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ROJAS vs. MAGLANA (192 SCRA 110) FACTS: A partnership was constituted between Rojas and Maglana to operate timber forest products concession, and articles of co-partnership were duly executed and registered with the SEC using the firm name Eastcoast Development Enterprises. Later, the partners took in an industrial partner, whereby they executed an Additional Agreement which essentially adopted the registered articles but covering the acceptance of an industrial partner, which agreement was not duly registered with the SEC, and the partnership operated under the original registered firm name. Shortly thereafter, the original partners bought out the interest, share and participation of the industrial partner in the firm, and the partnership was continued without the benefit of any written agreement or reconstitution of their written articles of co-partnership. When Rojas entered into a separate management contract with another logging enterprise and withdrew his equipment from the partnership, Maglana made a formal demand against Rojas for the payment of his promised contribution to the partnership and compliance with his obligation to perform the duties of logging superintendent as provided expressly in the registered articles of co-partnership. When Rojas responded that he would not be able to comply with his promised contribution and will not work as logging superintendent for the partnership, Maglana gave notice of the dissolution of the partnership. In the suit that ensued between the partners, one of the issues that had to be resolved by the Court was the nature of the partnership and the legal relationship of Rojas and Maglana after the retirement of the industrial partner from the second partnership. ISSUE: Whether or not there was a change in the nature of the partnership/legal relationship of the partners after the retirement of the industrial partner of the second partnership? HELD: NO. On this issue, the trial court ruled that the second partnership superseded the first partnership, so that when the second partnership was dissolved by the withdrawal of the industrial partner, there being no written contract of co-partnership when it was continued by the two original partners, there was no reconstitution of the original partnership, and consequently the partnership that was continued between Rojas and Maglana was a de facto partnership at will. In overruling the court a quo, the Supreme Court held . . . [I]t appears evident that it was not the intention of the partners to dissolve the first partnership, upon the constitution of the second one, which they unmistakable called an Additional Agreement . . . Except for the fact that they took in one industrial partner, gave him an equal share in the profits and fixed the term of the second partnership to thirty (30) years, everything else was the same. Thus, they adopted the same name, . . . they pursued the same purposes and the capital contributions of Rojas and Maglana as stipulated in both partnership call for the same amounts. Just as important is the fact that all subsequent renewal of Timber License No. 35-36 were secured in favor of the First Partnership, the original licensee. . . To all intents and purpose therefore, the First Articles of Partnership were only amended, in the form of Supplementary Articles of Co-Partnership . . . which was never registered . . . Otherwise stated, even during the existence of the second partnership, all business transactions were carried out under the duly registered articles. (Ibid, at pp. 117-118) The Court then proceeded to hold that On the other hand, there is no dispute that the second partnership was dissolved by common consent. Said dissolution did not affect the first partnership which continued to exist as shown by the subsequent acts of the original partners carrying one with the original partnership business and confirming the obligations constituted under the original articles of partnership. The conclusion of the Court was thus: Under the circumstances, the relationship of Rojas and Maglana after the withdrawal of [the industrial partner] can neither be considered as a de facto partnership, nor a partnership at will, for as stressed, there is an existing partnership, duly registered. (Ibid, at p. 118) Rojas therefore affirms two important aspects in Partnership Law: Firstly, that registration of the contract of partnership with the SEC has the legal effect of binding the partners (and perhaps even third parties dealing with the partnership), as to the contractual obligations, the rights and duties of the partners, and which has effective force even as the partnership undergoes changes within its constitution by the acceptance into and withdrawal of partners into the venture. Secondly, the underlying business enterprise, the manner of its operation, has much legal influence of determining the contractual intents of the partners in the determination of inter-partnership rights and obligations. Campos Rueda & Co v Pacific Commercial (44 Phil 916)

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Facts: Campos, Rueda & Co., a limited partnership, is indebted to the appellants: Pacific Commercial Co. , Asiatic Petroleum Co, and International Banking Corporation amounting to not less than P1,000.00 (which were not paid more than 30 days prior to the date of the filing by petitioners of the application for voluntary insolvency). The trial court denied their petition on the ground that it was not proven, nor alleged, that the members of the firm were insolvent at the time the application was filed. It also held that the partners are personally and solidarily liable for the consequences of the transactions of the partnership. Issue: Whether or not a limited partnership may be held to have committed an act of insolvency. Held: Yes. A limited partnerships juridical personality is different from the personality of its members. On general principle, the limited partnership must answer for and suffer the consequence of its acts. Under our Insolvency Law, one of the acts of bankruptcy upon w/c an adjudication of involuntary insolvency can be predicated is the failure to pay obligations. The failure of Campos, Rueda & Co., to pay its obligations constitutes an act w/c is specifically provided for in the Insolvency Law for declaration of involuntary insolvency. The petitioners have a right to a judicial decree declaring the involuntary insolvency of said partnership. ____________ another Fire Insurance was procured from respondent Philippine British Assurance Company, covering the same building for P50,000.00 and the contents thereof for P70,000.00. The building and the contents were totally razed by fire. Based on the computation of the loss, including the Travellers Multi- Indemnity, respondents, Zenith Insurance, Phil. British Assurance and S.S.S. Accredited Group of Insurers, paid their corresponding shares of the loss. Complainants were paid the following: P41,546.79 by Philippine British Assurance Co., P11,877.14 by Zenith Insurance Corporation, and P5,936.57 by S.S.S. Group of Accredited Insurers Demand was made from respondent Travellers MultiIndemnity for its share in the loss but the same was refused. Hence, complainants demanded from the other three (3) respondents the balance of each share in the loss in the amount of P30,894.31 (P5,732.79-Zenith Insurance: P22,294.62, Phil. British: and P2,866.90, SSS Accredited) but the same was refused, hence, this action. In their answers, Philippine British Assurance and Zenith Insurance Corporation denied liability on the ground that the claim of the complainants had already been waived, extinguished or paid. Both companies set up counterclaim in the total amount of P 91,546.79. SSS Accredited Group of Insurers informed the Commission that the claim of complainants for the balance had been paid in the amount in full. Travellers Insurance, on its part, admitted the issuance of a Policy and alleged defenses that Fire Policy, covering the furniture and building of complainants was secured by a certain Arsenio Chua and that the premium due on the fire policy was paid by Arsenio Chua. Tai Tong Chuache & Co. also filed a complaint in intervention claiming the proceeds of the fire Insurance Policy issued by respondent Travellers MultiIndemnity. As adverted to above respondent Insurance Commission dismissed spouses Palomos' complaint on the ground that the insurance policy subject of the complaint was taken out by Tai Tong Chuache & Company, for its own interest only as mortgagee of the insured property and thus complainant as mortgagors of the insured property have no right of action against the respondent. It likewise dismissed petitioner's complaint in intervention in the following words: From the above decision, only intervenor Tai Tong Chuache filed a motion for reconsideration but it was likewise denied hence, the present petition. Issue: WON Tai Tong had insurable interest

Tai Tong v Insurance G.R. No. L-55397 February 29, 1988

J. Gancayco Facts: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of P100,000.00. To secure the payment of the loan, a mortgage was executed over the land and the building in favor of Tai Tong Chuache & Co. Arsenio Chua, representative of Thai Tong Chuache & Co. insured the latter's interest with Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for the building and P30,000.00 for the contents thereof) Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000.00 with respondent Zenith Insurance Corporation. On July 16, 1975,

Held: Yes. Petition granted.

