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PARTNERSHIP
331UNIVERSITYOFSANTOTOMASF a c u l t a d d e D e r e c h o C i v
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ACADEMICSCHAIR:LESTERJAYALANE.FLORESIIVICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZAVICECHAIRFORADMINISTRATIONANDFINANCE:JEANELLEC.LEEVICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
I.CONTRACTOFPARTNERSHIP
A.DEFINITIONQ:Whatispartnership?A:Acontractwherebytwoormorepersonsbindthemselves
to contribute money, property,
orindustrytoacommonfund,withtheintentionofdividingtheprofitsamongthemselves.Note:
Two or more persons may also form apartnership for the exercise of
a profession. (Art.1767,NCC)
B.ELEMENTSQ: What are the essential elements of
apartnership?A:
1. Agreement to contribute money,propertyor
industrytoacommonfund(mutual contribution to a commonstock);and
2. Intention to divide the profits
amongthecontractingparties(joint interest intheprofits).
(Evangelistav.CollectorofInternalRevenue,G.R.No.
L9996,Oct.15,1987).
Q:Whataretherequisitesofapartnership?A:ICJ
1. Intentiontocreateapartnership2. Common fund obtained from
contributions3. Jointinterestindividingtheprofits(and
losses)Q:Whatarethecharacteristicsofapartnership?A:BONCCPP
1. Bilateral it is entered intoby twoormore persons and the
rights andobligations arising therefrom arereciprocal
2. Onerouseachofthepartiesaspirestoprocure for himself a benefit
throughthegivingofsomething
3. Nominate it has a special name ordesignationinourlaw
4. Consensual perfected by mereconsent
5. Commutativetheundertakingofeachof the partners is considered
as theequivalentofthatoftheothers
6. Principal its life doesnot depend
ontheexistenceofanothercontract
7. Preparatorybecauseitisenteredintoasameans toanend, i.e.
toengage inbusiness
8. Fiduciary it is based on trust andconfidence
Q: Jose entered into a verbal
agreementwithFranciscotoformapartnershipforthepurchaseofcascoesforaproposedboatrentalbusiness.ItwasagreedthatFranciscowouldbuythecascoesand
each partner is to furnish such amount ofmoneyashecould,and that
theprofitswillbedivided proportionately. After
FranciscopurchasedacascowiththemoneyadvancedbyJose, they undertook
to draft the articles ofpartnership and embody the same in
anauthentic document. However, they did notcome to an agreement.
So, Francisco returnedthemoney advanced by Jose,which the
latterreceivedwith an express reservation of all
hisrightsasapartner.
1. Was there a partnership formedbetweenJoseandFrancisco?
2. If such partnership existed, was itterminated by the receipt
of Jose ofthemoneyheadvanced?
A:
1. Yes. Both elements in a contract ofpartnership exist: a)
mutualcontributiontoacommonstock,andb)a joint interest in the
profits. If
thecontractcontainsthesetwoelements,apartnershiprelationresults,andthelawitself
fixes the incidentsof this relationif theparties fail todoso. In
thiscase,therewasmoneyfurnishedbyJoseandreceivedby Francisco for
thepurchaseof the cascoes and there was also anintention to divide
the profitsproportionately between them. Thus,there is a
partnership by virtue of theverbal agreement between Jose
andFrancisco.
2. No. There was no clear intent on
thepartofJose,inacceptingthemoney,torelinquish his rights as a
partner.(Fernandez v.DelaRosa,G.R.No. 413,Feb.2,1903)
Q: Chim was the owner and manager of
alumberyard.VicenteandTingparticipatedintheprofitsand losses.
Acontractofsawing lumberwas entered into by Chim, acting in his
ownname,withFrank.Atthetimethecontractwas
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made, they were the joint proprietors
andoperatorsofthesaidlumberyardengagedinthepurchase and sale of
lumber under the nameand style of Chim. In an action to recover
thebalanceunderthecontractfiledbyFrankagainstChim, Vicente and
Ting, the latter two allegedthat they are not Chims partners. Did
Chim,VicenteandTingformapartnership?A: No. A simple business was
formed by Chimexclusively in his own name and under hispersonal
management and he effected
everytransactioninhisnameandinthenamesofotherpersonsinterestedintheprofitsandlossesofthebusiness.Whathasbeenformed
isanaccidentalpartnershipofcuentasenparticipacion.Note: Under the
Code of Commerce, cuentas enparticipacion means a sort of an
accidentalpartnership constituted in such a manner that
itsexistence was only known to those who had aninterest in the
same, there being no mutualagreement between the partners, and
without acorporatenameindicatingtothepublicinsomewaythat
therewereotherpeoplebesides theonewhoostensibly managed and
conducted the business,governed under article 239 of the Code
ofCommerce.(Bournsv.Carman,G.R.No.L2880,Dec.4,1906)
INTENTTOCREATEAPARTNERSHIP
Q:Henry and Lyons are engaged in real
estatebusinessandarecoownersofaparcelof
land.Henry,withtheconsentofLyons,mortgagedthepropertytoraisethefundssufficienttobuyanddeveloptheSanJuanEstate.Lyonsexpressedhisdesire
not to be part of the developmentproject, but Henry, nevertheless,
pursued thebusiness alone.When the business prospered,Lyonsdemanded
fora share in thebusiness.
IsLyonsentitledtothesharesinSanJuanEstate?
A:No.Lyonshimselfmanifestedhisdesirenottobe part of the
development project. Thus, nopartnership was formed. The mortgage
of theland was immaterial to the existence of thepartnership. It is
clear thatHenry, inbuying theSan Juan Estate, was not acting for
anypartnershipcomposedofhimselfandLyons,andthe law cannot be
distorted into a
propositionwhichwouldmakeLyonsaparticipantinthisdealcontrary to his
express determination. (Lyons
v.Rosenstock,G.R.No.35469,Mar.17,1932)
332
Q: Catalino and Ceferino acquired a jointtenancy over a parcel
of land under a verbalcontract of partnership. It was stipulated
thateachofthesaidpurchasersshouldpayonehalf
ofthepriceandthatanequaldivisionshouldbemadebetweenthemofthelandthuspurchased.DespiteCatalinosdemand
foranequaldivisionbetween them, Ceferino refused to do so andeven
profited from the fruits of the land.
Aretheypartnersorcoowners?
A:Theyarecoownersbecauseitdoesnotappearthattheyenteredintoanycontractofpartnershipbut
only for the sole transaction of
acquiringjointlyorbymutualagreementofthelandundertheconditionthattheywouldpayofthepriceofthelandandthatitbedividedequallybetweenthem.
(Gallemitv.Tabiliran,G.R.No.5837,Sept.15,1911)
COMMONFUND
Q: May a partnership be formed even if
thecommonfundiscomprisedentirelyofborrowedorloanedmoney?Whatwouldbetheliabilityofthepartnersinsuchacase?
A: Yes. A partnership may be deemed to existamong parties who
agree to borrow money topursue a business and to divide the profits
orlosses that may arise therefrom, even if it
isshownthattheyhavenotcontributedanycapitalof their own to a
"common fund." Theircontribution may be in the form of credit
orindustry, not necessarily cash or fixed assets.Being partners,
they are all liable for debtsincurredbyoronbehalfof thepartnership.
(LimTong Lim v. Philippine Fishing Gear
Industries,Inc.,G.R.No.136448,Nov.3,1999)
SHAREINPROFITSANDLOSSES
Q: Mariano and Isabelo entered into apartnership agreement
wherein they are tocontribute P15,000 each for the purpose
ofprinting 95,000 posters. Isabelowas unable
toprintenoughposterspursuanttotheagreement,thus he executed in
favor of Mariano
apromissorynoteinanamountequivalenttotheunrealizedprofitduetoinsufficientprinting.Thewhole
amount became due but Isabelodefaultedpayment.
IsMarianoentitledtofileacasefortherecoveryoftheunrealizedprofitofthepartnership?
A:No.Theessenceofapartnershipistoshareinthe profits and losses,
thus, Mariano
shouldshoulderthelosseswithIsabelo.(MoranJr.,v.CA,G.R.No.L59956,Oct.31,1984)
Q: To form a lending business, itwas
verballyagreedthatNoynoywouldactasfinancierwhileCoryandKriswouldtakechargeofsolicitationof
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
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PARTNERSHIP
membersandcollectionof loanpayments.Theyagreed that Noynoywould
receive 70% of
theprofitswhileCoryandKriswouldearn15%each.Thepartiesexecutedthe'ArticlesofAgreement'whichformalizedtheirearlierverbalagreement.Later,NoynoyfiledacomplaintagainstCoryandKris
formisappropriation of funds allegedly
intheircapacitiesasNoynoysemployees. Intheiranswer, Cory and Kris
asserted that theywerepartners and not mere employees of
Noynoy.What kind of relationship existed between theparties?
A:Apartnershipwas formedamong theparties.The "Articles of
Agreement" stipulated that
thesignatoriesshallsharetheprofitsofthebusinessin a 701515manner,
with Noynoy getting thelion's share. This stipulation clearly
proved
theestablishmentofapartnership.(Santosv.SpousesReyes,G.R.No.135813,Oct.25,2001)
333UNIVERSITYOFSANTOTOMASF a c u l t a d d e D e r e c h o C i v
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ACADEMICSCHAIR:LESTERJAYALANE.FLORESIIVICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZAVICECHAIRFORADMINISTRATIONANDFINANCE:JEANELLEC.LEEVICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
Q:Joseconveyedhislotsinfavorofhisfoursonsinorder for them
tobuild their residences.Hissons sold the lots since they found the
lotsimpractical for residential purposes because ofhigh costsof
construction. Theyderivedprofitsfrom the sale and paid income tax.
The sonswere required topaycorporate income taxandincome tax
deficiency, on the theory that theyformed an unregistered
partnership or
jointventuretaxableasacorporation.Didthesiblingsformapartnership?
A:No.Theoriginalpurposewastodividethelotsfor
residentialpurposes. If later, they foundoutthat it
isnotfeasibletobuildtheirresidencesonthe lots, they can dissolve
the coownership byreselling said lots.Thedivisionon
theprofitwasmerely incidental to the dissolution of the coownership
which was in the nature of things atemporary state. (Obillos, Jr.
v. CIR, G.R. No. L68118,Oct.29,1985)
C.RULESTODETERMINEEXISTENCE
Q:Whataretherulestodeterminetheexistenceofpartnership?A:
1. Personswhoarenotpartnersastoeachother are not partners as to
thirdpersons.
2. Coownership/copossession does
notofitselfestablishapartnership.
3. Sharing of gross returns does not
ofitselfestablishapartnership.
4. Receipt of a person of a share in
theprofitsisaprimafacieevidencethathe
is a partner, but notwhen received aspaymentfor:
a. Debtasinstallmentb. Wagesc. Annuityd. Interestinaloane.
Considerationforthesaleofa
goodwill
Note: in subparagraphs a e, the profits in
thebusinessarenotsharedasprofitsofapartnerasapartner, but in some
other respects or for someotherpurpose.Q: Distinguish partnership
from coownership/copossession.A:
PARTNERSHIPCOOWNERSHIP/COPOSSESSION
IntenttoderiveprofitsTheprofitsmustbederivedfromtheoperationofthe
businessorundertakingbythemembersoftheassociationandnotmerelyfromproperty
ownership.
Thecoownersshareintheprofitsderivedincidenttothejoint
ownership.
ExistenceoffiduciaryrelationshipThereisawelldefinedfiduciaryrelationshipbetweenthemas
partners.
Thereisnofiduciaryrelationshipbetween
theparties.
RemedyfordisputeTheremedyforadisputeordifferencebetween
themwouldbeanactionfordissolution,termination,and
accounting.
Theremedywouldbeanaction,asforinstance,fornonperformanceofa
contract.
IntentTheremustbean
unmistakableintentiontoformapartnership.
Thereisnointenttoformapartnership.
Q: A and B are coowners of an
inheritedproperties.Theyagreedtousethesaidcommonpropertiesandtheincomederivedtherefromasa
common fundwith the intention to
produceprofitsfortheminproportiontotheirrespectiveshares in the
inheritance as determined in aproject of partition.What is the
effect of suchagreementontheexistingcoownership?A: The coownership
is automatically
convertedintoapartnership.Fromthemomentofpartition,A and B, as
heirs, are entitled already to theirrespective definite shares of
the estate and theincomethereof,foreachofthemtomanageand
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dispose of as exclusively his own without theinterventionof
theotherheirs,and,accordingly,hebecomes liable
individuallyforallthetaxes
inconnectiontherewith.If,aftersuchpartition,anheirallowshissharestobe
held in common with his coheirs under
asinglemanagementtobeusedwiththe intentofmakingprofit thereby
inproportion
tohisshare,therecanbenodoubtthat,evenifnodocumentorinstrumentwereexecutedforthepurpose,fortax
purposes, at least, an unregisteredpartnership is formed. (Ona v.
Commissioner
ofInternalrevenue,45SCRA74[1972])Q:Whatarethetypicalincidentsofpartnership?A:
1. Thepartnersshareinprofitsandlosses.(Arts.1767,179798)
2. They have equal rights in themanagement and conduct of
thepartnershipbusiness.(Art.1803)
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CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
3. Every partner is an agent ofpartnership, and entitled to bind
theother partners by his acts, for
thepurposeofitsbusiness.(Art.1818)
4. Allpartnersarepersonallyliableforthedebts of the partnership
with
theirseparateproperty(Arts.1816,182224)exceptlimitedpartners.
5. A fiduciary relationship exists
betweenthepartners.(Art.1807)
6. On dissolution, the partnership is notterminated, but
continues until thewindingupofpartnershipiscompleted.(Art1828)
Q:What are the rules
regardingdistributionofprofitsandlosses?A:
1. Distributionofprofitsa. Thepartnersshareintheprofits
accordingtotheiragreementb. Intheabsenceofsuch:
i. Capitalistpartnerinproportiontohiscontribution
ii.
Industrialpartnerwhatisjustandequitableunderthecircumstances
2. Distributionoflossesa. The partners share in the losses
accordingtotheiragreementb. In the absence of such,
according
totheiragreementastoprofits
c. In the absence of profitagreement, in proportion to
hiscapitalcontribution
Q:Whatistheruleregardingastipulationwhichexcludesapartner in the
sharingofprofitsandlosses?A:
GR:Stipulationisvoid.XPN: Industrialpartner isnot liablefor
losses[Art. 1797(2), NCC]. However, he is notexempted from
liability insofar as
thirdpersonsareconcerned.Note:LossisdifferentfromliabilityIf,besideshisservicesthe
industrialpartnerhascontributedcapital,heshallalsoreceiveashareintheprofitsinproportiontohiscapital.
D.HOWPARTNERSHIPISFORMEDQ:Howarepartnershipsformed?A: It is
created by agreement of the parties(consensual).Note: There is no
such thing as a partnershipcreatedby laworbyoperationor
implicationoflaw alone. (De Leon, Comments and cases
onPartnership,AgencyandTrust,p.13,2005ed.Q: What are the
formalities needed for thecreationofapartnership?A:
GR:Nospecialformisrequiredforitsvalidityorexistence.(Art.1771,NCC)XPN:
If property or real rights have beencontributedtothepartnership:1.
Personalproperty
a. LessthanP3,000maybeoralb. P3,000ormoremustbe:
i. inapublicinstrument;andii. registered with SEC (Art.
1772,NCC)Note: Even if
thepartnershipisnotregisteredwithSEC,thepartnership is still valid
andpossesses a distinctpersonality (Paras, Civil Codeof the
Philippines Annotated,Volume5,p.412,19696thed)
2. Realpropertyorrealrightsmustbe:
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PARTNERSHIP
a. in a public instrument (Art. 1771,NCC)
b. withaninventoryofsaidpropertyi. signedbythepartiesii.
attached to the public
instrument(Art.1773,NCC)
Note: Everything must becomplied with;
otherwise,partnershipisvoidandhasnojuridical personality even
asbetween the parties (Art.1773,NCC)
iii. registered in the Registry ofProperty of the province,where
the real property isfound to bind third persons(Paras,p.412)
3. Limited partnership must
beregisteredassuchwithSEC,otherwise,it is not valid as a limited
partnershipbut may still be considered a generalpartnership with
juridical personality(Paras, Civil Code of the
PhilippinesAnnotated,Volume 5, p. 412, 1969 6thed)
Q: If the requirements under Art. 1773, asregards contribution
of real property to
apartnership,hasnotbeencompliedwith,whatisthestatusofthepartnership?
A: It is void. Nonetheless, a void
partnershipunderArt.1773,inrelationtoArt.1771NCC,maystill be
considered by the courts as an ordinarycontract as regards the
parties thereto
fromwhichrightsandobligationstoeachothermaybeinferred and enforced.
(Torres v. CA, G.R. No.134559,Dec.91999)
Note:Torresv.CAdoesnotinvolvethirdpersons.
Q: What must be done in order that thepartnership may be
effective as against thirdpersons whenever immovable property
iscontributed?
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ACADEMICSCHAIR:LESTERJAYALANE.FLORESIIVICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZAVICECHAIRFORADMINISTRATIONANDFINANCE:JEANELLEC.LEEVICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
A:Tobeeffectiveagainst3rdparties,partnershipmustberegistered in
theRegistryofPropertyoftheprovincewheretherealpropertycontributedislocated.(Art.1771,NCC)
Q:Cantherebeapartnershipbasedonaverbalagreement, andwithout such
agreement beingregisteredwithSEC?
A: Yes. Article 1772 NCC requires thatpartnerships with a
capital of P3,000 or more
mustregisterwithSEC.However,thisregistrationrequirement
isnotmandatory.Article1768NCCexplicitlyprovidesthatthepartnershipretains
itsjuridicalpersonalityevenifitfailstoregister.Thefailure to
register the contract of partnershipdoes not invalidate the same as
among thepartners,solongasthecontracthastheessentialrequisites,
because the main purpose
ofregistrationistogivenoticetothirdparties,anditcan be assumed that
the members themselvesknew of the contents of their contract.
Noncompliance with this directory provision of
thelawwillnotinvalidatethepartnership.
A partnership may be constituted in any form,exceptwhere
immovable property of real rightsare contributed thereto, in which
case a publicinstrument shall be necessary.Hence, based onthe
intentionof theparties,averbal
contractofpartnershipmayarise.(SungaChanv.Chua,G.R.No.143340,Aug.15,2001)
Note:Registration ismerely for administration andlicensing
purposes; hence, it shall not affect
theliabilityofthepartnershipandthemembersthereoftothirdpersons.[Art.1772,(2),NCC]
Q: A partnership was entered into betweenMauricio and Severino
to operate a
fishpond.Neitherpartnercontributedafishpondorarealright over any
fish pond. Their capitalcontributions were in cash in the amount
ofP1,000each.Whilethepartnershipcontractwasdoneinapublicinstrument,noinventoryofthefishpondtobeoperatedwasattachedinthesaidinstrument.
Is there a valid contract ofpartnership?
A: Yes. There is a valid contract of partnershipdespitethe
lackof inventory.Thepurposeofthepartnership was not to engage in
the fishpondbusinessbut tooperatea fishpond.Neither saidfishpond
nor a real right to any fish pond
wascontributedtothepartnershiporbecomepartofthecapital thereof.
(Agadv.Mabato,G.R.No.L24193,June28,1968)
E.PARTNERSHIPTERM
Q:Whatisapartnershipwithafixedterm?A:Itisoneinwhichthetermofitsexistencehasbeenagreeduponbythepartnerseither:
1. Expresslythereisadefiniteperiod2. Impliedly a particular
enterprise or
transactionisundertakenNote:Themereexpectationthatthebusinesswouldbesuccessfulandthatthepartnerswouldbeableto
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recouptheir investment
isnotsufficienttocreateapartnershipforaterm.Q: Can the partners fix
any term in thepartnershipcontract?A: Yes. The partners shall be
bound to remainundersuchrelationforthedurationoftheterm.Q:What is
the effectwhen the fixed termhasexpired?A: The expiration of the
term fixed or theaccomplishment of the particular
undertakingspecifiedwill cause the automaticdissolution
ofthepartnership.Q:Whendoesapartnershipcommencetoexist?
A: A partnership commences from the time ofexecutionof the
contract if there isno contrarystipulation as to the date of
effectivity of thesame.
NOTE:Registration toSEC isnotessential togive
itjuridicalpersonality.
There isno time limitprescribedby law for
thelifeofapartnership.
Q:Whatisafuturepartnership?
A: It isakindofpartnershipwhere thepartnersmay stipulate some
other date for thecommencementofthepartnership.Personswhoenter into
a future partnership do not becomepartners until or unless the
agreed time hasarrivedorthecontingencyhashappened.
NOTE: It is a partnership created by impliedagreement, the
continued existence of which willdependupon
themutualdesireandconsentof thepartners.
Q:Whenisapartnershipatwillterminate?
A: Itmaybe lawfully terminated atany
timebytheexpresswillofallthepartnersoranyofthem.
Q:Howisapartnershipatwilldissolved?
A: Any one of the partners may dictate
adissolutionofapartnershipatwill.
