Escolar Documentos
Profissional Documentos
Cultura Documentos
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Fernandez for the purchase of casco no. 1515 (not casco no.
2089) but maintained not receiving anything for the purchase
of casco no. 2089. Verily, Dela Rosa, at some point, returned
the sum of 1,125 pesos to Fernandez.
The lower court ruled in favor of Dela Rosa .
Issue:
WON a partnership exists between Fernandez and Dela Rosa.
Held:
Yes, a partnership exists between the parties.
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 (Civil Code, secs.
1689, 1695.)
As regards the first element, the Supreme Court found that
money was indeed furnished by Fernandez and received by
Dela Rosa with the understanding that it was to be used for the
purchase of the cascoes in question. As regards 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.
While the Supreme Court was unable to find that there was
any specific verbal agreement of partnership, the same may be
implied from the fact as to the purchase of the casco. It is thus
apparent that a complete and perfect contract of partnership
was entered into by the parties.
As to the absence of a written instrument
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.)
As to the return of Fernandezs money contribution
The amount returned fell short 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 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
leonine.
There was no intention on the part of the plaintiff in accepting
the money to relinquish his rights as a partner, nor is there any
evidence that by anything that he said or by anything that he
omitted to say he gave the defendant any ground whatever to
believe that he intended to relinquish them. On the contrary he
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4.
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The sale of the boats, as well as the division among the three
of the balance remaining after the payment of their loans,
proves beyond cavil that F/B Lourdes, though registered in his
name, was not his own property but an asset of the
partnership. It is not uncommon to register the properties
acquired from a loan in the name of the person the lender
trusts, who in this case is the petitioner himself. After all, he is
the brother of the creditor, Jesus Lim.
Being partner, they are all liable for debts incurred by or on
behalf of the partnership. The liability for a contract entered
into on behalf of an unincorporated association or ostensible
corporation may lie in a person who may not have directly
transacted on its behalf, but reaped benefits from that contract.
In this case, private respondent has not shown that A.C. Aguila
& Sons, Co., as a separate juridical entity, is being used for
fraudulent, unfair, or illegal purposes. Moreover, the title to the
subject property is in the name of A.C. Aguila & Sons, Co. and
the Memorandum of Agreement was executed between private
respondent, with the consent of her late husband, and A.C.
Aguila & Sons, Co., represented by petitioner. Hence, it is the
partnership, not its officers or agents, which should be
impleaded in any litigation involving property registered in its
name.
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Alicbusan vs. CA
Facts:
Cesar Cordero and Leopoldo Alicbusan were partners in the
operation of Babys Canteen located in the Philtranco terminal
in Pasay City. Pursuant to their agreement, Cordero assumed
the position of Managing partner while Alicbusan took care of
accounting, records keeping and other comptrollership
functions.
The partnership was to exist for a fixed term, between July
1981 up to July 1984. Upon expiration of the said period, both
of them continued their relationship under the original term.
On May 11, 1990, Cordero filed a complaint for collection for
various sums totaling P209, 497. 36 which he later on
amended to P309, 681. 51. This represented the collectibles
he had from Philtranco, by virtue of an arrangement whereby
Philtranco employees were allowed to buy goods and items
from Babys Canteen on credit, which payments were
subsequently deducted by Philtranco from the employees
salaries. Philtranco would remit the amount to them 15 days
later.
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, PlazaSta. Cruz, Manila, the principal conditions of
the offer being:
(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.
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 the judgment.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 present action in 1954, alleging the existence of
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The sisters filed a case with the CTA, claiming that they were
not subject to the aforementioned taxes since the said taxes
were imposed upon corporations provided for in Section 24 of
Commonwealth Act 84.
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Navarro vs. CA
3.
Facts:
On July 23, 1976, Olivia V. Yanson filed a complaint against
Lourdes Navarro for "Delivery of Personal Properties With
Damages". The complaint incorporated an application for a writ
of replevin. (*was subsequently amended to include private
respondent's husband, Ricardo B. Yanson, as co-plaintiff, and
petitioner's husband, as co-defendant.)
Issue:
Whether a partnership existed between the parties in the
present case. NO.
2.
Held:
As a premise, Article 1767 of the New Civil Code defines
the contract of partnership:
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2.
April 1955: Pending such civil case, Constantino filed with the
ROD a notice of LIS PENDENS on the area/property which
was converted into a subdivision
May 1955: Owners sold it to Santos. ROD made annotation of
the LP on owners and Santos title
June 1955: They filed a PETITION for cancellation of said LP
July 1955: Lower court decided in favor of the owners and
ordered the cancellation of the LP stating that Constantinos
civil action was purely and clearly a claim for money
judgment which does not affect the title or the right of
possession of real property annotated with LP and it being a
settled rule in this jurisdiction that a notice of lis pendens may
be invoked as a remedy in cases where the very lis mota of the
pending litigation concerns directly the possession of, or title to
a specific real property
Constantinos theory: Such holding that his was purely a
money judgement claim is wrong. Instead he is contending that
the agreement whereby he is to be paid commission and fee
actually converted him into a partner and gave him 1/5
participation of the property itself, thus, his suit is one for the
settlement and adjustment of partnership interest or a
partition action or proceeding
Issue:
Whether there is partnership amongst Constantino and
Biglangawa/Espiritu. NONE
RULING:
There is no word nor expression in the contract that suggests
any idea of partnership. On the contrary, Constantino
expressly avers in his complaint that Biglangawa and Espiritu
appointed him as their EXCLUSIVE AGENT to develop xxx.
