G.R. No. 112675 January 25, 1999AFISCO INSURANCE CORPORATION, et
al. petitioner, vs.COURT OF APPEALS, COURT OF TAX APPEALS and
COMISSIONER OF INTERNAL REVENUE, respondent.PANGANIBAN, J.:Pursuant
to "reinsurance treaties," a number of local insurance firms formed
themselves into a "pool" in order to facilitate the handling of
business contracted with a nonresident foreign insurance company.
May the "clearing house" or "insurance pool" so formed be deemed a
partnership or an association that is taxable as a corporation
under the National Internal Revenue Code (NIRC)? Should the pool's
remittances to the member companies and to the said foreign firm be
taxable as dividends? Under the facts of this case, has the
goverment's right to assess and collect said tax prescribed?The
CaseThese are the main questions raised in the Petition for Review
on Certiorari before us, assailing the October 11, 1993 Decision 1
of the Court of Appeals 2 in CA-GR SP 25902, which dismissed
petitioners' appeal of the October 19, 1992 Decision 3 of the Court
of Tax Appeals 4 (CTA) which had previously sustained petitioners'
liability for deficiency income tax, interest and withholding tax.
The Court of Appeals ruled:WHEREFORE, the petition is DISMISSED,
with costs against petitioner 5The petition also challenges the
November 15, 1993 Court of Appeals (CA) Resolution 6 denying
reconsideration.The FactsThe antecedent facts, 7 as found by the
Court of Appeals, are as follows:The petitioners are 41 non-life
insurance corporations, organized and existing under the laws of
the Philippines. Upon issuance by them of Erection, Machinery
Breakdown, Boiler Explosion and Contractors' All Risk insurance
policies, the petitioners on August 1, 1965 entered into a Quota
Share Reinsurance Treaty and a Surplus Reinsurance Treaty with the
Munchener Ruckversicherungs-Gesselschaft (hereafter called Munich),
a non-resident foreign insurance corporation. The reinsurance
treaties required petitioners to form a [p]ool. Accordingly, a pool
composed of the petitioners was formed on the same day.On April 14,
1976, the pool of machinery insurers submitted a financial
statement and filed an "Information Return of Organization Exempt
from Income Tax" for the year ending in 1975, on the basis of which
it was assessed by the Commissioner of Internal Revenue deficiency
corporate taxes in the amount of P1,843,273.60, and withholding
taxes in the amount of P1,768,799.39 and P89,438.68 on dividends
paid to Munich and to the petitioners, respectively. These
assessments were protested by the petitioners through its auditors
Sycip, Gorres, Velayo and Co.On January 27, 1986, the Commissioner
of Internal Revenue denied the protest and ordered the petitioners,
assessed as "Pool of Machinery Insurers," to pay deficiency income
tax, interest, and with [h]olding tax, itemized as follows:Net
income per information return P3,737,370.00===========Income tax
due thereon P1,298,080.00Add: 14% Int. fr. 4/15/76to 4/15/79
545,193.60TOTAL AMOUNT DUE & P1,843,273.60COLLECTIBLEDividend
paid to MunichReinsurance Company P3,728,412.0035% withholding tax
atsource due thereon P1,304,944.20Add: 25% surcharge 326,236.0514%
interest from1/25/76 to 1/25/79 137,019.14Compromise
penalty-non-filing of return 300.00late payment 300.00TOTAL AMOUNT
DUE & P1,768,799.39COLLECTIBLE ===========Dividend paid to Pool
Members P655,636.00===========10% withholding tax atsource due
thereon P65,563.60Add: 25% surcharge 16,390.9014% interest
from1/25/76 to 1/25/79 6,884.18Compromise penalty-non-filing of
return 300.00late payment 300.00TOTAL AMOUNT DUE &
P89,438.68COLLECTIBLE =========== 8The CA ruled in the main that
the pool of machinery insurers was a partnership taxable as a
corporation, and that the latter's collection of premiums on behalf
of its members, the ceding companies, was taxable income. It added
that prescription did not bar the Bureau of Internal Revenue (BIR)
from collecting the taxes due, because "the taxpayer cannot be
located at the address given in the information return filed."
Hence, this Petition for Review before us. 9The IssuesBefore this
Court, petitioners raise the following issues:1. Whether or not the
Clearing House, acting as a mere agent and performing strictly
administrative functions, and which did not insure or assume any
risk in its own name, was a partnership or association subject to
tax as a corporation;2. Whether or not the remittances to
petitioners and MUNICHRE of their respective shares of reinsurance
premiums, pertaining to their individual and separate contracts of
reinsurance, were "dividends" subject to tax; and3. Whether or not
the respondent Commissioner's right to assess the Clearing House
had already prescribed. 10The Court's RulingThe petition is devoid
of merit. We sustain the ruling of the Court of Appeals that the
pool is taxable as a corporation, and that the government's right
to assess and collect the taxes had not prescribed.First Issue:Pool
Taxable as a CorporationPetitioners contend that the Court of
Appeals erred in finding that the pool of clearing house was an
informal partnership, which was taxable as a corporation under the
NIRC. They point out that the reinsurance policies were written by
them "individually and separately," and that their liability was
limited to the extent of their allocated share in the original risk
thus reinsured. 11 Hence, the pool did not act or earn income as a
reinsurer. 12 Its role was limited to its principal function of
"allocating and distributing the risk(s) arising from the original
insurance among the signatories to the treaty or the members of the
pool based on their ability to absorb the risk(s) ceded[;] as well
as the performance of incidental functions, such as records,
maintenance, collection and custody of funds, etc." 13Petitioners
belie the existence of a partnership in this case, because (1)
they, the reinsurers, did not share the same risk or solidary
liability, 14 (2) there was no common fund; 15 (3) the executive
board of the pool did not exercise control and management of its
funds, unlike the board of directors of a corporation; 16 and (4)
the pool or clearing house "was not and could not possibly have
engaged in the business of reinsurance from which it could have
derived income for itself." 17The Court is not persuaded. The
opinion or ruling of the Commission of Internal Revenue, the agency
tasked with the enforcement of tax law, is accorded much weight and
even finality, when there is no showing. that it is patently wrong,
18 particularly in this case where the findings and conclusions of
the internal revenue commissioner were subsequently affirmed by the
CTA, a specialized body created for the exclusive purpose of
reviewing tax cases, and the Court of Appeals. 19 Indeed,[I]t has
been the long standing policy and practice of this Court to respect
the conclusions of quasi-judicial agencies, such as the Court of
Tax Appeals which, by the nature of its functions, is dedicated
exclusively to the study and consideration of tax problems and has
necessarily developed an expertise on the subject, unless there has
been an abuse or improvident exercise of its authority. 20This
Court rules that the Court of Appeals, in affirming the CTA which
had previously sustained the internal revenue commissioner,
committed no reversible error. Section 24 of the NIRC, as worded in
the year ending 1975, provides:Sec. 24. Rate of tax on
corporations. (a) Tax on domestic corporations. A tax is hereby
imposed upon the taxable net income received during each taxable
year from all sources by every corporation organized in, or
existing under the laws of the Philippines, no matter how created
or organized, but not including duly registered general
co-partnership (compaias colectivas), general professional
partnerships, private educational institutions, and building and
loan associations . . . .Ineludibly, the Philippine legislature
included in the concept of corporations those entities that
resembled them such as unregistered partnerships and associations.
Parenthetically, the NIRC's inclusion of such entities in the tax
on corporations was made even clearer by the tax Reform Act of
1997, 21 which amended the Tax Code. Pertinent provisions of the
new law read as follows:Sec. 27. Rates of Income Tax on Domestic
Corporations. (A) In General. Except as otherwise provided in this
Code, an income tax of thirty-five percent (35%) is hereby imposed
upon the taxable income derived during each taxable year from all
sources within and without the Philippines by every corporation, as
defined in Section 22 (B) of this Code, and taxable under this
Title as a corporation . . . .Sec. 22. Definition. When used in
this Title:xxx xxx xxx(B) The term "corporation" shall include
partnerships, no matter how created or organized, joint-stock
companies, joint accounts (cuentas en participacion), associations,
or insurance companies, but does not include general professional
partnerships [or] a joint venture or consortium formed for the
purpose of undertaking construction projects or engaging in
petroleum, coal, geothermal and other energy operations pursuant to
an operating or consortium agreement under a service contract
without the Government. "General professional partnerships" are
partnerships formed by persons for the sole purpose of exercising
their common profession, no part of the income of which is derived
from engaging in any trade or business.xxx xxx xxxThus, the Court
in Evangelista v. Collector of Internal Revenue 22 held that
Section 24 covered these unregistered partnerships and even
associations or joint accounts, which had no legal personalities
apart from their individual members. 23 The Court of Appeals
astutely applied Evangelista. 24. . . Accordingly, a pool of
individual real property owners dealing in real estate business was
considered a corporation for purposes of the tax in sec. 24 of the
Tax Code in Evangelista v. Collector of Internal Revenue, supra.
The Supreme Court said:The term "partnership" includes a syndicate,
group, pool, joint venture or other unincorporated organization,
through or by means of which any business, financial operation, or
venture is carried on. *** (8 Merten's Law of Federal Income
Taxation, p. 562 Note 63)Art. 1767 of the Civil Code recognizes the
creation of a contract of partnership when "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." 25 Its requisites are: "(1) mutual contribution to a
common stock, and (2) a joint interest in the profits." 26 In other
words, a partnership is formed when persons contract "to devote to
a common purpose either money, property, or labor with the
intention of dividing the profits betweenthemselves." 27 Meanwhile,
an association implies associates who enter into a "joint
enterprise . . . for the transaction of business." 28In the case
before us, the ceding companies entered into a Pool Agreement 29 or
an association 30 that would handle all the insurance businesses
covered under their quota-share reinsurance treaty 31 and surplus
reinsurance treaty 32 with Munich. The following unmistakably
indicates a partnership or an association covered by Section 24 of
the NIRC:(1) The pool has a common fund, consisting of money and
other valuables that are deposited in the name and credit of the
pool. 33 This common fund pays for the administration and operation
expenses of the pool. 24(2) The pool functions through an executive
board, which resembles the board of directors of a corporation,
composed of one representative for each of the ceding companies.
35(3) True, the pool itself is not a reinsurer and does not issue
any insurance policy; however, its work is indispensable,
beneficial and economically useful to the business of the ceding
companies and Munich, because without it they would not have
received their premiums. The ceding companies share "in the
business ceded to the pool" and in the "expenses" according to a
"Rules of Distribution" annexed to the Pool Agreement. 36 Profit
motive or business is, therefore, the primordial reason for the
pool's formation. As aptly found by the CTA:. . . The fact that the
pool does not retain any profit or income does not obliterate an
antecedent fact, that of the pool being used in the transaction of
business for profit. It is apparent, and petitioners admit, that
their association or coaction was indispensable [to] the
transaction of the business, . . . If together they have conducted
business, profit must have been the object as, indeed, profit was
earned. Though the profit was apportioned among the members, this
is only a matter of consequence, as it implies that profit actually
resulted. 37The petitioners' reliance on Pascuals v. Commissioner
38 is misplaced, because the facts obtaining therein are not on all
fours with the present case. In Pascual, there was no unregistered
partnership, but merely a co-ownership which took up only two
isolated transactions. 39 The Court of Appeals did not err in
applying Evangelista, which involved a partnership that engaged in
a series of transactions spanning more than ten years, as in the
case before us.Second Issue:Pool's Remittances are
TaxablePetitioners further contend that the remittances of the pool
to the ceding companies and Munich are not dividends subject to
tax. They insist that such remittances contravene Sections 24 (b)
(I) and 263 of the 1977 NIRC and "would be tantamount to an illegal
double taxation as it would result in taxing the same taxpayer" 40
Moreover, petitioners argue that since Munich was not a signatory
to the Pool Agreement, the remittances it received from the pool
cannot be deemed dividends. 41 They add that even if such
remittances were treated as dividends, they would have been exempt
under the previously mentioned sections of the 1977 NIRC, 42 as
well as Article 7 of paragraph 1 43 and Article 5 of paragraph 5 44
of the RP-West German Tax Treaty. 45Petitioners are clutching at
straws. Double taxation means taxing the same property twice when
it should be taxed only once. That is, ". . . taxing the same
person twice by the same jurisdiction for the same thing" 46 In the
instant case, the pool is a taxable entity distinct from the
individual corporate entities of the ceding companies. The tax on
its income is obviously different from the tax on the dividends
received by the said companies. Clearly, there is no double
taxation here.The tax exemptions claimed by petitioners cannot be
granted, since their entitlement thereto remains unproven and
unsubstantiated. It is axiomatic in the law of taxation that taxes
are the lifeblood of the nation. Hence, "exemptions therefrom are
highly disfavored in law and he who claims tax exemption must be
able to justify his claim or right." 47 Petitioners have failed to
discharge this burden of proof. The sections of the 1977 NIRC which
they cite are inapplicable, because these were not yet in effect
when the income was earned and when the subject information return
for the year ending 1975 was filed.Referring, to the 1975 version
of the counterpart sections of the NIRC, the Court still cannot
justify the exemptions claimed. Section 255 provides that no tax
shall ". . . be paid upon reinsurance by any company that has
already paid the tax . . ." This cannot be applied to the present
case because, as previously discussed, the pool is a taxable entity
distinct from the ceding companies; therefore, the latter cannot
individually claim the income tax paid by the former as their
own.On the other hand, Section 24 (b) (1) 48 pertains to tax on
foreign corporations; hence, it cannot be claimed by the ceding
companies which are domestic corporations. Nor can Munich, a
foreign corporation, be granted exemption based solely on this
provision of the Tax Code, because the same subsection specifically
taxes dividends, the type of remittances forwarded to it by the
pool. Although not a signatory to the Pool Agreement, Munich is
patently an associate of the ceding companies in the entity formed,
pursuant to their reinsurance treaties which required the creation
of said pool.Under its pool arrangement with the ceding companies;
Munich shared in their income and loss. This is manifest from a
reading of Article 3 49 and 10 50 of the Quota-Share Reinsurance
treaty and Articles 3 51 and 10 52 of the Surplus Reinsurance
Treaty. The foregoing interpretation of Section 24 (b) (1) is in
line with the doctrine that a tax exemption must be construed
strictissimi juris, and the statutory exemption claimed must be
expressed in a language too plain to be mistaken. 53Finally the
petitioners' claim that Munich is tax-exempt based on the RP- West
German Tax Treaty is likewise unpersuasive, because the internal
revenue commissioner assessed the pool for corporate taxes on the
basis of the information return it had submitted for the year
ending 1975, a taxable year when said treaty was not yet in effect.
54 Although petitioners omitted in their pleadings the date of
effectivity of the treaty, the Court takes judicial notice that it
took effect only later, on December 14, 1984. 55Third
Issue:PrescriptionPetitioners also argue that the government's
right to assess and collect the subject tax had prescribed. They
claim that the subject information return was filed by the pool on
April 14, 1976. On the basis of this return, the BIR telephoned
petitioners on November 11, 1981, to give them notice of its letter
of assessment dated March 27, 1981. Thus, the petitioners contend
that the five-year statute of limitations then provided in the NIRC
had already lapsed, and that the internal revenue commissioner was
already barred by prescription from making an assessment. 56We
cannot sustain the petitioners. The CA and the CTA categorically
found that the prescriptive period was tolled under then Section
333 of the NIRC, 57 because "the taxpayer cannot be located at the
address given in the information return filed and for which reason
there was delay in sending the assessment." 58 Indeed, whether the
government's right to collect and assess the tax has prescribed
involves facts which have been ruled upon by the lower courts. It
is axiomatic that in the absence of a clear showing of palpable
error or grave abuse of discretion, as in this case, this Court
must not overturn the factual findings of the CA and the
CTA.Furthermore, petitioners admitted in their Motion for
Reconsideration before the Court of Appeals that the pool changed
its address, for they stated that the pool's information return
filed in 1980 indicated therein its "present address." The Court
finds that this falls short of the requirement of Section 333 of
the NIRC for the suspension of the prescriptive period. The law
clearly states that the said period will be suspended only "if the
taxpayer informs the Commissioner of Internal Revenue of any change
in the address."WHEREFORE, the petition is DENIED. The Resolution
of the Court of Appeals dated October 11, 1993 and November 15,
1993 are hereby AFFIRMED. Cost against petitioners.1wphi1.ntSO
ORDERED.
G.R. No. 134559 December 9, 1999ANTONIA TORRES assisted by her
husband, ANGELO TORRES; and EMETERIA BARING, petitioners, vs.COURT
OF APPEALS and MANUEL TORRES, respondents.Courts may not extricate
parties from the necessary consequences of their acts. That the
terms of a contract turn out to be financially disadvantageous to
them will not relieve them of their obligations therein. The lack
of an inventory of real property will not ipso facto release the
contracting partners from their respective obligations to each
other arising from acts executed in accordance with their
agreement.The CaseThe Petition for Review on Certiorari before us
assails the March 5, 1998 Decision 1 of the Court of Appeals 2 (CA)
in CA-GR CV No. 42378 and its June 25, 1998 Resolution denying
reconsideration. The assailed Decision affirmed the ruling of the
Regional Trial Court (RTC) of Cebu City in Civil Case No. R-21208,
which disposed as follows:WHEREFORE, for all the foregoing
considerations, the Court, finding for the defendant and against
the plaintiffs, orders the dismissal of the plaintiffs complaint.
The counterclaims of the defendant are likewise ordered dismissed.
No pronouncement as to costs. 3The FactsSisters Antonia Torres and
Emeteria Baring, herein petitioners, entered into a "joint venture
agreement" with Respondent Manuel Torres for the development of a
parcel of land into a subdivision. Pursuant to the contract, they
executed a Deed of Sale covering the said parcel of land in favor
of respondent, who then had it registered in his name. By
mortgaging the property, respondent obtained from Equitable Bank a
loan of P40,000 which, under the Joint Venture Agreement, was to be
used for the development of the subdivision. 4 All three of them
also agreed to share the proceeds from the sale of the subdivided
lots.The project did not push through, and the land was
subsequently foreclosed by the bank.According to petitioners, the
project failed because of "respondent's lack of funds or means and
skills." They add that respondent used the loan not for the
development of the subdivision, but in furtherance of his own
company, Universal Umbrella Company.On the other hand, respondent
alleged that he used the loan to implement the Agreement. With the
said amount, he was able to effect the survey and the subdivision
of the lots. He secured the Lapu Lapu City Council's approval of
the subdivision project which he advertised in a local newspaper.
He also caused the construction of roads, curbs and gutters.
Likewise, he entered into a contract with an engineering firm for
the building of sixty low-cost housing units and actually even set
up a model house on one of the subdivision lots. He did all of
these for a total expense of P85,000.Respondent claimed that the
subdivision project failed, however, because petitioners and their
relatives had separately caused the annotations of adverse claims
on the title to the land, which eventually scared away prospective
buyers. Despite his requests, petitioners refused to cause the
clearing of the claims, thereby forcing him to give up on the
project. 5Subsequently, petitioners filed a criminal case for
estafa against respondent and his wife, who were however acquitted.
Thereafter, they filed the present civil case which, upon
respondent's motion, was later dismissed by the trial court in an
Order dated September 6, 1982. On appeal, however, the appellate
court remanded the case for further proceedings. Thereafter, the
RTC issued its assailed Decision, which, as earlier stated, was
affirmed by the CA.Hence, this Petition. 6Ruling of the Court of
AppealsIn affirming the trial court, the Court of Appeals held that
petitioners and respondent had formed a partnership for the
development of the subdivision. Thus, they must bear the loss
suffered by the partnership in the same proportion as their share
in the profits stipulated in the contract. Disagreeing with the
trial court's pronouncement that losses as well as profits in a
joint venture should be distributed equally, 7 the CA invoked
Article 1797 of the Civil Code which provides:Art. 1797 The losses
and profits shall be distributed in conformity with the agreement.
If only the share of each partner in the profits has been agreed
upon, the share of each in the losses shall be in the same
proportion.The CA elucidated further:In the absence of stipulation,
the share of each partner in the profits and losses shall be in
proportion to what he may have contributed, but the industrial
partner shall not be liable for the losses. As for the profits, the
industrial partner shall receive such share as may be just and
equitable under the circumstances. If besides his services he has
contributed capital, he shall also receive a share in the profits
in proportion to his capital.The IssuePetitioners impute to the
Court of Appeals the following error:. . . [The] Court of Appeals
erred in concluding that the transaction. . . between the
petitioners and respondent was that of a joint venture/partnership,
ignoring outright the provision of Article 1769, and other related
provisions of the Civil Code of the Philippines. 8The Court's
Ruling: The Petition is bereft of merit.Main Issue: Existence of a
PartnershipPetitioners deny having formed a partnership with
respondent. They contend that the Joint Venture Agreement and the
earlier Deed of Sale, both of which were the bases of the appellate
court's finding of a partnership, were void.In the same breath,
however, they assert that under those very same contracts,
respondent is liable for his failure to implement the project.
Because the agreement entitled them to receive 60 percent of the
proceeds from the sale of the subdivision lots, they pray that
respondent pay them damages equivalent to 60 percent of the value
of the property. 9The pertinent portions of the Joint Venture
Agreement read as follows:KNOW ALL MEN BY THESE PRESENTS:This
AGREEMENT, is made and entered into at Cebu City, Philippines, this
5th day of March, 1969, by and between MR. MANUEL R. TORRES, . . .
the FIRST PARTY, likewise, MRS. ANTONIA B. TORRES, and MISS
EMETERIA BARING, . . . the SECOND PARTY:WITNESSETH:That, whereas,
the SECOND PARTY, voluntarily offered the FIRST PARTY, this
property located at Lapu-Lapu City, Island of Mactan, under Lot No.
1368 covering TCT No. T-0184 with a total area of 17,009 square
meters, to be sub-divided by the FIRST PARTY;Whereas, the FIRST
PARTY had given the SECOND PARTY, the sum of: TWENTY THOUSAND
(P20,000.00) Pesos, Philippine Currency upon the execution of this
contract for the property entrusted by the SECOND PARTY, for
sub-division projects and development purposes;NOW THEREFORE, for
and in consideration of the above covenants and promises herein
contained the respective parties hereto do hereby stipulate and
agree as follows:ONE: That the SECOND PARTY signed an absolute Deed
of Sale . . . dated March 5, 1969, in the amount of TWENTY FIVE
THOUSAND FIVE HUNDRED THIRTEEN & FIFTY CTVS. (P25,513.50)
Philippine Currency, for 1,700 square meters at ONE [PESO] &
FIFTY CTVS. (P1.50) Philippine Currency, in favor of the FIRST
PARTY, but the SECOND PARTY did not actually receive the
payment.SECOND: That the SECOND PARTY, had received from the FIRST
PARTY, the necessary amount of TWENTY THOUSAND (P20,000.00) pesos,
Philippine currency, for their personal obligations and this
particular amount will serve as an advance payment from the FIRST
PARTY for the property mentioned to be sub-divided and to be
deducted from the sales.THIRD: That the FIRST PARTY, will not
collect from the SECOND PARTY, the interest and the principal
amount involving the amount of TWENTY THOUSAND (P20,000.00) Pesos,
Philippine Currency, until the sub-division project is terminated
and ready for sale to any interested parties, and the amount of
TWENTY THOUSAND (P20,000.00) pesos, Philippine currency, will be
deducted accordingly.FOURTH: That all general expense[s] and all
cost[s] involved in the sub-division project should be paid by the
FIRST PARTY, exclusively and all the expenses will not be deducted
from the sales after the development of the sub-division
project.FIFTH: That the sales of the sub-divided lots will be
divided into SIXTY PERCENTUM 60% for the SECOND PARTY and FORTY
PERCENTUM 40% for the FIRST PARTY, and additional profits or
whatever income deriving from the sales will be divided equally
according to the . . . percentage [agreed upon] by both
parties.SIXTH: That the intended sub-division project of the
property involved will start the work and all improvements upon the
adjacent lots will be negotiated in both parties['] favor and all
sales shall [be] decided by both parties.SEVENTH: That the SECOND
PARTIES, should be given an option to get back the property
mentioned provided the amount of TWENTY THOUSAND (P20,000.00)
Pesos, Philippine Currency, borrowed by the SECOND PARTY, will be
paid in full to the FIRST PARTY, including all necessary
improvements spent by the FIRST PARTY, and-the FIRST PARTY will be
given a grace period to turnover the property mentioned above.That
this AGREEMENT shall be binding and obligatory to the parties who
executed same freely and voluntarily for the uses and purposes
therein stated. 10A reading of the terms embodied in the Agreement
indubitably shows the existence of a partnership pursuant to
Article 1767 of the Civil Code, which provides:Art. 1767. By the
contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the
intention of dividing the profits among themselves.Under the
above-quoted Agreement, petitioners would contribute property to
the partnership in the form of land which was to be developed into
a subdivision; while respondent would give, in addition to his
industry, the amount needed for general expenses and other costs.
Furthermore, the income from the said project would be divided
according to the stipulated percentage. Clearly, the contract
manifested the intention of the parties to form a partnership. 11It
should be stressed that the parties implemented the contract. Thus,
petitioners transferred the title to the land to facilitate its use
in the name of the respondent. On the other hand, respondent caused
the subject land to be mortgaged, the proceeds of which were used
for the survey and the subdivision of the land. As noted earlier,
he developed the roads, the curbs and the gutters of the
subdivision and entered into a contract to construct low-cost
housing units on the property.Respondent's actions clearly belie
petitioners' contention that he made no contribution to the
partnership. Under Article 1767 of the Civil Code, a partner may
contribute not only money or property, but also
industry.Petitioners Bound byTerms of ContractUnder Article 1315 of
the Civil Code, contracts bind the parties not only to what has
been expressly stipulated, but also to all necessary consequences
thereof, as follows:Art. 1315. Contracts are perfected by mere
consent, and from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in
keeping with good faith, usage and law.It is undisputed that
petitioners are educated and are thus presumed to have understood
the terms of the contract they voluntarily signed. If it was not in
consonance with their expectations, they should have objected to it
and insisted on the provisions they wanted.Courts are not
authorized to extricate parties from the necessary consequences of
their acts, and the fact that the contractual stipulations may turn
out to be financially disadvantageous will not relieve parties
thereto of their obligations. They cannot now disavow the
relationship formed from such agreement due to their supposed
misunderstanding of its terms.Alleged Nullity of thePartnership
AgreementPetitioners argue that the Joint Venture Agreement is void
under Article 1773 of the Civil Code, which provides: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.They
contend that since the parties did not make, sign or attach to the
public instrument an inventory of the real property contributed,
the partnership is void.We clarify. First, Article 1773 was
intended primarily to protect third persons. Thus, the eminent
Arturo M. Tolentino states that under the aforecited provision
which is a complement of Article 1771, 12 "The execution of a
public instrument would be useless if there is no inventory of the
property contributed, because without its designation and
description, they cannot be subject to inscription in the Registry
of Property, and their contribution cannot prejudice third persons.
This will result in fraud to those who contract with the
partnership in the belief [in] the efficacy of the guaranty in
which the immovables may consist. Thus, the contract is declared
void by the law when no such inventory is made." The case at bar
does not involve third parties who may be prejudiced.Second,
petitioners themselves invoke the allegedly void contract as basis
for their claim that respondent should pay them 60 percent of the
value of the property. 13 They cannot in one breath deny the
contract and in another recognize it, depending on what momentarily
suits their purpose. Parties cannot adopt inconsistent positions in
regard to a contract and courts will not tolerate, much less
approve, such practice.In short, the alleged nullity of the
partnership will not prevent courts from considering the Joint
Venture Agreement an ordinary contract from which the parties'
rights and obligations to each other may be inferred and
enforced.Partnership Agreement Not the Resultof an Earlier Illegal
ContractPetitioners also contend that the Joint Venture Agreement
is void under Article 1422 14 of the Civil Code, because it is the
direct result of an earlier illegal contract, which was for the
sale of the land without valid consideration.This argument is
puerile. The Joint Venture Agreement clearly states that the
consideration for the sale was the expectation of profits from the
subdivision project. Its first stipulation states that petitioners
did not actually receive payment for the parcel of land sold to
respondent. Consideration, more properly denominated as cause, can
take different forms, such as the prestation or promise of a thing
or service by another. 15In this case, the cause of the contract of
sale consisted not in the stated peso value of the land, but in the
expectation of profits from the subdivision project, for which the
land was intended to be used. As explained by the trial court, "the
land was in effect given to the partnership as [petitioner's]
participation therein. . . . There was therefore a consideration
for the sale, the [petitioners] acting in the expectation that,
should the venture come into fruition, they [would] get sixty
percent of the net profits."Liability of the Parties Claiming that
rerpondent was solely responsible for the failure of the
subdivision project, petitioners maintain that he should be made to
pay damages equivalent to 60 percent of the value of the property,
which was their share in the profits under the Joint Venture
Agreement.We are not persuaded. True, the Court of Appeals held
that petitioners' acts were not the cause of the failure of the
project. 16 But it also ruled that neither was respondent
responsible therefor. 17 In imputing the blame solely to him,
petitioners failed to give any reason why we should disregard the
factual findings of the appellate court relieving him of fault.
Verily, factual issues cannot be resolved in a petition for review
under Rule 45, as in this case. Petitioners have not alleged, not
to say shown, that their Petition constitutes one of the exceptions
to this doctrine. 18 Accordingly, we find no reversible error in
the CA's ruling that petitioners are not entitled to
damages.WHEREFORE, the Perition is hereby DENIED and the challenged
Decision AFFIRMED. Costs against petitioners.SO ORDERED
G.R. No. 172690 March 3, 2010HEIRS OF JOSE LIM, represented by
ELENITO LIM, Petitioners, vs.JULIET VILLA LIM, Respondent.D E C I S
I O NNACHURA, J.:Before this Court is a Petition for Review on
Certiorari1 under Rule 45 of the Rules of Civil Procedure,
assailing the Court of Appeals (CA) Decision2 dated June 29, 2005,
which reversed and set aside the decision3 of the Regional Trial
Court (RTC) of Lucena City, dated April 12, 2004.The facts of the
case are as follows:Petitioners are the heirs of the late Jose Lim
(Jose), namely: Jose's widow Cresencia Palad (Cresencia); and their
children Elenito, Evelia, Imelda, Edelyna and Edison, all surnamed
Lim (petitioners), represented by Elenito Lim (Elenito). They filed
a Complaint4 for Partition, Accounting and Damages against
respondent Juliet Villa Lim (respondent), widow of the late Elfledo
Lim (Elfledo), who was the eldest son of Jose and
Cresencia.Petitioners alleged that Jose was the liaison officer of
Interwood Sawmill in Cagsiay, Mauban, Quezon. Sometime in 1980,
Jose, together with his friends Jimmy Yu (Jimmy) and Norberto Uy
(Norberto), formed a partnership to engage in the trucking
business. Initially, with a contribution of P50,000.00 each, they
purchased a truck to be used in the hauling and transport of lumber
of the sawmill. Jose managed the operations of this trucking
business until his death on August 15, 1981. Thereafter, Jose's
heirs, including Elfledo, and partners agreed to continue the
business under the management of Elfledo. The shares in the
partnership profits and income that formed part of the estate of
Jose were held in trust by Elfledo, with petitioners' authority for
Elfledo to use, purchase or acquire properties using said
funds.Petitioners also alleged that, at that time, Elfledo was a
fresh commerce graduate serving as his fathers driver in the
trucking business. He was never a partner or an investor in the
business and merely supervised the purchase of additional trucks
using the income from the trucking business of the partners. By the
time the partnership ceased, it had nine trucks, which were all
registered in Elfledo's name. Petitioners asseverated that it was
also through Elfledos management of the partnership that he was
able to purchase numerous real properties by using the profits
derived therefrom, all of which were registered in his name and
that of respondent. In addition to the nine trucks, Elfledo also
acquired five other motor vehicles.On May 18, 1995, Elfledo died,
leaving respondent as his sole surviving heir. Petitioners claimed
that respondent took over the administration of the aforementioned
properties, which belonged to the estate of Jose, without their
consent and approval. Claiming that they are co-owners of the
properties, petitioners required respondent to submit an accounting
of all income, profits and rentals received from the estate of
Elfledo, and to surrender the administration thereof. Respondent
refused; thus, the filing of this case.Respondent traversed
petitioners' allegations and claimed that Elfledo was himself a
partner of Norberto and Jimmy. Respondent also claimed that per
testimony of Cresencia, sometime in 1980, Jose gave Elfledo
P50,000.00 as the latter's capital in an informal partnership with
Jimmy and Norberto. When Elfledo and respondent got married in
1981, the partnership only had one truck; but through the efforts
of Elfledo, the business flourished. Other than this trucking
business, Elfledo, together with respondent, engaged in other
business ventures. Thus, they were able to buy real properties and
to put up their own car assembly and repair business. When Norberto
was ambushed and killed on July 16, 1993, the trucking business
started to falter. When Elfledo died on May 18, 1995 due to a heart
attack, respondent talked to Jimmy and to the heirs of Norberto, as
she could no longer run the business. Jimmy suggested that three
out of the nine trucks be given to him as his share, while the
other three trucks be given to the heirs of Norberto. However,
Norberto's wife, Paquita Uy, was not interested in the vehicles.
Thus, she sold the same to respondent, who paid for them in
installments. Respondent also alleged that when Jose died in 1981,
he left no known assets, and the partnership with Jimmy and
Norberto ceased upon his demise. Respondent also stressed that Jose
left no properties that Elfledo could have held in trust.
Respondent maintained that all the properties involved in this case
were purchased and acquired through her and her husbands joint
efforts and hard work, and without any participation or
contribution from petitioners or from Jose. Respondent submitted
that these are conjugal partnership properties; and thus, she had
the right to refuse to render an accounting for the income or
profits of their own business.Trial on the merits ensued. On April
12, 2004, the RTC rendered its decision in favor of petitioners,
thus:WHEREFORE, premises considered, judgment is hereby rendered:1)
Ordering the partition of the above-mentioned properties equally
between the plaintiffs and heirs of Jose Lim and the defendant
Juliet Villa-Lim; and2) Ordering the defendant to submit an
accounting of all incomes, profits and rentals received by her from
said properties.SO ORDERED.Aggrieved, respondent appealed to the
CA. On June 29, 2005, the CA reversed and set aside the RTC's
decision, dismissing petitioners' complaint for lack of merit.
Undaunted, petitioners filed their Motion for Reconsideration,5
which the CA, however, denied in its Resolution6 dated May 8,
2006.Hence, this Petition, raising the sole question, viz.:IN THE
APPRECIATION BY THE COURT OF THE EVIDENCE SUBMITTED BY THE PARTIES,
CAN THE TESTIMONY OF ONE OF THE PETITIONERS BE GIVEN GREATER WEIGHT
THAN THAT BY A FORMER PARTNER ON THE ISSUE OF THE IDENTITY OF THE
OTHER PARTNERS IN THE PARTNERSHIP?7In essence, petitioners argue
that according to the testimony of Jimmy, the sole surviving
partner, Elfledo was not a partner; and that he and Norberto
entered into a partnership with Jose. Thus, the CA erred in not
giving that testimony greater weight than that of Cresencia, who
was merely the spouse of Jose and not a party to the partnership.8
Respondent counters that the issue raised by petitioners is not
proper in a petition for review on certiorari under Rule 45 of the
Rules of Civil Procedure, as it would entail the review,
evaluation, calibration, and re-weighing of the factual findings of
the CA. Moreover, respondent invokes the rationale of the CA
decision that, in light of the admissions of Cresencia and Edison
and the testimony of respondent, the testimony of Jimmy was
effectively refuted; accordingly, the CA's reversal of the RTC's
findings was fully justified.9We resolve first the procedural
matter regarding the propriety of the instant Petition.Verily, the
evaluation and calibration of the evidence necessarily involves
consideration of factual issues an exercise that is not appropriate
for a petition for review on certiorari under Rule 45. This rule
provides that the parties may raise only questions of law, because
the Supreme Court is not a trier of facts. Generally, we are not
duty-bound to analyze again and weigh the evidence introduced in
and considered by the tribunals below.10 When supported by
substantial evidence, the findings of fact of the CA are conclusive
and binding on the parties and are not reviewable by this Court,
unless the case falls under any of the following recognized
exceptions: (1) When the conclusion is a finding grounded entirely
on speculation, surmises and conjectures;(2) When the inference
made is manifestly mistaken, absurd or impossible;(3) Where there
is a grave abuse of discretion;(4) When the judgment is based on a
misapprehension of facts;(5) When the findings of fact are
conflicting;(6) When the Court of Appeals, in making its findings,
went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee;(7) When the findings are
contrary to those of the trial court;(8) When the findings of fact
are conclusions without citation of specific evidence on which they
are based;(9) When the facts set forth in the petition as well as
in the petitioners' main and reply briefs are not disputed by the
respondents; and(10) When the findings of fact of the Court of
Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record.11We note, however, that the
findings of fact of the RTC are contrary to those of the CA. Thus,
our review of such findings is warranted.On the merits of the case,
we find that the instant Petition is bereft of merit.A partnership
exists when two or more persons agree to place their money,
effects, labor, and skill in lawful commerce or business, with the
understanding that there shall be a proportionate sharing of the
profits and losses among them. A contract of partnership is defined
by the Civil Code as one where two or more persons bind themselves
to contribute money, property, or industry to a common fund, with
the intention of dividing the profits among
themselves.12Undoubtedly, the best evidence would have been the
contract of partnership or the articles of partnership.
