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OF
THE
CONTRACT
OF
Notes of
hotjurist
in foro conscientiae
Page
whether a partnership has a juridical
personality or not depends on its PERSONAL LAW of
the partnership or the law of the place where the
partnership was organized
REQUISITES FOR EXISTENCE OF PARTNERSHIP [I,
CF, JI]
1. INTENTION to create a partnership
2. COMMON FUND obtained from contributions
3. JOINT INTERESTS in the PROFITS
WHAT DO NOT ESTABLISH A PARTNERSHIP
1. mere co-ownership or co-possession
even with profit sharing
2. mere sharing of GROSS returns
even with joint ownership of the properties
involved
RULES TO DETERMINE THE EXISTENCE OF A
PARTNERSHIP
1.
2.
3.
4.
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Notes of
hotjurist
in foro conscientiae
Page
a partnership contract is NOT CONVERED by
the STATUTE of FRAUDS
an AGREEMENT TO FORM a partnership
does not itself create a partnership
when there are conditions to be fulfilled or when
a certain period is to lapse, the partnership is not created
till after the fulfillment of the conditions or the arrival of
the term and this is true even if one of the parties has
already advanced his agreed share of the capital
RULE: if CAPITAL is P3,000 or more
REQUIRED:
1. PUBLIC INSTRUMENT
2. RECORDED S.E.C.
* FAILURE TO COMPLY shall not effect the liability
of the partnership and its members to third persons
** IF REAL PROPERTIES have been contributed,
REGARDLESS of the VALUE, a public instrument is
needed for the attainment of legal personality
REQUIREMENTS WHERE IMMOVABLE / REAL
PROPERTY IS CONTRIBUTED
1. PUBLIC INSTRUMENT
2. INVENTORY signed and attached to the P.I.
* applies regardless of the value of the real
property
* applies even if only real rights over the real
property are
contributed
* applies if aside from real property, cash or
personal property is
contributed
TRANSFER of land to the partnership must be duly
recorded in the ROD to make the transfer effective
insofar as third persons are concerned
RULE:
any immovable property or an interest therein maybe
acquired in the partnership
name
title so acquired can be conveyed only in the
partnership name
IF the partnership has ALIENS, it CANNOT OWN
LANDS, whether public or private or whether agricultural
or commercial EXCEPT through HEREDITARY
SUCCESSION
LIMITATIONS ON ACQUISITION
1. AGRICULTURAL LANDS 1024 HECTARES
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1.
2.
3.
4.
5.
Notes of
hotjurist
in foro conscientiae
Page
I) AS TO PURPSE
1. COMMERCIAL / TRADING
2. PROFESSIONAL / NON-TRADING
GENERAL PARTNERSHIP
one where all the partners are general partners
they are LIABLE even with respect to their individual
properties, after the assets of the partnership has been
exhausted
LIMITED PATNERSHIP
one where at least one partner is a general partner
and the others are limited partners
one whose liability is limited only up to the extent of his
contribution
a partnership where all the partners are limited
partners cannot exist as a limited partnership
REFUSED REGISTRATION
IF it continuous as such, it will be considered as a
general partnership and all the
partners will be
general partners
KINDS OF UNIVERSAL PARTNERSHIP
1. PARTNERSHIP OF ALL PRESENT PROPERTY
2. PARTNERSHIP OF ALL PROFITS
*UNIVERSAL PARTNERSHIP OF ALL PRESENT
PROPERTY
CONTRIBUTION of
1. ALL the properties actually belonging to the
partners
2. the PROFITS acquired with said property
BECOMES COMMON PROPERTY
EXCEPT all FUTURE PROPERTY
FRUITS of FUTURE PROPERTY
INCLUDED IF STIPULATED UPON
*UNIVERSAL PARTNERSHIP OF PROFITS
comprises all that the partners may acquire by the
INDUSTRY or WORK of the partners become common
property regardless of within said profits were obtained
