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II-D-04. La Compañia Maritima v. Muñoz. Cruz

Emilio Muñoz, Francisco Muñoz, and Rafael Naval formed a general mercantile partnership called Francisco Muñoz & Sons in 1905. The partnership agreement stated it was an ordinary general partnership engaged in mercantile business. Rafael Naval was entitled to a fixed salary as part of the agreement. The plaintiff argued Emilio Muñoz contributed nothing and received nothing from the partnership. However, the Supreme Court held that in a general partnership, all partners are generally liable, including industrial partners. The Court ruled industrial partners are liable to third parties for partnership debts, and settlement of debts between partners does not change this liability.

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85 views1 page

II-D-04. La Compañia Maritima v. Muñoz. Cruz

Emilio Muñoz, Francisco Muñoz, and Rafael Naval formed a general mercantile partnership called Francisco Muñoz & Sons in 1905. The partnership agreement stated it was an ordinary general partnership engaged in mercantile business. Rafael Naval was entitled to a fixed salary as part of the agreement. The plaintiff argued Emilio Muñoz contributed nothing and received nothing from the partnership. However, the Supreme Court held that in a general partnership, all partners are generally liable, including industrial partners. The Court ruled industrial partners are liable to third parties for partnership debts, and settlement of debts between partners does not change this liability.

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Topic: Obligations of the Partners to Third

Persons
Case Title: La Compaia Maritima v. Muoz
Date: December 12, 1907
Ponente: J. Willard
Legal Doctrine:
Industrial partners are also liable to third persons
for liabilities of the partnership.
Facts:
On the 31st day of March, 1905, the
defendants Francisco Muoz, Emilio Muoz, and
Rafael Naval formed on ordinary general
mercantile partnership under the name of Francisco
Muoz & Sons for the purpose of carrying on the
mercantile business in the Province of Albay which
had formerly been carried on by Francisco Muoz.
In the articles of partnership, it is expressly stated
that they have agreed to form, and do form, an
ordinary, general mercantile partnership. The object
of the partnership, as stated in the fourth paragraph
of the articles, is a purely mercantile one and all the
requirements of the Code of Commerce in
reference to such partnership were complied with.
The articles of partnership were recorded in the
mercantile registry in the Province of Albay.
Rafael Naval was entitled by the articles of
agreement to a fixed salary of P2,500 as long as he
was in charge of the branch office established at
Ligao
The argument of the appellees seems to be that,
because no yearly or monthly salary was assigned
to Emilio Muoz, he contributed nothing to the
partnership and received nothing from it.
Issues: Whether or not Muoz is liable to third
persons even if he is an industrial partner.
Held:

YES.

Ratio: The Supreme Court held that in limited


partnership, the Code of Commerce recognizes a
difference between general and special partners, but
in a general partnership there is no such distinction
all the members are general partners. The fact
that some may be industrial and some capitalist
partners does not make the members of either of
these classes alone such general partners.
Our construction of the article is that it relates
exclusively to the settlement of the partnership
affairs among the partners themselves and has

nothing to do with the liability of the partners to


third persons; that each one of the industrial
partners is liable to third persons for the debts of
the firm; that if he has paid such debts out of his
private property during the life of the partnership,
when its affairs are settled he is entitled to credit
for the amount so paid, and if it results that there is
not enough property in the partnership to pay him,
then the capitalist partners must pay him.
Our conclusion is upon this branch of the case that
neither on principle nor on authority can the
industrial partner be relieved from liability to third
persons for the debts of the partnership

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