21 Singsong V ISabela Sawmill, GR No. L-27343, February 28. 1979 PDF
21 Singsong V ISabela Sawmill, GR No. L-27343, February 28. 1979 PDF
nullity of the contract if he is prejudiced in his rights with respect to one of the
contracting parties, and can show detriment which would positively result to him
from the contract in which he has no intervention.
Page 3 of 16
No. L-27343. February 28, 1979. the criterion of first ascertaining the nature of the principal action or
MANUEL G. SINGSONG JOSE BELZUNCE, AGUSTIN E. remedy sought. If it is primarily for the recovery of a sum of money,
TONSAY, JOSE L. ESPINOS, BACOLOD SOUTHERN the claim is considered capable of pecuniary estimation, and whether
LUMBER YARD, and OPPEN, ESTEBAN, INC., plaintiffs- jurisdiction is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic
appellees, vs. ISABELA SAWMILL, MARGARITA G.
issue is something other than the right to recover a sum of money,
SALDAJENO and her husband CECILIO SALDAJENO LEON
where the money claim is purely incidental to, or a consequence of,
GARIBAY, TIMOTEO TUBUNGBANUA, and THE the principal relief sought, this Court has considered such actions as
PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL, cases where the subject of the litigation may not be estimated in terms
defendants, MARGARITA G. SALDAJENO and her husband of money, and are cognizable exclusively by courts of first instance.
CECILIO SALDAJENO, defendants-appellants. Same; Same; Court of First Instance or a branch thereof has
Remedial Law; Jurisdiction; Question of nullity of assignment of authority and jurisdiction to take cognizance of and to act in suits to
rights with chattel mortgage is not capable of pecuniary estimation annul final and executory judgments rendered by another Court of
and falls within the jurisdiction of the Court of First First Instance or by another branch of the same court; Old doctrines
InstanceJurisdiction of all courts defined in Judiciary Act; Courts of on the matter re-examined and reversed.—In December 1971,
First Instance have exclusive original jurisdiction over all cases whose however, this Court re-examined and reversed its earlier doctrine on
subject matters are not capable of pecuniary estimation.—This content the matter. In Dulap vs. Court of Appeals, this Tribunal, speaking
tion is devoid of merit because all the plaintiffs also asked for the through Mr. Justice Villamor declared: xxx “The present doctrine
nullity of the assignment of right with chattel mortgage entered into which postulate that one court or one branch of a court may not annul
by and between Margarita G. Saldajeno and her former partners Leon the judgment of another court or branch, not only opens the door to a
Garibay and Timoteo Tubungbanua. This cause of action is not violation of Section 2 of Rule 4, (of the rules of Court) but also limit
capable of pecuniary estimation and falls under the jurisdiction of the the opportunity for the application of said rule. “Our conclusion must
Court of First Instance. Where the basic issue is something more than therefore be that a court of first instance or a branch thereof has the
the right to recover a sum of money and where the money claim is authority and jurisdiction to take cognizance of, and to act in, suit to
purely incidental to or a consequence of the principal relief sought, annul final and executory judgment or order rendered by another
the action is as a case where the subject of the litigation is not capable court of first instance or by another branch of the same court. . .” In
of pecuniary estimation and is cognizable exclusively by Philippines, February 1974 this Court reiterated the ruling in the Dulap case. In
in so far as the authority thereof depends upon the nature of the light of the latest ruling of the Supreme Court, there is no doubt
litigation, is defined in the amended Judiciary Act, pursuant to which that one branch of the Court of First Instance of Negros Occidental
courts of first instance shall have exclusive original jurisdiction over can take cognizance of an action to nullify a final judgment of the
any case the subject matter of which is not capable of pecuniary other two branches of the same court.
estimation. An action for the annulment of a judgment and an order Civil Law; Partnership; Dissolution; When the partnership is
of a court of justice belongs to this category. dissolved, the partnership is not terminated but continues until
Same; Same; Same; Criterion in determining whether an action winding up of business.—It is true that the dissolution of a
is one the subject matter of which is not capable of pecuniary partnership is caused by any partner ceasing to be associated in the
estimation to vest jurisdiction in Court of First Instance or another carrying on of the business. However, on dissolution, the partnership
court.—In determining whether an action is one the subject matter of is not terminated but continuous until the winding up of the business.
which is not capable of pecuniary estimation, this Court has adopted The remaining partners did not terminate the business of the
Page 4 of 16
partnership “Isabela Sawmill”. Instead of winding up the business of blame for not insisting on the liquidation of the assets of the
the partnership, they continued the business still in the name of said partnership. She even agreed to let Leon Garibay and Timoteo
partnership. It is expressly stipulated in the memorandumagreement Tubungbanua continue doing the business of the partnership “Isabela
that the remaining partners had constituted themselves as the Sawmill” by entering into the memorandum-agreement with them.
partnership entity, the “Isabela Sawmill.” Although it may be presumed that Margarita G. Saldajeno had acted
Same; Same; Properties is dissolved but unliquidated in good faith, the appellees also acted in good faith in extending credit
partnership which was mortgaged, judicially foreclosed and then sold to the partnership. Where one of two innocent persons must suffer,
at public auction to the partner who had withdrawn still belong to that person who gave occasion for the damages to be caused must bear
partnership and the said properties as well as of the withdrawn the consequences. Had Margarita G. Saldajeno not entered into the
partner are answerable to liabilities of partnership and to innocent memorandum-agreement allowing Leon Garibay and Timoteo
third persons.—There was no liquidation of the assets of the Tubungbanua to continue doing the business of the partnership, the
partnership. The remaining partners, Leon Garibay and Timoteo appellees would not have been misled into thinking that they were
Tubungbanua. continued doing the business of the partnership in the still dealing with the partnership “Isabela Sawmill”. Under the facts,
name of “Isabela Sawmill”. They used the properties of said it is of no moment that technically speaking the partnership “Isabela
partnership. The properties mortgaged to Margarita G. Saldajeno by Sawmill” was dissolved by the withdrawal therefrom of Margarita G.
the remaining partners, Leon Garibay and Timoteo Tubungbanua, Saldajeno. The partnership was not terminated and it continued
belonged, to the partnership “Isabela Sawmill”. The appellant, doing business through the two remaining partners.
