PARTNERSHIP lig “It cannot-bebelieved that a hi no win BY Book, any singe gt SLE tas Spy memorandum concen ee wtten aceon oO. ng it (Padilla vy i ii, CGR NO. BTSRF 0.6,179}) St vs. Lim rem TG iv nershipSseparate and“Mstingt Te ich firm Tiaiie, whichis esse ntial in a parthersh, rrticle-1768. Civil Code) 75-poattme iar ayelees are nt partners” RaSh tures, Mie VE-VMETIMG, TA-G.R. No. I7eIe August 8, 1958). Gloris there anything mentioned regain ne dispsiton of losses, should there be any. nehee any sfdication as to its termination or ay ‘All ARISE CICUMBTANEES TEPATe The existence es, Al $$ aa, ioneee of part ship. Art, 1816. All partners, including industrial ones, shall be liable pro rata with all their Property and after all the partnership assets have been ex- hausted, for the contracts which may be enterea into the name and for the account of the partnership, undee signature and by a person authorized to act for the partnership. However, any partner may enter into ¢ separate obligation to perform a partnership contract (a) Source: This is taken from Article 1698 of the Old Cuil Code except the last sentence which is taken from Section 15 (b) of the Uniform Partnership Act. COMMENT: Liability Of Partnership And Partners For Part. nership Contracts.—To enforce the liability of the part. ners for partnership debts and obligations, the action should be filed both against the partnership and the120 Partversitp. AGENCY AND TRUSTS However, the private pr individual partners cannot be seized forwaatisfantntte partnership debts until all the partnership assets hac! parineNhausted, When the assets of the partnershi fe been exhausted and there remains some obligations na unpaid, the partners individually phall respond ior. tee Concern’s debts (See: Compania Maritema vs. Muto, fhe Phil. 326; Vda. de Chan Dioco vs. Peng: 53 Phil. 906). "© 7 Industrial Partner Not Exempted From Liabj ity—An Industrial partner 1s exempted [rom losses tart 1267). However, he is not exempted from lability. 4 ‘The exemption of the industrial partner to pay losses relates exclusively to the settlement ‘of the partnershi vtuire among the pariners themselves and has nothing eS Go with the liabilities of the partners to third persons. An do Miirial partner is not exempted from lability to third persons for the debis of the ‘partnership (Compania Mari- tima vs. Mujioz, 9 Phil. 326). ‘The industrial partner can recover the amount he has “1 the capitalist partners unless there 1s a” agree: ihe contrary (did. (De Tos Reyes vs: Lukban.-S5 individual partners. paid fror ment to tl Phil. 757). lommercial Co. vs. Aboitiz Pacific Ci and Martinez 48 Phil. 841 weld: ‘The members of general mercantile co- partnership, whether managing partners or not, are Ii- Pole in solidum for the debts and obligations to third parties resulting from the duly authorized transac Fens made in the name and for the account of the partnership. Nature Of Liability of Partners.—The liability of the artners for the partnership debts is pro rata, if their contributions are unequal.PARTNERSHIP 121 ProRata.—Pro rata means in k Propo yeani”d ", aivision according to share, inletie, oo inet (Carried Lumber Co, vs, ACCFA, 63 SCRA ol “ei! 08) jand Sales Ine. v5. United Pioneers {General Construction Co,, et a, 65 SCRA 554 cts: ‘The United Ploneets 1s a partnership rat of five (5) general partners. It was sued fer compen ofa promissory note. The plaintiff fed a mo, men yamiss the case against one of the pariners, son 1 fon was granted. ‘TeMseue: How much will each of the four (a) re- snnng defendants pay—/5 0° 1/4 ofthe debt? eld: Each of the four (4) partners wil pay 1/5 the debt. Under Art. 1816 of the Cuil Code, the of the Stare liable “Pro rata” meaning “Jone (as ds. partnened from solidary]. Originally each of the five (5) Lingus was liable for 1/5. The discharge from the partnvimnt of one of them, Lumawig. did not mean that conPiyecharged defendant is no longer a partner, So sai Of the remaining four (4) should pay 1/5. ‘They cach Got be made liable for the share of the fith part. sus ihn plaintif moved to dismiss the complaint it net erely condoning Lumawig’ individual lability to wae Fjainiif. Said condonation will not benefit the the Poin debtors or partners, ‘Mufasque vs. Court of Appeals 139 SCRA 535 Held: While it is true that under Article 1816 of the Civil Code, “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 the aecount of the partnership. x x x’, thls prov: sion should be construed together with Article 1824 which provides that: “All partners are liable sotidarily with the partnership for everything chargeable to the122 Parrnersip, AGENCY Axo Trusts ertnerlp under Arties 1602 and 1628. tna Teun bast ote porters ee Mey Joes Transactions entered into by the partnership, a thirg person who transacted with said partnership, can by id aoe antivir the whole obaion Ie pase of the third person falls under Articles. 