Partenership digest

8/18/2019 Partenership digest

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Business Organization 1 (September 5)

1. COMMISSIONER OF INTERN! RE"EN#E$ petitioner$ %s. &I!!IM'. S#TER an TE CO#RT OF T* ++E!S$ responents.

REYES, J.B.L., J.:

FACTS

A limited partnership named "William J. Suter '!r!in' C!., Ltd #as $!rmed%& William Suter as the eneral partner, and Julia Spiri and (usta) Carls!n,as the limited partners and therea$ter reistered #ith the SEC. (eneral*artner Suter and limited partner Spiri !t married and limited partnerCarls!n s!ld his share in the partnership t! Suter and his #i$e #hih asreistered #ith the SEC. The limited partnership had %een $ilin its in!meta+ returns as !rp!rati!n, #ith!ut !%eti!n %& herein petiti!nerC!mmissi!ner !$ -nternal Re)enue. An assessment #as d!ne, and $!und !utthat there #as a de$iien& in!me ta+ aainst Suter.

The C-R arued that the marriae !$ Suter and Spiri and their su%seuentauisiti!n !$ the interests !$ remainin partner Carls!n in the partnershipdiss!l)ed the limited partnership, and i$ the& did n!t, the $iti!n !$ uridialpers!nalit& !$ the partnership sh!uld %e disrearded $!r in!me ta+ purp!ses%eause the sp!uses ha)e e+lusi)e !#nership and !ntr!l !$ the %usiness.Suter pr!tested the assessment %ut #as denied. S! he $iled an appeal t! the

C!urt !$ Ta+ Appeals !ntendin that marriae #ith limited partner Spiriand their auisiti!n !$ Carls!n's interests in the partnership in /012 is n!t ar!und $!r diss!luti!n !$ the partnership and that sine its uridialpers!nalit& had n!t %een a$$eted and sine, as a limited partnership, as!ntra distinuished $r!m a dul& reistered eneral partnership, it is ta+a%le!n its in!me similarl& #ith !rp!rati!ns. CTA re)ersed the deisi!n !$ C!mmissi!ner !$ -nternal Re)enue.

-SS3E

Whether !r n!t the partnership #as diss!l)ed a$ter the marriae !$ the

partners.

R3L-4(

4!. The petiti!ner5appellant has e)identl& $ailed t! !%ser)e the $at thatWilliam J. Suter "!r!in" C!., Ltd. #as not a uni%ersa, partners-ip$ buta partiu,ar one. As appears $r!m Artiles /671 and /678 !$ the Spanish

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Ci)il C!de, !$ /220 9#hih #as the la# in $!re #hen the su%et $irm #as!ranied in /017;, a uni)ersal partnership reuires either that the !%et !$ the ass!iati!n %e all the present pr!pert& !$ the partners, as !ntri%uted %&them t! the !mm!n $und, !r else "all that the partners ma& auire %& theirindustr& !r #!r< durin the e+istene !$ the partnership". William J. Suter

"!r!in" C!., Ltd. #as n!t suh a uni)ersal partnership, sine the!ntri%uti!ns !$ the partners #ere $i+ed sums !$ m!ne&, *=>,>>>.>> %&William Suter and */2,>>>.>> %& Julia Spiri and neither !ne !$ them #as anindustrial partner. -t $!ll!#s that William J. Suter "!r!in" C!., Ltd. /asnot a partners-ip t-at spouses /ere 0orbien to enter %& Artile /677!$ the Ci)il C!de !$ /220.

The appellant's )ie#, that %& the marriae !$ %!th partners the !mpan&%eame a sinle pr!priet!rship, is equally erroneous. The apital!ntri%uti!ns !$ partners William J. Suter and Julia Spiri #ere separatel&!#ned and !ntri%uted %& them %e$!re their marriae? and a$ter the& #ere !ined in #edl!


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name !$ a deeased partner as part there!$, shall n!t itsel$ ma


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the #id!# n!r the heirs an %e held lia%le $!r transati!ns entered int! a$terthe death !$ their la#&er5predeess!r.

Artile /21> treats m!re !$ a ommeria, partners-ip #ith a !!d #ill t!pr!tet rather than !$ a pro0essiona, partners-ip$ /it- no sa,eab,e

goo #ill %ut #h!se reputati!n depends !n the pers!nal uali$iati!ns !$ itsindi)idual mem%ers. Thus, it has %een held that a salea%le !!d#ill ane+ist !nl& in a !mmerial partnership and ann!t arise in a pr!$essi!nalpartnership !nsistin !$ la#&ers. As a eneral rule, up!n the diss!luti!n !$ a!mmerial partnership the sueedin partners !r parties ha)e the riht t!arr& !n the %usiness under the !ld name, in the a%sene !$ a stipulati!n$!r%iddin it, sine the name !$ a !mmerial partnership is a partnershipasset insepara%le $r!m the !!d #ill !$ the $irm. n the !ther hand, apr!$essi!nal partnership the reputati!n !$ #hih epens on t-eini%iua, s9i,, o0 t-e members, suh as partnerships !$ att!rne&s !rph&siians, has n! !!d #ill t! %e distri%uted as a $irm asset !n itsdiss!luti!n, h!#e)er intrinsiall& )alua%le suh s


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FACTS

n 4!)em%er =0, /017, plainti$$ W!!dh!use entered int! a #rittenareement #ith de$endant alili statin am!n !thers that: /; that the&shall !ranie a partnership $!r the %!ttlin and distri%uti!n !$ issi!n s!$t

drin perent #ith 1; damaes inthe am!unt !$ *=>>,>>>. The De$endant !n the !ther hand laims that: /;the de$endantHs !nsent t! the areement, #as seured %& therepresentati!n !$ plainti$$ that he #as the !#ner, !r #as a%!ut t! %e!me!#ner !$ an e+lusi)e %!ttlin $ranhise, #hih representati!n #as $alse, andthat plainti$$ did n!t seure the $ranhise %ut #as i)en t! de$endant himsel$ =; that de$endant did n!t $ail t! arr& !ut his underta>,>> as damaes.

The CF- rulin: /; a!untin !$ pr!$its and t! pa& plainti$$ /8 !$ thepr!$its and that the =; e+euti!n !$ !ntrat ann!t %e en$!red up!nparties. Lastl&, the @; $raud #asnHt pr!)ed.

-SS3E /

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W4 $alse representati!n, i$ it e+isted, annuls the areement t! $!rm thepartnership.

R3L-4(

4!. -n !nseuene, artile /=7> !$ the Spanish Ci)il C!de distinuishes t#! perent share in the net pr!$its %eause he #as trans$errin his e+lusi)e

$ranhise t! the partnership.

We delare, there$!re, that i$ he #as uilt& !$ a $alse representati!n, this#as not t-e ausa, onsieration, !r the prinipal induement, that ledplainti$$ t! enter int! the partnership areement.

a)in arri)ed at the !nlusi!n that the !ntrat annot be e,are nu,,an %oi, ma& the areement %e arried !ut !r e+eutedK The SC $inds n!merit in the laim !$ plainti$$ that the partnership #as alread& a $ait a!mpli$r!m the time !$ the !perati!n !$ the plant, as it is e)ident $r!m the )er&lanuae !$ the areement that the parties intene t-at t-e e;eutiono0 t-e agreement to 0orm a partners-ip /as to be arrie out at a

,ater ate. , The de$endant ma& n!t %e !mpelled aainst his #ill t! arr&!ut the areement n!r e+eute the partnership papers. The la# re!niesthe indi)idualHs $reed!m !r li%ert& t! d! an at he has pr!mised t! d!, !r n!tt! d! it, as he pleases.

-SS3E =

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W4 plainti$$ $alsel& represented that he had an e+lusi)e $ranhise t! %!ttleissi!n %e)erae

R3L-4(

Yes. *lainti$$ did ma


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#ithdra#al there$r!m, reardless !$ !!d $aith !r %ad $aith, sine n! partneran %e $!red t! !ntinue in the partnership aainst his #ill.

-SS3E

W4 the partnership !$ Bit!, isa L!ada 9n!# Bit!, L!ada, rtea Castill!;is a partnership at #ill W4 the #ithdra#al !$ isa diss!l)ed thepartnership reardless!$ his !!d !r %ad $aith.

R3L-4(

A partnership that d!es n!t $i+ its term is a partnership at #ill. That the la#$irm "Bit!, isa L!ada," and n!# "Bit!, L!ada, rtea and Castill!," isindeed suh a partnership need n!t %e undul& %ela%!red.

The partnership areement 9amended artiles !$ /0 Auust /012; d!es n!tpr!)ide $!r a spei$ied peri!d !r underta


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the partners, li


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Yes, e)en th!uh it #as n!t redued t! #ritin, $!r a partners-ip an beinstitute in an7 0orm. The $at that it #as reistered as a s!lepr!priet!rship is !$ n! m!ment $!r suh reistrati!n #as !nl& $!r the!mpan&Hs trade name.

