Law on Partnership

PARTNERSHIP
Chapter 1: GENERAL PROVISION
Chapter 2: OBLIGATIONS OF THE PARTNERS
Section 1: Obligation of the Partners among
Section 2: Property Rights of a Partner
Section 3: Obligations of the Partners with
regard to 3rd
person
Chapter 3: DISSOLUTION AND WINDING UP
Chapter 4: LIMITED PARTNERSHIP
 Chapter 1: GENERAL PROVISION
Art. 1767. By the contract of partnership 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.
ELEMENTS OF A PARTNERSHIP: (I-PA-CO) It is also required that the articles of
There shall be a partnership whenever partnership must NOT be kept SECRET
1. Intention to form a contract of partnership among the members; otherwise, the
2. PArticipation in both profits and losses association shall have no legal personality and
3. COmmunity of interests shall be governed by the provisions on CO-
OWNERSHIP (Art. 1775).
Basic Features (V-A-M-L-A-M-S)
1. Voluntary agreement "kept secret among the members" =
2. Association for profit secrecy directed not to third persons but to
3. Mutual contribution to a common fund some of the partners
4. Lawful purpose or object
5. Articles must not be kept secret
6. Mutual agency of partners
7. Separate juridical personality
 Chapter 1: GENERAL PROVISION
Characteristics (CO-BI-PRE-NO-ON-CO-PRI)

1. COnsensual – perfected by mere

consent.
2. BIlateral – formed by two or more
persons creating reciprocal rights and
obligations.
3. PREparatory - entered into as a means
to an end.
4. NOminate – has a special name or
designation.
5. ONerous – contributions in the form of
either money, property and/or industry
must be made. Principle of Delectus Personae (choice of
6. COmmutative – the undertaking of persons) – a person has the right to select
each partner is considered as the persons with whom he wants to be associated with
equivalent of that of the others. in partnership.
7. PRIncipal – its existence or validity
does not depend on some other
contract.
 Chapter 1: GENERAL PROVISION
Art. 1768. The partnership has a juridical Effect of failure to comply with statutory
personality separate and distinct from requirements
that of each of the partners even in case
of failure to comply with the Under Art 1772
requirements of Article 1772, first Partnership still acquires personality despite
Partnership,
paragraph. a juridical person failure to comply with the requirements of
execution of public instrument and
As an independent juridical person, a registration of name in SEC.
partnership may enter into contracts, acquire
and possess property of all kinds in its name, Under Arts 1773 and 1775
as well as incur obligations and bring civil or Partnership with immovable property
criminal actions. Thus, a partnership may be contributed, if without requisite inventory,
declared insolvent even if the partners are signed and attached to public instrument,
not. It may enter into contracts and may sue shall not acquire any juridical personality
and be sued in its firm name or by its duly because the contract itself is void. This is
authorized representative. It is sufficient that To organize
also true a associations
for secret partnership not an
or societies.
service of summons be served on any partner. absolute right
Partners cannot be held liable for the
obligations of the partnership unless it is It is but a privilege which may be enjoyed
shown that the legal fiction of a different only under such terms as the State may
juridical personality is being used for a deem necessary to impose.
 Chapter 1: GENERAL PROVISION
4. The receipt by a person of a share of the
Art. 1769. In determining whether a profits of a business is prima facie evidence
partnership exists, these rules shall apply: that he is a partner in the business, but no
such inference shall be drawn if such profits
1. Except as provided by Article 1825, were received in payment:
persons who are not partners as to each a. As a debt by installments or otherwise.
other are not partners as to third persons. b. As wages of an employee or rent to a
landlord.
2. Co-ownership or co-possession does not c. As an annuity to a widow or
of itself establish a partnership, whether representative of a deceased partner.
such co-ownership or co-possessors do or d. As interest on a loan, though the
do not share any profits made by the use amount of payment vary with the profits
of the property. of the business.
e. As thetoconsideration
In general, for the
establish the sale ofofa a
existence
3. The sharing of gross returns does not of goodwill ofalla business or other property by or
partnership, of its essential features
itself establish a partnership, whether or installmentsmust
or otherwise.
characteristics be shown as being present.
not the persons sharing them have a joint
In case of doubt, art.1769 shall apply. This article
or common right or interest in any
seeks to exclude from the category of
property from which the returns are
partnership certain features enumerated herein
derived.
which, by
themselves, are not indicative of the existence of
 Chapter 1: GENERAL PROVISION
Persons not partners as to each other

Persons who are partners as between themselves are partners as to third persons.
Generally, the converse is true: if they are not partners between themselves, they cannot
be partners as to third persons. Partnership is a matter of intention, each partner giving his
consent to become a partner. whether a partnership exists between the parties is a factual
matter.

