Tocao v. Court of Appeals

G.R. No. 127405, 4 October 2000

FACTS:

Petitioner seek to reverse the decision ordering them to pay the private respondent damages, commissions, and to render an accounting of the partnership’s affairs.

She alleges that private respondent was a mere agent of the company, as there was no contract of partnership, and as evidenced by her receiving commissions, such being the case she is not entitled to ask for any audit of the partnership’s affairs.

ISSUE:

Were the petitioner’s allegations possessed of merit?

RULING:

No, they were void of any merit.

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.15 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.

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.

Petitioner Tocao herself admitted private respondent’s indispensable role in putting up the business. By the set-up of the business, third persons were made to believe that a partnership had indeed been forged between petitioners and private respondents.

The payment of commissions did not preclude the existence of the partnership inasmuch as such practice is often resorted to in business circles as an impetus to bigger sales volume.

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 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 a liability for damages.

In this case, petitioner Tocao’s 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. The determination of the amount of damages commensurate with the factual findings upon which it is based is primarily the task of the trial court.

*Case digest by Roger Angielo V. Atenta, LLB-4, Andres Bonifacio Law School, SY 2019-2020

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