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VI. Partnership - Coggle Diagram

- - - - 2. Creation (1770-1778,1784,1815, CPR 3.02, 1411) - As a contract, there must be a meeting of the minds to constitute a partnership. (Lyons v. Rosenstock)
        
        FORM (1771) -
        
        GR: May be constituted in any form
        
        XCPN - where immovable property or real rights are contributed. Here, a public instrument shall be necessary.
        
        Effect of Non-Inventory (1773) - Partnership becomes void. However, failure to comply with inventory requirements shall not affect the liability of the partnership and the members thereof to a third person.
        
        Purpose (1770) - provisions of law are deemed incorporated into every contract. A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners.
        
        Equity Holders - Partnerships, as business enterprises means that the partners are in effect owners of the business. This means that they are equity holders and thus entitled to the profits from the business as well as assume the risks connected with it.
        
        CONSENT (1769) - The birth and life of a partnership at will is predicated on the MUTUAL desire and consent of the partners. There must be consent of EACH partner.
        
        Capacity to Contract (1782) - Parties to a contract of partnership must have capacity to contract. Persons who are prohibited from giving each other any donation or advantage cannot enter into a universal partnership.
        
        FC 87 - Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage.
        
        C2. Capacity of donees - sufficient that the donee has juridical capacity. No need that they have capacity to act. So long as not specially disqualified.
        
        Adultery or Concubinage - No previous criminal conviction is necessary. However, one party can raise defense of no knowledge of marriage of other party.
        
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        Corporations/Juridical Entities (Mendiola v. CA) - Originally, corporations cannot be partners because violation of mutual agency. Corporation decides via board, who would then bind the partnership.
        
        XCPN - Joint Ventures. But, this must be found in articles of incorporation creating the partnership itself. As well as the basic elements of a partnership in order for JVA i.e. partnership between partnerships to exist.
        
        Registration as a Partnership [SEC Opinion, 29 February 1980] - JVA may be registered as a partnership if:
        
        The articles of incorporation of the corporations involved must expressly authorize the corporation to enter into contracts of partnership with others in the pursuit of its business;
        
        The agreement or articles of partnership must provide that all the partners will manage the partnership; and
        
        The articles of partnership must stipulate that all the partners are and shall be jointly and severally liable for all the obligations of the partnership.
        
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        Essence of JVA - Provided that JVA is in line with business of the partnership and is limited to a single transaction. Essence of JVA is joint-control aspect. Goes into mutuality of the partnership.
        
        Representation - Persons who are not partners as to each other are not partners as to third persons (1767)
        
        AMENDMENT (1767) - Partnership is a contract. This means that no unilateral amendment of the terms and conditions of the partnership UNLESS prior stipulation.
        
        Partnership as Privilege - Inconsistent to say that it is a privilege as a contract of partnership vests right in the contracting parties.
        
        As a Right (CONST. Art. III, Sec. 8) - Constitutional right to form associations, etc. Can also be founded on general principles of obligation of contracts. Such as autonomy of contract, i.e. may stipulate so long as not contrary to law.
        
        Admission of New Partner (1804) - Even in an already existing partnership, no person shall be admitted into a partnership or become a party to the partnership arrangement without the consent of all the parties.
        
        OBJECT (1767) - Subject matter of the meeting of the minds. Here, the object is the pursuit of a business enterprise, as embodied in 1767 which defines the essential elements of partnership as
        
        COMMON FUND - an agreement to contribute (money, property or industry) to a common fund
        
        JOINT INTEREST - in the profits and losses among the contracting parties (Partners)
        
        Equity-Holder - Essence of partnership. Such that the receipt of share in the business profits is prima facie evidence of partnership. (1769)
        
        EXISTENCE;HOW DETERMINED (1769) - In determining whether a partnership exists, these rules shall apply:
        
        Gross Returns (1769) - Receipt thereof does not establish a partnership. Return on investment isn't necessarily the same as profit. ROI deals with the money you invest in the company and the return you realize on that money based on the net profit of the business. Profit, on the other hand, measures the performance of the business
        
        Co-Ownership/Co-Possession (1769 & Navarro v. CA) - mere co-ownership or co-possession of property DOES NOT NECESSARILY CONSTITUTE the co-owners or co-possessors partners, regardless of whether or not they share any profits derived from the use of the property, when no indication is shown that the parties had intended to enter into a partnership.
        
