Untitled

• The document consists of study notes for Business Organizations involving partnerships and corporations
• It contains primary and secondary references
• Also provides discussion questions

Corporation Definition

• An artificial being created by law
• Has succession rights
• Includes powers, attributes, and properties either expressly authorized or incidental to its existence per Section 2 of corporation definition

Code of Commerce

• Article 239 allows merchants to invest capital in other merchants' ventures
• They can participate in profits/losses based on an agreed proportion

Partnership Essential Requisites

• The 5 points are:
  • Must have a valid contract including legal capacity
  • Object must be lawful
  • Primary purpose is to obtain profit and divide it among the parties
  • There must be a mutual contribution

Civil Code - Partnerships

• Article 1767 states a partnership involves two or more people binding themselves to contribute money, property, or industry to a common fund, intending to divide profits
• The article also notes two or more persons can form a partnership for the exercise of a profession
• Article 1768 states a partnership has a separate juridical personality from the partners, even without full compliance to Article 1772 standards
• Article 1769 is about determination of a partnership
• Persons not partners to each other are generally not partners to third parties, except as per Article 1825

Co-ownership

• It does not of itself establish a partnership per Article 1769
• Whether or not co-owners share profits from the property's use is irrelevant
• Sharing of gross returns also doesn't automatically create a partnership
• It does not matter whether those sharing have joint/common rights to the property from which returns come

Profit Sharing

• When receiving a share indicates being a business partner
• This inference doesn't apply to debts repaid in installments, wages, rent, annuities to a widow, loan interest, or goodwill sale payments

Partnership Articles

• Article 1770 requires a lawful object or purpose and establishment for partners' common benefit/interest
• Associations/societies with secret articles and individual member contracts with third parties lack juridical personality under Article 1775
• These are governed by co-ownership provisions

Partnership Formation

• Article 1771 permits any form unless immovable property or real rights are contributed, requiring a public instrument
• Article 1772 states contracts with capital of ₱3,000+ in money/property must appear in a public instrument filed with the SEC
• Failure to comply here doesn't affect the liability of the partnership/members to third parties
• Article 1773 regards Contracts as void if immovable property is contributed without an attached inventory signed by involved parties
• Under Article 1774, any immovable property or interest can be under the partnership's name and only conveyed under that name.

Partnership Varieties

• Partnerships can vary by subject matter, partner liability, duration, legality, representation, or publicity
• Key attributes of de jure and de facto partnerships:
  • De jure has strict compliance with all legal requirements
  • De facto has an attempted but defective compliance

Partnership by Estoppel

• It does not need an actual partnership
• Liability arises from misrepresentations that lead a third party to believe one exists

Partnerships - All property vs. Profit

• Article 1775 discusses associations/societies with secret articles, individual contracts, lacking juridical personality that are governed by co-ownership law
• Article 1776 states partnerships are either universal or particular based on their object
• Partner liability designates general or limited status

General Partnerships

• Partners are fully liable with all their property after exhausting partnership assets
• Stipulations to the contrary are void, other than among partners

Limited Partnerships

• General partners manage the business with unlimited liability
• Limited partners' liability is capped at their investment amount

Universal Partnerships.

• These may refer to all present property as per Articles 1777
• Article 1778 encompasses the way partners contribute all current property to a common fund, intending its division among themselves with all acquired profit
• Article 1779 involves all owned property at the partnership's start becoming common as well as all subsequent profits
• There can be common enjoyment of other profits but inheritance, legacy, or donation acquisitions are excluded, except for fruits/interests

Partnerships - Profit and loss

• Article 1780 says one of profits comprises all that partners acquire by their industry or work during the venture
• Article 1781 says universal partnership articles, without nature specification, only constitutes a universal partnership of profits
• Article 1782 states that persons prohibited from donating to each other cannot form a universal partnership

Particular Partnerships

• Article 1783 focuses on defined things, their use/fruits, an undertaking, or exercise of a profession
• The nature of them includes dealing with a defined thing, specific income from a thing, a specific and limited undertaking or a vocation
• They are defined to achieve one objective like assets management or project execution
• It is an association carrying out a single for-profit business enterprise, related to a single transaction rather than continuous business

Joint Ventures

• Joint ventures are considered within the meaning of particular partnership
• Different kinds of partners revolve around contribution nature, management, public perception

Partner Types

• Secret, those active, but not known
• Silent, known but not active
• Dormant, inactive and unknown
• Capitalist partners contribute money or property, and industrial partners contribute labor or expertise
• General partners have extended liability, while limited partners have liability only up to contribution
• Managing partners are involved in operations whereas silent partners aren't

Additional Partner Classifications

• Liquidating partners wind up affairs after dissolution
• Nominal partners aren't truly partners but are liable as such to protect third parties
• Ostensible partners are public and active, secret partners are active but unknown, and dormant partners manage neither actively, nor publicly
• Various other qualifiers exist like continuing, surviving, sub, original, incoming, and retiring.

