G.R. No. L-47045 November 22, 1988 NOBIO SARDANE vs. THE O!

RT O" A##EALS $%& RO'EO (. A O(EDO "A TS) Acojedo brought an action in the City Court of Dipolog for collection of a sum of P5,21 .25 based on promissory notes e!ecuted by the herein "obio #ardane in favor of the herein Acojedo. $!hibit % is a printed promissory note involving Pl,11 .25 and dated &ay 1', 1( 2. $!hibit C is li)e*ise a printed promissory note and denotes on its face that the sum loaned *as Pl,+,,.,,. $!hibit D is also a printed promissory note dated &ay '1, 1( involving an amount of P1,,.,,. $!hibit $ is *hat is commonly )no*n to the layman as -vale- *hich reads. -/ood for. t*o hundred pesos 0#gd1 "obio #ardane-. $!hibit 2 is stated in the follo*ing tenor. -3eceived from &r. 3omeo Acojedo the sum Pesos. 4*o 4housand 4*o 5undred 0P2,2,,.,,1 6"78, to be paid on or before December 25, 1( 5. 0#gd1 "obio #ardane.- $!hibit / and 5 are both vales- involving the same amount of one hundred pesos, and dated August 25, 1( 2 and #eptember 12, 1( 2 respectively. 9" :9$; 62 45$ 263$/69"/, judgment is hereby rendered in favor of the plaintiff and against the defendant as follo*s. *$+ 6rdering the defendant to pay unto the plaintiff the sum of 2ive 4housand 4*o 5undred #eventeen Pesos and 4*enty<five centavos 0P5,21 .251 plus legal interest to commence from April 2', 1( = ,-e% .-/0 1$0e ,$0 2/3e& /% 1o4r.. ISS!E) *hether or not #ardane is a partner in a partnership thus the debts in issue are partnership contributions> HELD) "o. 4he Court of Appeals held, and still the evidence is insufficient to prove that a partnership e!isted bet*een the private parties hereto. As manager of the basnig S$r1$&o naturally some degree of control over the operations and maintenance thereof had to be e!ercised by herein petitioner. 4he fact that he had received 5,? of the net profits does not conclusively establish that he *as a partner of the private respondent herein. Article 1 =(0+1 of the Civil Code is e!plicit that *hile the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, no such inference shall be dra*n if such profits *ere received in payment as *ages of an employee. 2urthermore, herein petitioner had no voice in the management of the affairs of the basnig. @nder similar facts, this Court in the early case of Fortis vs. Gutierrez Hermanos, in denying the claim of the plaintiff therein that he *as a partner in the business of the defendant, declared. 4his contention cannot be sustained. 9t *as a mere contract of employment. 4he plaintiff had no voice nor vote in the management of the affairs of the company. 4he fact that the compensation received by him *as to be determined *ith reference to the profits made by the defendant in their business did not in any sense ma)e him a partner therein. ... 4here are other considerations noted by respondent Court *hich negate herein petitioner-s pretension that he *as a partner and not a mere employee indebted to the present private respondent. Also, although he contends that herein private respondent is the treasurer of the alleged partnership, yet it is the latter *ho is demanding an accounting. 4he advertence of the Court of 2irst 9nstance to the fact that the casco bears the name of herein petitioner disregards the finding of the respondent Court that it *as just a concession since it *as he *ho obtained the engine used in the #ardaco from the Department of 7ocal /overnment and Community Development. 2urther, the use by the parties of the pronoun AourA in referring to Aour basnig, our catchA, Aour depositA, or Aour boserosA *as merely indicative of the camaraderie and not evidentiary of a partnership, bet*een them. #unga<Chan vs Chua 2acts. 7amberto Chua verbally entered into a partnership *ith Bacinto #unga for the distribution of #hellane 7P/. 2or business convenience, they agreed to register the business name of their partnership, #hellite /as Appliance Center under the name of Bacinto as a sole proprietorship. %oth contributed 1,,) each and agreed that any profits *ill be divided eCually among them. 4he management of the business *as entrusted

to Bacinto and ChuaDs sister in la*, Bosephine. 2or their management, Bacinto *as to receive 1,? of the gross profits and Bosephine 1,? of the net profits.