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        Taxation - under our tax laws, a partnership is treated like a corporate taxpayer and liable separately for income tax for its operations apart from the individual income tax liabilities of each of the partners. UNLESS general professional partnership.
        
        Proof Of Business Enterprise (Idos v. CA) - Existence of the business enterprise may become the basis by which the existence of a partnership contract is determined.
        
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        General Professional Partnerships(Tan v. Del Rosario) - Excluded from taxation as corporations. Means that law-firms not subject to corporate income tax. Partnerships formed for SOLE PURPOSE of exercising COMMON PROFESSION, no part of the income derived from trade/business. If GPP does business, they will become subject to corporate income tax.
        
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        VOID/ILLEGAL PARTNERSHIP (1770) - A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners.
        When an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of the State, without prejudice to the provisions of the Penal Code governing the confiscation of the instruments and effects of a crime.
        
        Effect of Forfeiture (Arbes v. Polistico) - All profits were confiscated. BUT partners may recover their contributions.
        
        CAUSE - the undertaking of the other/s to contribute money, property, or industry to a common fund. Being consensual, the contract is perfected by the agreement to make the contribution i.e. assumption of the obligation to contribute or render service.
        
        Enumeration of Partners (Tocao v. CA) - Even if articles of partnership are silent about the industrial partners, they are still considered as partners.
        
        Association (Tocao v. CA) - Calling something an association irrelevant. So long as partnership elements are present.
        
        Survivorship Agreement - Not a partnership. Lacking elements as no intent to divide the profits.
        
        Beginning (1784) A partnership begins from the moment of the EXECUTION of the contract, unless it is otherwise stipulated. (1679)
        
        NAME (1815) Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners.
        Liability - Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner. (n)
        
        Code of Professional Responsibility
        Rule 3.02. In the choice of a firm name, no false, misleading or assumed name shall be used. The continued use of the name of a deceased partner is permissible provided that the firm indicates in all its communications that said partner is deceased.
        
        Purpose - Protection of third parties. Inclusion of name in partnership name means that person will be held liable.
        
        PARI DELICTO/ILLEGAL PARTNERSHIP (1411) - When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract.
        
        FORMAL REQUIREMENTS OF PARTNERSHIP
        
        CONSENSUAL JURIDICAL PERSONALITY (1771;1785) - CONTRACTUAL - Principally a contract between the parties, subject to the caveat that it is also a medium for doing business.
        1.GR: Begins from the moment of the execution of the contract, unless otherwise stipulated. This means that parties can stipulate on the date of the formation of the partnership. If however, for more than (1) year after then must be in writing to comply with the Statute of Frauds. (1785)
        
        Purpose - to add to the commercial efficiency of the partnerships as a medium of association/doing business i.e. a cheaper means of doing business, removing steps necessary for juridical personality formation i.e. corporations
        
        Dissolution (1803) - Can be dissolved by will of any of the partners/all of them/chance without need for a formal dissolution process.
        
        Exceptions -
        
        LARGE CAPITAL (1772) - Where the contract of partnership has more than P3000 as capital contributions, it shall appear in a public instrument and recorded with the SEC.
        
        IMMOVABLE PROPERTY (1771/1773) - Where immovable property or real rights are contributed to the partnership.
        
        Here, public instrument shall be necessary + an inventory of said property, signed by the parties and attached to the public instrument in order to bind third persons.
        
        LIMITED PARTNERSHIPS (1843/1844) - Must be formally registered with the SEC
        
        Non-Compliance (Torres v. CA) - resulting partnership is void. This does not however, bar the courts from treating the agreement as an ordinary contract which can be the source of obligations.
        
