1) The document discusses several cases related to partnership law in the Philippines. It analyzes issues regarding the existence of partnerships, the liability of partners, and the rights of third parties in transactions with partnerships.
2) Specifically, it finds that an unregistered partnership can be considered a "partnership by estoppel" when it holds itself out as a partnership in dealings with third parties. This prevents the partnership from denying its existence in disputes with those third parties.
3) The document also examines the joint and solidary liability of partners for partnership obligations and debts. It finds that partners are jointly liable for general partnership transactions but solidary liable for transactions that involve misconduct by a partner under Articles 1822 and 1823
1) The document discusses several cases related to partnership law in the Philippines. It analyzes issues regarding the existence of partnerships, the liability of partners, and the rights of third parties in transactions with partnerships.
2) Specifically, it finds that an unregistered partnership can be considered a "partnership by estoppel" when it holds itself out as a partnership in dealings with third parties. This prevents the partnership from denying its existence in disputes with those third parties.
3) The document also examines the joint and solidary liability of partners for partnership obligations and debts. It finds that partners are jointly liable for general partnership transactions but solidary liable for transactions that involve misconduct by a partner under Articles 1822 and 1823
1) The document discusses several cases related to partnership law in the Philippines. It analyzes issues regarding the existence of partnerships, the liability of partners, and the rights of third parties in transactions with partnerships.
2) Specifically, it finds that an unregistered partnership can be considered a "partnership by estoppel" when it holds itself out as a partnership in dealings with third parties. This prevents the partnership from denying its existence in disputes with those third parties.
3) The document also examines the joint and solidary liability of partners for partnership obligations and debts. It finds that partners are jointly liable for general partnership transactions but solidary liable for transactions that involve misconduct by a partner under Articles 1822 and 1823
1) The document discusses several cases related to partnership law in the Philippines. It analyzes issues regarding the existence of partnerships, the liability of partners, and the rights of third parties in transactions with partnerships.
2) Specifically, it finds that an unregistered partnership can be considered a "partnership by estoppel" when it holds itself out as a partnership in dealings with third parties. This prevents the partnership from denying its existence in disputes with those third parties.
3) The document also examines the joint and solidary liability of partners for partnership obligations and debts. It finds that partners are jointly liable for general partnership transactions but solidary liable for transactions that involve misconduct by a partner under Articles 1822 and 1823
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In the Matter of the Petition for Authority to
Continue Use of the Firm Name Ozaeta,
Romula, etc. (See Old Digest: Sycip Case) Art. 1815. Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners. Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner. (partners should be living persons who can be subjected to liability) Art. 1840 treats more of a commercial partnership with a good will to protect rather than a professional partnership, with no sealable good will but whose reputation depends on the personal qualifications of its individual members. (NOTE: Rule 3.02 of the CPR approved and promulgated by the SC on June 21,1988 in effect abandoned the ruling in the Sycip case.)
Magdusa vs. Albaran Facts: Appellant and appellees, together with various other persons, had verbally formed a partnership de facto, for the sale of general merchandise in Surigao, Surigao, to which appellant contributed P2,000 as capital, and the others contributed their labor, under the condition that out of the net profits of the business 25% would be added to the original capital, and the remaining 75% would be divided among the members in proportion to the length of service of each. Sometime in 1953 and 1954, the appellees expressed their desire to withdraw from the partnership, and appellant thereupon made a computation to determine the value of the partners' shares to that date known as Exhibit "C". Appellees thereafter made demands upon appellant for payment, but appellant having refused, they filed the initial complaint in the court below. Issue: W/N Appellees can collect their shares in the partnership? Rule: No. A partner's share can not be returned without first dissolving and liquidating the partnership (Po Yeng Cheo vs. Lim Ka Yam, 44 Phil. 177). The liquidation Exhibit "C" is not signed by the other members of the partnership besides appellees and appellant; it does not appear that they have approved, authorized, or ratified the same, and, therefore, it is not binding upon them. In addition, unless a proper accounting and liquidation of the partnership affairs is first had, the capital shares of the appellees, as retiring partners, can not be repaid, for the firm's outside creditors have preference over the assets of the enterprise (Civ. Code, Art. 1839). Munasque vs. CA Facts: Elmo Muasque, in behalf of Galan and Muasque partnership as Contractor, entered into a written contract with Tropical Commercial Co., through its branch manager Ramon Pons, for remodelling of Tropicals building in Cebu. The consideration for the entire services is P25,000 to be paid: 30% upon signing of contract, and balance on 3 equal instalments of P6,000 every 15working days.
