PARTNERSHIP (Arts.

1767-1783)
ARTICLE 1767. 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. (1665a)
PARTNERSHIP
--DEFINITION: a contract whereby 2 or more persons bind themselves to contribute money, property, or industry to a common
fund,
with the intention of dividing the profits among themselves (1767)
: a contract which 2 or more persons form for the exercise of a profession (1767)
(NOTE: While strictly speaking the exercise of a profession is not a business undertaking nor an enterprise for profit the
law considers the joint pursuit thereof, for mutual help, as a partnership.)

--CONCEPT
(1) a contract
(2) an juridical entity: w/ personality separate and distinct from the partners (1768)
--a person having its own assets & liabilities and for the purpose of w/c it was created
(3) an association
(4) a legal/fiduciary relation based upon express/implied agreement in carrying on lawful business as Ps for joint profit
(5) the status arising out of a contract entered into
(5) an organization for production of income to which each partner contributes capital or service
(6) a joint undertaking to share in the profit and loss
--GOVERNING LAW IN OUR JURISDICTION
--PRIMARY: NCC, Title IX, from Article 1767 to Article 1867
--SUPPLEMENT: other provisions of NCC insofar as they are applicable (particularly: contracts & agency)
*There is no more distinction between commercial and civil partnerships.
* The partnerships contemplated are those formed for private interest or purpose
--SOURCES OF OUR LAW ON PARTNERSHIP.
1. old Civil Code
2. two American statutes: Uniform Partnership Act & Uniform Limited Partnership Act. (1769, 1774, 1785, 1787,
1805 to 1807, 1809 to 1814, 1819 to 1826)
3. the opinions of civilians (1789, 1791)
4. Code of Commerce. (1789, 1808)
5. New Rules formulated by the Commission (1768, 1770, par. 2, 1772, 1790, 1815.)
--CHARACTERISTICS:
1. Consensual - mere consent, upon the express or implied agreement of two or more persons
--although such consent must be manifested in certain cases by the proper formalities
2. Principal - does not depend for its existence or validity upon some other contracts
3. Bilateral/Multilateral - entered into by 2 or more persons and arising rights & obli are always reciprocal
4. Nominate - it has a special name or designation in our law (1767)
5. Preparatory - entered into as a means to an end
--other contracts essential in the carrying out of its purposes can be entered into
6. Onerous - each of the parties aspires to procure for himself a benefit through the giving of something (1767)
7. Commutative - the undertaking of each of the partners is considered as the equivalent of that of the others
* A partnership contract, in its essence, is a contract of agency. (1818)
--ESSENTIAL REQUISITES:
1. Valid Contract
--There must be affectio societatis--the desire to formulate an ACTIVE union w/ people among whom there
exist mutual confidence and trust (delectus personarum). (Fernandez v. De la Rosa)
--A new personality must arise, distinct from the separate personality of each of the members. (1768).
2. Legal Capacity of Parties to enter into a contract
3. Mutual Contribution of Money, Property or Industry to a Common Fund (1767)
--The industry contributed may be intellectual or physical.
-- A limited partner cannot contribute mere industry. (1845)
4. Lawful Object or Purpose (1770)
5. Established for the Common Benefit/Interest: obtain profits & divide it among the partners (1767, 1770)
--There must be an intention of dividing the profit among the partners (1767) since the firm is for the
common benefit or interest of the partners. (1770).
*Where two people jointly borrowed from their father a sum of money which, together with their own personal funds, was used by them
in buying real properties for lease to third parties, such investment consisting of a series of transactions and the management
thereof being under one person for more than 10 years, the legal entity created by them is a partnership.(Evangelista VS CIR)
*The object must be for profit and not merely for common enjoyment; otherwise, only a co-ownership has been formed. However,
pecuniary profit need not be the only aim; it is enough that it is the principal purpose. Thus, other ends like social, moral, or
spiritual objectives may also properly exist.
* It is also required that the articles of partnership must not be kept secret among the members; otherwise, the association shall have
no legal personality and shall be governed by the provisions of the Civil Code relating to co-ownership. (1775)
1. EXISTENCE OF A VALID CONTRACT.
--Partnership relation fundamentally contractual being a voluntary relation created by agreement of the parties.
Actually, the partnership relation is not the contract itself, but the result of the contract.
--Articles of Partnership - written document embodying the terms of the assoc & stating the name, nature or purpose & location of

PARTNERSHIP (Arts. 1767-1783)

the firm, & defining, among others, the powers, rights, duties, & liabilities of partners among themselves, their contributions,
the manner by which the profits and losses are to be shared, and the procedure for dissolving the partnership.
--Power to dissolve partnership - Neither would presence of a period for its specific duration or a statement of a particular purpose
for its creation prevent the dissolution of any partnership by an act/will of a partner. (1830[2])
-Delectus Personarum - choice of the person/s (ONLY re GENERAL PARTNER)
--the law gives such wide authority to one partner, to bind another by contract or otherwise.
2. LEGAL CAPACITY OF THE PARTIES TO ENTER INTO THE CONTRACT.
GR: ANY PERSON may be a partner who is capable of entering into contractual relations.
EXCEPT:
1. Unemancipated minors UNLESS guardian/parent consents
2. Insane or demented persons
3. Deaf-mutes who do not know how to write;
4. Persons who are suffering from civil interdiction; and
5. Incompetents who are under guardianship. (1327, 1329; 34 RPC; Rules 93-94, RoC)
6. Persons who are prohibited from giving each other any donation or advantage cannot enter into a UP (1782)
7. Corporations UNLESS authorized by statute or by its charter based on public policy
8. Married woman as to contributing conjugal funds/prop
* A partnership being a juridical person by itself can, it is believed, form another partnership, either with private individuals or with
other partnerships, there being no prohibition on the matter.
3. CONTRIBUTION OF MONEY, PROPERTY, OR INDUSTRY TO A COMMON FUND.
-- Existence of proprietary interest - contribute capital which may be money or property &/or services, to the common business.
a) Money. currency which is legal tender in the Philippines. Checks, drafts, promissory notes payable to order, and other
mercantile documents are not money but only representatives of money. Consequently, there is no contribution of money until
they have been cashed. (Art. 1249.)
b) Property. may be real or personal, corporeal or incorporeal
c)
Industry. the active cooperation, the work of the party associated, which may be either personal manual efforts or intellectual,
and for which he receives a share in the profits (not merely salary) of the business.
--Proof of contribution. necessary that there be contribution of money, property, or industry to a common fund with the
intention of dividing the income or profits obtained therefrom.
4. LEGALITY OF THE OBJECT. (1770)

