Heirs of Jose Lim vs.

Lim
( Trucking Business )
F: Petitioners insists that Jose Lim was the partner of
Norberto and Jimmy and not Elfledo (late husband of
respondent) and therefore all the properties acquired
by Elfledo and respondent form part of the estate of
Jose, having been derived from the alleged partnership.
I: W/N Elfledo is a partner of the said trucking company.
H:

The court applying 1769 of the Civil Code held

that Elfledo is a partner.
Cresencia Lim testified that jose gave Elfledo
50k, as share in the partnership, on a date that
coincided with the payment of the initial capital
of the partnership
Elfledo ran the affairs of the partnership,
wielding absolute control, power and authority,
without intervention or opposition whatsoever
of the petitioners herein;
All the properties particularly the 9 trucks of the
partnership were registered in the name of
Elfledo.
Jimmy testified that Elfledo did not receive
wages or salaries from the partnership,
indicating that what he actually received were
shares of the profits of the business;
None of the petitioners, as heirs of Jose, the
alleged partner, demanded periodic accounting
from Elfledo during his lifetime.

petitioner's "compensation" as manager that cannot be

paid in cash.
The mining suffered serious loses which ended business
of both parties evidenced by their execution of a
compromise agreement.
The CIR assessed Philex Mining for tax deficiencies. It
stressed that Philex entered into a partnership with
Baguio Gold.
Petitioner denied the allegations of the CIR and
maintained that its advances of money and property to
Baguio Gold were in a nature of a loan as evidenced by
the compromise agreement.
I: W/N Philex and Baguio Mining formed partnership.
H:

Philex Mining Corp vs. CIR

(Joint Venture for Mining)
F: Petitioner entered into an agreement with Baguio
Gold, where the former agreed to manage the mining
operations of the latter. The agreement was evidenced
by a Power of Attorney. It was indicated in the said
document, that Baguio Gold would contribute P11M
under its owner's account plus any of its income that is
left in the project, in addition to its actual mining
claim. Meanwhile, petitioner's contribution would
consist of its expertise in the management and
operation of mines, as well as the manager's account
which is comprised of P11M in funds and property and

Yes. The parties entered into the compromise

agreements as a consequence of the dissolution
of their business relationship. It did not define
that relationship or indicate its real character.
The relationship of the parties may be gleaned
upon the power of attorney document
entered between the 2.
An examination of the "Power of Attorney"
reveals that a partnership or joint venture was
indeed intended by the parties. Under a
contract of partnership, two or more persons
bind themselves to contribute money, property,
or industry to a common fund, with the
intention of dividing the profits among
themselves.
The term compensation found in the said
document could not be deemed as wages. It
is impossible for a company to give a salary to
an employee representing 50% of its net profit.
While a corporation, like petitioner, cannot
generally enter into a contract of partnership
unless authorized by law or its charter, it has
been held that it may enter into a joint venture
which is akin to a particular partnership:
under Philippine law, a joint venture is a form of
partnership and should be governed by the law
of partnerships

Tocao vs. CA
I: W/N petitioner is the real party in interest.
F: Petitioners maintain that there was no partnership
between petitioner Belo, on one hand, and respondent
Nenita Anay, on the other hand; and that the latter
being merely an employee of petitioner Tocao. It was
found out that Belo sometimes would participate in
Geminesse Enterprise meetings to help petitioner
Tocao.

H:

I: W/N Belo is a partner of Tocao.

H:

No. Belos presence in Geminesse Enterprises

meetings was merely as guarantor of the
company and to help Tocao his personal friend.
Respondent herself professed lacked of
knowledge that petitioner Belo received any
share in the profits of Geminesse.
On the other hand, Tocao declared that Belo
was not entitled to any share in the profits of
the enterprise.
With no participation in the profits, petitioner
Belo cannot be deemed a partner; since the
essence of a partnership is that the partners
share in the profits and losses.

Aguila, Jr. vs. CA

F: Petitioner is the manager of A.C. Aguila & Sons, Co, a
partnership engaged in lending activities. Private
respondent Felicidad Abrogar entered into a MOA w/
A.C. Aquila & Sons involving a pacto de retro sale of a
house & lot. As private respondent failed to redeem the
property within the prescribed period, petitioner
caused the cancellation of TCT and the issuance of the
new certificate of title in the name of the partnership.
Private respondent filed a petition for a declaration of
the nullity of the deed of sale and a criminal complaint
for forgery against petitioner alleging that the signature
of her husband was a forgery because he was already
dead when the deed was supposed to have been
executed.
Petitioner now contends that he is not the real party in
interest but A.C. Aguila & Co., against which this case
should have been brought.