Categorically, he referred to himself as agent, not a partner,
entitled to compensation in the form of commission and/or fee,
not participation and not in the form of share.
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that the old rule that sharing profits as profits made one a
partner is overthrown. (Mechem, second edition, p. 89.)
It is nowhere stated in Exhibit A that the parties were
establishing a partnership or intended to become partners.
Great stress in laid by the trial judge and plaintiff's attorneys on
the fact that in the sixth paragraph of Exhibit A the phrase "en
sociedad con" is used in providing that defendant corporation
not engage in the business of prepared fertilizers except in
association with the plaintiff (en sociedad con). The fact is
that en sociedad con as there used merely means en reunion
con or in association with, and does not carry the meaning of
"in partnership with".
The trial judge found that the defendant corporation had not
always regarded the contract in question as an employment
agreement, because in its answer to the original complaint it
stated that before the expiration of Exhibit A it notified the
plaintiff that it would not continue associated with him in said
business. The trial judge concluded that the phrase
"associated with", used by the defendant corporation, indicated
that it regarded the contract, Exhibit A, as an agreement of
copartnership.
HELD:
It is Elfledo Lim based on the evidence presented regardless of
Jimmy Yus testimony in court that Jose Lim was the partner. If
Jose Lim was the partner, then the partnership would have
been dissolved upon his death . A partnership is dissolved
upon the death of the partner. Further, no evidence was
presented as to the articles of partnership or contract of
partnership between Jose, Norberto and Jimmy. Unfortunately,
there is none in this case, because the alleged partnership was
never formally organized.
The heirs of Jose Lim argued that Elfledo Lim acquired his
properties from the partnership that Jose Lim formed with
Norberto and Jimmy. In court, Jimmy Yu testified that Jose Lim
was the partner and not Elfledo Lim. The heirs testified that
Elfledo was merely the driver of Jose Lim.
Issue:
Who is the partner between Jose Lim and Elfledo Lim?
Elfledo Lim
But at any rate, the Supreme Court noted that based on the
functions performed by Elfledo, he is the actual partner.
The following circumstances tend to prove that Elfledo was
himself the partner of Jimmy and Norberto:
1.) Cresencia testified that Jose gave Elfledo P50,000.00, as
share in the partnership, on a date that coincided with the
payment of the initial capital in the partnership;
2.) Elfledo ran the affairs of the partnership, wielding absolute
control, power and authority, without any intervention or
opposition whatsoever from any of petitioners herein;
3.) all of the properties, particularly the nine trucks of the
partnership, were registered in the name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or
salaries from the partnership, indicating that what he actually
received were shares of the profits of the business; and
5.) none of the heirs of Jose, the alleged partner, demanded
periodic accounting from Elfledo during his lifetime.
As repeatedly stressed in the case of Heirs of Tan Eng
Kee, a demand for periodic accounting is evidence of a
partnership.
Furthermore, petitioners failed to adduce any evidence to show
that the real and personal properties acquired and registered in
the names of Elfledo and Juliet formed part of the estate of
Jose, having been derived from Joses alleged partnership with
Jimmy and Norberto.
Elfledo was not just a hired help but one of the partners in the
trucking business, active and visible in the running of its affairs
from day one until this ceased operations upon his demise.
The extent of his control, administration and management of
the partnership and its business, the fact that its properties
were placed in his name, and that he was not paid salary or
other compensation by the partners, are indicative of the fact
that Elfledo was a partner and a controlling one at that. It is
apparent that the other partners only contributed in the initial
capital but had no say thereafter on how the business was ran.
Evidently it was through Elfredos efforts and hard work that
the partnership was able to acquire more trucks and otherwise
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Facts:
On September 9, 2008 respondents Ernesto and Corazon
Oliva (the Olivas) filed an action for accounting and specific
performance with damages against petitioner spouses Jose
Miguel and Gladys Miriam Anton (the Antons) before the
Regional Trial Court (RTC) of Quezon City.
The Olivas alleged that they entered into three Memoranda of
Agreement (MOA) with Gladys Miriam, their daughter, and
Jose Miguel, their son-in-law, setting up a business partnership
covering three fast food stores, known as "Pinoy Toppings"
that were to be established at SM Megamall, SM Cubao, and
SM Southmall.
Under the MOAs, the Olivas wer,e entitled to 30% share of the
net profits of the SM Megamall store and 20% in the cases of
SM Cubao and SM Southmall stores.
The pertinent portions of the first MOA dated May 2, 1992,
covering the SM Megamall store (see full text).
The pertinent terms of the second MOA dated May 6, 1993,
covering the SM Cubao store (see full text).
The pertinent portions of the third MOA dated April 20, 1995,
covering the SM Southmall Branch (see full text).
The Olivas alleged that while the Antons gave them a total of
P2,547,000.00 representing their monthly shares of the net
profits from the operations of the SM Megamall and SM
Southmall stores, the Antons did not give them their shares of
the net profits from the store at SM Cubao.
Further, Jose Miguel did not render to them an account of the
operations of the three stores. And, beginning November 1997,
the Antons altogether stopped giving the Olivas their share in
the net profits of the three stores.
The Olivas demanded an accounting of partnership funds but,
in response, Jose Miguel terminated their partnership
agreements.
JOSE MIGUEL ALLEGED: that he and his wife, Gladys
Miriam, never partnered with the Olivas in the operations of the
three stores. The Antons merely borrowed money from the
Olivas to finance the opening of those stores. Gladys Miriam,
who managed the operations of the business, remitted to the
Olivas the amounts due them even after the loans had been
paid. If any accounting was needed, it should orily be for the
purpose of ascertaining the correctness the payments made.
