QN - Partneship
QN - Partneship
Two or more persons may also form a partnership 2. Co-ownership or co-possession does not A partnership must have a lawful object or
for the exercise of a profession. itself establish a partnership, whether purpose, and must established for the common
such co-owners or co-possessors do or do benefit or interest of the partners.
Elements of partnership: not share any profits made by the use of
the property; When an unlawful partnership is dissolved by a
a. An agreement to contribute money, judicial decree, the profits shall be confiscated in
property or industry to a common fund, 3. The sharing of gross returns does not of favor of the State, without prejudice to the
and itself establish a partnership, whether or provisions of the Penal Code governing the
b. Intent to divide the profits among the not the persons sharing them have a joint confiscation of the instruments and effects of a
contracting parties. or common right or interest in any crime.
property from which the returns are
Characteristics of partnership: derived; Article 1771.
a. Partnership has a juridical personality 4. The receipt by a person of a share of the A partnership may be constituted in any form,
separate and distinct from that of each of profits of a business is prima facie except where immovable property or real rights
the partners. evidence that he is a partner in the are contributed thereto, in which case a public
b. Consensual contract; valid even though business, but no such inference shall be instrument shall be necessary.
not in writing drawn if such profits were received in Article 1772
c. payment:
Article 1768 Every contract of partnership having a capital of
a. As a debt by installments or P3,000 or more, in money or property, shall
appear in a public instrument, which must be or particular.
recorded in the Office of the Securities and Movable or immovable property which each of
Exchange Commission. As regards the liability of the partners, a the partners may possess at the time of the
partnership may be general or limited. celebration of the contract shall continue to Page |
Failure to comply with the requirements of the pertain exclusively to each, only the usufruct 2
preceding paragraph shall not affect the liability passing to the partnership.
of the partnership and the members thereof to Article 1777.
third persons. Article 1782.
A universal partnership may refer to all the
Article 1773. present property or to all profits. Persons who are prohibited from giving each
other any donation or advantage cannot enter into
A contract of partnership is void, whenever Article 1778. universal partnership.
immovable property is contributed thereto, if an
inventory of said property is not made, signed by A partnership of all present property is that in Take Note:
the parties, and attached to the public instrument. which the partners contribute all the property
which actually belongs to them to a common DQ from entering universal partnership
Article 1774. fund, with the intention of dividing the same persons who are prohibited from giving each
among themselves, as well as all the profits they other any donation or advantage
Any immovable property or an interest therein may acquire therewith.
may be acquired in the partnership name. Title so Article 739 provides that the following donations
acquired can be conveyed only in the partnership Article 1779. shall be void:
name.
In a universal partnership of all present property, a. Those made between persons who are
Article 1775. the property which belonged to each partners at guilty of adultery or concubinage at the
the time of the constitution of the partnership, time of the donation;
Associations and societies, whose articles are kept becomes the common property of all the partners, b. Those made between persons found
secret among the members, and wherein any one as well as all the profits which they may acquire guilty of the same criminal offense, in
of the members may contract in his own name therewith. consideration thereof;
with third persons, shall have no juridical c. Those made to a public officer or his
personality, and shall be governed by the Article 1780. wife, descendants or ascendants, by
provisions relating to co-ownership. reason of his office.
A universal partnership of profits comprises all
Article 1776 that the partners may acquire by their industry or H&W cannot enter a universal
work during the existence of the partnership. partnership; but can enter a limited
As to its object, a partnership is either universal partnership or be members thereof.
