Case Digest: Torres vs. Court of Appeals (G.R. No.

134559, December 9, 1999)

I. FACTS OF THE CASE Petitioners Antonia Torres and Emeteria Baring entered into a joint venture
agreement with respondent Manuel Torres to develop a parcel of land in Lapu-Lapu City into a
subdivision. As part of the agreement, petitioners executed a Deed of Sale transferring the land to
Manuel Torres, who then registered it in his name.
To fund the project, Manuel Torres mortgaged the property to obtain a loan of ₱40,000 from
Equitable Bank. However, the subdivision project failed to materialize, leading to the foreclosure of
the property by the bank. Petitioners claimed that the failure was due to the respondent's lack of
funds and alleged misuse of the loan for personal purposes. Respondent, on the other hand,
contended that the loan was utilized for project-related expenses, such as surveying, securing
approvals, and initial construction. He argued that the project's failure resulted from adverse claims
annotated on the property's title by petitioners and their relatives, which deterred potential buyers.
The petitioners initially filed a criminal case for estafa against Manuel Torres and his wife, but they
were acquitted. Subsequently, the petitioners filed a civil case seeking damages equivalent to 60% of
the property's value. The Regional Trial Court (RTC) of Cebu City dismissed the case, and the Court of
Appeals (CA) affirmed the dismissal.
II. ISSUE/S RELATED TO PARTNERSHIP
1. Whether the joint venture agreement constituted a partnership under Philippine law.
2. Whether the absence of an inventory of the contributed real property rendered the partnership
void under Article 1773 of the Civil Code.
3. Whether petitioners were entitled to damages equivalent to 60% of the property's value due to
the project's failure.
III. RULING OF THE SUPREME COURT The Supreme Court ruled as follows:

1. Existence of a Partnership - The Court held that the joint venture agreement constituted a
partnership under Article 1767 of the Civil Code, as it demonstrated the parties' intent to
contribute resources (land by petitioners and industry plus capital by respondent) to a common
fund with the goal of sharing profits from the subdivision project.

2. Validity of the Partnership Despite Absence of Inventory - While Article 1773 requires an
inventory of immovable property contributed to a partnership, the Supreme Court clarified that
the absence of such an inventory does not automatically render the partnership void. This
provision is primarily meant to protect third parties. Since no third-party interests were
adversely affected in this case, the partnership remained valid.

3. Entitlement to Damages - The Court found no basis to hold respondent solely liable for the
project's failure. It noted that both parties contributed to the circumstances leading to the
project's non-fulfillment. As a result, petitioners were not entitled to the claimed damages
equivalent to 60% of the property's value.

The Supreme Court affirmed the decision of the Court of Appeals, emphasizing that parties are bound
by the terms of their agreement and must bear the consequences of their contractual commitments.
Case Digest: Aguila vs. Court of Appeals (310 SCRA 246)
I. FACTS OF THE CASE Petitioner Aguila and respondent entered into an agreement to develop a piece
of land into a residential subdivision. Aguila contributed capital, while the respondent provided
expertise and management. The parties agreed to share the profits from the sale of subdivided lots.
However, disputes arose regarding the distribution of proceeds, leading Aguila to file a case for an
accounting of profits and dissolution of the partnership.
The Regional Trial Court (RTC) ruled in favor of Aguila, ordering the respondent to account for all
transactions and share the profits accordingly. However, the Court of Appeals (CA) reversed the
decision, holding that there was insufficient evidence to prove the existence of a partnership.
II. ISSUE/S RELATED TO PARTNERSHIP
1. Whether a partnership existed between Aguila and the respondent under Philippine law.
2. Whether Aguila was entitled to an accounting of profits and a share in the proceeds from the
project.
III. RULING OF THE SUPREME COURT

1. Existence of a Partnership - The Supreme Court ruled that a partnership existed between the
parties, as there was a clear intention to contribute capital and industry to a common enterprise and
to share in the profits.

2. Right to Accounting and Profit Sharing - The Court held that Aguila was entitled to an accounting of
the business transactions and a share of the profits. It emphasized that even if a formal partnership
agreement was lacking, the conduct of the parties demonstrated a partnership relationship.

