1.

It is contract whereby two or more persons bind themselves to contribute money,

property or industry to a common fund with the intention of dividing profits among
themselves.
2. Characteristics
 Perfected by mere consent
 Formed by two or more persons creating reciprocal rights and obligations
 entered into as a means to an end
 has a special name or designation
 contributions in the form of either, money, property and/or industry must be made
 the undertaking of each partner is considered as the equivalent of that of the
others.
 Its existence or validity does not depend on some other contract.
3. A person has the right to select persons with whom he wants to be associated with in the
parentship
4. There is ____ whenever the ownership of an undivided thing or right belongs to different
persons.
5. A partnership must have a lawful _____or ____and must be established for the common
benefit or interest of the partners.
6. A partnership may be constituted in any form, except where immovable property or
real rights are contributed thereto, in which case _______-shall be necessary.
7. Every contract of partnership having a capital of three thousand pesos or more, in
money or property, shall appear in __________.
8. A contract of partnership is ______, whenever immovable property is contributed
thereto, if an inventory of said property is not made, signed by the parties, and attached
to the public instrument.
Classification of Partnership
As to extent of its subject matter
 Universal partnership
Universal partnership of all present property
Universal partnership of profits
 Particular partnership
As to liability of the partners
 General partnership: one consisting of general partners who are liable pro rata
and subsidiary and sometimes solidarily w/ their separate property for
partnership debts.
 Limited partnership: one formed by two or more persons having as members
one or more general partners and one or more limited partners, the latter not
being personally liable for the obligations of the partnership.

As to duration

 Partnership at will: one in w/c no time is specified and is not formed for a
particular undertaking or venture and w/c may be terminated at any time by mutual
agreement of the partners, or by the will of any one partner alone; or one for a fixed term
or particular undertaking w/c is continued after the end of the term or undertaking w/o
express agreement.
 Partnership with a fixed term: one w/c the term for w/c the partnership is to exist is
fixed or agreed upon or one formed for a particular undertaking
As to the legality of its existence

 De jure partnership: one w/c has complied w/ all the legal requirements for its
establishment.
 De facto partnership: one w/c has failed to comply w/ all the legal requirements for
its establishment.

As to representation to others

 Ordinary or real partnership: one w/c actually exists among the partners and also as
to 3rd persons.
 Ostensible partnership or partnership by estoppel: one w/c in reality is not a
partnership, but is considered a partnership only in relation to those who, by their
conduct or admission, are precluded to deny or disprove its existence.
As to publicity

 Secret partnership: one wherein the existence of certain persons as partners is not
avowed or made known to the public by any of the partners.
 Open or notorious partnership: one whose existence is avowed or made known to
the public by the members of the firm.
As to purpose
 Commercial or trading partnership: one formed or the transaction of business.
 Professional or non-trading partnership: one formed for the exercise of a profession.

Kinds of partners
1. Capitalist partner: one who contributes money or property to the common fund.
2. Industrial partner: one who contributes only his industry or personal service.
3. General partner: one whose liability to 3rd persons extends to his separate property.
4. Limited partner: one whose liability to 3rd persons is limited to his capital contribution.
5. Managing partner: one who manages the entity.
6. Liquidating partner: one who takes charge of the winding up of partnership affairs upon
dissolution.
7. Partner by estoppel: one who is not really a partner but is liable as a partner for the
protection of innocent 3rd persons. He is one represented as being a partner but who is
not so between the partners themselves.
8. Continuing partner: one who continues the business of a partnership after it has been
dissolved by reason of the admission of a new partner, or the retirement, death or
expulsion of one or more partners.
9. Surviving partner: one who remains after a partnership has been dissolved by the
death of any partner.
10. Subpartner: one who, not being a member of the partnership, contracts w/ a partner
w/reference to the latter’s share in the partnership.
Other classifications
1. Ostensible partner: one who takes active part and known to the public as a partner
 2. Secret partner: one who takes active part in the business but is not known to be a
partner by outside parties nor held out as a partner by the other partners. He is an actual
partner.
3. Silent partner: one who does not take any active part in the business although he may
be known to be a partner.
4. Dormant partner: one who does not take active part in the business and is not known or
held out as a partner. He would be both a silent and a secret partner.
5. Original partner: one who is a member of the partnership from the time of its
organization.
6. Incoming partner: a person lately, or about to be, taken into an existing partnership as
a member.
7. Retiring partner: one withdrawn from the partnership; a withdrawing partner.
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. 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.
A particular partnership is one w/c is neither a universal partnership of present property nor a
universal partnership of profits.
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 w/ 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.
Art. 1810. The property rights of a partner are:
1. His rights in specific partnership property;
2. His interest in the partnership;
3. His right to participate in the management, extent of property rights of a partner
A partner’s interest in the partnership is his share of the profits and surplus.
Pro rata liability – Literally, pro rata liability means proportionate distribution of liability.
prima facie a joint (pro rata) obligation
Estoppel – A preclusion, in law, which prevents a man from alleging or denying a fact, in
consequence of his own previous act, allegation, or denial of a contrary tenor.
Dissolution “designates the point in time when the partners cease to carry on the business
together”
Termination is the point in time when all partnership affairs are wound up.
Winding up is the process of settling partnership affairs after dissolution.
1. The assets of the partnership are:
a. The partnership property.
b. The contributions of the partners necessary for the payment of all the liabilities specified in
No. 2.
2. The liabilities of the partnership shall rank in order of payment, as follows: a. Those owing to
creditors other than partners.
b. Those owing to partners other than for capital and profits.
c. Those owing to partners in respect of capital.
d. Those owing to partners in respect of profits.
Where a partner has become insolvent or his estate is insolvent, the claims against his separate
property shall rank in the following order:
a. Those owing to separate creditors
b. Those owing to partnership creditors
c. Those owing to partners by way of contribution

Redemption or purchase of interest charged

Redemptioner – The interest of the debtor partner so charged may be redeemed or purchased
w/ the separate property of any one or more of the partners, or w/ partnership property but w/
the consent of all the partners whose interests are not so charged or sold.
Redemption Price – The value of the partner’s interest in the partnership has no bearing on the
redemption price w/c is likely to be lower since it will be dependent on the amount of the
unsatisfied judgment debt.
Right of redeeming non-debtor partner – The redeeming non-debtor partner does not acquire
absolute ownership over the debtor-partner’s interest but holds it in trust for him consistent w/
principles of fiduciary relationship.