336
Note: The partner who wants the partnershipdissolved must do so
in good faith, not that theattendanceofbad faithcanprevent
thedissolutionof the partnership, but to avoid the liability
fordamagestootherpartners.
CLASSIFICATIONSOFPARTNERSHIP
Q:Statetheclassificationsofpartnership.A:Asto:
1. Objecta. Universalpartnership
i. of all present property (Art.1778, NCC) comprises
thefollowing: propertywhichbelonged
toeachofthepartnersatthe time of theconstitution of
thepartnership
profits which they mayacquirefromallpropertycontributed
ii. ofallprofits(Art.1780,NCC)comprises all that
thepartnersmayacquirebytheirindustry or work during
theexistenceofthepartnership
b. Particular partnership It is onewhich has for its
object,determinate things, their use andfruits,ora
specificundertakingorthe exercise of a profession or
avocation.(Art.1783,NCC)
2. Liabilityofpartnersa. General partnership One where
all partners are general
partnerswhoareliableevenwithrespecttotheir individual properties,
aftertheassetsof thepartnershiphavebeenexhausted(Paras,p.411)
b. LimitedpartnershipOne formedby 2 or more persons having
asmembers one or more generalpartners and one ormore
limitedpartners, the latter not
beingpersonallyliablefortheobligationsofthepartnership.
3. Durationa. Partnership at will Partnership
for a particular undertaking orventurewhichmaybe
terminatedanytimebymutualagreement.
b. Partnership with a fixed period
Thetermforwhichthepartnershipis toexist is fixedor agreeduponor one
formed for a particularundertaking.
4. Legalityofexistencea. Dejurepartnershipb.
Defactopartnership
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
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PARTNERSHIP
5. Representationtoothersa. Ordinaryorrealpartnershipb.
Ostensible or partnership by
estoppel When two or morepersons attempt to create
apartnershipbutfailtocomplywiththelegalpersonalitiesessentialforjuridical
personality, the lawconsiders them as partners, andthe association
is a partnershipinsofar as it is favorable to
thirdpersons,byreasonoftheequitableprinciple of estoppel
(MacDonaldet. al. v. Natl. City Bank of NewYork, G.R. No. L7991,
May 21,1956)
6. Publicitya. Secret partnership Partnership
thatisnotknowntomanybutonlyastoitspartners.
b. Notoriousoropenpartnership Itisknownnotonly to
thepartners,buttothepublicaswell.
7. Purposea. Commercial or trading One
formed for the transaction ofbusiness.
b. Professional or nontrading One
formed for the exercise of aprofession
Q:WhatarethedifferentkindsofpartnershipundertheSpanishCivilCode?A:
1. Sociedad Anonima similar toanonymouspartnership
2. SociedadColectivawhichisgeneralorcollectivepartnership
3. SociedaddeCuentasenParticipacionjointaccountpartnership
4.
SociedadMercantileRegularColectivamercantilepartnershipcompany
5.
SociedadLeonilapartnershipbywhichtheentireprofitsshouldbelongtosomeofthepartnersinexclusionoftherest
Q:Whomaybepartners?A:
GR:Any person capacitated to
contractmayenterintoacontractofpartnership.
337
XPNs:1. Personswhoareprohibitedfromgiving
each other any donation or advantage
cannot enter into a universalpartnership.(Art.1782,NCC)
2. Personssufferingfromcivilinterdiction3. Personswho cannot
give consent to a
contract:a. Minorsb. Insanepersonsc.
Deafmuteswhodonotknowhow
towriteQ:Whatistheprincipleofdelectuspersonae?A:Thisreferstotherulethatisinherentineverypartnership,
thatnoone canbecomeamemberof the partnership association without
theconsentofallthepartners.Note:Evenifapartnerwillassociateanotherpersonin
his share in the partnership, the associate shallnot be admitted
into the partnership without theconsent of all the partners, even
if the partnerhavinganassociateshouldbeamanager(Art.1804,NCC).Q:May
a corporation enter into a partnershipwithanothercorporation?A:As a
rule, it is illegal for two corporations toenter into a
partnership. Nevertheless, acorporationmay enter into a joint
venturewithanotherifthenatureoftheventureisinlinewiththebusinessauthorizedby
itscharter.(Tuasonv.Bolaos,G.R.No.L4935,May28,1954)Q:Whatarethedifferentkindsofpartners?A:
1. CapitalistContributesmoneyorpropertytothecommonfund
2. Industrial Contributes only hisindustryorpersonalservice
3. General One whose liability to 3rdpersons extends to his
separate orpersonalproperty
4. Limited One whose liability to 3rdpersons is limited to his
capitalcontribution
5. Managing Manages the affairs orbusinessofthepartnership
6. Liquidating Takes charge of thewinding up of partnership
affairs upondissolution
7. Partner by estoppel Is not really
apartnerbutisliableasapartnerfortheprotectionofinnocent3rdpersons
8. Continuing partner Continues thebusiness of a partnership
after it hasbeen dissolved by reason of
theadmissionofanewpartner,retirement,
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death or expulsion of one of thepartners
9. Surviving partner Remains after apartnership has been
dissolved bydeathofanypartner
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CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
10. Subpartner Is not amember of thepartnership; contracts with
a partnerwith reference to the latter's share inthepartnership
11. Ostensible Takes active part andknown to the public as
partner in thebusiness
12. Secret Takes active part in thebusiness but is not known to
be apartnerbyoutsideparties
13.
SilentDoesnottakeanyactivepartinthebusinessalthoughhemaybeknowntobeapartner
14. DormantDoesnottakeactivepart inthebusiness and isnot
knownorheldoutasapartner
Q:Whataretherelationscreatedbyacontractofpartnership?A:
1. PartnersPartners2. PartnersPartnership3. Partnership3rd
persons with whom it
contracts4. Partners3rd persons with whom
partnershipcontracts.F.UNIVERSALVS.PARTICULAR;
GENERALVS.LIMITED
UNIVERSALPARTNERSHIPQ: Distinguish the classes of
universalpartnership.A:ALLPROFITS ALLPRESENTPROPERTY
WhatconstitutescommonpropertyOnlyusufructofthepropertiesofthepartners
becomecommonproperty
Allpropertiesactuallybelongingtothepartnersarecontributedtheybecome
commonproperty(ownedbyallofthepartners
andthepartnership)Astoprofitsascommonproperty
Allprofitsacquiredbytheindustryofthe
partnersbecomecommonproperty(whetherornot
theywereobtainedthrough
Astoprofitsfromothersources:GR:Asidefromthecontributedproperties,theprofitsofsaidpropertybecomecommon
property
XPN:Profitsfromothersourcesmaybecomecommon
theusufructcontributed)
ifthereisastipulationtosucheffect
Astopropertiessubsequentlyacquired:
GR:
Propertiessubsequentlyacquiredbyinheritance,legacyordonation,cannotbeincluded
inthestipulation
XPN:Onlyfruitsthereofcanbeincludedinthestipulation(Art.
1779,NCC)Q:
IftheArticlesofUniversalPartnershipfailtospecifywhether it
isoneofallpresentpropertyorofprofits,whatshallbethenatureofsuch?A:ArticlesofUniversalPartnership
entered intowithout specification of its nature
onlyconstitutesauniversalpartnershipofprofits(Art.1781,NCC),because
it imposeslesserobligationson the partners, since they preserve
theownershipoftheirseparateproperty.
PARTICULARPARTNERSHIPQ:Whatisparticularpartnership?A: It
isonewhichhas for itsobject,determinatethings, their use and
fruits, or a specificundertakingor theexerciseof aprofessionor
avocation.(Art.1783,NCC)Q:J,PandBformedalimitedpartnershipcalledSuter
Co.,with P as the general partner and Jand B as limited partners. J
and B contributedP18,000andP20,000respectively.Later,JandBgot
married and P sold his share of thepartnership to the
spouseswhichwas recordedin the SEC. Has the limited partnership
beendissolvedbyreasonofthemarriagebetweenthelimitedpartners?A: No.
The partnership is not a universal but aparticular one. As provided
by law, a
universalpartnershiprequireseitherthattheobjectoftheassociation
must be all present property of thepartners as contributed by them
to a commonfund,orallelsethatthepartnersmayacquirebytheir industry
or work. Here, the contributionswere fixed sums of money and
neither one ofthemwere industrial partners. Thus, the firm isnot a
partnership which the spouses
areforbiddentoenterinto.Thesubsequentmarriagecannotoperatetodissolveitbecauseitisnotoneof
the causes provided by law. The capitalcontributions were owned
separately by thembefore their marriage and shall remain to
beseparate under the Spanish Civil Code. Their
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individual interest did not become commonproperty after their
marriage. (Commissioner
ofInternalRevenuev.Suter,G.R.No.L25532,Feb.28,1969)Q:Whendoesapartnerbindthepartnership?A:
1. When he is expressly or impliedlyauthorized
2. Whenheactsinbehalfandinthenameofthepartnership
GENERALPARTNERSHIP
Q:Whatisgeneralpartnership?A: One where all partners are general
partnerswho are liable even with respect to theirindividual
properties, after the assets of thepartnership have been exhausted
(Paras, CivilCode of the PhilippinesAnnotated,Volume 5,
p.411,19696thed)
Q:Whoisageneralpartner?A:Onewhoseliabilitytothirdpersonsextendstohis
separate property; he may be either acapitalist or an industrial
partner. (De
Leon,CommentsandCasesonPartnership,Agency,andTrust,p.77,2005ed)Q:Whataretheobligationsofapartner?A:
1. Obligationsamongthemselves2. Obligationstothirdpersons
Q:Whatisthebasisforsuchobligations?A: These obligations are
based on trust andconfidence of the partners since partnership
isgrounded on the fiduciary relationship of
thepartnersandaswelltothirdpersons.
Q:Whatarethedistinctionsbetweenageneralandalimitedpartner/partnership?A:
GENERAL LIMITEDExtentofLiability
Personallyliableforpartnershipobligations Liabilityextendsonly
tohiscapitalcontributionsRightinManagement
Whenmannerofmanagementisnotagreedupon,allgeneralpartnershaveanequalrightinthe
managementofthebusinessNoparticipationinmanagement
ContributionContributecash,propertyorindustry
Contributecashorpropertyonly,notindustry
IfProperPartyto ProceedingsByorAgainstPartnership
Properpartytoproceedingsby/againstpartnership
Not proper party to proceedings by/against partnership,unless:1.
Heisalsoageneralpartner;or2. Where the object of the proceeding is
to enforce a
limitedpartnersrightorliabilitytothepartnershipAssignmentofInterest
Interestisnotassignablewithoutconsentofotherpartners
Interestisfreelyassignable
FirmName
Namemayappearinfirmname
GR: Namemustnot appearinfirmname
XPNs:1. Itisalsothesurnameofageneralpartner;2. Prior to the time
when the limited partner became
such,thebusinesshadbeencarriedonunderanameinwhichhissurnameappeared.
