1|P a r t n e r s h i p C a s e s B. CLASSES OF PARTNERSHIPS AND PARTNERS ABAYON: Ortega s. CA FACTS: On Dece Decemb mber er 19, 19, 1980 1980,, resp respon onde dent nt Misa Misa associa associated ted himsel himselff togeth together, er, as senior senior partne partnerr with with petitioners Ortega, del Castillo, Jr., and Bacorro, as !nior partners. On "eb. 1#, 1988, respondent Misa wrote a letter stating that he is withdrawing and retiring from the firm and as$ing for a meeting meeting with the petitioners petitioners to disc!ss disc!ss the mechanics mechanics of the li%!idation. li%!idation. On J!ne &0, 1988, 1988, petitioner petitioner filed a petition to the Commision's (ec!rities )n*estigation and Clearing Department Department for the formal dissol!tion dissol!tion and li%!idatio li%!idation n of the partnershi partnership. p. On March &1, 1989, the hearing officer rendered a decision r!ling that the withdrawal of the petitioner petitioner has not dissol*ed dissol*ed the partnership. partnership. On appeal, appeal, the (+C en banc re*ersed the decision and was affirmed b the Co!rt of -ppeals. ence, this petition.
ISS!E:
/hether or not the Co!rt of -ppeals has erred in holding holding that the partnership partnership is a partnership partnership at will and whether or not the Co!rt of -ppeals has erred in holding that the withdrawal withdrawal of pri*ate pri*ate respondent respondent dissol*ed dissol*ed the partnership regardless of his good or bad faith
HELD:
o. he (C !pheld the r!ling of the the C- regarding the nat!re of the partnership. he (C f!rther stated that a partnership that does not fi2 its term is a partnership at will. he birth and life of a partnership at will is predicated on the m!t!al desire and consent of the partners. he right to choose with whom a person wishes to associate himself is the *er fo!ndation fo!ndation and essence essence of that partnership partnership.. )ts contin!ed e2istence is, in t!rn, dependent on the constanc of that m!t!al resol*e, along with each partner's capabilit to gi*e it, and the absence of a ca!se for dissol!tion pro*ided b the law itself. 3eril, an one of the partners ma, at his sole pleas!re, dictate a dissol!tion of the partnership at will. e m!st, howe*er, act in good faith, not that the attendance of bad faith can pre*ent the dissol!tion dissol!tion of the partnership partnership b!t that it can res!lt in a liabilit for damages.
Fernan"# Sant#s s Sp#$ses Arseni# an" Niees Re%es Fa&ts:
his is a petition for re*iew on certiorari assailing C- decision which affirmed the 4C decision. decision. (antos and ie*es ie*es 4ees 4ees *erbal *erball l agreed agreed that that (antos (antos wo!ld wo!ld act as financ financier ier while while ie*es ie*es and Meliton Meliton 5abat 5abat wo!ld wo!ld act as solicitors for membership and collectors of loan pament.
#06 of the profits wo!ld go to (antos while ie*es and 5abat wo!ld get 176 each. )t was a lending *ent!re b!siness. ie*es ie*es introd introd!ce !ced d rager rageraa of Monte Monte Maria Maria Corp, Corp, who obta obtain ined ed shor shortt term term loan loanss for for the the part partne nersh rship ip in consideratio consideration n of commissions commissions.. )n )n 198, 198, ie*es ie*es and 5abat e2ec!ted an agreement which formali:ed their earlier *erbal agreement. agreement. B!t, (antis and ie*es ie*es later disco*ered that 5abat engaged in the same lending b!siness. ence, 5abat was e2pelled e2pelled from the partnership partnership.. On On J!ne 198#, (antos filed a complaint for reco*er of s!m of mone and damages against against the respondents, respondents, alleging them as emploees emploees who misappropri misappropriated ated the f!nds. f!nds. 4espond 4espondents ents assert the were partners and not mere emploees. (antos claimed that after disco*er disco*er of 5abat's 5abat's acti*ities, acti*ities, he ceased ceased inf!sing inf!sing f!nds thereb e2ting!ishing the partnership.
Iss$e:
/hether or not the parties' relationship was one of partnership or of emploer;emploee He'":
(ar)#rie T#&a# An" *i''ia+ T. Be'# ,s. CA An" Nenita A. Ana% FACTS:
/illia /illiam m Belo Belo introd introd!ce !ced d enita enita -na -na to his girlfriend, Marorie ocao. he three agreed to form a oint *ent!re for the sale of coo$ing wares. Belo was to contrib!te >?.7 million@ ocao also contrib!ted some cash and she shall also act as president and general manager@ and -na shall be in charge of mar$eting. Belo and ocao specificall as$ed -na -na beca!s beca!se e of her e2perien e2perience ce and connec connectio tions ns as a mar$eter. he agreed f!rther that -na shall recei*e the followingA
106 share of ann!al net profits 6 o*erriding commission for wee$l sales
&06 of sales -na will ma$e herself
?6 share for her demo ser*ices
he operated !nder the name eminesse +nterprise, +nterprise, this name was howe*er registered as a sole proprietorship with the B!rea! of Domestic rade !nder ocao. he oint *ent!re agreement was not red!ced to writing beca!se -na tr!sted Belos ass!rances. he *ent!re s!cceeded !nder -nas mar$eting prowess. B!t then the relationship between -na and ocao so!red. One da, ocao ad*ised one of the branch managers that -na -na was no longer longer a part part of the compan compan.. -na -na then then demanded that the compan be a!dited and her shares be gi*en to her.
ISS!E:
/hether or not there is a partnership.
HELD:
-|P a r t n e r s h i p C a s e s ocaos !nilateral e2cl!sion of -na from the partnership is shown b her memo to the C!bao office plainl stating that -na -na was, as of October October 9, 198#, no longer longer the *ice; *ice; president for sales of eminesse +nterprise. B that memo, petitioner petitioner ocao effected her own withdrawal from the partnershi partnership p and considered considered herself as ha*ing ha*ing ceased to be associated with the partnership in the carring on of the b!siness. e*ertheless, the partnership was not terminated thereb@ it contin!es !ntil the winding !p of the b!siness. Motion for 4econsideration filed b ocao and Belo decided b the (C on (eptember ?0, ?001. Belo is not a partner. -na was not able to pro*e that Belo in fact recei*ed profits from the compan. Belo merel acted as a g!arantor. is participation in the b!siness meetings was not as a partner b!t as a g!arantor. e in fact had onl limited partnership. ocao also testified that Belo recei*ed nothing from the profits. he (!preme Co!rt also noted that the partnership was et to be registered in the (ec!rities and +2change Commission. -s s!ch, it was !nderstandable that Belo, who was after all petitioner ocaos good friend and confidante, wo!ld occasionall participate in the affairs of the b!siness, altho!gh ne*er in a formal or official capacit.
their agreement is the e%!al sharing of whate*er proceeds reali:ed from their b!siness@ owe*er, sometime on J!l ?&, 19#, pri*ate respondent Oli*ia 3.
erson >ersonal al >roperties /ith Damages and with an application for a writ of reple*in. reple*in. >ri*ate respondents' respondents' application application for a writ of reple*in reple*in was later appro*edFgran appro*edFgranted ted b the trial co!rt. co!rt. "or her defense, petitioner a*arro arg!e that she and pri*ate respondent respondent
ISS!E: 1. /hether or not there was a partnership that e2isted between the parties. ?. /hether the properties that were commonl !sed in the operation of -llied -ir "reight belonged to the alleged partnership b!siness.
R!LIN0: -rticle 1## of the ew Ci*il Code defines the ACLEDAN: LO!RDES NA,ARRO AND (ENARDO NA,ARRO petiti#ners s. CO!RT OF APPEALS /!D0E BETHEL ATALBAS2(OSCARDON Presi"ing /$"ge Regi#na' Tria' C#$rt #3 Ba&#'#" Cit% Bran&h 4- Si5th /$"i&ia' Regi#n an" Sp#$ses OLI,IA ,. YANSON AND RICARDO B. YANSONresp#n"ents. FACTSA
>ri*ate >ri*ate respond respondent ent Oli*ia Oli*ia 3. etition >etitioner er Eo!rdes a*arro were engaged in the b!siness of -ir "reight (er*ice (er*ice -genc. -genc. >!rs!ant >!rs!ant to the -greement -greement which the entered, the agreed to operate the said -genc@ )t is the >ri*at >ri*ate e 4espon 4esponden dentt Oli*ia Oli*ia
contra contract ct of partn partnersh ershipA ipA -rt. -rt. 1##. 1##. B the contract contract of partne partnersh rship ip two or more more person personss bind bind themse themsel*e l*ess to contrib!te mone, propert, or ind!str to a common f!nd, with with the intent intention ion of di*idi di*iding ng the procee proceeds ds among among themse themsel*e l*es. s. - c!rsor c!rsor e2amin e2aminati ation on of the the e*iden e*idences ces presented presented no proof that a partnershi partnership, p, whether oral or writt written en had been been consti constit!t t!ted. ed. )n fact, fact, those those mo*abl mo*ables es bro!ght bro!ght b the plaintiff plaintiff for the !se in the operation operation of the b!siness remain registered in her name. /hile there ma ha*e been co;ownership co;ownership or co;possessio co;possession n of some items andFor an sharing of proceeds b wa of ad*ances recei*ed b both plaintiff and the defendant, these are not indicati*e and s!pporti*e of the e2istence of an partnership between them. them. -rt. -rt. 1#9 1#9 par. par. ? pro*id pro*idesA esA Co;own Co;owners ership hip or co; possession does not of itself establish a partnership, whether s!ch co;owners or co;possessors do or do not share an profits made b the !se of the propert Besides, the alleged profit was a difference fo!nd after *al!ating the assets and not arising arising from from the real operat operation ion of the b!siness. b!siness. )n
acco!nting proced!res, strictl, this co!ld not be profit b!t a net worth.
(ORAN ,S CA FACTS:
)n "ebr!ar 19#1, )sabelo Moran and Mariano Mariano >ecson entered into a partnership agreement where the agreed to contrib!te >17$ each for the p!rpose of printing 97$ posters of the delegates to the then 19#1 Constit!tional Commission. Commission. Moran shall be in charge in managing the printing of the posters. )t was f!rther agreed that >ecson will recei*e a commission of >1$ a month starting -pril 19#1 to December 19#1@ that the partnership is to be li%!idated on December 17, 19#1. >ecson partiall partiall f!lfilled f!lfilled his obligation obligation to the partnership partnership when he iss!ed >10$ in fa*or of the partnership. e ga*e the >10$ to Moran as the managing partner. Moran howe*er did not add anthing and, instead, he onl !sed >G$ o!t of the >10$ in printing ?,000 posters. e onl printed ?,000 posters beca!se beca!se he felt that printing printing all 97$ posters posters is a losing *ent!re beca!se of the dela b the COM+E+C in anno!ncing the f!ll delegates. -ll the posters were sold for a total of >10$. >ecson s!ed Moran. he trial co!rt ordered Moran to pa >ecson damages. he Co!rt of -ppeals affirmed the decision of the trial co!rt b!t modified the same as it ordered Moran to pa >G#.7$ for !nreali:ed profit@ >8$ for >ecsons monthl commiss commission ions@ s@ >#$ as ret!rn ret!rn of in*est in*estmen mentt beca!s beca!se e the *ent!re ne*er too$ off@ pl!s interest.
ISS!EA /hether or not the C- !dgment is correct. HELDA o. he award award of >G#.7$ >G#.7$ for !nreal !nreali:e i:ed d profit profit is spec!l spec!lati ati*e. *e. here here is no e*iden e*idence ce whatso whatsoe*e e*err that that the the partnershi partnership p between between the Moran and >ecson wo!ld ha*e been been a prof profit itab able le *ent *ent!r !re e Hbec Hbeca! a!se se base base on the the circ!m circ!msta stance ncess then then i.e. i.e. the dela of the COM+E+C COM+E+C in proclaiming the candidates, profit is highl !nli$elI. )n fact, it was a fail!re doomed from the start. here is therefore no basis basis for the award award of spec!l spec!lati ati*e *e damages damages in fa*or fa*or of >ecson. "!rther, there is m!t!al breach in this case, >ecson onl ga*e >10$ instead of >17$ while Moran ga*e nothing at all. -s for the >8$ monthl commission, this is witho!t basis. he agreement does not state the basis of the commission. he pament of the commission co!ld onl ha*e been predicated
6|P a r t n e r s h i p C a s e s on relati*el e2tra*agant profits. he parties co!ld not ha*e intended the gi*ing of a commission inspite of loss or fail!re of the *ent!re. (ince the *ent!re was a fail!re, >ecson is not entitled to the >8$ commission. -s for the >#$ award as ret!rn for >ecsons in*estment, the C- erred in his r!ling too. ho!gh the *ent!re failed, it did too$ off the gro!nd as e*idenced b the ?,000 posters printed. ence, ret!rn of in*estment is not proper in this case. here are ris$s in an b!siness *ent!re and the fail!re of the !nderta$ing cannot entirel be blamed on the managing partner alone, speciall if the latter e2ercised his best b!siness !dgment, which seems to be tr!e in this case. Moran m!st howe*er ret!rn the !n!sed >$ of >ecsons contrib!tion to the partnership pl!s >&$ representing >ecsons profit share in the sale of the printed posters. Comp!tation of >&$ profit share is as followsA H>10$ profit from the sale of the ?,000 posters printedI H>G$ e2pense in printing the ?$ postersI K H>$ profitI@ >rofit L ? K >&$ each.
Re%es s. CIR 7-8 SCRA 19; FACTS:
9. he assessment so!ght to be reconsidered was f!tile. 10. On appeal to the Co!rt of a2 -ppeals, the C- r!led that petitioners are liable for the income ta2 d!e from the partnership formed b petitioners.
ISS!E A
-re petitioners s!bect to the ta2 on corporations pro*ided for in the ational )nternal 4e*en!e Code
HELD:
-fter referring to another section of the )4C, which e2plicitl pro*ides that the term corporation incl!des partnerships and then to -rticle 1## of the Ci*il Code of the >hilippines, defining what a contract of partnership is, the opinion goes on to state that the essential elements of a partnership are two, namelA aI an agreement to contrib!te mone, propert or ind!str to a common f!nd@ and bI intent to di*ide the profits among the contracting parties. he first element is !ndo!btedl present in the case, for, admittedl, petitioners ha*e agreed to , and did, contrib!te mone and propert to a common f!nd. ence, the iss!e narrows down to their intent in acting as the did. Npon consideration of all the facts and circ!mstances s!rro!nding the case, it was determined that their p!rpose was to engage in real estate transaction for monetar gain and then di*ide the same among themsel*es, hence ta2able.
1. >etitioners "lorencio and -ngel 4ees, father and son, p!rchased a lot and b!ilding for > 8&7,000.00. ?. he amo!nt of > ,000.00 was paid. &. he balance of > G0,000.00 was left, which represents the mortgage obligation of the *endors with the China Ban$ing Corporation, which mortgage obligations were ass!med b the *endees. G. he initial pament of > ,000.00 was shared e%!all b the petitioners. 7. -t the time of the p!rchase, the b!ilding was leased to *ario!s tenants, whose rights !nder the lease contracts with the original owners, the p!rchaser, petitioners herein, agreed to respect. . >etitioners di*ided e%!all the income of operation and maintenance. #. he gross income from rentals of the b!ilding amo!nted to abo!t > 90,000.00 ann!all. 8. -n assessment was ma de against petitioners b the C)4.
D!e to fail!re of pament of the ta2 demanded, a warrant of distraint and le* against the propert of the plaintiffs was made. o a*oid embarrassment, the plaintiffs paid !nder protest a s!m of >01 as part of the ta2 and penalties to the m!nicipal treas!rer and re%!ested that the be allowed to pa !nder protest the remaining balance in monthl installments. he re%!est was granted b the defendant with the condition that the plaintiffs file the !s!al bond sec!red b two sol*ent persons to g!arantee prompt pament of each installment as it becomes d!e. Before the first installment was d!e, the plaintiff's formall protested against the pament of the s!m of >01 b!t the defendant o*err!led the protest and denied the ref!nd. D!e to fail!re of the plaintiff's to pa the installments in accordance to the bond filed b them, the defendant ordered the m!nicipal treas!rer to e2ec!te within fi*e das the warrant of distraint and le* against the plaintiffs. )n order to a*oid f!rther embarrassment and annoance, the plaintiff's paid !nder protest the s!m of >1,?0 representing the !npaid balance of the income ta2 and penalties demanded b defendant. claim for the ref!nd of the total s!m of >1,8&.GG paid !nder protest b them b!t that defendant ref!sed and still ref!ses to ref!nd the said amo!nt notwithstanding the plaintiffs demand, hence this appeal.
ISS!E:
/hether or not the plaintiffs formed partnership hence liable for income ta2
BANTILAN: 0ATCHALIAN ,S. CO(ISSIONER OF INTERNAL RE,EN!E <= Phi'. <<<. Apri' -9 1969. /. I+peria'. FACTS:
atchalian and compan contrib!ted mone in order to p!rchase one sweepsta$es tic$et *al!ed at two pesos H>?I from one of the d!l a!thori:ed agents of the ational Charit (weepsta$es Office, and the same was registered !nder the same name. he tic$et conse%!entl won one of the third pri:es with the amo!nt of >70,000. atchalian and compan then cashed the pri:e chec$ against the >hilippine ational Ban$. atchalian was re%!ired to file the corresponding income ta2 ret!rn co*ering the pri:e won. he defendant had an assessment against atchalian and compan re%!esting that the pament of the s!m of >1,G99 to the dep!t pro*incial treas!rer in B!lacan. he plaintiffs, thro!gh their respecti*e co!nsels, re%!ested the e2emption from the pament of the income ta2 b!t were denied.
HELD:
70,000. he partnership was not onl formed, b!t !pon the organi:ation thereof and the winning of the pri:e, Jose atchalian personall appeared in the office of the >hilippine Charit (weepsta$es, in his capacit as co; partner, as s!ch collection the pri:e, the office iss!ed the chec$ for >70,000 in fa*or of Jose atchalian and compan, and the said partner, in the same capacit, collected the said chec$. -ll these circ!mstances repel the idea that the
8|P a r t n e r s h i p C a s e s plaintiffs organi:ed and formed a comm!nit of propert onl.
