MARJORIE TOCAO and WILLIAM T. BELO, petitioners, vs.

COURT OF APPEALS
and NENITA A. ANAY, respondents.

2000-10-04 | G.R. No. 127405

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review of the Decision of the Court of Appeals in CA-G.R. CV No. 41616,[1]
affirming the Decision of the Regional Trial Court of Makati, Branch 140, in Civil Case No. 88-509.[2]

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. Belo volunteered to finance the joint venture and assigned to Anay the job of
marketing the product considering her experience and established relationship with West Bend
Company, a manufacturer of kitchen wares in Wisconsin, U.S.A. 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 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.

Anay having secured the distributorship of cookware products from the West Bend Company and
organized the administrative staff and the sales force, the cookware business took off successfully. 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, Roger Muencheberg of West Bend Company invited Anay to the
distributor/dealer meeting in West Bend, Wisconsin, U.S.A., from July 19 to 21, 1987 and to the
southwestern regional convention in Pismo Beach, California, U.S.A., from July 25-26, 1987. Anay
accepted the invitation with the consent of Marjorie Tocao who, as president and general manager of
Geminesse Enterprise, even wrote a letter to the Visa Section of the U.S. Embassy in Manila on July 13,
1987. A portion of the letter reads:

"Ms. Nenita D. Anay (sic), who has been patronizing and supporting West Bend Co. for twenty (20) years
now, acquired the distributorship of Royal Queen cookware for Geminesse Enterprise, is the Vice
President Sales Marketing and a business partner of our company, will attend in response to the
invitation." (Italics supplied.)[3]

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 August 31,
1987, she received a plaque of appreciation from the administrative and sales people through Marjorie
Tocao[4] for her excellent job performance. On October 7, 1987, in the presence of Anay, Belo signed a
| Page 1 of 10
memo[5] entitling her to a thirty-seven percent (37%) commission for her personal sales "up Dec 31/87."
Belo explained to her that said commission was apart from her ten percent (10%) share in the profits. On
October 9, 1987, Anay learned that Marjorie Tocao had signed a letter[6] 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.[7] Anay
attempted to contact Belo. She wrote him twice to demand her overriding commission for the period of
January 8, 1988 to February 5, 1988 and the audit of the company to determine her share in the net
profits. When her letters were not answered, Anay consulted her lawyer, who, in turn, wrote Belo a letter.
Still, that letter was not answered.

Anay still received her five percent (5%) overriding commission up to December 1987. The following
year, 1988, she did not receive the same commission although the company netted a gross sales of
P13,300,360.00.

On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for sum of money with
damages[8] against Marjorie D. Tocao and William Belo before the Regional Trial Court of Makati,
Branch 140.

In her complaint, Anay prayed that defendants be ordered to pay her, jointly and severally, the following:
(1) P32,00.00 as unpaid overriding commission from January 8, 1988 to February 5, 1988; (2)
P100,000.00 as moral damages, and (3) P100,000.00 as exemplary damages. The plaintiff also prayed
for an audit of the finances of Geminesse Enterprise from the inception of its business operation until she
was "illegally dismissed" to determine her ten percent (10%) share in the net profits. She further prayed
that she be paid the five percent (5%) "overriding commission" on the remaining 150 West Bend
cookware sets before her "dismissal."

In their answer,[9] 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 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.

Petitioners (defendants therein) further alleged that Anay filed the complaint on account of "ill-will and
resentment" because Marjorie Tocao did not allow her to "lord it over in the Geminesse Enterprise."
Anay had acted like she owned the enterprise because of her experience and expertise. Hence,
petitioners were the ones who suffered actual damages "including unreturned and unaccounted stocks of
Geminesse Enterprise," and "serious anxiety, besmirched reputation in the business world, and various
damages not less than P500,000.00." They also alleged that, to "vindicate their names," they had to hire
counsel for a fee of P23,000.00.

At the pre-trial conference, the issues were limited to: (a) whether or not the plaintiff was an employee or
partner of Marjorie Tocao and Belo, and (b) whether or not the parties are entitled to damages.[10]

In their defense, Belo denied that Anay was supposed to receive a share in the profit of the business. He,
however, admitted that the two had agreed that Anay would receive a three to four percent (3-4%) share
in the gross sales of the cookware. He denied contributing capital to the business or receiving a share in
its profits as he merely served as a guarantor of Marjorie Tocao, who was new in the business. He
attended and/or presided over business meetings of the venture in his capacity as a guarantor but he
| Page 2 of 10
never participated in decision-making. He claimed that he wrote the memo granting the plaintiff
thirty-seven percent (37%) commission upon her dismissal from the business venture at the request of
Tocao, because Anay had no other income.

For her part, Marjorie Tocao denied having entered into an oral partnership agreement with Anay.
However, she admitted that Anay was an expert in the cookware business and hence, they agreed to
grant her the following commissions: thirty-seven percent (37%) on personal sales; five percent (5%) on
gross sales; two percent (2%) on product demonstrations, and two percent (2%) for recruitment of
personnel. Marjorie denied that they agreed on a ten percent (10%) commission on the net profits.
Marjorie claimed that she got the capital for the business out of the sale of the sewing machines used in
her garments business and from Peter Lo, a Singaporean friend-financier who loaned her the funds with
interest. Because she treated Anay as her "co-equal," Marjorie received the same amounts of
commissions as her. However, Anay failed to account for stocks valued at P200,000.00.

On April 22, 1993, the trial court rendered a decision the dispositive part of which is as follows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1. Ordering defendants to submit to the Court a formal account as to the partnership affairs for the years
1987 and 1988 pursuant to Art. 1809 of the Civil Code in order to determine the ten percent (10%) share
of plaintiff in the net profits of the cookware business;

2. Ordering defendants to pay five percent (5%) overriding commission for the one hundred and fifty (150)
cookware sets available for disposition when plaintiff was wrongfully excluded from the partnership by
defendants;

3. Ordering defendants to pay plaintiff overriding commission on the total production which for the period
covering January 8, 1988 to February 5, 1988 amounted to P32,000.00;

4. Ordering defendants to pay P100,000.00 as moral damages and P100,000.00 as exemplary damages,
and

5. Ordering defendants to pay P50,000.00 as attorney's fees and P20,000.00 as costs of suit.

SO ORDERED."

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. The testimony of Elizabeth Bantilan, Anay's cousin and the administrative officer of
Geminesse Enterprise from August 21, 1986 until it was absorbed by Royal International, Inc.,
buttressed the fact that a partnership existed between the parties. The letter of Roger Muencheberg of
West Bend Company stating that he awarded the distributorship to Anay and Marjorie Tocao because he
was convinced that with Marjorie's financial contribution and Anay's experience, the combination of the
two would be invaluable to the partnership, also supported that conclusion. Belo's claim that he was
merely a "guarantor" has no basis since there was no written evidence thereof as required by Article
2055 of the Civil Code. Moreover, his acts of attending and/or presiding over meetings of Geminesse
Enterprise plus his issuance of a memo giving Anay 37% commission on personal sales belied this. On
the contrary, it demonstrated his involvement as a partner in the business.

The trial court further held that the payment of commissions did not preclude the existence of the
| Page 3 of 10
partnership inasmuch as such practice is often resorted to in business circles as an impetus to bigger
sales volume. It did not matter that the agreement was not in writing because Article 1771 of the Civil
Code provides that a partnership may be "constituted in any form." The fact that Geminesse Enterprise
was registered in Marjorie Tocao's name is not determinative of whether or not the business was
managed and operated by a sole proprietor or a partnership. What was registered with the Bureau of
Domestic Trade was merely the business name or style of Geminesse Enterprise.
The trial court finally held 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."

Petitioners' appeal to the Court of Appeals[11] was dismissed, but the amount of damages awarded by
the trial court were reduced to P50,000.00 for moral damages and P50,000.00 as exemplary damages.
Their Motion for Reconsideration was denied by the Court of Appeals for lack of merit.[12] 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.

Petitioners Tocao and Belo contend that the Court of Appeals erroneously held that a partnership existed
between them and private respondent Anay because Geminesse Enterprise "came into being" exactly a
year before the "alleged partnership" was formed, and that it was very unlikely that petitioner Belo would
invest the sum of P2,500,000.00 with petitioner Tocao contributing nothing, without any "memorandum
whatsoever regarding the alleged partnership."[13]

The issue of whether or not a partnership exists is a factual matter which are within the exclusive domain
of both the trial and appellate courts. This Court cannot set aside factual findings of such courts absent
any showing that there is no evidence to support the conclusion drawn by the court a quo.[14] In this
case, both the trial court and the Court of Appeals are one in ruling that petitioners and private
respondent established a business partnership. This Court finds no reason to rule otherwise.

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.[16]
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[17] 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. Petitioner
| Page 4 of 10
Tocao herself admitted private respondent's 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,
she testified thus:

"A: No, sir at the start she was the marketing manager because there were no one to sell yet, it's only
me there then her and then two (2) people, so about four (4). Now, after that when she recruited already
Oscar Abella and Lina Torda-Cruz these two (2) people were given the designation of marketing
managers of which definitely Nita as superior to them would be the Vice President."[18]

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. Thus, the communication dated June 4, 1986 of
Missy Jagler of West Bend Company to Roger Muencheberg of the same company states:

"Marge Tocao is president of Geminesse Enterprises. Geminesse will finance the operations. Marge
does not have cookware experience. Nita Anay has started to gather former managers, Lina Torda and
Dory Vista. She has also gathered former demonstrators, Betty Bantilan, Eloisa Lamela, Menchu Javier.
They will continue to gather other key people and build up the organization. All they need is the finance
and the products to sell."[19]

On the other hand, petitioner Belo's denial that he financed the partnership rings hollow in the face of the
established fact that he presided over meetings regarding matters affecting the operation of the business.
Moreover, his having authorized in writing on October 7, 1987, on a stationery of his own business firm,
Wilcon Builders Supply, that private respondent should receive thirty-seven (37%) of the proceeds of her
personal sales, could not be interpreted otherwise than that he had a proprietary interest in the business.
His claim that he was merely a guarantor is belied by that personal act of proprietorship in the business.
Moreover, if he was indeed a guarantor of future debts of petitioner Tocao under Article 2053 of the Civil
Code,[20] he should have presented documentary evidence therefor. While Article 2055 of the Civil
Code simply provides that guaranty must be "express," Article 1403, the Statute of Frauds, requires that
"a special promise to answer for the debt, default or miscarriage of another" be in writing.[21]

Petitioner Tocao, a former ramp model,[22] was also a capitalist in the partnership. She claimed that she
herself financed the business. Her and petitioner Belo's roles as both capitalists to the partnership with
private respondent are buttressed by petitioner Tocao's admissions that petitioner Belo was her
boyfriend and that the partnership was not their only business venture together. They also established a
firm that they called "Wiji," the combination of petitioner Belo's first name, William, and her nickname,
Jiji.[23] The special relationship between them dovetails with petitioner Belo's claim that he was acting in
behalf of petitioner Tocao. Significantly, in the early stage of the business operation, petitioners
requested West Bend Company to allow them to "utilize their banking and trading facilities in Singapore"
in the matter of importation and payment of the cookware products.[24] The inevitable conclusion,
therefore, was that petitioners merged their respective capital and infused the amount into the
partnership of distributing cookware with private respondent as the managing partner.

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,[26] including selection of people who would constitute the administrative staff and the
sales force. Secondly, petitioner Tocao's 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 allowances[28] and not a fixed salary.[29] Petitioner
| Page 5 of 10
Tocao testified:

"Q: Of course. Now, I am showing to you certain documents already marked as Exhs. 'X' and 'Y.' Please
go over this. Exh. 'Y' is denominated `Cubao overrides' 8-21-87 with ending August 21, 1987, will you
please go over this and tell the Honorable Court whether you ever came across this document and know
of your own knowledge the amount ---
A: Yes, sir this is what I am talking about earlier. That's the one I am telling you earlier a certain
percentage for promotions, advertising, incentive.

Q: I see. Now, this promotion, advertising, incentive, there is a figure here and words which I quote:
'Overrides Marjorie Ann Tocao P21,410.50' this means that you have received this amount?
A: Oh yes, sir.

Q: I see. And, by way of amplification this is what you are saying as one representing commission,
representation, advertising and promotion?
A: Yes, sir.

