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ARTICLE 1305 Requisites of a contract: Essential Feature (5) Primary purpose which is to A contract is a meeting of minds ARTICLE 1318. There is no Partnership is a type of business obtain profits and to divide the b...

ARTICLE 1305 Requisites of a contract: Essential Feature (5) Primary purpose which is to A contract is a meeting of minds ARTICLE 1318. There is no Partnership is a type of business obtain profits and to divide the between two persons whereby one contract unless the following organization created by a contract. same among the parties binds himself, with respect to the requisites concur: other, to give something or to (1) Consent of the contracting A corporation must be registered to Age of majority -> 18 yrs old can render some service. parties; SEC. enter in a contract. Below age of 18, (2) Object certain which is the there should have legal guardian In a contract there is two party. You subject matter of the contract; Article 1767 to represent them in entering in a cannot make contract by yourself (3) Cause of the obligation which is In order that there may be contract. established. partnership, two or more people Contracting party consist of 2 must agree to unite their money, Legal Capacity is not only people who has reciprocal and non Kinds of Elements of a contract property, labor or skill in carrying determined by age of majority reciprocal duty. (1) Essential out a legitimate business for profit - Ability to Read and Write (2) Natural - not incapacitated by law or Example: Part A offered to party B (3) Accidental Money sickness/ illness/ disease the sale of land cruiser (car) for 3M Property:Personal and Real pesos. Essential Elements: Article 1318 Labor - manpower Ratification - a contract agreed Skill - actual set of abilities upon accepting the flaws of other Bind means legal tie or valid Natural Elements are presumed to parties and is considered valid. sources of obligation. exist in certain contracts unless A2AB AF expressly stipulated to the contract. 12 partners -> Trust Characteristics of a Partnership Sources of obligation: (1) Consensual (1)Law Example:Reviews/Warranty 1,2,3 (money) 500k for establishing (2) Bilateral (2) Contracts the firm (3) Principal (3) Quasi-contracts Accidental Elements are particular 4,5,6 (real property) 1000sqm lot in (4) Commutative (4) Acts or omissions punished by stipulation that talks about period of Sto Tomas (5) Preparatory law; and a contract. Stipulate specifically. 7 (personal property) materials, (6) Onerous (5) Quasi-delicts gadgets, furniture (7) Nominate Example:Penalty clause 8,9,10,11,12 (skill and labor) Contracts are valid if they are professional advising and admin Consensual - perfected by mere (1) lawful 3 Stages in the life of a contract: work consent (2) legally binding (1) Preparation (2) Perfection/Birth A partnership is duly formed under Bilateral - entered between 2 or Validity and enforceability of lawful (3) Consumation/Termination the law is a juridical person that has more persons with reciprocal rights contracts a personality separate and distinct and obligations 3 Types of Contracts from the partners. ARTICLE 1306. The contracting (1) Consensual Contract Principal - it does not depend for parties may establish such (2) Real Contract Juridical person is a person who its validity or existence upon some stipulations, clauses, terms and (3) Formal/ Solemn Contract is not a people but created by other contract. conditions as they may deem fiction of law to have a rights similar convenient, provided they are not Consensual Contract - simpleng to natural person. Commutative - undertaking of one contrary to law, morals, good usap partner is regarded as the customs, public order, or public Article 1768 equivalent of that of the other policy. Real Contract - perfected upon It may acquire and possess all partners. Ang kagalingan ng isa ay delivery kinds of properties, incur kagalingan ng lahat. Ang For a contract to be lawful and valid, obligations and file cases or kapalpakan ng isa ay kapalpakan they must not be contrary to: Formal/Solemn Contract - certain become defendants in cases filed in ng lahat. by power of agency (1) law requirement courts. (2) morals Preparatory - it is entered into so (3) good customs Estate tax is the tax you pay if your (TCT) Transfer of Certificate Title that such persons may lawfully (4) Public order ancestor dies. Without this, you shows the name of owner. engage in business to realize (5) Public policy cannot receive mana profits which will then be divided A juridical person is an ARTIFICIAL among themselves. Morals deals with what is In deed of donation, there should BEING created by fiction of law. Its considered right and wrong in a be an acceptance from the donee. personality commences as soon as Onerous - profit making society that is evolving. It differs the contract of partnership is from different society. Partnership perfected or its effectivity is Nominate - has a special name or Is a certain group or legal expressly stipulated at a later date. designation under the law Good customs are practices that partnership established not for are past down from generations to companionship but for profit. 