#1. ISLAND SALES VS. UNITED PIONEERS GEN The defendants Benjamin C. Daco and Noel C.

Sim moved to
CONSTRUCTION CO. reconsider the decision claiming that since there are five (5) general
partners, the joint and subsidiary liability of each partner should not
Art. 1816: Condonation by creditor of share in partnership debt of
exceed one-fifth (1/5) of the obligations of the defendant company.
one partner does not increase pro rata liability of other partners.

FACTS: T ​ he respondent (UNITED PIONEERS GENERAL The trial court denied the said motion notwithstanding the
CONSTRUCTION COMPANY ET .AL ), a general partnership duly conformity of the plaintiff to limit the liability of the defendants Daco
registered under the laws of the Philippines, purchased from the
and Sim to only one-fifth (1/5 ) of the obligations of the defendant
petitioner ( ISLAND SALES, INC) a ​motor vehicle o​n installment
company.
basis and for this purpose executed a promissory note for P9,440.00,
payable in twelve (12) equal monthly installments with the condition
that failure to pay any of said installments would render the whole ISSUE: ​WON the dismissal of the complaint to favor one of the
unpaid balance immediately due and demandable.
general partners of a partnership increases the joint and subsidiary
liability of each of the remaining partners for the obligations of the
Having failed to receive the installment due on July 22, 1961, the
partnership.
petitioner sued the defendant company for the unpaid balance

Ruling: No. ​No. In the instant case, there were five (5) general
Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B.
partners when the promissory note in question was executed for and
Lumauig, and Augusto Palisoc were included as co-defendants in
on behalf of the partnership. Since the liability of the partners is pro
their capacity as general partners of the defendant company.
rata, the liability of the appellant Benjamin C. Daco shall be limited
to only one-fifth ( 1/ 5 ) of the obligations of the defendant
When the case was called for hearing, the defendants and their
company. The fact that the complaint against the defendant Romulo
counsels failed to appear despite the notices sent to them.
B. Lumauig was dismissed, upon motion of the plaintiff, does not
Consequently, the trial court authorized the petitioner to present its
unmake the said Lumauig as a general partner in the defendant
evidence ex-parte , after which the trial court rendered the decision
company. the petitioner merely condoned Lumauig's individual
appealed from.
liability to the plaintiff.
#2. COMPANIA MARITIMA VS MUNOZ Losses shall be charged in the same proportion among the partners
who have contributed capital, without including those who have
FACTS: not, unless by special agreement the latter have been constituted
-​Francisco Muñoz, Emilio Muñoz, and Rafael Naval formed an ordinary as participants therein.
general mercantile partnership for the purpose of carrying on the mercantile
business in Albay. They named the partnership “Francisco Muñoz & Sons”. Issue:​ Whether Muñoz (an industrial partner) is liable to third person - La
Compana Maritima.
-In the articles of partnership, it is expressly stated that they have agreed to
form, and do form, an ordinary, general mercantile partnership. Ruling: Y
​ es.
Under Art. 127 of Code of Commerce;
-Francisco was the capitalist partner while the other two were industrial All the members​ of the general copartnership, be they or be they
not managing partners of the same, are liable personally and ​in
partners. In the articles of partnership, it was agreed upon by the three that
solidum w​ ith all their property for the results of the transactions
for profits, Francisco shall have a 3/4th share while the other two would made in the name and for the account of the partnership, under
the signature of the latter, and by a person authorized to make use
have 1/8th each. For losses, only Francisco shall bear it.
thereof.

The SC held that in limited partnership, the Code of Commerce recognizes a

-Later, the partnership was sued by La Compañia Martitama for collection of difference between general and special partners, but in a general
sum of money. The partnership lost the case and was ordered to make said partnership there is no such distinction — all the members are general
partners. The fact that some may be industrial and some capitalist partners
payment; that in case the partnership can’t pay the debt, all the partners does not make the members of either of these classes alone such general
should be liable for it. partners.

