Partnership Law Cases

001 CASES - PARTNERSHIP, AGENCY AND TRUST
(Art 1767) Santos v. Spouses Reyes GR NO. 135813 25 October 2001
(Art 1769) Yulo v. Yang Chiaco Seng GR NO. L-12541 28 August 1959
Heirs of Tan Eng Kee v. CA GR NO. 126881 3 October 2000
(Art 1782) CIR v. Suter and CTA GR No. L-25532 28 February 1969
(Art 1785) Ortega v. CA GR No. 109248 3 July 1995
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VOL. 368, OCTOBER 25, 2001 261

Santos vs. Reyes
G.R. No. 135813. October 25, 2001. *
FERNANDO SANTOS, petitioner, vs. Spouses ARSENIO and NIEVES

REYES, respondents.
Remedial Law; Appeals; Factual findings of the Court of Appeals affirming
those of the trial court are binding and conclusive on the Supreme Court.—
Petitioner has utterly failed to demonstrate why a review of these factual findings
is warranted. Well-entrenched is the basic rule that factual findings of the Court
of Appeals affirming those of the trial court are binding and conclusive on the
Supreme Court. Although there are exceptions to this rule, petitioner has not
satisfactorily shown that any of them is applicable to this issue.
Same; Same; When the judgment of the Court of Appeals is premised on a
misapprehension of facts or a failure to notice certain relevant facts that would
otherwise justify a different conclusion, a review of its factual findings may be
conducted.—When the judgment of the CA is premised on a misapprehension of
facts or a failure to notice certain relevant facts that would otherwise justify a
different conclusion, as in this particular issue, a review of its factual findings
may be conducted, as an exception to the general rule applied to the first two
issues.
PETITION for review on certiorari of a decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.

Pacifico M. Lontok and Arcangelita M. Romilla-Lontok for
petitioner.
Benito P. Fabie for private respondents.
PANGANIBAN, J.:
As a general rule, the factual findings of the Court of Appeals affirming

those of the trial court are binding on the Supreme Court. However,
there are several exceptions to this principle. In the present case, we find
occasion to apply both the rule and one of the exceptions.
_______________
* THIRD DIVISION.
262
262 SUPREME COURT REPORTS ANNOTATED
Santos vs. Reyes
The Case
Before us is a Petition for Review on Certiorari assailing the November
28, 1997 Decision, as well as the August 17, 1998 and the October 9,
1
1998 Resolutions, issued by the Court of Appeals (CA) in CA-GR CV

2
No. 34742. The Assailed Decision disposed as follows:

“WHEREFORE, the decision appealed from is AFFIRMED save as For the
counterclaim which is hereby DISMISSED. Costs against [petitioner].” 3
Resolving respondent’s Motion for Reconsideration, the August 17,

1998 Resolution ruled as follows:
“WHEREFORE, [respondents’] motion for reconsideration is GRANTED.
Accordingly, the court’s decision dated November 28, 1997 is hereby
MODIFIED in that the decision appealed from is AFFIRMED in toto, with costs
against [petitioner].”
4
The October 9, 1998 Resolution denied “for lack of merit” petitioner’s

Motion for Reconsideration of the August 17, 1998 Resolution. 5
The Facts
The events that led to this case are summarized by the CA as follows:
“Sometime in June, 1986, [Petitioner] Fernando Santos and [Respondent] Nieves
Reyes were introduced to each other by one Meliton Zabat regarding a lending
business venture proposed by Nieves. It was
________________
1 FirstDivision, composed of JJ. Fidel P. Purisima, chairman; Corona Ibay-Somera,
member; and Oswaldo D. Agcaoili, member and ponente.
2 Special Former First Division, composed of JJ. Quirino D. Abad Santos, Jr., chairman
(vice J. Purisima); Ibay-Somera and Agcaoili.
3 CA Decision, p. 12; rollo, p. 96.
4 CA Resolution, p. 3; rollo, p. 241.
5 Rollo, p. 128.
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VOL. 368, OCTOBER 25, 2001 263
Santos us. Reyes
verbally agreed that [petitioner would] act as financier while [Nieves] and Zabat
[would] take charge of solicitation of members and collection of loan payments.
The venture was launched on June 13, 1986, with the understanding that
[petitioner] would receive 70% of the profits while x x x Nieves and Zabat
would earn 15% each,
“In July, 1986, x x x Nieves introduced Cesar Gragera to [petitioner].
Gragera, as chairman of the Monte Maria Development Corporation (Monte 6
Maria, for brevity), sought short-term loans for members of the corporation.
[Petitioner] and Gragera executed an agreement providing funds for Monte
Maria’s members. Under the agreement, Monte Maria, represented by Gragera,
was entitled to P1.31 commission per thousand paid daily to [petitioner] (Exh.
‘A’), x x x Nieves kept the books as representative of [petitioner] while
[Respondent] Arsenio, husband of Nieves, acted as credit investigator.
“On August 6, 1986, [petitioner], xxx [Nieves] and Zabat executed the
‘Article of Agreement’ which formalized their earlier verbal arr angement.
“[Petitioner] and [Nieves] later discovered that their partner Zabat engaged in
the same lending business in competition with their partnership[.] Zabat was
thereby expelled from the partnership. The operations with Monte Maria
continued.
“On June 5, 1987, [petitioner] filed a complaint for recovery of sum of money
and damages. [Petitioner] charged [respondents], allegedly in their capacities as
employees of [petitioner], with having misappropriated funds intended for
Gragera for the period July 8, 1986 up to March 31, 1987. Upon Gragera s
complaint that his commissions were inadequately remitted, [petitioner]
entrusted P200,000.00 to x x x Nieves to be given to Gragera. x x x Nieves
allegedly failed to account for the amount. [Petitioner] asserted that after
examination of the records, he found that of the total amount of P4,623,201.90
entrusted to [respondents], only P3,068,133.20 was remitted to Gragera, thereby
leaving the balance of P1,555,065.70 unaccounted for.
“In their answer, [respondents] asserted that they were partners and not mere
employees of [petitioner]. The complaint, they alleged, was filed to preempt and
prevent them from claiming their rightful share to the profits of the partnership.
“x x x Arsenic alleged that he was enticed by [petitioner] to take the place of
Zabat after [petitioner] learned of Zabat’s activities. Arsenio re
_______________
6 Referred
to by petitioner in his Memorandum (p. 4) as “Monte Maria Community
Development Group, Inc.”
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Santos us. Reyes
signed from his job at the Asian Development Bank to join the partnership.
“For her part, x x x Nieves claimed that she participated in the business as a
partner, as the lending activity with Monte Maria originated from her initiative.
Except for the limited period of July 8, 1986 through August 20, 1986, she did
not handle sums intended for Gragera. Collections were turned over to Gragera
because he guaranteed 100% payment of all sums loaned by Monte Maria.
Entries she made on worksheets were based on this assumptive 100% collection
of all loans. The loan releases were made less Gragera’s agreed commission.
Because of this arrangement, she neither received payments from borrowers nor
remitted any amount to Gragera. Her job was merely to make worksheets (Exhs.
‘15’ to ‘15-DDDDDDDDDD’) to convey to [petitioner] how much he would
earn if all the sums guaranteed by Gragera were collected.
“[Petitioner] on the other hand insisted that [respondents] were his mere
employees and not partners with respect to the agreement with Gragera. He
claimed that after he discovered Zabat’s activities, he ceased infusing funds,
thereby causing the extinguishment of the partnership. The agreement with
Gragera was a distinct partnership [from] that of [respondent] and Zabat.
[Petitioner] asserted that [respondents] were hired as salaried employees with
respect to the partnership between [petitioner] and Gragera.
“[Petitioner] further asserted that in Nieves’ capacity as bookkeeper, she
received all payments from which Nieves deducted Gragera’s commission. The
commission would then be remitted to Gragera. She likewise determined loan
releases.
“During the pre-trial, the parties narrowed the issues to the following points:
whether [respondents] were employees or partners of [petitioner], whether
[petitioner] entrusted money to [respondents] for delivery to Gragera, whether
the P1,555,068.70 claimed under the complaint was actually remitted to Gragera
and whether [respondents] were entitled to their counterclaim for share in the
profits.”
7
Ruling of the Trial Court

In its August 13, 1991 Decision, the trial court held that respondents
were partners, not mere employees, of petitioner. It further ruled that
Gragera was only a commission agent of petitioner, not his partner.
Petitioner moreover failed to prove that he had en-
________________
7 CA Decision. pp. 2–4: rollo, 86–88.

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VOL. 368, OCTOBER 25, 2001 265
Santos us. Reyes
trusted any money to Nieves. Thus, respondents’ counterclaim for their
share in the partnership and for damages was granted. The trial court
disposed as follows:
“39. WHEREFORE, the Court hereby renders judgment as follows:
39.1. THE SECOND AMENDED COMPLAINT dated July 26, 1989 is
DISMISSED.
39.2. The [Petitioner] FERNANDO J. SANTOS is ordered to pay the
[Respondent] NIEVES S. REYES, the following:
39.2.1. P3,064,428.00 The 15 percent share of the [respondent] NIEVES S.
REYES in the profits of her joint venture with the [petitioner].
39.2.2. Six (6) percent of P3,064,428.00 As damages from August 3, 1987
until the P3,064,428.00 is fully paid.
39.2.3. ------ P50,000.00 As moral damages
39.2.4. P10,000.00 As exemplary damages
39.3. The [petitioner] FERNANDO J. SANTOS is ordered to pay the
[respondent] ARSENIO REYES, the following:
39.3.1. P2,899,739.50 The balance of the 15 percent share of the [respondent]
ARSENIO REYES in the profits of his joint venture with the [petitioner].
39.3.2. ------ Six (6) percent of P2,899,739.50 As damages from August 3,
1987 until the P2,899,739.50 is fully paid.
39.3.3. P25,000.00 As moral damages
39.3.4. ------ P10,000.00 ------ As exemplary damages
39.4. ------ The [petitioner] FERNANDO J. SANTOS is ordered to pay the
[respondents]:
39.4.1. ------ P50,000.00 As attorney’s fees; and
39.4.2. ------ The cost of the suit.”8
Ruling of the Court of Appeals

On appeal, the Decision of the trial court was upheld, and the
counterclaim of respondents was dismissed. Upon the latter’s Motion for
Reconsideration, however, the trial court’s Decision was
________________
8 RTC Decision, pp. 16–17; rollo, pp. 82–83.

