ARTICLE 1787-

1796
BAYLON, RACHEL AN G.
BSBA- MM3
 ARTICLE 1787
 When the capital or a part thereof which a partner is
bound to contribute consists of goods, their appraisal
must be made in the manner prescribed in the
contract of partnership, and in the absence of
stipulation, it shall be made by experts chosen by the
partners, and according to current prices, the
subsequent changes thereof being for account of the
partnership. (n)
 APPRAISAL OF GOODS OR PROPERTY
CONTRIBUTED
 1. The appraisal of the value of the goods contributed is
necessary to determine how much has been contributed by
the partners.

 2. In the case of immovable property, the appraisal is made

in the inventory of said property; otherwise, it may be
made as provided in Article 1787. There is no reason why
the rule in Article 1787 should not also apply with respect
to other kinds of property.
 ARTICLE 1788
 A partner who has undertaken to contribute a sum of
money and fails to do so becomes a debtor for the
interest and damages from the time he should have
complied with his obligation.

 The same rule applies to any amount he may have

taken from the partnership coffers, and his liability
shall begin from the time he converted the amount to
his own use. (1682)
 Obligations with respect to contribution of money
and money converted to personal use

 This article contemplates two distinct cases. The

first paragraph refers to money promised but not
given on time and the second, to partnership
money converted to the personal use of the
partner.
 ARTICLE 1789
 An industrial partner cannot engage in business for
himself, unless the partnership expressly permits
him to do so; and if he should do so, the capitalist
partners may either exclude him from the firm or
avail themselves of the benefits which he may have
obtained in violation of this provision, with a right to
damages in either case. (n)
OBLIGATIONS OF INDUSTRIAL PARTNER
 An industrial partner is one who contributes his industry,
labor, or services to the partnership. He is considered the
owner of his services, which are his contribution to the
common fund.
 Unless the contrary is stipulated, he becomes a debtor of
the partnership for his work or services from the moment
of the commencement of the partnership. In effect, the
partnership acquires an exclusive right to avail itself of
his industry. Consequently, if he engages in business for
himself, such act is considered prejudicial to the interest
of the other partners.
 ARTICLE 1790
Unless there is a stipulation to the contrary,
the partners shall contribute equal shares to
the capital of the partnership. (n)
 EXTENT OF CONTRIBUTION TO
PARTNERSHIP
 The partners can stipulate the contribution of unequal
shares to the common fund, but in the absence of such
stipulation, the presumption is that their contribution shall
be in equal shares. This principle is just and reasonable
and is consistent with the reasonable and is consistent
with the rule that partners are deemed to have equal
rights and obligations
 Obviously, the above rule is not applicable to an
industrial partner unless, besides his services, he has
contributed capital pursuant to an agreement to that
effect.
 ARTICLE 1791
 If there is no agreement to the contrary, in case of
an imminent loss of the business of the partnership,
any partner who refuses to contribute an additional
share to the capital, except an industrial partner, to
save the venture, shall he obliged to sell his interest
to the other partners. (n)
 OBLIGATION OF CAPITALIST PARTNER TO
CONTRIBUTE ADDITIONAL CAPITAL
 As a general rule, a capitalist partner is not bound to
contribute to the partnership more than what he agreed to
contribute.
 In case, however, of an imminent loss of the business, and
there is no agreement to the contrary, he is under
obligation to contribute an additional share to save the
venture. If he refuses to contribute, he shall be obliged to
sell his interest to the other partners.
 ARTICLE 1792
 If a partner authorized to manage collects a demandable
sum which was owed to him in his own name, from a person
who owed the partnership another sum also demandable,
the sum thus collected shall be applied to the two credits in
proportion to their amounts, even though he may have
given a receipt for his own credit only; but should he have
given it for the account of the partnership credit, the
amount shall be fully applied to the latter.
 The provisions of this article are understood to be without
prejudice to the right granted to the other debtor by article
1252, but only if the personal credit of the partner should
be more onerous to him. (1684)
OBLIGATION OF MANAGING PARTNER WHO
COLLECTS DEBT
 A person may be separately indebted to the partnership
and to the managing partner at the same time. Any sum
received by the managing partner shall be applied to the
two credits in proportion to their amounts.
 The exception is where the managing partner received the
sum for the account of the partnership, In which the case,
The whole sum shall be applied to the partnership credit
only.
 ARTICLE 1793
 A partner who has received, in whole or in part, his
share of a partnership credit, when the other
partners have not collected theirs, shall be obliged,
if the debtor should thereafter become insolvent, to
bring to the partnership capital what he received
even though he may have given receipt for his
share only. (1685a)
 OBLIGATION OF PARTNER WHO RECEIVES
SHARE OF PARTNERSHIP CREDIT
 The case contemplated under this article is different from
the referred in Article 1792, which treats of two distinct
credits, one in favor of the partnership and another in favor
of the managing partner.
 In the present, article, there is only one credit- credit in
favor of the partnership.
 Furthermore, the present article applies whether the
partner who receives his share of the partnership credit is
authorized to manage or not.
 ARTICLE 1794
 Every partner is responsible to the partnership for
damages suffered by it through his fault, and he
cannot compensate them with the profits and
benefits which he may have earned for the
partnership by his industry. However, the courts
may equitably lessen this responsibility if through
the partner's extraordinary efforts in other activities
of the partnership, unusual profits have been
realized. (1686a)
 OBLIGATION OF PARTNER FOR DAMAGES
TO PARTNERSHIP
 This article follows the general rule applicable to all
contracts that any person guilty of negligence or
fault in the fulfillment of his obligation, shall be
liable for damages.
 The partner’s fault, however, must be determined in
accordance with the nature of the obligation and the
circumstances of the person, the time, and the place.
 ARTICLE 1795
 The risk of specific and determinate things, which are not
fungible, contributed to the partnership so that only their
use and fruits may be for the common benefit, shall be
borne by the partner who owns them.
 If the things contribute are fungible, or cannot be kept
without deteriorating, or if they were contributed to be
sold, the risk shall be borne by the partnership. In the
absence of stipulation, the risk of the things brought and
appraised in the inventory, shall also be borne by the
partnership, and in such case the claim shall be limited to
the value at which they were appraised. (1687)
 RISK OF LOSS THINGS CONTRIBUTED
 There are five (5) cases contemplated by the present article
for the determination of the risk of the things contributed to
the partnership, namely:
 1. Specific and determinate things which are not tangible
where only the use is contributed.
 2. Specific and determinate things the ownership of which is
transferred to the partnership.
 3. Fungible things or things which cannot be kept without
detoeriorting even if they are contributed only for the use of
partnership
 4. Things contributed to be sold
 5. Things brought and appraised in the inventory.
 ARTICLE 1796
 The partnership shall be responsible to every
partner for the amounts he may have disbursed on
behalf of the partnership and for the corresponding
interest, from the time the expense are made; it
shall also answer to each partner for the obligations
he may have contracted in good faith in the interest
of the partnership business, and for risks in
consequence of its management. (1688a)
 RESPONSIBILITY OF PARTNERSHIP TO
PARTNERS
 In the absence of any stipulations to the contrary, every partner is
an agent of the partnership for the purpose of its business, Hence,
the obligations of the partnership to every partner:
 1. to refund amounts disbursed by him in behalf of the
partnership plus the corresponding interest from the time the
expenses are made. Here, the law refers to loans or advances
made by a partner to the partnership other than capital
contributes by him;
 2. To answer for the obligation he may have contracted in good
faith in the interest of the partnership business and;
 3. To answer for risk in consequence of its management.
Being a mere agent, the partner is not
personally liable, provided, however, that he
is free from all fault and he acted within the
scope of his authority.
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