Tocao v. Court of Appeals

19. Tocao v. Court of Appeals or inexistent.
There could not have been a partnership

342 SCRA 20 (2000) because, as Anay herself admitted, Geminesse Enterprise
was the sole proprietorship of Marjorie Tocao.
DOCTRINE OF DELECTUS PERSONAE
Trial court held that there was indeed an "oral partnership
agreement between the plaintiff and the defendants,"
FACTS: based on the following: (a) there was an intention to create
a partnership; (b) a common fund was established through
Nenita A. Anay met petitioner William T. Belo then the contributions consisting of money and industry, and (c)
vice-president for operations of Ultra Clean Water Purifier. there was a joint interest in the profits the same was
affirmed by the Court of Appeals. Hence, the present case.
Belo introduced Anay to petitioner Marjorie Tocao, who
conveyed her desire to enter into a joint venture with her ISSUE(S):
for the importation and local distribution of kitchen
cookware. 1. W/N a partnership was formed among the parties
Belo volunteered to finance the joint venture and assigned 2. W/N Anay is entitled to the share of profits.
to Anay the job of marketing the product considering her
experience and established relationship with West Bend 3. W/N the partnership was terminated.
Company.
HELD:
Under the joint venture, Belo acted as capitalist, Tocao as
president and general manager, and Anay as head of the Issues #1 and 2
marketing department and later, vice-president for sales.
Yes. A partnership was formed among the parties. It did
Anay organized the administrative staff and sales force not matter that the agreement was not in writing. A
while Tocao hired and fired employees, determined partnership, according to Article 1771, a partnership may
commissions and/or salaries of the employees, and be constituted in any form.
assigned them to different branches.
This implies that since a contract of partnership is
The parties agreed that Belo’s name should not appear in consensual, an oral contract of partnership is as good as a
any documents relating to their transactions with West written one.
Bend Company. Instead, they agreed to use Anay’s name in
securing distributorship of cookware from that company. Also to be considered a juridical personality, a partnership
must fulfill the following requisites:
The parties agreed further that Anay would be entitled to: (1) two or more persons bind themselves to
1. 10% of the annual net profits of the business; contribute money, property or industry to a
2. overriding commission of 6% of the overall common fund; and
weekly production;
3. 30% of the sales she would make; and (2) intention on the part of the partners to divide the
4. 2% for her demonstration services. The profits among themselves.
agreement was not reduced to writing on the
strength of Belo’s assurances that he was sincere, In the case at bar, Belo acted as capitalist while Tocao as
dependable and honest when it came to financial president and general manager, and Anay as head of the
commitments. marketing department and later, vice-president for sales.
Furthermore, Anay as an industrial partner had the right

They operated under the name of Geminese Enterprise, a
to demand for a formal accounting of the business and to
sole proprietorship registered in Marjorie Tocao’s name.
receive her share in the net profit.
Anay then learned that Tocao had signed a letter stating Issue #3: W/N the partnership was terminated.
that she (Anay) is no longer the vice president of Geminise
Enterprise and that Tocao had barred her from holding
office. No. The partnership is not terminated.
Tocao’s unilateral exclusion of Anay from the partnership

Anay demanded for her overriding commissions and the was shown in her memo.
audit of the company for the determination of her share in
the profits. By that, Tocao effected her own withdrawal from the
partnership and considered herself as having ceased to be
Anay received 5% of the overriding commission up to Dec associated with the partnership.
1987 but did not on the following year.
Nevertheless, the partnership was not terminated thereby
and continues until the winding up of the business.
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
The right to choose with whom a person wishes to
associate himself is the very foundation and essence of  Consequences of the Partnership being a
that partnership. Its continued existence is, in turn, Juridical Entity
dependent on the constancy of that mutual resolve, along
with each partner’s capability to give it, and the absence of Art. 1768 NCC. - The partnership has a juridical
cause for dissolution provided by the law itself. personality separate and distinct from that of each
of the partners.
Verily, any one of the partners may, at his sole pleasure,
dictate a dissolution of the partnership at will.
As discussed in the case, the fact that Geminesse
He must, however, act in good faith, not that the Enterprise was registered in Marjorie Tocao’s
attendance of bad faith can prevent the dissolution of the name is not determinative of whether or not the
partnership but that it can result in a liability for damages. business was managed and operated by a sole
proprietor or a partnership. What was registered
An unjustified dissolution by a partner can subject him to with the Bureau of Domestic Trade was merely
action for damages because by the mutual agency that the business name or style of Geminesse
arises in a partnership, the doctrine of delectus Enterprise.
personae allows the partners to have the power, although
not necessarily the right to dissolve the partnership.
TEACHINGS OF THE CASE/DOCTRINE:
 Kinds of partners
a. Capitalist partner – contributes money

or property
b. Industrial partner – contributes

industry (mental or physical)
 Dissolution of a partnership
Art 1828 NCC. - The dissolution of a partnership

is the change in the relation of the partners caused
by any partner ceasing to be associated in the
carrying on as distinguished from the winding up
of the business.
(Notes from the book of Paras)
just because partnership is dissolved, this does

not necessarily mean that a partner can evade
previous obligations entered into the partnership
As discussed in the case, 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."

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19. Tocao v. Court of Appeals or inexistent.

There could not have been a partnership

Furthermore, Anay as an industrial partner had the right

Tocao’s unilateral exclusion of Anay from the partnership

TEACHINGS OF THE CASE/DOCTRINE:

a. Capitalist partner – contributes money

b. Industrial partner – contributes

Art 1828 NCC. - The dissolution of a partnership

(Notes from the book of Paras)

just because partnership is dissolved, this does

As discussed in the case, a partner who is excluded

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