EUFEMIA EVANGELISTA, MANUELA

EVANGELISTA, and FRANCISCA

EVANGELISTA
,petitioners,
vs.
THE COLLECTOR OF INTERNAL REVENUE
and THE COURT OFTAX APPEALS,
respondents.
G.R. No. L-9996, October 15, 1957
Facts:
Petitioners borrowed sum of money from their
father and together with their own personal
funds they used said money to buy several real
properties. They then appointed their brother
(Simeon) as manager of the said real properties
with powers and authority to sell, lease or rent
out said properties to third persons. They
realized rental income from the said properties
for the period 1945-1949.On September 24,
1954 respondent Collector of Internal Revenue
demanded the payment of income tax on
corporations, real estate dealer's fixed tax and
corporation residence tax for the years 19451949. The letter of demand and corresponding
assessments were delivered to petitioners on
December 3, 1954, whereupon they instituted
the present case in the Court of Tax Appeals,
with a prayer that "the decision of the
respondent contained in his letter of demand
dated September 24, 1954" be reversed, and that
they be absolved from the payment of the taxes
in question. CTA denied their petition and
subsequent MR and New Trials were denied.
Hence this petition.
Issue:
Whether or not petitioners have formed a
partnership and consequently, are subject to the
tax on corporations provided for in section 24 of
Commonwealth Act. No. 466, otherwise known
as the National Internal Revenue Code, as well
as to the residence tax for corporations and the
real estate dealers fixed tax.
Held: YES.
The essential elements of a partnership are two,
namely: (a)
an agreement to contribute money, property
or industry to a common fund
; and (b)
intent to divide the profits among the
contracting parties

. The first element is undoubtedly present in the

case at bar, for, admittedly, petitioners have
agreed to, and did, contribute money and
property to a common fund. Upon consideration
of all the facts and circumstances surrounding
the case, we are fully satisfied that their purpose
was to engage in real estate transactions for
monetary gain and then divide the same among
themselves, because of the following
observations, among others: (1) Said common
fund was not something they found already in
existence; (2)They invested the same, not merely
in one transaction, but in a series of transactions;
(3) The aforesaid lots were not devoted to
residential purposes, or to other personal uses, of
petitioners herein. Although, taken singly, they
might not suffice to establish the intent
necessary to constitute a partnership, the
collective effect of these circumstances is such
as to leave no room for doubt on the existence of
said intent in petitioners herein. For purposes of
the tax on corporations, our National Internal
Revenue Code, includes these partnerships

with the exception only of duly registered

general co partnerships

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.
MARIANO P. PASCUAL and RENATO P.
DRAGON,
petitioners, vs.
THE COMMISSIONER OF INTERNAL
REVENUE and COURT OF TAX
APPEALS,
respondents.
G.R. No. 78133 October 18,
1988GANCAYCO,
J.:
FACTS:
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. Petitioners realized a net
profit in the sale made in 1968 in the amount of
P165,224.70, while they realized a net profit of
P60,000.00 in the sale made in 1970. The
corresponding capital gains taxes were paid by
petitioners in 1973 and 1974 by availing of the
tax amnesties granted in the said years.
However, in a letter dated March 31, 1979 of
then Acting BIR Commissioner Efren I. Plana,
petitioners were assessed andrequired to pay a
total amount of P107,101.70 as alleged
deficiency corporate income taxes for the years
1968 and 1970.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
1
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; and
that the availment of tax amnesty under P.D. No.
23, as amended, by petitioners relieved
petitioners of their individual income tax
liabilities but did not relieve them from the tax
liability of the unregistered partnership. Hence,
the petitioners were required to pay the
deficiency income tax assessed.
ISSUE:
whether petitioners are subject to the tax on
corporations provided for in section 24 of
Commonwealth Act No. 466,otherwise known
as the National Internal Revenue Code, as well
as to the residence tax for corporations and the
real estate dealers' fixed tax.
HELD:
Article 1767 of the Civil Code of the Philippines
provides: By the contract of partnership two or
more persons bind themselves to contribute
money, property, or industry to a common fund,
with the intention of dividing the profits among
themselves. Pursuant to this article,
the essential elements of a partnership are two,
namely: (a) an agreement to contribute money,
property or industry to a common fund; and (b)

