CHAPTER 1 State, without prejudice to the provisions of the Penal

Code governing the confiscation of the instruments and

GENERAL PROVISIONS
effects of a crime. (1666a)
ARTICLE 1767
ARTICLE 1771
By the contract of partnership two or more persons
A partnership may be constituted in any form, except
bind themselves to contribute money, property, and
where immovable property or real rights are
industry to a common fund, with the intention of
contributed thereto, in which case a public instrument
dividing the profits among themselves
shall be necessary. (1667a)

-says that a partnership can be created in any way,

ARTICLE 1768 meaning people can form a partnership however they
choose. However, if someone is contributing property
The partnership has a juridical personality separate and (like land or a building) or real rights (legal rights over
distinct from that of each partner, even in the case of property) to the partnership, then they must use a
failure to comply with the requirements of Article 1772, formal public document (a public instrument) to make it
first paragraph official. This is to ensure everything is legally recorded
when real property is involved.

ARTICLE 1769 ARTICLE 1772

In determining whether the partnership exist, these Every contract of partnership having a capital of three
rules must apply: thousand pesos or more, in money or property, shall
appear in a public instrument, which must be recorded
1. Partners that are not partners are not partner in the Office of the Securities and Exchange
to third persons as stated by Article 1825. Commission.
2. Co-owning or co-possessing property doesn’t
automatically create a partnership, even if Failure to comply with the requirements of the
profits are shared. preceding paragraph shall not affect the liability of the
3. Sharing gross returns alone doesn’t establish a partnership and the members thereof to third persons.
partnership, even if the parties have a shared ARTICLE 1773
interest in the property generating those
returns. A contact of partnership is void, whenever an
4. Receiving a share of business profits generally immovable property is contributed thereto, if an
indicates partnership status, but this inference inventory of a said property is not made, signed by the
doesn't apply in cases where the profit is parties, and attached to the public instrument.
received:
ARTICLE 1774
• As a debt repayment,
• As wages or rent, Any immovable property or an interest therein may be
• As an annuity from a deceased partner’s estate, acquired in the partnership name Title so acquired can
• As interest on a loan, or be conveyed only in the partnership name. (n)
• As payment for the sale of business goodwill or This means that a partnership can buy or own property
property. (like land or buildings) under the partnership’s name,
ARTICLE 1770 not the individual names of the partners. If the
partnership wants to sell or transfer that property later,
A partnership must have a lawful object or purpose, it can only be done in the partnership's name, not in the
and must be established for the common benefit or name of any one partner. This ensures that the property
interest of the partners. is legally tied to the partnership itself, not to individual
When an unlawful partnership is dissolved by a judicial partners.
decree, the profits shall be confiscated in favor of the
ARTICLE 1775 ARTICLE 1779

Associations and societies, whose articles are kept In a universal partnership of all present property, the
secret among the members, and wherein any one of the property which belonged to each of the partners at the
members may contract in his own name with third time of the constitution of the partnership, becomes
persons, shall have no juridical personality, and shall be the common property of all the partners, as well as all
governed by the provisions relating to co-ownership. the profits which they may acquire therewith.
(1669)
A stipulation for the common enjoyment of any other
This statement means that associations or societies profits may also be made; but the property which the
formed where the members keep their rules secret (so partners may acquire subsequently by inheritance,
only the members know them) and allow any member legacy, or donation cannot be included in such
to deal with outsiders in their own name, will not be stipulation, except the fruits thereof. (1674a)
treated as separate legal entities. They won't have a
Let’s say Maria and John form a universal partnership of
"juridical personality," which means they don't have the
all present property. At the time of forming the
legal rights of a company or partnership. Instead, they
partnership, Maria contributes her car and $10,000,
are treated like a co-ownership, meaning the members
while John contributes a house and $5,000. Any profits
act as individual owners, not as a group.
they make from using their current assets (like renting
Ex. Let’s say a group of friends forms a club to buy and share rare out the house or selling the car) will be shared between
collectibles. They agree to keep their rules private and trust each them. Later, Maria inherits a piece of land from her
member to buy items in their own name, without involving the whole aunt. The land itself doesn’t become part of the
group. For example, if Sarah buys a rare painting for the club, she
buys it using her own name and not the club’s name. Because they
partnership, but if Maria rents the land and earns rental
keep things secret and Sarah is dealing with the painting as if it’s income, that income will be shared between Maria and
hers, the club doesn't have its own legal identity. In this case, the John, since it’s considered a profit made from Maria's
club will be treated like a co-ownership. If there’s any dispute or legal asset, even though the land wasn’t part of the initial
issue, it will be dealt with as if Sarah and the other members are
partnership.
individually owning the property, not as a partnership or company
with separate legal rights.

ARTICLE 1776 ARTICLE 1780

As to its object, a partnership is either universal or A universal partnership of profits comprises all that the
particular. partners may acquire by their industry or work during
As regards the liability of the partners, a partnership the existence of the partnership.
may be general or limited. (1671a) The partners don’t contribute their existing property to
ARTICLE 1777 the partnership. Instead, they agree to share any profits
they make through their joint business activities or
A universal partnership may refer to all the present labor while the partnership lasts.
property or to all the profits.
Let’s say Sarah and Lisa start a marketing agency together. They
ARTICLE 1778 agree to form a universal partnership of profits. They don’t
contribute any of their personal property just their skills and efforts.
In simpler terms, when two or more people form this Over the years, they work on various projects and earn money from
kind of partnership, they agree to combine all their clients. The money they earn from these projects is shared between
them according to their agreement. If Sarah later gets a personal
existing assets (like money, property, or anything of
inheritance or buys a car, these items aren't part of the partnership.
value) into a common fund. Then, any profits or gains Only the profits they generate from their agency work (like earnings
made from those assets will be shared equally or from clients) will be shared. So, in a universal partnership of profits,
according to the agreed terms. the focus is solely on what the partners can earn through their work
during the partnership’s lifetime.
ARTICLE 1781

Articles of universal partnership, entered into without

specification of its nature, only constitute a universal
partnership of profits. (1676)

ARTICLE 1782

Persons who are prohibited from giving each other any

donation or advantage cannot enter into universal
partnership. (1677)

The law wants to avoid situations where individuals who

are already restricted from giving each other benefits—
due to legal, familial, or financial reasons—could bypass
those restrictions by entering into a partnership where
assets and profits are shared.

ARTICLE 1783

A particular partnership has for its object determinate

things, their use or fruits, or a specific undertaking, or
the exercise of a profession or vocation.

partnership formed for a specific purpose or goal. The

partners work together on one particular thing, and
once that thing is finished or achieved, the partnership
ends.

If three friends start a partnership to open a bakery for

one year, their partnership is a particular partnership.
After one year, when the bakery is either sold or closed,
their partnership ends. They came together for a specific
purpose—to run the bakery.