Partnership - By the contract of partnership, 2 or more persons bind

themselves to contribute money, property or industry to a common fund with

the intention of dividing profits among themselves. (Art. 1767)

Who?
2 or more Persons
What?
Contribute on the same fund using
*Money
*Property
*Industry

Why?
To divide profit among themselves.

Essential Features:
1. There must be a valid contract.
2. Must have Legal capacity to enter into a contract
3. There must be a mutual contribution of money, property, or industry to a
common fund
4. Object must be LAWFUL
5. The primary purpose should be to obtain profit and divide among
themselves.
Distinction of Partnership, Co-Ownership and Corporation in Terms of
the following

Distinction Partnership Co-Ownership Corporation

Created by a
contract, by mere
Creation Created by Law Created by Law
agreement of
parties
Has a juridical Has a juridical
Personality personality
Juridical separate and separate and
None
Personality Distinct from distinct from
That of each that of each
Partner partner
Common Enjoyment
Realization of Common Enjoyment
Purpose of a right or
Profits of Rights
thing
50 years and
extendible by
Duration/ Term of another 50 years
No Limit 10 years Maximum
Existence depending from
Articles of
Incorporations
Stockholder has a
right to transfer
Transferability Co- Owner may shares without
Disposal
of Interest freely do so prior consent of
other
stockholders
In Absence of
Stipulation to
Management is
contrary, a Co-Owner cannot
Power to Act with vested with the
Partner may bind represent the co-
3rd Person Board of
partnership (Each ownership
Directors
partner is agent
of Partnership)
Death of co-owner
Death of partner Death of
does not
results in stockholder does
Effect of Death necessarily
Dissolution of not dissolve
dissolve co-
Partnership corporation
ownership
May be dissolved May be dissolved
Can only be
at any time by anytime by the
dissolved with
Dissolution the will of any will of any or
the consent of
or all of the all of the co-
the state
partners owners
 No. of Minimum of 2 Minimum of 2 Minimum of 5
Incorporators persons persons incorporators
From date of
From the moment
Commencement of issuance of
of execution of
Juridical None certificate of
contract of
Personality incorporation by
partnership
the SEC

NO PRESUMPTION OF PARTNERSHIP FROM RECEIPT OF PROFITS:

1.    As debt by installment

2.    As wages or rent

3.    As annuity

4.    As interest on loan

5.    As consideration for sale of goodwill of business/other property by

installments

SIMILARITIES BETWEEN A PARTNERSHIP AND A CORPORATION

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

2.    Both can only act through agents

3.    Both organizations are composed of an aggregate of individuals (except

corporation sole)

4.    Both distribute profits to those who contribute capital to the business

5.    Both can only be organized when there is a law authorizing their
organization

6.    Both are taxable as a corporation

EFFECTS OF UNLAWFUL PARTNERSHIP

1.    The contract is void ab initio 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 no. 3

FORM OF PARTNERSHIP CONTRACT  

GENERAL RULE: No special form is required for the validity of the contract

EXCEPTIONS:

1.    Where immovable property/real rights are contributed

a.    Public instrument is necessary

b.    Inventory of the property contributed must be made, signed by the

parties and attached to the public instrument otherwise it is VOID

2.    Where capital is P3,000 or more, in money or property

a.    Public instrument is necessary

b.    Must be registered with SEC

CLASSIFICATIONS OF PARTNERSHIP  
1.      As to extent of its subject matter

1. UNIVERSAL PARTNERSHIP

i.      UNIVERSAL PARTNERSHIP OF ALL PRESENT PROPERTY - comprises the

following:

a)  Property which belonged to each of the partners at the time of the
constitution of the partnership

b)    Profits which they may acquire from all property contributed

ii.    UNIVERSAL PARTNERSHIP OF PROFITS - comprises all that the

partners may acquire by their industry or work during the existence of
the partnership

Note: Persons who are prohibited from giving donations or advantage to

each other cannot enter into a universal partnership

1. PARTICULAR PARTNERSHIP - has for its objects:

i.      Determinate things

ii.     Their use or fruits

iii.    Specific undertaking

iv.   Exercise of profession or vocation

 2.As to liability of partners

1. GENERAL PARTNERSHIP - consists of general partners who are liable pro

rata and subsidiarity and sometimes solidarity with their separate
property for partnership debts

1. LIMITED PARTNERSHIP - one formed by 2 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

3.    As to duration

1. PARTNERSHIP AT WILL - one in which no time is specified and is not

formed for a particular undertaking or venture which may be terminated
anytime by mutual agreement

1. PARTNERSHIP WITH A FIXED TERM - the term for which the partnership is
to exist is fixed or agreed upon or one formed for a particular
undertaking

4.      As to legality of existence

1. DE JURE PARTNERSHIP - one which has complied with all the legal
requirements for its establishment

1. DE FACTO - one which has failed to comply with all the legal
requirements for its establishment

 
5.    As to representation to others

1. ORDINARY OR REAL PARTNERSHIP - one which actually exists among the

partners and also as to 3rd persons

1. OSTENSIBLE OR PARTNERSHIP BY ESTOPPEL - one which in reality is not a

partnership but is considered a partnership only in relation to those
who, by their conduct or omission, are precluded to deny or disprove
its existence

6.    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

1. OPEN OF NOTORIOUS PARTNERSHIP - one whose existence is avowed or made

known to the public by the members of the firm

7. As to purpose

1. COMMERCIAL OR TRADING PARTNERSHIP - one formed for the transaction of

business

1. PROFESSIONAL OR NON-TRADING PARTNERSHIP - one formed for the exercise

of a profession