digested cases part 2

7/31/2019 Digested Cases Part 2

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PATS ELEMENTS

LIM TONG LIM v. PHILIPPINE FISHING GEAR INDUSTRIES INC

(G.R. No. 136448; November 3, 1999)

FACTS:

On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a

Contractdated February 7, 1990, for the purchase of fishing nets of various sizes from the Philippine

Fishing Gear Industries,Inc. (herein respondent). They claimed that they were engaged in a business

venture with Petitioner Lim Tong Lim,who however was not a signatory to the agreement. The total

price of the nets amounted to P532,045. Four hundredpieces of floats worth P68,000 were also sold to

the Corporation.The buyers, however, failed to pay for the fishing nets and the floats; hence, private

respondents filed a collectionsuit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ

of preliminary attachment. The suit wasbrought against the three in their capacities as general partners,

on the allegation that "Ocean Quest FishingCorporation" was a nonexistent corporation as shown by a

Certification from the Securities and ExchangeCommission. On September 20, 1990, the lower court

ISSUEd

Aa Writ of Preliminary Attachment, which the sheriff enforced by attaching the fishing nets on board F/B

Lourdes which was then docked at the Fisheries Port, Navotas,Metro Manila.ISSUE: Whether or not

there was a partnership?

HELD:

Yes. it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started

bybuying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's

brother. Theseboats, the purchase and the repair of which were financed with borrowed money, fell

under the term "common fund"under Article 1767. The contribution to such fund need not be cash orfixed assets; it could be an intangible likecredit or industry. That the parties agreed that any loss or profit

from the sale and operation of the boats would bedivided equally among them also shows that they had

indeed formed a partnership. Given the preceding FACTS, itis clear that there was, among petitioner,

Chua and Yao, a partnership engaged in the fishing business. Theypurchased the boats, which

constituted the main assets of the partnership, and they agreed that the proceeds from thesales and

operations thereof would be divided among them.

PATS FORMAL REQUIREMENTS

Lilibeth Sunga Chan vs Lamberto Chua(G.R. No. 143340 August 15, 2001

FACTS: In 1977, Lamberto Chua verbally entered into a partnership agreement with Jacinto L Sunga,

father of petitioner, in the distribution of Shellane Liquefied Petroleum Gas (LPG) in Manila. For business

convenience,respondent and Jacinto allegedly agreed to register the business name of their partnership,

SHELLITE GASAPPLIANCE CENTER (hereafter Shellite), under the name of Jacinto as a sole proprietorship.

Respondentallegedly delivered his initial capital contribution of P100,000.00 to Jacinto while the latter


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petitioner, CIR, until in 1959 when the latter, in an assessment,consolidated the income of the firm and

the individual incomes of thepartners-spouses Sutter and Spirig resulting in a determination of a

deficiencyincome tax against respondent Sutter. Respondent Sutter protested theassessment, and

requested its cancellation and withdrawal, as not inaccordance with law, but his request was denied.

Unable to secure areconsideration, he appealed to the CTA, which ruled in favor of Sutter.

Issue:

Was the partnership dissolved by the marriage of Sutter and Spirigand the subsequent sale of Carlson of

his share to the spouses?

Ruling:

No. The appellant's view, that by the marriage of both partners thecompany became a single

proprietorship, is erroneous. The capitalcontributions of partners William J. Sutter and Julia Spirig were

separatelyowned and contributed by them

before

their marriage; and after they were joined in wedlock, such contributions remained their respectiveseparateproperty under the Spanish Civil Code (Article 1396):

The following shall be the

exclusive

property of each spouse:

(a) That which is brought to the marriage as his or her own; ....

It being a basic tenet of the Spanish and Philippine law that the partnershiphas a juridical personality of

its own, distinct and separate from that of itspartners (unlike American and English law that does notrecognize suchseparate juridical personality), the bypassing of the existence of the limitedpartnership as

a taxpayer can only be done by ignoring or disregarding clear statutory mandates and basic principles of

our law. The limited partnership'sseparate individuality makes it impossible to equate its income with

that of thecomponent members. True, section 24 of the Internal Revenue Code mergesregistered

general co-partnerships (

compaias colectivas

) with the personalityof the individual partners for income tax purposes. But this rule is exceptionalin its

disregard of a cardinal tenet of our partnership laws, and can not beextended by mere implication to

limited partnerships.

As the limited partnership under consideration is taxable on its income,to require that income to be

included in the individual tax return of respondentSutter is to overstretch the letter and intent of the

law. In fact, it would evenconflict with what it specifically provides in its Section 24: for the

appellantCommissioner's stand results in equal treatment, tax wise, of a generalcopartnership (

compaia colectiva

) and a limited partnership, when the codeplainly differentiates the two. Thus, the code taxes the latter

on its income, butnot the former, because it is in the case of

compaias colectivas


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that themembers, and not the firm, are taxable in their individual capacities for anydividend or share of

the profit derived from the duly registered generalpartnership (Section 26, N.I.R.C.; Araas, Anno. &

Juris. on the N.I.R.C., As Amended, Vol. 1, pp. 88-89).

digested cases part 2

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