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  • ISLAND SALES v. United Pioneers

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    This case involves a dispute over the pro rata liability of partners in a partnership. United Pioneers General Construction Company purchased a vehicle from Island Sales on an installment plan but failed to make payments. Island Sales sued United Pioneers and its five partners. The complaint against one partner was dismissed at Island Sales' request. The remaining partners argued their liability should be limited to one-fifth each since there were originally five partners. The court agreed, finding that dismissing the complaint against one partner did not change his status as a partner, but merely condoned his individual liability. Under the Civil Code, partners are liable pro rata based on the original number of partners.

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    This case involves a dispute over the pro rata liability of partners in a partnership. United Pioneers General Construction Company purchased a vehicle from Island Sales on an installment plan but failed to make payments. Island Sales sued United Pioneers and its five partners. The complaint against one partner was dismissed at Island Sales' request. The remaining partners argued their liability should be limited to one-fifth each since there were originally five partners. The court agreed, finding that dismissing the complaint against one partner did not change his status as a partner, but merely condoned his individual liability. Under the Civil Code, partners are liable pro rata based on the original number of partners.

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    17 views2 pages

    ISLAND SALES v. United Pioneers

    Uploaded by

    Susie Soto
    This case involves a dispute over the pro rata liability of partners in a partnership. United Pioneers General Construction Company purchased a vehicle from Island Sales on an installment plan but failed to make payments. Island Sales sued United Pioneers and its five partners. The complaint against one partner was dismissed at Island Sales' request. The remaining partners argued their liability should be limited to one-fifth each since there were originally five partners. The court agreed, finding that dismissing the complaint against one partner did not change his status as a partner, but merely condoned his individual liability. Under the Civil Code, partners are liable pro rata based on the original number of partners.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    of 2

    ISLAND SALES v.

    UNITED PIONEERS GENERAL CONSTRUCTION COMPANY


    GR No. L-22493; July 31, 1975.

    CONCEPCION, JR., J.:

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

    FACTS:
    UNITED PIONEERS GENERAL CONSTRUCTION COMPANY ET.AL (defendant), a general
    partnership duly registered under the laws of the Philippines, purchased from ISLAND SALES,
    INC. (plaintiff) a motor vehicle on an installment basis and for this purpose executed a
    promissory note payable in twelve (12) equal monthly installments, 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.

    Upon failure of United Pioneers to pay an installment, Island Sales sued it for the unpaid
    balance. Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto
    Palisoc were included in their capacity as general partners of the said company.

    Daniel A. Guizona failed to file an answer and was consequently declared in default.
    Subsequently, on motion of Island Sales, the complaint was dismissed insofar as the defendant
    Romulo B. Lumauig is concerned. The rest of the defendants failed to appear at the hearing and
    were declared in default.

    Judgment was rendered against the partnership and the four (4) partners, excluding Lumauig
    whose case was dismissed at the motion of Island Sales.

    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 United Pioneers company.

    The lower court denied the said motion, 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 each partner shall be limited to only one-fifth ( 1/ 5 ) of the obligations
    of the united Pioneers. The fact that the complaint against the defendant Romulo B. Lumauig
    was dismissed, upon motion of the Island Sales, does not unmake the said Lumauig as a general
    partner in the United Pioneers company. In so moving to dismiss the complaint, Island Sales
    merely condoned Lumauig's individual liability to it.

    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”

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