TOCAO V. COURT OF APPEALS, 342 SCRA 20 (2000) Belo.
Belo. She wrote him twice to demand her overriding commission for the
Facts:
Petitioner William T. Bello introduced private respondent Nenita
Anay to petitioner Tocao, who conveyed her desire to enter into a joint
venture with her for the importation and local distribution of kitchen
cookwares. Belo acted the capitalist, Tocao as president and general
manager, and Anay as head of the marketing department (considering her
experience and established relationship with West Bend Company,c a
manufacturer of kitchen wares in Wisconsin, U.S.A) and later, vice-president
for sales. The parties agreed further that 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.
The same was not reduced to writing on the strength of Belo’s
assurances.
Later, Anay was able to secure the distributorship of cookware
products from the West Bend Company. They operated under the name of
Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocao’s
name. Anay attended distributor/dealer meetings with West Bend Company
with the consent of Tocao.
Due to Anay’s excellent job performance she was given a plaque of
appreciation. Also, in a memo signed by Belo, Anay was given 37%
commission for her personal sales "up Dec 31/87,” apart from the 10%
share in profits.
On October 9, 1987, Anay learned that Marjorie Tocao terminated
her as vice-president of Geminesse Enterprise. Anay attempted to contact
period of January 8, 1988 to February 5, 1988 and the audit of the company
to determine her share in the net profits. Belo did not answer.
Anay still received her five percent (5%) overriding commission up
to December 1987. The following year, 1988, she did not receive the same
commission although the company netted a gross sales of P13,300,360.00.
On April 5, 1988, Nenita A. Anay filed a complaint for sum of money
with damagesagainst Tocao and Belo before the RTC of Makati. She prayed
that she be paid (1) P32,00.00 as unpaid overriding commission from
January 8, 1988 to February 5, 1988; (2) P100,000.00 as moral damages, and
(3) P100,000.00 as exemplary damages. The plaintiff also prayed for an
audit of the finances of Geminesse Enterprise from the inception of its
business operation until she was “illegally dismissed” to determine her ten
percent (10%) share in the net profits. She further prayed that she be paid
the five percent (5%) “overriding commission“ on the remaining 150 West
Bend cookware sets before her “dismissal.”
However, Tocao and Belo asserted that the alleged agreement was
not reduced to writing nor ratified, hence, unenforceable, void, or
nonexistent. Also, they denied the existence of a partnership because, as
Anay herself admitted, Geminesse Enterprise was the sole proprietorship of
Marjorie Tocao. Belo also contended that he merely acted as a guarantor of
Tocao and denied contributing capital. Tocao, on the other hand, denied
that they agreed on a ten percent (10%) commission on the net profits.
Both trial court and court of appeals ruled that a business
partnership existed and ordered the defendants to pay.
Issue:
Whether or not a partnership existed – YES
Ratio:
To be considered a juridical personality, a partnership must fulfill
these requisites: (1) two or more persons bind themselves to contribute
money, property or industry to a common fund; and (2) intention on the
part of the partners to divide the profits among themselves. 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.
Private respondent Anay contributed her expertise in the business
of distributorship of cookware to the partnership and hence, under the law,
she was the industrial or managing partner.
Petitioner Belo had an proprietary interest. He presided over
meetings regarding matters affecting the operation of the business.
Moreover, his having authorized in writing giving Anay 37% of the proceeds
of her personal sales, could not be interpreted otherwise than that he had a
proprietary interest in the business. This is inconsistent with his claim that
he merely acted as a guarantor. If indeed he was, he should have presented
documentary evidence. Also, Art. 2055 requires that a guaranty must be
express and the Statute of Frauds requires that it must be in writing.
Petitioner Tocao was also a capitalist in the partnership. She claimed that
she herself financed the business.
The business venture operated under Geminesse Enterprise did not
result in an employer-employee relationship between petitioners and
private respondent. First, Anay had a voice in the management of the affairs
of the cookware distributorship and second, Tocao admitted that Anay, like
her, received only commissions and transportation and representation
allowancesand not a fixed salary. If Anay was an employee, it is difficult to
believe that they recieve the same income.
Also, the fact that they operated under the name of Geminesse
Enterprise, a sole proprietorship, is of no moment. Said business name 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.
The partnership exists until dissolved under the law. Since the
partnership 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.
Petitioners Tocao’s unilateral exclusion of private respondent from
the partnership is shown by her memo to the Cubao office plainly stating
that private respondent was, as of October 9, 1987, no longer the vice-
president for sales of Geminesse Enterprise.By that memo, petitioner Tocao
effected her own withdrawal from the partnership and considered herself
as having ceased to be associated with the partnership in the carrying on of
the business. Nevertheless, the partnership was not terminated thereby; it
continues until the winding up of the business.
The partnership among petitioners and private respondent is
ordered dissolved, and the parties are ordered to effect the winding up and
liquidation of the partnership pursuant to the pertinent provisions of the
Civil Code. Petitioners are ordered to pay Anay’s 10% share in the profits,
after accounting, 5% overriding commission for the 150 cookware sets
available for disposition since the time private respondent was wrongfully
excluded from the partnership by petitioner, overriding commission on the
total production, as well as moral and exemplary damages, and attorney’s
fees.
JG Summit Holdings, Inc. vs Court of Appeals, September 24, 2003
FACTS:
A joint venture (JVA) was entered by a government corporation, National
Investment and Development Corporation (NIDC) with a Japanese
corporation, Kawasaki Heavy Industries, Ltd. for a shipyard business,
Philippine Shipyard and Engineering Corporation (PHILSECO), with an
agreement of a shareholding proportion of 60%-40 respectively and a right
of first refusal to Kawasaki. Thereafter, NIDC transferred all its rights, title
and interest to the Philippine National Bank (PNB). After several months, by
virtue of Administrative Order 14, PNB's interest in PHILSECO was
transferred to the National Government. Then President Aquino’s
Proclamation No. 50 was issued establishing the Committee on Privatization
(COP) and the Asset Privatization Trust (APT) to take title to and possession
of, conserve, manage and dispose of non-performing assets of the National
Government. A trust agreement was entered into between the National
Government and the APT by virtue of which the latter was named the
trustee of the National Government's share in PHILSECO. As a result of a
quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the
National Government's shareholdings in PHILSECO increased to 97.41%
thereby reducing Kawasaki's shareholdings to 2.59%.
After negotiations, it was agreed that Kawasaki’s right of first refusal under
the JVA be “exchanged” for the right to top by 5% the highest bid for said
shares. Kawasaki informed that Philyards Holdings, Inc. (PHI), in which it was
a stockholder, would exercise this right in its stead. Petitioner JG Summit
Holdings was declared highest bidder. Even so, because of the right to top
by 5% percent the highest bid, Kawasaki/PHI’s was able to top the winning
bid. JG Summit protested, contending that PHILSECO, as a shipyard is a
public utility and, hence, must observe the 60%-40% Filipino-foreign
capitalization. By buying 87.67% of PHILSECO’s capital stock at bidding,
Kawasaki/PHI in effect now owns more than 40% of the stock, thus violative
of the laws.
ISSUE:
Whether or not PHILSECO, a shipyard, is a public utility and hence
Kawasaki, a foreign corporation, can acquire only a maximum of 40% of its
capital.
HELD:
No, a shipyard such as PHILSECO is not considered a public utility.
First, because a shipyard which is a place or enclosure where ships
are built or repaired is in its nature serves a limited clientele and not legally
obliged to render its services indiscriminately to the public. While the
business may be regulated for public good, it does not justify the
qualifications for public utility which implies public use and service to the
public hence it must be engaged in regularly supplying the public with some
commodity or service of public consequence.
Second, it is not declared as public utility by law. Based on its
legislative history, since the enactment of Act No. 2307 which created the
Public Utility Commision (PUC) until repealed by Commonwealth Act No.
146 establishing Public Service Commission, a shipyard was a public utility
and should abide by the Filipino citizenship requirement of 60-40 capital of
a corporation. Thereafter, Pres. Marcos issued PD No. 666 which removed
the shipbuilding and ship repair industry from the list of public utilities
thereby freeing it from the 60-40 citizenship requirement. Batas Pambansa
Blg. 391 repealed the PD No. 666 and reverted shipyards as public utilities.
Then Pres. Aquino’s Executive Order No. 226 repealed the previous laws
with no revival of the principle that shipyards are public utilities. Thus
absent of such legislation declaring the same, a shipyard reverts back to its
status as a non-public utility.
With this, there was nothing preventing Kawasaki from acquiring
more than 40% of PHILSECO’s total capitalization. The JVA should also be
interpreted as the phrase “maintaining a proportion of 60%-40%” refers to
their respective share of the burden each time the Board of Directors
decides to increase the subscription to reach the target paid-up capital of
P312 million. It does not bind the parties to maintain the sharing scheme all
throughout the existence of their partnership.
Dispositive Portion: IN VIEW OF THE FOREGOING, the Motion for
Reconsideration is hereby GRANTED. The impugned Decision and Resolution
of the Court of Appeals are AFFIRMED.
ISSUE:
Whether or not the Court of Appeals has erred in holding that the
partnership is a partnership at will and whether or not the Court of Appeals
has erred in holding that the withdrawal of private respondent dissolved the
partnership regardless of his good or bad faith

(NOTE: Two motions were filed for resolution of this decision. The
decision appealed from was affirmed upholding the status of non-public
utility of shipyards. It held that the prohibition in the Constitution applies to
the ownership of land; the fact that PHILSECO owns land cannot deprive
Kawasaki of its right of first refusal reiterating the basic corporate law
principle that the corporation and its stockholders are separate juridical
entities. In this vein, the right of first refusal over shares pertains to the
shareholders whereas the capacity to own land pertains to the corporation.
Hence, no law disqualifies a person from purchasing shares in a landholding
corporation even if the latter will exceed the allowed foreign equity, what
the law disqualifies is the corporation from owning land. (J.G. Summit
Holdings, Inc. vs CA; 450 SCRA 169; January 31, 2005))
Ortega vs. CA, 245 SCRA 529
HELD:
No. The SC upheld the ruling of the CA regarding the nature of the
partnership. The SC further stated that a partnership that does not fix its
term is a partnership at will. The birth and life of a partnership at will is
predicated on the mutual desire and consent of the partners. The right to
choose with whom a person wishes to associate himself is the very
foundation and essence of that partnership. Its continued existence is, in
turn, dependent on the constancy of that mutual resolve, along with each
partner's capability to give it, and the absence of a cause for dissolution
provided by the law itself. Verily, any one of the partners may, at his sole
pleasure, dictate a dissolution of the partnership at will. He must, however,
act in good faith, not that the attendance of bad faith can prevent the
dissolution of the partnership but that it can result in a liability for damages.

FACTS:

On December 19, 1980, respondent Misa associated himself

together, as senior partner with petitioners Ortega, del Castillo, Jr., and
Bacorro, as junior partners. On Feb. 17, 1988, respondent Misa wrote a
letter stating that he is withdrawing and retiring from the firm and asking
for a meeting with the petitioners to discuss the mechanics of the
liquidation. On June 30, 1988, petitioner filed a petition to the Commision's
Securities Investigation and Clearing Department for the formal dissolution
and liquidation of the partnership. On March 31, 1989, the hearing officer
rendered a decision ruling that the withdrawal of the petitioner has not
dissolved the partnership. On appeal, the SEC en banc reversed the decision
and was affirmed by the Court of Appeals. Hence, this petition.