Unfortunately, there is none in this case, because the alleged
partnership was never formally organized. Nonetheless, we are asked
to determine who between Jose and Elfledo was the "partner" in the
trucking business. A careful review of the records persuades us to
affirm the CA decision. The evidence presented by petitioners falls
short of the quantum of proof required to establish that: (1) Jose
was the partner and not Elfledo; and (2) all the properties
acquired by Elfledo and respondent form part of the estate of Jose,
having been derived from the alleged partnership.Petitioners
heavily rely on Jimmy's testimony. But that testimony is just one
piece of evidence against respondent. It must be considered and
weighed along with petitioners' other evidence vis--vis
respondent's contrary evidence. In civil cases, the party having
the burden of proof must establish his case by a preponderance of
evidence. "Preponderance of evidence" is the weight, credit, and
value of the aggregate evidence on either side and is usually
considered synonymous with the term "greater weight of the
evidence" or "greater weight of the credible evidence."
"Preponderance of evidence" is a phrase that, in the last analysis,
means probability of the truth. It is evidence that is more
convincing to the court as worthy of belief than that which is
offered in opposition thereto.13 Rule 133, Section 1 of the Rules
of Court provides the guidelines in determining preponderance of
evidence, thus: SECTION I. Preponderance of evidence, how
determined. In civil cases, the party having burden of proof must
establish his case by a preponderance of evidence. In determining
where the preponderance or superior weight of evidence on the
issues involved lies, the court may consider all the facts and
circumstances of the case, the witnesses' manner of testifying,
their intelligence, their means and opportunity of knowing the
facts to which they are testifying, the nature of the facts to
which they testify, the probability or improbability of their
testimony, their interest or want of interest, and also their
personal credibility so far as the same may legitimately appear
upon the trial. The court may also consider the number of
witnesses, though the preponderance is not necessarily with the
greater number.At this juncture, our ruling in Heirs of Tan Eng Kee
v. Court of Appeals14 is enlightening. Therein, we cited Article
1769 of the Civil Code, which provides: Art. 1769. In determining
whether a partnership exists, these rules shall apply:(1) Except as
provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons;(2) Co-ownership or
co-possession does not of itself establish a partnership, whether
such co-owners or co-possessors do or do not share any profits made
by the use of the property;(3) The sharing of gross returns does
not of itself establish a partnership, whether or not the persons
sharing them have a joint or common right or interest in any
property from which the returns are derived; (4) The receipt by a
person of a share of the profits of a business is a prima facie
evidence that he is a partner in the business, but no such
inference shall be drawn if such profits were received in
payment:(a) As a debt by installments or otherwise;(b) As wages of
an employee or rent to a landlord;(c) As an annuity to a widow or
representative of a deceased partner;(d) As interest on a loan,
though the amount of payment vary with the profits of the
business;(e) As the consideration for the sale of a goodwill of a
business or other property by installments or otherwise. Applying
the legal provision to the facts of this case, the following
circumstances tend to prove that Elfledo was himself the partner of
Jimmy and Norberto: 1) Cresencia testified that Jose gave Elfledo
P50,000.00, as share in the partnership, on a date that coincided
with the payment of the initial capital in the partnership;15 (2)
Elfledo ran the affairs of the partnership, wielding absolute
control, power and authority, without any intervention or
opposition whatsoever from any of petitioners herein;16 (3) all of
the properties, particularly the nine trucks of the partnership,
were registered in the name of Elfledo; (4) Jimmy testified that
Elfledo did not receive wages or salaries from the partnership,
indicating that what he actually received were shares of the
profits of the business;17 and (5) none of the petitioners, as
heirs of Jose, the alleged partner, demanded periodic accounting
from Elfledo during his lifetime. As repeatedly stressed in Heirs
of Tan Eng Kee,18 a demand for periodic accounting is evidence of a
partnership. Furthermore, petitioners failed to adduce any evidence
to show that the real and personal properties acquired and
registered in the names of Elfledo and respondent formed part of
the estate of Jose, having been derived from Jose's alleged
partnership with Jimmy and Norberto. They failed to refute
respondent's claim that Elfledo and respondent engaged in other
businesses. Edison even admitted that Elfledo also sold Interwood
lumber as a sideline.19 Petitioners could not offer any credible
evidence other than their bare assertions. Thus, we apply the basic
rule of evidence that between documentary and oral evidence, the
former carries more weight.20 Finally, we agree with the judicious
findings of the CA, to wit: The above testimonies prove that
Elfledo was not just a hired help but one of the partners in the
trucking business, active and visible in the running of its affairs
from day one until this ceased operations upon his demise. The
extent of his control, administration and management of the
partnership and its business, the fact that its properties were
placed in his name, and that he was not paid salary or other
compensation by the partners, are indicative of the fact that
Elfledo was a partner and a controlling one at that. It is apparent
that the other partners only contributed in the initial capital but
had no say thereafter on how the business was ran. Evidently it was
through Elfredos efforts and hard work that the partnership was
able to acquire more trucks and otherwise prosper. Even the
appellant participated in the affairs of the partnership by acting
as the bookkeeper sans salary.1avvphi1It is notable too that Jose
Lim died when the partnership was barely a year old, and the
partnership and its business not only continued but also
flourished. If it were true that it was Jose Lim and not Elfledo
who was the partner, then upon his death the partnership should
havebeen dissolved and its assets liquidated. On the contrary,
these were not done but instead its operation continued under the
helm of Elfledo and without any participation from the heirs of
Jose Lim.Whatever properties appellant and her husband had
acquired, this was through their own concerted efforts and hard
work. Elfledo did not limit himself to the business of their
partnership but engaged in other lines of businesses as well.In
sum, we find no cogent reason to disturb the findings and the
ruling of the CA as they are amply supported by the law and by the
evidence on record.WHEREFORE, the instant Petition is DENIED. The
assailed Court of Appeals Decision dated June 29, 2005 is AFFIRMED.
Costs against petitioners.SO ORDERED.
G.R. No. 126881 October 3, 2000HEIRS OF TAN ENG KEE,
petitioners, vs.COURT OF APPEALS and BENGUET LUMBER COMPANY,
represented by its President TAN ENG LAY, respondents.DE LEON, JR.,
J.:In this petition for review on certiorari, petitioners pray for
the reversal of the Decision1 dated March 13, 1996 of the former
Fifth Division2 of the Court of Appeals in CA-G.R. CV No. 47937,
the dispositive portion of which states: THE FOREGOING CONSIDERED,
the appealed decision is hereby set aside, and the complaint
dismissed.The facts are:Following the death of Tan Eng Kee on
September 13, 1984, Matilde Abubo, the common-law spouse of the
decedent, joined by their children Teresita, Nena, Clarita, Carlos,
Corazon and Elpidio, collectively known as herein petitioners HEIRS
OF TAN ENG KEE, filed suit against the decedent's brother TAN ENG
LAY on February 19, 1990. The complaint,3 docketed as Civil Case
No. 1983-R in the Regional Trial Court of Baguio City was for
accounting, liquidation and winding up of the alleged partnership
formed after World War II between Tan Eng Kee and Tan Eng Lay. On
March 18, 1991, the petitioners filed an amended complaint4
impleading private respondent herein BENGUET LUMBER COMPANY, as
represented by Tan Eng Lay. The amended complaint was admitted by
the trial court in its Order dated May 3, 1991.5 The amended
complaint principally alleged that after the second World War, Tan
Eng Kee and Tan Eng Lay, pooling their resources and industry
together, entered into a partnership engaged in the business of
selling lumber and hardware and construction supplies. They named
their enterprise "Benguet Lumber" which they jointly managed until
Tan Eng Kee's death. Petitioners herein averred that the business
prospered due to the hard work and thrift of the alleged partners.