Ana& #as n!t e)en an empl!&ee %eause #hen the& )entured int! theareement, the& e+pliitl& areed t! pr!$it sharin this is e)en th!uh Ana&#as reei)in !mmissi!ns %eause this is !nl& inidental t! her e$$!rts as ahead mar


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partnership propert! is absent in the reations between petitioner and private respondent &acfor. ''' the parties in this case, mere!

shared profits. This aone does not ma$e a partnership. (esides, acorporation cannot become a member of a partnership in the

absence of e'press authori)ation b! statute or charter. This doctrine

is based on the foowin# considerations: *+ that the mutua a#enc! between the partners, whereb! the corporation woud be bound b!

the acts of persons who are not its du! appointed and authori)ed a#ents and officers, woud be inconsistent with the poic! of the aw

that the corporation sha mana#e its own affairs separate! and

e'cusive! and, * that such an arran#ement woud improper! aow corporate propert! to become sub%ect to ris$s not

contempated b! the stoc$hoders when the! ori#ina! invested inthe corporation.

FCTSA *ri)ate resp!ndent *ai$i F!rest Res!ures, *hils., -n. 9*a$!r; is a!rp!rati!n !ranied and e+istin under the la#s !$ Cali$!rnia, 3SA. -t is asu%sidiar& !$ Cellul!se ar


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pr!p!se t! pri)ate resp!ndent *a$!r the settin up !$ a representati)e!$$ie, and "n!t a %ranh !$$ie" in the *hilippines t! sa)e !n ta+es. *etiti!nerlaimed that he #as all al!n made t! %elie)e that he #as in a !int )enture#ith them? that he #!uld ha)e %een %etter !$$ remainin as an independentaent !r representati)e !$ *a$!r53SA as AT ar>>, petiti!ner #r!te *a$!r53SA demandin pa&ment !$ unpaid !mmissi!ns and !$$ie $urniture andeuipment rentals. *ri)atre resp!ndent *a$!r thr!uh !unsel !rderedpetiti!ner t! turn !)er t! it all papers, d!uments, $iles, re!rds, and !thermaterials in his !r AT ar


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and !n$lit !$ interest? hared petiti!ner ane# #ith seri!us mis!ndut $!rthe latter's alleed at !$ $raud and misrepresentati!n in auth!riin therelease !$ an additi!nal pes! salar& $!r himsel$, %esides the d!llar salar&areed up!n %& the parties. *ri)ate resp!ndent als! aused petiti!ner !$ disl!&alt& and representati!n !$ !n$litin interests $!r ha)in !ntinued

usin the *a$!r *hils.' !$$ie $!r !perati!ns !$ E*-

CA: A$$irmed h!ldin that "the leal %asis !$ the !mplaint is n!templ!&ment %ut perhaps partnership, !5!#nership, !r independent!ntrat!rship." ene, the La%!r C!de ann!t appl&.

IssuesA &as t-ere an emp,o7er8emp,o7ee re,ations-ip or a

partners-ip Can bot- e;ist at t-e same time

R#!IN=A There #as an empl!&er empl!&ee relati!nship %ut n! partnership

*etiti!ner arues that he is an industrial partner !$ the partnership he$!rmed #ith pri)ate resp!ndent *a$!r, and als! an empl!&ee !$ thepartnership. *etiti!ner insists that an industrial partner ma& at the sametime %e an empl!&ee !$ the partnership, pr!)ided there is suh anareement, #hih, in this ase, is the "Side Areement" and the "Re)isedperatin and *r!$it Sharin Areement." We h!ld that petiti!ner is anempl!&ee !$ pri)ate resp!ndent *a$!r and that n! partnership !r !5!#nership e+ists %et#een the parties.

-n a partnership, the mem%ers %e!me !5!#ners !$ #hat is !ntri%uted t!

the $irm apital and !$ all pr!pert& that ma& %e auired there%& andthr!uh the e$$!rts !$ the mem%ers. The pr!pert& !r st!< !$ the partnership$!rms a !mmunit& !$ !!ds, a !mm!n $und, in #hih eah part& has apr!prietar& interest. -n $at, the 4e# Ci)il C!de reards a partner as a !5!#ner !$ spei$i partnership pr!pert&. Eah partner p!ssesses a !intinterest in the #h!le !$ partnership pr!pert&. -$ the relati!n d!es n!t ha)ethis $eature, it is n!t !ne !$ partnership. This essential element, the!mmunit& !$ interest, !r !5!#nership !$, !r !int interest in partnershippr!pert& is a%sent in the relati!ns %et#een petiti!ner and pri)ate resp!ndent*a$!r. *etiti!ner is n!t a part5!#ner !$ *a$!r *hils. William (leas!n, pri)ateresp!ndent *a$!r's *resident esta%lished this $at #hen he said that *a$!r*hils. is simpl& a "the!retial !mpan&" $!r the purp!se !$ di)idin thein!me 8>58>. e stressed that petiti!ner


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auth!riati!n %& statute !r harter. This d!trine is %ased !n the $!ll!#in!nsiderati!ns: 9/; that the mutual aen& %et#een the partners, #here%&the !rp!rati!n #!uld %e %!und %& the ats !$ pers!ns #h! are n!t its dul&app!inted and auth!ried aents and !$$iers, #!uld %e in!nsistent #ith thep!li& !$ the la# that the !rp!rati!n shall manae its !#n a$$airs separatel&

and e+lusi)el&? and, 9=; that suh an arranement #!uld impr!perl& all!#!rp!rate pr!pert& t! %e!me su%et t! ris until he )aates theland. n appeal de$endant raised a num%er !$ assinments !r err!rs in thedeisi!n, !ne !$ #hih is that the trial !urt erred in n!t dismissin the ase!n the r!und that the ase #as n!t %r!uht %& the real part& in interest.

Issue: Whether !r n!t the l!#er !urt erred in n!t dismissin the ase !nthe r!und that it #as n!t %r!uht %& the real part& in interestK Q

R3L-4(: 4. What the Rules !$ C!urt reuire is that an ati!n %e %r!uht inthe name !$, %ut n!t neessaril& %&, the real part& in interest. -n $at thepratie is $!r an att!rne&5at5la# t! %rin the ati!n, that is t! $ile the!mplaint, in the name !$ the plainti$$. That pratie appears t! ha)e %een$!ll!#ed in this ase, sine the !mplaint is sined %& the la# $irm !$ Aranetaand Araneta, "!unsel $!r plainti$$" and !mmenes #ith the statement"!mes n!# plainti$$, thr!uh its undersined !unsel." -t is true that the!mplaint als! states that the plainti$$ is "represented herein %& its anain*artner (re!ri! Araneta, -n.", an!ther !rp!rati!n, %ut there is n!thin

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aainst !ne !rp!rati!n %ein represented %& an!ther pers!n, natural !r uridial, in a suit in !urt. The !ntenti!n that (re!ri! Araneta, -n. ann!t at as manain partner $!r plainti$$ !n the the!r& that it is illeal $!rt#! !rp!rati!ns t! enter int! a partnership is #ith!ut merit, $!r the truerule is that "th!uh a !rp!rati!n has n! p!#er t! enter int! a partnership, it

ma& ne)ertheless enter int! a !int )enture #ith an!ther #here the nature !$ that )enture is in line #ith the %usiness auth!ried %& its harter."

. #RBC %. SNITR2 &RES (eember 15$ 1DD)

DOCTRINE: The rue is that whether the parties to a particuar contract have thereb! estabished amon# themseves a %oint venture

or some other reation depends upon their actua intention which isdetermined in accordance with the rues #overnin# the

interpretation and construction of contracts.

FCTSA Sani#ares, a d!mesti !rp!rati!n #as in!rp!rated $!r the primar&purp!se !$ manu$aturin and mar


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n arh 2, /02@, the annual st!1; and %& Luian! E.Salaar 9d!86/7;. The petiti!ns #ere

!ns!lidated and the appellate !urt in its deisi!n !rdered the remand !$ the ase t! the Seurities and E+hane C!mmissi!n #ith the direti)e thata ne# st!


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determined: 9/; the nature !$ the %usiness esta%lished %& the parties#hether it #as a !int )enture !r a !rp!rati!n and 9=; #hether !r n!t theAS- (r!up ma& )!te their additi!nal /> euit& durin eleti!ns !$ Sani#ares' %!ard !$ diret!rs.

R3L-4(: -n the instant ases, !ur e+aminati!n !$ imp!rtant pr!)isi!ns !$ theAreement as #ell as the testim!nial e)idene presented %& the Ladame!and Y!un (r!up sh!#s that the parties areed t! esta%lish a !int )entureand n!t a !rp!rati!n.

-n the instant ases, e+aminati!n !$ imp!rtant pr!)isi!ns !$ the Areementas #ell as the testim!nial e)idene presented %& the Ladame! and Y!un(r!up sh!#s that the parties areed t! esta%lish a !int )enture and n!t a!rp!rati!n.

An e+aminati!n !$ the Areement sh!#s that ertain pr!)isi!ns #ereinluded t! pr!tet the interests !$ AS- as the min!rit&. F!r e+ample, the)!te !$ 7 !ut !$ 0 diret!rs is reuired in ertain enumerated !rp!rate ats.AS- is !ntratuall& entitled t! desinate a mem%er !$ the E+euti)eC!mmittee and the )!te !$ this mem%er is reuired $!r ertain transati!ns.The Areement als! reuires a 78 super5ma!rit& )!te $!r the amendment!$ the artiles and %&5la#s !$ Sani#ares. AS- is als! i)en the riht t!desinate the president and plant manaer. The Areement $urther pr!)idesthat the sales p!li& !$ Sani#ares shall %e that #hih is n!rmall& $!ll!#ed %&AS- and that Sani#ares sh!uld n!t e+p!rt "Standard" pr!duts !ther#isethan thr!uh AS-'s E+p!rt ar


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st!


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The propert! contributed ma! be rea or persona, corporea or incorporea. /ence, credit such as promissor! note or other evidence

of obi#ation or even a mere #oodwi ma! be contributed, as the! are considered propert!.

FCTSA The plainti$$ !mmened an ati!n aainst the de$endants, Franis!(am%e, anuel *ere, Ant!ni! erran, and Fl!reni! (arri, #h! !nstitutethe !mmerial $irm !$ erran (arri, $!r the purp!se !$ re!)erin thesum !$ $i)e th!usand d!llars 9O8,>>>;, 3nited States urren&, $!r ertaindamaes !asi!ned %& the steamship Al$red t! the "Spanish Bride" in theit& !$ anila.

(am%e, a pil!t and mem%er !$ the *il!tsH Ass!iati!n !$ the p!rt !$ anila,#hile in hare !$ a ertain steamship as suh pil!t, %& neliene aused aninur& t! the "Spanish Bride," pr!pert& %el!nin t! the it& !$ anila. Theit& %r!uht an ati!n aainst (am%e . and seured a udment $!r theam!unt !$ damaes. An e+euti!n #as issued aainst (am%e. and returnedunsatis$ied. (am%e, #hen he %eame a mem%er !$ the *il!tsH Ass!iati!n, asall !$ the mem%ers did, paid int! the $unds !$ said ass!iati!n the sum !$ *2>>. This $und, a!rdin t! the rules and reulati!ns !$ the ass!iati!n,#as held %& the ass!iati!n $!r the purp!se !$ ans#erin $!r damaesaused %& its mem%ers t! ships. The it& !$ anila attempted, under thepr!)isi!ns !$ seti!n 1@/ !$ the C!de !$ *r!edure in Ci)il Ati!ns, t! attahthe $unds !$ the ass!iati!n $!r the pa&ment !$ its laim aainst (am%e.

R#!IN=A That the $unds !$ the ass!iati!n did n!t !nstitute a de%t, redit,

!r pers!nal pr!pert&, %el!nin t! (., su%et t! %e attahed under saidseti!n 1@/.

De%t" as used in seti!n 1@/, C!de !$ Ci)il *r!edure, means s!me de$initeam!unt !$ m!ne&, asertained !r apa%le !$ %ein asertained, #hih ma&%e paid !)er t! the sheri$$ !r t! the !urt under an !rder, #hile "redits" and"pers!nal pr!pert&" are s!methin %el!nin t! the de$endant, %ut inp!ssessi!n and under the !ntr!l !$ the pers!n attahed. The de%t, redit, !rpers!nal pr!pert& #hih is attempted t! %e su%eted t! the pa&ment !$ the!%liati!n !$ the de$endant and #hih is alleed t! %e in the p!ssessi!n !$ the pers!n attahed, must e+ist in s!me de$inite and asertaina%le $!rm atthe time !$ the attahment.

The uesti!n #hether the it& !$ anila !uld maintain a speial ati!naainst the ass!iati!n $!r the purp!se !$ re!)erin damaes $!r the inur&!mplained !$ is n!t deided.

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1@. !IM TON= !IM %. +I!I++INE FISIN= =ER IN#STRIES =.R.No. 1:?


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FatsA The !riinal apitalist partners, D!min! C. E)anelista, Jr., Le!nard!Atiena A%ad Sant!s and C!nhita *. 4a)arr!, $!rmed a !5partnership underthe name !$ "E)anelista C!,I #herein its artiles #as amended as t!inlude Estrella A%ad Sant!s as industrial partner. The share in the pr!$itsand l!sses shall %e di)ided and distri%uted am!n the partners in the

pr!p!rti!n !$ 7> $!r the $irst three !riinal partners, t! %e di)ided am!nthem euall&, and @> $!r the $!urth partner Estrella A%ad Sant!s.

Sant!s $iled suit aainst the three !ther partners allein that the

partnership had %een pa&in di)idends t! the partners e+ept t! her and

that n!t#ithstandin her demands the de$endants had re$used t! let her

e+amine the partnership %!!>>, $!r #hih the plainti$$ had sined a pr!miss!r& n!te as !5ma


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testim!nial and d!umentar& e)idenes, in arri)in at the $atual !nlusi!n

e+pressed in the deisi!n.

E)en as she #as and still is a Jude !$ the Cit& C!urt !$ anila, she has

rendered ser)ies $!r appellants #ith!ut #hih the& #!uld n!t ha)e had the

#here#ithal t! !perate the %usiness $!r #hih appellant !mpan& #as

!ranied. rti,e 1? !$ the 4e# Ci)il C!de #hih pr!)ides that 3B&

!ntrat !$ partnership t#! !r m!re pers!ns %ind themsel)es, t! !ntri%ute

m!ne&, pr!pert&, !r industr& t! a !mm!n $und, #ith the intenti!n !$

di)idin the pr!$its am!n themsel)es,I it oes not spei07 t-e 9in o0

inustr7 t-at a partner ma7 t-us ontribute$ -ene t-e sai ser%ies

ma7 ,egitimate,7 be onsiere as appe,,eeHs ontribution to t-e

ommon 0un.

rti,e 1D !$ the 4CC pr!)ides that GAn industrial partner ann!t enaein %usiness $!r himsel$, unless the partnership e+pressl& permits him t! d!

s!? and i$ he sh!uld d! s!, the apitalist partners ma& either e+lude him

$r!m the $irm !r a)ail themsel)es !$ the %ene$its #hih he ma& ha)e

!%tained in )i!lati!n !$ this pr!)isi!n, #ith a riht t! damaes in either

ase.I -t is n!t disputed that the pr!)isi!n aainst the industrial partner

enain in %usiness $!r himsel$ see7?

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91; Whene)er !ther irumstane render it ust and reas!na%le.

ispositi%eA Judment appealed a$$irmed.

1. E!I=IO ESTNIS!O$ 'R.$ #etitioner $ %. TE ONORB!E CO#RT

OF ++E!S$ REMEIOS ESTNIS!O$ EMI!IO an !EOCIO

SNTI=O$ "espondents.

J=.R. No. !8>.>> t! %e ta>>.>>

ad)ane rental shall %e dep!sited #ith SELL t! !)er ad)anes !$ $uel t!

petiti!ner as dealer #ith a pr!)is! that said areement anels and

supersedes the pre)i!us J!int A$$ida)it e+euted %& the !5!#ners.

The $inanial rep!rt sh!#ed that the %usiness #as a%le t! ma,>>>.>> #as

realied. Thus,pri)ate resp!ndents $iled a !mplaint in the aainst petiti!ner

sa&in am!n !thers that the latter %e !rdered: 9/; t! e+eute a pu%lid!ument em%!d&in all the pr!)isi!ns !$ the partnership areement

entered int! %et#een them? 9=; t! render a $!rmal a!untin !$ the

%usiness !perati!n and that the same %e su%et t! pr!per audit? 9@; t! pa&

the plainti$$s their la#$ul shares and partiipati!n in the net pr!$its !$ the

%usiness. The trial !urt dismissed the ase %ut su%seuentl& rendered a

deisi!n in $a)!r !$ resp!ndents, up!n R. The CA a$$irmed the same.

23


24/52

ene, this petiti!n. *etiti!ner !ntended that %eause !$ the said stipulati!n

anellin and supersedin that pre)i!us J!int A$$ida)it, #hate)er

partnership areement there #as in said pre)i!us areement had there%&

%een a%r!ated.

