Law on partnership

• Articles 1767 to 1867 of Title IX,

  Book IV of the Civil Code of the Philippines. The entire provisions of law relative to partnership
• Article 1767 of Book IV of the Civil Code of the Philippines. A partnership is a type of business organization created by a contract. there may be a partnership, two or more persons must agree to unite their money, property, labor, or skill in carrying out a legitimate business for profit.
• Article 1768 - it may acquire and possess all kinds of properties, incur obligations, and file cases or become defendants in cases filed in courts.
• Article 1774 - real properties or any interest therein may be acquired in the partnership name since it has a juridical personality separate from and distinct from the partners and ownership can be conveyed only in the name of the partnership.
• In order to establish the existence of a partnership, there must be:

  1. a valid contract;

  2. legal capacity of the persons forming the partnership;

  3. mutual contribution of money, property, or industry to a common business;

  4. a lawful business; and

  5. primary purpose which is to obtain profits and to divide the same among the parties.
• Partnership as a contract

  • Consensual - perfected by mere consent, except if real property is contributed wherein, it becomes a formal or solemn contract that requires the contract of partnership to be notarized and an inventory of real property attached to the said public instrument
  • Bilateral - entered between two or more persons with reciprocal rights and obligations
  • Principal - does not depend for its validity or existence upon some other contract
  • Commutative - the undertaking of one partner is regarded as the equivalent of that of the other partners
  • Preparatory - entered into so that such persons may lawfully engage in business to realize profits which will then be divided among themselves
  • Onerous - partners contribute something so that they may share in the profits of the business
  • Nominate - has a special name or designation under the law
• Article 1778 - a universal partnership of all present property, the partners contribute all the properties that belong to them to a common fund together with the profits they may acquire from said properties.
• Article 1779 - they may also agree to include all other profits they may subsequently receive but the property that the partners may acquire subsequently by inheritance, legacy, or donation cannot be included in their agreement, except the fruits thereof.
• Article 1780 - universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership
• Article 1781 - when the articles of universal partnership do not specify the nature of the partnership, the presumption is that the partners intended only a universal partnership of profits.
• Article 1782 - persons who are prohibited by law to give donations to each other, such as a husband and wife, cannot form a universal partnership.
• Article 1783 - While spouses cannot enter into a universal partnership, they can form and be partners in a limited partnership Article 1783 contemplates a particular partnership known as a professional partnership formed by professionals who join together to practice their profession.
• Article 1771 - as a general rule, a contract of partnership may be made orally or in writing, unless real property or rights are contributed, in which case, it should be in a public instrument.
• Article 1772 - when cash or property worth 13,000 or more is contributed as capital, the Articles of Partnership shall be in a public instrument and registered with the Securities and Exchange Commission (SEC).
• Article 1773 - if real property, regardless of value, is contributed by any of the partners, the contract of the partnership must be in a public instrument, and attached to it should be an inventory of the property contributed, duly signed by the parties.
• Article 1775 - associations whose articles are kept secret among the members and where they contract in their own name with third persons are not partnerships because they do not have juridical personality, and are governed by the provisions on co-ownership.
• Article 1785 - a partnership term may be extended expressly or impliedly, when the partnership is for a fixed term or particular undertaking and is continued, without any express agreement, after the termination of the fixed term or particular undertaking.
• Types of partnerships

  • Partnership de jure
  • Partnership de facto
  • Universal partnership of all the present property
  • Universal partnership of all profits
  • Particular partnership
  • General partnership
  • Limited partnership
  • Secret partnership
  • Open or notorious partnership
  • Commercial or trading partnership
  • Professional or non-trading partnership
  • Partnership for a fixed term
  • Partnership for a particular undertaking
  • Partnership at will
• Partnership de jure


  Partnership that has complied with all the requisites for its lawful establishment
• Partnership de facto


  Partnership that failed to comply with all the requisites for its lawful establishment
• Universal partnership of all the present property


  Partnership whose object is all the present property
• Universal partnership of all profits


  Partnership whose object is all profits
• Particular partnership


  Partnership whose object is not all the present property or all profits
• General partnership


  Partnership consisting of general partners who are liable pro rata and subsidiarily or at times solidarily with their separate property for partnership obligations
• Limited partnership


  Partnership formed by two or more persons having as members one or more general partners and one or more limited partners who are not personally liable for the partnership obligations
• Secret partnership


  Partnership where the existence of certain persons as partners is not made known by the partners
• Open or notorious partnership


  Partnership whose existence is made known to the public by the partners
• Commercial or trading partnership


  Partnership that exists for the transaction of business
• Professional or non-trading partnership


  Partnership that exists for the exercise of a profession
• Partnership for a fixed term


  Partnership that exists for a fixed term
• Partnership for a particular undertaking


  Partnership that exists for a particular undertaking
• Partnership at will


  Partnership that exists at the will of the partners
• Different kinds of partners

  • Capitalist partner
  • Industrial partner
  • General partner
  • Limited partner
  • Managing partner
  • Liquidating partner
  • Partner by estoppel
  • Continuing partner
  • Surviving partner
  • Sub-partner
  • Ostensible partner
  • Secret partner
  • Silent partner
  • Dormant partner
  • Original partner
  • Incoming partner
  • Retiring partner
• Capitalist partner


  Contributes money or property
• Industrial partner


  Contributes only his industry, skills, or services
• General partner


  Liability to third persons extends to his separate property
• Limited partner


  Liability to third persons is limited to his capital contribution
• Managing partner


  Designated to manage the affairs or business of the partnership
• Liquidating partner


  Takes charge of winding up the partnership affairs
• Partner by estoppel


  Not really a partner but is liable as such for the protection of innocent third persons