Rojas v. Maglana
Just as important is the fact that all
Facts:
Maglana and Rojas executed their
Articles of Co-Partnership called
Eastcoast Development Enterprises
(EDE). It was a partnership with an
indefinite term of existence. Maglana
shall manage the business affairs while
Rojas shall be the logging
superintendant and shall manage the
logging operation. They shall share in
all profits and loss equally. Due to
difficulties encountered they decided to
avail of the sources of Pahamatong as
industrial partners. They again executed
their Articles of Co-Partnership under
EDE. The term is 30 years. After
sometime Pamahatong sold his interest
to Maglana and Rojas including
equipment contributed. After withdrawal
of Pamahatong, Maglana and Rojas
continued the partnership. After 3
months, Rojas entered into a
management contract with another
logging enterprise. He left and
abandoned the partnership. He even
withdrew his equipment from the
partnership and was transferred to CMS.
He never told Maglana that he will not
be able to comply with the promised
contributions and he will not work as
logging superintendent. Maglana then
told Rojas that the latter share will just
be 20% of the net profits. Rojas took
funds from the partnership more than his
contribution. Thus, Maglana notified
Rojas that he dissolved the partnership.
Issue: What is the nature of the
partnership and legal relationship of
Maglana and Rojas after Pahamatong
retired from the second partnership
Held:
it was not the intention of the partners to
dissolve the first partnership, upon the
constitution of the second one, which
they unmistakably called an "Additional
Agreement.
Except for the fact that they took in one
industrial partner; gave him an equal
share in the profits and fixed the term of
the second partnership to thirty (30)
years, everything else was the same.
Thus, they adopted the same name,
EASTCOAST DEVELOPMENT
ENTERPRISES, they pursued the same
purposes and the capital contributions of
Rojas and Maglana as stipulated in both
partnerships call for the same amounts.
subsequent renewals of Timber License
No. 35-36 were secured in favor of the
First Partnership, the original licensee.
To all intents and purposes therefore, the
First Articles of Partnership were only
amended, in the form of Supplementary
Articles of Co-Partnership (Exhibit "C")
which was never registered (Brief for
Plaintiff-Appellant, p. 5). Otherwise
stated, even during the existence of the
second partnership, all business
transactions were carried out under the
duly registered articles
is no dispute that the second partnership
was dissolved by common consent. Said
dissolution did not affect the first
partnership which continued to exist
Under the circumstances, the
relationship of Rojas and Maglana after
the withdrawal of Pahamotang can
neither be considered as a De Facto
Partnership, nor a Partnership at Will,
for as stressed, there is an existing
partnership, duly registered.
, except as to the legal relationship of
the partners after the withdrawal of
Pahamotang which is unquestionably a
continuation of the duly registered
partnership and the sharing of profits
and losses which should be on the basis
of share and share alike as provided for
in the duly registered Articles of Co-
Partnership, no plausible reason could
be found to disturb the findings and
conclusions of the trial court
2. Campos Rueda & Co v Pacific
Commercial (44 Phil 916)
Facts:
Campos, Rueda & Co., a limited
partnership, is indebted to the
appellants: Pacific Commercial Co. ,
Asiatic Petroleum Co, and International
Banking Corporation amounting to not
less than P1,000.00 (which were not
paid more than 30 days prior to the date
of the filing by petitioners of the
application for voluntary insolvency).
The trial court denied their petition on
the ground that it was not proven, nor
alleged, that the members of the firm
were insolvent at the time the
application was filed. It also held that
the partners are personally and solidarily
liable for the consequences of the
transactions of the partnership.
Issue:
Whether or not a limited partnership
may be held to have committed an act of
insolvency.
Held:
Yes. A limited partnerships juridical
personality is different from the
personality of its members. On general
principle, the limited partnership must
answer for and suffer the consequence
of its acts. Under our Insolvency Law,
one of the acts of bankruptcy upon w/c
an adjudication of involuntary
insolvency can be predicated is the
failure to pay obligations.
Failed to pay its obligations with three
creditors for a period of more than thirty
days, which failure constitutes, under
our Insolvency Law, one of the acts of
bankruptcy upon which an adjudication
of involuntary insolvency can be
predicated, this partnership must suffer
the consequences of such a failure, and
must be adjudged insolvent
The liability of the limited partners for
the obligations and losses of the
partnership is limited to the amounts
paid or promised to be paid into the
common fund except when a limited
partner should have included his name
or consented to its inclusion in the firm
name
The failure of Campos, Rueda & Co., to
pay its obligations constitutes an act w/c
is specifically provided for in the
Insolvency Law for declaration of
involuntary insolvency. The petitioners
have a right to a judicial decree
declaring the involuntary insolvency of
said partnership.
3. NGO TIAN TEK and NGO HAY,
petitioner,
vs.
PHILIPPINE EDUCATION CO.,
INC., respondent.
4. TAI TONG CHUACHE &
CO., petitioner,
vs.
THE INSURANCE COMMISSION
and TRAVELLERS MULTI-
INDEMNITY
CORPORATION, respondents
FACTS:
Azucena Palomo bought a parcel of
land and building from Rolando
Gonzales and assumed a mortgage
of the building in favor of S.S.S.
which was insured with S.S.S.
