G.R. No. L-45624; April 25, 1939
GEORGE LITTON, petitioner-appellant, vs. HILL & CERON, ET AL., respondents-appellees.

FACTS

Petitioner George Litton sold mining share certificates to Carlos Ceron, a managing partner of the brokerage partnership Hill & Ceron. Ceron issued a receipt on February 14, 1934, on a document bearing the firm name “Hill & Ceron” and signed by him. After a partial payment, a balance of P720 remained unpaid. Litton sued the partnership, its partners (Ceron and Robert Hill), and its surety. The trial court held only Ceron personally liable, absolving the partnership, Hill, and the surety. The Court of Appeals affirmed, finding Ceron acted in his individual capacity, not for the firm.

ISSUE

Whether the partnership Hill & Ceron is liable for the unpaid balance arising from the transaction entered into by its managing partner, Carlos Ceron, despite the lack of proof of consent from the other partner, Robert Hill.

RULING

Yes. The Supreme Court reversed the Court of Appeals. The partnership is liable. Under the Code of Commerce, third persons contracting with a managing partner of a commercial partnership are not required to ascertain whether that partner obtained the consent of the other partner(s). A managing partner is presumed to have authority to bind the firm in transactions within the partnership’s ordinary business. Here, the transaction involved stock brokerage, which was the very business of Hill & Ceron. Furthermore, the partnership’s dissolution was not registered in the commercial registry, so it remained binding on third parties. The legal provisions protect third parties acting in good faith and promote commercial dispatch. The contract is not annullable even if entered against the will of a co-partner, without prejudice to the firm’s right to seek reimbursement from the guilty partner. Thus, Hill & Ceron is solidarily liable for the unpaid balance.

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