However, they claimed that in 1981, Tan Eng Lay and his children
caused the conversion of the partnership "Benguet Lumber" into a
corporation called "Benguet Lumber Company." The incorporation was
purportedly a ruse to deprive Tan Eng Kee and his heirs of their
rightful participation in the profits of the business. Petitioners
prayed for accounting of the partnership assets, and the
dissolution, winding up and liquidation thereof, and the equal
division of the net assets of Benguet Lumber.After trial, Regional
Trial Court of Baguio City, Branch 7 rendered judgment6 on April
12, 1995, to wit:WHEREFORE, in view of all the foregoing, judgment
is hereby rendered:a) Declaring that Benguet Lumber is a joint
venture which is akin to a particular partnership;b) Declaring that
the deceased Tan Eng Kee and Tan Eng Lay are joint adventurers
and/or partners in a business venture and/or particular partnership
called Benguet Lumber and as such should share in the profits
and/or losses of the business venture or particular partnership;c)
Declaring that the assets of Benguet Lumber are the same assets
turned over to Benguet Lumber Co. Inc. and as such the heirs or
legal representatives of the deceased Tan Eng Kee have a legal
right to share in said assets;d) Declaring that all the rights and
obligations of Tan Eng Kee as joint adventurer and/or as partner in
a particular partnership have descended to the plaintiffs who are
his legal heirs.e) Ordering the defendant Tan Eng Lay and/or the
President and/or General Manager of Benguet Lumber Company Inc. to
render an accounting of all the assets of Benguet Lumber Company,
Inc. so the plaintiffs know their proper share in the business;f)
Ordering the appointment of a receiver to preserve and/or
administer the assets of Benguet Lumber Company, Inc. until such
time that said corporation is finally liquidated are directed to
submit the name of any person they want to be appointed as receiver
failing in which this Court will appoint the Branch Clerk of Court
or another one who is qualified to act as such.g) Denying the award
of damages to the plaintiffs for lack of proof except the expenses
in filing the instant case.h) Dismissing the counter-claim of the
defendant for lack of merit.SO ORDERED.Private respondent sought
relief before the Court of Appeals which, on March 13, 1996,
rendered the assailed decision reversing the judgment of the trial
court. Petitioners' motion for reconsideration7 was denied by the
Court of Appeals in a Resolution8 dated October 11, 1996.Hence, the
present petition.As a side-bar to the proceedings, petitioners
filed Criminal Case No. 78856 against Tan Eng Lay and Wilborn Tan
for the use of allegedly falsified documents in a judicial
proceeding. Petitioners complained that Exhibits "4" to "4-U"
offered by the defendants before the trial court, consisting of
payrolls indicating that Tan Eng Kee was a mere employee of Benguet
Lumber, were fake, based on the discrepancy in the signatures of
Tan Eng Kee. They also filed Criminal Cases Nos. 78857-78870
against Gloria, Julia, Juliano, Willie, Wilfredo, Jean, Mary and
Willy, all surnamed Tan, for alleged falsification of commercial
documents by a private individual. On March 20, 1999, the Municipal
Trial Court of Baguio City, Branch 1, wherein the charges were
filed, rendered judgment9 dismissing the cases for insufficiency of
evidence.In their assignment of errors, petitioners claim that:ITHE
HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO
PARTNERSHIP BETWEEN THE LATE TAN ENG KEE AND HIS BROTHER TAN ENG
LAY BECAUSE: (A) THERE WAS NO FIRM ACCOUNT; (B) THERE WAS NO FIRM
LETTERHEADS SUBMITTED AS EVIDENCE; (C) THERE WAS NO CERTIFICATE OF
PARTNERSHIP; (D) THERE WAS NO AGREEMENT AS TO PROFITS AND LOSSES;
AND (E) THERE WAS NO TIME FIXED FOR THE DURATION OF THE PARTNERSHIP
(PAGE 13, DECISION).IITHE HONORABLE COURT OF APPEALS ERRED IN
RELYING SOLELY ON THE SELF-SERVING TESTIMONY OF RESPONDENT TAN ENG
LAY THAT BENGUET LUMBER WAS A SOLE PROPRIETORSHIP AND THAT TAN ENG
KEE WAS ONLY AN EMPLOYEE THEREOF.IIITHE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT THE FOLLOWING FACTS WHICH WERE DULY SUPPORTED
BY EVIDENCE OF BOTH PARTIES DO NOT SUPPORT THE EXISTENCE OF A
PARTNERSHIP JUST BECAUSE THERE WAS NO ARTICLES OF PARTNERSHIP DULY
RECORDED BEFORE THE SECURITIES AND EXCHANGE COMMISSION:a. THAT THE
FAMILIES OF TAN ENG KEE AND TAN ENG LAY WERE ALL LIVING AT THE
BENGUET LUMBER COMPOUND;b. THAT BOTH TAN ENG LAY AND TAN ENG KEE
WERE COMMANDING THE EMPLOYEES OF BENGUET LUMBER;c. THAT BOTH TAN
ENG KEE AND TAN ENG LAY WERE SUPERVISING THE EMPLOYEES THEREIN;d.
THAT TAN ENG KEE AND TAN ENG LAY WERE THE ONES DETERMINING THE
PRICES OF STOCKS TO BE SOLD TO THE PUBLIC; ANDe. THAT TAN ENG LAY
AND TAN ENG KEE WERE THE ONES MAKING ORDERS TO THE SUPPLIERS (PAGE
18, DECISION).IVTHE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT THERE WAS NO PARTNERSHIP JUST BECAUSE THE CHILDREN OF THE LATE
TAN ENG KEE: ELPIDIO TAN AND VERONICA CHOI, TOGETHER WITH THEIR
WITNESS BEATRIZ TANDOC, ADMITTED THAT THEY DO NOT KNOW WHEN THE
ESTABLISHMENT KNOWN IN BAGUIO CITY AS BENGUET LUMBER WAS STARTED AS
A PARTNERSHIP (PAGE 16-17, DECISION).VTHE 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 A PUBLIC INSTRUMENT CREATING
A PARTNERSHIP SHOULD HAVE BEEN MADE AND NO SUCH PUBLIC INSTRUMENT
ESTABLISHED BY THE APPELLEES (PAGE 17, DECISION).As a premise, we
reiterate the oft-repeated rule that findings of facts of the Court
of Appeals will not be disturbed on appeal if such are supported by
the evidence.10 Our jurisdiction, it must be emphasized, does not
include review of factual issues. Thus:Filing of petition with
Supreme Court. A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever
authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition shall raise only
questions of law which must be distinctly set forth.11 [emphasis
supplied]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 findings, goes beyond the
issues of the case, and such findings are contrary to the
admissions of both appellant and appellee;(6) when the judgment of
the Court of Appeals is premised on a misapprehension of facts;(7)
when the Court of Appeals fails to notice certain relevant facts
which, if properly considered, will justify a different
conclusion;(8) when the findings of fact are themselves
conflicting;(9) when the findings of fact are conclusions without
citation of the specific evidence on which they are based; and(10)
when the findings of fact of the Court of Appeals are premised on
the absence of evidence but such findings are contradicted by the
evidence on record.12 In reversing the trial court, the Court of
Appeals ruled, to wit:We note that the Court a quo over extended
the issue because while the plaintiffs mentioned only the existence
of a partnership, the Court in turn went beyond that by justifying
the existence of a joint venture.When mention is made of a joint
venture, it would presuppose parity of standing between the
parties, equal proprietary interest and the exercise by the parties
equally of the conduct of the business, thus:xxx xxx xxxWe have the
admission that the father of the plaintiffs was not a partner of
the Benguet Lumber before the war. The appellees however argued
that (Rollo, p. 104; Brief, p. 6) this is because during the war,
the entire stocks of the pre-war Benguet Lumber were confiscated if
not burned by the Japanese. After the war, because of the absence
of capital to start a lumber and hardware business, Lay and Kee
pooled the proceeds of their individual businesses earned from
buying and selling military supplies, so that the common fund would
be enough to form a partnership, both in the lumber and hardware
business. That Lay and Kee actually established the Benguet Lumber
in Baguio City, was even testified to by witnesses. Because of the
pooling of resources, the post-war Benguet Lumber was eventually
established. That the father of the plaintiffs and Lay were
partners, is obvious from the fact that: (1) they conducted the
affairs of the business during Kee's lifetime, jointly, (2) they
were the ones giving orders to the employees, (3) they were the
ones preparing orders from the suppliers, (4) their families stayed
together at the Benguet Lumber compound, and (5) all their children
were employed in the business in different capacities.xxx xxx xxxIt
is obvious that there was no partnership whatsoever. Except for a
firm name, there was no firm account, no firm letterheads submitted
as evidence, no certificate of partnership, no agreement as to
profits and losses, and no time fixed for the duration of the
partnership. There was even no attempt to submit an accounting
corresponding to the period after the war until Kee's death in
1984. It had no business book, no written account nor any
memorandum for that matter and no license mentioning the existence
of a partnership [citation omitted].Also, the exhibits support the
establishment of only a proprietorship. The certification dated
March 4, 1971, Exhibit "2", mentioned co-defendant Lay as the only
registered owner of the Benguet Lumber and Hardware. His
application for registration, effective 1954, in fact mentioned
that his business started in 1945 until 1985 (thereafter, the
incorporation). The deceased, Kee, on the other hand, was merely an
employee of the Benguet Lumber Company, on the basis of his SSS
coverage effective 1958, Exhibit "3". In the Payrolls, Exhibits "4"
to "4-U", inclusive, for the years 1982 to 1983, Kee was similarly
listed only as an employee; precisely, he was on the payroll
listing. In the Termination Notice, Exhibit "5", Lay was mentioned
also as the proprietor.xxx xxx xxxWe would like to refer to Arts.
771 and 772, NCC, that a partner [sic] may be constituted in any
form, but when an immovable is constituted, the execution of a
public instrument becomes necessary. This is equally true if the
capitalization exceeds P3,000.00, in which case a public instrument
is also necessary, and which is to be recorded with the Securities
and Exchange Commission. In this case at bar, we can easily assume
that the business establishment, which from the language of the
appellees, prospered (pars. 5 & 9, Complaint), definitely
exceeded P3,000.00, in addition to the accumulation of real
properties and to the fact that it is now a compound. The execution
of a public instrument, on the other hand, was never established by
the appellees.And then in 1981, the business was incorporated and
the incorporators were only Lay and the members of his family.
There is no proof either that the capital assets of the
partnership, assuming them to be in existence, were maliciously
assigned or transferred by Lay, supposedly to the corporation and
since then have been treated as a part of the latter's capital
assets, contrary to the allegations in pars. 6, 7 and 8 of the
complaint. These are not evidences supporting the existence of a
partnership:1) That Kee was living in a bunk house just across the
lumber store, and then in a room in the bunk house in Trinidad, but
within the compound of the lumber establishment, as testified to by
Tandoc; 2) that both Lay and Kee were seated on a table and were
"commanding people" as testified to by the son, Elpidio Tan; 3)
that both were supervising the laborers, as testified to by
Victoria Choi; and 4) that Dionisio Peralta was supposedly being
told by Kee that the proceeds of the 80 pieces of the G.I. sheets
were added to the business. Partnership presupposes the following
elements [citation omitted]: 1) a contract, either oral or written.
