CHAPTER 1 LAW ON PARTNERSHIP PART 1

Learning Objectives:
Learn the introduction to partnership.
Understand the different characteristics of partnership.
Explain the difference between tests and incidents of partnership.
Explain the different kinds of partnership.

Art. 1767. 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.

Definition
Partnership is a contract whereby two or more persons bind themselves to contribute
money, property or industry to a common fund with the intention of dividing profits
among themselves.

Elements
 Intention to form a contract of partnership
 Participation in both profits and losses
 Community of interests
Basic Features
 Voluntary agreement
 Association for profit
 Mutual contribution to a common fund
 Lawful purpose or object
 Mutual agency of partners
 Articles must not be kept secret
 Separate juridical personality

Characteristics
1. Consensual – perfected by mere consent.
2. Bilateral – formed by two or more persons creating reciprocal rights and
obligations.
3. Preparatory - entered into as a means to an end.
4. Nominate – has a special name or designation.
5. Onerous – contributions in the form of either money, property and/or industry
must be made.
6. Commutative – the undertaking of each partner is considered as the equivalent
of that of the others.
7. Principal – its existence or validity does not depend on some other contract.
8. Principle of Delectus Personae (choice of persons) – a person has the right to
select persons with whom he wants to be associated with in partnership.

Art. 1768. The partnership has a juridical personality separate and distinct from that of
each of the partners even in case of failure to comply with the requirements of Article
1772, first paragraph.

Partnership, a juridical person

As an independent juridical person, a partnership may enter into contracts, acquire and
possess property of all kinds in its name, as well as incur obligations and bring civil or

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criminal actions. Thus, a partnership may be declared insolvent even if the partners are
not. It may enter into contracts and may sue and be sued in its firm name or by its duly
authorized representative. It is sufficient that service of summons be served on any
partner.
Partners cannot be held liable for the obligations of the partnership unless it is shown
that the legal fiction of a different juridical personality is being used for a fraudulent,
unfair or illegal purpose.

Effect of failure to comply with statutory requirements

Under Art 1772
Partnership still acquires personality despite failure to comply with the requirements of
execution of public instrument and registration of name in SEC.

Under Arts 1773 and 1775

Partnership with immovable property contributed, if without requisite inventory, signed
and attached to public instrument, shall not acquire any juridical personality because the
contract itself is void. This is also true for secret associations or societies.

To organize a partnership not an absolute right

It is but a privilege which may be enjoyed only under such terms as the State may deem
necessary to impose.

Art. 1769. In determining whether a partnership exists, these rules shall apply:
Except as provided by Article 1825, persons who are not partners as to each other are
not partners as to third persons.
Co-ownership or co-possession does not of itself establish a partnership, whether such
co-ownership or co-possessors do or do not share any profits made by the use of the
property.
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 in any property from
which the returns are derived.

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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 be drawn if such profits
were received in payment:
1. As a debt by installments or otherwise.
2. As wages of an employee or rent to a landlord.
3. As an annuity to a widow or representative of a deceased partner.
4. As interest on a loan, though the amount of payment varies with the profits of the
business.
5. As the consideration for the sale of a goodwill of a business or other property by
installments or otherwise.

In general, to establish the existence of a partnership, all of its essential features or

characteristics must be shown as being present. In case of doubt, art.1769 shall apply.
This article seeks to exclude from the category of partnership certain features
enumerated herein which, by themselves, are not indicative of the existence of a
partnership.

Persons not partners as to each other Persons who are partners as between
themselves are partners as to third persons. Generally, the converse is true: if they are
not partners between themselves, they cannot be partners as to third persons.
Partnership is a matter of intention, each partner giving his consent to become a
partner. However, whether a partnership exists between the parties is a factual matter.
Where parties declare they are not partners, this, as a rule, settles the question
between them. But where a person misleads third persons into believing that they are
partners in a non-existent partnership, they become subject to liabilities of partners
(doctrine of estoppel). Whether or not the parties call their relationship or believe it to be
a partnership is immaterial. Thus, with the exception of partnership by estoppel, a
partnership cannot exist as to third persons if no contract of partnership has been
entered into between the parties themselves.

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Co-ownership or co-possession
There is co-ownership whenever the ownership of an undivided thing or right belongs to
different persons.

Clear intent to derive profits from operation of business

Co-ownership does not of itself establish the existence of a partnership, although it is
one of its essential elements. The law does not imply a partnership between co-owners
because of the fact that they develop or operate a common property, since they may
rightfully do this by virtue of their respective titles. There must be a clear intent to form a
partnership.

Existence of fiduciary relationship

Partners have a well-defined fiduciary relationship between them. Co-owners do not.
Should there be dispute; the remedy of partners is an action for dissolution, termination
and accounting. For co-owners it would be one, for instance, for non-performance of
contract. People can become co-owners without a contract but they cannot become
partners without one.

Persons living together without benefit of marriage

Property acquired governed by rules on co-ownership.

Sharing of gross returns not even presumptive evidence of partnership

The mere sharing of gross returns alone does not even constitute prima facie evidence
of partnership, since in a partnership; the partners share profits after satisfying all of the
partnership’s liabilities.

Reason for the rule

Partner interested in both failures and successes; it is the chance of loss or gain that
characterizes a business. Where the contract requires a given portion of gross returns
to be paid over, the portion is paid over as commission, wages, rent, etc.

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Where there is evidence of mutual management
Where there is further evidence of mutual management and control, partnership may
result.

Receipt of share in the profits strong presumptive evidence of partnership

An agreement to share both profits and losses tends strongly to establish the existence
of a partnership. It is not conclusive, however, just prima facie and may be rebutted by
other circumstances.

When no such inference will be drawn

Under par. 4 of art. 1769, sharing of profits is not prima facie evidence of partnership in
the cases enumerated under subsections (a) – (e). In these cases, the profits are not
shared as partner but in some other respects or purpose. The basic test of partnership
is whether the business is carried on in behalf of the person sought to be held liable.

Sharing of profits as owner

It is not merely the sharing of profits, but the sharing of them as co-owner of the
business or undertaking that makes one partner. Test: Does the recipient have an equal
voice as proprietor in the conduct and control of the business? Does he own a share of
the profits as proprietor of the business producing them? One must have an interest
with another in the profits of a business as profits.

Burden of proof and presumption

The burden of proving the existence of a partnership rests on the party having the
affirmative of that issue. The existence of a partnership must be proved and will not be
presumed. The law presumes that those acting as partners have entered into a contract
of partnership. Where the law presumes the existence of partnership, the burden of
proof is on the party denying its existence. When a partnership is shown to exist, the
presumption is that it continues and the burden of proof is on the person asserting its
termination. One who alleges partnership cannot prove it merely by evidence of an
agreement using the term “partner”. Non-use of the term, however, is entitled to weight.

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The question of whether a partnership exists is not always dependent upon the personal
arrangement or understanding of the parties. Parties intending to do a thing which in law
constitutes partnership are partners.

Legal intention is the crux of partnership. Parties may call themselves partners but their
contract may be adjudged something quite different. Conversely, parties may expressly
state that theirs in not a partnership yet the law may determine otherwise on the basis of
legal intent. However, courts will be influenced to some extent by what the parties call
their contract.

Tests and incidents of partnership

In determining whether a partnership exists, it is important to distinguish between tests
or indicia and incidents of partnership. Only those terms of a contract upon which the
parties have reached an actual understanding, either expressly or impliedly, may afford
a test by which to ascertain the legal nature of the contract. Some of the typical
incidents of a partnership are:
1. The partners share in profits and losses.
2. They have equal rights in the mgt and conduct of the partnership business.
3. Every partner is an agent of the partnership, and entitled to bind the others by his
acts. He may also be liable for the entire partnership obligations.
4. All partners are personally liable for the debts of the partnership with their
separate property except that limited partners are not bound beyond the amount
of their investment.
5. A fiduciary relation exists between the partners.

On dissolution, the partnership is not terminated, but continues until the winding up of
partnership is completed. Such incidents may be modified by stipulation of the partners.

Similarities between a partnership and a corporation

1. Both have juridical personality separate and distinct from that of the individuals
composing it;

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 2. Both can only act through its agents;
3. Both are organizations composed of an aggregate of individuals;
4. Both distribute profits to those who contribute capital to the business;
5. Both can only be organized where there is a law authorizing is organization;

Partnerships are taxable as corporations.

Art. 1770. A partnership must have a lawful object or purpose, and must be established
for the common benefit or interest of the partners. When an unlawful partnership is
dissolved by a judicial decree, the profits shall be confiscated in favor of the State,
without prejudice to the provisions of the Penal Code governing the confiscation of the
instrument and effects of a crime. Object or purpose of partnership

The provision of the 1st paragraph reiterates 2 essential elements of a contract of

partnership:
1. Legality of the object; and
2. Community of benefit or interest of the partners.
3. The parties possess absolute freedom to choose the transaction or transactions
they must engage in.
4. The only limitation is that the object must be lawful and for the common benefit of
the members. The illegality of the object will not be presumed; it must appear to
be of the essence of the relationship.

Effects of an unlawful partnership

1. The contract is void and the partnership never existed in the eyes of the law;
2. The profits shall be confiscated in favor of the government;
3. The instruments or tools and proceeds of the crime shall also be forfeited in favor
of the government;
4. The contributions of the partners shall not be confiscated unless they fall under
#3.

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 5. A partnership is dissolved by operation of law upon the happening of an event
which makes it unlawful. A judicial decree is not necessary to dissolve an
unlawful partnership.

However, advisable that judicial decree be secured. 3rd persons who deal w/
partnership w/o knowledge of illegal purpose are protected.

Right to return of contribution where partnership is unlawful

Partners must be reimbursed the amount of their respective contributions. The partner
who limits himself to demanding only the amount contributed by him need not resort to
the partnership contract on which to base his claim or action. Since the purpose for
which the contribution was made has not come into existence, the manager or
administrator must return it, and he who has paid his share is entitled to recover it.

Right to receive profits where partnership is unlawful

Law does not permit action for obtaining earnings from an unlawful partnership because
for that purpose, the partner will have to base his action upon the partnership contract,
which is null and without legal existence by reason of its unlawful object; and it is self-
evident that what does not exist cannot be a cause of action. Profits earned do not
constitute or represent the partner’s contribution. He must base his claim on the
contract which is void. It would be immoral and unjust for the law to permit a profit from
an industry prohibited by it. The courts will refuse to recognize its existence, and will not
lend their aid to assist either of the parties thereto in an action against each other.
Therefore, there cannot be no accounting demanded of a partner for the profits which
may be in his hands, nor can recovery be had.

Effect of partial illegality of partnership business

Where a part of the business is legal and part illegal, a n account of that which is legal
may be had. Where, w/o the knowledge or participation of the partners, the firm’s profits
in a lawful business has been increased by wrongful acts, the innocent partners are not
precluded as against the guilty partners from recovering their share of the profits.

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Effect of subsequent illegality of partnership business
Contract will not be nullified. Where the business for which the partnership is formed is
legal when the partnership is entered into, but afterward becomes illegal, an accounting
may be had as to the business transacted prior to such time.

Community of interest between the partners for business purposes

The salient features of an ordinary partnership are a community of interest in profits and
losses, a community of interest in the capital employed, and a community of power in
administration. This community of interest is the basis of the partnership relation.
However, although every partnership is founded on a community of interest, e very
community of interest does not necessarily constitute a partnership. Property used in
the business may belong to one or more partners, so that there is no joint property,
other than joint earnings. To state that partners are co-owners of a business is to state
that they have the power if ultimate control. But partners may agree upon concentration
of management, leaving some of their members entirely inactive or dormant. Only one
of these features, profit-sharing, seems to be absolutely essential. But a mere sharing of
profits of itself does not of necessity constitute a partnership. The court must consider
all the essential elements in light of the facts of the particular case before deciding
whether a partnership exists.

Art. 1771. A partnership may be constituted in any form, except where immovable
property or real rights are contributed thereto, in which case a public instrument shall be
necessary. Form of partnership contract

General rule
No special form required for validity or existence of the contract of partnership. Contract
maybe made orally or in writing regardless of the value of the contributions.

Where immovable property or real rights are contributed

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Execution of public instrument necessary for validity of contract of partnership. To affect
3rd persons, the transfer of real property to the partnership must be duly registered in
the Registry of Property.

When partnership agreement covered by the Statute of Frauds

An agreement to enter in a partnership at a future time, which by its terms is not to be
performed w/in a year from the making thereof is covered by the Statute of Frauds.
Such agreement is unenforceable unless it is in writing or at least evidenced by some
note or memorandum.

Partnership implied from conduct

1. Binding effect
2. Existence of partnership may be implied from the acts or conduct of the parties,
as well as from other declarations, and such implied contract would be as binding
as a written and express contract.

3. Ascertainment of intention of parties

In determining whether a particular transaction constitutes a partnership, as between
the parties, the intention as disclosed by the entire transaction, and as gathered from
the facts and from the language employed by the parties as well as their conduct,
should be ascertained.

