PACIFIC COMMERCIAL COMPANY, Plaintiff-Appellee, v.

ABOITIZ & MARTINEZ ET

AL., Defendants. JOSE MARTINEZ, Defendant-Appellant.

FACTS:

In 1919, a "a regular, collective, mercantile partnership" was formed between Arnaldo F. de Silva, Guillermo
Aboitiz, Vidal Aboitiz as capital partners and Jose Martinez as an industrial partner

After failure of the partnership to pay a debt in favor of herein plaintiff- appelle, Pacific Commercial Company,
the latter brought an action for the recovery of the unpaid balance with interest.
The Trial Court ruled in favor of the plaintiff and ordered, among others, that herein defendant Jose Martinez be
subsidiarily liable for the awards in favor of Pacific Commercial Company. Hence the present appeal where
Martinez contends that as a mere industrial partner, he cannot be held responsible for the partnership’s debt
under the provision of the code of commerce.

ISSUE: whether or not an industrial partner may be held liable for a partnership debt

RULING:

Yes, an industrial partner may be held liable for a partnership debt.

Citing its ruling in the case of Compañia Maritima v. Munoz (9 Phil., 326), it was held that industrial partners
are secondarily liable for the debts of the partnership. The court relied in Article 127 of the Code of Commerce
which reads as follows:jgc:chanrobles.com.ph

"All the members of the general copartnership, be they or be they not managing partners of the same, are liable
personally and in solidum with all their property for the results of the transactions made in the name and for
the account of the partnership, under the signature of the later, and by a person authorized to make use
thereof."

The language of this article is clear and specific and must be taken to mean exactly what it says, namely, that all
the members of a general copartnership are liable with all their property for the results of the duly authorized
transactions made in the name and for the account of the partnership.

According to the court article 141, upon which the appellant relies and which provides that "losses shall be
computed in the same proportion among the capitalist partners without including the industrial partners, unless
by special agreement the latter have been constituted as participants therein," is susceptible of two different
interpretations of which that given it in the Compania Maritima case, supra, i. e., that it relates merely to the
distribution of losses among the partners themselves in the settlement of the partnership affairs and has
no reference to partnership obligations to third parties, appears to us to be the more logical.

There is a marked distinction between a liability and a loss, and the inability of a partnership to pay a debt to
third party at a particular time does not necessarily mean that the partnership business, as a whole, has been
operated at a loss. The partnership may have outstanding credits which for the moment may be unavailable for
the payment of debts, but which eventually may be realized upon and yield profits more than sufficient to cover
all losses. Bearing this in mind it will be found that there in reality is no conflict between the two articles
quoted; one speaks of liabilities, the other of losses.

Hence, the petition was denied.