Property Rights of a Partner G.R. No. L-13680 April 27, 1960 MAURO LOZANA, plaintiff-appellee, -versus- SERAFIN DE A!A!

I"O, defendant-appellant F#$%&' plaintiff Mauro Lozana entered into a contract with defendant Serafin Depakakibo wherein they established a partnership capitalized at the su of P!",""", plaintiff furnishing #"$ thereof and the defendant, %"$, for the purpose of aintaining, operating and distributing electric light and power in the Municipality of Du angas, Province of &loilo, under a franchise issued to Mrs' Piadosa (uenaflor' )owever, the franchise or certificate of public necessity and convenience in favor of the said Mrs' Piadosa (uenaflor was cancelled and revoked because of the cancellation of the franchise, plaintiff Lozana sold a generator to the new grantee *li pia D' Decolongon Defendant Serafin Depakakibo, on the other hand, sold one +rossly Diesel ,ngine to the spouses -eli. /i enea and -elina )arder plaintiff Lozana brought an action against the defendant, alleging that he is the owner of the 0enerator (uda 1Diesel2 and 3" wooden posts with the wires connecting the generator to the different houses supplied by electric current in the Municipality of Du angas, and that he is entitled to the possession thereof, but that the defendant has wrongfully detained the defendant denied that the sub4ect properties belong to the plaintiff and alleged that the sa e had been contributed by the plaintiff to the partnership entered into between the in the sa e anner that defendant had contributed e5uip ents also, and therefore that he is not unlawfully detaining the he further alleged in his counterclai that under the partnership agree ent the parties were to contribute e5uip ents, plaintiff contributing the generator and the defendant, the wires for the purpose of installing the ain and delivery lines and that the plaintiff sold his contribution to the partnership, in violation of the ter s of their agree ent

6he ;nti-Du y law has not been violated as parties plaintiff and defendant are not aliens but -ilipinos' 6he ;nti-Du y law refers to aliens only the court erred in declaring that the contract was illegal fro the beginning and that parties to the partnership are not bound therefor, such that the contribution of the plaintiff to the partnership did not pass to it as its property &t also follows that the clai of the defendant in his counterclai that the partnership be dissolved and its assets li5uidated is the proper re edy, not for each contributing partner to clai back what he had contributed'

-*E LE,-E-SAMAR SALES .O., #/+ RA,MUNDO -OMASSI, p)%i%io/)r&, 0&. SUL I.IO 1. .EA, i/ 2i& $#p#$i%3 #& 4(+5) o6 %2) .o(r% o6 Fir&% I/&%#/$) o6 L)3%) #/+ OLEGARIO LAS-RILLA, r)&po/+)/%&. -;+6S -red (rown 1like ;rnold )all and /ean Ro.as2 was a partner of the -,L+*, was defendant in +ivil +ase <o' 8:! as such partner, and that the properties sold at auction actually belonged to the -,L+* partnership and the partners' 7e shall also assu e that the sale ade to Lastrilla on Septe ber =:, 8:%:, of all the shares of -red (rown in the -,L+* was valid' 1Re e ber that 4udg ent in this case was entered in the court of first instance a year before'2 6he result then, is that on /une :, 8:98 when the sale was effected of the properties of -,L+* to Roberto Dorfe and Pepito ;sturias, Lastrilla was already a partner of -,L+*' &SS>,? Does Lastrilla have any proper clai to the proceeds of the sale@

),LD? &f he was a creditor of the -,L+*, perhaps or aybe' (ut he was not' 6he partner of a partnership is not a creditor of such partnership for the a ount of his shares' &nas uch as Lastrilla had ac5uired the shares of (rown in Septe ber, 8:%:, i'e', before the auction sale, and he was not a party to the litigation, such shares could not have been transferred to Dorfe and ;sturias

0ranting, arguendo that the auction sale did not include the interest or 6he lower court declared that the contract of partnership was portion of the -,L+* properties corresponding to the shares of Lastrilla null and void, because by the contract of partnership, the parties in the sa e partnership 183$2, the resulting situation would be - at ost thereto have beco e du ies of the owner of the franchise - that the purchasers Dorfe and ;sturias will have to recognize do inion of Lastrilla over 83 per cent of the properties awarded to the ', = So I&&()' 7hether or not the (uda diesel engine contributed by the plaintiff Lastrilla ac5uired no right to de and any part of the oney paid by had beco e the property of the partnership Dorfe and ;sturias to the sheriff for the benefit of -,L+* and 6o assi, the plaintiffs in that case, for the reason that, as he says, his shares *)l+' ,ES 1ac5uired fro (rown2 could not have been and were not auctioned off to Dorfe and ;sturias' as it is not stated therein that there has been a li5uidation of the partnership assets at the ti e plaintiff sold the (uda Diesel ;+6&*<SA R,M,DB *- *7<,R *- PR*P,R6B 7R*<0->LLB ,ngine on *ctober 89, 8:99, and since the court below had S*LD C 6he re edy of the owner of a property wrongfully sold is to found that the plaintiff had actually contributed one engine and clai the property and not the proceeds of the sale' 3" posts to the partnership, it necessarily follows that the (uda diesel engine contributed by the plaintiff had beco e the property of the partnership' ;s properties of the partnership, the sa e could not be disposed of by the party contributing the sa e without the consent or approval of the partnership or of the other partner'

*bligations of Partners as to 6hird Persons

plaintiff bank' 6he ano alous adoption of the fir na e above noted does not affect the liability of the general partners to third parties under article 8=3 of the +ode of +o erce G.R. No. L-26937 O$%o7)r 8, 1927 Jo Chung Cang vs. Pacific Commercial Co. the ob4ect of article 8=# of the +ode of +o erce in re5uiring *ILI INE NA-IONAL "AN!, plaintiff-appellee, a general partnership to transact business under the na e of all vs' its e bers, of several of the , or of one only, is to protect SE1ERO EUGENIO LO, E- AL., defendants' the public fro i position and fraudA and that the provision of SE1ERIO EUGENIO LO, NG !*E, LING #/+ ,E SENG, said article 8=# is for the protection of the creditors rather than appellants of the partners the selves -acts? 6herefore, the defendants cannot invoke in their defense the ano aly in *n Septe ber =:, 8:8#, the appellants Severo ,ugenio Lo and the fir na e which they the selves adopted <g Dhey Ling, together with /' ;' Say Lian Ping, Do 6iao )un, As to the alleged death of the manager of the company, Say ian Ping *n Be De La and +o Sieng Peng for ed a co ercial 6he trial court did not find this fact proven at the hearing' (ut even partnership under the na e of E6ai Sing and +o',E with a capital supposing that the court had erred, such an error would not 4ustify the of P%",""" contributed by said partners reversal of the 4udg ent, for two reasons at least? 182 (ecause *u Bong o &n the articles of copartnership? the partnership was to last Dela was a partner who contracted in the na e of the partnership, for five years, to do business in &loilo and other parts of the without any ob4ection of the other partnersA and 1=2 because it appears in Philippines under the na e of E6ai Sing F +o',E for the the record that the appellant-partners Severo ,ugenio Lo, <g Dhey Ling purchase and sale of erchandise and goods as well as and Bap Seng, appointed Sy 6it as anager, and he obtained fro the +hinese and /apanese, products plaintiff bank the credit in current account, the debit balance of which is o *ne of the partners, /' ;' Say Lian Ping was appointed sought to be recovered in this action general anager of the partnership *n /une %, 8:83, general anager ;' Say Lian Ping e.ecuted a ISLAND SALES, IN.., plaintiff-appellee, power of attorney in favor of ;' B' Dela , authorizing hi to vs' act in his stead as anager and ad inistrator of E6ai Sing F UNI-ED IONEERS GENERAL .ONS-RU.-ION .OM AN,, +o',E for, and obtained a loan of PG,""" in current account fro E-. AL +)6)/+#/%&. "EN4AMIN .. DA.O,defendant-appellant' the plaintiff bank' FA.-S' o ;s security for said loan, he ortgaged certain personal 6he defendant co pany, a general partnership duly registered property of E6ai Sing F +o under the laws of the Philippines, purchased fro the plaintiff 6his credit was renewed several ti es a otor vehicle on the install ent basis and for this purpose o e.ecuted a chattel ortgage in favor of plaintiff bank as e.ecuted a pro issory note for P:,%%"'"", payable in twelve security for a loan of P=",""" with interest 18=2 e5ual onthly install ents with the condition that failure o again renewed and e.ecuted another chattel ortgage for to pay any of said install ents as they fall due would render the said su of P=",""" in favor of plaintiff bank the whole unpaid balance i ediately due and de andable' Defendants had been using this co ercial credit in a current )aving failed to receive the install ent due on /uly ==, 8:#8, the plaintiff sued the defendant co pany for the unpaid account with the plaintiff bank, fro the year 8:8G, to May ==, balance 8:=8 (en4a in +' Daco, Daniel ;' 0uizona, <oel +' Si , Ro ulo 6his total is the su clai ed in the co plaint, together with (' Lu auig, and ;ugusto Palisoc were included as cointerest on the P8#,98G'3% debt, at : per cent per annu defendants in their capacity as general partners of the Defendant ,ugenio Lo sets up, as a general defense, that E6ai defendant co pany' Sing F +o' was not a general partnership, and that the Subse5uently, on otion of the plaintiff, the co plaint was co ercial credit in current account which E6ai Sing F +o' dis issed insofar as the defendant Ro ulo (' Lu auig is obtained fro the plaintiff bank had not been authorized by the concerned' board of directors of the co pany, nor was the person who 6he trial court rendered a decision in favor of plaintiff' subscribed said contract authorized to ake the sa e, under the 6he defendants Daco and Si oved to reconsider the article of copartnership' decision clai ing that since there are five 192 general partners, &ssue? 7H< they for ed a general partnership the 4oint and subsidiary liability of each partner should not )eld? Bes e.ceed one-fifth 1 8H 9 2 of the obligations of the defendant Ratio? co pany' ;ppellants ad it, and it appears fro the conte.t of ,.hibit ;, that the (ut the trial court denied the said otion' defendant association for ed by the defendants is a general partnership, as ISSUE' 9oN %2) +i&:i&&#l o6 %2) $o:pl#i/% %o 6#0or o/) o6 %2) defined in article 8=# of the +ode +o erce' 6his partnership was 5)/)r#l p#r%/)r& o6 # p#r%/)r&2ip i/$r)#&)& %2) ;oi/% #/+ &(7&i+i#r3 registered in the ercantile register of the Province of &loilo' 6he only li#7ili%3 o6 )#$2 o6 %2) r):#i/i/5 p#r%/)r& 6or %2) o7li5#%io/& o6 %2) ano aly noted in its organization is that instead of adopting for their fir p#r%/)r&2ip. na e the na es of all of the partners, of several of the , or only one of *ELD' NO the , to be followed in the last two cases, by the words Eand to be Ar%i$l) 1816 o6 %2) .i0il .o+) pro0i+)&' followed in the last two cases, by the words Eand co panyE the partners ;ll partners including industrial ones, shall be liable pro agreed upon E6ai Sing F +o'E as the fir na e' rata with all their property and after all the partnership assets have been e.hausted, for the contracts which ay be entered &n the case of )ung-Man-Boc, under the na e of Kwong-Wo-Sing into in the na e and for the account of the partnership, under vs. Kieng-Chiong-Seng, cited by appellants, this court held that, as the its signature and by a person authorized to act for the co pany for ed by defendants had e.isted in fact, though not in law due partnership' )owever, any partner ay enter into a separate to the fact that it was not recorded in the register, and having operated and obligation to perfor a partnership contract' contracted debts in favor of the plaintiff, the sa e ust be paid by -2) p#r%/)r& #r) /o% li#7l) )#$2 6or %2) <2ol) +)7% o6 %2) so eone' 6his applies ore strongly to the obligations contracted by the defendants, for they for ed a partnership which was registered in the p#r%/)r&2ip. -2) li#7ili%3 i& pro rata. ercantile register, and carried on business contracting debts with the

&n the instant case, there were five 192 general partners when the pro issory note in 5uestion was e.ecuted for and in behalf of the partnership' Si/$) %2) li#7ili%3 o6 %2) p#r%/)r& i& pro r#%#, %2) li#7ili%3 o6 %2) #pp)ll#/% ")/;#:i/ .. D#$o &2#ll 7) li:i%)+ %o o/l3 o/)-6i6%2 = 1> 8 ? o6 %2) o7li5#%io/& o6 %2) +)6)/+#/% $o:p#/3. 6he fact that the co plaint against the defendant Ro ulo (' Lu auig was dis issed, upon otion of the plaintiff, does not un ake the said Lu auig as a general partner in the defendant co pany' &n so oving to dis iss the co plaint, the plaintiff erely condoned Lu auigIs individual liability to the plaintiff'

*ILI FA.-S'

INE NA-IONAL "AN! 0. LO

said that the ob4ect of article 8=# of the +ode of +o erce in re5uiring a general partnership to transact business under the na e of all its e bers, of several of the , or of one only, is to protect the public fro i position and fraudA and that the provision of said article 8=# is for the protection of the creditors rather than of the partners the selves' ;nd conse5uently the doctrine was enunciated that the law ust be unlawful and unenforceable only as between the partners and at the instance of the violating party, but not in the sense of depriving innocent parties of their rights who ay have dealt with the offenders in ignorance of the latter having violated the lawA and that contracts entered into by co ercial associations defectively organized are valid when voluntarily e.ecuted by the parties, and the only 5uestion is whether or not they co plied with the agree ent' 6herefore, the defendants cannot invoke in their defense the ano aly in the fir na e which they the selves adopted'

6he court also found that the partnership property described in the ortgage ,.hibit - no longer e.isted at the ti e of the filing of the herein co plaint nor has its e.istence been proven, nor was it offered to 6he appellants Severo ,ugenio Lo, etc' for ed a co ercial the plaintiff for sale' partnership under the na e of E6ai Sing and +o',E with a capital of P%",""" contributed by said partners' GEORGE LI--ON, petitioner-appellant, &n the articles of copartnership, it appears that the partnership vs' was to last for five years fro after the date of its organization' *ILL @ .ERON, E- AL., respondents-appellees' *ne of the partners, /' ;' Say Lian Ping was appointed general anager of the partnership, with the powers specified in said -acts? articles of copartnership. *n -ebruary 8%, 8:!%, the plaintiff sold and delivered to *n /une %, 8:83, general anager ;' Say Lian Ping e.ecuted a +arlos +eron, who is one of the anaging partners of )ill F power of attorney in favor of ;' B' Dela , authorizing hi to +eron, a certain nu ber of ining clai s, and by virtue of act in his stead as anager and ad inistrator of E6ai Sing F said transaction, the defendant +arlos +eron delivered to the +o',E for, and obtained a loan of PG,""" in current account fro plaintiff a docu ent reading as follows? the plaintiff bank' 8' JReceived fro Mr' 0eorge Litton share certificates ;s security for said loan, he ortgaged certain personal property <os' %%=G, %%=: and ##:: for 9,""", 9,""" and of E6ai Sing F +o', 3,""" shares respectively C total 83,""" shares of 6his credit was renewed several ti es until its default' (ig 7edge Mining +o pany, which we have sold at P"'88 1eleven centavos2 per share or P8,G3"'"" less Defendant ,ugenio Lo sets up, as a general defense, that E6ai 8H= per cent brokerage'K Sing F +o' was not a general partnership, and that the )&LL F +,R*< co ercial credit in current account which E6ai Sing F +o' obtained fro the plaintiff bank had not been authorized by the board of directors of the co pany, nor was the person who subscribed said contract authorized to ake the sa e, under the (y? 1Sgd'2 +;RL*S +,R*< article of copartnership' +eron paid to the plaintiff the su or P8,89" leaving an unpaid ;fter the hearing, the court found against the partners' balance of P3=" >nable to collect this su either fro )ill F +eron or fro its surety Lisayan Surety F &nsurance +orporation, Litton filed a ISSUE' 7hether all the e bers of a general partnership, be they co plaint in the +ourt of -irst &nstance of Manila against the anaging partners thereof or not, shall be personally and solidarily liable said defendants for the recovery of the said balance with all their property 6he court ordered +arlos +eron personally to pay the a ount clai ed and absolved the partnership )ill F +eron, Robert RULING' ,ES. 6he S+ held that this partnership was registered in the )ill and the Lisayan Surety F &nsurance +orporation ercantile register of the Province of &loilo' 6he only ano aly noted in its +; affir ed the decision of the court having reached the organization is that instead of adopting for their fir na e the na es of conclusion that +eron did not intend to represent and did not all of the partners, of several of the , or only one of the , to be followed act for the fir )ill F +eron in the transaction involved in this in the last two cases, by the words Eand to be followed in the last two litigation cases, by the words Eand co panyE the partners agreed upon E6ai Sing F &ssueH)eld? +o'E as the fir na e' 7H< the transaction is binding on the partnership H B,S Ratio? &n the case of )ung-Man-Boc, under the na e of Kwong-Wo-Sing 6he transaction ade by +eron with the plaintiff should be vs. Kieng-Chiong-Seng, cited by appellants, this court held that, as the understood in law as effected by )ill F +eron and binding co pany for ed by defendants had e.isted in fact, though not in law due upon it to the fact that it was not recorded in the register, and having operated and &n the first place, it is an ad itted fact by Robert )ill when he contracted debts in favor of the plaintiff, the sa e ust be paid by testified at the trial that he and +eron, during the partnership, so eone' 6his applies ore strongly to the obligations contracted by the had the sa e power to buy and sell and that on the date of the defendants, for they for ed a partnership which was registered in the transaction, -ebruary 8%, 8:!%, the partnership between )ill ercantile register, and carried on business contracting debts with the and +eron was in e.istence plaintiff bank' 6he ano alous adoption of the fir na e above noted does 8' ;fter this date, or on -ebruary 8:th, )ill F +eron not affect the liability of the general partners to third parties under article sold shares of the (ig 7edgeA and when the 8=3 of the +ode of +o erce' ;nd the Supre e +ourt so held in the case transaction was entered into with Litton, it was of Jo Chung Cang vs. Pacific Commercial Co., 1%9 Phil', 8%=2, in which it