ART. 1770. 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. (1666a)
LAWFUL OBJECT OR PURPOSE: Otherwise, the partnership contract is VOID AB INITIO. (1409)

--w/in the commerce of man, possible, and not contrary to law, morals, good customs, public order or public policy (1347,
1348)
* If a partnership has several purposes, one of which is unlawful, the partnership can still validly exist so long as the illegal purpose
can be separated from the legal purposes.This limitation arises not only from the express provisions of the law, but from the
general principles of morality & justice. (1306) The illegality of object will not be presumed; it must appear to be of essence of
relationship.
Query: Is a Judicial Decree Needed to Dissolve an Unlawful Partnership?
No, for the contract is void from the very beginning, and therefore never existed from the viewpoint of the law. (1409)
However, it may sometimes be advisable that a judicial decree of dissolution be secured for the convenience and peace of
mind of the parties. Third persons who deal with the partnership without being aware of its illegal purpose or character are
protected unless such knowledge can be presumed as where the transaction is plainly unlawful.
Instances When a Partnership Is Unlawful
(a) A Pship formed to furnish apartment houses which would be used for prostitution. (Chateau v. Singla)
(b) A Pship formed to create illegal monopolies or combinations in restraint of trade. (186 RPC)
(c) A Pship for gambling purposes. (Arbes v. Polistico)
(d) A Pship formed for purpose of acquiring parcels of land in excess of max allowed by Friar Lands Act. (Torres v.
Puzon)
Consequences of Unlawful Partnership
(a) If guilty of a crime, articles which are not subject of lawful commerce shall be destroyed AND instruments or tools
and proceeds of the crime shall also be forfeited in favor of the government (45 RPC)
(b) The partners forfeit proceeds/profits, but NOT contributions, provided no #1. If contributions already been made,
they can be RETURNED; if the contributions have not yet been made, the partners cannot be made to make the
contribution.
(c) An unlawful partnership has no legal personality.
(d) The contract is void ab initio and the partnership never existed in the eyes of the law (Art. 1409[1].);
* A partnership is dissolved by operation of law upon the happening of an event which makes it unlawful for the business of the
partnership to be carried on, or for the members to carry it on in partnership. (Art. 1830[3].)
Effect of partial illegality of partnership business.
1. an account of that which is legal may be had.
2. Where, w/out knowledge/participation of partners, the firms profits in a lawful business have been in-creased by wrongful
acts, the innocent partners are not precluded as against the guilty partners from recovering the share of profits

PARTNERSHIP (Arts. 1767-1783)

Effect of subsequent illegality of partnership business.
-- will not nullify the contract
-- an accounting may be had as to the business transacted prior to such time
Community of interest between the partners for business purposes.
The salient features of an ordinary partnership are a community of interest in profits and losses, a community of interest in the
capital employed, and a community of power in administration.
(1) Community of interest partners must be co-owners of business is the basis of partnership relation. However, altho every Pship
appears to be founded on community of interest, every community of interest does not necessarily constitute Pship.
* The partners may, however, by agreement, entrust the mgt of the business to 1 or some of them. (1801-1803)
* Such an arrangement is itself an exercise of the right to participate in the mgt or control of the partnership. (1810[3].)
* In a limited partnership, the limited partners do not participate in the control or manage-ment of the business. (1848)
(2) Property used in the business may belong to one or more partners, so that there is no joint property, other than joint earnings. To state
that partners are co-owners of a business is to state that they have the power of ultimate control. But partners may agree upon
concentration of management, leaving some of their members entirely inactive or dormant.
(3) Only one of these features, profit-sharing, seems to be absolutely essential. No doubt, in every partnership, profits are to be divided
among the partners. But the mere sharing of profits of itself does not of necessity constitute a partnership or the members partners
inter se. (1769[4].)
5. PURPOSE TO OBTAIN PROFITS.
-- The very reason for existence of partnership: to carry on a business. Need only be the principal, not exclusive aim.
-- SHARING OF PROFITS: A partnership is essentially a business enterprise established for profit.
--Not necessarily in equal shares, only joint interest in the profits
If all the other elements create a partnership, a stipulation which excludes one or more partners from any participation
in the profits (or losses) is void. (1799.)
-- Not conclusive evidence of partnership but is merely presumptive
There are numerous instances of parties who have a common interest in the profits & losses of an enterprise but are
not
partners. (1769) If division of profits is merely used as a guide to determine compensation due = NOT a
PARTNER
--SHARING OF LOSSES.
--Necessary corollary of sharing in profits: The object of partnership is primarily the sharing of profits, while distribution of
loss
is but a consequence of it. The right to share in profits carries w/ it the duty to contribute to the losses, if any. (1797)
-- Agreement not necessary, for the obli is implied from the partnership relation but if only the share of each partner in profits
has been agreed upon, the share of each in the losses shall be in the same proportion. (1797, par. 1.)
* Generally, a stipulation which excludes one or more partners from any share in the profits or losses is void. (1799.)
* Only in the difference representing the net profits does the industrial partner share. But if, on the contrary, the losses exceeded
the income, the industrial partner does not share in the losses. (Ferdinand Santos v. Sps. Reyes)
General professional partnership. (1767, par 2)
--PROFESSION: a group of men pursuing a learned art as a common calling in the spirit of public service no less a public
service because it may incidentally be a means of livelihood
* The practice of a profession is not a business or an enterprise for profit. However, the law allows the joint pursuit by two/more persons
as partners. (1783) In such case, it is the individual partners, and not the partnership, who engage in the practice of the
profession and are responsible for their own acts as such. The law does not allow individuals to practice a profession as a
corporate entity.
Partnership for the practice of law.
--Partnerships between lawyers and members of other profession or non-professional persons should not be formed or permitted
where any part of the partnerships employment consists of the practice of law. (Canons of Professional Ethics.)
--Distinguished from business. The practice of law is intimately and peculiarly related to the administration of justice and should
not be considered like an ordinary money-making trade.
The primary characteristics which distinguish the legal profession from business are the following:
(1) A duty of public service: emolument is a by-product & in which 1 may attain highest eminence w/out making much money
(2) A relation as an officer of court to the administration of justice involving thorough sincerity, integrity, and reliability
(3) A relation to clients in the highest fiduciary degree
(4) A relation to colleagues at the bar characterized by candor, fairness, and unwillingness to resort to current business methods
of advertising and encroachment on their practice, or dealing directly with their clients.

