DECISION

THIRD DIVISION
[G.R. No. 135813. October 25, 2001]
FERNANDO SANTOS, petitioner, vs. Spouses ARSENIO and NIEVES
REYES, 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

Remedial Law; Appeals; Factual findings of the Court of Appeals

the rule and one of the exceptions.

affirming those of the trial court are binding and conclusive on the

The Case

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

Before us is a Petition for Review on Certiorari assailing

those of the trial court are binding and conclusive on the Supreme

the November 28, 1997 Decision,[1] as well as the August 17,

Court. Although there are exceptions to this rule, petitioner has not

1998 and the October 9, 1998 Resolutions, [2] issued by the

satisfactorily shown that any of them is applicable to this issue.

Court of Appeals (CA) in CA-GR CV No. 34742. The Assailed

Decision disposed as follows:

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

WHEREFORE,

the

decision

appealed

from

is

AFFIRMED save as for the counterclaim which is hereby

DISMISSED. Costs against [petitioner].[3]

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

Resolving respondents Motion for Reconsideration, the

August 17, 1998 Resolution ruled as follows:

issues.

WHEREFORE, [respondents] motion for reconsideration is

GRANTED. Accordingly, the courts decision dated November

28, 1997 is hereby MODIFIED in that the decision appealed

short-term loans for members of the corporation. [Petitioner]

from is AFFIRMED in toto, with costs against [petitioner].

and Gragera executed an agreement providing funds for Monte

[4]

Marias

members. Under

the

agreement,

Monte

Maria,

represented by Gragera, was entitled to P1.31 commission per

The October 9, 1998 Resolution denied for lack of merit
petitioners Motion for Reconsideration of the August 17, 1998
Resolution.[5]

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], x x x [Nieves] and Zabat

The Facts

executed the Article of Agreement which formalized their

earlier verbal arrangement.

The events that led to this case are summarized by the

CA as follows:
Sometime in June, 1986, [Petitioner] Fernando Santos and

[Petitioner] and [Nieves] later discovered that their partner

[Respondent] Nieves Reyes were introduced to each other by

Zabat engaged in the same lending business in competition

one Meliton Zabat regarding a lending business venture

with their partnership[.] Zabat was thereby expelled from the

proposed by Nieves. It was verbally agreed that [petitioner

partnership. The operations with Monte Maria continued.

would] act as financier while [Nieves] and Zabat [would] take

charge of solicitation of members and collection of loan

On June 5, 1987, [petitioner] filed a complaint for recovery of

payments. The venture was launched on June 13, 1986, with

sum

the understanding that [petitioner] would receive 70% of the

[respondents], allegedly in their capacities as employees of

profits while x x x Nieves and Zabat would earn 15% each.

[petitioner], with having misappropriated funds intended for

of

money

and

damages. [Petitioner]

charged

Gragera for the period July 8, 1986 up to March 31,

1987. Upon Grageras complaint that his commissions were
inadequately remitted, [petitioner] entrusted P200,000.00 to x
In July, 1986, x x x Nieves introduced Cesar Gragera to

x x Nieves to be given to Gragera. x x x Nieves allegedly failed

[petitioner]. Gragera,

to account for the amount. [Petitioner] asserted that after

as

Development Corporation

chairman
[6]

of

the

Monte

Maria

(Monte Maria, for brevity), sought

examination of the records, he found that of the total amount

commission. Because

of P4,623,201.90

[respondents],

received payments from borrowers nor remitted any amount to

only P3,068,133.20 was remitted to Gragera, thereby leaving

Gragera. Her job was merely to make worksheets (Exhs. 15 to

the balance of P1,555,065.70 unaccounted for.

15-DDDDDDDDDD) to convey to [petitioner] how much he

entrusted

to

of

this

arrangement,

she

neither

would earn if all the sums guaranteed by Gragera were

collected.
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

[Petitioner] on the other hand insisted that [respondents] were

them from claiming their rightful share to the profits of the

his mere employees and not partners with respect to the

partnership.

agreement with Gragera. He claimed that after he discovered

Zabats activities, he ceased infusing funds, thereby causing
the extinguishment of the partnership. The agreement with

x x x Arsenio alleged that he was enticed by [petitioner] to take

the place of Zabat after [petitioner] learned of Zabats
activities. Arsenio

resigned

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

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 Grageras commission. The commission would then
be remitted to Gragera. She likewise determined loan releases.

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

During the pre-trial, the parties narrowed the issues to the

worksheets were based on this assumptive 100% collection of

following points: whether [respondents] were employees or

all loans. The loan releases were made less Grageras agreed

partners of [petitioner], whether [petitioner] entrusted money

to

[respondents]

for

delivery

to

Gragera,

whether

39.2.1. P3,064,428.00 - The 15 percent share of the

the P1,555,068.70 claimed under the complaint was actually

[respondent] NIEVES S. REYES in the profits of

remitted to Gragera and whether [respondents] were entitled

her joint venture with the [petitioner].

to their counterclaim for share in the profits.

[7]

39.2.2. Six (6) percent of - As damages from

P3,064,428.00

August

3,

1987

until

the

P3,064,428.00 is fully paid.

Ruling of the Trial Court

39.2.3. P50,000.00 - As moral damages

In its August 13, 1991 Decision, the trial court held that
respondents

were

petitioner. It

further

partners,
ruled

not
that

mere

employees,

Gragera

was

only

of
a

commission agent of petitioner, not his partner. Petitioner

moreover failed to prove that he had entrusted any money to
Nieves. Thus, respondents counterclaim for their share in the
partnership and for damages was granted. The trial court
disposed as follows:

39.2.4. 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

renders

REYES in the profits of his joint venture with the

39.1. THE SECOND AMENDED COMPLAINT dated

39.3.2. Six (6) percent of - As damages from

39.

WHEREFORE,

the

Court

hereby

judgment as follows:

July 26, 1989 is DISMISSED.

39.2. The [Petitioner] FERNANDO J. SANTOS is
ordered to pay the [Respondent] NIEVES S.
REYES, the following:

[petitioner].

P2,899,739.50

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 attorneys fees; and

39.4.2 The cost of the suit.[8]

The CA disbelieved petitioners 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

Ruling of the Court of Appeals

prepare

the

daily

cash

flow

reports

(Exhs.

15-

15DDDDDDDDDD) to keep track of his collections.

On appeal, the Decision of the trial court was upheld,
and the counterclaim of respondents was dismissed. Upon the

Hence, this Petition.[9]

latters Motion for Reconsideration, however, the trial courts

Issue

Decision was reinstated in toto. Subsequently, petitioners own

Motion for Reconsideration was denied in the CA Resolution of

Petitioner asks this Court to rule on the following issues:

October 9, 1998.
[10]

The CA ruled that the following circumstances indicated

the existence of a partnership among the parties: (1) it was

Whether or not Respondent Court of Appeals acted with grave

Nieves who broached to petitioner the idea of starting a

abuse

money-lending business and introduced him to Gragera; (2)

jurisdiction in:

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.

of

discretion

1. Holding

that

tantamount

private

to

excess

respondents

or

lack

were

partners/joint venturers and not employees of

Santos in connection with the agreement between
Santos and Monte Maria/Gragera;
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;

of

3. Affirming that the signature of Nieves Reyes on

First Issue:

Exhibit E was a forgery;

4. Finding that Exhibit H [did] not establish receipt

Business Relationship

by Nieves Reyes of P200,000.00 for delivery to

Gragera;
5. Affirming

Petitioner maintains that he employed the services of

respondent spouses in the money-lending venture with

the

dismissal

of

Santos

[Second]

Amended Complaint;
6. Affirming the decision of the trial court, upholding
private respondents counterclaim;
7. Denying Santos motion for reconsideration dated

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.