5 Essential Requisites of a The Capacity of the following generation. This are habits and Partnership persons to enter into a contract of practices which too long usage has - arises from a contract entered into (1) Valid Contract partnership is limited: been followed and enforce by by people who trust (foundation (2) Legal capacity of the persons (1) those who are prohibited from society or some part of it as a and fundamental) one another forming the partnership giving each other any donation or binding rule of contract. (3) Mutual contribution of money, advantage cannot enter into The very foundation and essence of property, or industry (labor and skill) universal partnership Public order means the safety of a partnership is the mutual desire to common business (2) A corporation which cannot the masses and consent of the partners (4) Lawful business enter into a partnership in the absence of express authorization wife cannot form universal Duration of partnership (2) As to its object by statute or charter, but may partnership. A husband and wife - A partnership may either be for a > Universal Partnership engage in a joint venture with may, however, form a particular fixed term or a particular > Particular Partnership others. partnership. (limited partnership) undertaking or at will, the formation and dissolution of which (3) As to Partner’s Liability The essential elements of a Particular partnership known as a depends on the mutual desire and > General partnership are the lawful object professional partnership formed by consent of the parties. >Limited and common benefit or interest professionals who join together to of the partners. practice their profession Dissolution - end of partnership (4) As to Publicity > Secret Void means not legally enforceable Article 1771, A contract of Rules to Determine Existence Open/Notorious partnership may be made orally or (1) Persons who are not partners The contract is Void ab initio if the in writing unless real property or to each other are not partners as (5) As to Purpose partnership has an unlawful object rights, in which case, it should be in to third persons unless there is > Commercial/ Trading (exist for or purpose. It is void from the public instrument. estoppel. the transactions of business) beginning (2) Co-ownership or co- > Professional/ Non Trading Article 1772, Cash or property possession does not establish a (exist for the exercise of a Once dissolved by order of the worth 3,000 pesos or more is partnership, even when there is profession) court, the partnership’s profits, the contributed as capital, The AP shall sharing of profits in the use of instrument or tools, and proceeds be in public instrument and the property (6) As to Duration of the crime shall be confiscated in registered with the Securities and (3) Sharing of gross returns does > Fixed Term favor of the government and even Exchange Commission (SEC) not establish a partnership, even > For a Particular undertaking the contributions of the partners when the parties have a joint or > at will shall be confiscated if they are used Public instrument - legal common interest in any property as instruments or tools of crime. document and need to be notarized from which the returns are Kinds of Partner by notary public derived. (1) Capitalists partner who Only court can dissolve (4) The receipt by a person of a contributes money or property Partnership by order. Notary public- lawyer empowered share in the profits of a business (2) Industrial partner who by the court to make public private is prima facie evidence that he is contributes only his industry, skills, The partnership is void if there is no document a partner, which may be or services requisites of a partnership contradicted by proof that such (3) General partner whose liability Common fund - this is where the profits were received in payment to third persons extends to his Universal partnership refers to all contribution goes voluntary of a debt, wages, rents, annuity, separate property the present property or to all profits interest on a loan, or as (4) Limited partner whose liability or particular partnership which has Article 1773, If real property, consideration for the sale of a to third persns is limited to his for its object determine things, their regardless of value, is contributed goodwill of a business. capital contribution use or fruits, or specific undertaking, by any of the partners, the contract (5) Managing partner who is or the exercise of a profession or of the partnership must be in a designated to manage the affairs or vocation. public instrument and attached to it PRIMA FACIE - on its face or upon business of the partnership should be an inventory of the first instance (6) Liquidating partner who takes The properties contributed include property contributed, duly signed by charge of winding up the all those owned by the partners at the parties. Doctrine of Estoppel: partnership affairs the time of the constitution of the - A bar which PRECLUDES a (7) Partner by Estoppel who is not partnership. Presumption of the law: person from DENYING OR really a partner but is liable as such Perpetuating an illegal business if ASSERTING anything for the protection of innocent third Article 1779, they may also agree not registered in SEC CONTRARY to what has been person to include all other profits they may established as the truth by (8) Continuing partner who subsequently receive but the PRINCIPLE OF DELECTUS his/her own deed/ words/ continues the business after the property that the partners may PERSONAE representations. dissolution of the partnership by the acquire subsequently by The right of partners to admission of a new partner, or inheritance, legacy or donation EXERCISE their CHOICE & 2 KINDS OF PARTNERSHIP retirement, death, or expulsion of cannot be included in their PREFERENCE as to the I. General existing partners. agreement, except the fruits admission of new partners into - Partners share UNLIMITED (9) Surviving partner who remains thereof. the partnership. LIABILITY for ALL OBLIGATIONS a partner after dissolution by the (including liabilities) of the death of any partner Article 1780, A universal Partners see when they exercise partnership. (10) Sub partner who is not a partnership of profits comprises all Delectus Personae: II. LIMITED member of the partnership and that the partners may acquire by C-C-P-P - Partners can only be liable for technically and legally speaking, their industry or work during the (1)CHARACTER their share equal to the amount not a partne as he only contracts existence of the