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Pacific Commercial Co

The partnership Aboitiz & Martinez failed to pay a promissory note owed to Pacific Commercial Co. Martinez, an industrial partner who furnished no capital, appealed a ruling holding him responsible for the partnership's debt. The court ruled that under Article 127 of the Code of Commerce, all partners are personally and jointly liable for partnership debts, regardless of their status as capitalist or industrial partners. Article 141, cited by Martinez, refers only to distributing losses among partners and does not limit liability to third parties. The inability to pay a debt does not necessarily mean the partnership operated at a loss overall.

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81 views2 pages

Pacific Commercial Co

The partnership Aboitiz & Martinez failed to pay a promissory note owed to Pacific Commercial Co. Martinez, an industrial partner who furnished no capital, appealed a ruling holding him responsible for the partnership's debt. The court ruled that under Article 127 of the Code of Commerce, all partners are personally and jointly liable for partnership debts, regardless of their status as capitalist or industrial partners. Article 141, cited by Martinez, refers only to distributing losses among partners and does not limit liability to third parties. The inability to pay a debt does not necessarily mean the partnership operated at a loss overall.

Uploaded by

eliz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Pacific Commercial Co. vs.

Aboitiz & Martinez, et al


Gr no. 25007, 2 March 1926

Facts:
In 1919, De Silva, Guillermo and Vidal Aboitiz and Martinez formed “a regular, collective,
mercantile partnership” with a capital of P40,000 of which each of the partners Aboitiz and De
Silva furnished 1/3. Partner Martinez was an industrial partner and furnished no capital.

It was provided in the partnership article that Martinez was to receive 30 per cent of the
profits and that his responsibility for losses should not exceed the amount of the profits
received by him.

In 1922, the partnership executed a promissory note in favor of the plaintiff, the Pacific
Commercial Company. As security for the payment of the note, the partnership executed a
chattel mortgage in favor of the plaintiff on certain personal property.

The partnership failed to pay the debt, thus, the chattel mortgage was foreclosed, the
mortgaged property sold and the proceeds of the sale was paid over to the plaintiff. No further
payment on the note appears to have been made which prompted the plaintiff to brought an
action for the recovery of the unpaid balance with interest.

The court decided in favor of the plaintiff and against the partnership. The judgment
further provided that execution should first issue against the property of the partnership
Aboitiz & Martinez and that in the event of the insolvency of the partnership, it might issue
against the property of the partners De Silva and Aboitiz, and in the event of their insolvency
partner Martinez.

Martinez appealed and maintains that as an industrial partner, he cannot be held


responsible for the partnership’s debt.

Issue:
Whether Martinez, an industrial partner, be held to pay for the partnership’s debt.

Ruling:
Yes.
Art. 127 of the Code of Commerce provides: “All the members of the general copartnership, be
they or be they not managing partners of the same, are liable personally and in solidum with all their
property for the results of the transactions made in the name and for the account of the partnership,
under the signature of the later, and by a person authorized to make use thereof.”

Art. 141, upon which the appellant relies and which provides that “losses shall be
computed in the same proportion among the capitalist partners without including the industrial
partners, unless by special agreement the latter have been constituted as participants therein,” is
susceptible of two different interpretations of which that given it in the Companñia Maritima
case, that it relates merely to the distribution of losses among the partners themselves in the
settlement of the partnership affairs and has no reference to partnership obligations to third
parties.

There is a marked distinction between a liability and a loss, and the inability of a
partnership to pay a debt to a 3rd party at a particular time does not necessarily mean that the
partnership business, as a whole, has been operated at a loss.

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