Art. 1768 of the Civil Code, a partnership has a

juridical personality separate and distinct from
that of each partner. The partners cannot be
held liable for the obligations of the partnership
unless it is shown that the legal fiction of a
different juridical personality is being used for
fraudulent, unfair, or illegal purposes.
In this case. Private respondent has not shown
that A.C. Aguila & Sons, Co., represented by
petitioner. Hence, it is the partnership, not its
officers or agents, which should be impleaded
in any litigation involving property registered in
its name.

Ortega vs. CA
F: Petitioner filed a MR for the decision of the SEC en
banc which dissolved the partnership of Bito, Misa &
Lozada upon withdrawal of Atty. Joaquin L. Misa. He
also asked for an appointment of a receiver to take over
the assets of the dissolved partnership and to take
charge of the winding up of its affairs.
I: W/N the CA erred in holding that the withdrawal of
private respondent dissolved the partnership regardless
of his good or bad faith.
H:

The birth and life of a partnership at will is

predicated on the mutual desire and consent of
the partners. The right to choose with whom a
person wishes to associate himself is the
foundation and essence of partnership.
Its continued existence is, in turn, dependent on
the mutual resolve, along with each partners
capability to give it, and the absence of a cause
for dissolution provided by law itself. Verily, any
one of the partners may, at his sole pleasure,
dictate dissolution of the partnership at will. He
must however, act in good faith not that the
attendance of bad faith can prevent the
dissolution of the partnership at will.

In the matter of the Petition for Authority To Continue

use of the firm name Ozaeta, Romulo, etc.
F: 2 separate petitions were filed by the surviving
partners of Atty. Alexander Sycip and the surviving
partners of Herminiano Ozaeta, praying that they be
allowed to continue using, in the name of their firms,
the names of partners who passed away.
Arguments:
1. Under the law, a partnership is not prohibited
from continuing its business under a firm name
which includes the name of the deceased
partner.( Art. 1840 of the Civil Code )
2. In regulating other professions, such as
accountancy and engineering, the legislature
has authorized the adoption of firm names
without any restriction as to the use, in such
firm name, of the deceased partner.
3. The Canons of Professional Ethics are not
transgressed because as adopted by American
Bar Association: the continued use of the
name of a deceased or former partner when
permissible by local custom is not unethical, but
care should be taken that no imposition or
deception is practiced through this use.
4. The deaths of the partners were wellpublicized.
5. No local custom prohibits the continued use of
the partners name in a professional firms
name.
6. The continued use of the deceased partners
name in the firm name of law partnerships has
been consistently allowed by US Courts.
I: W/N the names of the deceased partners should
be allowed to continue in use in the firm name.
H:

Art. 1815. Every partnership shall operate

under a firm name, which may or may not
include the name of one or more of the
partners.
Those who, not being members of the
partnership, include their names in the firm

name, shall be subject to the liability of a

partner.
(partners should be living persons who can
be subjected to liability)
Art. 1840 treats more of a commercial
partnership with a good will to protect
rather than a professional partnership, with
no sealable good will but whose reputation
depends on the personal qualifications of
its individual members.
The partnership for the practice of law
cannot be likened to partnerships formed
by other professionals or for business. The
practice of law is also a special privilege,
highly personal and partaking of the nature
of a public trust.
Firm names, under local customs, identify
the more active and more senior members
or partners of the law firm.
The possibility of deception upon the
public, real, or consequential, where the
name of a deceased partner continues to be
used cannot be ruled out.
NB: Rule 3.02 of the CPR approved and promulgated by
the SC on June 21,1988 in effect abandoned the ruling
in the Sycip case. (see Art. 1815 Civil Code)
Pascual vs. CIR
F: The petitioners Pascual and dragon bought 5 parcels
of land. The first 2 were sold in 1968, while the
remaining 3 were sold in 1970. Petitioners paid the
corresponding capital gains taxes on both sales availing
the tax amnesties way back in 1974. However, the CIR
assessed and required petitioners to pay corporate
income taxes for the said years. Respondent insisted
that in both years, petitioners as co-owners in the real
estate transactions formed an unregistered partnership
taxable as corporation.
I: W/N petitioners formed a partnership in both
transactions.

