CLASSIFICATION OF PARTNERSHIP
industry or work during the existence of the partnership and
I. As to Object
a. UNIVERSAL PARTNERSHIP
ART. 1776. As to its object, a partnership is either universal or
particular. As regards the liability of the partners, a partnership
may be general or limited. (1671a)
ART. 1777. A universal partnership may refer to all the present
property or to all the profits. (1672)
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. (1673)
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 therewith.
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. (1674a)
Universal Partnership of all Present Property:
 comprises all that the partners may acquire by their
industry or work during the existence of the partnership and
the usufruct of movable or immovable property which each
of the partners may possess at the time of the celebration of
the contract
 The following become the common property of all partners:
1. Property which belonged to each of them at the time of the
constitution of the partnership, and
2. Profits which they may acquire from the property
contributed
Contribution of future property:
 GR: future properties cannot be contributed. Property
subsequently acquired by inheritance, legacy or donation
cannot be included by stipulation
 XPN: fruits thereof
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. (1675)
Universal Partnership of Profits:
 comprises all that the partners may acquire by their
the usufruct of movable or immovable property which each
of the partners may possess at time of celebration of the
contract
Ownership of present and future property:
 partners retain their ownership, what passes to the
partnership are the profits or income and the use or usufruct
of the same. Such property is returned to such partners
upon dissolution.
Profits acquired through chance:
 not included
Fruits of property subsequently acquired:
 GR: NO.
 XPN: unless included by express stipulation
ART. 1781. Articles of universal partnership, entered into
without specification of its nature, only constitute a universal
partnership of profits. (1676)
Presumption:
 when the articles of partnership do not specify the nature of
the partnership, it will be presumed that the parties intended
merely a partnership of profits
Reason:
 a universal partnership of profits imposes less obligations
on the partners, since they preserve the ownership of their
separate property
ART. 1782. Persons who are prohibited from giving each other
any donation or advantage cannot enter into a universal
partnership. (1677)
Purpose:
 to allow persons who are prohibited to give each other any
donation or advantage from a universal partnership will be
like permitting them to do indirectly what the law expressly
prohibits. A partnership formed in violation of this article is
null and void.
Also, take note of the following articles:
 Art. 87 (Family Code). Every donation or grant of
gratuitous advantage, direct or indirect, between the
spouses during the marriage shall be void, except moderate
gifts, which the spouses may give to each other on the
occasion of any family rejoicing. The prohibition shall also
apply to persons living together as husband and wife
without a valid marriage.
 Article 739. (Civil Code) The following donations
shall be void:
(1) Those made between persons who were guilty of
adultery or concubinage at the time of the
donation;
(2) Those made between persons found guilty of the
same criminal offense, in consideration thereof;
(3) Those made to a public officer or his wife,
descendants and ascendants, by reason of his
office.
In the case referred to in No. 1, the action for declaration of
nullity may be brought by the spouse of the donor or donee;
and the guilt of the donor and donee may be proved by
preponderance of evidence in the same action. (n)
b. PARTICULAR PARTNERSHIP
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. (1678)
Particular Partnership:
 limited and well-defined, being confined to an undertaking
of a single, temporary or ad hoc nature
 The fundamental difference between a universal
partnership and a particular partnership lies in the
scope of their subject matter or object. In the former,
the object is vague and indefinite, contemplating a
general business with some degree of continuity, while
in the latter, it is limited and well-defined, being
confined to an undertaking of a single, temporary, or ad
hoc nature.
Business of partnership need not be continuing in nature.
 carrying on of a business of a continuing nature is not
essential to constitute a partnership. An agreement to
undertake a particular piece of work or a single transaction
or a limited number of transactions and immediately divide
the resulting profits would seem to fall within the meaning
of the term “partnership” as used in the law.
Rule under American law.
 The above is not true under the Uniform Partnership Act
which defines a partnership as “an association of two or
more persons to carry on as co-owners a business for
profit” (Sec. 6 thereof.) and states that “business includes
every trade, occupation, or profession.” (Sec. 2 thereof.
 The word “business,” as used in the Act, clearly means
business in the commercial sense only, not merely “a joint
venture’’ which exists for carrying on a single act or
isolated transaction or a limited number of transactions.
Thus, a distinction exists between a joint venture, a legal
concept of common law origin, on which the members are
interested only in a single transaction, and is thus of a
temporary nature although the business of conducting it
may continue for a number of years, and a partnership in
which the members (partners) are interested in carrying on
together of a general and continuing business of a particular
kind
Joint Venture:
 a partnership created for some temporary or limited
purpose, although not a formal partnership. It has a legal
personality separate and distinct from the parties
composing it.
Corporation as a partner
 While under the Philippine Civil Code, a joint venture is a
form of partnership with a legal personality separate and
distinct from the parties composing it, and should thus be
governed by the law of partnership, the Supreme Court has,
however, recognized a distinction between these two
business forms, and has held that although a corporation
cannot enter into a partnership contract, it may, however,
engage in a joint venture with others
II. As to Liability of Partners
a. GENERAL PARTNERSHIP
ART. 1776. As to its object, a partnership is either universal or
particular. As regards the liability of the partners, a partnership
may be general or limited. (1671a)
General Partnership
 one consisting of general partners who are liable pro rata
and subsidiarily (Art. 1816.) and sometimes solidarily
(Arts. 1822-1824.) with their separate property for
partnership debts
b. LIMITED PARTNERSHIP
ART. 1843. A limited partnership is one formed by two or more
persons under the provisions of the following article, having as
members one or more general partners and one or more limited
