AGENCY TRUST AND PARTNERSHIP | ORTEGA VS. COURT OF APPEALS, 245 SCRA 529, JULY 3, 1935

ORTEGA VS. COURT OF APPEALS,

245 SCRA 529

 

TOPIC/DOCTRINE

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.

 

FACTS

“On February 17, 1988, petitioner-appellant wrote the respon-dents-appellees a letter stating:

“ ‘I am withdrawing and retiring from the firm of Bito, Misa and Lozada, effective at the end of this month.

 

“On 19 February 1988, petitioner-appellant wrote respondents-appellees another letter stating:

“ ‘The partnership has ceased to be mutually satisfactory because of the working conditions of our employees including the assistant attorneys. All my efforts to ameliorate the below subsistence level of the pay scale of our employees have been thwarted by the other partners. Not only have they refused to give meaningful increases to the employees, even attorneys, are dressed down publicly in a loud voice in a manner that deprived them of their self-respect. The result of such policies is the formation of the union, including the assistant attorneys.’

 

The partnership agreement (amended articles of 19 August 1948) does not provide for a specified period or undertaking. The ‘DURATION’ clause simply states:

“ ‘5. DURATION. 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.’

 

ISSUE

Whether the Atty. Misa’s withdrawal from the partnership had changed the relation of the parties and inevitably caused the dissolution of the partnership.

 

RULING

Yes.

The court ruled 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. 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. 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.

Here, the court ruled that the law firm “Bito, Misa & Lozada,” and now “Bito, Lozada, Ortega and Castillo,” is indeed such a partnership need not be unduly belabored. That Attorney Misa did not act in bad faith. 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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