Tocao vs.

CA
Business Organization – Partnership, Agency, Trust – Dissolution of the Partnership

FACTS: 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
5.
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 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 thepower, 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.

Guy vs Gacott

Nature: Gacott secured a favorable judgment against QSC in a complaint for damages before RTC Puerto Princesa. During
execution, he learned that QSC was not a corporation but a general partnership with Mr. Guy as a partner and its general
manager. The sheriff then attached Guy's vehicle by virtue of a Notice of Attachment/Levy upon Personalty.
The SC held that a partner must be separately and distinctly impleaded before he can be bound by a judgment. It is non
sequitur that a suit against a partnership is necessarily a suit impleading each and every partner.

A partnership has a separate legal personality from the partners. Art. 1816, NCC states that the partners' obligation with
respect to partnership liabilities is subsidiary in nature. They shall only be liable with their property after the partnership
assets have been exhausted.
Since Guy was not the judgment debtor in the case before the RTC, his levied vehicle was released.
Evangelista vs CIR

Facts: Petitioners borrowed sum of money from their father and together with their own personal funds they used said
money to buy several real properties. They then appointed their brother (Simeon) as manager of the said real properties with
powers and authority to sell, lease or rent out said properties to third persons. They realized rental income from the said
properties for the period 1945-1949.On September 24, 1954 respondent Collector of Internal Revenue demanded the
payment of income tax on corporations, real estate dealer's fixed tax and corporation residence tax for the years 1945-1949.
The letter of demand and corresponding assessments were delivered to petitioners on December 3, 1954, whereupon
theyinstituted the present case in the Court of Tax Appeals, with a prayer that "the decision of the respondent contained in
his letter of demand dated September 24, 1954" be reversed, and that they be absolved from the payment of the taxes in
question. CTA denied their petition and subsequent MR and New Trials were denied.Hence this petition.
Issue: WONpetitioners have formed a partnership and consequently, are subject to the tax on corporations provided for in
section 24 of Commonwealth Act. No. 466, otherwise known as the NationalInternal Revenue Code, as well as to the
residence tax for corporations and the real estate dealers fixed tax.
Held: YES.The essential elements of a partnership are two, namely: (a)an agreement to contribute money,property or
industry to a common fund; and (b)intent to divide the profits among the contractingparties
. The first element is undoubtedly present in the case at bar, for, admittedly, petitioners have agreed to,and did, contribute
money and property to a common fund. Upon consideration of all the facts and circumstances surrounding the case, we are
fully satisfied that their purpose was to engage in real estate transactions for monetary gain and then divide the same among
themselves, because of the following observations, among others:
(1) Said common fund was not something they found already in existence;
(2)They invested the same, not merely in one transaction, but in a series of transactions;
(3) The aforesaid lotswere not devoted to residential purposes, or to other personal uses, of petitioners herein.Although,
taken singly, they might not suffice to establish the intent necessary to constitute a partnership, thecollective effect of these
circumstances is such as to leave no room for doubt on the existence of said intent inpetitioners herein.For purposes of the
tax on corporations, our National Internal Revenue Code, includes these partnerships
—
with the exception only of duly registered general copartnerships
—
within the purview of the term"corporation." It is, therefore, clear to our mind that petitioners herein constitute a
partnership, insofar as saidCode is concerned and are subject to the income tax for corporations.