LOREN>O T. O?A an" HEIRS OF /!L IA B!?ALES na+e'%: RODOLFO B. O?A (ARIANO B. O?A L!> B. O?A ,IR0INIA B. O?A an" LOREN>O B. O?A /R. s. THE CO((ISSIONER OF INTERNAL RE,EN!E 0.R. N#. L21968- (a% -4 19=FACTS:
J!lia B!ales died lea*ing as heirs her s!r*i*ing spo!se, Eoren:o . Oa and her fi*e children. - ci*il case was instit!ted in the C") of Manila for the settlement of her estate. Oa, the s!r*i*ing spo!se, was appointed administrator of the estate of said deceased. e s!bmitted the proect of partition, which was appro*ed b the Co!rt. Beca!se three of the heirs, namel, E!:, 3irginia and Eoren:o, Jr, all s!rnamed Oa, were still minors when the proect of partition was appro*ed, Eoren:o Oa, their father and administrator of the estate filed a petition with the C") of Manila for the appointment as g!ardian of said minors. he Co!rt appointed him g!ardian of the persons and propert of the aforenamed minors. he heirs ha*e !ndi*ided P interest in 10 parcels of land, ho!ses and mone from the /ar Damage Commission. -ltho!gh the proect of partition was appro*ed b the Co!rt, no attempt was made to di*ide the properties and the properties remained !nder the management of Eoren:o Oa who !sed said properties in b!siness b leasing or selling them and in*esting the income deri*ed therefrom and proceeds from the sales thereof in real properties and sec!rities. C)4 decided that petitioners formed an !nregistered partnership and therefore, s!bect to the corporate income ta2, p!rs!ant to (ection ?G, in relation to (ection 8GHbI, of the a2 Code. -ccordingl, he assessed against the petitioners corporate income ta2es for 1977 and 197. >etitioners protested against the assessment and as$ed for reconsideration of the r!ling of respondent that the ha*e formed an !nregistered partnership. "inding no merit in petitioners' re%!est, C)4 denied it.
p!rs!ant to the proect of partition appro*ed in 19G9, the properties remained !nder the management of Eoren:o . Oa who !sed said properties in b!siness b leasing or selling them and in*esting the income deri*ed therefrom and the proceeds from the sales thereof in real properties and sec!rities. )t is th!s incontro*ertible that petitioners did not, contrar to their contention, merel limit themsel*es to holding the properties inherited b them. )ndeed, it is admitted that d!ring the material ears herein in*ol*ed, some of the said properties were sold at considerable profit, and that with said profit, petitioners engaged, thr! Eoren:o . Oa, in the p!rchase and sale of corporate sec!rities. )t is li$ewise admitted that all the profits from these *ent!res were di*ided among petitioners proportionatel in accordance with their respecti*e shares in the inheritance. -s alread indicated, for ta2 p!rposes, the co; ownership of inherited properties is a!tomaticall con*erted into an !nregistered partnership the moment the said common properties andFor the incomes deri*ed therefrom are !sed as a common f!nd with intent to prod!ce profits for the heirs in proportion to their respecti*e shares in the inheritance as determined in a proect partition either d!l e2ec!ted in an e2tra!dicial settlement or appro*ed b the co!rt in the corresponding testate or intestate proceeding., the petitioners formed an !nregistered partnership. -mong the reasons for holding the appellants therein to be !nregistered co;partners for ta2 p!rposes, that their common f!nd =was not something the fo!nd alread in e2istence= and that =it was not a propert inherited b them pro indiviso ,= b!t it is certainl far fetched to arg!e therefrom, as petitioners are doing here, that ergo, in all instances where an inheritance is not act!all di*ided, there can be no !nregistered co;partnership.
/O petitioners formed an !nregistered partnership.
0.R. N#. L2<11 O&t#@er -9 194 /OSE P. OBILLOS /R. SARAH P. OBILLOS RO(EO P. OBILLOS an" RE(EDIOS P. OBILLOS @r#thers an" sisters petiti#ners s. CO((ISSIONER OF INTERNAL RE,EN!E an" CO!RT OF TA APPEALS resp#n"ents. A!INO J.:
R!LIN0:
Fa&ts:
ISS!E:
petitioners formed an !nregistered partnership. (!preme Co!rt held that that instead of act!all distrib!ting the estate of the deceased among themsel*es
On March ?, 19#& Jose Obillos, (r. bo!ght two lots with areas of 1,1?G and 9& s%!are meters of located at reenhills, (an J!an, 4i:al. he ne2t da he transferred his
rights to his fo!r children, the petitioners, to enable them to b!ild their residences. he orrens titles iss!ed to them showed that the were co;owners of the two lots. )n 19#G, or after ha*ing held the two lots for more than a ear, the petitioners resold them to the /alled Cit (ec!rities Corporation and Olga Cr!: Canada for the total s!m of >&1&,070. he deri*ed from the sale a total profit of >1&G, &G1.88 or >&&,78G for each of them. he treated the profit as a capital gain and paid an income ta2 on one;half thereof or of >1,#9?. )n -pril, 1980, the Commissioner of )nternal 4e*en!e re%!ired the fo!r petitioners to pa corporate income tax on the total profit of >1&G,&& in addition to indi*id!al income ta2 on their shares thereof. he petitioners are being held liable for deficienc income ta2es and penalties totalling >1?#,#81.# on their profit of >1&G,&&, in addition to the ta2 on capital gains a lread paid b them. he Commissioner acted on the theor that the fo!r petitioners had formed an !nregistered partnership or oint *ent!re he petitioners contested the assessments. wo J!dges of the a2 Co!rt s!stained the same. ence, the instant appeal.
Iss$e:
/F the petitioners had indeed formed a partnership or oint *ent!re and th!s liable for corporate ta2
He'":
he (!preme Co!rt held that the petitioners sho!ld not be considered to ha*e formed a partnership !st beca!se the allegedl contrib!ted >1#8,#08.1? to b! the two lots, resold the same and di*ided the profit among themsel*es. o regard so wo!ld res!lt in oppressi*e ta2ation and confirm the dict!m that the power to ta2 in*ol*es the power to destro. hat e*ent!alit sho!ld be ob*iated. -s testified b Jose Obillos, Jr., the had no s!ch intention. he were co;owners p!re and simple. o consider them as partners wo!ld obliterate the distinction between a co;ownership and a partnership. he petitioners were not engaged in an oint *ent!re b reason of that isolated transaction.
Article 1769(3) of the Civ il Code provides that "the sharing of gross returns does not of itself estalish a partnership! hether or not the persons sharing the# have a $oint or co##on right or interest in an% propert% fro# hich the returns are derived". &here #ust e an
4|P a r t n e r s h i p C a s e s un#ista'ale intention to for# a partnership or $oint venture.
heir original p!rpose was to di*ide the lots for residential p!rposes. )f later on the fo!nd it not feasible to b!ild their residences on the lots beca!se of the high cost of constr!ction, then the had no choice b!t to resell the same to dissol*e the co;ownership. he di*ision of the profit was merel incidental to the dissol!tion of the co;ownership which was in the nat!re of things a temporar state. )t had to be terminated sooner or later. he did not contrib!te or in*est additional ' capital to increase or e2pand the properties, nor was there an !nmista$able intention to form partnership or oint *ent!re. /+4+"O4+, the !dgment of the a2 Co!rt is re*ersed and set aside. he assessments are cancelled. o costs. All coonerships are not dee#ed unregistered partnership.— Co;Ownership who own properties which prod!ce income sho!ld not a!tomaticall be considered partners of an !nregistered partnership, or a corporation, within the p!r*iew of the income ta2 law. o hold otherwise, wo!ld be to s!bect the income of all Co-ownerships of inherited properties to the tax on corporations, inasmuch as if a property does not produce an income at all, it is not subject to any kind of income tax, whether the income tax on individuals or the income tax on corporation.
BANAYBANAY: FRANCISCO BASTIDA 7P'ainti332appe''ee; s. (EN>I CO. INC. /.(. (EN>I an" P.C. SCHLOBOH( 7De3en"ants; (EN>I CO. 7Appe''ant; THE FACTS: Defendant Men:i Q Compan was organi:ed in 19?1 for the p!rpose of importing and selling general merchandise, incl!ding fertili:ers and fertili:er ingredients. he defendant corporation s!bse%!entl established a oint *ent!re with John Bordman, and established Men:i;Bordman Compan. Defendant e*ent!all ac%!ired the goodwill, trademar$s, b!siness and other assets of the old erman firm Behn, Meer Q Co., Etd. -mong the trademar$s of fertili:ers ac%!ired b the defendant corporation were those $nown as the -4-DO, O5 and CO4O-. Men:i Q Co. )nc was di*ided into se*eral different departments, each of which was headed b a manager, who
recei*ed a fi2ed salar and a percentage of the profits. he corporation had to borrow mone or obtain credits from time to time and pa interest thereon. he amo!nt paid for interest was charged against the department concerned, and the interest charges were ta$en in to acco!nt in determining the net profits of each department. he practice of the corporation was to debit or credit each department with interest at the ban$ rate on its dail balance. he fertili:er b!siness of Men:i Q Co., )nc. was carried on in accordance with this practice !nder the (!ndries Department !ntil J!l 19?&, and after that as a separate department. )n o*ember 19?1, plaintiff Bastida, who has had some e2perience in mi2ing and selling fertili:er, went to see Mr. oehl, the manager of the (!ndries Department of Men:i Q Co., )nc., and told him that he had a written contract with the >hilippine (!gar Centrals -genc for 1,?70 tons of mi2ed fertili:ers, and that he co!ld obtain other contracts, incl!ding one from the Calamba (!gar +states for G70 tons, b!t he did not ha*e the mone to b! the ingredients to fill the order and carr on the b!siness. e offered to assign to Men:i Q Co., )nc., his contract with the >hilippine (!gar Centrals -genc and to s!per*ise the mi2ing of the fertili:er. e also had the a!thorit to obtain other orders for 706 of the net profits that the defendant corporation might deri*e therefrom. he latter accepted plaintiffs officer. >laintiff assigned to Men:i Q Co., )nc., his contract with the (!gar Centrals -genc, and the defendant corporation proceeded to fill the order. >laintiff s!per*ised the mi2ing of the fertili:er. On Jan!ar 10, 19??, the defendant corporation, at plaintiffs re%!est, ga*e him a letter. Men:i Q Co., )nc., contin!ed to carr on its fertili:er b!siness !nder the arrangement with the plaintiff. )t ordered ingredients from the Nnited (tates and other co!ntries, and the interest on the drafts for the p!rchase of these materials was changed to the b!siness as part of the cost of the materials. he mi2ed fertili:ers were sold b Men:i Q Co., )nc. between Jan!ar 19 and -pril 1, 19?? !nder its CO4O- brand. On or abo!t -pril ?G, 19??, the net profits of the b!siness carried on !nder the oral agreement were determined b Men:i Q Co., )nc., after ded!cting interest charges, proportional part of wareho!se rent, and salaries and wages, and other e2penses of said b!siness, and the plaintiff was
paid some >?0,000 in f!ll satisfaction of his share of the profits. On -pril ?#, 19??, the defendant corporation entered a written agreement with the plaintiff. he fertili:er b!siness was carried on m defendant corporation. On Ma &, 19?G, plaintiff made a contract with defendant corporation to f!rnish it all the stems and scraps to tobacco that it might need for its fertili:er b!siness either in the >hilippines or for e2port to other co!ntries. his contract is rendered to in the record as the 3astago Contract. he defendant corporation ad*anced the plaintiff, paing the salaries of his emploees, and other e2penses in performing his contract. >rior to the e2piration of the contract, the manager of the defendant corporation notified the plaintiff that the contract for his ser*ices wo!ld not be renewed. /hen plaintiffs contract e2pired on -pril ?#, 19?#, the fertili:er department of Men:i Q Co., )nc., had on had materials and ingredients, and two "ord tr!c$s worth >#7,000 and acco!nts recei*able amo!nting to >10&,000. he defendant corporation decided to dispose of the materials and e%!ipment, collect the o!tstanding acco!nts of s!ch corporation, prepare a balance sheet and a profit and loss statement in order to determine the net profits at that time. >laintiff ref!sed to accept it, and filed the present action. Men:i Q Co., )nc. proceeded to li%!idate its fertili:er b!siness. (ince it had old and damages stoc$s worth >G0,000, it proposed to sell those stoc$s at p!blic or pri*ate sale, and to di*ide the proceeds between the parties. his proposal did not materiali:e, and e*ent!all, the old stoc$s were ta$en o*er b the defendant corporation. -n a!dit cond!cted after the final li%!idation of the fertili:er b!siness re*ealed certain errors of boo$$eeping. - balance d!e to the plaintiff was fo!nd amo!nting to >?1,&&.?0. )n order to collect this balance, plaintiff filed a complaint, with nine H9I ca!ses of action, before the Co!rt of "irst )nstance of Manila. >laintiff contended that a partnership e2isted between him and Men:i Q Co., )nc. with the former as the ind!strial partner and the latter as the capitalist. e also
<|P a r t n e r s h i p C a s e s arg!ed that he was entitled to goodwill as well as the fertili:er trademar$s of the compan.
THE R!LIN0 OF THE CFI:
he C") rendered a decision, which held that a partnership agreement e2isted between plaintiff and the defendant corporation. /hile it dismissed fo!r HGI ca!ses of action, it ne*ertheless ordered Men:i Q Co., )nc. to pa the plaintiff the amo!nts d!e to him as a partner in the b!siness. ence, Men:i Q Co., )nc. appealed the r!ling of the C") before the (!preme Co!rt.
cI
2)
THE ISS!ES:
aI
>laintiff did not own the fertili:er trademar$s !sed b the defendant corporation. e did not contrib!te to the rep!tation of these trademar$s beca!se these alread e2isted long before plaintiff wor$ed in the corporation.
here alread e2isted a settlement between plaintiff and the defendant corporation. )t is a settled r!le that where one of the parties to s!ch contract ac%!iesces in the terms and conditions, he is bo!nd to it d!e to m!t!al consent.
bI
>laintiff cannot claim a share of the net profits after his contract with Men:i Q Co., )nc., ended. (ince he was !st an emploee, his right to the net profits made after his termination of emploment was alread e2ting!ished.
RE0ARDIN0 THE SECOND ISS!E: *hether or not the contract entered into % ,en-i Co.! /nc.! and plaintiff astida as #erel% a contract of e#plo%#ent.
1)
* he th er o r n ot t he re e +i st ed a r egu la r co##ercial copartnership eteen ,en-i Co.! /nc.! and plaintiff 0rancisco astida. 2) *hether or not the contract entered into % ,en-i Co.! /nc.! and plaintiff astida as #erel% a contract of e#plo%#ent. 3) *hether or not the plaintiff as entitled to a percentage of the net profits.
HELD: 4es. &he contract entered into % ,en-i Co.! /nc.! and plaintiff astida as #erel% a contract of e#plo%#ent.
he (!preme Co!rt modified the decision of the C") of Manila. )t ordered that the defendant corporation pa the plaintiff the amo!nt of >?1,&&.?0 with legal interest from the date of the filing of complaint.
aI
he plaintiff was wor$ing for Men:i Q Co., )nc. as an emploee beca!se the fertili:er b!siness belonged to the defendant corporation.
bI
he plaintiff was wor$ing for the defendant corporation. owe*er, instead of recei*ing a fi2ed salar and a small percentage of the net profits, he was to recei*e &76 of the net profits as compensation for his ser*ices. )n addition, the corporation was to gi*e him a cash ad*ance of >&00 per month on acco!nt of his participation in the profits.
THE BASIS OF THE S!PRE(E CO!RT R!LIN0: RE0ARDIN0 THE FIRST ISS!E: *hether or not there e+isted a regular co##ercial co partnership eteen ,en-i Co.! /nc.! and plaintiff 0rancisco astida. o. &here e+isted no regular co##ercial copartnership eteen ,en-i Co.! /nc.! and plaintiff 0rancisco astida.
either the pro*isions of the contract nor the cond!ct of the parties prior or s!bse%!ent to its e2ec!tion !stified the finding that it was a contract of co;partnership.
3)
the plaintiff as entitled to a percentage of the net profits.
Nnder the said -rticles of Co;>artnership, it was agreed thatA
/hile plaintiff ma be associated with the defendant corporation, it does not mean that this relationship is a!tomaticall considered a partnership.
HELD: 4es. &he plaintiff as entitled to a bI
here was no common f!nd belonging to the parties as oint owners or partners. he was no e*idence of the plaintiff and the defendant corporation in placing in a
One of the p!rposes of the d!l;registered partnership was to appl or sec!re timber andFor minor forest prod!cts licenses and concessions o*er p!blic andFor pri*ate forest lands and to operate, de*elop and promote s!ch forests rights and concessions.
RE0ARDIN0 THE THIRD ISS!E: *hether or not
cI
REASONS:
On Jan!ar 1G, 1977, defendant;appellee Constancio Maglana and plaintiff;appellant +!fracio 4oas e2ec!ted their -rticles of Co;>artnership called +astcoast De*elopment +nterprises H+D+I with onl the two of them as partners. he partnership +D+ with an indefinite term of e2istence was d!l registered on Jan!ar ?1, 1977 with the (ec!rities and +2change Commission.
- d!l;registered -rticles of Co;>artnership was filed together with an application for a timber concession co*ering the area located at Cateel and Baganga in Da*ao >ro*ince, with the B!rea! of "orestr which was appro*ed. imber Eicense o. &7;7 was d!l registered and became the basis for s!bse%!ent renewals made for an in behalf of the d!l registered partnership +D+.
HELD:
aI
E!FRACIO D. RO/AS 7P'ainti332Appe''ant; s. CONSTANCIO B. (A0LANA 7De3en"ant2Appe''ee; THE FACTS:
REASONS:
THE R!LIN0 OF THE S!PRE(E CO!RT:
1)
common f!nd an propert, ind!str, or an of these things, in order to obtain profit.
percentage of the net profits! ut is onl% alloed to collect the alance of 521!633.2.
REASONS:
1I
Maglana shall manage the b!siness affairs of the partnership, incl!ding mar$eting and handling of cash, and is a!thori:ed to sign all papers and instr!ments relating to the partnership.
=|P a r t n e r s h i p C a s e s ?I
4oas shall be the logging s!perintendent and shall manage the logging operations of the partnership. )t is also pro*ided in the said -rticles of Co;>artnership that all profits and losses of the partnership shall be di*ided share and shared ali$e between the partners.
D!ring the period from Jan!ar 1G, 1977 to -pril &0, 197, there was no operation of said partnership. Beca!se of the diffic!lties enco!nted in the b!siness, 4oas and Maglana decided to a*ail the ser*ices of -g!stin >ahamotang as an ind!strial partner. On March G, 197, Maglana, 4oas and >ahamotang e2ec!ted their -rticles of Co;>artnership !nder the same name +-(CO-( D+3+EO>M+ ++4>4)(+( H+D+I. -side from the slight difference in the p!rpose of the second partnership which is to hold and sec!re renewal of timber license instead of to sec!re the license as in the first partnership and the term of the second partnership fi2ed to thirt H&0I ears, e*erthing else is the same. he second partnership started its operation on Ma 1, 197, and was able to ship logs and reali:e profits amo!nting to >G&,&&.0#. On October ?7, 197, the three partners e2ec!ted a doc!ment entitled COD))O-E (-E+ O" )+4+( ) + >-4+4()>, +-(CO-( D+3+EO>M+ ++4>4)(+ in which Maglana and 4oas shall p!rchase the interest, share and participation of >ahamotang in the *al!e of >&1,701.1?. >ahamotang was paid in f!ll, and his properties contrib!ted to the partnership was ac%!ired b Maglana and 4oas. Maglana and 4oas contin!ed the partnership. owe*er, the did not made an written agreement or reconstit!tion of their written -rticles of Co;>artnership. 4oas entered into a management contract with another logging enterprise, the CM( +state, )nc. e left and abandoned the partnership. e also withdrew his e%!ipment from +D+ for !se in the newl ac%!ired area. (!ch e%!ipment were transferred to CM( +state, )nc., b wa of chattel mortgage. - month later, Maglana wrote to 4oas, reminding him of his obligation to contrib!te, either in cash or in e%!ipment, to the capital in*estments of +D+ as well as the obligation to perform his d!ties as logging s!perintendent. wo wee$
later, 4oas told Maglana that he will not be able to compl with the promised contrib!tions and he will no longer wor$ as logging s!perintendent. Maglana then told the 4oas that the latters share will be !st ?96 of the net profits. 4ohas too$ f!nds from +D+ more than his contrib!tion. h!s, Maglana informed 4oas that he dissol*ed the partnership. 4oas filed an action before the Co!rt of "irst )nstance of Da*ao against Maglana for the reco*er of properties, acco!nting, recei*ership and damages. he C") denied 4oas petition for appointment of a recei*er. he C") also appointed commissioners to e2amine the acco!nts of +D+. )t appro*ed the s!bmitted Commissioners 4eport.
dissolution of the second one! as a de facto partnership and at ill.
HELD: o. &he partnership! carried on % o$as and ,aglana after the dissolution of the second one! as not a de facto partnership and at ill.
REASONS: 1I
?I
THE R!LIN0 OF THE CFI: he C") rendered its decision r!ling thatA &I 1I ?I &I
he complaint of the plaintiff be dismissed. he partnership of the defendant and the plaintiff is one of a de facto and at will. he plaintiff is not entitled to an share in the profits of said partnership, since his indebtedness to the partnership e2ceeded his act!al contrib!tion.
here is an e2isting partnership that was d!l registered at the time the second partnership was dissol*ed. )t was not the intention of the partners to dissol*e the first partnership !pon the constit!tion of the second one. +2cept for the fact that the too$ in one ind!strial partner and ga*e him an e%!al share in the profits as well as fi2ing the term of the second partnership to thirt H&0I ears, e*erthing else was the same. he obligations of 4oas and Maglana referred to the -rticles of Co;>artnership of the first partnership.
RE0ARDIN0 THE SECOND ISS!E:
*hether or not ,aglana is liale for da#ages for li8uidating the partnership.
ence, plaintiff 4oas filed the present petition before the (!preme Co!rt.
HELD:
THE ISS!ES:
REASONS:
1)
1I ?I
2) 3)
*hether or not the partnership! carried on % o$as and ,aglana after the dissolution of the second one! as a de facto partnership and at ill. *hether or not ,aglana is lial e for da#ages for li8uidating the partnership. *hether o$as is entitled to an% profit after the li8uidation of the partnership.
o. *hether or not ,aglana is liale for da#ages for li8uidating the partnership.
&I
Maglana can !nilaterall dissol*e the partnership. he li%!idation of the partnership was done properl. -n acco!nting on the partnership assets w as c ond !c te d a fte r th e C ") o rd er ed commissioners to do s!ch tas$. his was accomplished. Maglana cannot be said to be in bad faith.
THE R!LIN0 OF THE S!PRE(E CO!RT:
he (!preme Co!rt modified that decision of the C") of Da*ao.
THE BASIS OF THE S!PRE(E CO!RT R!LIN0: RE0ARDIN0 THE FIRST ISS!E: *hether or not the partnership! carried on % o$as and ,aglana after the
RE0ARDIN0 THE SECOND ISS!E:
*hether o$as is entitled to an% profit after the li8uidation of the partnership.
HELD: o. o$as is not entitled to an% profit after the li8uidation of the partnership.
|P a r t n e r s h i p C a s e s REASONS: 1I
4oas failed to contrib!te the whole amo!nt of >178,178.00 to the partnership. e onl contrib!ted >18,#70. )t is settled r!le that when a partner who has !nderta$en to contrib!te a s!m of mone fails to do so, he becomes a debtor of the partnership for whate*er he ma ha*e promised to contrib!te H-rticle 1#8, Ci*il CodeI. e is also liable for interests and damages from the time he sho!ld ha*e complied with his obligation H-rticle 1#88, Ci*il CodeI.
1I
?I
&I
)n the ears 198 and 19#0, petitioners as co; owners of real estate transactions formed and !nregistered partnership or oint *ent!re ta2able as a corporation !nder (ection ?0HbI and its income was s!bect to the ta2es prescribed !nder (ection ?G, both of the ational )nternal 4e*en!e Code. he !nregistered partnership was s!bect to corporate income ta2 as disting!ished from profits deri*ed from the partnership b them which is s!bect to indi*id!al income ta2. he a*ailment of ta2 amnest !nder >.D. o. ?& relie*ed petitioners of their indi*id!al income ta2 liabilities b!t did not relie*e them from the ta2 liabilit of the !nregistered partnership. ence, the petitioners were re%!ired to pa the deficienc income ta2 assessed.
?I
On the other hand, 4oas is liable in the amo!nt of >1&1,1 to the partnership. e is liable of >G0,09? as well as on the basis of act!al capital contrib!tion, in the amo!nt of >7?,0G0.&1.
&I
Maglana contrib!ted >?#,7G1.GG, which is more that his commitment to contrib!te >10,98G. ence, he is s!bect to reimb!rsement from 4oas regarding the e2cess.
>etitioners filed a petition for re*iew with the Co!rt of a2 -ppeals.
(ARIANO P. PASC!AL an" RENATO P. DRA0ON 75etitioners; s. CO((ISSION OF INTERNAL RE,EN!E an" CO!RT OF TA APPEALS 7 espondents;
owe*er, in a separate dissenting opinion, C- -ssociate J!dge Constate 4oa%!in stated that considering the circ!mstances of the case, altho!gh there might in fact be a co;ownership between the petitioners, there was no ade%!ate basis for the concl!sion that the thereb formed an !nregistered partnership which made them liable for corporate income ta2 !nder the a2 Code. ence, petitioners filed the present petition before the (!preme Co!rt.
RE0ARDIN0 THE FIRST ISS!E: *hether or not petitioners for#ed an unregistered partnership su$ect to corporate inco#e ta+. HELD: o. 5etitioners did not for# an unregistered partnership su$ect to corporate inco#e ta+. REASONS: 1I
There as n# ei"en&e that petiti#ners entere" int# an agree+ent t# &#ntri@$te +#ne% pr#pert% #r in"$str% t# a &#++#n 3$n". or did the intended to di*ide the profits among themsel*es. 4espondent C)4 andFor his representati*e !st ass!med these conditions to be present on the basis of the fact that petitioners p!rchased certain parcels of land and became co; owners thereof. he character of habit!al acti*it pec!liar to b!siness transaction was absent in the case. he two transaction of b!ing and selling land in 19 and 198 were isolated.
THE FACTS: On J!ne ??, 197, petitioners bo!ght two H?I parcels of land from (antiago Bernardino, et. al. On Ma ?8, 19, the bo!ght another three H&I parcels of land from J!an 4o%!e. )n 198, the first two parcels of land were sold b petitioners to Marenir De*elopment Corporation. On March 19, 19#0, the three parcels of land were sold b petitioners to +rlinda 4ees and Maria (amson. >etitioners reali:ed a profits of >0,000 in the sale made in 19#0. he corresponding capital gains ta2 were paid b petitioners in 19#& and 19#G b a*ailing of the ta2 amnesties granted in the said ears. On March &1, 19#9, the Commissioner of )nternal 4e*en!e sent a letter to petitioners, in which the were assessed and re%!ired to pa a total amo!nt of >10#,101.#0 as alleged deficienc corporate income ta2es for the ears 198 and 19#0. >etitioners protested the said assessment, asserting that the had a*ailed of ta2 amnesties wa bac$ in 19#G. he Commissioner replied, stating the followingA
THE R!LIN0 OF THE CTA: The CTA a33ir+e" the "e&isi#n #3 the C#++issi#ner #3 Interna' Reen$e.
THE ISS!ES: 1)
2)
* he th er o r n ot p et it io ner s f or #e d a n unregistered partnership su$ect to corporate inco#e ta+. *hether or not the ta+ a#nest% relieved the petitioners fro# pa%#ent of other ta+es for the period covered % such a#nest%.
THE R!LIN0 OF THE S!PRE(E CO!RT: The S$pre+e C#$rt grante" the petiti#n. )t re*ersed and set aside the decision of the C-.
THE BASIS OF THE S!PRE(E CO!RT R!LIN0:
-;
The 3a&t that th#se h# agree t# 3#r+ a #nership share #r "# n#t share an% pr#3its +a"e @% the $se #3 the pr#pert% he'" in &#++#n "#es n#t &#nert their ent$re int# a partnership.
)n the present case, there is clear e*idence of co;ownership between the petitioners. here is no ade%!ate basis to s!pport the proposition that the thereb formed an !nregistered partnership. he two isolated transactions whereb the p!rchased properties and sold the same a few ears thereafter did not ma$e them partners.
RE0ARDIN0 THE SECOND ISS!E: *hether or not the ta+ a#nest% relieved the petitioners fro# pa%#ent of other ta+es for the period covered % such a#nest%.
HELD: 4es. &he ta+ a#nest% relieved the petitioners fro# pa%#ent of other ta+es for the period covered % such a#nest%.
REASON: As petiti#ners hae aai'e" #3 the @ene3its #3 ta5 a+nest% as in"ii"$a' ta5pa%ers in these transa&ti#ns the% are there@% re'iee" #3 an% 3$rther ta5 'ia@i'it% arising there3r#+.
9|P a r t n e r s h i p C a s e s CASTRO: 0.R. N#. L2999< O&t#@er 14 194= E!FE(IA E,AN0ELISTA (AN!ELA E,AN0ELISTA an" FRANCISCA E,AN0ELISTA petiti#ners s. THE COLLECTOR OF INTERNAL RE,EN!E an" THE CO!RT OF TA APPEALS resp#n"ents. Fa&ts: >etitioners borrowed s!m of mone from their father and together with their own personal f!nds the !sed said mone to b! se*eral real properties. he then appointed their brother H(imeonI as manager of the sa id real properties with powers and a!thorit to sell, lease or rent o!t said properties to third persons. he reali:ed rental income from the said properties for the period 19G7;19G9. On (eptember ?G, 197G respondent Collector of )nternal 4e*en!e demanded the pament of income ta2 on corporations, real estate dealer's fi2ed ta2 and corporation residence ta2 for the ears 19G7;19G9. he letter of demand and corresponding assessments were deli*ered to petitioners on December &, 197G, where!pon the instit!ted the present case in the Co!rt of a2 -ppeals, with a praer that =the decision of the respondent contained in his letter of demand dated (eptember ?G, 197G= be re*ersed, and that the be absol*ed from the pament of the ta2es in %!estion. Cdenied their petition and s!bse%!ent M4 and ew rials were denied. ence this petition.
Iss$e: /hether or not petitioners ha*e formed a partnership and conse%!entl, are s!bect to the ta2 on corporations pro*ided for in section ?G of Commonwealth -ct. o. G, otherwise $nown as the ational )nternal 4e*en!e Code, as well as to the residence ta2 for corporations and the real estate dealers fi2ed ta2.
He'": YES. he essential elements of a partnership are two, namelA HaI an agree+ent t# &#ntri@$te +#ne% pr#pert% #r in"$str% t# a &#++#n 3$n" @ and HbI intent t# "ii"e the pr#3its a+#ng the &#ntra&ting parties . he first element is !ndo!btedl present in the case at bar, for, admittedl, petitioners ha*e agreed to, and did, contrib!te mone and propert to a common f!nd. Npon consideration of all the facts and circ!mstances s!rro!nding the case, we are f!ll satisfied that their p!rpose was to engage in real estate transactions for monetar gain and then di*ide the same among themsel*es, beca!se of the following obser*ations, among othersA H1I (aid common f!nd was not something the fo!nd alread in e2istence@ H?I he in*ested
the same, not merel in one transaction, b!t in a series of transactions@ H&I he aforesaid lots were not de*oted to residential p!rposes, or to other personal !ses, of petitioners herein.
H>7,?1#.?7I pl!s legal interest to commence from -pril ?&, 19# hen this &ase as 3i'e" in
&#$rt. ISS!E: whether or not (ardane is a partner in a partnership
-ltho!gh, ta$en singl, the might not s!ffice to establish the intent necessar to constit!te a partnership, the collecti*e effect of these circ!mstances is s!ch as to lea*e no room for do!bt on the e2istence of said intent in petitioners herein. "or p!rposes of the ta2 on corporations, o!r ational )nternal 4e*en!e Code, incl!des these partnerships R with the e2ception onl of d!l registered general copartnerships R within the p!r*iew of the term =corporation.= )t is, therefore, clear to o!r mind that petitioners herein constit!te a partnership, insofar as said Code is concerned and are s!bect to the income ta2 for corporations.
0.R. N#. L28=84
N#e+@er -- 19
NOBIO SARDANE petiti#ner s. THE CO!RT OF APPEALS an" RO(EO /. ACO/EDO resp#n"ents. FACTS: -coedo bro!ght an action in the Cit Co!rt of Dipolog for collection of a s!m of >7,?1#.?7 based on promissor notes e2ec!ted b the herein obio (ardane in fa*or of the herein -coedo. +2hibit B is a printed promissor note in*ol*ing >l,11#.?7 and dated Ma 1&, 19#?. +2hibit C is li$ewise a printed promissor note and denotes on its face that the s!m loaned was >l,G00.00. +2hibit D is also a printed promissor note dated Ma &1, 19## in*ol*ing an amo!nt of >100.00. +2hibit + is what is commonl $nown to the laman as '*ale' which readsA 'ood forA two h!ndred pesos H(gdI obio (ardane'. +2hibit " is stated in the following tenorA '4ecei*ed from Mr. 4omeo -coedo the s!m >esosA wo ho!sand wo !ndred H>?,?00.00I OE<, to be paid on or before December ?7, 19#7. H(gdI obio (ardane.' +2hibit and are both *ales' in*ol*ing the same amo!nt of one h!ndred pesos, and dated -!g!st ?7, 19#? and (eptember 1?, 19#? respecti*el. ) 3)+/ O" + "O4+O), !dgment is hereb rendered in fa*or of the plaintiff a nd against the defendant as followsA
7a;
Ordering the defendant to pa !nto the plaintiff the s!m of "i*e ho!sand wo !ndred (e*enteen >esos and went;fi*e centa*os
th!s the debts in iss!e are partnership contrib!tions
HELD: o. he Co!rt of -ppeals held, and still the e*idence is ins!fficient to pro*e that a partnership e2isted between the pri*ate parties hereto. -s manager of the asnig Sar&a"# nat!rall some degree of control o*er the operations and maintenance thereof had to be e2ercised b herein petitioner. he fact that he had recei*ed 706 of the net profits does not concl!si*el establish that he was a partner of the pri*ate respondent herein. -rticle 1#9HGI of the Ci*il Code is e2plicit that while the receipt b a person of a share of the profits of a b!siness is prima facie e*idence that he is a partner in the b!siness, no s!ch inference shall be drawn if s!ch profits were recei*ed in pament as wages of an emploee. "!rthermore, herein petitioner had no *oice in the management of the affairs of the basnig. Nnder similar facts, this Co!rt in the earl case of 0ortis vs. utierre- er#anos in dening the claim of the plaintiff therein that he was a partner in the b!siness of the defendant, declaredA his contention cannot be s!stained. )t was a mere contract of emploment. he plaintiff had no *oice nor *ote in the management of the affairs of the compan. he fact that the compensation recei*ed b him was to be determined with reference to the profits made b the defendant in their b!siness did not in an sense ma$e him a partner therein. ... here are other considerations noted b respondent Co!rt which negate herein petitioner's pretension that he was a partner and not a mere emploee indebted to the present pri*ate respondent. -lso, altho!gh he contends that herein pri*ate respondent is the treas!rer of the alleged partnership, et it is the latter who is demanding an acco!nting. he ad*ertence of the Co!rt of "irst )nstance to the fact that the casco bears the name of herein petitioner disregards the finding of the respondent Co!rt that it was !st a concession since it was he who obtained the engine !sed in the (ardaco from the Department of Eocal o*ernment and Comm!nit
1 | P a r t n e r s h i p C a s e s De*elopment. "!rther, the !se b the parties of the prono!n =o!r= in referring to =o!r basnig, o!r catch=, =o!r deposit=, or =o!r boseros= was merel indicati*e of the camaraderie and not e*identiar of a partnership, between them.
0.R. N#. L2-446-
Fe@r$ar% - 19<9
CO((ISSIONER OF INTERNAL RE,EN!E petiti#ner s. *ILLIA( /. S!TER an" THE CO!RT OF TA APPEALS resp#n"ents.
FACTSA- limited partnership named /illiam J. (!ter 'Morcoin' Co., Etd was formed &0(eptember 19G# b /illiam J. (!ter as the general partner, and J!lia (pirig and !sta* Carlson. he contrib!ted, respecti*el, >?0,000.00, >18,000.00 and>?,000.00. it was also d!l registered with the (+C. On 19G8 (!ter and (pirig got married and in effect Carlson sold his share to the co!ple, the same was also registered with the (+C. he limited partnership had been filing its income ta2 ret!rns as a corporation, witho!t obection b the herein petitioner, Commissioner of )nternal 4e*en!e, !ntil in 1979 when the latter, in an assessment, consolidated the incomeof the firm and the indi*id!al incomes of the partners;spo!ses (!ter and (pirig res!lting in a determination of a deficienc income ta2 against respondent (!ter in the amo!nt of >?,#8.0 for 197G and >G,7#.00 for 1977.
ISS!EA /hether or not the limited partnership has been dissol*ed after the marriage of (!ter and (pirig and b!ing the interest of limited partner Carlson.
