PRINCIPAL / ONEROUS/ UNILATERAL/

CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES

ACCESSORY GRATUITOUS BILATERAL
COMMODATU Bailee General It may be oral It is a real Principal Gratuitous Unilateral Obligations of the Bailee
M Rule: or in writing contract. Contract Principal obligations:
(Art. 1935 to Bailor Only non- (merely for the Note: If In 1. Take care of the thing with diligence of a good father of a family. (Art. 1163, NCC);
1952, NCC) consumables convenience of Delivery is consideration is commodatum, 2. Return the identical thing loaned upon expiration of the term or upon the accomplishment of the purpose. (Art. 1933,
(Art. 1933, the parties) necessary for given, it ceases only the bailee NCC)
NCC) the perfection to be has the
of the commodatum obligation to Other obligations:
Exception: contract of (Art. 1935, deliver 1. Pay for the ordinary expenses for the use and preservation of the thing loaned. (Art. 1941, NCC);
If the commodatum NCC) 2. Liability for loss due to fortuitous event (Art. 1942, NCC);
purpose is for . 3. Liability for deterioration due to the use of the thing. (Art. 1943, NCC);
exhibition In such cases, 4. Pay for extraordinary expenses arising from the actual use of the thing, even though the bailee acted without fault. In
(Art. 1936, the contract this case, the Bailor and the bailee shall bear the expenses equally. (Art. 1949 (2), NCC); and
NCC) may be 5. To pay for the expenses other than those under Arts 1941 and 1949 of the Civil Code for the purpose of making use of
considered a the thing. (Art. 1950, NCC)
contract of
lease. Obligations of the Bailor:
1. Respect the duration of the loan. (Art. 1946, NCC);
2. Refund to the bailee extraordinary expenses incurred for the preservation of the thing, provided that the bailee brings
the same to the knowledge of the bailor before incurring them, except when the reply to the notification cannot be
awaited without danger. (Art. 1949 (1), NCC);
3. Be liable to the bailee for damages for known hidden flaws. (Art. 1951, NCC)
COMMODATUM

MUTUUM
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
MUTUUM Creditor Fungible General Rule: Real Contract Principal Contract General Rule: It is a bilateral Obligation of the creditor/lender:
(Art. 1953 to (Lender) Property – Requires no formality Gratuitous contract whereby one 1. To deliver the thing loaned
1961, NCC) property of the parties delivers
Debtor which can be Exception: It is to another money or Obligations of the debtor/borrower:
(Borrower) replaced with Exceptions: considered onerous if other consumable 1. If what was loaned is a fungible thing other than money, the
property of Art. 1956. No interest there is interest thing with the debtor owes another thing of the same kind, quantity and
the same shall be due unless it has understanding that quality, even if it should change in value. In case it is
kind or been expressly stipulated Note: If the borrower the same amount, of impossible to deliver the same kind, its value at the time of
quality (Art. in writing. is required not to the same kind and the perfection of the loan shall be paid (Art. 1955 of the NCC).
1953) return what is given, it quality, shall be paid 2. The payment of debts in money must be made in the
Art. 1403. If the promise becomes a Donation (Art. 1933 of the currency stipulated, and if it is not possible to deliver such
to deliver is to be NCC). currency, then in the currency which is a legal tender in the
performed after more Philippines. In case of extraordinary inflation or deflation of
than one (1) year from the The promise to pay of the stipulated currency should supervene, the value of the
date of the agreement, the the borrower is the currency at the time of the establishment of the obligation
contract must be in consideration for the shall be the basis of payment, unless there is an agreement to
writing to be enforceable. obligation, making the the contrary (Art. 1249 in relation to Art. 1955 of the NCC)
Art. 1403 (2a) loan a bilateral
contract.

