Ortega vs. Court of Appeals, 245 SCRA 529

By Jereka Escalona


Under the case of Ortega v. Court of Appeals, “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 foundation and essence of partnership.”

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“Its continued existence is, in turn, dependent on the mutual resolve, along with each partner’s capability to give it, and the absence of a cause for dissolution provided by 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 at will.”


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 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 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.