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Supreme Court

The Supreme Court of the Philippines ruled that general partner Emilio Muñoz is liable for the debts and obligations of the partnership Francisco Muñoz & Sons. The company sued the partnership and its partners to recover a debt. While Emilio Muñoz received no salary, he contributed equally to the partnership as the other industrial partner and was therefore considered a general partner according to the Code of Commerce. As a general partner, Emilio Muñoz is personally liable for the debts of the partnership along with the other partners.

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Hechelle S. DE LA CRUZ
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6 views

Supreme Court

The Supreme Court of the Philippines ruled that general partner Emilio Muñoz is liable for the debts and obligations of the partnership Francisco Muñoz & Sons. The company sued the partnership and its partners to recover a debt. While Emilio Muñoz received no salary, he contributed equally to the partnership as the other industrial partner and was therefore considered a general partner according to the Code of Commerce. As a general partner, Emilio Muñoz is personally liable for the debts of the partnership along with the other partners.

Uploaded by

Hechelle S. DE LA CRUZ
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-3704 December 12, 1907

LA COMPAÑIA MARITIMA, plaintiff-appellant,


vs.
FRANCISCO MUÑOZ, ET AL., defendants-appellees.

FACTS:
 La Compaña Maritima brought the action on the Court of First Instance of Manila against
the partnership of Franciso Muñoz & Sons, and against Francisco Muñoz de Bustillo,
Emilio Muñoz de Bustillo, and Rafael Naval to recover the sum of P26,828.30, with
interest and costs.
 On March 31, 1905, the defendants Francisco Muñoz, Emilio Muñoz, and Rafael Naval
formed on ordinary general mercantile partnership under the name of Francisco Muñoz &
Sons for the purpose of carrying on the mercantile business in the Province of Albay
which had formerly been carried on by Francisco Muñoz.
 Francisco Muñoz was a capitalist partner and Emilio Muñoz and Rafael Naval were
industrial partners.
 The court decided that in the articles of partnership it was called an ordinary, general
mercantile partnership, but that from the article it does not appear to be such a
partnership. While the appellees claimed that it is not an ordinary, general commercial
partnership.
 The appellees claimed that Emilio Muñoz contributed nothing to the partnership, either in
property, money, or industry, cannot be sustained. He contributed as much as did the
other industrial partner, Rafael Naval, the difference between the two being that Rafael
Naval was entitled by the articles of agreement to a fixed salary of P2,500 as long as he
was in charge of the branch office established at Ligao. If he had left that branch office
soon after the partnership was organized, he would have been in the same condition then
that Emilio Muñoz was from the beginning. Such a change would have deprived him of
the salary P2,500, but would not have affected in any way the partnership nor have
produced the effect of relieving him from liability as a partner.
 Appellees argued that because no yearly or monthly salary was assigned to Emilio
Muñoz, he contributed nothing to the partnership and received nothing from it. Emilio
Muñoz was entirely excluded from the management of the business.
 Emilio Muñoz was, therefore, a general partner.
ISSUE:
1. Whether or not general partner, Emilio Muñoz is liable to third persons for the
obligations contracted by the partnership.

RULING:
1. Yes. In an ordinary general mercantile partnership the industrial partners are liable to
third parties for the debts and obligations of the partnership.

Under Articles 127 provides that all the members of the general copartnership, be
they or be they not managing partners of the same, are liable personally and in solidum
with all their property for the results of the transactions made in the name and for the
account of the partnership, under the signature of the latter, and by a person authorized to
make use thereof.

In this case, Emilio Muñoz was a general partner. He contributed as much as did the other
industrial partner, Rafael Naval, the difference between the two being that Rafael Naval was
entitled by the articles of agreement to a fixed salary of P2,500 as long as he was in charge of the
branch office established at Ligao.
In limited partnership the Code of Commerce recognizes a difference between general
and special partners, but in a general partnership there is no such distinction-- all the members
are general partners. The fact that some may be industrial and some capitalist partners does not
make the members of either of these classes alone such general partners. There is nothing in the
code which says that the industrial partners shall be the only general partners, nor is there
anything which says that the capitalist partners shall be the only general partners. If the phrase
"all the partners" as found in the articles other than article 127 includes industrial partners, then
article 127 must include them and they are liable by the terms thereof for the debts of the firm.
The judgment of the court below is reversed and judgment is ordered against all of the
defendants for the sum of P26,828.30, with interest thereon at the rate of 8 per cent per annum
since the 31st day of March, 1905, and for the cost of this action. Execution of such judgment
shall not issue against the private property of the defendants Francisco Muñoz, Emilio Muñoz, or
Rafael Naval until the property of the defendant Francisco Muñoz & Sons is exhausted. No costs
will be allowed to their party in this court.
Therefore, neither on principle nor on authority can the industrial partner be relieved
from liability to third persons for the debts of the partnership. Because the mere payment of a
salary to one of the partners of a concern and the subsequent discontinuance of such salary does
not destroy the interest of the partner nor relieve him from partnership liability.

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