through the usufruct contributed
EXCEPT PRIZES and GIFTS
RULE:
articles of universal partnership, entered without
specification of its nature, only constitute a universal
partnership of PROFITS
RULE:
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PARTICULAR PARTNERSHIP
a particular partnership has for its OBJECT:
1. DETERNMINATE THINGS their use or fruits
2. SPECIFIC UNDERTAKING
3. EXERCISE of a PROFESSION or VOCATION
OBLIGATIONS OF THE PARTNERS
RULE:
a PARTNERSHIP BEGINS from the moment of the
EXECUTION of the CONTRACT
* even if contributions have not yet been made the firm
already exists, for partnership is a consensual contract
DURATION OF PARTNERSHIP
UNLIMITED
* MAY BE AGREED UPON
1. EXPRESSLY definite period
2. IMPLIEDLY upon achievement of its
purpose
PARTNERSHIP AT WILL
a partnership wherein its continued existence really
depends upon the will of the partners or even on the will
of any of them
2 KINDS:
1. when there is no term, express or implied
2. when it is continued by the habitual managers
although the period has ended or the purpose
has been accomplished
3 IMPORTANT DUTIES OF EVERY PARTNER [C, D-F,
W]
1. duty to CONTRIBUTE what had been promised
2. duty to DELIVER the FRUITS of what should
have been delivered
3. duty to WARRANT
Notes of
hotjurist
in foro conscientiae
Page
RIULES ON THE DUTY TO CONTRIBUTE
1. the contribution must be made at the time the
partnership is entered into UNLESS a different
period is stipulated
2. no demand is needed to put the partner in
default
3. the partner must exercise due diligence in
preserving the property to be contributed before
he actually contributes the same
4. a partner who promises to contribute to the
partnership becomes a promissory debtor of the
partnership
RULES ON THE DUTY TO DELIVER THE FRUITS
1. IF property has been promised, the fruits thereof
should also be given
2. the fruits referred to are those arising from the
time they should have been delivered, without a
need of any demand
3. IF the partner is in BAD FAITH, he is liable not
only for the fruits actually produced, BUT also for
those that could have been produced
4. IF MONEY HAS BEEN PROMISED, INTEREST
and DAMAGES from the time he should have
complied with his obligation should be given
5. NO DEMAND is needed to put the partner in
default
6. it is DELIVERY, actual or constructive that
TRANSFERS OWNERSHIP
RULES ON THE DUTY TO WARRANT
1. the warranty in case of eviction refers to specific
and determinate things already contributed
2.
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Notes of
hotjurist
in foro conscientiae
Page
LIQUIDATING PARTNER
one who winds up or liquidates the affairs of the firm
after it has been dissolved
OSTENSIBLE PARTNER
one whose connection with the firm is public and open
SECRET PARTNER
one whose connection with the firm is concealed or
kept secret
DORMANT PARTNER
one who is both a secret (hidden) and silent (not
managing) partner
NOMINAL PARTNER
one who is not really a partner BUT who may become
liable as such insofar as third persons are concerned
RULE:
partners shall CONTRIBUTE EQUAL SHARES to the
capital of the partnership
* it is permissible to contribute UNEQUAL SHARES
IF there is a stipulation to this effect
* in the absence of proof, the shares are presumed
to be equal
CONDITIONS before a capitalist partner is obliged
to sell his shares / interest to the other partners [IL,
RC, NA]
1. if there is IMMINENT LOSS of the BUSINESS of
the partnership
2. he REFUSES to
CONTRIBUTE
ADDITIONAL SHARE to the CAPITAL
an
MANAGING
PARTNER
REQUISITES:
1. existence of at
PARTNERSHIP
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COLLECTS
FUNGIBLE or DETERIORABLE
FIRM bears the loss for it is evident ownership
was transferred
3.
