SC remands Reyes BBQ dispute case to QC court

In 1992, Francisco, after working at the Aristocrat Restaurant, thought of putting up his own restaurant and franchising business. He established Reyes Barbecue in 2002 and registered it as a sole proprietorship. (File photo: Kath Haboc-Lee/Flickr, CC BY-NC 2.0)

MANILA — The Supreme Court (SC) remanded the case involving a dispute between the brothers behind the Reyes Barbecue restaurants to a lower court.

In an eight-page resolution dated Nov. 13, 2019, and released Wednesday, the Court’s Third Division reinstated the civil case and remanded it to the Quezon City Regional Trial Court (RTC) Branch 216, to conduct an accounting of the profits of the barbecue franchising business.

The lower court was also directed to determine the portion of the profits derived from the franchising business of Reyes Barbecue that may be attributed to the contributions made by the brothers; and the portion of the profits derived from the franchising business of Reyes Barbecue that may be attributed only to Francisco Reyes, one of the brothers.

In remanding the case, the SC also ruled that a partnership was created between the brothers-owners of the franchising business despite its non-registration with the Securities and Exchange Commission (SEC).

The Court noted and considered that numerous franchises were opened through the contributions of Francisco’s brothers — Adolfo, Ramon, and Carlos.

In 1992, Francisco, after working at the Aristocrat Restaurant, thought of putting up his own restaurant and franchising business. He established Reyes Barbecue in 2002 and registered it as a sole proprietorship. In 2005, he filed an application for registration of the trademark “Reyes Barbecue”.

In 2005, Francisco offered his brothers to form a partnership for the franchising arm of Reyes Barbecue as he needed capital for business expansion. Adolfo and Carlos each contributed PHP100,000 in exchange for a 24 percent and 15 percent share, respectively, while Ramon contributed a desktop computer valued at PHP39,000 for a 25 percent share.

For Francisco, it was agreed that his contribution will be the Reyes Barbecue trademark registered in his name.

Francisco denied having proposed a business partnership with his brothers and insisted that he and his wife Carolina Inez Angela Reyes, his co-petitioner, conceptualized the business on their own; and that the intent, from the start, was to form a franchising corporation with his brothers and not a partnership. Francisco further alleged that the contributions of his brothers were really subscription payments to the franchising corporation.

Francisco further claimed that he abandoned the plan to form a franchising corporation when he discovered that the Reyes Barbecue trademark had been fraudulently transferred to an employee of his nephew, lawyer Adolfo Reyes II.

In 2008, Adolfo, Carlos, and Ramon, through a counsel, sent a demand letter calling for an accounting of the business to determine any share in the profits that may be due them. They then filed a complaint for damages.

“Although the registration of the franchising arm of Reyes Barbecue did not materialize, numerous franchises were opened through the contributions of all the Reyes brothers. Thus, a partnership for the franchising business of Reyes Barbecue was created,” the Court held.