Heirs of Tan Eng Kee vs CA

G.R. No. 126881

October 3, 2000
Facts:
Matilde Abubo, common law spouse of decedent Tan Eng Kee, joined by their children filed
an amended complaint impleading BENGUET LUMBER COMPANY, as represented by Tan Eng
Lay. The amended complaint claimed that 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.
The trial court held that Benguet Lumber is a joint venture which is akin to a particular
partnership formed by Tan Eng Kee and Tan Eng Lay. The trial court also declared that that
the assets of Benguet Lumber are the same assets turned over to Benguet Lumber Co. Inc.
and as such the heirs or legal representatives of the deceased Tan Eng Kee have a legal right
to share in said assets. On appeal, the CA reversed the trial courts decision on the ground
that the petitioners failed to prove the existence of a partnership; that the decedent is only
an employee and that Tan Eng Lay was the only listed owner of the business. Hence, this
present petition.
Issue: WON Tan Eng Kee and Tan Eng Lay were business partners in Benguet Lumber.
Ruling:
The SC held affirmed the CAs decision.
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 which the returns are derived; (4) The receipt by a person of a share of the profits
of a business is a 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
installment 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.