ProhibitiontoEngageinOtherBusinessProhibitedinengaginginbusiness
Noprohibition againstengaginginbusiness
EffectofDeath,Insolvency,Retirement,InsanityRetirement,death,insolvency,insanityofgeneral
partnerdissolvespartnershipDoesnothavesameeffect;rightsaretransferredtolegal
representativeCreation
Asarule,itmaybeconstitutedinanyform,by
Createdbythemembersaftersubstantialcompliancein
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contractorconductofthepartnership
goodfaithoftherequirementssetforthbylawComposition/Membership
ComposedonlyofgeneralpartnersComposedofoneormoregeneralpartnersandoneor
morelimitedpartners
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CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
G.PARTNERSHIPBYESTOPPELQ:Whoisapartnerbyestoppel?A:Onewho,bywordsorconductdoesanyofthefollowing:
1.
Directlyrepresentshimselftoanyoneasapartnerinanexistingpartnershiporinanonexistingpartnership
2. Indirectly represents himself
byconsentingtoanotherrepresentinghimas a partner in an existing
partnershiporinanonexistingpartnership
Q:Whatare
theelementsbeforeapartnercanbeheldliableonthegroundofestoppel?A:
1. Defendant represented himself aspartner or is represented by
others assuch, and did not deny/refute suchrepresentation.
2. Plaintiffreliedonsuchrepresentation.3.
Statementofdefendantisnotrefuted.
Q:Whataretheliabilitiesincaseofestoppel?A:
WhenPartnershipisLiable
Ifallactualpartnersconsentedtotherepresentation,thentheliabilityofthepersonwho
representedhimselftobeapartnerorwhoconsentedtosuchrepresentationandtheactual
partnerisconsideredapartnershipliability
WhenLiabilityisPRORATA
When there isnoexistingpartnershipandall thoserepresented as
partners consented to therepresentation, then the liabilityof
thepersonwhorepresented himself to be a partner and all
whomadeandconsentedtosuchrepresentation,isjointorprorata
WhenLiabilityisSEPARATE
Whenthereisnoexistingpartnershipandnotallbutonly some of those
represented as partnersconsented to the representation, or none of
thepartnership inanexistingpartnership consented tosuch
representation, then the liability will beseparate
H.PARTNERSHIPV.JOINTVENTUREQ:Whatisajointventure?A:Anassociationofpersonsorcompaniesjointlyundertaking
some commercial
enterprise;generally,allcontributesassetsandsharerisks.Itrequires a
community of interest in theperformance of the subject matter, a
right todirect and govern the policy in connectiontherewith, and a
dutywhichmay be altered
byagreementtosharebothinprofitsandlosses.
Partnership JointVentureTransactionsenteredinto
Thedurationofapartnershipgenerallyrelatestoacontinuingbusinessofvarious
transactionsofacertainkind.
Limitedtotheperiodinwhichthegoodsaresoldortheprojectiscarriedonorasingle
transaction.
NaturePermanent,partnersareinterestedincarryingontogetherofageneralandcontinuingbusinessofa
particularkind.
Note:Aparticularpartnershiphasalimitedandtemporaryoradhocnature,beingconfinedtoasingleundertaking.
Temporary,althoughitmaycontinueforanumberofyears.
FirmNameandLiablitiesTheremustbea
partnershiporfirmnameunderwhichthe
partnershipshalloperate.Thenamesofthe
partnersmayappearinthefirmnameandtheactofthepartnerswillmakethepartnership
liable.
Afirmnameisnotnecessary,thustheparticipatingpersonscantransactbusinessundertheirownnameandcanbeindividually
liabletherefore.
CorporationaspartnerCorporationcannotenter
intoapartnershipcontract,thusitcannotbeapartnerbyreasonofpublicpolicy;otherwisepeopleotherthanitsofficersmaybeabletobindit(Albano,CivilLaw
Corporationscanengageinajoint
venturewithothersthroughacontractof
agreementifthenatureoftheventureinline
withthebusinessofthecorporationanditis
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PARTNERSHIP
Reviewer,1998,p.570) authorizedinitscharter.
LegalPersonalityA partnership acquirespersonality afterfollowing
the requisitesrequiredby law.e.g.Art.17711773,NCCNote: SEC
registration isnot required before
apartnershipacquireslegalpersonality. (Art. 1768,NCC)
Ajointventurehasnolegalpersonality.
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I.PROFESSIONALPARTNERSHIPQ:Whatisaprofessionalpartnership?A: It
is apartnership formedbypersons for thesole purpose of exercising
their commonprofession, no part of the income of which
isderivedfromengaginginanytradeorbusiness.Q:Inaprofessionalpartnership,whoisdeemedengagedinthepracticeofprofession?A:
It is the individual partners and not thepartnership. Thus, they
are responsible for theirownacts.Q: What is prohibited in the
formation of aprofessionalpartnership?A:Partnershipbetween
lawyersandmembersofother profession or nonprofessional
personsshould not be formed or permitted where
anypartofthepartnershipsemploymentconsistsofthe practice of law.
(Canons of
ProfessionalEthics)Q:Whatarethecharacteristicsofapartnershipforthepracticeoflaw?A:
a. A duty of public service, of which
theemolumentisabyproduct
b. Arelationasanofficerofcourttotheadministrationofjustice
c. A relation to clients in the highestfiduciarydegree
d. A relationship to colleagues at the barcharacterized by
candor, fairness, andunwillingness to resort to currentbusiness
methods of advertising andencroachment on their practice,
ordealingwiththeirclients.(IntheMatter
ofPetitionforAuthoritytoContinueUseof Firm Name Sycip, Salazar,
etc. /Ozeata Romulo, etc., 92 SCRA 1[1979], citingH.S.Drinker,
Legal Ethics[1953],pp45.)
Q: What is prohibited in the firm name of
apartnershipforthepracticeoflaw?A:Intheselectionanduseoffirmname,nofalse,misleading,
assumed, or trade names should
beused.(CanonsofProfessionalEthics)
J.MANAGEMENTOFTHEPARTNERSHIPQ: What are the modes of appointment
of amanager?A:Appointmentthrough
theArticlesofPartnership
AppointmentOtherThanintheArticles
Powerisirrevocablewithoutjustorlawful
cause
Note:Voterequiredforremovalofmanager
1. For just cause Vote of
thecontrollingpartners(controllingfinancialinterest)
2. Without cause orfor unjust cause Unanimousvote
Powertoactisrevocableanytime,withorwithoutcause(shouldbedonebythecontrollinginterest)
ExtentofPower1. If he acts in good
faith,hemaydoallacts ofadministration(despiteopposition of
hispartners)
2. If he acts in badfaith,hecannot
Aslongasheisamanager,hecanperformallactsofadministration(ifothersoppose,hecan
beremoved)
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CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
Q:Whatistherulewheretherearetwoormoremanagers?A:Withoutspecificationoftheirrespectivedutiesandwithoutstipulationrequiringunanimityof
actionGR: Eachmay separately execute all acts ofadministration
(unlimited power toadminister)
XPN:Ifanyofthemanagersopposes,decisionofthemajorityprevails
Note:IncaseoftieDecisionofthecontrollinginterest(whoarealsomanagers)shallprevail
Nature
GR:Unanimousconsentofallthemanagingpartnersshallbenecessaryforthevalidityoftheactsandabsenceorinabilityofanymanaging
partnercannotbealleged.
XPN:Wherethereisanimminentdangerofgraveorirreparableinjurytothepartnership.
Q: What is the rule when the manner
ofmanagementhasnotbeenagreedupon?A:
1. All partners shall be consideredmanagersandagents
2. Unanimous consent is required
foralterationofimmovableproperty
Q:AzucenaandPedroacquiredaparcelof
landandabuilding.AzucenaobtainedaloanfromTaiTong Co., secured by a
mortgage which wasexecuted over the land and building.
Arsenio,representative of Tai Tong, insured it withTravellers Multi
Indemnity Corporation.
Thebuildingandthecontentsthereofwererazedbyfire. Travellers failed
to pay the insurance.Hence, Azucena and Pedro filed a case
againstTravellerswhereinTaiTong intervenedclaimingentitlement to
the proceeds from
Travellers.Whoisentitledtotheproceedsofthepolicy?A:TaiToingisentitledtotheinsuranceproceeds.Arseniocontractedtheinsurancepolicyonbehalfof
Tai Tong. As the managing partner of thepartnership, he may execute
all acts ofadministration including the right to suedebtorsof
thepartnership in caseof their failure topaytheir obligations when
it became due anddemandable.Or at the very least, Arsenio is
anagent of the partnership. Being an agent, it
isunderstoodthatheactedforandinbehalfofthe
firm. (Tai Tong Chuache & Co. v.
InsuranceCommissioner,G.R.No.L55397,Feb.29,1988)Note:Ifrefusalofpartnerismanifestlyprejudicialtotheinterestofpartnership,courtsinterventionmaybesought.Q:
What are the remedies available to thecreditorsofapartner?A:
1. Separate or individual creditors shouldfirst securea
judgmenton their credit;and
2. Applytothepropercourtforachargingorder subjecting the
interest of thedebtorpartner in the partnership
forthepaymentoftheunsatisfiedamountof the judgment debt with
interestthereon.
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PARTNERSHIP
Q:Whataretheeffectsoftheactsofpartners?A:
ACTSOFAPARTNER EFFECT
Actsforapparentlycarryingonintheusualwaythebusinessofthepartnership
Withbindingeffectexcept:1.
Whenthepartnersoactinghasinfactnoauthorityto
actforthepartnershipintheparticularmatter,and2.
Thepersonwithwhomheisdealinghasknowledgeof
thefactthathehasnosuchauthority
ActsnotintheordinarycourseofbusinessDonotbind
partnershipunlessauthorizedbyother
partners(par.2,Art.1818,NCC)Actsofstrictdominionorownership:
1. Assigning partnership property in trust forcreditors;
2. Disposingofgoodwillofbusiness;3. Doinganactwhichwouldmake it
impossibleto
carryontheordinarybusinessofpartnership;4.
Confessingajudgment;5. Entering into a compromise concerning a
partnershipclaimorliability;6. Submitting partnership claim or
liability to
arbitration;7. Renouncingclaimofpartnership
GR:Oneormorebutlessthanallthepartnershavenoauthority
XPNs:
1. authorizedbytheotherpartners;or
2. p3. artners have abandoned the business (par. 2, Art.
