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Philex Mining Corporation vs. CIR the50-50 sharing of income of the mine.

Moreover, in an agency coupled

[G.R. No. 148187 (April 16, 2008)] with interest, it is the agency that cannot be revoked or withdrawn by the
principal due to an interest of a third party that depends upon it or the
Facts: mutual interest of both principal and agent. In this case the non-revocation
Petitioner Philex entered into an agreement with Baguio Gold Mining or non-withdrawal under the PA applies to the advances made by the
Corporation for the former to manage the latter’s mining claim know as petitioner who is the agent and not the principal under the contract. Thus,
the Sto. Mine. The parties’ agreement was denominated as“ Power of it cannot be inferred from the stipulation that it is an agency.
Attorney”. The mine suffered continuing losses over the years, which
resulted in petitioners’ withdrawal as manager of the mine. The parties
executed a “Compromise Dation in Payment”, where in the debt of
Baguio amounted to Php. 112,136,000.00. Petitioner deducted said
amount from its gross income in its annual tax income return as “loss on
the settlement of receivables from Baguio Gold against reserves and
allowances”. BIR disallowed the amount as deduction for bad debt.
Petitioner claims that it entered a contract of agency evidenced by the
“power of attorney” executed by them and the advances made by
petitioners is in the nature of a loan and thus can be deducted from its
gross income. Court of Tax Appeals (CTA) rejected the claim and held
that it is a partnership rather than an agency. CA affirmed CTA

Whether or not it is an agency.

No. The lower courts correctly held that the “Power of Attorney” (PA) is
the instrument material that is material in determining the true nature of
the business relationship between petitioner and Baguio. An examination
of the said PA reveals that a partnership or joint venture was indeed
intended by the parties. While a corporation like the petitioner cannot
generally enter into a contract of partnership unless authorized by law or
its charter, it has been held that it may enter into a joint venture, which is
akin to a particular partnership. The PA indicates that the parties had
intended to create a PAT and establish a common fund for the purpose.
They also had a joint interest in the profits of the business as shown by
Heirs of Jose Lim vs Juliet Villa Lim the SC did not say so, I believe it should have been dissolved upon Norberto’s
death in 1993). A partnership is dissolved upon the death of the partner. Further,
Business Organization – Partnership, Agency, Trust – Partner – Periodic no evidence was presented as to the articles of partnership or contract of
Accounting – Profit Sharing partnership between Jose, Norberto and Jimmy. Unfortunately, there is none in
this case, because the alleged partnership was never formally organized.
In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a partnership But at any rate, the Supreme Court noted that based on the functions performed
agreement with Jimmy Yu and Norberto Uy. The three contributed P50,000.00 by Elfledo, he is the actual partner.
each and used the funds to purchase a truck to start their trucking business. A
year later however, Jose Lim died. The eldest son of Jose Lim, Elfledo Lim, took The following circumstances tend to prove that Elfledo was himself the partner of
over the trucking business and under his management, the trucking business Jimmy and Norberto:
prospered. Elfledo was able to but real properties in his name. From one truck, he
increased it to 9 trucks, all trucks were in his name however. He also acquired 1.) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the
other motor vehicles in his name. partnership, on a date that coincided with the payment of the initial capital in the
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack.
Elfledo’s wife, Juliet Lim, took over the properties but she intimated to Jimmy 2.) Elfledo ran the affairs of the partnership, wielding absolute control, power and
and the heirs of Norberto that she could not go on with the business. So the authority, without any intervention or opposition whatsoever from any of
properties in the partnership were divided among them. petitioners herein;

