Partnership Reviewer
Partnership Reviewer
> the firm cannot acquire by purchase or 1. persons who are not partners to each
otherwise AGRICULTURAL Philippine other are not partners as to third
lands persons
2) foreign partnership may “lease” lands EXCEPTION:
provided the period does not exceed 99 years > PARTNERSHIP BY ESTOPPEL
3) foreign partnership may be
“MORTGAGEES” of land 2. CO-OWNERSHIP of a property does not
> period of 5 years, renewable for itself establish a partnership, even
another 5 years though the co-owners share in the
> they cannot purchase it in a profits derived from the incident of joint
foreclosure sale ownership
RULES IN CASE OF ASSOCIATIONS NOT 3. SHARING OF GROSS RETURNS
LAWFULLY ORGANIZED AS PARTNERSHIP ALONE does not indicate a partnership
1. it possesses NO LEGAL PERSONALITY whether or not the persons sharing
> it cannot sue as such HOWEVER, the them have a joint or common right or
partners in their individual capacity interest in any property from which the
CAN returns are derived
2. one who enters into a contract with a
partnership as such cannot when sued 4. the receipt of the share in the profits is
later on for recovery of the debt, allege a strong presumptive evidence of
the lack of legal personality on the part partnership HOWEVER, no such
of the firm, even if indeed it had no inference will be drawn if such profits
personality were received in payment
> ESTOPPEL A) as a DEBT by installments or
otherwise
> whether a partnership has a juridical B) as WAGES of an employee
personality or not depends on its PERSONAL C) as RENT to a landlord
LAW of the partnership or the law of the place D) as an ANNUITY to a widow or
where the partnership was organized representative of a deceased
partner
REQUISITES FOR EXISTENCE OF E) as INTEREST on a LOAN, though
PARTNERSHIP [I, CF, JI] the amount of payment vary with
1. INTENTION to create a partnership the profits of the business
2. COMMON FUND obtained from F) as the CONSIDERATION for the
contributions sale of a GOOD WILL of a
3. JOINT INTERESTS in the PROFITS business or other property or
otherwise
WHAT DO NOT ESTABLISH A > creditors are not partners, for their only
PARTNERSHIP interest in the sharing of profits is
1. mere co-ownership or co-possession the receipt or payment of their
> even with profit sharing credits
2. mere sharing of GROSS returns
> even with joint ownership of the properties > in a partnership, the partners are supposed
involved to trust and have confidence in all
the partners
RULES TO DETERMINE THE EXISTENCE
OF A PARTNERSHIP
* > applies if aside from real property, 1. contracts entered into by a “partner” in
cash or personal property is his own name may be sued upon still
contributed by him in his individual capacity, not
withstanding the absence of a
> TRANSFER of land to the partnership must partnership
be duly “recorded” in the ROD to make the 2. when two or more individuals, having a
transfer effective insofar as third persons are common interests in a business bring
