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[G.R. No. 127405. October 4, 2000.] MARJORIE TOCAO and WILLIAM T. BELO, petitioners, vs.

COURT OF APPEALS and NENITA A. ANAY , respondents. Fortunato M. Lira Law Office for petitioners. Rodolfo D. Mapile for private respondent. SYNOPSIS For havin been e!c"#ded fro$ the partnership %Ge$inesse &nterprises,% Nenita 'na( bro# ht a co$p"aint for s#$ of $one( )ith da$a es a ainst *ar+orie ,. -ocao and .i""ia$ /e"o before the Re iona" -ria" 0o#rt of *a1ati. 2n their ans)er, -ocao and /e"o asserted that Ge$inesse &nterprises )as the so"e proprietorship of -ocao and that 'na( $ere"( acted as *ar1etin ,e$onstrator of Ge$inesse. -h#s, -ocao and /e"o theori3ed that 'na(4s co$p"aint )hich pertains to her co$pensation or dis$issa", sho#"d have been "od ed )ith the ,epart$ent of 5abor. 't the pre6tria", the parties defined as the $ain iss#e, the 7#estion of )hether or not 'na( )as a partner of -ocao and /e"o. -he tria" co#rt r#"ed that she )as. -ocao and /e"o ad$itted that 'na( had the e!pertise to en a e in the b#siness of distrib#torship of coo1)are. 'na( contrib#ted s#ch e!pertise to the partnership and, hence, #nder the "a), she )as the ind#stria" or $ana in partner. 2t )as thro# h her rep#tation that the partnership )as ab"e to open the b#siness of distrib#torship8 it )as thro# h the sa$e efforts that the b#siness )as prope""ed to financia" s#ccess. *oreover, 'na( had a voice in the $ana e$ent of the affairs of the b#siness, inc"#din se"ection of peop"e )ho )o#"d constit#te the ad$inistrative staff and the sa"es force. 5i1e)ise, -ocao ad$itted that, "i1e her )ho o)ned Gi$enesse &nterprises, 'na( received on"( co$$issions and transportation and representation a""o)ances and not a fi!ed sa"ar(. 2f indeed -ocao )as 'na(4s e$p"o(er, it )as diffic#"t to be"ieve that the( sha"" receive the sa$e inco$e in the b#siness. SYLLABUS 1.R&*&,2'5 5'.8 &92,&N0&8 F'0-:'5 F2N,2NG; OF -R2'5 0O:RG&N&R'55< :=>&5, ON '==&'5. ? -he iss#e of )hether or not a partnership e!ists is a fact#a" $atter )hich are )ithin the e!c"#sive do$ain of both the tria" and appe""ate co#rts. -his 0o#rt cannot set aside fact#a" findin s of

s#ch co#rts absent an( sho)in that there is no evidence to s#pport the conc"#sion dra)n b( the co#rt a quo. 2n this case, both the tria" co#rt and the 0o#rt of 'ppea"s are one in r#"in that petitioners and private respondent estab"ished a b#siness partnership. -his 0o#rt finds no reason to r#"e other)ise.
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2.02925 5'.8 ='R-N&R;>2=8 .>&N 0ON;2,&R&, ' @:R2,20'5 =&R;ON'52-<. ? -o be considered a +#ridica" persona"it(, a partnership $#st f#"fi"" these re7#isitesA B1C t)o or $ore persons bind the$se"ves to contrib#te $one(, propert( or ind#str( to a co$$on f#nd8 and B2C intention on the part of the partners to divide the profits a$on the$se"ves. D.2,.8 2,.8 *'< /& 0ON;-2-:-&, 2N 'N< FOR* &E0&=- .>&R& R&'5 R2G>-; 'R& 2N9O59&,. ? 2t $a( be constit#ted in an( for$8 a p#b"ic instr#$ent is necessar( on"( )here i$$ovab"e propert( or rea" ri hts are contrib#ted thereto. -his i$p"ies that since a contract of partnership is consens#a", an ora" contract of partnership is as ood as a )ritten one. .here no i$$ovab"e propert( or rea" ri hts are invo"ved, )hat $atters is that the parties have co$p"ied )ith the re7#isites of a partnership. 4.2,.8 2,.8 2N,:;-R2'5 ='R-N&R8 &E'*=5& ->&R&OF. ? =etitioners ad$it that private respondent had the e!pertise to en a e in the b#siness of distrib#torship of coo1)are. =rivate respondent contrib#ted s#ch e!pertise to the partnership and hence, #nder the "a), she )as the ind#stria" or $ana in partner. 2t )as thro# h her rep#tation )ith the .est /end 0o$pan( that the partnership )as ab"e to open the b#siness of distrib#torship of that co$pan(4s coo1)are prod#cts8 it )as thro# h the sa$e efforts that the b#siness )as prope""ed to financia" s#ccess. 5.2,.8 2,.8 '0-; 2N,20'-2NG ->'- ON& 2; ' ='R-N&R. ? =etitioner /e"o4s denia" that he financed the partnership rin s ho""o) in the face of the estab"ished fact that he presided over $eetin s re ardin $atters affectin the operation of the b#siness. *oreover, his havin a#thori3ed in )ritin on October 7, 1FG7, on a stationer( of his o)n b#siness fir$, .i"con /#i"ders ;#pp"(, that private respondent sho#"d receive thirt(6seven BD7HC of the proceeds of her persona" sa"es, co#"d not be interpreted other)ise than that he had a proprietar( interest in the b#siness. 2f he )as indeed a #arantor of f#t#re debts of petitioner -ocao #nder 'rtic"e 205D of the 0ivi" 0ode, he sho#"d have presented doc#$entar( evidence therefor. .hi"e 'rtic"e 2055 of the 0ivi" 0ode si$p"( provides that #arant( $#st be %e!press,% 'rtic"e 140D, the ;tat#te of Fra#ds, re7#ires that %a specia" pro$ise to ans)er for the debt, defa#"t or $iscarria e of another% be in )ritin . .hi"e it is tr#e that the receipt of a percenta e of net profits constit#tes on"( prima facie evidence that the recipient is a partner in the b#siness, the

evidence in the case at bar controverts an e$p"o(er6e$p"o(ee re"ationship bet)een the parties. 2n the first p"ace, private respondent had a voice in the $ana e$ent of the affairs of the coo1)are distrib#torship, inc"#din se"ection of peop"e )ho )o#"d constit#te the ad$inistrative staff and the sa"es force. ;econd"(, petitioner -ocao4s ad$issions $i"itate a ainst an e$p"o(er6e$p"o(ee re"ationship. ;he ad$itted that, "i1e her )ho o)ned Ge$inesse &nterprise, private respondent received on"( co$$issions and transportation and representation a""o)ances and not fi!ed sa"ar(. I.2,.8 2,.8 R2G>-; 'N, O/52G'-2ON; OF ' ='R-N&R8 -O ;>'R& 2N ->& =ROF2-; 'N, 5O;;&; OF ->& 9&N-:R&8 &E0&=-2ON. ? 2n a partnership, each partner $#st share in the profits and "osses of the vent#re, e!cept that the ind#stria" partner sha"" not be "iab"e for the "osses. 's an ind#stria" partner, private respondent had the ri ht to de$and for a for$a" acco#ntin of the b#siness and to receive her share in the net profit. 7.2,.8 2,.8 :N'00O:N-&, ;-O0J =RO9&; ->& &E2;-&N0& OF ' ='R-N&R;>2=. ? =etitioners #nderscore the fact that the 0o#rt of 'ppea"s did not ret#rn the %#nacco#nted and #nre$itted stoc1s of Ge$inesse &nterprise a$o#ntin to =20G,250.00.% Obvio#s"( a p"o( to offset the da$a es a)arded to private respondent, that c"ai$, $ore than an(thin e"se, proves the e!istence of a partnership bet)een the$. 2n Idos v. Court of Appeals, this 0o#rt saidA %-he best evidence of the e!istence of the partnership, )hich )as not (et ter$inated Btho# h in the )indin #p sta eC, )ere the #nso"d oods and #nco""ected receivab"es, )hich )ere presented to the tria" co#rt. ;ince the partnership has not been ter$inated, the petitioner and private co$p"ainant re$ained as co6 partners. . . . .% G.2,.8 2,.8 &E2;-; :N-25 ,2;;O59&, :N,&R ->& 5'.. ? ' $ere fa""in o#t or $is#nderstandin bet)een partners does not convert the partnership into a sha$ or ani3ation. -he partnership e!ists #nti" disso"ved #nder the "a). F.2,.8 2,.8 ,2;;O5:-2ON 'N, .2N,2NG :=8 ='R-N&R;>2= '- .255 *'< /& ,2;;O59&, /< ->& .255 OF ' ='R-N&R. ? ;ince the partnership created b( petitioners and private respondent has no fi!ed ter$ and is therefore a partnership at )i"" predicated on their $#t#a" desire and consent, it $a( be disso"ved b( the )i"" of a partner. 10.2,.8 2,.8 2,.8 :N@:;-2F2&, ,2;;O5:-2ON ;:/@&0-; G:25-< ='R-N&R -O ,'*'G&;. ? 'n #n+#stified disso"#tion b( a partner can s#b+ect hi$ to action for da$a es beca#se b( the $#t#a" a enc( that arises in a partnership, the doctrine of delectus personae a""o)s the partners to have the power, a"tho# h not necessari"( the right to disso"ve the partnership.
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11.2,.8 2,.8 2,.8 :N25'-&R'5 &E05:;2ON OF ON& ='R-N&R, 'N &FF&0-29& .2->,R'.'5 FRO* ->& ='R-N&R;>2=8 0';& '- /'R. ? =etitioner -ocao4s #ni"atera" e!c"#sion of private respondent fro$ the partnership is sho)n b( her $e$o to the 0#bao office p"ain"( statin that private respondent )as, as of October F, 1FG7, no "on er the vice6president for sa"es of Ge$inesse &nterprise. /( that $e$o, petitioner -ocao effected her o)n )ithdra)a" fro$ the partnership and considered herse"f as havin ceased to be associated )ith the partnership in the carr(in on of the b#siness. Neverthe"ess, the partnership )as not ter$inated thereb(8 it contin#es #nti" the )indin #p of the b#siness. DECISION YNARES-SANTIAGO , A

-his is a petition for revie) of the ,ecision of the 0o#rt of 'ppea"s in 0'6 G.R. 09 No. 41I1I, 1 affir$in the ,ecision of the Re iona" -ria" 0o#rt of *a1ati, /ranch 140, in 0ivi" 0ase No. GG650F. 2 Fresh fro$ her stint as $ar1etin adviser of -echno"#! in /an 1o1, -hai"and, private respondent Nenita '. 'na( $et petitioner .i""ia$ -. /e"o, then the vice6president for operations of :"tra 0"ean .ater =#rifier, thro# h her for$er e$p"o(er in /an 1o1. /e"o introd#ced 'na( to petitioner *ar+orie -ocao, )ho conve(ed her desire to enter into a +oint vent#re )ith her for the i$portation and "oca" distrib#tion of 1itchen coo1)ares. /e"o vo"#nteered to finance the +oint vent#re and assi ned to 'na( the +ob of $ar1etin the prod#ct considerin her e!perience and estab"ished re"ationship )ith .est /end 0o$pan(, a $an#fact#rer of 1itchen )ares in .isconsin, :.;.'. :nder the +oint vent#re, /e"o acted as capita"ist, -ocao as president and enera" $ana er, and 'na( as head of the $ar1etin depart$ent and "ater, vice6president for sa"es. 'na( or ani3ed the ad$inistrative staff and sa"es force )hi"e -ocao hired and fired e$p"o(ees, deter$ined co$$issions andKor sa"aries of the e$p"o(ees, and assi ned the$ to different branches. -he parties a reed that /e"o4s na$e sho#"d not appear in an( doc#$ents re"atin to their transactions )ith .est /end 0o$pan(. 2nstead, the( a reed to #se 'na(4s na$e in sec#rin distrib#torship of coo1)are fro$ that co$pan(. -he parties a reed f#rther that 'na( )o#"d be entit"ed toA B1C ten percent B10HC of the ann#a" net profits of the b#siness8 B2C overridin co$$ission of si! percent BIHC of the overa"" )ee1"( prod#ction8 BDC thirt( percent BD0HC of the sa"es she )o#"d $a1e8 and B4C t)o percent B2HC for her de$onstration services. -he a ree$ent )as not red#ced to )ritin on the stren th of /e"o4s ass#rances that he )as sincere, dependab"e and honest )hen it ca$e to financia" co$$it$ents.

