Partnership KAMM | 2018

CIVIL PARTNERSHIP v . COMMERCIAL  How do Quantify Immovable Properties? MARKET VALUE.

P A R T N E R SH I P  How do Quantify Movable Properties? The Amount of the Property itself.

As to Habitualness IMPORTANCE of Quantifying the Amount?

1. Commercial Partnership- those that were undertaken by Merchants. 1. To determine the extent of Contribution
Characterized by Habitualness. 2.
2. Civil Partnership – not Habitual. Governed by the Civil Code
What kind of INDUSTRIES?
As to Registration  Just and Equitable unless Stipulated
1. Civil – Mere meeting of the minds will perfect the Partnership
2. Commercial – Registration before the SEC in order to attain juridical 3. COMMON FUND
personality
 pooling of all the contributions of the partners for the capital
As to its Liability
1. Commercial - Solidary Liable for Debts Once you contribute, your contribution will be given to the Partnership.
2. Civil - Jointly Liable for Debts It’s title will be transferred to the Partnership. You cannot claim it back.
Hence, you will be forming a Universal Partnership of all Present
As to who are the partners Properties
1. Commercial – deemed for merchants If it is only for the Use, Universal Partnership of the Profits.
2. Civil - anyone
4. PROFIT
NOTE: Under Civil Code, the application of the law does not distinguish the two kinds  Basic indication that you are forming a Partnership. But not the
of Partnership Exclusive Indication.

P A R T N E R SH I P N A T U R E O F P A R T N E R SH I P

Art. 1767. By the contract of partnership two or more persons bind Highly FIDUCIARY Relationship.
themselves to contribute money, property, or industry to a common fund,  There must be TRUST and CONFIDENCE.
with the intention of dividing the profits among themselves. (Universal  Because all of them will be Mutual Agents of each other. You’re allowed
Partnership) to enter into transaction for the Partnership.

Two or more persons may also form a partnership for the exercise of a What is Delectus Personae?
profession. (Particular Partnership) “Choice of the person or choice of the persons”
 A person has the right to choose the person or the partner he wants to
1. PARTNERS choose for honesty, integrity and trust and confidence.
Natural or Juridical

How many members are there in a Partnership? CHARACTERTICS

Minimum: 2
Maximum: None, but for practicality, if more than 5 better form a corporation 1. Consensual
-there must be consent between the partners
KINDS OF PARTNERS: -can be oral and written
1. General Partners – Whose partnership includes money and property
2. Industrial Partners – Industry
The Articles of Partnership must registered with the SEC when:
a. there is a contribution of P3,000 or more;
Allowed:
b. there is a contribution of property.
All General or a mix of General-Industrial
2. Nominate
Not Allowed:
-the partnership must have a special name or designation
All Industrial Partners
Why? Because the money will be your partnership asset and because 3. Bilateral
that is the partnership asset, that will be used for the start of the business.
-it is entered into by two or more persons and the rights and obligations arising
AND when there is liability, the asset of the Partnership.
therefrom are always reciprocal

Industrial Partner can pay in cases of liability, but he may run after the General
4. Preparatory
Partner. -the contract of partnership must be perfected before the partnership begins

2. CONTRIBUTION
5. Onerous
-because there is a giving of contribution for the partner to benefit himself, i.e. profit
What kind of MONEY?
Legal tender. Foreign Currency is allowed.
6. Commutative
Promissory Note is considered as property, -the undertaking of each of the partners is considered as the equivalent of that of the
Checks- only when encashed others

What kind of PROPERTY? 7. Principal

Real or personal; Corporeal or incorporeal -partnership it does not depend for its existence or validity upon some other
It should be an accessible property,
contracts;
Rights over a property