Conflict between intention and terms of contract

If the parties intend a general partnership, they are general partners although their
purpose is to avoid the creation of such a relation.

Art. 1772. Every contract of partnership having a capital of three thousand pesos or
more, in money or property, shall appear in a public instrument, which must be recorded
in the Office of the Securities and Exchange Commission. Failure to comply with the
requirements of the preceding paragraph shall not affect the liability of the partnership
and the members thereof to third persons. Registration of partnership

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Partnership with capital of P3, 000 or more
Requirements:
The contract must appear in a public instrument;
It must be recorded or registered w/ the SEC.
However, failure to comply w/ the above requirements does not prevent the formation of
the partnership or affect its liability and that of the partners to 3rd persons. But any
partner is granted the right bylaw to compel each other to execute the contract in a
public instrument.

Purpose of registration
Registration is necessary as a condition for the issuance of licenses to engage in
business and trade. In this way, the tax liabilities of big partnerships cannot be evaded
and the public can determine more accurately their membership and capital before
dealing with them.

When partnership considered registered the objective of the law is to make the recorded
instrument open to all and to give notice thereof to interested parties. This objective is
achieved from the date the partnership papers are presented to and left for record in the
Commission. This is the effective date of registration. If the certificate of recording is
issued on a subsequent date, its effectively retroacts to date of presentation.

Art. 1773. A contract of partnership is void, whenever immovable property is contributed

thereto, if an inventory of said property is not made, signed by the parties, and attached
to the public instrument. Partnership with contribution of immovable property

Where immovable property contributed, failure to comply w/ the following requisites will
render the partnership contract void:
The contract must be in a public instrument;

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An inventory of the property contributed must be made, signed by the parties, and
attached to the public instrument. Art. 1773 is intended primarily to protect 3rd persons.
W/ regard to 3rdpersons, a de facto partnership or partnership by estoppel may exist.
There is nothing to prevent the court from considering the partnership agreement an
ordinary contract from which the parties’ rights and obligations to each other may be
inferred and enforced.

When inventory is not required

An inventory is required only whenever immovable property is contributed. If not
contributed or if personal property, no inventory required.

Importance of making inventory of real property in a partnership

An inventory is very important in a partnership to how much is due from each partner to
complete his share in the common fund and how much is due to each of them in case of
liquidation. The execution of a public instrument of partnership would be useless if there
is no inventory of immovable property contributed because w/o its description and
designation, the instrument cannot be subject to inscription in the Registry of Property,
and the contribution cannot prejudice 3rd persons.

Art. 1774. Any immovable property or an interest therein may be acquired in the
partnership name. Title so acquired can be conveyed only in the partnership name.
Acquisition or conveyance of property by partnership
Since partnership has juridical personality of its own, it may acquire immovable property
in its own name. Title so acquired can be conveyed only in the partnership name.

Art. 1775. Associations and societies, whose articles are kept secret among the
members, and wherein any one of the members may contract in his own name with
third persons, shall have no juridical personality, and shall be governed by the
provisions relating to co-ownership. Secret partnerships without juridical personality

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Partnership relation is created only by the voluntary agreement of the partners. It is
essential that the partners are fully informed not only of the agreement but of all matters
affecting the partnership. Secret partnerships are not by nature partnerships. Secret
partnerships shall be governed by the provisions relating to co-ownership.

Importance of giving publicity to articles of partnership

It is essential that the arts of partnership be given publicity for the protection not only of
the members themselves but also 3rd persons from fraud and deceit. A member who
transacts business for the secret partnership in his own name becomes personally
bound to 3rd persons unaware of the existence of such association.
Partnership liability may still result, however, in cases of estoppel.

Art. 1776. As to its object, a partnership is either universal or particular. As regards the
liability of the partners, a partnership may be general or limited. Classifications of
partnership
As to extent of its subject matter
1. Universal partnership. (Art. 1777)
2. Universal partnership of all present property. (Art. 1778)
3. Universal partnership of profits. (Art. 1780)
4. Particular partnership. (Art. 1783)

As to liability of the partners

General partnership: one consisting of general partners who are liable pro rata and
subsidiary and sometimes solidarily w/ their separate property for partnership debts.

Limited partnership: one formed by two or more persons having as members one or
more general partners and one or more limited partners, the latter not being personally
liable for the obligations of the partnership.

