Digested by: GANA-AN, ROWELL IAN M.

ELMO MUÑASQUE, Petitioners,

vs.
COURT OF APPEALS, CELESTINO GALAN, TROPICAL
COMMERCIAL COMPANY and RAMON PONS, Respondent.
(G.R. No. L-39780. November 11, 1985) , Ponente: GUTIERREZ, JR., J.

Topic : Obligations of Partners with regards to Third Persons

Principle : ARTICLE 1824. All partners are liable solidarily with the partnership
for everything chargeable to the partnership under articles 1822 and 1823.

FACTS:

Munasque entered into a partnership with Galan under the registered name
“Galan and Associates” as Contractor. They entered into a written contract with
respondent Tropical for remodeling the latter’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.
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 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.
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.

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

ISSUE:

1. Whether or not there was a partnership between Munasque and Galan?

2. Whether or not Munasque was liable to the suppliers ?

RULING:
1. Yes, there was a partnership between Munasque and Galan?
The records will show that the petitioner entered into a contract with
Tropical for the renovation of the latter's building on behalf of the
partnership of "Galan and Muñasque." This is readily seen in the first
paragraph of the contract where it states:
This agreement made this 20th day of December in the year
1966 by Galan and Muñasque hereinafter called the Contractor, and
Tropical Commercial Co., Inc., hereinafter called the owner do hereby
for and in consideration agree on the following:
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

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2. Yes, Munasque was liable to the suppliers.

Article 1824 which provides that: "All partners are liable solidarily with the
partnership for everything chargeable to the partnership under Articles
1822 and 1823." In short, 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
or 1823

Articles 1822 and 1823 of the Civil Code provide

Art. 1822. Where, by any wrongful act or omission of any partner

acting in the ordinary course of the business of the partnership or with
the authority of his co-partners, loss or injury is caused to any person,
not being a partner in the partnership or any penalty is incurred, the
partnership is liable therefor to the same extent as the partner so
acting or omitting to act

Art. 1823. The partnership is bound to make good the loss

"(1) Where one partner acting within the scope of his apparent authority
receives money or property of a third person and misapplies it; and

"(2) Where the partnership in the course of its business

receives money or property of a third person and the money or
property so received is misapplied by any partner while it is in
the custody of the partnership."

In the case at bar it was proven that there existed a partnership between
Munasque and Galan, and it was proven that the later received money
from Tropical Commercial Company thru Ramon Pons. Which funds could
have been made to pay the suppliers for the construction project.

Thus, Munasque, together with Galan are liable to the suppliers for the
materials used for the remodeling of the building

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