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ELEMENTS
1. There must be a Valid Contract
a. There has to be a valid and voluntary agreement to become partners
b. The parties must have legal capacity to enter into a contract
Who may be allowed?
General Rule: Anyone can be allowed.
Except: Article 1782 because it is a circumvention of the law.
Art. 1782. Persons who are prohibited from giving each other any donation
or advantage cannot enter into universal partnership.
Exemption on Spouses – In Particular Partnership. For the purpose of
exercising their Profession.
TEST to determine the Validity of the Contract
1. Voluntary
(Insert Here)
Registration is not necessary but it is one of the formalities.
Can a Partnership enter into another partnership? Yes. Provided that the new
partnership is Separate and Distinct from the former.
SPECIAL FEATURES OF PARTNERSHIP
1. There must be a valid contract
There has to be a valid and voluntary agreement to become partners
The parties must have legal capacity to enter into a contract
INCAPABLE: unemancipated minors, insane, deaf-mute, persons suffering
civil interdiction
They cannot enter into any contracts, those who cannot give donation,
e.g. husband and wife, rationale: circumvent the law on donation, the
property donated shall become partnership property, partners who are
living as husband and wife (common law)
2. There is a contribution of property
3. It must be an association of profits with the intention of dividing their profits
themselves
The division must be proportionate to the contribution of the partner.
A partnership once has its own separate juridical personality it can now be sue and
sued, it can even own properties and shall pay its own taxes.
There is a sharing of profits entails the sharing of loss
4. It has a juridical personality which is separate and distinct from the
partners
When a partnership enters into a contract and there was a breach of contract, who
pays the damages? The partnership
Q: When will the partner be liable personally? A: when he acts beyond his scope of
his authority
5. The partner is mutually an agent of the other partner
a partner who enters into contract for and in behalf of the partnership is considered
as the agent of another partner and thus they are bound If an authorized partner
enters into a contract s/he shall be personally liable.
If there is a managing partner and such partner enters into a contract with a third
person, the partnership shall be held liable.
6. Purpose of the partnership must be lawful, not morals, public policy and
within the commerce of man
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7. An Article of Partnership must not be kept secret
The provisions, terms and conditions must be open and known to the partners in
order the that each partners may act intelligently and wisely for the common of the
partnership
Effect if kept secret: If one of the partners was acting in behalf of the other
partner, without knowledge of an existence of a managing partner, and one of
the partners was able to buy a property for the partnership---rules on co-
ownership shall apply
3 LEVELS OF EXISTENCE OF PARTNERSHIP
1. It is a contractual Relation between the partners
-Take note of the COC
2. It is a means or medium of doing business
-It has a juridical personality
3. It is a business enterprise/venture
1. It is a contractual Relation between the partners
Art. 1770. A partnership must have a lawful object or purpose, and
must be established for the common benefit or interest of the
partners.
When an unlawful partnership is dissolved by a judicial decree, the
profits shall be confiscated in favor of the State, without prejudice to
the provisions of the Penal Code governing the confiscation of the
instruments and effects of a crime. (1666a)
Art. 1771. A partnership may be constituted in any form, except
where immovable property or real rights are contributed thereto, in
which case a public instrument shall be necessary. (1667a)
-They have the R&O of a Partnership
LIONS v. ROSENTACT
No partnership because there is no meeting of the minds of the partner.
Lions and Elser are partners in a Real Estate Business.
Lions wanted to buy a real estate in San Juan.
He approached Elser and told him his intention to buy. Elser refused.
Lions proceeded to buy.
SC: There is no Partnership because there is no meeting of the mind. With respect to
that property in San Juan, it is not part of the Partnership. Because they did not agree.
What is important is the Meeting of the Minds.
2. It is a means or medium of doing business
Art. 1768. The partnership has a judicial personality separate and distinct
from that of each of the partners, even in case of failure to comply with the
requirements of Article 1772, first paragraph.
Art. 1772. Every contract of partnership having a capital of three thousand
pesos or more, in money or property, shall appear in a public instrument,
which must be recorded in the Office of the Securities and Exchange
Commission.
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or
purpose, created by law; their personality begins as soon as they have been
constituted according to law;
(3) Corporations, partnerships and associations for private interest or
purpose to which the law grants a juridical personality, separate and
