Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin Bacorro v.

CA, SEC and Joaquin Misa

G.R. No. 109248 July 3, 1995
Vitug, J.
Facts:
Ortega, then a senior partner in the law firm Bito, Misa, and Lozada
withdrew in said firm.
He filed with SEC a petition for dissolution and liquidation of
partnership.
SEC en banc ruled that withdrawal of Misa from the firm had
dissolved the partnership.Reason: since it is partnership at will, the
law firm could be dissolved by any partner at any time, 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.
Issue:
1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada,
Ortega & Castillo)is a partnership at will;
2. WON the withdrawal of Misa dissolved the partnership regardless
of his good or bad faith;
Held:
1. Yes. The partnership agreement of the firm provides that [t]he
partnership shal lcontinue so long as mutually satisfactory and upon
the death or legal incapacity of one of the partners, shall be continued
by the surviving partners.
2. Yes. Any one of the partners may, at his sole pleasure, dictate a
dissolution of thepartnership at will (e.g. by way of withdrawal of a
partner). 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

Lozana vs. Depakakibo

Case Digest
FACTS:
Lozana and Depakakibo established a partnership for the
purpose of maintaining, operating, anddistributing electric light and
power in the Municipality of Dumangas. The partnership is capitalized
at the sum ofP30, 000.00 where Lozana agreed to furnish 60% while
Depakakibo, 40%. However, the franchise for venture in favor of
Buenaflor was cancelled and revoked by the Public
ServiceCommission. Lozana thereafter sold Generator Buda
[Lozanas contribution to the partnership; no liquidation made] to
Decologon. When the decision was appealed, a temporary certificate
of public convenience was issued inthe name of Decolongon.
Depakakibo sold one Crossly Diesel Engine [Depakakibos
contribution to the partnership] to Spouses Jimenea and
Harder.Lozana brought action against Depakakibo alleging the latter
wrongfully detained the Generator Buda and wooden posts to which
he is entitled to the possession of. Lozano prayed the properties be
delivered back to him.
CFI ordered sheriff to take possession of the properties and the
delivery thereof to Lozano. Depakakiboalleged properties have been
contributed to the partnership and therefor he is not unlawfully
detaining them. Inaddition, Lozano sold his contribution to partnership
in violation of terms of their agreement.
CFI declared Lozano owner of and entitled to the equipment.
Depakakibo appealed decision to theSupreme Court.

ISSUE:
W/N partnership is void or the act of the partnership in furnishing
electric current to the franchise holder withoutprevious approval of
Public Service Commission render the partnership void?W/N disposal
of contribution of parties is allowed.
RULING:
Validity of the Partnership. Partnership is valid. The fact of furnishing
the current to the holder of thefranchise alone, without the previous
approval of the Public Service Commission, does not per se make
thecontract of partnership null and void from the beginning and render
the partnership entered into by the parties forthe purpose also void
and non-existent
Disposal of Contributed Property to the Partnership.
Facts show that parties entered into the contract ofpartnership,
Lozana contributing the amount of P18, 000, and there has not been
liquidation prior to the sale ofthe contributed properties: Buda Diesel
Engine and 70 posts. It necessarily follows that the Buda
diesel enginecontributed by the plaintiff had become the property of
the partnership. As properties of the partnership, thesame could not
be disposed of by the party contributing the same without the consent
or approval of thepartnership or of the other partner.
G.R. No. L-33580 February 6, 1931MAXIMILIANO SANCHO,
plaintiff-appellant,vs.
SEVERIANO LIZARRAGA,
defendant-appellee.
ROMUALDEZ,
J.:
FACTS:
The plaintiff brought an action for the rescission of a partnership
contract between himself and the defendant, thereimbursement by the
latter of his 50,000 peso investment therein, with interest at 12 per
cent per annum fromOctober 15, 1920.The defendant denies
generally and specifically all the allegations of the complaint and
asks for the dissolution of thepartnership, and the payment to him as
its manager and administrator of P500 monthly from October 15,
1920, until thefinal dissolution, with interest, one-half of said amount to
be charged to the plaintiff.The CFI of Manila held that the defendant
had not contributed all the capital he had bound himself to invest, and
thatthe plaintiff had demanded that the defendant liquidate the
partnership, declared it dissolved on account of theexpiration of the
period for which it was constituted, and ordered the defendant, as
managing partner, to proceedwithout delay to liquidate it, submitting to
the court the result of the liquidation.
Issue:
W/N Sancho entitled to rescission of the partnership contract and to
the return of his investment.
Held:
No
Ratio:
Counsel for the appellee, says that the appeal is premature. The point
is based on the contention that inasmuch as the liquidation ordered by
the trial court, and the consequent accounts, have not been made and
submitted, the case
cannot be deemed terminated in said court and its ruling is not yet
appealable.
This contention is well founded. Until the accounts have been
rendered as ordered by the trial court, and until they havebeen either
approved or disapproved, the litigation involved in this action cannot

