Tocao and Belo vs Court of Appeals and Anay
incidental to her efforts as a head marketer.
Business Organization – Partnership, Agency, Trust – Dissolution of
the Partnership
William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao.
The three agreed to form a joint venture for the sale of cooking
wares. Belo was to contribute P2.5 million; Tocao also contributed
some cash and she shall also act as president and general manager;
and Anay shall be in charge of marketing. Belo and Tocao
specifically asked Anay because of her experience and connections
as a marketer. They agreed further that Anay shall receive the
following:
1. 10% share of annual net profits
2. 6% overriding commission for weekly sales
3. 30% of sales Anay will make herself
4. 2% share for her demo services
They operated under the name Geminesse Enterprise, this name
was however registered as a sole proprietorship with the Bureau of
Domestic Trade under Tocao. The joint venture agreement was not
reduced to writing because Anay trusted Belo’s assurances.
The venture succeeded under Anay’s marketing prowess.
But then the relationship between Anay and Tocao soured. One day,
Tocao advised one of the branch managers that Anay was no longer
a part of the company. Anay then demanded that the company be
audited and her shares be given to her.
ISSUE: Whether or not there is a partnership.
HELD: Yes, even though it was not reduced to writing, for a
partnership can be instituted in any form. The fact that it was
registered as a sole proprietorship is of no moment for such
registration was only for the company’s trade name.
Anay was not even an employee because when they ventured into
the agreement, they explicitly agreed to profit sharing this is even
though Anay was receiving commissions because this is only
The Supreme Court also noted that a partner who is excluded
wrongfully from a partnership is an innocent partner. Hence, the
guilty partner must give him his due upon the dissolution of the
partnership as well as damages or share in the profits “realized from
the appropriation of the partnership business and goodwill.” An
innocent partner thus possesses “pecuniary interest in every existing
contract that was incomplete and in the trade name of the co-
partnership and assets at the time he was wrongfully expelled.”
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.
Tocao’s unilateral exclusion of Anay from the partnership is shown
by her memo to the Cubao office plainly stating that Anay 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.
NOTE: Motion for Reconsideration filed by Tocao and Belo decided
by the SC on September 20, 2001.
Belo is not a partner. Anay was not able to prove that Belo in fact
received profits from the company. Belo merely acted as a
guarantor. His participation in the business meetings was not as a
partner but as a guarantor. He in fact had only limited partnership.
Tocao also testified that Belo received nothing from the profits. The
Supreme Court also noted that the partnership was yet to be
registered in the Securities and Exchange Commission. As such, it
was understandable that Belo, who was after all petitioner Tocao’s
good friend and confidante, would occasionally participate in the
affairs of the business, although never in a formal or official capacity.