ATENEO CENTRAL BAR OPERATIONS 2008 Civil Law SUMMER REVIEWER

LAW ON PARTNERSHIP
CHAPTER 1: GENERAL PROVISIONS

$.

0ersonal liability of partners for partnership debts 'OR& O' PARTNERSHIP CONTRACT

PARTNERSHIP - a contract wherein two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividin the profits amon themselves! "see Art. 1767, CC#

GR: 'o special form is re&uired for the validity of a contract. (Art. 1=-!! CHAPTER $: O+LIGATIONS O' PARTNERS Art. 1 :;. A partnership begins from the moment of the execution of the contract, unless it is otherwise stipulated.

General Professional Partnership (Art.1 ! " #$%: Two or more persons may also form a partnership for the exercise of a profession. ELE&ENTS O' A PARTNERSHIP: There shall be a partnership whenever: 1. There is a meeting of the minds; 2. To form a common fund; 3. ith intention that profits (and losses! will be divided among the contracting parties. ESSENTIAL 'EAT(RES: 1. There must be a VALI) CONTRACT. 2. The parties must have LEGAL CAPACIT* to enter into the contract. 3. There must be a mutual contribution of money" property" or industry to a CO&&ON '(N). #. There must be a LAW'(L O+,ECT. $. The purpose or primary purpose must be to obtain PRO'ITS and )IVI)E the same among the parties. %t is also re&uired that the articles of partnership must '(T be )ept *+,-+T among the members; otherwise" the association shall have no legal personality and shall be governed by the provisions on ,(.( '+-*/%0 (Art. 1 -!. ./ept se0ret a1on2 the 1e13ers. 4 secrecy directed not to third persons but to some of the partners QuickTime and a TIFF (U ncompressed) decompressor this 5oes not 1ean that there are needed to see this picture. 0o6l5 3e no 0ontra0t6al relations a1on2st the parties7 there is onl8 no partnership or asso0iation 9ith 5istin0t le2al personalit8

Atty. Villareal: This is not entirely accurate. %t is better to say that its legal life begins from the moment of the perfection of the contract amongst the parties" 5'6+** (T/+- %*+ *T%0564T+2 (e.g. the parties can agree that the partnership is deemed to commence legal existence on a later date!

Exceptions: 1. Where i11o>a3le propert8?real ri2hts are 0ontri36te5 (Art. 1 1! a. 0ublic instrument is necessary b. %nventory of the property contributed must be made" signed by the parties and attached to the public instrument otherwise it is 7(%2 2. When the 0ontra0t falls 6n5er the 0o>era2e of the Stat6te of 'ra65s (Art. 1;<@! 3. Where 0apital is P="<<< or 1ore" in 1one8 or propert8 (Art. 1 $! a. 0ublic instrument is necessary b. 3ust be registered with *+, NOTE: 8enerally" partnerships may be ,('*T%T5T+2 %' 4'9 :(-3 (Art. 1 1!; thus" even if there is no compliance with 4rt. 1;;2" < 1 (contracts of partnership having capital of 0hp3"=== or more in money or property shall appear in a public instrument registered with the *+,!" the ob1ective of which is notice to the public" particularly those interested in dealing with the partnership" there may be a validly existing partnership" save in cases where immovables are contributed where public

CHARACTERISTICS: 1. +ssentially contractual in nature ( Art. 1 ! " 1 :;! 2. *eparate 1uridical personality (Art. 1 !:! 3. 2electus personae #. 3utual 4gency (Art. 1:<=!

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

instrument and inventory necessary. failure to comply with public instrument>registration re&uirement shall not affect liability of partnership and of partners to 3rd persons (Art. 1 $" # $! partners. .he right to choose with whom a person wishes to associate himself is the &er) foundation and essence of that partnership. 0lural form is delectus personarum; this doctrine" however does not apply to a limited partner who merely contributes his interest and is not barred from engaging in competitive business or from transacting business with the partnership as if he were a stranger ( Art. 1:!!" in relation to Arts. 1 :@" 1:<:" an5 1:-;!. &EANING of &(T(AL AGENC* BA00or5in2 to )ean Villan6e>a% %n the absence of contractual stipulation" all partners shall be considered agents and whatever any one of them may do alone shall bind the partnership (Arts. 1:<=B1%" 1:1:! 0artners can dispose of partnership property even when in partnership name ( Art. 1:1@! 4n admission or representation made by any partner concerning partnership affairs is evidence against the partnership ( Art. 1:$<! 'otice to any partner of any matter relating to partnership affairs is notice to the partnership (Art. 1:$1! rongful act or omission of any partner acting for partnership affairs ma)es the partnership liable (Art. 1:$$! 0artnership bound to ma)e good losses for acts or misapplications of partners (Art. 1:$=! (NLI&ITE) LIA+ILIT* BA00or5in2 to )ean Villan6e>a% 4ll partners are liable pro rata with all their properties and after partnership assets have been exhausted" for all partnership debts (Art. 1:1!! 4ny stipulation against personal liability of partners for partnership debts is void " except as among them (Art. 1:1 ! 4ll partners are liable solidarily with the partnership for everything chargeable to the partnership when caused by the wrongful act or omission of any partner acting in the ordinary course of business of the partnership or with authority from the other partners and for partnerAs act or misapplication of properties (Art. 1:$;! 4 newly admitted partner into an existing partnership is liable for all the

Torres >. CA 320 SCRA 42 !"###$ A %&oid' partnership under Article "((3, in relation to Article "((", ma) still be considered a partnership de facto or b) estoppel &is*+*&is third persons, and ma) be considered b) the courts as an ordinar) contract !though not exactl) an %Art. "(-(' partnership$ from which rights and obligations ma) legall) stem. SEC Opinion" 1 ,6ne 1@!<: :or purposes of convenience in dealing with government offices and financial institutions" registration of partnership having a capital of less than 0hp 3"=== is recommended. SEPARATE ,(RI)ICAL PERSONALIT* Art. 1 !:. .he partnership has a /uridical personalit) separate and distinct form that of each of the partners, e&en in case of failure to compl) with the re0uirements of Article "((2, first paragraph. 4s a ?5-%2%,46 0+-*('" a partnership may: 1. ac&uire and possess property of all )inds; 2. incur obligations; and 3. bring civil or criminal actions" in conformity with the laws and regulations of their organi@ation. (See Art. ;!! )ELECT(S PERSONAE A The selection or choice of the person. I1pli0ations: (2ean 7illanueva! The assignment of a partner of his share does not ma)e assignee a partner (Art. 1:<; and 1:1=! QuickTime and a TIFF (U ncompressed) decompressor The existence of the partnership is are needed to see this picture. closely tied.up to the particular contractual relationship of the partners (see instances QuickTime a of dissolution of the and partnership upon TIFF (U ncompressed) decompressor are needed to see this picture. ! change of contractual relationship. Orte2a >. CA 1.R. 2o. "0#24 , 3ul) 3, "##4 Doctrine of Delectus Personae: .he birth and life of a partnership at will is predicated on the mutual desire and consent of the

