Chapter II known as partner; both secret

& silent partners

Obligations of the Partners 5. As to membership
a. Real partners – partners in an
KINDS OF PARTNERS
existing legal partnership
1. As to contribution b. Partners by Estoppel – not
a. Capitalist partners – really partners but represent
contribute money or property themselves, or consent to
or both to the common fund another or others representing
b. Industrial partners – them to anyone as partners
contribute only their 6. As to continuance of the business
industry/labor/service to the affairs after dissolution
common fund a. Continuing partners –
c. Capitalist-Industrial partners continue the partnership
– contribute money or business after dissolution
property and industry to the b. Discontinuing partners – do
common fund not continue the partnership
2. As to liability business after dissolution
a. General partners – held liable 7. As to the nature of membership
to third persons partnership a. Original partners – members
obligations even to the extent of the partnership from the
of their separate property tome of its constitution
b. Limited partners – cannot be b. Incoming partners – became
held liable to third persons members after its
for partnership obligations establishment
3. As to management c. Retiring partners – withdraw
a. Managing partners – manage from the partnership
actively the partnership 8. As to state of survivorship
affairs a. Surviving partners – continue
b. Silent partners – do not take the partnership after its
active part in the business dissolution by reason of
though they share in the death
profits/losses b. Deceased partners – who died
c. Liquidating partners – take while being a member
charge of the winding 9. As to the effect of expulsion
up/liquidation of the a. Expelled partners – who’s
partnership affairs after expelled from the partnership
dissolution by the other partners for a
4. As to third persons valid cause
a. Ostensible partners – take b. Expelling partners – who
active part and known to the caused the expulsion of a
public partner
b. Secret partners – not known 10. As to value of the contribution
as partner a. Majority partners –
c. Dormant partners – do not represents the
take active part and not majority/controlling interests
 b. Nominal partners – 4. To ask for the dissolution of the
represents the minority partnership at the proper time
interest 5. Property rights of partners:
a. Rights in specific partnership
1. Relations created by a contract of property
partnership b. Interest in the partnership
c. Right to participate in the
Legal relations created by a contract of
management
partnership:
i. Limited partners have
1. Relations between partners no right in the
2. Relations between the partners and management
the partnership
2. When does a partnership acquire a
3. Relations between the partners and
third persons separate juridical personality?
4. Relations between the partnership Art. 1784 A partnership begins from the
and the third persons moment of the execution of the contract,
unless it is otherwise stipulated.
Obligations of a partners (duty)
General: Juridical personality exists at the
1. To give their promised contributions
2. Not to convert partnership money to moment of execution of contract
their own use Exception: Partners can agree on some other
3. To account and hold as trustee for date for the start of the partnership
any profits derived without the
consent of the other partners 3. What constitutes prima facie of a
4. Not to engage in any business which contribution of the partnership after the
is of the kind which the partnership expiration of its fixed term?
is engaged
5. Managing partners to credit to the Art. 1785 When a partnership for a fixed
partnership the payment made by a term or particular undertaking is continued
debtor who owes them and the after the termination of such term or
partnership particular undertaking without any express
6. Obligation to share of the partnership agreement, the rights and duties of the
credit which they have received from partners remain the same as they were at
an insolvent partnership debtor – such termination, so far as is consistent with
losses a partnership at will
7. Pay for the damages suffered by the
A continuation of the business by the
partnership through their fault
partners or such of them as habitually acted
Rights of partners (privilege, entitlement) therein during the term, without any
settlement or liquidation of the partnership
1. To associate with another person in affairs, is prima facie evidence of a
their share continuation of the partnership
2. To have access to and inspect and
copy partnership books Partnership with a fixed term – life/period of
3. Demand a formal account existence has been agreed upon by the
partners
Partnership for a particular undertaking – damages occasioned thereby
exist until the purpose is accomplished and not rescission
 Rescission – to end officially
Partnership at will – does not fix its term; 2. Obligation to deliver the fruits
birth and life of a partnership is predicated thereof
on the mutual desire and consent of the a. If property has been
partners contributed, fruits thereof
Very foundation and essence of partnership: should also be given
right to choose with whom a person wishes b. Fruits – arising from the time
to associate himself they should have been
delivered, without the need of
4. In the preceding question, is there any any demand
change in rights and duties of the c. Partner is in bad faith – liable
partners? for the fruits actually
produced and those that could
5. When is a partner considered a debtor have been produced
of the partnership? d. If money is contributed –
debtor for the interest and
6. Obligations of a partner with respect to damages from the time he
his promise to contribute property? should have complied with
7. If the capital or part thereof which a his obligation
partner is bound to contribute consists of 3. Obligation to warrant
goods, how shall said good be appraised? a. Warranty in case of eviction
refers only to specific
8. The liabilities of the partner who has determinate things which a
undertaken to contribute a sum of money partner contributed to the
