Jo Chung Case

G.R. No.
19892 September 6, 1923
TECK SEING AND CO., LTD., petitioner-appellee.

SANTIAGO JO CHUNG, ET AL., partners,
vs.
PACIFIC COMMERCIAL COMPANY, ET AL., creditors-appellants.
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; (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.,
Proceeding by process of elimination, it is self-evident that Teck Seing & Co., Ltd., is not
a corporation. Neither is it contended by any one that Teck Seing & Co., Ltd., is
accidental partnership denominated cuenta en participacion (joint account association).
Issue: WON the partnership contract created a limited partnership.
Ruling: No.
The contract created was not a limited partnership but a general partnership even if
“Ltd.” Was used in the firm’s name to avoid liability for possible losses. 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.
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.
Article 125 of the Code of Commerce provides that the articles of general co-partnership
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 instrusted; the capital; the duration of the co-partnership; 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 co-partnership must transact business under the name of all its members, of
several of them, or of one only. It should 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.
What is said in Article 126 of the Code of Commerce relating to the general co-
partnership 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 for the protection of the
creditors than of the partners themselves.
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.
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:
…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
co-partnership 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.
The court reach the conclusion that the contract of partnership found in the document
established a 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,
inconformity with the provisions of the Insolvency Law

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G.R. No.

19892 September 6, 1923

TECK SEING AND CO., LTD., petitioner-appellee.

Following the presentation of an application to be adjudged an insolvent by the

Issue: WON the partnership contract created a limited partnership.

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