MORAN VS CA133 SCRA 88

FACTS- Pecson and Moran entered into an agreement whereby both wouldcontribute P15,000 each or the !ur!ose
o !rinting "5,000 !osters whicheatures the delegates o the Constitutional Con#ention$ Pecson ga#eMoran P10,000
!esos or which the latter issued a recei!t$- %ut o the "5,000 co!ies agreed u!on only &,000 co!ies were !rinted$
'tcan be said that the #enture ailed$- Pecson iled with the CF' an action or reco#ery o a sum o a sum o money and
demanded or the return o his contribution o P10,000 andshare in the !roits that the !artnershi! would ha#e
earned, and !aymento un!aid commission, among others$
'SS()*hether or not Pecson can demand or his share o the !roits and!ayment o un!aid commission o the business
+),-- .eing a contract o !artnershi!, each !artner must share in the !roitsand losses o the #enture$ That is the essence o a !artnershi!$-
)#en with an assurance made by one o the !artners that they would earna huge amount o !roits, in the absence o raud, the other
!artnercannot claim a right to reco#er the highly s!eculati#e !roits$ 't is a rarebusiness #enture guaranteed to gi#e 1005 !roits$- Article 1/"/
0CC, the losses and !roits shall be distributed in conormitywith the agreement$ ' only the share o each !artner in the !roits hasbeen
agreed u!on, the share o each in the losses shall be in the same!ro!ortion
Tocao vs CA365 SCRA 463
FACTS1Petitioner Tocao and !ri#ate res!ondent Anay entered into a 2oint 3entureor the im!ortation and local
distribution o 4itchen coo4wares$Petitioner .elo is the one who inanced the 2oint 3enture$ .elo acted asCa!italist,
Tocao as President and 5eneral Manager while Anay as +ead o the Mar4eting -e!artment and later became the
3ice-President or sales$The 6ob o mar4eting the !roducts was assigned to res!ondent Anayconsidering her
e7!erienced and established relationshi! with *est .endCom!any, a manuacturer o 4itchen wares in (SA$
The !arties agreed that 8es!ondent Anay would be entitled to recei#e T)0910:; P)8C)0T o the Annual 0et Proits
o the business, <:Commission and other beneits$ +owe#er, the said agreement was notreduced into writing$The
coo4ware business o the !arties becomes successul and it o!erated
under the 0ame =5)M'0)SS) )0T)8P8'S)>, a sole !ro!rietorshi!
registered in Tocao?s 0ame$+owe#er, res!ondent Anay learned later on that !etitioner Tocao remo#edher as the 3ice-
President o 5)M'0)S) )0T)8P8'S)$ She was alreadybarred rom holding her oice$Thus she iled a com!laint or
sum o money w@ damages beore 8TC o Ma4ati against Petitioner Tocao and .elo$
'SS()1*hether or not !artnershi! e7ists between the !arties$
8(,'0510%T)1 Petitioners argue that res!ondent was their em!loyee and no!artnershi! e7isted between them$There is !artnershi! when1
91; Two or more !ersons bind themsel#es tocontribute money, !ro!erty or industry to a common undA and 9&;'ntention on the !art o the
!artners to di#ide the !roits amongthemsel#es$'t may be constituted in any orm$ A contract o !artnershi! isconsensual, hence, an oral
contract o !artnershi! is as good as a writtenone
't was admitted by the !etitioners that res!ondent Anay had the e7!ertiseto engage in the business o distributorshi! o coo4ware$
Pri#ateres!ondent contributed such e7!ertise to the !artnershi!, hence, underthe law, she was the industrial or managing !artner$ 't was
through hereorts that the business was !ro!elled to inancial success$The business #enture o!erated under 5)M'0)SS) )0T)8P8'S)
did notresult in an em!loyer-em!loyee relationshi! between !etitioners and!ri#ate res!ondents$8)AS%0S11$ Pri#ate res!ondent had a #oice
in the management o the aairs o thecoo4ware distributorshi! which includes the selection o the !eo!le whowould constitute the
administrati#e sta and the sales orceA&$ Petitioners and !ri#ate res!ondent recei#ed the same income in thebusinessAB$ Pri#ate res!ondent
is recei#ing share in the !roits o the business
%n the other hand, the contention o !etitioner .elo that he is a mereguarantor and not a !artner is beret o merit$ 'n
act he is the one whoinanced the !artnershi!$ +e had a !ro!rietary interest in the business$+is claim that he was
merely a guarantor is belied by that !ersonal act o !ro!rietorshi! in the business$0%T)1 Petitioners iled a Motion or
8econsideration o the abo#e decision$The SC PA8T'A,,C 58A0T)- the M8 and ruled as ollows11$ That !etitioner
.elo acted merely as guarantor o 5eminesse )nter!rise$&$ 0o e#idence was !resented to show that !etitioner .elo
!artici!ated inthe !roits o the business enter!rise$ 8es!ondent hersel !roessed lac4o 4nowledge that !etitioner
.elo recei#ed any share in the net income o the !artnershi!$ %n the other hand, !etitioner Tocao declared
that!etitioner .elo was not entitled to any share in the !roits o 5eminesse)nter!rise$B$ *ith no !artici!ation in the
!roits, !etitioner .elo cannot be deemed a!artner since the essence o a !artnershi! is that the !artners share inthe
!roits and losses$ConseDuently, inasmuch as !etitioner .elo was not a !artner in 5eminesse)nter!rise, res!ondent
had no cause o action against him and hercom!laint against him should accordingly be dismissed$
Sy et. al. vs Court of Appeals
G..R. No. 14!3
"e#ruary $% &&3
Employer-Employee Relationship
"acts'
This !etition or re#iew see4s the re#ersal o the decision o the Court o A!!eals dated February &", &000$
Sometime in 1"5E, !ri#ate res!ondent 2aime Sahot started wor4ing as a truc4 hel!er or !etitioners? amily-owned
truc4ing business named 3icente Sy Truc4ing$ 'n 1"<5, he became a truc4 dri#er o the same amily business,
renamed T$ Paulino Truc4ing Ser#ice, later <.?s Truc4ing Cor!oration in 1"E5, and thereater 4nown as S.T Truc4ing
Cor!oration since 1""F$ Throughout all these changes in names and or B< years, !ri#ate res!ondent continuously
ser#ed the truc4ing business o !etitioners$
'n A!ril 1""F, Sahot was already 5" years old$ +e had been incurring absences as he was suering rom #arious
