LAW 303 – AGENCY, TRUST, AND PARTNERSHIP

G.R. No. 126881             October 3, 2000

HEIRS OF TAN ENG KEE, Petitioner

vs.
HONORABLE COURT OF APPEALS and TAN ENG LAY, Respondents

Application in the Case of a Particular Article on the Law of Partnership:

ARTICLE 1771 OF THE NEW CIVIL CODE

A partnership may be constituted in any form, except where immovable property or real rights are
contributed thereto, in which case a public instrument shall be necessary.
ARTICLE 1772 OF THE NEW CIVIL CODE
Every contract or partnership having a capital of three thousand pesos or more, in money or
property, shall appear in a public instrument, which must be recorded in the office of the Securities and
Exchange Commission

FACTS:
On February 19, 1990, the heirs of Tan Eng Kee filed a suit against the decedent's brother Tan
Eng Lay in the Regional Trial Court of Baguio City for accounting, liquidation and winding up of the
alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay.
The complaint principally alleged that after the second World War, Tan Eng Kee and Tan Eng
Lay, pooling their resources and industry together, entered into a partnership engaged in the business of
selling lumber and hardware and construction supplies which they named "Benguet Lumber" and was
jointly managed until Tan Eng Kee's death. Such claim is supported by the following facts: that both
families of the Tan Eng Kee and Tan Eng Lay were all living in one compound, that both Lay and Kee
were supervising and commanding the employees, and lasty that both were the ones determining the price
of the stocks and making orders to the supplier.
On the other hand, Tan Eng Lay alleged that he was the only registered owner of Benguet
Lumber and that the deceased Tang Eng Kee was merely an employee of the company on the basis of the
SSS coverage and that he was listed in the payroll only as an employee.
The RTC ruled in favor of the heirs declaring that Benguet Lumber is a joint venture which is
akin to a particular partnership. However, the Court of Appeals reversed the said decision and the petition
for reconsideration was denied.

ISSUE:
Whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber.
RULING:
No, Tan Eng kee and Tan Eng lay were not partners in Benguet Lumber
The SC ruled 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. It had no business book, no
written account nor any memorandum for that matter and no license mentioning the existence of a
partnership.
Arts. 1771 and 1772, NCC states that a partner may be constituted in any form, but when an
immovable is constituted, the execution of a public instrument becomes necessary. This is equally true if
the capitalization exceeds P3,000.00, in which case a public instrument is also necessary, and which is to
be recorded with the Securities and Exchange Commission.
In this case at bar, we can easily assume that the business establishment definitely exceeded
P3,000.00, in addition to the accumulation of real properties and to the fact that it is now a compound.
However, the execution of a public instrument, on the other hand, was never established by the appellees.
SC stated that the facts that both were commanding and supervising people are not evidences supporting
the existence of a partnership.
The evidence presented by petitioners fall short of the quantum of proof required to establish a
partnership. Thus, we conclude that Tan Eng Kee was only an employee, not a partner.

Other Law principles in the case:

Filing of petition with Supreme Court

A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court
of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only
questions of law which must be distinctly set forth.

Exceptions:

1) when the factual findings of the Court of Appeals and the trial court are contradictory;

(2) when the findings are grounded entirely on speculation, surmises, or conjectures;

(3) when the inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible;

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

 (5) when the appellate court, in making its findings, goes beyond the issues of the case,
and such findings are contrary to the admissions of both appellant and appellee;

(6) when the judgment of the Court of Appeals is premised on a misapprehension of

facts;

(7) when the Court of Appeals fails to notice certain relevant facts which, if properly
considered, will justify a different conclusion;

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

(9) when the findings of fact are conclusions without citation of the specific evidence on
which they are based; and

(10) when the findings of fact of the Court of Appeals are premised on the absence of
evidence but such findings are contradicted by the evidence on record

Group IV Team Members

• Ms. April Rose Anne Y. Sanchez;
• Ms. Princess F. Magpatoc;
• Ms. Ianna Carmel Y. Quitayen; and
• Mr. Zyrus Andrey D. Hermoso

Law 303 Lawyer – Professor

Atty. Julius Eleazar Mañego