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Santos vs. Reyes
reinstated in toto. Subsequently, petitioner’s own Motion for
Reconsideration was denied in the CA Resolution of October 9, 1998.
The CA ruled that the following circumstances indicated the
existence of a partnership among the parties: (1) it was Nieves who
broached to petitioner the idea of starting a money-lending business and
introduced him to Gragera; (2) Arsenio received “dividends” or “profit-
shares” covering the period July 15 to August 7, 1986 (Exh. “6”); and
(3) the partnership contract was executed after the Agreement with
Gragera and petitioner and thus showed the parties’ intention to consider
it as a transaction of the partnership. In their common venture, petitioner
invested capital while respondents contributed industry or services, with
the intention of sharing in the profits of the business.
The CA disbelieved petitioner’s claim that Nieves had
misappropriated a total of P200,000 which was supposed to be delivered
to Gragera to cover unpaid commissions. It was his task to collect the
amounts due, while hers was merely to prepare the daily cash flow
reports (Exhs. “15–15DDDDDDDDDD”) to keep track of his
collections.
Hence, this Petition. 9
Issue
Petitioner asks this Court to rule on the following issues: 10
“Whether or not Respondent Court of Appeals acted with grave abuse of

discretion tantamount to excess or lack of jurisdiction in:
________________
9 On November 4, 1999, the Court received the Memorandum for the Respondents,
signed by Atty. Benito P. Fabie. Petitioner’s Memorandum, signed by Atty. Arcangelita M.
Romilla-Lontok, was received on October 20, 1999. In its October 27, 1999 Resolution,
this Court required the CA to explain the discrepancy in the copies of the August 17, 1998
Resolution received by the parties and to furnish it with an authentic copy thereof. The CA
complied on November 12, 1999, the date on which this case was deemed submitted for
resolution.
10 Memorandum for the Petitioner, pp. 7–8; rollo, pp. 180–181.
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Santos vs. Reyes
1. 1. 
Holding that private respondents were partners/joint venturers and
not employees of Santos in connection with the agreement between
Santos and Monte Maria/Gragera;
2. 2. 
Affirming the findings of the trial court that the phrase ‘Received
by’ on documents signed by Nieves Reyes signified receipt of
copies of the documents and not of the sums shown thereon;
3. 3. 
Affirming that the signature of Nieves Reyes on Exhibit ‘E’ was a
forgery;
4. 4. 
Finding that Exhibit ‘H’ [did] not establish receipt by Nieves
Reyes of P200,000.00 for delivery to Gragera;
5. 5. 
Affirming the dismissal of Santos’ [Second] Amended Complaint;
6. 6. 
Affirming the decision of the trial court, upholding private
respondents’ counterclaim;
7. 7. 
Denying Santos’ motion for reconsideration dated September 11,
1998.”
Succinctly put, the following were the issues raised by petitioner: (1)
whether the parties’ relationship was one of partnership or of employer-
employee; (2) whether Nieves misappropriated the sums of money
allegedly entrusted to her for delivery to Gragera as his commissions;
and (3) whether respondents were entitled to the partnership profits as
determined by the trial court.
The Court’s Ruling
The Petition is partly meritorious.
First Issue: Business Relationship
Petitioner maintains that he employed the services of respondent spouses
in the money-lending venture with Gragera, with Nieves as bookkeeper
and Arsenio as credit investigator. That Nieves introduced Gragera to
Santos did not make her a partner. She was only a witness to the
Agreement between the two. Separate from the partnership between
petitioner and Gragera was that which existed among petitioner, Nieves
and Zabat, a partnership that was dissolved when Zabat was expelled.
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Santos vs. Reyes
On the other hand, both the CA and the trial court rejected petitioner’s
contentions and ruled that the business relationship was one of
partnership. We quote from the CA Decision, as follows:
“[Respondents] were industrial partners of [petitioner]. xxx Nieves herself
provided the initiative in the lending activities with Monte Maria. In consonance
with the agreement between appellant, Nieves and Zabat (later replaced by
Arsenio), [respondents] contributed industry to the common fund with the
intention of sharing in the profits of the partnership. [Respondents] provided
services without which the partnership would not have [had] the wherewithal to
carry on the purpose for which it was organized and as such [were] considered
industrial partners (Evangelista v. Abad Santos, 51 SCRA 416 [1973]).
“While concededly, the partnership between [petitioner,] Nieves and Zabat
was technically dissolved by the expulsion of Zabat therefrom, the remaining
partners simply continued the business of the partnership without undergoing the
procedure relative to dissolution. Instead, they invited Arsenio to participate as a
partner in their operations. There was therefore, no intent to dissolve the earlier
partnership. The partnership between [petitioner,] Nieves and Arsenio simply
took over and continued the business of the former partnership with Zabat, one
of the incidents of which was the lending operations with Monte Maria.
xxx xxx xxx
“Gragera and [petitioner] were not partners. The money-lending activities
undertaken with Monte Maria was done in pursuit of the business for which the
partnership between [petitioner], Nieves and Zabat (later Arsenio) was
organized. Gragera who represented Monte Maria was merely paid commissions
in exchange for the collection of loans. The commissions were fixed on gross
returns, regardless of the expenses incurred in the operation of the business. The
sharing of gross returns does not in itself establish a partnership.” 11
We agree with both courts on this point. By the contract of partnership,

two or more persons bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits
among themselves. The “Articles of Agreement”
12
_______________
11 CA Decision, pp. 7–8; rollo, pp. 91–92.

12 Art. 1767, Civil Code. The essential elements of a partnership are as follows: (1) an
agreement to contribute money, property or industry to a common fund; and (2) an intent
to divide the profits among the contracting
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VOL. 368, OCTOBER 25, 2001 269
Santos vs. Reyes
stipulated that the signatories shall share the profits of the business in a
70–15–15 manner, with petitioner getting the lion’s share. This 13
stipulation clearly proved the establishment of a partnership.

We find no cogent reason to disagree with the lower courts that the
partnership continued lending money to the members of the Monte
Maria Community Development Group, Inc., which later on changed its
business name to Private Association for Community Development, Inc.
(PACDI). Nieves was not merely petitioner’s employee. She discharged
her bookkeeping duties in accordance with paragraphs 2 and 3 of the
Agreement, which states as follows:
1. “2. 
That the SECOND PARTY and THIRD PARTY shall handle the
solicitation and screening of prospective borrowers, and shall x x x
each be responsible in handling the collection of the loan payments
of the borrowers that they each solicited.
2. “3. 
That the bookkeeping and daily balancing of account of the
business operation shall be handled by the SECOND PARTY.” 14
The “Second Party” named in the Agreement was none other than
Nieves Reyes. On the other hand, Arsenio’s duties as credit investigator
are subsumed under the phrase “screening of prospective borrowers.”
Because of this Agreement and the disbursement of monthly
“allowances” and “profit shares” or “dividends” (Exh. “6”) to Arsenio,
we uphold the factual finding of both courts that he replaced Zabat in the
partnership.
Indeed, the partnership was established to engage in a moneylending
business, despite the fact that it was formalized only after the
Memorandum of Agreement had been signed by petitioner and Gragera.
Contrary to petitioner’s contention, there is no evidence to show that a
different business venture is referred to in this Agreement, which was
executed on August 6, 1986, or about a
________________
parties. Vitug, Compendium of Civil Law & Jurisprudence, 1993 rev. ed., p. 707; Fue

Leung v. Intermediate Appellate Court, 169 SCRA 746, 754, January 31, 1989;
and Evangelista v. Collector of Internal Revenue, 102 Phil. 140, 144, October 15, 1957.
13 Par. 4, Articles of Agreement, Annex “D”; rollo, p. 56.
14 Annex “D” of the Petition, rollo; p. 56.
270
Santos vs. Reyes
month after the Memorandum had been signed by petitioner and Gragera
on July 14, 1986. The Agreement itself attests to this fact:
“WHEREAS, the parties have decided to formalize the terms of their business
relationship in order that their respective interests may be properly defined and
established for their mutual benefit and understanding,” 15
Second Issue: No Proof of Misappropriation of  

Gragera’s Unpaid Commission
Petitioner faults the CA finding that Nieves did not misappropriate
money intended for Gragera’s commission. According to him, Gragera
remitted his daily collection to Nieves. This is shown by Exhibit
“B” (the “Schedule of Daily Payments”), which bears her signature
under the words “received by.” For the period July 1986 to March 1987,
Gragera should have earned a total commission of P4,282,429.30.
However, only P3,068,133.20 was received by him. Thus, petitioner
infers that she misappropriated the difference of P1,214,296.10, which
represented the unpaid commissions. Exhibit “H” is an untitled
tabulation which, according to him, shows that Gragera was also entitled
to a commission of P200,000, an amount that was never delivered by
Nieves. 16
On this point, the CA ruled that Exhibits “B,” “F,” “E” and “H” did
not show that Nieves received for delivery to Gragera any amount from
which the P1,214,296.10 unpaid commission was supposed to come, and
that such exhibits were insufficient proof that she had embezzled
P200,000. Said the CA:
______________
15 Annex “D” of the Petition; rollo, p. 56.

16 Petitioner claims that Nieves embezzled P1,555,068.70 from the partnership (rollo, p.
12), the amount broken down as follows:
P1,214,296.10—unpaid commission due Gragera (Exh. “C-1”)
140,772.60—unpaid commission for the two-day advance payment of clients (Exh.
“C-11”)
200,000.00—cash actually delivered by petitioner to Nieves (Exh “H”)
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Santos vs. Reyes
“The presentation of Exhibit ‘D’ vaguely denominated as ‘members ledger’ does
not clearly establish that Nieves received amounts from Monte Maria’s
members. The document does not clearly state what amounts the entries thereon
represent. More importantly, Nieves made the entries for the limited period of
January 11, 1987 to February 17, 1987 only while the rest were made by
Gragera’s own staff.
“Neither can we give probative value to Exhibit ‘E' which allegedly shows
acknowledgment of the remittance of commissions to Verona Gonzales. The
document is a private one and its due execution and authenticity have not been
duly proved as required in [S]ection 20, Rule 132 of the Rules of Court which
states:
‘Sec. 20. Proof of Private Document—Before any private document offered as authentic
is received in evidence, its due execution and authenticity must be proved either:
1. (a) 
By anyone who saw the document executed or written; or
2. (b) 
By evidence of the genuineness of the signature or handwriting of the maker.
‘Any other private document need only be identified as that which it is claimed to be.’
“The court a quo even ruled that that the signature thereon was a forgery, as it
found that:
‘x x x. But NIEVES denied that Exh. E-1 is her signature; she claimed that it is a forgery.
The initial stroke of Exh. E-1 starts from up and goes downward. The initial stroke of the
genuine signatures of NIEVES (Exhs. A-3, B-1, F-1, among others) starts from below
and goes upward. This difference in the start of the initial stroke of the signatures Exhs.
E-1 and of the genuine signatures lends credence to Nieves’ claim that the signature Exh.
E-1 is a forgery.’
x x x x x x x x x
“Nieves’ testimony that the schedules of daily payment (Exhs. ‘B’ and ‘F’)
were based on the predetermined 100% collection as guaranteed by Gragera is
credible and clearly in accord with the evidence. A perusal of Exhs. “B” and “F”
as well as Exhs. 15’ to 15-DDDDDDDDDD’ reveal that the entries were indeed
based on the 100% assumptive collection guaranteed by Gragera. Thus, the total
amount recorded on Exh. ‘B’ is exactly the number of borrowers multiplied by
the projected collection of P150.00 per borrower. This holds true for Exh. ‘F.’
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Santos vs. Reyes
“Corollarily, Nieves’ explanation that the documents were pro forma and that she
signed them not to signify that she collected the amounts but that she received
the documents themselves is more believable than [petitioner’s] assertion that
she actually handled the amounts.
“Contrary to [petitioner’s] assertion, Exhibit ‘H’ does not unequivocally
establish that x x x Nieves received P200,000.00 commission for Gragera. As
correctly stated by the court a quo, the document showed a liquidation
of P240,000.00 and not P200,000.00.
“Accordingly, we find Nieves’ testimony that after August 20, 1986, all
collections were made by Gragera believable and worthy of credence. Since
Gragera guaranteed a daily 100% payment of the loans, he took charge of the
collections. As [petitioner’s] representative, Nieves merely prepared the daily
cash flow reports (Exh. ‘15’ to ‘15 DDDDDDDDDD’) to enable [petitioner] to
keep track of Gragera’s operations. Gragera on the other hand devised the
schedule of daily payment (Exhs. ‘B’ and ‘F’) to record the projected gross daily
collections.
“As aptly observed by the court a quo:
‘26.1. As between the versions of SANTOS and NIEVES on how the commissions of
GRAGERA [were] paid to him[,] that of NIEVES is more logical and practical and
therefore, more believable. SANTOS’ version would have given rise to this improbable
situation: GRAGERA would collect the daily amortizations and then give them to
NIEVES; NIEVES would get GRAGERA’s commissions from the amortizations and then
give such commission to GRAGERA.’ ” 17
These findings are in harmony with the trial court’s ruling, which we
quote below:
“21. Exh. H does not prove that SANTOS gave to NIEVES and the latter
received P200,000.00 for delivery to GRAGERA. Exh. H shows under its sixth
column ADDITIONAL CASH’ that the additional cash was P240,000.00. If Exh.
H were the liquidation of the P200,000.00 as alleged by SANTOS, then his
claim is not true. This is so because it is a liquidation of the sum of P240,000.00.
“21.1. SANTOS claimed that he learned of NIEVES’ failure to give the
P200,000.00 to GRAGERA when he received the latter’s letter complaining of
its delayed release. Assuming as true SANTOS’ claim that he gave P200,000.00
to GRAGERA, there is no competent evidence that NIEVES did not give it to
GRAGERA. The only proof that NIEVES did not
________________
17 CA Decision, pp. 10–11; rollo, pp. 94–95.