September 11, 1998.

On the other hand, both the CA and the trial court
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

rejected petitioners contentions and ruled that the business

relationship was one of partnership. We quote from the CA
Decision, as follows:

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 Courts Ruling
The Petition is partly meritorious.

[Respondents] were industrial partners of [petitioner]. x x x

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]
We agree with both courts on this point. By the contract

considered industrial partners (Evangelista v. Abad Santos, 51

of partnership, two or more persons bind themselves to

SCRA 416 [1973]).

contribute money, property or industry to a common fund,

with the intention of dividing the profits among themselves.
[12]

The Articles of Agreement stipulated that the signatories

While concededly, the partnership between [petitioner,] Nieves

shall share the profits of the business in a 70-15-15 manner,

and Zabat was technically dissolved by the expulsion of Zabat

with petitioner getting the lions share. [13] This stipulation

therefrom, the remaining partners simply continued the

clearly proved the establishment of a partnership.

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

We find no cogent reason to disagree with the lower

partnership between [petitioner,] Nieves and Arsenio simply

courts that the partnership continued lending money to the

took

former

members of the Monte Maria Community Development Group,

partnership with Zabat, one of the incidents of which was the

Inc., which later on changed its business name to Private

lending operations with Monte Maria.

Association for Community Development, Inc. (PACDI). Nieves

over

and

continued

the

business

of

the

was not merely petitioners employee. She discharged her

xxxxxxxxx

bookkeeping duties in accordance with paragraphs 2 and 3 of

the Agreement, which states as follows:

Gragera and [petitioner] were not partners. The money-lending

activities undertaken with Monte Maria was done in pursuit

2. That the SECOND PARTY and THIRD PARTY shall handle

of the business for which the partnership between [petitioner],

the solicitation and screening of prospective borrowers, and

Nieves and Zabat (later Arsenio) was organized. Gragera who

shall x x x each be responsible in handling the collection of

represented Monte Maria was merely paid commissions in

the loan payments of the borrowers that they each solicited.

exchange for the collection of loans. The commissions were

fixed on gross returns, regardless of the expenses incurred in

3. That the bookkeeping and daily balancing of account of the

the operation of the business. The sharing of gross returns

business operation shall be handled by the SECOND PARTY.

does not in itself establish a partnership.

[11]

[14]

Second Issue:
The Second Party named in the Agreement was none
other than Nieves Reyes. On the other hand, Arsenios duties
as credit investigator are subsumed under the phrase

No

shares or dividends (Exh. 6) to Arsenio, we uphold the factual

finding of both courts that he replaced Zabat in the
partnership.

of

Misappropriation

of

Grageras

Unpaid

Commission

screening of prospective borrowers. Because of this Agreement

and the disbursement of monthly allowances and profit

Proof

Petitioner faults the CA finding that Nieves did not

misappropriate

money

intended

for

Grageras

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

Indeed, the partnership was established to engage in a

money-lending

business,

despite

the

fact

that

it

was

formalized only after the Memorandum of Agreement had

been signed by petitioner and Gragera. Contrary to petitioners
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 month after the

should

have

earned

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]

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]

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:

The presentation of Exhibit D vaguely denominated as

members ledger does not clearly establish that Nieves received
amounts from Monte Marias members. The document does

x x x. But NIEVES denied that Exh. E-1 is her signature; she

not

thereon

claimed that it is a forgery. The initial stroke of Exh. E-1

represent. More importantly, Nieves made the entries for the

starts from up and goes downward. The initial stroke of the

limited period of January 11, 1987 to February 17, 1987 only

genuine signatures of NIEVES (Exhs. A-3, B-1, F-1, among

while the rest were made by Grageras own staff.

others) starts from below and goes upward. This difference in

clearly

state

what

amounts

the

entries

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.
Neither can we give probative value to Exhibit E which
allegedly

shows

acknowledgment

of

the

remittance

of

xxxxxxxxx

commissions to Verona Gonzales. The document is a private

one and its due execution and authenticity have not been duly

Nieves testimony that the schedules of daily payment (Exhs. B

proved as required in [S]ection 20, Rule 132 of the Rules of

and F) were based on the predetermined 100% collection as

Court which states:

guaranteed by Gragera is credible and clearly in accord with

the evidence. A perusal of Exhs. B and F as well as Exhs. 15
private

to 15-DDDDDDDDDD reveal that the entries were indeed

document offered as authentic is received in evidence, its due

based on the 100% assumptive collection guaranteed by

execution and authenticity must be proved either:

Gragera. Thus, the total amount recorded on Exh. B is exactly

Sec.

20. Proof

of

Private

Document Before

any

the number of borrowers multiplied by the projected collection

(a) By anyone who saw the document executed or written; or

of P150.00 per borrower. This holds true for Exh. F.

(b) By evidence of the genuineness of the signature or

handwriting of the maker.
Corollarily, Nieves explanation that the documents were pro
Any other private document need only be identified as that

forma and that she signed them not to signify that she

which it is claimed to be.

collected the amounts but that she received the documents

The court a quo even ruled that the signature thereon was a
forgery, as it found that:

themselves is more believable than [petitioners] assertion that

she actually handled the amounts.

get GRAGERAs commissions from the amortizations and then

give such commission to GRAGERA.[17]
Contrary to [petitioners] assertion, Exhibit H does not
unequivocally

establish

that

Nieves

received P200,000.00 as 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.

These findings are in harmony with the trial courts

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.

Accordingly, we find Nieves testimony that after August 20,

H shows under its sixth column ADDITIONAL CASH that the

1986, all collections were made by Gragera believable and

additional

worthy of credence. Since Gragera guaranteed a daily 100%

liquidation of the P200,000.00 as alleged by SANTOS, then

payment of the loans, he took charge of the collections. As

his claim is not true. This is so because it is a liquidation of

[petitioners] representative, Nieves merely prepared the daily

the sum of P240,000.00.

cash

was P240,000.00. If

Exh.

were

the

cash flow reports (Exh. 15 to 15 DDDDDDDDDD) to enable

[petitioner] to keep track of Grageras operations.Gragera on
the other hand devised the schedule of daily payment (Exhs.
B and F) to record the projected gross daily collections.

21.1. SANTOS claimed that he learned of NIEVES failure to

As aptly observed by the court a quo:

latters letter complaining of its delayed release. Assuming as

give the P200,000.00 to GRAGERA when he received the

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 give it is the

26.1. As between the versions of SANTOS and NIEVES on how

letter. But SANTOS did not even present the letter in

the commissions of GRAGERA [were] paid to him[,] that of

evidence. He did not explain why he did not.

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

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.

Accounting of Partnership

[18]

Petitioner refuses any liability for respondents claims on

the profits of the partnership. He maintains that both
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

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.

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

Respondent spouses, on the other hand, postulate that

she misappropriated P200,000, because Exhibit H does not

petitioner instituted the action below to avoid payment of the

indicate that such amount was received by her; in fact, it

demands of Nieves, because sometime in March 1987, she

shows a different figure.

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

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.[19] Although there are exceptions to
this rule, petitioner has not satisfactorily shown that any of
them is applicable to this issue.

Third Issue:

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-I-3); and
Arsenios, P2,026,000 minus the P30,000 which was already
advanced to him (Petty Cash Vouchers, Exhs. 6, 6-A to 6-B).

The CA originally held that respondents counterclaim was

premature,

pending

an

accounting

of

the

partnership. However, in its assailed Resolution of August 17,

from June 13, 1986 to April 19, 1987 (Exh. 1-I-4). She had a

1998, it turned volte face. Affirming the trial courts ruling on

share of P3,064,428.00 (Exh. 10-I-3) and ARSENIO, about

the counterclaim, it held as follows:

P2,926,000.00, in the profits.

We earlier ruled that there is still need for an accounting of

the profits and losses of the partnership before we can rule
the

27.1.1 SANTOS never denied NIEVES testimony that the

partners. Upon a further review of the records of this case,

money-lending business he was engaged in netted a profit and

however, there appears to be sufficient basis to determine the

that the originals of the daily case flow reports were furnished

amount of shares of the parties and damages incurred by

to him. SANTOS however alleged that the money-lending

[respondents]. The fact is that the court a quo already made

operation of his joint venture with NIEVES and ZABAT

such a determination [in its] decision dated August 13, 1991

resulted in a loss of about half a million pesos to him. But

with

certainty

as

to

the

respective

on the basis of the facts on record.

shares

of

[20]

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.

The trial courts ruling alluded to above is quoted below:

27.2 The P26,260.50 which ARSENIO received as part of his
27. The defendants counterclaim for the payment of their

share in the profits (Exhs. 6, 6-A and 6-B) should be deducted

share in the profits of their joint venture with SANTOS is

from his total share.[21]

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

After a close examination of respondents exhibits, we find

are shown in the working papers (Exhs. 10 to 10-I, inclusive)

reason to disagree with the CA. Exhibit 10-I[22] shows that the

which she prepared.Exhs. 10 to 10-I (inclusive) were based on

partnership earned a total income of P20,429,520 for the

the daily cash flow reports of which Exh. 3 is a sample. The

period June 13, 1986 until April 19, 1987. This entry is

originals of the daily cash flow reports (Exhs. 3 and 15 to 15-

derived from the sum of the amounts under the following

D (10) were given to SANTOS. The joint venture had a net

column headings: 2-Day Advance Collection, Service Fee,

profit of P20,429,520.00 (Exh. 10-I-1), from its operations

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.
Similarly, Exhibits 15 et seq.,[24] which are the Daily
Cashflow Reports, do not reflect the business expenses
incurred by the parties, because they show only the daily
The total income shown on Exhibit 10-I did not consider

cash collections. Contrary to the rulings of both the trial and

the expenses sustained by the partnership. For instance, it

the appellate courts, respondents exhibits do not reflect

did not factor in the gross loan releases representing the

the complete financial

money loaned to clients. Since the business is money-lending,

business. The lower courts obviously labored over a mistaken

such releases are comparable with the inventory or supplies

notion that Exhibit 10-I-1 represented the net profits earned

in other business enterprises.

by the partnership.

condition

of

the

money-lending

For the purpose of determining the profit that should go

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. [23] show that
Arsenio received allowances from 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

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]

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

When the judgment of the CA is premised on a

the

misapprehension of facts or a failure to notice certain relevant

partnership. The share of each one of them should be based

facts that would otherwise justify a different conclusion, as in

on this net profit and not from the gross income or total

this particular issue, a review of its factual findings may be

income reflected in Exhibit 10-I, which the two courts

conducted, as an exception to the general rule applied to the

invariably referred to as cash flow sheets.

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 REVERSEDand SET ASIDE. No costs.
SO ORDERED.

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

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
Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 126881

October 3, 2000

HEIRS OF TAN ENG KEE, petitioners,

vs.
COURT OF APPEALS and BENGUET LUMBER COMPANY, represented by
its President TAN ENG LAY,respondents.

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

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

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

generally relates to a continuing business of various transactions of

Benguet Lumber. A contract of partnership is defined by law as one

a certain kind.

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

Same; Same; Same; Same; A joint venture may be likened to a

constitute a partnership, it must be established that (1) two or more

particular partnership; The legal concept of a joint venture is of

persons bound themselves to contribute money, property, or industry

common law origin and has no precise legal definition, but it has been

to a common fund, and (2) they intend to divide the profits among

generally understood to mean an organization formed for some

themselves. The agreement need not be formally reduced into

temporary purpose.A joint venture presupposes generally a parity

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

of standing between the joint co-ventures or partners, in which each

save in two instances: (1) when immovable property or real rights are

party has an equal proprietary interest in the capital or property

contributed, and (2) when the partnership has a capital of three

contributed, and where each party exercises equal rights in the

thousand pesos or more. In both cases, a public instrument is

conduct of the business. Nonetheless, in Aurbach, et al. v. Sanitary

required. An inventory to be signed by the parties and attached to

Wares Manufacturing Corporation, et al., we expressed the view that

the public instrument is also indispensable to the validity of the

a joint venture may be likened to a particular partnership, thus: The

partnership whenever immovable property is contributed to the

legal concept of a joint venture is of common law origin. It has no

partnership.

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 similarcommunity of interest

Same; Same; Joint Ventures; Partnership and Joint Venture,

in the business, sharing of profits and losses, and a mutual right of

Distinguished.The trial court determined that Tan Eng Kee and Tan

control. (Blackner v. McDermott, 176 F. 2d. 498 [1949]; Carboneau v.

Eng Lay had entered into a joint venture, which it said is akin to a

Peterson, 95 P.2d., 1043 [1939]; Buckley v. Chadwick, 45 Cal. 2d.

particular partnership. A particular partnership is distinguished

183, 288 P.2d. 12 289 P.2d. 242 [1955]). The main distinction cited

from a joint adventure, to wit: (a) A joint adventure (an American

by most opinions in common law jurisdiction is that the partnership

concept similar to our joint accounts ) is a sort of informal

contemplates a general business with some degree of continuity,

partnership, with no firm name and no legal personality. In a joint

while the joint venture is formed for the execution of a single

account, the participating merchants can transact business under

transaction, and is thus of a temporary nature. (Tufts v. Mann, 116

their own name, and can be individually liable therefor, (b) Usually,

Cal. App. 170, 2 P.2d. 500 [1931]; Harmon v. Martin, 395 111. 595,

but not necessarily a joint adventure is limited to a SINGLE

71 NE 2d. 74 [1947]; Gates v. Megargel, 266 Fed. 811 [1920]). This

TRANSACTION, although the business of pursuing to a successful

observation is not entirely accurate in this jurisdiction, since under

termination may continue for a number of years; a partnership

the Civil Code, a partnership may be particular or universal, and a

particular partnership may have for its object a specific undertaking.

the forty years the partnership was allegedly in existence, Tan Eng

(Art. 1783, Civil Code). It would seem therefore that under Philippine

Kee never asked for an accounting. The essence of a partnership is

law, a joint venture is a form of partnership and should thus be

that the partners share in the profits and losses. Each has the right

governed by the law of partnerships. The Supreme Court has

to demand an accounting as long as the partnership exists. We have

however recognized a distinction between these two business forms,

allowed a scenario wherein [i]f excellent relations exist among the

and has held that although a corporation cannot enter into a

partners at the start of the business and all the partners are more

partnership contract, it may however engage in a joint venture with

interested in seeing the firm grow rather than get immediate returns,

others. (At p. 12, Tuazon v. Bolaos, 95 Phil. 906 [1954]) (Campos

a deferment of sharing in the profits is perfectly plausible. But in

and

the situation in the case at bar, the deferment, if any, had gone on

Lopez-Campos

Comments,

Notes

and

Selected

Cases,

Corporation Code 1981).

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

Same; Co-Ownership; A co-ownership or co-possession is not an

Eng Lay.

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

Same; Where circumstances taken singly may be inadequate to prove

met Tan Eng Kee after the liberation, the latter asked the former to

the intent to form a partnership, nevertheless, the collective effect of

accompany him to get 80 pieces of G.I. sheets supposedly owned by

these circumstances may be such as to support a finding of the

both brothers. Tan Eng Lay, however, denied knowledge of this

existence of the parties intent.In the instant case, we find private

meeting or of the conversation between Peralta and his brother. Tan

respondents arguments to be well-taken. Where circumstances

Eng Lay consistently testified that he had his business and his

taken singly may be inadequate to prove the intent to form a

brother had his, that it was only later on that his said brother, Tan

partnership, nevertheless, the collective effect of these circumstances

Eng Kee, came to work for him. Be that as it may, co-ownership or

may be such as to support a finding of the existence of the parties

copossession (specifically here, of the G.I. sheets) is not an indicium

intent. Yet, in the case at bench, even the aforesaid circumstances

of the existence of a partnership.

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

Same; The essence of a partnership is that the partners share in the

occupied a niche above the rank-and-file employees. He would have

profits and losses; A demand for periodic accounting is evidence of a

enjoyed liberties otherwise unavailable were he not kin, such as his

partnership.Besides, it is indeed odd, if not unnatural, that despite

residence in the Benguet Lumber Company compound. He would

have moral, if not actual, superiority over his fellow employees,

winding up of the alleged partnership formed after World War

thereby entitling him to exercise powers of supervision. It may even

II between Tan Eng Kee and Tan Eng Lay. On March 18, 1991,

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.

the

petitioners

filed

an

amended

complaint 4 impleading

private respondent herein BENGUET LUMBER COMPANY, as

represented by Tan Eng Lay. The amended complaint was
admitted by the trial court in its Order dated May 3, 1991.5
The amended complaint principally alleged that after the
second World War, Tan Eng Kee and Tan Eng Lay, pooling
their

DE LEON, JR., J.:

resources

and

industry

together,

entered

into

partnership engaged in the business of selling lumber and

In this petition for review on certiorari, petitioners pray for the
1

reversal of the Decision dated March 13, 1996 of the former

hardware and construction supplies. They named their

enterprise "Benguet Lumber" which they jointly managed until

Fifth Division of the Court of Appeals in CA-G.R. CV No.

Tan Eng Kee's death. Petitioners herein averred that the

47937, the dispositive portion of which states:

business prospered due to the hard work and thrift of the

alleged partners. However, they claimed that in 1981, Tan Eng

THE

FOREGOING

CONSIDERED,

the

appealed

Lay and his children caused the conversion of the partnership

decision is hereby set aside, and the complaint

"Benguet Lumber" into a corporation called "Benguet Lumber

dismissed.

Company." The incorporation was purportedly a ruse to

deprive Tan Eng Kee and his heirs of their rightful

The facts are:

participation in the profits of the business. Petitioners prayed

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,

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.

Corazon and Elpidio, collectively known as herein petitioners

HEIRS OF TAN ENG KEE, filed suit against the decedent's
brother

TAN

ENG

LAY

on

February

19,

1990.

The

complaint, docketed as Civil Case No. 1983-R in the Regional

Trial Court of Baguio City was for accounting, liquidation and

After trial, Regional Trial Court of Baguio City, Branch 7

rendered judgment6 on April 12, 1995, to wit:

WHEREFORE, in view of all the foregoing, judgment is

f) Ordering the appointment of a receiver to preserve

hereby rendered:

and/or administer the assets of Benguet Lumber

Company, Inc. until such time that said corporation is

a) Declaring that Benguet Lumber is a joint venture

finally liquidated are directed to submit the name of

which is akin to a particular partnership;

any person they want to be appointed as receiver

b) Declaring that the deceased Tan Eng Kee and Tan

Eng Lay are joint adventurers and/or partners in a
business venture and/or particular partnership called

failing in which this Court will appoint the Branch

Clerk of Court or another one who is qualified to act as
such.

Benguet Lumber and as such should share in the

g) Denying the award of damages to the plaintiffs for

profits and/or losses of the business venture or

lack of proof except the expenses in filing the instant

particular partnership;

case.

c) Declaring that the assets of Benguet Lumber are the

h) Dismissing the counter-claim of the defendant for

same assets turned over to Benguet Lumber Co. Inc.

lack of merit. SO ORDERED.

and as such the heirs or legal representatives of the

deceased Tan Eng Kee have a legal right to share in

Private respondent sought relief before the Court of Appeals

said assets;

which, on March 13, 1996, rendered the assailed decision

reversing the judgment of the trial court. Petitioners' motion

d) Declaring that all the rights and obligations of Tan

for reconsideration7 was denied by the Court of Appeals in a

Eng Kee as joint adventurer and/or as partner in a

Resolution8 dated October 11, 1996.

particular partnership have descended to the plaintiffs

who are his legal heirs.

Hence, the present petition.

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

As a side-bar to the proceedings, petitioners filed Criminal

of Benguet Lumber Company, Inc. so the plaintiffs

Case No. 78856 against Tan Eng Lay and Wilborn Tan for the

know their proper share in the business;

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 Eng Kee was a mere employee of Benguet

TESTIMONY OF RESPONDENT TAN ENG LAY THAT

Lumber, were fake, based on the discrepancy in the

BENGUET LUMBER WAS A SOLE PROPRIETORSHIP

signatures of Tan Eng Kee. They also filed Criminal Cases

AND THAT TAN ENG KEE WAS ONLY AN EMPLOYEE

Nos. 78857-78870 against Gloria, Julia, Juliano, Willie,

THEREOF.

Wilfredo, Jean, Mary and Willy, all surnamed Tan, for alleged
III

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 insufficiency of evidence.

THE HONORABLE COURT OF APPEALS ERRED IN

HOLDING THAT THE FOLLOWING FACTS WHICH
WERE DULY SUPPORTED BY EVIDENCE OF BOTH

In their assignment of errors, petitioners claim that:

PARTIES DO NOT SUPPORT THE EXISTENCE OF A

PARTNERSHIP JUST BECAUSE THERE WAS NO

ARTICLES
BEFORE

THE HONORABLE COURT OF APPEALS ERRED IN

OF
THE

PARTNERSHIP

DULY

RECORDED

SECURITIES

AND

EXCHANGE

COMMISSION:

HOLDING THAT THERE WAS NO PARTNERSHIP

BETWEEN THE LATE TAN ENG KEE AND HIS

a. THAT THE FAMILIES OF TAN ENG KEE AND

BROTHER TAN ENG LAY BECAUSE: (A) THERE WAS

TAN ENG LAY WERE ALL LIVING AT THE

NO FIRM ACCOUNT; (B) THERE WAS NO FIRM

BENGUET LUMBER COMPOUND;

LETTERHEADS

SUBMITTED

AS

EVIDENCE;

(C)

THERE WAS NO CERTIFICATE OF PARTNERSHIP; (D)

b. THAT BOTH TAN ENG LAY AND TAN ENG

THERE WAS NO AGREEMENT AS TO PROFITS AND

KEE WERE COMMANDING THE EMPLOYEES

LOSSES; AND (E) THERE WAS NO TIME FIXED FOR

OF BENGUET LUMBER;

THE DURATION OF THE PARTNERSHIP (PAGE 13,

DECISION).

LAY WERE SUPERVISING THE EMPLOYEES

THEREIN;

II
THE HONORABLE COURT OF APPEALS ERRED IN
RELYING

c. THAT BOTH TAN ENG KEE AND TAN ENG

SOLELY

ON

THE

SELF-SERVING

d. THAT TAN ENG KEE AND TAN ENG LAY

WERE THE ONES DETERMINING THE PRICES

OF STOCKS TO BE SOLD TO THE PUBLIC;

ESTABLISHED

AND

DECISION).

BY

THE

APPELLEES

(PAGE

17,

e. THAT TAN ENG LAY AND TAN ENG KEE

WERE THE ONES MAKING ORDERS TO THE
As a premise, we reiterate the oft-repeated rule that findings

SUPPLIERS (PAGE 18, DECISION).

of facts of the Court of Appeals will not be disturbed on appeal

if such are supported by the evidence.10 Our jurisdiction, it

IV

must be emphasized, does not include review of factual

THE HONORABLE COURT OF APPEALS ERRED IN

issues. Thus:

HOLDING THAT THERE WAS NO PARTNERSHIP JUST

BECAUSE THE CHILDREN OF THE LATE TAN ENG

Filing of petition with Supreme Court. A party

KEE:

CHOI,

desiring to appeal by certiorari from a judgment or

BEATRIZ

final order or resolution of the Court of Appeals, the

TANDOC, ADMITTED THAT THEY DO NOT KNOW

Sandiganbayan, the Regional Trial Court or other

WHEN THE ESTABLISHMENT KNOWN IN BAGUIO

courts whenever authorized by law, may file with the

CITY AS BENGUET LUMBER WAS STARTED AS A

Supreme Court a verified petition for review on

PARTNERSHIP (PAGE 16-17, DECISION).

certiorari. The petition shall raise only questions of law

ELPIDIO

TOGETHER

TAN

WITH

AND

THEIR

VERONICA
WITNESS

which must be distinctly set forth.11 [emphasis supplied]

V
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 THE PRESENT
CAPITAL OR ASSETS OF BENGUET LUMBER IS
DEFINITELY MORE THAN P3,000.00 AND AS SUCH
THE

EXECUTION

OF

PUBLIC

INSTRUMENT

CREATING A PARTNERSHIP SHOULD HAVE BEEN

MADE

AND

NO

SUCH

PUBLIC

INSTRUMENT

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 grounded entirely on

speculation, surmises, or conjectures;
In reversing the trial court, the Court of Appeals ruled, to wit:
(3) when the inference made by the Court of Appeals
from its findings of fact is manifestly mistaken,

We note that the Court a quo over extended the issue

absurd, or impossible;

because while the plaintiffs mentioned only the

existence of a partnership, the Court in turn went

(4) when there is grave abuse of discretion in the

beyond that by justifying the existence of a joint

appreciation of facts;

venture.

(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

When mention is made of a joint venture, it would

appellee;

presuppose parity of standing between the parties,

equal proprietary interest and the exercise by the

(6) when the judgment of the Court of Appeals is

parties equally of the conduct of the business, thus:

premised on a misapprehension of facts;

xxx

xxx

xxx

(7) when the Court of Appeals fails to notice certain

relevant facts which, if properly considered, will justify

We have the admission that the father of the plaintiffs

a different conclusion;

was not a partner of the Benguet Lumber before the

war. The appellees however argued that (Rollo, p. 104;

(8) when the findings of fact are themselves conflicting;

Brief, p. 6) this is because during the war, the entire

stocks

of

the

pre-war

Benguet

Lumber

were

(9) when the findings of fact are conclusions without

confiscated if not burned by the Japanese. After the

citation of the specific evidence on which they are

war, because of the absence of capital to start a

based; and

lumber and hardware business, Lay and Kee pooled

(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

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

Also, the exhibits support the establishment of only a

Baguio City, was even testified to by witnesses.

proprietorship. The certification dated March 4, 1971,

Because of the pooling of resources, the post-war

Exhibit "2", mentioned co-defendant Lay as the only

Benguet Lumber was eventually established. That the

registered

father of the plaintiffs and Lay were partners, is

Hardware. His application for registration, effective

obvious from the fact that: (1) they conducted the

1954, in fact mentioned that his business started in

affairs of the business during Kee's lifetime, jointly, (2)

1945 until 1985 (thereafter, the incorporation). The

they were the ones giving orders to the employees, (3)

deceased, Kee, on the other hand, was merely an

they

the

employee of the Benguet Lumber Company, on the

suppliers, (4) their families stayed together at the

basis of his SSS coverage effective 1958, Exhibit "3". In

Benguet Lumber compound, and (5) all their children

the Payrolls, Exhibits "4" to "4-U", inclusive, for the

were employed in the business in different capacities.

years 1982 to 1983, Kee was similarly listed only as an

were

the

ones

preparing

orders

from

owner

of

the

Benguet

Lumber

and

employee; precisely, he was on the payroll listing. In

xxx

xxx

xxx

It is obvious that there was no partnership whatsoever.