intent to divide the profits among the contracting

parties.
. The first element is undoubtedly present in the
case at bar, for, admittedly, petitioners have
agreed to, and did, contribute money and
property to a common fund.
Hence, the issue narrows down to their intent in
acting as they did
. Upon consideration of all the facts and
circumstances surrounding the case,
we are fully satisfied that their purpose was to
engage in real estate transactions for monetary
gain and then divide the same among themselves
, because:1.
Said common fund was not something they
found already in existence
. It was not a property inherited by them pro
indiviso. They
created it purposely
. What is more they jointly borrowed a
substantial portion thereof in order to establish
said common fund.2. They
invested the same, not merely in one transaction,
but in a series of transactions
. On February 2,1943, they bought a lot for
P100,000.00. On April 3, 1944, they purchased
21 lots for P18,000.00. This
LIM TONG LIM,
petitioner, vs.
PHILIPPINE FISHING GEAR
INDUSTRIES, INC.,
respondent.
G.R. No. 136448 November 3, 1999

FACTS
:
On behalf of Ocean Quest Fishing Corp
Antonio Chua and Peter Yao entered into
a contract
with Phil. Fishing Gear (PFGI) for the purchase
of fishing nets. They claimed they were engaged
in a business venture with petitioner Lim who
was not a signatory to the agreement. Chua and
Yao failed to pay for the nets and floats. PFGI
filed a collection suit against Chua, Yao and Lim
as general partners alleging that Ocean Quest
was nonexistent. Chua filed a Manifestation
admitting liability and requesting reasonable
time to pay. Yao filed an answer waiving his

right to cross-ex and present evidence. Lim filed

an answer with counterclaim and cross claim.
Trial Court ordered sale of nets at auction which
were bought by PFGI. Trial Court ruled that
a partnership existed between Lim, Chua and
Yao based on testimonies, Compromise
Agreement, declaration of ownership of fishing
boats.CA: Lim was a partner of Chua and Yao in
a fishing business and may be liable for the
fishing nets and
floats purchased for partnerships use
.
ISSUE:
Whether by their acts, Lim Chua and Yao could
be deemed to have entered into a partnership
SC
: Petition denied. CA affirmed. There existed a
partnership between Chua, Yao and Lim
pursuant to Art 1767 based on factual findings
ofthe lower courts which established that they
had decided to engage in a fishing business for
which they
bought boats worth P3.35M financed by a loan
from Jesus Lim, Lims brother. In the
Compromise
Agreement, they were to pay the loan with the
proceeds of the sales of the boats and losses or
excess were
to be divided equally. The boats, purchase and
repair financed by borrowed money fell under
common fund.
Contribution to such fund need not be cash or
fixed assets

it could be an intangible like credit or

industry
. The partnership extended not only to purchase
of the boat but also to the nets and floats. The
Compromise Agreement was not the sole basis
of the partnership. It was but an embodiment of
the relationship extant among the parties prior to
execution. Petitioner was a partner and not
merely a lessor as he entered into a business
agreement with Chua and Yao in which debts
were undertaken to finance the acquisition and
upgrading of vessels to be used in their fishing
business. The boat, F/B Lourdes, though
registered in Lims name was an asset of the of
the partnership.
Petitioner benefited from the use of the
nets found inside the boat. Those acting on

behalf of a corporation and those benefited by it,

knowing it to be without valid existence are held
liable as general partners. Technically, Lim did
not act on behalf of a corporation. However,
having reaped the benefits of the contract
entered into by persons whom he previously had
an existing relationship, he is deemed part of the
association and covered by the scope of the
doctrine of corporation by estoppel.
A 3rd party who knowing an association to
be unincorporated, nonetheless treated it as a
corporation and received benefits from it, may
be barred from denying its corporate existence in
a suit brought against the corporation.

Sevilla vs CA
A contract by and between Noguera and Tourist World
Service (TWS), represented by Canilao, wherein TWS
leased the premises belonging to Noguera as
branch office of TWS. When the branch office
was opened, it was run by appellant Sevilla
payable to TWS by any airline for any fare
brought in on the efforts of Mrs. Sevilla, 4% was
to go to Sevilla and 3% was to be withheld by
the TWS.Later, TWS was informed that Sevilla
was connected with rival firm, and since
the branch office was losing, TWS considered
closing down its office. On January 3, 1962, the
contract with appellee for the use of the branch
office premises was terminated and while the
effectivity thereof was January 31, 1962, the
appellees no longer used it. Because of this,
Canilao, the secretary of T WS, went over
to the branch office, and finding the
premises locked, he padlocked the
premises. When neither appellant Sevilla
nor any of his employees could enter, a
complaint was filed by the appellants
against the appellees. TWS insisted that Sevilla
was a mere employee, being the branch
manager of its branch office and thatshe had
no say on the lease executed with the private
respondent, Noguera.
ISSUE:
W/N ER-EE relationship exists between Sevilla and TWS
HELD:

The records show that petitioner, Sevilla, was

not subject to control by the private respondent
TWS. In the f i r s t p l a c e , u n d e r t h e
contract of lease, she
had bound herself in solidum as an
d f o r r e n t a l p a y m e n t s , a n arrangement that
would belie claims of a master-servant relationship. That
does not make her an employee of TWS ,since a true
employee cannot be made to part with
his own money in pursuance of his
employers business, or otherwise, assume any
liability thereof.In the second place, when
the branch office was opened, the same was run
by the appellant Sevilla payable to TWS by any
airline for any fare brought in on the effort of
Sevilla. Thus, it cannot be said that Sevilla was
under the control of TWS. Sevilla in pursuing the business,
relied on her own capabilities. It is further
admitted that Sevilla was not in the
companys payroll. For her efforts, she
retained 4% in commissions from airline
bookings, the remaining 3% going to
TWS. Unlike an employee, who earns a fixed
salary, she earned compensation in fluctuating
amount depending on her booking
successes. The fact that Sevilla had been
designated branch manager does not
make her a TWS employee. It appears that
Sevilla is a bona fide travel agent herself, and
she acquired an interest in the business entrusted
toher. She also had assumed personal
obligation for the operation thereof,
holding herself solidary liable for the
payment of rentals. Wherefore, TWS and Canilao are
jointly and severally liable to indemnify the petitioner,
Sevilla.
ANTONIA TORRES assiste
d by her husband, ANGEL
O T O R R E S ; a n d EMETERIA B
ARING,
petitioners, vs.
C O U R T O F A P P E A L S a
n d M A N U E L TORRES,
respondents.
FACTS:
This is a petition for Review on
Certiorari for the decision of the Court
of Appeals affirming the decision of the Trial
Court in favour of herein respondent and
denying

reconsideration.S i s t e r s A n t o n i a T o r r e s
and Emeteria Baring, petitioners, e
ntered into a
"joint venture agreement"
with Respondent Manuel Torres for
t h e d e v e l o p m e n t o f a parcel of land
into a subdivision. They executed a Deed
of Sale covering the said parcel of land
in favor of respondent, who then had it
registered in his name.
Bym o r t g a g i n g t h e p r o p e r t y , r e s p o n
dent obtained from Equitable Bank
a l o a n o f P40,000 which was to be used for
the development of the subdivision.
All three of them also agreed to share
the proceeds from the sale of the
subdivided lots
.
The project did not push through, and the land
was subsequently foreclosed by the bank.
Respondent used the loan to implement
the Agreement, among others are: effect
the survey and subdivision of the lots; approval
of the subdivision project with LapuLapu
City Council; advertisement in the
local newspaper; construction of roads,
curbs and gutters; and construction of 6 low cost
housing
units.R e s p o n d e n t c l a i m e d t h a t t h
e subdivision project failed, h
o w e v e r , b e c a u s e petitioners and
their relatives had separately caused the
annotations of adverse claims on the title
to the land, which eventually sc ared
away prospective buyers. Despite his
requests, petitioners refused to cause the clearing
of the claims, thereby forcing him to give up on
the project. Petitioners filed with the RTC a civil
action against respondent. RTC ruled in favour
of respondent and which was later affirmed by
CA. Hence, this Petition.
ISSUE:
WON, the CA erred in concluding t
hat the agreement entered betweenp
etitioners and respondent was that of a joint
venture/partnership.
HELD:
Art. 1767. By the contract of p
artnership two or more persons

b i n d themselves to contribute money,

property, or industry to a common fund, with the
intention of dividing the profits among
themselves.

