I.
PARTNERSHIP
Week No. 1
A. General Provisions (Article 1767 – 1783)
1. What is a contract of
partnership? (Art. 1767)
Art. 1767. By the contract
of partnership two or more persons bind themselves to contribute money,
property, or industry 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. (1665a)
SANTOS VS. SPS. REYES, 368 SCRA 261
2.
Determining factors in the existence of partnership (Art. 1769)
Art. 1769. In determining whether a partnership exists,
these rules shall apply:
(1) Except as provided by Article 1825, persons who are not
partners as to each other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a
partnership, whether such-co-owners or co-possessors do or do not share any
profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or common
right or interest in any property from which the returns are derived;
(4) The receipt by a person of a share of the profits of a business
is prima facie evidence that he is a partner in the business, but no such
inference shall be drawn if such profits were received in payment:
(a) As a debt by
installments or otherwise;
(b) As wages of an
employee or rent to a landlord;
(c) As an annuity to a
widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary
with the profits of the business;
(e) As the consideration for the sale of a goodwill of a
business or other property by installments or otherwise. (n)
HEIRS OF TAN ENG KEE VS. CA, 341 SCRA 740
(citing
Evangelista vs Collector of Internal Revenuw, 54 O.G. 996
NEGADO VS. MAKABENTA, 54 O.G. 4082
Castro, J.
YULO VS. YANG CHIACO SENG, L-12541, AUG. 28, 1959
LABRADOR, J.:
3. Distinction between
partnership and private corporation
FLETCHER, Cyc. Corp., Sec.
20
4. Formalities required by law for the
organization/constitution of partnership (Art. 1771, 1772, 1773, 1843)
Art. 1771. A partnership
may be constituted in any form, except
where immovable property or real
rights are contributed thereto, in which case a public instrument shall be necessary. (1667a)
Art. 1772. Every contract
of partnership having a capital of
three thousand pesos or more, in money or property, shall appear in a public
instrument, which must be recorded in the Office of the Securities
and Exchange Commission.
Failure to comply with the requirements of
the preceding paragraph shall not affect the liability of the partnership and
the members thereof to third persons. (n)
Art. 1773. A contract of
partnership is void, whenever
immovable property is contributed thereto, if an inventory of said property is
not made, signed by the parties, and attached to the public instrument. (1668a)
Art. 1843. A limited
partnership is one formed by two or more persons under the provisions of the
following article, having as members one or more general partners and one
more limited partners. The limited partners as such shall not be bound by
the obligations of the partnership.
SEC Memorandum Circular 14, Series of 2017
Consolidated Guidelines and Procedures on the Use of
Corporate and Partnership Names
SEC Memorandum Circular No. 9, Series of 2018
Amendment of the
Guidelines and Procedures on the Use if Corporate and Partnership Names
SEC Memorandum Circular No. 6, Series of 2016
Omnibus
Guidelines on Principal Office Addressm Address of each Incorporator, Director,
Trustee or Partner
Executive Order No. 184
Tenth Foreign
Investment Negative List
Week No. 2
5. Different kinds of partnership
Art.
1776. As to its object, a
partnership is either universal or particular.
As regards the liability of the partners, a
partnership may be general or limited. (1671a)
a.)
As to
object (Art, 1777, 1778, 1780, 1783)
i.
Universal
Partnership
Art. 1777. A universal partnership may refer to all the present property or to all the
profits. (1672)
Art. 1780. A universal partnership of profits comprises all that the partners may acquire by their industry or
work during the existence of the partnership.
Movable or
immovable property which each of the partners may possess at the time of the
celebration of the contract shall continue to pertain exclusively to each, only
the usufruct passing to the partnership. (1675)
2 kinds of universal partnership:
1.
Universal
partnership or one which refers to ALL THE PRESENT PROPERTY OR TO ALL PROFITS (1777)
2.
Universal
partnership of profits defined in ART. 1780.
Art. 1778. A partnership of all present property is that in which the partners
contribute all the property which actually belongs to them to a common fund,
with the intention of dividing the same among themselves, as well as all the
profits which they may acquire therewith. (1673)
ii.
Particular
Partnership
Art. 1783. A particular partnership has for its
object determinate things, their use or fruits, or specific
undertaking, or the exercise of a profession or vocation. (1678)
b.) As to liability of the partners
i.
General Partnership
General Partnership or one consisting of general partners who are
liable pro rata and subsidiarily (Art. 1816) and sometimes SOLIDARILY (Arts.
1822 – 1824) with their separate property for partnership debts; or
ii.
Limited Partnership
Limited Partnership or one formed by two or more persons having as members
one or more general partners and one or more limited partners, the latter not
being personally liable for the obligations of the partnership. (Art. 1843)
6. Different kinds of partners
a.)
