PATS ELEMENTS LIM TONG LIM v. PHILIPPINE FISHING GEAR INDUSTRIES INC (G.R. No.

136448; November 3, 1999)

FACTS: On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contractdated February 7, 1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries,Inc. (herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim,who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four hundredpieces of floats worth P68,000 were also sold to the Corporation.The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a collectionsuit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment. The suit wasbrought against the three in their capacities as general partners, on the allegation that "Ocean Quest FishingCorporation" was a nonexistent corporation as shown by a Certification from the Securities and ExchangeCommission. On September 20, 1990, the lower court ISSUEd Aa Writ of Preliminary Attachment, which the sheriff enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries Port, Navotas,Metro Manila.ISSUE: Whether or not there was a partnership? HELD: Yes. it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started bybuying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's brother. Theseboats, 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 likecredit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would bedivided equally among them also shows that they had indeed formed a partnership. Given the preceding FACTS, itis clear that there was, among petitioner, Chua and Yao, a partnership engaged in the fishing business. Theypurchased the boats, which constituted the main assets of the partnership, and they agreed that the proceeds from thesales and operations thereof would be divided among them.

PATS FORMAL REQUIREMENTS Lilibeth Sunga Chan vs Lamberto Chua (G.R. No. 143340 August 15, 2001
FACTS: In 1977, Lamberto Chua verbally entered into a partnership agreement with Jacinto L Sunga, father of petitioner, in the distribution of Shellane Liquefied Petroleum Gas (LPG) in Manila. For business convenience,respondent and Jacinto allegedly agreed to register the business name of their partnership, SHELLITE GASAPPLIANCE CENTER (hereafter Shellite), under the name of Jacinto as a sole proprietorship. Respondentallegedly delivered his initial capital contribution of P100,000.00 to Jacinto while the latter

in turn producedP100,000.00 as his counterpart contribution, with the intention that the profits would be equally divided betweenthem.Upon Jacinto's death in the later part of 1989, his surviving wife, petitioner Cecilia and particularly his daughter,petitioner Lilibeth, took over the operations, control, custody, disposition and management of Shellite withoutrespondent's consent. Despite respondent's repeated demands upon petitioners for accounting, inventory, appraisal,winding up and restitution of his net shares in the partnership, petitioners failed to comply. Petitioner Lilibethallegedly continued the operations of Shellite, converting to her own use and advantage its properties.On March 31, 1991, respondent claimed that after petitioner Lilibeth ran out the alibis and reasons to evaderespondent's demands, she disbursed out of the partnership funds the amount of P200,000.00 and partially paid thesame to respondent. Petitioner Lilibeth allegedly informed respondent that the P200,000.00 represented partialpayment of the latter's share in the partnership, with a promise that the former would make the complete inventoryand winding up of the properties of the business establishment. Despite such commitment, petitioners allegedlyfailed to comply with their duty to account, and continued to benefit from the assets and income of Shellite to thedamage and prejudice of respondent.Trial court directed petitioner to render an accounting, to restitute to the partnership all properties, assets, incomeand profits they misapplied and converted to their own use and advantage, to pay the plaintiff earned but unreceivedincome and profits from the partnership from 1988 to May 30, 1992, ORDERING them to wind up the affairs of thepartnership and terminate its business activities pursuant to law. CA affirmed the decision. ISSUES: WON there exists a partnership HELD: Decision is affirmed.Ratio Decidendi: A partnership may be constituted in any form, except where immovable property of real rights arecontributed thereto, in which case a public instrument shall necessary. Hence, 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. The essential profits that must be proven to that a partnership was agreed upon are (1) mutual contribution to a common stock, and (2) a joint interest in the profits.

PATS PARTICULAR PARTNERSHIP P a g e | 2 27 SCRA 152 G.R. No. L-25532 February 28, 1969
Facts: A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," wasformed by herein respondent William J. Sutter as the general partner, andJulia Spirig and Gustav Carlson, as the limited partners. The partnerscontributed, respectively, P20,000.00, P18,000.00 and P2,000.00 to thepartnership. The firm was duly registered with the Securities and ExcangangeCommission and engaged in lawful business. Later, Sutter and Spirig gotmarried while Carlson sold his share to the spouses. The limited partnershiphad been filing its income tax returns as a corporation, without objection bythe herein

petitioner, CIR, until in 1959 when the latter, in an assessment,consolidated the income of the firm and the individual incomes of thepartners-spouses Sutter and Spirig resulting in a determination of a deficiencyincome tax against respondent Sutter. Respondent Sutter protested theassessment, and requested its cancellation and withdrawal, as not inaccordance with law, but his request was denied. Unable to secure areconsideration, he appealed to the CTA, which ruled in favor of Sutter. Issue: Was the partnership dissolved by the marriage of Sutter and Spirigand the subsequent sale of Carlson of his share to the spouses? Ruling: No. The appellant's view, that by the marriage of both partners thecompany became a single proprietorship, is erroneous. The capitalcontributions of partners William J. Sutter and Julia Spirig were separatelyowned and contributed by them before their marriage; and after they were joined in wedlock, such contributions remained their respective separateproperty under the Spanish Civil Code (Article 1396): The following shall be the exclusive property of each spouse:

(a) That which is brought to the marriage as his or her own; .... It being a basic tenet of the Spanish and Philippine law that the partnershiphas a juridical personality of its own, distinct and separate from that of itspartners (unlike American and English law that does not recognize suchseparate juridical personality), the bypassing of the existence of the limitedpartnership as a taxpayer can only be done by ignoring or disregarding clear statutory mandates and basic principles of our law. The limited partnership'sseparate individuality makes it impossible to equate its income with that of thecomponent members. True, section 24 of the Internal Revenue Code mergesregistered general co-partnerships ( compaias colectivas ) with the personalityof the individual partners for income tax purposes. But this rule is exceptionalin its disregard of a cardinal tenet of our partnership laws, and can not beextended by mere implication to limited partnerships. As the limited partnership under consideration is taxable on its income,to require that income to be included in the individual tax return of respondentSutter is to overstretch the letter and intent of the law. In fact, it would evenconflict with what it specifically provides in its Section 24: for the appellantCommissioner's stand results in equal treatment, tax wise, of a generalcopartnership ( compaia colectiva ) and a limited partnership, when the codeplainly differentiates the two. Thus, the code taxes the latter on its income, butnot the former, because it is in the case of compaias colectivas

that themembers, and not the firm, are taxable in their individual capacities for anydividend or share of the profit derived from the duly registered generalpartnership (Section 26, N.I.R.C.; Araas, Anno. & Juris. on the N.I.R.C., As Amended, Vol. 1, pp. 88-89).