least
debts
----
---- PARTNER
2. both sums are demandable
3. the collecting partner is the managing partner
Notes of
hotjurist
in foro conscientiae
Page
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amount
of
2. EXTENT of POWER
as long as he remains manager, he can perform all
acts of administration
BUT if others oppose and he persists, he can be
removed
*RULE WHEN there are 2 or MORE MANAGERS
CONDITIONS:
1. 2 or more partners are managers
2. there is no specification of respective duties
3. there is no stipulation requiring UNANIMITY
SPECIFIC RULES:
1. each may separately execute all acts of
administration
UNLIMITED POWER to ADMINISTER
2. IF any of the managers OPPOSE
MAJORITY RULE
IN CASE OF A TIE
- persons owning controlling interest prevail
provided they are also managers
* right to oppose is not given to NON-MANAGERS
* OPPOSITION should be done BEFORE the acts
produce legal effects insofar as third persons are
concerned
RULE WHEN UNANIMITY is REQUIRED
1. the CONCURRENCE of all shall be necessary
for the validity of the acts
2. the ABSENCE or DISABILITY of ANYONE of
them CANNOT BE ALLEGED UNLESS there is
imminent danger of grave or irreparable injury to
the partnership
RULE ON DUTY of THIRD PERSONS
third persons are not required to inquire as to whether
or not a partner with whom he transacts has the consent
of all the managers
*RULES to be observed when the manner of
management has not been agreed upon:
1. all the partners are considered AGENTS
whatever any one of them may do alone shall
not bind the partnership
2. IF the acts of one are opposed by the rest, the
majority shall prevail
3. when a partner acts in his OWN NAME, he does
not bind the partnership
Notes of
hotjurist
in foro conscientiae
Page
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RULE:
* a partner is CO-OWNER with his partners of
SPECIFIC PARTNERSHIP PROPERTY
* RIGHTS of a PARTNER
PARTNERSHIP PROPERTY
in
SPECIFIC
Notes of
hotjurist
in foro conscientiae
Page
the ASSIGNOR is still the partner, with a right
to demand accounting and settlement
3. the ASSIGNEE CANNOT interfere in the
MANAGEMENT or ADMINISTRATION of the
firm
the ASSIGNEE CANNOT also DEMAND [I, A,
I]
A) INFORMATION
B) ACCOUNTING
C) INSPECTION of partnership books
*** while a partners INTEREST in the firm may be
CHARGED or LEVIED upon, his INTEREST in a specific
firm PROPERTY CANNOT be attached.
RIGHTS of the ASSIGNEE
1. to get whatever profits the assignor-partner
would have obtained
2. to avail himself of the usual remedies in case of
fraud in the management
3. to ask for ANNULMENT of the contract of
assignment IF:
A) he was induced to enter into it through any of
the vices of consent
OR
B) he himself was incapacitated to give consent
4. to demand an accounting BUT only if the
partnership is dissolved
PREFERENTIAL
RIGHTS
of
PARTNERSHIP
CREDITORS
* partnership creditors are entitled to PRIORITY over
partnership assets, including the partners interest in the
profits
** SEPARATE or INDIVIDUAL creditors have
PREFERENCE in separate or individual properties
* when the CHARGING ORDER is applied for and
granted, the court may appoint a receiver of the partners
share in the profits
the receiver appointed is entitled to any relief
necessary to conserve the partnership assets for
partnership purposes
* interest charged may be redeemed at any time
before foreclosure
* AFTER FORECLOSURE the interest may still be
redeemed by (without causing dissolution)
1. with separate property, by any one or more of the
partners
OR
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Notes of
hotjurist
in foro conscientiae
Page
* every partner is an agent of the partnership for the
purpose of its business
G.R.- the act of every partner for apparently carrying on
in the USUAL WAY the business of the partnership of
which he is member binds the partnership
EXCEPT:
1. if he has NO AUTHORITY
and
2. the person with whom he was dealing with HAS
KNOWLEDGE of the fact that he has no such authority
RULE:
an act of a partner which is not apparently for the
carrying on of business of the partnership in the usual
way does not bind the partnership UNLESS authorized
by the other partners
* a partnership is a CONTARCT of MUTUAL AGENCY,
each partner acting as a principal on his own behalf and
as an agent for his co-partners or the firm
REQUISITES on WHEN can a partner BIND the
partnership
1. expressly or impliedly AUTHORIZED
2. when he acts in BEHALF AND IN THE NAME of
the partnership
INSTANCES of IMPLIED AUTHORIZATION
1. when the other partners DO NOT OBJECT,
although they have knowledge of the act
2. when the act is for apparently carrying on in the
usual way the business of the partnership
* this is binding on the firm even if the partner
was not really authorized PROVIDED that the third
party is in GOOD FAITH
RULE on UNUSUAL ACTS
one or more but less than all the partners HAVE NO