DEPOSIT
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
DEPOSIT Depositor Judicial Deposit – It may be Real Contract Principal Contract General Rule: It can be unilateral Obligations of a Depositary:
(Art. 1962 to and Any Property oral or in Gratuitous when gratuitous 1. To keep the thing safely. (Art. 1972 of the NCC);
2009, NCC) Depositary writing because only the 2. To return the thing. (Art. 1972 of the NCC);
Extrajudicial Exception: depositary has an 3. Not to deposit the thing with a third person unless authorized by express stipulation. (Art. 1973 of
Deposit – If there is mutual obligation. the NCC);
movable or agreement 4. To change the way of the deposit if under the circumstances, the depositary may reasonably
corporeal things between the It can be bilateral if presume that the depositor would consent to the change if he knew of the facts of the situation,
parties or with compensation provided, that the former notifies the depositor thereof and wait for his decision, unless delay
depositary is because it gives rise would cause danger. (Art. 1974 of the NCC);
engaged in storing to obligations on the 5. If the thing deposited should earn interest: a) To collect interest and the capital itself as they fall
goods. part of both the due; and b) To take steps to preserve its value and rights with regard to it. (Art. 1975 of the NCC);
depositary and 6. Not to commingle things of the same kind and quality deposited of so stipulated. (Art. 1976 of the
depositor. NCC);
7. Not to make use of the thing deposited unless authorized. (Art. 1977 of the NCC);
8. To be liable for loss through fortuitous event provided that: a) it is stipulated; b) if he uses the thing
without depositor’s permission; c) if he delays its return; d) if he allows others to use it, even
though he himself may have been authorized to use the same. (Art. 1979 of the NCC);
9. Liability when the thing deposited is delivered closed and sealed;
10. Obligation to return products, accessories, and accessions;
11. To pay interest on sums converted to personal use from the day of conversion if the deposit
consists of money. (Art. 1983 and 1986 of the NCC);
12. To advise the true owner that a deposit has been made should he discover that the thing deposited

Obligations of the Depositor:

1. To pay expenses for preservation if the deposit is gratuitous. (Art. 1992 of the NCC)
2. To pay for losses incurred by the depositary due to the character of the thing deposited. (Art. 1993
of the NCC)

GUARANTY
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
GUARANTY Guarantor Object is the same with that of Contract of guaranty Consensual Accessory A guaranty is generally Unilateral Rights of a guarantor:
the principal contract since is covered by the gratuitous except 1. Benefit of excussion (Art. 2058, NCC)
Creditor guaranty is an accessory Statute of Frauds It is perfected by the A guaranty cannot when there is a It gives rise to a duty on 2. Benefit of division (Art. 2065, NCC)
contract. (Art. 1403 2[b], NCC). mere agreement of the exist by itself. There stipulation to the the part of the 3. Right to contribution of a guarantor who pays if
Therefore it must be parties. must be a valid contrary. guarantor in relation to there is solidary liability. (Art. 2073, NCC)
Usually, the principal contract in writing to be principal obligation. the creditor in the event 4. Right of indemnity or reimbursement. (Art. 2066,
is mutuum. enforceable. the debtor is unable to NCC)
pay his obligation. 5. Right of guarantor to proceed against debtor
before payment. (Art. 2071, NCC)
6. Right to subrogation (Art. 2058, NCC)

SURETY

PRINCIPAL ONEROUS/ UNILATERAL/

CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
SURETY Surety. Object is the same with Contract of guaranty is Consensual Accessory Generally gratuitous Unilateral Rights of a Surety
that of the principal covered by the Statute unless there is a 1. He may bind himself for less, but not for more than the
Principal Debtor contract since guaranty of Frauds (Art. 1403 stipulation to the principal debtor both as to the amount and onerous
is an accessory contract 2[b], NCC). Therefore it contrary. nature of the obligation (Art. 2054, NCC);
Creditor must be in writing to 2. Benefit of compromise - that any compromise entered
be enforceable into by the principal debtor and the creditor is also
binding to the guarantor except when such compromise
is prejudicial to him (Art. 2063, NCC);
3. Benefit of division - should there be several guarantors
of only one debtor and for the same debt, the obligation
to answer for the same is divided among all (Art. 2065,
NCC);
4. Right of reimbursement (Art. 2066, NCC)
5. Right of subrogation – surety who pays is subrogated by
virtue thereof to all the rights which the creditor had
against the debtor.

