PAT

Article 1767, 1769

Lim Tong Lim v. Philippine Fishing Gear, Inc. --------------------------------------------- 2

Article 1767

Heirs of Lim v. Lim -------------------------------------------------------------------------------- 7

Article 1768

Villarreal et al v. Ramirez ------------------------------------------------------------------------ 10

Article 1769

Heirs of Tan Eng Kee v. CA --------------------------------------------------------------------- 13

[G.R. No. 136448. November 3, 1999.]

 LIM TONG LIM, Petitioner, v. PHILIPPINE FISHING GEAR INDUSTRIES, i. Accrued interest of P73,221.00 on Invoice No. 14407 for P385,377.80 dated February
INC, Respondent. 9, 1990;

DECISION ii. Accrued interest of P27,904.02 on Invoice No. 14413 for P146,868.00 dated February
13, 1990;

PANGANIBAN, J.: iii. Accrued interest of P12,920.00 on Invoice No. 14426 for P68,000.00 dated February
19, 1990;

c. P50,000.00 as and for attorney’s fees, plus P8,500.00 representing P500.00 per
A partnership may be deemed to exist among parties who agree to borrow money to appearance in court;
pursue a business and to divide the profits or losses that may arise therefrom, even if it is
shown that they have not contributed any capital of their own to a "common fund." Their d. P65,000.00 representing P5,000.00 monthly rental for storage charges on the nets
contribution may be in the form of credit or industry, not necessarily cash or fixed assets. counted from September 20, 1990 (date of attachment) to September 12, 1991 (date of
Being partners, they are all liable for debts incurred by or on behalf of the partnership. auction sale);chanroblesvirtuallawlibrary
The liability for a contract entered into on behalf of an unincorporated association or
ostensible corporation may lie in a person who may not have directly transacted on its e. Cost of suit.
behalf, but reaped benefits from that contract.chanroblesvirtuallawlibrary:red
"With respect to the joint liability of defendants for the principal obligation or for the
The Case unpaid price of nets and floats in the amount of P532,045.00 and P68,000.00,
respectively, or for the total amount of P600,045.00, this Court noted that these items
were attached to guarantee any judgment that may be rendered in favor of the plaintiff
In the Petition for Review on Certiorari before us, Lim Tong Lim assails the November but, upon agreement of the parties, and, to avoid further deterioration of the nets during
26, 1998 Decision of the Court of Appeals in CA-GR CV 41477, 1 which disposed as the pendency of this case, it was ordered sold at public auction for not less than
follows:jgc:chanrobles.com.ph P900,000.00 for which the plaintiff was the sole and winning bidder. The proceeds of the
sale paid for by plaintiff was deposited in court. In effect, the amount of P900,000.00
"WHEREFORE, [there being] no reversible error in the appealed decision, the same is replaced the attached property as a guaranty for any judgment that plaintiff may be able
hereby affirmed." 2  to secure in this case with the ownership and possession of the nets and floats awarded
and delivered by the sheriff to plaintiff as the highest bidder in the public auction sale. It
The decretal portion of the Quezon City Regional Trial Court (RTC) ruling, which was has also been noted that ownership of the nets [was] retained by the plaintiff until full
affirmed by the CA, reads as follows:jgc:chanrobles.com.ph payment [was] made as stipulated in the invoices; hence, in effect, the plaintiff attached
its own properties. It [was] for this reason also that this Court earlier ordered the
"WHEREFORE, the Court rules:chanrob1es virtual 1aw library attachment bond filed by plaintiff to guaranty damages to defendants to be cancelled and
for the P900,000.00 cash bidded and paid for by plaintiff to serve as its bond in favor of
1. That plaintiff is entitled to the writ of preliminary attachment issued by this Court on defendants.
September 20, 1990;chanrobles virtual lawlibrary
"From the foregoing, it would appear therefore that whatever judgment the plaintiff may
2. That defendants are jointly liable to plaintiff for the following amounts, subject to the be entitled to in this case will have to be satisfied from the amount of P900,000.00 as this
modifications as hereinafter made by reason of the special and unique facts and amount replaced the attached nets and floats. Considering, however, that the total
circumstances and the proceedings that transpired during the trial of this case; judgment obligation as computed above would amount to only P840,216.92, it would be
inequitable, unfair and unjust to award the excess to the defendants who are not entitled
a. P532,045.00 representing [the] unpaid purchase price of the fishing nets covered by the to damages and who did not put up a single centavo to raise the amount of P900,000.00
Agreement plus P68,000.00 representing the unpaid price of the floats not covered by aside from the fact that they are not the owners of the nets and floats. For this reason, the
said Agreement; defendants are hereby relieved from any and all liabilities arising from the monetary
judgment obligation enumerated above and for plaintiff to retain possession and
b. 12% interest per annum counted from date of plaintiff’s invoices and computed on ownership of the nets and floats and for the reimbursement of the P900,000.00 deposited
their respective amounts as follows:chanrob1es virtual 1aw library by it with the Clerk of Court.
 the amount of P5,750,000.00 including the fishing net. This P5,750,000.00 shall be
SO ORDERED." 3chanroblesvirtuallawlibrary applied as full payment for P3,250,000.00 in favor of JL Holdings Corporation and/or
Lim Tong Lim;
The Facts
"b) If the four (4) vessel[s] and the fishing net will be sold at a higher price than
P5,750,000.00 whatever will be the excess will be divided into 3: 1/3 Lim Tong Lim; 1/3
On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered Antonio Chua; 1/3 Peter Yao;
into a Contract dated February 7, 1990, for the purchase of fishing nets of various sizes
from the Philippine Fishing Gear Industries, Inc. (herein respondent). They claimed that "c) If the proceeds of the sale the vessels will be less than P5,750,000.00 whatever the
they were engaged in a business venture with Petitioner Lim Tong Lim, who however deficiency shall be shouldered and paid to JL Holding Corporation by 1/3 Lim Tong Lim;
was not a signatory to the agreement. The total price of the nets amounted to P532,045. 1/3 Antonio Chua; 1/3 Peter Yao." 11 
Four hundred pieces of floats worth P68,000 were also sold to the Corporation. 4 
The trial court noted that the Compromise Agreement was silent as to the nature of their
The buyers, however, failed to pay for the fishing nets and the floats; hence, private obligations, but that joint liability could be presumed from the equal distribution of the
respondent filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim with a profit and loss. 12 
prayer for a writ of preliminary attachment. The suit was brought against the three in their
capacities as general partners, on the allegation that "Ocean Quest Fishing Corporation" Lim appealed to the Court of Appeals (CA) which, as already stated, affirmed the RTC.
was a nonexistent corporation as shown by a Certification from the Securities and
Exchange Commission. 5 On September 20, 1990, the lower court issued a Writ of Ruling of the Court of Appeals
Preliminary Attachment, which the sheriff enforced by attaching the fishing nets on board
F/B Lourdes which was then docked at the Fisheries Port, Navotas, Metro
Manila.chanrobles law library : red In affirming the trial court, the CA held that petitioner was a partner of Chua and Yao in
a fishing business and may thus be held liable as such for the fishing nets and floats
Instead of answering the Complaint, Chua filed a Manifestation admitting his liability purchased by and for the use of the partnership. The appellate court
and requesting a reasonable time within which to pay. He also turned over to respondent ruled:jgc:chanrobles.com.ph
some of the nets which were in his possession. Peter Yao filed an Answer, after which he
was deemed to have waived his right to cross-examine witnesses and to present evidence "The evidence establishes that all the defendants including herein appellant Lim Tong
on his behalf, because of his failure to appear in subsequent hearings. Lim Tong Lim, on Lim undertook a partnership for a specific undertaking, that is for commercial
the other hand, filed an Answer with Counterclaim and Crossclaim and moved for the fishing . . . . Obviously, the ultimate undertaking of the defendants was to divide the
lifting of the Writ of Attachment. 6 The trial court maintained the Writ, and upon motion profits among themselves which is what a partnership essentially is . . . . By a contract of
of private respondent, ordered the sale of the fishing nets at a public auction. Philippine partnership, two or more persons bind themselves to contribute money, property or
Fishing Gear Industries won the bidding and deposited with the said court the sales industry to a common fund with the intention of dividing the profits among themselves
proceeds of P900,000. 7  (Article 1767, New Civil Code)." 13chanroblesvirtual|awlibrary

On November 18, 1992, the trial court rendered its Decision, ruling that Philippine Hence, petitioner brought this recourse before this Court. 14 
Fishing Gear Industries was entitled to the Writ of Attachment and that Chua, Yao and
Lim, as general partners, were jointly liable to pay Respondent. 8  The Issues