Accredited Group of Insurers
April 19, 1975: Azucena Palomo
obtained a loan from Tai Tong
Chuache Inc. in the amount of
P100,000 and to secure it, the land
and building was mortgaged
June 11, 1975: Pedro Palomo
secured a Fire Insurance
Policy covering the building for
P50,000 with Zenith Insurance
Corporation
July 16, 1975: another Fire
Insurance policy was procured
from Philippine British Assurance
Company, covering the same
building for P50,000 and the
contents thereof for P70,000
Before the occurrence of the peril
insured against the Palomos had
already paid their credit due the
July 31, 1975: building and the
contents were totally razed by fire
Palomo was able to
claim P41,546.79 from Philippine
British Assurance Co., P11,877.14
from Zenith Insurance Corporation
and P5,936.57 from S.S.S. Group of
Accredited Insurers but Travellers
Multi-Indemnity refused so it
demanded the balance from the
other three but they refused so they
filed against them
Insurance Commission, CFI:
absolved Travellers on the basis that
Arsenio Cua was claiming and NOT
Tai Tong Chuache
Palomo Appealed
Travellers reasoned that the policy
is endorsed to Arsenio
Chua, mortgage creditor
Tai Tong Chuache & Co. filed a
complaint in intervention claiming
the proceeds of the fire Insurance
Policy issued by travellers
affirmative defense of lack of
insurable interest that before the
occurrence of the peril insured
against the Palomos had already
paid their credit due the petitioner
ISSUE: W/N Tai Tong Chuache & Co.
has insurable interest

HELD:
Respondent pointed out that the action
must be brought in the name of the real
party in interest. We agree. However, it
should be borne in mind that petitioner
being a partnership may sue and be sued
in its name or by its duly authorized
representative. The fact that Arsenio
Lopez Chua is the representative of
petitioner is not questioned. Petitioner's
declaration that Arsenio Lopez Chua
acts as the managing partner of the
partnership was corroborated by
respondent insurance company. 11 Thus
Chua as the managing partner of the
partnership may execute all acts of
administration 12 including the right to
sue debtors of the partnership in case of
their failure to pay their obligations
when it became due and demandable. Or
at the very least, Chua being a partner of
petitioner Tai Tong Chuache &
Company is an agent of the partnership.
Being an agent, it is understood that he
acted for and in behalf of the
firm. 13 Public respondent's allegation
that the civil case flied by Arsenio Chua
was in his capacity as personal creditor
of spouses Palomo has no basis.
5. CIR VS. SUTER
FACTS:
A limited partnership named William J.
Suter 'Morcoin' Co., Ltd was formed 30
September 1947 by William J. Suter as
the general partner, and Julia Spirig and
Gustav Carlson. They contributed,
respectively, P20,000.00, P18,000.00
andP2,000.00. it was also duly
registeredwith the SEC. On 1948 Suter
and Spirig got married and ineffect
Carlson sold his share to the couple, the
same was also registered with the SEC.
The limited partnership had been filing
its income tax returns as a corporation,
without objection by the herein
petitioner, Commissioner of Internal
Revenue, until in1959 when the latter, in
an assessment, consolidated the income
of the firm and the individual incomes
of the partners-spouses Suter and Spirig
resulting in a determination of a
deficiency income tax against
respondent Suter in the amount of
P2,678.06 for 1954 and P4,567.00 for
1955.
ISSUE: Whether or not the limited
partnership has been dissolved after the
marriage of Suter and Spirig and buying
the interest of limited partner Carlson.
RULING: No, the limited partnership
was not dissolved.
In refutation of the foregoing,
respondent Suter maintains, as the Court
of Tax Appeals held, that his marriage
with limited partner Spirig and their
acquisition of Carlson's interests in the
partnership in 1948 is not a ground for
dissolution of the partnership, either in
the Code of Commerce or in the New
Civil Code, and that since its juridical
personality had not been affected and
since, as a limited partnership, as contra
distinguished from a duly registered
general partnership, it is taxable on its
income similarly with corporations,
Suter was not bound to include in his
individual return the income of the
limited partnership.
A husband and a wife may not enter
into a contract of general copartnership,
because under the Civil Code, which
applies in the absence of express
provision in the Code of Commerce,
persons prohibited from making
donations to each other are prohibited
from entering int universal partnerships.
(2Echaverri 196) It follows that the
marriage of partners necessarily brings
about the dissolution of a pre-existing
partnership.What the law prohibits was
when the spouses entered into a general
partnership. In the case at bar, the
partnership was limited.
William J. Suter "Morcoin" Co., Ltd.
was not such a universal partnership,
since the contributions of the partners
were fixed sums of money, P20,000.00
by William Suter and P18,000.00 by
Julia Spirig and neither one of them was
an industrial partner. It follows that
William J. Suter "Morcoin" Co., Ltd.
was not a partnership that spouses were
forbidden to enter by Article 1677 of the
Civil Code of 1889.
The capital contributions of partners
William J. Suter and Julia Spirig were
separately owned and contributed by
them before their marriage; and after
they were joined in wedlock, such
contributions remained their respective
separate
6. EVANGELISTA VS CIR
Facts: Petitioners borrowed money from
their father and purchased several lands.