neither published in the newspapers nor stated in the co ercial registry that the partnership )ill F +eron had been dissolved >nder article ==# of the +ode of +o erce, the dissolution of a co ercial association shall not cause any pre4udice to third parties until it has been recorded in the co ercial registry Moreover, Respondents assert that by virtue of paragraph # of the articles of partnership of )ill F +eron, he consent of the other is necessary to bind the partnership as it is stipulated in the said paragraph that that the anage ent of the business of the partnership has been entrusted to both partners thereof *o<)0)r, %2ir+ p)r&o/&, liA) %2) pl#i/%i66, #r) /o% 7o(/+ i/ )/%)ri/5 i/%o # $o/%r#$% <i%2 #/3 o6 %2) %<o p#r%/)r&, %o #&$)r%#i/ <2)%2)r or /o% %2i& p#r%/)r <i%2 <2o: %2) %r#/&#$%io/ i& :#+) 2#& %2) $o/&)/% o6 %2) o%2)r p#r%/)r 1. -2) p(7li$ /))+ /o% :#A) i/B(ir)& #& %o %2) #5r)):)/%& 2#+ 7)%<))/ %2) p#r%/)r&. I%& A/o<l)+5), i& )/o(52 %2#% i% i& $o/%r#$%i/5 <i%2 %2) p#r%/)r&2ip <2i$2 i& r)pr)&)/%)+ 73 o/) o6 %2) :#/#5i/5 p#r%/)r& -2)r) i& # 5)/)r#l pr)&(:p%io/ %2#% )#$2 i/+i0i+(#l p#r%/)r i& #/ #(%2oriC)+ #5)/% 6or %2) 6ir: #/+ %2#% 2) 2#& #(%2ori%3 %o 7i/+ %2) 6ir: i/ $#rr3i/5 o/ %2) p#r%/)r&2ip %r#/&#$%io/& -2) pr)&(:p%io/ i& &(66i$i)/% %o p)r:i% %2ir+ p)r&o/& %o 2ol+ %2) 6ir: li#7l) o/ %r#/&#$%io/& )/%)r)+ i/%o 73 o/) o6 :):7)r& o6 %2) 6ir: #$%i/5 #pp#r)/%l3 i/ i%& 7)2#l6 #/+ <i%2i/ %2) &$op) o6 2i& #(%2ori%3 ;lso, the =nd paragraph of the articles of partnership reads? 8' Second? 6hat the purpose or ob4ect for which this copartnership is organized is to engage in the business of brokerage in general, such as stock and bond brokers, real brokers, invest ent security brokers, shipping brokers, and other activities pertaining to the business of brokers in general 6he kind of business in which the partnership )ill F +eron is to engage being thus deter ined, none of the two partners, under article 8!" of the +ode of +o erce, ay legally engage in the business of brokerage in general as stock brokers, security brokers and other activities pertaining to the business of the partnership' 8' +eron, therefore, could not have entered into the contract of sale of shares with Litton as a private individual, but as a anaging partner of )ill F +eron 6he respondent argues in its brief that even ad itting that one of the partners could not, in his individual capacity, engage in a transaction si ilar to that in which the partnership is engaged without binding the latter 8' <evertheless there is no law which prohibits a partner in the stock brokerage business for engaging in other transactions different fro those of the partnership, as it happens in the present case, because the transaction ade by +eron is a ere personal loan, and this argu ent, so it is said, is corroborated by the +ourt of ;ppeals' 7e do not find this alleged corroboration because the only finding of fact ade by the +ourt of ;ppeals is to the effect that the transaction ade by +eron with the plaintiff was in his individual capacity

