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Week 13, Case #2 ZOSA | GR No.

109248, July 3, 1995


PETITIONERS: Gregorio Ortega, Tomas Del Castillo, Benjamin Bacorro, all
junior partners of the firm
RESPONDENTS: Court of Appeals, Securities and Exchange Commission
(SEC) and Joaquin Misa
TOPIC: Dissolution and Winding up
DOCTRINES:
1. A partnership that does not fix its term is a partnership at will.
2. The birth and life of a partnership at will is predicated on the mutual desire
and consent of the partners.
3. 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.
FACTS:
A law firm as first registered as
Ross, Selph and Carrascoso (1958), was later changed to
Ross, Selph, Salcedo, Del Rosario, Bito & Misa (1965), to
Salcedo, Del Rosario, Bito, MIsa & Lozada (1972), to
Del Rosario, Bito, Misa & Lozada (March 1977) and to
Bito, Misa & Lozada (June 1977)
On Feb 17, 1988, Joaquin Misa, a senior partner in the said firm, wrote a
letter to the firm, saying that he is withdrawing from Bito, Misa & Lozada
effective at the end of that February; that the accountants have been
instructed to make the proper liquidation with regard to his participation in the
firm. Misa also wrote a letter to the junior partners that he would like to meet
him that very day to discuss the mechanics of liquidation and his interest in
the two floors of the building where the firm was holding office (in Salcedo,
Makati).

liquidation of the shares of any withdrawing partner in the partnership


interest.
Misa appealed and the SEC en banc reversed the decision of the Hearing
Officer. It ruled that since the firm was a partnership at will, it could be
dissolved by any partner at anytime, such as by Misas withdrawal,
regardless of good faith or bad faith, since no partner can be forced to
continue in the partnership against his will.
The junior partners sought a reconsideration for the SEC en banc decision.
Misa asked for an appointment of a receiver to take over the assets of the
dissolved partnership and to take charge of the winding up of its affairs. SEC
denied the motion for reconsideration and rejected as well the petition for
receivership. The case was remanded to the Hearing Officer.
Both parties filed an appeal in the Court of Appeals. During the pendency of
the case, Bito and Lozada died, this prompted Misa to renew his application
for receivership. This was opposed by the junior partners.
Court of Appeals affirmed in toto the SEC decision, that:
1. Misas withdrawal caused the dissolution of the partnership;
2. Withdrawal was not in bad faith;
3. Misas interest should be computed and paid in the manner stipulated in
the partnership agreement;
4. case be remanded to the Hearing Officer for the determination of Misas
share in the partnership; and
5. the appointment of receiver was unnecessary as no sufficient proof
indicating assets are in danger of being lost, removed or materially impaired
was shown.
Junior partners filed this petition for review.
ISSUES:

On Feb 19, 1988, Misa wrote another letter to the junior partners telling them
that the partnership has ceased to be mutually satisfactory because of the
working conditions of our employees, and that other partners refused to
give meaningful increases to the employees; even attorneys, are dressed
down publicly in a loud voice in a manner that deprived them of their selfrespect.
Misa then filed with the SECs Securities Investigation and Clearing
Department a petition for dissolution and liquidation of partnership. The junior
partners filed their opposition to the petition. The Hearing Officer ruled that
Misas withdrawal from the law firm did not dissolve the partnership and the
junior partners are required to abide by the Agreement regarding the

1. W/N the partnership is a partnership at will. Yes, it is.


2. W/N Misas withdrawal dissolved the partnership. Yes, it did.
3. W/N Misas withdrawal was made in bad faith. No, it was in good faith.
DECISION:
1. A partnership that does not fix its term is a partnership at will. Bito, Misa &
Lozada was a partnership at will as evidenced by the DURATION CLAUSE
in the partnership agreement that The partnership shall continue so along as
mutually satisfactory and upon the death or legal incapacity of one of the
partners, shall be continued by the surviving partners.

2. The birth and life of a partnership at will is predicated on the mutual desire
and consent of the partners. Its continued existence is dependent on (1) the
constancy of that mutual resolve, along with each partners capability to give
it and (2) 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, otherwise, it
can result in a liability 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 of
the business. It is different 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 partnership is governed by various provisions of the
Civil Code however, an agreement of the partners, like any other contract, is
binding among them. Thus, with respect to the 2 floors of office
condominium, according to the partnership agreement, The share of the
retiring or deceased partner in the aforementioned two (2) floor office

condominium shall be determined upon the basis of the valuation above


mentioned which shall be paid monthly within the first ten (10) days of every
month in installments of not less than P20,000.00 for the Senior Partners,
P10,000.00 in the case of two (2) existing Junior Partners and P5,000.00 in
the case of the new Junior Partner.
3. Atty Misa did not act in bad faith. 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. 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.
WHEREFORE, the decision appealed from is AFFIRMED. No
pronouncement on costs.
SO ORDERED.