Professional Documents
Culture Documents
WWW – 6/15/13
Q: Last meeting we asked the question “why is there a need for a business law?” and our favorite answer was
profit. Is there anything you could add? (Mr. Dacanas)
A: In poverty, there is no need for a law. But when you have assets, when you now become rich, you have a lot of
properties, there should be a law because if there was no law, then there is danger or risk on your properties.
If you own 1 hectare in Colon Street, there will be squatters or informal settlers. Because of this, even if there is law, they
even try to take your properties away and when you sue them in court, “abi pobre man mi gidaut2 mi.” And then they will
form an organization, the United Squatters Association (USA) or the Informal Settlers Association (ISA). In other words,
we have business law not only for profit but also to protect your profits and assets.
Other than protecting assets, we now move to the partnership area. Starting today we are already businessmen even if
we don’t have businesses because if you want to learn this subject by heart then you must assume that you have
business. We have learned that the need for business law is more on the protection of assets. In some schools in the US,
they do not have a course on business organization. They have the Asset Protection Course, which is a special course.
Q: Other than the informal settlers, robbers or thieves, what could happen to your assets? What are these other
ways of losing your assets? (Ms. Cabergas)
A: Failure in business. If you fail in business you lose your assets, you lose your investment. If you engage in a
partnership business, for example, and that partnership business does not succeed, you lose.
Q: What else? How else could we lose our profits for us to have a need to protect our assets?
A: Misappropriation could be a way of losing assets.
Q:But how? The purpose of this meeting is to form our minds to become business minded.
A: I know you’re an honest girl but sometimes there are other students who will ask their parents, “Mom, I need P10,000
for contribution, slippers, BIKINI, and bikinis could get smaller,” even though all you really need is P5,000. You use
something intended for one thing and use it for another.
In a partnership for example, there could be misappropriation. Because in a partnership you contribute and there are a lot
of you and everyone might have access to the money. You might notice that one partner reports to the office very early in
the morning. Everybody appreciates him. Buntag sayo, maoy mauna sa opisina, maulahig uli. Ngilngig kayo partnera.
Only to find out later that the partnership money is gone because very early in the morning he already starts getting the
money and when everybody is in the office, he is already drinking his coffee. Misappropriation could be a way of losing
your assets.
Q: How else? That’s why we have business law to know the ways of protecting our assets. (Ms. Judilla)
A: We have to know the law so that we would know what are the expenses and the duties that we have to attend to.
Otherwise, we will lose more in terms of penalties, interest and all those things. So Negligence or failure to comply. We
have to study the law on business so that we will know in what way we will preserve and protect our assets against
penalties, interest, thieves, robbers.
But that’s Criminal Law. Here, we take the provisions of the law to protect our assets against civil losses.
Q: How will we protect our assets against sources of obligations, for example? By the way, what are the sources
of obligations?
A:
(1) Law
(2) Contracts – Cause, Object, Consent
(3) Quasi-Contracts
(4) Quasi-Delicts
(5) Delicts
Q: What else?
A: Quasi-delict or torts
Example, if you have earned a lot of profit this year, for example, 20 million, in your business. One day, after a drinking
session, you drove your car very slowly at 120kph, and in every corner you hit a pedestrian. Let’s say 3 pedestrians were
hit and all of them sued you for the amount of 5 million each. So your profit of 20million minus 15million is now down to
only 5 million. You lost 15million out of your profit out of negligence.
Q: What could you have done to protect that 20 million from any liability arising from your negligence?
A: If you were a businessman, you formed a business organization. What happens to you personally will not affect your
profit. By protecting your profit, you are now enjoying your investments.
Notes of the Warrior (Partnership 404 2013)
If the car were registered in your name, and profits were in the name of the corporation, even if you kill 5 or more, the
profit of your corporation will not be affected. That is how you should think and understand.
So as a businessman, avoid debt. Although sometimes it is necessary, but so long as you are assured that you are
capable of complying with your obligations, you don’t have to despair. Borrowing is part of business. But be sure your
assets are larger than your debts. So here, while we are protecting our assets, we also said that borrowing is a necessity.
But it is something you should exercise with prudence because if you borrow more than your assets, nigkalapas nimo sa
imong assets, whether it’s owned by the business organization or you personally…..
These are the things that we should have to be aware so that we will fully understand why there is a need for a law on
business. We’re trying to protect our assets not only for the criminal acts of others, but also for other contractual
obligations and also from legal remedies of our creditors.
Now we know why there should be a law on business: So that there will be order in the business community and other
than that, so that we will protect our assets and pursue our business.
Q: Ms. Judilla earlier mentioned of a contract as a source of an obligation. Ms. Judilla even explained that if there
is a contract, there are three elements, what are these three elements?
A: Consent, Object, Cause or consideration.
Q: When we say a written contract, what is another way of saying a written contract?
A: Formal. Contract will be valid and binding only upon the moment it complies with the formalities of the law.
Q: A formal contract should be distinguished with the verbal or? (Mr. Menchavez)
If you ask for something from your girlfriend, you don’t have to write her, it should be perfected by mere consent.
A: Art. 1767. 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.
Except:
i. When the capital of the partnership is P3,000 or more – must appear in a public instrument, which must be
recorded in the Office of the Securities and Exchange Commission (Article 1772)
ii. When there is a contribution of an immovable or real rights to the common fund – requirements:
1. The contract must be in a public instrument (Article 1771)
2. An inventory of the property contributed must be made, signed by the parties, and attached to the public
instrument (Article 1772)
iii. When parties agree to create a partnership at a future time not exceeding one year – the contract must be in
writing (Statute of Frauds)
(1)Land, buildings, roads and constructions of all kinds adhered to the soil;
Notes of the Warrior (Partnership 404 2013)
(2)Trees, plants, and growing fruits, while they are attached to the land or form an integral part
of an immovable;
(3)Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;
(4)Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on
lands by the owner of the immovable in such a manner that it reveals the intention to
attach them permanently to the tenements;
(5)Machinery, receptacles, instruments or implements intended by the owner of the tenement for
an industry or works which may be carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in
case their owner has placed them or preserves them with the intention to have them
permanently attached to the land, and forming a permanent part of it; the animals in
these places are included; cdtai
(7)Fertilizer actually used on a piece of land;
(8)Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters
either running or stagnant;
(9)Docks and structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake, or coast;
(10) Contracts for public works, and servitudes and other real rights over immovable property.
(334a)
Q: Do you see those big luxury vessels floating? They move from pier to pier, are they movable?
A: The law considers them an immovable property.
Movable and Immovable properties sows confusion because when you go to the bank and you offer the vessel as a
security you will be required not to execute not a REM but a Chattel Mortgage.
Power plants can be moved in actuality but the moment they are incorporated, they are considered immovable property.
In a conjugal partnership, just be able to make sure that you will be able to contribute your intimacy.
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Notes of the Warrior (Partnership 404 2013)
6/20/2013
From this day on, the Santoses shall be known as Santol and Santal in this class.
Marvin – Gave more examples under incorporeal property. Among mentioned: credits, stocks
Louie – continued examples of incorporeal property: Intellectual property rights and goodwill.
He added another classification referring to fungibles and infungibles
Several people were asked about the meaning of this classification until we arrived with the correct definition that
fungibles are those properties which we can only enjoy their uses if it will consumed while infungibles are those whose
uses can be enjoyed even without being consumed.
Louraine – we learned in her recit that all these kinds of properties can be contributed in the common fund in a
partnership. As well as industry and money.
Atty gave the example of the pimp selling out the services of the prostitutes with the arrangement that they share the
profits afterwards
Paul – we learned that such example is not a partnership because it doesn’t have a lawful object which is an essential
feature of a partnership.
ARTICLE 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)
Example of betting on a sweepstakes ticket and sharing the proceeds if ever the ticket wins.
From the facts, it cannot be gleaned that there is a partnership because there is no arrangement on the sharing of profits.
Georfo – Asked if it was a partnership were Olive, a flower gardener sells her flowers for 10 pesos to a flower arranger.
Olive agrees to allow the flower arranger to sell these flowers, which she will arrange for whatever price as long as she
gets back her 10 pesos.
Atty gave another example: what If Anj was made a manager of the property of her boyfriend who recently
succeeded the 1 out of the 5 units of cars in a rent-a-car business from his deceased father, together with his 4
other brothers. As compensation, Anj will be given 10% of the profits of the business
Olive – There is no partnership. No agreement among the brothers to contribute their inheritance to a common fund.
Who will pay for the repairs of the car, who bears the losses?
Anj – the partnership should pay for the salaries. It has a separate juridical personality
Alfie – answered they are partners and they are engaged in a partnership.
As to duration –
1.) Partnership at will: one in w/c no time is specified and is not formed for a particular undertaking or venture and w/c
may be terminated at any time by mutual agreement of the partners, or by the will of any one partner alone; or
one for a fixed term or particular undertaking w/c is continued after the end of the term or undertaking w/o express
agreement.