Margarita G. Saldajeno, was correctly held liable by the trial court Same; Contracts; General rule is that a person not a party to a
because she purchased at public auction the properties of the contract cannot assail the contract; Exception to the rule is when
partnership which were mortgaged to her. although not a party his rights are prejudiced with respect to one of the
Same; Same; Same; Partner who had withdraw from partnership contracting parties; Case at bar.—As a rule, a contract cannot be
is relieved from partnership liability only when there is liquidation of assailed by one who is not a party thereto. However, when a contract
assets of partnership and his withdrawal had been published; Where prejudices the rights of a third person, he may file an action to annul
a former partner entered into agreement with remaining partners to the contract. This Court has held that a person, who is not a party
continue business of partnership and third parties were misled into obliged principally or subsidiarily under a contract, may exercise an
believing that they are dealing with, the same old partnership, that action for nullity of the contract if he is prejudiced in his rights with
partner who withdrawn is still liable to partnership liabilities; Where respects to one of the contracting parties, and can show detriment
one of two persons must suffer, that person who gave occasion for the which would positively result to him from the contract in which he
damages to be caused must hear consequences.—It does not appear has no intervention. The plaintiffs-appellees were prejudiced in their
that the withdrawal of Margarita G. Saldajeno from the partnership rights by the execution of the chattel mortgage over the properties of
was published in the newspapers. The appellees and the public in the partnership “Isabela Sawmill” in favor of Margarita G. Saldajeno
general had a right to expect that whatever credit they extended to by the remaining partners, Leon Garibay and Timoteo Tubungbanua.
Leon Garibay and Timoteo Tubungbanua doing the business in the Hence, said appellees have a right to file the action to nullify the
name of the partnership “Isabela Sawmill” could be enforced against chattel mortgage in question.
the properties of said partnership. The judicial foreclosure of the Attorney’s Fees; Attorney’s fees not awarded when absent a
chattel mortgage executed in favor of Margarita G. Saldajeno did not showing of wanton disregard of rights of affected parties; Case at
relieve her from liability to the creditors of the partnership. The bar.—The portion of the decision appealed from ordering the
appellant, Margarita G. Saldajeno, cannot complain. She is partly to appellants to pay attorney’s fees to the plaintiffs-appellees cannot be
Page 5 of 16
Republic of the Philippines the complaint on June 5, 1959; (4) that the same defendant
SUPREME COURT is indebted to the plaintiff Manuel G. Singsong in the total
Manila amount of P5,723.50, with interest thereon at the rate of 1
% per month from May 6, 1959, (the date of the statements
FIRST DIVISION of account, Exhs. "L" and "M"), and 25% of the total
indebtedness at the time of payment, for attorneys' fees,
G.R. No. L-27343 February 28, 1979 both interest and attorneys fees being stipulated in Exhs. "I"
to "17", inclusive; (5) that the same defendant is indebted to
the plaintiff Agustin E. Tonsay in the amount of P933.73,
MANUEL G. SINGSONG, JOSE BELZUNCE, AGUSTIN E. TONSAY,
with legal interest thereon from the filing of the complaint on
JOSE L. ESPINOS, BACOLOD SOUTHERN LUMBER YARD, and
June 5, 1959; (6) that the same defendant is indebted to the
OPPEN, ESTEBAN, INC., plaintiffs-appellees,
plaintiff Jose L. Espinos in the amount of P1,579.44, with
vs.
legal interest thereon from the filing of the complaint on
ISABELA SAWMILL, MARGARITA G. SALDAJENO and her husband
June 5, 1959; (7) that the same defendant is indebted to the
CECILIO SALDAJENO LEON GARIBAY, TIMOTEO TUBUNGBANUA,
plaintiff Bacolod Southern Lumber Yard in the amount of
and THE PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL,
Pl,048.78, with legal interest thereon from the filing of the
defendants, MARGARITA G. SALDAJENO and her husband CECILIO
complaint on June 5, 1959; (8) that the same defendant is
SALDAJENO, defendants-appellants.