1818,NCC)
ActsincontraventionofarestrictiononauthorityPartnershipisnotliable
to3rdpersonshavingactualor
presumptiveknowledgeoftherestrictionQ:Whatistheeffectofconveyanceofarealproperty?A:
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TYPEOFCONVEYANCE EFFECT
Titleinthepartnershipsname;Conveyanceinpartnershipname
Conveyancepassestitlebutpartnershipcanrecoverunless:
1. a. Conveyancewasdoneintheusualwayofbusiness,andb. Thepartner
so actinghas the authority to act for the
partnership;or2. Thepropertywhichhasbeenconveyedby
thegranteeora
person claiming through such grantee to aholder for valuewithout
knowledge that the partner, in making
theconveyance,hasexceededhisauthority
Titleinthepartnershipsname;Conveyanceinpartner'sname
Conveyancedoesnotpasstitlebutonlyequitableinterest,provided:
1. Conveyancewasdoneintheusualwayofbusiness,or2. The partner so
acting has the authority to act for the
partnership
Titleinthenameof1ormorepartners,andtherecorddoesnotdisclosetherightofthe
partnership;Conveyanceinnameofpartner/sinwhosenametitlestands
Conveyancepassestitlebutthepartnershipmayrecoversuchpropertyifthepartnersactdoesnotbindthepartnership:
1. The partner so acting has no authority to act for
thepartnership,and
2. Thepersonwithwhomhe isdealinghasknowledgeof thefact unless
the purchaser of his assignee, is a holder
forvalue,withoutknowledge
Titleinnameof1ormoreorallpartnersor3rdpersonintrustforpartnership;
Conveyanceexecutedinpartnershipnameorinnameofpartners
Conveyancewillonlypassequitableinterest,provided:1.
Theactisonewithintheauthorityofthepartner,and2.
Conveyancewasdoneintheusualwayofthebusiness
Titleinthenamesofallthepartners;Conveyanceexecutedbyallthepartners
Conveyancewillpassalltherightsinsuchproperty
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CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
II.RIGHTSANDOBLIGATIONSOFPARTNERSHIPQ:Whataretheresponsibilitiesofapartnershiptopartners?A:
1. Refund the amounts disbursed
bypartnerinbehalfofthepartnershippluscorresponding interest from
the timetheexpensesaremade (e.g. loansandadvances made by a partner
to thepartnership aside from capitalcontribution)
2. Answer for obligations a partner mayhave contracted in good
faith in theinterestofthepartnershipbusiness
3. Answer for risks in consequence of
itsmanagement(Art.1796)
III.RIGHTSANDOBLIGATIONSOFPARTNERSAMONGTHEMSELVES
Q:Whatare theobligationsofpartnersamongthemselves?A:
1. Contributionofproperty(Art.1786)2. Contribution of money and
money
convertedtopersonaluse(Art.1788)3. Prohibition in engaging in
business for
himself(Art.1789)4. Contributeadditionalcapital(Art.1791)5.
Managing partner who collects debt
(Art.1792)6. Partner who receives share of
partnershipcredit(Art.1793)7. Damagestopartnership(Art.1794)8.
Renderinformation(Art.1806)9. Accountableasfiduciary(Art.1807)
CONTRIBUTIONOFPROPERTY
Q: What are the obligations of partners
withrespecttocontributionofproperty?A:ToCAFPI
1. Contribute at the beginning of thepartnership, or at the
stipulated time,themoney,propertyor
industrywhichhemayhavepromisedtocontribute
2. Answer for eviction in case thepartnership is deprived of
thedeterminatepropertycontributed
3. AnswertothepartnershipfortheFruitsof the property the
contribution ofwhich he delayed, from the date they
shouldhavebeencontributeduptothetimeofactualdelivery
4. Preserve said property with thediligence of a good father of
a family,pendingdeliverytothepartnership
5. Indemnify the partnership for
anydamagecausedtoitbytheretentionofthe same or by the delay in
itscontribution
Q: Who bears the risk of loss of thingscontributed?A:
KINDOFPROPERTY/THINGWHOBEARSTHE
RISK?
Specificanddeterminatethingswhicharenotfungiblewhereonlytheuseiscontributed
partners
Specificanddeterminatethingstheownershipofwhichis
transferredtothepartnership
partnershipFungiblethings(Consumable)
Thingscontributedtobesold
Thingsbroughtandappraisedintheinventory
Q: What is the effect if a partner fails tocontribute the
propertywhich he promised todelivertothepartnership?A:
1. Partners become ipso jure a debtor ofthepartnershipeven in
theabsenceofanydemand(Art.1786,NCC)
2. Remedy of the other partner is
notrescissionbutspecificperformancewithdamagesfromdefaultingpartner
CONTRIBUTIONOFMONEYANDMONEY
CONVERTEDTOPERSONALUSEQ:Whataretherulesregardingcontributionofmoneytothepartnership?A:CRIP
1. To Contribute on the date fixed theamount
thepartnerhasundertaken tocontributetothepartnership
2. To Reimburse any amount the partnermay have taken from the
partnershipcoffersandconvertedtohisownuse
3. To Indemnify the partnership for thedamages caused to it by
delay in the
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PARTNERSHIP
contribution or conversion of any
sumforthepartnerspersonalbenefits
4. ToPay for theagreedor legal interest,if the partner fails to
pay
hiscontributionontimeorincasehetakesanyamountfromthecommonfundandconvertsittohisownuse
CONTRIBUTEADDITIONALCAPITAL
Q:Whataretherulesregardingobligationstocontributetopartnershipcapital?A:
1. Partners must contribute equal sharesto thecapitalof
thepartnershipunlessthereisstipulationtocontrary
2. Capitalist partners must contributeadditional capital in case
of imminentloss to thebusinessof thepartnershipwhen there is no
stipulation to thecontrary; Refusal to do so shall
createanobligationontherefusingpartnertosellhisinteresttotheotherpartners
Q: What are the requisites before capitalistpartnersarecompelled
tocontributeadditionalcapital?A:
1. Imminent loss of the business of thepartnership
2. Majorityofthecapitalistpartnersareofthe opinion that an
additionalcontribution to the common fundwouldsavethebusiness
3. Capitalistpartnerrefusesdeliberatelytocontribute (not due to
financialinability)
4. Thereisnoagreementtothecontrary
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MANAGINGPARTNERWHOCOLLECTSDEBT
Q: What are the obligations of managingpartners who collect his
personal receivablefromapersonwhoalsoowesthepartnership?A:
1. Apply sum collected to 2 credits
inproportiontotheiramounts
2. If he received it for the account ofpartnership, the whole
sum shall beappliedtopartnershipcredit
Note:Requisites:
1. At least2debts,onewherethecollectingpartner is creditor and
the other,wherethepartnershipisthecreditor
2. Bothdebtsaredemandable
3. Partner who collects is authorized tomanage and actually
manages thepartnership
PARTNERWHORECEIVESSHAREOF
PARTNERSHIPCREDITQ:Whatistheobligationofapartnerwhoreceivesshareofpartnershipcredit?A:Tobringtothepartnershipcapitalwhathehasreceivedeven
thoughhemayhavegivenreceiptforhisshareonly.Note:Requisites:
1.
Apartnerhasreceivedinwholeorinpart,hisshareofthepartnershipcredit
2. Other partners have not collected theirshares
3.
PartnershipdebtorhasbecomeinsolventQ:Mayapersonwhohasnotdirectlytransactedin
behalf of an unincorporated association beheld liable for a
contract entered into by
suchassociation?A:Yes.Theliabilityforacontractenteredintoonbehalf
of an unincorporated association orostensible corporation may lie
in a person whomay not have directly transacted on its
behalf,butreapedbenefitsfromthatcontract.(LimTongLimv.PhilippineFishingGear
Industries Inc.,G.R.No.136448,Nov.3,1999)
PROHIBITIONINENGAGINGINBUSINESS
Q:Whatare the rules regarding
theprohibitiontoengageinanotherbusiness?A:INDUSTRIALPARTNER
CAPITALISTPARTNER
Prohibition
Cannotengageinbusinessforhimself
unlessthepartnershipexpresslypermitshimto
doso
Cannotengageinbusiness(withsamekindofbusinesswiththepartnership)forhisownaccount,unless
thereisastipulationtothecontrary
RemedyCapitalistpartnersmay:1. Exclude him from
thefirm2. Avail themselves of
the benefits whichhe may haveobtained
3. Damages, in eithercase (Art. 1789,NCC)
Capitalist partner, whoviolatedshall:1. Bring to the
common fund anyprofits accruing tohim from
saidtransaction;and
2. Bears all losses(Art.1808,NCC)
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Q:JoeandRudyformedapartnershiptooperatea car repair shop
inQuezon City. Joe
providedthecapitalwhileRudycontributedhislaborandindustry.Ononesideoftheirshop,
Joeopenedandoperatedacoffeeshop,whileon theotherside,Rudy putup a
car accessories store.Maytheyengageinsuchseparatebusinesses?Why?A:
Joe, the capitalistpartner,mayengage in therestaurant business
because it is not the
samekindofbusinessthepartnershipisengagedin.Onthe other hand, Rudy
may not engage in anyotherbusinessunless
theirpartnershipexpresslypermits him to do so because as an
industrialpartner he has to devote his full time to thebusiness of
the partnership (Art. 1789, NCC).(2001BarQuestion)
DAMAGESTOPARTNERSHIPQ:Whatistherulewithregardtotheobligationof a
partner as to damages suffered by
thepartnershipthroughhisfault?A:
GR: Every partner is responsible to thepartnership for damages
suffered by itthroughhisownfault.Thesedamagescannotbeoffsetby
theprofitsorbenefitswhichhemay have earned for the partnership by
hisindustry.XPN:Ifunusualprofitsarerealizedthroughextraordinaryeffortsoftheguiltypartner,thecourtsmayequitablymitigateorlessenhisliabilityfordamages.(Art.1794,NCC)
DUTYTORENDERINFORMATION
Q:Whatisthedutyofthepartnerswithrespecttoinformationaffectingthepartnership?A:
They shall render on demand true and
fullinformationofallthingsaffectingthepartnershipto:
1. thepartner;or2. legalrepresentativeofanydeceasedor
legally disabled partner. (Art. 1806,NCC)
ACCOUNTABLEASFIDUCIARY
Q:Howarepartnersaccountable toeachotherasfiduciary?
346
A:Everypartnermustaccounttothepartnershipfor any benefit, and
hold as trustee for it
anyprofitsderivedbyhimwithouttheconsentofthe
other partners from any transaction
connectedwiththeformation,conduct,orliquidationofthepartnership or
from any use by him of itsproperty.(Art.1807,NCC)
RIGHTSOFGENERALPARTNERSQ:Whatarethepropertyrightsofapartner?
A:SIM1. RightinSpecificpartnershipproperty2.