and fails to do so partnership
Manner of appraisal:
9. Rule in the event a partner converts 1. By stipulation
partnership money to his personal use 2. Absence of stipulation, by experts
chosen by the partners according to
Art 1786 Every partner is a debtor of the
current prices
partnership for whatever he may have
promised to contribute thereto Essence of a partnership – each partner must
share in the profits and losses of the venture
Obligation of every partner
Cases covered of the liability for damages
1. Obligation to contribute what had
and interest:
been promised
a. First test in order to have a 1. Money promised by a partner is
contract of partnership given on time
b. Failure to contribute make 2. Money of the partnership is
the partner a debtor converted to partnership’s own use
c. Exception: no delay when
there is no demand Demand is not necessary: (there’s no
d. Remedy is specific default, if there’s no demand)
performance with interest and
1. In case of contribution:
 a. Formed precisely to make use Industrial
Capitalist Partners
of the contributions, and this Partners
use should start from its Contribution
formation, unless a different Money or property Industry
period has been set; Prohibition to engage in other business
otherwise the firm is General Rule: Cannot General Rule:
necessarily deprived of the engage in the same Cannot engage
benefits thereof. Thus, injury kind of business in business for himself
is constant which the partnership Exception: If the
2. In case of conversion: is engaged partners expressly
a. Even if no actual injury Exception: stipulation permits him to do
results, the liability exists, authorizing him so
because the Article is Profits
absolute 1. As to Agreement 1) As to agreement
2. No Agreement – in 2) No agreement –
10. May industrial partner engage in
proportion to his just and equitable
business for himself?
contribution (pro- under the
11. Does this prohibition apply to a rata) circumstances
business the same as the business of the Losses
partnership? General Rule: General Rule:
1) As to 1) As to agreement,
12. The remedies available to the agreement if any
partnership if an industrial partner 2) No agreement 2) Absence of
engages in business for himself without – agreement agreement – shall
the express permission of the partnership. as to profits not be liable for
Exception: Absence losses
Art 1789 An industrial partner cannot of agreement as to
engage in business for himself, unless the profit and losses, in
partnership expressly permits him to do so; proportion to his
and if he should do so, the capitalist partners contribution
may either exclude him from the firm or
avail themselves of the benefits which he
may have obtained in violation of this Remedies of Capitalist partners against and
provision, with a right to damages in either industrial partner who engaged in business
case. for himself
Capitalist Partners – contribute money or 1) Capitalist partner may exclude the
property or both to the common fund industrial partner from the
partnership plus damages; or
Industrial Partners – contribute only
2) The capitalist partners may avail
industry, labor or service to the common
themselves of the benefits which the
fund
industrial partner may have obtained
Capitalist-Industrial Partners – contribute plus damages.
money or property and industry or both
Note: An action for specific performance to
money, property, and industry to the
compel the partner to perform the promised
common fund
industry is not available as a remedy
because this will lead to the prohibition on share to the capital, except an industrial
involuntary servitude under the Philippine partner, to save the venture, shall be
Constitution. obliged to sell his interest to the other
partners who are willing to contribute
13. If A, B and C form a partnership additional capital
stipulating that the capital shall be
P150,000.00 without specifying the share Note: Contract of partnership is governed by
of each partner, how much shall each the principle of fiduciary relationship, that is
partner contribute? trust and confidence.
Art 1790 Unless there is a stipulation to the 17. A and B are partners in A and
contrary, the partners shall contribute equal Company. A is the managing partner. X
shares to the capital of the partnership owes A and Company P50,000.00 and A,
in his personal credit, another sum of
14. In case of imminent loss of the P50,000.00. Both debts are due and
business of the partnership, which demandable. If A collects the amount of
partners are required to contribute P50,000.00 form X, how shall such
additional capital to save the business of payment be applied?
the partnership?
Art 1792 If a partner authorized to manage
15. The remedy in case a capitalist collects a demandable sum which was owed
partner refuses to contribute additional to in his own name, from a person who
fund when he is bound to do so? owed the partnership another sum also
demandable, the sum thus collected shall be
16. Which partner is not bound to
applied to the two credits in proportion to
contribute additional fund despite
their amounts, even though he may have
imminent loss of the business of the
given a receipt for his own credit only; but
partnership?
should he have given it for the account of
Art 1791 If there is no agreement to the the partnership credit, the amount shall be
contrary, in case of an imminent loss of the fully applied to the latter.
business of the partnership, any partner who
The provisions of this article are understood
refuses to contribute an additional share to
to be without prejudice to the right granted
the capital, except an industrial partner, to
to the debtor by Article 1252, but only if the
save the venture, shall be obliged to sell his
personal credit of the partner should be more
interest to the other partners.
onerous to him.
Obligation of capitalist partners to
Rationale:
contribute additional capital
Art 1792 is not applicable to a partner who
General Rule: Capitalist partners are not
is not a managing partner because there is no
bound to contribute additional capital
basis for the suspicion that the partner is in
Exception: bad faith.