AN-ONIO .. GOEUIOLA,, E- AL., plaintiffs-appellants, vs' 9AS*ING-ON Z. S,.I , E- AL., defendants-appellees' F#$%&' 6an Sin ;n and ;ntonio +' 0o5uiolayE, entered into a general co ercial partnership &n the agree ent it was stipulated that 82 that 6an Sin ;n would be the e.clusive anaging partner, and 1=2 in the event of the death of any of the partners the partnership would continue, the deceased to be represented by his heirs *n May =:, 8:%", the partnership ac5uired three parcels of land e.ecuting a ortgage in favor of ELa >rbana Sociedad Mutua de +onstruccion Presta osE *n the sa e date, 6an Sin ;n, in his individual capacity, ac5uired %# parcels of land e.ecuting a ortgage thereon in favor of the sa e co pany these two ortgage obligations and as a result 6an Sin ;n, in his individual capacity, and the partnership bound the selves to pay 4ointly and severally the total a ount on /une =#, 8:%=, 6an Sin ;n died and was survived by his widow, defendant Dong +hai Pin, and four children Dong +hai Pin filed a petition in the probate court to sell all the properties of the partnership as well as so e of the con4ugal properties left by 6an Sin ;n for the purpose of paying the clai s of creditors which the court approved -ollowing approval by the court of the petition for authority to sell, Dong +hai Pin, in her capacity as ad inistratri., and presu ing to act as anaging partner of the partnership, sold the properties owned by 6an Sin ;n and by the partnership in favor of third persons these transactions took place without the knowledge of 0o5uiolay 0o5uiolay sought to nullify the sale challenging the authority of Dong +hai Pin to sell the partnership properties on the ground that she had no authority because even granting that she beca e a partner upon the death of 6an Sin ;n the power of attorney granted in favor of the latter e.pired after his death' )e also insists that, Dong +hai Pin, widow of the deceased partner 6an Sin ;n, never beca e ore than a limited partner, incapacitated by law to anage the affairs of the partnership

Defendants, on the other hand, defended the validity of the sale on the theory that she succeeded to all the rights and prerogatives of 6an Sin ;n as anaging partner 6he trial court sustained the validity of the sale on the ground that under the provisions of the articles of partnership allowing the heirs of the deceased partner to represent hi in the partnership after his death, Dong +hai Pin beca e a anaging partner, this being the capacity held by 6an Sin ;n when he died

G.R. No. L-118D0 4(l3 26, 1960 AN-ONIO .. GOEUIOLA, #/+ -*E AR-NERS*I F-AN SIN AN #/+ AN-ONIO .. GOEUIOLA,, plaintiffs-appellants, vs' 9AS*ING-ON Z. S,.I , E- AL., defendants-appellees 1and2 G.R. No. L-118D0 D)$):7)r 10, 1963

I&&()&' 82 whether or not the sale of the properties of the partnership to third persons ade by the widow of a deceased partner was valid =2 whether or not the widow of the deceased partner beca e a partner herself after the latterMs death pursuant to the e.isting partnership agree ent *)l+' ,ES Strangers dealing with a partnership have the right to assu e, in the absence of restrictive clauses in the co-partnership agree ent, that every general partner has power to bind the partnership, specially those partners acting with ostensible authority 6he third person ay rightfully assu e that the contracting partner was duly authorized to contract for and in behalf of the fir and that, further ore, he would not ordinarily act to the pre4udice of his copartners' 6he regular course of business procedure does not re5uire that each ti e a third person contracts with one of the anaging partners, he should in5uire as to the latterIs authority to do so, or that he should first ascertain whether or not the other partners had given their consent thereto

0o5uiolay recognized her as such partner, and is now in estoppel to deny her position as a general partner, with authority to ad inister and alienate partnership property 6he ;rticles did not provide that the heirs of the deceased would be erely limited partnerA on the contrary they e.pressly stipulated that in case of death of either partner Ethe co-partnership ''' will have to %e continuedE with the heirs or assigns

ELMO MUGASEUE, p)%i%io/)r,0&. .OUR- OF A EALS,.ELES-INO GALAN -RO I.AL .OMMER.IAL.OM AN, #/+ RAMON ONS, r)&po/+)/%&. -acts? Munas5ue 1petitioner2 entered into a partnership with 0alan under the registered na eJ0alan and ;ssociatesK as +ontractor' 6hey entered into a written contract with respondent 6ropical for re odeling the latterMs +ebu branch building' >nder the contract, the pro4ect totaled =9,""" to be paid in install entsA 3, """ upon signing and #, """ every89 working days' 6ropical ade the first pay ent by check in the na e of Munas5ue' Munas5ue indorsed the check in favor of 0alan to enable 0alan to deposit it in the bank and pay for the aterials and labor used in the pro4ect' )owever, 0alan allegedly spent P#, 8G!'!3 for his personal use' 7hen the second check ca e, Munas5ue refused to indorse it again to 0alan' 0alan infor ed 6ropical of the isunderstanding between hi and Munas5ue as partners' )ence upon second pay ent, 6ropical changed the na e of the payee on the second check fro Munas5ue to J0alan and ;ssociatesK which enabled 0alan to encashthe second check' Meanwhile, the construction was continued through Munas5ueMs sole efforts by incurring debts fro various suppliers' 6he construction work was finished ahead of schedule with the total e.penditure reaching P !%, """ 1note yung contract nila =9k lang2' Munas5ue filed a co plaint for pay ent of su of oney and da ages against 0alan, 6ropical, and 6ropicalMs +ebu branch anager Pons' +ebu Southern )ardware +o pany and (lue Dia ond 0lass Palace intervened in the case for the credit which they e.tended to the partnership of Munas5ue and 0alan for the construction pro4ect' (oth trial court and +ourt of ;ppeals absolved respondents 6ropical and its +ebu anager, Pons, fro any liability' 6+ held 0alvan and Munas5ue J4ointly and severallyK liable to its creditors which decision was odified by +; and held the J4ointlyK liable' &ssues?7hether the obligation of Munas5ue and 0alan is 4oint or solidary@ )eld? Solidary' 7hile it is true that under ;rticle 8G8# of ++, J;ll partners, including industrial ones,shall be liable pro rate with all their property and after all the partnership assets have been e.hausted, for the contracts which ay be entered into the na e and for account of the partnership, under its signature and by a person authorized to act for the partnership'...K, this provision should be construed together with ;rticle 8G=% which provides that?J;ll partners are liable solidarily with the partnership for everything chargeable to the partnership under ;rticles 8G== and 8G=!'K 7hile the liability of the partners are erely 4oint 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 caseof the third person falls under ;rticles 8G== and 8G=!'6he obligation is solidary because the law protects hi , who in good faith relied upon theauthority of a partner, whether such authority is real or apparent'

