Philex Mining Corp vs.

CIR FACTS: Petitioner entered into an agreement with B a g u i o G o l d , w h e r e t h e f o r m e r a g r e e d t o manage the mining operations of the latter. The agreement was evidenced by a Powero f A t t o r n e y . I t w a s i n d i c a t e d i n t h e s a i d document, that Baguio Gold would contribute P11M under its owner's account plus any of its income that is left in the project, inaddition to its actual mining claim .Meanwhile, petitioner's contribution wouldc o n s i s t o f i t s e x p e r t i s e i n t h e management and operation of mines, asw e l l as the manager's a c c o u n t w h i c h i s comprised of P11M in funds and propertya n d p e t i t i o n e r ' s "compensation" asmanager that cannot be paid in cash. T h e m i n i n g s u f f e r e d s e r i o u s l o s e s w h i c h ended business of both parties evidenced byt h e i r e x e c u t i o n o f a c o m p r o m i s e agreement. T h e CIR assessed P h i l e x M i n i n g f o r t a x deficiencies. It stressed that Philex enteredinto a partnership with Baguio Gold.Petitioner denied the allegations of the CIRand maintained that its advances of moneyand property to Baguio Gold were in a natureof a loan as evidenced by the compromiseagreement.I : W / N P h i l e x a n d B a g u i o M i n i n g f o r m e d partnership.H: Yes. The parties entered into thec o m p r o m i s e a g r e e m e n t s a s a consequence of the dissolution of theirbusiness relationship. It did not definet h a t r e l a t i o n s h i p o r i n d i c a t e i t s r e a l character. The relationship of the parties may begleaned upon the power of attorneydocument entered between the 2. A n e x a m i n a t i o n o f t h e " P o w e r o f Attorney" reveals that a partnership or joint venture was indeed intended by t h e p a r t i e s . U n d e r a c o n t r a c t o f partnership, two or more persons bindt h e m s e l v e s t o c o n t r i b u t e m o n e y , p r o p e r t y , o r i n d u s t r y t o a c o m m o n fund, with the intention of dividing theprofits among themselves.

The term compensation found in thesaid document could not be deemeda s w a g e s . I t i s i m p o s s i b l e f o r a c o m p a n y t o g i v e a s a l a r y t o a n employee representing 50% of its netprofit. W h i l e a c o r p o r a t i o n , l i k e p e t i t i o n e r , cannot generally enter into a contracto f p a r t n e r s h i p u n l e s s a u t h o r i z e d b y law or its charter, it has been held thatit may enter into a joint venture whichis akin to a particular partnership: under Philippine law, a joint venture isa f o r m o f p a r t n e r s h i p a n d s h o u l d b e governed by the law of partnership