ATAP - Agency, Trust, and Partnership: Atty. Ranada Syllabus notes - WEEK 1 & 2

I.                     PARTNERSHIP

Week No. 1

A. General Provisions (Article 1767 – 1783)

1. What is a contract of partnership? (Art. 1767)

Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

Two or more persons may also form a partnership for the exercise of a profession. (1665a)

SANTOS VS. SPS. REYES, 368 SCRA 261

https://juristprudent.blogspot.com/2018/10/santos-vs-sps-reyes-368-scra-261.html

2. Determining factors in the existence of partnership (Art. 1769)

Art. 1769. In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership, whether such-co-owners or co-possessors do or do not share any profits made by the use of the property;

(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived;

(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

(a) As a debt by installments or otherwise;

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

(c) As an annuity to a widow or representative of a deceased partner;

(d) As interest on a loan, though the amount of payment vary with the profits of the business;

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

HEIRS OF TAN ENG KEE VS. CA, 341 SCRA 740

                (citing Evangelista vs Collector of Internal Revenuw, 54 O.G. 996

https://juristprudent.blogspot.com/2018/10/heirs-of-tan-eng-kee-vs-ca-341-scra-740.html

NEGADO VS. MAKABENTA, 54 O.G. 4082

Castro, J.

https://juristprudent.blogspot.com/2018/10/negado-vs-makabenta-54-og-4082.html

YULO VS. YANG CHIACO SENG, L-12541, AUG. 28, 1959

LABRADOR, J.:

3. Distinction between partnership and private corporation

FLETCHER, Cyc. Corp., Sec. 20

4. Formalities required by law for the organization/constitution of partnership (Art. 1771, 1772, 1773, 1843)

Art. 1771. 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. (1667a)

Art. 1772. Every contract of 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.

Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnership and the members thereof to third persons. (n)

Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument. (1668a)

Art. 1843. A limited partnership is one formed by two or more persons under the provisions of the following article, having as members one or more general partners and one more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.

SEC Memorandum Circular 14, Series of 2017

Consolidated Guidelines and Procedures on the Use of Corporate and Partnership Names

SEC Memorandum Circular No. 9, Series of 2018

Amendment of the Guidelines and Procedures on the Use if Corporate and Partnership Names

    SEC Memorandum Circular No. 6, Series of 2016

    Omnibus Guidelines on Principal Office Addressm Address of each Incorporator, Director, Trustee or Partner

    http://www.sec.gov.ph/sec-memorandum-circular-no-06-9/

    Executive Order No. 184

    Tenth Foreign Investment Negative List

Week No. 2

5. Different kinds of partnership

Art. 1776. As to its object, a partnership is either universal or particular.

As regards the liability of the partners, a partnership may be general or limited. (1671a)

                   a.)     As to object (Art, 1777, 1778, 1780, 1783)

i.                     Universal Partnership

Art. 1777. A universal partnership may refer to all the present property or to all the profits. (1672)

Art. 1780. A universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership.

Movable or immovable property which each of the partners may possess at the time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership. (1675)

2 kinds of universal partnership:

1.       Universal partnership or one which refers to ALL THE PRESENT PROPERTY OR TO ALL PROFITS (1777)

2.       Universal partnership of profits defined in ART. 1780.

Art. 1778. A partnership of all present property is that in which the partners contribute all the property which actually belongs to them to a common fund, with the intention of dividing the same among themselves, as well as all the profits which they may acquire therewith. (1673)

ii.                   Particular Partnership

Art. 1783. A particular partnership has for its object determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or vocation. (1678)

           
                     b.)     As to liability of the partners

i.                     General Partnership

General Partnership or one consisting of general partners who are liable pro rata and subsidiarily (Art. 1816) and sometimes SOLIDARILY (Arts. 1822 – 1824) with their separate property for partnership debts; or

ii.                   Limited Partnership

Limited Partnership or one formed by two or more persons having as members one or more general partners and one or more limited partners, the latter not being personally liable for the obligations of the partnership. (Art. 1843)

