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1 C a s e
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O R G
In all these cases, the period of the interruption shall be counted for the
prescription. (1946a)
Sancho v Lizarraga
GR L-33580
February 6, 1931
Article 1681. Neither does the lessee have any right to a reduction of
the rent if the fruits are lost after they have been separated from their
stalk, root or trunk. (1576)
Article 1682. The lease of a piece of rural land, when its duration has
not been fixed, is understood to have been for all the time necessary
for the gathering of the fruits which the whole estate leased may yield
in one year, or which it may yield once, although two or more years
have to elapse for the purpose. (1577a)
SECOND DIVISION
G.R. No. L-19819 October 26, 1977
WILLIAM UY, plaintiff-appellee,
vs.
BARTOLOME PUZON, substituted by FRANCO PUZON, defendantappellant.
Penned by: CONCEPCION JR.
By: Earshad Banjal
FACTS:
CFI:
The Court of First Instance of Manila, having heard the cause, and
finding it duly proved that the defendant had not contributed all the
capital he had bound himself to invest, and that the plaintiff had
demanded that the defendant liquidate the partnership, declared it
dissolved on account of the expiration of the period for which it was
constituted, and ordered the defendant, as managing partner, to
proceed without delay to liquidate it, submitting to the court the result of
the liquidation together with the accounts and vouchers within the period
of thirty days from receipt of notice of said judgment, without costs.
(ISSUES) The plaintiff appealed from said decision making the following
assignments of error:
1. In holding that the plaintiff and appellant is not entitled to the
rescission of the partnership contract, Exhibit A, and that article
1124 of the Civil Code is not applicable to the present case.
2. In failing to order the defendant to return the sum of P50,000 to
the plaintiff with interest from October 15, 1920, until fully paid.
3. In denying the motion for a new trial.
In the brief filed by counsel for the appellee, a preliminary question is
raised purporting to show that this appeal is premature and therefore will
not lie. The point is based on the contention that inasmuch as the
liquidation ordered by the trial court, and the consequent accounts, have
not been made and submitted, the case cannot be deemed terminated
in said court and its ruling is not yet appealable. In support of this
contention counsel cites section 123 of the Code of Civil Procedure, and
the decision of this court in the case of Natividad vs. Villarica (31 Phil.,
172).
HELD:
This contention is well founded. Until the accounts have been rendered
as ordered by the trial court, and until they have been either approved
or disapproved, the litigation involved in this action cannot be considered
as completely decided; and, as it was held in said case of Natividad vs
.Villarica, also with reference to an appeal taken from a decision ordering
the rendition of accounts following the dissolution of partnership, the
appeal in the instant case must be deemed premature.
But even going into the merits of the case, the affirmation of the
judgment appealed from is inevitable. In view of the lower court's
findings referred to above, which we cannot revise because the parol
evidence has not been forwarded to this court, articles 1681 and 1682
of the Civil Code have been properly applied. Owing to the defendant's
failure to pay to the partnership the whole amount which he bound
himself to pay, he became indebted to it for the remainder, with interest
and any damages occasioned thereby, but the plaintiff did not thereby
acquire the right to demand rescission of the partnership contract
according to article 1124 of the Code. This article cannot be applied to
the case in question, because it refers to the resolution of obligations in
general, whereas article 1681 and 1682 specifically refer to the contract
of partnership in particular. And it is a well known principle that special
provisions prevail over general provisions.
By virtue of the foregoing, this appeal is hereby dismissed, leaving the
decision appealed from in full force, without special pronouncement of
costs. So ordered.
NOTES:
Article 1124. Judicial summons shall be deemed not to have been
issued and shall not give rise to interruption:
(1) If it should be void for lack of legal solemnities;
(2) If the plaintiff should desist from the complaint or should
allow the proceedings to lapse;
B U S
O R G
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Moran vs. CA
By: Albert Bantan
Facts:
In February 1971, Isabelo Moran and Mariano Pecson entered into a
partnership agreement where they agreed to contribute P15k each for
the purpose of printing 95k posters of the delegates to the then 1971
Constitutional Commission. Moran shall be in charge in managing the
printing of the posters. It was further agreed that Pecson will receive a
commission of P1k a month starting from April 1971 to December 1971;
that the partnership is to be liquidated on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he issued
P10k in favor of the partnership. He gave the P10k to Moran as the
managing partner. Moran however did not add anything and, instead, he
only used P4k out of the P10k in printing 2,000 posters. He only printed
2,000 posters because he felt that printing all 95k posters is a losing
venture because of the delay by the COMELEC in announcing the full
delegates. All the posters were sold for a total of P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson
damages. The Court of Appeals affirmed the decision of the trial court
but modified the same as it ordered Moran to pay P47.5k for unrealized
profit; P8k for Pecsons monthly commissions; P7k as return of
investment because the venture never took off; plus interest.
ISSUE: Whether or not the CA judgment is correct.
HELD: No. The award of P47.5k for unrealized profit is speculative.
There is no evidence whatsoever that the partnership between the
Moran and Pecson would have been a profitable venture (because base
on the circumstances then i.e. the delay of the COMELEC in proclaiming
the candidates, profit is highly unlikely). In fact, it was a failure doomed
from the start. There is therefore no basis for the award of speculative
damages in favor of Pecson. Further, there is mutual breach in this case,
Pecson only gave P10k instead of P15k while Moran gave nothing at all.
As for the P8k monthly commission, this is without basis. The agreement
does not state the basis of the commission. The payment of the
commission could only have been predicated on relatively extravagant
profits. The parties could not have intended the giving of a commission
inspite of loss or failure of the venture. Since the venture was a failure,
Pecson is not entitled to the P8k commission.
As for the P7k award as return for Pecsons investment, the CA erred in
his ruling too. Though the venture failed, it did took off the ground as
evidenced by the 2,000 posters printed. Hence, return of investment is
not proper in this case. There are risks in any business venture and the
failure of the undertaking cannot entirely be blamed on the managing
partner alone, specially if the latter exercised his best business
judgment, which seems to be true in this case.
Moran must however return the unused P6k of Pecsons contribution to
the partnership plus P3k representing Pecsons profit share in the sale
of the printed posters. Computation of P3k profit share is as follows:
(P10k profit from the sale of the 2,000 posters printed) (P4k expense
in printing the 2k posters) = (P6k profit); Profit 2 = P3k each.
DAN FUE LEUNG, petitioner,vs.HON. INTERMEDIATE APPELLATE
COURT and LEUNG YIU, respondents.
