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PARTNERSHIPS
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Prepared by: Raymond Andes, May 2010
Sources: Based on the New Cii! Code o" the Phi!ippines, much o" this wor# was ta#en "ro
$e!en Area!o%s reiewer supp!emented
supp!emented by commentaries by Paras, Suare& and 'o!entin
A!so, some portions,
portions, a!beit minima!, were
were ta#en "rom the reiewer
reiewer prepared
prepared by Rene
Ca!!anta and the reiewer prepared "or the c!ass o" Pro"essor Roberto )io(
Note: 'his reiewer is ori*ina!!y and speci"ica!!y

speci"ica!!y desi*ned "or the pre+reiew pro*ram o"
Accountancy *raduates
*raduates o" Bico!
Bico! niersity c!ass o" 2010 in preparation
preparation "or the -ctobe
CPA Board ./ams( 'he author did not inc!ude a!! topics
topics "or the subect due to the "act tha
the schedu!e was on!y "or one day, which he be!iees
be!iees is not enou*h to coer the entire
subect matter( $oweer, he does be!iee that this reiewer can sti!! be used "or mid+term
purposes as this coers a si*ni"icant
si*ni"icant bu!# o" the topics
topics under partnership(
partnership( .""orts
.""orts are e/e
in order to present the topics in a ery conenient sty!e, enriched with reasons and pers
comments made by the author himse!", "or the ery purpose
purpose o" incu!catin* in the minds
the readers proisions embedded in the Cii! Code "or partnerships and "or easy
understandin*((( J
Definition: It is a contract whereby two or more persons bind themselves to contribute

Definition:
money, property, or industry to a common fund, with the intention of dividing profits am
themselves, or in order to exercise
exercise a profession. – taken from Art. 1! of "ivil
"ivil "ode
#ince partnership is a contract, the general provisions of the "ivil "ode on "ontracts are
applicable. $owever, partnership has certain characteristics that are uni%ue to it. $ence,
has its own separate
separate provisions, in addition to the general provisions on contracts.
Characteristics (What kind of a contract is partnership?)
a. "onsensu
"onsensual
al – perfected
perfected by mere
mere consent.
consent.&
&
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b. 'omina
'om inate has a with
te – has design
designatScribd
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name.
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(repara
(reparatory
tory – its formati
formation
on is followed
followed by other
other contract
contracts s to carry out
out its purpose
purpose
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rouss – involves
involves cons
conside
idera
ratio
tion.
n.
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essential element, however, does not preclude artificial entities such as a

 Sheet Music partnership from forming another partnership.  Q: Can 2 or more corporations
create a partnership? 
c. +here must be la"ful urose – as one of the basic principles of a contract, the
parties have the liberty to create partnership for whatever purpose. $owever, suc
purpose must not be contrary to law, morals, good customs, public order or publi
policy. +his is in conformance with Art. 1-! of "ivil "ode.
Effects of an unla"ful artnershi

i. +he contract is void ab initio and the partnership never existed in the e
of the law
ii. +he profits shall be confiscated in favor of the government – It would b
immoral and unust for the law to permit a profit from an industry
prohibited by it. *esides, if profits are not confiscated, this would only g
incentives to other persons to establish partnerships for the same illega
purpose because even if their contributions /see 02 are confiscated, th
still have earnings or profit, which is basically the reason why they set u
the partnership in the first place.
iii. +he instruments or tools and proceeds of the crime shall also be forf
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in favor of the government
iv. +he contributions of the partners shall not be confiscated unless they f
under 0 Unlock full access with a free trial.
Download With money,

d. +here must be a mutual contribution of Free Trialproperty or industry to a comm
fund.

e. +he purpose is to with
obtain Scribd
rofits and to divide the same among the partners.
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A2
ac%uire and possess property of all kinds
 Sheet Music *2
incur obligations
"2
bring civil and criminal actions
82
can be adudged insolvent even if the individual members be each finan
solvent
. unless he is generally sued, a partner has no right to make a separate appearan
court if the partnership being sued is already represented
R%*ES T# DETER,INE THE E-ISTENCE #& A PARTNERSHIP .Art/ 01234
1. persons who are not partners to each other are not partners as to third persons
6<"6(+I)': (A7+'67#$I( *= 6#+)((6; />$6' 9 persons, who are partners, in
connivance with a friend who is not a partner inform a stranger that said frien
their partner, a partnership by estoppel also result to the end that the stranger
should not be rejudiced2.
9. ")?)>'67#$I( of a property does not itself establish a partnership, even thou

co?owners share in the profits derived from the incident of oint ownership.
./amp!e o" Co+ownership: Rosa!inda Mar*arita owns an apartment in Matno*,