1822 ang 1823. ‘The obligation s solidary because the law pro. tects him, who in good faith relied upon the authority of partner, whether such authority {s real or apparent This is why under Articles 1824 of the Civil Code all partners, whether innocent or guilty. as well as the le- fal entity which is a partnership, are solidarily Hable. Partner May Act In His Own Name.—A partner may enter into a separate obligation to perform a partnership contract. He is then acting in his own name for the benefit of the partnership. Consequently, he is the only one bound for his own acts. Art, 1817. Any stipulation against the liability laid down in the preceding article shall be void, except as among the partners. (n) Source: This is a new provision based on opinions of Spanish commentators on the Spanish Coll Code. COMMENT: Pro Rata Liability Is Void; Stipulation Against Exception.—Any stipulation by and among the partners contradicting the pro rata liability of partners provided in Article 1816 ts void insofar as it shall affect the rights of innocent third persons. However, such stipulation is valid by and among the partners themselves. Inconsistency Between Article 1817 And Article 1799; Reconciliation.—Article 1799 provides “A stipula- dian which excludes one or more partners from any share in the profits or losses is void". The partners cannot exPARTNERSHIP 193 ation a partner from sharing in the profits ipul y ge DY SUPE stipulation shall be void. Whereas, under oss {ne partners, may by implication, stipulate of ie de 18Xhselves that @ partner may be exempted from non SBD sg paigard I Paras, opined— gust aye would seem that the only way to harmonize wy articles (insofar as capitalist partners are fs this: it fs permissible to stipulate among 2 capitalist partner will be exempted from at Boose af the original capital contributed: but ‘exempted insofar as his capital is con- bit vill not PE permet ilustration- : . and) are_partners. They contriby (B50 cach They a ‘tthe liability of lps Sa contribution FODTO. fot : et partnership assets have been exhausted and pare obi Pp remains an ‘unpald ligaten d£P90,000.00)in favor nero reme, the Falter can still recover BH0,000.00 each oregedior Tr iners as their stipulation cannot adversely ing Hower ons ie sini 5a the partners. if Paid_P30,000.00, he is among We Peover from (B")and(cc’) the amount of on °X) However, Ca” pannot Fi ooODOLpald by him tl TD capitarcontribution of 100,000.00. “= ‘art, 1818. Every er is aX(agen) of the part- spurpeve of | nership for the its business, and the act of every partner, including the execution in the partnér- Ship name of any instrument, for app: e oni the usual way the (business of the-partn which he is a member binds the partnership, the so acting has in fact no authority t (or the the particular matter, and thé per- son with whom he is dealing has knowledge of the fact that he has no such authority.124 Pagrnerstip, AGENCY AND TRUSTS ‘Any act of a partner which is not appare; the carrying on of business of the partnership i for usual way does not bind the partnership unless ay, te ized by the other partners. thor. Except when authorized by the other partners unless they have abandoned the business, one or more put less than all partners have no authority to: (1) Assign the partnership property in trust creditors or on the assignee's promise to pay the Genes of the partnership; (2) Dispose of the goodwill of the business; Do any other act which would make it impos. (3) ‘dinary business of a partner. sible to carry on the or ship; (4) Confess a judgment: (5) Enter into a compromise concerning a part. nership claim or liability; (6) Submit a partnership claim or liability to ar- bitration; (7) Renounce a claim of the partnership. a partner in contravention of a restric. tion on authority shall bind the partnership to persons having knowledge of the restriction. (n) Source: This is a new provision based on Section 19 of the Uniform Partnership Act. No act of COMMENT: Law On Partnership Is A Branch Of The Law On ‘Ageney.