For several years, these lands were
leased to tenants by the petitioners. In
1954, respondent Collector of Internal
Revenue demanded from petitioners the
payment of income tax on corporations,
real estate dealer's fixed tax and
corporation residence tax for the years
1945-1949. A letter of demand and
corresponding assessments were
delivered to petitioners. Petitioners
claim that they should be absolved from
paying said taxes since they are not a
corporation.
Issue: Whether petitioners are subject to
the tax on corporations provided for in
section 24 of Commonwealth Act. No.
466, otherwise known as the
National Internal Revenue Code, as well
as to the residence tax
for corporations and the real estate
dealers fixed tax.
Held: Yes. Petitioners are subject to the
income tax and residence tax for
corporation.
As defined in section 84 (b) of
the Internal Revenue Code, "the term
corporation includes partnerships, no
matter how created or organized." This
qualifying expression
clearly indicates that a joint venture
need not be undertaken in any of the
standard forms, or in conformity with
the usual requirements of the law on
partnerships, in order that one could be
deemed constituted for purposes of the
tax on corporations. Partnership, as has
been defined in the civil code refers to
two or more persons who bind
themselves to contribute money,
properly, or industry to a common fund,
with the intention of dividing the profits
among themselves. Thus, petitioners,
being engaged in the real estate
transactions for monetary gain and
dividing the same among themselves
constitute a partnership so far as the
Code is concerned and are subject to
income tax for corporation.
Since Sec 2 of the Code in
defining corporations also includes
joint-stock company, partnership, joint
account, association or insurance
company, no matter how created or
organized, it follows that petitioners,
regardless of how their partnership was
created is also subject to the residence
tax for corporations.
7. FERNANDEZ vs. DE LA ROSA
G.R. No. 413
February 2, 1903
FACTS: Fernandez alleges that in
January, 1900, he entered into a verbal
agreement with Dela Rosa to form a
partnership for the purchase of cascoes
and the carrying on of the business of
letting the same for hire in Manila,
and Dela Rosa is to buy the cascoes and
each partner to furnish for that purpose
such amount of money as he could, the
profits to be divided proportionately;
Fernandez furnished Dela Rosa sums to
purchase and repair cascoes, the latter
taking the titles in his own name; that in
April the parties undertook to draw up
articles of partnership for the purpose of
embodying the same in an authentic
document, but that the defendant having
proposed a draft of such articles which
differed materially from the terms of the
earlier verbal agreement, and being
unwillingly to include the 2nd casco in
the partnership, they were unable to
come to any understanding and no
written agreement was executed; that the
defendant having in the meantime had
the control and management of the two
cascoes, the plaintiff made a demand for
an accounting upon him, which the
defendant refused to render, denying the
existence of the partnership altogether.
Dela Rosa admits that the project of
forming a partnership in the casco
business in which he was already
engaged to some extent individually was
discussed between himself and the
plaintiff in January, 1900, but he denies
that any agreement was ever
consummated. He denies that the
plaintiff furnished any money in
January, 1900, for the purchase of the
first casco, or for repairs on the same,
but claims that he borrowed 300 pesos
on his individual account in January
from the bakery firm, consisting of the
plaintiff, Marcos Angulo, and Antonio
Angulo. The 825 pesos, which he admits
he received from the Fernandez March
5, he claims was for the purchase of the
first casco, which he alleged was bought
March 12, and he alleges that he never
received anything from the defendant
toward the purchase of the 2nd casco. He
claims to have paid, exclusive of repairs,
1,200 pesos for the first casco and 2,000
pesos for the second one.
ISSUE:
(1) Did a partnership exist between the
parties?
(2) If such partnership existed, was it
terminated as a result of the act of the
defendant in receiving back the 1,125
pesos?
HELD:
(1) Partnership is a contract by which
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.
(Civil Code, art. 1665.)
The essential points upon which the
minds of the parties must meet in a
contract of partnership are, therefore, (1)
mutual contribution to a common stock,
and (2) a joint interest in the profits. If
the contract contains these two elements
the partnership relation results, and the
law itself fixes the incidents of this
relation if the parties fail to do so. (Civil
Code, secs. 1689, 1695.)
We have found as a fact that money was
furnished by the plaintiff and received
by the defendant with the understanding
that it was to be used for the purchase of
the cascoes in question. This establishes
the first element of the contract, namely,
mutual contribution to a common stock.
The second element, namely, the
intention to share profits, appears to be
an unavoidable deduction from the fact
of the purchase of the cascoes in
common, in the absence of any other
explanation of the object of the parties
in making the purchase in that form,
and, it may be added, in view of the
admitted fact that prior to the purchase
of the first casco the formation of a
partnership had been a subject of
negotiation between them.
It is thus apparent that a complete and
perfect contract of partnership was
entered into by the parties. This contract,
it is true, might have been subject to a
suspensive condition, postponing its
operation until an agreement was
reached as to the respective participation
of the partners in the profits, the
character of the partnership as collective
or en comandita, and other details, but
although it is asserted by counsel for the
defendant that such was the case, there
is little or nothing in the record to
support this claim, and that fact that the
defendant did actually go on and
purchase the boat, as it would seem,
before any attempt had been made to
formulate partnership articles, strongly
discountenances the theory.
The execution of a written agreement
was not necessary in order to give
efficacy to the verbal contract of
partnership as a civil contract, the
contributions of the partners not having
been in the form of immovables or
rights in immovables. (Civil Code, art.
