G.R. No.

127405 October 4, 2000

MARJORIE TOCAO and WILLIAM T. BELO, petitioners,

vs.

COURT OF APPEALS and NENITA A. ANAY, respondents.

YNARES-SANTIAGO, J.:

Topic: Discuss the basic elements/requisites of a contract of partnership.

Nature of Case: This is a petition for review of the Decision of the Court of Appeals in CA-G.R. CV No.
41616, affirming the Decision of the Regional Trial Court of Makati, Branch 140, in Civil Case No. 88-509.

Facts: Nenita A. Anay met petitioner William T. Belo, 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. 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. 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 Belo’s assurances that he was sincere, dependable and honest when it
came to financial commitments.

They operated under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie
Tocao’s name, with office at 712 Rufino Building, Ayala Avenue, Makati City. Belo made good his
monetary commitments to Anay. Thereafter, Anay went to U.S.A to attend the distributor/dealer
meeting in West Bend, Wisconsin, and to the southwestern regional convention in Pismo Beach,
California.

Anay arrived from the U.S.A. in mid-August 1987, and immediately undertook the task of saving the
business on account of the unsatisfactory sales record in the Makati and Cubao offices. 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, October 10,
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.

On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for 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. Anay merely acted as marketing demonstrator of Geminesse Enterprise for an agreed
remuneration.

The trial court held that there was 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.

Petitioners filed an appeal to the Court of Appeals but was dismissed. Their Motion for Reconsideration
was denied by the Court of Appeals for lack of merit. Petitioners Belo and Marjorie Tocao are now
before this Court on a petition for review on certiorari, asserting that there was no business partnership
between them and herein private respondent Nenita A. Anay who is, therefore, not entitled to the
damages awarded to her by the Court of Appeals.

Issue: W/N a partnership exists

Ruling: 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.
The pertinent provision of the Civil Code on the matter states:

Art. 1768. The partnership has a juridical personality separate and distinct from that of each of the
partners, even in case of failure to comply with the requirements of article 1772, first paragraph.

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.

Disposition: WHEREFORE, the instant petition for review on certiorari is DENIED. 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. This
case is remanded to the Regional Trial Court for proper proceedings relative to said dissolution. The
appealed decisions of the Regional Trial Court and the Court of Appeals are AFFIRMED with
MODIFICATIONS, as follows ---

1. Petitioners are ordered to submit to the Regional Trial Court a formal account of the partnership
affairs for the years 1987 and 1988, pursuant to Article 1809 of the Civil Code, in order to determine
private respondent’s ten percent (10%) share in the net profits of the partnership;
2. Petitioners are ordered, jointly and severally, to pay private respondent five percent (5%) overriding
commission for the one hundred and fifty (150) cookware sets available for disposition since the time
private respondent was wrongfully excluded from the partnership by petitioners;

3. Petitioners are ordered, jointly and severally, to pay private respondent overriding commission on the
total production which, for the period covering January 8, 1988 to February 5, 1988, amounted to
P32,000.00;

4. Petitioners are ordered, jointly and severally, to pay private respondent moral damages in the amount
of P50,000.00, exemplary damages in the amount of P50,000.00 and attorney’s fees in the amount of
P25,000.00.

SO ORDERED.