RTICLE 1784ART. 1784.

A partnership begins from the moment of the execution of the contract,

unless it is otherwise stipulated. COMMENCEMENT AND TERM OFPARTNERSHIP(1) A
partnership is a consensual contract; hence, it exists from the moment of the
celebration of the contract by the partners.1 (see Art. 1315.) Since under Article 1784, a
partnership commences from the time of execution of the contract if there is no contrary
stipulation as to the date of effectivity of the same, its registration in the Securities and
Exchange Commission is not essential to give it juridical personality. (2) The birth and life of a
partnership is predicated on the mutual desire and consent of the parties. (see Ortega vs.
Court of Appeals, 245 SCRA 529 [1995].) Unlike a corporation, no time limit is prescribed
by law for the life of partnership. Hence, the partners may fi x in their contract any term and they
shall be bound to remain under such a relation for the duration of the term barring the
occurrence of any of the events causing dissolution of the partnership before its expiration.
(Arts. 1830-1831.) RULES GOVERNING PARTNERSHIPRELATIONWhat is necessary for
the existence of a partnership is that the essential requisites of a contract of partnership
are present even when the partners have not yet actually begun the carrying on of its business
or given their contributions, or even though its conditions or details, such as the
participation of the partners in the profits and losses and the nature of the partnership, have
not yet been fixed, as they pertain to the accidental and not to the essential parts of the
contract. E X E C U T O R Y A G R E E M E N T O F PARTNERSHIP( 1 ) F u t u r e
partnership. — The partners may stipulate some other date for the
commencement of the partnership. Persons who have entered into a contract to become
partners at some future time or on the happening of some future contingency do not
become partners until or unless the agreed time has arrived or the contingency has
happened. As long as the agreement for a partnership remains inchoate or unperformed, the
partnership is not consummated. (2) Agreement to create partnership. — There is a marked
distinction between a partnership actually consummated and an agreement to enter into a contract
of partnership at a future time. A partnership in fact cannot be predicated on an
agreement to enter into a co- partnership at a future day unless it is shown that
such an agreement was actually consummated. So long as the agreement remains
executory the partnership is inchoate, not having called into being by the concerted
action necessary under the partnership agreement. (3) Failure to agree on material
terms. — A failure of the parties to agree on material terms may not merely be evidence of the
intent of the parties to be bound only in the future, but may prevent any rights or
obligations from arising on either side for lack of complete contract.
CONTINUATION OF PARTNERSHIP BEYOND FIXED TERM ARTICLE 1785ART. 1785.
When a partnership for a fixed term or particular undertaking is continued after the termination
of such term or particular undertaking without any express agreement, the rights and duties of
the partners remain the same as they were at such termination, so far as is consistent with a
partnership at will. A continuation of the business by the partners or such of them as
habitually acted therein during the term, without any settlement or liquidation of the
partnership affairs, is prima facie evidence of a continuation of the partnership.
CONTINUATION OF PARTNERSHIPBEYOND(1) Rights and duties of partners. — The
partnership, however, may be extended or renewed by the partners by express agreem e nt ,
wri t t e n or oral, or impliedly, by the mere FI XED TERMcontinuation of the business
after the termination of such term or particular undertaking without any settlement or
liquidation. In such case, the rights and duties of the partners remain the same as they
were at such termination but only insofar as is consistent with a partnership at will. (2)
Dissolution of partnership. — Verily, any one of the partners may, at his sole pleasure, dictate
a dissolution of a partnership at will. He must, however, act in good faith not that the attendance of
bad faith can prevent the dissolution of the partnership (see Art. 1830[1, b].) but that can
result in a liability for damages to the other partners. (Art. 1830[2]; see Art. 1837, par. 2;
Ortega vs. Court of Appeals, 245 SCRA 529 [1995].) Implicit in good faith is the requirement
that the dissolution must not be made at an improper or unreasonable time. CONTINUATION OF
PARTNERSHIPFOR AN INDEFINITE TERM(1) Partnership for a term impliedly fixed.
— Although the term of a partnership is not expressly fixed, an agreement of the
parties may evidence an understanding that the relation should continue until the
accomplishment of a particular undertaking or certain things have been done or have taken
place. (2) Partnership with mere expectation that business will be profitable. —
Where the understanding to which defendant (the partner who contended that the partnership
created was for a term) testified was no more than a common hope that the partnership
earnings would pay for all the necessary expenses, such a hope does not establish even by
implication a “fixed term or particular undertaking” as required by Article 1785. The mere
expectation that the business would be successful and that the partners would be able to
recoup their investment is not sufficient to create a partnership for a term. All partnerships are
ordinarily entered into with the hope or expectation that they will be profitable, but that alone
does not make them all partnerships for a term and obligate the partners to continue in
the partnership until all the losses over a period of many years may have been recovered.
OBLIGATIONS WITH RESPECT TO CONTRIBUTION OF PROPERTY ARTICLE 1786ART.
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 and determinate things which he may have contributed to the
partnership, in the same cases and in the same manner as the vendor is bound with respect to
the vendee. He shall also be liable for the fruits thereof from the time they should have been
delivered, without the need of any demand. OBLIGATIONS WITH RESPECT
TOCONTRIBUTION OF PROPERTY(1) To contribute at the beginning of the partnership or
at the stipulated time the money, property, or industry which he may have promised to
contribute; (2) To answer for eviction in case the partnership is deprived of the determinate
property contributed; and (3) To answer to the partnership for the fruits of the property the
contribution of which he delayed, from the date they should have been contributed up to the
time of actual delivery. In addition, the partner has the obligation: (4) To preserve said property
with the diligence of a good father of a family pending delivery to the partnership (Art. 1163.);
and (5) To indemnify the partnership for any damage caused to it by the retention of the same or
by the delay in its contribution. EFFECTOFFAILURETOCONTRIBUTE
PROPERTYPROMISEDThe mutual contribution to a common fund being of the
essence of the contract of partnership (Art. 1767.), for without the contributions the
partnership is useless, it is but logical that the failure to contribute is to make the
partner ipso jure a debtor of the partnership even in the absence of any demand. LIABILITY
OF PARTNER IN CASE OFEVICTIONThe partner is bound in the same cases and in the same
manner as the vendor is bound with respect to the vendee with regard to specific and
determinate things which he may have contributed to the partnership. This matter is, therefore,
governed by the law on sales. Under the law on sales, eviction shall take place whenever by a
final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is
deprived of the whole or a part of the thing purchased.2 This obligation of warranty in
case of eviction is in consequence of the character of the contract of partnership which is an
onerous contract. L I A B I L I T Y O F P A R T N E R F O R FRUITS OF PROPERTY IN
CASE OF DELAY Here, again, no demand is necessary to put the partner in default.
LIABILITY OF PARTNE