@pon BacintoDs death, Cecilia and 7ilibeth 0petitioners < BacintoDs *ife and daughter1 too) over the management of #hellite *ithout ChuaDs consent. Chua demanded accounting, inventory, appraisal, *inding up and restitution of his net shared in the partnership ho*ever petitioners failed to comply. 5ence, Chua filed a complaint for E;inding up of partnership affairs, accounting, appraisal and recovery of shares and damages *ith preliminary attachmentF. 4rial court ruled in favor of Chua and ordered petitioners herein to render and accounting, return and restitute to the partnership any properties *hich they have misapplied, restitute Chua his G share and to *ind up the partnership. Petitioners Cuestioned the finding of the 4C and the CA that a partnership had e!isted since there is no *ritten agreement to prove the same and the testimony of Bosephine falls *ithin the proscription of the EDead &anDs #tatuteF. Petitioners further argued that assuming there is in fact a partnership, the same is not valid because it is not registered *ith the #$C as reCuired by Art 1 2. 9ssue. ;H" there a partnership e!isted. ;H" non registration affects the validity of the partnership. 5eld. A partnership may be constituted in any form, e!cept *here immovable property of real rights are contributed thereto, in *hich case a public instrument shall necessary. = 5ence, based on the intention of the parties, as gathered from the facts and ascertained from their language and conduct, a verbal contract of partnership may arise. 4he essential profits that must be proven to that a partnership *as agreed upon are 011 mutual contribution to a common stoc), and 021 a joint interest in the profits. I @nderstandably so, in vie* of the absence of the *ritten contract of partnership bet*een Chua and Bacinto, Chua resorted to the introduction of documentary and testimonial evidence to prove said partnership. 9n a desperate bid to cast doubt on the validity of the oral partnership bet*een respondent and Bacinto, petitioners maintain that said partnership that had initial capital of P2,,,,,,.,, should have been registered *ith the #ecurities and $!change Commission 0#$C1 since registration is mandated by the Civil Code, 4rue, Article 1 2 of the Civil Code reCuires that partnerships *ith a capital of P',,,,.,, or more must register *ith the #$C, ho*ever, this registration reCuirement is not mandatory. Article 1 =I of the Civil Code25 e!plicitly provides that the partnership retains its juridical personality even if it fails to register. 4he failure to register the contract of partnership does not invalidate the same as among the partners, so long as the contract has the essential reCuisites, because the main purpose of registration is to give notice to third parties, and it can be assumed that the members themselves )ne* of the contents of their contract. 2= 9n the case at bar, non<compliance *ith this directory provision of the la* *ill not invalidate the partnership considering that the totality of the evidence proves that respondent and Bacinto indeed forged the partnership in Cuestion. J;ith regards to Dead &anDs #tatute, #C held that the counterclaims filed by petitioners removed the case from the ambit of the Dead &anDs #tatute. ;ell entrenched is the rule that *hen it is the e!ecutor or administrator or

representatives of the estates that sets up the counterclaim, the plaintiff, herein respondent, may testify to occurrences before the death of the deceased to defeat the counterclaim. 1' &oreover, as defendant in the counterclaim, respondent is not disCualified from testifying as to matters of facts occurring before the death of the deceased, said action not having been brought against but by the estate or representatives of the deceased. 1+ #econd, the testimony of Bosephine is not covered by the ADead &an-s #tatuteA for the simple reason that she is not Aa party or assignor of a party to a case or persons in *hose behalf a case is prosecuted.A 3ecords sho* that respondent offered the testimony of Bosephine to establish the e!istence of the partnership bet*een respondent and Bacinto. Petitioners- insistence that Bosephine is the alter ego of respondent does not ma)e her an assignor because the term AassignorA of a party means Aassignor of a cause of action *hich has arisen, and not the assignor of a right assigned before any cause of action has arisen.A15 Plainly then, Bosephine is merely a *itness of respondent, the latter being the party plaintiff. ANTONIA TORRES, $00/0.e& b5 -er -40b$%&, ANGELO TORRES6 $%& E'ETERIA BARING, petitioners, vs. O!RT O" A##EALS $%& 'AN!EL TORRES, respondents. 7G.R. No. 184559. De1ember 9, 19999 "A TS) 9n 1(=(, sisters Antonia 4orres and $meteria %aring entered into a joint venture agreement *ith &anuel 4orres. @nder the agreement, the sisters agreed to e!ecute a deed of sale in favor &anuel over a parcel of land, the sisters received no cash payment from &anuel but the promise of profits 0=,? for the sisters and +,? for &anuel1 K said parcel of land is to be developed as a subdivision. &anuel then had the title of the land transferred in his name and he subseCuently mortgaged the property. 5e used the proceeds from the mortgage to start building roads, curbs and gutters. &anuel also contracted an engineering firm for the building of housing units. %ut due to adverse claims in the land, prospective buyers *ere scared off and the subdivision project eventually failed. 4he sisters then filed a civil case against &anuel for damages eCuivalent to =,? of the value of the property, *hich according to the sisters, is *hatDs due them as per the contract. 4he lo*er court ruled in favor of &anuel and the Court of Appeals affirmed the lo*er court. 4he sisters then appealed before the #upreme Court *here they argued that there is no partnership bet*een them and &anuel because the joint venture agreement is void. ISS!E) ;hether or not there e!ists a partnership. HELD) 8es. 4he joint venture agreement the sisters entered into *ith &anuel is a partnership agreement *hereby they agreed to contribute property 0their land1 *hich *as to be developed as a subdivision. ;hile on the other hand, though &anuel did not contribute capital, he is an industrial partner for his contribution for general e!penses and other costs. 2urthermore, the income from the said project *ould be divided according to the stipulated percentage 0=,<+,1. Clearly, the contract manifested the intention of the parties to form a partnership. 2urther still, the sisters cannot invo)e their right to the =,? value of the property and at the same time deny the same contract *hich entitles them to it. As to the alleged nullity of the Partnership Agreement, Petitioners argue that the Boint :enture Agreement is void under Article 1 ' of the Civil Code.

