In the real estate business example, what were the points that we raised?

We asked the question WON the managing partner has the authority to sell the subdivision lots if such were the business. We agreed that if it was in the normal course of the business then ti could be valid. Then we can further discussed it with respect to the effects in whos name the title is and its conveyance

ARTICLE 1819: SUMMARY BY NYERA( Please check for errors) TITLE In Partnership Name CONVEYANCE In Partnership Name EFFECT Passes Title RECOVERY IF: a. The conveyance was not in the usual way of business b. Buyer had knowledge of the fact that partner has no authority even though the conveyance was made in the usual way of business CANNOT RECOVER IF: Buyer conveyed title to the third person who had no knowledge of partners lack of actual authority

In Partnership Name

In Partners Name

Equitable Interest IF: Selling of the land is in the usual court of business of the partnership NOT EVEN EQUITABLE INTEREST: a. Not engaged in the buying o selling of lands b. Buyer had knowledge of partners lack of authority although the sale was made in the usual course of business

Name of one or

Name of partner or

Pass Title

SAME AS PAR 1

SAME AS PAR

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

more partners

Name of one or Equitable interest SAME AS PAR 2 SAME AS PAR more or all partners 2 rd or 3 person in trust for partnership Name of All Partners Name of All Partners Passes Title 5th- effect will be the same though the same is not in the usual course of business Equitable interest- only has the personal right to compel the partners to complete his legal right by ratifying the act done by one of the partners or the partners provided that it is done within the scope of authority and in the usual court of the business. So that again as a: GENRULE: every partner is an agent of the partnership. Meaning he can bind the partnership PRESUMPTION HERE IS: the partner has authority

partners whos name title stands Partnership name

In order words, if the partner deals with us. Do we always need to ask? No need to ask because the presumption is that he can bind the partnership

The partner cannot bind the partnership when the 3 requisites are not complied with: 1. The partner has no authority 2. When it is not in the usual way of business 3. When the 3rd party has knowledge that the partner has no authority However, despite these rules there are certain acts which he cannot perform? Why? Because unanimity is required

ACTS WHERE UNANIMITY IS REQUIRED: 1. Confession of judgment

Confession of judgment The partnership confess liability Ex. vecowill not file a case if you publish that you admit the liability in sunstar. Or else, we will file a criminal case. The partner then says, cge publish nalang. That cannot be done. Renounces a claim For example the partnerhisp has a claim or the partnership is a creditor and the partner renounces the claim. He needs the consent of all partner. Involves an disposition of asset. A claim is a potential asset. What is the opposite of renouncing a claim? Confession of judgment

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

How is it done? There is already a judgment. It must be filed in court and instead of filing an answer, the partner will just file a manifestation that it will admit liability and will assume the liability. It involves the abandonment of a claim, so it requires unanimity. Assignment of partnership property It is when a partner will assign a partnership property in trust for another person. in that case, the consent of the other partners is also required. The property may be one that is essential or important to the partnership. If it is given to another person, it may be prejudicial to the partnership What is the common denominator? If it will be inimical to the interest of the partnership since they are acts of ownership which would tantamount to disposal of the assets of the partnership. What is the rule? In the absence of a stipulation, every partner is an agent of the partnership. Hence, the partners act binds the partnership. UNLESS the exceptions are present: A.) FIRST exception: 1. not for the usual business of the partnership, 2. He has no authority 3. Third person who contracted knows that the partner does not have authority. B.) SECOND exception: Acts which require the unanimity of the partners A partnership may own properties. As a result of acquiring properties, the partnership may exercise certain rights. As owners, these rights may be: Use Fruits Possess Dispose Recover Abuse As owner, you exercise all of these rights. What is the right that you can demand from the state? You can demand that the State to respect that right. So, you can ask the titling of the partnership. That is the only way that the State can respect your right. You must ask for a title. Right to use. So that if u are exercising full ownership of the property, you have all those rights. If you exercise all those rights over the property, over a parcel of land. What right do you have from the state? What can you demand from the state? Ans: I can demand from the state to respect my right of ownership over the land by having a title issued over the land. When the law says title, what do we mean? If the title is in the name of partnership etc. Title is the claim or evidence of absolute ownership , FULL ownership of the property. As absolute owner, he has the right to use, right to dispose, right to enjoy and right to its fruits. Equitable interest, is it different from title? Or are they one and the same? Equitable interest only considers the right to possess, the right to use, the right to the fruits.. These rights are limited. There is no right to dispose. There is only the BENEFICIAL right (the 3 mentioned above) as against the right of FULL ownership.

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

If the title is in the name of the partnership, it can only be conveyed in the partnerships name which is a legitimate act of ownership. Earlier we said, disposal of the property needs unanimity. Here In this example, the property is in the name of the partnership however, it was conveyed only by one partner, signed only by one partner. There is only a little fault. Which should have been done with the consent of all the partners. The remedy of the partnership can recover the property because it was not signed by all the partners and by proving that the partner had no authority, that such transaction was not in the usual business of the partnership and that the 3rd person had knowledge of said partners lack of authority. However, certain circumstances may exist that may prevent the partnership from recovery if the partnership gave AUTHORITY to the partner. Even If there was no authority but the 3rd person had the knowledge of the lack of authority then the partnership can recover. The second instance, Title in the name of partnership but conveyed in the name of the partners. The partnership owns the property but the deed of conveyance was in the name of one of the partners. What happens here? Only the Equitable Interest passes. What's the second instance? If the title is in the partnership name and the conveyance was done in the name of a partner. This is different. Title in the name of the partnership but conveyed in the name of only one partner. This is more serious. The partnership owns a property but the deed of conveyance indicates that it is just one of the parties. What happens here? Only the equitable interest is passed. Provided that such was done in the normal course of business. Otherwise, the partnership can recover the property because one of the exceptions is that if it is not in the usual course. What was lacking, why only equitable interest? He has the beneficial right but he cannot dispose. For him to dispose the property he can compel the partnership to confirm the sale and let all the other partners ratify. That's part of your equitable interest. The third instance is title in the name of one or more of partners but not all but conveyed in the name of such partner/s. The effect is legal title is passed. Here, it appears there's nothing wrong. It appears that all owners are the ones who conveyed. Conveyance is valid. Unless, there was no authority, such lack of authority is known to the third person, and it is not in the usual way of the business. Not usual, no authority, known lack of authority. Next instance is the title is in the name of one or all of the partners or in the name of a third person as a trustee and conveyed in the name of the partnership. A trustee is a person charged with the administration or preservation of a property in the behalf of the trustor. The trustor need not be the owner of the property. Here there is a third person holding the property in trust of the partnership. If such third person conveys the property in the partnership name, what is transferred is the equitable interest. The transferee can compel the other partners to ratify the transfer. Why not full ownership, what was the defect?

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

There was no unanimity. However, not even equitable interest is passed if the transfer was not in the usual course of business, there was no authority given, and the third person has knowledge of the lack of authority. Last is when the title is in the name of all the partners and conveyed in the name of all the partners. What is transferred is absolute ownership. This is the most perfect form of partnership. A President of a partnership is accused of having an affair with the Secretary and the wife sued the Secretary. Meanwhile, the wife requested one of the partners to testify in the case. Can the partner testify? Is his testimony binding to the partnership? No. In order for such testimony to be binding three requisites must concur. First, the testimony must refer to the affairs of the partnership. Second, the testimony must have been acquired within his scope of authority. Third, the testimony must refer to matters acquired by him during the time that he was still a partner. Atty: For a testimony to be admitted as evidence against the partnership, 3 requisites must concur: The testimony must be of a matter concerning partnership affairs The testimony must have been acquired within his scope of authority The testimony must refer to something that occurred while he was still a partner If he testifies something against the partnership or informations acquired when he is no longer a partner, this should not bind the partnership. Basis: Article 1820. An admission or representation made by any partner concerning partnership affairs within the scope of his authority in accordance with this Title is evidence against the partnership. (n) Atty: As agent of the partnership while it does not bind the partnership insofar knowledge or information lim, there is a similar provision which means? Student: Notice to a partner is notice to the partnership. And the partner who is acting in a particular matter has notice prior to his admission to the partnership it is as if it is a notice to the partnership because such was then present to his mind. Atty: Right. Because we said, a partner can bind the partnership, generally. Another general rule would be notice to the partner is notice to the partnership. And admission by a partner or testimony of a partner binds the partnership. These are the rules but there are some requisites. When we say notice to the partner is notice to the partnership not just any notice because the notice may be chismis which is differentiated from notice. When we say notice, it relates to matters involving the partnership. Atty: So what are the requisites before we apply the rule that notice to a partner is notice to the partnership? When will notice to a partner be considered notice to the partnership? Ans: In order that notice will bind the partnership three requisites must concur: It must be matters concerning partnership affairs Knowledge acquired in the particular matter present to his mind There is opportunity to communicate- because if he received the notice in a situation where he could not convey such information or notice then it will be unfair to the partnership if the notice cannot reach the partnership