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Santos vs. Reyes
give it is the letter. But SANTOS did not even present the letter in evidence. He
did not explain why he did not.
“21.2. The evidence shows that all money transactions of the money-lending
business of SANTOS were covered by petty cash vouchers. It is therefore
strange why SANTOS did not present any voucher or receipt covering the
P200,000.00.” 18
In sum, the lower courts found it unbelievable that Nieves had

embezzled P1,555,068.70 from the partnership. She did not remit
P1,214,296.10 to Gragera, because he had deducted his commissions
before remitting his collections. Exhibits “B” and “F” are merely
computations of what Gragera should collect for the day; they do not
show that Nieves received the amounts stated therein. Neither is there
sufficient proof that she misappropriated P200,000, because Exhibit “H”
does not indicate that such amount was received by her; in fact, it shows
a different figure.
Petitioner has utterly failed to demonstrate why a review of these
factual findings is warranted. Well-entrenched is the basic rule that
factual findings of the Court of Appeals affirming those of the trial court
are binding and conclusive on the Supreme Court. Although there are
19
exceptions to this rule, petitioner has not satisfactorily shown that any of
them is applicable to this issue.
Third Issue: Accounting of Partnership
Petitioner refuses any liability for respondents’ claims on the profits of
the partnership. He maintains that “both business propositions were
flops,” as his investments were “consumed and eaten up by the
commissions orchestrated to be due Gragera”—a situation that “could
not have been rendered possible without complicity between Nieves and
Gragera.”
_______________
18 RTC Decision, p. 12; rollo, p. 78.

19 National Steel Corp. v. Court of Appeals, 283 SCRA 45, 66, December 12,
1997; Fuentes v. Court of Appeals, 268 SCRA 703, 708–709, February 26, 1997; Sps.
Lagandaon v. Court of Appeals, 290 SCRA 330, 341, May 21,1998.
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Santos vs. Reyes
Respondent spouses, on the other hand, postulate that petitioner
instituted the action below to avoid payment of the demands of Nieves,
because sometime in March 1987, she “signified to petitioner that it was
about time to get her share of the profits which had already accumulated
to some P3 million.” Respondents add that while the partnership has not
declared dividends or liquidated its earnings, the profits are already
reflected on paper. To prove the counterclaim of Nieves, the spouses
show that from June 13, 1986 up to April 19, 1987, the profit totaled
P20,429,520 (Exhs. “10” et seq. and “15” et seq.). Based on that income,
her 15 percent share under the joint venture amounts to P3,064,428
(Exh. “10–1– 3”); and Arsenio’s, P2,026,000 minus the P30,000 which
was already advanced to him (Petty Cash Vouchers, Exhs. “6, 6-A to
6B”).
The CA originally held that respondents’ counterclaim was
premature, pending an accounting of the partnership. However, in its
assailed Resolution of August 17, 1998, it turned volte face.Affirming
the trial court’s ruling on the counterclaim, it held as follows:
“We earlier ruled that there is still need for an accounting of the profits and
losses of the partnership before we can rule with certainty as to the respective
shares of the partners. Upon a further review of the records of this case,
however, there appears to be sufficient basis to determine the amount of shares
of the parties and damages incurred by [respondents]. The fact is that the court
a quo already made such a determination [in its] decision dated August 13, 1991
on the basis of the facts on record.” 20
The trial court’s ruling alluded to above is quoted below:

“27. The defendants’ counterclaim for the payment of their share in the profits of
their joint venture with SANTOS is supported by the evidence.
“27.1. NIEVES testified that: Her claim to a share in the profits is based on
the agreement (Exhs. “5”, “5-A” and “5-B”). The profits are shown in the
working papers (Exhs. “10” to “10–1”, inclusive) which she prepared. Exhs.
“10” to “10–1” (inclusive) were based on the daily cash flow reports of
_______________
20 CA Resolution, p. 2; rollo, p. 240.

275
VOL. 368, OCTOBER 25, 2001 275
Santos vs. Reyes
which Exh. “3” is a sample. The originals of the daily cash flow reports (Exhs.
“3” and “15” to “15-D(10)” were given to SANTOS. The joint venture had a net
profit of P20,429,520.00 (Exh. “10-I-1”), from its operations from June 13, 1986
to April 19, 1987 (Exh. “1–1–4”). She had a share of P3,064,428.00 (Exh. “10-
I-3”) and ARSENIO, about P2,926,000.00, in the profits.
“27.1.1 SANTOS never denied NIEVES' testimony that the moneylending
business he was engaged in netted a profit and that the originals of the daily case
flow reports were furnished to him. SANTOS however alleged that the money-
lending operation of his joint venture with NIEVES and ZABAT resulted in a
loss of about half a million pesos to him. But such loss, even if true, does not
negate NIEVES’ claim that overall, the joint venture among them—SANTOS,
NIEVES and ARSENIO—netted a profit. There is no reason for the Court to
doubt the veracity of [the testimony of] NIEVES.
“27.2 The P26,260.50 which ARSENIO received as part of his share in the
profits (Exhs. 6, 6-A and 6-B) should be deducted from his total share.”21
After a close examination of respondents’ exhibits, we find reason to

disagree with the CA. Exhibit “10-I” shows that the partnership earned
22
a “total income” of P20,429,520 for the period June 13, 1986 until April
19, 1987. This entry is derived from the sum of the amounts under the
following column headings: “2-Day Advance Collection,” “Service
Fee,” “Notarial Fee,” “Application Fee,” “Net Interest Income” and
“Interest Income on Investment.” Such entries represent the collections
of the money-lending business or its gross income.
The “total income” shown on Exhibit “10-I” did not consider the
expenses sustained by the partnership. For instance, it did not factor in
the “gross loan releases” representing the money loaned to clients. Since
the business is money-lending, such releases are comparable with the
inventory or supplies in other business enterprises.
________________
21 RTC Decision, p. 14; rollo, p. 80.

22 “Daily Interest Income & Other Income Control,” Folder II, Records.
276
Santos vs. Reyes
Noticeably missing from the computation of the “total income” is the
deduction of the weekly allowance disbursed to respondents. Exhibits
“I” et seq. and “J” et seq. show that Arsenio received allowances from
23
July 19, 1986 to March 27, 1987 in the aggregate amount of P25,500;
and Nieves, from July 12, 1986 to March 27, 1987, in the total amount
of P25,600. These allowances are different from the profit already
received by Arsenio. They represent expenses that should have been
deducted from the business profits. The point is that all expenses
incurred by the money-lending enterprise of the parties must first be
deducted from the “total income” in order to arrive at the “net profit” of
the partnership. The share of each one of them should be based on this
“net profit” and not from the “gross income” or “total income” reflected
in Exhibit “10–1,” which the two courts invariably referred to as “cash
flow” sheets.
Similarly, Exhibits “15” et seq., which are the “Daily Cashflow
24
Reports,” do not reflect the business expenses incurred by the parties,

because they show only the daily cash collections. Contrary to the
rulings of both the trial and the appellate courts, respondents’ exhibits do
not reflect the complete financial condition of the money-lending
business. The lower courts obviously labored over a mistaken notion that
Exhibit “10–1–1” represented the “net profits” earned by the partnership.
For the purpose of determining the profit that should go to an
industrial partner (who shares in the profits but is not liable for the
losses), the gross income from all the transactions carried on by the firm
must be added together, and from this sum must be subtracted the
expenses or the losses sustained in the business. Only in the difference
representing the net profits does the industrial partner share. But if, on
the contrary, the losses exceed the income, the industrial partner does not
share in the losses. 25
________________
23 Folder I, Records.
24 Folder II, Records.
25 Criado v. Gutierrez Hermanos, 37 Phil. 883, 894–895, March 23, 1918; and Moran,
Jr. v. Court of Appeals, 133 SCRA 88, 96, October 31, 1984.
277
VOL. 368, OCTOBER 25, 2001 277
Santos us. Reyes
When the judgment of the CA is premised on a misapprehension of facts
or a failure to notice certain relevant facts that would otherwise justify a
different conclusion, as in this particular issue, a review of its factual
findings may be conducted, as an exception to the general rule applied to
the first two issues. 26
The trial court has the advantage of observing the witnesses while
they are testifying, an opportunity not available to appellate courts.
Thus, its assessment of the credibility of witnesses and their testimonies
are accorded great weight, even finality, when supported by substantial
evidence; more so when such assessment is affirmed by the CA. But
when the issue involves the evaluation of exhibits or documents that are
attached to the case records, as in the third issue, the rule may be
relaxed. Under that situation, this Court has a similar opportunity to
inspect, examine and evaluate those records, independently of the lower
courts. Hence, we deem the award of the partnership share, as computed
by the trial court and adopted by the CA, to be incomplete and not
binding on this Court.
WHEREFORE, the Petition is partly GRANTED. The assailed
November 28, 1997 Decision is AFFIRMED, but the challenged
Resolutions dated August 17, 1998 and October 9, 1998 are
REVERSED and SET ASIDE. No costs.
SO ORDERED.
Melo (Chairman) and Sandoval-Gutierrez, JJ., concur.
Vitug, J., On official leave.
Petition partly granted, judgment affirmed. Resolutions of August 17,
1998 and October 9, 1998 reversed and set aside.
Note.—Factual findings of the Court of Appeals are conclusive on
the parties and carry even more weight when the said court affirms the
factual findings of the trial court. (Boneng vs. People,304 SCRA
252 [1999])
——o0o——
_______________
26 Fuentes v. CA, supra at 709.

