Jarantilla v. Jarantilla (G.R. No. 154486; Dec. 1, 2010)

CASE DIGEST: FEDERICO JARANTILLA, JR., Petitioner, v. ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE, substituted by CYNTHIA REMOTIGUE, DOROTEO JARANTILLA and TOMAS JARANTILLA, Respondents. Jarantilla v. Jarantilla (G.R. No. 154486; December 1, 2010).

FACTS: The spouses Andres Jarantilla and FelisaJaleco were survived by eight children: Federico Sr., Delfin, Benjamin, Conchita, Rosita, Pacita, Rafael and Antonieta. Petitioner Federico Jarantilla, Jr. is the grandchild of the late Jarantilla spouses by their son Federico Jarantilla, Sr. and his wife Leda Jamili. Petitioner also has two other brothers: Doroteo and Tomas Jarantilla.

The Jarantilla heirs extrajudicially partitioned amongst themselves the real properties of their deceased parents. With the exception of the real property adjudicated to PacitaJarantilla, the heirs also agreed to allot the produce of the said real properties for the years 1947-1949 for the studies of Rafael and AntonietaJarantilla.

Sps. Rosita Jarantilla and Vivencio Deocampo entered into an agreement with the spouses Buenaventura Remotigue and ConchitaJarantilla to provide mutual assistance to each other by way of financial support to any commercial and agricultural activity on a joint business arrangement. This proved to be successful as they were able to establish a manufacturing and trading business, acquire real properties, and construct buildings, among other things. The same ended in 1973 upon their voluntary dissolution.

The spouses Buenaventura and ConchitaRemotigue executed a document Acknowledgement of Participating Capital stating the participating capital of of their co-owners as of the year 1952, with AntonietaJarantillas stated as eight thousand pesos (P8,000.00) and Federico Jarantilla, Jr.s as five thousand pesos (P5,000.00).

The controversy started when Antonieta filed a complaint against Buenaventura, Cynthia, Doroteo and Tomas, for the accounting of the assets and income of the co-ownership, for its partition and the delivery of her share corresponding to eight percent (8%), and for damages. She alleged that the initial contribution of property and money came from the heirs inheritance, and her subsequent annual investment of seven thousand five hundred pesos (P7,500.00) as additional capital came from the proceeds of her farm.

Respondents denied having formed a partnership. They did not deny the existence and validity of the "Acknowledgement of Participating Capital" and in fact used this as evidence to support their claim that Antonietas 8% share was limited to the businesses enumerated therein. Petitioner Federico Jr joined his aunt Antonieta and likewise asserted his share in the supposed partnership.

The RTC rendered judgment in favor of Antonieta and Federico. On appeal, the CA set the RTC Decision. Petitioner filed a petition for review to the SC.

ISSUE: Did the CA err in ruling that petitioners are not entitled to profits over the businesses not listed in the Acknowledgement?

HELD: There is a co-ownership when an undivided thing or right belongs to different persons. It is a partnership when two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

The common ownership of property does not itself create a partnership between the owners, though they may use it for the purpose of making gains; and they may, without becoming partners, agree among themselves as to the management, and use of such property and the application of the proceeds therefrom.

Under Article 1767 of the Civil Code, there are two essential elements in a contract of partnership: (a) an agreement to contribute money, property or industry to a common fund; and (b) intent to divide the profits among the contracting parties.

It is not denied that all the parties in this case have agreed to contribute capital to a common fund to be able to later on share its profits. They have admitted this fact, agreed to its veracity, and even submitted one common documentary evidence to prove such partnership - the Acknowledgement of Participating Capital.The Acknowledgement of Participating Capital is a duly notarized document voluntarily executed by Conchita Jarantilla-Remotigue and Buenaventura Remotigue in 1957. Petitioner does not dispute its contents and is actually relying on it to prove his participation in the partnership.

Art. 1797. The losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion.

In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses.

The petitioner himself claims his share to be 6%, as stated in the Acknowledgement of Participating Capital. However, petitioner fails to realize that this document specifically enumerated the businesses covered by the partnership: Manila Athletic Supply, Remotigue Trading in Iloilo City and Remotigue Trading in Cotabato City.

Since there was a clear agreement that the capital the partners contributed went to the three businesses, then there is no reason to deviate from such agreement and go beyond the stipulations in the document. Therefore, the CA did not err in limiting petitioners share to the assets of the businesses enumerated in the Acknowledgement of Participating Capital.
In Villareal v. Ramirez, the Court held that since a partnership is a separate juridical entity, the shares to be paid out to the partners is necessarily limited only to its total resources.

The petitioner further asserts that he is entitled to respondents properties based on the concept of trust.

As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements. While implied trusts may be proved by oral evidence, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be fabricated.

The petitioner has failed to prove that there exists a trust over the subject real properties. Aside from his bare allegations, he has failed to show that the respondents used the partnerships money to purchase the said properties. Even assuming arguendo that some partnership income was used to acquire these properties, the petitioner should have successfully shown that these funds came from his share in the partnership profits. After all, by his own admission, and as stated in the Acknowledgement of Participating Capital, he owned a mere 6% equity in the partnership.