concerned a court action, it should be presumed
that they prosecute the same in their
RULE: individual capacity as co-owners and
> any immovable property or an interest not in behalf of a partnership which
therein maybe acquired in the partnership does not exist in legal contemplation
name
> title so acquired can be conveyed only in the CLASSIFICATION OF PARTNERSHIPS
partnership name A) ACCORDING TO MANNER OF CREATION
1. ORALLY constituted
>IF the partnership has ALIENS, it CANNOT 2. constituted in a PRIVATE
OWN LANDS, whether public or private or INSTRUMENT
whether agricultural or commercial EXCEPT 3. constituted in a PUBLIC
through HEREDITARY SUCCESSION INSTRUMENT
4. REGISTERED – S.E.C.
B) ACCORDING TO OBJECT
1. UNIVERSAL
LIMITATIONS ON ACQUISITION 2. PARTICULAR
1. AGRICULTURAL LANDS – 1024 C) ACCORDING TO LIABILITY
HECTARES 1. LIMITED PARTNERSHIP
2. lease of public lands (GRAZING) – 2000 2. GENERAL PARTNERSHIP
HAS. D) ACCORDING TO LEGALITY
1. LAWFUL OR LEGAL
RULES IF A) articles are kept secret 2. UNLAWFUL OR ILLEGAL
among the members E) ACCORDING TO DURATION
B) any one of the members may 1. for a SPECIFIC PEIOD or FIXED
contract in his “own” name PERIOD
with third persons 2. PARTNERSHIP AT WILL
1. NOT a partnership – NOT a LEGAL F) ACCORDING TO REPRESENTATION TO
PERSON OTHERS
2. it may be sued by third person under 1. ORDINARY PARTNERSHIP
the common name it uses 2. PARTNERSHIP BY ETOPPEL
3. it cannot sue as such and cannot be G) AS TO LEGALITY OF EXISTENCE
ordinarily be a party to a civil action 1. DE JURE PARTNERSHIP
4. insofar as innocent third parties are 2. DE FACTO PARTNERSHIP
concerned H) AS TO PUBLICITY
> the parities can be considered as 1. SECRET PARTNERSHIP
members of a partnership 2. NOTORIOUS / OPEN PARTNERSHIP
5. as between themselves or insofar as I) AS TO PURPSE
third persons are prejudiced 1. COMMERCIAL / TRADING
> only the rules of co-ownership must 2. PROFESSIONAL / NON-TRADING
apply
EFFECT OF CERTAIN TRANSACTIONS GENERAL PARTNERSHIP
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> one where all the partners are general > articles of universal partnership, entered
partners without specification of its nature, only
> they are LIABLE even with respect to their constitute a universal partnership of PROFITS
individual properties, after the assets of the
partnership has been exhausted RULE:
> persons who are prohibited from giving each
LIMITED PATNERSHIP other any donation or advantage cannot enter
> one where at least one partner is a general into universal partnership
partner and the others are limited partners WHO:
> one whose liability is limited only up to the 1. HUSBAND and WIFE
extent of his contribution 2. those guilty of ADULTERY or
CONCUBINAGE
> a partnership where all the partners are 3. those guilty of the same criminal
limited partners cannot exist as a limited offense if the partnership was entered
partnership into in consideration of the same
> REFUSED REGISTRATION
> IF it continuous as such, it will be > while spouses cannot enter into a universal
considered as a general partnership and all partnership, they can enter into a particular
the partners will be general partners partnership or be members thereof
KINDS OF UNIVERSAL PARTNERSHIP > a universal partnership is virtually a
1. PARTNERSHIP OF ALL PRESENT donation to each other of the partners
PROPERTY properties or at least their usufruct
2. PARTNERSHIP OF ALL PROFITS
*> NOT EXEMPTED from LOSSES > one who does not participate in the
*> he can engage in other business management, though he shares in the
PROVIDED there is no competition PROFITS or LOSSES
between the partnership and his business
*> share in the profits according to LIQUIDATING PARTNER
agreements > one who winds up or liquidates the affairs of
the firm after it has been dissolved
INDUSTRIAL PARTNER
> one who FURNISHES INDUSTRY or OSTENSIBLE PARTNER
LABOR > one whose connection with the firm is public
*> he is EXEMPTED from LOSSES as and open
between the partner BUT liable to
strangers without prejudice to SECRET PARTNER
reimbursement from the capitalist partner > one whose connection with the firm is
*> he CANNOT engage in any other concealed or kept secret
BUSINESS WITHOUT the express
CONSENT of the other partners, DORMANT PARTNER
OTHERWISE > one who is both a secret (hidden) and silent
1. he can be EXCLUDED from the firm (not managing) partner
- plus damages OR
