1.

Elmo Muasque vs CA

Facts:
Elmo Muasque, in behalf of Galan and Muasque partnership as Contractor, entered into a written contract with Tropical Commercial Co.,
through its branch manager Ramon Pons, for remodelling of Tropicals building in Cebu. The consideration for the entire services is P25,000
to be paid: 30% upon signing of contract, and balance on 3 equal instalments of P6,000 every 15working days.
First payment of check worth P7,000 was payable to Muasque, who indorsed it to Galan for purposes of depositing the amount and paying
the materials already used. But since Galan allegedly misappropriated P6,183.37 of the check for personal use, Muasque refused to indorse
the second check worth P6,000. Galan then informed Tropical of the misunderstanding between him and Muasque and this prompted
Tropical to change the payee of the second check from Muasque to Galan and Associates (the duly registered name of Galan and
Muasque partnership). Despite the misappropriation, Muasque alone was able to finish the project. The two remaining checks were
properly issued to Muasque.
Muasque filed a complaint for payment of sum of money plus damages against Galan, Tropical and Pons for the amount covered by the first
and second checks. Cebu Southern Hardware Co and Blue Diamond Glass Palace were allowed as intervenors having legal interest claiming
against Muasue and Galan for materials used.

(1)
(2)

Where one partner acting within the scope of his apparent authority receives money or property of a third
person and misapplies it, and
Where the partnership in the course of its business receives money or property of a third person x x x is
misapplied by any partner while it is in the custody of the partnership.

GR: In transactions entered into by the partnership, the liability of the partners is merely joint
Exception: In transactions involving third persons falling under Articles 1822 and 1823, such third person may hold any partner
solidarily liable for the whole obligation with the partnership.
Reason for exception: the law protects him, who in good faith relied upon the authority if a partner, whether real or apparent.
However, as between Muasque and Galan, justice also dictates reimbursement in favour of Muasque as Galan was proven to
be in bad faith in his dealings with his partner.
2.MACDONALD vs. NATIONA CITY BANK OF NEW YORK
L-7991 | may 21, 1956 | Paras | Pet for Review by Certiorari
Petitioners:
Paul MacDonald et al.
Respondent:
National City Bank of New York

TC:
Muasque and Pons jointly and severally liable to intervenors
Tropical and Pons absolved
CA affirmed with modification:
Muasque and Pons jointly liable to intervenors
Issue:
1.
2.
3.

W/N Muasque and Galan are partners?

W/N payment made by Tropical to Galan was good payment?
W/N Galan should shoulder exclusively the amounts payable to the intervenors (granting he misappropriated the amount from the
two checks)?

Held:
yes-yes-no!
1.

YES. Tropical had every right to presume the existence of the partnership:
a.
Contract states that agreement was entered into by Galan and Muasque
b.
The first check issue in the name of Muasque was indorsed to Galan
The relationship was made to appear as a partnership.

2.

YES. Muasque and Galan were partners when the debts to the intervenors were incurred, hence, they are also liable to third
persons who extended credit to their partnership.
There is a general presumption that each individual partner is an authorized agent for the firm and that he has authority to bind the
firm in carrying on the partnership transactions. The presumption is sufficient to permit third persons to hold the firm liable on
transactions entered into by one of the members of the firm acting apparently in its behalf and within the scope of his authority

3.

NO. Article 1816 BUT construed together with Article 1824.

Art. 1816. All partners, including industrial ones, shall be liable pro rata x x x for the contracts which may be entered into the
name and for the account of the partnership, under its signature and by a person authorized x x x
Art. 1824. All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822
and 1823
Art. 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business x x x or with the
authority of his co-partners, loss or injury is caused to any person x x x
Art. 1823. The partnership is bound to make good the loss:

Quick Summary:
Facts: Stasikinocey is a partnership formed by da Costa, Gorcey, Kusik and Gavino. It was denied registration by the SEC due to a confusion
between the partnership and Cardinal Rattan. Cardinal Rattan is the business name or style used by Stasikinocey. Da Costa and Gorcey are
the general partners of Cardinal Rattan. Moreover, Da Costa is the managing partner of Cardinal Rattan. Stasikinocey had an overdaft account
with Nationa City Bank, which was later converted into an ordinary loan due the partnerships failure in paying its obligation. The ordinary loan
was secured by a chattel mortgage over 3 vehicles. During the subsistence of the loan, the vehicles were sold to MacDonald 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.
Held: While an unregistered commercial partnership has no juridical personality, nevertheless, where two or more persons attempt to create a
partnership failing to comply with all the legal formalities, the law considers 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. Where a partnership not duly organized has been recognized
as such in its dealings with certain persons, it shall be considered as partnership by estoppel and the persons dealing with it are estopped
from denying its partnership existence.
Facts:
Stasikinocey is a partnership formed by Alan Gorcey, Louis Da Costa Jr., William Kusik and Emma Badong Gavino.
It was denied registration in the SEC due to the confusion between this partnership and the business Cardinal Rattan, which is
treated as a co-partnership where Gorcey and Da Costa are the general partners. It appears that Cardinal Rattan is merely the
business name or style used by the partnership, Stasikinocey.
Prior to June 3, 1949 - Stasikinocey had an overdraft account with the National City Bank of New York, a foreign banking association
duly licensed to do business in the Philippines.
June 3, 1949 - said overdraft account has a P6,134.92 balance. Due to the failure of Stasikinocey to make the required payment,
said balance was converted into an ordinary loan for which a promissory joint note, non-negotiable was executed on the same day by
Da Costa for and in the name of Cardinal Rattan, himself and Gorcey.
June 7, 1949 - said promissory note was secured by a chattel mortgage executed by Da Costa, general partner for and in the name
of Stasikinocey. Said mortgage was constituted over the following:
1.
Fargo truck with motor No. T-118-202839, Serial No. 81410206 and with plate No. T-7333 (1949)
2.
Plymouth Sedan automobile motor No. T-5638876, Serial No. 11872718 and with plate No. 10372
3.
Fargo Pick-Up FKI-16, with motor No. T-112800032, Serial No. 8869225 and with plate No. T-7222 (1949)
The mortgage deed was duly registered with the Office of the Register of Deeds Pasig, Rizal. It has the following stipulations:
1.
mortgagor shall not sell or otherwise dispose of the said chattels without the mortgagees written consent
2.
mortgagee may foreclose the mortgage at any time, after breach of any condition thereof, the mortgagor waiving the 30- day
notice of foreclosure
June 7, 1949 - Gorcey and Da Costa executed an agreement purporting to convey and transfer all their rights, title and participation
in Stasikinocey to Shaeffer, allegedly in consideration of the cancellation of an indebtedness of P25,000 owed by them and
Stasikinocey to the latter. Said agreement is said to be in violation of the Bulk Sales Law.
June 24, 1949 - during the subsistence of the loan and chattel mortgage, Stasikinocey,, through Gorcey and Da Costa transferred to
MacDonald the Fargo truck and Plymouth sedan

June 28, 1949 - Shaeffer sold the Fargo pick-up to MacDonald

July 19, 1944 [what the case stated but I guess it should be 1949] - Paul MacDonald sold the Fargo truck and Plymouth sedan to
Benjamin Gonzales
When the National City Bank learned of these transactions, it filed an action against Stasikinocey, Da Costa, Gorcey, MacDonald and
Gonzales to recover its credit and to foreclose the chattel mortgage.
CFI: annulled the sale of the vehicles to Gonzales; ordered Da Costa and Gorcey to pay the Bank jointly and severally P6,132.92
with legal interest; ordered Gonzales to deliver the vehicles to the Bank for sale at public auction if Da Costa and Gorcey fails to pay;
ordered Da Costa, Gorcey and MacDonald to pay the Bank jointly and severally any deficiency that remains unpaid should the
proceeds of the auction sale be insufficient
MacDonald and Gonzales appealed to the CA.
CA: modified the CFI decision by ruling that MacDonald is not jointly and severally liable with Gorcey and Da Costa to pay any
deficiency