ART. 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)
PARTNERSHIP, A JURIDICAL PERSON.
--sometimes referred to as a firm or a company, connotes an entity separate from its aggregate individual partners
-- As an independent juridical person, a partnership may enter into contracts, acquire and possess property of all kinds in its name, as
well as incur obligations and bring civil or criminal actions in conformity with the laws and regulations of its organizations. (46)
-- EFFECTS/CONSEQUENCES:
1. Its juridical personality is SEPARATE and DISTINCT from that of each of the partners.
2. The partnership can, in general: (46)
a) acquire and possess property of all kinds
b) incur obligations
c)
bring civil or criminal actions
d) can be adjudged INSOLVENT even if the individual members be each financially solvent.
3. Unless he is personally sued, a partner has no right to make a separate appearance in court, if the partnership being sued is
already represented.

PARTNERSHIP (Arts. 1767-1783)

EFFECT OF FAILURE TO COMPLY WITH STATUTORY REQUIREMENTS.
1. Under 1772: with reference to the execution of a public instrument and registration of the same w/ SEC in cases when the
partnership capital exceeds P3,000.00, such partnership acquires juridical personality. (1784)
--The law recognizes that in PH, most partnerships are created w/ very small capital to engage in small business & it would be
impractical to require that they appear in a public instrument & be registered as provided in 1772.
* REGISTRATION W/ SEC is not a prerequisite for the acquisition of juridical personality by the Pship, but merely as a
condition for the issuance of licenses to engage in business or trade.
2. Under 1773 & 1775: in the case contemplated in 1773, the partnership shall not acquire any juridical personality because the
contract itself is void. This is also true re secret associations or societies which do not acquire juridical personality under 1775.
TO ORGANIZE A PARTNERSHIP NOT AN ABSOLUTE RIGHT.
--that could claim a juridical personality of its own and transact business as such, is but a privilege which may be enjoyed only
under such terms as the State may deem necessary to impose.
--LIMITATIONS ON ALIEN PARTNERSHIPS
(a) If at least 60% of the capital of a partnership is not owned by Filipinos, the firm cannot acquire by purchase or
otherwise agricultural Philippine lands. (Sec. 5, Art. XIII, 1935 Const.) If land is neither timberland nor mineral land, it
is for necessity agricultural and would include residential, commercial, or industrial lands.
(b) Foreign partnerships may lease lands provided the period does not exceed 99 years.
(c) Foreign partnerships may be the mortgagees of land, the mortgage to last for 5 years, renewable for another years.
However, they cannot purchase the same at the foreclosure sale. (RA 133).
--Rules in Case of Associations Not Lawfully Organized as Partnerships
(a) Though it apparently carries on the business as a Psship, it possesses no legal personality. Therefore, it cannot sue
as such. However, the partners, in their individual capacity, can.
(b) One who enters into contract with a partnership as such cannot, when sued later on for recovery of the debt, allege
the lack of legal personality on the part of the firm, even if indeed it had no personality. The reason is that the
borrower is in estoppel.

ART. 1769. In determining whether a partnership exists, these rules shall apply:
1. Except as provided by Article 1825, persons who are not partners as to each other are not partners as to 3Ps;
2. Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or copossessors do or do not share any profits made by the use of the property;
3. 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;
4. 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, but no such inference shall be drawn if such profits were received in payment:
a) As a debt by installments or otherwise;
b) As wages of an employee or rent to a landlord;
c) As an annuity to a widow or representative of a deceased partner;
d) As interest on a loan, though the amount of payment vary with the profits of the business;
e) As the consideration for the sale of a good-will of a business or other property by installments or otherwise. (n)
Purpose : To indicate some tests to determine if what may seem to be a partnership really is one, or it is not.
Requisites for Existence of Partnership: all of its essential characteristics must be proved; in particular it must be proved that:
(a) there was an intention to create a partnership
(b) there was a common fund obtained from contributions
(c) there was a joint interest in the profits. (Fernandez v. De la Rosa)
THEREFORE:
1.
mere co-ownership or co-possession (even with profit-sharing)
2.
mere sharing of GROSS returns (even with joint own-ership of the properties involved) do not establish a Pship.
Sharing of Net Profits : prima facie evidence that one is a partner except in the five instances enumerated under Art. 1769 (No. 4).
Proof Needed to Establish the Existence of a Partnership
Rules to determine existence of partnership: WON an association is one of partnership.
(1) Where terms of contract not clear: In case of doubt, Article 1769 shall apply. This seeks to exclude from the category of Pship
certain features enumerated therein which, by themselves, are not indicative of the existence of a partnership.
(2) Where existence disputed: by an interested party. The issue as to whether a partnership exists is a factual matter to be
decided
on the basis of all circumstances.
1. Persons not partners as to each other.
Persons who are partners as between themselves are partners as to third persons. Generally, the converse is true, to wit: if they
are not partners as between themselves, they cannot be partners as to third persons.
(1) Intention to create partnership: Where the parties expressly declare they are not partners, this, as a rule, settles the question as
between themselves. EXCEPTION: Partnership by estoppel.
2. Co-ownership or co-possession. - when the ownership (or possession) of an undivided thing/right belongs to diff. persons.
(484.)
(A) Clear intent to derive profits from operation of business: Two or more persons may become co-owners without a contract but
they cannot be partners in the absence of contract.
(B) Existence of fiduciary relationship. If the parties are partners in the business undertaking, there is a well-defined fiduciary
relationship between them as partners. On the other hand, if the parties are merely co-owners, there is no fiduciary

