CHAPTER 1 – GENERAL PROVISIONS

Art 1767. By the contract of partnership, two or more DOCTRINE OF DELECTUS PERSONAE
persons bind themselves to contribute money, property (choice of the person)
or industry to a common fund, with the intention of - the right to choose with whom a person wished
dividing the profits among themselves. to associate himself is the very foundation and
essence of partnership
Two or more persons may also form a partnership for the
- allows the partners to have power but not right
exercise of profession.
to dissolve the partnership (any unjustified
PARTNERSHIP – two or more persons agree to place dissolution can held them liable for damages)
their money, effects, labor and skill in lawful commerce
GENERAL RULE: a person cannot be compelled to
or business with the understanding that there shall be a
associate with another person ; the right to choose with
proportionate sharing of the profits and losses among
whom a person wished to associate himself is the very
them.
foundation and essence of that partnership
Profession – a group of men pursuing a learned art as a
PARTNERSHIP AT WILL
common calling in the spirit of public service if not it
will be considered as livelihood. - a partnership that does not fix it term
- the birth and life of a partnership at will is
REQUISITES
predicated on the mutual desire and consent of
a. Valid contract the partners
b. Contribution of money, property or industry to a
BEST EVIDENCE OF THE EXISTENCE OF A
common fund
PARTNERSHIP
c. Organized for gain or profit
d. Lawful object or purpose a. unsold golds
e. Must be established for the common benefit or b. uncollected receivable
interest of partners
Art 1768. The partnership has a juridical personality
TWO TEST TO BE CONSIDERED AS JURIDICAL separate and distinct from that of each of the partners
PERSONALITY even in case of failure to comply with the requirements
of Article 1772, first paragraph.
1. Agreement to contribute money, property or
industry to a common fund Partners cannot be held liable for the obligations of the
2. Intent to divide the profits among themselves partnership unless it is shown that the legal fiction of a
different juridical personality is being used for a
CHARATERISTICS
fraudulent, unfair or illegal purpose.
1. Consensual - perfected by mere consent
ARTIFICIAL PERSON – an entity created by law and
2. Commutative – equivalent contributions
given legal rights and duties of a human being ; a being,
3. Principal – do not depend on other contracts
real or imaginary who for the purpose of legal reasoning
4. Bilateral – entered by two or more persons
is treated more or less as a human being
5. Onerous - each partner must contribute
6. Nominate – has name under the law Art. 1769. In determining whether a partnership exists,
7. Preparatory - preparation for other contracts these rules shall apply:
MONEY - medium of exchange authorized or adopted [Link] as provided by Article 1825, persons who are
by a government as part of its currency not partners as to each other are not partners as to third
persons.
PROPERTY – any external thing over which the rights
of possession, use and enjoyment are exercised. - when they misrepresented themselves to a third person
without objection, then they are partners by estoppel
INDUSTRY – diligence in the performance of a task ; a
particular form or branch of productive labor 2. Co-ownership or co-possession does not of itself
establish a partnership, whether such co-ownership or
PARTNERSHIP VS. JOINT VENTURE
copossessors do or do not share any profits made by the
- Governed by the law on partnership use of the property.
 Partnership Co-ownership or interest of the partners. When an unlawful partnership
Creation contract Contract and is dissolved by a judicial decree, the profits shall be
law confiscated in favor of the State, without prejudice to the
Juridical Has legal Has no legal provisions of the Penal Code governing the confiscation
personality personality and personality thus of the instruments and effects of a crime.
can be sued cannot be sued
Purpose profit Common Lawful object or purpose – the object or purpose of a
enjoyment of a partnership must be within the commerce of man, not
thing impossible and it must not be contrary to law, morals,
Profit Stipulated upon Proportionate good customs public order and public policy.
share; any
stipulation is EFFECT OF UNLAWFUL PARTNERSHIP
VOID
1. the contract is void from the beginning
Dissolution Dissolved by Not dissolved by
2. profits shall be confiscated in favor of the
death or the death or
incapacity of a incapacity of a government
partner partner 3. instrument, tools and proceed of the crime shall
Form May appear in No form is be forfeited in favor of the government
any form except required 4. contribution of the partner shall not be
if immovable confiscated unless they fall under no.3
Art 1771. A partnership may be constituted in any form,
[Link] sharing of gross returns does not of itself establish except where immovable property or real rights are
a partnership, whether or not the persons sharing them contributed thereto, in which case a public instrument
have a joint or common right or interest in any property shall be necessary .
from which the returns are derived.
GENERAL RULE: no form is required; can be oral or
- disputable presumption that the partnership if net profit writing
is being shared but if gross profit there is no
EXCEPTION: if real properties or real right is
presumption of partnership
contributed by the partners – public instrument is
4. The receipt by a person of a share of the profits of a required otherwise void.
business is prima facie evidence that he is a partner in
the business, but no such inference shall be drawn if
such profits were received in payment: REAL RIGHT – right that is connected with a thing
rather than a person
a. As a debt by installments or otherwise.
PUBLIC INSTRUMENT – a document prepared by a
b. As wages of an employee or rent to a landlord.
notary public in the presence of the parties who sign it
c. As an annuity to a widow or representative of a before witnesses
deceased partner.
d. As interest on a loan, though the amount of payment
ART 1772. Every contract of partnership having a
vary with the profits of the business.
capital of three thousand pesos or more, in money or
e. As the consideration for the sale of a goodwill of a property, shall appear in a public instrument, which must
business or other property by installments or otherwise. be recorded in the Office of the Securities and Exchange
Commission. Failure to comply with the requirements of
the preceding paragraph shall not affect the liability of
PRIMA FACIE - sufficient establish a fact or raise a the partnership and the members thereof to third persons.
presumption unless disproved or rebutted
Note: Personal property only
NOTE: a demand for periodic accounting is evidence
of a partnership. Purpose of registration

