Sources : Sources : OCC, Uniform Partnership Act, Uniform Limited Partnership Act 1767
principal aim it can ha$e other ends lie social, must !e the principal aim moral, spiritual% 4he sharin" sharin" is merel merel presumpti$e presumpti$e and not not conclusi$e conclusi$e e$idence of partnership%
Partnership -It is also a status and a duciar relation su!sistin" !et#een persons carrin" on a !usiness in common #ith a $ie# on prot% &Paras' Characteristics 1% Consensual(perfected ! mere consent, althou"h such consent must !e manifested in certain cases ! proper formalities )% *ilateral+ ultilateral(entered into !et#een t#o or more persons % .ominate(desi"nated ! a specic name /% Principal(its e0istence does not depend on the life of another contract
A stipulation e0cludin" one partner from sharin" of losses is $oid% E. !here must be the afectio societatis(the desire to formulate an AC4I25 union #ith people amon" #hom there e0ist mutual confdence and trust% 9iduciar; in nature: It is a personal relation in #hich the element of delectus personae &choice personae &choice of the person+s' e0ists% It is !ecause of this that one partner has authorit to !ind the other, or the ri"ht to dissol$e the partnership pro$ided in "ood faith% 8In the same $ein, 3ust !ecause partners appear in the contract, does not necessaril mean that a partnership e0isted% 4here must !e a ne# personalit that #ill !e formed separate and distinct from each of the mem!ers% "istory &
% Onerous(certain contri!utions ha$e to !e made 6% Preparator(after it has !een entered into, other contracts essential in the carrin" out of its purposes can !e entered into Elements
1% )%
% /%
A. 2alid contract &Consent and capacit, O!3ect #hich is the su!3ect matter of the contract, cause #hich is esta!lished' % Articles of Partnership(em!odies Partnership(em!odies the terms of association #hich contain the name, nature or purpose and location of the rm and denin" the po#ers, ri"hts, lia!ilities and duties of ther partners, their contri!utions, the manner ! #hich prots and losses are to !e shared and procedure procedure for dissol$in" the partnership% B. 4here B. 4here must !e a contribution of contribution of mone, propert or industr &intellectual or phsical' to a common fund &credit, commercial or economic and "ood#ill ma !e contri!uted as it is considered as propert' • •
•
•
one(le"al tender in the Philippines Propert(real, personal, corporeal or incorporeal% 5$en "ood#ill ma !e contri!uted% A license ma !e contri!uted% Industr(means an acti$e cooperation, the #or of the part associated, #hich ma !e either personal manual eorts or intellectual, and for #hich he recei$es a share in the prots ¬ merel salar'% It can !e credit or industr not necessaril cash or 0ed assets%
C. 4he C. 4he o!3ect o!3ect must !e la#ful% la#ful% D. 4her D. 4here e must !e an intention of di$idin" the prot prot amon" the partners since it is for the common !enet or interest of the partners% 8o!3ect must be for prot not for common enjoyment, otherwise only a co-ownership is forme. Pecuniar aim
6%
4here 4here #as #as no limit limit to the num!e num!err of partners partners%% A partner partner #as not consi consider dered ed the implied implied a"ent a"ent of the others% A partner had to o!tain an e0press mandate from each% 4he partne partners rs #ere #ere lia!le lia!le 3ointl 3ointl, , not solida solidaril ril% 4he partne partners rs had the ri"ht ri"ht to to the the benefcium competentiae, competentiae , that is, the #ere held nanciall =lia!le onl insofar as the #ould not !e reduced to destitution% 4he heirs heirs of a decease deceased d partner partner could could not succeed succeed to the ri"hts of the deceased, e$en ! e0press stipulation% A roman roman partn partner er could could not not retire retire in order order to en3o en3o alone a "ain #hich he ne# #as a#aitin" him%
*efore the .CC !ecame eecti$e, there #ere t#o inds of partnership: ci$il and commercial or mercantile% 4he dierence lies in the ends desired not the manner of the or"ani>ation% In the a!sence of a clear sho#in", the form #as held indicati$e of its nature% Code of Commerce "o$erns the latter% 4he .CC repealed this and no# "o$erns all transactions in partnership, #hether ci$il or mercantile% !rust(le"al !rust(le"al relationship !et#een one person ha$in" the e?uita!le o#nership in propert and another o#nin" the le"al title to such propert the e?uita!le o#nership of the former entitlin" him to the performance of certain duties and the A#ency(a"ent acts e0ercise of certain po#ers ! the latter% A#ency(a"ent for his principal% A partner is !oth a principal &for his o#n interest' and an a"ent &for the rm and the others'% $oint A%enture or $oint Accounts Accounts(is (is a sort of informal partnership, #ith no rm name, and no le"al personalit% In 3oint account, account, the participatin" participatin" merchants merchants can transact transact !usiness under their o#n name, and can !e individually liable therefor% It is limited to a single transaction, transaction , althou"h the !usiness of pursuin" it to a successful termination ma continue for a num!er of ears= a partnership "enerall relates to a continuin" !usiness of $arious transactions of a certain ind%
1
Synicate(particular undertain" for some temporar o!3ecti$e
Creation
Partnership 2oluntar
E&istence
.o time limit
'iability
a !e lia!le #ith their pri$ate propert
!ransferability of interest
Ability to bin
(ismana#eme nt
)ationality 'e#al personality
Dissolution
4he transferee does not !ecome a partner unless all consent Benerall, a partner acts on !ehalf of the partnership as a"ents, conse?uentl the can !ind !oth rm and the partners Partner can sue a partner
Countr of creation 2ested from the time of contract
Corporation @pecial charter or "eneral la# .ot more than ears Lia!le onl for pament of their su!scri!ed capital stoc A transfer maes the transferee a stocholder @tocholders cannot !ind corporation since the are not a"ents
Ea corporation unless authorie by statute, charter, it has no capacity to enter into a partnership. *t cannot become a partner on #rouns of public policy, since in a partnership the corporation #ould !e !ound ! the acts of persons #ho are not its dul appointed and authori>ed a"ents and oFcers% Go#e$er, a corporation can enter into a 3oint $enture #ith another where the nature of that %enture is in line with the business authorie in its charter% A corporation ma act as a mana"in" partner in line #ith the corporate !usinesses of the corporations concerned% Can a corporation an an ini%iual form a #eneral partnership/ B<: .o, !ecause a corporation ma not !e !ound ! persons #ho are neither directors nor oFcers of the corporation% Go#e$er, a corporation ma form a #eneral partnership #ith another corporation or an indi$idual pro$ided: &1' the articles of incorporation e0pressl allo#s the corporation to enter into partnerships &)' the articles of partnership must pro$ide that all partners #ill mana"e the partnership &mana"in" partners' and the shall all !e 3ointl and se$erall lia!le% 0123-juriical personality
A stocholder cannot sue a mem!er of the !oard, must !e in the name of the corporation Countr of incorporation rom re"istration in @5C and all re?uisites ha$e !een complied #ith
eath, retirement, insol$enc, ci$il interdiction, insanit
If re?uisites are not complied #ith, the partnership maintains its 3uridical personalit% A<4 177) is onl intended to !e prere?uisites for the issuance of licenses 4ta& purposes an for accountability5information to persons ealin# with the partnership6 to en#a#e in the business or trae )! for the ac?uisition of a 3uridical personalit ! the partnership% 7ailure to re#ister does not in$alidate the contract of partnership so lon" as the contract has essential re?uisites, !ecause the main purpose of re"istration is to #i%e notice to thir persons, and it can !e assumed that mem!ers themsel$es ne# the contents of the contract Conse8uences of bein# a juriical entity 1% )% % /%
CAPAC*!+ ! BEC(E A PA!)E % Incapacitated: Unemancipated minors, insane or demented persons, deaf-mutes #ho donDt no# ho# to read and #rite, persons suerin" from ci$il interdiction, incompetents #ho are under "uardianship Capacitated persons: Eminor, unless parent or "uardian consents other#ise partnership is $oida!le, unless other partners are in the same situation, in #hich case the contract is unenforcea!le% Ea married #oman #ith re"ard to con3u"al funds, or #ho is an administrator of the partnership, the court must "i$e its consent+authorit% Ea partnership can !e a partner either #ith a pri$ate indi$idual or #ith other partnerships, there is no prohibition
@eparate and distinct Can ac?uire and possess propert of all inds &Art /6' *rin" ci$il or criminal actions Can !e ad3ud"ed insol$ent e$en if the mem!ers are sol$ent Unless sued, a partner has no ri"ht to appear in court, if the partnership is alread represented
)ot lawfully or#anie 1% )%
It possesses no le"al personalit, it cannot sue% Partners can sue in their indi$idual capacit% Partnership ! estoppel applies%
0129:ules in Determinin# Partnerships e8uisites 1% )% %
Intention to create(the desi"nation ma !e indicati$e of their intention Common fund o!tained from contri!utions Hoint interest in the prots
)
*t is the substance an not the name of the arran#ement that etermines the le#al relationship. *t can be etermine from the conuct of the parties, ocumentary e%ience an testimony of parties. -Sharin# of #ross returns alone does not indicate a partnership, since in a partnership= the partners share net prots after satisfin" all of the partnershipDs lia!ilities%
% 6% 7%
0110:7(A'*!*ES
-Sharin# of net prots is prima facie e$idence that one is a partner e0cept the enumerations%
1%
Creditors are not partners for their interest is the receipt or pament of their credits onl%
)%
-Co-ownership e0ists #hene$er the o#nership of an undi$ided thin" or ri"ht !elon"s to dierent persons% A duciar relationship does not necessaril e0ist in coo#nership unlie in partnership% -Buren of proof an presumption 1% )% %
