Cases for BUS-ORg (Delson Partnership)

7/25/2019 Cases for BUS-ORg (Delson Partnership)

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Pascual v. CIR

Petitioners bought two (2) parcels of land and a year after, they bought another three (3)

parcels of land. Petitioners subseuently sold the said lots in !"#$ and !"%&, and

reali'ed net profits. he corresponding capital gains taes were paid by petitioners in!"%3 and !"%* by availing of the ta a+nesties granted in the said years. owever, the

-cting IR Co++issioner assessed and reuired Petitioners to pay a total a+ount of

P!&%,!&!.%& as alleged deficiency corporate inco+e taes for the years !"#$ and !"%&.

Petitioners protested the said assess+ent asserting that they had availed of ta

a+nesties way bac/ in !"%*. In a reply, respondent Co++issioner infor+ed petitioners

that in the years !"#$ and !"%&, petitioners as co0owners in the real estate transactions

for+ed an unregistered partnership or 1oint venture taable as a corporation under

ection 2&(b) and its inco+e was sub1ect to the taes prescribed under ection 2*, both

of the ational Internal Revenue Code that the unregistered partnership was sub1ect to

corporate inco+e ta as distinguished fro+ profits derived fro+ the partnership by the+which is sub1ect to individual inco+e ta4 and that the avail+ent of ta a+nesty under

P.5. o. 23, as a+ended, by petitioners relieved petitioners of their individual inco+e

ta liabilities but did not relieve the+ fro+ the ta liability of the unregistered

partnership. ence, the petitioners were reuired to pay the deficiency inco+e ta

assessed.

I678

9hether the Petitioners should be treated as an unregistered partnership or a co0

ownership for the purposes of inco+e ta.

R6:I;8

he Petitioners are si+ply under the regi+e of co0ownership and not under

unregistered partnership.

y the contract of, with the intention of dividing the profits a+ong the+selves (-rt. !%#%,

Civil Code of the Philippines). In the present case, there is no evidence that petitioners

entered into an agree+ent to contribute +oney, property or industry to a co++on fund,

and that they intended to divide the profits a+ong the+selves. he sharing of returns

does not in itself establish a partnership whether or not the persons sharing therein

have a 1oint or co++on right or interest in the property. here +ust be a clear intent to

for+ a partnership, the eistence of a 1uridical personality different fro+ the individualpartners, and the freedo+ of each party to transfer or assign the whole property. ence,

there is no adeuate basis to support the proposition that they thereby for+ed an

unregistered partnership. he two isolated transactions whereby they purchased

properties and sold the sa+e a few years thereafter did not thereby +a/e the+

partners. hey shared in the gross profits as co0 owners and paid their capital gains

taes on their net profits and availed of the ta a+nesty thereby. 6nder the

circu+stances, they cannot be considered to have for+ed an unregistered partnership


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which is thereby liable for corporate inco+e ta, as the respondent co++issioner

proposes.

7stanislao v C-

FACTS:

Petitioner and private respondents are brothers and sisterswho are co0owners of

certain lots at the corner of -nnapolis and -urora lvd.,


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other evidence in the record8

Petitioner sub+itted to private respondents periodic accounting of the business.

Petitioner gave a written authority to private respondent Re+edios 7stanislao, his

sister, to ea+ine and audit the boo/s of their Eco++on businessE (a+ing negosyo).

Respondent Re+edios assisted in the running of the business.

@ue :eung v I-C

!.) 5- @67 :76;,

petitioner, vs.

>. I7R?75I-7 -PP7::-7 C>6R and :76; BI6,

respondents.

