ELMO MUÑASQUE v. CA, GR No.

L-39780, 1985-11-11

Facts:
the petitioner seeks to annul and set aside the decision of the Court of Appeals affirming
the existence of a partnership between petitioner and one of the respondents, Celestino
Galan and holding both of them liable to the... two intervenors which extended credit to
their partnership. The petitioner wants to be excluded from the liabilities of the
partnership.
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... petitioner entered into a contract with respondent Tropical through its Cebu Branch
Manager Pons for remodelling a portion of its building
Tropical and/or Pons delivered a check for P7,000.00 not to the plaintiff but to a stranger to
the contract, Galan, who succeeded in getting petitioner's indorsement on the same check...
persuading the latter that the same be deposited in a joint account; that on January 26,
1967, 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, respondent Pons
suceeded in changing... the payee's name from Elmo Muñasque to Galan and Associates
Galan to cash the same at the Cebu Branch of the Philippine Commercial and Industrial
Bank... petitioner in great financial difficulty in his construction business and subjecting
him to... demands of creditors to pay for construction materials, the payment of which
should have been made from the P13,000.00 received by Galan; that petitioner undertook
the construction at his own expense completing it prior to the March 16, 1967 deadline;
that because of the... unauthorized disbursement by respondents Tropical and Pons of the
sum of P13,000.00 to Galan, petitioner demanded that said amount be paid to him by
respondents under the terms of the written contract between the... trial, the court rendered
judgment... ordering plaintiff Muñasque and defendant Galan to pay jointly and severally
the intervenors Cebu and Southern Hardware Company and Blue Diamond Glass Palace...
absolving the defendants Tropical Commercial Company and Ramon Pons from any liability.
The petitioner and intervenor Cebu Southern Company and its proprietor, Tan Siu filed
motions for reconsideration.
On January 15, 1971, the trial court issued another order... to pay Intervenor Cebu Southern
Hardware Company and Tan Siu jointly and severally interest at 12% per annum of the sum
of P6,229.34 until the amount is fully paid;... to pay P500.00 representing attorney's fees
jointly and severally to Intervenor Cebu Southern Hardware Company;... the Court of
Appeals 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) Whether or not there existed a partnership between Celestino Galan and Elmo
Muñasque; and
(2) Whether or not there existed a justifiable cause on the part of respondent Tropical to
disburse money to respondent Galan.
Ruling:
Likewise, when Muñasque received the first payment of Tropical in the amount of
P7,000.00 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.
No error was committed by the appellate court in holding that the payment made by
Tropical to Galan was a good payment which binds both Galan and the petitioner. Since the
two were partners when the debts were incurred, they are also both liable to third persons
who extended... credit to their partnership.
take exception to the ruling of the appellate court that the... trial court's ordering petitioner
and Galan to pay the credits of Blue Diamond and Cebu Southern Hardware "jointly and
severally" is plain error since the liability of partners under the law to third... persons for
contracts executed in connection with partnership business is only pro rata under Art.
1816, of the Civil Code.
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 partnership
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.
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. This is... it is but fair that the consequences of
any wrongful act committed by any of the partners therein should be answered solidarily
by all the partners and the partnership as a whole.
Justice also dictates that Muñasque 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 Muñasque as a
partner.
The decision appealed from is hereby AFFIRMED with the MODIFICATION that the liability
of petitioner 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.

Principles:
"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."
(Mills vs. Riggle, 112 Pac., 617).
"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." (Le Roy vs. Johnson, 7 U.S. (Law. ed.), 391.)
"Art. 1822. Where, by any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership 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 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 and the money or property so received is misapplied by any
partner while it is in the custody of the partnership."