        Conveyance (1774) - Immovables or interest may be acquired in the partnership name. Tittle so acquired can be conveyed only int he partnership name.
        
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        Non-Compliance (1772) - does not affect the liability of the partnership and the members to third persons.
        
        However, once fulfilled partnership is deemed de jure, the terms and conditions of which serve to bind the partners as to their contractual intent.
        
        RATIONALE - To prevent tax evasion liabilities of big partnerships. tax liabilities for big partnerships can’t be evaded, and the public can also determine more accurately their membership and capital before dealing with them
        
        JURIDICAL RELATIONS ARISING FROM THE PARTNERSHIP
        
        Among Partners - Contractual stipulations govern here.
        
        Partner and Firm - Question of obligation of the partners to the firm i.e. duty of loyalty, fidelity, specific duties of the managing partner, etc.
        
        Firm and Third Persons - Obligations of the firm
        
        Partners and Third Persons - Consequences, such as partnership by estoppel are present here.
        
        CHARACTERISTICS OF PARTNERSHIP
        
        Fiduciary
        
        Nominate
        
        Consensual
        
        Bilateral or multilateral
        
        Principal
        
        Preparatory
        
        Capable of Suit
        
        Profit-oriented - for the common benefit or interest of the partners. Contribution of money, property, industry with intent of mutual benefit. Purpose must be for profit, not just common enjoyment, or else it is one of co-ownership But pecuniary benefit need not be only purpose → may have social, moral, spiritual aims.
      - MUTUAL AGENCY (1803;1818) -
        
        GR - Each of the partners is an agent of the partnership and all other partners in pursuit of partnership affairs OR not usual business BUT authorized.
        
        XCPN - unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority OR not for carrying on usual business in the usual way WITHOUT authorization.
        Alteration of Immovable (1803 par. 2) - None of the partners may, without the consent of the others, make any important alteration in the immovable property of the partnership, even if it may be useful to the partnership. But if the refusal of consent by the other partners is manifestly prejudicial to the interest of the partnership, the court's intervention may be sought.
        
        JOINT CONTROL (1818) - Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority. An act of a partner which is not apparently for the carrying on of business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.
        
        2. Mutual Agency ( ART. 1803, 1818, 1819, 1820, 1821, 1822, 1825; Revised Rules of Court, Rule 130, Sec. 29; 1997 Revised Rules of Civil Procedure Rule 14, Section 11; ART. 1800, 1801, 1802, 1832, 1833, 1834) - Agency here only contemplates acts of administration. As such, requires specific authorization of ALL partners to perform acts of strict dominion.
        
        MANAGING PARTNER (1800) -
        
        GR - Partner who is appointed managing partner may execute all acts of administration EVEN if partners oppose.
        
        XCPN - Acts in bad faith AND his power is irrevocable without just or lawful cause. Here, vote of the partners representing the controlling itnerest shall be necessary for revocation of power.
        
        POWER OF REVOCATION - A power granted after the partnership has been constituted may be revoked at any time.
        
        MULTIPLE MANAGING PARTNERS (1801) - Two or more partners AND either without:
        
        SPECIFICATION of their respective duties OR
        
        STIPULATION that one of them shall not act without the consent of all others
        Each one may separately execute all acts of administration.
        
        CONFLICT -
        
        GR. if any of them should oppose the acts of the others, the decision of the majority shall prevail.
        
        XCPN - In case of a tie, the matter shall be decided by the partners owning the controlling interest
        
        JOINT MANAGEMENT (1802) - IF stipulation that none of the managing partners shall act without the consent of the others, THEN concurrence of ALL shall be necessary for the validity of the acts.
        
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        DISSOLUTION (1832) -
        
        GR: Dissolution terminates all authority of any partner to act for the partnership
        
        XCPN - if necessary to wind up partnership affairs OR complete transactions already begun.
        