6he records fail to disclose that appellant 0o5uiolay ade any opposition to the sale of the partnership realty to 7ashington N' Sycip and (etty LeeA on the contrary, it appears that he 10o5uiolay2 only interposed his ob4ections after the deed of conveyance was e.ecuted and approved by the probate court, and, conse5uently, his opposition ca e too late to be effective 6he contract ade between the plaintiff and the then anager of the defendant partnership did not in any way vary or odify this provision of the articles of partnership' 6he profits of the business could not be deter ined until all of the e.penses had been paid' ; part of the e.penses to be paid for the year 8:"= was the salary of the plaintiff' 6hat salary had to be deducted before the net profits of the business, which were to be divided a ong the partners, could be ascertained' &t was undoubtedly necessary in order to deter ine what the salary of the plaintiff was, to deter ine what the profits of the business were, after paying all of the e.penses e.cept his, but that deter ination was not the final deter ination of the net profits of the business' &t was ade for the purpose of fi.ing the basis upon which his co pensation should be deter ined'

,ES =R)&ol(%io/ D)$):7)r 10, 1963 - G.R. No. L-118D0? the widow was not a ere agent, because she had beco e a partner upon her husbandIs death, as e.pressly provided by the articles of co-partnership' ,ven ore, granting that by succession to her husband, 6an Sin ;n, the widow only a beca e the limited partner, !o"uiolay#s authori$ation to manage the partnership property was proof that he considered and recogni$ed her has general partner, at least since 8:%9' (y seeking authority to anage partnership property, 6an Sin ;nIs widow showed that she desired to be considered a general partner' (y authorizing the widow to anage partnership property 1which a li ited partner could not be authorized to do2,

 6ropical had every reason to believe that a partnership e.isted between Munas5ue and 0alan and no fault or error can be i puted against it for aking pay ents to J0alan and ;ssociatesK because as far as it was concerned, 0alan was a true partner with real authority to transact in behalf of the partnership it was dealing with 1because in the first place they entered into a duly registered partnership na e and secondly, Munas5ue endorsed the first check pay ent to 0alan2' 6his is even ore true in the cases of the intervenors who supplied aterials on credit to the partnership' 6hus, it is but fair that the conse5uences of any wrongful act co itted by any of the partners therein should be answered solidarily by all the partners and the partnership as a whole' )owever, as between Munas5ue and 0alan, 0alan ust rei burse Munas5ue for the pay ents ade to the intervenors as it was satisfactorily established that 0alan acted in bad faith in his dealings with Munas5ue as a partner'

6he +; odified the +-&Ms decision, relieving Appellant 7illia Shaeffer of the obligation of paying, 4ointly and severally, together with ;lan 7' 0orcey and Louis -' da +osta, /r', any deficiency that ay re ain unpaid after applying the proceeds of the sale of the said otor vehicles, hence this appeal'