Art 1770. A partnership must have a lawful object or 1. set a condition for the issuance of licenses to
purpose, and must be established for the common benefit engage in business or trade
 2. tax liabilities of big partnership will not be a. Universal partnership of all present
evaded property. (Art. 1778) – partners contribute
3. public can determine more accurately the property that actually belongs to them
membership and capital before dealing b. b. Universal partnership of profits – it
4. give notice to third persons comprises all that the partners may acquire
by their industry or work during the
ART 1773. A contract of partnership is void, whenever
existence of the partnership
immovable property is contributed thereto, if an
2. Particular partnership. (Art. 1783)
inventory of said property is not made, signed by the
- has for its object determinate things, their use or
parties, and attached to the public instrument.
fruits or specific undertaking or the exercise of a
Note: an inventory is still required is aside from real profession or vocation
property, personal property is contributed.
As to liability of the partners
Effect: If not, no partnership
1. General partnership: all partners are general
rd
Intention: To protect 3 persons partners who are liable pro rata and subsidiary
and sometimes solidarily w/ their separate
ART 1774. Any immovable property or an interest property for partnership debts.
therein may be acquired in the partnership name. Title so 2. Limited partnership: one formed by two or more
acquired can be conveyed only in the partnership name. persons having as members one general
Acquisition or conveyance of property by partnership partners and limited partners, the latter not
Since partnership has juridical personality of its own, it being personally liable for the obligations of the
may acquire immovable property in its own name. partnership. ; not liable beyond their separate
assets
ART. 1775. Associations and societies, whose articles
are kept secret among the members, and wherein any As to duration
one of the members may contract in his own name with 1. Partnership at will - no fixed term, not formed
third persons, shall have no juridical personality, and for a particular undertaking or it is one for a
shall be governed by the provisions relating to co- fixed term or particular undertaking continued
ownership. after the termination
Partnership Association 2. Partner with a fixed term – one where the life or
Juridical Has juridical
Has no juridical period of existence of the partnership has been
Personality personality personality agreed upon by the partners
Purpose Profit May not be for 3. Partnership for a particular undertaking - ir is
profit one where it will exists until the purpose is
Contribution of Contribution of No contribution accomplished
members property, money of capital
or industry or As to representation to others
combination 1. Ordinary partnership - two or more persons
Liability Partnership is Members are bind themselves to contribute money property or
one liable individually industry to a common fund
liable
2. Partnership by Estoppel - persons through
words spoken or written consent or represent to
Art. 1776. As to its object, a partnership is either others that they are partners in an existing
universal or particular. As regards the liability of the partnership where they are not actual partners
partners, a partnership may be general or limited.
As to the legality of its existence
CLASSIFICATIONS OF PARTNERSHIP
1. De jure partnership: one w/c has complied w/
As to extent of its subject matter all the legal requirements for its establishment.
2. De facto partnership: one w/c has failed to
1. Universal partnership comply w/ all the legal requirements for its
establishment.
As to publicity outside parties nor held out as a partner by the
other partners. He is an actual partner.
1. Secret partnership: one wherein the existence of
3. Silent partner: one who does not take any active
certain persons as partners is not avowed or
part in the business although he may be known
made known to the public by any of the partners.
to be a partner.
2. Open or notorious partnership: one whose
4. Dormant partner: one who does not take active
existence is avowed or made known to the public
part in the business and is not known or held out
by the members of the firm.
as a partner. He would be both a silent and a
As to purpose secret partner.
5. Original partner: one who is a member of the
1. Commercial or trading partnership: one formed partnership from the time of its organization.
or the transaction of business. 6. Incoming partner: a person lately, or about to
2. Professional or non-trading partnership: one be, taken into an existing partnership as a
formed for the exercise of a profession. member.
KINDS OF PARTNERS 7. Retiring partner: one withdrawn from the
partnership; a withdrawing partner.
Under the Civil Code
ART. 1777. A universal partnership may refer to all the
1. Capitalist partner: one who contributes money present property or to all the profits.
or property to the common fund.
2. Industrial partner: one who contributes only his
industry or personal service. ART. 1778. A partnership of all present property is that
3. General partner: one whose liability to 3rd in which the partners contribute all the property which
persons extends to his separate property. actually belongs to them to a common fund, with the
4. Limited partner: one whose liability to 3rd intention of dividing the same among themselves, as
persons is limited to his capital contribution. well as all the profits they may acquire therewith.
5. Managing partner: one who manages the entity. ART. 1779. In a universal partnership of all present
6. Liquidating partner: one who takes charge of property, the property which belongs to each of the
the winding up of partnership affairs upon partners at the time of the constitution of the partnership
dissolution. becomes the common property of all the partners, as
7. Partner by estoppel: one who is not really a well as all the profits which they may acquire there with.
partner but is liable as a partner for the A stipulation for the common enjoyment of any other
protection of innocent 3rd persons. He is one profits may also be made; but the property which the
represented as being a partner but who is not so partners may acquire subsequently by inheritance,
between the partners themselves. legacy or donation cannot be included in such
8. Continuing partner: one who continues the stipulation, except the fruits thereof.
business of a partnership after it has been
dissolved by reason of the admission of a new Reasons why future property cannot be included:
partner, or the retirement, death or expulsion of
1. Contracts regarding successional rights cannot
one or more partners.
be made
9. Surviving partner: one who remains after a
2. Partnership demands that the contribution must
partnership has been dissolved by the death of
be determinate known and certain
any partner.
3. Universal partnership of all present property
10. Subpartner: one who, not being a member of the
implies donation
partnership, contracts w/ a partner w/reference
to the latter’s share in the partnership. ART. 1780. A universal partnership of profits comprises
all that the partners may acquire by their industry or
OTHER CLASSIFICATIONS
work during the existence of the partnership. Movable or
1. Ostensible partner: one who takes active part immovable property which each of the partners may
and known to the public as a partner. possess at the time of the celebration of the contract shall
2. Secret partner: one who takes active part in the continue to pertain exclusively to each, only the usufruct
business but is not known to be a partner by passing to the partnership.
NOTE: Partners retain their ownership over their 16. I
present and future property. What passes are the profits 17. O
and use of the same. 18. R
19. K
20. G
ART. 1781. Articles of universal partnership, entered
into without specification of its nature, only constitute a
universal partnership of profits. 1. F
2. F
- It imposes less obligation because their real
3. T
and personal property retained with them,
4. F
ART. 1782. Persons who are prohibited from giving each 5. T
other any donation or advantage cannot enter into a 6. F
universal partnership. 7. T
8. T
EFFECT: the partnership is null and void 9. T
PERSONS WHO CANNOT ENTER INTO A 10. T
UNIVERSAL PARTNERSHIP 11. T
12. F
1. Legally married spouses but can enter 13. F
particular partnership 14. F
2. Persons living together as husbands and wife 15. T
without valid marriage 16. T
3. Persons who were guilty of adultery or 17. F
concubinage at the time of the donation 18. T
4. Persons who were guilty id the same criminal 19. F
offense 20. F
5. A person or persons and a public officer or his
wife. Descendants and ascendants by reason of LEGAL RELATIONS CREATED BY A
his office CONTRACT OF PARTNERSHIP

