pablo
Babasanta. Babasanta made a downpayment of fifty thousand pesos (P50,000.00) as
evidenced by a receipt issued by Pacita Lu of the same date. Several other payments
totaling two hundred thousand pesos (P200,000.00) were made by Babasanta. He
demanded the execution of a Final Deed of Sale in his favor so he may effect full
payment of the purchase price; however, the spouses declined to push through with the
sale. They claimed that when he requested for a discount and they refused, he refused
with the agreement. Thus, Babasanta filed a case for Specific Performance.
On the other hand, San Lorenzo Development Corporation (SLDC) alleged that on 3
May 1989, the two parcels of land involved, namely Lot 1764-A and 1764-B, had been
sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good
faith and for value and therefore it had a better right over the property in litigation.

ISSUE:
Who between SLDC and Babasanta has a better right over the two parcels of land?

HELD:
With the facts presented, as well as the evidence showned by the parties, irresistibly
leads to the conclusion that the agreement between Babasanta and the Spouses Lu is a
contract to sell and not a contract of sale.
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty
thousand pesos (P50,000.00) from Babasanta as partial payment for the lot. While there
is no stipulation that the seller reserves the ownership of the property until full payment
of the price which is a distinguishing feature of a contract to sell, the subsequent acts of
the parties convince us that the Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price.
With Babasanta's letter telling that he stated therein that despite his repeated requests
for the execution of the final deed of sale in his favor so that he could effect full payment
of the price, Pacita Lu allegedly refused to do so. In effect, Babasanta himself
recognized that ownership of the property would not be transferred to him until such
time as he shall have effected full payment of the price. Doubtlessly, the receipt signed
by Pacita Lu should legally be considered as a perfected contract to sell.
The perfected contract to sell imposed upon Babasanta the obligation to pay the
balance of the purchase price. There being an obligation to pay the price, Babasanta
should have made the proper tender of payment and consignation of the price in court
as required by law. Glaringly absent from the records is any indication that Babasanta
even attempted to make the proper consignation of the amounts due, thus, the
obligation on the part of the sellers to convey title never acquired obligatory force.
There was no double sale in this case because the contract in favor of Babasanta was a
mere contract to sell; hence, Art. 1544 is not applicable. There was neither actual nor
constructive delivery as his title is based on a mere receipt. The rights of SLDC must be
preferred.
[ G.R. NO. 160346, AUGUST 25, 2009 ]
PURITA PAHUD VS. CA

FACTS:
Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-square
meter parcel of land situated in Barangay Anos, Los Baos, Laguna and covered by
Original Certificate of Title . Agatona Genil and Pedro San Agustin died , left with
children: respondents, Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita
and Virgilio.

Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided Shares
conveying in favor of petitioners their respective shares . Eufemia also signed the deed
on behalf of her four (4) other co-heirs, Only Isabelita has the Power of attorney while
the other three (3) co-heirs has no written consent authorizing such sale. It was not
notarized.

The Pahuds paid the accounts into the Los Baos Rural Bank where the property was
mortgaged. The bank issued a release of mortgage and turned over the ownership
Pahuds, the Pahuds made more payments to Eufemia and her siblings. When Eufemia
and her co-heirs drafted an extra-judicial settlement of estate to facilitate the transfer of
the title to the Pahuds, Virgilio refused to sign it.

Virgilio's co-heirs filed a complaint for judicial partition of the subject property before
the RTC of Calamba, Laguna.In the course of the proceedings for judicial partition, a
Compromise Agreement was signed with seven (7) of the co-heirs agreeing to sell their
undivided shares to Virgilio .. The compromise agreement was, however, not approved
by the trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six (6) co-
heirs, refused to sign the agreement because he knew of the previous sale made to the
Pahuds.

Eufemia acknowledged having received the payments from Virgilio. Virgilio then sold
the entire property to spouses Isagani Belarmino and Leticia Ocampo (Belarminos) .
The Belarminos immediately constructed a building on the subject property.