1) Stipulation Obligation of a managing partner who

2) in case of an imminent loss of the collects debt
business of the partnership, any partner
Requisites:
who refuses to contribute an additional
 1) Existence of at least 2 debts Damages suffered by the partnership
(managing partner-creditor, through the fault or negligence of a partner
partnership-creditor) are not generally subject to set-off with the
2) Both sums are demandable profits and benefits which that partner may
have earned for the partnership by his
18. The obligation of a partner who has industry.
received in whole or in part, his share of a
partnership credit when the other Rationale:
partners have not collected their share
and the partnership debtor thereafter It is the obligation of a partner to earn
become insolvent? benefits and profits for the partnership and it
is also his obligation not to cause damages
Art 1793 A partner who has received, in through negligence for the partnership.
whole or in part, his share of a partnership These are two distinct obligations that
credit, when the other partners have not cannot be set-off. Moreover, in the law on
collected theirs, shall be obliged, if the obligation, only a right and an obligation are
debtor should thereafter become insolvent, required to be compensated or set-off.
to bring to the partnership capital; what he
received even though he may have given Mitigation of liability by the courts
receipt for his share only. In case of a partner’s extraordinary efforts in
Rationale: other activities of the partnership, unusual
profits have been realized. This principle
Equity demands proportionate share in the rests on equity.
benefits and losses.
21. Who shall bear the risk of loss of
19. If the partnership suffers loss or things contributed to the partnership?
damage due to the fault or negligence of a
partner, who shall be responsible? Art 1975 The risk of specific and
determinate things, which are not fungible,
20. Can the partner who is responsible for contributed to the partnership so that only
the damage compensate them with the their use and fruits may be for the common
profits and benefits which he may have benefit, shall be borne by the partner who
earned for the partnership by his owns them.
industry?
If the things contributed are fungible, or
Art 1794 Every partner is responsible to the cannot be kept without deteriorating, or if
partnership for damages suffered by it they were contributed to be sold, the risk
through his fault, and he cannot compensate shall be borne by the partnership. In the
them with the profits and benefits which he absence of stipulation, the risk of the things
may have earned for the partnership by his brought and appraised in the inventory, shall
industry. However, the courts may equitably also be borne by the partnership, and in such
lessen the responsibility if through the case the claim shall be limited to the value at
partner’s extraordinary efforts in other which they were appraised.
activities of the partnership, unusual profits
have been realized. Risk of loss:

General Rule:
 1) Specific and determinate things share of each in the losses shall be in the
which are not fungible – same proportion.
PARTNERS
2) Fungible things – PARTNERSHIP In the absence of stipulation, the share of
3) Things contributed to be sold – each partner in the profits and losses shall be
PARTNERSHIP in proportion to what he may have
4) Things brought and appraised in the contributed, but the industrial partner shall
inventory – PARTNERSHIP not be liable for the losses. As for the
profits, the industrial partner shall receive
22. Who shall be answerable for the such share as may be just and equitable
amounts disbursed and for the obligations under the circumstances. If besides his
a partner may have contracted in good services he has contributed capital, he shall
faith in the interest of the partnership also receive a share in the profits in
business and for risks in consequence of proportion to his capital.
its management?
Rules for distribution of profits and losses of
Art 1796 The partnership shall be a partnership
responsible to every partner for the amounts
he may have disbursed on behalf of the 1) Distribution of profits:
partnership and for the corresponding a. Agreement
interest, from the time the expenses are b. No agreement
made; it shall also answer to each partner for i. Capitalist Partner -
the obligations he may have contracted in pro-rata
good faith in the interest of the partnership ii. Industrial Partner –
business, and for risks in consequence of its just and equitable
management. 2) Distribution of losses:
a. Agreement
Obligation of the partnership to every b. No agreement
partner: i. Capitalist Partner –
pro-rata
1) To refund the amounts a partner may ii. Industrial Partner –
have disbursed on behalf of the not liable for losses
partnership plus the interest from the unless he waives his
time the expenses were made. right
2) To answer to each partner for
obligations, he may have contracted Note: Excludes an industrial partner from
into in good faith in the interest of the losses, but he is not exempted from
the partnership, and for the risks in liability insofar as third persons are
consequence of its management. concerned. He may, however, recover what
he has given to third persons from the other
23. How shall be the profits and losses be partners because as to him and his partners,
distributed among the partners? that will no be treated as a loss.
Art 1797 The losses and profits shall be Liability – obligation towards third persons
distributed in conformity with the
agreement. If only the share of each partner Losses – obligation as among the partners
in the profits has been agreed upon, the
*** When a thing goes out of commerce of Note: one of the tests in order to have a
man, such way cannot be recovered partnership is the intent of the contracting
parties to divide the profits and losses
24. Can the designation of the share of the among themselves
partners in profits and losses be entrusted
to a third person? Exception:

25. If the decision of the third person is to Unless the industrial partner waived his
be impugned, within what time shall it be right.
brought?
Rationale: Why an industrial partner is not
Art 1798 If the partners have agreed to liable for losses?
entrust to a third person the designation of
the share of each one in the profits and While capitalist partners can withdraw their
losses, such designation may be impugned capital, the industrial partner cannot
only when it is manifestly inequitable. In no withdraw any labor or industry he had
case may a partner who has begun to already exerted. Moreover, he already has
execute the decision of the third person, or shared in the losses in that, if the partnership
who has not impugned the same within a shows no profit, this means that he has
period of three months from the time he had labored in vain.
knowledge thereof, complain of such
26. The 2 distinct ways of appointing a
decision.
partner as managing partner.
The designation of profits and losses cannot
27. What are the rights and obligations of
be entrusted to one of the partners.
a managing partner whose appointment is
Third person designating the share of the contained in the articles of co-
partners in the profits and losses. partnership?

General Rule: Art 1800 The partner who has been

appointed manager in the Articles of
It is valid. Partnership may execute all acts of
administration despite the opposition of his
Exception: partners, unless he should act in bad faith;
and his power is irrevocable without just or
Not valid and it may be questioned if it is
lawful cause. The vote of the partners
manifestly inequitable, unless (ma valid):
representing the controlling interest shall be
1) A partner began to execute the necessary for such revocation of power.
decision of the third person; or
A power granted after the partnership has
2) A partner has not questioned the said
been constituted may be revoked at any
decision of the third person within a
time.
period of 3 months from the time he
had knowledge thereof. Who shall manage the partnership?
Art 1799 A stipulation which excludes one Either one, some or all of the partners
or more partners from any share in the designated as managing partners either in
profits or losses is void. the Articles of Partnership or after the
contract of partnership had already been
constituted. If there is NO AGREEMENT, 28. What are the powers if 2 or more
management is vested in all the partners. managing partners whose respective
duties are not specified?
Two modes of appointment:
Art 1801 If two or more partners have been
1) Articles of Partnership; or entrusted with the management of the
a. General Rule: power is partnership without specification of their
irrevocable without just or respective duties, or without a stipulation
lawful cause that one of the shall not act without the
b. Exception: consent of all the other, each one separate
i. Remove for just cause, execute all acts of administration, but if any
vote of partners having of them should oppose the acts of the others,
controlling interest is the decisions of the majority shall prevail. In
necessary case of a tie, the matter shall be decided by
ii. Remove for without just the partners owning the controlling interest.
cause, unanimity
including his own vote When 2 or more managing partners have
1. Reason: represent a been entrusted with the management
change in the will of
the parties; change in Requisites:
the terms if the
1) Two or more partners are managers;
contract; a novation
2) There is no specification of
(substitution of a
respective duties;
new legal obligation)
3) There is no stipulation requiring
c. Extent of Power:
unanimity, that is, that one of them
i. Acts in good faith –
shall not act without the consent of
may do all acts of
all the partners
administration
ii. Acts in bad faith – General Rule:
cannot do any act of
administration. Each one may separately execute all acts of
iii. Presumption: GOOD administration
FAITH
2) Made in an instrument other than the Exception: If any of the managers should
Articles of Partnership oppose:
a. General Rule: power to act 1) The decision of the majority (per
may be revoked at any time, head) of the managing partners shall
with or without just cause by prevail.
the partners owning the 2) In case of a tie, the decision of the
controlling interest managing partners owning the
i. Reason: is a mere controlling interest (more than 50%)
delegation of power; shall prevail.
revocable any time
b. Extent of Power: do all acts Note: The right to oppose is not given to
of administration non-managers because in appointing their
other partners as managers, they have
stripped themselves of all participation in contracts has, in the ordinary and natural
the administration. course of business, the consent of his
copartner; for otherwise he would not enter
29. How shall management be exercised into the contract.
in case it is stipulated that none-of-the
managing partners shall act without the 30. Who shall manage the partnership in
consent of the others? case no manner of management has been
agreed upon?
Art 1802 In case it should have been
stipulated that none of the managing Art 1803 When the manner of management
partners shall act without the consent of the has not been agreed upon, the following
others, the concurrence of all shall be rules shall be observed:
necessary for the validity of the acts, and
there is the absence or disability of any one 1) All the partners shall be considered
of them cannot be alleged, unless there is agents and whatever any one of them
imminent danger of grave or irreparable may do alone shall bind the
injury to the partnership. partnership, without prejudice to the
provisions of Article 1801
Stipulation requiring unanimity of action 2) None of the partners may, without
the consent of the others, make any
General Rule: important alteration in the
immovable property of the
Unanimous consent of all the managing
partnership, even if it may be useful
partners (even if absent/incapacitated) shall
to the partnership. But if the refusal
be necessary for the validity of the acts and
of consent by the other partners is
absence or disability of any managing
manifestly prejudicial to the interest
partner cannot be alleged.
of the partnership, the court’s
Exception: intervention may be sought.

When there is an imminent danger or Rules when manager of management has not
irreparable injury to the partnership been agreed upon:

Art 1802 NOT applicable to third person 1) All the partners hall be considered as
managers. Consequently, all partners
Any of the two managing partners may can do all acts of administration. If
contract and sign in the name of the the acts of a partner are opposed by
partnership with the consent of the other, the other partners, the majority (per
undoubtedly creates an obligation between head) shall prevail. In case of tie (per
the two partners, which consists in asking head), then the vote of the partners
the other’s consent before contracting for the representing the controlling interest
partnership. This obligation is not imposed shall prevail.
upon a third person who contracts with the 2) For important alterations in
partnership. Neither it is necessary for the immovable property, unanimity is
third person to ascertain if the managing required.
partner with whom he contracts has
previously obtained the consent of the other.
A third person may and has a right to
presume that the partner with whom he
31. Can a partner associate another ** Every partner given right to access,
person with him in his share in the inspect and copy (AIC)
partnership without the consent of the
other partners? 36. To whom shall partners be obligated
to render information of all things
32. Can the associate take part in the affecting the partnership?
management?
Art 1806 Partners shall render on demand
33. What will the associate share with the true and full information of all things
partner? affecting the partnership to any partner or
the legal representative of any deceased
Art 1804 Every partner may associate partner or of any partner under legal
another person with him in his share, but disability.
the associate shall not be admitted into the
partnership without the consent of all the  Violation of Art 1806 is concealment
other partners, even if the partner having an
associate should be a manager. Who can demand true and full information?

*Contract of Sub-partnership 1) Any partner

2) Legal representative of any deceased
 the consent of the other partners is partner
required 3) Legal representative of any partner
under legal disability
 Associate in his share or sub-partner
37. When are partners accountable to the
 cannot be admitted based on the ff partnership and are considered as
reasons: trustees for the partnership?
1) Mutual trust Art 1807 Every partner must account to the
2) A change in membership is a partnership for any benefit, and hold as
modification or novation of the trustee for it any profits derived by him
contract without the consent of the other partners
from any transaction connected with the
34. Where shall be partnership books be
formation, conduct, or liquidation of the
kept?
partnership or from any use by him of its
35. What are the rights of the partners property
with respect to the books of the
 Rationale: fiduciary relationship
partnership?
Art 1805 The partnership books shall be 38. Can a capitalist partner engage in
kept, subject to any agreement between the business for his own account without the
partners, at the principal place of business of consent of the other partners?
the partnership, and every partner shall at 39. What is the liability of a capitalist
any reasonable hour have access to and may partner who engages in the same business
inspect and copy any of them. that of the partnership without the
** Reasonable hour- should be business consent of the other partners?
days throughout the year
Art 1808 The capitalist partners cannot Industrial Partner Capitalist Partner
engage for their own account in any Prohibition
operation which is of the kind of business in ABSOLUTE RELATIVE
which the partnership is engaged, unless PROHIBITION PROHIBITION
there is a stipulation to the contrary. General Rule: General Rule: cannot
Cannot engage engage in the same
Any capitalist partner violating this business for kind of business as the
prohibition shall bring to the common funds himself partnership for his
any profits accruing to him from his Exception: own
transactions, and shall personally bear all the Expressly permits Exception: There’s a
losses. him to do so stipulation
 Rationale: Capitalist partner has already Remedy
acquired knowledge of the business secrets Capitalist partners Capitalist Partner,
may: who violated shall:
 Effects of the violation: 1) Exclude 1) Bring to the
him from common fund
1) Shall bring to the common fund any the firm any profits
profits accruing to him; and plus accruing to
2) Shall personally bears all the losses damages him from said
2) Avail transaction
40. Under what circumstances shall any themselves 2) Personally
partner demand a formal account as to of the bears all losses
partnership affairs? benefits
which he
Art 1809 Any partner shall have the right to may have
a formal account as to partnership affairs: obtained

Exceptions:
SECTION 2
(1) If he is wrongfully excluded from the
partnership business or possession of its Property Rights of a Partner
property by his co-partners;
1. What are the property rights of a
(2) If the right exists under the terms of any partner?
agreement;
Art 1810 The property rights of a partner
(3) As provided by article 1807; are:

(4) Whenever other circumstances render it (1) His rights in specific partnership
just and reasonable. property;

 No formal accounting is demandable (2) His interest in the partnership; and

until after the dissolution
(3) His right to participate in the
management
2. As regards specific partnership  Profit: excess of revenues over
property, what relationship exists expenditures in a business transaction
between and among the partners?
 Surplus: excess of receipts over
3. What are the incidents of this co- disbursements. Funds that remain after
ownership? dissolution and paid all debts

Art 1811 A partner is co-owner with his 5. Can a partner assign his whole interest
partners of specific partnership property. in the partnership to another without the
consent of the other partners?
The incidents of this co-ownership are such
that: 6. Will the assignee become a partner?

