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MARJORIE TOCAO v. CA

FACTS:

This case involves a dispute between Nenita Anay and Marjorie Tocao, who were allegedly engaged in a joint venture through Geminesse Enterprise. Anay filed a complaint against Tocao and her co-defendants, claiming that she was wrongfully excluded from the joint venture and seeking various forms of relief. The defendants denied the existence of a joint venture and argued that Anay was merely a marketing demonstrator for Geminesse Enterprise. The trial court ruled in favor of Anay, finding that there was indeed a joint venture between the parties based on their intention to create a joint venture, establishment of a common fund, and joint interest in the profits. The court ordered the defendants to submit a formal account of the joint venture affairs and granted various forms of relief to Anay, including damages. The Court of Appeals affirmed this ruling but reduced the amount of damages awarded. The defendants now seek review before the Supreme Court, disputing the existence of a joint venture between them and Anay.

ISSUES:

  1. Whether or not a partnership exists between the petitioners and private respondent.

  2. Whether there was an employer-employee relationship between the petitioners and the private respondent.

  3. Whether the cookware distributorship operated under Geminesse Enterprise was a partnership.

  4. Whether there is a partnership between the petitioners and the private respondent.

  5. Whether the unilateral exclusion of the private respondent from the partnership by petitioner Tocao is valid.

  6. Whether the petitioners are liable to pay damages to the private respondent.

  7. Whether the award of damages, moral damages, and attorney's fees should be reduced.

  8. Whether or not the petitioners should be held liable for damages.

RULING:

  1. The Court of Appeals and the trial court both ruled that a partnership exists between the petitioners and private respondent. The Supreme Court affirms this ruling and finds no reason to rule otherwise.

  2. No, there was no employer-employee relationship between the petitioners and the private respondent. The evidence presented in the case contradicts such a relationship. The private respondent had a voice in the management of the cookware distributorship and received commissions and allowances instead of a fixed salary. The sharing of income between the petitioners and the private respondent also indicates that they treated each other as equals.

  3. Yes, the cookware distributorship operated under Geminesse Enterprise was a partnership. The petitioners merged their capital and infused it into the partnership, as established by their joint financing of the business and their establishment of other business ventures together. The fact that the distributorship operated under the name of a sole proprietorship is of no consequence as it was merely used for practical reasons.

  4. Yes, there is a partnership between the petitioners and the private respondent. The existence of unsold goods and uncollected receivables, as well as the continuous receipt of overriding commission by the private respondent, indicate the existence of a partnership.

  5. No, the unilateral exclusion of the private respondent from the partnership by petitioner Tocao is not valid. The partnership continues until dissolved under the law and any one of the partners may dissolve the partnership at will. However, the partner who causes an unjustified dissolution may be held liable for damages.

  6. Yes, the petitioners are liable to pay damages to the private respondent. The private respondent is entitled to an account of the partnership affairs, a 5% overriding commission for the cookware sets available for disposition, and an overriding commission on the total production.

  7. Yes, the awards of exemplary damages, moral damages, and attorney's fees should be reduced. Exemplary damages should be reduced to P50,000.00, moral damages should be reduced to P50,000.00, and attorney's fees should be reduced to P25,000.00.

  8. The petitioners are held jointly and severally liable to pay the private respondent the following:

  9. Actual damages in the amount of P32,000.00;

  10. Moral damages in the amount of P50,000.00;

  11. Exemplary damages in the amount of P50,000.00;

  12. Attorney's fees in the amount of P25,000.00.

PRINCIPLES:

  • In determining the existence of a partnership, it is a factual matter that falls within the domain of the trial and appellate courts. The Supreme Court cannot set aside factual findings absent a showing that there is no evidence to support the conclusion drawn.

  • To be considered a juridical personality, a partnership requires the contribution of money, property, or industry to a common fund, as well as the intention to divide the profits among the partners. A partnership can be constituted in any form, and a written instrument is only necessary when immovable property or real rights are involved.

  • The fact that there is no public instrument in the Securities and Exchange Commission does not nullify the existence of a partnership as long as the requisites of a partnership have been met.

  • A partner who contributes expertise and plays an indispensable role in the business can be considered the industrial or managing partner.

  • Third parties may believe a partnership exists if the set-up of the business suggests so.

  • A person's actions, such as presiding over meetings and authorizing transactions related to the business, can be interpreted as evidence of a proprietary interest in the partnership.

  • To establish an employer-employee relationship, the following elements must be present: (a) the selection and engagement of the employee, (b) the payment of wages, (c) the power of control, and (d) the power to dismiss. (Ruling on Issue 1)

  • The sharing of income, especially in the form of a percentage of net profits, is prima facie evidence of a partnership. (Ruling on Issue 2)

  • Partners in a business venture must share in the profits and losses, except for an industrial partner who is not liable for losses. (Ruling on Issue 1)

  • The name under which a business operates does not determine its legal nature, as it may be used for practical reasons and does not preclude the existence of a partnership. (Ruling on Issue 2)

  • The best evidence of the existence of a partnership is the presentation of unsold goods and uncollected receivables.

  • A partnership continues until dissolved under the law, and the dissolution of a partnership at will may be done by any one of the partners.

  • Unjustified dissolution of a partnership may subject the partner causing the dissolution to liability for damages.

  • The determination of damages is primarily the task of the trial court, and the Court of Appeals may only modify the amount when its factual findings are diametrically opposed to that of the trial court or when the award is palpably or scandalously and unreasonably excessive.

  • Joint and several liability - When two or more persons are found liable for a claim, they can be held jointly and severally liable, meaning that each person is individually liable for the full amount of the claim.

  • Actual damages - Actual damages are awarded to compensate the aggrieved party for the loss or injury they have actually suffered.

  • Moral damages - Moral damages are awarded to compensate the aggrieved party for the mental anguish, suffering, and moral shock they have experienced due to the wrongful act of the defendants.

  • Exemplary damages - Exemplary damages are awarded to set a public example and to punish the defendants for their wrongful act, especially if it involves gross negligence, wanton disregard of the rights of others, or oppressive behavior.

  • Attorney's fees - Attorney's fees may be awarded to the prevailing party as indemnity for the expenses incurred in pursuing or defending their rights in court.