'na( havin sec#red the distrib#torship of coo1)are prod#cts fro$ the .est /end 0o$pan( and or ani3ed the ad$inistrative staff and the sa"es force, the coo1)are b#siness too1 off s#ccessf#""(. -he( operated #nder the na$e of Ge$inesse &nterprise, a so"e proprietorship re istered in *ar+orie -ocao4s na$e, )ith office at 712 R#fino /#i"din , '(a"a 'ven#e, *a1ati 0it(. /e"o $ade ood his $onetar( co$$it$ents to 'na(. -hereafter, Ro er *#encheber of .est /end 0o$pan( invited 'na( to the distrib#torKdea"er $eetin in .est /end, .isconsin, :.;.'., fro$ @#"( 1F to 21, 1FG7 and to the so#th)estern re iona" convention in =is$o /each, 0a"ifornia, :.;.'., @#"( 256 2I, 1FG7. 'na( accepted the invitation )ith the consent of *ar+orie -ocao )ho, as president and enera" $ana er of Ge$inesse &nterprise, even )rote a "etter to the 9isa ;ection of the :.;. &$bass( in *ani"a on @#"( 1D, 1FG7. ' portion of the "etter readsA
%*s. Nenita ,. 'na( BsicC, )ho has been patroni3in and s#pportin .est /end 0o. for t)ent( B20C (ears no), ac7#ired the distrib#torship of Ro(a" L#een coo1)are for Ge$inesse &nterprise, is the 9ice =resident ;a"es *ar1etin and a !usiness partner of our compan"# )i"" attend in response to the invitation.% B2ta"ics s#pp"ied.C 3

'na( arrived fro$ the :.;.'. in $id6'# #st 1FG7, and i$$ediate"( #ndertoo1 the tas1 of savin the b#siness on acco#nt of the #nsatisfactor( sa"es record in the *a1ati and 0#bao offices. On '# #st D1, 1FG7, she received a p"a7#e of appreciation fro$ the ad$inistrative and sa"es peop"e thro# h *ar+orie -ocao 4 for her e!ce""ent +ob perfor$ance. On October 7, 1FG7, in the presence of 'na(, /e"o si ned a $e$o 5 entit"in her to a thirt( seven percent BD7HC co$$ission for her persona" sa"es %#p ,ec D1KG7.% /e"o e!p"ained to her that said co$$ission )as apart fro$ her ten percent B10HC share in the profits. On October F, 1FG7, 'na( "earned that *ar+orie -ocao had si ned a "etter addressed to the 0#bao sa"es office to the effect that she )as no "on er the vice6president of Ge$inesse &nterprise. -he fo""o)in da(, October 10, she received a note fro$ 5ina -. 0r#3, $ar1etin $ana er, that *ar+orie -ocao had barred her fro$ ho"din office and cond#ctin de$onstrations in both *a1ati and 0#bao offices. ! 'na( atte$pted to contact /e"o. ;he )rote hi$ t)ice to de$and her overridin co$$ission for the period of @an#ar( G, 1FGG to Febr#ar( 5, 1FGG and the a#dit of the co$pan( to deter$ine her share in the net profits. .hen her "etters )ere not ans)ered, 'na( cons#"ted her "a)(er, )ho, in t#rn, )rote /e"o a "etter. ;ti"", that "etter )as not ans)ered.
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'na( sti"" received her five percent B5HC overridin co$$ission #p to ,ece$ber 1FG7. -he fo""o)in (ear, 1FGG, she did not receive the sa$e co$$ission a"tho# h the co$pan( netted a ross sa"es of = 1D,D00,DI0.00.

On 'pri" 5, 1FGG, Nenita '. 'na( fi"ed 0ivi" 0ase No. GG650F, a co$p"aint for s#$ of $one( )ith da$a es " a ainst *ar+orie ,. -ocao and .i""ia$ /e"o before the Re iona" -ria" 0o#rt of *a1ati, /ranch 140. 2n her co$p"aint, 'na( pra(ed that defendants be ordered to pa( her, +oint"( and severa""(, the fo""o)in A B1C =D2,000.00 as #npaid overridin co$$ission fro$ @an#ar( G, 1FGG to Febr#ar( 5, 1FGG8 B2C =100,000.00 as $ora" da$a es, and BDC =100,000.00 as e!e$p"ar( da$a es. -he p"aintiff a"so pra(ed for an a#dit of the finances of Ge$inesse &nterprise fro$ the inception of its b#siness operation #nti" she )as %i""e a""( dis$issed% to deter$ine her ten percent B10HC share in the net profits. ;he f#rther pra(ed that she be paid the five percent B5HC %overridin co$$ission% on the re$ainin 150 .est /end coo1)are sets before her %dis$issa".% 2n their ans)er, # *ar+orie -ocao and /e"o asserted that the %a""e ed a ree$ent% )ith 'na( that )as %neither red#ced in )ritin , nor ratified,% )as %either #nenforceab"e or void or ine!istent.% 's far as /e"o )as concerned, his on"( ro"e )as to introd#ce 'na( to *ar+orie -ocao. -here co#"d not have been a partnership beca#se, as 'na( herse"f ad$itted, Ge$inesse &nterprise )as the so"e proprietorship of *ar+orie -ocao. /eca#se 'na( $ere"( acted as $ar1etin de$onstrator of Ge$inesse &nterprise for an a reed re$#neration, and her co$p"aint referred to either her co$pensation or dis$issa", s#ch co$p"aint sho#"d have been "od ed )ith the ,epart$ent of 5abor and not )ith the re #"ar co#rt. =etitioners Bdefendants thereinC f#rther a""e ed that 'na( fi"ed the co$p"aint on acco#nt of %i""6)i"" and resent$ent% beca#se *ar+orie -ocao did not a""o) her to %"ord it over in the Ge$inesse &nterprise.% 'na( had acted "i1e she o)ned the enterprise beca#se of her e!perience and e!pertise. >ence, petitioners )ere the ones )ho s#ffered act#a" da$a es %inc"#din #nret#rned and #nacco#nted stoc1s of Ge$inesse &nterprise,% and %serio#s an!iet(, bes$irched rep#tation in the b#siness )or"d, and vario#s da$a es not "ess than =500,000.00.% -he( a"so a""e ed that, to %vindicate their allies,% the( had to hire co#nse" for a fee of =2D,000.00. 't the pre6tria" conference, the iss#es )ere "i$ited toA BaC )hether or not the p"aintiff )as an e$p"o(ee or partner of *ar+orie -ocao and /e"o, and BbC )hether or not the parties are entit"ed to da$a es. 1$ 2n their defense, /e"o denied that 'na( )as s#pposed to receive a share in the profit of the b#siness. >e, ho)ever, ad$itted that the t)o had a reed that 'na( )o#"d receive a three to fo#r percent BD64HC share in the ross sa"es of the coo1)are. >e denied contrib#tin capita" to the b#siness or receivin a share in its profits as he $ere"( served as a #arantor of *ar+orie -ocao, )ho )as ne) in the b#siness. >e attended andKor presided over b#siness $eetin s of the vent#re in his capacit( as a #arantor b#t he never participated in

