LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, petitioners, vs. DONALDO EFREN C.

RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA C. RAMIREZ ,respondents. G.R. No. 144214 Subject: BusOrg 1 A share in a partnership can be returned only after the completion of the latters dissolution, liquidation and w inding up of the business. Facts: 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 under the name Aquarius Food House and Catering Services. Villareal was appointed general manager and Carmelito Jose, operations manager. Respondent Donaldo Ra mirez joined as a partner on September 5, 1984 with a capital contribution of P250,000 which was paid by his parents, Respondents Cesar and Carmelita Ramirez. Jesus Jose withdrew from the partnership and his capital contribution of P250,000 was refunded to him in cash by agreement of the partners. In the same month, without prior knowledge of respondents, petitioners closed down the restaurant, allegedly because of increased rental. The restaurant furniture and equipment were deposited in the respondents house for storage. On March 1, 1987, respondent spouses wrote petitioners, saying that they were no longer intereste d in continuing their partnership or in reopening the restaurant, and that they were accepting the latters offer t o return their capital contribution. Respondent wrote another letter informing petitioners of the deterioration o f the restaurant furniture and equipment stored in their house. She also reiterated the request for the return of t heir one-third share in the equity of the partnership. The repeated oral and written requests were, however, left unheeded. Respondents filed before the RTC for the collection of a sum of money from petitioners. Petitioners contende d that respondents had expressed a desire to withdraw from the partnership and had called for its dissolution u nder Articles 1830 and 1831; that respondents had been paid, upon the turnover to them of furniture and equip ment worth over P400,000; and that the latter had no right to demand a return of their equity because their sha re, together with the rest of the capital of the partnership, had been spent as a result of irreversible business los ses. In their Reply, respondents alleged that had not received any regular report or accounting from the latter, who had solely managed the business. Respondents also alleged that they expected the equipment and the furniture stored in their house to be removed by petitioners as soon as the latter found a better location for the restaura nt. RTC 17 ruled that the parties had voluntarily entered into a partnership, which could be dissolved at any ti me. Petitioners clearly intended to dissolve it when they stopped operating the restaurant. Hence, the trial cour t rendered a judgment in favor of respondents and ordering the petitioners to pay jointly and severally. Issue: WON petitioners are liable to respondents for the latters share in the partnership July 14, 2003

Held: The Petition has merit. Both the trial and the appellate courts found that a partnership had indeed existed, and that it was dissolved on March 1, 1987. They found that the dissolution took place when respondents informe d petitioners of the intention to discontinue. Respondents consequently demanded from petitioners the return of their one-third equity in the partnership. We hold that respondents have no right to demand from petitioners the return of their equity share. Except as managers of the partnership, petitioners did not personally hold its equity or assets. The partnership has a juridical personality separate and distinct from that of each of the part ners. Since the capital was contributed to the partnership, not to petitioners, it is the partnership that must ref und the equity of the retiring partners. The amount to be refunded is necessarily limited to its total resources. In other words, it can only pay out wha t it has in its coffers, which consists of all its assets. However, before the partners can be paid their shares, the creditors of the partnership must first be compensated. After all the creditors have been paid, whatever is left of the partnership assets becomes a vailable for the payment of the partners shares. Evidently, in the present case, the exact amount of refund equivalent to respondents one -third share in the par tnership cannot be determined until all the partnership assets will have been liquidated. Primelink vs. Lazatin

In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agre ement whereby the Lazatins shall contribute a huge parcel of land and Primelink shal l develop the same into a subdivision. For 4 years however, Primelink failed to develo p the said land. So in 1998, the Lazatins filed a complaint to rescind the joint venture agreement with prayer for preliminary injunction. In said case, Primelink was declared in default or failing to file an answer and for asking multiple motions for extension. Th e trial court eventually ruled in favor of the Lazatins and it ordered Primelink to return t he possession of said land to the Lazatins as well as some improvements which Prim elink had so far over the property without the Lazatins paying for said improvements. This decision was affirmed by the Court of Appeals. Primelink is now assailing the ord er; that turning over improvements to the Lazatins without reimbursement is unjust; th at the Lazatins did not ask the properties to be placed under their possession but they merely asked for rescission. ISSUE: Whether or not the improvements made by Primelink should also be turned o ver under the possession of the Lazatins. HELD: Yes. In the first place, even though the Lazatins did specifically pray for posse ssion the same (placing of improvements under their possession) is incidental in the r elief they prayed for. They are therefore entitled possession over the parcel of land pl us the improvements made thereon made by Primelink. In this jurisdiction, joint ventures are governed by the laws of partnership. Under the l aws of partnership, when a partnership is dissolved, as in this case when the trial cou rt rescinded the joint venture agreement, the innocent party has the right to wind up th e partnership affairs. With the rescission of the JVA on account of petitioners fraudulent acts, all authority of any partner to act for the partnership is terminated except so far as may be necess ary to wind up the partnership affairs or to complete transactions begun but not yet fin ished. On dissolution, the partnership is not terminated but continues until the windin g up of partnership affairs is completed. Winding up means the administration of the assets of the partnership for the purpose of terminating the business and discharging the obligations of the partnership. It must be stressed, too, that although the Lazatins acquired possession of the lands and the improvements thereon, the said lands and improvements remained partnershi p property, subject to the rights and obligations of the parties, inter se, of the creditors and of third parties and subject to the outcome of the settlement of the accounts betw een the parties, absent any agreement of the parties in their JVA to the contrary (here no agreement in the JVA as to winding up). Until the partnership accounts are deter mined, it cannot be ascertained how much any of the parties is entitled to, if at all.

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