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MEMORY AID
PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE
(ARTICLES 1767-1817, NCC)

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DEFINITION

REQUISITE
S

ENUMERATIO
N

DISTINCTIO
N

PARTNERSHIP
PRELIMINARY
RULE
EXAMINATION COVERAGE

INCORPORATED
IN CLASS

GENERAL PROVISIONS
ARTICLES 1767-1783

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

CONTRACT OF PARTNERSHIP*
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. (Art. 1767, NCC)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

PROFESSION
A group of men pursuing a learned art
as a common calling in the spirit of
public service

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

CHARACTERISTIC
ELEMENTS OF PATNERSHIP
(CBCPON-P)*
1. CONSENSUAL perfected
by mere consent
2. BILATERAL entered into by two or more persons whose rights and
obligations are reciprocal
3. COMMUTATIVE undertaking of each of the partner is considered as
the equivalent of that of the others
4. PRINCIPAL does not depend upon any other contract for its validity
or existence
5. ONEROUS each of the parties aspires to procure for himself a benefit
through contributing money, property or industry to a common fund
6. NOMINATE has a special name or designation in our law
7. PREPARATORY a means by which other contracts will be entered
into as the partnership pursues its business
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

ESSENTIAL FEATURES
OF PARTNERSHIP*

1. Valid partnership contract;


2. Parties must have legal capacity;
3. Mutual contribution of money, property,
or industry to a common fund;
4. Object must be lawful; and
5. Obtain profits and to divide the same
among the parties (as primary purpose)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

ELEMENT OF DELECTUS
PERSONAE

Choice of the person or choice of the


persons
(The right to
person wishes
to associate
foundation
partnership.)
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choose with whom a


to associate or continue
himself is the very
and
essence
of
PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

FIDUCIARY
RELATIONSHIP*

The relation between the partners


which essentially involves mutual trust
and confidence, each partner being
considered in law, as he is in fact, the
confidential agent of the others

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

1.
2.
3.
4.

THOSE WHO CANNOT GIVE THEIR


CONSENT TO A CONTRACT OF
PARTNERSHIP

Unemancipated minors;
Insane or demented persons;
Deaf-mutes who do not know how to write;
Persons who are suffering from civil interdiction;
and
5. Incompetents who are under guardianship
IN ADDITION (relative incapacity):
6. Spouses or those living together as husband and
wife without a valid marriage to enter into a
universal partnership
PARTNERSHIP PRELIMINARY
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EXAMINATION COVERAGE

FORM OF CONTRIBUTION
(MPI)
Money
Property
Industry

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

10

RULES TO DETERMINE
EXISTENCE OF
PARTNERSHIP*
1. 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;
3. The sharing of gross returns does not of itself
establish a partnership; however,
4. Receipt by a person of a share of the profits of a
business is prima facie evidence that he is a
partner
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

11

EXCEPTION, ARTICLE 1769(4), NCC*


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 amounts of
payment vary with the profits of the business;
PARTNERSHIP
e)
As the consideration
for PRELIMINARY
the sale of a goodwill of 12
a
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EXAMINATION COVERAGE

DOCTRINE OF ESTOPPEL
One where persons by their acts,
consent, or representations have
misled third persons or parties into
believing that the former are partners
in anon-existing partnership such
persons become subject to liabilities of
partners to all who, in good faith, deal
with them in their apparent relations

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

13

CO-OWNERSHIP
Ownership (or possession) of an
undivided thing or right belongs to
different persons

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

14

PARTNERSHIP vs. COOWNERSHIP

Contract

Separate and distinct from


that of each partner
Realization of profits

No limitation
GR: Partner, not allowed
EXC: Agreement by all of the
partners
Partner may bind the
partnership
Dissolved
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Creation

Juridical
personality

Law
None

Purpose

Common enjoyment of a
thing or right

Duration

An agreement to keep the


thing undivided for more
than
ten years is not allowed

Disposal of
interests

Co-owner may freely do so

Power to act
with third
persons

Co-owner cannot represent


the co-ownership

PARTNERSHIP
Effect ofPRELIMINARY
death
EXAMINATION COVERAGE

Not dissolved
15

CONJUGAL PARTNERSHIP OF GAINS


A partnership formed by the marriage of husband
and wife by virtue of which, they place in a common
fund the fruits and income from their separate
properties and those acquired through their efforts
or by chance, and unless otherwise agreed in the
marriage settlements, divide equally, upon the
dissolution of the marriage or the partnership, the
net gains or benefits obtained by either or both of
them during the marriage (Art. 206, FC)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

16

PARTNERSHIP vs. CONJUGAL


PARTNERSHIP OF GAINS
Partners belonging to either
sex
Stipulation of the parties
Separate and distinct from
that of each partner
GR: Execution of the contract
EXC: Contrary stipulation
Realization of profits
Agreement or pro-rata
GR: Shared equally
EXC: Appointment of
managing partners
May
be disposed of even
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without the consent of the

Parties

Future spouses a man and a


woman

Governing laws
Juridical
personality

Law
None

Commencement

On the date of the


celebration of marriage;
contrary stipulation is void

Purpose

Regulate property relations


of spouses

Distribution of
profits
Management
PARTNERSHIP
PRELIMINARY
Disposition
of
EXAMINATION COVERAGE

shares

Divided equally
Jointly; husbands decision
prevails
in case of disagreement
Cannot be disposed
17

PARTNERSHIP vs.
VOLUNTARY ASSOCIATION
Separate and
distinct from that
of each partner
Realization of
profits

Juridical
personality
Purpose

Contribution of
capital either in
the form of
money, property,
or industry

Contributions of
members

Partnership is
the one liable in
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the first place

Liability of
PARTNERSHIP
PRELIMINARY
members
EXAMINATION COVERAGE

None
Not apparent

No contribution
of capital

Members are
individually liable
18

EFFECTS OF
UNLAWFUL PARTNERSHIP*
1. Contract is void ab initio and the partnership never
existed in the eyes of the law;
2. Profits shall be confiscated in favor of the
government;
3. Instruments or tools and proceeds of the crime shall
also be forfeited in favor of the government; and
4. Contributions of the partners shall not be confiscated
unless they be also proceeds of the crime

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

19

FORM OF PARTNERSHIP CONTRACT*


General Rule: No special form
Exception:
a) Personal property (capital of Php3,000 or more)
1.
2.

Contract must be in a public instrument; and


Recorded or registered with the Securities and Exchange
Commission

b) Immovable or real property


1.
2.

Contract must be in a public instrument; and


An inventory of the property contributed must be made,
signed by the parties, and attached to the public instrument.

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

20

PARTNERSHIP WITH
CONTRIBUTION OF IMMOVABLE
PROPERTY, TO BE VALID*

1. Contract must be in a public


instrument;
2. Inventory
of
the
property
contributed must be made;
3. Signed by the parties; and
4. Attached to the public instrument
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

21

CLASSIFICATIONS OF PARTNERSHIP*
1. Universal partnership
2. Particular partnership
3. General partnership
4. Limited partnership
5. Partnership at will
6. Partnership with a fixed term
7. De jure partnership
8. De facto partnership
9. Ordinary or real partnership
10.Ostensible partnership or partnership by estoppel
11.Secret partnership
12.Open or notorious partnership
13.Commercial or trading partnership
14.Professional or non-trading partnership
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

22

AS TO THE EXTENT OF
ITS SUBJECT MATTER*
1. Universal partnership
One which refers to all the present property or to
all profits
2. Particular partnership
One which has for its object determinate things,
their use or fruits, or a specific undertaking, or the
exercise of a profession or vocation; one which is
neither a universal partnership of present property
nor a universal partnership of profits
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

23

AS TO LIABILITY OF THE PARTNERS*


1. General partnership
One consisting of general partners who are liable
pro rata and subsidiarily, sometimes solidarily, with
their separate property for partnership debts
2. Limited partnership
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
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

24

AS TO ITS DURATION*
1. Partnership at will
One in which no time is specified and is not formed for a particular
undertaking or venture and which may be terminated anytime by
mutual agreement of the partners, or by the will of any one partner
alone, or one for a fixed term or particular undertaking which is
continued by the partners after the termination of such term or
particular undertaking without express agreement
2. Partnership with a fixed term
One in which the term for which the partnership is to exist is fixed
or agreed upon or one formed for a particular undertaking, and upon
the expiration of the term or completion of the particular enterprise,
the partnership is dissolved, unless continued by the partners
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

25

KINDS OF PARTNERSHIP
AT WILL*

1. Partnership without a fixed duration


2. Partnership with a fixed term or
particular undertaking which is
continued by the partners after the
termination
of such
term
or
particular
undertaking
without
express agreement
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

