Articles 1825 Partnership by Estoppel
The Court of Appeals affirmed the ruling of the CFI, with
PAUL MACDONALD, ET AL., petitioners,
vs.
THE NATIONAL CITY BANK OF NEW YORK,
respondent.
Facts:
Stasikinocey is a partnership formed by da Costa, Gorcey,
Kusik and Gavino. It was denied registration by the SEC due
to a confusion between the partnership and Cardinal Rattan.
Cardinal Rattan is the business name or style used by
Stasikinocey. Da Costa and Gorcey are the general partners of
Cardinal Rattan.
Moreover, Da Costa is the managing partner of Cardinal
Rattan.
Stasikinocey had an overdraft account with respondent
National City Bank, which was later converted into an ordinary
loan for which the corresponding promissory note was
executed, due the partnership’s failure in paying its obligation.
The promissory note was secured by a chattel mortgage over
3 vehicles (Plymouth sedan, Fargo truck, Fargo pick-up).
The chattel mortgage was registered in San Juan Rizal, in
the residence or place of business of the partnership
Stasikinocey.
The Chattel mortgage provides that the mortgagor
(Stasikinocey) shall not sell or otherwise dispose of the said
chattels without the mortgagee’s written consent, and that
mortgagee may foreclose the mortgage at any time after
breach of any condition.
Despite the said prohibition, on the same day of the execution
of the chattel mortgage, Gorcey and Da Costa convey and
transfer to William Shaeffer the Fargo pickup.
Also, while the said loan was still unpaid and the chattel
mortgage subsisting, defendant partnership through Da costa
and Gorcey, transfer the two other vehicles to MacDonald.
William Shaeffer also sold the Fargo pick-up to MacDonald.
Later on, MacDonald sold 2 (Fargo truck and Plymouth Sedan)
of these 3 vehicles to Benjamin Gonzales.
Upon learning of the transfers made by the partnership
Stasikinocey of the properties pledged, respondent Bank
brought an action against Stasikinocey and its alleged
partners, Paul Macdonald and Benjamin Gonzales, to recover
its credit and to foreclose the corresponding chattel mortgage.
Macdonald and Gonzales were made defendants because
they claimed to have a better right over the pledged vehicle.
The Court of First Instance rendered a decision in favor of
respondents and annulled the sale of the vehicles in question.
The court also ordered De Costa and Gorcey to pay
respondent jointly and severally the amount of credit with
interest. Should they fail to pay the money judgment, they sall
deliver the vehicles for sale at public auction. And if proceeds
of the sale is insufficient, De costa, Gorcey and Saheffers shall
jointly and severally pay the deficiency.
modification relieving Shaeffer of the obligation to pay jointly
and severally any deficiency.
Hence, this petition.
********* di ko sure hahahah (Petitioner alleged that the Chattel
mortgage is not valid and not binding against them
because it was registered in the residence of the partnership.
Since the partnership is unregistered, it has no independent
juridical personality, thus it cannot have a domicile which is
necessary for the Chattel Mortgage registration pursuant to
Section 4 of the Chattel Mortgage. )
Issues
1.) Whether or not an unregistered partnership which has
no juridical personality, can have a domicile for the
registration of a chattel mortgage?
Held:
1.) AFFIRMATIVE.
While an unregistered commercial partnership has no
juridical personality, nevertheless, where two or more
persons attempt to create a partnership failing to
comply with all the legal formalities, the law considers
them as partners and the association is a partnership
in so far as it is a favorable to third persons, by
reason of the equitable principle of estoppel.
Da Costa and Gorcey cannot deny that they are
partners of the partnership Stasikinocey, because in
all their transactions with the respondent they
represented themselves as such. Petitioner McDonald
cannot disclaim knowledge of the partnership
Stasikinocey because he dealt with said entity in
purchasing two of the vehicles in question through
Gorcey and Da Costa.
Where a partnership not duly organized has been
recognized as such in its dealings with certain
persons, it shall be considered as "partnership by
estoppel and the persons dealing with it are estopped
from denying its partnership existence. The sale of
the vehicles in question being void as to petitioner
McDonald, the transfer from the latter to petitioner
Benjamin Gonzales is also void, as the buyer cannot
have a better right than the seller.
It results that if the law recognizes a defectively
organized partnership as de facto as far as third
persons are concerned, for purposes of its de facto
existence it should have such attribute of a
partnership as domicile.
The registration of the chattel mortgage in question
with the Office of the Register of Deeds of Rizal, the
residence or place of business of the partnership
Stasikinocey being San Juan, Rizal, was therefore in
accordance with section 4 of the Chattel Mortgage
Law.
As a de facto partnership, Stasikinocey had its
domicile in San Juan, Rizal.
Articles 1825 Partnership by Estoppel