2.) Partnership with a fixed term: one w/c the term for w/c the partnership is to exist is fixed or agreed upon or one
formed for a particular undertaking.
As to representation to others –
rd
1.) Ordinary or real partnership: one w/c actually exists among the partners and also as to 3 persons.
2.) Ostensible partnership or partnership or partnership by estoppel: one w/c 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.
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.
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.
Death of partner results to dissolution Does not necessarily dissolve the co-
Effect of Death
of the partnership ownership
Just in case apil ni, gi apil nalang pud ning partnership v. corporation
Partnership Corporation
Manner of creation Mere agreement of the parties By law or operation of law
Number of May be organized by only 2 persons Requires at least 5 incorporators
incorporators
Commencement of From the moment of the execution of the From the date of issuance of the certificate
juridical contract of partnership of incorporation by the SEC
personality
Powers May exercise any power authorized by the Can exercise only the powers expressly
partners provided it is not contrary to law, granted by law or implied from those
morals, good customs, public order or public granted or incident to its existence
policy
Management Every partner is an agent of the partnership Power to do business and manage its
unless the management is agreed upon to affairs is vested in the board of directors
the contrary
Effect of A partner as such can sue a co-partner who The suit against a member of the board of
mismanagement mismanages directors who mismanages must be in the
name of the corporation
Right of None since when a partner dies, the Has so that even if the stockholder will die,
succession partnership will be dissolved the corporation will not be dissolved but the
stockholdings of the deceased stockholder
will be transmitted to his heirs
Extent of liability to Partners (except limited partners) are liable Stockholders are only liable to the extent of
third persons personally (may be severally liable) for the shares subscribed by them
partnership debts to third persons
Transferability of Partner cannot transfer his interest in the Generally, stockholder has the right to
interest partnership so as to make the transferee a transfer his shares without the prior consent
partner without the consent of all the other of the other stockholders
partners
Term of existence Any period of time as stipulated by the May not be formed for a term in excess of
partners 50 years extendible to not more than 50
years in any one instance
Firm name Limited partnership is required by the law to May adopt any firm name provided it is not
add the word “Ltd.” to its name the same as or similar to any registered firm
name.
Dissolution At any time by the will of any or all of the Can only be dissolved with the consent of
partners the State
Governing law Civil Code Corporation Code
If A owns a carabao, farm, and warehouse and B owns an apartment and cars, who becomes the owners of
these?
In a UNIVERSAL PARTNERSHIP OF PROPERTIES, the ownership of all the properties will now be transferred to the
PARTNERSHIP. Whereas, if the agreement is UNIVERSAL PARTNERSHIP OF PROFITS, it is only the USE OF THE
PROPERTIES, but the ownership of the properties would remain to the PARTNERS.
In the universal partnership of all present properties, the properties and the fruits become the COMMON PROPERTY
OF THE PARTNERSHIP.
- ARTICLE 1777. A universal partnership may refer to all the present property or to all the profits. (1672)
- 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. (1673)
- ARTICLE 1779. In a universal partnership of all present property, the property which belonged 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. (1674a)
- ARTICLE 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. (1675) cd i
ARTICLE 1781.Articles of universal partnership, entered into without specification of its nature, only
constitute a universal partnership of profits. (1676)
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WWW 06.22.13
Art. 1767. 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.
Scenario 1: 2 brothers contribute 5 million each to buy a land in a subdivision worth 10million. They wanted to
subdivide to start building their houses at first but the cost of materials is expensive so they decided to sell the
land. They were able to sell at 12 million getting a profit of 2million. Was there a partnership?
- One answer: they were not partners since there should be continuity or series of transactions before they can be
considered partners.
- Atty. Pointed out that the definition does not require a series of transactions before a partnership is formed. (Art.
1767)
- They were not partners. There was no clear agreement or no intention to form a partnership - sell the property
and divide the profits among themselves. The receipt of the profit was not intended from the beginning. No
intention to engage in business.
- Receipt of profits = only a presumption of partnership. In this case, it was only incidental of the intention to
dispose the land.
- There should be an agreement to contribute (money, property, and industry). There should be an agreement to
share the profits earned. The most important element is the agreement or intention to share the profits.
Scenario 2: the 2 brothers bought furniture by lot they learned about from a newspaper ad– 1M for sala set and
matrimonial bed. They contributed 500k each. Brother A got the bed, the other Brother B got the sala set. The
wife of B didn’t like the color of the sala set. B sold it at 600k (for a profit of 100k). A learned about the sale and
asked for a share of the profit. Is he entitled to the profit? Are A and B partners?
Scenario 3: This time, the wife was not contented with the sala set and opted to sell the matrimonial bed. A sold
the matrimonial bed for 400k (for a loss of 100k). For the losses incurred, A demanded that B share in the loss of
the sale. Should B share in the losses?
- Atty’s. Answer
o THEY ARE NOT PARTNERS
We just divided the furniture, not divide in profits
If I destroyed the matrimonial bed, I cannot compel B to pay part of the repairs
Scenario 4: After A and B bought the matrimonial bed and sala set, they sold both and divided the PROFIT. They
bought the furniture for 1M @ 500k each, and sold the same at 2M with profit as 1M. Is there partnership?
- No partnership, there was no intention to divide the profits. The profit here was only incidental
Scenario 5: Buying and selling of old coffins (class laughs). For those who do not have extra money, they only
buy simple coffins for burial, and rent a nice coffin for viewing. A buys the coffins while B pays for materials and
labor in order to refurnish the old coffins with the end result of splitting GROSS RECEIPTS.
Q1: Is there partnership? (take note that what will be split are GROSS RECEIPTS)
Q2: If the coffin is sold at 5M, how much will the parties get? Is there partnership? (Atty. Clarified
here that the parties will not be getting 2.5M exactly since the other party who paid for
labor/materials will have to deduct his expenses from the 2.5M)
- Q1: There is a partnership, in this case they are composed of different types of partners (A capital partner, B as
industrial partner)
o ARTICLE 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;
(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;
(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:
- Answer to Q2
o There is no partnership since there was no sharing of expenses. One bought the coffin while the other did
not share in the expenses, instead the other only paid for labor/materials
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July 4, 2013
Notes of the Warrior (Partnership 404 2013)
(Jessa)
Here is A who owns a vessel and B who is a master of the vessel. A told B, try to get some cargoes, load it in my
vessel and once you load it, bring it to the port of destination and you collect the freight. After the collection I
give you 10%. Partners?
Here is Mr. A, a creditor, who lent money to you, and because you cannot pay, Mr. A said I have my karaoke place
and since you’re a good singer I want you to sing for 5 nights and your obligation to pay will be considered
settled. Partners?
Here is Ms. Judilla who proposed to you a business. Let us go to the bank and borrow money. So you borrowed
10,000 from the bank. With your P10000, you will have to rent a building, buy a crucifix and put up an altar inside
your building. So that everytime there will somebody who will come in, you will say that this is your new church
and you are encouraged to give a donation. And so everyday some people come in and donate. Each day you
have P10 for 5 days P500. When the weekend came, you guys decided to share the P250 and keep the rest of the
P250 in the donation box. Partners? What is the nature of the ‘donation?’ Is it profit?
They are partners. By the definition of partnership, two persons bind themselves to contribute money, property or industry
to a common fund with the intention of dividing the profit.
Is there a contribution?
They contributed here even if they merely loaned from the bank because once the bank grants it to you it’s yours, you are
merely obliged to pay.
They rented a building, put up an altar and bought a crucifix and shared the donation which is in the nature of the profit
since they gained by virtue of such donation even if it is merely gratuitous.
23:47 – 39:50
Student: Profits sir can be defined as a turnout of your labor or skill which will inure to your benefit. Donations sir, should
be considered profit. And since they share the profit, they can be considered a partnership.
Because by definition, in a contract of partnership 2 or more persons bind themselves to contribute money, industry or
property…
Money sir, yes. The one they loaned from the bank.
They rented a building with a very nice crucifix and asked people to utilize the property as a chapel and in turn ask for
donation.
Sir: That’s right class. Your donations will bring you to heaven. So, more donations come in. More profits to
share! So in short, is it a partnership? Summarize why.
Because by definition, they contributed money to a common fund, rented a place and put a crucifix there so that other
people can use the place for worship and they will ask for donations. And such donation will be divided among them.
Of course it’s not! You’re not forcing people to come. They come to pray there. And you’re not forcing people to pay!
You’re just encouraging them to donate! So what was the principal intention of the sisters when they put up the chapel?
The real intention sir was profit. If somebody goes to heaven, that’s incidental. Donation, or whatever you might like to call
it, is still an amount of money, and that’s still profit. That’s why Rome has the biggest bank in the world. And who owns
that bank? The church! They have the biggest partnership!
