YULO V.

YANG CHIAO SENG Facts: Yang Chiao Seng proposed to form a partnership with Rosario Yulo to run and operate a theatre on the premises occupied by Cine Oro, Plaza Sta Cruz, !anila, the principal conditions of the offer being "#$ Yang guarantees Yulo a monthly participation of P%,&&& "'$ partnership shall be for a period of ' years and ( months with the condition that if the land is e)propriated, rendered impracticable for business, owner constructs a permanent building, then Yulo*s right to lease and partnership e+en if period agreed upon has not yet e)pired, "%$ Yulo is authorized to personally conduct business in the lobby of the building, and "-$ after .ec %#, #/-0, all impro+ements placed by partnership shall belong to Yulo but if partnership is terminated before lapse of # and 1 years, Yang shall ha+e right to remo+e impro+ements Parties established, 2Yang and Co 3td 4, to e)ist from 5uly #,#/-6 7 .ec %#, #/-0 8n 5une #/-(, they e)ecuted a supplementary agreement e)tending the partnership for % years beginning 5an #, #/-9 to .ec %#, #/6& :he land on which the theatre was constructed was leased by Yulo from owners, ;milia Carrion and !aria Carrion Santa !arina for an indefinite period but that after # year, such lease may be cancelled by either party upon /&<day notice 8n =pr #/-/, the owners notified Yulo of their desire to cancel the lease contract come 5uly Yulo and husband brought a ci+il action to declare the lease for a indefinite period Owners brought their own ci+il action for e>ectment upon Yulo and Yang CF8: :wo cases were heard >ointly, Complaint of Yulo and Yang dismissed declaring contract of lease terminated C=: =ffirmed the >udgment 8n #/6&, Yulo demanded from Yang her share in the profits of the business Yang answered saying he had to suspend payment because of pending e>ectment suit Yulo filed present action in #/6-, alleging the e)istence of a partnership between them and that Yang has refused to pay her shares .efendant*s Position: :he real agreement between plaintiff and defendant was one of lease and not of partnership, that the partnership was adopted as a subterfuge to get around the prohibition contained in the contract of lease between the owners and the plaintiff against the sublease of the property :rial Court: .ismissal 8t is not true that a partnership was created between them because defendant has not actually contributed the sum mentioned in the =rticles of Partnership or any other amount :he agreement is a lease because plaintiff didn*t share either in the profits or in the losses of the business as re?uired by =rt #0(/ "CC$ and because plaintiff was granted a 2guaranteed participation4 in the profits belies the supposed e)istence of a partnership 8ssue: @as the agreement a contract a lease or a partnershipA Ruling: .ismissal :he agreement was a sublease not a partnership :he following are the re?uisites of partnership: "#$ :wo or more persons who bind themsel+es to contribute money, property or industry to a common fund, "'$ :he intention on the part of the partners to di+ide the profits among themsel+es "=rticle #0(#, CC$ Plaintiff did not furnish the supposed P'&,&&& capital nor did she furnish any help or inter+ention in the management of the theatre Beither has she demanded from defendant any accounting of the e)penses and earnings of the business She was absolutely silent with respect to any of the acts that a partner should ha+e done, all she did was to recei+e her share of P%,&&& a month which cannot be interpreted in any manner than a payment for the use of premises which she had leased from the owners

