Bachrach v La Protectora

Facts:

Nicolas Segundo, Antonio Adiarte, Ignacio Flores and Modesto Serrano (defendants) formed a civil partnership called “La Protectora” for the purpose of engaging in the business of transporting passengers and freight at Laoag, Ilocos Norte. Marcelo Barba, acting as manager, negotiated for the purchase of 2 automobile trucks from E. M. Bachrach for P16,500. Barba paid P3,000 in cash and for the balance executed promissory notes.

One of these promissory notes was signed in the following manner:

“P.P La Protectora, By Marcelo Barba Marcelo Barba”

The other 2 notes were signed in the same way but the word “by” was omitted. It was obvious that in signing the notes, Barba intended to bind both the partnership and himself.

The defendants executed a document in which they declared that they were members of La Protectora and that they had granted to its president full authority to contract for the purchase of the 2 automobiles.  The document was delivered by Barba to Bachrach at the time the vehicles were purchased.

Barba incurred a debt amounting to P2,617.57 and Bachrach foreclosed a chattel mortgage on the trucks but there was still balance. To recover the balance, action was instituted against the defendants. Judgment was rendered against the defendants.

Issue:

a.Whether or not the defendants are liable for the firm debts.

b.Whether or not Barba had authority to incur expenses for the partnership (relevant issue)

Held:

a.Yes. Promissory notes constitute the obligation exclusively of La Protectora and Barba. They do not constitute an obligation directly binding the defendants.  Their liability is based on the principles of partnership liability. A member is not liable in solidum with his fellows for the entire indebtedness but is liable with them or his aliquot part.

SC obiter:  the document was intended merely as an authority to enable Barba to bind the partnership and that the parties to the instrument did not intend to confer upon Barba an authority to bind them personally.

b. Yes. Under Art 1804, every partner may associate another person with him in his share. All partners  are considered agents of the partnership. Barba must be held  to have authority to incur these expenses. He is shown to have been in fact the president/manager, and there can be no doubt that he had actual authority to incur obligation.

Campos Rueda & Co v Pacific Commercial (44 Phil 916)

Facts:

Campos, Rueda & Co., a limited partnership, is indebted to the appellants: Pacific Commercial Co. , Asiatic Petroleum Co, and International Banking Corporation amounting to not less than P1,000.00 (which were not paid more than 30 days prior to the date of the filing by petitioners of the application for voluntary insolvency).

The trial court denied their petition on the ground that it was not proven, nor alleged, that the members of the firm were insolvent at the time the application was filed. It also held that the partners are personally and solidarily liable for the consequences of the transactions of the partnership.

Issue:

Whether or not a limited partnership may be held to have committed an act of insolvency.

Held:

Yes.  A limited partnership’s juridical personality is different from the personality of its members.  On general principle, the limited partnership must answer for and suffer the consequence of its acts. Under our Insolvency Law, one of the acts of bankruptcy upon w/c an adjudication of involuntary insolvency can be predicated is the failure to pay obligations.

The failure of Campos, Rueda & Co., to pay its obligations constitutes an act w/c is specifically provided for in the Insolvency Law for declaration of involuntary insolvency. The petitioners have a right to a judicial decree declaring the involuntary insolvency of said partnership.