indebted to the plaintiff Jose Belzunce in the amount of
P2,052.10, with legal interest thereon from the filing of the
complaint on June 5. 1959; (9) that the defendant Margarita
G. Saldajeno, having purchased at public auction the
FERNANDEZ, J.: assets of the defendant partnership over which the plaintiffs
have a preferred right, and having sold said assets for P
This is an appeal to the Court of Appeals from the judgment of the Court of 45,000.00, is bound to pay to each of the plaintiffs the
First Instance of Negros Occidental in Civil Cage No. 5343, entitled respective amounts for which the defendant partnership is
"Manuel G. Singson, et all vs. Isabela Sawmill, et al.,", the dispositive held indebted to, them, as above indicated and she is
portion of which reads: hereby ordered to pay the said amounts, plus attorneys
fees equivalent to 25% of the judgment in favor of the
IN VIEW OF THE FOREGOING CONSIDERATIONS, it is plaintiff Manuel G. Singson, as stipulated in Exhs. "I" "to I-
hereby held. (1) that the contract, Appendix "F", of the 17", inclusive, and 20% of the respective judgments in favor
Partial Stipulation of Facts, Exh. "A", has not created a of the other plaintiffs, pursuant to. Art. 2208, pars. (5) and
chattel mortgage lien on the machineries and other chattels (11), of the Civil Code of the Philippines; (10) The
mentioned therein, all of which are property of the defendants Leon Garibay and Timoteo Tibungbanua are
defendant partnership "Isabela Sawmill", (2) that the hereby ordered to pay to the plaintiffs the respective
plaintiffs, as creditors of the defendant partnership, have a amounts adjudged in their favor in the event that said
preferred right over the assets of the said partnership and plaintiffs cannot recover them from the defendant Margarita
over the proceeds of their sale at public auction, superior to G. Saldajeno and the surety on the bond that she has filed
the right of the defendant Margarita G. Saldajeno, as for the lifting of the injunction ordered by this court upon the
creditor of the partners Leon Garibay and Timoteo commencement of this case.
Tubungbanua; (3) that the defendant Isabela Sawmill' is
indebted to the plaintiff Oppen, Esteban, Inc. in the amount The cross-claim cf the defendant Margarita G. Saldajeno
of P1,288.89, with legal interest thereon from the filing of against the defendants Leon Garibay arid Timoteo
Page 7 of 16
Tubungbanua is hereby discussed Margarita G. Saldajeno (3) That the so-called Chattel Mortgage executed by the
shall pay the costs. defendant Leon Garibay and Timoteo Tubungbanua in
favor of the defendant Margarita G. Saldajeno on May 26,
SO ORDERED.1 1958 be declared null and void being in fraud of creditors of
the defendant partnership and without valuable
In a resolution promulgated on February 3, 1967, the Court of Appeals consideration insofar as the said defendant is concerned:
certified the records of this case to the Supreme Court "considering that the
resolution of this appeal involves purely questions or question of law over (4) That the Honorable Court order the sale of public
which this Court has no jurisdiction ...2 auction of the assets of the defendnat partnership in case
the latter fails to pay the judgment that the plaintiffs may
On June 5. 1959, Manuel G. Singsong, Jose Belzunce, Agustin E. Tonsay, recover in the action, with instructions that the proceeds of
Jose L. Espinos, Bacolod Southern Lumber Yard, and Oppen, Esteban, the sale b e applied in payment of said judgment before any
Inc. filed in the Court of first Instance of Negros Occidental, Branch I, part of saod proceeds is paid to the defendant Margarita G.
against "Isabela Sawmill", Margarita G. Saldajeno and her husband Cecilio Saldajeno;
Saldajeno, Leon Garibay, Timoteo Tubungbanua and the Provincial Sheriff
of Negros Occidental a complaint the prayer of which reads: (5) That the defendant Leon Garibay, Timoteo
Tubungbanua, and Margarita G. Saldajeno be declared
WHEREFORE, the plaintiffs respectfully pray: jointly liable to the plaintifs for whatever deficiency may
remain unpaid after the proceeds of the sale of the assets
of the defendnt partnership are supplied in payment of the
(1) That a writ of preliminary injunction be issued restraining
judgment that said plaintiffs may recover in this action;
the defendant Provincial Sheriff of Negros Occidental from
proceeding with the sales at public auction that he
advertised in two notices issued by him on May 18, 1959 in (6) The plaintiffs further pray for all other remedies to which
connection with Civil Case No. 5223 of this Honorable the Honorable Court will find them entitled to, with costs to
Court, until further orders of this Court; and to make said the defendants.
injunction permanent after hearing on the merits:
Bacolod City, June 4, 1959.3
(2) That after hearing, the defendant partnership be
ordered; to pay to the plaintiff Manuel G. Singson the sum The action was docketed as Civil Case No. 5343 of said court.
of P3,723.50 plus 1% monthly interest thereon and 25%
attorney's fees, and costs; to pay to the plaintiff In their amended answer, the defendants Margarita G. Saldajeno and her
JoseBelzunce the sum of P2,052.10, plus 6% annual husband, Cecilio Saldajeno, alleged the following special and affirmative
interest thereon and 25% for attorney's fees, and costs;to defenses:
pay to the plaintiff Agustin E. Tonsay the sum of P993.73
plus 6% annual interest thereon and 25% attorney's fees, xxx xxx xxx
and costs; to pay to the plaintiff Bacolod Southern Lumber
Yard the sum of P1,048.78, plus 6% annual interest thereon 2. That the defendant Isabela Sawmill has been dissolved
and 25% attorney's fees, and costs; and to pay to the by virtue of an action entitled "In the matter of: Dissolution
plaintiff Oppen, Esteban, Inc. the sum of P1,350.89, plus of Isabela Sawmill as partnership, etc. Margarita G.
