MICHAEL C.

GUY, Petitioner

VS.

ATTY. GLENN C. GACOTT, Respondent

FACTS

Atty. Glenn C. Gacott (Gacott) from Palawan purchased two (2) brand new trnasreceivers from Quantech
Systems Corporation (QSC) in Manila on March 3, 1997 through Rey Medestomas (Medestomas),an
employee, with a total worth of P18,000.00. Gacott personally returned the transreceivers due to major
defects. Medestomas promised to replace the units within two (2) weeks from May 10, 1997.

Gacott gone through several demands orally and in writing but there was still no replacement or refund
received. With this, Gacott filed a complaint for damages. Summons was served upon QSC and
Medestomas then an answer was filed by them, verified by Medestomas and someone names Elton Ong
(Ong). During the trial, no evidende was presented by QSC and Medestomas.

Regional Trial Court (RTC) made a final decision in favor of the plaintiff, and QSC and Medestomas did
not interpose an appeal. Gacott secured a Writ of Execution on September 26, 2007. And he eventually
learned that QSC was originally a general partnership registered with the Securities and Exchange
Commission (SEC). In its articles of partnership, the appointed General Manager of QSC was Michael C.
Guy.

Branch Sheriff Ronnie L. Felizarte was instructed by Gacott to attach of one of the motor vehicles of Guy
based on the certification issued by the DOTC-LTO. Afterwards, Guy received a notice that his vehicle
was attached by virtue of the Notice of Attachment/Levy upon Personalty. A Motion to Lift Attachment
Upon Personalty was filed by Guy stating that he was not a judgment debtor. Then, an opposition to the
motion was filed by Gacott.

The RTC denied Guy’s motion and found that the property of Guy may be validly attached in lieu of the
liabilities of Quantech Corporation as the latter is an ostensible corporation and Guy being considered by
the RTC as a general partner imposing a joint ans several liability to defendants.

The Court of Appeals (CA) emphasized that Guy was bound by the summons served upon QSC based on
the Article 1821 of the Civil Code. Further, it stated that the partner need not be actually involved in a
suit for him to be liable.

ISSUE
 1. Whether or not Petitioner Guy is solidarily liable with the partnership
2. Whether or not Petitioner Guy is bound to be liable for damages arising from the breach of the
contract of sale with Respondent Gacot.

RULINGS

No, Michael Guy is not solidarily liable with the partnership and is not bound to be liable for damages
arising from the breach of the contract of sale with Respondent Gacot.

A partner must be separate and distinctly impleaded before a judgment can be made. Although partners
can generally represent the business in its ordinary affairs based on the concept of mutual agency, it still
does not follow that a suit against the partnership is necessarily a suit impleading each and every
partner as the partnership is a juridical entity that has a distinct and separate personality from the
persons making it. Moreover, in the Article 1821 of the Civil Code, the provision shows that notice to
any partner, serves as a notice to the partnership and not in the other way around unless there is an
unequivocal law stating that a partner should be automatically charged.

Partners’ liability is subsidiary and generally joint, immediate levy upon the property of partner cannot
be done. Article 1816 provides that all partners shall only be liable with their property after all the
partnership assets have been exhausted. It also states that partner’s obligation to third persons with
regards to the partnership’s liability is pro rate or joint. Solidary liability was never presumed as per
Article 1207 unless the obligation or the law so provides.

In the Article 1824, all partners should be held as solidarily liable with the partnership for any charges
that it will incur under the Articles 1822 and 1823. The later articles makes the partners solidarily liable if
any wrongful act or omission of any partner was committed under the ordinary course of business. But
in this case, Guy and the other partners did not commit any wrongful act. Instead, the liability was from
the breach of warranty in a contractual obligation entered into in the name and account of the
partnership and not due to the acts of any of the partners.

Therefore, the petition was granted. The CA decision was reversed and an order to release Michael C.
Guy’s motor vehicle was made.

n the case at bench, it was not shown that Guy or the other partners did a wrongful act or misapplied
the money or property he or the partnership received from Gacott. A third person who transacted with
said partnership can hold the partners solidarily liable for the whole obligation if the case of the third
person falls under Articles 1822 or 1823.41 Gacott’s claim stemmed from the alleged defective
transreceivers he bought from QSC, through the latter's employee, Medestomas. It was for a breach of
warranty in a contractual obligation entered into in the name and for the account of QSC, not due to the
acts of any of the partners. For said reason, it is the general rule under Article 1816 that governs the
joint liability of such breach, and not the exceptions under Articles 1822 to 1824. Thus, it was improper
to hold Guy solidarily liable for the obligation of the partnership.

COURT RULINGS

Jurisdiction over the person – is the power of the court to render personal judgment or to subject the
paties in a particular action based on the judgment and other rulings rendered in the action. – it is part
of the due process. Plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court,
while defendant, the court acquired jurisdiction over his person either by proper service of the
summons or by his coluntary appearance in the actions

Under section 11, rule 14, of 1997 revised rules of civil procedure, the defendant is a corporation,
partnership or assoc organized under the laws of the Philippines with juridical personality, the service of
summon may be made o president managing partner, gen manager, corpo secretary, treasurer, or in
house counsel. Provisions prvides an exclusive enumeration of the persons authorized to receive
summons for juridical entities

So in this case, yung qsc was never shown to have been served with summons through any of the
enumerated authorized person. And under SECTION 11, service of summon upon persons other than
those officers enumerated is invalid. SO KAHIT YUNG SUBSTANTIAL COMPLIANCE IS NOT SUFFICIENT
SERVICE OF SUMONS> CA WAS OBVIOUSLY MISTAKEN na immaterial daw whether summon to qsc was
served on the theory that it was a corpo.

However, the lack or dfect in service of summons may be cured by the defendants subsequent voluntary
submission to the court’s jurisdiction through his filing a responsive pleasing as an answer. So QSC filed
its answer despite the defective summons THUS, JURISDICTION OVER ITS PERSON WAS ACQUIRED
THROUGH VOLUNTARY APPEARANCE.

#2 ; IS THE JURISDICTION OVER QSC EXTENDED TO GUY INSOFAR AS HOLDING HIM SOLIDARILY LIABLE
WITH THE PARTNERSHIP – THROUGH A THOROUGH STUDY OF RELEVANT LAWS, AND JUSPRUDENCE,
THE ANSWER “NO”!!!!!

THOUGH BASEDSA MUTUAL AGENCY ANG PARTNERSHIP, WHEREANY PARTNER CAN GENERALLY
REPRESENT THE BUSINESS IN ITS BUSINESS AFFAIRS, IT STILL DOES NOT FOLLOW THAT A SUIT AGAINST
THE PARTNERSHIP IS NECESSARILLY A SUIT IMPLEADING EACH AND EVERY PARTNER, SINCE
PARTNERSHIP IS A JURIDICAL ENTITY THAT HAS A DISTINT AND SEPARATE PERSONALITY FROM THE
PERSONS COMPOSING IT.
Article 1821 OF CC, so ang notice to any partneroperates as notice to or knowledge to the partnership
only and not in the other way around. Unless there is an unequivocal law which states that a partner is
automatically charged in a complaint against the partnership. There should be a due process where a
partner must first be impleaded before being considered as a judgment debtor.

The partner’s liability is subsidiary and generally joint , immediate levy upon the property of partner is
not allowed.

Granting that Guy was properly impleaded in the complaint, the execution of judgment would be
improper. Article 1816 of the Civil Code governs the liability of the partners to third persons, which
states that:

Article 1816. 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 a partnership
contract.( THIS SAYS THAT : 1st,  the partners’ obligation with respect to the partnership liabilities is
subsidiary in nature. It provides that the partners shall only be liable with their property after all the
partnership assets have been exhausted. Therefore, Guy could only be held personally liable if
properly impleaded and after all partnership assets had been exhausted.

Second,  Article 1816 provides that the partners’ obligation to third persons with respect to the
partnership liability is pro rata  or joint.1âwphi1 Liability is joint  when a debtor is liable only for the
payment of only a proportionate part of the debt. In contrast, a solidary  liability makes a debtor liable
for the payment of the entire debt. In the same vein, Article 1207 does not presume solidary liability
unless: 1) the obligation expressly so states; or 2) the law or nature requires solidarity. With regard to
partnerships, ordinarily, the liability of the partners is not solidary. 39 The joint liability of the partners
is a defense that can be raised by a partner impleaded in a complaint against the partnership.

In other words, only in exceptional circumstances shall the partners’ liability be solidary in nature.
Articles 1822, 1823 and 1824 of the Civil Code provide for these exceptional conditions, to wit:

Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of
the business of the partnership or with the authority of his co-partners, loss or injury is caused to any
person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable
therefor to the same extent as the partner so acting or omitting to act.

Article 1823. The partnership is bound to make good the loss:

(2) Where the partnership in the course of its business receives money or property of a third person
and the money or property so received is misapplied by any partner while it is in the custody of the
partnership.