;S:=B8S3=O, 5R CS CODR: OF =PP;=3S Facts: :he petitioner and pri+ate respondents are brothers and sisters who are co<owners of certain lots at the in Euezon City which were then being leased to SF;33 :hey agreed to open and operate a gas station thereat to be Gnown as ;stanislao Shell Ser+ice Station with an initial in+estment of PhP#6,&&& && to be taGen from the ad+ance rentals due to them from SF;33 for the occupancy of the said lots owned in common by them = >oint affida+it was e)ecuted by them on =pril ##, #/(( :he respondents agreed to help their brother, petitioner therein, by allowing him to operate and manage the gasoline ser+ice station of the family 8n order not to run counter to the company*s policy of appointing only one dealer, it was agreed that petitioner would apply for the dealership Respondent Remedios helped in co<managing the business with petitioner from !ay #/(( up to February #/(0 On !ay #/((, the parties entered into an =dditional Cash Pledge =greement with SF;33 wherein it was reiterated that the P#6,&&& && ad+ance rental shall be deposited with SF;33 to co+er ad+ances of fuel to petitioner as dealer with a pro+iso that said agreement 2cancels and supersedes the 5oint =ffida+it 4 For some time, the petitioner submitted financial statement regarding the operation of the business to the pri+ate respondents, but thereafter petitioner failed to render subse?uent accounting Fence, the pri+ate respondents filed a complaint against the petitioner praying among others that the latter be ordered: "#$ :o e)ecute a public document embodying all the pro+isions of the partnership agreement they entered into, "'$ :o render a formal accounting of the business operation +eering the period from !ay (, #/(( up to .ecember '#, #/(9, and from 5anuary #, #/(/ up to the time the order is issued and that the same be sub>ect to proper audit, "%$ :o pay the plaintiffs their lawful shares and participation in the net profits of the business, and "-$ :o pay the plaintiffs attorney*s fees and costs of the suit 8ssue: Can a partnership e)ist between members of the same family arising from their >oint ownership of certain propertiesA :rial Court: :he complaint "of the respondents$ was dismissed Hut upon a motion for reconsideration of the decision, another decision was rendered in fa+our of the respondents C=: =ffirmed in toto Petitioner: :he C= erred in interpreting the legal import of the 5oint =ffida+it +is<I<+is the =dditional Cash Pledge =greement Hecause of the stipulation cancelling and superseding the 5oint =ffida+it, whate+er partnership agreement there was in said pre+ious agreement had thereby been abrogated =lso, the C= erred in declaring that a partnership was established by and among the petitioner and the pri+ate respondents as regards the ownership and or operation of the gasoline ser+ice station business Feld: :here is no merit in the petitioner*s contention that because of the stipulation cancelling and superseding the pre+ious >oint affida+it, whate+er partnership agreement there was in said pre+ious agreement had thereby been abrogated Said cancelling pro+ision was necessary for the 5oint =ffida+it speaGs of P#6,&&& && ad+ance rental starting !ay '6, #/(( while the latter agreement also refers to ad+ance rentals of the same amount starting !ay '-, #/(( :here is therefore a duplication of reference to the P#6,&&& && hence the need to pro+ide in the subse?uent document that it 2cancels and supercedes4 the pre+ious none 8ndeed, it is true that the latter document is silent as to the statement in the 5oin =ffida+it that the +alue represents the 2capital in+estment4 of the parties in the business and it speaGs of the petitioner as the sole dealer, but this is as it

should be for in the latter document, SF;33 was a signatory and it would be against their policy if in the agreement it should be stated that the business is a partnership with pri+ate respondents and not a sole proprietorship of the petitioner Furthermore, there are other e+idences in the record which show that there was in fact such partnership agreement between parties :he petitioner submitted to the pri+ate respondents periodic accounting of the business and ga+e a written authority to the pri+ate respondent Remedios ;stanislao to e)amine and audit the booGs of their 2common business4 "aming negosyo$ :he respondent Remedios, on the other hand, assisted in the running of the business 8ndeed, the parties hereto formed a partnership when they bound themsel+es to contribute money in a common fund with the intention of di+iding the profits among themsel+es

38! :OBJ 38! CS PF838PP8B; F8SF8BJ J;=R8B.DS:R8;S 8BC F=C:S: On behalf of 2Ocean Euest Fishing Corp4 =ntonio Chua and Peter Yao entered into a contract with Phil Fishing Jear "PFJ8$ for the purchase of fishing nets :hey claimed they were engaged in a business +enture with petitioner 3im who was not a signatory to the agreement Chua and Yao failed to pay for the nets and floats PFJ8 filed a collection suit against Chua, Yao and 3im as general partners alleging that Ocean Euest was none)istent Chua filed a !anifestation admitting liability and re?uesting reasonable time to pay Yao filed an answer wai+ing his right to cross<e) and present e+idence 3im filed an answer with counterclaim and cross claim :rial Court ordered sale of nets at auction which were bought by PFJ8 :rial Court ruled that a partnership e)isted between 3im, Chua and Yao based on testimonies, Compromise =greement, declaration of ownership of fishing boats C=: 3im was a partner of Chua and Yao in a fishing business and may be liable for the fishing nets and floats purchased for partnership*s use 8SSD;: @hether by their acts, 3im Chua and Yao could be deemed to ha+e entered into a partnership SC: Petition denied C= affirmed :here e)isted a partnership between Chua, Yao and 3im pursuant to =rt #0(0 based on factual findings of the lower courts which established that they had decided to engage in a

