G.R. No. 45662ENRIQUE CLEMENTE, plaintiff-appellee, vs.DIONISIO GALVAN, defendant-appellee. JOSE ECHEVARRIA, intervenor-appellant.Engracio F. Clemeña and Celedonio Bernardo for appellant.Vicente Bengson for defendant-appellee.No appearance for other party.DIAZ, J.:The intervenor Jose Echevarria having lost in the Court of First Instance of manila which rendered judgment against him, the pertinent portion of which reads: "and with respect to the complaint of the intervenor, the mortgage executed in his favor by plaintiff is declared null and void, and said complaint in intervention, as well as the counterclaim filed by the defendant against the intervenor, is dismissed, without pronouncement as to costs," he appealed to this court on the ground that, according to him, the lower court committed the errors assigned in his brief as follows:I. The court a quo erred in finding in the appealed decision that plaintiff was unable to take possession of the machines subject of the deed of mortgage Exhibit B either before or after the execution thereof.II. The court a quo likewise erred in deciding the present case against the intervenor-appellant, on the ground, among others, that "plaintiff has not adduced any evidence nor has he testified to show that the machines mortgaged by him to the intervenor have ever belonged to him, notwithstanding that said intervenor is his close relative.".III. The lower court also erred in declaring null and void the mortgage executed by plaintiff in favor of the intervenor and, thereby, dismissing the complaint in intervention.IV. The lower court lastly erred in ordering the receiver J. D. Mencarini to deliver to the defendant the aforesaid machines upon petition of the plaintiff.In order to have a clear idea of the question, it is proper to state the facts bearing on the case as they

appear in the decision and judgment of the lower court and in the documents which constitute all the evidence adduced by the parties during the trial.On June 6, 1931, plaintiff and defendant organized a civil partnership which they named "Galvan y Compañia" to engage in the manufacture and sale of paper and other stationery. they agreed to invest therein a capital of P100,000, but as a matter of fact they did not cover more than one-fifth thereof, each contributing P10,000. Hardly a year after such organization, the plaintiff commenced the present case in the above-mentioned court to ask for the dissolution of the partnership and to compel defendant to whom the management thereof was entrusted to submit an accounting of his administration and to deliver to him his share as such partner. In his answer defendant expressed his conformity to the dissolution of the partnership and the liquidation of its affairs; but by way of counterclaim he asked that, having covered a deficit incurred by the partnership amounting to P4,000 with his own money, plaintiff reimburse him of one-half of said sum. On petition of the plaintiff a receiver and liquidator to take charge of the properties and business for the partnership while the same was not yet definitely dissolved, was appointed, the person chosen being Juan D. Mencarini. The latter was already discharging the duties of his office when the court, by virtue of a petition ex parte of the plaintiff, issued the order of May 24, 1933, requiring said receiver to deliver to him (plaintiff) certain machines which were then at Nos. 705-707 Ylaya Street, Manila but authorizing him to charge their value of P4,500 against the portion which may eventually be due to said plaintiff. To comply with said order, the receiver delivered to plaintiff the keys to the place where the machines were found, which was the same place where defendant had his home; but before he could take actual possession of said machines, upon the strong opposition of defendant, the court, on motion of the latter, suspended the effects of its order of May 24, 1933. In the meantime the judgments rendered in cases Nos. 42794 and 43070 entitled

"Philippine Education Co., Inc. vs. Enrique Clemente" for the recovery of a sum of money, and "Jose Echevarria vs. Enrique Clemente", also for the recovery of a sum of money, respectively, were made executory; and in order to avoid the attachment and subsequent sale of the machines by the sheriff for the satisfaction from the proceeds thereof of the judgments rendered in the two cases aforecited, plaintiff agreed with the intervenor, who is his nephew, to execute, as he in fact executed in favor of the latter, a deed of mortgage Exhibit B encumbering the machines described in said deed in which it is stated that "they are situated on Singalong Street No. 1163", which is a place entirely different from the house Nos. 705 and 707 on Ylaya Street hereinbefore mentioned. The one year agreed upon in the deed of mortgage for the fulfillment by the plaintiff of the obligation he had contracted with the intervenor, having expired, the latter commenced case No. 49629 to collect his mortgage credit. The intervenor, as plaintiff in the said case, obtained judgment in his favor because the defendant did not interpose any defense or objection, and, moreover, admitted being really indebted to the intervenor in the amount set forth in the deed of mortgage Exhibit B. The machines which the intervenor said were mortgaged to him were then in fact in custodia legis, as they were under the control of the receiver and liquidator Juan D. Mencarini. It was, therefore, useless for the intervenor to attach the same in view of the receiver's opposition; and the question having been brought to court, it decided that nothing could be done because the receiver was not a party to the case which the intervenor instituted to collect his aforesaid credit. (Civil case No. 49629.) The question ended thus because the intervenor did not take any other step until he thought of joining in this case as intervenor.1. From the foregoing facts, it is clear that plaintiff could not obtain possession of the machines in question. The constructive possession deducible from the fact that he had the keys to the place where the machines were found (Ylaya Street Nos.

