G.R. No.

159333

July 31, 2006

ARSENIO T. MENDIOLA, petitioner, vs. COURT OF APPEALS, NATIONAL LA OR RELATIONS COMMISSION, PACIFIC FOREST RESOURCES, P!ILS., INC. "#$%o& CELLMAR' A , respondents. DECISION PUNO, J.( On appeal are the Decision1 and Resolution2 of the Court of Appeals, dated January 30, 2003 and July 30, 2003, respectively, in CA- .R. !" #o. $102%, affir&in' the rulin'3 of the #ational (a)or Relations Co&&ission *#(RC+, ,hich in turn set aside the July 30, 2001 Decision- of the la)or ar)iter. .he la)or ar)iter declared ille'al the dis&issal of petitioner fro& e&ploy&ent and a,arded separation pay, &oral and e/e&plary da&a'es, and attorney0s fees. .he facts are as follo,s1 "rivate respondent "acific 2orest Resources, "hils., 3nc. *"acfor+ is a corporation or'ani4ed and e/istin' under the la,s of California, 5!A. 3t is a su)sidiary of Cellulose 6ar7etin' 3nternational, a corporation duly or'ani4ed under the la,s of !,eden, ,ith principal office in othen)ur', !,eden. "rivate respondent "acfor entered into a 8!ide A'ree&ent on Representative Office 7no,n as "acific 2orest Resources *"hils.+, 3nc.89 ,ith petitioner Arsenio .. 6endiola *A.6+, effective 6ay 1, 1::9, 8assu&in' that "acfor-"hils. is already approved )y the !ecurities and ;/chan'e Co&&ission <!;C= on the said date.8> .he !ide A'ree&ent outlines the )usiness relationship of the parties ,ith re'ard to the "hilippine operations of "acfor. "rivate respondent ,ill esta)lish a "acfor representative office in the "hilippines, to )e 7no,n as "acfor "hils, and petitioner A.6 ,ill )e its "resident. "etitioner0s )ase salary and the overhead e/penditures of the co&pany shall )e )orne )y the representative office and funded )y "acfor?A.6, since "acfor "hils. is e@ually o,ned on a 90-90 e@uity )y A.6 and "acfor-usa. On July 1-, 1::9, the !;C 'ranted the application of private respondent "acfor for a license to transact )usiness in the "hilippines under the na&e of "acfor or "acfor "hils.$ 3n its application, private respondent "acfor proposed to esta)lish its representative office in the "hilippines ,ith the purpose of &onitorin' and coordinatin' the &ar7et activities for paper products. 3t also desi'nated petitioner as its resident a'ent in the "hilippines, authori4ed to accept su&&ons and processes in all le'al proceedin's, and all notices affectin' the corporation.% 3n 6arch 1::$, the !ide A'ree&ent ,as a&ended throu'h a 8Revised Operatin' and "rofit !harin' A'ree&ent for the Representative Office Ano,n as "acific 2orest Resources *"hilippines+,8: ,here the salary of petitioner ,as increased to B$%,000 per annu&. Coth a'ree&ents sho, that the operational e/penses ,ill )e )orne )y the representative office and funded )y all parties 8as e@ual partners,8 ,hile the profits and co&&issions ,ill )e shared a&on' the&. 3n July 2000, petitioner ,rote Aevin Daley, Dice "resident for Asia of "acfor, see7in' confir&ation of his 90E e@uity of "acfor "hils.10 "rivate respondent "acfor, throu'h Fillia& leason, its "resident, replied that petitioner is not a part-o,ner of "acfor "hils. )ecause the latter is &erely "acfor-5!A0s representative office and not an entity separate and distinct fro& "acfor-5!A. 83t0s si&ply a 0theoretical co&pany0 ,ith the purpose of dividin' the inco&e 90-90.811 "etitioner presu&a)ly 7ne, of this arran'e&ent fro& the start, havin' )een the one to propose to private respondent "acfor the settin' up of a representative office, and 8not a )ranch office8 in the "hilippines to save on ta/es.12 "etitioner clai&ed that he ,as all alon' &ade to )elieve that he ,as in a Goint venture ,ith the&. He alle'ed he ,ould have )een )etter off re&ainin' as an independent a'ent or representative of "acfor-5!A as A.6 6ar7etin' Corp.13 Had he 7no,n that no Goint venture e/isted, he ,ould not have allo,ed "acfor to ta7e the profita)le )usiness of his o,n co&pany, A.6 6ar7etin' Corp.1- "etitioner raised other issues, such as the rentals of office furniture, salary of the e&ployees, co&pany car, as ,ell as co&&issions alle'edly due hi&. .he issues ,ere not resolved, hence, in Octo)er 2000, petitioner ,rote "acfor-5!A de&andin' pay&ent of unpaid co&&issions and office furniture and e@uip&ent rentals, a&ountin' to &ore than one &illion dollars.19 On #ove&)er 2$, 2000, private respondent "acfor, throu'h counsel, ordered petitioner to turn over to it all papers, docu&ents, files, records, and other &aterials in his or A.6 6ar7etin' Corporation0s possession that "a'e I 1

)elon' to "acfor or "acfor "hils.1> On Dece&)er 1%, 2000, private respondent "acfor also re@uired petitioner to re&it &ore than three hundred thousand-peso Christ&as 'ivea,ay fund for clients of "acfor "hils. 1$ (astly, private respondent "acfor ,ithdre, all its offers of settle&ent and ordered petitioner to transfer title and turn over to it possession of the service car.1% "rivate respondent "acfor li7e,ise sent letters to its clients in the "hilippines, advisin' the& not to deal ,ith "acfor "hils. 3n its letter to 3ntercontinental "aper 3ndustries, 3nc., dated #ove&)er 21, 2000, private respondent "acfor stated1 5ntil further notice, please course all in@uiries and co&&unications for "acific 2orest Resources *"hilippines+ to1 "acific 2orest Resources 200 .a&al "la4a, !uite 200 Corte 6adera, CA, 5!A :-:29 *-19+ :2$ 1$00 phone *-19+ 3%1 -39% fa/ "lease do not send any co&&unication to 6r. Arsenio 8Coy8 .. 6endiola or to the offices of A.6 6ar7etin' Corporation at Roo& 90-, Concorde Cuildin', (e'aspi Dilla'e, 6a7ati City, "hilippines.1: 3n another letter addressed to Davao Corru'ated Carton Corp. *DADCOR+, dated Dece&)er 2000, private respondent directed said client 8to please co&&unicate directly ,ith us on any further @uestions associated ,ith these pay&ents or any future )usiness. Do not co&&unicate ,ith <"acfor= and?or <A.6=.820 "etitioner construed these directives as a severance of the 8unre'istered partnership8 )et,een hi& and "acfor, and the ter&ination of his e&ploy&ent as resident &ana'er of "acfor "hils.21 3n a &e&orandu& to the e&ployees of "acfor "hils., dated January 2:, 2001, he stated1 3 received a letter fro& "acific 2orest Resources, 3nc. de&andin' the turnover of all records to the& effective Dece&)er 1:, 2000. .he co&pany records ,ere turned over only on January 2>, 2001. .his &eans our Go)s ,ith "acific 2orest ,ere ter&inated effective Dece&)er 1:, 2000. 3 a& concerned a)out your ,elfare. 3 ,ould li7e to help you )y offerin' you to ,or7 ,ith A.6 6ar7etin' Corporation. "lease let &e 7no, if you are interested.22 On the )asis of the 8!ide A'ree&ent,8 petitioner insisted that he and "acfor e@ually o,n "acfor "hils. .hus, it follo,s that he and "acfor li7e,ise o,n, on a 90?90 )asis, "acfor "hils.0 office furniture and e@uip&ent and the service car. He also reiterated his de&and for unpaid co&&issions, and proposed to offset these ,ith the re&ainin' Christ&as 'ivea,ay fund in his possession.23 2urther&ore, he did not rene, the lease contract ,ith "ulp and "aper, 3nc., the lessor of the office pre&ises of "acfor "hils., ,herein he ,as the si'natory to the lease a'ree&ent.2On 2e)ruary 2, 2001, private respondent "acfor placed petitioner on preventive suspension and ordered hi& to sho, cause ,hy no disciplinary action should )e ta7en a'ainst hi&. "rivate respondent "acfor char'ed petitioner ,ith ,illful diso)edience and serious &isconduct for his refusal to turn over the service car and the Christ&as 'ivea,ay fund ,hich he applied to his alle'ed unpaid co&&issions. "rivate respondent also alle'ed loss of confidence and 'ross ne'lect of duty on the part of petitioner for alle'edly allo,in' another corporation o,ned )y petitioner0s relatives, Hi'h ;nd "roducts, 3nc. *H;"3+, to use the sa&e telephone and facsi&ile nu&)ers of "acfor, to possi)ly steal and divert the sales and )usiness of private respondent for H;"30s principal, 3nternational 2orest "roducts, a co&petitor of private respondent.29 "etitioner denied the char'es. He reiterated that he considered the i&port of "acfor "resident Fillia& leason0s letters as a 8cessation of his position and of the e/istence of "acfor "hils.8 He li7e,ise infor&ed private respondent "acfor that A.6 6ar7etin' Corp. no, occupies "acfor "hils.0 office pre&ises,2> and de&anded pay&ent of his separation pay.2$ On 2e)ruary 19, 2001, petitioner filed his co&plaint for ille'al dis&issal, recovery of separation pay, and pay&ent of attorney0s fees ,ith the #(RC. 2% 3n the &eanti&e, private respondent "acfor lod'ed fresh char'es a'ainst petitioner. 3n a &e&orandu& dated 6arch 9, 2001, private respondent directed petitioner to e/plain ,hy he should not )e disciplined for serious &isconduct and conflict of interest. "rivate respondent char'ed petitioner ane, ,ith serious &isconduct for the latter0s alle'ed act of fraud and &isrepresentation in authori4in' the release of an additional peso salary for "a'e I 2

hi&self, )esides the dollar salary a'reed upon )y the parties. "rivate respondent also accused petitioner of disloyalty and representation of conflictin' interests for havin' continued usin' the "acfor "hils.0 office for operations of H;"3. 3n addition, petitioner alle'edly solicited )usiness for H;"3 fro& a co&petitor co&pany of private respondent "acfor.2: (a)or Ar)iter 2elipe "ati ruled in favor of petitioner, findin' there ,as constructive dis&issal. Cy directin' petitioner to turn over all office records and &aterials, re'ardless of ,hether he &ay have retained copies, private respondent "acfor virtually deprived petitioner of his Go) )y the 'radual di&inution of his authority as resident &ana'er. "etitioner0s position as resident &ana'er ,hose duty, a&on' others, ,as to &aintain the security of its )usiness transactions and co&&unications ,as rendered &eanin'less. .he dispositive portion of the decision of the (a)or Ar)iter reads1 FH;R;2OR;, pre&ises considered, Gud'&ent is here)y rendered orderin' herein respondents Cell&ar7 AC and "acific 2orest Resources, 3nc., Gointly and severally to co&pensate co&plainant Arsenio .. 6endiola separation pay e@uivalent to at least one &onth for every year of service, ,hichever is hi'her (sic), as reinstate&ent is no lon'er feasi)le )y reason of the strained relations of the parties e@uivalent to five *9+ &onths in the a&ount of B32,000.00 plus the su& of "290,000.00J pay co&plainant the su& of "900,000.00 as &oral and e/e&plary da&a'es and ten percent *10E+ of the a&ounts a,arded as and for attorney0s fees. All other clai&s are dis&issed for lac7 of )asis. !O ORD;R;D.30 "rivate respondent "acfor appealed to the #(RC ,hich ruled in its favor. On Dece&)er 20, 2001, the #(RC set aside the July 30, 2001 decision of the la)or ar)iter, for lac7 of Gurisdiction and lac7 of &erit.31 3t held there ,as no e&ployer-e&ployee relationship )et,een the parties. Cased on the t,o a'ree&ents )et,een the parties, it concluded that petitioner is not an e&ployee of private respondent "acfor, )ut a full co-o,ner *90?90 e@uity+. .he #(RC denied petitioner0s 6otion for Reconsideration.32 "etitioner ,as not successful on his appeal to the Court of Appeals. .he appellate court upheld the rulin' of the #(RC. "etitioner0s 6otion for Reconsideration33 of the decision of the Court of Appeals ,as denied. Hence, this appeal.3"etitioner assi'ns the follo,in' errors1 A. .he Respondent Court of Appeals co&&itted reversi)le error and a)used its discretion in renderin' Gud'&ent a'ainst petitioner since Gurisdiction has )een ac@uired over the su)Gect &atter of the case as there e/ists e&ployer-e&ployee relationship )et,een the parties. C. .he Respondent Court of Appeals co&&itted reversi)le error and a)used its discretion in rulin' that Gurisdiction over the su)Gect &atter cannot )e ,aived and &ay )e alle'ed even for the first ti&e on appeal or considered )y the court &otu prop<r=io.39 .he first issue is ,hether an e&ployer-e&ployee relationship e/ists )et,een petitioner and private respondent "acfor. "etitioner ar'ues that he is an industrial partner of the partnership he for&ed ,ith private respondent "acfor, and also an e&ployee of the partnership. "etitioner insists that an industrial partner &ay at the sa&e ti&e )e an e&ployee of the partnership, provided there is such an a'ree&ent, ,hich, in this case, is the 8!ide A'ree&ent8 and the 8Revised Operatin' and "rofit !harin' A'ree&ent.8 .he Court of Appeals denied the appeal of petitioner, holdin' that 8the le'al )asis of the co&plaint is not e&ploy&ent )ut perhaps partnership, co-o,nership, or independent contractorship.8 Hence, the (a)or Code cannot apply. Fe hold that petitioner is an e&ployee of private respondent "acfor and that no partnership or co-o,nership e/ists )et,een the parties.

"a'e I 3

3% .ithdre. 2irst. it .a'esJ *c+ the po. as e&ployer. private respondent "acfor.hen private respondent "acfor sent letters to its clients in the "hilippines.his .000. havin' )een the one to propose to private respondent "acfor the settin' up of a representative office.s that . particularly 3ntercontinental "aper 3ndustries.er. as private respondent "acfor0s resident a'ent in the "hilippines.his essential ele&ent.ith various offenses. the parties in this case.3n a partnership. a representative of "acfor.-1 .his ri'ht of control . #e/t.-3 3n the instant case.-2 #o such authori4ation has )een proved in the case at )ar. 3n its letter to DADCOR. or Goint interest in partnership property is a)sent in the relations )et.hich selected and en'a'ed the services of petitioner as its resident a'ent in the "hilippines.er of control over the &eans and &ethod of petitioner in acco&plishin' his . all the fore'oin' ele&ents are present. .as private respondent "acfor . the co&&unity of interest.ould i&properly allo. !econd. "etitioner is not a part-o.he ele&ents to deter&ine the e/istence of an e&ploy&ent relationship are1 *a+ the selection and en'a'e&ent of the e&ployeeJ *)+ the pay&ent of . "etitioner.ever.3n the case at )ar. .ould certainly &a7e the .or7. private respondent "acfor has the po.he evidence sho. and . . .3$ 3n fact. corporate property to )eco&e su)Gect to ris7s not conte&plated )y the stoc7holders .or7.ay fund intended for clients of "acfor "hils.000 per annu& . . a corporation cannot )eco&e a &e&)er of a partnership in the a)sence of e/press authori4ation )y statute or charter.hen it . and it is not the actual e/ercise of the ri'ht )y interferin' . Ce that as it &ay. 2irst. .hile char'in' hi& .hy no disciplinary action should )e ta7en a'ainst hi&. *2+ that such an arran'e&ent .J . is si&ply a 8theoretical co&pany8 for the purpose of dividin' the inco&e 90-90. it is not one of partnership.in' considerations1 *1+ that the &utual a'ency )et.ould not @uit ho.ner of specific partnership property.-0 Cesides. . .hich constitutes the test of the e/istence of an e&ployer-e&ployee relationship.as constructively dis&issed fro& e&ploy&ent. )ut the ri'ht to control. an e&ployer-e&ployee relationship is present in the case at )ar.een petitioner and private respondent "acfor.anted. 3f the relation does not have this feature.e hold that on the )asis of the evidence.hen it ordered petitioner to re&it the Christ&as 'ivea. and orderin' hi& to sho.er to control the e&ployee0s conduct.-.hich each party has a proprietary interest.as no lon'er .or7 to )e done.hus.or7. . private respondent "acfor directed petitioner to turn over to it all records of "acfor "hils.as e/ercised )y private respondent "acfor durin' the period of #ove&)er to Dece&)er 2000. serious &isconduct. a co&&on fund. . clearly possesses such ri'ht of control.hen they ori'inally invested in the corporation.as later increased to B$%.ith the policy of the la.3: . private respondent "acfor pays petitioner his salary a&ountin' to B>9.ould )e inconsistent . e/actly so.illful diso)edience. He stressed that petitioner 7ne. the #e. . . all its offers of settle&ent and ordered petitioner to transfer title and turn over to it the possession of the service car.ners of . includin' .er of control refers &erely to the e/istence of the po. 3t .as also durin' this period .hen it directed petitioner to turn over to it all records of "acfor "hils.er of dis&issal. in . placin' the latter on preventive suspension ..hen petitioner insisted on his 90E e@uity in "acfor "hils. private respondent "acfor )e'an to syste&atically deprive petitioner of his duties and )enefits to &a7e hi& feel that his presence in the co&pany . . not only as to the result of the . . only an a'ent of the corporation.he &ost i&portant ele&ent is the e&ployer0s control of the e&ployee0s conduct. of this arran'e&ent fro& the very start.nership of. Civil Code re'ards a partner as a co-o.ho transacts )usiness. and not to the actual e/ercise thereof.his doctrine is )ased on the follo. is. and for&ulated a revised pay&ent pro'ra& for DADCOR. .hen he said that "acfor "hils.ach partner possesses a Goint interest in the .ould )e )ound )y the acts of persons . 3nc. &erely shared profits.hird. Fillia& leason.his alone does not &a7e a partnership. and 'ross ne'lect of duty.he property or stoc7 of the partnership for&s a co&&unity of 'oods. cause .ho are not its duly appointed and authori4ed a'ents and officers.he po.ner of "acfor "hils. or co-o.hich . and DADCOR.n affairs separately and e/clusivelyJ and. private respondent "acfor holds the po. )ut also as to the &eans and &ethods to acco&plish it.ith petitioner and?or "acfor "hils.here)y the corporation . private respondent "acfor0s "resident esta)lished this fact . as stipulated in their !ide A'ree&ent. . (astly and &ost i&portant.e shall deter&ine if petitioner .J and.ith the . the &e&)ers )eco&e co-o. that the corporation shall &ana'e its o. as &ay )e 'leaned throu'h the various &e&oranda it issued a'ainst petitioner. .or7 of petitioner "a'e I - .he principal consideration is . private respondent "acfor replied to the client0s re@uest for an invoice pay&ent e/tension.3> .er of dis&issalJ and *d+ the e&ployer0s po.hat is contri)uted to the fir& capital and of all property that &ay )e ac@uired there)y and throu'h the efforts of the &e&)ers.his is one un&ista7a)le proof that private respondent "acfor e/ercises control over the petitioner. .hether the e&ployer has the ri'ht to control the &anner of doin' the . .hole of partnership property. and 8not a )ranch office8 in the "hilippines to save on ta/es.een the partners. and accepts service on its )ehalf. advisin' the& not to deal .

. MR.as placed under the Operation (and . Fe re&ind private respondent "acfor that the e/ercise of &ana'e&ent prero'ative is not a)solute. et al. its issuance of the fore'oin' directives a'ainst petitioner .ner of a parcel of a'ricultural land covered )y . MARIANO DA)ID.#0&. resident a'ent for "acfor "hils. -$093 issued )y the Re'istry of Deeds of An'eles City.s and oppress e&ployees. SUARE5.000.+ #o.0$ 2y 3. 8Don "epe Henson .ere underta7en .C.u-. MARCIAL DA6RIT.he Court of Appeals0 January 30. unreasona)le.he e/ercise of &ana'e&ent prero'ative cannot )e utili4ed as an i&ple&ent to circu&vent our la.here is an act of clear discri&ination.hey . 6ariano David. is the re'istered o.ith petitioner and?or "acfor "hils. 2001 Decision of the (a)or Ar)iter isREINSTATED . Pangilinan<1= . 1/.enant . ARISTIDES R.hen petitioner sou'ht clarification fro& the private respondent a)out his supposed 90E e@uity on "acfor "hils. and DADCOR.9 hectares.ner. enco&passin' as it could )e. vs. 2003 Resolution. "#$ MEL7UIADES DE GU5MAN.as a valid e/ercise of &ana'e&ent prero'ative. containin' an area of &ore or less 1: hectares.ith the principles of fair play at heart and Gustice in &ind.arded separation pay.ransfer Certificate of . &01&0-0#.ever.he harassin' acts of the private respondent are unGustified. is )ein' tilled )y petitioner0s tenantsL respondents 6ariano David. JUAN PANGILINAN. and located at Caran'ay "a&pan'. DECISION CARPIO MORALES. affir&in' the Dece&)er 20.herein herein respondents .. An'eles City.-9 Althou'h there is no reduction of the salary of petitioner.ransfer "ro'ra& of the Depart&ent of A'rarian Refor& *DAR+ pursuant to ".R.3#. in lieu of reinstate&ent.-% As resident a'ent of private respondent corporation. Juan "an'ilinan. 2003 Decision in CA.&ancipation Decree. 3n the li'ht of the strained relations )et. 6arcial Dayrit and 6el@uiades de u4&an.ay fund intended for clients of "acfor "hils.itle *. IN )IE* *!EREOF.-> . !" #o.R. 2001 Decision of the #ational (a)or Relations Co&&ission.ere held to )e entitled to security of tenure as tenants. the . G. private respondent "acfor ordered petitioner to re&it the Christ&as 'ivea. 3nc. 8Cy its very nature. the portion tilled )y respondents . at the very least. "rivate respondent "acfor invo7es its ri'hts as an o. particularly 3ntercontinental "aper 3ndustries. 1+0+96 Au. !" #o. -$$>%.very difficult. "a'e I 9 . . . Durin' the pendency of that case. the petition is GRANTED.ith due re'ard to the ri'hts of la)or K verily. private respondent "acfor appointed a ne. (astly.ransfer in favor of respondents.00 representin' an alle'ed increase in petitioner0s salary shall )e deducted fro& the 'rant of separation pay for lac7 of evidence. petitioner occupied a position involvin' trust and confidence. appeals fro& the decision of the Court of Appeals in CA. if not i&possi)le. .een the parties.. constructive dis&issal is still present )ecause continued e&ploy&ent of petitioner is rendered. a partnership.nterprise v. are ANNULED and SET ASIDE. Alle'edly. A portion of the land. the full restoration of an e&ploy&ent relationship )ased on trust and confidence is no lon'er possi)le.R.-$ . . petitioners.as settled )y this Court in Don Pepe Henson Enterprises v.he July 30. . not to deal . No. J.8 . 2$.4P"&.nterprise. insensi)ility or disdain )y the e&ployer that continued e&ploy&ent &ay )eco&e so un)eara)le on the part of the e&ployee so as to foreclose any choice on his part e/cept to resi'n fro& such e&ploy&ent. respondent.8 "etitioner.hen it ordered petitioner to transfer title and turn over to it the possession of the service car.( "etitioner Don "epe Henson .een the parties . He should )e a. SO ORDERED.ith the MODIFICATION that the a&ount of "290. ho.hat a landlord-tenant relationship e/ists )et. 200+ DON PEPE !ENSON ENTERPRISE. represented )y its &ana'in' partner Aristides R. &ana'e&ent prero'ative &ust )e e/ercised in 'ood faith and . $102% and July 30.ith an a''re'ate area of 9. #o. resultin' in the issuance of Certificates of (and .M"#".. !uare4.D. . 3t also advised its clients in the "hilippines. !econd.

and the issuance of . 2$.er . 3n its co&plaint. it citin' the decision in Don Pepe Henson<3= and the principle of conclusiveness of Gud'&ent.2OR.2OR. each of . thus dra. %1> only conte&plates deliberate non-pay&ent.ho& is entitled to the retention li&it of $ hectaresJ that the issuance of Certificates of (and . 6onths after the pro&ul'ation of this Court0s decision in Don Pepe Henson<2=. as follo. it alle'in' that the land is devoted to su'arcane production and is.-2AR6. a&on' other thin's. 2inally. O3# .arded to respondents. petitioner co&plained a)out respondents not payin' rentals nor sharin' their harvest.itle . 1:%% a co&plaint. that .R.ransfer and . 2$ and the Certificates of (and . clai&ed. 2$ as it is not o.D..ell as its valuation of the land.#.ell as its clai& that the valuation of the land . "a&pan'a.! .ere conse@uently issued in respondents0 na&e. (. petitioner raised four causes of action. #o. #o. petitioner clai&ed for da&a'es. On their failure to pay rentals. petitioner challen'ed the covera'e of its land under ".D..as or'ani4ed ..ransfer Certificates of . it havin' refused to reco'ni4e the& as tenants.! !HA(( "AM .hile the )ul7 of petitioner0s land is devoted to su'arcane. #o.ever.ith e&ployees of the DAR.3.R!?A R3C5(. Gud'&ent is here)y rendered in favor of the plaintiff and a'ainst the defendants.HO(D R.#A(. 3# D3. #o.H.D.ransfer.ays )een devoted to palay and ve'eta)les. it alle'in' that the said co&&ittee .ned )y the partnership )ut )y each of the partners in co&&on.HA.!!. respondents denied the sa&e. up to and until they finally vacate the su)Gect landholdin'sJ 9+ Orderin' the defendants to pay to plaintiff the a&ount of "3. 2or its first cause of action. they cannot )e divested of their far&holdin'. respondents clai&ed that they actually offered to pay the& to petitioner .H. As for petitioner0s alle'ation that it . did not. #o. thus forfeitin' their Certificates of (and .# .as fraudulently &ade.#A#. the dispositive portion of . for its fourth cause of action.. 2OR.00 as attorney0s fees.as later a&ended. )y Decision of 21 2e)ruary 1::2.000.H. for 8Declaration of #ullity.as &ade throu'h collusion . .ransfer pursuant to ".&ancipation "atents are null and void. therefore. "a'e I > .A!.5RA( (. their far&holdin' is covered )y ".D.M 2A(( D5. prior notice thereof to petitioner not havin' )een 'iven.ithout notice to petitioner and the co&&ittee0s valuation of the land . . A#D "ROD3D3# ".H. Respondents thus concluded that since ". 8"ROD3D3# .&ancipation "atents and . ho. 2or its second cause of action.A(! FH. #o. %1> and Da&a'es8 a'ainst respondents )efore the Depart&ent of A'rarian Refor& AdGudication Coard *DARAC+ Re'ional Office 333 in !an 2ernando. outside the covera'e of said la.hich reads1 8FH. petitioner filed on !epte&)er 30.hich . 2$ )ecause it has al.as not infor&ed of the for&ation of the Caran'ay Co&&ittee on (and "roduction as .D.D. Diolation of ". #o.D.ith Counterclai&. . the survey )y the Cureau of (ands of the portion of the land a. %1>. .F O2 A(( .8 As its third cause of action. accept the sa&e.in' the& to consi'n the rentals in court.R.he correspondin' .he "rovincial AdGudicator.hich applies only to 8private a'ricultural lands pri&arily devoted to rice and cornJ8 that the land is e/e&pt fro& ".s1 1+ Declarin' the covera'e of defendants0 landholdin's under ". petitioner @uestioned the for&ation of the Caran'ay Co&&ittee on (and "roduction as . in their Ans.&ancipation "atents issued to the& as null and voidJ 2+ Declarin' the defendants to have forfeited their respective ri'hts over the su)Gect landholdin'sJ 3+ Orderin' the defendants to vacate peacefully their respective landholdin's and surrender possessionthereof to plaintiffJ -+ Orderin' defendants to pay plaintiff 1.cavans per hectare?per annu& as lease rentals for a'ricultural years 1:%% to 1::1 N every year thereafter.hich. rendered Gud'&ent in favor of petitioner. Respondents.

.D.C(AR3# .in' issues1 3 FH.3O# A6O5#.C.! D3D #O.3O# A6O5#.8 *5nderscorin' supplied+ A''rieved.!.! AR.H.((A#. sustainin' the findin' that the far&holdin' of respondents .as le'ally and effectively ter&inated i&&ediately on 21 Octo)er 1:$2 *not.HA. DO.R A! 3..H.he DARAC. the leasehold syste& .6. 9... D3O(A.! A#D C. HO#ORAC(..D CM .R ".C3!3O# O2 . R.R OR #O.ithin the covera'e of Operation (and .CO #3O. #O. #o.H.. 2OR6.HA# .HA. D. R.3O# A6O5#.! O2 .H.as 8provisionally &aintained8+.H.H.! . FA! "RO".ere dee&ed o. O2 .HA.ner.D 3. D.R OR #O..HA. . .as 8provisionally &aintained8 )ut the 8lease rentals8 paid )y the tenants-far&ers prior to such full pay&ent )y the (and Can7 to the old lando. ADJ5D3CA. 2$. CA!3! 3# (AF A#D 3# 2AC.3A( D.s to respondents .3O# 3# D.R. R. i.ner )y the (and Can7 of the "hilippines. the tenants-far&ers )eca&e o. A#M J5!.#.8#o pronounce&ent as to costs.3O# COARD HA! 3#D.ransfer.6A#C3"A.! D3!CR.H.#A#.25!. ho. A((M COD. HO#ORAC(. "etitioner thus appealed to the Court of Appeals on the follo.2OR6 "RO RA6 O2 .C.ners thereof upon the effectivity of ".D ".#.ransfer. #O.D AC5!. HO#ORAC(.#DA#.8 #onetheless.. O2 .! D3O(A. .9 H. %1> #O...hich they raised the follo. .3O# COARD RAD.H.A( "AM6.AR AD63!!3O# O2 D.. 2$. .#. .D 5#D. )y Decision of Octo)er 2-.#.O (ACA O2 J5R3!D3C. held.. .ransfer.ould )e credited no lon'er as rentals )ut rather as 8a&orti4ation pay&ents8 of the price of the land.. and .OR F3.6"(OM.322-A"".! #O.O (ACA O2 J5R3!D3C. "(A3#. the Court of Appeals..A3# . . 333 FH. .F3.H. A! 3. . "R. D.((. it citin' Locsin v.H. . D. (A#DHO(D3# O2 D.O R.H. (A#D !5CJ.H. .R.D 3.AR.H.ithstandin' the curious state&ent in Depart&ent Circular #o.e. / / / 8<9= "a'e I $ . !".# D.3O# 3# R.R.323AC(.((A#.R!3# . 1:::.! D3!CR.!. "ROC.#DA#.H!.#.A#D3# . .3# . the appellate court also held that there is no proof that the far&holdin' has )een paid for )y respondents .! OF# CO#C(5!3O# A! 3.2OR6 R.D.#DA#.&ancipation "atents.R. "R.C.D 3.C(AR3# . CM A""(M3# 3. COD.!"O#D. "endin' full pay&ent of the cost of the land to the old lando.!!J 2+ .! D3!CR.!3D. .as vitiated due to the violation of petitioner0s ri'ht to due process.#3A( O2 D5. 2$ on 21 Octo)er 1:$2.!-A"".H.H.H. OD. %1>. &any years.R ".R .D. #o.H. 6OR. ADJ5D3CA. the appellate court held that respondents cannot )e eGected )ecause they ..3O# "A.. O2 A RAR3A# R.D.C.!-A"". . &uch they paid and for ho.s that in respect of land su)Gected to Operation (and .(M AC5!."AR. CA!.H.O (ACA O2 J5R3!D3C.R(M A#D (.. "ROD3#C3A( ADJ5D3CA. R. (A#D R.3O# COARD RAD.ever.H. ADJ5D3CA. C(.ho 8do no<t= even see& to 7no.((A#.!.H.#. FA! CO((5!3O# C.as covered )y ".H.3D. respondents appealed to the DARAC )efore .#C.HA. 2AC.#. Cy Decision of June 2:. % that it .#. Valenzuela<-= .DJ A#D 3+ ..D.in' 'rounds1 1+ .C323CA((M 5#D.h3ch held1 8/ / / 3t follo. the leasehold syste& .2.CR.H.! CA!3! RA.R#6. 21 Octo)er 1:$2.R OR #O. 2$. ho.!"3.H..D. 1::$. 3!!5A#C. #O.3O# 3# D.2.F.. that the issuance of the Certificates of (and .(M AC5!. 2$ 33 FH.ners of the land they tilled as of the effective date of "residential Decree #o. 3n respect of lands )rou'ht . .!-A"".2.D .3# .D3D. the un-a&orti4ed portion )ein' paya)le )y the (and Can7. reversed the decision of the "rovincial AdGudicator and dis&issed the co&plaint of petitioner. !i'nificantly.HO5.HA.3# .

