An artificial being like a

corporation, may be a partner in

a partnership.
A limited partner may contribute
money and/or property to a
partnership but not services.
A partnership has a personality
separate and distinct from each
of the partners.
 Two or more persons may also
form a partnership
for the exercise of a profession.
 An artificial being like a
corporation, may be a partner in
a partnership.
 The contract is consensual.
 There must be a contribution of money, property or industry to a
common fund.
 The object must be a lawful one.
 There must be an intention of dividing the profit among the
partners.
 There must be the affectio societatis — the desire to formulate
an ACTIVE union
 Its juridical personality is SEPARATE and DISTINCT from that
of each of the partners.
 The partnership can, in general: acquire and possess property
of all kinds, incur obligations, bring civil or criminal actions,
can be adjudged INSOLVENT even if the individual members
be each financially solvent.
 Unless he is personally sued, a partner has no right to make
a separate appearance in court, if the partnership being sued
is already represented.
FACTS:

Fortis was a bookkeeper in a partnership named

“Gutierrez Hermanos”, with a yearly salary
amounting to 5% of the net profits for each year.
Fortis, however, had no vote at all in the
management of the business. Was he a partner?
FACTS:
Bastida worked for Menzi and Co., as procurer of contracts for
fertilizers to be manufactured by the fi rm, and as supervisor
of the mixing of the fertilizers. However, he had no voice in the
management of the business except in his task of supervising
the mixing of said fertilizers.
For his services, he was entitled to 35% of the net profits in
the fertilizer business. Aside from this, he sued the fi rm for
35% of the value of its goodwill on the ground that he had
become a partner thereof. Decide.
The object or purpose must be LAWFUL, i.e.,
it must be within the commerce of man,
possible, and not contrary to law, morals,
good customs, public order or public policy.

Is a Judicial Decree Needed to Dissolve

an Unlawful Partnership?
ANS.: No, for the contract is void from the very
beginning, and therefore never existed from the
viewpoint of the law. (See Art. 1409, Civil Code; see
also People v. Mendoza).

However, there would be nothing wrong in having the

court dissolve the partnership. This will be good and
convenient for everybody; moreover, there may be a
question as to whether or not the partnership is
indeed unlawful. This is particularly true when the
object was lawful at the beginning but has later on
become unlawful.
Whenever real properties or real rights in real properties are
contributed — regardless of the value — a PUBLIC INSTRUMENT is
needed. (The contract itself must be in the public instrument;
moreover, there must be an INVENTORY of the immovables. This
INVENTORY must be signed by the parties and attached to the
public instrument.) (See Art. 1773, Civil Code).

[NOTE: Without the public instrument, the partnership is VOID.

(Art. 1773, Civil Code).]

[NOTE: The inventory is important to show how much is due from

each partner to complete his share in the common fund and how
much is due to each of them in the event of liquidation. (Tablason v.
Bollozos, et al., C.A., 51 O.G. 1966). Without such inventory, the
contract is void. (11 Manresa 278-279 and Art. 1773)].
A partnership was formed orally though more
than P500 was contributed in cash. Now then,
under the last paragraph of Art. 1358, contracts
“where the amount involved exceeds P500 [such
contract] must appear in writing, even a private
one.” Should the oral partnership formed be
considered valid?
FACTS: On Aug. 29, 1952, a partnership was entered
into between Mauricio Agad and Severino Mabato “to operate
a fishpond.” Neither partner contributed a fishpond or a
real right to any fishpond. Their contributions were limited
to the sum of P1,000 each. The partnership contract was in
a public instrument, but an inventory of the fishpond to be
operated was not attached to said instrument.

ISSUE: Is the contract of partnership valid?

Even if not registered, the partnership having a
capital of P3,000 or more is still a valid one, and
therefore has legal personality. (Art. 1768, Civil
Code).

(NOTE: Of course if real properties had been

contributed, regardless of value, a public instrument
is needed for the attainment of legal personality.)
If registration is needed or desired, any of the partners
of a valid partnership can compel the others to
execute the needed public instrument, and to
subsequently cause its registration. (Art. 1357, Civil
Code).

[NOTE: This right cannot be availed of if the

partnership is void. (Art. 1356 and Art. 1357, Civil
Code).]
DRILL
1. The object of the partnership must be for profit
and not merely for common enjoyment.

2. Partners were liable jointly, not solidarily.

3. In general, it is the law that governs matters like

object, length of existence, etc.; the will of the
partners is only subsidiary.

4. An unemancipated minor may become a partner

even his parent or guardian does not consent.
5. Its juridical personality is SEPARATE and
DISTINCT from that of each of the partners. (Thus,
in the partnership “Sundiang and Castillo,” there are
three persons: Sundiang, Castillo, and the firm
“Sundiang and Castillo”.)