—There is more than mutual agency among the partners. They are not only agents of one another but they vee also agents of the partnership. Each partner Is acting as principal on his own behalf and as agent for his co- partners. When the manner of management has not been agreed upon, “all partners shall be considered agents and ae ever any one of them may do alone shall bind thePARTNERSHIP 125 1 prejudice t nip, without p1 0 the provi 1 inds Of Acts Of A Pa 0 Kin rtner Co, Tanele. There are two kinds of acts op plated in ot al py the Article— Partner covel which apparently are §; Acts ly are for the yess of the Partnership tn the ustal yey NS of the pus! 9) Acts which are not apparently for ey joss of the partnership in the usual way. pust 1, the acts of the partners bing fo Neely the partnershi jess the partner had in fact no authority and ine third urrson dealing with him had knowledge of such fae nt perso" rst par). 181" | No. 2, the acts of the partner o; hip if he was in fact authorized 1818. second par.). tion Of Presumption. ey Pa that each individual pa presumi nat he has authority to bind the fine carrying the partnership transactions. The presumption ent to permit third persons to hold the firm liable on suffic tions entered into by any one of the members of wane, acting apparently in its behalf and within the tne ve of his authority (Litton vs. Hill & Ceron, 67 Phil eye third person has the right to presume that a gen- 513)- artner dealing with partnership property has the oa) we authority from his co-partner (Goquiolay vs, 2% Sup, 105 Phil. 984). “sual Way,” Concept.—The term usual way means jt is an ordinary activity for the particular partnership or ‘ i artnership. Example: A partnership engaged in restate is usually involved in the sale and purchase of uaa buildings. It is unusual for it to sell fish or animals. Trying on the nly bind the part- by his co- “3 Partners (art. —There is a general rtner is an agent of the ® See also: Manasque vs. Court of Appeals, 139 SCRA 533.126 Parrnerstp, AGENCY AND ‘TRUSTS Dominion Or Ownership. — ‘acts of dominion Sor er be transacted on behalf er tray act. The law require t unless the business at Seven Acts Of cle enumerates seven (7) Any of these acts can only partnership fall the partners J} tnanimity of actions OF consent been abandoned. ie law provides for an exception when a part may execute of any said ‘acts. The law, however, Feqtlige the following conditions— (1) All the co-P’ artners have authorized a part. rer to execute the act, or (2) All the co-partners had abandoned the thich case, their conformity is business, in W no longer required. They are deemed to {heir rights to interfere. have abandoned al Ways” Of Carrying The Seven Acts Are Not “Usui of A Partnership: Reasons. he on The Business following are “unusual acts” of carrying on the business— (2) Assignment of partnership property in ust for creditors or on the assignee’s promise to pay the debls of the partnership. ‘This act of dominion or ownership m: solution of the partnership. (2) Disposal or allena’ ay cause the dis- tion of the goodwill of the bust- ness. Its disposition is a artnership. It is an 'A goodwill has a property value. ue of the P disposition of an asset of va act of dominion. (3) Making the usual way of carrying on the bust ness of the partnership impossible. ‘Thus, a partnership engaged in the sale of goods and merchandise should not include in its business the sale of gs like “shabu”. “Shabu” is beyond the dissolution of the prohibited dru commerce of men. partnership. This will cause thePaRTNeRsHip 127 of a judgment. Thi confession fe trata “ aadgment abeui nown as nod)" gsion of judgment is a written adm 2 5 comes ne has no defense to a een might or which may be brought on his default and that upon such default he authoris o be entered against him (Phy to m ment 1, p. 161) pine Legal to confess a judgment is a ious Mn act of domin- Obvnot a ustial way of carrying on the business fra * menter a judgment against the partnership, i ne pans tering it compromise concerning paris sp iam fis 1s an_act of dominion. Under Article 1878(3), an ise or submit to arbitration wit vot comprom tion without agent CV power of attorney. Qu ‘gubmit a partnership claim or liability to arbi- shi a spec! 6) tration. % “the co-partner may have trust and confidence on a ner, but the former may not have trust and confidence pare arbitrator: ‘This is also an act of dominion. oy (7) Renunciation of a partnership claim. ‘this is not a usual way of running business. Its an act of dominion or ownership. ih partner cannnot renounce a partnership claim. That joes nt belong to him. It belongs to the partnership. “the manager of a partnership has no authority to re- tease debtors after his definite retirement from the part- least yp (Ormachea Tin-Congeo vs, Trllana, 19 Phil, 194), Phrase “including the execution on the partner- snip name of any instrument”, Authorizes The Agent To Enter Into Formal Contracts On Behalf Of The Portnership.