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TOCAO V. COURT OF APPEALS, 342 SCRA 20 (2000) Belo.

Belo. She wrote him twice to demand her overriding commission for the
period of January 8, 1988 to February 5, 1988 and the audit of the company
Facts: to determine her share in the net profits. Belo did not answer.
Petitioner William T. Bello introduced private respondent Nenita Anay still received her five percent (5%) overriding commission up
Anay to petitioner Tocao, who conveyed her desire to enter into a joint to December 1987. The following year, 1988, she did not receive the same
venture with her for the importation and local distribution of kitchen
commission although the company netted a gross sales of P13,300,360.00.
cookwares. Belo acted the capitalist, Tocao as president and general
manager, and Anay as head of the marketing department (considering her On April 5, 1988, Nenita A. Anay filed a complaint for sum of money
experience and established relationship with West Bend Company,c a with damagesagainst Tocao and Belo before the RTC of Makati. She prayed
manufacturer of kitchen wares in Wisconsin, U.S.A) and later, vice-president that she be paid (1) P32,00.00 as unpaid overriding commission from
for sales. The parties agreed further that Anay would be entitled to: 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
(1) ten percent (10%) of the annual net profits of the business; audit of the finances of Geminesse Enterprise from the inception of its
(2) overriding commission of six percent (6%) of the overall weekly business operation until she was “illegally dismissed” to determine her ten
production; 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
(3) thirty percent (30%) of the sales she would make; and Bend cookware sets before her “dismissal.”

(4) two percent (2%) for her demonstration services. However, Tocao and Belo asserted that the alleged agreement was
not reduced to writing nor ratified, hence, unenforceable, void, or
The same was not reduced to writing on the strength of Belo’s
nonexistent. Also, they denied the existence of a partnership because, as
Anay herself admitted, Geminesse Enterprise was the sole proprietorship of
Later, Anay was able to secure the distributorship of cookware Marjorie Tocao. Belo also contended that he merely acted as a guarantor of
products from the West Bend Company. They operated under the name of Tocao and denied contributing capital. Tocao, on the other hand, denied
Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocao’s that they agreed on a ten percent (10%) commission on the net profits.
name. Anay attended distributor/dealer meetings with West Bend Company
Both trial court and court of appeals ruled that a business
with the consent of Tocao.
partnership existed and ordered the defendants to pay.
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% Whether or not a partnership existed – YES
share in profits.

On October 9, 1987, Anay learned that Marjorie Tocao terminated

her as vice-president of Geminesse Enterprise. Anay attempted to contact
Ratio: used only for practical reasons - it was utilized as the common name for
petitioner Tocao’s various business activities, which included the
To be considered a juridical personality, a partnership must fulfill distributorship of cookware.
these requisites: (1) two or more persons bind themselves to contribute
money, property or industry to a common fund; and (2) intention on the The partnership exists until dissolved under the law. Since the
part of the partners to divide the profits among themselves. It may be partnership created by petitioners and private respondent has no fixed term
constituted in any form; a public instrument is necessary only where and is therefore a partnership at will predicated on their mutual desire and
immovable property or real rights are contributed thereto.This implies that consent, it may be dissolved by the will of a partner.
since a contract of partnership is consensual, an oral contract of partnership
Petitioners Tocao’s unilateral exclusion of private respondent from
is as good as a written one.
the partnership is shown by her memo to the Cubao office plainly stating
Private respondent Anay contributed her expertise in the business that private respondent was, as of October 9, 1987, no longer the vice-
of distributorship of cookware to the partnership and hence, under the law, president for sales of Geminesse Enterprise.By that memo, petitioner Tocao
she was the industrial or managing partner. effected her own withdrawal from the partnership and considered herself
as having ceased to be associated with the partnership in the carrying on of
Petitioner Belo had an proprietary interest. He presided over
the business. Nevertheless, the partnership was not terminated thereby; it
meetings regarding matters affecting the operation of the business. continues until the winding up 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 The partnership among petitioners and private respondent is
proprietary interest in the business. This is inconsistent with his claim that ordered dissolved, and the parties are ordered to effect the winding up and
he merely acted as a guarantor. If indeed he was, he should have presented liquidation of the partnership pursuant to the pertinent provisions of the
documentary evidence. Also, Art. 2055 requires that a guaranty must be Civil Code. Petitioners are ordered to pay Anay’s 10% share in the profits,
express and the Statute of Frauds requires that it must be in writing. after accounting, 5% overriding commission for the 150 cookware sets
Petitioner Tocao was also a capitalist in the partnership. She claimed that available for disposition since the time private respondent was wrongfully
she herself financed the business. excluded from the partnership by petitioner, overriding commission on the
total production, as well as moral and exemplary damages, and attorney’s
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
JG Summit Holdings, Inc. vs Court of Appeals, September 24, 2003 ISSUE:

FACTS: 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
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, HELD:
Philippine Shipyard and Engineering Corporation (PHILSECO), with an
agreement of a shareholding proportion of 60%-40 respectively and a right No, a shipyard such as PHILSECO is not considered a public utility.
of first refusal to Kawasaki. Thereafter, NIDC transferred all its rights, title First, because a shipyard which is a place or enclosure where ships
and interest to the Philippine National Bank (PNB). After several months, by are built or repaired is in its nature serves a limited clientele and not legally
virtue of Administrative Order 14, PNB's interest in PHILSECO was obliged to render its services indiscriminately to the public. While the
transferred to the National Government. Then President Aquino’s business may be regulated for public good, it does not justify the
Proclamation No. 50 was issued establishing the Committee on Privatization qualifications for public utility which implies public use and service to the
(COP) and the Asset Privatization Trust (APT) to take title to and possession public hence it must be engaged in regularly supplying the public with some
of, conserve, manage and dispose of non-performing assets of the National commodity or service of public consequence.
Government. A trust agreement was entered into between the National
Government and the APT by virtue of which the latter was named the Second, it is not declared as public utility by law. Based on its
trustee of the National Government's share in PHILSECO. As a result of a legislative history, since the enactment of Act No. 2307 which created the
quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the Public Utility Commision (PUC) until repealed by Commonwealth Act No.
National Government's shareholdings in PHILSECO increased to 97.41% 146 establishing Public Service Commission, a shipyard was a public utility
thereby reducing Kawasaki's shareholdings to 2.59%. and should abide by the Filipino citizenship requirement of 60-40 capital of
a corporation. Thereafter, Pres. Marcos issued PD No. 666 which removed
After negotiations, it was agreed that Kawasaki’s right of first refusal under the shipbuilding and ship repair industry from the list of public utilities
the JVA be “exchanged” for the right to top by 5% the highest bid for said thereby freeing it from the 60-40 citizenship requirement. Batas Pambansa
shares. Kawasaki informed that Philyards Holdings, Inc. (PHI), in which it was Blg. 391 repealed the PD No. 666 and reverted shipyards as public utilities.
a stockholder, would exercise this right in its stead. Petitioner JG Summit Then Pres. Aquino’s Executive Order No. 226 repealed the previous laws
Holdings was declared highest bidder. Even so, because of the right to top with no revival of the principle that shipyards are public utilities. Thus
by 5% percent the highest bid, Kawasaki/PHI’s was able to top the winning absent of such legislation declaring the same, a shipyard reverts back to its
bid. JG Summit protested, contending that PHILSECO, as a shipyard is a status as a non-public utility.
public utility and, hence, must observe the 60%-40% Filipino-foreign
capitalization. By buying 87.67% of PHILSECO’s capital stock at bidding, With this, there was nothing preventing Kawasaki from acquiring
Kawasaki/PHI in effect now owns more than 40% of the stock, thus violative more than 40% of PHILSECO’s total capitalization. The JVA should also be
of the laws. 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 ISSUE:
throughout the existence of their partnership.
Whether or not the Court of Appeals has erred in holding that the
Dispositive Portion: IN VIEW OF THE FOREGOING, the Motion for partnership is a partnership at will and whether or not the Court of Appeals
Reconsideration is hereby GRANTED. The impugned Decision and Resolution has erred in holding that the withdrawal of private respondent dissolved the
of the Court of Appeals are AFFIRMED. partnership regardless of his good or bad faith

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


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.