Notes of the Warrior (Partnership 404 2013) WWW 6/15/13 Q: Last meeting we asked the question why is there

e a need for a business law? and our favorite answer was profit. Is there anything you could add? (Mr. Dacanas) A: In poverty, there is no need for a law. But when you have assets, when you now become rich, you have a lot of properties, there should be a law because if there was no law, then there is danger or risk on your properties. If you own 1 hectare in Colon Street, there will be squatters or informal settlers. Because of this, even if there is law, they even try to take your properties away and when you sue them in court, abi pobre man mi gidaut2 mi. And then they will form an organization, the United Squat ters Association (USA) or the Informal Settlers Association (ISA). In other words, we have business law not only for profit but also to protect your profits and assets. Other than protecting assets, we now move to the partnership area. Starting today we are already businessmen even if we dont have businesses because if you want to learn this subject by heart then you must assume that you have business. We have learned that the need for business law is more on the protection of assets. In some schools in the US, they do not have a course on business organization. They have the Asset Protection Course, which is a special course. Q: Other than the informal settlers, robbers or thieves, what could happen to your assets? What are these other ways of losing your assets? (Ms. Cabergas) A: Failure in business. If you fail in business you lose your assets, you lose your investment. If you engage in a partnership business, for example, and that partnership business does not succeed, you lose. Q: What else? How else could we lose our profits for us to have a need to protect our assets? A: Misappropriation could be a way of losing assets. Q:But how? The purpose of this meeting is to form our minds to become business minded. A: I know youre an honest girl but sometimes there are other students who will ask their parents, Mom, I need P10,000 for cont ribution, slippers, BIKINI, and bikinis could get smaller, even though all you really need is P5,000. You use something intended for one thing and use it for another. In a partnership for example, there could be misappropriation. Because in a partnership you contribute and there are a lot of you and everyone might have access to the money. You might notice that one partner reports to the office very early in the morning. Everybody appreciates him. Buntag sayo, maoy mauna sa opisina, maulahig uli. Ngilngig kayo partnera. Only to find out later that the partnership money is gone because very early in the morning he already starts getting the money and when everybody is in the office, he is already drinking his coffee. Misappropriation could be a way of losing your assets. Q: How else? Thats why we have business law to know the ways of protecting our assets. (Ms. Judilla) A: We have to know the law so that we would know what are the expenses and the duties that we have to attend to. Otherwise, we w ill lose more in terms of penalties, interest and all those things. So Negligence or failure to comply. We have to study the law on business so that we will know in what way we will preserve and protect our assets against penalties, interest, thieves, robbers. But thats Criminal Law. Here, we take the provisions of the law to protect our assets against civil losses. Q: How will we protect our assets against sources of obligations, for example? By the way, what are the sources of obligations? A: (1) Law (2) Contracts Cause, Object, Consent (3) Quasi-Contracts (4) Quasi-Delicts (5) Delicts Q: (Mr. Lumapas), Delicts as a sort of obligation are what? A: Crimes. Thieves, robbers, estafadors. These are sources of obligations. And because these are sources of obligations, even though we have a remedy under the law, in business, its always better to PREVENT. Protect our assets from thieves, robbers, assets, and misap propriation. Q: What else? A: Quasi-delict or torts Example, if you have earned a lot of profit this year, for example, 20 million, in your business. One day, after a drinking session, you drove your car very slowly at 120kph, and in every corner you hit a pedestrian. Lets say 3 pedestrians were hit and all of the m sued you for the amount of 5 million each. So your profit of 20million minus 15million is now down to only 5 million. You lost 15million out of your profit out of negligence. Q: What could you have done to protect that 20 million from any liability arising from your negligence? A: If you were a businessman, you formed a business organization. What happens to you personally will not affect your profit. By protecting your profit, you are now enjoying your investments. If the car were registered in your name, and profits were in the name of the corporation, even if you kill 5 or more, the profit of your corporation will not be affected. That is how you should think and understand. Q: Is there life after debt? A: No life at all. If you are buried with debt, then you could never enjoy life anymore. So as a businessman, avoid debt. Although sometimes it is necessary, but so long as you are assured that you are capable of complying with your obligations, you dont have to despair. Borrowing is part of busines s. But be sure your assets are larger than your debts. So here, while we are protecting our assets, we also said that borrowing is a necessity. But it is something you should exercise with prudence because if you borrow more than your assets, nigkalapas nimo sa imong assets, whether its owned by the business organization or you personally.. Q: What will happen? (Lim) A: Attachment, execution, levy, these are also ways of losing your assets. So we should know. These are the things that we should have to be aware so that we will fully understand why there is a need for a law on business. Were trying to protect our assets not only for the criminal acts of others, but also for other contractual obligations and also from legal remedies of our creditors. Now we know why there should be a law on business: So that there will be order in the business community and other than that, so that we will protect our assets and pursue our business. Q: Ms. Judilla earlier mentioned of a contract as a source of an obligation. Ms. Judilla even explained that if there is a contract, there are three elements, what are these three elements? A: Consent, Object, Cause or consideration. Q: We also mentioned the kinds of contracts, its either

Notes of the Warrior (Partnership 404 2013) A: Written or Oral. Dont forget the word oral. Dont have difficulty pronouncing that word. Q: In the internet news, what can you say about oral? A: It had something to do with the actor Michael Douglas. It was alleged that too much oral sex could cause cancer of the throat. Q: When we say a written contract, what is another way of saying a written contract? A: Formal. Contract will be valid and binding only upon the moment it complies with the formalities of the law. Q: Example? Are you married? A: Not yet sir. (Class looks at Karen, Espedido takes a closer look, the class laughs and asks, Did I notice something?) Marri age is a formal contract. No formal requisites, no marriage. Q: A formal contract should be distinguished with the verbal or? (Mr. Menchavez) (Adlib) Ay kog ingna mo ingon ka og bai, verbal sa ta A: Consensual. Perfected by mere consent. If you ask for something from your girlfriend, you dont have to write her, it should be perfected by mere consent. Q: In the Law on Partnership, what is a partnership? A: Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Q: What kind of a contract is a partnership? Is it a consensual or formal contract? (Ms. Baya) A: (Ms. Pasatiempo) Generally, a contract of partnership is a consensual contract in the sense that it is perfected by mere consent; as distinguished from a formal or solemn contract which means a specific form is required for perfection Except: i. ii. When the capital of the partnership is P3,000 or more must appear in a public instrument, which must be recorded in the Office of the Securities and Exchange Commission (Article 1772) When there is a contribution of an immovable or real rights to the common fund requirements: 1. The contract must be in a public instrument (Article 1771) 2. An inventory of the property contributed must be made, signed by the parties, and attached to the public instrument (Article 1772) When parties agree to create a partnership at a future time not exceeding one year the contract must be in writing (Statute of Frauds)

iii.

Q: What are the immovable properties? A: ARTICLE 415.The following are immovable property: (1)Land, buildings, roads and constructions of all kinds adhered to the soil; (2)Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; (3)Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; (4)Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements; (5)Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; (6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included; cdtai (7)Fertilizer actually used on a piece of land; (8)Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant; (9)Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast; (10) Contracts for public works, and servitudes and other real rights over immovable property. (334a)

Q: What are the kinds of immovable properties? A: Immovable by nature, incorporation, destination, law Q: Do you see those big luxury vessels floating? They move from pier to pier, are they movable? A: The law considers them an immovable property. Movable and Immovable properties sows confusion because when you go to the bank and you offer the vessel as a security you will be required not to execute not a REM but a Chattel Mortgage. Power plants can be moved in actuality but the moment they are incorporated, they are considered immovable property. Q: This is important to know because what can be contributed in a partnership? A: money, property, or industry In a conjugal partnership, just be able to make sure that you will be able to contribute your intimacy. _________________________________________________________________________________________________________________________

Notes of the Warrior (Partnership 404 2013) 6/20/2013 Louie Asked on the classification of properties: Among mentioned, Real vs Personal; Immovable vs Movable; Corporeal vs Incorporeal He gave examples under each classification From this day on, the Santoses shall be known as Santol and Santal in this class. Marvin Gave more examples under incorporeal property. Among mentioned: credits, stocks Louie continued examples of incorporeal property: Intellectual property rights and goodwill. He added another classification referring to fungibles and infungibles Several people were asked about the meaning of this classification until we arrived with the correct definition that fungibles are those properties which we can only enjoy their uses if it will consumed while infungibles are those whose uses can be enjoyed even without being consumed. Georfo added the classification consumable and non-consumable. Louraine we learned in her recit that all these kinds of properties can be contributed in the common fund in a partnership. As well as industry and money. Atty gave the example of the pimp selling out the services of the prostitutes with the arrangement that they share the profits afterwards Paul we learned that such example is not a partnership because it doesnt have a lawful object which is an essent ial feature of a partnership. ARTICLE 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. (1666a)

Example of betting on a sweepstakes ticket and sharing the proceeds if ever the ticket wins. Paul It is a partnership. It is a lawful object. Example of betting on Spurs. Paul such is illegal gambling, and therefore the object is illegal Example of buying and selling cars From the facts, it cannot be gleaned that there is a partnership because there is no arrangement on the sharing of profits. Georfo Asked if it was a partnership were Olive, a flower gardener sells her flowers for 10 pesos to a flower arranger. Olive agrees to allow the flower arranger to sell these flowers, which she will arrange for whatever price as long as she gets back her 10 pesos. Anj said it constitutes an agency, Atty suggested that it could also be a simple contract of sale. Atty gave another example: what If Anj was made a manager of the property of her boyfriend who recently succeeded the 1 out of the 5 units of cars in a rent-a-car business from his deceased father, together with his 4 other brothers. As compensation, Anj will be given 10% of the profits of the business Olive There is no partnership. No agreement among the brothers to contribute their inheritance to a common fund. Who will pay for the repairs of the car, who bears the losses? Olive the owner of each unit. Who pays the managers salaries? Anj the partnership should pay for the salaries. It has a separate juridical personality What are the types of business organization? Anj Sole proprietorship, Partnership, Corporation *Atty tells the story of creation *Atty then asked Anj if she and Alfie are partners if they agree that Anj, builds residences, Alfie sells them and they share the profits. Alfie answered they are partners and they are engaged in a partnership. *Atty asked several students of the types of partnership Luj summed up all the classifications given by the other students Classifications of partnership As to extent of its subject matter 1.) Universal partnership. (Art. 1777) a.) Universal partnership of all present property. (Art. 1778) b.) Universal partnership of profits. (Art. 1780) 2.) Particular partnership. (Art. 1783) As to liability of the partners 1.) General partnership: one consisting of general partners who are liable pro rata and subsidiarily and sometimes solidarily w/ their separate property for partnership debts. 2.) Limited partnership: 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.

