PARTNERSHIP Law on Business Organizations Reviewer

Art. 1767. By the contract of partnership failure to comply with the requirements of
two or more persons bind themselves to Article 1772, first paragraph.
contribute money, property, or industry to
a common fund with the intention of Partnership, a juridical person
dividing the profits among themselves. As an independent juridical person, a
partnership may enter into contracts,
Definition acquire and possess property of all kinds in
Partnership is a contract whereby two or its name, as well as incur obligations and
more persons bind themselves to bring civil or criminal actions. Thus, a
contribute money, property or industry to a partnership may be declared insolvent even
common fund with the intention of dividing if the partners are not. It may enter into
profits among themselves. contracts and may sue and be sued in its
firm name or by its duly authorized
Elements representative. It is sufficient that service
1. Intention to form a contract of of summons be served on any partner.

partnership Partners cannot be held liable for the

2. Participation in both profits and losses obligations of the partnership unless it is
3. Community of interests shown that the legal fiction of a different
juridical personality is being used for a
Basic Features fraudulent, unfair or illegal purpose.
1. Voluntary agreement
2. Association for profit Effect of failure to comply with statutory
3. Mutual contribution to a common fund requirements
4. Lawful purpose or object Under Art 1772
5. Mutual agency of partners Partnership still acquires personality despite
6. Articles must not be kept secret failure to comply with the requirements of
7. Separate juridical personality execution of public instrument and
registration of name in SEC.
Characteristics
1. Consensual – perfected by mere Under Arts 1773 and 1775
Partnership with immovable property
consent. contributed, if without requisite inventory,
2. Bilateral – formed by two or more signed and attached to public instrument,
shall not acquire any juridical personality
persons creating reciprocal rights and because the contract itself is void. This is
obligations. also true for secret associations or societies.
3. Preparatory - entered into as a means
to an end. To organize a partnership not an absolute
4. Nominate – has a special name or right
designation. It is but a privilege which may be enjoyed
5. Onerous – contributions in the form of only under such terms as the State may
either money, property and/or industry deem necessary to impose.
must be made.
6. Commutative – the undertaking of each Art. 1769. In determining whether a
partner is considered as the equivalent partnership exists, these rules shall apply:
of that of the others.
7. Principal – its existence or validity does 1. Except as provided by Article 1825,
not depend on some other contract. persons who are not partners as to
each other are not partners as to third
Principle of Delectus Personae (choice of persons.
persons) – a person has the right to select
persons with whom he wants to be 2. Co-ownership or co-possession does
associated with in partnership. not of itself establish a partnership,
whether such co-ownership or co-
Art. 1768. The partnership has a juridical possessors do or do not share any
personality separate and distinct from that profits made by the use of the property.
of each of the partners even in case of