6. Different kinds of partners

a.)     Industrial Partner – or one who contributes only his industry or personal service (Arts. 1789, 1767)

Art. 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly permits him to do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case. (n)

Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

Two or more persons may also form a partnership for the exercise of a profession. (1665a)

b.)     Capitalist Partners – or one who contributes money or property to the common fund (see Art. 1767)

Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

Two or more persons may also form a partnership for the exercise of a profession. (1665a)

c.)      General Partner – or one whose liability to third persons extends to his separate property; he may be either a capitalist or industrial partner. (see Art. 1843, 1816). He is also known as a REAL PARTNER

Art. 1843. A limited partnership is one formed by two or more persons under the provisions of the following article, having as members one or more general partners and one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.

Art. 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership. However, any partner may enter into a separate obligation to perform a partnership contract. (n)

d.)     Limited Partner – or one whose liability to third persons is limited to his capital contribution. (see Art. 1843) He is also known as “SPECIAL PARTNER”. The term “general partner” and “limited partner” have relevance only in LIMITED PARTNERSHIP.

Art. 1843. A limited partnership is one formed by two or more persons under the provisions of the following article, having as members one or more general partners and one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.

e.)     Managing Partner – or one who manages the affairs or business of the partnership; he may be appointed either in the articles of partnership or after the constitution of the partnership (See Art. 1800) He is also known as GENERAL or REAL partner;

Art. 1800. The partner who has been appointed manager in the articles of partnership may execute all acts of administration despite the opposition of his partners, unless he should act in bad faith; and his power is irrevocable without just or lawful cause. The vote of the partners representing the controlling interest shall be necessary for such revocation of power.

f.)      Silent Partner – or one who does NOT take any active part in the business although he may be known to be a partner. (Ibid.) Thus, he need not be a secret partner. If he withdraws from the partnership, he must give notice to those persons, who do business with the firm to escape liability in the future;

g.)     Ostensible Partner – or one who takes ACTIVE PART and known to the public as a partner in the business (See Art. 1834, par. 2), whether or not he has an actual interest in the firm. Thus, he may be an actual partner or a nominal partner. If he is not actually a partner, he is subject to liability by the doctrine estoppel. (Art. 1825)

Art. 1825. When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to anyone, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such persons to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made:

(1) When a partnership liability results, he is liable as though he were an actual member of the partnership;

(2) When no partnership liability results, he is liable pro rata with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately.

When a person has been thus represented to be a partner in an existing partnership, or with one or more persons not actual partners, he is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. When all the members of the existing partnership consent to the representation, a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation. (n)

h.)     Secret Partner – or one who takes active part in the business but is not known to be a partner by outside parties nor held out as a partner by the other partners (Ibid.), although he participates in the profits and losses of the partnership. He is an ACTUAL partner. He is also an ACTIVE partner in the sense that he participates in the management of the partnership affairs.

i.)       Partner by Estoppel – or one who is not really a partner, not being a party to a partnership agreement, but is liable as a partner for the protection of innocent third persons. (See Art 1825) He is one who represented as being in fact a partner, but who is not so as between the partners themselves. He is also known as PARTNER BY IMPLICATION OR NOMINAL PARTNER.

The term QUASI-PARTNER is sometimes used. (68 C.J.S. 405)

-----------------------------------------

Reviewer Made by: Liz Lorenzo

YULO VS. YANG CHIACO SENG, L-12541, AUG. 28, 1959

YULO VS. YANG CHIACO SENG, L-12541, AUG. 28, 1959

LABRADOR, J.:

[No. L-12541. August 28, 1959]

Parties:

 ROSARIO U. YULO, assisted by her husband JOSE C. YULO, plaintiffs and appellants,

YANG CHIAO SENG, defendant and appellee.

Nature: APPEAL from a judgment of the Court of First Instance of Manila.