Q: I see. Below your name is the words and figure and I quote 'Nita D. Anay P21,410.50', what is this?
A: That's her overriding commission.

Q: Overriding commission, I see. Of course, you are telling this Honorable Court that there being the
same P21,410.50 is merely by coincidence?
A: No, sir, I made it a point that we were equal because the way I look at her kasi, you know in a sense
because of her expertise in the business she is vital to my business. So, as part of the incentive I offer
her the same thing.

Q: So, in short you are saying that this you have shared together, I mean having gotten from the
company P21,140.50 is your way of indicating that you were treating her as an equal?
A: As an equal.

Q: As an equal, I see. You were treating her as an equal?

Q: I am calling again your attention to Exh. 'Y' 'Overrides Makati the other one is ---
A: That is the same thing, sir.

Q: With ending August 21, words and figure 'Overrides Marjorie Ann Tocao P15,314.25' the amount
there you will acknowledge you have received that?
A: Yes, sir.

Q: Again in concept of commission, representation, promotion, etc.?

Q: Okey. Below your name is the name of Nita Anay P15,314.25 that is also an indication that she
received the same amount?
A: Yes, sir.

Q: And, as in your previous statement it is not by coincidence that these two (2) are the same?
A: No, sir.

Q: It is again in concept of you treating Miss Anay as your equal?

If indeed petitioner Tocao was private respondent's employer, it is difficult to believe that they shall
receive the same income in the business. In a partnership, each partner must share in the profits and
losses of the venture, except that the industrial partner shall not be liable for the losses.[31] As an
industrial partner, private respondent had the right to demand for a formal accounting of the business
and to receive her share in the net profit.[32]

The fact that the cookware distributorship was operated under the name of Geminesse Enterprise, a sole
proprietorship, is of no moment. What was registered with the Bureau of Domestic Trade on August 19,
1987 was merely the name of that enterprise.[33] While it is true that in her undated application for
renewal of registration of that firm name, petitioner Tocao indicated that it would be engaged in retail of
"kitchenwares, cookwares, utensils, skillet,"[34] she also admitted that the enterprise was only "60% to
70% for the cookware business," while 20% to 30% of its business activity was devoted to the sale of
water sterilizer or purifier.[35] Indubitably then, the business name Geminesse Enterprise was used only
for practical reasons - it was utilized as the common name for petitioner Tocao's various business
activities, which included the distributorship of cookware.

Petitioners underscore the fact that the Court of Appeals did not return the "unaccounted and unremitted
stocks of Geminesse Enterprise amounting to P208,250.00."[36] Obviously a ploy to offset the damages
awarded to private respondent, that claim, more than anything else, proves the existence of a
partnership between them. In Idos v. Court of Appeals, this Court said:

"The best evidence of the existence of the partnership, which was not yet terminated (though in the
winding up stage), were the unsold goods and uncollected receivables, which were presented to the trial
court. Since the partnership has not been terminated, the petitioner and private complainant remained as
co-partners. x x x."[37]

It is not surprising then that, even after private respondent had been unceremoniously booted out of the
partnership in October 1987, she still received her overriding commission until December 1987.

Undoubtedly, petitioner Tocao unilaterally excluded private respondent from the partnership to reap for
herself and/or for petitioner Belo financial gains resulting from private respondent's efforts to make the
business venture a success. Thus, as petitioner Tocao became adept in the business operation, she
started to assert herself to the extent that she would even shout at private respondent in front of other
people.[38] Her instruction to Lina Torda Cruz, marketing manager, not to allow private respondent to
hold office in both the Makati and Cubao sales offices concretely spoke of her perception that private
respondent was no longer necessary in the business operation,[39] and resulted in a falling out between
the two. However, a mere falling out or misunderstanding between partners does not convert the
partnership into a sham organization.[40] The partnership exists until dissolved under the law. Since the
partnership created by petitioners and private respondent has no fixed term and is therefore a
partnership at will predicated on their mutual desire and consent, it may be dissolved by the will of a
partner. Thus:

"x x x. 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."[41]

| Page 7 of 10
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.[42]

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.[44]

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.[45] The Court of Appeals may modify that amount only when
its factual findings are diametrically opposed to that of the lower court,[46] or the award is palpably or
scandalously and unreasonably excessive.[47] However, exemplary damages that are awarded "by way
of example or correction for the public good,"[48] should be reduced to P50,000.00, the amount correctly
awarded by the Court of Appeals. Concomitantly, the award of moral damages of P100,000.00 was
excessive and should be likewise reduced to P50,000.00. Similarly, attorney's fees that should be
granted on account of the award of exemplary damages and petitioners' evident bad faith in refusing to
satisfy private respondent's plainly valid, just and demandable claims,[49] appear to have been
excessively granted by the trial court and should therefore be reduced to P25,000.00.

