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Delectus personarum / Delectus personae
- literally, choice of the person
- nobody can become a member of a partnership without the consent of all the partners
Partnership
1. Consensual mere consent is enough
2. Nominate standardized (with a name)
3. Bilateral or multilateral two or more
4. Onerous sales
5. Commutative
6. Principal can principal exist without accessory, can accessory exist without principal
7. Contribution
5 Elements of Partnership
Note: COC (consent object cost
- Valid Contract
- Legal Capacity
- Mutual contribution
- Primary purpose is to gain and share profit
- Object must be lawful
Natural created by birth
Juridical created by law, separate and distinct personality
1 incapacitated voidable
Both incapacitated unenforceable
1 or both prohibited void
Doctrine of Corporation Fiction
Art. 1769 used if you have doubts
(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
copossessors 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; because they use the net returns
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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)
Art 1770 Effects of Unlawful Partnership (unlawful object or purpose)
- Void ab nitio void from the start
- No juridical order or court is required
- Only the Capital or contributions shall not be confiscated unless the capital itself is void
Form of Partnership
No form is required because it is consensual
Except
1. More than one year (in writing) to avoid being unenforceable
2. Public instrument + Registered = General
3. PI + Inventory to avoid being Void
Partnership with capital of P3000 or more
Optional Requirements
1. PI
2. Registered with SEC
In case of doubt
- General or limited
- UP of all present prop or UP of Profits
Prohibited from forming a universal partnership: Effect is VOID
Art 87 Can husband and wife make universal or general partnership, NO
Art 739 Persons who are guilty of adultery, concubinage or bribery
Particular Partnership v Universal Specific v Broad
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All Present Property only all the current property, NOT INCLUDING FUTURE PROPERTY
All Present Property’s Profits – fruits of the present property
Profit you are still the owner of the property
2
nd
Meeting
Immovable without inventory void
Immovable with/without appraisal valid
A partner who was not able to contribute is AUTOMATICALLY A DEBTOR OF THE PARTNERSHIP at the
time of FAILURE
INDUSTRIAL PARTNER
- should be more LOYAL since he contributes SERVICES
- NOT ALLOWED TO START BUSINESS OF BOTH SAME OR DIFFERENT TYPE
- Exception EXPRESS PERMISSION
- Effect is EXCLUSION and AVAILMENT OF BENEFITS
CAPITALIST PARTNER
- should be more LOYAL since he contributes SERVICES
- NOT ALLOWED TO START BUSINESS OF SAME TYPE but ALLOWED to start a DIFFERENT TYPE
- Exception is STIPULATION
- Effect is BRING TO THE COMMON FUND and SHALL PERSONALLY BEAR ALL THE LOSSES
Partners generally contribute equal shares, unless there is a stipulation
Because the presumption is that the profit sharing is equal.
IMMINENT LOSS (GROUND)
- any partner who refuses to contribute additional share to the capital, EXCEPT INDUSTRIAL
PARTNER, to save the venture shall be obliged to sell his interest to other partners
EXECPTIONS:
1. INDUSTRIAL PARTNER
2. Stipulation of no additional Contribution
3. Partner is insolvent
Insolvent situations where a debtor cannot pay the debts, he/she owes
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Onerous a contract or lease that has more obligations than advantages
1792
- 2 debts
- Proportionate or fully applied
- Managing partner
1793
- 1 debt
- Bring to the partnership capital / they will share with what was paid
- No managing partners
1794
- Every partner is responsible to the partnership for damages suffered by it through his fault, and
he CANNOT COMPENSATE with the profits and benefits which he may have earned for the
partnership.
- Both debtors in a situation can’t compensate
- Unusual Profit has been realized (ground) courts may equitably lessen the responsibility (STILL
NO COMPENSATION)
1795
- If ownership is with the partnership, the partnership bears the loss
- If ownership is with the partner, the partner bears the loss
RES PERIT DOMINO the thing perishes with the owner
BEFORE
AFTER
REMARK
GENERIC
X
X
REPLACE
SPECIFIC
D
X
PTBL
USE
D
D
PRBL
PTBL PARTNERSHIP BEARS THE LOSS
PRBL PARTNER BEARS THE LOSS
D PARTNERSIHP IS DISSOLVED
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1796
- Partnership is responsible to every partner for the
1. Amounts he may have disbursed on behalf of the partnership and for the corresponding
interest, FROM THE TIME THE EXPENSES ARE MADE; it shall also answer to each partner for the
obligations he may have (ex: Payment made in behalf of the partnership)
2. Contracted in good faith in the interest of the partnership business, and; (ex: paper for the
partnership)
3. For risks in consequence of its management (ex: Getting injured in the line of work)
1797
- Losses and profits shall be distributed in conformity with the agreement
- If only the share of each partner in the profits has been agreed upon, the share of each in the
losses shall be in the same proportion.
Distribution of Profits and Losses
Profits stipulation, if none, capital contribution
Losses stipulation, if none, profit sharing agreement, if none, capital contribution
Share of the IP
Profits stipulation, if none, what is just and equitable
Losses NOT liable
Liabilities - Liable
*DEFAULT RULE - CAPITAL CONTRIBUTION*
1798
Profit and loss sharing should be fixed by all the partners, NOT by one of the partners or a third person
Manifestly inequitable (ground)
Three months from the time he had knowledge thereof, complain of such decision
Can a TP decide the profit and loss sharing of the partners?
GR NO, parties should
Exception agreement of the partners to give TP
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If agreed upon, can the partners question the decision of the TP?
GR NO, decision is binding on them
Exception MANIFESTLY INEQUITABLE unfair or unjust
E-E NO 1. decision has been executed
2. three-month period expired
1799
Pactum Leonina a stipulation that excludes one of the partners from profit and loss sharing is VOID.
Can a stipulation exclude one of the partners from profit or loss sharing? NO, VOID EFFECT (PACTUM
LEONINA)
Can one of the partners decide the profit and loss sharing? NO
Can the IP be made liable for losses? NO
Is the IP liable for contractual liability? YES
ACTS OF ADMINISTRATION
- MP decides
- Day to day affair
ACTS OF OWNERSHIP
- All Partners decide
- 7 acts (ownership)
Majority of the Partners
- Number of partners (majority)
Controlling Interest
- Based on their Contribution
Can the MP be removed?
It depends when he was appointed.
If appointed in the Arts of Partnership IRREVOCABLE, except for a just and lawful cause and the vote
of the majority of the controlling interest.
If appointed after the creation of the partnership, it is REVOCABLE.
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Powers of two or more MPs whose respective duties are unspecified (1801)
GR any MP can perform
Exception in case of tie, majority of MP
Exception to the exception in case of tie, vote of the controlling interest
Where unanimity of action stipulated (1802)
GR consent of ALL MP
Exception imminent danger (GROUND) imminent danger of grave or irreparable injury to the
partnership (GROUND)
Effect: Act will not be executed
GR Every partner is an agent of the partnership (Acts of Administration)
Acts of Ownership / Acts of Strict Dominion / Alteration consent of ALL of the partners\
3
rd
Week
1810
Only 3 Property rights of a partner:
1. Rights in specific partnership property
2. Interest in the partnership (assignable)
3. Participate in the management
1811
A partner is a CO-OWNER with his partners specific partnership property
Effects of partner’s right (CO-OWNER) in specific partnership property
-NOT to be possessed, except consent of all
-NOT assignable (sell or transfer), except consent of all
-NOT subject to attachment or execution, except consent of all
-NOT subject to legal support, NO EXCEPTION
Partnership Property v Separate Property
Individual, Private, Personal
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Charging Order attachment to interest of a partner with no separate property
ATTACHMENT COLLATERAL in a sense
1813
Assignee CANNOT (because they are not a partner)
- interfere in the management or administration of partnership business or affairs
- require any information or account of partnership transactions
- inspect the partnership books
Assignee CAN
- receive in accordance with his contract the profits to which the assigning partner would
otherwise be entitled
- in case of fraud in the management of the partnership, the assignee can avail himself of the
usual remedies
- in case of dissolution of the partnership, the assignee is entitled to receive his assignor’s
interest and may require an account from the date only of the last account agreed by all the
partners
Partner’s interest profits and surplus
Effect of assignment NOT a partner
If interest is charged by a separate creditor, it can be redeemed with:
(1) separate prop. of any one of the partners
(2) partnership prop. with consent of all the partner
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