26

AS TO THE LEGALITY OF ITS EXISTENCE

1. De jure partnership
One which has complied with all the
legal requirements for its establishment
2. De facto partnership
One which has failed to comply with
all the legal requirements for its
establishment
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

27

AS TO REPRESENTATION TO OTHERS
1. Ordinary or real partnership
One which actually exists among the partners
and also as to third persons
2. Ostensible partnership or partnership by
estoppel
One which in reality is not a partnership, but is
considered a partnership only in relation to those
who, by their conduct or admission, are precluded
to deny or disprove its existence
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

28

AS TO PUBLICITY*
1. Secret partnership
One wherein the existence of certain
persons as partners is not avowed or made
known to the public by any of the partners
2. Open or notorious partnership
One whose existence is avowed or made
known to the public by the members of the
firm
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

29

AS TO PURPOSE
1. Commercial or trading partnership
One formed for the transaction of
business
2. Professional
or
non-trading
partnership
One formed for the exercise of a
profession
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

30

KINDS OF PARTNERS
UNDER THE CIVIL CODE*
1. Capitalist partner
2. Industrial partner
3. General partner
4. Limited partner
5. Managing partner
6. Liquidating partner
7. Partner by estoppel
8. Continuing partner
9. Surviving partner
10.Subpartner
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

31

KINDS OF PARTNERS
(OTHER CLASSIFICATIONS)*

1.
2.
3.
4.
5.
6.
7.
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Ostensible partner
Secret partner
Silent partner
Dormant partner
Original partner
Incoming partner
Retiring partner
PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

32

AS TO NATURE OF CONTRIBUTION*

1. Capitalist partner
One who contributes money or
property to the common fund
2. Industrial partner
One who contributes only his
industry or personal service
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

33

AS TO LIABILITY*
1. General partner
One whose liability to third persons extends
to his separate property; he may either be a
capitalist or industrial partner
2. Limited partner / special partner
One whose liability to third persons is
limited to his capital contribution; he does not
participate in the management of the business
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

34

AS TO NATURE OF
MANAGEMENT WORK*
1. Managing partner
One who is authorized and actually manages
the affairs or business of the partnership; he
may be appointed in the articles of partnership
or after the constitution of the partnership
2. Liquidating partner
One who takes charge of the winding up of
partnership affairs upon dissolution
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

35

AS TO REPRESENTATION*
1. Partner by estoppel / partner by
implication / nominal partner /
quasi-partner
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; liable for the debts of the firm
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

36

AS TO OCCURRENCE OF DISSOLUTION*
1. Continuing partner
One who continued the business of a
partnership after it has been dissolved by reason
of the admission of new partner, or the retirement,
death, or expulsion of one or more partners
2. Surviving partner
One who remains after a partnership has been
dissolved by the death of any partner
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

37

SUBPARTNER
One who, not being a member of the
partnership, contracts with a partner
with reference to the latters share in
the partnership; a person whom a
partner may associate with him in his
share without the consent of the other
partners
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

38

AS TO KNOWLEDGE BY THE PUBLIC*


1. Ostensible partner
One who takes active part and known to the
public as a partner in the business, whether or not
he has an actual interest in the firm; if he is not
actually a partner, he is subject to liability by the
doctrine of estoppel
2. Secret partner
One who contributes only his industry or personal
service
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

39

AS TO POWER IN
PARTNERSHIP MANAGEMENT*
1. Silent partner
One who does not take any active part in the business
although he may be known to be a 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
2. Dormant partner / sleeping partner
One who does not take active part in the business and
is not known or held out as partner; both a silent and a
secret partner
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

40

AS TO TIME OF
ADMISSION/WITHDRAWAL*
1. Original partner
One who is a member of the partnership from
the time of its organization
2. Incoming partner
A person lately, or about to be, taken into a
partnership as a member
3. Retiring partner / withdrawing partner
One withdrawn from the partnership
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

41

UNIVERSAL PARTNERSHIP
OF ALL PRESENT PROPERTY*

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 (Art.
1778, NCC)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

42

PROPERTY INCLUDED
(p.42)*

1. Property belonging to the partners at the time of the


constitution of the partnership (present property)
2. Profits that may be acquired from the present property
3. Property acquired by each partner after the formation
of the partnership but only if stipulated and shall
include:
a)
b)

The property itself except that the stipulation shall not


include property acquired by inheritance, legacy, or donation
The profits and fruits therefrom including those from property
acquired by inheritance, legacy or donation

