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TRUSTS SPLITTING NAKED AND BENEFICIAL TITLE

 Essence of trust = fiduciary relationship or enforcement


CHAPTER 1 of equity is built on property relations
INTRODUCTION  NO Real Trusts = only meeting of the minds
TRUSTS o UNLESS THE TITLE IS TRANSFERRED TO
 TRUST = a right, enforceable based on equity, to the TRUSTEE
beneficial enjoyment of property, the legal title to which o 3 different ways to transfer
is vested to another 1. Only Naked Title given = registered
as naked/legal title holder
Tolentino- the legal relationship between one person 2. Full Title registered in his name +
having an equitable ownership in property and another Clear agreement: holding for the
person owning legal title to such property benefit of another person =
> the equitable ownership of the former = entitling him EXPRESS TRUST, at best
to the performance of certain duties + RESULTING TRUST, at least
> exercise certain powers by the latter 3. Constructive Trust = full title
 Express or implied acquired by law or equity> obligation
o Express – intention of the trustor or the to convey it to another person who
parties has better claim
o Implied – created by operation of law
ROOTED ON AMERICAN LAW ON TRUSTS
 1442: Principles of general law of trust > insofar not in KINDS OF TRUSTS
conflict with CIVIL CODE + CODE OF COMMERCE + ROC  Express o implied
+ SPL = are hereby adopted EXPRESS
EXPRESS TRUST  Created by the intention of the trustor or the parties
 CONSENSUALITY, MUTUALITY and RELATIVITY IMPLIED
 Equity also  Comes into being by operation to law
EQUITY = ESSENCE OF IMPLIED TRUST  TWO TYPES OF IMPLIED TRUST (jurisprudence)
 1445: no trust shall fail because the trustee appointed o Resulting Trust
declines> unless contrary appears o Constructive Trusts
 NO TRUST = WON Express or Implied > when it violates DIFFERENCE IN ESSENCE
law , morals or public policy  Express > based on autonomy or “freedom to contract
NATURE OF TRUST doctrine”
 Technical sense: right, enforceable based on equity, to  Implied > those, without being expressed, are deducible
the beneficial enjoyment of property, the legal title to from the nature of the transaction = as a matter of
which is vested to another intent
 Also: indicates Duties, relations, and responsibilities > o Superinduced on the transaction as matters of
not strictly technical trust equity > independently of the particular
 Trustor – one who establishes the trust intention of the parties
 Trustee - one in whom confidence is reposed as regards
the property
 Beneficiary – one for whose benefit the trust has been
created
o Cestui que trust SUSCEPTIBILITY TO PRESCRIPTION OR LACHES
INTENTION OF THE TRUSTOR = MORE ESSENTIAL  Express> not susceptible to prescription or laches
CONSIDERATION o His possession is not adverse
 In private trust = beneficiary may not be named or even o There is an implied acceptance> he holds the
in esse trust property for the beneficiary
 In charitable trust > for noble cause  Implied> possible to be extinguished by prescription or
SHOULD NOT VIOLATE THE LAW, MORAL, PUBLIC POLICY laches
o No implied acceptance of trust obligation>
NATURE OF TRUST ORAL EVIDENCE TO PROVE TRUST
1. Do not Create a Separate Judicial Entities  Express Trust on IMMOVABLE> cannot be enforced
2. Divorces Naked Title from the Rest of Trustor by oral evidence = must be supported by written
Estate instrument
3. Anchored on Splitting the Naked Title and  Implied Trust> may always be enforced by oral
Beneficial Title evidence
o Not within the operative coverage of SOF
DO NOT CREATE A SEPARATE JUDICIAL ENTITY COMMON DENOMINATOR
 DBP v. COA = SC> no separate legal entity for the FUND  They are LEGAL RELATIONSHIPS built upon property
DIVORCES NAKED TITLE rights
 Principal and income of the fund> separate and distinct  No Express or Implied Trust, unless some property
