March 1926 - Philippine Supreme Court Decisions/Resolutions
Philippine Supreme Court Jurisprudence
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G.R. No. 25007 March 2, 1926 - PACIFIC COMMERCIAL COMPANY v. ABOITIZ & MARTINEZ, ET AL.
048 Phil 841:
048 Phil 841:
EN BANC
[G.R. No. 25007. March 2, 1926. ]
PACIFIC COMMERCIAL COMPANY, Plaintiff-Appellee, v. ABOITIZ & MARTINEZ ET AL., Defendants. JOSE MARTINEZ, Defendant-Appellant.
Espina & Espina for Appellant.
Block, Johnston & Greenbaum for Appellee.
SYLLABUS
1. PARTNERSHIP; PERSONAL LIABILITY OF PARTNERS FOR PARTNERSHIP DEBTS. — The members of a general mercantile copartnership, whether managing partners or not, are liable in solidum for the debts and obligations to third parties resulting from the duly authorized transactions made in the name and for the account of the partnership.
2. ID.; ID. — Article 141 of the Code of Commerce relates merely to the distribution of losses among the partners themselves in the settlement of the partnership affairs and has no reference to partnership obligations to third parties.
2. ID.; ID. — Article 141 of the Code of Commerce relates merely to the distribution of losses among the partners themselves in the settlement of the partnership affairs and has no reference to partnership obligations to third parties.
D E C I S I O N
OSTRAND, J. :
In April, 1919, Arnaldo F. de Silva, Guillermo Aboitiz, Vidal Aboitiz and Jose Martinez formed "a regular, collective, mercantile partnership" with a capital of P40,000 of which each of the partners Aboitiz and De Silva furnished one-third. The partner Jose Martinez was an industrial partner and furnished no capital; it was provided in the partnership article that he was to receive 30 per cent of the profits and that his responsibility for losses should not exceed the amount of the profits received by him.
On April 27, 1922, the partnership, through its duly authorized representative, Guillermo Aboitiz, executed a promissory note in favor of the plaintiff, the Pacific Commercial Company, for the sum of P23,168.71, with interest at 12 per cent per annum until fully paid and an additional sum of 10 per cent as attorney’s fees and costs of collection in the event it became necessary to resort to judicial proceedings. As security for the payment of the note, the partnership executed a chattel mortgage in favor of the plaintiff on certain personal property therein described.
For failure of the partnership to pay the debt, the chattel mortgage was foreclosed, the mortgaged property sold, and the proceeds of the sale, P2,000, was paid over to the plaintiff on December 28, 1923. No further payment on the not appears to have been made and, on January 4, 1924, the present action was brought for the recovery of the unpaid balance with interest. Upon trial, the court below rendered judgment in favor of the plaintiff and against the partnership for the sum of P27,951.68 and for the payment of interest on the capital of P21,168.71 at the rate of 10 per cent per annum from the 31st of October. 1924, until paid, together with 10 per cent on the amount due for fees for collection in accordance with the terms of the aforesaid note. The judgment further provided that execution should first issue against the property of the partnership Aboitiz & Martinez and that in the event of the insolvency of the partnership, it might issue against the property of the partners De Silva and Aboitiz, and in the event of their insolvency, then against the property of the industrial partner Jose Martinez. From this judgment Martinez appealed to this court and here maintains that under article 141 of the Code of Commerce he, as a mere industrial partner, cannot be held responsible for the partnership’s debt.
The case is practically identical with that of the Compañia Maritima v. Munoz (9 Phil., 326), in which this court held the industrial partners secondarily liable for the debts of the partnership, but on the strength of the vigorous dissenting opinion of Chief Justice Arellano in that case, the appellant argues that the decision therein was erroneous and should now be overruled. With all due respect for the legal acumen of the first Chief Justice of this Court, we are still of the opinion that the case was correctly decided. Article 127 of the Code of Commerce reads as follows:jgc:chanrobles.com.ph
"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 later, and by a person authorized to make use thereof."cralaw virtua1aw library
The language of this article is clear and specific and must be taken to mean exactly what it says, namely, that all the members of a general copartnership are liable with all their property for the results of the duly authorized transactions made in the name and for the account of the partnership. On the other hand, article 141, upon which the appellant relies and which provides that "losses shall be computed in the same proportion among the capitalist partners without including the industrial partners, unless by special agreement the latter have been constituted as participants therein," is susceptible of two different interpretations of which that given it in the Compania Maritima case, supra, i. e., that it relates merely to the distribution of losses among the partners themselves in the settlement of the partnership affairs and has no reference to partnership obligations to third parties, appears to us to be the more logical.
There is a marked distinction between a liability and a loss, and the inability of a partnership to pay a debt to third party at a particular time does not necessarily mean that the partnership business, as a whole, has been operated at a loss. The partnership may have outstanding credits which for the moment may be unavailable for the payment of debts, but which eventually may be realized upon and yield profits more than sufficient to cover all losses. Bearing this in mind it will be found that there in reality is no conflict between the two articles quoted; one speaks of liabilities, the other of losses.
The judgment appealed from is affirmed with the costs against the appellant. So ordered.
Avanceña, C.J., Street, Malcolm, Villamor, Johns, Romualdez and Villa-Real, JJ., concur.
On April 27, 1922, the partnership, through its duly authorized representative, Guillermo Aboitiz, executed a promissory note in favor of the plaintiff, the Pacific Commercial Company, for the sum of P23,168.71, with interest at 12 per cent per annum until fully paid and an additional sum of 10 per cent as attorney’s fees and costs of collection in the event it became necessary to resort to judicial proceedings. As security for the payment of the note, the partnership executed a chattel mortgage in favor of the plaintiff on certain personal property therein described.
For failure of the partnership to pay the debt, the chattel mortgage was foreclosed, the mortgaged property sold, and the proceeds of the sale, P2,000, was paid over to the plaintiff on December 28, 1923. No further payment on the not appears to have been made and, on January 4, 1924, the present action was brought for the recovery of the unpaid balance with interest. Upon trial, the court below rendered judgment in favor of the plaintiff and against the partnership for the sum of P27,951.68 and for the payment of interest on the capital of P21,168.71 at the rate of 10 per cent per annum from the 31st of October. 1924, until paid, together with 10 per cent on the amount due for fees for collection in accordance with the terms of the aforesaid note. The judgment further provided that execution should first issue against the property of the partnership Aboitiz & Martinez and that in the event of the insolvency of the partnership, it might issue against the property of the partners De Silva and Aboitiz, and in the event of their insolvency, then against the property of the industrial partner Jose Martinez. From this judgment Martinez appealed to this court and here maintains that under article 141 of the Code of Commerce he, as a mere industrial partner, cannot be held responsible for the partnership’s debt.
The case is practically identical with that of the Compañia Maritima v. Munoz (9 Phil., 326), in which this court held the industrial partners secondarily liable for the debts of the partnership, but on the strength of the vigorous dissenting opinion of Chief Justice Arellano in that case, the appellant argues that the decision therein was erroneous and should now be overruled. With all due respect for the legal acumen of the first Chief Justice of this Court, we are still of the opinion that the case was correctly decided. Article 127 of the Code of Commerce reads as follows:jgc:chanrobles.com.ph
"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 later, and by a person authorized to make use thereof."cralaw virtua1aw library
The language of this article is clear and specific and must be taken to mean exactly what it says, namely, that all the members of a general copartnership are liable with all their property for the results of the duly authorized transactions made in the name and for the account of the partnership. On the other hand, article 141, upon which the appellant relies and which provides that "losses shall be computed in the same proportion among the capitalist partners without including the industrial partners, unless by special agreement the latter have been constituted as participants therein," is susceptible of two different interpretations of which that given it in the Compania Maritima case, supra, i. e., that it relates merely to the distribution of losses among the partners themselves in the settlement of the partnership affairs and has no reference to partnership obligations to third parties, appears to us to be the more logical.
There is a marked distinction between a liability and a loss, and the inability of a partnership to pay a debt to third party at a particular time does not necessarily mean that the partnership business, as a whole, has been operated at a loss. The partnership may have outstanding credits which for the moment may be unavailable for the payment of debts, but which eventually may be realized upon and yield profits more than sufficient to cover all losses. Bearing this in mind it will be found that there in reality is no conflict between the two articles quoted; one speaks of liabilities, the other of losses.
The judgment appealed from is affirmed with the costs against the appellant. So ordered.
Avanceña, C.J., Street, Malcolm, Villamor, Johns, Romualdez and Villa-Real, JJ., concur.