Except for a firm name, there was no firm account, no

the Termination Notice, Exhibit "5", Lay was mentioned

also as the proprietor.
xxx

xxx

xxx

firm letterheads submitted as evidence, no certificate

of partnership, no agreement as to profits and losses,

We would like to refer to Arts. 771 and 772, NCC, that

and no time fixed for the duration of the partnership.

a partner [sic] may be constituted in any form, but

There was even no attempt to submit an accounting

when an immovable is constituted, the execution of a

corresponding to the period after the war until Kee's

public instrument becomes necessary. This is equally

death in 1984. It had no business book, no written

true if the capitalization exceeds P3,000.00, in which

account nor any memorandum for that matter and no

case a public instrument is also necessary, and which

license mentioning the existence of a partnership

is to be recorded with the Securities and Exchange

[citation omitted].

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

proceeds of the 80 pieces of the G.I. sheets were added

instrument, on the other hand, was never established

to the business.

by the appellees.

Partnership

presupposes

the

following

elements

And then in 1981, the business was incorporated and

[citation omitted]: 1) a contract, either oral or written.

the incorporators were only Lay and the members of

However, if it involves real property or where the

his family. There is no proof either that the capital

capital is P3,000.00 or more, the execution of a

assets of the partnership, assuming them to be in

contract is necessary; 2) the capacity of the parties to

existence, were maliciously assigned or transferred by

execute the contract; 3) money property or industry

Lay, supposedly to the corporation and since then have

contribution; 4) community of funds and interest,

been treated as a part of the latter's capital assets,

mentioning equality of the partners or one having a

contrary to the allegations in pars. 6, 7 and 8 of the

proportionate share in the benefits; and 5) intention to

complaint.

divide

the

profits,

being

the

true

test

of

the

partnership. The intention to join in the business

venture for the purpose of obtaining profits thereafter
These are not evidences supporting the existence of a
partnership:

to be divided, must be established. We cannot see

these elements from the testimonial evidence of the
appellees.

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

As can be seen, the appellate court disputed and differed from

establishment, as testified to by Tandoc; 2) that both

the trial court which had adjudged that TAN ENG KEE and

Lay and Kee were seated on a table and were

TAN ENG LAY had allegedly entered into a joint venture. In

"commanding people" as testified to by the son, Elpidio

this connection, we have held that whether a partnership

Tan; 3) that both were supervising the laborers, as

exists is a factual matter; consequently, since the appeal is

testified to by Victoria Choi; and 4) that Dionisio

brought to us under Rule 45, we cannot entertain inquiries

Peralta was supposedly being told by Kee that the

relative to the correctness of the assessment of the evidence

by the court a quo.13 Inasmuch as the Court of Appeals and

to be signed by the parties and attached to the public

the trial court had reached conflicting conclusions, perforce

instrument is also indispensable to the validity of the

we must examine the record to determine if the reversal was

partnership

justified.

whenever

immovable

contributed to the partnership.

property

is

19

The primordial issue here is whether Tan Eng Kee and Tan

The trial court determined that Tan Eng Kee and Tan Eng Lay

Eng Lay were partners in Benguet Lumber. A contract of

had entered into a joint venture, which it said is akin to a

partnership is defined by law as one where:

particular

partnership.20 A

particular

partnership

is

distinguished from a joint adventure, to wit:

. . . two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of

(a) A joint adventure (an American concept similar to

dividing the profits among themselves.

our joint accounts) is a sort of informal partnership,

with no firm name and no legal personality. In a joint

Two or more persons may also form a partnership for

account, the participating merchants can transact

the exercise of a profession.14

business

under

their

own

name,

and

can

be

individually liable therefor.

Thus, in order to constitute a partnership, it must be

established that (1) two or more persons bound
themselves to contribute money, property, or industry
to a common fund, and (2) they intend to divide the
profits among themselves.15 The agreement need not
be formally reduced into writing, since statute allows

(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

the oral constitution of a partnership, save in two

A joint venture "presupposes generally a parity of standing

instances: (1) when immovable property or real rights

between the joint co-ventures or partners, in which each party

are contributed,

16

and (2) when the partnership has a

capital of three thousand pesos or more.

cases, a public instrument is required.

18

17

In both

An inventory

has an equal proprietary interest in the capital or property

contributed, and where each party exercises equal rights in

the conduct of the business."22 Nonetheless, in Aurbach, et.

al. v. Sanitary Wares Manufacturing Corporation, et. al.,

23

venture is a form of partnership and should thus be

we

governed by the law of partnerships. The Supreme

expressed the view that a joint venture may be likened to a

Court has however recognized a distinction between

particular partnership, thus:

these two business forms, and has held that although

a corporation cannot enter into a partnership contract,

The legal concept of a joint venture is of common law

it may however engage in a joint venture with others.

origin. It has no precise legal definition, but it has

(At p. 12, Tuazon v. Bolaos, 95 Phil. 906 [1954])

been generally understood to mean an organization

(Campos and Lopez-Campos Comments, Notes and

formed

Selected Cases, Corporation Code 1981).

for

Megargel,

some
266

temporary

Fed.

811

purpose.

[1920])

It

(Gates
is

v.

hardly

distinguishable from the partnership, since their

elements are similar community of interest in the
business, sharing of profits and losses, and a mutual

Undoubtedly, the best evidence would have been the contract

right of control. (Blackner v. McDermott, 176 F. 2d.

of partnership itself, or the articles of partnership but there is

498, [1949]; Carboneau v. Peterson, 95 P.2d., 1043

none. The alleged partnership, though, was never formally

[1939]; Buckley v. Chadwick, 45 Cal. 2d. 183, 288

organized. In addition, petitioners point out that the New Civil

P.2d. 12 289 P.2d. 242 [1955]). The main distinction

Code was not yet in effect when the partnership was allegedly

cited by most opinions in common law jurisdiction is

formed sometime in 1945, although the contrary may well be

that the partnership contemplates a general business

argued that nothing prevented the parties from complying

with some degree of continuity, while the joint venture

with the provisions of the New Civil Code when it took effect

is formed for the execution of a single transaction, and

on August 30, 1950. But all that is in the past. The net effect,

is thus of a temporary nature. (Tufts v. Mann. 116 Cal.

however, is that we are asked to determine whether a

App. 170, 2 P. 2d. 500 [1931]; Harmon v. Martin, 395

partnership existed based purely on circumstantial evidence.

Ill. 595, 71 NE 2d. 74 [1947]; Gates v. Megargel 266

A review of the record persuades us that the Court of Appeals

Fed. 811 [1920]). This observation is not entirely

correctly reversed the decision of the trial court. The evidence

accurate in this jurisdiction, since under the Civil

presented by petitioners falls short of the quantum of proof

Code, a partnership may be particular or universal,

required to establish a partnership.

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

Unfortunately for petitioners, Tan Eng Kee has passed away.

partnership is that the partners share in the profits and

Only he, aside from Tan Eng Lay, could have expounded on

losses.29 Each has the right to demand an accounting as long

the precise nature of the business relationship between them.

as the partnership exists.30 We have allowed a scenario

In the absence of evidence, we cannot accept as an

wherein "[i]f excellent relations exist among the partners at

established fact that Tan Eng Kee allegedly contributed his

the start of the business and all the partners are more

resources to a common fund for the purpose of establishing a

interested in seeing the firm grow rather than get immediate

partnership. The testimonies to that effect of petitioners'

returns, a deferment of sharing in the profits is perfectly

witnesses is directly controverted by Tan Eng Lay. It should be

plausible."31 But in the situation in the case at bar, the

noted that it is not with the number of witnesses wherein

deferment, if any, had gone on too long to be plausible. A

preponderance lies;

24

the quality of their testimonies is to be

considered. None of petitioners' witnesses could suitably

person is presumed to take ordinary care of his concerns. 32 As

we explained in another case:

account for the beginnings of Benguet Lumber Company,

except perhaps for Dionisio Peralta whose deceased wife was

In the first place, plaintiff did not furnish the

He stated that when he met Tan

supposed P20,000.00 capital. In the second place, she

Eng Kee after the liberation, the latter asked the former to

did not furnish any help or intervention in the

accompany him to get 80 pieces of G.I. sheets supposedly

management of the theatre. In the third place, it does

related to Matilde Abubo.

25

owned by both brothers. Tan Eng Lay, however, denied

not

knowledge of this meeting or of the conversation between

defendant any accounting of the expenses and earnings

26

appear

that

she

has

even

demanded

from

Tan Eng Lay consistently testified

of the business. Were she really a partner, her first

that he had his business and his brother had his, that it was

concern should have been to find out how the business

only later on that his said brother, Tan Eng Kee, came to work

was progressing, whether the expenses were legitimate,

for him. Be that as it may, co-ownership or co-possession

whether the earnings were correct, etc. She was

(specifically here, of the G.I. sheets) is not an indicium of the

absolutely silent with respect to any of the acts that a

Peralta and his brother.

27

existence of a partnership.

28

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

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

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.

33

[emphasis supplied]

(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

demand

for

periodic

accounting

is

evidence

of

the use of the property;

partnership.34 During his lifetime, Tan Eng Kee appeared

never to have made any such demand for accounting from his

(3) The sharing of gross returns does not of itself

brother, Tang Eng Lay.

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;

This brings us to the matter of Exhibits "4" to "4-U" for private

(4) The receipt by a person of a share of the profits of a

respondents, consisting of payrolls purporting to show that

business is a prima facie evidence that he is a partner

Tan Eng Kee was an ordinary employee of Benguet Lumber, as

in the business, but no such inference shall be drawn

it was then called. The authenticity of these documents was

if such profits were received in payment:

questioned by petitioners, to the extent that they filed criminal

charges against Tan Eng Lay and his wife and children. As

(a) As a debt by installment or otherwise;

aforesaid, the criminal cases were dismissed for insufficiency

of evidence. Exhibits "4" to "4-U" in fact shows that Tan Eng

(b) As wages of an employee or rent to a

Kee received sums as wages of an employee. In connection

landlord;

therewith, Article 1769 of the Civil Code provides:

In determining whether a partnership exists, these rules shall
apply:

(c) As an annuity to a widow or representative

of a deceased partner;
(d) As interest on a loan, though the amount of

(1) Except as provided by Article 1825, persons who

are not partners as to each other are not partners as
to third persons;

payment vary with the profits of the business;

(e) As the consideration for the sale of a
goodwill of a business or other property by
installments or otherwise.

In the light of the aforequoted legal provision, we conclude

Petitioners seem to have missed the point in asserting

that Tan Eng Kee was only an employee, not a partner. Even if

that the above enumerated powers and privileges

the payrolls as evidence were discarded, petitioners would still

granted in favor of Tan Eng Kee, were indicative of his

be back to square one, so to speak, since they did not present

being a partner in Benguet Lumber for the following

and offer evidence that would show that Tan Eng Kee received

reasons:

amounts of money allegedly representing his share in the

profits of the enterprise. Petitioners failed to show how much

(i) even a mere supervisor in a company, factory or

their father, Tan Eng Kee, received, if any, as his share in the

store gives orders and directions to his subordinates.

profits of Benguet Lumber Company for any particular period.

So long, therefore, that an employee's position is

Hence, they failed to prove that Tan Eng Kee and Tan Eng Lay

higher in rank, it is not unusual that he orders around

intended to divide the profits of the business between

those lower in rank.

themselves, which is one of the essential features of a

partnership.
(ii) even a messenger or other trusted employee, over
whom confidence is reposed by the owner, can order
Nevertheless, petitioners would still want us to infer or believe

materials from suppliers for and in behalf of Benguet

the alleged existence of a partnership from this set of

Lumber.

circumstances: that Tan Eng Lay and Tan Eng Kee were

necessarily have to perform this particular task. It is,

commanding the employees; that both were supervising the

thus, not an indication that Tan Eng Kee was a

employees; that both were the ones who determined the price

partner.

Furthermore,

even

partner

does

not

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.

(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.

However, private respondent counters that:

Naturally,

close

personal

relations

existed

between them. Whatever privileges Tan Eng Lay gave

his brother, and which were not given the other

as his residence in the Benguet Lumber Company compound.

employees, only proves the kindness and generosity of

He would have moral, if not actual, superiority over his fellow

Tan Eng Lay towards a blood relative.

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

(iv) and even if it is assumed that Tan Eng Kee was

quarreling with Tan Eng Lay in connection with the
pricing of stocks, this does not adequately prove the
existence of a partnership relation between them. Even

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.

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

There being no partnership, it follows that there is no

dissolution, winding up or liquidation to speak of. Hence, the
petition must fail.

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.36 Yet, in the case at bench, even the aforesaid
circumstances

when

taken

together

are

not

persuasive indicia of a partnership. They only tend to show

that Tan Eng Kee was involved in the operations of Benguet
Lumber, but in what capacity is unclear. We cannot discount
the likelihood that as a member of the family, he occupied a
niche above the rank-and-file employees. He would have
enjoyed liberties otherwise unavailable were he not kin, such

WHEREFORE, the petition is hereby denied, and the appealed

decision of the Court of Appeals is herebyAFFIRMED in toto.
No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-12541

August 28, 1959

ROSARIO U. YULO, assisted by her husband JOSE C. YULO, plaintiffsappellants,

vs.
YANG CHIAO SENG, defendant-appellee.
Punzalan, Yabut, Eusebio & Tiburcio for appellants.
Augusto Francisco and Julian T. Ocampo for appellee.

1. TRIAL; ABSENCE OF ONE PARTY PURSUANT TO AGREEMENT;

The record discloses that on June 17, 1945, defendant Yang

EFFECT ON JUDGMENT.If the parties to a case agreed to postpone

Chiao Seng wrote a letter to the palintiff Mrs. Rosario U. Yulo,

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 his favor.
The judgment rendered by the Court based on such evidence should,
in the interest of justice, be set aside.