Alarmed by the ongoing construction on the lot they purchased, the Pahuds immediately
confronted Eufemia who confirmed to them that Virgilio had sold the property to the
Belarminos.Then the Pahuds filed a complaint in intervention in the pending case for
judicial partition.

ISSUE/S:
1.Whether or not the sale of the subject property by Eufemia and her co-heirs to the
Pahuds is valid and enforceable.
2.Whether or not the sale by co-heirs to Virgilio is void.
3.Whether or not the sale of Virgilio to Belarminos is valid.

Ruling:

The sale made by Eufemia, Isabelita and her two brothers to the Pahuds should be
valid only with respect to the authorized share of Eufemia While the sale with respect to
the other portion of the lot representing the shares of Zenaida, Milagros, and Minerva, is
void because Eufemia could not dispose of the interest of her co-heirs in the said lot
absent any written authority from the latter, as required by law.

2.the subsequent sale made by the seven co-heirs to Virgilio was void because they no
longer own the subject property which they could alienate at the time of the second
transaction. You can not give what you do not possess.

3. The sale to Bilarminos is not valid, they did not purchased the property from Virgilio in
good faith. the Belarminos were fully aware that the property was registered not in the
name of Virgilio.

They knew that the property was still subject of proceedings before the trial court.

The supreme court reversed and set aside the ruling of the CA and reinstated of the
RTC with modification.

G.R. No. 142403 March 26, 2003

ALEJANDRO GABRIEL and ALFREDO GABRIEL, petitioners,
vs.

SPOUSES PABLO MABANTA and ESCOLASTICA COLOBONG, DEVELOPMENT

BANK OF THE PHILIPPINES (Isabela Branch) and ZENAIDA TAN-REYES,
respondents.

FACTS:

On October 25, 1975 The Mabanta's mortgaged two (2) parcels of land with the DBP as
collateral to the amount of 14,000. In 1980, they sold the lots to Susana Soriano with
the right to repurchase the property within 2 years. The Mabanta's failed to do
repurchase. In 1984, they convinced petitioner Alejandro Gabriel to purchase the lot
from Soriano as a result, DBP had to transfer the name of mortgagor to Gabriel. In 1982
however, one lot was sold to Zenaida Tan-Reyes by the spouses Mabanta who in turn
filed an intervention to the case after not being a party in the instant case. As a result,
the petitioners filed for damages, and specific performance which the trial court ruled in
their favor holding that the sale between the spouses Mabanta and Tan-Reyes null and
void. On appeal, the CA modified the trial courts decision holding that the second sale
was indeed valid.

ISSUE:

Whether or not the second sale in 1982 to Tan-Reyes is valid.

HELD:

Article 1544 of the Civil Code provides that when an immovable property is sold to
different vendees, the ownership shall belong to the first person in good faith to register
it in the registry of property. Unfortunately, the registration made by Zenaida Tan-Reyes
of her deed of sale was in bad faith, and for this reason in accordance with the same
Article 1544, the land shall be sold to the person who in good faith was first in
possession.Undoubtedly, that it is the Gabriels who are in possession of the land.

G.R. No. 142612. July 29, 2005

OSCAR ANGELES and EMERITA ANGELES, Petitioners,
vs.
THE HON. SECRETARY OF JUSTICE and FELINO MERCADO, Respondents.

FACTS:

The Angeles' entered into a contract of antichresis on a parcel of land in Laguna which
bears lanzones fruits owned by Juana Suazo. Mercado is the one who convinced the
Angeles. The contract of antichresis was to last for five (5) years. The parties agreed
that Mercado would administer the said land.

After three (3) years the Angeles found out that after the demand of accounting papers
that the land was transferred to Mercado and his spouse.
Mercado defended that there was an existing industrial partnership, where the Angeles
are the financiers while them, the Mercados are the industrial partners.

