= Essential Elements of a Contract of Partnership a. Mutual contribution of money, property, or industry to a common fund. - money: legal tender in the Philippines (Philippine or Foreign currency) - property: real, personal, tangible, or intangible = Credit or Goodwill are considered as properties. (it may be a valid contribution to a contract of partnership) + Political or Personal Influence are not considered properties. - industry: physical or intellectual (no specific distinguishment; statutory construction) b. Object or purpose must be lawful. (Article 1770) - if the object is unlawful but the contributions made are lawful, it is a requirement that those contribution be returned to the partners. c. Community of benefit/interest. (Article 1770) - if one of the partners doesn't receive a share from the profits, the partnership would still be considered valid, provided it complied with the requirements/form under the law. ~- however, the stipulation that excludes one of the partners from receiving his share of profits would be considered void. = Partnership is a Juridical Person (Article 44 and 46) - partnership for private purpose (Article 44) - partnership has the right to acquire properties (Article 46) - partnership can dispose properties - it may also incur obligations, enter into a contract - it may bring civil and criminal actions, may also be charged with civil and criminal actions = Partnership has a Separate Personality (Article 1768, Article 44) - the properties owned by the partnership are not owned by either of the partners - the obligations of the partnership are not obligations of the partners= Cases that do not Establish a Partnership (Article 1769) + Co-Ownership does not of itself establish partnership. Example: A husband and wife owns a parcel of land that grows corn. Due to an accident, both were found death. The land will be inherited by their 3 children. Every month, the money they earn from selling the crops are being divided among the 3 children. Question: Is there a partnership formed? Answer: No. Even though there is a distribution of profit, a mere co-ownership of land does not establish a partnership. + Sharing of gross returns does not of itself establish a partnership. Example: A car owner decides to register his car to Grab to earn income. He enters into a contract with a driver to drive his car. They agreed upon a 70% - 30% share in the daily income. Question: Is there a partnership formed? Answer: No. Even though there is a distribution of profit, it does not establish a partnership even if there is community with respect to the property. = Form of Partnership (Article 1771 - 1773) - oral or in writing, partly oral or partly in writing. - 3,000 or more (public instrument) - registered to Securities and Exchange Commission. Question: If the contract of partnership did not comply with the last two requirements, is it considered void? Answer: No. It is still considered as valid. It will not affect the liabilities of the partnership and the members of the partnership. Example: A group of friends wanted to form a partnership. They contributed real and personal property. They created an inventory with respect to the immovable property they contributed, but with no inven-tory with respect to personal property. The immovable property were in public instrument, with inventory signed by the parties and attached to the public instrument. Question: Is the contract of partnership considered void? Answer: The contract of partnership is considered valid. There shpuld only be inventory of the immovable (real) property, not of personal (movable) property. © Universal Partnership of All Present Property - properties at the time of constitution. (automatic) - as well as the profits therewith. - other profits (income from profession, etc) are automatically not included. But, it may be included if there is a stipulation. - property acquired subsequently by inheritance, legacy, or donation cannot be included in stipulation, except the fruits (profits or income) thereof may be included by stipulation. - property acquired other than through inheritance, legacy, or donation as well as profits therefrom may be included by stipulation. © Universal Partnership of All Profits - all that the partners may acquire by their industry or work. - profits acquired through chance, not included to the partnership (although, this may be included through stipulation, if it is a universal partnership of all present property) - properties at the time of the celebration are not included, shall pertain to the partners, except the right of usufruct. (the partnership may use these properties of the partners at the time of constitution) - properties subsequently acquired shall pertain to the partners, except fruits therefrom if stipulated. Question: What if the husband and wife (both CPAs) created a contract of partnership as an exercise of profession, is it considered void?Answer: The contract created is valid. The partnership entered into is not a universal partnership, but a particular partnership.