Article 1767.

By the contract of CIVIL LAW CONCEPT AND AMERICAN

partnership two or more persons CONCEPT OF PARTNERSHIP,
bind themselves to contribute DISTINGUISHED.
money, property, or industry to
a common fund, with the
intention of dividing the CIVIL LAW AMERICAN
profits among themselves. CONCEPT
Basis of Speaks of a Speaks of a
Two or more persons may also Concept CONTRACT RELATION
form a partnership for the Possession has Juridical Does not
exercise of a profession. of Personality recognize
separate of its own separate
personalit juridical
CONCEPT OF PARTNERSHIP y personality
Treatment Treated for
Art. 1767 gives the legal for income income tax
definition of partnership from tax purposes
the viewpoint of a contract. purposes (except
general
professional
partnerships)
Other definitions:
PARTNERSHIP IS A:
GENERAL PROFESSIONAL PARTNERSHIP
1. CONTRACT – of two (2) or
Paragraph 2 of Art. 1767
more competent persons to
place their money, effects, - Relates to a partnership
labor and skill, in lawful for the exercise of a
commerce or business and to profession or a general
divide the profits and bear professional partnership.
the losses in certain
proportions. PROFESSION
- Group of men pursuing
2. ASSOCIATION – two (2) or learned art as a common
more persons to carry on as calling in the spirit of
co-owners of a business for public service – no less a
profit. public service because it
may incidentally be a means
3. LEGAL RELATION – based on of livelihood.
the agreement of 2 or more
persons whereby they unite The practice of a profession is
their property, labo or not a business or an enterprise
skill in carrying on some for profit.
lawful business as
However, the law allows the
principals for profit.
joint pursuit thereof by two (2)
4. STATUS
or more persons as partners.
5. ORGANIZATION
6. ENTITY In such case, it is the
7. JOINT UNDERTAKING individual partners, and not the
partnership, who engage in the 3. RELATION TO CLIENTS IN
practice of the profession and THE HIGHEST FIDUCIARY
are responsible for their own DEGREE
acts as such. 4. RELATION TO COLLEAGUES
The law does not allow CHARACTERISTIC ELEMENTS OF
individuals to practice a PARTNERSHIP.
profession as a corporate
entity. 1. CONSENSUAL
2. NOMINATE
Personal qualifications for such 3. BILATERAL
practice cannot be possessed by 4. ONEROUS
a corporation. 5. COMMUTATIVE
6. PRINCIPAL
7. PREPARATORY
PARTNERSHIP FOR THE PRACTICE OF ESSENTIAL FEATURES OF
LAW. PARTNERSHIP
1. VALID CONTRACT
1. A mere association for non- 2. TWO OR MORE PERSONS MUST
business purpose HAVE CAPACITY TO ENTER
INTO CONTRACT
A partnership for the practice 3. MUTUAL CONTRIBUTION
of law cannot be likened to 4. OBJECT MUST BE LAWFUL
partnerships formed by other 5. PRIMARY PURPOSE IS TO
professionals or for business. CARRY ON BUSINESS FOR
PROFIT

