Partnership ( 1767 – 1863) 5.

Intention to divide profits and losses

1767 – Partnership (defined)
• 2 or more parties
• Money, property, or industry
(Not required I-contribute lahat)
Money & Property – Capitalist Partner
Industry – Industrial Partner
• Intention of dividing profits (best test to
determine the existence)
2 Kinds of Persons (1768)
1. Natural – created by birth
2. Juridical – Private & Public Juridical Person
- Separate and distinct personality
Advantages of being juridical person
• Juridical Capacity - fitness to be subject of
legal relations (minor)
• Capacity to Act – power to do acts of legal
effects

1. Partnership enters to another Partnership = 1769 3 Basic Test

Yes G.R. In determining whether a person is a partner
2. Partnership enters to Corporation = Yes 1. Required Contribution
3. Corporation enters to Partnership = G.R. Not 2. Share in right / management
allowed 3. Share in Losses
➢ because of Delectus Personarum – choice Exemption: In case of doubt 1769
of the person 1. TPs are not partner E – 1825
➢ Exception Joint Venture 2. Co-ownership / Co possession
4. Corporation enters to another Corporation = - Not a partnership
Yes - Purpose: common enjoyment of the thing
Can partner be exempted from giving - Co-ownership – Partition - Partnership
contributions? No. 3. Sharing of Gross returns
Is actual delivery required to create partnership? Partnership: Net returns (losses and profits)
No. mere promise is enough 4. Receipt of a person in share of profits (G.R.)
The partner did not contribute is the partnership Exception: 5 Instances
still valid. Remedy: Compel specific 1) Death by installment or otherwise
performance (creditor is not a partner – receipt is
incidental)
Characteristics of Partnership 2) Wages of the employee/ landlord
1. Consensual – created by mere consent. 3) Annuity to the widow
Exception Real 4) Interest in the loan
2. Nominate – Opposite Innominate 5) Sale of a goodwill
3. Bilateral/ Multilateral – Not Unilateral
4. Onerous – Opposite Gratuitous 1770 Lawful object – Capital
5. Commutative – equivalent consideration / Lawful Purpose – Business itself
opposite Aleatory Effect of Unlawful Partnership
6. Principal – it can stand alone / opposite: 1. Void ab initio
accessory 2. No juridical declaration
7. Preparatory – Preparation
LESSON: 1771 – 1713
Contribution – Check Form of Partnership
G.R.: No form is required because partnership is
Elements of Partnership consensual
1. Valid Contract – create if we have COC Exemption: a form is required
Major advantage of partnership 1. 1771 – 1773 (Immovable/Real property is
- Delectus pesonarum: choice of person contributed Requirement: public instrument
- Fiduciary : Trust and confidence and inventory)
2. Legal Capacity – need to be capacitated 2. 1403(2) (more than 1 yr. must be in writing if
3. Mutual Contribution – no one can be not this is unenforceable)
exempted. Delivery is not required only for 3. 1844 (Limited Partnership: Requirement
transferring ownership Public Instrument & Registered if not General
4. Object must be lawful
 Partnership) General – liable hanggang sa Except the fruits thereof(3rd paragraph
kanilang private properties 1779), future properties: Not allowed

1772 – 3,000 or more contribution 1780: UP of all Profits

- Public and Registration
- This is optional for BIR and SEC
1773 Inventory
- Must be made, signed, and attached to the
Public Instrument (Notarized)
- Area, kind of land, owner
1774 All Acquisition / conveyance
- conveyed only in the partnership name.
1175 Secret Partnership
- have no juridical personality
- Law on Co-ownership will be applied
1776 – Kinds of Partnership
1. Universal v. Particular – specific and not
specific purpose
2. General v. Limited – yung liable general:
limited only contributed property is liable.
3. At Will v. Fixed – no period at will
4. De Jure v De facto – nacomply – De jure
hindi na comply – De facto
5. Ordinary/Real v. Ostensible/ Estopel –
valid real : Estopel: Ostensible partnership
6. Secret v. Open/Notorious
7. Commercial v Professional – trading :
commercial / not trading : Professional
Kinds of Partnership
Capitalist v. Industrial
General v. Limited
Sub Partner v. SLP
Managing v. Liquidating – not manage silent
partner
1. Industry or work during the existence of
the partnership
2. Usufruct – right to use (Jus Utendi)
Not included profits by acquired by
lucrative title
1781: Presumption in favor of All Profits
1782: Persons who are prohibited to enter in
Universal partnership
If 1 is incapacitated – voidable
If both are incapacitated – unenforceable
If 1 or both are prohibited – void
o H&W selling – void No
o H&W donating - No
o H&W universal partnership – No
o H&W limited partnership – yes
Prohibited: Article 739 – kabit and sulsulan yung
officers
Art. 1783 Particular Partnership
1. Determinate things – Land – cultivate
2. Use or Fruits – car rental
3. Specific undertaking – building
4. Exercise of a Profession – law firm