278
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
[No. L-12541. August 28, 1959]
ROSARIO U. YULO, assisted by her husband JOSE C. YULO,
plaintiffs and appellants, vs. YANG CHIAO SENG, defendant and
appellee.
1. 1. 
TRIAL; ABSENCE OF ONE PARTY PURSUANT TO
AGREEMENT; EFFECT ON JUDGMENT.—If the parties to a case
agreed to postpone the trial of the same in view of a probable amicable
settlement, neither of them can take advantage of the other's absence in the
hearing by appearing. therein and adducing evidence in
111
VOL. 106, AUGUST 28, 1959 111
Yulo vs. Yang Chiao Seng
2. his favor. The judgment rendered by the Court based on such evidence
should, in the interest of justice, be set aside.
1. 2. 
CONTRACTS; LEASE; CIRCUMSTANCES THAT NEGATE
PARTNERSHIP.—Where one of the parties to a contract does not
contribute the capital he is supposed to contribute to a common fund; does
not furnish any help or intervention in the management of the business
subject of the contract; does not demand from the other party an
accounting of the expenses and earnings of the business; and is absolutely
silent with respect to any of the acts that a partner should have done, but,
on the other hand, receives a fixed monthly sum from the other party, there
can be no other conclusion than that the contract between the parties is one
of lease and not of partnership.
APPEAL from a judgment of the Court of First Instance of Manila. Tan,
J.
Punzalán, Yabut, Eusebio & Tiburcio for appellants.
Augusto Francisco and Julián T. Ocampo for appellee.
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 plaintiff 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
112
112 PHILIPPINE REPORTS ANNOTATED
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 egrees
of patrons of the theatre; (4) that after December 31, 1947, all
improvements placed by the partnership shall belong to Mrs. Yulo, but
that 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 con-
113
VOL. 106, AUGUST 28, 1959 113
tract 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 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 in the
Court of First Instance of Manila on July 3, 1949 to declare the lease of
the premises one for an indefinite period. On August 17, 1949, the
owners on their part brought an action in the Municipal Court of Manila
against Mrs. Yulo and her husband and Yang Chiao Seng to eject them
from 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").
114
In view of the ref usal of Yang to pay to her the amount agreed upon,
Mrs. Yulo instituted this action on May 26, 1954, alleging the existence
of a partnership between them, and that 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 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 P300 for the
115
VOL. 106, AUGUST 28, 1959 115
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 profits 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 one of partnership but one of 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 a 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 defendant failed to present
116
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 the parties had 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 defendant-
appellee to prove that the relation between him and the plaintiff is one of
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 one of partnership. We
have gone over the evidence and we fully agree with the conclusion of
the trial court that the agreement was a sublease, not a partnership. The
following are the requisites of partnership: (1) two or more persons who
bind themselves to contribute money, property, or industry to a common
fund; (2) intention on the part of the partners to divide the profits among
themselves. (Art. 1767, Civil Code.)
117
VOL. 106, AUGUST 28, 1959 117
In the first place, plaintiff did not furnish the supposed P20,000 capital.
In the second 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 ever demanded from defendant any accounting of the expenses and
earnings of the business. Were she really a partner, her first concern
should have been to find out how the business was progressing, whether
the 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 to receive her share of P3,000 a month,
which can not be interpreted in any manner than a payment for the use
of the premises which she had leased from the owners. Clearly, plaintiff
had always acted in accordance with the original letter of defendant of
June 17, 1945 (Exh. "A"), which shows that both parties considered this
offer as the real contract between them.
Plaintiff claims the sum of P41,000 as representing her share or
participation in the business f rom December, 1949. But the original
letter of the defendant, Exh. "A", expressly states that the agreement
between the plaintiff and the defendant was to end upon the termination
of the right of the plaintiff to the lease. Plaintiff's right having terminated
in July, 1949 as found by the Court of Appeals, the partnership
agreement or the agreement for her to receive a participation of P3,000
automatically ceased as of said date.
We find no error in the judgment of the court below and we affirm
it in toto, with costs against plaintiff-appellant.
Parás, C. J., Padilla, Bautista Angelo, Endencia, and Barrera,
JJ., concur.
Judgment affirmed.
118
Bachrach Motor Co., Inc. vs. Guico, etc.
Heirs of Tan Eng Kee vs. Court of Appeals
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.
Appeals; Evidence; Findings of facts of the Court of Appeals will not be
disturbed on appeal if such are supported by the evidence.—As a premise, we
reiterate the oft-repeated rule that findings of facts of the Court of Appeals will
not be disturbed on appeal if such are supported by the evidence. Our
jurisdiction, it must be emphasized, does not include review of factual issues.
Same; Same; Exceptions.—Admitted exceptions have been recognized,
though, and when present, may compel us to analyze the evidentiary basis on
which the lower court rendered judgment. Review of factual issues is therefore
warranted: (1) when the factual findings of the Court of Appeals and the trial
court are contradictory; (2) when the findings are
_______________
* SECOND DIVISION.
741
VOL. 341, OCTOBER 3, 2000 741

grounded entirely on speculation, surmises, or conjectures; (3) when the
inference made by the Court of Appeals from its findings of fact is manifestly
mistaken, absurd, or impossible; (4) when there is grave abuse of discretion in
the appreciation of facts; (5) when the appellate court, in making its findings,
goes beyond the issues of the case, 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 facts; (7) when the Court of
Appeals fails to notice certain relevant facts which, if properly considered, will
justify a different conclusion; (8) when the findings of fact are themselves
conflicting; (9) when the findings of fact are conclusions without citation of the
specific evidence on which they are based; and (10) when the findings of fact of
the Court of Appeals are premised on the absence of evidence but such findings
are contradicted by the evidence on record.
Partnerships; Words and Phrases; 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 intended to divide
the profits among themselves.—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: x x x 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. 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. 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, and (2) when the partnership has a capital of three thousand
pesos or more. In both cases, a public instrument is required. 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.
Same; Same; Joint Ventures; “Partnership” and “Joint Venture,”
Distinguished.—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.
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
742

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.
Same; Same; Same; Same; A joint venture may be likened to a particular
partnership; The legal concept of a joint venture is of common law origin and
has no precise legal definition, but it has been generally understood to mean an
organization formed for some temporary purpose.—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.” Nonetheless, in Aurbach, et al. v. Sanitary Wares
Manufacturing Corporation, et al., 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, 395 111. 595, 71 NE 2d. 74 [1947]; Gates
v. Megargel, 266 Fed. 811 [1920]). This observation is not entirely accurate in
this jurisdiction, since under the Civil Code, a partnership may be particular 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 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, 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
[1954]) (Campos and Lopez-Campos Comments, Notes and Selected Cases,
Corporation Code 1981).
743
VOL. 341, OCTOBER 3, 2000 743
Same; Co-Ownership; A co-ownership or co-possession is not an indicium
of the existence of a partnership.—None of petitioners’ witnesses could suitably
account for the beginnings of Benguet Lumber Company, except perhaps for
Dionisio Peralta whose deceased wife was related to Matilde Abubo. 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 supposedly owned by both
brothers. Tan Eng Lay, however, denied knowledge of this meeting or of the
conversation between Peralta and his brother. Tan Eng Lay consistently testified
that he had his business and his brother had his, that it was only later on that his
said brother, Tan Eng Kee, came to work for him. Be that as it may, co-
ownership or copossession (specifically here, of the G.I. sheets) is not an
indicium of the existence of a partnership.
Same; The essence of a partnership is that the partners share in the profits
and losses; A demand for periodic accounting is evidence of a partnership.—
Besides, it is indeed odd, if not unnatural, that despite the forty years the
partnership was allegedly in existence, Tan Eng Kee never asked for an
accounting. The essence of a partnership is that the partners share in the profits
and losses. Each has the right to demand an accounting as long as the partnership
exists. We have allowed a scenario wherein “[i]f excellent relations exist among
the partners at the start of the business and all the partners are more interested in
seeing the firm grow rather than get immediate returns, a deferment of sharing in
the profits is perfectly plausible.” But in the situation in the case at bar, the
deferment, if any, had gone on too long to be plausible. A person is presumed to
take ordinary care of his concerns, x x x A demand for periodic accounting is
evidence of a partnership. During his lifetime, Tan Eng Kee appeared never to
have made any such demand for accounting from his brother, Tang Eng Lay.
Same; 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.—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, nevertheless, the collective effect of these circumstances
may be such as to support a finding of the existence of the parties’ intent. 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
744

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.
Appeals.

Lauro D. Gacayan for petitioner.
Soo, Gutierrez, Leogardo & Lee collaborating counsel for
petitioner.
Francisco S. Reyes Law Office for private respondents.
DE LEON, JR., J .:
In this petition for review on certiorari, petitioners pray for the reversal
of the Decision dated March 13, 1996 of the former Fifth Division of
1 2
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
_______________
1 Rollo, pp. 129-147.

2 Justice Bernardo LL. Salas, ponente, with Justices Pedro A. Ramirez and Ma. Alicia
Austria-Martinez, concurring.
745
VOL. 341, OCTOBER 3, 2000 745
February 19, 1990. The complaint, docketed as Civil Case No. 1983-R
3
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 impleading private respondent
4
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 hardware and construction 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 the hard work and thrift of the alleged partners. However, they
claimed that in 1981, Tan Eng Lay and his children caused the
conversion of the partnership “Benguet Lumber” into a corporation
called “Benguet Lumber Company.” The incorporation was 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 the dissolution, winding up and liquidation
thereof, and the equal division of the net assets of Benguet Lumber.
After trial, Regional Trial Court of Baguio City, Branch 7 rendered
judgment on April 12, 1995, to wit:
6
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

1. a) 
Declaring that Benguet Lumber is a joint venture which is akin to a
particular partnership;
2. 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
_______________
3 Records, pp. 1-4.

4 Records, pp. 123-126.
5 Records, p. 130.
6 Records, pp. 632-647.
746
3. its and/or losses of the business venture or particular partnership;
4. c) 
Declaring that the assets of Benguet Lumber are the same assets turned
over to Benguet Lumber Co., Inc. and as such the heirs or legal
representatives of the deceased Tan Eng Kee have a legal right to share in
said assets;
5. d) 
Declaring that all the rights and obligations of Tan Eng Kee as joint
adventurer and/or as partner in a particular partnership have descended to
the plaintiffs who are his legal heirs.
6. 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 Lumber Company, Inc. so the plaintiffs know their
proper share in the business;
7. f) 
Ordering the appointment of a receiver to preserve and/or administer the
assets of Benguet Lumber Company, Inc. until such time that said
corporation is finally liquidated are directed to submit the name of any
person they want to be appointed as receiver failing in which this Court
will appoint the Branch Clerk of Court or another one who is qualified to
act as such.
8. g) 
Denying the award of damages to the plaintiffs for lack of proof except the
expenses in filing the instant case.
9. h) 
Dismissing the counter-claim of the defendant for lack of merit.
SO ORDERED.
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 was denied by
7
the Court of Appeals in a Resolution dated October 11, 1996.

8
Hence, the present petition.

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 proceeding. Petitioners complained that
Exhibits “4” to “4-U” offered by the defendants before the trial court,
consisting of payrolls indicating that Tan
_______________
7 Rollo, pp. 148-149.

