Tuason v. Zamora
REITERATIONFacts
The Antecedents: Don Mariano Tuason and Don Manuel Garcia San Pedro formed a mercantile partnership en comandita with Luis Vives, known as "Luis Vives & Co." Upon Vives' death, the partnership dissolved and was reorganized on December 31, 1898, as "Tuason & San Pedro," composed solely of the surviving partners. This new partnership assumed the business of the former, including wood sawing and building contracting, with liability retroactive to July 11, 1897. In February 1898, Don Mariano Tuason entered into a contract with Don Juan Feliciano for the construction of a house, without explicitly stating it was on behalf of the firm "Tuason & San Pedro." A protest dated June 23, 1898, regarding the house's delivery was made by Don Manuel San Pedro on behalf of "Tuason & San Pedro," noting that Don Mariano Tuason had contracted for the building. Procedural History: On August 25, 1900, Tuason & San Pedro filed an action to recover the price of the house built. The defendants objected to the partnership's right to sue. The Petition: The core issue was whether a partnership could sue on a contract made by one partner in his own name, and whether payment should be made to the partnership.
Issue(s)
Whether a partnership can maintain an action in its own behalf upon a contract entered into by one of the partners in his own name. Whether payment for the house construction should be made to the partnership.
Ruling
The Supreme Court affirmed the judgment of the lower court, holding that the action brought by the partnership will lie and that payment made to the partnership under the stated circumstances will be perfectly legal. The Court modified the legal grounds of the appealed judgment concerning the payment of the house price, clarifying that the owner and his heirs are bound to pay the agreed price because the house burned after the work was terminated and after the defendants were in default for failing to receive it.
Ratio Decidendi
On the issue of whether a partnership can maintain an action in its own behalf upon a contract entered into by one of the partners in his own name: The Court held that the action will lie. The facts showed that the partnership claimed ownership of the credit through its protest, possessed the relevant documents, and its attorney held a power of attorney from the managing partner. The Court reasoned that everything Tuason might have done was being done by the partnership, and after the partnership's actions, Tuason could do nothing further. The action was considered solidary, meaning the result would be the same whether brought by the partnership or by Tuason alone. Citing Article 1162 of the Civil Code and Manresa's commentaries, the Court explained that payment should be made to the person who is the creditor at the time payment is due, which in this case was the partnership. The Court further noted that although Tuason may have operated in his own name, it was not with his private funds, and the contract was communicated to the partnership, which became responsible for it under Article 134 of the Code of Commerce. The Court concluded that the responsibility of the partner Tuason was included in the responsibility of Tuason & San Pedro, and since it was a general partnership, the liability of the firm was not less than the personal liability of the partner. Therefore, the exception taken by the defendant was deemed practically unnecessary, although theoretically supportable. On the issue of whether payment for the house construction should be made to the partnership: The Court ruled in the affirmative. The Court found that the partnership was the rightful entity to receive payment. The reasoning for this was intertwined with the first issue: the partnership had assumed the business and liabilities of the contract, and the partner who entered into the contract had done so in a manner that bound the partnership. The Court's modification of the lower court's conclusion clarified that the obligation to pay the price was due to the contractor (and by extension, the partnership) because the house burned after the work was terminated and after the defendants had defaulted in their obligation to receive it. This default, coupled with the termination of work, meant the contractor had fulfilled his part, and the risk of loss due to the fire fell upon the owner, who was then still obligated to pay the agreed price to the entity entitled to receive it, which was the partnership.
Main Doctrine
A partnership can maintain an action in its own behalf upon a contract entered into by one of its partners in his own name, provided the partnership assumes the business and the liability related to the contract, and the partner acted within the scope of his authority as managing partner.