Aguila vs CAIn April 1991, the spouses Ruben and Felicidad Abrogarenteredinto a loan agreement with a lending firm called A.C. Aguila & Sons, Co., a partnership. The loan was for P200k. To secure the loan, the spouses mortgaged their house and lot located in a subdivision. The terms of the loan further stipulates that in case of non-payment, the property shall be automatically appropriated to the partnership and a deed of sale be readily executed in favor of the partnership. She does have a 90 day redemption period.Ruben died, and Felicidad failed to make payment. She refused to turn over the property and so the firm filed an ejectment case against her (wherein she lost). She also failed to redeem the property within the period stipulated. She then filed a civil case against Alfredo Aguila, manager of the firm, seeking for the declaration of nullity of the deed of sale. The RTC retained the validity of the deed of sale. The Court of Appeals reversed the RTC. The CA ruled that the sale is void for it is apactum commissorium sale which is prohibited under Art. 2088 of the Civil Code (note the disparity of the purchase price, which is the loan amount, with the actual value of the property which is after all located in a subdivision).ISSUE:Whether or not the case filed by Felicidad shall prosper.HELD:No. Unfortunately, the civil case was filed not against the real party in interest. As pointed out by Aguila, he is not the real party in interest but rather it was the partnership A.C. Aguila & Sons, Co. The Rules of Court provide that every action must be prosecuted and defended in the name of the real party in interest. A real party in interest is one who would be benefited or injured by the judgment, or who is entitled to the avails of the suit.Any decision rendered against a person who is not a real party in interest in the case cannot be executed.Hence, a complaint filed against such a person should be dismissed for failure to state a cause of action, as in the case at bar.Under Art. 1768 of the Civil Code, a partnership has a juridical personality separate and distinct from that of each of the partners. The partners cannot be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent, unfair, or illegal purposes.In this case, Felicidad has not shown that A.C. Aguila & Sons, Co., as a separate juridical entity, is being used for fraudulent, unfair, or illegal purposes. Moreover, the title to the subject property is in the name of A.C. Aguila & Sons, Co. It is the partnership, not its officers or agents, which should be impleaded in any litigation involving property registered in its name. A violation of this rule will result in the dismissal of the complaint.

tan eng kee vs CABenguet Lumber has been around even before World War II but during the war, its stocks were confiscated by the Japanese. After the war, the brothers Tan Eng Lay and Tan Eng Kee pooled their resources in order to revive the business. In 1981, Tan Eng Lay caused the conversion of Benguet Lumber into a corporation called Benguet Lumber and Hardware Company, with him and his family as the incorporators. In 1983, Tan Eng Kee died. Thereafter, the heirs of Tan Eng Kee demanded for an accounting and the liquidation ofthe partnership.Tan Eng Lay denied that there was a partnership between him and his brother. He said that Tan Eng Kee was merely an employee of Benguet Lumber. He showed evidence consisting of Tan Eng Kees payroll; his SSS as an employee and Benguet Lumber being the employee. As a result of the presentation of said evidence, the heirs of Tan Eng Kee filed a criminal case against Tan Eng Lay for allegedly fabricating those evidence. Said criminal case was however dismissed for lack of evidence.ISSUE:Whether or not Tan Eng Kee is a partner.HELD:No. There was no certificate of partnership between the brothers. The heirs were not able to show what was the agreement between the brothers as to the sharing of profits. All they presented were circumstantial evidence which in no way proved partnership.It is obvious that there was no partnership whatsoever. Except for a firm name, there was no firm account, no firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits and losses, and no time fixed for the duration ofthe partnership. There was even no attempt to submit an accounting corresponding to the period after the war until Kees death in 1984. It had nobusiness book, no written account nor any memorandum for that matter and no license mentioning the existence of a partnership.In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole proprietorship. He registered the same as such in 1954; that Kee was just an employee based on the latters payroll and SSS coverage, and other records indicating Tan Eng Lay as the proprietor.Also, the business definitely amounted to more P3,000.00 hence if there was a partnership, it should have been made in a public instrument.

