Partnership Case Digest

De Los Reyes v. Lukban and Borja, 35 Phil. 757 G.R. No.
10695, December 15, 1916

FACTS:
Teodoro delos Reyes brought a suit in the Court of First Instance of Mani l a agai nst Vi cente Lukban and Espi ri di on
Borj a to recover from t hem pay men t f or t he mer chandi s e t he y bough t on cr edi t by t he f i r mLukban
& Borj a from the pl ai nti ff' s shi p suppl y store named La
I ndustri a. A judgment was rendered, on which the defendant firm was ordered to pay the sum of P1,086. 65 wi th i nterest
thereon amounti ng to P1,102.95. Esperidion Borja paid P522.69. Teodoro delos Reyes later on brought a sui t agai nst Lukban
& Borj a to recover the sum of P853, the remaining unpaid balance plus legal interest. Defendant Lukban contended
that he i s not l i abl e, he was merel y an i ndus t r i al par t ner i n t he f i r m and i t was Bor j a who f ur ni s hed t he
c a p i t a l .

A s i t w a s p r o v e n o n t r i a l t h a t t h e p a r t n e r s h i p h a s n o m o r e remaining property, as it is
already insolvent, the court rendered judgment hol di ng Borj a and Lukban j oi ntl y and several l y l i abl e to pay the sum to
plaintiff de los Reyes.

ISSUE: I s a credi tor enti tl ed to col l ect i ndi vi dual l y from the partners the amount of the debt that the di ssol ved
partnershi p owed at the ti me of i ts dissolution?

RULING: Yes. The creditor has the right to recover from the partners thereof i n t h e m a n n e r p r o v i d e d b y A r t . 1 2 7 o f
t h e C o d e o f C o mme r c e ( n o w governed by Art. 1816 of the Civil Code of the Philippines). Art. 127 of the Code of
Commerce provides:"All the members of the general co-partnership, be they or be theynot managi ng partners of the same,
are personal l y and several l y l i abl ewi th al l thei r properti es for the resul ts of the transacti ons made i n the name
and for the account of the partnershi p, under the si gnature of the latter, and by the person authorized to make use
thereof".

PACIFIC COMMERCIAL COMPANY vs. ABOITIZ & MARTINEZ, ET AL., 48 Phil. 841. G.R. No. L-25007, March 2, 1926

FACTS:
Arnaldo F. de Silva, Guillermo Aboitiz, Vidal Aboitiz and Jose Martinez formed a regular, collective, mercantile partnership
with a capital of P40,000 as contri buted equal l y by de Si l va and the two Aboi ti z whi l e Jose Marti nez was an
i ndustri al partner wi th no capi tal contri buti on. As provided in the article of partnership, Martinez was to receive 30% of the
profi ts and shal l al so be responsi bl e for l osses whi ch shoul d not exceed 30%.

The partnership, through Guillermo Aboitiz, executed a promissory note i n favor of Paci fi c Commerci al Company i n
the sum of P23,168. 71 wi th i nterest at 12% per annum. They executed a chattel mortgage to secure the note.
Due to thei r fai l ure to pay thei r obl i gati on, the chattel mor t gage was f or ecl os ed and s ol d at P 2 , 0 0 0
whi ch was pai d ov er t o plaintiff Pacific Co. Due to non payment of the remaining balance, plaintiff brought a sui t for
recovery of unpai d bal ance wi th i nterest agai nst the partnership.

A judgment was rendered in favor of plaintiff and the partnership was ordered to pay the sum of P27,951.68 and the interest
amounting to P21,168.71 at 10% per annum unti l ful l y pai d pl us fees. The j udgment further provided that the execution
should first issue against the property of the partnership Aboitiz & Martinez and in the event of the insolvency of the partnership, it
might issue against the property of de Silva and Aboitiz and in the event of insolvency, then against the property of Jose Martinez.
Defendant Martinez appealed to the decision and invoked that under Art.141 of the Code of Commerce, he is merely an industrial
partner, thus, he cannot be held liable for the partnership's debt.

ISSUE: Is an industrial partner liable for partnership's debt?

RULING Yes. The l anguage of Ar t. 127 of the Code of Commerce i s cl ear and specific and must be taken to mean exactly
what it says, namely, that a l l t h e me mb e r s o f a g e n e r a l c o p a r t n e r s h i p a r e l i a b l e w i t h a l l
t h e i r property for the resul ts of the dul y authori zed transacti ons made i n the name and for the account of the
partnership. Defendant' s rel i ance to Ar t. 141 i s mi spl aced. Thi s arti cl e of the Code of Commerce rel ates merel y to
the di stri buti on of l osses among partners themsel ves i n the settl ement of the partnershi p affai rs and has no
obligations to third parties.

Island Sales, Inc. v. United Pioneers General Construction Company, Et. AlG.R. No. L-22493, July 31, 1975

FACTS: United Pioneers General Construction Company is a general partnership formed by Benjamin Daco, Daniel Guizona, Noel Sim,
Augusto Palisoc and Romulo Lumauig. In 1961, United Pioneers purchased by installment a motor vehicle from Island Sales, Inc. United
Pioneers defaulted in its payment hence it was sued and the 5 partners were impleaded as co-defendants.
Upon motion of Island Sales, Lumauig was removed as a defendant.
United Pioneers lost the civil case and the trial court rendered judgment ordering United Pioneers to pay the outstanding balance
plus interest and costs. It further decreed that the remaining 4 co-defendants shall pay Island Sales in case United Pioneers property
will not be enough to satisfy its indebtedness to Island Sales.

ISSUE: What is the extent of the liability of the partners considering that one partner was removed as a co-defendant on motion of
Island Sales?

HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is should be noted that since there were 5 partners when
the purchase was made in behalf of the partnership, the liability of each partner should be 1/5th (of the companys obligation) each.
The fact that the complaint against Lumauig was dismissed, upon motion of the Island Sales, does not unmake Lumauig as a general
partner in the company. In so moving to dismiss the complaint, Island Sales merely condoned Lumauigs individual liability to them.

Island sales inc vs. United Pioneers genereal construction

Facts: United Pioneers General Construction Company is a general partnership formed by Benjamin Daco,
Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo Lumauig. In 1961, United Pioneers purchased by
installment a motor vehicle from Island Sales, Inc. United Pioneers defaulted in its payment hence it was sued
and the 5 partners were impleaded as co-defendants.
Upon motion of Island Sales, Lumauig was removed as a defendant.
United Pioneers lost the civil case and the trial court rendered judgment ordering United Pioneers to pay the
outstanding balance plus interest and costs. It further decreed that the remaining 4 co-defendants shall pay
Island Sales in case United Pioneers property will not be enough to satisfy its indebtedness to Island Sales.
ISSUE: What is the extent of the liability of the partners considering that one partner was removed as a co-
defendant on motion of Island Sales?
HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But is should be noted that since
there were 5 partners when the purchase was made in behalf of the partnership, the liability of each partner
should be 1/5
th
(of the companys obligation) each. The fact that the complaint against Lumauig was dismissed,
upon motion of the Island Sales, does not unmake Lumauig as a general partner in the company. In so moving
to dismiss the complaint, Island Sales merely condoned Lumauigs individual liability to them.

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De Los Reyes v. Lukban and Borja, 35 Phil. 757 G.R. No.

10695, December 15, 1916

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