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Ortega v. CA - Digest

The law firm of Bito, Misa & Lozada was a partnership at will between senior partners Joaquin Misa, Jesus Bito, and Mariano Lozada, and junior partners Gregorio Ortega, Tomas Del Castillo, Jr., and Benjamin Bacorro. In 1988, Atty. Misa withdrew from the partnership citing unsatisfactory working conditions. The SEC ruled that Misa's withdrawal dissolved the partnership as a partnership at will can be dissolved by any partner at any time. The Court of Appeals affirmed this decision and also denied appointing a receiver to the partnership assets. The Supreme Court upheld the lower courts' rulings, finding that the partnership was at will, any partner could dissolve it at

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1K views3 pages

Ortega v. CA - Digest

The law firm of Bito, Misa & Lozada was a partnership at will between senior partners Joaquin Misa, Jesus Bito, and Mariano Lozada, and junior partners Gregorio Ortega, Tomas Del Castillo, Jr., and Benjamin Bacorro. In 1988, Atty. Misa withdrew from the partnership citing unsatisfactory working conditions. The SEC ruled that Misa's withdrawal dissolved the partnership as a partnership at will can be dissolved by any partner at any time. The Court of Appeals affirmed this decision and also denied appointing a receiver to the partnership assets. The Supreme Court upheld the lower courts' rulings, finding that the partnership was at will, any partner could dissolve it at

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G.R. No.

109248

July 3, 1995

GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR., and BENJAMIN T.


BACORRO, petitioners,
vs.
HON. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION and JOAQUIN
L. MISA, respondents.

FACTS:

The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in the
Mercantile Registry on 1937 and reconstituted with the Securities and Exchange Commission
on 1948. The SEC records show that there were several subsequent amendments to the
articles of partnership since the firm name was changed six (6) times from 1958 to 1977 and
the recent name was BITO, MISA & LOZADA. The latter composed of Joaquin Misa, Jesus Bito
and Mariano Lozada, as senior partners, and Gregorio Ortega, Tomas Del Castillo, Jr., and
Benjamin Bacorro, as junior partners.

On 1988, Atty. Joaquin Misa withdrew from the firm stating that the partnership has ceased
to be mutually satisfactory because of the working conditions of the employees including the
assistant attorneys. He filed with the Commissions Securities Investigation and Clearing
Department (SICD) a petition for dissolution and liquidation of partnership.

On 1989, the hearing officer rendered a decision ruling that the withdrawal of Atty. Misa did
not dissolve the law partnership.

On appeal, the SEC en banc reversed the decision of the Hearing Officer and held that the
withdrawal of Attorney Joaquin L. Misa had dissolved the partnership. The Commission ruled
that, being a partnership at will, the law firm could be dissolved by any partner at any time,
regardless of good faith or bad faith, since no partner can be forced to continue in the
partnership against his will.

Reconsideration was sought by the parties and Atty. Misa, in addition, asked for an
appointment of a receiver. Respondent SEC denied such reconsideration, as well as rejecting
the petition for receivership. The parties filed with the appellate court separate appeals.

During the pendency of the case with the Court of Appeals, Atty. Jesus Bito and Atty. Mariano
Lozada both died. The death of such partners and the addition of new partners prompted
Atty. Misa to file again a petition for receivership to preserve and care for the partnership
assets.

The CA affirmed in toto the SEC decision and likewise denied the appointment of a receiver.
Hence, petitioners filed this petition.

ISSUES:
1. Whether or not the partnership is a partnership at will;
2. Whether or not the withdrawal of Atty. Misa dissolved the partnership regardless of
his good or bad faith; and
3. Whether or not the demand for dissolution of Atty. Misa was made in bad faith.

HELD:

First Issue
A partnership that does not fix its term is a partnership at will. The law firm is a partnership
at will. The partnership agreement states that the partnership shall continue so long as
mutually satisfactory and upon the death or legal incapacity of one of the partners, shall be
continued by the surviving partners."

Second Issue
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 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.

Among partners, mutual agency arises and the doctrine of delectus personae 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.

Third Issue
Attorney Misa did not act in bad faith. Public respondents viewed his withdrawal to have
been spurred by "interpersonal conflict" among the partners. It would not be right, we agree,
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.
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.

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