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.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.
| Page 8 of 10
[1] Presiding Justice Nathanael P. de Pano, Jr., ponente; Associate Justices Fermin A. Martin, Jr. and
Conchita Carpio Morales, concurring.
[2] Presided by Judge Leticia P. Morales.
[3] Exh. VV.
[4] Exh. WW.
[5] Exh. CC.
[6] Exh. JJ.
[7] Exh. HH.
[8] Rollo, p. 67-73.
[9] Rollo, pp. 79-82.
[10] Record, p. 71.
[11] Decision dated August 9, 1996; Rollo, pp. 24-37.
[12] Resolution dated December 5, 1996; Rollo, pp. 39-43.
[13] Petition, p. 15.
[14] Alicbusan v. Court of Appeals, 336 Phil. 321, 326-327 (1997).
[15] Civil Code, Art. 1767; Fue Leung v. Intermediate Appellate Court, 169 SCRA 746, 754 (1989); citing
Yulo v. Yang Chiao Cheng, 106 Phil. 110 (1959).
[16] Civil Code, Art. 1771; Agad v. Mabato, 132 Phil. 634, 636 (1968).
[17] Civil Code, Art. 1772. Every contract of partnership having a capital of three thousand pesos or
more, in money or property, shall appear in a public instrument, which must be recorded in the Office of
the Securities and Exchange Commission.
Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the
partnership and the members thereof to third persons.
[18] TSN, November 12, 1991, p. 49.
[19] Exh. C-5-A.
[20] Civil Code, Art. 2053. A guaranty may also be given as security for future debts, the amount of
which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A
conditional obligation may also be secured.
[21] V TOLENTINO, CIVIL CODE OF THE PHILIPPINES, p. 507, 1992 ed.
[22] TSN, November 12, 1991, p. 4.
[23] Ibid., p. 44.
[24] Exh. C-4; TSN, December 16, 1991, pp. 15-18.
[25] Sardane v. Court of Appeals, 167 SCRA 524, 530-531 (1998).
[26] Ibid.
[27] TSN, November 12, 1991, pp. 54.
[28] Ibid., pp. 52-53.
[29] Ibid., p. 50.
[30] Ibid., pp. 56-59.
[31] Civil Code, Art. 1797; Moran, Jr. v. Court of Appeals, 218 Phil. 105, 112 (1984).
[32] Civil Code, Art. 1799; Evangelista & Co. v. Abad Santos, 151-A Phil. 853, 860 (1973).
[33] Exh. 5.
[34] Exh. 5-A.
[35] TSN, November 12, 1991, p. 42.
[36] Petition, p. 10; Rollo, p. 18.
[37] 296 SCRA 194, 206 (1998).
[38] TSN, June 14, 1989, pp. 5-6.
[39] TSN, November 12, 1991, p. 35.
[40] Muñasque v. Court of Appeals, 139 SCRA 533, 540 (1985).
[41] Ortega v. Court of Appeals, 315 Phil. 573, 580-581 (1995).
[42] Ibid., at p. 581.
[43] Exh. 7.
| Page 9 of 10
[44] Singsong v. Isabela Sawmill, 88 SCRA 623 (1979).
[45] Air France v. Carrascoso, 124 Phil. 722, 742 (1966).
[46] Prudencio v. Alliance Transport System, Inc., 148 SCRA 440, 447 (1987).
[47] Ibid.; Philippine Airlines, Inc. v. Court of Appeals, 226 SCRA 423, 425 (1993).
[48] Civil Code, Art. 2229.
[49] Civil Code, Art. 2208 (1) & (5).

| Page 10 of 10