Title
Ang Seng Quen vs. Te Chico
Case
G.R. No. 4765
Decision Date
Jan 20, 1909
Dispute over partnership debts; general partner Juan Te Chico held personally liable, while special partner Cu Ung Jeng's liability limited to capital contribution.
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Case Digest (G.R. No. 4765)

Facts:

  1. Background of the Case:

    • The case involves a dispute between plaintiffs Ang Seng Quen et al. and defendants Juan Te Chico et al. regarding the liability of the defendants for debts incurred by a commercial partnership.
    • A prior appeal in this case was reported in 7 Phil. Rep., 541, where the judgment was affirmed as to defendant Uy Su Liong but reversed and a new trial ordered as to defendants Juan Te Chico and Cu Ung Jeng.
  2. Evidence Presented:

    • At the second trial, the plaintiffs reintroduced the same evidence from the first trial, which established a prima facie case against some defendants.
    • A letter from Ong Bun Po, the manager of the business at Iloilo, was presented, indicating financial difficulties and requesting an extension to pay debts.
    • The defendants introduced additional evidence, but it did not weaken the plaintiffs' prima facie case.
  3. Partnership Details:

    • The defendants formed a special partnership (sociedad en comandita) on December 22, 1902, with Juan Te Chico as the general partner and Cu Ung Jeng and Ang Ban Gui as special partners.
    • Each partner contributed 4,000 pesos as capital, and the partnership was named "Te Chico, sociedad en comandita."
    • The partnership articles were not recorded in the mercantile registry, and the business was operated under the name "Sam Jap Jim & Co." prior to 1902.
  4. Role of Defendants:

    • Juan Te Chico was the sole manager of the business and actively managed its operations.
    • Cu Ung Jeng was a special partner who contributed capital but did not participate in the management of the business or make any contracts with the plaintiffs.

Issue:

  1. Whether the plaintiffs, as individuals, can maintain the action despite the partnership articles not being recorded in the registry.
  2. Whether the defendants Juan Te Chico and Cu Ung Jeng are liable for the debts of the partnership.
  3. Whether the customs of Chinese merchants in the Philippines can override the provisions of the Code of Commerce.

Ruling:

  1. As to the Plaintiffs' Right to Sue:

    • The plaintiffs, as individuals, can maintain the action even though their partnership articles were not recorded in the registry. This is supported by prior decisions of the court (Prautch vs. Jones, 8 Phil. Rep., 1).
  2. As to the Liability of Cu Ung Jeng:

    • Cu Ung Jeng, as a special partner, is not personally liable for the debts of the partnership. His liability is limited to the amount he contributed to the capital, as per the Code of Commerce.
    • His name did not appear in the partnership title, and he did not participate in the management or make any contracts with the plaintiffs.
  3. As to the Liability of Juan Te Chico:

    • Juan Te Chico, as the sole manager of the business, is personally liable for the debts of the partnership under Article 120 of the Code of Commerce.
  4. As to the Customs of Chinese Merchants:

    • The customs of Chinese merchants in the Philippines cannot override the provisions of the Code of Commerce.

Ratio:

  1. Recording of Partnership Articles:

    • The failure to record partnership articles in the mercantile registry does not prevent individuals from maintaining an action, but it limits the liability of special partners to their contributed capital.
  2. Liability of Special Partners:

    • Special partners in a sociedad en comandita are not personally liable for partnership debts if they have contributed the agreed capital and have not participated in management.
  3. Liability of General Partners:

    • General partners who manage the business are personally liable for the debts of the partnership under the Code of Commerce.
  4. Customs vs. Law:

    • Customs of merchants cannot supersede the provisions of the Code of Commerce, which governs commercial partnerships in the Philippines.


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