4he e0istence of a partnership must !e pro$ed and #ill not !e presumed% 4he la# presumes that persons #ho are actin" as partners ha$e entered into a contract of partnership% *urden is proof is on the person assertin" termination, if the partnership is sho#n to e0ist%
-*ncients of partnership 1% )% %
/%
%
6% 7%
4he partners share in prots and losses% 4he ha$e e?ual ri"hts in the mana"ement and conduct of the partnership !usiness% 5$er partner is an a"ent of the partnership, and entitled to !ind the other partners ! his acts, for the purpose of its !usiness% 5$er partner is an a"ent of partnership and entitled to !ind the other partners ! his acts, for the purpose of its purposes% All partners are personall lia!le for the de!ts of the partnership #ith their separate propert e0cept that limited partners are not !ound !eond the amount of their in$estment% A duciar relation e0ists !et#een the partners% On dissolution, the partnership is not terminated, !ut continues until the #indin" up of partnership is completed%
%
/%
*s a juicial ecree neee to issol%e an unlawful partnership/ .o, !ecause the contract is $oid from the $er !e"innin"% Conse8uences of
% /%
If "uilt of crime, the instruments or tools are forfeited in fa$or of the "o$ernment 4he partners forfeit the proceeds or prots, !ut .O4 their contri!utions, pro$ided no criminal prosecution has !een instituted% Partnership has no le"al personalit Partners must !e returned of their contri!ution%
B<: .o form is re?uired for 2ALII4 or 5.O
011=:E>*S!A!*) *) SEC
)%
@till $alid and has le"al personalit 8if real prop is contri!uted, a pu!lic instrument is needed One can compel the other to re"ister
011@-*((AB'E PPE!+ *S C)!*B
011;:lawful object or purpose 'awful(must !e #ithin the commerce of man, possi!le, and not contrar to la#, morals, "ood customs, pu!lic order or pu!lic polic% Other#ise, it is 2OI A* I.I4IO%
In cases of partial ille"alit, an accountin" ma !e had on the le"al transactions% Innocent partners ma "o a"ainst "uilt partners for their share in the prots% @u!se?uent ille"alit does not nullif the contract% An accountin" ma !e had as to the !usiness transacted prior to such time%
4here must !e a pu!lic instrument% 4he in$entor must !e made, si"ned ! parties and attached to the pu!lic instrument%
Compliance is absolute an inispensible for %aliity. Applicability only to property contribute by partners, not to property possesse or owne by the partnership 1% )% %
Applies re"ardless of the $alue of
e#istration in the e#ister of Property to mae transfer eecti$e as far as third persons are concerned% Jith re"ard to them, a de facto partnership e0ists% *n%entory sho#s the description and desi"nation of immo$a!le or real propert% It sho#s much is due from each
partner to complete his share in the common fund and #ho much is due to each of them in case of li?uidation% 011 AC<*S*!*) 7 PPE!+ <)DE PA!)ES"*P )A(E
%
Applies to !oth real and personal propert @ee article /6 'imitations B% 1% )%
%
An alien cannot o#n lands, e0cept thru hereditar succession% 5$en if entirel o#ned ! a ilipino, a partnership ma not ac?uire, lease, or hold pu!lic a"ricultural lands in e0cess of 1,)/ has% Cannot lease lands adapted to "ra>in" in e0cess of ), has%
011:*7 A!*C'ES AE FEP! SECE! 1% )% % /%
%
.ot considered a 3uridical entit% It ma !e sued ! third persons under a common name it uses% It cannot sue% A@ to third parties, the are partnership, !ut as !et#een themsel$es, onl the rules on co-o#nership appl% A 9partner; ma !e sued in his indi$idual capacit, not#ithstandin" the a!sence of partnership%
*%
C%
%
5%
(anner of Creation a% Orall constituted !% Pri$ate instrument c% Pu!lic instrument d%
G%
of an partner alone= or one #hich has a 0ed term and continued ! the partners after termination of such term epresentation to others a% Ordinar(actuall e0ists amon" the partners and also as to third persons !% Partnership ! estoppel(one #hich in realit is not a partnership, !ut considered as such onl in relation to those #ho, ! their conduct or admission, are precluded to den or dispro$e its e0istence% Publicity a% @ecret(one #herein the e0istence of certain persons as partners is not a$o#ed or made no#n !% Open or notorious Purpose a% Commercial(one formed for !usiness !% Professional(formed for e0ercise of profession
>eneral Partnership(is one #here all the partners are general partners #ho are lia!le e$en #ith respect to their indi$idual properties, after the assets of the partnership ha$e !een e0hausted 'imite Partnership(one #here at least one partner is a "eneral partner and the others are limited partners% A limited partner is one #hose lia!ilit is limited onl up to the e0tent of his contri!ution% If all partners are limited, it cannot !e re"istered% It #ill !e considered "eneral partnership instead% Partnership de facto(#hen the mana"in" partner continues to act for the !enet of all the partners #ithout causin" their ri"hts to !e recorded in the < Partnership by Estoppel E&. Jhen t#o or more persons attempt to create a partnership !ut ail to comply with the legal ormalities essential to juridical personality. F*)DS 7 PA!)ES 0.