The trial court ruled that a partnership among Lim, Chua and Yao existed based (1) on
the testimonies of the witnesses presented and (2) on a Compromise Agreement executed In his Petition and Memorandum, Lim asks this Court to reverse the assailed Decision on
by the three 9 in Civil Case No. 1492-MN which Chua and Yao had brought against Lim the following grounds:jgc:chanrobles.com.ph
in the RTC of Malabon, Branch 72, for (a) a declaration of nullity of commercial
documents; (b) a reformation of contracts; (c) a declaration of ownership of fishing boats; "I THE COURT OF APPEALS ERRED IN HOLDING, BASED ON A COMPROMISE
(d) an injunction and (e) damages. 10 The Compromise Agreement AGREEMENT THAT CHUA, YAO AND PETITIONER LIM ENTERED INTO IN A
provided:chanroblesvirtualawlibrary SEPARATE CASE, THAT A PARTNERSHIP AGREEMENT EXISTED AMONG
THEM.
"a) That the parties plaintiffs & Lim Tong Lim agree to have the four (4) vessels sold in
"II SINCE IT WAS ONLY CHUA WHO REPRESENTED THAT HE WAS ACTING (2) That after convening for a few times, Lim Chua, and Yao verbally agreed to acquire
FOR OCEAN QUEST FISHING CORPORATION WHEN HE BOUGHT THE NETS two fishing boats, the FB Lourdes and the FB Nelson for the sum of P3.35 million;
FROM PHILIPPINE FISHING, THE COURT OF APPEALS WAS UNJUSTIFIED IN
IMPUTING LIABILITY TO PETITIONER LIM AS WELL. (3) That they borrowed P3.25 million from Jesus Lim, brother of Petitioner Lim Tong
Lim, to finance the venture.
"III THE TRIAL COURT IMPROPERLY ORDERED THE SEIZURE AND
ATTACHMENT OF PETITIONER LIM’S GOODS."cralaw virtua1aw library (4) That they bought the boats from CMF Fishing Corporation, which executed a Deed of
Sale over these two (2) boats in favor of Petitioner Lim Tong Lim only to serve as
In determining whether petitioner may be held liable for the fishing nets and floats security for the loan extended by Jesus Lim;
purchased from respondent, the Court must resolve this key issue: whether by their acts,
Lim, Chua and Yao could be deemed to have entered into a (5) That Lim, Chua and Yao agreed that the refurbishing , re-equipping, repairing, dry
partnership.chanroblesvirtuallawlibrary docking and other expenses for the boats would be shouldered by Chua and Yao;

This Court’s Ruling (6) That because of the "unavailability of funds," Jesus Lim again extended a loan to the
partnership in the amount of P1 million secured by a check, because of which, Yao and
Chua entrusted the ownership papers of two other boats, Chua’s FB Lady Anne Mel and
The Petition is devoid of merit. Yao’s FB Tracy to Lim Tong Lim.chanroblesvirtual|awlibrary

First and Second Issues:chanrob1es virtual 1aw library (7) That in pursuance of the business agreement, Peter Yao and Antonio Chua bought
nets from Respondent Philippine Fishing Gear, in behalf of "Ocean Quest Fishing
Existence of a Partnership and Petitioner’s Liability Corporation," their purported business name.

In arguing that he should not be held liable for the equipment purchased from respondent, (8) That subsequently, Civil Case No. 1492-MN was filed in the Malabon RTC, Branch
petitioner controverts the CA finding that a partnership existed between him, Peter Yao 72 by Antonio Chua and Peter Yao against Lim Tong Lim for (a) declaration of nullity of
and Antonio Chua. He asserts that the CA based its finding on the Compromise commercial documents; (b) reformation of contracts; (c) declaration of ownership of
Agreement alone. Furthermore, he disclaims any direct participation in the purchase of fishing boats; (4) injunction; and (e) damages.
the nets, alleging that the negotiations were conducted by Chua and Yao only, and that he
has not even met the representatives of the respondent company. Petitioner further argues (9) That the case was amicably settled through a Compromise Agreement executed
that he was a lessor, not a partner, of Chua and Yao, for the "Contract of Lease" dated between the parties-litigants the terms of which are already enumerated above.
February 1, 1990, showed that he had merely leased to the two the main asset of the
purported partnership — the fishing boat F/B Lourdes. The lease was for six months, From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had
with a monthly rental of P37,500 plus 25 percent of the gross catch of the boat. decided to engage in a fishing business, which they started by buying boats worth P3.35
million, financed by a loan secured from Jesus Lim who was petitioner’s brother. In their
We are not persuaded by the arguments of petitioner. The facts as found by the two lower Compromise Agreement, they subsequently revealed their intention to pay the loan with
courts clearly showed that there existed a partnership among Chua, Yao and him, the proceeds of the sale of the boats, and to divide equally among them the excess or loss.
pursuant to Article 1767 of the Civil Code which provides:jgc:chanrobles.com.ph These boats, the purchase and the repair of which were financed with borrowed money,
fell under the term "common fund" under Article 1767. The contribution to such fund
"ARTICLE 1767. By the contract of partnership, two or more persons bind themselves to need not be cash or fixed assets; it could be an intangible like credit or industry. That the
contribute money, property, or industry to a common fund, with the intention of dividing parties agreed that any loss or profit from the sale and operation of the boats would be
the profits among themselves." chanrobles lawlibrary : rednad divided equally among them also shows that they had indeed formed a partnership.

Specifically, both lower courts ruled that a partnership among the three existed based on Moreover, it is clear that the partnership extended not only to the purchase of the boat,
the following factual findings: 15  but also to that of the nets and the floats. The fishing nets and the floats, both essential to
fishing, were obviously acquired in furtherance of their business. It would have been
(1) That Petitioner Lim Tong Lim requested Peter Yao who was engaged in commercial inconceivable for Lim to involve himself so much in buying the boat but not in the
fishing to join him, while Antonio Chua was already Yao’s partner; acquisition of the aforesaid equipment, without which the business could not have
proceeded.chanroblesvirtual|awlibrary
Given the preceding facts, it is clear that there was, among petitioner, Chua and Yao, a properties acquired from a loan in the name of the person the lender trusts, who in this
partnership engaged in the fishing business. They purchased the boats, which constituted case is the petitioner himself. After all, he is the brother of the creditor, Jesus
the main assets of the partnership, and they agreed that the proceeds from the sales and Lim.chanrobles.com.ph : virtual law library
operations thereof would be divided among them.
We stress that it is unreasonable — indeed, it is absurd — for petitioner to sell his
We stress that under Rule 45, a petition for review like the present case should involve property to pay a debt he did not incur, if the relationship among the three of them was
only questions of law. Thus, the foregoing factual findings of the RTC and the CA are merely that of lessor-lessee, instead of partners.
binding on this Court, absent any cogent proof that the present action is embraced by one
of the exceptions to the rule. 16 In assailing the factual findings of the two lower courts, Corporation by Estoppel
petitioner effectively goes beyond the bounds of a petition for review under Rule 45.
Petitioner argues that under the doctrine of corporation by estoppel, liability can be
Compromise Agreement Not the Sole Basis of Partnership imputed only to Chua and Yao, and not to him. Again, we disagree.