IssueA Whether a partnership #as esta%lished %& and am!n the petiti!ner

and the pri)ate resp!ndents as reards the !#nership andM!r !perati!n !$

the as!line ser)ie stati!n %usinessK

Ru,ingA Yes.

&e 0in no merit in t-is argument. Said anellin pr!)isi!n #as

neessar& $!r the J!int A$$ida)it spea>>.>> ad)ane rentals

startin a& =8, /066 #hile the latter areement als! re$ers t! ad)ane

rentals !$ the same am!unt startin a& =1, /066. There is, there$!re, adupliati!n !$ re$erene t! the */8,>>>.>> hene the need t! pr!)ide in the

su%seuent d!ument that it "anels and supersedes" the pre)i!us !ne.

True it is that in the latter d!ument, it is silent as t! the statement in the

J!int A$$ida)it that the */8,>>>.>> represents the "apital in)estment" !$ the

parties in the as!line stati!n %usiness and it spea>>.>> ad)ane rental due t!

them $r!m SELL shall aument their "apital in)estment" in the !perati!n

!$ the as!line stati!n. !re!)er !ther e%iene in t-e reor s-o/s t-at

t-ere /as in 0at su- partners-ip agreement bet/een t-e

parties. This is attested %& the testim!nies !$ pri)ate resp!ndent Remedi!s

Estanisla! and Att&. Aneles. *etiti!ner su%mitted t! pri)ate resp!ndents

peri!di a!untin !$ the %usiness. *etiti!ner a)e a #ritten auth!rit& t!pri)ate resp!ndent Remedi!s Estanisla!, his sister, t! e+amine and audit the

%!!


25/52

the issuane !$ all !)ernment permits and lienses in the name !$ petiti!ner

#as in !mpliane #ith the a$!re5stated p!li& !$ SELL and the

understandin !$ the parties !$ ha)in !nl& !ne dealer !$ the SELL

pr!duts.

ispositi%eA Judment appealed a$$irmed.

S7,,abusA

REMEI! !& E"IENCE FININ=S OF FCT OF TE CO#RT OF

++E!S$ =ENER!!2 CONC!#SI"E ON ++E!. The $indins !$ $ats!$ the resp!ndent !urt are !nlusi)e in this pr!eedin, and its !nlusi!n

%ased !n the said $ats are in a!rdane #ith the applia%le la#.

/@. 'OSE FERNNE4$ #laintiff)Appellant $ %. FRNCISCO E !

ROS$ %efendant)Appellee

J=.R. No. >, he entered int! a )er%al

areement #ith Dela R!sa t! $!rm a partnership $!r the purhase !$ as!es

and the arr&in !n !$ the %usiness !$ lettin the same $!r hire in anila.

Dela R!sa is t! %u& the as!es and eah partner t! $urnish $!r that purp!se

suh am!unt !$ m!ne& as he !uld, the pr!$its t! %e di)ided pr!p!rti!natel&.

Fernande $urnished, !n di$$erent dates, Dela R!sa sums t! purhase and

repair as!es, the latter ta


26/52

de$endant re$used t! render, den&in the e+istene !$ the partnership

alt!ether. At s!me time su%seuentl& t! the $ailure !$ the attempt t! aree

up!n partnership artiles and a$ter the de$endant had %een !peratin the

as!es $!r s!me time, the de$endant returned t! the plainti$$, /,/=8 pes!s,

in t#! di$$erent sums, !ne !$ @>> and !ne !$ 2=8 pes!s.

An ati!n #as $iled t! !%tain $r!m the !urt a delarati!n 9/; that a

partnership e+ists %et#een the parties, 9=; that the plainti$$ has a

!nseuent interest in ertain as!es #hih are alleed t! %e partnership

pr!pert&, and 9@; that the de$endant is %!und t! render an a!unt !$ his

administrati!n !$ the as!es and the %usiness arried !n #ith them.

IssuesA

9/; Did a partnership e+ist %et#een the partiesK

9=; -$ suh partnership e+isted, #as it terminated as a result !$ the at !$ the

de$endant in reei)in %a< the /,/=8 pes!sK

Ru,ingA

/. &-ere t-e 0at is estab,is-e t-at parties -a%e mutua,,7

ontribute to t-e pur-ase o0 a ommon sto9$ uner irumstanes

/-i- a00or no i00erent e;p,anation o0 t-eir obKet$ it must be

eue t-at t-e7 intene a Koint interest in t-e pro0its t-ere0rom.

Sine t-e genera, pro%isions o0 arti,e 1@ o0 t-e Ci%i, Coe are

ontro,,e b7 t-e speia, pro%isions o0 arti,e 1?? iem$ /ritten

arti,es o0 opartners-ip are on,7 neessar7 in t-e ases mentione

in t-e ,atter.

"*artnership is a !ntrat %& #hih t#! !r m!re pers!ns %ind themsel)es t!

!ntri%ute m!ne&, pr!pert&, !r industr& t! a !mm!n $und, #ith the

intenti!n !$ di)idin the pr!$its am!n themsel)es." 9Ci)il C!de, art. /668.;

The essential p!ints up!n #hih the minds !$ the parties must meet in a

!ntrat !$ partnership are, there$!re, 9/; mutual !ntri%uti!n t! a !mm!n

st!


27/52

/608.;

We ha)e $!und as a $at that m!ne& #as $urnished %& the plainti$$ and

reei)ed %& the de$endant #ith the understandin that it #as t! %e used $!r

the purhase !$ the as!es in uesti!n. This esta%lishes the $irst element !$ the !ntrat, namel&, mutual !ntri%uti!n t! a !mm!n st!


28/52

re!niin the plainti$$Hs riht in the partnership pr!pert& and in the pr!$its.

a)in $ailed t! d! this he an n!t %e permitted t! $!re a diss!luti!n up!n

his !partner up!n terms #hih the latter is un#illin t! aept. We see

n!thin in the ase #hih an i)e the transati!n in uesti!n an& !ther

aspet than that !$ the #ithdra#al %& !ne partner #ith the !nsent !$ the!ther !$ a p!rti!n !$ the !mm!n apital.

ispositi%eA Judment re)ersed.

1>,

pa&a%le in the *hilippines, #hih #ere n!t paid m!re than thirt& da&s pri!r t!

the date !$ the $ilin %& the petiti!ners !$ the appliati!n $!r in)!luntar&

ins!l)en&.

The trial !urt denied the petiti!n !n the r!und that it #as n!t pr!)en, n!r

alleed, that the mem%ers !$ the a$!resaid $irm #ere ins!l)ent at the time

the appliati!n #as $iled? and that as said partners are pers!nall& and

s!lidaril& lia%le $!r the !nseuenes !$ the transati!ns !$ the partnership,

it ann!t %e aduded ins!l)ent s! l!n as the partners are n!t alleed and

pr!)en t! %e ins!l)ent. Fr!m this udment the petiti!ners appeal t! this

!urt, !n the r!und that this $indin !$ the l!#er !urt is err!ne!us.

IssueA Whether !r n!t a limited partnership, suh as the appellee, #hih has

$ailed t! pa& its !%liati!ns #ith three redit!rs $!r m!re than thirt& da&s,

ma& %e held t! ha)e !mmitted an at !$ ins!l)en&, and there%& %e

aduded ins!l)ent aainst its #illK

Ru,ingA Yes.

28


29/52

In t-e +-i,ippines a ,imite partners-ip u,7 organize in aorane

/it- ,a/ -as a persona,it7 istint 0rom t-at o0 its members an i0 it

ommits an at o0 ban9rupt7$ su- as t-at o0 0ai,ing 0or more t-an

t-irt7 a7s to pa7 ebts amounting to +1$@@@ or more$ it ma7 be

aKuge inso,%ent on t-e petition o0 t-ree o0 its reitors a,t-oug-its members ma7 not be inso,%ent.

-$, as in the instant ase, the limited partnership !$ Camp!s Rueda C!.

$ailed t! pa& its !%liati!ns #ith three redit!rs $!r a peri!d !$ m!re than

thirt& da&s, #hih $ailure !nstitutes, under !ur -ns!l)en& La#, !ne !$ the

ats !$ %an


30/52

"The $!ll!#in are udiial pers!ns:

"/. The !rp!rati!ns, ass!iati!ns, and instituti!ns !$ pu%li interest

re!nied %& la#.

"=. The ass!iati!ns !$ pri)ate interest, %e the& i)il, !mmerial, !r

industrial, t! #hih the la# rants pr!per pers!nalit&, independent !$ that !$

eah mem%er there!$."

rala# )irtua/a# li%rar&

Artile @2 pr!)ides: "Judiial pers!ns ma& auire and p!ssess pr!pert& !$

all


31/52

de$endant.

