Tai Tong v Insurance G.R. No.

L-55397 February 29, 1988

Facts:
Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of P100,000.00. To
secure the payment of the loan, a mortgage was executed over the land and the building in favor of Tai
Tong Chuache & Co. Arsenio Chua, representative of Thai Tong Chuache & Co. insured the latter's
interest with Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 forthe building and
P30,000.00 for the contents thereof)
Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000.00 with respondent
Zenith Insurance Corporation. On July 16, 1975, another Fire Insurance was procured from respondent
Philippine British Assurance Company, covering the same building for P50,000.00 and the contents
thereof for P70,000.00.
The building and the contents were totally razed by fire.
Based on the computation of the loss, including the Travellers Multi- Indemnity, respondents, Zenith
Insurance, Phil. British Assurance and S.S.S. Accredited Group of Insurers, paid their corresponding
shares of the loss. Complainants were paid the following: P41,546.79 by Philippine British Assurance Co.,
P11,877.14 by Zenith Insurance Corporation, and P5,936.57 by S.S.S. Group of Accredited Insurers
Demand was made from respondent Travellers Multi-Indemnity for its share in the loss but the same was
refused. Hence, complainants demanded from the other three (3) respondents the balance of each share
in the loss in the amount of P30,894.31 (P5,732.79-Zenith Insurance: P22,294.62, Phil. British: and
P2,866.90, SSS Accredited) but the same was refused, hence, this action.
In their answers, Philippine British Assurance and Zenith Insurance Corporation denied liability on the
ground that the claim of the complainants had already been waived, extinguished or paid. Both
companies set up counterclaim in the total amount of P 91,546.79.
SSS Accredited Group of Insurers informed the Commission that the claim of complainants for the
balance had been paid in the amount in full.
Travellers Insurance, on its part, admitted the issuance of a Policy and alleged defenses that Fire Policy,
covering the furniture and building of complainants was secured by a certain Arsenio Chua and that the
premium due on the fire policy was paid by Arsenio Chua.
Tai Tong Chuache & Co. also filed a complaint in intervention claiming the proceeds of the fire
Insurance Policy issued by respondent Travellers Multi-Indemnity.
As adverted to above respondent Insurance Commission dismissed spouses Palomos' complaint on the
ground that the insurance policy subject of the complaint was taken out by Tai Tong Chuache &
Company, for its own interest only as mortgagee of the insured property and thus complainant as
mortgagors of the insured property have no right of action against the respondent. It likewise dismissed
petitioner's complaint in intervention in the following words:
From the above decision, only intervenor Tai Tong Chuache filed a motion for reconsideration but it was
likewise denied hence, the present petition.

Issue: WON Tai Tong had insurable interest

Held: Yes. Petition granted.

Ratio:
Respondent advanced an affirmative defense of lack of insurable interest on the part of the petitioner
that before the occurrence of the peril insured against, the Palomos had already paid their credit due the
petitioner. However, they were never able to prove that Tai had a lack ofinsurable interest. Hence, the
decision must be adverse against them.
However respondent Insurance Commission absolved respondent insurance company fromliability on
the basis of the certification issued by the then Court of First Instance of Davao, Branch II, that in a
certain civil action against the Palomos, Arsenio Lopez Chua stands as the complainant and not Tai Tong
Chuache.
From said evidence respondent commission inferred that the credit extended by petitioner to the
Palomos secured by the insured property must have been paid. These findings was based upon a mere
inference.
The record of the case shows that the petitioner to support its claim for the insurance proceeds offered
as evidence the contract of mortgage which has not been cancelled nor released. It has been held in a
long line of cases that when the creditor is in possession of the document of credit, he need not prove
non-payment for it is presumed. The validity of the insurance policy taken by petitioner was not assailed
by private respondent. Moreover, petitioner's claim that the loanextended to the Palomos has not yet
been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein
petitioner.
Public respondent argues however, that if the civil case really stemmed from the loan granted to
Azucena Palomo by petitioner the same should have been brought by Tai Tong Chuache or by its
representative in its own behalf. From the above premise, respondent concluded that the obligation
secured by the insured property must have been paid. However, it should be borne in mind that
petitioner being a partnership may sue and be sued in its name or by its duly authorized representative.
Petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the partnership was
corroborated by respondent insurance company. Thus Chua as the managing partner of the partnership
may execute all acts of administration including the right to sue debtors of the partnership in case of
their failure to pay their obligations when it became due and demandable. Public respondent's allegation
that the civil case flied by Arsenio Chua was in his capacity as personal creditor of spouses Palomo has no
basis. The policy, then had legal force and effect.

