G.R. No. L-3704 - La Compania Maritima vs. Munoz

Plaintiff, La Compania Maritima, filed a suit in the Court of First Instance of Manila.
Defendants were the partnership Francisco Munoz & Sons and individual partners Francisco Munoz de Bustillo, Emilio Munoz de Bustillo, and Rafael Naval.
Plaintiff sought recovery of P28,828.30, with interest and cost, for debts contracted by the partnership.

On March 31, 1905, Francisco Munoz, Emilio Munoz, and Rafael Naval formed an ordinary general mercantile partnership named Francisco Munoz & Sons in Albay province.
Francisco Munoz was a capitalist partner, while Emilio Munoz and Rafael Naval were industrial partners.
The articles of partnership explicitly declared the formation of an ordinary, general mercantile partnership complying with Code of Commerce requirements.
The articles were duly recorded in the mercantile registry of Albay.

Emilio Munoz was alleged by appellees to have contributed nothing in money, property, or industry.
Emilio Munoz had a right to one-eighth of profits after five years, though without a fixed salary during the partnership term.
Rafael Naval was entitled to a fixed salary of P2,500 during his management of the branch office at Ligao.
Emilio Munoz was excluded from management by his own accord, not by the articles, which conferred management on specific partners.
Article 12 of the articles stipulated profit and loss sharing: capitalist partner to receive three-fourths of profits, industrial partners one-eighth each, but losses to be borne solely by the capitalist partner.

The Court of First Instance acquitted Emilio Munoz and Rafael Naval.
It rendered judgment for plaintiff against the partnership and Francisco Munoz de Bustillo for P26,828.30 plus interest and costs.
Plaintiff appealed the partial acquittal and the judgment.

Whether Emilio Munoz as an industrial partner was liable to third parties for partnership debts.
Whether the partnership was an ordinary general mercantile partnership.
Whether industrial partners who did not contribute capital or actively manage are liable for debts.
Construction of relevant provisions in the Code of Commerce and Civil Code pertaining to partners’ liability.

Does the contract create an ordinary, general mercantile partnership?
Is Emilio Munoz, as an industrial partner, liable to third parties for the debts and obligations contracted by the partnership?
Can industrial partners be relieved of personal liability by the articles of partnership or commercial law provisions?
How should Articles 127, 140, and 141 of the Code of Commerce, together with relevant Civil Code provisions, be construed regarding industrial partners’ liability?
Is the judicial practice of allowing an action simultaneously against the partnership and individual partners proper, considering Article 237 of the Code of Commerce?