Sorso*on( -n 1131132011, Rosa!inda died, !eain* her apartment to her twin
dau*hters 4ere!yn and 4iri!in where it was stated in her !ast wi!! and testament tha
such property wi!! be shared by them( 'he *ir!s are considered co+owners o" the
property( You're Reading a Preview
+he reason why co?ownership is full
Unlock notaccess
considered
with a freeatrial.
partnership is the fact that it la
some of the essential elements of partnership such as mutual contribution,
to engage in business or rofession and meeting of minds, which is an
Download With Free Trial
essential element of a contract.
. #$A7I' )@ 7)## 76+7'# A;)'6 does not indicate a partnership whether or

the persons sharing them have a oint or common right or interest in any propert
from which the returns are derived
Master your +his
semester withfrom
can also be derived Scribd
the fact that mere sharing of gross returns,if witho
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the essential elements of a partnership, cannot be considered partnership.

. the
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Only of the share in the profits is a strong presumptive evidence of partne
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$)>6B67, no such inference will be drawn if such profits were received in payme
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are exceptions to this general rule.

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6xception: >here immovable roert! contributed, failure to comply wC the followin
re%uisites will render the partnership contract void:
1.2 +he contract must be in a public instrumentD

9.2 An inventory of the property contributed must be made, signed by the parties, an
attached to the public instrument.
An inventory is very important in a partnership to show how much is due from each part
to complete his share in the common fund and how much is due to each of them in case
li%uidation.
+he execution of a public instrument of partnership would be useless if there is no inven

of immovable property contributed because wCo its description and designation, the
instrument cannot be subect to inscription in the 7egistry of (roperty, and the contribut
cannot affect third persons.
$)>6B67: A partnership with a capital of at least (,---, even if none of the properties
immovable, must have the following re%uirements:
1. +he contract must appear in a public instrumentD

9. It must be recorded or registered wC the #6".
$owever, failure to comply wC the above re%uirements does not prevent the formation o
You're
partnership or affect its liability and that ofReading a Preview
the partners to third persons. *ut any partne
granted the right by law to compel each other to execute the contract in a public
instrument. Unlock full access with a free trial.
Purpose of registration – 7egistration is necessary

Download With Free as a condition for the issuance of
Trial
licenses to engage in business and trade. In this way, the tax liabilities of big partnershi
cannot be evaded and the ublic can determine more accuratel! their members
and caital before dealing with them /+7#+ and ")'@I86'"6C+7A'#(A76'"= purpos
C*ASSI&ICATI#NS #& PARTNERSHIPS

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partnership
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a. niversal partnership of all present property – the properties that belon
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partners are ")'+7I*+68 – and said partners becomes ")EE)' (7)(67+=

 Sheet Music properties become ")EE)' (7)(67+=
/owned by all the partners and by the
/owned by them and the partnership2D
'AF68 )>'67#$I( is retained by each o
partnership2
the partners.
)nly those (7)@I+# 867IB68 @7)E A;; (7)@I+# ac%uired by the I'8#+7= o
")EE)' (7)(67+I6# becomes ")EE)' >)7F of the partners become ")EE)'
(7)(67+= except those stipulated. (7)(67+= /regardless of whether or no
said profits were obtained through the
usufruct contributed2.
(ersons who are prohibited by law to give donations cannot enter into a universal
partnership for the reason that each of the partners virtually makes a donation. +o allow
would be permitting them to do indirectly what the law expressly prohibits. ./amp!e:
$usband and 5i"e(
A partnership formed in violation of this article is null and void. "onse%uently, no legal
personality is ac%uired.
A husband and wife, however, may enter into a articular artnershi5 or be membe
thereof.
9. (articular partnership ? A particular partnership is one wCc is neither a universal

partnership of present property nor You're Reading
a universal a Preview of profits.
partnership
+he fundamental difference betweenUnlock fullaaccess with a free

universal trial.
partnership and a particular partner
lies in the scope of their subect matter or obect. In the former, the obect is vagu
and indefinite, contemplating a general business wC some degree of continuity, w
in the latter, it is limited and well?defined, being confined to an undertaking of a
single, temporary, or ad hoc nature.
As to !iabi!it" of the partners –

1.2 eneral with
partnership Scribdof general partners
: one consisting
subsidiarily and sometimes solidaril! wC theirRead Free
separate
who are liable pro rata
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debts.
9.2 ;imited partnership: one formed by two or more persons having as members one
more general partners and one or more limited partners, the latter not being
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As to the !ega!it" of its existence –

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1.2 8e ure partnership: one wCc has complied wC all the legal re%uirements for its
establishment.
9.2 8e facto partnership: one wCc has failed to comply wC all the legal re%uirements fo
its establishment. ./amp!e: a partnership where rea! properties are contributed b
pub!ic instrument was not e/ecuted(
As to representation to others –
1. )rdinary or real partnership: one wCc actually exists among the partners and also
to rd persons.
9. (artnership by estoppel: one wCc in reality is not a partnership, but is considered

partnership only in relation to those who, by their conduct or admission, are
precluded to deny or disprove its existence.
As to pub!icit" –
1. #ecret partnership: one wherein the existence of certain persons as partners is no

avowed or made known to the public by any of the partners.
9. )pen or notorious partnership: one whose existence is avowed or made known t

the public by the members You're
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firm. a Preview
As to purpose – Unlock full access with a free trial.
1. "ommercial or trading partnership:

DownloadoneWith
formed
Freefor the transaction of business.
Trial
9. (rofessional or non?trading partnership: one formed for the exercise of a professio
6INDS #& PARTNERS

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#nder the Ci$i! Code – Read Free Foron
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1. "apitalist partner: one who contributes money or property to the common fundCancel anytime.
9. Industrial partner: one who contributes only his industry or personal service.
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who is not so between the partners themselves.

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5. "ontinuing partner: one who continues the business of a partnership after it ha
been dissolved by reason of the admission of a new partner, or the retirement, de
or expulsion of one or more partners.
H. #urviving partner: one who remains after a partnership has been dissolved by
death of any partner.
%ther c!assifications –
1. )stensible partner: one who takes active part and known to the public as a partne
9. #ecret partner: one who takes active part in the business but is not known to be a
partner by outside parties nor held out as a partner by the other partners. $e is a
actual partner.
. #ilent partner: one who does not take any active part in the business although he
be known to be a partner.
. 8ormant partner: /a.k.a. 3sleeping partner2 one who does not take active part in th
business and is not known or held out as a partner. $e would be both a silent and
secret partner.
G. )riginal partner: one who is a member of the partnership from the time of its
organiation.
!. Incoming partner: a person lately, or about to be, taken into an existing partnersh
a member.
. 7etiring partner: one withdrawn from
You're the partnershipD
Reading a Preview a withdrawing partner.
#'*I(ATI#NS #& THE PARTNERS
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>hen two or more persons form a partnership, different relationships may arise:
1. 7elations among the partners themselvesD
9. 7elations of the partners with the partnershipD
. 7elations of the partnership with third personsD
. 7elations of the partners with third persons.
As a result of these relationships, different obligations and 
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the execution of the contract, which is the birth of a partnership, certain obligations  and
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#'*I(ATI#NS 7ITH RESPECT T# C#NTRI'%TI#N
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delivery – consistent with the proision on "ruits o" ob!i*ations see -b!i*ations(
 Sheet Music . +o preserve said property with the diligence of a good father of a family pending
delivery to the partnership – consistent with the proisions on ob!i*ations3duties
an ob!i*or see -b!i*ations
G. +o indemnify the partnership for any damage caused to it by the retention of the s
or by the delay in its contribution. – consistent with the proisions on the
ob!i*ations3duties o" an ob!i*or see -b!i*ations(
Effect of failure to contribute roert! romised
@ailure to contribute makes the partner a debtor of the partnership even in the absence
any demand.&
*iabilit! of artner for fruits of roert! in case of dela!
'o demand& is necessary to put the partner at fault. +he inury to the partnership is
constant.
Araisal of goods or roert! contributed
Appraisal is necessary to determine how much has been contributed by the partners.
+he appraisal is made:
1. In manner prescribed by contract of partnershipD

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9. If no stipulation, by experts chosen by Reading a Preview
the partners and according to current prices.
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After the goods have been contributed, theaccess with a free trial.
partnership bears the risk or gets the benefit
subse%uent changes of value.
#bligations of industrial artner
An industrial partner is one who contributes his industry, labor or services to the
partnership. $e is considered the owner of his services, which is his contribution to the
common fund.
nless the contrary is stipulated, he becomes a debtor Read Free Foron
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partnership title
for his work or
services from the moment the partnership relation begins. In effect, Not
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an exclusive right to avail itself of his industry. "onse%uently, if he engages in business f
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act is considered preudicial to the interest of the other partners.
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the time or the effort which he will have for it /;imuco v "alinao, "ourt of Appeals case2
 Sheet Music
As regards capita!ist partners – (rohibition extends only to any operation which is of
same kind of business in which the partnership is engaged. Eethinks this prohibition
prevents a partner from competing with the partnership / conflict of interest2.
E8tent of contribution to artnershi caital
(artners can stipulate contribution of une%ual funds to the common fund, but in the abse
of such stipulation, the presumption is that their contribution shall be in e%ual shares.
)bviously, this does not apply to an industrial partner unless he also contributes capital.
effect, he becomes a capita!ist+industria!ist partner .
#bligation of caitalist artner to contribute additional caital
eneral rule: "apitalist partner not bound to contribute more than what he agreed to.
6xcept: In case of imminent loss of the business, and there is no agreement to the contr
he is under obligation to contribute an additional share to save the venture. If he refus
to contribute9 he shall be obliged to sell his interest to the other artners .
&e'uisites for app!ication of ru!e of sa!e of interest–
1.2 Imminent loss of the business of the partnershipD

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9.2 Eaority of capitalist partners are Reading
of the opinion a Preview
that an additional contribution to the
common fund would save the businessD
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.2 "apitalist partner refuses deliberately access with a freehe
because trial.
has no money2 to contribute a
additional share to the capitalD
.2 +here is no agreement that even in case of
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With imminent
Trial loss of the business the part
are not obliged to contribute.
+he industrial partner is exempt. $aving contributed his entire industry, he can do nothin
further.
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– 7efusal of partner to contribute additional share reflects lac
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interest in the continuance of the partnership. It is unust up
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doesnJt also help.
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C#**ECTI#N #& PARTNERSHIP CREDIT
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 Sheet Music .2 +he partner who collects is authoried to manage and actually manages the
partnership.
&eason for app!"ing pa"ment to partnership credit – +he law safeguards the inter
of the partnership by preventing the possibility of their being subordinated by the manag
partner to his own interest to the preudice of the other partners.
+his rule does not apply to partner not authori;ed to manage. >here manner of
management not agreed upon and all partners participate in mgt, every partner conside
managing partner.
&ight of debtor to app!ication of pa"ment – 8ebtor given right to prefer payment o