@. -D.? -D.? SER"ICE OF +ROCESS. The ser)ie !$ summ!ns !n suh a

!mpan& is made in pursuane !$ pararaph /, seti!n. @06 !$ the C!de !$

Ci)il *r!edure %& deli)erin a !p& there!$ t! the president !r !ther head !$ the !rp!rati!n, seretar& ashier, !r manain aent there!$.

1. -D.? -D.? -D.? RET#RN OF SERIFF S E"IENCE. The erti$iate !$

ser)ie %& the sheri$$ is prima $aie e)idene !$ the $ats set !ut in suh

erti$iate? and #here suh erti$iate sh!#s that ser)ie !$ summ!ns in an

ati!n aainst a partnership dul& !ranied and reistered under the la#s !$

the *hilippine -slands #as made %& ser)in a !p& there!$ !n a pers!n

therein named and desri%ed as the manain aent !$ the !mpan&, it is

prima $aie e)idene !$ the $at that the pers!n !n #h!m the summ!ns #as

ser)ed #as in $at the manain aent !$ the !mpan&.

8. -D.? -D.? -D.? -D. T! !)er!me the presumpti!n arisin $r!m the

sheri$$Hs erti$iate the e)idene must %e lear and !n)inin.

6. '#STICE OF TE +ECE '#=MENT +RES#M+TION OF "!IIT2.

A udment rendered %& a ustieHs !urt is presumed t! %e a )alid and

en$!rea%le udment #here the re!rd disl!ses that all !$ the steps

neessar& t! !n$er urisditi!n !n the !urt ha)e %een ta


32/52

B!+ Fat!r&, under the manaement !$ iente Tan. Thr!uh iente Tan,

s!uht redit #ith the plainti$$ and its assin!rs, 4! a&, in !n)ersati!ns

and inter)ie#s #ith their !$$iers and empl!&ees, represented that he #as

the prinipal !#ner !$ suh $at!r&, that the Lee (uan B!+ Fat!r& and the

!dern B!+ Fat!r& %el!ned t! the same !#ner, and that the Lee (uan B!+Fat!r& #as a su%sidiar& !$ the !dern B!+ Fat!r&. !re!)er, Tan delared

that Lee (uan B!+ Fat!r& #as pre)i!usl& !#ned %& the partnership !$ 4!

a& and 4! Tian Te>,>>>.>>;. T! seure the pa&ment !$ the l!an, a m!rtae #as e+euted

!)er the land and the %uildin in $a)!r !$ Tai T!n Chuahe C!. Arseni!

Chua, representati)e !$ Thai T!n Chuahe C!. insured the latter's interest

#ith Tra)ellers ulti5-ndemnit& C!rp!rati!n $!r */>>,>>>.>> 9*7>,>>>.>> $!r

the %uildin and *@>,>>>.>> $!r the !ntents there!$;.

*edr! *al!m! seured a Fire -nsurane *!li& 4!. F5 >=8>>, !)erin

the %uildin $!r *8>,>>>.>> #ith resp!ndent enith -nsurane C!rp!rati!n.

Therea$ter, an!ther Fire -nsurane *!li& 4!. 2180 #as pr!ured $r!m

resp!ndent *hilippine British Assurane C!mpan&, !)erin the same

%uildin $!r *8>,>>>.>> and the !ntents there!$ $!r *7>,>>>.>>. n Jul& @/,

/078, the %uildin and the !ntents #ere t!tall& raed %& $ire.

Based !n the !mputati!n !$ the l!ss, inludin the Tra)ellers ulti5

-ndemnit&, resp!ndents, enith -nsurane, *hil. British Assurane and S.S.S.

Aredited (r!up !$ -nsurers, paid their !rresp!ndin shares !$ the l!ss.

Demand #as made $r!m resp!ndent Tra)ellers ulti5-ndemnit& $!r its share

in the l!ss %ut the same #as re$used. ene, !mplainants demanded $r!m

the !ther three 9@; resp!ndents the %alane !$ eah share in the l!ss %ased

32


33/52

!n the !mputati!n !$ the Adustment Standards Rep!rt e+ludin Tra)ellers

ulti5-ndemnit& %ut the same #as re$used, hene, this ati!n. n a& @/,

/077, Tai T!n Chuahe C!. $iled a !mplaint in inter)enti!n laimin the

pr!eeds !$ the $ire -nsurane *!li& 4!. F5880 D, issued %& resp!ndent

Tra)ellers ulti5-ndemnit&.

Tra)ellers -nsurane, in ans#er t! the !mplaint in inter)enti!n,

alleed that the -nter)en!r is n!t entitled t! indemnit& under its Fire

-nsurane *!li& $!r la< !$ insura%le interest %e$!re the l!ss !$ the insured

premises and that the !mplainants, sp!uses *edr! and Auena *al!m!,

had alread& paid in $ull their m!rtae inde%tedness t! the inter)en!r. @

As ad)erted t! a%!)e resp!ndent -nsurane C!mmissi!n dismissed

sp!uses *al!m!s' !mplaint !n the r!und that the insurane p!li& su%et

!$ the !mplaint #as ta


34/52

pa&ment $!r it is presumed. The )alidit& !$ the insurane p!li& ta


35/52

and held, am!n !thers, that the transati!n #as an euita%le m!rtae

#hih is in the nature !$ patum !mmiss!rium, hene in)alid. *etiti!ner

n!# !ntends, am!n !thers, that he is n!t the real part& in interest %ut

A.C. Auila C!., aainst #hih this ase sh!uld ha)e %een %r!uht.

-ssue: Whether !r n!t petiti!ner sh!uld %e held lia%le in this aseK

eld: 4!. 3nder Art. /762 !$ the Ci)il C!de, a partnership "has a uridial

pers!nalit& separate and distint $r!m that !$ eah !$ the partners." The

partners ann!t %e held lia%le $!r the !%liati!ns !$ the partnership unless it

is sh!#n that the leal $iti!n !$ a di$$erent uridial pers!nalit& is %ein used

$!r $raudulent, un$air, !r illeal purp!ses. 1@ -n this ase, pri)ate resp!ndent

has n!t sh!#n that A.C. Auila S!ns, C!., as a separate uridial entit&, is

%ein used $!r $raudulent, un$air, !r illeal purp!ses. !re!)er, the title t!

the su%et pr!pert& is in the name !$ A.C. Auila S!ns, C!. and theem!randum !$ Areement #as e+euted %et#een pri)ate resp!ndent, #ith

the !nsent !$ her late hus%and, and A.C. Auila S!ns, C!., represented %&

petiti!ner. ene, it is the partnership, n!t its !$$iers !r aents, #hih

sh!uld %e impleaded in an& litiati!n in)!l)in pr!pert& reistered in its

name. A )i!lati!n !$ this rule #ill result in the dismissal !$ the !mplaint.

1D.) EIRS OF TN EN= GEE %. C 6 BEN=#ET !#MBER COM+N2

(+res. TN EN= !2)$ =.R. No. 1?1$ Otober :$ @@@.

Fats: eirs !$ Tan En Nee $iled a suit aainst his %r!ther Tan En La&and Benuet Lum%er C!mpan&. The !mplaint alleed that that a$ter the

se!nd W!rld War, Tan En Nee and Tan En La&, p!!lin their res!ures and

industr& t!ether, entered int! a partnership enaed in the %usiness !$

sellin lum%er and hard#are and !nstruti!n supplies. The& named their

enterprise "Benuet Lum%er" #hih the& !intl& manaed until Tan En Nee's

death. The laimed that Tan En La& and his hildren aused the !n)ersi!n

!$ the partnership "Benuet Lum%er" int! a !rp!rati!n alled "Benuet

Lum%er C!mpan&." The in!rp!rati!n #as purp!rtedl& a ruse t! depri)e Tan

En Nee and his heirs !$ their riht$ul partiipati!n in the pr!$its !$ the%usiness. *etiti!ners pra&ed $!r a!untin !$ the partnership assets, and

the diss!luti!n, #indin up and liuidati!n there!$, and the eual di)isi!n !$

the net assets !$ Benuet Lum%er.

The RTC ruled in $a)!r !$ the petiti!ners and held that the partnership

is a !int )enture. ene, the resp!ndent s!uht $!r re!urse %e$!re the CA,

35


36/52

#hih re)ersed the deisi!n !$ the RTC. The& $iled $!r a !ti!n $!r

Re!nsiderati!n %ut it #as denied, hene this petiti!n.

