Ang Pue vs.

CA

FACTS:
- On May 1, 1953, Ang Pue and Tan Siong, both Chinese citizens, organized the
partnership Ang Pue & Company for a term of five years from May 1, 1953, extendible
by their mutual consent.
o "to maintain the business of general merchandising, buying and selling at
wholesale and retail, particularly of lumber, hardware and other construction
materials for commerce”
- On June 19, 1954, RA 1180 was later enacted and provided that a partnership not wholly
formed by Filipinos could continue to engage in the retail business until the expiration of
its term.
- On April 15, 1958 — prior to the expiration of the five-year term of the partnership Ang
Pue & Company, the partners extended the term of life of the partnership to another
five years.
- When the amended articles were presented for registration in the Office of the
Securities & Exchange Commission on April 16, 1958, registration was refused upon the
ground that the extension was in violation of RA 1180

ISSUE: Whether the extension of the term of a partnership not wholly owned by Filipinos is
prohibited with the enactment of RA 1180

HELD:

Yes, extension of a partnership’s term by foreigners violates RA 1180.

To organize a partnership is a privilege which may be enjoyed only under such terms as the
State may deem necessary. The State has the right to enact RA 1180 and to provide that only
wholly owned by Filipinos may engage in the retail business. This provision was clearly intended
to apply to partnership already existing is shown by its provision giving them the right to
continue until the expiration of their term.

Even if the original articles of partnership provided that the partners could extend the term,
such is still subject to the law existing at the time the extension is agreed. In this case, the
partners amended the articles when RA 1180 was already in force.

Hence, they can no longer extend the life of their partnership as RA 1180 is already in force and
prohibits such.

Vargas & Company vs. Chan

FACTS:
 Vargas and Company is a mercantile association organized under Philippine laws.
 Chan Hang Chiu instituted an action against Vargas and Co.
  Summons and complaint was served by the sheriff to Vargas & Co., by delivering true
copies thereof to Jose Macapinlac, the managing agent of the said Vargas & Co.
 Court of justice rendered judgment against Vargas & Co. for P372, which levied by the
property of the latter.
 Vargas paid the amount of judgment under protest.
 Vargas argued that the decision of the lower court is that it being a partnership, it is
necessary to serve the summons on all of the partners, delivering to each one of them
personally a copy thereof;
 Summons was only served on the managing agent only.
 Thus, such service was no effect against the company, making the judgment entered by
virtue of such service was void.

ISSUE: Whether the service of summons to the managing agent is void.

HELD:

“Article 116 of the Code of Commerce provides: After a commercial association has been
established, it shall have legal representation in all its acts and contracts”

No, service of summons to the managing agent is valid.

A partnership, duly organized and registered under laws of the Philippine Islands, is a legal
entity capable of suing and of being sued in the company name. In bringing an action against
such a company, it is not necessary to make the partners composing said company parties’
defendant.

The certificate of service by the sheriff shows that service of summons in an action against a
partnership was made by serving a copy to a person named as the managing agent of the
company. It is prima facie evidence of the fact that the person on whom the summons was
served was in fact the managing agent of the company.

The plaintiff brings this action in the company name, and not in the name of the members of
the firm. Actions against companies of the class to which Vargas & Co., belongs are brought
against such companies in their company names, not against the individual partners
constituting the firm.

Associations of the class to which Vargas & Co., belongs have an independent and separate legal
entity sufficient to permit them to sue and be sued in the company name and to be served with
process through the chief officer or managing agent thereof, or any other official of the
company specified by law. If it is necessary to serve the partners individually, they are entitled
to be heard individually in the action, and they must, therefore be made into parties thereto so
that they can be heard.

Hence, service of summons to managing agent is valid as being sued in its company name.
Aguila vs. CA

FACTS:

 Petitioner is the manager of A.C. Aguila & Sons, Co., a partnership engaged in lending.
 Private respondent (Abrogar) and her late husband executed a memorandum of
agreement with the petitioner
o Abrogar sold their house and lot in Marikina to the petitioner’s company for
P200k with option to repurchase within 90 days
o agreement will be cancelled and the deed of absolute sale shall proceed to
transfer ownership should the private respondent fail to exercise the option to
repurchase.
 Private respondent failed to redeem the property within the 90-day period as provided
in the Memorandum of Agreement.
 Petitioner caused the cancellation of TCT No. 195101 and the issuance of a new
certificate of title in the name of A.C. Aguila and Sons, Co.
 Private respondent received a letter to vacate the premises within 15 days.
 Upon the refusal of private respondent to vacate the subject premises, A.C. Aguila &
Sons, Co. filed an ejectment case.
 Respondent filed a petition for declaration of nullity of deed of sale alleging that that the
signature of her husband on the deed of sale was forged as he was already dead when
the deed was supposed to have been executed.
 The CA ruled that the agreement between the parties was in fact a pactum
commissorium and that the real intention of Aguila, Jr. is to secure the payment.

ISSUE: Whether the partnership should be impleaded in any litigation involving property
registered in its name.