R!LIN0A O, the limited partnership was not dissol*ed. h!sband and a wife ma not enter into a contract of general copartnership, beca!se !nder the Ci*il Code, which applies in the absence of e2press pro*ision in the Code of Commerce, persons prohibited from ma$ing donations to each other are prohibited from entering into !ni*ersal partnerships. )t follows that the marriage of partners necessaril brings abo!t the dissol!tion of a pre;e2isting partnership. /hat the law prohibits was when the spo!ses entered into a general partnership. )n the case at bar, the partnership was limited
DACALDACAL: (aga'#na et a' s Pesa%&# FACTS:
Magalona, (ermeno, and >esaco formed a partnership for the p!rpose of catching semillas de baSg!s o a!a in the sea and ri*ers of -nti%!e. )t was agreed that >esaco sho!ld p!t in a bid for this pri*ilege and that the partners sho!ld each s!ppl one third of the capital in case the defendant was awarded the desired pri*ilege. >esaco was to be the manager in case the bid was accepted. >esaco offered 7.7T in the 19&1. -s a deposit of U of the amo!nt of the bid was re%!ired, each of the partners p!t !p 1F& of this amo!nt. he pri*ilege was awarded to the defendant. >esaco enetered !pon his d!ties and ga*e an aacco!nt of two sales of semillas de baSg!s o a!a to Magalons representati*e, ib!rcio E!tero. -s >esaco onl had >G10, he wired E!tero for s!fficient mone to complete the pament of the first %!arter. E!tero immediatel sent >1$ to the m!nicipalit treas!rer. >esaco managed the b!siness from Jan 1, 19&1, and with the e2ception of the two sales mentioned, he ne*er ga*e an acco!nt of his catched or sales to his partners. - complaint was filed b the petitioner with a praer that a recei*er be appointed to ta$e charge of the f!nds of the partnership and management of its affairs. -lso, to order >esaco to render an acco!nt of his management and to pa to the plaintiff their participation in the profits and to t!rn o*er to the recei*er all the f!nds. he recei*er too$ o*er the management and too$ possession of the f!nds. -t the trial, it was pro*en that >esaco obtained and sold a total of 9#7T. semillas de baSg!s and that he made no report of this nor did he pa the plaintiffs an part of the proceeds of the sale. >escao denied that there was a partnership and depends principall !pon the fact that the partnership agreement was not in writing. he partnership was concl!si*el pro*en b the oral testimon of the plaintiffs and other witnesses two of whom were -tts E!tero and Ma:a. he defense made no obection to the %!estions as$ed with regard to the forming of this partnership. his Co!rt has held that if a part permits a contract, which the pro*ides shall be in writing, to be pro*ed, witho!t obection as to the form of the
proof, it is !st as binding as if the stat!te has been complied with.
ISS!E:
/O a partnership agreement sho!ld be in writing. O.
HELD:
owe*er, we cannot agree with the appellant that one of the re%!isites of a partnership agreement s!ch as the one !nder consideration, is that it sho!ld be in writing. -rticle 1# of the Ci*il Code pro*ides that =Ci*il partnerships ma be established in an form whate*er, !nless real propert or real rights are contrib!ted to the same, in which case a p!blic instr!ment shall be necessar.= -rticles of partnership are not re%!ired to be in writing e2cept in the cases mentioned in article 1#, Ci*il Code, which controls article 1?80 of the same C ode.
Aga" s (a@at# an" (a@at# an" Aga" C#+pan% FACTS:
-lleging that he HMa!ricio -gadI and defendant (e*erino Mabato arepartners in a fishpond b!siness, to the capital of which -gad contrib!ted >1,000, with the right to recei*e 706 of the profits. hat from 197? !p to and incl!ding 197, Mabato who handled the partnership f!nds, had earl rendered acco!nts of the operations of the partnership. hat despite repeated demands, Mabato had failed and ref!sed to render acco!nts for the ears 197# to 19&, -gad praed in his complaint against Mabato and Mabato Q -gad Compan. Mabato admitted the formal allegations of the complaint and denied the e2istence of said partnership, !pon the gro!nd that the contract therefor had not been perfected beca!se -gad had allegedl failed to gi*e his >1,000 contrib!tion to the partnership capital. the lower co!rt dismissed that case on the gro!nd that it had no !risdiction o*er the s!bect matter.
ISS!E: /O immo*able propert or real rights ha*e been contrib!ted to the partnership !nder consideration. O
HELD:
)t sho!ld be noted that the cop of the p!blic instr!ment attached in the complaint pro*ides that =the partnership was established =to operate a fishpond=, not to
11 | P a r t n e r s h i p C a s e s =engage in a fishpond b!siness=. Moreo*er, none of the partners contrib!ted either a fishpond or a real right to an fishpond. heir contrib!tions were limited to the s!m of >1,000 each. h!s, Mabatos contention that it is reall inconcei*able how a partnership engaged in the fishpond b!siness co!ld e2ist witho!t said fishpond propert being contrib!ted to the partnership is witho!t merit. heir contrib!tion were limited to >1000 each and neither a fishpond nor a real right thereto was contrib!ted to the partnership. herefore, -rticle 1##& of the ew Ci*il Code finds no application in the case at bar. Case remanded to the lower co!rt for f!rther proceedings.
Sei''a s CA FACTS:
Mrs. (eg!ndina og!era and the o!rist /orld (er*ice, )nc., represented b Mr. +liseo Canilao entered into a contract that the o!rist /orld (er*ice, )nc. leased the premises belonging to Mrs og!era at Mabini (t., Manila for the former;s !se as a branch office. )n the said contract the part of the third part held herself solidaril liable with the part of the part for the prompt pament of the monthl rental agreed on. /hen the branch office was opened, the same was r!n b the herein appellant Nna 0. (e*illa paable to o!rist /orld (er*ice )nc. b an airline for an fare bro!ght in on the efforts of Mrs. Eina (e*illa, G6 was to go to Eina (e*illa and &6 was to be withheld b the o!rist /orld (er*ice, )nc. On or abo!t o*ember ?G, 191 H+2hibit 1I the o!rist /orld (er*ice, )nc. appears to ha*e been informed that Eina (e*illa was connected with a ri*al firm, the >hilippine ra*el B!rea!, and, since the branch office was anhow losing, the o!rist /orld (er*ice considered closing down its office. )t appears that on Jan. &, 19?, the contract with the appellees for the !se of the Branch Office premises was terminated and while the effecti*it thereof was Jan. &1, 19?, the appellees no longer !sed it. the corporate secretar abino Canilao went o*er to the branch office, and, finding the premises loc$ed, and, being !nable to contact Eina (e*illa,
ISS!E:
he padloc$ed the premises on J!ne G, 19? to protect the interests of the o!rist /orld (er*ice. a complaint wall filed b the herein appellants against the appellees with a praer for the iss!ance of mandator preliminar in!nction. /O there was a partnership between /( and
(e*illa
HELD:
O. )t was a >rincipal;-gent relationship.
)n reecting o!rist /orld (er*ice, )nc.'s arg!ments howe*er, we are not, as a conse%!ence, accepting Eina (e*illa's own, that is, that the parties had embar$ed on a oint *ent!re or otherwise, a partnership. -nd apparentl, (e*illa herself did not recogni:e the e2istence of s!ch a relation. )n her letter of o*ember ?8, 191, she e2pressl 'concedes o!r Vo!rist /orld (er*ice, )nc.'sW right to stop the operation of o!r branch office 1G in effect, accepting o!rist /orld (er*ice, )nc.'s control o*er the ma nner in which the b!siness was r!n. - oint *ent!re, incl!ding a partnership, pres!pposes generall a of standing between the oint co;*ent!rers or partners, in which each part has an e%!al proprietar interest in the capital or propert contrib!ted 17 and where each part e2ercises e%!al rights in the cond!ct of the b!siness.1 f!rthermore, the parties did not hold themsel*es o!t as partners, and the b!ilding itself was embellished with the electric sign =o!rist /orld (er*ice, )nc. 1#in lie! of a distinct partnership name. )t is the Co!rt's considered opinion, that when the petitioner, Eina (e*illa, agreed to HwoIman the pri*ate respondent, o!rist /orld (er*ice, )nc.'s +rmita office, she m!st ha*e done so p!rs!ant to a contract of agenc. )t is the essence of this contract that the agent renders ser*ices =in representation or on behalf of another.18 )n the case at bar, (e*illa solicited airline fares, b!t she did so for and on behalf of her principal, o!rist /orld (er*ice, )nc. -s compensation, she recei*ed G6 of the proceeds in the concept of commissions. -nd as we said, (e*illa herself based on her letter of o*ember ?8, 191, pre;ass!med her principal's a!thorit as owner of the b!siness !nderta$ing. /e are con*inced, considering the circ!mstances and from the respondent Co!rt's recital of facts, that the ties had contemplated a principal agent relationship, rather than a oint management or a partnership. B!t !nli$e simple grants of a power of attorne, the agenc that we hereb declare to be compatible with the intent of the parties, cannot be re*o$ed at will. he reason is
that it is one co!pled with an interest, the agenc ha*ing been created for m!t!al interest, of the agent and the principal. 19 )t appears that Eina (e*illa is a bona fide tra*el agent herself, and as s!ch, she had ac%!ired an interest in the b!siness entr!sted to her. Moreo*er, she had ass!med a personal obligation for the operation thereof, holding herself solidaril liable for the pament of rentals. (he contin!ed the b!siness, !sing her own name, after o!rist /orld had stopped f!rther operations. er interest, ob*io!sl, is not to the commissions she earned as a res!lt of her b!siness transactions, b!t one that e2tends to the *er s!bect matter of the power of management delegated to her. )t is an agenc that, as we said, cannot be re*o$ed at the pleas!re of the principal. -ccordingl, the re*ocation complained of sho!ld entitle the petitioner, Eina (e*illa, to damages.
DILLERA: 0.R. N#. 18668
A$g$st 14 -1
LILIBETH S!N0A2CHAN an" CECILIA S!N0A petitioners, *s.
LA(BERTO T. CH!A respondent. 0ON>A0A2REYES J .: Fa&ts: Eamberto . Ch!a HrespondentI filed a &#+p'aint against Eilibeth (!nga Chan Hpetitioner EilibethI and Cecilia (!nga Hpetitioner CeciliaI, da!ghter and wife, respecti*el of the deceased Jacinto E. (!nga Hhereafter JacintoI, 3#r G*in"ing
!p #3 Partnership A33airs A&&#$nting Appraisa' an" Re&#er% #3 Shares an" Da+ages with /rit of >reliminar -ttachment= with the 4egional rial Co!rt HBranch 11, (indangan, 5amboanga del orteI. 4esponded alleged that he *erball entered into a partnership with Jacinto in the distrib!tion of (hellane Ei%!efied >etrole!m as in Manila. "or b!siness con*enience, respondent and Jacinto allegedl agreed to register the b!siness name of their partnership, (+EE)+ -( ->>E)-C+ C++4, !nder the name of Ja cinto as a sole proprietorship. allegedl deli*ered his initial &apita' &#ntri@$ti#n #3 P1. to Jacinto while the latter in 4espondent
t!rn prod!ced >100,000.00 as his co!nterpart contrib!tion, with the intenti#n that the pr#3its #$'" @e e$a''% "ii"e" between them.
1- | P a r t n e r s h i p C a s e s Npon Jacinto's death, petitioner Cecilia and petitioner Eilibeth, too$ o*er the operations, control, c!stod, disposition and management of (hellite witho!t respondent's consent.
partnership from 1988 to Ma &0, 199?, when the plaintiff learned of the clos!re of the store the s!m of >&7,000.00 per month, with legal rate of interest !ntil f!ll paid@
Despite respondent's repeated demands !pon petitioners for acco!nting, in*entor, appraisal, winding !p and restit!tion of his net shares in the partnership, petitioners failed to compl. >etitioner Eilibeth allegedl contin!ed the operations of (hellite, con*erting to her own !se and ad*antage its properties.
H7I O4D+4) them to wind !p the affairs of the partnership and terminate its b!siness acti*ities p!rs!ant to law, after deli*ering to the plaintiff all the P interest, shares, participation and e%!it in the partnership, or the *al!e thereof in mone or mone's worth, if the properties are not phsicall di*isible@
Petiti#ners C#ntenti#n: Xthat the are not liable for partnership shares, !nrecei*ed incomeFprofits, interests, damages and attorne's fees, that respondent does not ha*e a ca!se of action against them...
RTC De&isi#n: 4!ling for respondent. =/+4+"O4+, !dgment is hereb rendered in fa*or of the plaintiff and against the defendants, as followsA H1I D)4+C) them to render an acco!nting in acceptable form !nder acco!nting proced!res and standards of the properties, assets, income and profits of the (hellite as -ppliance Center (ince the time of death of Jacinto E. (!nga, from whom the contin!ed the b!siness operations incl!ding all b!sinesses deri*ed from (hellite as -ppliance Center, s!bmit an in*entor, and appraisal of all these properties, assets, income, profits etc. to the Co!rt and to plaintiff for appro*al or disappro*al@ H?I O4D+4) them to ret!rn and restit!te to the partnership an and all properties, assets, income and profits the misapplied and con*erted to their own !se and ad*antage the legall pertain to the plaintiff and acco!nt for the properties mentioned in pars. - and B on pages G;7 of this petition as basis@ H&I D)4+C) them to restit!te and pa to the plaintiff P shares and interest of the plaintiff in the partnership of the listed properties, assets and good will HsicI in sched!les -, B and C, on pages G; 7 of the petition@ HGI O4D+4) them to pa the plaintiff earned b!t !nrecei*ed income and profits from the
HI ")D) them especiall Eilibeth (!nga;Chan g!ilt of breach of tr!st and in bad faith and hold them liable to the plaintiff the s!m of >70,000.00 as moral and e2emplar damages@ and, H#I D)4+C) them to reimb!rse and pa the s!m of >?7,000.00 as attorne's HsicI and >?7,000.00 as litigation e2penses.
CA De&isi#n:
Dismissed the appeal.
=/+4+"O4+, the instant appeal is dismissed. he appealed decision is -"")4M+D in all respects.=
>etitioners %!estion the correctness of the finding of the trial co!rt and the Co!rt of -ppeals that a partnership e2isted between respondent and Jacinto. o s!pport the arg!ment, petitioners in*o$e the Dea" (ans Stat$te or (!r*i*orship 4!le.
Iss$e: /hether or not partnership can be formed or instit!ted absent written contract among the parties. H
R$'ing: - partnership ma be constit!ted in an form, e2cept where immo*able propert of real rights are contrib!ted thereto, in which case a p!blic instr!ment shall necessar. ence, based on the intention of the parties, as gathered from the facts and ascertained from their lang!age and cond!ct, a *erbal contract of partnership ma arise. he =Dead Man's (tat!te= pro*ides that if one part to the alleged transaction is precl!ded from testifing b death, insanit, or other mental disabilities, the s!r*i*ing part is not
entitled to the !nd!e ad*antage of gi*ing his own !ncontradicted and !ne2plained acco!nt of the transaction. >etitioners' reliance alone on the =Dead Man's (tat!te= to defeat respondent's claim cannot pre*ail o*er the fact!al findings of the trial co!rt and the Co!rt of -ppeals that a partnership was established between respondent and Jacinto. Based not onl on the testimonial e*idence, b!t the doc!mentar e*idence as well, the trial co!rt and the Co!rt of -ppeals considered the e*idence for respondent as s!fficient to pro*e the formation of partnership, albeit an informal one. otabl, petitioners did not present an e*idence in their fa*or d!ring trial. >etitioners cannot now t!rn to this Co!rt to %!estion the admissibilit and a!thenticit of the doc!mentar e*idence of respondent when petitioners failed to obect to the admissibilit of the e*idence at the time that s!ch e*idence was offered. >etitioners maintain that said partnership that had initial capital of >?00,000.00 sho!ld ha*e been registered with the (ec!rities and +2change Commission H(+CI since registration is mandated b the Ci*il Code. r!e, -rticle 1##? of the Ci*il Code re%!ires that partnerships with a capital of >&,000.00 or more m!st register with the (+C, howe*er, this registration re%!irement is not mandator. -rticle 1#8 of the Ci*il Code e2plicitl pro*ides that the partnership retains its !ridical personalit e*en if it fails to register. he fail!re to register the contract of partnership does not in*alidate the same as among the partners, s# '#ng as the &#ntra&t has the essentia' re$isites , beca!se the
+ain p$rp#se #3 registrati#n is t# gie n#ti&e t# thir" parties, and it can be ass!med that the members themsel*es $new of the contents of their contract. )n the case at bar, n#n2&#+p'ian&e ith this "ire&t#r% pr#isi#n of the law will n#t ina'i"ate the partnership considering that the totalit of the e*idence pro*es that respondent and Jacinto indeed forged the partnership in %!estion. >etition is denied.
0.R. N#. 1=8189
(eptember 8, ?010
/.TIOSE/OIN,EST(ENTCORP. s. SPO!SES BEN/A(IN AND ELEANOR
16 | P a r t n e r s h i p C a s e s PERE> J.: Fa&ts: HDecember ?8, 1997I >etitioner entered into a Joint enture !greement HJ3-I with >rimetown >ropert ro!p, )nc. H>>)I for the de*elopment of a residential condomini!m proect to be $nown as "he #editel H9,70? s%!are meterI propert along (amat (t., ighwa ills, Mandal!ong Cit.
owners of the condomini!m proect, were ordered to paA HaI respondents claim for ref!nd of the >11,719.7? the paid, with interest at the rate of 1?6 per ann!m from 7 "ebr!ar 199#@ HbI damagesX
below is modified.
O33i&e #3 the Presi"ent:
he o!sing and Eand Nse 4eg!lator Board HEN4BI iss!ed Eicense to (ell in fa*or of petitioner and >>) as proect owners. B *irt!e of said license, >>) e2ec!ted Contract to $ell %&o. '()(* with (po!ses Benamin and +leanor -ng o*er the &7.G7;s%!are meter condomini!m !nit H>?,0##,&&G.?7I, and 1?.70 s%!are meter par$ing space H>&1&,700.00I.
?00 resol!tion, disposing of the formers pending motion for e2tension as well as the petition itself.
>etitioner also specificall denied the material allegations of the complaint. Calling attention to the fact that its prestation !nder the J3- consisted in contrib!ting the propert on which "he #editel was to be constr!cted, petitioner asse*erated that, b the ter+s #3 the /,A , each part was indi*id!all responsible for the mar$eting and sale of the !nits pertaining to its share@ that not being pri* to the Contracts to (ell e2ec!ted b >>) and respondents, it did not recei*e an portion of the paments made b the latter.
H#$sing an" Lan" !se 7HL!; Ar@iter D$nstan T. San ,i&ente: Declaring the s!bect Contracts to (ell cancelled and rescinded on acco!nt of the non;completion of the condomini!m proect. On the gro!nd that the J3- created a partnership liabilit on their part, petitioner and >>), as co;
*s.
PHILIPPINE FISHIN0 0EAR IND!STRIES INC. respondent. PAN0ANIBAN J.: Fa&ts:
HL!RB B#ar" #3 C#++issi#ners: Decision of the Office
/ith petitioner contrib!ting the same propert to the oint *ent!re and >>) !nderta$ing to de*elop the condomini!m, the J3- pro*ided, among other terms and conditions, that the de*eloped !nits shall be shared b the former and the latter at a ratio of 1#6;8&6, respecti*el.