6% annual interest thereon and 25% attorney's fees and Saldajeno et al. vs. Isabela Sawmill, et al., Civil Case No.
costs: 4787, Court of First Instance of Negros Occidental;
Page 8 of 16
3. That as a result of the said dissolution and the decision 8. That in so far as the claims of these alleged creditors
of the Court of First Instance of Negros Occidental in the plaintiffs are concerned, there is a misjoinder of parties
aforesaid case, the other defendants herein Messrs. Leon because this is not a class suit, and therefore this
Garibay and Timoteo Tubungbanua became the Honorable Court cannot take jurisdictionof the claims for
successors-in-interest to the said defunct partnership and payment;
have bound themselves to answere for any and all
obligations of the defunct partnership to its creditors and 9. That the claims of plaintiffs-creditors, except Oppen,
third persons; Esteban, Inc. go beyond the limit mentioned inthe statute of
frauds, Art. 1403 of the Civil Code, and are therefor
4. That to secure the performance of the obligations of the unenforceable, even assuming that there were such credits
other defendants Leon Garibay and Timoteo Tubungbanua and claims;
to the answering defendant herein, the former have
constituted a chattel mortgage over the properties 10. That this Honorable Court has no jurisdiction in this
mentioned in the annexes to that instrument entitled case for it is well settled in law and in jurisprudence that a
"Assignment of Rights with Chattel Mortgage" entered into court of first instance has no power or jurisdiction to annul
on May 26, 1968 and duly registered in the Register of judgments or decrees of a coordinate court because other
Deeds of Negros Occidental on the same date: function devolves upon the proper appellate court; (Lacuna,
et al. vs. Ofilada, et al., G.R. No. L-13548, September 30,
5. That all the plaintiffs herein, with the exceptionof the 1959; Cabigao vs. del Rosario, 44 Phil. 182; PNB vs.
plaintiff Oppen, Esteban, Inc. are creditors of Messrs. Leon Javellana, 49 O.G. No. 1, p.124), as it appears from the
Garibay and Timoteo Tubungbanua and not of the defunct complaint in this case to annul the decision of this same
Isabela Sawmill and as such they have no cause of action court, but of another branch (Branch II, Judge Querubin
against answering defendant herein and the defendant presiding).4
Isabela Sawmill;
Said defendants interposed a cross-claim against the defendsants Leon
6. That all the plaintiffs herein, except for the plaintiff Garibay and Timoteo Tubungbanua praying "that in the event that
Oppen, Esteban, Inc. granted cash advances, gasoline, judgment be rendered ordering defendant cross claimant to pay to the
crude oil, motor oil, grease, rice and nipa to the defendants plaintiffs the amount claimed in the latter's complaint, that the cross
Leon Garibay and Timoteo Tubungbanua with the claimant whatever amount is paid by the latter to the plaintiff in accordance
knowledge and notice that the Isabela Sawmill as a former to the said judgment. ...5
partnership of defendants Margarita G. Isabela Sawmill as a
former partnership of defendants Margarita G. Saldajeno, After trial, judgment was rendered in favor of the plaintiffs and against the
Leon Garibay and Timoteo Tubungbanua, has already been defendants.
dissolved;
The defendants, Margarita G. Saldajeno and her husband Cecilio
7. That this Honorable Court has no jurisdictionover the Saldajeno, appealed to the Court of Appeals assigning the following errors:
claims of the plaintiffs Oppen, Esteban, Inc., Agustin R.
Tonsay, Jose L. Espinos, and the Bacolod Southern I
Lumber Yard, it appearing that the amounts sought to be
recovered by them in this action is less than P2,000.00
THE COURT A QUO ERRED IN ASSUMING
each, exclusive of interests;
JURISDICTION OVER THE CASE.
Page 9 of 16
II VII
THE COURT A QUO ERRED IN HOLDING THAT THE THE COURT A QUO ERRED IN HOLDING THAT
ISSUE WITH REFERENCE TO THE WITHDRAWAL OF DEFENDANT-APPELLANT MARGARITA G. SALDAJENO
DEFENDANT-APPELLANT MARGARITA G. SALDAJENO BECAME PRIMARILY LIABLE TO THE PLAINTFFS-
FROM THE PARTNERSHIP "SABELA SAWMILL" WAS APPELLEES FOR HAVING ACQUIRED THE
WHETHER OR NOT SUCH WITHDRAWAL CAUSED THE MORTGAGED CHATTLES IN THE FORECLOSURE SALE
"COMPLETE DISAPPEARANCE" OR "EXTINCTION" OF CONDUCTED IN CONNECTION WITH CIVIL CASE NO.
SAID PARTNERSHIP. 5223.
III VIII
THE COURT A QUO ERRED IN OT HOLDING THAT THE THE COURT A QUO ERRED IN HOLDING DEFENDANT-
WITHDRAWAL OF DEFENDANT-APPELLANT APPELLANT MARGARITA G. SALDAJENO LIABLE FOR
MARGARITA G. SALDAJENO AS A PARTNER THEREIN THE OBLIGATIONS OF MESSRS. LEON GARIBAY AND
DISSOLVED THE PARTNERSHIP "ISABELA SAWMILL" TIMOTEO TUBUNGBANUA, INCURRED BY THE LATTER
(FORMED ON JAN. 30, 1951 AMONG LEON GARIBAY, AS PARTNERS IN THE NEW 'ISABELA SAWMILL',
TIMOTEO TUBUNGBANUA AND SAID MARGARITA G. AFTER THE DISSOLUTION OF THE OLD PARTNERSHIP
SALDAJENO). IN WHICH SAID MARGARITA G. SALDAJENO WAS A
PARTNER.
IV
IX
THE COURT A QUO ERRED IN ISSUING THE WRIT OF
PRELIMINARY INJUNCTION. THE COURT A QUO ERRED IN HOLDING DEFENDANT-
APPELLANT MARGARITA G. SALDAJENO LIABLE TO
V THE PLAINTIFFS-APPELLEES FOR ATTORNEY'S FEES.
