PARTNERSHIP

ART. 1777
A universal partnership may refer to all the present property or to all the profits.
ART 1778
A partnership of all present property is that in which the partners contribute all the
property which actually belongs to them to a common fund, with the intention of dividing
the same among themselves, as well as all the profits they may acquire therewith.
ART. 1779.
In a universal partnership of all present property, the property which belongs to each of
the partners at the time of the constitution of the partnership becomes the common
property of all the partners, as well as all the profits which they may acquire there with. A
stipulation for the common enjoyment of any other profits may also be made; but the
property which the partners may acquire subsequently by inheritance, legacy or donation
cannot be included in such stipulation, except the fruits thereof.
The law does not specifically define what a universal partnership is, but it gave
two kind of universal partnership. First is a universal partnership of all present property
which is covered under Article 1777, 1778 and 1779. Universal partnership of all present
property, explained that the properties that partners contributed at the time the
constitution of the partnership was created ay mapupunta sa common fund. Also these
articles emphasized that the partners has the intension of dividing the same among
themselves of all the asset, profit or even the contributed properties at the time they want
to dissolve the partnership.
The general rule in universal partnership of all present property is, ang mge future
properties ay hindi maaring ma contribute to the partnership, because it requires that the
contribution is determinate. In instance, that there’s an existence of donor or donations it
can be included along with the acquired profit of these sources into the partnership but
there must be stipulation that those donor or donations are belong to the partnership. Yet,
there’s an exception to the rule. Thus, property subsequently acquired inheritance and
legacy ay hindi maaring isama sa partnership kahit na mirong stipulation, only the fruits
thereof.
Example:
Migs and Riana are partners. They agreed to contribute all their properties sa
common fund with intention of dividing everything in the partnership the same between
themselves. So, Riana contributed all her car and farm. Migs contributed all his properties
consisting 1 million cash and land.
 So, this kind of agreement or contract of Migs and Riana is what we call universal
partnership of all present property.
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ART. 1780
A universal partnership of profits comprises all that the partners may acquire by their
industry or work during the existence of the partnership.
Movable or immovable property which each of the partners may possess at the time of
the celebration of the contract shall continue to pertain exclusively to each, only the
usufruct passing to the partnership.
The second kind of universal partnership is universal of partnership of profit. This
article explained that, the profit that acquires of the partner is made from their industry or
work during the existence of the partnership and usufruct of movable or immovable
properties that they contributed to the partnership. Meaning, whatever they own during
the celebration of the contract must be contributed to the partnership, but kailangan
nating matandaan na what the partners contributing is only the usufruct of their
properties. In addition, if this movable and immovable contribution of partner obtain a
profit it belong to the partnership. But, upon the dissolution of the partnership the
properties that were contributed must be returned to the partner who own it.
So, there are three thing that we need to understand in the universal partnership of
profit. First, what the partners earn through their industry and work, and the profit
acquired from the usufruct of properties belongs to the partnership. Second, the money or
properties that may acquire of partners by chance, such as lottery or other lucrative tittle
are not included in the partnership. Lastly, properties subsequently acquired are not also
included in the partnership, however, maaring masali sa partnership if there an stipulation
that the properties belong to the partnership.
Example:
Riana and Migs agreed that they would retain the ownership over their respective
properties, only their usufruct ang ipupunta sa partnership, and they would divide equally
the net profits realized during the existence of the partnership. Then the partnership
formed by Riana nad Migs was a Universal Partnership of Profits.
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ART. 1781
Articles of universal partnership, entered into without specification of its nature, only
constitute a universal partnership of profits.
This article emphasized na kung walang naka specify kun ano ang nature ng universal
partnership, whether isang itong present property or profit, it will always be presumed in
favor of universal partnership of profits because it is more lesser transmission of rights
and less obligations on the partners since they preserve the ownership of their separate
property.
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ART. 1782
Persons who are prohibited from giving each other any donation or advantage cannot
enter into a universal partnership. Limitations upon the right to form a partnership
Art. 87
Stresses the limitations upon the right to form a universal partnership. Persons who
cannot give donations are prohibited by law na pumasok sa isang universal partnership.
One of the prohibited ay ang husband and wife.

Example:
Riana, Migs and Jaja formed a universal partnership. Subsequently, Riana and Migs got
married and thereafter, Jaja sold his share to Migs and Riana for a nominal amount.
Issue: Was the partnership dissolved after the marriage of Riana and Migs and the
subsequent sale to them by Jaja of the latter’s participation?
Held: Yes. Because the kind of partnership that was entered by Riana, Migs and Jaja was
universal partnership, the marriage between Riana and Migs necessarily brings about its
dissolution in view of the prohibition of article 1782.
Art. 739
This article shown the following donations that shall be void:
1. Those made between persons who were guilty of adultery or concubinage at
the time of the donations;
2. Those made between persons found guilty of the same criminal offense, in
consideration thereof;
3. Those made to a public officer or wife, descendants and ascendants by reason
of his office.
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ART. 1783
A particular partnership has for its object determinate things, their use or fruits, or a
specific undertaking, or the exercise of a profession or vocation.
This article define a particular partnership. Particular partnership is neither universal
partnership of present property nor universal partnership of profit. Sample of particular
partnership if general profession partnership.
Example of particular partnership are:
 Those established for the purpose of carrying out a specific enterprise such as the
construction of a building;
 Those formed for the practice of profession or vacation
Business of partnership need not be continuing in nature.
The continuing nature is not essential to constitute a particular partnership. Kasi dito sa
particular partnership an agreement to undertake a particular piece of work immediately
divide the existing profits would seem to fall within the meaning of the term
“partnership” as used in the law.

