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Munasque vs.


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

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 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
W/N payment made by
Tropical to Galan was good payment?
W/N Galan should shoulder
exclusively the amounts payable to the
intervenors (granting he misappropriated
the amount from the two checks)?
Yes. Tropical had every right to
presume the existence of the partnership:
Contract states that agreement was
entered into by Galan and Muasque
The first check issue in the name of
Muasque was indorsed to Galan
The relationship was made to appear as a

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
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:
Where one partner acting within the
scope of his apparent authority receives
money or property of a third person and
misapplies it, and
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
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
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.