PARTNERSHIP

1. COMMISSIONER VS. BURROUGH, LTD.

FACTS: Burroughs Limited is a foreign corporation authorized to engage in trade or business in the Philippines through a branch office
located at Makati. Sometime in 1979, said branch office applied with the Central Bank for authority to remit to its parent company
abroad, branch profit. It paid the 15% branch profit remittance tax. Claiming that the 15% profit remittance tax should have been
computed on the basis of the amount actually remitted and not on the amount before profit remittance tax, Burroughs filed a written
claim for the refund or tax credit representing alleged overpaid branch profit remittance tax. Thereafter Burroughs filed with the CTA a
petition for review for the recovery of the amount. CTA ordered the CIR to grant a tax credit in favour of Burroughs Limited.

ISSUE: Whether the tax base upon which the 15% branch profit remittance tax shall be imposed is the amount applied for remittance
on the profit actually remitted and not the amount before profit remittance tax?

HELD: Yes. Section 24(b)(2)(ii) (Now Section 28(A)(5) states that Any profit remitted abroad by a branch to its head office shall be
subject to a tax of fifteen per cent (15 ). In a BIR Ruling dated 1980, the CIR held that the provision should mean that "the tax base
upon which the 15% branch profit remittance tax ... shall be imposed...(is) the profit actually remitted abroad and not on the total branch
profits out of which the remittance is to be made. " Applying therefore, the aforequoted ruling, the claim of Burrough that it made an
overpayment is valid.

LEGAL DOCTRINE: Memorandum Circular No. 8-82 cannot be given retroactive effect in light of Section 327 of the
NIRC.

FACTS:
1. March 1979: The branch office of Burroughs Limited, a foreign corporation, applied with the Central Bank for
authority to remit to its parent company abroad, branch profit.

Amount Applied for: Php 7,647,058.00

15% Branch Profit Remittance Tax: Php 1,147,048.70
Amount Actually Remitted: Php 6,499,999.30

2. 24 December 1980: Burroughs claims a tax refund/credit of Php172,058.90. Branch Profit Remittance tax should be 15% of Amount
Actually Remitted. (based on Ruling of Acting Commissioner of Internal Revenue)

3. CTA: grants tax credit

4. CIR: Burroughs no longer entitled to refund because Memorandum Circular No. 8-82 dated 17 March 1982 had revoked and/or
repealed theBIR ruling of 21 Jan 1980.

ISSUE(S)
WON Memorandum Circular No. 8-82 (MC 8-82) dated 17 March 1982 can be given retroactive effect? (NO)

Disposition:

Sec. 327. Non-retroactivity of rulings

Any revocation, modification, or reversal of any of the rules and regulations promulgated in accordance with the preceding section or
any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation,
modification, or reversal will be prejudicial to the taxpayer except in the following cases (a) where the taxpayer deliberately
misstates or omits material facts from his return or in any document required of him by the Bureau of Internal Revenue; (b) where
the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based, or (c) where
the taxpayer acted in bad faith.

2. CHARLES F. WOODHOUSE, plaintiff-appellant, vs. FORTUNATO F. HALILI, defendant-appellant.

G.R. No. L-4811 July 31, 1953
Doctrine: Fraud

FACTS:

On November 29, 1947, plaintiff Woodhouse entered into a written agreement with defendant Halili stating among others that: 1) that
they shall organize a partnership for the bottling and distribution of Mission soft drinks, plaintiff to act as industrial
partner or manager, and the defendant as a capitalist, furnishing the capital necessary therefore; 2) that plaintiff was
to secure the Mission Soft Drinks franchise for and in behalf of the proposed partnership and 3) that the plaintiff was
to receive 30 per cent of the net profits of the business.

Prior to entering into this agreement, plaintiff had informed the Mission Dry Corporation of Los Angeles, California, that he had
interested a prominent financier (defendant herein) in the business, who was willing to invest half a million dollars in the bottling and
distribution of the said beverages, and requested, in order that he may close the deal with him, that the right to bottle and distribute
be granted him for a limited time under the condition that it will finally be transferred to the corporation. Pursuant to this request,
plaintiff was given a thirty days option on exclusive bottling and distribution rights for the Philippines. The contract was finally signed
by plaintiff on December 3, 1947.