decision6$a1in . >e c"ai$ed that he )rote the $e$o rantin the p"aintiff thirt(6seven percent BD7HC co$$ission #pon her dis$issa" fro$ the b#siness vent#re at the re7#est of -ocao, beca#se 'na( had no other inco$e. For her part, *ar+orie -ocao denied havin entered into an ora" partnership a ree$ent )ith 'na(. >o)ever, she ad$itted that 'na( )as an e!pert in the coo1)are b#siness and hence, the( a reed to rant her the fo""o)in co$$issionsA thirt(6seven percent BD7HC on persona" sa"es8 five percent B5HC on ross sa"es8 t)o percent B2HC on prod#ct de$onstrations, and t)o percent B2HC for recr#it$ent of personne". *ar+orie denied that the( a reed on a ten percent B10HC co$$ission on the net profits. *ar+orie c"ai$ed that she ot the capita" for the b#siness o#t of the sa"e of the se)in $achines #sed in her ar$ents b#siness and fro$ =eter 5o a ;in aporean friend6financier )ho "oaned her the f#nds )ith interest. /eca#se she treated 'na( as her %co6e7#a",% *ar+orie received the sa$e a$o#nts of co$$issions as her. >o)ever, 'na( fai"ed to acco#nt for stoc1s va"#ed at =200,000.00. On 'pri" 22, 1FFD, the tria" co#rt rendered a decision the dispositive part of )hich is as fo""o)sA
%.>&R&FOR&, in vie) of the fore oin , +#d $ent is hereb( renderedA 1.Orderin defendants to s#b$it to the 0o#rt a for$a" acco#nt as to the partnership affairs for the (ears 1FG7 and 1FGG p#rs#ant to 'rt. 1G0F of the 0ivi" 0ode in order to deter$ine the ten percent B10HC share of p"aintiff in the net profits of the coo1)are b#siness8
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2.Orderin defendants to pa( five percent B5HC overridin co$$ission for the one h#ndred and fift( B150C coo1)are sets avai"ab"e for disposition )hen p"aintiff )as )ron f#""( e!c"#ded fro$ the partnership b( defendants8 D.Orderin defendants to pa( p"aintiff overridin co$$ission on the tota" prod#ction )hich for the period coverin @an#ar( G, 1FGG to Febr#ar( 5, 1FGG a$o#nted to =D2,000.008 4.Orderin defendants to pa( =100,000.00 as $ora" da$a es and =100,000.00 as e!e$p"ar( da$a es, and 5.Orderin defendants to pa( =50,000.00 as attorne(4s fees and =20,000.00 as costs of s#it. ;O OR,&R&,.%

-he tria" co#rt he"d that there )as indeed an %ora" partnership a ree$ent bet)een the p"aintiff and the defendants,% based on the fo""o)in A BaC there )as

an intention to create a partnership8 BbC a co$$on f#nd )as estab"ished thro# h contrib#tions consistin of $one( and ind#str(, and BcC there )as a +oint interest in the profits. -he testi$on( of &"i3abeth /anti"an, 'na(4s co#sin and the ad$inistrative officer of Ge$inesse &nterprise fro$ '# #st 21, 1FGI #nti" it )as absorbed b( Ro(a" 2nternationa", 2nc., b#ttressed the fact that a partnership e!isted bet)een the parties. -he "etter of Ro er *#encheber of .est /end 0o$pan( statin that he a)arded the distrib#torship to 'na( and *ar+orie -ocao beca#se he )as convinced that )ith *ar+orie4s financia" contrib#tion and 'na(4s e!perience, the co$bination of the t)o )o#"d be inva"#ab"e to the partnership, a"so s#pported that conc"#sion. /e"o4s c"ai$ that he )as $ere"( a % #arantor% has no basis since there )as no )ritten evidence thereof as re7#ired b( 'rtic"e 2055 of the 0ivi" 0ode. *oreover, his acts of attendin andKor presidin over $eetin s of Ge$inesse &nterprise p"#s his iss#ance of a $e$o ivin 'na( D7H co$$ission on persona" sa"es be"ied this. On the contrar(, it de$onstrated his invo"ve$ent as a partner in the b#siness. -he tria" co#rt f#rther he"d that the pa($ent of co$$issions did not prec"#de the e!istence of the partnership inas$#ch as s#ch practice is often resorted to in b#siness circ"es as an i$pet#s to bi er sa"es vo"#$e. 2t did not $atter that the a ree$ent )as not in )ritin beca#se 'rtic"e 1771 of the 0ivi" 0ode provides that a partnership $a( be %constit#ted in an( for$.% -he fact that Ge$inesse &nterprise )as re istered in *ar+orie -ocao4s na$e is not deter$inative of )hether or not the b#siness )as $ana ed and operated b( a so"e proprietor or a partnership. .hat )as re istered )ith the /#rea# of ,o$estic -rade )as $ere"( the b#siness na$e or st("e of Ge$inesse &nterprise. -he tria" co#rt fina""( he"d that a partner )ho is e!c"#ded )ron f#""( fro$ a partnership is an innocent partner. >ence, the #i"t( partner $#st ive hi$ his d#e #pon the disso"#tion of the partnership as )e"" as da$a es or share in the profits %rea"i3ed fro$ the appropriation of the partnership b#siness and ood)i"".% 'n innocent partner th#s possesses %pec#niar( interest in ever( e!istin contract that )as inco$p"ete and in the trade na$e of the co6 partnership and assets at the ti$e he )as )ron f#""( e!pe""ed.% =etitioners4 appea" to the 0o#rt of 'ppea"s 11 )as dis$issed, b#t the a$o#nt of da$a es a)arded b( the tria" co#rt )ere red#ced to =50,000.00 for $ora" da$a es and =50,000.00 as e!e$p"ar( da$a es. -heir $otion for Reconsideration )as denied b( the 0o#rt of 'ppea"s for "ac1 of $erit. 12 =etitioners /e"o and *ar+orie -ocao are no) before this 0o#rt on a petition for revie) on certiorari, assertin that there )as no b#siness partnership bet)een the$ and herein private respondent Nenita '. 'na( )ho