Petitioner argues that the appellate court’s sole basis for assuming the existence of a Section 21 of the Corporation Code of the Philippines provides:jgc:chanrobles.com.ph
partnership was the Compromise Agreement. He also claims that the settlement was
entered into only to end the dispute among them, but not to adjudicate their preexisting "SECTION 21. Corporation by estoppel. — All persons who assume to act as a
rights and obligations. His arguments are baseless. The Agreement was but an corporation knowing it to be without authority to do so shall be liable as general partners
embodiment of the relationship extant among the parties prior to its execution. for all debts, liabilities and damages incurred or arising as a result thereof: Provided
however, That when any such ostensible corporation is sued on any transaction entered
A proper adjudication of claimants’ rights mandates that courts must review and by it as a corporation or on any tort committed by it as such, it shall not be allowed to use
thoroughly appraise all relevant facts. Both lower courts have done so and have found, as a defense its lack of corporate personality.
correctly, a preexisting partnership among the parties. In implying that the lower courts
have decided on the basis of one piece of document alone, petitioner fails to appreciate "One who assumes an obligation to an ostensible corporation as such, cannot resist
that the CA and the RTC delved into the history of the document and explored all the performance thereof on the ground that there was in fact no
possible consequential combinations in harmony with law, logic and fairness. Verily, the corporation." chanrobles.com:cralaw:red
two lower courts’ factual findings mentioned above nullified petitioner’s argument that
the existence of a partnership was based only on the Compromise Agreement.chanrobles Thus, even if the ostensible corporate entity is proven to be legally nonexistent, a party
law library may be estopped from denying its corporate existence. "The reason behind this doctrine
is obvious — an unincorporated association has no personality and would be incompetent
Petitioner Was a Partner, Not a Lessor to act and appropriate for itself the power and attributes of a corporation as provided by
law; it cannot create agents or confer authority on another to act in its behalf; thus, those
We are not convinced by petitioner’s argument that he was merely the lessor of the boats who act or purport to act as its representatives or agents do so without authority and at
to Chua and Yao, not a partner in the fishing venture. His argument allegedly finds their own risk. And as it is an elementary principle of law that a person who acts as an
support in the Contract of Lease and the registration papers showing that he was the agent without authority or without a principal is himself regarded as the principal,
owner of the boats, including F/B Lourdes where the nets were found. possessed of all the right and subject to all the liabilities of a principal, a person acting or
purporting to act on behalf of a corporation which has no valid existence assumes such
His allegation defies logic. In effect, he would like this Court to believe that he consented privileges and obligations and becomes personally liable for contracts entered into or for
to the sale of his own boats to pay a debt of Chua and Yao, with the excess of the other acts performed as such agent." 17 
proceeds to be divided among the three of them. No lessor would do what petitioner did.
Indeed, his consent to the sale proved that there was a preexisting partnership among all The doctrine of corporation by estoppel may apply to the alleged corporation and to a
three. third party. In the first instance, an unincorporated association, which represented itself to
be a corporation, will be estopped from denying its corporate capacity in a suit against it
Verily, as found by the lower courts, petitioner entered into a business agreement with by a third person who relied in good faith on such representation. It cannot allege lack of
Chua and Yao, in which debts were undertaken in order to finance the acquisition and the personality to be sued to evade its responsibility for a contract it entered into and by
upgrading of the vessels which would be used in their fishing business. The sale of the virtue of which it received advantages and benefits.
boats, as well as the division among the three of the balance remaining after the payment
of their loans, proves beyond cavil that F/B Lourdes, though registered in his name, was On the other hand, a third party who, knowing an association to be unincorporated,
not his own property but an asset of the partnership. It is not uncommon to register the nonetheless treated it as a corporation and received benefits from it, may be barred from
denying its corporate existence in a suit brought against the alleged corporation. In such The nets and the floats were specifically manufactured and tailor-made according to their
case, all those who benefited from the transaction made by the ostensible corporation, own design, and were bought and used in the fishing venture they agreed upon. Hence,
despite knowledge of its legal defects, may be held liable for contracts they impliedly the issuance of the Writ to assure the payment of the price stipulated in the invoices is
assented to or took advantage of.chanrobles virtual lawlibrary proper. Besides, by specific agreement, ownership of the nets remained with Respondent
Philippine Fishing Gear, until full payment thereof.
There is no dispute that the respondent, Philippine Fishing Gear Industries, is entitled to
be paid for the nets it sold. The only question here is whether petitioner should be held WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs
jointly 18 liable with Chua and Yao. Petitioner contests such liability, insisting that only against petitioner.chanrobles virtual lawlibrary
those who dealt in the name of the ostensible corporation should be held liable. Since his
name does not appear on any of the contracts and since he never directly transacted with SO ORDERED.
the respondent corporation, ergo, he cannot be held liable.
Melo, Purisima and Gonzaga-Reyes, JJ., concur.
Unquestionably, petitioner benefited from the use of the nets found inside F/B Lourdes,
the boat which has earlier been proven to be an asset of the partnership. He in fact Separate Opinions
questions the attachment of the nets, because the Writ has effectively stopped his use of
the fishing vessel.
VITUG, J., concurring:chanrob1es virtual 1aw library
It is difficult to disagree with the RTC and the CA that Lim, Chua and Yao decided to
form a corporation. Although it was never legally formed for unknown reasons, this fact I share the views expressed in the ponencia of an esteemed colleague, Mr. Justice
alone does not preclude the liabilities of the three as contracting parties in representation Artemio V. Panganiban, particularly the finding that Antonio Chua, Peter Yao and
of it. Clearly, under the law on estoppel, those acting on behalf of a corporation and those petitioner Lim Tong Lim have incurred the liabilities of general partners. I merely would
benefited by it, knowing it to be without valid existence, are held liable as general wish to elucidate a bit, albeit briefly, the liability of partners in a general partnership.
partners.
When a person by his act or deed represents himself as a partner in an existing
Technically, it is true that petitioner did not directly act on behalf of the corporation. partnership or with one or more persons not actual partners, he is deemed an agent of
However, having reaped the benefits of the contract entered into by persons with whom such persons consenting to such representation and in the same manner, if he were a
he previously had an existing relationship, he is deemed to be part of said association and partner with respect to persons who rely upon the representation. 1 The association
is covered by the scope of the doctrine of corporation by estoppel. We reiterate the ruling formed by Chua, Yao and Lim, should be, as it has been deemed, a de facto partnership
of the Court in Alonso v. Villamor: 19chanrobles.com.ph : virtual law library with all the consequent obligations for the purpose of enforcing the rights of third
persons. The liability of general partners (in a general partnership as so opposed to a
"A litigation is not a game of technicalities in which one, more deeply schooled and limited partnership) is laid down in Article 1816 2 which posits that all partners shall be
skilled in the subtle art of movement and position, entraps and destroys the other. It is, liable pro rata beyond the partnership assets for all the contracts which may have been
rather, a contest in which each contending party fully and fairly lays before the court the entered into in its name, under its signature, and by a person authorized to act for the
facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of partnership. This rule is to be construed along with other provisions of the Civil Code
form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, which postulate that the partners can be held solidarily liable with the partnership
unlike duels, are not to be won by a rapier’s thrust. Technicality, when it deserts its specifically in these instances — (1) where, by any wrongful act or omission of any
proper office as an aid to justice and becomes its great hindrance and chief enemy, partner acting in the ordinary course of the business of the partnership or with the
deserves scant consideration from courts. There should be no vested rights in authority of his co-partners, loss or injury is caused to any person, not being a partner in
technicalities."cralaw virtua1aw library the partnership, or any penalty is incurred, the partnership is liable therefor to the same
extent as the partner so acting or omitting to act; (2) where one partner acting within the
Third Issue:chanrob1es virtual 1aw library scope of his apparent authority receives money or property of a third person and
misapplies it; and (3) where the partnership in the course of its business receives money
Validity of Attachment or property of a third person and the money or property so received is misapplied by any
partner while it is in the custody of the partnership 3 — consistently with the rules on the
Finally, petitioner claims that the Writ of Attachment was improperly issued against the nature of civil liability in delicts and quasi-delicts.chanrobles law library : red
nets. We agree with the Court of Appeals that this issue is now moot and academic. As
previously discussed, F/B Lourdes was an asset of the partnership and that it was placed
in the name of petitioner, only to assure payment of the debt he and his partners owed.
G.R. No. 172690               March 3, 2010 On May 18, 1995, Elfledo died, leaving respondent as his sole surviving heir. Petitioners
claimed that respondent took over the administration of the aforementioned properties,
HEIRS OF JOSE LIM, represented by ELENITO LIM, Petitioners,  which belonged to the estate of Jose, without their consent and approval. Claiming that
they are co-owners of the properties, petitioners required respondent to submit an
vs.
JULIET VILLA LIM, Respondent. accounting of all income, profits and rentals received from the estate of Elfledo, and to
surrender the administration thereof. Respondent refused; thus, the filing of this case.

DECISION
Respondent traversed petitioners' allegations and claimed that Elfledo was himself a
partner of Norberto and Jimmy. Respondent also claimed that per testimony of Cresencia,
NACHURA, J.: sometime in 1980, Jose gave Elfledo ₱50,000.00 as the latter's capital in an informal
partnership with Jimmy and Norberto. When Elfledo and respondent got married in 1981,
Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of the partnership only had one truck; but through the efforts of Elfledo, the business
Civil Procedure, assailing the Court of Appeals (CA) Decision 2 dated June 29, 2005, flourished. Other than this trucking business, Elfledo, together with respondent, engaged
which reversed and set aside the decision 3 of the Regional Trial Court (RTC) of Lucena in other business ventures. Thus, they were able to buy real properties and to put up their
City, dated April 12, 2004. own car assembly and repair business. When Norberto was ambushed and killed on July
16, 1993, the trucking business started to falter. When Elfledo died on May 18, 1995 due
to a heart attack, respondent talked to Jimmy and to the heirs of Norberto, as she could no
The facts of the case are as follows: longer run the business. Jimmy suggested that three out of the nine trucks be given to him
as his share, while the other three trucks be given to the heirs of Norberto. However,
Petitioners are the heirs of the late Jose Lim (Jose), namely: Jose's widow Cresencia Norberto's wife, Paquita Uy, was not interested in the vehicles. Thus, she sold the same to
Palad (Cresencia); and their children Elenito, Evelia, Imelda, Edelyna and Edison, all respondent, who paid for them in installments.
surnamed Lim (petitioners), represented by Elenito Lim (Elenito). They filed a
Complaint4 for Partition, Accounting and Damages against respondent Juliet Villa Lim Respondent also alleged that when Jose died in 1981, he left no known assets, and the
(respondent), widow of the late Elfledo Lim (Elfledo), who was the eldest son of Jose and partnership with Jimmy and Norberto ceased upon his demise. Respondent also stressed
Cresencia. that Jose left no properties that Elfledo could have held in trust. Respondent maintained
that all the properties involved in this case were purchased and acquired through her and
Petitioners alleged that Jose was the liaison officer of Interwood Sawmill in Cagsiay, her husband’s joint efforts and hard work, and without any participation or contribution
Mauban, Quezon. Sometime in 1980, Jose, together with his friends Jimmy Yu (Jimmy) from petitioners or from Jose. Respondent submitted that these are conjugal partnership
and Norberto Uy (Norberto), formed a partnership to engage in the trucking business. properties; and thus, she had the right to refuse to render an accounting for the income or
Initially, with a contribution of ₱50,000.00 each, they purchased a truck to be used in the profits of their own business.
hauling and transport of lumber of the sawmill. Jose managed the operations of this
trucking business until his death on August 15, 1981. Thereafter, Jose's heirs, including Trial on the merits ensued. On April 12, 2004, the RTC rendered its decision in favor of
Elfledo, and partners agreed to continue the business under the management of Elfledo. petitioners, thus:
The shares in the partnership profits and income that formed part of the estate of Jose
were held in trust by Elfledo, with petitioners' authority for Elfledo to use, purchase or
acquire properties using said funds. WHEREFORE, premises considered, judgment is hereby rendered:

Petitioners also alleged that, at that time, Elfledo was a fresh commerce graduate serving 1) Ordering the partition of the above-mentioned properties equally between
as his father’s driver in the trucking business. He was never a partner or an investor in the the plaintiffs and heirs of Jose Lim and the defendant Juliet Villa-Lim; and
business and merely supervised the purchase of additional trucks using the income from
the trucking business of the partners. By the time the partnership ceased, it had nine 2) Ordering the defendant to submit an accounting of all incomes, profits and
trucks, which were all registered in Elfledo's name. Petitioners asseverated that it was rentals received by her from said properties.
also through Elfledo’s management of the partnership that he was able to purchase
numerous real properties by using the profits derived therefrom, all of which were
SO ORDERED.
registered in his name and that of respondent. In addition to the nine trucks, Elfledo also
acquired five other motor vehicles.
Aggrieved, respondent appealed to the CA. (4) When the judgment is based on a misapprehension of facts;

On June 29, 2005, the CA reversed and set aside the RTC's decision, dismissing (5) When the findings of fact are conflicting;
petitioners' complaint for lack of merit. Undaunted, petitioners filed their Motion for
Reconsideration,5 which the CA, however, denied in its Resolution6 dated May 8, 2006.
(6) When the Court of Appeals, in making its findings, went beyond the issues
of the case and the same is contrary to the admissions of both appellant and
Hence, this Petition, raising the sole question, viz.: appellee;

