32. G.R. No.

109248 July 3, 1995

VITUG, J.:

FACTS:
The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in the
Mercantile Registry on January 1937 and reconstituted with the Securities and Exchange
Commission on August 1948. The SEC records show that there were several subsequent
amendments to the articles of partnership to change the firm name. On December 1980,
[Joaquin L. Misa] appellees Jesus B. Bito and Mariano M. Lozada associated themselves
together, as senior partners with respondents-appellees Gregorio F. Ortega, Tomas O. del
Castillo, Jr., and Benjamin Bacorro, as junior partners.

On February 1988, the petitioner-appellant wrote a letter to the respondent-appellees stating his
withdrawal and retirement from the firm of Bito, Misa and Lozada.

On June 1988, the petitioner filed with this Commission's Securities Investigation and Clearing
Department (SICD) a petition for dissolution and liquidation of partnership which was followed by
a filing of opposition by the respondent-appellees on July 13, 1988.

On March 1989, the hearing officer rendered a decision that the withdrawal of the petitioner from
the law firm Bito, Misa & Lozada did not dissolve the said law partnership.

On appeal, the SEC en banc reversed the decision of the Hearing Officer and held that the
withdrawal of Attorney Joaquin L. Misa had dissolved the partnership of "Bito, Misa & Lozada."
The Commission ruled that being a partnership at will, the law firm could be dissolved by any
partner at any time, such as by his withdrawal therefrom, regardless of good faith or bad faith,
since no partner can be forced to continue in the partnership against his will.

During the pendency of the case with the Court of Appeals, Attorney Jesus Bito and Attorney
Mariano Lozada both died. The death of the two partners, as well as the admission of new
partners, in the law firm, prompted Attorney Misa to renew his application for receivership. He
expressed concern over the need to preserve and care for the partnership assets. The other
partners opposed the prayer.

ISSUES:
1. Whether or not the Court of Appeals has erred in holding that the partnership of Bito, Misa &
Lozada (now Bito, Lozada, Ortega & Castillo) is a partnership at will;
2. 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; and
3. Whether or not the Court of Appeals has erred in holding that the private respondent's demand
for the dissolution of the partnership so that he can get a physical partition of the partnership was
not made in bad faith;

RULING:
The birth and life of a partnership at will are 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 liability for damages.

In passing, neither would the presence of a period for its specific duration or the statement of a
particular purpose for its creation prevent the dissolution of any partnership by an act or will of a
partner. Among partners, mutual agency arises and the doctrine of delectus personae allows
them to have the power, although not necessarily the right, to dissolve the partnership. An
unjustified dissolution by the partner can subject him to a possible action for damages.

The dissolution of a partnership is the change in the relation of the parties caused by any partner
ceasing to be associated in the carrying on, as might be distinguished from the winding up of, the
business. Upon its dissolution, the partnership continues and its legal personality is retained until
the complete winding up of its business culminating in its termination. The liquidation of the
assets of the partnership following its dissolution is governed by various provisions of the Civil
Code; 10 however, an agreement of the partners, like any other contract, is binding among them
and normally takes precedence to the extent applicable over the Code's general provisions.

The term "retirement" must have been used in the articles in a generic sense to mean the
dissociation by a partner, inclusive of resignation or withdrawal, from the partnership that thereby
dissolves it.

On the third and final issue, we accord due respect to the appellate court and respondent
Commission on their common factual finding, i.e., that Attorney Misa did not act in bad faith.
Public respondents viewed his withdrawal to have been spurred by "interpersonal conflict"
among the partners. It would not be right, we agree, to let any of the partners remain in the
partnership under such an atmosphere of animosity; certainly, not against their will. Indeed, for
as long as the reason for the withdrawal of a partner is not contrary to the dictates of justice and
fairness, nor for the purpose of unduly visiting harm and damage upon the partnership, bad faith
cannot be said to characterize the act. Bad faith, in the context here used, is no different from its
normal concept of a conscious and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity.

33. G.R. No. 127405. October 4, 2000

FACTS:
Fresh from her stint as marketing adviser of Technolux in Bangkok, Thailand, private respondent
Nenita A. Anay met petitioner William T. Belo, then the vice-president for operations of Ultra
Clean Water Purifier, through her former employer in Bangkok. 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. 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 Belos name should not appear in any documents relating to their
transactions with West Bend Company. Instead, they agreed to use Anays name in securing
distributorship of cookware from that company. 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 agreement
was not reduced to writing on the strength of Belos assurances that he was sincere, dependable
and honest when it came to financial commitments.