distinct from that of each shareholder, partner or member. (35a)
Art. 45. Juridical persons mentioned in Nos. 1 and 2 of the preceding article
are governed by the laws creating or recognizing them.
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Partnership
Private corporations are regulated by laws of general application on the
subject.
Partnerships and associations for private interest or purpose are governed
by the provisions of this Code concerning partnerships. (36 and 37a)
Art. 46. Juridical persons may acquire and possess property of all kinds, as
well as incur obligations and bring civil or criminal actions, in conformity
with the laws and regulations of their organization. (38a)
Rights of a Juridical Persons. Hence, the Partnership are entitled to these kinds of
rights.
In Partnership, one death/incapacity of a Partner, will automatically dissolve the
Partnership but the Partners are allowed to continue. But those who will continue
will be considered as a NEW PARTNERSHIP.
Art. 1774. Any immovable property or an interest therein may be acquired
in the partnership name. Title so acquired can be conveyed only in the
partnership name. (n)
Art. 1775. Associations and societies, whose articles are kept secret among
the members, and wherein any one of the members may contract in his
own name with third persons, shall have no juridical personality, and shall
be governed by the provisions relating to co-ownership. (1669)
Secret: to preserved Equality and to prevent defrauding others.
Doctrine of Piercing the Veil of Corp Fiction may be applied. It is applicable of Corp..
CIR v. SUPPER
AGUILAR JR. v. CA
If the purpose is to defraud the partnership or 3rd person, then the courts may look
into the personality of that Partnership, and claim for that particular transaction, all
the partners shall be liable.
If facts shall, the juridical partnership shall be used to fraud or sham, the court will
treat the partners as liable for the partnership transaction.
SC realizes that if the Partner is hiding under the cloak of the separate personality of
the partnership for the purposes of defrauding, the SC can remove the separate
personality and the partners will be liable themselves.
Q: Does the Partnership have Constitutional Rights?
Corp = it has all of these rights except right against self-incrimination
Part – it has all of these rights
Because what you see is the personality of the Partners.
Merely an extension of the partners
Hence, each partners can use the constitutional right against self-incrimination
3. It is a business enterprise/venture
Has its own property. Separately valued to the personal properties of each partners.
TEST TO DETERMINE THE EXISTENCE OF A
PARTNERSHIP
Art. 1769. In determining whether a partnership exists, these rules shall
apply:
(1) Except as provided by Article 1825, 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, whether such-co-owners or co-possessors do or do not
share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or
common right or interest in any property from which the returns are
derived;
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(4) 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 amount of payment vary
with the profits of the business;
(e) As the consideration for the sale of a goodwill of a business
or other property by installments or otherwise. (n)
ORTEGA v. CA
As long as there is a meeting of the minds, and there is an intent to form a
partnership. You may already consider yourselves to be partners.
EVANGELISTA CASE
They are partners. Leasing the properties. Their main intention is to derive income.
REYES v. CIR
They bought a lot and have it administered by an administrator and divided the
income. There was partnership because the original intention to profit.
Although Prima Facie. Salary and sharing of terms does not mean there is
partnership. Merely receiving profits cannot claim a profit.
Equity Holder – You are not receiving profits, because you are also sharing in the
losses. If you are one, you are considered as partners. Otherwise, you’re just a person
who merely receives profits/salary.
Q: As an Industrial Partner, are you allowed to share in the loss?
A: No, it is exempted. However, with respect to partnership liabilities, it is obliged to
share, but, applying the rule, industrial partners can ask for Reimbursements.
Par 4. This is not a good indication that they are partners.
BOTTOMLINE: It is essentially to provide a common fund, with the intention to
divide profits and losses. Therefore, the person who merely receives profit is not
deemed a partner because he is not sharing in the burden in case of loss.4
NOTE: Existence of Partnership is never presumed.
Burden of Proof: The one claiming the existence of the Partnership.
The one claiming the non-existence of the Partnership has the burden of Proof.
SUMMARY OF THE TESTS:
1. Intent must be checked. Once the Partnership is established.
The following activities shall happen:
1. Sharing of losses
2. Equal Rights or Voice, in the absence of General Partners
3. The Partner is the Agent of the Partners, hence they may bind the Partnerships,
except limited Partner
4. Books shall be kept in the Principal Office
5. Fiduciary Relationship shall exists
Q: Why is a Capitalists Partner allowed to enter into another Partnership?
