Republic of the Philippines Know all men by these presents:
SUPREME COURT
Manila
EN BANC
G.R. No. L-16318 October 21, 1921
PANG LIM and BENITO GALVEZ, plaintiffs-appellees,
vs.
LO SENG, defendant-appellant.
Cohn, Fisher and DeWitt for appellant.
No appearance for appellees.
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:
x xx x xx x xx
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. That all the improvements and betterments
which they may 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 LegislacionHipotecaria, 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 The judgment appealed from will be reversed, and the defendant will be
in the contract of lease now in question, is not in a position to terminate it: absolved from the complaint. It is so ordered, without express adjudication
and this is a fatal obstacle to the maintenance of the action of unlawful as to costs.
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.
 Republic of the Philippines latter's interest with Travellers Multi-Indemnity Corporation
SUPREME COURT for P100,000.00 (P70,000.00 for the building and
Manila P30,000.00 for the contents thereof) (Exhibit "A-a,"
contents thereof) (Exhibit "A-a").
FIRST DIVISION
On June 11, 1975, Pedro Palomo secured a Fire Insurance
G.R. No. L-55397 February 29, 1988 Policy No. F- 02500 (Exhibit "A"), covering the building for
P50,000.00 with respondent Zenith Insurance Corporation.
TAI TONG CHUACHE & CO., petitioner, On July 16, 1975, another Fire Insurance Policy No. 8459
vs. (Exhibit "B") was procured from respondent Philippine
THE INSURANCE COMMISSION and TRAVELLERS MULTI-INDEMNITY British Assurance Company, covering the same building for
CORPORATION, respondents. P50,000.00 and the contents thereof for P70,000.00.

On July 31, 1975, the building and the contents were totally
razed by fire.
GANCAYCO, J.:
Adjustment Standard Corporation submitted a report as
This petition for review on certiorari seeks the reversal of the decision of the follow
Insurance Commission in IC Case #367 1 dismissing the complaint 2 for
recovery of the alleged unpaid balance of the proceeds of the Fire Insurance xxxxxxxxx
Policies issued by herein respondent insurance company in favor of
petitioner-intervenor. ... Thus the apportioned share of each company is as
follows:
The facts of the case as found by respondent Insurance Commission are as
follows: Policy Company Risk
No..
Complainants acquired from a certain Rolando Gonzales a
parcel of land and a building located at San Rafael Village, MIRO Zenith Building
Davao City. Complainants assumed the mortgage of the
building in favor of S.S.S., which building was insured with F- Insurance
respondent S.S.S. Accredited Group of Insurers for 02500
P25,000.00.
Corp.
On April 19, 1975, AzucenaPalomo obtained a loan from Tai F- Phil. Household
Tong Chuache Inc. in the amount of P100,000.00. To secure 84590
the payment of the loan, a mortgage was executed over the
land and the building in favor of Tai Tong Chuache& Co. British
(Exhibit "1" and "1-A"). On April 25, 1975, Arsenio
Chua, representative of Thai Tong Chuache& Co. insured the Assco.
 Co.