First payment of check worth P7,000 was payable to Muasque, who indorsed it to Galan for purposes of depositing the amount and paying the materials already used. But since Galan allegedly misappropriated P6,183.37 of the check for personal use, Muasque refused to indorse the second check worth P6,000. Galan then informed Tropical of the misunderstanding between him and Muasque and this prompted Tropical to change the payee of the second check from Muasque to Galan and Associates (the duly registered name of Galan and Muasque partnership). Despite the misappropriation, Muasque alone was able to finish the project. The two remaining checks were properly issued to Muasque.
Muasque filed a complaint for payment of sum of money plus damages against Galan, Tropical and Pons for the amount covered by the first and second checks. Cebu Southern Hardware Co and Blue Diamond Glass Palace were allowed as intervenors having legal interest claiming against Muasue and Galan for materials used.
Issue: 1. W/N Muasque and Galan are partners? 2. W/N payment made by Tropical to Galan was good payment? 3. W/N Galan should shoulder exclusively the amounts payable to the intervenors (granting he misappropriated the amount from the two checks)?
Rule:
1. Yes. Tropical had every right to presume the existence of the partnership: a. Contract states that agreement was entered into by Galan and Muasque b. The first check issue in the name of Muasque was indorsed to Galan The relationship was made to appear as a partnership.
2. YES. Muasque and Galan were partners when the debts to the intervenors were incurred, hence, they are also liable to third persons who extended credit to their partnership.
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 the members of the firm acting apparently in its behalf and within the scope of his authority.
3. NO. Article 1816 BUT construed together with Article 1824.
Art. 1816. All partners, including industrial ones, shall be liable pro rata x x x for the contracts which may be entered into the name and for the account of the partnership, under its signature and by a person authorized x x x
Art. 1824. All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822 and 1823
Art. 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business x x x or with the authority of his co-partners, loss or injury is caused to any person x x x
Art. 1823. The partnership is bound to make good the loss:
(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 x x x is misapplied by any partner while it is in the custody of the partnership.
GR: In transactions entered into by the partnership, the liability of the partners is merely joint Exception: In transactions involving third persons falling under Articles 1822 and 1823, such third person may hold any partner solidarily liable for the whole obligation with the partnership.
Reason for exception: the law protects him, who in good faith relied upon the authority if a partner, whether real or apparent.
However, as between Muasque and Galan, justice also dictates reimbursement in favour of Muasque as Galan was proven to be in bad faith in his dealings with his partner.
MacDonald vs. National City Bank of New York Facts: Stasikinocey is a partnership forme d by da Costa, Gorcey, Kusik and Gavino. It was denied registration by theSEC due to a confusion between the partnership and Cardinal Rattan. Cardinal Rattan is the business name or style used by Stasikinocey. Da Costa and Gorcey are the general partners of Cardinal Rattan. Moreover, Da Costa is the managing partnerof Cardinal Rattan. Stasikinocey had an overdaft account with National City Bank, which was later converted into an ordinary loan due the partnerships failure in paying its obligation. Theor di nar y l oan was s ec ur ed by a c hat t el mor t ga ge over 3 vehicles. During the subsistence of the loan, the vehicles weresold to MacDonald and later on, MacDonald sold 2 of the 3 vehicles to Gonzales. The bank brought an action for recovery of its credit and foreclosure of the chattel mortgage upon learning of these transactions.
Issue: WON the partnership, Stasikinocey is estop ped f r om as s er t i ng t hat i t does not have j ur i di c al personality since it is an unregistered commercial partnership
Held: Yes. While an unregistered commercial partnership has no juridical personality, nevertheless, where two or more personsattempt to create a partnership failing to comply with all thelegal formalities, the law considers them as partners and theassociation is a partnership in so far as it is a favorable tothird persons, by reason of the equitable principle of estoppel.Where a partnership not duly organized has been recognized as s uc h i n i t s deal i ngs wi t h c er t a i n per s ons , i t s hal l beconsidered as partnership by esto ppel and the persons dealing with it are estopped from denying its partnership existence.
(NOTE: Respondent and the Petitioners are all third persons as regards the partnership Stasikinocey; and even assuming that the Petitioners are purchasers in good faith and for value, the Respondent having transacted with Stasikinocey earlier than the Petitioners, it should enjoy and be given priority.)
Island Sales, Inc vs. United Pioneers Gen. 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 th (of the companys 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 Lumauigs individual liability to them.