partners. The limited partners as such shall not be bound by the
obligations of the partnership.
 The term is sometimes used to designate joint ventures and
partnerships limited only in respect of the nature and scope
of the business to be carried on.
 correct usage of the term confines it to the form of business
association composed of one or more general partners and
one or more special partners, the latter not being personally
liable for the partnership debts
 It is so called because the liability to third persons of one or
 more of its members referred to as limited (or special)
partners is limited to a fixed amount, their capital
contributions or the amount they have invested in the
 partnership. This limited liability is the key characteristic of
the limited partnership.
Characteristics of limited partnership
(1) A limited partnership is formed by compliance with the
statutory requirements (Art. 1844.);
(2) One or more general partners control the business and are
personally liable to creditors (Arts. 1848, 1850.);
(3) One or more limited partners contribute to the capital and
share in the profits but do not participate in the
management of the business and are not personally liable
for partnership obligations beyond the amount of their
capital contributions (Arts. 1845, 1848, 1856.);
(4) The limited partners may ask for the return of their capital
contributions under the conditions prescribed by law
(Arts. 1844[h], 1857.);
(5) The partnership debts are paid out of common fund and
the individual properties of the general partners
Business reason and purpose of statutes authorizing limited
partnerships.
(1) Secure capital from others for one’s business and still retain
control.
- “The business reason for the adoption of acts
making provisions for limited or special partners is
that men in business often desire to secure capital
from others.
- three classes of contracts which can be made with
those from whom the capital is secured:
i. the ordinary loan on interest.
ii. loan where the lender, in lieu of interest,
takes a share in the profits of the
business.
iii. those cases in which the person
advancing the capital secures, besides a
share in the profits, some measure of
control over the business.
- The lender who takes a share in the profits does
not by reason of that fact, run a risk of being held
as a partner. If, however, his contract falls within
the third class mentioned and he has any measure
of control over the business, he at once runs
serious risk of being liable for the debts of the
business as a partner.”
(2) Share in profits of a business without risk of personal
liability.
- The policy of laws authorizing the formation of
limited partnerships is to bring into trade and
commerce funds of those not inclined to engage in
that business, who are disposed to furnish capital
upon such limited liability with a view to the share
of profits which might be expected to result to
them from its use.”
(3) Associate as partners with those having business skill.
- The primary purpose of the statute authorizing the
formation of limited partnerships is to encourage
those having capital to become partners with those
having skill, by limiting the liability of the former
to the incidental amount actually contributed by
them. The object of such a statute is to furnish
reasonable protection to those dealing with the
concern by requiring acts to be done and public
notice thereof given so that all who desire may
know the essential features of the arrangement.”
Differences between a general partner/partnership and a limited
partner/partnership.
(1) A general partner is personally liable for partnership
obligations (Art. 1816.), while a limited partner’s liability
extends only to his capital contribution (Arts. 1845, 1848,
1856.);
(2) When the manner of management has not been agreed
upon, all of the general partners have an equal right in the
management of the business (Arts. 1803, 1810[3].),
whether or not the general partner has made any capital
contribution, while a limited partner has no share in the
management of a limited partnership, his rights being
limited to those enumerated in Article 1851, such that he
renders himself liable to creditors as a general partner if he
takes part in the control of the business (Art. 1848.);
(3) A general partner may contribute money, property, or
industry to the partnership (Art. 1767.), while a limited
partner must contribute cash or property to the partnership
but not services (Art. 1845.);
(4) Unlike a general partner, a limited partner is not a proper
party to proceedings by or against a partnership unless he is
also a general partner (Art. 1853.), or where the object of
the proceeding is to enforce a limited partner’s right
against, or liability to, the partnership (Art. 1866.);
(5) A general partner’s interest in the partnership (Art. 1812.)
may not be assigned as to make the assignee a new partner
without the consent of the other partners (Art. 1813.)
although he may associate a third person with him in his
share (Art. 1804.), while a limited partner’s interest is
freely assignable, with the assignee acquiring all the rights
of the limited partner subject to certain qualifications1 (Art.
1859.);
(6) The name of a general partner may appear in the firm name
(Art. 1815.), while, as a general rule, that of a limited
partner must not (Art. 1846.);
(7) A general partner is prohibited from engaging in a business
which is of the kind of business in which the partnership is
engaged, if he is a capitalist partner (Art. 1808.), or in any
business for himself if he is an industrial partner (Art.
1789.), while there is no such prohibition in the case of a
limited partner who is considered as a mere contributor to
the partnership (see Art. 1866.); and
(8) The retirement, death, insanity, or insolvency of a general
partner dissolves the partnership (Arts. 1860, 1830, 1831.),
while the retirement, etc. of a limited partner does not have
the same effect, for his executor or administrator shall have
the rights of a limited partner for the purpose of selling his
estate. (Art. 1861.)
- The other differences are: a general partnership
may, as a general rule, be constituted in any form
by contract or conduct of the parties, while a
limited partnership is created by the members after
 compliance with the requirements set forth by law;
it is composed only of general partners; it must
operate under a fi rm name which in the case of a
limited partnership must be followed by the word
“Limited” (Art. 1844[1, a].); and its dissolution
and winding up are governed by different rules.
- A limited partnership, unless prohibited by law,
may carry on any business which could be carried
on by a general partnership.
the requirement that the dissolution must not be made at
an improper or unreasonable time.
- Even a partnership for a fixed term may likewise be
terminated by the express will of any partner before the
time mentioned. (Art. 1830[2].) There is no such thing
as an indissoluble partnership.
b. PARTNERSHIP FOR A PARTICULAR UNDERTAKING