R. this ti&e ensurin' that due process .! D3!CR.R ". . O2 A""."AR.CORD.addressed to the !ecretary of A'rarian Refor& directs as follo.C.3DA.#. (A#D !5CJ.!"O#D.D.H.9 hectare portion thereof K the far&holdin' of respondents K is devoted to palay.! D3!CR.(M AC5!. 3.A(! RAD.8 )e deleted. !uffice it to state that petitioner.. that the far&holdin' a. #o.H.!"3. this Court holds that .ned )y the partnership )ut )y at least t.as thus le'ally disposed to respondents under the Operation (and . #o. *5nderscorin' supplied+ "etitioner prays for the &odification of the challen'ed decision such that the i&position of a @ualification on the annul&ent of the Certificates of (and . hence. .D .3# .D.3O# FH. #O.he petition itself @uotes approvin'ly the Decision of the "rovincial AdGudicator that 85ndisputed is the fact that the 9.ho o. petitioner0s present petition for revie.H.hus the appellate court disposed1 8FH.A 3! O5.ransfer Certificates of . D.D 3.J5D3C.ner of the land. the appellate court annulled respondents0 Certificates of (and .3# .HA.ransfer "ro'ra&. D.3O# A6O5#. "R. O2 .H.!"3.D.ed is here)y rendered *sic+ A##5((3# the .ithout preGudice to <respondents0= applyin' for the issuance of ne.HA. D. !till.ithstandin'.J. . O# R. "etitioner0s position does not lie..s 1 81.ransfer.C.3# . and .H. . O2 A"".D. .H.P3!.! D. the 9. Mou shall underta7e to place under the (and . . A#D 3.H.AR "RO#O5#C. in so positin'.C.9 hectare far&holdin' of the land . should )e entertained as a 'eneral rule. %1> A#D . 2$.arded to respondents is e/e&pt fro& the covera'e of ". fails.6.ransfer "ro'ra& of the 'overn&ent pursuant to "residential Decree #o.! 2RO6 ".D 3.O .&ancipation "atents and . the far&holdin' is e/e&pt fro& ". O2 A RAR3A# R.D 5#D.HA.3O# A6O5#.H. 3! C(.hich they derive ade@uate inco&e to support the&selves and their fa&ilies. O2 .25!. instead of orderin' the eGect&ent of respondents. co&&ercial. . (AF A! 2O5#D CM .#C. 1::2J 2+ . K that it is 8.. it havin' "a'e I % . all tenanted rice?corn lands . 2AC.3O#. And since each of these partners is entitled to the $-hectare retention li&it. R.n other a'ricultural lands of &ore than seven hectares in a''re'ate areas or lands used for residential.itle issued to the respondents and to 6el@uiades and Adriano de u4&an. Fith re'ard to the first 'round to .s )ut 'ave the& the opportunity to apply ane. CO5R. 2$.HO5.9 hectares is devoted to plantin' of palay .H.#.AR(M A "AR. in .O (ACA O2 J5R3!D3C. (AF A#D . #o.ould )e o)served. after o)servance of due process of la. under Rule -9 anchored to the follo. 3! COD. R. #O.3O# O2 !5 ARCA#.. to their applyin' for the issuance of ne.hich only @uestions of la.&ancipation "atents.R0! (A#D. especially since this is a petition for revie. industrial or other ur)an purposes fro& .H. . .DO.ransfer.RA . HO#ORAC(.H.O A""(M ". .D . the Decision of the DARAC herein revie.OR O2 .s. .<%= ..his Court sees no reason to alter this findin'. and that respondents )e ordered eGected.ith areas of seven hectares or less )elon'in' to lando. <$=.O (ACA O2 J5R3!D3C. O2 A (A#DHO(D3# "R36AR3(M D. .(M AC5!.not.he 9..enty-three *23+ partners in co&&on.D.C. petitioner concludes that the a''re'ate area of 1: hectares is e/e&pt fro& said la. A partnership has a Guridical personality separate fro& the individual partners.. CO5R. 2$ in li'ht of its si4e. C5(.hile the rest of the nineteen *1:+ hectares are devoted to su'arcane production.he appellate court has found as a fact that petitioner is the re'istered o. petitioner still has 13.8<>= *5nderscorin' supplied+ "etitioner0s atte&pt to sho.D3D. CA!. (etter of 3nstruction *(O3+ #o. petitioner posits that the directive of (O3 -$.3.! AR. for the issuance of such docu&ents.2OR.. -$.H.in' 'rounds1 1+ . HO#ORAC(.9 hectares of far&land.3O# 3# A223R63# .2OR6 3# 3.Hence. 2$. "ROD3#3C3A( ADJ5D3CA.R. F3.9 hectares.ners .!3D.# 3. . 2$ as the 1:-hectare land is not o...hich the present petition is anchored. COD.CR5ARM 21. such far&holdin' is covered )y ". after o)servance of due process of la. patents and certificates to the&.&ancipation "atents and .hile it is undisputed that the )ul7 of the 1:-hectare land of petitioner is devoted to su'arcane production.D 2.9-hectare far&holdin' is deducted fro& the 1:-hectare property of petitioner.A(! RAD..6.8 Hence.C3!3O# DA.#.8 *5nderscorin' and e&phasis supplied+ 3f the 9. C(.HA. contradicts itself. Fhile the far&holdin' contains only 9.H. O2 . patents and certificates to the&.

it can )e assu&ed that no pay&ent has )een &ade and that such failure to pay .hat section of ". 3n fact. of this Court0s findin' that the land is covered )y ".ho shall continue not to pay his lease rentals or a&orti4ation pay&ents .3O# 2.&ancipation "atents and . #o. patents and certificates. . !ection 3.8 On this score. ".here )ein' then a deli)erate and?or continuin' refusal to pay a&orti4ation pay&ents. upon hearin' and final Gud'&ent. . "etitioner does not state specifically .ith !ection 3 of ". As to the second 'round of the petition.&ancipation "atents. 2$. 1:$2.ned )y a sin'le entity.A. if his far&holdin' is already covered )y such Certificate of (and .D.as either deli)erate or continuin'.is ruled out.D.hich reads1 8!. #o.his leaves for consideration the re&ainin' @uestion of . .ould )e incon'ruous to apply !ection 2 of ".hose landholdin' is not yet covered )y a Certificate of (and .<11= Fhile the appellate court did not state .=here is no proof that the petitioner has )een paid for its land. and R. &uch they paid and for ho. )e annulled. therefore.hich . 3t should )e noted. #o.o *2+ years to the lando. 3n the present case. this Court held that tenant-far&ers covered )y ".ner of a parcel of land / / / covered )y . petitioner filed the co&plaint )efore the DARAC Re'ional Office 333 as far )ac7 as !epte&)er 30. held1 .D. #o. #o. in respondents0 case.D. as reflected a)ove.D.stated in its present petition that it is 8the a)solute o. petitioner see7s the eGect&ent of respondents fro& the far&holdin' on the )asis of t. %1>. no docu&entary evidence havin' )een presented in support thereof.C. %1> it is invo7in'.ransfer Certificate of . ". #o.herefore. . 3n vie.D.as deli)erate and?or continuous.hich they violated.8<:= . and neither is this Court. there appears to )e no reason to distur) it. the applica)ility of !ection 3> of R.ransfer under "residential Decree #o.D.ransfer and .ever. ho. in its challen'ed decision. 2$ .C.ere dee&ed o. -$093. #o. #o.C.ners of their far&holdin'. !ince this particular rulin' is not )ein' challen'ed )y any party. . 2$ and <their= far&holdin'.D. lose his ri'ht to )e issued a Certificate of (and .ransfer8.ere vitiated due to the violation of petitioner0s ri'ht to due process. Fhat should apply instead is !ection 3 of the sa&e la. #o. .A.ever. Respondents have asserted thou'h that they have )een payin' throu'h consi'nation )y depositin' rentals in court.ere dee&ed o. <. ho.s issued to respondents .s )ein' void then.ners of the land they tilled as of Octo)er 21.ransfer. !ection 3><10= if it is not.ransfer under ". &any years.D.itle #o. %1> if the land is covered )y ".he appellate court .hen they fall due for a period of t.ner?a'ricultural lessor shall.he Court of Appeals.hich reads1 8!. #o. 3%--. 2$ . their 8o.&phasis and underscorin' supplied+ . and . .o *2+ years shall. its decision is not in accordance .as not convinced.hether the failure to pay . respondents0 eGect&ent is proper.ever. .as su)Gect to the provision of ". forfeit the Certificate of (and . it .he Certificates of (and . "a'e I : . 3t is 'athered fro& the conte/t of the petition.D.as priorly @uoted.nership8 . ho. .hile they li7e.hodeli)erately refuses and?or continues to refuse to pay the rentals or a&orti4ation pay&ents . the Court of Appeals ruled that the Certificates of (and . %1>.ransfer issued in his favor. of the veracity of such clai&.ed respondents to apply for ne.C. %1>.hat any a'ricultural lessee of a rice or corn land under "residential Decree #o. that it is referrin' to !ection 2 thereof . and should.hat any a'ricultural lessee . they are still insistin' that they are depositin' 0rentals0 in court.he land )ein' then o. Fhile in Locsin<12= the pertinent portion of .s that &ay alternatively )e applied.ransfer "ro'ra& pursuant to (O3 -$-. a partnership.hen they fall due for a period of t. it is a&on' those covered )y the Operation (and . that !ection 2 thereof covers only those far&holdin's 8already covered )y such Certificate of (and . #o proof of pay&ent havin' )een proffered and 'iven after the lapse of a considera)le len'th of ti&e fro& the filin' of the co&plaint. . upon proper hearin' and Gud'&ent. or )oth. 2$ and his far&holdin'J8 *. .3O# 3.hich operates to deprive respondents of their 8ri'ht to )e issued Certificate<s= of (and . %1> applies.D. . 2$. .o la. .he respondents do no *sic+ even see& to 7no.ransfer. 3%-. 1:%%. the date of effectivity of the said decree.ransfer and his far&holdin'J8 *5nderscorin' supplied+ . %1> . ho. in so far as that the appellate court allo.ise .hether respondents should )e eGected for alle'ed violation of ".

Exceptions. althou'h the o)li'ation to pay the rental due that particular crop is not there)y e/tin'uishedJ / / / G. Jacinto . C!UA.#o. patents and certificates. Accountin'.9 . !un'a *hereafter Jacinto+.a'es and other re&uneration fro& the )usiness.hen it falls due1 Provided.ransfer.ithstandin' any a'ree&ent as to the period or future surrender of the land.ith the Re'ional .R *hereafter !hellite+.*!EREFORE. a sister of the .ith Jacinto in the distri)ution of !hellane (i@uefied "etroleu& as *(" + in 6anila.00 to Jacinto .hat if the nonpay&ent of the rental shall )e due to crop failure to the e/tent of seventy-five per centu! as a result of a fortuitous event.000.H "R. 1::2. 15. . As co&pensation. the nonpay&ent shall not )e a 'round for dispossession. and . "a'e I 10 . Foo. . . petitioners. #ot. C.3>.s1 On June 22. SO ORDERED. respondent ho.. Respondent clai&ed that he could attest to success of their )usiness )ecause of the volu&e of orders and deliveries of filled !hellane cylinder tan7s supplied )y "ilipinas !hell "etroleu& Corporation.rial Court. !indan'an. an a'ricultural lessee shall continue in the enGoy&ent and possession of his landholdin' e/cept . fro& the ti&e that !hellite opened for )usiness on July %. 2000 in the case entitled 8(a&)erto . 1+33+0 Au.000.ere understated and undervalued )y Jacinto and Josephine for their o.((3.itle coverin' their far&holdin' is F3. Chua *hereafter respondent+ filed a co&plaint a'ainst (ili)eth !un'a Chan *hereafter petitioner (ili)eth+ and Cecilia !un'a *hereafter petitioner Cecilia+. Respondent alle'edly delivered his initial capital contri)ution of "100.n that1 /// *>+ .010 !.&ancipation "atents.u-.he partnership alle'edly had Jacinto as &ana'er.00 as his counterpart contri)ution. !H.ould )e e@ually divided )et. the challen'ed decision of the Court of Appeals is here)y AFFIRMED 83.J5D3C.orth of !hellite fro& 1:$$ to 1:%:.ife. 2001 LILI ET! SUNGA4C!AN "#$ CECILIA SUNGA. A! A""(3A#C. .( Cefore us is a petition for revie. under the na&e of Jacinto as a sole proprietorship.ife respondent.n selfish reasons and for ta/ avoidance. dau'hter and .ith the &erchandise inventories.ith Frit of "reli&inary Attach&ent8 . Oa&)oan'a del #orte. (a&)erto .. No.as profita)le. and they are ordered to peacefully vacate their far&holdin'.ould receive 10E of the net profits. Fhile Jacinto furnished respondent ..ransfer Certificates of . 2000 denyin' the &otion for reconsideration of herein petitioners (ili)eth !un'a and Cecilia !un'a *hereafter collectively referred to as petitioners+.he pertinent facts of this case are as follo. 1:$$.ould receive a &ana'er0s fee or re&uneration of 10E of the 'ross profit and Josephine . Respondent alle'ed that in 1:$$. LAM ERTO T. (ili)eth !un'a Chan and Cecilia !un'a8 and of the Resolution dated 6ay 23.C. Chua vs.rlinda !y.ith the intention that the profits . respectively of the deceased Jacinto (.ever suspected that the a&ount indicated in these docu&ents . he ver)ally entered into a partnership .een the&. its )usiness operation . to their applyin' for ne. Appraisal and Recovery of !hares and Da&a'es . Cranch 11.ent @uite and . Possession of Landholding. respondent. GON5AGA4RE6ES. in addition to her .hen his dispossession has )een authori4ed )y the Court in a Gud'&ent that is final and e/ecutory if after due hearin' it is sho. Alle'edly. .. assisted )y Josephine !y *hereafter Josephine+. 2or )usiness convenience.90 MODIFICATIONthat the annul&ent of respondents0 Certificates of (and .R. respondent and Jacinto alle'edly a'reed to re'ister the )usiness na&e of their partnership. . J.hile the latter in turn produced "100. vs. for 8Findin' 5p of "artnership Affairs. )alance sheets and net . on certiorari under Rule -9 of the Rules of Court of the Decision1 of the Court of Appeals dated January 31.he a'ricultural lessee does not pay the lease rental .#.

petitioners failed to co&ply. too7 over the operations. the trial denied the second &otion to dis&iss for lac7 of &erit.ife. she dis)ursed out of the partnership funds the a&ount of "200. On January 30. control. !un'a. On Au'ust 2.as co&&itted )y the appellate court. petitioner Cecilia and particularly his dau'hter. 1::>. the trial court 'ranted the &otion to suspend pre-trial conference.C.000. not the Re'ional .C )ein' the a'ency that has ori'inal and e/clusive Gurisdiction over the case. interests. On !epte&)er 29.s1 *1+ D3R. Despite respondent0s repeated de&ands upon petitioners for accountin'. petitioners filed a 6otion to Dis&iss on the 'round that the !ecurities and .ho& they continued the )usiness operations includin' all )usinesses derived fro& !hellite as "a'e I 11 . On 6arch 31. that a reversi)le error .00 represented partial pay&ent of the latter0s share in the partnership. that respondent does not have a cause of action a'ainst the&..indin' up of partnership affairs.he dispositive of the Decision reads1 8FH.ith a pro&ise that the for&er . On January 1>. Respondent presented his evidence .indin' up and restitution of his net shares in the partnership. unreceived inco&e?profits. the !. Despite such co&&it&ent.ith their duty to account. On January 12. On Au'ust 1>. and that the trial court has no Gurisdiction over the nature of the action. 8as petitioners failed to sho. accountin' and recovery of shares in partnership affairs.indin' up of the properties of the )usiness esta)lish&ent.. contendin' that they are not lia)le for partnership shares. "etitioner (ili)eth alle'edly infor&ed respondent that the "200. As counterclai&. accountin' and recovery of shares in partnership assets?properties should )e dis&issed and prosecuted a'ainst the estate of deceased Jacinto in a pro)ate or intestate proceedin'. da&a'es and attorney0s fees.R. the trial court ter&inated the pre-trial conference and set the hearin' of the case of January 1$.aived their ri'ht to present evidence for their failure to attend the scheduled date for reception of evidence despite notice. On #ove&)er 2>. 1::9. petitioner sou'ht attorney0s fees and e/penses of liti'ation.ith the trial court a 6otion to !uspend "re-trial Conference. respondent clai&ed that after petitioner (ili)eth ran out the ali)is and reasons to evade respondent0s de&ands. "etitioner (ili)eth alle'edly continued the operations of !hellite. . as follo. 1::9. and continued to )enefit fro& the assets and inco&e of !hellite to the da&a'e and preGudice of respondent.n use and advanta'e its properties. petitioners filed their Ans./chan'e Co&&ission *!.82 On 2e)ruary 20. 1::3. on certiorari filed )y petitioner. petitioner filed a second 6otion to Dis&iss this ti&e on the 'round that the clai& for . On Dece&)er 13.ithout respondent0s consent. 1::3. this Court denied the petition for revie. 1::9. the Court of Appeals denied the petition for lac7 of &erit.ith the Court of Appeals doc7eted as CA. 1::3.000. disposition and &ana'e&ent of !hellite . 1::9.3# the& to render an accountin' in accepta)le for& under accountin' procedures and standards of the properties. custody. !" #o.ould &a7e the co&plete inventory and . Respondent opposed the &otion to dis&iss. 1::3. 1::1.C+ in 6anila.as re&anded to the trial court on April 2>. 1::3.er . petitioner (ili)eth. . On Octo)er $. the trial court findin' the co&plaint sufficient in fro& and su)stance denied the &otion to dis&iss. appraisal. Gud'&ent is here)y rendered in favor of the plaintiff and a'ainst the defendants.ere considered to have . On #ove&)er 2:. 1::2. assets.5pon Jacinto0s death in the later part of 1:%:. fro& . "rohi)ition and 6anda&us .rial Court in Oa&)oan'a del #orte had Gurisdiction over the action.2OR. 1::3. On Dece&)er 1:. 1::-.00 and partially paid the sa&e to respondent. On #ove&)er 19. inventory. 1::3.as &ade )y the Cler7 of Court and the case . petitioners filed their "etition for Certiorari. petitioners alle'edly failed to co&ply . entry of Gud'&ent .R. petitioners filed . his survivin' . inco&e and profits of the !hellite as Appliance Center !ince the ti&e of death of Jacinto (.ith Co&pulsory Counter-clai&s. 32-:: @uestionin' the denial of the &otion to dis&iss. . the trial court rendered its Decision rulin' for respondent.hile petitioners . convertin' to her o. 1::$.

ill *sic+ in schedules A. petitioners filed a #otice of Appeal .he Court of Appeals erred in &a7in' a le'al conclusion that there e/isted a partnership )et. the findin' of hi'hly e/a''erated a&ounts or values in the partnership assets and profits. Josephine. A and C on pa'es --9 of this petition as )asisJ *3+ D3R. . !O ORD.n use and advanta'e the le'ally pertain to the plaintiff and account for the properties &entioned in pars.000.00 as &oral and e/e&plary da&a'esJ and. 3.D. appealin' the case to the Court of Appeals.D in all respects.R.00 as attorney0s *sic+ and "29.ere proscri)es fro& hearin' the testi&onies of respondent and his . C and C. !un'a upon the latter00 invitation and offer and that upon his death the partnership assets and )usiness .R. . assets. 2000.89 "etitioners @uestion the correctness of the findin' of the trial court and the Court of Appeals that a partnership e/isted )et. to prove the alle'ed "a'e I 12 . assets and 'ood .ith the trial court. . *$+ D3R. Chua and the late Jacinto (. on pa'es --9 of the petitionJ *-+ ORD. Hence. #O special pronounce&ents as to CO!.C..een respondent (a&)erto .R3# the& to pay the plaintiff earned )ut unreceived inco&e and profits fro& the partnership fro& 1:%% to 6ay 30.2OR. such partnership )et.arrant the findin' of a partnership. . 2. assets. the Court of Appeals denied the &otion for reconsideration filed )y petitioner.he Court of Appeals erred in &a7in' the le'al conclusion that laches and?or prescription did not apply in the instant case. and appraisal of all these properties. 2000. or the value thereof in &oney or &oney0s .R3# the& to return and restitute to the partnership any and all properties.3# the& to rei&)urse and pay the su& of "29.een respondent and Jacinto fro& 1:$$ until Jacinto0s death.83 On Octo)er 2%. this petition .Appliance Center. inco&e and profits they &isapplied and converted to their o. and assu&in' arguendo that indeed there .ritten docu&ent to sho. if the properties are not physically divisi)leJ *>+ 23#D3# the& especially (ili)eth !un'a-Chan 'uilty of )reach of trust and in )ad faith and hold the& lia)le to the plaintiff the su& of "90.een respondent and Jacinto.C.herein petitioner relies upon follo. .in' 'rounds1 81. 1::$.he dispositive portion of the Decision reads1 8FH.orth.!. inco&e. su)&it an inventory.3# the& to restitute and pay to the plaintiff Q shares and interest of the plaintiff in the partnership of the listed properties. profits etc. . participation and e@uity in the partnership.hen the plaintiff learned of the closure of the store the su& of "39.000. to the Court and to plaintiff for approval or disapprovalJ *2+ ORD.000. shares. 1::2.ind up the affairs of the partnership and ter&inate its )usiness activities pursuant to la. 3n the a)sence of any . the instant appeal is dis&issed. after deliverin' to the plaintiff all the Q interest..8On 6ay 23.he appealed decision is A223R6.as co&petent and credi)le evidence to .as a partnership.he Court of Appeals erred in &a7in' the le'al conclusion that there ..00 as liti'ation e/penses.000. petitioners ar'ues that these courts .R3# the& to .ere ta7en over )y petitioners.00 per &onth. .ith le'al rate of interest until fully paidJ *9+ ORD. the Court of Appeals dis&issed the appeal. On January 31.itness.

Rule 130 of the Rules of Court that provides1 8SEC.: Cut )efore this rule can )e successfully invo7ed to )ar the introduction of testi&onial evidence.hether or not the 8Dead 6an0s !tatute8 applies to this case so as to render inad&issi)le respondent0s testi&ony and that of his . . or other &ental disa)ilities. Josephine. His testi&ony refers to any &atter of fact of .hen it is the e/ecutor or ad&inistrator or representatives of the estates that sets up the counterclai&. respondent is not dis@ualified fro& testifyin' as to &atters of facts occurrin' )efore the death of the deceased..er )efore the trial court. insanity.o support this ar'u&ent.hich case a pu)lic instru&ent shall necessary.he su)Gect-&atter of the action is a clai& or de&and a'ainst the estate of such deceased person or a'ainst person of unsound &indJ -. respondent resorted to the introduction of docu&entary and testi&onial evidence to prove said partnership. the latter )ein' the party plaintiff. &ay testify to occurrences )efore the death of the deceased to defeat the counterclai&. .13 6oreover.ith the filin' of their counterclai&. said action not havin' )een )rou'ht a'ainst )ut )y the estate or representatives of the deceased. or persons in .itness is a party or assi'nor of a party to case or persons in . and not the assi'nor of a ri'ht assi'ned )efore any cause of action has arisen. herein respondent.$ .hich occurred )efore the death of such deceased person or )efore such person )eca&e of unsound &ind. petitioners invo7e the 8Dead 6an0s !tatute0 or 8!urvivorship Rule8 under !ection 23.here i&&ova)le property of real ri'hts are contri)uted thereto. .810 .he 8Dead 6an0s !tatute8 provides that if one party to the alle'ed transaction is precluded fro& testifyin' )y death. cannot testify as to any &atter of fact occurrin' )efore the death of such deceased person or )efore such person )eca&e of unsound &ind. that respondent offered the testi&ony of Josephine to esta)lish the e/istence of the partnership )et.he essential profits that &ust )e proven to that a partnership .een respondent and Jacinto.as a'reed upon are *1+ &utual contri)ution to a co&&on stoc7. a ver)al contract of partnership &ay arise. 23. . should not have )een ad&itted to prove certain clai&s a'ainst a deceased person *Jacinto+. and .% 5nderstanda)ly so. as 'athered fro& the facts and ascertained fro& their lan'ua'e and conduct. petitioners the&selves effectively re&oved this case fro& the a&)it of the 8Dead 6an0s !tatute8.partnership three years after Jacinto0s death.12 Fell entrenched is the rule that . as defendant in the counterclai&.itness of respondent. 2irst. Fe are not persuaded.he action is a'ainst an e/ecutor or ad&inistrator or other representative of a deceased person or a person of unsound &indJ 3. "etitioners0 insistence that Josephine is the alter e'o of respondent does not &a7e her an assi'nor )ecause the ter& 8assi'nor8 of a party &eans 8assi'nor of a cause of action . or a'ainst such person of unsound &ind.ritten contract of partnership )et.1!econd.hose )ehalf a case is prosecuted. it is necessary that1 81. the testi&ony of Josephine is not covered )y the 8Dead 6an0s !tatute8 for the si&ple reason that she is not 8a party or assi'nor of a party to a case or persons in . petitioners filed a co&pulsory counterclai&11 a'ainst respondents in their ans. or a'ainst a person of unsound &ind. . no. )ased on the intention of the parties. the plaintiff. upon a clai& or de&and a'ainst the estate of such deceased person.819 "lainly then. e/cept . K "arties or assi'nors of parties to a case. Dis"ualification b# reason of death or insanit# of adverse part#. of the a)sence of the . . Josephine is &erely a . represented )y petitioners. 2. "a'e I 13 . a'ainst an e/ecutor or ad&inistrator or other representative of a deceased person. and *2+ a Goint interest in the profits.he .o reasons forestall the application of the 8Dead 6an0s !tatute8 to this case. in . in vie.he crucial issue to settle then is to .8 Records sho.hose )ehalf a case in prosecuted.> Hence.8 "etitioners thus i&plore this Court to rule that the testi&onies of respondent and his alter e'o.hich has arisen.itness. the survivin' party is not entitled to the undue advanta'e of 'ivin' his o.hose )ehalf a case is prosecuted. A partnership &ay )e constituted in any for&. Josephine.n uncontradicted and une/plained account of the transaction.een respondent and Jacinto.

. Respondents..een respondent and Jacinto..ithin the prescri)ed period. .C+ since re'istration is &andated )y the Civil Code.he Civil Code23 e/pressly provides that upon dissolution. in this case.ife of respondent does not di&inish the value of her testi&ony since relationship per se.000. Cy the .indin' up of its )usiness.ould not have testified. 2005 OSCAR ANGELES "#$ EMERITA ANGELES. Fe fail to see ho. the partnership continues and its le'al personality is retained until the co&plete .ere not re@uested to do so she .2OR. .hen petitioners failed to o)Gect to the ad&issi)ility of the evidence at the ti&e that such evidence . 1+2612. of the fore'oin'. cul&inatin' in its ter&ination. .as forced to )e a . #ota)ly.ithout &ore. No.ell .he Civil Code provides that an action to enforce an oral contract prescri)es in si/ *>+ years20 . petitioners &aintain that said partnership that had initial capital of "200. petitioners did not present any evidence in their favor durin' trial./chan'e Co&&ission *!. the petition is D. . .as Jacinto0s death that respondent as the survivin' partner had the ri'ht to an account of his interest as a'ainst petitioners.ay cate'orically say that she .as esta)lished )et. SECRETAR6 OF JUSTICE "#$ FELINO MERCADO.ith the !ecurities and . "a'e I 1- . a factual &atter li7e the findin' of the e/istence of a partnership )et.R. July 29. FH.1> "etitioners0 reliance alone on the 8Dead 6an0s !tatute8 to defeat respondent0s clai& cannot prevail over the factual findin's of the trial court and the Court of Appeals that a partnership ..as offered. Article 1$$2 of the Civil Code re@uires that partnerships . this re'istration re@uire&ent is not &andatory.he failure to re'ister the contract of partnership does not invalidate the sa&e as a&on' the partners. of the contents of their contract.D.00 or &ore &ust re'ister .D and the appealed decision is A223R6. the fact that Josephine is the sister of the .1% 3t &ust )e also pointed out that petitioners failed to attend the presentation of evidence of respondent.1: Fith re'ard to petitioners0 insistence that laches and?or prescription should have e/tin'uished respondent0s clai&. in the a)sence of any contrary a'ree&ent.23n a desperate )id to cast dou)t on the validity of the oral partnership )et. in vie. Cased not only on the testi&onial evidence.Fe are not convinced )y petitioners0 alle'ation that Josephine0s testi&ony lac7s pro)ative value )ecause she .D. "etitioners cannot no. .C.ith the trial court and the Court of Appeals that the action for accountin' filed )y respondents three *3+ years after Jacinto0s death .R.een respondent and Jacinto cannot )e in@uired into )y this Court on revie.21 Considerin' that the death of a partner results in the dissolution of the partnership22.1$ .hen she did not in any .rue.00 should have )een re'istered .$%&phi$.as re@uested )y respondent to testify and that if she .2> 3n the case at )ar. Josephine &erely declared in court that she .000. ho. it .n't G.hile Jacinto0s death dissolved the partnership. does not affect the credi)ility of . Article 1$>% of the Civil Code29 e/plicitly provides that the partnership retains its Guridical personality even if it fails to re'ister. vs. assess and . "etitioners.ell. .as .ere correct in accordin' superior credit to this or that piece of evidence of one party or the other. turn to this Court to @uestion the ad&issi)ility and authenticity of the docu&entary evidence of respondent . Also. !O ORD.ill not invalidate the partnership considerin' that the totality of the evidence proves that respondent and Jacinto indeed for'ed the partnership in @uestion.itness of respondent. to testify in his favor.hile the ri'ht to de&and an accountin' for a partner0s interest as a'ainst the person continuin' the )usiness accrues at the date of dissolution.ith the !. so lon' as the contract has the essential re@uisites. the trial court and the Court of Appeals considered the evidence for respondent as sufficient to prove the for&ation of partnership.ei'ht of Gudicial precedents. )ecause the &ain purpose of re'istration is to 'ive notice to third parties.ith this directory provision of the la.een respondent and Jacinto. nonco&pliance .ever. 3t )ears stressin' that .ith a capital of "3. the dissolution did not i&&ediately ter&inate the partnership.ei'h the& to ascertain if the trial court and the appellate court . and it can )e assu&ed that the &e&)ers the&selves 7ne.his Court can no lon'er )e tas7ed to 'o over the proofs presented )y the parties and analy4e.#3. her )rother-in-la.e can conclude fro& this candid ad&ission that Josephine0s testi&ony is involuntary .itnesses.as alle'edly coerced coerced )y respondent.R. al)eit an infor&al one.e a'ree . T!E !ON. )ut the docu&entary evidence as .