Keyword: circumstance that negate partnership

Facts:

On June 17, 1945, defendant Yang Chiao Seng proposed a partnership to the plaintiff Mrs. Rosario U. Yulo, to run and operate a theatre in Manila. In their agreement, the principle agreement was that (1)Yang Chiao Seng shall pay Mrs. Yulo a monthly participation of P3,000, (2) that the partnership shall be for a period of two years.and six months, with the condition that if the land is expropriated, rendered impracticable for the business, or if the owner constructs a permanent building thereon, or Mrs. Yulo's right of lease is terminated by the owner, then the partnership shall be terminated even if the period of partnership has not yet expired; (3) that Mrs. Yulo may conduct such business in the lobby of the building as is ordinarily carried on in lobbies of theatres in operation, provided the said business may not obstruct the free ingress and egrees of patrons of the theatre; (4) that after December 31, 1947, all improvements placed by the partnership shall belong to Mrs. Yulo, but that if the partnership agreement is terminated before the lapse of one and a half years period under any of the causes mentioned in paragraph (2), then Yang Chiao Seng shall have the right to remove and take away all improvements that the partnership may place in the premises.

                Upon agreement by Mrs. Yulo & Yang, they executed a partnership agreement establishing “Yang & Company, Ltd”.  The capital is fixed at P100,000, P80,000 shouldered by Yang Chiao Seng and P20,000, by Mrs. Yulo. All gains and profits are distributed among the partners in the same proportion as their capital contribution.

In June, 1946, extended their partnership for another 3 years & by the end of the terms, the showhouse building shall belong exclusively to Mrs. Yulo.

Problem arised when the owner of the land canceled the contract of lease of Mrs Yulo. Due to such notice, Mrs Yulo and her husband

The land on which the theatre was constructed was leased by plaintiff Mrs, Yulo from Emilia Carrion Santa Marina and Maria Carrion Santa Marina. In the con- tract of lease it was stipulated that the lease shall continue for an indefinite period of time, but that after one year the lease may be cancelled by either party by written notice to the other party at least 90 days before the date of cancellation. The last contract was executed between the owners and Mrs. Yulo on April 5, 1948. But on April 12, 1949, the the attorney for the owners notified Mrs. Yulo of the owner's desire to cancel the contract of lease on July 31, 1949. In view of the above notice, Mrs. Yulo and her husband brought a civil action in the Court of First Instance of Manila on July 3, 1949 to declare the lease of the premises one for an indefinite period. On August 17, 1949, the owners on their part brought an action in the Municipal Court of Manila against Mrs. Yulo and her husband and Yang Chiao Seng to eject them from the premises. On February 9, 1950, the Municipal Court of Manila rendered judgment ordering the ejectment of Mrs. Yulo and Mr. Yang. The judgment was appealed. In the Court of First Instance, the two cases were afterwards heard jointly, and judgment was rendered dismissing the complaint of Mrs. Yulo and her husband, and declaring the contract of lease of the premises terminated as of July 31, 1949, and fixing the reasonable monthly rentals of said premises at P100. Both parties appealed from said decision and the Court of Appeals, on April 30, 1955, affirmed the judgment.

Issue WON the agreement was that of a contract of lease or partnership

Held: The agreement was a sublease not a partnership. The following are the requisites of partnership:

(1)    two or more persons who bind themselves to contribute money, property or industry to a common fund;

(2)    the intention on the part of the partners to divide the profits among themselves (Article 1761, CC)

Plaintiff did not furnish the supposed P20,000 capitalnor did she furnish any help or intervention in the management of the theatre. Neither has she demanded from defendant any accounting of the expenses and earnings of the business. She was absolutely silent with respect to any of the acts thata partner should have done; all she did was to receive her share of P3,000 a month which cannot be interpreted in any manner than a payment for the use of premises which she had leased from the owners

Ruling: Dismissed.

Same Same:

1.   CONTRACTS; LEASE; CIRCUMSTANCES THAT NEGATE PARTNERSHIP.—Where one of the parties to a contract does not contribute the capital he is supposed to contribute to a common fund; does not furnish any help or intervention in the management of the business subject of the contract; does not demand from the other party an accounting of the expenses and earnings of the business; and is absolutely silent with respect to any of the acts that a partner should have done, but, on the other hand, receives a fixed monthly sum from the other party, there can be no other conclusion than that the contract between the parties is one of lease and not of partnership.