Partnership Timeline

• Article 1784 governs partnership operations
• A partnership commences from contract execution unless otherwise stipulated
• Continuation beyond a fixed term per Article 1785 means rights/duties remain, so far as consistent

Partner Primacy

• Continuing the business without settlement is prima facie evidence of partnership continuation
• Every partner is a debtor to the partnership for promised contributions by Article 1786

Partner Debt

• He is bound for warranty/eviction regarding contributed specifics same as a vendor to vendee
• He's liable for fruits from when they should've been delivered, without demand

Partner Contribution

• Article 1787 covers goods requiring appraisal per partnership contract or by experts at current prices, with changes for partnership account
• Article 1788 states failure to contribute money makes a partner a debtor for interest/damages from when contribution was due
• The rule applies to funds taken from partnership coffers, with liability beginning upon conversion

Partner Business

• Article 1789: Industrial partners can't engage in business for themselves
• Capitalist partners may exclude the former or claim benefits/damages if violated
• Unless stipulated otherwise, Article 1790 states partners contribute equally to capital
• Article 1791 states in imminent loss, partners, except industrial ones, must contribute additional capital or sell interest to save a failing venture
• Article 1792 states that partners authorized to manage who collects a sum owed to him, should have that sum applied propotionally

Partner Credit

• The provisions of this article are understoodd to be without prejudice to the right granted to the other debtor by article 1252, but only if the personal credit of the partner should be more onerous to him. (1684)
• Article 1793 states a partner taking a share of a partnership credit when others haven't collected, must bring it to partnership capital if the debtor becomes insolvent
• Article 1794 states Partner is responsible to partnership for damages from their fault that can't be offset by benefits they've earned
• Courts may lessen this responsibility with extraordinary efforts and profits
• Article 1795 states partners bear risk for specific, non-fungible things contributed for common benefit use/fruits only

Property Ownership

• Fungible items, deteriorating items, or items contributed for sale means the partnership bears such risk
• Valuation of the items brought are a claim limited at appraised value, but without stipulation risk is borne by partnership

Module 3A

• Article 1796 states the partnership is responsible for amounts disbursed by partners on its behalf with interest
• It also answers for partner obligations contracted in good faith for the partnership, and for management risks

Profits and Losses

• Article. 1797 states Profits and losses distributed according to agreement but without any agreed formula, losses match profit share
• Without stipulations, share is proportional to contribution; industrial partners aren't liable for losses

Profit split

• The individual gets such share equitable under circumstances; if contributing capital too, receives a proportional share
• Article 1798 states Third-party designation of profits/losses can only be impugned if manifestly inequitable although is not allowed to be intrusted to one of the partners
• Partners executing decisions or not complaining in three months can't complain
• Article 1799: Stipulations excluding partners from any profit/loss share are void

Managing Partners

• Article 1800 states managers appointed in partnership articles can execute all admin acts, barring bad faith, their power irrevocable without just cause, majority vote needed for revocation
• A power granted post-constitution can be revoked anytime
• For two or more managers, Article 1801 states duties unspecified, each can act separately but the majority prevails, and the controlling interest decides ties
• Article 1802 states when all managers must consent, it is necessary for validity, and absence of one must be disregarded unless imminent danger

Management Agreements

• Article 1803 states when a management agreement is absent, all partners are agents binding the partnership, subject to Article 1801
• Important immovable property changes require consent, but court intervention can be sought if refusal is prejudicial
• Sub-Partnerships are governed by Article 1804
• It states every partner can associate someone, but admission into the firm needs every partners consent
• Per Article 1805, Partnership books must be kept at the primary place and be accessible for partners review at reaosnable hours

Partner Primacy and Rights

• Article 1806 says true and full information must be available to partners
• Article 1807 requires partners to account for benefits, and profits derived from third person acts are to be held as trustee for the company

Restrictions for Capitalist Partners

• Article 1808 restricts the capitalist kind from independently engage in other operations of the business the subject company is engaged. unless there is stipulation to the contrary
• A violation of any of this must result in a return to common funds, and shoulder losses.
• Rights for the partnership may result under Article 1809, with a formal account if they are excluded from management
• Under 807, or whenever circumstances warrant, it is reasonable

Partner Property Rights

• Article 1810 defines rights including specific partnership property, plus their interest, and also the right to participate in the management.
• Co-ownership exists in partnership property under Article 1811

Partnership as an Entity

• Subject to Title provisions/agreements, partners possess equal rights to use property for partnership ends
• The partner cannot use it for other purposes without consent
• Rights to specific property cannot be assigned except with other partner's rights to same property
• Property rights are unassignable except with all partner's rights and aren't subject to attachment/execution for a partnership debt
• A claim is not subject to legal support by law.