Rule: It must be a universal partnership 1. Relations between partners

2. Relations between partners on one hand and the
ART. 1783. A particular partnership has for its object partnership on the other hand
determinate things, their use or fruits, or a specific 3. Relations between the partners on one hand and
undertaking, or the exercise of a profession or vocation. third persons on the other hand
4. Relations between the partnership and third
persons
1. B
OBLIGATIONS OD PARTNERS
2. A
3. F 1. To give their promised contributions
4. Q 2. Not to convert partnership money to their own
5. L use
6. N 3. To account and hold as trustee for any profits
7. P derived without consent of the other partners
8. E 4. Not to engage in any business which if of kind
9. S in which partnership is engaged
10. M 5. Obligation of managing partners to credit to the
11. J partnership the payment made by a debtor who
12. T owes them and the partnership
13. H 6. Obligation to share with the other partners the
14. D share of the partnership credit which they have
15. C received from an insolvent partnership debtor
 7. Pay for damages suffered by the partnership 4. Warranty in case of eviction in specific and
through their fault determinate things contributed by a partner
RIGHTS OF PARTNERS ART. 1787. When the capital or part thereof which a
partner is bound to contribute consists of goods, their
1. Right to associate with another person in their
appraisal must be made in the manner prescribed in the
share
contract of partnership, and in the absence of stipulation,
2. Right to have access to and inspect and copy
it shall be made by experts chosen by the partners, and
partnership books
according to current prices, the subsequent changes
3. Right to demand a formal account
thereof being for the account of the partnership.
4. Right to ask for the dissolution of partnerhip at a
proper time MANNER:
5. Property rights of partners
A. Stipulation
NOTE: limited partner do not have a right to B. Experts chosen by the partners according to
participate in the management current price
ART. 1784. A partnership begins from the moment of the ART. 1788. A partner who has undertaken to contribute a
execution of the contract, unless it is otherwise sum of money and fails to do so becomes a debtor for
stipulated. (1679) Therefore there is no obligations nor the interest and damages from the time he should have
right to speak of. complied with his obligation. The same rule applies to
any amount he may have taken from the partnership
ART. 1785. When a contract for a fixed term or
coffers, and his liability shall begin from the time he
particular undertaking is continued after the termination
converted the amount to is own use.
of such term or particular undertaking without any
express agreement, the rights and duties of the partners CASES COVERED OF THE LIABILITY FOR
remains the same as they were at such termination, so far DAMAGES AND INTEREST
as is consistent with a partnership at will. A continuation
1. money promised by the partners to contribute
of the business by the partners or such of them as
2. money of the partnership converted into partners
habitually acted therein during the term, without any
use
settlement or liquidation of the partnership affairs, is
prima facie evidence of a continuation of the partnership NOTE: DEMAND IS NOT NECESSARY
ART. 1786. Every partner is a DEBTOR of the ART. 1789. An industrial partner cannot engage in
partnership for whatever he may have promised to any business for himself, UNLESS the partnership
contribute thereto. He shall also be bound for warranty expressly permits him to do so; and if he should do so,
in case of eviction with regard to specific and the capitalist partners may either exclude him from
determinate things which he may have contributed to the the firm or avail themselves of the benefits which he
partnership, in the same cases and in the same manner as may have obtained in violation of this provision, with
the vendor is bound with respect to the vendee. He shall a right to damages in either case.
also be liable for the fruits thereof from the time they
should have been delivered, without the need of any ART. 1790. Unless there is a stipulation to the contrary,
demand the partners shall contribute equal shares to the
capital of the partnership.
1. Failure to contribute makes the partner debtor of
the partnership even if there is no demand Art. 1791. If there is no agreement to the contrary, in
2. The remedy is specific fulfillment plus interest case of an imminent loss of the business of the
and damages partnership, any partner who refuses to contribute
3. Fruits must be delivered from the time they have an additional share to the capital, except an industrial
been delivered, without any demand. Failure to partner, to save the venture, shall be obliged to sell his
do so would result to: interest to the other partners.
a. If in bad faith, fruits as well as those that ART. 1792. If a partner authorized to manage collects a
could have produced demandable sum, which was owed to him in his own