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

43

UNIVERSAL PARTNERSHIP OF PROFITS*

One which comprises all that the


partners may acquire by their industry
or work during the existence of the
partnership and the usufruct of
movable or immovable property which
each of the partners may possess at
the time of the celebration of the
contract
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

44

PROPERTY INCLUDED
(p.44)*

1. Profits obtained by the partners by their work or industry


during the existence of the partnership
(those acquired by chance or lucrative title are excluded)
2. The usufruct (the use) of the property belonging to each
partner at the time of the constitution of the partnership
3. The profits and fruits from the properties aforementioned
(Nos. 1 & 2)
4. Profits and fruits, if stipulated, of property acquired by
each partner after the constitution of the partnership

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

45

OBLIGATIONS OF THE
PARTNERS AMONG
THEMSELVES
ARTICLES 1784-1809

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

46

RELATIONS CREATED BY A
CONTRACT OF PARTNERSHIP

1. Among the partners themselves;


2. Partners with the partnership;
3. Partnership with third persons with
who it contracts; and
4. Partners with such third persons

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

47

OBLIGATIONS OF THE PARTNERS


WITH
RESPECT TO CONTRIBUTION OF
PROPERTY*
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;
2. To answer for eviction in case the partnership is deprived of the
determinate property contributed; and
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
IN ADDITION:
4. To preserve said property with the diligence of a good father of a family
pending delivery to the partnership; and
5. To indemnify the partnership for any damage caused to it by the
retention of the same or by the delay in its contribution
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

48

WHAT ARE TO BE
DELIVERED*
1. Fruits

a) Natural fruits
b) Industrial fruits
c) Civil fruits

2. Accessories
3. Accessions
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

49

EVICTION
One that shall take place whenever by
a final judgement based on a right
prior to the sale or an act imputable to
the vendor, the vendee is deprived of
the whole or a part of the thing
purchased
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

50

ESSENTIAL ELEMENTS FOR EVICTION*


1. Final judgment;
2. Purchaser has been deprived in whole or in part
of the thing sold;
3. Deprivation was by virtue of a right prior to the
sale (or one imputable to the seller) effected by
the seller;
4. Vendor has been previously notified of the
complaint for eviction at the instance of the
purchaser
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

51

RULE AS TO APPRAISAL OF GOODS


OR PROPERTY CONTRIBUTED*

1. Stipulation on the contract of


partnership
2. In the absence of stipulation, by
experts chosen by the partners and
according to current prices

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

52

INSTANCES WHERE OBLIGATIONS WITH RESPECT


TO CONTRIBUTION OF MONEY AND MONEY
CONVERTED TO PERSONAL USE ARISE

a) Money promised but not given on


time; or
b) Partnership money converted to the
personal use of the partner

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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

53

OBLIGATIONS WITH RESPECT TO


CONTRIBUTION OF
MONEY AND MONEY CONVERTED TO
PERSONAL USE*

1. To contribute on the due date the amount he has


undertaken to contribute to the partnership;
2. To reimburse any amount he may have taken from the
partnership coffers and converted to his own use;
3. To pay the agreed or legal interest, if he fails to pay his
contribution on time or incase he takes any amount from
the common fund and converts it to his own use; and
4. To indemnify the partnership for the damages caused to
it by the delay in the contribution or the conversion of
any sum for his personal benefit
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

54

PROHIBITION ON
CAPITALIST PARTNERS*
RELATIVE PROHIBITION
General Rule: Of the kind of business in which the
partnership is engaged
Exception: Contrary stipulation
Effect of violation:
1. Bring to the common fund any profits accruing to him;
and
2. In case of losses, he shall bear them alone
(if not the same kind of business: allowed so long as
partnership does not prohibit such activity)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

55

PROHIBITION ON
INDUSTRIAL PARTNERS*
ABSOLUTE PROHIBITION
General Rule: Cannot engage in business for himself
Exception: Expressly permitted by the partnership
Effect of violation:
1. Exclude industrial partner from the firmwith
damages; or
2. Avail themselves of the benefits which he may
have obtained with damages
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

56

REQUISITES FOR APPLICATION OF RULE ON OBLIGATION OF


CAPITALIST PARTNER TO CONTRIBUTE ADDITIONAL CAPITAL*

1. Imminent loss of the business of the partnership;


2. Majority of the capitalist partners are of the opinion
that an additional contribution to the common fund
would save the business;
3. Capitalist partner refuses (deliberately, not because of
his financial inability to do so) to contribute additional
share to the capital; and
4. No agreement that even in case of an imminent loss of
the business the partners are not obliged to contribute
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

