PARTNERSHIP

GENERAL PROVISIONS
PARTNERSHIP

• It 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
the profits among themselves (CC Art. 1767)
DOES A PARTNERSHIP HAVE SEPARATE JURIDICAL
PERSONALITY?

• Yes. A partnership has juridical personality separate and distinct

from that each of the partners.
ESSENTIAL FEATURES OF A PARTNERSHIP

 
• There must be a valid contract. Partnership is created by voluntary agreement between parties.
There is no such thing as partnership created by law.
• The partnership relation is evidenced by the term of the contract which maybe oral, written,
implied or express from the acts or declarations of the parties.
• The parties must have legal capacity to enter into a contract
• There must be a mutual contribution of money or property or industry to a common fund.
• The primary purpose must be to obtain profits and to divide the same among the parties.
• The purpose of the partnership must be lawful.
• A bought a second hand car. He told B that he would give
half the profit of its sale to B if B would repair the car. B
did not repair the car. A hired C to do the work and later
sold the car at a profit. Is B entitled to the profit as well?
• A and B entered into a contract of partnership. B
wants to withdraw from the partnershi. Can A
compel B to enter into a contract of partnership?
PARTIES WHO CANNOT GIVE CONSENT TO A
CONTRACT OF PARTNERSHIP
• Minors
• Insane or demented persons
• Deaf mutes who do not know how to write
• Persons who are suffering from civil interdiction ( prisoners etc.)
• Incompetents who are under guardianship.
•  
WHAT COMPRISES A PARTNER’S CONTRIBUTION
IN A CONTRACT OF PARTNERSHIP?

• Money
• Property
• Credit evidenced through promissory notes and other evidences of obligation
• Industry
FORMALITIES REQUIRED BY LAW
 

In cases where immovable property or real rights is contributed, regardless of the value
• It must be in writing in a public instrument. (Without the public instrument, the partnership in
void and has no judicial personality as between the parties)
• An inventory of said property should be made, signed by the parties and attached to the public
instrument
• Where the contracts falls into the Statute of Frauds, the contract in itself must be in writing.
• In cases where personal property is contributed
• If capital is less than Php, 3,000.00, no special form is required for its validity
or existence.
• When the contract of partnership has a capital of Php 3,000 or more in money
or property, the same shall appear in a public instrument and must be recorded
in the Office of the Securities and Exchange Commission.
•  
RULES TO DETERMINE WHETHER A
PARTNERSHIP EXISTS

• Y an employee of partnership X, shall receive instead a fixed salary, or being

the owner of a building rented by the partnership, Y shall receive as rent a
certain percentage of the monthly net proceeds.
• Y , the widow of deceased partner in partnership X, in consideration of the
continuation of the business without liquidation and satisfaction of the
deceased interest, shall receive an annuity within five years.
• Y, creditor of the partnership agreed that payment of interest shall be taken
from the profits realized from the partnership
• Y sold property to partnership X, and he agreed that the purchase price shall
be paid out of the net proceeds of the business