Where parties declare they are not partners, this, as a rule, settles the question
between them. But where a person misleads third persons into believing that they are
partners in a non-existent partnership, they become subject to liabilities of partners
(doctrine of estoppel).Whether or not the parties call their relationship or believe it to be
a partnership is immaterial. Thus, with the exception of partnership by estoppel, a
partnership cannot exist as to third persons if no contract of partnership has been entered
into between theorparties
Co-ownership themselves.
co-possession

There is co-ownership whenever the ownership of an undivided thing or right belongs to

different persons.
 Chapter 1: GENERAL PROVISION
Existence of fiduciary relationship Reason for the rule
Partner interested in both failures and
Partners have a well-defined fiduciary relationship successes; it is the chance of loss or
between them. Co-owners do not. Should there be gain that characterizes a business.
dispute; the remedy of partners is an action for Where the contract requires a given
dissolution, termination and accounting. For co- portion of gross returns to be paid over,
owners it would be one, for instance, for the portion is paid over as commission,
nonperformance of contract. People can become wages,
Where rent,
there etc.
is evidence of mutual
co-owners without a contract but they cannot
management
become partners without one.
Persons living together without benefit of Where there is further evidence of
marriage mutual management and control,
partnership may result
Property acquired governed by rules on
Sharing Receipt of share in the profits
coownershipof gross returns not even
presumptive evidence of partnership strong presumptive evidence of
partnership
The mere sharing of gross returns alone does not An agreement to share both profits and
even constitute prima facie evidence of losses tends strongly to establish the
partnership, since in a partnership, the partners existence of a partnership. It is not
share profits after satisfying all of the partnership’s conclusive, however, just prima facie and
liabilities. may be rebutted by other circumstances.
 Chapter 1: GENERAL PROVISION
When no such inference will be drawn Burden of proof and presumption

Under par. 4 of art. 1769, sharing of profits is The burden of proving the existence of a
not prima facie evidence of partnership in the partnership rests on the party having the
cases enumerated under subsections (a) – affirmative of that issue. The existence of a
(e). In these cases, the profits are not shared partnership must be proved and will not be
as partner but in some other respects or presumed. The law presumes that those acting
purpose. The basic test of partnership is as partners have entered into a contract of
whether the business is carried on in behalf partnership. Where the law presumes the
of the person sought to be held liable. existence of partnership, the burden of proof is
Sharing of profits as owner
on the party denying its existence. When a
It is not merely the sharing of profits, but the partnership is shown to exist, the presumption
sharing of them as co-owner of the business is that it continues and the burden of proof is
or undertaking that makes one partner. on the person asserting its termination. One
Test: Does the recipient have an equal voice who alleges partnership cannot prove it merely
as proprietor in the conduct and control of by evidence of an agreement using the term
the business? Does he own a share of the “partner”. Non-use of the term, however, is
profits as proprietor of the business entitled to weight. The question of whether a
producing them? partnership exists is not always dependent
One must have an interest with another in upon the personal arrangement or
 Chapter 1: GENERAL PROVISION
Some of the typical incidents of a partnership
Legal intention is the root of partnership. are:
Parties may call themselves partners but
their contract may be adjudged something 1. The partners share in profits and
quite different. Conversely, parties may losses.
expressly state that theirs in not a 2. They have equal rights in the
partnership yet the law may determine management and conduct of the
otherwise on the basis of legal intent. partnership business.
However, courts will be influenced to some 3. Every partner is an agent of the
extent by what the parties call their partnership, and entitled to bind the
contract.
Tests and incidents of partnership others by his acts. He may also be
liable for the entire partnership
In determining whether a partnership obligations.
exists, it is important to distinguish 4. All partners are personally liable for the
between tests or indicia and incidents of debts of the partnership with their
partnership. Only those terms of a contract separate property except that limited
upon which the parties have reached an partners are not bound beyond the
actual understanding, either expressly or amount of their investment.
impliedly, may afford a test by which to 5. A fiduciary relation exists between the
ascertain the legal nature of the contract. partners.
6. On dissolution, the partnership is not
 Chapter 1: GENERAL PROVISION
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 its agents;
3. Both are organizations composed of
an aggregate of individuals;
4. Both distribute profits to those who
contribute capital to the business;
5. Both can only be organized where
there is a law authorizing is
organization;
6. Partnerships are taxable as
corporations.
 Chapter 1: GENERAL PROVISION
Art. 1770. A partnership must have a lawful object or purpose, and must be
established for the common benefit or interest of the partners. When an
unlawful partnership is dissolved by a judicial decree, the profits shall be
confiscated in favor of the State, without prejudice to the provisions of the
Penal Code governing the confiscation of the instruments and effects of a crime.
Object or purpose of [Link] of an unlawful partnership
The provision of the 1st
paragraph reiterates 2 1. The contract is void and the partnership never
essential elements of a existed in the eyes of the law;
contract of partnership: 2. The profits shall be confiscated in favor of the
1. Legality of the object; and government;
2. Community of benefit or interest 3. The instruments or tools and proceeds of the
of the partners. The parties crime shall also be forfeited in favor of the
possess absolute freedom to government;
choose the transaction or 4. The contributions of the partners shall not be
transactions they must engage in. confiscated
A partnership unless they
is dissolved fall underof#3.
by operation law upon the
The only limitation is that the happening of an event which makes it unlawful. A
object must be lawful and for the judicial decree is not necessary to dissolve an unlawful
common benefit of the members. partnership. However, advisable that judicial decree be
The illegality of the object will not secured. 3rd persons who deal w/ partnership w/o
be presumed; it must appear to be knowledge of illegal purpose are protected.
 Chapter 1: GENERAL PROVISION
Right to return of Right to receive profits where partnership is
contribution where unlawful
partnership is unlawful
Law does not permit action for obtaining earnings
Partners must be reimbursed from an unlawful partnership because for that
the amount of their purpose, the partner will have to base his action
respective contributions. The upon the partnership contract, which is null and
partner who limits himself to without legal existence by reason of its unlawful
demanding only the amount object; and it is self-evident that what does not
contributed by him need not exist cannot be a cause of action. Profits earned do
resort to the partnership not constitute or represent the partner’s
contract on which to base his contribution. He must base his claim on the
claim or action. Since the contract which is void. It would be immoral and
purpose for which the unjust for the law to permit a profit from an
contribution was made has industry prohibited by it. T he courts will refuse to
not come into existence, the recognize its existence, and will not lend their aid
manager or administrator to assist either of the parties thereto in an action
must return it, and he who against each other. Therefore, there cannot be no
has paid his share is entitled accounting demanded of a partner for the profits
to recover it. which may be in his hands, nor can recovery be
 Chapter 1: GENERAL PROVISION
Effect of partial illegality of Community of interest between the partners for
partnership business business purposes

Where a part of the business is legal The salient features of an ordinary partnership are a
and part illegal, a n account of that community of interest in profits and losses, a
which is legal may be had. Where, community of interest in the capital employed, and a
without the knowledge or participation community of power in administration. This community
of the partners, the firm’s profits in a of interest is the basis of the partnership relation.
lawful business has been increased by However, although every partnership is founded on a
wrongful acts, the innocent partners community of interest, e very community of interest
are not precluded as against the guilty does not necessarily constitute a partnership. Property
partners from recovering their share of used in the business may belong to one or more
the profits. partners, so that there is no joint property, other than
joint earnings. To state that partners are co-owners of
Effect of subsequent illegality of a
partnership business business is to state that they have the power if
ultimate control. But partners may agree upon
Contract will not be nullified. Where the concentration of management, leaving some of their
business for which the partnership is members entirely inactive or dormant. Only one of
formed is legal when he partnership is these features, profit-sharing, seems to be absolutely
entered into, but afterward becomes essential. But a mere sharing of profits of itself does
 Chapter 1: GENERAL PROVISION
Art. 1771. A partnership may be constituted in any form, except where immovable
property or real rights are contributed thereto, in which case a public instrument
shall be necessary .Form of partnership contract

General rule When partnership agreement covered by the

Statute of Frauds
No special form required for validity or
existence of the contract of partnership. An agreement to enter in a partnership at a future time, which
Contract maybe made orally or in writing by its terms is not to be performed w/in a year from the
regardless of the value of the making thereof is covered by the Statute of Frauds. Such
contributions. agreement is unenforceable unless it is in writing or at
least evidenced by some note or memorandum.
Where immovable property or real
rights are contributed Partnership implied from conduct (Binding
effect)
Execution of public instrument necessary
for validity of contract of partnership. To Existence of partnership may be implied from the
affect 3rd persons, the transfer of real acts or conduct of the parties, as well as from
property to the partnership must be duly other declarations, and such implied contract
registered in the Registry of Property. would be as binding as a written and express
contract.
Chapter 1: GENERAL PROVISION
Ascertainment of intention of parties

In determining whether a particular transaction constitutes a partnership, as between the

parties, the intention as disclosed by the entire transaction, and as gathered from the
facts and from the language employed by the parties as well as their conduct, should be
ascertained.

