Also referred to as case: 406 SCRA 145 (2003)
RELATED DOCTRINE: The partnership has a juridical personality separate and distinct from that of each of the partners.
SUMMARY: Respondents were no longer interested in continuing the partnership and demanded the return of their capital distribution to the petitioners.
FACTS: Villareal, C. Jose, and J. Jose formed a partnership for the operation of a restaurant and catering business under the name Aquarius Food House and Catering Services, each contributing 250K. Ramirez was later added, contributing 250K as well which was paid by his parents. After some time, one of them (J. Jose) withdrew from the partnership; his capital contribution was refunded to him in cash by agreement of the partners.
Without prior knowledge of Ramirez, petitioners closed the restaurant, allegedly because of increased rental. On March 1, 1987, Ramirez wrote petitioners saying that they were no longer interested in continuing their partnership or in reopening the restaurant and that they were accepting the petitioners’ offer to return their capital contribution. However, the repeated oral and written requests were left unheeded.
ISSUE: Whether or not petitioners are liable to Ramirez in his share in the partnership.
RULING: No. Ramirez has no right to demand from petitioners, however, the partnership is liable. The partnership has a juridical personality separate and distinct from that of each of the partners. Ramirez has no right to demand from petitioners the return of their equity share. Since the capital was contributed to the partnership, not to petitioners, it is the partnership that must refund the equity of the retiring partners.
However, before the partners can be paid their shares, the creditors of the partnership must first be compensated. Therefore, the exact amount of refund equivalent to respondents’ one-third share in the partnership cannot be determined until all the partnership assets have been liquidated and all partnership creditors have been paid.
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