8 Rollo, p. 173.
747
VOL. 341, OCTOBER 3, 2000 747
Eng Kee was a mere employee of Benguet Lumber, were fake, based on
the discrepancy in the signatures of Tan Eng Kee. They also filed
Criminal Cases Nos. 78857-78870 against Gloria, Julia, 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 Municipal Trial Court of Baguio City, Branch 1, wherein
the charges were filed, rendered judgment dismissing the cases for
9
insufficiency of evidence.
In their assignment of errors, petitioners claim that:
I
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

THERE WAS NO PARTNERSHIP BETWEEN THE LATE TAN ENG KEE
AND HIS BROTHER TAN ENG LAY BECAUSE: (A) THERE WAS NO
FIRM ACCOUNT; (B) THERE WAS NO FIRM LETTERHEADS
SUBMITTED AS EVIDENCE; (C) THERE WAS NO CERTIFICATE OF
PARTNERSHIP; (D) THERE WAS NO AGREEMENT AS TO PROFITS AND
LOSSES; AND (E) THERE WAS NO TIME FIXED FOR THE DURATION OF
THE PARTNERSHIP (PAGE 13, DECISION).
II
THE HONORABLE COURT OF APPEALS ERRED IN RELYING

SOLELY ON THE SELF-SERVING TESTIMONY OF RESPONDENT TAN
ENG LAY THAT BENGUET LUMBER WAS A SOLE PROPRIETORSHIP
AND THAT TAN ENG KEE WAS ONLY AN EMPLOYEE THEREOF.
III

THE FOLLOWING FACTS WHICH WERE DULY SUPPORTED BY
EVIDENCE OF BOTH PARTIES DO NOT SUPPORT THE EXISTENCE OF A
PARTNERSHIP JUST BECAUSE THERE WAS NO ARTICLES OF
PARTNERSHIP DULY RECORDED BEFORE THE SECURITIES AND
EXCHANGE COMMISSION:
1. a. 
THAT THE FAMILIES OF TAN ENG KEE AND TAN ENG LAY WERE
ALL LIVING AT THE BENGUET LUMBER COMPOUND;
_______________
9 Rollo, pp. 412-419.

748
2. b. 
THAT BOTH TAN ENG LAY AND TAN ENG KEE WERE
COMMANDING THE EMPLOYEES OF BENGUET LUMBER;
3. c. 
THAT BOTH TAN ENG KEE AND TAN ENG LAY WERE
SUPERVISING THE EMPLOYEES THEREIN;
4. d. 
THAT TAN ENG KEE AND TAN ENG LAY WERE THE ONES
DETERMINING THE PRICES OF STOCKS TO BE SOLD TO THE
PUBLIC; AND
5. e. 
THAT TAN ENG LAY AND TAN ENG KEE WERE THE ONES
MAKING ORDERS TO THE SUPPLIERS (PAGE 18, DECISION).
IV

THERE WAS NO PARTNERSHIP JUST BECAUSE THE CHILDREN OF
THE LATE TAN ENG KEE: ELPIDIO TAN AND VERONICA CHOI,
TOGETHER WITH THEIR WITNESS BEATRIZ TANDOC, ADMITTED
THAT THEY DO NOT KNOW WHEN THE ESTABLISHMENT KNOWN IN
BAGUIO CITY AS BENGUET LUMBER WAS STARTED AS A
PARTNERSHIP (PAGE 16-17, DECISION).
V

THERE 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 EXECUTION OF A PUBLIC INSTRUMENT
CREATING A PARTNERSHIP SHOULD HAVE BEEN MADE AND NO
SUCH PUBLIC INSTRUMENT ESTABLISHED BY THE APPELLEES
(PAGE 17, DECISION).
As a premise, we reiterate the oft-repeated rule that findings of facts of
the Court of Appeals will not be disturbed on appeal if such are
supported by the evidence. Our jurisdiction, it must be emphasized,
10
does not include review of factual issues. Thus:

_______________
10 Brusas v. Court of Appeals, 313 SCRA 176, 188 (1999); Guerrero v. Court of
Appeals, 285 SCRA 670, 678 (1998); Atillo III v. Court of Appeals 266 SCRA 596,
605-606 (1997); Mallari v. Court of Appeals, 265 SCRA 456, 461 (1996).
749
VOL. 341, OCTOBER 3, 2000 749
Filing of petition with Supreme Court.—A party desiring to appeal by certiorari
from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which must be distinctly
set forth. [italics supplied]
11
Admitted exceptions have been recognized, though, and when present,

may compel us to analyze the evidentiary basis on which the lower court
rendered judgment. Review of factual issues is therefore warranted:
1. (1) 
when the factual findings of the Court of Appeals and the trial
court are contradictory;
2. (2) 
when the findings are grounded entirely on speculation, surmises,
or conjectures;
3. (3) 
when the inference made by the Court of Appeals from its findings
of fact is manifestly mistaken, absurd, or impossible;
4. (4) 
when there is grave abuse of discretion in the appreciation of facts;
5. (5) 
when the appellate court, in making its findings, goes beyond the
issues of the case, and such findings are contrary to the admissions
of both appellant and appellee;
6. (6) 
when the judgment of the Court of Appeals is premised on a
misapprehension of facts;
7. (7) 
when the Court of Appeals fails to notice certain relevant facts
which, if properly considered, will justify a different conclusion;
8. (8) 
when the findings of fact are themselves conflicting;
9. (9) 
when the findings of fact are conclusions without citation of the
specific evidence on which they are based; and
10. (10) 
when the findings of fact of the Court of Appeals are premised on
the absence of evidence but such findings are contradicted by the
evidence on record. 12
_______________
11 1997 RULES OF CIVIL PROCEDURE, Rule 45, Sec. 1.

12 Fuentes v. Court of Appeals, 268 SCRA 703, 708-709 (1997).
750
In reversing the trial court, the Court of Appeals ruled, to wit:
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 justifying the existence of a joint venture.
When mention is made of a joint venture, it would presuppose parity of
standing between the parties, equal proprietary interest and the exercise by the
parties equally of the conduct of the business, thus:
x x x x x x x x x x x x
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 form
a partnership, both in the lumber and hardware 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 postwar Benguet 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 during Kee’s lifetime, jointly, (2) they were the ones giving orders to
the employees, (3) 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 business in different capacities.
It is obvious that there was no partnership whatsoever. Except for a firm
name, there was 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 partnership. There was even no attempt to submit an
accounting corresponding to the 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 a partnership [citation omitted].
Also, the exhibits support the establishment of only a proprietorship. The
certification dated March 4, 1971, Exhibit “2,” mentioned codefendant Lay as
the only registered owner of the Benguet Lumber and Hardware. His application
for registration, effective 1954, in fact mentioned that his business started in
1945 until 1985 (thereafter, the incor-
751
VOL. 341, OCTOBER 3, 2000 751
poration). 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 the Payrolls, Exhibits “4” to “4-U,” inclusive, for the years 1982
to 1983, Kee was 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 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
752
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. Inasmuch as the Court of Appeals and the trial court had
13
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:
x x x 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. The agreement need not be formally reduced into
15
writing, since statute allows the oral constitution of a partnership, save in

two instances: (1) when immovable property or real rights are
contributed, and (2) when the partnership has a capital of three
16
thousand pesos or more. In both

17
_______________
13 Cf. Alicbusan v. Court of Appeals, 269 SCRA 336, 340-341 (1997)

14 CIVIL CODE, Art. 1767.
15 Yulo v. Yang Chiao Seng, 106 Phil. 110, 116 (1959).
753
VOL. 341, OCTOBER 3, 2000 753
cases, a public instrument is required. An inventory to be signed by the
18
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. A particular partnership is distinguished from a joint
20
adventure, to wit:
1. (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.
2. (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.” Nonetheless, in Aurbach, et al. v. Sanitary Wares
22
Manufacturing Corporation, et al. we expressed the view that a joint

23
venture may be likened to a particular partnership, thus:

_______________
18 Note, however, Article 1768 of the Civil Code which provides: “The partnership has
a juridical personality separate and distinct from that of each of the partners, even in case
of failure to comply with the requirements of Article 1772, first paragraph.”
20 “A particular partnership has for its object determinate things, their use or fruits, or a
specific undertaking, or the exercise of a profession or vocation.” (CIVIL CODE, Art.
1783)
21 V.E. PARAS, CIVIL CODE OF THE PHILIPPINES ANNOTATED 546 (13th ed.,
1995).
22 Sevilla v. Court of Appeals, 160 SCRA 171, 181 (1988).
23 180 SCRA 130, 146-147 (1989).
754
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, 395 111. 595,
71 NE 2d. 74 [1947]; Gates v. Megargel, 266 Fed. 811 [1920]). This observation
is not entirely accurate in this jurisdiction, since under the Civil Code, a
partnership may be particular 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 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, 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 [1954]) (Campos and Lopez-Campos Comments, Notes and Selected
Cases, Corporation Code 1981).
Undoubtedly, the best evidence would have been the contract of
partnership itself, or the articles of partnership, but there is none. The
alleged partnership, though, was never formally organized. In addition,
petitioners point out that the New Civil Code was not yet in effect when
the partnership was allegedly formed sometime in 1945, although the
contrary may well be argued that nothing prevented the parties from
complying with the 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 partnership existed
based purely on circumstantial evidence. A review of the record
persuades us that the Court of Appeals correctly reversed the decision of
the trial court. The evidence presented by petitioners falls short of the
quantum of proof required to establish a partnership.
755
VOL. 341, OCTOBER 3, 2000 755
Unfortunately for petitioners, Tan Eng Kee has passed away. Only he,
aside from Tan Eng Lay, could have expounded on the precise nature of
the business relationship between them. In the absence of evidence, we
cannot accept as an established fact that Tan Eng Kee allegedly
contributed his resources to a common fund for the purpose of
establishing a partnership. The testimonies to that effect of petitioners’
witnesses is directly controverted by Tan Eng Lay. It should be noted
that it is not with the number of witnesses wherein preponderance lies;
the quality of their testimonies is to be considered. None of petitioners’
24
witnesses could suitably account for the beginnings of Benguet Lumber

Company, except perhaps for Dionisio Peralta whose deceased wife was
related to Matilde Abubo. He stated that when he met Tan Eng Kee after
25
the liberation, the latter asked the former to accompany him to get 80
pieces of G.I. sheets supposedly owned by both brothers. Tan Eng Lay,
26
however, denied knowledge of this meeting or of the conversation

between Peralta and his brother. Tan Eng Lay consistently testified that
27
he had his business and his brother had his, that it was only later on that
his said brother, Tan Eng Kee, came to work for him. Be that as it may,
co-ownership or co-possession (specifically here, of the G.I. sheets) is
not an indicium of the existence of a partnership. 28
Besides, it is indeed odd, if not unnatural, that despite the forty years
the partnership was allegedly in existence, Tan Eng Kee never asked for
an accounting. The essence of a partnership is that the partners share in
the profits and losses. Each has the right to demand an accounting as
29
long as the partnership exists. We have allowed a scenario wherein “[i]f
30
excellent relations exist among the partners at the start of the business
and all the partners are more
_______________
24 REVISED RULES ON EVIDENCE, Rule 133, Sec. 1.

