HEIRS OF TAN ENG KEE v. CA

HEIRS OF TAN ENG KEE v. CA

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

Ponente: J. De Leon Jr.

FACTS:

Following the death of Tan Eng Kee on September 13, 1984, Matilde Abubo, the common-law spouse of the decedent, joined by their children Teresita, Nena, Clarita, Carlos, Corazon and Elpidio, collectively known as herein petitioners HEIRS OF TAN ENG KEE, filed suit against the decedent's brother TAN ENG LAY on February 19, 1990. The complaint was for accounting, liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay.

         

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. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged partners.

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.

The RTC ruled in favor of the Heirs of Tan Eng Kee. However, the Court of Appeals reversed and set aside the lower court’s decision.

ISSUE:

          Whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber

HELD:

          No, Tan Eng Lay and Tan Eng Kee were not partners in Benguet Lumber

The Supreme Court held that 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. Undoubtedly, the best evidence would have been the contract of partnership itself, or the articles of partnership but there is none.

In the case at hand, there is no evidence that Tan Eng Kee contributed his resources to a common fund for the purpose of establishing a partnership. Moreover, 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.

          Therefore, Tan Eng Kee and Tan Eng lay were not partners in Benguet Lumber