PASCUAL v. Commissioner of Internal Revenue:On June 22, 1965, petitioners bought two (2) parcels of land from Santiago Bernardino, et al. and on May 28, 1966, they bought another three (3) parcels of land from Juan Roque. The first two parcels of land were sold by petitioners in 1968 to Marenir Development Corporation, while the three parcels of land were sold by petitioners to Erlinda Reyes and Maria Samson on March 19,1970. Petitioner realized a net profit 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. The corresponding capital gains taxes were paid by petitioners in 1973 and 1974 .Respondent Commissioner informed petitioners that in the years 1968 and 1970, petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture taxable as a corporation under Section 20(b) and its income was subject to the taxes prescribed under Section 24, both of the National Internal Revenue Code; that the unregistered partnership was subject to corporate income tax as distinguished from profits derived from the partnership by them which is subject to individual income tax.ISSUE: Whether petitioners formed an unregistered partnership subject to corporate income tax (partnership vs. co-ownership)RULING:Article 1769 of the new Civil Code lays down the rule for determining when a transaction should be 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-owners or co-possessors do or do not share any profits made by the use of the property; (3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right 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 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.Santos vs reyesIn June 1986, Fernando Santos (70%), Nieves Reyes (15%), and Melton Zabat (15%) orally instituted a partnership with them as partners. Their venture is to set up a lending business where it was agreed that Santos shall be financier and that Nieves and Zabat shall contribute their industry.**The percentages after their names denote their share in the profit.Later, Nieves introduced Cesar Gragera to Santos. Gragera was the chairman of a corporation. It was agreed that the partnership shall provide loans to the employees of Grageras corporation and Gragera shall earn commission from loan payments.In August 1986, the three partners put into writing their verbal agreement to form the partnership. As earlier agreed, Santos shall finance and Nieves shall do the daily cash flow more particularly from their dealings with Gragera, Zabat on the other hand shall be a loan investigator. But then later, Nieves and Santos found out that Zabat was engaged in another lending business which competes with their partnership hence Zabat was expelled.The two continued with the partnership and they took with them Nieves husband, Arsenio, who became their loan investigator.Later, Santos accused the spouses of not remitting Grageras commissions to the latter. He sued them for collection of sum of money. The spouses countered that Santos merely filed the complaint because he did not want the spouses to get their shares in the profits. Santos argued that the spouses, insofar as the dealing with Gragera is concerned, are merely his employees. Santos alleged that there is a distinct partnership between him and Gragera which is separate from the partnership formed between him, Zabat and Nieves.The trial court as well as the Court of Appeals ruled against Santos and ordered the latter to pay the shares of the spouses.ISSUE:Whether or not the spouses are partners.HELD:Yes. Though it is true that theoriginalpartnership between Zabat, Santos and Nieves was terminated when Zabat was expelled, the said partnership was however considered continued when Nieves and Santos continued engaging as usual in the lending business even getting Nieves husband, who resigned from the Asian Development Bank, to be their loan investigator who, in effect, substituted Zabat.There is no separate partnership between Santos and Gragera. The latter being merely a commission agent of the partnership. This is even though the partnership was formalized shortly after Gragera met with Santos (Note that Nieves was even the one who introduced Gragera to Santos exactly for the purpose of setting up a lending agreement between the corporation and the partnership).HOWEVER, the order of the Court of Appeals directing Santos to give the spouses their shares in the profit is premature. The accounting made by the trial court is based on the total income of the partnership. Such total income calculated by the trial court did not consider the expenses sustained by the partnership. All expenses incurred by the money-lending enterprise of the parties must first be deducted from the total income in order to arrive at the net profit of the partnership. The share of each one of them should be based on this net profit and not from the gross income or total income.