)ein' &arried to . sa &a'<-= asa.(3#O 6. read1 /// #a alan'-alan' sa hala'an' DA(AFA# DAA# A.hich he used to )uy &ore lan4ones trees. J.RCADO ay na'7asundo na silan' &a'<-=asa.he Case .(3#O 6. (a'una *8"rovincial "rosecution Office8+.hich he entered into in )ehalf of the An'eles spouses.ant to )e identified as the financiers. 2. (a'una and o.$ .een hi& and his spouse as industrial partners and the An'eles spouses as the financiers.ith other people under the na&e of 6ercado )ecause the An'eles spouses did not . lala.a nila . 199. A. 6ercado denied the An'eles spousesR alle'ations. 7ahalili at i)an' dapat pa'li.3 . )ayan n' #a'carlan. #a a7o at an' &a'<-=asa. # . 2. si'ned )y Juana !ua4o alone.(3#O 6. A. ay a7in' ipina')ili. &'a nasa huston' 'ulan'. # . salapin' 'astahin.!. collo@uially 7no. 3n their affidavits. 6ercado used his and his spouseRs earnin's as part of the capital in the )usiness transactions .% 3n his counter-affidavit.ith "210. A. .(3#O 6.DECISION CARPIO. # .ee7ends.(3#O 6.atan n' 7anilan' 7arapatan.RCADO ay na'7asundo na a7o ay )i)i'yan nila n' (36A *9+ na <sic= 7ain' na lan4ones taon-taon sa loo) n' (36A *9+ na <sic= taon n' a&in' 7asunduan' ito. #a a7o at an' &a'<-=asa.a nila . A. the An'eles spouses as7ed for an accountin' fro& 6ercado. As the years passed. :>-:3: dated 2% 2e)ruary 1::$ rendered )y the "rovincial "rosecution Office of the Depart&ent of Justice in !anta Cru4.as their practice to enter into )usiness transactions .000+. 6ercado 'ave no accountin' for 1::9. # . sa a7in ay &a'&a&ana. "a'e I 19 .he "rovincial "rosecution Office resolved to dis&iss the co&plaint for estafa filed )y petitioners Oscar and . #o.n as sanglaang(perde. A.= sa 7anila ay &a'&a&ana. an' pa&o&osision at pa7i7ina)an' sa lahat na puno n' lan4ones sa na)an''it na FA(O# *%+ (a'ay na (upan' Cocal-(an4onal ay &anunu&)ali7 sa a7in.he An'eles spouses clai& that only after this de&and for an accountin' did they discover that 6ercado had put the contract of sanglaang( perde over the su)Gect land under 6ercado and his spouseRs na&es. sa ta7dan' (36A *9+ #A <sic= .as to last for five years . Antecedent 2acts On 1: #ove&)er 1::>.a nila . hindi 7asa&a an' i)an' hala&an na napapaloo)an nito. .a nila .atan n' a7in' 7arapatan na a7o ay . 6aravilla.his is a petition for certiorari1 to annul the letter-resolution2 dated 1 2e)ruary 2000 of the !ecretary of Justice in Resolution #o.210 in 1::3. sa na)an''it na &a'<-= asa. 2.ith fruit-)earin' lan4ones trees located in #a'carlan.he contract of antichresis . 7ayaRt pa'7atapos n' lansonesan sa taon' 1::$.000 as consideration. 2. na a7in' tinan''ap sa &a'<-=asa. of the An'eles spouses. inili.ee7days and 'o to (a'una only on .&erita An'eles *8An'eles spouses8+ a'ainst respondent 2elino 6ercado *86ercado8+.a nila .at at isinalin sa naulit na hala'a. 6ercado convinced the& to enter into a contract of antichresis.RCADO an' &a'papaalis n' dapo sa puno n' lansones taon-taon <sic= sa loo) n' (36A *9+ <sic= taonn' <sic= a&in' 7asunduan' ito. the An'eles spouses clai&ed that in #ove&)er 1::2.a nila . )et. A. the An'eles spouses filed a cri&inal co&plaint for estafa under Article 319 of the Revised "enal Code a'ainst 6ercado )efore the "rovincial "rosecution Office.in 3. the parties a'reed that 6ercado . 6ercado e/plained that the su)Gect land earned "->.i'an n' (a'una. at &a'tatapos sa taon' 1::$. an' lahat na i)u)un'a n' lahat na puno n' lan4ones. 6ercado clai&ed that there e/ists an industrial partnership. As the An'eles spouses stay in 6anila durin' . tu&itira at &ay pahatiran' sulat sa C'y. 6ercado also reported that the trees )ore no fruit in 1::-.ould ad&inister the lands and co&plete the necessary paper.&erita An'elesR sister (aura.RCADO<. # . 2.or7.> After three years.RCADO.ned )y Juana !ua4o. 6ercado is the )rother-in-la.n as sos#o industrial. !A6"5# (3CO# "3!O *"210. coverin' ei'ht parcels of land *8su)Gect land8+ planted .RCADO.9 collo@uially 7no. &a'papasi&ula sa taon' 1::3. . 7ahalili at i)an' dapat pa'li. )efore the contract of antichresis over the su)Gect land. .( . n' na)an''it na FA(O# *%+ (a'ay na (upan' Cocal-(an4onal. 2. .he !ecretary of Justice affir&ed the resolution. 2ilipino.(3#O 6.alan' i)a)ali7 na ano pa &an' hala'a.AO#.he relevant portions of the contract of sanglaang(perde.his industrial partnership had e/isted since 1::1. 3t . # .

ant to )e revealed as the financiers.he docu&ent alone. failed to convince us that there .he An'eles spouses filed a &otion for reconsideration.in' the records of the case. instead of the An'eles spouses.ere indeed for their account.hich the "rovincial "rosecution Office denied in a resolution dated .een the <An'eles spouses= and <6ercado= durin' the hearin' of their )aran'ay conciliation case reveals that the <An'eles spouses= ac7no.he accusation of 8estafa8 here lac7s enou'h credi)le evidentiary support to sustain a pri&a facie findin'. "re&ises considered. 6ercado &oved for its reconsideration.he An'eles spouses alle'e that this docu&ent alone proves 6ercadoRs &isappropriation of their "210. on 2> 2e)ruary 1::$.ould readily part .hile the profit . 3ndeed.he partnership .!".ould )e divided evenly )et. never disputed that the deposits &ade )y <6ercado= .he transcript of notes on the dialo'ue )et. .25((M !5C63.ith their &oney.10 .he su)Gect of the co&plaint hin'es on a partnership 'one sour.hus1 Revie. that <6ercado= .e are of the opinion that the indict&ent of <6ercado= for the cri&e of estafa cannot )e sustained. . . ho.ise.6ercado attached )an7 receipts sho.ithout holdin' on to so&e docu&ent to evidence the receipt of &oney.ith their &oney . . <6ercado= satisfactorily e/plained that the <An'eles spouses= do not .000. they. Durin' the )aran'ay conciliation proceedin's.Au'ust 1::$.hich <6ercado= conducted the )usiness and handled and distri)uted the funds.hile. . "a'e I 1> .hese deposits represented their share in the profits of their )usiness venture.ith the orchard o.een the <An'eles spouses= and <6ercado=. . it is respectfully reco&&ended that the co&plaint for estafa )e dis&issed.&erita An'eles and contracts under his na&e for the An'eles spouses. sufficient proof that <6ercado= deli)erately deceived the& in the 8san'laan' perde8 transaction. <.. . 5nder the circu&stances.as initially unsaddled <. . Hence. 6ana'e&ent )eca&e the source of &isunderstandin' includin' the accountin' of profits. .as not raised in issued <sic= )y <the An'eles spouses=. ho.D. .as a)le to &a7e deposits for the account of the <An'eles spouses=. 3n addition.C.he "rovincial "rosecution Office stated thus1 .as issued .as only .een 6ercado and the An'eles spouses. .in' deposits in )ehalf of .: . On receivin' the 3 January 1::$ resolution.as revealed that the contract ..ithout 6ercadoRs counteraffidavit. .rittensos#o industrial a'ree&ent1 capital . the "rovincial "rosecution Office issued a resolution reco&&endin' the filin' of cri&inal infor&ation for estafa a'ainst 6ercado. it is difficult to )elieve that the <An'eles spouses= . .ith <6ercado= althou'h they assailed the &anner )y . .ever.he Rulin' of the !ecretary of Justice On appeal to the !ecretary of Justice. 6ercado filed his counter-affidavit on 2 January 1::$.ever.as not really in their na&es. . .as a .as in the na&e of <6ercado and his spouse=. 6ean.e are inclined to )elieve that <the An'eles spouses= 7ne. Oscar An'eles stated that there . the "rovincial "rosecution Office issued an a&ended resolution dis&issin' the An'eles spousesR co&plaint for estafa a'ainst 6ercado.as e/ecuted in the na&e of the 6ercado spouses.he Rulin' of the "rovincial "rosecution Office On 3 January 1::$. fro& the very start that the @uestioned docu&ent .ith= pro)le&s.hich led to further &isunderstandin' until it .ithout the na&es of the co&plainants.his resolution. the An'eles spouses e&phasi4ed that the docu&ent evidencin' the contract of sanglaang(perde . R. .ould co&e fro& the An'eles spouses . Records . .as deceit or false representation on the part of <6ercado= that induced the <An'eles spouses= to part .he !ecretary of Justice found other. Althou'h the <An'eles spouses= deny the e/istence of a partnership. .hich .e are convinced that a partnership truly e/isted )et.ould sho. . .ith the na&e of the respondent. or at least to inspect the docu&ent involved in the said transaction.he for&ation of a partnership .ner .as clear fro& the fact that they contri)uted &oney to a co&&on fund and divided the profits a&on' the&selves.he veracity of this transcript .led'ed their Goint )usiness ventures .ith Juana !ua4o .he An'eles spouses= failed to sho. 6ercado also attached the &inutes of the )aran'ay conciliation proceedin's held on $ !epte&)er 1::>.

.J *2+ pu)lic interest is involvedJ *3+ there is ur'encyJ *-+ a @uestion of Gurisdiction is s@uarely raised )efore and decided )y the lo.. $ "hil. and 6ercado failed to do so and also failed to deliver the proceeds to the An'eles spousesJ -.D.here i&&ova)le property or real ri'hts are contri)uted thereto. the co-partnerRs lia)ility is civil in nature *"eople v.he An'eles spouses fail to convince us that the !ecretary of Justice co&&itted 'rave a)use of discretion .he a)use of discretion &ust )e so patent and 'ross as to a&ount to an evasion of positive duty.hen the sa&e is perfor&ed in a capricious or . 1$$1.hi&sical e/ercise of Gud'&ent a&ountin' to lac7 of Gurisdiction. the appeal is here)y D3!63!!.er is e/ercised in an ar)itrary and despotic &anner )ecause of passion or personal hostility. this petition. A previous &otion for reconsideration )efore the filin' of a petition for certiorari is necessary unless1 *1+ the issue raised is one purely of la. A partnership &ay )e constituted in any for&. . Fhether a partnership e/isted )et.hich case a pu)lic instru&ent shall )e necessary. the An'eles spouses co&&itted an error in procedure . 3n fact. Fhether the !ecretary of Justice co&&itted 'rave a)use of discretion a&ountin' to lac7 of Gurisdiction in dis&issin' the appeal of the An'eles spousesJ 2. 3ssues . 6oreover. or to a virtual refusal to perfor& a duty enGoined )y la.hether there .o!!itted -rave .Althou'h the le'al for&alities for the for&ation of a partnership .as a partnership. .hen they failed to file a &otion for reconsideration of the !ecretary of JusticeRs resolution.in' issues1 1. Conse@uently. 90-+ FH.11 Hence. 1$$2.2OR.12 . )hether a Partnership Existed /et&een 0ercado and the . )hether the *ecretar# of +ustice .very contract of partnership havin' a capital of three thousand pesos or &ore.he Rulin' of the Court . the partnership relationship of the <An'eles spouses= and <6ercado= is evident in this case.ngeles *pouses . that their case falls under any of the e/ceptions.een the An'eles spouses and 6ercado even .ithout any docu&entary proof to sustain its e/istenceJ 3. e/cept . . "a'e I 1$ . this present petition for certiorari is dis&issi)le for this reason alone. Art. 3n case of &isapplication or conversion of the &oney received.R.he petition has no &erit. . . Fhether the !ecretary of Justice should order the filin' of the infor&ation for estafa a'ainst 6ercado.ere not adhered to..here the po.he An'eles spouses as7 us to consider the follo.he An'eles spouses rely on Articles 1$$1 to 1$$3 of the Civil Code.hich &ust )e recorded in the Office of the !ecurities and .here &oney is delivered )y a partner to his co-partner on the latterRs representation that the a&ount shall )e applied to the )usiness of their partnership.13 . Assu&in' that there .he An'eles spouses alle'e that they had no partnership ./chan'e Co&&ission.buse of Discretion An act of a court or tri)unal &ay constitute grave abuse of discretion .hich state that1 Art. shall appear in a pu)lic instru&ent. 1.as &isappropriation )y 6ercado of the proceeds of the lan4ones after the An'eles spouses de&anded an accountin' fro& hi& of the inco&e at the office of the )aran'ay authorities on $ !epte&)er 1::>. there is no estafa . in &oney or property. in ..he An'eles spouses failed to sho. Clarin. as .hen he dis&issed their appeal.er courtJ and *9+ the order is a patent nullity.ith 6ercado.

0&ly E A L INTBL S!IPPING CORP.09 Article 2132 of the Civil Code provides1 8Cy the contract of antichresis the creditor ac@uires the ri'ht to receive the fruits of an i&&ova)le of his de)tor.as the practice to have all the contracts of antichresis of their partnership secured in <6ercadoRs= na&e as <the An'eles spouses= are apprehensive that. LUNETA T!EATER. "eopleRs Ar&y or their )usiness deals )e @uestioned )y the Cureau of 3nternal Revenue or .as in the na&e of <6ercado and his spouse=.he docu&ent alone. RO ERT T.D. L3. 2irst. '. . A partnership &ay e/ist even if the partners do not use the .0&ly E.C does not invalidate a contract that has the essential re@uisites of a partnership. <6ercado= satisfactorily e/plained that the <An'eles spouses= do not . 6ANG.een the An'eles spouses and 6ercado. INC.ith the !. E A L REALT6. LITONJUA. EDDIE '. .. INC. MARITIME. INC.orse. (a'una . as /// Oscar An'eles ... !O ORD.1> 2urther&ore. and attached to the pu)lic instru&ent.e hold that the !ecretary of Justice did not a)use his discretion in dis&issin' the appeal of the An'eles spouses. EDDIE '. 2005 AURELIO '.or7in' . LITONJUA SECURITIES..ith the o)li'ation to apply the& to the pay&ent of the interest.C8+ holds no .ith the !ecurities and . #either does such failure to re'ister affect the partnershipRs Guridical personality. . "etitioner.8 3ndeed.hich . if an inventory of said property is not &ade.R. INC.hich decided the civil case for da&a'es.ith their &oney. and division of profits )et.rial Court of !anta Cru4. the An'eles spouses ad&it to facts that prove the e/istence of a partnership1 a contract sho. *!EREFORE. contri)ution of &oney and industry to a co&&on fund.2ailure to co&ply .o#?u" S0:@. A contract of partnership is void. . INC. "a'e I 1% . INC. NOS. DDM GARMENTS.ords 8partner8 or 8partnership. CINEPLE<. JR. G. their assets and une/plained inco&e )e se@uestered. &ere failure to re'ister the contract of partnership . ANGLO P!ILS.ith the 'overn&ent.ven Cranch 2> of the Re'ional .R.ith the re@uire&ents of the precedin' para'raph shall not affect the lia)ility of the partnership and the &e&)ers thereof to third persons.henever i&&ova)le property is contri)uted thereto.... vs. .D.#o.in'..he An'eles spousesR position that there is no partnership )ecause of the lac7 of a pu)lic instru&ent indicatin' the sa&e and a lac7 of re'istration .he present petition for certiorari is D3!63!!. .@.. SR. INC..819 . inGunction and restrainin' order filed )y the An'eles spouses a'ainst 6ercado and (eo Ceray)an. FNP CO.he purpose of re'istration of the contract of partnership is to 'ive notice to third parties. LITONJUA S!IPPING AGENC6. if they co&e out into the open as financiers of said contracts.e A223R6 the decision of the !ecretary of Justice.in' a sos#o industrial or industrial partnership.ant to )e revealed as the financiers.. =>o&. =>o&. Foo.. !OME ENTERPRISES. INC. INC. 1$$3.he !ecretary of Justice ade@uately e/plained the alle'ed &isappropriation )y 6ercado1 8. stated1 /// <3=t . 2ailure to re'ister the contract of partnership does not affect the lia)ility of the partnership and of the partners to third persons. .20& 13. and thereafter to the principal of his credit. si'ned )y the parties. accountin' of the proceeds is not a proper su)Gect for the present case. )hether there &as 0isappropriation b# 0ercado . EDUARDO '. 1662994300 D0:0. failed to convince us that there . Art.ater. !econd./chan'e Co&&ission *8!. LITONJUA. they &i'ht )e 7idnapped )y the #e. LITONJUA S!IPPING CO. if o.as deceit or false representation on the part of <6ercado= that induced the <An'eles spouses= to part . the An'eles spouses contri)uted &oney to the partnership and not i&&ova)le property. .as then . 2or these reasons.

as then a'reed upon )et.duardo entered into a Goint venture?partnership for the continuation of their fa&ily )usiness and co&&on fa&ily funds S.3 doc7eted as Civil Case #o.his Goint venture?<partnership= a'ree&ent . 3n his co&plaint.C+ at "asi' City. LITONJUA S!IPPING CO. ODEON REALT6 CORP.een <Aurelio= and .een the& started . 2002. <Aurelio= has reasona)le cause to )elieve that .1 . =>o&. <Aurelio= . on Dece&)er -. *Aurelio+ and herein respondent .01 On or a)out 22 June 1:$3. ACT T!EATER INC. shippin' and land develop&ent+ and contri)utin' his industry to the continued operation of these )usinesses. >:239 and eventually raffled to Cranch >% of the court. REALT6 CO. INC. *P. .. Aurelio filed a suit a'ainst his )rother . . CLC DE). . .in' factual )ac7drop1 "etitioner Aurelio A. -.hichever is 'reater. INC.duardo that in consideration of <AurelioRs= retainin' his share in the re&ainin' fa&ily )usinesses *&ostly.in' &aterial aver&ents1 3.. 3nc. /// /// /// 9.heater )usiness . 34563 and . Avenue Realty. A)ENUE REALT6. 3nc.Respondents.duardo A.09 Fhat is . (itonGua. )ut .1.duardo+ are )rothers. . Odeon Realty Corporation *operator of Odeon 3 and 33 theatres+.0. under Rule -9 of the Rules of Court. INC. (itonGua..ell as Co))y <Man'=. MACOIL INC. &ovie theaters. INC. he and .as contained in a &e&orandu& addressed )y . E7UIT6 TRADING CO.duardo are into a Goint venture?partnership arran'e&ent in the Odeon . or <in= a span of 2% years. CORP. various real properties of the corporations )elon'in' to the Goint venture?partnership to other parties in fraud of <Aurelio=. =Fo&. (C6 . 200-1 in consolidated cases . LCM T!EATRICAL ENTERPRISES. <Aurelio= and .heater invest&ent.orse..duardo and?or the corporate defendants as . 3n conse@uence.hen. A)ENUE T!EATER. INC. see7s to nullify and set aside the Decision of the Court of Appeals *CA+ dated 6arch 31.@. <Aurelio= is therefore causin' at this "a'e I 1: . Man' is descri)ed in the co&plaint as petitionerRs and . -.. ED:9"#.een <Aurelio= and .. Man' *Man'+ and several corporations for specific perfor&ance and accountin'. .ner of lands and )uildin's.. J.. (itonGua..02 3n addition .he sa&e co&plaint also contained the follo. INC. Jr.0&ly G0#0&"l T90". -. *..0.duardo caused to )e re'istered in the na&es of other partiesS.02 !o&eti&e in 1::2... INC.ere not heeded=.duardo )eca&e sour so that <Aurelio= re@uested for an accountin' and li@uidation of his share in the Goint venture?partnership <)ut these de&ands for co&plete accountin' and li@uidation .heatrical . INC.Aurelio alle'ed that. .nterprises.1. 2o. .: 3n this petition for revie. a&on' other corporations. in the Re'ional . Copy of this &e&orandu& is attached hereto and &ade an inte'ral part asA##0D CAC and the portion referrin' to <Aurelio= su)&ar7ed as A##0D CA418.. /// /// /// 9.he le'al dispute )et.. 3.. since June 1:$3.01.9 .duardo had accu&ulated in their Goint venture?partnership various assets includin' )ut not li&ited to the corporate defendants and <their= respective assets.. DECISION GARCIA.02 3t .hich had e/panded thru invest&ent in Cineple/. /// /// /// -.he su)stantial assets of &ost of the corporate defendants consist of real properties S.. parents and other relatives.01 S fro& 22 June 1:$3 to a)out Au'ust 2001. "#$ L)F P!ILIPPINES.0&ly )F P!ILIPPINES@. Jr. o. GLOED LAND CORP... A list of so&e of these real properties is attached hereto and &ade an inte'ral part as A##0D C 8.he recourse is cast a'ainst the follo.&3:"l A F3l..rial Court *R. !r.duardo and herein respondent Ro)ert .. 200-.ill )e 'iven "1 6illion or 10E e@uity in all these )usinesses and those to )e su)se@uently ac@uired )y the& . are transferrin' .duardo to his si)lin's.. 3D CORP.EAUMONT DE). . 3. the relations )et. INC. petitioner Aurelio A.duardoRs partner in their Odeon . -.. *p.2 denyin' petitionerRs &otion for reconsideration. <Aurelio= and . SARATOGA REALT6. 2o 36337 and its Resolution dated Dece&)er 0$.. the Goint venture?partnership S had also ac@uired <various other assets=.

hat you are entitled to. e/cept for Man'. . if any.duardo. 3 . the sa&e court denied the &otion of .2*)E18 )ut e/pressly reserved the ri'ht to see7 reconsideration of the April 2. . inter alia. on the contention that 'rave a)use of discretion and inGudicious haste attended the issuance of the trial courtRs afore&entioned O&ni)us Orders dated 6arch 9.duardo a'reed to do.er K &oved to dis&iss on the 'round..duardo and the corporate respondents.13.ill as7 you to stay as 3 . et al.000. On January 10. 3 . 3 . he &oved for reconsideration of the O&ni)us Order of April 2. the second. Mou .ffir!ative Defenses. 2003.duardo. 2.!O! *"1.hich you can 7eep.hich 3 repeat. in an O&ni)us Order dated 6arch 9.hole thin' of .he follo.ay 3 .ill arran'e to 'ive you first O#. Man' . On Au'ust 2>.duardo and the corporate defendants.hich 3 have )uilt.ill )e in stoc7s fro& all the corporations . as to hi&.ill 'ive you in for& of stoc7s . for reconsideration12 and Man'Rs &otion to dis&iss. Anne/ "A-1".R.2*)E1)ith . 000.e. On April 1-. denied the affir&ative defenses and. Fhatever is left in the corporation.ill )e the only one left ..o sons are ready ta7e over )ut 'ive the& the chance to run the co&pany .ho .hat 3 have and . Anne/ "A-1" of the co&plaint. SP No. 2003. . Man' .ill also 'ladly 'ive you the share of Fac7-Fac7 Sand Dalley olf S )ecause you have )een 'ood. "a'e I 20 . *. the pattern S. . 2002..ith the co&pany.000. infra.ill )e all alone and 3 .ill &a7e sure that you 'et O#. denyin' his &otion for reconsideration. S.ill need a place to stay.00+ or ten percent *10E+ e@uity. .ent to the Court of Appeals *CA+ in a petition for certiorari under Rule >9 of the Rules of Court. 3 a& tryin' &y )est to &old you the . S. 3 .hichever is 'reater.ith su&&ons lon' after the other defendants su)&itted their ans.ill 'a&)le the .his stoc7 3 assure you is 'ood and salea)le. 3 . )ein' void under the ter&s of Article 1$>$ in relation to Article 1$$3 of the Civil Code.in' then transpired insofar as Man' is concerned1 1.. > On Dece&)er 20.arlier. your o. alle'ed that the co&plaint states no cause of action. &ore particularly that portion thereof depictin' petitioner and .ay. On April 2-. 63((3O# ". since no cause of action &ay )e derived fro& the actiona)le docu&ent. and April 2. the trial court.19 to nullify the separate orders of the trial court.hich petitioner asserts to have )een &eant for hi& )y his )rother . 2003. .D . *AA(+ <Referrin' to petitioner Aurelio A. . petitioner interposed an 9pposition &ith ex(Parte 0otion to *et the .!O!1 *"100.11 3n another O&ni)us Order of April 2. 2003. As affir&ative defenses. 78774.. Artia'a so you can live )etter there.ill not )e ready to help &e yet until a)out &ay)e 19?20 years fro& no. that. 3f ever 3 pass a.o!pulsor# .n life to live after havin' )een &arried. the first denyin' his &otion to dis&iss the )asic co&plaint and. under Anne/ "A1".ase for Pre(trial.as served .ords in )rac7et added.ant you to run it the . 2003.ill )e you and &e alone on this.10 Actin' on the separate &otions i&&ediately adverted to a)ove. 6y sons . Mou 7eep &y share for &y t. apart fro& raisin' a Gurisdictional &atter.or7 so you can follo. petitioner has no cause of action and the co&plaint does not state any. 2003. 2003 O&ni)us Order and to pursue his failed &otion to dis&iss13 to its full resolution. /// /// /// Cecause you . .$ 2or his part.he rest 3 .duardo. pertinently reads1 10+ JR.hatever underta7in' .o this &otion.ay 3 a& tryin' to run it )ecause 3 . 3t is further alle'ed that .ant you to ta7e care of all of this. li7e (t.ti&e the annotation on the titles of these real propertiesS a notice of lis pendens E. 3t . et al. as defendants a "uo8 filed a Goint .o . doc7eted as CA-G. ten percent *10E+ e@uity. H5#DR.: . .ay. 2003. Man' filed his .&phasis in the ori'inalJ underscorin' and . i.. .+ 2or ease of reference.as denied in an Order of July -.00+ in cash or asset.ant you to run this office every ti&e 3 a& a.duardo. a&on' us )rothers and 3 . 2003.duardo as havin' entered into a contract of partnership. 2003. Fe t. . filed a 0otion to 1esolve .ill depend entirely to you *sic+. set the case for pre-trial on April 10. et al. )ut his &otion .HO5!A#D! ". (itonGua=1 Mou have no.ounterclai! denyin' under oath the &aterial alle'ations of the co&plaint.he rest . are unenforcea)le under the provisions of the !tatute of 2rauds.% "etitioner opposed this &otion to dis&iss.

Man' and the corporate defendants a "uo is 8void or legall# inexistent8. Hence.1. of his partnership?Goint venture share.duardo. on the other hand.1> the CARs 1-th Division ordered the consolidation of . 2ore&ost of these are the follo. as defined in the petitory portion of his co&plaint in the trial court..duardo and Man'.o or &ore persons )ound the&selves to contri)ute &oney.hich he depicts in his co&plaint to )e the contract of partnership?Goint venture )et. or definin' the for&al re@uisites.Anne/ 8A-18 . . SP No.1: A partnership e/ists . *P 2o.ith the court a @uo is here)y dismissed. and &ay )e li7ened to.hether or not petitioner and respondent . 76987. Gud'&ent is here)y rendered 'rantin' the issuance of the . "er its resolution dated Octo)er 2. . i.0$ M"&:9 31. as it .ith . *P 2o. findin' for . 200+.ith the herein assailed D0:3-3o# $". sou'ht relief fro& the CA via si&ilar recourse. then. as . shippin' and realty )usiness.een hi&self and . and upon .R. reversin' and settin' aside the assailed orders of the court a @uo dated 6arch 9. C.as to support his pleaded cause of action )y another le'al perspective?ar'u&ent.ith the intention of dividin' the profits a&on' the&selves.2003. inter alia8 that the alle'ed partnership.here t. the appellate court stated.20& /. 3n ti&e. the appellate court ca&e out .1% . or industry to a co&&on fund . Fhen it ruled that petitioner has chan'ed his theory on appeal . et al. la)or. a partnership since their ele&ents are si&ilar.in' provisions of the Civil Code1 Art.&phasis in the ori'inalJ . disposin' as follo. property.= .R. petitionerRs present recourse. on partnership. co&&unity of interests in the )usiness and sharin' of profits and losses.. And the issue )earin' on the first assi'ned error relates to the @uestion of .. Fhen it ruled that there .rit of certiorari in these consolidated cases annullin'.2OR. petitioner see7in'. a Goint venture is 'enerally 'overned )y the la.here i&&ova)le property or real ri'hts are contri)uted thereto.ere contri)uted to the partnership. Fhen it ruled that the co&plaint stated no cause of action a'ainst <respondent= Ro)ert Man'J and D.hich case a pu)lic instru&ent shall )e necessary.he petition lac7s &erit. a loo7 at the le'al provisions deter&inative of the e/istence. 2003. . -. is hardly distin'uisha)le fro&.. Cein' a for& of partnership.3o# o> D0:0.duardo are partners in the theatre. 2003 and the co&plaint filed )y private respondent <no. 2003 and July -. 1$$1.. 2003. is for delivery or pay&ent to hi&.duardoRs and Man'Rs partner. on the contention that the CA erred1 A.he underlyin' issue that necessarily co&es to &ind in this proceedin's is . A partnership &ay )e constituted in any for&. in .heir petition for certiorari .D. 36337 . as lead petitioners therein.as not a pu)lic instru&ent and i&&ova)le properties .duardo.hich the other denies.hat he dee&s to )e partnership?Goint venture property.duardo. of a partnership is indicated. Clearly.o or &ore persons a'ree to place their &oney.een the&. Fhen it ruled that the actiona)le docu&ent did not create a de&anda)le ri'ht in favor of petitioner. herein respondents . petitioner Aurelio= a'ainst all the petitioners <no.as denied )y the CA in its e@ually assailedR0-olu.ere.s1 FH. 200+.1. April 2. -.21 A Goint venture.1$ *. 2ollo.+ . 34563. "etitionerRs de&and. as one clai&s )ut .ful co&&erce or )usiness. !O ORD. and s7ill in la./plainin' its case disposition. C. to enforce the actiona)le docu&ent .as doc7eted as CA G.as no partnership created )y the actiona)le docu&ent )ecause this . after an accountin' has )een duly conducted of . petitioner &oved for reconsideration )ut his &otion .R. "a'e I 21 .hich petitioner solely predicates his ri'ht?s alle'edly violated )y .in' the su)&ission )y the parties of their respective 6e&oranda of Authorities.e.hen t.20 A contract of partnership is defined )y the Civil Code as one .ith the understandin' that there shall )e a proportionate sharin' of the profits and losses )et. as evidenced )y the actiona)le docu&ents. effects.22 . Anne/ "A" and "A-1" attached to the co&plaint.ords in )rac7et added.hen all that "etitioner had done . e/cept .hat le'al provision is applica)le under the pre&ises.

"etitionerRs assertion in his &otion for reconsideration2.C+. 6oreover. his contri)ution as a partner in the alle'ed partnership?Goint venture consisted of i&&ova)le properties and real ri'hts. 1$$2.hich case a pu)lic instru&ent shall )e necessary. prescindin' fro& . &ovie theatres and realty develop&ent fa&ily )usinesses .ere ac@uired after the for&ation of the supposed partnership. Anne/ CA-1C cannot )e presented for notari4ation.hen i&&ova)le property or real ri'hts are contri)uted thereto or . .hich o.rote in its assailed Decision2> a)out the pro)ative value and le'al effect of Anne/ "A-1" co&&ends itself for concurrence1 Considerin' that the alle'ations in the co&plaint sho. there can )e no @ui))lin' that Anne/ 8A-18 does not &eet the pu)lic instru&entation re@uire&ents e/acted under Article 1$$1 of the Civil Code.ritten entries.hich of the partners.ned i&&ova)les even )efore Anne/ "A-1" . the contract-validatin' inventory re@uire&ent under Article 1$$3 of the Civil Code applies as lon' real property or real ri'hts are initially )rou'ht into the partnership.duardo. business= leaves no roo& for speculation as to .ho )et. 2ailure to co&ply . the Court.Art. addressin' the fore'oin' @uery.00. a pu)lic instru&ent and there . the 86e&orandu&8 *Anne/ 8A8 of the co&plaint+ . in . to the supposed partnership. or. contains type. Frote that court1 A further e/a&ination of the alle'ations in the co&plaint . it is really of no &o&ent . else there is le'ally no partnership to spea7 of. in an o)vious )id to evade the application of Article 1$$3. correctly stated that petitionerRs contri)ution consisted of i&&ova)les and real ri'hts. )ut . in this case. . 2or.29 And if only to stress .hich case an inventory of the contri)uted property duly si'ned )y the parties should )e attached to the pu)lic instru&ent.00 in &oney or property. cannot plausi)ly e/tend Anne/ 8A-18 the le'al effects that petitioner so desires and pleads to )e 'iven.000. &as :petitioner<s. personal in tone.ords.hen the partnership has a capital of at least "3.as contri)uted. even if so disposed. shall appear in a pu)lic instru&ent.ould sho. (est it )e overloo7ed. an inventory to )e si'ned )y the parties and attached to the pu)lic instru&ent is alsoindispensa)le to the validity of the partnership . A contract of partnership is void. Anne/ "A-1". Considerin' thus the value and nature of petitionerRs alle'ed contri)ution to the purported partnership.as #O inventory of the i&&ova)le property "a'e I 22 .ned varia)le i&&ova)le properties.ith the appellate courtRs o)servation that.very contract of partnership havin' a capital of three thousand pesos or &ore. petitioner &atter-of-factly concurred . "etitioner.of the CARs decision. petitioner hi&self ad&itted contri)utin' his share in the supposed shippin'.hich &ust )e recorded in the Office of the !ecurities and . iven the fore'oin' perspective. contri)uted i&&ova)les.he CA.hich already o. in fine. S. ar'ues that the i&&ova)les in @uestion . as earlier stated.hat he hi&self alle'ed in his )asic co&plaint.23 !i'nificantly enou'h. the ne/t lo'ical point of in@uiry turns on the nature of petitionerRs contri)ution. )ein' unsi'ned and dou)tless referrin' to a partnership involvin' &ore than "3.ith the !ecurities and .ere not contri)uted. #eedless to stress. ./chan'e Co&&ission *!. that 8&hat &as to be contributed to the business :of the partnership.he le'al and factual &ilieu of the case calls for this disposition. si'ned )y the parties. that <petitionerRs= contri)ution to the socalled 8partnership?Goint venture8 . 3n short. in .as alle'edly e/ecuted.hich purports to esta)lish the said 8partnership?Goint venture8 is #O. . .ed that <petitioner= contri)uted i&&ova)le properties to the alle'ed partnership. if any.ith the re@uire&ent of the precedin' para'raph shall not affect the lia)ility of the partnership and the &e&)ers thereof to third persons. . industr# and his share in the fa!il# :theatre and land develop!ent. and attached to the pu)lic instru&ent. let alone re'istered .000. )ut is unsi'ned and undated.henever i&&ova)le property is contri)uted thereto. 1$$3. shippin' and land develop&ent under para'raph 3. save .hat petitioner contri)uted to the perceived partnership.een petitioner and his )rother . And inas&uch as the inventory re@uire&ent under the succeedin' Article 1$$3 'oes into the &atter of validity . on its face.henever i&&ova)le property is contri)uted to it. Anne/ 8A-18.02 of the co&plaint. Art. As an unsi'ned docu&ent./chan'e Co&&ission.hat the appellate court . the Court cannot accord co'ency to this specious ar'u&ent. A partnership &ay )e constituted in any for&. . the &ore i&portant consideration is that real property . 3n other . if an inventory of said property is not &ade. cannot support the e/istence of the partnership sued upon and sou'ht to )e enforced.hen i&&ova)le property is contri)uted to the partnership. 3n conte/t. in &oney or property.hat has repeatedly )een articulated. as called for under the Article 1$$2 of the Code. his contri)ution to the partnership consisted of his share in the (itonGua fa&ily )usinesses .as his supposed share in the fa&ily )usiness that is consistin' of &ovie theaters.

