CASE NO.

3 - ZARATE
ISLANDS SALES INC.,
vs.
UNITED PIONEERS GENERAL CONSTRUCTION COMPANY
G.R. No. L-22493
July 31, 1975

FACTS:

The United Pioneers General Construction Company (UPGCC), a general

partnership duly registered under the laws of the Philippines, purchased from Islands
Sales Inc. A motor vehicle on the installment basis and executed a promissory note
that failure to pay any of said installments as they fall due would render the whole
unpaid balance immediately due and demandable. Having failed the receive the
installment due, Islands Sales Inc. sued UPGCC along with Benjamin Daco, Daniel
Guizona, Noel Sim, Romulo Lumauig and Augusto Palisoc as co-defendants in their
capacity as general partners of UPGCC.

Co-defendant Guizona failed to file an answer and was declared in default. The
complaint was dismissed insofar as co-defendant Lumauig is concerned. When the
case was called for hearing, the defendants failed to appear despite notices. Plaintiff
was authorized to present evidence ex-parte. The trial court rendered the decision
appealed from. Co-defendants Daco and Sim moved to reconsider the decision
claiming that since there are 5 general partners, the joint and subsidiary liability of
each partner should not exceed one-fifth of the obligations of UPGCC. Trial court
denied said motion.

ISSUE:

Whether the dismissal of the complaint in favor to one of the general partners of a
partnership increases the joint and subsidiary liability of each of the remaining
partners for the obligation of UPGCC.

RULING:

Article 1816 of the Civil Code provides that, “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 in the name and for the
account of the partnership, under its signature and by a person authorized to act for
the partnership. However,any partner my enter int a separate obligation to perform a
partnership contract.

In the case at bar, there were 5 general partners when the promissory note in
question was executed for and in behalf of the partnership. Since the liability of the
partners is pro rata, the liability of the appellant Daco shall be limited to one-fifth (1/5)
o the obligations of UPGCC. The fact that the complaint against Lumauig was
dismissed, upon motion of Islands Sales Inc., does not unmake Lumauig as a
general partner.