However, if it involves real property or where the capital is
P3,000.00 or more, the execution of a contract is necessary; 2) the
capacity of the parties to execute the contract; 3) money property
or industry contribution; 4) community of funds and interest,
mentioning equality of the partners or one having a proportionate
share in the benefits; and 5) intention to divide the profits,
being the true test of the partnership. The intention to join in
the business venture for the purpose of obtaining profits
thereafter to be divided, must be established. We cannot see these
elements from the testimonial evidence of the appellees.As can be
seen, the appellate court disputed and differed from the trial
court which had adjudged that TAN ENG KEE and TAN ENG LAY had
allegedly entered into a joint venture. In this connection, we have
held that whether a partnership exists is a factual matter;
consequently, since the appeal is brought to us under Rule 45, we
cannot entertain inquiries relative to the correctness of the
assessment of the evidence by the court a quo.13 Inasmuch as the
Court of Appeals and the trial court had reached conflicting
conclusions, perforce we must examine the record to determine if
the reversal was justified.The primordial issue here is whether Tan
Eng Kee and Tan Eng Lay were partners in Benguet Lumber. A contract
of partnership is defined by law as one where:. . . two or more
persons bind themselves to contribute money, property, or industry
to a common fund, with the intention of dividing the profits among
themselves.Two or more persons may also form a partnership for the
exercise of a profession.14 Thus, in order to constitute a
partnership, it must be established that (1) two or more persons
bound themselves to contribute money, property, or industry to a
common fund, and (2) they intend to divide the profits among
themselves.15 The agreement need not be formally reduced into
writing, since statute allows the oral constitution of a
partnership, save in two instances: (1) when immovable property or
real rights are contributed,16 and (2) when the partnership has a
capital of three thousand pesos or more.17 In both cases, a public
instrument is required.18 An inventory to be signed by the parties
and attached to the public instrument is also indispensable to the
validity of the partnership whenever immovable property is
contributed to the partnership.19 The trial court determined that
Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which
it said is akin to a particular partnership.20 A particular
partnership is distinguished from a joint adventure, to wit:(a) A
joint adventure (an American concept similar to our joint accounts)
is a sort of informal partnership, with no firm name and no legal
personality. In a joint account, the participating merchants can
transact business under their own name, and can be individually
liable therefor.(b) Usually, but not necessarily a joint adventure
is limited to a SINGLE TRANSACTION, although the business of
pursuing to a successful termination may continue for a number of
years; a partnership generally relates to a continuing business of
various transactions of a certain kind.21 A joint venture
"presupposes generally a parity of standing between the joint
co-ventures or partners, in which each party has an equal
proprietary interest in the capital or property contributed, and
where each party exercises equal rights in the conduct of the
business."22 Nonetheless, in Aurbach, et. al. v. Sanitary Wares
Manufacturing Corporation, et. al.,23 we expressed the view that a
joint venture may be likened to a particular partnership, thus:The
legal concept of a joint venture is of common law origin. It has no
precise legal definition, but it has been generally understood to
mean an organization formed for some temporary purpose. (Gates v.
Megargel, 266 Fed. 811 [1920]) It is hardly distinguishable from
the partnership, since their elements are similar community of
interest in the business, sharing of profits and losses, and a
mutual right of control. (Blackner v. McDermott, 176 F. 2d. 498,
[1949]; Carboneau v. Peterson, 95 P.2d., 1043 [1939]; Buckley v.
Chadwick, 45 Cal. 2d. 183, 288 P.2d. 12 289 P.2d. 242 [1955]). The
main distinction cited by most opinions in common law jurisdiction
is that the partnership contemplates a general business with some
degree of continuity, while the joint venture is formed for the
execution of a single transaction, and is thus of a temporary
nature. (Tufts v. Mann. 116 Cal. App. 170, 2 P. 2d. 500 [1931];
Harmon v. Martin, 395 Ill. 595, 71 NE 2d. 74 [1947]; Gates v.
Megargel 266 Fed. 811 [1920]). This observation is not entirely
accurate in this jurisdiction, since under the Civil Code, a
partnership may be particular or universal, and a particular
partnership may have for its object a specific undertaking. (Art.
1783, Civil Code). It would seem therefore that under Philippine
law, a joint venture is a form of partnership and should thus be
governed by the law of partnerships. The Supreme Court has however
recognized a distinction between these two business forms, and has
held that although a corporation cannot enter into a partnership
contract, it may however engage in a joint venture with others. (At
p. 12, Tuazon v. Bolaos, 95 Phil. 906 [1954]) (Campos and
Lopez-Campos Comments, Notes and Selected Cases, Corporation Code
1981).Undoubtedly, the best evidence would have been the contract
of partnership itself, or the articles of partnership but there is
none. The alleged partnership, though, was never formally
organized. In addition, petitioners point out that the New Civil
Code was not yet in effect when the partnership was allegedly
formed sometime in 1945, although the contrary may well be argued
that nothing prevented the parties from complying with the
provisions of the New Civil Code when it took effect on August 30,
1950. But all that is in the past. The net effect, however, is that
we are asked to determine whether a partnership existed based
purely on circumstantial evidence. A review of the record persuades
us that the Court of Appeals correctly reversed the decision of the
trial court. The evidence presented by petitioners falls short of
the quantum of proof required to establish a
partnership.Unfortunately for petitioners, Tan Eng Kee has passed
away. Only he, aside from Tan Eng Lay, could have expounded on the
precise nature of the business relationship between them. In the
absence of evidence, we cannot accept as an established fact that
Tan Eng Kee allegedly contributed his resources to a common fund
for the purpose of establishing a partnership. The testimonies to
that effect of petitioners' witnesses is directly controverted by
Tan Eng Lay. It should be noted that it is not with the number of
witnesses wherein preponderance lies;24 the quality of their
testimonies is to be considered. 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.25 He stated that when he met Tan Eng
Kee after the liberation, the latter asked the former to accompany
him to get 80 pieces of G.I. sheets supposedly owned by both
brothers.26 Tan Eng Lay, however, denied knowledge of this meeting
or of the conversation between Peralta and his brother.27 Tan Eng
Lay consistently testified that he had his business and his brother
had his, that it was only later on that his said brother, Tan Eng
Kee, came to work for him. Be that as it may, co-ownership or
co-possession (specifically here, of the G.I. sheets) is not an
indicium of the existence of a partnership.28 Besides, it is indeed
odd, if not unnatural, that despite the forty years the partnership
was allegedly in existence, Tan Eng Kee never asked for an
accounting. The essence of a partnership is that the partners share
in the profits and losses.29 Each has the right to demand an
accounting as long as the partnership exists.30 We have allowed a
scenario wherein "[i]f excellent relations exist among the partners
at the start of the business and all the partners are more
interested in seeing the firm grow rather than get immediate
returns, a deferment of sharing in the profits is perfectly
plausible."31 But in the situation in the case at bar, the
deferment, if any, had gone on too long to be plausible. A person
is presumed to take ordinary care of his concerns.32 As we
explained in another case:In the first place, plaintiff did not
furnish the supposed P20,000.00 capital. In the second place, she
did not furnish any help or intervention in the management of the
theatre. In the third place, it does not appear that she has even
demanded from defendant any accounting of the expenses and earnings
of the business. Were she really a partner, her first concern
should have been to find out how the business was progressing,
whether the expenses were legitimate, whether the earnings were
correct, etc. She was absolutely silent with respect to any of the
acts that a partner should have done; all that she did was to
receive her share of P3,000.00 a month, which cannot be interpreted
in any manner than a payment for the use of the premises which she
had leased from the owners. Clearly, plaintiff had always acted in
accordance with the original letter of defendant of June 17, 1945
(Exh. "A"), which shows that both parties considered this offer as
the real contract between them.33 [emphasis supplied]A demand for
periodic accounting is evidence of a partnership.34 During his
lifetime, Tan Eng Kee appeared never to have made any such demand
for accounting from his brother, Tang Eng Lay.This brings us to the
matter of Exhibits "4" to "4-U" for private respondents, consisting
of payrolls purporting to show that Tan Eng Kee was an ordinary
employee of Benguet Lumber, as it was then called. The authenticity
of these documents was questioned by petitioners, to the extent
that they filed criminal charges against Tan Eng Lay and his wife
and children. As aforesaid, the criminal cases were dismissed for
insufficiency of evidence. Exhibits "4" to "4-U" in fact shows that
Tan Eng Kee received sums as wages of an employee. In connection
therewith, Article 1769 of the Civil Code provides:In determining
whether a partnership exists, these rules shall apply:(1) Except as
provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons;(2) Co-ownership or
co-possession does not of itself establish a partnership, whether
such co-owners or co-possessors do or do not share any profits made
by the use of the property;(3) The sharing of gross returns does
not of itself establish a partnership, whether or not the persons
sharing them have a joint or common right or interest in any
property which the returns are derived; (4) The receipt by a person
of a share of the profits of a business is a prima facie evidence
that he is a partner in the business, but no such inference shall
be drawn if such profits were received in payment:(a) As a debt by
installment or otherwise;(b) As wages of an employee or rent to a
landlord;(c) As an annuity to a widow or representative of a
deceased partner;(d) As interest on a loan, though the amount of
payment vary with the profits of the business;(e) As the
consideration for the sale of a goodwill of a business or other
property by installments or otherwise.In the light of the
aforequoted legal provision, we conclude that Tan Eng Kee was only
an employee, not a partner. Even if the payrolls as evidence were
discarded, petitioners would still be back to square one, so to
speak, since they did not present and offer evidence that would
show that Tan Eng Kee received amounts of money allegedly
representing his share in the profits of the enterprise.
