De Los Reyes v. Lukban and Borja, 35 Phil. 757 G.R. No.

10695, December 15, 1916

FACTS:
Teodoro delos Reyes brought a suit in the Court of First Instance o f M anila a ga ins t Vic en te Lukba n and
Esp ir id io n B orja to reco ver from t h e m p a y m e n t f o r t h e m e r c h a n d i s e t h e y b o u g h t o n c r e d i t b y t h e
fi r m Lukban & Bo rja fro m the plaintiff ' s sh ip supp ly s tore nam ed La
Indu stria. A judgment was rendered, on which the defendant firm was o rd ered to p ay th e sum o f P1,08 6.65 with
interest thereon amo untin g to P1,102.95. Esperidion Borja paid P522.69. Teodoro delos Reyes later on b roug ht a su it
agains t Lukban & Bor ja to rec over the sum of P8 53 , th e remaining unpaid balance plus legal interest. Defendant
Lukban con tend ed th at he is not lia ble, he wa s m erely a n i n d u s t r i a l p a r t n e r i n t h e fi r m a n d i t w a s
Borja who furnished the c a p i t a l .

A s i t w a s p r o v e n o n t r i a l t h a t t h e p a r t n e r s h i p h a s n o m o r e remaining property, as it is
already insolvent, the court rendered judgment ho ld in g Bo rja a nd Lukban jo in tly an d severa lly liab le to p ay th e sum
to plaintiff de los Reyes.

ISSUE: Is a creditor en titled to co llect ind ivid ua lly fro m the par tn er s the am ount o f the debt th at the
d iss olved par tn er ship o wed a t th e time o f its dissolution?

RULING: Yes. The creditor has the right to recover from the partners thereof i n t h e m a n n e r p r o v i d e d b y A r t .
1 2 7 o f t h e C o d e o f C o m m e r c e ( n o w governed by Art. 1816 of the Civil Code of the Philippines). Art. 127 of the
Code of Commerce provides:"All the members of the general co-partnership, be they or be theyno t man aging par tn er s of
the same, are p ers on ally an d s ever ally liab lewith a ll their properties fo r the resu lts o f the tran sa ctio ns made
in the name and for th e a cc oun t o f the pa rtnersh ip , under the signa tu re o f the latter, and by the person
authorized to make use thereof".

PACIFIC COMMERCIAL COMPANY vs. ABOITIZ & MARTINEZ, ET AL., 48 Phil. 841. G.R. No. L-25007, March 2, 1926

FACTS:
Arnaldo F. de Silva, Guillermo Aboitiz, Vidal Aboitiz and Jose Martinez formed a regular, collective, mercantile
partnership with a capital o f P40 ,0 00 as con tr ib uted equ ally by de Silva and the two Ab oitiz wh ile Jos e Mar tinez
was an indus tr ial pa rtner with no c ap ital c ontribu tion . As provided in the article of partnership, Martinez was to
receive 30% of the profi ts a nd sh all als o b e res pons ib le for los ses wh ic h sh ould no t exc eed 30%.

The partnership, through Guillermo Aboitiz, executed a promissory no te in favor of Pac ifi c Com merc ial
C omp any in th e sum o f P23 ,1 68 .7 1 with interest a t 1 2% per annu m. Th ey exec uted a c ha ttel mor tg ag e to
s ecu re the note. Due to th eir fa ilure to pa y their ob liga tio n, the ch attel m o r t g a g e w a s f o r e c l o s e d a n d
s o l d a t P 2 , 0 0 0 w h i c h w a s p a i d o v e r t o plaintiff Pacific Co. Due to non payment of the remaining balance,
plaintiff b roug ht a su it for reco ver y of unpa id balan ce with interest ag ains t the partnership.

A judgment was rendered in favor of plaintiff and the partnership was ordered to pay the sum of P27,951.68 and the
interest amounting to P2 1,16 8.71 a t 1 0% per ann um un til fu lly pa id plu s fees. Th e judg ment further provided that
the execution should first issue against the property of the partnership Aboitiz & Martinez and in the event of the insolvency
of the partnership, it might issue against the property of de Silva and Aboitiz and in the event of insolvency, then against the
property of Jose Martinez. Defendant Martinez appealed to the decision and invoked that under Art.141 of the Code of
Commerce, he is merely an industrial partner, thus, he cannot be held liable for the partnership's debt.

ISSUE: Is an industrial partner liable for partnership's debt?

RULING Yes. Th e lan guag e of Art. 1 27 o f th e C ode o f C omm erce is c lear and specific and must be taken to mean
exactly what it says, namely, that a l l t h e m e m b e r s o f a g e n e r a l c o p a r t n e r s h i p a r e l i a b l e w i t h
a l l t h e i r p rop er ty fo r the resu lts o f the duly autho rized tr ans ac tion s m ade in th e name and for the account of
the partnership. Defenda nt's relian ce to A rt. 141 is misplac ed . This a rtic le of th e C ode of Co mm erce relates
merely to the d istribu tion of lo sses a mong par tn er s thems elves in th e s ettlement o f the pa rtnersh ip aff air s
an d has no obligations to third parties.

Island Sales, Inc. v. United Pioneers General Construction Company, Et. AlG.R. No. L-22493, July 31, 1975

FACTS: United Pioneers General Construction Company is a general partnership formed by Benjamin Daco, Daniel Guizona, Noel
Sim, Augusto Palisoc and Romulo Lumauig. In 1961, United Pioneers purchased by installment a motor vehicle from Island Sales,
Inc. United Pioneers defaulted in its payment hence it was sued and the 5 partners were impleaded as co-defendants.
Upon motion of Island Sales, Lumauig was removed as a defendant.
United Pioneers lost the civil case and the trial court rendered judgment ordering United Pioneers to pay the outstanding
balance plus interest and costs. It further decreed that the remaining 4 co-defendants shall pay Island Sales in case United
Pioneers’ property will not be enough to satisfy its indebtedness to Island Sales.

ISSUE: What is the extent of the liability of the partners considering that one partner was removed as a co-defendant on motion
of Island Sales?

HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is should be noted that since there were 5
partners when the purchase was made in behalf of the partnership, the liability of each partner should be 1/5th (of the
company’s obligation) each. The fact that the complaint against Lumauig was dismissed, upon motion of the Island Sales, does
not unmake Lumauig as a general partner in the company. In so moving to dismiss the complaint, Island Sales merely condoned
Lumauig’s individual liability to them.

Island sales inc vs. United Pioneers genereal construction

Facts: United Pioneers General Construction Company is a general partnership formed by Benjamin Daco,
Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo Lumauig. In 1961, United Pioneers purchased by
installment a motor vehicle from Island Sales, Inc. United Pioneers defaulted in its payment hence it was sued
and the 5 partners were impleaded as co-defendants.
Upon motion of Island Sales, Lumauig was removed as a defendant.
United Pioneers lost the civil case and the trial court rendered judgment ordering United Pioneers to pay the
outstanding balance plus interest and costs. It further decreed that the remaining 4 co-defendants shall pay
Island Sales in case United Pioneers’ property will not be enough to satisfy its indebtedness to Island Sales.
ISSUE: What is the extent of the liability of the partners considering that one partner was removed as a co-
defendant on motion of Island Sales?
HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is should be noted that since
there were 5 partners when the purchase was made in behalf of the partnership, the liability of each partner
should be 1/5 (of the company’s obligation) each. The fact that the complaint against Lumauig was dismissed,
th

upon motion of the Island Sales, does not unmake Lumauig as a general partner in the company. In so moving
to dismiss the complaint, Island Sales merely condoned Lumauig’s individual liability to them.