So if A owns a bank, he also owns a farm which he is entitled to inherit (inherited) from his father. While B owns 5
units of cars and a dairy farm which was donated to him by a former teacher. The teachers can be donees too,
Notes of the Warrior (Partnership 404 2013)
class. So if you have something to give to your teacher, you are allowed. So A and B met one day and pledged to
contribute everything to a common fund and share everything among themselves. Are they partners?
Yes, sir. They are partners. Because in a contract of partnership 2 or more persons bind themselves to contribute money,
property and industry to a common fund with the intention to divide the profits among themselves.
So who now owns the inherited farm? The partnership. So with regards to all the properties, once they enter into
that agreement, who owns what now? The partnership of A and B owns the inherited farm, bank, the 5 cars and
the donated dairy farm since the partnership is a separate juridical entity so here it is the partnership who owns
the properties now.
(calls another student) Who owns what? They said we are now partners, we share the profits. But who owns what?
Everything that A and B agreed to put up to the partnership will belong to the partnership. However it will depend on the
kind of partnership that they entered into. If they entered into a universal partnership of all present property or a universal
partnership of profits.
39:50 – 55:53
Mipps: A still owns the 5horses, bank, and farm(inherited) while B still owns the 5cars, dairy-farm(donated), and 10cows.
SIR: Why?
Mipps: Because under Article 1781, if a partnership is without specification of its nature, it only constitutes a universal
partnership of profits. In a universal partnership of profits, the profits that the partners may acquire by their work or
industry pertains to the partnership but the property they contributed pertains to them individually.
SIR: However, if they agreed to have a universal partnership of all present property?
SIR: All these things, including the inherited farm? Remember inheritance?
Mipps: Yes Sir. At the time of the execution of the partnership, A is already the owner of the inherited farm, so I submit
that the partnership owns the farm.
Lumantas: If there is that situation, it will be presumed to be a universal partnership of profits, thus A and B owns those
properties. But if it were a universal partnership of all present property, then the partnership will own all of those properties
because the inherited farm and the donated dairy-farm were acquired by A and B right before they entered into a
partnership.
SIR: In other words, when the partnership was executed, they were already part of the “present” property. That’s
why it’s called “all present property”. Now, if the properties will earn:
A: Farm (inherited) = 100 cavans rice; Bank = P50 Million; 5 horses = 5 foals;
B: 5 cars = Rental; Dairy farm (donated) = milk; 10 cows = beef;
Borres: The partnership now owns the profits, both UPAPP and UPP it is said that the profits will now belong to the
partnership.
SIR: So regardless of UPAPP or UPP the profits belong to the partnership. Now, if A said that “I have 50 wives,
and I would like to give each wife one cavan; it is up to you on what you will do with your 50 cavans”. B on the
other hand was single, virgin, he was able to sell the 50 cavans for P50,000. And with the P50k, he was able to
buy a brand new yacht. Who now owns the brand new yacht?
Borres: B will still own the brand new yacht because it is stated that what will belong to the partnership are only the
properties at the time of the constitution of the partnership. But then the yacht was acquired by B after the constitution of
the partnership. It was the fruit of the inherited farm and the profit was already distributed to both partners however B
instead of getting the rice he sold it and acquired another property which is the yacht and he owns it, it belongs specifically
to B.
Notes of the Warrior (Partnership 404 2013)
SIR: In other words the P50k proceeds of the sale already belongs to B because it was his share in the profits,
not the profits of the partnership. Before, it was 100cavans that was the profit of the partnership. When it became
50, it was his share in the profit now solely owned. So, the 5 baby horses, borres?
SIR: Uy, Philip! If the entire baby horses will be sold, Philip?
Philip: Yes sir, that the horses will not be divided then they were sold, the money or consideration of the horses would still
belong to the partnership.
SIR: The proceeds of the 5 baby horses will still belong, why?
Philip: Because there hasn’t been any division yet of the profits.
SIR: And they agreed that A offered a job to his 50 wives. And their job is to report to the farm every morning, and
all of them have to hold the udders to secure milk from the cows. Who pays for the salary of the wives?
Philip: The partnership. Because the milk belongs to the partnership and they chose to employ persons to collect the milk
from the cows.
SIR: Meaning expenses incurred in the production of the milk should be assumed by the partnership.
It would appear Mr. Uy that we have discussed the basic classification of partnership namely?
Philip: We distinguish from object which is either universal or particular, and liability whether general or limited, as to
duration: at will or for a fixed term, as to legality whether either de jure or de facto, as to representation to others:
ostensible or ordinary, as to publicity: open or secret, as to purpose whether it’s for business or profession.
55:53 – 1:11:56
Sir: So that, Colis, going back to the formalities – what are the formalities?
Colis: Since partnership is essentially a consensual contract, clearly, there’s no need for it to be written in a public
instrument unless an immovable property is contributed, an inventory of such property is made, and the partners would
want to enter into a partnership that would take years under the Statute of Frauds, and if the capital of the partnership
exceeds 3,000 pesos then this should be registered in the SEC.
Unless:
Colis: Unless if there is a immovable property donated – this will be in a public instrument and an inventory of the property
made. If two or more persons enter into a partnership within a year – it should be in writing since it is unenforceable under
the Statute of Frauds. IF the capital of the partnership exceeds 3,000 pesos – it should be registered in SEC.
Colis: An immovable property is a property that cannot be transferred from one place to another.
Sir: As distinguished from a movable, which can be transferred from one place or another.
Colis: Non-consumables are those things that can be enjoyed without need to consume.
Sir: So it is said that when an immovable property is contributed, it should be in what form?
Notes of the Warrior (Partnership 404 2013)
Sir: But this is not only when immovable property is contributed, but even if a real right is contributed. What is a
real right? Because the law says, “an immovable property or a real right.” So what is a real right?
Albete: Real rights are rights that are enforceable upon the whole world.
Sir: So this water jug, although it’s a personal property, but I have a real right over this. When I say I have a real
right over this…?
Sir: Correct. Then if Archbishop Palma says, “I want that!” I can say that “No, this is mine!” because I have a real
right over this and I can enforce a real right against anyone. Against the whole world. Because it’s a real right. So
what is a personal right?
Sir: So that if this is again taken by Archbishop Palma, I saw him take it away, can I go to Pope Francis and say,
“Pope Francis, give me back my water jug because Archbishop Palma took it away!” Can I go to Pope Francis?
NO! I cannot enforce my personal right against Pope Francis because my personal right is enforceable only
against a particular person, the person who got my water jug, and that person is Archbishop Palma. Remember
that, remember that. That is the difference between a real right from a personal right. Now, we say an immovable
property is contributed…also?
Sir: So then if also a real right is contributed, the formalities should be?
Albete: The formalities should be, when an immovable property or a real right is contributed, there must be an inventory
signed by the parties, attached in a public instrument, and this must be recorded in the registry of the location of the
property. And that this must also be recorded in SEC.
ARTICLE 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)
Sir: So that if you agreed with Mr. Lumapas to enter into a partnership, and you offered your 5M pesos as
contribution, and Lumapas offered to lease the fish pond owned by his father to the partnership, what formalities
would it require?
1:11:56 – 1:27:59
Lumapas contributed a fishpond leased from his father situation… allow the partnership to use the property.
- Which was the real right? Lease of the property by Lumapas from his father
- What did he contribute his rights over the area?
Scenario: One partner contributed a 20sqm lot worth Php 1,500 only and the other partner will contribute his
expertise in changing tires.
- Are they partners? Yes
- Formalities required? Public instrument, inventory signed by the parties
o Value of the property does not matter. So long as it involves immovable property, it needs to follow the
formalities.
ARTICLE 1768.The partnership has a juridical 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. (n) cdt
If you were working and you have a salary, and you are a partner with A, can A demand a share of the salary?
- Yes, A is entitled since it Universal partnership of profits include the profits acquired by their industry or work
during the existence of the partnership.
1:27:00 – 1:44:00
ATTY: The right to life, to liberty. We do not know how to send them to jail. They are juridical persons. The right to
liberty, however, is not to be enjoyed. The right to be presumed innocent until proven guilty?
Josie:
- Basically from what we’ve learned, even if you’re suing a juridical entity such as a partnership, if the courts find a
juridical entity liable, then it’s the officers (partners in our case) that are liable for the juridical entity’s acts or
omissions.
Notes of the Warrior (Partnership 404 2013)
Atty: But that is the right of the officers, not the right of the partnership. Does the partnership has the right to be
presumed innocent?
Josie:
- Yes, because partnerships can be sanctioned in different ways other than being sent to jail. Like confiscation of
their properties, damages, payment of fines, or even dissolution of a partnership if it’s found to have an unlawful
cause
Atty:
- Alright, fines and penalties. There are different subjects, so there could be different penalties. Not just
imprisonment. As you said, they could be dissolved. If it were a natural person, that’s death. So, they could still be
penalized, not necessarily imprisoned. There are various forms of penalties; fines, dissolution, confiscation of
assets.