4espondents filed against petitioner and >>) the complaint for the rescission of the aforesaid Contracts to (ell before the EN4B. Contending that the were ass!red b petitioner and >>) that the s!bect condomini!m !nit and par$ing space wo!ld be a*ailable for t!rn;o*er and occ!panc in December 1998, that in *iew of the non;completion of the proect according to said representation, respondents instr!cted petitioner and >>) to stop depositing the post;dated chec$s the iss!ed and to cancel said Contracts to (ell@ and, that despite se*eral demands, petitioner and >>) ha*e failed and ref!sed to ref!nd the >11,719.7? the alread paid !nder the circ!mstances.
LI( TON0 LI( petitioner,
Dismissing petitioners appeal on the gro!nd that the latters appeal memorand!m was filed o!t of time and that the EN4B Board committed no gra*e ab!se of discretion in rendering the appealed decision.
C#$rt #3 Appea's: C- iss!ed the herein assailed ?& Ma
+e resolve to & the second extension motion and rule to /$#/$$ the petition for being filed late.
Iss$e: /hether or not partnership can be constit!ted in a oint *ent!re agreement. H>) with third parties.
On behalf of =Ocean Y!est "ishing Corporation,= -ntonio Ch!a and >eter hilippine "ishing ear )nd!stries, )nc. Hherein respondentI. he claimed that the were engaged in a b!siness *ent!re with >etitioner Eim ong Eim, who howe*er was not a signator to the agreement. he total price of the nets amo!nted to >7&?,0G7. "o!r h!ndred pieces of floats worth >8,000 were also sold to the Corporation. he b!ers, howe*er, failed to pa for the fishing nets and the floats@ hence, pri*ate respondents filed a collection s!it against Ch!a, etitioner Eim ong Eim with a praer for a writ of preliminar attachment. he s!it was bro!ght against the three in their capacities as general partners, on the allegation that =Ocean Y!est "ishing Corporation= was a none2istent corporation as shown b a Certification from the (ec!rities and +2change Commission.
RTC De&isi#n:
-rticle 3))), (ection 1 of the J3-A
he trial co!rt r!led that a partnership among Eim, Ch!a and
(ec. 1. 0escission and damages
C#$rt #3 Appea's: )n affirming the trial co!rt, the C- held
1 )n an case, the Owner shall respect and strictl compl with an co*enant entered into b the De*eloper and third parties with respect to an of its !nits in the Condomini!m >roect. o enable the owner to compl with this contingent liabilit, the De*eloper shall f!rnish the Owner with a cop of its contracts with the said b!ers on a month;to;month basis...
that petitioner was a partner of Ch!a and
3iewed in the light of the foregoing pro*ision of the J3-, petitioner cannot a*oid liabilit b claiming that it was not in an wa pri* to the Contracts to (ell e2ec!ted b >>) and respondents. -s correctl arg!ed b the latter, moreo*er, a oint *ent!re is considered in this !risdiction as a form of partnership and is, accordingl, go*erned b the law of partnerships. >etition for 4e*iew is D+)+D.
0.R. N#. 16<88 N#e+@er 6 1999
Iss$e:
/hether or not a partnership can be instit!ted b the acts of the parties therein H
R$'ing: here e2ist a partnership. >etitioner contro*erts the C- finding that a partnership e2isted between him, >eter
18 | P a r t n e r s h i p C a s e s the two the main asset of the p!rported partnership R the fishing boat 234 5ourdes. he lease was for si2 months, with a monthl rental of >&#,700 pl!s ?7 percent of the gross catch of the boat. /e are not pers!aded b the arg!ments of petitioner. he facts as fo!nd b the two lower co!rts clearl showed that there e2isted a partnership among Ch!a, etitioner Eim ong Eim re%!ested >eter &.&7 million@ H&I hat the borrowed >&.?7 million from Jes!s Eim, brother of >etitioner Eim ong Eim, to finance the *ent!re. HGI hat the bo!ght the boats from CM" "ishing Corporation, which e2ec!ted a Deed of (ale o*er these two H?I boats in fa*or of >etitioner Eim ong Eim onl to ser*e as sec!rit for the loan e2tended b Jes!s Eim@ H7I hat Eim, Ch!a and 1 million sec!red b a chec$, beca!se of which, eter
4espondent >hilippine "ishing ear, in behalf of =Ocean Y!est "ishing Corporation,= their p!rported b!siness name. ZZ "rom the fact!al findings of both lower co!rts, it is clear that Ch!a, &.&7 million, financed b a loan sec!red from Jes!s Eim who was petitioner's brother. )n their Compromise -greement, the s!bse%!entl re*ealed their intention to pa the loan with the proceeds of the sale of the boats, and to di*ide e%!all among them the e2cess or loss. hese boats, the p!rchase and the repair of which were financed with borrowed mone, fell !nder the term =common f!nd= !nder -rticle 1##. he contrib!tion to s!ch f!nd need not be cash or fi2ed assets@ it co!ld be an intangible li$e credit or ind!str. hat the parties agreed that an loss or profit from the sale and operation of the boats wo!ld be di*ided e%!all among them also shows that the had indeed formed a partnership. Moreo*er, it is clear that the partnership e2tended not onl to the p!rchase of the boat, b!t also to that of the nets and the floats. he fishing nets and the floats, both essential to fishing, were ob*io!sl ac%!ired in f!rtherance of their b!siness. i*en the preceding facts, it is clear that there was, among petitioner, Ch!a and
/e are not con*inced b petitioner's arg!ment that he was merel the lessor of the boats to Ch!a and
3eril, as fo!nd b the lower c o!rts, petitioner entered into a b!siness agreement with Ch!a and etition is Denied.
LIBA: (ACDONALD s. NATIONAL CITY BAN OF NE* YOR J0.R. N#. L2=991. (a% -1 194<.K Fa&ts:
(tasi$inoce is a partnership formed b da Costa, orce, T!si$ and a*ino. )t was denied registration b the (+C d!e to a conf!sion between the partnership and Cardinal 4attan. Cardinal 4attan is the b!siness name or stle !sed b (tasi$inoce. Da Costa and orce are the general partners of Cardinal 4attan. Moreo*er, Da Costa is the managing partner of Cardinal 4attan. (tasi$inoce had an o*erdaft acco!nt with ationa Cit Ban$, which was later con*erted into an ordinar loan d!e the partnerships fail!re in paing its obligation. he ordinar loan was sec!red b a chattel mortgage o*er & *ehicles. D!ring the s!bsistence of the loan, the *ehicles were sold to MacDonald and later on, MacDonald sold ? of the & *ehicles to on:ales. he ban$ bro!ght an action for reco*er of its credit and foreclos!re of the chattel mortgage !pon learning of these transactions. eldA /hile an !nregistered commercial partnership has no !ridical personalit, ne*ertheless, where two or more persons attempt to create a partnership failing to compl with all the legal formalities, the law considers them as partners and the association is a partnership in so far as it is a fa*orable to third persons, b reason of the e%!itable principle of estoppel. /here a partnership not d!l organi:ed has been recogni:ed as s!ch in its dealings with certain persons, it shall be considered as partnership b estoppel and the persons dealing with it are estopped from dening its partnership e2istence.
14 | P a r t n e r s h i p C a s e s Iss$e: /O the partnership, (tasi$inoce is estopped from asserting that it does not ha*e !ridical personalit since it is an !nregistered commercial partnership
Rati#:
V<+(W /hile an !nregistered commercial partnership has no !ridical personalit, ne*ertheless, where two or more persons attempt to create a partnership failing to compl with all the legal formalities, the law considers them as partners and the association is a partnership in so far as it is a fa*orable to third persons, b reason of the e%!itable principle of estoppel. Da Costa and orce cannot den that the are partners of the partnership (tasi$inoce, beca!se in all their transactions with the ational Cit Ban$ the represented themsel*es as s!ch. McDonald cannot disclaim $nowledge of the partnership (tasi$inoce beca!se he dealt with said entit in p!rchasing two of the *ehicles in %!estion thro!gh orce and Da Costa. he sale of the *ehicles to MacDonald being *oid, the sale to on:ales is also *oid since a b!er cannot ha*e a better right than the seller. -s was held in Behn Meer Q Co. *s. 4osat:in, where a partnership not d!l organi:ed has been recogni:ed as s!ch in its dealings with certain persons, it shall be considered as partnership b estoppel and the persons dealing with it are estopped from dening its partnership e2istence. )f the law recogni:es a defecti*el organi:ed partnership as de facto as far as third persons are concerned, for p!rposes of its de facto e2istence it sho!ld ha*e s!ch attrib!te of a partnership as domicile.
0.R. N#. L2648<9 (ar&h 1= 196E. S. LYONS s. C. *. ROSENSTOC E5e&$t#r #3 the Estate #3 Henr% *. E'ser "e&ease" FACTS:
enr /. +lser was engaged in b!ing, selling, and administering real estate. +. (. Eons oined with him, the profits being shared b the two in e%!al parts. Eons, whose reg!lar *ocation was that of a missionar or missionar agent, of the Methodist +piscopal Ch!rch, went on lea*e to the Nnited (tates and was gone for nearl a ear and a half. +lser made written statements showing that Eons was, at that time, half owner with +lser of three partic!lar pieces of real propert. Conc!rrentl with this act Eons e2ec!te in fa*or of +lser a general power of attorne empowering him to manage and dispose of said properties at will and to represent Eons f!ll and ampl, to the m!t!al ad*antage of both.
he attention of +lser was drawn to a piece of land, referred to as the (an J!an +state. e obtained the loan of >70,000 to complete the amo!nt needed for the first pament on the (an J!an +state. he lender insisted that he sho!ld proc!re the signat!re of the "idelit Q (!ret Co. on the note to be gi*en for said loan. +lser mortgaged to the "idelit Q (!ret Co. the e%!it of redemption in the propert owned b himself and Eons on Carriedo (treet to sec!re the liabilit th!s ass!med b it. he case for the plaintiff s!pposes that, when +lser placed a mortgage for >70,000 !pon the e%!it of redemption in the Carriedo propert, Eons, as half owner of said propert, became, as it were, in*ol!ntaril the owner of an !ndi*ided interest in the propert ac%!ired partl b that mone@ and it is insisted for him that, in consideration of this fact, he is entitled to the fo!r h!ndred fort;si2 and two;thirds shares of J. T. >ic$ering Q Compan, with the earnings thereon, as claimed in his complaint.
ISS!E: /hether there was a general relation of partnership. R!LIN0A NO he position of the appellant is, in o!r opinion, !ntenable. )f +lser had !sed an m one act!all belonging to Eons in this deal, he wo!ld !nder article 1#?G of the Ci*il Code and article ?G of the Code of Commerce, be obligated to pa interest !pon the mone so applied to his own !se. Nnder the law pre*ailing in this !risdiction a tr!st does not ordinaril attach with respect to propert ac%!ired b a person who !ses mone belonging to another HMartine: *s. Martine:, 1 >hil., G#@ +nri%!e: *s. Olag!er, ?7 >hil., G1.I. Of co!rse, if an act!al relation of partnership had e2isted in the mone !sed, the case might be different@ and m!ch emphasis is laid in the appellant's brief !pon the relation of partnership which, it is claimed, e2isted. B!t there was clearl no general relation of partnership, !nder article 1#8 of the Ci*il Code. )t is clear that +lser, in b!ing the (an J!an +state, was not acting for an partnership composed of himself and Eons, and the law cannot be distorted into a proposition which wo!ld ma$e Eons a participant in this deal contrar to his e2press determination. )t seems to be s!pposed that the doctrines of e%!it wor$ed o!t in the !rispr!dence of +ngland and the Nnited (tates with reference to tr!st s!ppl a basis for this action. he doctrines referred to operate, howe*er, onl where mone belonging to one person is !sed b another for the ac%!isition of propert which sho!ld belong to both@ and it ta$es b!t little discernment to see that the sit!ation here
in*ol*ed is not one for the application of that doctrine, for no mone belonging to Eons or an partnership composed of +lser and Eons was in fact !sed b +lser in the p!rchase of the (an J!an +state. Of co!rse, if an damage had been ca!sed to Eons b the placing of the mortgage !pon the e%!it of redemption in the Carriedo propert, +lser's estate wo!ld be liable for s!ch damage. B!t it is e*ident that Eons was not pre!dice b that act.
ANTONIA TORRES assiste" @% her h$s@an" AN0ELO TORRES an" E(ETERIA BARIN0 petiti#ners s. CO!RT OF APPEALS an" (AN!EL 0.R. N#. 168449. De&e+@er 9 1999 FACTS:
(isters -ntonia orres and +meteria Baring, herein petitioners, entered into a =oint *ent!re agreement= with 4espondent Man!el orres for the de*elopment of a parcel of land into a s!bdi*ision. he e2ec!ted a Deed of (ale co*ering the said parcel of land in fa*or of Man!el, who then had it registered in his name and obtained from +%!itable Ban$ a loan of >G0, 000 which, !nder the Joint 3ent!re -greement, was to be !sed for the de*elopment of the s!bdi*ision thro!gh mortgage of said propert. -ll three of them also agreed to share the proceeds from the sale of the s!bdi*ided lots. he proect failed and the propert was foreclosed. >etitioner alleged that it was d!e to Man!els lac$ of f!nds or means and s$ills. -nd also alleged that the latter misappropriate the amo!nt loaned to his own compan. On the other hand, respondent alleged that he !sed the loan to implement the -greement, which inc!rred >87, 000 e2penses. -nd f!rther a*ers that fail!re of proect was d!e to petitioners and their relati*es had separatel ca!sed the annotations of ad*erse claims on the title to the land, which e*ent!all scared awa prospecti*e b!ers, forcing him to gi*e !p on the proect. (!bse%!entl, petitioners filed a criminal case for estafa against respondent and his wife, b!t were ac%!itted. he filed a ci*il case, b!t was dismissed b trial co!rt and affirmed b Co!rt of -ppeals. ence, this petition.
ISS!ES: 1. /hether the petitioners ha*e formed partnership respondent and if the do, whether or not it was *oid. ?. /hether or not respondent shall be held liable to the fail!re of the proect.
HELD:
1< | P a r t n e r s h i p C a s e s 1.
- re ad ing of t he t er ms e mbo di ed i n t he -greement ind!bitabl shows the e2istence of a partnership p!rs!ant to -rticle 1## of the Ci*il Code, which pro*idesA B the contract of partnership two or more persons bind themsel*es to contrib!te mone, propert, or ind!str to a common f!nd, with the intention of di*iding the profits among themsel*es.
Nnder the -greement, petitioners wo!ld contrib!te propert to the partnership in the form of land which was to be de*eloped into a s!bdi*ision@ while respondent wo!ld gi*e, in addition to his ind!str, the amo!nt needed for general e2penses and other costs. "!rthermore, the income from the said proect wo!ld be di*ided according to the stip!lated percentage. here is manifestation of intent to form partnership. )t sho!ld be stressed that the parties implemented the contract. h!s, petitioners transferred the title to the land to facilitate its !se in the name of the respondent. On the other hand, respondent ca!sed the s!bect land to be mortgaged, the proceeds of which were !sed for the s!r*e and the s!bdi*ision of the land. -s noted earlier, he de*eloped the roads, the c!rbs and the g!tters of the s!bdi*ision and entered into a contract to constr!ct low;cost ho!sing !nits on the propert. 4espondents actions clearl belie petitioners contention that he made no contrib!tion to the partnership. Nnder -rticle 1## of the Ci*il Code, a partner ma contrib!te not onl mone or propert, b!t also ind!str. "!rther, !nder -rt. 1##&, - contract of partnership is *oid, whene*er immo*able propert is contrib!ted thereto, if an in*entor of said propert is not made, signed b the parties, and attached to the p!blic instr!ment. his was intended primaril to protect third persons the e2ec!tion of a p!blic instr!ment wo!ld be !seless if there is no in*entor of the propert contrib!ted, beca!se witho!t its designation and description, the cannot be s!bect to inscription in the 4egistr of >ropert, and their contrib!tion cannot pre!dice third persons. his will res!lt in fra!d to those who contract with the partnership in the belief VinW the efficac of the g!arant in which the immo*ables ma consist. h!s, the contract is declared *oid b the law when no s!ch in*entor is made. he case at bar does not in*ol*e third parties who ma be pre!diced.
?. he Co!rt of -ppeals held that petitioners acts were not the ca!se of the fail!re of the proect. B!t it also r!led that neither was respondent responsible therefor. )n imp!ting the blame solel to him, petitioners failed to gi*e an reason wh we sho!ld disregard the fact!al findings of the appellate co!rt relie*ing him of fa!lt. 3eril, fact!al iss!es cannot be resol*ed in a petition for re*iew !nder 4!le G7, as in this case. >etitioners ha*e not alleged, not to sa shown, that their >etition constit!tes one of the e2ceptions to this doctrine. -ccordingl, we find no re*ersible error in the C-'s r!ling that petitioners are not entitled to damages.
LI(: 0.R. N#. 1-=68= N#e+@er -4 1999 ALFREDO N. A0!ILA /R. petitioner, HONORABLE CO!RT OF APPEALS an" *s. FELICIDAD S. ,DA. DE ABRO0AR respondents.
(ENDO>A J.
Fe'i&i"a" recei*ed a letter demanding that she *acate the premises within 17 das b!t she ref!sed to do so A.C. Ag$i'a 3i'e" an e)e&t+ent &ase against her Fe'i&i"a" on the other hand, filed a petition for "e&'arati#n #3 n$''it% #3 a "ee" #3 sa'e alleging that the signat$re #3 her h$s@an" was a 3#rger% beca!se he was alread dead when the deed was s!pposed to ha*e been e2ec!ted RTC: the & re%!ired doc!ments HMO-, (>- Q Deed of (aleI were all signed b the parties. Common sense dictates that an established lending and realt firm li$e -g!ila Q (ons wo!ld not part with >?00,000 to the -brogar spo!ses witho!t the sim!ltaneo!s accomplishment and signing of all the re%!ired doc!ments. CA: transaction was e%!itable mortgage and pact!m commissori!m, th!s *oid
Fa&ts:
Ag$i'a 7petiti#ner; manager of -.C. -g!ila Q (ons, Co., a partnership engaged in 'en"ing a&tiities Fe'i&i"a" 7PR; an" her 'ate h$s@an" R$@en
Iss$e: /o -g!ila is the real part in interest Nnder -rt. 1#8 of the Ci*il Code, a He'": NO. partnership Ghas a )$ri"i&a' pers#na'it% separate an" "istin&t from that of each of the partners.=
registered owners of a ho!se and lot 89ouse : 5ot; "C" &o. )<=)') in #arikina
Apri' 1 1991 "elicidad, with the consent of her late h!sband Q -.C. -g!ila Q (ons, Co., represented b petitioner, entered into a MO(ame da parties e2ec!ted a deed of absol!te sale
8#>!; ). !.C. !guila shall buy the property for 7('','''. (. 2elicidad is given the option to repurchase the said property within a period of <' days from the execution of the #>! ?. if she fails to exercise the option, she shall deliver peacefully the possession of the property
he partners &ann#t @e he'" 'ia@'e for the #@'igati#ns #3 the partnership $n'ess it is sh#n that the 'ega' 3i&ti#n of a different !ridical personalit is @eing $se" 3#r 3ra$"$'ent $n3air #r i''ega' p$rp#ses . )n this case, priate resp#n"ent has n#t sh#n that A.C. Ag$i'a S#ns C# ., as a separate !ridical entit, is @eing $se" 3#r 3ra$"$'ent $n3air #r i''ega' p$rp#ses . Moreo*er, the tit'e t# the s$@)e&t pr#pert% is in the na+e #3 A.C. Ag$i'a S#ns C#. and the (e+#ran"$+ #3 Agree+ent as e5e&$te" between pri*ate resp#n"ent, with the consent of her late h!sband, and A.C. Ag$i'a S#ns C#., represented b petitioner. ence, it is the partnership n#t its #33i&ers #r agents
hi&h sh#$'" @e i+p'ea"e" in an% 'itigati#n in#'ing pr#pert% registere" in its na+e.