ANTICHRESIS
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
ANTICHRESIS Antichretic Fruits of an Art. 2143 of the NCC Consensual Accessory It is an onerous It is a bilateral contract. Rights of the Antichretic Creditor:
Creditor immovable requires that the contract since the
property (e.g. amount of the principal Antichresis is It secures the fruits of the The obligation on the 1. The right to the fruits and income of the thing. (Art. 2132,
And natural, and of the interest must perfected by mere performance of a immovable is applied part of the Antichretic NCC);
industrial, or be specified in writing consent of the principal obligation. to the interest first and debtor is to give 2. To retain the thing until the debt is paid. (Art. 2136[1],
Antichretic civil fruits) otherwise the contract parties. then to the principal possession of the NCC);T
debtor of Antichresis is void. debt. property to the creditor 3. To have the thing sold upon nonpayment at maturity. (Art.
and that the Antichretic 2137, NCC);
creditor will apply the 4. Preference to the proceeds of the sale of the thing; and
fruits of the property to 5. To be reimbursed for his expense for machinery and other
the payment of interest improvements on the land, and for the sums paid as land
first then to the taxes.
principal debt and deliver
back the property once Obligations of Antichretic Creditor:
paid
1. To pay taxes and charges on the estate, if there has been no
stipulation to the contrary, and to bear the expenses
necessary for preservation and repair. The sums spent shall
be deducted from the fruits. (Art. 2136, NCC)
2. To apply all the fruits, after receiving them to the payment
of interest, if owing, and thereafter to the principal in
accordance with the provisions of Art. 2133 or 2138 of the
Civil Code (Art. 2132, NCC);
3. To render an account of the fruits to the debtor.

PLEDGE
 PRINCIPAL / ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
ACCESSORY GRATUITOUS BILATERAL
PLEDGE Pledgor – Movables There is no prescribed Real Contract Accessory Onerous Unilateral – Rights of the Pledgor:
debtor (Art. 2094, form. However, in order to (Art. 2093
Pledgee - NCC) bind third persons, the of the New 1. To demand the return in case of reasonable grounds to fear destruction or impairment of the thing
creditor contract of pledge must be Civil Code) without the pledgee’s fault, subject to the duty of replacement (Art. 2107, NCC);
Incorporeal in a public instrument 2. To bid and be preferred at the public auction (Art. 2113, NCC);
rights (Art. containing the date of the 3. To Alienate the thing pledged provided the pledgee consents to the sale (Art. 2097, NCC);
2095, NCC) pledge and the description 4. To ask that the thing pledged be deposited in any of the following cases:
of the thing pledged (Art. a. If the creditor uses the thing without authority or misuses the thing, he may deposit the thing
2096, NCC). judicially or extrajudicially (Art. 2104, NCC); or
b. If the thing is in danger of being lost or impaired because of negligence or willful act of the
pledgee, he may deposit the thing with a third person (Art. 2106 of the NCC)

Obligation of the Pledgor:

1. To advise the pledgee of the flaws of the thing (Arts. 2101 and 1951, NCC);
2. Not to demand the return of the thing until after full payment of the debt, including interest due
thereon and expenses incurred for its preservation (Art 2105, NCC)

Rights of the Pledgee:

1. Options to demand replacement or immediate payment of the debt in case of deception as to
substance or quality (Art. 2109, NCC);
2. To sell at public auction in case of reasonable grounds to fear destruction or impairment of the thing
without his fault (Art. 2108 NCC);
3. To bring actions pertaining to the owner or to defend it against third persons (Art. 2103 NCC);
4. To choose which of several things pledge shall be sold (Art. 2119, NCC);
5. To collect and receive the amount due on credit pledged (Art. 2118, NCC);
6. To bid at the public auction, unless he is the only bidder (Art. 2113, NCC);
7. To appropriate the thing in case of failure the second public auction (Art. 2112, NCC);
8. To apply fruits, interests or earnings of the pledge to the interest, if any, then to the principal of the
credit (Art. 2102, NCC);
9. To retain excess value received in the public sale;
10. To retain the thing until after full payment of the debt;
11. To be reimbursed for the expenses made for the preservation of the thing pledged (Art. 2099, NCC);
12. To object to the alienation of the thing;
13. To possess the thing (Art. 2098, NCC);
14. To sell at public auction in case of non-payment of debt at maturity (Art. 2112, NCC)

