7/25/2019 Bus. Org. Case Digest (1st Set) http://slidepdf.com/reader/full/bus-org-case-digest-1st-set 1/24 PARTNERSHIP IN GENERAL EN BANC G.R. No. L-45425 April 29, 1939 JOSE GATCHALIAN, ET AL., plai!i"#-app$lla!#, %#. THE COLLECTOR O& INTERNAL RE'EN(E, )$*$)a!-app$ll$$ &a+!# Plaintifs purchased, in the ordinary course o business, rom one o the duly authorized agents o the National Charity Sweepstakes Oce one ticket or the sum o two pesos Php !"# $he said ticket was registered in the name o %ose &atchalian ' Company# $he ticket won third prize in the draw# &atchalian was re(uired by income ta) e)aminer to *le the corresponding income ta) return, and made an assessment against %ose &atchalian ' Company re(uesting the sum o Php +,--#- to the deputy pro.incial treasurer o /ulacan# $hey re(uested an e)emption, but the Collector denied plaintif0s re(uest, and also reiterated his demand# $he Collector o 1nternal 2e.enue collected the ta) under section +3 o 4ct No# !566, as last amended by section ! o 4ct No# 678+, reading as ollows9 S:C# +3# a" $here shall be le.ied, assessed, collected, and paid annually upon the total net income recei.ed in the preceding calendar year rom all sources by e.ery corporation, ;oint< stock company, partnership, ;oint account cuenta en participacion", association or insurance company, organized in the Philippine 1slands, no matter how created or organized, but not including duly registered general copartnership compa=ias colecti.as", a ta) o three per centum upon such income> and a like ta) shall be le.ied, assessed, collected, and paid annually upon the total net income recei.ed in the preceding calendar year rom all sources within the Philippine 1slands by e.ery corporation, ;oint<stock company, partnership, ; oi nt ac cou nt cuenta en participacion", association, or insurance company organized, authorized, or e)isting under the laws o any oreign country, including interest on bonds, notes, or other interest<bearing obligations o residents, corporate or otherwise9 Provided, however, $hat nothing in this section shall be construed as permitting the ta)ation o the income deri.ed rom di.idends or net pro*ts on which the normal ta) has been paid# $he gain deri.ed or loss sustained rom the sale or other disposition by a corporation, ;oint stock company, partnership, ;oint accoun cuenta en participacion", association, o insurance company, or property, real, personal or mi)ed, shall be ascertained in accordance with subsections c" and d" o section two o 4ct Numbered $wo thousand eight hundred and thirty<three, as amended by 4ct Numbered $wenty<nine hundred and twenty<si)# $he oregoing ta) rate shall apply to the net income recei.ed by e.ery ta)able corporation ;oint<stock company, partnership, ;oint account cuenta en participacion", association, o insurance company in the calendar yea nineteen hundred and twenty and in each year thereater# I##$ ?hether the plaintifs ormed a partnership, or merely a community o property without a personality o its own> in the *rst case it is admitted that the partnership thus ormed is liable or the payment o income ta) whereas i there was merely a community o property they are e)empt rom such payment# H$l) $here is no doubt that i the plaintifs merely ormed a community o property the latter is e)empt rom the payment o income ta) under the law# /ut according to the stipulation acts the plai!i"# orai/$) a par!$r#0ip o a ci.il nature because each o them put up money to buy a sweepstakes ticket or the sole purpose o di.iding e(ually the prize which they may win, as they did in act in the amount o P@3,333 article +88@, Ci.il Code"# $he partnership was not only ormed, but upon the organization thereo and the winning o the prize, %ose &atchalian personally appeared in the oce o the Philippines Charity Sweepstakes, in his capacity as co<partner, as such collection the prize, the oce issued the check o P@3,333 in a.or o %ose &atchalian ' Company, and the said partner, in the same capacity, collected the said check# 4ll these circumstances repel the idea that the plaintifs organized and ormed a community o property only# Aa.ing organized and constituted a partnership o a ci.il nature, the said entity is the one bound to pay the income ta) which the deendant collected under the aoresaid section +3 a" o 4ct No# !566, as amended P42$ 1# P42$N:2SA1PBCase igestsBD:+37 !3+8<!3+7" E + /FS O2& 1
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plaintifGs contention that the ta) should be prorated
among them and paid indi.idually, resulting in their
e)emption rom the ta)#
Oillo# '#. CIR# No# D<85++5 October !-, +-5@
&a+!#On Harch !, +-76 %ose Obillos, Sr# bought two
lots with areas o +,+! and -86 s(uare meters o located at &reenhills, San %uan, 2izal# $he ne)t day hetranserred his rights to his our children, thepetitioners, to enable them to build their residences# $he $orrens titles issued to them showed that theywere co<owners o the two lots#
1n +-7, or ater ha.ing held the two lots ormore than a year, the petitioners resold them to the?alled City Securities Corporation and Olga CruzCanada or the total sum o P6+6,3@3# $hey deri.edrom the sale a total pro*t o P+6, 6+#55 or P66,@5or each o them# $hey treated the pro*t as a capitalgain and paid an income ta) on one<hal thereo or o P+8,7-!#
