PARTNERSHIP

PARTNERSHIP
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.

Two or more persons may also form a

partnership for the exercise of a profession.
(Art. 1767) (General Professional Partnership)
 PARTNERSHIP

A partnership has a
juridical personality
which is separate and
distinct from that of the
partners.
ELEMENTS OF A
PARTNERSHIP:
ELEMENTS OF A PARTNERSHIP

There shall be a partnership whenever:

1. There is a meeting of the minds;
2. To form a common fund;
3. With intention that profits
(and losses) will be divided among
the contracting parties.
ESSENTIAL FEATURES:
 ESSENTIAL FEATURES:
1. There must be a VALID CONTRACT
2. The parties must have LEGAL CAPACITY to
enter into the contract.
3. There must be a mutual contribution of
money, property, or industry to a
COMMON FUND.
4. There must be a LAWFUL OBJECT
5. The purpose or primary purpose must be to
obtain PROFITS and DIVIDE the same
among the parties.
CHARACTERISTICS
 CHARACTERISTICS
1. Essentially consensual in nature
( Art. 1767,1784)
2. Separate juridical personality
( Art. 1768)
3. Delectus personae
4. Mutual Agency ( Art. 1803)
5. Personal liability of partners for
partnership debts
 Consensual- as it is perfected
by mere consent, express or
implied;

EXAMPLE
A and B both consented to
form AB Partnership.
Separate juridical personality
Article 1768. The partnership has
a juridical personality separate
and distinct from that of each of
the partners, even in case of
failure to comply with the
requirements of article 1772, first
paragraph. (n)
Separate juridical personality
As a JURIDICAL PERSON, a
partnership may:
1. acquire and possess property of all
kinds;
2. incur obligations; and
3. bring civil or criminal actions, in
conformity with the laws and
regulations of their organization.
Doctrine of Delectus Personae

Delectus Personae (choice of

persons) a person has the
right to select persons with
whom he wants to be
associated with is the very
foundation and essence of
partnership.
(Ortega vs. CA, GR. No. 109248, July 3, 1995)
 Mutual Agency

Mutual agency is the right of

all partners to represent the
company's normal business
operations and the authority
to bind it
to mutual contracts and
agreements.
FORM OF PARTNERSHIP
CONTRACT
 FORM OF PARTNERSHIP
CONTRACT
GENERAL RULE:
No special form is required
for the validity or existence
of the contract of
partnership. (Art. 1356)
 FORM OF PARTNERSHIP
CONTRACT
EXCEPTIONS:

1. Where immovable property or real rights

are contributed, the partnership contract
shall be void unless:
a. It is reduced to writing in a public
instrument (Art. 1771).
b. An inventory of the property contributed
is made, signed by the parties and
attached to the public instrument.
(Art.1773).
 FORM OF PARTNERSHIP
CONTRACT
EXCEPTIONS:
2. Where the contract is by its
terms not to be performed within a
year from the making thereof, such
partnership contract is covered by
the statute of frauds and thus
requires a written agreement to be
enforceable.
Article 1784. A partnership
begins from the moment of
the execution of the
contract, unless it is
otherwise stipulated. (NCC)
EXCEPTIONS:
 EXCEPTIONS: PARTNERSHIP

1.Where immovable property/real rights

are contributed ( Art. 1771)
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.
 EXCEPTIONS: PARTNERSHIP

2. When the contract

falls under the
coverage of the
Statute of Frauds
( Art.1403)
THOSE FALLING UNDER THE
STATUTE OF FRAUD
Statute of Fraud

While not all contracts need to be

in writing and subscribed by or
signed by the parties to be
enforceable, the Statute of Frauds,
found in paragraph 2 of Article
1403 of our Civil Code,
enumerates six (6) classes of
statutes which describe
transactions required by law to be
in writing.
Statute of Fraud

1. The first statute

pertains to an agreement
whose terms are not to be
performed within a year
from its making.
(http://www.accralaw.com/publications/statute-frauds-more-just-
handshake)
Statute of Fraud

2. The second statute applies to

a special promise to answer for
the debt, default or miscarriage of
another.

It must be noted however that

for this statute to apply, the
promise must be merely
collateral. (means secondary in nature
or subordinate to the primary promise)
(http://www.accralaw.com/publications/statute-frauds-more-just-
handshake)
Statute of Fraud

3. The third statute involves transactions

made in consideration of marriage.

To clarify, this statute does not cover

instances where there is a breach of a mutual
promise to marry. Consequently, a groom may
sue his bride for damages based on a verbal
promise (Cabague v. Auxilio, G.R. No. 5028, 26
November 1952).

What the statute contemplates is a promise

by third persons to one of the parties
contemplating the marriage.
(http://www.accralaw.com/publications/statute-frauds-more-just-
handshake)
Statute of Fraud

4. The fourth statute relates to sale

of personal property for a price not
less than Five Hundred Pesos (PhP
500.00).

While this amount may be

considered unsubstantial at this age
and time, the value of PhP 500.00 still
controls, since there has been no
amendment to this provision of law.
(http://www.accralaw.com/publications/statute-frauds-more-just-
handshake)
Statute of Fraud

5. The fifth
statute pertains to
an agreement for a
lease longer than
one year.
Statute of Fraud

6. the sixth statute

applies to
representations made
to the credit of a third
person.
Conclusion-Statute of Fraud
In conclusion, knowing which transactions
are covered by the Statute of Frauds is
relevant to either ensure the enforceability of
contractual obligations or challenge any
obligation or liability not agreed upon.
It is safer to have a written contract, note
or memorandum which clearly defines the
terms of the obligation --- especially since,
there may be instances when a handshake
may not be enough.
(http://www.accralaw.com/publications/statute-frauds-more-just-
handshake)
 EXCEPTIONS: PARTNERSHIP

3. Where capital is P3,000 or

more, in money or property (Art.
1772)

a. Public instrument is necessary

b. Must be registered with SEC.
(The Partnership must be registered with
SEC)