b. If money, interest plus damages name, from a person who owned the partnership
another sum also demandable, the sum thus collected
shall be applied to the two credits in proportion to on behalf of the partnership and for the corresponding
their amounts, even though he may have given a interest, from the time the expenses are made; it shall
receipt for his own credit only; but should he have also answer to each partner for the obligations he may
given it for the account of the partnership credit, the have contracted in good faith in the interest of the
amount shall be fully applied to the latter. The partnership business, and for the risk inconsequence
provisions of this article are understood to be without of its management.
prejudice to the right granted to the debtor by Art. 1252,
Art. 1797. The profits and losses shall be distributed in
but only if the personal credit of the partner should be
conformity with the agreement. If only the share of each
more onerous to him.
partner in the profits has been agreed upon, the share of
ART. 1793. A partner who has received, in whole or in each in the losses shall be in the same proportion. In the
part, his share of a partnership credit, when the other absence of stipulation, the share of each partner in the
partners have not collected theirs, shall be obliged, if the profits and losses shall be in proportion to what he may
debtor should thereafter become INSOLVENT, to have contributed, but the industrial partner shall not be
bring to the partnership capital what he received even liable for the losses. As for the profits, the industrial
though he may have given receipt for his share only partner shall receive such share as may be just and
equitable under the circumstances. If besides his services
Art. 1794. Every partner is responsible to the
he has contributed capital, he shall also receive a share
partnership for damages suffered by it through his
in the profits in proportion to his capital.
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
BEING A CONTRACT OF PARTNERSHIP, EACH
may equitably lessen this responsibility if through the
PARTNER MUST SHARE IN THE PROFIT OR
partner’s extraordinary efforts in other activities of
LOSSES OF THE VENTURE. THAT IS THE
the partnership, unusual profits have been realized
ESSENCE OF PARTNERSHIP.
Obligation of a partner to earn benefits and profits and
RULES FOR THE DISTRIBUTION OF PROFITS
obligation to not cause damages through negligence are
AND LOSSES OF A PARTNERSHIP
distinct obligations that cannot be ser off.
1. DISTRIBUTION OF PROFITS
A right and an obligation are required to be compensated
a. According to agreement
and set off.
b. If there is no agreement
ART. 1795. The risk of specific and determinate things, A. Capitalist – proportion of contribution
which are not fungible, contributed to the partnership so B. Industrial – just and equitable under the
that only their use and fruits may be for the common circumstances
benefit, shall be borne by the partner who owns them. If 2. DISTRIBUTION OF LOSSES
the things contributed are fungible, or cannot be kept a. According to agreement
without deteriorating, or if they were contributed to be b. According to profit agreement
sold, the risk shall be borne by the partnership. In the c. If there is no agreement
absence of stipulation, the risk of things brought and A. Capitalist partners – proportionate
appraised in the inventory, shall also be borne by the contribution
partnership, and in such case the claim shall be limited B. Industrial – not liable for losses
to the value at which they were appraised.
NOTE: Liability refers to obligation towards 3 rd
RISK OF LOSS persons and losses refers to obligation among the
partners.
1. Specific and determinate not fungible things –
partners ART. 1798. If the partners have agreed to entrust to a
2. Fungible things – partnership third person the designation the share of each one in
3. Things contributed to be sold - partnership the profits and losses, such designation may be
4. Things brought and appraised in the impugned only when it is MANIFESTLY
inventory – partnership INEQUITABLE. In no case may a partner who has
begun to execute the decision of the third person, or
Art. 1796. The partnership shall be responsible to
who has not impugned the same within a period OF
every partner for the amounts he may have disbursed
THREE MONTHS FROM THE TIME HE HAD consent of all others, each one separately execute all acts
KNOWLEDGE THEREOF, complain of such of administration, but if anyone of them should oppose
decision. THE DESIGNATION OF PROFITS AND the act of each other, the decision of the majority shall
LOSSES CANNOT BE ENTRUSTED TO ONE OF prevail. In the case of tie the partners owning the
THE PARTNERS controlling interest shall decide the matter
ART. 1799. A stipulation which excludes one or more REQUISITES
partners from any share in the profits or losses is VOID 1. Two or more are managers
2. No specifications of respective duties
Exception: industrial partner is not liable for losses