dependent on the constancy of that organization formed for some temporary
Article 1783 mutual resolve, along with each partner’s purpose, a JV is likened to a particular
capability to give it, and the absence of a partnership or one which :has for its object
A particular partnership has for its object cause for dissolution provided by the law determinate things, their use or fruits or a Page |
determinate things, their use or fruits, or a itself. specific undertaking, or the exercise of a 3
specific undertaking, or the exercise of a profession or vocation”
profession or vocation. Partnership by estoppel
Professional partnership
Partnership term: Goquiolay v. Syeip July 26, 1960
i. Management
Article 1785. The widow of the managing partner who was Article 1800
authorized by the other partner to manage the
When a partner for a fix term or particular partnership is a partner by estoppel. By The partner who has been appointed manager in
undertaking is continued after the termination of authorizing the widow of the managing partner to the articles of partnership may execute all acts of
such term or particular undertaking without any manage the partnership property (which a ltd administration despite the opposition of his
express agreement, the rights and duties of the partner could not be authorized to do) the other partners, unless he should act in bad faith; and his
partners remain the same as they were at such general partner recognized her as a general power is irrevocable without just or lawful cause.
termination, so far as is consistent with a partner, and is not in estoppel to deny her position The vote of the partners representing the
partnership at will. as a general partner, with authority to administer controlling interest shall be necessary for such
and alienate partnership property. revocation of power.
A continuation of the business by the partners or
such of them as habitually acted therein during A third person has a right to presume that a A power granted after the partnership has been
the term, without any settlement or liquidation of general partner dealing with partnership property constituted may be revoked at any time.
the partnership affairs, is prima facie evidence of has the requisite authority from his co-partners.
a continuation of the partnership. Article 1801.
Partnership v. Joint Venture
Partnership at will does not fix term; the birth If two or more partners have been intrusted with
and life of partnership at will on the mutual desire 1. As to definition- the management of the partnership without
and consent of the partners. Partnership is defined as two or more persons specification of their respective duties, or without
bind themselves together to contribute stipulation that one of them shall not act without
The right to choose with whom a person money, property or industry with the the consent of all the others, each one may
wishes to associate himself is the very intention of dividing the profits among separately execute all acts of administration, but
foundation and essence of that themselves. if any of them should oppose the acts of the
partnership. others, the decision of the majority shall prevail.
Its continued existence is, in turn, While joint venture understood to mean an In case of a tie, the matter shall be decided by the
partners owning the controlling interest. partnership and partners. capital of the partnership.
Article 1802. Article 1796 When does a partner become a debtor of the
partnership? Page |
In case it should have been stipulated that none of The partnership shall be responsible to every 4
the managing partners shall act without the partner for the amounts he may have disbursed on a. Every partner is a debtor of the
consent of the others, the concurrence of all shall behalf of the partnership and for the partnership for whatever he may have
be necessary for the validity of the acts, and the corresponding interest, from the time the promised to contribute thereto. (Article
absence or disability of any one of them cannot be expenses are made; it shall also answer to each 1786, par. 1)
alleged, unless there is imminent danger of grave partner for the obligations he may have contracted
or irreparable injury to the partnership. in good faith in the interest of the partnership b. A partner who has undertaken to
business, and for risks in consequence of its contribute a sum of money and fails to do
Article 1803. management. so becomes a debtor for the interest and
damages from the time he should have
When the manner of management has not been Article 1795 complied with his obligation.
agreed upon, the following rules shall be
observed: The risk of specific and determinate things, which c. The same rule applies to any amount he
are not fungible, contributed to the partnership so may have taken from the partnership
a. All the partners shall be considered that only their use and fruits may be for the coffers, and his liability shall begin from
agents and whatever any one of them may common benefit, shall be borne by the partners the time he converted the amount to his
do alone shall bind the partnership, who owns them. own use.
without prejudice to the provision of
Article 1801 If the things contributed are fungible, or cannot be Article 1786, par. 2 and 3
kept without deteriorating, or if they were
b. None of the partners may, without the contributed to be sold, the risk shall be borne by He shall also be bound for warranty in case of
consent of the others, make any important the partnership. In the absence of stipulation, the eviction with regard to specific and determinate
alteration in the immovable property of risk of things brought and appraised in the things which he may have contributed to the
the partnership, even if it may be useful inventory, shall also be borne by the partnership, partnership, in the same cases and in the same
to the partnership. But if the refusal of and in such case the claim shall be limited to the manner as the vendor is bound with respect to the
consent by the other partners is value at which they were appraised. vendee.
manifestly prejudicial to the interest of
the partnership, the court’s intervention Article 1790 He shall also be liable for the fruits thereof from
may be sought. the time they should have been delivered, without
Unless there is a stipulation to the contrary, the the need of any demand.