Inc. FFF & F5 50,000 39,186.10 FFF & PE

Policy Company Risk Insures

PVC- SSS
Pays Accredited
No. 15181

FIC- SSSAccre Group of

15381
Insurers Building
dited
Group F-599 Insurers I-Ref
DV
of Building P25,000 P8,805.47
Insurers Multi II-Building

Totals P195,000 P90,257.81 Totals

We are showing hereunder another apportionment of the Based on the computation of the loss, including the
loss which includes the Travellers Multi-Indemnity policy for Travellers Multi- Indemnity, respondents, Zenith Insurance,
reference purposes. Phil. British Assurance and S.S.S. Accredited Group of
Insurers, paid their corresponding shares of the loss.
Complainants were paid the following: P41,546.79 by
Policy Company Risk Injures Pays Co., P11,877.14 by Zenith
Philippine British Assurance
No. Insurance Corporation, and P5,936.57 by S.S.S. Group of
Accredited Insurers (Par. 6. Amended Complaint). Demand
MIRO/ Zenith
was made from respondent Travellers Multi-Indemnity for
F- Insurance its share in the loss but the same was refused. Hence,
02500 complainants demanded from the other three (3)
respondents the balance of each share in the loss based on
Corp. Building P50,000
the computation of theP11,877.14
Adjustment Standards Report
excluding Travellers Multi-Indemnity in the amount of
F- Phil. P30,894.31 (P5,732.79-Zenith Insurance: P22,294.62, Phil.
84590 British: and P2,866.90, SSS Accredited) but the same was
refused, hence, this action.
British

Assco. I-Building In their answers, Philippine

70,000 British Assurance and Zenith
16,628.00
Co. Insurance Corporation admitted the material allegations in
the complaint, but denied liability on the ground that the
II-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.
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: that Fire
Policy No. 599 DV, covering the furniture and building of
complainants was secured by a certain Arsenio Chua,
mortgage creditor, for the purpose of protecting his
mortgage credit against the complainants; that the said
policy was issued in the name of AzucenaPalomo, only to
indicate that 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 insured was
Arsenio Chua and the complainants; that the premium due
on said fire policy was paid by Arsenio Chua; that
respondent Travellers is not liable to pay complainants.
On May 31, 1977, Tai Tong Chuache& Co. filed a complaint
in intervention claiming the proceeds of the fire Insurance
Policy No. F-559 DV, issued by respondent Travellers Multi-
Indemnity.
Travellers Insurance, in answer to the complaint in
intervention, alleged that the Intervenor is not entitled to
indemnity under its Fire Insurance Policy for lack of
insurable interest before the loss of the insured premises
and that the complainants, spouses Pedro and
AzucenaPalomo, had already paid in full their mortgage
indebtedness to the intervenor. 3
As adverted to above respondent Insurance Commission dismissed spouses
Palomos' complaint on the ground that the insurance policy subject of the
complaint was taken out by Tai Tong Chuache& Company, petitioner herein,
for its own interest only as mortgagee of the insured property and thus
complainant as mortgagors of the insured property have no right of action
against herein respondent. It likewise dismissed petitioner's complaint in
intervention in the following words:
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 1316 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 AzucenaPalomo 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 AzucenaPalomo 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.
 SECOND DIVISION 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
JOSEFINA P. REALUBIT, G.R. No. 178782 AmauryBiondo and the subsequent conduct of accounting,
Petitioner, liquidation of assets and division of shares of the joint
venture business.