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %&' of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

obligations of the partnership arising before his 5pon dissolution of the partnership" admission but out of partnership property the partners shall contribute the amounts shares (Art. 1:$!! necessary to satisfy the partnership liabilities 0artnership creditors are preferred (Art. 1:=@B;%" B %! to those of each of the partners as regards the partnership property (Art. 1:$ ! PARTNERSHIP )ISTING(ISHE) 'RO& COAOWNERSHIP AN) CORPORATION +ASIS Creation PARTNERSHIP ,reated by a contract" by mere agreement of the parties /as a 1uridical personality separate and distinct from that of each partner COAOWNERSHIP ,reated by law CORP ,reated by law

3uridical personalit)

'one

/as a 1uridical personality separate and distinct from that of each stoc)holder

5urpose

-eali@ation of profits

,ommon en1oyment of a thing or right 1= years maximum

2epends on 4(%

6uration7 .erm of existence

'o limitation

$= years maximum" extendible to not more than $= years in any one instance *toc)holder has a right to transfer shares without prior consent of other stoc)holders

6isposal7 .ransferabilit) of interest

0artner may not dispose of his individual interest unless agreed upon by all partners

,o.owner may freely do so

5ower to act with 3rd persons 8ffect of death

%n absence of stipulation to contrary" a partner may bind partnership (each partner is agent of partnership! 2eath of partner results in dissolution of partnership

,o.owner cannot represent the co. ownership 2eath of co.owner does not necessarily dissolve co.ownership

3anagement is vested with the Board of 2irectors 2eath of stoc)holder does not dissolve corporation

6issolution

3ay be dissolved at any time by the will of any or all of the partners
QuickTime and a TIFF (U ncompressed) decompressor are needed to see this picture.

3ay be dissolved anytime by the will of any or all of the co.owners 3inimum of 2 persons 'one

,an only be dissolved with the consent of the state 3inimum of $ incorporators :rom date of issuance of certificate of incorporation by the *+,

9 of incor*porators

3inimum of 2 persons

QuickTime and a Commencement of :rom the moment of TIFF (U ncompressed) decompressor are needed to see this picture. /uridical personalit) execution of contract of partnership

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %&) of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

Heirs of Tan En2 Cee >. CA" 1.R. 2o. "2:ctober 3, 2000 ",

Particular partnership distinguished from joint venture A particular partnership is distinguished from /oint &enture, to wit; "$ a /oint &enture !an American concept similar to our /oint account$ is a sort of informal partnership, with no firm name and no legal personalit). <n a /oint account, the participating merchants can transact business under their own name, and can be indi&iduall) liable therefore, and 2$ usuall), but not necessaril) a /oint &enture is limited to a single transaction, although the business of pursuing to a successful termination ma) continue for a number of )ears, a partnership generall) relates to a continuing business of &arious transactions of a certain =ind. <t would seem that under 5hilippine law, a /oint &enture is a !R" of PAR#$ER%&'P , specificall) a particular partnership which has for its ob/ect specific underta=ing. A6r3a0h >. Sanitar8 Wares " 0 SCRA "30 !"# #$ .he Supreme Court has, howe&er, recogni>ed a distinction between these two business forms and has held that although a corporation cannot enter into a partnership, it ma), howe&er, engage in a /oint &enture with others.

0etition by partner will dissolve the partnership when a partner has been declared insane; or the partner has become incapable of performing his part of the partnership contract; a partner has been found guilty of such conduct as tends to affect pre1udicially the partnership business; partner willfully or persistently commits a breach of partnership agreement; the partnership business can only be carried at a loss; other e&uitable reasons (Art. 1:=1! %E( !pinion) *+ April ,--.: .he death of a partner, as a general rule, dissol&es the partnership b) operation of law, except if the articles of partnership stipulate for the continuance of the partnership relations upon the death of any of the partners. %E( !pinion) . August ,--/: <f the remaining partners of the dissol&ed partnership intended for all legal intents and purposes, to continue the partnership business e&en after the death of a partner, there is continuit) of personalit) of the partnership as there exists a ?partnership at will.?

NOTE:

R(LES TO )ETER&INE EDISTENCE O' PARTNERSHIP GR: 0ersons who are '(T partners as between themselves" ,4''(T be partners as to third persons. (Art. 1 !@B1%!

WEACNESSES O' A PARTNERSHIP B)ean Villan6e>a% 0artners are co.owners of the partnership properties and en1oy personal possession (Art. 1:11! 0artners may individually dispose of real property of the partnership even when in partnership name (Art. 1:1@! 2issolution of the partnership can come about by the change in the relationship of the partners" such as when a and partner chooses QuickTime a TIFF (U ncompressed) decompressor to cease being part of the partnership ( Arts. are needed to see this picture. 1:$:" 1:=<B1%B3%! +xpulsion of partner dissolves the QuickTime and a partnership (TIFF Art. ! (U1:=<B1%B5% ncompressed) decompressor are needed to see this picture. 2issolved by the loss of the thing promised to be contributed to the partnership (Art. 1:=<B;%! 2eath" insolvency" or civil interdiction of a partner dissolves the partnership (Art. 1:=< B-%"B!%"B %!

Exception: 0artnership by +stoppel under Art. 1:$OTHER R(LES TO )ETER&INE WHETHER A PARTNERSHIP EDISTS: (Art. 1 !@! 1. ,o.ownership or co.possession does not of itself establish a partnership 2. The sharing of gross returns does not of itself establish a partnership" whether or not the persons sharing them have a 1oint or common right or interest in any property from which the returns are derived; 3. 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" 5'6+** such were received in payment: a. 4s debt by installments or otherwise; b. 4s wages or rent; c. 4s annuity; d. 4s interest on loan;

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+, of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

e. 4s consideration for sale of goodwill of business>other property by installments $. Persons s6fferin2 fro1 0i>il inter5i0tion. =. Persons 9ho 0annot 2i>e 0onsent to a 0ontra0t: a. 3inors b. insane persons c. deaf.mutes who do not )now how to write De 0eon: There is no prohibition for partnerships to be partners" B5T T/%* %* 2(5BT:56 4'2 %30-4,T%,46 on account of 4rt. 1;CD (that a partnership has a /uridical personalit) separate from that of each of the partners$ and of the essential attribute called delectus personae. &A* CORPORATIONS ENTER INTO PARTNERSHIPE Philippine Corporate La9 B$<<1% 38 Dean Villanueva Bp. @<$% citing &arious S8C :pinions: ,orporations may enter into partnership agreements on the following conditions: 1. 4uthority to enter into a partnership relation is expressly conferred by the charter or the articles of incorporation (4o%!" and the nature of the business venture to be underta)en by the partnership is in line with the business authori@ed by the charter or 4o%. 2. %f it is a foreign corporation" it must obtain a license to transact business in the country in accordance with the ,orporation ,ode of the 0hilippines. NOTE: /ow tax law treats the matter: 'otion of partnership no matter how created or organi@ed: a pool of insurance companies was considered a partnership under applicable tax law BAfisco v. (A) G.R. $o. ,,*1/.) 2anuary *.) ,---3 ithout pre1udice to the formation of a 1oint venture 42.". #ua5on v. 6olanos) -. Phil. ,71 4,-.839 Aur:ach v. %anitary ;ares "anufacturing) ,+7 %(RA ,<7 4,-+-33. WHAT &A* +E CONTRI+(TE) 1. must be in e0ual shares unless otherwise stipulated 4Art. ,/-73. 3oney E failure to contribute promised money ma)es the promissory.partner liable

