Professional Documents
Culture Documents
contribute money, property or industry to a common fund, with the intention of dividing
the profits among themselves
ESSENTIAL FEATURES:
1. There must be a valid contract
2. The parties must have legal capacity to enter into the contract
3. There must be a mutual contribution of money, property, or industry to a common
fund
4. The object must be lawful
5. The purpose or primary purpose must be to obtain profits and divide the same
among the parties
PARTNERSHIP DISTINGUISHED FROM CO-OWNERSHIP AND CORPORATION
Creation
Juridical
personality
Purpose
PARTNERSHIP
Created by a
contract, my mere
agreement of the
parties
Has a juridical
personality separate
and distinct from that
of each partner
Realization of profits
Duration/
Term of
existence
No limitation
Disposal/
Transferability
of interest
Power to act
with 3rd
persons
Effect of
deat
h
Dissolution
No. of
May be dissolved at
any time by the will of
any or all of the
partners
Minimum of 2
CO-OWNERSHIP
Created by law
CORPORATION
Created by law
None
Has a juridical
personality separate
and distinct from that
of each partner
Depends on AOI
Common enjoyment
of a thing or right
10 years maximum
Co-owner cannot
represent the coownership
Death of co-owner
does not necessarily
dissolve coownership
May be dissolved
anytime by the will of
any or all of the coowners
Minimum of 2
50 years maximum,
extendible to not
more than 50 years in
any one instance
Stockholder has a
right to transfer
shares without prior
consent of other
stockholders
Management is
vested with the Board
of Directors
Death of stockholder
does not dissolve
corporation
Can only be dissolved
with the consent of
the state
Minimum of 5
incorporators
Commencement of
juridical
personality
persons
From the moment of
execution of contract
of partnership
persons
From date of
issuance of certificate
of incorporation by
the SEC
incorporators
KINDS OF PARTNERS
1. CAPITALIST - one who contributes money or property to the common fund
2. INDUSTRIAL - one who contributes only his industry or personal service
3. GENERAL - one whose liability to 3rd persons extends to his separate property
4. LIMITED - one whose liability to 3rd persons is limited to his capital contribution
5. MANAGING - one who manages the affairs or business of the partnership
6. LIQUIDATING - one who takes charge of the winding up of partnership affairs upon
dissolution
7. PARTNERS BY ESTOPPEL - one who is not really a partner but is liable as a
partner for the protection of innocent 3rd persons
8. CONTINUING PARTNER - one who continues the business of a partnership after it
has been dissolved by reason of the admission of a new partner, retirement, death or
expulsion of one of the partners
9. SURVIVING PARTNER - one who remains after a partnership has been dissolved by
death of any partner
10. SUBPARTNER - one who is not a member of the partnership who contracts with a
partner with reference to the latter's share in the partnership
11. OSTENSIBLE - one who takes active part and known to the public as partner in the
business
12. SECRET - one who takes active part in the business but is not known to be a partner
by outside parties
13. SILENT - one who does not take any active part in the business although he may be
known to be a partner
14. DORMANT - one who does not take active part in the business and is not known or
held out as a partner
RELATIONS CREATED BY A CONTRACT OF PARTNERSHIP
1. Relations among the partners themselves
2. Relations of the partners with the partnership
3. Relations of the partnership with 3rd persons with whom it contracts
4. Relations of the partners with such 3rd persons
REMEDY
INDUSTRIAL PARTNER
Industrial partner cannot engage
in business (w/n same line of
business with the partnership)
unless partnership expressly
permits him to do so
Capitalist partners may:
1. Exclude him from the firm, or
2. Avail themselves of the
benefits which he may have
obtained
3. Damages, in either case
CAPITALIST PARTNER
Capitalist partner cannot engage
in business (with same kind of
business with the partnership) for
his own account, unless there is
a stipulation to the contrary
Capitalist partner in violation
shall:
1. Bring to common fund any
profits accruing to him from
said transaction, and
2. Bear all losses
Partner is appointed
manager after constitution
of partnership
2 or more persons
entrusted with
management of partnership
without specification of
duties/stipulation that each
shall not act w/o the other's
consent
Stipulated that none of the
managing partners shall act
w/o the consent of others
Manner of management
not agreed upon
revoke power
In case of opposition,
decision of majority shall
prevail; In case of tie,
decision of partners
owning controlling interest
shall prevail
Concurrence of all
necessary for the validity of
acts
Absence or disability of
any one cannot be alleged
unless there is imminent
danger of grave or
irreparable injury to
partnership
If refusal of partner is
manifestly prejudicial to
interest of partnership,
court's intervention may be
sought
c.
d.
Confess a judgement
e.
Enter
into
compromise
partnership claim or liability
concerning
f.
Submit partnership
arbitration
or
to
claim
liability
Partnership is liable
Person who represented
himself & all those who
made representation liable
pro-rata/jointly
Person who represented
himself liable & those who
made/consented
to
representation separately
liable
6. Insolvency of a partner/partnership
7. Civil interdiction of any partner
8. Decree of court under art 1831
GROUNDS FOR DISSOLUTION BY DECREE OF COURT (art 1831)
1. Partner declared insane in any judicial proceeding or shown to be of unsound mind
2. Incapacity of partner to perform his part of the partnership contract
3. Partner guilty of conduct prejudicial to business of partnership
4. Willful or persistent breach of partnership agreement or conduct which makes it
reasonably impracticable to carry on partnership with him
5. Business can only be carried on at a loss
6. Other circumstances which render dissolution equitable
Upon application by purchaser of partner's interest:
1. After termination of specified term/particular undertaking
2. Anytime if partnership at will when interest was assigned/charging order issued
EFFECTS OF DISSOLUTION:
A. AUTHORITY OF PARTNER TO BIND PARTNERSHIP
General Rule: Authority of partners to bind partnership is terminated
Exception:
1. Wind up partnership affairs
2. Complete transactions not finished
Qualifications:
1. With respect to partners a. Authority of partners to bind partnership by new contract is immediately
terminated when dissolution is not due to ACT, DEATH or INSOLVENCY (ADI) of
a partner (art 1833);
b. If due to ADI, partners are liable as if partnership not dissolved, when the ff.
concur:
i. If cause is ACT of partner, acting partner must have knowledge of such
dissolution
ii. If cause is DEATH or INSOLVENCY, acting partner must have knowledge/
notice
2. With respect to persons not partners (art 1834) a. Partner 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) Situation 1 i. Had extended credit to partnership prior to dissolution &
ii. Had no knowledge/notice of dissolution, or
(b) Situation 2 i. Did not extend credit to partnership
ii. Had known partnership prior to dissolution
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AS TRUSTEE
Specific property stated as contributed but
not yet contributed/wrongfully returned
Money/other property wrongfully paid/
conveyed to him on account of his
contribution
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AMENDMENT/CANCELLATION OF CERTIFICATE
Cancelled:
1. Partnership is dissolved other than by reason of expiry of term
2. All limited partners cease to be such
Amended:
1. Change in name of partnership, amount/character of contribution of ltd. partner
2. Substitution of ltd. partner
3. Admission of additional ltd. partner
4. Admission of gen. partner
5. Death, insolvency, insanity, civil interdiction of gen. partner & business is
continued
6. Change in character of business
7. False/erroneous statement in certificate
8. Change in time as stated in the certificate for dissolution of partnership/return of
contribution
9. Time is fixed for dissolution of partnership. Return of contribution if no orig. time
specified
10. Change in other statement in certificate
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