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 and
P2,000.00. it was also duly registered with the SEC. On 1948 Suter and Spirig got
married and in effect 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 in 1959 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.
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 into universal partnerships. 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.

Ang Pue & Company vs. Sec. of Commerce

FACTS:
On May 1, 1953, Ang Pue and Tan Siong, both Chinese citizens, organized the
partnership Ang Pue & Company for a term of five years from May 1, 1953,
extendible by their mutual consent. The purpose of the partnership was to maintain
the business of general merchandising, buying and selling at wholesale and retail,
particularly of lumber, hardware and other construction materials for commerce,
either native or foreign. The corresponding articles of partnership were registered in
the Office of the Securities & Exchange Commission on June 16, 1953.
However, On June 19, 1954 Republic Act No. 1180 was enacted to regulate
the retail business. It provided, among other things that, after its enactment, a
partnership not wholly formed by Filipinos could continue to engage in the retail
business until the expiration of its term.
Then, after the enactment of the said Act but before the expiration of the 5
year term of the Ang Pue & Company, the partners already mentioned amended the
original articles of part ownership so as to extend the term of life of the partnership
to another five years. When the amended articles were presented for registration in
the Office of the Securities & Exchange Commission, such registration was refused
upon the ground that the extension was in violation of the aforesaid Act.
Issue: Whether or Not RA 1180 cannot adversely affect the appellants in extending
the life of their partnership.
Ruling: To organize a corporation or a partnership that could claim a juridical
personality of its own and transact business as such, is not a matter of absolute
right but a privilege which may be enjoyed only under such terms as the State may
deem necessary to impose. That the State, through Congress, and in the manner
provided by law, had the right to enact Republic Act No. 1180 and to provide therein
that only Filipinos and concerns wholly owned by Filipinos may engage in the retail
business cannot be seriously disputed. That this provision was clearly intended to
apply to partnership already existing at the time of the enactment of the law is
clearly showing by its provision giving them the right to continue engaging in their
retail business until the expiration of their term or life.
To argue that because the original articles of partnership provided that the partners could extend the
term of the partnership, the provisions of Republic Act 1180 cannot be adversely affect appellants
herein, is to erroneously assume that the aforesaid provision constitute a property right of which the
partners cannot be deprived without due process or without their consent. The agreement contain
therein must be deemed subject to the law existing at the time when the partners came to agree
regarding the extension. In the present case, as already stated, when the partners amended the
articles of partnership, the provisions of Republic Act 1180 were already in force, and there can be

not the slightest doubt that the right claimed by appellants to extend the original term of their
partnership to another five years would be in violation of the clear intent and purpose of the law
aforesaid.

Kiel vs. Estate of P.S. Sabert

Facts:
In 1907 Albert F. Kiel along with William Milfeil commenced to work on certain public
lands situated in the municipality of Parang, Province of Cotabato, known as Parang
Plantation Company. Kiel subsequently took over the interest of Milfeil.
Subsequently, Kiel and P. S. Sabert entered into an agreement to develop the
Parang Plantation Company. Sabert was to furnish the capital to run the plantation
and Kiel was to manage it. They were to share and share alike in the property. It
seems that this partnership was formed so that the land could be acquired in the
name of Sabert, Kiel being a German citizen and not deemed eligible to acquire
public lands in the Philippines.
By virtue of the agreement, from 1910 to 1917, Kiel worked upon and developed the
plantation. During the World War, he was deported from the Philippines.
Meanwhile, after the deportation of Kiel, Sabert organized the Nituan Plantation
Company together with 5 more persons, with a subscribed capital of P40,000.00 .
And On April 10, 1922, P. S. Sabert transferred all of his rights in two parcels of land
situated in the municipality of Parang, Province of Cotabato, embraced within his
homestead application No. 21045 and his purchase application No. 1048, in
consideration of the sum of P1, to the Nituan Plantation Company. In the same
period Kiel appears to have secured a settlement with Sabert. But Sabert's death
came before any amicable arrangement could be reached and before an action by
Kiel against Sabert could be decided. So these proceedings against the estate of
Sabert.
Issue: Whether or Not there existed a copartnership between Kiel and the deceased
Sabert.
Ruling: No partnership agreement in writing was entered into by Kiel and Sabert. The question
consequently is whether or not the alleged verbal copartnership formed by Kiel and Sabert has been
proved, if we eliminate the testimony of Kiel and only consider the relevant testimony of other witnesses.
In performing this task, we are not unaware of the rule of partnership that the declarations of one partner,
not made in the presence of his copartner, are not competent to prove the existence of a partnership
between them as against such other partner, and that the existence of a partnership cannot be
established by general reputation, rumor, or hearsay.
The testimony of the plaintiff's witnesses, together with the documentary evidence, leaves the firm
impression with us that Kiel and Sabert did enter into a partnership, and that they were to share
equally. Applying the tests as to the existence of partnership, we feel that competent evidence exists
establishing the partnership. Even more primary than any of the rules of partnership above announced, is
the injunction to seek out the intention of the parties, as gathered from the facts and as ascertained from
their language and conduct, and then to give this intention effect.