IN THE APPRECIATION BY THE COURT OF THE EVIDENCE SUBMITTED BY (7) When the findings are contrary to those of the trial court;
THE PARTIES, CAN THE TESTIMONY OF ONE OF THE PETITIONERS BE
GIVEN GREATER WEIGHT THAN THAT BY A FORMER PARTNER ON THE
(8) When the findings of fact are conclusions without citation of specific
ISSUE OF THE IDENTITY OF THE OTHER PARTNERS IN THE PARTNERSHIP? 7 evidence on which they are based;

In essence, petitioners argue that according to the testimony of Jimmy, the sole surviving
(9) When the facts set forth in the petition as well as in the petitioners' main
partner, Elfledo was not a partner; and that he and Norberto entered into a partnership and reply briefs are not disputed by the respondents; and
with Jose. Thus, the CA erred in not giving that testimony greater weight than that of
Cresencia, who was merely the spouse of Jose and not a party to the partnership. 8
(10) When the findings of fact of the Court of Appeals are premised on the
supposed absence of evidence and contradicted by the evidence on record. 11
Respondent counters that the issue raised by petitioners is not proper in a petition for
review on certiorari under Rule 45 of the Rules of Civil Procedure, as it would entail the
review, evaluation, calibration, and re-weighing of the factual findings of the CA. We note, however, that the findings of fact of the RTC are contrary to those of the CA.
Moreover, respondent invokes the rationale of the CA decision that, in light of the Thus, our review of such findings is warranted.
admissions of Cresencia and Edison and the testimony of respondent, the testimony of
Jimmy was effectively refuted; accordingly, the CA's reversal of the RTC's findings was On the merits of the case, we find that the instant Petition is bereft of merit.
fully justified.9

A partnership exists when two or more persons agree to place their money, effects, labor,
We resolve first the procedural matter regarding the propriety of the instant Petition. and skill in lawful commerce or business, with the understanding that there shall be a
proportionate sharing of the profits and losses among them. A contract of partnership is
Verily, the evaluation and calibration of the evidence necessarily involves consideration defined by the Civil Code as one where two or more persons bind themselves to
of factual issues — an exercise that is not appropriate for a petition for review on contribute money, property, or industry to a common fund, with the intention of dividing
certiorari under Rule 45. This rule provides that the parties may raise only questions of the profits among themselves.12
law, because the Supreme Court is not a trier of facts. Generally, we are not duty-bound
to analyze again and weigh the evidence introduced in and considered by the tribunals Undoubtedly, the best evidence would have been the contract of partnership or the
below.10 When supported by substantial evidence, the findings of fact of the CA are articles of partnership. Unfortunately, there is none in this case, because the alleged
conclusive and binding on the parties and are not reviewable by this Court, unless the partnership was never formally organized. Nonetheless, we are asked to determine who
case falls under any of the following recognized exceptions: between Jose and Elfledo was the "partner" in the trucking business.

(1) When the conclusion is a finding grounded entirely on speculation, A careful review of the records persuades us to affirm the CA decision. The evidence
surmises and conjectures; presented by petitioners falls short of the quantum of proof required to establish that: (1)
Jose was the partner and not Elfledo; and (2) all the properties acquired by Elfledo and
(2) When the inference made is manifestly mistaken, absurd or impossible; respondent form part of the estate of Jose, having been derived from the alleged
partnership.
(3) Where there is a grave abuse of discretion;
Petitioners heavily rely on Jimmy's testimony. But that testimony is just one piece of (b) As wages of an employee or rent to a landlord;
evidence against respondent. It must be considered and weighed along with petitioners'
other evidence vis-à-vis respondent's contrary evidence. In civil cases, the party having (c) As an annuity to a widow or representative of a deceased
the burden of proof must establish his case by a preponderance of evidence.
partner;
"Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on
either side and is usually considered synonymous with the term "greater weight of the
evidence" or "greater weight of the credible evidence." "Preponderance of evidence" is a (d) As interest on a loan, though the amount of payment vary with
phrase that, in the last analysis, means probability of the truth. It is evidence that is more the profits of the business;
convincing to the court as worthy of belief than that which is offered in opposition
thereto.13 Rule 133, Section 1 of the Rules of Court provides the guidelines in (e) As the consideration for the sale of a goodwill of a business or
determining preponderance of evidence, thus: other property by installments or otherwise.

SECTION I. Preponderance of evidence, how determined. In civil cases, the party having Applying the legal provision to the facts of this case, the following circumstances tend to
burden of proof must establish his case by a preponderance of evidence. In determining prove that Elfledo was himself the partner of Jimmy and Norberto: 1) Cresencia testified
where the preponderance or superior weight of evidence on the issues involved lies, the that Jose gave Elfledo ₱50,000.00, as share in the partnership, on a date that coincided
court may consider all the facts and circumstances of the case, the witnesses' manner of with the payment of the initial capital in the partnership; 15 (2) Elfledo ran the affairs of
testifying, their intelligence, their means and opportunity of knowing the facts to which the partnership, wielding absolute control, power and authority, without any intervention
they are testifying, the nature of the facts to which they testify, the probability or or opposition whatsoever from any of petitioners herein; 16 (3) all of the properties,
improbability of their testimony, their interest or want of interest, and also their personal particularly the nine trucks of the partnership, were registered in the name of Elfledo; (4)
credibility so far as the same may legitimately appear upon the trial. The court may also Jimmy testified that Elfledo did not receive wages or salaries from the partnership,
consider the number of witnesses, though the preponderance is not necessarily with the indicating that what he actually received were shares of the profits of the business; 17 and
greater number. (5) none of the petitioners, as heirs of Jose, the alleged partner, demanded periodic
accounting from Elfledo during his lifetime. As repeatedly stressed in Heirs of Tan Eng
At this juncture, our ruling in Heirs of Tan Eng Kee v. Court of Appeals 14 is enlightening. Kee,18 a demand for periodic accounting is evidence of a partnership.
Therein, we cited Article 1769 of the Civil Code, which provides:
Furthermore, petitioners failed to adduce any evidence to show that the real and personal
Art. 1769. In determining whether a partnership exists, these rules shall apply: properties acquired and registered in the names of Elfledo and respondent formed part of
the estate of Jose, having been derived from Jose's alleged partnership with Jimmy and
Norberto. They failed to refute respondent's claim that Elfledo and respondent engaged in
(1) Except as provided by Article 1825, persons who are not partners as to other businesses. Edison even admitted that Elfledo also sold Interwood lumber as a
each other are not partners as to third persons;
sideline.19 Petitioners could not offer any credible evidence other than their bare
assertions. Thus, we apply the basic rule of evidence that between documentary and oral
(2) Co-ownership or co-possession does not of itself establish a partnership, evidence, the former carries more weight.20
whether such co-owners or co-possessors do or do not share any profits made
by the use of the property; Finally, we agree with the judicious findings of the CA, to wit:

(3) The sharing of gross returns does not of itself establish a partnership,
The above testimonies prove that Elfledo was not just a hired help but one of the partners
whether or not the persons sharing them have a joint or common right or in the trucking business, active and visible in the running of its affairs from day one until
interest in any property from which the returns are derived;
this ceased operations upon his demise. The extent of his control, administration and
management of the partnership and its business, the fact that its properties were placed in
(4) The receipt by a person of a share of the profits of a business is a prima his name, and that he was not paid salary or other compensation by the partners, are
facie evidence that he is a partner in the business, but no such inference shall indicative of the fact that Elfledo was a partner and a controlling one at that. It is apparent
be drawn if such profits were received in payment: that the other partners only contributed in the initial capital but had no say thereafter on
how the business was ran. Evidently it was through Elfredo’s efforts and hard work that
(a) As a debt by installments or otherwise; the partnership was able to acquire more trucks and otherwise prosper. Even the appellant
participated in the affairs of the partnership by acting as the bookkeeper sans 1 and the July 26, 2000 Resolution 2 of the Court of Appeals 3 (CA) in CA-GR CV No.
salary.1avvphi1 41026. The assailed Decision disposed as follows:jgc:chanrobles.com.ph

"WHEREFORE, foregoing premises considered, the Decision dated July 21, 1992
It is notable too that Jose Lim died when the partnership was barely a year old, and the
partnership and its business not only continued but also flourished. If it were true that it rendered by the Regional Trial Court, Branch 148, Makati City is hereby SET ASIDE
and NULLIFIED and in lieu thereof a new decision is rendered ordering the [petitioners]
was Jose Lim and not Elfledo who was the partner, then upon his death the partnership
should have jointly and severally to pay and reimburse to [respondents] the amount of P253,114.00.
No pronouncement as to costs." 4 

been dissolved and its assets liquidated. On the contrary, these were not done but instead Reconsideration was denied in the impugned Resolution.
its operation continued under the helm of Elfledo and without any participation from the
heirs of Jose Lim. The Facts

Whatever properties appellant and her husband had acquired, this was through their own
concerted efforts and hard work. Elfledo did not limit himself to the business of their On July 25, 1984, Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a
partnership but engaged in other lines of businesses as well. partnership with a capital of P750,000 for the operation of a restaurant and catering
business under the name "Aquarius Food House and Catering Services." 5 Villareal was
appointed general manager and Carmelito Jose, operations manager.
In sum, we find no cogent reason to disturb the findings and the ruling of the CA as they
are amply supported by the law and by the evidence on record.
Respondent Donaldo Efren C. Ramirez joined as a partner in the business on September
5, 1984. His capital contribution of P250,000 was paid by his parents, Respondents Cesar
WHEREFORE, the instant Petition is DENIED. The assailed Court of Appeals Decision and Carmelita Ramirez. 6 
dated June 29, 2005 is AFFIRMED. Costs against petitioners.
After Jesus Jose withdrew from the partnership in January 1987, his capital contribution
SO ORDERED. of P250,000 was refunded to him in cash by agreement of the partners. 7 

In the same month, without prior knowledge of respondents, petitioners closed down the
[G.R. No. 144214. July 14, 2003.] restaurant, allegedly because of increased rental. The restaurant furniture and equipment
were deposited in the respondents’ house for storage. 8 
LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO
JOSE, Petitioners, v. DONALDO EFREN C. RAMIREZ and Spouses CESAR G. On March 1, 1987, respondent spouses wrote petitioners, saying that they were no longer
RAMIREZ JR. and CARMELITA C. RAMIREZ, Respondents. interested in continuing their partnership or in reopening the restaurant, and that they
were accepting the latter’s offer to return their capital contribution. 9 
DECISION
On October 13, 1987, Carmelita Ramirez wrote another letter informing petitioners of the
deterioration of the restaurant furniture and equipment stored in their house. She also
PANGANIBAN, J.: reiterated the request for the return of their one-third share in the equity of the
partnership. The repeated oral and written requests were, however, left unheeded. 10 

Before the Regional Trial Court (RTC) of Makati, Branch 59, respondents subsequently
A share in a partnership can be returned only after the completion of the latter’s filed a Complaint 11 dated November 10, 1987, for the collection of a sum of money
dissolution, liquidation and winding up of the business.chanrob1es virtua1 1aw 1ibrary from petitioners.

