Compania Maritima vs. Muñoz, 9 Phil.

326

Facts:

Francisco Munoz, Emilio Munoz, and Rafael Naval formed a mercantile partnership
under the name of Francisco Munoz and Sons.

Francisco was the capitalist partner and Emilio and Rafael were industrial partners.
The articles of partnership also contains that Emilio and Rafael shall not bear losses.

Compañia Maritima filed a complaint against the Francisco and Sons to recover the
sum of money with interest and cost, which was granted by the court but Emilio and
Rafael were absolved on the ground of they were industrial partners.

Issues:

1. Whether or not an industrial partner in an ordinary, general mercantile

partnership liable to third persons for the debts and obligations contracted by
the partnership.
2. Whether or not the articles of partnership that exempts Emilio and Rafael from
losses extends liability to third person. (Art. 1817)

Ruling:

1. Art. 1816.

Yes.

Article 1816 of the New Civil Code provides that all partners, including industrial
partners are liable pro rata in so far as the third persons is concerned.

In the case at bar, the lower court absolved Emilio and Rafael from any liability of
partnership to Compañia Maritima on the grounds of they are industrial partners.

Therefore, Emilio and Rafael as industrial partners of Francisco and Sons are liable to
Compañia Maritima because the law clearly provides that all partners, including
industrial partners, are liable pro rata in so far as their liability to third persons is
concerned.

2. (Art. 1817)

No.

The law provides that industrial partners are exempted from losses, but not exempted
from liability to third person.

In the case at bar, the articles of partnership of Francisco and Sons contains that
Emilio and Rafael shall not bear losses.

Therefore, articles of partnership that exempts industrial partners from losses would
not apply to liability to third person because partners, including industrial partners
are liable to third person. Further, in case that the articles of partnership exempts
them from liability to third person, it is null and void pursuant to Article 1817.
 Santiago Syjuco, Inc. vs. Castro, 175 SCRA 171\

Facts:

Lims borrowed from Santiago Syjuco Inc. the sum of P800,000.00, which was secured
by first mortgage covering two (2) TCT Numbered 75413 and 75415, collectively owned
by Lims. Thereafter, another loan was obtained from Santiago, the aggregate of the
loans stood at P2,460,000.00.

Lims defaulted, which prompted Syjuco to file for the execution of the mortgage.
However, Lims argue that the mortgage executed was null and void because it was
executed by the Lims without authority from the partnership.

Issue:

Whether or not the mortgage executed by all the partners was valid and binding.

Ruling:

Yes.

Article 1819 (5) states that where the title to real property is in the names of all the
partners a conveyance executed by all the partners passes all their rights in such
property.

In the case at bar, Lims obtain a sum of money and executed a mortgage covering
their two (2) properties. However, Lims argue that the mortgage was void because it
was executed by the Lims without authority from the partnership.

Therefore, the mortgage executed by Lims is valid because Article 1819 (5) clearly
provides that where the title to real property is in the names of all partners,
conveyance thereof executed by all the partners passess all their right in such
property.

Liwanag and Reyes vs. Workmen’s Compensation Commission, 105 Phil. 741

Facts:

Benito Liwanag and Maria Liwanag Reyes are co-owners of Liwanag Auto Supply. They
employed Roque Balderama as security guard who, while in line of duty, was killed by
criminal hands.

The window of Balderama filed a complaint for compensation with the Workmen's
Compensation Commission, which was granted.

Liwanag and Reyes argues that the compensation under Workmen'c Compensation
Act is divisible. Hence, the Court erred in ordering them to solidarily pay the amount
awarded.

Issue:

Whether or not Partners shall be held solidarily liable for the amount awarded.

Ruling:

Yes.

Article 1711 and 1712 of the Civil Code provides that employer shall be solidarily
liable for compensation in case of the death or injury of their employee. In relation
thereto, Section 2 of the Workmen's Compensation Act provides that the right to
compensation of an employee shall not be defeated on the ground that the death or
injury is due to negligence of a fellow servant, without prejudice to the right of
employer to proceed against the negligent party

In the case at bar, Liwanag and Reyes are co-owners of a business, where Balderamo
was one of their security guard, who died in the criminal hands during his duty. The
former contends that compensation under Workmen's Compensation Act shall not be
solidary, but instead joint obligation.

The Court held that in Workmen's Compensation cases, the liability of business
partners arising from compensable injury or death of an employee should be solidarily,
otherwise, it will defeat the right of employee in case one of the partners happens to be
insolvent.

McDonald vs. National City Bank of New York, 99 Phil. 156

Facts:

STASIKINOCEY is a partnership formed by Gorcey, Da Costa, Kusik and Gavino. This

partnership, however, was denied registration in the Securities and Exchange
Commission.

