G.R. No.
70926 January 31, 1989 conducted by the PC Crime Laboratory on orders of the trial court granting the private
DAN FUE LEUNG, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.
John L. Uy for petitioner.
Edgardo F. Sundiam for private respondent.
GUTIERREZ,  JR., J.:
The petitioner asks for the reversal of the decision of the then Intermediate Appellate
Court in AC-G.R. No. CV-00881 which affirmed the decision of the then Court of First
Instance of Manila, Branch II in Civil Case No. 116725 declaring private respondent Leung
Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah Panciteria and
ordering the petitioner to pay to the private respondent his share in the annual profits of
the said restaurant.
This case originated from a complaint filed by respondent Leung Yiu with the then Court of
First Instance of Manila, Branch II to recover the sum equivalent to twenty-two percent
(22%) of the annual profits derived from the operation of Sun Wah Panciteria since
October, 1955 from petitioner Dan Fue Leung.
The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz,
Manila, was established sometime in October, 1955. It was registered as a single
proprietorship and its licenses and permits were issued to and in favor of petitioner Dan
Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial
of the case to show that Sun Wah Panciteria was actually a partnership and that he was
one of the partners having contributed P4,000.00 to its initial establishment.
The private respondents evidence is summarized as follows:
About the time the Sun Wah Panciteria started to become operational, the private
respondent gave P4,000.00 as his contribution to the partnership. This is evidenced by a
receipt identified as Exhibit "A" wherein the petitioner acknowledged his acceptance of the
P4,000.00 by affixing his signature thereto. The receipt was written in Chinese characters
so that the trial court commissioned an interpreter in the person of Ms. Florence Yap to
translate its contents into English. Florence Yap issued a certification and testified that the
translation to the best of her knowledge and belief was correct. The private respondent
identified the signature on the receipt as that of the petitioner (Exhibit A-3) because it was
affixed by the latter in his (private respondents') presence. Witnesses So Sia and Antonio
Ah Heng corroborated the private respondents testimony to the effect that they were both
present when the receipt (Exhibit "A") was signed by the petitioner. So Sia further testified
that he himself received from the petitioner a similar receipt (Exhibit D) evidencing
delivery of his own investment in another amount of P4,000.00 An examination was
respondents motion for examination of certain documentary exhibits. The signatures in
Exhibits "A" and 'D' when compared to the signature of the petitioner appearing in the pay
envelopes of employees of the restaurant, namely Ah Heng and Maria Wong (Exhibits H,
H-1 to H-24) showed that the signatures in the two receipts were indeed the signatures of
the petitioner.
Furthermore, the private respondent received from the petitioner the amount of
P12,000.00 covered by the latter's Equitable Banking Corporation Check No. 13389470-B
from the profits of the operation of the restaurant for the year 1974. Witness Teodulo
Diaz, Chief of the Savings Department of the China Banking Corporation testified that said
check (Exhibit B) was deposited by and duly credited to the private respondents savings
account with the bank after it was cleared by the drawee bank, the Equitable Banking
Corporation. Another witness Elvira Rana of the Equitable Banking Corporation testified
that the check in question was in fact and in truth drawn by the petitioner and debited
against his own account in said bank. This fact was clearly shown and indicated in the
petitioner's statement of account after the check (Exhibit B) was duly cleared. Rana
further testified that upon clearance of the check and pursuant to normal banking
procedure, said check was returned to the petitioner as the maker thereof.
The petitioner denied having received from the private respondent the amount of
P4,000.00. He contested and impugned the genuineness of the receipt (Exhibit D). His
evidence is summarized as follows:
The petitioner did not receive any contribution at the time he started the Sun Wah
Panciteria. He used his savings from his salaries as an employee at Camp Stotsenberg in
Clark Field and later as waiter at the Toho Restaurant amounting to a little more than
P2,000.00 as capital in establishing Sun Wah Panciteria. To bolster his contention that he
was the sole owner of the restaurant, the petitioner presented various government
licenses and permits showing the Sun Wah Panciteria was and still is a single
proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied
having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking
Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B).
As between the conflicting evidence of the parties, the trial court gave credence to that of
the plaintiffs. Hence, the court ruled in favor of the private respondent. The dispositive
portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering the latter to deliver and pay to the former, the sum equivalent to
22% of the annual profit derived from the operation of Sun Wah Panciteria from
October, 1955, until fully paid, and attorney's fees in the amount of P5,000.00 and cost
of suit. (p. 125, Rollo)
The private respondent filed a verified motion for reconsideration in the nature of a motion
for new trial and, as supplement to the said motion, he requested that the decision
rendered should include the net profit of the Sun Wah Panciteria which was not specified in
the decision, and allow private respondent to adduce evidence so that the said decision
will be comprehensively adequate and thus put an end to further litigation.
