[No. 19892.

September 6, 1923]
TECK SEING & Co., LTD., petitioner and appellee.
SANTIAGO Jo CHUNG CANG ET AL., partners, vs.
PACIFIC COMMERCIAL COMPANY ET AL., creditors
and appellants.
1. MERCANTILE LAW CONTRACTS PARTNERSHIP
INSTANT
CASE.Held:
That
the
mercantile
establishment which operated under the name of Teck
Seing & Co., Ltd., and which was constituted

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Jo Chung Cang vs. Pacific Commercial Co.

by the document set forth in the decision, is not a

corporation, nor a cuenta en participacin (joint account
association), nor a sociedad annma, nor a sociedad en
comandita (limited partnership), nor a de facto
commercial association, but is a general partnership.
2. ID. ID. ID. LIMITED PARTNERSHIP.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.
3. ID. ID. ID. ID.To establish a limited partnership,
there must be, at least, one general partner and the name
of at least one of the general partners must appear in the
firm name. (Code of Commerce, arts. 122 [2], 146, 148.)
4. ID. ID. ID. DEFECTS IN THE ORGANIZATION FIRM
NAME ARTICLE 126 OF THE CODE OF COMMERCE,
CONSTRUED.Article 126 of the Code of Commerce
requires the general copartnership to transact business

under the name of all its members, or of several of them,

or of one only. The object of the article is manifestly to
protect the public against imposition and fraud.
5. ID. ID. ID. ID. ID. ID.Article 126 of the Code of
Commerce was intended more for the protection of the
creditors than of the partners themselves. A distinction
can be drawn between the right of the alleged partnership
to institute action when failing to live up to the provisions
of the law, or even the rights of the partners as among
themselves, and the right of a third person to hold
responsible a general partnership which merely lacks a
firm name, in order to make it a partnership de jure. The
law should be construed as rendering contracts made in
violation of it unlawful and unenforceable at the instance
of the offending party only, but not as designed to take
away the rights of innocent parties who may have dealt
with the offenders in ignorance of their having violated
the law.
6. ID. ID. ID. ID. ID. ID.The civil law and the common
law alike point to a difference between the rights of the
partners who have failed to comply with the law and the
rights of third persons who have dealt with the
partnership.
7. ID. ID. ID. ID. ID. ID.According to the Spanish civil
law, defects in the organization cannot affect relations
with third persons. Contracts entered into by commercial
associations defectively organized are valid when they are
voluntarily executed by the parties, if the only controversy
relates to whether or not they complied with the
agreement.

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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

8. ID. ID. ID. ID. ID. ID. FAILURE OF REGISTRY,

EFFECT.While the failure to register in the commercial
registry necessarily precludes the members from enforcing
rights acquired by them against third persons, such
failure cannot prejudice the rights of third persons.
(Decisions of the supreme court of Spain of December 6,
1887, January 25, 1888, November 10, 1890, and January
26, 1900.)

9. ID. ID. ID. ID. ID. ID. DECISION IN HUNGMANYoc

vs. KIENGCHIONGSENG, DISTINGUISHED.There
is a marked difference between the facts of the case of
HungManYoc vs. KiengChiongSeng ([1906], 6 Phil.,
498), and the facts of the instant case.
10 . ID. ID. ID. ID. ID. ID. TEST OF PARTNERSHIP.
The legal intention deducible from the acts of the parties
controls in determining the existence of a partnership. If
they intend to do a thing which in law constitutes a
partnership, they are partners, although their purpose
was to avoid the creation of such relation.
11. ID. ID. ID. ID. ID. ID. BANKRUPTCY AND
INSOLVENCY LIABILITY OF PARTNERSHIP AND
PARTNERS.If a firm be insolvent, but one or more
partners thereof are solvent, the creditors may proceed
both against the firm and against the solvent partner or
partners, first exhausting the assets of the firm before
seizing the property of the partners.

APPEAL from an order of the Court of First Instance of

Cebu. Abeto, J.
The facts are stated in the opinion of the court.
Del Rosario & Del Rosario and Block, Johnston &
Greenbaum for appellants.
F. V. Arias for appellees Jo Ibec and Go Tayco.
No appearance for petitioner and appellee.
Jose A. Espiritu and Felipe Ysmael as amici curi.
MALCOLM, J.:
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, Piol
& Company, Riu Hermanos, and W. H. Anderson
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Jo Chung Cang vs. Pacific Commercial Co.