Article 1824. All partners are liable solidarily with the partnership for everything chargeable to the
partnership under Articles 1822 and 1823.

[Emphases Supplied]

In essence, these provisions articulate that it is the act of a partner which caused loss or injury to a
third person that makes all other partners solidarily liable with the partnership because of the
words "any wrongful act or omission of  any partner  acting in the ordinary course of the business,"
"one partner  acting within the scope of his apparent authority"  and "misapplied by  any partner  while
it is in the custody of the partnership."  The obligation is solidary because the law protects the third
person, who in good faith relied upon the authority of a partner, whether such authority is real or
apparent.40

In the case at bench, it was not shown that Guy or the other partners did a wrongful act or misapplied
the money or property he or the partnership received from Gacott. A third person who transacted
with said partnership can hold the partners solidarily liable for the whole obligation if the case of the
third person falls under Articles 1822 or 1823.41 Gacott’s claim stemmed from the alleged defective
transreceivers he bought from QSC, through the latter's employee, Medestomas. It was for a breach
of warranty in a contractual obligation entered into in the name and for the account of QSC, not due
to the acts of any of the partners. For said reason, it is the general rule under Article 1816 that governs
the joint liability of such breach, and not the exceptions under Articles 1822 to 1824. Thus, it was
improper to hold Guy solidarily liable for the obligation of the partnership.

Finally,  Section 21 of the Corporation Code,42 as invoked by the RTC, cannot be applied to sustain
Guy's liability. The said provision states that a general partner shall be liable for all debts, liabilities
and damages incurred by an ostensible corporation. It must be read, however, in conjunction with
Article 1816 of the Civil Code, which governs the liabilities of partners against third persons.
Accordingly, whether QSC was an alleged ostensible corporation or a duly registered partnership, the
liability of Guy, if any, would remain to be joint and subsidiary because, as previously stated, all
partners 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.

WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the March 5, 2013 Resolution
of the Court of Appeals in CA-G.R. CV No. 94816 are hereby REVERSED and SET ASIDE. Accordingly, the
Regional Trial Court, Branch 52, Puerto Princesa City, is ORDERED TO RELEASE Michael C. Guy's Suzuki
Grand Vitara subject of the Notice of Levy/ Attachment upon Personalty.
SO ORDERED.

Story

PETITIONER – Michael C. Guy

RESPONDENT – Atty. Glenn C. Gacott

March 3 1997 – date of purchase ng 2 brand new transreceivers from Quantech Sytems Corporation
(QSC) in manila through (Rey Medestomas – employee)

Worth 18000

May 10, 1997 – may major defecrs so Gacott returned the items and requested to be replaced.

Medestomas received the returned items and promised to send him the replacement units within 2
weeks from may 10 1997.

Time passed walang natanggap. Ayon sa QSC, no unit available daw, and hindi naman daw pwede
irefund. Despite sa maraming beses and demands , oral and written, gacott never receives the
replacement items or refund.

It caused gacott to incur expenses in total of 40936.44. so he filed a complaint for damages.

However, both did not present any evidence during the trial. So in a decision in:::::

In march 16,2007, RTC found that the 2 transreceivers were defective and were not replace or refunded
Gacott’s money.

The decision :::

The judgment is in favour of the plaintiff, ordering the defendants to jointly and severally pay plaintiff
the following:

1. Purchase price plus 6% per anum from March 3,1997 up to and until fully paid – 18k
2. Actual damages -- 40k
3. Moral damages – 75k
 4. Corrective damages – 100k
5. Attorney’s fees – 60k
6. Costs

SO ORDERED

The decision became final since di naman nag interpose ng appeal si qsc and medestomas.

Sept 26,2007 –executed a writ of execution, Pero nalaman ditoni gacott na hindi pala corpo ung qsc,
partnership pala. Registered sila sa SEC and sa articles of partnership, Guy was appointed as gen
manager of QSC

To investigate and execute judgment, Branch sheriff Ronnie l felizarte went sa main office nf Dept of
transpo and communications, land transpo office (DOTC-LTO)in quezon city to verify if the three had
personal properties registered sa kanila. And nalaman na si GUY had registered under his name. Tapos
ininstruct ni Gacott na mag lagay ng attachment sa isa sa motor vehic ni guy .

March 3, 2009 si sheriff ay nag attached by virtue ng notice of attachment/ levy upon personalty.

So si guy, ay nag file ng motion to lift attachment upon personalty, he argues that he was not judgment
debtor ans his vehicle should not be attached.