Now the other heirs of Jose Lim, represented by Elenito Lim, required Juliet to do 3.) all of the properties, particularly the nine trucks of the partnership, were
an accounting of all income, profits, and properties from the estate of Elfledo Lim registered in the name of Elfledo;
as they claimed that they are co-owners thereof. Juliet refused hence they sued
her. 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 heirs of Jose Lim argued that Elfledo Lim acquired his properties from the the business; and
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 5.) none of the heirs of Jose, the alleged partner, demanded periodic accounting
that Elfledo was merely the driver of Jose Lim. 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.
Who is the “partner” between Jose Lim and Elfledo Lim? 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
HELD: formed part of the estate of Jose, having been derived from Jose’s alleged
It is Elfledo Lim based on the evidence presented regardless of Jimmy Yu’s partnership with Jimmy and Norberto.
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 (in fact, though
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
Elfredo’s efforts and hard work that the partnership was able to acquire more
trucks and otherwise prosper. Even the appellant participated in the affairs of the
partnership by acting as the bookkeeper sans salary.
MARJORIE TOCAO & WILLIAM BELO v CA & NENITA ANAY property or real rights are contributed thereto. This implies that since a
[G.R. No. 127405. October 4, 2000] contract of partnership is consensual, an oral contract of partnership is as
good as a written one. Where no immovable property or real rights are
Facts: involved, what matters is that the parties have complied with the
Nenita Anay, a former marketing adviser of Technolux Bangkok, requisites of a partnership. The fact that there appears to be no record in
accepted an offer from William Belo and Marjorie Tocao, to become an the Securities and Exchange Commission of a public instrument
industrial partner to a business venture/partnership. Geminese Enterprises, embodying the partnership agreement pursuant to Article 1772 of the
a sole-proprietorship registered in Tocao’s name, would be a Civil Code did not cause the nullification of the partnership.
distributorship of cookware, and would benefit from Anay’s expertise and
knowledge and her connection with a kitchenware manufacturer in the
US. The partnership also agreed to use her name in securing
distributorship of cookware from such manufacturer. Anay eventually
became Vice-President for sales. She organized administrative staff and
sales force. Tocao was the president and general manager of Geminise
while Belo was the capitalist partner. Anay accepted the invitation of their
manufacturer to attend a distributor/dealer meeting in Wisconsin. Upon
her return, Anay learned that Tocao had written a letter to the Cubao sales
office to the effect that she was no longer the vice-president of Geminese,
and was now barred from holding office and conducting demonstrations
in the offices. Anay, failing to get a response from Belo, demanded for the
commission due her and an audit of the company, to determine her share
in the net profits.

Whether or not the plaintiff was an employee or partner of Marjorie
Tocao and Belo

Yes, the plaintiff was an employee or partner of Tocao and Belo. To be
considered a juridical personality, a partnership must fulfill these
requisites: (1) two or more persons bind themselves to contribute money,
property or industry to a common fund; and (2) intention on the part of the
partners to divide the profits among themselves. It may be constituted in
any form; a public instrument is necessary only where immovable
G.R. No. L-25532 February 28, 1969 dissolution of the partnership, either in the Code of Commerce or in the New
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. Civil Code, and that since its juridical personality had not been affected and
WILLIAM J. SUTER and THE COURT OF TAX APPEALS, since, as a limited partnership, as contra distinguished from a duly registered
respondents. general partnership, it is taxable on its income similarly with corporations, Suter
was not bound to include in his individual return the income of the limited
A limited partnership named William J. Suter 'Morcoin' Co., Ltd was formed
What the law prohibits was when the spouses entered into a general partnership.
30September 1947 by William J. Suter as the general partner, and Julia Spirig
In the case at bar, the partnership was limited.
and Gustav Carlson. They contributed, respectively, P20,000.00, P18,000.00
andP2,000.00. It was duly registered with the SEC.
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
On 1948 Suter and Spirig got married, and, thereafter, Carlson sold his share to
(unlike American and English law that does not recognize such separate juridical
the couple, the same was also registered with the SEC. The limited partnership
personality), the bypassing of the existence of the limited partnership as a
had been filing its income tax returns as a corporation, without objection by the
taxpayer can only be done by ignoring or disregarding clear statutory mandates
herein petitioner, Commissioner of Internal Revenue, until in 1959 when the
and basic principles of our law. The limited partnership's separate individuality
latter, in an assessment, consolidated the income of the firm and the individual
makes it impossible to equate its income with that of the component members.
incomes of the partners-spouses Suter and Spirig resulting in a determination of a
True, section 24 of the Internal Revenue Code merges registered general co-
deficiency income tax against respondent Suter in the amount of P2,678.06 for
partnerships (compañias colectivas) with the personality of the individual
1954 and P4,567.00 for 1955.
partners for income tax purposes. But this rule is exceptional in its disregard of a
cardinal tenet of our partnership laws, and cannot be extended by mere
The Commissioner of Internal Revenue, in an assessment, consolidated the
implication to limited partnerships.
income of the firm and the individual incomes of the partners-spouses Suter and
Spirig resulting in a determination of a deficiency income tax against respondent
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.
(a) Whether or not the corporate personality of the William J. Suter "Morcoin"
The difference in tax rates between the income of the limited partnership being
Co., Ltd. should be disregarded for income tax purposes, considering that
consolidated with, and when split from the income of the spouses, is not a
respondent William J. Suter and his wife, Julia Spirig Suter actually formed a
justification for requiring consolidation; the revenue code, as it presently stands,
single taxable unit; and
does not authorize it, and even bars it by requiring the limited partnership to pay
(b) Whether or not the partnership was dissolved after the marriage of the
tax on its own income.

No, the limited partnership was not dissolved. Respondent Suter maintains, as the
Court of Tax Appeals held, that his marriage with limited partner Spirig and their
acquisition of Carlson's interests in the partnership in 1948 is not a ground for