LIST OF CONSOLIDATED CASES IN PARTNERSHIP

August 25, 2017

1. Lim Tong Lim v Phil Fishing Gear Industries 317 SCRA 728
2. Pioneer Insurance v CA 175 SCRA 668
3. Ona v CIR 67 Phil Reports 666
4. Obillos Jr v CIR 139 SCRA 436
5. CIR v Suter 27 SCRA 152, Sept 8, 2017
6. Evangelista & Co. v. Abad Santos, G.R. No. L-31684, June 28, 1973
7. Bachrach v. La Protectora 37 Phil. 441, Sept 15, 2017
8. Island Sales, Inc v. United Pioneers, 65 SCRA 554
9. Munasque v. Court of Appeals, 139 SCRA 533
10. Ortega v. Court of Appeals, 245 SCRA 529
11. Singson v. Isabela Sawmill, 88 SCRA 623

------------------------------------------------------------------------------------------------------------

1. Lim Tong Lim v Phil Fishing Gear Industries 317 SCRA 728

FACTS:
It was established that Lim Tong Lim requested Peter Yao to engage in
commercial fishing with him and one Antonio Chua.
The three agreed to purchase two fishing boats but since they do not have
the money they borrowed from one Jesus Lim (brother of Lim Tong Lim).
They again borrowed money and they agreed to purchase fishing nets and
other fishing equipments.
Now, Yao and Chua represented themselves as acting in behalf of
Ocean Quest Fishing Corporation (OQFC) they contracted with Philippine
Fishing Gear Industries (PFGI) for the purchase of fishing nets amounting to
more than P500k.
They were however unable to pay PFGI and so they were sued in their own
names because apparently OQFC is a non-existent corporation.
Chua admitted liability and asked for some time to pay.
Yao waived his rights.
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

Lim Tong Lim however argued that hes not liable because he was not aware that
Chua and Yao represented themselves as a corporation; that the two acted
without his knowledge and consent.
ISSUE:
Whether or not Lim Tong Lim is liable.
HELD:
Yes. From the factual findings of both lower courts, it is clear that Chua,
Yao and Lim had decided to engage in a fishing business, which they started by
buying boats worth P3.35 million, financed by a loan secured from Jesus Lim.
In their Compromise Agreement, they subsequently revealed their
intention to pay the loan with the proceeds of the sale of the boats, and to divide
equally among them the excess or loss.
These boats, the purchase and the repair of which were financed with
borrowed money, fell under the term common fund under Article 1767. The
contribution to such fund need not be cash or fixed assets; it could be an
intangible like credit or industry. That the parties agreed that any loss or profit
from the sale and operation of the boats would be divided equally among them
also shows that they had indeed formed a partnership.
Lim Tong Lim cannot argue that the principle of corporation by estoppels
can only be imputed to Yao and Chua.
Unquestionably, Lim Tong Lim benefited from the use of the nets found in
his boats, the boat which has earlier been proven to be an asset of the
partnership.
Lim, Chua and Yao decided to form a corporation. Although it was never
legally formed for unknown reasons, this fact alone does not preclude the
liabilities of the three as contracting parties in representation of it.
Clearly, under the law on estoppel, those acting on behalf of a corporation
and those benefited by it, knowing it to be without valid existence, are held liable
as general partners.

------------------------------------------------------------------------------------------------------------