Art. 1 <. A partnership must ha&e a lawful ob/ect or purpose, and must be established for the common benefit or interest of the partners. @hen an unlawful partnership is dissol&ed b) a /udicial decree, the profits shall be confiscated in fa&or of the State, without pre/udice to the pro&isions of the 5enal Code go&erning the confiscation of the instruments and effects of a crime. E''ECTS O' AN (NLAW'(L PARTNERSHIP: 1. The contract is void ab initio and the partnership never existed in the eyes of the law. (Art. 1;<@B1%! $. The profits shall be confiscated in favor of the government. (Art. 1 <! =. The instruments or tools and proceeds of the crime shall also be forfeited in favor of the government. (Art. 1 <" Art. ;-ARPC! ;. The contributions of the partners shall not be confiscated unless they fall under no. 3. (See Arts. 1;11 and 1;1$! NOTE: ?udicial decree is not necessary to dissolve an unlawful partnership. NOTE: That there is no legally constituted partnership 2(+* '(T mean that there are no contractual or legal relations among the parties.

E''ECT O' PARTIAL ILLEGALIT*: 1. here a part of the business of a partnership is legal and a part illegal" an account of that which is legal may be had. 2. here" without the )nowledge or participation of the partners" the firmAs profits in a lawful business have been increased by wrongful acts" the innocent partners are not precluded as against the guilty partners from recovering their share QuickTime a of the profits. ()e Leon" p.and !!
TIFF (U ncompressed) decompressor are needed to see this picture.

WHO &A* +E PARTNERS

(U ncompressed) decompressor GR: 4ny person TIFF capacitated to contract may enter are needed to see this picture. into a contract of partnership. Exceptions: 1. Persons 9ho are prohi3ite5 fro1 2i>in2 ea0h other an8 5onation or a5>anta2e 0annot enter into a 6ni>ersal partnership. (Art. 1 :$! QuickTime and a

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+% of ()*

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not only for the amount promised" but also for interest due and damages arising from the time the former should have complied with his or her underta)ing BArt. 1 :!" # 1% (upon perfection of contract" unless contrary stipulation! . if there is fraud or misrepresentation" action for rescission may be filed and the party entitled to rescind" without pre1udice to any other right" has the right to: a. lien on" or right of retention over" the surplus of partnership property after satisfying partnership liabilities to third persons (for any sum paid by the in1ured partner for the purchase of an interest in the partnership and for any capital or advances contributed by the latter! b. stand in place of creditors of the partnership for any payments made by the in1ured partner in respect of partnership liabilities" after all liabilities to third persons have been satisfied c. indemnity by the guilty partner against all partnership debts and liabilities (Art. 1:=:!; relate to 4rt. 1D31: with or without fraud or misrepresentation" in1ured partner may see) 1udicial dissolution 0roperty E may include intangible or incorporeal" e.g. credit (0im #ong 0im v. Phil. ishing Gear) <,1 %(RA /*+ 4,---3!. . Art. 1 :!" ## 1 an5 $ applies: liable for fruits from the time property should have been delivered without need of demand; also include obligation to preserve the promised property with the diligence of a good father of a family pending delivery. QuickTime and a TIFF (U ncompressed) decompressor %ndustry E may concur with any or both of the are needed to see this picture. first two or in the absence of any one or both of them; manual QuickTime and a and>or intellectual in consideration TIFF (U ncompressed) decompressor needed to see this picture. ofare share in the profits; hence" as generally" partners are not entitled to charge each other 4"arsh=s Appeal) 1- Pa. %t. <73. . F+very partner is bound to wor) to the extent of his ability for the benefit of the whole" without regard to the services of his co. partners" and without comparison of value; for services to the firm cannot" from their very nature" be estimated and e&uali@ed by compensation of differences.G 46eatty v. ;ray) / &arris .,-%. B5T: a partner who has agreed to render special service to the partnership" for the performance of which he is &ualified" and which is one of the inducements for the other members to enter the partnership" was found liable civilly to account for the value of such service upon a finding that he wrongfully refused to perform such service. B5T T/+' 484%'" specific performance not available due to constitutional prohibition vs. involuntary servitude

%ince Art. ,/+1 expressly declares him a de:tor) does this :ar a criminal prosecution for say) estafa) on account of the constitutional prohi:ition vs. non>payment of de:t? Atty. Villareal: 'ot if your legal theory is grounded on criminal liability" since any civil aspect thereof is merely incidental. NOTE: 4 limited partner is not allowed to contribute services" only Fcash or other propertyG BArt. 1:;-%; otherwise" he is considered an Findustrial and general partnerG and thus" not exempted from personal liability. WHEN I&&OVA+LES OR REAL RIGHTS CONTRI+(TE) Art. 1 =. 4 contract of partnership is void" whenever immovable property is contributed thereto" if an inventory of said property is not made" signed by the parties" and attached to the public instrument. GR: :ailure to comply with the re&uirement of appearance in public instrument and *+, -egistration will not affect the liability of the partnership and the members thereof to third persons. (Art. 1 $" # $! Exception: hen I&&OVA+LE PROPERT*? REAL RIGHTS are contributed"

2.

3.

Fp63li0 instr61ent G in>entor8F

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+( of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

made and signed by the parties and attached to the public instrument ( Arts. 1 1 and 1 =! is re&uired for the benefit of third persons. E''ECT O' A+SENCE O' REH(IRE&ENTS (N)ER ARTICLES 1 1 AN) 1 = CON)ITION O' PARTNERSHIP WHERE REAL PROPERT* IS CONTRI+(TE) 'o public %nstrument" 'o %nventory ith 0ublic %nstrument" 'o %nventory propert) contributed, in spite of article "((3 declaring the partnership &oid would not render the partnership &oid when; a. 2: .C<R6 5AR.D <2A:EA86 !since Art. "((3 was intended for the protection of 3rd parties, b. 5artners ha&e FA68 A CEA<F :2 .C8 5AR.28RSC<5 A1R88F82.. CLASSI'ICATIONS O' PARTNERSHIP AS TO EDTENT O' ITS S(+,ECT &ATTER (NIVERSAL PARTNERSHIP a. 5'%7+-*46 04-T'+-*/%0 (: 466 0-+*+'T 0-(0+-T9 . comprises the following: i. 0roperty which belonged to each of the partners at the time of the constitution of the partnership ii. 0rofits which they may ac&uire from all property contributed b. 5'%7+-*46 04-T'+-*/%0 (: 0-(:%T* . comprises all that the partners may ac&uire by their industry or wor) during the existence of the partnership NOTE: 5ersons who are prohibited from gi&ing donations or ad&antage to each other cannot enter into a uni&ersal partnership. (Art. 1 :$! 2. PARTIC(LAR PARTNERSHIPIhas for its o3Je0ts: a. 2eterminate things b. Their use or fruits c. *pecific underta)ing d. +xercise of profession or vocation 1.