Industrial partners have a voice in the management of the business, if no

manager has been named in the articles; they share in the profits and as to
-The argument of the respondent is that, because no yearly or monthly
third persons it is no more than right that they should share in the
salary was assigned to Emilio Muñoz, he contributed nothing to the obligations.
partnership and received nothing from it.
Article 141 of the code of commerce

ART. 141. Losses shall be charged in the same proportion among

-Francisco (the capitalist partner) now argues that the industrial partners
the partners who have contributed capital, without including those
should NOT be liable pursuant to Article 141 of the Code of Commerce who have not, unless by special agreement the latter have been
constituted as participants therein.
which states:
SC states that the construction of this article is that it ​relates exclusively
to the settlement of the partnership affairs among the partners
themselves and has nothing to do with the liability of the partners
to third persons;​ that each ​one of the industrial partners is liable to third
persons for the debts of the firm;​ that if he has paid such debts out of his
private property during the life of the partnership, when its affairs are
settled he is entitled to credit for the amount so paid, and if it results that
there is not enough property in the partnership to pay him, then the
capitalist partners must pay him.

SC concluded that, in this case neither on principle nor on authority

can the industrial partner be relieved from liability to third persons
for the debts of the partnership.
#3. SANTIAGO SYJUCO INC VS CASTRO RULING:

Facts: Yes, the mortgage executed by the Lims is attributable to their partnership.

- the Lims, borrowed from petitioner Santiago Syjuco, Inc., the sum of
The Supreme Court held that the legal fiction of a separate juridical
P800,000.00. The loan was given on the security of a first mortgage on
personality and existence will not shield it from the conclusion of having
property registered in the names of said borrowers as owners. such knowledge which naturally and irresistibly flows from the undeniable
facts. It would violate all precepts of reason, ordinary experience and
Then additional loans on the same security were obtained by the Lims from
common sense to propose that a partnership, as such, cannot be held
Syjuco. In total, the loans is at P2,460,000.00, exclusive of interest, and the accountable with knowledge of matters commonly known to all the partners
security had been augmented by bringing into the mortgage other property.
or of acts in which all of the latter, without exception, have taken part,
where such matters or acts affect property claimed as its own by said
-Lims failed to pay it despite demands therefore; that Syjuco consequently partnership.
caused extra-judicial proceedings for the foreclosure of the mortgage. THe
sheriff scheduled the auction sale of the mortgaged property.
There is no reason to distinguish between the Lims, as individuals,
-The attempt to foreclose triggered off a legal battle that has dragged on for and the partnership itself, since the lims constituted the entire
membership of the partnership.
several years, fought through five (5) cases in the trial courts, two (2) in
the Court of Appeals, and three (3) more in the Supreme Court.
In other words, ​despite the concealment of the existence of the
- One of the complaints filed by the Lims was filed not in their individual partnership, for all intents and purposes and consistently with the
names, but in the name of a partnership of which they themselves were the Lims’ own theory​, it was that ​partnership which was the real party in
only partners: "​Heirs of Hugo Lim." interest in all the action​s;

-The complaint advocated the theory that the mortgage which they, it was actually represented in said actions by all the individual members
together with their mother, had individually constituted over lands standing thereof, and consequently, those members’ acts, declarations and omissions
in their names in the Property Registry as owners p​ ro indiviso​, in fact no cannot be deemed to be simply the individual acts of said members, but in
longer belonged to them at that time, having been earlier deeded over by fact and in law, those of the partnership.
them to the partnership, "Heirs of Hugo Lim,".

-Thus, said mortgage was void because executed by them without authority The silence and failure of the partnership to impugn(dispute the truth) said
from the partnership. mortgage within a reasonable time, let alone a space of more than
seventeen years, brought into play the doctrine of estoppel to preclude any
attempt to avoid the mortgage as allegedly unauthorized.
ISSUE: Whether the ​mortgage executed by the Lims be attributable
to their partnership.
Respondents are jointly and severally liable to pay the petitioner.
#4: LIWANAG AND REYES VS. WORKMEN’S COMPENSATION which is evidently contrary to the intent and purpose of the law to give full
COMMISSION. protection to the employee.

WCA should be construed fairly, reasonably and liberally in favor of and for
Facts: the benefit of the employee and his dependents.

-Petitioners Liwanag and Reyes are co-owners of Liwanag Auto supply. They All doubts as to the right of compensation shall be resolved in favor of the
employed Balderama as a security guard who, while in the line of duty, was employee.
killed by criminal hands.

-His widow, Ciriaca Balderama & his children filed a claim for compensation
with the Workmen’s Compensation Commission, which granted the award of
3,494.40 to be paid by the petitioner jointly and severally.

