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Diges 5

William Uy and Bartolome Puzon formed a partnership to be subcontractors for road and bridge construction projects. Puzon promised to contribute $50,000 but was short on cash, so he promised the proceeds of a $150,000 loan would go to the partnership. However, Puzon assigned the project payments to pay off his personal loan without Uy's knowledge. When Uy demanded Puzon contribute his share, Puzon failed to do so and terminated the partnership. The court ruled Puzon was liable for failing to contribute capital as promised and assigning payments in a way that prejudiced the partnership.

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57 views

Diges 5

William Uy and Bartolome Puzon formed a partnership to be subcontractors for road and bridge construction projects. Puzon promised to contribute $50,000 but was short on cash, so he promised the proceeds of a $150,000 loan would go to the partnership. However, Puzon assigned the project payments to pay off his personal loan without Uy's knowledge. When Uy demanded Puzon contribute his share, Puzon failed to do so and terminated the partnership. The court ruled Puzon was liable for failing to contribute capital as promised and assigning payments in a way that prejudiced the partnership.

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Jeepers Kreepers
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© © All Rights Reserved
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William Uy v.

Bartolome Puzon
G.R. No. L-19819 in relation to Art. 1786
Art. 1786 –
Every partner is a debtor of the partnership for whatever he may have promised to contribute
thereto.
He shall also be bound for warranty in case of eviction with regard to specific and determinate
things which he may have contributed to the partnership, in the same cases and in the same
manner as the vendor is bound with respect to the vendee. He shall also be liable for the fruits
thereof from the time they should have been delivered, without the need of any demand.
FACTS:
Bartolome Puzon had contracts with the government to construct roads and bridges. In
need of financial assistance, Puzon proposed to create a partnership with William Uy where the
said partnership would be the sub-contractor of the projects, and to divide the profits among
themselves. They both agreed to contribute Php50,000 each. However, since Puzon was short of
cash, he promised to contribute his share in the capital upon approval of his loan application
with the Philippine National Bank in the amount of Php150,000. William Uy advanced
Php40,000 in the interim. Puzon promised Uy that the proceeds of his loan would be given to
the partnership (Php40,000 as reimbursement of Uy’s capital contribution, Php50,000 as
Puzon’s own contribution, and Php60,000 as Puzon’s personal loan to the partnership. In order
to guarantee the PNB loan and unknown to William Uy, Puzon assigned the receivable payments
for the projects to PNB to pay off his own loan.
Uy had been the one in charge of managing the projects of the partnership. Due to the
financial demands of the projects, Uy demanded that Puzon place his capital contribution to the
partnership. However, Puzon failed to comply with the demands. Puzon thereafter terminated
the sub-contract agreement with the partnership in effect disallowing Uy to hold office in the
U.P. Construction Company and revoking his authority to negotiate with the Public Works
Bureau. This prompted William Uy to filed a suit for the dissolution of the partnership with
damages.

ISSUE:
Whether or not Puzon is liable for his contribution to the partnership, and damages.

RULING:

YES. Puzon failed to contribute capital to the partnership. When his loan was approved, he only
gave Php60,000 to Uy. Puzon never made any additional contribution thereafter. His assignment
of the project payments to his own personal loan was also prejudicial to the partnership.
Appellant had been remiss in his obligations as partner and as prime contractor of the
construction projects in question.

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