Heirs of Tan Eng Kee Vs CA

Benguet Lumber has been around even before World War II but during the war, its stocks were
confiscated by the Japanese. After the war, the brothers Tan Eng Lay and Tan Eng Kee pooled their
resources in order to revive the business. In 1981, Tan Eng Lay caused the conversion of Benguet Lumber
into a corporation called Benguet Lumber and Hardware Company, with him and his family as the
incorporators. In 1983, Tan Eng Kee died. Thereafter, the heirs of Tan Eng Kee demanded for an
accounting and the liquidation of the partnership.
Tan Eng Lay denied that there was a partnership between him and his brother. He said that Tan Eng Kee
was merely an employee of Benguet Lumber. He showed evidence consisting of Tan Eng Kees payroll;
his SSS as an employee and Benguet Lumber being the employee. As a result of the presentation of said
evidence, the heirs of Tan Eng Kee filed a criminal case against Tan Eng Lay for allegedly fabricating those
evidence. Said criminal case was however dismissed for lack of evidence.
ISSUE: Whether or not Tan Eng Kee is a partner.
HELD: No. There was no certificate of partnership between the brothers. The heirs were not able to
show what was the agreement between the brothers as to the sharing of profits. All they presented
were circumstantial evidence which in no way proved partnership.
It is obvious that there was no partnership whatsoever. Except for a firm name, there was no firm
account, no firm letterheads submitted as evidence, no certificate of partnership, no agreement as to
profits and losses, and no time fixed for the duration of the partnership. There was even no attempt to
submit an accounting corresponding to the period after the war until Kees death in 1984. It had no
business book, no written account nor any memorandum for that matter and no license mentioning the
existence of a partnership.
In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole proprietorship. He
registered the same as such in 1954; that Kee was just an employee based on the latters payroll and SSS
coverage, and other records indicating Tan Eng Lay as the proprietor.
Also, the business definitely amounted to more P3,000.00 hence if there was a partnership, it should
have been made in a public instrument.
But the business was started after the war (1945) prior to the publication of the New Civil Code in 1950?
Even so, nothing prevented the parties from complying with this requirement.
Also, the Supreme Court emphasized that for 40 years, Tan Eng Kee never asked for an accounting. The
essence of a partnership is that the partners share in the profits and losses. Each has the right to demand
an accounting as long as the partnership exists. Even if it can be speculated that a scenario wherein if
excellent relations exist among the partners at the start of the business and all the partners are more
interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the
profits is perfectly plausible. But in the situation in the case at bar, the deferment, if any, had gone on
too long to be plausible. A person is presumed to take ordinary care of his concerns. A demand for
periodic accounting is evidence of a partnership which Kee never did.
The Supreme Court also noted:
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as
to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or
co-possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons
sharing them have a joint or common right or interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a
partner in the business, but no such inference shall be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of the business;
(e) As the consideration for the sale of a goodwill of a business or other property by installments or
otherwise.