G.R. No. 70926 January 31, 1989
By: Gladys Barretto
FACTS:
A complaint was filed by Leung Yiu with the then Court of
First Instance of Manila to recover the sum equivalent to twenty-two
percent (22%) of the annual profits derived from the operation of Sun
Wah Panciteria since October, 1955 against Dan Fue Leung.
The Sun Wah Panciteria, a restaurant and was registered
under the name of Dan Fue Leung as the sole proprietor.
Leung Yiu adduced evidence during the trial of the case to
show that Sun Wah Panciteria was actually a partnership and that he
was one of the partners having contributed P4,000.00 to its initial
establishment.
The petitioner denied having received from the private
respondent the amount of P4,000.00.
He argued that he used his savings from his salaries as an employee
at Camp Stotsenberg in Clark Field and later as waiter at the Toho
Restaurant amounting to a little more than P2,000.00 as capital in
establishing Sun Wah Panciteria. To bolster his contention that he was
the sole owner of the restaurant, the petitioner presented various
government licenses and permits showing the Sun Wah Panciteria was
and still is a single proprietorship solely owned and operated by himself
alone.
B U S
O R G
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HELD:
As between the conflicting evidence of the parties, the trial
court gave credence to that of the plaintiffs. Hence, the court ruled
in favor of the private respondent.
The petitioner appealed the trial court's decision to the then
Intermediate Appellate Court.
Later, the appellate court affirmed the lower court's decision.
The petitioner filed a motion for reconsideration but was denied.
The petitioner now asks for the reversal of the decision of the
then Intermediate Appellate Court which affirmed the decision of the
then Court of First Instance of Manila declaring private respondent
Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun
Wah Panciteria and ordering the petitioner to pay to the private
respondent his share in the annual profits of the said restaurant.
He further argued that :"The complaint avers that private
respondent extended 'financial assistance' to herein petitioner at the
time of the establishment of the Sun Wah Panciteria, in return of which
private respondent allegedly will receive a share in the profits of the
restaurant. The same complaint did not claim that private
respondent is a partner of the business. It was, therefore, a serious
error for the lower court and the Hon. Intermediate Appellate Court to
grant a relief not called for by the complaint. It was also error for the Hon.
Intermediate Appellate Court to interpret or construe 'financial
assistance' to mean the contribution of capital by a partner to a
partnership;"
ISSUE NO. 1
Whether or not the private respondent is a partner of the
petitioner in the establishment of Sun Wah Panciteria.
HELD:
The Court held that private respondent is a partner of the
petitioner in Sun Wah Panciteria.
In essence, the private respondent alleged that when Sun
Wah Panciteria was established, he gave P4,000.00 to the petitioner
with the understanding that he would be entitled to twenty-two percent
(22%) of the annual profit derived from the operation of the said
panciteria. These allegations, which were proved, make the private
respondent and the petitioner partners in the establishment of Sun Wah
Panciteria because Article 1767 of the Civil Code provides that "By the
contract of partnership two or more persons bind themselves to
contribute money, property or industry to a common fund, with the
intention of dividing the profits among themselves".
Therefore, the lower courts did not err in construing the
complaint as one wherein the private respondent asserted his rights as
partner of the petitioner in the establishment of the Sun Wah Panciteria,
notwithstanding the use of the term financial assistance therein. We
agree with the appellate court's observation to the effect that "... given
its ordinary meaning, financial assistance is the giving out of money to
another without the expectation of any returns therefrom'. It connotes an
ex gratia dole out in favor of someone driven into a state of destitution.
But this circumstance under which the P4,000.00 was given to the
petitioner does not obtain in this case.' The complaint explicitly stated
that "as a return for such financial assistance, plaintiff (private
respondent) would be entitled to twenty-two percentum (22%) of the
annual profit derived from the operation of the said panciteria.
The private respondent's cause of action is premised
upon the failure of the petitioner to give him the agreed profits in
the operation of Sun Wah Panciteria. In effect the private
respondent was asking for an accounting of his interests in the
partnership.
It is Article 1842 of the Civil Code in conjunction with Articles
1144 and 1155 which is applicable. Article 1842 states:
The right to an account of his interest shall accrue to any
partner, or his legal representative as against the winding up partners or
the surviving partners or the person or partnership continuing the
business, at the date of dissolution, in the absence or any agreement to
the contrary.
ISSUE NO. 2
Whether or not the cause of action already prescribed.
B U S
The Court of Appeals did not make any findings that there was fraud.
The pronouncement that the evidence tends to prove that there were
mistakes in the petitioner's' statements of accounts, without specifying
the mistakes, merely intimates as suspicion and is not such a positive
and unmistakable finding of fact as to justify a revision, especially
because the Court of Appeals has relied on the bare allegations of the
parties, Even admitting that, as alleged by the petitioners in their
counterclaim, they overpaid the respondents in the sum of P575.12, this
error is essentially fatal to the latter's theory what the statement of
accounts shows, and is therefore not the kind of error that calls for
another accounting which will serve the purpose of the respondent's suit.
If the liquidation is ordered in the absence of any particular error, found
as a fact, simply because no damage will be suffered by the petitioners
in case the latter's final statement of the accounts proves to be correct,
we shall be assuming a fundamentally inconsistent position. If there is
not mistake, the only reason for a new accounting disappears. The
petitioners may not be prejudiced in the sense that they will be required
to pay anything to the respondents, but they will have to go to the trouble
of itemizing accounts covering a period of twenty years mostly from
memory, its appearing that no regular books of accounts were kept.
Stated more emphatically, they will be told to do what seems to be hardly
possible. When it is borne in mind that this case has been pending for
nearly nine years and that, if another accounting is ordered, a costly
action or proceeding may arise which may not be disposed of within a
similar period, it is not improbable that the intended relief may in fact be
the respondents' funeral.
O R G
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From June 27, 1900, up to the date when the partner Fitton died,
the latter failed to pay into the partnership funds, the remainder of
the price of the properties purchased by him in the amount of 3,000
pesos. Neither the administrator of the latter's estate (Feliciano
Velez) nor any other person had turned into the partnership or paid
to the plaintiff the aforesaid 3,000 pesos.
The properties in question had been entirely unproductive and
losses and damages had been occasioned to the plaintiff in the
sum of 2,000 pesos because of the failure of Fitton to comply with
his obligation.
Hence, plaintiff prayed for the rescission of the contract, the
dissolution of the partnership "A. M. Pabalan and Company," and
the annulment of the sale of the said properties.