Obligation of the Pledgee:

1. Take care of the thing with the diligence of a good father of a family and be liable for the loss or
deterioration of such (Art. 2099, NCC);
2. Not to use the thing unless authorized by the owner or its preservation requires its use (Art. 2104,
NCC);
3. Not to deposit the thing with a third person unless so stipulated (Art. 2100, NCC);
4. Responsibility for acts of agents and employees as regards the thing (Art. 2100, NCC);
5. To advise pledgor of danger of the thing;
6. To advise pledgor of the result of the public auction (Art. 2116, NCC);
7. To return the thing upon payment of debt.
 REAL ESTATE MORTGAGE

PRINCIPAL ONEROUS/ UNILATERAL/

CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
REAL ESTATE Mortgagee/ 1. Immovable properties (Art. 2124, It must appear Consensual Accessory Onerous Unilateral contract. Rights of the Mortgagee/Lender:
MORTGAGE – Lender NCC) in a public 1. The right to demand the execution and
MACEDA LAW 2. Alienable rights over real property document and Not all real property the recording of the document in which
It creates only an
(Art. 2124 to And 3. Properties considered by the court recorded in the can be immediately the mortgage is formalized. (Art. 2125
obligation on the part of
2131, NCC) as immovables Registry of accepted as collateral [2], NCC);
the creditor who must
Mortgagor/ Property for it to be bind third because the 2. Right to recover deficiency;
free the property from
Borrower parties (Civil mortgagee will 3. Right to alienate the mortgaged property,
the encumbrance once
Code, Art. evaluate if the but the mortgage shall remain attached to
the obligation is fulfilled.
2125) property is the property. (Art. 2130, NCC).
acceptable or not.
Non-compliance with recoding Rights of mortgagor:
does not affect the validity and 1. Right to possess the property;
enforceability of the contract as 2. Right of redemption within one year from
between the parties (Art. 2125, registration of sale;
NCC) 3. Right to claim from a third person in
possession of the mortgaged property the
payment of the part of the credit secured
by the property which said third person
possesses.

CHATTEL MORTGAGE

CONTRACT PARTIES OBJECT
CHATTEL Mortgagee/ Movable or personal properties.
MORTGAGE Lender (Arts. 2124 & 2140, NCC)
And Properties held to be mortgaged
under the Chattel Mortgage Law:
Mortgagor/
Borrower 1. Shares of stock in a corporation;
2. Interest in the business;
3. Machinery treated by the parties
as personal property
subsequently installed on
leased land;
4. Vessel, but it is essential that the
mortgage is recorded in the
office of the Philippine Coast
Guard of the port of
documentation of such vessel;
5. Motor vehicles;
6. House of mixed materials;
7. House intended to be
demolished;
8. House built on rented land;
9. Machinery which is movable in
its nature and becomes
immobilized by attachment;
10. House of strong
materials.
PRINCIPAL ONEROUS/ UNILATERAL/
FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
A chattel Consensual Accessory Contract Onerous Unilateral Rights of the Mortgagee/Lender:
mortgage is 1. Right to demand principal obligation;
required to be in The purpose of a Not all real property Only the creditor has the 2. Right to foreclose;
writing and to be chattel mortgage is to can be immediately obligation to free the 3. Right to deficiency which arises upon foreclosure and when
registered in the serve as security for accepted as collateral thing from encumbrance proceeds is not sufficient;
Chattel Mortgage the performance of a because the mortgagee upon the fulfilment of the
Register to be principal obligation. will evaluate if the principal obligation. Obligation of the Mortgagee/ Lender
valid. property is acceptable 1. The mortgagee must discharge the mortgage upon
or not. performance of principal obligation.
Rights of the Mortgagor/Borrower:
1. Right to the excess.
2. Right of redemption. (before the foreclosure sale)
Obligation of the Mortgagor/Borrower:
1. To take care of the thing mortgaged. [Note that in a chattel
mortgage, there is no delivery of the thing mortgage, otherwise,
it is a contract of pledge]

