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Partnership Codal and Case Digests

Partnership Codal and Case Digests

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Published by Estudyante Blues
To whom much is given, much is required.
Luke 12:48
To whom much is given, much is required.
Luke 12:48

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Published by: Estudyante Blues on Jan 29, 2010
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PARTNERSHIP CODAL AND CASE DIGESTSPage 1 of 16BY: MA. ANGELA LEONOR C. AGUINALDOATENEO LAW 2010GENERAL PROVISIONS
Art. 1767. By the contract of partnership two or morepersons bind themselves to contribute money,property, or industry to a common fund, with theintention of dividing the profits among themselves.Two or more persons may also form a partnership forthe exercise of a profession. (1665a)Art. 1768. The partnership has a judicial personalityseparate and distinct from that of each of the partners,even in case of failure to comply with the requirementsof Article 1772, first paragraph. (n)Art. 1769. In determining whether a partnership exists,these rules shall apply:(1) Except as provided by Article 1825, personswho are not partners as to each other are not partnersas to third persons;(2) Co-ownership or co-possession does not of itself establish a partnership, whether such-co-ownersor co-possessors do or do not share any profits madeby the use of the property;(3) The sharing of gross returns does not of itself establish a partnership, whether or not the personssharing them have a joint or common right or interestin any property from which the returns are derived;(4) The receipt by a person of a share of the profitsof a business is prima facie evidence that he is apartner in the business, but no such inference shall bedrawn if such profits were received in payment:(a) As a debt by installments or otherwise;(b) As wages of an employee or rent to alandlord;(c) As an annuity to a widow or representativeof 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 agoodwill of a business or other property by installmentsor otherwise. (n)Art. 1770. A partnership must have a lawful object orpurpose, and must be established for the commonbenefit or interest of the partners.When an unlawful partnership is dissolved by a judicialdecree, the profits shall be confiscated in favor of theState, without prejudice to the provisions of the PenalCode governing the confiscation of the instruments andeffects of a crime. (1666a)Art. 1771. A partnership may be constituted in anyform, except where immovable property or real rightsare contributed thereto, in which case a publicinstrument shall be necessary. (1667a)Art. 1772. Every contract of partnership having acapital of three thousand pesos or more, in money orproperty, shall appear in a public instrument, whichmust be recorded in the Office of the Securities andExchange Commission.Failure to comply with the requirements of thepreceding paragraph shall not affect the liability of thepartnership and the members thereof to third persons.(n)Art. 1773. A contract of partnership is void, wheneverimmovable property is contributed thereto, if aninventory of said property is not made, signed by theparties, and attached to the public instrument. (1668a)Art. 1774. Any immovable property or an interesttherein may be acquired in the partnership name. Titleso acquired can be conveyed only in the partnershipname. (n)Art. 1775. Associations and societies, whose articlesare kept secret among the members, and wherein anyone of the members may contract in his own name withthird persons, shall have no juridical personality, andshall be governed by the provisions relating to co-ownership. (1669)Art. 1776. As to its object, a partnership is eitheruniversal or particular. As regards the liability of thepartners, a partnership may be general or limited.(1671a)Art. 1777. A universal partnership may refer to all thepresent property or to all the profits. (1672)Art. 1778. A partnership of all present property is thatin which the partners contribute all the property whichactually belongs to them to a common fund, with theintention of dividing the same among themselves, aswell as all the profits which they may acquire therewith.(1673)Art. 1779. In a universal partnership of all presentproperty, the property which belongs to each of thepartners at the time of the constitution of thepartnership, becomes the common property of all thepartners, as well as all the profits which they mayacquire therewith.A stipulation for the common enjoyment of any otherprofits may also be made; but the property which thepartners may acquire subsequently by inheritance,legacy, or donation cannot be included in suchstipulation, except the fruits thereof. (1674a)Art. 1780. A universal partnership of profits comprisesall that the partners may acquire by their industry orwork during the existence of the partnership.Movable or immovable property which each of thepartners may possess at the time of the celebration of the contract shall continue to pertain exclusively toeach, only the usufruct passing to the partnership.(1675)Art. 1781. Articles of universal partnership, enteredinto without specification of its nature, only constitute auniversal partnership of profits. (1676)Art. 1782. Persons who are prohibited from giving eachother any donation or advantage cannot enter intouniversal partnership. (1677)Art. 1783. A particular partnership has for its objectdeterminate things, their use or fruits, or specificundertaking, or the exercise of a profession orvocation. (1678)
CASE DIGESTS: ARTICLES 1767 TO 17831 EVANGELISTA, ET. AL. V. CIR 102 PHIL 140
 
PARTNERSHIP CODAL AND CASE DIGESTSPage 2 of 16BY: MA. ANGELA LEONOR C. AGUINALDOATENEO LAW 2010
The essential elements of a partnership are thefollowing:1.
 
