PARTNERSHIPGENERAL PROVISIONSDefinition:ART 1767. By the contract of partnership 2 or more persons bind themselves to contribute:1. money,2. property, or3. industryto a common fund, with the intention of dividing the profits among themselves.(General Professional Partnership)Two or more persons may also form a partnership for the exercise of a profession.* A partnership has a juridical personality of its own, distinct and separate from that of each of the partners* For TAXATION PURPOSES, partnerships, except for general professional partnerships, are treated for income tax purposes as corporations and subject to tax as suchPractice of LawA partnership for the practice of law is NOT a legal entity. It is a mere relationship or association for a particular purpose such as public service.It is not a partnership formed for the purpose of carrying on a trade orbusiness or of holding propertyThus, the use of a nom de plume, assumed or trade name in law practice is improper1- In the matter of the petition for authority to continue use of firm name
Sycip, Salazar, etc./ Ozeata, Romula, etc.
(92S 1)H: Primary Characteristics w/c Distinguish the Legal Profession from Business1. A duty of public service, of w/c emolument is a by-product, and in which onemay attain the highest eminence without making much money;2. A relation as an
officer of the court
to the administration of justice involving thorough sincerity, integrity, and reliability;3. A relation to clients in the highest fiduciary degree; and4. A relation to colleagues in the bar characterized by candor, fairness, and unwillingness to resort to current business methods of advertising and encroachment of their practice, or dealing directly with clientsCharacteristics Elements of Partnership1. Consensual
perfected by mere consent, upon the express or implied agreement of the parties2. Nominate
it has a special name or designation in our law3. Bilateral (or Multilateral)
entered into by 2 or more persons and the rightsand obligations arising from them are always reciprocal4. Onerous
each party aspire to procure for himself a benefit through the givingof something5. Commutative
undertaking of each is considered as the equivalent of that of the others6. Principal
does not depend upon some other contract for existence or validity7. Preparatory
entered into as a means to an endEssential Features of a Partnership/ Requisites of Contract of Partnership:1. There must be a valid contract (Art 1318)a. Consent and capacity of contracting partiesb. Object which is the subject matter of the contractc. Cause or consideration2. The parties must have legal capacity to enter into a contract
3. There must be a mutual contribution of money, property or industry to the common fund4. The object must be lawful5. The primary purpose must be to obtain profits and divide the same among parties Valid Contract:* No such thing as partnership created by operation of law alone* FORM: oral or written, express or implied subject to provisions of 1771-1173 and Statute of Frauds* Articles of Partnership = customarily embody the terms of the association* If Article of Partnership are kept secret among members, there is no legal personality and the relationship will be governed by rules on co-ownership (1775)Doctrine of Delectus Personae: (Choice of the Person/s)* No one can be a member of the partnership w/o the consent of all the others* REASON: fiduciary nature of the partnership relation and the liability of eachpartner for the acts of the others within the scope of the partnership business* Partners have the power but not necessarily the right to dissolve the partnership.Legal Capacity to Enter into a Contract of Partnership1. Individualsa. The following cannot give consent to a contract of partnership* Unemancipated minors* Insane or demented persons* Deaf-mutes who do not know how to read or write* Persons suffering from civil interdiction* Incompetents under guardianship (Art 1327, 1329; Art 34RPC; Rules 93-94 of RC)b. Persons who are prohibited from giving each other donations cannot enter intoa universal partnership? husbands and wives (spouses may enter into a particular partnership)? common law spousesc. A married woman may enter into a contract of partnership w/o her husbands consent but he may object on valid, serious or moral grounds (Art 87 & 73 of FC)2. Partnership
may be a partner in another partnership (the partnership formed is called RESULTING PARTNERSHIP)3. Corporationsa. Unless authorized by a statute or its charter, a corporation is w/o capacityor power to enter into a contract of partnership* REASON
based on public policy, a corporation can only act through its BODb. BUT it may enter into a joint venture partnership with another where the nature of the joint venture is in line with the business authorized by its statutec. IF a foreign corp. is a limited partner in a limited partnership for investment purposes only = not be deemed
doing business
in the PhilippinesJoint Venture: (Joint Adventure)Joint Adventure is an informal partnership, with no firm name and no legal capacity. It is an American concept similar to our joint accounts. In Joint Account, the participating merchants can transact business under their own name,and can be individually liable therefor.Usually, but not necessarily, it is limited to a single transaction, althoughthe business of pursuing it to a successful termination may continue for a number of years.PartnershipJoint AdventureThough it may exist for a single transaction, usually contemplates the undertaking of a general & continuous businessOrdinarily limited to a single transaction; it is not intended to pursue a conti
nuous businessProperty contributed belongs to the partnership and hence of all the partnersProperty used remains undivided of its contributorWhen acting pursuance to firm business, can bind himself, partnership, and his c
o-partnersNone of the joint adventurers can bind the joint adventure or hi co-adventurersOperate under a firm nameNo firm name
PartnershipJoint Account (sociedad de cuentas en participacion)Operates under a firm nameDoes not operate under a business nameEach partner participates in the conduct of businessBusiness is transacted and managed by only one of them in his own name and on hi
s own liability, so that the public has no way of knowing that there are other people in the businessPartner can not only bind himself but also his co-partners3rd person has the right of action only against the manager nor can other associates sue those who deal w/ the managerLiquidation and accounting, as a rule, is the right and duty of every partnerLiquidation and accounting of the results of the business is the sole duty and prerogative of the managerSharing of Profits1. Merely presumptive and not conclusive evidence of partnership2. The object of a partnership is primarily a sharing of profits, while the distribution of losses is but a consequence of the same3. How losses are shared: (Art 1797)a. according to the agreement (but cannot exclude any of the partners -- 1799)b. in accordance with the profit-sharing ratioc. in proportion to the amount contributed to the partnership (BUT purely industrial partner shall not be liable for losses)MERCANTILE VIEW OF PARTNERSHIP: (as opposed to COMMON LAW that views partnershipnot as a juridical person)ART 1768. The partnership has a juridical personality separate and distinct fromthat of each of the partners, even in case of failure to comply with the requirements of Art. 1772(1).ART. 1772(1): Every contract of partnership having a capital of P3,000 or more,in money or property, shall:1. appear in a public instrument,2. which must be recorded in the SECArt 1772(1) is not intended as a pre-requisite to acquire juridical personality BUT merely as condition for issuance of license.Partnership can in general: (Art 46 NCC)1. Acquire and possess property of all kinds2. Incur obligations3. Bring civil or criminal actions4. Can be adjudged as insolvent even if the individual members be each financially solventInstances when there is no juridical personality:1. Failure to make an inventory when an immovable property is contributed (1773)2. Secret associations or societies (1775)RULES TO DETERMINE THE EXISTENCE OF PARTNERSHIP:ART 1769. In determining whether a partnership exists, these rules shall apply:1. Except as provided by Art. 1825 (partner by estoppel), persons who are not partners as to each other are not partners as to third persons;2. Co-ownership or co-possession does not of itself establish a partnership, whether such-co-owners or co-possessors do or do not share any profits made by theuse of the property;3. The sharing of GROSS returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest inany property from which the returns are derived;4. The receipt by a person of a share of the PROFITS of a business is prima facie evidence that he is a partner in the business, but no such inference shall bedrawn if such profits were received in payment:a. As a debt by installments or otherwise;b. As wages of an employee or rent to a landlord;c. As an annuity to a widow or representative of a deceased partner;d. As interest on a loan, though the amount of payment vary with the profits of
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