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LUZVIMINDA J. VILLAREAL v. DONALDO EFREN C. RAMIREZ

FACTS:

On July 25, 1984, Luzviminda J. Villareal, Carmelito Jose, and Jesus Jose formed a partnership with a capital of P750,000 for the operation of a restaurant and catering business named "Aquarius Food House and Catering Services." Respondent Donaldo Efren C. Ramirez joined as a partner on September 5, 1984, with a capital contribution of P250,000 paid by his parents. After Jesus Jose withdrew from the partnership in January 1987, his capital contribution of P250,000 was refunded to him in cash. Without the knowledge of respondents, petitioners closed down the restaurant in the same month. Respondent spouses sent letters to petitioners in March and October 1987, requesting the return of their share in the partnership equity and expressing their disinterest in continuing the partnership. When their requests were ignored, respondents filed a complaint for the collection of a sum of money from petitioners. The trial court ruled in favor of respondents, holding petitioners liable for actual damages, attorney's fees, and costs of suit. The Court of Appeals affirmed the decision but computed petitioners' liability based on the outstanding obligation of the partnership before respondents joined, resulting in the amount of P253,114.00 to be returned to respondents. Petitioners now challenge the decision of the Court of Appeals.

ISSUES:

  1. Whether the Court of Appeals' decision ordering the distribution of the capital contribution instead of the net capital after the dissolution and liquidation of a partnership is in accordance with law and jurisprudence.

  2. Whether the Court of Appeals' decision ordering the petitioners to pay and reimburse the amount of P253,114.00 is supported by the evidence on record.

  3. Whether the Court of Appeals was correct in making no pronouncement as to costs.

RULING:

  1. No, the Court of Appeals' decision ordering the distribution of the capital contribution instead of the net capital after the dissolution and liquidation of a partnership is not in accordance with law and jurisprudence. A share in a partnership can be returned only after the completion of the latter's dissolution, liquidation, and winding up of the business.

  2. Yes, the Court of Appeals' decision ordering the petitioners to pay and reimburse the amount of P253,114.00 is supported by the evidence on record. The Court found that the outstanding obligation of the partnership, as proven, was P240,658.00. In accordance with Article 1826 of the New Civil Code, this amount should be deducted from the remaining capitalization of the partnership, resulting in the amount of P759,342.00. This amount should be divided into three shares, with each share amounting to P253,114.00. This is the amount that the petitioners should return to the respondents, representing their contribution to the partnership minus the outstanding debt.

  3. Yes, the Court of Appeals' decision to make no pronouncement as to costs is proper.

PRINCIPLES: