Civil Law,  Legally Yours

Heirs of Tan Eng Kee v. Court of Appeals

Heirs of Tan Eng Kee v. Court of Appeals

G.R. No. 126881; October 3, 2000

FACTS:

Tan Eng Kee and Tan Eng Lay was alleged by the heirs of Tan Eng Kee to have formed a partnership under the name Benguet Lumber. Thus, when the said company was turned into a corporation, Benguet Lumber Company, the heirs filed a complaint for the proper accounting of the assets of the partnership transferred to the corporation and their shares of the decedent partner Tan Eng Kee as heirs.

However, Tan Eng Lay contested that Tan Eng Kee was merely an employee and that Benguet Lumber was his sole proprietorship. Thus, the heirs averred that there was an oral formation of a partnership on the basis that:

  1. Tan Eng Kee commanded and supervised the employees along with Tan Eng Lay;
  2. Tan Eng Kee also determined the price at which the stocks were sold;
  3. Tan Eng Kee also placed orders to the suppliers; and
  4. Both partners’ families lived together in the same compound.

Tan Eng Lay, however, protested that:

  1. Even a mere supervisor could give orders to subordinates;
  2. Even a messenger can order materials from suppliers; and
  3. Tan Eng Kee and Tan Eng Lay are brothers so that the privilege was accorded due to their personal relations.

ISSUE:

Was a partnership formed based on the circumstances?

HELD:

No. The Court held that a partnership was not formed considering the circumstances. While the Court acknowledged that an oral and unwritten partnership may indeed be formed, the Court held that the circumstances in the case at bar falls short of proving the existence of a partnership.

Art. 1769 was applied which enumerated the rules in determining a partnership. In this case, the best evidence of a partnership – a contract of partnership or articles of partnership – was non-existent.

Furthermore, the NCC provides that in case of real property or where the capital is more than P3,000.00, the execution of a contract is necessary and that a public instrument must be executed.

While it can be said that the NCC was still not in effect when the supposed partnership was formed, the other circumstances still fall short of proving a partnership.

Aside from respondents’ arguments, the Court made notice of the fact that Tan Eng Kee never asked for accounting to assess his share in the profits and losses. Moreover, the alleged contribution of Tan Eng Kee of 80 pieces of G.I. sheets is insufficient to prove the existence of a partnership since co-ownership or co-possession is not an indicium of the existence of a partnership.

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