ANGELES v. SECRETARY OF JUSTICE Angeles spouses.
It was their practice to enter into business
(July 29, 2005)
Oscar Angeles and Emerita Angeles, petitioners, v. The Hon. Secretary of
Justice and Felino Mercado, respondents
DOCTRINE: The purpose of registration of the contract of partnership with
the SEC 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, nor does it affect the partnerships juridical
personality. A partnership may exist even if the partners do not use the
words partner or partnership.
NATURE: Special civil action. Certiorari.
PONENTE: Carpio, J.
FACTS:
Angeles spouses filed a criminal complaint for estafa against Mercado,
their brother-in-law
o Claimed that Mercado convinced them to enter into a contract of
antichresis, to last for 5 years, covering 8 parcels of land planted with
fruit-bearing lanzones trees in Nagcarlan, Laguna and owned by Juan
Sanzo
o The parties agreed that Mercado would administer the ands and
complete the necessary paperwork
o After 3 years, the Angeles spouses asked for an accounting from
Mercado, and they claim that only after this demand for an accounting
did thy discover that Mercado had put the contract of antichresis over
the subject land under Mercado and his spouses names
Mercado denied the Angeles spouses allegations
o Claimed that there exists an industrial partnership, colloquially
known as sosyo industrial, between him and his spouse as industrial
partners and the Angeles spouses as financiers, and that this had
existed since 1991, before the contract of antichresis over the subject
land
o Mercado used his and his spouses earnings as part of the capital in
the business transactions which he entered into in behalf of the
transactions with other people under the name of Mercado because
the Angeles spouses did not want to be identified as the financiers
o Attached bank receipts showing deposits in behalf of Emerita Angeles
and contracts under his name for the Angeles spouses
During the barangay conciliation proceedings, Oscar Angeles stated that
there was a written sosyo industrial agreement: capital would come from
the Angeles spouses while the profit would be divided evenly between
Mercado and the Angeles spouses
Provincial Prosecution Office: first recommended the filing of a
criminal information for estafa, but after Mercado filed his counter-
affidavit and moved for reconsideration, issued an amended resolution
dismissing the complaint
Angeles spouses appealed to Sec. of Justice, saying that the document
evidencing the contract of antichresis executed in the name of the
Mercado spouses, instead of the Angeles spouses, and that such
document alone proves Mercados misappropriation of their P210, 000
Sec. of Justice: dismissed the appeal
o Angeles spouses failed to show sufficient proof that Mercado
deliberately deceived them in the transaction
o Mercado satisfactorily explained that the Angeles spouses do not want
to be revealed as the financiers
o Under the circumstances, it was more likely that the Angeles spouses
knew from the very start that the questioned document was not really
in their names
o A partnership truly existed between the Angeles spouses and
Mercado, which was clear from the fact that they contributed money
to a common fund and divided the profits among themselves.
o Angeles spouses acknowledged their joint business venture in the
barangay conciliation proceedings although they assailed the manner
the business was conducted
o Although the legal formalities for the formation were not adhered to,
the partnership relationship was evident.
o There is no estafa where money is delivered by a partner to his co-
partner on the latters representation that the amount shall be applied
to the business of their partnership. In case of the money received,
the co-partners liability is civil in nature
ISSUES/HELD:
 1. W/N the Sec. of Justice committed grave abuse of discretion in Even the RTC of Sta. Cruz, Laguna, which handled the civil case filed by
dismissing the appeal - No the Angeles spouses against Mercado and Leo Cerayban stated that it
2. W/N a partnership existed between Mercado and the Angeles was the practice to have the contracts secured in Mercados name as the
spouses - Yes Angeles spouses fear being kidnapped by the NPA or being questioned by
3. W/N there was misappropriation by Mercado No the BIR as Oscar Angeles was working with the government.

RATIO/RULING: Accounting of the proceeds is not a proper subject for the present case.

1. Angeles spouses fail to convince that the Secretary of Justice committed DISPOSITION: Petition for certiorari dismissed. Decision of Sec. of Justice
grave abuse of discretion when he dismissed their appeal. Moreover, they affirmed.
committed a procedural error when they failed to file a motion for
reconsideration of the Sec. of Justices resolution, which is already enough VOTE: 1st Division, all concur.
reason to dismiss the case.

2. Angeles spouses allege that they had no partnership with Mercado,

relying on Arts. 1771 to 1773 of the Civil Code.

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 SEC holds no water
o The Angeles spouses contributed money to the partnership and not
immovable property
o 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 is to give notice to third
parties.
Failure to register does not affect the liability of the partnership and of
the partners to third persons, nor does it affect the partnerships juridical
personality
The Angeles spouses admit to facts that prove the existence of a
partnership
o A contract showing a sosyo industrial or industrial partnership
o Contribution of money & industry to a common fund
o Division of profits between the Angeles spouses and Mercado

3. Mercado satisfactorily explained that the Angeles spouses do not want to

be revealed as the financiers, thus the document which was in the name of
Mercado and his spouse fail to convince that there was deceit or false
representation that induced the Angeles spouses to part with their money