Beruflich Dokumente
Kultur Dokumente
of
the
Philippines
COURT
THIRD DIVISION
VITUG, J.:
The instant petition seeks a review of the decision rendered by the Court of
Appeals, dated 26 February 1993, in CA-G.R. SP No. 24638 and No. 24648
affirming in toto that of the Securities and Exchange Commission ("SEC") in
SEC AC 254.
The antecedents of the controversy, summarized by respondent
Commission and quoted at length by the appellate court in its decision, are
hereunder restated.
The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly
registered in the Mercantile Registry on 4 January 1937 and
reconstituted with the Securities and Exchange Commission on 4
August 1948. The SEC records show that there were several
subsequent amendments to the articles of partnership on 18
September 1958, to change the firm [name] to ROSS, SELPH and
CARRASCOSO; on 6 July 1965 . . . to ROSS, SELPH, SALCEDO, DEL
ROSARIO, BITO & MISA; on 18 April 1972 to SALCEDO, DEL ROSARIO,
BITO, MISA & LOZADA; on 4 December 1972 to SALCEDO, DEL
ROSARIO, BITO, MISA & LOZADA; on 11 March 1977 to DEL ROSARIO,
BITO, MISA & LOZADA; on 7 June 1977 to BITO, MISA & LOZADA; on 19
December 1980, [Joaquin L. Misa] appellees Jesus B. Bito and Mariano
M. Lozada associated themselves together, as senior partners with
respondents-appellees Gregorio F. Ortega, Tomas O. del Castillo, Jr., and
Benjamin Bacorro, as junior partners.
On February 17, 1988, petitioner-appellant wrote the respondentsappellees a letter stating:
I am withdrawing and retiring from the firm of Bito, Misa and
Lozada, effective at the end of this month.
"I trust that the accountants will be instructed to make the
proper liquidation of my participation in the firm."
On the same day, petitioner-appellant wrote respondents-appellees
another letter stating:
"Further to my letter to you today, I would like to have a
meeting with all of you with regard to the mechanics of
liquidation, and more particularly, my interest in the two
floors of this building. I would like to have this resolved soon
because it has to do with my own plans."
On 19 February 1988, petitioner-appellant wrote respondents-appellees
another letter stating:
"The partnership has ceased to be mutually satisfactory
because of the working conditions of our employees
including the assistant attorneys. All my efforts to ameliorate
the below subsistence level of the pay scale of our
employees have been thwarted by the other partners. Not
only have they refused to give meaningful increases to the
employees, even attorneys, are dressed down publicly in a
loud voice in a manner that deprived them of their selfrespect. The result of such policies is the formation of the
union, including the assistant attorneys."
On 30 June 1988, petitioner filed with this Commission's Securities
Investigation and Clearing Department (SICD) a petition for dissolution
Atty. Misa's withdrawal from the partnership had changed the relation of the
parties and inevitably caused the dissolution of the partnership; (b) that
such withdrawal was not in bad faith; (c) that the liquidation should be to
the extent of Attorney Misa's interest or participation in the partnership
which could be computed and paid in the manner stipulated in the
partnership agreement; (d) that the case should be remanded to the SEC
Hearing Officer for the corresponding determination of the value of Attorney
Misa's share in the partnership assets; and (e) that the appointment of a
receiver was unnecessary as no sufficient proof had been shown to indicate
that the partnership assets were in any such danger of being lost, removed
or materially impaired.
In this petition for review under Rule 45 of the Rules of Court, petitioners
confine themselves to the following issues:
1. Whether or not the Court of Appeals has erred in holding that the
partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega &
Castillo) is a partnership at will;
2. Whether or not the Court of Appeals has erred in holding that the
withdrawal of private respondent dissolved the partnership regardless
of his good or bad faith; and
3. Whether or not the Court of Appeals has erred in holding that private
respondent's demand for the dissolution of the partnership so that he
can get a physical partition of partnership was not made in bad faith;
to which matters we shall, accordingly, likewise limit ourselves.
A partnership that does not fix its term is a partnership at will. That the law
firm "Bito, Misa & Lozada," and now "Bito, Lozada, Ortega and Castillo," is
indeed such a partnership need not be unduly belabored. We quote, with
approval, like did the appellate court, the findings and disquisition of
respondent SEC on this matter; viz:
The partnership agreement (amended articles of 19 August 1948) does
not provide for a specified period or undertaking. The "DURATION"
clause simply states:
In passing, neither would the presence of a period for its specific duration or
the statement of a particular purpose for its creation prevent the dissolution
of any partnership by an act or will of a partner. 6 Among partners, 7 mutual
agency arises and the doctrine of delectus personae allows them to have
the power, although not necessarily the right, to dissolve the partnership.
An unjustified dissolution by the partner can subject him to a possible action
for damages.
The dissolution of a partnership is the change in the relation of the parties
caused by any partner ceasing to be associated in the carrying on, as might
be distinguished from the winding up of, the business. 8 Upon its dissolution,
the partnership continues and its legal personality is retained until the
complete winding up of its business culminating in its termination. 9
The liquidation of the assets of the partnership following its dissolution is
governed by various provisions of the Civil Code; 10 however, an agreement
of the partners, like any other contract, is binding among them and normally
takes precedence to the extent applicable over the Code's general
provisions. We here take note of paragraph 8 of the "Amendment to Articles
of Partnership" reading thusly:
. . . In the event of the death or retirement of any partner, his interest
in the partnership shall be liquidated and paid in accordance with the
existing agreements and his partnership participation shall revert to
the Senior Partners for allocation as the Senior Partners may
determine; provided, however, that with respect to the two (2) floors of
office condominium which the partnership is now acquiring, consisting
of the 5th and the 6th floors of the Alpap Building, 140 Alfaro Street,
Salcedo Village, Makati, Metro Manila, their true value at the time of
such death or retirement shall be determined by two (2) independent
appraisers, one to be appointed (by the partnership and the other by
the) retiring partner or the heirs of a deceased partner, as the case
may be. In the event of any disagreement between the said appraisers
a third appraiser will be appointed by them whose decision shall be
final. The share of the retiring or deceased partner in the
aforementioned two (2) floor office condominium shall be determined
upon the basis of the valuation above mentioned which shall be paid
monthly within the first ten (10) days of every month in installments of
not less than P20,000.00 for the Senior Partners, P10,000.00 in the
case of two (2) existing Junior Partners and P5,000.00 in the case of the
new Junior Partner. 11
The term "retirement" must have been used in the articles, as we so hold, in
a generic sense to mean the dissociation by a partner, inclusive of
resignation or withdrawal, from the partnership that thereby dissolves it.