—This phrase is added to avold any possible doubt as to whether the partner has authority, in the ordinary course of business, to enter into formal contracts for his partnership or to convey partnership property when the conveyance is the result of a sale in the ordinary128 PagrNeRsHiP, AGENCY AND Trusts, course of partnership business (Commissioners' Notes, 4 U.LA. pp. 17-18). De Ia Rosa vs. Ortega Go-Cotay 48 Phil. 605 Facts: On August 3, 1918, the defendant as. sumed complete responsibility for the business for op. Jecting to the appointment of a receiver as prayed fo, by plaintiff, and giving a bond therefor. Until the date his acts were those of a managing partner, binding against the partnership: but thereafter his acts were those of a receiver whose authority Is prescribed in Section 175 tnow Rule G1, Section 7) of the Code of Cwil Procedure. Issue: May the receiver continue to act as man- aging partner? Held: A receiver has no right to carry on and conduct a business unless he is authorized or directed by a court to do so and such authority is not derived fom an order of appointment to take and preserve the Property (34 Cyc., 283; 23 C.L. 73). It does not appear that the defendant as a receiver was authorized by the fourt Lo continue the business of the partnership in quidation. This being so, he is personally liable fen {he losses that the business may have sustained (34 Gye: 296). The partnership must not, therefore, be Ir able for the acts of the defendant. in connection with the management of the business from August 3, 1918, the date when he ceased to be a member and manager {in order to be a receiver, Art. 1819. Where title to real Property is in the Partnership name, any partner may convey title to Such property by a conveyance executed in the part- nership name; but the partnership may recover suchPAaRINERSiip 129 ga making the conveyance, a, | rf Kee 0 eded hj ost is au. Mere title £0 real property tg in gy Eo ee nssne ney executed by 9" RC Of the ners) ar name, Passes the equitable. ya%P&rtner, vn 0 le iy pis Ov enip, provided the act ig Interest. netine partner under the prooi"¥*8I the aan ity © gph of Article 1818. ons of or paral title to real pro where Perty is i, more but not all the partners, ang ¢re, Tame o or Maisclose the right of the partnershin®;re°O%4 not Kose name the title stands as . the at operty, but the partnership may sropertY if the partners’ act does not bing th re under the provisions of the first pa; Partner. sijole 1818, unless the purchaser of pig PUCE**Ph of poider for value, without knowledge. ‘ignee, is a where the title to real property is in the qne of more or all Partners, or in a third p tnership, a conv ust for the part eyance ex sirener in the partnership name, or in hie setts 2 & asses the equitable interest of the partnership, me. vided the act is one within the authority of the perry under the provisions of the first paragraph of ‘Artin 1818. where the title to real property is in the names of all the partners a conveyance executed by all the part- ners passes all their rights in such property, (n} f one does ne Source: This ts a new provision based on Section 10, Uniform Partnership Act. COMMENT: Applicability.—The article applies only to real prop- erty”—which refers to immovable like land or building ” For definition and listing of real property, see Article 415, NCC.Pagrnersiie, AGENCY AND TRUSTS 130 vords title to real property, f se of the wort equi. because of the us : conveyances. table interest and he Real Pro, e Names The Perty 1, Persons In Whos: ee as and Second Paragraphs—It 18 in the name ship of a paragraph—It in the name of one or mr, the partners; Lo ig Paragraph—It is in the name of one o, or all partners; br) eet is in the name of alt the par, ners. Effects Of Conveyances Of Real Property In Excess Of Authority. — fh 1—Any partner may convey title to real property tn the prierehip nape by 4 deol of correo in the name of the partnership. The partnership may recover this property from the buyer or grantee except, when (1) the conveyance was for the carrying on the busi, ness of the partnership in the usual way or (2) the prop. erty has been conveyed by the buyer or grantee to a holder for value without knowledge that the conveying partne: has exceeded his authority. Paragraph 2—Where the partner has conveyed the Property not in the name of the partnership, but in hig tha name, the conveyance passes the equitable interest ot the partnership to the grantee provided the act of convey. ance is within the authority of the conveying partner Taig, {Be first paragraph of the previous. articre (art, 1818) Paragraph 3.—When the title to real Property is in the name of one or more but not ail Partners, the named " may convey the property. However,Parny ARTNERS np first Paragraph of Arty, 13 ne d to rec icle gig w 1 oot aor holder fer ett uae Ye roperty Or value ang yt or Parner mh is in Sj ID is paragraph 4.