Notes of the Warrior (Partnership 404 2013) As to duration 1.) Partnership at will: one in w/c no time is specified and is not formed for a particular undertaking or venture and w/c may be terminated at any time by mutual agreement of the partners, or by the will of any one partner alone; or one for a fixed term or particular undertaking w/c is continued after the end of the term or undertaking w/o express agreement. 2.) Partnership with a fixed term: one w/c the term for w/c the partnership is to exist is fixed or agreed upon or one formed for a particular undertaking. As to the legality of its existence 1.) De jure partnership: one w/c has complied w/ all the legal requirements for its establishment. 2.) De facto partnership: one w/c has failed to comply w/ all the legal requirements for its establishment. As to representation to others
rd

1.) Ordinary or real partnership: one w/c actually exists among the partners and also as to 3 persons. 2.) Ostensible partnership or partnership or partnership by estoppel: one w/c 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. As to publicity 1.) Secret partnership: one wherein the existence of certain persons as partners is not avowed or made known to the public by any of the partners. 2.) Open or notorious partnership: one whose existence is avowed or made known to the public by the members of the firm. As to purpose 1.) Commercial or trading partnership: one formed for the transaction of business. 2.) Professional or non-trading partnership: one formed for the exercise of a profession. How do you distinguish partnership from co-ownership? CJP DDPE Creation Juridical Personality Purpose Duration Disposal of interests Power to act with third persons Effect of Death Partnership Always created by a contract Separate and distinct from partners Realization of profits No limitation as to duration May not dispose of individual interest in the partnership to make assignee a partner unless agreed upon by all partners Partner may bind the partnership Death of partner results to dissolution of the partnership Co-ownership Generally created by law, may exist even without a contract No juridical personality Common enjoyment of a thing or a right which does not necessarily involve sharing of profits Agreement to keep thing undivided for more than 10 years is not allowed Can freely do so Cannot represent the co-ownership; judgment against one does not bind the others Does not necessarily dissolve the co-ownership

Just in case apil ni, gi apil nalang pud ning partnership v. corporation Partnership Manner of creation Number incorporators Commencement juridical personality Powers of of Mere agreement of the parties May be organized by only 2 persons From the moment of the execution of the contract of partnership May exercise any power authorized by the partners provided it is not contrary to law, morals, good customs, public order or public policy Every partner is an agent of the partnership unless the management is agreed upon to the contrary of A partner as such can sue a co-partner who mismanages None since when a partner dies, the partnership will be dissolved Corporation By law or operation of law Requires at least 5 incorporators From the date of issuance of the certificate of incorporation by the SEC Can exercise only the powers expressly granted by law or implied from those granted or incident to its existence Power to do business and manage its affairs is vested in the board of directors The suit against a member of the board of directors who mismanages must be in the name of the corporation Has so that even if the stockholder will die, the corporation will not be dissolved but the stockholdings of the deceased stockholder will be transmitted to his heirs Stockholders are only liable to the extent of the shares subscribed by them Generally, stockholder has the right to transfer his shares without the prior consent of the other stockholders May not be formed for a term in excess of 50 years extendible to not more than 50 years in any one instance May adopt any firm name provided it is not the same as or similar to any registered firm name. Can only be dissolved with the consent of the State Corporation Code

Management Effect mismanagement Right of succession

Extent of liability third persons Transferability interest Term of existence

to

Partners (except limited partners) are liable personally (may be severally liable) for partnership debts to third persons Partner cannot transfer his interest in the partnership so as to make the transferee a partner without the consent of all the other partners Any period of time as stipulated by the partners

of

Firm name Dissolution Governing law

Limited partnership is required by the law to add the word Ltd. to its name At any time by the will of any or all of the partners Civil Code

Notes of the Warrior (Partnership 404 2013) If A owns a carabao, farm, and warehouse and B owns an apartment and cars, who becomes the owners of these? In a UNIVERSAL PARTNERSHIP OF PROPERTIES, the ownership of all the properties will now be transferred to the PARTNERSHIP. Whereas, if the agreement is UNIVERSAL PARTNERSHIP OF PROFITS, it is only the USE OF THE PROPERTIES, but the ownership of the properties would remain to the PARTNERS. UNIVERSAL PARTNERSHIP OF PROPERTIES PROPERTIES farm carabao warehouse apartment cars OWNER PARNTNERSHIP PARNTNERSHIP PARNTNERSHIP PARNTNERSHIP PARNTNERSHIP FRUITS/INCOME Rice Calf Rentals Rentals (ambotlang) OWNER PARTNERSHIP PARNTNERSHIP PARNTNERSHIP PARNTNERSHIP PARNTNERSHIP

In the universal partnership of all present properties, the properties and the fruits become the COMMON PROPERTY OF THE PARTNERSHIP. What is a universal partnership? ARTICLE 1777. A universal partnership may refer to all the present property or to all the profits. (1672) ARTICLE 1778.A partnership of all present property is that in which the 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. (1673) ARTICLE 1779. In a universal partnership of all present property, 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. A stipulation for the common enjoyment of any other profits may also be made; but the property which the partners may acquire subsequently by inheritance, legacy, or donation cannot be included in such stipulation, except the fruits thereof. (1674a) ARTICLE 1780.A universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership. 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. (1675) cd i What is the presumption when the type of partnership is not stipulated? it is presumed that the partnership is a universal partnership of profits ARTICLE 1781.Articles of universal partnership, entered into without specification of its nature, only constitute a universal partnership of profits. (1676) this is because it transmits the least amount of rights

_________________________________________________________________________________________________________________________ WWW 06.22.13 Review the definition of Partnership o Intention of sharing profits o Does not require a series of transactions to constitute partnership How to determine whether a partnership exists or not.

Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Scenario 1: 2 brothers contribute 5 million each to buy a land in a subdivision worth 10million. They wanted to subdivide to start building their houses at first but the cost of materials is expensive so they decided to sell the land. They were able to sell at 12 million getting a profit of 2million. Was there a partnership? One answer: they were not partners since there should be continuity or series of transactions before they can be considered partners. Atty. Pointed out that the definition does not require a series of transactions before a partnership is formed. (Art. 1767) They were not partners. There was no clear agreement or no intention to form a partnership - sell the property and divide the profits among themselves. The receipt of the profit was not intended from the beginning. No intention to engage in business. Receipt of profits = only a presumption of partnership. In this case, it was only incidental of the intention to dispose the land. There should be an agreement to contribute (money, property, and industry). There should be an agreement to share the profits earned. The most important element is the agreement or intention to share the profits.

Does it require a series of transaction before a partnership is formed? NO. it does not need to be continuous Back to the classification of partnership: Particular Partnership A particular partnership has for its object determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or vocation. Specific/particular undertaking may only be one instance. i.e. agree to buy a lot, build a house, sell the house and share the profit earned. No partnership was formed in the above scenario.

Scenario 2: the 2 brothers bought furniture by lot they learned about from a newspaper ad 1M for sala set and matrimonial bed. They contributed 500k each. Brother A got the bed, the other Brother B got the sala set. The wife of B didnt like the color of t he sala set. B sold it at 600k (for a profit of 100k). A learned about the sale and asked for a share of the profit. Is he entitled to the profit? Are A and B partners? NO. They are NOT partners. Go back to definition of partnership (Art. 1767), where the intention of the partners is to divide profit o In this case, no partnership exists because their intent was not to divide profit, but instead merely to split the furniture lot and get their respective items

Notes of the Warrior (Partnership 404 2013) Scenario 3: This time, the wife was not contented with the sala set and opted to sell the matrimonial bed. A sold the matrimonial bed for 400k (for a loss of 100k). For the losses incurred, A demanded that B share in the loss of the sale. Should B share in the losses? Attys. Answer o THEY ARE NOT PARTNERS We just divided the furniture, not divide in profits If I destroyed the matrimonial bed, I cannot compel B to pay part of the repairs

Scenario 4: After A and B bought the matrimonial bed and sala set, they sold both and divided the PROFIT. They bought the furniture for 1M @ 500k each, and sold the same at 2M with profit as 1M. Is there partnership? No partnership, there was no intention to divide the profits. The profit here was only incidental

Scenario 5: Buying and selling of old coffins (class laughs). For those who do not have extra money, they only buy simple coffins for burial, and rent a nice coffin for viewing. A buys the coffins while B pays for materials and labor in order to refurnish the old coffins with the end result of splitting GROSS RECEIPTS. Q1: Is there partnership? (take note that what will be split are GROSS RECEIPTS) Q2: If the coffin is sold at 5M, how much will the parties get? Is there partnership? (Atty. Clarified here that the parties will not be getting 2.5M exactly since the other party who paid for labor/materials will have to deduct his expenses from the 2.5M) Q1: There is a partnership, in this case they are composed of different types of partners (A capital partner, B as industrial partner) o ARTICLE 1769.In determining whether a partnership exists, these rules shall apply: (1)Except as provided by article 1825, persons who are not partners as to each other are not partners as to third persons; (2)Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or copossessors do or do not share any profits made by the use of the property; (3)The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived; (4)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, but no such inference shall be drawn if such profits were received in payment: (a) As a debt by installments or otherwise; (b) As wages of an employee or rent to a landlord; (c) As an annuity to a widow or representative of a deceased partner; (d) As interest on a loan, though the amount of payment vary with the profits of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.(n) Answer to Q2 o There is no partnership since there was no sharing of expenses. One bought the coffin while the other did not share in the expenses, instead the other only paid for labor/materials Atty. Suspended oral recitations, to be continued on Thurs 6/27/2013 _________________________________________________________________________________________________________________________ July 4, 2013 (Jessa) Here is A who owns a vessel and B who is a master of the vessel. A told B, try to get some cargoes, load it in my vessel and once you load it, bring it to the port of destination and you collect the freight. After the collection I give you 10%. Partners? It is a wage, there is no partnership relationship but an EE-ER relationship Here is Mr. A, a creditor, who lent money to you, and because you cannot pay, Mr. A said I have my karaoke place and since youre a good singer I want you to sing for 5 nights and your obligation to pay will be considered settled. Partners? No. their relationship is Creditor-Debtor since it is an obligation. Here is Ms. Judilla who proposed to you a business. Let us go to the bank and borrow money. So you borrowed 10,000 from the bank. With your P10000, you will have to rent a building, buy a crucifix and put up an altar inside your building. So that everytime there will somebody who will come in, you will say that this is your new church and you are encouraged to give a donation. And so everyday some people come in and donate. Each day you have P10 for 5 days P500. When the weekend came, you guys decided to share the P250 and keep the rest of the P250 in the donation box. Partners? What is the nature of the donation? Is it profit? They are partners. By the definition of partnership, two persons bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profit. Is there a contribution? They contributed here even if they merely loaned from the bank because once the bank grants it to you its yours, you are mer ely obliged to pay. What did they do with the common fund? They rented a building, put up an altar and bought a crucifix and shared the donation which is in the nature of the profit since they gained by virtue of such donation even if it is merely gratuitous. 23:47 39:50 Sir: Donations cannot be profits? How do you define profits? Student: Profits sir can be defined as a turnout of your labor or skill which will inure to your benefit. Donations sir, should be considered profit. And since they share the profit, they can be considered a partnership.

Notes of the Warrior (Partnership 404 2013) So why are they a partnership? Because by definition, in a contract of partnership 2 or more persons bind themselves to contribute money, industry or proper ty So did they contribute? Money sir, yes. The one they loaned from the bank. So what did they do with their common funds? They rented a building with a very nice crucifix and asked people to utilize the property as a chapel and in turn ask for donation. Sir: Thats right class. Your donations will bring you to heaven. So, more donations come in. More profits to share! So in short, is it a partnership? Summarize why. Because by definition, they contributed money to a common fund, rented a place and put a crucifix there so that other people can use the place for worship and they will ask for donations. And such donation will be divided among them. Someone said it is unlawful, is it unlawful? I dont think so sir. Of course its not! Youre not forcing people to come. They come to pray there. And youre not forcing people to pay! Youre just encouraging them to donate! So what was the principal intention of the sisters when they put up the chapel? The real intention sir was profit. If somebody goes to heaven, thats incidental. Donation, or whatever you might like to call it, is still an amount of money, and thats still profit. Thats why Rome has the biggest bank in the world. And who owns that bank? The church! They have the biggest partnership! So if A owns a bank, he also owns a farm which he is entitled to inherit (inherited) from his father. While B owns 5 units of cars and a dairy farm which was donated to him by a former teacher. The teachers can be donees too, class. So if you have something to give to your teacher, you are allowed. So A and B met one day and pledged to contribute everything to a common fund and share everything among themselves. Are they partners? Yes, sir. They are partners. Because in a contract of partnership 2 or more persons bind themselves to contribute money, property and industry to a common fund with the intention to divide the profits among themselves. So who now owns the inherited farm? The partnership. So with regards to all the properties, once they enter into that agreement, who owns what now? The partnership of A and B owns the inherited farm, bank, the 5 cars and the donated dairy farm since the partnership is a separate juridical entity so here it is the partnership who owns the properties now. (calls another student) Who owns what? They said we are now partners, we share the profits. But who owns what? Everything that A and B agreed to put up to the partnership will belong to the partnership. However it will depend on the kind of partnership that they entered into. If they entered into a universal partnership of all present property or a universal partnership of profits. 39:50 55:53 SIR: Who owns what now? Mipps: A still owns the 5horses, bank, and farm(inherited) while B still owns the 5cars, dairy-farm(donated), and 10cows. SIR: Why? Mipps: Because under Article 1781, if a partnership is without specification of its nature, it only constitutes a universal partnership of profits. In a universal partnership of profits, the profits that the partners may acquire by their work or industry pertains to the partnership but the property they contributed pertains to them individually. SIR: However, if they agreed to have a universal partnership of all present property? Mipps: Then the six items there pertains to the partnership. SIR: All these things, including the inherited farm? Remember inheritance? Mipps: Yes Sir. At the time of the execution of the partnership, A is already the owner of the inherited farm, so I submit that the partnership owns the farm. SIR: So what cannot be included? Lumantas: If there is that situation, it will be presumed to be a universal partnership of profits, thus A and B owns those properties. But if it were a universal partnership of all present property, then the partnership will own all of those properties because the inherited farm and the donated dairy-farm were acquired by A and B right before they entered into a partnership. SIR: In other words, when the partnership was executed, they were already part of the present property. Thats why its called all present property. Now, if the properties will earn: A: Farm (inherited) = 100 cavans rice; Bank = P50 Million; 5 horses = 5 foals; B: 5 cars = Rental; Dairy farm (donated) = milk; 10 cows = beef; Lumantas, who now owns all these? Lumantas: The partnership owns the fruits of the properties. SIR: Regardless of the type of partnership? Girl3: Yes, both sir. Borres: The partnership now owns the profits, both UPAPP and UPP it is said that the profits will now belong to the partnership.

SIR: So regardless of UPAPP or UPP the profits belong to the partnership. Now, if A said that I have 50 wives, and I would like to give each wife one cavan; it is up to you on what you will do with your 50 cavans. B on the other hand was single, virgin, he was able to sell the 50 cavans for P50,000. And with the P50k, he was able to buy a brand new yacht. Who now owns the brand new yacht?

Notes of the Warrior (Partnership 404 2013) Borres: B will still own the brand new yacht because it is stated that what will belong to the partnership are only the properties at the time of the constitution of the partnership. But then the yacht was acquired by B after the constitution of the partnership. It was the fruit of the inherited farm and the profit was already distributed to both partners however B instead of getting the rice he sold it and acquired another property which is the yacht and he owns it, it belongs specifically to B. SIR: In other words the P50k proceeds of the sale already belongs to B because it was his share in the profits, not the profits of the partnership. Before, it was 100cavans that was the profit of the partnership. When it became 50, it was his share in the profit now solely owned. So, the 5 baby horses, borres? Borres: The 5 baby horses still belong to the partnership. SIR: If these were sold? Borres: The proceeds will be divided among the partners A and B. SIR: Uy, Philip! If the entire baby horses will be sold, Philip? Philip: Yes sir, that the horses will not be divided then they were sold, the money or consideration of the horses would still belong to the partnership. SIR: The proceeds of the 5 baby horses will still belong, why? Philip: Because there hasnt been any division yet of the profits. SIR: No sharing of the profits yet. The milk? Philip: It would still belong to the partnership. SIR: And they agreed that A offered a job to his 50 wives. And their job is to report to the farm every morning, and all of them have to hold the udders to secure milk from the cows. Who pays for the salary of the wives? Philip: The partnership. Because the milk belongs to the partnership and they chose to employ persons to collect the milk from the cows. SIR: Meaning expenses incurred in the production of the milk should be assumed by the partnership. It would appear Mr. Uy that we have discussed the basic classification of partnership namely? Philip: We distinguish from object which is either universal or particular, and liability whether general or limited, as to duration: at will or for a fixed term, as to legality whether either de jure or de facto, as to representation to others: ostensible or ordinary, as to publicity: open or secret, as to purpose whether its for business or profession. 55:53 1:11:56 Sir: So that, Colis, going back to the formalities what are the formalities? Colis: Since partnership is essentially a consensual contract, clearly, theres no need for it to be written in a public inst rument unless an immovable property is contributed, an inventory of such property is made, and the partners would want to enter into a partnership that would take years under the Statute of Frauds, and if the capital of the partnership exceeds 3,000 pesos then this should be registered in the SEC. Sir: Then how do you classify partnership? Colis: It is a consensual partnership generally, Sir. Sir: So it is perfected by mere consent? Colis: Yes, Sir. Unless: Colis: Unless if there is a immovable property donated this will be in a public instrument and an inventory of the property made. If two or more persons enter into a partnership within a year it should be in writing since it is unenforceable under the Statute of Frauds. IF the capital of the partnership exceeds 3,000 pesos it should be registered in SEC. Sir: What is an immovable property? Colis: An immovable property is a property that cannot be transferred from one place to another. Sir: As distinguished from a movable, which can be transferred from one place or another. Sir: What are consumables? - Property that must be consumed to be enjoyed Sir: All right. What about non-consumables? Colis: Non-consumables are those things that can be enjoyed without need to consume. Sir: So it is said that when an immovable property is contributed, it should be in what form? Colis: It should be in a public instrument, Sir. Sir: But this is not only when immovable property is contributed, but even if a real right is contributed. What is a real right? Because the law says, an immovable property or a real right. So what is a real right? Albete: Real rights are rights that are enforceable upon the whole world. Sir: Ah, so it includes a right over personal property? Albete: Yes, Sir. Sir: So this water jug, although its a personal property, but I have a real right over this. When I say I have a real right over this? Albete: You can enforce your right against anybody.

Notes of the Warrior (Partnership 404 2013) Sir: Correct. Then if Archbishop Palma says, I want that! I can say that No, this is mine! because I have a real right ov er this and I can enforce a real right against anyone. Against the whole world. Because its a real right. So what is a personal right? Albete: A personal right is the right of a person against a specific person. Sir: Only against a specific person. Albete: Yes, Sir. Only against a specific person. Sir: So that if this is again taken by Archbishop Palma, I saw him take it away, can I go to Pope Francis and say, Pope Francis, give me back my water jug because Archbishop Palma took it away! Can I go to Pope Francis? NO! I cannot enforce my personal right against Pope Francis because my personal right is enforceable only against a particular person, the person who got my water jug, and that person is Archbishop Palma. Remember that, remember that. That is the difference between a real right from a personal right. Now, we say an immovable property is contributedalso? Albete: Also real rights, Sir. Sir: So then if also a real right is contributed, the formalities should be? Albete: The formalities should be, when an immovable property or a real right is contributed, there must be an inventory signed by the parties, attached in a public instrument, and this must be recorded in the registry of the location of the property. And that this must also be recorded in SEC. ARTICLE 1771.A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary. (1667a) Sir: So that if you agreed with Mr. Lumapas to enter into a partnership, and you offered your 5M pesos as contribution, and Lumapas offered to lease the fish pond owned by his father to the partnership, what formalities would it require? 1:11:56 1:27:59 Lumapas contributed a fishpond leased from his father situation allow the partnership to use the property. Which was the real right? Lease of the property by Lumapas from his father What did he contribute his rights over the area? What are the different formalities required? ARTICLE 1771.A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary. (1667a) ARTICLE 1772.Every contract of partnership having a capital of three thousand pesos or more, in money or property, shall appear in a public instrument, which must be recorded in the Office of the Securities and Exchange Commission. Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnership and the members thereof to third persons. (n) ARTICLE 1773.A 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. (1668a) If it involves Immovable Property Public Instrument Inventory of the property signed by the parties Annotate in the Land Registry where the property is located If it involves Real rights Public instrument Scenario: One partner contributed a 20sqm lot worth Php 1,500 only and the other partner will contribute his expertise in changing tires. Are they partners? Yes Formalities required? Public instrument, inventory signed by the parties o Value of the property does not matter. So long as it involves immovable property, it needs to follow the formalities. Once juridical personality is formed, what is the effect? The partnership will become a distinct personality. i.e 3 persons A, B and Partnership AB. ARTICLE 1768.The partnership has a juridical personality separate and distinct from that of each of the partners, even in case of failure to comply with the requirements of article 1772, first paragraph. (n) cdt What rights does a juridical personality enjoy? Bill of Rights (kamo na bahala kng applicable ba ni) o o o o o o o o o o Right against unlawful search and seizures Right to due process privacy of communication and correspondence Private property shall not be taken for public use without just compensation. No law impairing the obligation of contracts shall be passed. Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies. Equal protection of the law Right to life Some authors have different views: right to life are only granted to natural persons. Right to liberty

Right to own properties

What about the right to be presumed innocent? Since a juridical entity cannot be placed to jail, the law provides that officers or partners (natural persons) will be liable and will be put to jail.

Notes of the Warrior (Partnership 404 2013) Partnership can have that right sanctions such as fines and penalties, confiscation of assets dissolution of partnership. Partnerships can still be penalized thus they still enjoy this right

How do you illustrate Equal protection of the law? Requirement of 3000 capital which shall be in a public instrument shall apply to all types of partnerships. Define Universal Partnership of profits. Article 1780 A universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership. 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. If you were working and you have a salary, and you are a partner with A, can A demand a share of the salary? Yes, A is entitled since it Universal partnership of profits include the profits acquired by their industry or work during the existence of the partnership. 1:27:00 1:44:00

ATTY: The right to life, to liberty. We do not know how to send them to jail. They are juridical persons. The right to liberty, however, is not to be enjoyed. The right to be presumed innocent until proven guilty? Josie: Basically from what weve learned, even if youre suing a juridical entity such as a partnership, if the courts find a juridical entity liable, then its the officers (partners in our case) that are liable for the juridical entitys acts or omissions.

Atty: But that is the right of the officers, not the right of the partnership. Does the partnership has the right to be presumed innocent? Josie: Atty: Alright, fines and penalties. There are different subjects, so there could be different penalties. Not just imprisonment. As you said, they could be dissolved. If it were a natural person, thats death. So, they could still be penalized, not necessarily imprisoned. There are various forms of penalties; fines, dissolution, confiscation of assets. Since they are subjected to these actions, they should enjoy the right to be presumed innocent until proven guilty Q: what would the other bill of rights be? Yes, because partnerships can be sanctioned in different ways other than being sent to jail. Like confiscation of their properties, damages, payment of fines, or even dissolution of a partnership if its found to have an unlawful cause

Josie: -

Right to enter into contracts, Right to own property

Attty: What rights do we have in the bill or rights? Josie: Equal protection of the laws o Equality among equals o That if one burden or privilege is imposed on one particular partnership, all other partnerships falling in the same class should bear that burden or enjoy that privilege

Atty: Universal partnership of all present property and universal partnership of profits. What do we mean by universal partnership of profits?

Art 1783. A Universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership Movable or immovable property which each of the partners possess at the time of the celebration of the contract shall pertain exclusively to each, only the usufruct passing to the partnership

Torres: Universal partnership of profits is one where it comprises what the partners acquire through their work or industry and including the usufruct of whatever property that they have during the execution of the partnership.

