PARTNERSHIP
Article Remarks
Art. 1767
Definition of partnership
A partnership is a contract of two (2) or
more competent persons to place their
money, effects, labor and skill, or some or
all of them, in lawful commerce or business
and to divide the profits and bear the losses
in certain proportions
Par 2 – general professional partnership
Profession – a group of men pursuing a
learned art as a common calling in the
pursuit of public service – no less a public
service because it may incidentally be a
means of livelihood
Characteristic elements of partnership
1. Consensual -
perfected by mere consent
2. Nominate -
it has a special name or designation
in law
3. Bilateral -
entered into by two or more
persons
4. Onerous -
shared burden
5. Commutative -
one’s action is the action of another
6. Principal -
it can exist on its own
7. Preparatory -
entered into as a means to an end
Purpose of partnership: obtain PROFIT and
share LOSSES
A partnership contract is a contract of
agency (Art 1818)
Partnership relation is fiduciary in nature
Based on trust
Element of delectus personae exists Delectus personae – choice of the
person(s). Reason behind the authority
As a consequence of fiduciary relations, provided by law to one partner to bind
PARTNERSHIP
partners has: another by contract or otherwise. It
a. Right to choose co-partners assumes that one party ascertains the
b. Power to dissolve the partnership character of the individual as trustworthy
enough. Applicable to a general partner
only
Essentials features of partnership
1. There must be a valid contract
2. Parties must have legal capacity to
enter into the contract
3. There must be a mutual
contribution of money, property, or
industry to a common fund
4. The object must be lawful
5. The primary purpose must be to
carry on a business for profits and
to divide the same among the
parties
Legal capacity of the parties Who CANNOT be an individual partner –
any person who cannot give consent into a
Parties can be: contract:
Individuals a. Unemancipated minors –
Partnership e.g. married minors
Corporation b. Insane or demented persons
Joint venture c. Deaf-mutes who do not know how
to write
d. Persons suffering from civil
interdiction – incompetent or
incapacitated to enter into a
contract (under guardianship)
Form of contribution (one or combination)
1. Money – legal tender
2. Property – real or personal
3. Industry – active cooperation, work
(only for general partner)
PARTNERSHIP
ART 1786 This article speaks of three (3)
obligations of a partner with respect to
their contribution by way of property to
the partnership
First obligation is,
1. To contribute at the beginning of
the partnership or at the
stipulated time the money,
property or industry which he
may have promised to contribute;
(in other words, that is
to contribute what the partner
really promised the partnership)
Given that there is an obligation to
contribute, failure to contribute the
property promised will result or make
the partner, by operation of law, a
debtor of the partnership even if there
was no demand.
However, even if the partner is now a
debtor, the partnership contract can no
longer be rescinded. What the partners
or the partnership can do as a remedy is
not rescission but an action for specific
performance or to collect what is owing
plus the damages and the interests.
There is an exemption, though. In Art
1838, rescission or annulment of a
partnership contract is allowed on the
ground of fraud or misrepresentation
committed by one of the partners.
Now, for the second obligation, that is:
2. To answer for eviction in case
the partnership is deprived of the
determinate property contributed;
PARTNERSHIP
This is an obligation to warrant and
refers to specific and determinate
things which are already contributed to
the partnership but then the partnership
was not able to enjoy. We can view this
on the context of eviction under the law
of sales. A partner is obligated similarly
as to how a vendor shall answer for the
eviction when the vendee is deprived of
the whole or part of the thing
purchased. This obligation of warranty
arises because the contract of
partnership is onerous in character.
Lastly, the third obligation in this article
is,
3. To answer to the partnership for
the fruits of the property the
contribution of which he delayed,
from the date they should have
been contributed up to the time
of actual delivery
(or simply, to deliver the fruits of
what should have been
delivered).
The partner liable if he caused a delay in
delivery. Why? Well, if we may recall, the
partnership’s purpose is to obtain
profits. With the delay, the partnership,
then failed to obtain the greatest
possible profit out of the property.
Note that the money or property
contributed by a partner becomes the
property of partnership. This also goes
the same for its fruits.