3. No stipulation requiring unanimity, one shall not
unless he waive his right.
act without the consent of all the other
ART. 1800. The partner who has been appointed GENERAL RULE: each one may separately execute all
manager in the articles of the partnership may execute acts of administration
all acts of the administration despite the opposition of
Exception: when other managers oppose
his partners, unless he should act in Bad faith., and his
a. Majority will prevail
powers is irrevocable without the just or lawful cause.
b. In case of tie, the partner who owns the
The vote of the partners representing the controlling
controlling interest shall prevail
interest shall be necessary for such revocation of power.
A power granted after the partnership has constituted ART. 1802 In case it should have been stipulated that
may revoked at any time. none of the managing partner shall act without the
consent of the others, the concurrence of all shall be
TWO MODES OF APPOINTMENT
necessary for validity of the acts, and the absence or
1. Appointment as manager in the articles of disability of any one of them cannot alleged, unless there
partnership is imminent danger of grave or irreparable injury to the
partnership
Extent of power:
NOTE: not applicable to third person as they assume
1. All acts of administration in good faith despite that partners are not violating the articles of
opposition of partners partnership
2. If in bad daith, cannot do any act of
administration ART. 1803. When the manner of management has not
agreed upon, the following rules shall observed:
GENERAL RULE: power is irrevocable without
just and lawful cause 1. All partners shall be considered agents and
whatever any one of them may do alone shall bind
Exception: the partnership without prejudice to the provision of
a. Just cause – vote of partners having controlling article 1801
interest is necessary
b. Without just cause unanimity including his own 2. None of the partners may, without the consent of
vote others, make any important alteration in the
2. Appointment as manager made in an immovable property of the partnership, even if it may
instrument other than the article of be useful to the partnership, but if there ids refusal of the
partnership consent by the other partners is manifestly prejudicial to
the interest of the partnership, the court’s intervention
Extent of power: All acts of administration may be sought. (deals with immovable property)
GENERAL RULE: power is evocable even without ART. 1804. Every partner may associate another person
just and lawful cause by the partners owning the with him in his share, but the associates shall not
controlling interest as appointment is a mere admitted into the partnership without the consent of all
delegation of power other partners, even of the partner having an associate
ART. 1801. If two or more partners have been entrusted should be a manager of subpartnership nature
with the management of the partnership without the - Refers to contract of sub-partnerhip
specification of their respective duties or without the - In contract of sub-partnership all partners can
stipulation that one of them shall not act without the have an associate in his share and consent of
 other partners is not required but he cannot be GENERAL RULE: No formal accounting is
admitted in the partnership without the consent demandable until after the dissolution of partnership
of all partners because: Exceptions:
A. There is a mutual trust 1. If he is wrongfully excluded from the partnership
B. A change in membership is a modification business or possession of its property by his co-partner;
or novation of contract 2. If the right exists under the terms of any agreement;
3. Provided by article 1807;
ART. 1805. The partnership books shall be kept, subject
4. Whenever other circumstances render it just and
to any agreement between the partners, at the
reasonable
principal place of the business of the partnership,
and every partner shall at any reasonable hour have
ART. 1810. The property rights of a partner are:
access to and may inspect and copy any of them.
1. His rights in specific partnership property;
REASONABLE HOUR – business days throughout the 2. His interest in the partnership;
year 3. His right to participate in the management, extent of
property rights of a partner.
ART. 1806. Partners shall render on demand true and full
information of all things affecting the partnership to any ART. 1811. A partner is co-owner with his partners of
partner or the legal representative of any deceased specific partnership property. The incidents of this co-
partner or of any partner under legal disability. ownership are such that;
- Violation is called CONCEALMENT 1. A partner has an equal right with his partners to
possess specific partnership property for
WHO CAN DEMAND TRUE AND FULL partnership purposes
INFORMATION? 2. A partner’s right to specific partnership property is
not assignable
A. Any partner
3. A partner’s right in specific partnership is not
B. Legal representative of any deceased partner