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2,000.00. it was also duly registered with the SEC. On 1948 Suter and Spirig got married and in effect Carlson sold his share to the couple, the same was also registered with the SEC. The limited partnership had been filing its income tax returns as acorporation, 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 husband and a wife may not enter into a contract of generalcopartnership, bec ause under the Civil Code, which applies in the absence of express provision in th e Code of Commerce, persons prohibited from makingdonations to each other are prohibited from entering into universal partnerships. (2Echaverri 196) It follows that the marriage of partners necessarily brings about the dissolution of a preexisting partnership. What the law prohibits was when the spouses entered into a generalpartnership. In the case at bar, the partnership was limited ___________ Evangelista, et al. v. CIR, GR No. L-9996, October 15, 1957 Facts: Herein petitioners seek a review of CTAs decision holding them liable for income tax, real estate dealers tax and residence tax. As stipulated, petitioners borrowed from th eir father acertain sum for the purpose of buying real properties. Within February 1943 to April 1994, they have bought parcels of land from different persons, the management of said prop erties was charged to their brother Simeon evidenced by a document. These properties wer e then leased or rented to various tenants. On September 1954, CIR demanded the payment of income tax on corporations, real estate dealers fixed tax, and corporation residence tax to which the petitioners s eek to be

Ratio: Respondent advanced an affirmative defense of lack of insurable interest on the part of the petitioner that before the occurrence of the peril insured against, the Palomos had already paid their credit due the petitioner. However, they were never able to prove that Tai had a lack of insurable interest. Hence, the decision must be adverse against them. However respondent Insurance Commission absolved respondent insurance company from liability on the basis of the certification issued by the then Court of First Instance of Davao, Branch II, that in a certain civil action against the Palomos, Arsenio Lopez Chua stands as the complainant and not Tai Tong Chuache. From said evidence respondent commission inferred that the credit extended by petitioner to the Palomos secured by the insured property must have been paid. These findings was based upon a mere inference. The record of the case shows that the petitioner to support its claim for the insurance proceeds offered as evidence the contract of mortgage which has not been cancelled nor released. It has been held in a long line of cases that when the creditor is in possession of the document of credit, he need not prove nonpayment for it is presumed. The validity of the insurance policy taken by petitioner was not assailed by private respondent. Moreover, petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner. Public respondent argues however, that if the civil case really stemmed from the loan granted to Azucena Palomo by petitioner the same should have been brought by Tai Tong Chuache or by its representative in its own behalf. From the above premise, respondent concluded that the obligation secured by the insured property must have been paid. However, it should be borne in mind that petitioner being a partnership may sue and be sued in its name or by its duly authorized representative. Petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by respondent insurance company. Thus Chua as the managing partner of the partnership may execute all acts of administration including the right to sue debtors of the partnership in case of their failure to pay their obligations when it became due and demandable. Public respondent's allegation that the civil case filed by Arsenio Chua was in his capacity as personal creditor of spouses Palomo has no basis. The policy, then had legal force and effect. _________________ 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 andGustav Carlson. They contributed, respectively, P20,000.00, P18,000.00 andP

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absolved from such payment. Issue: Whether petitioners are subject to the tax on corporations. Ruling: The Court ruled that with respect to the tax on corporations, the issue hinges on the meaning of the terms corporation and partnership as used in Section 24 (prov ides that a tax shall be levied on every corporation no matter how created or organized except g eneral co-partnerships) and 84 (provides that the term corporation includes among othe rs, partnership) of the NIRC. Pursuant to Article 1767, NCC (provides for the concept of partnersh ip), its essential elements are: (a) an agreement to contribute money, property or indus try to a common fund; and (b) intent to divide the profits among the contracting parties. It is of the opinion of the Court that the first element is undoubtedly present for p etitioners have agreed to, and did, contribute money and property to a common fund. As to the s econd element, the Court fully satisfied that their purpose was to engage in real estate transactio ns for monetary gain and then divide the same among themselves as indicated by the following ci rcumstances: 1. The common fund was not something they found already in existence nor a property inherited by them pro indiviso. It was created purposely, jointly borrowi ng a substantial portion thereof in order to establish said common fund; 2. They invested the same not merely in one transaction, but in a series of transactions. The number of lots acquired and transactions undertake is strongly indicative of a pattern or common design that was not limited to the conservation and preservation of the aforementioned common fund or even of the property acquire d. In other words, one cannot but perceive a character of habitually peculiar to busines s transactions engaged in the purpose of gain; 3. Said properties were not devoted to residential