1. Attorney Joaquin Misa withdrew from the law firm Bito, Misa & Lozada, which he had been a senior partner in.
2. Misa filed a petition with the Securities and Exchange Commission (SEC) seeking dissolution and liquidation of the partnership.
3. The SEC ruled that Misa's withdrawal dissolved the partnership because it was a partnership at will. The Court of Appeals affirmed this ruling.
1. Attorney Joaquin Misa withdrew from the law firm Bito, Misa & Lozada, which he had been a senior partner in.
2. Misa filed a petition with the Securities and Exchange Commission (SEC) seeking dissolution and liquidation of the partnership.
3. The SEC ruled that Misa's withdrawal dissolved the partnership because it was a partnership at will. The Court of Appeals affirmed this ruling.
1. Attorney Joaquin Misa withdrew from the law firm Bito, Misa & Lozada, which he had been a senior partner in.
2. Misa filed a petition with the Securities and Exchange Commission (SEC) seeking dissolution and liquidation of the partnership.
3. The SEC ruled that Misa's withdrawal dissolved the partnership because it was a partnership at will. The Court of Appeals affirmed this ruling.
1. Attorney Joaquin Misa withdrew from the law firm Bito, Misa & Lozada, which he had been a senior partner in.
2. Misa filed a petition with the Securities and Exchange Commission (SEC) seeking dissolution and liquidation of the partnership.
3. The SEC ruled that Misa's withdrawal dissolved the partnership because it was a partnership at will. The Court of Appeals affirmed this ruling.
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Ortega v. CA, 245 SCRA 529 2. On February 17, 1988, senior partner Atty.
Misa wrote Ortega/Dela
Castillo/Bacorro (O/D/B) a letter stating: G.R. No. 109248 | July 3, 1995 | Vitug, J. | Partnership at will Petitioners: GREGORIO ORTEGA, TOMAS DEL CASTILLO, JR., & BENJAMIN BACORRO - I am withdrawing and retiring from the firm of Bito, Misa and Lozada, effective Respondents: CA, SEC & JOAQUIN L. MISA at the end of this month. - "I trust that the accountants will be instructed to make the proper liquidation Nature. The instant petition seeks a review of the decision rendered by the CA, of my participation in the firm." affirming in toto that of the Securities and Exchange Commission. Atty. Misa further wrote: - "Further to my letter to you today, I would like to have a meeting with all of Summary. Atty. Misa, senior partner in the law firm Bito, Misa, and Lozada you with regard to the mechanics of liquidation, and more particularly, my withdrew from said firm. He filed with SEC a petition for dissolution and liquidation interest in the two floors of this building. I would like to have this resolved soon of partnership. SEC en banc ruled that withdrawal of Misa from the firm had because it has to do with my own plans." dissolved the partnership. Since it is partnership at will (reversing hearing officer’s opinion that it was a partnership for a specific undertaking), the law firm could be 3. On 19 February 1988, Atty. Misa wrote O/D/B another letter stating: dissolved by any partner at any time, such as by withdrawal therefrom, regardless - "The partnership has ceased to be mutually satisfactory because of the working of good faith or bad faith, since no partner can be forced to continue in the conditions of our employees including the assistant attorneys. All my efforts to partnership against his will. The CA affirmed the SEC’s ruling in toto. On the issue of ameliorate the below subsistence level of the pay scale of our employees have w/n the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo) is a been thwarted by the other partners. Not only have they refused to give partnership at will, the Court affirmed the CA ruling that it is a partnership at will as meaningful increases to the employees, even attorneys, are dressed down the partnership agreement of the firm provided that ”the partnership shall continue publicly in a loud voice in a manner that deprived them of their self-respect. so long as mutually satisfactory and upon the death or legal incapacity of one of the The result of such policies is the formation of the union, including the assistant partners, shall be continued by the surviving partners. On the issue of w/n the attorneys." withdrawal of Misa dissolved the partnership regardless of his good or bad faith, the Court ruled that any one of the partners may, at his sole pleasure, dictate a 4. On 30 June 1988, Atty. Misa filed with the SEC's Securities Investigation and dissolution of the partnership at will (e.g. by way of withdrawal of a partner). He Clearing Department (SICD) a petition for dissolution and liquidation of partnership, must, however, act in good faith, not that the attendance of bad faith can prevent praying that the Commission: the dissolution of the partnership but that it can result in a liability for damages. - (1) Decree & order the formal dissolution & immediate liquidation of Doctrine. A partnership that does not fix its term is a partnership at will. partnership; (2) Order O/D/B to deliver or pay for Misa’s share in the partnership assets plus the profits, rent or interest attributable to the use of his right in the assets of the dissolved partnership; (3) Enjoin O/D/B from using the RELEVANT FACTS firm name of Bito, Misa & Lozada in any of their correspondence, checks and pleadings and to pay damages for the use thereof; (4) Order O/D/B jointly and 1. History of the law firm: severally to pay Atty. Misa’s litigation expenses; (5) Order payment of moral - 4 Jan 1937 – registered in the Mercantile Registry; 4 Aug 1948 – reconstituted (P500,000.00) and exemplary (P200,000.00) damages; and other just and w/ the SEC] ROSS, LAWRENCE, SELPH and CARRASCOSO equitable reliefs. - subsequent amendments to the articles of partnership: [18 Sept 1958] ROSS, 5. Decision of Hearing Officer: SELPH and CARRASCOSO [6 Jul 1965] ROSS, SELPH, SALCEDO, DEL ROSARIO, BITO & MISA [18 Apr 1972] SALCEDO, DEL ROSARIO, BITO, MISA & LOZADA - "[P]etitioner's withdrawal from the law firm Bito, Misa & Lozada did not [4 Dec 1972] SALCEDO, DEL ROSARIO, BITO, MISA & LOZADA [11 Mar dissolve the said law partnership. Accordingly, the petitioner and respondents 1977] DEL ROSARIO, BITO, MISA & LOZADA; [7 Jun 1977] BITO, MISA & are hereby enjoined to abide by the provisions of the Agreement relative to the LOZADA; [19 Dec 1980] senior partners – Joaquin L. Misa, Jesus B. Bito and matter governing the liquidation of the shares of any retiring or withdrawing Mariano M. Lozada / junior partners – Gregorio F. Ortega, Tomas O. del partner in the partnership interest." Castillo, Jr., and Benjamin Bacorro. 