Realubit vs. Jaso

A conveyance by a partner of his whole interest in a partnership does not dissolve the partnership nor make the assignee a partner, but merely entitles the assignee to receive the assigning partner's share of the profits; however, the assignee may seek judicial dissolution of the partnership under Article 1831 of the Civil Code. A notarized deed of assignment is a public document that enjoys the presumption of regularity and is prima facie evidence of the facts stated therein, and a party assailing its authenticity must present clear, convincing, and more than merely preponderant evidence.

Petitioner Josefina P. Realubit and Francis Eric Amaury Biondo, a French national, entered into a Joint Venture Agreement on 17 March 1994 for the operation of an ice manufacturing business. Josefina was the industrial partner and Biondo the capitalist partner, with each entitled to 40% of the net profit and the remaining 20% to be used for payment of the ice making machine. Joint ventures are governed by the law on partnerships, which are based on mutual agency or delectus personae, and the relevant provisions of the Civil Code on partnerships, particularly Articles 1812, 1813, and 1831, control the rights and obligations arising from the assignment of a partner's interest.

On 17 March 1994, petitioner Josefina P. Realubit entered into a Joint Venture Agreement with Francis Eric Amaury 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.

For and in consideration of the sum of ₱500,000.00, 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, the wife of respondent Prosencio Jaso. With Biondo's eventual departure from the country, the Spouses Jaso caused their lawyer to send Josefina a letter dated 19 February 1998, apprising her of their acquisition of said Frenchman's share in the business and formally demanding an accounting and inventory thereof as well as the remittance of their portion of its profits.

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, 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. The complaint alleged, among other matters, that the Spouses Realubit had no gainful occupation or business prior to their joint venture with Biondo; that with the income of the business which earned not less than ₱3,000.00 per day, they were able to acquire the two-storey building as well as the land on which the joint venture's ice plant stands, another building used as their office and/or residence, and six delivery vans; and that aside from appropriating for themselves the income of the business, the Spouses Realubit fraudulently concealed the funds and assets thereof through their relatives, associates, or dummies.

Served with summons, the Spouses Realubit filed their Answer dated 21 October 1998, specifically denying the material allegations of the complaint. Claiming that they had been engaged in the tube ice trading business under a single proprietorship even before their dealings with Biondo, the Spouses Realubit averred that their business partner had left the country in May 1997 and could not have executed the Deed of Assignment which bears a signature markedly different from that which he affixed on their Joint Venture Agreement; that they refused the Spouses Jaso's demand in view of the dubious circumstances surrounding their acquisition of Biondo's share in the business which was established at Don Antonio Heights, Commonwealth Avenue, Quezon City; that said business had already stopped operations on 13 January 1996 when its plant shut down after its power supply was disconnected by MERALCO for non-payment of utility bills; and that it was their own tube ice trading business which had been moved to 66-C Cenacle Drive, Sanville Subdivision, Project 6, Quezon City that the Spouses Jaso mistook for the ice manufacturing business established in partnership with Biondo.

The RTC tried the case on its merits and rendered 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 could be adequately reckoned, but finding that the Spouses Jaso had been subrogated to Biondo's rights in the business in view of their valid acquisition of the latter's share as capitalist partner. On appeal, the CA set aside the RTC Decision, finding that the Spouses Jaso validly acquired Biondo's share in the business which had been transferred to and continued its operations at 66-C Cenacle Drive, Sanville Subdivision, Project 6, Quezon City and was not dissolved; that absent showing of Josefina's knowledge and consent to the transfer, Eden could not be considered a partner pursuant to Article 1813 of the Civil Code; that while entitled to Biondo's share in the profits, Eden could not interfere with the management of the partnership, require information or account of its transactions, and inspect its books; that the partnership should first be dissolved before Eden could seek an accounting and demand Biondo's share; and that the evidence did not support the award of moral damages.