subject to attachment or execution
C. Legal representative of any partner under legal
4. A partner’s right in specific partnership property is
disability
not subject to legal support
ART. 1807. Every partner must account the partnership
for any benefit, and hold as trustee for it any profits
ART. 1812. A partner’s interest in the partnership is his
derived from him without the consent of the partners
share of the profits and surplus.
from any transaction connected with the formation,
conduct, or liquidation of the partnership or from any PROFIT – excess of revenues over expenditures in a
use by him of his property. business transaction
- Refers only to any profits derived by a partner SURPLUS – the excess of receipts over disbursements
without the consent of the other partners
ART.1813. A conveyance by a partner by his whole
ART. 1808. The Capitalist partners cannot engage for interest in the partnership does not of itself dissolve
their own account in any operation, which is of the the partnership, or, against the other partners in the
kind of business in which the partnership is engaged, absence of agreement, entitle the assignee, during the
unless there is a stipulation to the contrary . Any continuance of the partnership, to interfere in the
capitalist partner violating this prohibition shall bring to management or administration of the partnership
the common funds any profit accruing to him from business or affairs, or to require any information or
his transactions, and shall personally bear all the account of the partnership transactions, or to inspect
losses the partnership books; however it merely entitles the
assignee to receive the accordance with his contract,
- The rationale of this prohibition is that capitalist
the profits to which the assigning partner would
partners already acquired knowledge of the
otherwise be entitled. In case of fraud in the
business secrets.
management of the partnership, the assignee may avail
ART. 1809. Any partner shall have the right to a formal himself of the usual remedies. In case of dissolution of
account as partnership affairs: the partnership, the assignee is entitle to receive his
assignor’s interest and may require an account from
the date only of the last account agreed to by all RIGHT OF A PARTNER UNDER EXEMPTION
partners LAWS
- Shall not be deprived
ART. 1814. Without prejudice to the preferred rights of
- Cannot be availed in so far as his right in
the partnership creditors on due application to a
specific partnership property is concerned
competent court by any judgement creditor of the
partner, the court which entered the interest of the debtor
ART. 1815. Every partnership shall operate under a firm
partner with payment of the unsatisfied amount of such
name, which may or may not include the name of one
judgement debt with the interest thereon; and may then
or more of the partners, those who, not being
or later appoint a receiver of his share of the profits, and
members of the partnership, include their names in
of any other money due or to fall due to him in respect
the firm name, shall be subject to liability of a
of the partnership, and make all other orders, directions
partner.
and accounts and inquiries which the debtor partner
might have made, or which circumstances of the case GENERAL RULE: any name desired
may require. The interest charged may redeem at any
Exception: identical or deceptively confusingly
time before foreclosure, or in any case of a sale being
similar to that existing partnership or corporation
directed by the court, may be purchase without thereby
causing dissolution: ART. 1816. All partners, including industrial ones,
shall be liable pro rata with all their property and
1. With separate property, by any one or more of the
after all the partnership assets have been exhausted,
partners;
for the contracts which may be entered into in the name
2. With partnership property, by any one or more of the and for the account of the partnership, under its signature
partners with the consent of all the partners a whose and by a person authorized to act for the partnership.
interest are not so charged or sold, nothing in this title However, any partner may enter into a separate
shall be held to deprive a partner of his right, if any, obligation to perform a partnership contract.
under the exemption laws, as regards his interest in the
partnership  Partners obligation with respect to
partnership obligation is subsidiary in
CHARGING ORDER: remedy available to a nature.
judgement creditor of a debtor-partner to charge the  Partners obligation as to third person with
interest of the latter in the partnership by means of a respect to partnership liability is prorata or
court order for the purpose of satisfying the amount of joint.
judgement  If a partner in his own name, enters into a
NOTE: The charging order will be issued by the court contract with a third person, then its only
after the creditor obtained favorable judgement form that partner who is liable and not the
the court which became final partnership