Capita lis t:one #ho contri!utes mone or propert to common fund =. *nustria l:one #ho contri!utes onl his industr or personal ser$ice @. >eneral(one #hose lia!ilit to third persons e0tends to his separate propert . 'imite(one #hose lia!ilit to third persons is limited to his capital contri!ution . (ana#in#(one #ho mana"es the aairs #ho ma !e appointed in the articles or after constitution 2. 'i8uiat in#(one #ho taes char"e of the #indin" up of partnership aairs upon dissolution 1. Partner by estoppel:one #ho is not reall a partner, !ut lia!le for the protection of third persons% 3. Continuin#(one #ho continues the !usiness of a partnership after it has !een dissol$ed ! reasons of admission, retirement, death or e0pulsion 9. Sur%i%in#(one #ho remains after partnership has !een dissol$ed ! death of an partner 0;. Subpartner(one #ho, not !ein" a mem!er, contracts #ith a partner #ith reference to the latterDs share%
/
FORMALITIES NEEDED FOR CREATION
A.
B.
Personal Propert a. Less than ,(ma !e oral b. , or more(must !e in a pu!lic instrument and re"istered in @5C% 5$en if not complied, the partnership is still $alid
C%
Limited Partnership(must !e re"istered indicatin" that it is limited in the @5C, other#ise it is not $alid as limited !ut a "eneral one%
0111-13:<)*ESA' PA!)ES"*P A.
B.
of all present property one #hich comprises all that the partners ma ac?uire ! their industr or #or durin" the e0istence of the partnership and the usufruct of mo$a!le or immo$a!le propert #hich each of the partners ma possess at the time of the cele!ration of the contract% 4he contri!ution here consists of a. all the properties actuall !elon"in" to partners b. 4he prots ac?uired #ith said properties f all prots:one which comprises all that the partners ma ac?uire ! their industr or #or durin" the e0istence of the partnership and the usufruct of mo$a!le or immo$a!le propert #hich each of the partners ma possess at the time of the cele!ration of the contract%
A'' P7*!S a'Onl the usufruct of the properties of partners !ecomes common property Grefers only to property possesse by the partner at the time of the celebration of the contract% If ac?uired after, it does not !elon" to the rm as a matter of ri"ht% .aed o#nership is retained ! partners !' All prots ac?uired ! inustry or worH of the partners !ecome common &as a matter of ri"ht' @tipulation as to e0clusion is $alid
A'' PESE)! PPE!+ All propert actuall contri!uted !elon"in" to the partners are common property
by inheritance, le#acy, onation cannot be inclue, but the 7<*!S thereof can be inclue in the stipulation.
7
Contracts re: succession ri"hts cannot !e made A partnership demands that thin"s !e determinate, no#n and certain% A uni$ersal partnership of all present properties implies a donation, and a future propert cannot !e donated%
0130:presumption in fa%or of partnership of prots 1% )%
%
Applies onl #hen a uni$ersal partnership has !een entered into
013=:persons who to#ether cannot form a uni%ersal partnership--*D 1% )% %
Gus!and and #ife, as a rule 4hose "uilt of adulter and concu!ina"e &7K' 4hose "uilt of the same criminal oense, if the partnership #as entered into in consideration of the same
8Jhile spouses cannot enter into a uni$ersal partnership, the can enter into particular partnership or !e mem!ers thereof% A!* It is $irtuall a donation to each other of the partnerDs properties% If persons are prohi!ited to donate to each other, the should not !e allo#ed to do indirectl #hat the la# for!ids% 013@:PA!*C<'A PA!)ES"*P 50% Construct a !uildin", !u and sell real estate, practice la#, a rm en"a"ed in importation, maretin", distri!ution and operation of radios, amusement machines etc
O#ned ! all partners and ! partnership Onl the prots of contri!uted common propert ¬ other prots'
In the uni$ersal partnership, the scope is $a"ue and indenite contemplatin" a "eneral !usiness #ith some de"ree of continuit, #hile particular partnership is limted and #elldened, !ein" conned to an undertain" of a sin"le, temporar or ad hoc in nature%
Prots from other sources ma !ecome common if there is a stipulation Properties ac8uire
6
