ARTICLE 1767.

A contract is considered a partnership when at least to persons bind themselves to contribute money,
property or industry to a common fund to earn and divide those earnings among themselves.

Contract by definition is a written or spoken agreement that is intended to be enforceable by law. It is

important to note that a contract usually signifies intention to make the agreement legally binding, whether
written or spoken initially.

The Civil Code article enumerated what partners may contribute, these are money, property, and industry.
These are basically everything what a partner can contribute. Anything can fall under those enumerated.

ARTICLE 1768.
That partnership has a separate juridical personality from that of each partners, even in case of failure to
comply with Art. 1772, par. 1 of the Civil Code

Art. 1769 – Determinants for the Existence of a Partnership

Purpose:
- to indicate some test to determine if what may seem to be a partnership really is one, or it is not

 Requisites for Existence of Partnership

1. intention to create a partnership;

2.  common fund obtained from contributions;

3. there was joint interest in the profits;

 mere co-ownership or co-possession; mere profit sharing or GROSS returns do not establish a partnership

Art. 1770 – Lawful Object or Purpose

1.must be within the commerce of man, possible and not contrary to law, morals, good customs, public order
or public policy
2. if a partnership has several purposes, one of which is unlawful, the partnership can still validly exist so long
as the illegal purpose can be separated from the legal purpose

 -Judicial decree is not necessary to dissolve an unlawful partnership.

- the contract is void and therefore never existed from the viewpoint of the law

Art. 1771 – Formalities of Partnership

 General Rule:
-for the validity of the contract, as well as for enforceability, no form is required, regardless of the value of
the contributions

 Exception:
 - whenever real properties or real rights in real properties are contributed – regardless of the value – a public
instrument is needed. Moreover, an inventory of the immovables is needed. This must be signed by the
parties and attached to the public instrument

Art. 1772 – Partnership with capital of Php 3,000 or more – Registration with the SEC

·         Purpose of the registration with the office of the SEC

-          to set a condition for the issuance of licenses to engage in business or trade

Effect of non-registration

1.        even if not registered, the partnership having a capital of Php 3,000.00 or more is still a valid one, and
therefore has legal personality;

2.        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. 1773 – Where real property is contributed

 Requirements where real property is contributed

1.There must be a public instrument regarding the partnership;

2. The inventory of the realty must be made, signed by the parties, and attached to the public instrument

 
 Applicability

1. applies regardless of the value of the property;

2. applies even if only real rights over real property are contributed;

3. applies also if cash or personal property is contributed

Art. 1774 – Acquisition of property under the Partnership name

-applicable to immovable as well as personalty because the partnership is a juridical entity, capable of owning
and possessing property

- alien partners must comply with the requirements as provided for in Sec. 7, Art 12 of the 1987 Constitution

 Art. 1775 – Secret Partnership

 If articles are kept secret

1. the association here is certainly not a partnership and therefore not a legal person, because anyone of the
members may contract in his own name with third persons and not in the name of the firm;
2. although not a juridical entity, it may be sued by third persons under the common name it uses, otherwise,
said innocent third parties may be prejudiced;
3.  however, it cannot sue as such, because it has no legal personality and therefore, cannot ordinarily be a
party to a civil action;
4. therefore, insofar as innocent third parties are concerned, the partners can be considered as members of a
partnership; but as between themselves, or insofar as third persons are prejudiced, only the rules on co-
ownership must apply.  Same rule applies in the case of a partnership by estoppel

 Note:
-   contracts entered into by a partner in his own name may be sued upon still by him in his own individual
capacity, notwithstanding the absence of partnership

Art. 1782 – Persons prohibited by law to give donation- cannot enter into Universal Partnership

Reason: they should not be allowed to do indirectly what the law forbids directly

Art. 1783 – Particular Partnership

- it has for its object determinate things, their use of fruits, or specific undertaking, or the exercise of a
profession or vocation

 Doctrine:

If two (2) individuals form a particular partnership for a deal in reality, it does not necessarily follow that all
deals are for the benefit of the partnership.  In the absence of agreement, each particular deal results in a
particular partnership. If one of them, on his account, and using his own funds, should make transactions in
the same business, it is his own undertaking

 
Art. 1784 – When partnership begins

General Rule:
begins from the moment of the execution of the contract

Exception:
  unless it is otherwise stipulated

Intent to create a future partnership

Art 1784 presupposes that there can be a future partnership which at the moment has no juridical existence
yet

The agreement for a future partnership does not itself result in a partnership. The intent must be later on
actualized by the formation of the intended partnership

 
Rule if contributions have not yet been actually made

- generally, even if contributions have not yet been made, the firm already exists, for partnership is a
consensual contract (all requisites for such consent must be present)

Art. 1785 – Duration of Partnership

Duration: unlimited in the sense that no time limit is fixed by law; may be agreed upon (expressly or
impliedly)

Partnership “at will”

2 kinds
a. when there is no term, express or implied

b.  when continued by habitual managers

 note:

It is called “at will” because its continued existence really depends upon the will of the partners or even on
the will of any of them.

Art. 1786 – Duties of Parties

3 Important Duties of a partner

1. to contribute what has been promised;

2. to deliver the fruits of what should have been delivered; and
3.to warrant

 
 Obligations with respect to contribution 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; and
5. to indemnify the partnership for any damage caused to it by the retention of the sane or by the delay in its
contribution

Effects of failure to contribute property promised

-The mutual contribution to a common fund being of the essence of the contract of partnership, 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.

-The remedy of the partner is not rescission but an action for specific performance with damages and interest
from the defaulting partner from the time he should have complied with his obligation.

 Art. 1787 – Appraisal of Goods

-manner prescribed by the contract of partnership in the absence of stipulation, appraisal shall be made by
experts chosen by the partners and according to current prices