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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. 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 respondents, petitioners closed down the restaurant, allegedly
because of increased rental. On March 1, 1987, The respondent spouses wrote petitioners,
saying that they were no longer interested in continuing their partnership or in reopening the
restaurant, and that they were accepting the latters offer to return their capital contribution.
The repeated oral and written requests were, however, left unheeded
The CA sustained the lower courts decision, and made a computation on the petitioners
liability to respondents:
HELD: We hold that respondents have no right to demand from petitioners the return of their
equity share.
YES
Generally, in the pursuit of a partnership business, its capital is either increased by profits
earned or decreased by losses sustained. It does not remain static and unaffected by the
changing fortunes of the business. In the computation of the amount to be refunded to
respondents, The CA did not consider:
1. The omission of any provision for the depreciationof the furniture and the equipment.
3. The capitalization amount paid by the partnership to J. Jose when he withdrew from the
partnership.
Because of the above-mentioned transactions, the partnership capital was actually reduced.
But the disposition is without prejudice to proper proceedings for the accounting, the
liquidation and the distribution of the remaining partnership assets, if any
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