purposes, or to other personal uses, of petitioners but were leased separately to several persons; 4. They were under the management of one person where the affairs relative to s aid properties have been handled as if the same belonged to a corporation or busines s and enterprise operated for profit; 5. Existed for more than ten years, or, to be exact, over fifteen years, since the fi rst property was acquired, and over twelve years, since Simeon Evangelista became the manager; 6. Petitioners have not testified or introduced any evidence, either on their purpo se in creating the set up already adverted to, or on the causes for its continued existen ce. The collective effect of these circumstances is such as to leave no room for doubt on the existence of said intent in petitioners herein. Also, petitioners argument that their being mere co-owners did not create a sep arate legal entity was rejected because, according to the Court, the tax in question is o ne imposed upon "corporations", which, strictly speaking, are distinct and different from "part nerships". When the NIRC includes "partnerships" among the entities subject to the tax on "corpor ations", said Code must allude, therefore, to organizations which are not necessarily "partners hips", in the technical sense of the term. The qualifying expression found in Section 24 and 84 (b) clearly indicates that a joint venture need not be undertaken in any of the standard form s, or in conformity with the usual requirements of the law on partnerships, in order that one could be deemed constituted for purposes of the tax on corporations. Accordingly, the law maker could not have regarded that personality as a condition essential to the existence of the par tnerships therein referred to. For purposes of the tax on corporations, NIRC includes these partnerships with the exception only of duly registered general co partnerships - within the pur view of the term "corporation." It is, therefore, clear that petitioners herein constitute a partnershi p, insofar as said Code is concerned and are subject to the income tax for corporations. As regards the residence of tax for corporations (Section 2 of CA No. 465), it is analogous to that of section 24 and 84 (b) of the NIRC. It is apparent that the ter ms "corporation"

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and "partnership" are used in both statutes with substantially the same meaning. Consequently, petitioners are subject, also, to the residence tax for corporations. Finally, on the issues of being liable for real estate dealers tax, they are also liabl e for the same because the records show that they have habitually engaged in leasing said properties whose yearly gross rentals exceeds P3,000.00 a year. __________ EUFEMIA EVANGELISTA, MANUELA EVANGELISTA, and FRANCISCA EVANGELISTA ,petitioners, THE COLLECTOR OF INTERNAL REVENUE and THE COURT OFTAX APPEALS, respondents. G.R. No. L-9996, October 15, 1957 Facts: Petitioners borrowed sum of money from their father and together with their own personal funds theyused said money to buy several real properties. They then appointed their brother (Simeon) as manager of thesaid real properties with powers and authority to sell, lease or rent out said properties to third persons. Theyrealized rental income from the said properties for the period 1945-1949.On September 24, 1954 respondent Collector of Internal Revenue demanded the payment of income tax oncorporations, real estate dealer's fixed tax and corporation residence tax for the years 1945-1949. The letter of demand and corresponding assessments were delivered to petitioners on December 3, 1954, whereupon theyinstituted the present case in the Court of Tax Appeals, with a prayer that "the decision of the respondent contained in his letter of demand dated September 24, 1954" be reversed, and that they be absolved from thepayment of the taxes in question. CTA denied their petition and subsequent MR and New Trials were denied.Hence this petition. Issue: Whether or not petitioners have formed a partnership and consequently, are subject to the tax oncorporations provided for in section 24 of Commonwealth Act. No. 466, otherwise known as the NationalInternal Revenue Code, as well as to the residence tax for corporations and the real estate dealers fixed tax. Held: YES. The essential elements of a partnership are two, namely: (a) an agreement to contribute money, property or industry to a common fund ; and (b) intent to divide the profits among the contracting parties . The first element is undoubtedly present in the case at bar, for, admittedly, petitioners have agreed to, and did, contribute money and property to a common fund. Upon consideration of all the facts and circumstances surrounding the case, we are fully satisfied that their purpose was to engage in real estate transactions for monetary gain and then divide the same among themselves, because of the following observations, among others: (1) Said common fund was not something they found already in existence; (2)They invested the same, not merely in one transaction, but in a series of transactions; (3) The aforesaid lots were not devoted to residential purposes, or to other personal uses, of petitioners herein. Although, taken singly, they might not suffice to establish the intent necessary to constitute a partnership, the collective effect of these circumstances is such as to leave no room for doubt on the existence of said intent in petitioners herein. For purposes of the tax on corporations, our National Internal Revenue Code, includes these partnerships with the exception only of duly registered general co partnerships within the purview of the term" corporation." It is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as said Code is concerned and are subject to the income tax for corporation. _____________ NO DIGEST for FERNANDEZ VS DELA ROSA _____________ ESTANISLAO, JR. VS. COURT OF APPEALS Facts: The petitioner and private respondents are brothers and sisters who are co-owners of certain lots at the in Quezon City which were then being leased to SHELL. They