-ssue: Whether !r n!t there #as a partnership %et#een Tan En Nee

and Tan En La& in Benuet Lum%erK

eld: C!urt held in the neati)e. -n !rder t! !nstitute a partnership, it must

%e esta%lished that 9/; t#! !r m!re pers!ns %!und themsel)es t! !ntri%ute

m!ne&, pr!pert&, !r industr& t! a !mm!n $und, and 9=; the& intend t!

di)ide the pr!$its am!n themsel)es. The areement need n!t %e in #ritin,

sine the statute all!#s the !ral !nstituti!n !$ a partnership, sa)e in t#!

instanes: 9/; #he imm!)a%le pr!pert& !r real rihts are !ntri%uted, and

9=; #hen the partnership has a apital !$ three th!usand pes!s !r m!re. -n

%!th ases, a pu%li instrument is reuired. An in)ent!r& t! %e sined %& the

parties and attahed t! the pu%li instrument is als! indispensa%le t! the)alidit& !$ the partnership #hene)er imm!)a%le pr!pert& is !ntri%uted t!

the partnership.

The trial !urt determined that Tan En Nee and Tan En La& had

entered int! a !int )enture, #hih it said is a


37/52

Fats: *etiti!ners %!uht 8 parels !$ l!t and s!ld it therea$ter. The&

ained realied a net pr!$it in the sale made in %!th transati!ns. The

!rresp!ndin apital ains ta+es #ere paid %& petiti!ners in /07@ and /071

%& a)ailin !$ the ta+ amnesties ranted in the said &ears. !#e)er, then

Atin B-R C!mmissi!ner *lana, assessed the petiti!ners and reuired themt! pa& a t!tal am!unt !$ the alleed de$iien& !rp!rate in!me ta+es $!r

the &ears /062 and /07>. *etiti!ners pr!tested the said assessment

assertin that the& had a)ailed !$ ta+ amnesties #a& %a< in /071.

Resp!ndent C!mmissi!ner in$!rmed petiti!ners that in the &ears /062

and /07>, petiti!ners as !5!#ners in the real estate transati!ns $!rmed an

unreistered partnership !r !int )enture ta+a%le as a !rp!rati!n under

Seti!n =>9%; and its in!me #as su%et t! the ta+es presri%ed under

Seti!n =1, %!th !$ the 4ati!nal -nternal Re)enue C!de 1 that the

unreistered partnership #as su%et t! !rp!rate in!me ta+ as

distinuished $r!m pr!$its deri)ed $r!m the partnership %& them #hih is

su%et t! indi)idual in!me ta+? and that the a)ailment !$ ta+ amnest&

under *.D. 4!. =@, as amended, %& petiti!ners relie)ed petiti!ners !$ their

indi)idual in!me ta+ lia%ilities %ut did n!t relie)e them $r!m the ta+ lia%ilit&

!$ the unreistered partnership. ene, the petiti!ners #ere reuired t! pa&

the de$iien& in!me ta+ assessed.

-n the said ase, petiti!ners %!rr!#ed a sum !$ m!ne& $r!m their

$ather #hih t!ether #ith their !#n pers!nal $unds the& used in %u&inse)eral real pr!perties. The& app!inted their %r!ther t! manae their

pr!perties #ith $ull p!#er t! lease, !llet, rent, issue reeipts, et. The& had

the real pr!perties rented !r leased t! )ari!us tenants $!r se)eral &ears and

the& ained net pr!$its $r!m the rental in!me. Thus, the C!llet!r !$

-nternal Re)enue demanded the pa&ment !$ in!me ta+ !n a !rp!rati!n,

am!n !thers, $r!m them.

-ssue: Whether !r n!t there #as an unreistered partnership #hih

made them lia%le $!r !rp!rate in!me ta+ under the Ta+ C!deK

eld: -n !rder t! !nstitute a partnership inter sese, there must %e: 9a; an

intent t! $!rm the same? 9%; enerall& partiipatin in %!th pr!$its and

l!sses? and 9; suh a !mmunit& !$ interest, as $ar as third pers!ns are

!nerned as ena%les eah part& t! ma


38/52

The sharin !$ returns d!es n!t in itsel$ esta%lish a partnership

#hether !r n!t the pers!ns sharin therein ha)e a !int !r !mm!n riht !r

interest in the pr!pert&. There must %e a lear intent t! $!rm a partnership,

the e+istene !$ a uridial pers!nalit& di$$erent $r!m the indi)idual partners,

and the $reed!m !$ eah part& t! trans$er !r assin the #h!le pr!pert&.

-n the present ase, there is lear e)idene !$ !5!#nership %et#een the

petiti!ners. There is n! adeuate %asis t! supp!rt the pr!p!siti!n that the&

there%& $!rmed an unreistered partnership. The t#! is!lated transati!ns

#here%& the& purhased pr!perties and s!ld the same a $e# &ears therea$ter

did n!t there%& ma8.>> in /010 t! * 12>,>>>. => in /086.

38


39/52

Resp!ndent C-R deided that petiti!ners $!rmed an unreistered partnershipand there$!re, su%et t! the !rp!rate in!me ta+ pursuant t! Seti!n =1,in relati!n t! Seti!n 219%; !$ the Ta+ C!de. *etiti!ners pr!tested aainst theassessment and as #as dra#n %& the 4ati!nal Charit&S#eepsta


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Therea$ter, J!se (athalian #as reuired %& in!me ta+ e+aminer Al$red!Da)id t! $ile the !rresp!ndin in!me ta+ return !)erin the prie #!n %&J!se (athalian C!mpan& and that !n Deem%er =0, /0@1The de$endant made an assessment aainst J!se (athalian C!mpan&reuestin the pa&ment !$ the sum !$ */,100.01 t! the deput& pr!)inial

treasurer !$ *ulilan, Bulaan. Tthe plainti$$s reuested e+empti!n $r!m thepa&ment !$ the in!me ta+ %ut it #as reeted. The plainti$$s paid in pr!testthe ta+ assessment i)en t! them.

ISS#EA Whether the plainti$$s $!rmed a partnership, thus n!t e+empted $r!mpa&in in!me ta+K

R#!IN=A 2ES.The Supreme C!urt held that a!rdin t! the stipulated $ats the plainti$$s!ranied a partnership !$ a i)il nature %eause eah !$ them put up m!ne&t! %u& a s#eepsta>>. Thepartnership #as n!t !nl& $!rmed, %ut up!n the !raniati!n there!$ and the#innin !$ the prie, J!se (athalian pers!nall& appeared in the !$$ie !$ the*hilippine Charit& S#eepsta,>>> in $a)!r !$ J!se(athalian and !mpan&, and the said partner. in the same apait&,!lleted the said he 9a; !$ At 4!. =2@@, asamended %& seti!n = !$ At 4!. @76/.

:. RE2ES "S. COMMISSIONER OF INTERN! RE"EN#E

=.R. NOS. !8


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maintenane. The r!ss in!me $r!m rentals !$ the %uildin am!unted t!

a%!ut * 0>,>>>.>> annuall&. An assessment #as made aainst petiti!ners %&

the C-R. The assessment s!uht t! %e re!nsidered #as $utile. n appeal t!

the C!urt !$ Ta+ Appeals, the CTA ruled that petiti!ners are lia%le $!r the

in!me ta+ due $r!m the partnership $!rmed %& petiti!ners.

ISS#EA Whether !r n!t petiti!ners su%et t! the ta+ !n !rp!rati!ns

pr!)ided $!r in the 4ati!nal -nternal Re)enue C!deK

R#!IN=A 2ES.

A$ter re$errin t! an!ther seti!n !$ the 4-RC, #hih e+pliitl& pr!)ides that

the term !rp!rati!ns inludes partnerships and then t! Artile /767 !$ the

Ci)il C!de !$ the *hilippines, de$inin #hat a !ntrat !$ partnership is, the

!pini!n !es !n t! state that the essential elements !$ a partnership are

t#!, namel&: a; an areement t! !ntri%ute m!ne&, pr!pert& !r industr& t!

a !mm!n $und? and %; intent t! di)ide the pr!$its am!n the !ntratin

parties. The $irst element is und!u%tedl& present in the ase, $!r, admittedl&,

petiti!ners ha)e areed t!, and did, !ntri%ute m!ne& and pr!pert& t! a

!mm!n $und. ene, the issue narr!#s d!#n t! their intent in atin as

the& did. 3p!n !nsiderati!n !$ all the $ats and irumstanes surr!undin

the ase, it #as determined that their purp!se #as t! enae in real estate

transati!n $!r m!netar& ain and then di)ide the same am!n themsel)es,

hene ta+a%le.


42/52

R#!IN=A 2ES.*etiti!ners are su%et t! the in!me ta+ and residene ta+ $!r !rp!rati!n.As de$ined in seti!n 21 9%; !$ the -nternal Re)enue C!de, "the term!rp!rati!n inludes partnerships, n! matter h!# reated !r !ranied." Thisuali$&in e+pressi!n learl& indiates that a !int )enture need n!t %e

underta


43/52

n Auust /6, /0/0, $i)e pers!ns, inludin *. S. Sa%ert, !ranied the

4ituan *lantati!n C!mpan&, #ith a su%sri%ed apital !$ *1>,>>>. n April

/>, /0==, *. S. Sa%ert trans$erred all !$ his rihts in t#! parels !$ land

situated in the muniipalit& !$ *aran, *r!)ine !$ C!ta%at!, em%raed #ithin

his h!mestead appliati!n 4!. =/>18 and his purhase appliati!n 4!. />12,in !nsiderati!n !$ the sum !$ */, t! the 4ituan *lantati!n C!mpan&.

