G.R. No. L-929 : October 8, 1903
THUNGA CHUI, plaintiff-appellee, vs. QUE BENTEC, defendant-appellant.

FACTS:
The plaintiff, Thunga Chui, and the defendant, Que Bentec, entered into a verbal contract of partnership. Thunga Chui contributed 1,000 pesos, and Que Bentec contributed 2,000 pesos. A dispute arose, leading to litigation. The defendant-appellant, Que Bentec, contended that the partnership contract was invalid and unenforceable because it was not in writing. He argued that the contract was required to be in writing under Article 1280 of the Civil Code (as the prestations exceeded 1,500 pesetas) and under Articles 119 and 51 of the Code of Commerce.

ISSUE:
Whether a verbal contract of partnership, where the contributions exceed 1,500 pesetas, is valid and enforceable between the contracting parties.

RULING:
Yes. The Supreme Court affirmed the judgment of the lower court, holding the verbal partnership contract valid and enforceable between the parties.

1. If governed by the Civil Code (as a civil partnership): Article 1278 of the Civil Code provides that contracts are binding whatever their form, provided essential conditions for validity are present. Articles 1279 and 1280 do not make the reduction to writing a prerequisite for the enforceability of the contract between the immediate parties. Following the doctrine established by the Supreme Court of Spain, Article 1279 grants a privilege, not an obligation, to compel the reduction of the contract to writing. The plaintiff can maintain an action directly on the verbal contract without first resorting to the procedure under Article 1279. The requirement for a writing under Article 1280 is not an essential requisite for the contract’s existence between the parties.

2. If governed by the Code of Commerce (as a commercial partnership): Article 117 of the Code of Commerce states that a mercantile partnership contract is valid and binding upon the parties “whatever may be its form,” provided it has the essential requisites of the law. The “essential requisites” refer to the general conditions for a valid contract (consent, object, cause), not the formal requirement of a public instrument under Article 119. The formalities in Article 119 (public writing and registration in the Mercantile Registry) are designed for the protection of third persons, not to invalidate the contract between the partners themselves. The Court cited the preface to the Code, which explicitly states the law’s intent to bind partners from the moment of celebration, even without publicity, repealing the contrary principle in the old code.

Therefore, whether considered a civil or commercial partnership, a verbal contract is valid and enforceable between the contracting parties themselves. The formal requirements for a writing are for the benefit of third persons or for specific effects, not to bar an action between the partners.