agreed to open and operate a gas station thereat to be known as Estanislao Shell Service Station with an initial investment of PhP15,000.00 to be taken from the advance rentals due to them from SHELL for the occupancy of the said lots owned in common by them. A joint affidavit was executed by them on April 11, 1966. The respondents agreed to help their brother, petitioner therein, by allowing him to operate and manage the gasoline service station of the family. In order not to run counter to the companys 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 May 1966 up to February 1967. On May 1966, the parties entered into an Additional Cash Pledge Agreement with SHELL wherein it was reiterated that the P15,000.00 advance rental shall be deposited with SHELL to cover advances of fuel to petitioner as dealer with a proviso that said agreement cancels and supersedes the Joint Affidavit. For sometime, the petitioner submitted financial statement regarding the operation of the business to the private respondents, but thereafter petitioner failed to render subsequent accounting. Hence , the private respondents filed a complaint against the petitioner praying among others that the latter be ordered:

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(1) To execute a public document embodying all the provisions of the partnership agreement they entered into; (2) To render a formal accounting of the business operation veering the period from May 6, 1966 up to December 21, 1968, and from January 1, 1969 up to the time the order is issued and that the same be subject to proper audit; (3) To pay the plaintiffs their lawful shares and participation in the net profits of the business; and (4) To pay the plaintiffs attorneys fees and costs of the suit. Issue: Can a partnership exist between members of the same family arising from their joint ownership of certain properties? Trial Court: The complaint (of the respondents) was dismissed. But upon a motion for reconsideration of the decision, another decision was rendered in favor of the respondents. CA: Affirmed in toto Petitioner: The CA erred in interpreting the legal import of the Joint Affidavit vis--vis the Additional Cash Pledge Agreement. Because of the stipulation cancelling and superseding the Joint Affidavit, whatever partnership agreement there was in said previous agreement had thereby been abrogated. Also, the CA erred in declaring that a partnership was established by and among the petitioner and the private respondents as regards the ownership and /or operation of the gasoline service station business. Held: There is no merit in the petitioners contention that because of the stipulation cancelling and superseding the previous joint affidavit, whatever partnership agreement there was in said previous agreement had thereby been abrogated. Said cancelling provision was necessary for the Joint Affidavit speaks of P15,000.00 advance rental starting May 25, 1966 while the latter agreement also refers to advance rentals of the same amount starting May 24, 1966. There is therefore a duplication of reference to the P15,000.00 hence the need to provide in the subsequent document that it cancels and supercedes the previous none. Indeed, it is true that the latter document is silent as to the statement in the Join Affidavit that the value represents the capital investment of the parties in the business and it speaks of the petitioner as the sole dealer, but this is as it should be for in the latter document, SHELL 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 private respondents and not a sole proprietorship of the petitioner. Furthermore, there are other evidences in the record which show that there was in fact such partnership agreement between parties. The petitioner submitted to the private respondents periodic accounting of the business and gave a written authority to the private respondent Remedios Estanislao to examine and audit the books of their common business (aming negosyo). The respondent Remedios, on the other hand, assisted in the running of the business. Indeed, the parties hereto formed a partnership when they bound themselves to contribute money in a common fund with the intention of dividing the profits among themselves. 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, Manila, the principal conditions of the offer being (1) Yang guarantees Yulo a monthly participation of P3,000 (2) partnership shall be for a period of 2 years and 6 months with the condition that if the land is expropriated, rendered impracticable for business, owner constructs a permanent building, then Yulos right to lease and partnership even if period agreed upon has not yet expired; (3) Yulo is authorized to personally conduct business in the lobby of the building; and (4) after Dec 31, 1947, all improvements placed by partnership shall belong to Yulo but if partnership is terminated before lapse of 1 and years, Yang shall have right to remove improvements. Parties established, Yang and Co. Ltd., to exist from July 1, 1945 Dec 31, 1947. In June 1946, they executed a supplementary agreement extending the partnership for 3 years beginning Jan 1, 1948 to Dec 31, 1950. The land on which the theater was constructed was leased by Yulo from owners, Emilia Carrion and Maria Carrion Santa Marina for an indefinite period but that after 1 year, such lease may be cancelled by either party upon 90-day notice. In Apr 1949, the owners notified Yulo of their desire to cancel the lease contract come July. Yulo and husband brought a civil action to declare the lease for a indefinite period. Owners brought their own civil action for ejectment upon Yulo and Yang. CFI: Two cases were heard jointly; Complaint of Yulo and Yang dismissed declaring contract of lease terminated. CA: Affirmed the judgment. In 1950, Yulo demanded from Yang her share in the profits of the business. Yang answered saying he had to suspend payment because of pending ejectment suit. Yulo filed present action in 1954, alleging the existence of a partnership between them and that Yang has refused to pay her shares.