Conflict between intention and terms of contract

If the parties intend a general partnership, they are general partners although their
purpose is to
Chapter 1: GENERAL PROVISION
Art. 1772. Every contract of partnership having a capital of three thousand
pesos or more, in money or property, shall appear in a public instrument,
which must be recorded in the Office of the Securities and Exchange
Commission. Failure to comply with the requirements of the preceding
paragraph shall not affect the liability of the partnership and the members
thereof to third persons. Registration of partnership
Partnership with capital of P3, 000 or more Requirements:

1. The contract must appear in a public instrument;

2. It must be recorded or registered w/ the SEC. However, failure to comply w/ the
above requirements does not prevent the formation of the partnership or affect
its liability and that of the partners to 3rd persons. But any partner is granted the
right bylaw to compel each other to execute the contract in a public instrument.

Purpose of registration

Registration is necessary as a condition for the issuance of licenses to engage in

business and trade. In this way, the tax liabilities of big partnerships cannot be evaded
and the public can determine more accurately their membership and capital before
dealing with them.
Chapter 1: GENERAL PROVISION
When partnership considered registered

The objective of the law is to make the recorded instrument open to all and to give
notice thereof to interested parties. This objective is achieved from the date the
partnership papers are presented to and left for record in the Commission. This is the
effective date of registration. If the certificate of recording is issued on a subsequent
date, its effectively retroacts to date of presentation.
 Chapter 1: GENERAL PROVISION
Art. 1773. A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the
parties, and attached to the public instrument. Partnership with contribution of
immovable property When inventory is not required
Where immovable property
contributed, failure to comply w/
the following requisites will render An inventory is required only whenever immovable property is
the partnership contract void: contributed. If not contributed or if personal property, no
inventory required.
1. The contract must be in a public
instrument; Importance of making inventory of real
2. An inventory of the property property in a partnership
contributed must be made, signed by
the parties, and attached to the public An inventory is very important in a partnership to how much is
instrument. Art. 1773 is intended due from each partner to complete his share in the common
primarily to protect 3rd persons. W/ fund and how much is due to each of them in case of
regard to 3rdpersons, a de facto liquidation. The execution of a public instrument of partnership
partnership or partnership by estoppel would be useless if there is no inventory of immovable
may exist. There is nothing to prevent property contributed because w/o its description and
the court from considering the designation, the instrument cannot be subject to inscription in
partnership agreement an ordinary the Registry of Property, and the contribution cannot prejudice
contract from which the parties’ rights 3rd persons.
Chapter 1: GENERAL PROVISION
Art. 1774. Any immovable property or an interest therein may be acquired
in the partnership name. Title so acquired can be conveyed only in the
partnership name. Acquisition or conveyance of property by partnership.

Since partnership has juridical personality of its own, it may acquire immovable
property in its own name. Title so acquired can be conveyed only in the partnership
name.
Chapter 1: GENERAL PROVISION
Art. 1775. Associations and societies, whose articles are kept secret among the members, and wherein any
one of the members may contract in his own name with third persons, shall have no juridical personality, and shall
be governed by the provisions relating to co-ownership. Secret partnerships without juridical personality
Partnership relation is created only by the voluntary agreement of the partners. It is essential that the partners are
fully informed not only of the agreement but of all matters affecting the partnership. Secret partnerships are not
by nature partnerships. Secret partnerships shall be governed by the provisions relating to coownership.

Importance of giving publicity to articles of partnership

It is essential that the arts of partnership be given publicity for the protection not only of the members themselves
but also 3rd persons from fraud and deceit. A member who transacts business for the secret partnership in his own
name becomes personally bound to 3rd persons unaware of the existence of such association. Partnership liability
may still result, however, in cases of estoppel.
Chapter 1: GENERAL PROVISION
Art. 1776. As to its object, a partnership is either universal or particular. As
regards the liability of the partners, a partnership may be general or limited.
Classifications
As of partnership
to extent of its subject matter Limited partnership: one formed by two or more
persons having as members one or more general
1. Universal partnership. (Art. 1777) partners and one or more limited partners, the
a. Universal partnership of all latter not being personally liable for the obligations
present property. (Art. 1778) of the partnership.
b. Universal partnership of
profits. (Art. 1780) As to duration