is, therefore, not entit"ed to the da$a es a)arded to her b( the 0o#rt of 'ppea"s. =etitioners -ocao and /e"o contend that the 0o#rt of 'ppea"s erroneo#s"( he"d that a partnership e!isted bet)een the$ and private respondent 'na( beca#se Ge$inesse &nterprise %ca$e into bein % e!act"( a (ear before the %a""e ed partnership% )as for$ed, and that it )as ver( #n"i1e"( that petitioner /e"o )o#"d invest the s#$ of =2,500,000.00 )ith petitioner -ocao contrib#tin nothin , )itho#t an( %$e$orand#$ )hatsoever re ardin the a""e ed partnership.%4 13 -he iss#e of )hether or not a partnership e!ists is a fact#a" $atter )hich are )ithin the e!c"#sive do$ain of both the tria" and appe""ate co#rts. -his 0o#rt cannot set aside fact#a" findin s of s#ch co#rts absent an( sho)in that there is no evidence to s#pport the conc"#sion dra)n b( the co#rt a quo. 14 2n this case, both the tria" co#rt and the 0o#rt of 'ppea"s are one in r#"in that petitioners and private respondent estab"ished a b#siness partnership. -his 0o#rt finds no reason to r#"e other)ise. -o be considered a +#ridica" persona"it(, a partnership $#st f#"fi"" these re7#isitesA B1C t)o or $ore persons bind the$se"ves to contrib#te $one(, propert( or ind#str( to a co$$on f#nd8 and B2C intention on the part of the partners to divide the profits a$on the$se"ves. 15 2t $a( be constit#ted in an( for$8 a p#b"ic instr#$ent is necessar( on"( )here i$$ovab"e propert( or rea" ri hts are contrib#ted thereto. 1 -his i$p"ies that since a contract of partnership is consens#a", an ora" contract of partnership is as ood as a )ritten one. .here no i$$ovab"e propert( or rea" ri hts are invo"ved, )hat $atters is that the parties have co$p"ied )ith the re7#isites of a partnership. -he fact that there appears to be no record in the ;ec#rities and &!chan e 0o$$ission of a p#b"ic instr#$ent e$bod(in the partnership a ree$ent p#rs#ant to 'rtic"e 1772 of the 0ivi" 0ode 1! did not ca#se the n#""ification of the partnership. -he pertinent provision of the 0ivi" 0ode on the $atter statesA
'rt. 17IG.-he partnership has a +#ridica" persona"it( separate and distinct fro$ that of each of the partners, even in case of fai"#re to co$p"( )ith the re7#ire$ents of 'rtic"e 1772, first para raph.
a&>2,-

=etitioners ad$it that private respondent had the e!pertise to en a e in the b#siness of distrib#torship of coo1)are. =rivate respondent contrib#ted s#ch e!pertise to the partnership and hence, #nder the "a), she )as the ind#stria" or $ana in partner. 2t )as thro# h her rep#tation )ith the .est /end 0o$pan( that the partnership )as ab"e to open the b#siness of distrib#torship of that co$pan(4s coo1)are prod#cts8 it )as thro# h the sa$e efforts that the b#siness )as prope""ed to financia" s#ccess. =etitioner -ocao herse"f ad$itted private respondent4s indispensab"e ro"e in p#ttin #p the

b#siness )hen, #pon bein as1ed if private respondent he"d the positions of $ar1etin $ana er and vice6president for sa"es, she testified th#sA
%'ANo, sir at the start she )as the $ar1etin $ana er beca#se there )ere no one to se"" (et, it4s on"( $e there then her and then t)o B2C peop"e, so abo#t fo#r B4C. No), after that )hen she recr#ited a"read( Oscar 'be""a and 5ina -orda60r#3 these t)o B2C peop"e )ere iven the desi nation of $ar1etin $ana ers of )hich definite"( Nita as s#perior to the$ )o#"d be the 9ice =resident.% 1"

/( the set6#p of the b#siness, third persons )ere $ade to be"ieve that a partnership had indeed been for ed bet)een petitioners and private respondents. -h#s, the co$$#nication dated @#ne 4, 1FGI of *iss( @a "er of .est /end 0o$pan( to Ro er *#encheber of the sa$e co$pan( statesA
%*ar e -ocao is president of Ge$inesse &nterprises. Ge$inesse )i"" finance the operations. *ar e does not have coo1)are e!perience. Nita 'na( has started to ather for$er $ana ers, 5ina -orda and ,or( 9ista. ;he has a"so athered for$er de$onstrators, /ett( /anti"an, &"oisa 5a$e"a, *ench# @avier. -he( )i"" contin#e to ather other 1e( peop"e and b#i"d #p the or ani3ation. '"" the( need is the finance and the prod#cts to se"".% 1#

On the other hand, petitioner /e"o4s denia" that he financed the partnership rin s ho""o) in the face of the estab"ished fact that he presided over $eetin s re ardin $atters affectin the operation of the b#siness. *oreover, his havin a#thori3ed in )ritin on October 7, 1FG7, on a stationer( of his o)n b#siness fir$, .i"con /#i"ders ;#pp"(, that private respondent sho#"d receive thirt(6seven BD7HC of the proceeds of her persona" sa"es, co#"d not be interpreted other)ise than that he had a proprietar( interest in the b#siness. >is c"ai$ that he )as $ere"( a #arantor is be"ied b( that persona" act of proprietorship in the b#siness. *oreover, if he )as indeed a #arantor of f#t#re debts of petitioner -ocao #nder 'rtic"e 205D of the 0ivi" 0ode, 2$ he sho#"d have presented doc#$entar( evidence therefor. .hi"e 'rtic"e 2055 of the 0ivi" 0ode si$p"( provides that #arant( $#st be %e!press,% 'rtic"e 140D, the ;tat#te of Fra#ds, re7#ires that %a specia" pro$ise to ans)er for the debt, defa#"t or $iscarria e of another% be in )ritin . 21 =etitioner -ocao, a for$er ra$p $ode", 22 )as a"so a capita"ist in the partnership. ;he c"ai$ed that she herse"f financed the b#siness. >er and petitioner /e"o4s ro"es as both capita"ists to the partnership )ith private respondent are b#ttressed b( petitioner -ocao4s ad$issions that petitioner /e"o )as her bo(friend and that the partnership )as not their on"( b#siness vent#re to ether. -he( a"so estab"ished a fir$ that the( ca""ed %.i+i,% the co$bination of petitioner /e"o4s first na$e, .i""ia$, and her nic1na$e, @i+i. 23 -he specia" re"ationship bet)een the$ dovetai"s )ith petitioner /e"o4s c"ai$ that he )as

actin in beha"f of petitioner -ocao. ;i nificant"(, in the ear"( sta e of the b#siness operation, petitioners re7#ested .est /end 0o$pan( to a""o) the$ to %#ti"i3e their ban1in and tradin faci"ities in ;in apore% in the $atter of i$portation and pa($ent of the coo1)are prod#cts. 24 -he inevitab"e conc"#sion, therefore, )as that petitioners $er ed their respective capita" and inf#sed the a$o#nt into the partnership of distrib#tin coo1)are )ith private respondent as the $ana in partner. -he b#siness vent#re operated #nder Ge$inesse &nterprise did not res#"t in an e$p"o(er6e$p"o(ee re"ationship bet)een petitioners and private respondent. .hi"e it is tr#e that the receipt of a percenta e of net profits constit#tes on"( prima facie evidence that the recipient is a partner in the b#siness, 25 the evidence in the case at bar controverts an e$p"o(er6e$p"o(ee re"ationship bet)een the parties. 2n the first p"ace, private respondent had a voice in the $ana e$ent of the affairs of the coo1)are distrib#torship, 2 inc"#din se"ection of peop"e )ho )o#"d constit#te the ad$inistrative staff and the sa"es force. ;econd"(, petitioner -ocao4s ad$issions $i"itate a ainst an e$p"o(er6e$p"o(ee re"ationship. ;he ad$itted that, "i1e her )ho o)ned Ge$inesse &nterprise, 2! private respondent received on"( co$$issions and transportation and representation a""o)ances 2" and not a fi!ed sa"ar(. 2# =etitioner -ocao testifiedA
%LAOf co#rse. No), 2 a$ sho)in to (o# certain doc#$ents a"read( $ar1ed as &!hs. 4E4 and 4<.4 ="ease o over this. &!h. 4<4 is deno$inated 40#bao overrides4 G6216G7 )ith endin '# #st 21, 1FG7, )i"" (o# p"ease o over this and te"" the >onorab"e 0o#rt )hether (o# ever ca$e across this doc#$ent and 1no) of (o#r o)n 1no)"ed e the a$o#nt ? 'A<es, sir this is )hat 2 a$ ta"1in abo#t ear"ier. -hat4s the one 2 a$ te""in (o# ear"ier a certain percenta e for pro$otions, advertisin , incentive. LA2 see. No), this pro$otion, advertisin , incentive, there is a fi #re here and )ords )hich 2 7#oteA 4Overrides *ar+orie 'nn -ocao =21,410.504 this $eans that (o# have received this a$o#ntM 'AOh (es, sir. LA2 see. 'nd, b( )a( of a$p"ification this is )hat (o# are sa(in as one representin co$$ission, representation, advertisin and pro$otionM 'A<es, sir.

LA2 see. /e"o) (o#r na$e is the )ords and fi #re and 2 7#ote 4Nita ,. 'na( =21,410.50,4 )hat is thisM 'A-hat4s her overridin co$$ission. LAOverridin co$$ission, 2 see. Of co#rse, (o# are te""in this >onorab"e 0o#rt that there bein the sa$e =21,410.50 is $ere"( b( coincidenceM 'A$o# sir# I made it a point that we were equal !ecause the wa" I loo% at her %asi# "ou %now in a sense !ecause of her e&pertise in the !usiness she is vital to m" !usiness. 'o# as part of the incentive I offer her the same thing.
a(AD)C

LA;o, in short (o# are sa(in that this (o# have shared to ether, 2 $ean havin otten fro$ the co$pan( =21,140.50 is (o#r )a( of indicatin that "ou were treating her as an equal* 'AAs an equal. LA's an e7#a", 2 see. <o# )ere treatin her as an e7#a"M 'A+es# sir. LA2 a$ ca""in a ain (o#r attention to &!h. 4<4 %Overrides *a1ati the other one is ? 'A-hat is the sa$e thin , sir. LA.ith endin '# #st 21, )ords and fi #re 4Overrides *ar+orie 'nn -ocao =15,D14.254 the a$o#nt there (o# )i"" ac1no)"ed e (o# have received thatM 'A<es, sir. LA' ain in concept of co$$ission, representation, pro$otion, etc.M 'A<es, sir. LAO1e(. /e"o) (o#r na$e is the na$e of Nita 'na( =15,D14.25 that is a"so an indication that she received the sa$e a$o#ntM 'A<es, sir. LA'nd, as in (o#r previo#s state$ent it is not b( coincidence that these t)o B2C are the sa$eM

'ANo, sir. LA2t is a ain in concept of (o# treatin *iss 'na( as (o#r e7#a"M 'A<es, sir.% Bita"ics s#pp"ied.C 3$