When the bottling plant was already in operation, plaintiff demanded of defendant that the partnership papers be executed. Defendant
Halili gave excuses and would not execute said agreement, thus the complaint by the plaintiff.
Plaintiff prays for the : 1.execution of the contract of partnership; 2) accounting of profits and 3)share thereof of 30 percent with 4)
damages in the amount of P200,000. The Defendant on the other hand claims that: 1) the defendants consent to the agreement, was
secured by the representation of plaintiff that he was the owner, or was about to become owner of an exclusive bottling franchise,
which representation was false, and that plaintiff did not secure the franchise but was given to defendant himself 2) that defendant did
not fail to carry out his undertakings, but that it was plaintiff who failed and 3)that plaintiff agreed to contribute to the exclusive
franchise to the partnership, but plaintiff failed to do so with a 4) counterclaim for P200,00 as damages.

The CFI ruling: 1) accounting of profits and to pay plaintiff 15 % of the profits and that the 2) execution of contract cannot be
enforced upon parties. Lastly, the 3) fraud wasnt proved

ISSUES

1. WON plaintiff falsely represented that he had an exclusive franchise to bottle Mission beverages
2. WON false representation, if it existed, annuls the agreement to form the partnership

HELD

1. Yes. Plaintiff did make false representations and this can be seen through his letters to Mission Dry Corporation asking for the latter
to grant him temporary franchise so that he could settle the agreement with defendant. The trial court reasoned, and the plaintiff on
this appeal argues, that plaintiff only undertook in the agreement to secure the Mission Dry franchise for and in behalf of the proposed
partnership. The existence of this provision in the final agreement does not militate against plaintiff having represented that he had
the exclusive franchise; it rather strengthens belief that he did actually make the representation. The defendant believed, or was made
to believe, that plaintiff was the grantee of an exclusive franchise. Thus it is that it was also agreed upon that the franchise was to be
transferred to the name of the partnership, and that, upon its dissolution or termination, the same shall be reassigned to the plaintiff.
Again, the immediate reaction of defendant, when in California he learned that plaintiff did not have the exclusive franchise, was to
reduce, as he himself testified, plaintiffs participation in the net profits to one half of that agreed upon. He could not have had such a
feeling had not plaintiff actually made him believe that he (plaintiff) was the exclusive grantee of the franchise.

2. No. In consequence, article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud, the causal fraud, which may be
ground for the annulment of a contract, and the incidental deceit, which only renders the party who employs it liable for damages only.
The Supreme Court has held that in order that fraud may vitiate consent, it must be the causal (dolo causante), not merely the
incidental (dolo incidente) inducement to the making of the contract.

The record abounds with circumstances indicative of the fact that the principal consideration, the main cause that induced defendant to
enter into the partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to bottle and distribute for
the defendant or for the partnership. The original draft prepared by defendants counsel was to the effect that plaintiff obligated
himself to secure a franchise for the defendant. But if plaintiff was guilty of a false representation, this was not the causal
consideration, or the principal inducement, that led plaintiff to enter into the partnership agreement. On the other hand, this supposed
ownership of an exclusive franchise was actually the consideration or price plaintiff gave in exchange for the share of 30 per cent
granted him in the net profits of the partnership business. Defendant agreed to give plaintiff 30 per cent share in the net profits
because he was transferring his exclusive franchise to the partnership.

Having arrived at the conclusion that the contract cannot be declared null and void, may the agreement be carried out or executed?
The SC finds no merit in the claim of plaintiff that the partnership was already a fait accompli from the time of the operation of the
plant, as it is evident from the very language of the agreement that the parties intended that the execution of the agreement to form a
partnership was to be carried out at a later date. , The defendant may not be compelled against his will to carry out the agreement nor
execute the partnership papers. The law recognizes the individuals freedom or liberty to do an act he has promised to do, or not to do
it, as he pleases.

3. EVANGELISTA & CO. v. ABAD SANTOS

G.R. No. L-31684; June 28, 1973

4. Duterte vs Rallos

FACTS:

On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co." On June 7, 1955 the Articles of Co-
partnership were amended so as to include herein respondent, Estrella Abad Santos, as industrial partner, with herein petitioners
Domingo C. Evangelista, Jr., Leonarda Atienza Abad Santos and Conchita P. Navarro, the original capitalist partners, remaining in that
capacity, with a contribution of P17,500 each

On December 17, 1963 herein respondent filed suit against the three other partners, alleging that the partnership, which was
also made a party-defendant, had been paying dividends to the partners except to her; and that notwithstanding her demands the
defendants had refused and continued to refuse to let her examine the partnership books or to give her information regarding the
partnership affairs or to pay her any share in the dividends declared by the partnership

The defendants, in their answer, denied ever having declared dividends or distributed profits of the partnership; denied likewise
that the plaintiff ever demanded that she be allowed to examine the partnership books; and by way of affirmative defense alleged that
the amended Articles of Co-partnership did not express the true agreement of the parties, which was that the plaintiff was not an
industrial partner; that she did not in fact contribute industry to the partnership.

ISSUE:

Whether Abad Santos is entitled to see the partnership books because she is an industrial partner in the partnership

HELD:

Yes, Abad Santos is entitled to see the partnership books.

 The Supreme Court ruled that according to

ART. 1299. Any partner shall have the right to a formal account as to partnership affairs:

(1)If he is wrongfully excluded from the partnership business or possession of its property by his co-partners;
(2)If the right exists under the terms of any agreement;
(3)As provided by article 1807;
(4)Whenever other circumstances render it just and reasonable."
In the case at hand, the company is estopped from denying Abad Santos as an industrial partner because it has been 8 years and the company
never corrected their agreement in order to show their true intentions. The company never bothered to correct those up until Abad Santos filed a
complaint.

Eligio Estanislao, Jr. v. Court of Appeals ,REMEDIOS ESTANISLAO, EMILIO and LEOCADIO SANTIAGO

FACTS:

Petitioner and private respondents are brothers and sisters who are co-owners of certain lots at the corner of Annapolis and Aurora
Blvd., Quezon City which were then being leased to the Shell Company of the Philippines Limited (SHELL). They agreed to open and
operate a gas station thereat to be known as Estanislao Shell Service Station with an initial investment of P15,000.00 to be taken from
the advance rentals due to them from SHELL for the occupancy of the said lots owned in common by them.

On May 26, 1966, the parties herein entered into an Additional Agreement with a proviso that said agreement cancels and
supersedes the original agreement executed by the co-owners.

For sometime, the petitioner submitted financial statements regarding the operation of the business to private respondents, but
thereafter petitioner failed to render subsequent accounting.

A demand was made on petitioner:

to render an accounting of the profits;
to execute a public document embodying all the provisions of the partnership agreement;
to pay the plaintiffs their lawful shares and participation in the net profits of the business.

ISSUE:
IS A PARTNERSHIP a FORMED WHERE MEMBERS OF THE SAME FAMILY BIND THEMSELVES TO CONTRIBUTE MONEY TO A COMMON
FUND WITH THE INTENTION OF DIVIDING THE PROFITS AMONG THEMSELVES?

HELD:
YES. The Joint Affidavit of April 11, 1966 (Exhibit A), clearly stipulated by the members of the same family that the P15,000.00
advance rental due to them from SHELL shall augment their "capital investment" in the operation of the gasoline station.

other evidence in the record:

Petitioner submitted to private respondents periodic accounting of the business.
Petitioner gave a written authority to private respondent Remedios Estanislao, his sister, to examine and audit the books of their
"common business" (aming negosyo).

Respondent Remedios assisted in the running of the business.

Moran, Jr. vs CA
Business Organization Partnership, Agency, Trust Profit and Loss Sharing Speculative Damages
In February 1971, Isabelo Moran and Mariano Pecson entered into a partnership agreement where they agreed to contribute P15k each
for the purpose of printing 95k posters of the delegates to the then 1971 Constitutional Commission. Moran shall be in charge in
managing the printing of the posters. It was further agreed that Pecson will receive a commission of P1k a month starting from April
1971 to December 1971; that the partnership is to be liquidated on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor of the partnership. He gave the P10k to Moran
as the managing partner. Moran however did not add anything and, instead, he only used P4k out of the P10k in printing 2,000
posters. He only printed 2,000 posters because he felt that printing all 95k posters is a losing venture because of the delay by the
COMELEC in announcing the full delegates. All the posters were sold for a total of P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of Appeals affirmed the decision of the trial court
but modified the same as it ordered Moran to pay P47.5k for unrealized profit; P8k for Pecsons monthly commissions; P7k as return of
investment because the venture never took off; plus interest.
ISSUE: Whether or not the CA judgment is correct.
HELD: No. The award of P47.5k for unrealized profit is speculative. There is no evidence whatsoever that the partnership between the
Moran and Pecson would have been a profitable venture (because base on the circumstances then i.e. the delay of the COMELEC in
proclaiming the candidates, profit is highly unlikely). In fact, it was a failure doomed from the start. There is therefore no basis for the
award of speculative damages in favor of Pecson. Further, there is mutual breach in this case, Pecson only gave P10k instead of P15k
while Moran gave nothing at all.
As for the P8k monthly commission, this is without basis. The agreement does not state the basis of the commission. The payment of
the commission could only have been predicated on relatively extravagant profits. The parties could not have intended the giving of a
commission inspite of loss or failure of the venture. Since the venture was a failure, Pecson is not entitled to the P8k commission.
As for the P7k award as return for Pecsons investment, the CA erred in his ruling too. Though the venture failed, it did took off the
ground as evidenced by the 2,000 posters printed. Hence, return of investment is not proper in this case. There are risks in any
business venture and the failure of the undertaking cannot entirely be blamed on the managing partner alone, specially if the latter
exercised his best business judgment, which seems to be true in this case.
Moran must however return the unused P6k of Pecsons contribution to the partnership plus P3k representing Pecsons profit share in
the sale of the printed posters. Computation of P3k profit share is as follows: (P10k profit from the sale of the 2,000 posters printed)
(P4k expense in printing the 2k posters) = (P6k profit); Profit 2 = P3k each.