The motion was granted over the objections of the petitioner. After hearing the trial court
rendered an amended decision, the dispositive portion of which reads:
FOR ALL THE FOREGOING CONSIDERATIONS, the motion for reconsideration filed by
the plaintiff, which was granted earlier by the Court, is hereby reiterated and the
decision rendered by this Court on September 30, 1980, is hereby amended. The
dispositive portion of said decision should read now as follows:
WHEREFORE, judgment is hereby rendered, ordering the plaintiff (sic) and against the
defendant, ordering the latter to pay the former the sum equivalent to 22% of the net
profit of P8,000.00 per day from the time of judicial demand, until fully paid, plus the
sum of P5,000.00 as and for attorney's fees and costs of suit. (p. 150, Rollo)
The petitioner appealed the trial court's amended decision to the then Intermediate
Appellate Court. The questioned decision was further modified by the appellate court. The
dispositive portion of the appellate court's decision reads:
WHEREFORE, the decision appealed from is modified, the dispositive portion thereof
reading as follows:
1. Ordering the defendant to pay the plaintiff by way of temperate damages 22% of the
net profit of P2,000.00 a day from judicial demand to May 15, 1971;
2. Similarly, the sum equivalent to 22% of the net profit of P8,000.00 a day from May
16, 1971 to August 30, 1975;
3. And thereafter until fully paid the sum equivalent to 22% of the net profit of
P8,000.00 a day.
Except as modified, the decision of the court a quo is affirmed in all other respects. (p.
102, Rollo)
Later, the appellate court, in a resolution, modified its decision and affirmed the lower
court's decision. The dispositive portion of the resolution reads:
WHEREFORE, the dispositive portion of the amended judgment of the court a
quo reading as follows:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant,
ordering the latter to pay to the former the sum equivalent to 22% of the net profit of
P8,000.00 per day from the time of judicial demand, until fully paid, plus the sum of
P5,000.00 as and for attorney's fees and costs of suit.
is hereby retained in full and affirmed in toto it being understood that the date of judicial
demand is July 13, 1978. (pp. 105-106, Rollo).
In the same resolution, the motion for reconsideration filed by petitioner was denied.
Both the trial court and the appellate court found that the private respondent is a partner
of the petitioner in the setting up and operations of the panciteria. While the dispositive
portions merely ordered the payment of the respondents share, there is no question from
the factual findings that the respondent invested in the business as a partner. Hence, the
two courts declared that the private petitioner is entitled to a share of the annual profits of
the restaurant. The petitioner, however, claims that this factual finding is erroneous. Thus,
the petitioner argues: "The complaint avers that private respondent extended 'financial
assistance' to herein petitioner at the time of the establishment of the Sun Wah Panciteria,
in return of which private respondent allegedly will receive a share in the profits of the
restaurant. The same complaint did not claim that private respondent is a partner of the
business. It was, therefore, a serious error for the lower court and the Hon. Intermediate
Appellate Court to grant a relief not called for by the complaint. It was also error for the
Hon. Intermediate Appellate Court to interpret or construe 'financial assistance' to mean
the contribution of capital by a partner to a partnership;" (p. 75, Rollo)
The pertinent portions of the complaint state:
xxx xxx xxx
2. That on or about the latter (sic) of September, 1955, defendant sought the financial
assistance of plaintiff in operating the defendant's eatery known as Sun Wah Panciteria,
located in the given address of defendant; as a return for such financial assistance.
plaintiff would be entitled to twenty-two percentum (22%) of the annual profit derived
from the operation of the said panciteria;
3. That on October 1, 1955, plaintiff delivered to the defendant the sum of four
thousand pesos (P4,000.00), Philippine Currency, of which copy for the receipt of such
amount, duly acknowledged by the defendant is attached hereto as Annex "A", and
form an integral part hereof; (p. 11, Rollo)
In essence, the private respondent alleged that when Sun Wah Panciteria was established,
he gave P4,000.00 to the petitioner with the understanding that he would be entitled to
twenty-two percent (22%) of the annual profit derived from the operation of the said
panciteria. These allegations, which were proved, make the private respondent and the
petitioner partners in the establishment of Sun Wah Panciteria because Article 1767 of the
Civil Code provides that "By the contract of partnership two or more persons bind
themselves to contribute money, property or industry to a common fund, with the
intention of dividing the profits among themselves".
Therefore, the lower courts did not err in construing the complaint as one wherein the
private respondent asserted his rights as partner of the petitioner in the establishment of
the Sun Wah Panciteria, notwithstanding the use of the term financial assistance therein.