AUTHORITY TO:
[AP, DG, AI, CJ, EC, SA, RC]
1. ASSIGN the PARTNERS PROPERTY
2. DISPOSE of GOODWILL
3. do any other act which would make it impossible
to carry on the ordinary business of the
partnership
4. CONFESS a judgment
5. ENTER into a COMPROMISE
6. SUBMIT to ARBITRATION
7. RENOUNCE to CLAIM
*RULES on CONVEYANCE of REAL PROPERTY
1. where title to real property is in the partnership
name
any partner may convey title to such property
by a conveyance executed in the partnership
name
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Notes of
hotjurist
in foro conscientiae
Page
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LOSS OR INJURY
RULE on WRONGFUL ACT or OMISSION of a
PARTNER (SOLIDARY LIABILITY)
* the partnership is solidarily liable with the partner if
the wrongful act or omission
1. the partner is acting in the ordinary course of
business of the partnership
OR
2. with authority of his co-partners
* innocent partners have right to recover from the
guilty partner
* When the firm and other partners not liable:
1. if the wrongful act or omission was NOT DONE
A) within scope of partnership business
B) with authority of the other co-partners
2. if the act or omission is NOT WRONGFUL
LIABILITY
of
PARTNERSHIP
for
MISAPPROPRIATION (SOLIDARY LIABILITY)
1. RECEIVING PARTY MISAPPROPRIATES
2. ANY PARTNER MISAPPPROPRIATES
- money or property in custody of
partnership
PARTNER BY ESTOPPEL
a person who represents himself or consents to
another / others representing him to anyone as a partner
either in an existing partnership or in one that is fictitious
or apparent
PARTNERSHIP BY ESTOPPEL
when all the members of the existing partnership
consent to such representation of a partner by estoppel
RULES AND SITUATIONS:
1. if a third person is misled and acts because of
such misrepresentation
the deceiver is a partner by estoppel
2. if the partnership consented
misrepresentation
partnership liability results
to
such
Notes of
hotjurist
in foro conscientiae
Page
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Notes of
hotjurist
in foro conscientiae
Page
1. after the termination of the specified term or
particular undertaking
2. AT ANY TIME, if the partnership was a
partnership at will when the interest was
assigned or when the charging ordered was
issued
* proof as to the existence of the firm must first be
given
* even if a partner has not yet been previously
declared insane by the court, dissolution may be asked,
as long as the insanity is duly proved in court
* in a suit for dissolution, the court may appoint a
RECEIVER at its discretion
EFFECTS OF DISSOLUTION
RULE:
* when the firm is dissolved, a partner can no longer
bind the partnership
* a dissolved partnership still has the personality for
the winding up of its affairs
the firm is still allowed to collect previously
acquired credits
the firm is still bound to pay of its debts
DISSOLUTION CAUSED by A-I-D
RULE: (STILL BOUND) as to each partners
G.R. where the dissolution is caused by the ACT,
INSOLVENCY or DEATH of a partner, each partner is
liable to his co-partners for his share of any liability
created by any partner acting for the partnership
EXCEPTION: - individual liabilities
1. if dissolution by ACT
the partner acting for the partnership HAD
KNOWLEDGE of the dissolution
OR
2. if dissolution by DEATH or INSOLVENCY
the partner acting for the partnership HAD
knowledge or notice of the death or insolvency
* only the partner acting assumes liability
*AFTER DISSOLUTION, a partner can still bind the
PARTNERSHIP
(WU, UT, TB)
1. By any ACT appropriate for WINDING UP
partnership affairs
2. By COMPLETING transactions UNFINISHED at
dissolution
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Notes of
hotjurist
in foro conscientiae
Page
JUDICIAL:
under the control and direction of the court, upon
proper cause that is shown to the court
* profits that will actually enter the firm after dissolution
as a consequence of transactions already made before
dissolution are included because they are considered as
profits existing at the time of dissolution
* any other income earned after the time, like interest
or dividends on stock owned by the partners or
partnership at the time of dissolution should not be
distributed as profits BUT as merely additional income to
the capital
BETTER RIGHTS of INNOCENT PARTNERS
innocent partners have better rights than guilty
partners and that the guilty partners are required to
indemnify for the damages caused
* RIGHT of INOCENT PARTNERS TO CONTINUE the
BUSINESS
in essence this is a new partnership
can use the same firm name
can ask new members to join
BUT shall: for protection of guilty partners
1. give a BOND approved by the court
2. to PAY guilty partners his interests at the time of
dissolution MINUS DAMAGES
* a guilty partner who is EXCLUDED will be
indemnified against all present or future partnership
