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PNB VS LO

Defendant Eugenio Lo sets up, as a


general defense, that "Tai Sing &
Co. was not a general partnership,
and that the commercial credit in
current account which "Tai Sing &
Co. obtained from the plaintiff bank
had not been authorized by the
board of directors of the company,
nor was the person who subscribed
said contract authorized to make
the same, under the article of
copartnership.

Other allegations raised by the


Respondents:
o The firms name did not
comply
with
the
requirement of the Code of
Commerce that a firm name
should contain the names
of all of the partners, of
several of them, or only one
of them; hence, general
partners are not liable to
the bank.
o Acts of Kelam after the
death of Say Lian Ping, the
general manager, is not
binding upon the other
partners because the power
of attorney shall have
already ceased.

RTC: Defendants were ordered


jointly and severally to pay to pay
PNB

Facts:

Appellants Severo Eugenio Lo and


Ng Khey Ling, together with J. A.
Say Lian Ping, Ko Tiao Hun, On Yem
Ke Lam and Co Sieng Peng formed
a commercial partnership under
the name of "Tai Sing and Co. with
a capital of P40,000 contributed by
said partners. The firm name was
registered
in
the
mercantile
registrar in the Province of Iloilo.

Purpose: purchase and sale of


merchandise, goods, and native, as
well as Chinese and Japanese,
products, and to carry on such
business and speculations as they
might consider profitable.

J.A Say Lian Ping, in the articles of


partnership, was assigned as the
general
manager
of
the
partnership.

However, in 1917, he executed a


power of attorney in favor of Kelam
to act in his behalf as the manager
and administrator of the Tai Sing &
Co..

Subsequently,
Kelam
obtained
several loans from PNB the loan
was under the firms name. He
mortgaged
certain
personal
properties of Tai Sing & Co. as a
security for the loans.

Yap Seng, Severo Eugenio Lo, A.Y


Kelam and Ng Khey Ling executed
a power of attorney in favor of Sy
Tit to authorize the latter to obtain
credit from Plaintiff bank and
executed chattel mortgage to
secure the same.
The loans were not objected by any
of the partners.
Later, PNB sued the firm for nonpayment.

ISSUES:
(1) Whether or not the anomaly in the
firm name can be a ground for the
appellants to evade liability against
the bank?
(2) W/N the loans by the attorney-infact Kelam from PNB executed after
the death of the managing partner,
Say Lian Ping, were valid?
(3) W/N Defendants are jointly and
severally liable to PNB? (Note:
this case was decided in 1927.
New Civil Code provision on

pro rata liability of partners


does not apply)

the
members
of
a
general
partnership, be they managing
partners thereof or not, shall be
personally and solidarily liable with
all their property, for the results of
the transactions made in the name
and for the account of the
partnership, under the signature of
the latter, and by a person
authorized to use it.

HELD:
(1) No.
The anomalous adoption of the firm
name above noted does not affect the
liability of the general partners to third
parties under Article 127 of the Code
of Commerce. The object in requiring a
general
partnership
to
transact
business under the name of all its
members, of several of them, or of one
only, is to protect the public from
imposition and fraud; it is for the
protection of the creditors rather than
of the partners themselves. It is
unenforceable as between the partners
and at the instance of the violating
party, but not in the sense of depriving
innocent parties of their rights who
may have dealt with the offenders in
ignorance of the latter having violated
the law; and that contracts entered
into by a partnership firm defectively
organized are valid when voluntarily
executed by the parties, and the only
question is whether or not they
complied
with
the
agreement.
Therefore, appellants cannot invoke in
his defense the anomaly in the firm
name which they themselves adopted.
(2) Appellants were not able to prove
the alleged death of the managing
partner, Say Lian Ping. But even
assuming arguendo, his second
contention does not deserve merit
because (a) Kelam, in acting as a
GM, is also a partner and his
actions were never objected to by
the partners, and (b) it also
appeared from the evidence that
Lo, Kelam, Ng Khey ling and Yap
Seng, and authorized Sy Tit as
manager,
the
latter
having
obtained the loan from the Plaintiff
Bank.

(3) Article 127 of the Code of


Commerce which provides that all

SHARRUF AND CO. VS BALOISE FIRE


INSURANCE CO.
FACTS:

The plaintiffs Salomon Sharruf and


Elias Eskenazi were doing business
under the firm name of Sharruf &
Co.

They insured their stocks with


Defendant companies for insurance
of the merchandise they had in
stock.

Insurance
companies
issued
insurance policies in the total
amount of P40,000 in the name of
Sharruf & Co.

Thereafter, the plaintiffs executed a


contract of partnership between
themselves
wherein
they
substituted the name of Sharruf &
Co. with the Sharruf & Eskenazi,
stating
that
Elias
Eskenazi
contributed to the partnership, as
his capital, goods valued at
P26,299.94

A fire ensued at their building and


the merchandise insured was
subsequently destroyed by fire.
Sharuff and Eskenazi filed their
claim
against
the
insurance
company.
But
Defendant
companies refused to pay on the
ground that the policy was issued
in the name of Sharuff and Co. and
not Sharuff and Eskenazi.

The lower court ordered Baloise


Fire InsuranceCo., Sun Insurance

Office
Ltd.,
and
Springfield
Insurance Co., to pay the partners
Salomon Sharruf and Elias Eskenazi
P40,000 plus 8% interest.
ISSUE: W/N the Defendant insurance
companies may be liable for the payment
of insurance claims of Plaintiffs-appellees,
notwithstanding the change in their
business name?
HELD: Yes
While it is true that at the
beginning the plaintiffs had been doing
business in said name of "Sharruf & Co.",
insuring their business in said name, and
upon executing the contract of partnership
on August 26, 1933, they changed the title
thereof to "Sharruf & Eskenazi," the
membership of the partnership in question
remained unchanged, the same and only
members of the former, Salomon Sharruf
and Elias Eskenazi, being the ones
composing the latter, and it does not
appear that in changing the title of the
partnership they had the intention of
defrauding the herein defendant insurance
companies.
Therefore, the responsibility of said
defendants to the plaintiffs by virtue of the
respective insurance policies has not been
altered.

Note: SC still absolved Defendant companies from


liability because the claim was found to be
fraudulent. Findings were the following:

A person who presents a claim for damages


caused by fire to articles and goods not
existing at the time of the fire does so
fraudulently and his claim is fraudulent, and

when immediately after a fire that broke out


inside a completely locked building, lasting
scarcely 27 minutes, only about ten or
eleven partly burned and scorched cases,
some containing textiles and wrapping
paper and others, statutes of saints, have
been found without any trace of the
destruction of other cases by said fire, it can
neither logically nor reasonably be inferred
that 40 of said cases were inside the
building when the fire broke out.