On the third and final issue, we accord due respect to the appellate court
and respondent Commission on their common factual finding, i.e., that
Attorney Misa did not act in bad faith. Public respondents viewed his
withdrawal to have been spurred by "interpersonal conflict" among the
partners. It would not be right, we agree, to let any of the partners remain in
the partnership under such an atmosphere of animosity; certainly, not
against their will. 12Indeed, for as long as the reason for withdrawal of a
partner is not contrary to the dictates of justice and fairness, nor for the
purpose of unduly visiting harm and damage upon the partnership, bad
faith cannot be said to characterize the act. Bad faith, in the context here
used, is no different from its normal concept of a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral obliquity.
WHEREFORE, the decision appealed from is AFFIRMED. No pronouncement
on costs.
of
the
Philippines
COURT
THIRD DIVISION
G.R. No. 75875 December 15, 1989
WOLRGANG AURBACH, JOHN GRIFFIN, DAVID P. WHITTINGHAM and
CHARLES
CHAMSAY, petitioners,
vs.
SANITARY WARES MANUFACTURING CORPORATOIN, ERNESTO V.
LAGDAMEO, ERNESTO R. LAGDAMEO, JR., ENRIQUE R. LAGDAMEO,
GEORGE F. LEE, RAUL A. BONCAN, BALDWIN YOUNG and AVELINO V.
CRUZ, respondents.
G.R. No. 75951 December 15, 1989
Section 5 (a) of the agreement uses the word "designated" and not
"nominated" or "elected" in the selection of the nine directors on a six to
three ratio. Each group is assured of a fixed number of directors in the
board.
Moreover, ASI in its communications referred to the enterprise as joint
venture. Baldwin Young also testified that Section 16(c) of the Agreement
that "Nothing herein contained shall be construed to constitute any of the
parties hereto partners or joint venturers in respect of any transaction
hereunder" was merely to obviate the possibility of the enterprise being
treated as partnership for tax purposes and liabilities to third parties.
Quite often, Filipino entrepreneurs in their desire to develop the industrial
and manufacturing capacities of a local firm are constrained to seek the
technology and marketing assistance of huge multinational corporations of
the developed world. Arrangements are formalized where a foreign group
becomes a minority owner of a firm in exchange for its manufacturing
expertise, use of its brand names, and other such assistance. However,
there is always a danger from such arrangements. The foreign group may,
from the start, intend to establish its own sole or monopolistic operations
and merely uses the joint venture arrangement to gain a foothold or test the
Philippine waters, so to speak. Or the covetousness may come later. As the
Philippine firm enlarges its operations and becomes profitable, the foreign
group undermines the local majority ownership and actively tries to
completely or predominantly take over the entire company. This
undermining of joint ventures is not consistent with fair dealing to say the
least. To the extent that such subversive actions can be lawfully prevented,
the courts should extend protection especially in industries where
constitutional and legal requirements reserve controlling ownership to
Filipino citizens.
The Lagdameo Group stated in their appellees' brief in the Court of Appeal
In fact, the Philippine Corporation Code itself recognizes the right
of stockholders to enter into agreements regarding the exercise of
their voting rights.
Sec. 100. Agreements by stockholders.xxx xxx xxx
the board of directors while Section 3 (a) (1) relates to the manner of voting
for these nominees.
This is the proper interpretation of the Agreement of the parties as regards
the election of members of the board of directors.
To allow the ASI Group to vote their additional equity to help elect even a
Filipino director who would be beholden to them would obliterate their
minority status as agreed upon by the parties. As aptly stated by the
appellate court:
... ASI, however, should not be allowed to interfere in the voting
within the Filipino group. Otherwise, ASI would be able to
designate more than the three directors it is allowed to designate
under the Agreement, and may even be able to get a majority of
the board seats, a result which is clearly contrary to the
contractual intent of the parties.
Such a ruling will give effect to both the allocation of the board
seats and the stockholder's right to cumulative voting. Moreover,
this ruling will also give due consideration to the issue raised by
the appellees on possible violation or circumvention of the AntiDummy Law (Com. Act No. 108, as amended) and the
nationalization requirements of the Constitution and the laws if
ASI is allowed to nominate more than three directors. (At p. 39,
Rollo, 75875)
Equally important as the consideration of the contractual intent of the
parties is the consideration as regards the possible domination by the
foreign investors of the enterprise in violation of the nationalization
requirements enshrined in the Constitution and circumvention of the AntiDummy Act. In this regard, petitioner Salazar's position is that the AntiDummy Act allows the ASI group to elect board directors in proportion to
their share in the capital of the entity. It is to be noted, however, that the
same law also limits the election of aliens as members of the board of
directors in proportion to their allowance participation of said entity. In the
instant case, the foreign Group ASI was limited to designate three directors.
This is the allowable participation of the ASI Group. Hence, in future
dealings, this limitation of six to three board seats should always be
Republic
SUPREME COURT
of
the
Philippines
SECOND DIVISION
G.R. No. 126881
October 3, 2000
HEIRS
OF
TAN
ENG
KEE, petitioners,
vs.
COURT OF APPEALS and BENGUET LUMBER COMPANY, represented
by its President TAN ENG LAY,respondents.
DE LEON, JR., J.:
In this petition for review on certiorari, petitioners pray for the reversal of
the Decision1 dated March 13, 1996 of the former Fifth Division 2 of the Court
of Appeals in CA-G.R. CV No. 47937, the dispositive portion of which states:
THE FOREGOING CONSIDERED, the appealed decision is hereby set
aside, and the complaint dismissed.
The facts are:
Following the death of Tan Eng Kee on September 13, 1984, Matilde Abubo,
the 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 ENG KEE, filed suit against the decedent's brother
TAN ENG LAY on February 19, 1990. The complaint, 3 docketed as Civil Case
No. 1983-R in the Regional Trial Court of Baguio City was for accounting,
liquidation and winding up of the alleged partnership formed after World
War II between Tan Eng Kee and Tan Eng Lay. On March 18, 1991, the
petitioners filed an amended complaint 4 impleading private respondent
herein BENGUET LUMBER COMPANY, as represented by Tan Eng Lay. The
amended complaint was admitted by the trial court in its Order dated May
3, 1991.5
The amended complaint principally alleged that after the second World War,
Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together,
entered into a partnership engaged in the business of selling lumber and
TAN ENG
LAY
WERE
d. THAT TAN ENG KEE AND TAN ENG LAY WERE THE ONES
DETERMINING THE PRICES OF STOCKS TO BE SOLD TO THE
PUBLIC; AND
e. THAT TAN ENG LAY AND TAN ENG KEE WERE THE ONES MAKING
ORDERS TO THE SUPPLIERS (PAGE 18, DECISION).
IV
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
xxx
xxx
We have the admission that the father of the plaintiffs was not a
partner of the Benguet Lumber before the war. The appellees however
argued that (Rollo, p. 104; Brief, p. 6) this is because during the war,
the entire stocks of the pre-war Benguet Lumber were confiscated if
not burned by the Japanese. After the war, because of the absence of
capital to start a lumber and hardware business, Lay and Kee pooled
the proceeds of their individual businesses earned from buying and
selling military supplies, so that the common fund would be enough to
xxx
xxx
xxx
xxx
We would like to refer to Arts. 771 and 772, NCC, that a partner [sic]
may be constituted in any form, but when an immovable is constituted,
the execution of a public instrument 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 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
properties and to the fact that it is now a compound. The execution of
a public instrument, on the other hand, was never established by the
appellees.
And then in 1981, the business was incorporated and the incorporators
were only Lay and the members of his family. There is no proof either
that the capital assets of the partnership, assuming them to be in
existence, were maliciously assigned or transferred by Lay, supposedly
to the corporation and since then have been treated as a part of the
latter's capital assets, contrary to the allegations in pars. 6, 7 and 8 of
the complaint.
These are not evidences supporting the existence of a partnership:
1) That Kee was living in a bunk house just across the lumber store,
and then in a room in 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 "commanding
people" as testified to by the son, Elpidio Tan; 3) that both were
supervising the laborers, as testified to by Victoria Choi; and 4) that
Dionisio Peralta was supposedly being told by Kee that the proceeds of
the 80 pieces of the G.I. sheets were added to the business.
Partnership presupposes the following elements [citation omitted]: 1) a
contract, either oral or written. However, if it involves real property or
where the capital is P3,000.00 or more, the execution of a contract is
necessary; 2) the capacity of the parties to execute the 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; and 5) intention to divide the
profits, being the true test of the partnership. The intention to join in
the business venture for the purpose of obtaining profits thereafter to
be divided, must be established. We cannot see these elements from
the testimonial evidence of the appellees.
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 venture. In this connection, we have held that whether a
partnership exists is a factual matter; consequently, since the appeal is
brought to us under Rule 45, we cannot entertain inquiries relative to the
correctness of the assessment of the evidence by the court a
quo.13 Inasmuch as the Court of Appeals and the trial court had reached
conflicting conclusions, perforce we must examine the record to determine
if the reversal was justified.
The primordial issue here is whether Tan Eng Kee and Tan Eng Lay were
partners in Benguet Lumber. A contract of partnership is defined by law as
one where:
. . . two or more persons bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing the profits among
themselves.
Two or more persons may also form a partnership for the exercise of a
profession.14
Thus, in order to constitute a partnership, it must be established that
(1) two or more persons bound themselves to contribute money,
property, or industry to a common fund, and (2) they intend to divide
the profits among themselves.15 The agreement need not be formally
reduced into writing, since statute allows the oral constitution of a
partnership, save in two instances: (1) when immovable property or
real rights are contributed,16 and (2) when the partnership has a capital
of three thousand pesos or more.17 In both cases, a public instrument is
required.18 An inventory to be signed by the parties and attached to
the public instrument is also indispensable to the validity of the
partnership whenever immovable property is contributed to the
partnership.19
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 distinguished from a joint adventure, to wit:
(a) A joint adventure (an American concept similar to our joint
accounts) is a sort of informal partnership, with no firm name and no
legal personality. In a joint account, the participating merchants can
transact business under their own name, and can be individually liable
therefor.
(b) Usually, but not necessarily a joint adventure is limited to a SINGLE
TRANSACTION, although the business of pursuing to a successful
termination may continue for a number of years; a partnership
generally relates to a continuing business of various transactions of a
certain kind.21
A joint venture "presupposes generally a parity of standing between the
joint co-ventures or partners, in which each party has an equal proprietary
interest in the capital or property contributed, and where each party
exercises equal rights in the conduct of the business." 22 Nonetheless, in
Aurbach, et. al. v. Sanitary Wares Manufacturing Corporation, et. al., 23 we
expressed the view that a joint venture may be likened to a particular
partnership, thus:
The legal concept of a joint venture is of common law origin. It has no
precise legal definition, but it has been generally understood to mean
an organization formed for some temporary purpose. (Gates v.
