General

Provisions
BUSINESS LAWS AND REGULATIONS
Partnership
A contract wherein two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing
the profits among themselves.
Problem
Sisters Mary and Antonette, entered into a “Joint Venture Agreement (JVA)” with John for the
development of a parcel of land into a subdivision. Pursuant to the contract, they executed a Deed
of Sale covering the said parcel of land in favor of John, who then had it registered in his name. By
mortgaging the property, John obtained from ABC Bank a loan of ₱400,000 which, under the JVA,
was to be used for the development of the subdivision. All three of them also agreed to share the
proceeds from the sale of the subdivided lots.

The project was not realized, and land was subsequently foreclosed by ABC bank.

Is there a partnership?
Answer
Yes. A reading of the terms embodied in the Agreement indubitably shows the existence of a
partnership pursuant to Article 1767 of the Civil Code, which provides:

“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 among
themselves.”
Elements of a Partnership
There shall be a partnership whenever:
1. There is a meeting of minds
2. To form a common fund
3. With the intention that profits (and losses) will be divided among the
contracting parties.
Essential Features
1. There must be a valid contract.

2. The parties must have legal capacity to enter into the contract

3. There must be a mutual contribution of money, property, or industry to a common fund.

4. There must be a lawful object.

5. The purpose or primary purpose must be to obtain profits and divide the same among the
parties.
CHARACTERISTICS OF A CONTRACT OF PARTNERSHIP

Consensual Commutative Principal Bilateral

Onerous Nominate Preparatory

 DOCTRINE OF DELECTUS PERSONAE

The right to choose with whom a person wishes to associate himself is

the very foundation and essence of partnership.

No one can become a member of the partnership association without

the consent of all the other associates.
 LEGAL CAPACITY

The following cannot give their consent to a contract of partnership:

A. Unemancipated Minors
B. Insane or demented minors
C. Deaf-mutes who do not know how to write
D. Persons who are suffering from civil interdiction; and
E. Incompetents who are under guardianship

Persons who are prohibited from giving each other any donation or
advantage cannot enter into a universal partnership.

Unless authorized by law, a corporation is without capacity or power to enter

into a contract of partnership.