+A(TISTA" E.

)E LEON

VOI)

VOI)

VOI) VALI) but either party may compel execution of public instrument so it may be registered in the registry of property; nonetheless" partnership agreement may be enforced (cf. Arts. 1=-! to 1=-:! VALI)

VOI)

'o 0ublic %nstrument" ith %nventory

VOI)

ith 0ublic %nstrument" ith %nventory

VALI)

AS TO LIA+ILIT* O' PARTNERS 1. GENERAL PARTNERSHIPIconsists of general partners who are liable pro rata and subsidiarily and sometimes solidarily with their separate property for partnership debts. LI&ITE) PARTNERSHIPIone formed by 2 or more persons having as members one or more general partners and one or more limited partners" the latter not being personally liable for the obligations of the partnership

!Source: 6ar Revie@ $otes for Partnership 0a@ b) Att). Aillareal$ Atty. Villareal: The safer view is 2e 6eonHs due to his simplified view of statute. QuickTime and a
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2.

NOTE: Torres >. CA 320 SCRA 42 !"###$ QuickTime and a 5artnerships &oid under Art."((3, in relation Art. TIFF (U ncompressed) decompressor are needed to see this picture. "((" ma) still be considered either de facto or estoppel partnerships &is*+*&is third persons, ma) e&en be treated as an ordinar) contract from which rights and obligations ma) &alidl) arise, although not exactl) a partnership under the Ci&il Code. Bailure to prepare an in&entor) of the immo&able

AS TO )(RATION 1. PARTNERSHIP AT WILLIone in which no fixed term is specified and is not formed for a particular underta)ing or venture

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+- of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

which may be terminated anytime by mutual agreement $. PARTNERSHIP WITH A 'IDE) TER& I the term for which the partnership is to exist is fixed or agreed upon or one formed for a particular underta)ing AS TO LEGALIT* O' EDISTENCE 1. 2. )E ,(RE PARTNERSHIPIone which has complied with all the legal re&uirements for its establishment )E 'ACTOIone which has failed to comply with all the legal re&uirements for its establishment 11. 12. 13. 1#. OSTENSI+LEIone who ta)es active part and )nown to the public as partner in the business SECRETIone who ta)es active part in the business but is not )nown to be a partner by outside parties SILENTIone who does not ta)e any active part in the business although he may be )nown to be a partner )OR&ANTIone who does not ta)e active part in the business and is not )nown or held out as a partner

AS TO P(RPOSE 1. 2. CO&&ERCIAL OR TRA)ING PARTNERSHIPIone formed for the transaction of business PRO'ESSIONAL OR NON TRA)ING PARTNERSHIPIone formed for the exercise of a profession

O+LIGATIONS O' THE PARTNERS TO ONE ANOTHER A3 !60'GA#'!$% ! #&E PAR#$ER% A"!$G #&E"%E0VE% 1. PRO&ISE) CONTRI+(TION !:ligations @ith respect to contri:ution of property: a. to contribute at the beginning of the partnership or at the stipulated time the money" property or industry which he may have promised to contribute (Art. 1 :!! b. To answer for eviction in case the partnership is deprived of the determinate property contributed (Art. 1 :!! c. To answer to the partnership for the fruits of the property the contribution of which he delayed" from the date they should have been contributed up to the time of actual delivery (Art. 1 :!! d. To preserve said property with the diligence of a good father of a family pending delivery to partnership (Art. 11!=! e. To indemnify partnership for any damage caused to it by the retention of the same or by the delay in its contribution ( Arts. 1 ::" 11 <! E''ECT O' 'AIL(RE TO CONTRI+(TE PROPERT* PRO&ISE): 1. 0artners becomes ipso /ure a debtor of the partnership even in the absence of any demand (*ee Art. 11!@K1L! 2. -emedy of the other partner is not rescission but specific performance with damages from defaulting partner ( Art. 1 ::! !:ligations @ith respect to contri:ution of

CIN)S O' PARTNERS: 1. CAPITALISTIone who contributes money or property to the common fund 2. IN)(STRIALIone who contributes only his industry or personal service 3. GENERALIone whose liability to 3rd persons extends to his separate property #. LI&ITE)Ione whose liability to 3rd persons is limited to his capital contribution $. &ANAGINGIone who manages the affairs or business of the partnership C. LIH(I)ATINGIone who ta)es charge of the winding up of partnership affairs upon dissolution ;. PARTNERS +* ESTOPPELIone who is not really a partner but is liable as a partner for the protection of innocent 3 rd persons D. CONTIN(ING PARTNERIone who continues the business of a partnership after it has been dissolved QuickTime and a by reason of TIFF (U ncompressed) decompressor the admission ofsee a new partner" are needed to this picture. retirement" death or expulsion of one of the partners QuickTime and a J. S(RVIVING TIFF (U ncompressed) PARTNER decompressor Ione who are needed to see this picture. remains after a partnership has been dissolved by death of any partner 1=. S(+PARTNERIone who is not a member of the partnership who contracts with a partner with reference to the latterAs share in the partnership

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+. of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

money and money converted to personal use: a. To contribute on the date fixed the amount he has underta)en to contribute to the partnership b. To reimburse any amount he may have ta)en from the partnership coffers and converted to his own use To pay for the agreed or legal interest" if he fails to pay his contribution on time or in case he ta)es any amount from the common fund and converts it to his own use CO&PETITIVE +(SINESS IN)(STRIAL PARTNER . cannot engage in business (w>n same line of business with the partnership! unless partnership expressly permits him to do so. (Art. 1 :@! CAPITALIST PARTNER . cannot engage in business (with same )ind of business with the partnership! for his own account" unless there is a stipulation to the contrary. ( Art. 1:<:!

c.

d.

To indemnify the partnership for the damages caused to it by delay in the contribution or conversion of any sum for his personal benefits (See Art. 1 ::! $. 'I)(CIAR* )(T* 4 partnership is a fiduciary relationIone entered into and to be maintained on the basis of trust and confidence. ith that" a partner must observe the utmost good faith" fairness" and integrity in his dealings with the others: a. he cannot directly or indirectly use partnership assets for his own benefit; b. he cannot carry on a business of the partnership for his private advantage; he cannot" in conducting the business of the partnership" ta)e any profit clandestinely; he cannot obtain for himself that he should have obtained for the partnership (e.g. business opportunity! QuickTime and a he cannot carry on another business in competition with the partnership; he cannot avail himself of )nowledge or information which may be properly regarded as the property of the partnership; AGAINST ENGAGING IN
QuickTime and a TIFF (U ncompressed) decompressor are needed to see this picture. TIFF (U ncompressed) decompressor are needed to see this picture.

CONSEH(ENCES I' AN '$DA%#R'A0 PAR#$ER ENGAGES IN AN* +(SINESS: (Art. 1 :@! 1. he can be excluded from the partnership; or 2. the capitalist partners can avail of the benefit he obtained from the business" or 3. the capitalist partners have the right to file an action for damages against the industrial partner" in either case. CONSEH(ENCES I' THE CAPITALIST PARTNER ENGAGES IN A +(SINESS (which competes with the business of the partnership!: 1. he may be re&uired to bring to the common fund the profits he derived from the other business; (Art. 1:<:% 2. he shall personally bear the losses; ( Art. 1:<:! 3. he may be ousted form the partnership" especially if there was a warning. !:ligations @ith respect to contri:ution to partnership capital: a. 0artners must contribute e&ual shares to the capital of the partnership unless there is stipulation to contrary (Art. 1 @<! b. 0artners (capitalist! must contribute additional capital in case of imminent loss to the business of the partnership and there is no stipulation otherwise; refusal to do so shall create an obligation on his part to sell his interest to the other partners (Art. 1 @<! ReM6isites: a. There is an imminent loss of the business of the partnership b. The ma1ority of the capitalist partners are of the opinion that an additional contribution to the common fund would save the business c. The capitalist partner refuses

c.

d.

e. f.

PROHI+ITION

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+& of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

d. deliberately to contribute (not due to financial inability! There is no agreement to the contrary *pecific and determinate things which are not fungible where only the use is contributed -is) is borne by partner

!:ligation of managing partners @ho collects de:t from person @ho also o@ed the partnership (Art. 1 @$! a. 4pply sum collected to 2 credits in proportion to their amounts b. %f he received it for the account of partnership" the whole sum shall be applied to partnership credit ReM6isites: a. There exists at least 2 debts" one where the collecting partner is creditor and the other" where the partnership is the creditor b. c. Both debts are demandable The partner who collects is authori@ed to manage and actually manages the partnership

RULES FOR DISTRIBUTION OF PROFITS AND LOSSES "See Art. 1797#

PRO'ITS @ith @ithout agreement 4ccording to agreement 1. *hare of capitalist partner is in proportion to his capital contribution 2. *hare of industrial partner is not fixed . as may be 1ust and e&uitable under the circumstances LOSSES 4ccording to agreement 1. %f sharing of profits is stipulated . apply to sharing of losses 2. %f no profit sharing stipulated . losses shall be borne according to capital contribution 3. 0urely industrial partner not liable for losses

!:ligation of partner @ho receives share of partnership credit a. (bliged to bring to the partnership capital what he has received even though he may have given receipt for his share only (Art. 1 @=! ReM6isites: a. 4 partner has received in whole or in part" his share of the partnership credit b. The other partners have not collected their shares c. The partnership debtor has become insolvent +EARING THE RISC O' LOSS O' THINGS CONTRI+(TE) (Art. 1 @-! *pecific and determinate things -is) is borne which are not fungible where only and partner QuickTime a TIFF (U ncompressed) decompressor the use is contributed are needed to see this picture. *pecific and determinate things -is) is borne the ownership of which is partnership QuickTime and a TIFF (U ncompressed) decompressor transferred to the partnership are needed to see this picture. :ungible things (consumable! -is) is borne partnership Things contributed to be sold -is) is borne partnership Things brought and appraised in -is) is borne the inventory partnership by by

Art. 1 @@. A stipulation which excludes one or more partners from an) share in the profits and losses is &oid. NOTE: *tipulation exempting a partner from losses should be allowed. %f a person can ma)e a gift to another" there is no sound reason why a person cannot also agree to bear all the losses. (f course" as far as T/%-2 0+-*('* are concerned" any such stipulation may be properly declared void. (2e 6eon" pp. 12#.12$" citing +spiritu and *ibal! RIGHTS AN) O+LIGATIONS WITH RESPECT TO &ANAGE&ENT 5artner is appointed manager in the articles of partnership 0ower of managing partner is irrevocable without 1ust>lawful cause; -evocable only when in bad 7ote of partners representing controlling interest necessary to revo)e power

by by by

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %++ of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

5artner is appointed manager after constitution of partnership 2 or more persons entrusted with management of partnership without specification of duties7stipulation that each shall not act w7o the otherGs consent Stipulated that none of the managing partners shall act w7o the consent of others faith 0ower is revocable any time for any cause +ach may execute all acts of administration %n case of opposition" decision of ma1ority shall prevail; %n case of tie" decision of partners owning controlling interest shall prevail 4bsence or disability of any one cannot be alleged unless there is imminent danger of grave or irreparable in1ury to partnership %f refusal of partner is manifestly pre1udicial to interest of partnership" courtAs intervention may be sought #. henever other circumstances render it 1ust and reasonable 2uty to render on demand true and full information affecting partnership to any partner or legal representative of any deceased partner or of any partner under legal disability 2uty to account to the partnership as fiduciary d.

$.

63 PR!PER#B R'G&#% ! A PAR#$ER 1. /is rights in spe0ifi0 partnership propert8 2. /is interest in the partnership 3. /is right to parti0ipate in the 1ana2e1ent (Art. 1:1<! NAT(RE O' PARTNERNS RIGHT IN SPECI'IC PARTNERSHIP PROPERT* I a partner has an e&ual right to possession which is not assignable and such right is limited to the share of what remains after partnership debts have been paid NAT(RE O' PARTNERNS RIGHT IN THE PARTNERSHIPIa share in the profits and surplus (3 !60'GA#'!$ ! PAR#$ER% ;'#& REGARD #! #&'RD PER%!$% 1. +very partnership shall operate under a firm name. 0ersons who include their names in the partnership name even if they are not members shall be liable as a partner 2. 4ll partners shall be liable for contractual obligations of the partnership with their property" after all partnership assets have been exhausted: a. 0ro rata b. *ubsidiary 3. 4dmission or representation made by any partner concerning partnership affairs within scope of his authority is evidence against the partnership #. 'otice to partner of any matter relating to partnership affairs operates as notice to partnership" except in case of fraud: a. Knowledge" of partner acting in the particular matter" ac&uired while a partner b. Knowledge of the partner acting in the particular matter then present to his mind c. Knowledge of any other partner who reasonably could and

,oncurrence of all necessary for the validity of acts

Fanner of management not agreed upon

1.

2.

4ll partners are agents of the partnership 5nanimous consent re&uired for alteration of immovable property

Other ri2hts an5 o3li2ations of partners: 1. -ight to associate another person with him in his share without consent of other partners (subpartnership! QuickTime and a 2. -ight to inspect and copy partnership boo)s TIFF (U ncompressed) decompressor are needed to see this picture. at any reasonable hour 3. -ight to a formal account as to partnership affairs (evenQuickTime duringand aexistence of TIFF (U ncompressed) decompressor partnership!: are needed to see this picture. a. %f he is wrongfully excluded from partnership business or possession of its property by his copartners b. %f right exists under the terms of any agreement c. 4s provided by art. 1D=;

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+* of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

$. C. should have communicated it to the acting partner 0artners and the partnership are solidary liable to 3rd persons for the partnerAs tort or breach of trust 6iability of incoming partner is limited to: a. /is share in the partnership property for existing obligations b. /is separate property for subse&uent obligations ,reditors of partnership preferred in partnership property L may attach partnerAs share in partnership assets +very partner is an agent of the partnership PARTNER AS AGENT O' into compromise concerning a partnership claim or liability D. *ubmit partnership claim or liability to arbitration J. -enounc e claim of partnership 4cts in contravention of a restriction on authority

;. D.

POWER O' PARTNERSHIP 4cts for carrying on in the usual way the business of the partnership 1.

2.

3.

#. $.

C. ;.

4ct w>c is not apparently for the carrying of business in the usual way 4cts of strict dominion or ownership: 4ssign partnership property in trust for creditors 2ispose of good.will of business 2o an act w>c QuickTime and a TIFF (U ncompressed) decompressor would ma)e are needed to see this picture. it impossible QuickTime and a to carry on TIFF (U ncompressed) decompressor are needed to see this picture. ordinary business of partnership ,onfess a 1udgement +nter

+very partner is an agent and may execute acts with binding effect even if he has no authority 8xcept; when 3rd person has )nowledge of lac) of authority 2oes not bind partnership unless authori@ed by other partners

0artnership not liable to 3rd persons having actual or presumptive )nowledge of the restrictions

E''ECTS O' CONVE*ANCE O' REAL PROPERT* +ELONGING TO PARTNERSHIP Title in partnership name" ,onveyance in partnership name ,onveyance passes title but partnership can recover if: 1. ,onveyance was not in the usual way of business" or 2. Buyer had )nowledge of lac) of authority ,onveyance does not pass title but only e&uitable interest" unless: 1. ,onveyance was not in the usual way of business" or 2. Buyer had )nowledge of lac) of authority ,onveyance passes title but partnership can recover if: 1. ,onveyance was not in the usual way of business" or 2. Buyer had )nowledge of lac) of authority ,onveyance will only pass e&uitable interest

Title in partnership name" ,onveyance in partnerAs name

Title in name of 1> more partners" ,onveyance in name if partner>partners in whose name title stands

Title in name of 1>more>all partners or 3rd person in trust for partnership"

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+' of ()*

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,onveyance executed partnership name if name of partners Title in name of partners" ,onveyance name of all partners in in all in ,onveyance pass title will 2. 3. #. D3 obtained 4vail usual remedies in case of fraud in the management 4s) for annulment of contract of assignment if he was induced to 1oin through any of the vices of consent 2emand an accounting (only in case of dissolution!

PARTNER +* ESTOPPELI by words or conduct" he does any of the ff.: 1. 2irectly represents himself to anyone as a partner in an existing partnership or in a non.existing partnership 2. %ndirectly represents himself by consenting to another representing him as a partner in an existing partnership or in a non existing partnership ELE&ENTS TO ESTA+LISH LIA+ILIT* AS A PARTNER ON GRO(N) O' ESTOPPEL: 1. 2efendant represented himself as partner>represented by others as such and not denied>refuted by defendant 2. 0laintiff relied on such representation 3. *tatement of defendant not refuted LIA+ILITIES IN ESTOPPEL 4ll partners consented to representation 'o existing partnership L all those represented consented; 'ot all partners of existing partnership consents to representation 'o existing partnership L not all represented consented; 'one of partners in existing partnership consented 0artnership is liable 0erson who represented himself L all those who made representation liable pro.rata>1ointly

RE%P!$%'6'0'#B ! PAR#$ER%&'P #! PAR#$ER% 1. To refund the amounts disbursed by partner in behalf of the partnership M corresponding interest from the time the expenses are made (loans and advances made by a partner to the partnership aside from capital contribution! 2. To answer for obligations partner may have contracted in good faith in the interest of the partnership business 3. To answer for ris)s in conse&uence of its management

CHAPTER =: )ISSOL(TION AN) WIN)ING (P )ISSOL(TIONIchange in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business; partnership is not terminated but continues until the winding up of partnership affairs is completed WIN)ING (PIprocess of settling the business or partnership affairs after dissolution TER&INATIONIthat point when all partnership affairs are completely wound up and finally settled. %t signifies the end of the partnership life. CA(SES O' )ISSOL(TION: 1. ithout violation of the agreement between the partners a. By termination of the definite term> particular underta)ing specified in the agreement b. By the express will of any partner" who must act in good faith" when no definite term or particular underta)ing is specified c. By the express will of all the partners who have not assigned their interest> charged them for their separate debts" either before or after the termination of any specified term or particular underta)ing d. By the bona fide expulsion of any

0erson who represented himself liable L those who made>consented to representation separately liable

ASSIGN&ENT O' INTEREST IN PARTNERSHIP 4ssignment is sub1ect to three (3! conditions: QuickTime and a 1. made in good faith TIFF (U ncompressed) decompressor are needed to see this picture. 2. for fair consideration 3. after a fair and complete disclosure of all important information as to its value RIGHTS O' AN ASSIGNEE: 1. 8et whatever assignor.partner would have

QuickTime and a TIFF (U ncompressed) decompressor are needed to see this picture.

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %+) of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

2. partner from the business in accordance with power conferred by the agreement %n contravention of the agreement between the partners" where the circumstances do not permit a dissolution under any other provision of this article" by the express will of any partner at any time By any event which ma)es it unlawful for business to be carried on>for the members to carry it on for the partnership 6oss of specific thing promised by partner before its delivery 2eath of any partner %nsolvency of a partner>partnership ,ivil interdiction of any partner 2ecree of court under art. 1D31 1. With respe0t to partnersI a. 4uthority of partners to bind partnership by new contract is immediately terminated when dissolution is not due to 4,T" 2+4T/ or %'*(67+',9 (42%! of a partner (art 1D33!; b. %f due to 42%" partners are liable as if partnership not dissolved" when the ff. concur: i. %f cause is 4,T of partner" acting partner must have )nowledge of such dissolution ii. %f cause is 2+4T/ or %'*(67+',9" acting partner must have )nowledge> notice $. With respe0t to persons not partners BArt. 1:=;%I a. 0artner continues to bind partnership even after dissolution in ff. cases: (1! Transactions in connection to winding up partnership affairs>completing transactions unfinished (2! Transactions which would bind partnership if not dissolved" when the other party>obligee: (a! *ituation 1 . i. /ad extended credit to partnership prior to dissolution L ii. /ad no )nowledge>notice of dissolution" or (b! *ituation 2 . i. 2id not extend credit to partnership ii. /ad )nown partnership prior to dissolution iii. /ad no )nowledge>notice of dissolution>fact of dissolution not advertised in a newspaper of general circulation in the place where partnership is regularly carried on b. 0artner cannot bind the partnership anymore after dissolution: (1! here dissolution is due to unlawfulness to carry on with business (except: winding up of partnership affairs! (2! here partner has become insolvent (3! here partner unauthori@ed to wind up partnership affairs" except by transaction with one who:

3.