be considered as completely decided. But even going into the

merits of the case, the affirmation of the judgment appealed from is
inevitable.
Articles 1681and 1682 have been properly applied. Owing to
the defendant's failure to pay to the partnership the whole amount
which he bound himself to pay, he became indebted to it for the
remainder, with interest and any damages occasioned thereby, but the
plaintiff did not thereby acquire the right to demand rescission of the
partnership contract according to Article 1124 of the Code. This article
cannot be applied to the case in question, because it refers to the
resolution of obligations in general, whereas article 1681 and 1682
specifically refer to the contract of partnership in particular. And itis a
well-known principle that special provisions prevail over general
provisions.

PABALAN vs VELEZ
FACTS:

MORAN VS. CA and PECSON

FACTS:
In February 1971, Isabelo Moran and Mariano Pecson entered into a
partnership agreement where they agreed to contribute P15k each for
the purpose of printing 95k posters of the delegates to the then 1971
Constitutional Commission. Moran shall be in charge in managing the
printing of the posters. It was further agreed that Pecson will receive a
commission of P1k a month starting from April 1971 to December
1971; that the partnership is to be liquidated on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he
issued P10k in favor of the partnership. He gave the P10k to Moran as
the managing partner. Moran however did not add anything and,
instead, he only used P4k out of the P10k in printing 2,000 posters.
He only printed 2,000 posters because he felt that printing all 95k
posters is a losing venture because of the delay by the COMELEC in
announcing the full delegates. All the posters were sold for a total of
P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson
damages. The Court of Appeals affirmed the decision of the trial court
but modified the same as it ordered Moran to pay P47.5k for
unrealized profit; P8k for Pecsons monthly commissions; P7k as
return of investment because the venture never took off; plus interest.
ISSUE: Whether or not the CA judgment is correct.
HELD: No. The award of P47.5k for unrealized profit is speculative.
There is no evidence whatsoever that the partnership between the
Moran and Pecson would have been a profitable venture (because
base on the circumstances then i.e. the delay of the COMELEC in
proclaiming the candidates, profit is highly unlikely). In fact, it was a
failure doomed from the start. There is therefore no basis for the
award of speculative damages in favor of Pecson. Further, there is
mutual breach in this case, Pecson only gave P10k instead of P15k
while Moran gave nothing at all.
As for the P8k monthly commission, this is without basis. The
agreement does not state the basis of the commission. The payment
of the commission could only have been predicated on relatively

extravagant profits. The parties could not have intended the giving of a
commission inspite of loss or failure of the venture. Since the venture
was a failure, Pecson is not entitled to the P8k commission.
As for the P7k award as return for Pecsons investment, the CA erred
in his ruling too. Though the venture failed, it did took off the ground
as evidenced by the 2,000 posters printed. Hence, return of
investment is not proper in this case. There are risks in any business
venture and the failure of the undertaking cannot entirely be blamed
on the managing partner alone, specially if the latter exercised his
best business judgment, which seems to be true in this case.
Moran must however return the unused P6k of Pecsons contribution
to the partnership plus P3k representing Pecsons profit share in the
sale of the printed posters. Computation of P3k profit share is as
follows: (P10k profit from the sale of the 2,000 posters printed) (P4k
expense in printing the 2k posters) = (P6k profit); Profit 2 = P3k
each.