Civil
Code of the Philippines
ARTICLE
1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves.
Two
or more persons may also form a partnership for the exercise of a profession.
(1665a)
Breaking
Down the Definition
A
contract is considered a partnership when at least to persons bind themselves
to contribute money, property or industry to a common fund to earn and divide
those earnings among themselves.
Contract
by definition is a written or spoken agreement that is intended to be
enforceable by law. It is important to note that a contract usually signifies
intention to make the agreement legally binding, whether written or spoken
initially.
The
Civil Code Article specifically mentioned persons, and not artificial
beings. Meaning, partners must simply be
persons and not anything else.
The
Civil Code article enumerated what partners may contribute, these are money,
property, and industry. These are basically everything what a partner can
contribute. Anything can fall under those enumerated.
Money
may be physical cash, cash in banks, or any other things that can be considered
as legal tender.
Properties
can be sub-classified further: Real and Personal. Real properties are land and
buildings, and any other immovable properties that you can think of. Personal
properties are any movable properties. It could be a thing, animal, or anything
that can be considered as a property.
Industry
is hard work. A person can contribute his or her skills to be a partner. Any
work such as accounting, auditing, marketing, advertising, drawing, clerical
work, other specialized skills depending on the business being formed by the
partnership, anything.
All
these money, properties, and industries of each and every partner who
contributed, must be gathered to a common fund. Intentions must be there that
these must be used by the partnership in order to earn. These money,
properties, and industries must be dedicated for partnership use.
The
intention of a partnership must be to earn, and to maximize profit. Lastly, the earnings must be divided among
partners by the end of every operating cycle of the partnership, usually yearend.
If
the intention of a partnership is not to earn, it shall not be recognized by
law. If the intention of a partnership is to accumulate earnings without any
intention of dividing said earning to partners, it shall not be considered as
partnership according to the Philippine Law.
To
end, the following must be present before a contract can be considered as a
partnership:
- Two or more persons must form the partnership
- Partners must contribute money, properties, or industries
- Contributions must be gathered to a common fund
- There must be intention to earn
- There must be intention to divide the earnings among partners