Stela contributed PHP 4 million, while Barbie and Choco contributed PHP 1 million each for their partnership. Zia is an industrial partner and did…

Explanation

Article 1816 of the Civil Code establishes that all partners, including industrial partners who contribute services instead of capital, are liable to third-party creditors for partnership debts. This liability is pro rata, meaning each partner is liable only for their proportionate share, and it arises only after the partnership's assets have been exhausted. Article 1817 invalidates any agreement that attempts to exempt partners from this liability as to third parties, although such agreements may be valid among the partners themselves. Article 1797 allows industrial partners to be exempt from losses in the partnership's internal distribution of profits and losses, but this exemption does not extend to liability to third-party creditors.

The Supreme Court in Maritima v. Muñoz clarified that industrial partners cannot be relieved from liability to third parties for partnership debts, even if they do not contribute capital. Similarly, in Guy v. Gacott, the Court emphasized that partners' liability to creditors is subsidiary and joint, and that partners can only be held liable after partnership assets are exhausted.

Application to the facts

In this case, Barbie and Choco contributed capital, while Zia is an industrial partner who contributed no capital. The partnership agreement provides that Barbie and Zia are exempt from any share in liabilities and losses. However, such stipulations are void as to third-party creditors under Article 1817. Therefore, despite the agreement, Barbie and Zia remain liable to the creditors Glen and Froilan.

Since the partnership went bankrupt and lost all its assets, the creditors have a judgment against the partnership and the partners for PHP 3 million. Under Article 1816, the partners are liable pro rata with all their property after the partnership assets have been exhausted. The partnership assets are already exhausted due to bankruptcy, so the partners, including Barbie and Zia, are liable to the creditors.

Barbie, as a capitalist partner, is liable for her share of the debts. Zia, although an industrial partner who did not contribute capital and was exempted from losses internally, is still liable to third-party creditors because the law does not allow exemption from liability to third parties. The agreement among the partners cannot exempt Zia from liability to creditors.