;.R. o. %&"2# Fanuary 3!, !"$";6I7RR7G,

FR., F.8

@-C8

he petitioner as/s for the reversal of the decision of the then Inter+ediate -ppellate

Court in -C0;.R. o. C0&&$$! whichaffir+ed the decision of the then Court of @irst

Instance of ?anila, ranch II in Civil Case o. !!#%2= declaring privaterespondent

:eung Biu a partner of petitioner 5an @ue :eung in the business of un 9ah Panciteriaand ordering thepetitioner to pay to the private respondent his share in the annual

profits of the said restaurant.his case originated fro+ a co+plaint filed by respondent

:eung Biu with the then Court of @irst Instance of ?anila, ranchII to recover the su+

euivalent to twenty0two percent (22H) of the annual profits derived fro+ the operation

of un 9ahPanciteria since >ctober, !"== fro+ petitioner 5an @ue :eung.he un

9ah Panciteria, a restaurant, located at @lorentino orres treet, ta. Cru', ?anila, was

established so+eti+e in>ctober, !"==. It was registered as a single proprietorship and

its licenses and per+its were issued to and in favor of petitioner 5an @ue :eung as the

sole proprietor. Respondent :eung Biu adduced evidence during the trial of the case

toshow that un 9ah Panciteria was actually a partnership and that he was one of thepartners having contributed P*,&&&.&&to its initial establish+ent.he private

respondents evidence is su++ari'ed as follows8-bout the ti+e the un 9ah Panciteria

started to beco+e operational, the private respondent gave P*,&&&.&& as

hiscontribution to the partnership. his is evidenced by a receipt wherein the petitioner

ac/nowledged his acceptance of theP*,&&&.&& by affiing his signature thereto.

@urther+ore, the private respondent received fro+ the petitioner the a+ount of

P!2,&&&.&& covered by the latters 7uitable an/ing Corporation Chec/ fro+ the


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profits of the operation of the restaurantfor the year !"%*he petitioner denied having

received fro+ the private respondent the a+ount of P*,&&&.&&. e contested and

i+pugnedthe genuineness of the receipt. is evidence is su++ari'ed as follows8he

petitioner did not receive any contribution at the ti+e he started the un 9ah Panciteria.

e used his savings fro+ hissalaries as an e+ployee at Ca+p totsenberg in Clar/

@ield and later as waiter at the oho Restaurant a+ounting to a little+ore thanP2,&&&.&& as capital in establishing un 9ah Panciteria. Petitioner presented various

govern+ent licenses andper+its showing the un 9ah Panciteria was and still is a

single proprietorship solely owned and operated by hi+self alone.@ue :eung also flatly

denied having issued to the private respondent the receipt (7hibit ;) and the 7uitable

an/ingCorporations Chec/ o. !33$"*%& in the a+ount of P!2,&&&.&& (7hibit ).

I678 9> Private respondent is a partner of the petitioner in un 9ah PanciteriaD

7:58 he private respondent is a partner of the petitioner in un 9ah Panciteria. he

reuisites of a partnership which are!)two or +ore persons bind the+selves to

contribute +oney, property, or industry to a co++on fund4 and 2) intention on thepart ofthe partners to divide the profits a+ong the+selves (-rticle !%#%, Civil Code4 Bulo v.

Bang Chiao Cheng, ! Phil.!!&)0have been established. -s stated by the respondent,

a partner shares not only in profits but also in the losses of thefir+. If ecellent relations

eist a+ong the partners at the start of business and all the partners are +ore

interested in seeingthe fir+ grow rather than get i++ediate returns, a defer+ent of

sharing in the profits is perfectly plausible. It would beincorrect to state that if a partner

does not assert his rights anyti+e within ten years fro+ the start of operations, such

rightsare irretrievably lost. he private respondents cause of action is pre+ised upon

the failure of the petitioner to give hi+ theagreed profits in the operation of un 9ah

Panciteria. In effect the private respondent was as/ing for an accounting of hisinterests

in the partnership

an 7ng Jee v C-

FACTS8 enguet :u+ber has been around even before 9orld 9ar II but during the war, its

stoc/s were confiscated by the Fapanese. -fter the war, the brothers an 7ng :ay and an

