G.R. No. L-39780 November 11, 1985 ELMO MUASQUE, petitioner, vs.

COURT OF APPEALS
,CELESTINO GALAN TROPICAL COMMERCIAL COMPANY and RAMON PONS, respondents.
GUTTIERREZ, JR., J.: Facts: Munasque (petitioner) entered into a partnership wit
h Galan under the registered name Galan and Associates as Contractor. They entered
into a written contract with respondent Tropical for remodeling the latters Cebu
branch building. Under the contract, the project totaled 25,000 to be paid in i
nstallments; 7, 000 upon signing and 6, 000 every 15 working days. Tropical made
the first payment by 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 mat
erials and labor used in the project. However, Galan allegedly spent P6, 183.37
for his personal use. When the second check came, Munasque refused to indorse it
again to Galan. Galan informed Tropical of the misunderstanding between him and
Munasque as partners. Hence upon second payment, Tropical changed the name of t
he payee on the second check from Munasque to Galan and Associates which enabled G
alan to encash the second check. Meanwhile, the construction was continued throu
gh Munasques sole efforts by incurring debts from various suppliers. The construc
tion work was finished ahead of schedule with the total expenditure reaching P 3
4, 000 (note yung contract nila 25k lang). Munasque filed a complaint for paymen
t of sum of money and damages against Galan, Tropical, and Tropicals Cebu branch
manager Pons. Cebu Southern Hardware Company and Blue Diamond Glass Palace inter
vened in the case for the credit which they extended to the partnership of Munas
que and Galan for the construction project. Both trial court and Court of Appeal
s absolved respondents Tropical and its Cebu manager, Pons, from any liability.
TC held Galvan and Munasque jointly and severally liable to its creditors which de
cision was modified by CA and held them jointly liable.
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, includin
g industrial ones, shall be liable pro rate with all their property and after al
l the partnership assets have been exhausted, for the contracts which may be ent
ered into the name and for account of the partnership, under its signature and b
y a person authorized to act for the partnership. xxx, this provision should be c
onstrued together with Article 1824 which provides that: All partners are liable
solidarily with the partnership for everything chargeable to the partnership und
er Articles 1822 and 1823. While the liability of the partners are merely joint i
n transactions entered into by the partnership, a third person who transacted wi
th said partnership can hold the partners solidarily liable for the whole obliga
tion if the case of the third person falls under Articles 1822 and 1823. The obl
igation 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 Gal
an and no fault or error can be imputed against it for making payments to Galan a
nd Associates because as far as it was concerned, Galan was a true partner with r
eal authority to transact in behalf of the partnership it was dealing with (beca
use in the first place they entered into a duly registered partnership name and
secondly, Munasque endorsed the first check payment to Galan). This is even more
true in the cases of the intervenors who supplied materials on credit to the pa
rtnership. Thus, it is but fair that the consequences of any wrongful act commit
ted by any of the partners therein should be answered solidarily by all the part
ners and the partnership as a whole. However, as between Munasque and Galan, Gal
an must reimburse Munasque for the payments made to the intervenors as it was sa
tisfactorily established that Galan acted in bad faith in his dealings with Muna
sque as a partner.