ailments$ Particularly causing him !ain was his let thigh, which greatly aected the !erormance o his tas4 as a
dri#er$ +e inDuired about his medical and retirement beneits with the Social Security System 9SSS; on A!ril &5, 1""F,
but disco#ered that his !remium !ayments had not been remitted by his em!loyer$
Sahot had iled a wee4-long lea#e sometime in May 1""F$ .ut ound himsel in a dilemma$ +e was acing dismissal i
he reused to wor4, .ut he could not retire on !ension because !etitioners ne#er !aid his correct SSS !remiums$
The 0,8C 0C8 ruled that there was no illegal dismissal in Sahot?s case$ Pri#ate res!ondent had ailed to re!ort to
wor4$ %n a!!eal, the 0ational ,abor 8elations Commission modiied the 6udgment o the ,abor Arbiter$ Petitioners
assailed the decision o the 0,8C beore the Court o A!!eals$
(ssues
9a; *hether or not an em!loyer-em!loyee relationshi! e7isted between !etitioners and res!ondent SahotG
9b; *hether or not there was #alid dismissalG
9c; *hether or not res!ondent Sahot is entitled to se!aration !ayG
)el*'
.ut dealing the ,abor Arbiter a re#ersal on this score the 0,8C, concurred in by the Court o A!!eals, held that1
*hile it was #ery ob#ious that com!lainant did not ha#e any intention to re!ort bac4 to wor4 due to his illness which
inca!acitated him to !erorm his 6ob, such intention cannot be construed to be abandonment$ 'nstead, the same
should ha#e been considered as one o those alling under the 6ust causes o terminating an em!loyment$ The
insistence o res!ondent in ma4ing com!lainant wor4 did not change the scenario$
't is worthy to note that res!ondent is engaged in the truc4ing business where !hysical strength is o utmost
reDuirement 9sic;$ Com!lainant started wor4ing with res!ondent as truc4 hel!er at age twenty-three 9&B;, then as
truc4 dri#er since 1"<5$ Com!lainant was already ity-nine 95"; when the com!laint was iled and suering rom
#arious illness triggered by his wor4 and age$
%n the last issue, as held by the Court o A!!eals, res!ondent 2aime Sahot is entitled to se!aration !ay$ The law is
clear on the matter$ An em!loyee who is terminated because o disease is entitled to Hse!aration !ay eDui#alent to at
least one month salary or to one-hal month salary or e#ery year o ser#ice, whiche#er is greater 777$H Following the
ormula set in Art$ &EF o the ,abor Code, his se!aration !ay was com!uted by the a!!ellate court at P&,0E0 times B<
years 91"5E to 1""F; or P/F,EE0$ *e agree with the com!utation, ater noting that his last monthly salary was
PF,1<0$00 so that one-hal thereo is P&,0E0$00$ Finding no re#ersible error nor gra#e abuse o discretion on the !art
o a!!ellate court, we are constrained to sustain its decision$ To a#oid urther delay in the !ayment due the se!arated
wor4er, whose claim was iled way bac4 in 1""F, this decision is immediately e7ecutory$ %therwise, si7 !ercent 9<:;
interest !er annum should be charged thereon, or any delay, !ursuant to !ro#isions o the Ci#il Code$
*+)8)F%8), the !etition is -)0')- and the decision o the Court o A!!eals dated February &", &000 is
AFF'8M)-$ Petitioners must !ay !ri#ate res!ondent 2aime Sahot his se!aration !ay or B< years o ser#ice at the
rate o one-hal monthly !ay or e#ery year o ser#ice, amounting to P/F,EE0$00, with interest o si7 !er centum 9<:;
!er annum rom inality o this decision until ully !aid$
)e+rs of Ta, -,. /ee vs Court of Appeals
On June 30, 2012
Business Organization Partnership, Ageny, !rust Perio"i Aounting Pro#it $haring
.enguet ,umber has been around e#en beore *orld *ar '' but during the war, its stoc4s were coniscated by the
2a!anese$ Ater the war, the brothers Tan )ng ,ay and Tan )ng Iee !ooled their resources in order to re#i#e the
business$ 'n 1"E1, Tan )ng ,ay caused the con#ersion o .enguet ,umber into a cor!oration called .enguet ,umber
and +ardware Com!any, with him and his amily as the incor!orators$ 'n 1"EB, Tan )ng Iee died$ Thereater, the
heirs o Tan )ng Iee demanded or an accounting and the liDuidation o the !artnershi!$
Tan )ng ,ay denied that there was a !artnershi! between him and his brother$ +e said that Tan )ng Iee was merely
an em!loyee o .enguet ,umber$ +e showed e#idence consisting o Tan )ng Iee?s !ayrollA his SSS as an em!loyee
and .enguet ,umber being the em!loyee$ As a result o the !resentation o said e#idence, the heirs o Tan )ng Iee
iled a criminal case against Tan )ng ,ay or allegedly abricating those e#idence$ Said criminal case was howe#er
dismissed or lac4 o e#idence$
(SS0-' *hether or not Tan )ng Iee is a !artner$
)-12' 0o$ There was no certiicate o !artnershi! between the brothers$ The heirs were not able to show what was
the agreement between the brothers as to the sharing o !roits$ All they !resented were circumstantial e#idence
which in no way !ro#ed !artnershi!$
't is ob#ious that there was no !artnershi! whatsoe#er$ )7ce!t or a irm name, there was no irm account, no irm
letterheads submitted as e#idence, no certiicate o !artnershi!, no agreement as to !roits and losses, and no time
i7ed or the duration o the !artnershi!$ There was e#en no attem!t to submit an accounting corres!onding to the
!eriod ater the war until Iee?s death in 1"EF$ 't had no business boo4, no written account nor any memorandum or
that matter and no license mentioning the e7istence o a !artnershi!$
'n act, Tan )ng ,ay was able to show e#idence that .enguet ,umber is a sole !ro!rietorshi!$ +e registered the same
as such in 1"5FA that Iee was 6ust an em!loyee based on the latter?s !ayroll and SSS co#erage, and other records
indicating Tan )ng ,ay as the !ro!rietor$
Also, the business deinitely amounted to more PB,000$00 hence i there was a !artnershi!, it should ha#e been
made in a !ublic instrument$
But the %usiness &as starte" a#ter the &ar '1()*+ prior to the pu%liation o# the ,e& -i.il -o"e in 1(*0/
)#en so, nothing !re#ented the !arties rom com!lying with this reDuirement$
