Partnership Part 12(1)

7/29/2019 Partnership Part 12(1)

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THE LAW ON

PARTNERSHIPS

Arts. 1767-1867

PART 1


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ASSIGNED READING: To be

summarized 1. Kinds of persons under the law

2. Kinds of business organizations

3. Partnership: definition

4. Characteristic elements of partnership

5. Essential elements of partnership

6. Rules in determining existence of partnership

7. Kinds of partnership

8. Classifications of businesses 9. Kinds of partners

10. Comparison between general and limitedpartners


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INTRODUCTION

KINDS OF PERSONS UNDER THE CIVIL CODE

1. NATURAL/INDIVIDUAL

2. ARTIFICIAL/JURIDICAL A. Partnership

B. Corporation

C. Cooperatives

KINDS OF BUSINESS ORGANIZATIONS A. Sole proprietorship

B. Partnership C. Corporation

D. Cooperatives


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PARTNERSHIP

ART 1767 By a contract of partnership, two or more persons

bind themselves to contribute money, property orindustry to a common fund, with the intention of

dividing the profits among themselves. Two or more persons may also form a

partnership for the exercise of a profession.

CHARACTERISTIC ELEMENTS OF PARTNERSHIP

1. Consensual 5. Commutative2. Nominate 6. Principal

3. Bilateral 7. Preparatory

4. Onerous 8. Fiduciary


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ESSENTIAL FEATURES OF

PARTNERSHIP 1. There must be a valid contract (delectus

personaeChoice of the person)

2. Legal capacity of the parties (Art 1327-1329)

3. Mutual contribution of money, property andindustry

MONEY currency (medium of exchange) w/c is

legal tender in the Philippines

PROPERTY tangible/intangible, real/personal,

movables/immovables, res alicujus

INDUSTRY physical or mental


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ESSENTIAL FEATURES OF

PARTNERSHIP 4. Lawful purpose/objectsubject to the Freedom to

contract clause ART 1770 par 2 Effects of an unlawful partnership

Contract is void ab ini t io

Profits will be confiscated in favor of the government

Instruments/proceeds/tools of the crime shall be forfeited infavorof the govt unless belonging to a 3rd person who did notparticipate but those not within the commerce of man will bedestroyed.

4. Lawful purpose/objectsubject to the Freedom to contractclause

5. Primary purpose is to divide profits; carries with itthe obligation to share in loss except for industrialpartners but NOT in liabilities (Art 1769 vs Art 1816)


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FORMAT OF PARTNERSHIP

CONTRACT GEN RULE: Art 1771: Partnership contracts

are valid in whatever form.

Art 1768: Partnership has juridical personality

even if there is no compliance with Art 1772 (defacto) w/c requires that a partnership with

capital of more than P3K must be in a public

instrument and recorded with the SEC

Art 1773: If immovable is contributed, an

inventory signed by the parties should be

attached to the public instrument.


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WHEN DOES A

PARTNERSHIP EXIST? GEN RULE: Intention of the parties prevail

Art. 1769 Rules to determine whether apartnership exists or not

1. Persons who are not partners to eachother are not partners as to third personsexcept those in estoppel (Art 1825)

2. Co-ownership/co-possession does not by

itself establish partnership 3. Sharing of gross returns does not by itselfestablish partnership


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WHEN DOES A

PARTNERSHIP EXIST?4. Receipt of a person of share in the profits is

PRIMA FACIEevidence of partnership,except if such share is for:

a. payment of debtb. Wages

c. Annuity

d. Interest of loane. Consideration for sale of goodwill or

property


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KINDS OF PARTNERSHIP

UNIVERSAL PARTNERSHIP OF ALL

PRESENT PROPERTY all properties of the

partners before, during and after constitution of

the partnership belong to the partnership UNIVERSAL PARTNERSHIP OF PROFITS

only those acquired after the constitution of the

partnership belong to the partnership

Note: husband and wife cannot enter into

universal partnerships


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PARTICULAR PARTNERSHIP object is

determinate; for a specific undertaking or for the

exercise of a profession

GENERAL PARTNERSHIP all partners aregeneral partners who are liable even with their

own properties

LIMITED PARTNERSHIP at least has one

general partner with other limited partners who

are only liable to the extent of their

contributions.


