G.R. No. 135813. October 25, 2001.

FERNANDO SANTOS, petitioner,vs.Spouses ARSENIO and NIEVES REYES, respondents

Dispute over business partnership and profit distribution

 The case involves a dispute between petitioner Fernando Santos and respondents Spouses Arsenio
and Nieves Reyes over their business partnership.
 The court ruled that the "Articles of Agreement" between the parties established a partnership, with
petitioner receiving 70% of the profits and the respondents receiving 15% each.
 However, the court found that the financial records presented by the respondents did not accurately
reflect the complete financial condition of the business.

Determination of partnership and not employer-employee relationship

 The court determined that the respondents were partners, not employees, of the petitioner.
 The court ordered the petitioner to pay the respondents their share of the profits from the joint
venture, as well as damages and attorney's fees.
 The court found no proof of misappropriation of funds by the respondent.

Issues raised by the petitioner

 The petitioner raised several issues, but the court found them partly meritorious.

Incorrect computation of profits by the Court of Appeals

 The Court of Appeals made a mistake in its computation of the partnership's profits.
 The Court of Appeals did not deduct the expenses incurred by the business.
 The Supreme Court granted the petition in part, affirming the lower court's decision but reversing the
Court of Appeals' ruling on the counterclaim.

Emphasis on the need for complete accounting

 The Supreme Court emphasized the need for a complete accounting of the partnership's finances to
determine the proper distribution of profits.
 The court concluded that the share of each partner should be based on the net profit of the
partnership, after deducting all expenses.
 G.R. No. 126881. October 3, 2000.
HEIRS OF TAN ENG KEE, petitioners, vs. COURT OF APPEALS and BENGUET LUMBER
COMPANY, represented by its President TAN ENG LAY, respondents.

Dispute over Partnership Existence

 The case involves a dispute between the heirs of Tan Eng Kee and Tan Eng Lay regarding the
existence of a partnership in Benguet Lumber Company.
 The trial court ruled in favor of the heirs, declaring that there was a partnership and they were
entitled to a share in the company's assets.
 The Court of Appeals reversed the decision, stating that there was no partnership and Tan Eng Kee
was only an employee.

Supreme Court's Agreement with Court of Appeals

 The Supreme Court examined the evidence and agreed with the Court of Appeals, concluding that
Tan Eng Kee was an employee and not a partner.
 The court cited various factors, such as the lack of evidence of Tan Eng Kee contributing resources
to a common fund, the absence of any request for an accounting despite the alleged 40-year
partnership, and the payrolls showing that Tan Eng Kee received wages as an employee.

Insufficient Evidence for Partnership

 The case involves a dispute over whether a partnership existed between two individuals in a lumber
and hardware business.
 The trial court ruled in favor of the plaintiffs, finding that a partnership existed.
 The Court of Appeals reversed the decision, stating that there was no partnership based on the lack
of evidence.
 The Supreme Court upheld the decision of the Court of Appeals, stating that the evidence presented
by the plaintiffs was insufficient to establish the existence of a partnership.
 The court emphasized the need for a contract, contribution of money or property, intention to divide
profits, and other elements to establish a partnership.
 The court also noted that the alleged partner did not demand an accounting, which is a
characteristic of a partnership.

Employee Status Based on Evidence

 This case involves a dispute over whether the person in question was a partner or an employee in a
business.
 The court concludes that the person was an employee based on the evidence presented.
 The court states that the receipt of a share of profits is prima facie evidence of partnership, but this
inference can be rebutted if the profits were received as a debt, wages, rent, annuity, interest on a
loan, or consideration for the sale of property.
 The court finds that the evidence does not show that the person received any share of profits, and
therefore, there is no partnership.
 The court also dismisses the argument that certain privileges and responsibilities indicate a
partnership, stating that they could also be consistent with the person's position as an employee.
 As a result, the court denies the petition and affirms the decision of the Court of Appeals.
 G.R. No. L-12541. August 28, 1959.
ROSARIO U. YULO, assisted by her husband JOSE C. YULO, plaintiffs-appellants, vs. YANG
CHIAO SENG, defendant-appellee.

Dispute between Rosario U. Yulo and Yang Chiao Seng

 The case involves a disagreement between Rosario U. Yulo and Yang Chiao Seng.
 The dispute revolves around the nature of their agreement regarding the operation of a theater.

Yulo's claim of a partnership agreement

 Yulo claimed that there was a partnership agreement between them.
 Yulo believed that their agreement was based on a partnership, indicating joint ownership and
shared responsibilities.

Seng's argument of a lease agreement

 Seng argued that the agreement was a lease, not a partnership.
 Seng believed that Yulo did not contribute capital or participate in the management of the business.
 Seng claimed that Yulo received a fixed monthly payment, which is more indicative of a lease
agreement.

Court's finding of a lease agreement

 The court ultimately determined that the agreement between Yulo and Seng was a lease
agreement.
 The court based its decision on the fact that Yulo did not contribute capital or participate in the
management of the business.
 The fixed monthly payment received by Yulo further supported the court's conclusion.