1667.) The special provision cited,
requiring the execution of a public
writing in the single case mentioned and
dispensing with all formal requirements
in other cases, renders inapplicable to
this species of contract the general
provisions of article 1280 of the Civil
Code.
2) The remaining question is as to the
legal effect of the acceptance by the
plaintiff of the money returned to him
by the defendant after the definitive
failure of the attempt to agree upon
partnership articles. The amount
returned fell short, in our view of the
facts, of that which the plaintiff had
contributed to the capital of the
partnership, since it did not include the
sum which he had furnished for the
repairs of casco No. 1515. Moreover, it
is quite possible, as claimed by the
plaintiff, that a profit may have been
realized from the business during the
period in which the defendant have been
administering it prior to the return of the
money, and if so he still retained that
sum in his hands. For these reasons the
acceptance of the money by the plaintiff
did not have the effect of terminating the
legal existence of the partnership by
converting it into a societas leonina, as
claimed by counsel for the defendant.
The result is that we hold and declare
that a partnership was formed between
the parties in January, 1900, the
existence of which the defendant is
bound to recognize; that cascoes No.
1515 and 2089 constitute partnership
property, and that the plaintiff is entitled
to an accounting of the defendants
administration of such property, and of
the profits derived therefrom. This
declaration does not involve an
adjudication as to any disputed items of
the partnership account.

8. TOCAO V. CA
G.R. No. 127405; October 4, 2000
Ponente: J. Ynares-Santiago
FACTS:
Private respondent Nenita A. Anay met
petitioner William T. Belo, then the
vice-president for operations of Ultra
Clean Water Purifier, through her
former employer in Bangkok. Belo
introduced Anay to petitioner Marjorie
Tocao, who conveyed her desire to enter
into a joint venture with her for the
importation and local distribution of
kitchen cookwares
Under the joint venture, Belo acted as
capitalist, Tocao as president and
general manager, and Anay as head of
the marketing department and later,
vice-president for sales
The parties agreed that Belo's name
should not appear in any documents
relating to their transactions with West
Bend Company. Anay having secured
the distributorship of cookware products
from the West Bend Company and
organized the administrative staff and
the sales force, the cookware business
took off successfully. They operated
under the name of Geminesse
Enterprise, a sole proprietorship
registered in Marjorie Tocao's name.
The parties agreed further that Anay
would be entitled to:
(1) ten percent (10%) of the annual net
profits of the business;
(2) overriding commission of six percent
(6%) of the overall weekly production;
(3) thirty percent (30%) of the sales she
would make; and
(4) two percent (2%) for her
demonstration services. The agreement
was not reduced to writing on the
strength of Belo's assurances that he was
sincere, dependable and honest when it
came to financial commitments.
On October 9, 1987, Anay learned that
Marjorie Tocao had signed a letter
addressed to the Cubao sales office to
the effect that she was no longer the
vice-president of Geminesse Enterprise.
Anay attempted to contact Belo. She
wrote him twice to demand her
overriding commission for the period of
January 8, 1988 to February 5, 1988 and
the audit of the company to determine
her share in the net profits.
Anay still received her five percent (5%)
overriding commission up to December
1987. The following year, 1988, she did
not receive the same commission
although the company netted a gross
sales of P 13,300,360.00.
On April 5, 1988, Nenita A. Anay filed
Civil Case No. 88-509, a complaint for
sum of money with damages against
Marjorie D. Tocao and William Belo
before the Regional Trial Court of
Makati, Branch 140
The trial court held that there was
indeed an "oral partnership agreement
between the plaintiff and the defendants.
The Court of Appeals affirmed the lower
courts decision.
ISSUE:
Whether the parties formed a
partnership
HELD:
Yes, the parties involved in this
case formed a partnership
The Supreme Court held that to be
considered a juridical personality, a
partnership must fulfill these requisites:
(1) two or more persons bind themselves
to contribute money, property or
industry to a common fund; and
(2) intention on the part of the partners
to divide the profits among themselves.
It may be constituted in any form; a
public instrument is necessary only
where immovable property or real rights
are contributed thereto.
This implies that since a contract of
partnership is consensual, an oral
contract of partnership is as good as a
written one.
In the case at hand, Belo acted as
capitalist while Tocao as president and
general manager, and Anay as head of
the marketing department and later,
vice-president for sales. Furthermore,
 Anay was entitled to a percentage of the
net profits of the business.
9. REMEDIOS ESTANISLAO,
EMILIO and LEOCADIO
SANTIAGO
FACTS:
Petitioner and private respondents
are brothers and sisters who are co-
owners of certain lots at the corner of
Annapolis and Aurora Blvd., Quezon
City which were then being leased to the
Shell Company of the Philippines
Limited (SHELL). They agreed to open
and operate a gas station thereat to be
known as Estanislao Shell Service
Station with an initial investment of
P15,000.00 to be taken from the advance
rentals due to them from SHELL for the
occupancy of the said lots owned in
common by them.
On May 26, 1966, the parties herein
entered into an Additional
Agreement with a proviso that said
agreement cancels and supersedes the
original agreement executed by the co-
owners.
For sometime, the petitioner submitted
financial statements regarding the
operation of the business to private
respondents, but thereafter petitioner
failed to render subsequent accounting.
A demand was made on petitioner:
to render an accounting of the profits;
to execute a public document
embodying all the provisions of the
partnership agreement;
to pay the plaintiffs their lawful
shares and participation in the net profits
of the business.
ISSUE:
IS A PARTNERSHIP a FORMED
WHERE MEMBERS OF THE SAME
FAMILY BIND THEMSELVES TO
CONTRIBUTE MONEY TO A
COMMON FUND WITH THE
INTENTION OF DIVIDING THE
PROFITS AMONG THEMSELVES?
HELD:
YES. The Joint Affidavit of April 11,
1966 (Exhibit A), clearly stipulated by
the members of the same family that the
P15,000.00 advance rental due to them
from SHELL shall augment
Therefore, the parties formed a
partnership.
their "capital investment" in the
operation of the gasoline station.
other evidence in the record:
Petitioner submitted to private
respondents periodic accounting of the
business.
Petitioner gave a written authority to
private respondent Remedios Estanislao,
his sister, to examine and audit the
books of their "common business"
(aming negosyo).
Respondent Remedios assisted in the
running of the business.
10.
YULO V. YANG CHIAO SENG
Mike
Facts:
Yang Chiao Seng proposed to form a
partnership with Rosario Yulo to run
and operate a theatre on the premises
occupied by Cine Oro, Plaza Sta. Cruz,
Manila, w/ the ff principal conditions:
(1) Yang guarantees Yulo a monthly
participation of P3,000 (2) partnership
shall be for a period of 2 years and 6
months with the condition that if the
land is expropriated, rendered
impracticable for business, owner
constructs a permanent building, then
Yulos right to lease and partnership
even if period agreed upon has not yet
expired; (3) Yulo is authorized to
personally conduct business in the lobby
of the building; and (4) after Dec 31,
1947, all improvements placed by
partnership shall belong to Yulo but if
partnership is terminated before lapse of
1 and years, Yang shall have right to
remove improvements. Parties
established, Yang and Co. Ltd., to
exist from July 1, 1945 Dec 31, 1947.
In June 1946, they executed a
suplemntry agreement extending the
partnership for 3 years = from 1/1/1948
to 12/31/1951
The land on which the theater was
constructed was leased by Yulo from
owners, Emilia Carrion and Maria
Carrion Santa Marina for an indefinite
period but that after 1 year, such lease
may be cancelled by either party upon
90-day notice. In Apr 1949, the owners
notified Yulo of their desire to cancel
the lease contract come July. Yulo and
husband brought a civil action to declare
the lease for a indefinite period.
Owners brought their own civil action
for ejectment upon Yulo and Yang.
CFI: Two cases were heard jointly;
Complaint of Yulo and Yang dismissed
declaring contract of lease terminated.
CA: Affirmed
In 1950, Yulo demanded from Yang her
share in the profits of the business. Yang
answered saying he had to suspend
payment because of pending ejectment
suit.
Yulo filed action in 1954, alleging the
existence of a partnership between them
and that Yang has refused to pay her
shares.
Defendants Position: Lease not
partnership; partnership was adopted as
a subterfuge to get around the
prohibition contained in the contract of
lease between the owners and the
plaintiff against the sublease of the
property.
TC: Dismissal. No partnership was
created b/w them because defendant has
not actually contributed the sum
mentioned in the Articles of Partnership
or any other amount. The agreement is a
lease because plaintiff didnt share
either in the profits or in the losses of
the business as required by Art 1769
(CC) and because plaintiff was granted a
guaranteed participation in the profits
belies the supposed existence of a
partnership.
Issue: Was the agreement a contract a
lease or a partnership?
HELD: Dismissal. The agreement was a
sublease not a partnership. The
following are the requisites of
partnership: (1) two or more persons
who bind themselves to contribute
money, property or industry to a
common fund; (2) the intention =
divide the profits among themselves
(Art1761)
Plaintiff did not furnish the supposed
P20,000 capital nor did she anything in
the management of the theatre. Neither
has she demanded from defendant any
accounting of the expenses and earnings
of the business. She was absolutely
silent with respect to any of the acts that
a partner should have done; all she did
was to receive her share of P3,000 a
month which cannot be interpreted in
any manner than a payment for the use
of premises which she had leased from
the owners
11. SY vs. COURT OF APPEALS
FACTS: Sometime in 1958, private
respondent Jaime Sahot[ started working
as a truck helper for petitioners family-
owned trucking business named Vicente
Sy Trucking. In 1965, he became a truck
driver of the same family business,
renamed T. Paulino Trucking Service,
later 6Bs Trucking Corporation in
1985, and thereafter known as SBT
Trucking Corporation since 1994.
Throughout all these changes in names
and for 36 years, private respondent
continuously served the trucking
business of petitioners. When Sahot was
59 years old, he incurred several
absences due to various ailments.
Particularly causing him pain was his
left thigh, which greatly affected the
performance of his task as a driver. He
inquired about his medical and
retirement benefits with the Social
Security System (SSS) on April 25,
1994, but discovered that his premium
payments had not been remitted by his
employer.Sahot filed a week-long leave
to get medical attention. He was treated
for EOR, presleyopia, hypertensive
retinopathy G II and heart enlargement.
Because of such, Belen Paulino of the
SBT Trucking Service management told
him to file a formal request for
extension of his leave. When Sahot
applied for an extended leave, he was
threatened of termination of
employment should he refuse to go back
to work.
