Business Organization – Partnership, Agency, Trust – Dissolution of the share in the profits “realized from the appropriation of the

on of the partnership
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 incidental to her efforts as a
head marketer.
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
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.