Heirs of Tan Eng Kee v. CA & Benguet Lumber Co.

& Tan Eng Lay

October 3, 2000
De Leon Jr. J.:
Doctrine: Where circumstances taken singly may be inadequate to prove the intent
to form a partnership, nevertheless, the collective effect of these circumstances may
be such as to support a finding of existence of the parties’ intent.
 Article 1825 is meant to protect third persons who were misled by a person acting
as a partner even if he really isn’t. Since Tan Eng Kee never represented himself as
a partner, and there is no evidence or documentation of him being a partner, then he
is not a partner.

 The Doctrine is the essence of 1825.

Facts:
After Tan Eng Kee’s Death, his common-law wife Matilde Abuho and their children
filed an action against his brother, Tan Eng Lay for accounting, liquidation and
winding up of the alleged partnership Tan Eng Kee had with Tan Eng Lay.

The heirs claim that the two brothers were partners in Benguet Lumber Co. and had
been partners since the company was operating after the end of World War 2. Tan
Eng Lay, the president of the company claims that Tan Eng Kee was only an
employee and presented documents showing that Tan Eng Kee was receiving salary
from the company payroll.

The RTC ruled in favor of the Heirs of Tan Eng Kee.

The CA reversed the RTC and found that no such partnership existed between the
brothers.

Issue:
Whether the two brothers were partners in Benguet Lumber Co.

Held:
NO. They were never partners.

Ratio:
Tan Eng Kee, in his lifetime never executed any acts which would indicate that he
was a partner.
1. He never demanded for periodic accountings of the common fund, which
would be expected of a real partner;
2. He never received any shares in the profits of Benguet Lumber, he only
received salary as evidenced by the payroll documents presented by Tan
Eng Lay;
3. The Heirs were unable to prove that the brothers intended to divide the
profits of the business between themselves.

Even if Tan Eng Kee was granted certain privileges not given to regular employees,
(such as being allowed to live with his family on the grounds of the Lumber
Compound, and having supervisory powers over the regular employees) the Court
found that these privileges were a result of being related to the owner of the
company and not because he was a partner.

 Tan Eng Kee never represented himself as a partner to any third person his
actions, when he was alive, taken together with how his brother treated him, strongly
indicate that he was NOT a partner.