AGENCY
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
AGENCY Principal and Execution of a Judicial act General Rule: No required Consensual Principal It is gratuitous if It is unilateral if Obligations of the agent
(Arts. 1868 to Agent to a third person on form. there is no the agency is General obligation of an agent to the principal:
1932) behalf of the principal compensation to gratuitous.
(Art. 1868, NCC) Exceptions: the agent. 1. To obey all lawful orders and instructions of principal within the scope of the agency;
1. Sale of a piece of land – It is bilateral if the 2. To act with utmost good faith and loyalty for furtherance of principal’s interests; and
the authority must be in It is onerous if agency is onerous. 3. To exercise reasonable care, skill and diligence.
writing (Art. 1874, compensation is In this case, the
NCC); given to the agent principal has the Specific obligation of agent to the principal:
2. Strict acts of dominion obligation to pay 1. To carry out the agency which he has accepted (Civil Code, Art. 1884);
enumerated under Art. the agent while in 2. To answer for damages which through his non-performance the principal may suffer
1878, NCC requires a turn, the agent has (Civil Code, Art. 1884);
Special Power of the obligation to 3. To finish the business already begun on the death of the principal should delay entail any
Attorney account and danger (Civil Code, Art. 1884);
deliver the 4. To observe diligence of a good father of a family in the custody and preservation of the
proceeds of the goods forwarded to him by the owner in case he declines an agency, until an agent is
agency. appointed.
5. To advance the necessary funds should there be a stipulation to do so (Civil Code, Art.
1886);
6. Not to carry out the agency if its execution would manifestly result in the loss or damage
to the principal (Civil Code, Art. 1888);
7. To answer for damages if there being a conflict between his interest and those of the
principal, he should prefer his own (Civil Code, Art.1889)
8. Not to loan to himself if he has been authorized to lend money at interest (Civil Code, Art.
1890);
9. To render an account of his transactions and to deliver to the principal whatever he may
have received by virtue of the agency (Civil Code, Art. 1891);

Obligations of the Principal:

General obligation of the principal to agent:

The duties and liabilities of the principal are primarily based upon the contract and the validity
of the contract between them. In addition to his contractual duties, the principal is under an
obligation to deal fairly and in good faith with his agent.

Specific obligation of the principal to agent:

1. To comply with all the obligations which the agent may have contracted within the scope of
his authority (Civil Code, Arts. 1910, 1881, 1897) and in the name of the principal (Civil
Code, Arts. 1886, 1883);
2. To advance to the agent, should the latter so request, the sums necessary for the execution
of the agency (Civil Code, Art. 1912);
3. To reimburse the agent for what the latter has advanced (plus interest), even if the business
was not successful, provided the agent was free from fault (Civil Code, Art. 1912);
4. To indemnify the agent for all the damages, which the execution of the agency may have
caused the latter without fault or negligence on his part (Civil Code, Art. 1913);

5. To pay the agent the compensation agreed upon, or if no compensation was specified, the
reasonable values of the agent’s services (Civil Code, Arts. 1875, 1306)