We agree with the appellate court's observation to the effect that "... given its ordinary
meaning, financial assistance is the giving out of money to another without the
expectation of any returns therefrom'. It connotes an ex gratia dole out in favor of
someone driven into a state of destitution. But this circumstance under which the
P4,000.00 was given to the petitioner does not obtain in this case.' (p. 99, Rollo) The
complaint explicitly stated that "as a return for such financial assistance, plaintiff (private
respondent) would be entitled to twenty-two percentum (22%) of the annual profit derived
from the operation of the said panciteria.' (p. 107, Rollo) The well-settled doctrine is that
the '"... nature of the action filed in court is determined by the facts alleged in the
complaint as constituting the cause of action." (De Tavera v. Philippine Tuberculosis
Society, Inc., 113 SCRA 243; Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37).
The appellate court did not err in declaring that the main issue in the instant case was
whether or not the private respondent is a partner of the petitioner in the establishment of
Sun Wah Panciteria.
The petitioner also contends that the respondent court gravely erred in giving probative
value to the PC Crime Laboratory Report (Exhibit "J") on the ground that the alleged
standards or specimens used by the PC Crime Laboratory in arriving at the conclusion
were never testified to by any witness nor has any witness identified the handwriting in
the standards or specimens belonging to the petitioner. The supposed standards or
specimens of handwriting were marked as Exhibits "H" "H-1" to "H-24" and admitted as
evidence for the private respondent over the vigorous objection of the petitioner's counsel.
The records show that the PC Crime Laboratory upon orders of the lower court examined
the signatures in the two receipts issued separately by the petitioner to the private
respondent and So Sia (Exhibits "A" and "D") and compared the signatures on them with
the signatures of the petitioner on the various pay envelopes (Exhibits "H", "H-1" to 'H-
24") of Antonio Ah Heng and Maria Wong, employees of the restaurant. After the usual
examination conducted on the questioned documents, the PC Crime Laboratory submitted
its findings (Exhibit J) attesting that the signatures appearing in both receipts (Exhibits "A"
and "D") were the signatures of the petitioner.
The records also show that when the pay envelopes (Exhibits "H", "H-1" to "H-24") were
presented by the private respondent for marking as exhibits, the petitioner did not
interpose any objection. Neither did the petitioner file an opposition to the motion of the
private respondent to have these exhibits together with the two receipts examined by the
PC Crime Laboratory despite due notice to him. Likewise, no explanation has been offered
for his silence nor was any hint of objection registered for that purpose.
Under these circumstances, we find no reason why Exhibit "J" should be rejected or
ignored. The records sufficiently establish that there was a partnership.
The petitioner raises the issue of prescription. He argues: The Hon. Respondent
Intermediate Appellate Court gravely erred in not resolving the issue of prescription in
favor of petitioner. The alleged receipt is dated October 1, 1955 and the complaint was
filed only on July 13, 1978 or after the lapse of twenty-two (22) years, nine (9) months
and twelve (12) days. From October 1, 1955 to July 13, 1978, no written demands were
ever made by private respondent.
The petitioner's argument is based on Article 1144 of the Civil Code which provides:
Art. 1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
in relation to Article 1155 thereof which provides:
Art. 1155. The prescription of actions is interrupted when they are filed before the
court, when there is a written extra-judicial demand by the creditor, and when there is
any written acknowledgment of the debt by the debtor.'
The argument is not well-taken.
The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites
of a partnership which are — 1) two or more persons bind themselves to contribute
money, property, or industry to a common fund; and 2) intention on the part of the
partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang
Chiao Cheng, 106 Phil. 110)-have been established. As stated by the respondent, a
partner shares not only in profits but also in the losses of the firm. If excellent relations
exist among the partners at the start of business and all the partners are more interested
in seeing the firm grow rather than get immediate returns, a deferment of sharing in the
profits is perfectly plausible. It would be incorrect to state that if a partner does not assert
his rights anytime within ten years from the start of operations, such rights are
irretrievably lost. The private respondent's cause of action is premised upon the failure of
the petitioner to give him the agreed profits in the operation of Sun Wah Panciteria. In
effect the private respondent was asking for an accounting of his interests in the
partnership.
It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is
applicable. Article 1842 states:
The right to an account of his interest shall accrue to any partner, or his legal
representative as against the winding up partners or the surviving partners or the
person or partnership continuing the business, at the date of dissolution, in the absence
or any agreement to the contrary.
Regarding the prescriptive period within which the private respondent may demand an A For regular days, I received around P7,000.00 a day during my shift alone and
accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting during pay days I receive more than P10,000.00. That is excluding the catering
exists as long as the partnership exists. Prescription begins to run only upon the outside the place.
dissolution of the partnership when the final accounting is done.
Q What about the catering service, will you please tell the Honorable Court how
Finally, the petitioner assails the appellate court's monetary awards in favor of the private many times a week were there catering services?
respondent for being excessive and unconscionable and above the claim of private
respondent as embodied in his complaint and testimonial evidence presented by said A Sometimes three times a month; sometimes two times a month or more.
private respondent to support his claim in the complaint.
xxx xxx xxx
Apart from his own testimony and allegations, the private respondent presented the
cashier of Sun Wah Panciteria, a certain Mrs. Sarah L. Licup, to testify on the income of
Q Now more or less, do you know the cost of the catering service?
the restaurant.

A Yes, because I am the one who receives the payment also of the catering.
Mrs. Licup stated:

Q How much is that?

ATTY. HIPOLITO (direct examination to Mrs. Licup).

A That ranges from two thousand to six thousand pesos, sir.

Q Mrs. Witness, you stated that among your duties was that you were in charge of
the custody of the cashier's box, of the money, being the cashier, is that correct?
Q Per service?
A Yes, sir.
A Per service, Per catering.
Q So that every time there is a customer who pays, you were the one who accepted
the money and you gave the change, if any, is that correct? Q So in other words, Mrs. witness, for your shift alone in a single day from 3:30
P.M. to 11:30 P.M. in the evening the restaurant grosses an income of P7,000.00 in
a regular day?
A Yes.

A Yes.
Q Now, after 11:30 (P.M.) which is the closing time as you said, what do you do
with the money?
Q And ten thousand pesos during pay day.?
A We balance it with the manager, Mr. Dan Fue Leung.
A Yes.
ATTY. HIPOLITO:
(TSN, pp. 53 to 59, inclusive, November 15,1978)
I see.
xxx xxx xxx
Q So, in other words, after your job, you huddle or confer together?
COURT:
A Yes, count it all. I total it. We sum it up.
Any cross?
Q Now, Mrs. Witness, in an average day, more or less, will you please tell us, how
much is the gross income of the restaurant? ATTY. UY (counsel for defendant):
 No cross-examination, Your Honor. (T.S.N. p. 65, November 15, 1978). (Rollo, pp.
127-128)
The statements of the cashier were not rebutted. Not only did the petitioner's counsel
waive the cross-examination on the matter of income but he failed to comply with his
promise to produce pertinent records. When a subpoena duces tecum was issued to the
petitioner for the production of their records of sale, his counsel voluntarily offered to
bring them to court. He asked for sufficient time prompting the court to cancel all hearings
for January, 1981 and reset them to the later part of the following month. The petitioner's
counsel never produced any books, prompting the trial court to state:
Counsel for the defendant admitted that the sales of Sun Wah were registered or
recorded in the daily sales book. ledgers, journals and for this purpose, employed a
bookkeeper. This inspired the Court to ask counsel for the defendant to bring said
records and counsel for the defendant promised to bring those that were available.
Seemingly, that was the reason why this case dragged for quite sometime. To
bemuddle the issue, defendant instead of presenting the books where the same, etc.
were recorded, presented witnesses who claimed to have supplied chicken, meat,
shrimps, egg and other poultry products which, however, did not show the gross sales
nor does it prove that the same is the best evidence. This Court gave warning to the
defendant's counsel that if he failed to produce the books, the same will be considered
a waiver on the part of the defendant to produce the said books inimitably showing
decisive records on the income of the eatery pursuant to the Rules of Court (Sec. 5(e)
Rule 131). "Evidence willfully suppressed would be adverse if produced." (Rollo, p. 145)
The records show that the trial court went out of its way to accord due process to the
petitioner.
The defendant was given all the chance to present all conceivable witnesses, after the
plaintiff has rested his case on February 25, 1981, however, after presenting several
witnesses, counsel for defendant promised that he will present the defendant as his last
witness. Notably there were several postponement asked by counsel for the defendant
and the last one was on October 1, 1981 when he asked that this case be postponed
for 45 days because said defendant was then in Hongkong and he (defendant) will be
back after said period. The Court acting with great concern and understanding reset the
hearing to November 17, 1981. On said date, the counsel for the defendant who again
failed to present the defendant asked for another postponement, this time to November
24, 1981 in order to give said defendant another judicial magnanimity and substantial
due process. It was however a condition in the order granting the postponement to said
date that if the defendant cannot be presented, counsel is deemed to have waived the
presentation of said witness and will submit his case for decision.
On November 24, 1981, there being a typhoon prevailing in Manila said date was
declared a partial non-working holiday, so much so, the hearing was reset to December
7 and 22, 1981. On December 7, 1981, on motion of defendant's counsel, the same
was again reset to December 22, 1981 as previously scheduled which hearing was
understood as intransferable in character. Again on December 22, 1981, the
defendant's counsel asked for postponement on the ground that the defendant was
sick. the Court, after much tolerance and judicial magnanimity, denied said motion and
ordered that the case be submitted for resolution based on the evidence on record and
gave the parties 30 days from December 23, 1981, within which to file their
simultaneous memoranda. (Rollo, pp. 148-150)
The restaurant is located at No. 747 Florentino Torres, Sta. Cruz, Manila in front of the
Republic Supermarket. It is near the corner of Claro M. Recto Street. According to the trial
court, it is in the heart of Chinatown where people who buy and sell jewelries,
businessmen, brokers, manager, bank employees, and people from all walks of life
converge and patronize Sun Wah.
There is more than substantial evidence to support the factual findings of the trial court
and the appellate court. If the respondent court awarded damages only from judicial
demand in 1978 and not from the opening of the restaurant in 1955, it is because of the
petitioner's contentions that all profits were being plowed back into the expansion of the
business. There is no basis in the records to sustain the petitioners contention that the
damages awarded are excessive. Even if the Court is minded to modify the factual findings
of both the trial court and the appellate court, it cannot refer to any portion of the records
for such modification. There is no basis in the records for this Court to change or set aside
the factual findings of the trial court and the appellate court. The petitioner was given
every opportunity to refute or rebut the respondent's submissions but, after promising to
do so, it deliberately failed to present its books and other evidence.
The resolution of the Intermediate Appellate Court ordering the payment of the petitioner's
obligation shows that the same continues until fully paid. The question now arises as to
whether or not the payment of a share of profits shall continue into the future with no
fixed ending date.
Considering the facts of this case, the Court may decree a dissolution of the partnership
under Article 1831 of the Civil Code which, in part, provides:
Art. 1831. On application by or for a partner the court shall decree a dissolution
whenever:
xxx xxx xxx
(3) A partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business;
(4) A partner willfully or persistently commits a breach of the partnership agreement,
or otherwise so conducts himself in matters relating to the partnership business that it
is not reasonably practicable to carry on the business in partnership with him;
xxx xxx xxx
 (6) Other circumstances render a dissolution equitable.
There shall be a liquidation and winding up of partnership affairs, return of capital, and
other incidents of dissolution because the continuation of the partnership has become
inequitable.
WHEREFORE, the petition for review is hereby DISMISSED for lack of merit. The decision
of the respondent court is AFFIRMED with a MODIFICATION that as indicated above, the
partnership of the parties is ordered dissolved.
SO ORDERED.
[G.R. No. 910. February 10, 1903. ]
PRAUTCH, SCHOLES & CO., Plaintiffs-Appellees, v. DOLORES HERNANDEZ DE
GOYENECHEA, Defendant-Appellant.
Francisco Ortigas, for Appellant.
T . L. McGirr, for Appellees.
SYLLABUS
1. PARTNERSHIP; CIVIL AND MERCANTILE. — A commercial partnership is distinguished
from a civil one by the object to which it is devoted and not by the machinery by which it
is organized.
2. ID.; JURIDICAL ENTITY; CAPACITY TO SUE. — A copartnership organized for the buying
and selling of merchandise is a commercial one governed by the Code of Commerce, and
the failure to comply with the latter does not cause it to be a civil partnership.
3. ID.; ID.; ID. — A copartnership organized for commercial purposes not in compliance
with the Code of Commerce is not a juridical entity and can not maintain an action in its
name.
4. APPEAL; REVIEW OF EVIDENCE; MOTION FOR NEW TRIAL. — Whether there is any
evidence whatever to support a finding of fact is a question of law and the appellate court
will always examine the record to determine this question, whether there has been a
motion for a new trial or not.
Per COOPER, J., dissenting:
5. ID.; ID. — In the absence of a motion for a new trial on the ground that the findings are
contrary to the evidence it is not within the province of the appellate court to examine the
record to discover whether there is no evidence to support the findings.
6. PARTNERSHIP; JURIDICAL ENTITY; CAPACITY TO SUE. — Where no objection has been
taken by demurrer or answer to the want of plaintiff’s legal capacity to sue, the objection
is waived and the court will not pass upon the question of whether the plaintiff is a
juridical entity.
DECISION
WILLARD, J.  :
The plaintiff in this case is Prautch, Scholes & Co. This appears from the complaint and
from the judgment. The fact stated in the complaint that the recovery is for the use of A.