During the barangay conciliation proceedings, Oscar Angeles stated that there was a
writtensosyo industrial agreement: capital would come from the Angeles spouses while
the profit would be divided evenly between Mercado and the Angeles spouses.

The Provincial Prosecution Office recommended to file an estafa case against Mercado
but later was amended and held that the accusation of estafa lacks enough evidence.
While The Secretary ruled that a partnership truly existed between the two. Hence,
there is no estafa where money is delivered by a partner to his co-partner on the latters
representation that the amount shall be applied to the business of their partnership. In
case of misapplication or conversion of the money received, the co-partners liability is
civil in nature

ISSUE:

Whether or not there has been an existing partnership between Angeles and Mercado?

HELD:

The Angeles spouses position that there is no partnership because of the lack of a
public instrument indicating the same and a lack of registration with the Securities and
Exchange Commission ("SEC") holds no water. First, the Angeles spouses contributed
money to the partnership and not immovable property. Second, mere failure to register
the contract of partnership with the SEC does not invalidate a contract that has the
essential requisites of a partnership. The purpose of registration of the contract of
partnership is to give notice to third parties. Failure to register the contract of
partnership does not affect the liability of the partnership and of the partners to third
persons. Neither does such failure to register affect the partnerships juridical
personality. A partnership may exist even if the partners do not use the words "partner"
or "partnership."
G.R. No. 144214 July 14, 2003
LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO
JOSE, petitioners,
vs.
DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and
CARMELITA C. RAMIREZ,respondents.
FACTS:

Villareal, C. Jose, J. Jose formed a partnership (restaurant) with a Capital of 750,000.

Later, Ramirez joined the partnership with a contribuution of 250,000. After some time J.
Jose withdrew from the partnership and his capital contribution of 250,000 was
refunded.

The restaurant was closed down allegedly because of of increased rentals. Furniture &
equipments was deposited at Ramirez's house.

The Ramirez's said to petitioners that they are not interested in the partnership anymore
and asking of the refund of their capital contribution.

Before the RTC, petitioners contented that the respondents cannot ask for a refund
since the capital had been spent on business lossess. Respondents replied, defended
that if such allegations were true then the loans incurred by petitioners should be
regarded as purely personal.
RTC ruled that the parties voluntarily entered into a partnership which could be
dissolved at anytime. While the CA ruled that respondents had no right to demand the
return of capital distribution.

ISSUES:

1. What is the share in partnership?

2. What must be returned?

HELD:

1.Both the trial and the appellate courts found that a partnership had indeed existed,
and that it was dissolved on March 1, 1987. They found that the dissolution took place
when respondents informed petitioners of the intention to discontinue it because of the
former's dissatisfaction with, and loss of trust in, the latter's management of the
partnership affairs. These findings were amply supported by the evidence on record.
Respondents consequently demanded from petitioners the return of their one-third
equity in the partnership.

We hold that respondents have no right to demand from petitioners the return of their
equity share. Except as managers of the partnership, petitioners did not personally hold
its equity or assets. "The partnership has a juridical personality separate and distinct
from that of each of the partners." Since the capital was contributed to the partnership,
not to petitioners, it is the partnership that must refund the equity of the retiring partners.
2. Since it is the partnership, as a separate and distinct entity, that must refund the
shares of the partners, the amount to be refunded is necessarily limited to its total
resources. In other words, it can only pay out what it has in its coffers, which consists of
all its assets. However, before the partners can be paid their shares, the creditors of the
partnership must first be compensated. After all the creditors have been paid, whatever
is left of the partnership assets becomes available for the payment of the partners'
shares.
G.R. No. 126334 November 23, 2001
EMILIO EMNACE, petitioner,
vs.
COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO,
VICENTE WILLIAM TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY
TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents.
FACTS:
Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a
business concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986,
they decided to dissolve their partnership and executed an agreement of partition and
distribution of the partnership properties among them, consequent to Jacinto
Divinagracia's withdrawal from the partnership.Among the assets to be distributed were
five (5) fishing boats, six (6) vehicles, two (2) parcels of land located at Sto. Nio and
Talisay, Negros Occidental, and cash deposits in the local branches of the Bank of the
Philippine Islands and Prudential Bank.
Throughout the existence of the partnership, and even after Vicente Tabanao's untimely
demise in 1994, petitioner failed to submit to Tabanao's heirs any statement of assets
and liabilities of the partnership, and to render an accounting of the partnership's
finances. Petitioner also reneged on his promise to turn over to Tabanao's heirs the
deceased's 1/3 share in the total assets of the partnership, amounting to
P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for payment
thereof.