2. Pioneer Insurance & Surety Corporation vs Court of Appeals

 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

175 SCRA 668 Business Organization Corporation Law When De Facto

Partnership Does Not Exist
FACTS:
Jacob Lim was the owner of Southern Air Lines, a single proprietorship.
In 1965, Lim convinced Constancio Maglana, Modesto Cervantes,
Francisco Cervantes, and Border Machinery and Heavy Equipment Company
(BORMAHECO) to contribute funds and to buy two aircrafts which would form
part a corporation which will be the expansion of Southern Air Lines. Maglana et
al then contributed and delivered money to Lim.
But instead of using the money given to him to pay in full the aircrafts, Lim,
without the knowledge of Maglana et al, made an agreement with Pioneer
Insurance for the latter to insure the two aircrafts which were brought in
installment from Japan Domestic Airlines (JDA) using said aircrafts as security.
So when Lim defaulted from paying JDA, the two aircrafts were foreclosed by
Pioneer Insurance.
It was established that no corporation was formally formed between Lim and
Maglana et al.
ISSUE:
Whether or not Maglana et al must share in the loss as general partners.
HELD:
No. There was no de facto partnership.
Ordinarily, when co-investors agreed to do business through a corporation
but failed to incorporate, a de facto partnership would have been formed, and as
such, all must share in the losses and/or gains of the venture in proportion to
their contribution.
But in this case, it was shown that Lim did not have the intent to form a
corporation with Maglana et al.
This can be inferred from acts of unilaterally taking out a surety from
Pioneer Insurance and not using the funds he got from Maglana et al. The record
shows that Lim was acting on his own and not in behalf of his other would-be
incorporators in transacting the sale of the airplanes and spare parts.
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

------------------------------------------------------------------------------------------------------------

3. Ona v CIR 67 Phil Reports 666

FACTS:

Julia Buales died leaving as heirs her surviving spouse, Lorenzo Oa

and her five children.

A civil case was instituted for the settlement of her state, in which Oa
was appointed administrator and later on the guardian of the three heirs who
were still minors when the project for partition was approved.

This shows that the heirs have undivided interest in 10 parcels of land,
6 houses and money from the War Damage Commission.

Although the project of partition was approved by the Court, no attempt was
made to divide the properties and they remained under the management of Oa
who used said properties in business by leasing or selling them and investing the
income derived therefrom and the proceeds from the sales thereof in real
properties and securities.As a result, petitioners properties and investments
gradually increased.

Petitioners returned for income tax purposes their shares in the net income but
they did not actually receive their shares because this left with Oa who invested
them.

Based on these facts, CIR decided that petitioners formed an unregistered

partnership and therefore, subject to the corporate income tax, particularly for
years 1955 and 1956. Petitioners asked for reconsideration, which was denied
hence this petition for review from CTAs decision.

Issue:

W/N there was a co-ownership or an unregistered partnership

W/N the petitioners are liable for the deficiency corporate income tax

Held:
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

Unregistered partnership. The Tax Court found that instead of actually

distributing the estate of the deceased among themselves pursuant to the project
of partition, the heirs allowed their properties to remain under the management of
Oa and let him use their shares as part of the common fund for their ventures,
even as they paid corresponding income taxes on their respective shares.

Yes. For tax purposes, the co-ownership of inherited properties is automatically

converted into an unregistered partnership the moment the said common
properties and/or the incomes derived therefrom are used as a common fund
with intent to produce profits for the heirs in proportion to their respective shares
in the inheritance as determined in a project partition either duly executed in an
extrajudicial settlement or approved by the court in the corresponding testate or
intestate proceeding.

The reason is simple. From the moment of such partition, the heirs are entitled
already to their respective definite shares of the estate and the incomes thereof,
for each of them to manage and dispose of as exclusively his own without the
intervention of the other heirs, and, accordingly, he becomes liable individually
for all taxes in connection therewith.

If after such partition, he allows his share to be held in common with his co-heirs
under a single management to be used with the intent of making profit thereby in
proportion to his share, there can be no doubt that, even if no document or
instrument were executed, for the purpose, for tax purposes, at least, an
unregistered partnership is formed.

For purposes of the tax on corporations, our National Internal Revenue Code
includes these partnerships

The term partnership includes a syndicate, group, pool, joint venture or other
unincorporated organization, through or by means of which any business,
financial operation, or venture is carried on (8 Mertens Law of Federal Income
Taxation, p. 562 Note 63; emphasis ours.)

with the exception only of duly registered general copartnerships within the
purview of the term corporation. It is, therefore, clear to our mind that petitioners
herein constitute a partnership, insofar as said Code is concerned, and are
subject to the income tax for corporations. Judgment affirmed.

------------------------------------------------------------------------------------------------------------
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

Obillos Jr v CIR 139 SCRA 436

Facts:

In 1973, Jose Obillos completed payment on two lots located in Greenhills, San
Juan.

The next day, he transferred his rights to his four children for them to build their
own residences. The Torrens title would show that they were co-owners of the
two lots.

However, the petitioners resold them to Walled City Securities Corporation and
Olga Cruz Canda for P313k or P33k for each of them. They treated the profit
as capital gains and paid an income tax of P16,792.00

The CIR requested the petitioners to pay the corporate income tax of their
shares, as this entire assessment is based on the alleged partnership under
Article 1767 of the Civil Code; simply because they contributed each to buy the
lots, resold them and divided the profits among them.

But as testified by Obillos, they have no intention to form the partnership and that
it was merely incidental since they sold the said lots due to high demand of
construction. Naturally, when they sell them as co-partners, it will result to the
share of profits. Further, their intention was to divide the lots for residential
purposes.

Issue:

Was there a partnership, hence, they are subject to corporate income taxes?

Court Ruling:

Not necessarily. As Article 1769 (3) of the Civil Code provides: the sharing of
gross returns does not in itself establish a partnership, whether or not the
persons sharing them have a joint or common right or interest in any property
from which the returns are derived. There must be an unmistakeable intention
to form a partnership or joint venture.

In this case, the Commissioner should have investigated if the father paid
donor's tax to establish the fact that there was really no partnership.
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

------------------------------------------------------------------------------------------------------------

CIR v Suter 27 SCRA 152, Sept 8, 2017

FACTS:

A limited partnership named William J. Suter 'Morcoin' Co., Ltd was

formed 30 September 1947 by William J. Suter as the general partner, and
Julia Spirig and Gustav Carlson.

They contributed, respectively, P20,000.00, P18,000.00 and P2,000.00. it

was also duly registered with the SEC.

On 1948 Suter and Spirig got married and in effect Carlson sold his
share to the couple, the same was registered with the SEC.

The limited partnership had been filing its income tax returns as a
corporation, without objection by the herein petitioner, Commissioner of Internal
Revenue,

until in 1959 when the latter, in an assessment, consolidated the income

of the firm and the individual incomes of the partners-spouses Suter and Spirig
resulting in a determination of a deficiency income tax against respondent
Suter in the amount of P2,678.06 for 1954 and P4,567.00 for 1955.

ISSUE:

Whether or not the limited partnership has been dissolved after the
marriage of Suter and Spirig and buying the interest of limited partner Carlson.

RULING:

No, the limited partnership was not dissolved.

A husband and a wife may not enter into a contract of general

partnership, because under the Civil Code, which applies in the absence of
express provision in the Code of Commerce,

persons prohibited from making donations to each other are

prohibited from entering into universal partnerships.

(2 Echeverri 196) It follows that the marriage of partners

necessarily brings about the dissolution of a pre-existing
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

partnership.

What the law prohibits was when the spouses entered into a
general partnership. In the case at bar, the partnership was
limited

------------------------------------------------------------------------------------------------------------

Evangelista & Co. v. Abad Santos, G.R. No. L-31684, June 28, 1973

FACTS:

On October 9, 1954 a co-partnership was formed under the name of

"Evangelista & Co."

On June 7, 1955 the Articles of Co-partnership were amended so as to include

herein respondent, Estrella Abad Santos, as industrial partner, with herein
petitioners Domingo C. Evangelista, Jr., Leonarda Atienza Abad Santos and
Conchita P. Navarro, the original capitalist partners, remaining in that capacity,
with a contribution of P17,500 each

On December 17, 1963 herein respondent filed suit against the three other
partners, alleging that the partnership, had been paying dividends to the partners
except to her; and that notwithstanding her demands the defendants had refused
and continued to refuse to let her examine the partnership books or to give her
information regarding the partnership affairs or to pay her any share in the
dividends declared by the partnership

The defendants, in their answer, denied ever having declared dividends or

distributed profits of the partnership; denied likewise that the plaintiff ever
demanded that she be allowed to examine the partnership books; and by way of
affirmative defense alleged that the amended Articles of Co-partnership did not
express the true agreement of the parties, which was that the plaintiff was not an
industrial partner; that she did not in fact contribute industry to the partnership.