Defendant alleged that the action prosecuted by the plaintiff had
prescribed and that the fact that the properties of the company
known as "A. M. Pabalan and Company" had been unproductive
was exclusively due to the great negligence of the plaintiff.
The court ordered a dissolution of the partnership formed between
the plaintiff and the deceased Walter A. Fitton and a recission of
the sale and contract of partnership executed between them.
We are reversing the appealed decision on the legal ground that the
petitioners' final statement of accounts had been approved by the
respondents and no justifiable reason (fraud, deceit, error or mistake)
has been positively and unmistakably found by the Court of Appeals so
as to warrant the liquidations sought by the respondents. In justice to the
petitioners, however, we may add that, considering that they ran the
business of the partnership for about twenty years at a place far from
the residence of the respondents and without the latter's intervention;
that the partners did not even know each other personally; that no formal
partnership agreement was entered into which bound the petitioners
under specific conditions; that the petitioners could have easily and
freely alleged that the business became partial, or even a total, loss for
any plausible reason which they could have concocted, it appearing that
the partnership engaged in such uncertain ventures as agriculture, cattle
raising and operation of rice mill, and the petitioners did not keep any
regular books of accounts; that the petitioners were still frank enough to
disclose that the original capital of P1,505.54 amounted, as of the date
of the dissolution of the partnership, to P44,618.67; and that the
respondents had received a total of P8,105.76 out of their capital of
P1,000, without any effort on their part, we are reluctant even to make
the conjecture that the petitioners had ever intended to, or actually did,
take undue advantage of the absence and confidence of the
respondents. Indeed, we feel justified in stating that the petitioners have
here given a remarkable demonstration of the legendary honesty, good
faith and industry with which the natives of Taal pursue business
arrangements similar to the partnership in question, and we would hate,
in the absence of any sufficient reason, to let such a beautiful legend
have a distasteful ending.
B U S
O R G
1 C a s e
Inasmuch as in this case nothing appears other than the failure to fulfill
an obligation on the part of a partner who acted as agent in receiving
money for a given purpose, for which he has rendered no accounting,
such agent is responsible only for the losses which, by a violation of the
provisions of the law, he incurred. This being an obligation to pay in
cash, there are no other losses than the legal interest, which interest is
not due except from the time of the judicial demand, or, in the present
case, from the filing of the complaint
Art. 1688 is NOT applicable in this case, in so far as it provides that the
partnership is liable to every partner for the amounts he may have
disbursed on account of the same and for the proper interest," for the
reason that no other money than that contributed as is involved Art.
1138, CC is also NOT applicable here as this deals with debts of a
partnership where the obligation is NOT joint. Likewise, Art 1723
regarding the liability of two or more agents with respect tithe return of
the money that they received from their principal is NOT applicable. No
showing of solidarity having been established, their liability is JOINT.
G.R. No. 30286
EN BANC
By: Jan Dela Cruz
YES. The ONGS failed to fulfill their obligation as partners who, acting
as MARTINEZs agents in receiving money, did not render proper
accounting therefor. Such renders them jointly liable for the losses;
solidarity not having been established.CFI decision is AFFRIMED in this
regard but REVERSED inasmuch as it found that the capital invested
earned profits. Thus, the CFIruling awarding MARTINEZ another P840
is DELETED. Ong PongCo is only liable to pay MARTINEZ half of the
capital, or P750, representing half of the loss which both ONGS
should jointly bear due to their omission, to earn legal interest of 6%
from time of filing this complaint, and costs.
To be sure, the whole action is based upon the fact that the
ONGSreceived capital from MARTINEZ for the purpose of organizing a
store. The ONGS, according to the agreement, were to handle the said
money and invest it in a store which was the object of the association.
The ONGS had no special agreement vesting in one sole person the
management of the business. Thus, both ONGS were the actual
administrators thereof; and as such administrators, they were the agents
of the company and incurred the liabilities peculiar to every agent,
among which is that of rendering account to the principal of their
transactions, and paying him everything they may have received by
virtue of the mandatum.
Since neither of them has rendered such account nor proven the losses,
they are therefore obliged to refund the money that they received for the
purpose of establishing the said store.
There is no evidence presented that the entire capital or any part thereof
was lost. Without proof, the allegation that the effects of the store were
ejected is, as earlier mentioned, of no moment. Even if we assume this
to be true, it could still not be inferred that the ejectment was due to the
fact that no rents were paid, and that the rent was not paid on account
of the loss of the capital belonging to the partnership.
With regard to the CFIs finding of profits, it appears that the same was
based on the statements of Ong Pong Co, to the effect that "there were
some profits, but not large ones."
M. TEAGUE, plaintiff-appellant,
vs.
H. MARTIN, J. T. MADDY and L.H. GOLUCKE, defendantsappellees.
HELD:
2 0 1 6 |5
This, however, was never proven. And even we admit the same; such
statement still does not make it possible to estimate the alleged profits.
As such, the CFI ruling on this point is REVERSED.
RATIO:
D i g e s t s / U M L a w
Defendants
allege
that
the
partnership was formed under a
written plan to which all agreed.
It is then alleged that the new
owners agree to duties as follows:
Capt. Maddy will have charger of
the Barracuda and the navigating of
the same. Salary P300 per month.
Mr. Martin will have charge of the
southern station, cold stores,
commissary and procuring fish.
Salary P300 per month.
Mr. Teague will have charge of
selling fish in Manila and
purchasing supplies. No salary until
business is on paying basis, then
the same as Maddy or Martin.
Defendant
Martin
specifically
denies the "plaintiff was named
general
manager
of
the
partnership," and alleged "that all
the duties and powers of the said
plaintiff were specifically set forth in
the
above
quoted
written
agreement and that no further or
additional powers were ever given
the said plaintiff."
B U S
O R G
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The defendants did not object to the dissolution of the partnership, but
prayed for an accounting with the plaintiff.
EN BANC
The lower court on April 30, 1928, rendered the following judgment:
G.R. No. 5840 September 17, 1910
That the partnership, existing among the parties in this suit, is
hereby declared dissolved;
vs.
EUSEBIO CLARIN, defendant-appellant.
That the barge Lapu-Lapu as well as the Ford truck No. T-3019 and
adding machine belong exclusively to the plaintiff, M. Teague, but
the said plaintiff must return to and reimburse the partnership the
sum of P14,032.26 taken from its funds for the purchase and
equipment of the said barge Lapu-Lapu; and also to return the sum
of P1,230 and P228 used for buying the Ford truck and adding
machine, respectively:
x
x
x
On June 7, 1928, plaintiff filed a petition praying that the decision of the
court in the case be set aside. On June 28, 1928, the court denied
plaintiff's motion for a new trial.