A: Because, it only shares money and property. As long as it does not Prejudice the
Industry/Partnership. Because, it enters other partnership in a risk.
Q: Why is an Industrial Partner not allowed?
A: Because as an Industrial Partner you are expected to exert all of your effort in that
Partnership, because you are contributing your expertise and knowledge.
EXCEPTION: Only if the other partners consented.
DISSOLUTION
Does not happen until winding up is completed.
Hence, you cannot say that the Partnership is already extinguished.
They can continue to do business but only for the purposes of winding up.
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Usually, they pay on their liabilities, sell the assets. 1. Confiscation. If the purpose is to commit a crime. The profits shall be
Once it is completed, the Partnership is already dead. confiscated in favor of the Government. The contribution shall also be
confiscated because it was utilized for the purchase of the Marijuana.
2. Void ab Initio if the formation of Partnership is unlawful from the start.
QUALIFICATIONS OF PARTNERS
B. Initially Lawful
GENERAL RULE: As long as they are capacitated If the partnership was lawful from the start, however, by virtue of a law it became
unlawful, the Partnership will be considered from that point be extinguished.
During partnership, one becomes incapacitated, the partnership shall be dissolved 1. Profits. The profit shall be confiscated by the Government from the time
because there is a change in the composition of the Partnership. the partnership was declared unlawful.
2. Contribution. The Contribution may be confiscated if it was used for the
However, there is no automatic winding up/liquidation because the remaining
partners may decide to continue. C. Partial Illegality
The Partnership is partially legal and partially illegal. The partnership may continue
EXCEPTIONS: by removing the illegal part.
1. Prohibited from giving each other donation, or advantage (Article 1782) 1. Profits. Make an accounting, and determine which part may be given
E.g. and which part may be confiscated.
a. Husband and Wife Article 133 2. Contribution. Same
b. Article 1470. Persons cannot sell to each other during marriage.
c. Persons prohibited from giving advantage CONTRIBUTION
2. Article 739
a. Those made between persons who were guilty of adultery or Contribution of Money, Property and Industry.
concubinage at the time of the donation;
b. Those made between persons found guilty of the same criminal It is important to determine the type of partnership you will enter into for the
offense, in consideration thereof; determination of LOSS.
c. Those made to a public officer or his wife, descendants and ascendants,
by reason of his office. UNIVERSAL PARTNERSHIP
1. Universal Partnership of All Present Property
Hence, the partnership is VOID.  lose ownership of their property
BEFORE: It shall be dissolved, because there was no contribution that was
Suppose: given
5 members formed a Partnership. A is capacitated. B, C, D & E are incapacitated. A AFTER: Apply the principle of Res Perit Domino – owner bears the loss
entered into a transaction with X. Who can X ran after? The Partnership or their 2. Universal Partnership of Profits
individual capacities?  the individual properties here continue to be owned by the partners,
Individual, because there is no partnership to talk about. but the usufruct thereof passes to the firm
BEFORE and AFTER: WON Specific/Generic, the partnership will be
Art. 1786. Every partner is a debtor of the partnership for whatever he may have promised to extinguished. The Partner is not obliged to substitute.
contribute thereto.
IN CASE OF LOSS OF:
He shall also be bound for warranty in case of eviction with regard to specific and determinate
things which he may have contributed to the partnership, in the same cases and in the same
manner as the vendor is bound with respect to the vendee. He shall also be liable for the fruits
PROPERTY
thereof from the time they should have been delivered, without the need of any demand. If the Property is lost (failure to deliver), the Partnership shall not be formed. The
Partner shall be liable as a debtor for its contribution, damages and interest. If the
CONSENT other Partners covered for him, the same rule applies.
Essential to the contract of partnership. There should be the intent to form a
partnership. Meeting of the minds whereby they bind themselves to form a Suppose:
partnership. Taxi Business. A partner shall deliver a taxi but it met an accident. It was in an
repair shop for 1 month. The partner shall be liable for the fruits it should have
had.
PARTNERSHIP BY ESTOPPEL
Despite the lack of consent, there are persons who may be considered as a partner. Specific Property (Universal Partnership of All Present Property) – As far as the
Partnership is concerned, it shall be dissolved, because there was no contribution
Definition/Instances: that was given. What if there was delivery but it was loss part, apply the principle
1. When they represent themselves to strangers as partners (Fictitious Partnership) of Res Perit Domino – owner bears the loss.
2. When a third person represent himself as included in a partnership (Legitimate Generic Property (Universal Partnership of Profits) – The partner may substitute
Partnership) that generic thing.