Interestinthepartnership(shareinthe
profitsandsurplus)3. RighttoparticipateintheManagement
Q: What is the nature of a partner's right
inspecificpartnershipproperty?A:
1. Equal right to possession forpartnershippurposes
2. Right is not assignable, except
inconnectionwithassignmentofrightsofallpartnersinthesameproperty
3. Right is limited to his share of whatremains after
partnership debts havebeenpaid
4. Right is not subject to attachment
orexecutionexceptonaclaimagainstthepartnership
5. RightisnotsubjecttolegalsupportQ: What are the effects of
assignment ofpartnerswholeinterestinthepartnership?A:
1. Rightswithheldfromtheassignee:Such assignment does not grant
theassigneetherightto:a. Tointerfereinthemanagementb. To require
any information or
accountc. Toinspectpartnershipbooks
2. Rightsofassigneeonpartnersinterest:
a. To receive in accordance with
hiscontracttheprofitsaccruingtotheassigningpartner
b. To avail himself of the usualremedies provided by law in
theeventoffraudinthemanagement
c. Toreceivetheassignorsinterestincaseofdissolution
d. To require an account ofpartnershipaffairs,butonlyincasethe
partnership is dissolved, andsuchaccountshallcovertheperiodfrom the
date only of the last
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
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account agreed to by all thepartners
Q:Whataretheeffectsofconveyanceofapartnerofhisinterestinthepartnership?A:
1. Conveyance of his whole interest partnership may either
remain or bedissolved
2. Assigneedoesnotnecessarilybecomeapartner;hecannot:a.
interfere in the management or
administration;orb. demand information, accounting
and inspection of the partnershipbooks.
Note:Buttheassigneehasthefollowingrights:
1. receive in accordance with his contractthe profits which the
assigning partnerwouldotherwisebeentitled
2. avail himself of the usual remediesprovided by law in event
of fraud inmanagement
3. receive assignors interest in case ofdissolution
4. requireandaccountofpartnershipaffairsbut only in case the
partnership isdissolved, and such account shall covertheperiod from
thedateonlyof the lastaccountagreedtobyalltheparties
CRIMINALLIABILITYFORMISAPPROPRIATION:
ESTAFAQ: Rosa received from Jois money, with theexpress
obligation to act as Jois agent inpurchasing local cigarettes, to
resell them toseveral stores,and to give Jois the
commissioncorrespondingtotheprofitsreceived.However,Rosa
misappropriated and converted the saidamount due to Jois to her
personal use andbenefit. Jois fileda caseofestafaagainstRosa.Can
Rosa deny liability on the ground that
apartnershipwasformedbetweenherandRosa?A: No. Even assuming that a
contract ofpartnership was indeed entered into by
andbetweentheparties,whenapartnerreceivesanymoneyorpropertyforaspecificpurpose(suchasthat
obtaining in the instant case) and he latermisappropriates the
same, is guilty of
estafa.(Liwanagv.CA,G.R.No.114398,Oct.24,1997)
347
IV.OBLIGATIONSOFPARTNERSHIP/PARTNERSTOTHIRDPERSONS
Q: What are the obligations of partners
withregardto3rdpersons?A:
1. Everypartnershipshalloperateunderafirm name. Persons who
include theirnames in thepartnershipnameeven
iftheyarenotmembersshallbe liableasapartner
2. All partners shall be liable forcontractual obligations of
thepartnershipwiththeirproperty,afterallpartnership assets have
beenexhausted:a. Proratab. Subsidiary
3. Admission or representation made byany partner concerning
partnershipaffairswithinthescopeofhisauthorityisevidenceagainstthepartnership
4.
Noticetopartnerofanymatterrelatingtopartnershipaffairsoperatesasnoticetopartnershipexceptincaseoffraud:a.
Knowledgeofpartneractinginthe
particularmatteracquiredwhileapartner
b. Knowledgeofthepartneractingintheparticularmatter
thenpresenttohismind
c. Knowledge of any other partnerwho reasonably could and
shouldhave communicated it to theactingpartner
5. Partners and the partnership aresolidarily liable to 3rd
persons for thepartner'stortorbreachoftrust
6. Liability of incoming partner is limitedto:a. His share in
the partnership
propertyforexistingobligationsb. His separate property for
subsequentobligations7. Creditorsofpartnershiparepreferredin
partnership property & may
attachpartner'sshareinpartnershipassets
Note: On solidary liability. Art. 1816 should beconstrued
together with Art. 1824 (in
connectionwithArts.1822and1823).Whilethe liabilityofthepartners
ismerely joint intransactionsentered intoby the partnership, a
third personwho transactedwith said partnership may hold the
partnerssolidarilyliableforthewholeobligationifthecaseofthethirdpersonfallsunderArticles1822and1823.(Munasquev.CA,G.R.No.L39780,Nov.11,1985)
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348
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
V.DISSOLUTIONQ: Distinguish dissolution, winding up
andtermination.Dissolution Windingup Termination
Achangeintherelationofthe
partnerscausedbyanypartnerceasing
tobeassociatedincarryingonthe
business.
Settlingthepartnershipbusinessoraffairsafterdissolution
Pointintimewhenall
partnershipaffairsare
wounduporcompleted;theendofthe
partnershiplife
Q:Whatarethecausesofdissolution?A:
1. Withoutviolatingtheagreement:a.
Terminationofthedefinitetermor
specificundertakingb. Expresswillofanypartneringood
faith, when there is no
definitetermandnospecifiedundertaking
c. Expresswillofallpartners (exceptthose who have assigned
theirinterests or suffered them to becharged for their separate
debts)either before or after thetermination of any specified
termorparticularundertaking
d. Expulsion of any partner in goodfaithofamember
2. Violatingtheagreement3. Unlawfulnessofthebusiness4. Loss
a. Specific thing promised ascontribution is lost or
perishedbeforedelivery
b. Lossofaspecificthingcontributedbeforeorafterdelivery,
ifonlytheuseofsuchiscontributed
Note: The partnership shall not bedissolvedbythe
lossofthethingwhen itoccursafter
thepartnershiphasacquiredtheownershipthereof.
5. Deathofanyofthepartners6. Insolvency of any partner or of
the
partnership7. Civilinterdictionofanypartner8.
BydecreeofcourtunderArt.1831,NCC
a. apartnerhasbeendeclaredinsaneorofunsoundmind
b. a partner becomes in any otherway incapable of performing
hispartofthepartnershipcontract
c. a partner has been guilty of suchconduct as tends to
affectprejudiciallythecarryingonofthebusiness
d. a partner willfully or persistentlycommits a breach of
thepartnershipagreement
e. thebusinessofthepartnershipcanonlybecarriedonataloss
f. other circumstances render adissolutionequitable
Q:Whataretheeffectsofdissolution?A:
1. Partnershipisnotterminated2. Partnership continues for a
limited
purpose3. Transaction of new business is
prohibited (De Leon, Comments andCases on Partnership, Agency,
andTrust,p.229,2005ed)
Note:Thedissolutionofapartnershipmustnotbeunderstood in
theabsoluteand strictsenseso thatat the termination of the object
for which it
wascreatedthepartnershipisextinguished,pendingthewindingupofsome
incidentsandobligationsofthepartnership,butinsuchcase,thepartnershipwillbereputedasexistinguntilthejuridicalrelationsarisingoutofthecontractaredissolved.
(TestateofMottav.Serra,G.R.No.L22825,Feb.14,1925)Dissolution does
not automatically result in thetermination of the legal personality
of thepartnership,northerelationsofthepartnersamongthemselves who
remain as copartners until thepartnership is terminated.
(DeLeon,CommentsandCasesonPartnership,Agency,andTrust,p.29,2005ed)Q:
What is the effect of dissolution on theauthorityofapartner?A:
GR: The partnership ceases to be a
goingconcernXPN:Thepartnerspowerofrepresentationisconfinedonlytoactsincidenttowindinguporcompleting
transactions begun but not thenfinished.(Art.1832,NCC)
Note: Subject to the qualifications set forth inArticles 1833
and 1834 in relation to Article1832,NCC:1. In so far as the
partners themselves are
concernedTheauthorityofanypartnertobindthepartnershipbyanewcontractis
immediately terminated when the
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PARTNERSHIP
dissolution is not by the Act,
Insolvency,orDeathofapartner(AID).
2. When the dissolution is by the act,insolvency, or death, the
termination ofauthority depends upon whether or notthe partner had
knowledge or notice ofdissolution(Art.1833,NCC).
Q:Thearticlesofcopartnershipprovidethat incase of death of one
partner, the
partnershipshallnotbedissolvedbutshallbecontinuedbythedeceasedpartnersheirs.WhenH,apartner,died,hiswife,W,tookoverthemanagementofsomeof
the realpropertieswithpermissionofthe
survivingpartner,X,buthernamewasnotincluded in the partnership
name. Sheeventuallysoldtheserealpropertiesafterafewyears. X now
claims thatW did not have
theauthoritytomanageandsellthosepropertiesasshewasnotapartner.Isthesalevalid?A:Yes.Thewidowwasnotamereagent,becauseshe
had become a partner upon her
husband'sdeath,asexpresslyprovidedbythearticlesofcopartnership, and
by authorizing the widow
tomanagepartnershippropertyXrecognizedherasa general partner with
authority to
administerandalienatepartnershipproperty.ItisimmaterialthatW'snamewasnotincludedinthefirmname,sincenoconversionofstatusisinvolved,andthearticlesofcopartnershipexpresslycontemplatedthe
admission of the partner's heirs into
thepartnership.(Goquiolayv.Sycip,G.R.No.L11840,Dec.16,1963)Q:What
is the liabilityof a partnerwhere thedissolution is caused by the
act, death orinsolvencyofapartner?A:
GR: Each partner is liable to his copartnersfor his share, of
any liability created by anypartner for the partnership, as if
thepartnershiphadnotbeendissolved.XPNs:Partnersshallnotbeliablewhen:1.
the dissolution, being by act of any
partner, the partner acting for thepartnership had knowledge of
thedissolution;or
2. the dissolution, being by the death orinsolvency of a
partner, the partneracting for the partnership hadknowledge or
notice of the death orinsolvency(Art.1833,NCC)
349
Q:After thedissolutionofapartnership,
canapartnerstillbindthepartnership?A:
GR: Yes. A partner continues to bindpartnership even after
dissolution in thefollowingcases:1. Transactions to wind up
partnership
affairs/complete transactionsunfinishedatdissolution;
2. Transactions which would bindpartnership if not dissolved
dissolutionhadnottakenplace,providedtheotherparty/obligee:a. i. Had
extended credit to partnership
priortodissolution;andii. Had no knowledge/notice of
dissolution;orb. i. Didnotextendcredittopartnership;ii. Had
known partnership prior to
dissolution;andiii. Had no knowledge/notice of
dissolution/fact of dissolution
notadvertisedinanewspaperofgeneralcirculation in the place
wherepartnershipisregularlycarriedon.
