partnership and of the partners to third persons.

Neither does such failure to register

Angeles v. Secretary of Justice affect the partnership’s juridical personality. A partnership may exist even if the
July 29, 2005 | CARPIO, J. | G.R. No. 142612 partners do not use the words "partner" or "partnership.
Creation of Partnership

PETITIONERS: OSCAR ANGELES and EMERITA ANGELES FACTS:

RESPONDENTS: THE HON. SECRETARY OF JUSTICE and FELINO 1. On 19 November 1996, The Angeles spouses filed a criminal complaint for estafa
MERCADO of the Revised Penal Code against their brother-in-law Mercado before the
SUMMARY: Provincial Prosecution Office
FACTS: The Angeles spouses filed a criminal complaint for estafa of the Revised 2. In their affidavits, the Angeles spouses claimed that in November 1992, Mercado
Penal Code against their brother-in-law Mercado before the Provincial Prosecution convinced them to enter into a contract of antichresis, colloquially known as
Office. The Angeles spouses claimed that in November 1992, Mercado convinced sanglaang-perde, covering eight parcels of land ("subject land") planted with
them to enter into a contract of antichresis, colloquially known as sanglaang-perde, fruit-bearing lanzones trees located in Nagcarlan, Laguna and owned by Juana
covering eight parcels of land ("subject land") planted with fruit-bearing lanzones Suazo. The contract of antichresis was to last for five years with ₱210,000 as
trees located in Nagcarlan, Laguna and owned by Juana Suazo. The contract of consideration. As the Angeles spouses stay in Manila during weekdays and go to
antichresis was to last for five years with ₱210,000 as consideration. The parties Laguna only on weekends, the parties agreed that Mercado would administer the
agreed that Mercado would administer the lands and complete the necessary lands and complete the necessary paperwork.
paperwork. However, the spouses discovered that Mercado had put the contract of 3. After three years, the Angeles spouses asked for an accounting from Mercado.
sanglaang-perde over the subject land under Mercado and his spouse’s names. In his Mercado explained that the subject land earned ₱46,210 in 1993, which he used
defense, Mercado claimed that there exists an industrial partnership, to buy more lanzones trees. Mercado also reported that the trees bore no fruit
colloquially known as sosyo industrial, between him and his spouse as industrial in 1994. Mercado gave no accounting for 1995. The Angeles spouses claim that
partners and the Angeles spouses as the financiers. This industrial partnership had only after this demand for an accounting did, they discover that Mercado had
existed since 1991, before the contract of antichresis over the subject land. Mercado put the contract of sanglaang-perde over the subject land under Mercado and
used his and his spouse’s earnings as part of the capital in the business transactions his spouse’s names.
which he entered on behalf of the Angeles spouses. It was their practice to enter into 4. In his counter-affidavit, Mercado denied the Angeles spouses’ allegations.
business transactions with other people under the name of Mercado because the Mercado claimed that there exists an industrial partnership, colloquially
Angeles spouses did not want to be identified as the financiers. known as sosyo industrial, between him and his spouse as industrial partners
and the Angeles spouses as the financiers. This industrial partnership had existed
ISSUE: Whether a partnership existed between the Angeles spouses and Mercado since 1991, before the contract of antichresis over the subject land. As the years
even without any documentary proof to sustain its existence (YES) passed, Mercado used his and his spouse’s earnings as part of the capital in the
business transactions which he entered into on behalf of the Angeles spouses. It was
RATIO: The Angeles spouses’ position that there is no partnership because of the their practice to enter into business transactions with other people under the name of
lack of a public instrument indicating the same and a lack of registration with the Mercado because the Angeles spouses did not want to be identified as the financiers.
Securities and Exchange Commission ("SEC") holds no water. The Angeles spouses 5. During the barangay conciliation proceedings, Oscar Angeles stated that there
contributed money to the partnership and not immovable property. Mere failure to was a written sosyo industrial agreement: capital would come from the Angeles
register the contract of partnership with the SEC does not invalidate a contract that spouses while the profit would be divided evenly between Mercado and the
has the essential requisites of a partnership. The purpose of registration of the Angeles spouses.
contract of partnership is to give notice to third parties. Failure to register the 6. Provincial Prosecution Office: Dismissed the Angeles spouses’ complaint for
contract of partnership does not affect the liability of the partnership and of the estafa against Mercado and stated that the accusation of "estafa" here lacks
partners to third persons. Neither does such failure to register affect the partnership’s enough credible evidentiary support to sustain a prima facie finding.