The Case In their Answer, petitioners contended that respondents had expressed a desire to
withdraw from the partnership and had called for its dissolution under Articles 1830 and
1831 of the Civil Code; that respondents had been paid, upon the turnover to them of
The Petition for Review on Certiorari before us challenges the March 23, 2000 Decision furniture and equipment worth over P400,000; and that the latter had no right to demand
a return of their equity because their share, together with the rest of the capital of the representing the contribution to the partnership minus the outstanding debt thereof." 19 
partnership, had been spent as a result of irreversible business losses. 12 
Hence, this Petition. 20 
In their Reply, respondents alleged that they did not know of any loan encumbrance on
the restaurant. According to them, if such allegation were true, then the loans incurred by Issues
petitioners should be regarded as purely personal and, as such, not chargeable to the
partnership. The former further averred that they had not received any regular report or
accounting from the latter, who had solely managed the business. Respondents also In their Memorandum, 21 petitioners submit the following issues for our
alleged that they expected the equipment and the furniture stored in their house to be consideration:jgc:chanrobles.com.ph
removed by petitioners as soon as the latter found a better location for the restaurant. 13 
"9.1. Whether the Honorable Court of Appeals’ decision ordering the distribution of the
Respondents filed an Urgent Motion for Leave to Sell or Otherwise Dispose of capital contribution, instead of the net capital after the dissolution and liquidation of a
Restaurant Furniture and Equipment 14 on July 8, 1988. The furniture and the equipment partnership, thereby treating the capital contribution like a loan, is in accordance with law
stored in their house were inventoried and appraised at P29,000. 15 The display freezer and jurisprudence;
was sold for P5,000 and the proceeds were paid to them. 16 
"9.2. Whether the Honorable Court of Appeals’ decision ordering the petitioners to
After trial, the RTC 17 ruled that the parties had voluntarily entered into a partnership, jointly and severally pay and reimburse the amount of [P]253,114.00 is supported by the
which could be dissolved at any time. Petitioners clearly intended to dissolve it when evidence on record; and
they stopped operating the restaurant. Hence, the trial court, in its July 21, 1992 Decision,
held there liable as follows: 18  "9.3. Whether the Honorable Court of Appeals was correct in making [n]o
pronouncement as to costs." 22 
"WHEREFORE, judgment is hereby rendered in favor of [respondents] and against the
[petitioners] ordering the [petitioners] to pay jointly and severally the On closer scrutiny, the issues are as follows: (1) whether petitioners are liable to
following:chanrob1es virtual 1aw library respondents for the latter’s share in the partnership; (2) whether the CA’s computation of
P253,114 as respondents’ share is correct; and (3) whether the CA was likewise correct in
(a) Actual damages in the amount of P250,000.00 not assessing costs.

(b) Attorney’s fee in the amount of P30,000.00

This Court’s Ruling
(c) Costs of suit."cralaw virtua1aw library
The Petition has merit.
The CA Ruling
First Issue:chanrob1es virtual 1aw library
The CA held that, although respondents had no right to demand the return of their capital
contribution, the partnership was nonetheless dissolved when petitioners lost interest in
Share in Partnership
continuing the restaurant business with them. Because petitioners never gave a proper
accounting of the partnership accounts for liquidation purposes, and because no sufficient
Both the trial and the appellate courts found that a partnership had indeed existed, and
evidence was presented to show financial losses, the CA. computed their liability as
that it was dissolved on March 1, 1987. They found that the dissolution took place when
follows:jgc:chanrobles.com.ph
respondents informed petitioners of the intention to discontinue it because of the former’s
dissatisfaction with, and loss of trust in, the latter’s management of the partnership
"Consequently, since what has been proven is only the outstanding obligation of the
affairs. These findings were amply supported by the evidence on record. Respondents
partnership in the amount of P240,658.00, although contracted by the partnership before
consequently demanded from petitioners the return of their one-third equity in the
[respondents’] have joined the partnership but in accordance with Article 1826 of the
partnership.
New Civil Code, they are liable which must have to be deducted from the remaining
capitalization of the said partnership which is in the amount of P1,000,000.00 resulting in
We hold that respondents have no right to demand from petitioners the return of their
the amount of P759,342.00, and in order to get the share of [respondents], this amount of
equity share. Except as managers of the partnership, petitioners did not personally hold
P759,342.00 must be divided into three (3) shares or in the amount of P253,114.00 for
its equity or assets. "The partnership has a juridical personality separate and distinct from
each share and which is the only amount which [petitioner] will return to [respondents’]
that of each of the partners." 23 Since the capital was contributed to the partnership, not shows that it was Sps. Diogenes P. Villareal and Luzviminda J. Villareal, the former
to petitioners, it is the partnership that must refund the equity of the retiring partners. 24  being the nominal party defendant in the instant case, who obtained a loan of
P355,000.00 on Oct. 1983, when the original partnership was not yet formed."cralaw
Second Issue:chanrob1es virtual 1aw library virtua1aw library

What Must Be Returned? Third, the CA failed to reduce the capitalization by P250,000, which was the amount paid
by the partnership to Jesus Jose when he withdrew from the partnership.
Since it is the partnership, as a separate and distinct entity, that must refund the shares of
the partners, the amount to be refunded is necessarily limited to its total resources. In Because of the above-mentioned transactions, the partnership capital was actually
other words, it can only pay out what it has in its coffers, which consists of all its assets. reduced. When petitioners and respondents ventured into business together, they should
However, before the partners can be paid their shares, the creditors of the partnership have prepared for the fact that their investment would either grow or shrink. In the
must first be compensated. 25 After all the creditors have been paid, whatever is left of present case, the investment of respondents substantially dwindled. The original amount
the partnership assets becomes available for the payment of the partners’ shares. of P250,000 which they had invested could no longer be returned to them, because one
third of the partnership properties at the time of dissolution did not amount to that much.
Evidently, in the present case, the exact amount of refund equivalent to respondents’ one-
third share in the partnership cannot be determined until all the partnership assets will It is a long established doctrine that the law does not relieve parties from the effects of
have been liquidated — in other words, sold and converted to cash — and all partnership unwise, foolish or disastrous contracts they have entered into with all the required
creditors, if any, paid. The CA’s computation of the amount to be refunded to formalities and with full awareness of what they were doing. Courts have no power to
respondents as their share was thus erroneous. relieve them from obligations they have voluntarily assumed, simply because their
contracts turn out to be disastrous deals or unwise investments. 29 
First, it seems that the appellate court was under the misapprehension that the total capital
contribution was equivalent to the gross assets to be distributed to the partners at the time Petitioners further argue that respondents acted negligently by permitting the partnership
of the dissolution of the partnership. We cannot sustain the underlying idea that the assets in their custody to deteriorate to the point of being almost worthless. Supposedly,
capital contribution at the beginning of the partnership remains intact, unimpaired and the latter should have liquidated these sole tangible assets of the partnership and
available for distribution or return to the partners. Such idea is speculative, conjectural considered the proceeds as payment of their net capital. Hence, petitioners argue that the
and totally without factual or legal support. turnover of the remaining partnership assets to respondents was precisely the manner of
liquidating the partnership and fully settling the latter’s share in the partnership.
Generally, in the pursuit of a partnership business, its capital is either increased by profits
earned or decreased by losses sustained. It does not remain static and unaffected by the We disagree. The delivery of the store furniture and equipment to private respondents
changing fortunes of the business. In the present case, the financial statements presented was for the purpose of storage. They were unaware that the restaurant would no longer be
before the trial court showed that the business had made meager profits. 26 However, reopened by petitioners. Hence, the former cannot be faulted for not disposing of the
notable therefrom is the omission of any provision for the depreciation 27 of the furniture stored items to recover their capital investment.
and the equipment. The amortization of the goodwill 28 (initially valued at P500,000) is
not reflected either. Properly taking these non-cash items into account will show that the Third Issue:chanrob1es virtual 1aw library
partnership was actually sustaining substantial losses, which consequently decreased the
capital of the partnership. Both the trial and the appellate courts in fact recognized the Costs
decrease of the partnership assets to almost nil, but the latter failed to recognize the
consequent corresponding decrease of the capital. Section 1, Rule 142, provides:jgc:chanrobles.com.ph