705-707), as they had been delivered to him by the receiver, does not help him any because the lower court suspended the effects of the other whereby the keys were delivered to him a few days after its issuance; and thereafter revoked it entirely in the appealed decision. Furthermore, when he attempted to take actual possession of the machines, the defendant did not allow him to do so. Consequently, if he did not have actual possession of the machines, he could not in any manner mortgage them, for while it is true that the oft-mentioned deed of mortgage Exhibit B was annotated in the registry of property, it is no less true the machines to which it refers are not the same as those in question because the latter are on Ylaya Street Nos. 705-707 and the former are on Singalong Street No. 1163. It can not be said that Exhibit B-1, allegedly a supplementary contract between the plaintiff and the intervenor, shows that the machines referred to in the deed of mortgage are the same as those in dispute and which are found on Ylaya Street because said exhibit being merely a private document, the same cannot vary or alter the terms of a public document which is Exhibit B or the deed of mortgage.2. The second error attributed to the lower court is baseless. The evidence of record shows that the machines in contention originally belonged to the defendant and from him were transferred to the partnership Galvan y Compania. This being the case, said machines belong to the partnership and not to him, and shall belong to it until partition is effected according to the result thereof after the liquidation.3. The last two errors attributed by the appellant to the lower court have already been disposed of by the considerations above set forth. they are as baseless as the previous ones.In view of all the foregoing, the judgment appealed from is affirmed, with costs against the appellant. So ordered.G.R. No. L-5963 May 20, 1953THE LEYTE-SAMAR SALES CO., and RAYMUNDO TOMASSI, petitioners, vs.SULPICIO V. CEA, in his capacity as Judge of the

Court of First Instance of Leyte and OLEGARIO LASTRILLA, respondents.Filomeno Montejo for petitioners.Sulpicio V. Cea in his own behalf.Olegario Lastrilla in his own behalf.BENGZON, J.:Labaled "Certiorari and Prohibition with preliminary Injunction" this petition prays for the additional writ ofmandamus to compel the respondent judge to give due course to petitioners' appeal from his order taxing costs. However, inasmuch as according to the answer, petitioners through their attorney withdrew their cash appeal bond of P60 after the record on appeal bond of P60 after the record on appeal had been rejected, the matter ofmandamus may be summarily be dropped without further comment.From the pleadings it appears that,In civil case No. 193 of the Court of First Instance of Leyte, which is a suit for damages by the Leyte-Samar Sales Co. (hereinafter called LESSCO) and Raymond Tomassi against the Far Eastern Lumber & Commercial Co. (unregistered commercial partnership hereinafter called FELCO), Arnold Hall, Fred Brown and Jean Roxas, judgment against defendants jointly and severally for the amount of P31,589.14 plus costs was rendered on October 29, 1948. The Court of Appeals confirmed the award in November 1950, minus P2,000 representing attorney's fees mistakenly included. The decision having become final, the sheriff sold at auction on June 9, 1951 to Robert Dorfe and Pepito Asturias "all the rights, interests, titles and participation" of the defendants in certain buildings and properties described in the certificate, for a total price of eight thousand and one hundred pesos. But on June 4, 1951 Olegario Lastrilla filed in the case a motion, wherein he claimed to be the owner by purchase on September 29, 1949, of all the "shares and interests" of defendant Fred Brown in the FELCO, and requested "under the law of preference of credits" that the sheriff be required to retain in his possession so much of the deeds of the auction sale as may be necessary "to pay his right". Over the plaintiffs' objection the judge in his order of June 13,

1951, granted Lastrilla's motion by requiring the sheriff to retain 17 per cent of the money "for delivery to the assignee, administrator or receiver" of the FELCO. And on motion of Lastrilla, the court on August 14, 1951, modified its order of delivery and merely declared that Lastrilla was entitled to 17 per cent of the properties sold, saying in part:

. . . el Juzgado ha encontrado que no se han respetado los derechos del Sr. Lastrilla en lo que se refiere a su adquiscicion de las acciones de C. Arnold Hall (Fred Brown) en la Far Eastern Lumber & Lumber Commercial C. porque la mismas han sido incluidas en la subasta.Es vedad que las acciones adquiridas por el Sr. Lastilla representan el 17 por ciento del capital de la sociedad "Far Eastern Lumber & Commercial Co., Inc., et al." pero esto no quiere decir que su vlor no esta sujeto a las fluctuaciones del negocio donde las invirtio.Se vendieron propiedades de la corporacion "Far Eastern Lumber & Co. Inc.," y de la venta solamente se obtuvo la cantidad de P8,100."En su virtud, se declara que el 17 por ciento de las propiedades vendidas en publica subasta pretenece al Sr. O Lastrilla y este tiene derecho a dicha porcion pero con la obligacion de pagar el 17 por ciento de los gastos for la conservacion de dichas propriedades por parte del Sheriff; . . . . (Annex K)

It is from this declaration and the subsequent orders to enforce it1 that the petitioners seek relief by certiorari, their position being the such orders were null and void for lack of jurisdiction. At their request a writ of preliminary injunction was issued here.The record is not very clear, but there are indications, and we shall assume for the moment, that Fred Brown (like Arnold Hall and Jean Roxas) was a partner of the FELCO, was defendant in Civil Case No. 193 as such partner,and that the properties sold at auction actually belonged to the FELCO partnership and the partners. We shall also assume

that the sale made to Lastrilla on September 29, 1949, of all the shares of Fred Brown in the FELCO was valid. (Remember that judgment in this case was entered in the court of first instance a year before.)The result then, is that on June 9, 1951 when the sale was effected of the properties of FELCO to Roberto Dorfe and Pepito Asturias, Lastilla was already a partner of FELCO.Now, does Lastrilla have any proper claim to the proceeds of the sale? If he was a creditor of the FELCO, perhaps or maybe. But he was no. The partner of a partnership is not a creditor of such partnership for the amount of his shares. That is too elementary to need elaboration.Lastrilla's theory, and the lower court's seems to be: inasmuch as Lastrilla had acquired the shares of Brown is September, 1949, i.e., before the auction sale and he was not a party to the litigation, such shares could not have been transferred to Dorfe and Austrilla.Granting arguendo that the auction sale and not included the interest or portion of the FELCO properties corresponding to the shares of Lastrilla in the same partnership (17%), the resulting situation would be — at most — that the purchasers Dorfe and Austrias will have to recognized dominion of Lastrillas over 17 per cent of the properties awarded to them.2 So Lastrilla acquired no right to demand any part of the money paid by Dorfe and Austrias to he sheriff any part of the money paid by Dorfe and Austrias to the sheriff for the benefit of FELCO and Tomassi, the plaintiffs in that case, for the reason that, as he says, his shares (acquired from Brown) could not have been and were not auctioned off to Dorfe and Austrias.Supposing however that Lastrillas shares have been actually (but unlawfully) sold by the sheriff (at the instance of plaintiffs) to Dorfe and Austrias, what is his remedy? Section 15, Rule 39 furnishes the answer.Precisely, respondents argue, Lastrilla vindicated his claim by proper action, i.e., motion in the case. We ruled once that "action" in this section means action as defined in section 1, Rule 2.3 Anyway his remedy is

to claim "the property", not the proceeds of the sale, which the sheriff is directed by section 14, Rule 39 to deliver unto the judgment creditors.In other words, the owner of property wrongfully sold may not voluntarily come to court, and insist, "I approve the sale, therefore give me the proceeds because I am the owner". The reason is that the sale was made for the judgment creditor (who paid for the fees and notices), and not for anybody else.On this score the respondent judge's action on Lastrilla's motion should be declared as in excess of jurisdiction, which even amounted to want of jurisdiction, which even amounted to want of jurisdiction, considering specially that Dorfe and Austrias, and the defendants themselves, had undoubtedly the right to be heard—but they were not notified.4

