FACTS:

The case involves a dispute among the heirs of the spouses Andres Jarantilla and Felisa Jaleco. The petitioners are the grandchildren of the late spouses and are defendants in the complaint filed by Antonieta Jarantilla. Also included as respondents are Buenaventura Remotigue, Cynthia Remotigue, Doroteo Jarantilla, and Tomas Jarantilla.

In 1948, the Jarantilla heirs partitioned the real properties of their deceased parents among themselves, with the exception of the property assigned to Pacita Jarantilla. They also agreed to use the produce of the said properties for the education of Rafael and Antonieta Jarantilla.

In the same year, the spouses Rosita Jarantilla and Vivencio Deocampo entered into a joint business arrangement with the spouses Buenaventura Remotigue and Conchita Jarantilla. They were successful in establishing a manufacturing and trading business and acquiring properties. In 1973, the parties voluntarily agreed to dissolve their joint business relationship.

On April 29, 1957, the spouses Buenaventura and Conchita Remotigue executed a document acknowledging that they were not the sole owners of the capital of their businesses and stated the participating capital of their co-owners, including Antonieta Jarantilla and Federico Jarantilla, Jr.

Antonieta filed an amended complaint in 1987 seeking an accounting of the co-ownership's assets and income, partition of the co-ownership, delivery of her share, and damages. She claimed that she entered into a business agreement with the respondents in 1946, where she made initial contributions from her inheritance and subsequent investments from the proceeds of her farm. She also alleged that she worked for the co-owned businesses without receiving a salary and that the defendants used partnership income to purchase the subject real properties.

The respondents, including the petitioner, denied forming a partnership with Antonieta in 1946 and claimed that she was still in school at that time. They admitted the existence of the "Acknowledgement of Participating Capital" but argued that Antonieta's share was only limited to the businesses enumerated in the document. They also denied using partnership income to purchase the subject real properties and argued that the certificates of title should be binding on Antonieta.

During the trial, petitioner Federico Jarantilla, Jr. entered into a compromise agreement with Antonieta, supporting her claims and asserting his entitlement to a share in the partnership as well.

The Regional Trial Court (RTC) approved the compromise agreement in a 1992 order.

The trial court rendered a judgment in favor of Antonieta, one of the co-owners, ordering the other defendants to deliver Antonieta's 8% share or its equivalent amount on certain properties and businesses, as well as to account for the assets and income of the co-ownership. The trial court also awarded moral damages, attorney's fees, and costs of the suit to Antonieta.

Both parties appealed this decision to the Court of Appeals. The Court of Appeals set aside the trial court's decision and ordered Antonieta to be given her 8% share in certain assets and profits of businesses, while the defendant, Federico Jarantilla, Jr., was given his 6% share.

Antonieta filed her own petition for review before the Supreme Court, but it was dismissed for failure to file within the reglementary period. Federico then filed a petition for review on the ground that he is entitled to a 6% share in the ownership of real properties acquired by the other defendants. He claimed to be in a partnership with the Remotigue spouses and other individuals, as evidenced by an Acknowledgement of Participating Capital executed in 1957.

The core issue is whether the partnership funded the subject real properties and what rights Federico has over these properties. It was clarified that the Supreme Court can only resolve questions of law and not questions of fact. Since the Court of Appeals did not fully adopt the factual findings of the trial court, the Supreme Court will only resolve the legal issues in this case.

The Court of Appeals held that Antonieta's claim of 8% should only apply to the businesses listed in the document and not to the other corporations. The Court of Appeals considered her claim on the respondents' real properties as more "precarious" since they were covered by certificates of title, which served as the best evidence of ownership. As petitioner's claim was essentially the same as Antonieta's, the Court of Appeals awarded him a 6% share in the businesses listed in the Acknowledgement of Participating Capital.

Exceptions to the general rule that the factual findings of the trial court, when affirmed by the Court of Appeals, are final and conclusive exist, such as when the findings are manifestly mistaken, when there is grave abuse of discretion, when the judgment is based on speculations or misapprehension of facts, when there are conflicting findings, or when relevant facts have been overlooked.

ISSUES:

1. Whether the relationship between the petitioner and the respondents is a co-ownership or a partnership.

2. Whether the rulings of the trial court and the Court of Appeals are erroneous.

3. Whether the Acknowledgement of Participating Capital limited the petitioner's share only to the assets of the businesses enumerated in the document.