Industrial Partner – or one who contributes only his industry
or personal service (Arts. 1789, 1767)
Art. 1789. An industrial partner cannot engage in business for
himself, unless the partnership expressly permits him to do so; and if he
should do so, the capitalist partners may either exclude him from the firm or avail
themselves of the benefits which he may have obtained in violation of this
provision, with a right to damages in either case. (n)
Art. 1767. By the contract of partnership two or more persons
bind themselves to contribute money, property, or industry 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. (1665a)
b.)
Capitalist Partners – or one who contributes money or property
to the common fund (see Art. 1767)
Art.
1767. By the contract of
partnership two or more persons bind themselves to contribute money, property,
or industry 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. (1665a)
c.)
General Partner – or one whose liability to third persons
extends to his separate property; he may be either a capitalist or industrial
partner. (see Art. 1843, 1816). He is also known as a REAL PARTNER
Art. 1843. A limited partnership is one formed by two or more
persons under the provisions of the following article, having as members one or
more general partners and one or more limited partners. The limited partners as
such shall not be bound by the obligations of the partnership.
Art. 1816. All partners, including industrial ones, shall be
liable pro rata with all their property and after all the partnership assets
have been exhausted, for the contracts which may be entered into in the name
and for the account of the partnership, under its signature and by a person
authorized to act for the partnership. However, any partner may enter into a
separate obligation to perform a partnership contract. (n)
d.)
Limited Partner – or one whose liability to third persons
is limited to his capital contribution. (see Art. 1843) He is also known as
“SPECIAL PARTNER”. The term “general partner” and “limited partner” have
relevance only in LIMITED PARTNERSHIP.
Art.
1843. A limited
partnership is one formed by two or more persons under the provisions of the
following article, having as members one or more general partners and one or
more limited partners. The limited partners as such shall not be bound by the
obligations of the partnership.
e.)
Managing Partner – or one who manages the affairs or business
of the partnership; he may be appointed either in the articles of partnership
or after the constitution of the partnership (See Art. 1800) He is also known
as GENERAL or REAL partner;
Art. 1800. The partner who has been appointed manager in the articles
of partnership may execute all acts of administration despite the opposition of
his partners, unless he should act in bad faith; and his power is irrevocable
without just or lawful cause. The vote of the partners representing the
controlling interest shall be necessary for such revocation of power.
f.)
Silent Partner – or one who does NOT take any active part in the
business although he may be known to be a partner. (Ibid.) Thus, he need not be
a secret partner. If he withdraws from the partnership, he must give notice to
those persons, who do business with the firm to escape liability in the future;
g.)
Ostensible Partner – or one who takes ACTIVE PART and known
to the public as a partner in the business (See Art. 1834, par. 2), whether or
not he has an actual interest in the firm. Thus, he may be an actual partner or
a nominal partner. If he is not actually a partner, he is subject to liability
by the doctrine estoppel. (Art. 1825)
Art. 1825. When a person, by words spoken or written or by
conduct, represents himself, or consents to another representing him to anyone,
as a partner in an existing partnership or with one or more persons not actual
partners, he is liable to any such persons to whom such representation has been
made, who has, on the faith of such representation, given credit to the actual
or apparent partnership, and if he has made such representation or consented to
its being made in a public manner he is liable to such person, whether the
representation has or has not been made or communicated to such person so
giving credit by or with the knowledge of the apparent partner making the
representation or consenting to its being made:
(1) When a partnership liability results, he is liable as though he
were an actual member of the partnership;
(2) When no partnership liability results, he is liable pro rata with
the other persons, if any, so consenting to the contract or representation as
to incur liability, otherwise separately.
When a person has been thus represented to be a partner in an existing
partnership, or with one or more persons not actual partners, he is an agent of
the persons consenting to such representation to bind them to the same extent
and in the same manner as though he were a partner in fact, with respect to
persons who rely upon the representation. When all the members of the existing
partnership consent to the representation, a partnership act or obligation
results; but in all other cases it is the joint act or obligation of the person
acting and the persons consenting to the representation. (n)
h.)
Secret Partner – or one who takes active part in the business but is
not known to be a partner by outside parties nor held out as a partner by the
other partners (Ibid.), although he participates in the profits and losses of
the partnership. He is an ACTUAL partner. He is also an ACTIVE partner in the
sense that he participates in the management of the partnership affairs.
i.)
Partner by Estoppel – or one who is not really a partner, not
being a party to a partnership agreement, but is liable as a partner for the
protection of innocent third persons. (See Art 1825) He is one who represented
as being in fact a partner, but who is not so as between the partners
themselves. He is also known as PARTNER BY IMPLICATION OR NOMINAL PARTNER.
The term QUASI-PARTNER is sometimes used. (68 C.J.S. 405)
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Reviewer Made by: Liz Lorenzo
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