25 TSN, June 23, 1990, p. 9.
26 TSN, January 28, 1993, p. 85.
27 TSN, July 1, 1993, p. 13; TSN, July 8, 1993, p. 4.
28 Navarro v. Court of Appeals, 222 SCRA 675, 679 (1993); CIVIL CODE, Art. 1769.
29 Moran v. Court of Appeals, 133 SCRA 88, 95 (1984).
30 Fue Lung v. Intermediate Appellate Court, 169 SCRA 746, 755 (1989).
756
interested in seeing the firm grow rather than get immediate returns, a
deferment of sharing in the profits is perfectly plausible.” But in the
31
situation in the case at bar, the deferment, if any, had gone on too long to
be plausible. A person is presumed to take ordinary care of his concerns.
As we explained in another case:
32
In the first place, plaintiff did not furnish the supposed P20,000.00 capital. In the
second 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 accounting of the expenses and earnings of the business.
Were she really a partner, her first concern should have been to find out how the
business was progressing, whether the 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 to receive her share of
P3,000.00 a month, which cannot be interpreted in any manner than a payment
for the use of the premises which she had leased from the owners. Clearly,
plaintiff had always acted in accordance with the original letter of defendant of
June 17, 1945 (Exh. “A”), which shows that both parties considered this offer as
the real contract between them. [italics supplied]
33
A demand for periodic accounting is evidence of a partnership. During 34
his lifetime, Tan Eng Kee appeared never to have made any such
demand for accounting from his brother, Tang Eng Lay.
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:
_______________
31 Id.,at 754.
32 1997 RULES OF CIVIL PROCEDURE, Rule 131, Sec. 3, Par. (d).
33 Yulo v. Yang Chiao Seng, 106 Phil. 110, 117 (1959).
34 Estanislao, Jr. v. Court of Appeals, 160 SCRA 830, 837 (1988).
757
VOL. 341, OCTOBER 3, 2000 757
In determining whether a partnership exists, these rules shall apply:
1. (1) 
Except as provided by Article 1825, persons who are not partners as to
each other are not partners as to third persons;
2. (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. (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. (4) 
The receipt by a person of a share of the profits of a business is 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:
1. (a) 
As a debt by installment or otherwise;
2. (b) 
As wages of an employee or rent to a landlord;
3. (c) 
As an annuity to a widow or representative of a deceased partner;
4. (d) 
As interest on a loan, though the amount of payment vary with the profits
of the business;
5. (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
758
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:
1. (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.
2. (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.
3. (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.
4. (iv) 
and even if it is assumed that Tan Eng Kee was quarrelling 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 well-

taken. Where circumstances taken singly may be inadequate to prove the
intent to form a partnership, nevertheless, the
_______________
35 Private Respondent’s Memorandum, Rollo, p. 390.

759
VOL. 341, OCTOBER 3, 2000 759
collective effect of these circumstances may be such as to support a
finding of the existence of the parties’ intent. Yet, in the case at bench,
36
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.
WHEREFORE, the petition is hereby denied, and the appealed
decision of the Court of Appeals is hereby AFFIRMED in toto. No
pronouncement as to costs.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Quisumbing and Buena,
JJ ., concur.
Petition denied, judgment affirmed in toto.
Notes.—A general professional partnership, unlike an ordinary
business partnership, is not itself an income taxpayer, as the income tax
is imposed not on the professional partnership but on the partners
themselves in their individual capacity. (Tan vs. Del Rosario, Jr., 237
SCRA 324 [1994])
_______________
36 Evangelista, et al. v. Collector of Internal Revenue, et al., 102 Phil. 141, 146 (1957).
760
Reyes vs. Sisters of Mercy Hospital
Absent a clear showing that a barbershop owner and a barber had
intended to pursue a relationship of industrial partnership, the Court
entertains no doubt that the latter was employed by the former as
caretaker-barber—undoubtedly, the services performed by a barber is
related to, and in the pursuit of the principal business activity of the
former. (Jo vs. National Labor Relations Commission, 324 SCRA
437 [2000])
——o0o——
Commissioner of Internal Revenue vs. Suter
No. L-25532. February 28, 1969.
COMMISSIONER OF INTERNAL REVENUE,
petitioner, vs.WILLIAM J. SUTER and THE COURT OF TAX
APPEALS, respondents.
Partnership; Where respondent company in the case at bar is considered a
particular partnership and not universal.—The respondent company was not a
universal partnership, but a particular one. As appears f rom Articles 1674 and
1675 of the Spanish Civil Code of 1889 (law in force when firm organized in
1947), a universal partnership requires either that the object of the association be
all the present property of the partners, as contributed by them to the common
fund, or else “all that the partners may acquire by their industry or work during
the existence of the partnership.” Respondent company was not such a universal
partnership, since the contributions of the partners were fixed sums of money
and neither one of them was an industrial partner. It follows that respondent
company was not a partnership that spouses were forbidden to enter by Article
1677 of the Civil Code of 1889. Nor could the subsequent marriage of the
partners operate to dissolve it, such marriage not being one of the causes
provided for that purpose either by the Spanish Civil Code or the Code of
Commerce.
Same; Where marriage of partners does not make the company a single
proprietorship.—The capital contributions of re-
153
VOL. 27, FEBRUARY 28, 1969 153