As to duration

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Partnership at will: one in w/c no time is specified and is not formed for a particular
undertaking or venture and w/c may be terminated at any time by mutual agreement of
the partners, or by the will of any one partner alone; or one for a fixed term or particular
undertaking w/c is continued after the end of the term or undertaking w/o express
agreement.

Partnership with a fixed term: one w/c the term for w/c the partnership is to exist is fixed
or agreed upon or one formed for a particular undertaking.

As to the legality of its existence

1. De jure partnership: one w/c has complied w/ all the legal requirements for its
establishment.
2. De facto partnership: one w/c has failed to comply w/ all the legal requirements
for its establishment.

As to representation to others
1. Ordinary or real partnership: one w/c actually, exists among the partners
and also as to 3rd persons.

2. Ostensible partnership or partnership or partnership by estoppel: one w/c in

reality is not a partnership, but is considered a partnership only in relation to
those who, by their conduct or admission, are precluded to deny or disprove its
existence.

As to publicity
1. Secret partnership: one wherein the existence of certain persons as partners is
not avowed or made known to the public by any of the partners.
2. Open or notorious partnership: one whose existence is avowed or made known
to the public by the members of the firm.

As to purpose

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 1. Commercial or trading partnership: one formed or the transaction of business.
2. Professional or non-trading partnership: one formed for the exercise of a
profession.

Kinds of partners
Under the Civil Code
1. Capitalist partner: one who contributes money or property to the common fund.
2. Industrial partner: one who contributes only his industry or personal service.
3. General partner: one whose liability to 3rd persons extends to his separate
property.
4. Limited partner: one whose liability to 3rd persons is limited to his capital
contribution.
5. Managing partner: one who manages the entity.
6. Liquidating partner: one who takes charge of the winding up of partnership affairs
upon dissolution.
7. Partner by estoppel: one who is not really a partner but is liable as a partner for
the protection of innocent 3rd persons. He is one represented as being a partner
but who is not so between the partners themselves.
8. Continuing partner: one who continues the business of a partnership after it has
been dissolved by reason of the admission of a new partner, or the retirement,
death or expulsion of one or more partners.
9. Surviving partner: one who remains after a partnership has been dissolved by
the death of any partner.
10. Sub partner: one who, not being a member of the partnership, contracts w/ a
partner w/reference to the latter’s share in the partnership.

Other classifications
1. Ostensible partner: one who takes active part and known to the public as a
partner.

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 2. Secret partner: one who takes active part in the business but is not known to be
a partner by outside parties nor held out as a partner by the other partners. He is
an actual partner.
3. Silent partner: one who does not take any active part in the business although he
may be known to be a partner.
4. Dormant partner: one who does not take active part in the business and is not
known or held out as a partner. He would be both a silent and a secret partner.
5. Original partner: one who is a member of the partnership from the time of its
organization.
6. Incoming partner: a person lately, or about to be, taken into an existing
partnership as a member.
7. Retiring partner: one withdrawn from the partnership; a withdrawing partner. Art.
1777.
8. A universal partnership may refer to all the present property or to all the profits.

Art. 1778. A partnership of all present property is that in which the partners contribute
all the property which actually belongs to them to a common fund, with the intention of
dividing the same among themselves, as well as all the profits they may acquire
therewith.

Art. 1779. In a universal partnership of all present property, the property which belongs
to each of the partners at the time of the constitution of the partnership becomes the
common property of all the partners, as well as all the profits which they may acquire
there with. A stipulation for the common enjoyment of any other profits may also be
made; but the property which the partners may acquire subsequently by inheritance,
legacy or donation cannot be included in such stipulation, except the fruits thereof.

Universal partnership of all present property explained

A universal partnership of profits is one w/c comprises all that the partners may acquire
by their industry or work during the existence of the partnership and the usufruct of
movable or immovable property w/c each of the partners may possess at the time of the

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celebration of the contract. In this kind of partnership, the following become the common
property of all the partners:
Property w/c belonged to each of them at the time of the constitution of the partnership;
Profits w/c they may acquire from the property contributed.

Contribution of future property

General rule: future properties cannot be contributed. The very essence of the contract
of partnership that the properties contributed be included in the partnership requires the
contribution of things determinate. The position of a partner is like that of a donor, and
donations cannot comprehend future property. Thus, property subsequently acquired by
1. inheritance; 2. Legacy; or 3. Donation cannot be included by stipulation except the
fruits thereof. Hence, any stipulation including property so acquired is void. Profits from
other sources (not from properties contributed) will become common property only is
there’s a stipulation.