An agreement to contribute money, property,or industry to a common fund2.
 
Intent to divide the profits among thecontracting parties.The first element is admittedly present in this case.The petitioners have agreed to and did contributemoney and property to a common fund.On the second element, considering the facts andcircumstances of the case, it is shown that the purposewas to engage in real estate transactions for monetarygain and then divide the same among themselvesbecause:1.
 
They created the fund purposedly2.
 
They invested the same not only in onetransaction but in a series of transactions3.
 
The properties were not used for personalconsumption or residential use but wereleased separately to several persons4.
 
The properties were under the managementof one personAlthough, taken singly, they might not suffice toestablish the intent necessary to constitute apartnership, the collective effect of these circumstancesis such as to leave no room for doubt of the existenceof said intent in petitioners herein.*For purposes of the tax on corporations, our NIRCincludes these partnerships—with the exception only of general copartnerships—within the purview of the termcorporation. It thus clear clear to our mind thatpetitioners herein constitute a partnership, insofar asthe Code is concerned, and are subject to the incometax for corporations.
2 LAGUNA TRANSPORTATION CO. V. SSS107 PHIL 833
While it is true that a corporation once formed isconferred a juridical personality separate and distinctfrom the persons composing it, it is but of legal fictionintroduced for the purposes of convenience and tosubverve the ends of justice. The concept cannot beextended to a point beyond its reasons and policy, andwhen invoked in support of an end subversive of thispolicy, will be disregarded by the courts.
3 TUAZON V. BOLANOS95 PHIL 106
There is nothing against one corporation beingrepresented by another person, natural or juridical, in asuit in court.The contention that Gregorio Araneta Inc. cannot act asmanaging partner for plaintiff on the theory that it isillegal for two corporations to enter into a partnership iswithout merit, for the true rule is that though acorporation has no power into a partnership, it maynevertheless enter into a joint venture with anotherwhere the nature of that venture is in line with thebusiness authorized by its charter.
4 WOODHOUSE V. HALILI93 PHIL 526
A contract to form a partnership cannot be executed.It entails an obligation to do. The law recognizes theindividual’s freedom to do an act he has promised todo, or not to do it, as he pleases. This is a verypersonal act of which courts may not compelcompliance, as it is considered as an act of violence todo so.
5 EVANGELISTA V. ABAD SANTOS51 SCRA 416
It is not disputed that the prohibition against anindustrial partner engaging in business for himself seeks to prevent any conflict in interest between theindustrial partner and the partnership, and to insurefaithful compliance by said partner with his prestation.
6 MORAN V. CA133 SCRA 98
1.
 
Partner who promises to contribute topartnership becomes promissory debtor of latter.2.
 
Essence of partnership is that partners sharein profits and losses.3.
 
Partner entitled to recover shares of profitsand losses realized by venture.4.
 
Where partnership venture is a failure, apartner is not entitled to any commissionpromised by co-partner where agreementdoesn’t state basis of commission.
7 THE LEYTE-SAMAR CO. V. CEA93 PHIL 100
A partner is not a creditor of the partnership.
8 COMMISSIONER OF INTERNAL REVENUEV. SUTER 27 SCRA 152
1.
 
Where a company is not a universalpartnership—when the contributions of thepartners were fixed sums of money andneither one of them was an industrialpartner, it follows that it is not a partnershipwherein spouses are forbidden to enter. Norcould the subsequent marriage of thepartners operate to dissolve it, such marriagebeing one of the causes provided for thatpurpose.2.
 
The marriage of the partners doesn’t makethe company a sole proprietorship when thecapital contributions of the partners wereseparately owned and contributed by thembefore their marriage, and after they were joined in wedlock, such contributionsremained their respective separate property.
9 IN RE: PETITION FOR AUTHORITY, ETC.92 SCRA 1
It is tacitly provided for in the pertinent provisions of the Civil Code in Partnership that names in a firm nameof a partnership must either be those of living partnersand, in the case of non-partners, should be livingpersons who can subjected to liability. It is alsoprovided in the Code that a third person is precludedfrom including his name in the firm name under pain of assuming liability. The heirs of a deceased partner in alaw firm cannot be held liable as the old members of the creditor of a firm particularly where they are non-lawyers.
 10 PALTING V. SAN JOSE PETROLEUM INC.18 SCRA 92411 CAMPOS RUEDA AND CO. V. PACIFICCOMMERCIAL
 
