Ortega et al. v.

CA, SEC, and Misa (1995)

Facts: The law firm Ross, Lawrence, Selph, and Carrasco was duly registered in the Mercantile
Registry in 1937 and was reconstituted in the SEC. From its constitution, the firm has changed its
firm name 6 times with private respondent Joaquin L. Misa and two others associating themselves as
senior partners and petitioners Gregorio Ortega and two others as junior partner. In February 17,
1988, Misa wrote 2 letters to petitioners informing them of his withdrawal as partner effective at the
end of the month and the liquidation of his interest in two floors of their building. Misa wrote a third
letter, in which he gave the thwarted increase in the pay scale of their employees and public
humiliation even of attorneys, by his fellow partners, as the reasons for his withdrawal as partner.
Soon after, Misa filed with the SEC’s Security Investigation and Clearing Department (SICD) a petition
for dissolution and liquidation of partnership praying for delivery of his share of partnership assets
and the disallowing of the use of the firm name, ‘Bito, Misa, and Lozada’.
The problem started when the Security, Investigation, and Clearing Department of the SEC ruled that
Misa’s withdrawal does not dissolve the law partnership and that Misa and the senior partners
should abide by their Agreement.
On appeal, the SEC en banc reversed the SICD’s decision and held that Misa’s withdrawal effectively
dissolved the partnership, regardless of good faith or bad faith, as a partnership at will. The case was
then remanded to the Hearing Officer for determination of rights and obligations. With the junior
partners motion for reconsideration and Misa’s petition for the appointment of a receiver being
denied.
As the case was pending in the CA, the other senior partners, Bito and Lozada passed away and this
prompted a renewed petition for the appointment of a receiver to preserve partnership assets. The
CA affirmed in toto the SEC decision that Misa’s withdrawal dissolved the partnership, his
withdrawal was not in bad faith, that Misa’s interest should be computed and paid, and that case be
remanded to the SEC Hearing Officer. The CA also seconded the SEC’s decision that the appointment
of a receiver was unnecessary as the partnership assets were not in danger of being lost, removed, or
materially impaired.

Issue: W/N the CA erred in ruling that Respondent Misa’s withdrawal from the law firm dissolved the
partnership at will?

Held: NO. The Amended Articles of Partnership submitted for registration with the SEC in 1948 did
not provide for a specific duration and even stipulated that the partnership would continue so long as
it was ‘mutually satisfactory’. The determination of the Hearing Officer that the partnership was one
for a specific undertaking as the Amended Articles of Partnership was to act as legal adviser for
persons and entities was improper as such purpose was not specific. Even if a specific purpose or
duration was stipulated, a partner can dissolve a partnership at his will as an offshoot of delectus
personae (partners having the choice of persons to partner with). The partner dissolving just needs
to act in good faith so as not to be liable for damages. Also, since the liquidation of the interest of a
retiring/ dissociating partner to the firm was specifically stipulated to dependent upon the
determination of appraisers, it shall be liquidated as such. Lastly, Misa’s ‘interpersonal conflict’ was
justified as no partner shall remain one against their will, and as such, Misa is deemed to be in good
faith. CA decision AFFIRMED.