4. Whether the petitioner is entitled to the respondents' properties based on the concept of trust.

5. Whether there exists a trust over the subject real properties

6. Whether the petitioner has successfully proven his 6% share in the subject real properties

7. Whether petitioner's challenge to the judgment granting the title of the real properties is a direct or collateral attack.

8. Whether the petitioner's documentary evidence is sufficient to prove his claim of co-ownership.

RULING:

1. The Court held that the relationship between the petitioner and the respondents is a partnership. While both parties characterized their relationship as a co-ownership, it was established that a verbal partnership was formed in 1946 and was affirmed in the 1957 Acknowledgement of Participating Capital. The Court explained that a co-ownership exists when an undivided thing or right belongs to different persons, while a partnership arises when two or more persons contribute money, property, or industry to a common fund with the intention of dividing the profits. Since the parties had contributed funds to a common enterprise and agreed to share the gross returns in proportion to their contributions, a partnership was formed.

2. The Court found no error in the rulings of the trial court and the Court of Appeals. Factual findings of the trial court, when confirmed by the Court of Appeals, are final and conclusive, except under certain circumstances. In this case, the Court found no basis to overturn the findings of the lower courts.

3. Yes. The Court of Appeals did not err in limiting the petitioner's share to the assets of the businesses enumerated in the Acknowledgement of Participating Capital. The document specifically listed Manila Athletic Supply, Remotigue Trading in Iloilo City, and Remotigue Trading in Cotabato City as the businesses covered by the partnership. Since there was a clear agreement that the capital the partners contributed went to these three businesses, there is no reason to deviate from such agreement and go beyond the stipulations in the document.

4. No. The petitioner's claim that he is entitled to the respondents' properties based on the concept of trust is not supported. There is no evidence that the subject real properties were assets of the partnership referred to in the Acknowledgement of Participating Capital. The petitioner's share is limited to the assets of the businesses listed in the document.

5. The petitioner failed to prove the existence of a trust over the subject real properties. He only presented bare allegations and failed to show that the respondents used the partnership's money to purchase the said properties. Even if it was established that some partnership income was used, the petitioner should have proven that these funds came from his share in the partnership profits.

6. The petitioner's claim of his 6% share in the subject real properties, based on his own testimony and the biased testimony of another witness, is unsubstantiated. The respondents, on the other hand, presented sufficient documentary evidence that they acquired and funded the properties, accompanied by tax receipts and declarations. Testimonial evidence cannot prevail over documentary evidence, and the use of mere self-serving testimonies to support a claim is disapproved by the court.

7. The challenge to the judgment granting the title of the real properties is a collateral attack, as it was made in another action to obtain a different relief and as an incident to the present action.

8. The petitioner's documentary evidence, the Acknowledgement of Participating Capital, failed to prove that the real properties were acquired out of the proceeds of the businesses covered by such document. Thus, the petitioner's claim of co-ownership has no factual or legal basis.

PRINCIPLES:

• Co-ownership does not establish a partnership, regardless of whether the co-owners share or do not share any profits made by the use of the property.

• Sharing of gross returns alone does not establish a partnership, regardless of whether the persons sharing the returns have a joint or common right or interest in the property from which the returns are derived.

• To constitute a partnership, there must be an intent to form one, participation in both profits and losses, and a community of interest as far as third persons are concerned.

• Express trusts are created by the intention of the trustor or parties, while implied trusts come into being by operation of law.

• Implied trusts are either resulting or constructive trusts.

• The burden of proving the existence of a trust is on the party asserting it, and the evidence must be clear and trustworthy.

• Trustworthy evidence is required for oral evidence of implied trusts, as it can easily be fabricated.

• Tax declarations and realty tax receipts, when accompanied by possession for a sufficient period, may constitute strong evidence of ownership.

• Testimonial evidence cannot prevail over documentary evidence.

• A certificate of title in the Torrens system is conclusive evidence of ownership and cannot be subject to collateral attack.

• A collateral attack on a title occurs when, in another action to obtain a different relief, an attack is made against the judgment granting the title.

• A direct attack on a title is made through an action whose main objective is to annul, set aside, or enjoin the enforcement of the judgment granting the title.

• Documentary evidence must be sufficient to prove the claim being asserted.