PARTNERSHIP Partnership as a Juridical Person

EH 403 August 19 2019 Monday – 2hrs Juridical person is created by law.

WWW Natural person is created by God.

Definition of Partnership Atty: Not even by your parents, they are only instruments of
A partnership is a contract where two or more persons bind God.
themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits Rights of a Juridical Person
among themselves. (1) Right to due process
(2) Equal Protection
A partnership is a contract and a person to be a partner (3) Acquire Properties
must not be legally incapacitated. To be capacitated means (4) To sue and be sued
there is no legal impediments to enter into a contract. There (5) Enter into contracts
is a need to be legally capacitated to be able to manage (6) Against illegal searches and seizure
one’s properties. (7) Freedom of Religion

Rights not Enjoyed

Definition of a Contract (1) Right to life
There is meeting of the minds between two persons (2) Right to liberty
whereby one binds himself with respect to the other to do (3) Right to vote
something or render some service.
Forms of Business Organizations
Elements of a Contract (1) Sole Proprietorship
(1) Consent – meeting of the minds (2) Partnership
(2) Object – subject matter of the contract; in (3) Corporation
partnership the object is the contribution such as
money, property or industry Genesis – Creation of natural persons
(3) Consideration – the cause or reason why the party Adam – Sole Proprietorship
entered into a contract; in partnership Eve – Partnership
consideration refers to profit Cain and Abel – Corporation

Legal impediments to enter into a contract
(1) Minority
(2) Deaf and mute who cannot read and write
(3) Suffering from civil interdiction
(4) Incompetent under guardianship
(5) Insane or demented
Note: Under the new law, the one person corporation
was approved. Once you enjoy a juridical personality, that
new personality is separate and distinct from other persons.
Advantages and Disadvantages and Liabilities

Civil Interdiction Sole Partnership Corporation

It is an accessory penalty wherein the person is deprived of Proprietorship
right to manage and dispose his properties. A person Advantage More control of More capital, Liability is only
suffering from civil interdiction cannot manage or the business and more resources limited to the
all profits go to to share; shares of the
administer his own properties although he may still own stockholders
you alone More minds at
properties. work

Deaf and Mute Disadvantage Less capital Liability Ardous process

A deaf-mute contemplated here is one who is not able to extends to the of creating a
communicate. Shoulder all personal corporation;
losses; liability properties of management is
Insane or demented extends to the the partners limited to a
the personal group of people
They are not legally incapacitated because they are not – The Board of
properties of the
capable of giving consent. owner Directors/Truste
es
Situation. Miss So offered Miss Rojas a business. So said to
contribute 50K each. From that 50K, they could rent a place
and Miss Rojas since she looks like a priest can conduct a
mass and share the profits. Is there partnership?
Yes. The profits will be taken from the offerings of the
people (but share it first with God).

How many persons are formed in a partnership?

Three persons: (1) Partner 1, (2) Partner 2, (3) Partnership
itself

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Types of Contracts Movable vs Immovable
(1) According to Name Movable Immovable
(a) Nominate Can be moved around Classifications:
(b) Innominate
Real by nature – cannot be
(2) According to Perfection carried from place to place
(a) Consensual – perfected by means of consent (lands, roads, trees)
(b) Real – by delivery of an object
(c) Solem or Formal – requires compliance with Real by incorporation –
certain formalities prescribed by law attached to an immovable
in a fixed manner to be an
(3) According to its relation to other contracts integral part thereof
(a) Principal – when it does not depend for its (buildings, statues)
existence and validity upon another contract
(b) Accessory – when it is dependent upon another Real by destination –
contract it secures guarantees for its existence placed in an immovable for
(c) Preparatory – when entered into as means to an the utility it gives to the
end activity carried thereon, such
as machinery installed in a
(4) According to the Nature of the Vinculum Produced building to meet the needs of
(a) Unilateral – when it creates an obligation on the an industry in the building
part of one of the parties and docks on a river
(b) Bilateral – gives rise to reciprocal obligations for
both parties Real by analogy – classified
by express provision of law
(5) According to Cause because it is regarded as
(a) Onerous – burdensome to you united to the immovable
(b) Gratuitous – given out of love and affection property

Characteristics of a Contract of Partnership

(1) Consensual – perfected by mere consent; there is
meeting of the minds
(2) Principal – existence or validity does not depend Consumable vs Non-Consummable
upon some other contract Consumable Non-Consumable
(3) Onerous – burdensome because you have to do Cannot be enjoyed without Can be enjoyed without
something being consumed being consumed
(4) Preparatory – means to an end
(5) Bilateral – entered into by at least 2 people
(6) Nominated – named provided by law
(7) Commutative – obligation is reciprocal; undertaking Perishable vs Non-Perishable
of one partner is equivalent to the other partner
Perishable Non-Perishable
General Rule: A partnership is a consensual contract
because it is perfected upon consent or the meeting of the
minds.
Why should there be law on partnership?
(1) Regulate relationships
Exceptions:
(2) Protect interests of contracting parties
(1) Contract of partnership has a capital of 3K or
(3) Protect rights of contracting parties
more
(a) It must appear in a public instrument
(b) It must be recorded in the Securities and
Relationships involved in Partnership
Exchange Commission (SEC)
(1) Relationship between partners and the partnership
(2) Relationship among partners themselves
(2) Immovable property or real rights contributed
(3) Relationship between the partners and third parties
(a) It must be in writing in a public instrument
(4) Relationship between the partnership and the State
(b) Make inventory of property contributed
(5) Relationship between the partnership itself and
and attach it to the public instrument
third parties
(c) Recorded with the Registry of Deeds
where the immovable is located in order
to bind 3rd persons

(3) Contract falls within the Statute of Frauds

Example: an agreement to enter into a partnership
in the future

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