ISSUE:
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

Whether Abad Santos is entitled to see the partnership books because

she is an industrial partner in the partnership

HELD:

Yes, Abad Santos is entitled to see the partnership books.

The Supreme Court ruled that according to

ART. 1299. Any partner shall have the right to a formal account as to partnership
affairs:

(1)If he is wrongfully excluded from the partnership business or possession of its

property by his co-partners;
(2)If the right exists under the terms of any agreement;
(3)As provided by article 1807;
(4)Whenever other circumstances render it just and reasonable."

In the case at hand, the company is estopped from denying Abad Santos as an
industrial partner because it has been 8 years and the company never corrected
their agreement in order to show their true intentions. The company never
bothered to correct those up until Abad Santos filed a complaint.

------------------------------------------------------------------------------------------------------------

Bachrach v. La Protectora 37 Phil. 441, Sept 15, 2017

Facts:
Nicolas Segundo, Antonio Adiarte, Ignacio Flores and Modesto Serrano
(defendants) formed a civil partnership called La Protectora for the purpose of
engaging in the business of transporting passengers and freight at Laoag, Ilocos
Norte.
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

Marcelo Barba, acting as manager, negotiated for the purchase of 2 automobile

trucks from E. M. Bachrach for P16,500.

Barba paid P3,000 in cash and for the balance executed promissory notes.

One of these promissory notes was signed in the following manner:

P.P La Protectora, By Marcelo Barba Marcelo Barba

The other 2 notes were signed in the same way but the word by was omitted.

It was obvious that in signing the notes, Barba intended to bind both the
partnership and himself.

The defendants executed a document in which they

declared that they were members of La Protectora and that they had granted to
its president full authority to contract for the purchase of the 2 automobiles.

The document was delivered by Barba to Bachrach at the time the vehicles were
purchased.

Barba incurred a debt amounting to P2,617.57 and Bachrach foreclosed a chattel

mortgage on the trucks but there was still balance. To recover the balance,
action was instituted against the defendants. Judgment was rendered against the
defendants.

Issue:
a.Whether or not the defendants are liable for the firm debts.
b.Whether or not Barba had authority to incur expenses for the partnership
(relevant issue)

Held:
a.Yes. Promissory notes constitute the obligation exclusively of La Protectora
and Barba. They do not constitute an obligation directly binding the defendants.
Their liability is based on the principles of partnership liability. A member is not
liable in solidum with his fellows for the entire indebtedness but is liable with
them or his aliquot part.
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

SC obiter: the document was intended merely as an authority to enable Barba to

bind the partnership and that the parties to the instrument did not intend to confer
upon Barba an authority to bind them personally.
b. Yes. Under Art 1804, every partner may associate another person with him in
his share. All partners are considered agents of the partnership. Barba must be
held to have authority to incur these expenses. He is shown to have been in fact
the president/manager, and there can be no doubt that he had actual authority to
incur obligation.

------------------------------------------------------------------------------------------------------------

Island Sales, Inc v. United Pioneers, 65 SCRA 554

75.
Island Sales, Inc.
v .
United Pioneers General Construction Company, Et. AlG.R. No. L-22493
,
July 31, 1975 FACTS:
United Pioneers General Construction Company is a general partnership formed
by Benjamin Daco, Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo
Lumauig. In 1961, United Pioneers purchased by installment a motor vehicle
from Island Sales, Inc. United Pioneers defaulted in its payment hence it was
sued and the 5 partners were impleaded as co-defendants. Upon motion of
Island Sales, Lumauig was removed as a defendant. United Pioneers lost the
civil case and the trial court rendered judgment ordering United Pioneers to pay
the outstanding balance plus interest and costs. It further decreed that the
remaining 4 co-
defendants shall pay Island Sales in case United Pioneers property will not be
enough to satisfy its
indebtedness to Island Sales.
ISSUE:
What is the extent of the liability of the partners considering that one partner was
removed as a co-defendant on motion of Island Sales?
HELD:
Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is should
be noted that since there were 5 partners when the purchase was made in behalf
of the partnership, the liability of each partner should be 1/5th (of the companys
obligation) each. The fact that the complaint against Lumauig was dismissed,
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

upon motion of the Island Sales, does not unmake Lumauig as a general partner
in the company. In so moving to dismiss the complaint, Island Sales merely
condoned
Lumauigs individual liability to them.

