Muñasque v Court of Appeals, G.R. No.

L-39780, November 11, 1985

Facts: Elmo Muñasque, in behalf of “Galan and Muñasque” partnership as Contractor entered
into a written contract with Tropical Commercial Co., through its branch manager Ramon Pons,
for remodeling of Tropical’s 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 Muñasque, who
indorsed it toGalan 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, Muñasque
refused to indorse the second check worth P6,000. Galan then informed Tropical of the
“misunderstanding” between him and Muñasque and this prompted Tropical to change the payee
of the second check from Muñasque to “Galan and Associates” (the duly registered name of
Galan and Muñasque partnership).Despite the misappropriation, Muñasque alone was able to
finish the project. Thetwo remaining checks were properly issued to Muñasque. Muñasque 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 Muñasue and
Galan for materialsused. TC:-Muñasque and Pons jointly and severally liable to intervenors-
Tropical and Pons absolvedCA affirmed with modification:-Muñasque and Pons jointly liable to
intervenors
Issue: 1.W/N Muñasque 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
theintervenors (granting he misappropriated the amount from the two checks)?
Held: yes-yes-no!1.YES. Tropical had every right to presume the existence of the
partnership:a.Contract states that agreement was entered into by “Galan andMuñasque”b.The
first check issue in the name of Muñasque was indorsed to Galan The relationship was made to
appear as a partnership.2.YES. Muñasque and Galan were partners when the debts to the
intervenorswere incurred, hence, they are also liable to third persons who extendedcredit to their
partnership

ELMO MUÑASQUE vs. COURT OF APPEALS, CELESTINO GALANTROPICAL

COMMERCIAL COMPANY and RAMON PONSG.R. No. L-39780, November 11, 1985FACTS
Petitioner Elmo Muñasque in behalf of the partnership "Galan & Muñasque", as a Contractor,
entered into a written contract with respondent Tropical for remodeling of its Cebu Branch
building. A total amount of P25,000 was to be paid under the contract for the entire services of the
Contractor. The first payment made by Tropical was in the form of a check for P7,000 in the name
of petitioner. Petitioner endorsed the check in favor of Galan to enable the latter to deposit it in the
bank and pay for the materials and labor used. A misunderstanding ensued between Muñasque and
Galan which came to the knowledge of Tropical, thus, the second check issued by the latter was
drawn in the name of "Galan and Associates" and was encashed by Galan. Meanwhile, the
construction continued through the sole efforts of petitioner, which caused him to borrow money
from a certain Mr. Espina. Two checks weresubsequently given to petitioner pursuant to a court
order. Petitioner fileda complaint for payment of sum of money and damages against
therespondents seeking to recover the amounts covered by the two checksand the additional
expenses that petitioner incurred in the construction.Both the trial and appellate courts absolved
respondents from any liabilityand held petitioner together with Galan jointly liable to intervenors
CebuSouthern Hardware Company and Blue Diamond Glass Palace for thecredit that they
extended to the partnership.
ISSUE
Do the payments made to Galan bind the partnership?

RULING
Yes. The payments made to Galan bind the partnership. The payments made to the partnership are
valid where the recipient made it appear that he and another were true partners in the partnership.
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. Liability of partners to third persons who extended
credit to the partnership. 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.