Petitioners failed to show how much their father, Tan Eng Kee,
received, if any, as his share in the profits of Benguet Lumber
Company for any particular period. Hence, they failed to prove that
Tan Eng Kee and Tan Eng Lay intended to divide the profits of the
business between themselves, which is one of the essential features
of a partnership.Nevertheless, petitioners would still want us to
infer or believe the alleged existence of a partnership from this
set of circumstances: that Tan Eng Lay and Tan Eng Kee were
commanding the employees; that both were supervising the employees;
that both were the ones who determined the price at which the
stocks were to be sold; and that both placed orders to the
suppliers of the Benguet Lumber Company. They also point out that
the families of the brothers Tan Eng Kee and Tan Eng Lay lived at
the Benguet Lumber Company compound, a privilege not extended to
its ordinary employees.However, private respondent counters that:
Petitioners seem to have missed the point in asserting that the
above enumerated powers and privileges granted in favor of Tan Eng
Kee, were indicative of his being a partner in Benguet Lumber for
the following reasons:(i) even a mere supervisor in a company,
factory or store gives orders and directions to his subordinates.
So long, therefore, that an employee's position is higher in rank,
it is not unusual that he orders around those lower in rank.(ii)
even a messenger or other trusted employee, over whom confidence is
reposed by the owner, can order materials from suppliers for and in
behalf of Benguet Lumber. Furthermore, even a partner does not
necessarily have to perform this particular task. It is, thus, not
an indication that Tan Eng Kee was a partner.(iii) although Tan Eng
Kee, together with his family, lived in the lumber compound and
this privilege was not accorded to other employees, the undisputed
fact remains that Tan Eng Kee is the brother of Tan Eng Lay.
Naturally, close personal relations existed between them. Whatever
privileges Tan Eng Lay gave his brother, and which were not given
the other employees, only proves the kindness and generosity of Tan
Eng Lay towards a blood relative.(iv) and even if it is assumed
that Tan Eng Kee was quarreling with Tan Eng Lay in connection with
the pricing of stocks, this does not adequately prove the existence
of a partnership relation between them. Even highly confidential
employees and the owners of a company sometimes argue with respect
to certain matters which, in no way indicates that they are
partners as to each other.35 In the instant case, we find private
respondent's arguments to be 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 as his residence in the Benguet Lumber Company compound. He
would have moral, if not actual, superiority over his fellow
employees, thereby entitling him to exercise powers of supervision.
It may even be that among his duties is to place orders with
suppliers. Again, the circumstances proffered by petitioners do not
provide a logical nexus to the conclusion desired; these are not
inconsistent with the powers and duties of a manager, even in a
business organized and run as informally as Benguet Lumber
Company.There being no partnership, it follows that there is no
dissolution, winding up or liquidation to speak of. Hence, the
petition must fail.WHEREFORE, the petition is hereby denied, and
the appealed decision of the Court of Appeals is hereby AFFIRMED in
toto. No pronouncement as to costs.SO ORDERED.
G.R. No. 154486 December 1, 2010FEDERICO JARANTILLA, JR.,
Petitioner, vs.ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE,
substituted by CYNTHIA REMOTIGUE, DOROTEO JARANTILLA and TOMAS
JARANTILLA, Respondents.D E C I S I O NLEONARDO-DE CASTRO, J.:This
petition for review on certiorari1 seeks to modify the Decision2 of
the Court of Appeals dated July 30, 2002 in CA-G.R. CV No. 40887,
which set aside the Decision3 dated December 18, 1992 of the
Regional Trial Court (RTC) of Quezon City, Branch 98 in Civil Case
No. Q-50464.The pertinent facts are as follows:The spouses Andres
Jarantilla and Felisa Jaleco were survived by eight children:
Federico, Delfin, Benjamin, Conchita, Rosita, Pacita, Rafael and
Antonieta.4 Petitioner Federico Jarantilla, Jr. is the grandchild
of the late Jarantilla spouses by their son Federico Jarantilla,
Sr. and his wife Leda Jamili.5 Petitioner also has two other
brothers: Doroteo and Tomas Jarantilla.Petitioner was one of the
defendants in the complaint before the RTC while Antonieta
Jarantilla, his aunt, was the plaintiff therein. His co-respondents
before he joined his aunt Antonieta in her complaint, were his late
aunt Conchita Jarantillas husband Buenaventura Remotigue, who died
during the pendency of the case, his cousin Cynthia Remotigue, the
adopted daughter of Conchita Jarantilla and Buenaventura Remotigue,
and his brothers Doroteo and Tomas Jarantilla.6In 1948, the
Jarantilla heirs extrajudicially partitioned amongst themselves the
real properties of their deceased parents.7 With the exception of
the real property adjudicated to Pacita Jarantilla, the heirs also
agreed to allot the produce of the said real properties for the
years 1947-1949 for the studies of Rafael and Antonieta
Jarantilla.8In the same year, the spouses Rosita Jarantilla and
Vivencio Deocampo entered into an agreement with the spouses
Buenaventura Remotigue and Conchita Jarantilla to provide mutual
assistance to each other by way of financial support to any
commercial and agricultural activity on a joint business
arrangement. This business relationship proved to be successful as
they were able to establish a manufacturing and trading business,
acquire real properties, and construct buildings, among other
things.9 This partnership ended in 1973 when the parties, in an
"Agreement,"10 voluntarily agreed to completely dissolve their
"joint business relationship/arrangement."11On April 29, 1957, the
spouses Buenaventura and Conchita Remotigue executed a document
wherein they acknowledged that while registered only in
Buenaventura Remotigues name, they were not the only owners of the
capital of the businesses Manila Athletic Supply (712 Raon Street,
Manila), Remotigue Trading (Calle Real, Iloilo City) and Remotigue
Trading (Cotabato City). In this same "Acknowledgement of
Participating Capital," they stated the participating capital of
their co-owners as of the year 1952, with Antonieta Jarantillas
stated as eight thousand pesos (P8,000.00) and Federico Jarantilla,
Jr.s as five thousand pesos (P5,000.00).12The present case stems
from the amended complaint13 dated April 22, 1987 filed by
Antonieta Jarantilla against Buenaventura Remotigue, Cynthia
Remotigue, Federico Jarantilla, Jr., Doroteo Jarantilla and Tomas
Jarantilla, for the accounting of the assets and income of the
co-ownership, for its partition and the delivery of her share
corresponding to eight percent (8%), and for damages. Antonieta
claimed that in 1946, she had entered into an agreement with
Conchita and Buenaventura Remotigue, Rafael Jarantilla, and Rosita
and Vivencio Deocampo to engage in business. Antonieta alleged that
the initial contribution of property and money came from the heirs
inheritance, and her subsequent annual investment of seven thousand
five hundred pesos (P7,500.00) as additional capital came from the
proceeds of her farm. Antonieta also alleged that from 1946-1969,
she had helped in the management of the business they co-owned
without receiving any salary. Her salary was supposedly rolled back
into the business as additional investments in her behalf.
Antonieta further claimed co-ownership of certain properties14 (the
subject real properties) in the name of the defendants since the
only way the defendants could have purchased these properties were
through the partnership as they had no other source of income. The
respondents, including petitioner herein, in their Answer,15 denied
having formed a partnership with Antonieta in 1946. They claimed
that she was in no position to do so as she was still in school at
that time. In fact, the proceeds of the lands they partitioned were
devoted to her studies. They also averred that while she may have
helped in the businesses that her older sister Conchita had formed
with Buenaventura Remotigue, she was paid her due salary. They did
not deny the existence and validity of the "Acknowledgement of
Participating Capital" and in fact used this as evidence to support
their claim that Antonietas 8% share was limited to the businesses
enumerated therein. With regard to Antonietas claim in their other
corporations and businesses, the respondents said these should also
be limited to the number of her shares as specified in the
respective articles of incorporation. The respondents denied using
the partnerships income to purchase the subject real properties and
said that the certificates of title should be binding on
her.16During the course of the trial at the RTC, petitioner
Federico Jarantilla, Jr., who was one of the original defendants,
entered into a compromise agreement17 with Antonieta Jarantilla
wherein he supported Antonietas claims and asserted that he too was
entitled to six percent (6%) of the supposed partnership in the
same manner as Antonieta was. He prayed for a favorable judgment in
this wise:Defendant Federico Jarantilla, Jr., hereby joins in
plaintiffs prayer for an accounting from the other defendants, and
the partition of the properties of the co-ownership and the
delivery to the plaintiff and to defendant Federico Jarantilla, Jr.
of their rightful share of the assets and properties in the
co-ownership.181avvphi1The RTC, in an Order19 dated March 25, 1992,
approved the Joint Motion to Approve Compromise Agreement20 and on
December 18, 1992, decided in favor of Antonieta, to wit:WHEREFORE,
premises above-considered, the Court renders judgment in favor of
the plaintiff Antonieta Jarantilla and against defendants Cynthia
Remotigue, Doroteo Jarantilla and Tomas Jarantilla ordering the
latter:1. to deliver to the plaintiff her 8% share or its
equivalent amount on the real properties covered by TCT Nos. 35655,
338398, 338399 & 335395, all of the Registry of Deeds of Quezon
City; TCT Nos. (18303)23341, 142882 & 490007(4615), all of the
Registry of Deeds of Rizal; and TCT No. T-6309 of the Registry of
Deeds of Cotabato based on their present market value;2. to deliver
to the plaintiff her 8% share or its equivalent amount on the
Remotigue Agro-Industrial Corporation, Manila Athletic Supply,
Inc., MAS Rubber Products, Inc. and Buendia Recapping Corporation
based on the shares of stocks present book value;3. to account for
the assets and income of the co-ownership and deliver to plaintiff
her rightful share thereof equivalent to 8%;4. to pay plaintiff,
jointly and severally, the sum of P50,000.00 as moral damages;5. to
pay, jointly and severally, the sum of P50,000.00 as attorneys
fees; and6. to pay,