SALE

CONTRACT PARTIES OBJECT FORM
SALE Vendor/Seller Real Property and General Rule: A contract of sale
Personal Property; may be made in writing, or by
And word of mouth, or partly in writing
Movable and Immovable and partly by word of mouth, or
Vendee/Buyer Property; may be inferred from the conduct
of the parties.
Rights and Interest in
Property, except Future Exception:
inheritance 1. Sale of personal property at a
price not less than P500;
2. Sale of real property or an
interest therein regardless of
the price involved;
3. Sale of property or of an
interest therein not to be
performed within a year from
the date thereof regardless of
the nature of the property and
the price involved; and
4. When an applicable statute
requires that the contract of
sale be in certain form. (Art.
1403 (2)(a)(d) and (e) and Art.
1356, NCC
LEASE
PRINCIPAL ONEROUS/ UNILATERAL/
PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
Consensual Principal Onerous Bilateral Obligations of the Vendor:
1. Accord the buyer the right to examine the goods (NCC Article 1584);
2. Deliver the thing sold (NCC, Articles 1458 and 1495);
3. Deliver the fruits and accessories (NCC, Articles 1164, 1166, and
1537);
4. Enter into contract with the carrier on behalf of the buyer as may be
reasonable under the circumstances (NCC, Article 1523);
5. Take care of the thing, upon perfection and prior to delivery, with the
proper diligence of a good father of a family (NCC, Article 1163);
6. Make warranties (can be waived or modified; warranty is not an
essential element of the contract of sale) (NCC, Arts. 1545-1581);
7. Pay for the expenses for the execution and registration of the sale,
unless there is stipulation to the contrary (NCC, Art. 1487);
8. Notify the buyer regarding the necessity to insure goods if it is usual
to insure them (NCC, Art. 1523);
9. Transfer ownership (NCC, Arts. 1458 and 1495)
Obligations of the Vendee:
1. To accept delivery of the thing sold;
2. To pay the price of the thing sold in legal tender unless another mode
as agreed upon at the time and place stipulated in the contract; and
3. 3. To bear the expenses for the execution and registration of the sale
and putting the goods in a deliverable state, if such is the stipulation.
(Civil Code, Article 1582)
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION RIGHTS AND OBLIGATION OF PARTIES
/ACCESSORY GRATUITOUS BILATERAL
LEASE Lessor Lease of things (movable Lease may be made orally, but if Consensual Principal Onerous Bilateral Obligations of Lessor:
or immovable) (Civil the lease of real property is for 1. Cannot alter the form of the thing leased (Civil Code, Art. 1661);
Lessee Code, Article 1654); more than 1 year, it must be in It requires that 2. The obligation to protect the lessee covers acts of third person and of
writing, in compliance with the there must be rent, the lessor;
Lease of Service (Civil Statute of Frauds. (Civil Code, compensation or 3. Delivery of the object (Civil Code, Art. 1654 [1]);
Code, Articles 1689, Article 1403, 2 (e)) price certain 4. Maintenance in peaceful and adequate enjoyment of the lease for the
1700, and 1732); entire duration of the contract (Civil Code, Art. 1654, [3]);
5. Making of necessary repairs unless there is a stipulation to the
Lease of work (Civil Code, contrary.
Article 1713)
Obligations of the Lessee:
1. To pay the price of the lease according to the terms stipulated (Civil
Code, Art. 1657 [1]);
2. To use the thing leased as a diligent father of a family would, devoting
it to the use stipulated; and in the absence thereof, to that inferred
from the nature of the thing leased according to the custom of the
place (Civil Code, Article 1657, [2]).
3. To make urgent repairs even if annoying to him unless the place
becomes uninhabitable (Civil Code, Art. 1662, par. 1, par. 3)
4. To pay expenses for the deed of lease. (Civil Code, Art. 1657 [3]);
5. To notify the lessor of usurpation or untoward acts which any third
person may have committed or may be openly preparing to carry out
upon the leased thing. (Civil Code, Article 1663);
6. To notify the lessor of need for repairs (Civil Code, Art. 1663 par.2)
7. To return the property leased upon termination of the lease in the
same condition as he received it save what has been lost or impaired
by lapse of time, ordinary wear and tear, inevitable cause/fortuitous
event. (Civil Code, Art. 1665)

PARTNERSHIP
 PRINCIPAL ONEROUS/ UNILATERAL/
CONTRACT PARTIES OBJECT FORM PERFECTION
/ACCESSORY GRATUITOUS BILATERAL
Partnership Partners Money, Property A. Form if personal property is Consensual Principal Onerous Bilateral
or Industry (Art. contributed:
1. Capitalist – partner who 1767, NCC)
contributes money or property i. If capital is less than P3,000 – No special
form is required for its validity or
2. Industrialist – partner who existence.
contributes industry or services ii. Where the contract of partnership has a
capital of P3,000 or more, in money or
property – it shall appear in public
instrument and must be recorded in the
office of the Securities and Exchange
Commission

B. Form if Real Property is contributed (where

immovable
property or real rights are contributed
regardless of the value thereof):

i. The contract itself must be in writing in a

public instrument; and
ii. an inventory of the property contributed
signed by the parties is attached to the
public instrument