6. Decision of SEC en banc: Reversed the decision of the Hearing Officer. - Withdrawal of Atty Joaquin L. Misa had dissolved the partnership of "Bito, Misa W/N Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo) & Lozada; is a partnership at will. - Being a partnership at will, the law firm could be dissolved by any partner at any time, such as by his withdrawal, regardless of good faith or bad faith, since - A partnership that does not fix its term is a partnership at will. no partner can be forced to continue in the partnership against his will. - Here, the partnership agreement does not provide for a specified period or - Remanded case to the Hearing Officer for determination of the respective undertaking. The "DURATION" clause simply states: rights and obligations of the parties. "5. DURATION. The partnership shall continue so long as mutually satisfactory and upon the death or legal incapacity of one of the partners, 7. MR by both parties denied, including Atty Misa’s request for an appointment of a shall be continued by the surviving partners." receiver to take over the assets of the dissolved partnership and to take charge of - The hearing officer however opined that the partnership is one for a specific the winding up of its affairs. undertaking and hence not a partnership at will, citing paragraph 2 of the 8. Decision of the CA: SEC decision affirmed in toto. Amended Articles of Partnership (19 August 1948): "2. Purpose. The purpose for which the partnership is formed, is to act - During the pendency of the case with the CA, Attorney Jesus Bito and Attorney as legal adviser and representative of any individual, firm and corporation Mariano Lozada both died. The death of the two partners, as well as the engaged in commercial, industrial or other lawful businesses and admission of new partners, in the law firm prompted Atty Misa to renew his occupations; to counsel and advise such persons and entities with respect application for receivership. He expressed concern over the need to preserve to their legal and other affairs; and to appear for and represent their and care for the partnership assets. The other partners opposed the prayer. principals and client in all courts of justice & government departments and - (a) that Atty. Misa's withdrawal from the partnership had changed the relation offices in the Philippines, and elsewhere when legally authorized to do so." of the parties and inevitably caused the dissolution of the partnership; (b) that - The "purpose" of the partnership is not the specific undertaking referred to in such withdrawal was not in bad faith; (c) that the liquidation should be to the the law. Otherwise, all partnerships, which necessarily must have a purpose, extent of Attorney Misa's interest or participation in the partnership which would all be considered as partnerships for a definite undertaking. There would could be computed and paid in the manner stipulated in the partnership therefore be no need to provide for articles on partnership at will as none agreement; (d) that the case should be remanded to the SEC Hearing Officer for would so exist. Apparently what the law contemplates, is a specific undertaking the corresponding determination of the value of Attorney Misa's share in the or "project" which has a definite or definable period of completion. partnership assets; and (e) that the appointment of a receiver was unnecessary as no sufficient proof had been shown to indicate that the partnership assets W/N the withdrawal of private respondent dissolved the partnership, were in any such danger of being lost, removed or materially impaired. regardless of his good or bad faith. ISSUE/S AND RATIO DECIDENDI - 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 1. W/N Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo) is a partnership associate himself is the very foundation and essence of that partnership. Its at will. continued existence is, in turn, dependent on the constancy of that mutual YES, IT IS A PARTNERSHIP AT WILL. resolve, along with each partner's capability to give it, and the absence of a cause for dissolution provided by the law itself. 2. W/N the withdrawal of private respondent dissolved the partnership regardless - Any one of the partners may, at his sole pleasure, dictate a dissolution of the of his good or bad faith. partnership at will. He must, however, act in good faith, not that the YES, IT DID DISSOLVE THE PARTNERSHIP. attendance of bad faith can prevent the dissolution of the partnership but that it can result in a liability for damages. 3. W/N the private respondent's demand for the dissolution of the partnership so - Neither would the presence of a period for its specific duration or the that he can get a physical partition of partnership was made in bad faith. statement of a particular purpose for its creation prevent the dissolution of any NO, IT WAS NOT MADE IN BAD FAITH. partnership by an act or will of a partner. Among partners, mutual agency arises and the doctrine of delectus personae (This phrase, which literally signifies the choice of a person, is applied to show that partners have the right to select their copartners; and that no set of partners can take another person into the partnership, without the consent of each of the partners) 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. - 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. - The liquidation of the assets of the partnership following its dissolution is governed by an agreement of the partners which, like any other contract, is binding among them and normally takes precedence to the extent applicable over the Code's general provisions. We here take note of paragraph 8 of the "Amendment to Articles of Partnership" reading thusly: . . . In the event of the death or retirement of any partner, his interest in the partnership shall be liquidated and paid in accordance with the existing agreements and his partnership participation shall revert to the Senior Partners for allocation as the Senior Partners may determine…. - The term "retirement" must have been used in the articles, as we so hold, in a generic sense to mean the dissociation by a partner, inclusive of resignation or withdrawal, from the partnership that thereby dissolves it.
W/N the private respondent's demand for the dissolution of the partnership so that he can get a physical partition of partnership was made 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. - 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. DISPOSITIVE WHEREFORE, the decision appealed from is AFFIRMED. No pronouncement on costs.