from the funds of the bank > DBP as Trustor is involved
2. BENEFICIARY
CHAPTER 2 3. RES
EXPRESS TRUSTS 4. CONTROL
DEFINITION AND NATURE
 1440: Trustor, Trustee, Beneficiary EXPRESS TRUST ESTABLISH CONTRACTUAL RELATIOSHIPS
 1441: Express or Implied > express = by intention of BUILT AROUND PROPERTY RELATION
trustor or the parties  With respect to property, not one involving merely
TRUSTOR, TRUSTEE, BENEFICIARY personal duties
 Trustor = grantor, settlor, founder  There must be PRESENT and COMPLETE
 Trustee = to whom confidence is reposed as regards to DISPOSITION of the TRUST PROPERTY,
the property or corpus notwithstanding that enjoyment in the beneficiary
o Res = trust property will take place in the future
 Beneficiary = cestui que trust
EXPRESS TRUST NOMINATE AND PRINCIPAL
 1440: legal relayionship
 Trust = fideicomiso; Trustee= fiduciario; Beneficiary = UNILATERAL AND GARTUITOUS
cestui que trustant
ESSENTAIL CHARACTERISTICS OF EXPRESS TRUST PREPARATORY CONTRACT
1. RELATIONSHIP
2. FIDUCIARY CHARACTER FIDUCIARY DUTIES ON THE TRUSTES
3. WITH RESPECT TO PROPERTY
4. EXISTENCE OF EQUITABLE DUTIES IMPOSED UPON ACQUISITIVE PRESCRIPTION ON CORPUS = UNAVAILING TO
THE HOLDER OF TITLE THE TRUSTEE
5. RESULT OF MANIFESTATION OF INTETION TO
CREATE RELATIOSHIP RULES OF ENFORCEABILITY OF EXPRESS TRUST
 Pertains to express and resulting trust  1443: no express trust on immovable or any interest >
o Not constructive trusts = because technically may be proved by parol evidence
the Trustee owes no fiduciary duty to  1444: no particular words required> sufficient that
beneficiary > it arises by operation of law; not trust is clearly intended
from the manifestation of intention to create  CONSENSUAL V. REAL
the relationship o Real = needs delivery
EXPRESS TRUST > ESSENTIALLY CONTRACTUAL IN CHARACTER  PROPRIETARY RELATIOSHIP
 1444: No particular words are required = sufficient o Needs possession
that a trust is clearly intended o Not merely acceptance of duties and
 1445: no trust shall fail because the trustee responsibilities of a trustee
declines, unless the contrary appear o Designated Trustee = may formally accept
 1446: ACCEPTANCE BY THE BENEFICIARY IS those duties and responsibilities laid out in a
NECESSARY Deed of Trust
> if trust has no onerous condition upon beneficiary =  Needs TRANSFER
acceptance is presumed, if there is no proof to contrary  WITHOUT NAKED TITLE OF THE
o Wrong impression: no need for consent of CORPUS being transferred= there is
trustee = not necessarily a contractual no moral or legal basis upon which
relationship his fiduciary obligation can arise
 TRUST IS REAL AND PREPARATORY  1445: no trust shall fail… = CAN ONLY MEAN TWO
CONTRACT > correct THINGS
TESTAMENTARY TRUST 1. No contractual Relationship has been
 Constituted in a will> law on Succession established YET
TRUST AS DONATION o could not fail = final establishment of trustee
 Solemn contract> Law on Donation mat be effected by another person who
STIPUATION POUR ATRUI accepts the trust > to whom naked title of
 Beneficiary is other than the trustor corpus may be instituted
2. Naked/Legal title has been effected by the
ESSENTIAL CHARACTERISTIC OF EXPRESS TRUST trustor in the name of the trustee , before the
1. Nominate And Principal trustee has expressly accepted the designation
2. Unilateral And Primarily Onerous As To Trustee o His refusal = not “fail” > because it is still
3. Primarily Gratuitous possible to transfer the naked title to another
4. Real person who accepts
5. Preparatory And Primarily As To Beneficiary  IDEAL FORM = Written Deed of Trust
6. Fiduciary o whereby naked title is conveyed to the
specified trustee under clear terms and
ESSENTIAL ELEMENTS condition
1. TRUSTEE  BUT, being EXPRESS> can also be by ORAL, DEEDS
 Execution of a Deed of Trust as PUBLIC DOCUMENT = in