        LIABILITY OF PARTNER AFTER DISSOLUTION (1833) - Where the dissolution is caused by either the ACT, DEATH, or INSOLVENCY of a partner. Each partner is liable to his co-partner for his share of any liability created by any partner acting for the partnership as if there was no dissolution UNLESS
        
        KNOWLEDGE;ACT - the dissolution by act, the partner acting for the partnership had knowledge of the dissolution
        
        KNOWLEDGE OR NOTICE;Death/Insolvency - the dissolution by death or insolvency, the partner acting had knowledge or notice of the same.
        
        ACT OF PARTNER AFTER DISSOLUTION (1834) - After dissolution, a partner can bind the partnership when:
        
        WINDING UP - any act appropriate for winding up partnership affairs/completing transactions unfinished at dissolution
        
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        Notice - more of a presumption i.e. leaving a letter in the place of business.
        
        Res Inter Alios Acta (ROC 130. S. 29 & 31) -
        
        Sec. 29. Admission by co-partner or agent.
        REQUIRES that the partnership or agency is shown by evidence other than the act or declaration itself. After which, any Act or declaration of a partner or agent of the party within the scope of his authority and during the existence of the partnership or agency, may be given in evidence against such party.
        The same rule applies to the act or declaration of a joint owner, joint debtor, or other person jointly interested with the party.
        
        Sec. 31. Admission by privies. - Where one derives title to property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former.
        
        REQUISITE OF AUTHORIZATION (1818) - Except when authorized by the other partners or unless they have abandoned the business, one or more but less than all the partners have no authority to:
        
        ASSIGN - the partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership;
        
        DISPOSE- of the good-will of the business;
        
        IMPOSSIBILITY - Do any other act which would make it impossible to carry on the ordinary business of a partnership;
        
        CONFESS - a judgment;
        
        COMPROMISE - Enter into a compromise concerning a partnership claim or liability;
        
        ARBITRATION - a partnership claim or liability to arbitration;
        
        RENOUNCE a claim of the partnership.
        
        No act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction. (n)
        
        CONVEYANCE OF REAL PROPERTY (1819) -
        
        IN THE NAME OF THE PARTNERSHIP - Any partner may convey title to such property by a conveyance executed in the partnership name. Here, partnership may recover UNLESS
        1a. The Partner was authorized, conveyed in the usual course of business (1818 par. 1) OR
        1b. Property was conveyed to a holder for value without knowledge of lack of authority.
        
        CONVEYANCE IN OWN NAME - Passes the equitable interest of the partnership if authorized under 1818 par. 1
        
        Holder for Value - Valuable consideration for transfer of instrument title in the name of the holder. Holder in due course must comply with requirements in negotiable instruments law and grants immunity to certain kinds of defenses.
        
        IN THE NAME OF ONE OR MORE OF THE PARTNERS -
        a. If record does not disclose the right of the partnership, the partners in whose name the title stands may convey title to such property. Here, partnership may recover such property if the partner's act does not bind partnership under 1818 par. 1 UNLESS the purchaser or assignee is a holder for value without the knowledge that the partner conveying exceeded authority.
        b. Authorized - Conveyance executed by a partner in the partnership name/own name passes equitable interest of the partnership so long as under 1818 par. 1
        
        IN THE NAME OF ALL PARTNERS - Where the title to real property is in the name of all the partners a conveyance executed by all the partners passes all their rights in such property.
        
        ADMISSION (1820; Rule 130 Sec. 9) - An admission or representation made by ANY PARTNER & DURING EXISTENCE of partnership/agency is evidence against the partnership IF :
        
        CONNECTED - with partnership affairs
        
        WITHIN - the scope of partner's authority.
        