7ng Jee pooled their resources in order to revive the business. In !"$!, an 7ng :ay

caused the conversion of enguet :u+ber into a corporation called enguet :u+ber and

ardware Co+pany, with hi+ and his fa+ily as the incorporators. In !"$3, an 7ng Jee

died. hereafter, the heirs of an 7ng Jee de+anded for an accounting and the liuidation

of the partnership.

an 7ng :ay denied that there was a partnership between hi+ and his brother. e said that

an 7ng Jee was +erely an e+ployee of enguet :u+ber. e showed evidence consisting


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of an 7ng JeeKs payroll4 his as an e+ployee and enguet :u+ber being the

e+ployee. -s a result of the presentation of said evidence, the heirs of an 7ng Jee filed a

cri+inal case against an 7ng :ay for allegedly fabricating those evidence. aid cri+inal

case was however dis+issed for lac/ of evidence.

ISSUE: 9hether or not an 7ng Jee is a partner.

HEL: o. here was no certificate of partnership between the brothers. he heirs were not

able to show what was the agree+ent between the brothers as to the sharing of profits. -ll

they presented were circu+stantial evidence which in no way proved partnership.

It is obvious that there was no partnership whatsoever. 7cept for a fir+ na+e, there was

no fir+ account, no fir+ letterheads sub+itted as evidence, no certificate of partnership, no

agree+ent as to profits and losses, and no ti+e fied for the duration of the partnership.

here was even no atte+pt to sub+it an accounting corresponding to the period after thewar until JeeKs death in !"$*. It had no business boo/, no written account nor any

+e+orandu+ for that +atter and no license +entioning the eistence of a partnership.

In fact, an 7ng :ay was able to show evidence that enguet :u+ber is a sole

proprietorship. e registered the sa+e as such in !"=*4 that Jee was 1ust an e+ployee

based on the latterKs payroll and coverage, and other records indicating an 7ng :ay

as the proprietor.

-lso, the business definitely a+ounted to +ore P3,&&&.&& hence if there was a partnership,

it should have been +ade in a public instru+ent.

But the business was started after the war (1945) prior to the publication of the New Civil

Code in 1950?

7ven so, nothing prevented the parties fro+ co+plying with this reuire+ent.

-lso, the upre+e Court e+phasi'ed that for *& years, an 7ng Jee never as/ed for an

accounting. he essence of a partnership is that the partners share in the profits and

losses. 7ach has the right to de+and an accounting as long as the partnership eists. 7venif it can be speculated that a scenario wherein Lif ecellent relations eist a+ong the

partners at the start of the business and all the partners are +ore interested in seeing the

fir+ grow rather than get i++ediate returns, a defer+ent of sharing in the profits is perfectly

plausible.M ut in the situation in the case at bar, the defer+ent, if any, had gone on too long

to be plausible. - person is presu+ed to ta/e ordinary care of his concerns. - de+and for

periodic accounting is evidence of a partnership which Jee never did.


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he upre+e Court also noted8

In deter+ining whether a partnership eists, these rules shall apply8

(!) 7cept as provided by -rticle !$2=, persons who are not partners as to each other are

not partners as to third persons4

(2) Co0ownership or co0possession does not of itself establish a partnership, whether such

co0owners or co0possessors do or do not share any profits +ade by the use of the property4

(3) he sharing of gross returns does not of itself establish a partnership, whether or not the

persons sharing the+ have a 1oint or co++on right or interest in any property which the

returns are derived4

(*) he receipt by a person of a share of the profits of a business is pri+a facie evidencethat he is a partner in the business, but no such inference shall be drawn if such profits

were received in pay+ent8

(a) -s a debt by install+ent or otherwise4

(b) -s wages of an e+ployee or rent to a landlord4

(c) -s an annuity to a widow or representative of a deceased partner4

(d) -s interest on a loan, though the a+ount of pay+ent vary with the profits of thebusiness4

(e) -s the consideration for the sale of a goodwill of a business or other property by

install+ents or otherwise.

-R5-7 . C>6R >@ -PP7-:

FACTS: Petitioner Sardane is the owner of a Sardane Trucking Services. One day Sardane

borrowed money from the other guy by making promises and issuing several promissory notes.