So gacott filed an opposition to the motion

RTC ORDER

Jun 28 2009 rtc issued an order na denying guys motion. Because qsc is not a corpo then guy should be
treated as a gen partner wherein he may be held jointly nad severally liable with qsc and medestomas

All those who act as corpo without authority shall be liable as gen partner for debts liab and damages
incurred. And any wrongful act or omission of partner acting in ordinary course of bus. Of parnetship,
loss or injury na nacuase to any person , or di naman pala partner, or any penalty na naincur,
partnership is liable sa same extent as the partner so acting or omitting to act. All partners are liable
solidarily with the partnership for everything chargeable to partnership

THEN, court finds and so holds the property of Michael guy may validly attached in satisfaction of the
liab adjudged by thus court agains qsc. MOTION TO LIFT ATTACHMENT UPON PERSONALTY submitted by
guy or movant is DENIED.

SO ORDERED
Di parin satisfied so nag file ng for reconsideration of the denial of his motion. Sabi niya under article
1824 of civil code, solidarily liab lang for partnership liab under exceptional circumstances, and dapat
para maging liable anf partner, dapat assets ng partnership ay ubos na or insolvent muna

Sa feb 19,2010, rtc issued an order denying his order. Kaya nag seek ng help si guy sa CA

CA said that guy being a partner in Qsc wa bound by summons served upon Qsc based on art. 1821 of
CC. Beause law did not require a partner to be actually involved in law suit in order for him to be liable.
He remained “solidarily liable whether he participated or not, whether he ratified it or not, or whether
he had knowledge of the act or omission.

In end, DENIED PARIN BY CA on march 5, 2013!!

Issue –there is a reversible error daw made by CA

Yunder 1822,1823,1824, of CC only applies when it stemmed from the act of a partner. Under 1816 of
cc, liability daw ng partners are joint and subsidiary in nature

Per bilang isang gen & managing partner ng qsc, sabi ni gacott, dapat hind imaging ignorant si guy sa
mga transactions ng qsc. (NNOTICE TO 1 partner, must be considered as notice to whole partnership

In contrary, guy contended that the jurisdiction over the person of the partnership was not acquired
because the summons was never served upon it or through any of its authorized office. And that the
partner’s liability was joint and subsidiary not solidary.

COURT RULINGS

Jurisdiction over the person – is the power of the court to render personal judgment or to subject the
paties in a particular action based on the judgment and other rulings rendered in the action. – it is part
of the due process. Plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court,
while defendant, the court acquired jurisdiction over his person either by proper service of the
summons or by his coluntary appearance in the actions

Under section 11, rule 14, of 1997 revised rules of civil procedure, the defendant is a corporation,
partnership or assoc organized under the laws of the Philippines with juridical personality, the service of
summon may be made o president managing partner, gen manager, corpo secretary, treasurer, or in
house counsel. Provisions prvides an exclusive enumeration of the persons authorized to receive
summons for juridical entities

So in this case, yung qsc was never shown to have been served with summons through any of the
enumerated authorized person. And under SECTION 11, service of summon upon persons other than
those officers enumerated is invalid. SO KAHIT YUNG SUBSTANTIAL COMPLIANCE IS NOT SUFFICIENT
SERVICE OF SUMONS> CA WAS OBVIOUSLY MISTAKEN na immaterial daw whether summon to qsc was
served on the theory that it was a corpo.

However, the lack or dfect in service of summons may be cured by the defendants subsequent voluntary
submission to the court’s jurisdiction through his filing a responsive pleasing as an answer. So QSC filed
its answer despite the defective summons THUS, JURISDICTION OVER ITS PERSON WAS ACQUIRED
THROUGH VOLUNTARY APPEARANCE.

#2 ; IS THE JURISDICTION OVER QSC EXTENDED TO GUY INSOFAR AS HOLDING HIM SOLIDARILY LIABLE
WITH THE PARTNERSHIP – THROUGH A THOROUGH STUDY OF RELEVANT LAWS, AND JUSPRUDENCE,
THE ANSWER “NO”!!!!!

THOUGH BASEDSA MUTUAL AGENCY ANG PARTNERSHIP, WHEREANY PARTNER CAN GENERALLY
REPRESENT THE BUSINESS IN ITS BUSINESS AFFAIRS, IT STILL DOES NOT FOLLOW THAT A SUIT AGAINST
THE PARTNERSHIP IS NECESSARILLY A SUIT IMPLEADING EACH AND EVERY PARTNER, SINCE
PARTNERSHIP IS A JURIDICAL ENTITY THAT HAS A DISTINT AND SEPARATE PERSONALITY FROM THE
PERSONS COMPOSING IT.