—When the 00g fain of the the name of One OF more gp tile to the be $0 all Ie te, oa Po rh pre ee oipaseeeyihetens name hip, eg Mane purine the grante © equitable inten”, te na mevatice ship ' ee provided the terest of thei Of the ict of artner- atihin the authority of the wiiph of Article 1818, This ie nee Wer the eee Is Second paragraph. fhe same nite as Para. ‘Sin the paragraph 5—When th f e title t o sa ea ee mamers and the cone CPE Is in Wee » the conveyance passes aff vat 15 madi tne property to the grantee (See: Sania (helt rights E casit0,175 SCRA 171), ago Syfuco ine. vy. article 1819 Is An amply wlificati. 1918—Paragraphs 2, 3, and 4 ee Of Article explicitly make reference to the provisions er ote aragraph of Article 1818 which provides of the first principle that @ partner is an agent of the ed general Ihe purpose of its business. ership for Equitable Interest, Concept.—An equi or title is one cognizable in equity Am ital interest interest in property which is imperfect, ‘ete unenforceable at law, but which under well-recognized © art, 1818. Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instr tment, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the parinership, linlegs the partner so acting has in fact no authority 10 act forthe partnership in the particular matter, and the person wih whet! sae dealing has Knowledge of the fact that he has no such authority,™ PARTNERSHIP, AGENCY AND Trusr 132 equitable principles should be and is con Vertible into, a legal right or title (30 C.J.S. 401) Partnership, Not Its Officers Impieaded Ta tieipation Inwolbinig Preperte Seok In Its Name.—Under A\ Property Registe oe : Na rt. 1768 of the Civil Cong Stereq nerahip thas a juridical personality separate ang 2 Pan ead oe deenpeshianh Hire permet held liable for the obligations of the partion aes is shown that the legal fiction of a different jurinu®®* t sonality is being used for fraudulent, unfair ort Bers purposes. In this case, private respondent has not gy! that A.C. Aguila and Sons, Co., as a separate juer ot oF illegal pee! entity, is being used for fraudulent, unfair, poses. Moreover, the title to the subject property is in Ss in the name of A.C. Aguila & Sons, Co. and the Memorand: Agreement was executed between the private respondent. eee toneent of her late husband, and A.C. Aguila ¢ Sons, Co., represented by petitioner. Henee, it is 4 ppt its officers or agents, which shoula rai impleaded in any litigation involving property registered its name. A violation of this rule will result in the dismissal i understand why both the of the complaint. We canno! Regional Trial Court and the Court of Appeals sidestepped thic issue when squarely raised before them by the pet { of Appeals, 319 SCRA 246). tioner (Aguila, Jr. vs. Court admission or representation made partnership, Art. 1820. An by any partner concerning partnership affairs within ‘ig authority in accordance with this Title partnership. (n) the scope of bi sion taken from Section 11 is evidence against the Source: This is a new provi ship Act. of the Uniform Partners COMMENT: Requisites To Make A Partner's Admission Or Rep- resentation Admissible Against The Partnership.—To render the partner's previous ‘admission or representationPARNERGigp 13g idence against the as evil Pattnershy, pinaint es are necessary— ip, quis the admission op rep 4 {1 gh partnership affairs; veto itis within the scone 2 the ‘lowing ES “sentation oF the Partne her's (3) it is made during the Xisten, : Ormachea Tin-co, t An admission ined by. Held: Y 8 former ariner of the partner mac aero Rag aE Partnership cannot be uy. im sainst the firm, ission After Dissolution; eee by a partner after the fi sion inding upon the pay will be etShip on Connecte ‘d th the winding up affairs of ¢,. firm (art, 18341) wil 1821. Notice to an Art. to partnership affairs knowledge of relating ner acting in the Particular ma ter, acquired the part artner or then present to his min, » @nd the while @ es of any other Partner who reasonably could snore ae Communicated it to tee Part. and sho’ te as notice to or knowledge Of the partner. wen operate ae not Sase of a fraud on the Partnership, ship. ¢ qa BF or with the consent of that partner, (a) cor e: This is a new provisi Section 12 of ie cert Partnership Act. q COMMENT: ‘ice A Partner, Effect Notice to a partner Siesta notice to the partnership tthe while alr ion taken from ‘ declaration or omission of “ 26, Rule 130. The act, le ravens relevant fact may be given in evidence against a party as him.134 PARTNERSHIP, AGENCY AND TRU: sts. matter is ‘ ‘onnected to areca partnership affairs Partncsyt eonsiktered a’ sufficient and effe Notice to : tive mote, ONe ice i " to ieee Without Notice: Effect —Kn is also a knowledge of the firm uindees nccige Of a © follow. rw ing— (a) When knowl : ledge is acquired by a ating n V a pa acting in the particular matter: It may tavelbecn at tots he is already a partner or even before his besos ris “present to his mee nd partner provided that the matte bers the partnership matte; fatter: which means, he still remem (b) When knowledge is acquired by 8 acting in the particular wratter, put with eae not eee TC matter would become or has the possibility becoming the subject of the partnership business, and he fg situated in such a way that he reid comminteate i the partner acting in the particular matter (See Comintife toners’ Note, 7 ULA, Section 12. PP: 20-21). fe Where the knowledge or notice has been received by re the pecame a paxiner, and Die partners, are partner acting in the ubt that there has been the partnership. Where, ting in the particular matter ac- became a partner, and the his mind, the partnership mmissioners’ Note, ign’ particular mat neither knowle however, the partn quired know! knowledge is th should be charged wit Section 12. ULA)- art. 1822. Where, by any wrongful yn of any partner acting in the ordinary course of the artnership or with the authority of his a , loss OF injury is caused to any person, not el partner ner in fe partnership, or any penalty is ship is jiable therefor to the same o acting OF omitting to act. (n) n taken from Secti¢ en present in h knowledge (Co act or omis- Source: This is anew provisio artnership Act.PARTNERSHIP 135 on queue The, article applies when a partner o eabillf | act or omission (crimes or torts) yp ng hird person. The liability of joss toa t vise from its contractual obliga- mputed or vicarious liability in Article THe law on partnership. The tortious ‘make the partnership and the other ‘o the third person who suffered 8 s. ese’, ror Application Of The Law.— pisites FO" mitted a wrongful act or omission ‘the act may be a crime or quasi-delict; ner is acting in the ordinary course res of the partnership or with the authority of if the act is not connected with the ener or inswy §S suffered by a third person as a O85 ronal act oF omission: ane wowed third person 18 not & partner in the re 1s no pre-existing contract between the up and the third person: if there is, but it was ip MGeiberately violated. this itself constitutes France vs. Carrascoso, 18 SCRA 155) Liability Of The Firm And Co- Jarm is liable to the same extent as the ners committed the tortious act (Art. 1822). All are als * colidarily liable with the firm (Art. 1824) ‘An. 2176, Whoever by act or omission causes damage io another, there being fault or negligence, 1s obliged to pay for tp anofyage done. Such fault or negligence, if there ts no pre- the dereontractual relation between the parties. is called a iastdeit and Is governed by the provisions of this Chapter. a Raew= 136 Pagrnensue, AGENCY ap Trusrs whether or not they participated in the commis; HON OF the wrongful acts or omission. Meaning Of “Any Person, Not Beins 7 A Part If the injured person is an employee or crea he is not included within the ambit of the term acim State Industrial Commission, 79 Utah 47). Palle va “The Worksmen Compensation Act shall appl an employee or worker 1s Pee yed in the injurious « where an scion. The Liability of the business partners ecto fam compensable injury or death of an employee ‘cat dary (Liwanag and Reyes vs. Worksmen’s ‘Compenscins Commission, 105 Phil. 741). ota ind Solidary Liability—The I. re 's solidary liability upon the ‘sare ship and the partner Is to protect an innocent third person whe, in good faith, relied upon the authority of'a parine wpe ner such authority is real or apparent (Mufasque ae CA, 139 SCRA 533) b Filing Of Suit—As the partners are liable solidary the aggrieved party has the Fiseretion whom to sue. He bers. He may may sue the firm or one or more of its mem even single out a pa personally, was in no wise riner who, involved in the comm! the tort or breach of trust \ission of (40 Am. Jur. 261). The Suit—To be excused from li- Defenses Against ‘d the co-partner/s must prove ability, the partnership an ‘committed the complained act for the bene- that the erring partner while acting for purposes of his own and not fit of the partnership, or acted not in the course of the pusiness of the partnership. Criminal Liability Of A Partner.