Fe'i&i"a" 3ai'e" t# re"ee+ the propert. ence, -g!ila ca!sed the cancellation of C and the iss!ance of a new title in the name of the -.C. -g!ila Q (ons, Co.
0.R. N#. 19-9 O&t#@er 6 1998
1= | P a r t n e r s h i p C a s e s R!FINO R.
TAN petitioner,
RA(ON R. DEL ROSARIO /R. as SECRETARY OF FINANCE /OSE !. ON0 as CO((ISSIONER OF INTERNAL RE,EN!E respondents.
)n fine, !nder the a2 Code on income ta2ation, the general professional partnership is deemed to be no more than a mere mechanism or a flow;thro!gh entit in the generation of income b, and the !ltimate distrib!tion of s!ch income to, respecti*el, each of the indi*id!al partners.
0.R. N#. 1988< O&t#@er 6 1998
0.R. N#. 149666
CARA0 CABALLES /A(ORA AND SO(ERA LA* OFFICES CARLO A. CARA0 (AN!ELITO O. CABALLES ELPIDIO C. /A(ORA /R. an" BEN/A(IN A. SO(ERA /R. petitioners,
ARSENIO
*s.
*s.
RA(ON R. DEL ROSARIO in his &apa&it% as SECRETARY OF FINANCE an" /OSE !. ON0 in his &apa&it% as CO((ISSIONER OF INTERNAL RE,EN!E respondents.
1.
?.
? consolidated petitionsA .4. o. 109?89 assailing the constit!tionalit of 4-. o. #G9 also $nown as (implified et )ncome a2ation (cheme H()I .4. o. 109GG assailing the *alidit of (ec. , 4.4. o. ?;9& prom!lgated b respondents p!rs!ant to ()
Petiti#ners Hta2paersI arg$e resp#n"ents e5&ee"e" the a$th#rit% in app'%ing SNIT pr#3essi#na' partnerships 70PPs;
that
p!blic
r$'e2+aMing t# genera'
Iss$e: /o the >> is liable for income ta2
>artnerships are, !nder the Code, either =ta2able partnerships= or =e2empt partnerships.= >rdinarily , partnerships, no matter how created or organi:ed, are s!bect to income ta2. =+2empt partnerships,= !pon the other hand, are not similarl identified as corporations nor e*en considered as independent ta2able entities for income ta2 p!rposes. - general professional partnership is s!ch an e2ample.
T.
(ENDIOLA petitioner,
CO!RT OF APPEALS NATIONAL LABOR RELATIONS CO((ISSION PACIFIC FOREST RESO!RCES PHILS. INC. an"#r CELL(AR AB respondents
Fa&ts:
>acific "orest 4eso!rces >hils, )nc. H>acforIA corporation organi:ed and e2isting o !nder the laws of California, N(s!bsidiar of Cell!lose Mar$eting )ntl, a o corporation d!l organi:ed !nder the laws of (weden >acfor entered into a (ide -greement on 4epresentati*e Office $nown as >acific "orest 4eso!rces H>hilsI, )nc. with Mendiola HpetitionerI
!greement; ). (.
He'":
>> is not itself an income ta2paer. he income ta2 is imposed not in >>, which is ta2;e2empt, b!t on the partners themsel*es in their indi*id!al capacit comp!ted on distrib!ti*e shares of partnership profits.
/$'% 61 -<
*s.
Fa&ts:
?.
>utlines the business relationship of the parties with regard to 7hilippine operations of 7acfor. 7acfor will establish a 7acfor representative office in the 7hilippines, to be known as 7acfor 7hils an #ediola will be its 7resident. #endiola@s base salary shall be borne by the representative office : funded by 7acfor3#endiola, since 7acfor 7hils. /s e8uall% oned on a ;; e8uit% by #endiola and 7acfor-A$!
(+C granted the application of >acfor. >acfor designated Mendiola as its resident agent in the >hilippines. (ide -greement was amended where the salar of petitioner was increased. Both agreements show that the operational e5penses will be borne b the representati*e office Q f!nded b all parties as e$a' partners
while pr#3its &#++issi#ns i'' @e share" a+#ng the+. Mendiola wrote to Te*in Dale H3> for -siaI see$ing confirmation of his 706 e%!it of >afcor. /illia leason, its >resident, replied that petitioner is n#t a part2#ner of >afcor >hils. @e&a$se the l at te r i s +ere'% Pa&3#r2!SAs representatie office Q not an entit separate Q distinct from >acfor;N(- and that it is si+p'% a the#reti&a' &#+pan% with the p!rpose of di*iding the income 70;70. Mendiola claimed that he was all along made to belie*e that he was in a oint *ent!re with them. e wrote >acfor;N(- demanding pament of !npaid commissions Q office f!rnit!re and e%!ipment rentals. >acfor ordered Mendiola to t!rn o*er to it all papers, doc!ments, titles, records Q other materials ) his possession that belong to >afcor , to remit >&00,000 Christmas gi*eawa and to transfer title and t!rn o*er to it possession of the ser*ice car. )t also sent letters to its clients in the >hilippines ad*ising them not to deal with >afcor >hils. >etitioner pressed charges before the Eabor -rbiter when he was placed on pre*enti*e s!spension for his ref!sal to ret!rn the ser*ice car and the Christmas gi*eawas.
Iss$e: /o Mendiola is a partner He'": NO. /e hold that petitioner is an emploee of pri*ate respondent >acfor and that no partnership or co;ownership e2ists between the parties. )n a partnership, the members become co;owners of what is contrib!ted to the firm capital and of all propert that ma be ac%!ired thereb and thro!gh the efforts of the members. he propert or stoc$ of the partnership forms a comm!nit of goods, a common f!nd, in which each part has a proprietar interest.
1 | P a r t n e r s h i p C a s e s )n fact, the ew Ci*il Code regards a partner as a co;owner of specific partnership propert. +ach partner possesses a oint interest in the whole of partnership propert.
Fa&ts: On 19 o*ember 199, the -ngeles spo!ses filed a
)f the relation does not ha*e this feat!re, it is not one of partnership.
he -ngeles spo!ses claimed that in o*ember 199?, Mercado con*inced them to enter into a contract of antichresis, collo%!iall $nown as sanglaang-perde, co*ering eight parcels of land Hs!bect landI planted with fr!it;bearing lan:ones trees located in agcarlan, Eag!na and owned b J!ana (!a:o. he contract of antichresis was to last for fi*e ears with>?10,000 as consideration. -s the -ngeles s po!ses sta in Manila d!ring wee$das and go to Eag!na onl on wee$ends, the parties agreed that Mercado wo!ld administer the lands and complete the necessar paperwor$.
his essential element, the &#++$nit% #3 interest #r
#nership #3 #r )#int interest in partnership pr#pert% is a@sent in the re'ati#ns @eteen petiti#ner an" priate resp#n"ent Pa&3#r . >etitioner is not a part;owner of >acfor >hils. /illiam leason, pri*ate respondent >acfor's >resident established this fact when he said that >acfor >hils. is simpl a =theoretical compan= for the p!rpose of di*iding the income 70;70. e stressed that petitioner $new of this arrangement from the *er start, ha*ing been the one to propose to pri*ate respondent >acfor the setting !p of a
representatie #33i&e an" Gn#t a @ran&h #33i&eG in the Phi'ippines t# sae #n ta5es . h!s, the parties in this case, merel shared profits. his alone does not ma$e a partnership. Besides, a corporation cannot become a member of a partnership in the absence of e2press a!thori:ation b stat!te or charter. his doctrine is based on the f ollowing considerationsA H1I that the m!t!al agenc between the partners, whereb the corporation wo!ld be bo!nd b the acts of persons who are not its d!l appointed and a!thori:ed agents and officers, wo!ld be inconsistent with the polic of the law that the corporation shall manage its own affairs separatel and e2cl!si*el@ and, H?I that s!ch an arrangement wo!ld improperl allow corporate propert to become s!bect to ris$s not contemplated b the stoc$holders when the originall in*ested in the corporation. o s!ch a!thori:ation has been pro*ed in the case at bar.
NEROSA: Ange'es Se&. #3 /$sti&e CARPIO J .:
criminal complaint for estafa against Mercado. Mercado is the brother;in;law of the -ngeles spo!ses, being married to +merita -ngeles sister Ea!ra.
-fter three ears, the -ngeles spo!ses as$ed for an acco!nting from Mercado. Mercado e2plained that the s!bect land earned >G,?10 in 199&, which he !sed to b! more lan:ones trees. Mercado also reported that the trees bore no fr!it in 199G. Mercado ga*e no acco!nting for 1997. he -ngeles spo!ses claim that onl after this demand for an acco!nting did the disco*er that Mercado had p!t the contract of sanglaang-perde o*er the s!bect land !nder Mercado and his spo!ses names. Mercado denied the -ngeles spo!ses allegations. Mercado claimed that there e2ists an ind!strial partnership, collo%!iall $nown as sosyo industrial , between him and his spo!se as ind!strial partners and the -ngeles spo!ses as the financiers. his ind!strial partnership had e2isted since 1991, before the contract of antichresis o*er the s!bect land. -s the ears passed, Mercado !sed his and his spo!ses earnings as part of the capital in the b!siness transactions which he entered into in behalf of the -ngeles spo!ses. )t was their practice to enter into b!siness transactions with other people !nder the name of Mercado beca!se the -ngeles spo!ses did not want to be identified as the financiers. Mercado attached ban$ receipts showing deposits in behalf of +merita -ngeles and contracts !nder his name for the -ngeles spo!ses. Mercado also attached the min!tes of the baranga conciliation proceedings. D!ring the baranga conciliation proceedings, Oscar -ngeles stated that there was a written sosyo industrial agreementA capital wo!ld come from the -ngeles spo!ses while the profit wo!ld be di*ided e*enl between Mercado and the -ngeles spo!ses . V9W On & Jan!ar 199#, the >ro*incial >rosec!tion Office iss!ed a resol!tion recommending the filing of criminal information for estafa against Mercado. Meanwhile, Mercado
filed his co!nter;affida*it on ? Jan!ar 199#. ence, the >ro*incial >rosec!tion Office iss!ed an amended resol!tion dismissing the -ngeles spo!ses complaint for estafa against Mercado. On appeal to the (ecretar of J!stice, the -ngeles spo!ses emphasi:ed that the doc!ment e*idencing the contract of sanglaang-perde with J!ana (!a:o was e2ec!ted in the name of the Mercado spo!ses, instead of the -ngeles spo!ses. he -ngeles spo!ses allege that this doc!ment alone pro*es Mercados misappropriation of their >?10,000. he (ecretar of J!stice fo!nd otherwise. h!sA 4e*iewing the records of the case, we are of the opinion that the indictment of VMercadoW for the crime of estafa cannot be s!stained. Vhe -ngeles spo!sesW failed to show s!fficient proof that VMercadoW deliberatel decei*ed them in the sanglaang perde transaction. H-bsence of deceitI. ence this petition.
Iss$e: /hether a partnership e2isted between the -ngeles spo!ses and Mercado e*en witho!t an doc!mentar proof to s!stain its e2istence@ <+(
R$'ing: he -ngeles spo!ses allege that the had no partnership with Mercado. he -ngeles spo!ses rel on -rticles 1##1 to 1##& of the Ci*il Code, which state thatA -rt. 1##1. - partnership ma be constit!ted in an form, e2cept where immo*able propert or real rights are contrib!ted thereto, in which case a p!blic instr!ment shall be necessar. -rt. 1##?. +*er contract of partnership ha*ing a capital of three tho!sand pesos or more, in mone or propert, shall appear in a p!blic instr!ment, which m!st be recorded in the Office of the (ec!rities and +2change Comm ission. "ail!re to compl with the re%!irements of the preceding paragraph shall not affect the liabilit of the partnership and the members thereof to third persons. -rt. 1##&. - contract of partnership is *oid, whene*er immo*able propert is contrib!ted thereto, if an in*entor of said propert is not made, signed b the parties, and attached to the p!blic instr!ment.
19 | P a r t n e r s h i p C a s e s he -ngeles spo!ses position that there is no partnership beca!se of the lac$ of a p!blic instr!ment indicating the same and a lac$ of registration with the (ec!rities and +2change Commission H(+CI holds no water. "irst, the -ngeles spo!ses contrib!ted mone to the partnership and not immo*able propert. (econd, mere fail!re to register the contract of partnership with the (+C does not in*alidate a contract that has the essential re%!isites of a partnership. he p!rpose of registration of the contract of partnership is to gi*e notice to third parties. "ail!re to register the contract of partnership does not affect the liabilit of the partnership and of the partners to third persons. either does s!ch fail!re to register affect the partnerships !ridical personalit. - partnership ma e2ist e*en if the partners do not !se the words partner or partnership. )ndeed, the -ngeles spo!ses admit to facts that pro*e the e2istence of a partnershipA a contract showing a sosyo industrial or ind!strial partnership, contrib!tion of mone and ind!str to a common f!nd, and di*ision of profits between the -ngeles spo!ses and Mercado. ( ,A &/=) ,isappropriation % ,ercado
*hether
there as
he (ecretar of J!stice ade%!atel e2plained the alleged misappropriation b MercadoA he doc!ment alone, which was in the name of VMercado and his spo!seW, failed to con*ince !s that there was deceit or false representation on the part of VMercadoW that ind!ced the V-ngeles spo!sesW to part with their mone. VMercadoW satisfactoril e2plained that the V-ngeles spo!sesW do not want to be re*ealed as the financiers.V17W +*en Branch ? of the 4egional rial Co!rt of (anta Cr!:, Eag!na which decided the ci*il case for damages, in!nction and restraining order filed b the -ngeles spo!ses against Mercado and Eeo Ceraban, statedA 222 V)Wt was the practice to ha*e all the contracts of antichresis of their partnership sec!red in VMercadosW name as Vthe -ngeles spo!sesW are apprehensi*e that, if the come o!t into the open as financiers of said contracts, the might be $idnapped b the ew >eoples -rm or their b!siness deals be %!estioned b the B!rea! of )nternal 4e*en!e or worse, their assets and !ne2plained income be se%!estered, as 222 Oscar -ngeles was then wor$ing with the go*ernment. V1W
HEIRS OF TAN EN0 EE CA
222 two or more persons bind themsel*es to contrib!te mone, propert, or ind!str to a common f!nd, with the intention of di*iding the profits among themsel*es.
DE LEON /R. J .: Fa&t: "ollowing the death of an +ng Tee on (eptember 1&, 198G, Matilde -b!bo, the common;law spo!se of the decedent, oined b their children eresita, ena, Clarita, Carlos, Cora:on and +lpidio, the +)4( O" - + T++, filed s!it against the decedents brother - + E-<. he complaint, was for acco!nting, li%!idation and winding !p of the alleged partnership formed after /orld /ar )) between an +ng Tee and an +ng Ea. On March 18, 1991, the petitioners filed an amended complaint VGW impleading pri*ate respondent herein B+N+ ENMB+4 COM>-<, as represented b an +ng Ea. he amended complaint alleged that after the /orld /ar )), an +ng Tee and an +ng Ea, pooling their reso!rces and ind!str together, entered into a partnership engaged in the b!siness of selling l!mber and hardware and constr!ction s!pplies. he named their enterprise Beng!et E!mber which the ointl managed !ntil an +ng Tees death. >etitioners a*erred that the b!siness prospered d!e to the hard wor$ and thrift of the alleged partners. owe*er, the claimed that in 1981, an +ng Ea and his children ca!sed the con*ersion of the partnership Beng!et E!mber into a corporation called Beng!et E!mber Compan. he incorporation was p!rportedl a r!se to depri*e an +ng Tee and his heirs of their rightf!l participation in the profits of the b!siness. >etitioners praed for acco!nting of the partnership assets, and the dissol!tion, winding !p and li%!idation thereof, and the e%!al di*ision of the net assets of Beng!et E!mber. he 4C declared that Beng!et E!mber is a oint ad*ent!re which is a$in to a partic!lar partnership@ that the assets of Beng!et E!mber are the same assets t!rned o*er to Beng!et E!mber Co. )nc. and as s!ch the heirs or legal representati*es of the deceased an +ng Tee ha*e a legal right to share in said assets. he C- re*ersed the said decision stating that Beng!et E!mber is !nder sole proprietorship and their decedent is merel an emploee. ence, the present petition.