        SERVICE UPON PARTNERSHIP (ROC 14 S. 11) - When the defendant is a corporation, partnership, or association/other juridical entities, service may be made on:
        
        PRESIDENT
        
        MANAGING PARTNER
        
        GENERAL MANAGER
        
        CORPORATE SECRETARY
        
        TREASURER
        
        IN-HOUSE COUNSEL
        
        NOTICE (1821) - Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in the particular matter, acquired while a partner or then present to his mind, and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner, operate as notice to or knowledge of the partnership, except in the case of fraud on the partnership, committed by or with the consent of that partner. (n)
        
        SOLIDARY LIABILITY (1822) - Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act. This makes both partnership and partners liable.
        
        ESTOPPEL (1825) - Where a person by words either spoken/written or by conduct represents himself or consents to another representing him as a partner in an existing partnership OR with person/s not actual partners, they are liable to any such persons to whom such representation has been made and on the basis of representation, gave credit (actual or apparent) to the partnership.
        Where person has made representation/consented to representation in a public manner, they are liable to such person whether the representation has / has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to it being made.
        
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        Ratio - because mutual agents, principal (mutual principals) are liable IF wrongful act or omission within scope of authority of the agent.
        
        Doctrine of Imputed Knowledge - Notice to principal is notice to agent.
        
        Apparent Authority - 1818 embodies the doctrine of apparent authority. This means that third person dealing with a juridical enetity to rely upon the validity and enforcebaility of contracts entered into with an officer or representative.
      - CONSENSUAL JURIDICAL PERSONALITY (1771;1785) - CONTRACTUAL - Principally a contract between the parties, subject to the caveat that it is also a medium for doing business.
        1.GR: Begins from the moment of the execution of the contract, unless otherwise stipulated. (1785)
        
        Purpose - to add to the commercial efficiency of the partnerships as a medium of association/doing business i.e. a cheaper means of doing business, removing steps necessary for juridical personality formation i.e. corporations
        
        Dissolution (1803) - Can be dissolved by will of any of the partners/all of them/chance without need for a formal dissolution process.
        
        Exceptions -
        
        LARGE CAPITAL (1772) - Where the contract of partnership has more than P3000 as capital contributions, it shall appear in a public instrument and recorded with the SEC.
        
        IMMOVABLE PROPERTY (1771/1773) - Where immovable property or real rights are contributed to the partnership. Here, public instrument shall be necessary + an inventory of said property, signed by the parties and attached to the public instrument.
        
        LIMITED PARTNERSHIPS (1843/1844) - Must be formally registered with the SEC
        
        Non-Compliance - resulting partnership is void.
        
        Torres v. CA - unique case kasi walang public inventory pero hinayaan ng court
        
        Conveyance (1774) - Immovables or interest may be acquired int he partnership name. Tittle so acquired can be conveyed only int he partnership name.
        
        Non-Compliance (1772) - does not affect the liability of the partnership and the members to third persons. However, once fulfilled partnership is deemed de jure, the terms and conditions of which serve to bind the partners as to their contractual intent.
      - DELECTUS PERSONAE;Selection of Persons - One selects his partners on the basis of their personal qualifications and qualities. This is the basis for mutual representation. | No one can become a partnership without the consent of all partners |
        
        As such, the the breaking of mutual desire and consent of the partners breaks the partnership.
      - UNLIMITED LIABILITY (UNLESS LMIITED PARTNER) (1816-1817) -
        
        GR (1816) - All partners, including industrial ones, shall be liable pro rata (in proportion i.e. joint liability) with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership
        
        XCPN (1817) - However, any partner may enter into a separate obligation to perform a partnership contract. | Any stipulation against the liability laid down in the preceding article shall be void, except as among the partners.
        
        Ratio - Partners are collective owners of the business enterprise. Via mutual agency, they are collective managers of the partnership affairs. As such, despite the separate juridical personality they wholly own, manage and control the business. Thus, they must also be the ones who bear the liability. Otherwise, partnerships creditors would take risks when they draw no benefit.
        
        Liability different from losses. Industrial partners liable to partnership creditors, but not for losses.
    - - 1. Separate Juridical Personality (1768/1775/NIRC 22(b); 26; Art. 1811(2) - Partnership has a juridical personality separate and distinct from each of the partners.
        
