Social Science
Law
Law on Partnership (Art. 1767 - 1867)
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Terms in this set (227)
By the contract of partnership, two or more persons
bind themselves to contribute money, property, or
Codal Definition of a
Partnership
industry to a common fund with the intention of
dividing profits among themselves.
Two or more persons may also form a partnership
for the exercise of a profession
General Professional
a partnership formed for the exercise of a common
Partnership (defined)
profession
Kinds of Partners (as to
1. Capitalist partner
Contribution)
2. Industrial partner
Kinds of partners (as to liability)
Kinds of partners (as to kind of
management work)
1. general partner
2. limited or special partner
1. managing partner - during the life of the
partnership
2. liquidating partner - during dissolution
Kinds of partners (as to
1. ostensible partner - a partner known to the public
knowledge by the public)
2. secret partner - a partner not known to the public
Kinds of partners (as to
1. real partner
relationship with the
2. nominal partner or a partner by estoppel
partnership)
Kinds of partners (as to their
1. universal partner
extent of participation)
2. particular partner
1. silent partner - participates in the management
Kinds of partners (as to power
but is not publicly known
in the partnership)
2. dormant partner - does not participate in the
management and is not publicly known
Kinds of partner (as to time of
1. original partner
admission)
2. newly admitted or incoming partner
1. subpartner
Other kinds of partners
2. retiring partner
3. substitute limited partner
delectus personae (defined)
no one can become a member of the partnership
without the consent of all other partners
1. consensual
2. nominate
3. bilateral/multilateral
Characteristics of a Partnership
4. onerous
5. commutative
6. principal
7. preparatory
contribution of money (kind)
fiduciary (defined)
GR on validity of corporations
being a partner in a partnership
must be in legal tender
trust and confidence
G.R. corporations cannot be a partner to a
partnership
E. Joint Ventures
Rationale for disallowing
it is the policy of law that a corporation will manage
corporations from being
its own affairs separately and exclusively
partners in a partnership
1. valid contract
2. legal capacity of the partners
Elements of a Partnership
3. mutual contribution
4. lawful object
5. primary purpose is sharing in profits
1. minors
Persons incapacitated from
entering a partnership
2. insane
3. deaf-mutes who do not know how to write
4. under civil interdiction
5. Under guardianship
Characteristics of Partnerships
as a Juridical Person (1768)
Elements of a partner in a
partnership (1769)
1. has a separate and distinct personality
2. has juridical capacity
3. has the capacity to act
1. gives a required contribution
2. shares in profit and losses
3. has a say in management
1. third persons are not partners
Rules in determining whether a
person is a partner in case of
doubt (1769)
2. co-ownerships are not partnerships
3. receipt of gross returns does not signify
partnership
4. receipt of net returns signifies partnership, except
in certain cases
G.R. receipt in net returns signifies a partnership
E. it does not in the following instances:
GR on receipt of net returns as
a sign of partnership
1. it is in payment of debt
2. it is for wages or rent
3. annuity to a widow or representative
4. payment of interest on a loan
5. payment in consideration of goodwill
1. contract of partnership is void ab initio
Effect of Unlawful Object on
the Partnership (1770)
2. profits, tools, instruments, and contributions of
the partners are confiscated in favor of the state if
they are illegal
3. legal contributions of the partners are returned
G.R. partnership is consensual and no form is
required
GR on the Forms of
Partnerships
E. form is required if:
1. immovable property is contributed - P.I. and
inventory
2. partnership to be formed after a year - writing
3. limited partnerships - P.I. and registered
Effect if immovable property
Partnership is void
contributed is not in a public
instrument with inventory
Effect if partnership to be
partnership is unenforceable
formed after a year is not in
writing
Form of Partnerships with
contract must be in a public instrument and
capital of 3000 or more (1772)
registered
Effect if the form for
failure to comply does not prevent a partnership
partnerships with a capital of
from gaining juridical personality
3000 or more is not complied
with
The purpose of registering
1. prevent tax evasion of larger partnerships
partnerships
2. make recorded instruments available to parties
Characteristics of Secret
1. no juridical personality
Partnerships (1775)
2. governed by law on co-ownership
