Jose Charito I.

Cortez II Business Organization

HUNG-MAN YOC, IN THE NAME OF KWONG-WO-SING,

PLAINTIFF AND APPELLE, VS.
KIENG-CHONG-SENG ET AL., DEFENDANTS AND APPELLANTS.

Facts:

Private respondents came into an agreement to engage in the importation

of goods for sale at a profit under the firm name of Kieng-Chiong-Seng. The
private respondents were as follows:

a. Chua-Che-Co
b. Yu-Tec-Pin - Manager
c. Ang-Chu-Keng
d. Kiong-Tiao-Eng - Manager

The problem arose when Yu-Tec-Pin and Kiong-Tiao-Eng contracted

obligations in favor of the petitioner. When the respondents failed to comply with
the alleged obligation, the petitioner instituted an action for its enforceability. The
lower court entered judgment against each and all respondents for the sum of
7,372.75 pesos with 6% interest per annum. It further ruled that the respondents
were partners under the firm name of Kieng-Chiong-Seng.

Aggrieved by the decision, Chua-Che-Co appealed the decision

contending that there was no partnership that existed and that they only formed
an association. In fact, such organization was never registered and is not
evidenced by any public document. Also he never contracted with the petitioner.

The petitioner contended that there is no doubt that the partnership of

Kieng-Chiong-Seng was a mercantile partnership organized for the purpose of
engaging in commercial pursuits, although such organization was not evidenced
by any public document as required by Article 119 of the Code of Commerce, nor
was it registered as required by Article 17 of the said code.

Issue: 1. What kind of partnership existed?

2. Whether or not all the respondents can be held liable for the to the
petitioner

Ruling:

1. The partnership in dispute was a de facto partnership. Although it had

no legal standing, since it contracted obligations in favor of the plaintiff, the
liability arising from such obligations must be enforceable against some one.

The partnership in question not being included in any of the classes of

partnership defined by the Code of Commerce there should be applied to it the
general provisions applicable to all partnerships contained in Article 120 of the
Code of Commerce, which reads as follows:
The persons in charge of the management of the association
who do not comply with the provisions of the foregoing article (art.
119, which requires that the articles of partnership be recorded in
the Mercantile Register) shall be responsible together with the
persons not members of the association with whom they may have
transacted business in the name of the same.
 It has not been proven that Kieng-Chiong-Seng was the firm name, but
rather the designation of the partnership.

It cannot be the firm name of a general partnership because this should

contain the names of all the partners, or some of them, or at least one of them to
be, followed in the two latter cases by the words and company, whereas in this
case none of the four names of those who it is alleged were members of the firm
appear in the firm name of the partnership.

Neither can it be considered as the firm name of a limited partnership for

the reason that this should contain the same requisites as the firm name of a
general partnership, and in addition thereto the word limited. The firm name in
question has absolutely none of these requisites.

2. No. Not all respondents cannot be held liable. The defendant, Chua-
Che-Co, was not in charge of the management of the association, nor did he
make any contract at all with the plaintiff, as clearly appears from the testimony
of the various witnesses, the agent of the partnership, Yu-Yec-Pin, being the
person who made all the contracts for the partnership; also Kieng-Tiao-Eng
according to two of the witnesses. It is evident, therefore, that he has incurred no
liability and that he cannot be held individually responsible for the payment of the
plaintiffs claims, as the court below found.