Muñasque v. CA

Facta:

Petitioner Muñasque in behalf of the partnership of "Galan and Muñasque" as Contractor entered into a written contract with respondent Tropical for remodeling the respondent's Cebu branch building. The first payment made by respondent Tropical was in the form of a check for P7,000.00 in the name of the petitioner. Petitioner, however, indorsed the check in favor of respondent Galan to enable the latter to deposit it in the bank and pay for the materials and labor used in the project. However, petitioner alleged that Galan spent P6,183.37 for his personal use so that when the second check came and Galan asked the petitioner to indorse it again, the petitioner refused.

The check was withheld from the petitioner. Since Galan informed the Cebu branch of Tropical that there was a "misunderstanding" between him and petitioner, respondent Tropical changed the name of the payee in the second check from Muñasque to "Galan and Associates" which enabled Galan to encash the second check.

The petitioner alleged that the construction continued through his sole efforts. He stated that he borrowed some P12,000.00 from Mr. Espina and although the expenses had reached the amount of P29,000.00 because of the failure of Galan to pay what was partly due the laborers and partly due for the materials, the construction work was finished ahead of schedule with the total expenditure reaching P34,000.00.

The two remaining checks were subsequently given to the petitioner alone with the last check being given pursuant to a court order.

Issues:

Whether or not the appellate court erred in holding that a partnership existed between petitioner and respondent Galan;

Assuming that there was such a partnership, whether or not the court erred in not finding Galan guilty of malversing the P13,000.00 covered by the first and second checks and therefore, accountable to the petitioner for the said amount; and

Whether or not the court committed grave abuse of discretion in holding that the payment made by Tropical through its manager Pons to Galan was "good payment"

Held:

The records will show that the petitioner entered into a contract with Tropical for the renovation of the latter's building on behalf of the partnership of "Galan and Muñasque." If there was a falling out or misunderstanding between the partners, such does not convert the partnership into a sham organization.

Likewise, when Muñasque received the first payment of Tropical with a check made out in his name, he indorsed the check in favor of Galan. Respondent Tropical therefore, had every right to presume that the petitioner and Galan were true partners. If they were not partners as petitioner claims, then he has only himself to blame for making the relationship appear otherwise, not only to Tropical but to their other creditors as well. The payments made to the partnership were, therefore, valid payments.

No error was committed by the appellate court in holding that the payment made by Tropical to Galan was a good payment which binds both Galan and the petitioner. Since the two were partners when the debts were incurred, they, are also both liable to third persons who extended credit to their partnership.

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 or 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. That is why under Article 1824 of the Civil Code all partners, whether innocent or guilty, as well as the legal entity which is the partnership, are solidarily liable.

In the case at bar, the respondent Tropical had every reason to believe that a partnership existed between the petitioner and Galan and no fault or error can be imputed against it for making payments to "Galan and Associates" and delivering the same to Galan because as far as it was concerned, Galan was a true partner with real authority to transact on behalf of the partnership with which it was dealing. This is even more true in the cases of Cebu Southern Hardware and Blue Diamond Glass Palace 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 the partners Muñasque and Galan, justice also dictates that Muñasque be reimbursed by Galan for the payments made by the former representing the liability of their partnership to herein intervenors, as it was satisfactorily established that Galan acted in bad faith in his dealings with Muñasque as a partner.