Atty. Alberto II Borbon Reyes

October 12, 1993 Atty. Alberto II Borbon Reyes Arcaya and Associates Law Offices 2nd Flr., Union Aji-nomoto Bldg. 331 Gil J. Puyat Ave., Makati, Metro Manila S i r : This refers to your letter of October 11, 1993 requesting opinion on the query posed therein. llcd As stated, your client is desirous of recovering her share in the partnership assets and funds which she and her partner were able to accumulate in their partnership business dealings. Since there is a possibility that the other partner would squander the partnership assets, she seeks for the dissolution of the partnership. Your query is, in cases of unregistered profession partnerships (unrecorded with the SEC and with no formal articles of partnership), where one of the partners is seeking the dissolution of the same, is it the SEC or the RTC which has jurisdiction to hear the petition? Jurisdiction over a subject matter is conferred by the Constitution or law. (De Jesus, et al. vs. Garcia, G.R. No. L-26816, Feb. 28, 1967) Jurisdiction cannot be presumed as the same "must appear clearly from statutes or it will not be held to exist." (Africa vs. Gronke, GR No. 10649, March 1, 1916, 34 Phil. 50) Jurisdiction cannot be broadened upon "doubtful inference" from statutes and, absent a statutory grant, neither convenience nor assumed justice propriety of the exercise thereof in a particular class of cases can justify the assumption of jurisdiction. (Tuason vs. Crossfield, GR No. 9453, March 30, 1915, 30 Phil. 543) Thus, the scope of the Commission's jurisdiction is clearly defined under Sections 3 and 5 of P.D. 902-A, as amended, quoted hereunder: "SECTION 3. The Commission shall have the absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who are the grantees of primary franchises and/or a license or permit issued by the government to operate in the Philippines, and in the aid and support of and to deputize any and all enforcement agencies of the government, civil or military as well as any private institution, corporation, firm, association or person." "SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:" (Emphasis supplied) The primary jurisdiction of the Commission of supervision and control over partnerships emanates from its authority under Article 1772 of the Civil Code of the Philippines which reads: "ARTICLE 1772. Every contract of partnerships 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 . (Emphasis supplied) Therefore, applying the above authorities, the Commission has jurisdiction only over partnerships registered with it and it should not assume jurisdiction over unregistered partnerships as to include them within its jurisdiction would be abrogating into the Commission the power and authority to broaden the law which is outside its competence and power. However, it should be noted that SEC registration under Article 1772 of the Civil Code is not a pre-requisite for the validity of a partnership. The Civil Code provides, thus: "ARTICLE 1772. Every contract of partnerships 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. Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnerships and the members thereof to third persons ." (Emphasis supplied) "ARTICLE 1768. The partnership has a juridical personality separate and distinct from that of each of the partners even in case of failure to comply with the requirements of Article 1772 , first paragraph." (Emphasis supplied) Accordingly, even if not registered with the SEC, a partnership having a capital of P3,000.00 or more may be considered a valid one. A partnership agreement, even in the absence of a formal Articles of Partnerships, is still considered a "contract" and any transaction undertaken or property acquired pursuant to the agreement are covered by the law on contracts and/or co-ownership under the Civil Code. Consequently, settlement of any controversy relating to unregistered partnerships is within the jurisdiction of the regular courts. LibLex Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman