PARTNERSHIP

I.

INTRODUCTION
A. Sources of Philippine Law on Partnership
1. Code of commerce (arts. 116-238) commercial and mercantile
partnerships dealt with mercantile transactions
2. Old Spanish civil code (arts. 1665 1708) non-commercial or civil
partnership engaged in civil purposes; difference was in the
desired purpose not the manner of organization
3. New civil code (title IX, arts. 1767 1867) no more distinction
between commercial and civil partnership; governs all transactions
of all partnership, whether the object be civil or mercantile
a. Uniform partnership act (source of arts. 1769, 1774, 1785, 1805
to 1907, 1809, 1810 to 1814, 1819 to 1826)
b. Uniform limited partnership act

II.

NATURE AND CHARACTERISTICS

A. Concept art. 1767, 1 st par., CC established by a contract but the
law fixes the conditions under which it shall operate once so
established.
- Belo vs CA and Anay, 342 SCRA 20 (2000)
- Torres vs CA, 320 SCRA 428 (1999)
- Lim Tong Lim vs Phil. Fishing Gear Ind., Inc., 317 SCRA 728
(1999)
B. Partnership as a contract art 1769
1. Essential elements and characteristics (i) mutual contribution to
a common stock; (ii) joint interest in the profits; sec 22 (b); 27
(a), National Internal Revenue Code
- Jarantilla, Jr. vs Jarantilla, 636 SCRA 299 (2010)
- Heirs of Jose Lim vs. Juliet Villa Lim, 614 SCRA 141 (2010)
- Philex mining corp. vs. comm. Of internal revenue, 551 SCRA
183
- Santos vs spouses reyes, GR No. 135813, October 25, 2001
- Tocao vs CA, 365 SCRA 463 (2001) (MR)
- AFISCO insurance corp. vs. CA, 302 SCRA 1 (1999(
- Evangelista vs. Coll. Of internal revenue, 102 Phil. 140 (1957)
- Yulo vs yanh chiao seng, 106 Phil. 111 (1959)
a. Requires fulfillment of the essential requisites of contracts
art. 1318
i.
Consent and capacity of the contracting parties art
1327; 1329; 1782; 87; 73; art 234 family code; art 34
revise penal code; rules 93-94 rules of court
- A corporation Is without capacity or power to enter into a
contract of partnership because but may enter into a joint
venture
- Mendiola vs CA, 497 SCRA 346 (2006)
- J.M. tuason & co. vs bolanos, 95 Phil. 106 [1954]
- Aurbach vs sanitary wares, 180 SCRA 130 [1989]

ii.

Object certain or lawful subject matter arts. 1306;

1347 to 1349; 1409; 1770; - the pursuit of a particular
business for profit; except where the law requires a
specific form of business
organization, such as
banking or insurance which only corporations can
undertake.
Deluao vs. Casteel, 26 SCRA 475 [1968]
Arbes vs Polistico, 53 Phil. 489 [1929]
Fernandez vs de la Rosa, 1 Phil 671 [1906]
iii.
Cause of obligation art 1350 for each contracting
party, the prestation or promise of a thing or service
by the other; the undertaking of the other to
contribute money, property or industry.
1. Distinction from other business relations and
organizations
a. Joint venture
Realubit vs Jaso, 658 SCRA 146 [2011]
Primelink properties and devt. corp. vs. lazatin-magat, 493
SCRA 444 [2006]
Heirs of Tan Eng Kee vs Ca and Benguet Lumber Co., 341 SCRA
740 (2000);
Sevilla vs CA, 160 SCRA 171 (1988)
b. Joint accounts Bourns vs Carman, 7 Phil 117
(1906);
Dietrich vs freeman 18 Phil. 341 (1911) cuentas en
participacion art 239, code of commerce; no business name;
business transacted by only one partner; liquidation and
accounting is prerogative of manager
c. Agency Biglangawa vs Constantino, 109 Phil
172 (1960)
d. Corporation
i.
Manner of creation art 1787 vs sec 2,
corp. code
ii.
Number of incorporators art. 1767 vs
sec. 10, corp. code
iii.
Start of existence art 1784vs sec 19,
corp. code
iv.
Powers art 1306 vs sec 2, 36, corp. code
v.
Name art 1844 (1, a) vs. Sec. 18, Corp.
code
vi.
Term of existence art 1767 vs Sec.
11,Corp. code
vii.
Liability to 3rd parties art 1816, 1822
1824 vs Sec. 64, 37, Corp. Code
viii.
Transferability of interest art 1767,
1804, vs Sec. 63, Corp. code

ix.

Management art 1803 vs Sec. 23, Corp.

code
x.
Dissolution art. 1830 (1) (2) vs sec. 117122, Corp. Code
xi.
Governing law civil code vs. corporation
code
e. Art. 1769
Ona vs CIR, 45 SCRA 24 (1972);
Reyes vs CIR, 24 SCRA 198;
Obillos vs CIR, 139 SCRA 436;
Sardane vs CA, 167 SCRA 524;
C. Legal personality of Partnership art. 1768, 1771
1. In general Art. 1772 Effect of non-compliance partnership
still a juridical person; art. 1772 (1) is not a prerequisite for
acquiring juridical personality, but merely as a condition for the
issuance of licenses to engage in business;
- Litonjua Jr. vs. Litonjua Sr., 477 SCRA 576 (2005)
- Aguilar Jr. vs. CA, 319 SCRA 246 (1999)
- Sunga vs Chua, GR No. 143340, august 15, 2001
2. Consequence of legal personality art 51, 46;
- Campos rueda & Co., vs. pacific comm. Co., 44 Phil. 916 (1922)
3. When no juridical personality acquired art. 1773 and 1775
4. Securities and exchange commission (SEC) information relating
to partnership registration/ monitoring
III.

CLASSES AND KINDS OF PARTNERSHIP AND PARTNERS

A. As to object art 1776
1. Universal partnership art. 1777
- Present property art 1778; 1779
- Profits art. 1780, 1st par.
- Presumption when kind of universal partnership not specified
art. 1781; 1378
- Disqualified from universal partnership art. 1782; 133; 739
universal partnership is almost a donation; prohibits indirect act
of donation.
- Commissioner of internal revenue vs. Suter, 27 SCRA 152 (1969)
2. Particular partnership art. 1783 limited and well-defined, single,
temporary undertaking
B. As to liability of partners
1. General partnership art 1816 personally liable pro rata and
subsidiarily; arts. 1822 1824 solidarily
General professional partnership art 1767, par. 2; sec. 22 (B),
NIRC
- Tan vs. Del Rosario, Jr., 237 SCRA 324
2. Limited partnership art 1843 limited to capital contribution
C. As to duration
1. Partnership with a fixed term art 1785
2. Partnership for a particular undertaking
3. Partnership at will Ortega vs. CA, 245 SCRA 529

IV.

KINDS OF PARTNERS
A. Definitions
1. General and limited partners art 1843; 1844; 1816 based on
liability
2. Capitalist and industrial partners art 1767; 1789 - - based on
contribution
3. Ostensible, nominal, and dormant partners art 1834 (2); - partner
by estoppel based on degree of connection to partnership
4. Original and incoming partners based on time of joining
partnership
5. Managing partner art 1800 based on duties; art 1818, par. 3
6. Liquidating partner art 1836