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Defendants Position: The 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. Trial Court: Dismissal. It is not true that a partnership was created between them because defendant has not actually contributed the sum mentioned in the Articles of Partnership or any other amount. The agreement is a lease because plaintiff didnt share either in the profits or in the losses of the business as required by Art 1769 (CC) and because plaintiff was granted a guaranteed participation in the profits belies the supposed existence of a partnership. Issue: Was the agreement a contract a lease or a partnership? Ruling: Dismissal. The agreement was a sublease not a partnership. The following are the requisites of partnership: (1) two or more persons who bind themselves to contribute money, property or industry to a common fund; (2) the intention on the part of the partners to divide the profits among themselves (Article 1761, CC) Plaintiff did not furnish the supposed P20,000 capital nor did she furnish any help or intervention in the management of the theatre. Neither has she demanded from defendant any accounting of the expenses and earnings of the business. She was absolutely silent with respect to any of the acts that a partner should have done; all she did was to receive her share of P3,000 a month which cannot be interpreted in any manner than a payment for the use of premises which she had leased from the owners. SY vs CA Case Digest [G.R. No. 142293. February 27, 2003] VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT TRUCKING CORPORATION, petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, respondents. FACTS Private respondent Jaime Sahot started working as a truck helper for petitioners family-owned trucking business named Vicente Sy Trucking. Throughout all the changes in names and for 36 years, private respondent continuously served the trucking business of petitioners. When Sahot was already 59 years old, he had been incurring absences as he was suffering from various ailments. Particularly causing him pain was his left thigh, which greatly affected the performance of his task as a driver. Sahot had filed a week-long leave sometime in May 1994. On May 27th, he was medically examined and treated for EOR, presleyopia, hypertensive retinopathy G II), HPM, UTI, Osteoarthritis and heart enlargement. On said grounds, Belen Paulino of the SBT Trucking Service management told him to file a formal request for extension of his leave. At the end of his weeklong absence, Sahot applied for extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to terminate his employment should he refuse to go back to work. They carried out their threat and dismissed him from work, effective June 30, 1994. He ended up sick, jobless and penniless. On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal for recovery of separation pay against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein petitioners. Petitioners, on their part, claimed that sometime prior to June 1, 1994, Sahot went on leave and was not able to report for work for almost seven days. On June 1, 1994, Sahot asked permission to extend his leave of absence until June 30, 1994. It appeared that from the expiration of his leave, private respondent never reported back to work nor did he file an extension of his leave. Instead, he filed the complaint for illegal dismissal against the trucking company and its owners. Petitioners add that due to Sahots refusal to work after the expiration of his authorized leave of absence, he should be deemed to have voluntarily resigned from his work. They contended that Sahot had all the time to extend his leave or at least inform petitioners of his health condition. The Labor Arbiter ruled in favor of the company. It held that Sahot failed to return to work. However, upon appeal, the NLRC modified the LAs decision, ruling that Sahot did not abandon his job but his employment was terminated on account of his illness, pursuant to Article 284 of the Labor Code. ISSUE Whether or not there was valid termination of employment due to his illness. HELD The SC held that although illness can be a valid ground for terminating an employee, the dismissal was invalid. Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease. However, in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires: Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his

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employment unless there is a certification by competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy in the protection of labor. In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahots dismissal was effected. Since the burden of proving the validity of the dismissal of the employee rests on the employer, the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the required certification by a competent public health authority, this Court has ruled against the validity of the employees dismissal. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the dismissal would be unjustified. This Court will not sanction a dismissal premised on mere conjectures and suspicions, the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. In addition, we must likewise determine if the procedural aspect of due process had been complied with by the employer. From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by the management of the trucking company. The employer is required to furnish an employee with two written notices before the latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense. These, the petitioners failed to do, even only for record purposes. What management did was to threaten the employee with dismissal, then actually implement the threat when the occasion presented itself because of private respondents painful left thigh. All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahots dismissal is tainted with invalidity. Petition is denied. ____________ G.R. No. 31057 September 7, 1929 ADRIANO ARBES, ET AL., plaintiffs-appellees, vs. VICENTE POLISTICO, ET AL., defendants-appellants. FACTS: This is an action to bring about liquidation of the funds and property of the association called "Turnuhan Polistico & Co." The plaintiffs were members or shareholders, and the defendants were designated as president-treasurer, directors and secretary of said association. By agreement of the parties, the court appointed a commissioner to examine all the books, documents, and accounts of "Turnuhan Polistico & Co. The commissioner rendered his report, showing a balance of the cash on hand in the amount of P24,607.80. The trial court in accepting the report, rendered judgment, holding that the association "Turnuhan Polistico & Co." is unlawful, and sentencing the defendants jointly and severally to return the amount of P24,607.80, as well as the documents showing the uncollected credits of the association, to the plaintiffs in this case, and to the rest of the members of the said association represented by said plaintiffs. There is no question that "Turnuhan Polistico & Co." is an unlawful partnership, but the appellants allege that because it is so, some charitable institution to whom the partnership funds may be ordered to be turned over, should be included, as a party defendant. The appellants refer to article 1666 of the Civil Code, particularly the second paragraph, which provides: When the dissolution of an unlawful partnership is decreed, the profits shall be given to charitable institutions of the domicile of the partnership, or, in default of such, to those of the province. ISSUE: WHETHER OR NOT A CHARITABLE INSTITUTION IS A NECESSARY PARTY IN THIS CASE. RULING: NO, no charitable institution is a necessary party in the present case of determination of the rights of the parties. The action which may arise from said article, in the case of unlawful partnership, is that for the recovery of the amounts paid by the member from those in charge of the administration of said partnership, and it is not necessary for the said parties to base their action to the existence of the partnership, but on the fact that of having contributed some money to the partnership capital. Hence, the charitable institution of the domicile of the partnership, and in the default thereof, those of the province are not necessary parties in this case.

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_____________________ PASCUAL v. Commissioner of InternalRevenue #10 BUSORG G.R. No. 78133 October 18, 1988 GANCAYCO, J.: FACTS: On June 22, 1965, petitioners bought two (2)parcels of land from Santiago Bernardino, et al.and on May 28, 1966, they bought anotherthree (3) parcels of land from Juan Roque. Thefirst two parcels of land were sold by petitionersin 1968 to Marenir Development Corporation,while the three parcels of land were sold bypetitioners to Erlinda Reyes and Maria Samsonon March 19,1970. Petitioner realized a netprofit in the sale made in 1968 in the amount of P165, 224.70, while they realized a net profit of P60,000 in the sale made in 1970. Thecorresponding capital gains taxes were paid bypetitioners in 1973 and 1974 .Respondent Commissioner informed petitionersthat in the years 1968 and 1970, petitioners asco-owners in the real estate transactions formedan unregistered partnership or joint venturetaxable as a corporation under Section 20(b)and its income was subject to the taxesprescribed under Section 24, both of theNational Internal Revenue Code; that theunregistered partnership was subject tocorporate income tax as distinguished fromprofits derived from the partnership by themwhich is subject to individual income tax. ISSUE: Whether petitioners formed an unregisteredpartnership subject to corporate income tax(partnership vs. co-ownership) RULING: Article 1769 of the new Civil Code lays down therule for determining when a transaction shouldbe deemed a partnership or a co-ownership.Said article paragraphs 2 and 3, provides:(2) Co-ownership or co-possession does not itself establish a partnership, whether such co-ownersor co-possessors do or do not share any profitsmade by the use of the property; (3) Thesharing of gross returns does not of itself establish a partnership, whether or not thepersons sharing them have a joint or commonright or interest in any property from which the returns are derived; The sharing of returns does not in itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. There must be a clear intent to form a partnership, the existence of a juridical personality different from the individual partners, and the freedom of each party to transfer or assign the whole property. In the present case, there is clear evidence of co-ownership between the petitioners. There is no adequate basis to support the proposition that they thereby formed an unregistered partnership. The two isolated transactions whereby they purchased properties and sold the same a few years thereafter did not thereby make them partners. They shared in the gross profits as co- owners and paid their capital gains taxes on their net profits and availed of the tax