W. Prautch does not make him the plaintiff.
The court below having allowed Prautch, Scholes & Co. as a juridical entity to recover, the
defendant objected to the judgment on this ground, and has assigned as error in this court
such ruling.
This partnership was engaged in the business of buying and selling cows, woods, bricks,
and the products of the country. The proofs show that it never attempted to comply with
any of the requirements of the Code of Commerce. if it had complied with that Code it
would have been a juridical person. (Article 116.) Assuming, without deciding, that civil
partnerships are also juridical persons, did Prautch and Scholes not having complied with
the Code of Commerce nevertheless become a civil partnership and thus acquire a
personality of its own?
Article 35 of the Civil Code provides that the following are juridical persons:
1. The corporations, associations, and institutions of public interest recognized by law.
Their personality begins from the very instant in which, in accordance with law, they are
validly established.
2. The associations of private interest, be they civil, commercial, or industrial, to which the
law may grant proper personality, independent of each member thereof.
Article 36 is as follows:
"The associations referred to in No. 2 of the foregoing article, shall be governed by the
provisions of their articles of associations, according to the nature of the latter."
It becomes necessary to know what partnerships are civil and what ones are mercantile in
order to know in a particular case by what provisions of law the partnership there in
question is governed. Is a commercial partnership distinguished from a civil one by the
object to which it is devoted or by the machinery with which it is organized? We think that
the former distinction is the true one. The Code of Commerce of 1829 distinctly provided
that those partnerships were mercantile which had for their object an operation of
commerce. (Art. 264.) The present Code has not in our opinion made any radical change
in this respect. Article 123 provides that mercantile partnerships may be of any class
provided that their agreements are lawful and their object industry or commerce.
Article 123 declares that mercantile and industrial partnerships are merchants. It does not
say that all partnerships are merchant even if organized under this Code. It is true that
article 116 provides that the contract of partnership shall be mercantile whatever may be
its class provided it is organized in conformity with the requirements of the Code.
Whatever this may mean it can not be construed as indicating that a partnership organized
for a purpose not connected at all with industry or commerce shall be a mercantile
partnership, thus rendering useless the whole of article 123, and unnecessary the words
"mercantile and industrial" in article 123. The present Code does not therefore allow
partnerships not included in article 123 to organize under it. That permission is, however,
given to them by article 1670 of the Civil Code.
This article 1670 is entirely inconsistent with the idea that civil and mercantile partnership
are distinguished only by the methods of their organization. (1) Its language is: "Civil
partnerships, on account of the objects to which they are devoted." (2) If article 116 of
the Code of Commerce is to be so construed that all partnerships organized in conformity
with that Code are mercantile no matter to what ends they are devoted then this article of
the Civil Code is unnecessary and useless. If, however, the true distinction is found as we
believe in the objects to which the partnerships are devoted, this article can have effect.
The Code of Commerce declares the manner in which commercial partnerships can be
organized. Such organization can be effected only in certain well-defined ways. The
provisions of this Code were well known when the Civil Code was adopted. The author of
that Code when writing article 1667, having in mind the provisions of the Code of
Commerce, did not say that a partnership may be organized in any form, which would
have repealed the said provisions of the Code of Commerce, but did say instead that a civil
partnership may be organized in any form.
If that section includes commercial partnerships then such a partnership can be organized
under it selecting from the Code of Commerce such of its provisions as are favorable to
the partners and rejecting such as are not, and even including in its articles of agreement
the right to do things which by that Code are expressly prohibited. Such a construction
would allow a commercial partnership to use or dispense with the Code of Commerce as
best suited its own ends.
For example a partnership is organized for commercial purposes. It fails to state its
agreements in a public document. The managers are sued by a third person with whom
the partnership has contracted, and it is claimed that each of such managers is liable for
the whole debt, they having violated article 119 of the Code of Commerce. Their answer is
that although they are organized for commercial purposes, they have intentionally omitted
to comply with said article 119, and consequently they are a civil partnership, to the
managers of which article 120 declaring such liability does not apply.
Another case may be supposed. A partnership is organized for commercial purposes. It
fails to comply with the requirements of article 119. A creditor sues the partnership for a
debt contracted by it, claiming to hold the partners severally. They answer that their
failure to comply with the Code of Commerce makes them a civil partnership and that they
are in accordance with article 1698 of the Civil Code only liable jointly. To allow such
liberty of action would be to permit the parties by a violation of the Code to escape a
liability which the law has seen fit to impose upon persons who organized commercial
partnerships; "Because it would be contrary to all legal principles that the nonperformance
of a duty should redound to the benefit of the person in default either intentional or
unintentional." (Mercantile Law, Eixala, fourth ed., p. 145.)