Dismissal of Yulo's claims for damages

 As the court found that the agreement was a lease, Yulo's claims for damages were dismissed.
 Yulo's claims were likely based on the assumption of a partnership agreement, which the court did
not uphold.

Affirmation of the lower court's decision in favor of Seng

 The court affirmed the lower court's decision, which favored Seng.
 This means that Seng's argument of a lease agreement was upheld by the court.
 Seng was likely granted the rights and responsibilities associated with a lease agreement, while
Yulo's claims were rejected.
 G.R. No. L-24193. June 28, 1968.
MAURICIO AGAD, plaintiff-appellant, vs. SEVERINO MABATO & MABATO & AGAD
COMPANY, defendants-appellees.

Dispute between partners in a fishpond business

 The case involves a disagreement between two partners in a fishpond business.
 The plaintiff, Mauricio Agad, claims that the defendant, Severino Mabato, did not give him his share
of the profits and did not provide any financial records for several years.

Complaint filed by Agad

 Agad filed a complaint seeking payment of his share of the profits and the dissolution of the
partnership.

Mabato's denial and argument

 Mabato denies the existence of the partnership and argues that Agad did not contribute his share to
the partnership capital.

Court's dismissal based on Article 1773 of the Civil Code

 The court dismissed the complaint, citing Article 1773 of the Civil Code.
 Article 1773 requires an inventory of immovable property contributed to a partnership.

Court's finding on the nature of the partnership

 The court determines that the partnership was formed to operate a fishpond, not to engage in a
fishpond business.
 It concludes that no fishpond or real right to a fishpond was contributed to the partnership.

Court's decision to set aside the dismissal and remand the case
 The court sets aside the dismissal of the complaint.
 It orders the case to be sent back for further proceedings.
 G.R. No. L-68118. October 29, 1985.
JOSE P. OBILLOS, JR., SARAH P. OBILLOS, ROMEO P. OBILLOS and REMEDIOS P.
OBILLOS, brothers and sisters, petitioners, vs. COMMISSIONER OF INTERNAL REVENUE and
COURT OF TAX APPEALS, respondents.

Background of the case

 The case involves the income tax liability of four siblings.
 The siblings sold two parcels of land that they inherited from their father.
 The Commissioner of Internal Revenue assessed them with deficiency income taxes and penalties.

Assessment as an unregistered partnership

 The Commissioner of Internal Revenue considered the siblings as an unregistered partnership.
 This led to the assessment of deficiency income taxes and penalties.

Argument of the siblings

 The siblings argued that they were co-owners and not partners.
 They claimed that there was no intention to form a partnership.
 They argued that the division of profit was incidental to the dissolution of the co-ownership.

Court's decision
 The court agreed with the siblings' argument.
 The court stated that there was no intention to form a partnership.
 The court considered the division of profit as incidental to the dissolution of the co-ownership.

Reversal of judgment and cancellation of assessments

 The court reversed the judgment of the Tax Court.
 As a result, the assessments of deficiency income taxes and penalties were
cancelled.
 G.R. No. 78133. October 18, 1988
MARIANO P. PASCUAL and RENATO P. DRAGON, petitioners, vs. THE COMMISSIONER OF
INTERNAL REVENUE and COURT OF TAX APPEALS, respondents.

Distinction between co-ownership and unregistered partnership for income tax purposes
 The case involves a distinction between co-ownership and an unregistered partnership for income
tax purposes.
 The petitioners bought parcels of land and sold them at a profit.
 The Commissioner of Internal Revenue assessed them for deficiency corporate income taxes.

Sharing of returns does not establish a partnership

 The Court ruled that the petitioners did not form an unregistered partnership and were not liable for
corporate income tax.
 The sharing of returns does not automatically establish a partnership.
 There must be a clear intent to form a partnership, a separate juridical personality, and the freedom
to transfer or assign the property.

Petitioners availed of tax amnesty as individual taxpayers

 The Court noted that the petitioners availed of tax amnesty as individual taxpayers.
 This relieved them of further tax liability.
 Even if they had formed a partnership, they could not be held individually liable for the unpaid tax.

Court ruling and relief of tax liability

 The court granted the petition and relieved the petitioners of the tax liability.
 The petitioners, who were co-owners of properties and shared in the profits, were not considered to
have formed an unregistered partnership liable for corporate income tax.
 G.R. Nos. 166299-300. December 13, 2005.
Litonjua, Jr. v. Litonjua, Sr.