In so ruling, the court had the occasion of explaining the scope and spirit of the provision of Article 1666 of the Civil Code (now Article 1770 of the New Civil Code). With regard to Contributions of an Illegal Partnership: the court holds that (1) The partner who limits himself to demanding only the amount contributed by him need not resort to the partnership contract on which to base his action since said contract does not exist in the eyes of the law, the purpose from which the contribution was made has not come into existence, and the administrator of the partnership holding said contribution retains what belongs to others, without any consideration; for which reason he is not bound to return it and he who has paid in his share is entitled to recover it. (2) Our Code does not state whether, upon the dissolution of the unlawful partnership, the amounts contributed are to be returned by the partners, because it only deals with the disposition of the profits; but the fact that said contributions are not included in the disposal prescribed profits, shows that in consequences of said exclusion, the general law must be followed, and hence the partners should reimburse the amount of their respective contributions. (3) Any other solution is immoral, and the law will not consent to the latter remaining in the possession of the manager or administrator who has refused to return them, by denying to the partners the action to demand them. With regard to Profits of an Illegal Partnership: the court holds that (1) The article cited above permits no action for the purpose of obtaining the earnings made by the unlawful partnership, during its existence as result of the business in which it was engaged, because for the purpose, the partner will have to base his action upon the partnership contract, which is to annul and without legal existence by reason of its unlawful object; and it is self evident that what does not exist cannot be a cause of action. (2) Profits earned in the course of the partnership, because they do not constitute or represent the partner's contribution but are the result of the industry, business or speculation which is the object of the partnership, and therefor, in order to demand the proportional part of the said profits, the partner would have to base his action on the contract which is null and void, since this partition or distribution of the profits is one of the juridical effects thereof. (3) Furthermore, it would be immoral and unjust for the law to permit a profit from an industry prohibited by it.

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amnesty thereby. Under the circumstances, they cannot be considered to have formed an unregistered partnership which is thereby liable for corporate income tax, as the respondent commissioner proposes. And even assuming for the sake of argument that such unregistered partnership appears to have been formed, since there is no such existing unregistered partnership with a distinct personality nor with assets that can be held liable for said deficiency corporate income tax, then petitioners can be held individually liable as partners for this unpaid obligation of the partnership ___________________ NO DIGEST FOR CITY OF MANILA VS GAMBE _____________ Test to Determine Existence of Partnership LYONS VS ROSENTOCK FACTS Elser and Lyons are engaged in real estate. They co-owned a parcel of land. Elser with the consent of Lyons, mortgaged the property to raise the money for the development of the San Juan Estate. Lyons expressed his desire not to be part of the development project. The business prospered. Lyons demand for a share in the mortgage and in the business claiming he is a partner. ISSUE: WON Lyon is a partner? RULING: NO. Lyons himself did not want to participate in the development project. No partnership was formed. The mortgage of the property is immaterial to the issue of partnership existence. __________________ CHARACTERISTICS/ ATTRIBUTES Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin Bacorro v. CA, SEC and Joaquin Misa G.R. No. 109248 July 3, 1995 Vitug, J. Facts: Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew in said firm. He filed with SEC a petition for dissolution and liquidation of partnership. SEC en banc ruled that withdrawal of Misa from the firm had dissolved the partnership.Reason: since it is partnership at will, the law firm could be dissolved by any partner atanytime, such as by withdrawal therefrom, regardless of good faith or bad faith, since nopartner can be forced to continue in the partnership against his will. Issue: 1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo)is a partnership at will; 2. WON the withdrawal of Misa dissolved the partnership regardlessof his good or bad faith; Held: 1. Yes. The partnership agreement of the firm provides that [t]he partnership shallcontinue so long as mutually satisfactory and upon the death or legal incapacity of one of the partners, shall be continued by the surviving partners. 2. Yes. Any one of the partners may, at his sole pleasure, dictate a dissolution of thepartnership at will (e.g. by way of withdrawal of a partner). He must, however, act in goodfaith, not that the attendance of bad faith can prevent the dissolution of the partnership butthat it can result in a liability for damages ____________ NEXT PAGE TO FOLLOWGOOD LUCK TO US!