PARTNERSHIP (Arts. 1767-1783)

relationship between them. If the parties are partners, the remedy for a dispute or difference between them would be an action
for dissolution, termination, and accounting. Where the relationship is that of co-owner, the remedy would be an action for nonperformance of a contract.
3. Sharing of gross returns.
-- Not even presumptive evidence of partnership since in a partnership, the partners share net profits after satisfying all of the
partnerships liabilities. (1812, 1839)
-- RATIONALE: when a business is carried on in behalf of a given person as partner, he is conceived as being interested in its
failures as well as its successes; it is the chance of gain or loss which characterizes a business, WON in the form of a partnership
-- Where there is evidence of mutual management & control, a partnership may result, even tho it calls for portion of gross
returns.
4. Receipt of share in the profits.
-- Strong presumptive evidence of partnership but the mere fact of a right under the contract to participate in both profits & losses
of
a business does not of itself have the effect of establishing a partnership between those engaged therein. Just a prima facie
evidence of an intention to form a partnership but not a conclusive evidence.
-- When no such inference will be drawn - 1769 abcde
--The basic test of partnership, whether inter se or as to third persons, is whether the business is carried on in behalf of the person
sought to be held liable
--Sharing of profits as owner: It is not merely the sharing of profits, but the sharing of them as co-owner of the business or
undertaking, that makes one a partner. To be a partner, one must have an interest with another in the profits of a business as profits.
-- Burden of proof and presumption on the party denying its existence.
-- Tests and incidents of partnership.
O 1. The partners share in profits & losses. (1767, 1797, 1798.) Community of interest in profits.
O 2. They have equal rights in the management and conduct of the partnership business (1803.)
O 3. Every partner is an agent of the Pship, & entitled to bind the other partners by his acts, for the purpose of its business.
(1818)
L 4. All partners are personally liable for the debts of Pship w/ their separate property (1816, 1822-1824) except that limited
partners are not bound beyond the amount of their investment (1843)
O 5. A fiduciary relation exists between the partners (1807)
O 6. On dissolution, the partnership is not terminated, but continues until the winding up of partnership is completed. (Art.
1828.)

ART. 1771. 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. (1667a)
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.
FORM OF PARTNERSHIP CONTRACT.
--GR: NO special form is required for the validity or existence of the contract of partnership.(1356)
The contract may be made orally or in writing regardless of the value of the contributions.
--EXCEPTIONS:
1. Where immovable property or real rights are contributed where a public instrument shall be necessary (1771) for the
validity of a contract of partnership. To affect third persons, the transfer of real property to the partnership must be duly
registered in the Registry of Property of the province or city where the property contributed is located.
2. When partnership agreement covered by Statute of Frauds An agreement to enter in a partnership at a future time, which
by its terms is not to be performed within a year from the making thereof is covered by the Statute of Frauds. Such
agreement is unenforceable unless the same be in writing or at least evidenced by some note or memorandum thereof
subscribed by the parties. (1403[2a].)

FORMALITIES NEEDED FOR THE CREATION OF A PARTNERSHIP

Personal property

-----

less than P3,000 (total)

P3,000 or more

may be oral
public instrument
registered in SEC
* If not complied w/, Pship is still valid & possesses a distinct personality. (1772,1768) Reqment is merely for admin & licensing purposes.
Real property
--- Regardless of value contri public instrument WITH an attached inventory
registered in the Registry of Property of the province where RP is found
* If not complied w/, Pship is VOID and has NO juridical personality even as between the parties. (1773)
* After all, there is an alienation here of a real right on real property.
Limited Pship
registered AS LTD PSHIP in the Office of SEC
* If not complied w/, not valid as LTD PSHIP BUT may still be considered general Pship possessing juridical personality). (1843, 1844)
* If registration is needed or desired, any of the partners of a valid partnership can compel the others to execute the needed public instrument, and
to subsequently cause its registration. (1357)

Partnership implied from conduct.

-- Binding effect: same as express // Conflict between intention and terms of contract = INTENTION WINS!
-- Ascertainment of intention of parties: as disclosed by the entire transaction, and as gathered from the facts and from the
language employed by the parties as well as their conduct
* There is a marked distinction bet a Pship actually consummated & an agreement to enter into a Pship at a future time. If an
agreement remains executory, Pship is inchoate, not having been called into being by the concerted action necessary under the

PARTNERSHIP (Arts. 1767-1783)

partnership agreement. (Limuco v. Calinao)
When Partnership Considered Registered: from the date Pship papers are presented to and left for record in SEC
Since the recording of articles of Pship is not for the purpose of giving the Pship juridical personality (1784), the only objective of
the law is to make the recorded instrument open to all and to give notice to interested parties.

ART. 1773. 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. (1668a)
PARTNERSHIP WITH CONTRIBUTION OF IMMOVABLE PROPERTY
--Requirements Where Immovable Property is Contrib-uted
a) There must be a public instrument regarding the partnership. (1773).
b) Inventory of the realty must be made, signed by the parties, and attached to the public instrument. (1773)
--Applicability of the Article
a) regardless of the value of the real property.
b) even if only real rights over real properties are contributed.
c)
if, aside from real prop, cash or personal prop is contributed. (here, inventory need not include the personalty)
--Registration in the Register of Property
--Transfer of the land to the partnership must be duly recorded to make it effective insofar as 3P are concerned.
--As to contracting parties. The absence of either formality renders the contract void.
* Although Article 1771 does not expressly state that without the public instrument the contract is void, Article 1773 is very clear that the
contract is void if the formalities specifically provided therein are not observed, implying that compliance therewith is absolute and
indispensable for validity.
* As to third persons. Article 1773 is intended primarily to protect third persons. With regard to them, a de facto partnership or
partnership by estoppel may exist. (1825) There is nothing to prevent the court from considering the partnership agreement an
ordinary contract from which the parties rights and obligations to each other may be inferred and enforced. (Torres vs. CA)
When inventory is not required.
1. in case of immovable property w/c may be possessed or owned by partnership but not contributed by any partner
2. If personal property, aside from real property, is contributed, the inventory need not include the personal prop.
Importance of making inventory of real property in a partnership: Article 1773 complements Article 1771.
--An inventory is very important in a partnership to show how much is due from each partner to complete his share in the common fund
and how much is due to each of them in case of liquidation. (Tablason vs. Bollozas)
--The execution of a public instrument of partnership would be useless if there is no inventory of immovable property contributed
because without its description and designation, the instrument cannot be subject to inscription in the Registry of Property, and the
contribution cannot prejudice third persons. This will result in fraud to those who contract with the partnership in the belief of the
efficacy of the guaranty in which the immovables may consist. Thus, the contract is declared void by law when no such inventory
is made.

ART. 1774. 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. (n)
ACQUISITION OR CONVEYANCE OF PROPERTY BY PARTNERSHIP
--APPLICATION: Though the Article speaks only of immovable
--apply also to personalty because the partnership is a juridical entity, capable of owning & possessing property. (1768)
*The legal effects of conveyance of property standing in the name of the partnership executed by a partner in the partnership name or
in his own name are governed by Article 1819, paragraphs one and two.
*The right of a partnership to deal in real as well as personal property is subject to limitations and restrictions prescribed by the
Constitution (Art. XIV, Secs. 3, 5, 8, 9, 11) and special laws. A partnership is an association as used in the Constitution.
ALIEN PARTNERS
-- If the partnership has aliens, it cannot own lands, whether public or private, or whether agricultural or commercial,
EXCEPT: --thru hereditary succession (by the partners who in turn convey the same to the partnership) OR
--when 60% of the capital is owned by Filipinos. (Art. XII, Sec. 7, 1987 Constitution).
* The same rule applies to the development, exploitation, or utilization of public agricultural, timber or mineral lands.
Limitations on Acquisition: A partnership, even if entirely of Filipino capital may NOT:
(a) acquire, lease, or hold public agricultural lands in excess of 1,024 hectares.
(b) lease public lands adapted to grazing in excess of 2,000 hectares.

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. (1669)
IF ARTICLES ARE KEPT SECRET:
(a) The association here is certainly not a partnership and therefore not a legal person, because anyone of the members may
contract in his own name with third persons and not in the name of the firm.
(b) Although not a juridical entity, it may be sued by third persons under the common name it uses; otherwise, said innocent
third parties may be prejudiced. (Rule 3, Sec. 15, RoC).
(c) However, it cannot sue as such, because it has no legal personality and, therefore, cannot ordinarily be a party to a civil
action. (Rule 3, Sec. 1, RoC). Moreover, the fact that it has no legal personality as a partnership cannot be invoked by the
partners for the purpose of evading compliance with obligations contracted by them, because they who caused the nullity of
a contract are prohibited from availing of its benefits.
(d) Therefore, insofar as innocent third parties are concerned, the partners can be considered as members of a
partnership; but as between themselves, or insofar as third persons are prejudiced, only the rules on co-ownership must
apply. (1775) The same rule applies in the case of a partnership by estoppel. (1825)

PARTNERSHIP (Arts. 1767-1783)

EFFECT OF CERTAIN TRANSACTIONS

Thus, contracts entered into by a partner in his own name may be sued upon still by him in his individual capacity,
notwithstanding the absence of a partnership.

It has also been held that when two or more individuals having a common interest in a business bring a court action, it should be
presumed that they prosecute the same in their individual capacity as co-owners, and not in behalf of a partnership which does
not exist in legal contemplation. (Smith v. Lopez)

Secret partnerships without juridical personality.

Importance of giving publicity to articles of partnership: protection of the members & 3Ps from fraud and deceit to which
otherwise they would be easy victims.

A member who transacts business for the secret partnership in his own name becomes personally bound to 3Ps unaware of the
existence of such association, in the same way and for the same reason that A who acts in his own name when dealing w/ 3Ps is
directly bound in favor of such persons who may only sue or be sued by A and not his P. (1883)

But a person may be held liable as a partner or partnership liability may result in favor of 3Ps by reason of estoppel. (1825)

As to the extent
of its subject
matter

CLASSIFICATIONS OF PARTNERSHIP
Universal Partnership (1777) --refers to all the present property or to all profits

Particular Partnership
(1783)
As To Liability of
Partners
*A partnership where all
partners are limited
partners cannot exist
as a limited partnership;
it will even be refused
registration. If at all it
continues, it will be a
general partnership,
and all the partners will
be general partners.

As To Duration

General Partnership (1776)

Limited Partnership (1776)

* The terms general partner
and limited partner have
relevance only in a limited
partnership

Partnership For a Fixed

Term (1785)
Partnership For a Particular
Undertaking (1785)
Partnership At Will (1785)

As To Representation
to Others

Ordinary Partnership
Partnership By
Estoppel/Ostensible (1825)
* If 2 persons not partners represent
themselves as partners to strangers,
a partnership by estoppel results.
* Similarly when 2 persons, who are
partners, in connivance with a friend
(who is not a partner), inform a
stranger that said friend is their
partner, a partnership by estoppel
may also result to the end that the
stranger should not be prejudiced.
(1769 [1] & 1825)

