Case Summary (G.R. No. L-22493)
Applicable Law
The pertinent law to this case is derived from the Civil Code, specifically Article 1816, which governs the liability of partners in a partnership. This provision states the obligations of partners concerning debts incurred by the partnership, emphasizing their joint and several liabilities.
Background of the Case
On April 22, 1961, United Pioneers General Construction Company executed a promissory note for ₱9,440 to purchase a motor vehicle on an installment basis, with the obligation that each of the twelve payments, including penalties for late payments, would render the entire unpaid balance due if missed. After a default occurred following the failure to pay the installment due on July 22, 1961, Island Sales, Inc. initiated a lawsuit for the recovery of the outstanding balance of ₱7,119.07.
Procedural History
In the proceedings, co-defendant Daniel A. Guizona did not respond to the lawsuit and was declared in default. The plaintiff subsequently motioned for the dismissal of the complaint with respect to another co-defendant, Romulo B. Lumauig. During the scheduled hearing, the defendants, including Benjamin C. Daco and Noel C. Sim, failed to appear, leading to a trial where evidence was presented by the plaintiff ex parte.
Trial Court's Decision
The trial court ruled in favor of Island Sales, Inc., ordering the defendant construction company to pay the plaintiff the outstanding amount plus interest and attorney's fees. However, the court specified that the individual defendants' liability would be contingent upon whether the company had leviable properties.
Arguments on Appeal
In the appeal, Benjamin C. Daco and Noel C. Sim contended that, given the five general partners, the liability of each partner should only be one-fifth of the company’s obligation. They argued that dismissing the complaint against Lumauig should proportionately reduce their liabilities as remaining partners. However, the trial court denied their motion for reconsideration despite the plaintiff’s consent to limit their liability to one-fifth of the debt.
Legal Issue
The central issue for determination was whether the dismissal of the complaint against one general partner would increase the joint and several liabilities of the other remaining partners.
Judicial Analysis
Citing Article 1816 of the Civil Code, the court highlighted that all partners are liable for partnership debts pro rata. The court affirmed that the total liability for the company’s obligation remains distributed among the partners. Therefore, regardless of the dismissal of the complaint against Lumauig, the liability of Benjamin C. Daco remains limited to one-fifth of the tota
...continue readingCase Syllabus (G.R. No. L-22493)
Case Background
- The case involves an appeal by defendant Benjamin C. Daco from a decision rendered by the Court of First Instance of Manila, Branch XVI, concerning a civil case (Civil Case No. 50682).
- The decision ordered the United Pioneer General Construction Company to pay Island Sales, Inc. the sum of P7,119.07 plus interest at a rate of 12% per annum until fully paid, along with attorney's fees of P800.00 and costs.
- The individual defendants, including Daco, were also held liable but with the stipulation that their liability would only be enforced if the company had no leviable properties left.
Transaction Details
- On April 22, 1961, the defendant company purchased a motor vehicle from the plaintiff on an installment basis.
- A promissory note for P9,440.00 was executed, outlining the payment terms: twelve equal monthly installments of P786.63, with the first installment due on May 22, 1961.
- The agreement included a provision stating that failure to pay any installment would render the entire unpaid balance immediately due and demandable.
Legal Proceedings
- The plaintiff filed a lawsuit due to non-payment of the installment due on July 22, 1961, claiming the unpaid balance of P7,119.07.
- Benjamin C. Daco and other individuals were included as co-defendants due to their sta