G.R. No. L-49982 April 27, 1988
ELIGIO ESTANISLAO, JR., petitioner, vs. THE HONORABLE COURT OF APPEALS, REMEDIOS ESTANISLAO, EMILIO and LEOCADIO SANTIAGO, respondents.

FACTS

Petitioner Eligio Estanislao, Jr. and private respondents, who are siblings, were co-owners of lots leased to Shell Company of the Philippines Limited (SHELL). They agreed to open a family gas station, the Estanislao Shell Service Station, using a P15,000.00 advance rental from SHELL as initial capital. A Joint Affidavit dated April 11, 1966, stated this amount was for their “capital investment” in the operation. They agreed petitioner would manage it and apply as the sole dealer to comply with SHELL’s policy.
Subsequently, on May 26, 1966, the parties and SHELL executed an Additional Cash Pledge Agreement for the same P15,000.00 advance rental, which contained a clause stating it “cancels and supersedes the Joint Affidavit dated 11 April 1966.” Petitioner thereafter operated the station, rendered periodic accountings showing substantial profits, and granted respondent Remedios authority to audit their “common business.” After petitioner stopped rendering accounts, private respondents filed a complaint for formal partnership accounting and profit shares.

ISSUE

Whether a partnership was established among the siblings despite the superseding clause in the later agreement and the sole dealership of petitioner.

RULING

Yes, a partnership was formed. The Supreme Court affirmed the Court of Appeals’ decision. The legal logic centers on the substantive intent and conduct of the parties, not merely the contractual language. The clause in the Additional Cash Pledge Agreement cancelling the prior Joint Affidavit was necessary to avoid duplication in referencing the same P15,000.00 advance rental, not to abrogate the underlying partnership agreement. The silence in the later document regarding the capital investment and the designation of petitioner as sole dealer were pragmatic accommodations to SHELL’s corporate policy of dealing with a single entity, not a negation of the parties’ mutual undertaking.
The existence of a partnership under Article 1767 of the Civil Code is determined by the parties’ agreement to contribute money to a common fund and to divide the profits. This agreement was evidenced by the initial Joint Affidavit and, crucially, by the parties’ subsequent conduct: the use of common capital, the rendering of financial statements by petitioner to his co-owners, the written authority to audit the “common business,” and the active participation of respondent Remedios in management. These acts consistently manifested a joint interest in the profits of the enterprise. The findings of fact by the lower courts, which established this conduct-based agreement, are conclusive. The form of the dealership was a compliance mechanism with a third party (SHELL) and did not alter the internal partnership relations among the siblings.