D.

OBLIGATIONS OF THE PARTNERS TO THIRD PERSONS

CASE # 40.
G.R. No. L-22493 July 31, 1975
ISLAND SALES, INC., plaintiff-appellee,
vs.
UNITED PIONEERS GENERAL CONSTRUCTION COMPANY, ET. AL defendants.
BENJAMIN C. DACO, defendant-appellant
FACTS:
United Pioneers General Construction Company (UNITED) is a general partnership
formed by Benjamin Daco, Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo
Lumauig. On April 1961, United purchased a motor vehicle on installment basis from
Island Sales, Inc. (ISLAND), executing a promissory note for PhP 9,440.00, payable in
twelve (12) equal monthly installments of PhP 786.63 until fully paid, with the condition
that failure to pay any of said installments as they fall due would render the whole
unpaid balance immediately due and demandable. In July 1961, United defaulted in its
payment prompting Island to sue United for the unpaid balance amounting to
P7,119.07. Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig,
and Augusto Palisoc were included as co-defendants in their capacity as general
partners of the United.
Upon motion of Island Sales, the complaint was dismissed insofar as the defendant
Romulo B. Lumauig is concerned. The rest of the defendants failed to appear at the
hearing and were declared in default.
The Trial Court rendered a decision against United and ordered it 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: WON the dismissal of the complaint to favor one of the general partners of a
partnership increases the joint and subsidiary liability of each of the remaining partners
for the obligations of the partnership.
HELD: NO
Article 1816 of the Civil Code provides:
Art. 1816. All partners including industrial ones, shall be liable pro rata
with all their property and after all the partnership assets have been

exhausted, for the contracts which may be entered into in the name and
for the account of the partnership, under its signature and by a person
authorized to act for the partnership. However, any partner may enter into
a separate obligation to perform a partnership contract.
Since the liability of the partners is pro rata, the liability of Benjamin C. Daco shall be
limited to only one-fifth ( 1/ 5 ) of the obligations of United. The fact that the
complaint against the defendant Romulo B. Lumauig was dismissed, upon the motion of
Island, does not unmake the said Lumauig as a general partner in the defendant
company. In so moving to dismiss the complaint, the Island merely condoned Lumauig's
individual liability to the company.