Kilala Manage
Ostensible / /
Secret X /
Silent / X
Dormant X X

1777 Universal Partnership

1. All present Property – ownership
2. All profit – only the use
1178: Universal Partnership of All Present
Property
1. Props owns at the time of creation
2. Profits from properties contributed
3. Stipulation for the common enjoyment of
any other profits, but the properties which
maybe subsequently acquired by
inheritance, legacy or donation ( cannot)
 Lecture Atty
Partnership
- 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 (Art. 1767,
NCC)
- money and property
- Industry
Corporation
- is an artificial being created by operation
of law, having the right of succession and
the powers, attributes and properties
expressly authorized by law or incident to
its existence (Sec. 2, RA 11232)
GENERAL PROVISIONS (1767-1783)
Delectus personarum / Delectus personae –
- literally, choice of the person
- Nobody can become a member of the
partnership without the consent of all the
partners.
Fiduciary relationship - Trust and confidence
Only partnership can exercise of a profession
Pwede partnership sa corporation
Corporation pwede pumasok sa ibang
corporation
Bawal pumasok ang corporation sa partnership
– kasi delectus personarum.
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
Two or more persons may also form a
partnership for the
exercise of a profession. (1665a)
Characteristics of Partnership
(1) Consensual v. (Real)
(2) Nominate v. (Innominate)
(3) Bilateral or multilateral v. (unilateral)
(4) Onerous v. (Gratuitous)
(5) Commutative v. (Aleatory)
(6) Principal v (Accessory)
(7) Preparatory
No exempt
Valid – di nag deliver
Demand - No
Compel specific performance - remedy
Essential features / Elements of Partnership
(1) There must be a valid contract - COC
(2) Legal capacity to enter into a contract
(3) Mutual contribution of money, property
or industry to a common fund
(4) Lawful object
(5) Intention to divide profits and losses
ARTICLE 1768. The partnership has a
juridical personality separate and distinct from
that of each of the partners, even in case of
failure to comply with the requirements of
article 1772, first paragraph.
2 kinds of persons
(1) Natural person
• Juridical capacity
Fitness to be the subject of legal
relations
• Capacity to Act
Power to do acts with legal effect
(2) Juridical person
• Private Juridical – partnership &
corporation
• Public jp – municipalities, baranggay
Concept of juridical personality
- separate and distinct
Doctrine of Corporation Fiction
1769
1-3 walang partnership 4 – meron abcd -
wala
ARTICLE 1769. In determining whether a
partnership exists, these rules shall apply:
DOUBT
(1-3 walang partnership)
(1) Except as provided by article 1825, persons
who are not partners as to each other are not
partners as to third persons.
(2) Co-ownership or co-possession does not of
itself establish a partnership, whether such co-
owners or co-possessors do or do not share any
profits made by the use of the property.
Co ownership – common enjoyment
Partnership – dividing profits
(3) The sharing of gross returns does not of
Itself establish a partnership, whether or not
the persons sharing them have a joint or
common right or interest in any property from
which the returns are derived: (NET
RETURN)
(4 – May partnership)
(4) The receipt by a person of a share of the
profits of a business is prima facie evidence
that he is a partner in the business, but no such
inference shell be drawn if such profits were
received in payment:
First glance at first instance – Prima facie
evidence
A-D ( No partnership)
(a) As a debt by installments or otherwise:
Creditor
(b) As wages of an employee or rent to a
landlord. Employee
(c) As an annuity to a widow or representative
of a deceased partner. Widow
d) As interest on a loan, though the amount of
payment vary with the profits of the business;
(e) As the consideration for the sale of a
goodwill of a business or other property by
installments or otherwise. in)
Partnership
1. Share losses
2. Nagpaparticipate sa Management
3. Contribution
ARTICLE 1770. A partnership must have a
lawful object or purpose and must be
established for the common benefit or interest
of the partners.
When an unlawful partnership is dissolved by
a judicial
decree, the profits shall be confiscated in favor
of the State, without prejudice to the provisions
of the Penal Code governing the confiscation
of the instruments and effects of a crime.
(1666a)