- Since they are subjected to these actions, they should enjoy the right to be presumed innocent until proven guilty
Atty: Universal partnership of all present property and universal partnership of profits. What do we mean by universal
partnership of profits?
Art 1783.
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 possess at the time of the celebration of the contract
shall pertain exclusively to each, only the usufruct passing to the partnership
Torres:
- Universal partnership of profits is one where it comprises what the partners acquire through their work or industry
and including the usufruct of whatever property that they have during the execution of the partnership.
Atty: Q: What do we mean by usufruct of movable or immovable property?
Torres:
- Usufruct means the use or the fruits of whatever movable or immovable property they contributed to the
partnership
Atty: So who owns the properties?
Torres:
- The ownership remains to the respective partners
- Only the fruits or the usufruct or whatever profits acquired belong to the partnership
Atty: So baya, if the partners agree only to a universal partnership of profits who owns this (movable or
immovable properties)?
Five-five:
- They would be owned by the respective partners who owned them before the execution (celebration of contract)
Atty: The partners RETAIN ownership. What is passed on to the partnership?
Five-five:
- It is the profits or the fruits of the properties
Atty: So here, these are the profits, these are the fruits, who owns this?
Five-Five:
- The partnership, sir.
Notes of the Warrior (Partnership 404 2013)
Atty: So only beneficial ownership or the right to use is transferred to the partnership
Q: Why would you say only the beneficial ownership? What other ownership do we have?
Five-Five:
- It is the ownership of the property wherein you don’t have just the usufruct of the property but you actually have its
ownership so you can sell it
Atty:
- Q: What is retained by the owner if he only passes the beneficial ownership?
- The owner retains NAKED OWNERSHIP when usufruct is passed to another
o To remember, when you take a bath, you sing your favorite song and you look at the mirror, what do you
see? You’re naked!
As distinguished from universal partnership, what other kinds of partnership do we have? As opposed to
universal partnership we have the particular partnership. Again what would constitute a particular partnership?
A particular partnership sir has for its object a determinate thing, the use of their fruits, a specific undertaking or the
exercise of profession or vocation.
In both partnerships, it’s the use that is contributed! So, when would we know if it’s a particular partnership or a
universal partnership of profits if only the use is contributed to the partnership?
SIR: Ah nature of activity is critical? Olvis! In a Particular Partnership where the use is contributed, refers only
to?
Olive: In a Particular Partnership where the use is contributed, it only pertains to a specific property or a specific
undertaking, the use of a particular property.
SIR: USE OF THE PARTICULAR PROPERTY! VERY SIMPLE! PARTICULAR PARTNERSHIP WHERE ONLY THE
USE IS CONTRIBUTED. As distinguished from the universal partnership of profits where? What is contributed
will be?
Olive: The properties contributed by the partners may be used by the partners…
Daphne: In a Particular Partnership since there is the use of a specific thing, the difference in a UPP is it is not only of a
specific thing it comprises of all or generally…
SIR: IT’S THE USE OF? OF “ALL”! It’s the use of ALL! It’s simple! In a particular partnership what is
contributed?
SIR: THE USE OF ALL! So what’s hard? What’s so difficult? It’s just in the words of the law according to your
classmate. So that although all partnerships, use is contributed, they differ in the sense that Particular
Partnership = the use of a particular property while in the
UPP = it’s the use of “all” properties. We got stuck up there. As we said earlier, a contract of partnership is what
kind of a contract?
SIR: unless?
Daphne: Unless the law requires other formalities such as the contribution of real property where it is required that there is
an inventory attached to a public instrument…
SIR: Alright. And so on and so forth. When partners agree to a partnership, relationships are established. And
once a partnership is entered into, what will be these relationships?
Daphne: There will be the relationship among the partners. The relationship between the partners and the partnership;
because the partnership has its own juridical personality. Third is the relationship between the partners and third persons.
SIR: Partners as to third persons! Because remember the juridical personality’s acquired but does not mean
that the partners no longer deal with third persons. Although generally it’s the partnership that deals with third
persons, which got a separate personality, there are also instances where the moment the partnership no longer
has any asset, third persons can go after the individual partners. Finally?
SIR: Olvis! In a partnership what happens? What happens when there’s partnership? How do we define
partnership?
Olive: Partnership is an agreement between partners that they contribute to a fund the property, industry..
SIR: Georfo
Georfo: 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.
SIR: Once that happens we have a Juridical Personality. So that here if A and B agreed that 6 months from
now they will enter into a partnership, are they now partners?
SIR: Not yet! Because if somebody approaches you georfi and say “Georfo, if you will come with me tonight, I
will marry you six months from now.” Are you already married?
Georfo: No sir.
Georfo: Executory.
SIR: That will not prevent you from executing something else. Hahaha. There was an intention TO ENTER into a
partnership. In a partnership, where you promise to contribute P10,000 and the other partner promise to give you
P10,000, and you already made contribution, and that the partnership to take effect 6 months from now. That your
contribution is already in, are you now partners?
Georfo: No sir.
SIR: Other than contribution you must have an agreement to divide the profits. So clearly there is no
partnership yet even if the contributions were made. However, if you have already the agreement but not yet the
contributions, will there now be a partnership?
Georfo: No sir.
SIR: If the agreement was done but with no contribution, still there is no partnership. Orte!
Daphne: If they have already entered into an agreement, even though they have not yet actually contributed their
property, there is already a partnership because the delivery is not one of the essential elements in order for you to
contract a partnership.
SIR: So even if they DO NOT agree on a contribution, there is already? Because it’s not an essential element?
Contribution is not an essential element?
Notes of the Warrior (Partnership 404 2013)
SIR: The law does not require that they ACTUALLY contribute. It is only required that they AGREED to
contribute. And that they agreed to divide the profits among themselves. So, if there is a partnership without the
contributions, what do you think can they do? You said there is a partnership even if there are no contributions,
how can it be? “Tinutukay lang ta ani?”
Daphne: They have the Obligation to contribute the thing that they have promised.
SIR: They should be obliged. Correct. If one partner contributed and the other did not; in the case Georfi
contributed 10k and the other partner did not, can Georfi Rescind the contract?
Daphne: What should be done is Specific Performance and not rescind the contract.
SIR: Not rescission but specific performance? But did we not learn in Law1 ObliCon that in reciprocal
obligations and one of the parties does not perform part of the obligation, the other party can demand for
rescission?
Daphne: Yes sir however the general rule is to enforce the other party to contribute so as it would have to go for a specific
performance
Daphne: We can rescind sir but only when ther is fraud or misrepresentation
SIR: Georfo: Rescission is the general rule, however here the remedy is specific performance by the special
provisions on the law on partnerships, why?
Georfo: Because the partners have the obligation to contribute money property industry even though not at the execution
of the partnership but at a later time
Girl: As provided for in the Civil Code the partners have the obligation to contribute money property or industry not just
at the execution of the contract but they can also agree at a later time.
SIR: Lim what do you think Lim? Why specific performance? Not rescission?
Arl: This is different form oblicon because in oblicon it is a general law and partnership law is a special provision.
Applying the stat con special law prevails over general law.
1:07:00 – 1:24:00
Scenario: Ms Cokaliong has a car, My Ygana is good in make-up. What could be the business with the car of
Cokaliong and skills of Ygana? The funeral business. It’s a good business since it’s always cash or carry
otherwise, they can sit on the donation box and take from there what they charge. Ms Cokaliong selected some
textiles from Chester Enterprises for the curtains.
Ygana declined to make-up ky “Itom kaau.” – batig nawng, gusto ig make up, buhi ghapon. Can you ask for
rescission?
particular undertaking which is continued by the partners after the termination of such term or particular
undertaking without express agreement
Partnership at will
- which the term for which the partnership is to exist is fixed or agreed upon or 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.
1:24:00 – END
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
Papi:
- There are two kinds
- A partnership which was at will and a partnership with a fixed term which was converted into a partnership at will
Papi
- When partners intend that they will operate with no definite term
Papi
- A partnership with a fixed term or particular partnership continues to operate even after expiration of the term, or
the particular purpose is achieved
Atty Q: Partnership with a fixed term, how many kinds do we have? You know what lumapas, they’re bluffing! Why
are they bluffing?
Migs
- Because there’s only one type of partnership with a fixed term
Atty: Q: If lumapas, logroño approaches you and says, let’s put up a condominium. Papi has a property at colon
street, migs is engaged in construction. I give my property and we split the building. 50/50, we will each have 20
rooms. Migs will have the rooms in odd-numbered floors while Papi will have the rooms in even-numbered floors.
So what kind of partnership is this?
Papi
- It’s a partnership with a particular undertaking which is the construction of the building
- After the construction of the building, we divide the units equally
Atty
- Q: After the building is complete and you divided the units, what happens?
