Case Name Angeles V Secretary of Justice

Topic Seperate Juridical Personality

Case No. |
G.R. No. 142612 | July 29, 2005
Date
Ponente CARPIO, J.:
The purpose of registration of the contract of partnership is to give notice to third
parties. Failure to register the contract of partnership does not affect the liability
Doctrine
of the partnership and of the partners to third persons. Neither does such failure
to register affect the partnership’s juridical personality.
Link https://lawphil.net/judjuris/juri2005/jul2005/gr_142612_2005.html

RELEVANT FACTS:
In November 1982, Private Respondent Felino Mercado convinced Petitioners Oscar
and Emerita Angeles to enter into a contract of antichresis covering eight parcel of land
planted with fruit-bearing lanzones trees owned by Juana Suazo, which to last for five
years with ₱ 210,000 as consideration. After three years, the Petitioners asked for an
accounting from the Private Respondent. However, when no accounting was given in
1995, the Petitioners discovered that the Private Respondent had put the contract of
antichresis over the subject land under his and his spouse’s name. Thus, they filed a
criminal complaint for estafa against the Private Respondent. The Private Respondent
denied the allegations by claiming that there is already an existing industrial partnership
between him and his spouse and the Petitioners, whereby the former are the industrial
partners and the latter are the financiers. They used the earnings as part of the capital
in the said business transaction. Further, the Petitioners did not want to be identified as
financiers which led them to name the contract under their name instead.

In a resolution, the Provincial Prosecution Office recommended the filing of a criminal

information for estafa against the Private Respondent, although the latter’s counter-
affidavit was not considered. When the Private Respondent moved for its
reconsideration, the said office issued an amended resolution dismissing the complaint.
On appeal, the Secretary of Justice dismissed the appeal of the Petitioners, stating that
they failed to show that the Private Respondent deliberately deceived them into entering
in the contract of antichresis. The Private Respondent satisfactorily explained that the
Petitioners did not want to be revealed as the financiers. Further, it found that a
partnership truly existed between them considering that they contributed money to a
common fund with the intention of dividing the profits among themselves. These were
evidenced by deposits representing their share in the profits of their business venture.
Thus, there was no estafa where the money is delivered by a partner to his co-partner
on the latter’s representation that the amount shall be applied to the business of their
partnership.

Hence, this Petition. The Petitioners alleged that there was no partnership between
them and the Private Respondent because the transaction lacked a public instrument
indicating the same, and the a lack of registration with the Securities and Exchange
Commission.

ISSUE: Whether or not a partnership between the Petitioners and the Private Respondents
exists.
RULING:
YES.

The Supreme Court ruled in the affirmative. Indeed, Article 1771 of the Civil Code provides that
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. Further, Article
1772 provides that 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. However, the Court ruled that mere failure
to register the contract of partnership with the SEC or putting the same in a public instrument
does not invalidate a contract that has the essential requisites of a partnership. The purpose of
registration of the contract of partnership is merely to give notice to third parties. Failure thereof
does not even affect the liability of the partnership and of the partners to third persons, neither
does such failure affect the partnership’s juridical personality.

In the present case, it is clear that the Petitioners contributed money and industry to a common
fund, and the profits thereof shall be divided between them and the Private Respondent. Hence,
there is an existence of a partnership between them.

RULING
WHEREFORE, we AFFIRM the decision of the Secretary of Justice. The present
petition for certiorari is DISMISSED.

SO ORDERED.