2. Particular partnership. (Art. 1783) Partnership at will: one in w/c no time is

specified and is not formed for a particular
As to liability of the partners undertaking or venture and w/c may be terminated
at any time by mutual agreement of the partners,
General partnership: one or by the will of any one partner alone; or one for a
consisting of general partners who fixed term or particular undertaking w/c is
are liable pro rata and subsidiary and continued after the end of the term or undertaking
sometimes solidarily w/ their w/o express agreement.
separate property for partnership
debts. Partnership with a fixed term: one w/c the
term for w/c the partnership is to exist is fixed or
Chapter 1: GENERAL PROVISION
As to the legality of its existence As to publicity

De jure partnership: one w/c has complied w/ all Secret partnership: one wherein the existence of
the legal requirements for its establishment. certain persons as partners is not avowed or made
known to the public by any of the partners.
De facto partnership: one w/c has failed to comply
w/ all the legal requirements for its establishment. Open or notorious partnership: one whose
existence is avowed or made known to the public
As to representation to others by the members of the firm.

Ordinary or real partnership: one w/c actually, As to purpose

exists among the partners and also as to 3rd
persons. Commercial or trading partnership: one
formed or the transaction of business.
Ostensible partnership or partnership or
partnership by estoppel: one w/c in reality is not a Professional or non-trading partnership: one
partnership, but is considered a partnership only in formed for the exercise of a profession.
relation to those who, by their conduct or
admission, are precluded to deny or disprove its
existence.
Chapter 1: GENERAL PROVISION
Kinds of partners

Under the Civil Code

1. Capitalist partner: one who contributes money or property to the common fund.
2. Industrial partner: one who contributes only his industry or personal service.
3. General partner: one whose liability to 3rd persons extends to his separate
property.
4. Limited partner: one whose liability to 3rd persons is limited to his capital
contribution.
5. Managing partner: one who manages the entity.
6. Liquidating partner: one who takes charge of the winding up of partnership
affairs upon dissolution.
7. Partner by estoppel: one who is not really a partner but is liable as a partner for
the protection of innocent 3rd persons. He is one represented as being a partner
but who is not so between the partners themselves.
8. Continuing partner: one who continues the business of a partnership after it
has been dissolved by reason of the admission of a new partner, or the
retirement, death or expulsion of one or more partners.
9. Surviving partner: one who remains after a partnership has been dissolved by
the death of any partner.
[Link] partner: one who, not being a member of the partnership, contracts w/ a
Chapter 1: GENERAL PROVISION
Other classifications

1. Ostensible partner: one who takes active part and known to the public as a partner.
2. Secret partner: one who takes active part in the business but is not known to be a
partner by outside parties nor held out as a partner by the other partners. He is an
actual partner.
3. Silent partner: one who does not take any active part in the business although he may
be known to be a partner.
4. Dormant partner: one who does not take active part in the business and is not known
or held out as a partner. He would be both a silent and a secret partner.
5. Original partner: one who is a member of the partnership from the time of its
organization.
6. Incoming partner: a person lately, or about to be, taken into an existing partnership as
a member.
7. Retiring partner: one withdrawn from the partnership; a withdrawing partner. Art.
1777. A universal partnership may refer to all the present property or to all the
profits.
Chapter 1: GENERAL PROVISION
Art. 1778. A partnership of all present property is that in which the partners
contribute all the property which actually belongs to them to a common fund, with
the intention of dividing the same among themselves, as well as all the profits
they may acquire therewith.

Art. 1779. In a universal partnership of all present property, the property which
belongs to each of the partners at the time of the constitution of the partnership
becomes the common property of all the partners, as well as all the profits which
they may acquire there with. A stipulation for the common enjoyment of any other
profits may also be made; but the property which the partners may acquire
subsequently by inheritance, legacy or donation cannot be included in such
stipulation,
Universal except theof
partnership fruits thereof.
all present property explained

A universal partnership of profits is one w/c comprises all that the partners may acquire by
their industry or work during the existence of the partnership and the usufruct of movable
or immovable property w/c each of the partners may possess at the time of the celebration
of the contract. In this kind of partnership, the following become the common property of
all the partners: Property w/c belonged to each of them at the time of the constitution of
the partnership; Profits w/c they may acquire from the property contributed.
Chapter 1: GENERAL PROVISION
Contribution of future property

