7.
Retiring partner after dissolution, ceases to be a partner in the business, which
is carried on by the others.
8. Continuing partners Art. 1840
9. Surviving partners - Art. 1842
10. Partner by Estoppel Art. 1825
V. CREATION AND DURATION
A. Formalities
1. General rule Art. 1771; 1356 no form; may be oral or in writing regardless of
value
2. If capital at lease P3,000.00 Art. 1772 public instrument is merely necessary
for registration for issuance of license;
- Tocao vs CA, Supra at II, C, 1
- Sunga vs Chua, GR No. 143340, August 15, 2001
3. If Immovable or Real rights contributed art 1771; 1773 public instrument and
inventory of the realty made, signed and attached to the public instrument;
- Agad vs Mabato, 23 SCRA 1223 (1968)
B. Duration
1. Commencement Art. 1784; may be agreed upon to be at some future time or
happening of event or after fulfillment of certain conditions
2. Term Art. 1785; 1830 (b)
VI. OBLIGATIONS OF PARTNERS AMONG THEMSELVES
A. Promised Contribution - Art. 1786 Moran vs CA, 133 SCRA 88 (1984)
1. Money
a. Consequences of Default Art. 1788 (1st part.); 2209;
- Rojas vs Maglana, 192 SCRA 110
b. Remedy of Non-defaulting Partner/s Arts. 1786 and 1788 (not 1191 on
rescission); see also 1838
- Sancho vs Lizarraga, 55 Phil. 610 (1931);
2. Property
a. Form or Kind
b. Time and Manner of Delivery
c. Appraisal Art 1787; 1773
d. Warranty in case of eviction and liability for fruits Art 1786; 1547
e. Risk Art. 1786; 1795
3. Industry or Service
4. Amount of Contribution due from each partner Art 1790; 1811 (1) Except
industrial partner
B. Contribution of additional capital Art 1791
C. Fiduciary Duty Art 1807; 1808; 1831; 1788; 1794; partnership is a relationship
of trust and confidence which must not be abused or used to personal advantage;
partner is treated as a confidential agent of the others and his duties are analogous
to a trustee
- Pang Lim and Galvez vs. Lo Seng, 42 Phil. 282 (1921)
- Tuason and San Pedro vs Zamora and Sons, 2 Phil 305
- Catalan vs Gatchalian, 105 Phil 1270
- Lim Tanhu vs Ramolete, 66 SCRA 425 (1975)
1. Duration Art. 1829;
- Hanlon vs Haussermann and Beam, 40 Phil. 796 (1920);
- Yu vs NRLC, 224 SCRA 75
2. Account for Benefits Art 1807; Meaning of transaction connected with conduct
of partnership Foucheck vs Janicek, 225 P. 2d 783 (1950) The courts have
interpreted transaction as the justice of each case demanded rather than by any
abstract definition, and have given the word a broad, comprehensive meaning
whenever necessary to meet the intention and purpose of the statute in which it
was employed. Transaction in the ordinary and popular sense has been defined as
signifying the doing or performing of any affair; that which is done or in the process
of being done, and again as a a matter or affair either completed or in the course
of completion. It is enough to constitute a given transaction a business transaction
if it carries a reasonable prospect of future advantage, even though the anticipated
values maybe lost in subsequent negotiations designed to bring it to fruition. This is
also true, even though it has no present market value in the hands of the
partnership or cannot be made the basis of a legal claim against parties outside of
the firm.
3. Engaging in Competitive Business Art 1808
a. Capitalist Partner
b. Industrial Partner Art 1789
D. Participation in losses Art 1799, 1797 (2nd par); 1798
Limited Partner Arts 1866, 1854, 1843, 1848, and 1851
VII. PROPERTY RIGHTS OF A PARTNER
A. General Scope Arts. 1810; 1805; 1806; 1809; 1796; 1830-1831
B. Right in Specific Partnership Property Art 1811
1. Co-Ownership partners are co-owners (tenants in common with
proportional, sometimes equal) right thereto, however, the rules on coownership do not necessarily apply; thus, this is not accurate because
specific partnership property is owned not by the partners in common but
by the partnership as a juridical person, since partnership is a distinct and
separate entity from the partners who compose it ( Art 1768)
2. Incidents of Co-Ownership
a. Equal Right of Possession
Not exclusive Art 1809 (1)
For Partnership purposes only Art 1811 (1)
Subject to agreement and provisions of Code Arts. 1811 (1), 1803 (2),
1800 (1st par.), 1803
b. Not assignable Art 1811 (2); Lozana vs Depakakibo, 107 Phil 728
(1960) makes assignee a partner without agreement of the others;
prevents interference of outsiders.
c. Not subject to attachment or execution Art 1811 (3) logical
consequence of non-assignability of his right to partnership property.
