1. Can a Corporation be a partner in a partnership? Can 2 corporations form a partnership?

Yes, a corporation can be a partner in a partnership. Under the Revised Corporation Code of the
Philippines, a corporation is defined as an artificial being created by operation of law, having the right of
succession and the powers, attributes, and properties expressly authorized by law or incidental to its
existence. One of the reasons why a corporation can be a partner in a partnership is because a corporation
is seen as a juridical person that possesses the same essential abilities as individuals, including the ability
to enter into a partnership. Thus, when a corporation enters into a partnership, it would be given the same
liabilities and responsibilities just like an individual in a partnership. Furthermore, two corporation can
also form a partnership because under Article 1767 a partnership is not only for natural person but also to
juridical persons. Corporation is an artificial being as stated in its definition; therefore, a two corporation
can form a partnership because they are legal person and possesses the same essential abilities of an
individual.

2. Explain the concept of Delectus Personae and provide your own example.
Delectus Personae is simply defined as “choice of the person,” it refers to the rule that is inherent in
every partnership, wherein a partner has the right to exercise his choice or preference in choosing his
partner, moreover, no one can become a member of the partnership without the consent of all the partners.
In this manner, no person is compelled to become a partner of another person, it must be solely based on
the willingness of a person whether he/she wants to be a partner to a certain person because the right to
choose with whom a person wishes to associate himself is the very foundation and essence of partnership.
To elaborate more this concept, here is an example: Ms. Sallatic and Ms. Escocio are planning to form a
partnership in order to establish a Japanese Restaurant in Baguio City. Meanwhile, Mr. Tolentino a close
friend of Ms. Escocio is also looking for a partner in order to establish his Korean Restaurant in Pasay
City. Without the knowledge of Ms. Sallatic, her partner Ms. Escocio contacted Mr. Tolentino and invited
him to join their partnership. Ms. Escocio did not know that Ms. Sallatic and Mr. Tolentino had a sad past
relationship, but still Mr. Tolentino agreed to join in the partnership; with the condition of it is no longer a
Japanese Restaurant but a Japanese-Korean Restaurant. Mr. Tolentino then came to Baguio to finalize the
contract; however, when Ms. Sallatic was informed about this, she declined to be partnered with Mr.
Tolentino due to their past issue. In this scenario, Ms. Sallatic illustrated the concept of delectus personae,
she has the right to decline or admit a new member in their partnership. In this case she decline because of
some personal reason.

3. Kindly read Art 1769 of the Civil Code. Explain in your own words and make one example of the
rules in determining the existence of a partnership.
Article 1769 of the Civil Code contains the rules to be applied in determining whether a partnership
exists.
To start with, the first rule states that “except as provided by article 1825, persons who are not partners
as to each other are not partners as to third persons.” In this rule, it simply means that if the two person,
(let us say first person and second person) says in public that they are not partners then there is no
existence of partnership. When two people are not legally partners, then third parties cannot regard them
as partners. However, according to Article 1825 when one of that person tell it to a 3 rd person that they are
in partnership then that 3rd person enters into a contract with them, then that two person are in a
Partnership of Estoppel. Partnership of Estoppel is defined as “where a partnership not duly organized
has been recognized as such in its dealings with certain persons, it shall be considered as “partnership of
estoppel” and the persons dealing with it are stopped from denying its partnership existence.” This
simply means that if one of the person misrepresents himself that there is a partnership between them
making the third person enters into a contract with them because of the assumption that there is a
partnership; as a result, if that 3rd person suffers from any losses then that person is liable for it.
Example:
Joseph and Marco own equal shares of a restaurant that they manage however; they do not regard
themselves as partners they are just doing it to exercise their skills in cooking. One day, when Joseph is
on duty and Marco is not within the restaurant, a customer complains that he had stomach ache after
eating in there restaurant and demanded that she must be brought to a hospital and the restaurant will be
liable for it. Since Joseph is, the person present on that day he is the only person liable to pay the damages
because it was agreed by both of them that they are not in a partnership. On another day, an investor came
to their place and offer to invest in order to open another branch, the investor says that “I want to invest in
your partnership in order to expand your business” Joseph and Marco agreed, without correcting the
investor that they are not within a partnership, therefore, the investor reasonably believes that the two are
partners. As time goes by, the investor was informed that the restaurant is not doing well and demanded
that they must return the money he invested, Joseph and Marco will then be both liable to return the
money as being part of a partnership by estoppel.

Going on to the second rule, it states that “Co-ownership or co-possession 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”
In this rule, it means that if a two person both has the right to a real property, they will not be entitled as
partners because they are just co-owners; therefore, there is no partnership between the two. For example,
let’s say Jannen and Mable are siblings, when their parents died, they inherited a parcel of land, since they
are both busy on their career they have decided to lease the land for 100,000 per month, thus it can be said
that they share profits, however they are still not in a partnership, they are just co-owners the profit is just
incidental and it is not derived from business operations. However, if they use that land and build an
apartment for rent and Jannen and Mable will share profit from the rent, then there is an ordinary business
operation therefore it can be regarded as partnership because it is already for profit.
The third rule states that, 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. This rule simply means that, if you have a share into the income of the business it
doesn’t mean that you are already partners. Going back to the definition of partnership which is “It is an
agreement whereby two or more persons agree to contribute money, property, or industry to a common
fund with the intention of dividing the profits among themselves” this definition eventually lead us to the
point that sharing of profits doesn’t mean that partnership exist. This will be best illustrated in
Agriculture, in most highland provinces just like in our province, farming is there main source of living.
So here is the example, a farmer and a supplier enters into a an agreement wherein Delfin the farmer will
plant a Cabbage in the land of JR. JR says that he will supply all the needs of Delfin in planting the
cabbage until it is ready for harvesting. The gross income that will be earn from the sale of goods will be
divided into two after deducting all the expenses incurred in planting the cabbage. In this example, there
is sharing of profits however we cannot say that there is partnership between the two because the farmer
had no contribution, the farmer has no say on the disposition of the land and in case of loss, the supplier
shall carry the entire burden, and the farmer need not pay anything. It is not bound to the definition of
partnership. Thus, the sharing of gross returns does not of itself establish a partnership.

The last rule states that, 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:
Let me first elaborate what prima facie means, prima facie evidence is, that which suffices for proof of a
fact until rebutted by another evidence. Prima facie evidence may be disproved, but until it has been
proved incorrect, it is assumed correct. Therefore, the receipt of a person of a share from the profits of a
business is an evidence that he is a partner in the business. However, not in all cases, below are the five
exemption to the rule.
a. As a debt by installments or otherwise;
For example, Cherie and Jeremy formed JC Partnership, in order to finance other business needs
they loan an amount of 50,000 from Nelson. On the first year of the business operation, JC
Partnership paid their debt to Nelson from their business income. In this scenario, Nelson is not
considered as a partner even if the payment is from the profit of the business because it is merely
a payment of debt.

b. As wages of an employee or rent to a landlord;

To illustrate this exception, Janice, Ellen and Sarah formed JES Partnership, instead of building
their own office they decided to rent a space. Ismael offered his newly constructed office for rent,
the rent is 20,000 per month. At the end of the month, JES Partnership paid Ismael from the profit
of the business. This doesn’t not make Ismael a partner in the partnership because the receipt of
share in the net income of the business is just a payment of rent to the landlord.

c. As an annuity to a widow or representative of a deceased partner;

In a partnership, when one of the partner dies the partnership will be terminated, thus, all of the
assets of the business will be liquidated. For example, JES, JC, and JAH formed a partnership. On
the 2nd quarter of the business operations, JC went to a business trip, which causes him to die due
to a fortuitous event. The partnership was then on the process of liquidation because of the death
of one of the partner, which is JC, JC has a wife named Ashley. JES, JAH, and Ashley agreed
that Ashley would receive a 20% of the annual net income of the partnership. In this scenario,
 Ashley is not counted as a partner just because she received 20% share of the partnership’s profit
it is just an annuity to a widow of a deceased partner.

d. As interest on a loan, though the amount of payment vary with the profits of the business;
Lulu, Ash and Jam formed a partnership. To finance their business operations they loan an
amount of 100,000 subjected to a 5% interest per annum from Jessica. It was agreed that the
payment of interest would be paid from the first year net profit of the business. In this case,
Jessica is not a partner because the receipt of share from the profit is just a payment of the loan’s
interest.

e. As the consideration for the sale of a goodwill of a business or other property by installments or
otherwise.
Ananayo, Sallatic and Escocio formed ASE Partnership in order to exercise their accounting
profession. ASE Partnership is looking for a building to buy, meanwhile, Partosa is selling her
land and building. Partosa the sell her building to ASE Partnership with the agreement that it will
be paid from the profit of the business operation. In this scenario, Partosa is not a partner because
the receipt of share from the profit is just a payment to the acquired property.