credit of partner if it should be more onerous to him.
#bligation of artner "ho receives share of artnershi credit
Rule: A partner who has received, in whole or in part, his share of a partnership, when th
other partners have not collected theirs, shall be obliged, if a debtor should thereafter
become insolvent, to bring to the partnership capital what he received even though he m
have given receipt for his share only.
&e'uisites for app!ication of ru!e –
1. A partner has received, in whole or in part, his share of the partnership creditD
You're their
9. +he other partners have not collected Reading a Preview
sharesD
. +he partnership debtor has become insolvent.
&eason for imposing ob!igation to return – the debt becomes a bad debt and is a lo
which must be borne by all partners, including
Download theFree
With partner
Trialwho has already received his
share in the partnership credit, because they have a community of interest and a
proportionate share in profits and losses. It would be unust for that one partner not to sh
in the loss.
Quer"
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Eadam  owes a firm ( 1 million. *ayani @ernando, a partner, towas
vote on
given titleshare of
his
(G--,---, there being only two partners. ;ater, Eadam Useful
becomes insolvent.
Not useful Eust *aya
share the (G--,--- with the other partnerM
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&eason for the ru!e – the partner has the 8+= to secure benefits for the partnershipD
 Sheet Music the other hand, he has the 8+= also not to be at fault. #ince both are duties, compensa
should not take place, the partner being the debtor in both instances. "ompensation
re%uires 9 persons who are reciprocally debtors and creditors of each other. /(aras2
" persona! comment on the reason pro$ided b" Paras – It seems that as a separ
entity, the partnership has the corresponding obligation to remunerate the partnerJs
services. +herefore, there now exist 9 persons /the partnership and the partner2 who are
reciprocally debtors and creditors of each other, which seems to comply with
"ompensationJs re%uirement. $)>6B67, Arevalo stated in the reviewer she prepared th
partner is not the partnershipJs creditor as to its interest. +his statement reinforces (ara
reason but I could not find where Arevalo lifted that concept from and she did not provid
the reason why we cannot consider a partner as a creditor of the partnership. @urthermo
Article 1H!, the article that provides for the obligations of a partnership did not mention
that a partnership has the obligation to remunerate for the services of an industrial partn
which seems to affirm both ArevaloJs statement and (arasJ reason. 8espite all these, I
not satisfied with (arasJ reason so I came up with another reason which is similar as that
the obligation arising from penal offense where compensation would be improper and
inadvisable because the satisfaction of such obligation is imerative. *oth obligations
/obligation arising from a penal offense and obligation of a partner arising from damages
are based on injur! or harm, which makes me think why they should not be set off or
compensated. Eeanwhile, +olentino did not provide any reason at all.
E8cetion: If unusual profits are realied through the extraordinary efforts of the partne
fault, the courts may e%uitably mitigate or lessen his liability for damages. +his rule rests
e<uit!. You're Reading a Preview
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PARTNERS
In the absence of stipulation to theDownload

contrary, With
every partner
Free Trial is an agent of the partnership
the purpose of its business. $ence, the partnership has the obligation to:
1. 7efund amounts disbursed by the partner in behalf of the partnership plus intere
from time expenses made

9. Answer with
for obligations theScribd
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*istribution of !osses –
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1. According to agreement.
9. If no such agreement, but contract provides for share in profits, share in losses in
accordance with profit?sharing ratio, but industrial partner not liable for losses.
. 'o profit?sharing stipulated, losses in proportion to capital contributions, but

industrial partner not liable for losses.
&eason h" industria! partner is exempted from !osses – while capitalist partners
withdraw their capital, the industrial partner cannot withdraw any labor or industry he ha
already exerted. Eoreover, in a certain sense, he already has shared in the losses in that
the partnership shows no profit, this means that he has labored in vain. /taken by (aras
Eanresa2
Prob!em
A partnership was formed with the following contributions:
8ick – G-,---
6ddie – -,---
Namby – 9-,--- O services
N" – services
In 9-11, the partnership gained a profit of 1,9--,---. +he partners believe that both Nam
and N" must receive 1--,--- each You're Reading
year. $ow mucha Preview
would be the share of each partner in
the profitM
Anser
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.09=>>9>>> ? =>>9>>> @
09>>>9>>>4
Dic ? G-P x 1,---,--- Q G--,--- G--,---
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1. If one or more of the managing partners shall oppose the acts of the others, then
 Sheet Music decision of the maority of the managing partners shall prevail. 7ight to oppose c
be exercised only by those entrusted with mgt.
9. In case of tie, matter shall be decided by the vote of the partners owning the
controlling interest.
&e'uisites for the app!ication of the ru!e6
1. +wo or more partners have been appointed as managersD
9. +here is no specification of their respective dutiesD
. +here is no stipulation that one of them shall not act without the consent of all th
others.
7hen consent of other artners stiulated
Concurrence necessar" for $a!idit" of acts – +he partners may stipulate that none o
the managing partners shall act without the consent of the others. In such a case, the
unanimous consent of all the managing partners shall be necessary for the validity of the
acts. +his consent is so indispensable that neither absence nor disability of any one of th
may be alleged as excuse to dispense with re%uirement.
6xception: >hen there is imminent danger of grave or irrearable injur! to the