• Validity of the Assignment: The Spouses Realubit argued that both the RTC and the CA inordinately gave premium to the notarization of the 27 June 1997 Deed of Assignment, and that the failure to present the assignor Biondo or the witnesses to the document meant that the testimony of the Notary Public Rolando Diaz did not suffice to establish its authenticity and/or validity. They insisted that notarization did not automatically and conclusively confer validity on the deed, since it was still entirely possible that Biondo did not execute the deed or appear before the notary public.
• Forgery of Signature: The Spouses Realubit made a bare assertion that Biondo's signature on the Deed of Assignment appeared to be forged, markedly different from that which he affixed on the Joint Venture Agreement.
• Right to Accounting: The Spouses Realubit questioned whether the Court may order petitioner Josefina Realubit as partner in the joint venture to render an accounting to one who is not a partner in said joint venture.
• Rights in the Joint Venture and Separate Business: The Spouses Realubit questioned whether the private respondents have any right in the joint venture and in the separate ice business of the petitioners, insisting that the joint venture had already been dissolved and that the ice manufacturing business at 66-C Cenacle Drive was merely a continuation of their previously operated single proprietorship business.

N/A — The decision does not separately recount the respondents' arguments beyond their position as reflected in their complaint and their successful defense of the CA Decision.

• Validity of the Assignment: Whether there was a valid assignment of rights to the joint venture.
• Right to Accounting: Whether the Court may order petitioner Josefina Realubit as partner in the joint venture to render an accounting to one who is not a partner in said joint venture.
• Rights in the Joint Venture and Separate Business: Whether private respondents Spouses Jaso have any right in the joint venture and in the separate ice business of the petitioners.

• Validity of the Assignment: Yes. The Deed of Assignment was valid. As a public document acknowledged before a notary public, it enjoyed the presumption of regularity and was prima facie evidence of the facts stated therein, and the Spouses Realubit failed to present clear, convincing, and more than merely preponderant evidence to overcome it.
• Right to Accounting: No, not as a partner, but the assignee may seek dissolution. Under Article 1813 of the Civil Code, the assignment did not make Eden a partner or entitle her to interfere in management or require an accounting during the continuance of the partnership; however, under Article 1831, the purchaser of a partner's interest may apply for judicial dissolution, after which the assignee is entitled to receive the assignor's interest and may require an account.
• Rights in the Joint Venture and Separate Business: Yes, the Spouses Jaso have rights in the joint venture. They are entitled to Biondo's share in the profits, and the CA correctly granted Eden's prayer for dissolution of the joint venture. The claim regarding the separate ice business involved questions of fact not proper for review under Rule 45.

• Validity of the Assignment: The Court applied the settled rule that documents acknowledged before notaries public are public documents admissible in evidence without necessity of preliminary proof as to their authenticity and due execution. As a public document, the Deed of Assignment not only enjoys a presumption of regularity but is also considered prima facie evidence of the facts therein stated. A party assailing the authenticity and due execution of a notarized document is required to present evidence that is clear, convincing, and more than merely preponderant. The Spouses Realubit failed to discharge this burden, and both the RTC and the CA correctly upheld the authenticity and validity of the Deed of Assignment upon the combined strength of the disputable presumptions and the testimonies elicited from Eden and Notary Public Rolando Diaz. As for the bare assertion of forgery, the Court noted that like fraud, forgery is never presumed and must be proved by clear and convincing evidence by the party alleging it. The forgery claim was not borne out by a comparison of Biondo's signatures on the Joint Venture Agreement and the Deed of Assignment, and was debunked by Biondo's duly authenticated certification dated 17 November 1998 confirming the transfer of his interest in the business in favor of Eden.
• Right to Accounting: The Court quoted Article 1813 of the Civil Code in full, which provides that a conveyance by a partner of his whole interest in the partnership does not itself dissolve the partnership, nor, 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; it merely entitles the assignee to receive in accordance with his contracts the profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies. In the case of a dissolution of the partnership, the assignee is entitled to receive his assignor's interest and may require an account from the date only of the last account agreed to by all the partners. The Court cited Tolentino's Civil Code commentary: "The transfer by a partner of his partnership interest does not make the assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the management of the partnership business or to receive anything except the assignee's profits. The assignment does not purport to transfer an interest in the partnership, but only a future contingent right to a portion of the ultimate residue as the assignor may become entitled to receive by virtue of his proportionate interest in the capital." Since a partner's interest in the partnership includes his share in the profits under Article 1812, the CA committed no reversible error in ruling that the Spouses Jaso are entitled to Biondo's share in the profits, despite Josefina's lack of consent to the assignment. Although Eden did not become a partner as a consequence of the assignment and did not acquire the right to require an accounting of the partnership business, the CA correctly granted her prayer for dissolution of the joint venture conformably with the right granted to the purchaser of a partner's interest under Article 1831 of the Civil Code.
• Rights in the Joint Venture and Separate Business: The Court refused to entertain the Spouses Realubit's insistence on the supposed fact that the joint venture had already been dissolved and that the ice manufacturing business at 66-C Cenacle Drive was merely a continuation of their previously operated single proprietorship business, because these involved questions of fact. 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. The Court is not a trier of facts and is not duty bound to examine the evidence introduced by the parties below to determine if the trial and appellate courts correctly assessed and evaluated the evidence on record. Absent a showing that the factual findings complained of are devoid of support by the evidence on record or that the assailed judgment is based on misapprehension of facts, the Court will limit itself to reviewing only errors of law. Both the RTC and the CA 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 Josefina and Biondo. As a rule, findings of fact of the CA are binding and conclusive upon the Court and will not be reviewed or disturbed on appeal unless the case falls under any of the recognized exceptions, none of which applied to the case.