Eventually, Sahot was dismissed from
employment which prompted the latter
to file an illegal dismissal case with the
NLRC. For their part, petitioners
admitted they had a trucking business in
the 1950s but denied employing helpers
and drivers. They contend that private
respondent was not illegally dismissed
as a driver because he was in fact
petitioners industrial partner. They add
that it was not until the year 1994, when
SBT Trucking Corporation was
established, and only then did
respondent Sahot become an employee
of the company, with a monthly salary
that reached P4,160.00 at the time of his
separation.
The NLRC and the CA ruled that Sahot
was an employee of the petitioner.
ISSUE: Whether Sahot is an industrial
partner
RULING:
No. Article 1767 of the Civil Code states
that in 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.
Not one of these circumstances is
present in this case. No written
agreement exists to prove the
partnership between the parties. Private
respondent did not contribute money,
property or industry for the purpose of
engaging in the supposed business.
There is no proof that he was receiving a
share in the profits as a matter of course,
during the period when the trucking
business was under operation. Neither is
there any proof that he had actively
participated in the management,
administration and adoption of policies
of the business. Thus, the NLRC and the
CA did not err in reversing the finding
of the Labor Arbiter that private
respondent was an industrial partner
from 1958 to 1994. On this point, the
Court affirmed the findings of the
appellate court and the NLRC. Private
respondent Jaime Sahot was not an
industrial partner but an employee of
petitioners from 1958 to 1994. The
existence of an employer-employee
relationship is ultimately a question of
fact and the findings thereon by the
NLRC, as affirmed by the Court of
Appeals, deserve not only respect but
finality when supported by substantial
evidence. Substantial evidence is such
amount of relevant evidence which a
reasonable mind might accept as
adequate to justify a conclusion
12. ADRIANO ARBES, ET AL vs.
VICENTE POLISTICO, ET AL.,
G.R. No. 31057 September 7, 1929
VILLAMOR,
J.:
FACTS: This is an action to bring about
liquidation of the funds and property of
the association called "Turnuhan
Polistico & Co." The plaintiffs were
members or shareholders, and the
defendants were designated as president-
treasurer, directors and secretary of said
association. This case is brought for 2
nd
time. In the 1
st
one, the court court held then that in an
action against the officers of a voluntary
association to wind up its affairs and
enforce an accounting for money and
property in their possessions, it is not
necessary that all members of the
association be made parties to the
action. The court appointed
commissioner of Insular Auditor's
Office, to examine all the books,
documents, and accounts of "Turnuhan
Polistico & Co.," and to receive
whatever evidence. Commissioner's
report show a balance of P24, 607.80
cash on hand. Despite defendant
s objection to the report, the trial court
rendered judgment holding said
association is unlawful. And sentenced
defendants jointly and severally to
return the amount and documents to the
plaintiffs and members of the
association. The Appellant alleged that
the association being unlawful, some
charitable institution to whom the
partnership funds may be ordered to be
turned over, should be included, as a
party defendant. Referring to article
1666 of the Civil Code, which provides:
A partnership must have a lawful object,
and must be established for the common
benefit of the partners. When the
dissolution of an unlawful partnership is
decreed, the profits shall be given to
charitable institutions of the domicile of
the partnership, or, in default of such, to
those of the province.
ISSUE: Whether or not charitable
institution is a necessary party to this
case.
HELD:
No. No charitable institution is a
necessary party in the present case of
determination of the rights of the parties.
The action which may arise from said
article, in the case of unlawful
partnership, is that for the recovery of
the amounts paid by the member from
those in charge of the administration of
said partnership, and it is not necessary
for the said parties to base their action to
the existence of the partnership, but on
the fact that of having contributed some
money to the partnership capital. And
hence, the charitable institution of the
domicile of the partnership, and in the
default thereof, those of the province are
not necessary parties in this case. The
article cited above permits no action for
the purpose of obtaining the earnings
made by the unlawful partnership,
during its existence as result of the
business in which it was engaged,
because for the purpose, as Manresa
remarks, the partner will have to base
his action upon the partnership contract,
which is to annul and without legal
existence by reason of its unlawful
object; and it is self evident that what
does not exist cannot be a cause of
action. Hence, paragraph 2 of the same
article provides that when the
dissolution of the unlawful partnership
is decreed, the profits cannot inure to the
benefit of the partners, but must be
given to some charitable institution.The
profits are so applied, and not the
contributions, because this would be an
excessive and unjust sanction for, as we
have seen, there is no reason, in such a
case, for depriving the partner of the
portion of the capital that he contributed,
the circumstances of the two cases being
entirely different.
Art. 1807.
Every partner must account to the
partnership for any benefit, and hold as
trustee for it any profits derived by him
without the consent of the other partners
from any transaction connected with the
formation, conduct, or liquidation of the
partnership or from any use by him of its
property.
13. G.R. L-No. 3666 August 17,
1909
THE CITY OF MANILA, plaintiff-
appellant,
vs.
FRANCISCO GAMBE, ET AL.,
defendants-appellees.
PILOT ASSOCIATION- NO
DEBTS, CREDITS OR PERSONAL
PROPERTY BELONGING TO DF
GAMBE.
