PARTNERSHIP

-By the contract of partnership, two or more persons bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits among themselves,

-Two or more persons may also form a partnership for the exercise of a profession (Art. 1767)

>A partnership has a juridical personality which is separate and distinct from that of the partners.

>A partnership may sue and be sued in its name or by its duly authorized representatives. A managing
partner of a partnership may execute all acts of administration including the right to sue debtors of the
partnership in the case of their failure to pay their obligation when it becomes demandable (Tai Tong
Chuache and Co. vs Insurance Commission 158 SCRA 336)

FORM OF PARTNERSHIP CONTRACT

General Rule: No special form is required for the validity or existence of the contract of partnership

Exceptions:

1. Where immovable property or real rights are contributed, the partnership contract shall be void
unless:

a. It is reduced to writing in a public instrument (Art. 1771)

b. An inventory of the property contributed is made, signed by the parties and attached to the
public instrument (Art. 1773)

>A partnership contract which states that the partnership is established to operate a fish pond is not
rendered void because no inventory of the fishpond was made (where it did not clearly appear in the
articles of partnership that the real property had been contributed by anyone of the partners) (Agad vs
Mabolo Agad and Co. 23 SCRA 1223)

2. Where the contract is by its terms not to be performed within a year from the making thereof, such
partnership contract is covered by the statute of frauds and thus requires a written agreement to be
enforceable.

3. Where the contract of partnership has a capital of Php 3,000 pesos or more, in money or property, it
shall appear in a public instrument and must be recorded in the Securities and Exchange Commission.
However, a partnership has a juridical personality even if it fails to comply with this requirement.

Requisites:

1. Intention to create a partnership

2. Common fund obtained from contributions

3. Joint interest in the profits

Essential features:

1. There must be a valid contract

 2. The parties must have legal capacity to enter into the contract

>With regard to the legal capacity of contracting parties, individuals not legally incapacitated to contract
may enter into a contract of partnership. With respect to corporations, the Supreme Court held in
Aurbach vs. Sanitary Wares Manufacturing Corporation 180 SCRA 130, that although a corporation may
not enter into a partnership contract, it may however engage in a joint venture with others. A joint
venture has been generally understood to mean an organization formed for some temporary purpose.

3. There must be mutual contribution of money, property and industry to a common fund.

>A partnership of a civil nature was formed because Gatchalian and Co. put up money to buy a
sweepstakes ticket for the sole purpose of dividing equally the price which they may win as they did in
fact in the amount of Php50,000.00 (Gatchalian vs CIR 67 Phil 666)

>Where the father sold his rights over 2 parcels of land to his 4 children so they can build their
residences, but the latter after 1 year sold them and paid the capital gains, they should not be treated to
have formed an unregistered partnership and taxed corporate income tax on the sale and on the
dividend income tax on their shares of the profits from the sale (Obillos Jr. vs, CIR)

4. The object must be lawful; and

5. The primary purpose must be to obtain profits