NEGADO VS. MAKABENTA, 54 O.G. 4082

NEGADO VS. MAKABENTA, 54 O.G. 4082

Castro, J.

Nature: Appeal from a judgment of the CFI of Leyte

Keywords: Evidence / showing existence of partnership : books, papers, accounts and similar writings are admissible provided that the party against whom they are offered is shown to have authorized or ratified them

Parties:

Petitioner: Filomeno Negado, Narciso Rocha, and Juan Guirindola

Respondents: Gonzalo Makabenta

Filomeno Negado, Narciso Rocha, and Juan Guirindola vs Gonzalo Makabenta 54 OG 40822 8 February 1958

Facts: Plaintiffs filed a suit against the defendant for the recovery of possession and management of Liberty Theater located in Leyte and for an accounting of all money and property pertaining thereto. The plaintiffs allege that the theater is owned and operated by a partnership known as Hemarogui Company composed of the plaintiffs and defendant. Conversely, the defendant alleges that he is the sole and exclusive owner of the theater while the plaintiffs are merely creditor. The trial court held that no partnership exists and the oral and material evidence (books,accounts, and papers) presented by the plaintiffs are incompetent to establish existence of the partnership.

Issue: Whether or not a partnership exists among Negado, Rocha, Guirindola and Makabenta 3

Decision: There exists a partnership. In determining whether or not a particular transaction constitutes partnership, the intention as disclosed by the entire transaction, and as gathered from the facts and from the language employed by the parties as well as their conduct. A partnership may be created without any definite intention to create it, the intention of the parties being inferred from their conduct and dealings with each other. For the purpose of showing the existence of a partnership, books, papers, accounts and similar writings are admissible as evidence provided that the party against whom they are offered is shown to have authorized or ratified them

Same Same:

1. EVIDENCE; PARTNERSHIP; PROOF OF INTENTION OF PARTIES PARAMOUNT -- In determining whether or not a particular transaction constitutes a partnership as between the parties, the intention as disclosed by the entire transaction, and as gathered from the facts and from the language employed by the parties, as well as their conduct, should be ascertained. A partnership may even be created without any definite intention to create it, the intention of the parties being Inferred from their conduct and dealings with each other.

2. PROOFS OF THE EXISTENCE OF A PARTNERSHIP -- For the purpose of showing the existence of a partnership, books, papers, accounts and similar writings are admissible provided the party against whom they are offered is shown to have authorized or ratified them, or in any way, to have been legally responsible for them [See Kiel vs Estate of Sabert 46 Phil. 198; 68 C.J. S. 415; Berret vs Harrel, 125 W. 2394, 178 Ark,]

HEIRS OF TAN ENG KEE VS. CA, 341 SCRA 740

HEIRS OF TAN ENG KEE VS. CA, 341 SCRA 740

(citing Evangelista vs Collector of Internal Revenuw, 54 O.G. 996

 DE LEON, JR., J .:

G.R. No. 126881. October 3, 2000

Parties:

HEIRS OF TAN ENG KEE, petitioners 

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

Nature: PETITION for review on certiorari of a decision of the Court of Appeals.

Keyword: Partnership, Joint venture

Facts:

Following the death of Tan Eng Kee, the HEIRS OF TAN ENG KEE (Matilde Abube, the common-law spouse & their children) filed suit against the decedent’s brother TAN ENG LAY. The complaint in the Baguio RTC was for the accounting, liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay. On March 1991, the petitioner HEIRS filed an amended complaint impleading BENGUET LUMBER COMPANY (BLC), as represented by Tan Eng Lay.

                The amended complaint alleged that after the war, Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together, entered into a partnership engaged in the business of selling lumber and hardware and construction supplies. They named their enterprise Benguet Lumber” which they jointly managed until Tan Eng Kee’s death. Petitioner HEIRS averred that the business prospered due to the hard work and thrift of the alleged partners.