(1) A partner, subject to the provisions of 7. Will the conveyance of a partner of his
this Title and to any agreement between the whole interest in the partnership dissolve
partners, has an equal right with his partners the partnership?
to possess specific partnership property for
partnership purposes; but he has no right to 8. What are the rights of an assignee of a
possess such property for any other purpose partner’s interest?
without the consent of his partners;
9. What rights cannot be exercised by an
(2) A partner's right in specific partnership assignee?
property is not assignable except in
connection with the assignment of rights of Art 1813 A conveyance by a partner of his
all the partners in the same property; whole interest in the partnership does not of
itself dissolve the partnership, or, as against
(3) A partner's right in specific partnership the other partners in the absence of
property is not subject to attachment or agreement, entitle the assignee, during the
execution, except on a claim against the continuance of the partnership, to interfere
partnership. When partnership property is in the management or administration of the
attached for a partnership debt the partners, partnership business or affairs, or to require
or any of them, or the representatives of a any information or account of partnership
deceased partner, cannot claim any right transactions, or to inspect the partnership
under the homestead or exemption laws; books; but it merely entitles the assignee to
receive in accordance with his contract the
(4) A partner's right in specific partnership profits to which the assigning partner would
property is not subject to legal support under otherwise be entitled. However, in case of
article 291. fraud in the management of the partnership,
the assignee may avail himself of the usual
4. What is the nature of a partner’s remedies.
interest in the partnership?
In case of a dissolution of the partnership,
Art 1812 A partner's interest in the the assignee is entitled to receive his
partnership is his share of the profits and assignor's interest and may require an
surplus. account from the date only of the last
account agreed to by all the partners.
 Conveyance: voluntary transfer of a 1827, on due application to a competent
right/property court by any judgment creditor of a partner,
the court which entered the judgment, or any
 Effects of conveyance by partner of his other court, may charge the interest of the
whole interst in the partnership: debtor partner with payment of the
unsatisfied amount of such judgment debt
1) If a partner conveys his whole with interest thereon; and may then or later
interest, it may still subsist (exist) or appoint a receiver of his share of the profits,
may be dissolved and of any other money due or to fall due to
2) Assignee: him in respect of the partnership, and make
a. Cannot interfere in the all other orders, directions, accounts and
management inquiries which the debtor partner might
b. Cannot require information have made, or which the circumstances of
or accounting of partnership the case may require.
transactions
c. Cannot inspect partnership The interest charged may be redeemed at
books any time before foreclosure, or in case of a
sale being directed by the court, may be
 Rights of the Assignee: purchased without thereby causing a
dissolution:
1) To receive profits of the assigning
partner (1) With separate property, by any one or
2) In case of fraud in the management, more of the partners; or
can avail himself of the usual
remedies provided by law (2) With partnership property, by any one or
3) In case of dissolution, receive more of the partners with the consent of all
assignor’s interest the partners whose interests are not so
4) In case of dissolution, may require charged or sold.
an account from the date only of
the last account agreed to by all the Nothing in this Title shall be held to deprive
partners a partner of his right, if any, under the
exemption laws, as regards his interest in the
10. Is a partner’s interest in the partnership.
partnership subject to attachment or
execution for his personal debts?  Charging order: remedy available to a
judgment creditor of a debtor-partner to
11. May the interest so charged be charge the interest of the latter in the
redeemed and with what property shall it partnership by means of court-order for the
be redeemed? purpose of satisfying the amount of the
judgment
12. What are other right may a partner
whose interest has been so charged avail  Appointment of a receiver: court may
of? appoint a receiver

Art 1814 Without prejudice to the preferred  Redemption of interest charged:

rights of partnership creditors under article
 1) Before foreclosure: redeemed at any name, shall be subject to the liability of a
time partner.
2) After foreclosure: may still be
purchased without thereby causing a General Rule: may use a firm name desired
dissolution:
a. With separate property of a Exception: cannot use an identical or
partner deceptively confusingly of any existing
b. With partnership property partnership/corporations or any other name
with the consent of all the already protected by law or patently
partners whose interest are deceptive or contrary to existing laws
not so charged/sold (less than
50%) 4. How are partners including industrial
ones be liable for contractual obligations
 Redemption: extinguishment of the of the partnership?
charge/attachment on the partner’s interest
in the profits 5. What is meant by subsidiary liability of
the partners?
 Right of a partner under exemption laws:
6. What is meant by the partner’s pro-
1) Shall not be deprived of his right rata liability?
(interest) under the exemption laws
2) Cannot avail himself of the 7. How do you reconcile the exception of
exemption laws insofar as his right and industrial partner from loss and his
in specific partnership property pro-rata and subsidiary liability of the
partners?
Section 3
8. When is a partnership contractual
Obligations of the Partners with Regards obligation incurred?
to Third Persons
Art 1816 All partners, including industrial
1. Under what name shall every ones, shall be liable pro rata with all their
partnership operate? property and after all the partnership assets
have been exhausted, for the contracts which
2. Is there any limitation as to the firm may be entered into in the name and for the
name a partnership may adopt? account of the partnership, under its
signature and by a person authorized to act
3. What is the liability of a person, who for the partnership. However, any partner
not being a partner includes his name in may enter into a separate obligation to
the partnership’s name? perform a partnership contract. (Liable to
partner not the partnership)
Art 1815 Every partnership shall operate
under a firm name, which may or may not ** Liability: as to third persons
include the name of one or more of the
partners. ** Losses: between partners
Those who, not being members of the
partnership, include their names in the firm
9. What is the effect of a stipulation Except when authorized by the other
among the partners contrary to the pro- partners or unless they have abandoned the
rata and subsidiary liability of the business, one or more but less than all the
partners? partners have no authority to:

Art 1817 Any stipulation against the liability (1) Assign the partnership property in
laid down in the preceding article shall be trust for creditors or on the assignee's
void, except as among the partners. (n) promise to pay the debts of the
partnership;
10. In the absence of any agreement to the
contrary, who shall act as agent of the (2) Dispose of the good-will of the
partnership? business;

11. Classify the acts of a partner in the (3) Do any other act which would make it
partnership? impossible to carry on the ordinary
business of a partnership;
12. If a partner who has no authority
performs an act for apparently carrying (4) Confess a judgment;
on in the usual manner the business of the
partnership, will such act be binding (5) Enter into a compromise concerning a
upon the partnership? partnership claim or liability;

13. Give examples for acts of strict (6) Submit a partnership claim or liability
dominion. to arbitration;

14. When shall the partnership be bound (7) Renounce a claim of the partnership.
by any act of strict dominion?
No act of a partner in contravention of a
Art 1818 Every partner is an agent of the restriction on authority shall bind the
partnership for the purpose of its business, partnership to persons having knowledge
and the act of every partner, including the of the restriction.
execution in the partnership name of any
instrument, for apparently carrying on in the 1) Acts apparently for carrying on in
usual way the business of the partnership of the usual way the business of the
which he is a member binds the partnership, partnership
unless the partner so acting has in fact no 2) Acts not apparently for the
authority to act for the partnership in the carrying on in the usual way of
particular matter, and the person with whom business of the partnership
he is dealing has knowledge of the fact that a. Not binding, unless
he has no such authority. authorized
3) Acts of ownership/Act of strict
An act of a partner which is not apparently dominion
for the carrying on of business of the 4) Acts in contravention of a
partnership in the usual way does not bind restriction on authority
the partnership unless authorized by the a. Not binding to the
other partners. partnership as to third
 persons having knowledge of a holder for value without knowledge that
the restriction the partner, in making the conveyance, has
exceeded his authority.
15. Under whose name may real property
owned by the partnership be registered? Where title to real property is in the name of
the partnership, a conveyance executed by a
16. Where title to real property is in the partner, in his own name, passes the
partnership name, who may convey title equitable interest of the partnership,
to such property? provided the act is one within the authority
of the partner under the provisions of the
17. One title is conveyed may the first paragraph of article 1818.
partnership recover such property?
Where title to real property is in the name of
18. Where title to real property is in the one or more but not all the partners, and the
name of the partnership, and a record does not disclose the right of the
conveyance is executed by a partner in his partnership, the partners in whose name the
own name, will title pass to the grantee? title stands may convey title to such
property, but the partnership may recover
19. Define equitable interest such property if the partners' act does not
bind the partnership under the provisions of
20. When may conveyance of real the first paragraph of article 1818, unless the
property of the partnership by a partner purchaser or his assignee, is a holder for
in his own name pass title to the grantee? value, without knowledge.

21. Where title to real property is in the Where the title to real property is in the
name of one ore more or all the partners, name of one or more or all the partners, or in
or in a third person in trust for the a third person in trust for the partnership, a
partnership and is conveyed by a partner conveyance executed by a partner in the
in his own name or in the partnership partnership name, or in his own name,
name, will title pass to the property? passes the equitable interest of the
partnership, provided the act is one within
22. If real property is registered in the the authority of the partner under the
names of all the partners and is conveyed provisions of the first paragraph of article
by all the partners, what passes to the 1818.
grantee?
Where the title to real property is in the
Art 1819 Where title to real property is in name of all the partners a conveyance
the partnership name, any partner may executed by all the partners passes all their
convey title to such property by a rights in such property.
conveyance executed in the partnership
name; but the partnership may recover such  Title: legal evidence of a person’s
property unless the partner's act binds the ownership rights in property; and instrument
partnership under the provisions of the first that constitutes such evidence
paragraph of article 1818, or unless such
property has been conveyed by the grantee  Equitable Interest: interest held by
or a person claiming through such grantee to virtue of an equitable title or claimed on
equitable grounds, held by a trust knowledge of the partnership, except in the
beneficiary case of fraud on the partnership, committed
by or with the consent of that partner.
 Real property may be registered or
owned in the name of:  Instances where knowledge of a partner
is considered knowledge of the partnership:
1) Partnership
2) One or more but not all partners 1) Acquired while a partner
3) One or more or all partners/third 2) Present to his mind
person in trust 3) Who reasonably could and should
4) All the partners have communicated it to the acting
partner
23. When may admission or
representation made by a partner be  Exception: in case of fraud on the
considered evidence against the partnership, committed by or with the
partnership? consent of that partner (selective)