-Appellants appealed the case and claimed that under the Workmen’s
Compensation Act, the compensation should be divisible & not paid jointly
and severally.

Issue​: WON the liability of partners arising from compensable injury or

death of an employee should be joint?

Ruling: No. It must be solidary.

Although the Workmen's Compensation Act does not contain any provision
expressly declaring that the obligation of business partners arising from
compensable injury or death of an employee should be solidary, however,
there are other provisions of law from which it could be gathered that their
liability must be solidary. Arts. 1711 and 1712 of the New Civil Code.

Section 2 of the Workmen's Compensation Act, indicates that in

compensation 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 happens to be insolvent, the amount awarded to
the dependents of the deceased employee would only be partially satisfied,
#5: PAUL MCDONALD VS. NATIONAL CITY BANK OF NEW YORK -​McDonald and Gonzales were made defendants because they claimed to
have a better right over, the pledged vehicle.
Doctrine: W​ hile an unregistered commercial partnership has no juridical
Issue​: ​Whether an unregistered commercial partnership, that has no
personality, nevertheless, where two or more persons attempt to create a
juridical personality, can have a domicile so that the registration of a chattel
partnership failing to comply with all the legal formalities, the law considers mortgage therein is notice to the world.
them as partners and the association is a partnership in so far as it is a
favorable to third persons, by reason of the equitable principle of estoppel. Ruling:

YES. In ruling that an unregistered commercial partnership which has no

Facts: independent juridical personality can have a domicile so that a chattel
Partners: ​Alan W. Gorcey, Louis F. da Costa, Jr. . William Kusik and Emma mortgage registered in that domicile would bind third persons who are
Badong Gavino innocent purchasers for value.

-​While an unregistered commercial partnership has no juridical personality,

- STASIKINOCEY is a partnership doing business in San Juan, Rizal, nevertheless, where two or more persons attempt to create a partnership
formed by 4 persons. This partnership was denied registration in the failing to comply with all the legal formalities, the law considers them as
Securities and Exchange Commission (SEC), and while it is confusing to see partners and the association is a partnership in so far as it is a favorable to
that the Cardinal Rattan Factory is treated as a copartnership, of which third persons, by reason of the equitable principle of estoppel.
defendants Gorcey and da Costa are considered general partners. Then it is
established that Cardinal Rattan is merely the business name or style used -​Da Costa and Gorcey cannot deny that they are partners of the partnership
by the partnership Stasikinocey. Stasikinocey, because in all their transactions with the National City Bank
they represented themselves as such.
-Stasikinocey had an account with The National City Bank of New York, a
foreign banking association duly licensed to do business in the Philippines.
-McDonald cannot disclaim knowledge of the partnership Stasikinocey
-The account showed a balance of P6,134.92 against the because he dealt with said entity in purchasing two of the vehicles in
Stasikinocey/Cardinal Rattan, which account, due to the failure of the question through Gorcey and Da Costa. The sale of the vehicles to
partnership to make the required payment, was converted into an ordinary MacDonald being void, the sale to Gonzales is also void since a buyer cannot
loan for which the corresponding promissory 'joint note non-negotiable' was have a better right than the seller.
executed by Costa for and in the name of the Cardinal Rattan.

-This PN was secured by a chattel mortgage executed by Costa, Jr., General Thus, if the law recognizes a defectively organized partnership as de facto
Partner for and in the name of Stasikinocey, alleged' to be a duly registered as far as third persons are concerned, for purposes of its de facto existence
Philippine partnership, doing business under the name and style of Cardinal it should have such attribute of a partnership as domicile. The registration of
Rattan. The chattels mortgaged were a Fargo truck, Plymouth Sedan and the chattel mortgage in question with the Office of the Register of Deeds of
Fargo Pick-up. Rizal, the residence or place of business of the partnership Stasikinocey
being San Juan, Rizal, was therefore in accordance with section 4 of the
-​Du​ring the subsistence of the loan, the vehicles were sold to MacDonald Chattel Mortgage Law.
and later on, MacDonald sold 2 of the 3 vehicles to Gonzales. The bank
brought an action for recovery of its credit and foreclosure of the chattel
mortgage upon learning of these transactions.
#6: PIONEER INSURANCE & SECURITY CORP VS CA

Facts:
Argument:
-​Jacob S. Lim was engaged in the airline business as owner-operator of Lim - questioned the court's decision that other defendants must bear the
Southern Air Lines (SAL) a single proprietorship. In Tokyo, Japan, losses based on their contributions and that a de facto partnership was
Domestic Airlines (JDA) and Lim entered into and executed a sales created.
contract for the sale and purchase of 2 aircrafts and 1 set of
necessary spare parts. -Questioned the rules governing the relationship among co-investors whose
agreement was to do business through a corporate vehicle but fault to
-Pioneer Insurance and Surety Corporation (petitioner) as surety executed incorporate the entity.
and issued its Surety Bond in favor of JDA, in behalf of its principal, Lim, for
the balance price of the aircrafts and spare parts. Issue: ​Whether a de facto partnership has been created by the failure of
the parties to incorporate
-It appears that Border Machinery and Heavy Equipment Company, Inc.
(Bormaheco), Francisco and Modesto Cervantes (Cervanteses) and Ruling: No.
Constancio Maglana ​(respondents in both petitions) ​contributed some
funds used in the purchase of the above aircrafts and spare parts. -it is ordinarily held that persons who attempt, but fail, to form a corporation
and who carry on business under the corporate name occupy the position of
partners inter se.
-The funds were supposed to be their contributions to a new corporation
proposed by Lim to expand his airline business.
-Thus, where persons associate themselves together under articles to
purchase property to carry on a business, and their organization is defective
-Lim doing business under the name and style of SAL executed in favor of
as to come short of creating a corporation within the statute, they become
Pioneer as deed of chattel mortgage as security for the latter’s
in legal effect partners inter se, and their rights as members of the company
suretyship​. It was stipulated that Lim transfer and convey to the surety the
to the property acquired by the company will be recognized.
two aircrafts.

However, such a relation does not necessarily exist, for ordinarily persons
-Lim defaulted on his subsequent installment payments prompting JDA to
cannot be made to assume the relation of partners, as between themselves,
request payment from Pioneer.
when their purpose is that no partnership shall exist. and it should be
implied only when necessary to do justice between the parties;
-Pioneer then filed a petition for the extrajudicial foreclosure of the said
chattel mortgage when Lim defaulted in his payment.
-thus, one who takes no part except to subscribe for stock in a proposed
corporation which is never legally formed does not become a partner with
-The court rendered a decision holding Lim liable to pay Pioneer and other subscribers who engage in business under the name of the pretended
dismissed the complaint to other defendants. corporation, so as to be liable as such in an action for settlement of the
alleged partnership and contribution
#7: JAI ALAI CORP VS. BPI deemed to have given the warranty prescribed in Section 66 of the
NIL that every single one of those checks "is genuine and in all
respects what it purports to be​."
Facts:
Respondent which relied upon the petitioner's warranty should not be held
liable for the resulting loss.
-10 checks with a total face value of around 8K were deposited by the
petitioner Jai-Alai in its current account with the respondent bank BPI, which
the former acquired from one Antonio Ramirez who was a sales agent of Jai Alai Corporation is negligent in accepting the checks without question
Inter-Island Gas Corporation and a regular bettor at jai-alai games.
from Antonio Ramirez notwithstanding that the payee was the Inter-Island
Gas Services, Inc. and it did not appear that he was authorized to indorse it.
-After Ramirez had resigned from the Inter-Island Gas and after the checks
had been submitted to interbank clearing, the Inter-Island Gas discovered
that all the endorsements made on the checks were forged.

-Inter-Island Gas notified the petitioner and respondent, of the said checks
about the forgeries, and filed a criminal complaint against Ramirez.

-Repondent BPI debited petitioner’s current account and forwarded the

checks containing the forged endorsements, which the petitioner refused to
accept.

-So when petitioner drew against its current account with respondent a
check for P135,000 payable to the order of Mariano Olondriz in payment of
certain stocks, the same was dishonored because of insufficiency of funds.

-The petitioner filed a complaint against the respondent with CFI Manila
but it was dismissed by the trial court as well as by Court of Appeals.

Issue:
Whether or not the BPI had the right to debit from the petitioner's current
account the value of the checks with the forged endorsements?