However, they claimed that in 1981, Tan Eng Lay and his children caused the conversion of the partnership “Benguet Lumber” into a corporation called “Benguet Lumber Company.” The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and liquidation thereof, and the equal division of the net assets of Benguet Lumber.

RTC: declared that: (1) Benguet Lumber is a JOINT VENTURE which is akin to particular partnership; (2) that the deceased Tan Eng Kee and Tan Eng Lay are joint adventurers and/or partners in a business venture and/or particular its and/or losses of the business venture or particular partnership; (3) that the assets of Benguet Lumber are the same assets turned over to Benguet Lumber Co., Inc. and as such the heirs or legal representative of the deceased Tan Eng Kee have a legal right to share in said assets; (4) that all the rights and obligations of Tan Eng Kee as joint adventurers and/or as partner in a particular partnership have descended to the plaintiffs who are his legal heirs; (5) ordered Defendant to render accounting of all the assets of Benguet Lumber Company, Inc.; (6) Denied the award of damages; (7) denied the counter-claim of the defendants for lack of merit.

CA: reversed the judgment of the trial court.

As a side-bar to the proceedings, petitioners filed Criminal Case against Tan Eng Lay and Wilborn Tan for the use of allegedly falsified documents in a judicial proceeding. Petitioners complained that Exhibits offered by the defendants before the trial court, consisting of payrolls indicating that Tan Eng Kee was a mere employee of Benguet Lumber, were fake, based on the discrepancy in the signatures of Tan Eng Kee. They also filed Criminal Cases Nos. 78857-78870 against Gloria, Julia, Juliano, Willie, Wilfredo, Jean, Mary and Willy, all surnamed Tan, for alleged falsification of commercial documents by a private individual.

MTC: dismissed the cases for insufficiency of evidence

Issue:  WHETHER OR NOT THE LATE TAN ENG KEE WAS A PARTNER OR AN EMPLOYEE OF HIS BROTHER TAN ENG LAY

Held: We conclude that Tan Eng Kee was only an employee, not a partner.

Ratio:

A contract of partnership is defined by law as one where:

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

Two or more persons may also form a partnership for the exercise of a profession.¹⁴

Thus, in order to constitute a partnership, it must be established that (1) two or more persons bound themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide the profits among themselves.¹⁵ The agreement need not be formally reduced into writing, since statute allows the oral constitution of a partnership, save in two instances: (1) when immovable property or real rights are contributed,¹⁶ and (2) when the partnership has a capital of three thousand pesos or more.

In both cases, a public instrument is required. An inventory to be signed by the parties and attached to the public instrument is also indispensable to the validity of the partnership whenever immovable property is contributed to the partnership.¹⁹

The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership.²⁰ A particular partnership is distinguished from a joint adventure, to wit:

(a)A joint adventure (an American concept similar to our joint accounts) is a sort of informal partnership, with no firm name and no legal personality. In a joint account, the participating merchants can transact business under their own name, and can be individually liable therefor.

(b)Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful termination may continue for a number of years; a partnership generally relates to a continuing business of various transactions of a certain kind.

A joint venture “presupposes generally a parity of standing between the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or property contributed, and where each party exercises equal rights in the conduct of the business.”²² Nonetheless, in Aurbach, et al. v. Sanitary Wares Manufacturing Corporation, et al.²³ we expressed the view that a joint venture may be likened to a particular partnership.

Undoubtedly, the best evidence would have been the contract of partnership itself, or the articles of partnership, but there is none. The alleged partnership, though, was never formally organized. In addition, petitioners point out that the New Civil Code was not yet in effect when the partnership was allegedly formed sometime in 1945, although the contrary may well be argued that nothing prevented the parties from complying with the provisions of the New Civil Code when it took effect on August 30, 1950. But all that is in the past. The net effect, however, is that we are asked to determine whether a partnership existed based purely on circumstantial evidence. A review of the record persuades us that the Court of Appeals correctly reversed the decision of the trial court. The evidence presented by petitioners falls short of the quantum of proof required to establish a partnership.

