JG Summit Holdings Inc. vs.

Court of Appeals
[GR 124293, 20 November 2000]
Facts: On 27 January 1977, the National Investment and Development Corporation
(NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with
Kawasaki Heavy Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction,
operation, and management of the Subic National Shipyard, Inc. (SNS), which
subsequently became the Philippine Shipyard and Engineering Corporation
(PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding
proportion of 60% - 40%, respectively. One of the provisions of the JVA accorded the
parties the right of first refusal should either party sell, assign or transfer its interest in
the joint venture. On 25 November 1986, NIDC transferred all its rights, title and interest
in PHILSECO to the Philippine National Bank (PNB).
More than two months later or on 3 February 1987, by virtue of Administrative Order 14,
PNB's interest in PHILSECO was transferred to the National Government. Meanwhile,
on 8 December 1986, President Corazon C. Aquino issued Proclamation 50
establishing the Committee on Privatization (COP) and the Asset Privatization Trust
(APT) to take title to and possession of, conserve, manage and dispose of nonperforming assets of the National Government. On 27 February 1987, a trust agreement
was entered into between the National Government and the APT by virtue of which the
latter was named the trustee of the National Government's share in PHILSECO. In
1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to
PNB, the National Government's shareholdings in PHILSECO increased to 97.41%
thereby reducing Kawasaki's shareholdings to 2.59%. Exercising their discretion, the
COP and the APT deemed it in the best interest of the national economy and the
government to privatize PHILSECO by selling 87.67% of its total outstanding capital
stock to private entities.
After a series of negotiations between the APT and Kasawaki, they agreed that the
latter's right of first refusal under the JVA be "exchanged" for the right to top by 5% the
highest bid for said shares. They further agreed that Kawasaki would be entitled to
name a company in which it was a stockholder, which could exercise the right to top. On
7 September 1990, Kawasaki informed APT that Philyards Holdings, Inc. (PHI) would
exercise its right to top by 5%. At the pre-bidding conference held on 28 September
1993, interested bidders were given copies of the JVA between NIDC and Kawasaki,
and of the Asset Specific Bidding Rules (ASBR) drafted for the 87.67% equity (sic) in
PHILSECO of the National Government. The provisions of the ASBR were explained to
the interested bidders who were notified that bidding would be held on 2 December
1993. At the public bidding on said date, the consortium composed of JG Summit
Holdings, Inc. (JGSMI), Sembawang Shipyard Ltd. of Singapore (Sembawang), and
Jurong Shipyard Limited of Malaysia (Jurong), was declared the highest bidder at P2.03
billion. The following day, the COP approved the sale of 87.67% National Government
shares of stock in PHILSECO to said consortium. It notified JGSMI of said approval
"subject to the right of Kawasaki Heavy Industries, Inc./Philyards Holdings, Inc. to top
JGSMI's bid by 5% as specified in the bidding rules."

On 29 December 1993, JGSMI informed the APT that it was protesting the offer of PHI
to top its bid on the grounds that: (a) the Kawasaki/PHI consortium composed of
Kawasaki, Philyards, Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the
ASBR because the last four (4) companies were the losing bidders (for P1.528 billion)
thereby circumventing the law and prejudicing the weak winning bidder; (b) only
Kawasaki could exercise the right to top; (c) giving the same option to top to PHI
constituted unwarranted benefit to a third party; (d) no right of first refusal can be
exercised in a public bidding or auction sale, and (e) the JG Summit Consortium was
not estopped from questioning the proceedings. On 2 February 1994, JGSMI was
notified that PHI had fully paid the balance of the purchase price of the subject bidding.
On 7 February 1994, the APT notified JGSMI that PHI had exercised its option to top
the highest bid and that the COP had approved the same on 6 January 1994. On 24
February 1994, the APT and PHI executed a Stock Purchase Agreement. Consequently,
JGSMI filed with the Supreme Court a petition for mandamus under GR 114057. On 11
May 1994, said petition was referred to the Court of Appeals. On 18 July 1995, the
Court of Appeals "denied" for lack of merit the petition for mandamus. JGSMI filed a
motion for the reconsideration of said Decision which was denied on 15 March 1996.
JGSMI filed the petition for review on certiorari.
Issue: Whether PHILSECO, as a shipyard, is a public utility and, hence, could be
operated only by a corporation at least 60% of whose capital is owned by Filipino
citizens, in accordance with Article XII, Section 10 of the Constitution.
Held: A shipyard such as PHILSECO being a public utility as provided by law, Section
11 of the Article XII of the Constitution applies. The provision states that "No franchise,
certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations organized
under the laws of the Philippines at least sixty per centum of whose capital is owned by
such citizens, nor shall such franchise, certificate, or authorization be exclusive in
character or for a longer period than fifty years. Neither shall any such franchise or right
be granted except under the condition that it shall be subject to amendment, alteration,
or repeal by the Congress when the common good so requires. The State shall
encourage equity participation in public utilities by the general public. The participation
of foreign investors in the governing body of any public utility enterprise shall be limited
to their proportionate share in its capital, and all the executive and managing officers of
such corporation or association shall be citizens of the Philippines." The progenitor of
this constitutional provision, Article XIV, Section 5 of the 1973 Constitution, required the
same proportion of 60% - 40% capitalization. The JVA between NIDC and Kawasaki
entered into on 27 January 1977 manifests the intention of the parties to abide by the
constitutional mandate on capitalization of public utilities. The joint venture created
between NIDC and Kawasaki falls within the purview of an "association" pursuant to
Section 5 of Article XIV of the 1973 Constitution and Section 11 of Article XII of the 1987
Constitution. Consequently, a joint venture that would engage in the business of
operating a public utility, such as a shipyard, must observe the proportion of 60%-40%
Filipino-foreign capitalization. Further, paragraph 1.4 of the JVA accorded the parties the

