CATALAN vs.

GATCHALIAN
105 Phil 1270, G.R. No. L-11648, April 22, 1959

FACTS: Catalan and Gatchalian are partners. They mortgaged two lots to Dr. Marave
together with the improvements thereon to secure a credit from the latter. The
partnership failed to pay the obligation. The properties were sold to Dr. Marave at a
public auction. Catalan redeemed the property and he contends that title should be
cancelled and a new one must be issued in his name.

ISSUE: Did Catalan’s redemption of the properties make him the absolute owner of the
lands?

HELD: No. Under Article 1807 of the NCC every partner becomes a trustee for his
copartner with regard to any benefits or profits derived from his act as a partner.
Consequently, when Catalan redeemed the properties in question, he became a trustee
and held the same in trust for his copartner Gatchalian, subject to his right to demand
from the latter his contribution to the amount of redemption.

Clemente vs. Galvan

Facts:

 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.
 Plaintiff ask for dissolution which the defendant confirm but with a condition 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.
 Juan D. Mencarini, assigned as receiver and liquidator. Upon acting on his duty, the court
ordered him to deliver certain machines which were then at Nos. 705-707 Ylaya Street.
 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
 In the meantime the judgments rendered in cases Nos. 42794 and 43070 ordering Clemente
to pay a sum of money.
 He mortgage the machines with his nephew, the intervenor (plaintiff in the herein case.) For
having expired the terms in the mortgage the intervenor commenced case No. 49629 to
collect his mortgage credit.

Issue: W/N the mortgage between Clemente and his nephew (intervenor, plaintiff in the case) is
valid?

Rule: No. 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. Also, Clemente did not have actual possession of the machines, he
could not in any manner mortgage them.
Leyte-Samar-Sales and K. Tomassi vs. Cea and O. Castrilla

Facts:

 Thisis 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.
 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
 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
 June 13, 1951, granted Lastrilla's motion. On August 14, 1951, modified its order of delivery and
merely declared that Lastrilla was entitled to 17 per cent of the properties sold.
 the petitioners seek relief by certiorari, their position being the such orders were null and void for
lack of jurisdiction.

Issue: W/N the court acted with excess of its jurisdiction?

Rule: Yes. The 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.). 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.

(NOTE: If Lastrilla was a partner, 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.)