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Sir: Avila. So we have defined what a partnership is. What is it again?

A: 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.
Sir: And most of all of those who were asked if they were qualified to be a partner, they said yes. How
about you, are you qualified to be a partner?
A: I can be a partner sir but depending on what kind of partnership. As of the moment I cannot be a
partner of a business because I do not have the money, property or industry. As to industry, I do not have
the skills necessary in a business.
Sir: You know, with your eyeglasses, Avila, somebody who intends to open up an optical clinic would
approach you and tell you, Mark, we were coming out with a commercial with the latest brand of
eyeglasses. You know, you look good with your eyeglasses. You could be a perfect model. Will you give
us a picture of you? Opening soon, Mark Optical Clinic! You dont have to contribute anything, just your
picture. When we start, you will be entitled every month, 5% of our monthly net profit. Now you could be
a partner.
Now, having that share in the profit, do you think you can now change your mind and say, okay, now I
can be a partner? Are you now a partner, Mark?
A: Now, I can be a partner sir because I am contributing industry to the partnership.
Sir: Not only that but the share of profits you are earning, how much is that?
A: 5% of the profit every month.
Sir: What did you contribute? Were you required to work?
A: No.
Sir: But your boss only required you to submit a picture.
A: But in the picture sir, I posed and that constitutes industry.
Sir: Do you think that is enough of a contribution to be considered a partner? What do you say,
Cebrecus?
A: I believe I concur with his answer sir because posing is a service and a service can be contributed in a
partnership sir.
Sir: So how many times does he pose? Does he pose everyday there? Only once! Why did you say that
he is a partner?
A: Because before he gave the picture sir, he had to pose.
Sir: Herrera.

A: For me sir, there is no categorical answer whether there is a partnership because what is holding here
is the intention of the parties to be bound. In a partnership, the intention of forming a business and the
distribution of profits among themselves is important. Here, for Jonah, maybe his contribution is just for
one time, and maybe the profits could be in the form of royalty or in any other term sir. Bottom line sir,
there is no partnership.
Sir: How about his share in the profits?
A: It could not leave us solely to him becoming a partner because perhaps it could be just a form of
royalty by the use of his picture.
Sir: What is the royalty for?
A: The royalty is for his contribution which is the picture.
Sir: So he really contributed. Then why is he not a partner?
A: Because his intention is not really to be bound by the partnership.
Sir: Colina. Is he a partner?
A: Mark cannot be a partner because it is an isolated transaction and that profit that he gained is only
incidental.
Sir: Felongco. Every month of profit, is that isolated?
A: I submit sir that what Miss Colina means is that the submitting of the picture is the isolated case.
However the giving of the profit per month is not isolated. But I would still submit that Jonah is not a
partner because first, there is no agreement to contribute money, property or industry to a common fund
with the aim of dividing the profits among themselves.
Sir: Why do you say that there was no agreement? Was he not offered? Didnt he contribute?
A: Yes sir, but the agreement was not a partnership because they did not agree it to be so. The
circumstances would point out that it was not a partnership because first, he just contributed his picture
and for that picture, he would be receiving a mere 5%. The fact that the partner used the picture is only
one of the aspects of a business which is advertisement.
Sir: Llorad, what do you say?
A: Jonah is not a partner sir because for you to be a partner you should have a proprietary interest by
contributing money, property or industry. A picture cannot necessarily be considered money or property.
Sir: A picture is not a property? If I ask you for a picture would you give me your picture? Youll say, No
because this is my property. Oracion. What is the implication if we say shares of profits?
A: If one receives profits sir, the implication is one is a partner. The purpose of partnership is to create a
common fund for profit sharing.
Sir: Mark. What is the implication if you receive 5%?
A: If you receive 5%, there is a presumption that there is partnership.

Sir: Exactly, there is a presumption of partnership. Do you still insist that you are not a partner? If this is a
true story, all the partners are now going to Europe for free and you tell them that you must be included
for the free travel because you are a partner. What is your basis now for being a partner?
A: My basis is first, my share in the profit. The law says that the profit shall be divided among themselves.
Sir: Cebrecus.
A: The receipt of profit is a prima facie evidence that there is partnership.
Sir:because the partners are going to Europe, free, all expenses paid, Mark is now asking for his free
ticket.

Q: What is the basis for considering yourself a partner?