Also, the Su!reme Court em!hasiJed that or F0 years, Tan )ng Iee ne#er as4ed or an accounting$ The essence o
a !artnershi! is that the !artners share in the !roits and losses$ )ach has the right to demand an accounting as long
as the !artnershi! e7ists$ )#en i it can be s!eculated that a scenario wherein =i e7cellent relations e7ist among the
!artners at the start o the business and all the !artners are more interested in seeing the irm grow rather than get
immediate returns, a deerment o sharing in the !roits is !erectly !lausible$> .ut in the situation in the case at bar,
the deerment, i any, had gone on too long to be !lausible$ A !erson is !resumed to ta4e ordinary care o his
concerns$ A demand or !eriodic accounting is e#idence o a !artnershi! which Iee ne#er did$
The Su!reme Court also noted1
'n determining whether a !artnershi! e7ists, these rules shall a!!ly1
91; )7ce!t as !ro#ided by Article 1E&5, !ersons who are not !artners as to each other are not !artners as to third
!ersonsA
9&; Co-ownershi! or co-!ossession does not o itsel establish a !artnershi!, whether such co-owners or co-
!ossessors do or do not share any !roits made by the use o the !ro!ertyA
9B; The sharing o gross returns does not o itsel establish a !artnershi!, whether or not the !ersons sharing them
ha#e a 6oint or common right or interest in any !ro!erty which the returns are deri#edA
9F; The recei!t by a !erson o a share o the !roits o a business is !rima acie e#idence that he is a !artner in the
business, but no such inerence shall be drawn i such !roits were recei#ed in !ayment1
9a; As a debt by installment or otherwiseA
9b; As wages o an em!loyee or rent to a landlordA
9c; As an annuity to a widow or re!resentati#e o a deceased !artnerA
9d; As interest on a loan, though the amount o !ayment #ary with the !roits o the businessA
9e; As the consideration or the sale o a goodwill o a business or other !ro!erty by installments or otherwise$
3ASC0A1 4 2RAGON VS C(R AN2 CTA
580 /E1BB %ctober 1E, 1"EE
5ancayco, 2$1
FACTS1
Petitioners bought two !arcels o land and another B !arcels the ollowing year$ The & !arcels were sold in 1"<E while
the other B were sold in 1"/0$ 8ealiJing !roits rom the sale, !etitioners iled ca!ital gains ta7$ +owe#er, they were
assessed with deiciency ta7 or cor!orate income ta7es$
'SS()1
*hether or not !etitioners ormed an unregistered !artnershi! thereby assessed with cor!orate income ta7$
8(,'051
.y the contract o !artnershi!, two or more !ersons bind themsel#es to contribute money, industry or
!ro!erty to a common und with the intention o di#iding !roits among themsel#es$ There is no e#idence though, that
!etitioners entered into an agreement to contribute MP' to a common und and that they intend to di#ide !roits
among themsel#es$ The !etitioners !urchased !arcels o land and became co-owners thereo$ Their transactions o
selling the lots were isolated cases$ The character o habituality !eculiar to the business transactions or the !ur!ose
o gain was not !resent$
The sharing o returns oes not in itsel establish a !artnershi! whether or not the !ersons sharing therein
ha#e a 6oint or common right or interest in the !ro!erty$ There must be a clear intent to orm !artnershi!, the
e7istence o a 6uridical !ersonality dierent rom the indi#idual !artners, and the reedom o each !arty to transer or
assign the whole !ro!erty$
1OR-N5O O6A V C(R
&" 2an
58 0o$ , -1"BF& K May &5, 1"/& K 2$ .arredo
"acts'
2ulia .uLales died lea#ing as heirs her sur#i#ing s!ouse, ,orenJo %La and her i#e children$ A ci#il case was
instituted or the settlement o her state, in which %La was a!!ointed administrator and later on the guardian o the
three heirs who were still minors when the !ro6ect or !artition was a!!ro#ed$ This shows that the heirs ha#e
undi#ided M interest in 10 !arcels o land, < houses and money rom the *ar -amage Commission$
Although the !ro6ect o !artition was a!!ro#ed by the Court, no attem!t was made to di#ide the !ro!erties and they
remained under the management o %La who used said !ro!erties in business by leasing or selling them and
in#esting the income deri#ed thererom and the !roceeds rom the sales thereo in real !ro!erties and securities$ As a
result, !etitioners? !ro!erties and in#estments gradually increased$ Petitioners returned or income ta7 !ur!oses their
shares in the net income but they did not actually recei#e their shares because this let with %La who in#ested them$
.ased on these acts, C'8 decided that !etitioners ormed an unregistered !artnershi! and thereore, sub6ect to the
cor!orate income ta7, !articularly or years 1"55 and 1"5<$ Petitioners as4ed or reconsideration, which was denied
hence this !etition or re#iew rom CTA?s decision$
(ssue'
*@0 there was a co-ownershi! or an unregistered !artnershi!
*@0 the !etitioners are liable or the deiciency cor!orate income ta7
)el*'
0,re.+stere* part,ers7+p. The Ta7 Court ound that instead o actually distributing the estate o the deceased
among themsel#es !ursuant to the !ro6ect o !artition, the heirs allowed their !ro!erties to remain under the
management o %La and let him use their shares as !art o the common und or their #entures, e#en as they !aid
corres!onding income ta7es on their res!ecti#e shares$
8es. For ta7 !ur!oses, the co-ownershi! o inherited !ro!erties is automatically con#erted into an unregistered
!artnershi! the moment the said common !ro!erties and@or the incomes deri#ed thererom are used as a common
und with intent to !roduce !roits or the heirs in !ro!ortion to their res!ecti#e shares in the inheritance as
determined in a !ro6ect !artition either duly e7ecuted in an e7tra6udicial settlement or a!!ro#ed by the court in the
corres!onding testate or intestate !roceeding$ The reason is sim!le$ From the moment o such !artition, the heirs are
entitled already to their res!ecti#e deinite shares o the estate and the incomes thereo, or each o them to manage