The Supreme Court reversed the Court of Appeals' ruling and reinstated the decision of the RTC,
affirming Aguila's right to an accounting and profit sharing.
Case Digest: Tan vs. del Rosario (G.R. No. 109289, 109446. October 3, 1994)
I. FACTS OF THE CASE Petitioners, including Tan, were partners in various registered general
partnerships engaged in the business of real estate and securities. The Bureau of Internal Revenue
(BIR) assessed them for deficiency income taxes, contending that the partnerships should be taxed as
corporations under the National Internal Revenue Code (NIRC). The petitioners argued that their
partnerships were not corporations and should be taxed as partnerships instead.
The Court of Tax Appeals (CTA) ruled in favor of the BIR, holding that general professional
partnerships and business partnerships were subject to corporate taxation. The decision was later
affirmed by the Court of Appeals (CA), prompting the petitioners to elevate the case to the Supreme
Court.
II. ISSUE/S RELATED TO PARTNERSHIP
1. Whether the general partnerships were considered corporations for tax purposes under the
National Internal Revenue Code.
2. Whether the petitioners were liable for corporate income taxes instead of being taxed as
partners.
III. RULING OF THE SUPREME COURT

1. Tax Treatment of Partnerships - The Supreme Court ruled that for tax purposes, general
partnerships engaged in business (as opposed to professional partnerships) are considered
corporations under the NIRC. Therefore, they are subject to corporate income tax.

2. Liability of the Partners - The Court held that while professional partnerships are not subject to
corporate income tax, business partnerships are treated as corporations for taxation.
Consequently, the partnerships in question were liable for corporate income tax, and the
petitioners could not claim exemption from such tax liability.

The Supreme Court upheld the Court of Appeals' ruling, affirming that the partnerships were subject
to corporate taxation under the NIRC.
Case Digest: Angeles vs. Secretary of Justice (G.R. No. 142612, July 29, 2005)
I. FACTS OF THE CASE Petitioner Angeles entered into an agreement with several individuals to
engage in a business venture. A dispute arose regarding the management and control of the business,
leading Angeles to file criminal complaints for estafa against his former associates. The Department of
Justice (DOJ) dismissed the complaints, ruling that the matter was civil in nature and should be
resolved through partnership laws rather than criminal prosecution.
Angeles sought relief from the Court of Appeals (CA), which upheld the DOJ’s findings. Dissatisfied,
Angeles elevated the case to the Supreme Court, arguing that his associates misappropriated
partnership funds and should be held criminally liable.
II. ISSUE/S RELATED TO PARTNERSHIP
1) Whether the dispute arising from the business venture constituted a civil matter rather than a
criminal offense.
2) Whether Angeles’ former associates could be held criminally liable for misappropriation of
partnership funds.
III. RULING OF THE SUPREME COURT

1. Nature of the Dispute - The Supreme Court ruled that the dispute was civil in nature, as it
primarily involved the rights and obligations of partners. It emphasized that criminal prosecution
cannot be used as a means to settle business disagreements arising from a partnership.

2. Misappropriation of Partnership Funds - The Court held that funds belonging to a partnership
cannot be considered as misappropriated under estafa laws unless there is clear proof of fraud
beyond a mere failure to account for business transactions. Since Angeles failed to present
sufficient evidence to support criminal liability, the Court ruled that the appropriate remedy was
to file a civil case for accounting and settlement of the partnership.

The Supreme Court affirmed the ruling of the Court of Appeals, emphasizing that partnership disputes
should be resolved through civil litigation and not through criminal prosecution.
Case Digest: Philex Mining Corp. vs. CIR (G.R. No. 148187, April 16, 2008)
I. FACTS OF THE CASE Philex Mining Corporation was assessed by the Bureau of Internal Revenue (BIR)
for deficiency excise taxes on its mineral products. The company argued that it had already paid its tax
obligations through its remittances to the government in the form of royalties to the National
Government. The Court of Tax Appeals (CTA) ruled against Philex Mining, holding that such payments
could not be credited as excise tax payments. The Court of Appeals (CA) affirmed this ruling,
prompting Philex Mining to elevate the case to the Supreme Court.
II. ISSUE/S RELATED TO PARTNERSHIP
1) Whether Philex Mining Corporation’s royalty payments to the National Government could be
credited as excise tax payments.
2) Whether Philex Mining was still liable for the assessed deficiency excise taxes despite its
previous remittances.
III. RULING OF THE SUPREME COURT

1. Excise Tax Liability - The Supreme Court ruled that Philex Mining Corporation remained liable for
the deficiency excise taxes. It held that excise taxes are distinct from royalty payments, and the
latter cannot be used to offset the former.

2. Nature of Excise Taxes - The Court explained that excise taxes are imposed on the privilege of
extracting and selling mineral products and must be paid independently of any other financial
obligations to the government.

The Supreme Court affirmed the decision of the Court of Appeals, ruling that Philex Mining
Corporation must pay the assessed deficiency excise taxes as determined by the BIR.
Case Digest: Tocao vs. Court of Appeals (G.R. No. 127405, October 4, 2000)
I. FACTS OF THE CASE Petitioner Irene Tocao and respondent William Chan entered into a business
venture to distribute Royal International cookware in the Philippines. Chan provided the financial
capital, while Tocao managed the business operations. Despite their agreement, no formal written
partnership was executed. Disputes arose when Tocao, without Chan’s consent, removed his name
from the business and took full control of the operations.
Chan filed a complaint before the Regional Trial Court (RTC) for recognition of the partnership,
accounting, and recovery of profits. The RTC ruled in favor of Chan, recognizing the existence of a
partnership. The Court of Appeals (CA) affirmed the RTC’s decision, prompting Tocao to appeal to the
Supreme Court.
II. ISSUE/S RELATED TO PARTNERSHIP
1) Whether a partnership existed between Tocao and Chan despite the absence of a written
agreement.
2) Whether Tocao’s actions in excluding Chan from the business operations constituted a breach of
partnership obligations.
III. RULING OF THE SUPREME COURT

1. Existence of a Partnership - The Supreme Court ruled that a partnership existed between Tocao
and Chan based on their contributions and mutual agreement to share profits. The Court
reiterated that a formal written contract is not necessary to establish a partnership as long as
the essential elements of a partnership are present.

2. Breach of Partnership Obligations - The Court held that Tocao’s unilateral removal of Chan from
the business operations and profits was a violation of their partnership agreement. As a result,
Tocao was ordered to render an accounting and compensate Chan for his rightful share of the
profits.

The Supreme Court affirmed the decision of the Court of Appeals, emphasizing that partnerships may
exist even without a formal agreement as long as the parties intended to create a joint business
venture with profit-sharing.
Case Digest: Heirs of Jose Lim vs. Lim (G.R. No. 172690, March 3, 2010)
I. FACTS OF THE CASE The case involves a dispute among the heirs of Jose Lim regarding the
ownership and management of a business established by the deceased. The heirs of Jose Lim claimed
that the business was a partnership between Jose Lim and his brother, respondent Lim, and that they
were entitled to a share of the business assets. Respondent Lim, on the other hand, asserted that the
business was solely his and not a partnership with Jose Lim.
The heirs filed a case before the Regional Trial Court (RTC) seeking recognition of the partnership and
a proper distribution of assets. The RTC ruled in favor of the heirs, declaring that a partnership existed
between Jose Lim and respondent Lim. However, the Court of Appeals (CA) reversed the decision,
holding that there was no sufficient evidence to prove the existence of a partnership.
II. ISSUE/S RELATED TO PARTNERSHIP
1) Whether a partnership existed between Jose Lim and respondent Lim.
2) Whether the heirs of Jose Lim were entitled to a share in the business assets.
III. RULING OF THE SUPREME COURT

1. Existence of a Partnership - The Supreme Court ruled that a partnership requires proof of an
agreement to contribute money, property, or industry to a common fund with the intent to
divide profits. In this case, there was insufficient evidence to establish that Jose Lim and
respondent Lim had such an agreement.

2. Entitlement to Business Assets - Since no partnership was proven, the heirs of Jose Lim were not
entitled to claim a share of the business assets. The Court emphasized that mere participation in
business operations does not automatically create a partnership.

The Supreme Court upheld the decision of the Court of Appeals, ruling that the business belonged
solely to respondent Lim and that the heirs of Jose Lim had no legal claim to its assets.