Of the commentators writing since the promulgation of the Civil Code Blanco thus defines
the difference between a civil and a mercantile partnership: "If we can define the contract
of partnership in general by saying that it is one by virtue of which several persons bring
their property or industry into a common fund for the attainment of a common purpose by
common means, then a mercantile partnership will be one in which two or more persons
put their property or industry in common or both, applying them to commercial
transaction for the purpose of obtaining some profit to be divided among them." (2 Blanco,
Mercantile Law, 332.)
Estasen says: "Companies, in order to be regarded as mercantile, must have for their
object the realization of some mercantile act either as a means or an end." (7 Mercantile
Law, 122.)
Aramburo says: "Artificial persons of private interest: We shall have but little to say of
these persons, because we have said enough in speaking of the laws by which they are
governed. These same laws are those which govern their capacity, and thus civil
partnerships will be governed by the provisions of the Civil Code (1) mercantile
partnerships by the provisions of the Code of Commerce (20 and industrial partnerships,
according to their nature, will be subject to the provisions relative to one or the other of
the former classes of partnerships." (P. 457.) "In effect, we have observed that there are
three classes of artificial persons of private interest; that the essential purpose of
mercantile partnerships is the earning of a profit; that industrial partnerships may have
the characteristics of mercantile or civil partnerships, according to whether they have been
established in accordance with the requirements of the Code of Commerce or without
regard to the latter; and finally that the civil partnership is the result of the contract of this
name entered into by persons who undertake to devote to a common purpose either
money, property, or labor with the intention of dividing the profits between themselves."
(Civil Capacity, 407-432.)
Manresa’s statement that if partnerships are not organized under the Code of Commerce
they become civil partnerships clearly refers to industrial partnerships as distinguished
from mercantile, and his opinion thus agrees entirely with that of Aramburo above stated.
(1 Manresa, Spanish Civil Code, 184.)
It is not necessary in this case to attempt to define an industrial partnership or to
distinguish between it and a civil partnership on one hand and a commercial partnership
on the other. The partnership of Prautch, Scholes & Co. was a typical commercial
partnership buying personal property with the purpose of reselling it in the same form at a
profit.
Article 1697 of the Italian Civil Code is substantially the same as article 1665 of our Civil
Code. Supino in his commentaries on the Commercial Law of Italy, referring to article
1697, says: "This definition is in general applicable even to mercantile partnerships which
are those which are established with the view to effecting one or more commercial
operations. (Art. 76.) It is therefore the purpose which determines the character of a
partnership as civil or mercantile. The mercantile form assumed by a partnership whose
purposes are of a civil nature is not sufficient to give it the character of a mercantile
partnership; it will be governed by the provisions of the Code of Commerce, except with
respect to bankruptcy and jurisdiction. (Art. 229.) (Mercantile Law, p. 168)."
We have found no opinion holding the contrary doctrine except a note (p. 44) by the
translator of Supino’s work, which is as follows:" (a) Our Code provides that inscription in
the Mercantile Registry is obligatory upon companies and partnerships. (Art. 17.) Upon
this inscription and the will of the partners depend the character, civil or mercantile, as the
Civil Code does not establish any essential difference (art. 1665) between the two classes,
and authorizes civil partnerships (art. 1670) to organize with all the formalities prescribed
by the Code of Commerce. (T. N.)"
The following note also occurs in the work of Don Ramon Marti de Eixala (p. 259):" (b)
Text writers have discussed the question as to whether the division of the social capital
into shares is peculiar to commercial associations. This is denied by Toplong (No. 143 of
the Commentaries of the Contract of Partnership), who maintains that a company of
partnership is to be classified as civil or mercantile according to its object and not
according to its mechanism. But other writers support the contrary view."
We hold then on principle and authority that the contract of partnership between Prautch
and Scholes was in its nature commercial; that under article 36 of the Civil Code said
partnership was governed by the provisions of the Code of Commerce; that its failure to
comply with the requirements of that Code did not make it a civil partnership, and thus
give it legal personality, which we have assumed such partnerships have.
Having seen that the partnership in question is governed by the Code of Commerce, it
remains to ascertain what are the consequences of the failure of the partners to comply
with the requirements of the Code.
Article 116 provides that the partnership shall have personality if it is organized in
accordance with the Code. This impliedly denies to it personality unless it is so organized.
The partners are required to state their agreements in a public writing, and to record them
in the Mercantile Registry. (Art. 119, 17.)
