Digest of G.R. No. L-2888

FACTS:
1. The plaintiff-appellee, Hung-Man-Yoc (acting in the name of Kwong-Wo-Sing), filed a case against defendants-appellants Chua-Che-Co, Yu-Yec-Pin, and Ang-Chu-Keng, alleging they were partners in the firm Kieng-Chiong-Seng.
2. The lower court ruled against all defendants, holding them jointly liable for 7,962.14 pesos (Mexican) (equivalent to 7,372.75 pesos, Philippine currency) plus interest from December 7, 1903, and costs.
3. Only Chua-Che-Co appealed, arguing that he should not be held liable.
4. The alleged partnership lacked proper registration under the Code of Commerce (Arts. 119, 126, 146) and had no public instrument formalizing its existence.
5. The partnership engaged in mercantile activities (importation and sale of goods) but was not legally constituted under Philippine commercial law.

ISSUE:
Whether Chua-Che-Co, as an alleged partner in the unregistered Kieng-Chiong-Seng, can be held personally liable for the partnership’s debt to the plaintiff.

RULING:
1. No legal personality of the partnership: The Supreme Court found that Kieng-Chiong-Seng was not a legally recognized partnership because:
– It failed to comply with Article 119 of the Code of Commerce (requiring a public instrument and registration in the Mercantile Register).
– It did not meet the formal requirements for a general or limited partnership (Arts. 126, 146).
– It was merely a de facto partnership without legal standing.

2. Liability of managing partners: Under Article 120 of the Code of Commerce, only those managing the unregistered partnership are liable to third parties.
– Yu-Yec-Pin (the manager) and Kiong-Tiao-Eng (another active partner) were the ones who contracted with the plaintiff.
– Chua-Che-Co was not involved in management or transactions with the plaintiff.

3. Acquittal of Chua-Che-Co: Since Chua-Che-Co did not participate in managing the partnership or contracting debts, he cannot be held personally liable.
– The lower court’s judgment against him was reversed.
– The case was remanded for execution against the properly liable parties (Yu-Yec-Pin and Kiong-Tiao-Eng).

DISPOSITIVE PORTION:
The Supreme Court reversed the lower court’s decision, absolving Chua-Che-Co from liability. The case was remanded for further proceedings consistent with the ruling. No costs were awarded.

DOCTRINE:
An unregistered partnership lacks legal personality, but managing partners (those actively conducting business) are personally liable for its obligations under Article 120 of the Code of Commerce. Non-managing partners are not liable unless proven to have participated in transactions.

Concurring Justices:
Arellano, Mapa, Johnson, Carson, Willard, and Tracey.