right of first refusal "under the same terms." This phrase implies that when either party
exercises the right of first refusal under paragraph 1.4, they can only do so to the extent
allowed them by paragraphs 1.2 and 1.3 of the JVA or under the proportion of 60%-40%
of the shares of stock. Thus, should the NIDC opt to sell its shares of stock to a third
party, Kawasaki could only exercise its right of first refusal to the extent that its total
shares of stock would not exceed 40% of the entire shares of stock of SNS or
PHILSECO. The NIDC, on the other hand, may purchase even beyond 60% of the total
shares. As a government corporation and necessarily a 100% Filipino-owned
corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign capitalization. Kawasaki was
bound by its contractual obligation under the JVA that limits its right of first refusal to
40% of the total capitalization of PHILSECO. Thus, Kawasaki cannot purchase beyond
40% of the capitalization of the joint venture on account of both constitutional and
contractual proscriptions. From the facts on record, it appears that at the outset, the
APT and Kawasaki respected the 60%-40% capitalization proportion in PHILSECO.
However, APT subsequently encouraged Kawasaki to participate in the public bidding of
the National Government's shareholdings of 87.67% of the total PHILSECO shares,
definitely over and above the 40% limit of its shareholdings. In so doing, the APT went
beyond the ambit of its authority.
Email This

R. No. 109248 July 3, 1995 GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO,

JR., and BENJAMIN T. BACORRO, petitioners, vs. HON. COURT OF APPEALS,
SECURITIES AND EXCHANGE COMMISSION and JOAQUIN L. MISA,
respondents. FACTS: Ortega, then a senior partner in the law firm Bito, Misa,
and Lozada withdrew from the said firm. He filed with SEC a petition for
dissolution and liquidation of the partnership. The SEC en banc ruled that
withdrawal of Misa from the firm had dissolved the partnership. Since it is
partnership at will, the law firm could be dissolved by any partner at
anytime, such as by withdrawal therefrom, regardless of good faith or bad
faith, since no partner can be forced to continue in the partnership against
his will. ISSUE: 1. WON the partnership of Bito, Misa & Lozada (now Bito,
Lozada, Ortega & Castillo)is a partnership at will 2. WON the withdrawal of
Misa dissolved the partnership regardlessof his good or bad faith HELD: 1.
Yes. The partnership agreement of the firm provides that [t]he partnership
shall continue so long as mutually satisfactory and upon the death or legal
incapacity of one of the partners, shall be continued by the surviving
partners. 2. Yes. Any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will (e.g. by way of withdrawal of a partner).
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

