Partnership, Agency & Trust

Brief Historical Backround

1. Development of Partnership permit combinations of capital, or capital and experience, and to
secure economy by eliminating some of the overhead costs of individual enterprises, the
partnership plan of business association was developed.
2. Ancient origin of partnership as a business organization (Romans) capital, goods, talents, and
credit of two or more individuals might best be combined to carry on a trade business.\

Law of merchants fairs or staples were merchants gather seeking to sell their goods.
English law of partnership

American Uniform Acts uniformity of law on partnership

Governing law in our jurisdiction:

Previously governed by the Code of Commerce (Art. 116-238) and no-commercial or civil
partnership by the old Spanish Civil code.
New civil code expressly repealed the Code of commerce (Article 2270 [2])
What governs is Title IX (Article 1767-1867)
Partnerships contemplated are formed for private interest

Sources of our law on partnership

Uniform Partnership Act and Uniform Limited Partnership Act of the United States
Spanish Civil Code
Code of Commerce
New Civil Code What governs now

General Provision

Article 1767
Concept - Falls between two extremes (single proprietorship and corporation)
Partnership is a contract for lawful commerce or business and divide the profits and bear
losses
Partnership is an association carry on as co-owners of a business for profit
Partnership is a legal relation they unite property, labor or skill
Partnership is a status agree to share as common owners the profits of a business
Partnership is an organization each partner contributes ingredients to income (capital/service)
Partnership is an entity distinct and apart from the members composing it
Partnership is a joint undertaking share profit and loss

Civil law concept and American concept of partnership

Basis of concept civil code, contract; American, relation
Possession of separate personality civil, has own juridical personality; American, extension of
its members
 Aggregate Theory regarded as a conglomerate of individuals, an association of two or more
persons
Philippine Jurisdiction (For purposes of Taxes) except general professional partnerships,
treated as corporations

General Professional partnership group of men pursuing a learned art as a common calling in the spirit
of public service

Partnership for the practice of law

1. A mere association for non-business purpose not a natural or constitutional right but a
privilege or franchise.
a. Nom de Plume use of trade name
2. Distinguish from Business
a. A duty of public service, which emolument is a by-product
b. Relation as an officer of court, administration of justice
c. Relation in the highest fiduciary degree
d. Relation to colleagues, characterized by candor, fairness and unwillingness to resort to
current business, or dealing directly with their clients.

Characteristics Elements of partnership (CNBOCPP)

Consensual perfected by mere consent
Nominate special name or designation in our law
Bilateral entered by two or more persons and rights and obligations are reciprocal
Onerous each of the parties aspires to procure for himself through giving something
Commutative undertaking is equivalent of that of the other
Principal does not depend for its existence
Preparatory entered into as a means to an end

Essential Features of Partnership

1. There must be a valid contract
2. The parties must have legal capacity to enter into the contract
3. There must be mutual contribution of money property, or industry to a common fund
4. The object must be lawful
5. Primary purpose must be to obtain profits and to divide the same among themselves
a. Articles of Partnership must not be kept secret among members (No legal personality)

Existence of a valid contract

Form may be oral or written, express or implied (Subject to the Statutes of Frauds)
Articles of Partnership written document which embody the terms of the association of a
partnership. States the name, nature or purpose and location of the firm and defining, among
others, the powers, rights, duties and liabilities of the partners among themselves, their
contribution and manner by which profits and losses are shared and procedure of dissolution.
Requisites Consent; Object or Subject Matter; Cause