—Article 1822 docs not extend the criminal liability of the erring partner to the artnership or partners because the wrongdoing (like embezzlement) is regarded as individual in character. jfessional ‘Thus a member of law firm which is pro! rinership is not subject t tive case (disbar- 0 administral ment) for the miscom where he had no ‘Reason Behi why the law impose duct of his partner ¥A PArTNERsiP 137 Je said misconduct nor con sosee tne. Brawn, 389 Ill. 516: Spo ywiedtion an asisSin 2209) ; 087 Of Penalty—The article does not only honing njury, but also of penalty when it states ty? loss fy ts incurred’. The penalty cannot rele a veal y enal f imprisonment unless, what is come iu of ara fy the form piracy, in cat ¢ or offense and there is cons, pa is Cnn Ss partierarmagtbetiela criminally liable iin case, the Co-trcipal offender, wgner wath y refer to “fines”. However, the term pen penalty Mire in reference to a civil Penalty like the one may Wearticle 1226— sented to its kane vs. Peter- ally covers obligations with a penal clause, the penalty “avatitute the indemnity for damages da we shal gat of interests in case of noncompliance. ifthe paviatipulation to the contrary. Nevertheless, dae js no aa be paid if the obligor refuses to pay the ages fy or 18 guilty of fraud in the fulfillment of the ob- penalty eee eee only when it is de- dable in accordance with the provisions of this ‘mandal Code.” edy Of Innocent Partners.—The innocent part. fins se Petr Hable solidarily with the offending Meriner is tO seek recovery against the latter for what they fine paid with interest (See: Munasque ve CA, 139 SCRA 533) art. 1823. The partnership is bound to make good the loss: La) (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 prop erty so received is misapplied by™ 138 Pagerne1 esuip, AGENCY AND Trusts any partner wh: ship. (n) ile it is in the custoay of of the Pai they, Source: Thi , is ts ane Q 's a new prot of the Uniform Partnership ME eee rom Section 14 COMMENT: Mis. i Miscou plicesion Of Money Or Propert; rape ear oP et ane a deine ; ved by a partner acting \ pert : received. Misapplication maj : vy cover mis ject or misuse of the money mseerseretongt iheiaeg Separate purpose not within t enothes eee hin the authority of the receiving If Joss is suffered by the third person who d the money or property. the partnership 1s eer with the misappropriating partner. mania In paragraph (2), the one who received the money 01 property is the partnership itself in the course of its bun jess but the one who misapplied or misappropriated Bi neney or property 15 any Parincr. ghd not necessarily the one who received it. vas in the first paragrapl ne partnership Is 5 fable with the offending partner Illustration: olidarily, re partners in the J&J Co., en- Make is a customer of the for purchase of gaged in ¢ Me delivered money i ey is with the partnership .d by the firm. ke wants to Te “a and accept ym John and receive misappropriated the money, Jal He can suc either John aloPARINERSinp 139 the ¢ can choose the person to sue h, partnership and the partners Waa the aba. iW he 824. AY under Liwanag vs. Court of 281 SCRA 225 7° etd: When money or property cewsed BY a partner for @ specific Hecte een re snisappropriates it, such partner is guilty of elie 1924. All partners are liable - Soli Arinership for everything chargeable toe with ave Bip under Articles 1822 and 1875, (q Part- ne urce: This is a new provision take; ago the Uniform Partnership Act 15 coMMENT: iiability Of Partnership And Partners, Solidary — sor everything chargeable to the partnership under the br (Q) preceding articles (Articles 1822 and 1823). the two ners are solidarily lable (See: Pacific Commercial Co, Peretz, et al, 48 Phil. 841). The partnership is also Shidarily able. when the wrongful acts or omissions constitut mes or torts, the liability of the partners is solidary. I the liability arises from contractual obligation, it is only joint, although Article 1866 speaks of “in proportion to air contribution” (Island Sales vs. Pioneers Gen, Con- Struction Co., 65 SCRA 554, July 31, 1975). Note, the erm pro rata is used in the sense of joint to distinguish ihe same from solidary (ibid.). Contractual liabilities arise from partnership obliga- tions while crimes and torts from the individual acts of the partners. Article 1824 Is An Exception To Article 1816— Under Article 1816, the liability of the partners, including industrial partners, is pro rata. However, under Article n from Section140 Parrversinp, AGENCY avn Trus, usTs 1824, the liabi f a ility of all partners a isd mies Articles 1822 and 1823. The on Jobe sot oe of these to articles constities tone tha ay idary y of the partners (See: nan asque v8. GA, 139 SCRA B83) ns ATE 21055, he lun. Liability Of Business Partners " Under men's Compensation Act Is Also Solidary,— The Wor. Liwanag