partnership. Only (2)CAPACITY of their CAPITAL with a partner concerning the share the usufruct over the property of the (3)PERFORMANCE CONTRIBUTION of the latter in the partnership partners passes to the partnerships. (4)PERSONALITY (11) Ostensible Partner who takes 6 KINDS OF PARTNERSHIP an active part in the business of the USUFRUCT- enjoyment of use. Trust & have confidence in the new (1) As to legality partnership and is known by the partners > De jure (legal, complied with all public Article 1782, Persons who ar requirements) (12) Secret partner who takes ab eprohibited by law to give donations > De facto (illegal, failed to comply) active part of the business but is to each other, such as husband anf unknown to the third persons as a CHAPTER 2: RIGHTS AND diligence of a good father of a partnership credit, the amount shall partner OBLIGATIONS family. be fully applied to the latter. (13) Silent partner who does not take an active part in the business, A contract of partnership creates Article 1790 Unless there is a The provisions of this article are but maybe known to be a partner four kinds of relationships: stipulation to the contrary, the understood to be without prejudice by third person (1) Among the partners partners shall contribute equal to the right granted to the debtor by (14) Dormant partner who does (2) Between the partners and shares to the capital of the article 1252, but only if the personal not take an active part in the partnership partnership. credit of the partner should be more business and is not known or held (3) Between the partnership and onerous to him. out as partner third persons Article 1789 An industrial partner (15) Original partner who has (4) Between the partners and cannot engage in the business for If received a big amount of money been a partner since the third persons himself, unless the partnership under his name, he shall give it pro constitution of the partnership expressly permits him to do so; and rata to the partnership. (16) Incoming partner who is Right to Contribution if he should do so, the capitalist about to join or be taken as a Article 1787 When the capital or a partners may either exclude him Right to Return of credit received member into an existing partnership part thereof which a partner is from the firm or avail themselves of ARTICLE 1793. A partner who has (17) Retiring partner who is bound to contribute consists of the benefits which he may have received, in whole or in part, his withdrawing from the partnership goods, their appraisal must be obtained in violation of this share of a partnership credit, when made in the manner prescribed in provision, with a right to damages the other partners have not Partnership distinguished from a the contract of partnership, and in in either case. collected theirs, shall be obliged, if Corporation the absence of stipulation, it shall the debtor should thereafter (1) A partnership is created by be made by experts chosen by the ARTICLE 1808. The capitalist become insolvent, to bring to the agreement, while corporation is partners, and according to current partners cannot engage for their partnership capital what he created by operation of law I,e., prices, the subsequent changes own account in any operation which received even though he may have Revised Corporation Code thereof being for the account of the is of the kind of business in which given receipt for his share only. (2) A partnership involves at least partnerships the partnership is engaged, unless two persons while corporation can there is a stipulation to the contrary. Right to Indemnity for Damages exist with a single stockholder, as in Appraisal - determination of the ARTICLE 1794. Every partner is the case of a one-person value of the goods Any capitalist partner violating this responsible to the partnership for corporation prohibition shall bring to the damages suffered by it through his (3) A partnership’s personality Article 1788 A partner who has common funds any profits accruing fault, and he cannot compensate commences from the moment of undertaken to contribute a sum of to him from his transactions, and them with the profits and execution of the contract, while a money and fails to do so becomes shall personally bear all the losses. benefits which he may have corporation’s personality a debtor for the interest and earned for the partnership by his commences from the issuance of damages from the time he should Right to Additional Contribution industry. the certificate of incorporation by have complied with his obligation. the SEC Article 1791 If there is no However, the courts may (4) A partnership can exercise any The same rule applies to any agreement to the contrary, in case equitably lessen this power authorized by partners, amount he may have taken from of an imminent loss of the business responsibility if through the while corporation can exercise only the partnership coffers, and his of the partnership, any partner who partner’s extraordinary efforts in powers conferred by the Revised liability shall begin from the time he refuses to contribute an additional other activities of the partnership, Corporation Code or by its articles converted the amount to his own share to the capital, except an unusual profits have been of incorporation, and such as are use industrial partner, to save the realized. necessary or incidental to the venture, shall be obliged to sell his exercise of such powers. Consequences of 1788: interest to the other partners. ARTICLE 1795. The risk of specific (5) When management is not (1) Indemnification for damages and determinate things, which are agreed upon, every partner may act (3) Payment of interest Right to Apply Payment received not fungible, contributed to the for the partnership, while to partnership credit partnership so that only their use management is vested in the board Article 1786 Every partner is a and fruits may be for the common