Plaintiff's case was tried on the theory that the partnership was
the owner of the property in question, and no claim was made
for the use of the Lapu-Lapu, and it appears that P14,032.26
of the partnership money was used in its purchase,
overhauling, expenses and repairs. In truth and in fact the
partnership had the use and benefit of the Lapu-Lapu in its
business from sometime in May until the receiver was
Larin charged them with the crime of estafa, but the provincial fiscal
filed an information only against Eusebio Clarin in which he
accused him of appropriating to himself not only the P172 but also
the share of the profits that belonged to Larin, amounting to P15.50.
Pedro Tarug and Carlos de Guzman appeared in the case as
witnesses and assumed that the facts presented concerned the
defendant and themselves together.
The trial court, that of First Instance of Pampanga, sentenced the
defendant, Eusebio Clarin, to six months' arresto mayor, to suffer
the accessory penalties, and to return to Pedro Larin P172, besides
P30.50 as his share of the profits, or to subsidiary imprisonment in
case of insolvency, and to pay the costs. The defendant appealed,
and in deciding his appeal we arrive at the following conclusions:
issue: WON a partnership can be held criminally liable for estafa?
Ruling: When two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention
of dividing the profits among themselves, a contract is formed
which is called partnership. (Art. 1665, Civil Code.)
When Larin put the P172 into the partnership which he formed with
Tarug, Clarin, and Guzman, he invested his capital in the risks or
benefits of the business of the purchase and sale of mangoes, and,
even though he had reserved the capital and conveyed only the
usufruct of his money, it would not devolve upon of his three
partners to return his capital to him, but upon the partnership of
which he himself formed part, or if it were to be done by one of the
three specifically, it would be Tarug, who, according to the
evidence, was the person who received the money directly from
Larin.
The P172 having been received by the partnership, the business
commenced and profits accrued, the action that lies with the
partner who furnished the capital for the recovery of his money is
not a criminal action for estafa, but a civil one arising from the
partnership contract for a liquidation of the partnership and a levy
on its assets if there should be any.
No. 5 of article 535 of the Penal Code, according to which those
are guilty of estafa "who, to the prejudice of another, shall
appropriate or misapply any money, goods, or any kind of personal
property which they may have received as a deposit on commission
for administration or in any other character producing the obligation
to deliver or return the same," (as, for example, in commodatum,
precarium, and other unilateral contracts which require the return
of the same thing received) does not include money received for a
partnership; otherwise the result would be that, if the partnership,
instead of obtaining profits, suffered losses, as it could not be held
liable civilly for the share of the capitalist partner who reserved the
ownership of the money brought in by him, it would have to answer
B U S
FACTS: The parties are all industrial partners. They contributed from
the profits of their business the sum of P807.28 as a fund toward the
construction of a casco. Inocencio, being the managing partner,
borrowed P3,500.00 from his wife to complete the construction since the
estimated cost of the casco was around P4,300.00. Inocencio, however,
failed to notify his partners of the borrowing of money and payment of
the various items from time to time, but it was shown that the books were
at all times open for their inspection. Agustin, representing all the
partners, was also present at the construction of the casco, in charge of
the practical work and cognizant of its needs and its progress.
O R G
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ISSUE:
WON Inocencio, in borrowing money and
advancing funds, was acting within the scope of his authority as a
managing partner.
HELD:
Yes. The work done in the casco having been within
the scope of the association and necessary to carry out its express
object, the borrowing of the money required to carry it on, with the
acquiescence if not with the affirmative consent of his associates, was
not outside the powers of the managing partner and constitutes a debt
for which all the associates are liable.
For the amount loaned, Inocencio became a creditor, subject
to the deduction therefrom of his proportionate part of the indebtedness.
Considered as a loan, this sum would place Inocencio as a creditor in a
stronger position as against his associates than if regarded as a mere
contribution to capital.
RATIO: The nature of the transaction (construction of casco) was
within the scope of the business of the partnership. Inocencio, in
borrowing money and advancing funds, was acting within the scope of
his authority as a managing partner. All partners, therefore, are liable for
the debt.
Facts:
The lower court, after trial, ordered Carlos Ceron personally to pay the
amount claimed and absolved the partnership Hill & Ceron, Robert Hill
and the Visayan Surety & Insurance Corporation. On appeal to the CA,
the latter affirmed the decision of the lower court, having reached the
conclusion that Ceron did not intend to represent and did not act for the
firm Hill & Ceron in the transaction involved in this litigation.
Issue: Whether or not Cerons act binds the partnership.
Held:
Yes, the Supreme Court reach the conclusion that the transaction made
by Ceron with the plaintiff should be understood in law as effected by
Hill & Ceron and binding upon it.
In the first place, it is an admitted fact by Robert Hill when he testified at
the trial that he and Ceron, during the partnership, had the same power
to buy and sell; that in said partnership Hill as well as Ceron made the
transaction as partners in equal parts; that on the date of the transaction,
February 14, 1934, the partnership between Hill and Ceron was in
existence.
According to the articles of copartnership of Hill & Ceron, a written
contract of the firm can only be signed by one of the partners if the other
partner consented. Without the consent of one partner, the other cannot
bind the firm by a written contract. Now, assuming for the moment that
Ceron attempted to represent the firm in this contract with the plaintiff
(the plaintiff conceded that the firm name was not mentioned at that
time), the latter has failed to prove that Hill had consented to such
contract. Also, third persons, like the plaintiff, are not bound in entering
into a contract with any of the two partners, to ascertain whether or not
this partner with whom the transaction is made has the consent of the
other partner. The public need not make inquires as to the agreements
had between the partners. Its knowledge, is enough that it is contracting
with the partnership which is represented by one of the managing
partners.
Ruling: NO
The respondent argues in its brief that even admitting that one of the
partners could not, in his individual capacity, engage in a transaction
similar to that in which the partnership is engaged without binding the
latter, nevertheless there is no law which prohibits a partner in the stock
brokerage business for engaging in other transactions different from
those of the partnership, as it happens in the present case, because the
transaction made by Ceron is a mere personal loan, and this argument,
so it is said, is corroborated by the Court of Appeals. The Supreme Court
do not find this alleged corroboration because the only finding of fact
made by the Court of Appeals is to the effect that the transaction made
by Ceron with the plaintiff was in his individual capacity.
B U S
a. Whether or not the defendants are liable for the firm debts.
b. Whether or not Barba had authority to incur expenses for the
partnership (relevant issue)
Held:
b.
2.
3.
4.
5.
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6.
Pang Lim sold all his interest in the distillery to his partner Lo
Seng, thus placing the latter in the position of sole owner.
7. Lo Shui, again as attorney in fact of Lo Yao, executed and
acknowledged before a notary public a deed purporting to
convey to Pang Lim and another Chinaman named Benito
Galvez, the entire distillery plant including the land used in
connection therewith.
8. The document also was never recorded in the registry of
property.
9. Pang Lim and Benito Galvez demanded possession from Lo
Seng, but the latter refused to yield.
10. An action of unlawful detainer was thereupon initiated by Pang
Lim and Benito Galvez.
11. The case for the plaintiffs is rested exclusively on the
provisions of article 1571 of the Civil Code, which reads in part
as follows: ART. 1571. The purchaser of a leased estate shall
be entitled to terminate any lease in force at the time of making
the sale, unless the contrary is stipulated, and subject to the
provisions of the Mortgage Law.
12. From the decision of the justice of the peace the case was
appealed to the Court of First Instance, where judgment was
rendered for the plaintiffs; and the defendant thereupon
appealed to the Supreme Court.
ISSUE:
Whether or not the plaintiffs herein, as purchasers of the estate, are at
liberty to terminate the lease, assuming that it was originally binding
upon all parties participating in it.
HELD:
Issue:
a.
O R G
Every competent person is by law bond to maintain in all good faith the
integrity of his own obligations; and no less certainly is he bound to
respect the rights of any person whom he has placed in his own shoes
as regards any contract previously entered into by himself.
While yet a partner in the firm of Lo Seng and Co., Pang Lim participated
in the creation of this lease, and when he sold out his interest in that firm
to Lo Seng this operated as a transfer to Lo Seng of Pang Lim's interest
in the firm assets, including the lease; and Pang Lim cannot now be
permitted, in the guise of a purchaser of the estate, to destroy an interest
derived from himself, and for which he has received full value.
On account of his status as partner in the firm of Lo Seng and Co., Pang
Lim knew that the original lease had been extended for fifteen years;
and he knew the extent of valuable improvements that had been made
thereon.
It would be shocking to the moral sense if the condition of the law were
found to be such that Pang Lim, after profiting by the sale of his interest
in a business, worthless without the lease, could intervene as purchaser
of the property and confiscate for his own benefit the property which he
had sold for a valuable consideration to Lo Seng.
Above all other persons in business relations, partners are required to
exhibit towards each other the highest degree of good faith. In fact the
relation between partners is essentially fiduciary, each being considered
in law, as he is in fact, the confidential agent of the other. It is therefore
accepted as fundamental in equity jurisprudence that one partner
cannot, to the detriment of another, apply exclusively to his own benefit
the results of the knowledge and information gained in the character of
partner.
It has been held that if one partner obtains in his own name and for his
own benefit the renewal of a lease on property used by the firm, to
commence at a date subsequent to the expiration of the firm's lease, the
partner obtaining the renewal is held to be a constructive trustee of the
firm as to such lease.
B U S
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ISSUES:
FACTS:
HELD:
Catalan and Gatchalian are partners. They mortgaged two lots to Dr.
Marave together with the improvements thereon to secure a credit from
the latter. The partnership failed to pay the obligation. The properties
were sold to Dr. Marave at a public auction. Catalan redeemed the
property and he contends that title should be cancelled and a new one
must be issued in his name.
ISSUE:
Did Catalans redemption of the properties make him the absolute owner
of the lands?
HELD:
No. Under Article 1807 of the NCC every partner becomes a trustee for
his copartner with regard to any benefits or profits derived from his act
as a partner. Consequently, when Catalan redeemed the properties in
question, he became a trustee and held the same in trust for his
copartner Gatchalian, subject to his right to demand from the latter his
contribution to the amount of redemption.
G.R. No. L-13680
April 27, 1960
MAURO LOZANA, plaintiff-appellee,
vs.
SERAFIN DEPAKAKIBO, defendant-appellant.
By: Jana Lomala
FACTS:
Plaintiff Mauro Lozana entered into a contract with
defendant Serafin Depakakibo wherein they established a
partnership, plaintiff furnishing 60% thereof and the
defendant, 40%, for the purpose of maintaining, operating and
distributing electric light and power in the Municipality of
Dumangas, Province of Iloilo, under a franchise issued to Mrs.
Piadosa Buenaflor. Later on the franchise or certificate of
public necessity and convenience in favor of Buenaflor was
cancelled and revoked by the Public Service Commission.
The said decision of the Public Service Commission was
appealed to SC. Consequently, a temporary certificate of
public convenience was issued in the name of Olimpia D.
Decolongon. By reason of the cancellation of the franchise in
the name of Buenaflor, plaintiff herein sold a generator Buda
(diesel) to the new grantee Decolongon, by a deed. Defendant
Depakakibo, on the other hand, sold one Crossly Diesel
Engine to the spouses Felix Jimenea and Felina Harder, by a
deed.
Plaintiff Mauro Lozana subsequently brought an
action against the defendant, alleging that he is the owner of
the Generator Buda (Diesel), valued at P8, 000 and 70
wooden posts with the wires connecting the generator to the
different houses supplied by electric current in the Municipality
of Dumangas, and that he is entitled to the possession
thereof, but that the defendant has wrongfully detained them
as a consequence of which plaintiff suffered damages.
Plaintiff prayed that said roperties be delivered back to him.
Judge Pelayo issued an order in said case authorizing the
sheriff to take possession of the generator and 70 wooden
posts, upon plaintiff's filing of a bond in favor of the defendant
(for subsequent delivery to the plaintiff).
Defendant filed an answer, denying that the
generator and the equipment mentioned in the complaint
belong to the plaintiff and alleging that the same had been
contributed by the plaintiff to the partnership entered into
between them in the same manner that defendant had
contributed equipments also, and therefore that he is not
unlawfully detaining them.
Defendant further filed a motion to declare plaintiff
in default on his counterclaim, but this was denied by the
court. Hearings on the case were conducted and the judge
entered a decision declaring plaintiff owner of the equipment
and entitled to the possession thereof, with costs against
B U S
same place where defendant had his home; but before he could
take actual possession of said machines, upon the strong
opposition of defendant, the court, on motion of the latter,
suspended the effects of its order.
