Case Digest (G.R. No. L-22493) Core Legal Reasoning Model
Facts:
The case of Island Sales, Inc. vs. United Pioneers General Construction Company, decided on July 31, 1975, arose out of a transaction involving the purchase of a motor vehicle by the defendant company, a general partnership registered under Philippine law. The purchase took place on April 22, 1961, when the company executed a promissory note for ₱9,440.00, agreeing to repay the amount in twelve equal monthly installments of ₱786.63, with the first installment due by May 22, 1961. A critical condition of the agreement stipulated that any failure to pay an installment when due would make the entire unpaid balance immediately due and demandable.
Subsequently, after the first two installments were paid, the defendant company defaulted on the payment due on July 22, 1961. This led Island Sales, Inc. to file a lawsuit against the defendant company for the outstanding balance amounting to ₱7,119.07. The lawsuit also included co-defendants Benjamin C. Daco, Daniel A. Guizona, Noel C. S
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Case Digest (G.R. No. L-22493) Expanded Legal Reasoning Model
Facts:
- Transaction Background
- On April 22, 1961, the defendant company— a general partnership registered under Philippine law—purchased a motor vehicle from the plaintiff on an installment basis.
- To effectuate the purchase, the partnership executed a promissory note for P9,440.00, stipulating twelve (12) equal monthly installments of P786.63 each.
- The first installment was due on or before May 22, 1961, with subsequent installments due on the 22nd of each month thereafter.
- Terms of the Promissory Note and Default
- The promissory note contained a condition that failure to pay any installment when due would render the entire unpaid balance immediately due and demandable.
- The defendant company failed to pay the installment due on July 22, 1961.
- As a result, the plaintiff initiated a suit against the defendant company for the unpaid balance amounting to P7,119.07.
- Parties and Proceedings
- The general partnership comprised five general partners: Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto Palisoc.
- In the suit, all the partners were included in their capacity as general partners of the defendant company.
- Daniel A. Guizona failed to file an answer and was declared in default.
- Upon motion of the plaintiff, the complaint was dismissed with respect to defendant Romulo B. Lumauig.
- Trial Proceedings and Evidence
- The defendants and their counsels failed to appear at the hearing, despite receipt of notice.
- Consequently, the trial court allowed the plaintiff to present its evidence ex-parte.
- Following the presentation of evidence, the trial court rendered its decision sentencing the defendant company to pay the plaintiff the balance with interest and fixing attorney’s fees and costs.
- Motion for Reconsideration and Issues Raised
- Defendants Benjamin C. Daco and Noel C. Sim moved to reconsider the decision, arguing that the joint and subsidiary liability of each partner should not exceed one-fifth (1/5) of the partnership’s obligations.
- The trial court denied their motion even though the plaintiff had confined the liability of these two defendants to one-fifth (1/5) of the total obligation.
- Benjamin C. Daco proceeded to appeal the decision.
- Legal Provision and Precedents
- Article 1816 of the Civil Code was cited, providing that partners are liable pro rata with all their property after the exhaustion of partnership assets for contracts entered into on behalf of the partnership.
- The decision referenced the case Co-Pitco vs. Yulo (8 Phil. 544), which established that in a civil partnership the liability of each partner is limited to their proportional share in the debt, a concept crucial to the issue at hand.
Issues:
- Liability Distribution in a Partnership
- Whether the dismissal of the complaint as to one general partner (Romulo B. Lumauig) effectively increases the joint and subsidiary liability of the remaining partners.
- Whether such a dismissal alters the pro rata nature of liability among the remaining general partners.
- Application of Civil Code Provisions
- How Article 1816 of the Civil Code, which provides for pro rata liability of the partners, applies in the context of the case.
- Whether the precedent set in Co-Pitco vs. Yulo, which limits the liability of a partner to his proportional share, is applicable in determining the extent of the appellant’s liability.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)