The facts, as found by the trial court, are: and Timoteo Tubungbanua, a copy of which
Complaint is attached as Appendix 'D'.
At the commencement of the hearing of the case on the
merits the plaintiffs and the defendant Cecilio and Margarita 5. That on April 27, 1958 the defendants
g. Saldajeno submittee a Partial Stipulation of Facts that LeonGaribay, Timoteo Tubungbanua and
was marked as Exh. "A". Said stipulation reads as folows: Margarita G. Saldajeno entered into a
"Memorandum Agreement", a copy of which
1. That on January 30, 1951 the defendants is hereto attached as Appendix 'E' in Civil
Leon Garibay, Margarita G. Saldejeno, and Case 4797 of the Court of First Instance of
Timoteo Tubungbanua entered into a Negros Occidental.
Contract of Partnership under the firm name
"Isabela Sawmill", a copy of which is hereto 6. That on May 26, 1958 the defendants
attached Appendix "A". Leon Garibay, Timoteo Tubungbanua and
Margarita G. Saldajeno executed a
2. That on February 3, 1956 the plaintiff document entitled "Assignment of Rights
Oppen, Esteban, Inc. sold a Motor Truck with Chattel Mortgage", a copy of which
and two Tractors to the partnership Isabela documents and its Annexes "A" to "A-5"
Sawmill for the sum of P20,500.00. In order forming a part of the record of the above
to pay the said purcahse price, the said mentioned Civil Case No. 4797, which deed
partnership agreed to make arrangements was referred to in the Decision of the Court
with the International Harvester Company at ofFirst Instance of Negros Occidental in Civil
Bacolod City so that the latter would sell Case No. 4797 dated May 29, 1958, a copy
farm machinery to Oppen, Esteban, Inc. of which is hereto attached as Appendix "F"
with the understanding that the price was to and "F-1" respectively.
be paid by the partnership. A copy of the
corresponding contract of sle is attached 7. That thereafter the defendants Leon
hereto as Appendix "B". Garibay and Timoteo Tubungbanua did not
divide the assets and properties of the
3. That through the method of payment "Isabela Sawmill" between them, but they
stipulated in the contract marked as continued the business of said partnership
Appendix "B" herein, the International under the same firm name "Isabela
Harvester Company has been paid a total of Sawmill".
P19,211.11, leaving an unpaid balance of
P1,288.89 as shown in the statements 8. That on May 18, 1959 the Provincial
hereto attached as Appendices "C", "C-1", Sheriff of Negros Occidental published two
and "C-2". (2) notices that he would sell at public
auction on June 5, 1959 at Isabela, Negros
4. That on April 25, 1958 Civil Case No. Occidental certain trucks, tractors,
4797 was filed by the spouses Cecilio machinery, officeequipment and other things
Saldajeno and Margarita G. Saldajeno that were involved in Civil Case No. 5223 of
against the Isabela Sawmill, Leon Garibay, the Court of First Instance of Negros
Page 11 of 16
Occidental, entitled "Margarita G. Saldajeno The fact that the defendnat 'Isabela Sawmill' is indebted to
vs. Leon Garibay, et al." See Appendices theplaintiff Oppen, Esteban, Inc. in the amount of P1,288.89
"G" and "G-1". as the unpaid balance of an obligation of P20,500.00
contracted on February 3, 10956 is expressly admitted in
9. That on October 15, 1969 the Provincial paragraph 2 and 3 of the Stipulation, Exh. "A" and its
Sheriff of Negros Occidental executed a Appendices "B", "C", "C-1", and "C-2".
Certificate ofSale in favor of the defendant
Margarita G. Saldajeno, as a result of the The plaintiff Agustin E. Tonssay proved by his own
sale conducted by him on October 14 and testimony and his Exhs. "B" to"G" that from October 6, 1958
15, 1959 for the enforcement of the to November 8, 1958 he advanced a total of P4,200.00 to
judgment rendered in Civil Case No. 5223 of the defendant 'Isabela Sawmill'. Agaist the said advances
the Court of First Instance of Negros said defendant delivered to Tonsay P3,266.27 worth of
Occidental, a certified copy of which lumber, leavng an unpaid balance of P933.73, which
certificte of sale is hereto attached as balance was confirmed on May 15, 1959 by the defendant
Appendix "H". Leon Garibay, as Manager of the defendant partnership.
10. That on October 20, 1959 the defendant The plaintiff Manuel G. Singsong proved by his own
Margarita G. Saldajeno executed a deed of testimony and by his Exhs. "J" to "L" that from May 25,
sale in favor of the Pan Oriental Lumber 1988 to January 13, 1959 he sold on credit to the defendnat
Company transfering to the latter for the "Isabela Sawmill" rice and bran, on account of which
sum of P45,000.00 the trucks, tractors, business transaction there remains an unpaid balance of
machinery, and other things that she had P3,580.50. The same plaintiff also proved that the
purchashed at a public auction referred to in partnership ownes him the sum of P143.00 for nipa shingles
the foregoing paragraph, a certified true bought from him on credit and unpaid for.
copy of which Deed of Sale is hereto
attached as Appendix "I". The plaintiff Jose L. Espinos proved through the testimony
of his witness Cayetano Palmares and his Exhs. "N" to "O-
11. The plaintiffs and the defendants Cecilio 3" that he owns the "Guia Lumber Yard", that on October
Saldajeno and Margarita G. Saldajeno 11, 1958 said lumber yard advanced the sum of P2,500.00
reserve the right to present additional to the defendant "Isabela Sawmill", that against the said
evidence at the hearing of this case. cash advance, the defendant partnership delivered to Guia
Lumber Yard P920.56 worth of lumber, leaving an
Forming parts of the above copied stipulation are outstanding balance of P1,579.44.