Second, the CA’s finding that the partnership had an outstanding obligation in the amount "SECTION 1. Costs ordinarily follow results of suit. — Unless otherwise provided in
of P240,658 was not supported by evidence. We sustain the contrary finding of the RTC, these rules, costs shall be allowed to the prevailing party as a matter of course, but the
which had rejected the contention that the obligation belonged to the partnership for the court shall have power, for special reasons, to adjudge that either party shall pay the costs
following reason:jgc:chanrobles.com.ph of an action, or that the same be divided, as may be equitable. No costs shall be allowed
against the Republic of the Philippines unless otherwise provided by law."cralaw
". . . [E]vidence on record failed to show the exact loan owed by the partnership to its virtua1aw library
creditors. The balance sheet (Exh.’4’) does not reveal the total loan. The Agreement
(Exh.’A’) par. 6 shows an outstanding obligation of P240,055.00 which the partnership Although, as a rule, costs are adjudged against the losing party, courts have discretion,
owes to different creditors, while the Certification issued by Mercator Finance (Exh.’8’) "for special reasons," to decree otherwise. When a lower court is reversed, the higher
court normally does not award costs, because the losing party relied on the lower court’s the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan
judgment which is presumed to have been issued in good faith, even if found later on to Eng Lay and his children caused the conversion of the partnership "Benguet Lumber"
be erroneous. Unless shown to be patently capricious, the award shall not be disturbed by into a corporation called "Benguet Lumber Company." The incorporation was
a reviewing tribunal. purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in
the profits of the business. Petitioners prayed for accounting of the partnership assets, and
WHEREFORE, the Petition is GRANTED, and the assailed Decision and Resolution the dissolution, winding up and liquidation thereof, and the equal division of the net
SET ASIDE. This disposition is without prejudice to proper proceedings for the assets of Benguet Lumber.
accounting, the liquidation and the distribution of the remaining partnership assets, if any.
No pronouncement as to costs.chanrob1es virtua1 1aw 1ibrary After trial, Regional Trial Court of Baguio City, Branch 7 rendered judgment 6 on April
12, 1995, to wit:chanrob1es virtual 1aw library
SO ORDERED.
[G.R. No. 126881. October 3, 2000.] WHEREFORE, in view of all the foregoing, judgment is hereby rendered:chanrob1es
virtual 1aw library
HEIRS OF TAN ENG KEE, Petitioners, v. COURT OF APPEALS and BENGUET
LUMBER COMPANY, represented by its President TAN ENG LAY, Respondents. a) Declaring that Benguet Lumber is a joint venture which is akin to a particular
partnership;
DECISION
b) Declaring that the deceased Tan Eng Kee and Tan Eng Lay are joint adventurers
and/or partners in a business venture and/or particular partnership called Benguet Lumber
DE LEON, JR., J.: and as such should share in the profits and/or losses of the business venture or particular
partnership;

c) Declaring that the assets of Benguet Lumber are the same assets turned over to
In this petition for review on certiorari, petitioners pray for the reversal of the Decision 1 Benguet Lumber Co. Inc. and as such the heirs or legal representatives of the deceased
dated March 13, 1996 of the former Fifth Division 2 of the Court of Appeals in CA-G.R. Tan Eng Kee have a legal right to share in said assets;
CV No. 47937, the dispositive portion of which states:chanrob1es virtua1 1aw 1ibrary
d) Declaring that all the rights and obligations of Tan Eng Kee as joint adventurer and/or
THE FOREGOING CONSIDERED, the appealed decision is hereby set aside, and the as partner in a particular partnership have descended to the plaintiffs who are his legal
complaint dismissed. heirs.

The facts are:chanrob1es virtua1 1aw 1ibrary e) Ordering the defendant Tan Eng Lay and/or the President and/or General Manager of
Benguet Lumber Company Inc. to render an accounting of all the assets of Benguet
Following the death of Tan Eng Kee on September 13, 1984, Matilde Abubo, the Lumber Company, Inc. so the plaintiffs know their proper share in the business;
common-law spouse of the decedent, joined by their children Teresita, Nena, Clarita,
Carlos, Corazon and Elpidio, collectively known as herein petitioners HEIRS OF TAN f) Ordering the appointment of a receiver to preserve and/or administer the assets of
ENG KEE, filed suit against the decedent’s brother TAN ENG LAY on February 19, Benguet Lumber Company, Inc. until such time that said corporation is finally liquidated
1990. The complaint, 3 docketed as Civil Case No. 1983-R in the Regional Trial Court of are directed to submit the name of any person they want to be appointed as receiver
Baguio City was for accounting, liquidation and winding up of the alleged partnership failing in which this Court will appoint the Branch Clerk of Court or another one who is
formed after World War II between Tan Eng Kee and Tan Eng Lay. On March 18, 1991, qualified to act as such.
the petitioners filed an amended complaint 4 impleading private respondent herein
BENGUET LUMBER COMPANY, as represented by Tan Eng Lay. The amended g) Denying the award of damages to the plaintiffs for lack of proof except the expenses in
complaint was admitted by the trial court in its Order dated May 3, 1991. 5  filing the instant case.

The amended complaint principally alleged that after the second World War, Tan Eng h) Dismissing the counter-claim of the defendant for lack of merit.
Kee and Tan Eng Lay, pooling their resources and industry together, entered into a
partnership engaged in the business of selling lumber and hardware and construction SO ORDERED.chanrob1es virtua1 1aw 1ibrary
supplies. They named their enterprise "Benguet Lumber" which they jointly managed
until Tan Eng Kee’s death. Petitioners herein averred that the business prospered due to Private respondent sought relief before the Court of Appeals which, on March 13, 1996,
rendered the assailed decision reversing the judgment of the trial court. Petitioners’
motion for reconsideration 7 was denied by the Court of Appeals in a Resolution 8 dated a. THAT THE FAMILIES OF TAN ENG KEE AND TAN ENG LAY WERE ALL
October 11, 1996. LIVING AT THE BENGUET LUMBER COMPOUND;

Hence, the present petition.chanrob1es virtua1 1aw 1ibrary b. THAT BOTH TAN ENG LAY AND TAN ENG KEE WERE COMMANDING THE
EMPLOYEES OF BENGUET LUMBER;
As a side-bar to the proceedings, petitioners filed Criminal Case No. 78856 against Tan
Eng Lay and Wilborn Tan for the use of allegedly falsified documents in a judicial c. THAT BOTH TAN ENG KEE AND TAN ENG LAY WERE SUPERVISING THE
proceeding. Petitioners complained that Exhibits "4" to "4-U" offered by the defendants EMPLOYEES THEREIN;
before the trial court, consisting of payrolls indicating that Tan Eng Kee was a mere
employee of Benguet Lumber, were fake, based on the discrepancy in the signatures of d. THAT TAN ENG KEE AND TAN ENG LAY WERE THE ONES DETERMINING
Tan Eng Kee. They also filed Criminal Cases Nos. 78857-78870 against Gloria, Julia, THE PRICES OF STOCKS TO BE SOLD TO THE PUBLIC; AND
Juliano, Willie, Wilfredo, Jean, Mary and Willy, all surnamed Tan, for alleged
falsification of commercial documents by a private individual. On March 20, 1999, the e. THAT TAN ENG LAY AND TAN ENG KEE WERE THE ONES MAKING
Municipal Trial Court of Baguio City, Branch 1, wherein the charges were filed, rendered ORDERS TO THE SUPPLIERS (PAGE 18, DECISION).
judgment 9 dismissing the cases for insufficiency of evidence.
IV
In their assignment of errors, petitioners claim that:chanrob1es virtual 1aw library

I THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE

WAS NO PARTNERSHIP JUST BECAUSE THE CHILDREN OF THE LATE TAN
ENG KEE: ELPIDIO TAN AND VERONICA CHOI, TOGETHER WITH THEIR
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WITNESS BEATRIZ TANDOC, ADMITTED THAT THEY DO NOT KNOW WHEN
WAS NO PARTNERSHIP BETWEEN THE LATE TAN ENG KEE AND HIS THE ESTABLISHMENT KNOWN IN BAGUIO CITY AS BENGUET LUMBER WAS
BROTHER TAN ENG LAY BECAUSE: (A) THERE WAS NO FIRM ACCOUNT; (B) STARTED AS A PARTNERSHIP (PAGE 16-17, DECISION).
THERE WAS NO FIRM LETTERHEADS SUBMITTED AS EVIDENCE; (C) THERE
WAS NO CERTIFICATE OF PARTNERSHIP; (D) THERE WAS NO AGREEMENT V
AS TO PROFITS AND LOSSES; AND (E) THERE WAS NO TIME FIXED FOR THE
DURATION OF THE PARTNERSHIP (PAGE 13, DECISION).
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE
II WAS NO PARTNERSHIP BETWEEN THE LATE TAN ENG KEE AND HIS
BROTHER TAN ENG LAY BECAUSE THE PRESENT CAPITAL OR ASSETS OF
BENGUET LUMBER IS DEFINITELY MORE THAN P3,000.00 AND AS SUCH THE
THE HONORABLE COURT OF APPEALS ERRED IN RELYING SOLELY ON THE EXECUTION OF A PUBLIC INSTRUMENT CREATING A PARTNERSHIP
SELF-SERVING TESTIMONY OF RESPONDENT TAN ENG LAY THAT SHOULD HAVE BEEN MADE AND NO SUCH PUBLIC INSTRUMENT
BENGUET LUMBER WAS A SOLE PROPRIETORSHIP AND THAT TAN ENG KEE ESTABLISHED BY THE APPELLEES (PAGE 17, DECISION).
WAS ONLY AN EMPLOYEE THEREOF.
As a premise, we reiterate the oft-repeated rule that findings of facts of the Court of
III Appeals will not be disturbed on appeal if such are supported by the evidence. 10 Our
jurisdiction, it must be emphasized, does not include review of factual issues.
Thus:chanrob1es virtual 1aw library
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
FOLLOWING FACTS WHICH WERE DULY SUPPORTED BY EVIDENCE OF Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a
BOTH PARTIES DO NOT SUPPORT THE EXISTENCE OF A PARTNERSHIP JUST judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the
BECAUSE THERE WAS NO ARTICLES OF PARTNERSHIP DULY RECORDED Regional Trial Court or other courts whenever authorized by law, may file with the
BEFORE THE SECURITIES AND EXCHANGE COMMISSION:chanrob1es virtual Supreme Court a verified petition for review on certiorari. The petition shall raise only
1aw library questions of law which must be distinctly set forth. 11 [Emphasis supplied]
 this is because during the war, the entire stocks of the pre-war Benguet Lumber were
Admitted exceptions have been recognized, though, and when present, may compel us to confiscated if not burned by the Japanese. After the war, because of the absence of capital
analyze the evidentiary basis on which the lower court rendered judgment. Review of to start a lumber and hardware business, Lay and Kee pooled the proceeds of their
factual issues is therefore warranted:chanrob1es virtual 1aw library individual businesses earned from buying and selling military supplies, so that the
common fund would be enough to form a partnership, both in the lumber and hardware
(1) when the factual findings of the Court of Appeals and the trial court are contradictory; business. That Lay and Kee actually established the Benguet Lumber in Baguio City, was
even testified to by witnesses. Because of the pooling of resources, the post-war Benguet
(2) when the findings are grounded entirely on speculation, surmises, or conjectures; Lumber was eventually established. That the father of the plaintiffs and Lay were
partners, is obvious from the fact that: (1) they conducted the affairs of the business
(3) when the inference made by the Court of Appeals from its findings of fact is during Kee’s lifetime, jointly, (2) they were the ones giving orders to the employees, (3)
manifestly mistaken, absurd, or impossible; they were the ones preparing orders from the suppliers, (4) their families stayed together
at the Benguet Lumber compound, and (5) all their children were employed in the
(4) when there is grave abuse of discretion in the appreciation of facts; business in different capacities.