"etitioner has thus thrusted the notion of an inno&inate contract on this Court . ho. the only portion of Anne/ 8A-18 .duardo as the author of Anne/ 8A-18. he has no.and earlier on the CA after he e/perienced a reversal of fortune thereat .2% since the partiesR )asic position had )een . As such.ere )rou'ht to its attention )y herein <respondents= in the their pleadin's. it is so o)vious . 3n our evaluation of <petitionerRs= co&plaint.ant you to run this office everyti&e 3 a& a.he appellate court. this no. 1:1+.duardo the o)servance of a deter&inate conduct. As respondent Man' pointedly o)served.ith a ri'ht to de&and fro& respondent . it is crystal clear that <petitioner= has no valid or le'al ri'ht . As it . especially its a)ove-@uoted provisions.n as an inno&inate contract *Civil Code. *Fords in )rac7et added.ould still )e dis&issi)le as a'ainst . at )otto&. esta)lished an actiona)le contract even thou'h it &ay not )e a partnership.+ (i7e. hu&&in' a different tune . . Fithal. reads1 /// Mou .hich could )e violated )y the <individual respondents= herein. #ecessarily. cannot really )e faulted for not yieldin' to petitionerRs du)ious strata'e& of alterin' his theory of Goint venture?partnership to an inno&inate contract. theory contravenes <petitionerRs= theory of the actiona)le docu&ent )ein' a partnership docu&ent.e do have to test the sufficiency of the cause of action on the )asis of partnership la.hich is not only prohi)ited )y the Rules )ut also is an i&plied ad&ission that the very theory he hi&self S has adopted. p. S. Fe hold that this ne.hatsoever.ise. 3 .ere.ant you to run it the .as alle'ed to have )een the order?s issued )y the trial court in 'rave a)use of discretion.duardo and. 3n a sudden t. petitionerRs co&plaint . Just )ecause the relationship created )y the a'ree&ent cannot )e specifically la)eled or pi'eonholed into a cate'ory of no&inate contract does not &ean it is void or unenforcea)le. the appellate courtRs certiorari Gurisdiction .his actiona)le contract is . the <trial= court did not appreciate and apply the le'al provisions . 3t cannot )e over-e&phasi4ed that petitioner points to . &ore so.hich could perhaps )e re&otely re'arded as vestin' petitioner . )ut surely the contract does create ri'hts and o)li'ations of the parties and . it is petitionerRs posture that Anne/ 8A-18. all the essential ele&ents of a cause of action are present. the alle'ations in the co&plaint. state a valid cause of action )ecause #O. Cut even assu&in' in gratia argu!enti that Anne/ 8A-18 parta7es of a perfected inno&inate contract.ay 3 a& tryin' to run it )ecause 3 . /// Derily. an ad&ission of the untena)ility of such theory in the first place. *5nderscorin' and .ise .hich .as no inventory of i&&ova)le properties si'ned )y the parties. petitionerRs clai& a'ainst Man' is doo&ed fro& the very start.ords in )rac7et added. )ecause of the failure to co&ply . includin' the actiona)le docu&ent attached thereto.hatever. 3t &ay not )e a contract of loan. even on this consideration alone. .ever. 2or. this actiona)le docu&ent.duly si'ned )y the parties. ///. the purported 8partnership?Goint venture8 is le'ally ine/istent and it produces no effect . Fe conclude that despite 'larin' defects in the alle'ations in the co&plaint as . --. a'ainst Man'.in' co&ple&entary e/cerpts fro& the CARs e@ually assailed Resolution of Dece&)er $.ill )e the only one left .hat is 7no. clearly de&onstrates that <petitioner= has #O valid contractual or le'al ri'ht . a void or le'ally ine/istent contract cannot )e the source of any contractual or le'al ri'ht. 3f anythin'. Coth the alle'ations in the co&plaint and the actiona)le docu&ents considered. nevertheless created de&anda)le ri'hts in his favor.ell-defined.ell as the actiona)le docu&ent attached thereto *Rollo.ill )e alone "a'e I 23 .ell-ta7en are the follo. Article 130$+. it is on those positions that the appellate court e/ercised its certiorari Gurisdiction.as circu&scri)ed )y .ith the essential for&alities of a valid contract. "etitionerRs act of chan'in' his ori'inal theory is an i&per&issi)le practice and constitutes. assu&in' its inefficacy or nullity as a partnership docu&ent. Ce that as it &ay . .hich ri'hts and o)li'ations &ay )e enforcea)le and de&anda)le. the said 86e&orandu&8 S is null and void for purposes of esta)lishin' the e/istence of a valid contract of partnership. contended that the actiona)le instru&ent &ay )e considered an innomina e !on ra! . as the CA aptly declared. the latter alle'ed inter alia to have contri)uted i&&ova)le properties to the alle'ed partnership )ut the actiona)le docu&ent is not a pu)lic docu&ent and there .ist of stance.+ 5nder the second assi'ned error. or a &ort'a'e or . a&on' us )rothers and 3 . chan'es <petitionerRs= theory of the case . Contrari. As petitioner succinctly puts it in this petition1 -3.ay. <petitionerRs= co&plaint does #O. that of petitioner )ein' that the actiona)le docu&ent esta)lished a partnership?Goint venture. 200-2$ denyin' petitionerRs &otion for reconsideration1 2urther.as an afterthou'ht.ith the co&pany. . <"etitioner= is no. filed and prosecuted )efore the respondent court is erroneous.ill as7 you to stay as 3 .hich could )e violated )y <respondents=. . Accordin'ly.hat . 3ndeed. As a conse@uence.2: *.&phasis in the ori'inalJ Fords in )rac7et added+.

petitioner is the intended )eneficiary of the "1 6illion or 10E e@uity of the fa&ily )usinesses supposedly pro&ised )y .ritten in A##0DCA-1C.duardo= and the <petitioner= in the Odeon . . 2. the Court cannot see its . if any.ithin one year fro& 8contract8 e/ecution on June 22. provide the lo'ical ne/us that . in its assailed decision.hichever is 'reater. the sa&e action could plausi)ly prosper a'ainst Man'. the actiona)le docu&ent did not contain such provision. As &ay )e noted. Cut such alle'ation cannot. 6y sons . property or industry to a co&&on fund . no action can )e proved unless the re@uire&ent e/acted )y the statute of frauds is co&plied . the creation of . ho.hen the docu&ent purportin' to esta)lish the partnership contract did not even &ention his na&e.ould contradict hi&self )y alle'in' that his 8invest&ent and that of .hich directly alle'ed ho.as 8for the continuation of their fa&ily )usiness and co&&on fa&ily funds . <petitionerRs= clai& a'ainst S Man' arose fro& his alle'ed partnership . !urely.heater invest&ent thereafter.een petitioner and . 2. the Court rules.3#eedless to stress.duardo . 3n fact. 3. .!O! *"1.hich is le'ally ine/istent or void or. Ho.ere theretofore )ein' &ainly &ana'ed )y . )e in . could a person )e considered a partner . the supposed contractual relation .duardo )ecause no valid partnership e/isted )et.8 . 6ore i&portantly.duardoRs partner in their Odeon .ritin' and su)scri)ed )y the party char'ed. ho. Ho. he is a 8partner8 of <.duardo and . "etitioner asserted in his co&plaint that his so-called Goint venture?partnership . petitioner . !everal para'raphs later.as intended to 'o to a co&&on fund .ever.ould tie Man' to hi& as his partner.duardo are )usiness partners in the <respondent= corporations.hence he sourced his ri'ht to dra' Man' into the fray.8 33 Cut Man' denies 7inship .as #O alle'ation in the co&plaint . in his co&plaint.his si&ply &eans that the 8Odeon .hat respondent . *5nderscorin' added+ 3t is at once apparent that . an ine/istent partnership.duardo to 'ive in the near future. 3 .000.ould indicate the contrary. 2.ill depend entirely to you.duardo ca&e firstJ Man' )eca&e their partner in their Odeon .duardo and Man' in the Odeon theater )usiness has e/panded throu'h a reinvest&ent of profit inco&e and direct invest&ents in several corporation includin' )ut not li&ited to <si/= corporate respondents8 . "etitioner states in par. let alone &ention the na&e of Man'. ho.hat his share in the )usinesses . unenforcea)le does not state a cause of action as a'ainst respondent . Consider1 1.ith .32 3n su& then.ever. the a'ree&ent e&)odied in Anne/ 8A-18 is covered )y the !tatute of 2rauds and ergounenforcea)le for non-co&pliance there.he Court of Appeals. Man' could not have )eco&e a partner in. as alle'ed in the co&plaint.ever.hich re@uires t.ill not )e ready to help &e yet until a)out &ay)e 19?20 years fro& no. thus1 /// /// /// Clearly.01 of the co&plaint that 8<he= and . And if no of action can successfully )e &aintained a'ainst respondent .rote Anne/ 8A-18. petitioner has not sufficiently esta)lished in his co&plaint the le'al vinculu! .hile 8Co))y is his and . 1:$3.o or &ore contractin' &inds &utually a'reein' to contri)ute &oney.Fhatever is left in the corporation.heater invest&entR *par.hich e/panded throu'h reinvest&ents of profits and direct invest&ents in several corporations. . at )est.ill &a7e sure that you 'et O#. )e &ade )ecause. unless the sa&e.ise1 <Respondent= Man'. is a pro&ise . petitioner &entioned .ould )e to read so&ethin' not . 63((3O# ".and 3 .00+ or ten percent *10E+ e@uity.duardo.ith the (itonGua fa&ily and petitioner has not disputed the disclai&er. as aptly o)served )y the CA. even this an'le alone ar'ues a'ainst the very idea of a partnership. .hich is not to )e perfor&ed .hat Man' contri)uted. if he indeed .ith the intention of dividin' the profits )et.heater 3nvest&ent .hich . indeed.ith. attendant circu&stances .30 Cy force of the statute of frauds.ith. let alone his proportional share in the profits.ever.heatre )usiness8 ca&e )efore the corporate respondents.. the fore'oin' "a'e I 2- . petitioner refers to the corporate respondents as 8pro'eny8 of the Odeon .hus.duardo i&posed upon hi&self under the a)ove passa'e. an a'ree&ent that )y its ter&s is not to )e perfor&ed .ay clear on ho.een or a&on' the&selves.een hi& and petitioner. as did the CA. Corollarily.ithin a year fro& the &a7in' thereof shall )e unenforcea)le )y action.hat he had contri)uted to the Goint venture?partnership . !i'nificantly enou'h.ith. Any su''estion that the stated a&ount or the e@uity co&ponent of the pro&ise .duardo and the corporate defendants.heatre )usiness. 3n so&e detail.31 (est it )e overloo7ed.ill )e. or could not have had any for& of )usiness relationship .03+.een <petitioner= and SMan'.ith . that petitionerRs co&plaint for specific perfor&ance anchored on an actiona)le docu&ent of partnership . petitioner has not.as created )et.. there . #o alle'ation is &ade . captured and for&ulated the le'al situation in the follo. S is i&pleaded )ecause.in' .000.ith petitioner and the S respondent. Accordin'ly.his &eans that the partnership )et. or so&e note or &e&orandu& thereof.hatsoever a)out .

petitioner too7 a different tac7.duardo= is void and le'ally ine/istent directly affects said clai& a'ainst SMan'.hat he said in par. stri7es the Court as a strained atte&pt to rationali4e an untena)le position. the Decision ta7es off fro& a false pre&ise that the actiona)le docu&ent attached to the co&plaint does not esta)lish a contractual relationship )et.o esta)lish a valid cause of action. esta)lished an actiona)le contract even thou'h it &ay not )e a partnership.s1 %. referrin' to . Contrari.hether or not he chan'ed his theory of the case. iven this consideration.ere contri)uted to this partnership.-0 3t is not difficult.as not a case of chan'in' theories )ut of supportin' his pleaded cause of action K that of the e/istence of a partnership . He &ade reference to the 8la& of >oint venture?partnership :being applicable. Fe are therefore pu44led ho. and different theory in the appellate court.ith . this actiona)le docu&ent.ould contractually connect <petitioner= and S Man'. "er the CourtRs o. petitioner e&)raced the inno&inate contract theory. .hether the actiona)le docu&ent )ears out an actiona)le contract K )e it a partnership. the actiona)le docu&ent solely as esta)lishin' a partnership?Goint venture. fro& a Goint venture?partnership theory . a person not &entioned in a docu&ent purportin' to esta)lish a partnership could )e considered a partner. Man' si&ply )ecause his docu&ent does not create a partnership or a Goint venture. as follo.duardo=. Fe e&phasi4ed in our decision S that insofar as <Man'= is concerned.hether or not to pursue the ori'inal cause of action or alto'ether a)andonin' the sa&e. the CA later stated in its resolution denyin' petitionerRs &otion for reconsideration the follo. Article 130$+.ould constitute the ulti&ate facts necessary to esta)lish the ele&ents of a cause of action a'ainst S Man'. assu&in' that the actiona)le docu&ent created a partnership )et. !uffice it to state. has )een discussed at len'th earlier and need not detain us lon'.)y another le'al perspective?ar'u&ent. . and <petitioner=.hatever. .his actiona)le contract is . the cited para'raphs are a study of a party hed'in' on . Goint venture. 3ncidentally.een <. such atte&pt had )eco&e futile )ecause there . as pere&ptorily deter&ined )y the CA. All told. petitioner faults the appellate court for readin'.duardo.in'1 /// Fhatever the co&plaint calls it. therefore. an issue . "etitionerRs protestation that his act of introducin' the concept of inno&inate contract . Gustice and due processJ hence.hus.ith &yopic eyes.ise. is . "ara'raph 12 of his &otion for reconsideration of the CARs decision virtually rele'ates partnership as a fall-)ac7 theory. especially its a)ove-@uoted provisions.o para'raphs later.hatever or so&e inno&inate contract S 3t &ay )e noted that one 7ind of inno&inate contract is .hich .= and to his =rights in all specific properties of their >oint venture?partnership8.8 Eduardo and /obb# :Aang. in the sa&e notion. 3llustrative of this shift is petitionerRs state&ent in par.duardo and Man' dou)tless pivots on the e/istence of the "a'e I 29 . petitionerRs ri'ht of action a'ainst respondents .rulin' of this Court that the purported partnership )et. he is not even &entioned in the said actiona)le docu&ent. is a le'al &atter. the proscription a'ainst a party shiftin' fro& one theory at the trial court to a ne. Fhat is deter&inative for purposes of sufficiency of the co&plainantRs alle'ations.hen it &ade short shrift of petitionerRs inno&inate contract theory on the )asis of the fore'oin' )asic reasons.duardo.n count.3$ -3. A state&ent of facts on those &atters is pivotal to the co&plaint as they . to the business relationship @ bet&een :hi!. no i&&ova)les . . !uffice it to say that after the CA has ruled that the alle'ed partnership is ine/istent. and Ro)erto .. it is the actiona)le docu&ent attached to the co&plaint that is controllin'.as neither averred in the co&plaint cannot )e raised for the first ti&e on appeal.ith the CA . .heater. !ince <petitioner= is tryin' to esta)lish his clai& a'ainst S Man' )y lin7in' hi& to the le'ally ine/istent partnership . includin' their alle'ed invest&ent in the Odeon .hich to connect <respondent= Man' to the alle'ed partnership )et. . Fe have not i'nored the actiona)le docu&ent S As a &atter of fact. Fhether or not the actiona)le docu&ent creates a partnership.een <petitioner= and respondent <.n as an inno&inate contract *Civil Code. !r.he last issue raised )y petitioner. petitioner used in his co&plaint the &i/ed .H3# that . to a'ree . the co&plaint should have a state&ent of fact upon .as #O. .3: On the sa&e rationale. .een <respondent= . T -3 of this petition.een <petitioner= and S .hat is 7no.3> *Fords in )rac7et ours+.ords 8>oint venture?partnership8 nineteen *1:+ ti&es and the ter& 8partner8 four *-+ ti&es. T% of his &otion for reconsideration of the CARs decision co&)ined . or . 39 "ressin' its point.his is S a &yopic readin' of the actiona)le docu&ent.3% !prin'in' surprises on the opposin' party is offensive to the sportin' idea of fair play. a Goint venture or . .n as du ut facias *3 'ive that you &ay do+. Derily.hat is 7no. thus1 12. /// 1-. !r.hich he adopted and consistently pursued in his co&plaint.

as purportedly evidenced )y the undated and unsi'ned Anne/ "A-18. and if they did not. respondent Fillia& J. G.he present case is a petition for revie.he Court a'rees.000. of the ta/ court0s aforesaid decision.00.00 and "2. On 1 Octo)er 1:-$. until in 1:9: .as duly recorded . in the i&portation..he partners contri)uted. the fiction of Guridical personality of the partnership should )e disre'arded for inco&e ta/ purposes )ecause the spouses have e/clusive o.as dissolved after the &arria'e of the partners. ho. he appealed to the Court of .. considerin' that respondent Fillia& J. 1969 COMMISSIONER OF INTERNAL RE)ENUE.000. . SUTER "#$ T!E COURT OF TA< APPEALS.and "-. 3t raises these issues1 *a+ Fhether or not the corporate personality of the Fillia& J. on 11 #ove&)er 1:>9. their parts and accessories. ustav Carlson. &aintainin' its o. (td.he theory of the petitioner. Julia !piri' !uter actually for&ed a sin'le ta/a)le unitJ and *)+ Fhether or not the partnership .. Co&&issioner of 3nternal Revenue. is that the &arria'e of !uter and !piri' and their su)se@uent ac@uisition of the interests of re&ainin' partner Carlson in the partnership dissolved the li&ited partnership.0> for 1:9. respectively. . !uter and Julia !piri' !uter and the su)se@uent sale to the& )y the re&ainin' partner. !uter as the 'eneral partner.ever. 'eneral partner !uter and li&ited partner !piri' 'ot &arried and. *ILLIAM J.hen the latter.al. !uter 06orcoin0 Co.he li&ited partnership had )een filin' its inco&e ta/ returns as a corporation.000.000./chan'e Co&&ission. &ar7etin'. Cost a'ainst the petitioner. the li&ited partnership . .9>$.>$%. A co&plaint for delivery and accountin' of partnership property )ased on such void or le'ally non-e/istent actiona)le docu&ent is dis&issi)le for failure to state of action.L. the instant petition is DENIED and the i&pu'ned Decision and Resolution of the Court of AppealsAFFIRMED.ith the !ecurities and .: A li&ited partnership.00 in the partnership for a no&inal a&ount of "1.ithdra.R. (td. as an actiona)le docu&ent of partnership. television sets and a&use&ent &achines. No.00 for 1:99. said the Court of Appeals.00. thereafter. handlin' and carryin' &erchandise. in an assess&ent. A void Anne/ 8A-18.hich court. li&ited partner Carlson sold his share in the partnership to !uter and his . should )e disre'arded for inco&e ta/ purposes. *!EREFORE.he fir& en'a'ed.ife.as for&ed on 30 !epte&)er 1:-$ )y herein respondent Fillia& J. !uter 86orcoin8 Co. J.ith the !ecurities and . consolidated the inco&e of the fir& and the individual inco&es of the partners-spouses !uter and !piri' resultin' in a deter&ination of a deficiency inco&e ta/ a'ainst respondent !uter in the a&ount of "2.. vs. of his participation of "2. 3t had an office and held itself out as a li&ited partnership. L425532 F02&u"&y 2F. na&ed 8Fillia& J. !uter and his . . as the li&ited partners. .he sale . distri)ution and operation of auto&atic phono'raphs. and Julia !piri' and ustav Carlson. .. .8 . )ills and letterheads )earin' its trade-na&e. 3n 1:-%. RE6ES. . . Respondent !uter protested the assess&ent.nership and control of the )usinessJ conse@uently the inco&e ta/ return of respondent !uter for the years in @uestion should have "a'e I 2> .ife.as re'istered .een the three of the&.as denied. radios. and re@uested its cancellation and .ith la.ith the Central Can7. J. petitioner. reversin' that of the Co&&issioner of 3nternal Revenue. . on 1% Dece&)er 1:-%./chan'e Co&&ission on 20 Dece&)er 1:-%. and had a @uota allocation .a/ Appeals.00 to the partnership.ithout o)Gection )y the herein petitioner. )ut his re@uest . 5na)le to secure a reconsideration. . "20. a&on' other activities. "1%. rendered a decision. filed )y the Co&&issioner of 3nternal Revenue.partnership )et. as not in accordance . respondents.n )oo7s of accounts and )an7 accounts. in 'ist.. after trial. Co&&issioner of 3nternal Revenue.ould strip petitioner of a cause of action under the pre&ises. usin' invoices. !o.

"a'e I 2$ . since the contri)utions of the partners .ife0s individual inco&es and that of the li&ited partnership. *1 uy de 6ontella 9%+ ..he capital contri)utions of partners Fillia& J. as contri)uted )y the& to the co&&on fund.hat . and that since its Guridical personality had not )een affected and since. ..as an industrial partner..as or'ani4ed is rested )y the appellant upon the opinion of no.he for&er Chief Justice of the !panish !upre&e Court.hich .ith re'ard to the prohi)ition contained in the aforesaid Article 1>$$1 (os conyu'es. . !uter to the ori'inally li&ited partner. a universal partnership re@uires either that the o)Gect of the association )e all the present propert# of the partners.ere fi/ed su&s of &oney. in force . is e@ually erroneous. 1.dition. respondent !uter &aintains. 1:92. (td.hich provides as follo.as not such a universal partnership. only one consolidated return for the ta/a)le year shall )e filed )y either spouse to cover the inco&e of )oth spousesJ .s that Fillia& J. 3n refutation of the fore'oin'.s1 A hus)and and a . D.a/ Appeals held.s of the "hilippines.d. Jose Casan. 3t follo.00 )y Fillia& !uter and "1%. . as contra distin'uished fro& a duly re'istered 'eneral partnership. *2 . such contri)utions re&ained their respective separate property under the !panish Civil Code *Article 13:>+1 .nJ .hether citi4ens. )ecause under the Civil Code.ere Goined in . .. . !uter .s1 *d+ Husband and &ife... in accordance . #or could the su)se@uent &arria'e of the partners operate to dissolve it.and 1>$9 of the !panish Civil Code.as or'ani4ed in 1:-$+. As appears fro& Articles 1>$.ith !ection -9 *d+ of the #ational 3nternal Revenue Code.he appellant0s vie. -th .chaverri 1:>+ 3t follo..hich applies in the a)sence of e/press provision in the Code of Co&&erce.as the la.. ya @ue nin'un precepto de nuestro Codi'o los prohi)e.000. Fe find the Co&&issioner0s appeal un&eritorious.as not a partnership that spouses .hich is )rou'ht to the &arria'e as his or her o. says . it is ta/a)le on its inco&e si&ilarly .ere separately o.00 )y Julia !piri' and neither one of the& . that his &arria'e . !uter 86orcoin8 Co. Fillia& J.asnot a universal partnership. such &arria'e not )ein' one of the causes provided for that purpose either )y the !panish Civil Code or the Code of Co&&erce.. Fillia& J.olentino in Co&&entaries and Jurisprudence on Co&&ercial (a. either in the Code of Co&&erce or in the #e.hen the su)Gect fir& .he thesis that the li&ited partnership. (td. Dolu&e -. pa'e 9%. Julia !piri' one year after the partnership . se'un esto. footnote 1. !uter 86orcoin8 Co. $th . that )y the &arria'e of )oth partners the co&pany )eca&e a sin'le proprietorship. .ned and contri)uted )y the& before their &arria'eJ and after they .included his and his . Fillia& J. !uter 86orcoin8 Co. (td. as a li&ited partnership. Civil Code. or else 8all that the partners &ay ac@uire )y their industr# or &orB durin' the e/istence of the partnership8. has )een dissolved )y operation of la. of 1%%: *. pero o podran constituir sociedad particularU Aun@ue el punto ha sido &uy de)atido.he follo. . nos inclina&os a la tesis per&isiva de los contratos de sociedad particular entre esposos. !uter and Julia !piri' .ere for)idden to enter )y Article 1>$$ of the Civil Code of 1%%:. Dol. !uter 86orcoin8 Co.. (a Gurisprudencia de la Direccion de los Re'istros fue favora)le a esta &is&a tesis en su resolution de 3 de fe)rero de 1:3>.s that the &arria'e of partners necessarily )rin's a)out the dissolution of a pre-e/istin' partnership. (td.as not )ound to include in his individual return the inco&e of the li&ited partnership. &as parece ca&)iar de ru&)o en la de : de &ar4o de 1:-3. pa'e 9->.. . !enator .edloc7. that reads as follo. as the Court of . "20. no pueden cele)rar entre si el contrato de sociedad universal.. persons prohi)ited fro& &a7in' donations to each other are prohi)ited fro& enterin' into universal partnerships. . residents or nonresidents.in' shall )e the exclusive property of each spouse1 *a+ . . )ut a particular one. L 3n the case of &arried persons.ife &ay not enter into a contract of general copartnership.ith corporations. in his Derecho Civil. y hay @ue estar a la nor&a 'eneral se'un la @ue toda persona es capa4 para contratar &ientras no sea declarado incapa4 por la ley. )ecause of the &arria'e of the only 'eneral partner.000.ith li&ited partner !piri' and their ac@uisition of Carlson0s interests in the partnership in 1:-% is not a 'round for dissolution of the partnership..he petitioner-appellant has evidently failed to o)serve the fact that Fillia& J.

that does not reco'ni4e such separate Guridical personality+. and Aoppel <"hil. 3n the cited cases. the partners did not enter into &atri&ony and thereafter )uy the interests of the re&ainin' partner .ith. the corporations .ife0s parapherna )eco&e conGu'al only . their conse@uences . the code ta/es the latter on its inco&e.s. a factor that Gustified a disre'ard of their corporate personalities for ta/ purposes.he chan'e in its &e&)ership.ould thro. . 3nc. .ith the personality of the individual partners for inco&e ta/ purposes. )rou'ht a)out )y the &arria'e of the partners and their su)se@uent ac@uisition of all interest therein.rue.C.ife+ &ay )e the sa&e for a 'iven ta/a)le year.of the ta/ code. and not the fir&. not other. 1/F/F2 S01.as or'ani4ed for le'iti&ate )usiness purposesJ it conducted its o. . (-1399-. in the cases cited. !uter 86orcoin8 Co.hat it specifically provides in its !ection 2-1 for the appellant Co&&issioner0s stand results in e@ual treat&ent. . .20& 21.n. Dol. Cut this rule is e/ceptional in its disre'ard of a cardinal tenet of our partnership la. section 2. .ould exe!pt the li&ited partnership fro& inco&e ta/ation )ut . is here)y affir&ed. Here. &ista7en in that it assu&es that the conGu'al partnership of 'ains is a ta/a)le unit. &erely served as )usiness conduits or alter egos of the stoc7holders. does not authori4e it. >0 "hil.hen the fiction of their corporate personality .. G. ta/es the inco&e of even Goint accounts that have no personality of their o.. .o. the ta/ )urden upon the partners-spouses in their individual capacities.. As far as the records sho. as their contri)utions in the )usiness partnership are not the sa&e. and "eople0s Can7 vs. and . is no 'round for .n dealin's .n't Cut it is ar'ued that the inco&e of the li&ited partnership is actually or constructively the inco&e of the spouses and for&s part of the conGu'al partnership of 'ains. the fruits of the .. $$ "hil. re@uirin' it to pay inco&e ta/. .. and even )ars it )y re@uirin' the li&ited partnership to pay ta/ on its o. #. Re'ister of Deeds of 6anila. . Re'ularity. of a 'eneral copartnership *co!paCia colectiva+ and a li&ited partnership. Matco. and had )een filin' its o. li7e.hich it is not.hus.he li&ited partnership0s separate individuality &a7es it i&possi)le to e@uate its inco&e .R. as it presently stands.ith its custo&ers prior to appellee0s &arria'e.ere already sub>ect to ta/ . As the li&ited partnership under consideration is ta/a)le on its inco&e. %%-%:+. .ould even conflict . 5niversity of the Disayas. .ise. vs.la&phi$. 6olo 90 "hil. is not a Gustification for re@uirin' consolidationJ the revenue code. 1 Appellant is. are ta/a)le in their individual capacities for any dividend or share of the profit derived fro& the duly re'istered 'eneral partnership *!ection 2>.J AraVas. the appellant0s ar'u&ent erroneously confines itself to the @uestion of the le'al personality of the li&ited partnership.ise. 3n fact.ithdra. the )ypassin' of the e/istence of the li&ited partnership as a ta/payer can only )e done )y i'norin' or disre'ardin' clear statutory &andates and )asic principles of our la. Resolution of 30 Octo)er 1:>-. did not )eco&e co&&on property of )oth after their &arria'e in 1:-%.=.H.n inco&e.ith the pre&editated sche&e or desi'n to use the partnership as a )usiness conduit to dod'e the ta/ la. O3# R.s.hich is not essential to the inco&e ta/a)ility of the partnership since the la.he rulin's cited )y the petitioner *Collector of 3nternal Revenue vs.n'lish la. )ecause it is in the case of co!paCias colectivas that the &e&)ers. ta/ .3.R.. the decision under revie. pp.his is not true in the present case.n inco&e ta/ returns as such independent entity.C.hen a'ain.ith .as piercedJ in the present case. 90-+ as authority for disre'ardin' the fiction of le'al personality of the corporations involved therein are not applica)le to the present case. to do so .ise.hen the code plainly differentiates the t.een the inco&e of the li&ited partnership )ein' consolidated .ife.he difference in ta/ rates )et. Fhat is ta/a)le is the 8inco&e of )oth spouses8 *!ection -9 <d= in their individual capacities. No. . to re@uire that inco&e to )e included in the individual ta/ return of respondent !uter is to overstretch the letter and intent of the la. (td.hen no lon'er needed to defray the e/penses for the ad&inistration and preservation of the paraphernal capital of the .0. 2OR.his is not . distinct and separate fro& that of its partners *unli7e A&erican and . 3t )ein' a )asic tenet of the !panish and "hilippine la. )ut not the for&er. the li&ited partnership is not a &ere )usiness conduit of the partner-spousesJ it . Anno. it . #o costs.holly correct. 2OR .he corporations.R. that the partnership has a Guridical personality of its o.n.in' the partnership fro& the covera'e of !ection 2.3. 1.hen split fro& the inco&e of the spouses. N Juris.hus.ould )e different. is presu&ed. . As A&ended. 2011 "a'e I 2% .A!O#!.ith that of the co&ponent &e&)ers.hou'h the a&ount of inco&e *inco&e of the conGu'al partnership vis(a(vis the Goint inco&e of hus)and and .of the 3nternal Revenue Code &er'es re'istered 'eneral copartnerships *co!paCias colectivas+ . As pointed out in A'apito vs. on the #. and can not )e e/tended )y &ere i&plication to li&ited partnerships. . 1>$. the individual interest of each consort in Fillia& J. $$:.

(et a copy hereof and the records of the case )e re&anded to the trial court for appropriate proceedin's. of their valid ac@uisition of the latterRs share as capitalist partner. that the !pouses Jaso had )een nevertheless su)ro'ated to CiondoRs ri'hts in the )usiness in vie.00. Fith Josefina as the industrial partner and Ciondo as the capitalist partner.o-storey )uildin' as .he validity as .ith the filin' of their 3 Au'ust 1::% Co&plaint a'ainst Josefina.rial Court *R.ric A&aury Ciondo *Ciondo+.$ 2aultin' Josefina . and . li@uidation of assets and division of shares of the Goint venture )usiness.as their o. petitioner Josefina Realu)it *Josefina+ entered into a Joint Denture A'ree&ent .C disposed of the case in the follo. her hus)and.2OR. transferrin' all his ri'hts and interests in the )usiness in favor of respondent . DECISION PERE5.ith Ciondo. Doc7eted as Civil Case #o.ere. accountin'. "etitioner.R. JASO. of the du)ious circu&stances surroundin' their ac@uisition of CiondoRs share in the )usiness .ith su&&ons.9 2or and in consideration of the su& of "900. J..n tu)e ice tradin' )usiness . e/a&ination.ith 2rancis .den Jaso *. REALU IT. the parties a'reed that they .e order the dissolution of the Goint venture )et.% !erved . Wue4on City that the !pouses Jaso &istoo7 for the ice &anufacturin' )usiness esta)lished in partnership ..he 2acts On 1$ 6arch 1::-. ho.JOSEFINA P. dissolution of the Goint venture.00 per day. another )uildin' .hich he affi/ed on their Joint Denture A'ree&entJ that they refused the !pouses JasoRs de&and in vie. 37e Realu)it *37e+. :%-0331 )efore respondent Cranch 29$ of the Re'ional .hich had )een &oved to >>-C Cenacle Drive.yer to send Josefina a letter dated 1: 2e)ruary 1::%.ell as the re&ittance of their portion of its profits.n after its po. thereafter.he issues thus Goined and the &andatory pre-trial conference su)se@uently ter&inated. JASO "#$ EDEN G. a 2rench national.hich earned not less than "3.as esta)lished at Don Antonio Hei'hts. the R.ever. they .3 the dispositive portion of . that aside fro& appropriatin' for the&selves the inco&e of the )usiness.ell as the conse@uences of an assi'n&ent of ri'hts in a Goint venture are at issue in this petition for revie.ealth Avenue. a&on' other &atters. PROSENCIO D. that it . associates or du&&ies. in turn.ould each receive -0E of the net profit. the !pouses Realu)it. to render its Decision dated 1$ !epte&)er 2001.ise1 "a'e I 2: .000. assets and the supposed dissolution of the Goint venture can )e ade@uately rec7oned.ent on to try the case on its &erits and. Co&&on. Ciondo su)se@uently e/ecuted a Deed of Assi'n&ent dated 2$ June 1::$.as disconnected )y 6. appoint&ent of a receiver and da&a'es. CD #o.ric A&aury Ciondo and the su)se@uent conduct of accountin'. !anville !u)division.in' . averred that their said )usiness partner had left the country in 6ay 1::$ and could not have e/ecuted the Deed of Assi'n&ent .hich the Goint ventureRs ice plant stands.elfth Division in CA.as purchased for the )usiness. for the operation of an ice &anufacturin' )usiness.hen its plant shut do. . Wue4on CityJ that said )usiness had already stopped operations on 13 January 1::> .hich .1 assailin' the 30 April 200$ Decision2rendered )y the Court of AppealsR *CA+ then .ever. vs.R.hich the inco&e.10 the R.ever.hich . said co&plaint alle'ed..een defendant-appellant Josefina Realu)it and 2rancis .ith the inco&e of the )usiness . the .ith CiondoJ that .hich states1 FH. discountin' the e/istence of sufficient evidence fro& . that the !pouses Realu)it had no 'ainful occupation or )usiness prior to their Goint venture . the !pouses Realu)it filed their Ans. the Decision appealed fro& is !. the !pouses Jaso caused their la.C . audit and inventory of assets and properties.hich they used as their office and?or residence and si/ *>+ delivery vansJ and. $3%>1. 5pon the findin'.ith unGustified failure to heed their de&and.ell as the land on .hich )ears a si'nature &ar7edly different fro& that ..den+. ho. ho. A!3D.000. Respondents. the !pouses Realu)it have fraudulently concealed the funds and assets thereof thru their relatives. Clai&in' that they have )een en'a'ed in the tu)e ice tradin' )usiness under a sin'le proprietorship even )efore their dealin's . filed pursuant to Rule -9 of the 1::$ Rules of Civil "rocedure. for specific perfor&ance. the !pouses Jaso co&&enced the instant suit .er supply .> Fith CiondoRs eventual departure fro& the country. apprisin' her of their ac@uisition of said 2rench&anRs share in the )usiness and for&ally de&andin' an accountin' and inventory thereof as . specifically denyin' the &aterial alle'ations of the fore'oin' co&plaint. and their alle'ed du&&ies.RA(CO for non-pay&ent of utility )illsJ and.er dated 21 Octo)er 1::%. "roGect >.: .ith Ciondo.ith the re&ainin' 20E to )e used for the pay&ent of the ice &a7in' &achine ..: .C+ of "araVa@ue City.ife of respondent "rosencio Jaso. a)le to ac@uire the t.