III. As to term
a. PARTNERSHIP WITH A FIXED TERM c. PARTNERSHIP AT WILL

ART. 1785. When a partnership 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 remain 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 or liquidation of the partnership affairs, is prima facie
evidence of a continuation of the partnership. (n)

Continuation of partnership beyond fixed term.

- A partnership with a fixed term is one in which the term of its

existence has been agreed upon expressly (as when there is a
definite period) or impliedly (as when a particular enterprise or
transaction is undertaken).
- The expiration of the term thus fixed or the accomplishment of
the particular undertaking specified (or the demonstration of
the impossibility of its accomplishment) will cause the
automatic dissolution of the partnership. (Art.1830[1, a].)
(1) Rights and duties of partners.
- The partnership, however, may be extended or renewed
by the partners by express agreement, written or oral, or
impliedly, by the mere continuation of the business
after the termination of such term or particular
undertaking without any settlement or liquidation.
- the rights and duties of the partners remain the same as
they were at such termination but only insofar as is
consistent with a partnership at will. (See Art. 1776.)
- with such continuation, the partnership for a fixed term
or particular undertaking is dissolved and a new one, a
partnership at will, is created by implied agreement
the continued existence of which will depend upon the
mutual desire and consent of the partners.
- the manner of management and profit-sharing ratio
originally agreed upon shall still govern but the
partnership having become a partnership at will may be
lawfully terminated at any time by the express will of
all the partners or any of them. (see Art. 1830[1, b, c].)

(2) Dissolution of partnership.

- Verily, any one of the partners may, at his sole
pleasure, dictate a dissolution of a partnership at will.
He must, however, act in good faith not that the
attendance of bad faith can prevent the dissolution of
the partnership but that can result in a liability for
damages to the other partners. Implicit in good faith is