1) Business Organization Partnership, Agency, Trust Partnership, how formed

Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that Eduardo entered into a
contract of partnership with him. Aurelio showed as evidence a letter sent to him by
Eduardo that the latter is allowing Aurelio to manage their family business (if Eduardos
away) and in exchange thereof he will be giving Aurelio P1 million or 10% equity, whichever
is higher. A memorandum was subsequently made for the said partnership agreement. The
memorandum this time stated that in exchange of Aurelio, who just got married, retaining
his share in the family business (movie theatres, shipping and land development) and some
other immovable properties, he will be given P1 Million or 10% equity in all these
businesses and those to be subsequently acquired by them whichever is greater.
In 1992 however, the relationship between the brothers went sour. And so Aurelio
demanded an accounting and the liquidation of his share in the partnership. Eduardo did not
heed and so Aurelio sued Eduardo.
ISSUE: Whether or not there exists a partnership.
HELD: No. The partnership is void and legally nonexistent. The documentary evidence
presented by Aurelio, i.e. the letter from Eduardo and the Memorandum, did not prove
partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but
is unsigned and undated. As an unsigned document, there can be no quibbling that said
letter does not meet the public instrumentation requirements exacted under Article 1771
(how partnership is constituted) of the Civil Code. Moreover, being unsigned and doubtless
referring to a partnership involving more than P3,000.00 in money or property, said letter
cannot be presented for notarization, let alone registered with the Securities and Exchange
Commission (SEC), as called for under the Article 1772 (capitalization of a partnership) of
the Code. And inasmuch as the inventory requirement under the succeeding Article 1773
goes into the matter of validity when immovable property is contributed to the partnership,
the next logical point of inquiry turns on the nature of Aurelios contribution, if any, to the
supposed partnership.
The Memorandum is also not a proof of the partnership for the same is not a public
instrument and again, no inventory was made of the immovable property and no inventory
was attached to the Memorandum. Article 1773 of the Civil Code requires that if immovable
property is contributed to the partnership an inventory shall be had and attached to the
contract.

2)
EUFEMIA EVANGELISTA, MANUELA EVANGELISTA, and FRANCISCA EVANGELISTA
,petitioners,
vs.
THE COLLECTOR OF INTERNAL REVENUE and THE COURT OFTAX APPEALS,
respondents.
G.R. No. L-9996, October 15, 1957

Facts:
Petitioners borrowed sum of money from their father and together with their own personal
funds theyused said money to buy several real properties. They then appointed their brother
(Simeon) as manager of thesaid real properties with powers and authority to sell, lease or rent
out said properties to third persons. Theyrealized rental income from the said properties for the
period 1945-1949.On September 24, 1954 respondent Collector of Internal Revenue demanded
the payment of income tax oncorporations, real estate dealer's fixed tax and corporation
residence tax for the years 1945-1949. The letter of demand and corresponding assessments
were delivered to petitioners on December 3, 1954, whereupon theyinstituted the present case in
the Court of Tax Appeals, with a prayer that "the decision of the respondent contained in his
letter of demand dated September 24, 1954" be reversed, and that they be absolved from
thepayment of the taxes in question. CTA denied their petition and subsequent MR and New
Trials were denied.Hence this petition.
Issue:
Whether or not petitioners have formed a partnership and consequently, are subject to the tax
oncorporations provided for in section 24 of Commonwealth Act. No. 466, otherwise known as
the NationalInternal Revenue Code, as well as to the residence tax for corporations and the real
estate dealers fixed tax.
Held: YES.
The essential elements of a partnership are two, namely: (a)
an agreement to contribute money,property or industry to a common fund
; and (b)
intent to divide the profits among the contractingparties
. The first element is undoubtedly present in the case at bar, for, admittedly, petitioners have
agreed to,and did, contribute money and property to a common fund. Upon consideration of all
the facts andcircumstances surrounding the case, we are fully satisfied that their purpose was to
engage in real estatetransactions for monetary gain and then divide the same among themselves,
because of the followingobservations, among others: (1) Said common fund was not something
they found already in existence; (2)They invested the same, not merely in one transaction, but in
a series of transactions; (3) The aforesaid lotswere not devoted to residential purposes, or to
other personal uses, of petitioners herein.Although, taken singly, they might not suffice to
establish the intent necessary to constitute a partnership, thecollective effect of these
circumstances is such as to leave no room for doubt on the existence of said intent inpetitioners
herein.For purposes of the tax on corporations, our National Internal Revenue Code, includes
these partnerships

with the exception only of duly registered general copartnerships

within the purview of the term"corporation." It is, therefore, clear to our mind that petitioners
herein constitute a partnership, insofar as saidCode is concerned and are subject to the income
tax for corporations.

3) Business Organization Partnership, Agency, Trust Corporation by Estoppel

It was established that Lim Tong Lim requested Peter Yao to engage in commercial fishing
with him and one Antonio Chua. The three agreed to purchase two fishing boats but since
they do not have the money they borrowed from one Jesus Lim (brother of Lim Tong Lim).
They again borrowed money and they agreed to purchase fishing nets and other fishing
equipments. Now, Yao and Chua represented themselves as acting in behalf of Ocean
Quest Fishing Corporation (OQFC) they contracted with Philippine Fishing Gear Industries
(PFGI) for the purchase of fishing nets amounting to more than P500k.
They were however unable to pay PFGI and so they were sued in their own names because
apparently OQFC is a non-existent corporation. Chua admitted liability and asked for some
time to pay. Yao waived his rights. Lim Tong Lim however argued that hes not liable
because he was not aware that Chua and Yao represented themselves as a corporation;
that the two acted without his knowledge and consent.
ISSUE: Whether or not Lim Tong Lim is liable.
HELD: Yes. From the factual findings of both lower courts, it is clear that Chua, Yao and
Lim had decided to engage in a fishing business, which they started by buying boats worth
P3.35 million, financed by a loan secured from Jesus Lim. In their Compromise Agreement,
they subsequently revealed their intention to pay the loan with the proceeds of the sale of
the boats, and to divide equally among them the excess or loss. These boats, the purchase
and the repair of which were financed with borrowed money, fell under the term common
fund under Article 1767. The contribution to such fund need not be cash or fixed assets; it
could be an intangible like credit or industry. That the parties agreed that any loss or profit
from the sale and operation of the boats would be divided equally among them also shows
that they had indeed formed a partnership.
Lim Tong Lim cannot argue that the principle of corporation by estoppels can only be
imputed to Yao and Chua. Unquestionably, Lim Tong Lim benefited from the use of the nets
found in his boats, the boat which has earlier been proven to be an asset of the partnership.
Lim, Chua and Yao decided to form a corporation. Although it was never legally formed for
unknown reasons, this fact alone does not preclude the liabilities of the three as contracting
parties in representation of it. Clearly, under the law on estoppel, those acting on behalf of a
corporation and those benefited by it, knowing it to be without valid existence, are held
liable as general partners.