(5) when the appellate court, in making its findings, goes beyond the issues of the case, x          x           x
and such findings are contrary to the admissions of both appellant and appellee;

(6) when the judgment of the Court of Appeals is premised on a misapprehension of It is obvious that there was no partnership whatsoever. Except for a firm name, there was
facts; no firm account, no firm letterheads submitted as evidence, no certificate of partnership,
no agreement as to profits and losses, and no time fixed for the duration of the
(7) when the Court of Appeals fails to notice certain relevant facts which, if properly partnership. There was even no attempt to submit an accounting corresponding to the
considered, will justify a different conclusion; period after the war until Kee’s death in 1984. It had no business book, no written
account nor any memorandum for that matter and no license mentioning the existence of
(8) when the findings of fact are themselves conflicting; a partnership [Citation omitted].

(9) when the findings of fact are conclusions without citation of the specific evidence on Also, the exhibits support the establishment of only a proprietorship. The certification
which they are based; and dated March 4, 1971, Exhibit "2", mentioned co-defendant Lay as the only registered
owner of the Benguet Lumber and Hardware. His application for registration, effective
(10) when the findings of fact of the Court of Appeals are premised on the absence of 1954, in fact mentioned that his business started in 1945 until 1985 (thereafter, the
evidence but such findings are contradicted by the evidence on record. 12  incorporation). The deceased, Kee, on the other hand, was merely an employee of the
Benguet Lumber Company, on the basis of his SSS coverage effective 1958, Exhibit "3."
In reversing the trial court, the Court of Appeals ruled, to wit:chanrob1es virtual 1aw In the Payrolls, Exhibits "4" to "4-U", inclusive, for the years 1982 to 1983, Kee was
library similarly listed only as an employee; precisely, he was on the payroll listing. In the
Termination Notice, Exhibit "5", Lay was mentioned also as the proprietor.
We note that the Court a quo over extended the issue because while the plaintiffs
mentioned only the existence of a partnership, the Court in turn went beyond that by
x          x           x
justifying the existence of a joint venture.

When mention is made of a joint venture, it would presuppose parity of standing between
We would like to refer to Arts. 771 and 772, NCC, that a partner [sic] may be constituted
the parties, equal proprietary interest and the exercise by the parties equally of the
in any form, but when an immovable is constituted, the execution of a public instrument
conduct of the business, thus:chanrob1es virtual 1aw library
becomes necessary. This is equally true if the capitalization exceeds P3,000.00, in which
case a public instrument is also necessary, and which is to be recorded with the Securities
x          x           x and Exchange Commission. In this case at bar, we can easily assume that the business
establishment, which from the language of the appellees, prospered (pars. 5 & 9,
Complaint), definitely exceeded P3,000.00, in addition to the accumulation of real
We have the admission that the father of the plaintiffs was not a partner of the Benguet properties and to the fact that it is now a compound. The execution of a public
Lumber before the war. The appellees however argued that (Rollo, p. 104; Brief, p. 6) instrument, on the other hand, was never established by the appellees.
 persons bound themselves to contribute money, property, or industry to a common fund,
And then in 1981, the business was incorporated and the incorporators were only Lay and and (2) they intend to divide the profits among themselves. 15 The agreement need not be
the members of his family. There is no proof either that the capital assets of the formally reduced into writing, since statute allows the oral constitution of a partnership,
partnership, assuming them to be in existence, were maliciously assigned or transferred save in two instances: (1) when immovable property or real rights are contributed, 16 and
by Lay, supposedly to the corporation and since then have been treated as a part of the (2) when the partnership has a capital of three thousand pesos or more. 17 In both cases, a
latter’s capital assets, contrary to the allegations in pars. 6, 7 and 8 of the public instrument is required. 18 An inventory to be signed by the parties and attached to
complaint.chanrob1es virtua1 1aw 1ibrary the public instrument is also indispensable to the validity of the partnership whenever
immovable property is contributed to the partnership. 19 
These are not evidences supporting the existence of a partnership:chanrob1es virtual 1aw
library The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint
venture, which it said is akin to a particular partnership. 20 A particular partnership is
1) That Kee was living in a bunk house just across the lumber store, and then in a room in distinguished from a joint adventure, to wit:chanrob1es virtual 1aw library
the bunk house in Trinidad, but within the compound of the lumber establishment, as
testified to by Tandoc; 2) that both Lay and Kee were seated on a table and were (a) A joint adventure (an American concept similar to our joint accounts) is a sort of
"commanding people" as testified to by the son, Elpidio Tan; 3) that both were informal partnership, with no firm name and no legal personality. In a joint account, the
supervising the laborers, as testified to by Victoria Choi; and 4) that Dionisio Peralta was participating merchants can transact business under their own name, and can be
supposedly being told by Kee that the proceeds of the 80 pieces of the G.I. sheets were individually liable therefor.
added to the business.chanrob1es virtua1 1aw 1ibrary
(b) Usually, but not necessarily a joint adventure is limited to a SINGLE
Partnership presupposes the following elements [Citation omitted]: 1) a contract, either TRANSACTION, although the business of pursuing to a successful termination may
oral or written. However, if it involves real property or where the capital is P3,000.00 or continue for a number of years; a partnership generally relates to a continuing business of
more, the execution of a contract is necessary; 2) the capacity of the parties to execute the various transactions of a certain kind. 21 
contract; 3) money property or industry contribution; 4) community of funds and interest,
mentioning equality of the partners or one having a proportionate share in the benefits; A joint venture "presupposes generally a parity of standing between the joint co-ventures
and 5) intention to divide the profits, being the true test of the partnership. The intention or partners, in which each party has an equal proprietary interest in the capital or property
to join in the business venture for the purpose of obtaining profits thereafter to be contributed, and where each party exercises equal rights in the conduct of the business."
divided, must be established. We cannot see these elements from the testimonial evidence 22 Nonetheless, in Aurbach, et. al. v. Sanitary Wares Manufacturing Corporation, et. al.,
of the appellees. 23 we expressed the view that a joint venture may be likened to a particular partnership,
thus:chanrob1es virtual 1aw library
As can be seen, the appellate court disputed and differed from the trial court which had
adjudged that TAN ENG KEE and TAN ENG LAY had allegedly entered into a joint The legal concept of a joint venture is of common law origin. It has no precise legal
venture. In this connection, we have held that whether a partnership exists is a factual definition, but it has been generally understood to mean an organization formed for some
matter; consequently, since the appeal is brought to us under Rule 45, we cannot entertain temporary purpose. (Gates v. Megargel, 266 Fed. 811 [1920]) It is hardly distinguishable
inquiries relative to the correctness of the assessment of the evidence by the court a quo. from the partnership, since their elements are similar — community of interest in the
13 Inasmuch as the Court of Appeals and the trial court had reached conflicting business, sharing of profits and losses, and a mutual right of control. (Blackner v.
conclusions, perforce we must examine the record to determine if the reversal was McDermott, 176 F. 2d. 498, [1949]; Carboneau v. Peterson, 95 P.2d., 1043 [1939];
justified. Buckley v. Chadwick, 45 Cal. 2d. 183, 288 P.2d. 12 289 P.2d. 242 [1955]). The main
distinction cited by most opinions in common law jurisdiction is that the partnership
The primordial issue here is whether Tan Eng Kee and Tan Eng Lay were partners in contemplates a general business with some degree of continuity, while the joint venture is
Benguet Lumber. A contract of partnership is defined by law as one where:chanrob1es formed for the execution of a single transaction, and is thus of a temporary nature. (Tufts
virtual 1aw library v. Mann. 116 Cal. App. 170, 2 P. 2d. 500 [1931]; Harmon v. Martin, 395 Ill. 595, 71 NE
2d. 74 [1947]; Gates v. Megargel 266 Fed. 811 [1920]). This observation is not entirely
. . . two or more persons bind themselves to contribute money, property, or industry to a accurate in this jurisdiction, since under the Civil Code, a partnership may be particular
common fund, with the intention of dividing the profits among themselves. or universal, and a particular partnership may have for its object a specific undertaking.
(Art. 1783, Civil Code). It would seem therefore that under Philippine law, a joint venture
Two or more persons may also form a partnership for the exercise of a profession. 14  is a form of partnership and should thus be governed by the law of partnerships. The
Supreme Court has however recognized a distinction between these two business forms,
Thus, in order to constitute a partnership, it must be established that (1) two or more and has held that although a corporation cannot enter into a partnership contract, it may
however engage in a joint venture with others. (At p. 12, Tuazon v. Bolaños, 95 Phil. 906 accounting of the expenses and earnings of the business. Were she really a partner, her
[1954]) (Campos and Lopez-Campos Comments, Notes and Selected Cases, Corporation first concern should have been to find out how the business was progressing, whether the
Code 1981). expenses were legitimate, whether the earnings were correct, etc. She was absolutely
silent with respect to any of the acts that a partner should have done; all that she did was
Undoubtedly, the best evidence would have been the contract of partnership itself, or the to receive her share of P3,000.00 a month, which cannot be interpreted in any manner
articles of partnership but there is none. The alleged partnership, though, was never than a payment for the use of the premises which she had leased from the owners.
formally organized. In addition, petitioners point out that the New Civil Code was not yet Clearly, plaintiff had always acted in accordance with the original letter of defendant of
in effect when the partnership was allegedly formed sometime in 1945, although the June 17, 1945 (Exh. "A"), which shows that both parties considered this offer as the real
contrary may well be argued that nothing prevented the parties from complying with the contract between them. 33 [Emphasis supplied]
provisions of the New Civil Code when it took effect on August 30, 1950. But all that is
in the past. The net effect, however, is that we are asked to determine whether a A demand for periodic accounting is evidence of a partnership. 34 During his lifetime,
partnership existed based purely on circumstantial evidence. A review of the record Tan Eng Kee appeared never to have made any such demand for accounting from his
persuades us that the Court of Appeals correctly reversed the decision of the trial court. brother, Tang Eng Lay.
The evidence presented by petitioners falls short of the quantum of proof required to
establish a partnership. This brings us to the matter of Exhibits "4" to "4-U" for private respondents, consisting of
payrolls purporting to show that Tan Eng Kee was an ordinary employee of Benguet
Unfortunately for petitioners, Tan Eng Kee has passed away. Only he, aside from Tan Lumber, as it was then called. The authenticity of these documents was questioned by
Eng Lay, could have expounded on the precise nature of the business relationship petitioners, to the extent that they filed criminal charges against Tan Eng Lay and his
between them. In the absence of evidence, we cannot accept as an established fact that wife and children. As aforesaid, the criminal cases were dismissed for insufficiency of
Tan Eng Kee allegedly contributed his resources to a common fund for the purpose of evidence. Exhibits "4" to "4-U" in fact shows that Tan Eng Kee received sums as wages
establishing a partnership. The testimonies to that effect of petitioners’ witnesses is of an employee. In connection therewith, Article 1769 of the Civil Code
directly controverted by Tan Eng Lay. It should be noted that it is not with the number of provides:chanrob1es virtua1 1aw 1ibrary
witnesses wherein preponderance lies; 24 the quality of their testimonies is to be
considered. None of petitioners’ witnesses could suitably account for the beginnings of In determining whether a partnership exists, these rules shall apply:chanrob1es virtual
Benguet Lumber Company, except perhaps for Dionisio Peralta whose deceased wife was 1aw library
related to Matilde Abubo. 25 He stated that when he met Tan Eng Kee after the
liberation, the latter asked the former to accompany him to get 80 pieces of G.I. sheets (1) Except as provided by Article 1825, persons who are not partners as to each other are
supposedly owned by both brothers. 26 Tan Eng Lay, however, denied knowledge of this not partners as to third persons;
meeting or of the conversation between Peralta and his brother. 27 Tan Eng Lay
consistently testified that he had his business and his brother had his, that it was only later (2) Co-ownership or co-possession does not of itself establish a partnership, whether such
on that his said brother, Tan Eng Kee, came to work for him. Be that as it may, co- co-owners or co-possessors do or do not share any profits made by the use of the
ownership or co-possession (specifically here, of the G.I. sheets) is not an indicium of the property;
existence of a partnership. 28 
(3) The sharing of gross returns does not of itself establish a partnership, whether or not
Besides, it is indeed odd, if not unnatural, that despite the forty years the partnership was the persons sharing them have a joint or common right or interest in any property which
allegedly in existence, Tan Eng Kee never asked for an accounting. The essence of a the returns are derived; 
partnership is that the partners share in the profits and losses. 29 Each has the right to
demand an accounting as long as the partnership exists. 30 We have allowed a scenario (4) The receipt by a person of a share of the profits of a business is a prima facie evidence
wherein" [i]f excellent relations exist among the partners at the start of the business and that he is a partner in the business, but no such inference shall be drawn if such profits
all the partners are more interested in seeing the firm grow rather than get immediate were received in payment:chanrob1es virtual 1aw library
returns, a deferment of sharing in the profits is perfectly plausible." 31 But in the
situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A (a) As a debt by installment or otherwise;
person is presumed to take ordinary care of his concerns. 32 As we explained in another
case:chanrob1es virtual 1aw library (b) As wages of an employee or rent to a landlord;