57

RULE ON OBLIGATION OF MANAGING


PARTNER WHO COLLECTS DEBT*

a) Account of the partner credit


1. Partner
2. Partnership
(in proportion their amounts, without prejudice to
the right granted to the debtor if personal credit
to the partner should be more onerous to him)

b)Account of the partnership credit


1. Partnership alone
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

58

REQUISITES FOR APPLICATION OF RULE ON


OBLIGATION OF MANAGING PARTNER WHO
COLLECTS DEBT*

1. At least two debts, one where the


collecting partner is creditor, and the
other, where the partnership is the
creditor;
2. Both debts are demandable; and
3. The partner who collects is authorized to
manage and actually manages the
partnership
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

59

REQUISITES FOR APPLICATION OF RULE ON


OBLIGATION OF PARTNER WHO RECEIVES
SHARE OF PARTNERSHIP CREDIT*

1. A partner has received, in whole or


in part, his share of the partnership
credit;
2. The other partners have not
collected their shares; and
3. The partnership debtor has become
insolvent
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

60

RULE ON THE RISK OF LOSS


OF THINGS CONTRIBUTED*
a) BY THE PARTNER (OWNER)
1. Specific and determinate things which are not fungible where
only the use is contributed
b)BY THE PARTNERSHIP
1. Specific and determinate things the ownership of which is
transferred to the partnership
2. Fungible things or things which cannot be kept without
deteriorating even if they are contributed only for the use of
the partnership
3. Things contributed to be sold
4. Things brought and appraised in the inventory
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

61

RESPONSIBILITY OF
PARTNERSHIP PARTNERS
1. To refund amounts disbursed by him in behalf
of the partnership plus the corresponding
interest from the time the expenses are made
2. To answer for the obligation he may have
contracted in good faith in the interest of the
partnership business; and
3. To answer for the risks in consequence of its
management
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

62

DISTRIBUTION OF
PROFITS*

GENERAL RULE: Divide equally


EXCEPTIONS:
1. According to partners agreement
2. If there is no agreement, in
proportion to each capitalist
partners capital contribution
(Industrial partners share must be
satisfied first)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

63

DISTRIBUTION OF
LOSSES*

GENERAL RULE: Divide equally


EXCEPTIONS:
1. According to partners agreement
2. If there is no agreement, profit-sharing ratio
3. If there is no profit-sharing ratio, in proportion
to capitalist partners capital contribution
(Purely industrial partners shall not be liable)
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PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

64

INDUSTRIAL PARTNERS SHARE*


a) PROFITS
As may be just and equitable
b)LOSSES
General Rule: Not liable (pure industrial
partner)
Exception: If besides his services he has
contributed
capital
(capitalist-industrial
partner)
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

65

RULE ON POWERS OF TWO OR MORE MANAGING PARTNERS


WHOSE RESPECTIVE DUTIES ARE UNSPECIFIED*

1. Each one may separately perform acts of


administration.
2. If one or more of the managing partners shall
oppose to the acts of the others, then the
decision of the majority (per head) of the
managing partners shall prevail.
3. In case of tie, the matter shall have to be
decided by the vote of the partners owning the
controlling interest.
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

66

REQUISITES FOR APPLICATION OF RULE ON POWERS OF


TWO OR MORE MANAGING PARTNERS WHOSE
RESPECTIVE DUTIES ARE UNSPECIFIED*

1. Two or more partners have been


appointed as managers;
2. No specification of their respective
duties; and
3. No stipulation that one of them shall
not act without the consent of all
the others
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

67

RULES WHEN MANNER OF


MANAGEMENT HAS NOT BEEN
AGREED UPON

1. All partners considered managers.


2. Unanimous consent is requires for any
important alteration in immovable property of
partnership.
(If refusal to give consent by the other partners is
manifestly prejudicial to the interest of the
partnership, the intervention by the court may be
sought for authority to make the necessary
alteration)
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

68

SUBPARTNERSHIP
The partnership formed between a
member of the partnership and a third
person for a division of the profits
coming to him from the partnership
enterprise

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

69

ANY REASONABLE HOUR


Reasonable hours on business days
throughout the year and not merely
during some arbitrary period of a few
days chosen by the managing partners