1n 4pril, +-53, the Commissioner o 1nternal2e.enue re(uired the our petitioners to pay corporateincome ta) on the total pro*t o P+6,668 in addition toindi.idual income ta) on their shares thereo# $hepetitioners are being held liable or de*ciency incometa)es and penalties totaling P+!7,75+#78 on their pro*toP+6,668, in addition to the ta) on capital gainsalready paid by them#
$he Commissioner acted on the theory that theour petitioners had ormed an unregisteredpartnership or ;oint .enture# $he petitioners contestedthe assessments# $wo %udges o the $a) Courtsustained the same# Aence, the instant appeal#
I##$
?hether or not the petitioners had indeed ormed apartnership or ;oint .enture and thus liable orcorporate ta)#
H$l)
$he Supreme Court held that the petitionersshould not be considered to ha.e ormed a partnership ;ust because they allegedly contributed P+75,735#+! tobuy the two lots, resold the same and di.ided the pro*tamong themsel.es# $o regard so would result inoppressi.e ta)ation and con*rm the dictum that the
power to ta) in.ol.es the power to destroy# $hate.entuality should be ob.iated#4s testi*ed by %ose Obillos, %r#, they had no
such intention# $hey were co<owners pure and simple# $o consider them as partners would obliterate thedistinction between a co<ownership and a partnership# $he petitioners were not engaged in any ;oint .entureby reason o that isolated transaction#
I4rticle +78-6" o the Ci.il Code pro.ides that
Jthe sharing o gross returns does not o itsel establisha partnership, whether or not the persons sharing them
ha.e a ;oint or common right or interest inany property rom which the returns are deri.edJ $here must be an unmistakable intention to orma partnership or ;oint .enture#I
$heir original purpose was to di.ide the lots orresidential purposes# 1 later on they ound it noteasible to build their residences on the lots because othe high cost o construction, then they had no choicebut to resell the same to dissol.e the co<ownership $he di.ision o the pro*t was merely incidental to thedissolution o the co<ownership which was in the natureo things a temporary state# 1t had to be terminatedsooner or later# $hey did not contribute or in.est additional G capital toincrease or e)pand the properties, nor was therean unmistakable intention to orm partnership or ;oint.enture#
?A:2:KO2:, the ;udgment o the $a) Court is re.ersedand set aside# $he assessments are cancelledNo costs#
G.R. No. 133 O+!o$r 1, 19
ARIANO P. PASC(AL a) RENATO P. RAGON,
petitioners, .s# THE COISSIONER O& INTERNALRE'EN(E a) CO(RT O& TA6 APPEALS,
respondents#
&ACTS
On %une !!, +-8@, petitioners bought two !" parcels o
land rom Santiago /ernardino, et al# and on Hay !5
+-88, they bought another three 6" parcels o land
rom %uan 2o(ue# Dater, they sold the said parcels o
land# Petitioners realized a net pro*t in the sale and
paid the corresponding capital gains ta)es by a.ailing
o the ta) amnesties#
Aowe.er, in a letter dated Harch 6+, +-7- o then
4cting /12 Commissioner :ren 1# Plana, petitioners
were assessed and re(uired to pay a total amount o
P+37,+3+#73 as alleged de*ciency corporate income
ta)es or the years +-85 and +-73 in which the
petitioners protested#
7COISIONER8 S R(LING
1n a reply o 4ugust !!, +-7-, respondent
Co::i##io$r inormed petitioners that in the years
+-85 and +-73, p$!i!io$r# a# +o-o;$r# i !0$
r$al $#!a!$ !ra#a+!io# *or:$) a r$i#!$r$)par!$r#0ip or <oi! %$!r$ !a=al$ a# a+orpora!io )$r S$+!io 2>7 a) i!# i+o:$;a# #<$+! !o !0$ !a=$# pr$#+ri$) )$rS$+!io 24, o!0 o* !0$ Na!ioal I!$raR$%$$ Co)$ 1 that the unregistered partnership
was sub;ect to corporate income ta) as distinguished
rom pro*ts deri.ed rom the partnership by them
which is sub;ect to indi.idual income ta)> and that the
a.ailment o ta) amnesty under P## No# !6, as
P42$ 1# P42$N:2SA1PBCase igestsBD:+37 !3+8<!3+7" E !/FS O2& 1
held liable or said de*ciency corporate income ta),
then petitioners can be held indi.idually liable as
partners or this unpaid obligation o the partnership p# Aowe.er, as petitioners ha.e a.ailed o the bene*ts
o ta) amnesty as indi.idual ta)payers in these
transactions, they are thereby relie.ed o any urther
ta) liability arising thererom#
Ara+0 %# Sai!ar@ ar$#
Kacts9
Pri.ate respondent, Sanitary ?ares, is a domesticcorporation engaged in manuacturing sanitary wares#4merican Standards 1nc 4S1", a oreign corporation,entered into an agreement with Saniwares and someKilipino in.estors whereby 4S1 and the Kilipino in.estorsagreed to participate in the ownership o an enterprisewhich would engage in the business o manuacturingin the Philippines and selling here and abroad sanitarywares# $he parties agreed that the business operationsin the Philippines#
1n their agreement, it contained a pro.ision whereby
4S1 shall own at least 63L o the outstanding stock o the corporation and also, three o the nine board o directors shall be designated by 4S1# $he agreementcontained pro.isions designed to protect it as aminority group, including the grant o .eto powers o.era number o corporate acts and the right to designatecertain ocers, such as a member o the :)ecuti.eCommittee whose .ote was re(uired or importantcorporate transactions#
Fnortunately, there came a disagreement betweenthe Kilipino and oreign in.estors due to their desire toe)pand the e)port operations o the company to which4S1 ob;ected as it apparently had other subsidiaries o ;oint ;oint .enture groups in the countries wherePhilippine e)ports were contemplated# Stockholdersthen proceeded to the election o the members o theboard o directors# 4S1 nominated 6 members, whom inthis case are the petitioners and the philippinein.estors also nominated si)# Aowe.er, dispute ensuedamong the *lipino and oreign in.estors which led tothe *ling o separate petitions regarding the decision o the chairman, /aldwin Moung, during their election toallow the nomination o oreign directors since 4S10sstocks were increased to 3L#
1ssue9
?ON the nature o the business established by theparties are a ;oint .enture or a corporation
2uling
Mes# 1n the instant case, our e)amination o importantpro.isions o the 4greement as well as the testimoniale.idence presented by the Dagdameo and Moung &roupshows that the parties agreed to establish a ;oint.enture and not a corporation# $he history o theorganization o Saniwares and the unusual
arrangements which go.ern its policy making body areall consistent with a ;oint .enture and not with anordinary corporation#
$he ;oint .enture character o the enterprise mustalways be taken into account, so long as the companye)ists under its original agreement# Cumulati.e .otingmay not be used as a de.ice to enable 4S1 to achie.estealthily or indirectly what they cannot accomplishopenly# $here are substantial saeguards in the4greement which are intended to preser.e the ma;oritystatus o the Kilipino in.estors as well as to maintainthe minority status o the oreign in.estors group asearlier discussed# $hey should be maintained#
1t is said that participants in a ;oint .enture, inorganizing the ;oint .enture de.iate rom thetraditional pattern o corporation management# 4noted authority has pointed out that ;ust as in closecorporations, shareholdersG agreements in ;oint .enturecorporations oten contain pro.isions which do one ormore o the ollowing9 +" re(uire greater than ma;ority.ote or shareholder and director action> !" gi.ecertain shareholders or groups o shareholders powerto select a speci*ed number o directors> 6" gi.e to
the shareholders control o.er the selection andretention o employees> and " set up a procedure orthe settlement o disputes by arbitration
uite oten, Kilipino entrepreneurs in their desire tode.elop the industrial and manuacturing capacities oa local *rm are constrained to seek the technology andmarketing assistance o huge multinationacorporations o the de.eloped world# 4rrangements areormalized where a oreign group becomes a minorityowner o a *rm in e)change or its manuacturinge)pertise, use o its brand names, and other suchassistance# Aowe.er, there is always a danger romsuch arrangements# $he oreign group may, rom thestart, intend to establish its own sole or monopolistic
operations and merely uses the ;oint .enturearrangement to gain a oothold or test the Philippinewaters, so to speak# Or the co.etousness may comelater# 4s the Philippine *rm enlarges its operations andbecomes pro*table, the oreign group undermines thelocal ma;ority ownership and acti.ely tries tocompletely or predominantly take o.er the entirecompany# $his undermining o ;oint .entures is noconsistent with air dealing to say the least# $o thee)tent that such sub.ersi.e actions can be lawullypre.ented, the courts should e)tend protectionespecially in industries where constitutional and legare(uirements reser.e controlling ownership to Kilipinocitizens#
1ssue !9?ON 4S1 may .ote their additional e(uity during theelection o board o directors#
2uling9
No# 4s in other ;oint .enture companies, the e)tent o4S1Gs participation in the management o thecorporation is spelled out in the 4greement# Section@a" hereo says that three o the nine directors shalbe designated by 4S1 and the remaining si) by the
P42$ 1# P42$N:2SA1PBCase igestsBD:+37 !3+8<!3+7" E /FS O2& 1
other stockholders, i#e#, the Kilipino stockholders# $hisallocation o board seats is ob.iously in consonancewith the minority position o 4S1#
Aa.ing entered into a well<de*ned contractualrelationship, it is imperati.e that the parties shouldhonor and adhere to their respecti.e rights andobligations thereunder# 4ppellants seem to contendthat any allocation o board seats, e.en in ;oint .enturecorporations, are null and .oid to the e)tent that suchmay interere with the stockholderGs rights tocumulati.e .oting as pro.ided in Section ! o theCorporation Code# $his Court should not be prepared tohold that any agreement which curtails in any waycumulati.e .oting should be struck down, e.en i suchagreement has been reely entered into bye)perienced businessmen and do not pre;udice thosewho are not parties thereto# 1t may well be that itwould be more cogent to hold, as the Securities and:)change Commission has held in the decisionappealed rom, that cumulati.e .oting rights may be.oluntarily wai.ed by stockholders who enter intospecial relationships with each other to pursue andimplement speci*c purposes, as in ;oint .enturerelationships between oreign and local stockholders,
so long as such agreements do not ad.ersely afectthird parties# $o allow the 4S1 &roup to .ote their additional e(uity tohelp elect e.en a Kilipino director who would bebeholden to them would obliterate their minority statusas agreed upon by the parties# 4s aptly stated by theappellate court9
### 4S1, howe.er, should not be allowedto interere in the .oting within the Kilipinogroup# Otherwise, 4S1 would be able todesignate more than the three directors it isallowed to designate under the 4greement,and may e.en be able to get a ma;ority o theboard seats, a result which is clearly contraryto the contractual intent o the parties#
Such a ruling will gi.e efect to both theallocation o the board seats and thestockholderGs right to cumulati.e .oting#Horeo.er, this ruling will also gi.e dueconsideration to the issue raised by theappellees on possible .iolation orcircum.ention o the 4nti<ummy Daw Com#4ct No# +35, as amended" and thenationalization re(uirements o theConstitution and the laws i 4S1 is allowed tonominate more than three directors# 4t p# 6-,2ollo, 7@57@"
$he insinuation that the 4S1 &roup may be able to
control the enterprise under the cumulati.e .otingprocedure cannot, howe.er, be ignored# $he .alidity o the cumulati.e .oting procedure is dependent on thedirectors thus elected being genuine members o theKilipino group, not .oters whose interest is to increasethe 4S1 share in the management o Saniwares# $he ;oint .enture character o the enterprise must alwaysbe taken into account, so long as the company e)istsunder its original agreement# Cumulati.e .oting maynot be used as a de.ice to enable 4S1 to achie.estealthily or indirectly what they cannot accomplishopenly# $here are substantial saeguards in the
4greement which are intended to preser.e the ma;oritystatus o the Kilipino in.estors as well as to maintainthe minority status o the oreign in.estors group asearlier discussed# $hey should be maintained#
TOCAO 'S CA, G.R. No. 124>5, S$p!$:$r 2>,2>>1
&ACTS O& THE CASE Petitioners Har;orie $ocao and
?illiam $# /elo *led a Hotion or 2econsideration o the
ecision dated October , !333# $hey maintain tha
there was no partnership between petitioner /elo, on
the one hand, and respondent Nenita 4# 4nay, on the
other hand> and that the latter being merely an
employee o petitioner $ocao#
4ter a careul re.iew o the e.idence presented, the
court was con.inced that, indeed, petitioner /elo acted
merely as guarantor o &eminesse :nterprise# $his was
categorically armed by respondentGs own witness
:lizabeth /antilan, during her cross<e)amination
Kurthermore, /antilan testi*ed that it was Peter Do who
was the companyGs *nancier#
$he oregoing was neither reuted nor contradicted by
respondentGs e.idence# 1t should be recalled that the
business relationship created between petitioner $ocao
and respondent 4nay was an inormal partnership
which was not e.en recorded with the Securities and
:)change Commission# 4s such, it was understandable
that /elo, who was ater all petitioner $ocaoGs good
riend and con*dante, would occasionally participate in
the afairs o the business, although ne.er in a orma
or ocial capacity# 4gain, respondentGs witness
:lizabeth /antilan, con*rmed that petitioner /eloGs
presence in &eminesse :nterpriseGs meetings wasmerely as guarantor o the company and to help
petitioner $ocao#
ISS(E ?hether or not a partnership e)ists between
petitioner /elo and respondent 4nay# NO
R(LING No e.idence was presented to show that
petitioner /elo participated in the pro*ts o the
business enterprise# 2espondent hersel proessed lack
o knowledge that petitioner /elo recei.ed any share in
the net income o the partnership# On the other hand
petitioner $ocao declared that petitioner /elo was not
entitled to any share in the pro*ts o &eminesse
:nterprise# ?ith no participation in the pro*ts
petitioner /elo cannot be deemed a partner since the
essence o a partnership is that the partners share in
the pro*ts and losses#
Conse(uently, inasmuch as petitioner /elo was not a
partner in &eminesse :nterprise, respondent had no
cause o action against him and her complaint against
P42$ 1# P42$N:2SA1PBCase igestsBD:+37 !3+8<!3+7" E @/FS O2& 1
partnership e)isted between the pri.ate parties# On the
ace o the promissory notes, nothing appears to be.ague or ambiguous# 1t was clearly the intent o the
parties to enter into a contract o loan# $he C4
correctly held that e.en i e.idence aliunde other than
the promissory notes may be admitted to alter the
meaning con.eyed thereby, still the e.idence is
insucient to pro.e that a partnership e)isted between
4co;edo and Sardane#
Sardane, as manager o the basnig business o
4co;edo, naturally had some degree o control o.er the
operations and maintenance thereo# Aowe.er, the act
that he had recei.ed @3L o the net pro*ts does not
conclusi.ely establish that he was a partner o the
pri.ate respondent# Ar!i+l$ 1F974 o* !0$ Ci%il
Co)$ i# $=pli+i! !0a! ;0il$ !0$ r$+$ip! @ a
p$r#o o* a #0ar$ o* !0$ proD!# o* a #i$##
i# prima facie $%i)$+$ !0a! 0$ i# a par!$r i !0$
#i$##, o #+0 i*$r$+$ #0all $ )ra; i*
#+0 proD!# ;$r$ r$+$i%$) i pa@:$! a#
;a$# o* a $:plo@$$. Kurther, the use by the
parties o the pronoun JourJ in reerring to Jour basnig,
our catchJ, Jour depositJ, or Jour boserosJ was merely
indicati.e o the camaraderie and not e.identiary o a
partnership, between them#
&lor$+io R$@$# a) A$l R$@$# %# CIR a) CTA
&a+!#
• On October 6+, +-@3, petitioners, ather andson, purchased a lot and building &ibbs
/uilding" in asmarinas Street, Hanila orP56@,333#33 o which they paid the sum o P67@,333#33, lea.ing a balance o P83,333#33, representing the mortgageobligation o the .endors with the China/anking Corporation, which mortgageobligations were assumed by the .endees# $hepetitioners shared the initial payment o P67@,333#33# 4t the time they purchased thebuilding, it was leased to .arious tenants# 4nadministrator was entrusted to collect therents, make repairs, and other unctions
necessary or the conser.ation andpreser.ation o the building# Petitioners di.idede(ually the income o operation andmaintenance# $he gross income rom rentals othe building amounted to about P-3,333#33annually#
• $hey were then assessed by respondent, C12the sum o P8,87#33 as income ta)surcharge and compromise or the years +-@+to +-@, which was later reduced toP67,@!5#33, as well as or the back incometa)es plus surcharge and compromise in thetotal sum o P!@,-76#7@, co.ering the years+-@@ and +-@8#
• $he C$4 sustained the action o respondent butreduced the ta) liability o petitioners4ccording to the C$4, the pro.isions o theNational 1nternal 2e.enue Code N12C" imposeincome ta) on corporations that includespartnership#
Ca#$ *or !0$ P$!i!io$r
• 4ccording to the petitioner, the C$4 erred inholding that petitioners, by ac(uiring the said
building, established a partnership sub;ect toincome ta) under the N12C"# $hey stressedthat their relation was as co<owners and notpartners#
I##$ ?hether or not petitioners are partners so as tosub;ect their ac(uisition o property to income ta)imposed on corporations
Rli
• Mes, petitioners are partners and the allegederror committed by the C$4 is untenable#
• 1n the opinion penned by the then Chie %ustice,
U4ter reerring to another section o theNational 1nternal 2e.enue Code, whiche)plicitly pro.ides that the term corporationJincludes partnershipsJ and then to 4rticle+787 o the Ci.il Code o the Philippinesde*ning what a contract o partnership is, theopinion goes on to state that Jthe essentiaelements o a partnership are two, namely9 a"an agreement to contribute money, property oindustry to a common und> and b" intent todi.ide the pro*ts among the contractingparties# $he *rst element is undoubtedlypresent in the case at bar, or, admittedlypetitioners ha.e agreed to and did, contributemoney and property to a common und# Aencethe issue narrows down to their intent in actingas they did# Fpon consideration o all the actsand circumstances surrounding the case, weare ully satis*ed that their purpose was toengage in real estate transactions or monetarygain and then di.ide the same amongthemsel.es#V
• $he Court reerred to circumstances thatsurround the present case, to wit9 +" thecommon und being created purposely notsomething already ound in e)istence> !" the
P42$ 1# P42$N:2SA1PBCase igestsBD:+37 !3+8<!3+7" E +3/FS O2& 1
in.estment o the same not merely in onetransaction but in a series o transactions> 6"the lots thus ac(uired not being de.oted toresidential purposes or to other personal useso petitioners in that case> " such propertiesha.ing been under the management o oneperson with ull power to lease, to collect rents,to issue receipts, to bring suits, to sign lettersand contracts and to endorse notes andchecks> @" the abo.e conditions ha.ing e)istedor more than +3 years since the ac(uisition o the abo.e properties> and 8" no testimonyha.ing been introduced as to the purpose Jincreating the set up already ad.erted to, or onthe causes or its continued e)istence#J
• $he Court once again noted that although,taken singly, they might not suce to establishthe intent necessary to constitute apartnership, the collecti.e efect o thesecircumstances is such as to lea.e no room ordoubt on the e)istence o said intent inpetitioners herein#
• Horeo.er, as de*ned in section 5b" o saidCode, Jthe term corporation includespartnerships, no matter how created or
organi1ed#J $his (ualiying e)pression clearlyindicates that a ;oint .enture need not beundertaken in any o the standard orms, or inconormity with the usual re(uirements o thelaw on partnerships, in order that one could bedeemed constituted or purposes o the ta) oncorporations# Kor purposes o the ta) oncorporations, our 2ational Internal RevenueCode, include these partnerships W with thee)ception only o duly registered general co<partnerships within the pur.iew o the termJcorporation#J 1t is, thereore, clear thatpetitioners herein constitute a partnership,insoar as said Code is concerned, and are
sub;ect to the income ta) or corporations#JE'ANGELISTA 'S CIR
SE'ILLA %. CA
G.R. No#. L-4112-3 April 15, 19
Po$!$ J. Sar:i$!o
&a+!#
On Oct# +-, +-83, the $ourist ?orld Ser.ice, 1nc# leased
an oce at Habini St#, Hanila or the ormerGs use as a
branch oce# ?hen the branch oce was opened, the
same was run by the herein appellant Dina O# Se.illa
payable to $ourist ?orld Ser.ice 1nc# by any airline or
any are brought in on the eforts o Hrs# Dina Se.illa,
L was to go to Dina Se.illa and 6L was to be withheld
by the $ourist ?orld Ser.ice, 1nc#
On or about No.ember !, +-8+, the $ourist ?orld
Ser.ice, 1nc# appears to ha.e been inormed that Dina
Se.illa was connected with a ri.al *rm, the Philippine
$ra.el /ureau, and, since the branch oce was anyhow
losing, the $ourist ?orld Ser.ice considered closing
down its oce#
$his was *rmed up by two resolutions o the board o
directors o $ourist ?orld Ser.ice, 1nc# dated ec# !
+-8+, the *rst abolishing the oce o the manager and
.ice<president o the $ourist ?orld Ser.ice, 1nc#, :rmita
/ranch, and the second, authorizing the corporate
secretary to recei.e the properties o the $ourist ?orld
Ser.ice then located at the said branch oce# 1t urthe
appears that on %an# 6, +-8!, the contract with the
appellees or the use o the /ranch Oce premises
was terminated and while the efecti.ity thereo was
%an# 6+, +-8!, the appellees no longer used it# 4s a
matter o act appellants used it since No.# +-8+
/ecause o this, and to comply with the mandate o the
$ourist ?orld Ser.ice, the corporate secretary &abino
Canilao went o.er to the branch oce, and, *nding the
premises locked, and, being unable to contact Dina
Se.illa, he padlocked the premises on %une , +-8! to
protect the interests o the $ourist ?orld Ser.ice#
?hen neither the appellant Dina Se.illa nor any o her
employees could enter the locked premises, a
complaint was *led by the herein appellants against
the appellees with a prayer or the issuance o
mandatory preliminary in;unction# /oth appellees
answered with counterclaims# Kor apparent lack ointerest o the parties therein, the trial court ordered
the dismissal o the case without pre;udice#
I##$
?hether the act o $ourist ?orld Ser.ice in abolishing
its :rmita branch proper# No#
Rli
$he act o $ourist ?orld Ser.ice in abolishing its :rmita
branch is not proper#
$he Supreme Court held that when the petitioner, Dina
Se.illa, agreed to manage $ourist ?orld Ser.ice, 1nc#Gs
:rmita oce, she must ha.e done so pursuant to a
contract o agency#
1n the case at bar, Se.illa solicited airline ares, but
she did so or and on behal o her principal, $ourist
?orld Ser.ice, 1nc# 4s compensation, she recei.ed L
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$he Ci.il Code pro.ides that an action to enorce an
oral contract prescribes in si) 8" years, while the right
to demand an accounting or a partnerGs interest as
against the person continuing the business accrues at
the date o dissolution, in the absence o any contrary
agreement#
1t was %acintoGs death that respondent as the sur.i.ing
partner had the right to an account o his interest as
against petitioners#
$he Ci.il Code e)pressly pro.ides that upon
dissolution, the partnership continues and its legal
personality is retained until the complete winding up o
its business, culminating in its termination#
J. Tio#$<o I%$#!:$! Corpora!io
%#.
Sp#. B$<a:i a) El$aor A
&a+!#
$his is a petition or re.iew seeking there.ersal o the C40s 2esolution declaring the petitionersolidary liable with Primetown Property &roup, 1nc#PP&1" to pay Spouses 4ng#
$he petitioner herein entered into a %ointenture 4greement with PP&1 or the de.elopment o aresidential condominium pro;ect known as Heditel inHandaluyong City# Petitioner contributed the lot whilePP&1 undertook to de.elop the condominium# $heparties urther agreed to a +7L<56L sharing as tode.eloped units# PP&1 urther undertook to use allproceeds rom the pre<selling o its saleable units orthe completion o the Condominium Pro;ect#
1n +--8, PP&1 e)ecuted a Contract toSell with Spouses 4ng on a certaincondominium unit and parking slot or P!,377,66#!@and P6+6,@33#33, respecti.ely#
Aowe.er, on %uly +---, respondent Spouses*led beore the Aousing and Dand Fse 2egulatory/oard ADF2/" a complaint or the rescission o theContract to Sell, against %# $iose;o and PP&1 due todelay in the turno.er o their purchased unit#
Spouses 4ng instructed petitioner and PP&1 tostop depositing the post<dated checks they issued andto cancel said Contracts to Sell# espite se.eraldemands, petitioner and PP&1 ha.e ailed and reused
to reund the P8++,@+-#@! they already paid under thecircumstances#
4s deense, PP&1 claim that the delay wasattributable to the economic crisis and Korce Ha;eureOn a separate answer, petitioner claims thatits prestation under the %4 consisted ocontributing the property on which the condominiumwas to be contributed# Not being pri.y to theContracts to Sell e)ecuted by PP&1 and respondents, itdid not recei.e any portion o the payments made by
the latter> and, that without any contributory ault andnegligence on its part, PP&1 and not the petitionerbreached its undertakings under the %4 by ailing tocomplete the condominium pro;ect#
$he Aousing and Dand Fse ADF" ruled in a.oro respondents, rescinding the contract and orderingpetitioner and PP&1 to pay reund, interest, damagesattorney0s ees and administrati.e *nes#
$he ADF2/ /oard o Commissioners armedthe ADF0s order# Hotion or 2econsideration H2" wasdenied# $he case was subse(uently raised to the Oceo the President OP" which rendered a decisiondismissing petitioner0s appeal on the ground that the
latter0s appeal memorandum was *led out o time andthat the ADF2/ /oard committed no gra.e abuse odiscretion in rendering the appealed decision# H2 wasalso denied#
Petitioner *led beore the C4 a motion oe)tension within which to *le its petition or re.iewclaiming hea.y workload o its counsel# $his wasdenied by the C4# H2 was denied or lack o merit#
I##$
