PARTNERSHIP

It is a CONTRACT whereby two or more persons (1) bind themselves to

CONTRIBUTE money, property, or industry to a COMMON FUND (2) with the intention
of
dividing the PROFITS among themselves or in order to EXERCISE a PROFESSION
a STATUS and a FIDUCIARY RELATION subsisting between persons carrying on a
business in common with a view on profit
CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP
[C, C, L, I, AS, NP]
1. CONSENSUAL
perfected by mere consent
2. CONTRIBUTION of money, property or industry to a COMMON FUND
3. object must be a LAWFUL one
4. INTENTION of DIVIDING the PROFIT among the PARTNERS
5. “AFFECTIO SOCIETATIS”
the desire to formulate an ACTIVE UNION, with people among whom there exist a
mutual CONFIDENCE and TRUSTS
6. NEW PERSONALITY
the object must be for profit and not merely for the common enjoyment otherwise
only
a co-ownership has been formed. HOWEVER, pecuniary profit need not be the only
aim,
it is enough that it is the principal purpose
BUSINESS TRUSTS
when certain persons entrust their property or money to others who will manage the
same for the former
RULES ON CAPACITY TO BECOME A PARTNER
1. a person capacitated to enter into contractual relations may become a partner
2. an UNEMANCIPATED MINOR CANNOT become a partner UNLESS his parent or
guardian consents
3. a MARRIED WOMAN, cannot contribute conjugal funds as her contribution to the
partnership UNLESS she is permitted to do so by her husband OR UNLESS she is the
administrator of the conjugal partnership, in which the COURT must give its consent
authority
4. a PARTNERSHIP being a juridical person by itself can form another partnership
5. a CORPORATION cannot become a partner on grounds of public policy
a partner shares not only in profits but also in the losses of the firm
RULE:
the partnership has a PERSONALITY SEPARATE and DISTINCT from that of each
partner
CONSEQUENCES OF THE PARTNERSHIP BEING A JURIDICAL ENTITY
1. its juridical personality is SEPARATE and DISTINCT from that of each partner
2. the partnership CAN in GENERAL:
A) acquire and possess property of all kinds
B) incur obligations
C) bring civil and criminal actions
D) can be adjudged insolvent even if the individual members be each financially
solvent
3. unless he is generally sued, a partner has no right to make a separate appearance in
court,
if the partnership being sued is already represented
LIMITATIONS ON ALIEN PARTNERSHIP
1) if 60% capital is not owned by Filipinos
the firm cannot acquire by purchase or otherwise AGRICULTURAL Philippine lands
2) foreign partnership may “lease” lands provided the period does not exceed 99 years
3) foreign partnership may be “MORTGAGEES” of land
period of 5 years, renewable for another 5 years
they cannot purchase it in a foreclosure sale
RULES IN CASE OF ASSOCIATIONS NOT LAWFULLY ORGANIZED AS
PARTNERSHIP
1. it possesses NO LEGAL PERSONALITY
it cannot sue as such HOWEVER, the partners in their individual capacity CAN
2. one who enters into a contract with a partnership as such cannot when sued later on
for
recovery of the debt, allege the lack of legal personality on the part of the firm, even if
indeed it had no personality
ESTOPPEL
whether a partnership has a juridical personality or not depends on its PERSONAL
LAW of the partnership or the law of the place where the partnership was organized
REQUISITES FOR EXISTENCE OF PARTNERSHIP [I, CF, JI]
1. INTENTION to create a partnership
2. COMMON FUND obtained from contributions
3. JOINT INTERESTS in the PROFITS
WHAT DO NOT ESTABLISH A PARTNERSHIP
1. mere co-ownership or co-possession
even with profit sharing
2. mere sharing of GROSS returns
even with joint ownership of the properties involved
RULES TO DETERMINE THE EXISTENCE OF A PARTNERSHIP
1. persons who are not partners to each other are not partners as to third persons
EXCEPTION:
PARTNERSHIP BY ESTOPPEL
2. CO-OWNERSHIP of a property does not itself establish a partnership, even though
the
co-owners share in the profits derived from the incident of joint ownership
3. SHARING OF GROSS RETURNS ALONE does not indicate 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
4. the receipt of the share in the profits is a strong presumptive evidence of partnership
HOWEVER, no such inference will be drawn if such profits were received in payment
A) as a DEBT by installments or otherwise
B) as WAGES of an employee
C) as RENT to a landlord
D) as an ANNUITY to a widow or representative of a deceased partner
E) as INTEREST on a LOAN, though the amount of payment vary with the profits
of the business
F) as the CONSIDERATION for the sale of a GOOD WILL of a business or other
property or otherwise
creditors are not partners, for their only interest in the sharing of profits is the
receipt or payment of their credits
in a partnership, the partners are supposed to trust and have confidence in all the
partners