#. $. C. ;. D.

GRO(N)S 'OR )ISSOL(TION +* )ECREE O' CO(RT !Art. " 3"$ 1. 0artner declared insane in any 1udicial proceeding or shown to be of unsound mind 2. %ncapacity of partner to perform his part of the partnership contract 3. 0artner guilty of conduct pre1udicial to business of partnership #. illful or persistent breach of partnership agreement or conduct which ma)es it reasonably impracticable to carry on partnership with him $. Business can only be carried on at a loss C. (ther circumstances which render dissolution e&uitable 5pon application by purchaser of partnerAs interest: 4fter termination of specified term>particular underta)ing 4nytime if partnership at will when interest was assigned>charging order issued E''ECTS O' )ISSOL(TION A. A(THORIT* are needed to see O' thisPARTNER picture. TO +IN) PARTNERSHIP
QuickTime and a QuickTime and a TIFF (U ncompressed) decompressor

TIFF (U ncompressed) decompressor GR: 4uthority of partners to bind partnership is are needed to see this picture. terminated Exception: 1. To 9in5 6p partnership affairs $. Co1plete transa0tions not finishe5

H(ALI'ICATIONS:

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %*, of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

(a! *ituation 1 . i. /ad extended credit to partnership prior to dissolution L ii. /ad no )nowledge>notice of dissolution" or (b! *ituation 2 . i. 2id not extend credit to partnership prior to dissolution ii. /ad )nown partnership prior to dissolution iii. /ad no )nowledge>notice of dissolution>fact of dissolution not advertised in a newspaper of general circulation in the place where partnership is regularly carried on +. )ISCHARGE O' LIA+ILIT* 2issolution does not discharge existing liability of partner" except by agreement between: 0artner and himself person>partnership continuing the business partnership creditors RIGHTS O' PARTNER WHERE )ISSOL(TION NOT IN CONTRAVENTION O' AGREE&ENT: 1. 4pply partnership property to discharge liabilities of partnership 2. 4pply surplus" if any to pay in cash the net amount owed to partners RIGHTS O' PARTNER WHERE )ISSOL(TION IN CONTRAVENTION O' AGREE&ENT: 1. 0artner who did not cause dissolution wrongfully: a. 4pply partnership property to discharge liabilities of partnership b. 4pply surplus" if any to pay in cash the net amount owed to partners c. %ndemnity for damages caused by partner QuickTime guilty and of wrongful a TIFF (U ncompressed) decompressor dissolution are needed to see this picture. d. ,ontinue business in same name during agreed term QuickTime and a e. 0osses partnership property if TIFF (U ncompressed) decompressor are needed to see this picture. business is continued 2. 0artner who wrongly caused dissolution: a. %f business not continued by others . apply partnership property to discharge liabilities of partnership L receive in cash his share of surplus less damages caused by his b. wrongful dissolution %f business continued by others . have the value of his interest at time of dissolution ascertained and paid in cash>secured by bond L be released from all existing>future partnership liabilities

RIGHTS O' IN,(RE) PARTNER WHERE PARTNERSHIP CONTRACT IS RESCIN)E) ON GRO(N) O' 'RA()?&ISREPRESENTATION +* 1 PART*: 1. -ight to lien on surplus of partnership property after satisfying partnership liabilities 2. -ight to subrogation in place of creditors after payment of partnership liabilities 3. -ight of indemnification by guilty partner against all partnership debts L liabilities C. SETTLE&ENT O' ACCO(NTS +ETWEEN PARTNERS ASSETS O' THE PARTNERSHIP: 1. 0artnership property (including goodwill! 2. ,ontributions of the partners OR)ER O' APPLICATION O' ASSETS: 1. Partnership 0re5itors $. Partners as 0re5itors 3. Partners as in>estorsIreturn of capital contribution #. Partners as in>estorsIshare of profits if any ). WHEN +(SINESS O' )ISSOLVE) PARTNERSHIP IS CONTIN(E): 1. ,reditors of old partnership are also creditors of the new partnership which continues the business of the old one w>o li&uidation of the partnership affairs 2. ,reditors have an e&uitable lien on the consideration paid to the retiring >deceased partner by the purchaser when retiring>deceased partner sold his interest w>o final settlement with creditors 3. -ights if retiring>estate of deceased partner: a. To have the value of his interest ascertained as of the date of dissolution b. To receive as ordinary creditor the value of his share in the dissolved partnership with interest or profits attributable to use of his right" at his option PERSONS A(THORIOE) TO WIN) (P 1. 0artners designated by the agreement 2. %n absence of agreement" all partners who have not wrongfully dissolved the partnership

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %*% of ()*

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3. 6egal representative partner of last surviving NOTE: &a256sa >. Al3aran ""4 5hil. 4"" !"#-2$ A partnerHs share cannot be returned without first dissol&ing and li0uidating the business for the partnershipHs outside creditors ha&e preference o&er the enterpriseHs assets. .he firmHs propert) cannot be diminished to their pre/udice. Villareal >. Ra1ireP 40- SCRA "44 6ue to its separate /uridical personalit) from the indi&idual partners, it is thus the partnership I ha&ing been the recipient of the capital contributions I which must refund the e0uit) of retiring partners. Such dut) does not pertain to partners who managed the business. .he amount to be refunded, supra, consistent with the partnership being a separate and distinct entit), must necessaril) be limited to what to the firmHs total resources. <t can onl) pa) out what it has for its total assets. Jut this is sub/ect to the priorit) en/o)ed b) outside creditors. %After all the !said$ creditors ha&e been paid, whate&er is left of the partnership assets becomes a&ailable for the pa)ment of partnersH shares. CHAPTER ;: LI&ITE) PARTNERSHIP CHARACTERISTICS: 1. :ormed by compliance with statutory re&uirements 2. (ne or more general partners control the business 3. (ne or more general partners contribute to the capital and share in the profits but do not participate in the management of the business and are not personally liable for partnership obligations beyond their capital contributions #. 3ay as) for the return of their capital contributions under conditions prescribed by law $. 0artnership debts are paid out of common fund and the QuickTime individualandproperties of a TIFF (U ncompressed) decompressor general partners are needed to see this picture. )I''ERENCES +ETWEEN GENERAL QuickTime and a TIFF (U ncompressed) decompressor LI&ITE) PARTNER?PARTNERSHIP are needed to see this picture. GENERAL 0ersonally liable for partnership obligations hen manner of mgt. AN) not agreed upon" all general partners have an e&ual right in the mgt. of the business ,ontribute cash" property or industry 0roper party to proceedings by>against partnership %nterest not assignable w>o consent of other partners 'ame may appear in firm name 0rohibition against engaging in business -etirement" death" insolvency" insanity of general partner dissolves partnership management

,ontribute cash or property only" not industry 'ot proper party to proceedings by>against partnership %nterest is freely assignable 'ame must appear in firm name 'o prohibition against engaging in business 2oes not have same effect; rights transferred to legal representative

LI&ITE) 6iability extends only to his capital contributions 'o participation in

REH(IRE&ENTS 'OR 'OR&ATION O' LI&ITE) PARTNERSHIP: 1. Certifi0ate of arti0les of the li1ite5 partnership 16st state the ff. 1atters: a. 'ame of partnership M word Nltd.N b. ,haracter of business c. 6ocation of principal place of business d. 'ame>place of residence of members e. Term for partnership is to exist f. 4mount of cash>value of property contributed g. 4dditional contributions h. Time agreed upon to return contribution of limited partner i. *haring of profits>other compensation 1. -ight of limited partner (if given! to substitute an assignee ). -ight to admit additional partners l. -ight of limited partners (if given! to priority for contributions m. -ight of remaining gen partners (if given! or continue business in case of death" insanity" retirement" civil interdiction" insolvency n. -ight of limited partner (if given! to demand>receive property>cash in return for contribution $. Certifi0ate 16st 3e file5 9ith the SEC NOTE: To validly form a limited partnership" all that

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %*( of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

is re&uired is *5B*T4'T%46 ,(306%4',+ %' 8((2 :4%T/ with all the re&uirements under Art. 1:;; (i.e. signing and swearing to a certificate" affixing the word F6imitedG to the partnership name" etc.!. %f no substantial compliance" then the firm becomes a general partnership to third persons (but as amongst the partners" still limited!. WHEN GENERAL PARTNER NEE)S CONSENT?RATI'ICATION O' ALL LI&ITE) PARTNERS: 1. 2o any act in contravention of the certificate 2. 2o any act which would ma)e it impossible to carry on the ordinary business of the partnership 3. ,onfess 1udgment against partnership #. 0ossess partnership property>assign rights in specific partnership property other than for partnership purposes $. 4dmit person as general partner C. 4dmit person as limited partner . unless authori@ed in certificate ;. ,ontinue business with partnership property on death" retirement" civil interdiction" insanity or insolvency of gen partner unless authori@ed in certificate SPECI'IC RIGHTS O' LI&ITE) PARTNERS: 1. -ight to have partnership boo)s )ept at principal place of business 2. -ight to inspect>copy boo)s at reasonable hour 3. -ight to have on demand true and full info of all things affecting partnership #. -ight to have formal account of partnership affairs whenever circumstances render it 1ust and reasonable $. -ight to as) for dissolution and winding up by decree of court C. -ight to receive share of profits>other compensation by way of income ;. -ight to receive return of contributions provided the partnership assets are in excess of all its liabilities REH(ISITES 'OR RET(RN O' CONTRI+(TION O' LI&ITE) PARTNER: QuickTime and a 1. 4ll liabilities of partnership have been TIFF (U ncompressed) decompressor needed to see this picture. paid>if notare yet paid" at least sufficient to cover them 2. ,onsent of all members has been obtained 3. ,ertificate is cancelled>amended as to set forth withdrawal >reduction of contribution
QuickTime and a TIFF (U ncompressed) decompressor are needed to see this picture.

LIA+ILITIES O' A LI&ITE) PARTNER To the partnership 1. for the difference between his contribution as actually made and that stated in the certificate as having been made" and 2. for any unpaid contribution which he agreed in the certificate to ma)e in the future time As a tr6stee for the partnership 1. for the specific property stated in the certificate as contributed by him but which he had not contributed; 2. for the specific property of the partnership which had been wrongfully returned to him; and 3. 3oney or other property wrongfully paid or conveyed to him on account of his contribution. )ISSOL(TION O' LI&ITE) PARTNERSHIP (0riority in 2istribution of 4ssets!: 1. Those due to creditors" including limited partners 2. Those due to limited partners in respect of their share in profits>compensation 3. Those due to limited partners of return of capital contributed #. Those due to general partner other than capital L profits $. Those due to general partner in respect to profits C. Those due to general partner for return of capital contributed A&EN)&ENT O' CERTI'ICATE O' PARTNERSHIP 1. %n case any of the ten enumerated changes and circumstances in 4rt. 1DC#" par. 2 are present. 2. %t must be signed and sworn to by all the members including the new members if some are added; in case of substitution" the assigning limited partner must also sign. 3. The cancellation or amendment must be recorded in the *+,. NOTE: 4ny person who suffers loss by reliance on false statement in certificate may hold liable for damages any party to the certificate who )new the statement to be false at the time the latter signed the certificate or came to )now such falsity subse&uently but within sufficient time before reliance to enable such party to cancel or amend the certificate or file the proper petition for such purpose (under Art. 1:!-!. BArt. 1:; 7 ;alraven v. Ramsay) .. $.;.d

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %*- of ()*

Civil Law Su""er Reviewer ATENEO CENTRAL BAR OPERATIONS 2008

+.<%. 4 general partnerHs )IIC (death, insol&enc), insanit), or ci&il interdiction! dissolves the partnership unless the business is continued by the surviving general partners under a right stated in the certificate or with their common (i.e. all! consent (Art. 1:!<!. *till" even if allowed under the certificate or consented to by all" there must be an amendment further to 4rts. 1DC# and 1DC$ (0f. +a6tista!. (therwise" limited partners will not be able to avail of the protection of the law as regards liability. The partnership will be considered general 40o@e v. Ari5ona Po@er C 0ight (o.) 8*/ P. d. <113. 4 limited partner shall not become liable as a general partner" unless in addition to the exercise of his rights and powers as a limited one" he ta/es part in the 0ontrol Ban5 1ana2e1ent% of the 36siness BArt. 1:;:7 &ol5man v. Escamilla) ,-. P. d. +<<%. . 4ctually" a person may be general and limited at the same time provided this is stated in the certificate. /e shall have all the powers" rights" and restrictions of a general partner; but with respect to his capital contribution" his right against the other members of the firm would be that of a limited partner (Art. 1:-=!. . 4 limited partner may also loan money to and transact other business with the firm. B5T" he cannot: (1! receive or hold as collateral any partnership property; or (2! receive from a general partner or from the firm any payment" conveyance" release if at that time assets of the firm are not sufficient to discharge liabilities to outside creditors; Art. 1:-;: an) &iolation would be fraud on such creditors. . The remedy of a general partner who suffers from or faces interference from his limited partners is dissolution 4;eil v. Diversified Properties) <,. %upp //+3.

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QuickTime and a TIFF (U ncompressed) decompressor are needed to see this picture.

Adviser: Dean Cynthia Roxas-Del Castillo, Atty. Eugenio Villareal; Heads: Joy Stephanie Ta an, John !aul Li"; Understudies: Char"aine #aw, $risti %e &ari Lu' u!"ect Head: Ri"o Ri(o; #$ed%ees: $ris )uenaventura& $it Singson $a e %*. of ()*