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degree of continuity

Manner of
Creation
Juridical
Personality
Purpose
Profits
Duration
Dissolution

Partnership
Always Created by
Contract
(Express or Implied)
Has juridical personality
separate and distinct from
that of each individual
partner
Realization of Profits

Co-Ownership
Generally created by LAW,
but may exist without a
contract.
No separate Juridical
Personality

May be stipulated upon by


the partners

Depends upon proportionate


shares of the co-owners

No limit

10 years or less

Death or incapacity of one


of the partners dissolves
the partnership

Death or incapacity of one of


the partners does not
dissolve the partnership

Universal Partnership of
ALL PRESENT PROPERTY
The property which belongs to all of
the partners at the time of the
constitution of the partnership
becomes the property of all
(common property) including the
profits from these properties.
Profits from other sources becomes
common property only if there is an
agreement between the partners

Universal Partnership
- The object is vague and
indefinite, contemplating a
general business with some

Common enjoyment of a
right or thing

Universal Partnership of
ALL PROFITS
Comprises all that the partners may
acquire by their industry or work
during the existence of the
partnership including the
usurfruct of movable or immovable
property that each partner may
possess at the time of the
agreement.
Profits acquired by the partners
through chance, without the
employment of physical or
intellectual efforts are not included.

Particular Partnership
- The object is well defined
and limited, confined to an
undertaking of a single, ad

hoc or temporary in nature.

Article 1794: Obligation of the Partner for Damages to the Partnership


In re: Article 1170 NCC, any person liable for fault or negligence shall be liable for
damages
Q: A B --- C (wholesale and retail of dry goods) in Manila. C was able to broker a
deal with a seller in balintawak, and the partnership earned a margin of P100k in
profits for three months because of the deal. C, with the permission of A and B,
decided to use some of the profits for a lending business in Balintawak. After
another three months, the partnership gained a loss of P200K.
Can C have these losses offset by the profits he gained by brokering the deal?
In the same Question, what if C had brokered the deal for P500K, can he now
offset the losses?
Article 1795: General Rule: Risk of Loss is borne the owner of the thing.
Article 1796: Every partner is an agent of the partnership for the purpose of its
business
A partner is not liable for carrying out the business of the partnership for as long
as he is not at fault and he acted within the scope of his authority
GR:no partner is entitled to compensation for his services to the partnership,
except in the case of stipulation/ consent of all the partners / implication
Article 1797: the losses and profits shall be distributed in conformity with:
Agreement
If none according to capital contribution
*industrial partner shall receive share first before capitalist partners just and
equitable
Article 1799: Stipulation excluding the partner from loss, generally void, but the
partnership exists.
How about for unequal shares? Is this allowed (yes)
Unless grossly unequal compared to other partners
But as far as third persons are concerned: each and every partner is liable
Q: what if one partner agrees to bear all the losses for another (valid)
Article 1800: Management rights and obligations
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GR: each partner is a manager in the absence of an agreement -- not dependent


on the share of the partners/ capital contribution
Q: Wisdom of appointing a managing partner?
Appointment in the articles of partnership as compared to after the execution of
the partnership agreement (as to revocability)
Example of powers of the partner appointed as manager:
- All the powers of an agent (general and incidental) to carry out its
business.
- Issuing receipts, securing loans on credit
- NA for businesses wholly foreign to the nature of the business of the
partnership

Article 1804: Sub Partnership Contract


Basically for the division of profits of that partner
Distinct and separate contract from the partnership
Article 1805: Partnership books kept at the Principal place of business
/what is a reasonable hour
Article 1806: Full disclosure of the partner of information
Article 1807: Fiduciary duty of a Partner to the other partners
Continuing duty from the formation of the partnership to its dissolution

GR: Manager not entitled to compensation, but they can enter into
a collateral verbal agreement to that effect.

A B and C were engaged in the Real Estate business for 20 years. During
the dissolution and winding up of its affairs in 2014, C received a check
representing an initial installment for profits from one of the business
ventures that the partnership invested in. He was able to secretly receive
3 other checks -- does he have the duty to tell the other partners of this?
(yes)

Exceptions of implied agreement as to compensation of the managing


partner
1. Duties in the capacity of a person not a partner
2. Extraordinary neglect in the management of the affairs of the
partnership and the partner is left out

In the same example, before the dissolution of the partnership, Vista Land
approached them and offered for sale a prime commercial lot in Pasig. The
deal fell through because A and B was interested in another location in
EDSA. However, C made his own deal with Vista Land and was able to
acquire the lot in Pasig.

Article 1801: In the first example (Produce Business) If only A and B are
given the power to manage the affairs of the partnership either may
execute acts of administration
If one should oppose the acts of the other, C may break the tie.
(however, the grounds for opposition must be valid)

If it was acquired with his own funds, does he now own the land?
If it was acquired with Partnership Funds, does he own the land?
Article 1809: Formal Accounting
GR: Partner does not have a right to formal accounting of the partnership
funds.

Article 1802: GR: If in the AOP it was stipulated that the consent of all of
the managing partners is needed for all acts of the partnership, what if B:
Decides to sell some of the produce at a discount? Valid? (no)
Decides to lease their market space to others? Not valid
What if in this case, their vegetable produce was ruined by a typhoon and
C decided to sell them at a discount? Is this allowed? (situation of grave or
irreparable injury to the partnership)
Article 1803: The authority of the partners to bind the partnership though
contracts is limited only to acts of administration - or for carrying out in
furtherance of the business of the partnership
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