G.R. No. L-39780 November 11, 1985 GUTTIERREZ, JR.

, J.:
ELMO MUÑASQUE, petitioner, vs. COURT OF APPEALS,CELESTINO GALAN TROPICAL
COMMERCIAL COMPANY and RAMON PONS, respondents.

FACTS:
 Munasque (petitioner) entered into a partnership with Galan under the registered name\“Galan
and Associates” as Contractor.
 Muñasque, in behalf of the partnership, entered into a written contract with respondent
Tropical for remodeling the Tropical’s Cebu branch building.
- Under the contract, the project totaled 25,000 to be paid in installments; 7, 000 upon
signing and 6, 000 every 15 working days.
 Tropical made the first payment by check in the name of Munasque. Munasque indorsed the
check in favor of Galan to enable Galan to deposit it in the bank and pay for the materials and
labor used in the project. However, Galan allegedly spent P6, 183.37 for his personal use.
 When the second check came, Munasque refused to indorse it again to Galan .
 Since Galan informed Tropical of the misunderstanding between him and Munasque as
partners. Hence upon second payment, Tropical changed the name of the payee on the second
check from Munasque to “Galan and Associates” which enabled Galan to encash the second
check.
 Meanwhile, the construction was continued through Munasque’s sole efforts by incurring
debts from various suppliers. The construction work was finished ahead of schedule with the
total expenditure reaching P 34, 000 (note yung contract nila 25k lang).
 Munasque filed a complaint for payment of sum of money and damages against Galan, Tropical,
and Tropical’s Cebu branch manager Pons.
 Cebu Southern Hardware Company and Blue Diamond Glass Palace intervened in the case for
the credit which they extended to the partnership of Munasque and Galan for the construction
project.

Both trial court and Court of Appeals absolved respondents Tropical and its Cebu manager, Pons,
from any liability. Trial Court held Galvan and Munasque “jointly and severally” liable to its
creditors which decision was modified by CA and held them “jointly” liable.

Issues: W/N the obligation of Munasque and Galan is joint or solidary – SOLIDARY

RULING:
 While it is true that under Article 1816 of CC, “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 the name and for account of the partnership, under
its signature and by a person authorized to act for the partnership. xxx”, this provision should
be construed together with Article 1824 which provides that:
- “All partners are liable solidarily with the partnership for everything chargeable to the
partnership under Articles 1822 and 1823.”
 While the liability of the partners are merely joint in transactions entered into by the
partnership, a third person who transacted with said partnership can hold the partners
solidarily liable for the whole obligation if the case of the third person falls under Articles 1822
and 1823.
 The obligation is solidary as to the 3 rd party because the law protects him, who in good
faith relied upon the authority of a partner, whether such authority is real or apparent.
 Tropical had every reason to believe that a partnership existed between Munasque and Galan
and no fault or error can be imputed against it for making payments to “Galan and Associates”
because as far as it was concerned, Galan was a true partner with real authority to transact in
behalf of the partnership it was dealing with (because in the first place they entered into a duly
registered partnership name and secondly, Munasque endorsed the first check payment to
Galan).
 This is also true in the cases of the intervenors who supplied materials on credit to the
partnership. Thus, it is but fair that the consequences of any wrongful act committed by any of
the partners therein should be answered solidarily by all the partners and the partnership as a
whole.
 However, as between Munasque and Galan, Galan must reimburse Munasque for the
payments made to the intervenors as it was satisfactorily established that Galan acted in
bad faith in his dealings with Munasque as a partner.