Remedy of partners separate creditors Art 1814
d. Not subject to support art 1811 (4) should now be art 195 of the
family code; but the interest in the partnership is subject to legal
support
C. Interest in Partnership Art 1812
1. Profit means the excess of returns over expenditures in a transaction or
series of transactions; or the net income of the partnership for a given
period of time ( De Leon, Partnership, p. 167) during the life of the
partnership
2. Surplus refers to the assets of the partnership after partnership debts
and liabilities are paid and settled and the rights of the partners among
themselves are adjusted ( art 1839) assets over liabilities after its
dissolution.
D. Assignment of partnership interest art 1813 does not cause dissolution;
- Realubit vs Jaso, supra
1. Assignee has no right to:
- Interfere in the management;
- Require any information or account;
- Inspect any of the partnership books
2. Assignee has right to
- Receive in accordance with his contract the profits accruing to the
-
assigning partner
Avail himself of the usual remedies provided by law in the event of fraud
in the management;
Receive the assignors interest in case of dissolution;
Require an account of partnership affairs, in case the partnership is
dissolved; and
Apply to the court for dissolution of the partnership, after the termination
of the specified term or undertaking or at any time if the partnership is
one at will.
E. Charging order Art 1814; 1827
1. Court will
(a) Enter an order charging the interest of the debtor partner with
payment of the unsatisfied amount of the judgment debt as well as the
interest thereon;
(b) Appoint a receiver of the debtor partners share of the profits and any
other money due or to fall due to him in respect of the partnership;
(c) Make all orders, directions, accounts, and inquiries which the debtor
partner might have made, or which the circumstances of the case may
require; and
(d) Direct the sale of the interest charged.
2. Redemption or purchase of charged interest
3. Right to dissolve partnership Art 1830 (c)
F. Participation in management Art 1800; 1801; 1802; 1803 acts of
administration not of strict ownership.
- Litton vs Hill & Ceron, 67 Phil 507 (1939)
- Smith, Bell & Co. vs Aznar, 40 O.G. 1881 (1941)
G. Access to partnership books art 1805; 1806
- Pardo vs Hercules Lumber Co., 47 Phil 964 (1924)
- Garrido vs Asencio, 10 Phil 691
H. Right to formal accounting art 1807, 1808, 1809, 1806
I. Right to dissolve art 1830-1831
VIII. OBLIGATIONS OF PARTNERS WITH THIRD PERSONS
A. Firm name art 1815
- In re Sycip Salazar, etc. 92 SCRA 1 (1979) old rule;
- Rule 3.02 of the Code of Professional Responsibility ( June 21, 1988)
B. Partners as agents art 1818, 1819
1. Acts within apparent authority essential or necessary to the furtherance
of
a.
b.
c.
the partnership business
Contracts of employment
Purchases of property
Conveyance or disposal of property
Real Property art 1819
- Goquiolay vs Sycip, L 11840, July 26, 1960, 108 Phil 947
- Goquiolay vs Sycip, December 10, 1963, 9 SCRA 663
Personal Property
d. Leases
e. Borrowing money
f. Negotiable instruments
g. Pledge and mortgages
h. Collection and enforcement of claims
i. Other acts
2. Acts requiring unanimous consent/ strict ownership art 1818, pars. 2 and
3
a. Assignment for benefit of creditors partnership is virtually dissolved
b. Disposal of good will goodwill is valuable property
c. Other acts making it impossible to carry on ordinary business
prejudicial to partnership
d. Confession of judgment if done before a case, void; if done later, the
partnership will be jeopardized
e. Compromise of partnership claim or liability act of ownership
equivalent to alienation
f. Submission to arbitration also act of ownership
g. Renunciation of partnership claim partner does not own claim
h. Abandonment of business
C. Liability for wrongful acts or omissions art 1822, 1823, 1824 solidary vs
contractual obligations which are joint and subsidiary, art 1816
- J. Tiosejo Investment Corp. vs Ang, 630 SCRA 334 [2010]
- Munasque vs CA, 139 SCRA 533 (1985)
- Island Sales, Inc. vs United Pioneers General Const. Co., 65 SCRA 554
D. Admissions or representations art 1820
E. Notice or knowledge art 1821
F. Partnership liability by estoppel art 1825