On the due date the other guy wanted his money back but instead of paying Sardane apologized

for his failure to pay on time, and he promised the other guy that he would pay him next time.

fter so many failed attempts to collect his money ! the other guy got mad and finally decided to

seek the intervention of the court. "ow after so many failed attempts to collect the promised

payment, the other guy, #r.co$edo %Private &espondent', with so much hate on his heart,


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finally filed a collection case against Sardane. (ven during the scheduled date of the trial,

Sardane, as usual he did not show up. On motion by the petitioner%herein private respondent',

the )ourt issued an order declaring the Sardane in default and eventually after presentation of

evidence ex parte, the court rendered $udgment by default in favor of the petitioner. Sardane

then appealed to the )*+, and he claimed that the promissory notes were his contribution to the

partnership and that there is no contract of loan thus he is not indebted to the other guy. The)*+, believing the arguments of Sardane, ruled on his favor thereby reversing the decision of the

lower court by dismissing the complaint and ordered the plaintiff-appellee co$edo to pay said

defendant-appellant P//.// for moral damages

ISSUE:

whether or not a partnership existed0

HELD:

"O"( .The fact that he had received /1 of the net profits does not conclusively establish thathe was a partner of the private respondent herein. rticle 2345%6' of the )ivil )ode is explicit

that while the receipt by a person of a share of the profits of a business isprima facieevidence

that he is a partner in the business, no such inference shall be drawn if such profits were received

in payment as wages of an employee. *urthermore, herein petitioner had no voice in the

management of the affairs of the basnig. 7nder similar facts, this )ourt in the early

case ofFortis vs. Gutierrez Hermanos, denied the claim of the plaintiff therein that he was a

partner in the business of the defendant. The same rule was reiterated inBastida vs. Menzi &

Co., Inc., et al. which involved the same factual and legal milieu.

antos v Reyes

FACTS8 In Fune !"$#, @ernando antos (%&H), ieves Reyes (!=H), and ?elton Gabat

(!=H) orally instituted a partnership with the+ as partners. heir venture is to set up a

lending business where it was agreed that antos shall be financier and that ieves and

Gabat shall contribute their industry. **he percenta!es after their na"es denote their share

in the profit#

:ater, ieves introduced Cesar ;ragera to antos. ;ragera was the chair+an of a

corporation. It was agreed that the partnership shall provide loans to the e+ployees of

;rageraKs corporation and ;ragera shall earn co++ission fro+ loan pay+ents.

In -ugust !"$#, the three partners put into writing their verbal agree+ent to for+ the

partnership. -s earlier agreed, antos shall finance and ieves shall do the daily cash flow

+ore particularly fro+ their dealings with ;ragera, Gabat on the other hand shall be a loan


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investigator. ut then later, ieves and antos found out that Gabat was engaged in another

lending business which co+petes with their partnership hence Gabat was epelled.

he two continued with the partnership and they too/ with the+ ievesK husband, -rsenio,

who beca+e their loan investigator.

:ater, antos accused the spouses of not re+itting ;rageraKs co++issions to the latter. e

sued the+ for collection of su+ of +oney. he spouses countered that antos +erely filed

the co+plaint because he did not want the spouses to get their shares in the profits. antos

argued that the spouses, insofar as the dealing with ;ragera is concerned, are +erely his

e+ployees. antos alleged that there is a distinct partnership between hi+ and ;ragera

which is separate fro+ the partnership for+ed between hi+, Gabat and ieves.

he trial court as well as the Court of -ppeals ruled against antos and ordered the latter to

pay the shares of the spouses.

ISSUE: 9hether or not the spouses are partners.