2f indeed petitioner -ocao )as private respondent4s e$p"o(er, it is diffic#"t to be"ieve that the( sha"" receive the sa$e inco$e in the b#siness. 2n a partnership, each partner $#st share in the profits and "osses of the vent#re, e!cept that the ind#stria" partner sha"" not be "iab"e for the "osses. 31 's an ind#stria" partner, private respondent had the ri ht to de$and for a for$a" acco#ntin of the b#siness and to receive her share in the net profit. 32 -he fact that the coo1)are distrib#torship )as operated #nder the na$e of Ge$inesse &nterprise, a so"e proprietorship, is of no $o$ent. .hat )as re istered )ith the /#rea# of ,o$estic -rade on '# #st 1F, 1FG7 )as $ere"( the na$e of that enterprise. 33 .hi"e it is tr#e that in her #ndated app"ication for rene)a" of re istration of that fir$ na$e, petitioner -ocao indicated that it )o#"d be en a ed in retai" of %1itchen)ares, coo1)ares, #tensi"s, s1i""et,% 34 she a"so ad$itted that the enterprise )as on"( %I0H to 70H for the coo1)are b#siness,% )hi"e 20H to D0H of its b#siness activit( )as devoted to the sa"e of )ater steri"i3er or p#rifier. 35 2nd#bitab"( then, the b#siness na$e Ge$inesse &nterprise )as #sed on"( for practica" reasons ? it )as #ti"i3ed as the co$$on na$e for petitioner -ocao4s vario#s b#siness activities, )hich inc"#ded the distrib#torship of coo1)are. =etitioners #nderscore the fact that the 0o#rt of 'ppea"s did not ret#rn the %#nacco#nted and #nre$itted stoc1s of Ge$inesse &nterprise a$o#ntin to =20G,250.00.% 3 Obvio#s"( a p"o( to offset the da$a es a)arded to private respondent, that c"ai$, $ore than an(thin e"se, proves the e!istence of a partnership bet)een the$. 2n Idos v. Court of Appeals, this 0o#rt saidA
%-he best evidence of the e!istence of the partnership, )hich )as not (et ter$inated Btho# h in the )indin #p sta eC, )ere the #nso"d oods and #nco""ected receivab"es, )hich )ere presented to the tria" co#rt. ;ince the partnership has not been ter$inated, the petitioner and private co$p"ainant re$ained as co6partners. . . . . % 3!

2t is not s#rprisin then that, even after private respondent had been #ncere$onio#s"( booted o#t of the partnership in October 1FG7, she sti"" received her overridin co$$ission #nti" ,ece$ber 1FG7. :ndo#bted"(, petitioner -ocao #ni"atera""( e!c"#ded private respondent fro$ the partnership to reap for herse"f andKor for petitioner /e"o financia" ains

res#"tin fro$ private respondent4s efforts to $a1e the b#siness vent#re a s#ccess. -h#s, as petitioner -ocao beca$e adept in the b#siness operation, she started to assert herse"f to the e!tent that she )o#"d even sho#t at private respondent in front of other peop"e. 3" >er instr#ction to 5ina -orda 0r#3, $ar1etin $ana er, not to a""o) private respondent to ho"d office in both the *a1ati and 0#bao sa"es offices concrete"( spo1e of her perception that private respondent )as no "on er necessar( in the b#siness operation, 3# and res#"ted in a fa""in o#t bet)een the t)o. >o)ever, a $ere fa""in o#t or $is#nderstandin bet)een partners does not convert the partnership into a sha$ or ani3ation. 4$ -he partnership e!ists #nti" disso"ved #nder the "a). ;ince the partnership created b( petitioners and private respondent has no fi!ed ter$ and is therefore a partnership at )i"" predicated on their $#t#a" desire and consent, it $a( be disso"ved b( the )i"" of a partner. -h#sA
%. . . . -he ri ht to choose )ith )ho$ a person )ishes to associate hi$se"f is the ver( fo#ndation and essence of that partnership. 2ts contin#ed e!istence is, in t#rn, dependent on the constanc( of that $#t#a" reso"ve, a"on )ith each partner4s capabi"it( to ive it, and the absence of ca#se for disso"#tion provided b( the "a) itse"f. 9eri"(, an( one of the partners $a(, at his so"e p"eas#re, dictate a disso"#tion of the partnership at )i"". >e $#st, ho)ever, act in ood faith, not that the attendance of bad faith can prevent the disso"#tion of the partnership b#t that it can res#"t in a "iabi"it( for da$a es.% 41
>c-,;'

'n #n+#stified disso"#tion b( a partner can s#b+ect hi$ to action for da$a es beca#se b( the $#t#a" a enc( that arises in a partnership, the doctrine of delectus personae a""o)s the partners to have the power, a"tho# h not necessari"( the right to disso"ve the partnership. 42 2n this case, petitioner -ocao4s #ni"atera" e!c"#sion of private respondent fro$ the partnership is sho)n b( her $e$o to the 0#bao office p"ain"( statin that private respondent )as, as of October F, 1FG7, no "on er the vice6 president for sa"es of Ge$inesse &nterprise. 43 /( that $e$o, petitioner -ocao effected her o)n )ithdra)a" fro$ the partnership and considered herse"f as havin ceased to be associated )ith the partnership in the carr(in on of the b#siness. Neverthe"ess, the partnership )as not ter$inated thereb(8 it contin#es #nti" the )indin #p of the b#siness. 44 -he )indin #p of partnership affairs has not (et been #nderta1en b( the partnership. -his is $anifest in petitioners4 c"ai$ for stoc1s that had been entr#sted to private respondent in the p#rs#it of the partnership b#siness. -he deter$ination of the a$o#nt of da$a es co$$ens#rate )ith the fact#a" findin s #pon )hich it is based is pri$ari"( the tas1 of the tria" co#rt. 45 -he 0o#rt of 'ppea"s $a( $odif( that a$o#nt on"( )hen its fact#a"

findin s are dia$etrica""( opposed to that of the "o)er co#rt, 4 or the a)ard is pa"pab"( or scanda"o#s"( and #nreasonab"( e!cessive. 4! >o)ever, e!e$p"ar( da$a es that are a)arded %b( )a( of e!a$p"e or correction for the p#b"ic ood,% 4" sho#"d be red#ced to =50,000.00, the a$o#nt correct"( a)arded b( the 0o#rt of 'ppea"s. 0onco$itant"(, the a)ard of $ora" da$a es of =100,000.00 )as e!cessive and sho#"d be "i1e)ise red#ced to =50,000.00. ;i$i"ar"(, attorne(4s fees that sho#"d be ranted on acco#nt of the a)ard of e!e$p"ar( da$a es and petitioners4 evident bad faith in ref#sin to satisf( private respondent4s p"ain"( va"id, +#st and de$andab"e c"ai$s, 4# appear to have been e!cessive"( ranted b( the tria" co#rt and sho#"d therefore be red#ced to =25,000.00. .>&R&FOR&, the instant petition for revie) on certiorari is ,&N2&,. -he partnership a$on petitioners and private respondent is ordered disso"ved, and the parties are ordered to effect the )indin #p and "i7#idation of the partnership p#rs#ant to the pertinent provisions of the 0ivi" 0ode. -his case is re$anded to the Re iona" -ria" 0o#rt for proper proceedin s re"ative to said disso"#tion. -he appea"ed decisions of the Re iona" -ria" 0o#rt and the 0o#rt of 'ppea"s are 'FF2R*&, )ith *O,2F20'-2ON;, as fo""o)s ? 1.=etitioners are ordered to s#b$it to the Re iona" -ria" 0o#rt a for$a" acco#nt of the partnership affairs for the (ears 1FG7 and 1FGG, p#rs#ant to 'rtic"e 1G0F of the 0ivi" 0ode, in order to deter$ine private respondent4s ten percent B10HC share in the net profits of the partnership8 2.=etitioners are ordered, +oint"( and severa""(, to pa( private respondent five percent B5HC overridin co$$ission for the one h#ndred and fift( B150C coo1)are sets avai"ab"e for disposition since the ti$e private respondent )as )ron f#""( e!c"#ded fro$ the partnership b( petitioners8 D.=etitioners are ordered, +oint"( and severa""(, to pa( private respondent overridin co$$ission on the tota" prod#ction )hich, for the period coverin @an#ar( G, 1FGG to Febr#ar( 5, 1FGG, a$o#nted to =D2,000.008 4.=etitioners are ordered, +oint"( and severa""(, to pa( private respondent $ora" da$a es in the a$o#nt of =50,000.00, e!e$p"ar( da$a es in the a$o#nt of =50,000.00 and attorne(4s fees in the a$o#nt of =25,000.00. ;O OR,&R&,.

Davide# r., C. ., ,uno# -apunan and ,ardo#


F%%&n%&'(

., conc#r.

1.=residin @#stice Nathanae" =. de =ano, @r., ponente, 'ssociate @#stices Fer$in '. *artin, @r., and 0onchita 0arpio *ora"es, conc#rrin . 2.=resided b( @#d e 5eticia =. *ora"es. D.&!h. 99. 4.&!h. ... 5.&!h. 00. I.&!h. @@. 7.&!h. >>. G.Rollo, pp. I767D. F.Rollo, pp. 7F6G2. 10.Record, p. 71. 11.,ecision dated '# #st F, 1FFI8 Rollo, pp. 246D7. 12.Reso"#tion dated ,ece$ber 5, 1FFI8 Rollo, pp. DF64D. 1D.=etition, p. 15. 14.Alic!usan vs. Court of Appeals, DDI =hi". D21, D2I6D27 B1FF7C. 15.0ivi" 0ode, 'rt. 17I78 Fue Leung v. Intermediate Appellate Court , 1IF ;0R' 74I, 754 B1FGFC8 citin +ulo v. +ang Chiao Cheng, 10I =hi". 110 B1F5FC. 1I.0ivi" 0ode, 'rt. 17718 Agad v. Ma!ato, 1D2 =hi". ID4, IDI B1FIGC. 17.0ivi" 0ode, 'rt. 1772. &ver( contract of partnership havin a capita" of three tho#sand pesos or $ore, in $one( or propert(, sha"" appear in a p#b"ic instr#$ent, )hich $#st be recorded in the Office of the ;ec#rities and &!chan e 0o$$ission. Fai"#re to co$p"( )ith the re7#ire$ents of the precedin para raph sha"" not affect the "iabi"it( of the partnership and the $e$bers thereof to third persons. 1G.-;N, Nove$ber 12, 1FF1, p. 4F.

1F.&!h. 0656'. 20.0ivi" 0ode, 'rt. 205D. ' #arant( $a( a"so be iven as sec#rit( for f#t#re debts, the a$o#nt of )hich is (et 1no)n8 there can be no c"ai$ a ainst the #arantor #nti" the debt is "i7#idated. ' conditiona" ob"i ation $a( a"so be sec#red. 21.9. -O5&N-2NO, CI.IL COD/ OF )(/ ,(ILI,,I$/', p. 507, 1FF2 ed. 22.-;N, Nove$ber 12, 1FF1, p. 4. 2D.I!id. p. 44 24.&!h. 0648 -;N, ,ece$ber 1I, 1FF1. pp. 1561G. 25.'ardane v. Court of Appeals, 1I7 ;0R' 524, 5D065D1 B1FFGC. 2I.I!id. 27.-;N, Nove$ber 12, 1FF1, pp. 54. 2G.I!id., pp. 5265D. 2F.I!id., p. 50. D0.I!id., pp. 5I65F. D1.0ivi" 0ode, 'rt. 17F78 Moran r. v. Court of Appeals, 21G =hi". 105, 112 B1FG4C. D2.0ivi" 0ode, 'rt. 17FF8 /vangelista 0 Co. v. A!ad 'antos, 1516' =hi". G5D6GI0 B1F7DC. DD.&!h. 5. D4.&!h. 56'. D5.-;N, Nove$ber 12, 1FF1, p. 42. DI.=etition, p. 108 Rollo, p. 1G.

D7.2FI ;0R' 1F4, 20I B1FFGC. DG.-;N, @#ne 14, 1FGF, pp. 56I. DF.-;N, Nove$ber 12, 1FF1, p. D5.

40.Mu1asque v. Court of Appeals, 1DF ;0R' 5DD, 540 B1FG5C. 41.Ortega v. Court of Appeals, D15 =hi". 57D, 5G065G1 B1FF5C. 42.I!id., at p. 5G1. 4D.&!h. 7. 44.'ingsong v. Isa!ela 'awmill, GG ;0R' I2D B1F7FC. 45.Air France v. Carrascoso, 124 =hi". 772, 742 B1FIIC. 4I.,rudencio v. Alliance )ransport '"stem# Inc., 14G ;0R' 440, 447 B1FG7C. 47.I!id., ,hilippine Airlines# Inc. v. Court of Appeals, 22I ;0R' 42D, 425 B1FFDC. 4G.0ivi" 0ode, 'rt. 222F. 4F.0ivi" 0ode, 'rt. 220G B1C N B5C.