EA34. 1 '. A contract of partnership is void, *henever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument.F 4hey contend that since the parties did not ma)e, sign or attach to the public instrument an inventory of the real property contributed, the partnership is void. ;e clarify. First, Article 1 ' *as intended primarily to protect third persons. 4hus, the eminent Arturo &. 4olentino states that under the aforecited provision *hich is a complement of Article 1 1,L12M Ethe e!ecution of a public instrument *ould be useless if there is no inventory of the property contributed, because *ithout its designation and description, they cannot be subject to inscription in the 3egistry of Property, and their contribution cannot prejudice third persons. 4his *ill result in fraud to those *ho contract *ith the partnership in the belief LinM the efficacy of the guaranty in *hich the immovables may consist. 4hus, the contract is declared void by the la* *hen no such inventory is made.F 4he case at bar does not involve third parties *ho may be prejudiced. Second, petitioners themselves invo)e the allegedly void contract as basis for their claim that respondent should pay them =, percent of the value of the property.L1'M 4hey cannot in one breath deny the contract and in another recogniNe it, depending on *hat momentarily suits their purpose. Parties cannot adopt inconsistent positions in regard to a contract and courts *ill not tolerate, much less approve, such practice. 9n short, the alleged nullity of the partnership *ill not prevent courts from considering the Boint :enture Agreement an ordinary contract from *hich the partiesD rights and obligations to each other may be inferred and enforced. At any rate, the failure of the partnership cannot be blamed on the sisters, nor can it be blamed to &anuel 0the sisters on their appeal did not sho* evidence as to &anuelDs fault in the failure of the partnership1. 4he sisters must then bear their loss 0*hich is =,?1. &anuel does not bear the loss of the other +,? because as an industrial partner, he is e!empt from losses. G.R. No. L-25582 "ebr4$r5 28, 19:9 O!RT O"

O''ISSIONER O" INTERNAL RE;EN!E, petitioner, vs. <ILLIA' (. S!TER $%& THE TA= A##EALS, respondents.

A limited partnership, named A;illiam B. #uter -&orcoin- Co., 7td.,A *as formed in 1(+ by ;illiam B. #uter as the general partner, and Bulia #pirig and /ustav Carlson, as the limited partners. 4he partners contributed, respectively, P2,,,,,.,,, P1I,,,,.,, and P2,,,,.,, to the partnership. 4he firm engaged, among other activities, in the importation, mar)eting, distribution and operation of automatic phonographs, radios, television sets and amusement machines, their parts and accessories. 9n 1(+I, ho*ever, general partner #uter and limited partner #pirig got married and, thereafter, limited partner Carlson sold his share in the partnership to #uter and his *ife. 4he limited partnership had been filing its income ta! returns as a corporation. 9n 1(5(, the Commissioner, in an assessment, consolidated the income of the firm and the individual incomes of the partners<spouses #uter and #pirig resulting in a determination of a deficiency income ta! against respondent #uter. ISS!ES)