H:
No. There is no evidence that the petitioners
entered into an agreement to contribute
money, property or industry in a common fund,
and that they intended to divide the profits
among themselves. Respondent CIR just
assumed these conditions to be present on the
basis of the fact that petitioners purchased
certain parcels of land and became co-owners
thereof.
The transactions were isolated. The character of
habituality peculiar to business transactions for
the purpose of gain was not present.
The sharing of returns does not in itself
establish a partnership whether or not the
persons sharing therein have a joint or
common right or interest in the property. There
must be a clear intent to form a partnership,
the existence of a juridical personality different
from the individual partners, and the freedom
of each party to transfer or assign the whole
property.

*(1) the nature of the business established by the

parties whether it was a joint venture or a corporation
and
H:

Aurbach vs. Sanitary Wares

(Partnership; Joint Venture; Foreign and Domestic Corp)

F: This consolidated petition assailed the decision of the

CA directing a certain MANNER OF ELECTION OF
OFFICERS IN THE BOARD OF DIRECTORS
*There are two groups in this case, the Lagdameo
group composed of Filipino investors and the American
Standard Inc. (ASI) composed of foreign investors.
The ASI Group and petitioner Salazar (G.R. Nos. 7597576) contend that the actual intention of the parties
should be viewed strictly on the "Agreement" dated
August 15,1962 wherein it is clearly stated that the
parties' intention was to form a corporation and not a
joint venture.

I: The main issue hinges on who were the duly elected

directors of Saniwares for the year 1983 during its
annual stockholders' meeting held on March 8, 1983. To
answer this question the following factors should be
determined:

While certain provisions of the Agreement

would make it appear that the parties thereto
disclaim being partners or joint venturers such
disclaimer is directed at third parties and is not
inconsistent with, and does not preclude, the
existence of two distinct groups of stockholders
in Saniwares one of which (the Philippine
Investors) shall constitute the majority, and the
other ASI shall constitute the minority
stockholder. In any event, the evident intention
of the Philippine Investors and ASI in entering
into the Agreement is to enter into a joint
venture enterprise
An examination of the Agreement shows that
certain provisions were inccuded to protect the
interests of ASI as the minority. For example,
the vote of 7 out of 9 directors is required in
certain enumerated corporate acts. ASI is
contractually entitled to designate a member of
the Executive Committee and the vote of this
member is required for certain transactions
The Agreement also requires a 75% supermajority vote for the amendment of the articles
and by-laws of Saniwares. ASI is also given the
right to designate the president and plant
manager .The Agreement further provides that
the sales policy of Saniwares shall be that which
is normally followed by ASI and that Saniwares
should not export "Standard" products
otherwise than through ASI's Export Marketing
Services. Under the Agreement, ASI agreed to
provide technology and know-how to Saniwares
and the latter paid royalties for the same.
The legal concept of a joint venture is of
common law origin. It has no precise legal
definition but it has been generally understood
to mean an organization formed for some
temporary purpose. It is in fact hardly
distinguishable from the partnership, since their
elements are similar community of interest in
the business, sharing of profits and losses, and a
mutual right of control.
The main distinction cited by most opinions in
common law jurisdictions is that the

partnership contemplates a general business

with some degree of continuity, while the joint
venture is formed for the execution of a single
transaction, and is thus of a temporary nature.
Ona vs. CIR
F: In 1944 Lorenzo Ona was appointed administrator of
the estate of his late wife Julia Bunales. The
administrator submitted the project of partition, which
was approved by the court. However, there was no
attempt was made to divide the properties among his 5
children. Instead, the properties remained under the
management of Lorenzo who used the said properties
in business by leasing or selling them and investing the
income derived therefrom.
In the years 1944 to 1954, respondent CIR did treat
petitioners as co-owners, not liable to corporate tax,
and it was only from 1955 that CIR considered them as
having formed an unregistered partnership.

the original owners, the purchasers, petitioners herein,

agreed to respect. The administration of the building
was entrusted to an administrator who collected the
rents; kept books and records and rendered statement
of accounts to the owners. Petitioners divided equally
the income of operation and maintenance.
The CTA held that petitioners formed a partnership
taxable by law applying the ruling in Evangelista case.
I: W/N petitioners indeed formed a partnership as
contemplated by law.
H:

I: W/N an unregistered partnership was formed.

