PARTNERSHIP

Chapter 1 General Provisions

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.
- You want to have a limited liability business.
- Accountants and Lawyers cant be a corporation, only partnerships
- JSEC - partnership
- Partner that gives industry- industrial partner (has an expertise)
- Charity isnt a valid partnership (it should be making profit or doing business)
- Partners divide the profit among themselves

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 requirements of Article
1772, first paragraph
- Identity separate and distinct

ARTICLE 1769.
In determining whether a partnership exists, these rules apply:
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 property;
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;
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

- It looks like theres a partnership cause theres a division of profits

- Persons who are not partners to each other arent partners with third parties
- Co-possession is not a partnership, whether they do or do not share the profits.
 - (Siblings that inherited a business) They were not able to choose who they are
partners with (forced to be together)
- Delectus Personae- personal choice
- A partnership: its the freedom to choose who are your partners or who you want to
associate with
- All of them have to agree to take someone new into the partnership.
- Not just because you share the income of something, you are partners

ARTICLE 1770

p.98
- Conjugal partnership of gains (when you get married)
- ABSOLUTE C
- Prenup agreement (to share everything you owned)
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ARTICLE 1771.
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 juridical 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.
- Meeting of the minds and
- Immovable
o Public document- notarized

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 SEC.
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.
- Even if youre not registered with the SEC, you will still be liable insofar as third
parties are concerned
- Like Corporation by Estoppel or de facto
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.
- Inventory has to be proposed because you have to be transparent with the public
- Third parties will no the extension of your assets (protection to the third parties)

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.
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ARTICLE 1775.
Associations and societies, whose articles are kept secret among the members,
and wherein anyone of the members may contract in his own name with third
persons, shall have no juridical persons, shall have no juridical personality, and shall
be governed by the provisions relating to co-ownership
- As so far as third partners are concerned there is no partnership since they have no
juridical personality
- Their liability is as co-owners (forced into it) not a partnership
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
- SKIP
ARTICLE 1777.
A universal partnership may refer to all the present property or to all the
profits
- SKIP. JUMP TO ARTICLE 1782
ARTICLE 1782
Persons who are prohibited from giving each other any donation or advantage
cannot enter into a universal partnership.
- You cant give all your assets to your spouse, only increments
- Adultery- crime committed by the wife having a relationship with another
man/woman
o If the wife commits once, adultery immediately
- Concubinage- crime committed by the husband having a concubine
o If husband has a one night stand, its not a crime. Its only a crime if he gave
the girl support.
ARTICLE 1783.
A particular partnership has for its object determinate things, their use or
fruits, or a specific undertaking, or the exercise of a profession or vocation

Chapter 2 Obligations of the Partners

ARTICLE 1784.
A partnership begins from the moment of the execution of the contract, unless
it is otherwise stipulated.
- Commenced when the contract is executed
- A contract is executed (and binding) if they agreed with the terms, and it doesnt
have to be in writing
- The cause is the profit
- The object is the business and property
- The consent is the contract
- When the three is present, its executed
ARTICLE 1785.
When a partnership for a fix 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 the 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.
- Partnership at will- there was a term
- Ex. 1 year and they still continued business is valid; after that term they are not
automatically continue for another year, but they can dissolve anytime
ARTICLE 1786.
Every partner is a debtor of a partnership for whatever he may have promised
to contribute thereof
He shall with regard also be bound for warranty in case of eviction with
regard to specific and determine things which he may have contributed to the
partnership, in the same cases and in the same manner as the vendor is bound with
the respect to the vendee. He shall also be liable for the fruits thereof from the time
they should have been delivered, without the need of any demand.
- Bound with warranty, you can occupy it. If youre ejected, he caanot be sued
- Even without demand the partnership is entitled to the fruits