effect > CONTRUCTIVE DELIVERY of the Trust Property EXPRESS TRUST DISTINGUISHED FROM SIMILAR
 BEST FORM OF EXPRESS TRUST > IMMOVABLES; LAND ARRANGEMENTS
OR INTEREST= WHEN TRUSTEE IS EXPRESSLY 1. Splitting of Full Dominion into Naked/Legal Title and
REGISTERED AS “NAKED TITLE OWNER” Beneficial/Equitable title
Trust
EXPRESS TRUST MUST NEVERTHELESS BE CLEARLY SHOWN TO Usufruct U> enjoys the Trustee> naked
HAVE BEEN INTENDED property and holder +
 Intended: shown by > clear, satisfactory, and fruits actively
Convincing evidence - not the naked manages and
owner administers the
o Cannot rest on vague, uncertain evidence; or
trust proeprty
on loose, equivocal, or indefinite declaration
U> obliged to
 Even without using words “trust” or “trustee” preserve the Beneficiery>
form and passive
ESSENCE OF RELATIONSHIP BETWEEN TRUSTOR AND TRUSTEE substance + receiver of
PRIOR TO THE CONVEYANCE OF RES take care of it fruits and
 A private deed of trust = would not give rise to a true with the benefits
trust relationship , until the property, constituted as diligence of a
corpus, is ACTUALLY CONVEYED TO THE TRUST good father
RELATIONSHIP Lease Lessee > Beneficiary>
o With the deed = constituting as constructive narrow full beneficial
delivery enjoyment of ownership over
possession and trust property
What is the status of a private Deed of Trust. Duly executed by
use
the trustor and trustee and accepted in the same instrument
-for limited Trustee >
by the beneficiary, before the title to the designated property period manage and
is actually placed un the name of the trustee administer
 BEFORE DELIVERY = no valid contract of trust
o DO UT FACIA Benefit>
 Trustor contractually bound himself Benefit> permanent
to deliver and transfer title over the temporary
trust property to the trustee; and period
 Trustee has bound himself to accept Sale Buyer> takes Trustee> only
delivery and to manage the fill ownership takes naked
properties to be delivered for the title
interest of the beneficiary
For its own end Preparatory
o Binding Obligation = trustor to delivery
Act
EXPRESS TRUST OVER IMMOVABLES MUST BE IN WRITING
2. On Being Bound to Fiduciary Duties and
 Clear Indication of 1443: must be in writing
Obligations
 CLV: 1443= lame provision
Agency Trust
1. Not in writing= express trust over immovable not Duty of NO duty of Obedience >trustee
void, but mere UNENFORCEABLE Obedience transacts business in his own
> merely for purposes of proof, not for the validity behalf as a trustee and legal title
of the trust agreement holder, not in the name of the
2. As a Real Contract> requires delivery beneficiary
> under current legislations = no title to registered
land may be registered with the register of deed in - trustee> has the legal title
the name of the trustee, unless the deed s are in Diligence Diligence
public instrument Loyalty Though bound by duty of loyalty >
3. PH Jurisprudence: when not in writing> it can still he must act for the best interest of
be proven by clear and convincing parol evidence the beneficiary
a. Under 1457: an implied trust may be
BUT HE IS NOT BOUND BY THE
proved by oral evidence> Resulting trust
INSTRUCTION OF THE
BENEFICIARY
LEGAL SIGNIFICANCE OF 1443
Though both a fiduciary in nature
 Provision to apply to an “agreement to create an Revocable at Not revocable at will
express trust over an immovable or any interest therein will = based Unless shown > unfit; breach of
 ORAL AGREEMENR> between the trustor and the primarily on obligation
trustee to constitute a trust over an immovable which is the willingness
not followed-up with an actual conveyance of the of the principal
covered property = NOT ENFORCEABLE BY PAROL to be
EVIDENCE represented by
another person
KINDS OF EXPRESS TRUST
1. Contractual Trusts
2. Inter Vivos Trusts = DONATION
3. Testamentary Trusts = WILL
4. Charitable Trust = Eleemosynary
5. Publicly- regulated Trust

CAPACITIES, RIGHTS, DUTIES, AND OBLIAGTIONS OF THE


APRTIES OF THE EXPRESS TRUST
Trustor = creator
Must have Legal
Trustor
Capacity to Convey
trust Property
Party Primarily
bound
Must have Legal
Capacity to Accept
the Trust
When trustee
Declines
Contractually Stated
Duties and Obligations
of the Trustee
Common Law Duties
Prohibited from
Donating the Trust
Property
Trustee cannot use
Trustee
Funds of the Trust to
Acquire Property for
Himself
Obligation of Trustee D & O under ROC
Proper Proceedings for
Sale or Encumbrance
Trustee does not
assume generally
personal liability on the
trust
Trustee is not entitled
to compensation for
Management
Removal or resignation
of Trustee
Passive recipient of
benefits from the
Beneficiary trust
Need have legal
capacity

EXTINGUISHMENT OF EXPRESS TRUST


 By reason determined in the trust agreement
 Those provided by law
1. Destruction of the Corpus
- destroyed or no longer serves its purpose
2. Revocation of the Trustor
- gen rule: trustor cannot revoke, unless expressly
provided
3. Achievement of the Objective/ Happening of an
Event> Provided for in the Instrument
4. Death or Legal Incapacity of the Trustee
5. Confusion/ Merger> Legal and Beneficial title in
Same person
6. Breach of Trust
IMPLIED TRUST o R/T draw its essence from the perceived
intention of the parties as taken from the
NATURE AND TYPES OF IMPLIED TRUST transaction
 1441: Trust either EXPRESS or IMPLIED; Express =  C/T similar to the Purpose to Quasi-Contracts of
intention; Implied = by operation of law Solution Indebiti
 1442: principles of general law of trusts are adopted > o More on procedural difference
insofar as not in conflict with CC, Code of Commerce and
ROC and Special Laws IMPLIED TRUST PARTICULARLY CONSTITUTED BY LAW
 NOT ONLY IN THE LIST GIVEN BY CC  1447: enumeration of implied trusts does not exclude
other established by general law of trust> but the
TWO TYPES OF IMPLIED TRUSTS limitation in 1442 shall be applicable
1. Resulting Trusts – deductible from the nature of the  1448- 1455 = resulting trust
transaction as matter of intent  1456 = constructive trust
 The court supplies the nomenclature; who are RESULTING TRUST
the parties 1448 1. Purchase of Property Where Title is Placed in One
 Law presumes intent Person, But the Price Paid by Another Person
2. Constructive Trusts – coming into being by operation of
law; Property is ACUIRED THROUGH MISTAKE or BUT IF TRUSTEE > CHILD = presumed GIFT
FRAUD
PURCHASE MONEY RESULTING TRUST
 No presumption of intent
 Law protects from fraud or mistake
1449 6. DONATION of a property to a Donee who shall
have no Beneficial Title
DUTIES AND RESPONSIBILITIES OF PARTIES: RESULTING V.
CONSTRUCTIVE 1450 2. Purchase of Property where the Title is place in
1. Resulting: Duty of Loyalty and Diligence the Name of Person Who Loaned the Purchase
Constructive: only to surrender the property to the beneficiary Price

IMPLIED TRUST V. EXPRESS TRUST 1451 7. Land Passes By SUCCESSION but Heir Places
Title into a Trustee
RESULTING TRUST
 Burden of Proof 1452 4. When Two or More Persons Purchase Property
o Beneficiary need only to prove facts that JOINTLY > But place Title to ONE of them
would cover the transaction + legal
1453 5. Property Conveyed to a Person Merely as Holder
presumption hat there exists a resulting trust
thereof
would arise from the very nature of the
transaction
1454 3, Where Absolute Conveyance of Property Effected
o Trustee = to show that there was no such trust as a Means to Secure Performance of Obligation
relationship intended
 Blurring distinction between Express and resulting 1555 8. TRUST FUND used to Purchase Property with is
trust Registered in Trustee’s Name
 Rules of Prescriptibility of resulting trust= same with
express trust CONSTRUCTIVE TRUST
o Imprescriptible > as long as the trustee has not 1456 Property is ACUIRED THROUGH MISTAKE or FRAUD:
repudiate constructive trust