Issue:
WON the partnership, Stasikinocey is estopped from asserting that it does not have juridical personality since it is an unregistered commercial
partnership [YES]
Ratio:
While an unregistered commercial partnership has no juridical personality, nevertheless, where two or more persons attempt to
create a partnership failing to comply with all the legal formalities, the law considers 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.
Da Costa and Gorcey cannot deny that they are partners of the partnership Stasikinocey, because in all their transactions with the
National City Bank they represented themselves as such. McDonald cannot disclaim knowledge of the partnership Stasikinocey
because he dealt with said entity in purchasing two of the vehicles in question through Gorcey and Da Costa. The sale of the vehicles
to MacDonald being void, the sale to Gonzales is also void since a buyer cannot have a better right than the seller.
As was held in Behn Meyer & Co. vs. Rosatzin, where a partnership not duly organized has been recognized as such in its dealings
with certain persons, it shall be considered as partnership by estoppel and the persons dealing with it are estopped from denying its
partnership existence.
If the law recognizes a defectively organized partnership as de facto as far as third persons are concerned, for purposes of its de
facto existence it should have such attribute of a partnership as domicile.
On the Validity of the Chattel Mortgage
The chattel mortgage is in the form required by law, and there is therefore the presumption of its due execution which cannot be
easily destroyed by the biased testimony of the one who executed it.
The interested version of Da Costa that the affidavit of good faith appearing in the chattel mortgage was executed in Quezon City
before a notary public for and in the City of Manila was correctly rejected by the trial court and the Court of Appeals.
In view of the conclusion that Stasikinocey is a de facto partnership, and Da Costa appears as a co-manager in the letter of Gorcey
to the National City Bank and in the promissory note executed by Da Costa, and that even the partners considered him as such 1, the
partner who executed the chattel mortgage in question must be deemed to be so fully authorized.
Section 6 of the Chattel Mortgage Law provides that when a partnership is a party to the mortgage, the affidavit may be made and
subscribed by one member thereof.
In this case the affidavit was executed and subscribed by Da Costa, not only as a partner but as a managing partner.
Dispositive: CA decision affirmed.
3.

PNB vs Lo et al

In September 1916, Severo Eugenio Lo and Ling, together with Ping, Hun, Lam and Peng formed a commercial partnership under the name of
Tai Sing and Co., with a capital of P40,000 contributed by said partners. The firm name was registered in the mercantile registrar in the
Province of Iloilo. Ping, in the articles of partnership, was assigned as the general manager. However, in 1917, he executed a special power of
attorney in favor of Lam to act in his behalf as the manager of the firm. Subsequently, Lam obtained a loan from PNB the loan was under the

1 That we as the majority partners hereby agree to appoint Louis da Costa co-managing partner of Alan W. Gorcey, duly approved managing
partner of the said firm

firms name. In the same year, Ping died in China. From 1918 to 1920, the firm, via GM Lam, incurred other loans from PNB. The loans were
not objected by any of the partners. Later, PNB sued the firm for non-payment. Lo, in his defense, argued that he cannot be liable as a partner
because the partnership, according to him, is void; that it is void because the firms name did not comply with the requirement of the Code of
Commerce that a firm name should contain the names of all of the partners, of several of them, or only one of them. Lo also argued that the
acts of Lam after the death of Ping is not binding upon the other partners because the special power of attorney shall have already ceased.

ISSUE: Whether or not Lo is correct in both arguments.

HELD: No. The anomalous adoption of the firm name above noted does not affect the liability of the general partners to third parties under
Article 127 of the Code of Commerce. The object of the Code of Commerce in requiring a general partnership to transact business under the
name of all its members, of several of them, or of one only, is to protect the public from imposition and fraud; it is for the protection of the
creditors rather than of the partners themselves. It is unenforceable 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 may have dealt with the offenders in ignorance of the latter having violated the
law; and that contracts entered into by a partnership firm defectively organized are valid when voluntarily executed by the parties, and the only
question is whether or not they complied with the agreement. Therefore, Lo cannot invoke in his defense the anomaly in the firm name which
they themselves adopted. Lo was not able to prove his second argument. But even assuming arguendo, his second contention does not
deserve merit because (a) Lam, in acting as a GM, is also a partner and his actions were never objected to by the partners, and (b) it also
appeared from the evidence that Lo, Lam and the other partners authorized some of the loans.

NOTE: Under the New Civil Code, a firm name may or may not include the name of one or more of the partners (Article 1815).

4. JOSEFINA P. REALUBIT vs. PROSENCIO D. JASO and EDENG JASO

G.R. No. 178782
September 21, 2011
FACTS
Petitioner Josefina Realubit entered into a Joint Venture Agreement with Francis Eric Amaury Biondo, a French national, for the
operation of an ice manufacturing business. With Josefina as the industrial partner and Biondo as the capitalist partner, the parties
agreed that they would each receive 40% of the net profit, with the remaining 20% to be used for the payment of the ice making machine
which was purchased for the business. For and in consideration of the sum of P500,000.00, however, Biondo subsequently executed
a Deed of Assignment transferring all his rights and interests in the business in favor of respondent Eden Jaso, the wife of respondent
Prosencio Jaso.With Biondos eventual departure from the country, the Spouses Jaso caused their lawyer to send Josefina a letter
apprising her of their acquisition of said Frenchmans share in the business and formally demanding an accounting and inventory thereof
as well as the remittance of their portion of its profits.
Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso commenced the instant suit for specific performance,
accounting, examination, audit and inventory of assets and properties, dissolution of the joint venture, appointment of a receiver and
damages. The said complaint alleged that the Spouses Realubit had no gainful occupation or business prior to their joint venture with

Biondo and that aside from appropriating for themselves the income of the business, they have fraudulently concealed the funds and
assets thereof thru their relatives, associates or dummies. The Spouses Realubit claimed that they have been engaged in the tube ice
trading business under a single proprietorship even before their dealings with Biondo.
The RTC rendered its Decision discounting the existence of sufficient evidence from which the income, assets and the supposed
dissolution of the joint venture can be adequately reckoned. Upon the finding, however, that the Spouses Jaso had been nevertheless
subrogated to Biondos rights in the business in view of their valid acquisition of the latters share as capitalist partner. On appeal before
the CA, the foregoing decision was set aside
upon the following findings that the Spouses Jaso validly acquired Biondos share in the business which had been transferred to and
continued its operations and not dissolved as claimed by the Spouses Realubit.
1.
2.
3.

ISSUES
Whether there was a valid assignment or rights to the joint venture
Whether the joint venture is a contract of partnership
Whether Jaso acquired the title of being a partner based on the Deed of Assignment

RULING
1.
Yes. As a public document, the Deed of Assignment Biondo executed in favor of Eden not only enjoys a presumption of
regularity but is also considered prima facie evidence of the facts therein stated. A party assailing the authenticity and due execution of
a notarized document is, consequently, required to present evidence that is clear, convincing and more than merely preponderant. In
view of the Spouses Realubits failure to discharge this onus, we find that both the RTC and the CA correctly upheld the authenticity and

validity of said Deed of Assignment upon the combined strength of the above-discussed disputable presumptions and the testimonies
elicited from Eden and Notary Public Rolando Diaz.
2.
Yes. Generally understood to mean an organization formed for some temporary purpose, a joint venture is likened to a particular
partnership or one which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a
profession or vocation. The rule is settled that joint ventures are governed by the law on partnerships which are, in turn, based on
mutual agency or delectus personae.
3.
No. It is evident that the transfer by a partner of his partnership interest does not make the assignee of such interest a partner of
the firm, nor entitle the assignee to interfere in the management of the partnership business or to receive anything except the assignees
profits. The assignment does not purport to transfer an interest in the partnership, but only a future contingent right to a portion of the
ultimate residue as the assignor may become entitled to receive by virtue of his proportionate interest in the capital. Since a partners
interest in the partnership includes his share in the profits, we find that the CA committed no reversible error in ruling that the Spouses
Jaso are entitled to Biondos share in the profits, despite Juanitas lack of consent to the assignment of said Frenchmans interest in the
joint venture. Although Eden did not, moreover, become a partner as a consequence of the assignment and/or acquire the right to
require an accounting of the partnership business, the CA correctly granted her prayer for dissolution of the joint venture conformably
with the right granted to the purchaser of a partners interest under Article 1831 of the Civil Code.