JO3#.3.! <!"O5!.C said assi'nor or.H.3.led'ed.e find that )oth the R. defendants are ordered to su)&it to plaintiffs a co&plete accountin' and inventory of the assets and lia)ilities of the Goint venture fro& its inception to the present. the fore'oin' decision .he CourtRs Rulin' Fe find the petition )ereft of &erit..#. . to allo. pursuant to Article 1%13 of the Civil Code of the "hilippinesJ *c+ .H. re@uire infor&ation or account of its transactions and inspect its )oo7sJ *d+ the partnership should first )e dissolved )efore .3# . li7e fraud. . &oreover de)un7ed )y CiondoRs duly authenticated certification dated 1$ #ove&)er 1::%.den cannot. *e+ the evidence adduced )efore the R. at the very least. did not suffice to esta)lish its authenticity and?or validity.H. Wue4on City and not dissolved as clai&ed )y the !pouses Realu)itJ *)+ a)sent sho.. CO5R.ever.R . O2 R3 H.H. the #otary "u)lic )efore . for that &atter. ho.in' issues.H.R <A=# ACCO5#. 3C. 3# .13 hence.21 As for the !pousesR Realu)itRs )are assertion that CiondoRs si'nature on the sa&e docu&ent appears to )e for'ed.#.#.R..R<!=. ho.he !pouses Realu)it ar'ue that.#.#.ise )e proved )y clear and convincin' evidence )y the party alle'in' the sa&e. FH. and to pay the plaintiffs the a&ount of "20. A "AR. 6AM ORD. D.1: 3n vie.ith the &ana'e&ent of the partnership.he 3ssues .led'e and consent to the transfer of CiondoRs share.O O#. re@uired to present evidence that is clear. suffice it to say that. .. appear )efore said notary pu)lic.R <JO!.! JA!O= HAD.it1 A. upon the follo..den can see7 an accountin' of its transactions and de&and CiondoRs share in the )usinessJ and.ho& the sa&e .3O#.hich had )een transferred to and continued its operations at >>-C Cenacle Drive. plaintiffs access to the )oo7s and accountin' records of the Goint venture.and the Deed of Assi'n&ent. .= A! "AR.C do not support the a.3O#. if any."ARA. .5R. )oth the R.23#A R. to . FA! A DA(3D A!!3 #6.den cannot )e considered as a partner in the )usiness.itnesses to said docu&ent.den. for &oral da&a'es. as a pu)lic docu&ent.1. interfere . to deliver to plaintiffs their share in the profits. R. confir&in' the transfer of his interest in the )usiness in favor of .he !pouses Realu)itRs &otion for reconsideration of the fore'oin' decision .29 said for'ery is.in' findin's and conclusions1 *a+ the !pouses Jaso validly ac@uired CiondoRs share in the )usiness ..1> 3t cannot )e 'ainsaid that. JO3#. !anville !u)division. the !pouses Realu)it &aintain that the testi&ony of Rolando Dia4. .H.H. . Callin' attention to the latterRs failure to present )efore the R.5R.1%A party assailin' the authenticity and due e/ecution of a notari4ed docu&ent is.11 On appeal )efore the CA. D.he !pouses Realu)it ur'e the reversal of the assailed decision upon the ne'ative of the follo.23Aside fro& not )ein' )orne out )y a co&parison of CiondoRs si'natures on the Joint Denture A'ree&ent2. "roGect >.den20 and #otary "u)lic Rolando Dia4. i&&ediately evident fro& the settled rule that docu&ents ac7no.C and the CA correctly upheld the authenticity and validity of said Deed of Assi'n&ent upon the co&)ined stren'th of the a)ove-discussed disputa)le presu&ptions and the testi&onies elicited fro& . since it is still entirely possi)le that Ciondo did not e/ecute said deed or.5R...ithout necessity of preli&inary proof as to their authenticity and due e/ecution. the .O . this petition.he clai&s for e/e&plary da&a'es and attorneyRs fees are denied for lac7 of )asis. D. C.R "R3DA.den not only enGoys a presu&ption of re'ularity1$ )ut is also considered pri&a facie evidence of the facts therein stated. .led'ed )efore notaries pu)lic are pu)lic docu&ents .#.as ac7no.H. !.22 for'ery is never presu&ed and &ust li7e.in' of JosefinaRs 7no.5R.2OR.as set aside in the herein assailed Decision dated 30 April 200$.O R. D.R 3# !A3D JO3#..ard of &oral da&a'es in favor of the !pouses Jaso.he dearth of &erit in the !pouses Realu)itRs position is.A(5C3.hich are ad&issi)le in evidence .. JO3#.H.as denied for lac7 of &erit in the CARs 2% June 200$ Resolution.R 3# .ever.C and the CA inordinately 'ave pre&iu& to the notari4ation of the 2$ June 1::$ Deed of Assi'n&ent e/ecuted )y Ciondo in favor of the !pouses Jaso. of the !pouses Realu)itRs failure to dischar'e this onus.#.000.#D.19 . A#M R3 H. FH.FH.hey insist that notari4ation did not auto&atically and conclusively confer validity on said deed.12 .R OR #O. FH.R ".!! O2 ". A#D 3# .!"O#D. convincin' and &ore than &erely preponderant. C. . the Deed of Assi'n&ent Ciondo e/ecuted in favor of . conse@uently. in upholdin' its validity. FHO 3! #O.2> "a'e I 30 .#.hile entitled to CiondoRs share in the profits of the )usiness.R. C5!3#.! .

ent )eyond the issues of the case and the sa&e is contrary to the ad&issions of )oth appellant and appelleeJ *$+ . *10+ .D for lac7 of &erit and the assailed CA Decision dated 30 April 200$ is.82$ . as a'ainst the other partners in the a)sence of a'ree&ent.in' only errors of la. )ased on &utual a'ency or delectus personae.2: 3nsofar as a partnerRs conveyance of the entirety of his interest in the partnership is concerned. 3n the case of a dissolution of the partnership. &oreover. Wue4on City . )ut only a future contin'ent ri'ht to a portion of the ulti&ate residue as the assi'nor &ay )eco&e entitled to receive )y virtue of his proportionate interest in the capital. the assi'nee is entitled to receive his assi'norRs interest and &ay re@uire an account fro& the date only of the last account a'reed to )y all the partners.2OR. As a rule.hich are.ith the ri'ht 'ranted to the purchaser of a partnerRs interest under Article 1%31 of the Civil Code. to deter&ine if the trial and the appellate courts correctly assessed and evaluated the evidence on record.he assi'n&ent does not purport to transfer an interest in the partnership.ill not )e revie.ith his contracts the profits to .. entitle the assi'nee. it is evident that 8*t+he transfer )y a partner of his partnership interest does not &a7e the assi'nee of such interest a partner of the fir&.e find that the CA co&&itted no reversi)le error in rulin' that the !pouses Jaso are entitled to CiondoRs share in the profits.enerally understood to &ean an or'ani4ation for&ed for so&e te&porary purpose. nor entitle the assi'nee to interfere in the &ana'e&ent of the partnership )usiness or to receive anythin' e/cept the assi'neeRs profits.3.A)sent sho. on partnerships2% .den did not.ith Ciondo had already )een dissolved and that the ice &anufacturin' )usiness at >>-C Cenacle Drive.D in toto. their use or fruits. accordin'ly.as &erely a continuation of the sa&e )usiness they previously operated under a sin'le proprietorship. sur&ises and conGecturesJ *2+ .hen the findin's of fact are conflictin'J *>+ .ill li&it itself to revie. A223R6. Althou'h .as the sa&e one esta)lished )y Juanita and Ciondo.830 !ince a partnerRs interest in the partnership includes his share in the profits. a Goint venture is li7ened to a particular partnership or one .ithout citation of specific evidence on . a)surd or i&possi)leJ *3+ .R. the petition is D.-0 5nfortunately for the !pouses Realu)itRs cause. "roGect >. the assi'nee &ay avail hi&self of the usual re&edies. !O ORD.e are not duty )ound to e/a&ine the evidence introduced )y the parties )elo.hich they are )asedJ *:+ .C3> and the CA3$ ruled out the dissolution of the Goint venture and concluded that the ice &anufacturin' )usiness at the aforesaid address .#3.he rule is settled that Goint ventures are 'overned )y the la.ise )e entitled..31 . 2ro& the fore'oin' provision. neither are .hich 8has for its o)Gect deter&inate thin's.hen the findin's of fact of the CA are pre&ised on the supposed a)sence of evidence and contradicted )y the evidence on record.in' reco'ni4ed e/ceptions1 *1+ . or to re@uire any infor&ation or account of partnership transactions.hen the findin's of fact are conclusions .in' that the factual findin's co&plained of are devoid of support )y the evidence on record or the assailed Gud'&ent is )ased on &isapprehension of facts. the Court . !anville !u)division. FH. in turn.ould other.e inclined to hospita)ly entertain the !pouses Realu)itRs insistence on the supposed fact that JosefinaRs Goint venture .D.hen the findin's are contrary to those of the trial courtJ *%+ .R.hen the conclusion is a findin' 'rounded entirely on speculation. )oth the R. . the CA correctly 'ranted her prayer for dissolution of the Goint venture confor&a)ly .33 5pon the principle that this Court is not a trier of facts.39 Cased on the evidence on record.hen the Gud'&ent is )ased on a &isapprehension of factsJ *9+ . or.hen the CA.s1 Art. Ho.hen the inference &ade is &anifestly &ista7en. or the e/ercise of a profession or vocation.3% and .ell as in the petitioners0 &ain and reply )riefs are not disputed )y the respondentsJ and. "a'e I 31 . despite JuanitaRs lac7 of consent to the assi'n&ent of said 2rench&anRs interest in the Goint venture.ed or distur)ed on appeal3: unless the case falls under any of the follo.ell-entrenched doctrine that @uestions of fact are not proper su)Gects of appeal )y certiorari under Rule -9 of the Rules of Court as this &ode of appeal is confined to @uestions of la. or a specific underta7in'. or to inspect the partnership )oo7sJ )ut it &erely entitles the assi'nee to receive in accordance . findin's of fact of the CA are )indin' and conclusive upon this Court. 3t is . )eco&e a partner as a conse@uence of the assi'n&ent and?or ac@uire the ri'ht to re@uire an accountin' of the partnership )usiness.hich the assi'nin' partners .hen the facts set forth in the petition as . . to interfere in the &ana'e&ent or ad&inistration of the partnership )usiness or affairs. . not one of the fore'oin' e/ceptions applies to the case. durin' the continuance of the partnership. A conveyance )y a partner of his . Article 1%13 of the Civil Code provides as follo. 1%13.here there is a 'rave a)use of discretionJ *-+ . &oreover.hole interest in the partnership does not itself dissolve the partnership.. in case of fraud in the &ana'e&ent of the partnership. in &a7in' its findin's.ever.32 $%&phi$ Considerin' that they involve @uestions of fact.

the spouses Cuenaventura and Conchita Re&oti'ue e/ecuted a docu&ent .ere survived )y ei'ht children1 2ederico. Antonieta alle'ed that the initial contri)ution of property and &oney ca&e fro& the heirsR inheritance.his partnership ended in 1:$3 .nership. Re&oti'ue . and for da&a'es. . 2010 FEDERICO JARANTILLA. Antonieta further clai&ed co-o.> 3n 1:-%. UENA)ENTURA REMOTIGUE. and Rosita and Divencio Deoca&po to en'a'e in )usiness. Conchita. Jr.ners as of the year 1:92. 15++F6 D0:0. 3loilo City+ and Re&oti'ue .ay of financial support to any co&&ercial and a'ricultural activity on a Goint )usiness arran'e&ent.. JR..00+ and 2ederico Jarantilla.ere his late aunt Conchita JarantillaRs hus)and Cuenaventura Re&oti'ue.: .radin' *Cota)ato City+. -0%%$. DECISION LEONARDO4DE CASTRO. Antonieta clai&ed that in 1:->.9 "etitioner also has t. Rafael and Antonieta.R. "etitioner.o&as Jarantilla. .he pertinent facts are as follo.$ Fith the e/ception of the real property adGudicated to "acita Jarantilla.00+ as additional capital ca&e fro& the proceeds of her far&. DOROTEO JARANTILLA "#$ TOMAS JARANTILLA. .*the su)Gect real properties+ in the na&e of the defendants since the only .20& 1. . on certiorari1 see7s to &odify the Decision2 of the Court of Appeals dated July 30. for its partition and the delivery of her share correspondin' to ei'ht percent *%E+.8 they stated the participatin' capital of their co-o. and his )rothers Doroteo and . ANTONIETA JARANTILLA.ay the defendants could have purchased these properties . "a'e I 32 .G.00+.0$ 2y C6NT!IA REMOTIGUE. Cynthia Re&oti'ue. is the 'randchild of the late Jarantilla spouses )y their son 2ederico Jarantilla.ife (eda Ja&ili. a&on' other thin's..nership of certain properties1.3. .as one of the defendants in the co&plaint )efore the R.s1 . 6anila+. the adopted dau'hter of Conchita Jarantilla and Cuenaventura Re&oti'ue. 2002 in CA.his petition for revie.led'ed that .ith Conchita and Cuenaventura Re&oti'ue.ners of the capital of the )usinesses 6anila Athletic !upply *$12 Raon !treet.000.810 voluntarily a'reed to co&pletely dissolve their 8Goint )usiness relationship?arran'e&ent.: .900.ho died durin' the pendency of the case. and her su)se@uent annual invest&ent of seven thousand five hundred pesos *"$.% 3n the sa&e year.he spouses Andres Jarantilla and 2elisa Jaleco . "etitioner .hile Antonieta Jarantilla.he present case ste&s fro& the a&ended co&plaint13 dated April 22. they .000. Rosita.hen the parties.ithout receivin' any salary. the spouses Rosita Jarantilla and Divencio Deoca&po entered into an a'ree&ent . CD #o. Respondents.C+ of Wue4on City. his aunt. in an 8A'ree&ent. she had entered into an a'ree&ent . J.as supposedly rolled )ac7 into the )usiness as additional invest&ents in her )ehalf. -u2-. 1:%$ filed )y Antonieta Jarantilla a'ainst Cuenaventura Re&oti'ue.u. 3n this sa&e 8Ac7no. and his . the heirs also a'reed to allot the produce of the said real properties for the years 1:-$-1:-: for the studies of Rafael and Antonieta Jarantilla. and construct )uildin's.. . the Jarantilla heirs e/traGudicially partitioned a&on'st the&selves the real properties of their deceased parents. Jr."etitioner 2ederico Jarantilla.ith the spouses Cuenaventura Re&oti'ue and Conchita Jarantilla to provide &utual assistance to each other )y .12 . CenGa&in.hich set aside the Decision3 dated Dece&)er 1%.ere not the only o.o&as Jarantilla.Rs as five thousand pesos *"9. for the accountin' of the assets and inco&e of the co-o.o&as Jarantilla. . Antonieta also alle'ed that fro& 1:->-1:>:. Rafael Jarantilla. 2ederico Jarantilla.ith Antonieta JarantillaRs stated as ei'ht thousand pesos *"%.ned . Jr.radin' *Calle Real. W-90->-. His co-respondents )efore he Goined his aunt Antonieta in her co&plaint.as the plaintiff therein.o other )rothers1 Doroteo and .rial Court *R. No. 1::2 of the Re'ional . Doroteo Jarantilla and .led'e&ent of "articipatin' Capital. Delfin.ere a)le to esta)lish a &anufacturin' and tradin' )usiness. she had helped in the &ana'e&ent of the )usiness they co-o. !r. 1:9$.herein they ac7no.his )usiness relationship proved to )e successful as they . Her salary . Cranch :% in Civil Case #o.ere throu'h the partnership as they had no other source of inco&e.C . ac@uire real properties. vs.811 On April 2:.R. his cousin Cynthia Re&oti'ue. "acita.hile re'istered only in Cuenaventura Re&oti'ueRs na&e.

here)y Goins in plaintiffRs prayer for an accountin' fro& the other defendants.1> Durin' the course of the trial at the R.1%$avvphi$ . the decision of the trial court. plaintiff Antonieta Jarantilla )e 'iven her share of %E in the assets and profits of 6anila Athletic !upply.as entitled to si/ percent *>E+ of the supposed partnership in the sa&e &anner as Antonieta .hey also averred that . to . includin' petitioner herein..it1 FH.R. the costs of the suit. . Re&oti'ue .ise1 Defendant 2ederico Jarantilla. the su& of "90. .C. *1%303+233-1.he petitioner clai&ed that the R. and the partition of the properties of the co-o. #o. the Court of Appeals rendered the herein challen'ed decision settin' aside the R.. #os.ith Antonieta in 1:->. dated 1% Dece&)er 1::2 is !. and Cuendia Recappin' Corporation )ased on the shares of stoc7s present )oo7 valueJ 3.00 as &oral da&a'esJ 9. she . entered into a co&pro&ise a'ree&ent1$ .he R. all of the Re'istry of Deeds of Wue4on CityJ . . in their Ans. Doroteo Jarantilla and .19 denied havin' for&ed a partnership .000.ith Antonieta Jarantilla .C. 3nc.CRs factual findin's. 1::2.nership and deliver to plaintiff her ri'htful share thereof e@uivalent to %EJ -.hey did not deny the e/istence and validity of the 8Ac7no.. and a ne.00 as attorneyRs feesJ and >.as in no position to do so as she .. 39>99. the su& of "90. 3n fact.000. the respondents said these should also )e li&ited to the nu&)er of her shares as specified in the respective articles of incorporation.as paid her due salary.radin' in Cota)ato CityJ *2+ after accountin'.hey clai&ed that she .as still in school at that ti&e. to account for the assets and inco&e of the co-o. . 33%3:%.. to deliver to the plaintiff her %E share or its e@uivalent a&ount on the Re&oti'ue A'ro-3ndustrial Corporation. A!3D.ere devoted to her studies.as li&ited to the )usinesses enu&erated therein. defendant 2ederico Jarantilla. Jr. 6anila Athletic !upply.2OR.->30: of the Re'istry of Deeds of Cota)ato )ased on their present &ar7et valueJ 2.C.as.o&as Jarantilla orderin' the latter1 1.. .C. . Jr.herein he supported AntonietaRs clai&s and asserted that he too . to pay plaintiff. petitioner 2ederico Jarantilla. it also esta)lished that Antonieta Jarantilla . Gointly and severally.21 Coth the petitioner and the respondents appealed this decision to the Court of Appeals. On July 30.nership and 'ivin' to <hi&= si/ per centu& *>E+ of the properties. one is here)y entered orderin' that1 *1+ after accountin'. of their ri'htful share of the assets and properties in the co-o.. 2002.led'e&ent of "articipatin' Capital8 and in fact used this as evidence to support their clai& that AntonietaRs %E share . decided in favor of Antonieta. as follo. Jr.radin' in 3loilo City and Re&oti'ue .C 8erred in not renderin' a co&plete Gud'&ent and orderin' the partition of the co-o. and that her %E share .as one of the ori'inal defendants. to deliver to the plaintiff her %E share or its e@uivalent a&ount on the real properties covered )y .er.2OR. in an Order1: dated 6arch 29.as not part of the partnership for&ed in 1:->.nership.led'e&ent of "articipatin' Capital. all of the Re'istry of Deeds of Ri4alJ and . Gointly and severally.R. 3nc. to pay. He prayed for a favora)le Gud'&ent in this .hile she &ay have helped in the )usinesses that her older sister Conchita had for&ed . the proceeds of the lands they partitioned . to pay.ith Cuenaventura Re&oti'ue.822 Fhile the Court of Appeals a'reed to so&e of the R. Gointly and severally.CRs decision.s1 FH. Fith re'ard to AntonietaRs clai& in their other corporations and )usinesses.C. the Court renders Gud'&ent in favor of the plaintiff Antonieta Jarantilla and a'ainst defendants Cynthia Re&oti'ue.he respondents denied usin' the partnershipRs inco&e to purchase the su)Gect real properties and said that the certificates of title should )e )indin' on her.ho . . #os. )e 'iven his share of >E of the assets and profits of the a)ove-&entioned enterprisesJ and. 33%3:: N 3393:9. Jr. 1::2.he respondents. 6A! Ru))er "roducts. approved the Joint 6otion to Approve Co&pro&ise A'ree&ent20and on Dece&)er 1%. holdin' that "a'e I 33 . pre&ises a)ove-considered.as li&ited to the )usinesses enu&erated in the Ac7no.nership and the delivery to the plaintiff and to defendant 2ederico Jarantilla. 1-2%%2 N -:000$*->19+.

H.ithin the re'le&entary period of fifteen *19+ days in accordance .J and *d+ C. Rule -9 of the Rules of Court.R!H3" O2 . 3nc. Antonieta Jarantilla filed )efore this Court her o.3O#.he Court of Appeals. *-+ #o costs. in issue.in' or evaluatin' the evidence. )ut not as to her share in the other corporations "a'e I 3- . of the evidence presented.led'e&ent of "articipatin' Capital. it is a @uestion of la.n testi&ony.hether the appellate court can deter&ine the issue raised .! FH. the @uestion posed is one of fact.hen there is dou)t as to .R.H.#. that are no.56 *>E+ !HAR.hen the dou)t arises as to the truth or falsity of the alle'ed facts..D CM . Rosita Jarantilla. as evidenced )y the Ac7no.led'e&ent of "articipatin' Capital. on the other hand.A(! !.ithout revie.A( "RO". .H. this Court.ith the Re&oti'ue spouses.hus. on certiorari29 dated !epte&)er 1>.#.C.(.H.H. on Au'ust 20. 2002. filed a 6otion for "artial Reconsideration )ut the Court of Appeals denied this in a Resolution2.J other.*3+ plaintiff Antonieta Jarantilla is a stoc7holder in the follo. only @uestions of la. 2002 for failure to file the appeal . CO5R. several other corporations and )usinesses .as in a partnership . Once it is clear that the issue invites a revie.ith !ection 2. arises . 2or a @uestion to )e one of la. the Deoca&po spouses.he R. .as affir&ed in the 1:9$ docu&ent.as dis&issed on #ove&)er 20.2: A @uestion of la.n petition for revie.hile there is a @uestion of fact . assailin' the Court of AppealsR decision on 8si&ilar 'rounds and si&ilar assi'n&ents of errors as this present case82> )ut it .HA.hat is the petitionerRs ri'ht over these real propertiesU 3t is a settled rule that in a petition for revie.C found that an unre'istered partnership e/isted since 1:-> .3.2% "etitioner asserts that he . on his o. 3nc. O2 A"". or of fact is not the appellation 'iven to such @uestion )y the party raisin' the sa&eJ rather.hich case.3((A. He contends that fro& this partnership.. Rafael Jarantilla. he is essentially as7in' for his >E share in the su)Gect real properties. it is . R. 3nc.D . in resolvin' the @uestions of la. Antonieta Jarantilla and Wuintin Dis&anos.R 2. O. 3n this petition.C as to AntonietaRs %E share in the )usiness enu&erated in the Ac7no.R D. R5(3# .D. 2002.hether a @uestion is one of la.O A !3P ". OF#. the 8Ac7no.ere ac@uired. is on a certain state of facts. a'reed .o courts a @uo differed in their appreciation thereof.30 !ince the Court of Appeals did not fully adopt the factual findin's of the R.2$ "etitioner filed )efore us this petition for revie. HO#ORAC(.H. JR. on the sole 'round that1 . C5!3#. 3! .he resolution of the issue &ust rest solely on .led'e&ent of "articipatin' Capital. provides on the 'iven set of circu&stances. Re&oti'ue A'ro-3ndustrial Develop&ent Corp.! 5!3# CO66O# 25#D! 2RO6 .H. ". and Antonieta JarantillaRs testi&ony to support this contention.C used this as its )asis for 'ivin' Antonieta Jarantilla an %E share in the three )usinesses listed therein and in the other )usinesses and real properties of the respondents as they had supposedly ac@uired these throu'h funds fro& the partnership. 3n other . .J *c+ 6anila Athletic !upply. the sa&e &ust not involve an e/a&ination of the pro)ative value of the evidence presented )y the liti'ants or any of the&. the test of . O2 .R C.led'e&ent of "articipatin' Capital the Re&oti'ue spouses e/ecuted in 1:9$.he R. .ere esta)lished and several real properties .ith the R.#DA#.2.! ACW53R. HAD OF#.23 .hether or not the partnership su)Gect of the Ac7no.he core issue is .led'e&ent of "articipatin' Capital funded the su)Gect real properties.hat the la. &ay )e raised )y the parties and passed upon )y this Court.D !5CH !HAR. He is relyin' on the Ac7no.D 3# #O.hich .RR.3.3.31 . shall loo7 into the facts only in so far as the t. 2003.hat the la.ords..he respondents.R3O5!(M .J *)+ 6A! Ru))er "roducts.ise it is a @uestion of fact.dated 6arch 21.8 .R3CO JARA#.in' corporations to the e/tent stated in their Articles of 3ncorporation1 *a+ Rural Can7 of Carotac #uevo.!!. on certiorari under Rule -9 of the Rules of Civil "rocedure. in .R. . .

n the rule for deter&inin' .hether such co-o. if properly considered.8 a duly notari4ed docu&ent .ho severally retain the title to their respective contri)ution.as affir&ed in the 1:9$ Ac7no.nership or co-possession does not itself esta)lish a partnership.and real properties. in "ascual v.as no reason to pattern her share in the other corporations fro& her share in the partnershipRs )usinesses. Civil Code lays do. sur&ises or conGecturesJ *-+ .hen a transaction should )e dee&ed a partnership or a co-o.as for&ed in 1:-> and .hich . . and no co&&unity of interest as principal proprietors in the )usiness itself .here is a co-o.van'elista v. providesJ *2+ Co-o. !aid article para'raphs 2 and 3.hen the findin's of fact are conflictin'J *>+ . .3> @uoted the concurrin' opinion of 6r.hey have no co&&on stoc7 or capital.he Court of Appeals also said that her clai& in the respondentsR real properties .nership .he Court of Appeals ruled that AntonietaRs clai& of %E is )ased on the 8Ac7no. there . 2actual findin's of the trial court.hen an undivided thin' or ri'ht )elon's to different persons.hen the findin's of fact of the Court of Appeals are pre&ised on the a)sence of evidence and are contradicted )y the evidence on record.hich the returns are derivedJ Dro! the above it appears that the fact that those &ho agree to for! a co( o&nership share or do not share an# profits !ade b# the use of the propert# held in co!!on does not convert their venture into a partnership.33 3n this case.39 . Hence.nership. a)surd or i&possi)leJ *2+ . property.he sharin' of 'ross returns does not of itself esta)lish a partnership.hich the proceeds derived.hich they are )asedJ *:+ .it1 3 .as essentially the sa&e as AntonietaRs.he Collector of 3nternal Revenue3$ to further elucidate on the distinctions )et. are final and conclusive e/cept in the follo. .hich.in' o)servation1 Article 1$>: of the ne.hen the findin' is 'rounded entirely on speculations.in' cases1 *1+ .hen t. Ehis onl# !eans that8 aside fro! the circu!stance of profit8 the presence of other ele!ents constituting partnership is necessar#8 such as the clear intent to for! a partnership8 the existence of a >uridical personalit# different fro! that of the individual partners8 and the freedo! to transfer or assign an# interest in the propert# b# one &ith the consent of the others. .nership and a partnership. the Court of Appeals also ruled that petitioner )e 'iven his >E share in the sa&e )usinesses listed in the Ac7no.ners or co-possessors do or do not share any profits &ade )y the use of the propertyJ *3+ . in &a7in' its findin's.hen confir&ed )y the Court of Appeals.ho contri)ute property or funds for a co&&on enterprise and a'ree to share the 'ross returns of that enterprise in proportion to their contri)ution. .ithout citation of specific evidence on . )ut . .hich served as the )est evidence as to all the &atters contained therein.he Co&&issioner of 3nternal Revenue.ould Gustify a different conclusionJ and *10+ . .ish ho.as specific as to the su)Gect of its covera'e. . .32!ince petitionerRs clai& . A Goint purchase of land.o.led'e&ent of "articipatin' Capital.hen the findin's of fact are conclusions . )y t.hen the findin's of the Court of Appeals are contrary to those of the trial courtJ *%+ .hen there is a 'rave a)use of discretionJ *3+ .hen the inference &ade is &anifestly &ista7en.3.led'e&ent of "articipatin' Capital.ith the intention of dividin' the profits a&on' the&selves. or industry to a co&&on fund.hen the Court of Appeals.3t is a partnership .he Court. . "a'e I 39 . . to . .ent )eyond the issues of the case and the sa&e is contrary to the ad&issions of )oth appellant and appelleeJ *$+ .nership. does not constitute a co-partnership in respect theretoJ nor does an a'ree&ent to share the profits and losses on the sale of land create a partnershipJ the parties are only tenants in co&&on. are not there)y rendered partners.as &ore 8precarious8 as these . )ut in the sa&e )reath.hen the Court of Appeals &anifestly overloo7ed certain relevant facts not disputed )y the parties and .e find no error in the rulin' of the Court of Appeals.een a co-o. Ft is evident that an isolated transaction &hereb# t&o or !ore persons contribute funds to bu# certain real estate for profit in the absence of other circu!stances sho&ing a contrar# intention cannot be considered a partnership.o or &ore persons )ind the&selves to contri)ute &oney.hen the Gud'&ent of the Court of Appeals is )ased on &isapprehension of factsJ *9+ .led'e&ent of "articipatin' Capital. assert that a ver)al partnership . 9r the sharing of the gross returns does not of itself establish a partnership &hether or not the persons sharing therein have a >oint or co!!on right or interest in the propert#.ith the respondents as a coo. Justice An'elo Cautista in .ere all covered )y certificates of title . "ersons . . Coth the petitioner and Antonieta Jarantilla characteri4e their relationship .hether or not the persons sharin' the& have a Goint or co&&on ri'ht or interest in any property fro& .ever to &a7e the follo.

Rafael Jarantilla *!3P . ".H.F.HO5!A#D+SSSS. and another a'reed to )eco&e o.M-23D.# .radin'.HO5!A#D+SSSSS. the spouses Cuenaventura Re&oti'ue and Conchita Jarantilla de Re&oti'ue.HO5!A#D+SSS.00 . Wue4on City. 2ilipinos and residents of (oyola Hei'hts.. .ith the other co-o.3. Cota)ato. and 'eneral &erchandise are recorded in their respective )oo7s . a'ree a&on' the&selves as to the &ana'e&ent. . )oth of le'al a'e..s1 1. .ners. Rosita J.#.. As this case revolves around the le'al effects of the Ac7no. "a'e I 3> .HO5!A#D+SS 19.o essential ele&ents in a contract of partnership1 (a) an agree!ent to contribute !one#8 propert# or industr# to a co!!on fund. 1:9$.hatever their relation &ay have )een as to third parties. and use of such property and the application of the proceeds therefro&. (b) generall# participating in both profits and losses.00 $.een the three parties. 2ederico Jarantilla.000.6. Antonieta Jarantilla *.!. 3# F3. ..000..000.ith Cuenaventura Re&oti'ue as the re'istered o.FO .nership of property does not itself create a partnership )et.3% *Citations o&itted.ners of a sin'le tract of realty.hat aside fro& the persons &entioned in the ne/t precedin' para'raph.HO5!A#D+"29.3: 3t is not denied that all the parties in this case have a'reed to contri)ute capital to a co&&on fund to )e a)le to later on share its profits. 19.HO5!A#D+S. x x x.!1 . 9. it .hat they are not the only o. (c) and such a co!!unit# of interest8 as far as third persons are concerned as enables each part# to !aBe contract8 !anage the business8 and dispose of the &hole propert#. .O2.3.000. no other person has any interest in the a)ove-&entioned three esta)lish&ents.00 -.he co&&on o. Wuintin Dis&anos *.ners of the capital of the three esta)lish&ents and their participation in the capital of the three esta)lish&ents to'ether . here)y state1 .!. no partnership e/isted as )et.he first ele&ent is undou)tedly present in the case at )ar.. .hey have ad&itted this fact.3# CA"3.00 3. a'reed to its veracity. Cota)ato Cranch. Conchita Jarantilla de Re&oti'ue *. the Re&oti'ue . . *23D.#.00 2. ".#. thou'h they &ay use it for the purpose of &a7in' 'ainsJ and they &ay.. Jr.A( A#OF A(( 6. 3loilo City and the Re&oti'ue .ithout )eco&in' partners.3C3"A. >. ". Cuenaventura Re&oti'ue *.M-23D.000..HO5!A#D+S 29.radin' of Calle Real.. and (b) intent to divide the profits a!ong the contracting parties.3 H.F.00 %.#.een the o.# . his )rother..e.. the )rother and the other not )ein' entitled to share in plaintiffRs co&&ission. contri)ute &oney and property to a co&&on fund.n intent to for! the sa!e.+ 5nder Article 1$>$ of the Civil Code. . and did.HO5!A#D+SSS.000.00 >.Fhere plaintiff.!! FH. there are t.ould )e instructive to e/a&ine the pertinent portions of this docu&ent1 ACA#OF(. %. O2 "AR... holdin' as tenants in co&&on.led'e&ent of "articipatin' Capital. and even su)&itted one co&&on docu&entary evidence to prove such partnership .#. all dealin' in athletic 'oods and e@uip&ents.ner and are )ein' operated )y the& as such1 .hat the 6anila Athletic !upply at $12 Raon. and to divide the profits of disposin' of it.. all the parties in this case have a'reed to.ners as of the year 1:92 are stated as follo.. this 2:th day of April.the Ac7no. Fn order to constitute a partnership inter sese there !ust beG (a) .000. .led'e&ent of "articipatin' Capital. .000.00 9. they si'n this instru&ent in the City of 6anila. Dicencio Deoca&po *232. ad&ittedly. for. "R. Hence8 the issue narro&s do&n to their intent in acting as the# did. Deoca&po *232. 2.# CM .3.R.D . 6anila.hat ..