Facts
 This case involves a dispute between brothers Aurelio K. Litonjua, Jr. (Aurelio) and Eduardo K.
Litonjua, Sr. (Eduardo) over a joint venture/partnership arrangement in various businesses,
including the Odeon Theater business. Aurelio filed a suit against Eduardo and several corporations
for specific performance and accounting. He alleged that they had entered into a joint
venture/partnership agreement in 1973, and that he was entitled to a share in the businesses and
assets acquired during their partnership. He also claimed that Eduardo and the corporate
defendants were transferring assets in fraud of him.
 Eduardo and the corporate defendants denied the allegations and raised affirmative defenses,
including that the alleged partnership was void and unenforceable. Yang, one of the defendants,
also moved to dismiss the complaint for lack of cause of action. The trial court denied the affirmative
defenses and set the case for pre-trial. Yang filed a petition for certiorari with the Court of Appeals
(CA) to nullify the trial court's orders, which was consolidated with Eduardo and the corporate
defendants' petition.
 The CA granted the petitions and dismissed the complaint, ruling that the alleged partnership was
void because the actionable documents were not in the required form and did not meet the legal
requirements for a partnership. The CA also found that the complaint failed to state a cause of
action against Yang.
 In his petition for review, Aurelio argued that the CA erred in ruling that there was no partnership and
that the actionable document did not create a demandable right. He also argued that the CA erred in
ruling that the complaint did not state a cause of action against Yang.

Issue
 The main issue in the case is whether there was a valid partnership agreement between Aurelio and
Eduardo, and whether the complaint stated a cause of action against Yang.

Ruling
 The Supreme Court (SC) held that a partnership exists when two or more persons agree to place
their money, effects, labor, and skill in lawful commerce or business, with the understanding that
there shall be a proportionate sharing of the profits and losses between them. The SC also noted
that a joint venture is similar to a partnership and is governed by the law on partnership.
 The SC ruled that the CA erred in dismissing the complaint and ruling that there was no partnership.
The SC held that the alleged partnership between Aurelio and Eduardo was valid and enforceable.
The SC emphasized that the existence of a partnership is determined by the intention of the parties,
which may be inferred from their conduct, declarations, and agreements. In this case, the SC found
that there was sufficient evidence to establish the existence of a partnership between Aurelio and
Eduardo.
 However, the SC agreed with the CA's ruling that the complaint failed to state a cause of action
against Yang. The SC held that there was no sufficient allegation in the complaint that directly
established the contractual relationship between Aurelio and Yang. Therefore, any claim against
Yang based on the alleged partnership between Aurelio and Eduardo was deemed futile.

Ratio
 The SC based its ruling on the definition of a partnership as provided by law. The SC explained that
a partnership exists when two or more persons agree to place their money, effects, labor, and skill in
lawful commerce or business, with the understanding that there shall be a proportionate sharing of
the profits and losses between them. The SC also emphasized that a joint venture is similar to a
partnership and is governed by the law on partnership.
  The SC further explained that the existence of a partnership is determined by the intention of the
parties, which may be inferred from their conduct, declarations, and agreements. In this case, the
SC found that there was sufficient evidence to establish the existence of a partnership between
Aurelio and Eduardo based on their conduct and agreements.
 However, the SC also noted that a complaint must state a cause of action against each defendant.
In this case, the SC agreed with the CA's ruling that the complaint failed to state a cause of action
against Yang. The SC held that there was no sufficient allegation in the complaint that directly
established the contractual relationship between Aurelio and Yang. Therefore, any claim against
Yang based on the alleged partnership between Aurelio and Eduardo was deemed futile.

Summary
 In summary, the Supreme Court (SC) ruled that there was a valid partnership between Aurelio and
Eduardo. The SC held that the alleged partnership was valid and enforceable based on the
evidence presented. However, the SC also agreed with the Court of Appeals' (CA) ruling that the
complaint failed to state a cause of action against Yang. The SC held that there was no sufficient
allegation in the complaint that directly established the contractual relationship between Aurelio and
Yang. Therefore, any claim against Yang based on the alleged partnership between Aurelio and
Eduardo was deemed futile.
Dispute over joint venture/partnership arrangement
 The case involves a dispute between two brothers, Aurelio and Eduardo Litonjua, over a joint
venture/partnership arrangement in various businesses.
 Aurelio filed a complaint against Eduardo and other defendants for specific performance and
accounting.

Court ruling in favor of defendants

 The Court of Appeals ruled in favor of Eduardo and the other defendants.
 The court stated that the alleged partnership was void because the document presented as
evidence did not meet the legal requirements for a partnership.
 The court also found that the complaint did not state a cause of action against one of the
defendants.

Denial of Aurelio's petition for review

 Aurelio's petition for review was denied.

Alleged partnership deemed legally inexistent and unenforceable

 The court ruled that the alleged partnership was legally inexistent and unenforceable because it did
not comply with the requirements of the law.

Failure to establish cause of action against defendants

 The court found that the plaintiff failed to establish a cause of action against the defendants.
 The plaintiff's attempt to change his theory of the case from a partnership to an innominate contract
was deemed impermissible.

Defendants not liable, complaint dismissed

 The court concluded that the defendants were not liable and dismissed the complaint.

Dispute over existence of partnership or joint venture

 The case involves a dispute over the existence of a partnership or joint venture between the parties.
 The court determines that the actionable document presented establishes an innominate contract,
which is a type of contract that is not specifically defined.

Criticism of petitioner for changing theories

 The court criticizes the petitioner for changing theories and introducing the concept of an innominate
contract after initially pleading for the existence of a partnership.

Denial of petition and affirmation of Court of Appeals decision

 The court ultimately denies the petition and affirms the decision of the Court of Appeals.