ADRIANO ARBES ET AL., plaintiffs-appellees, vs. VICENTE POLISTICO ET AL., defendants-appellants.

Marcelino Lontok and Manuel de la Rosa for appellants.
Sumulong & Lavides for appellees.

SYLLABUS
1. UNLAWFUL PARTNERSHIPS; "TURNUHAN POLISTICO & CO.;" CHARITABLE INSTITUTIONS. The partnership "Turnuhan Polistico
& Co." is an unlawful partnership (U. S. vs. Baguio, 39 Phil., 962). According to paragraph 2 of article 1666 of the Civil Code, when an
unlawful partnership is judicially dissolved, the earnings shall not be disposed of as profits, but shall be given to charitable institutions.
But in a case like the one at bar, whose object is to determine the rights of the parties, and to liquidate the unlawful partnership, no
charitable institution should be included as defendant, as the appellants contend, because it is not a necessary party to the case.
2. ID.; ACTION TO OBTAIN PROFITS OF UNLAWFUL PARTNERSHIP. Said article 1666 of the Civil Code allows no action for the
purpose of obtaining the earnings made by the unlawful partnership, during its existence, as a result of the business in which it was
engaged; because for that purpose the partner will have to base his action on the partnership contract which is null and without legal
existence by reason of its unlawful object, and it is self-evident that what does not exist cannot be a cause of action.

D E C I S I O N

VILLAMOR, J p:
This is an action to bring about a liquidation of the funds and property of the association called "Turnuhan Polistico & Co." The plaintiffs
were members or shareholders, and the defendants were designated as president-treasurer, directors and secretary of said
association.
It is well to remember that this case is now brought before the consideration of this court for the second time. The first time was when
the same plaintiffs appealed from the order of the court below sustaining the defendants' demurrer, and requiring the former to amend
their complaint within a certain period, so as to include all the members of "Turnuhan Polistico & Co.," either as plaintiffs or as
defendants. This court held then that in an action against the officers of a voluntary association to wind up its affairs and to enforce an
accounting for money and property in their possession, it is not necessary that all members of the association be made parties to the
action. (Borlasa vs. Polistico, 47 Phil., 345.) The case having been remanded to the court of origin, both parties amended, respectively,
their complaint and their answer, and by agreement of the parties, the court appointed Amadeo R. Quintos, of the Insular Auditor's
Office, commissioner to examine all the books, documents and accounts of "Turnuhan Polistico & Co.," and to receive whatever
evidence the parties might desire to present.
The commissioner rendered his report, which is attached to the record, with the following resume:
Income:
Members' shares P97,263.70
Credits paid 6,196.55
Interest received 4,569.45
Miscellaneous 1,891.00
P109,620.70
Expenses:
Premiums to members 68,146.25
Loans on real-estate security 9,827.00
Loans on promissory notes 4,258.55
Salaries 1,095.00
Miscellaneous 1,686.108
85,012.90