------------------------------------------------------------------------------------------------------------
Munasque v. Court of Appeals, 139 SCRA 533

Island Sales vs United Pioneers General Construction Company et al

Facts:
United Pioneers General Construction Company is a general partnership formed
by Benjamin Daco, Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo
Lumauig. In 1961, United Pioneers purchased by installment a motor vehicle
from Island Sales, Inc. United Pioneers defaulted in its payment hence it was
sued and the 5 partners were impleaded as co-defendants.
Upon motion of Island Sales, Lumauig was removed as a defendant.
United Pioneers lost the civil case and the trial court rendered judgment ordering
United Pioneers to pay the outstanding balance plus interest and costs. It further
decreed that the remaining 4 co-defendants shall pay Island Sales in case United
Pioneers property will not be enough to satisfy its indebtedness to Island Sales.
ISSUE: What is the extent of the liability of the partners considering that one
partner was removed as a co-defendant on motion of Island Sales?
HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is
should be noted that since there were 5 partners when the purchase was made
in behalf of the partnership, the liability of each partner should be 1/5th (of the
companys obligation) each. The fact that the complaint against Lumauig was
dismissed, upon motion of the Island Sales, does not unmake Lumauig as a
general partner in the company. In so moving to dismiss the complaint, Island
Sales merely condoned Lumauigs individual liability to them.
Elmo Muasque vs CA
Facts:
Elmo Muasque, in behalf of Galan and Muasque partnership as
Contractor,entered into a written contract with Tropical Commercial Co., through
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

its branchmanager Ramon Pons, for remodelling of Tropicals building in Cebu.

The consideration for the entire services is P25,000 to be paid: 30% upon signing
of contract, and balance on 3 equal instalments of P6,000 every 15working days.
First payment of check worth P7,000 was payable to Muasque, who indorsed it
to Galan for purposes of depositing the amount and paying the materials already
used.But since Galan allegedly misappropriated P6,183.37 of the check for
personal use,Muasque refused to indorse the second check worth P6,000.
Galan then informed Tropical of the misunderstanding between him and
Muasque and this prompted Tropical to change the payee of the second check
from Muasque to Galan and Associates (the duly registered name of Galan
and Muasque partnership).Despite the misappropriation, Muasque alone was
able to finish the project. The two remaining checks were properly issued to
Muasque.Muasque filed a complaint for payment of sum of money plus
damages againstGalan, Tropical and Pons for the amount covered by the first
and second checks.Cebu Southern Hardware Co and Blue Diamond Glass
Palace were allowed as intervenors having legal interest claiming against
Muasue and Galan for materials used. TC:-Muasque and Pons jointly and
severally liable to intervenors-Tropical and Pons absolved CA affirmed with
modification:-Muasque and Pons jointly liable to intervenors
Issue:
1.W/N Muasque and Galan are partners?
2.W/N payment made by Tropical to Galan was good payment?
3.W/N Galan should shoulder exclusively the amounts payable to theintervenors
(granting he misappropriated the amount from the two checks)?
Held:yes-yes-no!
1.YES. Tropical had every right to presume the existence of the
partnership:a.Contract states that agreement was entered into by Galan
andMuasqueb.The first check issue in the name of Muasque was indorsed to
Galan The relationship was made to appear as a partnership.
2.YES. Muasque and Galan were partners when the debts to the
intervenorswere incurred, hence, they are also liable to third persons who
extended credit to their partnership.