Megargel, 266 Fed. 811 [1920]) It is hardly distinguishable from the
partnership, since their elements are similar community of interest
in the business, sharing of profits and losses, and a mutual right of
control. (Blackner v. McDermott, 176 F. 2d. 498, [1949]; Carboneau v.
Peterson, 95 P.2d., 1043 [1939]; 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
contemplates a general business with some degree of continuity, while
the joint venture is formed for the execution of a single transaction,
and is thus of a temporary nature. (Tufts 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
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 Lumber, as it was then called. The authenticity of
these documents was questioned by petitioners, to the extent that they
filed criminal charges against Tan Eng Lay and his wife and children. As
aforesaid, the criminal cases were dismissed for insufficiency of evidence.
Exhibits "4" to "4-U" in fact shows that Tan Eng Kee received sums as wages
of an employee. In connection therewith, Article 1769 of the Civil Code
provides:
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners
as to each other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a
partnership, whether such co-owners or co-possessors do or do not
share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or
common right or interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is
a prima facie evidence that he is a partner in the business, but no such
inference shall be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased
partner;
(d) As interest on a loan, though the amount of payment vary with
the profits of the business;
(e) As the consideration for the sale of a goodwill of a business or
other property by installments or otherwise.
In the light of the aforequoted legal provision, we conclude that Tan Eng Kee
was only an employee, not a partner. Even if the payrolls as evidence were
discarded, petitioners would still be back to square one, so to speak, since
they did not present and offer evidence that would show that Tan Eng Kee
received amounts of money allegedly representing his share in the profits of
the enterprise. Petitioners failed to show how much their father, Tan Eng
Kee, received, if any, as his share in the profits of Benguet Lumber Company
for any particular period. Hence, they failed to prove that Tan Eng Kee and
Tan Eng Lay intended to divide the profits of the business between
themselves, which is one of the essential features of a partnership.
Nevertheless, petitioners would still want us to infer or believe the alleged
existence of a partnership from this set of circumstances: that Tan Eng Lay
and Tan Eng Kee were commanding the employees; that both were
supervising the employees; that both were 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 the
families of the brothers Tan Eng Kee and Tan Eng Lay lived at the Benguet
Lumber Company compound, a privilege not extended to its ordinary
employees.
However, private respondent counters that:
Petitioners seem to have missed the point in asserting that the above
enumerated powers and privileges granted in favor of Tan Eng Kee,
were indicative of his being a partner in Benguet Lumber for the
following reasons:
(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 a
company sometimes argue with respect to certain matters which, in no
way indicates that they are partners as to each other. 35
In the instant case, we find private respondent's arguments to be welltaken. Where circumstances taken singly may be inadequate to prove the
intent to form a partnership, nevertheless, the collective effect of these
circumstances may be such as to support a finding of the existence of the
parties' intent.36 Yet, in the case at bench, even the aforesaid circumstances
when taken together are not persuasive indicia of a partnership. They only
tend to show that Tan Eng Kee was involved in the operations of Benguet
Lumber, but in what capacity is unclear. We cannot discount the likelihood
that as a member of the family, he occupied a niche above the rank-and-file
employees. He would have enjoyed liberties otherwise unavailable were he
not kin, such as his residence in the Benguet Lumber Company compound.
He would have moral, if not actual, superiority 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 circumstances
proffered by petitioners do not provide a logical nexus to the conclusion
desired; these are not inconsistent with the powers and duties of a
manager, even in a business organized and run as informally as Benguet
Lumber Company.
There being no partnership, it follows that there is no dissolution, winding
up or liquidation to speak of. Hence, the petition must fail.
of
the
Philippines
COURT
THIRD DIVISION
FERNAN, C.J.:
The issue to be resolved in the instant case is whether or not the fishermencrew members of the trawl fishing vessel 7/B Sandyman II are employees of
its owner-operator, De Guzman Fishing Enterprises, and if so, whether or not
they were illegally dismissed from their employment.
Records show that the petitioners were the fishermen-crew members of 7/B
Sandyman II, one of several fishing vessels owned and operated by private
respondent De Guzman Fishing Enterprises which is primarily engaged in
the fishing business with port and office at Camaligan, Camarines Sur.
Petitioners rendered service aboard said fishing vessel in various capacities,
as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief
engineer; Laurente Bautu, second engineer; Jaime Barbin, master
fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and
Eleuterio Barbin, fishermen.
For services rendered in the conduct of private respondent's regular
business of "trawl" fishing, petitioners were paid on percentage commission
basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As
agreed upon, they received thirteen percent (13%) of the proceeds of the
sale of the fish-catch if the total proceeds exceeded the cost of crude oil
consumed during the fishing trip, otherwise, they received ten percent
(10%) of the total proceeds of the sale. The patron/pilot, chief engineer and
master fisherman received a minimum income of P350.00 per week while
the assistant engineer, second fisherman, and fisherman-winchman
received a minimum income of P260.00 per week. 1
On September 11, 1983 upon arrival at the fishing port, petitioners were
told by Jorge de Guzman, president of private respondent, to proceed to the
police station at Camaligan, Camarines Sur, for investigation on the report
that they sold some of their fish-catch at midsea to the prejudice of private
respondent. Petitioners denied the charge claiming that the same was a
countermove to their having formed a labor union and becoming members
of Defender of Industrial Agricultural Labor Organizations and General
Workers Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge
against petitioners, and no criminal charges were formally filed against
them. Notwithstanding, private respondent refused to allow petitioners to
return to the fishing vessel to resume their work on the same day,
September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for
illegal dismissal and non-payment of 13th month pay, emergency cost of
living allowance and service incentive pay, with the then Ministry (now
Department) of Labor and Employment, Regional Arbitration Branch No. V,
Legaspi City, Albay, docketed as Cases Nos. 1449-83 to 1456-83. 2 They
uniformly contended that they were arbitrarily dismissed without being
given ample time to look for a new job.
