Liwanag vs. Workmen’s Compensation Commission, 105 Phil. 741

Liwanag vs. Workmen’s Compensation Commission, 105 Phil. 741

Parties:

Petitioners & Appellant: Benito Liwanag and Maria Liwanag Reyes

Respondents & Appellees: Workmen’s Compensation Commission, et. Al.

Nature: Petition for review on certiorari of a decision of the Workmen’s compensation commission

Summary: Appellants Liwanag and Reyes are co-owners of Liwanag Auto supply. They employed Balderama as a a security guard who, while in the line of duty, was killed by criminal hands. His widow, Ciriaca Balderama & his children filed claim for compensation with the Workmen’s Compensation Commission, which granted the award of 3,494.40 to be paid by the appellants jointly and severally. Appellants appealed the case and claimed that under the Workmen’s Compensation Act, the compensation should be divisible & not paid jointly and severally.

Doctrine: WORKMEN'S COMPENSATION; SOLIDARY LIABILITY OF BUSINESS PARTNERS.—Although the Workmen's Compensation Act does not contain any provision expressly declaring that the obligation of business partners arising from compensable injury or death of an employee should be solidary, however, there are other provisions of law from which it could be gathered that their liability must be solidary. Arts. 1711 and 1712 of the New Civil Code and Section 2 of the Workmen's Compensation Act, reasonably indicate that in compensation cases, the liability of business partners should be solidary. If the responsibility of the partners were to be merely joint and not solidary, and one of them happens to be insolvent, the amount awarded to the dependents of the deceased employee would only be partially satisfied, which is evidently contrary to the intent and purpose of the law to give full protection to the employee.

 Facts: Appellants Benito Liwanag and Maria Liwanag Reyes are co-owners of Liwanag Auto Supply, a commercial establishment located at 349 Dimasalang, Sampaloc, Manila. They employed Roque Balderama as security guard who, while in line of duty, was killed by criminal hands. His widow Ciriaca vda. de Balderama and minor children Genara, Carlos and Leogardo, all surnamed Balderama, in due time filed a claim for compensation with the Workmen's Compensation Commission, which was granted in an award worded as follows:

WHEREFORE, the order of the referee under consideration should be, as it is hereby, affirmed and respondents Benito Liwanag and Maria Liwanag Reyes, ordered:

"1. To pay jointly and severally the amount of Three Thousand Four Hundred Ninety-four and 40/100 (P3,494.40) Pesos to the claimants in lump sum; and

"To pay to the Workmen's Compensation Funds the sum of P4.00 (including P5.00 for this review) as fees, pursuant to Section 55 of the Act."

In appealing the case to this Tribunal, appellants do not question the right of appellees to compensation nor the amount awarded. They only claim that, under the Workmen's Compensation Act, the compensation is divisible, hence the Commission erred in ordering appellants to pay jointly and severally the amount awarded. They argue that there is nothing in the compensation Act which provides that the obligation of an employer arising from compensable injury or death of an employee should be solidary; that if the legislative intent in enacting the law is to impose solidary obligation, the same should have been specifically provided, and that, in the absence of such clear provision, the responsibility of appellants should not be solidary but merely joint.

Issue: WON the liability of the partners are jointly and severally despite the absence of a clear provision stating such liability in the Compensation Act.

Held: YES. Although the Workmen's Compensation Act does not contain any provision expressly declaring that the obligation of business partners arising from compensable injury or death of an employee should be solidary, however, there are other provisions of law from which it could be gathered that their liability must be solidary. Arts. 1711 and 1712 of the New Civil Code and Section 2 of the Workmen's Compensation Act, reasonably indicate that in compensation cases, the liability of business partners should be solidary. If the responsibility of the partners were to be merely joint and not solidary, and one of them happens to be insolvent, the amount awarded to the dependents of the deceased employee would only be partially satisfied, which is evidently contrary to the intent and purpose of the law to give full protection to the employee.

Munasque vs. Court of Appeals, GR No. L-39780, November 11, 1985

Munasque vs. Court of Appeals, GR No. L-39780, November 11, 985

G.R. No. L-39780 November 11, 1985

ELMO MUÑASQUE, petitioner,

vs.

COURT OF APPEALS,CELESTINO GALAN TROPICAL COMMERCIAL

COMPANY and RAMON PONS, respondents.

GUTTIERREZ, JR., J.:

Facts:

Munasque (petitioner) entered into a partnership with Galan under the registered name\“Galan and Associates” as Contractor. They entered into a written contract with respondent Tropical for remodeling the latter’s Cebu branch building. Under the contract, the project totaled 25,000 to be paid in installments; 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 materials 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 the payee on the second check from Munasque to “Galan and Associates” which enabled Galan to encash the second check.

Meanwhile, the construction was continued through Munasque’s sole efforts by incurring debts from various suppliers. The construction work was finished ahead of schedule with the total expenditure reaching P 34, 000 (note yung contract nila 25k lang).

Munasque filed a complaint for payment of sum of money and damages against Galan, Tropical, and Tropical’s Cebu branch manager Pons. Cebu Southern Hardware Company and Blue Diamond Glass Palace intervened in the case for the credit which they extended to the partnership of Munasque and Galan for the construction project.

Both trial court and Court of Appeals absolved respondents Tropical and its Cebu manager, Pons, from any liability. TC held Galvan and Munasque “jointly and severally” liable to its creditors which decision 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, including industrial ones, shall be liable pro rate with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into the name and for account of the partnership, under its signature and by a person authorized to act for the partnership. xxx”, this provision should be construed together with Article 1824 which provides that:

“All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822 and 1823.” While the liability of the partners are merely joint in transactions entered into by the partnership, a third person who transacted with said partnership can hold the partners solidarily liable for the whole obligation if the case of the third person falls under Articles 1822 and 1823.

