Law on Partnership Reviewer | Article 1800 to 1809
I.
LAW ON PARTNERSHIP | ARTICLE 1800-1809 (NCC)
a.
HOW
MANAGING PARTNER MAY BE APPOINTED?
b.
HOW HIS
APPOINTMENT REVOKED?
MANAGING
PARTER IS APPOINTED:
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IN THE ARTICLES OF PARTNERSHIP;
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AFTER THE CONSTITUTION OF THE PARTNERSHIP
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by common agreement in the articles of partnership may
execute all acts of administration.
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constituted independently of the articles of partnership
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REVOCATION:
o
only upon just and
lawful cause; and
o
upon the vote of the
partners representing the controlling interest.
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REVOCATION:
at any time for any cause whatsoever.
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c.
POWERS
OF MANAGING PARTNER
¾ GR: has all the powers of a
general agent as well as all the incidental powers necessary to carry out the
object of the partnership in the transaction of its business.
ETR: when the powers are specifically restricted.
¾ unless expressly withheld, the minor power to issue receipts is
included in the general powers of the manager, as this is in keeping with
present day business dealings
¾ the manager of a partnership engaged in buying and selling is
clothed with sufficient authority even without approval of the other partners
to purchase on credit
¾
may execute all acts of administration,
including the right to sue debtors of the partnership.
d.
POWERS
OF TWO OR MORE MANAGING PARTNERS WHOSE RESPECTIVE DUTIES ARE NOT SPECIFIED
¾
REQUISITES for 1801 to apply:
i.
Two or more partners have been appointed
as managers;
ii.
There is no specification of their
respective duties; and
iii.
There is no stipulation that one of them
shall not act without the consent of all the others.
¾ If each one may separately perform acts of administration.
a) If one or more of the managing partners shall oppose the acts
of the others, then the decision of the majority (per head) of the managing
partners shall prevail. Note that the right to oppose can be exercised only by
those entrusted with the management of the partnership and not by any partner.
b) In case of tie, the matter shall have to be decided by the vote
of the partners owning the controlling interest, that is, more than 50% of the
capital investment.
e.
WHEN
UNANIMITY OF ACTION REQUIRED
¾ The partners may stipulate that none of the managing partners
shall act without the consent of the others. In such a case, the unanimous
consent of all the managing partners shall be necessary for the validity of
their acts.
¾ consent is so indispensable that neither the absence nor
disability of any one of them may be alleged as excuse or justification to
dispense with this requirement.
¾ EXCEPT: when there is an imminent danger of grave or
irreparable injury to the partnership, in which case, a partner may act alone
without the consent of the partner who is absent or under disability, without
prejudice to his liability for damages under Art 1794.
f.
WHEN THERE IS NO STIPULATION ON THE MANAGEMENT OF THE PARTNERSHIP
(1)
All of them shall be
considered managers and agents
¾ All partners shall have equal rights in the management and
conduct of partnership affairs regardless of the amount of their capital
contributions or extent of their services to the partnership.
¾ ART 1801:
IN CASE OF TIMELY OPPOSITION OF ANY PARTNER, the matter shall
first be decided by the majority vote, for the presumed intent is for all the
partners to manage regardless of the amount of capital they contributed.
IN CASE OF A TIE, then the matter shall be decided by the vote
of the partners representing the controlling interest.
(2) The unanimous consent of
all the partners is necessary for any important alteration
in the immovable property of the partnership.
¾ The consent need not be express. It may be presumed from the
fact of knowledge of the alteration without interposing any objection.
g.
CONTRACT
OF SUB-PARTNERSHIP
¾ The partnership formed between a member of a partnership and a
third person for a division of the profits coming to him from the partnership enterprise.
¾ SUBPARTNER - A partner may associate another person with him in his share
without the consent of the other partners.
Not being a member of the partnership, he does not acquire the
rights of a partner nor is he liable for its debts.
¾ The sub-partners are partners inter
se, but, in the absence of the mutual assent
of all the parties, a subpartner does not become a member of the partnership,
even though the agreement is known to the other members of the firm.
h.
RULES
GOVERNING PARTNERSHIP BOOKS
¾ The duty to keep true and correct books showing the firm’s
accounts, such books being at all times open to inspection of all members of
the firm, primarily rests on the managing or active partner or the particular
partner given record-keeping duties.
¾ GR: the partnership books should be kept at the principal place of
business
Each partner has a right to free access to them and to inspect
or copy any of them at any reasonable time, even after dissolution.
Right is granted to enable the partners to have true and full
information of all things affecting the partnership.
ETR: if it is subject to any agreement to the contrary
i.
DUTY OF
FULL DISCLOSURE (See also Art 1821)
¾ There must be NO CONCEALMENT between them in all matters
affecting the partnership.
¾ The information, to be sure, must be used only for a
partnership purpose.
¾ A partner:
o
bound to give information on demand but in
certain circumstances; and
o
Under the duty of voluntary disclosure of
material facts within his knowledge relating to or affecting partnership
affairs.
j.
RIGHT
TO FORMAL ACCOUNTING
¾ FORMAL ACCOUNT is a necessary incident to the dissolution of
the partnership.
¾ GR: during the existence of
the partnership, a partner is NOT ENTITLED to a formal account of partnership
affairs.
REASON:
o
The rights of the partner to know
partnership affairs are amply protected in Arts 1805 and 1806.
o
to entitle any partner to the right to
constantly demand or ask for a formal accounting will cause much inconvenience
and unnecessary waste of time.
ETR:
(1) If he is wrongfully excluded from the
partnership business or possession of its property by his copartners;
(2) If the right exists under the terms of
any agreement;
(3) As provided by Article 1807;
(4) Whenever other circumstances render it just
and reasonable
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