Aside from the three (3) mentioned,
PARTNERSHIP
there are other obligations of a partner
stipulated in other articles of the Civil
Code such as
1. in Art 1163 which stipulates
to preserve said property with the
diligence of a good father of a
family pending delivery to the
partnership; and
2. to indemnify the partnership for
any damage caused to it by the
retention of the same or by the
delay in its contribution as stated
Art 1788 and 1170
Art 1787 This article emphasizes the need for an
appraisal of the value of the goods or
property to be contributed to the
partnership. It is necessary in order to
determine how much has been or is
being contributed by the partners.
The importance of determining the
contribution of the partners lies in the
share of a partner in the profits and
losses depending on the proportion of
the partner’s contribution in the absence
of a stipulation.
Moreover, this article suggests on how
the appraisal is to be made.
As stated, first it is in the manner
prescribed by the contract of
partnership. If there is no stipulation,
then it shall be appraised by the experts
chosen by the partners and also should
at current prices.
PARTNERSHIP
1810 As we talk on the property rights of a
partner, we have first to distinguish
partnership property from partnership
capital. As to changes in value,
partnership property is variable. This
means that its value changes everyday
depending on the market value of the
partnership assests. On the other hand,
partnership capital is constant, it is fixed
by agreement of the partners.
As to the assets included, partnership
property includes
1. the original capital contributions
of the partners
2. all property acquired on the
account of the partnership or n
that name of the partnership
On the other hand, partnership capital
represents the sum of the individual
contributions made by the partners
Since we are talking about property, we
should also look into the ownership of
the property of the partnership. We have
to take note that:
An individual partner may allow his
property to be used in the partnership
business without intending to transfer
the ownership. Thus, there is a need for
an express agreement or intention of
the parties for the property is to be used
by the partnership.
Thus, when can we say that it is outright
a partnership property?
1. Property acquired by the
partnership using the partnership
funds is presumed to be
partnership property.
2. Property carried in partnership
books as partnership assets
PARTNERSHIP
3. Other factors such as
a. Income generated by the
property is received by the
partnership
b. Taxes is paid by the
partnership
1811 The article speaks of Co-Ownership in
Specific Partnership Property. However,
this term co-ownership is not the same
as that of the co-ownership in property
law. What the partners are co-owners of
refers to the rights of a partner in
specific partnership property (which
usually are tangible things, e.g. cars).
There are some rules that should be
taken note of:
1. In general, a partner has an equal
right to possess specific
partnership property for
partnership purposes. Thus, a
partner is not to use it for
individual purpose without the
consent of the other partners.
2. Second, the right is not
assignable. A partner cannot
separately assign his right to
specific partnership property but
all of them can assign their rights
in the same property.
3. Third, the right is limited to share
of what remains after partnership
debts have been paid. The whole
partnership property belongs to
the partnership which is
considered as a juridical person
and a person has no interest in it
but his share of what remains
after all the partnership debts
has paid. Thus, specific
partnership property is not
subject to attachement,
execution, garnishment, or
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injunction without the consent of
all partners except on a claim
against the partnership.
For example, a car contributed by one of
the partners to the partnership.
(a) In general, he has an equal right with
his partners to possess the car but only
for partnership purposes (not for
other purposes, except if the others
expressly or impliedly
give their consent).
(b) He cannot assign his right in the car
(except if all the
other partners assign their rights in the
same property).
Ra 9165
Impt: Sec 5,11, 21
Cases
Jb: gr229362 18 june 2019
Veda:
1. Gr 240596 novo
2. Gr 217978 jan 30 2019 anti trafficking in persons act
gr number highlight, then date of promulgation
Alvarado: gr 206627
Christian: 230337 june 17 2019
Mich gr 133993 10-13-1999 next meeting; people vs William rodriguez y bantoco ra 9165
Mustapha gr 189272 jan 21,2015; gr229049 june6 2019
Dan 112370 10-13-1999; 212626 june 3 2019
Lim 195244; 229828
Reyes: 235652; 228255
PARTNERSHIP
Martins alde
RA
Anti trafficking in persons
Cruelty in children