Atty: Q: What do we mean by usufruct of movable or immovable property? Torres: Usufruct means the use or the fruits of whatever movable or immovable property they contributed to the partnership

Atty: So who owns the properties? Torres: The ownership remains to the respective partners Only the fruits or the usufruct or whatever profits acquired belong to the partnership

Atty: So baya, if the partners agree only to a universal partnership of profits who owns this (movable or immovable properties)? Five-five: They would be owned by the respective partners who owned them before the execution (celebration of contract)

Atty: The partners RETAIN ownership. What is passed on to the partnership? Five-five: It is the profits or the fruits of the properties

Notes of the Warrior (Partnership 404 2013) Atty: So here, these are the profits, these are the fruits, who owns this? Five-Five: The partnership, sir.

Atty: So partnership owns the fruits, the profits acquired by their? Five-Five: Industry or property during the existence of the partnership

Atty: So that what was contributed was only the fruits, including the not only the fruits but who could use this now? Five-Five: The partnership, it includes the usufruct of the property

Atty: Q: When you say usufruct? Five-Five: It means the beneficial use of the property

Atty: Beneficial use, thats a good term. As distinguished from? Five-Five: As distinguished from those that you need to pay for the usage thereof

Atty: So only beneficial ownership or the right to use is transferred to the partnership Q: Why would you say only the beneficial ownership? What other ownership do we have?

Five-Five: Atty: Q: What is retained by the owner if he only passes the beneficial ownership? The owner retains NAKED OWNERSHIP when usufruct is passed to another o To remember, when you take a bath, you sing your favorite song and you look at the mirror, what do you see? Youre naked! It is the ownership of the property wherein you dont have just the usufruct of the property but you actually have its owners hip so you can sell it

July 11, 2013 As distinguished from universal partnership, what other kinds of partnership do we have? As opposed to universal partnership we have the particular partnership. Again what would constitute a particular partnership? A particular partnership sir has for its object a determinate thing, the use of their fruits, a specific undertaking or the exercise of profession or vocation. In both partnerships, its the use that is contributed! So, when would we know if its a particular partnership or a universal partnership of profits if only the use is contributed to the partnership? SIR: Ah nature of activity is critical? Olvis! In a Particular Partnership where the use is contributed, refers only to?

Olive: In a Particular Partnership where the use is contributed, it only pertains to a specific property or a specific undertaking, the use of a particular property. SIR: USE OF THE PARTICULAR PROPERTY! VERY SIMPLE! PARTICULAR PARTNERSHIP WHERE ONLY THE USE IS CONTRIBUTED. As distinguished from the universal partnership of profits where? What is contributed will be? Olive: SIR: The properties contributed by the partners may be used by the partners SO WHAT IS CONTRIBUTED in a UPP? Only? Ortezuela! Go Orte!

Daphne: In a Particular Partnership since there is the use of a specific thing, the difference in a UPP is it is not only of a specific thing it comprises of all or generally SIR: ITS THE USE OF? OF ALL! Its the use of ALL! Its simple! In a particular partnership what is contributed?

Daphne: Only a particular thing sir. Ah only a particular use. Ah SIR: Only the use of a particular property, while in a UPP?

Daphne: The use of all SIR: THE USE OF ALL! So whats hard? Whats so difficult? Its just in the words of the law according to your classmate. So that although all partnerships, use is contributed, they differ in the sense that Particular Partnership = the use of a particular property while in the UPP = its the use of all properties. We got stuck up there. As we said earlier, a contract of partn ership is what kind of a contract? Daphne: Its a consensual contract. It is perfected by mere consent. SIR: unless?

Daphne: Unless the law requires other formalities such as the contribution of real property where it is required that there is an inventory attached to a public instrument SIR: Alright. And so on and so forth. When partners agree to a partnership, relationships are established. And once a partnership is entered into, what will be these relationships? Daphne: There will be the relationship among the partners. The relationship between the partners and the partnership; because the partnership has its own juridical personality. Third is the relationship between the partners and third persons.

Notes of the Warrior (Partnership 404 2013) SIR: Partners as to third persons! Because remember the juridical personalitys acquired but does not mean that the partners no longer deal with third persons. Although generally its the partnership that deals with third persons, which got a separate personal ity, there are also instances where the moment the partnership no longer has any asset, third persons can go after the individual partners. Finally? Daphne: Lastly the relationship of the partnership as to third persons. SIR: Olvis! In a partnership what happens? What happens when theres partnership? How do we define partnership? Olive: Partnership is an agreement between partners that they contribute to a fund the property, industry.. SIR: Georfo

Georfo: By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves. SIR: Once that happens we have a Juridical Personality. So that here if A and B agreed that 6 months from now they will enter into a partnership, are they now partners? Georfo: Not yet.

SIR: Not yet! Because if somebody approaches you georfi and say Georfo, if you will come with me tonight, I will marry you six mo nths from now. Are you already married? Georfo: No sir. SIR: Georfo: Not yet! What happened was?.. Executory.

SIR: That will not prevent you from executing something else. Hahaha. There was an intention TO ENTER into a partnership. In a partnership, where you promise to contribute P10,000 and the other partner promise to give you P10,000, and you already made contribution, and that the partnership to take effect 6 months from now. That your contribution is already in, are you now partners? Georfo: No sir. SIR: Other than contribution you must have an agreement to divide the profits. So clearly there is no partnership yet even if the contributions were made. However, if you have already the agreement but not yet the contributions, will there now be a partnership? Georfo: No sir. SIR: If the agreement was done but with no contribution, still there is no partnership. Orte!

Daphne: If they have already entered into an agreement, even though they have not yet actually contributed their property, there is already a partnership because the delivery is not one of the essential elements in order for you to contract a partnership. SIR: So even if they DO NOT agree on a contribution, there is already? Because its not an essential element? Contribution is not an essential element? SIR: The law does not require that they ACTUALLY contribute. It is only required that they AGREED to contribute. And that they agreed to divide the profits among themselves. So, if there is a partnership without the contributions, what do you think can they do? You said there is a partnership even if there are no contributions, how can it be? Tinutukay lang ta ani? Daphne: They have the Obligation to contribute the thing that they have promised. SIR: They should be obliged. Correct. If one partner contributed and the other did not; in the case Georfi contributed 10k and the other partner did not, can Georfi Rescind the contract? Daphne: What should be done is Specific Performance and not rescind the contract. SIR: Not rescission but specific performance? But did we not learn in Law1 ObliCon that in reciprocal obligations and one of the parties does not perform part of the obligation, the other party can demand for rescission? Daphne: Yes sir however the general rule is to enforce the other party to contribute so as it would have to go for a specific performance SIR: But wont we apply that rule ? Daphne: We can rescind sir but only when ther is fraud or misrepresentation SIR: Georfo: Rescission is the general rule, however here the remedy is specific performance by the special provisions on the law on partnerships, why? Georfo: Because the partners have the obligation to contribute money property industry even though not at the execution of the partnership but at a later time Girl: As provided for in the Civil Code the partners have the obligation to contribute money property or industry not just at the execution of the contract but they can also agree at a later time. SIR: Lim what do you think Lim? Why specific performance? Not rescission?

Arl: This is different form oblicon because in oblicon it is a general law and partnership law is a special provision. Applying the stat con special law prevails over general law. 1:07:00 1:24:00 Why specific performance, not rescission? The remedy of specific performance is provided by a special provision in partnerships which prevails over general provisions in oblicon. Why did the law require? The RATIONALE: In a partnership, if a partner fails to deliver he is now a debtor ipso jure.

Notes of the Warrior (Partnership 404 2013) Scenario: Ms Cokaliong has a car, My Ygana is good in make-up. What could be the business with the car of Cokaliong and skills of Ygana? The funeral business. Its a good business since its always cash or carry otherwise, they can sit on the donation box and ta ke from there what they charge. Ms Cokaliong selected some textiles from Chester Enterprises for the curtains. Ygana declined to make-up ky Itom kaau. batig nawng, gusto ig make up, buhi ghapon. Can you ask for rescission? No, you can only ask for specific performance.

Can you compel Ygana? No, since you cannot compel someone to render services. It is tantamount to involuntary servitude. What is Cokaliongs relief? She can find a third party to do the services and claim reimbursement for expenses, interest if any, damages from Ygana. Will you still rescind the partnership? No Who will benefit from the payment of damages? If money used was from the partnership, then the partnership If money used was from Cokaliong, then it will for Ms. Cokaliong. Partnership for a Fixed Term which no time is specified and is not formed for a particular undertaking or venture and which may be terminated anytime by mutual agreement of the partners, or by 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 Partnership at will which the term for which the partnership is to exist is fixed or agreed upon or 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. How many kinds are there in a partnership at will? Two Kinds. o Partnership with no definite term o Partnership when originally they had a fixed term but after expiration of the term they continued to act as partners. 1:24:00 END Art. 1785 When a partnership for a fixed term or particular undertaking is continued after the termination of such term or particular undertaking without any express agreement, the rights and duties of the partners remain the same as they were at such termination, so far as is consistent with a partnership at will A continuation of the business by the partners or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is prima facie evidence of a continuation of the partnership Papi: -

There are two kinds A partnership which was at will and a partnership with a fixed term which was converted into a partnership at will

Atty: What do you mean when you say partnership at will? Papi When partners intend that they will operate with no definite term

Atty: What other type of partnership at will? Papi A partnership with a fixed term or particular partnership continues to operate even after expiration of the term, or the particular purpose is achieved

Atty Q: Partnership with a fixed term, how many kinds do we have? You know what lumapas, theyre bluffing! Why are they bluffing? Migs Because theres only one type of partnership with a fixed term

Atty: Q: If lumapas, logroo approaches you and says, lets put up a condominium. Papi has a property at colon street, migs is enga ged in construction. I give my property and we split the building. 50/50, we will each have 20 rooms. Migs will have the rooms in odd-numbered floors while Papi will have the rooms in even-numbered floors. So what kind of partnership is this? Papi Atty Papi Atty Papi We agree to rent a space for one month for the sinulog After the one month, we will no longer lease that Alright, we have accomplished our undertaking. Youve got your part of the building, Ive got mine, we share it equally. Then it is considered done and complete. Thats a particular undertaking. Q: Give me an example of a partnership with a fixed term, logroo The partnership is dissolved Q: After the building is complete and you divided the units, what happens? Its a partnership with a particular undertaking which is the construction of the building After the construction of the building, we divide the units equally

Notes of the Warrior (Partnership 404 2013) Migs We decide to rent a space for the incoming sinulog for 1 month and then we will sell our stocks to the visitors of the sinulog and it will only be for that specific month

Atty Migs Atty Q: You realize that the hotel business is more profitable during valentines rather than sinulog. You continue the business, what happens here? After the term of one month, the term is already expired and the partnership is terminated So what happens after one month?

Flores Atty -

It becomes a partnership at will

They continue to act like partners and therefore it has become a partnership at will o Memory aid: after valentines, marriage will come in march. And then april? Summertime. So people will always come Q: Going back to the obligations of the partners, we said that a partner fails to deliver what he has promised, what happens to him?

Art. 1786 Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto. He shall also be bound for warranty in case of eviction with regard to specific and determinate things which he may have contributed to the partnership, in the same case and in the same manner as the vendor is bound with respect to the vendee. He shall also be liable for the fruits thereof from the time they should have been delivered, without the need of any demand. Flores Atty Flores Because the partner is a debtor to the partnership, he can be compelled to contribute Q: What other obligations are there for the partners?