-n this same peri!d, Niel appears t! ha)e tried t! seure a settlement $r!m

Sa%ert. At least in a letter dated June 6, /0/2, Sa%ert #r!te Niel that he had

!$$ered "t! sell all pr!pert& that - ha)e $!r *1>,>>> !r ta


44/52

lanuae and !ndut, and then t! i)e this intenti!n e$$et. 9(iles vs. ette

/0=1U, =6@ 3. S., 88@.;

?. 'une $ 1D?

=.R. No. !8


45/52

. =.R. No. 1:,>>> #hih, under the J!int enture Areement t! %e used $!r thede)el!pment !$ the su%di)isi!n. All three !$ them als! areed t! share thepr!eeds $r!m the sale !$ the su%di)ided l!ts.

The pr!et $ailed and the pr!pert& #as $!rel!sed. *etiti!ner alleed that it#as anuelHs La< !$ $unds !r means and s


46/52

#hile resp!ndent #!uld i)e, in additi!n t! his industr&, the am!unt needed$!r eneral e+penses and !ther !sts. Furtherm!re, the in!me $r!m the saidpr!et #!uld %e di)ided a!rdin t! the stipulated perentae. Clearl&, the!ntrat mani$ested the intenti!n !$ the parties t! $!rm a partnership. 3nderArtile /767 !$ the Ci)il C!de, a partner ma& !ntri%ute n!t !nl& m!ne& !r

pr!pert&, %ut als! industr&.

alid !ntrat !$ partnership.

*irst , Artile /77@ #as intended primaril& t! pr!tet third pers!ns. Thus, theeminent Artur! . T!lentin! states that under the a$!reited pr!)isi!n #hihis a !mplement !$ Artile /77/, 1 "The e+euti!n !$ a pu%li instrument#!uld %e useless i$ there is n! in)ent!r& !$ the pr!pert& !ntri%uted,%eause #ith!ut its desinati!n and desripti!n, the& ann!t %e su%et t!insripti!n in the Reistr& !$ *r!pert&, and their !ntri%uti!n ann!tpreudie third pers!ns. This #ill result in $raud t! th!se #h! !ntrat #iththe partnership in the %elie$ inU the e$$ia& !$ the uarant& in #hih theimm!)a%les ma& !nsist. Thus, the !ntrat is delared )!id %& the la##hen n! suh in)ent!r& is made." The ase at %ar d!es n!t in)!l)e thirdparties #h! ma& %e preudied.

+econd , petiti!ners themsel)es in)! perent !$ the )alue !$

the pr!pert&. 1: The& ann!t in !ne %reath den& the !ntrat and in an!ther

re!n.ie it, dependin !n #hat m!mentaril& suits their purp!se. *arties

ann!t ad!pt in!nsistent p!siti!ns in reard t! a !ntrat and !urts #ill

n!t t!lerate, muh less appr!)e, suh pratie.

-n sh!rt, the alleed nullit& !$ the partnership #ill n!t pre)ent !urts $r!m

!nsiderin the J!int enture Areement an !rdinar& !ntrat $r!m #hih

the parties' rihts and !%liati!ns t! eah !ther ma& %e in$erred and

en$!red

. =.R. No. 1


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4in! mine, l!ated in At!< and Tu%la&, Benuet *r!)ine. The partiesH

areement #as den!minated as "*!#er !$ Att!rne&".

-n the !urse !$ manain and !peratin the pr!et, *hile+ inin made

ad)anes !$ ash and pr!pert& in a!rdane #ith the areement. !#e)er,

the mine su$$ered !ntinuin l!sses !)er the &ears #hih resulted t!

petiti!nerHs #ithdra#al as manaer !$ the mine and the e)entual essati!n !$

mine !perati!ns.

The parties e+euted a GC!mpr!mise #ith Dati!n in *a&mentI #here the

parties determined the inde%tedness !$ Baui! (!ld. Further e+euted a

GAmendment t! C!mpr!mise #ith Dati!n in *a&mentI assinin Baui!Hs

tani%le assets and trans$errin its euita%le title in !ne !$ its sement.

Su%seuentl&, petiti!ner #r!te !$$ in its /02= %!!>>.>> t! all!#anes and reser)es that #ere set up in /02/ and

*=,26>,762.>> t! the /02= !perati!ns.

-n its /02= annual in!me ta+ return, petiti!ner deduted $r!m its r!ss

in!me the am!unt !$ *//=,/@6,>>>.>> as "l!ss !n settlement !$ reei)a%les

$r!m Baui! (!ld aainst reser)es and all!#anes."0 !#e)er, the Bureau !$

-nternal Re)enue 9B-R; disall!#ed the am!unt as deduti!n $!r %ad de%t and

assessed petiti!ner a de$iien& in!me ta+ !$ *6=,2//,/6/.@0.

*etiti!ner pr!tested %e$!re the B-R aruin that the deduti!n must %e

all!#ed sine all reuisites $!r a %ad de%t deduti!n #ere satis$ied, t! #it:

9a; there #as a )alid and e+istin de%t? 9%; the de%t #as asertained t! %e

#!rthless? and 9; it #as hared !$$ #ithin the ta+a%le &ear #hen it #as

determined t! %e #!rthless.

B-R denied petiti!nerHs pr!test $!r la< !$ leal and $atual %asis. -t held that

the alleed de%t #as n!t asertained t! %e #!rthless sine Baui! (!ld

remained e+istin and had n!t $iled a petiti!n $!r %an; !$ the pr!etHs net pr!$it. *etiti!ner appealed %e$!re the CTA.

!#e)er the C!urt denied $!r la< !$ merit and a$$irmed the l!#er !urt

deisi!n.

47

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-ssue: Whether !r n!t the *!#er !$ Att!rne& part!!< !$ the nature !$

in)estment rather than a l!an.

eld: -n)estment

The l!#er !urts !rretl& held that the "*!#er !$ Att!rne&" is the

instrument that is material in determinin the true nature !$ the %usiness

relati!nship %et#een petiti!ner and Baui! (!ld. Be$!re res!rt ma& %e had

t! the t#! !mpr!mise areements, the partiesH !ntratual intent must $irst

%e dis!)ered $r!m the e+pressed lanuae !$ the primar& !ntrat under

#hih the partiesH %usiness relati!ns #ere $!unded. -t sh!uld %e n!ted that

the !mpr!mise areements #ere mere !llateral d!uments e+euted %&

the parties pursuant t! the terminati!n !$ their %usiness relati!nship reated

under the "*!#er !$ Att!rne&". n the !ther hand, it is the latter #hih

esta%lished the uridial relati!n !$ the parties and de$ined the parameters !$ their dealins #ith !ne an!ther.

An e+aminati!n !$ the "*!#er !$ Att!rne&" re)eals that a partnership !r !int

)enture #as indeed intended %& the parties. 3nder a !ntrat !$ partnership,

t#! !r m!re pers!ns %ind themsel)es t! !ntri%ute m!ne&, pr!pert&, !r

industr& t! a !mm!n $und, #ith the intenti!n !$ di)idin the pr!$its am!n

themsel)es./8 While a !rp!rati!n, li


49/52

there$!re that under *hilippine la#, a !int )enture is a $!rm !$

partnership and sh!uld %e !)erned %& the la# !$ partnerships. The

Supreme C!urt has h!#e)er re!nied a distinti!n %et#een these

t#! %usiness $!rms, and has held that alth!uh a !rp!rati!n ann!t

enter int! a partnership !ntrat, it ma& h!#e)er enae in a !int)enture #ith !thers. + + + 9Citati!ns !mitted; /6

*erusal !$ the areement den!minated as the "*!#er !$ Att!rne&" indiates

that the parties had intended t! reate a partnership and esta%lish a

!mm!n $und $!r the purp!se. The& als! had a !int interest in the pr!$its !$

the %usiness as sh!#n %& a 8>58> sharin in the in!me !$ the mine.