Art. 1780. A universal partnership of profits comprises all that the partners may acquire
by their industry or work during the existence of the partnership. Movable or immovable
property which each of the partners may possess at the time of the celebration of the
contract shall continue to pertain exclusively to each, only the usufruct passing to the
partnership.

Universal partnership of profits explained A universal partnership of profits is one w/c

comprises all that the partners may acquire by their industry or work during the
existence of the partnership and the usufruct of movable or immovable property w/c
each of the partners may possess at the time of the celebration of the contract.

Ownership of present and future property the partners retain their ownership over their
present and future property. What passes to the partnership are the profits or income
and the use or usufruct of the same. Consequently, upon dissolution, such property is
returned to the partners who own it.

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Profits acquired through chance
Since the law only speaks of profits w/c the partners may acquire by their industry or
work, profits acquired purely by chance are not included.

Fruits of property subsequently acquired Fruits of property subsequently acquired by the

partners do not belong to the partnership. Such profits, however, may be included by
express stipulation.

Art. 1781. Articles of universal partnership, entered into without specification of its
nature, only constitute a universal partnership of profits.

Presumption in favor of universal partnership of profits

Reason for presumption: universal partnership of profits imposes less obligations on the
partners, since they preserve the ownership of their separate property.

Art. 1782. Persons who are prohibited from giving each other any donation or
advantage cannot enter into a universal partnership. Limitations upon the right to form a
partnership

Persons who are prohibited by law to give donations cannot enter into a universal
partnership for the reason that each of the partners virtually makes a donation. To allow
it would be permitting them to do indirectly what the law expressly prohibits. A
partnership formed in violation of this article is null and void. Consequently, no legal
personality is acquired. A husband and wife, however, may enter into a particular
partnership or be members thereof. Relevant provisions:

Art. 87: Donations between spouses during marriage void, except moderate gifts on
occasion of family rejoicing. Also applies to those living together as husband and wife
w/o valid marriage.

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Art. 739: The following donations are void: Those made between persons who are
guilty of adultery or concubinage at the time of the donation (no need for conviction;
preponderance of evidence only required);
1. Those made between persons found guilty of the same criminal offense,
inconsideration thereof;
2. Those made to a public officer or his wife, descendants and ascendants, by
reason of his office.

Art. 1783. A particular partnership has for its object determinate things, their use or
fruits, or a specific undertaking, or the exercise of a profession or vocation.

Particular partnership explained

A particular partnership is one w/c is neither a universal partnership of present property
nor a universal partnership of profits. The fundamental difference between a universal
partnership and a particular partnership lies in the scope of their subject matter or
object. In the former, the object is vague and indefinite, contemplating a general
business w/ some degree of continuity, while in the latter, it is limited and well-defined,
being confined to an undertaking of a single, temporary, or ad hoc nature.

Business of partnership need not be continuing in nature

The carrying on of a business of a continuing nature is not essential to constitute a
partnership. An agreement to undertake a particular piece of work or a single
transaction or a limited number of transactions and immediately divide the resulting
profits would seem o fall w/in the meaning of the term “partnership” as used in the law.

Rule under American law

The above is not true under the Uniform Partnership Act w/c does not include joint
ventures w/c exists for a single transaction or a limited number of transactions.

Joint venture

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While a joint venture is not a formal partnership in the legal or technical sense, both are
governed, subject to certain qualifications, practically by the same rules or principles of
partnership. This is logical since in a joint venture, like in a partnership, there is a
community of interest in the business and a mutual right of control and an agreement to
share jointly in profits and losses.

Corporation as a partner
While under the Philippine Civil Code, a joint venture is a form of partnership w/ a legal
personality separate and distinct from the parties composing it, and should thus be
governed by the law of partnership, the Supreme Court has recognized the distinction
between these two business forms, and has held that although a corporation cannot
enter into a partnership contract, it may, however, engage in a joint venture if the nature
of the venture is authorized by its charter.

REFERENCE:
Lecture Notes Compilation of Dean Rene Boy R. Bacay, CPA, CrFA, CMC, MBA, FRIAcc

For further discussion please refer to the link provided:

Law on Partnership - General Provisions (Part 1) -

https://www.youtube.com/watch?v=WReCabrAOmI

Law on Partnerships - General Provisions (Part 2) -

https://www.youtube.com/watch?v=x9aAsSYL2mE

Law on Partnership: https://www.youtube.com/c/AttyRDJ

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