GLADYS MIRIAM'S PART: she affirmed having managed the
three stores up until she and Jose Miguel separated. They paid
the Olivas in checks, representing their share in the profits of
the business. Gladys Miriam filed a case for legal separation
against her husband, Jose Miguel, prompting the latter to
terminate their business partnership with her parents.
Issue:
Whether the CA erred in holding that, notwithstanding the
absence of a partnership between the Olivas and the Antons,
the latter have the obligation to pay the former their shares of
the net profits of the three stores plus legal interest on those
shares until they have been paid. NO.
HELD:
The Court will not disturb the finding of both the RTC and the
CA that, based on the terms of the MOAs and the
circumstances surrounding its implementation, the
relationship between the Olivas and the Antons was one of
creditor-debtor, not of partnership.
The finding is sound since, although the MOA denominated the
Olivas as "partners." the amounts they gave did not appear to
be capital contributions to the establishment of the stores.
Indeed, the stores had to pay the amounts back with interests.
Moreover, the MOAs forbade the Olivas from interfering
with the running of the stores. At any rate, none of the
parties has made an issue of the common finding of the courts
below respecting the nature of their relationship.
On Jose Miguels contention: since the Olivas were not the
Antons' partners in the stores, they were not entitled to receive
percentage shares of the net profits from the stores'
operations.
But, as the CA correctly held, although the Olivas were mere
creditors, not partners, the Antons agreed to compensate them
for the risks they had taken. The Olivas gave the loans with
no security and they were to be paid such loans only if the
stores made profits. Had the business suffered loses and
could not pay what it owed, the Olivas would have ultimately
assumed those loses just by themselves. Still there was
nothing illegal or immoral about this compensation
scheme. Thus, unless the MOAs are subsequently rescinded
on valid grounds or the parties mutually terminate them, the
same remain valid and enforceable.
It did not matter that the Antons had already paid for two of the
loans and their interests. Their obligation to share net
profits with the Olivas was not extinguished by such
payment. Indeed, the Antons paid the Olivas their share of the
profits from two stores although the loans corresponding to
them had in the meantime been paid. Only after Jose Miguel's
marital relation with Gladys Miriam turned sour in November
1997 did he cease to pay the Olivas their shares of the profits.
The CA also correctly ruled that, since the Olivas were mere
creditors, not partners, they had no right to demand that the
Antons make an accounting of the money loaned out to them.
Still, the Olivas were entitled to know from the Antons how
much net profits the three stores were making annually
since the Olivas were entitled to certain percentages of those
profits. Indeed, the third and second MO A directed the Antons
to provide the Olivas with copies of the monthly sales reports
from the operations of the stores involved, apparently to enable
them to know how much were due them. There is no reason
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TOCAO vs. CA
OCT. 4, 2000
GR No. 127405
Facts:
Belo, Tocao and Anay entered into a joint venture to distribute
cookware. Belo acted as capitalist, Tocao as president and
general manager and Anay as head of the marketing
department and VP of sales. They operated under the name
Geminesse Enterprise, a sole proprietorship registered in
Marjorie Tocaos name.
The parties agreed that:
a. Belos name should not appear in any documents relating to
their transactions with West Bend Company.
b. Anay would be entitled to 10% of the annual net profits, 6%
overriding commission, 30% of the sales she makes and 2% of
her demonstration services.
The agreement was not reduced to writing.
Anay received her commissions as agreed in 1987. In 1988,
however, she did not receive the same commission, prompting
her to file a complaint for sum of money with damages against
Tocao and Belo.
Tocao and Belo answered that the alleged agreement with
Anay that was neither reduced in writing, nor ratified, was
either unenforceable or void or inexistent. There could not
have been a partnership because Geminesse Enterprise was
the sole proprietorship of Tocao. Also, they alleged that Anay
merely acted as marketing demonstrator of Geminesse
Enterprise for an agreed remuneration, hence was only an
employee.
Trial court and CA ruled in favor of Anay.
Issues:
Whether Anay was a partner or employee in the business?
Partner.
Whether there was dissolution of the partnership? NO.
Held:
st
(1 Issue) They parties entered into a partnership.
There was indeed an oral partnership agreement between
Tocao, Belo and Anay. It did not matter that the agreement
was not in writing because Article 1771 of the Civil Code
provides that a partnership may be constituted in any form.
The fact that Geminesse Enterprise was registered in Tocaos
name is not determinative of whether or not the business was
managed and operated by a sole proprietor or a partnership.
Indubitably then, the business name Geminesse Enterprise
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Sardane vs. CA
Facts:
Acojedo brought an action in the City Court of Dipolog for
collection of a sum of P5,217.25 based on promissory notes
executed by the herein private respondent Nobio Sardane in
favor of the herein petitioner.
It has been established in the trial court that on many
occasions, Acoejdo demanded the payment of the total amount
of P5,217.25. Due to failure to pay upon extrajudicial demand
(demand letter from a lawyer), Acojedo sought to collect by
filing this case.
City Court of Dipolog issued an order dated May 18, 1976
declaring the private respondent in default and allowed the
petitioner to present his evidence ex-parte. The City Court of
Dipolog rendered judgment by default in favor of the petitioner.
Private respondent filed a motion to lift the order of default
which was granted.
CITY COURT OF DIPOLOG After the trial on the merits, the
City Court of Dipolog rendered its decision in favor of Acojedo
and against Sardaje as follows:
(a) Ordering the Sardaje to pay unto the plaintiff the sum of
(P5,217.25) plus legal interest to commence from April 23,
1976 when this case was filed in court;
(b) pay the plaintiff the sum of P200.00 as attorney's fee and to
pay the cost of this proceeding. 3
APPEAL TO CFI: Sardane appealed to the Court of First
Instance of Zamboanga del Norte which reversed the decision.
He said that he is a partner and that the PNotes are
evidence of his share in the common fund. CFI concluded
that the promissory notes involved were merely receipts for the
contributions to said partnership and, therefore, upheld the
claim that there was ambiguity in the promissory notes, hence
parol evidence was allowable to vary or contradict the terms of
the represented loan contract.
CA: Acojedo then sought the review of said decision by
petition to the CA. The issue on whether the oral testimony for
the therein private respondent Sardane that a partnership
existed between him and therein petitioner Acojedo are
admissible to vary the meaning of the abovementioned
promissory notes was raised in this appeal.
CA said that the exceptions to the rule do not apply in this case
as there is no ambiguity in the writings in question, thus the
issue is.
Issue:
Whether a partnership exists between Acojedo and Sardane
primarily based on the Promissory notes presented as
evidence? NO
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Held:
ON THE PROMISSORY NOTES: In the case at bar, the
promissory notes containing a promise to pay a sum certain in
money, payable on demand and the promise to bear the costs
of litigation in the event of the private respondent's failure to
pay the amount loaned when demanded extrajudicially.
THE PNotes clearly denote that the Sardane is obliged to
return the sum loaned to him. On their face, nothing appears to
be vague or ambigous, for the terms of the promissory notes
clearly show that it was incumbent upon the private respondent
to pay the amount involved in the promissory notes if and when
the petitioner demands the same.
It was clearly the intent of the parties to enter into a contract of
loan for how could an educated man like the private
respondent be deceived to sign a promissory note yet
intending to make such a writing to be mere receipts of the
petitioner's supposed contribution to the alleged partnership
existing between the parties?
OTHER EVIDENCE: It has been established in the trial court
that, the private respondent has been engaged in business for
quite a long period of time--as owner of the Sardane Trucking
Service, entering into contracts with the government for the
construction of wharfs and seawall; and a member of the City
Council of Dapitan. It indeed puzzles the COURT how Sardane
could have been misled into signing a document containing
terms which he did not mean them to be.
Court of Appeals held, and SC agrees, that even if
evidence aliunde other than the promissory notes may be
admitted to alter the meaning conveyed thereby, still the
evidence is insufficient to prove that a partnership existed
between the private parties hereto.
As manager of the basnig Sarcado he naturally has some
degree of control over the operations, and maintenance thereof
had to be exercised by herein petitioner.
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Issue:
Whether the members of the unlawful partnership have the
right to be reimbursed of the amount of their contributions
made to the unlawful partnership. YES
Held:
According to Manresa: "Ricci holds that the partner who
limits himself to demanding only the amount contributed
by him need not resort to the partnership contract on
which to base his claim or action. And, he adds in
explanation, that the partner makes his contribution, which
passes to the managing partner for the purpose of carrying on
the business or industry which is the object of the partnership;
or, in other words, to breathe the breath of life into a
partnership contract with an object forbidden by the law. And
as said contract does not exist in the eyes of the law, the
purpose for which the contribution was made has not
come into existence, and the administrator of the
partnership holding said contribution retains what
belongs to others, without any consideration; for which
reason he is bound to return it, and he who has paid in his
share is entitled to recover it.
"[The] Code does not state whether, upon the dissolution of the
unlawful partnership, the amounts contributed are to be
returned to the partners, because it only deals with the
disposition of the profits; but the fact that said contributions
are not included in the disposal prescribed for said profits,
shows that in consequence of said exclusion, the general
rules of law must be followed, and hence, the partners
must be reimbursed the amount of their respective
contributions. Any other solution would be immoral, and the
law will not consent to the latter remaining in the possession of
the manager or administrator who has refused to return them,
by denying to the partners the action to demand them."
(Manresa, Commentaries on the Spanish Civil Code, vol. XI,
pp. 262-264.)
Issue:
Whether the members of the unlawful partnership have the
right to be reimbursed of the amount of the
EARNINGS/PROFITS made by the unlawful partnership. NO
Held:
According to Manresa: " this is not the case with regard to
profits earned in the course of the partnership, because they
do not constitute or represent the partner's contribution but are
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Facts:
On June 22, 1992, Lamberto Chua filed with the RTC a
complaint against Lilibeth Sunga Chan and Cecilia Chan,
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Facts:
The present petition is rooted in an action for quieting of title
filed by the Secuyas against Gerarda M. vda. de Selma.
Secuyas asserted ownership over the disputed parcel of land,
alleging the following facts:
The parcel of land subject of this case is a PORTION of Lot
5679 that has an area of 12,750 square meters, more or less.
During the lifetime of Maxima Caballero, vendee and patentee
of Lot 5679, she entered into that AGREEMENT OF
PARTITION with Paciencia Sabellona, whereby the Maxima
bound herself and parted with one-third (1/3) portion of Lot
5679 in favor of the Pacienca. Among others it was stipulated
in said agreement of partition that the said portion of one-third
so ceded will be located adjoining the municipal road;
Paciencia Sabellona took possession and occupation of that
one-third portion of Lot 5679 adjudicated to her. Later, she sold
the three thousand square meter portion thereof to Dalmacio
Secuya for a consideration of P1,850.00, by means of a private
document which was lost. Such sale was admitted and
confirmed by Ramon Sabellona, only heir of Paciencia
Sabellona, per that instrument denominated CONFIRMATION
OF SALE OF UNDIVIDED SHARES.
