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In the Matter of the Petition for Authority to  Sometime in 1953 and 1954, the

Continue Use of the Firm Name “Ozaeta, appellees expressed their desire to
Romula, etc.” withdraw from the partnership, and
appellant thereupon made a computation
(See Old Digest: Sycip Case) to determine the value of the partners'
shares to that date known as Exhibit "C".
 “Art. 1815. Every partnership shall
 Appellees thereafter made demands upon
operate under a firm name, which
appellant for payment, but appellant
may or may not include the name of
having refused, they filed the initial
one or more of the partners.” “Those
complaint in the court below.
who, not being members of the
partnership, include their names in Issue: W/N Appellees can collect their shares in
the firm name, shall be subject to the the partnership?
liability of a partner.” (partners
should be living persons who can be Rule: No. A partner's share can not be returned
subjected to liability) without first dissolving and liquidating the
partnership (Po Yeng Cheo vs. Lim Ka Yam, 44
 Art. 1840 treats more of a Phil. 177). The liquidation Exhibit "C" is not signed
commercial partnership with a good by the other members of the partnership besides
will to protect rather than a appellees and appellant; it does not appear that
professional partnership, with no they have approved, authorized, or ratified the
sealable good will but whose same, and, therefore, it is not binding upon them.
reputation depends on the personal In addition, unless a proper accounting and
qualifications of its individual liquidation of the partnership affairs is first had,
members. the capital shares of the appellees, as retiring
partners, can not be repaid, for the firm's outside
(NOTE: Rule 3.02 of the CPR approved and
creditors have preference over the assets of the
promulgated by the SC on June 21,1988 in
enterprise (Civ. Code, Art. 1839).
effect abandoned the ruling in the Sycip case.)
Munasque vs. CA

Magdusa vs. Albaran
 Elmo Muñasque, in behalf of “Galan and
Muñasque” partnership as Contractor,
entered into a written contract with
Tropical Commercial Co., through its
 Appellant and appellees, together with
branch manager Ramon Pons, for
various other persons, had verbally remodelling of Tropical’s building in
formed a partnership de facto, for the sale Cebu. The consideration for the entire
of general merchandise in Surigao, services is P25,000 to be paid: 30% upon
Surigao, to which appellant contributed signing of contract, and balance on 3
P2,000 as capital, and the others equal instalments of P6,000 every
15working days.
contributed their labor, under the
condition that out of the net profits of the
 First payment of check worth P7,000 was
business 25% would be added to the payable to Muñasque, who indorsed it to
original capital, and the remaining 75% Galan for purposes of depositing the
would be divided among the members in amount and paying the materials already
proportion to the length of service of used. But since Galan allegedly
each. misappropriated P6,183.37 of the check
for personal use, Muñasque refused to
indorse the second check worth P6,000. presumption is sufficient to permit third
Galan then informed Tropical of the persons to hold the firm liable on
“misunderstanding” between him and transactions entered into by one of the
Muñasque and this prompted Tropical to members of the firm acting apparently in
change the payee of the second check its behalf and within the scope of his
from Muñasque to “Galan and Associates” authority.
(the duly registered name of Galan and
Muñasque partnership). Despite the 3. NO. Article 1816 BUT construed
misappropriation, Muñasque alone was together with Article 1824.
able to finish the project. The two
remaining checks were properly issued to Art. 1816. “All partners, including
Muñasque. industrial ones, shall be liable pro rata x x
x for the contracts which may be entered
 Muñasque filed a complaint for payment into the name and for the account of the
of sum of money plus damages against partnership, under its signature and by a
Galan, Tropical and Pons for the amount person authorized x x x”
covered by the first and second checks.
Cebu Southern Hardware Co and Blue Art. 1824. “All partners are liable
Diamond Glass Palace were allowed as solidarily with the partnership for
intervenors having legal interest claiming everything chargeable to the partnership
against Muñasue and Galan for materials under Articles 1822 and 1823”
Art. 1822. “Where, by any wrongful act or
Issue: omission of any partner acting in the
1. W/N Muñasque and Galan are partners? ordinary course of the business x x x or
2. W/N payment made by Tropical to Galan with the authority of his co-partners, loss
was “good payment”? or injury is caused to any person x x x”
3. W/N Galan should shoulder exclusively
the amounts payable to the intervenors Art. 1823. “The partnership is bound to
(granting he misappropriated the amount make good the loss:
from the two checks)?
(1) Where one partner acting
Rule: within the scope of his
apparent authority receives
1. Yes. Tropical had every right to presume money or property of a third
the existence of the partnership: person and misapplies it, and
a. Contract states that agreement was (2) Where the partnership in the
entered into by “Galan and course of its business
Muñasque” receives money or property
b. The first check issue in the name of of a third person x x x is
Muñasque was indorsed to Galan misapplied by any partner
The relationship was made to appear as a while it is in the custody of
partnership. the partnership.”

2. YES. Muñasque and Galan were GR: In transactions entered into by the
partners when the debts to the partnership, the liability of the partners is
intervenors were incurred, hence, they merely joint
are also liable to third persons who Exception: In transactions involving third
extended credit to their partnership. persons falling under Articles 1822 and
1823, such third person may hold any
There is a general presumption that each partner solidarily liable for the whole
individual partner is an authorized agent obligation with the partnership.
for the firm and that he has authority to
bind the firm in carrying on the Reason for exception: the law protects
partnership transactions. The him, who in good faith relied upon the
authority if a partner, whether real or in so far as it is a favorable to third persons,
apparent. by reason of the equitable principle of
estoppel.Where a partnership not duly organized
However, as between Muñasque and has been recognized a s s u c h i n i t s
Galan, justice also dictates dealings with certain persons, it
reimbursement in favour of Muñasque s h a l l b e considered as “partnership by esto
as Galan was proven to be in bad faith ppel” and the persons dealing with it are
in his dealings with his partner. estopped from denying its partnership

(NOTE: Respondent and the Petitioners are all

MacDonald vs. National City Bank of New York third persons as regards the partnership
Stasikinocey; and even assuming that
Facts: the Petitioners are purchasers in good faith
 Stasikinocey is a partnership forme and for value, the Respondent having
d by da Costa,Gorcey, Kusik and Gavino. transacted with Stasikinocey earlier than the
It was denied registration by theSEC due Petitioners, it should enjoy and be given
to a confusion between the partnership priority.)
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. Island Sales, Inc vs. United Pioneers Gen.
Moreover, Da Costa is the managing Construction
partnerof Cardinal Rattan.
 Stasikinocey had an overdaft account Facts:
with National City Bank, which was later
converted into an ordinary loan due  United Pioneers General Construction
the partnership’s failure in paying its Company is a general partnership formed
obligation. by Benjamin Daco, Daniel Guizona, Noel
 Theordinary loan was secured Sim, Augusto Palisoc and Romulo
by a chattel mortgage over 3 Lumauig. In 1961, United Pioneers
vehicles. purchased by installment a motor vehicle
 During the subsistence of the loan, the from Island Sales, Inc. United Pioneers
vehicles weresold to MacDonald and defaulted in its payment hence it was
later on, MacDonald sold 2 of the 3 sued and the 5 partners were impleaded
vehicles to Gonzales. as co-defendants.
 The bank brought an action for recovery  Upon motion of Island Sales, Lumauig was
of its credit and foreclosure of removed as a defendant.
the chattel mortgage upon learning of
 United Pioneers lost the civil case and the
these transactions.
trial court rendered judgment ordering
United Pioneers to pay the outstanding
WON the partnership, Stasikinocey is estop balance plus interest and costs. It further
ped f r o m a s s e r t i n g t h a t i t d o e s n o t decreed that the remaining 4 co-
h a v e j u r i d i c a l personality since it is an unregistered defendants shall pay Island Sales in case
commercial partnership United Pioneers’ property will not be
enough to satisfy its indebtedness to
Held: Island Sales.
Yes. While an unregistered commercial
partnership has no juridical personality,
nevertheless, where two or more personsattempt Issue: What is the extent of the liability of the
to create a partnership failing to comply with all partners considering that one partner was
thelegal formalities, the law considers them as removed as a co-defendant on motion of Island
partners and theassociation is a partnership Sales?
Held: Their liability is pro-rata pursuant to Article Issue: W/N defendant is relieved from such
1816 of the Civil Code. But is should be noted that liability, either because he is an industrial partner
since there were 5 partners when the purchase or because he was so relieved by the express
was made in behalf of the partnership, the liability terms of the articles of partnership?
of each partner should be 1/5th (of the company’s
obligation) each. The fact that the complaint Held: No. In limited partnership the Code of
against Lumauig was dismissed, upon motion of Commerce recognizes a difference between
the Island Sales, does not unmake Lumauig as a general and special partners, but in a general
general partner in the company. In so moving to partnership there is no such distinction-- all the
dismiss the complaint, Island Sales merely members are general partners. The fact that some
condoned Lumauig’s individual liability to them. may be industrial and some capitalist partners
does not make the members of either of these
classes alone such general partners. There is
Compania Maritima vs. Munoz nothing in the code which says that the industrial
partners shall be the only general partners, nor is
Facts: there anything which says that the capitalist
partners shall be the only general partners.
 The plaintiff brought this action in the
Court of First Instance of Manila against Our construction of the article is that it relates
the partnership of Franciso Muñoz & exclusively to the settlement of the partnership
Sons, and against Francisco Muñoz de affairs among the partners themselves and has
nothing to do with the liability of the partners to
Bustillo, Emilio Muñoz de Bustillo, and
third persons
Rafael Naval to recover the sum of
P26,828.30, with interest and costs.
Judgment was rendered in the court Our conclusion is upon this branch of the case that
below acquitting Emilio Muñoz de neither on principle nor on authority can the
industrial partner be relieved from liability to
Bustillo and Rafael Naval of the complain
third persons for the debts of the partnership.
 On the 31st day of March, 1905, the
defendants Francisco Muñoz, Emilio
Muñoz, and Rafael Naval formed on (Note: Each one of the industrial partners is
ordinary general mercantile partnership liable to third persons for the debts of the firm;
under the name of Francisco Muñoz & that if he has paid such debts out of his private
Sons for the purpose of carrying on the property during the life of the partnership,
mercantile business in the Province of when its affairs are settled he is entitled to
Albay which had formerly been carried on credit for the amount so paid, and if it results
by Francisco Muñoz. Francisco Muñoz that there is not enough property in the
was a capitalist partner and Emilio Muñoz partnership to pay him, then the capitalist
and Rafael Naval were industrial partners must pay him.)
 DEFENSE: (1) The contention of the Santiago Syjuco, Inc. vs. Castro
appellees were sound, it would result
that, where the articles of partnership Facts:
provided for a distribution of profits at
the end of each year, but did not assign  Eugenio Lim, along with his
any specific salary to an industrial brothers, all hereinafter collectively
partner during that time, he would not be
a member of the partnership. (2) It is also called the Lims, borrowed from
said in the brief of the appellees that petitioner Santiago Syjuco, Inc.
Emilio Muñoz was entirely excluded from (hereinafter, Syjuco only) the sum
the management of the business of 800,000.00. The loan was given
on the security of a first
mortgage on property
registered in the names of said of more than 17 years, brought into
borrowers as owners in p l a y t h e doctrine of estoppel to preclude
common.Thereafter, additional any attempt to avoid the mortgage as allegedly
loans on the same security unauthorized.
were obtained by the Lims
from Syjuco, so that the Also, Art. 1819 states that, “where the title to
aggregate of the loans stood at real property is in the names of all the
2,460,000.00, exclusive of interest. partners, a conveyance executed by all the
partners passes all their rights in such
 When the obligation matured, t h e
property.” Consequently, those members' acts,
Lims failed to pay it
declarations and omissions cannot be
despite demands
deemed to be simply the individual acts
therefor and consequently,
of said members, but infact and in law,
Syjuco caused extra-
those of the partnership.
j u d i c i a l proceedings for the
foreclosure of the mortgage.
 The attempt to foreclose
triggered off a legal battle that Pioneer Insurance & Security Corporation vs.
has dragged on for 20 years, CA
through 5 cases in the courts.
 DEFENSE: The respondents
advocated the theory that the  Jacob Lim was the owner of Southern
mortgage,which they Air Lines, a single proprietorship.
had individually constituted,
in fact no longer belonged to  In 1965, Lim convinced Constancio
Maglana, Modesto Cervantes,
them,having been earlier
Francisco Cervantes, and Border
deeded over by them to the Machinery and Heavy Equipment
partnership, “Heirs o f Hugo Company (BORMAHECO) to
Lim”, making the said contribute funds and to buy two
mortgage void because it was aircrafts which would form part a
executed by them without corporation which will be the
authority from the expansion of Southern Air Lines.
Maglana et al then contributed and
delivered money to Lim.
 Instead of using the money given to
Issue: W/N the Lim’s are estop from to
him to pay in full the aircrafts, Lim,
asserting the existence of the partnership?
without the knowledge of Maglana et
al, made an agreement with Pioneer
Held: Yes. The court holds that the respondent
Insurance for the latter to insure the
partnership was inescapably chargeable with
two aircrafts which were brought in
knowledge of the mortgage executed by all the installment from Japan Domestic
partners thereof, and therefore its silence and Airlines (JDA) using said aircrafts as
failure to impugn said m o r t g a g e w i t h i n a security.
reasonable time, let alone a space
 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.