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 respondent’s 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 Munasque’s sole efforts. The
construction 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 Tropical’s 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 liable
to the intervenors.

Issues:

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

Held:
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 act
for 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 Galan
acted in bad faith in his dealings with Munasque as a partner.