partnership then a partner may actYou're
aloneReading
withoutaconsent
Previewof partner who is absent or un
disability.
Consent of managing partners not necessar" in routine transactions – +he
re%uirement of written authority refers evidently
Download Withto formal
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Rules "hen manner of management has not been agreed uon
A!! partners considered managers and agents – All partners shall have e%ual rights
the mgt and conduct of partnership affairs. All of them shall be considered mgrs and age
and whatever any one of them may do alone shall bind the partnership. If there is timely
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opposition, however, the matter shall be decided by maority to vote
vote. on this
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consent re'uired for a!teration of immo$ab!e propert" – +he consen
need not be express. It may be presumed from the fact of knowledge of the alteration
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. 7ight to participate in management.

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Nature of artnerBs interest in the artnershi
+he interest of the partner in the partnership has been otherwise described as the net
balance remaining to himD after all partnership debts or claims against it have been paid
the e%uities and accounts between such partner and his copartners have been adusted.
,hare of the profits and surp!us – +he partnerJs interest in the partnership consists
share in the undistributed profits during the life of the partnership as a going concern an
his share in the undistributed surplus after its dissolution.
Profits: the excess of returns over expenditure in a transaction or series of transactions

the net income of the partnership for a given period of time.
,urp!us: the assets of the partnership after partnership debts and liabilities are paid an
settled and the rights of the partners among themselves are adusted. It is the excess of
assets over liabilities. If the liabilities are more than the assets, the difference represents
extent of the loss.
+xtent of the partner-s interest – +he interest in surplus alone wCc remains after t
firmJs debts have been paid and the e%uities between the partner and his co?partners ha
been adusted and the partnerJs share has been ascertained and set apart.
PARTNERSB #'*I(ATI#NS T# THIRD PERS#NS

Re<uirement of a firm name
eaning of ord .firm/: +he name, title, or style under which a company transacts
businessD a partnership pf two or more personsD
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commercial
Trial house. In its common
acceptation, the term implies a partnership. +he term is also used as synonymous with
3company,4 3house,4 and 3concern.4
0mportance of ha$ing a firm name – A partnership must have a firm name under whi
will operate. A firm name is necessary to distinguish the partnership which has a distinct
separate uridical personality from the individuals composing the partnership and from o
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of the partnership name. As a general rule, they may adopt any firm name des
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uses the name of the dissolved partnership or the name of a deceased partner as part
 Sheet Music thereof.
Distinction bet"een a liabilit! and a loss
+he inability of a partnership to pay debt to a  rd party at a particular time does not
necessarily mean that the partnership business, as a whole, has been operated at a loss
+he partnership may have outstanding credits which for the moment may be unavailable
the payment of debts, but which eventually may be realied upon and yield profits more
sufficient to cover all losses.
>hile an industrial partner is exempted by law from losses /as between or among the
partners2, he is not exempted from liability to third person. +he creditor of the firm can s
the partnership, all the partners, including the industrial partner. +he partners are liable
ointly or pro?rata after exhausting the partnership property. ;ater, the industrial partne
who contributed his share may ask for reimbursement from the capitalist partners, unles
there is contrary agreement /8e los 7eyes and "ompania Earitima cases2
*iabilit! for contractual obligations of the artnershi
Partnership !iabi!it" – (artners are principals to the other partners and agents for them
and the partnership. +hey are liable to  rd persons who have dealt with one of them in th
same way that a principal is liable to  rd persons who have dealt with an agent. +he gene
rule is that a partner has the right to make all partners liable for contracts he makes for
partnership in the name and for the account of the partnership.
0ndi$idua! !iabi!it" – A partner, however, may assume a separate undertaking in his na
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himself solidarily liable on a
partnership contract. In such case, the partner is personally bound by his contract even
only the partnership is shown to have derivedWith
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Nature of individual liabilit! of artners
Pro rata – 6%ually or ointly, not proportionately. (ro rating is based on the number of
partners and not on the amount of their contributions to the common fund, subect to
adustment among the partners. 7t wou!d be mind!ess to a!!ow a proportionate share in t
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payment o" ob!i*ations because i" that happens, industria! up to vote wou!d title
end up N-'
payin* he does not hae any contributions in the "orm o"Useful
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secondar" – It is subsidiary or secondary because the partners become
personally liable only after all the partnership assets have been exhausted. +hus, the
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of the creditor, it would be uneasy for him to determine who the industrial partners are a
 Sheet Music who the capitalist partners are. +his is anchored on the remedy given by law to industria
partner that he can recover the amount he has paid from the capitalist partners.
@urthermore, it would also be uneasy for him to determine the capital contributions and
compute the amount he will receive from each partner if the liabilities of the partners be
proportionate.
Stiulation against liabilit!
A stipulation among the partners contrary to the pro rata and subsidiary liability express
imposed by law is void and of no effect insofar as it affects the rights of  rd persons. It is
and enforceable only as among the partners.
Po"er of artner as agent of artnershi
In the absence of an agreement to the contrary, all partners have e%ual rights in the
management and conduct of the partnership business.
As among themse!$es – >hen a partner performs an act within the scope of his actua
implied, or apparent authority, he is not only a principal as to himself, but is also for all
purposes, an agent as to his co?partners or to the partnership, considered as a group.
(rinciple of mutual agency.
As to third persons – ;imitations upon the authority of any one of the partners are not
binding upon innocent rd persons dealing with the partnership who have the right to ass
You're
that every general partner has power Reading
to bind a Preview especially those partners
the partnership
acting with ostensible authority, by whatever is proper for the transaction in the ordinary
and usual manner of the business Unlock
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partnership.
1o dut" to make in'uiries as toDownload