two kinds of universal partnership

--UP Of All Present Prop (1778-79)
--UP Of Profits (1780) - the individual properties here continue to be owned by
the partners, but the usufruct thereof passes to the firm
the object are determinate things, their use or fruits; a specific undertaking, or
the exercise of a profession or occupation
--consisting of general partners who are liable pro rata and subsidiarily (1816) &
sometimes solidarily (1822-1824) w/ their separate prop for partnership debts
--here all the partners are general partners
--one where all the partners are general partners (that is, they are liable even
with respect to their individual properties, after the assets of the partnership
have been exhausted).
--formed by two 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. (1843)
--where at least one partner is a general partner, and the rest are limited
partners. (NOTE: A general partner is liable beyond his contribution; a limited
partner is liable only to the extent of his contribution.)
--one where at least one partner is a general partner and the others are limited
partners. (A limited partner is one whose liability is limited only up to the extent
of his contribution.)
--term for which the partnership is to exist is fixed or agreed upon or one formed
for a particular undertaking, and upon the expiration of the term or completion of
the particular enterprise, the partnership is dissolved, unless continued by the
partners.
--for a specific period or till the purpose is accomplished
--no time is specified and is not formed for a particular undertaking or venture
and which may be terminated at anytime by mutual agreement of the partners,
or by the will of any one partner alone; or one for a fixed term or particular
undertaking which is continued by the partners after the termination of such
term or particular undertaking without express agreement (1785)
--no period, express or implied, is given and so its duration depends on the will
of the partners
--if the period has expired, but the partnership continued, without liquidation, by
the partners who habitually acted as such during the term. (1785)
--one which actually exists among the partners and also as to third persons
--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. (Art. 1825.)
EXAMPLE:
Suppose A, B, and C are not really partners, but A told X that he (A), B, and C
are partners. X, believing the representation made by A and consented to by B,
extended credit to A.
As against A and B, A, B, and C constitute a partnership by estoppel. But as
against C, there is no partnership and X cannot hold him liable as a partner.
When the debt matures, X is entitled to collect only from A and B who are liable
as partners although not actually partners.
When two or more persons attempt to create a partner-ship but fail to comply
with the legal formalities essential for juridical personality, the law considers
them as partners, and the association is a partnership insofar as it is favorable
to third persons, by reason of the equitable principle of estoppel. (MacDonald vs
Nat. City Bank of New York)

PARTNERSHIP (Arts. 1767-1783)

As to the legality
of its existence

As to publicity

De jure partnership

--one which has complied with all the legal requirements for its establishment
(1772, par. 2; 1773)

De facto partnership

--one which has failed to comply with all the legal requirements for its
establishment
EXAMPLE:
If upon the death of the wife, the husband continues to manage the formerly
conjugal properties now owned by him and the common children, and said
children allow their father to so manage the property, without even causing their
rights to the property to be recorded in the Office of the Register of Deeds or in
the Assessors Office, a partnership de facto has been cre-ated. It is therefore to
be presumed that all the acts performed by the father, as managing partner,
were for the benefit of all the partners. (De Jesus vs Padilla)

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;
--one whose existence is avowed or made known to the public by the members
of the firm

Open/Notorious partnership
As to purpose

Commercial or trading
partnership
Professional or non-trading

--one formed for the transaction of business (1767)

--one which buys and sells; but buying and sell-ing need not be its sole purpose,
nor even its characteristic feature
--one formed for the exercise of a profession.

According to
manner of
creation

4)

1) orally constituted
2) constituted in a private instrument
3) constituted in a public instrument
registered in the Office of the SEC

KINDS OF PARTNERS
As To Liability

General/Real Partner (1816,1843)

Limited/Special Partners (1843)
General-limited Partner (1853)

As To Contribution

Capitalist Partner (1767)

Industrial Partner (1767, 1789)
Capitalist-Industrial Partner (1797)

Other Classification

Managing Partner (1800)

(AKA general or real partner)
Liquidating Partner (1836)

Nominal Partner (1825)

(partner by implication/
partner by estoppel / quasi-partner)
Continuing Partner (1840)
Surviving Partner (1842)

Subpartner (1804)
Ostensible Partner (1834, par 2)

Dormant Partner (1834, par 2)

(would be both silent & secret partner)
--AKA sleeping partner

Secret Partner

Silent Partner
(need not be a secret partner)
Original partner

Incoming partner (1826, 1828)

Retiring partner (1840, 1841)

--liability to 3P extends to his separate property

--may be either a capitalist or industrial partner
--liability to 3P is limited to his capital contribution

--contributes money or property to the common fund

--contributes only his industry or personal service

--manages the affairs or business of the partnership

--may be appointed in articles of partnership OR after consti
--takes charge of winding up of P-ship affairs upon dissolution
-- not really a partner, not being a party to a P-ship agreement, but is
liable as a partner for the protection of innocent 3P
--one who is represented as being in fact a partner, but who is not so as
between the partners themselves
--continues the business of a P-ship after it has been dissolved
remains after P-ship has been dissolved by death of any partner
--not being member of Pship, contracts w/ Pner w/ reference to Ps
share in Pship
--takes active part and known to the public as a partner in the business
WON he has an actual interest in the firm
--may be an actual partner or a nominal partner
--If he is not actually a partner, he is subject to liability by the doctrine of
estoppel
--does not take active part in the business and is not known or held out
as partner.
--may retire from the partnership w/o giving notice & cannot be held
liable for obligations of the firm subsequent to his withdrawal
--His only interest in joining the partnership would be the sharing of the
profits earned.
--takes active part in the business but is not known to be a partner by
outside parties nor held out as a partner by the other partners
although he participates in the profits and losses of the partnership
--an actual & active partner in the sense that he participates in the
management of the partnership affairs
--does not take any active part in the business although he may be
known to be a partner. (Ibid.) Thus, he need not be a secret partner
--If he withdraws from the partnership, he must give notice to those
persons who do business with the firm to escape liability in the
future
-- a member of the P-ship from the time of its organization
--a person lately, or about to be, taken into an existing partnership as a
member
--one withdrawn from the P-ship; a withdrawing partner

PARTNERSHIP (Arts. 1767-1783)

* All partners in any of these six classes are subject to liability for all partnership obligations. (1816, 1822-1824, 1826, 1835, 1844,
1841.)

ART. 1776. As to its object, a partnership is either universal or particular.