!ince there .here is no evidence that the su)Gect real properties . R. Ra)anillo. the Court of Appeals did not err in li&itin' petitionerRs share to the assets of the )usinesses enu&erated in the Ac7no. .&phases supplied.= C5.ever.this Court e/plained the concept of trusts. then to his share in proportion to his contri)ution to the partnership.<!'d.he petitioner further asserts that he is entitled to respondentsR properties )ased on the concept of trust. this Court held that1 Respondent has presented only )are assertions that a trust . Ho.hile i&plied trusts co&e into )ein' )y operation of la. )ut the industrial partner shall not )e lia)le for the losses.radin' in Cota)ato City.#AD. the a&ount to )e refunded is necessarily li&ited to its total resources. .5RA R. )efore the partners can )e paid their shares. 3n turn. the shares to )e paid out to the partners is necessarily li&ited only to its total resources.led'e&ent of "articipatin' Capital. it can only pay out . . that &ust refund the shares of the partners.led'e&ent of "articipatin' Capital is a duly notari4ed docu&ent voluntarily e/ecuted )y Conchita Jarantilla-Re&oti'ue and Cuenaventura Re&oti'ue in 1:9$. He clai&s that since the su)Gect real properties . 3n Dillareal v. the evidence &ust )e trust.as created.it1 .. petitioner fails to reali4e that this docu&ent specifically enu&erated the )usinesses covered )y the partnership1 6anila Athletic !upply.herein he has a >E share.led'e&ent of "articipatin' Capital.hat he &ay have contri)uted.he Ac7no.-0 .ere assets of the partnership referred to in the Ac7no. the industrial partner shall receive such share as &ay )e Gust and e@uita)le under the circu&stances.A JARA#. then there is no reason to deviate fro& such a'ree&ent and 'o )eyond the stipulations in the docu&ent. .-9 On provin' the e/istence of a trust. *.-. 1$:$. .+ 3t is clear fro& the fore'oin' that a partner is entitled only to his share as a'reed upon. Ra&ire4. as stated in the Ac7no.hey arise fro& the nature or circu&stances of the consideration involved in a transaction .-2 .ays to have )een conte&plated )y the parties.#.ith the a'ree&ent. Re&oti'ue . <!'d. the share of each partner in the profits and losses shall )e in proportion to .= CO#CH3.herefore.he losses and profits shall )e distri)uted in confor&ity . 3f )esides his services he has contri)uted capital. "a'e I 3$ . the e/istence of the trust and its ele&ents. Ho. As for the profits. After all the creditors have )een paid. or in the a)sence of any such stipulations.8-3 3n "i'ao v.3 5. and e@uity &andates that he should )e considered as a co-o.ever.ith e/tre&e caution. this Court has held thus1 8As a rule. any such intention. i&plied trusts are either resultin' or constructive trusts. the share of each in the losses shall )e in the sa&e proportion. . as a separate and distinct entity. .6O.radin' in 3loilo City and Re&oti'ue . 3f only the share of each partner in the profits has )een a'reed upon. either throu'h i&plication of an intention to create a trust as a &atter of la. to . Fhile i&plied trusts &ay )e proved )y oral evidence.here)y one person there)y )eco&es invested . #otin' the need to prove the e/istence of a trust.6O.orthy and received )y the courts .ner of those properties in such proportion. . the )urden of provin' the e/istence of a trust is on the party assertin' its e/istence./press trusts are created )y the intention of the trustor or of the parties. and such proof &ust )e clear and satisfactorily sho.hich consists of all its assets.3((A D.as a clear a'ree&ent that the capital the partners contri)uted .hatever is left of the partnership assets )eco&es availa)le for the pay&ent of the partnersR shares. 3n the a)sence of stipulation.it1 !ince it is the partnership.ent to the three )usinesses. and even contrary to.ith le'al title )ut is o)li'ated in e@uity to hold his le'al title for the )enefit of another.-1 the Court held that since a partnership is a separate Guridical entity.ords.ere purchased usin' funds of the partnership. or throu'h the i&position of the trust irrespective of. . 3n other . to .he petitioner hi&self clai&s his share to )e >E.led'e&ent of "articipatin' Capital. "etitioner does not dispute its contents and is actually relyin' on it to prove his participation in the partnership. then 8la.3 5. the creditors of the partnership &ust first )e co&pensated. Article 1$:$ of the Civil Code provides1 Art. he shall also receive a share in the profits in proportion to his capital.hat it has in its coffers. Resultin' trusts are )ased on the e@uita)le doctrine that valua)le consideration and not le'al title deter&ines the e@uita)le title or interest and are presu&ed al.

e/pressed our disapproval on usin' &ere selfservin' testi&onies to support oneRs clai&. or enGoin the enforce&ent of such Gud'&ent if not yet i&ple&ented.C.$avvphi$ As held )y this Court in Repu)lic of the "hilippines v. set aside. 6oreover. persons dealin' .hich the title .as sufficiently proved )y their . 3n the .nership.s1 A collateral attac7 transpires .hile ta/ declarations and realty ta/ receipts do not conclusively prove o.led'e&ent of "articipatin' Capital. !r.nershipJ hence. other than these unsu)stantiated testi&onies.rust. throu'h an action . 8such evidence cannot overpo.ith property covered )y a . / / /. . . they &ay constitute stron' evidence of o.n ad&issions and on the testi&ony of Antonieta Jarantilla. an attac7 is &ade a'ainst the Gud'&ent 'rantin' the title.hat appears on its face. proven their case a'ainst the petitioner. e@uivocal or indefinite declarations.931 3ndeed.heir testi&onies cannot prevail over the array of docu&ents presented )y Celen. Aside fro& his )are alle'ations.hen. After all.n ad&ission. the respondents have not only.as for partition of a co-o. )y testi&onial evidence..ithout the partnershipRs inco&e.nership cannot )e )ased si&ply on the testi&onies of . as follo. the "roperty Re'istration Decree. K A certificate of title shall not )e su)Gect to collateral attac7.nership over portions of the su)Gect real properties on the stren'th of his o. the petitioner should have successfully sho. .his &anner of attac7 is to )e distin'uished fro& a direct attac7 a'ainst a Gud'&ent 'rantin' the title. a . and a stron' presu&ption e/ists that a .as re'ularly issued and valid. to prove that the respondents did not have the &eans to fund their other )usinesses and real properties . )ut have also presented sufficient docu&entary evidence to su)stantiate their clai&s.orrens title.9As . -%.orrens title is incontroverti)le a'ainst anyinfor!acion possessoria. . .hich as discussed a)ove.hen its o)Gective is to nullify the title.and should not )e &ade to rest on loose.his Court had on several occasions. or cancelled e/cept in a direct proceedin' in accordance .nership.n that these funds ca&e fro& his share in the partnership profits.ven assu&in' ar'uendo that so&e partnership inco&e .hich is prohi)ited under !ection -% of "residential Decree #o.een a direct and an indirect or collateral attac7. Alfaro. 3t cannot )e altered.as used to ac@uire these properties. 3n Oca&po v.ith la.e held that1 "etitioners assert that their clai& of co-o.-:. A .ever. 92 Ho.orrens certificate of title are not re@uired to 'o )eyond . they ac@uired and funded such properties in addition to ta/ receipts and ta/ declarations. &ore so since plaintiffRs <petitionerRs= clai&s a&ount to a collateral attac7. . this cannot deprive an a''rieved party of a re&edy in la. .his Court has dee&ed an action or proceedin' to )e 8an attac7 on a title . &odified. there)y challen'in' the Gud'&ent pursuant to . and as stated in the Ac7no.hey presented preponderant proof on ho.herefore. of other title e/istin' prior to the issuance thereof not annotated on the . a collateral.led'e&ent of "articipatin' Capital.ertificate not sub>ect to collateral attacB. . petitioner asserts o.orthy evidence is re@uired )ecause oral evidence can easily )e fa)ricated.nership of the property . in another action to o)tain a different relief and as an incident to the present action. .orrens syste& does not create or vest title as re'istration is not a &ode of ac@uirin' o.as decreed.. )y relyin' on his o.er the conclusiveness of these certificates of title. it is a rule in this Gurisdiction that testi&onial evidence cannot prevail over docu&entary evidence. Orfinada.nership of .he petitioner has failed to prove that there e/ists a trust over the su)Gect real properties.orrens title is 'enerally conclusive evidence of o.90 a case on partition of a co-o. Oca&po. alle'ations and defenses. that the respondents used the partnershipRs &oney to purchase the said properties.ere ac@uired out of the proceeds of the )usinesses covered )y such docu&ent. )y his o.8-%6oreover.9$ this Court further distin'uished )et.-$ 3t has )een held that 8. failed to prove that the real properties he is clai&in' co-o.hose &ain o)Gective is to annul.nership of the land referred to therein. he has failed to sho. "etitioner has not presented evidence. "etitionerRs only piece of docu&entary evidence is the Ac7no. he o. .nership or title over the particular property descri)ed therein. . the petitioner is clai&in' his >E share in the su)Gect real properties.nership.itnesses -(uisa Oca&po-(lorin and 6elita Oca&po. A clai& of o.ned a &ere >E e@uity in the partnership. Fe disa'ree. or to see7 recovery if the property titled under the Gud'&ent had )een disposed of.ords of the Court of Appeals.hen acco&panied )y possession for a period sufficient for prescription. 3n essence. self-servin' as they are.89> 3n A'uilar v.n selfservin' testi&ony and the e@ually )iased testi&ony of Antonieta Jarantilla.orrens title .nership .itnessesJ &uch less on those of interested parties. "a'e I 3% .899 !.91 3t is true that a certificate of title is &erely an evidence of o.8 -> . petitionerRs theory has no factual or le'al le' to stand on. indirect attac7 on respondentsR ad&itted titles. 192:. to per&it petitionerRs clai& on these properties is to allo.e have settled that this action never really . On the other hand. Re'istration in the .

FH;R;2OR;, the "etition is here)y DENIED and the Decision of the Court of Appeals in CA- .R. CD #o. -0%%$, dated July 30, 2002 is AFFIRMED. !O ORD;R;D.

G.R. No. 1F33/+

Ju#0 29, 2010

MARSMAN DR6SDALE LAND, INC., "etitioner, vs. P!ILIPPINE GEOANAL6TICS, INC. AND GOTESCO PROPERTIES, INC., Respondents. / - - - - - - - - - - - - - - - - - - - - - - -/ G.R. No. 1F33/6 GOTESCO PROPERTIES, INC., "etitioner, vs. MARSMAN DR6SDALE LAND, INC. AND P!ILIPPINE GEOANAL6TICS, INC., Respondents. DECISION CARPIO MORALES, J.: On 2e)ruary 12, 1::$, 6ars&an Drysdale (and, 3nc. *6ars&an Drysdale+ and otesco "roperties, 3nc. * otesco+ entered into a Joint Denture A'ree&ent *JDA+ for the construction and develop&ent of an office )uildin' on a land o,ned )y 6ars&an Drysdale in 6a7ati City. 1 .he JDA contained the follo,in' pertinent provisions1 !;C.3O# -. CA"3.A( O2 .H; JD 3t is the desire of the "arties herein to i&ple&ent this A'ree&ent )y investin' in the "ROJ;C. on a 232.M *90E+ ";RC;#.- 232.M *90E+ ";RC;#. )asis. -.1. Contri)ution of <6ars&an Drysdale=-<6ars&an Drysdale= shall contri)ute the "roperty. .he total appraised value of the "roperty is ";!O!1 2O5R H5#DR;D .F;#.M 63((3O# *"-20,000,000.00+. 2or this purpose, <6ars&an Drysdale= shall deliver the "roperty in a )uilda)le condition ,ithin ninety *:0+ days fro& si'nin' of this A'ree&ent )arrin' any unforeseen circu&stances over ,hich <6ars&an Drysdale= has no control. Cuilda)le condition shall &ean that the old )uildin'?structure ,hich stands on the "roperty is de&olished and ta7en to 'round level. -.2. Contri)ution of < otesco=- < otesco= shall contri)ute the a&ount of ";!O!1 2O5R H5#DR;D .F;#.M 63((3O# *"-20,000,000.00+ in cash ,hich shall )e paya)le as follo,s1 -.2.1. .he a&ount of ";!O!1 232.M 63((3O# *"90,000,000.00+ upon si'nin' of this A'ree&ent. -.2.2. .he )alance of ";!O!1 .HR;; H5#DR;D !;D;#.M 63((3O# *"3$0,000,000.00+ shall )e paid )ased on pro'ress )illin's, relative to the develop&ent and construction of the Cuildin', )ut shall in no case e/ceed ten *10+ &onths fro& delivery of the "roperty in a Cuilda)le condition as defined in section -.1. A Goint account shall )e opened and &aintained )y )oth "arties for handlin' of said )alance, a&on' other "roGect concerns. -.3. 2undin' and 2inancin' -.3.1 Construction fundin' for the "roGect shall )e o)tained fro& the cash contri)ution of < otesco=.

"a'e I 3:

-.3.2 !u)se@uent fundin' shall )e o)tained fro& the pre-sellin' of units in the Cuildin' or, ,hen necessary, fro& loans fro& various )an7s or financial institutions. < otesco= shall arran'e the re@uired fundin' fro& such )an7s or financial institutions, under such ter&s and conditions ,hich ,ill provide financin' rates favora)le to the "arties. -.3.3 <6ars&an Drysdale= shall not )e o)li'ated to fund the "roGect as its contri)ution is li&ited to the "roperty. -.3.- 3f the cost of the "roGect e/ceeds the cash contri)ution of < otesco=, the proceeds o)tained fro& the presellin' of units and proceeds fro& loans, the "arties shall a'ree on other sources and ter&s of fundin' such e/cess as soon as practica)le. -.3.9 / / / /. -.3.> / / / /. -.3.$ / / / /. -.3.% All funds advanced )y a "arty *or )y third parties in su)stitution for advances fro& a "arty+ shall )e repaid )y the JD. -.3.: 3f any "arty a'rees to &a7e an advance to the "roGect )ut fails to do so *in ,hole or in part+ the other party &ay advance the shortfall and the "arty in default shall inde&nify the "arty &a7in' the su)stitute advance on de&and for all of its losses, costs and e/penses incurred in so doin'. *e&phasis suppliedJ underscorin' in the ori'inal+ Dia .echnical !ervices Contract *.!C+ dated July 1-, 1::$,2 the Goint venture en'a'ed the services of "hilippine eoanalytics, 3nc. *" 3+ to provide su)surface soil e/ploration, la)oratory testin', seis&ic study and 'eotechnical en'ineerin' for the proGect. " 3, ,as, ho,ever, a)le to drill only four of five )oreholes needed to conduct its su)surface soil e/ploration and la)oratory testin', Gustifyin' its failure to drill the re&ainin' )orehole to the failure on the part of the Goint venture partners to clear the area ,here the drillin' ,as to )e &ade.3 " 3 ,as a)le to co&plete its seis&ic study thou'h. " 3 then )illed the Goint venture on #ove&)er 2-, 1::$ for "2%-,993.90 representin' the cost of partial su)surface soil e/plorationJ and on January 19, 1::% for "290,%00 representin' the cost of the co&pleted seis&ic study.Despite repeated de&ands fro& " 3,9 the Goint venture failed to pay its o)li'ations. 6ean,hile, due to unfavora)le econo&ic conditions at the ti&e, the Goint venture ,as cut short and the planned )uildin' proGect ,as eventually shelved.> " 3 su)se@uently filed on #ove&)er 11, 1::: a co&plaint for collection of su& of &oney and da&a'es at the Re'ional .rial Court *R.C+ of Wue4on City a'ainst 6ars&an Drysdale and otesco. 3n its Ans,er ,ith Counterclai& and Cross-clai&, 6ars&an Drysdale passed the responsi)ility of payin' " 3 to otesco ,hich, under the JDA, ,as solely lia)le for the &onetary e/penses of the proGect.$ otesco, on the other hand, countered that " 3 has no cause of action a'ainst it as " 3 had yet to co&plete the services enu&erated in the contractJ and that 6ars&an Drysdale failed to clear the property of de)ris ,hich prevented " 3 fro& co&pletin' its ,or7.% Cy Decision of June 2, 200-,: Cranch 22> of the Wue4on City R.C rendered Gud'&ent in favor of " 3, disposin' as follo,s1 FH;R;2OR;, in vie, of all the fore'oin', Gud'&ent is here)y rendered in favor of plaintiff <" 3=. .he defendants < otesco= and <6ars&an Drysdale= are ordered to pay plaintiff, Gointly1 *1+ the su& of "939,393.90 ,ith le'al interest fro& the date of this decision until fully paidJ *2+ the su& of "200,000.00 as e/e&plary da&a'esJ *3+ the su& of "200,000.00 as and for attorneyRs feesJ and "a'e I -0

*-+ costs of suit. .he cross-clai& of defendant <6ars&an Drysdale= a'ainst defendant < otesco= is here)y follo,s1 RA#.;D as

a+ Defendant < otesco= is ordered to rei&)urse co-defendant <6ars&an Drysdale= in the a&ount of "939,393.<90= in accordance ,ith the <JDA=. )+ Defendant < otesco= is further ordered to pay co-defendant <6ars&an Drysdale= the su& of "100,000.00 as and for attorneyRs fees. !O ORD;R;D. *underscorin' in the ori'inalJ e&phasis supplied+ 6ars&an Drysdale &oved for partial reconsideration, contendin' that it should not have )een held Gointly lia)le ,ith otesco on " 3Rs clai& as ,ell as on the a,ards of e/e&plary da&a'es and attorneyRs fees. .he &otion ,as, )y Resolution of Octo)er 2%, 2009, denied. Coth 6ars&an Drysdale and otesco appealed to the Court of Appeals ,hich, )y Decision of January 2%, 200%,10affir&ed ,ith &odification the decision of the trial court. .hus the appellate court disposed1 FH;R;2OR;, pre&ises considered, the instant appeal is "AR.(M RA#.;D. .he assailed Decision dated June 2, 200- and the Resolution dated Octo)er 2%, 2009 of the R.C of Wue4on City, Cranch 22>, in Civil Case #o. W::-3:2-% are here)y A223R6;D ,ith 6OD323CA.3O# deletin' the a,ard of e/e&plary da&a'es in favor of <" 3= and the "100,000.00 attorneyRs fees in favor of <6ars&an Drysdale= and orderin' defendantappellant < otesco= to R;36C5R!; <6ars&an Drysdale= 90E of the a''re'ate su& due <" 3=, instead of the lu&p su& "939,393.00 a,arded )y the R.C. .he rest of the Decision stands. !O ORD;R;D. *capitali4ation and e&phasis in the ori'inalJ underscorin' supplied+ 3n partly affir&in' the trial courtRs decision, the appellate court ratiocinated that not,ithstandin' the ter&s of the JDA, the Goint venture cannot avoid pay&ent of " 3Rs clai& since 8<the JDA= could not affect third persons li7e <" 3= )ecause of the )asic civil la, principle of relativity of contracts ,hich provides that contracts can only )ind the parties ,ho entered into it, and it cannot favor or preGudice a third person, even if he is a,are of such contract and has acted ,ith 7no,led'e thereof.811 .heir &otions for partial reconsideration havin' )een denied,12 6ars&an Drysdale and otesco filed separate petitions for revie, ,ith the Court ,hich ,ere doc7eted as .R. #os. 1%33$- and 1%33$>, respectively. Cy Resolution of !epte&)er %, 200%, the Court consolidated the petitions. 3n .R. #o. 1%33$-, 6ars&an Drysdale i&putes error on the appellate court in A. SADJ5D 3# <6AR!6A# DRM!DA(;= F3.H JO3#. (3AC3(3.M A2.;R CO#C;D3# < O.;!CO= !HO5(D 5(.36A.;(M C; !O(;(M (3AC(; .O <" 3=. C. SAFARD3# A..OR#;MR! 2;;! 3# 2ADOR O2 <" 3=S .HA.

C. S3 #OR3# .H; 2AC. .HA. <" 3= D3D #O. CO6"(M F3.H .H; R;W53R;6;#. O2 8!A.3!2AC.ORM ";R2OR6A#C;8 O2 3.! "R;!.A.3O# FH3CH, "5R!5A#. .O .H; .;CH#3CA( !;RD3C;! CO#.RAC., 3! .H; CO#D3.3O# !3#; W5A #O# .O CO6";#!A.3O#. D. SD3!R; ARD3# C(;AR ;D3D;#C; !HOF3# A# AFARD O2 A..OR#;MR! 2;;!.13 On the other hand, in .R. #o. 1%33$>, <6AR!6A# DRM!DA(;R!= ;#.3.(;6;#. .O

otesco peddles that the appellate court co&&itted error ,hen it

SORD;R;D < O.;!CO= .O "AM "939,393.90 A! CO!. O2 .H; FORA ";R2OR6;D CM <" 3= A#D "100,000.00 <A!= A..OR#;MR! 2;;! S<A#D= .O R;36C5R!; <6AR!6A# DRM!DA(;= 90E O2 "939,393.90 A#D "AM <6AR!6A# DRM!DA(;= "100,000.00 A! A..OR#;MR! 2;;!. 1On the issue of ,hether " 3 ,as indeed entitled to the pay&ent of services it rendered, the Court sees no i&perative to re-e/a&ine the con'ruent findin's of the trial and appellate courts thereon. 5ndou)tedly, the e/ercise involves an e/a&ination of facts ,hich is nor&ally )eyond the a&)it of the CourtRs functions under a petition for revie,, for it is ,ell-settled that this Court is not a trier of facts. Fhile this Gudicial tenet ad&its of "a'e I -1

3f fro& the la.1:and all )illin' invoices indicated the consortiu& therein as the client. such as .o or &ore creditors or of t.hich . Art.ith the a'ree&ent. he shall also receive a share in the profits in proportion to his capital.hen the findin's of facts are contradicted )y the evidence on record. . it is otesco since. the sa&e ratio applies in splittin' the "939. or the nature or the .!C clearly listed the Goint venturers 6ars&an Drysdale and otesco as the )eneficial o. that it has no lia)ility to pay " 3 since it .hen the la.here is a solidary lia)ility only . .as to )e o)tained fro& otescoRs cash contri)ution. As the appellate court held. otesco )ears the . 120$.19 these e/tenuatin' 'rounds find no application in the present petitions..e/ceptions. the industrial partner shall receive such share as &ay )e Gust and e@uita)le under the circu&stances.in' to " 3 is Goint )et. A Goint venture )ein' a for& of partnership. or .hen the findin's of facts of the appellate court are contrary to those of the trial courtRs. as its *6ars&an DrysdaleRs+ participation in the venture . the capital contri)utions of 6ars&an Drysdale *land+ and otesco *cash+ as .ith the prestations. As for the profits. " 3 e/ecuted a technical service contract . presu&e that the o)li'ation o. otesco &aintains. inter alia. the credit or de)t shall )e presu&ed to )e divided into as &any e@ual shares as there are creditors or de)tors. the credits or de)ts )ein' considered distinct fro& one another. or .1% .hey did not provide for the splittin' of losses. "a'e I -2 .hen the lia)ility of the Goint venturers to each other .een Goint venturers 6ars&an Drysdale and lia)ility to pay " 3 its unpaid clai&s. Applyin' the a)ove-@uoted provision of Article 1$:$ then.as li&ited to the land.o or &ore de)tors in one and the sa&e o)li'ation does not i&ply that each one of the for&er has a ri'ht to de&and. 120%.een 6ars&an Drysdale and otesco.o 6ars&an Drysdale. or nature of the o)li'ation re@uires solidarity. 3f only the share of each partner in the profits has )een a'reed upon. the Court is convinced that " 3 had &ore than sufficiently esta)lished its clai&s a'ainst the Goint venture. the sa&e cannot )e used to defeat the la. under the JDA. it is to )e 'overned )y the la. the share of each in the profits and losses shall )e in proportion to . . ho. the share of each in the losses shall )e in the sa&e proportion.ful clai& of " 3 a'ainst the t.ever. 3n the a)sence of stipulation.90 o)li'ation-loss of the Goint venture. or that each one of the latter is )ound to render. . 1$:$. entire co&pliance .ever.he only ti&e that the JDA &ay )e &ade to apply in the present petitions is .hich respectively read1 Art. )ut the industrial partner shall not )e lia)le for the losses. 3f )esides his services he has contri)uted capital.as endorsed to otesco for processin' and pay&ent.hen the o)li'ation e/pressly so states. .hat he &ay have contri)uted.393.$avvphi$ .20 Article 1$:$ of the Civil Code provides1 Art.as una)le to co&plete its underta7in'.he concurrence of t. 6ars&an Drysdale and otesco a'reed on a 90-90 ratio on the proceeds of the proGect. 3n fact.ell as the fundin' and financin' &echanis& for the proGect. su)Gect to the Rules of Court 'overnin' the &ultiplicity of suits.ith the Goint venture and . construction fundin' for the proGect . or .as due to the fault of 6ars&an Drysdale that " 3 . *e&phasis and underscorin' supplied+ 3n the JDA.ner of the proGect.he .s on partnership. *e&phasis and underscorin' supplied+. .ordin' of the o)li'ations to .hen it *" 3+ received a Certificate of "ay&ent1> fro& the Goint ventureRs proGect &ana'er1$ .hen the Gud'&ent is )ased on a &isapprehension of facts.he core issue to )e resolved then is . Articles 120$ and 120% of the Civil Code.hich )et. 6ars&an Drysdale had lon' reco'ni4ed " 3Rs contractual clai&s .o Goint venturers-partners.21 .he Court finds 6ars&an Drysdale and otesco Gointly lia)le to " 3.hich the precedin' article refers the contrary does not appear.ould set in. Fhile the JDA clearly spelled out. At all events.as never a party to the JDA.he losses and profits shall )e distri)uted in confor&ity . ho.

ould not only )e contrary to the la. otesco.indin' up of the )usiness. Ehe Dacts "a'e I -3 .. 1::2 rendered )y the Re'ional .ard of attorneyRs fees in its favor &ust )e denied. and interest of 12E per annu& on the respective o)li'ations of 6ars&an Drysdale and otesco is i&posed.6ars&an Drysdale and otesco should )ear le'al interest on their respective o)li'ations. 2000 Resolution2 of the Court of Appeals3 *CA+ in CA. despite the fact that " 3Rs services redounded to the )enefit of the Goint venture. 3nc. 1::: up to the finality of the Decision. there is no need for otesco to rei&)urse 6ars&an Drysdale for 890E of the a''re'ate su& due8 to " 3.as co&pelled to liti'ate or that the civil action or proceedin' a'ainst it .ever. vs. #o pronounce&ent as to costs.as denied in the i&pu'ned Resolution. RAMIRE5. J.ase . and #5((323.ith this CourtRs rulin' in .2OR.he assailed Decision disposed as follo. Ehe . Allo. -102>. confor&a)ly .8Reconsideration .hat it paid to " 3 . Costs a'ainst petitioners 6ars&an Drysdale and !O ORD. affir&ed. DONALDO EFREN C.R.he 'rant )y the lo. G. 2000 Decision1 and the July 2>.s1 8FH. on partnership on division of losses )ut .D.he appellate courtRs decision &ust )e &odified.(. DIOGENES )ILLAREAL "#$ CARMELITO JOSE.as thus erroneous.( A share in a partnership can )e returned only after the co&pletion of the latter0s dissolution.. fore'oin' pre&ises considered.astern !hippin' (ines.er courts of 6ars&an Drysdale cross-clai& a'ainst otesco . li@uidation and . No. 3f the adGud'ed a&ount and the interest re&ain unpaid thereafter.00. in all other respects. 6a7ati City is here)y !.as clearly unfounded.R. on Certiorari )efore us challen'es the 6arch 23. PANGANI AN. co&puted fro& the last de&and or on January 9. RAMIRE5 JR.he "etition for Revie.R CD #o.2OR. )ILLAREAL. the Goint venture shall repay the advancin' party.he appealed decision is. 3t cannot clai& that it ..CESAR G. 3t . the assailed Decision and Resolution of the Court of Appeals are A223R6.ould parta7e of a clear case of unGust enrich&ent at otescoRs e/pense.as in fact hardline insistence on otesco havin' sole responsi)ility to pay for the o)li'ation. 6ars&an Drysdale and otesco )ein' Gointly lia)le. decision is rendered orderin' the <petitioners= Gointly and severally to pay and rei&)urse to <respondents= the a&ount of "293.D.2.as thus not precluded fro& advancin' funds to pay for " 3Rs contracted services to a)ate any le'al action a'ainst the Goint venture itself. . FH.respondents.ith 6OD323CA. petitioners.rial Court.R. the Decision dated July 21.. 6ars&an DrysdaleRs supplication for the a.in' 6ars&an Drysdale to recover fro& otesco . 2inally. an interest of 12E per annu& on the outstandin' o)li'ation &ust )e i&posed fro& the ti&e of de&and23as the delay in pay&ent &a7es the o)li'ation one of for)earance of &oney.R.. Court of Appeals. . RAMIRE5 "#$ S1ou-0. 2003 LU5)IMINDA J.D . v. that spa. "#$ CARMELITA C.11-. 1++21+ July 1+.ned the le'al action a'ainst it and otesco. Cranch 1-%. in the event a party advances funds for the proGect. for the JDA provided that. 22 6ars&an Drysdale .D and in lieu thereof a ne. .. ho. the interest rate shall )e 12E per annu& co&puted fro& the ti&e the Gud'&ent )eco&es final and e/ecutory until it is fully satisfied. A!3D.3O# in that the order for otesco to rei&)urse 6ars&an Drysdale is D.

Hence.as nonetheless dissolved . Respondents Cesar and Car&elita Ra&ire4.% On 6arch 1.hen they stopped operatin' the restaurant. 1::2 Decision. 1:%%.> After Jesus Jose .000 for the operation of a restaurant and caterin' )usiness under the na&e 8A@uarius 2ood House and Caterin' !ervices. . fro& the partnership and had called for its dissolution under Articles 1%30 and 1%31 of the Civil CodeJ that respondents had )een paid.n the restaurant.ritten re@uests . petitioners contended that respondents had e/pressed a desire to . 1:%-. held there lia)le as follo.in'1 *a+ Actual da&a'es in the a&ount of "290.he CA held that.ise Dispose of Restaurant 2urniture and .as paid )y his parents. Ra&ire4 Goined as a partner in the )usiness on !epte&)er 9. .he furniture and the e@uip&ent stored in their house .ere deposited in the respondents0 house for stora'e. as such.ithdre.rote another letter infor&in' petitioners of the deterioration of the restaurant furniture and e@uip&ent stored in their house. . upon the turnover to the& of furniture and e@uip&ent . to'ether .000. His capital contri)ution of "290.as appointed 'eneral &ana'er and Car&elito Jose. 1:%$.13 Respondents filed an 5r'ent 6otion for (eave to !ell or Other. 1:%$.C+ of 6a7ati.8 Ehe . Dillareal. alle'edly )ecause of increased rental. . respondent spouses . Accordin' to the&. sayin' that they . then the loans incurred )y petitioners should )e re'arded as purely personal and.ere paid to the&. . his capital contri)ution of "290.ere true.rial Court *R.On July 29. had )een spent as a result of irreversi)le )usiness losses.he repeated oral and .$ 3n the sa&e &onth. Car&elito Jose and Jesus Jose for&ed a partnership . financial losses. in its July 21. Respondent Donaldo .orth over "-00.12 3n their Reply.s11% 8FH.000J and that the latter had no ri'ht to de&and a return of their e@uity )ecause their share.ith a capital of "$90. respondents alle'ed that they did not 7no..2OR.s1 "a'e I -- . for the collection of a su& of &oney fro& petitioners. "etitioners clearly intended to dissolve it . of any loan encu&)rance on the restaurant. 1:%$.ho had solely &ana'ed the )usiness.ith the rest of the capital of the partnership. the partnership . the R.fren C.led'e of respondents. 3n their Ans. left unheeded. operations &ana'er.ere. the CA. not char'ea)le to the partnership. petitioners closed do.hich could )e dissolved at any ti&e.000.as presented to sho. 1:%-.00 *c+ Costs of suit.1> After trial.ever. if such alle'ation .ere inventoried and appraised at "2:.89 Dillareal .R. ho.000.he for&er further averred that they had not received any re'ular report or accountin' fro& the latter.00 *)+ Attorney0s fee in the a&ount of "30. the trial court.ithdra.ith the&.rote petitioners. Car&elita Ra&ire4 .000 and the proceeds . .19 .on July %.000 .ere acceptin' the latter0s offer to return their capital contri)ution. Respondents also alle'ed that they e/pected the e@uip&ent and the furniture stored in their house to )e re&oved )y petitioners as soon as the latter found a )etter location for the restaurant. and that they .as sold for "9. and )ecause no sufficient evidence .ere no lon'er interested in continuin' their partnership or in reopenin' the restaurant.he restaurant furniture and e@uip&ent .@uip&ent1. 1uling . (u4vi&inda J. Cecause petitioners never 'ave a proper accountin' of the partnership accounts for li@uidation purposes.10 Cefore the Re'ional .C 1$ ruled that the parties had voluntarily entered into a partnership. Gud'&ent is here)y rendered in favor of <respondents= and a'ainst the <petitioners= orderin' the <petitioners= to pay Gointly and severally the follo. Cranch 9:.: On Octo)er 13. . co&puted their lia)ility as follo.he display free4er . respondents su)se@uently filed a Co&plaint11 dated #ove&)er 10.er. !he also reiterated the re@uest for the return of their one-third share in the e@uity of the partnership.ithout prior 7no. fro& the partnership in January 1:%$.as refunded to hi& in cash )y a'ree&ent of the partners.hen petitioners lost interest in continuin' the restaurant )usiness .000 .. althou'h respondents had no ri'ht to de&and the return of their capital contri)ution.

.as thus erroneous. the creditors of the partnership &ust first )e co&pensated.in' issues for our consideration1 8:. and loss of trust in. Dirst Fssue1 *hare in Partnership Coth the trial and the appellate courts found that a partnership had indeed e/isted.vidently.hether petitioners are lia)le to respondents for the latter0s share in the partnershipJ *2+ .ever. the latter0s &ana'e&ent of the partnership affairs./cept as &ana'ers of the partnership. .00 &ust )e divided into three *3+ shares or in the a&ount of "293.11-. althou'h contracted )y the partnership )efore <respondents0= have Goined the partnership )ut in accordance .s1 *1+ .as respondents0 share is correctJ and *3+ . 3n other . it can only pay out . and GurisprudenceJ 8:.ill have )een li@uidated L in other . the issues are as follo. Ho.00.21 petitioners su)&it the follo.hich <petitioner= .822 On closer scrutiny.2*econd Fssue1 )hat 0ust /e 1eturnedU !ince it is the partnership. Ehis . Fhether the Honora)le Court of Appeals0 decision orderin' the distri)ution of the capital contri)ution. sold and converted to cash L and all partnership creditors. .3-2.3-2.ith.hich consists of all its assets.hese findin's .00.00 resultin' in the a&ount of "$9:. paid.ith la. Fe hold that respondents have no ri'ht to de&and fro& petitioners the return of their e@uity share.11-. . .29 After all the creditors have )een paid.823 !ince the capital . this a&ount of "$9:.1.00 is supported )y the evidence on recordJ and 8:. instead of the net capital after the dissolution and li@uidation of a partnership. Fhether the Honora)le Court of Appeals .hatever is left of the partnership assets )eco&es availa)le for the pay&ent of the partners0 shares.ith Article 1%2> of the #e.000. it is the partnership that &ust refund the e@uity of the retirin' partners. 1:%$.as contri)uted to the partnership.as correct in &a7in' <n=o pronounce&ent as to costs. 8. in the present case.he partnership has a Guridical personality separate and distinct fro& that of each of the partners.00 for each share and . if any.11. since .hey found that the dissolution too7 place . petitioners did not personally hold its e@uity or assets. as a separate and distinct entity. Civil Code. that &ust refund the shares of the partners.ords.hat it has in its coffers.ords.as under the &isapprehension that the total capital contri)ution .hat has )een proven is only the outstandin' o)li'ation of the partnership in the a&ount of "2-0.as e@uivalent to the 'ross assets to )e distri)uted to the partners at the ti&e of the dissolution of the partnership.as li7e.hich is the only a&ount .he "etition has &erit.ere a&ply supported )y the evidence on record. and in order to 'et the share of <respondents=. )efore the partners can )e paid their shares. Fhether the Honora)le Court of Appeals0 decision orderin' the petitioners to Gointly and severally pay and rei&)urse the a&ount of <"=293. there)y treatin' the capital contri)ution li7e a loan. not to petitioners.hich &ust have to )e deducted fro& the re&ainin' capitali4ation of the said partnership . . the a&ount to )e refunded is necessarily li&ited to its total resources. is in accordance .hen respondents infor&ed petitioners of the intention to discontinue it )ecause of the for&er0s dissatisfaction . and that it . the e/act a&ount of refund e@uivalent to respondents0 one-third share in the partnership cannot )e deter&ined until all the partnership assets .3.81: Hence. Respondents conse@uently de&anded fro& petitioners the return of their one-third e@uity in the partnership.8Conse@uently. "a'e I -9 .ourtHs 1uling .hich is in the a&ount of "1. they are lia)le .ise correct in not assessin' costs.as dissolved on 6arch 1.000.he CA0s co&putation of the a&ount to )e refunded to respondents as their share .ill return to <respondents0= representin' the contri)ution to the partnership &inus the outstandin' de)t thereof.hether the CA0s co&putation of "293. this "etition. it see&s that the appellate court .>9%.hether the CA . 2irst.20 Fssues 3n their 6e&orandu&. .2.

3t is a lon' esta)lished doctrine that the la. even "a'e I -> . Hence. does not relieve parties fro& the effects of un. 0-0+ does not reveal the total loan.ith full a.Fe cannot sustain the underlyin' idea that the capital contri)ution at the )e'innin' of the partnership re&ains intact. .8 Althou'h. . enerally. 0%0+ sho.ill2% *initially valued at "900.hen he . the e/act loan o.hich the partnership o./h.er court is reversed.hey .ould no lon'er )e reopened )y petitioners. the financial state&ents presented )efore the trial court sho.ere una.000.hile the Certification issued )y 6ercator 2inance *.ill sho. Dillareal.ould either 'ro. Rule 1-2. )ut the court shall have po.as actually reduced. 3t does not re&ain static and unaffected )y the chan'in' fortunes of the )usiness. in the pursuit of a partnership )usiness.ise.00 on Oct.ithout factual or le'al support.as !ps. costs are adGud'ed a'ainst the losin' party. provides1 8!.2: "etitioners further ar'ue that respondents acted ne'li'ently )y per&ittin' the partnership assets in their custody to deteriorate to the point of )ein' al&ost . 3n the present case.ere doin'. they should have prepared for the fact that their invest&ent .as precisely the &anner of li@uidatin' the partnership and fully settlin' the latter0s share in the partnership.he ori'inal a&ount of "290.er. . the CA0s findin' that the partnership had an outstandin' o)li'ation in the a&ount of "2-0. . Coth the trial and the appellate courts in fact reco'ni4ed the decrease of the partnership assets to al&ost nil.ever.ise provided )y la. costs shall )e allo.he )alance sheet *.s that it .00 .as actually sustainin' su)stantial losses.8 Ehird. 8for special reasons.as not yet for&ed. . Courts have no po. Fhen a lo.as for the purpose of stora'e. the for&er )ein' the no&inal party defendant in the instant case. si&ply )ecause their contracts turn out to )e disastrous deals or un.in' reason1 8/ / / <.hat they . nota)le therefro& is the o&ission of any provision for the depreciation2$ of the furniture and the e@uip&ent. *econd. . that the partnership . foolish or disastrous contracts they have entered into . . .s an outstandin' o)li'ation of "2-0.ard costs. Fe sustain the contrary findin' of the R.2> Ho.ith all the re@uired for&alities and . 0A0+ par.C. .000.he delivery of the store furniture and e@uip&ent to private respondents . Fe disa'ree. uni&paired and availa)le for distri)ution or return to the partners. or shrin7. to adGud'e that either party shall pay the costs of an action.hich . "roperly ta7in' these non-cash ite&s into account .indled. as a rule. the CA failed to reduce the capitali4ation )y "290. conGectural and totally .hen the ori'inal partnership .er court0s Gud'&ent .he A'ree&ent *. )ecause one third of the partnership properties at the ti&e of dissolution did not a&ount to that &uch. L 5nless other.ed a'ainst the Repu)lic of the "hilippines unless other. its capital is either increased )y profits earned or decreased )y losses sustained. )ut the latter failed to reco'ni4e the conse@uent correspondin' decrease of the capital.er to relieve the& fro& o)li'ations they have voluntarily assu&ed. petitioners ar'ue that the turnover of the re&ainin' partnership assets to respondents . !upposedly.3O# 1.000 .=vidence on record failed to sho.es to different creditors. the for&er cannot )e faulted for not disposin' of the stored ite&s to recover their capital invest&ent. Cecause of the a)ove-&entioned transactions.8 to decree other.ed to the prevailin' party as a &atter of course. Hence. Ehird Fssue1 .areness of . .ed )y the partnership to its creditors. as &ay )e e@uita)le.as not supported )y evidence.hich is presu&ed to have )een issued in 'ood faith.hich they had invested could no lon'er )e returned to the&.are that the restaurant . the hi'her court nor&ally does not a. courts have discretion. #o costs shall )e allo.orthless.C./h.ise invest&ents.ise provided in these rules.000+ is not reflected either. the latter should have li@uidated these sole tan'i)le assets of the partnership and considered the proceeds as pay&ent of their net capital. .ithdre.099. fro& the partnership. !uch idea is speculative.osts !ection 1./h.he a&orti4ation of the 'ood.hich had reGected the contention that the o)li'ation )elon'ed to the partnership for the follo. 3n the present case. )ecause the losin' party relied on the lo.ed that the )usiness had &ade &ea'er profits. Dillareal and (u4vi&inda J.osts ordinaril# follo& results of suit. the partnership capital .. Fhen petitioners and respondents ventured into )usiness to'ether. Dio'enes ". the invest&ent of respondents su)stantially d.ise. for special reasons.>9% . > sho. 1:%3. or that the sa&e )e divided.hich conse@uently decreased the capital of the partnership.ho o)tained a loan of "399.as the a&ount paid )y the partnership to Jesus Jose . . .

the a&ount necessary to satisfy the lia)ilities.in' order1 *a+ . 2. the li@uidation and the distri)ution of the re&ainin' partnership assets. the "etition is -1. !O ORD. *%+ Fhen partnership property and the individual properties of the partners are in possession of a court for distri)ution. furniture and e@uip&ent are depreciated over five years to reco'ni4e the decrease in their value due to . to the e/tent of the a&ount . 1 of this article to the satisfaction of the lia)ilities.n to )e patently capricious.in' rules shall )e o)served. *9+ An assi'nee for the )enefit of creditors or any person appointed )y the court shall have the ri'ht to enforce the contri)utions specified in the precedin' nu&)er.2OR. the clai&s a'ainst his separate property shall ran7 in the follo. "a'e I -$ .in' to partners other than for capital and profits.hose o.if found later on to )e erroneous.hose o.he lia)ilities of the partnership shall ran7 in order of pay&ent as follo.he partners shall contri)ute.in' to partnership creditorsJ *c+ . as provided )y article 1$:$. *)+ . savin' the ri'hts of lien or secured creditors.he contri)utions of the partners necessary for the pay&ent of all the lia)ilities specified in #o. *c+ .ard shall not )e distur)ed )y a revie.hose o. *-+ . .R.2EED.ear and tear.in' to partners in respect of capital.he partnership property. *$+ . the follo. #o pronounce&ent as to costs..in' to creditors other than partners.8 2$ As an accepted )usiness practice.his disposition is .ithout preGudice to proper proceedin's for the accountin'.s1 *a+ . *2+ .*FDE.in' the partners in respect of profits.in' to separate creditorsJ *)+ . *)+ .hose o.hose o.ay of contri)ution.he assets of the partnership are1 *a+ . su)Gect to any a'ree&ent to the contrary1 *1+ . *:+ Fhere a partner has )eco&e insolvent or his estate is insolvent. and the assailed Decision and Resolution *EE . 3n settlin' accounts )et.een the partners after dissolution. if any. *>+ Any partner or his le'al representative shall have the ri'ht to enforce the contri)utions specified in #o. -. *d+ . partnership creditors shall have priority on partnership property. -. FH. *3+ .in' tri)unal.D. 29 Article 1%3: of the Civil Code provides thus1 8Article 1%3:.hose o.hich he has paid in e/cess of his share of the lia)ility.he individual property of a deceased partner shall )e lia)le for the contri)utions specified in #o. the a. 5nless sho.he assets shall applied in the order of their declaration in #o.in' to partnership )y .R.hose o.

1::% and the Octo)er :.D in that the decision appealed fro& is A223R6. 8On Au'ust >. 3n the present case. 1?9 of the ori'inal value of 'ood. G.D.ere introduced to each other )y one 6eliton Oa)at re'ardin' a lendin' )usiness venture proposed )y #ieves.as ver)ally a'reed that <petitioner . vs.. <"etitioner= 2ernando !antos and <Respondent= #ieves Reyes .hile <#ieves= and Oa)at <.2OR. such that at the end of five years 'ood. 135F13 O:. 6onte 6aria. PANGANI AN.s1 8!o&eti&e in June. as chair&an of the 6onte 6aria Develop&ent Corporation> *6onte 6aria.o20& 25. 1::$ Decision.ould receive $0E of the profits . 3-$-2. 2001 FERNANDO SANTOS.2OR. 1::$ is here)y 6OD323.as entitled to "1. #ieves 7ept the )oo7s as representative of <petitioner= .D in toto.ould= act as financier . there are several e/ceptions to this principle.he Assailed Decision disposed as follo. J. No. 1::% Resolution denied 8for lac7 of &erit8 petitioner0s 6otion for Reconsideration of the Au'ust 1$.( As a 'eneral rule. . the factual findin's of the Court of Appeals affir&in' those of the trial court are )indin' on the !upre&e Court. represented )y ra'era. 1:%>.ase Cefore us is a "etition for Revie.s1 8FH.ell as the Au'ust 1$.s1 8FH.31 co&&ission per thousand paid daily to <petitioner= *.ith 6onte 6aria continued.e find occasion to apply )oth the rule and one of the e/ceptions.= Oa)at . . the court0s decision dated #ove&)er 2%.1 as .R. 3t .ould= ta7e char'e of solicitation of &e&)ers and collection of loan pay&ents.as there)y e/pelled fro& the partnership. <petitioner=..he events that led to this case are su&&ari4ed )y the CA as follo.2 issued )y the Court of Appeals *CA+ in CA. 0A0+/ / / .R CD #o.ith their partnership<. 83n July.hich is here)y D3!63!!.ould earn 19E each. petitioner.he Octo)er :.he venture . on Certiorari assailin' the #ove&)er 2%.hile / / / #ieves and Oa)at . <"etitioner= and ra'era e/ecuted an a'ree&ent providin' funds for 6onte 6aria0s &e&)ers.2% As an accepted )usiness practice. 5nder the a'ree&ent. 1::% Resolutions.ever. ra'era.83 Resolvin' respondent0s 6otion for Reconsideration. Ho. sou'ht short-ter& loans for &e&)ers of the corporation. 1::% Resolution ruled as follo.R. the Au'ust 1$. . hus)and of #ieves.ill no lon'er appears as an asset of the )usiness.he operations . / / / <#ieves= and Oa)at e/ecuted the 0Article of A'ree&ent0 . the decision appealed fro& is A223R6.ith the understandin' that <petitioner= . "a'e I -% .9 Ehe Dacts . . Ehe . / / / #ieves introduced Cesar ra'era to <petitioner=./h.. Accordin'ly.hile <Respondent= Arsenio. .D save as for the counterclai& .8. acted as credit investi'ator. for )revity+.D. SPOUSES ARSENIO "#$ NIE)ES RE6ES. respondents. 1:%>.ith costs a'ainst <petitioner=.as launched on June 13. Costs a'ainst <petitioner=. 8<"etitioner= and <#ieves= later discovered that their partner Oa)at en'a'ed in the sa&e lendin' )usiness in co&petition . 1::% Resolution. .R.hich for&ali4ed their earlier ver)al arran'e&ent. 1:%>. 1:%>. <respondents0= &otion for reconsideration is RA#. .ill is char'ed as a )usiness e/pense every year.

as actually re&itted to ra'era and .999.he trial court disposed as follo. not &ere e&ployees. 5pon ra'era0s co&plaint that his co&&issions .he co&plaint.8On June 9.1.>23.2. dated July 2>.he co&&ission . .ith havin' &isappropriated funds intended for ra'era for the period July %.or7sheets .00 3:.ere partners and not &ere e&ployees of <petitioner=.:0 entrusted to <respondents=. of petitioner.ere partners. 3:. .ed the issues to the follo. 3t further ruled that ra'era .hether <petitioner= entrusted &oney to <respondents= for delivery to ra'era.999.as 'ranted. <"etitioner= asserted that after e/a&ination of the records. . / / / #ieves clai&ed that she participated in the )usiness as a partner.ere collected.1. the follo. Arsenio resi'ned fro& his Go) at the Asian Develop&ent Can7 to Goin the partnership. 1:%> up to 6arch 31. he ceased infusin' funds.0>-. 0190 to 019-DDDDDDDDDD0+ to convey to <petitioner= ho.ould earn if all the su&s 'uaranteed )y ra'era .as filed to pree&pt and prevent the& fro& clai&in' their ri'htful share to the profits of the partnership.0>9. . as the lendin' activity . . 1:%>. she neither received pay&ents fro& )orro. .00 is fully paid. only "3.00 . .in' points1 .ere his &ere e&ployees and not partners . .hether <respondents= .ntries she &ade on .hich #ieves deducted ra'era0s co&&ission.2.as a distinct partnership <fro&= that of <respondent= and Oa)at.ith respect to the partnership )et.133. respondents0 counterclai& for their share in the partnership and for da&a'es .as &erely to &a7e .#D. alle'edly in their capacities as e&ployees of <petitioner=.ith 6onte 6aria ori'inated fro& her initiative./cept for the li&ited period of July %. he found that of the total a&ount of "-. #ieves alle'edly failed to account for the a&ount.he a'ree&ent . 1::1 Decision. Collections . .ere entitled to their counterclai& for share in the profits.ise deter&ined loan releases. 8<"etitioner= on the other hand insisted that <respondents= .-2%. <"etitioner= char'ed <respondents=.0>-.000.R#A#DO J. 8Durin' the pre-trial.CO#D A6.as re&itted to ra'era.O! is ordered to pay the <Respondent= #3. &uch he .0>%. !.in'1 3:.ere hired as salaried e&ployees .0>%.! in the profits of her Goint venture . 1:%: is D3!63!!.he 19 percent share of the <respondent= #3.s1 83:. He clai&ed that after he discovered Oa)at0s activities.D.he loan releases .$0 unaccounted for. <petitioner= filed a co&plaint for recovery of su& of &oney and da&a'es.ere &ade less ra'era0s a'reed co&&ission. "3. 1:%$.M.M.D CO6"(A3#. R.2.-2%. she received all pay&ents fro& .8$ 1uling of the Erial . . 82or her part.ere turned over to ra'era )ecause he 'uaranteed 100E pay&ent of all su&s loaned )y 6onte 6aria.hus.ers nor re&itted any a&ount to ra'era.20 .R.D. !he li7e. the parties narro. the Court here)y renders Gud'&ent as follo. FH.00 to / / / #ieves to )e 'iven to ra'era/ / / .$0 clai&ed under the co&plaint .as only a co&&ission a'ent of petitioner.een <petitioner= and ra'era.er. !i/*>+ percent . 8/ / / Arsenio alle'ed that he . . <petitioner= entrusted "200.As da&a'es fro& Au'ust 3.! !. 3:.2.3.he <"etitioner= 2. Her Go) . <respondents= asserted that they . they alle'ed. 3:.ere )ased on this assu&ptive 100E collection of all loans. . 83n their ans. . not his partner. she did not handle su&s intended for ra'era.00 .2OR. "etitioner &oreover failed to prove that he had entrusted any &oney to #ieves.ere inade@uately re&itted.ith respect to the a'ree&ent .!.s1 .hether <respondents= . 1:%> throu'h Au'ust 20. 8<"etitioner= further asserted that in #ieves0 capacity as )oo77eeper.As &oral da&a'es "a'e I -: . there)y causin' the e/tin'uish&ent of the partnership. the trial court held that respondents .000.! !.2.D.ith ra'era . 1:%$. <"etitioner= asserted that <respondents= .-2%. "90. "3.ourt 3n its Au'ust 13.as enticed )y <petitioner= to ta7e the place of Oa)at after <petitioner= learned of Oa)at0s activities..ould then )e re&itted to ra'era./hs.H.ere e&ployees or partners of <petitioner=. !A#.. Cecause of this arran'e&ent. R. there)y leavin' the )alance of "1. 1:%$ until the of "3.or7sheets *.201.ith ra'era.0>-.hether the "1.ith the <petitioner=.

the Decision of the trial court .he cost of the suit.as &erely to prepare the daily cash flo.00 . .As attorney0s feesJ and 3:./hi)it 0.he CA ruled that the follo. 1:%> *.3.: Fssue "etitioner as7s this Court to rule on the follo.0 .-. 2indin' that .n thereonJ 3. the trial court0s Decision .hich .as supposed to )e delivered to ra'era to cover unpaid co&&issions. Affir&in' the findin's of the trial court that the phrase 0Received )y0 on docu&ents si'ned )y #ieves Reyes si'nified receipt of copies of the docu&ents and not of the su&s sho.ith ra'era and petitioner and thus sho.$3:. 3t .! in the profits of his Goint venture .1. "90.3.$3:.2. ho.O! is ordered to pay the <respondents=1 .O! is ordered to pay the <respondent= AR!.$3:.000. "10.as #ieves . Hence. Holdin' that private respondents .as denied in the CA Resolution of Octo)er :.%::.As da&a'es fro& Au'ust 3.ith the a'ree&ent )et. reports *.hile hers .%::.ith the intention of sharin' in the profits of the )usiness. 1::%.R#A#DO J.M.-.3. this "etition.8% 1uling of the . "29.000.000.90 3:. . 3n their co&&on venture.in'1 3:.he <petitioner= 2. .90 . 8>8+J and *3+ the partnership contract .2. . !u)se@uently.!. Affir&in' the decision of the trial court.As e/e&plary da&a'es . .ere partners?Goint venturers and not e&ployees of !antos in connection .As &oral da&a'es . !i/*>+ percent .00 3:.he <petitioner= 2.3:. the follo.000.3.90 is fully paid.%::. 819-19DDDDDDDDDD8+ to 7eep trac7 of his collections.he CA dis)elieved petitioner0s clai& that #ieves had &isappropriated a total of "200.-.ppeals On appeal.ith 'rave a)use of discretion tanta&ount to e/cess or lac7 of Gurisdiction in1 1. Affir&in' that the si'nature of #ieves Reyes on .-.#3O R.R#A#DO J.000 . "10.As e/e&plary da&a'es .as his tas7 to collect the a&ounts due. petitioner invested capital .. 1:%$ until the of "2.1.-.as reinstated in toto./h.as upheld.00 3:. !A#.ith the <petitioner=.ed the parties0 intention to consider it as a transaction of the partnership.ever./hs.he )alance of the 19 percent share of the <respondent= AR!.000. 3:.n 6otion for Reconsideration .as e/ecuted after the A'ree&ent .in' issues110 8Fhether or not Respondent Court of Appeals acted .as dis&issed. "2./hi)it 0H0 <did= not esta)lish receipt )y #ieves Reyes of "200.as a for'eryJ -.ho )roached to petitioner the idea of startin' a &oney-lendin' )usiness and introduced hi& to ra'eraJ *2+ Arsenio received 8dividends8 or 8profit-shares8 coverin' the period July 19 to Au'ust $.in' circu&stances indicated the e/istence of a partnership a&on' the parties1 *1+ it .00 for delivery to ra'eraJ 9 Affir&in' the dis&issal of !antos0 <!econd= A&ended Co&plaintJ >.M. 3:.3.een !antos and 6onte 6aria? ra'eraJ 2. . !A#.#3O R.ourt of . petitioner0s o.hile respondents contri)uted industry or services.2. and the counterclai& of respondents . "2. upholdin' private respondents0 counterclai&J "a'e I 90 .3.00 3:. 5pon the latter0s 6otion for Reconsideration.

= #ieves and Oa)at .een appellant. as follo. .hat #ieves introduced ra'era to !antos did not &a7e her a partner.ers that they each solicited.as not &erely petitioner0s e&ployee. property or industry to a co&&on fund.ith 6onte 6aria.er courts that the partnership continued lendin' &oney to the &e&)ers of the 6onte 6aria Co&&unity Develop&ent roup.ith 6onte 6aria .as done in pursuit of the )usiness for .in' . A)ad !antos.he sharin' of 'ross returns does not in itself esta)lish a partnership. <Respondents= provided services .ourtHs 1uling .ithal to carry on the purpose for .hether respondents . Denyin' !antos0 &otion for reconsideration dated !epte&)er 11.een <petitioner. 91 !CRA -1> <1:$3=+. no intent to dissolve the earlier partnership.he co&&issions .as e/pelled.as or'ani4ed.s1 8<Respondents= .ith ra'era. Fe find no co'ent reason to disa'ree .van'elista v. #ieves .8 !uccinctly put.ere the issues raised )y petitioner1 *1+ .as or'ani4ed and as such <. the re&ainin' partners si&ply continued the )usiness of the partnership .ith the intention of sharin' in the profits of the partnership.he "etition is partly &eritorious.ho represented 6onte 6aria . .hich later on chan'ed its )usiness na&e to "rivate Association for Co&&unity Develop&ent. .as technically dissolved )y the e/pulsion of Oa)at therefro&.he &oney-lendin' activities underta7en . ra'era . one of the incidents of .= #ieves and Arsenio si&ply too7 over and continued the )usiness of the for&er partnership .ith para'raphs 2 and 3 of the A'ree&ent.12 .ere fi/ed on 'ross returns. 8Fhile concededly.as therefore.een petitioner and ra'era . On the other hand. the partnership )et. "a'e I 91 . t.H3RD "AR.een <petitioner=.ere entitled to the partnership profits as deter&ined )y the trial court. .hich . . re'ardless of the e/penses incurred in the operation of the )usiness.as &erely paid co&&issions in e/chan'e for the collection of loans.ith Oa)at. the follo.ith #ieves as )oo77eeper and Arsenio as credit investi'ator.here . .ere industrial partners of <petitioner=/ / / .13 . #ieves and Oa)at.as one of partnership or of e&ployer e&ployeeJ *2+ . Ehe ..M shall handle the solicitation and screenin' of prospective )orro.ere= considered industrial partners *.hat the !. *"ACD3+. !he dischar'ed her )oo77eepin' duties in accordance .ith 6onte 6aria.ere not partners.o or &ore persons )ind the&selves to contri)ute &oney.ith the intention of dividin' the profits a&on' the&selves.M and . . 3nc.s1 82. #ieves and Oa)at *later Arsenio+ . they invited Arsenio to participate as a partner in their operations.hich it .ould not have <had= the . a partnership that .hen Oa)at .his stipulation clearly proved the esta)lish&ent of a partnership. .o. 1::%. Fe @uote fro& the CA Decision.as one of partnership. 3n consonance . .ith the a'ree&ent )et. !eparate fro& the partnership )et.hether the parties0 relationship .as that . Dirst FssueG /usiness 1elationship "etitioner &aintains that he e&ployed the services of respondent spouses in the &oney-lendin' venture .itness to the A'ree&ent )et. /// /// /// 8 ra'era and <petitioner= . 3nstead. 3nc.as dissolved . <respondents= contri)uted industry to the co&&on fund .ithout . .hich states as follo.ithout under'oin' the procedure relative to dissolution.hich the partnership )et.811 Fe a'ree .here.hether #ieves &isappropriated the su&s of &oney alle'edly entrusted to her for delivery to ra'era as his co&&issionsJ and *3+ . Cy the contract of partnership.as only a .he 8Articles of A'ree&ent8 stipulated that the si'natories shall share the profits of the )usiness in a $0-19-19 &anner.he partnership )et. !he .as the lendin' operations . #ieves herself provided the initiative in the lendin' activities . .ith petitioner 'ettin' the lion0s share.CO#D "AR. .$.een <petitioner.hich e/isted a&on' petitioner.ith the lo.ith )oth courts on this point.een the t. )oth the CA and the trial court reGected petitioner0s contentions and ruled that the )usiness relationship . #ieves and Oa)at *later replaced )y Arsenio+. and shall / / / each )e responsi)le in handlin' the collection of the loan pay&ents of the )orro.hich the partnership .ers.

3ndeed. .he presentation of . C-1./h. petitioner infers that she &isappropriated the difference of "1.as for&ali4ed only after the 6e&orandu& of A'ree&ent had )een si'ned )y petitioner and ra'era. 1:%$ only .8 and 8H8 did not sho. 8#either can .R.hich.ard.hile the rest .0 8. 8>8+ to Arsenio.1> On this point.8 *the 8!chedule of Daily "ay&ents8+.hat the )oo77eepin' and daily )alancin' of account of the )usiness operation shall )e handled )y the !./hi)it 8D8 va'uely deno&inated as 0&e&)ers led'er0 does not clearly esta)lish that #ieves received a&ounts fro& 6onte 6aria0s &e&)ers.s that ra'era .! *.he initial stro7e of the 'enuine si'natures of #3. . Ho. . and that such e/hi)its ./hs.ances8 and 8profit shares8 or 8dividends8 *. .21-. the docu&ent e/ecuted or .hich alle'edly sho.8 is an untitled ta)ulation .he docu&ent is a private one and its due e/ecution and authenticity have not )een duly proved as re@uired in <!=ection 20. ra'era should have earned a total co&&ission of "-.hich the "1./hs. . .as e/ecuted on Au'ust >.ritin' of the &a7er. ./hi)it 0. the parties have decided to for&ali4e the ter&s of their )usiness relationship in order that their respective interests &ay )e properly defined and esta)lished for their &utual )enefit and understandin'. 0Any other private docu&ent need only )e identified as that . . or a)out a &onth after the 6e&orandu& had )een si'ned )y petitioner and ra'era on July 1-.ho sa.hich )ears her si'nature under the . sho. #ieves &ade the entries for the li&ited period of January 11.e uphold the factual findin' of )oth courts that he replaced Oa)at in the partnership.10 unpaid co&&ission . 2-1.000. the CA ruled that . that #ieves received for delivery to ra'era any a&ount fro& .819 *econd FssueG 2o Proof of 0isappropriation of -rageraHs Inpaid . . On the other hand.0 . as it found that1 0/ / / .hich states1 0!. Accordin' to hi&.ever. .hich it is clai&ed to )e.2:>. a&on' others+ starts fro& )elo.21-.he docu&ent does not clearly state .0>%.ere &ade )y ra'era0s o.83.as received )y hi&.ere insufficient proof that she had e&)e44led "200. an a&ount that .ard. 1:%>.8 8.s ac7no. !aid the CA1 8.he A'ree&ent itself attests to this fact1 8FH. there is no evidence to sho.3O# 20. . A-3.0 /// /// /// "a'e I 92 .2:>. and 'oes up. 6ore i&portantly.as never delivered )y #ieves.as esta)lished to en'a'e in a &oney-lendin' )usiness. .2%2.hich .-1 starts fro& up and 'oes do.133.81. .A!. only "3. 1:%$ to 2e)ruary 1$.n )y .20 .-1 is a for'ery. .he 8!econd "arty8 na&ed in the A'ree&ent .his is sho.-1 and of the 'enuine si'natures lends credence to #ieves0 clai& that the si'nature .e 'ive pro)ative value to .hich represented the unpaid co&&issions.rittenJ or *)+ Cy evidence of the 'enuineness of the si'nature or hand.10./hi)its 8C. Cut #3.8 Cecause of this A'ree&ent and the dis)urse&ent of &onthly 8allo.ords 8received )y.n.000.! denied that . Proof of Private Docu!ent L Cefore any private docu&ent offered as authentic is received in evidence.30.as a for'ery.M. Arsenio0s duties as credit investi'ator are su)su&ed under the phrase 8screenin' of prospective )orro.8 2or the period July 1:%> to 6arch 1:%$.D.-1 is her si'natureJ she clai&ed that it is a for'ery.he initial stro7e of .ers.as also entitled to a co&&ission of "200. .D. that a different )usiness venture is referred to in this A'ree&ent.led'&ent of the re&ittance of co&&issions to Derona on4ales.8 82. the partnership ./h./hi)it 8H./h.he court a "uo even ruled that the si'nature thereon .hat a&ounts the entries thereon represent.n staff. ra'era re&itted his daily collection to #ieves. despite the fact that it .as supposed to co&e./h. Rule 132 of the Rules of Court .-2:. its due e/ecution and authenticity &ust )e proved either1 *a+ Cy anyone .his difference in the start of the initial stro7e of the si'natures . . .o!!ission "etitioner faults the CA findin' that #ieves did not &isappropriate &oney intended for ra'era0s co&&ission.C./hi)it 8C. Contrary to petitioner0s contention. . 1:%>. accordin' to hi&.as none other than #ieves Reyes.hus.CO#D "AR.

