Topic Digested By: Title of Case Case No. & Date of Promulgation

Topic Art.
1824 Digested by: Rachel Zane

Title of Case ELMO MUÑASQUE, petitioner, vs. COURT Case No. & Date of • G.R. No. L-39780.
OF APPEALS, Promulgation • November 11, 1985
CELESTINO GALAN, TROPICAL
COMMERCIAL COMPANY
and RAMON PONS, respondents.
Ponente GUTIERREZ, JR., J. Court En Banc
Plaintiff/Appellant ELMO MUÑASQUE, Defendant/Appellee TROPICAL COMMERCIAL COMPANY
and RAMON PONS
Doctrine (Syllabus)
• While it is true that under Article 1816 of the Civil Code, "AII partners, including industrial ones, shall be liable pro rata with all
their property and after all the partnership assets have been exhausted, 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 to act for the partnership. x x x", this provision should
be construed together with Article 1824 which provides that: "All partners are liable solidarily with the partnership for everything
chargeable to the partnership under Articles 1822 and 1823." In short, 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.
• 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.
Facts
• Petitioner Elmo Muñasque filed a complaint for payment of sum of money and damages against respondents Celestino Galan,Tropical
Commercial, Co., Inc. (Tropical) and Ramon Pons. The present controversy began when petitioner Muñasque in behalf of the partnership
of "Galan and Muñasque" as Contractor entered into a written contract with respondent Tropical for remodelling the respondents Cebu
branch building. A total amount of P25,000 was to be paid. The terms of payment were as follows: thirty percent(30%) of the whole
amount upon the signing of the contract and the balance thereof divided into three equal installments at the rate of six thousand Pesos
(P6,000.00) every fifteen (15) working days.
• The first payment made by respondent Tropical was in the formof a check for P7,000.00 in the name of the petitioner. Petitioner,however,
indorsed the check in favor of respondent Galan. Petitioner alleged that Galan spent P6,183.37 out of theP7,000.00 for his personal use
so that when the second check in the amount of P6,000.00 came and Galan asked the petitioner to indorse it again, the petitioner refused.
• The check was withheld from the petitioner. Since Galan informed the Cebu branch of Tropical that there was a "misunderstanding"
between him and petitioner, respondent tropical changed the name of the payee in the second check from Muñasque to "Galan and
Associates'' which was the duly registered name of the partnership between Galan and petitioner and under which name a permit to do
construction business was issued by the mayor of Cebu city, This enabled Galan to encash the second check. As alleged by the petitioner,
the construction continued through his sole efforts.
• The respondents answered the complaint by denying some and admitting some of the material averments and setting up counterclaims.
• The business firms Cebu Southern Hardware Company and Blue Diamond Glass Palace were allowed to intervene, both having legal
interest in the matter in litigation.
• LOWER COURT RULING:

• > Ordered plaintiff Muñasque and defendant Galan to pay jointly and severally the intervenors
• > Absolved Tropical and Pons from liability.
• The petitioner and intervenor Cebu Southern Company and its proprietor, Tan Siu filed motions for reconsideration.
• LOWER COURT RULING: (Motion for Reconsideration)

• >Amended its judgment by also ordering Munasque and Galan to pay Intervenors jointly and severally interest at 12% plus P500 attorney’s
fee
• COURT OF APPEALS RULING:

• > affirmed the judgment of the trial court with the sole modification that the liability imposed in the dispositive part of the decision on the
credit of Cebu southern hardware and Blue Diamond Glass Palace was changed from"jointly and severally" to "jointly."
Issues: 1 WON a partnership existed between petitioner and Galan.

2 WON Galan should be held guilty of malversing P13,000 and therefore accountable to petitioner for said amount.
3 WON payment made by Tropical through its manager to Galan was “good payment”.
4 WON Muñasque and Galan should be held “jointly and severally” liable to the intervenors.
Ruling 1 and 2 1. 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 Muñasque." This is readily seen in the first paragraph of the
contract. There is nothing in the records to indicate that the partnership organized by the two men was not a genuine
one. If there was a falling out or misunderstanding between the partners, such does not convert the partnership into
a sham organization.
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Muñasque 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.
2. When the petitioner amended his complaint, it was only for the purpose of impleading Ramon Pons in his
personal capacity.Although the petitioner made allegations as to the alleged malversations of Galan. These were
the same allegations in his original complaint. The malversation by one partner was not an issue actually raised in
the amended complaint but the alleged connivance of Pons with Galan as a means to serve the latter's personal
purposes.
The petitioner, therefore, should be bound by the delimitation of the issues during the pre-trial because he himself
agreed to the same.
Petitioner could have asked at least for a modification of the issues if he really wanted to include the
determination of Galan's personal liability to their partnership but he chose not to do so, as he vehemently denied
the existence of the partnership.
Ruling 3 and 4
3. There was a good payment which binds both Galan and Muñasque. Since the two were partners when the debts
were incurred, they are also both 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 members of the firm acting apparently in its
behalf and within the scope of his authority.
In the case at bar the respondent Tropical had every reason to believe that a partnership existed between the
petitioner and Galan and no fault or error can be imputed against it for making payments to "Galan and
Associates" and delivering the same to Galan because as far as it was concerned, Galan was a true partner with
real authority to transact on behalf of the partnership with which it was dealing.
4. Petitioner is not solely burdened by the obligations of their ill starred partnership. The records show that there is
an existing judgment against Respondent Galan, holding him in favor of Eden Hardware which extended credit to
the partnership.
While it is true that under Article 1816 of the Civil Code, "all partners, including industrial ones, shall be liable
pro rata with all their property and after all the partnership assets have been exhausted, 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 to act for the partnership. x x x", this provision should be construed together with Article 1824 which
provides that: "All partners are liable solidarily with the partnership for everything chargeable to the partnership
under Articles 1822 and 1823." in short, while the liability of the partners are merely joint intransactions entered
into by the partnership, a third person who transacted with said partnership can hold the partners solidarity liable
for the whole obligation if the case of the third person falls under Articles 1822 or 1823.
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.
.
Dispositive WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that the liability of petitioner
Portion and respondent Galan to intervenors Blue Diamond Glass and Cebu Southern Hardware is declared to be joint and solidary.
Petitioner may recover from respondent Galan any amount that he pays, in his capacity as a partner, to the above intervenors.
Keywords • Partnership
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Topic Art.

1824 Digested by: Rachel Zane

• LOWER COURT RULING:

• LOWER COURT RULING: (Motion for Reconsideration)

• COURT OF APPEALS RULING:

Issues: 1 WON a partnership existed between petitioner and Galan.

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3B 2019-2020: StratPlan for Prelims

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