Compania Maritima vs. Munoz Facts: The plaintiff brought this action in the Court of First Instance of Manila against the partnership of Franciso Muoz & Sons, and against Francisco Muoz de Bustillo, Emilio Muoz de Bustillo, and Rafael Naval to recover the sum of P26,828.30, with interest and costs. Judgment was rendered in the court below acquitting Emilio Muoz de Bustillo and Rafael Naval of the complain On the 31st day of March, 1905, the defendants Francisco Muoz, Emilio Muoz, and Rafael Naval formed on ordinary general mercantile partnership under the name of Francisco Muoz & Sons for the purpose of carrying on the mercantile business in the Province of Albay which had formerly been carried on by Francisco Muoz. Francisco Muoz was a capitalist partner and Emilio Muoz and Rafael Naval were industrial partners. DEFENSE: (1) The contention of the appellees were sound, it would result that, where the articles of partnership provided for a distribution of profits at the end of each year, but did not assign any specific salary to an industrial partner during that time, he would not be a member of the partnership. (2) It is also said in the brief of the appellees that Emilio Muoz was entirely excluded from the management of the business
Issue: W/N defendant is relieved from such liability, either because he is an industrial partner or because he was so relieved by the express terms of the articles of partnership? Held: No. In limited partnership the Code of Commerce recognizes a difference between general and special partners, but in a general partnership there is no such distinction-- all the members are general partners. The fact that some may be industrial and some capitalist partners does not make the members of either of these classes alone such general partners. There is nothing in the code which says that the industrial partners shall be the only general partners, nor is there anything which says that the capitalist partners shall be the only general partners. Our construction of the article is that it relates exclusively to the settlement of the partnership affairs among the partners themselves and has nothing to do with the liability of the partners to third persons Our conclusion is upon this branch of the case that neither on principle nor on authority can the industrial partner be relieved from liability to third persons for the debts of the partnership. (Note: Each one of the industrial partners is liable to third persons for the debts of the firm; that if he has paid such debts out of his private property during the life of the partnership, when its affairs are settled he is entitled to credit for the amount so paid, and if it results that there is not enough property in the partnership to pay him, then the capitalist partners must pay him.) Santiago Syjuco, Inc. vs. Castro Facts: Eugenio Lim, along with his brothers, all hereinafter collectively called the Lims, borrowed from petitioner Santiago Syjuco, Inc. (hereinafter, Syjuco only) the sum of 800,000.00. The loan was given on the security of a first mortgage on property registered in the names of sai d borrowers as owners in common.Thereafter, additional loans on the same security were obtained by the Lims from Syjuco, so that the aggregate of the loans stood at 2,460,000.00, exclusive of interest. When the obligation matured, t he L i ms f ai l ed t o pay i t des pi t e demands t her ef or and c ons equent l y , Syj uc o c aus ed ex t r a- j udi c i al proceedings for the foreclosure of the mortgage. The attempt to foreclose triggered off a legal battle that has dragged on for 20 years, through 5 cases in the courts. DEFENSE: The respondents advocated the theory that the mortgage,which they had i ndivi dually constituted, in fact no longer belonged to them,having been earlier deeded over by them to the partnership, Heirs of Hugo Lim, making the said mortgage void because it was executed by them without authority from the partnership. Issue: W/N the Lims are estop from to asserting the existence of the partnership? Held: Yes. The court holds that the respondent partnership was inescapably chargeable with knowledge of the mortgage executed by all the partners thereof, and therefore its silence and failure to impugn said mor t gage wi t hi n a r eas onabl e t i me, l et al one a s pac e of mor e t han 17 y ear s , br ought i nt o pl ay t he doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly unauthorized. Also, Art. 1819 states that, where the title to real property is in the names of all the partners, a conveyance executed by all the partners passes all their rights in such property. Consequently, those members' acts, declarations and omissions cannot be deemed to be simply the individual acts of said members, but infact and in law, those of the partnership.
Pioneer Insurance & Security Corporation vs. CA Facts: Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In 1965, Lim convinced Constancio Maglana, Modesto Cervantes, Francisco Cervantes, and Border Machinery and Heavy Equipment Company (BORMAHECO) to contribute funds and to buy two aircrafts which would form part a corporation which will be the expansion of Southern Air Lines. Maglana et al then contributed and delivered money to Lim. Instead of using the money given to him to pay in full the aircrafts, Lim, without the knowledge of Maglana et al, made an agreement with Pioneer Insurance for the latter to insure the two aircrafts which were brought in installment from Japan Domestic Airlines (JDA) using said aircrafts as security. When Lim defaulted from paying JDA, the two aircrafts were foreclosed by Pioneer Insurance.
Issue: W/N Maglana et al must share in the loss as general partners?
Held: No. There was no de facto partnership. Ordinarily, when co-investors agreed to do business through a corporation but failed to incorporate, a de facto partnership would have been formed, and as such, all must share in the losses and/or gains of the venture in proportion to their contribution. But in this case, it was shown that Lim did not have the intent to form a corporation with Maglana et al. This can be inferred from acts of unilaterally taking out a surety from Pioneer Insurance and not using the funds he got from Maglana et al. The record shows that Lim was acting on his own and not in behalf of his other would-be incorporators in transacting the sale of the airplanes and spare parts.