2. the BENEFITS he obtains from the NOMINAL PARTNER
other businesses CAN BE AVAILED of > one who is not really a partner BUT who
by the other partners may become liable as such insofar as third
- plus damages persons are concerned
> whether or not there is
COMPETITION RULE:
*> in computing always look for -----> NET > partners shall CONTRIBUTE EQUAL
PROFITS SHARES to the capital of the partnership
-----> NET
LOSSES *> it is permissible to contribute UNEQUAL
SHARES IF there is a stipulation to this effect
CAPITALIST – INDUSTRIALIST PARTNER
> one who contributes BOTH CAPITAL and *> in the absence of proof, the shares are
INDUSTRY presumed to be equal
GENERAL PARTNER CONDITIONS before a capitalist partner is
> one who is liable “beyond” the extent of his obliged to sell his shares / interest to the
contribution other partners [IL, RC, NA]
LIMITED PARTNER 1. if there is IMMINENT LOSS of the
> one who is liable “only” to the extent of his BUSINESS of the partnership
contribution
2. he REFUSES to CONTRIBUTE an
***> an industrial partner can only be a ADDITIONAL SHARE to the CAPITAL
general partner, never a limited partner
3. there is no agreement to the contrary
MANAGING PARTNER
> one who manages actively the firms affairs *> INDUSTRIAL PARTNER IS EXEMPTED
SILENT PARTNER
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4. authority to bind the firm does not > any partner shall have the right to a formal
apply if somebody else has been given account as to partnership affairs
authority to manage in the articles of 1. if wrongfully excluded from partnership
organization or through some other BUSINESS
means 2. if wrongfully excluded from partnership
PROPERTY by his co-partners
5. ALTERATIONS REQUIRE UNANIMITY 3. if the right exists under the terms of
- IMMOVABLE partnership property agreement
- BUT if the refusal to consent by the 4. if the other partner receives other
others is prejudicial to the interest of benefits, profits or uses partnership
the partnership property
- COURTS INTERVENTION may be 5. whenever other circumstances render it
sought just and reasonable
RULES on ASSOCIATE of PARTNER *> the right to demand an accounting exists as
1. every partner may associate another long as the partnership exists
person with him in his share *> prescription begins to run only upon the
dissolution of the partnership when the final
2. for a partner to have an associate in his accounting is done
share
> consent of all the other partners is PROPERTY RIGHTS OF PARTNERS [P, I, M]
NOT REQUIRED 1. rights in specific PARTNERSHIP
PROPERTIES
3. for the associate to become a partner 2. INTERESTS in the PARTNERSHIP
> ALL MUST CONSENT 3. right to PARTICIPATE in the
MANAGEMENT
RULE:
RULES on PARTNERSHIP BOOKS *> a partner is CO-OWNER with his partners
1. kept at the principal place of business of SPECIFIC PARTNERSHIP PROPERTY
of the partnership
*> RIGHTS of a PARTNER in SPECIFIC
2. at any reasonable hour, every partner PARTNERSHIP PROPERTY
shall have access to and may inspect
and copy any of them 1. he has equal rights with his partners to
POSSESS the property BUT only for
DUTY of PARTNERS TO GIVE PARTNERSHIP PURPOSES
INFORMATION > he may possess such property for
> good faith not only requires that a partner other purposes PROVIDED the other
should not make any FALSE CONCEALMENT, partners expressly or impliedly gives
BUT he should abstain from all concealment their CONSENT
DUTY to ACCOUNT [B, P, U-P] 2. he CANNOT ASSIGN his right to the
> every partner must account to the partnership property EXCEPT if all the other
1. any benefit acquired partners assign their rights in the same
2. any profits received property
3. any use of partnership property
3. his right to the property is NOT
RIGHT TO DEMAND a FORMAL ACCOUNT SUBJECT to ATTACHMENT or
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*> the firm name may or may not include *> any partner may enter into a separate
the name of one or more of the partners obligation to perform a partnership contract
**> STRANGERS who include their names in RULE:
the firm are liable as partners because of *> every partner is an “agent” of the
ESTOPPEL, BUT do NOT have the RIGHTS of partnership for the purpose of its business
partners
G.R.- the act of every partner for apparently
**> IF a LIMITED PARTNER includes his name carrying on in the USUAL WAY the business of
in the firm name, he has obligations BUT not the partnership of which he is member binds