HELD:

Yes, the partnership, not its partners, should be impleaded in litigations involving properties
registered in its name

A partnership has a juridical personality separate and distinct from that of each of the partners.
The partners cannot be held liable for the obligations of the partnership unless it is shown that
the legal fiction of a different juridical personality is being used for fraudulent, unfair, or illegal
purposes.

In this case, private respondent has not shown that A.C. Aguila & Sons, Co., as a separate
juridical entity, is being used for fraudulent, unfair, or illegal purposes. Moreover, the title to the
subject property is in the name of A.C. Aguila & Sons, Co. and the Memorandum of Agreement
was executed between private respondent, with the consent of her late husband, and A.C.
Aguila & Sons, Co., represented by petitioner.
Hence, it is the partnership, not its officers or agents, which should be impleaded in any
litigation involving property registered in its name. A violation of this rule will result in the
dismissal of the complaint.

Campos Rueda v. Pacific Commercial

FACTS:
 Campos Rueda & Co. was deemed insolvent in December 1921 and July 1922.
 Campos Rueda & Co. was indebted to Pacific Commercial Co. Asiatic Petroleum Co. and
International Banking Corporation in various sums amounting to not less than P1,000,
payable in the Philippines
o not paid more than 30 days prior to the date of the filing by the petitioners of the
application for involuntary insolvency.
 The trial court denied the petition on the ground that it was not proven nor alleged that
the members of the firm were insolvent at the time the application was filed
o partners are personally and solidarily liable for the consequences of the
transactions of the partnership, that it cannot be adjudged insolvent so long as
the partners are not alleged and proven to be insolvent.

ISSUE: Whether an act of insolvency has been committed by the limited partnership

HELD:

Yes. A limited partnership which has failed to pay its obligations with three creditors for more
than thirty days, committed an act of insolvency and is adjudged insolvent against its will.

Court held that Philippine statutes consider a limited partnership as a juridical entity for all
intents and purposes, recognized in all its acts and contracts. The juridical personality of a
limited partnership being different from that of its members must answer for the consequences
of its acts as such an entity capable of being the subject of rights and obligations.

In the Philippines, a limited partnership duly organized in accordance with law has a personality
distinct from that of its members. If an act of bankruptcy is committed like failing for more than
thirty days to pay debts amounting to P1,000 or more, it may be adjudged insolvent on the
petition of three of its creditors although its members may not be insolvent.

Partnership can be insolvent even if the members are solvent or insolvent. Partnership is a
personality distinct from its members.

Liability of the limited partners for the obligations and losses of the partnership is limited to the
amounts paid or promised to be paid into the common fund except when a limited partner
should have included his name or consented to its inclusion in the firm name.
Lyons vs. Rosenstock

FACTS:

 Henry Elser joined Lyons in some of his ventures and they equally divided profits gained
from these.
 In 1919, Elser sold the Carriedo properties by virtue of a GPOA
 In 1920, Elser was drawn to a piece of land, the San Juan Estate, and he perceived an
opportunity to develop it into a suburban community. The Estate was offered by its owners
for P570,000 with an initial payment of P150,000.
 In May 1920, Elser wrote a letter to Lyons inducing the latter to join him in this venture and
to likewise supply the means necessary for the fulfillment of this project.
 Lyons replied on July 1920 and he did not want to participate
 Elser relieved the Carriedo property of the encumbrance which he had placed upon it and
requested the Fidelity and Surety Company to allow him to substitute another property for
it.
 Release of the old mortgage and the recording of the new were never registered because in
September 1920, when Lyons returned to Manila, he allowed the mortgage to remain on
the Carriedo property.
 But in January 1921, Elser was able to pay the note executed by him to Uy Siolong which
enabled the release of the Carriedo Property.
 Lyons posits that when Elser placed a mortgage for P50,000 upon the equity of redemption
in the Carriedo property, he, as half-owner, became involuntarily an owner of an undivided
interest in the property acquired partly by that money.
 As such, he is entitled to 406.66 of the shares in J.K. Pickering & Company.

ISSUE: Whether Lyons, as half owner of the Carriedo property, involuntarily became the owner
or a co-partner of an undivided interest in the San Juan Estate

HELD:

No. Lyons cannot be considered as a co-owner or co-partner of the Carriedo property.

The law cannot be distorted into a proposition which would make Lyons a participant in this
deal contrary to his express determination.

If Elser had used any money actually belonging to Lyons in this deal, be obligated to pay interest
upon the money so applied to his own use, under the rules of partnership. In the case at bar,
there was clearly no general relation of partnership between Lyons and Elser and the most that
can be said is that they had been co-participants in various transactions involving real estate.

Elser, in buying the San Juan Estate, was not acting for any partnership composed of himself and
Lyons, especially that the latter expressly communicated his desire not to participate in this
venture. No money belonging to Lyons or any partnership composed of Elser and Lyons was in
fact used by Elser in the purchase of the San Juan Estate.

Hence, Lyons cannot be considered as a co-owner or co-partner as he did not use his money to
pay for such properties.