Article-1800-1803 - Article 1800-1803 PDF

Preview

Summary

Article 1800The partner who has been appointed manager in the articles of partnershipmay execute all acts of administration despite the opposition of hispartners, unless he should act in bad faith; and his power is irrevocablewithout just or lawful cause. The vote of the partners representing thecon...

Description

Article 1800 The partner who has been appointed manager in the articles of partnership may execute all acts of administration despite the opposition of his partners, unless he should act in bad faith; and his power is irrevocable without just or lawful cause. The vote of the partners representing the controlling interest shall be necessary for such revocation of power. A power granted after the partnership has been constituted may be revoked at any time. (1692a)

Who manages the Partnership?  The partnership will choose designated partner as managing partner either in the articles of partnership or after the contract of partnership has already constituted. If there is no agreement, management is vested in all partners.

Two Modes of Appointment

 Partner is appointed as manager in the Articles of partnership GENERAL RULE 

Power is irrevocable without just or lawful cause.

EXCEPT;  

Vote of partners representing controlling interest necessary to revoke power. To remove him without just cause, there must be unanimity including his own vote.

EXTENT OF POWER  

Power of managing partner is IRREVOCABLE without just/lawful cause. REVOCABLE ONLY when in acts in bad faith. He can do all acts of administration despite opposition of partners if he acts in good faith.

 Partner is appointed as manager after constitution of partnership GENERAL RULE 

The power to act may be revoked at any time, for any cause.

EXCEPT  Vote of partners representing controlling interest necessary to revoke power. EXTENT OF POWERS 

The manager can do all acts of administration.

Article 1801 If two or more partners have been intrusted with the management of the partnership without specification of their respective duties, or without a stipulation that one of them shall not act without the consent of all the others, each one may separately execute all acts of administration, but if any of them should oppose the acts of the others, the decision of the majority shall prevail. In case of a tie, the matter shall be decided by the partners owning the controlling interest. (1693a)

Who manages the Partnership?  Two or more partners as managers  There is no specification of respective duties.  Two or more persons entrusted with management of partnership without specification of duties that each shall not act without the consent of others.

GENERAL RULE 

Each one may separately execute all acts of administration.

 

If any of the managers should oppose Incase of opposition, decision of majority shall prevail ( per managing head). In case of tie, the decision of the managing partners owning controlling interest who has more than 50 percent shall prevail.

EXCEPT



EXAMPLE Assuming that A, B, C and D are all managing partners and A appoints E as a secretary but only B OBJECTS to this. 

Is the appointment of E valid? Yes, since majority votes are first counted by head.

If C&D were the ones to OBJECT, and they OWNED COMBINED total of 51% of partnership interest 

Is the appointment of E valid? No, Majority votes are first counted by head, however, it’s a tie. So the decision will be by partnership Interest.

If B is the only one who OBJECTED and he OWNS 51% of partnership interest, 

Is the appointment of E valid? Yes, despite of his partnership interest because majority votes are first counted by head.

If the partnership cannot make a decision and ends up in a tie (head count and interest), then the partnership is to be dissolved. This will be the only remedy, unless one of the other partners will relent.

Article 1802 In case it should have been stipulated that none of the managing partners shall act without the consent of the others, the concurrence of all shall be necessary for the validity of the acts, and the absence or disability of any one of them cannot be alleged, unless there is imminent danger of grave or irreparable injury to the partnership. (1694)

Stipulated that non of the managing partners shall acts without the consent of others and the concurrence of all necessary for the validity of acts. The only instance in which a partner may transact without concurrence is when there is imminent danger of grave or irreparable damage to the partnership if he does not do so. However, the party involved must be able to prove so else he shall become liable for what he has done.

EXAMPLE A and B are in a partnership where they sell fruits, B notices that the fruits in the warehouse are starting to rot so, without consent of A, he sells them. This will be alright because if the fruits rot, then it would have been bad on the part of the partnership.

Article 1803 When the manner of management has not been agreed upon, the following rules shall be observed: (1) All the partners shall be considered agents and whatever any one of them may do alone shall bind the partnership, without prejudice to the provisions of Article 1801. (2) None of the partners may, without the consent of the others, make any important alteration in the immovable property of the partnership, even if it may be useful to the partnership. But if the refusal of consent by the other partners is manifestly prejudicial to the interest of the partnership, the court's intervention may be sought. (1695a)    

I.

II.

Manner of management not agreed upon All partners are agents of the partnership. Unanimous consent required for alteration of immovable property. If refusal of partner is manifestly prejudicial to interest of partnership, court's intervention may be sought.

If there is no agreement as to who will be the managing partners, during constitution and after constitution of the partnership, then the assumption shall be that ALL the partners are managing partners, without prejudice to Article 1801, meaning Article 1801 will then apply to their case. The second paragraph of this article provides that the partners cannot simply alter immovable property owned by the partnership without the consent of the other partners because this is NOT an act of administration but of OWNERSHIP.



Note that consent here is no qualified, so it may be expressed or it may be implied.

EXAMPLE Suppose before A builds the warehouse, he asks for the consent of the other partners, who refuse to give it. When a tries to convince them and asks why they refuse to give consent, they simply say that they do not want it to be there, making their objection manifestly prejudicial, meaning, there is really no reason for their objection, what then, is the remedy of A in this situation? A may bring the matter to court. If the court finds the other partners of having no solid reason to object, it may compel the other partners to give their consent.

PROBLEM I.

Article 1800 - There is two modes of appointment. 1. Appointment as manager in the Articles of partnership. 2. Appointment as manager made in an instrument other than the articles of partnership.

II.

Article 1801 - W, X, Y, Z are all managing partners. Z appoints A to sales. But only X with a 60% partnership Interest OBJECTS the appointment. Therefore, appointment of A will be INVALID.

III.

Article 1802 - Stipulated that non of the managing partners shall acts without the consent of others and the concurrence of all necessary for the validity of acts.

IV.

Article 1803 - Partners, if there is no agreement as to who will be the managing partner , will all be managing partners.

a.) b.) c.) d.)

TRUE,TRUE,TRUE,TRUE TRUE,FALSE,TRUE,TRUE FALSE,FALSE,FALSE,FALSE TRUE,FALSE,TRUE,FALSE

MCQ 1.) In article 1800, appointment as manager in the Articles of Partnership

A.) Is irrevocable without just or lawful cause. B.) The power to act may be revoked at any time, for any cause C.) Revocable when acts in GOOD FAITH. D.) Is irrevocable even when the managing partner acts in BAD FAITH.

2.) In Article 1800, If Partner is appointed as manager after constitution of partnership, the power to act may be revoked at any time, for any cause.

A.) I don't know B.) Maybe C.) True D.) False

3.) In article 1801, what decision shall prevail first.

A.) Majority B.) Highest partnership Interest C.) Oldest partner D.) Newest partner

4.) Which statement is True? A.) Article 1802, everyone may act without the consent of the other partners. B.) Article 1802, Non of the managing partner shall acts without the consent of others, EXCEPT, if there is an imminent danger of grave or irreparable damage to the partnership. C.) Article 1803, Manner of management is agreed upon D.) Article 1803, Partners may move property owned by partnership any time.

5.) Article 1803 says that the partners cannot simply alter immovable property owned by the partnership without the consent of the other partners.

A.) True. B.) False C.) maybe D.) I don't know...