vs. Workmen's Compensation Commission 105 Phil. 741 Facts: Roque Balderama is employed a curity guard of the Lhwaneg Auto Supply, a cores cial establishment. He was killed by criminal handle il cbr rae Mle etna Ban minor children filed a claim for compensation with the verse Cataie ellen Comencema he eine were ordered to pay the claimants jointly and several the amount fixed by the assigned referee. u Issue: Is the order of the Commission proper? Held: Yes. Although the Workmen's Compensa- tion Act does not contain any provision expressly de- claring that the obligation of business partners arising from compensable injury or death of an employee should be solidary, however, there are other provi- sions of law from which it could be gathered that their ability must be solidary. Arts. 1711 and 1712 of the New Civil Code and Section 2 of the Workmen's Com- pensation Act, reasonably indicate that in compensa- fion cases, the liability of business partners should be solidary. If the responsibility of the partners were to be merely joint and not solidary, and one of them hap- pens to be insolvent, the amount awarded to the de- pendents of the deceased employee would only be par- tially satisfied, which is evidently contrary to the in- tent and purpose of the law to give full protection to the employee. © Art, 2194. The responsibility of two or more persons who are liable for a quasi-delict Is solidary. (n)PARTWERSIp When a pe i 697 onduct, Renee. hime Spoken (tO oe representing him to anyone elf, or con, tie nership OF with one ¢, © *Pattner jn 70a melts Hable to any shin fix setton representation has been mage, 42 Oe it ‘of such representation, given cies tnd on pe Mor apparent Partnership, and if he That? the ott epresentation consented to its beings M&de ‘ mie er Bes is liable to such Persoat made in, jpebiesentation has OF BAS not been made Whether tne 1fed to such person so giving ered py °F com. polerowledge of the apparent or mer mth the jgentation OF consenting to its being ma, et the cP) When a partnership Ubility regu i ee though he were an actual member ess BiPi 0 mt ts, he is ii. of the part. when no partnership lability res spre racawith the other person, ae eae: sole Pye contract or representation as to incur lan i. ‘otherwise separately. abil. ‘when @ person has been thus represent, artner in an existing partnership, or with an = oan vartons not actual partners, he is an agent of the ome consenting to such representation to bind vem co the same extent and in the same manner as though he were a partner in fact, with respect to per. vs who rely upon the representation, When all the ‘embers of the existing partnership consent to the presentation, @ partnership act or obligation results; fe in all other cases it is the joint act or obligation of the person acting and persons consenting to the repre- sentation. (n) Source: This is a new provision taken from Section 16 ofthe Uniform Partnership Act.142 Parmveasinr, AGENCY AND Trusts COMMENT: Scope Of Article.—The article c% toppel” and “partnership by estoppel”. Where the tation of being a partner is committed by one perso he is referred to as “partner by estoppel tation involves several persons pretending to be a group Is referred to as “partnership by estoppel", overs “partners by « n onk Estoppel, Concept.— “Speaking generally. it ma said that estoppel is a bar which precludes a person irq denying or asserting anything contrary to that which je been, in contemplation of law. established as the truth elther by acts of judicial or legislative officers, or by jy own deed or representations either express or implied” (16 Am. Jur. 601). ‘Through estoppel an admission or representation jg rendered conclusive upon the person making it, ang cannot be denied or disproved as against the person rely. ing thereon (Art. 1431, New Civil Code). Origin Of Doctrine Of Estoppel.—The doctrine of es. toppel has its origin in equity, and is based on moral rights and natural justice. Its applicability to any particu. lar case depends to a very large extent upon the special circumstances of the case (Mirasol vs. Municipality of Tabaco, 43 Phil. 610). Nature Of The Admission Or Representation.—The admission or representation must be plain and clear. Estoppel cannot be sustained on doubtful or ambiguous inferences (19 Am. Jur. 653-654; See also: Kalalo vs, Luz, 34 SCRA 337). An estoppel in pais must be based upon express statements or upon positive acts or conduct intended to influence the other party, or the inclination is toward such influence. Estoppel Of Third Persons.—Even assuming that the partnership is not properly organized, it is quite clear upon the records that defendant Jose E.P. Cruz, far from