ISS!EA /hether an +ng Tee and an +ng Ea were partners in Beng!et E!mber. NO R$'ing: - contract of partnership is defined b law as one whereA
wo or more persons ma also form a partnership for the e2ercise of a profession.V1GW h!s, in order to constit!te a partnership, it m!st be established that H1I two or more persons bo!nd themsel*es to contrib!te mone, propert, or ind!str to a common f!nd, and H?I the intend to di*ide the profits among themsel*es.V17W he agreement need not be formall red!ced into writing, since stat!te allows the oral constit!tion of a partnership, sa*e in two instancesA H1I when immo*able propert or real rights are contrib!ted ,V1W and H?I when the partnership has a capital of three tho!sand pesos or more. V1#W )n both cases, a p!blic instr!ment is re%!ired. V18W -n in*entor to be signed b the parties and attached to the p!blic instr!ment is also indispensable to the *alidit of the partnership whene*er immo*able propert is contrib!ted to the partnership. V19W he trial co!rt determined that an +ng Tee and an +ng Ea had entered into a oint ad*ent!re, which it said is a$in to a partic!lar partnership. V?0W - partic!lar partnership is disting!ished from a oint ad*ent!re, to witA HaI - oint ad*ent!re Han -merican concept similar to o!r oint acco!ntsI is a sort of informal partnership, with no firm name and no legal personalit. )n a oint acco!nt, the participating merchants can transact b!siness !nder their own name, and can be indi*id!all liable therefor. HbI Ns!all, b!t not necessaril a oint ad*ent!re is limited to a ()E+ 4-(-C)O, altho!gh the b!siness of p!rs!ing to a s!ccessf!l termination ma contin!e for a n!mber of ears@ a partnership generall relates to a contin!ing b!siness of *ario!s transactions of a certain $ind.V?1W - oint ad*ent!re pres!pposes generall a parit of standing between the oint co;*ent!res or partners, in which each part has an e%!al proprietar interest in the capital or propert contrib!ted, and where each part e2ercises e%!al rights in the cond!ct of the b!siness. Nndo!btedl, the best e*idence wo!ld ha*e been the contract of partnership itself, or the articles of partnership b!t there is none. he alleged partnership, tho!gh, was ne*er formall organi:ed. )n addition, petitioners point o!t that the
- | P a r t n e r s h i p C a s e s ew Ci*il Code was not et in effect when the partnership was allegedl formed sometime in 19G7, altho!gh the contrar ma well be arg!ed that nothing pre*ented the parties from compling with the pro*isions of the ew Ci*il Code when it too$ effect on -!g!st &0, 1970. B!t all that is in the past. he net effect, howe*er, is that we are as$ed to determine whether a partnership e2isted based p!rel on circ!mstantial e*idence. - re*iew of the record pers!ades !s that the Co!rt of -ppeals correctl re*ersed the decision of the trial co!rt. he e*idence presented b petitioners falls short of the %!ant!m of proof re%!ired to establish a partnership. Nnfort!natel for petitioners, an +ng Tee has passed awa. Onl he, aside from an +ng Ea, co!ld ha*e e2po!nded on the precise nat!re of the b!siness relationship between them. )n the absence of e*idence, we cannot accept as an established fact that an +ng Tee allegedl contrib!ted his reso!rces to a common f!nd for the p!rpose of establishing a partnership. he testimonies to that effect of petitioners witnesses is directl contro*erted b an +ng Ea. )t sho!ld be noted that it is not with the n!mber of witnesses wherein preponderance lies@ V?GW the %!alit of their testimonies is to be considered. one of petitioners witnesses co!ld s!itabl acco!nt for the beginnings of Beng!et E!mber Compan, e2cept perhaps for Dionisio >eralta whose deceased wife was related to Matilde -b!bo. V?7W e stated that when he met an +ng Tee after the liberation, the latter as$ed the former to accompan him to get 80 pieces of .). sheets s!pposedl owned b both brothers. an +ng Ea, howe*er, denied $nowledge of this meeting or of the con*ersation between >eralta and his brother. an +ng Ea consistentl testified that he had his b!siness and his brother had his, that it was onl later on that his said brother, an +ng Tee, came to wor$ for him. Be that as it ma, co;ownership or co;possession Hspecificall here, of the .). sheetsI is not an indicium of the e2istence of a partnership.V?8W Besides, it is indeed odd, if not !nnat!ral, that despite the fort ears the partnership was allegedl in e2istence, an +ng Tee ne*er as$ed for an acco!nting. he essence of a partnership is that the partners share in the profits and losses.V?9W +ach has the right to demand an acco!nting as long as the partnership e2ists. V&0W /e ha*e allowed a scenario wherein ViWf e2cellent relations e2ist among the partners at the start of the b!siness and all the partners are more interested in seeing the firm grow rather than get immediate ret!rns, a deferment of sharing in the profits is perfectl pla!sible. V&1W B!t in the sit!ation in the case
at bar, the deferment, if an, had gone on too long to be pla!sible.
HdI -s interest on a loan, tho!gh the amo!nt of pament *ar with the profits of the b!siness@
- demand for periodic acco!nting is e*idence of a partnership.V&GW D!ring his lifetime, an +ng Tee appeared ne*er to ha*e made an s!ch demand for acco!nting from his brother, ang +ng Ea.
HeI -s the consideration for the sale of a goodwill of a b!siness or other propert b installments or otherwise.
his brings !s to the matter for pri*ate respondents, consisting of parolls p!rporting to show that an +ng Tee was an ordinar emploee of Beng!et E!mber, as it was then called. he a!thenticit of these doc!ments was %!estioned b petitioners, to the e2tent that the filed criminal charges against an +ng Ea and his wife and children. -s aforesaid, the criminal cases were dismissed for ins!fficienc of e*idence. )n connection therewith, -rticle 1#9 of the Ci*il Code pro*idesA )n determining whether a partnership e2ists, these r!les shall applA H1I +2cept as pro*ided b -rticle 18?7, persons who are not partners as to each other are not partners as to third persons@
)n the light of the afore%!oted legal pro*ision, we concl!de that an +ng Tee was onl an emploee, not a partner. +*en if the parolls as e*idence were discarded, petitioners wo!ld still be bac$ to s%!are one, so to spea$, since the did not present and offer e*idence that wo!ld show that an +ng Tee recei*ed amo!nts of mone allegedl representing his share in the profits of the enterprise. >etitioners failed to show how m!ch their father, an +ng Tee, recei*ed, if an, as his share in the profits of Beng!et E!mber Compan for an partic!lar period. ence, the failed to pro*e that an +ng Tee and an +ng Ea intended to di*ide the profits of the b!siness between themsel*es, which is one of the essential feat!res of a partnership.
Lit#n)$a Lit#n)$a 0ARCIA /.: FACTS: >etitioner -!relio T. Eiton!a, Jr. H-!relioI and herein
H?I Co;ownership or co;possession does not of itself establish a partnership, whether s!ch co;owners or co; possessors do or do not share an profits made b the !se of the propert@ H&I he sharing of gross ret!rns does not of itself establish a partnership, whether or not the persons sharing them ha*e a oint or common right or interest in an propert which the ret!rns are deri*ed@ HGI he receipt b a person of a share of the profits of a b!siness is prima facie e*idence that he is a partner in the b!siness, b!t no s!ch inference shall be drawn if s!ch profits were recei*ed in pamentA HaI -s a debt b installment or otherwise@ HbI -s wages of an emploee or rent to a landlord@ HbI -s an ann!it to a widow or representati*e of a deceased partner@
respondent +d!ardo T. Eiton!a, (r. H+d!ardoI are brothers. he legal disp!te between them started when filed a s!it against his brother +d!ardo and herein respondent 4obert .
-1 | P a r t n e r s h i p C a s e s sour so that !urelioD reFuested for an accounting and liFuidation of his share in the joint venture3partnership but these demands for complete accounting and liFuidation were not heededD. +hat is worse, !urelioD has reasonable cause to believe that duardo and3or the corporate defendants as well as 4obby angD, are transferring various real properties of the corporations belonging to the joint venture3partnership to other parties in fraud of !urelioD. /n conseFuence, !urelioD is therefore causing at this time the annotation on the titles of these real properties a notice of lis pendens .
Meanwhile, +d!ardo and the corporate respondents, as defendants a Fuo, filed a oint !&$+0 +ith Compulsory Counterclaim dening !nder oath the material allegations of the complaint, more partic!larl that portion thereof depicting petitioner and +d!ardo as ha*ing entered into a contract of partnership. (!ch defense was denied b the 4C. Npon -ppeal the C- r!led that there was no partnership created b the actionable doc!ment beca!se immo*able properties were contrib!ted to the partnership.
Iss$e: /F there had been partnershipFoint *ent!re between -!relio and +d!ardo,
NO R$'ing: - partnership e2ists when two or more persons agree to place their mone, effects, labor, and s$ill in lawf!l commerce or b!siness, with the !nderstanding that there shall be a proportionate sharing of the profits and losses between them. contract of partnership is defined b the Ci*il Code as one where two or more persons bo!nd themsel*es to contrib!te mone, propert, or ind!str to a common f!nd with the intention of di*iding the profits among themsel*es. - oint * ent !r e, on th e o th er ha nd , i s h ar dl disting!ishable from, and ma be li$ened to, a partnership since their elements are similar, i.e., comm!nit of interests in the b!siness and sharing of profits and losses. Being a form of partnership, a oint *ent!re is generall go*erned b the law on partnership. Clearl, then, a loo$ at the legal pro*isions determinati*e of the e2istence, or defining the formal re%!isites, of a partnership is indicated. "oremost of these are the following pro*isions of the Ci*il CodeA
-rt. 1##1. - partnership ma be constit!ted in an form, e2cept where immo*able propert or real rights are contrib!ted thereto, in which case a p!blic instr!ment shall be necessar. -rt. 1##?. +*er contract of partnership ha*ing a capital of three tho!sand pesos or more, in mone or propert, shall appear in a p!blic instr!ment, which m!st be recorded in the Office of the (ec!rities and +2change Commission. "ail!re to compl with the re%!irement of the preceding paragraph shall not affect the liabilit of the partnership and the members thereof to third persons. -rt. 1##&. - contract of partnership is *oid, whene*er immo*able propert is contrib!ted thereto, if an in*entor of said propert is not made, signed b the parties, and attached to the p!blic instr!ment. (ignificantl eno!gh, petitioner matter;of;factl conc!rred with the appellate co!rts obser*ation that, prescinding from what -!relio himself alleged in his basic complaint, his contrib!tion to the partnership consisted of his share in the Eiton!a famil b!sinesses which owned *ariable immo*able properties. Eest it be o*erloo$ed, the contract;*alidating in*entor re%!irement !nder -rticle 1##& of the Ci*il Code applies as long real propert or real rights are initiall bro!ght into the partnership. )n short, it is reall of no moment which of the partners, or, in this case, who between petitioner and his brother +d!ardo, contrib!ted immo*ables. )n conte2t, the more important consideration is that real propert was contrib!ted, in which case an in*entor of the contrib!ted propert d!l signed b the parties sho!ld be attached to the p!blic instr!ment, else there is legall no partnership to spea$ of. Considering th!s the *al!e and nat!re of petitioners alleged contrib!tion to the p!rported partnership, the Co!rt, e*en if so disposed, cannot pla!sibl e2tend the legal effects that petitioner so desires and pleads to be gi*en. )n fine, it cannot s!pport the e2istence of the partnership s!ed !pon and so!ght to be enforced. he legal and fact!al milie! of the case calls for this disposition. partnership ma be constit!ted in an form, sa*e when
immo*able propert or real rights are contrib!ted thereto or when the partnership has a capital of at least >&,000.00, in which case a p!blic instr!ment shall be necessar.V?7W -nd if onl to stress what has repeatedl been artic!lated, an in*entor to be signed b the parties and attached to the p!blic instr!ment is also indispensable to the *alidit of the partnership whene*er immo*able propert is contrib!ted to it. )n s!m then, the Co!rt r!les, as did the C-, that petitioners complaint for specific performance anchored on an actionable doc!ment of partnership which is legall ine2istent or *oid or, at best, !nenforceable does not state a ca!se of action as against respondent +d!ardo and the corporate defendants. -nd if no of action can s!ccessf!ll be maintained against respondent +d!ardo beca!se no *alid partnership e2isted between him and petitioner, the Co!rt cannot see its wa clear on how the same action co!ld pla!sibl prosper against
PA>: 0.R. N#. 181=
Apri' 1< -
PHILE (ININ0 CORPORATION petitioner, *s. CO((ISSIONER OF INTERNAL RE,EN!E respondent. YNARES2SANTIA0O J.: Fa&ts: >etitioner >hile2 Mining Corporation H>hile2 MiningI, entered into an agreementG with Bag!io old Mining Compan H=Bag!io old=I for the former to manage and operate the latters mining claim, $nown as the (to. ino mine. he parties agreement was denominated as GP#er #3 Att#rne%=. >hile2 Mining made ad*ances of cash and propert in accordance with paragraph 7 of the agreement. owe*er, the mine s!ffered contin!ing losses o*er the ears which res!lted to >hile2 Minings withdrawal as manager of the mine and in the e*ent!al cessation of mine operations. he parties e2ec!ted a Compromise with Dation in >ament wherein Bag!io old admitted an indebtedness to petitioner and agreed to pa the same in three segments .he parties also e2ec!ted an -mendment to Compromise
-- | P a r t n e r s h i p C a s e s with Dation in >ament where the parties determined that Bag!io olds indebtedness to petitioner act!all amo!nted to >?79,1&#,?G7.00,which s!m incl!ded liabilities of Bag!io old to other creditors that petitioner had ass!med as g!arantor. hese liabilities pertained to long;term loans contracted b Bag!io old .
ind!str to a common f!nd, with the intention of di*iding the profits among themsel*es. 17 /hile a corporation, li$e petitioner, cannot generall enter into a contract of partnership !nless a!thori:ed b law or its charter, it has been held that it ma enter into a oint *ent!re which is a$in to a partic!lar partnershipA
>hile2 Mining wrote off in its 198? boo$s of acco!nt the remaining o!tstanding indebtedness of Bag!io old b charging >11?,1&,000.00 to allowances and reser*es that were set !p in 1981 and >?,80,#8.00 to the 198? operations.
he legal concept of a )#int ent$re is of common law origin. )t has no precise legal definition, b!t it has been generall !nderstood to mean an organi:ation formed for some temporar p!rpose. 2 2 2 )t is in fact hardl disting!ishable from the partnership, since their elements are similar comm!nit of interest in the b!siness, sharing of profits and losses, and a m!t!al right of control. 2 2 2 he main distinction cited b most opinions in common law !risdictions is that the partnership contemplates a general b!siness with some degree of contin!it, while the oint *ent!re is formed for the e2ec!tion of a single transaction, and is th!s of a temporar nat!re. 2 2 2 his obser*ation is not entirel acc!rate in this !risdiction, since !nder the Ci*il Code, a partnership ma be partic!lar or !ni*ersal, and a parti&$'ar partnership ma ha*e for its obect a specific !nderta$ing. 2 2 2 )t wo!ld seem therefore that !nder >hilippine law, a oint *ent!re is a form of partnership and sho!ld be go*erned b the law of partnerships. he (!preme Co!rt has howe*er recogni:ed a distinction between these two b!siness forms, and has held that altho!gh a corporation cannot enter into a partnership contract, it ma howe*er engage in a oint *ent!re with others. 2 2 2 HCitations omittedI
)n its 198? ann!al income ta2 ret!rn, >hile2 Mining ded!cted from its gross income the amo!nt of >11?,1&,000.00 as loss on settlement of recei*ables from Bag!io old against reser*es anda llowances. owe*er, the B)4 disallowed the amo!nt as ded!ction for bad debt and assessed petitioner a deficienc income ta2 of >?,811,11.&9. >hile2 Mining protested before the B)4 arg!ing that the ded!ction m!st be allowed since all re%!isites for a bad debt ded!ction were satisfied. >etitioner emphasi:ed that the debt arose o!t of a *alid management contract it entered into with Bag!io old.
CTA reected petitioners assertion that the ad*ances it made for the (to. ino mine were in the nat!re of a loan. )t instead
&hara&terie" the a"an&es as petiti#ners inest+ent in a partnership ith Bag$i# 0#'" 3#r the "ee'#p+ent an" e5p'#itati#n #3 the St#. Nin# +ine . he C- held that the =>ower of -ttorne= e2ec!ted b petitioner and Bag!io old was act!all a partnership agreement. (ince the ad*anced amo!nt partoo$ of the nat!re of an in*estment, it co!ld not be ded!cted as a bad debt f rom petitioners gross income. he C#$rt #3 Appea's af 3ir+e" the "e&isi#n #3 the CTA.1?
ISS!E:
>er!sal of the agreement denominated as the =>ower of -ttorne= indicates that the parties had intended to create a partnership and establish a common f!nd for the p!rpose. he also had a oint interest in the profits of the b!siness as shown b a 70;70 sharing in the income of the mine.
contrib!te e%!all to the oint *ent!re assets !nder their respecti*e acco!nts . B ag!io old wo!ld contrib!te P11( !nder its owners acco!nt pl!s an of its income that is left in the proect, in addition to its a&t$a' +ining &'ai+. Meanwhile, petitioners contrib!tion wo!ld consist of its e5pertise in the management and operation of mines, as well as the managers acco!nt which is comprised of P11( in f!nds and propert and petitioners G&#+pensati#nG as manager that cannot be paid in cash.
0.R. N#. L2- De&e+@er 8 19< FRAN S. BO!RNS plaintiff;appellee, *s.
D. (. CAR(AN ET AL. defendants;appellants. +. !. Gincaid for appellants.
FACTS: -n action to reco*er the s!m of [G&#.70 balance d!e on a contract for the sawing of l!mber ard of Eo;Chim;Eim was filed b Bo!rns H>laintiffI. he contract was entered into b Eo;Chim;Eim, acting as in his own name with the plaintiff, and it appears that Eo;Chim;Eim personall agreed to pa for the wor$ himself. he plaintiff bro!ght the action against Eo;Chim;Eim and his co;defendants ointl, alleging that at the time the contract was made, the were the oint proprietors and operators of the said l!mber ard engaged in the p!rchase and sale of l!mber !nder the name and stle of Eo;Chim;Eim, hence were partners. he lower co!rt dismissed the action on the gro!nd that defendants D.M. Carman, "!lgencio and an;ongco, e2cept 3icente >alance and o;a!co were not the partners of Eo; Chim;Eim.
ISS!E: /hether appellants are deemed partners of Eo;Chim; Eim and hence are liable to Bo!rns
/O the parties entered into a contract of agenc co!pled with an interest which is not re*ocable at will
He'": -n e2amination of the =>ower of -ttorne= re*eals that a partnership or oint *ent!re was indeed intended b the parties. Nnder a &#ntra&t #3 partnership , two or more persons bind themsel*es to contrib!te mone, propert, or
Nnder the =>ower of -ttorne=, petitioner and Bag!io old !ndertoo$ to contrib!te mone, propert and ind!str to the common f!nd $nown as the (to. io mine. 1# )n this regard, we note that there is a s!bstanti*e e%!i*alence in the respecti*e contrib!tions of the parties to the de*elopment and operation of the mine. >!rs!ant to paragraphs G and 7 of the agreement, petitioner and Bag!io old were to
HELD: N#. he alleged partnership between Eo;Chim;Eim and the appellants was formed b *erbal agreement onl. here is no e*idence tending to show that the said agreement was red!ced to writing, or that it was e*er recorded in a p!blic instr!ment. Moreo*er, the partnership had no corporate name. he partnership was engaged in
-6 | P a r t n e r s h i p C a s e s b!siness !nder the name and stle of Eo;Chim;Eim onl. Moreo*er, it does not appear that there was an m!t!al agreement between the parties and if there were an, it has not been shown what the agreement was. he contracts made with the plaintiff were made b Eo;Chim;Eim indi*id!all in his own name, and there is no e*idence that the partnership o*er contracted in an form. Nnder s!ch circ!mstances we find nothing !pon which to consider this partnership other than as a partnership of cuentas en participacion. )t ma be that, as a matter of fact, it is something different, b!t a simple b!siness.
