Scribd
Upload
163 views2 pages

Island Sales v. United Pioneers General Construction Company

The document summarizes a court case between Island Sales, Inc. and United Pioneers General Construction Company regarding an unpaid promissory note. United Pioneers General Construction Company, a partnership of 5 partners, purchased a vehicle from Island Sales on an installment plan but failed to make payments. Island Sales sued the partnership and its 5 partners. One partner was declared in default while another was dismissed from the complaint by Island Sales. The remaining two partners, Daco and Sim, argued their liability should be limited to one-fifth of the partnership debt since there were originally 5 partners. The court agreed, ruling that condoning one partner's debt does not increase the liability of the other partners, which remains proportional.

Uploaded by

Jerry Yan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
163 views2 pages

Island Sales v. United Pioneers General Construction Company

The document summarizes a court case between Island Sales, Inc. and United Pioneers General Construction Company regarding an unpaid promissory note. United Pioneers General Construction Company, a partnership of 5 partners, purchased a vehicle from Island Sales on an installment plan but failed to make payments. Island Sales sued the partnership and its 5 partners. One partner was declared in default while another was dismissed from the complaint by Island Sales. The remaining two partners, Daco and Sim, argued their liability should be limited to one-fifth of the partnership debt since there were originally 5 partners. The court agreed, ruling that condoning one partner's debt does not increase the liability of the other partners, which remains proportional.

Uploaded by

Jerry Yan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Name: Yasie T.

Dungog

Subject: Agency, Trust and Partnership

Title: Island Sales v. United Pioneers General Construction Company

Citation: 65 SCRA 554

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

The defendant company ( UNITED PIONEERSGENERAL CONSTRUCTION COMPANY ET .AL ),a


general partnership duly registered under the laws of the Philippines, purchased from the
plaintiff ( ISLAND SALES, INC) a motor vehicle on installment basis and for this purpose executed
a promissory 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 as they 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
not exceed 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”

You might also like