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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
amongst themselves.
Two or more persons may also form a
partnership for the exercise of a general
profession
Characteristics
partnership

of

contract

of

Consensual perfected by mere


consent
Bi/multilateral entered into between
two or more persons
Nominate has a name
Principal existence does not depend
upon another contract
Onerous contributions have to be
made
Preparatory in the sense that after it
has been entered into other contracts
essential in the carrying out of its
purposes may be entered into.
Contribution of money, property or
industry
Lawful object
Intention of dividing the profit among
themselves
Desire to formulate an active union
with people among whom there exist
mutual trust and confidence

Consequences of a partnership being a


juridical entity

Juridical personality is separate and


distinct from that of each partner
The partnership can, in general
o Acquire and possess property of
all kinds
o Incur obligations
o 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.

1771
A partnership may be constituted in any form
except where movable property or real rights
are contributed thereto, in which case a
public instrument shall be necessary
1772
Every contract of partnership having a
capital of three thousand pesos or more, in
money or property, shall appear in a public
instrument, which must be recorded in the
Office of the Securities and Exchange
Commission.
Failure to comply with the requirements of
the preceding paragraph shall not affect the
liability of the partnership and the members
thereof to third persons.
1773
A contract of partnership is void, whenever
immovable property is contributed thereto, if
an inventory of said property is not made,
signed by the parties, and attached to the
public instrument.
1774
Any immovable property or an interest
therein may be acquired in the partnership
name. Title so acquired can be conveyed
only in the partnership name
Nature of universal,
limited partnerships

particular,

general,

Obligations and rights of a partner


Obligation

Give contribution
Not to convert firm money or property
for his own use

Not to engage in unfair competition


with his own firm
To account for and hold as trustee,
unauthorized personal profits
Pay for damages caused by his fault
Duty to credit to the firm the payment
made by a debtor who owes him and
the firm
To share with the other partners the
share of the partnership credit which
he has received from an insolvent firm
debtor

Rights

Property rights
o Rights in specific partnership
property
o Interest in the partnership
o Participate in the management
not available to limited partner
Right to associate with another person
in his share
Inspect and copy partnership books
Right to demand a formal account
Right to ask for the dissolution of the
firm at the proper time

Partnership at will (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
1789
An industrial partner cannot engage in
business for himself unless the partnership
expressly permits him to do so; and if he
should do so the capitalist partners may
either exclude him from the firm or avail
themselves of the benefits which he may
have obtained in violation of this provision,
with a right to damages in either case.
1797
Losses and profits shall be distributed in
conformity with the agreement. If only the
share of each partner in the profits has been
agreed upon, the share of each in the losses
shall be in the same proportion.
Absence of stipulation

Proportionate to their contribution


Industrial Partner
o Losses: industrial partner is not
liable
o Profits: he may receive such
share as may be just and
equitable
under
the
circumstances
o Besides services, contributed
capital: receive a share in the
profits in proportion to capital