Effects of Unlawful partnership (unlawful
object or purpose)
▪ It is void ab initio
▪ Profits shall be confiscated in
favor of the
Government. Capital if it is illegal
▪ Instruments or tools and proceeds
of the
crime shall also be forfeited
▪ Contributions of the partners shall
not be
confiscated unless...
ARTICLE 1771. A partnership may be
constituted in any
form, except where immovable property or
real rights
are contributed thereto, in which case a public
instrument shall be necessary. (1667a)
ARTICLE 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.
(1668a)
Form of partnership
G.R. – no form is required by law
Pwede oral
Exceptions –
1. more than one year (in writing)
Unforceable pag hindi writing.
2. limited partnership (PI + Registered)
▪ Limited – dalawa klase
partnership limited and general.
General – liable Limited – not
liable yung separate.
 Requirement sa Limited
▪ Public Instrument
▪ Registered
Pag di nagawa magiging general - liable
3. immovable property was contributed
(VOID kapag wala)
(PI + Inventory)
ARTICLE 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.
Partnership with capital of P3,000 or more
Requirements
1. public instrument
2. registered with SEC
Effect of non-compliance – still valid
ARTICLE 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.
ARTICLE 1775. Associations and societies,
whose articles are kept secret among the
members, and wherein any one of the members
may contract in his own name with third
persons, shall have no juridical personality,
and shall be governed by the provisions
relating to co-ownership. (1669)
Bawal ang secret partnership
Co-ownership – no separate and distinct
personality.
ARTICLE 1776. As to its object, a
partnership is either universal or particular. As
regards the liability of the partners,a
partnership may be general or limited. (1671a)
▪ Universal – broad di naka specify ang
purpose (Bawal ang husband and
wife)
▪ Particular – naka specify purpose
At will – walang period
Basahin libro ni de leon
ARTICLE 1777. A universal partnership may
refer to all the present property or to all the
profits. (1672)
All Present Property – ownership and use
Profits – use
Art. 1778. A partnership of all present (3)
property is that in which the partners
contribute all the property which actually
belongs to them to a common fund, with the
intention of dividing the same among
themselves, as well as all the profits they may
acquire therewith.
Art. 1779. In a universal partnership of all
present property, the property which belongs
to each of the partners at the time of the
constitution of the partnership
becomes the common property of all the
partners, as well as all the profits which they
may acquire there with. (2)
A stipulation for the common enjoyment of
any other profits may also be made; but the
property which the partners may acquire
subsequently by inheritance, legacy or
donation cannot be included in such
stipulation, except the fruits thereof. ( fruits
pwede isama)
Art. 1780. A universal partnership of profits
comprises all that the partners may acquire by
their industry or work during the existence of
the partnership.
Movable or immovable property which each of
the partners may possess at the time of the
celebration of the contract shall continue to
pertain exclusively to each, only the usufruct
passing to the partnership.
Usufruct – right to ….
Art. 1781. Articles of universal partnership,
entered into without specification of its nature,
only constitute a universal partnership of
profits.

In case of doubt –
General or Limited
UP of All Present Prop or UP of
Profits

Art. 1782. Persons who are prohibited from

giving each other any donation or advantage
cannot enter into a universal partnership.

Art. 87: Donations between spouses during

marriage void, except moderate gifts on
occasion of family rejoicing. Also applies to
those living together as husband and
wife w/o valid marriage.

Art. 739: The following donations are void:

1. Those made between persons who are
guilty of adultery or concubinage at
the time of the donation (no need for
conviction; preponderance of
evidence only required);
2. Those made between persons found guilty
of the same criminal offense,
inconsideration thereof;
3. Those made to a public officer or his wife,
descendants and ascendants, by reason of
his office.

Particular Partnership has for its object –

▪ determinate things
▪ their use or fruits
▪ specific undertaking
▪ exercise of a profession or vocation