On October 24, 1983, private respondent, thru its operations manager,
Conrado S. de Guzman, submitted its position paper denying the employeremployee relationship between private respondent and petitioners on the
theory that private respondent and petitioners were engaged in a joint
venture. 3
After the parties failed to reach an amicable settlement, the Labor Arbiter
scheduled the case for joint hearing furnishing the parties with notice and
summons. On December 27, 1983, after two (2) previously scheduled joint
hearings were postponed due to the absence of private respondent, one of
the petitioners herein, Alipio Ruga, the pilot/captain of the 7/B Sandyman II,
testified, among others, on the manner the fishing operations were
conducted, mode of payment of compensation for services rendered by the
fishermen-crew members, and the circumstances leading to their
dismissal. 4
On March 31, 1984, after the case was submitted for resolution, Labor
Arbiter Asisclo S. Coralde rendered a joint decision 5 dismissing all the
complaints of petitioners on a finding that a "joint fishing venture" and not
one of employer-employee relationship existed between private respondent
and petitioners.
From the adverse decision against them, petitioners appealed to the
National Labor Relations Commission.
On May 30, 1985, the National Labor Relations Commission promulgated its
resolution 6 affirming the decision of the labor arbiter that a "joint fishing
venture" relationship existed between private respondent and petitioners.
Solicitor General claims that the ruling of public respondent that a "joint
fishing venture" exists between private respondent and petitioners rests on
the resolution of the Social Security System (SSS) in a 1968 case, Case No.
708 (De Guzman Fishing Enterprises vs. SSS), exempting De Guzman Fishing
Enterprises, private respondent herein, from compulsory coverage of the
SSS on the ground that there is no employer-employee relations between
the boat-owner and the fishermen-crew members following the doctrine laid
down inPajarillo vs. SSS, 17 SCRA 1014 (1966). In applying to the case at
bar the doctrine in Pajarillo vs. SSS, supra, that there is no employeremployee relationship between the boat-owner and the pilot and crew
members when the boat-owner supplies the boat and equipment while the
pilot and crew members contribute the corresponding labor and the parties
get specific shares in the catch for their respective contribution to the
venture, the Solicitor General pointed out that the boat-owners in
the Pajarillo case, as in the case at bar, did not control the conduct of the
fishing operations and the pilot and crew members shared in the catch.
We rule in favor of petitioners.
Fundamental considerations of substantial justice persuade Us to decide the
instant case on the merits rather than to dismiss it on a mere technicality. In
so doing, we exercise the prerogative accorded to this Court enunciated
in Firestone Filipinas Employees Association, et al. vs. Firestone Tire and
Rubber Co. of the Philippines, Inc., 61 SCRA 340 (1974), thus "the wellsettled doctrine is that in labor cases before this Tribunal, no undue
sympathy is to be accorded to any claim of a procedural misstep, the idea
being that its power be exercised according to justice and equity and
substantial merits of the controversy."
Circumstances peculiar to some extent to fishermen-crew members of a
fishing vessel regularly engaged in trawl fishing, as in the case of petitioners
herein, who spend one (1) whole week or more 7 in the open sea performing
their job to earn a living to support their families, convince Us to adopt a
more liberal attitude in applying to petitioners the 10-calendar day rule in
the filing of appeals with the NLRC from the decision of the labor arbiter.
Records reveal that petitioners were informed of the labor arbiter's decision
of March 31, 1984 only on July 3,1984 by their non-lawyer representative
during the arbitration proceedings, Jose Dialogo who received the decision
eight (8) days earlier, or on June 25, 1984. As adverted to earlier, the
circumstances peculiar to petitioners' occupation as fishermen-crew
members, who during the pendency of the case understandably have to
earn a living by seeking employment elsewhere, impress upon Us that in the
ordinary course of events, the information as to the adverse decision
against them would not reach them within such time frame as would allow
them to faithfully abide by the 10-calendar day appeal period. This peculiar
circumstance and the fact that their representative is a non-lawyer provide
equitable justification to conclude that there is substantial compliance with
the ten-calendar day rule of filing of appeals with the NLRC when petitioners
filed on July 10, 1984, or seven (7) days after receipt of the decision, their
appeal with the NLRC through registered mail.
We have consistently ruled that in determining the existence of an
employer-employee relationship, the elements that are generally considered
are the following (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power
to control the employee with respect to the means and methods by which
the work is to be accomplished. 8 The employment relation arises from
contract of hire, express or implied. 9 In the absence of hiring, no actual
employer-employee relation could exist.
From the four (4) elements mentioned, We have generally relied on the socalled right-of-control test 10 where the person for whom the services are
performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end. The test calls merely for
the existence of the right to control the manner of doing the work, not the
actual exercise of the right. 11
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as
authority for the ruling that a "joint fishing venture" existed between private
respondent and petitioners is not applicable in the instant case. There is
neither light of control nor actual exercise of such right on the part of the
boat-owners in the Pajarillo case, where the Court found that the pilots
therein are not under the order of the boat-owners as regards their
employment; that they go out to sea not upon directions of the boatowners, but upon their own volition as to when, how long and where to go
fishing; that the boat-owners do not in any way control the crew-members
with whom the former have no relationship whatsoever; that they simply
join every trip for which the pilots allow them, without any reference to the
owners of the vessel; and that they only share in their own catch produced
by their own efforts.