Consequently, Tabanao's asked for an action for accounting, payment of shares,

division of assets and damages.
Anent the issue of prescription, the trial court ruled that prescription begins to run only
upon the dissolution of the partnership when the final accounting is done. Hence,
prescription has not set in the absence of a final accounting. Moreover, an action based
on a written contract prescribes in ten years from the time the right of action accrues.
ISSUE:

What are the three final stages of partnership?

HELD:
The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3)
termination.The partnership, although dissolved, continues to exist and its legal
personality is retained, at which time it completes the winding up of its affairs, including
the partitioning and distribution of the net partnership assets to the partners.For as long
as the partnership exists, any of the partners may demand an accounting of the
partnership's business. Prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is done.
G.R. No. 142936 April 17, 2002
PHILIPPINE NATIONAL BANK & NATIONAL SUGAR DEVELOPMENT
CORPORATION, petitioners,
vs.
ANDRADA ELECTRIC & ENGINEERING COMPANY, respondent.

FACTS:
In its complaint, the plaintiff [herein respondent] alleged that it is a partnership duly
organized, existing, and operating under the laws of the Philippines, with office and
principal place of business at Nos. 794-812 Del Monte [A]venue, Quezon City, while the
defendant [herein petitioner] Philippine National Bank (herein referred to as PNB), is a
semi-government corporation duly organized, existing and operating under the laws of
the Philippines, with office and principal place of business at Escolta Street, Sta. Cruz,
Manila; whereas, the other defendant, the National Sugar Development Corporation
(NASUDECO in brief), is also a semi-government corporation and the sugar arm of the
PNB, with office and principal place of business at the 2nd Floor, Sampaguita Building,
Cubao, Quezon City; and the defendant Pampanga Sugar Mills (PASUMIL in short), is a
corporation organized, existing and operating under the 1975 laws of the Philippines,
and had its business office before 1975 at Del Carmen, Floridablanca, Pampanga; that
the plaintiff is engaged in the business of general construction for the repairs and/or
construction of different kinds of machineries and buildings; that on August 26, 1975,
the defendant PNB acquired the assets of the defendant PASUMIL that were earlier
foreclosed by the Development Bank of the Philippines (DBP) under LOI No. 311; that
the defendant PNB organized the defendant NASUDECO in September, 1975, to take
ownership and possession of the assets and ultimately to nationalize and consolidate its
interest in other PNB controlled sugar mills; that prior to October 29, 1971, the
defendant PASUMIL engaged the services of plaintiff for electrical rewinding and repair,
most of which were partially paid by the defendant PASUMIL, leaving several unpaid
accounts with the plaintiff; that finally, on October 29, 1971, the plaintiff and the
defendant PASUMIL entered into a contract. that out of the total obligation of
P777,263.80, the defendant PASUMIL had paid only P250,000.00, leaving an unpaid
balance, as of June 27, 1973, amounting to P527,263.80, as shown in the Certification
of the chief accountant of the PNB, a machine copy of which is appended as Annex C
of the complaint; that out of said unpaid balance of P527,263.80, the defendant
PASUMIL made a partial payment to the plaintiff of P14,000.00, in broken amounts,
covering the period from January 5, 1974 up to May 23, 1974, leaving an unpaid
balance of P513,263.80; that the defendant PASUMIL and the defendant PNB, and now
the defendant NASUDECO, failed and refused to pay the plaintiff their just, valid and
demandable obligation; that the President of the NASUDECO is also the Vice-President
of the PNB, and this official holds office at the 10th Floor of the PNB, Escolta, Manila,
and plaintiff besought this official to pay the outstanding obligation of the defendant
PASUMIL, inasmuch as the defendant PNB and NASUDECO now owned and
possessed the assets of the defendant PASUMIL, and these defendants all benefited
from the works, and the electrical, as well as the engineering and repairs, performed by
the plaintiff; that because of the failure and refusal of the defendants to pay their just,
valid, and demandable obligations, plaintiff suffered actual damages in the total amount
of P513,263.80; and that in order to recover these sums, the plaintiff was compelled to
engage the professional services of counsel, to whom the plaintiff agreed to pay a sum
equivalent to 25% of the amount of the obligation due by way of attorneys fees.
ISSUE:
What is the extent of liablity for Corporate debts?