CONSTRUCTIVE TRUST
 Imposed by law> there is neither a promise nor 1. Purchase of Property Where Title is Placed in One Person,
fiduciary relation + so-called trustee does not But the Price Paid by Another Person
recognize any trust and has no intent to hold the  PURCHASE MONEY RESULTING TRUST
property for the beneficiary  Basis
 Prescription o Implied intention> Trustor-beneficiary and
o Applies only when the trustee assert right the acceptance of the obligation by the trustee
adverse to that of the beneficiary> such as who is fully aware > that the property
asserting ownership registered under his name for which he never
 VS RESULTING TRUST paid the price
o C/T draw its essence from the need to impose  Emphasized: Difference of Express trust
an obligation on a person who takes title to a o Formal constitution: The naked title s placed
property to achieve justice or equity on behalf in the trustee and the beneficial title pertains
of another person who would be adversely to beneficiary
affected by the fact that the title remains with  TITLE PLACED in the NAME OF A CHILD
another person o Presumed as a gift
o “child” = minor
o It cannot be normally expected that a child  it may be considered as an express trust: BUT THE
would administer property for the benefit of DIFFRENCE > THE PERSON SOUGHT TO BE BENEFITED
the parents BY THE GRANTOR HAS NOTYET GIVEN FORMAL
 EXCEPTION: no implied resulting trust under 1448 ACCEPTANCE TO THE BENEFIT
1. Trustee Minor Child that a parent stands in  1453 implies
loco parentis o Person conveying the property did not
2. Actual Contrary Intention is proved expressly state that he was establishing the
3. Where the Purchase is made in violation of an trust
existing statute and in evasion of its express
provision> since no trust can result in favor of 6. DONATION of a property to a Donee who shall have no
a party who is guilt of fraud Beneficial Title
 WHEN CHILD PROVIDES for the PURCHASE PRICE  Analogous to FIDEICOMMISSARY > Art. 863: where
o Considered as LOAN = no transfer of any the testator designates a person as an heir charging him
interest to the child to deliver to another person the whole or part of the
o Extended as a Loan = not a Trust inheritance

2, Purchase of Property where the Title is place in the Name of 7. Land Passes By SUCCESSION but Heir Places Title into a
Person Who Loaned the Purchase Price Trustee
 Situation  Limited to LAND
o Where a person, using his own funds > buys a 1. The principal of implied trust it embodies is most
property on behalf of another > who is in the appropriate to registered land> where the title is
meantime may not have the funds to purchase issued in the name of the trustee
it = the tile to the property is being place in the
name of the trustee > the person who pays, RULES ON PRESCRIPTION
until he is reimbursed by the beneficiary
 Akin to EQUITABLE MORTGAGE ARRANGEMENT RULES OF PRESCRIPTION FOR EXPRESS TRUSTS
o Equitable Mortgage = as one which although  General Rule: Express trusts not susceptible to
lacking in some formality> nevertheless Acquisitive Prescription
reveals the intention of the parties to chare the o Exception: trustee who is in Adverse
real property as security for a debt and Possession may claim title by prescription
contains nothing impossible or contrary to law o Requisites:
 Constructed> between PURPORTED 1. Trustee performed unequivocal acts of
SELLER and BUYER in a contract of repudiation> amounting to an ouster of
sale with a right of repurchase > beneficiary
where the purpose of sale is to 2. Positive acts of repudiation > made
secure a principal obligation , usually known to the beneficiary
a loan between them 3. Clear and Convincing Evidence
o HOWERVER IN 1450  Successor-in-Interest of the Trustee> cannot relat of the
 Not a typical equitable mortgage Torrens Title issue under the name of the Trustee
 Sale of a third party of his
property to a purported buyer RULES OF PRESCRIPTION FOR IMPLIED TRUST
who takes tilte to secure his loan  MINOR =
made to the beneficiary who is a o Defense of prescription or laches by the
stranger to the contract trustee cannot be accepted when the
beneficiary is a minor
3. , Where Absolute Conveyance of Property Effected as a  Since the latter was not in the
Means to Secure Performance of Obligation position to defend himself
 1454: = really constitutes an equitable mortgage  STILL ACKNOWLEDGES
 Better to transfer the Right to redeem to be part of Art. o Prescription cannot arise in favor of a trustee
1605 who still acknowledges the rights of the
beneficiary
4. When Two or More Persons Purchase Property JOINTLY >  UNDER THE NEW CIVIL CODE
But place Title to ONE of them o 2 stream of decision
 Insofar as the proportionate share of the first co-owner  Upholding the Doctrine of
is concerned Imprescriptibility; and
 WONDER WHY IT IS IMPLIED > despite having “agree”  Acknowledging the clear
and “ by common consent” repudiation of the trust
o Reason why it is not express: because Full  Action for Reconveyance based upon a Constructive
title, not just naked title, is placed in the or Implied Trust> may be barred by the statute of
name of the trustee limitation
o 10 years prescriptive period for all types of
5. Property Conveyed to a Person Merely as Holder thereof implied trusts
 PERIOD
o Constructive Trust = cause of action must be
deemed to have accrued only upon the
discovery of such bad faith or mistake
 SUMMARY OF RULES (Ramos v. Ramos)
1. Rule of Imprescriptibility = may possibly apply
as long as the trustee has not repudiate the
trust
2. Rule of Imprescriptibility does not apply in
Constructive Trust
3. Prescription may supervene in an implied
trust
4. Implied trust may be barred by laches
 WHEN DOES THE PERIOD BEGIN
o The beneficiary’s cause of action for
reconveyance arises not when the trust is
constituted but when the trustee repudiates
the trust
 Majority of Court Decision:
registration of title = reckoning time
 But there are decisions >
discovery of fraud =
reckoning time
 WHEN BENEFICIARY IS IN POSSESSION OF THE
PROPERTY = PRESCRIPTIVE PERIOD WILL NOT BE
APPLICABLE
 WHEN CIRCUMSTANCES DIS NOT GRANT
BENEFICIARY SUFFICIENT TIME TO DISCOVER THE
FRAUD
o Hid from other heir (Adille v. CA)
 Court: the period starts only from the
knowledge of the other heir