Papi
- The partnership is dissolved
Atty
- Alright, we have accomplished our undertaking. You’ve got your part of the building, I’ve got mine, we share it
equally. Then it is considered done and complete. That’s a particular undertaking.
- Q: Give me an example of a partnership with a fixed term, logroño
Papi
- We agree to rent a space for one month for the sinulog
- After the one month, we will no longer lease that
Migs
- We decide to rent a space for the incoming sinulog for 1 month and then we will sell our stocks to the visitors of
the sinulog and it will only be for that specific month
Notes of the Warrior (Partnership 404 2013)
Atty
- So what happens after one month?
Migs
- After the term of one month, the term is already expired and the partnership is terminated
Atty
- Q: You realize that the hotel business is more profitable during valentines rather than sinulog. You
continue the business, what happens here?
Flores
- It becomes a partnership at will
Atty
- They continue to act like partners and therefore it has become a partnership at will
o Memory aid: after valentines, marriage will come in march. And then april? Summertime. So people will
always come
- Q: Going back to the obligations of the partners, we said that a partner fails to deliver what he has
promised, what happens to him?
Art. 1786
Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto.
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 case and in the same manner as the vendor is bound with
respect to the vendee. He shall also be liable for the fruits thereof from the time they should have been delivered,
without the need of any demand.
Flores
- A partner can be compelled sir, because in so far as that partner is concerned such contribution is needed for the
partnership to exist
- Therefore such contribution is needed or required, there must be an action for specific performance
Atty
- Because the partner is a debtor to the partnership, he can be compelled to contribute
- Q: What other obligations are there for the partners?
Flores
- To answer for eviction when such property is being deprived (specific and determinate things which he may have
contributed to the partnership, art. 1786, par 2, 1st sentence)
- Fruits of the property when they should be delivered without need for demand (art 1786, par 2, 3 rd sentence)
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Scenario: A promised to deliver 5 horses. He was riding on one horse, while 4 other horses followed. “tsi, tsi…”
and 4 other younger horses also followed. What should be the liability of the partner?
- If he promises to deliver 5 horses, he should deliver the 5 horses.
Scenario: The delivery date should be on July 1 but the partner delivered the 5 horses only on July 15. The baby
horses were already born at the time of delivery. The partnership inquired, “where are the 5 horses?” As what
have said, the baby horses should already belong to the partnership. Was he in delay?
- Yes, the partner is already in delay
- What we learned in oblicon, “no demand, no delay” however here in partnership there is delay even when there is
no demand since this is a specific provision.
After the due date but before delivery, 3 of the 5 baby horses died. Who bears the risk of loss?
- Regarding the ownership of the 5 baby horses, it can already be determined that it’s the partnership who is the
owner. The expected delivery date was on July 1 and 5 baby horses were born after. The partner is expected to
deliver specific property he has promised including the fruits which he delayed.
- It depends on the cause of the death. If death was causes not attributable to the partner, then the partnership is
liable. The partner is only liable if he was the cause because of his negligence.
- The obligation to preserve the property does not require the partner to be an insurer. He is required only to
exercise diligence of a good father.
Scenario: Mr Lim contributed personal properties and asked his partner Mr Robles to determine the value. What’s
the rule?
- Appraisal must be made in the manner prescribed in the contract, and in the absence of stipulation, it shall be
made by experts chosen by the partners
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o Article 1798. If the partners have agreed to intrust to a third person the designation of the share of each
one in the profits and losses, such designation may be impugned only when it is manifestly inequitable. In
no case may a partner who has begun to execute the decision of the third person, or who has not
impugned the same within a period of three months from the time he had knowledge thereof, complain of
such decision.
The designation of losses and profits cannot be intrusted to one of the partners. (1690)
- The agreement would be void. Art. 1798 provides: The designation of losses and profits cannot be intrusted to
one of the partners. There is no express prohibition.
- However, in the absence of agreement as to the sharing of the losses and profits, the sharing will be based on the
proportion of partners’ contributions.
Notes of the Warrior (Partnership 404 2013)
- “In effect, when we allow any of the partners to determine the value of his contribution, we are in effect allowing
that partner to determine his share in the profits, which is not allowed by law.”
25:00 – 43:00
- although it’s not expressly prohibited to allow any of the partners to determine valuation of their contribution, but in
effect we are also allowing that partner to determine his share in the profits and losses
o because in the absence of profit and losses agreement, distribution of shares in profits and losses will be
determined in proportion to their contribution
Scenario: If at the time miss ubod delivered her property, the value was P5,000,000.00 and 1 year after, the value
of the property has increased by P2,000,000.00, how much now is the contribution of miss ubod?
- still 5 million, since the appraisal is based at current prices
- value of contribution should remain at 5 million since subsequent changes thereof are for the account of the
partnership
o subsequent changes include both an increase or decrease in value of the contribution
this is borne by the partnership
Q: If money was contributed by a partner, and the money was not contributed on the due date. What would
happen?
- legal basis
o Article 1788. A partner who has undertaken to contribute a sum of money and fails to do so becomes a
debtor for the interest and damages from the time he should have complied with his obligation.
The same rule applies to any amount he may have taken from the partnership coffers, and his liability
shall begin from the time he converted the amount to his own use. (1682)
Scenario: Here is partnership money received by Versoza, instead of giving to the partnership treasurer the
money received, you happened to pass through “tigbakay”. Used partnership money to gamble, and Versoza lost
the partnership money. What is Versoza’s liability?
- Art 1788 par. 2
- Versoza is liable to reimburse partnership funds that were converted (principal amount) including interest and
damages
- Liability reckoned from the time partnership money was converted
Classification of Partners?
- for purposes of our discussion, sir focused on CAPITAL PARTNER and INDUSTRIAL PARTNER
Capitalist Partner?
A capitalist partner is entitled to the share in profits and losses; while an industrial partner receives only a just and
equitable share.
Notes of the Warrior (Partnership 404 2013)
A capitalist partner is liable for losses; an industrial partner is not liable for losses
Why? Is it not a double-whammy? Wa pay labot sa amot wa pay labot sa alkansi? Why does the law exempt him
from losses?
Because if you invest capital and then you incur losses, something would still remain. If you stop at any point in time, you
can take back your capital. But in labor, it will be in vain. Usik ang kahago. You cannot take back all the efforts you have
sacrificed. If the business incurs losses, there’s no way you can recover your services.
Practically, he who has exerted all his efforts and despite his efforts the partnership ended up in losses, he should be
exempted from losses.
An industrial partner is absolutely prohibited from undertaking any business without express permission from the
partners, otherwise he would be excluded from the partnership or the partnership may avail of the benefits of such
undertaking. Whereas a capitalist partner is only relatively prohibited in the sense that he is only prohibited from
undertaking a business which is competitive to the business of the partnership. It may be in the same line of business but
if not competitive, it is not prohibited. If their market is different, it is not prohibited.
61:00 – 79:00
The moment he put sauce on his noodles, pancit with tomato sauce, spaghetti na. It’s already a competing business.
- Not just same line, nature, kind, but it should be a competing business.
Scenario: Mr Arnado approached Mr Versoza, who is the best mechanic in town. Mr Arnado invested money,
while Mr Versoza takes care of the labor in repairing the car. A few months later, Mr Arnado passed by the shop
but only saw Mr Versoza playing with his tablet, no customers. The following week, Mr Versoza came up with an
idea and put up a Banana Q stand. Long line of customers to the Banana Q stall and not to have their car
repaired. What are Mr Arnado’s options?
- Art. 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly
permits him to do so; and if he should do so, the capitalist partners may either exclude him from the firm
or avail themselves of the benefits which he may have obtained in violation of this provision, with a right
to damages in either case.
o Exclude the industrialist partner from the firm
o Capitalist partner avail of the benefits
o Right to damages
What if Mr Versoza will reason that the Car shop business is not affected at all with the Banana q business?
- The prohibition is absolute. Engaging in another business will prejudice the partnership. Mr Versoza should
devote all his time, effort and skills. He could have used his time to find customers and promote the car shop
business.
Scenario: If Versoza and Arnado were BOTH Capitalist partners, can Arnado exclude Versoza if he engages in a
Banana Q business beside the car shop.
- Generally, Mr Aranado cannot exclude Mr Versoza from the business since they are both capitalist partners. The
law only provides this remedy against the industrialist partner. However in this scenario, Mr Arnado can stop
Mr Versoza from pursuing the banana q business in the premises of the car shop since this violates their
partnership agreement to put up a car shop only. They never agreed to include a banana q business.
79 – End
- not only exclude but can also stop business of capitalist partner that was not agreed upon by the partnership
- other business of capitalist partner must be using what has been contributed in partnership (in this case, neldon’s
bbq stand was on the lot the partnership used for the auto repair shop)
- Article 1790. Unless there is a stipulation to the contrary, the partners shall contribute equal shares to the capital
of the partnership.