& 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.
There has been laid before us for consideration and
decision a question of some importance and of some
intricacy. 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., and
this issue requires us to look into, and analyze, the
document constituting Teck Seing & Co., Ltd, It reads:
"ESCRITURA DE SOCIEDAD MERCANTIL LIMITADA"
"Sepan todos por la presente:
"Que nosotros, Santiago Jo Chung Cang, mayor de edad,
comerciante, vecino y residente del municipio de Tabogon,
Provincia de Ceb, Islas Filipinas, Go Tayco, mayor de edad,
comerciante, vecino y residente del municipio de Ceb, Provincia
de Ceb, Islas Filipinas, Yap Gueco, mayor de edad, comerciante,
vecino y residente del municipio y Provincia de Ceb, Islas
Filipinas, Lim Yogsing, mayor de edad, comerciante, vecino y
residente del municipio de Ceb, Provincia de Ceb, Islas
Filipinas, y Jo Ybec, mayor de edad, comerciante, vecino y
residente del municipio de Jagna, Provincia de Bohol, Islas
Filipinas, hacemos constar por la presente, que constituimos y f
ormamos una sociedad mercantil limitada, bajo las leyes vigentes
en las Islas Filipinas, y para ser registrada de acuerdo con los
reglamentos vigentes del Cdigo de Comercio en Filipinas.
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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

"Que la razn social se denominar "Teck Seing & Co., Ltd." y

tendra su domicilio principal en la Calle Magallanes No. 94, de la
Ciudad de Ceb, Provincia de Ceb, Islas Filipinas.
"Que el capital social ser de treinta mil pesos (P30,000)
moneda legal de las Islas Filipinas, dividido en cinco acciones de a
P6,000 como sigue:
Santiago Jo Chung Cang
............................................

P6,000.00

Go Tayco ..................................................................

6,000.00

Yap Gueco ................................................................

6,000.00

Jo Ybec .....................................................................

6,000.00

Lim Yogsing .............................................................

6,000.00
____________

Total ..........................................................

30,000.00

"Que la duracin de la sociedad ser la de seis oos, a contar de

la fecha de esta escritura, pudiendo prorrogarse este tiempo a
discrecin unnime de todos los accionistas.
"El objeto de la sociedad ser la compra y venta de mercaderas
en general.
"El administrador o administradores de la sociedad podrn,
previa conformidad de los accionistas, establecer cuantas
sucursales o establecimientos considere necesarios para f acilitar
sus negocios y el mayor desarrollo del comercio a que se dedica la
sociedad, verificando todas las operaciones que crean
convenientes para el fomento de su capital.
"Las ganancias o prdidas que resultaren durante cada ao
comercial, se distribuirn proporcionalmente entre los accionistas,
de acuerdo con el capital aportado por cada uno de los mismos.
"Las ganancias que resultaren en cada ao comercial, si
resultaren algunas ganancias, no podrn ser retiradas por los
accionistas hasta dentro del trmino de tres aos, a contar de la
fecha del primer balance anual del negocio, quedando por tanto
estas ganancias en reserva, para ampliar el capital aportado por
los accionistas y ampliar por
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Jo Chung Cang vs. Pacific Commercial Co.

tanto la esfera de accin emprendida por la misma sociedad. Al
pasar o expirar el trmino de tres aos, cada accionista podr
retirar o depositar en poder de la sociedad, las ganancias que le
debieran corresponder durante dicho trmino de tres aos.
"Que los accionistas no podrn extraer ni disponer en ningn
tiempo cualesquiera cantidad o cantidades de la sociedad, que
haya sido aportado por los mismos, para atender sus gastos
particulares ni aun pagando rdito alguno sobre la cantidad que
intenten disponer o extraer de dicha sociedad.
"El accionista Sr. Lim Yogsing tendr a su cargo, en union del
Sr. Vicente Jocson Jo, la administracin de la Compaa, quienes
podrn usar indistintamente la firma social, quedando por
consiguiente autorizados ambos para hacer en nombre de ella
toda clase de operaciones, negocios y especulaciones mercantiles,
practicando judicial y extrajudicialmente cuantos actos se
requieran para el bien de la sociedad, nombrar procuradores o
abogados para reclamaciones y cobro de crditos y proponer ante