Partnership by Estoppel is only created if ALL of the partners do not object.

FORMALITIES
OBJECT or PURPOSE
GENERAL RULE: No specific form, thus maybe oral or written.
The object or purpose must be LAWFUL and established for the common benefit of
the partners. Q: Is it important to have a Written Document to attain Juridical Personality?
A: NO.
That it must be within the commerce of man, possible, and not contrary to law,
morals, good customs, public order or public policy. EXCEPTION:
1. Real Property
CONSEQUENCE if there is an Unlawful Purpose: 2. Money or Personal Property of at least Php3,000.00

A. Illegal from the Start Requirements for Immovable Property:

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a. Must be in a PUBLIC INSTRUMENT, and; Universal: With a Degree of Continuity. There is a continuing business venture.
b. There must be an INVENTORY of the immovables, attached to the public Particular: Specific Undertaking
instrument and signed by all the parties. Reason: to determine in terms
of money the contribution of the partner Article 1781. Articles of universal partnership, entered into without specification of its nature,
c. Registered in the REGISTER OF DEEDS, to protect the third persons only constitute a universal partnership of profits.
d. Registered before the SEC
In the absence of a specific nature of a Universal Partnership, the Partnership will
Requirements for Money/Personal Property: be presumed as a Universal Partnership of Profits because it has a lessen burden.

a. Must be in a PUBLIC INSTRUMENT, and; Between a Universal and Particular Partnership, the case of LIONS v. RUSETA,
b. Registered before the SEC Universal Partnership is never presumed, hence, the presumption is it is a
Particular Partnership.
PUBLIC INSTRUMENT
Any document will do as long as it is notarized. B. DURATION
As long as you delineate the type of partnership, especially of you are a Limited
Partnership. 1. For a FIXED Period
2. For particular UNDERTAKING/VENTURE/PURPOSE
INVENTORY 3. Partnership at WILL
To show the specific Real Property involved. a. Here, no period, express or implied, is given and so its duration
Purpose: to show the amount of the Real Property given depends on the will of the partners;
Contains: Location, Value, Character, and must be SIGNED by all the partners.  The 50-year period in Corporation does not apply
Must be signed: To show that the Partners are knowledgeable. b. If the period has expired, but the partnership continued, without
liquidation, by the partners who habitually acted as such during the
REGISTRY OF DEEDS term.
To show that they are not co-owned. Unless, the property is already sub-
divided. FIXED TERM
Purpose: to make sure the title is Clean and to NOTIFY third persons. They agree to a Period. After such period, it will automatically undergo to a
dissolution,