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,

NEGATE

starting from July 1, 1945 to December 31, 1947, with the

PARTNERSHIP.Where one of the parties to a contract does not

condition that if the land is expropriated or rendered

2.CONTRACTS;

LEASE;

CIRCUMSTANCES

THAT

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

impracticable for the business, or if the owner constructs a

permanent building thereon, or Mrs. Yulo's right of lease is
terminated by the owner, then the partnership shall be
terminated even if the period for which the partnership was
agreed to be established has not yet expired; (3) that Mrs. Yulo

monthly sum from the other party, there can be no other conclusion

is authorized personally to conduct such business in the

than that the contract between the parties is one of lease and not of

lobby of the building as is ordinarily carried on in lobbies of

partnership.

theatres in operation, provided the said business may not

obstruct the free ingress and agrees of patrons of the theatre;
(4) that after December 31, 1947, all improvements placed by
the partnership shall belong to Mrs. Yulo, but if the

LABRADOR, J.:

partnership agreement is terminated before the lapse of one

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.

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,

contract was executed between the owners and Mrs. Yulo on

the parties executed a partnership agreement establishing the

April 5, 1948. But on April 12, 1949, the attorney for the

"Yang & Company, Limited," which was to exist from July 1,

owners notified Mrs. Yulo of the owner's desire to cancel the

1945 to December 31, 1947. It states that it will conduct and

contract of lease on July 31, 1949. In view of the above notice,

carry on the business of operating a theatre for the exhibition

Mrs. Yulo and her husband brought a civil action to the Court

of motion and talking pictures. The capital is fixed at

of First Instance of Manila on July 3, 1949 to declare the lease

P100,000, P80,000 of which is to be furnished by Yang Chiao

of the premises. On February 9, 1950, the Municipal Court of

Seng and P20,000, by Mrs. Yulo. All gains and profits are to

Manila rendered judgment ordering the ejectment of Mrs. Yulo

be distributed among the partners in the same proportion as

and Mr. Yang. The judgment was appealed. In the Court of

their capital contribution and the liability of Mrs. Yulo, in case

First Instance, the two cases were afterwards heard jointly,

of loss, shall be limited to her capital contribution (Exh. "B").

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

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

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.

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.

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

The land on which the theatre was constructed was leased by

plaintiff Mrs. Yulo from Emilia Carrion Santa Marina and
Maria Carrion Santa Marina. In the contract of lease it was
stipulated that the lease shall continue for an indefinite
period of time, but that after one year the lease may be
cancelled by either party by written notice to the other party
at least 90 days before the date of cancellation. The last

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").

rental value of the land is only P1,100. By way of

counterclaim he alleges that by reason of an attachment
In view of the refusal of Yang to pay her the amount agreed

issued against the properties of the defendant the latter has

upon, Mrs. Yulo instituted this action on May 26, 1954,

suffered damages amounting to P100,000.

alleging the existence of a partnership between them and that

the defendant Yang Chiao Seng has refused to pay her share
from December, 1949 to December, 1950; that after December
31, 1950 the partnership between Mrs. Yulo and Yang

The first hearing was had on April 19, 1955, at which time

terminated, as a result of which, plaintiff became the absolute

only the plaintiff appeared. The court heard evidence of the

owner of the building occupied by the Cine Astor; that the

plaintiff in the absence of the defendant and thereafter

reasonable rental that the defendant should pay therefor from

rendered judgment ordering the defendant to pay to the

January, 1951 is P5,000; that the defendant has acted

plaintiff P41,000 for her participation in the business up to

maliciously and refuses to pay the participation of the plaintiff

December, 1950; P5,000 as monthly rental for the use and

in the profits of the business amounting to P35,000 from

occupation of the building from January 1, 1951 until

November, 1949 to October, 1950, and that as a result of such

defendant vacates the same, and P3,000 for the use and

bad faith and malice on the part of the defendant, Mrs. Yulo

occupation of the lobby from July 1, 1945 until defendant

has suffered damages in the amount of P160,000 and

vacates the property. This decision, however, was set aside on

exemplary damages to the extent of P5,000. The prayer

a motion for reconsideration. In said motion it is claimed that

includes a demand for the payment of the above sums plus

defendant failed to appear at the hearing because of his

the sum of P10,000 for the attorney's fees.

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

In answer to the complaint, defendant alleges that the real

plaintiff Rosario Yulo, the plaintiff has no right to claim the

agreement between the plaintiff and the defendant was one of

alleged participation in the profit of the business, etc. The

lease and not of partnership; that the partnership was

court, finding the above motion, well-founded, set aside its

adopted as a subterfuge to get around the prohibition

decision and a new trial was held. After trial the court

contained in the contract of lease between the owners and the

rendered the decision making the following findings: that it is

plaintiff against the sublease of the said property. As to the

not true that a partnership was created between the plaintiff

other claims, he denies the same and alleges that the fair

and the defendant because defendant has not actually

contributed the sum mentioned in the Articles of Partnership,

amicable settlement, the plaintiff could not take advantage of

or any other amount; that the real agreement between the

defendant's absence at the time fixed for the hearing. The

plaintiff and the defendant is not of the partnership but one of

lower court, therefore, did not err in setting aside its former

the lease for the reason that under the agreement the plaintiff

judgment. The final result of the hearing shown by the

did not share either in the profits or in the losses of the

decision indicates that the setting aside of the previous

business as required by Article 1769 of the Civil Code; and

decision was in the interest of justice.

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.

In the second assignment of error plaintiff-appellant claims

that the lower court erred in not striking out the evidence
offered by the defendant-appellee to prove that the relation
between him and the plaintiff is one of the sublease and not of

As to her claim for damages for the refusal of the defendant to

partnership. The action of the lower court in admitting

allow the use of the supposed lobby of the theatre, the court

evidence

after ocular inspection found that the said lobby was very

defendant's answer that the agreement set forth in the

narrow space leading to the balcony of the theatre which

complaint was one of lease and not of partnership, and that

could not be used for business purposes under existing

the partnership formed was adopted in view of a prohibition

ordinances of the City of Manila because it would constitute a

contained in plaintiff's lease against a sublease of the

hazard and danger to the patrons of the theatre. The court,

property.

is

justified by

the

express

allegation

in the

therefore, dismissed the complaint; so did it dismiss the

defendant's counterclaim, on the ground that the defendant
failed to present sufficient evidence to sustain the same. It is
against this decision that the appeal has been prosecuted by

The most important issue raised in the appeal is that

plaintiff to this Court.

contained in the fourth assignment of error, to the effect that

The first assignment of error imputed to the trial court is its

Exhs. "A", "B", and "C, between plaintiff and defendant, are

order setting aside its former decision and allowing a new

one of lease and not of partnership. We have gone over the

trial. This assignment of error is without merit. As that

evidence and we fully agree with the conclusion of the trial

parties agreed to postpone the trial because of a probable

court that the agreement was a sublease, not a partnership.

the lower court erred in holding that the written contracts,

The following are the requisites of partnership: (1) two or more

original letter of the defendant, Exh. "A", expressly states that

persons who bind themselves to contribute money, property,

the agreement between the plaintiff and the defendant was to

or industry to a common fund; (2) intention on the part of the

end upon the termination of the right of the plaintiff to the

partners to divide the profits among themselves. (Art. 1767,

lease. Plaintiff's right having terminated in July, 1949 as

Civil Code.).

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.

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

We find no error in the judgment of the court below and we

third place, it does not appear that she has ever demanded

affirm it in toto, with costs against plaintiff-appellant.

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 from December, 1949. But the