On April 5, 1988, Nenita A. Anay filed a complaint for a sum of money with damages against
Marjorie D. Tocao and William Belo before the Regional Trial Court of Makati.

In their answer, 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
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 a 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.

ISSUE: whether or not a partnership exists

RULLING:
Yes. 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. 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 did not cause the nullification of the partnership.

Petitioners admit that private respondent had the expertise to engage in the business of
distributorship of cookware. The 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. Petitioner Tocao herself admitted private
respondents indispensable role in putting up the business when, upon being asked if private
respondent held the positions of marketing manager and vice-president for sales.

The business venture operated under Geminesse Enterprise did not result in an employer-
employee relationship between petitioners and private respondent. While it is true that the receipt
of a percentage of net profits constitutes only prima facie evidence that the recipient is a partner
in the business,25 the evidence in the case at bar controverts an employer-employee relationship
between the parties. In the first place, private respondent had a voice in the management of the
affairs of the cookware distributorship, including selection of people who would constitute the
administrative staff and the sales force. Secondly, petitioner Tocaos admissions militate against
an employer-employee relationship. She admitted that, like her who owned Geminesse
Enterprise,27 private respondent received only commissions and transportation and
representation allowances28 and not a fixed salary.

An unjustified dissolution by a partner can subject him to action for damages because by the
mutual agency that arises in a partnership, the doctrine of delectus personae allows the partners
to have the power, although not necessarily the right to dissolve the partnership.

In this case, petitioner Tocaos 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. 43 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 winding up of partnership affairs has not yet been undertaken by the partnership. This is
manifest in petitioners claim for stocks that had been entrusted to private respondent in the
pursuit of the partnership business.

34. G.R. No. L-49982 April 27, 1988

FACTS:
Petitioner and private respondents are brothers and sisters who are co-owners of certain lots at
the corner of Annapolis and Aurora Blvd., QuezonCity which were then being leased to the Shell
Company of the Philippines Limited (SHELL). They agreed to open and operate a gas station
thereat to be known as Estanislao Shell Service Station with an initial investment of P 15,000.00
to be taken from the advance rentals due to them from SHELL for the occupancy of the said lots
owned in common by them. A joint affidavit was executed by them on April 11, 1966 which was
prepared by Atty. Democrito Angeles. They agreed to help their brother, petitioner herein, by
allowing him to operate and manage the gasoline service station of the family. They negotiated
with SHELL. For practical purposes and in order not to run counter to the company's policy of
appointing only one dealer, it was agreed that petitioner would apply for the dealership.
Respondent Remedios helped in managing the bussiness with petitioner from May 3, 1966 up to
February 16, 1967.

On May 26, 1966, the parties herein entered into an Additional Cash Pledge Agreement with
SHELL wherein it was reiterated that the P 15,000.00 advance rental shall be deposited with
SHELL to cover advances of fuel to petitioner as a dealer with a proviso that said agreement
cancels and supersedes the Joint Affidavit dated 11 April 1966 executed by the co-owners.

For sometime, the petitioner submitted financial statements regarding the operation of the
business to private respondents, but thereafter petitioner failed to render subsequent accounting.
Hence through Atty. Angeles, a demand was made on petitioner to render an accounting of the
profits.
ISSUE:
Whether or not a partnership exists between members of the same family arising from their joint
ownership of certain properties

RULLING:
Evidence in the record shows that there was in fact such partnership agreement between the
parties. This is attested by the testimonies of private respondent Remedies Estanislao and Atty.
Angeles. Petitioner submitted to private respondents periodic accounting of the business.
Petitioner gave a written authority to private respondent Remedies Estanislao, his sister, to
examine and audit the books of their common business. Respondent Remedios assisted in the
running of the business. There is no doubt that the parties hereto formed a partnership when
they bound themselves to contribute money to a common fund with the intention of dividing the
profits among themselves.6 The sole dealership by the petitioner and the issuance of all
government permits and licenses in the name of petitioner was in compliance with the afore-
stated policy of SHELL and the understanding of the parties of having only one dealer of the
SHELL products.

Further, the findings of facts of the respondent court are conclusive in this proceeding, and its
conclusion based on the said facts are in accordance with the applicable law.