0a1 ;hether or not the corporate personality of the ;illiam B. #uter A&orcoinA Co., 7td. should be disregarded for income ta! purposes, considering that respondent ;illiam B. #uter and his *ife, Bulia #pirig #uter actually formed a single ta!able unitO and 0b1 ;hether or not the partnership *as dissolved after the marriage of the partners, respondent ;illiam B. #uter and Bulia #pirig #uter and the subseCuent sale to them by the remaining partner, /ustav Carlson, of his participation of P2,,,,.,, in the partnership for a nominal amount of P1.,,. SC: 0a1 C93 has evidently failed to observe the fact that the partnership *as not a universal partnership, but a particular one. A universal partnership reCuires either that the object of the association be all the present property of the partners, as contributed by them to the common fund, or else A all that the partners may acCuire by their industry or work during the e!istence of the partnershipA. ;illiam B. #uter A&orcoinA Co., 7td. *as not such a universal partnership, since the contributions of the partners *ere fi!ed sums of money, P2,,,,,.,, by ;illiam #uter and P1I,,,,.,, by Bulia #pirig and neither one of them *as an industrial partner. 9t follo*s that ;illiam B. #uter A&orcoinA Co., 7td. *as not a partnership that spouses *ere forbidden to enter by Article 1= of the Civil Code of 1II(. 4he appellant-s vie*, that by the marriage of both partners the company became a single proprietorship, is eCually erroneous. 4he capital contributions of partners ;illiam B. #uter and Bulia #pirig *ere separately o*ned and contributed by them before their marriageO and after they *ere joined in *edloc), such contributions remained their respective separate property under the #panish Civil Code 0Article 1'(=1. 4he follo*ing shall be the exclusive property of each spouse. 0a1 4hat *hich is brought to the marriage as his or her o*nO .... 4hus, the individual interest of each consort in the partnership did not become common property of both after their marriage in 1(+I. 4he change in its membership, brought about by the marriage of the partners and their subseCuent acCuisition of all interest therein, is no ground for *ithdra*ing the partnership from the coverage of #ection 2+ of the ta! code, reCuiring it to pay income ta!. 4he code 0"93C1 ta!es a limited partnership on its income, but not a general copartnership 0 compaia colectiva1, because it is in the case of compaias colectivas that the members, and not the firm, are ta!able in their individual capacities for any dividend or share of the profit derived from the duly registered general partnership. 0b1 4he fi rm *as not a universal partnership, but a particular one. 9t follo*s that the partnership *as not one that A and % *ere forbidden to enter under Article 1= . 0no* Art. 1 I2.1 "or could the subseCuent marriage of the partners operate to dissolve it, such marriage not being one of the causes provided for that purpose by la*. 5eirs of 4an $ng Pee vs CA 2AC4#. 2ollo*ing the death of 4an $ng Pee in 1(I+, &atilde Abubo, the common<la* spouse of the decedent, joined by their children 4eresita, "ena, Clarita, Carlos, CoraNon and $lpidio, collectively )no*n as herein petitioners 5$93# 62 4A" $"/ P$$, filed suit against the decedent-s brother 4A" $"/ 7A8 on 2ebruary 1(, 1((, for accounting, liCuidation and *inding up of the alleged partnership formed after ;orld ;ar 99 bet*een 4an $ng Pee and 4an $ng 7ay. 6n &arch 1I, 1((1, An amended complaint *as filed impleading private respondent herein %$"/@$4 7@&%$3 C6&PA"8, as represented by 4an $ng 7ay.

4he amended complaint principally alleged that after the second ;orld ;ar, 4an $ng Pee and 4an $ng 7ay, pooling their resources and industry together, entered into a partnership engaged in the business of selling lumber and hard*are and construction supplies. 4hey named their enterprise A%enguet 7umberA *hich they jointly managed until 4an $ng Pee-s death. #e././o%er0 herein averred that the business prospered due to the hard *or) and thrift of the alleged partners. 5o*ever, they claimed that in 1(I1, 4an $ng 7ay and his children caused the conversion of the partnership A%enguet 7umberA into a corporation called A%enguet 7umber Company.A 4he incorporation *as purportedly a ruse to deprive 4an $ng Pee and his heirs of their rightful participation in the profits of the business. Petitioners prayed for accounting of the partnership assets, and the dissolution, *inding up and liCuidation thereof, and the eCual division of the net assets of %enguet 7umber. 34C< %enguet 7umber is a joint venture *hich is a)in to a particular partnership CA< 3eversed the 34CDs decision 9##@$. ;hether 4an $ng Pee and 4an $ng 7ay *ere partners in %enguet 7umber 5$7D. "o partnership *as established as the evidence presented *as insufficient. 4an $ng Pee *as merely an employee receiving *ages. 4he partnership contract is reCuired to be in *riting the capital of *hich e!ceeds P',,,, and the findings of the lo*er courts reveals the absence of such contract. Co<o*nership or co<possession is not an indictum of the e!istence of a partnership. A demand for a periodic accounting is evidence of a partnership *hich *as not done by 4an $ng Pee during his lifetime being his right if ever he *as a partner. 4he documents presented, not validly declared falsified by another court, further proves the non<e!istence of a partnership relation bet*een the t*o brothers but an employer<employee relationship. 2urthermore, petitioners did not offer or present evidence that their father received amounts pertaining to his share in the profits of the company. 4he allegations of petitioners merely sho* that their father *as merely involved in the operations of %enguet 7umber but does not establish in *hat capacity.