GR. No.

L-7199
May 21, 1956

MacDonald, et al. vs. Nat. City Bank of N.Y.

FACTS:

There was a partnership (Stasikinocey) which registration was denied by SEC. The
partnership obtained a loan from respondent bank secured by a chattel mortgage. While the
loan was still unpaid and the chattel mortgage was still subsisting, the partnership sold the
mortgaged vehicles to the petitioners. Respondent filed an action against the partnership
and the petitioners. The petitioner was held solidarily liable with the partnership.

ISSUE:

Among others, whether an unregistered commercial partnership that has no

juridical personality, can have a domicile so that the registration of a chattel mortgage
therein is notice to the world

HELD:

Yes, While an uregistered 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 favorable to third persons, by reason of the equitable principle of
estoppel.

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

As far as third persons are concerned, The partners cannot deny the existence of
their partnership, because in all their transactions with the respondent they represented
themselves as such

Petitioner cannot disclaim knowledge of the partnership; 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