• Effect of Assignment of a Partner's Interest (Article 1813, Civil Code) — A conveyance by a partner of his whole interest in the partnership does not itself dissolve the partnership, nor, 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; it merely entitles the assignee to receive in accordance with his contracts the profits to which the assigning partner would otherwise be entitled. The Court applied this doctrine to hold that Eden did not become a partner by virtue of the assignment but was entitled to Biondo's share of the profits.
• Right of Assignee to Seek Dissolution (Article 1831, Civil Code) — On the application of the purchaser of a partner's interest under Article 1813 or 1814, the court shall decree a dissolution: (1) after the termination of the specified term or particular undertaking; or (2) at any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued. The Court applied this doctrine to uphold the CA's grant of Eden's prayer for dissolution of the joint venture.
• Presumption of Regularity of Notarized Documents — 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. As public documents, they enjoy a presumption of regularity and are considered prima facie evidence of the facts stated therein. A party assailing the authenticity and due execution of a notarized document is required to present evidence that is clear, convincing, and more than merely preponderant. The Court applied this doctrine to uphold the validity of the Deed of Assignment.
• Forgery Never Presumed — Like fraud, forgery is never presumed and must be proved by clear and convincing evidence by the party alleging the same. The Court applied this doctrine to reject the Spouses Realubit's bare assertion that Biondo's signature on the Deed of Assignment was forged.
• Rule 45 Limited to Questions of Law — 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. The Court applied this doctrine to decline review of the factual findings that the joint venture was not dissolved and that the ice manufacturing business at 66-C Cenacle Drive was the same business established by Josefina and Biondo.

• "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." — This passage articulates the standard of proof required to overcome the presumption of regularity of a notarized document, which was central to the Court's ruling on the validity of the Deed of Assignment.
• "The transfer by a partner of his partnership interest does not make the assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the management of the partnership business or to receive anything except the assignee's profits. The assignment does not purport to transfer an interest in the partnership, but only a future contingent right to a portion of the ultimate residue as the assignor may become entitled to receive by virtue of his proportionate interest in the capital." — This passage, quoted from Tolentino's Civil Code commentary, defines the legal effect of an assignment of a partner's interest and was the basis for the Court's ruling that Eden was entitled to profits but did not become a partner.
• "Although Eden did not, moreover, become a partner as a consequence of the assignment and/or acquire the right to require an accounting of the partnership business, the CA correctly granted her prayer for dissolution of the joint venture conformably with the right granted to the purchaser of a partner's interest under Article 1831 of the Civil Code." — This passage states the Court's resolution of the accounting issue, distinguishing between the assignee's lack of management rights during the partnership's continuance and the assignee's right to seek dissolution.

• Cavile vs. Heirs of Clarita Cavile, 448 Phil. 302, 315 (2003) — Cited as the settled rule that documents acknowledged before notaries public are public documents admissible in evidence without necessity of preliminary proof as to their authenticity and due execution.
• Potenciano vs. Reynoso, 449 Phil. 396, 408 (2003) — Cited for the proposition that a public document enjoys a presumption of regularity.
• Spouses Caoili vs. Court of Appeals, 373 Phil. 122, 139 (1999) — Cited for the proposition that a public document is considered prima facie evidence of the facts stated therein.
• Manongsong vs. Estimo, 452 Phil. 862, 877-878 (2003) — Cited for the rule that a party assailing the authenticity and due execution of a notarized document must present evidence that is clear, convincing, and more than merely preponderant.
• Maestrado vs. Court of Appeals, 384 Phil. 418, 435 (2000) — Cited for the proposition that fraud is never presumed.
• Aloria vs. Clemente, 518 Phil. 764, 776 (2006) — Cited for the proposition that forgery is never presumed and must be proved by clear and convincing evidence by the party alleging it.
• Heirs of Tan Eng Kee vs. Court of Appeals, 396 Phil. 68, 80-81 (2000) — Cited for the rule that joint ventures are governed by the law on partnerships.
• Tocao vs. Court of Appeals, 396 Phil. 166, 184 (2000) — Cited for the proposition that partnerships are based on mutual agency or delectus personae.
• Goyena vs. Ledesma-Gustilo, 443 Phil. 150, 158 (2003) — Cited for the doctrine that questions of fact are not proper subjects of appeal by certiorari under Rule 45.
• Romualdez-Licaros vs. Licaros, 449 Phil. 824, 837 (2003) — Cited for the principle that the Court is not a trier of facts.
• Tsai vs. Court of Appeals, 418 Phil. 606, 617 (2001) — Cited for the rule that absent a showing that factual findings are devoid of support by the evidence, the Court will limit itself to reviewing only errors of law.
• Spouses Batingal vs. Court of Appeals, 403 Phil. 780, 788 (2001) — Cited for the rule that findings of fact of the CA are binding and conclusive upon the Court.
• Bank of the Phil. Islands vs. Leobrera, 461 Phil. 461, 465 (2003) — Cited for the rule that findings of fact of the CA will not be reviewed or disturbed on appeal.
• Spouses Sevilla vs. Court of Appeals, G.R. No. 150284, 22 November 2010, 635 SCRA 508, 514-515 — Cited for the recognized exceptions to the rule that findings of fact of the CA are binding and conclusive.

• Article 1813, Civil Code of the Philippines — The central provision applied in this case. It provides that a conveyance by a partner of his whole interest in the partnership does not itself dissolve the partnership, nor entitle the assignee to interfere in management or require an accounting during the continuance of the partnership, but merely entitles the assignee to receive the profits to which the assigning partner would otherwise be entitled. The Court applied this to hold that Eden was entitled to Biondo's share of profits but did not become a partner.
• Article 1831, Civil Code of the Philippines — Provides that on the application of the purchaser of a partner's interest under Article 1813 or 1814, the court shall decree a dissolution after the termination of the specified term or particular undertaking, or at any time if the partnership was a partnership at will when the interest was assigned. The Court applied this to uphold the CA's grant of Eden's prayer for dissolution.
• Article 1812, Civil Code of the Philippines — Provides that a partner's interest in the partnership includes his share in the profits. The Court cited this to support its ruling that the Spouses Jaso are entitled to Biondo's share in the profits.
• Article 1783, Civil Code of the Philippines — Defines a particular partnership as one which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation. The Court cited this in likening a joint venture to a particular partnership.
• Rule 45, 1997 Rules of Civil Procedure — The procedural basis of the petition, which confines appeals by certiorari to questions of law. The Court applied this to decline review of the factual findings regarding the dissolution of the joint venture and the identity of the ice manufacturing business.

Presbitero J. Velasco, Jr., Arturo D. Brion, Roberto A. Abad, and Maria Lourdes P. A. Sereno concurred in the decision. Arturo D. Brion was designated as Acting Chairperson, and Presbitero J. Velasco, Jr. and Roberto A. Abad were designated as Additional Members.

N/A — No dissenting opinions are noted in the case text.