A (Jonah): Sharing of profits (the 5%)
A (Aika): Receipt of shares of profits is prima facie evidence of partnership
Q: Partners are going abroad. Mark, who claims to be a partner, is asking for his ticket. As managing
partner, would you give him his ticket even if the rest of the partners disagree?
A (Aika): Yes. As long as the other partners dont have any evidence to the contrary, then I would give him
the ticket and consider him a partner.
Q: What possible reason would the others have to prove that he is not a partner?
A (Aika): He didnt contribute enough
A (Noel): A contract of partnership envisions a sharing of profits as well as loss. However, this
presumption can be outweighed by circumstances: Jonah doesnt share in the loss of the partnership,
even if he shares the profits. Based on that, he cannot be given a ticket, for he is not a partner.
Q: But even if the partners did not agree on the sharing of losses, and they actually suffered a loss, the
sharing of this loss will be based on the sharing of the profits.
A (Noel): Another objection is that he did not contribute industry. When we say industry, it should be an
active cooperation in the work or business. In this case, Jonah has not had an active participation in the
business, although he has contributed to one aspect, which is advertising the optical wares.
Q: What about royalties?
A (Madel): The compensation Jonah received did not mean a partners share in the profits, but to royalties
for the picture that he offered.
Q: What is the effect of receipt of royalties?
A (Madel): One need not be a partner to receive royalties. It just means that a partner recognizes his
contribution to the partnership and is repaying him through other forms, like royalties, but not necessarily
making him a partner.
Q: Whenever one has a share in the profits, he is presumed a partner. However, there are exceptions to
this.

A (Madel): The exceptions are when the share in the profits represents wage for an employee, payment
for rent, payment for a debt, and payment for the sale of goodwill of a business or other property.
Q: If it is payment for something else and not as compensation for industry or work or contribution, then
you are not a partner. If one does not contribute either money or industry or property, then he can not be a
partner. However, he could still earn money.
Contribute money, property or industry into a common fund for the purpose of dividing the profits among
themselves. If two natural persons agree on a partnership, how many persons do w now have?
A (Madel): 3 persons: 2 natural persons and one juridical person, the partnership.
Q: Do they have more or less similar rights?
A (Madel): They share more or less the same rights.
Q: How are these rights classified?
A (Madel): Personal rights and real rights, right to own properties, to sue and be sued, right to life, right to
vote (for natural persons).
Q: What are under the Bill of Rights?
A (Madel): Right against self-incrimination, right to counsel, right to bail, right to remain silent,
presumption of innocence, right against unlawful search and seizure.
A (Llorad): Due process, right to own property, right to privacy.
Q: All these rights, whether civil, political, or under the bill of rights, are enjoyed by both natural and
juridical persons. Are they not?
A (Llorad): Both have the right to own property, the right to sue and be sued, the right to enter into
contracts. But the right to bail is not available to juridical persons, since they are not subject to
imprisonment. They may be liable to pay though.
A (Oracion): Rights under the bill of rights include equal protection of the law and due process. No person
shall be deprived of life, liberty and property without due process of law, nor shall any person be denied
the equal protection of the laws.
Q: Would a juridical person enjoy these rights?
A (Oracion): Yes. Juridical persons enjoy both due process and equal protection of the laws.
Q: What about search and seizure?
A (Oracion): Yes. A corporation or partnership cannot easily be searched just by the filing of a criminal or
civil case against it.
Q: These rights are equally enjoyable by a juridical person. Although it is not stated in the constitution, a
juridical person is still considered a person entitled to all these rights. What about the right to vote and be
voted upon?
A (Oracion): Available only to natural persons.
Q: Juridical persons are entitled to rights under the Civil Code, under the Constitution, and the Bill of
Rights, unless it is limited only to natural persons. There is not enough jail to hold all juridical persons.

Although juridical persons may be subject to certain penal sanctions, fines and penalties, they are never
subject to imprisonment. But there are instances when the officers of a juridical person may be made
criminally liable. Juridical persons may be subjected to search and seizure, provided?
A (Oracion): Provided that the correct legal procedures are followed, such as a search warrant.
(Next meeting, we tackle reasons to prefer a corporation (or advantages) over a partnership and a sole
proprietorship, the types of partnerships, classifications of partnerships, and the rest of the assignment)