[G.R. No. 144214.July 14, 2003]; 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.; PANGANIBAN,J.:

FACTS: In 1984, Villareal, Carmelito Jose and Jesus Jose, formed apartnershipfor the purpose of operating a restaurant. Aquarius Food House and Catering Services.Villareal was appointed general manager and Carmelito Jose, operations manager. Each contributed P250,000.00. In 1984, Ramirez was added as a partner after he contributed P250,000.00 was paid by his mommy and daddy, resp.s Cesar and Carmelita Ramirez. In 1987, Jesus withdrew from the partnershipand his capital share of P250k was returned to him as agreed upon by the other partners. Thereafter, the restaurant suffered losses. Without informing Ramirez, Villareal and Carmelito shut down the restaurant. They then turned over the restaurant equipment to Ramirez. Later, Ramirez sent a letter to Villareal and Carmelito telling them hes no longer interested in being a partner and that hes demanding his shares in thepartnership. Villareal and Carmelito ignored the request of Ramirez hence the latter sued them. In their defense, Villareal and Carmelito said that the restaurant equipment served as payment to Ramirez when they were delivered to them; that Ramirez cannot ask for share in equity because the restaurant incurred debts (P240,658.00) and irreversiblebusinesslosses. Ramirez argued by saying that the equipment were merely placed in their house for storage as the two partners allegedly searched for a better restaurant location; that he was not aware of any losses or any indebtedness because he never took part in the management of the restaurant. The TC ruled in favor of Ramirez. The CA affirmed and it further ordered Villareal and Carmelito to pay Ramirez P253,114.00. The computation was done as follows: (OriginalPartnershipCapital PartnershipDebt =PartnershipAsset) Number of partners; hence: (P1,000,000.00 P240,658.00 = P759,342.00) 3 = P253,114.00.ISSUE:WON CA is correctHELD:Nopesieezzz.It is impossible that the said P1,000,000.00 original capital did not fluctuate. It could not have remained stagnant. Further, the Court of Appeals missed to note that one partner left and his contribution was returned (Jesus Jose). Generally, in the pursuit of apartnershipbusiness, 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 thebusiness.The SC also noted that Ramirez cannot demand his equity shares from Villareal and Carmelito because it should be thepartnership the partners and the partnershiphas a separate and distinct personality.In determining Ramirez share in the equity, losses must be accounted for. He cannot ask for an amount equivalent to his capital contribution especially in this case where thepartnershipincurred debts and losses. At any rate, Ramirez share is 1/3 of whatever assets thepartnershipstill has after debts and losses are deducted. Hence there is a need for a proper proceeding for the accounting, liquidation, and distribution of the remaining partnershipassets.A share in apartnershipcan be returned only after the completion of the latters dissolution, liquidation and winding up of thebusiness.On the issue of whether or not the turning over of the restaurant equipment to Ramirez served as payment of the latters share, it is wrong for Villarreal and Carmelito to assert that it served as a payment. Ramirez was merely made to believe that said equipment are being stored in his place and not being given to him as payment.