As regards the liability of the partners, a partnership may be general or limited. (1671a)
ART. 1777. A universal partnership may refer to all the present property or to all the profits. (1672)
ART. 1778. A partnership of all present property is that in which the partners contribute all the property which
actually belongs to them to a common fund, with the intention of dividing the same among themselves, as
well as all the profits they may acquire therewith. (1673)
ART. 1779. In a universal partnership of all present property, the property which belongs to each of the partners
at the time of the constitution of the partnership, becomes the common property of all the partners, as well
as all the profits which they may acquire therewith.
A stipulation for the common enjoyment of any other profits may also be made; but the property which the
partners may acquire subsequently by inheritance, legacy or donation cannot be included in such
stipulation, except the fruits thereof. (1674a)
ART. 1780. A universal partnership of profits comprises all that the partners may acquire by their industry or
work during the existence of the partnership.
Movable or immovable property which each of the partners may possess at the time of the celebration of
the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership.
KINDS OF UNIVERSAL PARTNERSHIPS
(a) Partnership of all present property
(b) Partnership of Profits
Transfer of Ownership From the Partners to the Universal Partnership (1779)
Future Property (by inheritance, legacy, donation) cannot be included in stipulation regarding the UP of all present prop
1.
as a rule, contracts regarding successional rights cannot be made.
2.
a partnership demands that the contributed things be determinate, known, and certain.
3.
a UP of all present properties really implies a donation & generally, future property cannot be donated. (751)

ART. 1781. Articles of universal partnership, entered into without specification of its nature, only constitute a
universal partnership of profits. (1676)
PRESUMPTION IN FAVOR OF UNIVERSAL PARTNERSHIP OF PROFITS.
APPLICATION: only when a universal partnership has been entered into.
: if nature of partnership is not specified, UP of present prop VS UP of profits = UP of profits
REASON: Less obligation is imposed in UP of profits because their real & personal properties are retained by them in
naked ownership (they preserve the ownership of their separate property.
* If however a universal partnership of all present properties is desired, REFORMATION is the proper remedy. (1359)

ART. 1782. Persons who are prohibited from giving each other any donation or advantage cannot enter into a UP.
--Persons Who Together Cannot Form a Universal Partnership
Examples of people prohibited:
(a) Husband and wife as a rule. (133)
(b) Those guilty of adultery or concubinage (739)
(c) Those guilty of the same criminal offense, if entered into in consideration of the same. (739)
--RATIONALE: A universal partnership is virtually a donation to each other of the partners properties (or at least, their
usufruct). Therefore, if persons are prohibited to donate to each other, they should not be allowed
to do indirectly what the law forbids directly.
--Effect of Violation
The partnership violating Art. 1782 is null and void, and its nullity may be raised anytime. No legal personality was ever
acquired. (1409[7].)
--A husband and his wife, however, may enter into a particular partnership or be members thereof. (CIR VS Suter)
Art. 739. The following donations shall be void:
(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;
(2) Those made between persons found guilty of the same criminal offense, in consideration thereof;
(3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office.
scope of SM or
object

UNIVERSAL PARTNERSHIP

PARTICULAR PARTNERSHIP (1783)

vague and indefinite, contemplating a general business

with some degree of continuity

limited and well-defined, being confined to an undertaking of a

single, temporary, or ad hoc nature

PARTNERSHIP (Arts. 1767-1783)

UNIVERSAL PARTNERSHIP OF ALL PRESENT PROP

UNIVERSAL PARTNERSHIP OF PROFITS

--one which comprises all that the partners may acquire by their
industry or work during the existence of the partnership and the
usufruct of im/movable property which each of the partners may
possess at the time of the celebration of the contract. (1778)

--one which comprises all that the partners may acquire by their
industry or work during the existence of the partnership and the
usufruct of im/movable property which each of the partners may
possess at the time of the celebration of the contract. (1780)

--OWNERSHIP of present prop & future profits belongs to partnership

--CONTRIBUTION:

--OWNERSHIP of present & future prop belongs to EACH partner

--CONTRIBUTION

1. All the properties actually belonging to the partners

2. Profits which they may acquire from the property contributed.
EXAMPLE:
A and B are partners in a partnership known as X & Co. They agreed
that they would contribute all their properties to a common fund for the
purpose of dividing the same between themselves, as well as the
profits to be derived therefrom. A contributed all his properties
consisting of two big parcels of agricultural land and a tractor. B
contributed also his properties consisting of P100,000.00 cash and farm
implements.
Future Property:
GR: future properties cannot be contributed. The very essence of the
contract of partnership that the properties contributed be included in the
partnership requires the contribution of things determinate.
X Property subsequently acquired by (1) inheritance, (2) legacy, or (3)
donation cannot be included by stipulation except the fruits thereof.
* Any stipulation including property so acquired is void.
X Profits from other sources (not from the properties contributed)

if there is a stipulation to include

Some Hypothetical Problems on ALL PRESENT PROPERTY

1. A

and B entered into a universal partnership of all present

property. No stipulation was made regarding other properties.
Subsequently, A received a parcel of land by inheritance from
his father; and another parcel of land from the San Beda
College as remuneration for As work as professor therein.
Are the two parcels of land and their fruits to be enjoyed by the
partnership? No, because there was no stipulation regard-ing future
properties or their fruits.

2. Same as (1) except that in the contract, it was stipulated that

all properties subsequently acquired would belong to the
partnership. Are the two parcels of land and their fruits to be
enjoyed by the partnership? The land acquired as salary as
well as its fruits will belong to the firm; but the land acquired
later by inheritance will NOT belong to the partnership since
this cannot be stipulated upon. (Art. 1780). The fruits of the
inherited land will go to the firm because said fruits may be
considered as properties subsequently acquired, and there is
no prohibition to stipulate on fruits, even if the fruits be those
of properties acquired later on by inheritance, legacy, or
donation.

1. the

profits/income & the use/usufruct of the prop of each

partner.
* Consequently, upon the dissolution of the partnership, such property
is returned to the partners who own it.
EXAMPLE:
The agreement of A and B is that they would retain the ownership
over their respective properties, only their usufruct being transferred to
partnership X & Co., and that they would divide equally the net profits
realized during the existence of the partnership.
Upon the dissolution of the partnership, the properties shall be
returned to the respective owners. The amount of P100,000
contributed by B shall be paid to him as a loan to the partnership.
X Profits acquired through chance
X Fruits of property subsequently acquired (par.2)
---may be included by express stipulation

Profits which the partners may acquire by their industry or work

during the existence of the partnership

Usufruct of their present properties (as a matter of right)

--Usufruct gives a right to enjoy the property of another w/ obligation
of preserving its form & substance.
* An express stipulation is necessary to exclude any of them.
Some Hypothetical Problems on Profits
1. In a universal partnership of profits, A contributed the use of his car.
At the end of the partnership, should the car be returned to him? Yes,
because the naked ownership had al-ways been with him, and upon
the end of the usufruct, full ownership reverts to him. Remember that
only its use had been previously contributed.
2. A and B entered into a universal partnership of profits.
Subsequently, A won 1st prize in the sweepstakes. Will the money
belong to the partnership? No, because it was not acquired by
industry or work. (1780, par. 1)

3. A

and B entered into a universal partnership of profits.

Subsequently A became a teacher at the Poveda Learn-ing
Centre. Will As salary belong to the partnership? Yes, even
though no stipulation was made on this point because after
all the salary was acquired by As industry or work during
the existence of the partnership. (Art. 1780, par. 1). Such
profit belongs therefore to the firm as a matter of RIGHT.
Of course, had there been a stipulation that such salary
would be excluded, the stipulation would be VALID.
4. A and B entered into a universal partnership of profits. Later, A
purchased a parcel of land. Will the fruits of said land belong to the
partnership? As a rule, NO, because the usufruct (use and fruits)
granted to the firm under Art. 1780, par. 2 refers only to that of the
property possessed by the partner at the time of the celebration of the
contract. It follows that fruits of after-acquired property do not belong to
the firm as a matter of right. However, it would be valid to stipulate that
the usufruct of after-acquired properties would belong to the Pship.

PARTNERSHIP (Arts. 1767-1783)

ILLUSTRATIVE CASE: Commissioner of Internal Revenue vs. Suter
In a particular partnership composed of three members, two of the partners got married and the third partner subsequently sold, for
a nominal amount, his share to them.
FACTS:
A, B, and C formed a limited partnership to engage, among other activities, in the importation, marketing and operation of automatic
phonographs, radios, television sets and amusement machines, their parts and accessories, with B and C as limited partners.
Subsequently, A and B got married and, thereafter, C sold his share to A and B. For a taxable year, A and B filed a separate income return
for the limited partnership and a consolidated return for them as spouses.
The Commissioner of Internal Revenue consolidated the income of the firm and the individual income of the partners resulting in the
determination of a deficiency income tax. A and B protested the assessment.
ISSUES:
(1) Whether or not the separate personality of the partnership should be disregarded for income tax purposes considering that A and B actually
formed a single taxable unit; and
(2) Whether or not the partnership was dissolved after the marriage of A and B and the subsequent sale to them by C of the latters participation
for the amount of P1.00.
HELD:
(1) Partners retained their separate interests. The view that by the marriage of A and B the company became a single proprietorship is
erroneous. Their capital contributions were separately owned and contributed by them before their marriage; and after they were joined in
wedlock, such contributions remained their respective separate property. (see Art. 148[1], Civil Code. 31 31Now, Art. 109, Family Code.) Thus,
the individual interest of A and B did not become common property of both after their marriage. The change in the membership of the firm
is no ground for withdrawing the partnership from the coverage of Section 24 of the National Internal Revenue Code requiring it to pay
income tax. A and B did not enter into matrimony and thereafter buy the interests of C with the premeditated scheme or design to use the
partnership as a business conduit to dodge the tax laws.
(2) Partnership, a particular one. The firm was not a universal partnership, but a particular one. It follows that the partnership was not one
that A and B were forbidden to enter under Article 1677. (now Art. 1782.) Nor could the subsequent marriage of the partners operate to
dissolve it, such marriage not being one of the causes provided for that purpose by law.

ART. 1783. A particular partnership has for its object determinate things, their use or fruits, or a specific undertaking,
or the exercise of a profession or vocation. (1678)
PARTICULAR PARTNERSHIP
--a partnership which has for its object determinate things, their use or fruits, or a specific undertaking, OR the exercise of a
profession or vocation.
--it is a partnership which is neither a universal partnership of present property nor a universal partnership of profits.
* A husband and his wife may enter into a particular partnership but NOT UP.
* Business of partnership need not be continuing in nature. (1767 & 1783)
An agreement to undertake a particular piece of work or a single transaction or a limited number of transactions and immediately divide
the resulting profits would seem to fall within the meaning of the term partnership as used in the law.
Doctrine: If two individuals form a particular partnership for a deal in realty, it does not necessarily follow that all deals are for the
benefit of the partnership. In the absence of agreement, each particular deal results in a particular partnership. If one of them, on
his own account, and using his own funds, should make transactions in the same business, it is his own undertaking. (Lyons v.
Rosenstock, 56 Phil. 632).
PARTICULAR PARTNERSHIP
JOINT VENTURE
JOINT ACCOUNTS
-- generally relates to a continuing
business of various transactions of a
certain kind
EXAMPLES:
1. those formed for the acquisition of
an immovable property for the
purpose of reselling it at a profit
or for common enjoyment of its
use & benefits derived therefrom
2. those established for purpose of
carrying out a specific enterprise
(construction of a building)
3. those formed for exercise/practice
of a profession/vocation
4. A firm engaged in, among other
activities,
importation,
marketing,
distribution
and
operation
of
automatic
phonographs, radios, TV sets &
amusement machine, their parts
& accessories
5. Real estate partnership: partner A
contributed a parcel of land and
partner B a building
6. Real estate Lessor partnership: A
contributed cash and B the use
and lease of his building

-- Limited to a SINGLE TRANSACTION, although the

business of pursuing to a successful termination may
continue for a number of years
-- partnership created for a limited purpose
-- there is a community of interest in the business and a
mutual right of control and an agreement to share
jointly in profits and losses resulting from the enterprise
-- a sort of informal partnership, with no firm name and
no legal personality
-- presupposes generally a parity of standing between
the joint co-ventures or partners, in which each party
has an equal proprietary interest in the capital or
property contributed, and where each party exercises
equal rights in the conduct of the business
--assoc of persons/companies jointly undertaking some
commercial enterprise; generally, all contribute assets
and share risks. It requires a community of interest in
the perform-ance of the subject matter, a right to direct
and govern the policy in connection therewith, and [a]
duty which may be altered by agreement to share both
in profits and losses (Kilosbayan vs. Guingona)
- altho a corp cannot enter into a Pship contract, it may,
however, engage in a joint venture with others through
a contract or agreement if the nature of the venture is
authorized by its charter (Tuazon vs. Bolanos)

the participating merchants can transact

business under their own name, and can be
individually liable