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HEIRS OF TAN ENG KEE, petitioners, Tan Eng Kee ASI nominees

Matilde Abubo Common law wife of

vs. Tan Eng Kee
CA and BENGUET LUMBER COMPANY, Teresita Children of Tan Eng Kee
represented by TAN ENG LAY, respondents.
OCTOBER 3, 2000 Clarita
NATURE OF CASE: Petition for review on certiorari Corazon
(Rule 45) Elpidio
Tan Eng Lay Brother of Tan Eng Kee

13 SEPT 1984 death of Tan Eng Kee

19 FEB 1990 heirs of Tan Eng Kee filed suit against Tan Eng Lay for the accounting, liquidation,
and winding up of the alleged partnership fromed after WWII

18 MAR 1991 heirs of Tan Eng Kee filed an amended complaint impleading Benguet Lumber
Company. Amended complaint alleged:
that after WWII, the Tan brothers pooled their resources together and entered into a
partnership engaged in the business of selling lumber and hardware. They jointly managed it
until Tan Eng Kees death
that in 1981, Tan Eng Lay and his children converted the partnership into a corporation
that the conversion deprived the heirs of Tan Eng Kee shares from the original partnership

12 APR 1995 RTC ruled that partnership exists and the heirs of Tan Eng Kee have rights over the
shares of Benguet Lumber Comp. It ordered Tan Eng Lay to render an accounting of all assets of the

Tan Eng Lay appealed to the CA.

13 MAR 1996 CA reversed RTC ruling. Petitioners motion for reconsideration denied.

Hence, this petition.

1. existence of a partnership

1. NO partnership.
There was no firm account, no firm letterheads, no certificate of partnership, no
agreement as to profits and losses, no time fixed for the duration of the partnership.
Art. 771 and 772, NCC. A partner may be constituted in any form, but when an
immovable is constituted, the execution of a public document becomes necessary.

Partnership presupposes a contract, either written or oral. However, if it involves a

real property or where the capital is 3,000php or more, the execution of a contract
is necessary
RULE 45 pertains to question of law. Existence of partnership pertains to question of
Evidence presented by heirs of Tan Eng Kee was not preponderant.

LORENZO ONA and HEIRS OF JULIA Julia Bunales Decedent
BUNALES, petitioners, Lorenzo Ona Husband of Julia,
administrator of estate
Children of Lorenzo
and Julia

CIR, respondent.

MAY 25, 1972

NATURE OF CASE: Petition for review of the decision of the Court of Tax Appeals (CTA) holding that:
petitioners have constituted an unregistered partnership
petitioners subject to the payment of the deficiency corporate income taxes (1955 and
1956, totaling to P21,901 subject to sursharge and monthly interest)

23 MAR 1944 death of Julia Bunales leaving as heirs her surviving spouse Lorenzo and her

1948 settlemenr of estate of Julia, Lorenzo apoointed as administrator

14 APR 1949 Lorenzo submitted project of partition

16 MAY 1949 partition approved by court

14 NOV 1949 Court appointed Lorenzo as guardian of his three minor children

Properties were not divided and were all left to the management of Lorenzo and leased or sold
them. Income derived was invested and there was a gradual increase in such properties and
investments. Incomes recorded in the books of account kept by Lorenzo.

Because of this, CIR decided that petitioners formed an unregistered partnership and thus require
the petitioners to pay tax (Sec. 24, Tax Code). Petitioners protested and asked for reconsideration
but to no avail.

Petitioners appealed to the CTA but affirmed the CIRs decision.

1. Nature of relationship among petitioners, co-owners or unregistered partners?

2. Unregistered Partners.
Petitioners allowed that their respective shares and income from the inherited
properties be used by Lorenzo as a common fund for other transactions with the
intention of deriving profit from it to be shared by them proprtionately. This act was
tantamount to form an unregistered partnership.
From the moment of partition, heirs are already entitled to their respective shares
and incomes thereof. If after partition, he allows his share to be held in common with

his co-heirs under a single management with the intention to derive profit from it,
even if no instrument was executed, then an unregistered partnership was formed.

JOSE P. OBILLOS, JR. ET AL., petitioners,

vs. Jose Obillos, Sr. Father
CIR and CTA, respondent. Jose Obillos, Jr. Children of Jose
Sarah Obillos Obillos, Sr.
OCTOBER 29, 1985
Romeo Obillos
NATURE OF CASE: income tax liability of four Remedios Obillos
brothers and sisters who sold two parcels of land Ortigas & Co. Ltd. Where Jose bought
which they had acquired from their father lots
Walled City Petitioners resold the
FACTS Securities Corp. lots to these parties
02 MAR 1973 Jose Obillos, Sr. completed Olga Cruz Canda
payment to Ortigas & Co. Ltd. on two lots.

03 MAR 1973 transferred his rights to his four children to enable them to build their residences.
Presumably, the Torrens titles issued to them showed that they were co-owners of said lots.

1974 petitioners resold the said lots to Walled City Securities Corp. and Olga Cruz Canda. Profit
was derived and treated it as a capital gain and paid for its income tax.

APR 1980 CIR required petitioners to pay corporate income tax in addition to the individual
income tax and petitioners were held liable for deficiency income tax and penalties. CIR theorized
that the four petitioners formed an unregistered partnership.

Petitioners contested the assessment of CIR. Two judges of CTA sustained CIRs decision but one
judge dissented.

Hence, instant appeal.

1. Existence of unregistered partnership

1. No unregistered partnership therefore the assessments were cancelled.
As testified by Obillos, Jr., they had no such intention. They were co-owners of the
lots sold.
Their original purpose was to divide the lots for residential use. Found out that the
residential use was not feasible so they have to sell the lots.
The profit gained and divided was incidental to the dissolution of co-ownership.
De Leon vs. CIR Co-ownership who own properties which produce income should
not automatically be considered partners of an unregistered partnership or a
corporation within the purview of the Income Tax Law. To hold otherwise, would be
to subject the income of all co-ownerships of inherited properties to the tax on