Unfortunately for petitioners, Tan Eng Kee has passed away. Only he, aside from Tan Eng Lay, could have expounded on the precise nature of the business relationship between them. In the absence of evidence, we cannot accept as an established fact that Tan Eng Kee allegedly contributed his resources to a common fund for the purpose of establishing a partnership. The testimonies to that effect of petitioners’ witnesses is directly controverted by Tan Eng Lay. It should be noted that it is not with the number of witnesses wherein preponderance lies;²⁴ the quality of their testimonies is to be considered. None of petitioners’ witnesses could suitably account for the beginnings of Benguet Lumber Company, except perhaps for Dionisio Peralta whose deceased wife was related to Matilde Abubo.²⁵ He stated that when he met Tan Eng Kee after the liberation, the latter asked the former to accompany him to get 80 pieces of G.I. sheets supposedly owned by both brothers.²⁶ Tan Eng Lay, however, denied knowledge of this meeting or of the conversation between Peralta and his brother.²⁷ Tan Eng Lay consistently testified that he had his business and his brother had his, that it was only later on that his said brother, Tan Eng Kee, came to work for him. Be that as it may, co-ownership or co-possession (specifically here, of the G.I. sheets) is not an indicium of the existence of a partnership.²⁸

The essence of a partnership is that the partners share in the profits and losses.²⁹ Each has the right to demand an accounting as long as the partnership exists.³⁰ 

A demand for periodic accounting is evidence of a partnership.³⁴ During his lifetime, Tan Eng Kee appeared never to have made any such demand for accounting from his brother, Tang Eng Lay.

We conclude that Tan Eng Kee was only an employee, not a partner. Even if the payrolls as evidence were discarded, petitioners would still be back to square one, so to speak, since they did not present and offer evidence that would show that Tan Eng Kee received amounts of money allegedly representing his share in the profits of the enterprise. Petitioners failed to show how much their father, Tan Eng Kee, received, if any, as his share in the profits of Benguet Lumber Company for any particular period. Hence, they failed to prove that Tan Eng Kee and Tan Eng Lay intended to divide the profits of the business between themselves, which is one of the essential features of a partnership.

Ruling: WHEREFORE, the petition is hereby denied, and the appealed decision of the Court of Appeals is hereby AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED.

Same Same:

Partnerships; Words and Phrases; In order to constitute a partnership, it must be established that (1) two or more persons bound themselves to contribute money, property or industry to a common fund, and (2) they intended to divide the profits among themselves.—

The primordial issue here is whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber. A contract of partnership is defined by law as one where: x x x two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession. Thus, in order to constitute a partnership, it must be established that (1) two or more persons bound themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide the profits among themselves. The agreement need not be formally reduced into writing, since statute allows the oral constitution of a partnership, save in two instances: (1) when immovable property or real rights are contributed, and (2) when the partnership has a capital of three thousand pesos or more. In both cases, a public instrument is required. An inventory to be signed by the parties and attached to the public instrument is also indispensable to the validity of the partnership whenever immovable property is contributed to the partnership.

Same; Same; Joint Ventures; “Partnership” and “Joint Venture,” Distinguished.—The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership. A particular partnership is distinguished from a joint adventure, to wit: (a) A joint adventure (an American concept similar to our joint accounts ) is a sort of informal partnership, with no firm name and no legal personality. In a joint account, the participating merchants can transact business under their own name, and can be individually liable therefor, (b) Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful termination may continue for a number of years; a partnership generally relates to a continuing business of various transactions of a certain kind.