Ramon Sabellona was the sole voluntary heir of Paciencia
Sabellona, per that Last Will and Testament of Paciencia
Sabellona, executed and acknowledged before s notary public.
Pursuant to such will, Ramon Sabellona inherited all the
properties left by Paciencia Sabellona.
After the purchase by Dalmacio Secuya, the latter, together
with his brothers and sisters took physical possession of the
land and cultivated the same. In 1967, Edilberto Superales
married Rufina Secuya, niece of Dalmacio Secuya. With the
permission and tolerance of the Secuyas, Edilberto Superales
constructed his house on the lot in question;
Subsequently, Dalmacio Secuya died. Thus his heirs
brothers, sisters, nephews and nieces are now the
petitioners.
In 1972, defendant-respondent Gerarda Selma bought a 1,000
square-meter portion of Lot 5679. Then on February 19, 1975,
she bought the bigger bulk of Lot 5679, consisting of 9,302
square meters, evidenced by that deed of absolute sale. The
land in question, a 3,000-square meter portion of Lot 5679, is
embraced and included within the boundary of the later
acquisition by respondent Selma.
Defendant-respondent Gerarda Selma lodged a complaint, she
was asserting ownership over the land inherited by plaintiffspetitioners from Dalmacio Secuya of which they had long been
in possession . . . in concept of owner.
Issue:
Whether or not there was a valid transfer or conveyance of
one-third (1/3) portion of Lot 5679 by Maxima Caballero in
favor of Paciencia Sabellona, by virtue of [the] Agreement of
Partition. NO
Held:
In the case at bar, petitioners allege that TCT No. 5679-C-120,
issued in the name of Private Respondent Selma, is a cloud on
their title as owners and possessors of the subject property,
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It being a basic tenet of the Spanish and Philippine law that the
partnership has a juridical personality of its own, distinct and
separate from that of its partners, the bypassing of the
existence of the limited partnership as a taxpayer can only be
done by ignoring or disregarding clear statutory mandates and
basic principles of our law. The limited partnership's separate
individuality makes it impossible to equate its income with that
of the component members. True, section 24 of the Internal
Revenue Code merges registered general co-partnerships
(compaias colectivas) with the personality of the individual
partners for income tax purposes. But this rule is exceptional in
its disregard of a cardinal tenet of our partnership laws, and
can not be extended by mere implication to limited
partnerships.
Here, the limited partnership is not a mere business conduit of
the partner-spouses; it was organized for legitimate business
purposes; it conducted its own dealings with its customers prior
to appellee's marriage, and had been filing its own income tax
returns as such independent entity. The change in its
membership, brought about by the marriage of the partners
and their subsequent acquisition of all interest therein, is no
ground for withdrawing the partnership from the coverage of
Section 24 of the tax code, requiring it to pay income tax. As
far as the records show, the partners did not enter into
matrimony and thereafter buy the interests of the remaining
partner with the premeditated scheme or design to use the
partnership as a business conduit to dodge the tax laws.
Regularity, not otherwise, is presumed.
As the limited partnership under consideration is taxable on its
income, to require that income to be included in the individual
tax return of respondent Suter is to overstretch the letter and
intent of the law. In fact, it would even conflict with what it
specifically provides in its Section 24: for the appellant
Commissioner's stand results in equal treatment, tax wise, of a
general copartnership (compaia colectiva) and a limited
partnership, when the code plainly differentiates the two. Thus,
the code taxes the latter on its income, but not the former,
because it is in the case of compaias colectivas that the
members, and not the firm, are taxable in their individual
capacities for any dividend or share of the profit derived from
the duly registered general partnership.
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and offer evidence that would show that Tan Eng Kee received
amounts of money allegedly representing his share in the
profits of the enterprise. Petitioners failed to show how much
their father, Tan Eng Kee, received, if any, as his share in the
profits of Benguet Lumber Company for any particular period.
Hence, they failed to prove that Tan Eng Kee and Tan Eng Lay
intended to divide the profits of the business between
themselves, which is one of the essential features of a
partnership.
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E. S. LYONS, plaintiff-appellant,
vs.
C. W. ROSENSTOCK, Executor of the Estate of Henry W.
Elser, deceased, defendant-appellee.
Facts:
Prior to his death on June 18, 1923, Henry W. Elser was
engaged in buying, selling, and administering real estate. In
several ventures, the plaintiff, E. S. Lyons, had joined with him,
the profits being shared by the two in equal parts. In April,
1919, Lyons, a missionary, went on leave to the United States
and was gone for nearly a year and a half. Elser made a
written statements showing that Lyons was, at that time, half
owner with Elser of three particular pieces of real property.
Concurrently with this act, Lyons execute in favor of Elser a
general power of attorney empowering Elser to manage and
dispose of said properties at will and to represent him fully and
amply, to the mutual advantage of both. During the absence of
Lyons two of the pieces of properties were sold, leaving in his
hands a single piece of property located at Carriedo Street.
In the spring of 1920 the attention of Elser was drawn to a
piece of land, referred to as the San Juan Estate. The amount
required for the first payment was P150,000, and as Elser had
available only about P120,000, including the P20,000
advanced upon the option, it was necessary to raise the
remainder by obtaining a loan for P50,000 which was obtained
from a Chinese merchant named Uy Siuliong. With this money
and what he already had in bank, Elser purchased the San
Juan Estate. For the purpose of the further development of the
property, a limited partnership had been organized by Elser
and three associates, under the name of J. K. Pickering &
Company.
