PARTNERSHIP DISTINGUISHED FROM CO-OWNERSHIP AND CORPORATION

PARTNERSHIP CO-OWNERSHIP CORPORATION

Creation Created by a Created by law Created by law
contract, my mere
agreement of the
parties
Juridical Has a juridical None Has a juridical
personality personality separate personality separate
and distinct from that and distinct from that
of each partner of each partner
Purpose Realization of profits Common enjoyment Depends on AOI
of a thing or right
Duration/ No limitation 10 years maximum Perpetual existence
Term of unless the AOI
existence provides otherwise
Disposal/ Partner may not Co-owner may freely Stockholder has a
Transferability dispose of his do so right to transfer
of interest individual interest shares without prior
unless agreed upon consent of other
by all partners stockholders
Power to act In absence of Co-owner cannot Management is
with 3rd stipulation to contrary, represent the co- vested with the Board
persons a partner may bind ownership of Directors
partnership (each
partner is agent of
partnership)
Effect of Death of partner Death of co-owner Death of stockholder
death results in dissolution does not necessarily does not dissolve
of partnership dissolve co- corporation
ownership
Dissolution May be dissolved at May be dissolved Can only be dissolved
any time by the will of anytime by the will of with the consent of
any or all of the any or all of the co- the state
partners owners
No. of Minimum of 2 Minimum of 2 Minimum of 1
incorporators persons persons incorporator
Commencem From the moment of From date of
ent of juridical execution of contract issuance of certificate
personality of partnership of incorporation by
the SEC

NO PRESUMPTION OF PARTNERSHIP FROM RECEIPT OF PROFITS:

1. As debt by installment
2. As wages or rent
3. As annuity
4. As interest on loan
5. As consideration for sale of goodwill of business/other property by installments

EFFECTS OF UNLAWFUL PARTNERSHIP

1. The contract is void ab initio 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 no. 3

FORM OF PARTNERSHIP CONTRACT

GENERAL RULE: No special form is required for the validity of the contract
EXCEPTIONS:
1. Where immovable property/real rights are contributed
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
2. Where capital is P3,000 or more, in money or property
RFBT Review 2020: Law on Partnership (1)
 a. Public instrument is necessary
b. Must be registered with SEC

CLASSIFICATIONS OF PARTNERSHIP
1. As to extent of its subject matter
a. UNIVERSAL PARTNERSHIP
i. UNIVERSAL PARTNERSHIP OF ALL PRESENT PROPERTY - comprises the following:
a) Property which belonged to each of the partners at the time of the constitution of
the partnership
b) Profits which they may acquire from all property contributed
ii. UNIVERSAL PARTNERSHIP OF PROFITS - comprises all that the partners may acquire
by their industry or work during the existence of the partnership

Note: Persons who are prohibited from giving donations or advantage to each other
cannot enter into a universal partnership

b. PARTICULAR PARTNERSHIP - has for its objects:

i. Determinate things
ii. Their use or fruits
iii. Specific undertaking
iv. Exercise of profession or vocation

2. As to liability of partners
a. GENERAL PARTNERSHIP - consists of general partners who are liable pro rata and
subsidiarily and sometimes solidarily with their separate property for partnership debts
b. LIMITED PARTNERSHIP - one formed by 2 or more persons having as members one or more
general partners and one or more limited partners, the latter not being personally liable for the
obligations of the partnership

3. As to duration
a. PARTNERSHIP AT WILL - one in which no time is specified and is not formed for a particular
undertaking or venture which may be terminated anytime by mutual agreement

b. PARTNERSHIP WITH A FIXED TERM - the term for which the partnership is to exist is fixed
or agreed upon or one formed for a particular undertaking

4. As to legality of existence
a. DE JURE PARTNERSHIP - one which has complied with all the legal requirements for its
establishment
b. DE FACTO - one which has failed to comply with all the legal requirements for its
establishment

5. As to representation to others
a. ORDINARY OR REAL PARTNERSHIP - one which actually exists among the partners and
also as to 3rd persons
b. OSTENSIBLE OR PARTNERSHIP BY ESTOPPEL - one which in reality is not a partnership
but is considered a partnership only in relation to those who, by their conduct or omission, are
precluded to deny or disprove its existence

6. As to publicity
a. SECRET PARTNERSHIP - one wherein the existence of certain persons as partners is not
avowed or made known to the public by any of the partners
b. OPEN OF NOTORIOUS PARTNERSHIP - one whose existence is avowed or made known to
the public by the members of the firm

7. As to purpose
a. COMMERCIAL OR TRADING PARTNERSHIP - one formed for the transaction of business
b. PROFESSIONAL OR NON-TRADING PARTNERSHIP - one formed for the exercise of a
profession

RELATIONS CREATED BY A CONTRACT OF PARTNERSHIP

1. Relations among the partners themselves
2. Relations of the partners with the partnership
3. Relations of the partnership with 3rd persons with whom it contracts
4. Relations of the partners with such 3rd persons
RFBT Review 2020: Law on Partnership (2)
OBLIGATIONS OF THE PARTNERS

A. OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES

Obligations with respect to contribution of property:

1. To contribute at the beginning of the partnership or at the stipulated time the money, property or
industry which he may have promised to contribute
2. To answer for eviction in case the partnership is deprived of the determinate property contributed
3. To answer to the partnership for the fruits of the property the contribution of which he delayed,
from the date they should have been contributed up to the time of actual delivery
4. To preserve said property with the diligence of a good father of a family pending delivery to
partnership
5. To indemnify partnership for any damage caused to it by the retention of the same or by the delay
in its contribution

Effect of Failure to contribute property promised:

1. Partners becomes ipso jure a debtor of the partnership even in the absence of any demand
2. Remedy of the other partner is not rescission but specific performance with damages from
defaulting partner

Obligations with respect to contribution of money and money converted to personal use
1. To contribute on the date fixed the amount he has undertaken to contribute to the partnership
2. To reimburse any amount he may have taken from the partnership coffers and converted to his
own use
3. To pay for the agreed or legal interest, if he fails to pay his contribution on time or in case he takes
any amount from the common fund and converts it to his own use
4. To indemnify the partnership for the damages caused to it by delay in the contribution or
conversion of any sum for his personal benefits

- Nothing Follows -

RFBT Review 2020: Law on Partnership (3)