Tan Eng Kee vs Court of Appeals

Benguet Lumber has been around even before World War II but during the war, its stocks
were confiscated by the Japanese. After the war, the brothers Tan Eng Lay and Tan Eng Kee
pooled their resources in order to revive the business. In 1981, Tan Eng Lay caused the
conversion of Benguet Lumber into a corporation called Benguet Lumber and Hardware
Company, with him and his family as the incorporators. In 1983, Tan Eng Kee died.
Thereafter, the heirs of Tan Eng Kee demanded for an accounting and the liquidation of the
partnership.
Tan Eng Lay denied that there was a partnership between him and his brother. He said that
Tan Eng Kee was merely an employee of Benguet Lumber. He showed evidence consisting
of Tan Eng Kees payroll; his SSS as an employee and Benguet Lumber being the employee.
As a result of the presentation of said evidence, the heirs of Tan Eng Kee filed a criminal case
against Tan Eng Lay for allegedly fabricating those evidence. Said criminal case was however
dismissed for lack of evidence.
ISSUE: Whether or not Tan Eng Kee is a partner.
HELD: No. There was no certificate of partnership between the brothers. The heirs were not
able to show what was the agreement between the brothers as to the sharing of profits. All
they presented were circumstantial evidence which in no way proved partnership.
It is obvious that there was no partnership whatsoever. Except for a firm name, there was no
firm account, no firm letterheads submitted as evidence, no certificate of partnership, no
agreement as to profits and losses, and no time fixed for the duration of the
partnership. There was even no attempt to submit an accounting corresponding to the period
after the war until Kees death in 1984. It had no business book, no written account nor any
memorandum for that matter and no license mentioning the existence of a partnership.
In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole proprietorship.
He registered the same as such in 1954; that Kee was just an employee based on the latters
payroll and SSS coverage, and other records indicating Tan Eng Lay as the proprietor.
Also, the business definitely amounted to more P3,000.00 hence if there was a partnership,
it should have been made in a public instrument.
But the business was started after the war (1945) prior to the publication of the New Civil
Code in 1950?
Even so, nothing prevented the parties from complying with this requirement.
Also, the Supreme Court emphasized that for 40 years, Tan Eng Kee never asked for an
accounting. The essence of a partnership is that the partners share in the profits and losses.
Each has the right to demand an accounting as long as the partnership exists. Even if it can
be speculated that a scenario wherein if excellent relations exist among the partners at the
start of the business and all the partners are more interested in seeing the firm grow rather
than get immediate returns, a deferment of sharing in the profits is perfectly plausible. But in
the situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A
person is presumed to take ordinary care of his concerns. A demand for periodic accounting
is evidence of a partnership which Kee never did.