PARTNERSHIP

Art. 1772- execution of public instrument and

Article 1767 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. Two or more persons may
also form a partnership for the exercise of a
profession.
GPP- General Professional Partnership
Consensual- perfected by mere consent,
express or implied agreement of 2 or more
persons.
Delectus Personae- choice of the person or
persons
a. Right to choose co-partners- fiduciary nature
of the partnership relation
b. Power to dissolve partnership- dissolve
partnership at his sole pleasure, should act in
good faith. Bad faith cannot prevent dissolution
but can result in a liability for damages.
registration to SEC in case when partnership
capital exceeds 3,000.
Art. 1769 Determining if Partnership Exists
1. Partnership is a matter of intention
2. Partnership by estoppel- a person by his acts,
consent, or representations have misled third
persons or parties into believing that he is a
partner in a non-existing partnership
3. Co- ownership does not establish Partnership
4. Sharing of gross returns does not indicate
Partnership
5. Receipt of share in the Profits is a prima facie
evidence that he is a partner
Except when received in payment:
a. As a debt by instalments
b. As wages
c. Annuity of a widow
d. Interest on a loan
e. As consideration for the sale

Essential Features of Partnership Partnership Co-Ownership

w/out this Partnership is VOID Creation Created by Created by law
1. Existence of Valid Contract contract
a. legal capacity of partners entering into Juridical Has juridical None
contract Personality personality
Purpose Realization of Common
People who cannot enter into partnership:
Profits enjoyment of a
 Unemancipated minors thing or right
 Insane or demented persons Duration No Limit 10 years
 Deaf-mutes who do not know how to Disposal of May not Free to didpose
write Interest dispose unless
 persons suffering from civil interdiction agreed upon
 incompetents under guardianship by other
partner
2. Mutual contribution to a common fund
Power to A partner may Co-owner
money, property, industry act w/ bind the cannot
3. Legality of Object- must be LAWFUL third partnership represent the
Object is Unlawful when it is contrary to law, persons co-ownership
morals, good customs, public order, and public Death Dissolve the Does not
policy. Partnership dissolve
4. Intention to realize and divide profits Co=ownership
Principal purpose: realization of pecuniary
Art. 1770 A partnership must have a lawful
PROFIT, intention to divide profits among
object. If Unlawful partnership is dissolved by
themselves
a juridical decree, profits shall be confiscated
Any stipulation excluding a partner from sharing in favor of the State.
Effect of Unlawful of Partnership
in the profits or losses thus not affect the
1. Contract is Void
existence of the partnership but the stipulation
2. Profits shall be confiscated in favor of the
is void.
government
3. The instruments or tools and proceeds of the
Art. 1768 The partnership has juridical
personality separate and distinct from that of crime shall also be forfeited in favor of the
each of the partners, even in the case of failure government
4. Contributions of the partners shall not be
to comply with the requirements of Art. 1772,
first paragraph. confiscated unless they fall under no.3.