A partner can be compelled sir, because in so far as that partner is concerned such contribution is needed for the partnership to exist Therefore such contribution is needed or required, there must be an action for specific performance

To answer for eviction when such property is being deprived (specific and determinate things which he may have contributed to the partnership, art. 1786, par 2, 1st sentence) Fruits of the property when they should be delivered without need for demand (art 1786, par 2, 3 rd sentence) ***Coverage for next meeting until Art. 1795***

________________________________________________________________________________________________________________________ WWW 071313 What are the rights and obligations of the partners? 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 To answer for eviction in case the partnership is deprived of the determinate property contributed To answer to the partnership 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 To preserve the property with diligence of a good father of the family What is warranty against eviction? When a partner delivers a property to the partnership, the partnership cannot hold possession of the property due to some other person or intervening events deprives the partnership of possession The partner shall be liable for damages. Scenario: A promised to deliver 5 horses. He was riding on one horse, while 4 other horses followed. tsi, tsi and 4 other younger horses also followed. What should be the liability of the partner? If he promises to deliver 5 horses, he should deliver the 5 horses. How about the young horses? If the young horses were born before the date he is expected to deliver, the younger horses shall be excluded since the partner is liable also for the fruits from the time he is expected to deliver up to the time of actual delivery. The partner himself owns the young horses. On the other hand, if the 5 horses were pregnant upon delivery. The young horses should belong to the partnership because it was born after the time of delivery which shall pertain to the partnership. Scenario: The delivery date should be on July 1 but the partner delivered the 5 horses only on July 15. The baby horses were already born at the time of delivery. The partnership inquired, where are the 5 horses? As what have said, the baby horses should already b elong to the partnership. Was he in delay? Yes, the partner is already in delay What we learned in oblicon, no demand, no delay however here in partnership there is delay even when there is no demand sin ce this is a specific provision. After the due date but before delivery, 3 of the 5 baby horses died. Who bears the risk of loss? Regarding the ownership of the 5 baby horses, it can already be determined that its the partnership who is the owner. The expected delivery date was on July 1 and 5 baby horses were born after. The partner is expected to deliver specific property he has promised including the fruits which he delayed.

Notes of the Warrior (Partnership 404 2013) It depends on the cause of the death. If death was causes not attributable to the partner, then the partnership is liable. The partner is only liable if he was the cause because of his negligence. The obligation to preserve the property does not require the partner to be an insurer. He is required only to exercise diligence of a good father.

Earlier we discussed about real property to be contributed, what is required? Inventory signed by the parties What is the contents? List of things, description, value. Why is the value important? This determines the contribution by the partner which in turn will determine the share in the partnership as well as the share of the losses. If contribution shall consist of goods, what is needed? Appraisal Scenario: Mr Lim contributed personal properties and asked his partner Mr Robles to determine the value. Whats the rule? Appraisal must be made in the manner prescribed in the contract, and in the absence of stipulation, it shall be made by experts chosen by the partners Was there an agreement? No, since the properties of Mr Lim cannot be left at the discretion of Mr Robles. The determination of Mr Robles alone can affect the share of Mr Lim in the partnership. It cannot be left to the discretion of one of the Partners. Can you ask Archbishop Jose Palma to appraise? No, since he is not an expert. It needs to be an expert to determine current prices. ________________________________________________________________________________________________________________________ 07 18 2013 7:00 to 25:00 Q: Valuation/Appraisal of the property dependent upon the sole will of one of the partners, we said? Why would it not be binding? Is there such express prohibition? Why would the law highly discourage it? legal basis o Article 1787. When the capital or a part thereof which a partner is bound to contribute consists of goods, their appraisal must be made in the manner prescribed in the contract of partnership, and in the absence of stipulation, it shall be made by experts chosen by the partners, and according to current prices, the subsequent changes thereof being for account of the partnership. (n) o Article 1798. If the partners have agreed to intrust to a third person the designation of the share of each one in the profits and losses, such designation may be impugned only when it is manifestly inequitable. In no case may a partner who has begun to execute the decision of the third person, or who has not impugned the same within a period of three months from the time he had knowledge thereof, complain of such decision. The designation of losses and profits cannot be intrusted to one of the partners. (1690) The agreement would be void. Art. 1798 provides: The designation of losses and profits cannot be intrusted to one of the partners. There is no express prohibition. However, in the absence of agreement as to the sharing of the losses and profits, the sharing will be based on the proportion of partners contributions. In effect, when we allow any of the partners to determine the value of his contribution, we are in effect allowing that partner to determine his share in the profits, which is not allowed by law. 25:00 43:00 although its not expressly prohibited to allow any of the partners to determine valuation of their contri bution, but in effect we are also allowing that partner to determine his share in the profits and losses o because in the absence of profit and losses agreement, distribution of shares in profits and losses will be determined in proportion to their contribution

Scenario: If at the time miss ubod delivered her property, the value was P5,000,000.00 and 1 year after, the value of the property has increased by P2,000,000.00, how much now is the contribution of miss ubod? still 5 million, since the appraisal is based at current prices value of contribution should remain at 5 million since subsequent changes thereof are for the account of the partnership o subsequent changes include both an increase or decrease in value of the contribution this is borne by the partnership

Q: If money was contributed by a partner, and the money was not contributed on the due date. What would happen? legal basis o Article 1788. A partner who has undertaken to contribute a sum of money and fails to do so becomes a debtor for the interest and damages from the time he should have complied with his obligation. The same rule applies to any amount he may have taken from the partnership coffers, and his liability shall begin from the time he converted the amount to his own use. (1682) Contribution of money when there is delay or conversion DELAY = contribute, payment of interest and damages Reckoned from the time he should have given contribution o Generally, at the celebration of contract of partnership CONVERSION = reimburse, payment of interest and damages Reckoned from the time he converted partnership funds for his personal use

Notes of the Warrior (Partnership 404 2013) Scenario: Here is partnership money received by Versoza, instead of giving to the partnership treasurer the money received, you happened to pass through tigbakay. Used partnership money to gamble, and Versoza lost the partnership money. What is Versozas liability? Art 1788 par. 2 Versoza is liable to reimburse partnership funds that were converted (principal amount) including interest and damages Liability reckoned from the time partnership money was converted

Classification of Partners? for purposes of our discussion, sir focused on CAPITAL PARTNER and INDUSTRIAL PARTNER Who is a general partner? General partner is a partner whose liability extends up to his individual property Who is a limited partner? a partner whose liability only extends to what he has contributed Who is a capitalist partner? a partner who contributes money or property to the partnership Who is an industrial partner? a partner who contributes labor or service to the partnership Capitalist Partner? One who contributes money or property to the common fund How else do we distinguish capitalist partner from an industrial partner? A capitalist partner is entitled to the share in profits and losses; while an industrial partner receives only a just and equitable share. A capitalist partner is liable for losses; an industrial partner is not liable for losses Why? Is it not a double-whammy? Wa pay labot sa amot wa pay labot sa alkansi? Why does the law exempt him from losses? Because if you invest capital and then you incur losses, something would still remain. If you stop at any point in time, you can take back your capital. But in labor, it will be in vain. Usik ang kahago. You cannot tak e back all the efforts you have sacrificed. If the business incurs losses, theres no way you can recover your services. Practically, he who has exerted all his efforts and despite his efforts the partnership ended up in losses, he should be exempted from losses. How else do we distinguish capitalist from industrial? An industrial partner is absolutely prohibited from undertaking any business without express permission from the partners, otherwise he would be excluded from the partnership or the partnership may avail of the benefits of such undertaking. Whereas a capitalist partner is only relatively prohibited in the sense that he is only prohibited from undertaking a business which is competitive to the business of the partnership . It may be in the same line of business but if not competitive, it is not prohibited. If their market is different, it is not prohibited. 61:00 79:00 The moment he put sauce on his noodles, pancit with tomato sauce, spaghetti na. Its already a competing business. Not just same line, nature, kind, but it should be a competing business. How do we distinguish Industrialist from Capitalist partner? Industrialist partner cannot engage in any kind of business = ABSOLUTE PROHIBITION Capitalist is only prohibited to engage in a competitive business against the partnership business. = RELATIVE PROHIBITION Scenario: Mr Arnado approached Mr Versoza, who is the best mechanic in town. Mr Arnado invested money, while Mr Versoza takes care of the labor in repairing the car. A few months later, Mr Arnado passed by the shop but only saw Mr Versoza playing with his tablet, no customers. The following week, Mr Versoza came up with an idea and put up a Banana Q stand. Long line of customers to the Banana Q stall and not to have their car repaired. What are Mr Arnados options? Art. 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly permits him to do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case. o Exclude the industrialist partner from the firm o Capitalist partner avail of the benefits o Right to damages

What if Mr Versoza will reason that the Car shop business is not affected at all with the Banana q business? The prohibition is absolute. Engaging in another business will prejudice the partnership. Mr Versoza should devote all his time, effort and skills. He could have used his time to find customers and promote the car shop business. Scenario: If Versoza and Arnado were BOTH Capitalist partners, can Arnado exclude Versoza if he engages in a Banana Q business beside the car shop. Generally, Mr Aranado cannot exclude Mr Versoza from the business since they are both capitalist partners. The law only provides this remedy against the industrialist partner. However in this scenario, Mr Arnado can stop Mr Versoza from pursuing the banana q business in the premises of the car shop since this violates their partnership agreement to put up a car shop only. They never agreed to include a banana q business.

79 End not only exclude but can also stop business of capitalist partner that was not agreed upon by the partnership other business of capitalist partner must be using what has been contributed in partnership (in this case, neldons bbq stand was on the lot the partnership used for the auto repair shop)

Q: What is contributed by the industrial partner? Capitalist partner?

Notes of the Warrior (Partnership 404 2013) Industrial partner o labor, services or profession capitalist partner o money or property Article 1790. Unless there is a stipulation to the contrary, the partners shall contribute equal shares to the capital of the partnership. Article 1797. The losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion. In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the industrial partner shall receive such share as may be just and equitable under the circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital. (1689a) o o o sharing of profits and losses distributed in conformity with the agreement if no agreement, sharing in proportion to what has been contributed industrial partner receives share of profits that are just and equitable under the circumstances if he contributes capital, he will also receive an additional share in profits in proportion to his capital contribution

contribution Money, property Capitalist partner follow agreement if there is any if no agreement, equal shares Labor, services, profession Industrial Partner contribute all labor, services, profession -

Profits according to stipulation (agreement) if no agreement, in proportion to their contribution just and equitable share under the circumstances* -

Losses agreement if no agreement, apply agreement in profit if none, in proportion to their contribution

No share in losses* *if industrial partner contributes capital, then he is obliged to share in the losses

*cannot stipulate share of profits of industrial partner

Coverage for 7/20/2013: up to Art 1800 ________________________________________________________________________________________________________________________ WWW July 25, 2013

Art. 1793. A partner who has received, in whole or in part, his share of a partnership credit, when the other partners have not collected theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital what he received even though he may have given receipt for his share only Scenario 1: A (partner) B (partner) C (partner) X (partnership debtor) = 10,000 (paid) Y (partnership debtor) = 10,000 (paid) Z (partnership debtor) = 10,000 (not paid)

Z was not yet insolvent in this case so C cannot compel A and B to return to the partnership capital their share of the partnership credit. Scenario 2: December came of that year, and everybody was not contented with what they were earning so they decided to dissolve the partnership. Upon liquidation, they discovered that although they had no more assets, they still had receivables. Same thing happened, 3 promissory notes, each of them got one worth 10,000 each. Division of promissory notes as follows: Partner A B C Partnership debtor Q R S Amount 10,000 10,000 10,000

B and C were able to collect, but A failed to collect. Upon failure of A to collect, he discovered that he cant collect from Q since he was insolvent. What can A do now? 2 schools of thought 1. Return share of partnership credit collected by respective partners to the partnership capital to divide proportionately among the partners Return to partnership capital since partners share in profits and losses, therefore partner who failed to collect should distribute loss to other partners Partners keep their respective shares Because collection was done after dissolution of partnership, then it pertains to the collecting partner Moreover, partner cant compel other partners to return their shares to the partnership anymore if he was NEGLIGENT in collecting his share of partnership credit

2.

