AGENCY TRUST AND PARTNERSHIP | JO CHUNG CANG V. PACIFIC COMMERCIAL CO., 45 PHIL 142, SEPTEMBER 6, 1923
JO
CHUNG CANG V. PACIFIC COMMERCIAL CO.,
45
PHIL 142, SEPTEMBER 6, 1923
TOPIC/DOCTRINE
A limited partnership
that does not comply with the registration requirements shall be treated as a
general partnership in which all the members are liable for partnership debts.
FACTS
Following the presentation of an application to be
adjudged an insolvent by the "Sociedad Mercantil, Teck Seing & Co.,
Ltd.," the creditors, the Pacific Commercial Company, Piñol & Company,
Riu Hermanos, and W. H. Anderson & Company, filed a motion in which the
Court was prayed to enter an order: "(A) Declaring the individual partners
as described in paragraph 5 parties to this proceeding; (B) to require each of
said partners to file an inventory of his property in the manner required by
section 51 of Act No. 1956; and (C) that each of said partners be adjudicated
insolvent debtors in this proceeding." The trial judge first granted the
motion, but, subsequently, on opposition being renewed, denied it. It is from
this last order that an appeal was taken in accordance with section 82 of the
Insolvency Law.
The issue in the case relates to a determination of
the nature of the mercantile establishment which operated under the name of
Teck Seing & co., Ltd.
ISSUE
Whether
Teck Seing & Co., Ltd., should be treated
as a general partnership notwithstanding the failure of the firm name to
include the name of one of the partners.
RULING
Yes.
The court ruled that that to establish a limited partnership there must
be, at least, one general partner and the name of the least one of the general
partners must appear in the firm name. (Code of Commerce, arts. 122 [2], 146,
148.) But neither of these requirements have been fulfilled. The general rule is, that those
who seek to avail themselves of the protection of laws permitting the creation
of limited partnerships must show a substantially full compliance with such
laws. A limited partnership that has not
complied with the law of its creation is not considered a limited partnership
at all, but a general partnership in which all the members are liable.
(Mechem, Elements of Partnership, p. 412; Gilmore, Partnership, pp. 499, 595;
20 R C. L. 1064.)
Article 125 of the Code of Commerce provides that
the articles of general copartnership must estate the names, surnames, and
domiciles of the partners; the firm name; the names, and surnames of the
partners to whom the management of the firm and the use of its signature is
instrusted; the capital which each partner contributes in cash, credits, or
property, stating the value given the latter or the basis on which their
appraisement is to be made; the duration of the copartnership; and the amounts
which, in a proper case, are to be given to each managing partner annually for
his private expenses, while the succeeding article of the Code provides that
the general copartnership must transact business under the name of all its
members, of several of them, or of one only. Turning to the document before us,
it will be noted that all of the requirements of the Code have been met, with
the sole exception of that relating to the composition of the firm name.
On the question of whether the fact that the firm
name "Teck Seing & Co., Ltd." does not contain the name of all or
any of the partners as prescribed by the Code of Commerce prevents the creation
of a general partnership, Professor Jose A. Espiritu, as amicus curiæ,
states: My opinion is that such a fact
alone cannot and will not be a sufficient cause of preventing the formation of
a general partnership, especially if the other requisites are present and the
requisite regarding registration of the articles of association in the
Commercial Registry has been complied with, as in the present case. I do
not believe that the adoption of a wrong name is a material fact to be taken
into consideration in this case; first, because the mere fact that a person
uses a name not his own does not prevent him from being bound in a contract or
an obligation he voluntarily entered into; second, because such a requirement
of the law is merely a formal and not necessarily an essential one to the
existence of the partnership, and as long as the name adopted sufficiently
identity the firm or partnership intended to use it, the acts and contracts
done and entered into under such a name bind the firm to third persons; and
third, because the failure of the partners herein to adopt the correct name
prescribed by law cannot shield them from their personal liabilities, as
neither law nor equity will permit them to utilize their own mistake in order
to put the blame on third persons, and much less, on the firm creditors in
order to avoid their personal possibility.