A partnership &#nstit$te" in s$&h a +anner the e5isten&e #3 hi&h as #n'% Mn#n t# th#se h# ha" an interest in the sa+e @eing n# +$t$a' agree+ents @eteen the partners an" ith#$t a &#rp#rate na+e in"i&ating t# the p$@'i& in s#+e a% that there ere #ther pe#p'e @esi"es the #ne h# #stensi@'% +anage" an" &#n"$&te" the @$siness is e5a&t'% the a&&i"enta' partnership #3 &$entas en parti&ipa&i#n "e3ine" in Art. -69 #3 the C#"e #3 C#++er&e. Th#se h# &#ntra&t ith the pers#n $n"er h#se na+e the @$siness #3 s$&h partnership #3 &$entas en parti&ipa&i#n is &#n"$&te" sha'' hae #n'% a right #3 a&ti#n against s$&h pers#n an" n#t against the #ther pers#ns intereste" an" the 'atter #n the #ther han" sha'' hae n# right #3 a&ti#n against the thir" pers#n h# &#ntra&te" ith the +anager $n'ess s$&h +anager 3#r+a''% trans3ers his right t# the+. C. PROPERTY RI0HTS OF A PARTNER CATALAN s. 0ATCHALIAN 14 Phi' 1-= 0.R. N#. L211<8 Apri' -- 1949
ISS!E: Did Catalans redemption of the properties ma$e him the absol!te owner of the lands
He'": N#. he theor of atchalian that he became the absol!te owner of the properties in %!estion !pon ma$ing the redemption beca!se he was s!brogated to the rights of Dr. Mara*e is !ntenable. Nnder the general principles of law, a partner is an agent of the partnership H-rt. 1818, CCI. "!rthermore, e*er partner becomes a tr!stee for his copartner with regard to an benefits or profits deri*ed from the act as partner H-rt 180#, CCI. Conse%!entl, when atchalian redeemed the properties in %!estion, he became a tr!stee and held the same in tr!st for his copartner s!bect to his right to redeem his contrib!tion to the amo!nt of redemption. he principle of s!brogation cannot be applied beca!se at the time Catalan redeemed the propert, Dr. Mara*e had not et become the absol!te owner of the properties. e ne*er recei*ed the definite and formal certificate of sale constit!ting the m!niment of title beca!se the redemption was made.
PE?ERA: 0.R. N#. 819= /$'% - 199 PIONEER INS!RANCE S!RETY CORPORATION petitioner, *s. THE HON. CO!RT OF APPEALS BORDER (ACHINERY HEA,Y E!IP(ENT INC. 7BOR(AHECO; CONSTANCIO (. (A0LANA an" /ACOB S. LI( respondents.
Fa&ts: +ligio Catalan and 4amon atchalian, as partners,
0.R. N#. 814= /$'% - 199
mortgaged to Dr. Dionisio Mara*e two lots, incl!ding the impro*ements thereon, all belonging to the partnership, to sec!re the pament of the loan. he partnership failed to pa the loan. he mortgage was foreclosed and the properties were sold at p!blic a!ction to Dr. Mara*e. Catalan redeemed the propert and he contends that title sho!ld be cancelled and a new one m!st be iss!ed in his name.
/ACOB S. LI( petitioner, *s. CO!RT OF APPEALS PIONEER INS!RANCE AND S!RETY CORPORATION BORDER (ACHINERY an" HEA,Y E!IP(ENT CO. INC FRANCISCO an" (ODESTO CER,ANTES an" CONSTANCIO (A0LANArespondents. 0!TIERRE> J.! J.:
FACTS:
Jacob (. Eim Hpetitioner in .4. o. 8G17#I was engaged in the airline b!siness as owner;operator of (o!thern -ir Eines H(-EI a single proprietorship. e entered into and e2ec!ted a sales contract with Japan Domestic -irlines HJD-I for the sale and p!rchase of two H?I DC;&pe aircrafts and one H1I set of necessar spare parts. >ioneer )ns!rance and (!ret Corporation as s!ret e2ec!ted and iss!ed a (!ret Bond in fa*or of JD-, in behalf of its principal, Eim, for the balance price of the aircrafts and spare parts. )t appears that Border Machiner and ea* +%!ipment Compan, )nc. HBormahecoI, "rancisco and Modesto Cer*antes HCer*antesesI and Constancio Maglana Hrespondents in both petitionsI contrib!ted some f!nds !sed in the p!rchase of the abo*e aircrafts and spare parts. he f!nds were s!pposed to be their contrib!tions to a new corporation proposed b Eim to e2pand his airline b!siness. he e2ec!ted two H?I separate indemnit agreements which stip!lated that the indemnitors principall agree and bind themsel*es ointl and se*erall to indemnif and hold and sa*e harmless >ioneer from and against anFall damages, losses, costs, damages, ta2es, penalties, charges and e2penses of whate*er $ind and nat!re which >ioneer ma inc!r in conse%!ence of ha*ing become s!ret !pon the bondFnote and to pa, reimb!rse and ma$e good to >ioneer, its s!ccessors and assigns, all s!ms and amo!nts of mone which it or its representati*es sho!ld or ma pa or ca!se to be paid or become liable to pa on them of whate*er $ind and nat!re. (!bse%!entl, Eim doing b!siness !nder the name and stle of (-E e2ec!ted in fa*or of >ioneer as deed of chattel mortgage as sec!rit for the latter's s!retship in fa*or of the former. )t was stip!lated therein that Eim transfer and con*e to the s!ret the two aircrafts. Eim defa!lted on his s!bse%!ent installment paments prompting JD- to re%!est paments from the s!ret. >ioneer then filed a petition for the e2tra!dicial foreclos!re of the said chattel mortgage before the (heriff of Da*ao Cit. he Cer*anteses and Maglana, howe*er, filed a third part claim alleging that the are co;owners of the aircrafts,
-8 | P a r t n e r s h i p C a s e s ISS!E: /O a de facto partnership was created among respondents Bormaheco, (po!ses Cer*antes, Constancio Maglana and petitioner Eim as a res!lt of their fail!re to incorporate >etitioner Jacob (. Eim poses the following iss!esA /hat legal r!les go*ern the relationship among co;in*estors whose agreement was to do b!siness thro!gh the corporate *ehicle b!t who failed to incorporate the entit in which the had chosen to in*est ow are the losses to be treated in sit!ations where their contrib!tions to the intended 'corporation' were in*ested not thro!gh the corporate f orm hese %!estions are premised on the petitioner's theor that as a res!lt of the fail!re of respondents Bormaheco, (po!ses Cer*antes, Constancio Maglana and petitioner Eim to incorporate, a de facto partnership among them was created, and that as a conse%!ence of s!ch relationship all m!st share in the losses andFor gains of the *ent!re in proportion to their contrib!tion.
R!LIN0: NO.
/hile it has been held that as between themsel*es the rights of the stoc$holders in a defecti*el incorporated association sho!ld be go*erned b the s!pposed charter and the laws of the state relating thereto and not b the r!les go*erning partners HCannon *. Br!sh +lectric Co., 7G -. 1?1, 9 Md. GG, 9G -m. (.4. 78GI, it is
#r"inari'% he'" that pers#ns h# atte+pt @$t 3ai' t# 3#r+ a &#rp#rati#n an" h# &arr% #n @$siness $n"er the &#rp#rate na+e #&&$p% the p#siti#n #3 partners inter se HEnch *. >errman, 119 >. ??9, ?9 O$l. 17, -nn. Cas. 191&107I. h!s, where persons associate themsel*es together !nder articles to p!rchase propert to carr on a b!siness, and their organi:ation is so defecti*e as to come short of creating a corporation within the stat!te, the become in legal effect partners inter se, and their rights as members of the compan to the propert ac%!ired b the compan will be recogni:ed H(mith *. (choodoc >ond >ac$ing Co., 8G -. ?8,109 Me. 777@ /hipple *. >ar$er, ?9 Mich. &9I. (o, where certain persons associated themsel*es as a corporation for the de*elopment of land for irrigation p!rposes, and each con*eed land to the corporation, and two of them contracted to pa a third the difference in the
proportionate *al!e of the land con*eed b him, and no stoc$ was e*er iss!ed in the corporation, it was treated as a tr!stee for the associates in an action between them for an acco!nting, and its capital stoc$ was treated as partnership assets, sold, and the proceeds distrib!ted among them in proportion to the *al!e of the propert contrib!ted b each H(horb *. Bea!dr, 7 Cal. GGI. 9owever, such a relation does not necessarily exist, for ordinarily persons cannot be made to assume the relation of partners, as between themselves, when their purpose is that no partnership shall exist and it should be implied only when necessary to do justice between the partiesH thus, one who takes no part except to subscribe for stock in a proposed corporation which is never legally formed does not become a partner with other subscribers who engage in business under the name of the pretended corporation, so as to be liable as such in an action for settlement of the alleged partnership and contribution H/ard *. Brigham, 1?# Mass. ?GI.
- partnership relation between certain stoc$holders and other stoc$holders, who were also directors, will not be implied in the absence of an agreement, so as to ma$e the former liable to contrib!te for pament of debts illegall contracted b the latter Heald *. Owen, GG ./. ?10, #9 )owa ?&I. HCorp!s J!ris (ec!nd!m, 3ol. 8, p. GGI. H)talics s!ppliedI. )n the instant case, it is to be noted that the petitioner was declared non;s!ited for his fail!re to appear d!ring the pretrial despite notification. )n his answer, the petitioner denied ha*ing recei*ed an amo!nt from respondents Bormaheco, the Cer*anteses and Maglana. he trial co!rt and the appellate co!rt, howe*er, fo!nd that the petitioner recei*ed the amo!nt of >171,000.0 0 representing the participation of Bormaheco and -tt. Constancio B. Maglana in the ownership of the s!bect airplanes and spare parts. he record shows that defendant Maglana ga*e >#7,000.00 to petitioner Jacob Eim thr! the Cer*anteses.
It is there3#re &'ear that the petiti#ner neer ha" the intenti#n t# 3#r+ a &#rp#rati#n ith the resp#n"ents "espite his representati#ns t# the+. his gi*es credence to the cross;claims of the respondents to the effect that the were ind!ced and l!red b the petitioner to ma$e contrib!tions to a proposed corporation which was ne*er formed beca!se the petitioner reneged on their agreement.
-ppling therefore the principles of law earlier cited to the facts of the case, necessaril, no de facto partnership was created among the parties which wo!ld entitle the petitioner to a reimb!rsement of the s!pposed losses of the proposed corporation. he record shows that the petitioner was acting on his own and not in behalf of his other wo!ld;be incorporators in transacting the sale of the airplanes and spare parts.
0.R. N#. L2848<8
Apri' - 1969
/OS!E SONC!YA plaintiff;appellant, L!NA defendant;appellee.
*s. CAR(EN DE
,ILLA2REAL J.: FACTS:
On (eptember 11, 19&, plaintiff Jos!e (onc!a filed with the Co!rt of "irst )nstance of Manila an amended complaint against Carmen de E!na in her own name and as co;administratri2 of the intestate estate, of Eibrada -*elino o the aforesaid amended complaint defendant Carmen de E!na interposed a dem!rrer based on the following gro!ndsA H1I hat the complaint does not contain facts s!fficient to constit!te a ca!se of action@ and H?I that the complaint is ambig!o!s, !nintelligible and *ag!e. )n the amended complaint it is praed that defendant Carmen de E!na be sentenced to pa plaintiff damages in the s!m of >#00,G&? as a res!lt of the administration, said to be fra!d!lent, of he partnership, =Centro +scolar de (eoritas=, of which plaintiff, defendant and the deceased Eibrada -*elino were members.
ISS!E: /O a partner ma be able to claim from another partner damages allegedl s!ffered b him b reason of the fra!d!lent administration of the latter ith#$t a prei#$s
'i$i"ati#n #3 sasi" partnership R!LIN0: NO "or the p!rpose of ad!dicating to plaintiff damages which he alleges to ha*e s!ffered as a partner b reason of the s!pposed fra!d!lent management of the partnership referred to, it is first necessar that a li%!idation of the b!siness thereof be made to the end that the profits and losses ma be $nown and the ca!ses of the latter and the
-4 | P a r t n e r s h i p C a s e s responsibilit of the defendant as well as the damages which each partner ma ha*e s!ffered, ma be determined.
ISS!E: /on petitioners are liable for the ad*ances made b respondent for the wor$ done in the casco.
b the partnership amo!nting to >G,000 with his own mone, plaintiff reimb!rse him of one;half of said s!m.
R!LIN0: )n this case, since it is not alleged in the complaint that s!ch a li%!idation has been effected nor is it praed that it be made. Conse%!entl, there is no reason or ca!se for plaintiff to instit!te the action for damages which he claims from the managing partner Carmen de E!na H>o hil., 1#?I.W )n *iew of the foregoing considerations, we are of the opinion and so hold that for a partner to be able to claim from another partner who manages the general copartnership, damages allegedl s!ffered b him b reason of the fra!d!lent administration of the latter, a pre*io!s li%!idation of said partnership is necessar.
0.R. N#. L26=84
O&t#@er -< 19=
/!AN A0!STIN ET ROSARIO appellant,
AL. plaintiffs@
,ICTOR
DEL
*s. BARTOLO(E INOCENCIO defendant;appellee.
TRACEY J.: FACTS:
he parties in this case are engaged in a partnership as ind!strial partners witho!t a capital. Contrib!ted from its profits the s!m of >80#.?8 as a f!nd toward the constr!ction of a casco for !se in their b!siness, to which the added >&,700, borrowed from Maria del 4osario, the wife of the defendant, Bartolome )nocencio, managing partner, admitted that o*er >G,&00 was the estimated cost of the casco b!t in the progress of the wor$ the defendant fo!nd that it called for additional f!nds, which he ad*anced to the amo!nt of >?,0?G.G9. )t satisfactoril appears from the e*idence that this amo!nt is necessar in order to complete the wor$ !nderta$en. -ltho!gh it wo!ld seem that he failed to notif his partners of the *ario!s items from time to time going to ma$e !p this s!m. owe*er, it is shown that the boo$s were at all times open to their inspection, and that, being as$ed to e2amine them, the omitted to do so, and that the plaintiff J!an -g!stin, representing all the partners, was also present at the constr!ction of the casco, in charge of the practical wor$ and cogni:ant of its needs and its progress.
he wor$ done in the casco ha*ing been within the scope of the association and necessar to carr o!t its e2press obect, the borrowing of the mone re%!ired to carr it on, with the ac%!iescence if not with the affirmati*e consent of his associates, was not o!tside the powers of the managing partner and constit!tes a debt for which all the associates are liable. he note passed into the hands of the defendant b reason of the s!ccessi*e deaths of his wife and of their onl child, each witho!t debts, and for the amo!nt thereof he became a creditor, s!bect, howe*er, to the ded!ction therefrom of his proportionate part of the indebtedness. he trial co!rt treated his claim on this note, as well as the s!m of >?,0?G.G9 f!rnished b him, as an addition to his capital in the firm, rather than as a loan, and this constit!tes one of the gro!nds of error stated b the appellant. /e do not deem it necessar to pass !pon this obection, for the reason that, considered as a loan, this s!m wo!ld place the defendant as a creditor in a stronger position as against his associates than if regarded as a mere contrib!tion to capital. he error, if it be an error, is not, therefore, pre!dicial to the plaintiff, b!t is rather beneficial to him. he respondent did not e2cept to it. lawphil.net 3ario!s small s!ms ha*e been paid o!t of the profits to some of the partners and these were properl allowed him in the !dgment.
PENDAT!N: 0.R. N#. L284<<1969 ENRI!E CLE(ENTE plaintiff;appellee,
Apri' -<
*s.
DIONISIO 0AL,AN defendant;appellee. /OSE ECHE,ARRIA inter*enor;appellant. DIA> J.: On J!ne , 19&1, plaintiff and defendant organi:ed a ci*il partnership which the named =al*an Compaia= to engage in the man!fact!re and sale of paper and other stationer. ardl a ear after s!ch organi:ation, the plaintiff as$ for the dissol!tion of the partnership. Defendant e2pressed his conformit to the dissol!tion of the partnership and the li%!idation of its affairs@ b!t b wa of co!nterclaim he as$ed that, ha*ing co*ered a deficit inc!rred
J!an D. Mencarini, assigned as recei*er and li%!idator. Npon acting on his d!t, the co!rt ordered him to deli*er certain machines which were then at os. #07;#0# laintiff agreed with the inter*enor, who is his nephew, to e2ec!ted a deed of mortgage enc!mbering the machines. he inter*enor, as plaintiff in the said case, obtained !dgment in his fa*or beca!se the defendant did not interpose an defense or obection.
Iss$e: /F the mortgage between Clemente and his nephew Hinter*enor, plaintiff in the caseI is *alid
R$'e: o. "rom the foregoing facts, it is clear that plaintiff co!ld not obtain possession of the machines in %!estion. he machines in contention originall belonged to the defendant and from him were transferred to the partnership al*an Compania. his being the case, said machines belong to the partnership and not to him, and shall belong to it !ntil partition is effected according to the res!lt thereof after the li%!idation. -lso, Clemente did not ha*e act!al possession of the machines, he co!ld not in an manner mortgage them.
0.R. N#. L249<6
(a% - 1946
THE LEYTE2SA(AR SALES CO. an" RAY(!NDO TO(ASSI petitioners, *s.
S!LPICIO ,. CEA in his &apa&it% as /$"ge #3 the C#$rt #3 First Instan&e #3 Le%te an" OLE0ARIO LASTRILLA respondents. BEN0>ON J.: his is a s!it for damages b the Eete;(amar (ales Co. Hhereinafter called E+((COI and 4amond omassi against the "ar +astern E!mber Q Commercial Co. H!nregistered commercial partnership hereinafter called "+ECOI, -rnold all, "red Brown and Jean 4o2as, !dgment against
-< | P a r t n e r s h i p C a s e s defendants ointl and se*erall for the amo!nt of >&1,789.1G pl!s costs. he decision ha*ing become final, the sheriff sold at a!ction on J!ne 9, 1971 to 4obert Dorfe and >epito -st!rias =all the rights, interests, titles and participation= of the defendants in certain b!ildings and properties described in the certificate On J!ne G, 1971 Olegario Eastrilla filed in the case a motion, wherein he claimed to be the owner b p!rchase on (eptember ?9, 19G9, of all the =shares and interests= of defendant "red Brown J!ne 1&, 1971, granted Eastrilla's motion. On -!g!st 1G, 1971, modified its order of deli*er and merel declared that Eastrilla was entitled to 1# per cent of the properties sold. he petitioners see$ relief b certiorari, their position being the s!ch orders were n!ll and *oid for lac$ of !risdiction.
Iss$e: /F the co!rt acted with e2cess of its !risdiction R$'e:
