Partnership: Abantas. Abinal. Jaranilla. Ignalig. Tiosen

PARTNERSHIP
ABANTAS. ABINAL. JARANILLA. IGNALIG. TIOSEN.
1
PARTNERSHIP
1. ORTEGA VS. COURT OF APPEALS
G.R. No. 109248. July 3, 1995.
Facts:
The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in the Mercantile
Registry on 4 January 1937 and reconstituted with the Securities and Exchange Commission on 4 August
1948. The SEC records show that there were several subsequent amendments to the articles of partnership
to change the firm name. On 19 December 1980, Joaquin L. Misa, Jesus B. Bito, and Mariano M. Lozada
associated themselves together, as senior partners with Gregorio F. Ortega, Tomas O. del Castillo, Jr., and
Benjamin Bacorro, as junior partners. On February 17, 1988, petitioner-appellant wrote the respondents-
appellees a letter stating his withdrawal and retirement from the firm of Bito, Misa and Lozada and
requested to make proper liquidation including his interest to the two floors of the building.
The petitioner led with this Commission's Securities Investigation and Clearing Department (SICD) a
petition for dissolution and liquidation of partnership which resulted to respondents-appellees filing their
opposition. The Hearing Officer held that the withdrawal of Atty. Misa had dissolved the partnership of
Bito, Misa and Lozada. A Motion for Reconsideration was sought but during the pendency of the case in
the CA, Bito and Lozada died which prompted Misa to renew his application for receivership.
Issues:
a. Whether or not CA has erred in holding that the partnership of Bito, Misa & Lozada is a
partnership at will;
b. Whether or not CA has erred in holding that the withdrawal of private respondent dissolved the
partnership regardless of his good or bad faith; and
c. Whether or not CA has erred in holding that private respondent's demand for the dissolution of the
partnership so that he can get a physical partition of partnership was not made in bad faith.
Held:
The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The
right to choose with whom a person wishes to associate himself is the very foundation and essence of that
partnership. Its continued existence is, in turn, dependent on the constancy of that mutual resolve, along
with each partner's capability to give it, and the absence of a cause for dissolution provided by the law
itself. Any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will.
Neither would the presence of a period for its specific duration or the statement of a particular purpose for
its creation prevent the dissolution of any partnership by an act or will of a partner. Among partners, mutual
agency arises and the doctrine of delectus personae allows them to have the power, although not necessarily
the right, to dissolve the partnership.
The Court we accord to the CA and the respondent Commission on their common factual finding, that
Attorney Misa did not act in bad faith. Public respondents viewed his withdrawal to have been spurred by
"interpersonal conflict" among the partners. It would not be right to let any of the partners remain in the
partnership under such an atmosphere of animosity; certainly, not against their will. For as long as the
reason for withdrawal of a partner is not contrary to the dictates of justice and fairness, nor for the purpose
of unduly visiting harm and damage upon the partnership, bad faith cannot be said to characterize the act.
Syllabi:
2
PARTNERSHIP
a. Commercial Law; Partnership; A partnership that does not fix its term is a partnership at will. —A
partnership that does not fix its term is a partnership at will. That the law firm “Bito, Misa &
Lozada,” and now “Bito, Lozada, Ortega and Castillo,” is indeed such a partnership need not be
unduly belabored. We quote, with approval, like did the appellate court, the findings and
disquisition of respondent SEC on this matter.
b. Same; Same; The birth and life of a partnership at will is predicated on the mutual desire and
consent of the partners. — The birth and life of a partnership at will is predicated on the mutual
desire and consent of the partners. The right to choose with whom a person wishes to associate
himself is the very foundation and essence of that partnership. Its continued existence is, in turn,
dependent on the constancy of that mutual resolve, along with each partner’s capability to give it,
and the absence of a cause for dissolution provided by the law itself. Verily, any one of the
partners may, at his sole pleasure, dictate a dissolution of the partnership at will. 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.
c. Same; Same; Neither would the presence of a period for its specific duration or the statement of a
particular purpose for its creation prevent the dissolution of any partnership by an act or will of a
partner.— In Ortega vs. Court of Appeals, passing, neither would the presence of a period for its
specific duration or the statement of a particular purpose for its creation prevent the dissolution of
any partnership by an act or will of a partner. Among partners, mutual agency arises and the
doctrine of delectus personae allows them to have the power, although not necessarily the right, to
dissolve the partnership. An unjustified dissolution by the partner can subject him to a possible
action for damages.
d. Same; Same; Upon its dissolution, the partnership continues and its legal personality is retained
until the complete winding up of its business culminating in its termination.—The dissolution of a
partnership is the change in the relation of the parties caused by any partner ceasing to be
associated in the carrying on, as might be distinguished from the winding up of, the business.
Upon its dissolution, the partnership continues and its legal personality is retained until the
complete winding up of its business culminating in its termination.
e. Same; Same; The liquidation of the assets of the partnership following its dissolution is governed
by various provisions of the Civil Code.—The liquidation of the assets of the partnership
following its dissolution is governed by various provisions of the Civil Code; however, an
agreement of the partners, like any other contract, is binding among them and normally takes
precedence to the extent applicable over the Code’s general provisions.
f. Same; Same; It would not be right to let any of the partners remain in the partnership under such
an atmosphere of animosity.—On the third and final issue, we accord due respect to the appellate
court and respondent Commission on their common factual finding, i.e., that Attorney Misa did
not act in bad faith. Public respondents viewed his withdrawal to have been spurred by
“interpersonal conflict” among the partners. It would not be right, we agree, to let any of the
partners remain in the partnership under such an atmosphere of animosity; certainly, not against
their will. Indeed, for as long as the reason for withdrawal of a partner is not contrary to the
dictates of justice and fairness, nor for the purpose of unduly visiting harm and damage upon the
partnership, bad faith cannot be said to characterize the act. Bad faith, in the context here used, is
no different from its normal concept of a conscious and intentional design to do a wrongful act for
a dishonest purpose or moral obliquity.

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PARTNERSHIP

ABANTAS. ABINAL. JARANILLA. IGNALIG. TIOSEN.

1. ORTEGA VS. COURT OF APPEALS

G.R. No. 109248. July 3, 1995.

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