In the meantime the judgments rendered in cases entitled
"Philippine Education Co., Inc. vs. Enrique Clemente", and "Jose
Echevarria vs. Enrique Clemente", all for the recovery of a sum of
money, were made executory; and in order to avoid the attachment
and subsequent sale of the machines by the sheriff for the
satisfaction from the proceeds thereof of the judgments rendered
in the two cases aforecited, plaintiff agreed with the intervenor Jose
Echevarria, who is his nephew, to execute a deed of mortgage
encumbering the machines described in said deed in which it is
stated that "they are situated on Singalong Street No. 1163", which
is a place entirely different from the house Nos. 705 and 707 on
Ylaya Street hereinbefore mentioned.
As the deed of mortgage expired, Echevarria commenced a case
to collect his mortgage credit. Echevarria obtained judgment in his
favor because the defendant did not interpose any defense or
objection, and, moreover, admitted being really indebted to the
intervenor in the amount set forth in the deed of mortgage.
However, the machines mortgaged were then in fact in custodia
legis, as they were under the control of the receiver and liquidator.
It was, therefore, useless for the intervenor to attach the same in
view of the receiver's opposition; and the question having been
brought to court, it decided that nothing could be done because the
receiver was not a party to the case which the intervenor instituted
to collect his aforesaid credit. The question ended thus because
the intervenor did not take any other step until he thought of joining
in this case as intervenor.
Hence, Echevarria appealed to the SC.
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ISSUE/S
I. WON the court a quo erred in finding in the appealed decision that
plaintiff was unable to take possession of the machines subject of the
deed of mortgage Exhibit B either before or after the execution thereof.
II. WON the court a quo likewise erred in deciding the present case
against the intervenor-appellant, on the ground, among others, that
"plaintiff has not adduced any evidence nor has he testified to show that
the machines mortgaged by him to the intervenor have ever belonged to
him, notwithstanding that said intervenor is his close relative."
HELD:
The result then, is that on June 9, 1951 when the sale was effected of
the properties of FELCO to Roberto Dorfe and Pepito Asturias, Lastilla
was already a partner of FELCO.
Now, does Lastrilla have any proper claim to the proceeds of the sale?
If he was a creditor of the FELCO, perhaps or maybe. But he was no.
The partner of a partnership is not a creditor of such partnership for the
amount of his shares. That is too elementary to need elaboration.
Lastrilla's theory, and the lower court's seems to be: inasmuch as
Lastrilla had acquired the shares of Brown is September,
1949, i.e., before the auction sale and he was not a party to the litigation,
such shares could not have been transferred to Dorfe and Asturias.
1. From the foregoing facts, it is clear that plaintiff could not obtain
possession of the machines in question. The constructive possession
deducible from the fact that he had the keys to the place where the
machines were found (Ylaya Street Nos. 705-707), as they had been
delivered to him by the receiver, does not help him any because the
lower court suspended the effects of the other whereby the keys were
delivered to him a few days after its issuance; and thereafter revoked it
entirely in the appealed decision. Furthermore, when he attempted to
take actual possession of the machines, the defendant did not allow him
to do so. Consequently, if he did not have actual possession of the
machines, he could not in any manner mortgage them, for while it is true
that the oft-mentioned deed of mortgage Exhibit B was annotated in the
registry of property, it is no less true the machines to which it refers are
not the same as those in question because the latter are on Ylaya Street
Nos. 705-707 and the former are on Singalong Street No. 1163. It cannot
be said that Exhibit B-1, allegedly a supplementary contract between the
plaintiff and the intervenor, shows that the machines referred to in the
deed of mortgage are the same as those in dispute and which are found
on Ylaya Street because said exhibit being merely a private document,
the same cannot vary or alter the terms of a public document which is
Exhibit B or the deed of mortgage.
Granting arguendo that the auction sale and not included the interest or
portion of the FELCO properties corresponding to the shares of Lastrilla
in the same partnership (17%), the resulting situation would be at
most that the purchasers Dorfe and Austrias will have to recognized
dominion of Lastrillas over 17 per cent of the properties awarded to
them.2 So Lastrilla acquired no right to demand any part of the money
paid by Dorfe and Austrias to the sheriff any part of the money paid by
Dorfe and Austrias to the sheriff for the benefit of FELCO and Tomassi,
the plaintiffs in that case, for the reason that, as he says, his shares
(acquired from Brown) could not have been and were not auctioned off
to Dorfe and Austrias.
c.
B U S
Defendants defense:
Defendant Eugenio Lo sets up, as a general defense, that "Tai Sing &
Co. was not a general partnership, and that the commercial credit in
current account which "Tai Sing & Co. obtained from the plaintiff bank
had not been authorized by the board of directors of the company, nor
was the person who subscribed said contract authorized to make the
same, under the article of copartnership. The other defendants, Yap
Sing and Ng Khey Ling, answered the complaint denying each and every
one of the allegations contained therein.
Trial Court found:
(1) That defendants Eugenio Lo, Ng Khey Ling and Yap Seng Co., Sieng
Peng indebted to plaintiff Philippine National Bank in sum of P22,595.26
to July 29, 1926, with a daily interest of P4.14 on the balance on account
of the partnership "Tai Sing & Co. for the sum of P16,518.74 until
September 9, 1922;
(2) Said defendants are ordered jointly and severally to pay the
Philippine National Bank the sum of P22,727.74 up to August 31, 1926,
and from the date, P4.14 daily interest on the principal; and
(3) The defendants are furthermore ordered to pay the costs of the
action.
ISSUE: Whether or not Lo is correct in both arguments.
HELD: No. The anomalous adoption of the firm name above noted does
not affect the liability of the general partners to third parties under Article
127 of the Code of Commerce. The object of the Code of Commerce in
requiring a general partnership to transact business under the name of
all its members, of several of them, or of one only, is to protect the public
from imposition and fraud; it is for the protection of the creditors rather
than of the partners themselves. It is unenforceable as between the
partners and at the instance of the violating party, but not in the sense
of depriving innocent parties of their rights who may have dealt with the
offenders in ignorance of the latter having violated the law; and that
contracts entered into by a partnership firm defectively organized are
valid when voluntarily executed by the parties, and the only question is
whether or not they complied with the agreement. Therefore, Lo cannot
invoke in his defense the anomaly in the firm name which they
themselves adopted. Lo was not able to prove his second argument. But
even assuming arguendo, his second contention does not deserve merit
because (a) Lam, in acting as a GM, is also a partner and his actions
were never objected to by the partners, and (b) it also appeared from
the evidence that Lo, Lam and the other partners authorized some of the
loans.