Article 24 is as follows:
"Articles constituting associations not recorded shall be binding between the members who
execute the same but they shall not prejudice third persons, who, however, may make use
thereof in so far as advantageous."
That a commercial partnership which has not recorded its articles of agreement can not
maintain an action in its firm name is well settled by the authorities.
"We see, then, that with respect to both classes of artificial persons (civil and mercantile)
certain formalities must be observed in order that their constitution result in legal effects."
(1 Mucius Scaevola, Com. Civil Code, p. 317.)
"It is also the fact that a mercantile partnership can not legally exist nor avail itself of the
sanction of article 296 of the Code of Commerce (reference is made to the old Code) in
enforcing its right against a third person until articles are recorded in the Provincial
Registry."
"It has also been declared that although under the provisions of article 284 of the Code of
Commerce all contracts of commercial partnerships must be evidenced by public
instrument executed with all the legal formalities, and although the failure to comply with
this requirement results in the nullity of the contract and makes it unenforceable for the
purposes of bringing action under the general provisions of article 236 of the same Code,
nevertheless persons who, conjointly and under a firm name or without it, but without
being organized with the formalities required, have entered into contracts with third
persons they may in their individual capacity bring suit upon actions resulting from such
contracts." (3 Estasen, Mercantile Law, 36, 37.)
The decisions of the Supreme Court deny legal personality to mercantile partnerships
whose articles of agreement are not recorded. (Judgments of May 8, 1885; March 12,
1888; November 23, 1883.)
It would be strange if this principle were not found in the positive law. When several
persons unite for a common end and desire to transact their joint business in the name of
a new artificial being which they create, they should notify the public who the persons are
that are responsible for the acts of this new entity. That notice can be given in no better
way than by requiring them to file their articles in the Mercantile Registry, a public record.
The firm of Prautch, Scholes & Co. had no legal personality, and this action can not be
maintained in its name.
2. No motion for a new trial was made in the court below, and it is therefore said that
article 497 of the Code of Civil Procedure prevents us from examining the evidence.
Except in the three cases therein specified this court can not examine or retry questions of
fact. But it can examine and decide any question of law that is properly presented by the
record.
Whether there is any evidence in the case to support a finding of fact is always a question
of law. And whenever it is claimed that there is no evidence to support a particular finding
we have a right to examine the record, and if we find no evidence at all upon which as a
matter of law such finding could be based it is our duty to so declare and to reverse the
judgment for error of law. If, on the contrary, we should find some evidence to support it
and a large amount of evidence against it we could not disturb it though we might be
convinced that the court below had erred in estimating the weight of the testimony.
In all cases it must appear either expressly by the certificate of the judge or impliedly from
the bill of exceptions that it contains all of the evidence in the case having any bearing
upon the point of issue. We must have before us all that the judge below had before him
when he made the finding in question. If we do not we can not say that there was no
evidence to support it.
It sufficiently appears from the bill of exceptions in this case that it contains all of the
evidence except the contract between the defendant and Poizart, a letter from Prautch to
Poizart, and one from Poizart to Prautch. None of these could have any bearing at all upon
this question of personality.

3. We have stated that the plaintiff is Prautch, Scholes & Co., but even on the assumption
that the plaintiff is Prautch and not the firm of Prautch, Scholes & Co., the judgment can
not be sustained. The court finds that Prautch succeeded to all the rights of the firm. There
is no evidence to support this finding. The only testimony on this point is the following by
Prautch: "Who succeeded to the firm name and signature? I." This statement is insufficient
as a matter of law to show that Prautch had acquired by assignment the interest of
Scholes in this contract of lease. It is entirely consistent with the idea that Scholes still
retained his rights in the assets of the extinct partnership.

On the supposition that Prautch might recover the whole of the claim for the benefit of the
firm the judgment would have to be reversed, for it allows a recovery in the name of the
firm for the sole benefit of Prautch.

4. Of the points made by the plaintiff in its brief, Nos. 1, 2, and 8 refer to the question of
personality. The proposition (1) that Prautch and Scholes brought with them from the
United States the law there in force relating to partnership and should be governed by it
here does not meet with our assent.

The claim (2) that the defendant is stopped from alleging this want of personality because
she has dealt with the partnership is not borne out by the record. The only contract which
she made with them was the lease. That was signed by them as individuals and not with
any firm name. Prautch in his testimony gives this as a reason for not notifying the
defendant of the dissolution.

The claim (8) that the decision in this case takes away from Prautch and Scholes rights
which they now have can not be sustained. We simply hold that they can not exercise such
rights by an action in the name of Prautch, Scholes & Co.

The judgment is reversed and a new trial granted with costs of the second instance
against the appellee. So ordered.