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[INSULAR SAW MILL v. CHARLIE HOGAN](https://www.lawyerly.ph/juris/view/c33ad?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. L-8761, Jul 31, 1956 ]

INSULAR SAW MILL v. CHARLIE HOGAN +

DECISION

99 Phil. 666

[ G.R. No. L-8761, July 31, 1956 ]

INSULAR SAW MILL, INC., PETITIONER, VS. CHARLIE HOGAN AND DEE C. TAM (AS PARTNERS IN THE UNREGISTERED PARTNERSHIP CHARLIE HOGAN AND CO., DOING BUSINESS UNDER THE NAME AND STYLE OF "GANIE ENTERPRISES"), RESPONDENTS.

D E C I S I O N

CONCEPCION, J.:

This  is an appeal by  certiorari from a decision  of the Court of Appeals,  reading  as follows:

"Before us  are two civil cases from the Court of First Instance of Manila.  In one, No. 8974, Woodcraft Works, Ltd., is the plaintiff;  in the other,  No. 9029, the plaintiff is the Insular Saw  Mill, Inc. Both  are for  recovery of the sum of money and, in  each,  Charlie  Hogan and Dee C. Tarn as partners in an unregistered partnership,  are the defendants. 

"After joint hearing, Judge Macadaeg rendered judgment granting the claims of Woodcraft Works, Ltd., and the Insular Saw  Mill, Inc. against Charlie Hogan alone, while Dee C. Tarn was freed from any liability.  Both Woodcraft, Ltd., and the Insular Saw  Mill, Inc.,  appealed Woodcraft Works,  Ltd., assigning  the following  errors:

'1.  The lower court errer in holding that  the unregistered partnership 'Charlie  Hogan &  Co., Ganie Enterprises' between the herein defendants-appellee  Charlie Hogan and Dee C. Tarn had  been dissolved prior to the  dates appellee Charlie Hogan incurred in behalf  of said partnership the obligation subject matter hereof from plaintiff-appellan. 

'2.  The lower court likewise erred in absolving defendant-appellee Dee C. Tarn  from  any liability whatever  in favor of  plaintiff-appellant. and the  Insular Saw Mill, Inc., alleging: 

  1. The triad court  erred in holding that there was a dissolution of the partnership  Charlie Hogan &  Co., doing business  under the  name and style of 'Ganie Enterprises' prior to the obligations contracted by Charlie Hogan in the name of the partnership.   
  2.  
  3. The trial court erred in  declaring that  only the  defendant Charlie  Hogan is  liable  for  the obligation  contracted  under  the partnership  name,  and in absolving  the defendant,  Dee C.  Tam, from  liability for said obligations.' 

"No controversy exists regarding the fact that Woodcraft Works, Ltd.,  a duly  registered  corporation dealing  on lumber,  furnished  lumber value  of P4,955.77 to Charlie  Hogan during the months of May  and June,  1949.  In payment,  the  latter delivered  that  sum in three checks D-18267, D-18269 and) D-18270 drawn against the Philippine  Bank of  Communications, Manila, but which  were not honored  upon their  presentation  to  the  drawee  Bank.  There  is also no  question that  Charlie. Hogan  received lumber valued  at Pl,472.17 from the Insular  Saw Mill, Inc., on April 30, May 3 and May 5,  1949.  In this connection,  it was agreed that Charlie Hogan would pay interest at the  rate of one per cent per month on. the amount  due and the sum equivalent to 20%  thereof for attorney's fees and  the  costs, should the collection  be  enforced  through court action.

"The  only issue, therefore, is whether Charlie Hogan's co-defendant in both cases, Dee C.  Tam, is severally and jointly liable with him.  We are completely in agreement with the court below that Charlie  Hogan alone is responsible for the lumber.  In the case of Woodcraft  Works, Ltd., the latter delivered  the  lumber during the months of,May and June, 1949, and the Insular Saw Mill, Inc., on April 30 and May 3  and May  5, 1949.  The partnership between Charlie  Hogan and Dee C. Tam was drawn up in a public document on April 9, 1949, but was never  registered with the Securities and Exchange Commission.  After a few days, that is, on April 25, 1949, it was dissolved, as  shown by a  public document  duly executed  to that effect.  At the  time of the  delivery of the Insular to  Charlie Hogan,  the latter was no  longer  in  partnership with Dee  C.  Tam.

"If Charlie  Hogan had  made  herein appellants  believe that he was taking the  lumber in behalf of the unregistered  partnership of which Dee  C  Tam was  a member, that was certainly his own concern.  For, subject to the exceptions .provided by law, 'the rights of a party cannot be prejudiced by the act, declaration or commission of another * * *'  (Section 10, Rule 123, Rules of Court.) 

"There is no merit in the contention that the partnership was not dissolved.  The deed  of dissolution was executed on April 25, 1949. The partnership constituted between Charlie Hogan and Dee C. Tam on April 9, 1949 and which was not registered, could not have been dissolved in any way better than what they  had done, agreeing on its dissolution through a public instrument which they signed together on  April  25, 1949.  Appellants failed to make any showing why we  should believe that the said deed of dissolution is false. 

FOR ALL THE FOREGOING, the judgment appealed from is hereby affirmed, with costs  against appellants."

Petitioner-appellant Insular Saw Mill, Inc., has appealed from the  foregoing decision as regards  said case No.  9029, upon the ground  that: 

"The  Court  of Appeals erred in absolving  the respondent Dee  C. Tam from liability  of  the  petitioner Insular Saw  Mill, Inc., for credit purchases made by the partnership from the said petitioner on the simple ground that when said purchases were made, Dee C. Tam was no longer in partnership with  Charlie  Hogan, although the petitioner in extending said credit acted and  believed in good faith that the partnership was still existing as there was no notice given or knowledge acquired on the alleged dissolution  thereof, and hence, in the disposition of this case, the  Court of Appeals has decided a question of substance not heretofore determining by the Supreme Court."

There is no merit in petitioner's contention  for: 

  1. Dee  C. Tam may  not  be held responsible for such misrepresentation, if any,  as Charlie Hogan  may have made to petitioner herein, there being nothing  to  show that Tam  had authorized  or ratified said act  of Hogan;  
  2.  
  3. Had  Hogan  misrepresented that he  was  acting on behalf of the partnership, the corresponding invoices would have been  issued in the name  of  said partnership,  but plaintiff-petitioner did not do so;  
     
  4. Pursuant to  the Articles of Co-partnership  executed by Tam and Hogan, "the stock for  said company shall be purchased under agreement  of both parties" and there is no proofs or even allegation, that Dee C. Tam had agreed or consented  to the purchases  in question  from plaintiff herein;  
  5.  
  6. Said Articles of Co-partnership state  that Tam and Hogan had formed a "business partnership *  *  *  which will the dealing (in) lumber, hardware and building construction  materials".  Said partnership was,  therefore, a general commercial partnership (Prautch, Scholes & Co. vs. Hernandez, 1  Phil., 705; 2 Blanco, 202).  Being unregistered, Charlie Hogan,  as general manager and treasurer thereof, is the only person responsible for  its obligations in favor of the third parties,  under Article 120, Code of Commerce, reading:

    "Those in charge of the  company's management who violate the provisions of the preceding article shall be solidarily responsible to persons not members of the association with whom they  may have contracted  in its name."  
  7.  
  8. The aforementioned transactions with petition-appellant took place after the dissolution  of the partnership. It is  urged, however,  that said dissolution cannot affect the rights of plaintiff herein, for Article 226 of the Code of  Commerce,  declares:

"The dissolution ox a commercial association, which proceeds from any cause other  than  the termination  of the period for which  it was created, shall not  produce any  effect to the prejudice of third persons  until it is entered  in the mercantile registry."

However, this provision refers solely to registered partnerships, for, in dealing with the same, third parties are entitled to give full faith and  credence to the articles of co-partnership recorded  in the mercantile registry.  It does not apply to unregistered partnerships, inasmuch as those transacting business with the  same have no such official record to rely on and are deemed satisfied with the solidary obligation of the manager of the partnership, pursuant to the above  quoted Article 120  of  the Code of Commerce (Jo Chung  Cang et al.  vs. Pacific Commercial Co., et al, 45 Phil., 142, 152; The  Manila Railroad Co, vs. t. S. Salmon, 48 Phil.,  132,  137; Hung-Man-Yoc vs. Kieng-Chiong- Seng, 6 Phil., 498; Ang Seng Quen et al. vs. Juan Te Chico et al., 12 Phil., 547-550).

Wherefore, the decision appealed from is hereby  affirmed, with costs against petitioner.   It is so ordered.

Paras, C. J.,  Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J. B. L., and Endencia, JJ., concur.


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