Defi nitions and Some Characteristics

(a) Capitalist partner one who furnishes capital. (He is not exempted from losses; he can engage in other
business provided there is NO COMPETITION between the partner and his business.) (See Art. 1808, Civil
Code).
(b) Industrial partner one who furnishes industry or labor. [He is exempted from losses as between the
partner; he cannot engage in any other business without the express
consent of the other partners; otherwise:
1) he can be EXCLUDED from the fi rm (PLUS DAMAGES);
2) OR the benefi ts he obtains from the other businesses can be availed of by the other partners (PLUS
DAMAGES). (Art. 1789, Civil Code).]
[NOTE: The rule remains true whether or not there is COMPETITION. Reason: All his industry
is supposed to be given only to the partnership.
(c) Capitalist-industrial partner one who contributes both capital and industry.
(d) General partner one who is liable beyond the extent of his contribution.
(e) Limited partner one who is liable only to the extent of his contribution.
[NOTE: An industrial partner can only be a general partner, never a limited partner. (See Art. 1845, Civil
Code).]
(f) Managing partner one who manages actively the firms affairs.
(g) Silent partner one who does not participate in the management (though he shares in the profi ts or
losses).
(h) Liquidating partner one who liquidates or winds up the affairs of the firm after it has been dissolved.
(i) Ostensible partner one whose connection with the firm is public and open (that is, not hidden). (Usually
his name is included in the firm name.)
(j) Secret partner one whose connection with the firm is concealed or kept a secret.
(k) Dormant partner one who is both a secret (hidden) and silent (not managing) partner.
(l) Nominal partner one who is not really a partner but who may become liable as such insofar as third
persons are concerned. (Example: a partner by estoppel.)
(3) Distinctions Between a Capitalist and an Industrial
Partner
(a) As to contribution:
1) the capitalist partner contributes money or property
2) the industrial partner contributes his industry(mental or physical)
(b) As to prohibition to engage in other business:
1) the capitalist partner cannot generally engage in the same or similar enterprise as that of his firm
(the test is the possibility of unfair competition).(Art. 1808, Civil Code).
2) the industrial partner cannot engage in any business for himself (Reason: all his industry is supposed to be
contributed to the firm). (Art. 1789, Civil Code).
(c) As to profits:
1) the capitalist partner shares in the profits according to the agreement thereon; if none, pro rata to his
contribution. (Art. 1797, Civil Code).
2) the industrial partner receives a just and equitable share. (Art. 1797, Civil Code).
(d) As to losses:
1) capitalist
a) first, the stipulation as to losses
b) if none, the agreement as to profits
c) if none, pro rata to contribution
2) the industrial partner is exempted as to losses (as between the partners). But is liable to strangers,
without prejudice to reimbursement from the capitalist partners. (Art. 1816, Civil Code).