LOURDES NAVARRO AND MENARDO NAVARRO, PETITIONERS, VS. COURT OF APPEALS, JUDGE BETHEL KATALBAS-MOSCARDON, PRESIDING JUDGE, REGIONAL TRIAL COURT OF BACOLOD CITY, BRANCH 52, SIXTH …

Assailed and sought to be set aside by the petition before us is
the Resolution of the Court of Appeals dated June 20, 1991 which dismissed the
petition for annulment of judgment filed by the Spouses Lourdes and Menardo
Navarro, thusly:

The instant petition for annulment of decision is DISMISSED.

1.       Judgments may be
annulled only on the ground of extrinsic or collateral fraud, as distinguished
from intrinsic fraud (Canlas vs. Court of Appeals, 164 SCRA 160, 170). No such ground is alleged in the petition.

2.       Even if the judgment
rendered by the respondent Court were erroneous, it is not necessarily void
(Chereau vs. Fuentebella, 43 Phil. 216). Hence, it cannot be annulled by the proceeding sought to be commenced by
the petitioners.

3.       The petitioners’
remedy against the judgment enforcement of which is sought to be stopped should
have been appeal.

SO ORDERED. (pp. 24-25,
Rollo.)

The antecedent facts of the case are as follows:

On July 23, 1976, herein private respondent Olivia V. Yanson
filed a complaint against petitioner Lourdes Navarro for “Delivery of
Personal Properties With Damages”. The complaint incorporated an application for a writ of replevin. The complaint was later docketed as Civil
Case No. 716 (12562) of the then Court of First Instance of Bacolod (Branch 55)
and was subsequently amended to include private respondent’s husband, Ricardo
B. Yanson, as co-plaintiff, and petitioner’s husband, as co-defendant.

On July 27, 1976, then Executive Judge Oscar R. Victoriano (later
to be promoted and to retire as Presiding Justice of the Court of Appeals)
approved private respondents’ application for a writ of replevin. The Sheriff’s Return of Service dated March
3, 1978 affirmed receipt by private respondents of all the pieces of personal
property sought to be recovered from petitioners.

On April 30, 1990, Presiding Judge Bethel Katalbas­-Moscardon
rendered a decision, disposing as follows:

Accordingly, in the light of the aforegoing findings, all chattels
already recovered by plaintiff by virtue of the Writ of Replevin and as listed
in the complaint are hereby sustained to belong to plaintiff being the owner of
these properties; the motor vehicle, particularly that Ford Fiera Jeep
registered in and which had remain in the possession of the defendant is
likewise declared to belong to her, however, said defendant is hereby ordered
to reimburse plaintiff the sum of P6,500.00 representing the amount advanced to
pay part of the price therefor; and said defendant is likewise hereby ordered
to return to plaintiff such other equipment[s] as were brought by the latter to
and during the operation of their business as were listed in the complaint and
not recovered as yet by virtue of the previous Writ of Replevin. (p. 12, Rollo.)

Petitioner received a copy of the decision on January 10, 1991
(almost 9 months after its rendition) and filed on January 16, 1991 a “Motion for Extension
of Time To File a Motion for Reconsideration”. This was granted on January 18,
1991. Private respondents filed
their opposition, citing the ruling in the case of Habaluyas Enterprises,
Inc. vs. Japson (142 SCRA 208 [1986]) proscribing the filing of any motion for extension
of time to file a motion for new trial or reconsideration. The trial judge vacated the order dated
January 18, 1991 and declared
the decision of April 30, 1990 as final and executory. (Petitioners’ motion for reconsideration was
subsequently filed on February 1, 1991 or 22 days after the receipt of the
decision).

On February 4, 1991, the trial judge issued a writ of execution
(Annex “5”, p. 79, Rollo). The Sheriff’s Return of Service (Annex “6”, p. 82, Rollo)
declared that the writ was “duly served and satisfied”. A receipt for the amount of P6,500.00 issued
by Mrs. Lourdes Yanson, co-petitioner in this case, was likewise submitted by
the Sheriff (Annex “7”, p. 83, Rollo).

On June 26, 1991, petitioners filed with respondent court a
petition for annulment of the trial court’s decision, claiming that the trial
judge erred in declaring the non-existence of a partnership, contrary to the
evidence on record.

The appellate court, as aforesaid, outrightly dismissed the
petition due to absence of extrinsic or collateral fraud, observing further
that an appeal was the proper remedy.

In the petition before us, petitioners claim that the trial judge
ignored evidence that would show that the parties “clearly intended to
form, and (in fact) actually formed a verbal partnership engaged in the
business of Air Freight Service Agency in Bacolod”; and that the decision
sustaining the writ of replevin is void
since “the properties belonging to the partnership do not actually
belong to any of the parties until the final disposition and winding up of the
partnership” (p. 15, Rollo). These
issues, however, were extensively discussed by the trial judge in her 16-page,
single-spaced decision.

We agree with respondents that the decision in this case has
become final. In fact a writ of
execution had been issued and was promptly satisfied by the payment of
P6,500.00 to private respondents.

Having lost their right of appeal, petitioners resorted to
annulment proceedings to justify a belated judicial review of their case. This was, however, correctly thrown out by
the Court of Appeals because petitioners failed to cite extrinsic or collateral
fraud to warrant the setting aside of the trial court’s decision. We respect the appellate court’s finding in
this regard.

