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G.R. No.

L-6912 March 30, 1912


JOSE ARGUELLES, Plaintiff-Appellant,
vs. 
PEDRO SYYAP, SILVINO LIM and ANTONINO BABASA, as sheriff of the Province of
Batangas, Defendants-Appellees.
FACTS:

The plaintiff and the defendant, Pedro Syyap, formed and organized a partnership for the repair of
the highway from Batangas to San Jose, of the Province of Batangas for the sum of P77,277 under the
name of the plaintiff. Partnership purchased and acquired, through Syyap and with the company's own
funds some equipment and materials to be used on the repair of the highway, for the sum of P27, 000.
On November 30, 1909, the defendant Silvino Lim sued the defendant Pedro Syyap for the sum of
P32, 000 alleging to be the debt of Pedro Syyap to the said Silvino Lim, wherein a writ of execution was
issued by the Court. Silvino Lim then mentioned to the sheriff the machinery belonging to the company
as being property owned by the said defendant Pedro Syyap which could be levied upon by means of the
writ of execution above mentioned, notwithstanding that the said Silvino Lim knew perfectly well that
the property did not belong to the defendant Pedro Syyap, but to the firm of Arguelles and Syyap.
The sheriff levied upon the said chattels and advertised the sale at public auction. Later on, sold
the said personal property to the defendant Silvino Lim, who disposed of the same as if it were of his
exclusive ownership and leased it to the Government, the said Silvino Lim applying to his own use the
whole of the price paid by the said Government for the lease of the personal property referred to. That
the attachment of the chattels and the deprivation of their use by the firm of Arguelles and Syyap, from
the date the attachment was served, has caused the plaintiff, as a member of the said partnership,
losses and damages to the amount of P50,000.
Plaintiff prays the court to render judgment the right or share from the sale of the said personal
property which belonged to the defendant Pedro Syyap, and that the plaintiff is now the owner of an
undivided part of the aforesaid personal property equivalent to the share he had as a capitalist partner
in the firm of Arguelles and Syyap.

ISSUE:
Whether or not the plaintiff has legal personality in the prosecution of the case.

RULING:
NONE. . If the said partnership, whose existence must be presumed as continuing, because there
is no allegation in the complaint to the contrary, was that which was dispossessed of the personal
property in question, obviously it is the partnership itself, and not any of its members in his character as
such, which should demand the same and the recovery of possession thereof, because the partnership is
a juridical entity completely distinct from the personality of the members constituting it. Therefore, the
plaintiff who demands the said property, not as the representative of the said partnership, but in his
character of a member thereof, has no legal personality whereupon to sustain his claim.
All that the plaintiff asks, he asks for himself; he brings an action of his own and demands a right
which he considers to be a personal right of his own and the payment of sums which in his opinion were
owing to him personally, also.
The dispossession alleged in the complaint may have been committed against the partnership
formed between the plaintiff and Pedro Syyap, and that this same partnership, and not the plaintiff as a
member thereof, is the one entitled to demand the property of which it was dispossessed, or its
equivalent value, as well as an indemnity for the losses and damages caused by such dispossession,
does not affect the personality of the plaintiff, but his right to ask for what he claims in the complaint.
He may not have such a right, he may lack the right of action under the complaint; but the lack of a
right of action is one thing, and the lack of personality is another thing entirely different: they are two
juridical conceptions which must not be confounded, and they produce different effects in law.
Personality affects the form; and the right of action, the substance. Lack of personality cannot be
predicated upon the lack of right of action.
G.R. No. L-39780 November 11, 1985
ELMO MUÑASQUE, petitioner,
vs.
COURT OF APPEALS,CELESTINO GALAN TROPICAL COMMERCIAL COMPANY and RAMON PONS,
respondents.
FACTS:
The present controversy began when petitioner Muñasque in behalf of the partnership of "Galan
and Muñasque" as Contractor entered into a written contract with respondent Tropical for remodelling
the respondent's Cebu branch building. A total amount of P25, 000.00 was to be paid under the contract
for the entire services of the Contractor. The terms of payment were as follows: thirty percent (30%) of
the whole amount upon the signing of the contract and the balance thereof divided into three equal
instalments at the lute of Six Thousand Pesos (P6, 000.00) every fifteen (15) working days.
The first payment made by Tropical was in the form of a check for P7, 000.00 in the name of the
petitioner. Petitioner, however, indorsed the check in favor of respondent Galan to enable the latter to
deposit it in the bank and pay for the materials and labor used in the project.
Petitioner alleged that Galan spent P6, 183.37 out of the P7, 000.00 for his personal use so that
when the second check in the amount of P6, 000.00 came and Galan asked the petitioner to indorse it
again, the petitioner refused.
The check was withheld from the petitioner. Since Galan informed the Cebu branch of Tropical
that there was a "misunderstanding" between him and petitioner, Tropical changed the name of the
payee in the second check from Muñasque to "Galan and Associates" which was the duly registered
name of the partnership between Galan and petitioner and under which name a permit to do
construction business was issued by the mayor of Cebu City. This enabled Galan to encash the second
check.
Meanwhile, the construction continued through petitioner’s his sole efforts. Because of this, the
petitioner filed a complaint for payment of sum of money and damages against the respondents, seeking
to recover the amounts covered by the first and second checks which fell into the hands of respondent
Galan, the additional expenses that the petitioner incurred in the construction, moral and exemplary
damages, and attorney's fees.

ISSUES:
(1) Whether or not there existed a partners between Celestino Galan and Elmo Muñasque;
(2) Whether or not the payment made by Tropical to Galan was "good payment"; and
(3) Whether or not Galan is accountable to the petitioner for the amount covered by the first and
second checks.

RULING:
1. Yes. Records will show that the petitioner entered into a contract with Tropical for the renovation
of the latter's building on behalf of the partnership of "Galan and Muñasque." There is nothing in
the records to indicate that the partner-ship organized by the two men was not a genuine one. If
there was a falling out or misunderstanding between the partners, such does not convert the
partnership into a sham organization.
Likewise, when Muñasque received the first payment of Tropical in the amount of P7, 000.00 with
a check made out in his name, he indorsed the check in favor of Galan. Respondent Tropical
therefore, had every right to presume that the petitioner and Galan were true partners
2. Yes. The payment made by Tropical to Galan was a good payment which binds both Galan and
the petitioner. Since the two were partners when the debts were incurred, they are also both
liable to third persons who extended credit to their partnership.
There is a general presumption that each individual partner is an authorized agent for the
firm and that he has authority to bind the firm in carrying on the partnership transactions.
The presumption is sufficient to permit third persons to hold the firm liable on transactions
entered into by one of members of the firm acting apparently in its behalf and within the
scope of his authority.
3. No. The obligation is solidary, because the law protects 3 rd persons, who in good faith relied upon
the authority of a partner, whether such authority is real or apparent. That is why under Article
1824 of the Civil Code all partners, whether innocent or guilty, as well as the legal entities which
is the partnership, are solidarily liable.
In the case at bar the respondent Tropical had every reason to believe that a partnership existed
between the petitioner and Galan and no fault or error can be imputed against it for making
payments to "Galan and Associates" and delivering the same to Galan because as far as it was
concerned, Galan was a true partner with real authority to transact on behalf of the partnership
with which it was dealing.
However, as between the partners Muñasque and Galan, justice also dictates that Muñasque be
reimbursed by Galan for the payments made by the former representing the liability of their
partnership to herein intervenors, as it was satisfactorily established that Galan acted in bad
faith in his dealings with Muñasque as a partner.