The aforementioned circumstances obtaining in Pajarillo case do not exist in
the instant case. The conduct of the fishing operations was undisputably
shown by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II,
to be under the control and supervision of private respondent's operations
manager. Matters dealing on the fixing of the schedule of the fishing trip
and the time to return to the fishing port were shown to be the prerogative
of private respondent. 12 While performing the fishing operations, petitioners
received instructions via a single-side band radio from private respondent's
operations manager who called the patron/pilot in the morning. They are
told to report their activities, their position, and the number of tubes of fishcatch in one day. 13 Clearly thus, the conduct of the fishing operations was
monitored by private respondent thru the patron/pilot of 7/B Sandyman II
who is responsible for disseminating the instructions to the crew members.
The conclusion of public respondent that there had been no change in the
situation of the parties since 1968 when De Guzman Fishing Enterprises,
private respondent herein, obtained a favorable judgment in Case No. 708
exempting it from compulsory coverage of the SSS law is not supported by
evidence on record. It was erroneous for public respondent to apply the
factual situation of the parties in the 1968 case to the instant case in the
light of the changes in the conditions of employment agreed upon by the
private respondent and petitioners as discussed earlier.
Records show that in the instant case, as distinguished from
the Pajarillo case where the crew members are under no obligation to
remain in the outfit for any definite period as one can be the crew member
of an outfit for one day and be the member of the crew of another vessel
the next day, the herein petitioners, on the other hand, were directly hired
by private respondent, through its general manager, Arsenio de Guzman,
and its operations manager, Conrado de Guzman and have been under the
employ of private respondent for a period of 8-15 years in various
capacities, except for Laurente Bautu who was hired on August 3, 1983 as
assistant engineer. Petitioner Alipio Ruga was hired on September 29, 1974
as patron/captain of the fishing vessel; Eladio Calderon started as a
mechanic on April 16, 1968 until he was promoted as chief engineer of the
held that fishermen crew members who were recruited by one master
fisherman locally known as "maestro" in charge of recruiting others to
complete the crew members are considered employees, not industrial
partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA
379 (1973) where petitioner therein, Dr. Agustin Abong, owner of the fishing
boat, claimed that he was not the employer of the fishermen crew members
because of an alleged partnership agreement between him, as financier,
and Simplicio Panganiban, as his team leader in charge of recruiting said
fishermen to work for him, we affirmed the finding of the WCC that there
existed an employer-employee relationship between the boat-owner and the
fishermen crew members not only because they worked for and in the
interest of the business of the boat-owner but also because they were
subject to the control, supervision and dismissal of the boat-owner, thru its
agent, Simplicio Panganiban, the alleged "partner" of Dr. Abong; that while
these fishermen crew members were paid in kind, or by "pakiao basis" still
that fact did not alter the character of their relationship with Dr. Abong as
employees of the latter.
In Philippine Fishing Boat Officers and Engineers Union vs. Court of
Industrial Relations, 112 SCRA 159 (1982), we held that the employeremployee relationship between the crew members and the owners of the
fishing vessels engaged in deep sea fishing is merely suspended during the
time the vessels are drydocked or undergoing repairs or being loaded with
the necessary provisions for the next fishing trip. The said ruling is premised
on the principle that all these activities i.e., drydock, repairs, loading of
necessary provisions, form part of the regular operation of the company
fishing business.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The
questioned resolution of the National Labor Relations Commission dated
May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is
ordered to reinstate petitioners to their former positions or any equivalent
positions with 3-year backwages and other monetary benefits under the law.
No pronouncement as to costs.
SO ORDERED.
Gutierrez, Jr., Bidin and Corts, JJ., concur.
Republic
SUPREME
Manila
of
the
Philippines
COURT
SECOND DIVISION
G.R. No. 159333
ARSENIO
T.
MENDIOLA, petitioner,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION,
PACIFIC FOREST RESOURCES, PHILS., INC. and/or CELLMARK
AB, respondents.
DECISION
PUNO, J.:
On appeal are the Decision 1 and Resolution2 of the Court of Appeals, dated
January 30, 2003 and July 30, 2003, respectively, in CA-G.R. SP No. 71028,
affirming the ruling3 of the National Labor Relations Commission (NLRC),
which in turn set aside the July 30, 2001 Decision 4 of the labor arbiter. The
In July 2000, petitioner wrote Kevin Daley, Vice President for Asia of Pacfor,
seeking confirmation of his 50% equity of Pacfor Phils. 10 Private respondent
Pacfor, through William Gleason, its President, replied that petitioner is not a
part-owner of Pacfor Phils. because the latter is merely Pacfor-USA's
representative office and not an entity separate and distinct from PacforUSA. "It's simply a 'theoretical company' with the purpose of dividing the
income 50-50."11 Petitioner presumably knew of this arrangement from the
start, having been the one to propose to private respondent Pacfor the
setting up of a representative office, and "not a branch office" in the
Philippines to save on taxes.12
Petitioner claimed that he was all along made to believe that he was in a
joint venture with them. He alleged he would have been better off remaining
as an independent agent or representative of Pacfor-USA as ATM Marketing
Corp.13 Had he known that no joint venture existed, he would not have
allowed Pacfor to take the profitable business of his own company, ATM
Marketing Corp.14 Petitioner raised other issues, such as the rentals of office
furniture, salary of the employees, company car, as well as commissions
allegedly due him. The issues were not resolved, hence, in October 2000,
petitioner wrote Pacfor-USA demanding payment of unpaid commissions and
office furniture and equipment rentals, amounting to more than one million
dollars.15
On November 27, 2000, private respondent Pacfor, through counsel, ordered
petitioner to turn over to it all papers, documents, files, records, and other
materials in his or ATM Marketing Corporation's possession that belong to
Pacfor or Pacfor Phils.16 On December 18, 2000, private respondent Pacfor
also required petitioner to remit more than three hundred thousand-peso
Christmas giveaway fund for clients of Pacfor Phils. 17 Lastly, private
respondent Pacfor withdrew all its offers of settlement and ordered
petitioner to transfer title and turn over to it possession of the service car. 18
Private respondent Pacfor likewise sent letters to its clients in the
Philippines, advising them not to deal with Pacfor Phils. In its letter to
Intercontinental Paper Industries, Inc., dated November 21, 2000, private
respondent Pacfor stated:
Until further notice, please course all inquiries and communications for
Pacific Forest Resources (Philippines) to:
Pacific
200
Tamal
Corte
Madera,
(415)
927
(415) 381 4358 fax
Forest
Plaza,
CA,
Suite
USA
1700
Resources
200
94925
phone
the actual exercise of the right by interfering with the work, but the right to
control, which constitutes the test of the existence of an employer-employee
relationship.44 In the case at bar, private respondent Pacfor, as employer,
clearly possesses such right of control. Petitioner, as private respondent
Pacfor's resident agent in the Philippines, is, exactly so, only an agent of the
corporation, a representative of Pacfor, who transacts business, and accepts
service on its behalf.