How much is an industrial partner entitled to collect as to his share of the profits? Art. 1797. The losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion. In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the industrial partner shall receive such share as may be just and

Notes of the Warrior (Partnership 404 2013) equitable under the circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital. (1689a) so industrial partner receives a share that is just and equitable under the circumstances industrial partner doesnt share in the losses as well o he shouldnt share in the losses since he already contributed all of his s ervice or industry, he is in effect not being paid for these services

Scenario 3: A partnership of A, B, and Iearned 9 million in profits, how much should the C, the industrial partner receive? the industrial partner should receive as much as is just and equitable under the circumstances

In the preceding question, what if these were the profits only from Jan-Nov, and in December the partnership lost ALL of its profits. How much should the I, industrial partner share? as far as losses are concerned, the industrial partner still shouldnt share in the profit if share in profits were to be collected only on December, then the industrial partner shouldnt receive anything since there was no longer any profit

How can I, the industrial partner, protect his share of the profits then? This time the industrial partner entered into another partnership with the same setup, but now I asks you what he can do to protect his share of the profits. Stipulate in articles of partnership as to when the industrial partner can get his share of the profits This is what the industrial partner can do to protect his share in the profits o In the present example, I was getting his share of the profits on a quarterly basis. This way, I would not lose all his share in the profits when losses occur at the end of the year. Art. 1799. A stipulation which excludes one or more partners from any share in the profits or losses is void. (1691) Meaning, the stipulation is void, but the partnership still subsists. So the share in the losses then would be: 1. 2. According to agreement in sharing of profits In absence, in proportion to their contributions

Scenario 4: C joins the partnership. There is a new partnership. (A, B, I and C). C assures dont worry, I will be your partner. But if there are losses, I will fully assume all the losses They have assets of 8 million, but they have liabilities worth 15 million. There is a loss of 7 million. Creditor X was the supplier of the goods for the partnership. What is the effect of the provision? Under the law: Art. 1799. A stipulation which excludes one or more partners from any share in the profits or losses is void. (1691) Meaning, the stipulation is void, but the partnership still subsists. So the share in the losses then would be: According to agreement in sharing of profits In absence, in proportion to their contributions Stipulation for exclusion from losses: Other authors are of the opinion that such a stipulation that would exclude one or more of the partners from sharing in the losses is binding among partners. As to creditors: The creditor could collect from either partner. With regards to the creditors perspective, it is immaterial whether or not t here is such stipulation between partners. Insofar as third parties are concerned, such stipulation is not binding. (the Law is intended to protect third parties) If X goes to A, he can collect from A. X can also collect from B and C. So if A is compelled to pay X, A should pay but subject to the right to ask for refund from C, who guaranteed to exclude A from the losses. -What is a Manager? * He manages the operation of the partnership. It includes preserving the assets, the power to hire, managing the day to day business. HE PERFORMS ACTS OF ADMINISTRATION as distinguished from acts of ownership. What are Acts of Ownership / acts of strict dominion? *Example is selling or disposing asset. What are the 2 types of Managers? 1. Manager whose name/appointment is designated in the articles of partnership 2. Manager appointed after the constitution of the partnership Which of these is more powerful? *Its the manager whose name/appointment is designated in the articles of partnership. His appointment can only be revoked up on just or lawful cause by the partners representing the controlling interest, UNLIKE the manager appointed after the constitution of the partnership whose appointment can be revoked with or without cause by the partners who owns the controlling interest. We earlier said that the articles of partnership is the basic contract among the partners and you know the appointment of the manager whose name was indicated in the articles inspite of the contract. How will he be removed? Simplify. *Appointment designated in the articles of partnership: *Appointed afterwards: Controlling Interest PLUS Lawful Cause Controlling Interest WITH OR WITHOUT Cause

Scenario 5: Managing partner with barong with coat and tie, wants to paint the office building BLACK, 2 barrels of black paint. What is the extent of power of a partner designated as manager in the articles? Can his decision be opposed? We are not talking about revocation, but certain acts of administration which can be opposed. *Art. 1803 (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. (1695a) *The power may be opposed when he makes an alteration of the immovable; And if CLEARLY PREJUDICIAL to the interest of the partners.

Notes of the Warrior (Partnership 404 2013) The partnership will be exposed to potential liabilities from the injuries that the customers will encounter. No need to prove bad faith since the partnership is exposed to liabilities and the partnership cannot be tolerated to continue with the decision.

If no one was appointed a managing partner, what will happen? Each partner becomes a manager If everybody will be a manager, what will happen? No single Kingdom can accommodate 2 Kings. No single palace can accommodate 2 Queens. It will be chaotic The law comes up with a provision when there are 2 or more managing partners Art. 1801. If two or more partners have been intrusted with the management of the partnership without specification of their respective duties, or without a stipulation that one of them shall not act without the consent of all the others, each one may separately execute all acts of administration, but if any of them should oppose the acts of the others, the decision of the majority shall prevail. In case of a tie, the matter shall be decided by the partners owning the controlling interest. Scenario 6: A (Managing Partner) was an environmentalist = wanted green paint B (Managing Partner) was a loyalist to the administration = wanted yellow paint C (Managing Partner) was a virigin = wanted white paint E voted with A D voted with A * A convinced E and D to choose green paint. Do we now have a green building? In cases when there is a tie, the majority that is contemplated under the law is not the majority of the number of number of partners but it is then based on the majority of the partners with controlling interest. Controlling interest? Depending on the partners capital contribution Do we now have a majority? It depends on the percentage of the contribution to those who have voted? Since we cant determine yet the contribution, do we now have the majority? Majority OF the partners? Yes, A, E, D voted for green, 3 partners out of the 5. Is it important here? No, since what we are trying to look for is the controlling interest. Majority of partners vs Controlling interest? Majority of partners will be based on the number of individual partners. Controlling interest is based on the capital contribution. NO SUCH AS MAJORITY CONTROLLING INTEREST - redundant It is either MAJORITY or CONTROLLING INTEREST. In the scenario above, we do not know who has the controlling interst. Since Managing Partners A,B, C are tied in their votes, we now go to the determination of controlling interest. Additional data as to controlling interest: A contributed 10% B contributed 10% Ccontributed 10% Dcontributed 10% Econtributed 50% **Giro si Paul Blanco, kuwangan daw ug 10%... A, E, and D has the controlling interest since they control more than 50% of the partnership. Art. 1802. In case it should have been stipulated that none of the managing partners shall act without the consent of the others, the concurrence of all shall be necessary for the validity of the acts, and the absence or disability of any one of them cannot be alleged, unless there is imminent danger of grave or irreparable injury to the partnership. Summary of 1801 and 1802: Rule 1: Several partners, no designation as to the extent of their powers, each partner does acts of administration Rule 2: if one will oppose, Majority wins Rule 3: No Majority in case when there is a tie, Controlling interest Rule 4: if there is a stipulation that unanimity is required, Unanimity Rule shall be followed Rule 5: Unless irreparable injury will occur to the partnership, unanimity rule will not apply Up to 1814 _________________________________________________________________________________________________________________________

Notes of the Warrior (Partnership 404 2013) July 27, 2013 How much salary is a managing partner entitled to? Generally, the managing partner is not entitled to salary. Unless there is a stipulation to the contrary, he is only entitled to his share of the profits o Reason: its because you are working for your own interest. You are a partner and you work for yourself, and you dont pay yo urself o If you devote so much time and effort in managing the partnership, the partners can agree to give the managing partner additional compensation (ex. A token or allowance) Partner X who had a meeting among the partners and learned that the partners wanted to buy a beach. After the meeting, X went to the owner of the beach lot and instead convinced the owner to sell it to himself. Remember that partners are prohibited in certain types of business. What are these prohibitions? Capitalist Partner o Unless the partners consent, he is prohibited from engaging in a business that is of the same kind and is competitive with the partnership business o Prohibition is relative Industrial Partner o Unless the partners consent, he is prohibited from engaging in any type of business o Prohibition is absolute

What can the partnership do if a partner/s engages in a business that is prohibited by the partnership? Industrial partner o Art. 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly permits him to do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case. (n) The partnership can either Exclude the industrial partner from the partnership (plus damages and interest) Share the profits (plus damages and interest)

Capitalist partner o Art. 1808. The capitalist partners cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged, unless there is a stipulation to the contrary. Any capitalist partner violating this prohibition shall bring to the common funds any profits accruing to him from his transactions, and shall personally bear all the losses. (n) o Unless there is a stipulation to the contrary Profits gained from prohibited business will be brought to the common funds of the partnership The capitalist partner who violates prohibition personally bears all the losses

Going back to earlier problem, (Partner X had a meeting among the partners and learned that the partners wanted to buy a beach. After the meeting, X went to the owner of the beach lot and instead convinced the owner to sell it to himself. Remember that partners are prohibited in certain types of business.) What can the partnership do if X was a capitalist partner? It doesnt matter here whether X is an industrial partner or a capitalist partner since he did not engage in a prohibited business. Instead, he engaged in a single transaction. X acts as a trustee for the partnership o Art. 1807. Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property. (n)

In case of conflict of interest between the partner and the partnership, the interest of the partnership must prevail o X knew that the partnership wanted to acquire the beach lot; instead he purchased it for himself. o X should therefore offer it to the partnership, however the partner can ask for the reimbursement of his purchase price

If X didnt offer the beach lot to the partnership, but instead sold it to another person, what should X do in view of Art. 1807? X should give the profit to the partnership, and retain the principal or purchase price Since X did this in bad faith, he is also liable for damages What are the rights of the subpartner? Art. 1804. Every partner may associate another person with him in his share, but the associate shall not be admitted into the partnership without the consent of all the other partners, even if the partner having an associate should be a manager. (1696) ____________________________________________________Read up to Art. 1814___________________________________________________ WWW August 1, 2013 Up to what extent is the subpartner recognized under the law? Art. 1804. Every partner may associate another person with him in his share, but the associate shall not be admitted into the partnership without the consent of all the other partners, even if the partner having an associate should be a manager. (1696) The law means to distinguish a subpartner from an ASSIGNEE Take note that the associate and assignee are different, they have different rights o Art. 1813. A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the partnership, or, as against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere

Notes of the Warrior (Partnership 404 2013) in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his contract the profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies. In case of a dissolution of the partnership, the assignee is entitled to receive his assignor's interest and may require an account from the date only of the last account agreed to by all the partners. (n) Between the partner and the assignee, who has better rights? the assignee has better rights (Art. 1813) 1. 2. 3. 4. he has the right to receive the profits entitled to the assigning partner in case of fraud in management of the partnership, the assignee can avail of the usual remedies receive the assignors interest in case of dissolution of the partnership ask for a formal account from the the date of the last account agreed to by all the partners

the assignee only acquires the interest of a partner in a partnership

What are the property rights of a partner? Art. 1810. The property rights of a partner are: (1) His rights in specific partnership property; (2) His interest in the partnership; and (3) His right to participate in the management. (n) the partner can use specific partnership property if its intended for partnership purposes o unless if the partners consent when partner uses specific partnership property for other purposes

What do we mean when a partner has a right in his interest in the partnership? his interest is the share in the profits and the surplus o Art. 1812. A partner's interest in the partnership is his share of the profits and surplus. (n)

As distinguished from an assignee and a mere associate, a partner, among others, exercises certain rights. What could these rights be? As a partner. reimbursement for advances made and indemnity for risk assumed (Art. 1796) right to access and inspect partnership books (Art. 1805) right to true and full information of all things affecting partnership (Art. 1806) right to a formal account of partnership affairs under certain circumstances (Art. 1809) right to dissolve the partnership under certain circumstances (Art. 1830-1831)

A partners bigger right than formal accounting is to be entitled to what? True and full information of all things affecting partnership (Art. 1806)! If a partner is already dead, can he demand TRUE AND FULL INFORMATION? Is there a way that formal accounting can be asked in behalf of the deceased partner? Yes, through LEGAL REPRESENTATIVE. His ESTATE can be represented through legal representatives. Who are these Legal Representatives? 1. ADMINISTRATOR The decedent died intestate / WITHOUT A WILL and the court appointed a person to administer his estate.

2. EXECUTOR The decedent died testate and the testator designated a person (EXECUTOR) through his WILL. What do these representatives do? He can ask for, among others, formal accounting, to receive whatever is due to the deceased partner. What are the property rights of a partner? (SIM) 1. Right over the Specific Partnership Property 2. Interest in the Partnership 3. Participate in the Management Specific partnership property, up to what extent is his right? Right to use and possess only for the benefit of the partnership or the purpose of carrying out the partnership. Ms. Abasolo had a FUNERAL partnership with Mr. Sotto (I think Fucsonnisiya). One day Mr. Fucson, on a special holiday, want to treat his family to Oslob to watch the butandings. Of course he needed the car. He checked for the schedule, and no deliveries were for that day. So some cars were scheduled for washing. Fucson said he will use the other car. The family/children enjoyed the butandings. After the trip, going home, Fucson hit a pedestrian. 1st question, can Fucson be required to pay rentals for the car? It was a holiday. Yes because the property right is only for the beneficial use of the partnership; UNLESS partners agreed/consented.

Can Fucson complain? Fucson must reimburse unless Abasolo consented. In another question, the pedestrian was hospitalized. The lawyer sent 3 demand letters, to Fucson, to Abasolo, and to the Partnership. Who could be held liable of the three (sir asked Bryce)? The partnership will be liable even though it was a personal undertaking by the partner. Respondeat superior & the registered owner rule. Who should be liable? Partnership should be liable since the owner of the vehicle is the partnership under the principle of Registered Owner Rule and the partnerships consent was given to allow the use of the vehicle. However, partnership can file a complaint against Fookson for reimbursement.

Notes of the Warrior (Partnership 404 2013) The lawyer of the partnership might not like that. The partnership can file a third party complaint to include Fookson Prayer: Should the partnership be held liable, the court should further decide that this liability should be passed on to Fo okson. The lawyer of the victim Should implead the partnership and Fookson, and the driver. Implead all. Should the court decide against Fookson? Fookson shall solely assume the liability When the judgment becomes final, the execution comes next. When the sheriff went to Fookson, he no longer have any assets. Can the Sheriff go against the partnership? The sheriff cannot go after the specific partnership property of the Partnership. The judgment creditor can apply a charging order before the court. 2 Options: Execute against judgment debtor Go after the interest of the judgment debtor in the partnership via a charging order. o The interest of the judgment debtor shall be applied up to the extent of the obligation in the judgment order. The sheriff thought that it will be a tasking process. He prefers to auction the car, apply the proceeds and return the excess to the partnership, can he do that? The sheriff cannot since the partner's right in specific partnership property is not subject to attachment or execution, except on a claim against the partnership. (Art. 1811 par 3) EMPHASIS: Specific partnership property can be attached if the claim is against the partnership. Specific partnership property cannot be attached to answer for personal liabilities incurred by the partners. Assuming now that there was a Motion for Recon, the court now held the partnership liable. The sheriff wanted to execute the decision against the partnership, what can he do? The sheriff can now attach the specific property of the partnership already. Therefore, partnership property can be made liable for the obligations of the partnership himself.

Gen. Rule: Sheriff cannot attach the specific partnership property because it cannot be subject to personal liability or to answer for personal obligations of the partner. If the partners personal property cannot satisfy the claim, how could the sheriff proceed? Under Art. 1814 - Ask for charging order. How should the charging order be worded? you are hereby directed to segregate all the profits due to abasolo and to pay this amount to the victim until the whole amount indicated in the judgment is satisfied Every time there is sharing of profits the victim is entitled to receive. So every time there is sharing of profits, the sheriff will be there. You dont want him to be there every time there is sharing because the sheriff is so hasul. Hambugero ra ba kayo. What can you do to avoid the sheriff going the office and creating a scene? One option available is to redeem the interest of the debtor partner. Art. 1814 (2nd par.) The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be purchased without thereby causing a dissolution: 1.) With separate property, by any one or more of the partners, or 2.) With the partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold. Provided, the partner liable should reimburse the partnership for any all the amounts the partnership has spent together with all costs.

Can the partnership, as it pursues its business, welcome additional partners? Yes, but it has to be with the consent of all the partners. The partnership is a fiduciary relationship. On the other hand, why does an assignee exist in a partnership? One of the partners may have needed some funds. And since the interest in the partnership is an asset, you can offer this as a mortgage or a collateral to secure an obligation. So how about the right to manage, can you offer this as a collateral? No, because the right to manage is not assignable. The right to participate in management is solely given to the partners. How about the right to specific partnership property? Generally not assignable. Incohate, not liquidated, impossible to determine extent of right over specific property. A partner in a partnership is not a co-owner in the strictest sense. It is so limited that the right to possess or the right to use is restricted solely to partnership purposes. One day, one partner decides to leave for the US, leaving his business. Because he needed money to buy ticket for his trip, he decided to assign his interest in the partnership. 2 months after, he found work there with 1,500 people under him. So he has started a new life there, but all along he has assigned his interest over the partnership. Is he still in business? If a partner assigns his rights over a partnership, is he still in business? yes, because the partner still has other property rights over the partnership, namely: o right to specific partnership property o right to participate in the management

When a partner assigns everything to someone else, is the partnership dissolved? no, it is not dissolved by assignment

Notes of the Warrior (Partnership 404 2013) When a partnership is dissolved, and there are more assets than liabilities, can the partnership satisfy its obligations? Who are the potential claimants of the partnership? yes, the partnership can satisfy its obligations when it has more assets than liabilities potential claimants of the partnership are: o partnership creditors o as to partnership assets or properties, partnership creditors enjoy preferred status over creditors of partners

any person having a claim against the partnership ex. When a partner is liable to a person due to acts of a partner for partnership purposes

creditors of partners

Art. 1814. Without prejudice to the preferred rights of partnership creditors under Article 1827, on due application to a competent court by any judgment creditor of a partner, the court which entered the judgment, or any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon; and may then or later appoint a receiver of his share of the profits, and of any other money due or to fall due to him in respect of the partnership, and make all other orders, directions, accounts and inquiries which the debtor partner might have made, or which the circumstances of the case may require. The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be purchased without thereby causing a dissolution: 1. 2. With separate property, by any one or more of the partners; or With partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold.

Nothing in this Title shall be held to deprive a partner of his right, if any, under the exemption laws, as regards his interest in the partnership. (n)

after the debts to partnership creditors are satisfied, debts due to creditors of partners can now be satisfied with the surplus or the profits o this is because what is left after liabilities are paid are assets available to distribution among the partners, in other words what remains are part of the surplus or the interest of the partners

Assuming Fiona is a partner, married, and has a child, is the partnership obliged to support her child? Art 1811(4) o A partner's right in specific partnership property is not subject to legal support under Article 291. (n) What can be subject to legal support, instead, is the interest of a partner in the partnership o Since it already pertains to the partner and does not affect the partnership

________________________________________________________________________________________________________________________

WWW August 6, 2013 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) Art. 1815. Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners.

That is the only way to distinguish the partnership not only as to other partnerships but also to the partners themselves. On the other hand, there are some responsibilities that will follow if your name is part of the partnership (2nd par) Moral lesson? Never allow your name to be used in a partnership name Art. 1816. All partners, including industrial ones, shall be liable pro rata 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. However, any partner may enter into a separate obligation to perform a partnership contract. (n) So talking now of liabilities to third persons, what is the extent of the liabilities of the partners? Their liability extends to the personal properties including the industrial partner That is the distinguishing factor between a partnership and a corporation because in a corporation The liabilities of the stockholders are limited to whatever their stockholdings are whereas in a partnership the liability of the partners extend beyond their capital contributions and extends even to their personal properties. What is the nature of the liability of the partners? The nature of the liability of the partner is SUBSIDIARY or SECONDARY as distinguished from PRIMARY or DIRECT. When you say PRIMARY liability, that person is DIRECTLY liable without going to anyone else as distinguished from SUBSIDIARY which means the person subsidiarily liable will only be held liable if the person primarily liable is insolvent. This is best illustrated by a contract of guaranty. In a contract of GUARANTY, Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.

Notes of the Warrior (Partnership 404 2013) As distinguished from a SURETY If a person binds himself solidarily with the principal debtor, xxxx the contract is called a suretyship. Distinction (From Sir): GUARANTY Guarantor is subsidiarily liable The Contract is spelled GUARANTY; to guarantee a person is spelled GUARANTEE Going back to the provision, liability of a partner to third persons It shall be subsidiary as distinguished from that of a principal liability. What is the extent of the partners liability? It shall be PRO-RATA. When we say pro-rata, it means jointly as distinguished from solidary. When we talk of solidary obligations what do we mean? It means that the debtor is liable for the whole amount. On the other hand, when we say solidary creditors.. It means that any creditor can demand for the whole obligation When we say joint debtor The debtor shall answer only for his share Joint creditor? The creditor can only demand for his share So that if X, Y and Z are the SOLIDARY DEBTORS of A, B and C who are SOLIDARY CREDITORS for P9000, How much can A demand from X? SURETY Surety is solidarily and principally liable

Solidary Debtors

X Y Z

P9000

A B C

Solidary Creditors

A, B, or C can demand the entire P9000. After X paid A, can B demand from Y? No, because the obligation is already extinguished. If X, Y, Z, SOLIDARY CREDITORS of A, B and C, JOINT DEBTORS, How much can X demand from A?
P3000 P3000 P3000 P3000 P3000 P3000 P3000 P3000 P3000

X Solidary Creditors Y Z
How much can Y demand from A? No more Can Y still demand from B? Yes, Y can still demand for Ys share in the obligation Can X still go to B? Yes, for Bs share (Authors Note: Para sayun, X, Y, or Z can demand 3k each from A B and C) If JOINT DEBTORS and JOINT CREDITORS?

A B C

Joint Debtors

Joint Creditors

X Y Z

A B C

Joint Debtors All P1000

NOTE: Para sayun, X, Y, and Z can demand P1000 each from A, B, and C

Notes of the Warrior (Partnership 404 2013) Going back, when we say pro-rata, what do we mean? Normally, when we say pro-rata it means in proportion. Supposedly, the partners liability should be in proportion. But the authors believe that p ro-rata in partnership should be equal. What is the reason why it should be equal and not in proportion? Why according to the number of partners, not according to capital contribution? Because if we apply liabilities in proportion to their contribution, insofar as third parties are concerned, it will be limited only to the capitalist partner and the industrial partner cannot be held liable. Whereas if we apply per partner, third persons are protected since industrial partners are also liable. We have to make everybody liable including the industrial partner.