CLASSIFICATION OF PARTNERSHIP What if they decide to continue despite of the dissolution because the
business is profitable? They can enter into a Partnership at Will (converted).
A. OBJECT
How can you prove such? If they continue to exercise the business through
I. UNIVERSAL their ACTS. (Article 1785)

a. Universal Partnership of All Present Property Is it necessary for them to enter into another contract? NO. (Article 1785)

General Rule:
Article 1778. 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.
At the time of Contribution, you currently own that property at the time
it will be given.
Exception:
Article 1779. In a universal partnership of all present property, the property which
belongs to each of the partners at the time of the constitution of the partnership,
becomes the common property of all the partners, as well as all the profits which they
may acquire therewith.
A stipulation for the common enjoyment of any other profits may also be made; but the
property which the partners may acquire subsequently by inheritance, legacy, or
donation cannot be included in such stipulation, except the fruits thereof.
Exception of the Exception: By stipulation, the Fruits thereof.
b. Universal Partnership of Profits
Art. 1780. A universal partnership of profits comprises all that the partners may acquire
by their industry or work during the existence of the partnership.
Movable or immovable property which each of the partners may possess at the time of
the celebration of the contract shall continue to pertain exclusively to each, only the
usufruct passing to the partnership.
II. PARTICULAR
Art. 1783. A particular partnership has for its object determinate things, their use or fruits, or
specific undertaking, or the exercise of a profession or vocation.
Art. 1785. When a partnership for a fixed term or particular undertaking is continued after the
termination of such term or particular undertaking without any express agreement, the rights
and duties of the partners remain the same as they were at such termination, so far as is
consistent with a partnership at will.
A continuation of the business by the partners or such of them as habitually acted therein
during the term, without any settlement or liquidation of the partnership affairs, is prima
facie evidence of a continuation of the partnership
C. EXTENT OF PARTNER LIABILITY
1. GENERAL PARTNERSHIP – Minimum one General Partners. The liability
is unlimited. Extends to the properties of the Partners.
NOTE:
(a) Industrial Partner will never share LOSSES, exception if there is a
stipulation in the Articles of Partnership. But because the Law already
exempted him, he can ran after to the General partner for
Partnerships.
(b) Industrial Partners will share in LIABILITIES. But because the Law
already exempted him, he can ran after to the General partner for
Partnerships
2. LIMITED PARTNERSHIP – at least one General and one Limited Partner.
Once one partner is a Limited Partner,
The liability of a Limited Partner is Limited. The liability is only up to the
extent of its contribution. You do not go to the personal assets of the Limited
Partner
D.
1. Ordinary Partnership – when they form a partnership and represented
themselves to the Public
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2. Partnership by Estoppel – representation that a person shall be a part of an 2. Subsequent – who are accepted in an already existing partnership. They can be
existing partnership or that persons represent themselves as partners considered as incoming partners, if the existing partners admit that they are already
partners. Note: Dissolution of the existing partners and creation of a new
E. PURPOSE partnership. No need to go to the SEC except on Limited Patnership.

1. Commercial In General Partnership – You do not need to go to the SEC. if there is a change in
2. Particular the composition of the Partnership.
In Limited Partnershp – you always have to amend your Certificate of Partnership.
KINDS OF PARTNERS If you did not go to the SEC, you will be considered as a General Partnership.

A. CONTRIBUTION 3. Subpartner – one - or one who, not being a member of the partnership, contracts
with a partner with reference to the latter’s share in the partnership
1. Capitalist
Prohibited from being a partner from a competing partnership/industry 3. There is a dissolution but you chose to continue the partnership.
2. Industrial
Prohibited from any, unless he is allowed by other partners 5. Retiring Partner – the one who will causing the dissolution

BOTH: Considered both as Capitalist and Industrial = Money + Property + Industry 6. Surviving – the one who does not die
Can he be a partner to other partnership? No. because the Prohibition as an
Industrial partner will follow him The only partner who cannot have several roles is the SUBPARTNER.

B. LIABILITY COMMENCEMENT

1. General Art. 1784. A partnership begins from the moment of the execution of the contract,
2. Limited unless it is otherwise stipulated.