I. Rights and obligations of the partners shall contribute equal shares to the
Article 1794 Any capitalist partner violation this prohibition Article 1809.
shall bring to the common funds any profits
Every partner is responsible to the partnership for accruing to him from his transactions, and shall Any partner shall have the right to a formal
damages suffered by it through his fault, and he personally bear all the losses. account as to partnership affairs: Page |
cannot compensate them with the profits and 5
benefits which he may have earned for the Take note: a. If he is wrongfully excluded from the
partnership by his industry. However, the courts partnership business or possession of its
may equitably lessen this responsibility if through If a person owes to the partnership and to property by his co-partners;
the partner’s extraordinary efforts in other the partner, tapos hi partner an b. If the right exists under the terms of any
activities of the partnership, unusual profits have kumarawat hn bayad, the sum collected agreement;
been unrealized. shall be applied to the 2 credits in c. As provided by Article 1807
proportion to their amounts, even though d. Whenever under circumstances render it
Take note: he may have given a receipt for his own just and reasonable.
credit. But if he have given it for the
Each partner must share in the profits and account of partnership, the full amount Article 1797
losses of the venture. does to the partnership hehe
A partner is entitled to recover share of The losses and profits shall be distributed on
profits actually realized by venture. Article 1793 conformity with the agreement. If only the share
of each partner in the profits has been agreed
Article 1789 A partner who has received, in whole or in part, upon, the share of each in the losses shall be in
his share of a partnership credit, when the other the same proportion.
An industrial partner cannot engage in business partners have not collected theirs, shall be
for himself, unless the partnership expressly obliged, if the debtor should thereafter become In the absence of stipulation, the share of each
permits him to do so; and if he should do so, the insolvent, to bring to the partnership capital what partner in the profits and losses shall be in
capitalist partners may either exclude him from he received even though he may have given proportion to what he may have contributed, but
the firm or avail themselves of the benefits which receipt for his share only. the industrial partner shall not be liable for the
he may have obtained in violation of this losses. As for the profits, the industrial partner
provision, with a right to damages in either case. Article 1806 shall receive such share as may be just and
equitable under the circumstances. If besides his
Article 1808. Partners shall render on demand true and full services he has contributed capital, he shall also
The capitalist partner cannot engage for their own information of all things affecting the partnership receive a share in the profits in proportion to his
account in any operation which is of the kind of to any partner or the legal representative of any capital.
business in which the partnership is engaged, deceased partner or of any partner under legal
unless there is a stipulation to the contrary. disability. Article 1799
A stipulation which excludes one or more execute the decision of the third person, or who property is not assignable except in
partners from any share in the profits or losses is has not impugned the same within a period of connection with the assignment of rights
void. three months from the time he had knowledge of all the partners in the same property;
thereof, complain of such decision. Page |
Article 1816 c. A partner’s right in specific partnership 6
The designation of losses and profits cannot be property is not subject to attachment or
All partners, including industrial ones, shall be intrusted to one of the partners. execution, except on a claim against the
liable pro rata with all their property and after all partnership. When partnership property is
the partnership assets have been exhausted, for Article 1810 attached for a partnership debt the
the contracts which may be entered into in the partners, or any of them, or the
name and for the account of the partnership, The property rights of a partner are: representatives of a deceased partner,
under its signature and by a person authorized to cannot claim any right under the
act for the partnership. However, any partner may a. His rights in specific partnership homestead or exemption laws;
enter into a separate obligation to perform a property;
partnership contract. b. His interest in the partnership; and d. A partner’s right in specific partnership
c. His right to participate in the property is not subject to legal support
Article 1817 management. under Article 291.