H:
Yes. It is admitted that all profits from these
ventures were divided among petitioners
proportionately in accordance with their
respective shares in the inheritance.
From the moment petitioners allowed not only
the incomes from their respective shares but
even the properties themselves to be used by
Lorenzo as a common fund in undertaking
several transactions or business, with the
intention of deriving profit to be shared by
them proportionately, such act was
tantamount to actually contributing such
incomes to a common fund and, in effect they
thereby formed an unregistered partnership
taxable by law.
Reyes vs. CIR
F: Petitioners purchased a lot and building. The initial
payment was shared equally by the respondents. At the
time of the purchase, the building was leased to various
tenants, whose rights under the lease contracts with

Yes. The essential elements of partnerships are

present in this case, namely; (a) an agreement
to contribute money, property, or industry to a
common fund; and (b) intent to divide the
profits among the contracting parties.
The first was already admitted and therefore it
boils down to their intent in acting as they did.
Upon consideration of the circumstances
surrounding the case, it was found out that the
petitioners purpose was to engage in real
estate transactions for monetary gain and then
divide the same among themselves.
In the case at bar, there was a common fund
used in a series of transactions; the property
thus acquired was not used for residential or
other purposes other than leasing. Such
properties having been under management by
one person with full power to lease and such
condition existed for 10 years already.
The collective effect of these circumstances is
such as to leave no room for doubt on the
existence of said intent in the petitioners
herein.

Sardane vs. CA
F: Petitioner advanced the theory that he is a partner of
private respondent and not a mere employee indebted
to the latter. Petitioners bases are the promissory
notes executed by private respondent in favor of
petitioner as allegedly his share or contribution for the
partnership.

I: W/N there exists a partnership between petitioner

and private respondent.
H:

No. While receipt of a share in the profits of the

business is a prima facie evidence that the
person is receiving the same as a partner, no
inference shall be drawn if such profits were
received in payment of his wages as an
employee.

Gallemit vs. Tabliran

(Co-ownership; Without intent for profit)
F: This suit concerns the partition of a piece of land held
pro indiviso which the plaintiff and the defendant had
acquired in common from its original owner. By the
refusal of the defendant to divide the property, the
plaintiff was compelled to bring the proper action for
the enforcement of partition.
Petitioner asserts that a contract of partnership was
created between them. Defendant simply denied the its
existence.

Obillos vs. CIR

(Profit merely incidental)
F: This case is about the income tax liability of four
brothers and sisters who sold two parcels of land which
they had acquired from their father.
Commissioner of Internal Revenue required the four
petitioners to pay corporate income tax on the total
profit of P134,336 in addition to individual income tax
on their shares thereof He assessed P37,018 as
corporate income tax, P18,509 as 50% fraud surcharge
and P15,547.56 as 42% accumulated interest, or a total
of P71,074.56.
The Commissioner acted on the theory that the four
petitioners had formed an unregistered partnership or
joint venture within the meaning of sections 24(a) and
84(b) of the Tax Code]
I: W/N an unregistered partnership was formed.
H:

I: W/N partnership exists.

H:

No. It does not appear that any contract of

partnership whatever was made between them
for the purposes expressed in article 1665 of
the Civil Code, for the sole transaction
performed by them was the acquisition jointly
by mutual agreement of the land in question,
since it was undivided, under the condition that
they each should pay one-half of the price
thereof and that the property so acquired
should be divided between the two purchasers;
and as, under this title, the plaintiff and the
defendant are the co-owners of the said land,
the partition or division of such property held in
joint tenancy must of course be allowed, and
the present possessor of the land has no right
to deny the plaintiff's claim on grounds or
reasons unsupported by proof.

No. Their original purpose was to divide the lots

for residential purposes. If later on they found it
not feasible to build their residences on the lots
because of the high cost of construction, then
they had no choice but to resell the same to
dissolve the co-ownership.
The division of the profit was merely incidental
to the dissolution of the co-ownership which
was in the nature of things a temporary state. It
had to be terminated sooner or later.
Article 1769(3) of the Civil Code provides that
"the sharing of gross returns does not of itself
establish a partnership, whether or not the
persons sharing them have a joint or common
right or interest in any property from which the
returns are derived". There must be an
unmistakable intention to form a partnership
or joint venture.