Kinds of partners in a general
consist of general partners
partnership
liabilities of partners in a
general partnerships
1. liable pro-rata
2. subsidiarily liable
3. sometimes liable solidarily
Kinds of partners in a limited
1. one or more general partners
partnership
2. one or more limited partners
1. no time specified
Characteristics of Partnerships
2. not formed for any particular undertaking
At Will
3. terminated at anytime by mutual agreement or by
the will of one
1. term is fixed
Characteristics of Fixed
2. formed for particular undertaking
Partnerships
3. dissolved by expiration of term or completion of
undertaking
Subpartnership (defined)
contracts with partners to share in their profits from
the partnership
Kinds of Universal Partnerships
1. universal partnership of all present property
2. universal partnership of all profits
1. all property owned at the time of creation
Things to be contributed in a
2. profits from property contributed
Universal partnership of all
3. stipulation for common enjoyment of any other
present property (1778 & 1779)
profits
4. the fruits of property acquired by gratuitous title
things not enjoyed in a
universal partnership of all
present property
Those acquired by
1. acquired by inheritance
2. legacy
3. donation
Things to be contributed in a
1. industry or work during the lifetime of the
Universal partnership of all
partnership
profits (1780)
2. usufruct of movable or immovable property
things not enjoyed in a
those acquired by:
universal partnership of all
1. chance
profits
2. lucrative title
Presumption about the kind of
presumed to be a universal partnership of all profits
Universal Partnerships (1781)
Rationale for the presumption
it has the least transmission of rights
about the kind of universal
partnership
1. individuals prohibited from entering a contract
Persons prohibited from
entering a universal
partnership (1782)
2. Husband and wife
3. those who are or were found guilty of adultery or
concubinage
4. public officers, his wife, descendants, and
ascendants
Rationale for disallowing
it would permit the indirect performance of what
certain persons from entering a
the law expressly prohibits
universal partnership
1. determinate things
Objects of Particular
2. use or fruits
Partnerships (1783)
3. specific undertakings
4. exercise of a profession
Characteristics of Co-
does not have juridical personality
ownership (existence of
juridical personality)
Characteristics of Co-
for common enjoyment
ownership (purpose)
Characteristics of Co-
all members participate in decision making
ownership (parties
participating in decisionmaking)
Characteristics of Co-
created by law and agreement
ownership (how it is created)
Characteristics of Conjugal
does not have juridical personality
Partnership of Gains (existence
of juridical personality)
Characteristics of Conjugal
regulates property relations
Partnership of Gains (purpose)
Characteristics of Conjugal
husband and wife participate in decision making
Partnership of Gains (parties
participating in decisionmaking)
Characteristics of Conjugal
created by marriage
Partnership of Gains (how it is
created)
Characteristics of Voluntary
there is no juridical personality
Association (existence of
juridical personality)
Characteristics of Voluntary
purpose varies
Association (purpose)
Characteristics of Voluntary
Association (parties
participating in decisionmaking)
officer makes the decisions
Characteristics of Voluntary
created by agreement
Association (how it is created)
Characteristics of a Partnership
has a juridical personality
(existence of juridical
personality)
Characteristics of a Partnership
purpose is to make a profit
(purpose)
Characteristics of a Partnership
all partners participate in decision making
(parties participating in
decision-making)
Characteristics of a Partnership
created through a contract
(how it is created)
Characteristics of a
has a juridical personality
Corporation (existence of
juridical personality)
Characteristics of a
purpose is to make a profit
Corporation (purpose)
Characteristics of a
Board of directors decide
Corporation (parties
participating in decisionmaking)
Characteristics of a
created by law
Corporation (how it is created)
Distinct juridical relations
created by a contract of
patnership
1. among the partners themselves
2. partners with the partnership
3. partnership with contracting third persons
4. partners with contracting third persons
GR on when a partnership
G.R. from the moment that contract is perfected
commences
E. Future partnerships commence on a later date
Instances of continuation
beyond fixed period (1785)
1. extended by the partners, expressly or impliedly
2. mere continuation of the business after the
termination without settlement/liquidation
Rights and duties of partners
rights and duties of the partners remain the same,
after continuation beyond fixed
insofar as is consistent with a partnership at will
period
Partnerships as personal
law will not force one to continue or become a
relationships
partner
1. there is no such thing as an indissoluble
Dissolubility of Partnerships
partnership
2. all partnerships are subject to dissolution at the
express will of a partner acting in good faith
1. contribute at the beginning or stipulated time
2. answer for the fruits from the date it should have
Obligation of partners with
been contributed
respect to contribution (1786)
3. answer for eviction
4. preserve/DGFF
5. be liable for damages
Remedy when partners fail to
Action for specific performance + damages and
make the required contribution
interest
Appraisal (1787) meaning
Valuation of property
Inventory (1773) meaning
Transfer of ownership
GR on who conducts the
G.R. the partners themselves
valuation or appraisal
E. Experts chosen by the partners
When a partner fails to
contribute money (1788)
They must contribute any amount they failed to
contribute + damages and interest from the time
they should have contributed
When a partner
They must reimburse any amount taken + damages
misappropriates the funds of
and interest from the time they misappropriated it
the partnership (1788)
GR on validity of Industrial
Partners participating in
another business (1789)
G.R. Industrial Partners are not allowed to
participate in another business because he is loyal
to the partnership
E. He can if expressly stipulated
Effect when IP participates in
1. Exclusion from the firm + damages
another business without
2. Availment of profits by the Partnership + damages
express permission
GR on Presumption as to
G.R. contributions are presumed to be equal
amount each partner
E. stipulation
contributes to the fund (1790)
G.R. there is an obligation to give additional capital
GR on Obligation of partners
to give additional capital in
case of imminent loss (1791)
when there is a threat of imminent loss
E. There is no obligation to give when
1. stipulation
2. industrial partner
3. partner is insolvent
When a capitalist partner
he is obliged to sell his interest to the other partners
refuses to contribute additional
capital in cases of imminent
loss
Best test of existence of
intention of dividing profits and losses
partnership
Advantage of a Partnership
Delectus Personarum
Acquisition and conveyance of
immovable property may be acquired and
any immovable property or
conveyed in the name of the partnership
interest therein
Look at the receipt
1. in the name of the managing partner Rules to follow when managing
proportionate application
partner receives credit
2. in the name of the partnership - solely to the
partnership
3. receipt states no name - solely to the partnership
Rules to follow when a partner
1. all partners are essentially managing partners of
receives credit and no
the partnership
managing partner has been
2. the rules of Art. 1792 apply
assigned
When article 1792 does not
apply
1. Not the MP
2. Not yet due
3. Debtor pays the more onerous debt
1. partner receives his share of the credit in whole or
Requisites for the application
in part
of the rule governing receipt of
2. other partners have not yet collected
interest by any partner when
3. Debtor becomes insolvent
there is only one debt and the
debtor becomes insolvent
the partner who has collected must bring to the
partnership what he has received
Effect when a partner receives
Obliged to bring to the partnership capital what
his share in the partnership
received.
credit but the debtor becomes
insolvent
GR on validity of
Compensating damages owed
by partners to the partnerships
through his own fault (1794)
G.R. cannot be compensated against the profit they
bring to the Partnership
E. When they bring unusual profits through
extraordinary efforts, the liability is equitably
lessened
Who bears the risk of loss after
1. When ownership is transferred - the partnership
delivery to the partnership (Res
2. When usufruct is transferred - the partner
Perit Domino 1795)
Responsibility of partnership to
partners (1796)
1. refund amounts disbursed plus interest
2. answer for obligations contracted in good faith
3. answer for risks in consequence of management
GR on the Distribution of
G.R. according to stipulation (profit sharing)
Profits
E. Capital contribution
G.R. Stipulation (loss sharing)
GR on Distribution of Losses
E. Profit Sharing agreement
E.E. Capital Contribution
GR on Industrial Partner profit
and loss sharing
Liability of industrial partner for
losses
G.R. according to stipulation
E. if there is no stipulation they are given what is just
and equitable under the circumstances
they are not liable