LAND + WITHOUT REGISTRATION = 10 YEAR PERIOD DOES


NOT EVEN BEGIN TO RUN
 Important: registration = in order to determine the
running of prescriptive period

WHEN REGISTRATION COVERS A VOID TITLE


 “signature of some the forced heirs were forged”
 Court: implied trust doctrines apply only when the
tile of the purported trustee is valid
o The court refused to apply the doctrines
that an action for reconveyance prescribes
after 10 years, on the ground that o
constructive rust had arisen

RULES ON PRESCRIPTION ON RESULTING TRUSTS FOLLOW


THOSE OF EXPRESS TRUST
 RESULTING TRUSTS: prescription does not begin to
run until there is an express repudiation by the
trustee
o Unequivocal acts
o Made known to the Beneficiary
o Clear and Convincing Evidence
PARTNERSHIP 1. Contractual relationship
2. Means of Doing business
TRI-LEVEL EXISTENCE OF THE PARTNERSHIP 3. Underlying business enterprise
1. Contractual Relationship DOCTRINE OF CONSENSUALITY
2. Means/ medium to do Business, thru a Separate  1771: P> may be constituted in any form
Judicial Personality o Except: immovable property or real right is
3. Business Enterprise contributed = public instrument is needed
*knowing the levels = important in determining the legal  1770: principle: the provision of law are deemed
significance of various provisions of CC in regulating incorporated into every contract > “ a partnership must
partnership have lawful object or purpose”
 MEETING OF THE MINDS = necessary > to constitute a
NOTED: contract of partnership
 Dissolution of a partnership as the change in the
relation of the partners caused by any partner ceasing PARTNERSHIP AS A MEANS OF DOING BUSINESS, THROUGH
to be associated = different from the winding up of the THE PARTNERSHIP JURIDICAL PERSON
business 1768: SEPARATE AND DISTINCT JURIDICAL PERSONALITY
 Legal personality of an expiring partnership persists for The partnership has a juridical personality separate and
the limited purpose of winding up and closing distinct from that of each of the partners > even in case of failure
o When new partnership simply ook ove the to comply with Art. 1772, par. 1
business enterprise + without winding up the >1772: Every contract of partnership having a capital of three
business affiars > paying off its debts, thousand pesos or more, in money or property, shall appear in a
liquidating and distributing its assets public instrument, which must be recorded in the Office of the
o SUCCESSOR- LIABILITY RULE Securities and Exchange Commission.
 the creditors of the business have a
right to recover payment against the 44: JURIDICAL PERSON
transferee of the business enterprise (3) Corporation, PARTNERSHIPS and associations for pirvate
 UNLIMITED LIABILITY = PARTNERSHIP > personal interest or purpose to which the law grants a JURIDICAL
property may be made liable PERSONALITY, SEPARATE AND DISTINCT. FROM THAT OF EACH
o Except: limited partnership SHAREHOLDER, PARTNER, OR MEMBER
CIVIL ACTION ARISING FROM PARTNERSHIP V. ESTAFA
45: PARTENRSHIPS and association for private interest or
 failure to deliver the profit = civil action purpose are governed by the provisions of the code in
 failure to appropriate money for capital = estafa partnerships