APPOINTMENT OF RECEIVER ART. 1817. Any stipulation against the liability laid
- Subject to the preferred rights or partnership down in the preceding article shall be void, except as
creditors among the partners.
REDEMPTION Remedy: Reimbursement
- Means the extinguishment of the charge or
attachment on the partner’s interest in profits
1. Before closure Art. 1818. Every partner is an agent of the
- The interest charged may be redeemed at any partnership for the purpose of its business, and the
time before foreclosure act of every partner, including the execution in the
2. After closure partnership name of any instrument, for apparently
- It may still be purchase without thereby causing carrying on in the usual way the business of the
a dissolution partnership of which he is a member binds the
a. Separate property of a partner partnership, unless the partner so acting has in fact
b. Partnership property with the consent of all no authority to act for the partnership in the
the partners whose interest are not so charge particular matter, and the person with whom he is
or sold
dealing has knowledge of the fact that he has no such
liability. An act of a partner which is not apparently ADMISSION: a statement in which someone admits
for the carrying on of business of the partnership in that something is true or that he or she has done
the usual way does not bind the partnership unless something wrong.
authorized by the other partners. Except when
authorized by the other partners or unless they have Art. 1821. Notice to any partner of any matter relating to
abandoned the business, one or more but less than all the partnership affairs, and the knowledge of the partner
partners have no authority to: acting in the particular matter, acquired while a partner
1. Assign the partnership property in trust for creditors or or then present to his mind, and the knowledge of any
on the assignee’s promise to pay the debts of the other partner who reasonably could and should have
partnership. communicated it to the acting partner, operate as notice
2. Dispose of the goodwill of the business. to or knowledge of the partnership, except in the case of
3. Do any other act which would make it impossible to fraud on the partnership, committed by or with the
carry on the ordinary business of a partnership. consent of that partner.
4. Confess a judgment.
5. Enter into a compromise concerning a partnership General Rule: Notice to a partner is a notice to a
claim or liability. partnership
6. Submit a partnership claim or liability to arbitration.
7. Renounce a claim of the partnership Exception: in case of fraud committed with consent
of that partner