CHAPTER 2 – OBLIGATION OF THE PARTNERS

Section 1 – Obligation of the Partners among Themselves
Relation created by a contract of partnership.
A contract of partnership gives rise to at least four (4) distinct juridical
relationship, namely:
1. Relations among the partners themselves;
2. Relations of the partners with the partnerships;
3. Relations of the partnership with third persons with whom it contracts; and
4. Relations of the partners with such third persons.
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ART. 1784
A partnership begins from the moment of the execution of the contract, unless it is
otherwise stipulated.
This article emphasized that a partnership is a consensual contract. Meaning, when a
partnership is celebrated this means it is already executed or legally existing. Pero,
partners has a lot of freedom when it comes of formation a partnership, which means they
have choice when they want to legalize their partnership. Meaning, the above rule on the
commencement of partnership is not absolute.
Article 1784 specified the three (3) executory agreement of partnership:
1. Future Partnership – Ang mga partner ay my karapatan to stipulate a date when
they want to commence the partnership which also signify that the partnership is
not yet legally existing.
2. Agreement to create partnership – There’s a distinction made between partnership
actually consummated and an agreement to enter into a contract of partnership at a
future time.
3. Failure to agree on material terms – A failure of the parties to agree on material
terms may not merely be evidence of the intent of the parties to be bound only in
the future but may prevent any rights or obligation.
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ART. 1785
When a contract for a fixed term or particular undertaking is continued after the
termination of such term or particular undertaking without any express agreement, the
rights and duties of the partners remains the same as they were at such termination, so far
as is consistent with a partnership at will.
A continuation of the business by the partners or such of them as habitually acted therein
during the term, without any settlement of liquidation of the partnership affairs, is prima
facie evidence of a continuation of the partnership.
Partnership with a Fixed Term is an agreement which the term of existence has been
agreed upon expressly and there’s a particular transaction will start. The accomplishment
of transaction will cause kung kilan ma didissolve ang partnership.
Example:
Riana and Migs formed a partnership kung saan magbibinta sila ng food on the
Foundation Day of their school. They both agreed that the partnership will exist only
during the Foundation Day and the profit will be divided equally among themselves. Ang
partnership nan a-form ni Migs at Riana ay isang halimbawa ng fixed term. After the
foundation day, automatically dissolve na ang partnership.
But if Migs and Riana continue to sell after foundation day. Therefore, dissolved na ang
partnership with a fixed term and PARTNERSHIP AT WILL is created. In such case, the
rights and duties of the partners remain the same but only insofar as it is consistent with a
partnership at wil
Partnership at will is a partnership that can be dissolved by will of either of the partners.
Kapag hindi indicated and duration ng existence ng partnership, generally it is a
partnership will.

ART. 1786
Every partner is a debtor of the partnership for whatever he may have promised to
contribute thereto.
He shall also be bound for warranty in case of eviction with regard to specific and
determinate things which he may have contributed to the partnership, in the same cases
and in the same manner as the vendor is bound with respect to the vendee. He shall also
be liable for the fruits thereof from the time they should have been delivered, without the
need of any demand.
This article emphasized na bawat partner ay debtor in the partnership sa kung ano ang
pinangako niya.
Example:
Riana promised to contribute cash to Migs. They agreed na ang cash ay mabibigay on or
before January 30, 2021.
First Scenario: If after January 30, 2021, Riana failed to deliver the cash she promise to
Migs, Riana automatically become debtor of the partnership even in the absence of
demand.
Second Scenario: Riana complied what she promise on the sad date and the money was
used in the operation. If after four months, Jaja friend of Riana came and claim na ang
pera na binigay ni Riana ay ninakaw lang mula sa kanya, Riana then became liable to the
partnership.
Third Scenario: In the above example, let’s say Riana agreed to contribute cash and
building to the partnership instead of cash only. On January 30, 2021, the building was on
fire. Because of the fire, the building can no longer use by the partnership.
Based on the above scenario, Riana has the obligation to preserve the cash and building
with the diligence of a good father of a family pending delivery. Riana will then
indemnify the partnership for any damages. Dahil hindi na magamit ang building dahil sa
sunog, pwedeng si Riana ang sumagot sa renovation place.
Failure to comply the partner of said contribution does not necessarily results to a
recession or cancellation of the partnership but an action for specific performance with
damages and interest.