Cash on hand 24,607.80

The defendants objected to the commissioner's report, but the trial court, having examined the reasons for the objection, found the
same sufficiently explained in the report and the evidence, and accepting it, rendered judgment, holding that the association
"Turnuhan Polistico & Co." is unlawful, and sentencing the defendants jointly and severally to return the amount of P24,607.80, as well
as the documents showing the uncollected credits of the association, to the plaintiffs in this case, and to the rest of the members of
said association represented by said plaintiffs, with costs against the defendants.
The defendants assigned several errors as grounds for their appeal, but we believe they can all be reduced to two points, to wit: (1)
That not all persons having an interest in this association are included as plaintiffs or defendants; (2) that the objection to the
commissioner's report should have been admitted by the court below.
As to the first point, the decision in the case of Borlasa vs. Polistico, supra, must be followed.
With regard to the second point, despite the praiseworthy efforts of the attorney for the defendants, we are of opinion that, the trial
court having examined all the evidence touching the grounds for the objection and having found that they had been explained away in
the commissioner's report, the conclusion reached by the court below, accepting and adopting the findings of fact contained in said
report, and especially those referring to the disposition of the association's money, should not be disturbed.
In Tan Diangseng Tan Siu Pic vs. Echauz Tan Siuco (5 Phil., 516), it was held that the findings of fact made by a referee appointed
under the provisions of section 135 of the Code of Civil Procedure stand upon the same basis, when approved by the court, as findings
made by the judge himself. And in Kriedt vs. E.C. McCullough & Co. (37 Phil., 474), the court held: "Under section 140 of the Code of
Civil Procedure it is made the duty of the court, to render judgment in accordance with the report of the referee unless the court shall
for cause shown set aside the report or recommit it to the referee. This provision places upon the litigant parties the duty of
discovering and exhibiting to the court any error that may be contained therein." The appellants stated the grounds for their objection.
The trial court examined the evidence and the commissioner's report, and accepted the findings of fact made in the report. We find no
convincing argument in the appellants' brief to justify a reversal of the trial court's conclusion admitting the commissioner's findings.
There is no question that "Turnuhan Polistico & Co." is an unlawful partnership (U. S. vs. Baguio, 39 Phil., 962), but the appellants
allege that because it is so, some charitable institution to whom the partnership funds may be ordered to be turned over, should be
included as a party defendant. The appellants refer to article 1666 of the Civil Code, which provides:
"A partnership must have a lawful object, and must be established for the common benefit of the partners.
"When the dissolution of an unlawful partnership is decreed, the profits shall be given to the charitable institutions of the domicile of
the partnership, or, in default of such, to those of the province."
Appellants' contention on this point is untenable. According to said article, no charitable institution is a necessary party in the present
case for the determination of the rights of the parties. The action which may arise from said article, in the case of an unlawful
partnership, is that for the recovery of the amounts paid in by the members from those in charge of the administration of said
partnership, and it is not necessary for the said partners to base their action on the existence of the partnership, but on the fact of
having contributed some money to the partnership capital. And hence, the charitable institutions of the domicile of the partnership, and
in default thereof, those of the province are not necessary parties in this case. The article cited above permits no action for the purpose
of obtaining the earnings made by the unlawful partnership, during its existence as a result of the business in which it was engaged,
because, for that purpose, as Manresa remarks, the partner will have to base his action upon the partnership contract, which is null
and without legal existence by reason of its unlawful object; and it is self-evident that what does not exist cannot be a cause of action.
Hence, paragraph 2 of the same article provides that when the dissolution of an unlawful partnership is decreed, the profits cannot
inure to the benefit of the partners, but must be given to some charitable institution.
We deem it pertinent to quote Manresa's commentaries on article 1666 at length, as a clear explanation of the scope and spirit of the
provision of the Civil Code with which we are concerned. Commenting on said article, Manresa, among other things says:
"When the subscriptions of the members have been paid to the management of the partnership, and employed by the latter in
transactions consistent with the purposes of the partnership may the former demand the return or reimbursement thereof from the
manager or administrator withholding them?
"Apropos of this, it is asserted: If the partnership has had no valid existence, if it is considered juridically non-existent, the contract
entered into can have no legal effect; and in that case, how can it give rise to an action in favor of the partners to judicially demand
from the manager or administrator of the partnership capital, each one's contribution?
"The authors discuss this point at great length; but Ricci decides the matter quite clearly, dispelling all doubts thereon. He 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.
"But 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 the result of the industry, business, or speculation, which is the object of the partnership; and, therefore,
in order to demand the proportional part of said profits, the partner would have to base his action on the contract, which is null and
void, since this partition or distribution of the profits is one of the juridical effects thereof. Wherefore, considering this contract as non-
existent, by reason of its illicit object, it cannot give rise to the necessary action, which must be the basis of the judicial complaint.
Furthermore, it would be immoral and unjust for the law to permit a profit from an industry prohibited by it.
"Hence, the distinction made in the second paragraph of this article of our Code, providing that the profits obtained by unlawful means
shall not enrich the partners, but shall, upon the dissolution of the partnership, be given to the charitable institutions of the domicile of
the partnership, or, in default of such, to those of the province.
"This is a new rule, unprecedented in our law, introduced to supply an obvious deficiency of the former law, which did not prescribe
the purpose to which those profits denied to the partners were to be applied, nor state what was to be done with them.
"The profits are so applied, and not the individual contributions, because this would be an excessive and unjust sanction for, as we
have seen, there is no reason, in such a case, for depriving the partner of the portion of the capital that he contributed, the
circumstances of the two cases being entirely different.
"Our 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.)
The judgment appealed from, being in accordance with law, should be, as it is hereby, affirmed with costs against the appellants;
provided, however, that the defendants shall pay the legal interest on the sum of P24,607.80 from the date of the decision of the
court, and provided, further, that the defendants shall deposit these sums of money and other documents evidencing uncollected
credits in the office of the clerk of the trial court, in order that said court may distribute them among the members of said association,
upon being duly identified in the manner it may deem proper. So ordered.