This right of control was exercised by private respondent Pacfor during the
period of November to December 2000, when it directed petitioner to turn
over to it all records of Pacfor Phils.; when it ordered petitioner to remit the
Christmas giveaway fund intended for clients of Pacfor Phils.; and, when it
withdrew all its offers of settlement and ordered petitioner to transfer title
and turn over to it the possession of the service car. It was also during this
period when private respondent Pacfor sent letters to its clients in the
Philippines, particularly Intercontinental Paper Industries, Inc. and DAVCOR,
advising them not to deal with petitioner and/or Pacfor Phils. In its letter to
DAVCOR, private respondent Pacfor replied to the client's request for an
invoice payment extension, and formulated a revised payment program for
DAVCOR. This is one unmistakable proof that private respondent Pacfor
exercises control over the petitioner.
Next, we shall determine if petitioner was constructively dismissed from
employment.
The evidence shows that when petitioner insisted on his 50% equity in
Pacfor Phils., and would not quit however, private respondent Pacfor began
to systematically deprive petitioner of his duties and benefits to make him
feel that his presence in the company was no longer wanted. First, private
respondent Pacfor directed petitioner to turn over to it all records of Pacfor
Phils. This would certainly make the work of petitioner very difficult, if not
impossible. Second, private respondent Pacfor ordered petitioner to remit
the Christmas giveaway fund intended for clients of Pacfor Phils. Then it
ordered petitioner to transfer title and turn over to it the possession of the
service car. It also advised its clients in the Philippines, particularly
Intercontinental Paper Industries, Inc. and DAVCOR, not to deal with
petitioner and/or Pacfor Phils. Lastly, private respondent Pacfor appointed a
new resident agent for Pacfor Phils.45
II. B. 3. F. Lease1
Republic
SUPREME
Manila
of
the
Philippines
COURT
EN BANC
G.R. No. L-12541
for
appellants.
LABRADOR, J.:
Appeal from the judgment of the Court of First Instance of Manila, Hon.
Bienvenido A. Tan, presiding, dismissing plaintiff's complaint as well as
defendant's counterclaim. The appeal is prosecuted by plaintiff.
The record discloses that on June 17, 1945, defendant Yang Chiao Seng
wrote a letter to the palintiff Mrs. Rosario U. Yulo, proposing the formation of
a partnership between them to run and operate a theatre on the premises
occupied by former Cine Oro at Plaza Sta. Cruz, Manila. The principal
conditions of the offer are (1) that Yang Chiao Seng guarantees Mrs. Yulo a
monthly participation of P3,000 payable quarterly in advance within the first
15 days of each quarter, (2) that the partnership shall be for a period of two
years and six months, starting from July 1, 1945 to December 31, 1947, with
the condition that if the land is expropriated or rendered impracticable for
the business, or if the owner constructs a permanent building thereon, or
Mrs. Yulo's right of lease is terminated by the owner, then the partnership
shall be terminated even if the period for which the partnership was agreed
to be established has not yet expired; (3) that Mrs. Yulo is authorized
personally to conduct such business in the lobby of the building as is
ordinarily carried on in lobbies of theatres in operation, provided the said
business may not obstruct the free ingress and agrees of patrons of the
theatre; (4) that after December 31, 1947, all improvements placed by the
partnership shall belong to Mrs. Yulo, but if the partnership agreement is
terminated before the lapse of one and a half years period under any of the
causes mentioned in paragraph (2), then Yang Chiao Seng shall have the
right to remove and take away all improvements that the partnership may
place in the premises.
Pursuant to the above offer, which plaintiff evidently accepted, the parties
executed a partnership agreement establishing the "Yang & Company,
Limited," which was to exist from July 1, 1945 to December 31, 1947. It
states that it will conduct and carry on the business of operating a theatre
for the exhibition of motion and talking pictures. The capital is fixed at
P100,000, P80,000 of which is to be furnished by Yang Chiao Seng and
P20,000, by Mrs. Yulo. All gains and profits are to be distributed among the
partners in the same proportion as their capital contribution and the liability
of Mrs. Yulo, in case of loss, shall be limited to her capital contribution (Exh.
"B").
In June , 1946, they executed a supplementary agreement, extending the
partnership for a period of three years beginning January 1, 1948 to
December 31, 1950. The benefits are to be divided between them at the
rate of 50-50 and after December 31, 1950, the showhouse building shall
belong exclusively to the second party, Mrs. Yulo.
The land on which the theatre was constructed was leased by plaintiff Mrs.
Yulo from Emilia Carrion Santa Marina and Maria Carrion Santa Marina. In
the contract of lease it was stipulated that the lease shall continue for an
indefinite period of time, but that after one year the lease may be cancelled
by either party by written notice to the other party at least 90 days before
the date of cancellation. The last contract was executed between the
owners and Mrs. Yulo on April 5, 1948. But on April 12, 1949, the attorney
for the owners notified Mrs. Yulo of the owner's desire to cancel the contract
of lease on July 31, 1949. In view of the above notice, Mrs. Yulo and her
husband brought a civil action to the Court of First Instance of Manila on July
3, 1949 to declare the lease of the premises. On February 9, 1950, the
Municipal Court of Manila rendered judgment ordering the ejectment of Mrs.