Ruling:

YES. The respondent BPI acted within legal bounds when it debited the
petitioner's account. When the petitioner deposited the checks with the
respondent, the nature of the relationship created at that stage was one of
agency, that is, the bank was to collect from the drawees of the checks the
corresponding proceeds.

BPI acted within legal bounds when it debited the petitioner's account. #8: SWITZERLAND GENERAL INSURANCE VS. RAMIREZ
Having endorsed the checks to respondent bank, petitioner is
Facts: -Defendant Oyama Lines alleged that it ceased to be represented in the
Philippines upon the declaration of its insolvency by the Tokyo Court;
Petitioner​ Switzerland General Insurance Company, Ltd, a foreign insurance
company authorized to do business in the Philippines filed an admiralty case -that due to the insolvency of Oyama lines, the case as against it should be
against Oyama Lines, a foreign firm doing business in the Philippines, and dismissed, Further, it imputed the loss or damage to the shipment to the
Citadel - which is the local agent of private respondent Oyama Shipping Co., shipper, Sumitomo Shoji Kaisha, Ltd. for failing to provide seaworthy
Inc. and/or Mabuhay Brokerage Co., Inc. (Mabuhay) packages for the goods, and/or the Mabuhay Brokerage for failure to
exercise utmost diligence after it took possession of the cargo.
The complaint alleged that 60,000 bags of Urea Nitrogen were shipped from
Japan, on board the S/S “St Lourdes”, claimed to be owned and operated by -The court rendered a decision in favor of petitioner as against therein
defendant Citadel. defendant Oyama Lines but absolving Citadel Lines, Inc. and Mabuhay
Brokerage Co., Inc. from liability
The goods were consigned to Borden International Phils., Inc., and insured
by petitioner against all risks.
Issue: ​ Whether respondent ​Citadel Lines,​ Inc.,​ the local agent of a
The shipment was discharged from the vessel owned by Mabuhay, but when foreign ocean going vessel, the S/S “St. Lourdes”,​ ​may be held primarily
the same was subsequently delivered to and received by the consignee, it liable for the loss/damage found to have been sustained by subject
was found to have sustained losses and/or damage which was paid by shipment while on board and/or still in the custody of the said
petitioner insurance company vesse​l.

Petitioner made repeated demands against private respondents for payment

of the losses but no payment was made. Ruling: Yes.

-Defendant filed an Answer alleging that Citadel Lines was merely the civil it is not disputed by the private respondent that it is the local representative
agent in the Philippines for the Japanese firm Oyama Lines., in the Philippines of the Oyama Lines and, as alleged by petitioner, upon
arrival of the vessel S/S “St. Lourdes” in Manila, it took charge of the
It was further alleged that the principal agency relationship between the unloading of the cargo and issued cargo receipts in its own name, for the
said Oyama Lines and Citadel Lines, Inc. was terminated when the Tokyo purpose of evidencing discharge of cargoes and the conditions thereof from
District Court declared and decreed its insolvency. the vessel to the arrastre operators and/or unto barges/lighters, and that
claims against the vessel S/S “St. Lourdes” for losses/damages sustained by
-It was argued that defendant Citadel Lines “has always acted as an agent shipments were in fact filed and processed by respondent Citadel Lines, Inc.
of a disclosed principal and, therefore, petitioner iis without any liability at
all” in connection with the respondents claim. These facts point to the inevitable conclusion that a private respondent is
the entity that represents the vessel in the port of Manila.

The liabilities of the ship agent are not disputed by the private Respondent.
It appearing that the Citadel Lines is the ship agent for the vessel S/S “St.
Lourdes” at the port of Manila, it is, therefore, liable to the petitioner,
solidarily with its principal, Oyama Shipping Co., Ltd., in an amount
representing the value of the goods lost and or damaged.

The insolvency of Oyama Lines has no bearing on the instant case insofar as
the liability of Citadel Lines, Inc. is concerned. The law does not make the
liability of the ship agent dependent upon the solvency or insolvency of the
ship owner.

Therefore, private respondent Citadel Lines, Inc. is hereby ordered

to pay, solidarily with its principal, Oyama Lines

A ship agent​, according to Article 586 of the Code of Commerce, is ​“the

person entrusted with the provisioning of a vessel, or who represents her in
the port in which she happens to be.