of directors and trustees debtor of the partnership for Managig partner is appointed benefit, shall be borne by the (6) Partners are generally liable for whatever he may have promised to either in partner who owns them. If the partnership debts, while contribute thereto. (1) Articles of Partnership things contribute are fungible, or stockholders are liable only to the (2) After constitution of the cannot be kept without deteriorating, extent of their shares in corporation. He shall also be bound for warranty partnership or if they were contributed to be (7) A partner cannot dispose of his in case of eviction with regard to sold, the risk shall be borne by the interest, so as to make the specific and determinate things ARTICLE 1792. If a partner partnership. In the absence of assignee a partner, without the which he may have contributed to authorized to manage collects a stipulation, the risk of things consent of others. the partnership, in the same cases demandable sum, which was owed brought and appraised in the (8) Partnership may be dissolved at and in the same manner as the to him in his own name, from a inventory, shall also be borne by any time by any partner or all of the vendor is bound with respect to the person who owed the partnership the partnership, and in such case partners, while corporation may vendee. He shall also be liable for another sum also demandable, the the claim shall be limited to the only dissolve with the consent of the fruits thereof from the time they sum thus collected shall be applied value at which they were appraised. the State. should have been delivered, to the two credits in proportion to without the need of any demand their amounts, even though he may ARTICLE 1796. The partnership have given a receipt for his own shall be responsible to every - if a partner promised to contribute credit only; but should he have partner for the amounts he may specific property, he is obliged to given it for the account of the have disbursed on behalf of the preserve said property with partnership and for the corresponding interest, from the shall be distributed as if there was time the expenses are made; it Right in a Specific Property no agreement. shall also answer to each partner ARTICLE 1811. A partner is co- for the obligations he may have owner with his partners of specific Obligations to render Information contracted in good faith in the partnership property. The partners should be honest and interest of the partnership business, truthful. They have the obligation to and for risks in consequence of its The incidents of this co-ownership disclose all information affecting the management. are such that: partnership. - obliged to refund (1) A partner, subject to the Obligation to Account and Act as provisions of this Title and to any Trustee LESSON 2: RIGHTS AND agreement between the partners, ARTICLE 1807. Every partner must OBLIGATIONS OF PARTNERS has an equal right with his account to the partnership for any INTER SE partners to possess specific benefit, and hold as trustee for it partnership property for any profits derived by him without Right to Associate Another in partnership purposes; but he has the consent of the other partners Share no right to possess such from any transaction connected ARTICLE 1804. Every partner property for any other purpose with the formation, conduct, or may associate another person without the consent of his liquidation of the partnership or with him in his share, but the partners; from any use by him of its property. associate shall not be admitted into the partnership without the consent (2) A partner’s right in specific of all the other partners, even if the partnership property is not partner having an associate should assignable except in connection be a manager. with the assignment of rights of all the partners in the same Right to Inspect Partnership property; Books ARTICLE 1805. The partnership (3) A partner’s right in specific books shall be kept, subject to any partnership property is not subject agreement between the partners, at to attachment or execution, the principal place of business of except on a claim against the the partnership, and every partner partnership. When partnership shall at any reasonable hour have property is attached for a access to and may inspect and partnership debt the partners, or copy any of them. any of them, or the representatives of a deceased partner, cannot claim Right to Formal Account any right under the homestead or ARTICLE 1809. Any partner shall exemption laws; have the right to a formal account as to partnership affairs: (4) A partner’s right in specific (1) If he is wrongfully excluded partnership property is not subject from the partnership business or to legal support under article 291. possession of its property by his co-partners; Interest in Partnership (2) If the right exists under the ARTICLE 1812. A partner’s interest terms of any agreement; in the partnership is his share of the (3) As provided by article 1807; profits and surplus. (4) Whenever other circumstances render it just and reasonable Right to Participate In Management Property Rights of Partners Management of the partnership is ARTICLE 1810. The property rights primarily governed by the agrement of a partner are: of the partners in the articles of (1) His rights in specific partnership partnership. property; (2) His interest in the partnership; Right to Profits and Obligation and for Losses (3) His right to participate in the Profits and losses shall be management distributed in conformity with the partnership agreement. Ownership of Certain Properties - depends on the intention of the Exclusion of Partner from Share parties. Partners can contribute Any stipulation that excludes one or usufructs more partners from any share in the profits and losses is void, but the - incident of co-ownership partnership remains valid and subsists and the profits and losses