Notes of the Warrior (Partnership 404 2013)
- Article 1797. The 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.
In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he
may have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the industrial
partner shall receive such share as may be just and equitable under the circumstances. If besides his services he
has contributed capital, he shall also receive a share in the profits in proportion to his capital. (1689a)
Art. 1793. A partner who has received, in whole or in part, his share of a partnership credit, when the other partners have
not collected theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital
what he received even though he may have given receipt for his share only
Z was not yet insolvent in this case so C cannot compel A and B to return to the partnership capital their share of the
partnership credit.
Scenario 2: December came of that year, and everybody was not contented with what they were earning so they decided
to dissolve the partnership. Upon liquidation, they discovered that although they had no more assets, they still had
receivables. Same thing happened, 3 promissory notes, each of them got one worth 10,000 each. Division of promissory
notes as follows:
B and C were able to collect, but A failed to collect. Upon failure of A to collect, he discovered that he can’t
collect from Q since he was insolvent. What can A do now?
Notes of the Warrior (Partnership 404 2013)
- 2 schools of thought
1. Return share of partnership credit collected by respective partners to the partnership capital to divide
proportionately among the partners
- Return to partnership capital since partners share in profits and losses, therefore partner who
failed to collect should distribute loss to other partners
How much is an industrial partner entitled to collect as to his share of the profits?
- Art. 1797. The 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.
In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may
have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the industrial partner
shall receive such share as may be just and equitable under the circumstances. If besides his services he has
contributed capital, he shall also receive a share in the profits in proportion to his capital. (1689a)
- so industrial partner receives a share that is just and equitable under the circumstances
- industrial partner doesn’t share in the losses as well
o he shouldn’t share in the losses since he already contributed all of his service or industry, he is in effect not
being paid for these services
Scenario 3: A partnership of A, B, and Iearned 9 million in profits, how much should the C, the industrial partner receive?
- the industrial partner should receive as much as is just and equitable under the circumstances
In the preceding question, what if these were the profits only from Jan-Nov, and in December the partnership lost
ALL of its profits. How much should the I, industrial partner share?
- as far as losses are concerned, the industrial partner still shouldn’t share in the profit
- if share in profits were to be collected only on December, then the industrial partner shouldn’t receive
anything since there was no longer any profit
How can I, the industrial partner, protect his share of the profits then? This time the industrial partner entered
into another partnership with the same setup, but now I asks you what he can do to protect his share of the
profits.
- Stipulate in articles of partnership as to when the industrial partner can get his share of the profits
- This is what the industrial partner can do to protect his share in the profits
o In the present example, I was getting his share of the profits on a quarterly basis. This way, I would
not lose all his share in the profits when losses occur at the end of the year.
- Art. 1799. A stipulation which excludes one or more partners from any share in the profits or losses is void.
(1691)
- Meaning, the stipulation is void, but the partnership still subsists. So the share in the losses then would be:
Scenario 4: C joins the partnership. There is a new partnership. (A, B, I and C). C assures “don’t worry, I will be your
partner. But if there are losses, I will fully assume all the losses” They have assets of 8 million, but they have liabilities
worth 15 million. There is a loss of 7 million. Creditor X was the supplier of the goods for the partnership.
Under the law: Art. 1799. A stipulation which excludes one or more partners from any share in the profits or losses is
void. (1691)
Meaning, the stipulation is void, but the partnership still subsists. So the share in the losses then would be:
Stipulation for exclusion from losses: Other authors are of the opinion that such a stipulation that would exclude one
or more of the partners from sharing in the losses is binding among partners.
As to creditors: The creditor could collect from either partner. With regards to the creditor’s perspective, it is immaterial
whether or not there is such stipulation between partners. Insofar as third parties are concerned, such stipulation is not
binding. (the Law is intended to protect third parties)
What is a Manager?
* He manages the operation of the partnership. It includes preserving the assets, the power to hire, managing the day to
day business. HE PERFORMS ACTS OF ADMINISTRATION as distinguished from acts of ownership.
We earlier said that the articles of partnership is the basic contract among the partners and you know the
appointment of the manager whose name was indicated in the articles inspite of the contract. How will he be
removed? Simplify.
*Appointment designated in the articles of partnership: Controlling Interest PLUS Lawful Cause
*Appointed afterwards: Controlling Interest WITH OR WITHOUT Cause
Scenario 5: Managing partner with barong with coat and tie, wants to paint the office building BLACK, 2 barrels of black
paint. What is the extent of power of a partner designated as manager in the articles? Can his decision be opposed? We
are not talking about revocation, but certain acts of administration which can be opposed.
*Art. 1803 (2) None of the partners may, without the consent of the others, make any important alteration in the
immovable property of the partnership, even if it may be useful to the partnership. But if the refusal of consent by the
other partners is manifestly prejudicial to the interest of the partnership, the court's intervention may be sought. (1695a)
*The power may be opposed when he makes an alteration of the immovable; And if CLEARLY PREJUDICIAL to the
interest of the partners.
- The partnership will be exposed to potential liabilities from the injuries that the customers will encounter. No need
to prove bad faith since the partnership is exposed to liabilities and the partnership cannot be tolerated to
continue with the decision.
Scenario 6:
A (Managing Partner) was an environmentalist = wanted green paint
B (Managing Partner) was a loyalist to the administration = wanted yellow paint
C (Managing Partner) was a virigin = wanted white paint
E voted with A
D voted with A
* A convinced E and D to choose green paint.
Do we now have a green building?
Notes of the Warrior (Partnership 404 2013)
- In cases when there is a tie, the majority that is contemplated under the law is not the majority of the number of
number of partners but it is then based on the majority of the partners with controlling interest.
Controlling interest?
- Depending on the partner’s capital contribution
Since we can’t determine yet the contribution, do we now have the majority?
- Majority “OF” the partners? Yes, A, E, D voted for green, 3 partners out of the 5.
- Is it important here? No, since what we are trying to look for is the controlling interest.
In the scenario above, we do not know who has the controlling interst.
Since Managing Partners A,B, C are tied in their votes, we now go to the determination of controlling interest.
Additional data as to controlling interest:
A contributed 10%
B contributed 10%
Ccontributed 10%
Dcontributed 10%
Econtributed 50%
**Giro si Paul Blanco, kuwangan daw ug 10%...
- A, E, and D has the controlling interest since they control more than 50% of the partnership.
Art. 1802. In case it should have been stipulated that none of the managing partners shall act without the consent of the
others, the concurrence of all shall be necessary for the validity of the acts, and the absence or disability of any one of
them cannot be alleged, unless there is imminent danger of grave or irreparable injury to the partnership.
Up to 1814
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Notes of the Warrior (Partnership 404 2013)
Partner X who had a meeting among the partners and learned that the partners wanted to buy a beach. After the
meeting, X went to the owner of the beach lot and instead convinced the owner to sell it to himself. Remember
that partners are prohibited in certain types of business. What are these prohibitions?
- Capitalist Partner
o Unless the partners consent, he is prohibited from engaging in a business that is of the same kind and is
competitive with the partnership business
o Prohibition is relative
- Industrial Partner
o Unless the partners consent, he is prohibited from engaging in any type of business
o Prohibition is absolute
What can the partnership do if a partner/s engages in a business that is prohibited by the partnership?
- Industrial partner
o Art. 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly
permits him to do so; and if he should do so, the capitalist partners may either exclude him from the
firm or avail themselves of the benefits which he may have obtained in violation of this provision,
with a right to damages in either case. (n)
- Capitalist partner
o Art. 1808. The capitalist partners cannot engage for their own account in any operation which is of the
kind of business in which the partnership is engaged, unless there is a stipulation to the contrary.
Any capitalist partner violating this prohibition shall bring to the common funds any profits accruing to
him from his transactions, and shall personally bear all the losses. (n)
Going back to earlier problem, (Partner X had a meeting among the partners and learned that the partners wanted to
buy a beach. After the meeting, X went to the owner of the beach lot and instead convinced the owner to sell it to himself.
Remember that partners are prohibited in certain types of business.) What can the partnership do if X was a capitalist
partner?
- It doesn’t matter here whether X is an industrial partner or a capitalist partner since he did not engage in a
prohibited business. Instead, he engaged in a single transaction. X acts as a trustee for the partnership
o Art. 1807. Every partner must account to the partnership for any benefit, and hold as trustee for it
any profits derived by him without the consent of the other partners from any transaction connected
with the formation, conduct, or liquidation of the partnership or from any use by him of its property. (n)
- In case of conflict of interest between the partner and the partnership, the interest of the partnership must prevail
o X knew that the partnership wanted to acquire the beach lot; instead he purchased it for himself.
o X should therefore offer it to the partnership, however the partner can ask for the reimbursement of his
purchase price
If X didn’t offer the beach lot to the partnership, but instead sold it to another person, what should X do in view of
Art. 1807?
- X should give the profit to the partnership, and retain the principal or purchase price
Notes of the Warrior (Partnership 404 2013)
____________________________________________________Read up to Art.
1814___________________________________________________
- Art. 1804. Every partner may associate another person with him in his share, but the associate shall not be
admitted into the partnership without the consent of all the other partners, even if the partner having an
associate should be a manager. (1696)
- Take note that the associate and assignee are different, they have different rights
o Art. 1813. A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the
partnership, or, as against the other partners in the absence of agreement, entitle the assignee, during
the continuance of the partnership, to interfere in the management or administration of the partnership
business or affairs, or to require any information or account of partnership transactions, or to inspect the
partnership books; but it merely entitles the assignee to receive in accordance with his contract the
profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the
management of the partnership, the assignee may avail himself of the usual remedies.
In case of a 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 to by all the partners. (n)
Between the partner and the assignee, who has better rights?
1. he has the right to receive the profits entitled to the assigning partner
2. in case of fraud in management of the partnership, the assignee can avail of the usual remedies
3. receive the assignor’s interest in case of dissolution of the partnership
4. ask for a formal account from the the date of the last account agreed to by all the partners
- the partner can use specific partnership property if it’s intended for partnership purposes
o unless if the partners consent when partner uses specific partnership property for other purposes
What do we mean when a partner has a right in his interest in the partnership?
o Art. 1812. A partner's interest in the partnership is his share of the profits and surplus. (n)
As distinguished from an assignee and a mere associate, a partner, among others, exercises certain rights. What
could these rights be? As a partner.
- reimbursement for advances made and indemnity for risk assumed (Art. 1796)
- right to access and inspect partnership books (Art. 1805)
- right to true and full information of all things affecting partnership (Art. 1806)
- right to a formal account of partnership affairs under certain circumstances (Art. 1809)
- right to dissolve the partnership under certain circumstances (Art. 1830-1831)
If a partner is already dead, can he demand TRUE AND FULL INFORMATION? Is there a way that formal
accounting can be asked in behalf of the deceased partner?
- Yes, through LEGAL REPRESENTATIVE. His ESTATE can be represented through legal representatives.
1. ADMINISTRATOR – The decedent died intestate / WITHOUT A WILL and the court appointed a person to
administer his estate.
2. EXECUTOR – The decedent died testate and the testator designated a person (EXECUTOR) through his WILL.
Ms. Abasolo had a FUNERAL partnership with Mr. Sotto (I think Fucsonnisiya). One day Mr. Fucson, on a special
holiday, want to treat his family to Oslob to watch the butandings. Of course he needed the car. He checked for
the schedule, and no deliveries were for that day. So some cars were scheduled for washing. Fucson said he will
use the other car. The family/children enjoyed the butandings. After the trip, going home, Fucson hit a
pedestrian.
1st question, can Fucson be required to pay rentals for the car? It was a holiday.
- Yes because the property right is only for the beneficial use of the partnership; UNLESS partners
agreed/consented.
In another question, the pedestrian was hospitalized. The lawyer sent 3 demand letters, to Fucson, to Abasolo,
and to the Partnership. Who could be held liable of the three (sir asked Bryce)?
- The partnership will be liable even though it was a personal undertaking by the partner. Respondeat superior &
the registered owner rule.
When the judgment becomes final, the execution comes next. When the sheriff went to Fookson, he no longer
have any assets. Can the Sheriff go against the partnership?
- The sheriff cannot go after the specific partnership property of the Partnership.
- The judgment creditor can apply a charging order before the court.
2 Options:
- Execute against judgment debtor
- Go after the interest of the judgment debtor in the partnership via a charging order.
o The interest of the judgment debtor shall be applied up to the extent of the obligation in the judgment
order.
The sheriff thought that it will be a tasking process. He prefers to auction the car, apply the proceeds and return
the excess to the partnership, can he do that?
- The sheriff cannot since the partner's right in specific partnership property is not subject
Notes of the Warrior (Partnership 404 2013)
- to attachment or execution, except on a claim against the partnership. (Art. 1811 par 3)
- EMPHASIS: Specific partnership property can be attached if the claim is against the partnership.
- Specific partnership property cannot be attached to answer for personal liabilities incurred by the partners.
Assuming now that there was a Motion for Recon, the court now held the partnership liable. The sheriff wanted to
execute the decision against the partnership, what can he do?
- The sheriff can now attach the specific property of the partnership already. Therefore, partnership property can be
made liable for the obligations of the partnership himself.
Gen. Rule: Sheriff cannot attach the specific partnership property because it cannot be subject to personal liability or to
answer for personal obligations of the partner.
If the partner’s personal property cannot satisfy the claim, how could the sheriff proceed?
So every time there is sharing of profits, the sheriff will be there. You don’t want him to be there every time there
is sharing because the sheriff is so hasul. Hambugero ra ba kayo. What can you do to avoid the sheriff going the
office and creating a scene?
So how about the right to manage, can you offer this as a collateral?
- No, because the right to manage is not assignable. The right to participate in management is solely given to the
partners.
One day, one partner decides to leave for the US, leaving his business. Because he needed money to buy ticket
for his trip, he decided to assign his interest in the partnership. 2 months after, he found work there with 1,500
people under him. So he has started a new life there, but all along he has assigned his interest over the
partnership. Is he still in business?
- yes, because the partner still has other property rights over the partnership, namely:
o right to specific partnership property
o right to participate in the management
When a partnership is dissolved, and there are more assets than liabilities, can the partnership satisfy its
obligations? Who are the potential claimants of the partnership?
Notes of the Warrior (Partnership 404 2013)
- yes, the partnership can satisfy its obligations when it has more assets than liabilities
o partnership creditors
as to partnership assets or properties, partnership creditors enjoy preferred status over creditors
of partners
ex. When a partner is liable to a person due to acts of a partner for partnership purposes
o creditors of partners
- Art. 1814. Without prejudice to the preferred rights of partnership creditors under Article 1827, on due
application to a competent court by any judgment creditor of a partner, the court which entered the judgment, or
any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of such
judgment debt with interest thereon; and may then or later appoint a receiver of his share of the profits, and of any
other money due or to fall due to him in respect of the partnership, and make all other orders, directions, accounts
and inquiries which the debtor partner might have made, or which the circumstances of the case may require.
The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the
court, may be purchased without thereby causing a dissolution:
Nothing in this Title shall be held to deprive a partner of his right, if any, under the exemption laws, as regards his
interest in the partnership. (n)
- after the debts to partnership creditors are satisfied, debts due to creditors of partners can now be satisfied with
the surplus or the profits
o this is because what is left after liabilities are paid are assets available to distribution among the partners,
in other words what remains are part of the surplus or the interest of the partners
Assuming Fiona is a partner, married, and has a child, is the partnership obliged to support her child?
- Art 1811(4)
o A partner's right in specific partnership property is not subject to legal support under Article 291. (n)
Art. 1815. Every partnership shall operate under a firm name, which may or may not include the name of one or
more of the partners.
- What can be subject to legal support, instead, is the interest of a partner in the partnership
o Since it already pertains to the partner and does not affect the partnership
_________________________________________________________________________________________________
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Those who, not being members of the partnership, include their names in the firm name, shall be subject to the
liability of a partner. (n)
That is the only way to distinguish the partnership not only as to other partnerships but also to the partners themselves.
On the other hand, there are some responsibilities that will follow if your name is part of the partnership
(2nd par)
Moral lesson?
Never allow your name to be used in a partnership name
Art. 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the
partnership assets have been exhausted, for the contracts which may be entered into in the name and for the
account of the partnership, under its signature and by a person authorized to act for the partnership. However,
any partner may enter into a separate obligation to perform a partnership contract. (n)
So talking now of liabilities to third persons, what is the extent of the liabilities of the partners?
Notes of the Warrior (Partnership 404 2013)
Their liability extends to the personal properties including the industrial partner
That is the distinguishing factor between a partnership and a corporation because in a corporation…
The liabilities of the stockholders are limited to whatever their stockholdings are whereas in a partnership the liability of
the partners extend beyond their capital contributions and extends even to their personal properties.
The nature of the liability of the partner is SUBSIDIARY or SECONDARY as distinguished from PRIMARY or DIRECT.
When you say PRIMARY liability, that person is DIRECTLY liable without going to anyone else as distinguished
from SUBSIDIARY which means the person subsidiarily liable will only be held liable if the person primarily liable
is insolvent.
Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, xxxx the contract is called a
suretyship.
GUARANTY SURETY
Guarantor is subsidiarily liable Surety is solidarily and principally liable
It shall be PRO-RATA. When we say pro-rata, it means jointly as distinguished from solidary.
It means that any creditor can demand for the whole obligation
Joint creditor?
So that if X, Y and Z are the SOLIDARY DEBTORS of A, B and C who are SOLIDARY CREDITORS for P9000, How
much can A demand from X?
