Article 1767

This article is the General rule of the partnership. The Composition of partnership is two or more
people. Those two can be General partners or Industrialized partner. The law does not interfere when
they are choosing their partner but it will be more advisable to be in corporation if they are about five
years or more members

The Partnership Contribution must be valid. If it is Money, it should be in legal tender. The partners can
contribute Property. It can be real property or personal property. The partners can also contribute their
intellectual skills or physical traits.

In this Article 1767 the Partnership is perfectly defined. By nature, the partnership is highly fiduciary
meaning involve trust. Therefore, the partners must have a trust and confidence to one another
because they are the agents of the partnership. They must be mutually enjoying the trust and
confidence of each other.

DELECTUS PERSONAE

- All partners have the right to choose the person they want to become his partner. Still it should be
done with the consultation of other partner’s consent.

The Characteristics of Partnership

The Partnership is consensual because it is created by MERE CONSENT of each member. The consent is
the permission of each partners regarding for the new agreement, changes or any decision making that
Partnership will have. It can be form in ORAL or Written. Consent can be like Oral agreement while the
Written is like contract agreement.

The Partnership is Nominate because it should have its own Name.

Ex. ABC.Co

MWL partnership

The Partnership should be bilateral meaning those members of the partnership should mutually have
the rights and obligations toward each other.

The Partnership has a Juridical Personality which means The Partnership that was made by two or more
people that Registered in the Security of Exchange Commission. When this Partnership recognize by Law
and Business Market Therefore Their Partnership has its Own Entity that has its papers and Taxable
enough in the Government.
The Partnership is preparatory because before creating its Juridical Personality. It should be first made
up of MERE consent, having its own articles of partnership, registered to SEC and also should be
profitable purposed. Meaning It is expected to gain profit someday.

The partnership is onerous in other words it is riskier. Why? Because you are contributing money as
one of the common fund that prepared to gain profit in the future. It is not easy to gamble your money
that is why it is risky.

Elements of Partnership

Voluntary

There must be a valid and voluntary agreement

No one force you to join in partnership

Common Interest

There must be a contribution to common fund and all members are having the same interest of its
profits, interest and benefits

Association of profits

The equal distribution of profits among the members of the partnership.

Mutual Agents

They proudly present or bear the name of the partnership provided that it must be in the articles of
their partnership.

Lawful Purpose

The Purpose of partnership must not against the Law

Ex. About drug distribution

Articles of Partnership must not be keep in secret

All the agreement written in the articles of the partnership must be open to every member about the
changes or any update

Ex. The terms and conditions

The Birth of the Partnership

Separate Juridical Personality

Its name and existence is what we call Its own entity.

The partners cannot use its juridical personality for their own sake esp. in lending money

Ex.

1) Use the ABC P. capital for funding his own newly entrant business

2) Use the ABC P. as a collateral in his loan from the bank

Art. 1768

The Registration of Partnership to SEC or must be P3000 minimum capitalization in money or property.
This registration is for the legal purpose to have Juridical personality of the partnership.

Ex. Private documents not registration to SEC

Issue: Breaching of contract

The partners and XXX. Co are liable to Mr. Y

Ex. Public instruments and duly registered to SEC

issue: Breaching of contract

Mr. Y can sue XXX. Co alone because it is now valid and registered.

Ex. Before approval of SEC

issue: Breaching of contract

The Partners and XXX. Co are liable because it is not yet registered so it doesn't have juridical personality
Art. 1770

The Partnership should have a lawful purpose and the mutual enjoyment of benefits must be exercised.
It should not against to the law. When the Partnership discovered by Government and dissolved the
benefits will be in the Government. All the Properties of the Firm will be confiscated and the members
will also have executed due to what they do as their objectives.

Art. 1771

The Partnership must have its form of contract and it can be oral or written. If it is Immovable property
creating a public instrument is obviously needed whether it is real or personal property

Exemption

1) Above P3000 capitalization must be in Public Instrument

2) Immovable properties or Real rights property must be in Public Instrument.

Art. 1772

A public instrument is a documentary which is already notified in the notary public office to prove that
this newly entrant partnership is legitimate and has its own entity in the Government. "Failure to
comply" means that if they do not obey and submit all the requirements the partnership they made will
not valid anymore. In this case the members and Partnership are liable enough to the third parties.

Art. 1773

There are many reasons to void the partnership and one of those is the absence of public instrument
about the inventory of immovable properties. The immovable properties refer to the amount of money
contributed in the partnership. When the registration of the partnership begins all the members should
be open to the Articles of partnership about terms and conditions, benefits and any other policies and
request of each member. They will all sign it in the contract of partnership.

This article emphasizes that one of the contract validation of the Partnership is the inventory of
immovable properties. The inventory is a listed properties and the value of money they contributed.

This is avoiding fraud or dishonesty among the members. It is advisable also for the dissolution stage of
partnership. One of the easiest strategy that can be use when returning partners' contribution during
liquidation.
Art. 1774

According to the Doctrine " Delectus Personae" the members are free to choose whatever or whoever
partners they want to have as long as they are capable and accountable for the liabilities. This article
says that the owner of partnership should not be 60% capital owned by other nation. It should be
natural born Filipino citizen who owned higher than the capital of other nation or not less than 60%.

Art. 1775

According to Art. 1767, characteristics of partnership " Articles of partnership must not be keep in
secret" on order to become valid. When association or society not register their Partnership to the SEC.
They also keep the Articles of partnership and they commit another agreement to the third parties
without the consent of other members it will now considered Co-ownership because in the Co-
ownership provision "His share can be sell to the third party even without consent of other members.

Partnership must be registered and Articles are not keep secret. This entity will not use to the third
parties esp. Selling properties or share to others without consent because it must be open to every
members and it should be majority decision of all members.

Art. 1777

This article refers to the two types of Universal Partnership.

The Partnership can be " Present Property". When the members can contribute each of their property to
the common fund and serves to be the Property of the Partnership. Also they have the intention of
dividing the profits which came from those properties they contributed equally among themselves

The Universal Partnership can be " Of Profits"

The ownership of the members in their contributed property or industry will still remain to their name
though it's purpose is to gain money and serves as the capital of the Partnership. How are they going to
divide their profits? When the Partnership gain 10 M through their properties and industries this 10 M
will be divided among themselves equally but not the properties and industries. It’s only the profits