The obligation 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 Galan and no fault or error can be imputed against it for making payments to “Galan and Associates” because as far as it was concerned, Galan was a true partner with real authority to transact in behalf of the partnership it was dealing with (because 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 partnership. Thus, it is but fair that the consequences of any wrongful act committed by any of the partners therein should be answered solidarily by all the partners and the partnership as a whole.

However, as between Munasque and Galan, Galan must reimburse Munasque for the payments made to the intervenors as it was satisfactorily established that Galan acted in bad faith in his dealings with Munasque as a partner.

Island Sales vs. United Pioneers GR No. L-22493, July 31, 1975

Island Sales vs. United Pioneers GR No. L-22493, July 31, 1975

DOCTRINE: Condonation by creditor of share in partnership debt of one partner does not increase pro rata liability of other partners.

FACTS:

The defendant company ( UNITED PIONEERS GENERAL CONSTRUCTION COMPANY ET .AL ), a general partnership duly registered under the laws of the Philippines, purchased from theplaintiff ( ISLAND SALES, INC) a motor vehicle on installment basis and for this purpose executed apromissory note for P9,440.00, payable in twelve (12) equal monthly installments of P786.63, the first installment payable on or before May 22, 1961 and the subsequent installments on the 22nd day of every month thereafter, until fully paid, with the condition that failure to pay any of said installments asthey fall due would render the whole unpaid balance immediately due and demandable.

 Having failed to receive the installment due on July 22, 1961, the plaintiff sued the defendant company for the unpaid balance amounting to P7,119.07. Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto Palisoc were included as co-defendants in their capacity as general partners of the defendant company.

Daniel A. Guizona failed to file an answer and was consequently declared in default. Subsequently, on motion of the plaintiff, the complaint was dismissed insofar as the defendant Romulo B. Lumauig is concerned.

When the case was called for hearing, the defendants and their counsels failed to appear notwithstanding the notices sent to them. Consequently, the trial court authorized the plaintiff to present its evidence ex-parte , after which the trial court rendered the decision appealed from.

The defendants Benjamin C. Daco and Noel C. Sim moved to reconsider the decision claiming that since there are five (5) general partners, the joint and subsidiary liability of each partner should notexceed one-fifth (1/5) of the obligations of the defendant company. But the trial court denied the said motion notwithstanding the conformity of the plaintiff to limit the liability of the defendants Daco and Sim to only one-fifth (1/5 ) of the obligations of the defendant company.Hence, this appeal.

ISSUE:  Whether the condonation of a partner’s share in the debts of the company increases the remaining partners’ liability?

RULING:

No. In the instant case, there were five (5) general partners when the promissory note in question was executed for and in behalf of the partnership. Since the liability of the partners is pro rata, the liability of the appellant Benjamin C. Daco shall be limited to only one-fifth ( 1/ 5 ) of the obligations of the defendant company. The fact that the complaint against the defendant Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not unmake the said Lumauig as a general partner in the defendant company. In so moving to dismiss the complaint, the plaintiff merely condoned Lumauig's individual liability to the plaintiff.

RATIO: Article 1816 of the Civil Code provides:

“All partners including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership. However, any partner may enter into a separate obligation to perform”

Pacific Commercial vs Aboitiz GR No. 25007, March 2, 1925

Pacific Commercial vs Aboitiz GR No. 25007, March 2, 1925

ACIFIC COMMERCIAL COMPANY vs. ABOITIZ & MARTINEZ, ET AL., 48 Phil. 841. G.R. No. L-25007, March 2, 1926

 FACTS:

 Arnaldo F. de Silva, Guillermo Aboitiz, Vidal Aboitiz and Jose Martinez formed a regular, collective, mercantile partnership with a capital of P40,000 as contributed equally by de Silva and the two Aboitiz while Jose Martinez was an industrial partner with no capital contribution. As provided in the article of partnership, Martinez was to receive 30% of the profits and shall also be responsible for losses which should not exceed 30%.

The partnership, through Guillermo Aboitiz, executed a promissory note in favor of Pacific Commercial Company in the sum of P23,168.71 with interest at 12% per annum. They executed a chattel mortgage to secure the note. Due to their failure to pay their obligation, the chattel mortgage was foreclosed and sold at P2,000 which was paid over to plaintiff Pacific Co. Due to non payment of the remaining balance, plaintiff brought a suit for recovery of unpaid balance with interest against the partnership.

A judgment was rendered in favor of plaintiff and the partnership was ordered to pay the sum of P27,951.68 and the interest amounting to P21,168.71 at 10% per annum until fully paid plus fees. The judgment further provided that the execution should first issue against the property of the partnership Aboitiz & Martinez and in the event of the insolvency of the partnership, it might issue against the property of de Silva and Aboitiz and in the event of insolvency, then against the property of Jose Martinez. Defendant Martinez appealed to the decision and invoked that under Art.141 of the Code of Commerce, he is merely an industrial partner, thus, he cannot be held liable for the partnership's debt.

ISSUE:

 Is an industrial partner liable for partnership's debt?

RULING

 Yes. The language of Art. 127 of the Code of Commerce is clear and specific and must be taken to mean exactly what it says, namely, that all the members of a general co partnership 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. Defendant's reliance to Art. 141 is misplaced. This article of the Code of Commerce relates merely to the distribution of losses among partners themselves in the settlement of the partnership affairs and has no obligations to third parties.