Same; Same; Same; Same; A joint venture may be likened to a particular partnership; The legal concept of a joint venture is of common law origin and has no precise legal definition, but it has been generally understood to mean an organization formed for some temporary purpose.—A joint venture “presupposes generally a parity of standing between the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or property contributed, and where each party exercises equal rights in the conduct of the business.” Nonetheless, in Aurbach, et al. v. Sanitary Wares Manufacturing Corporation, et al., we expressed the view that a joint venture may be likened to a particular partnership, thus: The legal concept of a joint venture is of common law origin. It has no precise legal definition, but it has been generally understood to mean an organization formed for some temporary purpose. (Gates v. Megargel, 266 Fed. 811 [1920]) It is hardly distinguishable from the partnership, since their elements are similar—community of interest in the business, sharing of profits and losses, and a mutual right of control. (Blackner v. McDermott, 176 F. 2d. 498 [1949]; Carboneau v. Peterson, 95 P.2d., 1043 [1939]; Buckley v. Chadwick, 45 Cal. 2d. 183, 288 P.2d. 12 289 P.2d. 242 [1955]). The main distinction cited by most opinions in common law jurisdiction is that the partnership contemplates a general business with some degree of continuity, while the joint venture is formed for the execution of a single transaction, and is thus of a temporary nature. (Tufts v. Mann, 116 Cal. App. 170, 2 P.2d. 500 [1931]; Harmon v. Martin, 395 111. 595, 71 NE 2d. 74 [1947]; Gates v. Megargel, 266 Fed. 811 [1920]). This observation is not entirely accurate in this jurisdiction, since under the Civil Code, a partnership may be particular or universal, and a particular partnership may have for its object a specific undertaking. (Art. 1783, Civil Code). It would seem therefore that under Philippine law, a joint venture is a form of partnership and should thus be governed by the law of partnerships. The Supreme Court has however recognized a distinction between these two business forms, and has held that although a corporation cannot enter into a partnership contract, it may however engage in a joint venture with others. (At p. 12, Tuazon v. Bolaños, 95 Phil. 906 [1954]) (Campos and Lopez-Campos Comments, Notes and Selected Cases, Corporation Code 1981).

Same; Co-Ownership; A co-ownership or co-possession is not an indicium of the existence of a partnership.—None of petitioners’ witnesses could suitably account for the beginnings of Benguet Lumber Company, except perhaps for Dionisio Peralta whose deceased wife was related to Matilde Abubo. He stated that when he met Tan Eng Kee after the liberation, the latter asked the former to accompany him to get 80 pieces of G.I. sheets supposedly owned by both brothers. Tan Eng Lay, however, denied knowledge of this meeting or of the conversation between Peralta and his brother. Tan Eng Lay consistently testified that he had his business and his brother had his, that it was only later on that his said brother, Tan Eng Kee, came to work for him. Be that as it may, co-ownership or copossession (specifically here, of the G.I. sheets) is not an indicium of the existence of a partnership.

Same; The essence of a partnership is that the partners share in the profits and losses; A demand for periodic accounting is evidence of a partnership.—Besides, it is indeed odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan Eng Kee never asked for an accounting. The essence of a partnership is that the partners share in the profits and losses. Each has the right to demand an accounting as long as the partnership exists. We have allowed a scenario wherein “[i]f excellent relations exist among the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible.” 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, x x x A demand for periodic accounting is evidence of a partnership. During his lifetime, Tan Eng Kee appeared never to have made any such demand for accounting from his brother, Tang Eng Lay.

Same; Where circumstances taken singly may be inadequate to prove the intent to form a partnership, nevertheless, the collective effect of these circumstances may be such as to support a finding of the existence of the parties’ intent.—In the instant case, we find private respondent’s arguments to be well-taken. Where circumstances taken singly may be inadequate to prove the intent to form a partnership, nevertheless, the collective effect of these circumstances may be such as to support a finding of the existence of the parties’ intent. Yet, in the case at bench, even the aforesaid circumstances when taken together are not persuasive indicia of a partnership. They only tend to show that Tan Eng Kee was involved in the operations of Benguet Lumber, but in what capacity is unclear. We cannot discount the likelihood that as a member of the family, he occupied a niche above the rank-and-file employees. He would have enjoyed liberties otherwise unavailable were he not kin, such as his residence in the Benguet Lumber Company compound. He would have moral, if not actual, superiority over his fellow employees, thereby entitling him to exercise powers of supervision. It may even be that among his duties is to place orders with suppliers. Again, the circumstances proffered by petitioners do not provide a logical nexus to the conclusion desired; these are not inconsistent with the powers and duties of a manager, even in a business organized and run as informally as Benguet Lumber Company.