Da Costa executed a chattel mortgage in favour of National City Bank of New York
covering two vehicles, a common property of Da Costa and Gorcey.

Later on, Da Costa and Gorcey transferred the subject vehicles of mortgage to
McDonald. The latter sold the subject vehicle to Benjamin Gonzales.

Upon discovery, the National City Bank of New York filed an action againts
STASIKINOCEY and its alleged partners Gorcey and Da Costa, as well as McDonald
and Gonzales, to recover its credit and foreclosed chattel mortgage, which was granted
by Court of First Instance.

Issues:

1. Whether or not a chattel mortgage executed by only one of the partners of an

unregistered commercial partnership is valid as to third persons.

2. Whether or not National City Bank of New York has a better right to the subject
vehicle than the purchaser for value and in good faith. (Art. 1827)

Ruling:

1. Partnership by Estoppel.

Yes.

Principle of Partnership by Estoppel may be considered as partnership, in so far as

their contractual obligations to stranger (third person) is concerned.

In the case at bar, Gorcey and Da Costa are partners of STASIKINOCEY, a partnership
whose registration was denied by Securities Exchange Commission. Da Costa
executed a chattel mortgage in favour of National City Bank of New York covering two
subject vehicles, commonly owned by Gorcey and Da Costa. Evidently, Gorcey and Da
Costa represented each other as partners in all their transactions.

Therefore, the chattel mortgage executed by Da Costa in favour of National City Bank
of New York is valid because the Principle of Partnership by Estoppel considers
partnership in so far as their contract obligations to third person is concerned.

2. National City Bank of New York has better right.

Yes.

Article 1827 provides that the creditors of the partnership shall be preferred to those
of each partner as regards the partnership property.

In the case at bar, Da Costa executed a chattel mortgage, covering the subject
vehicles, in favour of National City Bank of New York. Later on, the owner of the
subject vehicle, Gorcey and Da Costa, conveyed the vehicle to McDonald, and the
latter sold it to Gonzales.

Therefore, the National City Bank of New York should have a better right to the subject
vehicle because the former as creditor of Gorcey and Da Costa is preferred to those of
each partner as regards the partnership property.

Topic: Article 1823.

The partnership (including de facto) is bound to make good the loss. This will not apply
because based on the actions of Lim, there was no de facto partnership was created.
Hence, Bormaheco, Cervantes and Maglana are not bound and liable to Pioneer.

Pioneer Insurance & Security Corporation vs. Court of Appeals, 175 SCRA 668

Facts:

Jacob Lim was engaged in the airline business as owner-operator of Southern Air
Lines (SAL) a single proprietorship. Lim entered into and executed sales contract for
the sale and purchase of two (2) aircrafts and one set of necessary spare with Japan
Domestic Airlines (JDA).

Bormaheco, Spouses Cervantes and Maglana contributed some funds used in the
purchase of the aircrafts and spare parts. The funds were supposed to be their
contributions to a new corporation proposed by Lim to expand his airline business.

Lim while doing business under the name and style of SAL, executed a chattel
mortgage in favour of Pioneer as security for the surety of Lim and JDA, where the
mortgage covers the airplanes purchased.

However, Lim defaulted which prompted Pioneer to pay JDA. In turn, Pioneer filed an
action for judicial foreclosure of the airplanes. At this point, Pioneer contends that
failure of Lim, Bormaheco, Cervantes and Maglana to incorporate, a de facto
partnership among them, was created. Hence, they must share in the losses and gains
of their business proportion to their contribution.

Maglana, Bormaheco and Cervantes filed a cross-claims against Lim on the grounds
that they were not privies to the contracts signed by Lim.

Issue:

Whether or not a de facto partnership was created among Respondents which would
entitle Pioneer to a reimbursement of the supposed losses of the proposed corporation.

Ruling:

No.

Persons who attempt, but fail, to form a corporation but associate themselves together
under articles to purchase property to carry on a business, they become in legal effect
partners, and their rights as members of the company to the property acquired by the
company will be recognised.
In the case at bar, Lim proposed and induced Bormaheco, Cervantes and Maglana to
expaned his airline business. The three gave their contributions to Lim as part of their
participation in the proposed corporation to be known as SAL. However, Lim
proceeded to acquire the planes on his own account and refused to return the money
received.

Therefore, there is no de facto partnership was created among Respondents because

Lim acted on his and not in behalf of his other would-be incorporators in transacting
the sale of the airplanes and spare parts.

