CHAPTER 2: OBLIGATIONS OF PARTNER (SECTION 2) ▪ Not allowed.

The truck is protected unless the

partnership itself owes the debt.
❖ ARTICLE 1810
4. Not subject to legal support claims
Property rights of a partner: ➢ Specific partnership property cannot be claimed for
legal support under Article 291 (e.g., family support
1. Rights in specific partnership property
obligations).
➢ These are the actual assets contributed to the
• LEGAL SUPPORT
partnership.
➢ This means the obligation of certain family members
➢ Once contributed, the property becomes owned by
to provide financial assistance to others who are
the partnership, which has a separate juridical
legally entitled to it.
personality.
➢ Partners have co-ownership for business use, not Example:
personal use.
▪ Partner A is ordered by the court to give support to
2. Interest in the partnership
his child. He wants to use the partnership's truck for
➢ A partner's share in the profits and losses, based on
school transport.
their capital contribution or as agreed.
▪ Not Allowed - truck is not a personal asset.
➢ This is a financial interest, not ownership of specific
❖ ARTICLE 1812
assets.
• PROFIT
3. Right to participate in the management
➢ The excess of revenues over expenditures in a
➢ Unless otherwise agreed, all partners are managers.
business transaction.
➢ Each partner may perform acts of administration
• SURPLUS
and participate in decision-making.
➢ The excess of receipts over disbursements. Funds
❖ ARTICLE 1811
that remain after a partnership has been dissolved
➢ This article clarifies how partners share ownership of
and all its debts paid.
specific assets contributed to the partnership (e.g.,
land, truck, equipment). It sets limits and rules to -A partner's interest is not ownership of specific items
protect the partnership's integrity. like land, trucks, or cash. Instead, it's the right to
1. Equal right to possess for partnership purposes only receive profit and surplus.
➢ Each partner may use partnership property only for
partnership business. Example:
➢ Personal use requires consent from all partners. ▪ Three friends-Anna, Ben, and Carla-form a business
2. Non-assignable right in specific property called ABC Smoothies.
➢ A partner cannot assign their right in specific ▪ Anna contributes 100,000 cash
partnership property individually. ▪ Ben contributes a blender and equipment worth
➢ Assignment is only valid if all partners agree to $200,000
assign the property. ▪ Carla contributes a small kiosk valued at 200,000
• ASSIGNMENT
Anna decides to sell her 20% interest to her brother,
➢ Means the transfer of right or property.
Alex.
➢ The act of legally transferring a right, property, or
interest from one person to another. ▪ Alex now has the right to receive 20% of future
3. Not subject to attachment for personal debts profits and surplus
➢ A partner's share in specific partnership property ▪ Alex does not own the blender, kiosk, or have
cannot be seized for personal debts. control over operations
➢ It can be attached only for debts of the partnership. ❖ ARTICLE 1813
Example: • CONVEYANCE
➢ The voluntary transfer of a right or of property.
▪ Partner A owes P1M personally. His creditor wants ➢ In partnership law, conveyance means a partner can
to seize the partnership's truck. sell, assign, or donate their entire interest in the
partnership to someone else.
Key Legal Effects of Conveyance Example:
General Rule: Partnership continues even if one ▪ Partner A owes P100,000 to Creditor X. After
partner conveys their whole interest. winning in court, X asks for a charging order.
▪ The court allows X to collect A's share of profits from
Exception: Partnership may dissolve if remaining
the partnership until the debt is paid.
partners choose not to continue.
• APPOINTMENT OF A RECEIVER
WHAT THE ASSIGNEE CAN NOT DO? ➢ The court may appoint a receiver to collect
➢ The debtor-partner's share of profits
Action Explanation
➢ Any money due or to fall due from the partnership
Interfere in management The assignee cannot
➢ The receiver acts on behalf of the creditor to ensure
participate in decision-
making or operations of the debt is paid.
the partnership. • REDEMPTION OF CHARGED INTEREST
Require information or The assignee has no right ➢ Redemption means removing or extinguishing the
accounting of to demand financial court's charge on a partner's interest in the
transactions details during the partnership.
partnership's operation. ➢ It allows the debtor-partner (or others) to pay off
Inspect partnership The assignee cannot the debt and free the partner's share from legal
books access internal records attachment.
unless admitted as a
partner. Redemption of Charged Interest
RIGHTS OF THE ASSIGNEE 1. BEFORE FORECLOSURE
Action Explanation ➢ The debtor or other partners can pay off the debt
Receive profits due to The assignee is entitled before the court sells the interest.
the assigning partner to the economic benefits
the original partner Example
would have received.
Avail legal remedies in If fraud occurs in the ▪ Partner A's interest is charged due to a P100,000
case of fraud management, the debt.
assignee may take legal ▪ Before the court sells A's share, Partner B pays off
action. the debt using personal funds. A's interest is now
Receive assignor's Once the partnership is free.
interest upon dissolution dissolved, the assignee
Redemption of Charged Interest
can claim the original
partner's share 2. AFTER FORECLOSURE
Demand accounting The assignee may
(from last agreed request an accounting, ➢ Even after the court orders a sale, the interest may
account) upon but only from the last still be purchased without dissolving the partnership:
dissolution account agreed by all • Using separate property of any partner.
partners. • Using partnership property, but only with consent of
❖ ARTICLE 1814 all unaffected partners.
• CHARGING ORDER
Example
➢ A charging order is a court-issued remedy that
allows a judgment creditor to claim the economic ▪ The court sells A's interest. B and C can buy it using
interest of a debtor-partner in a partnership. partnership funds-but only if both agree and their
➢ It applies only after the creditor wins a final interests aren't charged.
judgment in court.
➢ The order does not dissolve the partnership or make
the creditor a partner.