Interest

• Article 1812 clarifies that a partners interest in the partnership is his share of distributed profits
• Article 1813 states interest conveyance doesn't dissolve the company, nor entitle assignee to interfere in the partnership's affairs but only profits

Article 1814

• Judgment on any partner must be ruled on by competent courts
• In the instance the value of one's investment is at stake, no title determines if a partner would see this through under partnership laws

Firm names and Agreements

• An agreement is determined under Article 1817
• Contractual obligations under Article 1816 indicate each partner shall be liable to the contracts entered under its name.

Liability for Action and Exceptions

• Article 1818 is subject to usual business practice and carries the partnership to which one is a registered member
• A partner who has no authority acting on good faith and the knowledge of whom he is dealing has no such authority

Article 1819 and 1820 are regarding property law and admissions

Under Article 1821 notice is made in the case of all affects made to partnership with partners as agents in such

Liability of Partners

• Solidary Liability to Third Persons - Article 1922 partners are generally liable to the firm for action or omission in the ordinary

Effect of Dissolution

• Article 1829 - Not considered to be terminated, until the winding of the affairs is completely finished per article 1830

Partner Authority

• Article 1881 - Dissolution terminates all act of any partner unless completed beforehand
• Subject to other creditors and partners unless the act or the partners involvement can be proved

Dissolution Consequences

• Article 1883 - Partners will be responsible for debts after the split, and are fully obligated to their co partners unless the partners acting for the partnership has knowledge of the dissolution - under 1834 is only able to bind based on what's listed in the paragraph unless properly advertised
• Section 2182 - Where a conflict on creditors stands - Article 18

Series of claims

• Article 1848 follows order of general partners
• General conditions must always be listed, and not be set aside unless by third party

Limited Partnership

• Created by two or more person by signing and swearing to a title per Article 1849, not limited to just new, but old partnerships with members or more or one limited

Rules and Guidelines

• The name in the partnership must contain the word "Limited"
• The nature of the business follows the location of placement
• The list of residences follow, with amount of contribution by each limited partner
• The individual must provide any time or events if there is a limited partner
• Compensation of the partners is to follow that is the best method to recieve income by respective members
• The partner should substitute an assignee if that is the right given to him
• One or more of all partners must be prioritized upon the contributions or other way by a nature given as priority
• There can only be more or less partners to continue business
• Limited partner should have rights to what he deposits and recieves
• Article 1845 states contributions may only be payed as CASH or PROPERTY
• Article 1846 states the surname of a limited partner may not be in a name unless general, or was a partner

Partner Control

• Article 1848: Partner won't be liable unless taking part in some type of control without exercising existing law

Article on Rights

• Article 1851: Should be kept at all places as inspected to the maximum as necessary
• All must be informed or the state on each is to know the status of what's happening to the specific partnership
• Dissolution must mean that a decree from the court can be issued
• May receive what's by way of compensations

Good-will of the Law

• Article 1847 may be held liable for if a member suffers on the account of the certificate

The Laws for Partners

• If certificate may be liable for if the account in question is listed as:
• Signed in a prior certificate / Relied upon by one submitting for a cancel or and amendment

Status in 1852

• Someone listed as a member of the partnership may not exist there - it may be one carrying out by some member
• These may have exclusive rights given to them as voted for, for no more than 5 years from the incorporation

Transactions

• Article 1838.

Limited Partners

• Article 1853: Both as a listed general, and as a special
• Will have both as listed as all power or the listed members

Creditor Standing & Limited Funds.

• Article 1884 states that a certificate must state the order they funds may be issued and for what purposes, should it be clear
• Any partner that gets discharged is for damages listed under numbers one, two, or three

•   1886: A limited partner is not a partner to any by or to members in what may affect the company, or will have the limited part to the liability and rights
  

New changes

• Under Article 1887, any member to the company will have no issue listed what articles and the time of when and where a member was part.

• 1842: Every partner is held to their accounts and winding of members to not violate anyone within the company