spondents-partners were separately owned and contributed by them before
their marriage; and after they were joined in wedlock, such contributions
remained their respective separate property under the Spanish Civil Code.
Same; Partnership has distinct and separate personality from that of its
partners; Section 24 of Internal Revenue Code is exception to the rule.—The
basic tenet of ,the Spanish and Philippine law is that the partnership has a
juridical personality of its own, distinct and separate from that of its partners, the
bypassing of the existence of the limited partnership as a taxpayer can only be
done by ignoring or disregarding clear statutory mandates and basic principles of
our law. The limited partnership’s separate individuality makes it impossible to
equate its income with that of the component members. True, section 24 of the
Internal Revenue Code merges registered general copartnerships with the
personality of the individual partners for income tax purposes. But this rule is
exceptional in its disregard of a cardinal tenet of our partnership laws, and can
not be extended by mere implication to limited partnerships.
Same; Taxation; Change in membership does not remove partnership from
coverage of section 24.—The limited partnership is not a mere business conduit
of the partner-spouses; it was organized for legitimate business purposes; it
conducted its own- dealings with its customers prior to appellee’s marriage, and
had been filing its own income tax returns as such independent entity. The
change in its membership, brought about by the marriage of the partners and
their subsequent acquisition of all interest therein. is no ground for withdrawing
the partnership from the coverage of Section 24 of the tax code, requiring it to
pay income tax. As far as the records show, the partners did not enter into
matrimony and thereafter buy the interests of the remaining partner with the
premeditated scheme or design to use the partnership as a business conduit to
dodge the to laws. Regularity, not otherwise, is presumed. The limited
partnership is taxable on its income and to require that income to be included in
the indiviual tax return of respondent is to overstretch the letter and intent of the
law.
Same; Same; Members and not firm are taxable in case of compañias
colectivas.—In fact, it would even conflict with what it specifically provides in
its Section 24: for the appellant’s stand results in equal treatment, taxwise, of a
general copartnership (compania colectiva) and a limited partnership, when the
code plainly differentiates the two. Thus, the code taxes the latter on its income,
but not the former, because it is in the case of compañias colectivas that the
members, and not the firm, are taxable in their individual capacities for any
dividend or share of the profit derived from the duly registered general
partnership (Section 26, N.I.R.C.; Arañas, Anno. & Juris on the N.I.R.C., As
Amended, Vol. 1, pp. 88–89).
154
Same; Same; Income of limited partnership forming part of the conjugal
partnership is not wholly correct.—That the income of the limited partnership is
actually or constructively the income of the spouses and forms part of the
conjugal partnership of gains is not wholly correct. The fruits of the wife’s
paraphernal become conjugal only when no longer needed to defray ,the
expenses for the administration and preservation of the paraphernal capital of the
wife. Then again, the appellant’s argument erroneously conf ines itself to the
question of the legal personality of the limited partnership since the law taxes the
income of ‘even joint accounts that have no personality of their own.
(Agapito v. Molo, 59 Phil. 779; People’s Bank v. Register of Deeds of Manila, 60
Phil. 167; V. Evangelista v. Collector of Internal Revenue, 102 Phil. 140;
Collector v. Batangas Transportation Co., 102 Phil. 822.)
Same; Same; What is taxable is income of both spouses, not the conjugal
partnership.—Appellant is, likewise, mistaken in that it assumes that the
conjugal partnership of gains is a taxable unit, which it is not. What is taxable is
the “income of both spouses” (Section 45 [d]) in their individual capacities.
Though the amount of income (income of the conjugal partnernership vis-a-
vis the joint income of husband and wife) may be the same for a given taxable
year, their consequences would ,be different, as their contributions in the
business partnership are not .the same.
Same; Same; Revenue code does not authorize consolidation of income of
limited partnership and income of spouses.—The diff erence in tax rates
between the income of the limited partnership being consolidated with, and
when split from the income of the spouses, is not a justification for requiring
consolidation; the revenue code, as it presently stands, does not authorize it, and
even bars it by requiring the limited partnership .to pay tax on its own income.
PETITION for review of a decision of the Court of Tax Appeals.
Solicitor General Antonio P. Barredo, Assistant Solicitor General
Felicisimo R. Rosete and Special Attorneys B. Gatdula, Jr.and T.
Temprosa, Jr. for petitioner.
A.S. Monzon, Gutierrez, Farrales & Ong for respondents.
REYES, J.B.L., J.:
A limited partnership, named “William J. Suter ‘Morcoin’ Co., Ltd.,"
was formed on 30 September 1947 by herein
155
VOL. 27, FEBRUARY 28, 1969 155
respondent William J. Suter, as the general partner, and Julia Spirig and
Gustav Carlson, as the limited partners. The partners contributed,
respectively, P20,000.00, P18,000.00 and P2,000.00 to the partnership.
On 1 October 1947, the limited partnership was registered with the
Securities and Exchange Commission. The firm engaged, among other
activities, in the importation, marketing, distribution and operation of
automatic phonographs, radios, television sets and amusement machines,
their parts and accessories.- It had an office and held itself out as a
limited partnership, handling and carrying merchandise, using invoices,
bills and letterheads bearing its trade-name, maintaining its own books
of accounts and bank accounts, and had a quota allocation with the
Central Bank.
In 1948, however, general partner Suter and limited partner Spirig
got married and, thereafter, on 18 December 1948, limited partner
Carlson sold his share in the partnership to Suter and his wife. The sale
was duly recorded with the Securities and Exchange Commission on 20
December 1948.
The limited partnership had been filing its income tax returns as a
corporation, without objection by the herein petitioner, Commissioner of
Internal Revenue, until in 1959 when the latter, in an assessment,
consolidated the income of the firm and the individual incomes of the
partnersspouses Suter and Spirig, resulting in a determination of a
deficiency income tax against respondent Suter in the amount of
P2,678.06 for 1954 and P4,567.00 for 1955.
Respondent Suter protested the assessment, and requested its
cancellation and withdrawal, as not in accordance with law, but his
request was denied. Unable to secure a reconsideration, he appealed to
the Court of Tax Appeals. which court, after trial, rendered a decision, on
11 November 1965, reversing that of the Commissioner of Internal
Revenue.
The present case is a petition for review, filed by the Commissioner
of Internal Revenue, of the tax court’s aforesaid decision. It raises these
issues:
(a) Whether or not the corporate personality of the William J. Suter
“Morcoin” Co., Ltd. should be disregarded
156
for income tax purposes, considering that respondent William J. Suter
and his wife, Julia Spirig Suter, actually formed a single taxable unit;
and
(b) Whether or not the partnership was dissolved after the marriage of
the partners, respondent William J. Suter and Julia Spirig Suter, and the
subsequent sale to them by the remaining partner, Gustav Carlson, of his
participation of P2,000.00 in the partnership for a nominal amount of
P1.00.
The theory of the petitioner, Commissioner of Internal Revenue, is
that the marriage of Suter and Spirig and their subsequent acquisition of
the interests of remaining partner Carlson in the partnership dissolved
the limited partnership, and if they did not, the fiction of juridical
personality of the partnership should be disregarded for income tax
purposes because the spouses have exclusive ownership and control of
the business; consequently, the income tax return of respondent Suter for
the years in question should have included his and his wife’s individual
incomes and that of the limited partnership, in accordance with Section
45 (d) of the National Internal Revenue Code, which provides as
follows:
"(d) Husband and wife.—In the case of married persons, whether citizens,
residents or non-residents, only one consolidated return for the taxable year shall
be filed by either spouse to cover the income of both spouses; x x x.”
In refutation of the foregoing, respondent Suter maintains, as the Court
of Tax Appeals held, that his marriage with limited partner Spirig and
their acquisition of Carlson’s interests in the partnership in 1948 is not a
ground for dissolution of the partnership, either in the Code of
Commerce or in the New Civil Code, and that since its juridical
personality had not been affected and since, as a limited partnership, as
contradistinguished from a duly registered general partnership, it is
taxable on its income similarly with corporations, Suter was not bound
to include in his individual return the income of the limited partnership.
We find the Commissioner’s appeal unmeritorious.
157
VOL. 27, FEBRUARY 28, 1969 157
The thesis that the limited partnership, William J. Suter “Morcoin” Co.,
Ltd., has been dissolved by operation of law because of the marriage of
the only general partner, William J. Suter, to the originally limited
partner, Julia Spirig, one year after the partnership was organized is
rested by the appellant upon the opinion of now Senator Tolentino in
Commentaries and Jurisprudence on Commercial Laws of the
Philippines, Vol. 1, 4th Ed., page 58, that reads as follows:
“‘A husband and a wife may not enter into a contract of generalcopartnership,
because under the Civil Code, which applies in the absence of express provision
in the Code of Commerce, persons prohibited from making donations to each
other are prohibited from entering into universalpartnerships. (2 Echaverri, 196)
It follows that the marriage of partners necessarily brings about the dissolution
of a pre-existing partnership. (1 Guy de Montella 58)' "
The petitioner-appellant has evidently failed to observe the fact that
William J. Suter “Morcoin” Co., Ltd. was not a universalpartnership, but
a particular one. As appears from Articles 1674 and 1675 of the Spanish
Civil Code of 1889 (which was the law in force when the subject firm
was organized in 1947), a universalpartnership requires either that the
object of the association be all the present property of the partners, as
contributed by them to the common fund, or else “all that the partners
may acquire by their industry or work during the existence of the
partnership”. William J. Suter “Morcoin” Co., Ltd. was not such a
universal partnership, since the contributions of the partners were fixed
sums of money, P20,000.00 by William Suter and P18,000.00 by Julia
Spirig, and neither one of them was an industrial partner. It follows that
William J. Suter “Morcoin” Co., Ltd. was not a partnership that spouses
were forbidden to enter by Article 1677 of the Civil Code of 1889.
The former Chief Justice of the Spanish Supreme Court, D. José
Casán, in his Derecho Civil, 7th Edition, 1952, Volume 4, page 546,
footnote 1, says with regard to the prohibition contained in the aforesaid
Article 1677:
“Los cónyuges, según esto, no pueden celebrar entre sí el contrato de sociedad
universal, pero 6 podrán constituir sociedad
158
particular? Aunque el punto ha sido muy debatido, nos inclinamos a la tesis
permisiva de los contratos de sociedad particular entre esposos, ya que ningun
precepto de nuestro Codigo los prohibe, y hay que estar a la norma general
según !a que toda persona es capaz para contratar mientras no sea declarado
incapaz por la ley. La jurisprudencia de la Dirección de los Registros fue
favorable a esta misma tesis en su resolución de 3 de febrero de 1936, mas
parece cambiar de rumbo en la de 9 de marzo de 1943."
Nor could the subsequent marriage of the partners ate to dissolve it, such
marriage not being one of the causes provided for that purpose either by
the Spanish Civil Code or the Code of Commerce.
The appellant’s view, that by the marriage of both partners the
company became a single proprietorship, is equally erroneous. The
capital contributions of partners William J. Suter and Julia Spirig were
separately owned and contributed by them before their marriage; and
after they were joined in wedlock, such contributions remained their
respective separate property under the Spanish Civil Code (Article
1396):
“The following shall be the exclusive property of each spouse:
(a) That which is brought to the marriage as his or her own; x x x,”
Thus, the individual interest of each consort in William J. Suter
“Morcoin” Co., Ltd. did not become common property of both after their
marriage in 1948.
It being a basic tenet of the Spanish and Philippine law that the
partnership has a juridical personality of its own, distinct and separate
from-that of its partners (unlike American and English law that does not
recognize such separate juridical personality), the bypassing of the
existence of the limited partnership as a taxpayer can only be done by
ignoring or disregarding clear statutory mandates and basic principles of
our law, The limited partnership’s separate individuality makes
it .impossible to equate its income with that of the component members.
True, section 24 of the Internal Revenue Code merges registered general
co-partnerships (compañias colectivas) with the personality
159
VOL. 27, FEBRUARY 28, 1969 159
of the individual partners for income tax purposes. But this rule is
exceptional in its disregard of a cardinal tenet of our partnership laws,
and can not be extended by mere implication to limited partnerships.
The rulings cited by the petitioner (Collector of Internal Revenue vs.
University of the Visayas, L-13554, Resolution of 30 October 1964, and
Koppel [Phil.], Inc. vs. Yatco, 77 Phil. 504) as authority for disregarding
the fiction of legal personality of the corporations involved therein are
not applicable to the present case. In the cited cases, the corporations
were already subject to tax when the fiction of their corporate
personality was pierced; in the present case, to do so would exempt the
limited partnership from income taxation but would throw the tax
burden upon the partners-spouses in their individual capacities. The
corporations, in the cases cited, merely served as business conduits
or alter egos of the stockholders, a factor that justified a disregard of
their corporate personalities for tax purposes. This is not true in the
present case. Here, the limited partnership is not a mere business conduit
of the partner-spouses; it was organized for legitimate business
purposes; it conducted its own dealings with its customers prior to
appellee’s marriage, and had been filing its own income tax returns as
such independent entity. The change in its membership, brought about
by the marriage of the partners and their subsequent acquisition of all
interest therein, is no ground for withdrawing the partnership from the
coverage of Section 24 of the tax code, requiring it to pay income tax.
As far as the records show, the partners did not enter into matrimony and
thereafter buy the interests of the remaining partner with the
premeditated scheme or design to use the partnership as a business
conduit to dodge the tax laws. Regularity, not otherwise, is presumed.
As the limited partnership under consideration is taxable on its
income, to require that income to be included in the individual tax return
of respondent Suter is to overstretch the letter and intent of the law. In
fact, it would even conflict with what it specifically provides in
160
its Section 24: for the appellant Commissioner’s stand results in equal
treatment, taxwise, of a general copartnership (compañia colectiva) and
a limited partnership, when the code plainly differentiates the two. Thus,
the code taxes the latter on its income, but not the f ormer, because it is
in the case of compañias colectivasthat the members, and not the firm,
are taxable in their individual capacities for any dividend or share of the
profit derived from the duly registered general partnership (Section 26,
N.I.R.C.; Arañas, Anno. & Juris. on the N.I.R.C., As Amended, Vol. 1,
pp. 88–89).
But it is argued that the income of the limited partnership is actually
or constructively the income of the spouses and forms part of the
conjugal partnership of gains. This is not wholly correct. As pointed out
in Agapito vs. Molo, 50 Phil. 779, and People’s Bank vs. Register of
Deeds of Manila, 60 Phil. 167, the fruits of the wife’s parapherna
become conjugal only when no longer needed to defray the expenses for
the administration and preservation of the paraphernal capital of the
wife. Then again, the appellant’s argument erroneously confines itself to
the question of the legal personality of the limited partnership, which is
not essential to the income taxability of the partnership since the law
taxes the income of even joint accounts that have no personality of their
own. Appellant is, likewise, mistaken in that it assumes that the
1
conjugal partnership of gains is a taxable unit, which it is not. What is

taxable is the “income of both spouses” (Section 45 [d]) in their
individual capacities. Though the amount of income (income of the
conjugal partnership vis-a-vis the joint income of husband and wife)
may be the same for a given taxable year, their consequences would be
different, as their contributions in the business partnership are not the
same.
The difference in tax rates between the income of the limited
partnership being consolidated with, and when split from the income of
the spouses, is not a justification for requiring consolidation; the revenue
code, as it present-
________________
1 V.Evangelista vs. Collector of Internal Revenue, 102 Phil 140; Collector vs. Batangas

Transportation Co., 102 Phil. 822.
161
VOL. 27, FEBRUARY 28, 1969 161
Ongsiaco vs. Dallo
ly stands, does not authorize it, and even bars it by requiring the limited
partnership to pay tax on its own income.
FOR THE FOREGOING REASONS, the decision under review is
hereby affirmed. No costs.
C o n c e p c i o n ,
C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistran
o and Teehankee, JJ., concur.
Barredo, J., did not take part.
Decision affirmed.
Note.—See the annotation on “Piercing the Veil of Corporate
Fiction” under A.D. Santos vs. Vasquez, L-23586, March 20, 1968, 22
SCRA 1156, 1159–1163.
_______________
VOL. 245, JULY 3, 1995 529
Ortega vs. Court of Appeals
G.R. No. 109248. July 3, 1995. *
GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR., and

BENJAMIN T. BACORRO, petitioners, vs. HON. COURT OF
APPEALS, SECURITIES AND EXCHANGE COMMISSION and
JOAQUIN L. MISA, respondents.
Commercial Law; Partnership; A partnership that does not fix its term is a
partnership at will.—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.
Same; Same; The birth and life of a partnership at will is predicated on the
mutual desire and consent of the partners.—The birth and life of a partnership at
will is predicated on the mutual desire and consent of the partners. The right to
choose with whom a person wishes to associate himself is the very foundation
and essence of that partnership. Its continued existence is, in turn, dependent on
the constancy of that mutual resolve, along with each partner’s capability to give
it, and the absence of a cause for dissolution provided by the law itself. Verily,
any one of the partners may, at his sole pleasure, dictate a dissolution of the
partnership at will. He must, however, act in good faith, not that the attendance
of bad faith can prevent the dissolution of the partnership but that it can result in
a liability for damages.
Same; Same; 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.—In
_______________
* THIRD DIVISION.
530