ARTICLE 1787.
When the capital or a a part thereof which a partner is bound to contribute
consists of goods, their appraisal must be made in the manner prescribed in the
contract of partnership, and in the absence of the stipulation, it shall be made by
experts chosen by the partners, and according to current prices, the subsequent
changes thereof being for the account of the partnership.
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ARTICLE 1788.
A partner who has undertaken to contribute a sum of money and fails to fo so
becomes a debtor for the interest and damages from the time he should have
complied with his obligation.
The same rule applies to any amount he may have taken from the partnership
coffers, and his liability shall begin from the time he converted the amount to his
own use.
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ARTICLE 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.
- Maraming connections (industrial- no capital)
 - Cars and wellness business at the same time is wrong unless he gets permission
even if its not in conflict with the present partnership.
- If he has another person, the industrial partners effort is divided
ARTICLE 1790.
Unless there is a stipulation to the contrary, the partners shall contribute
equal shares to the capital of the partnership.
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ARTICLE 1791.
If there is no agreement to the contrary, in case of an imminent loss of the
business of the partnership, any partner who refuses to contribute an additional
share to the capital, except an industrial partner, to save the venture, shall be
obliged to sell his interest to the other partners.
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ARTICLE 1792.
If a partner authorized to manage collects a demandable sum, which was owed
to him in his own name, from a person who owed the partnership another sum also
demandable, the sum thus collected 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;
but should he have given it for the account of the partnership credit, the amount
shall be fully applied to the latter.
The provisions of this article are understood to be without prejudice to the
right granted to the debtor by Article 1252, but only if the personal credit of the
partner should be more onerous to him.
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ARTICLE 1793.
A partner who has received, in whole or in part, his share of a partnership
credit, when the other partners have not collected theirs, shall be obliged, if the
debtor should thereafter become insolvent, to bring to the partnership capital what
he received even though he may have given receipt for his share only.
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ARTICLE 1794.
Unless there is a stipulation to the contrary, the partners shall contribute
equal shares to the capital of the partnership.
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ARTICLE 1797.
- Proportionate, if his contribution is 10%, his profit/loss is 10%
- Industrial partner isnt liable for losses
- Loss (something realized; expense more than income) vs. liability (still to be paid)
- Liability can become a loss
- Profits- industrial partner get share that JUST and EQUITABLE under circumstances
ARTICLE 1798
- Manifestly equitable
- Estoppel- you agreed but did not complain in three months
ARTICLE 1799
- If you lack the division, partnership is void.
ARTICLE 1800
- You acted in bad faith
- Decision of the managing partner will prevail if in good faith.
- If he has 51%, he can revoke the power. -controlling interest
- If granted after, can be evoke anytime.
ARTICLE 1801
- Generally anyone can bind the partnership
- If you have 2 entrusted with management, if you dont need consent of both, anyont
can bind the partnership
- Decision of all the partners not controlling interest (if tie- controlling interest)
ARTICLE 1802
- If articles require consent of all, their absence isnt an excuse

ARTICLE 1803
- No rules on who will manage, all partners are agents
- No big decisions even if its useful
- If their refusal is manifest, go to court

ARTICLE 1807
- Profits derived from the use of property of the ownership will be distributed to the
partners

ARTICLE 1808
- Capitalist partner cannot engage in the kind of business partnership is engaged
- He can do other businesses as long as its not the same as the existing
ARTICLE 1815
- If a persons name is in the firm name, hes liable even if hes not a person
ARTICLE 1816
- Liability- things that people owe
- Loss- when all the assets are exhausted, and not enough to pay for liabilities

ARTICLE 1818
- Expressly implied can be done
- Partner can act as an agent, as long as its in line with their business

ARTICLE 1819
- Cannot go against third person

ARTICLE 1820
- If one person knows, its assumed all the other partners know. (delectus personae)
- Crime committed by one, it assumed to be known (authorized) by all.

ARTICLE 1821
- Fraud (same like 1820)

ARTICLE 1822
- Wrongful act causes loss or liability

Chapter 3 Dissolution and Winding Up

ARTICLE 1828
- Dissolution- change in relationship -> delectus personae
- Winding- take care of affairs (you can still revive the partnership)
- Termination- closure; dissolved

ARTICLE 1835
- Partner dies- partnership is dissolved
Chapter 4 Limited Partnership

ARTICLE 1843
- General Partner- At least 2
- Limited partner- at least 1 (like a stockholder)
- limited until the extent of his contribution
- cannot contribute service
- putting his name in the business name makes you a general
partner

ARTICLE 1848
- Limited partner that takes part in controlling the business makes them a general
partner
- Limited partners does not have so much benefits, only in charge of decision making,
not control
ARTICLE 1852
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