NOTE: Under the New Civil Code, a firm name may or may not include
the name of one or more of the partners (Article 1815)
SHARRUF AND CO. VS. BALOISE FIRE INSURANCE CO
By: Gil Ontal
FACTS:
Plaintiffs Salomon Sharruf and Elias Eskenazi were doing business
under the firm name of Sharruf & Co. As they had applied to the
defendant companies for insurance of the merchandise they had in stock
On August 26, 1933, the plaintiffs executed a contract of partnership
between themselves wherein they substituted the name of Sharruf & Co.
with the Sharruf & Eskenazi, stating that Elias Eskenazi contributed to
the partnership, as his capital, goods valued at P26,299.94 listed in an
inventory. It was likewise stated in said contract that Salomon Sharruf
brought to said partnership, as his capital, goods valued at P24,205.10,
appearing in the inventories
A fire broke out and burned the the said goods.
Herein defendant questions the plaintiffs capacity to sue either as a
partnership or individually
ISSUE:
whether or not Salomon Sharruf and Elias Eskenazi had
juridical personality to bring this action, either individually or collectively.
HELD:
As already seen, Salomon Sharruf and Elias Eskenazi were doing
business under the firm name of Sharruf & Co. in whose name the
insurance policies were issued, Elias Eskenazi having paid the
corresponding premiums.
In the case of Lim Cuan Sy vs. Northern Assurance Co. (55 Phil., 248),
this court said:
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B U S
FACTS
When the plaintiff was first employed, this steam laundry was owned
and operated by Freeman and Pierce.
Pierce, sold all of his right, title, and interest in the said laundry to
Whitcomb, who, together with Freeman, then became the owners of
this laundry and continued to operate the same as long as the plaintiff
was employed.
An action was brought against O.K. Freeman, James L. Pierce, and
Burton Whitcomb, as owners and operators of the Manila Steam
Laundry, to recover the sum of P952 alleged to be the balance due
the plaintiff for services performed.
An action was brought against O.K. Freeman, James L. Pierce, and
Burton Whitcomb, as owners and operators of the Manila Steam
Laundry, to recover the balance due the plaintiff for services
performed.
Judgment was rendered in favor of the plaintiff and against Freeman
and Whitcomb, jointly and severally, for the sum of P752, with interest
at the rate of 6 per cent per annum from the 27th day of August, 1909,
and the costs of the cause. The complaint as to Pierce was dismissed,
Whitcomb alone appealing.
ISSUE
WON partners of a non-commercial partnership are individually liable for
the entire amount due to the plaintiff.
HELD: NO
Partners cannot make private agreements, but all must appear in the
articles of copartnership.
In the organization of this partnership by Freeman and Whitcomb the
provisions of law were not complied with; that is, no formal partnership
was ever entered into by them, notwithstanding the fact that they were
engaged in the operation of this laundry.
The purpose for which this partnership was entered into by Freeman
and Whitcomb show clearly that such partnership was not a
commercial one; hence the provisions of the Civil Code and not the
Code of Commerce must govern in determining the liability of the
partners.
Those partnerships, although commercial, were not organized in
accordance with the provisions of the Code of Commerce as
expressed in those articles. In determining the liability of the partners
in these cases the court, after making the finding of facts, was
governed by the provisions of article 120 of the Commercial Code.
"A partnership," quoting from the syllabus in this case, "constituted in
such a manner that its existence was only known to those who had
an interest in the same, there being no mutual agreement between
the partners, and without a corporate name indicating to the public in
some way that there were other people besides the one who
ostensibly managed and conducted the business, is exactly the
accidental partnership of cuentas en participacion defined in article
239 of the Code of Commerce."
In a partnership of cuentas en participacion, under the provisions of
article 242 of the Code of Commerce, those who contract with the
person in whose name the business of such a partnership was
conducted shall have only the right of action against such person and
not against other persons interested. So this case is easily
distinguished from the case at bar, in that the one did not have the
corporate name while the other was known as the Manila Steam
Laundry.
The plaintiff was employed by and performed services for the Manila
Steam Laundry and was not employed by nor did he perform services
for Freeman alone. The public did not deal with Freeman and
Whitcomb personally, but with the Manila Steam Laundry. These two
partners were doing business under this name and, as we have said,
it was not a commercial partnership. Therefore, by the express
provisions of articles 1698 and 1137 of the Civil Code the partners are
not liable individually for the entire amount due the plaintiff. The
liability is pro rata and in this case the appellant is responsible to the
plaintiff for only one-half of the debt.
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B U S
Facts: Appellants Benito Liwanag and Maria Liwanag Reyes are coowners of Liwanag Auto Supply, a commercial guard who while in line
of duty, was skilled by criminal hands. His widow Ciriaca Vda. de
Balderama and minor children Genara, Carlos and Leogardo, all
surnamed Balderama, in due time filed a claim for compensation with
the Workmen's Compensation Commission, which was granted in an
award worded as follows:
WHEREFORE, the order of the referee under consideration
should be, as it is hereby, affirmed and respondents Benito
Liwanag and Maria Liwanag Reyes, ordered.
1. To pay jointly and severally the amount of three thousand
Four Hundred Ninety Four and 40/100 (P3,494.40) Pesos to
the claimants in lump sum; and
To pay to the Workmen's Compensation Funds the sum of
P4.00 (including P5.00 for this review) as fees, pursuant to
Section 55 of the Act.
In appealing the case to this Tribunal, appellants do not question the
right of appellees to compensation nor the amount awarded. They only
claim that, under the Workmen's Compensation Act, the compensation
is divisible, hence the commission erred in ordering appellants to
pay jointly and severally the amount awarded. They argue that there is
nothing in the compensation Act which provides that the obligation of an
employer arising from compensable injury or death of an employee
should be solidary obligation, the same should have been specifically
provided, and that, in absence of such clear provision, the responsibility
of appellants should not be solidary but merely joint.
At first blush appellants' contention would seem to be well, for ordinarily,
the liability of the partners in a partnership is not solidary; but the law
governing the liability of partners is not applicable to the case at bar
wherein a claim for compensation by dependents of an employee who
died in line of duty is involved. And although the Workmen's
Compensation Act does not contain any provision expressly declaring
solidary obligation of business partners like the herein appellants, there
are other provisions of law from which it could be gathered that their
liability must be solidary. Arts. 1711 and 1712 of the new Civil Code
provide:
ART. 1711. Owners of enterprises and other employers are
obliged to pay compensation for the death of or injuries to their
laborers, workmen, mechanics or other employees, even
though the event may have been purely accidental or entirely
due to a fortuitous cause, if the death or personal injury arose
out of and in the course of the employment. . . . .
