CIR VS.

SUTER

G.R. No. L-25532

February 28, 1969
Commissioner of Internal Revenue vs. William J. Suter, et al.

FACTS:A limited partnership named William J. Suter 'Morcoin' Co., Ltd was formed 30September 1947 by William
J. Suter as the general partner, and Julia Spirig
andGustav Carlson. They contributed, respectively, P20,000.00, P18,000.00 andP2,000.00. it was also duly
registered with the SEC. On 1948 Suter and Spirig gotmarried and in effect Carlson sold his share to the couple, the
same was alsoregistered with the
SEC. The limited partnership had been filing its income tax returns as acorporation, without objection by the herein
petitioner, Commissioner of InternalRevenue, until in 1959 when the latter, in an assessment, consolidated the
incomeof the firm and the individual incomes of the partners-spouses Suter and Spirigresulting in a determination
of a deficiency income tax against respondent Suter inthe amount of P2,678.06 for 1954 and P4,567.00 for 1955.

ISSUE:Whether or not the limited partnership has been dissolved after the marriageof Suter and Spirig and buying
the interest of limited partner Carlson.

RULING:No, the limited partnership was not

dissolved.A husband and a wife may not enter into a contract of generalcopartnership, because under the Civil Cod
e, which applies in the absence of express provision in the Code of Commerce, persons prohibited from makingdon
ations to each other are prohibited from entering into universal partnerships. (2Echaverri 196) It follows that the
marriage of partners necessarily brings about thedissolution of a pre-existing partnership.
What the law prohibits was when the spouses entered into a generalpartnership. In the case at bar,
the partnership was limited

Ortega vs. CA
G.R. No. 109248 July 3, 1995
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.

MARJORIE TOCAO and WILLIAM T. BELO, petitioners, vs. COURT OF APPEALS and NENITA A.
ANAY, respondents.
G.R. No. 127405. October 4, 2000]

William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed to form a joint
venture for the sale of cooking wares. Belo was to contribute P2.5 million; Tocao also contributed some
cash and she shall also act as president and general manager; and Anay shall be in charge of marketing.
Belo and Tocao specifically asked Anay because of her experience and connections as a marketer. They
agreed further that Anay shall receive the following:

1. 10% share of annual net profits

2. 6% overriding commission for weekly sales

3. 30% of sales Anay will make herself

4. 2% share for her demo services

They operated under the name Geminesse Enterprise, this name was however registered as a sole
proprietorship with the Bureau of Domestic Trade under Tocao. The joint venture agreement was not
reduced to writing because Anay trusted Belos assurances.
The venture succeeded under Anays marketing prowess.
But then the relationship between Anay and Tocao soured. One day, Tocao advised one of the branch
managers that Anay was no longer a part of the company. Anay then demanded that the company be
audited and her shares be given to her.
ISSUE: Whether or not there is a partnership.
HELD: Yes, even though it was not reduced to writing, for a partnership can be instituted in any form. The
fact that it was registered as a sole proprietorship is of no moment for such registration was only for the
companys trade name.
Anay was not even an employee because when they ventured into the agreement, they explicitly agreed
to profit sharing this is even though Anay was receiving commissions because this is only incidental to her
efforts as a head marketer.
The Supreme Court also noted that a partner who is excluded wrongfully from a partnership is an innocent
partner. Hence, the guilty partner must give him his due upon the dissolution of the partnership as well as
damages or share in the profits realized from the appropriation of the partnership business and goodwill.
An innocent partner thus possesses pecuniary interest in every existing contract that was incomplete and
in the trade name of the co-partnership and assets at the time he was wrongfully expelled.
An unjustified dissolution by a partner can subject him to action for damages because by the mutual
agency that arises in a partnership, the doctrine of delectus personae allows the partners to have
the power, although not necessarily the right to dissolve the partnership.
Tocaos unilateral exclusion of Anay from the partnership is shown by her memo to the Cubao office plainly
stating that Anay was, as of October 9, 1987, no longer the vice-president for sales of Geminesse
Enterprise. By that memo, petitioner Tocao effected her own withdrawal from the partnership and
considered herself as having ceased to be associated with the partnership in the carrying on of the
business. Nevertheless, the partnership was not terminated thereby; it continues until the winding up of
the business.
 EVANGELISTA & CO. v. ABAD SANTOS
G.R. No. L-31684; June 28, 1973
Ponente: J. Makalintal

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.
Pascual and Dragon v. CIR, G.R. No. 78133, October 18, 1988

25MAR

[GANCAYCO, J.]
FACTS:
Petitioners bought two (2) parcels of land and a year after, they bought another three (3) parcels of land.
Petitioners subsequently sold the said lots in 1968 and 1970, and realized net profits. The corresponding
capital gains taxes were paid by petitioners in 1973 and 1974 by availing of the tax amnesties granted in
the said years. However, the Acting BIR Commissioner assessed and required Petitioners to pay a total
amount of P107,101.70 as alleged deficiency corporate income taxes for the years 1968 and 1970.
Petitioners protested the said assessment asserting that they had availed of tax amnesties way back in
1974. In a reply, respondent Commissioner informed petitioners that in the years 1968 and 1970,
petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture
taxable as a corporation under Section 20(b) and its income was subject to the taxes prescribed under
Section 24, both of the National Internal Revenue Code that the unregistered partnership was subject to
corporate income tax as distinguished from profits derived from the partnership by them which is subject
to individual income tax; and that the availment of tax amnesty under P.D. No. 23, as amended, by
petitioners relieved petitioners of their individual income tax liabilities but did not relieve them from the tax
liability of the unregistered partnership. Hence, the petitioners were required to pay the deficiency income
tax assessed.

ISSUE:
Whether the Petitioners should be treated as an unregistered partnership or a co-ownership for the
purposes of income tax.

RULING:
The Petitioners are simply under the regime of co-ownership and not under unregistered
partnership.
By the contract of partnership 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 (Art. 1767, Civil
Code of the Philippines). In the present case, there is no evidence that petitioners entered into an
agreement to contribute money, property or industry to a common fund, and that they intended to divide
the profits among themselves. The sharing of returns does not in itself establish a partnership whether or
not the persons sharing therein have a joint or common right or interest in the property. There must be a
clear intent to form a partnership, the existence of a juridical personality different from the individual
partners, and the freedom of each party to transfer or assign the whole property. Hence, there is no
adequate basis to support the proposition that they thereby formed an unregistered partnership. The two
isolated transactions whereby they purchased properties and sold the same a few years thereafter did not
thereby make them partners. They shared in the gross profits as co- owners and paid their capital gains
taxes on their net profits and availed of the tax amnesty thereby. Under the circumstances, they cannot be
considered to have formed an unregistered partnership which is thereby liable for corporate income tax,
as the respondent commissioner proposes.