Jai Ailai Corp. vs. BPI, 66 SCRA 29

Facts:

Jai-Ailai filed a complaint against BPI for debiting the value of the forged checks
issued by Antonio Ramirez in their account.

In this case, Antonio Ramirez, sales agent of Inter-Island Gas, issued 10 checks. The
payee of the checks is Inter-Island Gas. Ramirez does not have the authority to
exchange checks into cash.

Jai-Ailai cashed the checks given to them without any inquiry to the authority of
Ramirez to exchange checks belonging to the payee-corporation.

Inter-Island Gas discovered that the checks issued by Ramirez under their firm name
is forged, which prompted them to demand reimbursement to BPI for debiting the
value the checks. In turn, the latter, debited the value of reimbursement to Jai-Ailai’s
account.

Issue:

Whether or not BPI had the right to debit the amount of checks to Jai-Ailai's account.

Ruling:

Yes.

Article 1823 provides that when partnership in the course of its business receives
money and the money received is misapplied or misuse, the partnership is bound to
make good the loss.

In the case at bar, Jai-Ailai Corp. cashed the checks issued by Antonio Ramirez
despite that the payee of the checks is Inter-Island Gas Service. Consequently, Inter-
Island Gas demanded reimbursement to BPI which was granted. In turn, BPI debited
the value of the checks reimbursed in Jai-Ailai’s account in BPI.

Therefore, BPI had the right to debit the amount of checks because Jai-Ailai was
negligent when it cashed the value of the checks given by Ramirez without inquiring
the authority of the latter to exchange checks of Inter-Island Gas. Hence, Jai-Ailai is
bound to make good the loss.

Where check is deposited with a collecting bankrelationship created that of agency,

not creditor-debtor.Same rule follows after drawee-bank was forged by onewho
previously encashed them.
Topic: Article 1822

Switzerland General Insurance Co. Ltd., vs. Ramirez, 96 SCRA 297

Facts:

60,000 bags of Urea Nitrogen were on board the S/S "St Lourdes, claimed to be owned
and operated by Citadel Lines Inc. The goods were insured by Switzerland General
Insurance Company, Ltd. When the shipment was received by consignee, it was found
that it sustained losses/damaged, which was paid by Switzerland. Hence, by virtue of
payment, it became subrogated to the rights of the Switzerland.

Switzerland alleged that it made repeated demands against Oyama and Citadel for
payment of the damages but no payment was made, and uncertain in whose custody
the goods were damaged.

Citadel avers that:

1. It was merely the civil agent in the Philippines for the Japanese firm Oyama
Shipping Co, Ltd.

2. It has always acted as an agent of a disclosed principal. Therefore, it is without

liability at all, in connection with the Switzerland's claim.

3. The damage took place while the cargo was being delivered to the consignee by
the Mabuhay Brokerage, Inc.

Oyama argues that:

1. It ceased to be represented in the Philippines upon the declaration of its

insolvency.
2. Due to its insolvency, the case against them should be dismissed.
3. The damage shall be imputed against shipper, Sumitomo Shoji Kaisha, Ltd, for
failure to provide seaworthy packages for the goods, and/or Mabuhay
Brokerage for failure to exercise utmost diligence after it took possession of the
cargo from the vessel S/S St. Lourdes.
4. Switzerland reinsurer had already paid the former’s claim.

The lower court absolved Citadel and Mabuhay Brokerage as no evidenced set forth
that damage happened in their custody. On the other hand, the Court declared that
Oyama Lines is liable for the damages because it was undisputed that damage took
place in the custody of the carrier.

Switzerland argues that Citadel being the ship agent for the vessel S/S St. Lourdes is
liable under the pertinent provisions of Code of Commerce and jurisprudence.

However, Citadel counters stating that it is only an agent of the Oyama, not a ship
agent. Assuming arguendo that it is a ship agent, it cannot be held liable because the
Oyama has been declared insolvent.

Issue:

Whether or not Citadel Lines, Inc., may be held primarily liable for the damages
sustained by subject shipment while on board in its vessel.

Ruling:
Yes.

The Code of Commerce provides that ship agent is the person entrusted with the
provisioning of a vessel, or who represents her in the port in which she happens to be.
The same law states that ship agent shall be liable for the indemnities in favour of
third person.

In the case at bar, S/S St. Lourdes, owned and operated by Citadel, is in charge of the
unloading of the cargo and issued cargo. It is the vessel that shipped the cargo from
Japan to Philippines.

Therefore, Citadel is solidarily liable with its principal, Oyama Shipping, for the
damages sustained by the subject shipment because based on evidence, it is not a
mere agent but a ship agent, and since it is a ship agent, it shall be liable for the
indemnities in favour of third person, in this case, Switzerland.