PARTNERSHIPS Article 1767 By the contract of partnership, two or more persons bind themselves to Essential requsites of a contract of partnership 1. valid contract 2. contribution of money, property, and industry to a common funds 3. organized for the gain or profit 4. lawful object or purpose, and establish for the common benefit or interest of the partners industry to a common funds, with the themselves. Two or more persons may also forma partnership for the exercise of a ‘A juridical Person Money - medium of exchange Property - any external thing, right of possesion. Characteristic of a contract of partnership Consensual - Perfected by mere consent Commutative - Contribution of each partner Principal - it does not depent on other contract for its existence /Onerous- can contribute one, some or all ‘K group of men pursuing a learned art as a common calling Industry - diligence in the performance of a task. form or branch of productive labor Doctrine of delectus personar of these. ~ The right to choose with whom a person wishes to Nominate - contract which has a name of associate himself. law - it allow the partners to have the power, although not Preparatory - preperation fro anothor necessarily the right to dessolve the partnership. contract or contracts Delectus personarum - choice of persons The partners cannot held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent, nfair, oF illegal purposes. Delectus personae - choice of the person “Article 1768 The partneship has aj “seprate and distint from that of each of the [every contract of parinership having capital of thousand pesos or more, in money or even in case of failure to cimpl see Ee 7 m, «partners Py property, shall appear ina public intrument which with the requirement o first ‘must be recorded in the office of the SEC. paragraph Failure to ccomply with the requirements of the preceding paragraph shall not affect the labilityArticle 1769 In determining whether a pertnership exists, there rules shall apply: (1) Except as provided by Art. 1825, Parnership by Estoppel - Where a partnership not duly organized has been recgnized as such in its dealings with centain persons. (2) ‘establish a partnership, whether such co-owners or co possessors do or do not share any profits made bu the use of the property; (3) The sharing of gross return does not of itself _ establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the return are derived; (4) Th in the business, but no such inference shall be drawn of such profits were received in payment: (a) asa debt by installments or otherwise; (b) Aswagess of an employee or rent to a landlord; () Asan annuity to a widow or reprentative of a deceased partner; (d) Asinterest on a loan, though the amount of payment vary with the profit of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise When ai is without prejudice to the instruments and effects of the crime. Effects of an unlawful partnership The contract is void from the very beginning. General Rule: ‘the conract may be oral or in writing Public Instrumer Adocument preprared by a notary public in the presence of the parties who sign it beofre witness Real Rights: connected with a thing, rather that a person Object or purpose of a partnership ‘must be within the commerce of man, not impossible, and it must not be contrary to law, morals, good custom, _ purpose, and must be established for the | public order or public policy. - Formed for gambling purposes dissoalved by a juricial decree, the profit.) - Formed to furnish houses for prostitution purposes. in restraint of trade | Prima Facie - Sufficient to establish a fact raise a presumption unless disproved or rebutted; based on what seems to be true on first examination, even though it may later be proven to be untrue aR A partnership may be constituted required thus, jin any form, except where are contributed threto, in which case a public instrument shall be PRY necessary. —A contract of partnership is void, ‘An inventory is still required if aside from real whenever immovable property is property, personal property is contributed. However, the inventory need not include the contributed threto, personal property. parties, and intrument. Intented primarily to protect third persons. ‘therein may be acquired in the partnership name, Title so acquired can be conveyed “Article 175 ————— Partnership vs. Assocation Associations and societies, whose articles iy Thi ‘of money, | There is no eoniribution of capital Property, or industry or a | although fees are usually collected ‘combination ofthese from the members to maintain the | organization. The associations or Liability = : | The partnership is the one liable. — societies here cannot sue ™2 ——— becauase it has no legal suey ‘Article 1776 As to its object, a partnership is either ‘universal or particular. As reagrds the liability of the partners, a partnership — may be general or limited = Contribute all the property (Classification’of Partnership, which actually belongs to them 1. According to object for its object determinate things, roecommon Fond a. Universal partnership ee eee | profit b. Particular partnership profession or vocation. = may acquire by their industry 2. According to liability or work during the existence of a. General partnership all partner are general partners. the partnership b. Limited partnership _ they are liable up to the extent of | Partnership at will ‘one where there is at least one Partnership with a fixed term envel Partner and one limited partner, They are liable only to. eneeenccrenc . Partnership for a particula existence of the partnership has undertaking agreed upon by the partners 4. According to representation to oe ihere it will exist until the other purpose is accomplished Partnership definition 2. ordinary partnership ‘one wnere persons by woras i. Partnership by estoppel