PARTNERSHIP CODAL AND CASE DIGESTSPage 3 of 16BY: MA. ANGELA LEONOR C. AGUINALDOATENEO LAW 201018 SCRA 924
In the Philippines, a limited partnership duly organizedin accordance with law has a personality distinct fromthat of its members, and if it commits an act of bankruptcy, such as that of failing for more than 30days to pay debts amounting to P1000 or more, it maybe adjudged insolvent on the petition of three of itscreditors although its members may not be insolvent.
12 TAI TONG CHUACHE AND CO. V.INSURANCE COMMISION158 SCRA 336
A partnership may sue and be sued in its name or byits duly authorized representative.
13 PASCUAL V. COMMISSION OF INTERNALREVENUE166 SCRA 560
The sharing of returns doesn’t in itself establish apartnership. In order to constitute a partnership intersese, there must be: an intent to form the same;generally participating in both profits and losses; andsuch a community of interest, as far as third personsare concerned as enables each party to make contract,manage the business, and dispose of the wholeproperty.
14 FORTIS V. GUTIERREZ HERMANOS6 PHIL 100
The general manager of a general partnership hasauthority to employ a bookkeeper, and a contract thusmade was valid, though not in writing.
 15 DELUAO V. CASTEEL26 SCRA 475
The declarations of one partner, not made in thepresence of his co-partner, are not competent to provethe existence of a partnership between them as againstsuch other partner. The existence of a partnershipcannot be established by general reputation, rumor, orhearsay.
 16 LOZANO V. DEPAKAKIBO107 PHIL 728
An equipment which was contributed by one of thepartners to the partnership becomes the property of the partnership and as such cannot be disposed of bythe party contributing the same without the consent of the partnership or the other partner.
17 KIEL V. ESTATE OF P.S SABERT46 PHIL 19318 AGAD V. MABATO23 SCRA 1223
A partnership may be constituted in any form, exceptwhere immovable property or real rights arecontributed thereto, in which case, a public instrumentshall be necessary. A contract of partnership is void,whenever immovable property is contributed thereto, if inventory of said property is not made, signed by theparties, and attached to the public instrument.
19 AURBACH V. SANITARY WAREMANUFACTURING CO.180 SCRA 130
A corporation cannot enter into a partnership contractbut may engage in a joint venture with others.
 OBLIGATIONS OF THE PARTNERSOBLIGATIONS OF THE PARTNERS AMONGTHEMSELVES
Art. 1784. A partnership begins from the moment of the execution of the contract, unless it is otherwisestipulated. (1679)Art. 1785. When a partnership for a fixed term orparticular undertaking is continued after thetermination of such term or particular undertakingwithout any express agreement, the rights and dutiesof the partners remain the same as they were at suchtermination, so far as is consistent with a partnershipat will.A continuation of the business by the partners or suchof them as habitually acted therein during the term,without any settlement or liquidation of the partnershipaffairs, is prima facie evidence of a continuation of thepartnership. (n)Art. 1786. Every partner is a debtor of the partnershipfor whatever he may have promised to contributethereto.He shall also be bound for warranty in case of evictionwith regard to specific and determinate things which hemay have contributed to the partnership, in the samecases and in the same manner as the vendor is boundwith respect to the vendee. He shall also be liable forthe fruits thereof from the time they should have beendelivered, without the need of any demand. (1681a)Art. 1787. When the capital or a part thereof which apartner is bound to contribute consists of goods, theirappraisal must be made in the manner prescribed inthe contract of partnership, and in the absence of stipulation, it shall be made by experts chosen by thepartners, and according to current prices, thesubsequent changes thereof being for account of thepartnership. (n)Art. 1788. A partner who has undertaken to contributea sum of money and fails to do so becomes a debtor forthe interest and damages from the time he should havecomplied with his obligation.The same rule applies to any amount he may havetaken from the partnership coffers, and his liability shallbegin from the time he converted the amount to hisown use. (1682)Art. 1789. An industrial partner cannot engage inbusiness for himself, unless the partnership expresslypermits him to do so; and if he should do so, thecapitalist partners may either exclude him from thefirm or avail themselves of the benefits which he mayhave obtained in violation of this provision, with a rightto damages in either case. (n)Art. 1790. Unless there is a stipulation to the contrary,the partners shall contribute equal shares to the capitalof the partnership. (n)Art. 1791. If there is no agreement to the contrary, incase of an imminent loss of the business of thepartnership, any partner who refuses to contribute anadditional share to the capital, except an industrialpartner, to save the venture, shall he obliged to sell hisinterest to the other partners. (n)

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