DISTINT AND SEPARATE
ENTITY FROM ITS MEMBERS
The plaintiff commenced an
action against the defendants who
constitute the commercial firm of
Herranz&Garriz, for the purpose of
recovering the sum ($5,000), for certain
damages occasioned by the steamship
Alfred to the "Spanish Bridge" in the
city of Manila.
The Judge rendered a judgment
against the said Francisco Gambe, for
the sum of $1,300, and for the costs.
Gambe was a pilot and member
of the Pilot's Association of Manila and
was in charge of said steamship Alfred.
An execution was issued upon
the said judgment against defendant
Gambe, and was returned unsatisfied.
The plaintiff attempted to
attach whatever money or effects which
the defendant had in the Pilots'
Association of Manila
Whether or not the said Pilots'
Association had debts, credits, or
personal property, not capable of manual
delivery, in its possession or under its
control, belonging to the defendant.
In other words, did said Pilots'
Association owe to the defendant, a debt
or have in its possession and under its
control credits and other personal
property, belonging to the defendant,
subject to be attached in accordance
with the provisions of said section 431?
Section 431 of the Code of Procedure in
Civil Actions provides:
Debts and credits, and other
personal property not capable of manual
delivery, shall be attached by leaving
with the person owing such debts or
having in his possession or under his
control such credits and other personal
property, a copy of the order of
attachment, and a notice that the debts
owing by him to the defendant, or the
credits and other personal property in his
possession or under his control,
belonging to the defendant, are attached
in pursuance of such order.
The test whether or not the
interests of the defendant, if he has any,
in said association may be attached by
virtue of said section is whether said
Gambe could maintain an action against
the said association for the recovery of
the specific debt, credit, or personal
property.
 We do not believe that a mere
equitable or contingent debt, credit, or
personal property can be reached by the
procedure provided for in said section
(431).
Debt- some definite amount of
money, ascertained or capable of being
ascertained, which may be paid over to
the sheriff or the court under an order.
"Credits " and "personal
property" - something belonging to the
defendant, but in possession and under
the control of the person attached.
Essential: debt, credit, or the
personal property which is attempted to
be subjected to the payment of the
obligation of the defendant, and alleged
to be in the possession of the person
attached, must exist in some definite and
ascertainable form at the time of the
attachment.
The Pilots' Association is
purely a voluntary association of the
pilots of the city of Manila.
It is expressly recognized under
the law:
1. No one can become a member
of said association who has not shown
special qualifications as a pilot,
2. no one can act as a pilot who
has not been expressly recommended
and approved by the collector of the port
of Manila,
3. no one can become a member
without having paid a certain sum of
money into the treasury of said
association.
This funds becomes the property
of the association for the purpose of
protecting its members against losses
occasioned by its members to ships
while said ships are under the control of
a member or members of said
association.
The money paid in by one
member of said association becomes a
part of a general fund of said
association, subject to be paid out for
damages done to ships by any member
of the association.
The fund created by the
contributions of the members no longer
belongs to the members of the
association; it belongs to the association.
The association has a distinct
and separate entity from the individual
members who make it up.
The fund is created for a
specific purpose. (See articles 35, 36,
38, and 39 of the regulations of said
association.)
Under the regulations of said
association it has assumed a certain
responsibility for its members.
Whether the damage caused by
the defendant in this case is of such a
character for which the said association
assumed the responsibility is a question
which the person injured has a right to
test in a special action against said
association.
Said association had no debts,
credits, or personal property, not capable
of manual delivery, in its possession,
belonging to the defendant (Gambe),
which are subject to be attached in
accordance with the provisions of
section 431.
It is ordered that the plaintiff
take nothing in this action and that the
plaintiff be charged with the costs of
both instances.
14. LYONS VS. ROSENSTOCK
Facts: During his lifetime, Henry Elser
got engaged in the real estate business.
Petitioner Lyons, on the other hand,
joined Elser in some of his ventures and
they equally divided profits gained from
these.
In1919, Lyons needed to go back to the
United States for a year and a half and
by reason of which he executed a
general power of attorney in favor of
Elser, empowering the latter to manage
and dispose the properties owned by
them.
In 1920, Elser was drawn to a piece of
land, the San Juan Estate, and he
perceived an opportunity to develop it
into a suburban community. The Estate
was offered by its owners for P570,000
with an initial payment of P150,000. In
May 1920, Elser wrote a letter to Lyons
inducing the latter to join him in this
venture and to likewise supply the
means necessary for the fulfillment of
this project.
In the meantime, Elser raised P120,000
from his own funds and loaned P50,000
from Uy Siolong to pay for the initial
payment. However in order to obtain the
loan he had to give a personal note
signed by himself, by his other
associates and by the Fidelity and Surety
Company. Then again, in order to obtain
the signature of the Fidelity and Surety
Company Elser had to execute a
mortgage on one of the properties
owned by him and Lyons on Carriedo
Street. Lyons replied to the letter of
Elser only in July 1920 and he expressed
in it his unwillingness to join the latter
in this venture.
Because of this Elser relieved the
Carriedo property of the encumbrance
which he had placed upon it and
requested the Fidelity and Surety
Company to allow him to substitute
another property for it. However the
release of the old mortgage and the
recording of the new were never
registered because in September 1920,
when Lyons returned to Manila, he
allowed the mortgage to remain on the
Carriedo property. But in January 1921,
Elser was able to pay the note executed
by him to Uy Siolong which enabled the
release of the Carriedo Property.