PARTNERSHIP (CONT.)
 RIGHTS AND OBLIGATIONS OF PARTNERS
OBLIGATIONS OF PARTNERS AMONG THEMSELVES RIGHTS OF A PARTNER OBLIGATIONS OF A PARTNER TO THIRD PERSONS

Obligation with respect to contribution of property: 1. Property rights of a partner. (Civil Code, Art. 1. Liability for contractual obligation. (Civil Code, Art. 1816);
a. To contribute what had been promised (Civil Code, Article 1786); 1810); 2. Liability of partnership for acts of partners. (Civil Code, Art. 1818);
b. To warrant property contributed in case of eviction (Civil Code, Art.1786); 2. Right to reimbursement for amounts 3. Liability of partnership for torts. (Civil Code, Art. 1822);
c. To deliver the fruits of the property from the time they should have been delivered, without the need of any demand (Civil Code, Art. advanced to the partnership and to 4. Liability of partnership for breach of trust. (Civil Code, Art. 1823)
1786); indemnification for risks in consequence of
d. When contribution is in goods, the amount thereof must be determined by proper appraisal of the value thereof at the time of management. (Civil Code, Art. 1796);
contribution (Civil Code, Art. 1787); 3. Right to associate with another person in his
e. To preserve the property with the diligence of a good father of a family pending delivery to the partnership (Civil Code, Art. 1163); and share. (Civil Code, Art. 1804);
f. To indemnify for any damages caused by the retention of the property or by delay in its contribution (Civil Code, Arts. 1788 &1170). 4. Right of access and inspection of
partnership. (Civil Code, Art, 1805);
Obligations with respect to contribution of money and money converted to personal use: 5. Right to a formal account of partnership
a. To contribute on the date due the amount promised to be given (Civil Code, Art. 1788); affairs under certain circumstances. (Civil
b. To reimburse any amount he may have taken from the partnership coffers and converted to his own personal use (Civil Code, Art. 1788); Code, Art. 809);
c. To indemnify the partnership for the damages caused to it by the delay in the contribution (Civil Code, Art. 1788); 6. Right to true and full information of all the
d. To pay the agreed or legal interest, if he fails to pay in due time (Civil Code, Art. 1788) things affecting the partnership. (Civil Code,
Art. 1806)
Obligation not to engage in other business for himself: 7. Right to have partnership dissolved under
a. Industrial partner cannot engage in any business for himself unless the partnership expressly permits him to do so. The other partners certain conditions.
have the remedy of either excluding the erring partner from the firm or of availing themselves of the benefits which he may have
obtained.
b. Capitalist partner – the prohibition extends only to any operation which is of the same or similar kind of business in which the
partnership is engaged unless there is a stipulation to the contrary. (Civil Code, Art. 1808)

Obligation to contribute capital and additional capital:

a. The partners shall contribute equal shares except when there is a stipulation to the contrary; or an industrial partner unless besides his
services, he has contributed capital pursuant to an agreement to that effect.
b. A partner is not bound to contribute to additional capital (Civil Code, Art. 1791) except when there is an agreement to the contrary or in
case of imminent loss of the business;

Obligation of managing partner who collects debt:

Where a person is separately indebted to the partnership and to the managing partner at the same time, any sum received shall be applied to the
two credits in proportion to their amounts even though he may have given a receipt for his own credit only, except where he received it entirely for
the account of the partnership, in which case the whole sum shall be applied to the partnership credit only. (Civil Code, Art. 1792) This does not
apply if the collecting partner is not a managing partner.

Obligation of the partner who receives share in partnership credit:

Such partner is obliged, if the debtor should become insolvent, to bring to the partnership capital what he received even though he may have given
receipt for his share only (Civil Code, Art. 1793)

Obligation of a partner for damages to partnership:

Every partner is responsible to the partnership for damages suffered by it through his fault and he cannot compensate them with the profits and
benefits which he may have earned for the partnership by his industry. (Civil Code, Art. 1794)

Duty to render information:

Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any
deceased partner of any partner under legal disability.(Civil Code, Art. 1806)

Obligation to account for any benefit and hold as trustee unauthorized personal profits:
Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other
partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.
(Civil Code, Art. 1807)