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Case Name 9. Tocao and Belo vs CA
Topic Lesson I: Characteristics of Partnership
Case No. | Date G.R. No. 127405 | October 4, 2000
Ponente
Doctrine
RELEVANT FACTS
● Nenita Anay worked as an adviser of Technolux in Thailand. She met petitioner Belo, the then VP
for operations of Ultra Clean Water Purifier. Belo introduced Anay to petitioner Marjorie Tocao,
who conveyed her desire to enter into a joint venture with her for the importation and local
distribution of kitchen cookwares. Belo financed the joint venture and assigned to Anay the job of
marketing the product and established relationship with Westbend Company which is also engaged
in manufacturing.
● Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and Anay
as head of the marketing department and later, vice-president for sales. Anay organized the
administrative staff and sales force while Tocao hired and fired employees, determined commissions
and/or salaries of the employees, and assigned them to different branches.
● The parties agreed that Belo's name should not appear in any documents relating to their transactions
with West Bend Company. Instead, they agreed to use Anay's name in securing distributorship of
cookware from that company. Anay would be entitled to:
(1) ten percent (10%) of the annual net profits of the business;
(2) overriding commission of six percent (6%) of the overall weekly production;
(3) thirty percent (30%) of the sales she would make; and
(4) two percent (2%) for her demonstration services.
However, the agreement was not reduced to writing on the strength of Belo's assurances that he
was sincere, dependable and honest when it came to financial commitments.
Anay successfully secured the distributorship of the cookware products from the West Bend
Company and operated under the name of Geminesse Enterprise, a sole proprietorship
registered in Marjorie Tocao's name. Thereafter, Roger Muencheberg of West Bend
Company invited Anay to the distributor/dealer meeting in West Bend, Wisconsin, U.S.A.,
from July 19 to 21, 1987 and to the southwestern regional convention in Pismo Beach,
California, U.S.A., July 25- 26, 1987. Anay accepted the invitation with the consent of
Marjorie Tocao who, as president and general manager of Geminesse Enterprise, even
wrote a letter to the Visa Section of the U.S. Embassy in Manila.
However, on October 9, 1987, Anay learned that Marjorie Tocao had signed a letter
addressed to the Cubao sales office to the effect that she was no longer the vice-president of
Geminesse Enterprise. The following day, she received a note from Lina T. Cruz, marketing
manager, that Marjorie Tocao had barred her from holding office and conducting
demonstrations in both Makati and Cubao offices.
Civil case: Anay filed a complaint for sum of money with damages against Tocao and Belo
before the RTC.
Marjorie Tocao and Belo asserted that the "alleged agreement" with Anay that was "neither
reduced in writing, nor ratified," was "either unenforceable or void or inexistent." As far as
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Belo was concerned, his only role was to introduce Anay to Marjorie Tocao. There could not
have been a partnership because, as Anay herself admitted, Geminesse Enterprise was the
sole proprietorship of Marjorie Tocao. Because Anay merely acted as marketing
demonstrator of Geminesse Enterprise for an agreed remuneration, and her complaint
referred to either her compensation or dismissal, such complaint should have been lodged
with the Department of Labor and not with the regular court.
RTC Ruling: indeed an "oral partnership agreement between the plaintiff and the
defendants," based on the following: (a) there was an intention to create a partnership; (b) a
common fund was established through contributions consisting of money and industry, and
(c) there was a joint interest in the profits.
The trial court further held that the payment of commissions did not preclude the
existence of the partnership. It did not matter that the agreement was not in writing
because Article 1771 of the Civil Code provides that a partnership may be "constituted
in any form." The fact that Geminesse Enterprise was registered in Marjorie Tocao's name
is not determinative of whether or not the business was managed and operated by a sole
proprietor or a partnership. What was registered with the Bureau of Domestic Trade was
merely the business name or style of Geminesse Enterprise.
CA dismissed their appeal. Hence this petition on certiorari.
RATIO DECIDENDI
Issue Ratio
(1) W/N there 1. Yes. To be considered a juridical personality, a partnership must fulfill these
was requisites: (1) two or more persons bind themselves to contribute money,
partnership. property or industry to a common fund; and (2) intention on the part of the
partners to divide the profits among themselves.
-The testimony of Elizabeth Bantilan,
Anay's cousin and the administrative officer of Geminesse Enterprise from
August 21, 1986 until it was absorbed by Royal International, Inc., buttressed
the fact that a partnership existed between the parties.
-The letter of Roger Muencheberg of West Bend Company stating that he awarded
the
distributorship to Anay and Marjorie Tocao because he was convinced that
with Marjorie's financial contribution and Anay's experience, the combination
of the two would be invaluable to the partnership, also supported that
conclusion.
-Belo's acts of attending and/or presiding over meetings of Geminesse Enterprise
plus his issuance of a memo giving Anay 37%
commission on personal sales belied this. On the contrary, it demonstrated his
involvement as a partner in the business.
-payment of commissions did not preclude the existence of the partnership inasmuch
as such practice is often resorted to in business circles as an impetus to bigger sales
volume.
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-Petitioners admit that private respondent had the expertise to engage in the business
of distributorship of cookware. Private respondent contributed such expertise to the
partnership and hence, under the law, she was the industrial or managing partner.
It was through her reputation with the West Bend Company that the partnership was
able to open the business of distributorship of that company's cookware products; it
was through the same efforts that the business was propelled to financial success.
It may be constituted in any form; a public instrument is necessary only where
immovable property or real rights are contributed thereto. This implies that since
a contract of partnership is consensual, an oral contract of partnership is as good
as a written one. Where no immovable property or real rights are involved, what
matters is that the parties have complied with the requisites of a partnership. The
fact that there appears to be no record in the Securities and Exchange
Commission of a public instrument embodying the partnership agreement
pursuant to Article 1772 of the Civil Code 17 did not cause the nullification of
the partnership.
If indeed petitioner Tocao was private respondent's employer, it is difficult to
believe that they shall receive the same income in the business. In a partnership,
each partner must share in the profits and losses of the venture, except that the
industrial partner shall not be liable for the losses. 31 As an industrial partner,
private respondent had the right to demand for a formal accounting of the
business and to receive her share in the net profit.
The fact that the cookware distributorship was operated under the name of
Geminesse Enterprise, a sole proprietorship, is of no moment. What was
registered with the Bureau of Domestic Trade on August 19, 1987 was merely
the name of that enterprise.
Indubitably then, the business name Geminesse Enterprise was used only for
practical reasons — it was utilized as the common name for petitioner Tocao's
various business activities, which included the distributorship of cookware.
On winding up:
In Idos v. Court of Appeals, this Court said: "The best evidence of the existence
of the partnership, which was not yet terminated (though in the winding up
stage), were the unsold goods and uncollected receivables, which were presented
to the trial court. Since the partnership has not been terminated, the petitioner
and private complainant remained as co-partners. . . . . " 37 It is not surprising
then that, even after private respondent had been unceremoniously booted out of
the partnership in October 1987, she still received her overriding commission
until December 1987.
The partnership exists until dissolved under the law. Since the partnership
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created by petitioners and private respondent has no fixed term and is therefore a
partnership at will predicated on their mutual desire and consent, it may be
dissolved by the will of a partner.
RULING
Petition denied.
NOTES
They also established a firm that they called "Wiji," the combination of petitioner Belo's first name,
William, and her nickname, Jiji. 23 The special relationship between them dovetails with petitioner Belo's
claim that he was acting in behalf of petitioner Tocao.