spoken or written or by conduct, 5, According to the legality of its represent themselves as partners gyictence complied with all the legal inan existing partnership or with ‘one or more persons not actual es b. De facto partnership a. De jure partnership requirements for its creation. ‘not complied with all the legal requitment for its creation“Article 1777, Kinds of universal partnership | (AFti¢l@l1778 - Partnership of all present A universal partnership A partnership of all present property is property es = Partnership of all profits ‘that in which the partners contribute all property or to all the _ the property which actually belongs to profits” ‘them to a common funds, with the intention of diving the same among “Article 1779 themselves, as well as all the profits inisluniversal partnershiney which they may acquire therewith of the partners at the time of the constitution | Future Property (inheritance, Legacy, or Donation) Cannot be included because; of the partnership, become the common 1. Contract regarding successional rights cannot be porperty of all the partners, as well as all the made. profits which they may acquire therewith 2, Demands that the contributed things be derminate known and certain; eee 3. Implies a donation, and it is well-known that Astipulation for the generally, future property cannot be donated. _any other profit may also be made; but the property which the partners may acquire subsequently by inheritance, legacy, or “Article 1780 donation cannot be included in such Auniversal partnership of profits stipulation, except the fruit thereof. comprises all that the partners may Partners retain their ownership over their presnet and future property. What passes to the partnership are the profit and the Movable or immovable property which use of the same each, only the usurfruct passing to the axwally partnership. onerbted ether ch Ibecome common propery fal the ve | cE ‘ [Genera Rate =a Article of universal partnership Ear | _itsnatur, only contitute a universal partners and th partnership, Exception Presumption : Imposes less obligation becuase their realy and rts subsequent personal properties are retained by them in naked legacy or ownershipRationale: Universal partnership is virtually a donation to each other of the partners properties. Effect of violation Null and void, no legal personality was ever acquired “Article 1782 Pe advantage cannot enter into universal partnership A particular partnership has for its determinate things, their use or fruit, or specific undertaking or the exercise of a ‘money or property or both to _ Kinds of partners Ce one 1. As to contribution labor or industry to the a. Capitalist partner common funds, ». industrial partners both money or property and ©. Capitalist-Industrial partner | Meld lable to hid person for industry to the common funds 2. Asto liability partnership obiligation a. General partner: b, limited partner 3. As to management a. managing partners 2¢tively manage the business b. Silent partner not active, but share in the profit 0° Active and known to the public ¢. liquidation partners losses. 4. Asto third persons take charge of the winding up a. Ostensible partners after dissolution b, Secret partners <. Dormant partners 5. As to membership a. Real partners b. Parners by Estoppe! _ 6. As to continuation of the business affairs after” ‘connection 1s not known to the public not active, ana not Known to the public. bothe secret and silent nartners existing legal partnership not really partners but represent themselves Continue after dissolution do not continue after dissol Continuing partners Discountinuing partner a. Original partne member after its establishmer ‘those who withdraw expelled from the partnership fo a valid reason represents the majority or 3. Majority partners Nominal partners represent the minority interestGeneral rule: A partnership partnership begins from the moment of moment of the execution of the” ‘the execution of the contract contract, unless it is otherwise — 5 ception: ‘stipulated can agree on some other date for the start of the partnership _ Article 1785 Partnership with a fixed term one where the life or period of existence has been agreed upon. When a partnership for a fixed term or _ the termination of such term or particular undertaking without any express agreement, the rights and duties of the partners remain the same as they were ar such termination, so far as is accomplished consistent with a partnership at will. Partnership at will does not fixed its term _ Partners or such of them as habitually Article 1786 acted therein during the term, without Every partner is a debtor of the partnership for whatever he may have promised to any settlement or liquidation of the thereto. partnership affair, is prima facie evidence © f inuation of - He shall also be bound for warranty in case with regard to specific and ‘ontribution of common funds. failure tO contribute make the partner a debtor of the partnership even if there is no determinate things which he may have contributed to the partnership, in the same cases and in the same manner as the vendor is bound with respect to the vendee. He shall also be liable for the fruits thereof from the Partnership for a particular undertaking one where ot will exist until the purpose is TESTS OM TO SPECIIC OF determinite things which a partner contribute property has been promised. 