juridical personality. A partnership may exist even if the partners do not use the 7. Secretary of Justice: Held that the indictment of [Mercado] for the crime of
words "partner" or "partnership. Indeed, the Angeles spouses admit to facts that estafa cannot be sustained. [The Angeles spouses] failed to show sufficient proof
prove the existence of a partnership: a contract showing a sosyo industrial or that [Mercado] deliberately deceived them in the "sanglaang perde"
industrial partnership, contribution of money and industry to a common fund, and transaction. The document alone, which was in the name of [Mercado and his
division of profits between the Angeles spouses and Mercado. spouse], failed to show that there was deceit or false representation on the part of
[Mercado] that induced the [Angeles spouses] to part with their money. [Mercado]
DOCTRINE: Mere failure to register the contract of partnership with the SEC does satisfactorily explained that the [Angeles spouses] do not want to be revealed as the
not invalidate a contract that has the essential requisites of a partnership. The financiers.
purpose of registration of the contract of partnership is to give notice to third parties. 8. In addition, a partnership truly existed between the [Angeles spouses] and
Failure to register the contract of partnership does not affect the liability of the [Mercado]. The formation of a partnership was clear from the fact that they
 contributed money to a common fund and divided the profits among 8. The Secretary of Justice adequately explained the alleged misappropriation by
themselves. Records would show that [Mercado] was able to make deposits for Mercado: "The document alone, which was in the name of [Mercado and his
the account of the [Angeles spouses]. These deposits represented their share in spouse], failed to convince us that there was deceit or false representation on
the profits of their business venture. Although the [Angeles spouses] deny the the part of [Mercado] that induced the [Angeles spouses] to part with their
existence of a partnership, they, however, never disputed that the deposits money. [Mercado] satisfactorily explained that the [Angeles spouses] do not
made by [Mercado] were indeed for their account. want to be revealed as the financiers."15
ISSUES: 9. Even Branch 26 of the Regional Trial Court of Santa Cruz, Laguna which decided
1. Whether a partnership existed between the Angeles spouses and Mercado even the civil case for damages, injunction and restraining order filed by the Angeles
without any documentary proof to sustain its existence (YES) spouses against Mercado and Leo Cerayban, stated:
2. Whether or not there was misappropriation by Mercado of the proceeds of the 10. [I]t was the practice to have all the contracts of antichresis of their partnership
lanzones after the Angeles spouses demanded an accounting from him of the income secured in [Mercado’s] name as [the Angeles spouses] are apprehensive that, if
at the office of the barangay authorities on 7 September 1996, and Mercado failed to they come out into the open as financiers of said contracts, they might be
do so and also failed to deliver the proceeds to the Angeles spouses (NO) kidnapped by the New People’s Army or their business deals be questioned by
the Bureau of Internal Revenue or worse, their assets and unexplained income
RULING: WHEREFORE, we AFFIRM the decision of the Secretary of Justice. The present be sequestered, as xxx Oscar Angeles was then working with the government.
petition for certiorari is DISMISSED. SO ORDERED. 11. For these reasons, we hold that the Secretary of Justice did not abuse his discretion
in dismissing the appeal of the Angeles spouses.
RATIO:
Yes, a partnership Existed Between Mercado and the Angeles Spouses
1. The Angeles spouses allege that they had no partnership with Mercado. The
Angeles spouses rely on Articles 1771 to 1773 of the Civil Code, which state
that:
2. 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.
3. 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.
4. 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.
5. 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.
6. The Angeles spouses’ position that there is no partnership because of the lack of a
public instrument indicating the same and a lack of registration with the Securities
and Exchange Commission ("SEC") holds no water. First, the Angeles spouses
contributed money to the partnership and not immovable property. Second,
mere failure to register the contract of partnership with the SEC does not
invalidate a contract that has the essential requisites of a partnership. 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 of the partnership and of the partners to third persons. Neither does
such failure to register affect the partnership’s juridical personality. A
partnership may exist even if the partners do not use the words "partner" or
"partnership."
7. Indeed, the Angeles spouses admit to facts that prove the existence of a
partnership: a contract showing a sosyo industrial or industrial partnership,
contribution of money and industry to a common fund, and division of profits
between the Angeles spouses and Mercado.
No, there was no misappropriation committed by Mercado