/hi)its 8C8 and 828 are &erely co&putations of .!J #3./hi)it 0H0 does not une@uivocally esta)lish that / / / #ieves received "200. .00. .D. 3t is therefore stran'e . #ieves0 e/planation that the docu&ents .000.RA0s co&&issions fro& the a&orti4ations and then 'ive such co&&ission to RA . . 821. )ecause .ers &ultiplied )y the proGected collection of "190. "etitioner has utterly failed to de&onstrate . Cut !A#. .= that of #3.ere &ade )y ra'era )elieva)le and .hy !A#.O! . )ecause he had deducted his co&&issions )efore re&ittin' his collections. of these factual findin's is .s that all &oney transactions of the &oney-lendin' )usiness of !A#. H .$0 fro& the partnership.D.O! and #3. the docu&ent sho.s under its si/th colu&n 0ADD3.RA. As correctly stated )y the court a "uo.KKK KK and not "200. !he did not re&it "1.ell as .! did not 'ive it to RA .hich . . H does not prove that !A#. all collections .D. 0C0 and 020+ . the lo.000.RA./h./h. !A#.D.as received )y herJ in fact./h. 821.his is so )ecause it is a li@uidation of the su& of "2-0.RA.2.he only proof that #3./hs.! on ho.O! did not present any voucher or receipt coverin' the "200. A perusal of .81% 3n su&. Ehird FssueG . the total a&ount recorded on . As <petitioner0s= representative. !A#. 0C0 is e/actly the nu&)er of )orro. 0C0 and 020+ to record the proGected 'ross daily collections. As )et.ccounting of Partnership "a'e I 93 .O!0 version .00 as co&&ission for ra'era.000.O! clai&ed that he learned of #3. he too7 char'e of the collections.ere covered )y petty cash vouchers. .ere )ased on the predeter&ined 100E collection as 'uaranteed )y ra'era is credi)le and clearly in accord . Fellentrenched is the )asic rule that factual findin's of the Court of Appeals affir&in' those of the trial court are )indin' and conclusive on the !upre&e Court.000. then his clai& is not true.! .00 for delivery to RA .arranted.hen he received the latter0s letter co&plainin' of its delayed release.000.ould 'et RA .D. 02.D.ith the evidence. .ere= paid to hi&<.8 does not indicate that such a&ount .ould collect the daily a&orti4ations and then 'ive the& to #3.999. petitioner has not satisfactorily sho.D.RA .3O#A( CA!H0 that the additional cash .00 per )orro.O! 'ave to #3. 3f .ere pro for!a and that she si'ned the& not to si'nify that she collected the a&ounts )ut that she received the docu&ents the&selves is &ore )elieva)le than <petitioner0s= assertion that she actually handled the a&ounts.e @uote )elo. 0190 to 019 DDDDDDDDDD0+ to ena)le <petitioner= to 7eep trac7 of ra'era0s operations.n that any of the& is applica)le to this issue.000.! and the latter received "200.000.een the versions of !A#. the co&&issions of RA .1. there is no co&petent evidence that #3.! is &ore lo'ical and practical and therefore.hy a revie.21-.ould have 'iven rise to this i&pro)a)le situation1 RA . &ore )elieva)le.!0 failure to 'ive the "200.0>%./h.as "2-0. He did not e/plain .e find #ieves0 testi&ony that after Au'ust 20.RA <. .hese findin's are in har&ony .O! did not even present the letter in evidence.000.O!.s a different fi'ure.RA . . Assu&in' as true !A#.RA.8#ieves0 testi&ony that the schedules of daily pay&ent *.801$ .1: Althou'h there are e/ceptions to this rule./h. 1:%>. !ince ra'era 'uaranteed a daily 100E pay&ent of the loans.er.O!0 clai& that he 'ave "200.000. #ieves &erely prepared the daily cash flo. 8C8 and 828 as .hat ra'era should collect for the dayJ they do not sho.1 821. that #ieves received the a&ounts stated therein.ed a li@uidation of PJ7K./h.ith the trial court0s rulin'.ere indeed )ased on the 100E assu&ptive collection 'uaranteed )y ra'era. it sho. 8As aptly o)served )y the court a "uo1 02>.000./hs.2:>. #either is there sufficient proof that she &isappropriated "200.his holds true for .00 to RA .00 as alle'ed )y !A#. 8Contrary to <petitioner0s= assertion.ere the li@uidation of the "200. ra'era on the other hand devised the schedule of daily pay&ent *.orthy of credence. ./hs. reports *./hs. H sho.hy he did not./hi)it 8H. 8Accordin'ly.00.00 to RA .00.10 to ra'era.he evidence sho.! did not 'ive it is the letter.1. .er courts found it un)elieva)le that #ieves had e&)e44led "1.D.hus.00.0 8Corollarily. 0190 to 19-DDDDDDDDDD0 reveal that the entries .

-2:.ances are different fro& the profit already received )y "a'e I 9- . in the total a&ount of "29. 1:%$ in the a''re'ate a&ount of "29. reports of .-2:. that Arsenio received allo. )ecause so&eti&e in 6arch 1:%$.ever.ith !A#.O!.hich .:2>. on the other hand.8 8Application 2ee.o prove the counterclai& of #ieves. 3 and 19 to 19-D*10+ .as a)out ti&e to 'et her share of the profits .ith #3.as already advanced to hi& *"etty Cash Douchers.he trial court0s rulin' alluded to a)ove is @uoted )elo.920 *. postulate that petitioner instituted the action )elo. 810-3-38+J and Arsenio0s. the profits are already reflected on paper. 1:%> to April 1:. 9. . 1:%$. she 8si'nified to petitioner that it .ever alle'ed that the &oney-lendin' operation of his Goint venture . #oticea)ly &issin' fro& the co&putation of the 8total inco&e8 is the deduction of the . .8 as his invest&ents . pendin' an accountin' of the partnership.ithout co&plicity )et. #3.ance dis)ursed to respondents.1.8 8#otarial 2ee./hs. resulted in a loss of a)out half a &illion pesos to hi&.820 . that fro& June 13. reports *.n on . 10 to 10-3.2>0. Affir&in' the trial court0s rulin' on the counterclai&. !A#.he "2>.8 Respondent spouses. and 8198 et se@. in the profits.he Goint venture had a net profit of "20. >-A and >C+ should )e deducted fro& his total share.e find reason to disa'ree ./hs.he ori'inals of the daily cash flo.D. 1:%> to 6arch 2$. it did not factor in the 8'ross loan releases8 representin' the &oney loaned to clients. fro& its operations fro& June 13. inclusive+ . 10-3-1+. 1::1 on the )asis of the facts on record. a)out "2. 5pon a further revie.he defendants0 counterclai& for the pay&ent of their share in the profits of their Goint venture . .0>-.0>-. 1:%$ *. to avoid pay&ent of the de&ands of #ieves.in' colu&n headin's1 82-Day Advance Collection. 8108 et se@. Ho. . ho./hi)its 838 et se@. .>00. the profit totaled "20. does not ne'ate #3./h. such releases are co&para)le ./h.000 .ith certainty as to the respective shares of the partners.900J and #ieves. 1:%$.ere furnished to hi&. #3. the Goint venture a&on' the& L !A#.ances fro& July 1:.8 8#et 3nterest 3nco&e8 and 83nterest 3nco&e on 3nvest&ent. >. "2.s1 8Fe earlier ruled that there is still need for an accountin' of the profits and losses of the partnership )efore ./hs. Cut such loss. . .ever."etitioner refuses any lia)ility for respondents0 clai&s on the profits of the partnership.he 8total inco&e8 sho.he fact is that the court a "uo already &ade such a deter&ination <in its= decision dated Au'ust 13./hs.D. !he had a share of "3.hich she prepared.or7in' papers *. . even if true.O! is supported )y the evidence./hs. Cased on that inco&e. 1:%> up to April 1:.000 &inus the "30. 1::%.as pre&ature.here is no reason for the Court to dou)t the veracity of <the testi&ony of= #3.821 After a close e/a&ination of respondents0 e/hi)its. He &aintains that 8)oth )usiness propositions .D.D.1.000.ere )ased on the daily cash flo. fro& July 12.he profits are sho. .hile the partnership has not declared dividends or li@uidated its earnin's.ith the CA. in its assailed Resolution of Au'ust 1$. reports .02>.s that the partnership earned a 8total inco&e8 of "20.!.00 *.ee7ly allo.hich AR!. the spouses sho. >-A to >-C8+. it held as follo. 2or instance.!0 testi&ony that the &oney-lendin' )usiness he .D. 8>.00 *.O! ho.hese allo./h./hi)it 810-38 did not consider the e/penses sustained )y the partnership.#3O L netted a profit.920 for the period June 13.+. it turned volte face.his entry is derived fro& the su& of the a&ounts under the follo. 1-3--+.-2%./h.D. 1:%> to 6arch 2$. of the records of this case. 82$. 1:%$.00.O!. .! and AR!.1 82$.e can rule . 82$.-2:. 1:%> until April 1:. 82$.23 sho.he CA ori'inally held that respondents0 counterclai& .n in the . 10 to 10-3 *inclusive+ .! and OACA.ere 8consu&ed and eaten up )y the co&&issions orchestrated to )e due ra'era8 L a situation that 8could not have )een rendered possi)le .8 8!ervice 2ee./hs. ./hi)it 8103822 sho.as en'a'ed in netted a profit and that the ori'inals of the daily case flo. there appears to )e sufficient )asis to deter&ine the a&ount of shares of the parties and da&a'es incurred )y <respondents=.8 !uch entries represent the collections of the &oney-lendin' )usiness or its 'ross inco&e.90 .#3O./h.ith the inventory or supplies in other )usiness enterprises. 3 is a sa&ple. 9-A and 9-C+. and 8J8 et se@.920. .ere flops. . her 19 percent share under the Goint venture a&ounts to "3. .hich . .2 .#3O received as part of his share in the profits *. .een #ieves and ra'era.! testified that1 Her clai& to a share in the profits is )ased on the a'ree&ent *.!0 clai& that overall./hs.ere 'iven to !A#.O! never denied #3.-2% *.1 !A#.hich had already accu&ulated to so&e "3 &illion. !ince the )usiness is &oney-lendin'. 10-3-3+ and AR!.8 Respondents add that .

hen such assess&ent is affir&ed )y the CA.o courts invaria)ly referred to as 8cash flo.he assailed #ove&)er 2%. 1::$ Decision is A223R6.e dee& the a. Reports.2.R. its assess&ent of the credi)ility of . independently of the lo. S!ER*IN TA ANAO. to )e inco&plete and not )indin' on this Court. . petitioner failed to su)&it to . )ICENTA MA6 TA ANAO )ARELA.ere partners in a )usiness concern 7no.000. #el&a 2ishin' 3ndustry.ho shares in the profits )ut is not lia)le for the losses+. #o costs. J. Cut if.er courts.. . )ut the challen'ed Resolutions dated Au'ust 1$.. .ithdra. FH./hi)it 8 10-3-18 represented the 8net profits8 earned )y the partnership. ESTATE OF )ICENTE TA ANAO. . respondents. .he trial court has the advanta'e of o)servin' the . !i&ilarly. despite for&al de&and for pay&ent thereof. as co&puted )y the trial court and adopted )y the CA. the losses e/ceed the inco&e. #e'ros Occidental. Hence.n as 6a. "etitioner also rene'ed on his pro&ise to turn over to .D./hi)its 8198 et se@.a)anao0s heirs any state&ent of assets and lia)ilities of the partnership..00.2> .D. an opportunity not availa)le to appellate courts.he point is that all e/penses incurred )y the &oney-lendin' enterprise of the parties &ust first )e deducted fro& the 8total inco&e8 in order to arrive at the 8net profit8 of the partnership.a)anao0s heirs the deceased0s 1?3 share in the total assets of the partnership.o *2+ parcels of land located at !to. even finality. as an e/ception to the 'eneral rule applied to the first t. and cash deposits in the local )ranches of the Can7 of the "hilippine 3slands and "rudential Can7.D. Cut . !O ORD. and even after Dicente . respondents0 e/hi)its do not reflect the co!plete financial condition of the &oney-lendin' )usiness. they decided to dissolve their partnership and e/ecuted an a'ree&ent of partition and distri)ution of the partnership properties a&on' the&.ei'ht. the 'ross inco&e fro& all the transactions carried on )y the fir& &ust )e added to'ether. 6NARES4SANTIAGO.hich are the 8Daily Cashflo.itnesses .1 A&on' the assets to )e distri)uted .a)anao0s unti&ely de&ise in 1::-.a)anao and Jacinto Divina'racia .itnesses and their testi&onies are accorded 'reat .29 Fhen the Gud'&ent of the CA is pre&ised on a &isapprehension of facts or a failure to notice certain relevant facts that .ise Gustify a different conclusion. 1::% are R.: "etitioner .hen the issue involves the evaluation of e/hi)its or docu&ents that are attached to the case records. A!3D.ere five *9+ fishin' )oats. ROSELA TA ANAO "#$ )INCENT TA ANAO.2 "a'e I 99 . or the su& of "10.hey represent e/penses that should have )een deducted fro& the )usiness profits.o issues. .Arsenio.8 . as in the third issue.er courts o)viously la)ored over a &ista7en notion that . .000.D. G.R!.ard of the partnership share. of its factual findin's &ay )e conducted. .00.hus. a revie. t. Only in the difference representin' the net profits does the industrial partner share.8 sheets. #iVo and ..hrou'hout the e/istence of the partnership.hile they are testifyin'. this Court has a si&ilar opportunity to inspect. .000. 1::% and Octo)er :. 5nder that situation. e/a&ine and evaluate those records..hen supported )y su)stantial evidenceJ &ore so . si/ *>+ vehicles. only the daily cash collections.&nace.he share of each one of the& should )e )ased on this 8net profit8 and not fro& the 8'ross inco&e8 or 8total inco&e8 reflected in . JANETTE TA ANAO DEPOSO6./hi)it 810-3. No. 12633+ NoG0. as in this particular issue. vs.000.R.D and !. the rule &ay )e rela/ed. COURT OF APPEALS.hich the t.he lo. 2001 EMILIO EMNACE. Dicente . and fro& this su& &ust )e su)tracted the e/penses or the losses sustained in the )usiness. !o&eti&e in January of 1:%>. conse@uent to Jacinto Divina'racia0s .ould other.8 do not reflect the )usiness e/penses incurred )y the parties. the "etition is partly RA#.R. )ecause they sho. on the contrary.2OR. the industrial partner does not share in the losses.. petitioner.alisay. . and to render an accountin' of the partnership0s finances.&ilio . )ICENTE *ILLIAM TA ANAO. a&ountin' to "30.20& 23. 2or the purpose of deter&inin' the profit that should 'o to an industrial partner *.al fro& the partnership. Contrary to the rulin's of )oth the trial and the appellate courts.

the action is not only a personal action )ut also an action in persona!. of the provision of Article $$$ of the Civil Code. 2inally. Fhether or not respondent Jud'e acted . "etitioner filed a petition for certiorari )efore the Court of Appeals. 1::-. pay&ent of shares.ith 'rave a)use of discretion in insistin' to try the case .hird *1?3+ of the assets.hich the Honora)le Court &ay resolve the plaintiffs as entitled to plus "1. and other for&s and su)stance of treasures . the Court of Appeals rendered the assailed decision. Attorney0s fees e@uivalent to .o Hundred .%ar'uin' that the trial court did not ac@uire Gurisdiction over the case due to the plaintiffs0 failure to pay the proper doc7et fees. properties.hen the final accountin' is done. upon a findin' that no 'rave a)use of discretion a&ountin' to lac7 or e/cess of Gurisdiction .Conse@uently.hile realties .as &ade in order that the e/act value of the partnership &ay )e ascertained and. . the trial court denied the &otion to dis&iss. 6oreover.a)anao to sue.in'1 A.10 denyin' the &otion to dis&iss inas&uch as the 'rounds raised therein .000. &otor vehicles. 1::9. in vie.as not paid considerin' the hu'e a&ount involved in the clai&. "a'e I 9> . #o less than . On June 19. the action .$ incorporatin' the additional prayer that petitioner )e ordered to 8sell all *the partnership0s+ assets and thereafter pay?re&it?deliver?surrender?yield to the plaintiffs8 their correspondin' share in the proceeds thereof.ith 'rave a)use of discretion in not dis&issin' the case on the 'round of prescription.ith 'rave a)use of discretion in ta7in' co'ni4ance of a case despite the failure to pay the re@uired doc7et feeJ 33. On Au'ust %. respondents prayed as follo.ithout Gurisdiction or .as never appointed )y the court as ad&inistratri/ of the estatesJ and 3D. 1::>. Fhether or not respondent Jud'e acted .arrantin' the outri'ht dis&issal of the co&plaint.as directed a'ainst a particular person on the )asis of his personal lia)ilityJ hence. .housand "esos *"200.hich involve *sic+ a parcel of land situated outside of its territorial GurisdictionJ 333. Hence. land*s+. the trial court issued an Order. prescription has not set in the a)sence of a final accountin'. in a supple&ent to his &otion to dis&iss. filed a'ainst petitioner an action for accountin'. lac7 of Gurisdiction over the nature of the action or suit. truc7s. fishin' vessels.ere )asically the sa&e as the earlier &otion to dis&iss ."etitioner filed a &otion to dis&iss the co&plaint on the 'rounds of i&proper venue. 3t held that venue . Defendant )e ordered to render the proper accountin' of all the assets and lia)ilities of the partnership at )arJ and 2.he follo. thus. respondents herein.: petitioner also raised prescription as an additional 'round .in' day.3 3n their co&plaint. the trial court held that the heirs of .hich states that the ri'hts to the succession are trans&itted fro& the &o&ent of the death of the decedent.000.ith 'rave a)use of discretion in allo.hen there is no intestate case and filed )y one .hich has )een denied. division of assets and da&a'es.12 dis&issin' the petition for certiorari.hich )elon' and?or should )elon'. #o less than One .in' the estate of the deceased to appear as party plaintiff.ere involved. respondents filed an a&ended co&plaint. the trial court noted that a re@uest for accountin' .a)anao had ari'ht to sue in their o. the trial court ruled that prescription )e'ins to run only upon the dissolution of the partnership .as properly laid )ecause. After due notice and hearin' defendant )e ordered to pay?re&it?deliver?surrender?yield to the plaintiffs the follo. .00 for every appearance in court.as co&&itted )y the trial court in issuin' the @uestioned orders denyin' petitioner0s &otions to dis&iss.n na&es.a)anao0 s heirs. and lac7 of capacity of the estate of .ithout Gurisdiction or . an action )ased on a . had accrued and?or &ust accrue to the partnershipJ C.9 On Au'ust 30. Fhether or not respondent Jud'e acted .ritten contract prescri)es in ten years fro& the ti&e the ri'ht of action accrues.in' issues1 3.00+ as &oral da&a'esJ C.s1 1.> .11 raisin' the follo. petitioner filed a &anifestation and &otion to dis&iss. 3n due ti&e.hirty "ercent *30E+ of the entire share?a&ount?a. cash. As re'ards petitioner0s ar'u&ent of lac7 of Gurisdiction over the action )ecause the prescri)ed doc7et fee . Anent the issue of prescription. 2urther. .ho . the correct doc7et fee &ay )e paid.. dividends. Fhether or not respondent Jud'e acted .ithout Gurisdiction or .ithout Gurisdiction or .ard .

2ailure to pay the proper doc7et feeJ 33.or7 in ascertainin' the esti&ated value of the partnership0s assets.here is &erit in petitioner0s assertion. . cannot )e ascertained. the lo..illin'ness to pay.00+. . .here is evident .he le'al fees shall )e a lien on the &onetary or property Gud'&ent in favor of the pauper-liti'ant. the e/act value of the partnership0 s assets. "etitioner. .n't Fe do not a'ree.he rule applica)le to the case at )ar is !ection 9*a+ of Rule 1-1 of the Rules of Court. this case is one .ourt of .ard .he third para'raph of !ection 1>. 3t can )e readily seen that respondents0 pri&ary and ulti&ate o)Gective in institutin' the action )elo. na&ely1 3. .o 7inds of clai&s as1 *1+ those . Hence. . throu'h infor&ed and practical esti&ation. .19 #evertheless. 3D. ar'ues that the trial court and the Court of Appeals erred in condonin' the non-pay&ent of the proper le'al fees and in allo. Respondents cannot invo7e the a)ove provision in their favor )ecause it specifically applies to pauper-liti'ants.ith the appraisal of the court. or the e@uivalent value thereof.a)anaoJ and "rescription of the plaintiff heirs0 cause of action.hatever a.hich provides1 3n case the value of the property or estate or the su& clai&ed is less or &ore in accordance . Conse@uently. . as .3t is thus i&perative for respondents to pay the correspondin' doc7et fees in order that the trial court &ay ac@uire Gurisdiction over the action.er courts have noted their e/pressed desire to re&it to the court 8any paya)le )alance or lien on .as clearly an effort to defraud the 'overn&ent in avoidin' to pay the correct doc7et fees.hich defines the t. #o.orporation v.in' the sa&e to )eco&e a lien on the &onetary or property Gud'&ent that &ay )e rendered in favor of respondents. (ac7 of capacity to sue on the part of plaintiff heirs of Dicente . for respondents the&selves voluntarily pe''ed the . the a&ount they e/pect to collect fro& the partnership. raisin' the sa&e issues resolved )y the Court of Appeals.1.hich is really not )eyond pecuniary esti&ation.1% .hich are i&&ediately ascertaina)leJ and *2+ those .here in the records does it appear that respondents are liti'atin' as paupers. . .ever.his consideration &ay have &oved the trial court and the Court of Appeals to declare that the unpaid doc7et fees shall )e considered a lien on the Gud'&ent a.he trial court does not have to e&ploy 'uess. 3n fact.e see no atte&pt to cheat the courts on the part of respondents.ppeals81> .here there .13 Fhile it is true that the e/act value of the partnership0s total assets cannot )e sho. and the fact that the doc7et fee paid so far is inade@uate is not an indication that they are tryin' to avoid payin' the re@uired a&ount.ell as their correspondin' share therein. .ith certainty at the ti&e of filin'. )ut &ay si&ply )e due to an ina)ility to pay at the ti&e of filin'.hey also assert that until and unless a proper accountin' is done.his second class of clai&s.hich cannot )e i&&ediately ascertained as to the e/act a&ount. and as such are e/e&pted fro& the pay&ent of court fees.orth thereof at . the difference of fee shall )e refunded or paid as the case &ay )e.81$ . )ut rather parta7es of the nature of a si&ple collection case .hat they are actually as7in' is for the trial court to co&pel petitioner to pay and turn over their share. respondents can and &ust ascertain. fro& the proceeds of the sale of the partnership assets. *5nderscorin' ours+ 3n Pilipinas *hell Petroleu! . v. Rule 1-1 of the Rules of Court states that1 . unli7e in the case of 0anchester Develop!ent .000.#ot satisfied. .here the e/act a&ount still has to )e finally deter&ined )y the courts )ased on evidence presented.as to recover the decedent0s 1?3 share in the partnership0 s assets.ard. .hirty 6illion "esos *"30.hich the Honora)le Court &ay 'rant the& in this case should there )e any deficiency in the pay&ent of the doc7et fees to )e co&puted )y the Cler7 of Court.000. petitioner filed the instant petition for revie. falls s@uarely under the third para'raph of said !ection 9*a+. they feel Gustified in not havin' paid the co&&ensurate doc7et fee as re@uired )y the Rules of Court. in order to deter&ine the proper a&ount of doc7et and other fees.n . particularly fro& petitioner. ho.orp. "arcel of land su)Gect of the case pendin' )efore the trial court is outside the said court0s territorial GurisdictionJ 333. .$%&phi$. Fhile they as7 for an accountin' of the partnership0 s assets and finances.here the value of the su)Gect assets or a&ount de&anded is pecuniarily deter&ina)le.ourt of .ppeals81: this Court pronounced that the a)ove-@uoted provision 8clearly conte&plates an 3nitial pay&ent of the filin' fees correspondin' to the esti&ated a&ount of "a'e I 9$ .

ven if it . "a'e I 9% .hen the specific clai& 8has )een left for the deter&ination )y the court.orth ..arded and the fees paid upon filin' of this co&plaint that is su)Gect to adGust&ent and . e/cept . *5nderscorin' ours+ Accordin'ly.000.hey did. Respondents cannot no.suncion822 this Court held that . . the court .the clai& su)Gect to adGust&ent as to . in order to avoid tre&endous losses to the Gudiciary. 3f the plaintiff fails to co&ply .hich &ust )e strictly construed.000. and upon &otion )y petitioner. . that the trial court should have dis&issed the co&plaint for failure of private respondent to pay the correct a&ount of doc7et fees.ithin this re@uire&ent.he court ac@uires Gurisdiction over the action if the filin' of the initiatory pleadin' is acco&panied )y the pay&ent of the re@uisite fees.8 Clearly. Cased on the fore'oin'.hat later &ay )e proved.ill )e considered a lien or any a. . !ection 9*a+ of the Rules of Court specifically provides that the court &ay refund the 0e/cess or e/act additional fees should the initial pay&ent )e insufficient. 3n the oft-@uoted case of *un Fnsurance 9ffice8 Ltd.in' the plaintiff to pay the proper doc7et fees .e reiterated therein the principle that the pay&ent of filin' fees cannot )e &ade contin'ent or dependent on the result of the case. the )alance )et.ithin a reasona)le ti&e )efore the e/piration of the applica)le prescriptive or re'le&entary period. the additional filin' fee therefor shall constitute a lien on the Gud'&ent and it shall )e the responsi)ility of the Cler7 of Court or his duly authori4ed deputy to enforce said lien and assess and collect the additional fee. or. allo. 0axi!iano . the i&&ediate dis&issal of the co&plaint shall issue on Gurisdictional 'rounds. ho.hus.ourt of .ithin a reasona)le ti&e. this Court has rela/ed the strict adherence to the 0anchester doctrine.ise.ever. v.00+. Hon.ard until such additional fee is collected. #evertheless. . v. .his esti&ate can )e &ade the )asis for the initial doc7et fees that respondents should pay.orp. of course. provided the applica)le prescriptive or re'le&entary period has not yet e/pired. ho. the rules and Gurisprudence conte&plate the initial pay&ent of filin' and doc7et fees )ased on the esti&ated clai&s of the plaintiff.hirty 6illion "esos *"30.ppeals829 this Court held that1 .ard he &ay o)tain in his favor. the trial court erred in not dis&issin' the co&plaint outri'ht despite their failure to pay the proper doc7et fees. and it is only . Fhile the rule is that the pay&ent of the doc7et fee in the proper a&ount should )e adhered to. the plaintiff in an action to pay the sa&e .hen there is a deficiency that a lien &ay )e constituted on the Gud'&ent a. there are certain e/ceptions . and direct the& to pay the sa&e .as less or &ore than the a&ount alle'ed or esti&ated. esti&ate the partnership0s total assets to )e . and to the 'overn&ent as .hese fees are necessary to defray court e/penses in the handlin' of cases. .hen the clai&ant is a pauper-liti'ant. if the fees are not paid at the ti&e of the filin' of the pleadin'.een the appropriate doc7et fees and the a&ount actually paid )y the plaintiff . as in other procedural rules. it &ay )e li)erally construed in certain cases if only to secure a Gust and speedy disposition of an action.hey cannot avoid payin' the initial doc7et fees )y conveniently o&ittin' the said a&ount in their a&ended co&plaint. an initial pay&ent of the doc7et fees )ased on an esti&ated a&ount &ust )e paid si&ultaneous . prescription has set in the &eanti&e.ithin a reasona)le ti&e )efore the e/piration of the applica)le prescriptive or re'le&entary period.he &atter of pay&ent of doc7et fees is not a &ere triviality.ith the filin' of the co&plaint.ould stand to lose the filin' fees should the Gud'&ent later turn out to )e adverse to any clai& of the respondent heirs.ere later esta)lished that the a&ount proved . the pay&ent of doc7et fees cannot )e &ade dependent on the outco&e of the case. Rule 1-1.ould )e considered in estoppel.23 3n recent rulin's. in a letter21 addressed to petitioner.ithin such reasona)le ti&e as the court &ay 'rant. say that they are una)le to &a7e an esti&ate. .hich &ay )e su)Gected to alien. the defendant should ti&ely raise the issue of Gurisdiction or else he . Other. the trial court in the case at )ar should deter&ine the proper doc7et fee )ased on the esti&ated a&ount that respondents see7 to collect fro& petitioner. 3t does not follo. 3t is clear that it is only the difference )et.23n the recent case of 2ational *teel .ever.1?3 of the value of all the partnership assets )ut they did not alle'e a specific a&ount. respondents have a specific clai& . unless.820 6oreover. for the said letter and the ad&issions therein for& part of the records of this case. Althou'h the pay&ent of the proper doc7et fees is a Gurisdictional re@uire&ent.ell. Conse@uently. as of the ti&e of full pay&ent of the fees .ith. the trial court &ay allo. Applied to the instant case. .een the a&ount finally a. 3n the latter case. . 2ailure to co&ply there.

clai&s a de)t fro& petitioner and see7s the perfor&ance of a personal duty on his part. and ri'htly so.hich is a &ode of ac@uisition )y virtue of .hey. on the )asis of his personal lia)ility. there is no sho. any of the partners &ay de&and an accountin' of the partnership0s )usiness. 3t also see7s the enforce&ent of.indin' up of its affairs. ar'u&ents.n ri'ht as successors of Dicente . .he ti&e-tested case of .his contention is not .82% settled this issue thus1 . it is a personal action that.ell as to i&ple&ent the li@uidation and partition of the partnership0s assets.e find no error on the part of the trial court and the Court of Appeals in holdin' that the case )elo. had the capacity to sue and see7 the court0s intervention to co&pel petitioner to fulfill his o)li'ations. in effect.a)anao had a'ainst the partnership and petitioner . petitioner asserts that the survivin' spouse of Dicente .ever.336oreover. is not necessary for any of the heirs to ac@uire le'al capacity to sue.a)anao has no le'al capacity to sue since she . .as properly laid and the trial court correctly ruled so. . is a personal action .he fact that t. 2inally. venue in this case .hich. includin' the fishpond in @uestion. ar'uin' that respondents0 action prescri)ed four *-+ years after it accrued in 1:%>. did not chan'e the nature or character of the action. venue has nothin' to do . . As successors . therefore.hich should precede and?or is part of its process of dissolution.ere trans&itted to his heirs. such sale )ein' &erely a necessary incident of the li@uidation of the partnership.3% "a'e I 9: .3A prior settle&ent of the estate.ith Gurisdiction for venue touches &ore upon the su)stance or &erits of the case. for ri'hts to the succession are trans&itted fro& the &o&ent of death of the decedent.in' that the parcels of land involved in this case are )ein' disputed. or . at the election of the latter. .a)anao as e/ecutri/ or ad&inistratri/.o of the assets of the partnership are parcels of land does not &aterially chan'e the nature of the action. &ay )e co&&enced and tried . Clearly.32 Fhatever clai&s and ri'hts Dicente . .2$ 2urther&ore.a)anao0 s death. . petitioner.ere trans&itted to respondents.2: 3n fine. includin' the partitionin' and distri)ution of the net partnership assets to the partners.hich the property. "etitioner0s o)Gection in this re'ard is &isplaced. ri'hts and o)li'ations to the e/tent of the value of the inheritance of a person are trans&itted.2> "etitioner. respondents0 co&plaint see7in' the li@uidation and partition of the assets of the partnership .hich &ay )e filed in the proper court .ners of their respective hereditary shares fro& the &o&ent Dicente . they can co&&ence any action ori'inally pertainin' to the decedent. 0ercader8 et al. or even the appoint&ent of !alvacion . ho.On the &atter of i&proper venue.he three *3+ final sta'es of a partnership are1 *1+ dissolutionJ *2+ .3$ 2or as lon' as the partnership e/ists.31 As it is. sold and distri)uted accordin' to the a'ree&ent of the partners. that respondents are as7in' that the assets of the partnership )e accounted for. .laridades v. !he and her children are co&plainants in their o. it is only incidental that part of the assets of the partnership under li@uidation happen to )e parcels of land. at . . On the third issue.as i&properly laid since the action is a real action involvin' a parcel of land that is located outside the territorial Gurisdiction of the court a "uo. 3n fact. 2ro& the very &o&ent of Dicente . continues to e/ist and its le'al personality is retained. his ri'hts as a partner and to de&and fulfill&ent of petitioner0s o)li'ations as outlined in their dissolution a'ree&ent . 3t is an action in persona! )ecause it is an action a'ainst a person. his ri'hts insofar as the partnership .hen the final accountin' is done. 3> .indin'-upJ and *3+ ter&ination.39 2ro& the &o&ent of his death. the contract that the partners e/ecuted to for&ali4e the partnership0s dissolution. &ore particularly )y succession.here the action is a'ainst the thin' itself instead of a'ainst the person.a)anao.a)anao died.he trial court and the Court of Appeals 'ave scant consideration to petitioner0s hollo. under the Rules.ere trans&itted to respondents )y operation of la. respondents )eca&e o.he records indu)ita)ly sho.hich ti&e it co&pletes the .here the plaintiffs reside.he fact that plaintiff prays for the sale of the assets of the partnership.ell-ta7en. althou'h dissolved.he survivin' spouse does not need to )e appointed as e/ecutri/ or ad&inistratri/ of the estate )efore she can file the action. petitioner contends that the trial court should have dis&issed the co&plaint on the 'round of prescription.here the defendant resides or &ay )e found.30 Cesides.as concerned .he partnership. "rescription of the said ri'ht starts to run only upon the dissolution of the partnership .ho stepped into the shoes of their decedent upon his death.he action filed )y respondents not only see7s redress a'ainst petitioner..ith.ith da&a'es is a personal action . and petitioner0s co&pliance . na&ely.as never appointed as ad&inistratri/ or e/ecutri/ of his estate.here any of the parties reside. insists that venue . . as . 3t is not an action in re! . . .

Costs a'ainst petitioner. no final accountin' has )een &ade. . 3n fine. and the case isREMANDED to the Re'ional .ith petitioner resurrectin' the very sa&e ar'u&ents fro& the trial court all the . the Court of Appeals did not co&&it reversi)le error in upholdin' the trial court0s orders.Contrary to petitioner0s protestations that respondents0 ri'ht to in@uire into the )usiness affairs of the partnership accrued in 1:%>.rial Court of Cadi4 City. since petitioner has failed or refused to render an accountin' of the partnership0s )usiness and assets. Fhen a final accountin' is &ade.he ri'ht to an account of his interest shall accrue to any partner.hich is ORDERED to deter&ine the proper doc7et fee )ased on the esti&ated a&ount that plaintiffs therein see7 to collect.hen it denied petitioner0s &otions to dis&iss. the a)ove-cited provision states that the ri'ht to de&and an accountin' accrues at the date of dissolution in the a)sence of any a'ree&ent to the contrary. Article 1%-2 of the Civil Code provides1 .ay up to the !upre&e Court. prescription had not even )e'un to run in the a)sence of a final accountin'. (i7e.hat respondents are see7in' in their action )efore the trial court.ithout further delay. at the date of dissolution.he liti'ation of the &erits and su)stantial issues of this controversy is no. the trial court is ORDERED to conduct the appropriate proceedin's in Civil Case #o.hich also deal . in the a)sence of any a'ree&ent to the contrary. 3n the case at )ar. . lon' overdue and &ust proceed .ithin a reasona)le ti&e. Cranch >0. of all the fore'oin'. Applied in relation to Articles 1%0$ and 1%0:. prescri)in' four *-+ years thereafter. it is only then that prescription )e'ins to run. *!EREFORE. the instant petition is DENIED for lac7 of &erit. and direct said plaintiffs to pay the sa&e .ise. . . the said action is not )arred )y prescription.indin' up partners or the survivin' partners or the person or partnership continuin' the )usiness.ith the duty to account. or his le'al representative as a'ainst the . .hereafter. -1>-C. SO ORDERED. in vie. Hence. "a'e I >0 . the trial court neither erred nor a)used its discretion . provided the applica)le prescriptive or re'le&entary period has not yet e/pired. and that is precisely . "recious ti&e has )een lost Gust to settle this preli&inary issue.

"a'e I >1 .