1. PARTNERSHIP; PARTNER IS NOT CREDITOR OF PARTNERSHIP. — The partner of a partnership is not a creditor of such partnership for the amount of his share.

2. ACTIONS; REMEDY OF OWNER OF PROPERTY WRONGFULLY SOLD. — The remedy of the owner of a property wrongfully sold is to claim the property and not the proceeds of the sale.

3. PARTIES; WANT OF NECESSARY AND INDISPENSABLE PARTIES; EFFECT OF. — 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.

4. CERTIORARI; WHEN ACTION WILL LIE. — Where the lower court has acted without jurisdiction over the subject matter, or where the order or judgment complained of is a patent nullity, the judgment should be set aside although an appeal was available but was not availed of.

Labeled" Certiorari and Prohibition with Preliminary Injunction" this petition actually prays for the additional writ of mandamus 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 had been rejected, the matter of mandamus may 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 proceeds 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:jgc:chanrobles.com.ph

". . . el Juzgado ha encontrado que no se han respetado los derechos del Sr. Lastrilla en lo que se redere a su adquisicion de las acciones de C. Arnold Hall (Fred Brown) en la Far Eastern Lumber & Commercial Co. porque las mismas han sido incluidas en la subasta.

"Es verdad que las acciones adquiridas por el Sr. Lastrilla 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 valor no esta sujeto a las fluctuaciones del negocio donde las invirtio.

"Se vendieron propiedades de la corporacion ’Far Eastern Lumber & Commercial 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 pertenece al Sr. O. Lastrilla y este tiene derecho a dicha porcion pero con la obligacion de pagar el 17 por ciento de los gastos por la conservacion de dichas propiedades por parte del Sheriff; . . ." (Annex K).

It is from this declaration and the subsequent orders to enforce it 1 that the petitioners seek relief by certiorari, their position being that 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, Lastrilla 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 not. 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 in 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 Asturias.

Granting, arguendo that the auction sale did not include 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 Asturias will have to recognize dominion of Lastrilla 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 Asturias 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 Asturias.

Supposing however that Lastrilla’s shares have been actually (but unlawfully) sold by the sheriff (at the instance of plaintiffs) to Dorfe and Asturias, 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, considering specially that Dorfe and Asturias, 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 Asturias might be unwilling to recognize 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 redemption comes, Dorfe and Asturias will receive from redemptioners seventeen per cent (17%) less than the 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 Lastrilla, because it is so much money deducted, and for which the plaintiffs might ask another levy on their other holdings or resources. Supposing of course, there was no fraudulent collusion among them.

Now, these varied interests of necessity make Dorfe, Asturias and the defendants indispensable parties to the motion of Lastrilla — granting it was a 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, for without him no valid judgment for partition may be rendered." (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 question 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 six years after such 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 and void. In all these cases the existence of the right to appeal has been disregarded. In a probate case, a judgment according to its own 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. . . ."cralaw virtua1aw library

Invoking our ruling in Melocotones v. Court of First Instance, (57 Phil., 144), wherein we applied the theory of laches to petitioners’ 3-year delay in requesting certiorari, the 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 las propiedades vendidas en p