Fortis vs. Hermanos

Fortis vs. Hermanos

Facts:

Plaintiff Fortis is an employee of defendant Gutierrez Hermanos. Theformer brought an action to recover a balance due him as salary
forthe year 1902. He also alleged that he was entitled, as salary, to 5 percent of the net profits of the business of the defendants for
said year. The complaint also contained a cause of action for the sum of 600pesos, money expended by plaintiff for the defendants
during the year1903. The lower court ruled in favor of the plaintiff. The total judgmentrendered amounted to P13, 025.40, which was
reduced to Philippinecurrency. The defendants moved for new trial but were denied. They brought the case in the SC thru bill of
exceptions; the appellants(defendants) alleged that that the contract made the plaintiff acopartner of the defendants in the business,
which they were carrying on.

Issue: WON the plaintiff is a co-partner of the defendants in the business.

Ruling:

NO. It was a mere contract of employment. The plaintiff had neithervoice nor vote in the management of the affairs of the company.
Thefact that the compensation received by him was to be determined withreference to the profits made by the defendants in their
business didnot in any sense make by a partner therein. The articles of partnershipbetween the defendants provided that the profits
should be dividedamong the partners named in a certain proportion. The contract madebetween the plaintiff and the then manager of
the defendantpartnership did not in any way vary or modify this provision of thearticles of partnership.

Evangelista vs CIR
Facts: Petitioners borrowed money from theirfather and purchased several lands. For several years, these lands were leased to
tenants by the petitioners. In 1954, respondent Collector of Internal Revenue demanded from petitioners the payment of income tax
on corporations, real estate dealer's fixed tax and corporation residence tax for the years 1945-1949. A letter of demand and
corresponding assessments were delivered to petitioners. Petitioners claim that they should be absolved from paying said taxes since
they are not a corporation.

Issue: Whether petitioners are subject to the tax on corporations provided for in section 24 of Commonwealth Act. No. 466, otherwise
known as the National Internal Revenue Code, as well as to the residence tax for corporations and the real estate dealers fixed tax.
Held: Yes. Petitioners are subject to the income tax and residence tax for corporation.

As defined in section 84 (b) of the Internal Revenue Code, "the term corporation includes partnerships, no matter how created or
organized." This qualifying expression clearly indicates that a joint venture need not be undertaken in any of the standard forms, or in
conformity with the usualrequirements of the law on partnerships, in order that one could be deemed constituted for purposes of the
tax on corporations. Partnership, as has been defined in the civil code refers to two or more persons who bind themselves to contribute
money, properly, or industry to a common fund, with the intention of dividing the profits among themselves. Thus, petitioners, being
engaged in the real estate transactions for monetary gain and dividing the same among themselves constitute a partnership so far as
the Code is concerned and are subject to income tax for corporation.

Since Sec 2 of the Code in defining corporations also includes joint-stock company, partnership, joint account, association or insurance
company, no matter how created or organized, it follows that petitioners, regardless of how their partnership was created is also
subject to the residence tax for corporations.

