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 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, 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 materials used. The Trial order Muñasque and Galan
jointly and severally liable to intervenors- Cebu and Southern Hardware
Company and Blue Diamond Glass Palace the amount of P6,229.34 and
P2,213.51, respectively and absolving the defendants Tropical Commercial
Company and Ramon Pons from any liability. CA affirmed the decision 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."
Issue: 1. Whether Muñasque and Galan are partners?
2. Do the payments made to Galan bind the partnership?
Held: (1) YES. Tropical had every right to presume the existence of the
partnership because of the following circumstances: (a) Contract states that
agreement was entered on behalf of the partnership of “Galan and Muñasque”.
There is nothing in the records to indicate that the partnership organized by the
two men was not a genuine one. If there was a falling out or misunderstanding
between the partners, such does not convert the partnership into a sham
organization; (b) The first check issue in the name of Muñasque was indorsed to
Galan and the relationship was made to appear as a partnership.
(2) 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. The Appellate Court is correct 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.