PNB v. LO

PNB v. LO

G.R. No. 26937; October 5, 1927

Ponente: J. Villamor

FACTS:

          The 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 & Co.," with a capital of P40,000 contributed by said partners. In the articles of partnership, it appears that the partnership was to last for five years from and after the date of its organization, and that its purpose was to do business in the City of Iloilo, Province of Iloilo, or in any other part of the Philippine Islands the partners might desire, under the name of "Tai Sing & Co.," for the 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

         

General manager A. Say Lian Ping executed a power of attorney in favor of A. Y. Kelam, authorizing him to act in his stead as manager and administrator of "Tai Sing & Co." A. Y. Kelam, acting under such power of attorney, applied for, and obtained a loan of P8,000 in current account from the plaintiff. As security for said loan, he mortgaged certain personal property of Tai Sing & Co.This credit was renewed several times.

This mortgage was again renewed on April 16, 1920, and A. Y. Kelam, as attorney-in-fact of Tai Sing & Co., executed another chattel mortgage for the said sum of P20,000 in favor of the plaintiff bank.

On April 20, 1920, Yap Seng, Severo Eugenio Lo, A. Y. Kelam and Ng Khey Ling, the latter represented by M. Pineda Tayenko, executed a power of attorney in favor of Sy Tit by virtue of which Sy Tit, representing Tai Sing & Co. obtained a credit of P20,000 from plaintiff bank on January 7, 1921, executing a chattel mortgage on certain personal property belonging to Tai Sing & Co.

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 articles of copartnership.

 ISSUE:

         

 Whether anomalous adoption of a firm name affect the liability of the general partners to third persons

HELD:

         

          No, anomalous adoption of a firm name does not affect the liability of the general partners to third persons

The Supreme Court held that the object of the Code of Commerce 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, Lo cannot invoke in his defense the anomaly in the firm name which they themselves adopted