and dis!ose o as e7clusi#ely his own without the inter#ention o the other heirs, and, accordingly, he becomes liable
indi#idually or all ta7es in connection therewith$ ' ater such !artition, he allows his share to be held in common with
his co-heirs under a single management to be used with the intent o ma4ing !roit thereby in !ro!ortion to his share,
there can be no doubt that, e#en i no document or instrument were e7ecuted, or the !ur!ose, or ta7 !ur!oses, at
least, an unregistered !artnershi! is ormed$
For !ur!oses o the ta7 on cor!orations, our 0ational 'nternal 8e#enue Code includes these !artnershi!s N
The term =!artnershi!> includes a syndicate, grou!, !ool, 0oint .enture or other uninorporate" organization, through
or %y means o# &hih any %usiness, #inanial operation, or .enture is arrie" onO 9E Merten?s ,aw o Federal 'ncome
Ta7ation, !$ 5<& 0ote <BA em!hasis ours$;
with the e7ce!tion only o duly registered general co!artnershi!s N within the !ur#iew o the term =cor!oration$> 't is,
thereore, clear to our mind that !etitioners herein constitute a !artnershi!, insoar as said Code is concerned, and
are sub6ect to the income ta7 or cor!orations$ 9u*.:e,t aff+r:e*.
Gatc7al+a, vs. Collector of (,ter,al Reve,ue ;G.R. No. 1<4545% Apr+l !% 1!3!=
"acts' Plaintis !urchased, in the ordinary course o business, rom one o the duly authoriJed agents o the 0ational
Charity Swee!sta4es %ice one tic4et or the sum o two !esos 9P&;, said tic4et was registered in the name o 2ose
5atchalian and Com!any$ The tic4et won one o the third-!riJes in the amount o P50,000$
2ose 5atchalian was reDuired to ile the corres!onding income ta7 return co#ering the !riJe won$ -eendant-Collector
made an assessment against 2ose 5atchalian and Co$ reDuesting the !ayment o the sum o P1,F""$"F to the de!uty
!ro#incial treasurer o Pulilan, .ulacan$ Plaintis, howe#er through counsel made a reDuest or e7em!tion$ 't was
denied$
Plaintis ailed to !ay the amount due, hence a warrant o distraint and le#y was issued$ Plaintis !aid under !rotest
a !art o the ta7 and !enalties to a#oid the eects o the warrant$ A reDuest that the balance be !aid by !laintis in
installments was made$ This was granted on the condition that a bond be iled$
Plaintis ailed in their installment !ayments$ +ence a reDuest or e7ecution o the warrant o distraint and le#y was
made$ Plaintis !aid under !rotest to a#oid the e7ecution$
A claim or reund was made by the !laintis, which was dismissed, hence the a!!eal$
(ssue' *hether the !laintis ormed a !artnershi! hence liable or income ta7$
)el*' Ces$ According to the sti!ulation acts the !laintis organiJed a !artnershi! o a ci#il nature because each o
them !ut u! money to buy a swee!sta4es tic4et or the sole !ur!ose o di#iding eDually the !riJe which they may win,
as they did in act in the amount o P50,000$ The !artnershi! was not only ormed, but u!on the organiJation thereo
and the winning o the !riJe, 2ose 5atchalian !ersonally a!!eared in the oice o the Phili!!ines Charity
Swee!sta4es, in his ca!acity as co-!artner, as such collection the !riJe, the oice issued the chec4 or P50,000 in
a#or o 2ose 5atchalian and com!any, and the said !artner, in the same ca!acity, collected the said chec4$ All these
circumstances re!el the idea that the !laintis organiJed and ormed a community o !ro!erty only$
1+: to,. l+:
Business Organization Partnership, Ageny, !rust -orporation %y Estoppel
't was established that ,im Tong ,im reDuested Peter Cao to engage in commercial ishing with him and one Antonio
Chua$ The three agreed to !urchase two ishing boats but since they do not ha#e the money they borrowed rom one
2esus ,im 9brother o ,im Tong ,im;$ They again borrowed money and they agreed to !urchase ishing nets and
other ishing eDui!ments$ 0ow, Cao and Chua re!resented themsel#es as acting in behal o =%cean Puest Fishing
Cor!oration> 9%PFC; they contracted with Phili!!ine Fishing 5ear 'ndustries 9PF5'; or the !urchase o ishing nets
amounting to more than P5004$
They were howe#er unable to !ay PF5' and so they were sued in their own names because a!!arently %PFC is a
non-e7istent cor!oration$ Chua admitted liability and as4ed or some time to !ay$ Cao wai#ed his rights$ ,im Tong ,im
howe#er argued that he?s not liable because he was not aware that Chua and Cao re!resented themsel#es as a
cor!orationA that the two acted without his 4nowledge and consent$
(SS0-' *hether or not ,im Tong ,im is liable$
)-12' Ces$ From the actual indings o both lower courts, it is clear that Chua, Cao and ,im had decided to engage
in a ishing business, which they started by buying boats worth PB$B5 million, inanced by a loan secured rom 2esus
,im$ 'n their Com!romise Agreement, they subseDuently re#ealed their intention to !ay the loan with the !roceeds o
the sale o the boats, and to di#ide eDually among them the e7cess or loss$ These boats, the !urchase and the re!air
o which were inanced with borrowed money, ell under the term =common und> under Article 1/</$ The contribution
to such und need not be cash or i7ed assetsA it could be an intangible li4e credit or industry$ That the !arties agreed
that any loss or !roit rom the sale and o!eration o the boats would be di#ided eDually among them also shows that
they had indeed ormed a !artnershi!$
,im Tong ,im cannot argue that the !rinci!le o cor!oration by esto!!els can only be im!uted to Cao and Chua$
(nDuestionably, ,im Tong ,im beneited rom the use o the nets ound in his boats, the boat which has earlier been
!ro#en to be an asset o the !artnershi!$ ,im, Chua and Cao decided to orm a cor!oration$ Although it was ne#er
legally ormed or un4nown reasons, this act alone does not !reclude the liabilities o the three as contracting !arties
in re!resentation o it$ Clearly, under the law on esto!!el, those acting on behal o a cor!oration and those beneited
by it, 4nowing it to be without #alid e7istence, are 7el* l+a#le as .e,eral part,ers.
Sa,tos vs reyes
Business Organization Partnership, Ageny, !rust $hares in 1i2ui"ation ,et Pro#it .s 3ross 4nome
'n 2une 1"E<, Fernando Santos 9/0:;, 0ie#es 8eyes 915:;, and Melton Qabat 915:; orally instituted a !artnershi!
with them as !artners$ Their #enture is to set u! a lending business where it was agreed that Santos shall be
inancier and that 0ie#es and Qabat shall contribute their industry$ 55!he perentages a#ter their names "enote their
share in the pro#it6
,ater, 0ie#es introduced Cesar 5ragera to Santos$ 5ragera was the chairman o a cor!oration$ 't was agreed that the
!artnershi! shall !ro#ide loans to the em!loyees o 5ragera?s cor!oration and 5ragera shall earn commission rom
loan !ayments$
'n August 1"E<, the three !artners !ut into writing their #erbal agreement to orm the !artnershi!$ As earlier agreed,
Santos shall inance and 0ie#es shall do the daily cash low more !articularly rom their dealings with 5ragera, Qabat
on the other hand shall be a loan in#estigator$ .ut then later, 0ie#es and Santos ound out that Qabat was engaged in
another lending business which com!etes with their !artnershi! hence Qabat was e7!elled$
The two continued with the !artnershi! and they too4 with them 0ie#es? husband, Arsenio, who became their loan
in#estigator$
,ater, Santos accused the s!ouses o not remitting 5ragera?s commissions to the latter$ +e sued them or collection
o sum o money$ The s!ouses countered that Santos merely iled the com!laint because he did not want the
s!ouses to get their shares in the !roits$ Santos argued that the s!ouses, insoar as the dealing with 5ragera is
concerned, are merely his em!loyees$ Santos alleged that there is a distinct !artnershi! between him and 5ragera
which is se!arate rom the !artnershi! ormed between him, Qabat and 0ie#es$
The trial court as well as the Court o A!!eals ruled against Santos and ordered the latter to !ay the shares o the
s!ouses$
(SS0-' *hether or not the s!ouses are !artners$
)-12' Ces$ Though it is true that the original !artnershi! between Qabat, Santos and 0ie#es was terminated when
Qabat was e7!elled, the said !artnershi! was howe#er considered continued when 0ie#es and Santos continued
engaging as usual in the lending business e#en getting 0ie#es? husband, who resigned rom the Asian -e#elo!ment
.an4, to be their loan in#estigator R who, in eect, substituted Qabat$
There is no se!arate !artnershi! between Santos and 5ragera$ The latter being merely a commission agent o the
!artnershi!$ This is e#en though the !artnershi! was ormaliJed shortly ater 5ragera met with Santos 90ote that
0ie#es was e#en the one who introduced 5ragera to Santos e7actly or the !ur!ose o setting u! a lending
agreement between the cor!oration and the !artnershi!;$
+%*)3)8, the order o the Court o A!!eals directing Santos to gi#e the s!ouses their shares in the !roit is
!remature$ The accounting made by the trial court is based on the =total income> o the !artnershi!$ Such total
income calculated by the trial court did not consider the e7!enses sustained by the !artnershi!$ All e7!enses incurred
by the money-lending enter!rise o the !arties must irst be deducted rom the =total income> in order to arri#e at the
=net !roit> o the !artnershi!$ The share o each one o them should be based on this =net !roit> and not rom the
=gross income> or =total income>$
)e+rs of >ose l+: vs l+:
Business Organization Partnership, Ageny, !rust Partner Perio"i Aounting Pro#it $haring
'n 1"E0, the heirs o 2ose ,im alleged that 2ose ,im entered into a !artnershi! agreement with 2immy Cu and
0orberto (y$ The three contributed P50,000$00 each and used the unds to !urchase a truc4 to start their truc4ing
business$ A year later howe#er, 2ose ,im died$ The eldest son o 2ose ,im, )lledo ,im, too4 o#er the truc4ing
business and under his management, the truc4ing business !ros!ered$ )lledo was able to but real !ro!erties in his
name$ From one truc4, he increased it to " truc4s, all truc4s were in his name howe#er$ +e also acDuired other motor
#ehicles in his name$
'n 1""B, 0orberto (y was 4illed$ 'n 1""5, )lledo ,im died o a heart attac4$ )lledo?s wie, 2uliet ,im, too4 o#er the
!ro!erties but she intimated to 2immy and the heirs o 0orberto that she could not go on with the business$ So the
!ro!erties in the !artnershi! were di#ided among them$
0ow the other heirs o 2ose ,im, re!resented by )lenito ,im, reDuired 2uliet to do an accounting o all income, !roits,
and !ro!erties rom the estate o )lledo ,im as they claimed that they are co-owners thereo$ 2uliet reused hence
they sued her$
The heirs o 2ose ,im argued that )lledo ,im acDuired his !ro!erties rom the !artnershi! that 2ose ,im ormed with
0orberto and 2immy$ 'n court, 2immy Cu testiied that 2ose ,im was the !artner and not )lledo ,im$ The heirs
testiied that )lledo was merely the dri#er o 2ose ,im$
(SS0-' *ho is the =!artner> between 2ose ,im and )lledo ,imG
)-12' 't is )lledo ,im based on the e#idence !resented regardless o 2immy Cu?s testimony in court that 2ose ,im
was the !artner$ ' 2ose ,im was the !artner, then the !artnershi! would ha#e been dissol#ed u!on his death 9in act,
though the SC did not say so, ' belie#e it should ha#e been dissol#ed u!on 0orberto?s death in 1""B;$ A !artnershi! is
dissol#ed u!on the death o the !artner$ Further, no e#idence was !resented as to the articles o !artnershi! or
contract o !artnershi! between 2ose, 0orberto and 2immy$ (nortunately, there is none in this case, because the
alleged !artnershi! was ne#er ormally organiJed$
.ut at any rate, the Su!reme Court noted that based on the unctions !erormed by )lledo, he is the actual !artner$
The ollowing circumstances tend to !ro#e that )lledo was himsel the !artner o 2immy and 0orberto1
1$; Cresencia testiied that 2ose ga#e )lledo P50,000$00, as share in the !artnershi!, on a date that coincided with
the !ayment o the initial ca!ital in the !artnershi!A
&$; )lledo ran the aairs o the !artnershi!, wielding absolute control, !ower and authority, without any inter#ention or
o!!osition whatsoe#er rom any o !etitioners hereinA
B$; all o the !ro!erties, !articularly the nine truc4s o the !artnershi!, were registered in the name o )lledoA
F$; 2immy testiied that )lledo did not recei#e wages or salaries rom the !artnershi!, indicating that what he actually
recei#ed were shares o the !roits o the businessA and
5$; none o the heirs o 2ose, the alleged !artner, demanded !eriodic accounting rom )lledo during his lietime$ As
re!eatedly stressed in the case o 7eirs o# !an Eng 8ee, a demand or !eriodic accounting is e#idence o a
!artnershi!$
Furthermore, !etitioners ailed to adduce any e#idence to show that the real and !ersonal !ro!erties acDuired and
registered in the names o )lledo and 2uliet ormed !art o the estate o 2ose, ha#ing been deri#ed rom 2ose?s
alleged !artnershi! with 2immy and 0orberto$
)lledo was not 6ust a hired hel! but one o the !artners in the truc4ing business, acti#e and #isible in the running o
its aairs rom day one until this ceased o!erations u!on his demise$ The e7tent o his control, administration and
management o the !artnershi! and its business, the act that its !ro!erties were !laced in his name, and that he was
not !aid salary or other com!ensation by the !artners, are indicati#e o the act that )lledo was a !artner and a
controlling one at that$ 't is a!!arent that the other !artners only contributed in the initial ca!ital but had no say
thereater on how the business was ran$ )#idently it was through )lredo?s eorts and hard wor4 that the !artnershi!
was able to acDuire more truc4s and otherwise !ros!er$ )#en the a!!ellant !artici!ated in the aairs o the
!artnershi! by acting as the boo44ee!er sans salary$
G.R. No. 1<68118 Octo#er !% 1!859OS- 3. O?(11OS% 9R.% SARA) 3. O?(11OS% ROM-O 3. O?(11OS a,*
R-M-2(OS 3. O?(11OS%#rot7ers a,* s+sters% pet+t+o,ersvs.COMM(SS(ON-R O" (NT-RNA1 R-V-N0- a,*
CO0RT O" TA@ A33-A1S% respo,*e,ts.AA0(NO%
2$1
Facts1
%n March &, 1"/B 2ose %billos, Sr$ bought two lots with areas o 1,1&F and "<B sDuare meters o located
at5reenhills, San 2uan, 8iJal$ The ne7t day he transerred his rights to his our children, the !etitioners, to
enablethem to build their residences$ The Torrens titles issued to them showed that they were co-owners o the
twolots$'n 1"/F, or ater ha#ing held the two lots or more than a year, the !etitioners resold them to the *alled
CitySecurities Cor!oration and %lga CruJ Canada or the total sum o PB1B,050$ They deri#ed rom the sale a
total!roit o P1BF, BF1$EE or PBB,5EF or each o them$ They treated the !roit as a ca!ital gain and !aid an
incometa7 on one-hal thereo or o P1<,/"&$'n A!ril, 1"E0, the Commissioner o 'nternal 8e#enue reDuired the our
!etitioners to !ay
cor!orate incometa7
on the total !roit o P1BF,BB< in addition to indi#idual income ta7 on their shares thereo$ The !etitionersare being
held liable or deiciency income ta7es and !enalties totalling P1&/,/E1$/< on their !roit o P1BF,BB<, in addition to
the ta7 on ca!ital gains already !aid by them$The Commissioner acted on the theory that the our !etitioners had
ormed an unregistered !artnershi! or 6oint#enture The !etitioners contested the assessments$ Two 2udges o the Ta7
Court sustained the same$ +ence, theinstant a!!eal$
'ssue1
*hether or not the !etitioners had indeed ormed a !artnershi! or 6oint #enture and thus liable or cor!orate ta7$
+eld1
The Su!reme Court held that the !etitioners should not be considered to ha#e ormed a !artnershi! 6ust becausethey
allegedly contributed P1/E,/0E$1& to buy the two lots, resold the same and di#ided the !roit amongthemsel#es$ To
regard so would result in o!!ressi#e ta7ation and conirm the dictum that the !ower to ta7in#ol#es the !ower to
destroy$ That e#entuality should be ob#iated$As testiied by 2ose %billos, 2r$, they had no such intention$ They were
co-owners !ure and sim!le$ To considerthem as !artners would obliterate the distinction between a co-ownershi! and
a !artnershi!$ The !etitionerswere not engaged in any 6oint #enture by reason o that isolated transaction$
S
Article 1/<"9B; o the Ci#il Code !ro#ides that Hthe sharing o gross returns does not o itsel establish a !artnershi!,
whether or not the !ersons sharing them ha#e a 6oint or common right or interest in any !ro!erty rom which the
returns are deri#edH$ There must be an unmista4able intention to orm a !artnershi! or 6oint #enture$S
A2R(ANO AR?-S% -T A1 vs. V(C-NT- 3O1(ST(CO% -T A1.%
5$8$ 0o$ B105/ Se!tember /, 1"&" 3',,AM%8,
2$1
FACTS1 This is an action to bring about liDuidation o the unds and !ro!erty o the association called HTurnuhan
Polistico T Co$H The !laintis were members or shareholders, and the deendants were designated as !resident-
treasurer, directors and secretary o said association$ This case is brought or &
nd
time$ 'n the 1
st
one, the court court held then that in an action against the oicers o a #oluntary association to wind u! its aairs and
enorce an accounting or money and !ro!erty in their !ossessions, it is not necessary that all members o the
association be made !arties to the action$ The court a!!ointed commissioner o 'nsular AuditorUs %ice, to e7amine
all the boo4s, documents, and accounts o HTurnuhan Polistico T Co$,H and to recei#e whate#er e#idence$
CommissionerUs re!ort show a balance o P&F, <0/$E0 cash on hand$ -es!ite deendant
?
s ob6ection to the re!ort, the trial court rendered 6udgment holding said association is unlawul$ And sentenced
deendants 6ointly and se#erally to return the amount and documents to the !laintis and members o the association$
The A!!ellant alleged that the association being unlawul, some charitable institution to whom the !artnershi! unds
may be ordered to be turned o#er, should be included, as a !arty deendant$ 8eerring to article 1<<< o the Ci#il
Code, which !ro#ides1

=
A !artnershi! must ha#e a lawul ob6ect, and must be established or the common beneit o the !artners$ *hen the
dissolution o an unlawul !artnershi! is decreed, the !roits shall be gi#en to charitable institutions o the domicile o
the !artnershi!, or, in deault o such, to those o the !ro#ince$
>

'SS()1 *hether or not charitable institution is a necessary !arty to this case$ +),-1 0o$ 0o charitable institution is a
necessary !arty in the !resent case o determination o the rights o the !arties$ The action which may arise rom said
article, in the case o unlawul !artnershi!, is that or the reco#ery o the amounts !aid by the member rom those in
charge o the administration o said !artnershi!, and it is not necessary or the said !arties to base their action to the
e7istence o the !artnershi!, but on the act that o ha#ing contributed some

money to the !artnershi! ca!ital$ And hence, the charitable institution o the domicile o the !artnershi!, and in the
deault thereo, those o the !ro#ince are not necessary !arties in this case$ The article cited abo#e !ermits no action
or the !ur!ose o obtaining the earnings made by the unlawul !artnershi!, during its e7istence as result o the
business in which it was engaged, because or the !ur!ose, as Manresa remar4s, the !artner will ha#e to base his
action u!on the !artnershi! contract, which is to annul and without legal e7istence by reason o its unlawul ob6ectA
and it is sel e#ident that what does not e7ist cannot be a cause o action$ +ence, !aragra!h & o the same article
!ro#ides that when the dissolution o the unlawul !artnershi! is decreed, the !roits cannot inure to the beneit o the
!artners, but must be gi#en to some charitable institution$The !roits are so a!!lied, and not the contributions,
because this would be an e7cessi#e and un6ust sanction or, as we ha#e seen, there is no reason, in such a case, or
de!ri#ing the !artner o the !ortion o the ca!ital that he contributed, the circumstances o the two cases being
entirely dierent$
Art$ 1E0/$
)#ery !artner must account to the !artnershi! or any beneit, and hold as trustee or it any !roits deri#ed by him
without the consent o the other !artners rom any transaction connected with the ormation, conduct, or liDuidation o
the !artnershi! or rom any use by him o its !ro!erty$

-0"-M(A -VANG-1(STA% MAN0-1A -VANG-1(STA% a,* "RANC(SCA -VANG-1(STA
,!etitioners,

#s$

T+) C%,,)CT%8 %F '0T)80A, 8)3)0() and T+) C%(8T %FTAV APP)A,S,

res!ondents$
5$8$ 0o$ ,-"""<, %ctober 15, 1"5/

Facts1
Petitioners borrowed sum o money rom their ather and together with their own !ersonal unds theyused said money
to buy se#eral real !ro!erties$ They then a!!ointed their brother 9Simeon; as manager o thesaid real !ro!erties with
!owers and authority to sell, lease or rent out said !ro!erties to third !ersons$ TheyrealiJed rental income rom the
said !ro!erties or the !eriod 1"F5-1"F"$%n Se!tember &F, 1"5F res!ondent Collector o 'nternal 8e#enue
demanded the !ayment o income ta7 oncor!orations, real estate dealerUs i7ed ta7 and cor!oration residence ta7 or
the years 1"F5-1"F"$ The letter o demand and corres!onding assessments were deli#ered to !etitioners on
-ecember B, 1"5F, whereu!on theyinstituted the !resent case in the Court o Ta7 A!!eals, with a !rayer that Hthe
decision o the res!ondent contained in his letter o demand dated Se!tember &F, 1"5FH be re#ersed, and that they
be absol#ed rom the!ayment o the ta7es in Duestion$ CTA denied their !etition and subseDuent M8 and 0ew Trials
were denied$+ence this !etition$
'ssue1
*hether or not !etitioners ha#e ormed a !artnershi! and conseDuently, are sub6ect to the ta7 oncor!orations
!ro#ided or in section &F o Commonwealth Act$ 0o$ F<<, otherwise 4nown as the 0ational'nternal 8e#enue Code,
as well as to the residence ta7 or cor!orations and the real estate dealers i7ed ta7$
+eld1 C)S$
The essential elements o a !artnershi! are two, namely1 9a;
an agreement to contribute money,!ro!erty or industry to a common und
A and 9b;
intent to di#ide the !roits among the contracting!arties
$ The irst element is undoubtedly !resent in the case at bar, or, admittedly, !etitioners ha#e agreed to,and did,
contribute money and !ro!erty to a common und$ (!on consideration o all the acts andcircumstances surrounding
the case, we are ully satisied that their !ur!ose was to engage in real estatetransactions or monetary gain and then
di#ide the same among themsel#es, because o the ollowingobser#ations, among others1 91; Said common und was
not something they ound already in e7istenceA 9&;They in#ested the same, not merely in one transaction, but in a
series o transactionsA 9B; The aoresaid lotswere not de#oted to residential !ur!oses, or to other !ersonal uses, o
!etitioners herein$Although, ta4en singly, they might not suice to establish the intent necessary to constitute a
!artnershi!, thecollecti#e eect o these circumstances is such as to lea#e no room or doubt on the e7istence o said
intent in!etitioners herein$For !ur!oses o the ta7 on cor!orations, our 0ational 'nternal 8e#enue Code, includes
these !artnershi!s
N
with the e7ce!tion only o duly registered general co!artnershi!s
N
within the !ur#iew o the termHcor!oration$H 't is, thereore, clear to our mind that !etitioners herein constitute a
!artnershi!, insoar as saidCode is concerned and are sub6ect to the income ta7 or cor!orations

A"(SCO (,sura,ce Corporat+o, v. CA
5$8$ 0o$ 11&</5 2an$ &5, 1"""2ustice Panganiban
Facts1

Pursuant to =reinsurance treaties,> a number o local insurance irms ormed themsel#es into a=!ool> in order to
acilitate the handling o business contracted
with a non resident oreignreinsurance com!any$

Ater assessing their submitted inancial statement, the .'8 Commissioner reDuired them to !aydeiciency ta7es on
the ground that they ha#e ormed an unregistered !artnershi! ta7able as acor!oration

AF'SC%1 there was no !artnershi!
o

The reinsurance !olicies were written by them indi#idually and se!arately
o

Their liability was limited to the e7tent o their allocated share in the original ris4s thusreinsured
o

They did not share the same ris4 or solidary liability
o

There was no common und
o

The e7ecuti#e board o the !ool did not e7ercise control and management o its unds,unli4e the board o directors o
a cor!oration
o

The !ool or clearing house was not and could not !ossibly ha#e engaged in the businesso reinsurance rom which it
could ha#e deri#ed income or itsel

CA1 a !artnershi! was ormed
'ssue1

*%0 the !ool or clearing house was a !artnershi! or association sub6ect to ta7 as a cor!oration
+eld1

Ces, it is$

The Phili!!ine legislature included in the conce!t o cor!orations those entities that resembledthem such as
unregistered !artnershi!s and associations$
o

Parenthetically, the 0,8C?s inclusion o such entities in the ta7 on cor!orations was
made e#en clearer by the Ta7 8eorm Act o 1""/, which amended the Ta7 Code

SC1 the term !artnershi! includes syndicate, grou!, !ool, 6oint #enture and otherunincor!orated organiJation, through
or by means o which any business, inancial o!eration, or#enture is carried on 9)#angelista #$ Collector o 'nternal
8e#enue;

Art$ 1/</ o the Ci#il Code1 reDuisite o a contract o !artnershi!
o

Two or more !ersons mutually contribute to a common und
o

*ith the intention to di#ide the !roits among themsel#es

Meanwhile, an association im!lies associates who enter into a 6oint enter!rise or thetransaction o business

*here se#eral local insurance ceding com!anies enter into !ool agreement or an associationthat would handle all
the insurance business co#ered under their Duota-share reinsurance treatyand sur!lus reinsurance treaty with a non-
resident oreign reinsurance com!any, the resulting!ool ha#ing a common und, and unctions through an e7ecuti#e
board, and its wor4 inindis!ensable, beneicial and economically useul to the business o the ceding com!anies
andthe oreign irm, such circumstances indicate a !artnershi! or an association co#ered by Sec$ &Fo the 0'8C