Evangelista, et al. v. CIR, GR No. L-9996, October 15, 1957

Facts:
Herein petitioners seek a review of CTAs decision holding them liable for income tax, real estate
dealers tax and residence tax. As stipulated, petitioners borrowed from their father a certain sum for
the purpose of buying real properties. Within February 1943 to April 1994, they have bought parcels of
land from different persons, the management of said properties was charged to their brother Simeon
evidenced by a document. These properties were then leased or rented to various tenants.
On September 1954, CIR demanded the payment of income tax on corporations, real estate
dealers fixed tax, and corporation residence tax to which the petitioners seek to be absolved from such
payment.
Issue: Whether petitioners are subject to the tax on corporations.
Ruling:
The Court ruled that with respect to the tax on corporations, the issue hinges on the meaning of
the terms corporation and partnership as used in Section 24 (provides that a tax shall be levied on
every corporation no matter how created or organized except general co-partnerships) and 84 (provides
that the term corporation includes among others, partnership) of the NIRC. Pursuant to Article 1767,
NCC (provides for the concept of partnership), its essential elements are: (a) an agreement to contribute
money, property or industry to a common fund; and (b) intent to divide the profits among the
contracting parties.
It is of the opinion of the Court that the first element is undoubtedly present for petitioners have agreed
to, and did, contribute money and property to a common fund. As to the second element, the Court fully
satisfied that their purpose was to engage in real estate transactions for monetary gain and then divide
the same among themselves as indicated by the following circumstances:
1. The common fund was not something they found already in existence nor a property
inherited by them pro indiviso. It was created purposely, jointly borrowing 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. The number
of lots acquired and transactions undertake is strongly indicative of a pattern or common design that
was not limited to the conservation and preservation of the aforementioned common fund or even of
the property acquired. In other words, one cannot but perceive a character of habitually peculiar to
business transactions engaged in the purpose of gain;
3. Said properties were not devoted to residential purposes, or to other personal uses, of petitioners
but were leased separately to several persons;
4. They were under the management of one person where the affairs relative to said properties have
been handled as if the same belonged to a corporation or business and enterprise operated for profit;
5. Existed for more than ten years, or, to be exact, over fifteen years, since the first property was
acquired, and over twelve years, since Simeon Evangelista became the manager;
6. Petitioners have not testified or introduced any evidence, either on their purpose in creating the
set up already adverted to, or on the causes for its continued existence.

The collective effect of these circumstances is such as to leave no room for doubt on the existence of
said intent in petitioners herein.
Also, petitioners argument that their being mere co-owners did not create a separate legal entity
was rejected because, according to the Court, the tax in question is one imposed upon "corporations",
which, strictly speaking, are distinct and different from "partnerships". When the NIRC includes
"partnerships" among the entities subject to the tax on "corporations", said Code must allude, therefore,
to organizations which are not necessarily "partnerships", in the technical sense of the term. The
qualifying expression found in Section 24 and 84(b) clearly indicates that a joint venture need not be
undertaken in any of the standard forms, or in conformity with the usual requirements of the law on
partnerships, in order that one could be deemed constituted for purposes of the tax on corporations.
Accordingly, the lawmaker could not have regarded that personality as a condition essential to the
existence of the partnerships therein referred to. For purposes of the tax on corporations, NIRC includes
these partnerships - with the exception only of duly registered general co partnerships - within the
purview of the term "corporation." It is, therefore, clear that petitioners herein constitute a partnership,
insofar as said Code is concerned and are subject to the income tax for corporations.
As regards the residence of tax for corporations (Section 2 of CA No. 465), it is analogous to that
of section 24 and 84 (b) of the NIRC. It is apparent that the terms "corporation" and "partnership" are
used in both statutes with substantially the same meaning. Consequently, petitioners are subject, also,
to the residence tax for corporations.
Finally, on the issues of being liable for real estate dealers tax, they are also liable for the same
because the records show that they have habitually engaged in leasing said properties whose yearly
gross rentals exceeds P3,000.00 a year.