los tribunales las demandas, convenios, transacciones y

excepciones procedentes. En caso de ausencia, enfermedad o
cualquier otro impedimento del accionista administrador Sr. Lim
Yogsing, este podr conferir poder general o especial al accionista
que crea conveniente para que en union del administrador
auxiliar Sr. Vicente Jocson Jo, pudieran ambos administrar
convenientemente los negocios de la sociedad. Que los
administradores podrn tener los empleados necesarios para el
mejor manejo de los negocios de la sociedad, y fijarn los sueldos
que debieran percibir dichos empleados por servicios rendidos a la
sociedad.
"Que ambos administradores podrn disponer de mil doscientos
pesos (P1,200) moneda filipina, anualmente, para sus gastos
particulares, siendo dicha cantidad de P1,200 la que corresponde
a cada uno de dichos administradores, como emolumentos b
salarios que se les asigna a cada uno,
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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

por sus trabajos en la administracin de la sociedad.

Entendindose, que, los accionistas podrn disponer cada fin de
ao la gratificacin que se conceder a cada administrador, si los
negocios del ao fueran boyantes y justifiquen la concesin de una
gratificacin especial, aparte del salario aqu dispuesto y
especificado.
"Que pasado el trmino de seis aos, y es de la conveniencia de
los accionistas la continuacin del negocio de esta sociedad, dicho
trmino ser prorrogado por igual nmero de aos, sin necesidad
del otorgamiento de ulteriores escrituras, quedando la presente en
vigor hasta el trmino dispuesto por todos los accionistas.
"Que las diferencias que pudieran suscitarse entre los
accionistas, bien sea por razn de lo estipulado en esta escritura,
ya por actos en el curso y direccin de los negocios en ella
comprendidos, se procurar arreglar entre los mismos amistosa y
extrajudicialmente, y si no se consiguiere un arreglo de este modo,
dichos accionistas nombrarn un rbitro, cuya resolucin estn
todos obligados y por la presente se comprometen y se obligan a
acatarla en todas sus partes, renunciando ulteriores recursos.
"En cuyos trminos dejamos formalizada esta escritura de
sociedad mercantil limitada, y prometemos cumplirla fiel y
estrictamente segn los pactos que hemos establecido.
"En testimonio de todo lo cual, firmamos en la Ciudad de Ceb,
Provincia de Ceb, Islas Filipinas, hoy 31 de octubre de mil
novecientos diez y nueve.

(Fdos.) "LlM YOGSING

"Jo YBEC por Ho SENG SIAN
"SANTIAGO Jo CHUNG CANG
"Go TAYCO
"YAP GUECO
Firmado en presencia de:
(Fdos.) "ATILANO LEYSON
"JULIO DAZ
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Jo Chung Cang vs. Pacific Commercial Co.

"ESTADOS UNIDOS DE AMRICA
"ISLAS FlLIPINAS
"PROVINCIA DE CEB
"En el Municipio de Ceb, de la Provincia antes mencionada, I. F.,
hoy 31 de octubre de 1919, A. D., ante m, Notario Pblico que
subscribe, comparecieron personalmente Santiago Jo Chung
Cang, Go Tayco, Yap Gueco, Lim Yogsing y Jo Ybec, representado
este ltimo por Ho Seng Sian, segn autorizacin hecha en
telegrama de fecha 27 de septiembre de 1919 que se me ha
presentado en este mismo acto, de quienes doy f e de que les
conozco por ser las mismas personas que otorgaron el preinserto
documento, ratificando ante m su contenido y manifestando ser el
mismo un acto de su libre y voluntario otorgamiento. El Sr.
Santiago Jo Chung Cang me exhibi su cdula personal expedida
en Ceb, Ceb, I. F. el da 19 de septiembre de 1919 bajo el No.
H77742, Go Tayco tambin me exhibi la suya expedida en Ceb,
Ceb, I. F., el da 9 de octubre de 1919 bajo el No. G2042490, Yap
Gueco tambin me exhibi la suya expedida en Ceb, Ceb, I. F.
el da 20 de enero de 1919 bajo el No. F1452296, Lim Yogsing
tambin me exhibi la suya expedida en Ceb, Ceb, I. F., el da
26 de febrero de 1919 bajo el No. F1455662, y Ho Seng Sian
representante de Jo Ybec, me exhibi su cdula personal expedida
en Ceb, Ceb, I. F. el da 4 de febrero de 1919 bajo el No.
F1453733.
"Ante m,
(Fdo.) "F. V. ARIAS
"Notario Pblico
"Hasta el 1. de enero de 1920
"Asiento No. 157
Pgina No. 95 de mi
Registro Notarial

Serie 1919
Libro 2..
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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

"Presentado a las diez y cuarenta y tres minutos de la maana de

hoy, segn el asiento No. 125, pgina 9 del Tomo 1. del Libro
Diario. Ceb, 11 de febrero de 1920.
(Fdo.) "QUIRICO
[SELLO] "Registrador Mercantil ExOfficio
"Inscrito el documento que precede al folio 84 hoja No. 188,
inscripcin 1.a del Tomo 3. del Libro Registro de Sociedades
Mercantiles. Ceb, 11 de febrero de 1920. Honorarios treinta
pesos con cincuenta centavos. Art. 197, Ley No. 2711, Cdigo
Administrativo.
(Fdo.) "QUIRICO ABETO
[SELLO] "Registrador Mercantil ExOfficio"

Proceeding by process of elimination, it is selfevident that

Teck Seing & Co., Ltd., is not a corporation. Neither is it
contended by any one that Teck Seing & Co., Ltd., is the
accidental
partnership
denominated
cuenta
en
participacin (joint account association).
Counsel for the petitioner and appellee described his
client in one place in his opposition to the motion of the
creditors, as "una verdadera sociedad annima," (a true
sociedad annma). The provisions of the Code of
Commerce relating to sociedades annimas were, however,
repealed by section 191 of the Corporation Law (Act No.
1459), with the exceptions that sociedades annimas
lawfully organized at the time of the passage of the
Corporation Law were recognized, which is not our case.
The document providing for the partnership contract
purported to form "una sociedad mercantil limitada," and
counsel for the petitioner's first contention was that Teck
Seing & Co., Ltd. was not "una sociedad regular colectiva,
ni siquiera comanditaria, sino una sociedad mercantil
limitada " Let us see if the partnership contract created a
"sociedad en comandita," or, as it is known in English, and
will hereafter be spoken of, "a limited partnership.
To establish a limited partnership there must be, at
least, one general partner and the name of at least one of
the
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Jo Chung Cang vs. Pacific Commercial Co.

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.)
The contention of the creditors and appellants is that
the partnership contract established a general partnership.
Article 125 of the Code of Commerce provides that the
articles of general copartnership must state 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
intrusted 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. We leave
consideration of this phase of the case for later discussion.
The remaining possibility is the revised contention of
counsel for the petitioners to the effect that Teck Seing &
Co., Ltd. is "una sociedad mercantil 'de facto' solamente"
(only a de facto commercial association), and that the
decision of the Supreme Court in the case of HungManYoc
vs. KiengChiongSeng [1906], 6 Phil., 498), is controlling.
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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

It was this argument which convinced the trial judge, who

gave effect to his understanding of the case last cited and
which here must be given serious attention.
The decision in HungManYoc vs. KiengChiongSeng,
supra, discloses that the firm KiengChiongSeng was not
organized by means of any public document that the
partnership had not been recorded in the mercantile
registry and that KiengChiongSeng was not proven to be
the firm name, but rather the designation of the
partnership. The conclusion then was, that the partnership
in question was merely de facto and that, therefore, giving
effect to the provisions of article 120 of the Code of
Commerce, the right of action was against the persons in
charge of the management of the association.
Laying the facts of the case of HungManYoc vs.
KiengChiongSeng, supra, side by side with the facts before
us, a marked difference is at once disclosed. In the cited
case, the organization of the partnership was not evidenced
by any public document here, it is by a public document. In
the cited case, the partnership naturally could not present
a public instrument for record in the mercantile registry
here, the contract of partnership has been duly registered.
But the two cases are similar in that the firm name failed
to include the name of any of the partners.
We come then to the ultimate question, which is,
whether we should follow the decision in HungManYoc vs.
KiengChiongSeng, supra, or whether we should
differentiate the two cases, holding Teck Seing & Co., Ltd.,
a general copartnership, notwithstanding the failure of the
firm name to include the name of one of the partners. Let
us now notice this decisive point in the case.
Article 119 of the Code of Commerce requires every
commercial association before beginning its business to
state its articles, agreements, and conditions in a public
instrument, which shall be presented for record in the
mercantile registry. Article 120, next following, provides
that the persons in charge of the management of the
association who
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Jo Chung Cang vs, Pacific Commercial Co.

