TEC BI & COMPANY, INC vs THE COLLECTOR OF INTERNAL REVENUE

No. 42115. March 30, 1935

FACTS:

Tec Bi and Company filed a complaint to recover the income taxes paid by Yu Yiong &
Co., their predecessor. Yu Yiong and Co. as a registered general partnership is exempted from
paying the income tax. However, the collector of internal revenue alleges that Yu Yiong ceased
to be a registered general copartnership when it failed to register the transfers made; thus, Yu
Yiong and Co. is no longer exempt. It was only recognized when Yu Yiong and Co. admitted the
assignees as new partners, by notarial document.

ISSUE:

Whether or not the failure to rgister in the Mercantile Register the transfer made
converted Yu Yiong and Company into an unregistered association

RULING:

The failure to recognize the transfer did not convert Yu Yiong and Cp. Into an
unregistered association. The Court ruled that having regard the requirements of the articles of
association and the provisions of Article 143, the transfers made had no effect as regards the
partnership. The admission of additional partners in the firm under the circumstances mention
mentioned did not have the eddect of dissolving the duly registed general partnership of Yu
Yiong and co. and of creating a new unregistered copartnership

JO CHUNG CHANG vs PACIFIC COMMERCIAL CO.

No. 19892. September 6, 1923

FACTS:

Pacific Commercial Company is contending that the Tek Seing & Co., Ltd. Is a general
partnership. Thus, it prayed before the court in an insolvency proceeding of Teck Seing & Co.,
Ltd., to declare the individual partners as parties to this proceeding and to require an inventory
of their property. Tek Seing & co., Ltd. Is evidenced by a public document and the contract of
partnership is duly registered. The issue arises when the firm name failed to include the name of
any of the partners. The Regional Trial Court granted the motion but subsequently denied the
same on the ground mentioned.
ISSUE:

Whether or not Teck Seing & Co., Ltd. Is a general partnership notwithstanding the failure of the
firm name to include the name of one of the partners.

RULING:

To establish a limited partnership there must be, at least, on general partner and the
name of at least on of the general partners must appear in the firm name. But neither of these
requirements have been fulfilled. A limited partnership that has not complied with the law of its
creation is not considered a limited partnership at all, but a general partnership in which all
members are liable.

The legal intention deducible from the acts of the parties controls in determining the existence of
a partnership. If they intend to do a thing which in law constitutes a partnership, they are
partners, although their purpose was to avoid the creation of such relation. Here, the intention of
the persons making up Teck Seing & Co., Ltd. was to establish a partnership which they
erroneously denominated a limited partnership. If this was their purpose, all subterfuges
resorted to in order to evade liability for possible losses, while assuming their enjoyment of the
advantages to be derived from the relation, must be disregarded.

We reach the conclusion that the contract of partnership found in the document
established a general partnership or, to be more exact, a partnership as this word is used in the
Insolvency Law.

INOCENCIA DELUAO and FELIPA DELUAO VS NICANOR CASTEEL

NO. L-21907. AUGUST 29, 1969

FACTS:

Casteel was the original occupant and applicant of a fishpond area. To preclude others from
entering, he wanted to construct dikes and cultivate marketable fishes. To finance the
improvements, he borrowed money from Deluao. Due to this, he was compelled to enter into a
contract of partnership and agreed to divide the fishpond after its award.

ISSUE:

Whether or not the parties may divide the fishpond after its award
Whether or not a trust resulted when the parties agreed to acquire the fishpond in the
name of Casteel

RULING:

the contract of partnership to divide the fishpond between them after such award
became illegal because it is at war with several prohibitory laws. It is an elementary rule in law
that a partnership cannot be formed for an illegal purpose or one contrary to public policy and
that where the object of a partnership is the prosecution of an illegal business or one which is
contrary to public policy, the partnership is void.
 Since we held as Illegal the second part of the contract of partnership between the
parties to divide the fishpond between them after the award, a fortiori. no rights or obligations
could have arisen therefrom. Inescapably, no trust could have resulted because trust is founded
on equity and can never result from an act violative of the law. Art. 1452 of the Civil Code does
not support the appellees' stand because it contemplates an agreement between two or more
persons to purchase property—capable of private ownership—the legal title of which is to be
taken in the name of one of them for the benefit of all. In the case at bar, the parties did not
agree to purchase the fishpond, and even if they did, such is prohibited by law, a fishpond of the
public domain not being susceptible of private ownership.

ANTONIO GOQUIOLAY vs WASHINGTON SYCIP

No. L-11840. December 10, 1963

FACTS:

PHILIPPINE AIR LINES, INC. vs HEALD LUMBER COMPANY

NO. L-11497. August 16, 1957

FACTS:

Lepanto Consolidated Mines chartered a helicopter belonging to PAL. Unfortunately,

while on flight within the logging area of Heald Lumber Co., the helicopter collided with its
tramway steel cables, which is the cause of the destruction of the helicopter and the death of
the officers. The insurance companies paid PAL for indemnity (P120,000.00) but the latter
sustained additional damages which were not covered by insurance. PAL filed a complaint for
the recovery of damages and indemnity. The lower court ruled that PAL is not the real party in
interest for the claim for P120,000.00. PAL contends that it is acting as trustee for the insurance
company to the extent of the amount received by them from the insurers.
ISSUE:

Whether or not PAL is a trustee acting for the insurance company

RULING:

If a property is insured and the owner received the indemnity from the insurer, it is provided in
Article 2207 of the Civil Code that the insurer is deemed subrogated to the rights of the insured
against the wrong doer and if the amount paid by the insurer does not fully cover the loss then
the aggrieved party is the one entitled to recover the deficiency. Evidently, under this legal
provision, the real party in interest with regard to the portion of the indemnity paid is the insurer
and not the insured.

The payment of the indemnity by the insurer to the insured does not make the latter a trustee of
the former as in the American law. This matter being statutory, the same must be governed by
our own law in this jurisdiction. Before a person can sue for the benefit of another under a
trusteeship, he must be a trustee of an express trust. (section 3, Rule 3, Rules of Court) Thus,
under this provision "in order that a trustee may sue or be sued alone, it is essential that his
trust should be expressed that is, a trust created by the direct and positive acts of the parties, by
same writing, deed, or will or by proceedings in Court. The provision does not apply in cases of
implied trust that is, a trust which may be inferred merely from the acts of the parties or from
other circumstances.

RAMOS VS RAMOS

FACTS:

A project of partition of the estate of Martin Reyes was approved. In the said partition,
the adjudication of the estate was made to the legitimate children of Martin Ramos and Candida
Tanate and the natural children of Martin. The eight lots of the Himalayan Cadastre, in equal
shares of Gregoria Ramos (Jose’s wife) and her daughter Granada, are involved. A case was
filed against the heirs of Jose Ramos for the purpose of securing a reconveyance. It is alleged
that the shares of the plaintiff were held in trust by the heirs of Jose.

ISSUE:

Whether or not there exist trust between the plaintiffs and the heirs of Jose Ramos

RULING:

The plaintiffs did not prove any express trust in this

case.