[92] ANGELES v.
SECRETARY OF JUSTICE  During the barangay conciliation proceedings, Oscar Angeles stated that there was a
G.R. No. 142612; July 29, 2005; Carpio, J.
TOPIC: Separate Juridical Personality
SUMMARY: Sps. Angeles and Mercado entered into a contract of antichresis covering eight
parcels of land planted with fruit-bearing lanzones. The contract was to last for 5 years with
P210,000 as consideration. After 3 years, Mercado gave an account to the petitioner that the
land earned P 46,210 in 1993, which he used to buy more lanzones trees, no fruit for 1994 and
Mercado gave no accounting for 1995. The petitioner discovered that Mercado and his spouse
put their name in the contract and misappropriated their fund. Mercado denied their allegations
claiming that there exists an industrial partnership between them and the Angeles spouses as
their financiers. Mercado even attached bank receipts showing deposits in behalf of Emerita
Angeles. Sps. Angeles filed for estafa against Mercado but was dismissed by the Provincial
Prosecutor Office. On appeal, the Sec. of Justice affirmed the decision convinced that a
partnership existed between them. The fact that they contributed money to a common fund and
divided the profits among themselves and there is no estafa where is delivered by a partner to
his co-partner on the latter’s representation that the amount shall be applied to their partnership.
SC held that a partnership existed between the Angeles spouses and Mercado even without any
documentary proof to sustain its existence.
DOCTRINE
The purpose of registration of the contract of partnership with the SEC is to give notice to third
parties. Failure to register the contract of partnership does not affect the liability of the
partnership and of the partners to third persons, nor does it affects the partnership’s juridical
personality. A partnership may exist even if the partners do not use the word “partner” or
“partnership”.
RELEVANT PROVISION(S)
FACTS
 The Angeles spouses filed a criminal complaint for estafa against Mercado, their
brother-in-law.
o They claimed that Mercado convinced them to enter into a contract of
antichresis, to last for 5 years, covering 8 parcels of land planted with fruit-
bearing lanzones trees in Nagcarlan, Laguna owned by Juan Sanzo.
o The parties agreed that Mercado would administer the parcels of land and
complete the necessary paperwork.
o After 3 years, the Angeles spouses asked for an accounting from Mercado,
and claimed that only after such demand did they discover that Mercado
had put the contract of antichresis over the subject land under Mercado and
his spouse’s name.
 Mercado denied the allegations.
o He claimed that there exists an industrial partnership, colloquially known
as sosyo industrial, between him and his spouse as industrial partners and
the Angeles spouses as financiers, and that this has existed since 1991,
before predating the contract of antichresis over the subject land.
o Mercado used his and his spouse’s earnings as part of the capital in the
business transactions which he entered into in behalf of the Angeles
spouses. It was their practice to enter into business transactions with other
people under the name of Mercado because the Angeles spouses did not
want to be identified as the financiers.
 Attached are bank receipts showing deposits in behalf of Emerita
Angeles and contracts under his name for the Angeles spouses.
written sosyo industrial agreement: capital would come from the Angeles spouses
while the profit would be divided evenly between the Mercado and Angeles spouses.
 Provincial Prosecution Office: first recommended the filing of a criminal information
for estafa, but after Mercado filed his counter-affidavit and moved for reconsideration,
issued an amended resolution dismissing the complaint.
o The Angeles spouses appealed to the Sec. of Justice arguing that the
document evidencing the contract of antichresis was executed in the name
of the Mercado spouses, instead of the Angeles spouses, and that such
document alone proves Mercado’s misappropriation of their P210,000.
 Sec. of Justice: dismissed the appeal.
o The Angeles spouses failed to present sufficient proof that Mercado
deliberately deceived them in the transaction.
o Mercado satisfactorily explained that the Angeles spouses do not want to be
revealed as the financiers.
o Under the circumstances, it was more likely that the Angeles spouses knew
from the very start knew that the questioned document was not in their
names.
o A partnership truly existed between the two parties which was clear from the
fact that they contributed money to a common fund and divided the profits
among themselves.
o The Angeles spouses acknowledged their joint business venture in the
barangay conciliation proceedings although they assail the manner the
business was conducted.
 Although the legal formalities for the formation were not adhered
to, the partnership relationship was evident.
 There is no estafa where money is delivered by a partner to his
co-partner on the latter’s representation that the amount shall be
applied to the business of their partnership. In the case of the
money received, the co-partner’s liability is civil in nature.
ISSUE(S)/HELD
WON a partnership existed between the Angeles spouses and Mercado even without any
documentary proof to sustain its existence. – YES
 The Angeles spouses alleged that they had no partnership with the Mercados. They
relied on Arts. 1771 to 1773, CC which state that:
o Art. 1771. A partnership may be constituted in any form, except where immovable
property or real rights are contributed thereto, in which case a public instrument shall
be necessary.
o Art. 1772. Every contract of partnership having a capital of three thousand pesos or
more, in money or property, shall appear in a public instrument, which must be
recorded in the Office of the Securities and Exchange Commission.
 Failure to comply with the requirements of the preceding paragraph shall not affect the
liability of the partnership and the members thereof to third persons.
o Art. 1773. A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the parties,
and attached to the public instrument.
 The claim of the petitioner that there is no partnership holds no water.
o First, the Angeles spouses contributed money and not immovable property.
o Second, mere failure to register the contract of partnership with the SEC
does not invalidate a contract that has the essential requisites of a
partnership for it does not affect the liability of the partnership to third
persons.
 o A partnership may exist even if the partners do not use the words “partner”
or “partnership”. Indeed, the Angeles spouses admits the existence of a
contract showing industrial partnership, contribution of money and industry
to a common fund, and division of profits between the Angeles spouses and
Mercado.

RULING

DISPOSITIVE: WHEREFORE, we AFFIRM the decision of the Secretary of Justice. The

present petition for certiorari is DISMISSED. SO ORDERED.