?BN the petitioner should be held solidarily liabletogether with PP&1#
Rli
Mes# $he petitioner is solidarily liable together withPP&1#
/y e)press terms o the %4, it appears thatpetitioner not only retained ownership o the propertypending completion o the condominium pro;ect buthad also bound itsel to answer liabilities proceedingrom contracts entered into by PP&1 with third parties#
4rticle 111, Section + o the %4 distinctly pro.ides asollows9
Section +9 2escission and damages9
)))
1n any case, the Owner shall respect and strictlycomply with any co.enant entered into by thee.eloper and third parties with respect to any o itsunits in the Condominium Pro;ect# $o enable the owneto comply with this contingent liability, the e.elopershall urnish the Owner with a copy o its contracts withthe said buyers on a month<to<month basis#
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iewed in the light o the oregoing pro.ision o the %4, petitioner cannot a.oid liability by claimingthat it was not in any way pri.y to the Contracts to Selle)ecuted by PP&1 and respondents# Horeo.er, a ;oint.enture is considered in this ;urisdiction as a orm o partnership and is, accordingly, go.erned by the law o partnerships#
Fnder 4rticle +5! o the Ci.il Code o the
Philippines, all partners are solidarily liable with thepartnership or e.erything chargeable to thepartnership, including loss or in;ury caused to a thirdperson or penalties incurred due to any wrongul act oromission o any partner acting in the ordinary course o the business o the partnership or with the authority o his co< partners# ?hether innocent or guilty, all thepartners are solidarily liable with the partnership itsel#
&EERICO LOPE, ET AL, plaintifs<appellees, .s (
SE&AO a) BEHN, EER CO., deendants# (
SE&AO, deendant< appellant
&ACTS
$he herein plaintif *led an action beore the
CK1 to reco.er rom the deendants a boat or lanchon,
or its .alue, alleged to be P+,333, together with
damages in the sum o P,853# $he deendant, Mu
Seao, at *rst presented a demurrer, which was
subse(uently o.erruled# Dater, he presented a general
and special deense# Still later, he asked permission to
withdraw his counterclaim and instead thereo to
present the deense that the plaintifs were without
legal capacity to sue# $he deendants, /ehn, Heyer '
Co#, presented a general denial# Dater, /ehn, Heyer '
Co#, was absol.ed rom all liability under the complaint#
4ter hearing the e.idence adduced during the trial o
the case, the court rendered a ;udgment in a.or o the
plaintifs and against the deendant, Mu Seao#
$he deendant appealed the said ;udgment
alleging that the lower court committed an error in
deciding that the plaintifs had legal capacity to sue#
$he deendant and appellant argues that the plaintifshad been doing business under the name o 3ope1
(ermanos> that they had not been organized as a
society, in accordance with the pro.isions o the
Commercial Code, and that, thereore, they were not
authorized to sue and cited decisions o this court in
support o that conclusion#
ISS(E
?hether or not the herein plaintifs ha.e legal capacity
to sue#
HEL
Mes# $he SC armed the decision o the lowe
court holding that the deendant and appellant had not
e)amined the complaint presented by the plaintifs# 4ne)amination o the complaint would ha.e shown the
deendant that the present action was not commenced
in the name o 3ope1 (ermanos, but in the indi.idua
names o the persons constituting the alleged society
or mercantile association# $he SC urther held tha
nothing in the procedure in the present case which is in
conict with the decisions cited by the appellant# $he
plaintifs in the present case, e.en granting that the
society called 3ope1 (ermanos was not authorized to
sue in the name o said society or the reason that it
had not been properly organized, yet, ne.ertheless
they were permitted to sue in their indi.idual names#
BASTIA %# ENI
&a+!#
/astida ofered to assign to Henzi ' Co# his contract
with Phil Sugar Centrals 4gency and to super.ise the
mi)ing o the ertilizer and to obtain other orders or @3
L o the net pro*t that Henzi ' Co#, 1nc#, might deri.e
thererom# %# H# Henzi gen# manager o Henzi ' Co#"
accepted the ofer# $he agreement between the parties
was .erbal and was con*rmed by the letter o Henzi to
the plaintif on %anuary +3, +-!!# Pursuant to the .erba
agreement, the deendant corporation on 4pril !7
+-!! entered into a written contract with the plaintif
marked :)hibit 4, which is the basis o the present
action# Still, the ertilizer business as carried on in the
same manner as it was prior to the written contract,
but the net pro*t that the plaintif herein shall get
would only be 6@L# $he inter.ention o the plaintif
was limited to super.ising the mi)ing o the ertilizers
in the bodegas o Henzi# Prior to the e)piration o the
contract 4pril !7, +-!7", the manager o Henznoti*ed the plaintif that the contract or his ser.ices
would not be renewed# Subse(uently, when the
contract e)pired, Henzi proceeded to li(uidate the
ertilizer business in (uestion# $he plaintif reused to