Pioneer Insurance vs CA
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

175 SCRA 668 Business Organization Corporation Law When De Facto

Partnership Does Not Exist
Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In 1965,
Lim convinced Constancio Maglana, Modesto Cervantes, Francisco Cervantes,
and Border Machinery and Heavy Equipment Company (BORMAHECO) to
contribute funds and to buy two aircrafts which would form part a corporation
which will be the expansion of Southern Air Lines. Maglana et al then contributed
and delivered money to Lim.
But instead of using the money given to him to pay in full the aircrafts, Lim,
without the knowledge of Maglana et al, made an agreement with Pioneer
Insurance for the latter to insure the two aircrafts which were brought in
installment from Japan Domestic Airlines (JDA) using said aircrafts as security.
So when Lim defaulted from paying JDA, the two aircrafts were foreclosed by
Pioneer Insurance.
It was established that no corporation was formally formed between Lim and
Maglana et al.
ISSUE: Whether or not Maglana et al must share in the loss as general partners.
HELD: No. There was no de facto partnership. Ordinarily, when co-investors
agreed to do business through a corporation but failed to incorporate, a de facto
partnership would have been formed, and as such, all must share in the losses
and/or gains of the venture in proportion to their contribution. But in this case, it
was shown that Lim did not have the intent to form a corporation with Maglana et
al. This can be inferred from acts of unilaterally taking out a surety from Pioneer
Insurance and not using the funds he got from Maglana et al. The record shows
that Lim was acting on his own and not in behalf of his other would-be
incorporators in transacting the sale of the airplanes and spare parts.

------------------------------------------------------------------------------------------------------------
Ortega v. Court of Appeals, 245 SCRA 529

FACTS:

On December 19, 1980, respondent Misa associated himself together, as

senior partner with petitioners Ortega, del Castillo, Jr., and Bacorro, as junior
partners. On Feb. 17, 1988, respondent Misa wrote a letter stating that he is
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

withdrawing and retiring from the firm and asking for a meeting with the
petitioners to discuss the mechanics of the liquidation. On June 30, 1988,
petitioner filed a petition to the Commision's Securities Investigation and Clearing
Department for the formal dissolution and liquidation of the partnership. On
March 31, 1989, the hearing officer rendered a decision ruling that the withdrawal
of the petitioner has not dissolved the partnership. On appeal, the SEC en banc
reversed the decision since it is partnership at will, the law firm could be
dissolved by any partner at anytime, such as by withdrawal therefrom, regardless
of good faith or bad faith, since no partner can be forced to continue in the
partnership against his will and was affirmed by the Court of Appeals. Hence,
this petition.

ISSUE:
Whether or not the Court of Appeals has erred in holding that the
partnership is a partnership at will and whether or not the Court of Appeals has
erred in holding that the withdrawal of private respondent dissolved the
partnership regardless of his good or bad faith

HELD:
No. The SC upheld the ruling of the CA regarding the nature of the
partnership. The SC further stated that a partnership that does not fix its term is a
partnership at will. 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.

------------------------------------------------------------------------------------------------------------
Singson v. Isabela Sawmill, 88 SCRA 623

FACTS:
 LIST OF CONSOLIDATED CASES IN PARTNERSHIP

On December 19, 1980, respondent Misa associated himself together, as senior

partner with petitioners Ortega, del Castillo, Jr., and Bacorro, as junior partners.
On Feb. 17, 1988, respondent Misa wrote a letter stating that he is withdrawing
and retiring from the firm and asking for a meeting with the petitioners to discuss
the mechanics of the liquidation.
On June 30, 1988, petitioner filed a petition to the Commision's Securities
Investigation and Clearing Department for the formal dissolution and liquidation
of the partnership.
On March 31, 1989, the hearing officer rendered a decision ruling that the
withdrawal of the petitioner has not dissolved the partnership.
On appeal, the SEC en banc reversed the decision since it is partnership at will,
the law firm could be dissolved by any partner at anytime, such as by withdrawal
therefrom, regardless of good faith or bad faith, since no partner can be forced to
continue in the partnership against his will and was affirmed by the Court of
Appeals. Hence, this petition.

ISSUE:
Whether or not the Court of Appeals has erred in holding that the partnership is a
partnership at will and whether or not the Court of Appeals has erred in holding
that the withdrawal of private respondent dissolved the partnership regardless of
his good or bad faith

HELD:
No. The SC upheld the ruling of the CA regarding the nature of the partnership.
The SC further stated that a partnership that does not fix its term is a partnership
at will. 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.