Petitioners have come to us in a petition for review. However, the petition is focused solely on
factual issues which can no longer be entertained. Petitioners’ arguments are all directed against the decision of
the regional trial court; not a word is said in regard to the appellate court’s
disposition of their petition for annulment of judgment. Verily, petitioners keep on pressing the
idea that a partnership exists on account of the so-called admissions in
judicio. But the factual
premises of the trial court were more than enough to suppress and negate
petitioners’ submissions along this line:

To be resolved by this Court factually involved the issue of
whether there was a partnership that existed between the parties based on their
verbal contention; whether the properties that were commonly used in the
operation of Allied Air Freight belonged to this alleged partnership business;
and the status of the parties in this transaction of alleged partnership. On the other hand, the legal issue revolves
on the dissolution and winding up in case a partnership so existed as well as
the issue of ownership over the properties subject matter of recovery.

As a premise, Article 1767 of the New Civil Code defines the
contract of partnership to quote:

“ART. 1767. By
the contract of partnership two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing
the proceeds among themselves.

x x x                             x x
x                             x x x.”

Corollary to this definition is the provision
in determining whether a partnership exist as so provided under Article 1769,
to wit:

x x x                             x x
x                             x x x

Furthermore, the Code provides under
Article 1771 and 1772 that while a partnership may be constituted in any form,
a public instrument is necessary where immovables or any rights is
constituted. Likewise, if the
partnership involves a capitalization of P3,000.00 or more in money or
property, the same must appear in a public instrument which must be recorded in
the Office of the Securities and Exchange Commission. Failure to comply with these requirements shall only affect
liability of the partners to third persons.

In consideration of the above, it is undeniable that both the
plaintiff and the defendant-wife made admission to have entered into an
agreement of operating this Allied Air Freight Agency of which the plaintiff
personally constituted with the Manila Office in a sense that the plaintiff did
supply the necessary equipments and money while her brother Atty. Rodolfo
Villaflores was the Manager and the defendant the Cashier. It was also admitted that part of this
agreement was an equal sharing of whatever proceeds realized. Consequently, the plaintiff brought into
this transaction certain chattels in compliance with her obligation. The same has been done by the herein brother
and the herein defendant who started to work in the business. A cursory examination of the evidences
presented no proof that a partnership, whether oral or written had been
constituted at the inception of this transaction. True it is that even up to the filing of this complaint those
movables brought by plaintiff for the use in the operation of the business
remain registered in her name.

While there may have been co-ownership or co-possession of some
items and/or any sharing of proceeds by way of advances received by both
plaintiff and the defendant, these are not indicative and supportive of the
existence of any partnership between them. Article 1769 of the New Civil Code is explicit. Even the books and records retrieved by the
Commissioner appointed by the Court did not show proof of the existence of a
partnership as conceptualized by law. Such that if assuming that there were profits realized in 1975 after the
two-year deficits were compensated, this could only be subject to an equal
sharing consonant to the agreement to equally divide any profit realized. However, this Court cannot overlook the fact
that the Audit Report of the appointed Commissioner was not highly reliable in
the sense that it was more of his personal estimate of what is available on
hand. Besides, the alleged profits was
a difference found after valuating the assets and not arising from the real
operation of the business. In
accounting procedures, strictly, this could not be profit but a net worth.

In view of the above factual findings of the Court it follows
inevitably therefore that there being no partnership that existed, any
dissolution, liquidation or winding up is beside the point. The plaintiff herself had summarily ceased
from her contract of agency and it is a
personal prerogative to desist. On the
other hand, the assumption by the defendant in negotiating for herself the
continuance of the Agency with the principal in Manila is comparable to
plaintiff’s. Any account of plaintiff
with the principal as alleged, bore no evidence as no collection was ever
demanded of from her. The alleged P20,000.00 assumption
specifically, as would have been testified to by the defendant’s husband remain
a mere allegation.

As to the properties sought
to be recovered, the Court sustains the possession by plaintiff of all equip­ments
and chattels recovered by virtue of the Writ of Replevin. Considering the other vehicle which appeared
regis­tered in the name of the defendant, and to which even she admitted that
part of the purchase price came from the business claimed mutually operated,
although the Court have not as much considered all entries in the Audit report
as totally reliable to be sus­tained insofar as the operation of the business
is concerned, nevertheless, with this admission of the defendant and the fact
that as borne out in said Report there has been disbursed and paid for this
vehicle out of the business funds in the total sum of P6,500.00, it is only
fitting and proper that validity of these disbursements must be sustained as
true (Exhs. M-1 to M-3, p. 180, Records). In this connection and taking into account the earlier agreement that
only profits were to be shared equally, the plaintiff must be reimbursed of
this cost if only to allow the defendant continuous possession of the vehicle
in question. It is a fundamental, moral
and civil injunction that no one shall enrich
himself at the expense of another. (pp.
71-75, Rollo.)

Withal, the appellate court acted properly in dismissing the
petition for annulment of judgment, the issue raised therein having been
directly litigated in, and passed upon by, the trial court.

WHEREFORE, the petition is DISMISSED. The Resolution of the Court of Appeals dated
June 20, 1991 is AFFIRMED in all respects.

No special pronouncements is made as to costs.

SO ORDERED.

Feliciano, (Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.