Republic of the Philippines

SORSOGON STATE COLLEGE

Bulan Campus
Bulan, Sorsogon

Partnership and Corporation

Schedule: N/A

Lesson No: 1

Key Concepts:

 KINDS OF PARTNERSHIP

 As to Object

A) Universal Partnership- it is a partnership wherein it may either be a universal

property of all present property or universal property of profits. (Art 1777)

1.) Universal Partnership of All Present Property- this is a partnership in which

all the partners contribute all the property which actually belonged to them to
the common fund, with the intention of dividing the same among themselves, as
well as the profits which they acquire.

Properties which shall belong to the partnership:

a) Property belonging to the partners at the time of the constitution of the

partnership.

b) Profits that may be acquired from the present property.

c) Property acquired by each partner after the formation of the partnership, but
only if stipulated. (Art 1779). This includes:

aa) Property itself except when the property is acquired by inheritance,

legacy or donation. (LID)

bb) The profits and fruits of the property even if acquired through
inheritance, legacy or donation.

Example:
Mr. A and Mr. B formed a Universal Partnership of all Present Property and
stipulated to include properties acquired in the future. The following are the
properties of Mr. A and B during and after the constitution of the Partnership:

1. Mr. A- Delivery Truck (at the time of the partnership)

2. Mr. B- Commercial Building (at the time of the partnership)
3. Mr. A- Residential Building (from inheritance)
4. Mr. B- Shares of Stock (purchase after the partnership contract)
5. Rentals from Office Building
6. Rentals from Residential Building
7. Dividends of Shares of Stocks

*The Delivery Truck, Commercial Building, Shares of Stock and Rentals from
Office and Residential Buildings and Dividends shall belong to the Partnership
while the Residential Building shall belong exclusively to Mr. A for it is acquired
through inheritance.

2.) Universal Partnership of Profits- this comprises all that the partners may
acquire by their work or industry during the existence of the partnership.

Properties/Profits which shall belong to the partnership:

a) Profits obtained by the partners by their work or industry during the existence
of the partnership. Except those acquired without the exertion of physical or
intellectual efforts such as those acquired by chance or lucrative title (LID).

b) The Usufruct of the property belonging to each of the partner at the time of the
constitution of the partnership.

c) Profits and fruits from the properties mentioned above.

d) Profits and fruits, if stipulated, of property acquired by each of the partner after
the constitution of the partnership.

Example: Assume the same example as before but the partnership is of Profits.

*The Delivery Truck, Commercial Building, Residential Building, Shares of Stocks

shall belong to each of the partners but the Partnership has the right to Usufruct
for each of the Property. The Rentals and Dividends shall belong to the
Partnership.
 Rule in case the Universal Partnership is Without Specification

Articles of Universal Partnership entered into without specification of its nature,

only constitute a universal partnership of profits. (Art. 1781)

Prohibition to enter into a Universal Partnership

Persons prohibited from giving any donation or advantage cannot enter into a
universal partnership (Art 1782). This is so that a universal partnership is in effect
a donation and allowing person prohibited to enter into a universal partnership is
a circumvention of the law.

The following are persons not allowed to enter into donation hence form a
Universal Partnership:

a) Donations between spouses during the marriage except moderate gifts on the
occasion of a family rejoicing. These prohibition applies to persons living as
husbands and wives without the benefit of marriage. (Art. 87 FC)

b) Those made between persons who were guilty of adultery or concubinage at

the time of the donation.

c) Those made to public officer or his wife, descendants, or ascendants by reason

of his office.

B) Particular Partnership- a particular partnership has for its object determinate

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

Example: a) A real estate partnership where partners contribute land and cash.
b) A partnership formed to establish a restaurant where partners
contribute cash and building
c) A partnership formed by CPA’s to exercise the accountancy profession.

 As to Liability

A) General Partnership- A partnership where all the partners are general partners
who are liable to the extent of their separate property after the partnership assets
have been exhausted.

B) Limited Partnership- A partnership where there is at least one general partner

and at least one limited partner.
 As to Duration

A) Partnership for a Fixed Term- One for which a period for its duration is fixed
by the partners (Art 1785).

B) Partnership for a Particular Undertaking- one which is organized for a certain

undertaking which when attained will cause the termination of the partnership.

C) Partnership at Will- one where no period is fixed by the parties for its duration,
hence, may be terminated by the will of the partners.

If a partnership is for a fixed term or particular undertaking and the partners

continue the operation of the partner even after the expiration of the term or
fulfillment of the undertaking without any express agreement, the partnership
becomes a partnership at will (Art 1785).

 As to Representation to Others

A) Ordinary Partnership- one which actually exists among the partners as well as
third persons.

B) Partnership by Estoppel- one which in reality is not a partnership but is

considered as one with respect to those who, by reason of their conduct or
admission are precluded from denying its existence (Art 1825).

Partnership by Estoppel may arise from the following:

1) When a person represents himself as a partner in an existing partnership.

a) If all the partners consent to such misrepresentation, a partnership by

estoppel is created between the partners and the misrepresenting partner.

b) If not all partners consented to such misrepresentation, no partnership

by estoppel is created.

2) When a person represents himself as a partner to a non-existing partnership.

No partnership liability arises but the person who made the

misrepresentation and all persons who consented to it are liable jointly.
 KINDS OF PARTNERS

 As to Liability

A) General Partner- one who’s is liable for partnership debts to the extent of his
separate property after all the assets of the partnership have been exhausted (Art
1816).

B) Limited Partner- one who is liable for partnership debts to the extent of his
capital contribution only (Art. 1843).

C) General-Limited Partner- one who has all the rights and powers and restrictions
of a general partner except that in respect to his contribution, he shall have the
rights against the other members which he would have had if he were not also a
general partner.

Example: Mr. A, Mr. B and Mr. C are partners to a partner where A is a general
partner, B is a limited partner and C is a general limited partner. If the partnership
is already insolvent and has an outstanding debt of 100,000, the creditors may go
after the personal assets of Mr. A and Mr. C for they are general partners. Mr. C,
being a general-limited partner, may reimburse from Mr. A after paying the
partnership creditors.

 As to Contribution

A) Capitalist Partner- a partner who contributes money or property to the

common fund (Art 1767).

B) Industrial Partner- one who contributes his services or industry (physical or

intellectual) to the partnership (Art. 1767, 1789).

C) Capitalist-Industrial Partner- one who contributes not only money or property

but also his services to the partnership.

 Other Classifications

A) Managing Partner- one who manages the business and affairs of the
partnership. (Art 1800)

B) Liquidating Partner- one who takes charge of the winding up of the affairs of
the partnership after it is dissolved. (Art 1836)

C) Nominal Partner- one who is not actually a partner but may be held liable to
such third persons. (Art 1825)
 D) Ostensible Partner- one who is active and known to the public as a partner.

E) Secret Partner- one who is active but not known to the public.

F) Silent Partner- one who is inactive but is known to the public.

G) Dormant Partner- one who is inactive and unknown to the public.

References:

Prepared by

Name: Dominic Jason F. De Jesus

Position/Rank: Instructor 1
Institution: Sorsogon State College, Bulan Campus
Institution’s Address: Bulan, Sorsogon
Personal e-mail address: dejesusdj04@gmail.com
Personal mobile phone number: 0917 153 4102