documents that were marked as Appendices "A", "B", "C",
"C-1", "C-2", "D", "E", "F", "F-1", "G", "G-1", "H", and "I". The plaintiff Bacolod Southern Lumber Yard proved through
the testimony of the witness Cayetano Palmares an its
The plaintiffs and the defendants Cecilio and Margarita G. Exhs. "P" to "Q-1" that on October 11, 1958 said plaintiff
Saldajeno presented additional evidence, mostly advanced the sum of P1,500.00 to the defendsant 'Isabela
documentary, while the cross-defendants did not present Sawmill', that against the said cash advance, the defendant
any evidence. The case hardly involves quetions of fact at partnership delivered to the said plaintiff on November 19,
all, but only questions of law. 1958 P377.72 worth of lumber, and P73.54 worth of lumber
Page 12 of 16
on January 27, 1959, leaving an outstanding balance of recover a sum of money and where the money claim is purely incidental to
P1,048.78. or a consequence of the principal relief sought, the action is as a case
where the subject of the litigation is not capable of pecuniary estimation
The plaintiff Jose Balzunce proved through the testimony of and is cognizable exclusively by the Court of First Instance.
Leon Garibay whom he called as his witness, and through
the Exhs. "R" to "E" that from September 14, 1958 to The jurisdiction of all courts in the Philippines, in so far as the authority
November 27, 1958 he sold to the defedant "Isabela thereof depends upon the nature of litigation, is defined in the amended
Sawmill" gasoline, motor fuel, and lubricating oils, and that Judiciary Act, pursuant to which courts of first instance shall have exclusive
on account of said transactions, the defendant partnersip original jurisdiction over any case the subject matter of which is not capable
ownes him an unpaid balance of P2,052.10. of pecuniary estimation. An action for the annulment of a judgment and an
order of a court of justice belongs to th category.8
Appendix "H" of the stipulation Exh. "A" shows that on
October 13 and 14, 1959 the Provincial Sheriff sold to the In determining whether an action is one the subject matter of which is not
defendant Margrita G. Saldajeno for P38,040.00 the assets capable of pecuniary estimation this Court has adopted the criterion of first
of the defendsant "Isabela Sawmill" which the defendants ascertaining the nature of the principal action or remedy sought. If it is
Leon G. Garibay and Timoteo Tubungbanua had primarily for the recovery of a sum of money, the cliam is considered
mortgaged to her, and said purchase price was applied to capable of pecuniary estimation, and whether jurisdiciton is in the municipal
the judgment that she has obtained against he said courts or in the courts of first instance would depend on the amount of the
mortgagors in Civil Case No. 5223 of this Court. claim. However, where the basic issue is something other than the right to
recover a sum of money, where the money claim is purely incidental to, or
Appendix "I" of the same stipulation Exh. "A" shows that on a consequence of, the principal relief sought, this Court has considered
October 20, 1959 the defendant Margarita G. Saldajeno such actions as cases where the subject ogf the litigation may not be
sold to the PAN ORIENTAL LUMBER COMPANY for estimated in terms of money, and are cognizable exclusively by courts of
P45,000.00 part of the said properties that she had bought first instance.
at public aucton one week before.
In Andres Lapitan vs. SCANDIA, Inc., et al.,9 this Court held:
xxx xxx xxx7
Actions for specific performance of contracts have been
It is contended by the appellants that the Court of First Instance of Negros expressly prounounced to be exclusively cognizable by
Occidental had no jurisdiction over Civil Case No. 5343 because the courts of first instance: De Jesus vs. Judge Garcia, L-
plaintiffs Oppen, Esteban, Inc., Agustin R. Tonsay, Jose L. Espinos and the 26816, February 28, 1967; Manufacturers' Distributors, Inc.
Bacolod Southern Lumber Yard sought to collect sums of moeny, the vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent
biggest amount of which was less than P2,000.00 and, therefore, within the reason appears, and none is here advanced by the parties,
jurisdiction of the municipal court. why an actin for rescission (or resolution) should be
differently treated, a "rescission" being a counterpart, so to
This contention is devoid of merit because all the plaintiffs also asked for speak, of "specific performance'. In both cases, the court
the nullity of the assignment of right with chattel mortgage entered into by would certainly have to undertake an investigation into facts
and between Margarita G. Saldajeno and her former partners Leon Garibay that would justify one act of the other. No award for
and Timoteo Tubungbanua. This cause of action is not capable of damages may be had in an action for resicssion without first
pecuniary estimation and falls under the jurisdiction of the Court of First conducting an inquiry into matters which would justify the
Instnace. Where the basic issue is something more than the right to setting aside of a contract, in the same manner that courts
Page 13 of 16
of first instance would have to make findings of fact and law foreclosure of a chattel mortgage of personal properties
in actions not capable of pecuniary estimnation espressly valued at P15,340.00, so that it is clearly within the
held to be so by this Court, arising from issues like those competence of the respondent court to try and resolve.
arised in Arroz v. Alojado, et al., L-22153, March 31, 1967
(the legality or illegality of the conveyance sought for and In the light of the foregoing recent rulings, the Court of First Instance of
the determination of the validity of the money deposit Negros Occidental did no err in exercising jurisidction over Civil Case No.
made); De Ursua v. Pelayo, L-13285, April 18, 1950 5343.