NOTE:
But it is possible that one partner can be both a General and Limited Partner, only
when there is a Ltd Partnership, because your Limited Partnership is merely an
investor, he mainly contributes money and property. He is only interested in is
profits. Prohibited from meddling with the affairs of the Partnership.
If he comes to manage the affairs, he is converted as a General Partner.
But if from the Start of the Incorporation, a Partner is originally considered as a
General Partner, it follows its status until the dissolution, the change will only be with
respect to its Liability.
Perfection of the Contract is NOT NECESSARY because you can form a Partnership
orally. Except, if they have stipulated that the start of the Partnership is at a future
time.
Art. 1773. A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the parties,
and attached to the public instrument.
You can to go to the SEC for Registration.
Does not apply to Personal Properties. But you can still be considered as a DE FACTO
PARTNERSHIP.

C. AS TO MANAGEMENT TORRES v. CA
The SC stated that, requirement befpore the SEC is importatnt because this is
Managing Partner – may be designated in the Articles of Partnership, if not, he may meant for the protection of the parties and will not affect the intrarelationship
be chosen later own. There must be a written document. His designation is of the Partners.
IRREVOCABLE. If you are contributing an immovable, go to the registration process. If you do
not, you are a void partnership under Art. 1773. However, once transactions
Liquidating – if he was designated in the Articles of Partnership, his designation is are alreadby made, as far as third persons are concerned, they can ran after
IRREVOCABLE you, as to their personal liabilities.
Partners cannot hide behind the voidability of the Partnership, hence, they can
Silent Partner – he has no voice in the management of the Partnership ran after the personal assets of the Partner. The partners cannot state that the
3rd parties cannot ran after the assets.
D.

Ostensible – who is already known

Nominal – Not a partner, but by his actions, he will be liable as a partner,
Secret – nobody knows that you are a partner but you can manage the affairs
Dormant – combination of silent and secret
Partner by Estoppel – represent himself as a partner but he is not really a partner
Estoppel – Active Representation
Nominal – No active Representation, however, by his actuations he is liable as a
Partner.
E.g. – Putting your name in the Firm/Document representing the Partner.
As to Withdrawal – in Secret and Silent, kailangan ipaalam na nagwwithdraw sila.
Dormant Partner – because he is not known, he doesn’t not need to publicize his
removal/withdrawal from the Partnership. If he leaves, he will no longer be liable.
As to Membership
1. Original – who started the Partnership
The birth and life of the Partnership depends on the mutual desire and intent of the
Partners. There is no period of the life of the Partnership unless fixed.
Art. 1785. When a partnership for a fixed term or particular undertaking is continued
after the termination of such term or particular undertaking without any express
agreement, the rights and duties of the partners remain the same as they were at such
termination, so far as is consistent with a partnership at will.
A continuation of the business by the partners or such of them as habitually acted
therein during the term, without any settlement or liquidation of the partnership
affairs, is prima facie evidence of a continuation of the partnership.
Suppose:
The Partnership is going to enter in a business of Buy and Sell of vehicles. The
agreement of the contribution is the same. A bought a car because of its excitement.
The Partnership is not liable to the car, because it is not for the benefit of the
Partnerhsip.

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But if there is an agreement, that the Partnership will commence at a future time,
Statute of Frauds will apply i.e. One Year must be in writing.

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Partnership KAMM | 2018

Scope of the Powers of the Managing Partner:

Power of Administration

Question: Why can’t he perform acts of Dominion?

Answer: Because, he only acts as an Agent of the other Parties. As an agent, there is a
need to secure an SPA.

Art. 1801. If two or more partners have been intrusted with the management of the
partnership without specification of their respective duties, or without a stipulation
that one of them shall not act without the consent of all the others, each one may
separately execute all acts of administration, but if any of them should oppose the
acts of the others, the decision of the majority shall prevail. In case of a tie, the matter
shall be decided by the partners owning the controlling interest.