a. He rightfully but unsuccessfully demands Assignment of interest by the LP In settling accounts after dissolution, the
the return of his contribution, or liabilities of the partnership shall be entitled to
Article 1859 payment in the following order:
b. The other liabilities of the partnership
have not been paid, or the partnership A substituted LP is a person admitted to all the a. Those to creditors, in the order of priority
property is insufficient for their payment rights of a LP who has died or has assigned his as provided by law, except those to
as required by the 1st paragraph No 1 of interest in a partnership. limited partners on account of their
Article 1857, and the LP would otherwise contributions, and to GP
be entitled to the return of his An assignee, who does not become a substituted
contribution. LP, has no right to require any information or b. Those to LP in respect to their share of
account of the partnership transactions or to the profits and other compensation by
Take Note inspect the partnership books; he is only entitled way of income on their contributions
to receive the share of the profits or other
A partner cannot demand the return of his share to compensation by way of income, or the return of c. Those to LP in respect to the capital of
the capital of the partnership, but only to the net his contribution, to which his assignor would their contributions
profits from the partnership business during the otherwise be entitled.
life of the partnership period. If he is a LP, d. Those GP other than for capital and
however, he may ask for the return of his An assignee shall have the right to become a profits
contributions as provided in Articles 1856 and substituted LP if all the members consent thereto
e. Those of GP in respect to profits
1857. or if the assignor, being thereunto empowered by
the certificate, gives the assignee that right.
f. Those to GP in respect to capital
Article 1858
The substituted LP has all the rights and powers
Subject to any statement in the certificate or to
A LP is liable to the partnership: and is subject to all the restrictions and liabilities
subsequent agreement, LPs share in the contribution the court to order a cancellation or amendment
partnership assets in respect to their claims for thereof.
capital, and in respect to their claims for profits or i. A time is fixed for the dissolution of the
for compensation by way of income on their partnership or the return of a contribution If the court finds that the petitioner has a right to Page |
contribution respectively, in proportion to the no time having specified in the certificate have the writing executed by a person who 19
respective amounts of such claims. refuses to do so, it shall order the Office of the
j. The members desire to make a change in Securities and Exchange Commission where the
Article 1864 any other statement in the certificate in certificate us recorded to record the cancellation
order that it shall accurately represent the or amendment of the certificate; and when the
A certificate shall be amended when: agreement among them certificate is to be amended, the court shall also
cause to be filed for record in said office a
a. There is a change in the name of the Article 1860 certified copy of its decree setting forth the
partnership or in the amount or character amendment.
of the contribution of any LP The writing to amend a certificate shall:
A certificate is amended or cancelled when there
b. A person is substituted as LP a. Conform to the requirements of Article is filed for record in the OSEC, where the
1844 as far as necessary to set forth certificate is recorded:
c. An additional LP is admitted clearly the change in the certificate which
it is desired to make and a. A writing in accordance with the
d. A person is admitted as GP provisions of the first and second
b. Be signed and sworn to by all members, paragraph, or
e. A GP retires, dies, becomes insolvent, or and an amendment substituting a LP or
insane or is sentenced to civil interdiction adding a LP/GP shall be signed also by b. A certified copy of the order of court in
and the business is continued under the member to be substituted or added, accordance with the provisions of the
Article 1860 and when a LP is to be substituted, the fourth paragraph,
amendment shall also be signed bu the
f. There is a change in the character of the c. After the certificate is duly amended in
assigning LP.
business of the partnership accordance with this article, the amended
The writing to cancel a certificate shall be signed certificate shall thereafter be for all
g. There is a false or erroneous statement in by all members. purposes the certificate provided for in
the certificate
this Chapter. (Limited Partnership)
A person desiring the cancellation or amendment
h. There is a change in the time as stated in
of a certificate, if any person designated in the
the certificate for the dissolution of the
first and second paragraphs as a person who must
partnership or for the return of a
execute the writing refuses to do so, may petition