acting partner-s authorit" – rd persons are not
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bound, in entering a contract with any of the partners, to ascertain whether or not the
partner with whom the transaction is made has the consent of the other partners. $is
knowledge is enough that he is contracting with a partner.
Presumption that acting partner has authorit" to bind partnership – +here is a

general presumption that each individual partner is an agent of the firm and that he has
authority to bind the firm in carrying on the partnershipRead Free Foron30 Days
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transactions. this
+he title
presumption is
sufficient to permit  rd persons to hold the firm liable on transactions entered
useful into by any
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+here are t"o re<uisites in order that the partnership will not be liable:
 Sheet Music
a. +he partner so acting has in fact no authorityD and
b. +he rd person knows that the acting partner has no authority.
9. Acts of strict dominion pars( 2 and 8 – @or acts which are not apparently for
carrying on in the usual way of business of the partnership, the partnership is not
bound, unless authoried by a!! the other partners or unless they have abandone
the business. +he general rule is that powers not specifically delegated in a
partnership agreement are presumed to be withheld. n!i#e act 91, it seems tha
!aw does not re'uire kno!edge b"  rd person o" !ac# o" authority in this #ind
act( In addition to acts that are not aarentl! for carr!ing on the usual
of business, Article 1515 enumerates other acts that need other partnersJ
authoriation:
a. Assign the partnership property in trust for creditors or on the assigneeJs

promise to pay the debts of the partnership – reason: "irm wi!! be disso!ed
b. 8ispose of the goodwill of the business – *oodwi!! is a!uab!e property
c. 8o any other act which would make it impossible to carry on the ordinary
business of a partnership – eident!y preudicia!
d. "onfess a udgment – i" done be"ore a case is "i!ed, this is nu!! and oid i" do
!ater, "irm wou!d be eopardi&ed
e. 6nter into a compromise concerning a partnership claim or liability
f. #ubmit a partnership claim or liability to arbitration
g. 7enounce a claim of the You're Reading a Preview
partnership
*iabilit! arising from artnerBsUnlock

tort full
oraccess with aof
breach free trial.
trust
1ature of !iabi!it" – Articles 1599?9 provide