TOCAO V. COURT OF APPEALS

342 SCRA 20 (2000)
Facts
: Petitioner William T. Bello introduced private respondent Nenita Anay to petitioner
Tocao, who conveyed her desire to enter into a joint venture with her for the
importation and local distribution of kitchen cookwares. Belo acted the
capitalist, Tocao as president and general manager, and Anay as head of the
marketing department (considering her experience and established relationship
with West Bend Company,c a manufacturer of kitchen wares in Wisconsin,
U.S.A) and later, vice-president for sales. 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 same was not reduced to writing on the
strength of Belos assurances. Later, Anay was able to secure the distributorship
of cookware products from the West Bend Company. They operated under the name of
Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocaos name.
Anay attended distributor/dealer meetings with West Bend Company with the
consent of Tocao. Due to Anays excellent job performance she was given a
plaque of appreciation. Also, in a memo signed by Belo, Anay was given 37% commission
for her personal sales "up Dec 31/87, apart from the 10% share in profits. On
October 9, 1987, Anay learned that Marjorie Tocao terminated her as vicepresident of Geminesse Enterprise. 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. Belo did not answer. 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 a complaint for sum of
money with damages against Tocao and Belo before the RTC of Makati. She
prayed that she be paid (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. However, Tocao and Belo asserted that the alleged agreement
was not reduced to writing nor ratified, hence, unenforceable, void, or
nonexistent. Also, they denied the existence of a partnership because, as Anay herself
admitted, Geminesse Enterprise was the sole proprietorship of Marjorie Tocao. Belo
also contended that he merely acted as a guarantor of Tocao and denied
contributing capital. Tocao, on the other hand, denied that they agreed on a ten

percent (10%) commission on the net profits. Both trial court and court of
appeals ruled that a business partnership existed and ordered the defendants to pay.
Issue:
Whether or not a partnership existed
YES
Ratio:
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. 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. Private
respondent Anay contributed her expertise in the business of distributorship of
cookware to the partnership and hence, under the law, she was the industrial or
managing partner. Petitioner Belo had an proprietary interest. He presided over
meetings regarding matters affecting the operation of the business. Moreover, his
having authorized in writing giving Anay 37% of the proceeds of her personal sales,
could not be interpreted otherwise than that he had a proprietary interest in the
business. This is inconsistent with his claim that he merely acted as a guarantor.
If indeed he was, he should have presented documentary evidence. Also, Art. 2055
requires that a guaranty must be express and the Statute of Frauds requires that it
must be in writing. Petitioner Tocao was also a capitalist in the partnership. She
claimed that she herself financed the business. The business venture operated
under Geminesse Enterprise did not result in an employer-employee relationship
between petitioners and private respondent. First, Anay had a voice in the management of
the affairs of the cookware distributorship and second, Tocao admitted that Anay,
like her, received only commissions and transportation and representation
allowances and not a fixed salary. If Anay was an employee, it is difficult to
believe that they recieve the same income. Also, the fact that they operated under
the name of Geminesse
BUSORG CASE DIGESTS Atty. Charlie Mendoza 2
Enterprise, a sole proprietorship, is of no moment. Said business name was used only
for practical reasons - it was utilized as the common name for petitioner Tocaos
various business activities, which included the distributorship of cookware. 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. Petitioners Tocaos 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. 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 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. Petitioners are
ordered to pay Anays 10% share in the profits, after accounting, 5% overriding
commission for the 150 cookware sets available for disposition since the time
private respondent was wrongfully excluded from the partnership by petitioner,
overriding commission on the total production, as well as moral and exemplary
damages, and attorneys fees
JM TUAZON and CO v. BOLANOS
95 PHIL 106
Facts:
This is an action to recover possession of registered land situated in Barrio
Tatalon, Quezon City. The complaint of plaintiff JM Tuason & Co Inc was amended 3
times with respect to the extent and description of the land sough to be recovered.
Originally, the land sought to be recovered was said to be more or less 13
hectares, but it was later amended to 6 hectares, after the defendant had indicated
the plaintiff's surveyors the portion of land claimed and occupied by him. The
second amendment is that the portion of the said land was covered in another
TCT and the 3rd amendment was made after the defendant' surveyor and a
witness, Quirino Feria testified that the land occupied by the defendant was
about 13 hectares. Defendant raised the defense of prescription and title thru
"open, continuous, exclusive and public and notorious possession of land in dispute.
He also alleged that the registration of the land was obtained by plaintiff's
predecessor through fraud or error. The lower court rendered judgment in favor
of the plaintiff and ordered the defendant to restore possession of the land to the
plaintiff, as well as to pay corresponding rent from January 1940 until he vacates
the land. On appeal defendant raised a number of assignments or errors in the
decision, one of which is that the trial court erred in not dismissing the case on
the ground that the case was not brought by the real party in interest.
Issue:
Whether or not the lower court erred in not dismissing the case on the ground
that it was not brought by the real party in interest?
NO
Ratio:
What the Rules of Court require is that an action be broughtin the name of, but
not necessarily by, the real party in interest. In fact the practice is for an
attorney-at-law to bring the action, that is to file the complaint, in the name of
the plaintiff. That practice appears to have been followed in this case, since the complaint
is signed by the law firm of Araneta and Araneta, "counsel for plaintiff" and
commences with the statement "comes now plaintiff, through its undersigned
counsel." It is true that the complaint also states that the plaintiff is "represented
herein by its Managing Partner Gregorio Araneta, Inc.", another corporation, but

