Law

• a person has the right to select

  persons with whom he wants to be

  associated with in partnership

  Principle of Delectus personae
• Art. . The partnership has a juridical personality seperate and distinct from that of each of the partners even in case of failure to comply with the requirements of

  Article 1772, first paragraph.

  1768
• Partners cannot be held liable for the

  obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for a fraudulent, unfair or illegal purpose. 


  true
• Partnership still acquires personality despite failure to comply with the requirements of execution of public

  instrument and registration of name in SEC.


  true
• Partnership with immovable property

  contributed, if without requisite inventory, signed and attached to public instrument, shall not acquire any juridical personality because the contract itself is void. This is also true for secret associations or societies.


  73 and 75
• Determination if partnership exist

  Except as provided by Article 1825,

  persons who are not partners as to

  each other are not partners as to third

  persons. 


  True
• Determination if partnership exist

  Co-ownership or co-possession does

  not of itself establish a partnership,

  whether such co-ownership or copossessors do or do not share any

  profits made by the use of the property.


  True
• Determination if partnership exist

  The sharing of gross returns does not

  of itself establish 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.


  True
• Determination of partnership


  The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business
• Exceptions where no inference of partnership shall be drawn

  • As a debt by installments or otherwise
  • As wages of an employee or rent to a landlord
  • As an annuity to a widow or representative of a deceased partner
  • As interest on a loan, though the amount of payment vary with the profits of the business
  • As the consideration for the sale of a goodwill of a business or other property by installments or otherwise
• In general, to establish the existence of a partnership, all of its essential features or characteristics must be shown as being present. In case of doubt, art.1769 shall apply.

  True
• The mere sharing of gross returns alone does not even constitute ____ ____ ___ of partnership, since in a partnership, the partners share profits after satisfying all of the partnership’s liabilities.

  prima facie evidence
• the burden of proof is on the party denying its existence. When a partnership is shown to exist, the presumption is that it continues

  and the burden of proof is on the person.

  true
• 1.The partners share in profits and losses.

  2. They have equal rights in the mgt and

  conduct of the partnership business.

  3. Every partner is an agent of the

  partnership, and entitled to bind the

  others by his acts. He may also be liable

  for the entire partnership obligations.

  4. All partners are personally liable for

  the debts of the partnership with their

  separate property except that limited

  partners are not bound beyond the

  amount of their investment.
• 5. A fiduciary relation exists between

  the partners.

  6. On dissolution, the partnership is not

  terminated, but continues until the

  winding up of partnership is completed.

  Such incidents may be modified by

  stipulation of the partners.


  Typical incidents of partnership
• Art. __. 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 partnership


  1770
• Effects of unlawful partnership 


  1.The contract is void 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 #3.
• Is judical decree need to dissolve the unlawful partnership?

  A partnership is dissolved by operation of law upon the happening of an event which makes it unlawful. A judicial decree is not necessary to dissolve an unlawful partnership. However,

  advisable that judicial decree be secured. 3rd persons who deal w/ partnership w/o knowledge of

  illegal purpose are protected
• Art. ___ 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 to Form of partnership contract 


  1771
• Execution of public instrument necessary for validity of contract of partnership. To affect 3rd persons, the transfer of real property to the partnership must be duly registered in the Registry of Property


  true
• When partnership agreement covered by the Statute of Frauds

  An agreement to enter in a partnership at a future time, which by its terms is not to be performed w/in a year from the making thereof is covered by the Statute of Frauds. Such agreement is unenforceable unless it is in writing or at least evidenced by some

  note or memorandum.

  Partnership implied from 


  True
• 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


  true
• Art. ____. 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


  1773
• Art. 17__. 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.

  74
• 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.


  1775
• Art. 1776. As to its object, a partnership is either ____ or ____. As regards the liability of the partners, a partnership may be general or limited. Classifications of partnership


  universal or particular
• 1.Universal partnership. (Art. 1777)

  a.Universal partnership of all present

  property. (Art. 1778)

  b. Universal partnership of profits.

  (Art. 1780)

  2. Particular partnership


  Subject matter
• As to liability of the partners

  General partnership: one consisting of

  general partners who are liable ___ ___ and subsidiary and sometimes solidarily w/ their separate property for partnership debts.

  Pro rata
• Limited partnership: one formed by two or more persons having as members one or more general partners and one or more limited partners, the latter ___ _____ personally liable for the obligations of the partnership. 


  not being
• one in w/c no time is specified and is not formed for a particular undertaking or venture and w/c may be terminated at any time by mutual agreement of the partners,

  Partnership at will
• one w/c the term for w/c the partnership is to exist is fixed or agreed upon or one formed for a particular undertaking

  Partnership with a fixed term
• A partnership is created when there is an express or implied agreement between two or more persons to join together for carrying on as co-owners a business for profit.
• one w/c has complied w/ all the legal requirements for its establishment.


  De jure partnership
• one w/c has failed to comply w/ all the legal requirements for its establishment


  De facto partnership
• one w/c actually exists among the partners and also as to 3rd persons


  Ordinary or real partnership
• ____ partnership or partnership or partnership by _____: one w/c in reality is not a partnership, but is considered a partnership only in relation to those who, by their conduct or admission, are precluded to deny or disprove its existence


  Ostensible

  Estoppel
• ____ partnership: one wherein the

  existence of certain persons as partners is

  Secret
• Open or _____ partnership: one whose existence is avowed or made known to the public by the members of the firm.

  notorious
• Commercial or ____ partnership: one formed or the transaction of business.

  Trading