HEL: Bes. hough it is true that the original partnership between Gabat, antos and

ieves was ter+inated when Gabat was epelled, the said partnership was however

considered continued when ieves and antos continued engaging as usual in the lending

business even getting ievesK husband, who resigned fro+ the -sian 5evelop+ent an/, to

be their loan investigator N who, in effect, substituted Gabat.

here is no separate partnership between antos and ;ragera. he latter being +erely a

co++ission agent of the partnership. his is even though the partnership was for+ali'ed

shortly after ;ragera +et with antos (ote that ieves was even the one who introduced

;ragera to antos eactly for the purpose of setting up a lending agree+ent between the

corporation and the partnership).

>977R, the order of the Court of -ppeals directing antos to give the spouses their

shares in the profit is pre+ature. he accounting +ade by the trial court is based on the

Ltotal inco+eM of the partnership. uch total inco+e calculated by the trial court did not

consider the epenses sustained by the partnership. -ll epenses incurred by the +oney0

lending enterprise of the parties +ust first be deducted fro+ the Ltotal inco+eM in order to


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arrive at the Lnet profitM of the partnership. he share of each one of the+ should be based

on this Lnet profitM and not fro+ the Lgross inco+eM or Ltotal inco+eM.

ocao v C-

FACTS:9illia+ elo introduced enita -nay to his girlfriend, ?ar1orie ocao. he three

agreed to for+ a 1oint venture for the sale of coo/ing wares. elo was to contribute P2.=

+illion4 ocao also contributed so+e cash and she shall also act as president and general

+anager4 and -nay shall be in charge of +ar/eting. elo and ocao specifically as/ed -nay

because of her eperience and connections as a +ar/eter. hey agreed further that -nay

shall receive the following8

!. !&H share of annual net profits

2. #H overriding co++ission for wee/ly sales

3. 3&H of sales -nay will +a/e herself

*. 2H share for her de+o services

hey operated under the na+e ;e+inesse 7nterprise, this na+e was however registered

as a sole proprietorship with the ureau of 5o+estic rade under ocao. he 1oint venture

agree+ent was not reduced to writing because -nay trusted eloKs assurances.

he venture succeeded under -nayKs +ar/eting prowess.

ut then the relationship between -nay and ocao soured. >ne day, ocao advised one of

the branch +anagers that -nay was no longer a part of the co+pany. -nay then de+anded

that the co+pany be audited and her shares be given to her.

ISSUE: 9hether or not there is a partnership.

HEL: Bes, even though it was not reduced to writing, for a partnership can be instituted in

any for+. he fact that it was registered as a sole proprietorship is of no +o+ent for suchregistration was only for the co+panyKs trade na+e.

-nay was not even an e+ployee because when they ventured into the agree+ent, they

eplicitly agreed to profit sharing this is even though -nay was receiving co++issions

because this is only incidental to her efforts as a head +ar/eter.


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he upre+e Court also noted that a partner who is ecluded wrongfully fro+ a partnership

is an innocent partner. ence, the guilty partner +ust give hi+ his due upon the dissolution

of the partnership as well as da+ages or share in the profits Lreali'ed fro+ the appropriation

of the partnership business and goodwill.M -n innocent partner thus possesses Lpecuniary

interest in every eisting contract that was inco+plete and in the trade na+e of the co0partnership and assets at the ti+e he was wrongfully epelled.M

-n un1ustified dissolution by a partner can sub1ect hi+ to action for da+ages because by

the +utual agency that arises in a partnership, the doctrine of delectus personaeallows the

partners to have thepower$ although not necessarily the ri!ht to dissolve the partnership.

ocaoKs unilateral eclusion of -nay fro+ the partnership is shown by her +e+o to the

Cubao office plainly stating that -nay was, as of >ctober ", !"$%, no longer the vice0

president for sales of ;e+inesse 7nterprise. y that +e+o, petitioner ocao effected her

own withdrawal fro+ the partnership and considered herself as having ceased to be

associated with the partnership in the carrying on of the business. evertheless, the

partnership was not ter+inated thereby4 it continues until the winding up of the business.

orres v C-

In !"#", sisters -ntonia orres and 7+eteria aring entered into a 1oint venture agree+ent

with ?anuel orres. 6nder the agree+ent, the sisters agreed to eecute a deed of sale in

favor ?anuel over a parcel of land, the sisters received no cash pay+ent fro+ ?anuel butthe pro+ise of profits (#&H for the sisters and *&H for ?anuel) N said parcel of land is to be

developed as a subdivision.