fishing business for which they bought boats worth P% %6! financed by a loan from 5esus 3im, 3im*s brother 8n the Compromise =greement, they were to pay the loan with the proceeds of the sales of the boats and losses or e)cess were to be di+ided e?ually :he boats purchase and repair financed by borrowed money fell under 2common fund4 Contribution to such fund need not be cash or fi)ed assetsK it could be an intangible liGe credit or industry :he partnership e)tended not only to purchase of the boat but also to the nets and floats :he Compromise =greement was not the sole basis of the partnership 8t was but an embodiment of the relationship e)tant among the parties prior to e)ecution Petitioner was a partner and not merely a lessor as he entered into a business agreement with Chua and Yao in which debts were undertaGen to finance the ac?uisition and upgrading of +essels to be used in their fishing business :he boat, FLH 3ourdes, though registered in 3im*s name was an asset of the partnership Petitioner benefited from the use of the nets found inside the boat :hose acting on behalf of a corporation and those benefited by it, Gnowing it to be without +alid e)istence is held liable as general partners :echnically, 3im did not act on behalf of a corporation Fowe+er, ha+ing reaped the benefits of the contract entered into by persons whom he pre+iously had an e)isting relationship, he is deemed part of the association and co+ered by the scope of the doctrine of corporation by estoppel = %rd party who Gnowing an association to be unincorporated, nonetheless treated it as a corporation and recei+ed benefits from it, may be barred from denying its corporate e)istence in a suit brought against the corporation

=JD83=, 5R CS C= Facts: :he petitioner herein is the manager of = C =guila M Sons, Co , a partnership engaged in lending acti+ities, while the pri+ate respondent and her late husband were the registered owners of a house and lot, co+ered by a transfer certificate of title Sometime in #//#, the pri+ate respondent and = C =guila M Sons, Co , represented by the petitioner, entered into a !emorandum of =greement 8n this agreement, a deed of absolute sale shall be e)ecuted by the pri+ate respondent in fa+our of = C =guila MSons, Co , gi+ing the former an option to repurchase and obliging the same to deli+er peacefully the possession of the property to = C =guila M Sons, Co , within #6 days after the e)piration of the said /&days grace period @hen the pri+ate respondent failed to redeem the property within the grace period, the petitioner caused the cancellation of the transfer certificate of title under the pri+ate respondent*s name and the issuance of a new certificate of title in the name of = C =guila M Sons, Co Subse?uently, the pri+ate respondent was asGed to +acate the premises, howe+er she refused Hecause of this refusal, = C =guila M Sons, Co filed an e>ectment case against her :he !:C ruled in fa+or of = C =guila M Sons, Co , on the ground that the pri+ate respondent did not redeem the sub>ect property before the e)piration of the /&<day period pro+ided in the !O= She filed an appeal before the R:C, but failed again :hen, she filed a petition for declaration of nullity of a deed of sale with the R:C She alleged that the signature of her husband on the deed of sale was a forgery because he was already to be dead when the deed was supposed to ha+e been e)ecuted 8t appears howe+er that the she filed a criminal complaint for falsification against the petitioner

R:C: .;B8;. :he plaintiff ne+er ?uestioned recei+ing from = C =guila M Sons, Co the sum of P'&&,&&& && representing her loan from the defendant Common sense dictates that an established lending and realty firm liGe =guila would not part with Php'&&,&&& && to the spouses, who are +irtual strangers to it, without simultaneous accomplishment and signing of all the re?uired documents, more particularly the .eed of =bsolute Salem to protect its interest C=: R;C;RS;. :he transaction between the parties is indubitably an e?uitable mortgage Considering that the pri+ate respondent "+endor$ was paid the price which is unusually inade?uate "'-& s? m subdi+ision lot for only Php'&&,&&& && in the year#//#$, has retained possession of the property and has continued paying real ta)es o+er the sub>ect property Petitioner: # Fe is not the real party in interest but = C =guila M Sons, Co , ' :he >udgment in the e>ectment case is a bar to the filing of the complaint for declaration of nullity of a deed of sale in this case, and % :he contract between the parties is a pact ode retro sale and not an e?uitable mortgage Feld: :he petition is meritorious = real party in interest is one who would be benefited or in>ured by the >udgment, or who is entitled to the a+ails of the suit !oreo+er, under =rticle #0(9 of the Bew Ci+il Code, a partnership 2has a >uridical personality separate and distinct from that of each of the partners 4 :he partners cannot be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different >uridical personality is being used for fraudulent, unfair, or illegal purposes 8n this case, the pri+ate respondent has not shown that = C =guila M Sons, Co , as a separate >uridical entity, is being used for fraudulent, unfair or illegal purposes !oreo+er, the title to the sub>ect property is in the name of = C =guila M Sons, Co and the !O= was e)ecuted between the pri+ate respondent, with the consent of her husband, and = C =guila MSons, Co , represented by the petitioner Fence, it is the partnership, not its officers or agents, which should be impleaded in any litigation in+ol+ing property registered in its name @e cannot understand why both the R:C and the C= sidestepped this issue when it was s?uarely raised before them by the petitioner :he court*s conclusion is that the petitioner is not the real party in interest against whom this action should be prosecuted 8t is unnecessary to discuss the other issues raised by him in his appeal

F;8RS OF :=B ;BJ N;;, petitioners, O +s

O CODR: OF =PP;=3S and H;BJD;: 3D!H;R CO!P=BY, represented

byits President :=B ;BJ 3=Y, respondents, J R Bo #'(99#, October %, '&&&

Following the death of :an ;ng Nee, the common<law spouse

of the decedent, >oined by their children collecti+ely

Gnown asherein petitioners F;8RS OF :=B ;BJ N;;, filed suit

against the decedentPs brother :=B ;BJ 3=Y for accounting,

li?uidationand winding up of the alleged partnership formed

after @orld @ar 88 between :an ;ng Nee and :an ;ng 3ay

Facts: :he complaint alleged that after the second @orld @ar, :an

;ng Nee and :an ;ng 3ay, pooling their resources

andindustry together, entered into a partnership engaged in

the business of selling lumber and hardware and

constructionsupplies :hey named their enterprise QHenguet

3umberQ which they >ointly managed until :an ;ng NeePs

death Petitioners claimed that :an ;ng 3ay and his children

caused the con+ersion of the partnership QHenguet 3umberQ

into acorporation called QHenguet 3umber Company Q

Petitioners prayed for accounting of the partnership

assets, and thedissolution, winding up and li?uidation

thereof, and the e?ual di+ision of the net assets of

Henguet 3umber :he R:C ruled in fa+or of petitioners,

declaring that Henguet 3umber is a >oint +enture which is

aGin to a particularpartnership :he Court of =ppeals

rendered the assailed decision re+ersing the >udgment of

the trial court 8ssue: @hether or not :an ;ng Nee and :an ;ng 3ay were partners in

Henguet 3umber Feld: BO

:he trial court determined that :an ;ng Nee and :an ;ng 3ay

had entered into a >oint +enture, which it said isaGin to a

particular partnership = particular partnership is

distinguished from a >oint ad+enture, to wit:"a$ = >oint

ad+enture "an =merican concept similar to our >oint

accounts$ is a sort of informal partnership, with no

firmname and no legal personality 8n a >oint account, the

participating merchants can transact business under their

ownname, and can be indi+idually liable therefor "b$

Dsually, but not necessarily a >oint ad+enture is limited

to a S8BJ3; :R=BS=C:8OB, although the business of

pursuingto a successful termination may continue for a

number of years, a partnership generally relates to a

continuing business of +arious transactions of a certain

Gind = >oint +enture Qpresupposes generally a parity of

standing between the >oint co<+entures or partners, in

which each partyhas an e?ual proprietary interest in the

capital or property contributed, and where each party

e)ercises e?ual rights in theconduct of the business Q=

re+iew of the record persuades us that the Court of =ppeals

correctly re+ersed the decision of the trial court :hee+idence presented by petitioners falls short of the

?uantum of proof re?uired to establish a partnership Dnfortunately for petitioners, :an ;ng Nee has passed away Only he, aside from :an ;ng

3ay, could ha+e e)poundedon the precise nature of the

business relationship between them 8n the absence of e+idence, we cannot accept as

anestablished fact that :an ;ng Nee allegedly contributed

his resources to a common fund for the purpose of

establishing apartnership Hesides, it is indeed odd, if not

unnatural, that despite the forty years the partnership was

allegedly in e)istence, :an ;ngNee ne+er asGed for an

accounting

:he essence of a partnership is that the partners share in

the profits and losses ;achhas the right to demand an

accounting as long as the partnership e)ists

= demand for periodic accounting is e+idence of

apartnership .uring his lifetime, :an ;ng Nee appeared

ne+er to ha+e made any such demand for accounting from

hisbrother, :ang ;ng 3ay @e conclude that :an ;ng Nee was

only an employee, not a partner ;+en if the payrolls as

e+idence were discarded,petitioners would still be bacG to

s?uare one, so to speaG, since they did not present and

offer e+idence that would showthat :an ;ng Nee recei+ed

amounts of money allegedly representing his share in the

profits of the enterprise :here being no partnership, it follows that there is no

dissolution, winding up or li?uidation to speaG of Fence,

the petition must fail

' $ F;8RS OF :=B ;BJ N;;, petitioners, +s CODR: OF =PP;=3S and H;BJD;: 3D!H;R CO!P=BY,represented by

its President :=B ;BJ 3=Y, respondents J R Bo #'(99# October %, '&&&.; 3;OB, 5R , 5 :F=C:S: =fter the second @orld @ar, :an ;ng Nee and :an ;ng 3ay,

pooling their resources and industry together, enteredinto

a partnership engaged in the business of selling lumber and

hardware and construction supplies :hey namedtheir

enterprise QHenguet 3umberQ which they >ointly managed

until :an ;ng NeePs death Petitioners herein a+erredthat

the business prospered due to the hard worG and thrift of

the alleged partners Fowe+er, they claimed that in#/9#,

:an ;ng 3ay and his children caused the con+ersion of the

partnership QHenguet 3umberQ into a corporationcalled

QHenguet 3umber Company Q :he incorporation was purportedly

a ruse to depri+e :an ;ng Nee and his heirsof their

rightful participation in the profits of the business

Petitioners prayed for accounting of the partnership

assets,and the dissolution, winding up and li?uidation

thereof, and the e?ual di+ision of the net assets of

Henguet 3umber 8SSD;: whether :an ;ng Nee and :an ;ng 3ay were partners in

Henguet 3umber F;3.: :hus, in order to constitute a partnership, it must be

established that "#$ two or more persons bound themsel+es

tocontribute money, property, or industry to a common fund,

and "'$ they intend to di+ide the profits amongthemsel+es

:he agreement need not be formally reduced into writing,

since statute allows the oral constitution of a

partnership, sa+e in two instances: "#$ when immo+able

property or real rights are contributed, and "'$ when

thepartnership has a capital of three thousand pesos or

more 8n both cases, a public instrument is re?uired

=nin+entory to be signed by the parties and attached to the

public instrument is also indispensable to the +alidity of

thepartnership whene+er immo+able property is contributed

to the partnership :he trial court determined that :an ;ng

Nee and :an ;ng 3ay had entered into a >oint +enture, which

it said is aGin toa particular partnership = particular

partnership is distinguished from a >oint ad+enture, to

wit:"a$ = >oint ad+enture "an =merican concept similar to

our >oint accounts$ is a sort of informal partnership,with

no firm name and no legal personality 8n a >oint account,

the participating merchants can transactbusiness under

their own name, and can be indi+idually liable therefor "b$

Dsually, but not necessarily a >oint ad+enture is limited

to a S8BJ3; :R=BS=C:8OB, although thebusiness of pursuing

to a successful termination may continue for a number of

years, a partnershipgenerally relates to a continuing

business of +arious transactions of a certain Gind = >oint

+enture Qpresupposes generally a parity of standing between

the >oint co<+entures or partners, in which eachparty has

an e?ual proprietary interest in the capital or property

contributed, and where each party e)ercises e?ual&rights in

the conduct of the business Q:an ;ng Nee ne+er asGed for an

accounting :he essence of a partnership is that the

partners share in the profitsand losses ;ach has the right

to demand an accounting as long as the partnership e)ists

@e ha+e allowed ascenario wherein QRiSf e)cellent relations

e)ist among the partners at the start of the business and

all the partners aremore interested in seeing the firm grow

rather than get immediate returns, a deferment of sharing

in the profits isperfectly plausible Q Hut in the situation

in the case at bar, the deferment, if any, had gone on too

long to be plausible = person is presumed to taGe ordinary

care of his concerns 8n determining whether a partnership

e)ists, these rules shall apply:"#$ ;)cept as pro+ided by

=rticle #9'6, persons who are not partners as to each other

are not partners as tothird persons,"'$ Co<ownership or

co<possession does not of itself establish a partnership,

whether such co<owners or co<possessors do or do not share

any profits made by the use of the property,"%$ :he sharing

of gross returns does not of itself establish a

partnership, whether or not the persons sharingthem ha+e a

>oint or common right or interest in any property which the

returns are deri+ed,"-$ :he receipt by a person of a share

of the profits of a business is a prima facie e+idence that he is apartner in the business, but no such

inference shall be drawn if such profits were recei+ed in

payment:"a$ =s a debt by installment or otherwise,"b$ =s

wages of an employee or rent to a landlord,"c$ =s an

annuity to a widow or representati+e of a deceased

partner,"d$ =s interest on a loan, though the amount of

payment +ary with the profits of the business,"e$ =s the

consideration for the sale of a goodwill of a business or

other property by installments or otherwise 8n the light of

the afore?uoted legal pro+ision, we conclude that :an ;ng

Nee was only an employee, not a partner ;+en if the

payrolls as e+idence were discarded, petitioners would

still be bacG to s?uare one, so to speaG, since theydid not

present and offer e+idence that would show that :an ;ng Nee

recei+ed amounts of money allegedlyrepresenting his share

in the profits of the enterprise Petitioners failed to

show how much their father, :an ;ng Nee recei+ed, if any, as his share in the profits of Henguet

3umber Company for any particular period Fence, they

failedto pro+e that :an ;ng Nee and :an ;ng 3ay intended to

di+ide the profits of the business between themsel+es,

whichis one of the essential features of a

partnership :here being no partnership, it follows that

there is no dissolution, winding up or li?uidation to speaG

of

Feirs of 5ose 3im +s 3im " :rucGing Husiness $F: Petitioners insists that 5ose 3im

was thepartner of Borberto and 5immy and not;lfledo "late

husband of respondent$ andtherefore all the properties

ac?uired by;lfledo and respondent form part of theestate of

5ose, ha+ing been deri+ed from thealleged partnership 8:

@LB ;lfledo is a partner of the said trucGingcompany F: T :he court applying #0(/ of the Ci+ilCode held that ;lfledo

is a partner T Cresencia 3im testified that >ose ga+e;lfledo 6&G, as share

in thepartnership, on a date that coincidedwith the payment

of the initial capitalof the partnership T ;lfledo ran the affairs of thepartnership, wielding

absolute control,power and authority, withoutinter+ention

or opposition whatsoe+erof the petitioners herein, T =ll the properties particularly the /trucGs of the

partnership wereregistered in the name of ;lfledo T 5immy testified that ;lfledo did notrecei+e wages or

salaries from thepartnership, indicating that what

heactually recei+ed were shares of theprofits of the

business, T Bone of the petitioners, as heirs of 5ose, the alleged

partner, demandedperiodic accounting from ;lfledoduring his

lifetime

B=CFDR=, 5 :

F=C:S: Petitioners are the heirs of the late 5ose 3im

"5ose$ :hey filed a Complaint for Partition, =ccounting

and .amages against respondent 5uliet Cilla 3im

"respondent$, widow of the late ;lfledo 3im ";lfledo$, who

was the eldest son of 5ose and Cresencia

Petitioners alleged that 5ose was the liaison officer of

8nterwood Sawmill in Cagsiay, !auban, Euezon Sometime in

#/9&, 5ose, together with his friends 5immy Yu "5immy$ and

Borberto Dy "Borberto$, formed a partnership to engage in

the trucGing business 8nitially, with a contribution of

P6&,&&& && each, they purchased a trucG to be used in the

hauling and transport of lumber of the sawmill 5ose

managed the operations of this trucGing business until his

death on =ugust #6, #/9# :hereafter, 5osePs heirs,

including ;lfledo, and partners agreed to continue the

business under the management of ;lfledo :he shares in the

partnership profits and income that formed part of the

estate of 5ose were held in trust by ;lfledo, with

petitionersP authority for ;lfledo to use, purchase or

ac?uire properties using said funds Petitioners alleged

that ;lfledo was ne+er a partner or an in+estor in the

business and merely super+ised the purchase of additional

trucGs using the income from the trucGing business of the

partners

On !ay #9, #//6, ;lfledo died, lea+ing respondent as his

sole sur+i+ing heir Petitioners claimed that respondent

tooG o+er the administration of the aforementioned

properties, which belonged to the estate of 5ose, without

their consent and appro+al Claiming that they are co<

owners of the properties, petitioners re?uired respondent

to submit an accounting of all income, profits and rentals

recei+ed from the estate of ;lfledo, and to surrender the

administration thereof Respondent refused, thus, the

filing of this case

Respondent tra+ersed petitionersP allegations and claimed

that ;lfledo was himself a partner of Borberto and 5immy

Respondent also alleged that when 5ose died in #/9#, he

left no Gnown assets, and the partnership with 5immy and

Borberto ceased upon his demise Respondent also stressed

that 5ose left no properties that ;lfledo could ha+e held

in trust Respondent maintained that all the properties

in+ol+ed in this case were purchased and ac?uired through

her and her husband*s >oint efforts and hard worG, and

without any participation or contribution from petitioners

or from 5ose

8SSD;: @hether or not a partnership e)ists

F;3.: Y;S = partnership e)ists when two or more persons

agree to place their money, effects, labor, and sGill in

lawful commerce or business, with the understanding that

there shall be a proportionate sharing of the profits and

losses among them = contract of partnership is defined by

the Ci+il Code as one where two or more persons bind

themsel+es to contribute money, property, or industry to a

common fund, with the intention of di+iding the profits

among themsel+es

:he following circumstances tend to pro+e that ;lfledo was

himself the partner of 5immy and Borberto: #$ Cresencia

testified that 5ose ga+e ;lfledo P6&,&&& &&, as share in

the partnership, on a date that coincided with the payment

of the initial capital in the partnership, "'$ ;lfledo ran

the affairs of the partnership, wielding absolute control,

power and authority, without any inter+ention or opposition

whatsoe+er from any of petitioners herein, "%$ all of the

properties were registered in the name of ;lfledo, "-$

5immy testified that ;lfledo did not recei+e wages or

salaries from the partnership, indicating that what he

actually recei+ed were shares of the profits of the

business, and "6$ none of the petitioners, as heirs of

5ose, the alleged partner, demanded periodic accounting

from ;lfledo during his lifetime

.octrine:

:he sharing of gross returns does not of itself establish a

partnership, whether or not the persons sharing them ha+e a

>oint or common right or interest in any property from

which the returns are deri+ed :here must be an

unmistaGable intention to form a partnership or >oint

+enture

Facts: For at least one year after their receipt of two parcels of

land from their father, petitioners resold said lots to the

@alled City Securities Corporation and Olga Cruz Canda, for

which they earned a profit of P#%-,%-# 99 or P%%,69- for

each of them :hey treated the profit as a capital gain and

paid an income ta) on one<half thereof or of P#(,0/' One day before the e)piration of the fi+e<year prescripti+e

period, the Commissioner of 8nternal Re+enue, Commissioner

acting on the theory that the four petitioners had formed

an unregistered partnership or >oint +enture, re?uired the

four petitioners to pay corporate income ta) on the total

profit of P#%-,%%( in addition to indi+idual income ta) on

their shares thereof, a 6&U fraud surcharge and a -'U

accumulated interest Further, the Commissioner considered

the share of the profits of each petitioner in the sum of

P%%,69- as a Q ta)able in full "not a mere capital gain of

which is ta)able$ and re?uired them to pay deficiency

income ta)es aggregating P6(,0&0 '& including the 6&U fraud

surcharge and the accumulated interest :he petitioners contested the assessments :wo 5udges of

the :a) Court sustained the same 5udge Roa?uin dissented

Fence, the instant appeal

8ssue: @hether or not petitioners ha+e indeed formed a partnership

or >oint +enture and thus, liable for corporate income ta)

Feld:

@e hold that it is error to consider the petitioners as

ha+ing formed a partnership under article #0(0 of the Ci+il

Code simply because they allegedly contributed P#09,0&9 #'

to buy the two lots, resold the same and di+ided the profit

among themsel+es :o regard the petitioners as ha+ing formed a ta)able

unregistered partnership would result in oppressi+e

ta)ation and confirm the dictum that the power to ta)

in+ol+es the power to destroy :hat e+entuality should be

ob+iated =s testified by 5ose Obillos, 5r , they had no such

intention :hey were co<owners pure and simple :o consider

them as partners would obliterate the distinction between a

co<ownership and a partnership :he petitioners were not

engaged in any >oint +enture by reason of that isolated

transaction

=rticle #0(/"%$ of the Ci+il Code pro+ides that Qthe

sharing of gross returns does not of itself establish a

partnership, whether or not the persons sharing them ha+e a

>oint or common right or interest in any property from

which the returns are deri+edQ :here must be an

unmistaGable intention to form a partnership or >oint

+enture @F;R;FOR;, the >udgment of the :a) Court is re+ersed and

set aside :he assessments are cancelled Bo costs

=C:S: Carlos !endiola died on .ecember '9, #/9- and was

sur+i+ed by his spouse, Florentina and his children namely,

Reynaldo "herein petitioner$, Redentor, ;rnestina, ;dgardo,

!anuel, ;nrico, Ricardo, and !arilou all surnamed !endiola

"herein pri+ate respondents$

= petition for probate of the decedentVWXs will was filed

on !arch %&, #/90 with the R:C<Pasig Said court allowed

the will and issued letters of testamentary in fa+or of the

petitioner who was declared e)ecutor in the will 3ater on,

pri+ate respondents mo+ed for the remo+al of the e)ecutor

and subse?uently mo+ed for the appointment of Redentor :he

motion was granted and petitioner was remo+ed Redentor was

declared as e)cecutor = motion for reconsideration was

filed by the petitioner but it was denied by the court

On appeal, the Court of =ppeals affirmed the >udgment of

the trial court, hence, petitioner filed this petition for

re+iew :he latter a+erred that his remo+al was not

supported by e+idence and he was not gi+en his day in

court

8SSD;: @as the remo+al of the petitioner as e)ecutor

properA

RD38BJ: Yes :here was sufficient e+idence to support his

remo+al namely, his failure to pay the estate ta) and to

render an accounting of the estate and settle the same

according to law, and has in+ol+ed the other heirs in a

suit because of his own deeds :hus, his remo+al was in

accordance with Section ', Rule 9' of the Rules of Court

which states that VWYRiSf an e)ecutor or administrator

neglects to render his account and settle the estate

according to law, or to perform an order or >udgment of the

court, or a duty e)pressly pro+ided by these rules, or

absconds, or becomes insane, or otherwise incapable or

unsuitable to discharge the trust, the court may remo+e

him, or in its discretion, may permit him to resign VWO

Dnder this pro+ision, the court which appointed the

e)ecutor has the discretion to remo+e the same