Art.

1767 – Definition: C – not more than 50 years; may be reduced, but

Partnership – a contract whereby 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, or in order to exercise profession.
 
Profession – a group of men pursuing a learned art as a
common calling in the spirit of public service – no less a
public service because it may incidentally be a means of
livelihood.
 
Characteristics of Partnership
1.        Consensual
2.        Nominate
3.        Bilateral
4.        Onerous
5.        Commutative
6.        Principal
7.        Preparatory
 
·         A partnership contract, in its essence, is a contract of
agency
 
Elements
1.        consensual;
2.        there must be a contribution of money, property or
industry to a common fund;
3.        the subject must be a lawful one;
4.        there must be an intention of dividing the profit
among the partners;
5.        there must be a desire to formulate an active union
(affectio societatis);
6.        a new personality, that of the firm – must arise,
distinct from the separate personality of each of the
members
 
Essential Features of Partnership
1.        there must be a valid contract;
2.        the parties must have legal capacity to enter into the
contract;
3.        there must be a mutual contribution of money,
property, or industry to a common fund;
4.        the object must be lawful; and
5.        the primary purpose must be to obtain profits and to
divide the same among the parties
Differentiation:
Partnership (P) vs. Corporation (C)
a.        creation
P – voluntary agreement of parties
C – created by the state in the form of a special
charter or by a general enabling law
b.        how long it exists
P – no time limit except agreement by parties
never extended
c.        liability to strangers
P – may be liable with their private property beyond
their contribution to the firm
C – liable only for payment of their subscribed capital
stock
d.        transferability of interest
P – even if a partner transfers his interest to another,
the transferee does not become a partner unless all
other parties consent
C – a transfer of interest makes the transferee a
stockholder, even without the consent of the others
e.        ability to bind the firm
P – generally, partners acting on behalf of the
partnership are agents thereof; consequently they can
bind both the firm and the partners
C – generally, the stockholders cannot bind the
corporation since they are not agents thereof
f.          mismanagement
P – a partner can sue a partner who mismanages
C – a stockholder cannot sue a member of the board
of directors who mismanages: the action must be in
the name of the corporation
g.        nationality
P- a partnership is a national of the country it was
created
C – a corporation is a national of the country under
whose laws it was incorporated, except for wartime
purposes or for the acquisition of land, natural
resources and the operation of public utilities in the
Philippines, in which case the veil of the corporate
identity is pierced and we go to the nationality of the
controlling stockholders
h.        attainment of legal personality
P – the firm becomes a juridical person from the time
the contract begins
C – the firm becomes a juridical person from the time
it is registered in the Securities and Exchange
Commission, and all requisites have been complied
with
i.          dissolution
P – death, retirement, insolvency, civil interdiction, or
insanity of a partner dissolves the firm
C – such causes do not dissolve the corporation
Who is a partner by estoppel?
One who, by words or conduct does any of the following:

1. Directly represents himself to anyone as a partner in an existing partnership or in a non-

existing partnership

2. Indirectly represents himself by consenting to another representing him as a partner in an

existing partnership or in a non-existing partnership

What are the liabilities in case of estoppel?

When Partnership is Liable. If all actual partners consented to the representation, then the
liability of the person who represented himself to be a partner or who consented to such
representation and the actual partner is considered a partnership liability.

When Liability is PRO RATA. When there is no existing partnership and all those represented
as partners consented to the representation, then the liability of the person who represented
himself to be a partner and all who made and consented to such representation, is joint or
pro-rata.

When Liability is SEPARATE. When there

is no existing partnership and not all but
only some of those represented as
partners consented to the representation,
or none of the partnership in an existing
partnership consented to such
representation, then the liability will be
separate.