?anuel then had the title of the land transferred in his na+e and he subseuently

+ortgaged the property. e used the proceeds fro+ the +ortgage to start building roads,

curbs and gutters. ?anuel also contracted an engineering fir+ for the building of housing

units. ut due to adverse clai+s in the land, prospective buyers were scared off and the

subdivision pro1ect eventually failed.

he sisters then filed a civil case against ?anuel for da+ages euivalent to #&H of the

value of the property, which according to the sisters, is whatKs due the+ as per the contract.

he lower court ruled in favor of ?anuel and the Court of -ppeals affir+ed the lower court.

he sisters then appealed before the upre+e Court where they argued that there is no

partnership between the+ and ?anuel because the 1oint venture agree+ent is void.


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ISSUE: 9hether or not there eists a partnership.

HEL: Bes. he 1oint venture agree+ent the sisters entered into with ?anuel is a

partnership agree+ent whereby they agreed to contribute property (their land) which was to

be developed as a subdivision. 9hile on the other hand, though ?anuel did not contribute

capital, he is an industrial partner for his contribution for general epenses and other costs.

@urther+ore, the inco+e fro+ the said pro1ect would be divided according to the stipulated

percentage (#&0*&). Clearly, the contract +anifested the intention of the parties to for+ a

partnership. @urther still, the sisters cannot invo/e their right to the #&H value of the

property and at the sa+e ti+e deny the sa+e contract which entitles the+ to it.

-t any rate, the failure of the partnership cannot be bla+ed on the sisters, nor can it be

bla+ed to ?anuel (the sisters on their appeal did not show evidence as to ?anuelKs fault in

the failure of the partnership). he sisters +ust then bear their loss (which is #&H). ?anuel

does not bear the loss of the other *&H because as an industrial partner he is ee+pt fro+

losses.

:i+ ong :i+ v. P@;I

FACTS: It was established that :i+ ong :i+ reuested Peter Bao to engage in co++ercial

fishing with hi+ and one -ntonio Chua. he three agreed to purchase two fishing boats but

since they do not have the +oney they borrowed fro+ one Fesus :i+ (brother of :i+ ong

:i+). hey again borrowed +oney and they agreed to purchase fishing nets and other

fishing euip+ents. ow, Bao and Chua represented the+selves as acting in behalf of

L>cean


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P3.3= +illion, financed by a loan secured fro+ Fesus :i+. In their Co+pro+ise -gree+ent,

they subseuently revealed their intention to pay the loan with the proceeds of the sale of

the boats, and to divide eually a+ong the+ the ecess or loss. hese boats, the purchase

and the repair of which were financed with borrowed +oney, fell under the ter+ Lco++on

fundM under -rticle !%#%. he contribution to such fund need not be cash or fied assets4 itcould be an intangible li/e credit or industry. hat the parties agreed that any loss or profit

fro+ the sale and operation of the boats would be divided eually a+ong the+ also shows

that they had indeed for+ed a partnership.

:i+ ong :i+ cannot argue that the principle of corporation by estoppels can only be

i+puted to Bao and Chua. 6nuestionably, :i+ ong :i+ benefited fro+ the use of the nets

found in his boats, the boat which has earlier been proven to be an asset of the partnership.

:i+, Chua and Bao decided to for+ a corporation. -lthough it was never legally for+ed for

un/nown reasons, this fact alone does not preclude the liabilities of the three as contracting

parties in representation of it. Clearly, under the law on estoppel, those acting on behalf of a

corporation and those benefited by it, /nowing it to be without valid eistence, are held

liable as general partners$

Cases for BUS-ORg (Delson Partnership)

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Transcript of Cases for BUS-ORg (Delson Partnership)