It is not a partnership formed Articles of Incorporation must

for the purpose of carrying on not be kept secret among the
trade or business or of holding members; otherwise the
property. association shall have no legal
personality and shall be
governed by the Civil Code.
The use of a NOM DE PLUME (Pen
Name), Assumed or Trade Name in
law practice is improper. FIRST ESSENTIAL FEATURE OF
PARTNERSHIP:
EXISTENCE OF A VALID CONTRACT
2. Distinguished from business
1. PARTNERSHIP RELATION
Primary Characteristics which FUNDAMENTALLY CONTRACTUAL
distinguish legal profession
from business: Partnership is a VOLUNTARY
RELATION created by agreement of
1. DUTY OF PUBLIC SERVICE the parties.
2. OFFICER OF COURT
There is no such thing as a 7. Manner by which the
partnership created by law or by profits and losses are to
operation of law alone. be shared
8. Procedure for dissolving
Religious societies, conjugal the partnership
partnerships, and others of a
similar nature are not,
therefore, included as they are
not created by the express or (c) Requisites:
implied contract of the parties. Since partnership is
Actually, the partnership is not contractual, all essentials of a
the contract itself, but the valid contract must be present:
RESULT OF THE CONTRACT REQUISITES OF A CONTRACT:
(RELATION).
1. CONSENT and CAPACITY of
(a) FORM – relation is the contracting parties;
evidenced by the terms of 2. OBJECT – subject matter
contract which may be oral or of the contract
written, express or implied from 3. CAUSE which is
the acts and declarations of the established.
parties, subject to the
provisions of Art. 1771 to 1773
and to the Statute of Frauds. LATER DISAGREEMENTS AMONG
In other words, NO FORMALITY IS PARTNERS WILL NOT AUTOMATICALLY
REQUIRED IN SETTING UP A GENERAL DESTROY THE PARTNERSHIP.
PARTNERSHIP UNLESS IT FALLS What is important is the assent
WITHIN THE STATUTE OF FRAUDS. (acceptance) of the parties AT
(Art. 1403) However, there are THE TIME of the agreement to
formal requirements for creating associate as partners at the
a limited partnership. creation of the relationship.
In entering into a contract,
(b) ARTICLES OF PARTNERSHIP – there must be at least two (2)
where the terms of association competent parties.
is written. As in other cases of contracts,
It states the ff: in order to make an agreement
for a partnership valid, there
1. Name must be a valid consideration
2. Nature or Purpose existing as between the
3. Location of the firm partners.
4. Powers
5. Rights, Duties and Each partner surrenders to the
Liabilities of the partnership an interest in his:
partners among themselves - Property
6. Contributions - Labor
- Skill
- Energy
In accordance with the It is a personal relation in
stipulations of their mutual which the element of delectus
agreement. personae exists, involving as it
does trust and confidence
between the partners.
Ex. May second hand na car si B. Delectus personae  selection of a person
Sabi ni B. Bibigay ko ang satisfactory to oneself for a position (as of
kalahati ng profit sayo, B. partner) involving trust and confidence in the
kapag nirepair mo ang sasakyan. other's character, capacities, or
responsibility.
Hindi nirepair ng sasakyan so
hindi entitled si B sa kahit
anong profit dahil wala yung (a) RIGHT TO CHOOSE CO-PARTNERS
consideration for A’s promise,
na dapat irepair nya ang car. Unless provided in the
agreement, no one can become a
member of the partnership
association without the consent
Illustrative Case:
of all the other associates.
ISSUE: May A be compelled
The fiduciary in nature of
against his will to carry out
the partnership relation and the
the agreement or execute the
liability of each partner for
partnership papers?
the acts of the others within
HELD: No. Under Art. 1767, A has the scope of the partnership
an obligation to do, not to business require that each
give. person be granted the right to
choose with whom he will be
The law recognizes the associated in the firm.
individual’s freedom or liberty
to do an act as he promised to Fiduciary - involving trust, especially with
do, or not to do it, as he regard to the relationship between a trustee
and a beneficiary.
pleases.
(b) POWER TO DISSOLVE
It falls within what Spanish
PARTNERSHIP
commentators call a very
personal act (acto personalismo) Neither would the presence of a
of which courts may not compel period for its specific duration
compliance, as it is considered nor the statement of a
as an act of violence to do so. particular purpose for its
creation prevent the dissolution
(PERSONAL OBLIGATION: TO DO,
of any partnership by an act or
INVOLUNTARY SERVITUDE, DAMAGES)
will of a partner.
(2) PARTNERSHIP RELATION
Among partners, mutual agency
FIDUCIARY IN NATURE
arises and the DOCTRINE OF
Partnership is a form of DELECTUS PERSONAE ALLOWS THEM TO
voluntary association entered HAVE THE POWER, although not
into by the associates. necessarily the right, TO
DISSOLVE THE PARTNERSHIP.
Any one of the partners, at his of a partnership must be
sole pleasure dictate a determined from the conduct of
dissolution of the partnership the parties, any documentary
at will. HOWEVER, he must act in evidence bearing thereon, and
good faith, not that the the testimony of the parties.
attendance of bad faith can
prevent dissolution of
partnership but it can result in
a liability for damages.

(3) APPLICATION OF PRINCIPLES OF

ESTOPPEL
(Partnership by estoppel means that a
person who is not technically a partner can
be held liable as a general partner would be
for any debts and damages owed to a third
party.)

A partnership liability may be

imposed upon a person under
principles of estoppel where he
holds himself out, o permits
himself to be held out, as a
partner in an enterprise.
In such cases, there is no
actual or legal partnership
relation but merely a
partnership liability imposed by
law in favor of third persons.
A partnership may be created
without any definite intention
to create it. It is the
substance and not the name of
the arrangement, which
determines the legal
relationship, although the
designation adopted by the
parties should be considered as
indicative of their intention.
In case there is no written
agreement between the parties,
the existence or non-existence