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

70

RIGHTS OF PARTNER TO A FORMAL


ACCOUNT (GROUNDS)
1. If he is wrongfully excluded from the partnership
business or possession of its property by his copartners;
2. If the right exists under the terms of any agreement;
3. As provided by Article 1807;
(Duty to account for secret and similar profits and duty to
make full disclosure of information affecting the
partnership)
4. Whenever other circumstances render it just and
reasonable
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

71

PROPERTY RIGHTS
OF THE PARTNERS
ARTICLES 1810-1814

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

72

EXTENT OF [PRINCIPAL] PROPERTY


RIGHTS OF A PARTNER

1. Rights
in
specific
partnership
property
2. Interest in the partnership
3. Right
to
participate
in
the
management

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

73

EXTENT OF [RELATIVE] PROPERTY RIGHTS


OF A PARTNER
1. Right to reimbursement for amounts advanced to the
partnership and to indemnification for risks in
consequence of management;
2. Right of access and inspection of partnership books;
3. Right to true and full information of all things affecting
the partnership;
4. Right to a formal account of partnership affairs under
certain circumstances; and
5. Right to have the partnership dissolved also under
certain conditions
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

74

PARTNERSHIP PROPERTY vs.


PARTNERSHIP CAPITAL
Variable value may
vary from day to day
with changes in the
market value of the
partnership assets
Not only the original
capital contributions of
the partners, but all
property subsequently
acquired on account of
the partnership or with
partnership funds,
amgisidro
including partnership

Changes in
value

Constant remains
unchanged as the
amount fixed by the
agreement of the
partners, and is not
affected by fluctuations
in the value of
partnership property

Aggregate of the
individual contributions
made by the partners
Assets
(in cash or in property
included
or services the value of
PARTNERSHIP PRELIMINARY which has been fixed in
75
EXAMINATION COVERAGE
the partnership

PARTNERS INTEREST
IN THE PARTNERSHIP

A partners proportionate share in the


profits during the life of the
partnership as a going concern and his
share in the surplus after its
dissolution; generally assignable in
the absence of a contrary stipulation
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

76

PROFIT
Excess of returns over expenditure in a
transaction or series of transactions; or
the net income of the partnership for a
given period of time

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

77

SURPLUS
Assets of the partnership after
partnership debts and liabilities are
paid and settled and the rights of the
partners among themselves are
adjusted

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

78

RIGHTS WITHHELD FROM


ASSIGNEE OF PARTNERS
INTEREST
1. To interfere in the management;
2. To require any information or
account; or
3. To inspect any of the partnership
books

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

79

RIGHTS OF ASSIGNEE OF
PARTNERS INTEREST
1. To receive in accordance with his contract the profits
accruing to the assigning partner;
2. To avail himself of the usual remedies provided by law
in the event of fraud in the management;
3. To receive the assignors interest in case of
dissolutions; and
4. To require an account of partnership affairs, but only in
case the partnership is dissolved, and such account
shall cover the period from the date only of the last
account agreed to by all the partners
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

80

OBLIGATIONS OF THE
PARTNERS WITH REGARD
TO
THIRD
PERSONS
ARTICLES 1815-1817

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

81

FIRM
Name, title, or style under which a
company transacts business; a
partnership of two or more persons; a
commercial house
(used as synonymous with company)
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

82

PRO-RATA (AS TO
LIABILITY)

Equally or jointly and not


proportionately which is its literal
meaning because the pro-rating is
based on the number of partners and
not the amount of their contributions
to the common fund subject to adjust
among the partners
amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

83

LIABILITY vs. LOSS*


Liability
(Contractual)

Legal basis Losses (Financial)

Arts. 1816-1817

Applicable
provisions

Both parties (even a


purely industrial
partner)
1. Exhaust
partnership
property
2. If insufficient,
amgisidro
pro-rata liability

Parties
involved

Arts. 1797-1799
Capitalist and
industrial partners
with money and
property involved

1. Stipulation
2. No stipulation, in
General
proportion to
rules
contribution
PARTNERSHIP
PRELIMINARY
84
EXAMINATION COVERAGE 3. Third party

LIABILITY vs. LOSS*


Partners separate
assets (capital and
capital-industrial
partners)

Remedy for
None. Not provided
general
by law
rule
Pure industrial
partner

No exception

Exception

1. As among the
partners valid
2. In relation to
third persons
void (as against
public policy)

1. Capitalist void
Effect of
2. Capitalistcounter
industrial void
stipulation 3. Pure industrial
valid

amgisidro

PARTNERSHIP PRELIMINARY
EXAMINATION COVERAGE

85