Why was it necessary to hear them on the merits of Lastrilla's motion?Because Dorfe and Austrillas might be unwilling to recognized the validity of Lastrilla's purchase, or, if valid, they may want him not to forsake the partnership that might have some obligations in connection with the partnership properties. And what is more important, if the motion is granted, when the time for redemptioner seventeen per cent (178%) less than amount they had paid for the same properties.The defendants Arnold Hall and Jean Roxas, eyeing Lastrilla's financial assets, might also oppose the substitution by Lastrilla of Fred Brown, the judgment against them being joint and several. They might entertain misgivings about Brown's slipping out of their common predicament through the disposal of his shares.Lastly, all the defendants would have reasonable motives to object to the delivery of 17 per cent of the proceeds to Lustrial, because it is so much money deducted, and for which the plaintiffs might as another levy on their other holdings or resources. Supposing of course, there was no fraudulent collusion among them.Now, these varied interest of necessity make Dorfe, Asturias and the defendants indispensable parties to

the motion of Lastrilla — granting it was step allowable under our regulations on execution. Yet these parties were not notified, and obviously took no part in the proceedings on the motion.

A valid judgment cannot be rendered where there is a want of necessary parties, and a court cannot properly adjudicate matters involved in a suit when necessary and indispensable parties to the proceedings are not before it. (49 C.J.S., 67.)Indispensable parties are those without whom the action cannot be finally determined. In a case for recovery of real property, the defendant alleged in his answer that he was occupying the property as a tenant of a third person. This third person is an indispensable party, for, without him, any judgment which the plaintiff might obtain against the tenant would have no effectiveness, for it would not be binding upon, and cannot be executed against, the defendant's landlord, against whom the plaintiff has to file another action if he desires to recover the property effectively. In an action for partition of property, each co-owner is an indispensable party. (Moran, Comments, 1952 ed. Vol. I, p. 56.) (Emphasis supplied.)

Wherefore, the orders of the court recognizing Lastrilla's right and ordering payment to him of a part of the proceeds were patently erroneous, because promulgated in excess or outside of its jurisdiction. For this reason the respondents' argument resting on plaintiffs' failure to appeal from the orders on time, although ordinarily decisive, carries no persuasive force in this instance.For as the former Chief Justice Dr. Moran has summarized in his Comments, 1952 ed. Vol. II, p. 168 —

. . . And in those instances wherein the lower court has acted without jurisdiction over the subject-matter, or where the order or judgment complained of is a patent nullity, courts have gone even as far as to

disregard completely the questions of petitioner's fault, the reason being, undoubtedly, that acts performed with absolute want of jurisdiction over the subject-matter are void ab initio and cannot be validated by consent, express or implied, of the parties. Thus, the Supreme Court granted a petition for certiorari and set aside an order reopening a cadastral case five years after the judgment rendered therein had become final. In another case, the Court set aside an order amending a judgment acquired a definitive character. And still in another case, an order granting a review of a decree of registration issued more than a year ago had been declared null void. In all these case the existence of the right to appeal has been recitals was rendered without any trial or hearing, and the Supreme Court, in granting certiorari, said that the judgment was by its own recitals a patent nullity, which should be set aside though an appeal was available but was not availed of. . . .

Invoking our ruling in Melocotones vs. Court of First Instance, (57 Phil., 144), wherein we applied the theory of laches to petitioners' 3-years delay in requesting certiorari, respondents point out that whereas the orders complained of herein were issued in June 13, 1951 and August 14, 1951 this special civil action was not filed until August 1952. It should be observed that the order of June 13 was superseded by that of August 14, 1951. The last order merely declared "que el 17 por ciento de la propiedades vendidas en publica subasta pertenece at Sr. Lastrilla y este tiene derecho a dicha porcion." This does not necessarily mean that 17 per cent of the money had to be delivered to him. It could mean, as hereinbefore indicated, that the purchasers of the property (Dorfe and Asturias) had to recognize Lastrilla's ownership. It was only on April 16, 1952 (Annex N) that the court issued an order directing the sheriff "to tun over" to Lastrilla "17 per cent of the total proceeds of the auction sale". There

is the order that actually prejudiced the petitioners herein, and they fought it until the last order of July 10,. 1952 (Annex Q). Surely a month's delay may not be regarded as laches.In view of the foregoing, it is our opinion, and we so hold, that all orders of the respondents judge requiring delivery of 17 per cent of the proceeds of the auction sale to respondent Olegario Lastrilla are null and void; and the costs of this suit shall be taxed against the latter. The preliminary injunction heretofore issued is made permanent. So ordered.