        PERFECTION (1768) - Upon perfection of the contract of partnership, a separate juridical person is born. This applies even in cases of failure to comply with registration requirements under 1772
        
        Dissolution - the juridical personality of the partnership is linked with the underlying contract of partnership. As such, the dissolution of the later means the dissolution of the former.
        
        SECRET ASSOCIATIONS (1775) - Associations and societies whose articles are kept secret among the members where any of the members may contract in their own name and with third persons shall have no juridical personality. Instead, co-ownership applies.
        
        Q. Does this prevent partnership formation among the individual members of the group?
        
        LIABILITY (1816) - Partners, despite the separate juridical personality are personally liable with their separate properties for partnership debts after exhaustion of the partnership's properties
        
        Corporate Veil (CIR v. Suter) - limited applicability as partners liable personally. However, courts will pierce if the partnership is a means to evade a law or a sham.
        
        CONSTITUTIONAL RIGHTS AND GUARANTEES (Smith Bell v. Natividad) - Juridical persons are also entitled to constitutional safeguards such as immunity to unreasonable search and seizures.
        
        CO-OWNERSHIP (1811 par.2) - A partner is co-owner with his partners of specific partnership property. (2) A partner's right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property;
        
        SHARE - Presumed to be equal, unless the contrary is proven.
      - Distinguished from (1769):
        
        ;Joint Tenancy - Provides for the survivorship principle, dictates that co-owners who survive their contemporaries will acquire ownership of the deceased's portion. Unlike co-ownership/co-possession.
        
        Tenancy in common - Tenants own in common where the tenants own specific portions of an undivided property. Upon their death, their rights to their portion pass on to their heirs and beneficiaries. Here, they own SPECIFIC portions, unlike co-ownership who have inchoate rights pending the partition of the properties co-owned.
        
        Joint Ventures (Kilosbayan v. Guingona) - Technically not partnership. But treated as a partnership for taxation. Joint control is the hallmark of joint ventures, not necessarily 50-50 equity. An association of persons or companies, jointly undertaking some commercial enterprise; generally, all contribute assets and share risks which require a community of interest in the performance of the subject matter, a right to direct and govern the policy in connection therewith, and a duty to share in the profit and losses.
        
        Has distinct juridical personality, co-venturers personally liable with private property beyond contributions, transferee does not become co-venturer, mutual agency, dissolution upon death, retirement, insovlency, civil itnerdiction, dissolution.
        
        Joint Venture - particular partnership.
        
        Joint Adventures (Heirs of Tan Eng Kee v. CA) - Joint adventure, a joint account. American concept, informal partnership with no firm name and no legal personality Usually limited to a single transaction, although the business of pursuing a successful termination may continue for a number of years.
        
        In a joint account, the participating merchants can transact the business under their own name and can be individually liable.
        
        A partnership generally relates to a continuing business of various transactions of a certain kind.
        
        Joint Accounts - (Code of Commerce 239-242) - Both consensual contracts with intent to contribute capital to a common fund.
        
        Distinction - Joint account does not have a commercial name common to all. Partnership has partnership name. Also, transactions pertain to individual merchants, individual liabilities. No separate juridical personality.
        
        Cuentas en participacion/Joint Accounts/Accidental Partnership - Say partnership under Code of Commerce 242
        
        Bourns v. Carman - A partnership constituted in such a manner, the existence of which was only known to those who had an interest in the same, there being no mutual agreements between the partners, and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business, is exactly the accidental partnership of cuentas en participacion defined in Article 239 of the Code of Commerce
        
        Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted, shall have only a right of action against such person and not against the other person interested
        
        Co-ownership/Co-possession
      - C. Kinds
        
        1. Kinds of Partnerships
        
        AS TO OBJECT - As a rule, universal partnership is never presumed.
        
        Particular – ART. 1776, 1783 - has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.
        
        Universal – ART. 1776 – 1782, 739, Art. 87, Family Code - One where the contract of partnership encompasses either all the present properties of the partners OR all of the profits.
        