violate the provisions of the foregoing article shall be

responsible in solidum to the persons not members of the
association with whom they may have transacted business
in the name of the association. Applied to the facts before

us, it would seem that Teck Seing & Co., Ltd. has fulfilled
the provisions of article 119. Moreover, to permit the
creditors only to look to the person in charge of the
management of the association, the partner Lim Yogsing,
would not prove very helpful to them.
What is said in article 126 of the Code of Commerce
relating to the general copartnership transacting business
under the name of all its members or of several of them or
of one only, is wisely included in our commercial law. It
would appear, however, that this provision was inserted
more f or the protection of the creditors than of the
partners themselves. A distinction could well be drawn
between the right of the alleged partnership to institute
action when failing to live up to the provisions of the law,
or even the rights of the partners as among themselves,
and the right of a third person to hold responsible a general
copartnership which merely lacks a legal firm name in
order to make it a partnership de jure.
The civil law and the common law alike seem to point to
a difference between the rights of the partners who have
failed to comply with the law and the rights of third
persons who have dealt with the partnership.
The supreme court of Spain has repeatedly held that
notwithstanding the obligation of the members to register
the articles of association in the commercial registry,
agreements containing all the essential requisites are valid
as between the contracting parties, whatever the form
adopted, and that, while the failure to register in the
commercial registry necessarily precludes the members
from enforcing rights acquired by them against third
persons, such failure cannot prejudice the rights of third
persons. (See decisions of December 6, 1887, January 25,
1888, November 10, 1890, and January 26, 1900.) The
same reasoning would be
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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

applicable to the less formal requisite pertaining to the

firm name.
The common law is to the same effect. The State of
Michigan had a statute prohibiting the transaction of
business under an assumed name or any other than the
real name of the individual conducting the same, unless
such person shall file with the county clerk a certificate
setting forth the name under which the business is to be

conducted and the real name of each of the partners, with

their residences and postoffice addresses, and making a
violation thereof a misdemeanor. The Supreme Court of
Michigan said:
"The one object of the act is manifestly to protect the public
against imposition and fraud, prohibiting persons from concealing
their identity by doing business under an assumed name, making
it unlawful to use other than their real names in transacting
business without a public record of who they are, available for use
in courts, and to punish those who violate the prohibition. The
object of this act is not limited to facilitating the collection of
debts, or the protection of those giving credit to persons doing
business under an assumed name. It is not unilateral in its
application. It applies to debtor and creditor, contractor and
contractee, alike. Parties doing business with those acting under
an assumed name, whether they buy or sell, have a right, under
the law, to know who they are, and who to hold responsible, in
case the question of damages for failure to perform or breach of
warranty should arise.
"The general rule is well settled that, where statutes enacted to
protect the public against fraud or imposition, or to safeguard the
public health or morals, contain a prohibition and impose a
penalty, all contracts in violation thereof are void. * * *
"As this act involves purely business transactions, and affects
only money interests, we think it should be construed as rendering
contracts made in violation of it unlawful and unenforceable at the
instance of the offending party only.
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Jo Chung Cang vs. Pacific Commercial Co.

but not as designed to take away the rights of innocent parties who
may have dealt with the offenders in ignorance of their having
violated the statute." (Cashin vs. Pliter [1912], 168 Mich., 386
Ann. Cas. [1913C], 697.)

The early decision of our Supreme Court in the case of

Prautch, Scholes & Co. vs. Hernandez ([1903], 1 Phil., 705),
contains the following pertinent observations:
"Another case may be supposed. A partnership is organized for
commercial purposes. It fails to comply with the requirements of
article 119. A creditor sues the part nership for a debt contracted
by it, claiming to hold the partners severally. They answer that
their failure to comply with the Code of Commerce makes them a
civil partnership and that they are in accordance with article

1698 of the Civil Code only liable jointly. To allow such liberty of
action would be to permit the parties by a violation of the Code to
escape a liability which the law has seen fit to impose upon
persons who organized commercial partnerships 'Because it
would be contrary to all legal principles that the nonperformance
of a duty should redound to the benefit of the person in default
either intentional or unintentional.' (Mercantile Law, Eixal,
fourth ed., p. 145.)" (See also Lichauco vs. Lichauco [1916], 33
Phil., 350, 360.)