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

Basis: Article 1821. Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in the particular matter, acquired while a partner or then present to his mind, and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner, operate as notice to or knowledge of the partnership, except in the case of fraud on the partnership, committed by or with the consent of that partner. (n) Atty: Earlier, we discussed the liabilities of the partnership. And these liabilities are classified as? Ans: As to source Nature of liability Article 1816 Contracts 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.

Basis: Article 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) Article 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 his 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) Article 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) Article 1824. All partners are liable solidarily with the partnership for everything chargeable to the partnership under articles 1822 and 1823. (n) Atty: Here, if the partner, after collecting from the partnership debtor and instead endorsing it bringing it to the partnership funds he used for some other business. What happens here? Student: This is a case of misappropriation and then the partnership must make good the liability of the partner, meaning, the partnership is solidarily liable for the act of the partner. This arises from a crime. Atty: Is it a crime? Student: It is estafa. Because in estafa, a person is given an amount which will be used for a specific purpose but that person instead of using it for such specific purpose used it for another purpose.

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

Atty: In estafa, the person is given the amount has the obligation to endorse it to someone else but instead used it for his personal use. Atty: What is the difference between a crime and a tort? Student: A crime is an act or omission which is punished by law. The act itself is punished by law. You are a punished because you are negligent. If you werent negligent, wala ta ka naka ligis. So crimes are acts or omissions punished by law. Quasi-delicts (torts) are acts resulting from negligence (or failure to observe proper precautions required under circumstances as to persons, time, and place) So if you are at a certain place where children are playing, can you drive your car 100mph? Did you exercise the necessary precaution required under the circumstances? So the circumstances of persons, time, and place will control the extent of precaution required. How do we now distinguish when liability would be solidary and when liability would be subsidiary or joint? Liability is solidary when the liability arises from torts or quasi-delicts. Liability is subsidiary when it arises from contractual obligations. Partnership by estoppel (2 kinds) 1. When certain groups of people represent to the public that they are a partnership; effect is that they will be liable to third persons who relied on their representations 2. When a third person represents himself to be a partner to an existing partnership and all the partners to that existing partnership consents to his representation Partner by estoppel When a person represents himself directly or indirectly to a partnership whether existing or not What is the liability of a partner by estoppel? Partner by estoppel, along with those who consented to his representation as a partner, shall be liable pro rata. We said that, along the way, a partnership may admit new partners. If the new partner is admitted, somehow because he came in midway, something must have already occurred insofar as the business of the partnership is concerned. Along the way, profits might have already been enjoyed. So, as usual every year end, the partnership distributes profits. So that if the new partner was admitted only sometime in November before the distribution, how much share in the profits would he have? The new partners share in the profits shall depend on their agreement, if no agreement then it shall be in proportion to his contribution. His share will not be in proportion to his length of stay in the partnership.

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1

Now, how much does the new partner share in the liability debts of the partnership? For debts incurred before his admission, he will be liable only to the extent of the amount of his contribution. On the other hand, for debts incurred after his admission, he will be liable even up to the extent of his personal property. Chapter 3 for next meeting dissolution and winding

Business Organization Partnership Arra, Nyera, Patricio, Frank, Dan, Anthony August 1