To render a formal accounting of the business

operation veering the period from May 6,
1966up to December 21, 1968, and from January
1, 1969 up to the time the order is issued and
that the same be subject to proper audit;(3)

ESTANISLAO, JR. VS. COURT

OF APPEALS
Facts:

To pay the plaintiffs their lawful shares

and participation in the net profits of the
business; and(4)

The petitioner and private respondents are

brothers and sisters who are co-owners of certain
lots at the in Quezon City which were then being
leased to SHELL. They agreed to open and
operate a gas station thereat to be known
as Estanislao Shell Service Station with an initial
investment of PhP15,000.00to be taken from the
advance rentals due to them from SHELL for the
occupancy of the said lots owned in common by
them. A joint affidavit was executed by them on
April 11, 1966. The respondents agreed to help
their brother, petitioner therein, by allowing him
to operate and manage the gasoline service
station
of the family. In order not to run counter to the
companys policy of appointing only one dealer,
it was
agreed that petitioner would apply for the
dealership. Respondent Remedios helped in comanaging the business with petitioner from May
1966 up to February 1967.On May 1966, the
parties entered into an Additional Cash Pledge
Agreement with SHELL wherein it was
reiterated that the P15,000.00 advance rental
shall be deposited with SHELL to cover
advances of fuel to
petitioner as dealer with a proviso that said
agreement cancels and supersedes the Joint
Affidavit.
For sometime, the petitioner submitted financial
statement regarding the operation of the business
to the private respondents, but
thereafter petitioner failed to render subsequent
accounting. Hence , the private respondents filed
a complaint against the petitioner praying among
others that the latter be ordered:(1)

To pay the plaintiffs attorneys fees and costs of

the suit.

To execute a public document embodying all the

provisions of the partnership agreement they
entered into;(2)

Issue:
Can a partnership exist between members of the
same family arising from their joint ownership
of certain properties?
Trial Court:
The complaint (of the respondents) was
dismissed. But upon a motion for
reconsiderationof the decision, another decision
was rendered in favor of the respondents.
CA:
Affirmed in toto
Petitioner:
The CA erred in interpreting the legal import of
the Joint Affidavit vis--vis the Additional Cash
Pledge Agreement. Because of the stipulation
cancelling and superseding the Joint Affidavit,
whatever partnership agreement there was in
said previous agreement had thereby been
abrogated. Also, the CA erred in declaring that a
partnership was established by and among the
petitioner and the private respondents as regards
the ownership and /or operation of the gasoline
service station business.
Held:
There is no merit in the petitioners contention
that because of the stipulation cancelling and
superseding the previous joint affidavit,
whatever partnership agreement there was in
said previous agreement had thereby been
abrogated. Said cancelling provision was
necessary for the Joint Affidavit speaks of
P15,000.00 advance rental starting May 25,
1966 while the latter agreement also refers to
advance rentals of the same amount starting May
24, 1966.There is therefore a duplication of

reference to the P15,000.00 hence the need to

provide in the subsequent
document that it cancels and supersedes the
previous none. Indeed, it is true that the latter
document is
silent as to the statement in the Join Affidavit
that the value represents the capital investment
of the
parties in the business and it speaks of the
petitioner as the sole dealer, but this is as it
should be for in the latter document, SHELL
was a signatory and it would be against their
policy if in the agreement it should be stated that
the business is a partnership with private
respondents and not a sole proprietorship
of the petitioner. Furthermore, there are other
evidences in the record which show that there
was in fact such partnership agreement between
parties. The petitioner submitted to the private
respondents periodic accounting of the business
and gave a written authority to the private
respondent Remedios Estanislao to examine and
audit the books of their common business
(aming negosyo). The respondent Remedios, on
the other hand,
assisted in the running of the business. Indeed,
the parties hereto formed a partnership when
they bound themselves to contribute money in a
common fund with the intention of dividing the
profits among themselves.

RAMNANI VS COURT OF APPEALSFACTS

:
Ishwar Jethmal Ramnani and his wife Sonya had
their main business based in New York. Ishwar
received US $150,000.00 from his father-in-law
in Switzerland. In 1965, Ishwar Jethmal
Ramnani sent the amount ofUS $150,000.00 to
Choithram in two bank drafts ofUS$65,000.00
and US$85,000.00 for the purpose of investing
the same in real estate in the Philippines.
Subsequently, spouses Ishwar executed a
general
power of attorney appointing Ishwars full blood
brothers Choithram and Navalrai as attorneys-infact, empowering them to manage and conduct
their business concerns in the Philippines.