        PROHIBITED DONEE/DONORS - May enter into a particular partnership but not a universal one.
        
        Partnership of All Present Property (1778) - partners contribute all the property which actually belongs to them to a common fund, with the intention of dividing the same among themselves, as well as all the profits which they may acquire therewith
        
        EFFECT OF UNIVERSALITY (1779) - the property which belonged to each of the partners at the time of the constitution of the partnership, becomes the common property of all the partners, as well as all the profits which they may acquire therewith.
        
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        Partnership of All Profits (1779) - comprises all that the partners may acquire by their industry or work during the existence of the partnership.
        
        OWNERSHIP - Movable or immovable property which each of the partners may possess at the time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership.
        
        PRESUMED NATURE (1781) - Articles of universal partnership, entered into without specification of its nature, only constitute a universal partnership of profits. This is pursuant to the equitable principle of lesser transmission of rights.
        
        AS TO EXTENT OF LIABILITY (1776)
        
        Limited - Limited partners are liable for partnership debts only to the extent of their stipulated contributions under the articles of partnership
        
        General (1816) -
        
        GR - all partners are unlimitedly liable pro rata
        
        XCPN (Lim Tong Lim v. PH Fishing Gear Industries) - Solidary liable when:
        a. By any WRONGFUL ACT OR OMISSION - of any partner acting in the ordinary course of the business of the partnership or with the authority of his co--partners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act
        b. APPARENT AUTHORITY - One partner acting within the scope of his apparent authority receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership
        
        AS TO DURATION (1785)
        
        FOR A TERM/UNDERTAKING - Automatically dissolved upon the expiration of the stipulated term or achievement of the particular undertaking stipulated.
        
        EFFECT OF CONTINUATION - if continued after it has terminated without express agreement then the rights and duties of the partners remain the same prior to termination so far as consistent with a partnership at will.
        
        EVIDENCE - constitutes prima facie evidence of a continuation of partnership if WITHOUT settlement or liquidation of partnership affairs.
        
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        AT WILL - Has an indefinite term which is dissolved only when an act or cause of dissolution happens or arises
        
        (Ortega v. CA) These may by dissolved at any time by will of any of the parties.
        
        AS TO PECUNIARY PURPOSE
        
        General Professional – Organized for the exercise of profession
        
        Commercial - Organized for the pursuit of business or trade
        
        2. Kinds of Partners -
        
        AS TO NATURE OF CONTRIBUTION
        
        Capitalist (1789, 1790, 1797, 1808) - Contributes capital to the partnership which then becomes the property of the partnership.
        
        LIABILITY - Liable for losses sustained by the business. Also bound to make additional contributions to the partnership in case of an imminent loss of the business of the partnership.
        
        BUSINESS (1808) - may not engage in business or commercial undertaking competing with that of the partnership business.
        
        CONTRIBUTION (1790) - Unless contrary stipulation, partners shall contribute equal shares to the capital of the partnerhsip.
        
        Industrial (1789, 1797) - Does not contribute capital, but only industry or labor.
        
        BUSINESS;XCPN(1797) - Capitalist-Industrial. However, still cannot engage in ANY OTHER business for himself as the partnership becomes the owner of such business.
        
        LIABILITY - Not liable for losses of the partnership.
        
        If you admit an industrial partner exists in a professional partnership you admit that there is a capitalist partner. Capitalist partners are not bound to participate in the business. Sir thinks this not not possible/ethical.
        
        Managing (1792, 1800, 1801, 1802)
        
        Managing
        
        Liquidating
        
        Retired
        
        By estoppel (1825) - Not a formal partner, but by his acted third parties to believe he is a partner. Here, liable as a regular partner to such relying creditors.
        
        Doctrine in American jurisprudence whereby a party creating an appearance of fact which is not true is held bound by that appearance as against another person who has acted on the faith of it (Strong vs Gutierrez)
        Legal basis of estoppel is Art. 1431 & 1433, NCC