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CIR VS. SUTER 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 andG u s t a v C a r l s o n . T h e y c o n t r i b u t e d , r e s p e c t i v e l y , P 2 0 , 0 0 0 . 0 0 , P 1 8 , 0 0 0 . 0 0 a n d P2,000.00. it was also duly registered with the SEC. On 1948 Suter and Spirig gotm a r r i e d a n d i n effect Carlson sold his share to the couple, the same was a l s o registered with the SEC. T h e l i m i t e d p a r t n e r s h i p h a d b e e n f i l i n g i t s i n c o m e t a x r e t u r n s a s a corporation, 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 h u s b a n d a n d a w i f e m a y n o t e n t e r i n t o a c o n t r a c t o f g e n e r a l copartnership, because u nder the Civil Code, which applies in the absence of expre ss provision in the Code of Commerce, persons prohibited f r o m m a k i n g donations 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. W h a t t h e l a w p r o h i b i t s w a s w h e n t h e s p o u s e s e n t e r e d i n t o a g e n e r a l partnership. In the case at bar, the partnership was limited