PARTNERSHIP REVIEWER BY: Rene Callanta PARTNERSHIP > it is a CONTRACT whereby two or more persons (1) bind themselves to CONTRIBUTE money, pro pert y, or indus try to a COMMON FUND (2) wi th the intention ofdividing the PROFITS among the mselves 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. CONTRI BUT ION of mo ney , pr ope rty or indus try 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 ACT IVE UNION, with peo ple amo ng whom the re exi st a mutua l CONFIDENCE and TRUSTS 6. NEW PERSONALITY > the object must be for profit and not merely for the common enjo yment ot herwise 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 thei r prop erty or money to others who will manage the same for the former RULES ON CAPACITY TO BECOME A PARTNER 1. a pe rson ca pa ci tate d to en te r in to contractua l relations may become a partner 2. an UN EMAN CI PATE D MI NOR CA NN OT be come a partner UNLESS his parent or guardian consents 3. a MARRIE D WOMAN, ca nnot cont ri bute conj ugal funds as her contributi on to the partnership UNLESS she is permit ted to do so by he r hu sban d OR UNLE SS she is the adminis trat or of the conjuga l partner shi p, in whi ch the COURT must gi ve its consent authority 4. a PARTNE RSHIP bei ng a j urid ical pers on by itse lf can form another partnership 5. a CORP OR AT ION canno t be co me a pa rtner on grounds of public policy > a partner shares not only in profits but also in the losses of the firm RULE: > the par tner ship has a PERS ONALITY SEPA RAT E and DISTINCT from that of each partner CONSEQUENCES OF THE PARTNERSHI P BEING A JURIDICAL ENTITY1. its jur idi cal personalit y is SEPA RAT E and DISTINC T from that of each partner 2. the par tne rsh ip C AN in GEN ERAL: A) acquire and pos sess propert y of all kinds B) incur ob li ga tions C) bring ci vi l and criminal actions D) can be adjud ge d insolven t even if th e individual members be each financially solvent 3. unless he is generall y sued, a partner has no right to make a separa te 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 RUL ES IN CAS E OF ASS OCIATIONS NOT LAWFUL LY ORGANIZED AS PARTNERSHIP 1. it possesses NO L EGA L PERSONALI TY > it cannot sue as such HOWEVER, the partners in their individual capacity CAN 2. one who e nter s int o a c ontr act with a par tner ship 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 EXISTENC E OF PARTNERSHIP [I, CF, JI] 1. INT ENT ION to c rea te a par tne rsh ip 2. COMMON FUND obta ined fro m contri but ion s 3. JOINT INTERESTS in t he PROFI TS WHAT DO NOT ESTABLISH A PARTNERSHIP 1. mer e co-ownersh ip or co-p ossessio n > even with profit sharing 2. mer e shari ng of GROSS returns > even wi th joi nt ownershi p of the pr ope rties involved RULES TO DETERMINE THE EXISTENCE OF A PARTNERSHIP 1. per sons who are not part ners to e ach othe r are not partners as to third persons EXCEPTION: > PARTNERSHIP BY ESTOPPEL 2. CO-OWNERSHI P of a pr ope rty d oes n ot it sel festablish 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 rece ipt o f the shar e in the p rofi ts is a str ong presumptive evidence of partnership HOWEVER, no such inference will be drawn if such profits were received in payment A) as a DEBT by i nsta llments or othe rwis e 1