there is nothing against one corporation being represented by another person,

natural or juridical, in a suit in court. The contention that Gregorio Araneta, Inc. can not
act as managing partner for plaintiff on the theory that it is illegal for two
corporations to enter into a partnership is without merit, for the true rule is that "though a
corporation has no power to enter into a partnership, it may nevertheless enter
into a joint venture with another where the nature of that venture is in line with
the business authorized by its charter."
AGUILA, JR. v. COURT OF APPEALS 316 SCRA 246 (1999)
Facts:
Alfredo N. Aguilar, Jr. (petitioner) is the manager of A.C. Aguila & Sons, Co., a
partnership engaged in lending activities. Felicidad S. Vda. de Abrogar (private
respondent) and her late husband, Ruben M. Abrogar, were the registered owners
of a house and lot, covered by Transfer Certificate of Title No. 195101, in
Marikina, Metro Manila. On April 18, 1991, private respondent, with the consent
of her late husband, and A.C. Aguila & Sons, Co., represented by petitioner,
entered into a Memorandum of Agreement which provided that A.C. Aguila &
Sons, Co. shall buy the property from private respondent for P200,000 subject to an
option to repurchase for P230,000 (valid for 90 days), etc. On the same day, the
parties likewise executed a deed of absolute sale, dated June 11, 1991, wherein
private respondent, with the consent of her late husband, sold the subject
property to A.C. Aguila & Sons, Co., represented by petitioner, for P200,000,00.
In a special power of attorney dated the same day, April 18, 1991, private
respondent authorized petitioner
BUSORG CASE DIGESTS Atty. Charlie Mendoza 3
to cause the cancellation of TCT No. 195101 and the issuance of a new
certificate of title in the name of A.C. Aguila and Sons, Co., in the event she
failed to redeem the subject property as provided in the Memorandum of Agreement.
Private respondent failed to redeem the property. Pursuant to the special power
of attorney mentioned above, petitioner caused the cancellation of TCT No.
195101 and the issuance of a new certificate of title in the name of A.C. Aguila
and Sons, Co. Private respondent then received a letter dated August 10, 1991
from Atty. Lamberto C. Nanquil, counsel for A.C. Aguila & Sons, Co.,
demanding that she vacate the premises within 15 days after receipt of the letter and
surrender its possession peacefully to A.C. Aguila & Sons, Co. Otherwise, the
latter would bring the appropriate action in court. Upon the refusal of private
respondent to vacate the subject premises, A.C. Aguila & Sons, Co. filed an
ejectment case against her in the Metropolitan Trial Court, Branch 76, Marikina,
Metro Manila. MeTC, Marikina, MM (April 3, 1992): Ruled in favor of A.C.
Aguila & Sons, Co. Private respondent appealed to RTC Pasig, CA, and then SC
but she still lost. Private respondent then filed a petition for declaration of
nullity of a deed of sale filed by Felicidad S. Vda. de Abrogar against Alfredo N.
Aguila, Jr. She alleged that the signature of her husband on the deed of sale was
a forgery because he was already dead when the deed was supposed to have been
executed on June 11, 1991. RTC,Marikina,MM(April11,1995):Dismissed.

