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Munasque v. CA

Doctrine:

Article 1816 must be construed together with Article 1824. While the liability of the

partners are merely joint in transactions entered into by the partnership, a third

person who transacted with said partnership can hold the partners solidarily liable

for the whole obligation if the case of the third person falls under Articles 1822 and

1823.

Facts:

Munasque entered in behalf of the partnership with Galan under the duly registered

name Galan and Associates as Contractor entered into a written contract with

respondent Tropical for remodeling the respondents Cebu branch building. Under

the contract, the project was for the total of P25,000 to be paid in installments- 7,

000 upon signing and 6, 000 every 15 working days.

Tropical made the first payment in the form of a check in the name of Munasque.

Munasque indorsed the check in favor of Galan to enable Galan to deposit it in the

bank and pay for the materials and labor used in the project. However, Galan

allegedly spent P6, 183.37 for his personal use. When the second check came,

refused to indorse it again to Galan.

Galan informed Tropical of the misunderstanding between him and Munasque.

Tropical changed the name of the payee in the second check from Munasque to

Galan and Associates which enabled Galan to encash the second check.

Meanwhile, the construction was continued through Munasques sole efforts. Theconstruction work was finished ahead of schedule with the total expenditure

reaching P 34, 000.

Munasque filed a complaint for payment of sum of money and damages against

Galan, Tropical, and Tropicals Cebu branch manager Pons. Cebu Southern

Hardware Company and Blue Diamond Glass Palace intervened in the case for the

credit which they extended to the partnership of Munasque and Galan for the

construction project.

Both trial court and Court of Appeals absolved respondents Tropical and its Cebu

manager, Pons, from any liability but they also held that Munasque and Galan liableto the intervenors.

Issues:

Whether the obligation of Munasque and Galan is joint or solidary?

Held:

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Solidary.

While it is true that under Article 1816 of CC, All partners, including industrial ones,

shall be liable pro rate 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 account of the partnership, under its signature and by a person authorized to actfor the partnership. xxx, this provision should be construed together with Article

1824 which provides that: All partners are liable solidarily with the partnership for

everything chargeable to the partnership under Articles 1822 and 1823. While the

liability of the partners are merely joint in transactions entered into by the

partnership, a third person who transacted with said partnership can hold the

partners solidarily liable for the whole obligation if the case of the third person falls

under Articles 1822 and 1823.

The obligation is solidary because the law protects him, who in good faith relied

upon the authority of a partner, whether such authority is real or apparent.

Tropical had every reason to believe that a partnership existed between Munasque

and Galan and no fault or error can be imputed against it for making payments to

Galan and Associates because as far as it was concerned, Galan was a true

partner with real authority to transact in behalf of the partnership it was dealing

with. This is even more true in the cases of the intervenors who supplied materials

on credit to the partnership. Thus, it is but fair that the consequences of any

wrongful act committed by any of the partners therein should be answered

solidarily by all the partners and the partnership as a whole.

However, as between Munasque and Galan, Galan must reimburse Munasque for

the payments made to the intervenors as it was satisfactorily established that Galanacted in bad faith in his dealings with Munasque as a partner.