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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.

JOSE MACHUCA, plaintiff-appellee, vs. CHUIDIAN, BUENAVENTURA & CO., defendants-appellants.

FACTS:

CHUIDIAN, BUENAVENTURA & CO (defendants) is a regular general partnership. The original partners were D. Telesforo
Chuidian, Doa Raymunda Chuidian, Doa Candelaria Chuidian, and D. Mariano Buenaventura. The partners each
contributed a certain amount of money to the partnership.
Dona Raymunda retired from the partnership on November 1885. The partnership subsequently went into liquidation (it
does not appear that the liquidation has been terminated when this action was brought).

On January 1894, D. Mariano Buenaventura died, his estate passing by will to his children, including D. Vicente
Buenaventura. In 1898, D. Vicente Buenaventura executed a public instrument in which for a valuable consideration
he assigns to D. Jose Gervasio Garcia . . . a 25 per cent share in all that may be obtained by whatever right in whatever
form from the liquidation of the partnership of Chuidian, Buenaventura & Co., in the part pertaining to him in said
partnership.

A subsequent assignment was made by Garcia in favor of Jose Machuca (now plaintiff), which has been notified to the
liquidator of the partnership. The liquidator, however, declined to record in the books of the partnership Machucas claim
under the assignment as a credit due to him. Hence, Machuca filed an action to compel such record to be made, and he
further asks that he be adjudicated to be a creditor of the partnership in an amount equal to 25% of D. Vicente
Buenaventuras share (that he be immediately given the 25% share).

ISSUE: WON Machuca is entitled to 25% of D. Vicente Buenaventuras share in the partnership NO

HELD:

According to clause 19 of the partnership agreement: "upon the dissolution of the company, the pending obligations in favor
of outside parties should be satisfied, the funds of the minors Jose and Francisco Chuidian should be taken out, and
afterwards the resulting balance of the account-current of each one of those who had put in money should be paid."

Our construction of this clause is that it establishes a a basis for the final adjustment of the affairs of the partnership; that
that basis is that the liabilities to noncompartners are to be first discharged; that the claims of the Chuidian minors are to be
next satisfied; and that what is due to the respective partners on account of their advances to the firm is to be paid last of
all, leaving the ultimate residue, of course, if there be any, to be distributed, among the partners in the proportions in which
they may be entitled thereto.

Hence, it follows that D. Vicente Buenaventura, whose rights are those of his father, is in no case entitled to receive any
part of the assets until the creditors, who are nonpartners, and the Chuidian minors are paid. Whatever rights he had, he
could only transfer subject to this condition. It is clear, from the language of the instrument under which plaintiff claims,
that this conditional interest was all that Vicente ever intended to transfer.

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