HELD:
As a general rule, questions of fact may not be raised in a petition for review under Rule
45 of the Rules of Court.To this rule, however, there are some exceptions enumerated
in Fuentes v. Court of Appeals. After a careful scrutiny of the records and the pleadings
submitted by the parties, we find that the lower courts misappreciated the evidence
presented. Overlooked by the CA were certain relevant facts that would justify a
conclusion different from that reached in the assailed Decision.1
Petitioners posit that they should not be held liable for the corporate debts of PASUMIL,
because their takeover of the latters foreclosed assets did not make them assignees.
On the other hand, respondent asserts that petitioners and PASUMIL should be treated
as one entity and, as such, jointly and severally held liable for PASUMILs unpaid
obligation.1wphi1.nt
As a rule, a corporation that purchases the assets of another will not be liable for the
debts of the selling corporation, provided the former acted in good faith and paid
adequate consideration for such assets, except when any of the following
circumstances is present: (1) where the purchaser expressly or impliedly agrees to
assume the debts, (2) where the transaction amounts to a consolidation or merger of
the corporations, (3) where the purchasing corporation is merely a continuation of the
selling corporation, and (4) where the transaction is fraudulently entered into in order to
escape liability for those debts.
[G.R. No. 143340. August 15, 2001]
LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners,
vs. LAMBERTO T. CHUA, respondent.
FACTS: Chua and Sunga verbally agreed to form a partnership for the distribution of
LPGs in their community. Their business was very liquid but untimely Sunga died. After
Sungass death, his daughter assumed partnership with Chua over the business as and
as to the other business assets of the partnership. Chua then demanded for an
accounting but he never succeeded on getting one from Sunga's daughter(Lilibeth).
Chua filed a complaint for Winding Up of Partnership Affairs, Accounting, Appraisal and
Recovery of Shares and Damages with Writ of Preliminary Attachment against Lilibeth.
Lilibeth in her defense argued among others that Chuas action has been barred by
prescrition.

ISSUE: Whether or not Chuas claim to Lilibeth is barred by prescription.

HELD: No. The action for accounting filed by Chua three years after Sungass death
was well within the prescribed period. The Civil Code states that an action for oral
contract prescribes in six years. while the right to demand an accounting for a partners
interest as against the person continuing the business accrues at the date of
dissolution, in the absence of any contrary agreement. Considering that the death of a
partner results in the dissolution of the partnership, in this case, It bears stressing that
while Sungass death dissolved the partnership, it did not terminate immediately the
partnership. The Civil Code expressly provides that upon dissolution, the partnership
continues and its legal personality is retained until the complete winding up of its
business, culminating in its termination.

The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3)
termination.The partnership, although dissolved, continues to exist and its legal
personality is retained, at which time it completes the winding up of its affairs, including
the partitioning and distribution of the net partnership assets to the partners.For as long
as the partnership exists, any of the partners may demand an accounting of the
partnership's business. Prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is done.