148712-1957-Evangelista v. Collector of Internal Revenue
148712-1957-Evangelista v. Collector of Internal Revenue
148712-1957-Evangelista v. Collector of Internal Revenue
SYLLABUS
DECISION
CONCEPCION , J : p
Separate Opinions
BAUTISTA ANGELO , J., concurring :
I agree with the opinion that petitioners have actually contributed money to a
common fund with express purpose of engaging in real estate business for pro t. The
series of transactions which they had undertaken attest to this. This appears in the
following portion of the decision:
"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. On April 3,
1944, they purchased 21 lots for P18,000. This was soon followed on April 23,
1944, by the acquisition of another real estate for P108,825. Five (5) days later
(April 28, 1944), they got a fourth lot for P237,234.14. The number of lots (24)
acquired and transactions undertaken, as well as the brief interregnum between
each, particularly the last three purchases, is strongly indicative of a pattern or
common design that was not limited to the conservation and preservation of the
afore-mentioned common fund or even of the property acquired by petitioner in
February, 1943. In other words, one cannot but perceive a character of habituality
peculiar to business transactions engaged in for purposes of gain."
I wish however to make the following observation: Article 1769 of the new Civil
Code lays down the rule for determining when a transaction should be deemed a
partnership or a co-ownership. Said article paragraphs 2 and 3, provides:
"(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 from which the returns are derived;"
From the above it appears that the fact that those who agree to form a co-
ownership share or do not share any pro ts made by the use of the property held in
common does not convert their venture into a partnership Or the sharing of the gross
returns does not of itself establish a partnership whether or not the persons sharing
therein have a joint or common right or interest in the property. This only means that,
aside from the circumstance of pro t, the presence of other elements constituting
partnership is necessary, such as the clear intent to form a partnership, the existence of
a juridical personality different from that of the individual partners, and the freedom to
transfer or assign any interest in the property by one with the consent of the others
(Padilla, Civil Code of the Philippines Annotated, Vol. I, 1953 ed., pp. 635-636).
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It is evident that an isolated transaction whereby two or more persons contribute
funds to buy certain real estate for pro t in the absence of other circumstances
showing a contrary intention cannot be considered a partnership.
"Persons who contribute property or funds for a common enterprise and
agree to share the gross returns of that enterprise in proportion to their
contribution, but who severally retain the title to their respective contribution, are
not thereby rendered partners. They have no common stock or capital, and no
community of interest as principal proprietors in the business itself which the
proceeds derived." (Elements of the law of Partnership by Floyd R. Mechem, 2n
Ed., section 83, p. 74.)
"A joint purchase of land, by two, does not constitute a copartnership in
respect thereto; nor does an agreement to share the pro ts and losses on the sale
of land create a partnership; the parties are only tenants in common." (Clark vs.
Sideway, 142 U. S. 682, 12 S. Ct. 327, 35 L. Ed., 1157.)
"Where plaintiff, his brother, and another agreed to become owners of a
single tract of realty, holding as tenants in common, and to divide the pro ts of
disposing of it, the brother and the other not being entitled to share in plaintiff's
commissions, no partnership existed as between the three parties, whatever their
relation may have been as to third parties." (Magee vs. Magee, 123 N. E. 673, 233
Mass. 341.)
"In order to constitute a partnership inter sese there must be: (a) An intent
to form the same; (b) generally a participating in both pro ts and losses; (c) and
such a community of interest, as far as third persons are concerned as enables
each party to make contract, manage the business, and dispose of the whole
property." (Municipal Paving Co. vs. Herring, 150 P. 1067, 50 Ill. 470.)
"The common ownership of property does not itself create a partnership
between the owners, though they may use it for purpose of making gains; and
they may, without becoming partners, agree among themselves as to the
management and use of such property and the application of the proceeds
therefrom." (Spurlock vs. Wilson, 142 S. W. 363, 160 No. App. 14.)
This is impliedly recognized in the following portion of the decision: "Although,
taken singly, they might not su ce to establish the intent necessary to constitute a
partnership, the collective effect of these circumstances (referring to the series of
transactions) such as to leave no room for doubt on the existence of said intent in
petitioners herein."