CONTRACT OF PARTNERSHIP; ARTICLE 1767 It could be a thing,animal, or anything that can

be considered as a property.
ARTICLE 1767. Ang pakikipagsosyo o
pakikipagasosasyon ay isang kasunduan kung Industry is hard work. A person can contribute
saan dalawa o higit pang mga tao ang his or herskills to be a partner. Any work such as
pumapayag na mag-ambag ng pera, ariarian o accounting,auditing, marketing, advertising,
industriya (kasipagan) para sa isang pondo drawing, clerical work,other specialized skills
para sa lahat (common fund). Layunin nilang depending on the business beingformed by the
hatiin ang kita (profits) ng asosasyon sa bawat partnership, anything. All these money,
kasosyo. properties, and industries of each andevery
partner who contributed, must be gathered to
Dalawa o higit pang mga tao ay maaaring acommon fund. Intentions must be there that
bumuo ng pakikipagsosyo o these must beused by the partnership in order
pakikipagasosasyon para tupdin ang kanilang to earn. These money,properties, and industries
propesyon. must be dedicated forpartnership use.

Breaking Down the Definition The intention of a partnership must be to earn,

and tomaximize profit. Lastly, the earnings must
A contract is considered a partnership when at be dividedamong partners by the end of every
least topersons bind themselves to contribute operating cycle of thepartnership, usually
money, property orindustry to a common fund yearend.
to earn and divide thoseearnings among
themselves. If the intention of a partnership is not to earn, it
shall notbe recognized by law. If the intention
Contract by definition is a written or spoken of a partnership is toaccumulate earnings
agreementthat is intended to be enforceable by without any intention of dividing said earning to
law. It is important tonote that a contract partners, it shall not be considered
usually signifies intention to make aspartnership according to the Philippine Law.
theagreement legally binding, whether written
or spokeninitially. To end, the following must be present before a
contractcan be considered as a partnership:
The Civil Code Article specifically mentioned
persons, andnot artificial beings. Meaning, Two or more persons must form the
partners must simply bepersons and not partnership
anything else.
Partners must contribute money, properties,
The Civil Code article enumerated what orindustries
partners maycontribute, these are money,
property, and industry. These are basically Contributions must be gathered to a common
everything what a partner can contribute. fund

Anything can fall under those There must be intention to earn

enumerated.Money may be physical cash, cash
There must be intention to divide the earnings
in banks, or any otherthings that can be
considered as legal tender.Properties can be among partners
sub-classified further: Real andPersonal. Real Article 1768. Ang asosasyon o sosyo mismo ay
properties are land and buildings, and anyother may hiwalay at naiibang legal na pagkatao na
immovable properties that you can think of. hiwalay sa bawat isang kasosyo (partner) kahit
Personalproperties are any movable properties.
na hindi masunod ang porma o rekisitos sa (2) Kahit na mayroong magkakasamang
Article 1772. pagkamay-ari ay hindi agad ibig sabihing may
pakikipagsosyo, kahit pa naghahati-hati ang
Interpretation mga may-ari sa kita (profit) ng ariarian.
Partnership has an artificial personality separate (3) Ang paghahati-hait ng kabuuang kita ay
and different from its actual partners. hindi ang nagiisang takda para matiyak na may
Partnership is treated as if it has its own pakikipagsosyo, kahit pa mayroong
personality. Whenever a partner is entering any magkasamang karapatan or pakinabang sa ari-
agreements on behalf of the partnership, those arian kung saan nakukuha ang kita.
agreements will be treated as if it is the
partnership, not the partner, which enters to (4) Ang taong nakakuha o nakakukuha ng hati
agreements. Each partner can act as an agent of sa kita ng isang negosyo ay ebidensiya sa
the partnership. All partners’ deals on behalf of unang tingin (prima facie evidence) na siya ay
the partnership will make the latter liable or kasosyo sa negosyo. Pero, hindi masusunod ang
benefactor depending what those deals are. panuntunang ito kapag nakukuha ang kita dahil
sa:
A sale by a partner on behalf of the partnership
is a sale of the partnership. The partners are (a) Bayad sa utang;
mere agents of their partnership. An expense
by a partner on behalf of the partnership is (b) Bayad sa sweldo ng mga manggagawa;
likewise an expense of the partnership.
(c) Bayad sa renta;
This is true even if the partnership does not
(d) Taun-tanong bayad sa isang balo o
comply yet with Article 1772 of the Philippine
kinatawan ng isang namatay na kasosyo;
Civil Code. Article 1772 requires that all
partnership with P3,000 or more worth of (e) Bayad sa interes sa utang, kahit pa base sa
capital must be registered with Security and laki ng kita ng negosyo ang ibabayad; at
Exchange Commission (SEC). At the amount of
at least P3,000, it is virtually required that all (e) Bayad para sa pagbenta ng pangalan ng
partnerships must be registered with SEC. But negosyo o anupamang ari-arian.
non-compliance with the requirement will not
stop the partnership from having its own Article 1770. Ang isang asosasyon ay dapat
personality. Its liabilities may not be binding but may matuwid o legal na pakay at layunin. Ito ay
it still has its own personality. dapat maitatag para sa pakinabang at
kapakanan ng lahat ng kasosyo (partner).
To conclude, all partners are agents of the
partnership, and therefore, also bind other Pagkatapos mabuwag ng isang asosasyon na
partners. Such partnership feature is called labag sa batas, sa pamamagitan ng atas ng
Mutual Agency. Partnership is a Mutual Agency, korte, ang mga kita o tubo nito ay dapat
whether registered or not with SEC. samsamin para sa Estado.