TWO IMPORTANT ASPECTS OF PARTNERSHIP 46: JURIDICAL PERSON may:


1. REGISTRATION of the contract of partnership > legal ACQUIRE AND POSSESS property of all kinds +
effect: BINDING THE PARTNERS, as to contractual INCUR obligations +
obligations , right and duties of the partners BRING civil/ criminal actions
2. UNDERLYING BUSINESS ENTERPRISE > durable aspect In conformity with the laws and regulations of their
of the partnership and has much legal influence on organizations
determining the contractual intents of the partners
1774: IMMOVABLE PROPERTY OR INTERST THEREIN> may
be acquired in the partnership name. TITLE SO ACQUIRED >
PARTNERSHIP IS PRIMARILY A CONTRACTUAL
may be conveyed only in the partnership name
RELATIONSHIP
1767: By the contract of PARTNERSHIP > TWO or MORE LEGAL BASIS OF THE PARTNERSHIP JDURIDICAL PERSONALITY
PERSONS bind themselves to contribute money, property or
 1768 > clear implication > constitution of partnership
industry to a COMMON FUND, with the INTENTION > dividing
immediately bring a constitution by law of a separate
the profits among themselves
juridical person
Two or more persons may also a Form of Partnership
for the EXERCISE OF PROFESSION.
UNDERLYING BUSINESS ENDS OF THE APRTNERSHIP JURIDICAL
PEROSN
1770: PARTNERSHIP must have a LAWFUL OBJECT or
 Importance of Grant of Separate Juridical Personality =
PURPOSE + must be established for the COMMON BENEFIT or
to make the partnership medium an efficient means
INTEREST OF THE PARTIES
by which several persons can collectively pursue
business
1771: PARTNERSHIP> may be CONSTITUTED IN ANY FORM
o 46: Partnership > may acquire property, incur
Except: where immovable property or real rights are
obligation, and bring civil/criminal actions
contributed = public instrument is necessary
“PERSON” IN PARTNERSHIP
 Does not occupy the same level as the “person” of an
1784: PARTNERSHIP BEGINS> moment the execution of the
individual
contract,
 PERSON in PARTNERSHIP = a legislative grant by the
Unless it is otherwise stipulated
State or Created by law > as a means or medium by
LEVELS OF EXISTENCE
which individuals in society may achieve certain
business or commercial ends

SECRET ASSOCIATION
 1775> shall have no juridical personality and shall
be governed by the provisions of CO-OWNERSHIP
 They are not meant to undertake a business that is
supposed to deal with the public
o Since not intended to be a medium of being
business> no purpose of granting it a separate
juridical personality

DOCTRINE OF SEPARATE JURIDICAL PERSONALITTY OF


PARTNERSHIP
 Treat it as a class> as a legal or juridical entity and to
permit it to sue and be sued in the name of the
partnership
 COURT: death of either partner is not a ground for the
dismissal of a pending suit
 Insolvency of Partners > is NOT INSOLVENCY OF
PARTNERSHIP

DOCTRINE OF PEIRCING OF THE CORPORATE VEIL


 When acting partners may be held personally liable for
corporate debts > when shown: juridical personality
of the partnerships is but a means to evade the law
> then the court will pierce the veil of its separate
juridical personality to treat the partners as directly
liable or accountable for the consequence of the acts
done in partnership name
 Though limited application in Partnership = it may be
applied
 UNLIMITED LIABLITY of PARTNERS

ENTITLEMENT TO CONSTITUTIONAL RIGHTS AND


GUARANTEES
 PH Corporate Law = “person before the law” > entitled
to the Constitutional guarantee to:
o Due process and Equal Protection
o Rights against unreasonable searches and
seizure
*not right against self-incrimination
 Corporation organizing itself as a collective body waives
no constitutional immunities appropriate for such body

PARTNERSHIP AS A BUSINESS ENTERPRISE


 “A GOING CONCERN”