agree to this# 1t argued, among others, that the written
contract entered into by the parties is a contract o
general regular commercial partnership, wherein Henz
was the capitalist and the plaintif the industria
partner#
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Hunicipality o Padada, a.ao# Ais third applicationwas disappro.ed#
espite the said re;ection, Casteel did not loseinterest# Ae *led a motion or reconsideration#
Heanwhile, se.eral applications were submittedand granted permits" by other persons or portionso the area co.ered by CasteelGs application#
Fpon learning that portions o the area applied orby him were already occupied by ri.al applicants,
Casteel immediately *led the corresponding protests#Conse(uently, two administrati.e cases ensuedin.ol.ing the area in (uestion#
$he irector o Kisheries re;ected CasteelGsapplication on October !@, +--, re(uired him toremo.e all the impro.ements which he hadintroduced on the land, and ordered that the land beleased through public auction#
Casteel appealed to the Secretary o 4griculture andNatural 2esources#
On No.ember !@, +-- 1nocencia eluao wie o Kelipe eluao" and Nicanor Casteel e)ecuted acontract W denominated a Jcontract o ser.iceJ,
stating that the ormer hires and employs the latterand that eluao will *nance the construction andimpro.ements o the *shpond and Casteel will be theHanager and sole buyer o all the produce o the *shthat will be produced rom said *shpond# On thesame date, 1nocencia eluao e)ecuted a specialpower o attorney in a.or o %esus onesa, e)tendingto the latter the authority J$o represent me in theadministration o the *shpond at Halalag,Hunicipality o Padada, Pro.ince o a.ao,Philippines##J
On No.ember !-, +-- the irector o Kisheriesre;ected the application *led by Kelipe eluao#
On September +@, +-@3 the Secretary o 4gricultureand Natural 2esources issued a decision reinstatingNicanor Casteel or the area o ictorio # Carpio, o Deoncio 4radillos and o 4le;andro Cacam#
Sometime in %anuary +-@+ Nicanor Casteel orbade1nocencia eluao rom urther administering the*shpond, and e;ected the latterGs representati.eencargado", %esus onesa, rom the premises#
4lleging .iolation o the contract o ser.ice enteredinto between 1nocencia eluao and Nicanor Casteel,Kelipe eluao and 1nocencia eluao on *led an actionin the Court o Kirst 1nstance o a.ao or speci*cperormance and damages against Nicanor Casteeland %uan epra who, they alleged, instigatedCasteel to .iolate his contract"#
ISS(E
?ON a contract o partnership was created betweeneluao and Casteel based on the so<called Jcontract o ser.ice#J
HEL M:S
$he e.idence preponderates in a.or o the .iewthat the initial intention o the parties was not to
orm a co<ownership but to establish a partnership W1nocencia eluao as capitalist partner and Casteel asindustrial partner W the ultimate undertaking owhich was to di.ide into two e(ual parts such portiono the *shpond as might ha.e been de.eloped by theamount e)tended by the plaintifs<appellees, with theurther pro.ision that Casteel should reimburse thee)penses incurred by the appellees o.er one<hal othe *shpond that would pertain to him#
?e shall thereore construe the contract as one o
partnership, di.ided into two parts W namely, acontract o partnership to e)ploit the *shpondpending its award to either Kelipe eluao or NicanorCasteel, and a contract o partnership to di.ide the*shpond between them ater such award# $he *rst is.alid, the second illegal#
4rt# +5636" o the Ci.il Code enumerates, as one othe causes or the dissolution o a partnership, J##any e.ent which makes it unlawul or the business othe partnership to be carried on or or the membersto carry it on in partnership#J $he appro.al o theappellantGs *shpond application brought to the orese.eral pro.isions o law which made thecontinuation o the partnership unlawul and
thereore caused its ipso facto dissolution#
4ct 336, known as the Kisheries 4ct, prohibits theholder o a *shpond permit the permittee" romtranserring or subletting the *shpond granted tohim, without the pre.ious consent or appro.al o theSecretary o 4griculture and Natural 2esources#
Since the partnership had or its ob;ect the di.isioninto two e(ual parts o the *shpond between theappellees and the appellant ater it shall ha.e beenawarded to the latter, and thereore it en.isaged theunauthorized transer o one<hal thereo to partiesother than the applicant Casteel, it was dissol.ed bythe appro.al o his application and the award to him
o the *shpond# $he appro.al was an e.ent whichmade it unlawul or the business o the partnershipto be carried on or or the members to carry it on inpartnership#
CLASSES O& PARTNERSHIPS AN PARTNERS
Gr$orio Or!$a, To:a# )$l Ca#!illo, Jr. a)B$<a:i Ba+orro %. CA, SEC a) JoaKi i#a
G.R. No. 1>924 Jl@ 3, 1995
&a+!#
Ortega, then a senior partner in the law *rm /ito, Hisa
and Dozada withdrew in said *rm#
Ae *led with S:C a petition or dissolution and
li(uidation o partnership
S:C en banc ruled that withdrawal o Hisa rom the
*rm had dissol.ed the partnership#
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