6. D, to carry on a business, borrowed money from

C. It was agreed that D would return the money in
installments and that said installments would come
from D’s profits in the business. Is a partnership
created between D and C?
7. Every contract of partnership having a capital of
more than three thousand pesos, money or property,
shall appear in a public instrument, which must be
recorded in the Office of the Securities and Exchange
Commission.

8. Had real property been contributed, the oral

partnership would be voidable.

9. If two persons agree to form a partnership in the

future, does the partnership immediately arise from
the moment of said agreement? Yes or No.
10.
Arbes v. Polistico, et al. 53 Phil. 489
FACTS: An organization, “Turnuhan Polistico and Co.,”
was engaged in conducting a lottery among its partners-
members every weekend. The members contributed a
weekly amount, all of which except a certain amount
were distributed in turn to the lottery winners.

Obviously, the court had no alternative except to declare

the partnership an unlawful one. Issue: Can the
partners get back their capital? their profits?
Requirements Where Immovable Property
is Contributed

(a) There must be a public instrument

regarding the partnership. (See Art. 1773).
(b) The inventory of the realty must be made,
signed by the parties, and attached to the
public instrument. (Art. 1773).
Registration in the Register of Property

The transfer of the land to the partnership

must be duly recorded in the Register of
Property to make the transfer effective insofar
as third persons are concerned.
According to manner of creation:
1) orally constituted
2) constituted in a private instrument
3) constituted in a public instrument
4) registered in the Office of the Securities and
Exchange Commission
According to object:
1) Universal
a) with all present property
b) with all profits (the individual properties here
continue to be owned by the partners, but the
usufruct thereof passes to the fi rm)
2) Particular — here the object are determinate
things, their use or fruits; a specific undertaking,
or the exercise of a profession or occupation (Art.
1783, Civil Code).
According to liability:
1) Limited partnership — that where at least one
partner is a general partner, and the rest are limited
partners. (NOTE: A general partner is liable beyond
his contribution; a limited partner is liable only to
the extent of his contribution.)

2) General partnership — that where all the partners

are general partners.
According to legality:
1) lawful or legal
2) illegal or unlawful
According to duration:
1) For a specific period or till the purpose is
accomplished
2) Partnership at will
a) here, no period, express or implied, is given and so
its duration depends on the will of the partners;

b) if the period has expired, but the partnership

continued, without liquidation, by the partners who
habitually acted as such during the term. (Art. 1785,
Civil Code).
According to representation to others:
1) ordinary partnership
2) partnership by estoppel
When two or more persons attempt to create a
partnership but fail to comply with the legal
formalities essential for juridical personality, the
law considers them as partners, and the
association is a partnership insofar as it is
favorable to third persons, by reason of the
equitable principle of estoppel.
A general partnership is one where all the partners
are general partners (that is, they are liable even
with respect to their individual properties, after the
assets of the partnership have been exhausted).
A limited partnership is one where at least one partner
is a general partner and the others are limited partners.
(A limited partner is one whose liability is limited only
up to the extent of his contribution.)

(NOTE: A partnership where all the partners are

“limited partners” cannot exist as a limited
partnership; it will even be refused registration. If at
all it continues, it will be a general partnership, and
all the partners will be general partners.)
Examples of people prohibited:
(a) Husband and wife — as a rule. (Art. 133, Civil
Code).
(b) Those guilty of adultery or concubinage. (Art.
739, Civil Code).
(c) Those guilty of the same criminal offense, if
the partnership was entered into in consideration of
the same. (Art. 739, Civil Code).
FACTS: A limited partnership named “William J.
Suter ‘Morcoin’ Co., Ltd.” was formed on 30 Sept.
1947 by William J. Suter as general partner (one
liable even beyond his contribution), and Julia Spirig
and Gustav Carlson, as limited partners (those liable
only to the extent of their contribution).
In 1948, Suter and Spirig got married, and sometime
later, Carlson sold his share in the partnership to
Suter and his wife. Issue: Did the marriage dissolve
or put an end to the partnership?
HELD: No, the marriage did not dissolve the
partnership. While spouses cannot enter into a
universal partnership, they can enter into a
particular partnership or be members thereof. The
partnership was not, therefore, ended.
A universal partnership is virtually a donation to
each other of the partner’s properties (or at least,
their usufruct). Therefore, if persons are prohibited
to donate to each other, they should not be allowed
to do indirectly what the law forbids directly. (See 11
Manresa 317).
The partnership violating Art. 1782 is null and void,
and its nullity may be raised anytime. No legal
personality was ever acquired. (11 Manresa 317).
 Chapter 2
OBLIGATIONS OF THE
PARTNERS

Section 1
OBLIGATIONS OF THE PARTNERS
AMONG THEMSELVES