PARTNERSHIP it is a contract whereby 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.

ACCORDING TO PERSONS BOUND

1. Unilateral only one person needs to perform the
obligation
2. Bilateral/Multilateral mutually bound to perform
obligation to one another

ESSENTIAL ELEMENTS OF A CONTRACT OF

PARTNERSHIP:
1. Consent agreement of the parties to the object and
cause (terms and conditions) of the contract

ACCORDING TO EXCHANGE / VALUE RECEIVED /

RISK

2. Contribution money, property, or industry

1. Commutative receiving something with equal value

3. To earn profit and to divide the profits among

themselves

2. Aleatory uncertain whether will you receive

something

ACCORDING TO NAME:

ACCORDING TO FORMATION

1. Nominate theres a special name given by the given

law

1. Consensual perfected by mere consent (Contract

of partnership is consensual in nature)

2. Innominate no name assigned by the law

2. Real perfected upon delivery of the object

*Do do
*Do give
*Give do
*Give give

3. Formal/Solemn you must comply with certain

formalities or solemnities for it to be valid
*Partnership involves a contribution of real
property
-public instrument
-inventory

ACCORDING TO CAUSE

-signed by the partners

1. Onerous in order to receive something, you must

do something

-registered at SEC

2. Remunerative the services which is already

rendered
3. Gratuitous one person gives something and the
other person doesnt do anything

ACCORDING TO DEPENDENCE

DELECTUS PERSONAE a person cannot be

considered a partner without the consent of other
(mutual trust)

JURIDICAL PERSONALITY the partnership is

considered a person.

1. Principal doesnt need another contract to exist

-Can acquire properties

2. Accessory needs another contract to exist

-Can incur obligations

3. Preparatory entered in order to enter further

contracts

-Only act through its agents

-Created by law or operation of law

NATURAL PERSONS those conceived and born and

can act on its own

CLASSIFICATIONS OF PARTNERSHIP ACCORDING

TO LIABILITY

*Partners in a contract of partnership must be natural

1. General all partners are liable with their separate

property for partnership debts

*Stockholders can be juridical person / natural

2. Limited the partners are liable only to the extent of

their capital contribution
PARTNERSHIP EXISTS IF:
1. Persons not actually partners to each other
GR: Persons who are not partners to each other are not
partners as to third persons
EX: Partnership by estoppel (3rd person was made to
believe that two parties are partners)
2. Co-ownership and co-possession is not a
partnership
There is co-ownership whenever the ownership or copossession of an undivided thing or right belongs to
different persons (the parties involve just share the
common enjoyment of the thing/property)
3. Sharing of gross returns
The mere sharing of gross returns alone does not
indicate a partnership, but sharing of net profit could
indicate a partnership, since in a partnership, the
partners share profit after satisfying all the partnerships
liabilities.
4. Partnership doesnt exist if the profits received
are payment as:
-a debt by installment

CLASSIFICATIONS OF PARTNERSHIP ACCORDING

TO DURATION
1. Fixed term upon arrival of term/achievement of the
purpose, the partnership will dissolve (for a specific
period)
2. Partnership at will there is no period, term or
duration
*A partnership with fixed term can be change into
partnership at will if the period has expired but it was
continued by the habitual manager

CLASSIFICATIONS OF PARTNERSHIP ACCORDING

TO REPRESENTATION
1. Real partnership one which actually exists among
the partners and also as to 3rd persons
2. Ostensible partnership (partnership by estoppel)
one which is not a partnership, but considered a
partnership only in relation to those who, by their
conduct or admission are precluded to deny or disprove
its existence

-wages
-annuity to a widow or representative of a
deceased partner
-interest on a loan
-consideration for the sale of a goodwill of a
business

EFFECTS OF PARTNERSHIP WHEN UNLAWFUL

1. The proceeds and instruments or tools shall be
confiscated and forfeited in favor of the government
2. Property which were the object of unlawful commerce
shall be destroyed
3. The capital contributions of the partners must be
returned and only the profits are to be confiscated

CLASSIFICATIONS OF PARTNERSHIP ACCORDING

TO OBJECT
1. Universal partnership each person gives all of his
property
a. Of all present property is one in which the
partners contribute all the property which
actually belongs to each of them at the time of
the constitution of the partnership to a common
fund with the intention of dividing the profits
among themselves including all profits acquired
from such property. (Ownership is transferred)
GR: After acquired property is not contributed
EX: If the stipulation says so, so is it.
EX to the EX: If the after acquired property is
acquired by inheritance, legacy or donation, it
cannot be included in such stipulation because
its not a valid object. But the fruits of those
properties will be contributed.

b. Of all profits whatever is contributed, the

partner is still the owner. (Usufruct is transferred)

-Its an act or cutting off the obligation, like annulling or

cancelling the obligation of the partner.

GR: After acquired property is contributed as

long as the property was acquired through the
partners industry or work during the existence of
the partnership.

-The remedy for delay is not rescission but an action for

specific performance with damages and interest from the
defaulting partner.

2. Particular partnership has for its object determinate

things, their use of fruits or a specific undertaking (to
conduct a specific business)
*If parties entered into a universal partnership without
the specification of its nature, its considered a universal
partnership of all profits since it imposes less obligations
because the ownership of the contributed properties was
preserved by the partner.
*Persons who are prohibited to give donations cannot
enter into a universal partnership for the reason that the
partner virtually makes a donation.

REAL RIGHT vs. PERSONAL RIGHT

Real right is the right of ownership
Personal right right to ask or to demand for the
performance of the obligation
-If the property is not yet delivered, the partnership has
personal right over it.
-Upon the delivery of the property, the partnership has
real right over it.
APPRAISAL

EVICTION
-Its to recover (property) of or from a person by legal
process or by virtue of law.
-If the partnership is deprived of the property contributed
by the partner, there is eviction.
-Theres a breach in warrant of eviction if a third person
complains over the ownership of the property and he/she
(3rd person) be able to prove it, then the property will be
removed from the partnership.
-Eviction shall take place whenever by a final judgement
based on a right prior to the sale or an act imputable to
the vendor (partners), the vendee (partnership) is
deprived of the whole or a part of the thing purchased.

-Its the estimation or evaluation of the amount of goods

contributed to the partnership
-Appraisal is necessary to determine how much has
been contributed by the partners
-Appraisal of the goods is made according to current
prices
-Appraisal is made by:
-stipulation
-experts chosen by the partners

DELAY
-Its the failure to perform the obligation on the
agreed/specified time.
-The partnership can demand if the partner fails to
contribute the property promised or the fruits of the
property on time. But, when time already exists, and the
failure to contribute the property constitutes useless
action, the partner is liable for damages from the time
the partner is ought to deliver up to the time of actual
delivery.

RESCISSION

RISK OF LOSS

WHO BEARS THE RISK OF

OTHER BUSINESS
LOSS
The OWNER of the thing

1. Risk of SPECIFIC AND DETERMINATE

THINGS which are NOT FUNGIBLE where
THE USE is the only thing contributed
2. Risk of SPECIFIC AND DETERMINATE
THINGS which are NOT FUNGIBLE where
THERE IS A TRANSFER OF OWNERSHIP
3. FUNGIBLE THINGS (consumable) or
THINGS WHICH CANNOT BE KEPT
WITHOUT DETERIORATING even if ONLY
THE USE is contributed

The partnership EFFECT OF ENTERING INTO OTHER

BUSINESS
The partnership

-Can engage in other

-Provided that the bus
engaging in is differen
nature
-This is to avoid comp
-Profits accruing to him
transactions will go to
common fund
-Bear all the losses

ACTS OF ADMINISTRATION the partner is the owner

4. WHERE THE THING CONTRIBUTED IS

TO BE SOLD
5. THINGS BROUGHT AND APPRAISED IN
THE INVENTORY

ACTS OF DOMINION the partner just oversees (hes

The partnership not the owner)
The partnership

PROFIT SHARING
GR: The profits and losses shall be distributed in
conformity with the agreement

PROPERTY RIGHTS OF THE PARTNERS

EX: If only the share in the profits is agreed upon, the

share in the losses shall also be in the same proportion

1. His rights in specific partnership property

2. His interest in the partnership
3. His right to participate in the management
INTEREST CONSISTS OF:
1. Profits excess of returns over expenditure in a
transaction or series of transactions, the net income of
the partnership for a given period of time
2. Surplus assets of the partnership of after
partnership debts and liabilities are paid and settled and
the rights of the partners among themselves are
adjusted (excess of assets over liabilities)

CONTRIBUTION
LOSSES
IMMINENT LOSS

EX: If there is no agreement as to the share in losses

and profits, then, each partner shall have a share in the
same in proportion to what he may have contributed
EX to EX: The industrial partner is not liable to losses
EX to EX: The industrial partner shall be entitled to a
share in the profits as may be just and equitable under
the circumstances
PROFIT SHARING DESIGNATED BY 3RD PERSON

GR: If the partner has entrusted to a 3rd person the

designation of the share of each partner in the profits
and losses, the same may be impugned only if it is
manifestly inequitable
CAPITALIST
to EX: In no case may such decision be impugned if:
Contributes money orEX
property
Not exempt from losses
1. The partner has begun the execution of the
-Contributes additional share
designation
-If he refuses, he shall be obliged
2. He did not impugn the designation in the sharing
to sell his interest to the other of the profits within a period of 3 months from
partners
the time he had knowledge thereof