Part 1 – Partnership
partnership unless otherwise provided in the
Chapter 1: General Provisions
Art. 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.
Partnership defined:
 Association of 2 or more persons
 Legal relation based upon the
agreement of 2 or more persons
 Joint undertaking to share in the
profit/loss
 Status arising out of a contract
 Organization for production of income
 Entity distinct and apart from the
members composing it.
 Exercise of profession
 Fiduciary in nature
Profession – calling in the preparation for or
practice of which academic learning is required
and which has for its prime purpose the rendering
of public service.
- a group of men pursuing a learned art
as a common calling in the spirit of public service
Elements of partnership:
 Consensual – perfected by mere
consent
 Nominate – has specific name under the
law
 Bilateral – entered by two or more
persons and the rights & obligations are
reciprocal
 Onerous – partners are required to
contribute something to the partnership
 Commutative – undertaking of each of
the partner is equivalent to that of others
 Principal – does not depend for its
existence or validity upon some other
contract
 Preparatory – entered into as a means to
an end
* No one can become a member of the
agreement
* An act or will of a partner to dissolve the
partnership cannot be prevented by the
presence of a specific duration or the statement
of a particular purpose for its creation.
Features of a partnership: (VALE MU LA PU)
1. There must be a valid contract
2. Parties must have legal capacity to enter
into a contract
3. There must be mutual contribution
4. Object must be lawful
5. Its primary purpose must be to obtain
profits and to divide the same among
the parties
Since partnership is contractual, the requisites of
a valid contract must be present: Consent,
Object and Consideration
General rule: any person may ne a partner who is
capable under the law (examples of
incapacitated: unemancipated minors, insane or
demented persons, deaf-mutes who do not
know how to write, persons suffering from civil
interdiction, incompetents under guardianship)
Exception: persons who are prohibited from
giving each other donation or advantage
cannot enter into a universal partnership.
[spouses & persons living together as husband
and wife without valid marriage]
* There is no prohibition against a partnership
being a partner in another partnership.
* Unless authorized by the law, a corporation is
without capacity to enter into a partnership.
Forms of contribution:
 Money – must be legal tender; there is
no contribution of money until they have
been cashed
 Property – real or personal, tangible or
intangible
 Industry – work or services of the party
associated, which may be either
personal manual efforts or intellectual
and for which he receives a share in the
profits of the business
* The object is unlawful when it is contrary to law,
morals, good customs, public order or public
policy and if the object is unlawful, the
partnership is void.
* Partnership may be organized for any purpose
except that it may not engage in an enterprise
for which the law requires a specific form of
business. [e.g. banking]
* The partnership has a juridical personality
separate and distinct from each of the partners.
* Co-ownership or co-possession does not of itself
establish a partnership.
* If the existence of a partnership is unclear, rules
of Article 1769 shall apply.
- Persons not partners to each other are
not partners to third persons
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