Yulo vs yangYang Chiao Seng wrote a letter to a Yulo, proposing the formation of a partnership between them to run and operate a theatre. Among the principal conditions offered were: first, that Yulo would have a guaranteed monthly participation of P3,000; and second, that the partnership shall last for a period of two years and six months.Yulo accepted the offer and the parties executed a partnership agreement. The capital was fixed at P100,000, P80,000 of which was to be furnished by Yang and P20,000 by the Yulo. All gains were to be distributed among the partners in the same proportion as their capital contribution and Yulos liability, in case of loss, shall be limited to her capital contribution. Later, they executed a supplementary agreement, wherein they extended the partnership for three (3) years and the benefits were now to be divided equally between them.They built the theatre on a piece of land, which was leased under Yulos name. Two months before the partnership was due to expire, the Yulo demanded from Yang her share in the profits of the business. In a letter, Yang explained that he had stopped paying monthly rentals due to the pending ejectment case brought by the landlords against the Yulo. Inasmuch as he was the sub-lessee, he was retaining the rentals to make good the rentals due from the Yulo in arrears.Thus, the Yulo filed a suit for damages against him for maliciously refusing to give her share in the partnership profits.In his answer, Yang claimed that the real agreement between them was not one of partnership but of lease. The partnership was merely adopted as a subterfuge to get around the prohibition contained in the contract of lease between them and the landowners.The trial court rendered judgment in favor of Yang. It held that the real agreement between them is one of lease since under the agreement, Yulo did not actually share either in the profits or in the losses as required by the Civil Code for partnerships.Issue: whether or not Yulo and Yangs relationship is that of a Partnership.On appeal, the Supreme Court upheld the lower courts decision. Under Article 1767 of the Civil Code, the following are the requisites of a partnership: 1) two or more persons who bind themselves to contribute money, property, or industry to a common fund; and 2) the intention on the part of the partners to divide the profits among themselves. SC also held that, In the first place, Yulo did not furnish the supposed P20,000 capital. Second, she did not furnish any help or intervention in management of the theatre. Third, it does not appear that she has ever demanded from [Yang] any accounting of the expenses and earnings of the business. Were she really a partner, her first concern should have been to find out how the business was progressing, whether the expenses were legitimate, whether the earnings were correct, etc. She was absolutely silent with respect to any of the acts that a partner should have done; all that 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 the premises which she had leased from the ownersLim vs LimIn 1980, the heirs of Jose Lim alleged that Jose Lim entered into apartnership agreementwith Jimmy Yu and Norberto Uy. The three contributed P50,000.00 each and used the funds to purchase a truck to start their trucking business. A year later however, Jose Lim died. The eldest son of Jose Lim, Elfledo Lim, took over the trucking business and under his management, the trucking business prospered. Elfledo was able to but real properties in his name. From one truck, he increased it to 9 trucks,all truckswere in his name however. He also acquired other motor vehicles in his name.In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack. Elfledos wife, Juliet Lim, took over the properties but she intimated to Jimmy and the heirs of Norberto that she could not go on with the business. So the properties in the partnership were divided among them.Now the other heirs of Jose Lim, represented by Elenito Lim, required Juliet to do an accounting of all income, profits, and properties from the estate of Elfledo Lim as they claimed that they are co-owners thereof. Juliet refused hence they sued her.The heirs of Jose Lim argued that Elfledo Lim acquired his properties from the partnership that Jose Lim formed with Norberto and Jimmy. In court, Jimmy Yu testified that Jose Lim was the partner and not Elfledo Lim. The heirs testified that Elfledo was merely the driver of Jose Lim.ISSUE:Who is the partner between Jose Lim and Elfledo Lim?HELD:It is Elfledo Lim based on the evidence presented regardless of Jimmy Yus testimony in court that Jose Lim was the partner. If Jose Lim was the partner, then the partnership would have been dissolved upon his death (in fact, though the SC did not say so, I believe it should have been dissolved upon Norbertos death in 1993). A partnership is dissolved upon the death of the partner. Further, no evidence was presented as to the articles of partnership orcontract of partnershipbetween Jose, Norberto and Jimmy. Unfortunately, there is none in this case, because the alleged partnership was never formally organized.Petitioners failed to adduce any evidence to show that the real and personal properties acquired and registered in the names of Elfledo and Juliet formed part of the estate of Jose, having been derived from Joses alleged partnership with Jimmy and Norberto. Elfledo was not just a hired help but one of the partners in the trucking business, active and visible in the running of its affairs from day one until this ceased operations upon his demise. The extent of his control, administration and management of the partnership and its business, the fact that its properties were placed in his name, and that he was not paid salary or other compensation by the partners, are indicative of the fact that Elfledo was a partner and a controlling one at that.