Art 1820 An admission or representation ** 25. How is a partnership tort

made by any partner concerning partnership committed?
affairs within the scope of his authority in
accordance with this Title is evidence  Tort: a civil wrong that causes a
against the partnership. claimant to suffer loss or harm, resulting in
legal liability for the person who commits
 Admission: a statement in which the tortious act
someone admits that something is true or
done something wrong. Art 1822 Where, by any wrongful act or
omission of any partner acting in the
 Evidence against: ordinary course of the business of the
partnership or with the authority of his co-
1) Partnership affairs partners, loss or injury is caused to any
2) Within the scope of his authority person, not being a partner in the
partnership, or any penalty is incurred, the
24. Under what cases may notice or partnership is liable therefor to the same
acknowledge of any partner of any matter extent as the partner so acting or omitting
relating to partnership affairs operate as to act.
notice to or knowledge of the
partnership? Art 1823 The partnership is bound to make
good the loss:
Art 1821 Notice to any partner of any matter
relating to partnership affairs, and the (1) Where one partner acting within the
knowledge of the partner acting in the scope of his apparent authority receives
particular matter, acquired while a partner or money or property of a third person and
then present to his mind, and the knowledge misapplies it; and
of any other partner who reasonably could
and should have communicated it to the (2) Where the partnership in the course of its
acting partner, operate as notice to or business receives money or property of a
third person and the money or property so with one or more persons not actual
received is misapplied by any partner partners, he is an agent of the persons
while it is in the custody of the consenting to such representation to bind
partnership. them to the same extent and in the same
manner as though he were a partner in fact,
26. Who shall be charged liable for with respect to persons who rely upon the
partnership tort? representation. When all the members of the
existing partnership consent to the
Art 1824 All partners are liable solidarity representation, a partnership act or
with the partnership for everything obligation results; but in all other cases it is
chargeable to the partnership under articles the joint act or obligation of the person
1822 and 1823. acting and the persons consenting to the
representation.
27. How does a person not a partner
become a partner by estoppel?  Partnership by Estoppel: arises if all
the partners consented to the
Art 1825 When a person, by words spoken misrepresentation of a third person who is
or written or by conduct, represents himself, not a real partner. Creates a partnership
or consents to another representing him to obligation.
anyone, as a partner in an existing
partnership or with one or more persons not  Partner by Estoppel: a person who
actual partners, he is liable to any such represents himself, or consents to another or
persons to whom such representation has other representing him to any one, as a
been made, who has, on the faith of such partner either in an existing partnership or in
representation, given credit to the actual or one that is fictitious or apparent (not
apparent partnership, and if he has made consented by all partners)
such representation or consented to its being
made in a public manner he is liable to such 28. If a person is admitted as a partner
person, whether the representation has or into an existing partnership, shall he be
has not been made or communicated to such liable for all the obligations of the
person so giving credit by or with the partnership incurred by the partnership
knowledge of the apparent partner making before his admission?
the representation or consenting to its being
made: 29. For obligations of the partnership
incurred after he was admitted into the
(1) When a partnership liability results, he is partnership, to what extent shall he be
liable as though he were an actual member liable?
of the partnership;
(2) When no partnership liability results, he Art 1826 A person admitted as a partner into
is liable pro rata with the other persons, if an existing partnership is liable for all the
any, so consenting to the contract or obligations of the partnership arising before
representation as to incur liability, otherwise his admission as though he had been a
separately. partner when such obligations were
incurred, except that this liability shall be
When a person has been thus represented to satisfied only out of partnership property,
be a partner in an existing partnership, or unless there is a stipulation to the contrary.
** Note: Cannot go after the separate
property of the newly admitted partner

30. In respect to partnership assets

between the partnership creditors and the
creditors of the individual partners, who
shall be preferred?

Art 1827 The creditors of the partnership

shall be preferred to those of each partner as
regards the partnership property. Without
prejudice to this right, the private creditors
of each partner may ask the attachment
and public sale of the share of the latter in
the partnership assets.

 Preference of payment:

1) Partnership creditors
2) Partner creditors