July 18, 2015Sharing of the PartnersProfitsAs a general rule, the partners shall share in the profits or losses according to their agreement.[footnoteRef:1] Absent any agreement, the capitalist partners share the profits according to or in in proportion to their individual contribution.[footnoteRef:2] The industrial partner, however, shall receive such share as may be just and equitable under the circumstances.[footnoteRef:3] Of course, when the industrial partner also contributed money or property, he/she will be receiving aside from the just and equitable share for being a partner his share in proportion to the value of the contributed money or property. And when there is no stipulation as to the contribution, the law presumes that the partners contribute in equal shares.[footnoteRef:4] [1: Art. 1797] [2: Ibid. ] [3: Ibid, 2nd paragraph. ] [4: Art. 1790]

LossesAs a general rule, the agreement of the sharing of loss shall govern. In the absence of the agreement as to losses, the sharing must be governed by the agreement as to profits. In the absence, however, of agreement of sharing of profits the partners shall share in proportion to what he may have contributed, applying again the principal that the law presumes that, in the absence of a stipulation, the partners contributed in equal shares. However, the industrial partner is exempt from sharing of the loss. Also, if the industrial partner also contributed money or property, he shall suffer the loss to the extent of the value of his contributed *The agreement may be equitably adjusted, where the agreement is grossly inequitable which may be seen as circumvention of 1799, which says that a stipulation which excludes one or more partners from any share in the profits or losses is void because the agreement would be disregarded as though no agreement was had. Note that there is no literal exclusion, as what is provided in the provision, but it is submitted that there is an indirect exclusion. Here there is a simulated form or attempt to exclude a partner from any share in the profits or losses. Basic is the rule that what the law prohibits to be done directly, cannot be done indirectly. The circumstances, moreover, must be looked into by the Court in deciding whether the agreement is grossly inequitable or not. Third party To Designate the SharingThe partners may agree to entrust to a third person (who may not be an expert on the matter, unlike that in the provision for appraisal) the designation of the profit-sharing, but such designation may only be impugned only when it is manifestly inequitable. Also, the partner or the partnership may impugn it but not by the person who has begun to execute the decision of the third person. The partner or the partnership should bring this action within three months from his knowledge of the sharing. Moreover, a third person cannot impugn the agreement, where he is not the party who is at disadvantage. As a matter of fact, only the partner who has not executed the agreement and who is disadvantaged may impugn it.