Take note that when Elser obtained the loan of P50,000 to
complete the amount needed for the first payment on the San
Juan Estate, the lender, Uy Siuliong, insisted that Elser should
procure the signature of the Fidelity & Surety Co. on the note
to be given for said loan. But before signing the note with Elser
and his associates, the Fidelity & Surety Co. insisted upon
having security for the liability thus assumed by it. To meet this
requirements Elser mortgaged to the Fidelity & Surety Co. the
equity of redemption in the property owned by himself and
Lyons on Carriedo Street. This mortgage was executed on
June 30, 1920, at which time Elser expected that Lyons would
come in on the purchase of the San Juan Estate. But when he
learned from the letter from Lyons of July 21, 1920, that the
latter had determined not to come into this deal, Elser began to
cast around for means to relieve the Carriedo property of the
encumbrance which he had placed upon it. For this purpose,
on September 9, 1920, he addressed a letter to the Fidelity &
Surety Co., asking it to permit him to substitute a property
owned by himself at M. H. del Pilar Street, Manila, and 1,000
shares of the J. K. Pickering & Company, in lieu of the
Carriedo property, as security. The Fidelity & Surety Co.
agreed to the proposition; and later on, Elser executed in favor
of the Fidelity & Surety Co. a new mortgage on the M. H. del
Pillar property and delivered the same, with 1,000 shares of J.
K. Pickering & Company, to said company. The latter
thereupon in turn executed a cancellation of the mortgage on
the Carriedo property and delivered it to Elser.
The case for the plaintiff Lyons supposes that, when Elser
placed a mortgage for P50,000 upon the equity of redemption
in the Carriedo property, Lyons, as half owner of said property,
became, as it were, involuntarily the owner of an undivided
interest in the property acquired partly by that money; and it is
insisted for him that, in consideration of this fact, he is entitled
to the four hundred forty-six and two-thirds shares of J. K.
Pickering & Company, with the earnings thereon, as claimed in
his complaint.
Issue:
Whether Lyons is entitled to the four hundred forty-six and twothirds shares of J. K. Pickering & Company. NO
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Held:
Elser, in buying the San Juan Estate, was not acting for
any partnership composed of himself and Lyons.
In the purely legal aspect of the case, the position of the
appellant is, in our opinion, untenable. If Elser had used any
money actually belonging to Lyons in this deal, he would under
article 1724 of the Civil Code and article 264 of the Code of
Commerce, be obligated to pay interest upon the money so
applied to his own use. Under the law prevailing in this
jurisdiction a trust does not ordinarily attach with respect to
property acquired by a person who uses money belonging to
another. Of course, if an actual relation of partnership had
existed in the money used, the case might be difference; and
much emphasis is laid in the appellant's brief upon the relation
of partnership which, it is claimed, existed. But there was
clearly no general relation of partnership, under article 1678 of
the Civil Code. It is clear that Elser, in buying the San Juan
Estate, was not acting for any partnership composed of himself
and Lyons, and the law cannot be distorted into a proposition
which would make Lyons a participant in this deal contrary to
his express determination.
The doctrines of equity operates only where money
belong to one person is used by another for the
acquisition of the property which should belong to both.
It seems to be supposed that the doctrines of equity worked
out in the jurisprudence of England and the United States with
reference to trust supply a basis for this action. The doctrines
referred to operate, however, only where money belonging to
one person is used by another for the acquisition of property
which should belong to both; and it takes but little discernment
to see that the situation here involved is not one for the
application of that doctrine, for no money belonging to Lyons or
any partnership composed of Elser and Lyons was in fact used
by Elser in the purchase of the San Juan Estate. Of course, if
any damage had been caused to Lyons by the placing of the
mortgage upon the equity of redemption in the Carriedo
property, Elser's estate would be liable for such damage. But it
is evident that Lyons was not prejudice by that act.
The mortgaging of the Carriedo property never resulted in
damage to Lyons to the extent of a single cent.
In fact, it was found that when Lyons had arrived in Manila and
in the course of a conversation with Elser, he told the latter to
let the Carriedo mortgage remain on the property. The trial
court was then well justified in accepting as a proven fact the
consent of Lyons for the mortgage to remain on the Carriedo
property. This concession was not only reasonable under the
circumstances, but in view of the further fact that Elser had
given to Lyons 200 shares of the stock of the J. K. Pickering &
Co., having a value of nearly P8,000 in excess of the
indebtedness which Elser had owed to Lyons upon statement
of account.
Moreover, it is also plain that no money actually deriving from
this mortgage was ever applied to the purchase of the San
Juan Estate. What really happened was the Elser merely
subjected the property to a contingent liability, and no actual
liability ever resulted therefrom. The financing of the purchase
of the San Juan Estate, apart from the modest financial
participation of his three associates in the San Juan deal, was
the work of Elser accomplished entirely on his own account.
PIONEER INSURANCE v. CA
Note: Jacob Lim : purchaser of the plane // Maglana,
Cervantes and BORMAHECO: invested funds to purchase the
plane // Pioneer Insurance: insurer of the plane // Japan
Domestic Airlines: vendor of the plane
Facts:
Jacob S. Lim was engaged in the airline business as owneroperator of Southern Air Lines (SAL) a single proprietorship.
He bought two two DC-3A Type aircrafts and one set of
necessary spare parts from Japan Domestic Airlines. Jacob S.
Lim was able to get funds for payment out of Constancio
Maglana, Francisco and Modesto Cervantes and
BORMAHECO. The funds were supposed to be their
contributions to a new corporation proposed by Lim to expand
his airline business.
Contrary to the agreement among the Lim and Maglana,et al.,
Lim in connivance with Pioneer Insurace, signed and executed
the alleged chattel mortgage and surety bond agreement in his
personal capacity as the alleged proprietor of the SAL.
Maglana, Cervantes and Bormaherco learned for the first time
of this trickery and misrepresentation of the other, Jacob Lim,
when the herein plaintiff chattel mortgage allegedly executed
by defendant Lim, thereby forcing them to file an adverse claim
in the form of third party claim.
Issue:
What legal rules govern the relationship among co-investors
whose agreement was to do business through the corporate
vehicle but who failed to incorporate the entity in which they
had chosen to invest?
Relevance of the issue: If it the law on partnership that
governs, then Maglana, Cervantes and BORMAHECO should
share the loss. But if there is no partnership, Lim must
reimburse them for what they have paid
Held:
There was no de facto partnership formed
The rule is, while it has been held that as between themselves
the rights of the stockholders in a defectively incorporated
association should be governed by the supposed charter and
the laws of the state relating thereto and not by the rules
governing partners, it is ordinarily held that persons who
attempt, but fail, to form a corporation and who carry on
business under the corporate name occupy the position of
partners inter se. Thus, where persons associate themselves
together under articles to purchase property to carry on a
business, and their organization is so defective as to come
short of creating a corporation within the statute, they become
in legal effect partners inter se, and their rights as members of
the company to the property acquired by the company will be
recognized
However, in this case, it was shown that Lim did not have the
intent to form a corporation with Maglana et al. This can be
inferred from acts of unilaterally taking out a surety from
Pioneer Insurance and not using the funds he got from
Maglana et al. The record shows that Lim was acting on his
own and not in behalf of his other would-be incorporators in
transacting the sale of the airplanes and spare parts.
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Facts:
These two consolidated special civil actions for prohibition
challenge, in G.R. No. 109289, the constitutionality of Republic
Act No. 7496, also commonly known as the Simplified Net
Income Taxation Scheme ("SNIT"), amending certain
provisions of the National Internal Revenue Code and, in
G.R. No. 109446, the validity of Section 6, Revenue
Regulations No. 2-93, promulgated by public respondents
pursuant to said law.
Petitioners claim to be taxpayers adversely affected by the
continued implementation of the amendatory legislation.
The several propositions advanced by petitioners revolve
around the question of whether or not public respondents have
exceeded their authority in promulgating Section 6, Revenue
Regulations No. 2-93, to carry out Republic Act No. 7496.
The questioned regulation reads:
Sec. 6. General Professional Partnership The general
professional partnership (GPP) and the partners comprising
the GPP are covered by R. A. No. 7496. Thus, in determining
the net profit of the partnership, only the direct costs mentioned
in said law are to be deducted from partnership income. Also,
the expenses paid or incurred by partners in their individual
capacities in the practice of their profession which are not
reimbursed or paid by the partnership but are not considered
as direct cost, are not deductible from his gross income.
The real objection of petitioners is focused on the
administrative interpretation of public respondents that would
apply SNIT to partners in general professional partnerships.
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Held:
The Court should like to correct the apparent misconception
that general professional partnerships are subject to the
payment of income tax or that there is a difference in the tax
treatment between individuals engaged in business or in the
practice of their respective professions and partners in general
professional partnerships. The fact of the matter is that a
general professional partnership, unlike an ordinary business
partnership (which is treated as a corporation for income tax
purposes and so subject to the corporate income tax), is not
itself an income taxpayer. The income tax is imposed not on
the professional partnership, which is tax exempt, but on the
partners themselves in their individual capacity computed on
their distributive shares of partnership profits. Section 23 of the
Tax Code, which has not been amended at all by Republic Act
7496, is explicit:
Sec. 23. Tax liability of members of general professional
partnerships. (a) Persons exercising a common profession
in general partnership shall be liable for income tax only in their
individual capacity, and the share in the net profits of the
general professional partnership to which any taxable partner
would be entitled whether distributed or otherwise, shall be
returned for taxation and the tax paid in accordance with the
provisions of this Title.
(b)
In determining his distributive share in the net income
of the partnership, each partner
(1)
Shall take into account separately his distributive
share of the partnership's income, gain, loss, deduction, or
credit to the extent provided by the pertinent provisions of this
Code, and
(2)
Shall be deemed to have elected the itemized
deductions, unless he declares his distributive share of the
gross income undiminished by his share of the deductions.
There is, then and now, no distinction in income tax liability
between a person who practices his profession alone or
individually and one who does it through partnership (whether
registered or not) with others in the exercise of a common
profession. Indeed, outside of the gross compensation income
tax and the final tax on passive investment income, under the
present income tax system all individuals deriving income from
any source whatsoever are treated in almost invariably the
same manner and under a common set of rules.
We can well appreciate the concern taken by petitioners if
perhaps we were to consider Republic Act No. 7496 as an
entirely independent, not merely as an amendatory, piece of
legislation. The view can easily become myopic, however,
when the law is understood, as it should be, as only forming
part of, and subject to, the whole income tax concept and
precepts long obtaining under the National Internal Revenue
Code. To elaborate a little, the phrase "income taxpayers" is an
all embracing term used in the Tax Code, and it practically
covers all persons who derive taxable income. The law, in
levying the tax, adopts the most comprehensive tax situs of
nationality and residence of the taxpayer (that renders citizens,
regardless of residence, and resident aliens subject to income
tax liability on their income from all sources) and of the
generally accepted and internationally recognized income
taxable base (that can subject non-resident aliens and foreign
corporations to income tax on their income from Philippine
sources). In the process, the Code classifies taxpayers into
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Issue:
Whether a limited partnership which has failed to pay its
obligation with 3 creditors for more than 30 days, may be held
to have committed an act of insolvency, and thereby be
adjudged insolvent against its will. YES
Held:
(While is true that American courts has held that a partnership
may not be adjudged insolvent in an involuntary insolvency
proceeding unless all of its members are insolvent, we have to
take note that in American common law, partnerships have no
juridical personality independent from that of its members; and
if now they have such personality for the purpose of the
insolvency law.)
Philippine statutes, UNLIKE in common law, consider a limited
partnership as a juridical entity for all intents and purposes,
which personality is recognized in all its acts and contracts.
This being so and the juridical personality of a limited
partnership being different from that of its members, it
must, on general principle, answer for and suffer the
consequence of its acts as such an entity capable of being
the subject of rights and obligations.
Under the Insolvency Law of the Philippines, one of the acts of
bankruptcy upon which an adjudication of involuntary
insolvency can be predicated is the failure to pay obligations
(like what happened here).
Thus, it being proven that Campos, Rueda & Co failed to pay
its obligations constitutes an act which is specifically provided
for in the Insolvency Law for declaration of involuntary
insolvency, they have a right to a judicial decree declaring the
involuntary insolvency of said partnership.
Held:
The documents, papers, and things seized under the alleged
authority of the warrants in question may be split into two (2)
major groups, namely: (a) those found and seized in the offices
of the aforementioned corporations, and (b) those found and
seized in the residences of petitioners herein.
As regards the first group, petitioners have no cause of action
to assail the legality of the contested warrants and of the
seizures made in pursuance thereof, for the simple reason that
said corporations have their respective personalities, separate
and distinct from the personality of herein petitioners,
regardless of the amount of shares of stock or of the interest of
each of them in said corporations, and whatever the offices
they hold therein may be.
Indeed, it is well settled that the legality of a seizure can be
contested only by the party whose rights have been impaired
thereby, and that the objection to an unlawful search and
seizure is purely personal and cannot be availed of by third
parties. Consequently, petitioners herein may not validly object
to the use in evidence against them of the documents, papers
and things seized from the offices and premises of the
corporations adverted to above, since the right to object to the
admission of said papers in evidence belongs exclusively to
the corporations, to whom the seized effects belong, and may
not be invoked by the corporate officers in proceedings against
them in their individual capacity.
(But if you remember in Crim, ultimately all the warrants were
declared void for being too sweeping.)
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"In Linn v. United States, 163 C.C.A. 470, 251 Fed. 476, 480, it
was thought that a different rule applied to a corporation, the
ground that it was not privileged from producing its books and
papers. But the rights of a corporation against unlawful search
and seizure are to be protected even if the same result might
have been achieved in a lawful way." (Silverthorne Lumber
Company, Et. Al. v. United States of America, 251 U.S. 385, 64
L. ed. 319.)
In Stonehill, Et. Al. v. Diokno, Et Al., supra, this Court impliedly
recognized the right of a corporation to object against
unreasonable searches and seizures,
"As regards the first group, we hold that petitioners herein have
no cause of action to assail the legality of the contested
warrants and of the seizures made in pursuance thereof, for
the simple reason that said corporations have their respective
personalities, separate and distinct from the personality of
herein petitioners, regardless of the amount of shares of stock
or the interest of each of them in said corporations, whatever,
the offices they hold therein may be. Indeed, it is well settled
that the legality of a seizure can be contested only by the party
whose rights have been impaired thereby, and that the
objection to an unlawful search and seizure is purely personal
and cannot be availed of by third parties. Consequently,
petitioners herein may not validly object to the use in evidence
against them of the documents, papers and things seized from
the offices and premises of the corporations adverted to above,
since the right to object to the admission of said papers in
evidence belongs exclusively to the corporations, to whom the
seized effects belong, and may not be invoked by the
corporate officers in proceedings against them in their
individual capacity . . ."
In the Stonehill case only the officers of the various
corporations in whose offices documents, papers and effects
were searched and seized were the petitioners. In the case at
bar, the corporation to whom the seized documents belong,
and whose rights have thereby been impaired, is itself a
petitioner. On that score, petitioner corporation here stands on
a different footing from the corporations in Stonehill.
Issue:
Whether the right of self-incrimination applies to juridical
persons
Held:
BASECO contends that its right against self incrimination and
unreasonable searches and seizures had been transgressed
by the Order of April 18, 1986 which required it "to produce
corporate records from 1973 to 1986 under pain of contempt of
the Commission if it fails to do so." The order was issued upon
the authority of Section 3 (e) of Executive Order No. 1, treating
of the PCGG's power to "issue subpoenas requiring * * the
production of such books, papers, contracts, records,
statements of accounts and other documents as may be
material to the investigation conducted by the Commission, "
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The witness may not refuse to comply with the order on the
basis of his privilege against self-incrimination; but no
testimony or other information compelled under the order (or
any information directly or indirectly derived from such
testimony, or other information) may be used against the
witness in any criminal case, except a prosecution for perjury,
giving a false statement, or otherwise failing to comply with the
order.
The constitutional safeguard against unreasonable searches
and seizures finds no application to the case at bar either.
There has been no search undertaken by any agent or
representative of the PCGG, and of course no seizure on the
occasion thereof.