Aguila vs CA
Business Organization Partnership, Agency, Trust Identity Separate and Distinct
In April 1991, the spouses Ruben and Felicidad Abrogar entered into a loan agreement with a lending firm called A.C. Aguila & Sons,
Co., a partnership. The loan was for P200k. To secure the loan, the spouses mortgaged their house and lot located in a subdivision.
The terms of the loan further stipulates that in case of non-payment, the property shall be automatically appropriated to the
partnership and a deed of sale be readily executed in favor of the partnership. She does have a 90 day redemption period.
Ruben died, and Felicidad failed to make payment. She refused to turn over the property and so the firm filed an ejectment case
against her (wherein she lost). She also failed to redeem the property within the period stipulated. She then filed a civil case against
Alfredo Aguila, manager of the firm, seeking for the declaration of nullity of the deed of sale. The RTC retained the validity of the deed
of sale. The Court of Appeals reversed the RTC. The CA ruled that the sale is void for it is a pactum commissorium sale which is
prohibited under Art. 2088 of the Civil Code (note the disparity of the purchase price, which is the loan amount, with the actual value
of the property which is after all located in a subdivision).
ISSUE: Whether or not the case filed by Felicidad shall prosper.
HELD: No. Unfortunately, the civil case was filed not against the real party in interest. As pointed out by Aguila, he is not the real party
in interest but rather it was the partnership A.C. Aguila & Sons, Co. The Rules of Court provide that every action must be prosecuted
and defended in the name of the real party in interest. A real party in interest is one who would be benefited or injured by the
judgment, or who is entitled to the avails of the suit. Any decision rendered against a person who is not a real party in interest in the
case cannot be executed. Hence, a complaint filed against such a person should be dismissed for failure to state a cause of action, as
in the case at bar.
Under Art. 1768 of the Civil Code, a partnership has a juridical personality separate and distinct from that of each of the partners.
The partners cannot be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical
personality is being used for fraudulent, unfair, or illegal purposes. In this case, Felicidad 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. It is the partnership, not its officers or agents, which should be impleaded in any litigation
involving property registered in its name. A violation of this rule will result in the dismissal of the complaint.

PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME SYCIP, SALAZAR, FELICIANO, HERNANDEZ &
CASTILLO".
PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME SYCIP, SALAZAR, FELICIANO, HERNANDEZ & CASTILLO.
July 30, 1979

Facts:
Petitions were filed by the surviving partners of Atty. Alexander Sycip, who died on May 5, 1975 and by the surviving partners of Atty.
Herminio Ozaeta, who died on February 14, 1976, praying that they be allowed to continue using, in the names of their firms, the
names of partners who had passed away.
Petitioners contend that the continued use of the name of a deceased or former partner when permissible by local custom, is not
unethical but care should be taken that no imposition or deception is practiced through this use. They also contend that no local
custom prohibits the continued use of a deceased partners name in a professional firms name; there is no custom or usage in the
Philippines, or at least in the Greater Manila Area, which recognizes that the name of a law firm necessarily identifies the individual
members of the firm.
Issue:
WON the surviving partners may be allowed by the court to retain the name of the partners who already passed away in the name of
the firm? NO

Held:
In the case of Register of Deeds of Manila vs. China Banking Corporation, the SC said:
The Court believes that, in view of the personal and confidential nature of the relations between attorney and client, and the high
standards demanded in the canons of professional ethics, no practice should be allowed which even in a remote degree could give rise
to the possibility of deception. Said attorneys are accordingly advised to drop the names of the deceased partners from their firm
name.
The public relations value of the use of an old firm name can tend to create undue advantages and disadvantages in the practice of the
profession. An able lawyer without connections will have to make a name for himself starting from scratch. Another able lawyer, who
can join an old firm, can initially ride on that old firms reputation established by deceased partners.
The court also made the difference from the law firms and business corporations:
A partnership for the practice of law is not a legal entity. It is a mere relationship or association for a particular purpose. It is not a
partnership formed for the purpose of carrying on trade or business or of holding property. Thus, it has been stated that the use of a
nom de plume, assumed or trade name in law practice is improper.
We find such proof of the existence of a local custom, and of the elements requisite to constitute the same, wanting herein. Merely
because something is done as a matter of practice does not mean that Courts can rely on the same for purposes of adjudication as a
juridical custom.
Petition suffers legal and ethical impediment.

Ortega vs. CA
FACTS:

On December 19, 1980, respondent Misa associated himself together, as senior partner with petitioners Ortega, del Castillo, Jr., and
Bacorro, as junior partners. On Feb. 17, 1988, respondent Misa wrote a letter stating that he is withdrawing and retiring from the firm
and asking for a meeting with the petitioners to discuss the mechanics of the liquidation. On June 30, 1988, petitioner filed a petition to
the Commision's Securities Investigation and Clearing Department for the formal dissolution and liquidation of the partnership. On
March 31, 1989, the hearing officer rendered a decision ruling that the withdrawal of the petitioner has not dissolved the partnership.
On appeal, the SEC en banc reversed the decision and was affirmed by the Court of Appeals. Hence, this petition.

