partnership agency rfbt

• 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
• Partnership


  A form of business organization that falls between single proprietorship and corporation
• Elements of a contract of partnership

  • Meeting of the minds
  • To form a common fund
  • Intention that profits and losses will be divided among the contracting parties
• Essential features of a partnership contract

  • Valid contract
  • Parties have legal capacity
  • Mutual contribution of money, property, or industry to a common fund
  • Lawful object
  • Primary purpose is to obtain profits and divide them
  • Partnership has a juridical personality separate from individual partners
• Unlawful object of partnership

  • Contract is void ab initio
  • Profits shall be confiscated by the State
  • Instruments or tools and proceeds of the crime shall be forfeited to the State
  • Contributions of partners shall not be confiscated unless they are instruments or tools of the crime
• Associations without legal personality

  • Articles are kept secret among the members
  • Any one of the members may contract in his own name with third persons
• Characteristics of the contract of partnership

  • Consensual
  • Nominate
  • Bilateral or multilateral
  • Principal
  • Onerous
  • Preparatory
  • Commutative
• Persons who cannot enter into a contract of partnership

  • Those suffering from civil interdiction
  • Minors
  • Insane or demented persons
  • Deaf-mutes who do not know how to write
  • Incompetents who are under guardianship
• Persons with limited capacity to enter into a contract of partnership

  • Those prohibited from giving each other any donation or advantage cannot enter into a universal partnership
  • A corporation cannot enter into a partnership in the absence of express authorization by statute or charter
• Universal partnership


  • All present property
  • All the profits
• Particular partnership


  Has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation
• Form of the contract of partnership


  • May be constituted in any form
  • If immovable property or real rights are contributed, the contract must appear in a public instrument and have an attached inventory
  • If the capital is at least P3,000, the contract must appear in a public instrument and be recorded in the SEC
• Duration of the contract of partnership

  • Commencement: from the moment of execution, unless otherwise stipulated
  • Term: for a fixed term/particular undertaking or at will
  • Extension: by express renewal or implied renewal if requirements are met
• Rules to determine existence of partnership

  • Persons not partners to each other are not partners as to third persons, except by estoppel
  • Co-ownership or co-possession does not establish partnership
  • Sharing of gross returns does not establish partnership
  • Receipt of a share in profits is prima facie evidence of partnership, with exceptions
• Relations created by the contract of partnership


  • Among the partners themselves
  • Between the partners and the partnership
  • Between the partnership and third persons
  • Between the partners and third persons
• Kinds of partnership


  • As to legality: de jure, de facto
  • As to object: universal, particular
  • As to duration: for fixed term/particular undertaking, at will
  • As to liability of partners: general, limited
  • As to publicity: secret, open/notorious
  • As to purpose: commercial/trading, professional/non-trading
• Kinds of partners

  • Capitalist, Industrial
  • General, Limited
  • Managing, Liquidating
  • By estoppel, Continuing
  • Surviving, Subpartner
  • Ostensible, Secret
  • Silent, Dormant
  • Original, Incoming, Retiring
• Industrial partner


  • Contribution is industry
  • Exempted from losses as between partners, but liable to third persons
  • Cannot engage in business for himself, unless partnership permits
• Capitalist partner


  • Contribution is money or property
  • Share in profits and losses according to agreement or contribution
  • Cannot engage, for own account, in same kind of business as partnership, unless stipulated otherwise
• Partnership


  Joint venture
• A joint venture is a form of partnership and should be governed by the laws of partnership
• Violation of prohibition


  Entitles the partnership to benefits obtained and right to damages
• Partnership


  • Operates with firm name and legal personality
  • Generally relates to a continuing business of various transactions of a certain kind
• Joint Venture


  • Operates with no firm name and legal personality
  • Usually limited to a single transaction
  • Corporations may enter into joint ventures
• Under Philippine law, a joint venture is a form of partnership and should thus be governed by the laws of partnership
• Partnership

  • Generally created by either express or implied contract
  • Has a separate juridical personality
  • Generally, the purpose is to obtain profits
  • Duration has no limitation
  • There is mutual agency between partners
  • Death or incapacity of a partner dissolves the partnership
  • Partner cannot dispose of his interest so as to make the assignee a partner, without consent of others
• Co-Ownership


  • Generally created by law, and may exist even without a contract
  • Has no separate juridical personality
  • The purpose is common enjoyment of a thing or right
  • An agreement to keep a thing undivided for more than 10 years is not allowed
  • There is no mutual representation among co-owners
  • Death or incapacity of a co-owner does not dissolve the co-ownership
  • Co-owner can dispose of his share without consent of others
• Corporation

  • Has juridical personality separate and distinct from its individual members
  • Can only act through agents
  • Distributes its profits to those who contributed capital to the business
  • Can only be organized where there is a law authorizing its organization
  • Taxable as a corporation
  • Created by law (with SEC approval)
  • Except for a corporation sole, requires at least 5 incorporators
  • Personality commences from the issuance of certificate of incorporation
  • Can exercise only powers granted by law or those incidental to its existence
  • Management is vested in the board of directors of trustees
  • Stockholders are liable only to the extent of their shares
  • Stockholder has the right to transfer his shares without consent of others
  • The term is 50 years, but may be extended
  • May only be dissolved with the consent of the state
• Conjugal Partnership of Gains


  • Arises in case the spouses, of opposite sex, agree before marriage
  • Governed by law
  • Has no juridical personality
  • Commencement is on the date of the celebration of the marriage, and any stipulation to the contrary is void
  • Share in profits is equal
  • Administration belongs to the spouses jointly, but decision of husband prevails in disagreement
  • Spouse cannot dispose of interest during marriage, even with consent
• Voluntary Association


  • Has no juridical personality
  • Not always organized for profit
  • Capital is not contributed, although fees are collected from members
  • The members are liable individually for debts which they authorized or ratified
  • Share in profits is equal
  • Administration belongs to the spouses jointly, but decision of husband prevails in disagreement
  • Spouse cannot dispose of interest during marriage, even with consent
• Amount of contribution


  Partners are obliged to contribute equal shares to the capital of the partnership, unless there is an agreement to the contrary
• Determining value of contribution in goods

  1. In the manner prescribed in the partnership contract

  2. In the absence thereof, by experts chosen by the partners and according to current prices
• Risk of loss of things contributed

  • If the contribution consists in the use and fruits of specific and determinate things, the risk of loss shall be borne by the partner who owns them
  • The partnership bears the risk if the things are fungible, cannot be kept without deterioration, were contributed to be sold, or were brought and appraised in the inventory
• A partner is guilty of estafa if he misappropriates partnership money or property received by him for a specific purpose of the partnership
• Mere failure on the part of an industrial partner to return to the capitalist partner the capital brought by him into the partnership is not an act constituting estafa
• The liability for damages cannot be set-off or compensated by profits or benefits which the partner may have earned for the partnership by his industry, except that the court may equitably lessen the liability if, through his extraordinary efforts in other activities of the partnership, unusual profits were realized
• Before a partner may sue another for alleged fraudulent management and resultant damages, liquidation must first be effected to determine the extent of the damage
• Subpartnership


  A contract of subpartnership is a partnership within a partnership, distinct and separate from the main partnership
• Firm

  Partnership that operates under a firm name
• Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners