Law on Partnership Reviewer | Article 1776 to 1783

Law on Partnership Reviewer | Article 1776 to 1783

   October 17, 2018       FJ

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           LAW ON PARTNERSHIP REVIEWER |     ARTICLE 1776-1783 (NCC)

a.      CLASSIFICATIONS OF PARTNERSHIP:

  i.      AS TO THE EXTENT OF ITS SUBJECT MATTER

UNIVERSAL	PARTICULAR
One which refers to all the present property or to all profits. (1777)	Has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.
·        Universal partnership of all present property. (1778); and ·        Universal partnership of profits. (1780)

ii.      AS TO LIABILITY OF THE PARTNERS

GENERAL	LIMITED
one consisting of general partners who are liable pro rata and subsidiarily (1816) and sometimes solidarily (1822-1824) with their separate property for partnership debts	One formed by two 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. (1843)

iii.      AS TO ITS DURATION

PARTNERSHIP AT WILL	PARTNERSHIP WITH A FIXED TERM
one in which no time is specified and is not formed for a particular undertaking or venture and which may be terminated at anytime by mutual agreement of the partners, or by the will of any one partner alone; or one for a fixed term or particular undertaking which is continued by the partners after the termination of such term or particular undertaking without express agreement (1785)	one in which the term for which the partnership is to exist is fixed or agreed upon or one formed for a particular undertaking, and upon the expiration of the term or completion of the particular enterprise, the partnership is dissolved, unless continued by the partners. (1785)

iv.      AS TO THE LEGALITY OF ITS EXISTENCE

DE JURE	DE FACTO
one which has complied with all the legal requirements for its establishment (1772[2]-1773)	one which has failed to comply with all the legal requirements for its establishment. (same)

v.      AS TO REPRESENTATION TO OTHERS

ORDINARY / REAL PARTNERSHIP	OSTENSIBLE PARTNERSHIP / PARTNERSHIP BY ESTOPPEL
one which actually exists among the partners and also as to third persons	One which in reality is not a partnership, but is considered a partnership only in relation to those who, by their conduct or admission, are precluded to deny or disprove its existence. (1825)

vi.      AS TO PUBLICITY

SECRET	OPEN / NOTORIOUS
one wherein the existence of certain persons as partners is not avowed or made known to the public by any of the partners	one whose existence is avowed or made known to the public by the members of the firm.

vii.      AS TO PURPOSE

COMMERCIAL / TRADING PARTNERSHIP	PROFESSIONAL / NON TRADING PARTNERSHIP
one formed for the transaction of business (1767)	one formed for the exercise of a profession. (same)

b.      KINDS OF PARTNERS

   i.      CAPITALIST PARTNER

- One who contributes money or property to the common fund (1767);

 ii.      INDUSTRIAL PARTNER

- One who contributes only his industry or personal service (1789, 1767.);

iii.      GENERAL PARTNER

- One whose liability to third persons extends to his separate property; he may be either a capitalist or industrial partner. (1843, 1816.) He is also known as real partner;

iv.      LIMITED PARTNER

- One whose liability to third persons is limited to his capital contribution. (1843.) He is also known as special partner. The terms “general partner” and “limited partner” have relevance only in a limited partnership;

 v.      MANAGING PARTNER

- One who manages the affairs or business of the partnership; he may be appointed either in the articles of partnership or after the constitution of the partnership. (1800.) He is also known as general or real partner;

vi.      LIQUIDATING PARTNER

- one who takes charge of the winding up of partnership affairs upon dissolution (1836.);

vii.      PARTNER BY ESTOPPEL or one who is not really a partner, not being a party to a partnership agreement, but is liable as a partner for the protection of innocent third persons. (1825) He is one who is represented as being in fact a partner, but who is not so as between the partners themselves. He is also known as partner by implication or nominal partner.

viii.      SUBPARTNER

-          one who, not being a member of the partnership, contracts with a partner with reference to the latter’s share in the partnership. (1804)

c.       UNIVERSAL PARTNERSHIP

¾    may refer to all the present property or to all the profits. (1777)

¾    PRESUMPTION: that the parties intended merely a partnership of profits. (Where the articles of partnership do not specify the nature of the partnership)

Reason: a universal partnership of profits imposes fewer obligations on the partners, since they preserve the ownership of their separate property.

d.      OF ALL PRESENT PROPERTY (WHAT INCLUDES)

¾    The following become the common property of all the partners:

(1) Property which belonged to each of them at the time of the constitution of the partnership; and

(2) Profits which they may acquire from the property contributed.

¾    GR: future properties cannot be contributed.

Reason: properties contributed be included in the partnership requires the contribution of things determinate.

¾    Property subsequently acquired by:

(1) inheritance,

(2) legacy, or

(3) donation

CANNOT be included by stipulation = VOID

EXCEPT the FRUITS thereof.

e.      OF ALL PROFITS (WHAT IT INCLUDES)

¾    One which comprises all that the partners may acquire by their industry or work during the existence of the partnership and the usufruct of movable or immovable property which each of the partners may possess at the time of the celebration of the contract.

¾    The partners retain their ownership over their present and future property. What passes to the partnership are the profits or income and the use or usufruct of the same.

¾    Upon the dissolution of the partnership, such property is returned to the partners who own it.

¾    partners may acquire by their industry or work, it follows that profits acquired by the partners through chance

¾    fruits of property subsequently acquired by the

¾    Partners do not belong to the partnership. Such profits BUT may be included by express stipulation.

f.        PERSON PROHIBITED FROM ENTERING UNIVERSAL PARTNERSHIP; EXCEPTIONS

¾    ART. 1782. Persons who are prohibited from giving each other any donation or advantage cannot enter into a universal partnership.

¾    VOID

¾    Husband and his wife, however, may enter into a particular partnership or be members thereof.

¾    Art. 739. The following donations shall be void:

(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;

(it is not required that there be a previous conviction for adultery or concubinage.)

(2) Those made between persons found guilty of the same criminal offense, in consideration thereof;

(3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office.

g.      PARTICULAR PARTNERSHIP

¾    ART. 1783. A particular partnership has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.

¾    it is a partnership which is neither a universal partnership of present property nor a universal partnership of profits

UNIVERSAL	PARTICULAR
the object is vague and indefinite, contemplating a general business with some degree of continuity	it is limited and well-defined, being confined to an undertaking of a single, temporary, or ad hoc nature.