Articles 1773 and 1774 of the Civil Code reinforce the prescriptions of Articles 1768 and

1772. In Article 1773, it is stated that whenever an immovable property is contributed, an

inventory of said property should be made, signed by the partners, and attached to the public
instrument. If no such inventory of immovable property is made, the contract of partnership is
void. Again, a public instrument is mentioned, referring to the Contract of Partnership where the
partner who contributed the immovable transfers by way of contribution his immovable property
to the partnership. The inventory required here is actually a listing of the immovable property
particularly identifying it by its Title or Tax Declaration, its area, location, and assessed value at
the time of contribution. The inventory should be signed by the partners and attached to the
notarized contract of partnership. Failure to comply with the requirement of Art. 1773 will result
to the nullity of the contract of partnership. The inventory serves the purpose of identifying the
immovable contributed by a partner and determining its assessed value which in turn, will allow
the partners to determine the amount of contribution of the partner in monetary value. At the
time of dissolution, the property so contributed, if still intact, will be returned to the partner
contributor, making the inventory handy as reference. Article 1774, on the other hand, states that
“any immovable property or interest therein may be acquired in the partnership name. Title so
acquired can be conveyed only in partnership name”. This article reiterates that the immovable
contributed to the partnership, or acquired by the partnership by any manner, should be
transferred to the partnership name, and not to anyone or all of the partners in co-ownership.
Therefore, when a partner contributes an immovable property, the public instrument must
transfer the ownership from the partner to the partnership.

Lesson 4. Classifications of partnership

Partnerships are commonly classified as: according to object - universal or particular;
according to liability - general or limited; according to duration - with a fixed term or at will;
according to representation to others - ordinary or partnership by estoppel; and according to
legality of existence – de jure or de facto.

4.1 Universal Partnership

Universal partnerships may refer to partnership of all present properties or partnership of
all profits.
4.1.1 Universal Partnership of all Present Properties
In this kind of partnership, the partners contribute to the fund all the properties which
actually belong to them, including all the profits that they may earn from the use of such
properties. Once contributed, the properties of the partners become the ownership of the
partnership and are utilized for common enjoyment. The partners may likewise agree that any
other profits are also for common enjoyment, except future inheritance, legacy or donation.
 Example: Anna, Mona, and Liza formed AML Partnership. Anna contributed P1Million
which comprises her only property; Mona contributed her BMW and a house and lot which
comprise all her properties; and Liza contributed a parcel of rice land and all her share in the
harvest in the current planting season, which are her only property. AML Partnership is a
universal partnership of all present property.
4.1.2. Universal Partnership of all Gains
In this kind of partnership, the partners contribute all that they may earn through their
work or employment during the existence of the partnership. The properties of the partners
remain to be theirs exclusively, only the usufruct pass to the partnership. (Usufruct is literally
translated as use and fruits of the thing/property).
Example: Anna, Mona, and Liza formed AML Partnership. Anna contributed all the
interests earned by her P1Million deposit in XBank; Mona contributed the use of her BMW as
the service vehicle of the partnership, and the rents earned by her house and lot which is
currently on lease to a foreigner for P50,000.00 monthly; and Liza contributed all her share in the
harvests from her rice land every harvest season. AML Partnership is a universal partnership of
all profits.
Article 1781 (Civil Code) states that when a universal partnership is formed without
specifying its nature, it is presumed that a universal partnership of profits is formed. The reason
for this presumption is that universal partnership of profits is less burdensome than a universal
partnership of all present properties, since the partners retain the ownership of their properties
and only the use and fruits are contributed.
Persons who are prohibited to donate to each other are likewise prohibited to enter into
universal partnerships (Art. 1782, Civil Code). They are the following:

 Legally married spouses;

 Persons living together as husband and wife but are not legally married;
 Persons who are guilty of adultery or concubinage at the time of the donation;
 Persons found guilty of the same criminal offense, in consideration thereof;
 A person/s and a public officer or his wife, descendants and ascendants, by reason
of his office

4.2 Particular Partnership

Article 1783 (Civil Code) defines particular partnership as that which “has for its object
determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or
vocation”. By this definition, a particular partnership is neither a universal partnership of present
property nor a universal partnership of profits. Examples of this kind of partnership are those
which are formed for the buying and selling of real estate for the common enjoyment of profits
earned, partnerships formed for the construction of a building where the contractors pool their
money, property and industry and divide the profits earned. In these examples, the partnership is
automatically terminated after the completion of the particular undertaking. A professional
partnership is classified under particular undertaking, the purpose being the exercise of a
common profession.

Summary
Among the different kinds of business organizations, partnership strikes in the middle: it
is neither too ambitious nor too beggarly. It is commonly chosen by entrepreneurs because its
limitations make it within the control of the persons composing it. First, the partnership is for
businesses which require average capital; an amount which two or more persons (but not too
many) can comfortably share in by contribution. Second, the business itself is not complex and
capable of being managed by the partners themselves. Lastly, the objective of a partnership is
simple, to divide the profits among the partners. They who shared in the capital, share in the
profits.
Partnerships are founded on the principle of trust. A person has a free choice of the
person he would like to partner with. A person will not partner with someone he does not trust,
not even for the sake of business, most specially because it is business. These principles of
fiduciary relationship and delectus personae are the guiding principles of partnerships.
The more common types of general partnership are universal and particular. The more
aggressive kind is the universal partnership of all present property where the partners contribute
all their properties to the partnership fund for the purpose of common use and enjoyment.
Fiduciary relationship is never better demonstrated than in this kind. What would move a person
to give all he owns for common enjoyment with others? It is because he trusts that he is sharing
his treasures with persons who are capable of developing such treasures into more productivity,
for the common benefit of all partners. It is the essence of partnership: to become a partner, one
must be willing to contribute what he has to a common fund, and each of the partners share in the
income from the pooled resources.