(validity of a judgment); Bunayog v. Tunas, L-12707,
December 23, 1959 (validity of a mortgage); Baito v. The appellants also contend that the chattel mortgage may no longer be
Sarmiento, L-13105, August 25, 1960 (the relations of the annulled because it had been judicially approved in Civil Case No. 4797 of
parties, the right to support created by the relation, etc., in the Court of First Instance of Negros Occidental and said chattel mortgage
actions for support); De Rivera, et al. v. Halili, L-15159, had been ordered foreclosed in Civil Case No. 5223 of the same court.
September 30, 1963 (the validity or nullity of documents
upon which claims are predicated). Issues of the same
On the question of whether a court may nullify a final judgment of another
nature may be raised by a party against whom an action for
court of co-equal, concurrent and coordinate jusridiction, this Court
rescission has been brought, or by the plaintiff himself. It is,
originally ruled that:
therefore, difficult to see why a prayer for damages in an
action for rescission should be taken as the basis for
concluding such action for resiccison should be taken as A court has no power to interfere with the judgments or
the basis for concluding such action as one cpable of decrees of a court of concurrent or coordinate jurisdiction
pecuniary estimation - a prayer which must be included in having equal power to grant the relief sought by the
the main action if plaintiff is to be compensated for what he injunction.
may have suffered as a result of the breach committed by
defendant, and not later on precluded from recovering The various branches of the Court of First Instance of
damages by the rule against splitting a cause of action and Manila are in a sense coordinate courts and cannot be
discouraging multiplicitly of suits. allowed to interfere with each others' judgments or
decrees. 11
The foregoing doctrine was reiterated in The Good Development
Corporation vs. Tutaan, 10 where this Court held: The foregoing doctrine was reiterated in a 1953 case 12 where this Court
said:
On the issue of which court has jurisdiction, the case
of SENO vs. Pastolante, et al., is in point. It was ruled The rule which prohibits a Judge from intertering with the
therein that although the purposes of an action is to recover actuations of the Judge of another branch of the same court
an amount plus interest which comes within the original is not infringed when the Judge who modifies or annuls the
jurisidction of the Justice of the Peace Court, yet when said order isued by the other Judge acts in the same case and
action involves the foreclosure of a chattel mortgage belongs to the same court (Eleazar vs. Zandueta, 48 Phil.
covering personal properties valued at more than P2,000, 193. But the rule is infringed when the Judge of a branch of
(now P10,000.00) the action should be instituted before the the court issues a writ of preliminary injunction in a case to
Court of First Instance. enjoint the sheriff from carrying out an order by execution
issued in another case by the Judge of another branch of
In the instanct, case, the action is to recover the amount of the same court. (Cabigao and Izquierdo vs. Del Rosario et
P1,520.00 plus interest and costs, and involves the al., 44 Phil. 182).
Page 14 of 16
This ruling was maintained in 1967. In Mas vs. Dumaraog, 13 the judgment to the judgment sought to be annulled, for a direct attack
sought to be annulled was rendered by the Court of First Instance of Iloilo against a final and executory judgment is not a incidental to,
and the action for annullment was filed with the Court of First Instance of but is the main object of the proceeding. The cause of
Antique, both courts belonging to the same Judicial District. This Court held action in the two cases being distinct and separate from
that: each other, there is no plausible reason why the venue of
the action to annul the judgment should necessarily follow
The power to open, modify or vacant a judgment is not only the venue of the previous action ...
possessed by but restricted to the court in which the
judgment was rendered. The present doctrine which postulate that one court or one
branch of a court may not annul the judgment of another
The reason of this Court was: court or branch, not only opens the door to a violation of
Section 2 of Rule 4, (of the Rules of Court) but also limit the
Pursuant to the policy of judicial stability, the judgment of a opportunity for the application of said rule.
court of competent jurisdiction may not be interfered with by
any court concurrrent jurisdiction. Our conclusion must therefore be that a court of first
instance or a branch thereof has the authority and
Again, in 1967 this Court ruled that the jurisdiction to annul a judgement of jurisdiction to take cognizance of, and to act in, suit to annul
a branch of the court of First Instance belongs solely to the very same final and executory judgment or order rendered by another
branch which rendered the judgement. 14 court of first instance or by another branch of the same
court...
Two years later, the same doctrine was laid down in the Sterling
Investment case.15 In February 1974 this Court reiterated the ruling in the Dulap case.17
In December 1971, however, this court re-examined and reversed its In the light of the latest ruling of the Supreme Court, there is no doubt that
earlier doctrine on the matter. In Dupla v. Court of Appeals, 16 this Tribunal, one branch of the Court of First Instance of Negros Occidental can take
speaking through Mr. Justice Villamor declared: cognizance of an action to nullify a final judgment of the other two branches
of the same court.
