PARTNERSHIP REVIEWER

Definition of Partnership:

G E N E R A L P R O V I S I O N
>The partnership has a juridical personality separate and distinct from that of each of
the partners.
How to determine whether a partnership exists? (PCSR)
 Partners who are not partners to each other are not partners to third persons
 Co-owners or co-partners does not of itself establish a partnership
 The sharing of gross returns does not of itself establish a partnership
 Receipt of a person to share in the profits is a prima facie evidence
XPN: (DWAIC)
-as a debt by installment or otherwise
-as wage of an employee or as rent to a landlord
-annuity to a widow or representative of a deceased
-as interest on a loan
-as consideration for the sale of a goodwill of a business
>A partnership must have a lawful object or purpose and must be for the common
benefit of each partner.
Unlawful partnership:
-dissolved by judicial decree
-The profits shall be confiscated by the State
>A partnership may be instituted in any form
XPN: if it is a real right or immovable property. It needs to be in a form of public
instrument. Otherwise, the contract of partnership is void!
Whenever immovable property is being contributed, an inventory must be made, signed
by the parties and attached to a public instrument. (ISA)
As to its object, a partnership may be…
UNIVERSAL or
ALL PROFITS ALL PRESENT PROPERTY
 What constitutes common property

Only usufruct of the All properties actually belonging

properties of the partners to the partners are contributed
become common Property. – they become common property

(movable or immovable property (owned by all of the partners and

which each partners possess shall the partnership).
at the time of the celebration of the contract
shall belong exclusively to each)

As to profits as common property

All profits acquired by their

industry or work of the partners
become common property
during the existence of partnership
(whether or not they were
obtained through the usufruct
contributed) As to profits from other sources:

GR: Aside from the contributed properties,

the profits of said property become common property.
XPN: Profits from other sources may become common if
there is a stipulation to such effect.

As to properties subsequently acquired:

GR: Properties subsequently acquired by inheritance,

legacy or donation, cannot be included in the stipulation
(ILD)

XPN: Only fruits thereof can be included in the

stipulation

When there is no specification as to what type of partnership, it shall be deemed as a universal

partnership of profits because it imposes lesser obligations on the partners since they preserve the
ownership of their separate property.

Persons who are prohibited to give donation or advantage cannot enter into universal partnership.

PARTICULAR
-has for its object determinate things, their use of fruits, or a specific undertaking or the exercise of
their profession or vocation

O B L I G A T I O N S O F T H E P A R T N E R S

When does a partnership begins?

The partnership begins at the moment of the execution of the contract unless otherwise stipulated.