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solidar! liability of the partners a
the partnership to  rd persons for the wrongful act or omission or breach of trust of a par
acting within the scope of the firmJs business or with the authority of his co?partners. +h
true even though the other partners did not participate in, or ratify, or had no knowledge
the act or omission.
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of the partners Scribd
is different from their liability for contractua! obligations as
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defined in Article 151!. $ere, it is solidary, while in ArticleSign151!,
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oint title
and subsidiary
@urthermore, while the liability in Article 151! refers to partnership
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covers the liability of the partnership arising from the "rongful acts or omissions of a
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or omission is called tort when it does not constitute a crime or felony
punishable by law.
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9. $e must be acting in the ordinary course of business, or with the authority of his
 Sheet Music partners even if the act is unconnected with the business.
+he partnership is not liable if the partner acted on his own and not for the benefit of the
partnership in the course of some transaction not connected with the partnership busine
believe that the provisions of Article 1515 apply to this.
#'*I(ATI#NS #& #%T(#IN( AND INC#,IN( PARTNERS
*iabilit! of incoming artner for artnershi obligations
3imited to his share in partnership propert" for existing ob!igations – >hen a

partner is admitted as a partner into an existing partnership, he is liable for all obligation
existing at the time of his admission as though he was already a partner when such
obligations were incurred. @or such obligations, his liability is limited to his share in the
partnership property, unless there is a stipulation to the contrary.
+xtends to his separate propert" for subse'uent ob!igations – )nly those who w
already partners at the time when the obligations were incurred are liable with their
separate property. @or all the obligations accruing subse%uent to the admission of the ne
partner, all the partners are liable with their separate properties.
Rights of e8isting and subse<uent creditors
6xisting and subse%uent creditors have e%ual rights as against partnership property and
separate property of the previouslyYou're Reading
existing a Preview
members of the partnership while only
subse%uent creditors have rights against the separate estate of the newly admitted part
*iabilit! of outgoing artner
Contract made before retirement or ithdraa! – >here a partner gives notice of
retirement or withdrawal from the partnership, he is freed from any liability on contracts
entered into thereafter, but his liability on existing incomplete contracts continues. +hus
is liable for goods sold and delivered after his retirement or withdrawal and notice thereo
the same was pursuant to a contract made before such retirement or withdrawal.
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    Partnership Partnership Partnership

Note: 'his reiewer is ori*ina!!y and speci"ica!!y

Definition: It is a contract whereby two or more persons bind themselves to contribute

Characteristics (What kind of a contract is partnership?)

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    Partnership Partnership Partnership

essential element, however, does not preclude artificial entities such as a

Effects of an unla"ful artnershi

Download With money,

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    Partnership Partnership Partnership

R%*ES T# DETER,INE THE E-ISTENCE #& A PARTNERSHIP .Art/ 01234

9. ")?)>'67#$I( of a property does not itself establish a partnership, even thou

./amp!e o" Co+ownership: Rosa!inda Mar*arita owns an apartment in Matno*,

. #$A7I' )@ 7)## 76+7'# A;)'6 does not indicate a partnership whether or

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    Partnership Partnership Partnership

are exceptions to this general rule.

1.2 +he contract must be in a public instrumentD

+he execution of a public instrument of partnership would be useless if there is no inven

1. +he contract must appear in a public instrumentD

Purpose of registration – 7egistration is necessary

C*ASSI&ICATI#NS #& PARTNERSHIPS

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    Partnership Partnership Partnership

partners are ")'+7I*+68 – and said partners becomes ")EE)' (7)(67+=

9. (articular partnership ? A particular partnership is one wCc is neither a universal

+he fundamental difference betweenUnlock fullaaccess with a free

As to !iabi!it" of the partners –

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    Partnership Partnership Partnership

As to the !ega!it" of its existence –

As to representation to others –

9. (artnership by estoppel: one wCc in reality is not a partnership, but is considered

1. #ecret partnership: one wherein the existence of certain persons as partners is no

9. )pen or notorious partnership: one whose existence is avowed or made known t

As to purpose – Unlock full access with a free trial.

1. "ommercial or trading partnership:

6INDS #& PARTNERS

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    Partnership Partnership Partnership

who is not so between the partners themselves.

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    Partnership Partnership Partnership

Effect of failure to contribute roert! romised

*iabilit! of artner for fruits of roert! in case of dela!

Araisal of goods or roert! contributed

+he appraisal is made:

1. In manner prescribed by contract of partnershipD

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    Partnership Partnership Partnership

E8tent of contribution to artnershi caital

#bligation of caitalist artner to contribute additional caital

&e'uisites for app!ication of ru!e of sa!e of interest–

./amp!e o" Co+ownership: Rosa!inda Mararita owns an apartment in Matno,