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PARTNERSHIP AT WILL has no specifiedterm for its existence

DE JUREPARTNERSHIP one which exists in

fact and in law

DE FACTOPARTNERSHIP one which has no

complete documents

ORDINARY/REAL PARTNERSHIP one which

exists among themselves and as to 3rd persons SECRET PARTNERSHIP one where the

partners are not publicly known


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OSTENSIBLE/APPARENT/EVIDENT/IN

ESTOPPEL (Art 1825)

OPEN/NOTORIOUS PARTNERSHIP one

where the partners are publicly avowed COMMERCIAL/TRADING one whose primary

purpose is for profits

PROFESSIONAL/NON-TRADING one for theexercise of a profession or vocation


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KINDS OF PARTNERS

CAPITALIST one who contributes money and/orproperty; answerable for loss and liabilities; prohibitedfrom engaging in similar kind of business (Art 1808)

INDUSTRIALIST one who contributes services,

mental or physical; not liable for partnership loss (Art1769) but will answer for partnership liabilities orcontractual obligations to 3rd persons subject toreimbursement from capitalists (Art 1816); prohibitedfrom engaging in any kind of business (Art 1769)

QUERY: Are the businesses of selling banana queand selling banana only classified the same?


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KINDS OF PARTNERS

LIMITED/SPECIAL PARTNER mere

contributor/investor; cannot contribute industry

MANAGING PARTNER one who has been

tasked to manage the affairs of the partnership;may nor may not have been appointed in the

articles of partnership

LIQUIDATING PARTNER one who is tasked

to take charge of the affairs of the partnership on

dissolution


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KINDS OF PARTNERS

PARTNER BY ESTOPPEL/NOMINAL

PARTNER a partner by implication

OSTENSIBLE PARTNER one known to the

public as partner and participates actively SECRET PARTNER one who takes active part

in the partnerships affairs but is now publicly

known as a partner

SILENT PARTNER one who does not take

active part in partnership business


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KINDS OF PARTNERS

DORMANT PARTNER/ SLEEPING PARTNER

one who is both silent and does not participate

INCOMING PARTNER one belatedly

accepted in the partnership RETIRING PARTNER one who has withdrawn

from the partnership

SUBPARTNER technically not apartner/member of the partnership but shares in

a partners shares in the partnership


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KINDS OF PARTNERSGENERAL BASIS LIMITED

Personally liable PARTNERSHIP

OBLIGATIONS

Capital contribution

Equal rights MANAGEMENT RIGHTS No rights

Proper party PARTICIPATION IN

LAWSUITS

Not a party

Not assignable unless with

consent of other partners

ASSIGNABILITY OF

PARTNERSHIP

INTEREST

Freely assignable

Cannot engage in similar

business if capitalist; in any

business if industrialist

PROHIBITION No prohibition

Dissolution of partnership EFFECT OF DEATH,

INSANITY, INSOLVENCY

OF PARTNER

No effect

Money, property, industry CONTRIBUTION Money, property


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REFERENCES

De Leon, H.S. (2010), The Negotiable Instruments Law, Quezon City: REX PrintingCompany, Inc.

De Leon, H.S. (2010), The Law on Partnerships and Corporation Code, Quezon City: REXPrinting Press

REFERENCES

Black's law dictionary (8th ed) (2007). St. Paul, MN. : West Pub. Commercial laws of the Philippines.]. (2009). Manila: Rex,

Decasa, Lucila M. (2009). Handbook on private corporations: domestic and foreign. Manila:Rex.

De Leon, Hector S. (2010). (10th ed).The Corporate code of the Philippines: annotated.Manila: Rex,

De Leon, Hector S. (2010). (2010 ed.).The Philippine negotiable instruments law and alliedlaws annotated Manila: Rex,

Torress, Justo P. (2008). The law on business organizations (partnerships andcorporation). Manila: Rex,

Villanueva, Cesar L. (2010).Philippine Corporate law. Manila: Rex,

Documents

Partnership Part 12(1)