ART 1819. NOTE: It does not provide a reverse situation

TITLE - legal evidence of a person’s ownership rights
in property ; an instrument that constitute such evidence ART. 1822. Where, by any wrongful act or omission of
any partner acting in the ordinary course of the
EQUITABLE INTEREST - an interest held by virtue business of the partnership or with the authority of
of an equitable title or claimed on equitable grounds copartners, loss or injury is caused to any person, not
such as the interest held by a trust beneficiary being a partner in the partnership, or any penalty is
incurred, the partnership is liable therefor to the same
Real property may be registered or owned in the name extent as the partner so acting or omitting to act.
of:
Remedy of other partners not at fault: Reimbursement
1. Partnership
- If the partner has no authority, the partnership Art. 1823. The partnership is bound to make good the
can recover the land except when the partner is loss:
selling in line with the business or third person 1. Where one partner acting within the scope of his
is in good faith apparent authority receives money or property of
2. Partners a third person and misapplies it.
- Equitable interest will not be transferred if it is 2. Where the partnership in the course of The
not aligned with the business, has no authority partnership is liable for the conversion When a
or third person is in bad faith partnership liability results, he When no
3. One of more or all partners partnership liability results, he The law imposes
(same with 1) solidary liability upon the 2. its business
4. One or more or all partners; or in third persons receives money or property of a third person and
in trust for the partnership the money or property so received is misapplied
(same with 2) by any partner while it is in the custody of the
5. All the partners partnership.

ART. 1820. An admission or representation made by any ESTAFA – when money or property had been received
partner concerning partnership affairs within the by a partner for specific purpose and he later
scope of his authority in accordance with this Title is misappropriated it
evidence against the partnership
ART. 1824. All partners are liable solidarily with the
partnership for everything chargeable to the partnership
under articled 1822 and 1823.

ART 1825.

Partnership by Estoppel – all partners consented to the

misrepresentation

Partner by estoppel – not all partners consented

- Does not apply when third person is not

deceived

ART. 1826. A person admitted as a partner into an

existing partnership IS LIABLE FOR ALL THE
OBLIGATIONS OF THE PARTNERSHIP ARISING
BEFORE HIS ADMISSION as though he had been a
partner when such obligations were incurred, except that
this liability shall be satisfied only out of partnership
property, unless there is a stipulation to the contrary.
Loan occurred before admission – not liable for separate
property

Loan occurred after admission – can go after the

separate property.
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.