Juridical decree is not necessary to dissolve an
unlawful partnership.
Partnership may be constituted in any form
(orally or in writing), except:
1. immovable property or real rights is
contributed thereto- public instrument is
necessary, inventory of the property must be
made and signed by the parties (Art. 1773)
-VOID if not made
2. Captital of 3,000 or more- shall appear in
public instrument and recorded in SEC
-failure to comply does not affect the liability of
the partnership and the members thereof to
third persons (Art. 1772)
3. Secret partnership has no juridical
personality (Art. 1775)
Art 1776. Kinds of PARTNERSHIP
1. as to its object
 Universal Partnership- refers to all the
present property or to all profits
a. All present property- partners contribute all
present property which actually belongs to
them. Cannot be included:
Acquired subsequently through:
 inheritance
 legacy
 donation
-fruits thereof can be included
b. of Profits- comprises all that the partners
may acquire by their industry or work during
the existence of the partnership.
-immovable and movable property still belongs
to the partners, only the usufruct passing to the
partnership
If universal Partnership is silent, only pertains to
universal partnership of profits (Art. 1781)
Art. 1782 Persons who are prohibited from
giving each other any donation or advantage
cannot enter into a universal partnership.
 Particular- A particular partnership has
for its object determinate things, their
use of fruits, or specific undertaking, or
the exercise of a profession or vocation
(Art. 1783)
2. as to its liability
 General
 Limited
3. as to its duration
 Partnership at will- no time specified
and has no particular undertaking
 Partnership with a fixed term- fixed
duration for a particular undertaking
4. as to its legality of its existence
 De jure- complied with all the
requirements
 De facto- failed to comply with all the
requirements
5. as to representation to others
 Ordinary or real Partnership- one which
actually exists among the partners and
also to the third persons
 Ostensible or partnership by estoppel-
not a partnership but is considered as
one by their conduct or admission
6. as to publicity
 Secret partnership- existence of
certain partners is not made known
 Open or Notorious- made known to
the public
7. as to purpose
 Commercial or trading partnership-
formed for the transaction of business
 Professional or non-trading- one
formed for the exercise of a profession
Kinds of Partners
a. Capitalist- one who contributes money or
property to the common fund
b. Industrial- contributes only his industry or
personal service
c. General- liability as to third persons extend to
his separate property
d. Limited- liability limited to his capital
contribution
e. Managing- one who manages the affairs of
the business or partnership
f. Liquidating Partner- who takes charge of the
winding up of the partnership upon dissolution
g. Partner by estoppel- not a partner but liable
as a partner
h. Continuing- continues the business after
being dissolved by admission of a new partner,
retirement, death, or expulsion of partners.
i. Surviving- remains after the partnership is
dissolved by the death of a partner
j. Subpartner- not a partner, contracts with a
partner with reference to the partner’s share
k. Ostensible- takes active part and known as a
partner
l. Secret- active but not known
m. Silent- not active but known
n. Dormant- not active and not known
o. Original- member of the partnership from its
organization
p. Incoming- about to be taken into a
partnership
q. Retiring- a withdrawing partner
OBLIGATIONS OF THE PARTNERS
Art. 1784. A partnership begins from the
moment of the execution of the contract, unless
otherwise stipulated.
Art. 1785. Partnership for a particular
undertaking is continued after the termination
of the term, became as partnership at will
-a new partnership is created
-without any settlement or liquidation is a
prima facie evidence of continuation of the
partnership
Art. 1786 Every partner is a debtor of the
partnership for whatever he may have
promised to contribute thereto.
He shall also be bound for warranty in case of
eviction with regard to specific or determinate
things which he may have contributed to the
partnership
-Also liable for the fruits thereof from the time
they should have been delivered, w/out the
need of any demand.
Art. 1790 Unless there is a stipulation to the
contrary, partners shall contribute equal shares
to the capital of the partnership.
Art. 1791 Partners should contribute additional
share to the partnership in case of imminent
loss. Anyone who refuses shall be obliged to
share his interest
Industrial Partner- not included
Things to consider:
1. There must be an imminent loss
2. Partner who refuses is solvent/financially
capable
3. There is no agreement that he will not
contribute in cases of loses.
Article 1792
-If a managing partner collects demandable sum
in his name the sum is applied proportionally to
his debt and to the partnership debt.
-If named after the partnership, total sum will
be applied to the partnership debt
-The debtor has the right to apply payment, if
the personal credit was more onerous to him.
Art. 1793
Partner who received his share of

Art. 1787- Appraisal of goods contributed must

be made in the manner written in the contract
of partnership, if not stipulated by experts
chosen by the partners according to current
prices, subsequent changes being account of
the partnership

Art. 1788 A partner who has undertaken to

contribute a sum of money and fails to do so
becomes a debtor to the partnership
-interest and damages from the time he should
have complied with his obligation
- Same rule if he converts money from
partnership for his own use.

Art 1789 Industrial Partner cannot engage in

business for himself, unless expressly permitted
to do so
Consequence if violated:
Capitalists partner may either
1. exclude him from the firm with the right to
damages
2. avail them from the benefits which he may
obtained from the violation of this provision
with the right to damages.