Choithram, as attorney-in-factr, entered into two

agreements for the purchase of two parcels of
land located in Pasig Rizal from Ortigas &
Company, Ltd. Partnership (Ortigas Ltd.) with a
total area of approximately 10,048 square
meters. Three buildings were constructed
thereon and were leased out by Choithram as
attorney-in-fact of spouses Ishwar. Two of these
buildings were later burned. In 1970 Ishwar
asked Choithram to account for theincome and
expenses relative to these properties during the
period 1967 to 1970.Choithram failed and
refused to render such accounting which
prompted Ishwar to revoke the general power of
attorney.Choithram and Ortigas Ltd. were duly
notified by notice in writing of such revocation.
It was also registered with the Securities and
Exchange Commission and published in
The Manila Times. Nevertheless, Choithram as
such attorney-in-fact ofIshwar, transferred all
rights and interests of Ishwar spouses in favor
of Nirmla Ramnani, the wife of Choitrams son,
Moti. Ortigas also executed the corresponding
deeds of sale in favor of Nirmla and the TCT
Issued in her favour..Thus, spouses Ishwar filed
a complaint in the Court of First Instance of
Rizal against Choithram and spouses Nirmla and
Moti (Choithram et al.) and Ortigas Ltd. for
reconveyance of said properties or payment of
its value and damages. Trial court dismissed the
complaint ruling that the lone testimony of
Ishwar regarding the cash remittance is
unworthy of faith and credit because the cash
remittance was made before the execution of the
general power of attorney. Ishwar also failed to
corroborate this lone testimony and did not
exhibit any commercial document as regard to
the alleged remittances. It believed the claim of
Choitram that he and Ishwar entered into a
temporary arrangement in order to enable
Choithram, then a British citizen, to purchase the
properties in the name of Ishwar who was
an American citizen and who was then qualified
to purchase property in the Philippines under the

then Parity Amendment Upon appeal, the CA

reversed the decision and gave credence to
Ishwar.It upheld the validity of Ishwars
testimony and gave cognizance to a letter written
by Choihtram imploring Ishwar to renew the
power of attorney after it was revoked. It states
therein that Choithram reassures his brother that
he is not after his money and that the revocation
is hurting the reputation of Ishwar.Choithram
also made no mention of his claimed temporary
arrangement in the letter..The CA ruled that
Choithram is also estopped in pais or by deed
from claiming an interest over the properties.
Because of Choitrams admissions from(1)
power of attorney, (2) the Agreements, and
(3)the Contract of Lease It furthermore
HELD that Choithram's 'temporary arrangement,
by which he claimed purchasing the two (2)
parcels in question in 1966 and placing them in
the name of Ishwar who is an American citizen
circumvents the disqualification provision of
aliens acquiring real properties in the
Philippines. Upholding the supposed "temporary
arrangement with Ishwar would be sanctioning
the perpetration of an illegal act and culpable
violation of the Constitution. During the
pendency of the case, Choithram made several
attempts to dispose of his properties by way of
donation and also mortgaged the properties
under litigation for 3 million USD to a shell
partnership with a mere capital of 100 USD. The
Supreme Court affirms the findings of the Court
of Appeals.
ISSUE
: Whether or not there was a partnership
between the brothers Ishwar and Choithram
HELD
: Yes, Even without a written agreement, the
scenario is clear. Spouses Ishwar supplied the
capital of $150,000.00 for the business. They
entrusted the money to Choithram to invest in
aprofitable business venture in the Philippines.
For this purpose they appointed Choithram as
their attorney-in-fact. Choithram in turn decided
to invest in the real estate business. He bought

the two (2) parcels of land in question from

Ortigas as attorney-in-fact of Ishwar-Instead of
paying for the lots in cash, he paid in
installments and used the balance of the capital
entrusted to him, plus a loan, to build two
buildings. Although the buildings were burned
later, Choithram was able to build two other
buildings on the property .He rented them out
and collected the rentals. Through the industry
and genius of Choithram, Ishwar's property was
developed and improved into what it is now a
valuable asset worth millions of pesos.

We have a situation where two brothers engaged

in a business venture. One furnished the capital,
theother contributed his industry and talent.
Justice and equity dictate that the two share
equally the fruit oftheir joint investment and
efforts. Perhaps this Solomonic solution may
pave the way towards their reconciliation. Both
would stand to gain. No one would end up the
loser. After all, blood is thicker than water.
However, because of the devious machinations
and schemes that Choithram employed he
should pay moral and exemplary damages as
well as attorney's fees to spouses Ishwar.
ISSUE
: Whether or not Ortigas Ltd. is liable.
HELD
: Yes, because Ortigas had several notices of the
revocation. Despite said notices,
Ortigasnevertheless acceded to the
representation of Choithram, as alleged attorneyin-fact of Ishwar, to assign the rights of
petitioner Ishwar to Nirmla. While the primary
blame should be laid at the doorstep of
Choithram, Ortigas is not entirely without fault.
It should have required Choithram to secure
another power of attorney from Ishwar. For
recklessly believing the pretension of Choithram
that his power of attorney was still good, it must,
therefore, share in the latter's liability to Ishwar.

