WWW Partnership EH 402 LLB 3

July 15, 2016

Student: Yes sir because such stipulation is VOID under the

law.

OUTLINE:
Repeated discussion on distribution of CAPITAL, PROFITS
AND LOSSES as to Capitalist & Industrial Partner
Illustration: On partners A, B & C. Effect if stipulation of
profits should be determined by:
A third person
One of the partners
Industrial partner; what is
Illustration: Funeral business of Omar, Osorio & Amores
Management of Partnership
Removal of a partner
Illustration: on relocating the partnership business &
painting walls black

Summary: Rules on Contribution and Distribution of

Profits and Losses

PARTNERINDUSTRIALIST
PARTNERCAPITALIST

1.Based
Agreement

Profits
on

2.No Agreement
= Equal Sharing

ALL his industry

to
the
FULL
EXTENT

1.Based
Agreement

Student: Since there is a VOID agreement, you always have

the right to impugn it ANYTIME!
Sir: On the other hand, what does an industrial partner
contribute again?
Student: an industrial partner contributes ALL OF HIS
INDUSTRY.
Sir: and who was engaged in the funeral business?
Student: OSORIO and OMAR.

-DISCUSSION-

Contribution

Sir: Within what period can he impugn it?

Losses
on

1.Based
Agreement

on

2.No
Agreement
=
IN
PROPORTION to
their
CAPITAL

2.No Agreement
BUT there is
agreement as to
profit sharing =
SAME as profit

JUST
and
EQUITABLE

NOT LIABLE for

LOSSES

Sir: Lets try to review the situation wherein A contributes

20%, B 30% and C 50%. However they agreed that the
profits should be shared as follows: A 50%, B 30%, C 20%.
Any problem with that?
Student: No sir. That is perfectly valid because they agreed
to such stipulation.
Sir: That situation, that arrangement, that sharing will not be
valid only if?
Student: If the sharing of such profits is entrusted to a
THIRD PERSON.
Sir: If it was the decision of the third person, that is no longer
perfectly valid. Which means?
Student: Which means that the partner who thinks that such
sharing was manifestly inequitable he can impugn the
decision of the third person provided that it was done before
the execution of the decision or within three months from his
knowledge of such decision.
Sir: on the other hand, if that decision was made by just one
of the parties after the three of them agreed, can C still
complain?

Sir: Osorio and Omar. And they learned that they lack one
more partner and so they saw Amores. Since Amores had no
capital, he was made industrial partner (tig lunod sa patay).
On one Sunday, there were 3 customers ready for burial. But
Amores was not there. They called him but he was enjoying a
bottle of beer and refused to work. We have learned that if a
capitalist partner fails to deliver what he promised to
contribute what would he be liable for?
Student: liable as a debtor to the partnership.
Sir: yes. You must perform! You must deliver! Here, can the
partners now bring a police officer to force him to do what he
promised?
Student: They cannot. It would be tantamount to involuntary
servitude. He cannot be compelled to render service when he
does not want to. But when there is a contract, like when an
industrial partner has to render service as part of his
contribution, he may still be liable for damages.
Sir: so, what could be done? What will the partners do?
Student: they could hire someone else and make the
industrialist partner pay for that person for doing what the
industrialist partner was supposed to do.
Sir: so what can they now require the industrial partner to
do?
Student: ask the industrial partner to reimburse them for
whatever expenses they may have incurred for hiring a
substitute to perform his contribution.
Sir: alright. Now we talk about management of a partnership.
How is a partnership managed?
Student: absence of any stipulation, then every partner is
deemed to be a co-manager or he can be considered as an
agent of the partnership.
Sir: alright. So if they did not agree on who will be the
managing partner, who will manage?
Student: Everyone of them will be considered a manager.
Sir: however, they can also agree, and what could that
agreement be?

Student: they could also agree that they will designate

certain partners to be the managers of the business and it
can be included in the articles of the partnership. The
consequence of which is that person cannot be removed
unless there was bad faith or the concurrence of all the
partners.
Sir: They may also appoint partners. How many?
Student: depends on the agreement.
Sir: alright. They may appoint 1. And this appointment could
be?
Student: it may be done in the articles of partnership or after
the articles have been created.
Sir: alright. Is there any difference?
Student: in terms of removal. The removal of the partner
as a manager if his appointment was included in the articles
of partnership, then he could only be removed if what he did
was contrary to law, out of bad faith but such removal may
only be by the concurrence of all the partners.
But if he was designated as the manager after the articles of
partnership was formed, he could be removed at any time. At
any cost.
Sir: ok. So that if you were the manager appointed in the
articles of partnership, you are alone. What are your powers?
Student: I have powers to act as administrator of the
partnership.
Sir: alright. What are the limitations of your power as an
administrator?

Sir: so you decided, and all agreed, to move to SM. You

decided that you will paint the walls black. Can you do that?
Student: Yes sir since it is not an act of ownership. Its not
disposal of property.
Sir: do you think customers will still go to your business? Is
there anything wrong with that decision?
Student: in that case, since my act was detrimental to the
business, the partners could oppose my decision. In that
case, it is a lawful cause for my removal and if such other
partners have controlling interest, that vote to revoke or
remove my power may be effective.
Sir: in short, how can that manager be removed?
Student: if the manager, if its within the articles of
partnership that he may only be removed for lawful causes.
However, if he was appointed only after the agreement of the
partner or after the partnership was formed, he may be
removed at any time.
Sir: he was appointed by the articles of the partnership. We
may now remove her? Is it a just cause? Painting it black?
Student: I think it would be a just cause, if it is causing
losses to the partnership.
Sir: painting is not a just cause, but it has caused losses.
Which is now a just cause. If it now causes loss to the
partnership, definitely its a just cause. So there were three
partners and the managing partners are alone. Three partners
and the two other partners said remove. Would that be
enough? 2 vs 1?
Student: Yes, if they represent the controlling interest.

Student: acts of administration would be short of ownership.

Sir: but if the managing partner was an owner of 60%?

Sir: Acts of administration vs acts of ownership. Example?

Student: in that case, both the partners dont represent the

controlling interest. So, they cannot remove.

Student: I could not dispose of property without the consent

of other partners.
Sir: so that if you now decide to relocate the office, like from
Pasil to SM seaside. Can you?

---END--CREDITS: Bangis, Barcenas, Canda, Lescabo,

Montecillo, Tatad, Timtim, Omar, and Osorio

Maylon,

Student: if such moving of the office of the partnership

means disposing of the property, I could not. However if it is
merely moving, I could do so.