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. Among partners, 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.
Same; Same; Upon its dissolution, the partnership continues and its legal
personality is retained until the complete winding up of its business culminating
in its termination.—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. Upon its
dissolution, the partnership continues and its legal personality is retained until
the complete winding up of its business culminating in its termination.
Same; Same; The liquidation of the assets of the partnership following its
dissolution is governed by various provisions of the Civil Code.—The
liquidation of the assets of the partnership following its dissolution is governed
by various provisions of the Civil Code; 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.
Same; Same; It would not be right to let any of the partners remain in the
partnership under such an atmosphere of animosity.—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. Indeed, 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.
Appeals.
531
VOL. 245, JULY 3, 1995 531
Bito, Lozada, Ortega & Castillo for petitioners.
Misa Law Offices for private respondent.
Adrian Sison collaborating counsel for private respondent.
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 Au-gust 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 x x x 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 respon-dents-appellees
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
532
building. I would like to have this resolved 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 self-respect. 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 and
liquidation of partnership, docketed as SEC Case No. 3384 praying that the
Commission:
1. “‘1. 
Decree the formal dissolution and order the immediate liquidation of (the
partnership of) Bito, Misa & Lozada;
2. ‘2. 
Order the respondents to deliver or pay for petitioner’s share in the
partnership assets plus the profits, rent or interest attributable to the use of
his right in the assets of the dissolved partnership;
3. ‘3. 
Enjoin respondents from using the firm name of Bito, Misa & Lozada in
any of their correspondence, checks and pleadings and to pay petitioners
damages for the use thereof despite the dissolution of the partnership in
the amount of at least P50,000.00;
4. ‘4. 
Order respondents jointly and severally to pay petitioner attorney’s fees
and expense of litigation in such amounts as maybe proven during the trial
and which the Commission may deem just and equitable under the
premises but in no case less than ten (10%) per cent of the value of the
shares of petitioner or P100,000.00;
5. ‘5. 
Order the respondents to pay petitioner moral damages with the amount of
P500,000.00 and exemplary damages in the amount of P200,000.00.
‘Petitioner likewise prayed for such other and further reliefs that the
Commission may deem just and equitable under the premises.’
533
VOL. 245, JULY 3, 1995 533
“On 13 July 1988, respondents-appellees filed their opposition to the petition.
“On 13 July 1988, petitioner filed his Reply to the Opposition.
“On 31 March 1989, the hearing officer rendered a decision ruling that:
“ ‘[P]etitioner’s withdrawal from the law firm Bito, Misa & Lozada did not
dissolve the said law partnership. Accordingly, the petitioner and respondents are
hereby enjoined to abide by the provisions of the Agreement relative to the
matter governing the liquidation of the shares of any retiring or withdrawing
partner in the partnership interest.’ ”
1
On appeal, the SEC en banc reversed the decision of the Hearing Officer

and held that the withdrawal of Attorney Joaquin L. Misa had dissolved
the partnership of “Bito, Misa & Lozada.” The Commission ruled that,
being a partnership at will, the law firm could be dissolved by any
partner at anytime, such as by his withdrawal therefrom, regardless of
good faith or bad faith, since no partner can be forced to continue in the
partnership against his will. In its decision, dated 17 January 1990, the
SEC held:
“WHEREFORE, premises considered the appealed order of 31 March 1989 is
hereby REVERSED insofar as it concludes that the partnership of Bito, Misa &
Lozada has not been dissolved. The case is hereby REMANDED to the Hearing
Officer for determination of the respective rights and obligations of the parties.”
2
The parties sought a reconsideration of the above decision. Attorney
Misa, in addition, asked for an appointment of a receiver to take over the
assets of the dissolved partnership and to take charge of the winding up
of its affairs. On 04 April 1991, respondent SEC issued an order denying
reconsideration, as well as rejecting the petition for receivership, and
reiterating the remand of the case to the Hearing Officer.
The parties filed with the appellate court separate appeals
(docketed CA-G.R. SP No. 24638 and CA-G.R. SP No. 24648).
_______________
1 Rollo, pp. 53-56.

2 Rollo, p. 122.
534
During the pendency of the case with the Court of Appeals, Attorney
Jesus Bito and Attorney Mariano Lozada both died on, respectively, 05
September 1991 and 21 December 1991. The death of the two partners,
as well as the admission of new partners, in the law firm prompted
Attorney Misa to renew his application for receivership (in CA-G.R. SP
No. 24648). He expressed concern over the need to preserve and care for
the partnership assets. The other partners opposed the prayer.
The Court of Appeals, finding no reversible error on the part of
respondent Commission, AFFIRMED in toto the SEC decision and order
appealed from. In fine, the appellate court held, per its decision of 26
February 1993, (a) that 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. 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. 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. 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,
535
VOL. 245, JULY 3, 1995 535
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:
“ ‘5. DURATION. The partnership shall continue so long as mutually satisfactory and
upon the death or legal incapacity of one of the partners, shall be continued by the
surviving partners.’
“The hearing officer however opined that the partnership is one for a specific
undertaking and hence not a partnership at will, citing paragraph 2 of the
Amended Articles of Partnership (19 August 1948):
“‘2. Purpose. The purpose for which the partnership is formed, is to act as legal adviser
and representative of any individual, firm and corporation engaged in commercial,
industrial or other lawful businesses and occupations; to counsel and advise such persons
and entities with respect to their legal and other affairs; and to appear for and represent
their principals and client in all courts of justice and government departments and offices
in the Philippines, and elsewhere when legally authorized to do so.’
“The ‘purpose’ of the partnership is not the specific undertaking referred to in
the law. Otherwise, all partnerships, which necessarily must have a purpose,
would all be considered as partnerships for a definite undertaking. There would
therefore be no need to provide for articles on partnership at will as none would
so exist. Apparently what the law contemplates, is a specific undertaking or
‘project’ which has a definite or definable period of completion.” 3
The birth and life of a partnership at will is predicated on the mutual

desire and consent of the partners. The right to choose with whom a
person wishes to associate himself is the very foundation and essence of
that partnership. Its continued existence is, in turn, dependent on the
constancy of that mutual resolve, along with each partner’s capability to
give it, and the
_______________
3 Rollo, pp. 119-120.

536
absence of a cause for dissolution provided by the law itself. Verily, any
one of the partners may, at his sole pleasure, dictate a dissolution of the
partnership at will. He must, however, act in good faith, not that the
attendance of bad faith can prevent the dissolution of the partnership but 4
that it can result in a liability for damages. 5
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. Among 6
partners, mutual agency arises and the doctrine of delectus

7
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. Upon its 8
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
_______________
4 Art. 1830(1) (b), Civil Code.

5 See Art. 19, Civil Code.
6 Art. 1830(2), Civil Code; see also Rojas vs. Maglana, 192 SCRA 110.
7 As general, as distinguished from limited partners.
8 Art. 1828, Civil Code.
9 Art. 1829, Civil Code.
10 For instance, Art. 1837 of the Civil Code provides:
“ART. 1837. When dissolution is caused in any way, except in contravention of the partnership
agreement, each partner, as against his co-partners and all persons claiming through them in respect
of their interests in the partnership, unless otherwise agreed, may have the partnership property
applied to discharge its liabilities, and the surplus applied to pay in cash the net amount owning to the
respective partners. But if dissolution is caused by expulsion of a partner, bona fide under the
partnership agreement and if the expelled partner is discharged from all
537
VOL. 245, JULY 3, 1995 537
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:
“x x x 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 partner-
_______________
partnership liabilities, either by payment or agreement under the second paragraph of

Article 1835, he shall receive in cash only the net amount due him from the partnership.”
11 Rollo, pp. 69-70.
538
People vs. De Leon
ship under such an atmosphere of animosity; certainly, not against their
will. Indeed, for as long as the reason for withdrawal of a partner is not
12
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.
SO ORDERED.
Feliciano (Chairman), Romero, Melo and Francisco, JJ.,
concur.
Judgment affirmed.
———o0o———

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001 CASES - PARTNERSHIP, AGENCY AND TRUST

(Art 1767) Santos v. Spouses Reyes GR NO. 135813 25 October 2001

Heirs of Tan Eng Kee v. CA GR NO. 126881 3 October 2000

(Art 1785) Ortega v. CA GR No. 109248 3 July 1995

VOL. 368, OCTOBER 25, 2001 261

FERNANDO SANTOS, petitioner, vs. Spouses ARSENIO and NIEVES

The facts are stated in the opinion of the Court.

As a general rule, the factual findings of the Court of Appeals affirming

1998 Resolutions, issued by the Court of Appeals (CA) in CA-GR CV

No. 34742. The Assailed Decision disposed as follows:

Resolving respondent’s Motion for Reconsideration, the August 17,

The October 9, 1998 Resolution denied “for lack of merit” petitioner’s

Ruling of the Trial Court

7 CA Decision. pp. 2–4: rollo, 86–88.

Ruling of the Court of Appeals

8 RTC Decision, pp. 16–17; rollo, pp. 82–83.

“Whether or not Respondent Court of Appeals acted with grave abuse of

We agree with both courts on this point. By the contract of partnership,

11 CA Decision, pp. 7–8; rollo, pp. 91–92.

stipulation clearly proved the establishment of a partnership.

parties. Vitug, Compendium of Civil Law & Jurisprudence, 1993 rev. ed., p. 707; Fue

Second Issue: No Proof of Misappropriation of

15 Annex “D” of the Petition; rollo, p. 56.

17 CA Decision, pp. 10–11; rollo, pp. 94–95.

In sum, the lower courts found it unbelievable that Nieves had

18 RTC Decision, p. 12; rollo, p. 78.

The trial court’s ruling alluded to above is quoted below:

20 CA Resolution, p. 2; rollo, p. 240.

After a close examination of respondents’ exhibits, we find reason to

21 RTC Decision, p. 14; rollo, p. 80.

Reports,” do not reflect the business expenses incurred by the parties,

26 Fuentes v. CA, supra at 709.

HEIRS OF TAN ENG KEE, petitioners, vs. COURT OF APPEALS and

VOL. 341, OCTOBER 3, 2000 741

742 SUPREME COURT REPORTS ANNOTATED

744 SUPREME COURT REPORTS ANNOTATED

The facts are stated in the opinion of the Court.

the Court of Appeals in CA-G.R. CV No. 47937, the dispositive portion

1 Rollo, pp. 129-147.

in the Regional Trial Court of Baguio City was for accounting,

herein BENGUET LUMBER COMPANY, as represented by Tan Eng

The amended complaint principally alleged that after the second

WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

3 Records, pp. 1-4.

the Court of Appeals in a Resolution dated October 11, 1996.

Hence, the present petition.

7 Rollo, pp. 148-149.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

THE HONORABLE COURT OF APPEALS ERRED IN RELYING

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

9 Rollo, pp. 412-419.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

does not include review of factual issues. Thus:

Admitted exceptions have been recognized, though, and when present,

11 1997 RULES OF CIVIL PROCEDURE, Rule 45, Sec. 1.

reached conflicting conclusions, perforce we must examine the record to

Thus, in order to constitute a partnership, it must be established that (1)

writing, since statute allows the oral constitution of a partnership, save in

thousand pesos or more. In both

13 Cf. Alicbusan v. Court of Appeals, 269 SCRA 336, 340-341 (1997)

parties and attached to the public instrument is also indispensable to the

A joint venture “presupposes generally a parity of standing between the

Second Issue: No Proof of Misappropriation of  