liabilities
RIGHT TO GET CASH
in case on non-continuance of the business, the
interest of the partner should if he desires be given in
cash
assets may be sold
a guilty partner, in ascertaining the value of his
interest is not entitled to a proportional share of the value
of GOOD WIL
RIGHTS OF INNOCENT PARTNERS IN CASE of
RESCISSION
based
on
FRAUD
AND
MISREPRESENTATION
1. Right to LIEN or RETENTION SURPLUS
CAPITAL
ADVANCES
2. Right of SUBROGATION as creditor
3. Right of INDEMNIFICATION
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*ORDER
of
PAYMENT
in
WINDING-UP of
PARTNERSHIP LIABILITIES
GENERAL PARTNERSHIP: [C, R, C, P]
1. those owing to creditors other than partners
2. those owing to partners other than for capital
or profits REIMBURSEMENTS
3. those owing to partners in respect to CAPITAL
4. those owing to partners in respect to PROFITS
* IF the partnership assets are insufficient, the other
partners must contribute more money or property
PREFERENCE with RESPECT to the ASSETS
1. regarding partnership property
partnership creditors have preference
2. regarding individual properties of partners
individual creditors are preferred
RULE if PARTNER is INSOLVENT
- How INDIVIDUAL PROPERTY is DISTRIBUTED
ORDER OF PREFERENCE:
1. INDIVIDUAL or SEPARATE CREDITORS
2. PARTNERSHIP CREDITORS
3. those owing to other partners by way of
contribution
*When creditors of the dissolved partnership are
also creditors of the partnership continuing
business:
1. new partner is admitted without liquidation
2. a partner retires and assigns his rights IF the
business is continued without liquidation of the
partnership affairs
3. all but one partner retire without liquidation
4. when all partner assign their right to a person
who will assume their debt
5. after wrongful dissolution, remaining partners
continue the business without liquidation
6. when partner expelled and remaining partners
continue the business without liquidation
* liability of third person becoming a partner in the
partnership continuing the business to the creditors of
the dissolved partnership shall be satisfied out of the
partnership property ONLY
G.R. when a partner retires, he is entitled what is due
him after liquidation BUT no liquidation is needed if there
is already a settlement at the date of dissolution
JURISPRUDENCE
BASTIDA vs. MENZI
Notes of
hotjurist
in foro conscientiae
Page
* articles of association by which 2 or more persons
obligate themselves to place in a common fund any
property, industry, or any of these things, in order to
obtain profit, shall be COMMERCIAL
BORJA vs. ADDISON
* a surviving husband may form a partnership with the
heirs of the deceased wife for the management and
control of the community property
BUT in the absence of the formalities prescribed by
the Civil Code, knowledge of the existence of the new
partnership or community of property must at least be
brought home to third persons dealing with the surviving
husband in regard to the community real property in
order to bind them by the community agreement
KIEL vs. SABERT
* the declarations of one partner, not made in the
presence of his co-partner, are not competent to prove
the existence of a partnership between them as against
such partner
* the existence of a partnership cannot be established
by general reputation, rumor or hearsay
EVENGELISTA vs. C.I.R.
* By the contract of partnership 2 or more persons
bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing
the profits among themselves
ESSENTIAL ELEMENTS of a PARTNERSHIP
1. an agreement to CONTRIBUTE money,
property, or industry to a COMMON FUND
2. intent to divide the profits among the contracting
parties
* when our internal Revenue Code includes
partnerships among the entities subject to the tax on
corporations, said code which are not necessarily
partnerships in the technical sense of the term
* PARTNERSHIPS includes a SYNDICATE,
GROUP, POOL, JOINT VENTURE, or other
unincorporated organization, through or by the means of
which any business, financial operation, or venture is
carried on
* a joint venture need not be undertaken in any of the
standard forms,
or in conformity with the usual requirements of the law
on partnerships, in order that one could be deemed
constituted for purposes of the TAX on corporations
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Notes of
hotjurist
in foro conscientiae
Page
* the sharing of returns does not in itself establish a
partnership within the persons sharing therein have a
joint or common right or interest in the property
there must be:
1. clear intent to form a partnership
2. the existence of a juridical personality different
from the individual partners
AND
3. the freedom of each party to transfer or assign
the whole property
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Notes of
hotjurist
in foro conscientiae