Dr. Jose de Echavarri y Vivanco, in his Cdigo de Comercio,

includes the following comment after articles 121 and 126
of the Code:
"From the decisions cited in this and in the previous comments,
the following is deduced: 1st. Defects in the organization cannot
affect relations with third persons. 2d. Members who contract
with other persons before the association is lawfully ully
organized are liable to these persons. 3d. The intention to form an
association is necessary, so that if the intention of mutual
participation in the profits and losses in a particular business is
proved, and there are no articles of association, there is no
association. 4th. An association, the articles of which have not
been registered,
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PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

is valid in favor of third persons. 5th. The private pact or

agreement to form a commercial association is governed not by
the commercial law but by the civil law. 6th. Secret stipulations
expressed in a public instrument, but not inserted in the articles of
association, do not affect third persons, but are binding on the
parties themselves. 7th. An agreement made in a public
instrument, other than the articles of association, by means of
which one of the partners guarantees to another certain profits or
secures him from losses, is valid between them, without affecting
the association. 8th. Contracts entered into by commercial
associations defectively organized are valid when they are
voluntarily executed by the parties, if the only controversy relates
to whether or not they complied with the agreement.
* * * * * * *
"The name of the collective merchant is called firm name. By
this name, the new being is distinguished from others, its sphere
of action fixed, and the juridical personality better determined,
without constituting an exclusive character of the general

partnership to such an extent as to serve the purpose of giving a

definition of said kind of a mercantile partnership, as is the case
in our Code.
"Having in mind that these partnerships are prevailingly of a
personal character, article 126 says that they must transact
business under the name of all its members, of some of them, or of
one only, the words 'and company' to be added in the latter two
cases.
"It is rendered impossible for the general partnership to adopt
a firm name appropriate to its commercial object the law wants
to link, and does link, the solidary and unlimited responsibility of
the members of this partnership with the formation of its name,
and imposes a limitation upon personal liberty in its selection, not
only by prescribing the requisites, but also by prohibiting persons
not members of the company from including their names in its
firm name under penalty of civil solidary responsibility.
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157

Jo Chung Cang vs. Pacific Commercial Co.

"Of course, the form required by the Code for the adoption of the
firm name does not prevent the addition thereto of any other title
connected with the commercial purpose of the association. The
reader may see our commentaries on the mercantile registry
about the business names and firm names of associations, but it is
proper to establish here that, while the business name may be
alienated by any of the means admitted by the law, it seems
impossible to separate the firm names of general partnerships
from the juridical entity for the creation of which it was formed."
(Vol. 2, pp. 197, 213.) ,

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 curi, 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
identify 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
158

158

PHILIPPINE REPORTS ANNOTATED

Jo Chung Cang vs. Pacific Commercial Co.

order to put the blame on third persons, and much less, on

the firm creditors in order to avoid their personal
responsibility."
The legal intention deducible from the acts of the parties
controls in determining the existence of a partnership. If
they intend to do a thing which in law constitutes a
partnership, they are partners, although their purpose was
to avoid the creation of such relation. Here, the intention of
the persons making up Teck Seing & Co., Ltd. was to
establish a partnership which they erroneously
denominated a limited partnership. If this was their
purpose, all subterfuges resorted to in order to evade
liability for possible losses, while assuming their enjoyment
of the advantages to be derived from the relation, must be
disregarded. The partners who have disguised their
identity under a designation distinct from that of any of the
members of the firm should be penalized, and not the
creditors who presumably have dealt with the partnership
in good faith.
Articles 127 and 237 of the Code of Commerce make all
the members of the general copartnership liable personally
and in solidum with all their property for the results of the
transactions made in the name and for the account of the
partnership, Section 51 of the Insolvency Law, likewise,
makes all the property of the partnership and also all the
separate property of each of the partners liable. In other
words, if a firm be insolvent, but one or more partners
thereof are solvent, the creditors may proceed both against
the firm and against the solvent partner or partners, first
exhausting the assets of the firm before seizing the
property of the partners. (Brandenburg on Bankruptcy, sec.

108 De los Reyes vs. Lukban and Borja [1916], 35 Phil.,

757 Involuntary Insolvency of Campos Rueda & Co. vs.
Pacific Commercial Co. [1922], 44 Phil., 916.) We reach the
conclusion that the contract of partnership found in the
document hereinbefore quoted established a
159

VOL. 45, SEPTEMBER 11, 1923

159

People vs. Bustos

general partnership or, to be more exact, a partnership as

this word is used in the Insolvency Law.
Wherefore, the order appealed from is reversed, and the
record shall be returned to the court of origin for further
proceedings pursuant to the motion presented by the
creditors, in conformity with the provisions of the
Insolvency Law. Without special finding as to the costs in
this instance, it is so ordered.
Araullo, C. J., Johnson, Street, Avancea, Villamor,
Johns, and Romualdez, JJ., concur.
Order reversed and record remanded with instructions.
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