Present: Let a copy hereof and the records of the case be remanded
- versus - to the trial court for appropriate proceedings.[4]
VELASCO, JR.,* J.,
BRION,**
Acting Chairperson, The Facts
ABAD,***
PEREZ, and
On 17 March 1994, petitioner Josefina Realubit (Josefina) entered into
SERENO, JJ.
a Joint Venture Agreement with Francis Eric AmauryBiondo (Biondo), a
French national, for the operation of an ice manufacturing business. With
PROSENCIO D. JASO and EDENG.
Josefina as the industrial partner and Biondo as the capitalist partner, the
JASO,
Respondents. Promulgated: 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
September 21, 2011
was purchased for the business.[5] For and in consideration of the sum
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -x of P500,000.00, however, Biondo subsequently executed a Deed of
Assignment dated 27 June 1997, transferring all his rights and interests in
DECISION
the business in favor of respondent Eden Jaso (Eden), the wife of
PEREZ, J.: respondent ProsencioJaso.[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
The validity as well as the consequences of an assignment of rights
Frenchmans share in the business and formally demanding an accounting
in a joint venture are at issue in this petition for review filed pursuant to
and inventory thereof as well as the remittance of their portion of its
Rule 45 of the 1997 Rules of Civil Procedure,[1] assailing the 30 April 2007
profits.[7]
[2]
Decision rendered by the Court of Appeals (CA) then Twelfth Division in
CA-G.R. CV No. 73861,[3] the dispositive portion of which states:
 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
existence of sufficient evidence from which the income, assets and the
supposed dissolution of the joint venture can be adequately reckoned. Upon
the finding, however, that the Spouses Jaso had been nevertheless
subrogated to Biondos rights in the business in view of their valid acquisition
of the latters share as capitalist partner,[10] the RTC disposed of the case in
the following wise:
WHEREFORE, defendants are ordered to submit to plaintiffs
a complete accounting and inventory of the assets and
liabilities of the joint venture from its inception to the
present, to allow plaintiffs access to the books and
accounting records of the joint venture, to deliver to
plaintiffs their share in the profits, if any, and to pay the
plaintiffs the amount of P20,000. for moral damages. The
claims for exemplary damages and attorneys fees are
denied for lack of basis.[11]
On appeal before the CA, the foregoing decision
was set aside in the herein assailed Decision dated 30 April
2007, upon the following findings and conclusions: (a) the
Spouses Jaso validly acquired Biondos share in the business
which had been transferred to and continued its operations
at 66-C Cenacle Drive, Sanville Subdivision, Project 6,
Quezon City and not dissolved as claimed by the Spouses
Realubit; (b) absent showing of Josefinas knowledge and
consent to the transfer of Biondos share, Eden cannot be
considered as a partner in the business, pursuant to Article
 1813 of the Civil Code of the Philippines; (c) while entitled to
Biondos share in the profits of the business, Eden cannot,
however, interfere with the management of the
partnership, require information or account of its
transactions and inspect its books; (d) the partnership
should first be dissolved before Eden can seek an
accounting of its transactions and demand Biondos share in
the business; and, (e) the evidence adduced before the RTC
do not support the award of moral damages in favor of the
Spouses Jaso.[12]
The Spouses Realubits motion for reconsideration of the foregoing
decision was denied for lack of merit in the CAs 28 June 2007
[13]
Resolution, hence, this petition.
The Issues
The Spouses Realubiturge the reversal of the assailed decision upon
the negative of the following issues, to wit:
A. WHETHER OR NOT THERE WAS A to their authenticity and due execution.[16]
VALID ASSIGNMENT OF RIGHTS TO THE JOINT
VENTURE.
B. WHETHER THE COURT MAY ORDER PETITIONER
[JOSEFINA REALUBIT] AS PARTNER IN THE JOINT
VENTURE TO RENDER [A]N ACCOUNTING TO ONE
WHO IS NOT A PARTNER IN SAID JOINT VENTURE.
C. WHETHER PRIVATE RESPONDENTS [SPOUSES JASO]
HAVE ANY RIGHT IN THE JOINT VENTURE AND IN
THE SEPARATE ICE BUSINESS OF PETITIONER[S].[14]
The Courts Ruling
We find the petition bereft of merit.
The Spouses Realubitargue 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
It cannot be gainsaid that, as a public document, the Deed of
Assignment Biondo executed in favor of Eden not only enjoys a presumption
of 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 document is, consequently, required to present evidence that is
clear, 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
[23]
clear and convincing evidence by the party alleging the same. Aside from
not being borne out by a comparison of Biondos signatures on the Joint
[24] [25]
Venture Agreement and the Deed of Assignment, 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 by certiorari under Rule 45 of the Rules of Court as this mode of
appeal is confined to questions of law.[33] Upon the principle that this Court
is not a trier of facts, we are not duty bound to examine the evidence WHEREFORE, the petition is DENIED for lack of merit and the
introduced by the parties below to determine if the trial and the appellate assailed CA Decision dated 30 April 2007 is, accordingly, AFFIRMED in toto.
[34]
courts correctly assessed and evaluated the evidence on record. Absent
SO ORDERED.
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.