Yulo and Mr. Yang. The judgment was appealed. In the Court of First
Instance, the two cases were afterwards heard jointly, and judgment was
rendered dismissing the complaint of Mrs. Yulo and her husband, and
declaring the contract of lease of the premises terminated as of July 31,
1949, and fixing the reasonable monthly rentals of said premises at P100.
Both parties appealed from said decision and the Court of Appeals, on April
30, 1955, affirmed the judgment.
On October 27, 1950, Mrs. Yulo demanded from Yang Chiao Seng her share
in the profits of the business. Yang answered the letter saying that upon the
advice of his counsel he had to suspend the payment (of the rentals)
because of the pendency of the ejectment suit by the owners of the land
against Mrs. Yulo. In this letter Yang alleges that inasmuch as he is a
sublessee and inasmuch as Mrs. Yulo has not paid to the lessors the rentals
from August, 1949, he was retaining the rentals to make good to the
landowners the rentals due from Mrs. Yulo in arrears (Exh. "E").
In view of the refusal of Yang to pay her the amount agreed upon, Mrs. Yulo
instituted this action on May 26, 1954, alleging the existence of a
partnership between them and that the defendant Yang Chiao Seng has
refused to pay her share from December, 1949 to December, 1950; that
after December 31, 1950 the partnership between Mrs. Yulo and Yang
terminated, as a result of which, plaintiff became the absolute owner of the
building occupied by the Cine Astor; that the reasonable rental that the
defendant should pay therefor from January, 1951 is P5,000; that the
defendant has acted maliciously and refuses to pay the participation of the
plaintiff in the profits of the business amounting to P35,000 from November,
1949 to October, 1950, and that as a result of such bad faith and malice on
the part of the defendant, Mrs. Yulo has suffered damages in the amount of
P160,000 and exemplary damages to the extent of P5,000. The prayer
includes a demand for the payment of the above sums plus the sum of
P10,000 for the attorney's fees.
In answer to the complaint, defendant alleges that the real agreement
between the plaintiff and the defendant was one of lease and not of
partnership; that the partnership was adopted as a subterfuge to get around
the prohibition contained in the contract of lease between the owners and
the plaintiff against the sublease of the said property. As to the other claims,
he denies the same and alleges that the fair rental value of the land is only
P1,100. By way of counterclaim he alleges that by reason of an attachment
issued against the properties of the defendant the latter has suffered
damages amounting to P100,000.
The first hearing was had on April 19, 1955, at which time only the plaintiff
appeared. The court heard evidence of the plaintiff in the absence of the
defendant and thereafter rendered judgment ordering the defendant to pay
to the plaintiff P41,000 for her participation in the business up to December,
1950; P5,000 as monthly rental for the use and occupation of the building
from January 1, 1951 until defendant vacates the same, and P3,000 for the
use and occupation of the lobby from July 1, 1945 until defendant vacates
the property. This decision, however, was set aside on a motion for
reconsideration. In said motion it is claimed that defendant failed to appear
at the hearing because of his honest belief that a joint petition for
postponement filed by both parties, in view of a possible amicable
settlement, would be granted; that in view of the decision of the Court of
Appeals in two previous cases between the owners of the land and the
plaintiff Rosario Yulo, the plaintiff has no right to claim the alleged
participation in the profit of the business, etc. The court, finding the above
motion, well-founded, set aside its decision and a new trial was held. After
trial the court rendered the decision making the following findings: that it is
not true that a partnership was created between the plaintiff and the
defendant because defendant has not actually contributed the sum
mentioned in the Articles of Partnership, or any other amount; that the real
agreement between the plaintiff and the defendant is not of the partnership
but one of the lease for the reason that under the agreement the plaintiff
did not share either in the profits or in the losses of the business as required
by Article 1769 of the Civil Code; and that the fact that plaintiff was granted
a "guaranteed participation" in the profits also belies the supposed
existence of a partnership between them. It. therefore, denied plaintiff's
claim for damages or supposed participation in the profits.
As to her claim for damages for the refusal of the defendant to allow the use
of the supposed lobby of the theatre, the court after ocular inspection found
that the said lobby was very narrow space leading to the balcony of the
theatre which could not be used for business purposes under existing
ordinances of the City of Manila because it would constitute a hazard and
danger to the patrons of the theatre. The court, therefore, dismissed the
complaint; so did it dismiss the defendant's counterclaim, on the ground
that the defendant failed to present sufficient evidence to sustain the same.
It is against this decision that the appeal has been prosecuted by plaintiff to
this Court.
The first assignment of error imputed to the trial court is its order setting
aside its former decision and allowing a new trial. This assignment of error is
without merit. As that parties agreed to postpone the trial because of a
probable amicable settlement, the plaintiff could not take advantage of
defendant's absence at the time fixed for the hearing. The lower court,
therefore, did not err in setting aside its former judgment. The final result of
the hearing shown by the decision indicates that the setting aside of the
previous decision was in the interest of justice.
In the second assignment of error plaintiff-appellant claims that the lower
court erred in not striking out the evidence offered by the defendantappellee to prove that the relation between him and the plaintiff is one of
the sublease and not of partnership. The action of the lower court in
admitting evidence is justified by the express allegation in the defendant's
answer that the agreement set forth in the complaint was one of lease and
not of partnership, and that the partnership formed was adopted in view of
a prohibition contained in plaintiff's lease against a sublease of the property.
The most important issue raised in the appeal is that contained in the fourth
assignment of error, to the effect that the lower court erred in holding that
the written contracts, Exhs. "A", "B", and "C, between plaintiff and
defendant, are one of lease and not of partnership. We have gone over the
evidence and we fully agree with the conclusion of the trial court that the