-t sh!uld %e stressed that the main !%et !$ the "*!#er !$ Att!rne&" #as

n!t t! !n$er a p!#er in $a)!r !$ petiti!ner t! !ntrat #ith third pers!ns !n

%ehal$ !$ Baui! (!ld %ut t! reate a %usiness relati!nship %et#eenpetiti!ner and Baui! (!ld, in #hih the $!rmer #as t! manae and !perate

the latterHs mine thr!uh the partiesH mutual !ntri%uti!n !$ material

res!ures and industr&. The essene !$ an aen&, e)en !ne that is !upled

#ith interest, is the aentHs a%ilit& t! represent his prinipal and %rin a%!ut

%usiness relati!ns %et#een the latter and third pers!ns.=> Where

representati!n $!r and in %ehal$ !$ the prinipal is merel& inidental !r

neessar& $!r the pr!per dishare !$ !neHs param!unt underta


50/52

BE#MONT E". RE!T2 CO.$ INC.$ =!OE !N COR+.$ E>#IT2

TRIN= CO.$ INC.$ : COR+.$ 3!3 E". COR+$ !CM TETRIC!

ENTER+RISES$ INC.$ !ITON'# SI++IN= CO. INC.$ MCOI! INC.$

OEON RE!T2 COR+.$ SRTO= RE!T2$ INC.$ CT TETER INC.

(0ormer,7 =enera, T-eatria, 6 Fi,m E;-ange$ INC.)$ "EN#ERE!T2$ INC.$ "EN#E TETER$ INC. an !"F +I!I++INES$ INC.$

(Former,7 "F +I!I++INES)$Resp!ndents.

Fats: Aureli! and Eduard! are %r!thers. -n /07@, Aureli! alleed that

Eduard! entered int! a !ntrat !$ partnership #ith him. Aureli! sh!#ed as

e)idene a letter sent t! him %& Eduard! that the latter is all!#in Aureli! t!

manae their $amil& %usiness 9i$ Eduard!Hs a#a&; and in e+hane there!$ he

#ill %e i)in Aureli! */ milli!n !r /> euit&, #hihe)er is hiher. A

mem!randum #as su%seuentl& made $!r the said partnership areement.

The mem!randum this time stated that in e+hane !$ Aureli!, #h! ust !t

married, retainin his share in the $amil& %usiness 9m!)ie theatres, shippin

and land de)el!pment; and s!me !ther imm!)a%le pr!perties, he #ill %e

i)en */ illi!n !r /> euit& in all these %usinesses and th!se t! %e

su%seuentl& auired %& them #hihe)er is reater.

-n /00= h!#e)er, the relati!nship %et#een the %r!thers #ent s!ur. And s!

Aureli! demanded an a!untin and the liuidati!n !$ his share in the

partnership. Eduard! did n!t heed and s! Aureli! sued Eduard!.

ISS#EA Whether !r n!t there e+ists a partnership.

E!A 4!.

Art. /77/. A partnership ma& %e !nstituted in an& $!rm, e+ept #here

imm!)a%le pr!pert& !r real rihts are !ntri%uted theret!, in #hih ase a

pu%li instrument shall %e neessar&.

Art. /77=. E)er& !ntrat !$ partnership ha)in a apital !$ three th!usand

pes!s !r m!re, in m!ne& !r pr!pert&, shall appear in a pu%li instrument,

#hih must %e re!rded in the $$ie !$ the Seurities and E+hane

C!mmissi!n.

50


51/52

Failure t! !mpl& #ith the reuirement !$ the preedin pararaph shall n!t

a$$et the lia%ilit& !$ the partnership and the mem%ers there!$ t! third

pers!ns.

Art. /77@. A !ntrat !$ partnership is )!id, #hene)er imm!)a%le pr!pert& is

!ntri%uted theret!, i$ an in)ent!r& !$ said pr!pert& is n!t made, sined %&

the parties, and attahed t! the pu%li instrument.

The partnership is )!id and leall& n!ne+istent. The d!umentar& e)idene

presented %& Aureli!, i.e. the letter $r!m Eduard! and the em!randum, did

n!t pr!)e partnership.

The /07@ letter $r!m Eduard! !n its $ae, !ntains t&pe#ritten entries,

pers!nal in t!ne, %ut is unsined and undated. As an unsined d!ument,

there an %e n! ui%%lin that said letter d!es n!t meet the pu%liinstrumentati!n reuirements e+ated under Artile /77/ 9h!# partnership

is !nstituted; !$ the Ci)il C!de. !re!)er, %ein unsined and d!u%tless

re$errin t! a partnership in)!l)in m!re than *@,>>>.>> in m!ne& !r

pr!pert&, said letter ann!t %e presented $!r n!tariati!n, let al!ne

reistered #ith the Seurities and E+hane C!mmissi!n 9SEC;, as alled $!r

under the Artile /77= 9apitaliati!n !$ a partnership; !$ the C!de. And

inasmuh as the in)ent!r& reuirement under the sueedin Artile /77@

!es int! the matter !$ )alidit& #hen imm!)a%le pr!pert& is !ntri%uted t!

the partnership, the ne+t l!ial p!int !$ inuir& turns !n the nature !$ Aureli!Hs !ntri%uti!n, i$ an&, t! the supp!sed partnership.

The em!randum is als! n!t a pr!!$ !$ the partnership $!r the same is n!t a

pu%li instrument and aain, n! in)ent!r& #as made !$ the imm!)a%le

pr!pert& and n! in)ent!r& #as attahed t! the em!randum. Artile /77@ !$

the Ci)il C!de reuires that i$ imm!)a%le pr!pert& is !ntri%uted t! the

partnership an in)ent!r& shall %e had and attahed t! the !ntrat.

*etiti!ner, in an !%)i!us %id t! e)ade the appliati!n !$ Artile /77@, arues

that the imm!)a%les in uesti!n #ere n!t !ntri%uted, %ut #ere auired

a$ter the $!rmati!n !$ the supp!sed partnership. 4eedless t! stress, the

C!urt ann!t a!rd !en& t! this spei!us arument. F!r, as earlier

stated, petiti!ner himsel$ admitted !ntri%utin his share in the supp!sed

shippin, m!)ie theatres and realt& de)el!pment $amil& %usinesses #hih

51


52/52

alread& !#ned imm!)a%les e)en %e$!re Anne+ 21-+2 #as alleedl&

e+euted.

C!nsiderin thus the )alue and nature !$ petiti!nerHs alleed !ntri%uti!n t!

the purp!rted partnership, the C!urt, e)en i$ s! disp!sed, ann!t plausi%l&

e+tend Anne+ " 1-+" the leal e$$ets that petiti!ner s! desires and pleads t!

%e i)en. Anne+ 21-+2 , in $ine, ann!t supp!rt the e+istene !$ the

partnership sued up!n and s!uht t! %e en$!red. The leal and $atual

milieu !$ the ase alls $!r this disp!siti!n. A partnership ma& %e !nstituted

in an& $!rm, sa)e #hen imm!)a%le pr!pert& !r real rihts are !ntri%uted

theret! !r #hen the partnership has a apital !$ at least *@,>>>.>>, in #hih

ase a pu%li instrument shall %e neessar&.=8 And i$ !nl& t! stress #hat has

repeatedl& %een artiulated, an in)ent!r& t! %e sined %& the parties and

attahed t! the pu%li instrument is als!indispensa%le t! the )alidit& !$ the

partnership #hene)er imm!)a%le pr!pert& is !ntri%uted t! it.

(i)en the $!re!in perspeti)e, #hat the appellate !urt #r!te in its

assailed Deisi!n=6 a%!ut the pr!%ati)e )alue and leal e$$et !$ Anne+ 21-

+2 !mmends itsel$ $!r !nurrene:

C!nsiderin that the alleati!ns in the !mplaint sh!#ed that petiti!nerU

!ntri%uted imm!)a%le pr!perties t! the alleed partnership, the

"em!randum" 9Anne+ "A" !$ the !mplaint; #hih purp!rts t! esta%lish the

said "partnershipM!int )enture" is 4T a pu%li instrument and there #as4 in)ent!r& !$ the imm!)a%le pr!pert& dul& sined %& the parties. As suh,

the said "em!randum" V is null and )!id $!r purp!ses !$ esta%lishin the

e+istene !$ a )alid !ntrat !$ partnership. -ndeed, %eause !$ the $ailure t!

!mpl& #ith the essential $!rmalities !$ a )alid !ntrat, the purp!rted

"partnershipM!int )enture" is leall& ine+istent and it pr!dues n! e$$et

#hats!e)er. 4eessaril&, a )!id !r leall& ine+istent !ntrat ann!t %e the

s!ure !$ an& !ntratual !r leal riht. A!rdinl&, the alleati!ns in the

!mplaint, inludin the ati!na%le d!ument attahed theret!, learl&

dem!nstrates that petiti!nerU has 4 )alid !ntratual !r leal riht #hih!uld %e )i!lated %& the indi)idual resp!ndentsU herein. As a !nseuene,

petiti!nerHsU !mplaint d!es 4T state a )alid ause !$ ati!n %eause 4T

all the essential elements !$ a ause !$ ati!n are present. 93nders!rin
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Documents

Partenership digest