ART. 1712. If the death or injury is due to the negligence of a
fellow-worker, the latter and the employer shall be solidarily
liable for compensation. . . . .
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B U S
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B U S
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name of the person the lender trusts, who in this case is the petitioner
himself. After all, he is the brother of the creditor, Jesus Lim.
On November 18, 1992, the trial court rendered its Decision, ruling that
Philippine Fishing Gear Industries was entitled to the Writ of Attachment
and that Chua, Yao and Lim, as general partners, were jointly liable to
pay respondent.
The trial court ruled that a partnership among Lim, Chua and Yao existed
based (1) on the testimonies of the witnesses presented and (2) on a
Compromise Agreement executed by the three which Chua and Yao had
brought against Lim in the RTC of Malabon, Branch 72, for (a) a
declaration of nullity of commercial documents; (b) a reformation of
contracts; (c) a declaration of ownership of fishing boats; (d) an
injunction and (e) damages.
The CA affirmed the trial court decision.
In arguing that he should not be held liable for the equipment purchased
from respondent, petitioner controverts the CA finding that a partnership
existed between him, Peter Yao and Antonio Chua. He asserts that the
CA based its finding on the Compromise Agreement alone. Furthermore,
he disclaims any direct participation in the purchase of the nets, alleging
that the negotiations were conducted by Chua and Yao only, and that he
has not even met the representatives of the respondent company.
Petitioner further argues that he was a lessor, not a partner, of Chua and
Yao, for the "Contract of Lease" dated February 1, 1990, showed that
he had merely leased to the two the main asset of the purported
partnership -- the fishing boat F/B Lourdes. The lease was for six
months, with a monthly rental of P37,500 plus 25 percent of the gross
catch of the boat.
Hence, petitioner brought this recourse before this Court.
The Issue: Whether by their acts, Lim, Chua and Yao could be deemed
to have entered into a partnership.
Munasque v. CA
G.R. No. L-39780 November 11, 1985
FACTS:
Petitioner Elmo Munasque filed a complaint for payment of sum of
money and damages against respondents Celestino Galan, Tropical
Commercial, Co., Inc. and Ramon Pons. Petitioner alleged that he
entered into a contract with respondent Tropical for remodelling a portion
of its building without exchanging or expecting any consideration from
Galan. Galan was casually named as partner in the contract by virtue
of his having introduced the petitioner to Tropical.
Galan would receive some kind of compensation in the form of some
percentages or commission. Tropical agreed to give petitioner the
amount of P7,000.00 soon after the construction began and thereafter,
the amount of P6,000.00 every fifteen (15) days.
Tropical delivered a check for P7,000.00 to Galan who succeeded in
getting Munasques indorsement on the same check persuading the
latter that the same be deposited in a joint account. When the second
check for P6,000.00 was due, petitioner refused to indorse said check
presented to him by Galan but through later manipulations, changed the
payee's name from Elmo Muasque to Galan and Associates. Galan
encashed the same at the placing the petitioner in great financial
difficulty in his construction business and subjecting him to demands of
creditors to pay' for construction materials. Petitioner later on demanded
that said amount be paid to him by respondents under the terms of the
written contract between the petitioner and respondent company.
TRIAL COURT
- ordered plaintiff Muasque and defendant Galan to pay intervenors
(suppliers of construction materials) jointly and severally
- absolved the defendants Tropical and Pons from any liability,
Petitioner and Intervenors filed MR. MR denied.
CA: affirmed the judgment of the trial court with the sole modification that
the liability imposed was changed from "jointly and severally" to "jointly."
ISSUES:
(1) WON a partnership existed between petitioner and respondent Galan
(2) WON Galan and Munasque are solidarily liable
Petitioner contends that the appellate court erred in holding that he and
respondent Galan were partners, the truth being that Galan was a sham
and a perfidious partner who misappropriated the amount of P13,000.00
due to the petitioner.Petitioner also contends that the appellate court
committed grave abuse of discretion in holding that the payment made
by Tropical to Galan was "good" payment when the same gave occasion
for the latter to misappropriate the proceeds of such payment.
HELD:
(1) YES.
B U S
The records will show that the petitioner entered into a contract with
Tropical for the renovation of the latter's building on behalf of the
partnership of "Galan and Muasque." Likewise, when Muasque
received the first payment of Tropical with a check made out in his name,
he indorsed the check in favor of Galan. Respondent Tropical therefore
had every right to presume that the petitioner and Galan were true
partners. If they were not partners as petitioner claims, then he has only
himself to blame for making the relationship appear otherwise, not only
to Tropical but to their other creditors as well. The payments made to
the partnership were, therefore, valid payments.
There is a general presumption that each individual partner is an
authorized agent for the firm and that he has authority to bind the firm in
carrying on the partnership transactions. The presumption is sufficient
to permit third persons to hold the firm liable on transactions entered into
by one of members of the firm acting apparently in its behalf and within
the scope of his authority.
(2) YES.
While Article 1816 of the Civil Code states that,"All partners, including
industrial ones, shall be liable prorate with all their property and after all
the partnership assets have been exhausted...". this provision should be
construed together with
Article 1824: "All partners are liable solidarily with the partnership for
everything chargeable to the partnership under Articles 1822 and 1823."
While the liability of the partners are merely joint in transactions entered
into by the partnership, a third person who transacted with said
partnership can hold the partners solidarily liable for the whole obligation
if the case of the third person falls under Articles 1822 or 1823.
Articles 1822 and 1823 of the Civil Code provide:
Art. 1822. Where, by any wrongful act or omission of any partner
acting in the ordinary course of the business of the partner-ship or
with the authority of his co-partners, loss or injury is caused to any
person, not being a partner in the partnership or any penalty is
incurred, the partnership is liable therefor to the same extent as the
partner so acting or omitting to act.
Art. 1823. The partnership is bound to make good:
(1) Where one partner acting within the scope of his apparent
authority receives money or property of a third person and
misapplies it; and
(2) Where the partnership in the course of its business receives
money or property of a third person and t he money or property so
received is misapplied by any partner while it is in the custody of the
partnership.
The obligation is solidary, because the law protects him, who in good
faith relied upon the authority of a partner, whether such authority is real
or apparent. That is why under Article 1824 of the Civil Code all partners,
whether innocent or guilty, as well as the legal entity which is the
partnership, are solidarily liable.
However. as between the partners Muasque and Galan,justice also
dictates that Muasque be reimbursed by Galan for the payments made
by the former representing the liability of their partnership to herein
intervenors, as it was satisfactorily established that Galan acted in bad
faith in his dealings with Muasque as a partner.
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