EUFEMIA EVANGELISTA, MANUELA EVANGELISTA, and FRANCISCA EVANGELISTA, petitioners,

vs.
THE COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX APPEALS, respondents

FACTS: Petitioners are siblings. They borrowed from their father the sum money and contributed their own
in addition to that amount in order to buy several real properties. They rented and leased these properties
to people and they appointed their brother Simeon Evangelista to manage these. They accrued net rental
income which they distributed among themselves. In 1954, respondent Collector of Internal Revenue
demanded the payment of taxes, including income tax on corporations for the years 1945 to 1949.
Petitioners instituted a case before the Court of Appeals with prayer to reverse and set aside the decision
of the CTA and they be absolved from the financial liability. Petitioners insist, however, that they are mere
co-owners, not copartners because their union has no legal entity independent of the members and some
of the characteristics of partnerships are lacking in the case at bar, hence, they are not a corporation which
in the NIRC, includes partnership no matter how created or organized.

ISSUE: Whether or not there exists a partnership between the siblings.

RULING: Yes. Article 1767 of the Civil Code of the Philippines provides that "By the contract of partnership
two or more persons bind themselves to contribute money, properly, or industry to a common fund, with the
intention of dividing the profits among themselves." The first element is present in the case at bar, for
petitioners have agreed to contribute money and property to a common fund. Hence, the issue centered to
their intent to engage in such business. Upon consideration of all the facts and circumstances surrounding
the case, the Court was satisfied that their purpose was to engage in real estate transactions for monetary
gain and then divide the same among themselves, because:
Said common fund was created it purposely to acquire lots which were then leased separately to several
persons. The properties have been under the management of Simeon Evangelista, thus, the affairs relative
to said properties have been handled as if the same belonged to a corporation or business and enterprise
operated for profit. This set-up has been existed for over fifteen years and change in its purpose is not
evident. Petitioners have not testified or introduced any evidence, either on their purpose in creating the set
up already adverted to, or on the causes for its continued existence. They did not even try to offer an
explanation therefor. Wherefore, the appealed decision of the Court of Tax appeals is hereby affirmed with
costs against the petitioners herein.
LIM TONG LIM, petitioner,
vs.
PHILIPPINE FISHING GEAR INDUSTRIES, INC., respondent

FACTS: Antonio Chua and Peter Yao, on behalf of Ocean Quest Fishing Corporation, entered into a
contract for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc.
They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim, who however
was not a signatory to the agreement. The buyers, however, failed to pay for the fishing nets and the floats;
hence, private respondents filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim with a
prayer for a writ of preliminary attachment. The trial court found that there is a partnership between the
three as evidenced by the testimony of the witnesses and a compromise agreement. Subsequently, it
rendered its decision in favor of Philippine Fishing Gear Industries and that Chua, Yao and Lim, as general
partners, were jointly liable to pay respondent. Lim denied that partnership existed among them and argued
that the compromise agreement is not a sufficient proof that there is indeed a partnership existing among
the three.

ISSUE: Whether or not there is a partnership among the petitioners and whether or not a compromise
agreement can be a sole basis of partnership.

RULING: 1. YES. Article 1767 of the Civil Code of the Philippines provides that "By the contract of
partnership two or more persons bind themselves to contribute money, properly, or industry to a common
fund, with the intention of dividing the profits among themselves." From the factual findings of both lower
courts, it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started
by buying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's
brother. In their Compromise Agreement, they subsequently revealed their intention to pay the loan with the
proceeds of the sale of the boats, and to divide equally among them the excess or loss. These boats, the
purchase and the repair of which were financed with borrowed money, fell under the term "common fund"
under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangible
like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the
boats would be divided equally among them also shows that they had indeed formed a partnership.
Moreover, it is clear that the partnership extended not only to the purchase of the boat, but also to that of
the nets and the floats, both essential to fishing, and was obviously acquired in furtherance of their
business. Hence, without doubt, there exists a partnership among them.
2. A compromise agreement can be a sole basis of partnership as in this case because the
Agreement was but an embodiment of the relationship extant among the parties prior to its execution.
Moreover, their Compromise Agreement had revealed their intention to pay the loan with the proceeds of
the sale and to divide equally among them the excess or loss.
PRAUTCH, SCHOLES & CO., plaintiffs-appellees,
vs.
DOLORES HERNANDEZ DE GOYENECHEA, defendant-appellant

FACTS:
LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners,
vs.
LAMBERTO T. CHUA, respondent

FACTS: Respondent Chua entered into a partnership with Jacinto Chan in the distribution of Shellane
Liquefied Petroleum Gas (LPG) in Manila. They registered the business name of their partnership as
SHELLITE GAS APPLIANCE CENTER. They contributed 100,000 each as initial capital, with the intention
that the profits would be equally divided between them. The business grew and became profitable. When
Jacinto died, his surviving wife, petitioner Cecilia and his daughter, petitioner Lilibeth, took over the
operations, control, custody, disposition and management of Shellite without respondent's consent. The
latter demanded for accounting, inventory, appraisal, winding up and restitution of his net shares in the
partnership but petitioners failed to comply and just gave Chua 200,000 as initial net share while they
promise to complete the inventory. Chua brought this case to the Court but petitioners contends that they
are not liable for partnership shares, unreceived income/profits, interests, damages and attorney's fees,
that respondent does not have a cause of action against them, and that the trial court has no jurisdiction
over the nature of the action, the SEC being the agency that has original and exclusive jurisdiction over the
case. Petitioners maintain that said partnership that had initial capital of P200,000.00 should have been
registered with the Securities and Exchange Commission (SEC) since registration is mandated by the Civil
Code

ISSUE: Whether or not the partnership is invalid for not having registered to the SEC.

RULING: NO. Article 1772 of the Civil Code requires that partnerships with a capital of P3,000.00 or more
must register with the SEC, however, this registration requirement is not mandatory. Article 1768 of the
Civil Code explicitly provides that the partnership retains its juridical personality even if it fails to register.
The failure to register the contract of partnership does not invalidate the same as among the partners, so
long as the contract has the essential requisites, because the main purpose of registration is to give notice
to third parties, and it can be assumed that the members themselves knew of the contents of their contract.
In the case at bar, non-compliance with this directory provision of the law will not invalidate the partnership
considering that the totality of the evidence proves that respondent and Jacinto indeed forged the
partnership in question.
MAURICIO AGAD, plaintiff-appellant,
vs.
SEVERINO MABATO and MABATO and AGAD COMPANY, defendants-appellees

FACTS: Complainant Agad alleged that he and defendant Severino Mabato are partners in a fishpond
business. Accordingly, he had contributed P1,000, with the right to receive 50% of the profits. But Mabato
who handled the partnership funds had failed and refused to render accounts for the years 1957 to 1963,
Agad prayed in his complaint that judgment be rendered sentencing Mabato to pay him the sum of
P14,000, as his share in the profits of the partnership for the period from 1957 to 1963. In his answer,
Mabato denied the existence of said partnership on the ground that the contract therefor had not been
perfected because Agad did not actually pay the 1000 initial capital.

ISSUE: Whether or not “immovable property or real rights” have been contributed to the partnership under
consideration.