FACTS: This was an action to

recover possession of a parcel of
l a n d w h e r e t h e plaintiff was represented by
a corporation.

enter into a partnership is without merit, for the

true rule is that though a corporation has no
power into a partnership, itmay nevertheless
enter into a joint venture with another where the
nature of that venture is in line with the
business authorized by its charter.
NOTE: Point of the case is about j
oint ventures being treated separat
ely
F r o m partnerships. Tuason does not explain
why there was a difference in treatment
of corporate involvement in partnerships
as compared to that when it come to
joint ventures.

Issue: WON the case should be

dismissed on the ground that the
c a s e w a s n o t brought by the real property in
interest

AFISCO Insurance Corporation v. CA

G.R. No. 112675 Jan. 25, 1999Justice
Panganiban

J. M. UASON & CO., IN

C., represented by it M
anaging PARTNER, G R
E G O R I A
A R
A N E T A ,
I N
C . ,
plaintiff-appellee,-versusQUIRINO BOLAOS,
defendant-appellant.

Held:No.

there is nothing to the contention that

the present action is not brought by the
real party in interest, that is, by J. M. Tuason and
Co., Inc. What the Rules
of Court require is that an acti
on be brought
in the name of,
b u t n o t necessarily by , the real party in
interest. (Section 2, Rule 2.)
The complaint is signed by the law firm of
Araneta and Araneta, "counsel for plaintiff" and
commences with the statement "comes now
plaintiff, through its undersigned counsel."
It is true that the complaint also states
that the plaintiff
is "represented herein by its Managing
Partner Gregorio Araneta,I nc.",
another corporation

There is nothing against one c

orporation being represented b
y another person, natural or juridical, in a suit in
court.

The contention that Gregorio Araneta

Inc. cannot act as
managingp a r t n e r f o r p l a i n t i
ff on the theory that it i
s i l l e g a l f o r t w o corporations to

Facts:
Pursuant to reinsurance treaties, a number of local
insurance firms formed themselves into apool in order
to facilitate the handling of business contracted
with a non resident foreignreinsurance
company.After assessing their submitted
financial statement, the BIR Commissioner
required them to paydeficiency taxes on the
ground that they have formed an unregistered
partnership taxable as acorporation
AFISCO: there was no partnership
The reinsurance policies were written by them
individually and separately
Their liability was limited to the extent of their
allocated share in the original risks thusreinsured
They did not share the same risk or solidary
liabilityThere was no common fund
The executive board of the pool did not exercise
control and management of its funds,unlike the
board of directors of a corporation.The pool or
clearing house was not and could not possibly
have engaged in the businessof reinsurance from
which it could have derived income for itself
CA: a partnership was formed

Issue:
WON the pool or clearing house was a
partnership or association subject to tax as
a corporation
Held:
Yes, it is. The Philippine legislature included in
the concept of corporations those entities
that resembled them such as unregistered
partnerships and associations Parenthetically, the
NLRCs inclusion of such entities in the tax on corporations
was made even clearer by the Tax Reform Act of
1997, which amended the Tax Code
SC: the term partnership includes syndicate,
group, pool, joint venture and other
unincorporated organization, through or by
means of which any business, financial
operation, or venture is carried on (Evangelista
v. Collector of Internal Revenue)
Art. 1767 of the Civil Code: requisite of a
contract of partnership
Two or more persons mutually contribute to
a common fund
With the intention to divide the profits among
themselves
Meanwhile, an association implies associates
who enter into a joint enterprise for the
transaction of business
Where several local insurance ceding companies
enter into pool agreement or an association that
would handle all the insurance business covered
under their quota-share reinsurance treaty and
surplus reinsurance treaty with a non-resident
foreign reinsurance company, the resulting pool
having a common fund, and functions through
an executive board, and its work in
indispensable, beneficial and economically
useful to the business of the ceding companies
and the foreign firm, such circumstances
indicate a partnership or an association covered
by Sec. 24of the NIRC.