Article 1769. Sa pagtukoy kung mayroon Effects of unlawful partnership

pakikipagsosyo (partnership), ang mga
1.The contract is void ab initioand the
panuntunang ito ay dapat isaalangalang:
partnership never existed in the eyes of the law
(1) Kung hindi magkasosyo ang dalawang tao
2.The profits shall be confiscated in favor of the
para sa isa't isa, hindi sila magkasosyo para sa
government
ibang tao.
3.The instruments or tools and proceeds of the (a)Contract must appear in a public instrument
crime shall also be forfeited in favor of the
government (b)Must be recorded or registered with the SEC

4.The contributions shall not be confiscated 2. Failure to comply does not prevent the
unless they are instruments or tools and formation of partnership, or affect its liability
proceeds of the crime and that of the partners to third persons.

Article 1771. 3. However, the partners have the right to

compel each other to execute a contract in a
1. General rule -- no special form is required for public instrument. Note: this cannot be availed
the validity or existence of the partnership; may of if the contract of partnership is void.
be made orally or in writing regardless of the
value of contributions. 4. Purpose:

2.Exceptions -- (a) if real properties are (a)A condition for issuance of licenses to engage
contributed, public instrument is necessary. in business or trade
Otherwise, the contract is void. To affect third
(b)For tax purposes (tax liabilities cannot be
persons, the transfer of real property to the
evaded)
partnership must be duly registered in the
Registry of Property of the province or city (c)Public can determine more accurately their
where the property is located. membership and capital before dealing with
them
(b) If covered by Statute of Frauds -- when an
agreement to enter in a partnership which is 5. The recording of articles of partnership is not
not to be performed within a year from the for the purpose of giving the partnership
making thereof, such is unenforceable unless in juridical personality; the only objective of the
writing or at least evidence by some note or law is to make the recorded instrument open to
memorandum subscribed by the parties. all and to give notice thereof to interested
parties. The objective is achieved from the date
3.Partnership implied:
the partnership papers are presented to and
(a)Its existence may be implied from the acts or left for record in the Commission.
conduct of the parties, as well as from other
When the certificate recording of the
declarations; such implied contract shall be
instrument is issued on a date subsequent to
binding as a written and express contract.
the date of presentation thereof, its effectivity
(b)The intention as disclosed by the entire retroacts as of the later date.
transaction, and as gathered from the facts and
Article 1773.
from the language employed by the parties as
well as their conduct, should be ascertained. 1.The failure to comply with the following
(c)If the parties intend a general partnership, requirements shall render the partnership void
they are general partners although their insofar as the contracting parties are
purpose is to avoid the creation of such concerned:
relation.
(a)Contract must be in a public instrument
Article 1772.

1. Two requirements when partnership is with

capital of P3,000 or more:
(b)Inventory of the property contributed must ARTICLE 1779. In a universal partnership of all
be made, signed by the parties, and attached to present property, the property which belonged
the public instrument to each of the partners at the time of the
constitution of the partnership, becomes the
2. Article 1773 is intended primarily to protect common property of all the partners, as well
third persons. With regard to them, a de facto as all the profits which they may acquire
partnership or partnership by estoppel may therewith.
exist.
A stipulation for the common enjoyment of
3. Article 1773 does not apply in the case of any other profits may also be made; but the
immovable property which may be possessed property which the partners may acquire
or even owned by the partnership but not subsequently by inheritance, legacy, or
contributed by any of the partners. donation cannot be included in such
Article 1774. Any immovable property or an stipulation, except the fruits thereof.
interest therein may be acquired inthe ARTICLE 1780. A universal partnership of
partnership name. Title so acquired can be profits comprises all that the partners may
conveyed only in thepartnership name. acquire by their industry or work during the
existence of the partnership.
ARTICLE 1775. Associations and societies,
whose articles are kept secret among the Movable or immovable property which each of
members, and wherein any one of the the partners may possess at the time of the
celebration of the contract shall continue to
members may contract in his own name with
pertain exclusively to each, only the usufruct
third persons, shall have no juridical passing to the partnership.
personality, and shall be governed by the
provisions relating to co-ownership. ARTICLE 1781. Articles of universal
(1669)ARTICLE 1776. As to its object, a partnership, entered into without specification
of its nature, only constitute a universal
partnership is either universal or particular.
partnership of profits.
As regards the liability of the partners, a ARTICLE 1782. Persons who are prohibited
partnership may be general or limited. from giving each other any donation or
(1671a)ARTICLE 1777. A universal partnership advantage cannot enter into universal
may refer to all the present property or to all partnership.
the profits. (1672)
ARTICLE 1783. A particular partnership has for
ARTICLE 1778. A partnership of all present its object determinate things, their use or
fruits, or a specific undertaking, or the exercise
property is that in which the partners
of a profession or vocation.
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 which
they may acquire therewith. (1673)