conclusiones del apartado

RIGHTTOCONTRIBUTION,INGENERAL

The mutual contribution to a common fund is the essence of the contract of partnership [De Leon

(2010)]. As such, the partnership has a right to the

contribution (or partners are obliged to contribute). The money or property thus contributed, or their use or fruits, becomes a property of the partnership. To complement this right of the partnership and as an incident of its separate and distinct juridical personality, it is allowed by law to acquire any immovable property or an interest therein. Title so acquired can be conveyed only in the partnership name [Article 1774].

OBLIGATIONOFPARTNERSTOTHE PARTNERSHIP

WITHRESPECTTOCONTRIBUTIONOFMONEYOR PROPERTY

With respect to contribution of property, a partner is obliged to:

(1) To contribute, at the beginning of the partnership or at the stipulated time, the money, property or industry which he undertook to contribute; (2) In case a specific and determinate thing is to be

contributed:

(a) To warrant against eviction in the same manner as a vendor; and

(b) To deliver to the partnership the fruits of the property promised to be contributed, from the time they should have been delivered, without need of demand [Article 1786]; (3) In case a sum of money is to be contributed, or in

case he took any amount from the partnership coffers, to indemnify the partnership for:

(a) Interest; and

(b) Damages, from the time he should have complied with his obligation, or from the time he converted the amount to his own use, respectively [Article 1788].

Article 1788 is an exception to the general rule that in

obligations consisting in the payment of a sum of money, the indemnity for damages consists only in the payment of interest [Article 2209].

AMOUNT OF CONTRIBUTION

General rule: The partners are obliged to contribute equal shares to the capital of the partnership.

Exception: When there is an agreement to the

contrary, the contribution shall follow such agreement [Article 1790].

DETERMINING VALUE OF CONTRIBUTION IN GOODS To determine the value when the contribution consists, in whole or in part, of goods, their appraisal must be made:

(1) In the manner prescribed in the partnership contract;

(2) In the absence thereof, by experts chosen by the partners and according to current prices.

Subsequent changes in the price will be for the benefit or will be suffered by the partnership [Article

1787].

ADDITIONAL CAPITAL CONTRIBUTION

In case of an imminent loss of the business of the partnership, any partner who refuses to contribute an additional share to the capital, except an industrial

partner, to save the venture, shall be obliged to sell

his interest to the other partners, unless there is an agreement to the contrary [Article 1791].

Requisites:

(1) There is an imminent loss of the business of the partnership;

(2) The majority of the capitalist partners are of the opinion that an additional contribution to the common fund would save the business;

(3) The capitalist partner refuses deliberately (not because of financial inability) to contribute an additional share to the capital; and

(4) There is no agreement that even in case of imminent loss of the business, the partners are not obliged to contribute.

PROHIBITION AGAINST ENGAGING IN BUSINESS

General rule: A capitalist partner cannot engage for

his own account in any operation which is of the kind of business in which the partnership is engaged. Should he do so, he shall bring to the common fund any profit accruing to him from his transactions, while personally bearing all the losses.

Exception: The rule does not apply when there is a

stipulation to the contrary [Article 1808]. RISK OF LOSS OF THINGS CONTRIBUTED

In case the contribution consists in the use and fruits of specific and determinate things, which are not fungible, the risk of loss shall be borne by the partner who owns them.

The partnership bears the risk if the things: (1) Are fungible;

(3) Were contributed to be sold; or

(4) Were brought and appraised in the inventory. In the last case, the claim is limited to the appraised value of the things [Article 1795]. REMEDY IN CASE OF NON-COMPLIANCE

A partner is guilty of estafa if he misappropriates partnership money or property received by him for a specific purpose of the partnership [Liwanag v. CA

(1997)].

However, mere failure on the part of an industrial partner to return to the capitalist partner the capital brought by him into the partnership is not an act constituting estafa. The action that may be brought to recover the money is a civil one [US v. Clarin

(1910)].

OBLIGATIONOFPARTNERSTOTHE PARTNERSHIP

WITHRESPECTTOCONTRIBUTIONOFINDUSTRY With respect to contribution of industry, a partner is also obliged to contribute it at the stipulated time. PROHIBITION AGAINST ENGAGING IN BUSINESS

General rule: An industrial partner cannot engage in

business for himself. Should he do so, the capitalist partners, as well as industrial partners [De Leon

(2010)], may either:

(1) Exclude him from the firm; or

(2) Avail themselves of the benefit which he may have obtained.

Exception: He may engage in business for himself

when the partnership expressly permits him to do so. [Article 1789]

RIGHTTOAPPLYPAYMENTTOPARTNERSHIP CREDIT

General rule: A partner authorized to manage, who

collects a demandable sum owed to him in his own name from a person who also owes the partnership a demandable sum, is obliged to apply the sum collected to both credits pro rata, even if he issued a receipt for his own credit only.

Requisites:

(1) There exist at least two debts, one where the collecting partner is creditor, and the other, where the partnership is the creditor;

(2) Both debts are demandable; and

(3) The partner who collects is authorized to manage and actually manages the partnership.

Exceptions:

(1) In case the receipt was issued for the account of the partnership credit only, however, the sum shall be applied to the partnership credit alone. (2) When the debtor declares, pursuant to Article

1252, at the time of making the payment, to which

debt the sum must be applied, it shall be so applied [Article 1792].

The law, through this rule, safeguards the interests of the partnership by preventing the possibility of their being subordinated by the managing partner to his own interest, by intentionally failing to collect partnership credits to collect his own, to the prejudice of the other partners. This possibility does not exist in case the partner is not authorized to manage [De Leon (2010)].

RIGHTTORETURNOFCREDITRECEIVED

A partner, who is authorized to manage or not, is obliged to bring to the partnership capital what he received when:

(1) He has received, in whole or in part, his share of the partnership credit;

(2) The other partners have not collected their shares; and

(3) The partnership debtor has become insolvent. This obligation exists even when he issued a receipt for his share only. [Article 1793]

Ratio: In this case, the debt becomes a bad debt. It

would be unfair for the partner who already collected not to share in the loss of the other partners.

RIGHTTOINDEMNITYFORDAMAGES

Every partner is responsible to the partnership for damages suffered by it through his fault.

COMPENSATION OF LIABILITY

General rule: The liability for damages cannot be set-

off or compensated by profits or benefits which the partner may have earned for the partnership by his industry.

Ratio: The partner has the obligation to secure the

benefits for the partnership. As such, the requirement for compensation, that the partner be both a creditor and a debtor of the partnership at the same time, is not complied with [Article 1278; De Leon

(2010)].

Exception: The court may equitably lessen the

liability if, through his extraordinary efforts in other activities of the partnership, unusual profits were realized [Article 1794].

SUIT FOR DAMAGES

Before a partner may sue another for alleged fraudulent management and resultant damages, liquidation must first be effected to determine the extent of the damage. Without liquidation of partnership affairs, a partner cannot claim damages [Soncuya v. De Luna (1939)].

RESPONSIBILITYOFTHEPARTNERSHIPTO PARTNERS

In the absence of any stipulation to the contrary, every partner is an agent of the partnership for the purpose of its business. As such, it is responsible to every partner:

(1) For amounts, and the corresponding interest from the time the expenses were made, which he may have disbursed on behalf of the partnership; (2) For obligations he may have contracted in good

faith in the interest of the partnership business; and

(3) For risks in consequence of the management of the partnership. [Article 1796]

Rights and obligations