Case Summary (G.R. No. L-8531)
Key Dates
• July 25, 1984 – Partnership formed with capital of ₱750,000
• September 5, 1984 – Donaldo Ramirez admitted upon ₱250,000 contribution
• January 1987 – Jesus Jose’s withdrawal; petitioners close restaurant and store furniture at respondents’ home
• March 1, 1987 – Respondents formally communicate intention to withdraw and request return of capital
• November 10, 1987 – Respondents file complaint for collection of money
• July 21, 1992 – RTC Decision ordering petitioners to pay ₱250,000 actual damages and ₱30,000 attorney’s fees
• March 23, 2000 – Court of Appeals (CA) Decision ordering petitioners to reimburse ₱253,114
• July 26, 2000 – CA Resolution denying reconsideration
• July 14, 2003 – Supreme Court Decision under the 1987 Constitution
Applicable Law
• 1987 Philippine Constitution (as decision date is post-1990)
• Civil Code of the Philippines (Articles 1768 [partnership juridical personality], 1826 [liability of incoming partners], 1830–1831 [dissolution by notice], 1839 [order of settlement upon dissolution])
• Rules of Court, Rule 142, Section 1 (costs follow the result as a matter of course)
Factual Background
Petitioners formed a partnership for restaurant and catering services with an initial capital of ₱750,000 contributed by the three founding partners. Donaldo Ramirez joined in September 1984 with a ₱250,000 capital, paid by his parents (respondents). After Jesus Jose’s withdrawal in January 1987 and return of his ₱250,000 contribution, petitioners closed the restaurant—without informing respondents—and stored its furniture and equipment at the respondents’ residence. In March 1987, respondents signified their own withdrawal and demanded return of their capital share. Repeated requests for restitution went unheeded. Respondents then filed suit in November 1987 for collection of money representing their partnership share.
Procedural History
The RTC, Branch 148, Makati City, ruled in July 1992 that the partnership had been dissolved by petitioners’ unilateral cessation of business, and ordered them to pay respondents ₱250,000 actual damages plus attorney’s fees and costs. On appeal, the CA set aside the RTC decision in March 2000 and computed respondents’ one-third share of partnership capital—after deducting alleged partnership liabilities of ₱240,658—from the initial ₱1,000,000 capitalization, arriving at ₱253,114. The CA ordered reimbursement of that amount, without pronouncement as to costs. Reconsideration was denied in July 2000.
Issues
- Whether respondents could demand return of their capital contribution upon withdrawal.
- Whether the CA correctly computed respondents’ share at ₱253,114.
- Whether the CA properly declined to assess costs.
Court’s Analysis
Partnership Liability for Capital Refund
– A partnership is a separate juridical entity distinct from its partners. Capital contributions belong to the partnership, not to individual partners or managers.
– Only the partnership may refund a retiring partner’s equity, after dissolution, liquidation, and winding up. Respondents thus had no personal right to demand capital return directly from petitioners.Proper Basis for Computing Refund
– The amount available for distribution is the net proceeds of liquidation, after satisfaction of all partnership creditors, not the initial capital contributions. Capital fluctuates with business profits or losses.
– The CA erred by:
a) Treating the original ₱1,000,000 aggregate capital as static and fully distributable.
b) Relying on alleged partnership liabilities (₱240,658) unsupported by evidence; the RTC correctly found no proof that such obligations were partnership debts.
c) Failing to deduct the ₱250,000 paid out to Jesus Jose upon withdrawal, which permanently reduced partnership capital.
d) Ignoring depreciation of furniture
Case Syllabus (G.R. No. L-8531)
Procedural History
- Petitioners filed a Petition for Review on Certiorari before the Supreme Court, challenging:
- The March 23, 2000 Decision of the Court of Appeals (CA) in CA-GR CV No. 41026, which nullified the RTC decision and ordered petitioners to pay respondents ₱253,114.00.
- The July 26, 2000 Resolution of the CA denying reconsideration.
- The RTC, Branch 148, Makati City, initially rendered judgment on July 21, 1992 in Civil Case No. 18289, awarding respondents actual damages, attorney’s fees, and costs.
- The CA reversed and set aside the RTC decision, computed respondents’ share in the partnership as ₱253,114.00, and made no pronouncement as to costs.
- Petition for Review was deemed submitted on July 18, 2001 upon receipt of petitioners’ memorandum.
Facts
- On July 25, 1984, Luzviminda J. Villareal, Carmelito Jose, and Jesus Jose formed “Aquarius Food House and Catering Services” with total capital of ₱750,000.
- Villareal was appointed general manager; Carmelito Jose, operations manager.
- On September 5, 1984, Donaldo Efren C. Ramirez joined the partnership with a ₱250,000 contribution paid by his parents, Cesar G. and Carmelita C. Ramirez.
- January 1987: Jesus Jose withdrew; the partnership refunded his ₱250,000 capital in cash by agreement.
- Also in January 1987, petitioners closed the restaurant (citing increased rent) and stored its furniture and equipment at respondents’ house without their prior knowledge.
- March 1, 1987: Respondents wrote petitioners expressing intent to withdraw and accepting return of their ₱250,000 capital.
- October 13, 1987: Carmelita Ramirez notified petitioners of deterioration of stored assets and again requested return of respondents’ one-third equity.
- November 10, 1987: Respondents filed a complaint for collection of money against petitioners in RTC Makati, Branch 59.
- Petitioners contended respondents had called for dissolution under Articles 1830–1831, had been paid more than ₱400,000 in furniture/equipment, and that business losses had