the rights of a general partner the partnership
EXCEPT:
RULE on LIABILITY for CONTRACTUAL 1. if he has NO AUTHORITY and
OBLIGATIONS 2. the person with whom he was dealing with
*> all partners, including industrial ones, shall HAS KNOWLEDGE of the fact that he has no
be liable pro-rata with all their property and such authority
after all the partnership assets have been
exhausted RULE:
> an act of a partner which is not apparently
*> NOT APPLICABLE for TORTS or CRIMES for the carrying on of business of the
-----> LOSS partnership in the usual way does not bind
the partnership UNLESS authorized by the
-----> INJURY other partners
-----> MISAPPROPRIATION *> a partnership is a CONTARCT of MUTUAL
AGENCY, each partner acting as a principal
**> while an INDUSTRIAL PARTNER is on his own behalf and as an agent for his
exempted by law from LOSSES as between the co-partners or the firm
partners, he is NOT EXEMPTED from liability
insofar as third persons are concerned REQUISITES on WHEN can a partner BIND
> he may recover what he has paid from the partnership
the CAPITALIST partners 1. expressly or impliedly AUTHORIZED
2. when he acts in BEHALF AND IN THE
*> under the law the liability of the partners is NAME of the partnership
subsidiary and joint NOT principal and
solidary INSTANCES of IMPLIED AUTHORIZATION
1. when the other partners DO NOT
*RULE on LIABILITY of a PARTNER who has OBJECT, although they have
WITHDRAWN knowledge of the act
1. a partner who withdraws is not liable 2. when the act is for “apparently carrying
for liabilities contracted after he has on in the usual way the business of the
withdrawn partnership
*> this is binding on the firm even if
2. if his interest has not yet been paid him the partner was not really authorized
> his right to the same is that of a mere PROVIDED that the third party is in GOOD
creditor FAITH
**> a stipulation exempting liability to third RULE on UNUSUAL ACTS
persons is VOID > one or more but less than all the partners
HAVE NO AUTHORITY TO:
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[AP, DG, AI, CJ, EC, SA, RC] property IF done not in its USUAL
1. ASSIGN the PARTNERS PROPERTY BUSINESS EXCEPT if he had transferred
2. DISPOSE of GOODWILL it to a Holder for value
3. do any other act which would make it
impossible to carry on the ordinary 4. when property “held in trust” by partner
business of the partnership
4. CONFESS a judgment > a sale only conveys EQUITABLE
5. ENTER into a COMPROMISE INTEREST
6. SUBMIT to ARBITRATION
7. RENOUNCE to CLAIM 5. when title is in the name of all partners
*RULES on CONVEYANCE of REAL > conveyance executed by all partners
PROPERTY possess all rights of such property
1. where title to real property is in the EQUITABLE INTEREST
partnership name -BENEFICIAL INTEREST, BUT NOT
> any partner may convey title to such NAKED OWNERSHIP
property by a conveyance executed in
the partnership name *RULE on ADMISSION or
REPRESENTATION MADE by a PARTNER
*> PARTNERSHIP MAY RECOVER SUCH > an admission by a partner is an admission
PROPERTY against the partnersip,under the following
EXCEPT: conditions:
1. if the firm is engaged in the 1. the admissions must concern
buying and selling of land partnership affairs
(USUAL BUSINESS) 2. must be within the scope of his
2. if property was conveyed to a authority
HOLDER for VALUE and who
had NO KNOWLEDGE of the RESTRICTIONS ON THE RULE:
partners LACK of AUTHORITY 1. admissions made BEFORE
DISSOLUTION are binding only when
2. where title is in the name of the the partner has authority to act on the
partnership and partner sold in his OWN particular matter
NAME
2. admissions made AFTER
IF DONE IN USUAL BUSINESS
> DISSOLUTION are binding only if the
> buyer does not become owner BUT admissions were necessary to WIND UP
ACQUIRES EQUITABLE INTEREST the business
> IF NOT DONE IN USUAL BUSINESS 3. an admission made by a former partner
> buyer does not become owner and made after he has RETIRED from the
is not even entitled to equitable interest partnership is not evidence against the
firm
3. where title is in the name of one or more EFFECT of NOTICE to a PARTNER
BUT not all the partners → notice to a partner is notice to the
partnership
> partners in whose name the title is
named MAY CONVEY BUT the
PARTNERSHIP may RECOVER such
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