CA(November29,1990):Reversed ruling of the RTC. Hence, this petition for

review on certiorari. Petitioner now contends that: (1) he is not the real party in
interest but A.C. Aguila & Co., against which this case should have been
brought; (2) the judgment in the ejectment case is a bar to the filing of the complaint
for declaration of nullity of a deed of sale in this case; and (3) the contract between
A.C. Aguila & Sons, Co. and private respondent is a
pacto de retro
sale and not an equitable mortgage as held by the appellate court.
Issue:
Whether the real party in interest is A.C. Aguila & Co. and not petitioner.
YES
Ratio:
Under Art. 1768 of the Civil Code, a partnership "has a juridical personality separate
and distinct from that of each of the partners." The partners cannot be held liable for
the obligations of the partnership unless it is shown that the legal fiction of a
different juridical personality is being used for fraudulent, unfair, or illegal
purposes. In this case, private respondent has not shown that A.C. Aguila & Sons,
Co., as a separate juridical entity, is being used for fraudulent, unfair, or illegal
purposes. Moreover, the title to the subject property is in the name of A.C.
Aguila & Sons, Co. and the Memorandum of Agreement was executed between
private respondent, with the consent of her late husband, and A.C. Aguila &
Sons, Co., represented by petitioner. Hence, it is the partnership, not its officers
or agents, which should be impleaded in any litigation involving property
registered in its name. A violation of this rule will result in the dismissal of the
complaint.
HEIRS OF TAN ENG KEE v. COURT OF APPEALS 341 SCRA 740 (2000)
Facts:
The heirs of Tan Eng Kee filed a suit against the decedents brother Tan Eng Lay.
The complaint alleged that after the Second World War, the brothers, pooling their
resources and industry together, entered into a partnership engaged in the selling
of lumber and hardware and construction supplies. They named their enterprise
Benguet Lumber which they jointly managed until Tan Kees death. Petitioners averred
that the business prospered due to the hard work and thrift of the alleged partners.
However, they claimed that in 1981, Tan Eng Lay and his children caused the
conversion of the partnership Benguet Lumber into a corporation called
Benguet Lumber Company. The incorporation was purportedly a ruse to
deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the
business. Petitioners prayed for accounting of the partnership assets, and the
dissolution, and winding up of the alleged partnership formed after the World
War II between Tan Eng Kee and Tan Eng Lay. The Regional Trial court found
that Benguet Lumber is a joint venture which is akin to a particular partnership,
and declared that the assets of Benguet Lumber are the same assets turned over to
Benguet lumber Co. and as such the heirs or legal representatives of the deceased

Tan Eng Kee have a legal right to share in the said assets. The Court of Appeals
reversed the judgment of the Trial Court.
Issue:
Whether or not a partnership existed between Tan Eng Kee and Tan Eng LayNO
Ratio:
In order to constitute a partnership, it must be established that (1) two or more
persons bound themselves to contribute money, property, or industry to a
common fund, and (2) they intend to divide the profits among themselves. The
best evidence of the partnerships existence would have been the contract of
partnership itself, or the articles of partnership but there is none. The alleged
partnership, though, was never formally organized. In addition, petitioners point
out that the New Civil Code was not yet in effect when the partnership was allegedly
formed sometime in 1945, although the contrary may well be argued that nothing
prevented the parties from complying with the provisions of the New Civil Code
when it took effect on August 30, 1950. A review of the record persuades us that the
Court of Appeals correctly reversed the decision of the trial court. The evidence
presented by petitioners falls short of the quantum of proof required to establish a
partnership. It is indeed odd, if not unnatural, that despite the forty years the
partnership was allegedly in existence, Tan Eng Kee never asked for an
accounting. The essence of a partnership is that the partners share in the profits
and losses. Each has the right to demand an accounting as long as the partnership
exists. A
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TOCAO V. CA
G.R. No. 127405; October 4, 2000
Ponente: J. Ynares-Santiago
FACTS:
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
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
The parties agreed that Belo's name should not appear in any documents
relating to their transactions with West Bend Company. 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.
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.
On October 9, 1987, Anay learned that Marjorie Tocao had signed a
letter addressed to the Cubao sales office to the effect that she was no
longer the vice-president of Geminesse Enterprise.
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.
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 P 13,300,360.00.

On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a

complaint for sum of money with damages against Marjorie D. Tocao and
William Belo before the Regional Trial Court of Makati, Branch 140
The trial court held that there was indeed an "oral partnership
agreement between the plaintiff and the defendants. The Court of Appeals
affirmed the lower courts decision.
ISSUE:
Whether the parties formed a partnership
HELD:
Yes, the parties involved in this case formed a partnership
The Supreme Court held that 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. 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.
In the case at hand, Belo acted as capitalist while Tocao as president
and general manager, and Anay as head of the marketing department and
later, vice-president for sales. Furthermore, Anay was entitled to a
percentage of the net profits of the business.
Therefore, the parties formed a partnership.