... the underlying philosophy expressed in the Dumara-og
case, the policy of judicial stability, to the end that the It is true that the dissolution of a partnership is caused by any partner
judgment of a court of competent jurisdiction may not be ceasing to be associated in the carrying on of the business. 18 However, on
interfered with by any court of concurrent jurisdiction may dissolution, the partnershop is not terminated but continuous until the
not be interfered with by any court of concurrent jurisdiciton, winding up to the business. 19
this Court feels that this is as good an occasion as any to
re-examine the doctrine laid down ... The remaining partners did not terminate the business of the partnership
"Isabela Sawmill". Instead of winding up the business of the partnership,
In an action to annul the judgment of a court, the plaintiff's they continued the business still in the name of said partnership. It is
cause of action springs from the alleged nullity of the expressly stipulated in the memorandum-agreement that the remaining
judgment based on one ground or another, particularly partners had constituted themselves as the partnership entity, the "Isabela
fraud, which fact affords the plaintiff a right to judicial Sawmill". 20
interference in his behalf. In such a suit the cause of action
is entirely different from that in the actgion which grave rise
Page 15 of 16
There was no liquidation of the assets of the partnership. The remaining The contention of the appellant that the appleees cannot bring an action to
partners, Leon Garibay and Timoteo Tubungbanua, continued doing the annul the chattel mortgage of the propertiesof the partnership executed by
business of the partnership in the name of "Isabela Sawmill". They used Leon Garibay and Timoteo Tubungbanua in favor of Margarita G.
the properties of said partnership. Saldajeno has no merit.
The properties mortgaged to Margarita G. Saldajeno by the remaining As a rule, a contract cannot be assailed by one who is not a party thereto.
partners, Leon Garibay and Timoteo Tubungbanua, belonged to the However, when a contract prejudices the rights of a third person, he may
partnership "Isabela Sawmill." The appellant, Margarita G. Saldajeno, was file an action to annul the contract.
correctly held liable by the trial court because she purchased at public
auction the properties of the partnership which were mortgaged to her. This Court has held that a person, who is not a party obliged principally or
subsidiarily under a contract, may exercised an action for nullity of the
It does not appear that the withdrawal of Margarita G. Saldajeno from the contract if he is prejudiced in his rights with respect to one of the
partnership was published in the newspapers. The appellees and the public contracting parties, and can show detriment which would positively result to
in general had a right to expect that whatever, credit they extended to Leon him from the contract in which he has no intervention. 21
Garibay and Timoteo Tubungbanua doing the business in the name of the
partnership "Isabela Sawmill" could be enforced against the proeprties of The plaintiffs-appellees were prejudiced in their rights by the execution of
said partnership. The judicial foreclosure of the chattel mortgage executed the chattel mortgage over the properties of the partnership "Isabela
in favor of Margarita G. Saldajeno did not relieve her from liability to the Sawmill" in favopr of Margarita G. Saldajeno by the remaining partners,
creditors of the partnership. Leon Garibay and Timoteo Tubungbanua. Hence, said appelees have a
right to file the action to nullify the chattel mortgage in question.
The appellant, margrita G. Saldajeno, cannot complain. She is partly to
blame for not insisting on the liquidaiton of the assets of the partnership. The portion of the decision appealed from ordering the appellants to pay
She even agreed to let Leon Garibay and Timoteo Tubungbanua continue attorney's fees to the plaintiffs-appellees cannot be sustained. There is no
doing the business of the partnership "Isabela Sawmill" by entering into the showing that the appellants displayed a wanton disregard of the rights of
memorandum-agreement with them. the plaintiffs. Indeed, the appellants believed in good faith, albeit
erroneously, that they are not liable to pay the claims.
Although it may be presumed that Margarita G. Saldajeno had action in
good faith, the appellees aslo acted in good faith in extending credit to the The defendants-appellants have a right to be reimbursed whatever
partnership. Where one of two innocent persons must suffer, that person amounts they shall pay the appellees by their co-defendants Leon Garibay
who gave occasion for the damages to be caused must bear the and Timoteo Tubungbanua. In the memorandum-agreement, Leon Garibay
consequences. Had Margarita G. Saldajeno not entered into the and Timoteo Tubungbaun undertook to release Margarita G. Saldajeno
memorandum-agreement allowing Leon Garibay and Timoteo from any obligation of "Isabela Sawmill" to third persons. 22
Tubungbanua to continue doing the business of the aprtnership, the
applees would not have been misled into thinking that they were still WHEREFORE, the decision appealed from is hereby affirmed with the
dealing with the partnership "Isabela Sawmill". Under the facts, it is of no elimination of the portion ordering appellants to pay attorney's fees and
moment that technically speaking the partnership "Isabela Sawmill" was with the modification that the defendsants, Leon Garibay and Timoteo
dissolved by the withdrawal therefrom of Margarita G. Saldajeno. The Tubungbanua, should reimburse the defendants-appellants, Margarita G.
partnership was not terminated and it continued doping business through Saldajeno and her husband Cecilio Saldajeno, whatever they shall pay to
the two remaining partners. the plaintiffs-appellees, without pronouncement as to costs.
SO ORDERED.
Page 16 of 16
Teehankee (Chairman), Makasiar, Guerrero, De Castro and Melencio- 14 J.M.. Tuazon & Co. vs. Torres, etc., et al., G.R. No. L-
Herrera, JJ., concur. 24717, Dec. 4, 1967, 21 SCRA 1169.
3 Record on Appeal, Rollo, pp. 25-26. 18 Article 1828, Civil Code of the Philippines.
4 Record on Appeal, Rollo, pp. 55-56. 19 Article 1829, Civil Code of the Philippnes.
6 Brief for defendats-appellants, Rollo, pp. 161-162. 21 Teves vs. People's Homesite & Housing Corporation, L-
21498, 23 SCRA 1141, 1147, 1148; De Santos vs. City of
7 Record on Appeal, pp. 182-189, Rollo, pp. 112-116. Manila, 45 SCRA 409, 416.
8 Pedro Dulap, et al., vs. Hon Court of appeals, et al., G.R. 22 Rollo, p. 82.
No. L-28306, Dec. 18, 1971, 42 SCRA 537, 545-546.