Article 1821 OF CC, so ang notice to any partneroperates as notice to or knowledge to the partnership
only and not in the other way around. Unless there is an unequivocal law which states that a partner is
automatically charged in a complaint against the partnership. There should be a due process where a
partner must first be impleaded before being considered as a judgment debtor.

The partner’s liability is subsidiary and generally joint , immediate levy upon the property of partner is
not allowed.

Granting that Guy was properly impleaded in the complaint, the execution of judgment would be
improper. Article 1816 of the Civil Code governs the liability of the partners to third persons, which
states that:
Article 1816. 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 a partnership
contract.( THIS SAYS THAT : 1st,  the partners’ obligation with respect to the partnership liabilities is
subsidiary in nature. It provides that the partners shall only be liable with their property after all the
partnership assets have been exhausted. Therefore, Guy could only be held personally liable if
properly impleaded and after all partnership assets had been exhausted.

Second,  Article 1816 provides that the partners’ obligation to third persons with respect to the
partnership liability is pro rata  or joint.1âwphi1 Liability is joint  when a debtor is liable only for the
payment of only a proportionate part of the debt. In contrast, a solidary  liability makes a debtor liable
for the payment of the entire debt. In the same vein, Article 1207 does not presume solidary liability
unless: 1) the obligation expressly so states; or 2) the law or nature requires solidarity. With regard to
partnerships, ordinarily, the liability of the partners is not solidary. 39 The joint liability of the partners
is a defense that can be raised by a partner impleaded in a complaint against the partnership.

In other words, only in exceptional circumstances shall the partners’ liability be solidary in nature.
Articles 1822, 1823 and 1824 of the Civil Code provide for these exceptional conditions, to wit:

Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of
the business of the partnership or with the authority of his co-partners, loss or injury is caused to any
person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable
therefor to the same extent as the partner so acting or omitting to act.

Article 1823. The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his apparent authority receives money or property
of a third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or property of a third person
and the money or property so received is misapplied by any partner while it is in the custody of the
partnership.

Article 1824. All partners are liable solidarily with the partnership for everything chargeable to the
partnership under Articles 1822 and 1823.

[Emphases Supplied]

In essence, these provisions articulate that it is the act of a partner which caused loss or injury to a
third person that makes all other partners solidarily liable with the partnership because of the
words "any wrongful act or omission of  any partner  acting in the ordinary course of the business,"
"one partner  acting within the scope of his apparent authority"  and "misapplied by  any partner  while
it is in the custody of the partnership."  The obligation is solidary because the law protects the third
person, who in good faith relied upon the authority of a partner, whether such authority is real or
apparent.40

In the case at bench, it was not shown that Guy or the other partners did a wrongful act or misapplied
the money or property he or the partnership received from Gacott. A third person who transacted
with said partnership can hold the partners solidarily liable for the whole obligation if the case of the
third person falls under Articles 1822 or 1823.41 Gacott’s claim stemmed from the alleged defective
transreceivers he bought from QSC, through the latter's employee, Medestomas. It was for a breach
of warranty in a contractual obligation entered into in the name and for the account of QSC, not due
to the acts of any of the partners. For said reason, it is the general rule under Article 1816 that governs
the joint liability of such breach, and not the exceptions under Articles 1822 to 1824. Thus, it was
improper to hold Guy solidarily liable for the obligation of the partnership.

Finally,  Section 21 of the Corporation Code,42 as invoked by the RTC, cannot be applied to sustain
Guy's liability. The said provision states that a general partner shall be liable for all debts, liabilities
and damages incurred by an ostensible corporation. It must be read, however, in conjunction with
Article 1816 of the Civil Code, which governs the liabilities of partners against third persons.
Accordingly, whether QSC was an alleged ostensible corporation or a duly registered partnership, the
liability of Guy, if any, would remain to be joint and subsidiary because, as previously stated, all
partners 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.

WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the March 5, 2013 Resolution
of the Court of Appeals in CA-G.R. CV No. 94816 are hereby REVERSED and SET ASIDE. Accordingly, the
Regional Trial Court, Branch 52, Puerto Princesa City, is ORDERED TO RELEASE Michael C. Guy's Suzuki
Grand Vitara subject of the Notice of Levy/ Attachment upon Personalty.

SO ORDERED.