General rule: future properties cannot be contributed. The very essence of the contract
of partnership that the properties contributed be included in the partnership requires the
contribution of things determinate. The position of a partner is like that of a donor, and
donations cannot comprehend future property. Thus, property subsequently acquired by
[Link];
2. Legacy; or
3. Donation
cannot be included by stipulation except the fruits thereof. Hence, any stipulation
including property so acquired is void. Profits from other sources (not from properties
contributed) will become common property only is there’s a stipulation
Chapter 1: GENERAL PROVISION
Art. 1780. A universal partnership of profits comprises all that the partners may
acquire by their industry or work during the existence of the partnership. Movable
or immovable property which each of the partners may possess at the time of the
celebration of the contract shall continue to pertain exclusively to each, only the
usufruct passing to the partnership.
Universal partnership of profits Profits acquired through chance
explained
Since the law only speaks of profits w/c the
A universal partnership of profits is one w/c partners may acquire by their industry or
comprises all that the partners may acquire work, profits acquired purely by chance are
by their industry or work during the existence not included.
of the partnership and the usufruct of
movable or immovable property w/c each of Fruits of property subsequently
the partners may possess at the time of the acquired
celebration of the contract.
Fruits of property subsequently acquired
Ownership of present and future by the partners do not belong to the
property partnership. Such profits, however, may be
included by express stipulation.
The partners retain their ownership over their
present and future property. What passes to
Chapter 1: GENERAL PROVISION
Art. 1781. Articles of universal partnership, entered into without
specification of its nature, only constitute a universal partnership of profits.

Presumption in favor of universal partnership of profits

Reason for presumption: universal partnership of profits imposes less obligations on

the partners, since they preserve the ownership of their separate property.
Chapter 1: GENERAL PROVISION
Art. 1782. Persons who are prohibited from giving each other any donation or advantage cannot enter
into a universal partnership. Limitations upon the right to form a partnership

Relevant provisions:
Persons who are prohibited by law
to give donations cannot enter into Art. 87: Donations between spouses during marriage
a universal partnership for the void, except moderate gifts on occasion of family
reason that each of the partners rejoicing. Also applies to those living together as
virtually makes a donation. To husband and wife w/o valid marriage.
allow it would be permitting them
to do indirectly what the law Art. 739: The following donations are void:
expressly prohibits. A partnership
formed in violation of this article is a. Those made between persons who are guilty of
null and void. Consequently, no adultery or concubinage at the time of the
legal personality is acquired. A donation (no need for conviction;
husband and wife, however, may preponderance of evidence only required);
enter into a particular partnership b. Those made between persons found guilty of
or be members thereof. the same criminal offense, inconsideration
thereof;
c. Those made to a public officer or his wife,
descendants and ascendants, by reason of his
Chapter 1: GENERAL PROVISION
Art. 1783. A particular partnership has for its object determinate things, their
use or fruits, or a specific undertaking, or the exercise of a profession or
vocation.
Business of partnership need not be
Particular partnership
continuing in nature
explained
The carrying on of a business of a
A particular partnership is one w/c
continuing nature is not essential to
is neither a universal partnership
constitute a partnership. An agreement to
of present property nor a
undertake a particular piece of work or a
universal partnership of profits.
single transaction or a limited number of
The fundamental difference
transactions and immediately divide the
between a universal partnership
resulting profits would seem to fall w/in the
and a particular partnership lies in
meaning of the term “partnership” as used
the scope of their subject matter
in the law.
or object. In the former, the object
is vague and indefinite,
Rule under American law
contemplating a general business
w/ some degree of continuity,
The above is not true under the Uniform
while in the latter, it is limited and
Partnership Act w/c does not include joint
well-defined, being confined to an
ventures w/c exists for a single transaction
undertaking of a single,
or a limited number of transactions.
Chapter 1: GENERAL PROVISION
Corporation as a partner
Joint venture
While under the Philippine Civil Code, a
While a joint venture is not a formal partnership joint venture is a form of partnership w/
in the legal or technical sense, both are a legal personality separate and distinct
governed, subject to certain qualifications, from the parties composing it, and
practically by the same rules or principles of should thus be governed by the law of
partnership. This is logical since in a joint partnership, the Supreme Court has
venture, like in a partnership, there is a recognized the distinction between these
community of interest in the business and a two business forms, and has held that
mutual right of control and an agreement to although a corporation cannot enter into
share jointly in profits and losses. a partnership contract, it may, however,
engage in a joint venture if the nature of
the venture is authorized by its charter.
End of Chapter 1