XPNs: Partner cannot bind the
partnershipanymoreafterdissolutionwheredissolutionisduetounlawfulnesstocarryonbusiness
XPNtoXPN:Windingupofpartnershipaffairs1.
Partnerhasbecomeinsolvent2. Actisnotappropriateforwindingupor
forcompletingunfinishedtransactions3. Completely new
transactions which
would bind the partnership ifdissolution had not taken place
withthirdpersonsinbadfaith.
4. Partner is unauthorized to wind uppartnership affairs, except
bytransactionwithonewho:a. i. Had extended credit to
partnership
priortodissolution;ii. Had no knowledge or notice of
dissolution;orb. i. Didnotextend credit topartnership
priortodissolution;ii. Had known partnership prior to
dissolution;andiii. Had no knowledge/notice of
dissolution/fact of dissolution
notadvertisedinanewspaperofgeneralcirculation in the place
wherepartnershipisregularlycarriedon.
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Q: Does the dissolution of a
partnershipdischargeexistingliabilityofapartner?A:
GR:No.XPN:Said liability isdischargedwhenthere
isanagreementbetween:
1. Partnerhimself;2. Person/scontinuingthebusiness;and3.
Partnershipcreditors
Q: What is the order of priority in
thedistributionofassetsduringthedissolutionofalimitedpartnership?A:
In setting accounts after dissolution, theliabilities of the
partnership shall be entitled topaymentinthefollowingorder:
1. Those to creditors, in the order ofpriority as provided by
law, exceptthoseto limitedpartnersonaccountoftheir contributions,
and to generalpartners
2. Those to limitedpartners in respect totheir share of the
profits and othercompensation by way of income
ontheircontributions
3. Those to limitedpartners in respect
tothecapitaloftheircontributions
4. Those to general partners other thanforcapitalandprofits
5. Those togeneralpartners in respect toprofits
6. Those togeneralpartners in respect
tocapital(Art.1863,NCC)
Note:Subject toanystatement in
thecertificateortosubsequentagreement, limitedpartnersshare
inthepartnershipassets in respect to theirclaims forcapital,and in
respect to their claims forprofitsorfor compensation by way of
income on theircontribution respectively, in proportion to
therespectiveamountsofsuchclaims.
WINDINGUP
Q:What takes place during thewinding up ofthepartnership?A: It
is during this time after dissolution
thatpartnershipbusinessoraffairsarebeing settled.(De Leon, Comments
and Cases on Partnership,Agency,andTrust,p.229,2005ed)
350
Note:Examplesofwindingup:1. Payingpreviousobligations2.
Collectingassetspreviouslydemandable
Engaging innewbusinessnecessary forwindingupsuch as
contractingwith ademolition company forthe demolition of the garage
used in a used carpartnership (Paras, Civil Code of the
PhilippinesAnnotated,Volume5,p.485,19696thed)Q:Whoarethepersonsauthorizedtowindup?A:
1. Partnersdesignatedbytheagreement2.
Intheabsenceofsuch,allpartnerswho
have not wrongfully dissolved thepartnership
3. Legal representative of last
survivingpartnerwhoisnotinsolvent
Q:Whatarepartnershipassets?A:
1. Partnershipproperty2. Contributionsofthepartnersnecessary
for the payment of all liabilities [Art.1839(2),NCC]
Q:Whatistheorderofpaymentinwindingup?A:
1. Those owing to creditors other thanpartners
2. Thoseowingtopartnersotherthan forcapitalorprofits
3. Those owing to partners in respect ofcapital
4. Those owing to partners in respect
toprofits[Art.1839(2),NCC]
Q:Whatisthedoctrineofmarshallingofassets?A:
1. Partnership creditors have preferenceinpartnershipassets
2. Separate or individual creditors havepreference in separate
or individualproperties
3. Anything left from either goes to theother.
Q: What are the rights of a partner wheredissolution is not in
contravention of theagreement?A: Unless otherwise agreed, the
rights of eachpartnerareasfollows:
1. To have the partnership propertyapplied to discharge the
liabilities ofpartnership;and
2. Tohave the surplus, ifany,applied, topay in cash the net
amount owing totherespectivepartners.
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
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PARTNERSHIP
Q: What are the rights of a partner wheredissolution is in
contravention of theagreement?A: The rights of a partner vary
depending uponwhetherheistheinnocentorguiltypartner.
1. Rights of partner who has not
causedthedissolutionwrongfully:a. To have partnership property
applied for the payment of
itsliabilitiesandtoreceiveincashhisshareofthesurplus
b. Tobeindemnifiedforthedamagescaused by the partner guilty
ofwrongfuldissolution
c. To continue the business in thesamenameduringtheagreedtermof
the partnership, by themselvesorjointlywithothers
d. To possess partnership
propertyshouldtheydecidetocontinuethebusiness
2. Rights of partner who has wrongfully
causedthedissolution:a. If thebusiness isnot continuedby
the other partners, to have thepartnership property applied
todischarge its liabilities and toreceive in cash his share of
thesurpluslessdamagescausedbyhiswrongfuldissolution
b. Ifthebusinessiscontinued:i. To have the value of his
interest in the partnership atthe time of the dissolution,less
any damage caused bythe dissolution to his
copartners,ascertainedandpaidin cash, or secured by
bondapprovedbythecourt;and
ii. To be released from allexisting and future
liabilitiesofthepartnership
Q:Whataretherightsof
injuredpartnerwherepartnershipcontractisrescinded?A:
1. Right of a lien on, or retention of, thesurplus of
partnership property aftersatisfying partnership liabilities for
anysum of money paid or contributed byhim;
351
2. Right of subrogation in place ofpartnership creditors after
payment ofpartnershipliabilities;and
3. Right of indemnification by the guiltypartner against all
debts and liabilitiesofthepartnership.
Q: How are the accounts settled betweenpartners?A:
1. Assetsofthepartnershipinclude:a. Partnership property
(including
goodwill)b. Contributionsofthepartners
2. Orderofapplicationoftheassets:a. First, those owing to
partnership
creditorsb. Second, those owing to partners
other than for capital and
profitssuchasloansgivenbythepartnersoradvancesforbusinessexpenses
c. Third,thoseowingforthereturnofthe capital contributed by
thepartners
d. Fourth, the shareof theprofits, ifany,duetoeachpartner
Q:Apartnershipwas formedwithMagdusa asthe manager. During the
existence of
thepartnership,twopartnersexpressedtheirdesiretowithdrawfromthefirm.Magdusadeterminedthe
value of the partners share which wereembodied in the document
drawn in thehandwritingofMagdusabutwasnot signedbyall of the
partners. Later, the withdrawingpartners demanded for payment but
wererefused. Considering that not all
partnersintervenedinthedistributionofallorpartofthepartnershipassets,shouldtheactionprosper?A:
No. A partners share cannot be returnedwithout first dissolving and
liquidating thepartnership, for the return is dependent on
thedischarge of creditors, whose claims enjoypreference over those
of the partner, and it isselfevident thatallmembersof
thepartnershipare interested in itsassetsandbusiness,andareentitled
to be heard in thematter of the firmsliquidation and distribution
of its property. Theliquidation prepared by Magdusa not signed
bythe other partners is not binding on
them.(Magdusav.Albaran,G.R.No.L17526,
June30,1962)Q:Whatispartnerslien?A: The right of every partner to
have thepartnership property applied, to dischargepartnership
liabilities and surplus assets, if any,distributed in cash to the
respective partners,
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after deducting what may be due to
thepartnershipfromthemaspartners.Q:Canapartnerdemandforhisshareduringtheexistenceofapartnership?A:No.A
share inapartnership canbe returnedonly after the completion of the
latter'sdissolution, liquidation and winding up of
thebusiness.Since the capital was contributed to
thepartnership,nottopartners, it isthepartnershipthat must refund
the equity of the
retiringpartners.Sinceitisthepartnership,asaseparateanddistinctentitythatmustrefundthesharesofthe
partners, the amount to be refunded isnecessarily limitedto
itstotalresources. Inotherwords, it can only pay out what it has in
itscoffers,whichconsistsofallitsassets.(Villarealv.Ramirez,G.R.No.144214,July14,2003)Q:Whataretheeffectswhenthebusinessofadissolvedpartnershipiscontinued?A:
1. Creditors of old partnership are alsocreditors of the new
partnership whocontinues the business of the old onewithout
liquidation of the partnershipaffairs.
2. Creditorshaveanequitable lienon theconsideration paid to
theretiring/deceased partner by thepurchaser when
retiring/deceasedpartner sold his interest without
finalsettlementwithcreditors.
3. Rights of retiring/estate of deceasedpartner:a. To have the
value of his interest
ascertained as of the date ofdissolution;and
b. Toreceiveasordinarycreditorthevalueofhis share in
thedissolvedpartnershipwithinterestorprofitsattributable to use of
his right, athisoption.
Note: The right to demand on accounting of thevalue of his
interest accrues to any partner or
hislegalrepresentativeafterdissolution
intheabsenceofanagreementtothecontrary.
352
Prescriptionbeginstorunonlyuponthedissolutionof the partnership,
when the final accounting isdone.
Q:Whoarethepersonsrequiredtorenderanaccount?A:
1. Windinguppartner;2. Survivingpartner;and3. Person or
partnership continuing the
business
Q: Emnace and Tabanao decided to dissolvetheir partnership in
1986. Emnace failed tosubmitthestatementofassetsand
liabilitiesofthepartnership,andtorenderanaccountingofthepartnership's
finances.Tabanaosheirs filedagainst Emnace an action for
accounting, etc.Emnace counters, contending that
prescriptionhassetin.Decide.A:Prescriptionhasnotyetset
in.Prescriptionofthe said right starts to run only upon
thedissolution of the partnership when the finalaccounting is done.
Contrary to
Emnacesprotestations,prescriptionhadnotevenbeguntorunintheabsenceofafinalaccounting.Therighttodemandanaccountingaccruesat
thedateofdissolution in the absence of any agreement
tothecontrary.Whenafinalaccounting ismade, itis only then that
prescription begins to run.(Emnacev.CA,G.R.No.126334,Nov.23,2001)Q:
Pauline, Patricia and Priscilla formed
abusinesspartnershipforthepurposeofengaginginneonadvertising fora
termof five (5)years.Pauline subsequently assigned to Philip
herinterest in the partnership.When Patricia
andPriscillalearnedoftheassignment,theydecidedtodissolvethepartnershipbeforetheexpirationofitstermastheyhadanunproductivebusinessrelationshipwithPhilipinthepast.Ontheotherhand,
unaware of the move of Patricia
andPriscillabutsensingtheirnegativereactiontohisacquisition of
Paulines interest, Philipsimultaneouslypetitioned for
thedissolutionofthepartnership.Is the dissolution done by Patricia
and Priscillawithout the consent of Pauline or Philip
valid?Explain.A:UnderArt1830(1)(c),NCC, thedissolutionbyPatricia
and Priscilla is valid and did not violatethe
contractofpartnershipeven
thoughPaulineandPhilipdidnotconsentthereto.TheconsentofPauline
isnotnecessarybecauseshehadalreadyassigned her interest to Philip.