_________________________________________________________________________________________________________________________ WWW August 8, 2013 Part 1 What is the nature of the liability of a partner? It is subsidiary or secondary as opposed to primary or direct. Is there any instance where the liability shall be solidary? There are three instances: Art. 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 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. (n) Art. 1823. The partnership is bound to make good the loss: (1) Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it; and (2) Where the partnership in the course of its business 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. (n) Now, how do we classify the nature of the liability of a partner? Article 1816 Contracts / contractual obligation Liability is subsidiary. Liability is only secondary meaning partnership assets have to first be exhausted before separate assets of partners are made liable. Articles 1822-1823 Tort or Quasi-delict Liability is solidary meaning the liability is direct and primary, the injured party can go directly to the partnership or to a single partner for the entire obligation.

As to source Nature of liability

The nature of the liability is determined by its source

May the partnership creditor still go after a partner who is exempted based on the partnership agreement? Any stipulation which excludes the partner from losses shall be void as regards to third person but it shall be valid between partners. The creditor can still claim against the exempted partner and such partner shall have the right to reimbursement from the other partners. However, if the creditor goes to collect against the industrial partner? the industrial partner can still be liable to pay the LIABILITIES of the partnership. The partnership assets are already depleted, and they still have an obligation of 10M. Can the creditor still collect? Yes, the creditor can still collect. Not from the partnership but can claim directly against the personal assets of the partners. Now we agree when we say that the 10M obligation against the zero partnership assets is now considered a LOSS. Can the creditor in that loss of 10M still go after the industrial partner? First, we distinguish first what is LOSSES vis--vis LIABILITIES. o An industrial partner is exempted from the LOSSES of the partnership however he may still be obliged to pay for LIABILITIES. o We refer to liabilities as settlement of affairs against 3rd persons and losses refer to settlement of affairs among the partners themselves. Even we refer to the 10M as losses, it is in the nature of a liability since this is an obligation towards 3 rd persons but subject to the right of reimbursement of the industrial partner. Rule: For LIABILITIES, third persons can go after the partners subsidiarily including the industrial partner. Exemption from losses from liabilities would concern only the partners. Insofar as the public is concerned, there is no exemption. The reason being to protect third parties. What is the importance of the NAME of the Partnership? In order to distinguish the partnership from other partnerships and identify it from the partners.

Part 2 What are the basic rights of a partnership, among others? To HOLD PROPERTIES in the name of the partnership, normally. There are instances where the property is registered in the name of? 1. The partnership 2. the name of one or more but not all the partners 3. is in the name of one or more or all the partners, or in a third person in trust for the partnership 4. In the name of ALL the partners If it is in the name of partnership, theres no problem. But if it is not in the name of the partnership, what will the problem be?(blurry ang tingog ni Georfo) Conveyances; 1. Property might be in the name of the partnership but conveyed in the name of one or some of the partners 2. Title in the name of the partnership but conveyed in the name of one partner 3. Title in the name of one or more but not all partners, but conveyed in the name of one partner 4. Title in the name of one or more partners conveyed by a partner whose name appears in the title.

Notes of the Warrior (Partnership 404 2013) To be able to convey partnership property what would be necessary? If it is not in the usual business of the partnership, then it needs consent the partners. GENERAL RULE: Partner is an agent of the partnership, thus a partner can generally bind the partnership. EXCEPTION: if disposal of property, unanimous consent UNANIMITY IS NOT NEEDED: If it is the usual business of partnership Example is opening a partnership of MEATSHOP. Should the partners always agree whenever there is a buyer of 4 kilos, __kilos? Agree? Not anymore! HOWEVER if the partner sells property not in the usual business?... Partnership can recover, because conveyance can be questioned. That was not an authorized conveyance. If the property sold by the partnership was a parcel of land and the partnership IS ENGAGED IN DEVELOPMENT of real properties, selling of subdivision lot: will that be entitled to unanimous consent? No. Because it is the usual business. However if the property sold by the partnership engaged IN SELLING DRUGS (LEGAL DRUGS) and their only property is in Colon and they decided to sell it? - Yes, unanimous consent is necessary. If everybody consents then that is a valid sale. -Problem arise when not everybody signs If property is in the name of the partnership, how should it be conveyed? In the name of the partnership! If not in the name of the partnership, it will be invalid, unless? It is in the usual business of the partnership Authorized transaction by the partners or the partners consented If there was no consent, if only one of the partners sold but sold it in the name of the partnership? Partnership can recover! Although sold in the name of the partnership, the partner was not authorized. However? Lets have it again. (summary) Situation no. 1 Property in the name of partnership, partner sells property in behalf of the partnership , There is transfer of ownership, but the partnership can recover, provided the buyer PARTNER HAVE NO AUTHORITY , KNOWS LACK OF AUTHORITY , and CONVEYANCE IS NOT IN THE USUAL BUSINESS. Part 3 4 If you keep asking if one partner if he has authority, it is inconsistent with normal business behavior. Once Conveyed, it transfers title, unless: 1. Not usual business 2. No authority 3. Buyer is aware of the partners inauthority

Situation no. 2: Property is in the name of some but not all of the partners (in the name of A,B,C but owned by partnership, A,B,C,D,E) transferred was signed by the partners whose name is in the title. (only A,B,C,). What is the effect of the sale? Valid Transfer However, Partnership can recover if the sale is : 1. 2. 3. Not in the usual business Seller has No authority; and Buyer is aware of the partners lack of authority. (Buyer is in bad faith)

Situation no. 3: Property is in the name of the partnership, conveyance/sold by one of the partner in his own name. -Transferred is only the equitable title provided that it is in the usual business of the partnership. *Equitable Interest = Beneficial Rights/Beneficial Ownership. (The benefits only go to him.) *Full ownership = Title. How could he assume full ownership? -Buyer can compel the partnership to ratify the transaction. Situation no. 4: Property is in the name of all the partners and sold in the name of all the partners -No problem. Prefect sale. Each partner is an agent, as an agent what can he do? -Bind the Partnership Situation no. 5 Otero and Fiel Partnership; Funeral Parlor: The Wife of Mr. Fiel sued him for biga-me(hehehe), Wife wanted somebody to testify that one time somebody went to the F. Parlor wearing shortest short and was looking for fiel and mr. fiel invited her in one of the empty boxes in the funeral parlor. Wife knew this and wanted you to testify. Do you think what you will say will bind the partnership? General Rule: person is not bound by act, admission, or statement of another of which he has no knowledge or to which he has not given his consent Exception: admission of a partner is evidence against the partnership if: Made during existence of partnership Refer to a matter concerning partnership affairs Within the scope of his authority - No, because it does not involve partnership affairs. Situation No. 6: BIR investigated Mr. Fiel because his income tax returns are false. He only declared 10M when the truth of the matter is he earns more that and you were summoned to testify. You testified that the partnership earns 50M a month, I know this bec. I share. And BIR proceeds to prosecute Mr. Fiel. Later on BIR go against the partnership and sue the partnership for tax deficiency by using your testimony, what happens now? Can Mr. Fiel avail of the defense that the testimony of Ms. Otero cannot bind the partnership? - Testimony of Ms. Otero can bind the partnership because it was: Made during existence of partnership; Refer to a matter concerning partnership affairs; and Within the scope of his authority.

Notes of the Warrior (Partnership 404 2013) What kind of admission needs unanimity of the partnership: Confession a judgment (Art. 1818) Notices, Receipt of Information binds the partnership. Notice to the partner is notice to the partnership. Three cases of knowledge: Knowledge of the partner acting in the particular matter acquired while a partner Knowledge of the partner acting in the particular matter then present to his mind Knowledge of any other partner who reasonably could and should have communicated it to the acting partner Scenario 7: Mipps was offered to buy a lot but he refused because he discovered that there were 50 squatters residing in that property. 5 months after, he joined the partnership of Otero and Olvis. Otero, Olvis, Similliano Partnership. The partnership was looking for a parcel of land, and learned about the availability of the aforementioned property and decided to buy the same. Mipps omitted to inform the partnership about the squatters. Company acquired the property, later on Otero learned about the squatters and instituted and action for the rescission of the contract of sale. If you were the owner, will you return the property? Two Views: 1. 2.

Knowledge acquired before he became a partner does not bind the partnership Notwithstanding when the knowledge was acquired, as long as it is present in the mind of the partner, binds the partnership for the reason that he is duty bound to inform the partnership. (View subscribed by Sir E.)

Part 5 Art. 1825. When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to anyone, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such persons to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or 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 its being made: (1) When a partnership liability results, he is liable as though he were an actual member of the partnership; (2) When no partnership liability results, he is liable pro rata with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately. When a person has been thus represented to be a partner in an existing partnership, or with one or more persons not actual partners, he is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. When all the members of the existing partnership consent to the representation, a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation. (n) What is estoppel? A bar which precludes a person from denying what he has earlier represented No longer allowed to deny what you have said before When can one be a Partner by estoppel? Directly represents himself to be a partner in an existing or non-existing partnership Indirectly represents himself when he consents to another person representing him to be a partner to an existing or non-existing partnership To whom do we refer to when we say partner by estoppel? when not all of the partners consent to such representation by a person whether the partnership is existing or non-existing liability here is joint Here is mipps, comes to josie, and says I am a partner of lim, and I will supply to you bananas. There is no existing partnership here. Is he a partnership by estoppel? Yes, he is a partner by estoppel since Mipps represented himself as a partner with Mr. Lim o A partner by estoppel can either be a partner by estoppel in an EXISTING or NON-EXISTING partnership 2 types of partner by estoppel 1. partner by estoppel in an EXISTING PARTNERSHIP 2. partner by estoppel in a NON-EXISTING PARTNERSHIP To whom do we refer to when we say partnership by estoppel? when all of the partners in an EXISTING partnership consent to such representation (person who represents himself as a partner even when he is not), then there is a partnership by estoppel where the liability is a partnership liability If he represents himself to be a partner of a non-existing partnership, there are 6 of them and one says we are all partners are they a partnership by estoppel? no, they are just grouping themselves as partners when in fact they are not they are not even a partnership by estoppel because there is no partnership to talk about however, they are all liable as partners by estoppel; liable as a group of persons jointly

So sorry, i forgot to add the qurstions for last meeting. Ga lutaw nako last night. Anyway mao ni. If naay maka update sa notes please do. 1. Who is an associate? Art 1804 He has no rights in relation to the partnership. He only has rights to his share of the profits from partners share who associated

Notes of the Warrior (Partnership 404 2013)

him. As opposed to assignee who has rights to the partnership. (Art. 1813, PRIA; profits, remedies, receive interest of assignor, accounting from last date of account of partnership when it is dissolved) 2. Can an associate be a new partner? Yes, but requires the consent of all partners since it changes the terms of the partnership contract (art. 1814) 3. What are the rights of a new partner? Property rights, art 1810 (SIP) 4. What is the liability of newly added partners? Art. 1826 Existing contributions; limited only to contribution UNLESS there is a stipulation to the contrary Subsequent contributions; extends to separate property 4. Dissolution of partnership Art 1828, change in relation of the partners. Caused by any partner ceasing to be associated in the carrying on of business Ex. Death, retirement, withdrawal, addition of new partner 5. If a partnership is dissolved, can partners still enter into contract? Generally yes, if it's related to the winding up of the partnership business. If not related, his liability is personal. 6. What are the causes of dissolution? Art. 1830 for acts in contravention and not in contravention of agreement; operation of law Art. 1831 for decree of court 7. Situation beteeen luj and aika conducting funeral business. Red civic contributed, lost through fire, is partnership dissolved? Art. 1830(4). Specific thing where a partner had PROMISED TO CONTRIBUTE THE USE AND ENJOYMENT, and perishes before delivery. Provided that ownership is retained by partner. If loss occurs after thing has beem contributed, partnership is not dissolved.