ISSUE:
Whether or not the Court of Appeals has erred in holding that the partnership is a partnership at will and whether or not the Court of
Appeals has erred in holding that the withdrawal of private respondent dissolved the partnership regardless of his good or bad faith

HELD:
No. The SC upheld the ruling of the CA regarding the nature of the partnership. The SC further stated that a partnership that does not
fix its term is a partnership at will. The birth and life of a partnership at will is predicated on the mutual desire and consent of the
partners. The right to choose with whom a person wishes to associate himself is the very foundation and essence of that partnership.
Its continued existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner's capability to give it,
and the absence of a cause for dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will. He must, however, act in good faith, not that the attendance of bad faith can prevent the
dissolution of the partnership but that it can result in a liability for damages.

Campos Rueda & Co v Pacific Commercial (44 Phil 916)

Facts:
Campos, Rueda & Co., a limited partnership, is indebted to the appellants: Pacific Commercial Co. , Asiatic Petroleum Co, and
International Banking Corporation amounting to not less than P1,000.00 (which were not paid more than 30 days prior to the date of
the filing by petitioners of the application for voluntary insolvency).
The trial court denied their petition on the ground that it was not proven, nor alleged, that the members of the firm were insolvent at
the time the application was filed. It also held that the partners are personally and solidarily liable for the consequences of the
transactions of the partnership.

Issue:
Whether or not a limited partnership may be held to have committed an act of insolvency.

Held:
Yes. A limited partnerships juridical personality is different from the personality of its members. On general principle, the limited
partnership must answer for and suffer the consequence of its acts. Under our Insolvency Law, one of the acts of bankruptcy upon w/c
an adjudication of involuntary insolvency can be predicated is the failure to pay obligations.
The failure of Campos, Rueda & Co., to pay its obligations constitutes an act w/c is specifically provided for in the Insolvency Law for
declaration of involuntary insolvency. The petitioners have a right to a judicial decree declaring the involuntary insolvency of said
partnership.

PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME SYCIP, SALAZAR, FELICIANO, HERNANDEZ &
CASTILLO".
PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME SYCIP, SALAZAR, FELICIANO, HERNANDEZ &
CASTILLO. July 30, 1979

Facts:
Petitions were filed by the surviving partners of Atty. Alexander Sycip, who died on May 5, 1975 and by the surviving partners of Atty.
Herminio Ozaeta, who died on February 14, 1976, praying that they be allowed to continue using, in the names of their firms, the
names of partners who had passed away.
Petitioners contend that the continued use of the name of a deceased or former partner when permissible by local custom, is not
unethical but care should be taken that no imposition or deception is practiced through this use. They also contend that no local custom
prohibits the continued use of a deceased partners name in a professional firms name; there is no custom or usage in the Philippines,
or at least in the Greater Manila Area, which recognizes that the name of a law firm necessarily identifies the individual members of the
firm.
Issue:
WON the surviving partners may be allowed by the court to retain the name of the partners who already passed away in the name of
the firm? NO

Held:
In the case of Register of Deeds of Manila vs. China Banking Corporation, the SC said:
The Court believes that, in view of the personal and confidential nature of the relations between attorney and client, and the high
standards demanded in the canons of professional ethics, no practice should be allowed which even in a remote degree could give rise
to the possibility of deception. Said attorneys are accordingly advised to drop the names of the deceased partners from their firm name.
The public relations value of the use of an old firm name can tend to create undue advantages and disadvantages in the practice of the
profession. An able lawyer without connections will have to make a name for himself starting from scratch. Another able lawyer, who
can join an old firm, can initially ride on that old firms reputation established by deceased partners.
The court also made the difference from the law firms and business corporations:
A partnership for the practice of law is not a legal entity. It is a mere relationship or association for a particular purpose. It is not a
partnership formed for the purpose of carrying on trade or business or of holding property. Thus, it has been stated that the use of a
nom de plume, assumed or trade name in law practice is improper.
We find such proof of the existence of a local custom, and of the elements requisite to constitute the same, wanting herein. Merely
because something is done as a matter of practice does not mean that Courts can rely on the same for purposes of adjudication as a
juridical custom.
Petition suffers legal and ethical impediment.