1 fruit thereof should also be given Fruit referred to those arising from the time they should be been deliver without the need of any demand. Article 1787 Rationale: To know the monetary value of the When the capital or part thereof which a partner is contribution of that partner as of the date bound to contribute consist of goods, their appraisal _ of contribution Manner of aprraisal _ stipulation, it shall be made by experts chosen by the Partners, and according to current prices, the subsequent changes thereof being for account of the partnership —A partner who has undertaken to contribute "assum of money and fails to do so becom Essence of partnership | adebtor for the interest and the time he should have complied with his obligation. y and REED An industrial partner cannot engage in ‘i in business for himself unless the do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained it violation of this provision, with a right to damage in either case rl Exception: i “Article 1797, 1. Stipulated If there is no agreement to the contrary, in case of 2. incase of imminent loss of the business of the partnership partnership, any partner who refuses to General Rule / except an industrial partner, to save the venture, Capitalist partners are not bound to contribute additional capital _ shall be obliged to sell his interest to the other partners. Obligation of capitalist partners to contribute additional capital on | Rationale: to prevent furtherance of the partners personal interest to the dhasuipebuscolectedetel bacprlcs tosthiuociediioin | sevinenat he pacceati not applicable whos not given a receipt for his own credit only; but should he have menaging Partners given it for the account of the partnership credit, the amount shall be fully applied to the latter. The provisions of this article are understood to be without. prejudice to the right granted to the debtor by Article 1252, but only if the personal credit of the partner should be more onerous to him.A partner who has received, in whole or in Dri in reece of pte Sang part, his share of partnership credit, when ‘ical fer Lara bet eta ot he CESSES USSU, eens "shall be obliged, if the debtor should streptveaecman faa A OA Hod thereafter become insolvent, ee ee {eek iar av geno “Article 1794 Every partner isesponsible to the Rule: ‘through his fault, and he cannot Damages suffered by the partnership Cetin ee _ compensate them with the profits and partner are not generally subject to set off benefits which he may have earned for the with the profiits and benefits which that partnership by his industry. However, the partner may have earned for the partnership by his industry. a ® a provisions of Article 1801. f event (2) None of the partners may, without the See artnet eving on lcssoclate _ consent of the other, make any important qouldlbe @ _ alteration in the immovable property of the Contract of sub-partnership ‘partnership, even it may be useful to the ~ consent ofthe other partners isnot partnership. But if the refusal of the consent by required aa oes interest of the partnership, the court'sArticle 1805 The partnership books shall be between the partners, at the principal place of business of the partnership, and every partner copy any of them. Article 1807 ‘Every partner must account to the partnership for any benefit, and a ~ consent of the other partners: Article 1806 Partners shall render on _| Violation of the above demand true and full 7 stated article's called ‘ ‘ _ ‘representative of any deceased partner or of any partner under legal disability. Rationale: the parners are governed by fiduciary relationship that is mutual trust and confidence. _from any transaction connected with the formation, conduct, or Article 1808 liquidation of the partnership or The capitalist partners cannot _ from any use by him of its roperty. any operation which is of the kind 7 — | of business in which the — - capitalist partner shall bring to the common und any profits | Partnership is engaged, unless accruing to him there is a stipulation to the - shall personally bear all the contrary. losses e “Article 1809 Any capitalist partner violating as partnership _common fund any profits accruing affairs: to him from his transactions, and shall personally bear all the losses. (1) If the partnership business or Severaliule possession of its property by his co- partners; (2) If the rights exists under the terms of any agreement; (3) As provided by Article 1807; (4) Whenever other circumstances ‘render it just and reasonable No formal accounting is idemandable until after the dissolution of the partnership Giiticles 0, a The property rights of a partner are: (1) His rights in specific partnership property; (2) His interest in the partnership; and cia ae management.“Article 1817. A partner is co-owner with his partners of specific partnership property The incidents of this co-ownership are such that: (1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; but he has no right to possess such property for any other purpose without the consent of his partners; (2) A partner's right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property; (3) A partner's right in specific partnership property is not subject to attachment or execution, except on a claim against the partnership. When partnership property is attached for a partnership debt the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws; (4) A partner's right in specific partnership property is not subject to legal support under Article 291. Profit Surplus The excess of the revenue over | | The excess of receipts over expenditures in a business disbursement. funds that remain transaction after a paernership has been dissolved and all debts paid jr, aS against the other partners in the absence of agreement, entitle the assignee, during the continuance of the Conveyance partnership,to interfere in the management or the voluntary trasfer of etinnsactionsnoutodnspeckthepagtnershipboolsybutlt merely entitles the assignee to receive in accordance with his otherwise be entitled. However, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies. In case of dissolution of the partnership, the assignee is entitled to receive his assignor's interest and may require an account from the date only of the last account agreed to by all the partners.