The consent ofPhilip is also not necessary because theassignment to
him of Paulines interest did
notmakehimapartner,underArt.1813,NCC.
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
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PARTNERSHIP
Does Philip have any right to petition for thedissolution of the
partnership before theexpirationofitsspecifiedterm?Explain.A: No,
Philip has no right to petition fordissolution because he does not
have thestandingofapartner.(Art.1813,NCC)(1995BarQuestion)
353UNIVERSITYOFSANTOTOMASF a c u l t a d d e D e r e c h o C i v
i l
ACADEMICSCHAIR:LESTERJAYALANE.FLORESIIVICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZAVICECHAIRFORADMINISTRATIONANDFINANCE:JEANELLEC.LEEVICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
VI.LIMITEDPARTNERSHIP
A.DEFINITIONQ:Whatislimitedpartnership?A:Oneformedbytwoormorepersonshavingasmembersoneormoregeneralpartnersandoneor
more limited partners, the latter not
beingpersonallyliableforpartnershipdebts(Art.1843)Q:Whatarethecharacteristicsoflimitedpartnership?A:
1. It is formed by compliance with thestatutoryrequirements
2. One or more general partners
controlthebusinessandarepersonallyliabletocreditors
3. One or more limited partnerscontribute to the capital and
share intheprofitsbutdonotparticipate inthemanagement of the
business and arenot personally liable for partnershipobligations
beyond their capitalcontributions
4. The limited partners may ask for thereturn of their capital
contributionsunderconditionsprescribedbylaw
5. Partnership debts are paid out ofcommon fund and the
individualpropertiesofgeneralpartners
B.HOWLIMITEDPARTNERSHIPISFORMED/AMENDED
Q:Whatare theessential requirements for
theformationoflimitedpartnership?A:
1. Certificate of articles of limitedpartnership which states
the mattersenumerated inArt.1844,NCC,mustbesignedandsworn;and
2. Certificate must be filed for record intheofficeoftheSEC.
Note: Strict compliance with legal requirements
isnotnecessary.Itissufficientthatthereissubstantial
compliance in good faith (Jo Chun v.
PacificCommercialCo.,G.R.No.19892,Sept.6,1923).Q:Doesalimitedpartnershiphaveapersonalityseparateanddistinctfromthatofthepartners?Whataretheconsequencesofsuch?A:
Yes. The personality of a limited
partnershipbeingdifferentfromthatofitsmembers,itmust,on
generalprinciple, answer for, and suffer,
theconsequenceofitsactsassuchanentitycapableof being the subject of
rights and obligations. Ifthe limited partnership failed to pay
itsobligations, this partnership must suffer theconsequences of
such a failure, and must beadjudged insolvent. (Campos Rueda &
Co. v.PacificCommercialCo.,et.al,G.R.No.L18703,Aug.28,1922)Q:When
is the certificateor articlesof limitedpartnershipcancelled?A:
1. Whenthepartnershipisdissolved2.
Whenallthelimitedpartnersceasedto
besuchQ:Whenmayacertificateorarticlesof
limitedpartnershipbeamended?A:
1. Itmustfallunderthefollowingchangesandconditions:a. There is a
change in the name of
the partnership or in the
amountorcharacterofthecontributionofanylimitedpartner
b. Apersonissubstitutedasalimitedpartner
c. An additional limited partner isadmitted
d. Aperson is admitted as a generalpartner
e. A general partner retires, dies,becomes insolventor insane,or
issentenced to civil interdiction andthe business is continued
underArticle1860
f. There isachange in
thecharacterofthebusinessofthepartnership
g. There is a false or erroneousstatementinthecertificate
h. There is a change in the time asstated in the certificate for
thedissolution of the partnership orforthereturnofacontribution
i. A time is fixed for the
dissolutionofthepartnership,orthereturnof
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UST GOLDEN NOTES 2011
a contribution, no time havingbeenspecifiedinthecertificate
j. The members desire to make achange in any other statement
inthecertificate inorderthat itshallaccurately represent
theagreement among them (Art.1864,NCC)
2. Mustbe signed and sworn toby allof
the members including the newmembers if some added; in case
ofsubstitution, the assigning limitedpartnermustalsosign
3. MustberecordedintheSEC
LIMITEDPARTNERQ:Whataretheliabilitiesofalimitedpartner?A:
354
CIVILLAWTEAM:ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
ASCREDITOR ASTRUSTEE
Deficiencyincontribution
Specificpropertystatedascontributedbutnotyet
contributed/wrongfullyreturned
Unpaidcontribution
Money/otherpropertywrongfullypaid/conveyedtohimonaccountofhiscontribution
Q:What
transactionsareallowedorprohibitedinalimitedpartnership?A:
1. Alloweda. Grantingloanstopartnershipb. Transacting business
with
partnershipc. Receiving pro rata share of
partnership assets with
generalcreditorsifheisnotalsoageneralpartner
2. Prohibited
a. Receiving/holding partnershippropertyascollateralsecurity
b. Receiving any
payment,conveyance,releasefromliabilityifitwillprejudicerightof3rdpersons
Note:Violationoftheprohibitionwillgiverisetothepresumption that
it has been made to defraudpartnershipcreditors.Theprohibition
isnotabsolutebecause there
isnoprohibitionifthepartnershipassetsaresufficienttodischarge
partnership liabilities to persons
notclaimingasgeneralorlimitedpartners.
Q:Whendoesageneralpartnerneedconsentorratificationofallthelimitedpartners?A:Whenhe:
1. does any act in contravention of thecertificate;
2. does any act which would make itimpossible to carry on the
ordinarybusinessofthepartnership;
3. confesses judgment againstpartnership;
4. possesses partnership property /assigns rights in specific
partnershipproperty other than for partnershippurposes;
5. admitspersonasgeneralpartner;6. admits person as limited
partner
unlessauthorizedincertificate;or7. continues business with
partnership
property on death, retirement, civilinterdiction, insanity or
insolvency ofgeneralpartnerunlessauthorizedinthecertificate.
PARTNERSHIPTORT
Q:Whenisthereapartnershiptort?A:Where:
1.
byanywrongfulactoromissionofanypartner,actingintheordinarycourseofbusiness
of the partnership or withauthority of his copartners, loss
orinjuryiscausedtoanyperson,notbeingapartnerinthepartnership;
2. onepartner,actingwithin thescopeofhisapparentauthority,
receivesmoneyor property from a third person,
andmisappliesit;or
3. the partnership, in the course of itsbusiness, receives money
or
property,anditismisappliedbyanypartnerwhileitisinthecustodyofthepartnership.
Note: Partners are solidarily liable with
thepartnershipforanypenaltyordamagearisingfromapartnershiptort.
C.RIGHTSANDOBLIGATIONSOFALIMITEDPARTNER
Q: What are the specific rights of a limitedpartner?A:To:
1. havepartnershipbookskeptatprincipalplaceofbusiness;
2. inspect/copy books at reasonablehours;
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PARTNERSHIP
3. have on demand true and fullinformation of all things
affectingpartnership;
4. have formal account of partnershipaffairs whenever
circumstances renderitjustandreasonable;
5. ask for dissolution and winding up bydecreeofcourt;
6. receive share of
profits/othercompensationbywayofincome;and
7. receive return of contributions,provided the partnership
assets are inexcessofallitsliabilities.
Q:Whoisasubstitutedlimitedpartner?A:Apersonadmittedtoalltherightsofalimitedpartnerwhohasdiedorassignedhis
interest inthepartnershipQ: What are the rights and liabilities of
asubstitutedlimitedpartner?A:
GR:He has all the rights and powers and
issubjecttoalltherestrictionsand liabilitiesofhisassignor.XPN:
Those liabilitieswhich hewas ignorantof at the time that he became
a limitedpartner and which could not be
ascertainedfromthecertificate
Q:Whataretherequirementsfortheadmissionofasubstitutedlimitedpartner?
A:
1. All the members must consent to
theassigneebecomingasubstitutedlimitedpartner or the limited
partner, beingempoweredbythecertificatemustgivethe assignee the
right to become alimitedpartner;
2. The certificate must be amended
inaccordancewithArt.1865,NCC;and
3. The certificate as amended must beregisteredintheSEC.
Q: What is the basis of preference given
tolimitedpartnersoverotherlimitedpartners?A: Priority or
preferencemay be given to
somelimitedpartnersoverotherlimitedpartnersastothe:
1. returnoftheircontributions;
355
2. their compensation byway of income;or
3. anyothermatter.
Note: In the absence of such statement in thecertificate,even
ifthere isanagreement,all limitedpartners shall stand on equal
footing in respect ofthesematters.Q: What are the requisites for
return ofcontributionofalimitedpartner?A:
1. All liabilities of the partnership havebeenpaidor if
theyhavenotyetbeenpaid, the assets of the partnership
aresufficienttopaysuchliabilities;
2. The consent of all the
members(generalandlimitedpartners)hasbeenobtained except when the
return mayberightfullydemanded;and
3. The certificateof limitedpartnership iscancelledoramended
Q: When is the return of contribution of
alimitedpartneramatterofright?A:When all liabilities of the
partnership, exceptliabilities to general partners and to
limitedpartnerson accountof their contributions,havebeen paid or
there remains property of thepartnership sufficient to pay them and
thecertificate is cancelled or so amended as to
setforththewithdrawalorreduction:
1. onthedissolutionofthepartnership;2.
uponthearrivalofthedatespecifiedin
thecertificateforthereturn;or3.
aftertheexpirationof6monthnoticein
writing given by him to the otherpartners if no time is fixed in
thecertificate for the return of thecontribution or for the
dissolution ofthepartnership.
Note: Even if a limited partner has contributedproperty, he has
only the right to demand
andreceivecashforhiscontribution.Theexceptionsare:
1. When there is stipulation to
thecontraryinthecertificate;or
2.
Whenallthepartners(generalandlimitedpartners)consenttothereturnotherthanintheformofcash
Q:Whataretheliabilitiesofalimitedpartner?1.
TothepartnershipA:Sincelimitedpartnersarenotprincipals
inthetransaction of a partnership, their liability as
arule,istothepartnership