Deluao VS Casteel
(Property Rights of Partners)-Casteel was the origi nal occupant and applicant of a fishpond area
since before the last World War. He wanted to precludesubsequent applicants from entering
and spreading themselves within the area by expanding his occupation thereof by theconstruction of dikes
and the cultivation of marketable fishes.-Thus, he borrowed P27, 000 from the Deluaos to finance
needed improvements for the fishpond, and was compel led by forceof this circumstance to
enter into the contract of partnership, with an agreement to divide the fishpond after the
award.Eventually, Casteel administered the said property and single-handedly opposed rival applicants
who occupied portions of the fishpond area. He relentlessly pursued his claim to the said area up to the
Office of the DANR Secretary, until it wasfinally awarded to him.Issue: WON the parties can now validly divide the
said fishpond as agreed upon by them? NO.Ruling:-Spouses Deluaos statement that the beneficial right
over the fishpond in question is the
"specific partnership property" contemplated by art. 1811 of the Civil Code is incorrect. A reading of the
said provision will show that what is meant istangible property, such as a car, truck or a piece of
land, but not an intangible thing such as the beneficial right to afishpond. If what they have in mind
is the fishpond itself, they are grossly in error. A fishpond of the public domain can neverbe considered a specific partnership
property because only its use and enjoyment never its title or ownership is grantedto specific private persons.-Since
we held as illegal the second part of the contract of partnership between the parties to
divide the fishpond betweenthem after the award, a fortiori, no rights or obligations could have
arisen therefrom. Inescapably, no trust could haveresulted because trust is founded on equity and can
never result from an act violative of the law. Art. 1452 of the Civil Codedoes not support the appellees'
stand because it contemplates an agreement between two or more persons to purchaseproperty
capable of private ownership the legal title of which is to be taken in the name of one of them for the
benefitof all. In the case at bar, the parties did not agree to purchase the fishpond, and even if they did, such is prohibited
by law, afishpond of the public domain not being susceptible of private ownership.-It must be observed that,
despite the decisions of the DANR Secretary in DANR cases 353 and 353-B awarding the
area toCasteel, and despite the latter's proposal that they divide the fishpond between them,
the Deluaos unequivocally expressedin their aforequoted letter their decision not to share the fishpond
with Casteel. This produced the dissolution of the entirecontract of partnership (to jointly administer and to divide
the fishpond after the award) between the parties, not to mentionits automatic dissolution for being contrary to law.-
Pettioners final proposition that only by gi ving effect to the confirmed intention of the
parties may the cause of equity and justice be served, we must state that since the contract of
service is contrary to law and, therefore, null and void, it is notand can never be considered as the law between
the parties.



39. Agad vs Mabato

Facts: Petitioner Mauricio Agad claims that he and defendant Severino Mabato are partners in afishpond
business to which they contributed P1000 each. As managing partner, Mabato yearly renderedthe accounts of the
operations of the partnership. However, for the years 1957-1963, defendant failedto render the accounts
despite repeated demands. Petitioner filed a complaint against Mabato to whicha copy of the public instrument evidencing
their partnership is attached. Aside from the share of profits (P14,000) and attorneys fees (P1000), petitioner
prayed for the dissolution of the partnership and
winding up of its affairs.Mabato denied the existence of the partnership alleging that Agad failed to pay hisP1000
contribution.He then filed a motion to dismiss on the ground of lack of cause of action. The lower court
dismissed thecomplaint finding a failure to state a cause of action predicated upon the theory that the
contract of partnership is null and void, pursuant to Art. 1773 of our Civil Code, because an inventory of
thefishpond referred in said instrument had not been attached thereto.Art. 1771. A partnership may be constituted in any
form, except where immovable property or realrights are contributed thereto, in which case a public instrument shall be
necessary.Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if inventory
of said property is not made, signed by the parties; and attached to the public instrument.

Issue: Whether or not immovable property or real rights have been contributed to the partnership.

Held: Based on the copy of the public instrument attached in the complaint, the partnership
wasestablished to operate a fishpond", and not to "engage in a fishpond business. Thus,
Mabatoscontention that it is really inconceivable how a partnership engaged in the fishpond business
could exist without said fishpond property (being) contributed to the partnership is without merit. Their
contributions were limited to P1000 each and neither a fishpond nor a real right thereto wascontributed to the
partnership.Therefore, Article 1773 of the Civil Code finds no application in the case at bar. Case remanded to thelower
court for further proceedings