P9000
Solidary Debtors X A Solidary
Creditors
Y B
Z C
X A
Solidary Joint Debtors
Creditors P3000
Y B
P3000
Z C
All P1000
Y B
Z C
NOTE: Para sayun, X, Y, and Z can demand P1000 each from A, B, and C
What is the reason why it should be equal and not in proportion? Why according to the number of partners, not
according to capital contribution?
Because if we apply liabilities in proportion to their contribution, insofar as third parties are concerned, it will be limited
only to the capitalist partner and the industrial partner cannot be held liable. Whereas if we apply per partner, third
persons are protected since industrial partners are also liable. We have to make everybody liable including the industrial
partner.
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Art. 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of
the partnership or with the authority of co-partners, loss or injury is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting
or omitting to act. (n)
Notes of the Warrior (Partnership 404 2013)
May the partnership creditor still go after a partner who is exempted based on the partnership agreement?
- Any stipulation which excludes the partner from losses shall be void as regards to third person but it shall be valid
between partners.
- The creditor can still claim against the exempted partner and such partner shall have the right to reimbursement
from the other partners.
The partnership assets are already depleted, and they still have an obligation of 10M. Can the creditor still
collect?
- Yes, the creditor can still collect. Not from the partnership but can claim directly against the personal assets of the
partners.
Now we agree when we say that the 10M obligation against the zero partnership assets is now considered a
LOSS. Can the creditor in that loss of 10M still go after the industrial partner?
- First, we distinguish first what is LOSSES vis-à-vis LIABILITIES.
o An industrial partner is exempted from the LOSSES of the partnership however he may still be obliged to
pay for LIABILITIES.
o We refer to liabilities as settlement of affairs against 3rd persons and losses refer to settlement of affairs
among the partners themselves.
- Even we refer to the 10M as losses, it is in the nature of a liability since this is an obligation towards 3 rd persons
but subject to the right of reimbursement of the industrial partner.
- Rule: For LIABILITIES, third persons can go after the partners subsidiarily including the industrial partner.
Exemption from losses from liabilities would concern only the partners. Insofar as the public is concerned, there is
no exemption. The reason being – to protect third parties.
Part 2
What are the basic rights of a partnership, among others?
- To HOLD PROPERTIES in the name of the partnership, normally.
There are instances where the property is registered in the name of?
1. The partnership
2. the name of one or more but not all the partners
3. is in the name of one or more or all the partners, or in a third person in trust for the partnership
4. In the name of ALL the partners
If it is in the name of partnership, there’s no problem. But if it is not in the name of the partnership, what will the
problem be?(blurry ang tingog ni Georfo)
Conveyances;
1. Property might be in the name of the partnership but conveyed in the name of one or some of the partners
2. Title in the name of the partnership but conveyed in the name of one partner
3. Title in the name of one or more but not all partners, but conveyed in the name of one partner
4. Title in the name of one or more partners conveyed by a partner whose name appears in the title.
GENERAL RULE: Partner is an agent of the partnership, thus a partner can generally bind the partnership.
Notes of the Warrior (Partnership 404 2013)
If the property sold by the partnership was a parcel of land and the partnership IS ENGAGED IN DEVELOPMENT
of real properties, selling of subdivision lot: will that be entitled to unanimous consent?
- No. Because it is the usual business.
However if the property sold by the partnership engaged IN SELLING DRUGS (LEGAL DRUGS) and their only
property is in Colon and they decided to sell it?
- Yes, unanimous consent is necessary. If everybody consents then that is a valid sale.
-Problem arise when not everybody signs
If property is in the name of the partnership, how should it be conveyed? In the name of the partnership! If not in
the name of the partnership, it will be invalid, unless?
- It is in the usual business of the partnership
- Authorized transaction by the partners or the partners consented
If there was no consent, if only one of the partners sold but sold it in the name of the partnership?
Partnership can recover! Although sold in the name of the partnership, the partner was not authorized.
However? Let’s have it again. (summary)
Situation no. 1
Property in the name of partnership, partner sells property in behalf of the partnership ,
- There is transfer of ownership, but the partnership can recover, provided the buyer PARTNER HAVE NO
AUTHORITY , KNOWS LACK OF AUTHORITY , and CONVEYANCE IS NOT IN THE USUAL BUSINESS.
Part 3 – 4
If you keep asking if one partner if he has authority, it is inconsistent with normal business behavior. Once
Conveyed, it transfers title, unless:
1. Not usual business
2. No authority
3. Buyer is aware of the partner’s inauthority
Situation no. 2: Property is in the name of some but not all of the partners (in the name of A,B,C but owned by
partnership, A,B,C,D,E) transferred was signed by the partners whose name is in the title. (only A,B,C,). What is
the effect of the sale?
- Valid Transfer
- However, Partnership can recover if the sale is :
Situation no. 3: Property is in the name of the partnership, conveyance/sold by one of the partner in his own
name.
-Transferred is only the equitable title provided that it is in the usual business of the partnership.
Situation no. 4: Property is in the name of all the partners and sold in the name of all the partners
-No problem. Prefect sale.
Situation no. 5 Otero and Fiel Partnership; Funeral Parlor: The Wife of Mr. Fiel sued him for biga-me(hehehe),
Wife wanted somebody to testify that one time somebody went to the F. Parlor wearing shortest short and was
looking for fiel and mr. fiel invited her in one of the empty boxes in the funeral parlor. Wife knew this and wanted
you to testify. Do you think what you will say will bind the partnership?
General Rule: person is not bound by act, admission, or statement of another of which he has no knowledge or to
which he has not given his consent
Situation No. 6: BIR investigated Mr. Fiel because his income tax returns are false. He only declared 10M when
the truth of the matter is he earns more that and you were summoned to testify. You testified that the partnership
earns 50M a month, I know this bec. I share. And BIR proceeds to prosecute Mr. Fiel. Later on BIR go against the
partnership and sue the partnership for tax deficiency by using your testimony, what happens now? Can Mr. Fiel
avail of the defense that the testimony of Ms. Otero cannot bind the partnership?
Knowledge of the partner acting in the particular matter acquired while a partner
Knowledge of the partner acting in the particular matter then present to his mind
Knowledge of any other partner who reasonably could and should have communicated it to the acting
partner
Scenario 7: Mipps was offered to buy a lot but he refused because he discovered that there were 50 squatters
residing in that property. 5 months after, he joined the partnership of Otero and Olvis. Otero, Olvis, Similliano
Partnership. The partnership was looking for a parcel of land, and learned about the availability of the
aforementioned property and decided to buy the same. Mipps omitted to inform the partnership about the
squatters. Company acquired the property, later on Otero learned about the squatters and instituted and action
for the rescission of the contract of sale. If you were the owner, will you return the property?
Two Views:
1. Knowledge acquired before he became a partner does not bind the partnership
2. Notwithstanding when the knowledge was acquired, as long as it is present in the mind of the partner, binds
the partnership for the reason that he is duty bound to inform the partnership. (View subscribed by Sir E.)
Part 5
Art. 1825. When a person, by words spoken or written or by conduct, represents himself, or consents to another
representing him to anyone, as a partner in an existing partnership or with one or more persons not actual
partners, he is liable to any such persons to whom such representation has been made, who has, on the faith of
such representation, given credit to the actual or apparent partnership, and if he has made such representation
or consented to its being made in a public manner he is liable to such person, whether the representation has or
has not been made or communicated to such person so giving credit by or with the knowledge of the apparent
partner making the representation or consenting to its being made:
(1) When a partnership liability results, he is liable as though he were an actual member of the partnership;
(2) When no partnership liability results, he is liable pro rata with the other persons, if any, so consenting to the
contract or representation as to incur liability, otherwise separately.
When a person has been thus represented to be a partner in an existing partnership, or with one or more persons
not actual partners, he is an agent of the persons consenting to such representation to bind them to the same
extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the
representation. When all the members of the existing partnership consent to the representation, a partnership act
or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons
consenting to the representation. (n)
What is estoppel?
- A bar which precludes a person from denying what he has earlier represented
- No longer allowed to deny what you have said before
- Indirectly represents himself when he consents to another person representing him to be a partner to an existing
or non-existing partnership
Here is mipps, comes to josie, and says “I am a partner of lim, and I will supply to you bananas”. There is no
existing partnership here. Is he a partnership by estoppel?
- Yes, he is a partner by estoppel since Mipps represented himself as a partner with Mr. Lim
o A partner by estoppel can either be a partner by estoppel in an EXISTING or NON-EXISTING partnership
If he represents himself to be a partner of a non-existing partnership, there are 6 of them and one says “we are all
partners” are they a partnership by estoppel?
- no, they are just grouping themselves as partners when in fact they are not
- they are not even a partnership by estoppel because there is no partnership to talk about
- however, they are all liable as partners by estoppel; liable as a group of persons jointly