In the first place, plaintiff did not furnish the supposed P20,000.00 capital. In the second (c) As an annuity to a widow or representative of a deceased partner;
place, she did not furnish any help or intervention in the management of the theatre. In
the third place, it does not appear that she has even demanded from defendant any (d) As interest on a loan, though the amount of payment vary with the profits of the
business; a company sometimes argue with respect to certain matters which, in no way indicates
that they are partners as to each other. 35 
(e) As the consideration for the sale of a goodwill of a business or other property by
installments or otherwise. In the instant case, we find private respondent’s arguments to be well-taken. Where
circumstances taken singly may be inadequate to prove the intent to form a partnership,
In the light of the aforequoted legal provision, we conclude that Tan Eng Kee was only nevertheless, the collective effect of these circumstances may be such as to support a
an employee, not a partner. Even if the payrolls as evidence were discarded, petitioners finding of the existence of the parties’ intent. 36 Yet, in the case at bench, even the
would still be back to square one, so to speak, since they did not present and offer aforesaid circumstances when taken together are not persuasive indicia of a partnership.
evidence that would show that Tan Eng Kee received amounts of money allegedly They only tend to show that Tan Eng Kee was involved in the operations of Benguet
representing his share in the profits of the enterprise. Petitioners failed to show how much Lumber, but in what capacity is unclear. We cannot discount the likelihood that as a
their father, Tan Eng Kee, received, if any, as his share in the profits of Benguet Lumber member of the family, he occupied a niche above the rank-and-file employees. He would
Company for any particular period. Hence, they failed to prove that Tan Eng Kee and have enjoyed liberties otherwise unavailable were he not kin, such as his residence in the
Tan Eng Lay intended to divide the profits of the business between themselves, which is Benguet Lumber Company compound. He would have moral, if not actual, superiority
one of the essential features of a partnership. over his fellow employees, thereby entitling him to exercise powers of supervision. It
may even be that among his duties is to place orders with suppliers. Again, the
Nevertheless, petitioners would still want us to infer or believe the alleged existence of a circumstances proffered by petitioners do not provide a logical nexus to the conclusion
partnership from this set of circumstances: that Tan Eng Lay and Tan Eng Kee were desired; these are not inconsistent with the powers and duties of a manager, even in a
commanding the employees; that both were supervising the employees; that both were business organized and run as informally as Benguet Lumber Company.
the ones who determined the price at which the stocks were to be sold; and that both
placed orders to the suppliers of the Benguet Lumber Company. They also point out that There being no partnership, it follows that there is no dissolution, winding up or
the families of the brothers Tan Eng Kee and Tan Eng Lay lived at the Benguet Lumber liquidation to speak of. Hence, the petition must fail.
Company compound, a privilege not extended to its ordinary employees.
WHEREFORE, the petition is hereby denied, and the appealed decision of the Court of
However, private respondent counters that:chanrob1es virtua1 1aw 1ibrary Appeals is hereby AFFIRMED in toto. No pronouncement as to costs.

Petitioners seem to have missed the point in asserting that the above enumerated powers SO ORDERED.
and privileges granted in favor of Tan Eng Kee, were indicative of his being a partner in
Benguet Lumber for the following reasons:chanrob1es virtual 1aw library

(i) even a mere supervisor in a company, factory or store gives orders and directions to
his subordinates. So long, therefore, that an employee’s position is higher in rank, it is not
unusual that he orders around those lower in rank.

(ii) even a messenger or other trusted employee, over whom confidence is reposed by the
owner, can order materials from suppliers for and in behalf of Benguet Lumber.
Furthermore, even a partner does not necessarily have to perform this particular task. It
is, thus, not an indication that Tan Eng Kee was a partner.

(iii) although Tan Eng Kee, together with his family, lived in the lumber compound and
this privilege was not accorded to other employees, the undisputed fact remains that Tan
Eng Kee is the brother of Tan Eng Lay. Naturally, close personal relations existed
between them. Whatever privileges Tan Eng Lay gave his brother, and which were not
given the other employees, only proves the kindness and generosity of Tan Eng Lay
towards a blood relative.

(iv) and even if it is assumed that Tan Eng Kee was quarreling with Tan Eng Lay in
connection with the pricing of stocks, this does not adequately prove the existence of a
partnership relation between them. Even highly confidential employees and the owners of