ISSUE' 7hether partners herein are already stopped in denying that they are partners of the partnership Stasikinocey RULING' ,ES. 7hile an unregistered co ercial partnership has no 4uridical personality, nevertheless, where two or ore persons atte pt to create a partnership failing to co ply with all the legal for alities, the law considers the as partners and the association is a partnership in so far as it is a favorable to third persons, by reason of the e5uitable principle of estoppel' &n /o +hung +hang vs' Pacific +o ercial +o', %9 Phil', 8%9, it was held Jthat although the partnership with the fir na e of O6eck Seing and +o' Ltd',M could not be regarded as a partnership de 4ure, yet with respect to third persons it will be considered a partnership with all the conse5uent obligations for the purpose of enforcing the rights of such third persons'K D# .o&%# #/+ Gor$)3 $#//o% +)/3 %2#% %2)3 #r) p#r%/)r& o6 %2) p#r%/)r&2ip S%#&iAi/o$)3, 7)$#(&) i/ #ll %2)ir %r#/&#$%io/& <i%2 %2) Respondent %2)3 r)pr)&)/%)+ %2):&)l0)& #& &($2. Petitioner M$Do/#l+ $#//o% +i&$l#i: A/o<l)+5) o6 %2) p#r%/)r&2ip S%#&iAi/o$)3 7)$#(&) 2) +)#l% <i%2 &#i+ )/%i%3 i/ p(r$2#&i/5 %<o o6 %2) 0)2i$l)& i/ B()&%io/ %2ro(52 Gor$)3 #/+ D# .o&%#. ;s was held in (ehn Meyer F +o' vs' Rosatzin, 9 Phil', ##", where a partnership not duly organized has been recognized as such in its dealings with certain persons, it shall be considered as Jpartnership by estoppelK and the persons dealing with it are estopped fro denying its partnership e.istence' 6he sale of the vehicles in 5uestion being void as to Petitioner McDonald, the transfer fro the latter to Petitioner (en4a in 0onzales is also void, as the buyer cannot have a better right than the seller' &t results that if the law recognizes a defectively organized partnership as de facto as far as third persons are concerned, for purposes of its de facto e.istence it should have such attribute of a partnership as do icile' &n )ung-Man Boc vs' Dieng-+hiong-Seng, # Phil', %:G, it was held that although Jit has no legal standing, it is a partnership de facto and the general provisions of the +ode applicable to all partnerships apply to it'K 6he registration of the chattel ortgage in 5uestion with the *ffice of the Register of Deeds of Rizal, the residence or place of business of the partnership Stasikinocey being San /uan, Rizal, was therefore in accordance with section % of the +hattel Mortgage Law'

MA.DONALD 0. -*E NA-IONAL .I-, "AN! OF NE9 ,OR! FA.-S' JS6;S&D&<*+,B is a partnership doing business in San /uan, Rizal' 6his partnership was denied registration in the S,+' 6he +;RD&<;L R;66;<, so eti es called the +;RD&<;L R;66;< -;+6*RB, is treated as a copartnership, of which &efendants 0orcey and da +osta are considered general partners, we are satisfied that, as alleged in various instru ents appearing of record, said +ardinal Rattan is erely the business na e or style used by the partnership Stasikinocey' Defendant Stasikinocey had an overdraft account with 6he <ational +ity (ank of <ew Bork, a foreign banking association duly licensed to do business in the Philippines' 6he overdraft showed a balance of P#,8!%':= against the &efendant Stasikinocey or the +ardinal Rattan' Due to the failure of the partnership to ake the re5uired pay ent, was converted into an ordinary loan for which the corresponding pro issory O4oint note non-negotiableM was e.ecuted on /une !, 8:%:, by Louis -' da +osta for and in the na e of the +ardinal Rattan, Louis -' da +osta and ;lan 0orcey 1,.hibit D2' 6his pro issory note was secured by a chattel ortgage e.ecuted by Louis -' da +osta, /r', 0eneral Partner for and in the na e of Stasikinocey, alleged to be a duly registered Philippine partnership, doing business under the na e and style of +ardinal Rattan' 6he ortgage deed was fully registered by the ortgagee in the *ffice of the Register of Deeds for the province of Rizal' J7hile the said loan was still unpaid and the chattel ortgage subsisting, Defendant partnership, through Defendants 0orcey and Da +osta transferred to Defendant McDonald the -argo truck and Ply outh sedan' Paul Mcdonald, notwithstanding PlaintiffMs e.isting ortgage lien, in turn transferred the -argo truck and the Ply outh sedan to (en4a in 0onzales'K 6he <ational +ity (ank of <ew Bork, Respondent herein, upon learning of the transfers ade by the partnership Stasikinocey to 7illia Shaeffer, fro the latter to Paul McDonald, and fro Paul McDonald to (en4a in 0onzales, of the vehicles previously pledged by Stasikinocey to the Respondent, filed an action against Stasikinocey and its alleged partners 0orcey and Da +osta, as well as Paul McDonald and (en4a in 0onzales, to recover its credit and to foreclose the corresponding chattel ortgage' McDonald and 0onzales were ade &efendants because they clai ed to have a better right over the pledged vehicle' 6he +-& annulled the sale of the vehicles in 5uestion to (en4a in 0onzales'