#3 Alfredo Aguila Jr vs Court of Appeals et al.

Facts: In April 1991, the spouses Ruben and Felicidad Abrogar entered into 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 a pactum 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 hel d 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. #5 Pascual & Dragon vs CIR and CTA

GRN 78133 October 18, 1988 Gancayco, J.: Facts: Petitioners bought two parcels of land and another 3 parcels the following year. The 2 parcels were sold in 1968 while the other 3 were sold in 1970. Realizing profits from the sale, petitioners filed capital gains tax. However, they were assessed with deficiency tax for corporate income taxes. Issue: Whether or not petitioners formed an unregistered partnership thereby assessed with corporate income tax. Held: By the contract of partnership, two or more persons bind themselves to contribute money, industry or property to a common fund with the intention of dividing profits among themselves. There is no evidence though, that petitioners entered into an agreement to contribute MPI to a common fund and that they intend to divide profits among themselves. The petitioners purchased parcels of land and became co-owners thereof. Their transactions of selling the lots were isolated cases. The character of habituality peculiar to the business transactions for the purpose of gain was not present. The sharing of returns foes 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 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.

#6 Lorenzo Ona vs CIR GR No. L -19342 | May 25, 1972 | J. Barredo Facts: Julia Buales died leaving as heirs her surviving spouse, Lorenzo Oa and her five children. A civil case was instituted for the settlement of her state, in which Oa was appointed administrator and later on the guardian of the three heirs who were still minors when the project for partition was approved. This shows that the heirs have undivided interest in 10 parcels of land, 6 houses and money from the War Damage Commission.

Although the project of partition was approved by the Court, no attempt was made to divide the properties and they remained under the management of Oa who used said properties in business by leasing or selling them and investing the income derived therefrom and the proceeds from the sales thereof in real properties and securities. As a result, petitioners properties and investments gradually increased. Petitioners returned for income tax purposes their shares in the net income but they did not actually receive their shares because this left with Oa who invested them. Based on these facts, CIR decided that petitioners formed an unregistered partnership and therefore, subject to the corporate income tax, particularly for years 1955 and 1956. Petitioners asked for reconsideration, which was denied hence this petition for review from CTAs decision. Issue: W/N there was a co-ownership or an unregistered partnership W/N the petitioners are liable for the deficiency corporate income tax Held: Unregistered partnership. The Tax Court found that instead of actually distributing the estate of the deceased among themselves pursuant to the project of partition, the heirs allowed their properties to remain under the management of Oa and let him use their shares as part of the common fund for their ventures, even as they paid corresponding income taxes on their respective shares. Yes. For tax purposes, the co-ownership of inherited properties is automatically converted into an unregistered partnership the moment the said common properties and/or the incomes derived therefrom are used as a common fund with intent to produce profits for the heirs in proportion to their respective shares in the inheritance as determined in a project partition either duly executed in an extrajudicial settlement or approved by the court in the corresponding testate or intestate proceeding. The reason is simple. From the moment of such partition, the heirs are entitled already to their respective definite shares of the estate and the incomes thereof, for each of them to manage and dispose of as exclusively his own without the intervention of the other heirs, and, accordingly, he becomes liable individually for all taxes in connection therewith. If after such partition, he allows his share to be held in common with his co-heirs under a single management to be used with the intent of making profit thereby in proportion to his share, there can be no doubt that, even if no document or instrument were executed, for the purpose, for tax purposes, at least, an unregistered partnership is formed. For purposes of the tax on corporations, our National Internal Revenue Code includes these partnerships The term partnership includes a syndicate, group, pool, joint venture or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on (8 Mertens Law of Federal Income Taxation, p. 562 Note 63; emphasis ours.) with the exception only of duly registered general copartnerships 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 corporations. Judgment affirmed.

#14

Rafaela P. SironMauricio Agad vs. Severino Mabato G.R. No. L-24193, June 28, 1968Ponente: Concepcion, C. J. Facts: Mauricio Agad and defendant Severino Mabato are partners in a fishpond business. From 1952up to and including 1956, Mabato who handled the partnership funds, had yearly rendered accounts of the operations of the partnership, that despite repeated demands, Mabato failedand refused to render accounts for the years 1957 to 1963. Consequently Agad filed a complaint in the CIF of Davao. In his answer, Mabato admitted the formal allegations of the complaint and denied the existence of said partnership, upon the ground that the contracttherefor had not been perfected, despite the execution of Annex "A", because Agad had allegedly failed to give his P1,000 contribution to the partnership capital. Subsequently, Mabato filed a motion to dismiss, upon the ground that the complaint states no cause of action and that the lower court had no jurisdiction over the subject matter of the case, because it involves principally the determination of rights over public lands. After due hearing, the court issued the order appealed from, granting the motion to dismiss the complaint for failure to state a cause of action. This conclusion was predicated upon the theory that the contract of partnership, Annex "A", is null and void, pursuant to Art. 1773 of our Civil Code, because an inventory of the fish pond referred in said instrument had not been attached thereto. A reconsideration of this order having been denied, Agad brought the matter to the Supreme Court for review by record on appeal. Issue: Whether Art. 1773 of the Civil Code is applicable in this case. Held: We find that said Article 1773 of the Civil Code is not in point. Ratio: The issue before us hinges on whether or not "immovable property or real rights" have been contributed to the partnership under consideration. Mabato alleged and the lower courtheld that the answer should be in the affirmative, because "it is really inconceivable how apartnership engaged in the fishpond business could exist without said fishpond property (being)contributed to the partnership." It should be noted, however, that, as stated in Annex "A" thepartnership was established "to operate a fishpond", not to "engage in a fishpond business".Moreover, none of the partners contributed either a fishpond or a real right to any fishpond.Their contributions were limited to the sum of P1,000 each. Indeed, Paragraph 4 of Annex "A"provides: That the capital of the said partnership is Two Thousand (P2,000.00) Pesos Philippine Currency, of which One Thousand(P1,000.00) pesos has been contributed by Severino Mabato and One Thousand (P1,000.00) Pesos has been contributedby Mauricio Agad.x x x x x x x x x

The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership.Neither said fishpond nor a real right thereto was contributed to the partnership or became partof the capital thereof, even if a fishpond or a real right thereto could become part of its assets.