Issue: W/N Lyons, as half owner of the
Carriedo property, involuntarily became
the owner or a co-partner of an
undivided interest in the San Juan
Estate, which was acquired partly by the
money obtained through an
encumbrance placed on the Carriedo
property. No.
Held: Under our law, a trust does not
necessarily attach with respect to
property acquired by a person who uses
money belonging to another. In the case
at bar, there was clearly no general
relation of partnership between Lyons
and Elser and the most that can be said
is that they had been co-participants in
various transactions involving real
estate. It is clear the Elser, in buying the
San Juan Estate, was not acting for any
partnership composed for himself and
Lyons, especially that the latter
expressly communicated his desire not
to participate in this venture. Lastly, it
should be noted that no money
belonging to Lyons or any partnership
composed by Lyons and Elser was in
fact used by the latter in the purchase of
the San Juan Estate.
15. PASCUAL v. Commissioner of
Internal Revenue
G.R. No. 78133 October 18, 1988
GANCAYCO, J.:
FACTS:
On June 22, 1965, petitioners bought
two (2) parcels of land from Santiago
Bernardino, et al. and on May 28, 1966,
they bought another three (3) parcels of
land from Juan Roque. The first two
parcels of land were sold by petitioners
in 1968 to Marenir Development
Corporation, while the three parcels of
land were sold by petitioners to Erlinda
Reyes and Maria Samson on March
19,1970. Petitioner realized a net profit
in the sale made in 1968 in the amount
of P165, 224.70, while they realized a
net profit of P60,000 in the sale made in
1970. The corresponding capital gains
taxes were paid by petitioners in 1973
and 1974 .
Respondent Commissioner informed
petitioners that in the years 1968 and
1970, petitioners as co-owners in the
real estate transactions formed an
unregistered partnership or joint venture
taxable as a corporation under Section
20(b) and its income was subject to the
taxes prescribed under Section 24, both
of the National Internal Revenue Code;
that the unregistered partnership was
subject to corporate income tax as
distinguished from profits derived from
the partnership by them which is subject
to individual income tax.
ISSUE:
Whether petitioners formed an
unregistered partnership subject to
corporate income tax (partnership vs.
co-ownership)
RULING:
Article 1769 of the new Civil Code lays
down the rule for determining when a
transaction should be deemed a
partnership or a co-ownership. Said
article paragraphs 2 and 3, provides:(2)
Co-ownership or co-possession does not
itself establish a partnership, whether
such co-owners or co-possessors do or
do not share any profits made by the use
of the property; (3) 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;
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.
In the present case, there is clear
evidence of co-ownership between the
petitioners. There is no adequate basis to
support the proposition that they thereby
formed an unregistered partnership. The
two isolated transactions whereby they
purchased properties and sold the same a
few years thereafter did not thereby
make them partners. They shared in the
gross profits as co- owners and paid
their capital gains taxes on their net
profits and availed of the tax amnesty
thereby. Under the circumstances, they
cannot be considered to have formed an
unregistered partnership which is
thereby liable for corporate income tax,
as the respondent commissioner
proposes.
And even assuming for the sake of
argument that such unregistered
partnership appears to have been
formed, since there is no such existing
unregistered partnership with a distinct
personality nor with assets that can be
held liable for said deficiency corporate
income tax, then petitioners can be held
individually liable as partners for this
unpaid obligation of the partnership.
16. ORTEGA VS CA
FACTS: The law firm of R,L,S and C
was duly registered in the Mercantile
Registry and reconstituted with the SEC.
There were several amendments to its
articles of partnership.
any partner at anytime by his withdrawal
regardless of good faith or bad faith.
Remanded the case to the HO to
determine rights and obligations of
parties.
CA: affirmed in toto the SEC decision
and that there is no need for the
appointment of a receiver as no
sufficient proof had been shown to
indicate that the partnership assets were
in any such danger of being lost,
removed or materially impaired.
ISSUES: whether it was a partnership at
will; whether Ms withdrawal dissolved
the partnership; whether such
withdrawal was made in bad faith.
SC: It was a partnership at will as it had
not fixed a specified period for its
undertaking.
It may be dissolved at will by any of the
partners but if it was done in bad faith,
such partner shall be liable for damages.
Upon dissolution, the partnership
continues and its legal personality is
retained until the complete winding up
of its business culminating in its
termination. The liquidation of assets is
governed by the CC but an agreement
between parties is binding upon them.
It was not done out of bad faith as it was
spurred by an interpersonal conflict
among the partners.

Respondent-Appellees senior and junior

partners associated themselves together.
Ortega informed them through a letter
that he is retiring from the firm
of Bito, Misa and Lozada regarding the
liquidation of his participation in it. He
later on filed with the SICD a petition
for dissolution and liquidation of
partnership.

Hearing Officer: said withdrawal of O

did not dissolve the law partnership and
both parties to the case are enjoined to
abide by the provisions of the
Agreement re: the liquidation of the
shares of any retiring or withdrawing
partner.

SEC: reversed the decision ruling that

the withdrawal had in fact dissolved the
partnership of BML as a partnership at
will, the law firm can be dissolved by