G.R. No.

L-25007 March 2, 1926 Commerce he, as a mere industrial partner, cannot be held responsible for
the partnership's debt.
PACIFIC COMMERCIAL COMPANY, plaintiff-appellee,
vs. The case is practically identical with that of the Compania Maritima vs.
ABOITIZ & MARTINEZ, ET AL., defendants. Munoz (9 Phil., 326), in which this court held the industrial partners
JOSE MARTINEZ, defendant-appellant. secondarily liable for the debts of the partnership but on the strength of the
vigorous dissenting opinion of Chief Justice Arellano in that case, that
Espina & Espina for appellant. appellant argues that the decision therein was erroneous and should now be
Block, Johnston & Greenbaum for appellee. overruled. With all due respect for the legal acumen of the first Chief Justice
of this Court, we are still of the opinion that the case was correctly decided.
OSTRAND, J.: Article 127 of the Code of Commerce reads as follows:

In April, 1919 Arnaldo F. de Silva, Guillermo Aboitiz, Vidal Aboitiz and Jose All the members of the general copartnership, be they or be they not
managing partners of the same are liable personally and in
Martinez formed a "regular, collective, merchantile partnership" with a capital
solidum with all their property for the results of the transaction made
of P40,000 of which each of the partners Aboitiz and De Silva furnished one-
in the name and for the account of the partnership, under the
third. The partner Jose Martinez was an industrial partner and furnished no
signature of the later, and by a person authorized to make use
capital; it was provided in the partnership article that he was to receive 30 per
cent of the profits and that his responsibility for losses should not exceed the thereof.
amount of the profits received by him.
The language of this article is clear and specific that all the members of a
general copartnership are liable with all their property for the results of the
On April 27, 1922, the partnership, through its duly authorized representative,
duly authorized transactions made in the name and for the account of the
Guillermo Aboitiz, executed a promissory note in favor of the plaintiff the
Pacific Commercial Company for the sum of P23,168.71, with interest at 12 partnership. On the other hand, article 141, upon which the appellants relies
per cent per annum until fully paid as additional sum of 10 per cent as and which provides that "losses shall be computed in the same proportion
among the capitalist partners without including the industrial partners, unless
attorney's fees and costs of collection in the event it became necessary to
by special agreement the latter have been constituted as participants
resort to judicial proceedings. As security for the payment of the note, the
therein," is susceptible of two different interpretations of which that given it in
partnership executed a chattel mortgage in favor of the plaintiff on certain
the Compania Maritima case, supra, i. e., that it relates merely to the
personal property therein described.
distribution of losses among the partners themselves in the settlement of the
partnership affairs and has no reference to partnership obligations to third
For failure of the partnership to pay the debt the chattel mortgage was parties, appears to us to be the more logical.
foreclosed the mortgages property sold and the proceeds of the sale, P2,000
was paid over to the plaintiff on December 28, 1923. No further payment on
the note appears to have been made and January 4, 1924, the present There is a marked distinction between a liability and a loss and the inability of
action was brought for the recovery of the unpaid balance with interest. Upon a partnership to pay a debt to a third party at a particular time does not
necessarily mean that the partnership business as a whole, has been
trial the court below rendered judgment in favor of the plaintiff and against
operated at a loss. The partnership may have outstanding credits which for
the partnership for the sum of P27,951.68 and for the payment of interest on
the moment may have be unavailable for the payment of debts, but which
the capital of P21,168.71 at the rate of 10 per cent per annum from the 31st
eventually may be realized upon and yield profits more than sufficient to
October, 1924, until paid, together with 10 per cent on the amount due for
fees for collection in accordance with the terms of the aforesaid note. The cover all losses. Bearing this in mind it will be found that there in reality is no
judgment further provided that execution should first issue against the conflict between the two articles quoted; one speaks of liabilities, the other of
losses.
property of the partnership should first issue against the insolvency of the
partnership, it might issue against the property of the partners De Silva and
Aboitiz and in the event of their insolvency, then against the property of the The judgment appealed from is affirmed with the costs against the appellant.
industrial partner Jose Martinez. From this judgment Martinez appealed to So ordered.
this court and here maintains that under article 141 of the Code of