44 Obligations of the Partners Among Themselves: Render True and Full Information

CATALAN VS. GATCHALIAN

No. L-11648. April 22, 1959

FACTS:
 Eligio Catalan and Ramon Gatchalian, as partners, mortgaged to Dr. Dionisio
Marave two lots in Tacloban City, all belonging to the partnership, to secure the
payment of a loan.
 The partnership failed to pay the loan; the mortgage was foreclosed and the
properties were sold at public auction to Dr. Marave
 Before the expiration of the one year period of redemption, Catalan, on his own
behalf, redeemed the properties with his private funds.
 The Sheriff issued the corresponding certificate of redemption in favor of Catalan.
 Upon Catalan's petition, the lower court ordered the cancellation of the title in the
name of the partnership and to issue in its stead another in the name of Catalan.

ISSUE: Whether Catalan became the absolute owner of the properties upon making the
redemption because he was subrogated to the rights of Dr. Marave who made the
purchase at public auction.

RULING: No. Under general principles of law, a partner is an agent of the partnership.
(Art. 1818, new Civil Code). Furthermore, every partner becomes a trustee for his
copartner with regard to any benefits or profits derived from his act as partner. 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.
The principle of subrogation cannot be applied because at the time Catalan
redeemed the property, Dr. Marave, the purchaser at public auction, had not yet
become the absolute owner of said properties. He never received the definite and
formal certificate of sale for the reason that redemption was made. Consequently, there
was no title to the properties which he could convey to Catalan as redemptioner.