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August 19, 2014:
So how do you define agent and partnership? It is provided under article
1767 on the NCC :
Art. 1767. By the contract of partnership two or more persons bind
themselves to contribute money, property, or industry to a common
fund, with the intention of dividing the profits among themselves.
The second paragraph is the definition of a general
professional partnership which provides that:
Two or more persons may also form a partnership for the
exercise of a profession.
So what are the essential features of a general partnership? A general
partnership is synonymous to a business partnership.
First, there must be a valid contract (Estanislaovs CA).
Second, the parties must have the legal capacity to enter into a contract.
Maybe that the parties must be capable and competent to
enter into a contract thus the ff cannot enter into a contract (minors,
under civil interdiction [take note that civil interdiction is an accessory
penalty of being convicted of crimes] insane persons, incompetent
persons.) so for example if a person is charge in court, can he enter into
a contract of partnership? Yes, because he is not yet convicted of a
crime. He has still the legal capacity to enter into a legal contract.
Third, there must be mutual contribution of money, property, industry to
a common fund.
Fourth, the object must be lawful.
Fifth, the primary purpose must be to obtain profits and to divide the
same among the parties.
So, in a contract of partnership, it speaks of persons. When
you say persons, these does not only include natural persons but also
juridical persons.
Now, can corporation can enter into a contract of partnership?
As a general rule NO.because it is contrary to public policy.
Exceptions:
1. The articles of incorporation of the corporation must
expressly authorize the corporation to enter into contracts of partnership
with others in the pursuit of its business.
2. The articles of partnership mustg provide that all the
partners will manage partnership.
3, that the articles of partnership must stipulate that all the
partners are and shall be jointly and severally liable for all obligations of
the partnership.
Now, to contribute money, property, or industry, take note,
contribution of the ff makes the contract of partnership an onerous
contract because this is a mutual agreement that all must give or
contribute. Next, that the primary purpose must to obtain profits and to
divide the same among the parties. Take note that, the primary objective
of the partnership is to obtain profits and the sharing profits need not be
equal. As a general rule, the sharing ratios by the parties are determined
by the agreement of the parties, if there is no agreement, it will be based
upon the partners contribution.
How about an industrial partner, is he required to make a
contribution? What kind of contribution? As a general rule, NO because
what is his contribution is his services, he shall not also share to the loses
as to the partners but as to the third parties, he is not exempt without
prejudice to article 1816 of NCC.
Next, is form essential as to the validity of a partnership
contract? NO. because it can be orally entered into. Except when what is
being contributed is an immovable property which requires that it must
be in a public instrument and registered with the SEC. please relate that
to 1771 of the NCC.
So, can a partnership enter into another partnership? Is that
allowed? Yes.
Article 1768.The partnership has a judicial personality separate and
distinct from that of each of the partners, even in case of failure to
comply with the requirements of Article 1772, first paragraph. so this is
the consequence of partnership being a juridical entity. It is separate
from its partners. Then, as a separate juridical entity, it can sue or can be
sued, it can acquire property and in case of insolvency of your
partnership, it does not mean that the partners themselves are insolvent.
MANRESA
1769 provides for the rules in determining partnership.
First, persons who are not partners as to each other are not partners as
to third persons; why? Because, partnership Is a matter of intention.
Each partners must give its consent to become a partner. So as a general
rule, 1769 subject to exception as provided by Article 1825, or
partnership by estoppel wherein, a person misleads third persons into
believing that they are partners in the non-existent partnership.
Co-ownership or co-possession does not of itself establish a partnership ,
why? Because in a partnership, there must be clear intent to derive
profits from the operation of the business and in partnership there is
existence of fiduciary relationship of the parties. whether such-co-owners
or co-possessors do or do not share any profits made by the use of the
property;
The sharing of gross returns does not of itself establish a partnership,
why? Take note this is not even a presumptive evidence of partnership,
because the sharing is for the net income.
GR: The receipt by a person of a share of the profits of a business is
prima facie evidence that he is a partner in the business. Take note, this
is a strong presumptive evidence of partnership.
Exceptions:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased
partner;
(d) As interest on a loan, though the amount of payment vary
with the profits of the business;
(e) As the consideration for the sale of a goodwill of a business
or other property by installments or otherwise.
Take note of the some typical incidents of partnership:
1. The partners share in profits and losses.
2. They have equal rights in management and the
conduct of the partnership business.
3. That every partner is an agent of the partnership
and entitled to bind the others by his acts.
4. That all partners are personally liable to the debts of
the partnership with the separate property except
that of the limited partners.
5. If fiduciary relation exist between the parties.
6. In dissolution, the partnership continue to exist until
the winding up of the partnership affairs.
1770 provides for the object or purpose of the partnership.
A partnership must have:
1. a lawful object or purpose, and
2. must be established for the common benefit or interest of the
partners.
When an unlawful partnership is dissolved by a judicial decree,
the profits shall be confiscated in favor of the State, without prejudice to
the provisions of the Penal Code governing the confiscation of the
instruments and effects of a crime.
When you say lawful objects it refers to capital. Lawful object
refers to capital, lawful purpose to the business itself, so what are the
effects of an unlawful partnership:
1. first, take note the contract is void ab initio and the partnership
never existed in the eyes of the law.
2. the partnership shall be confiscated in favour of the
government.
3. the instruments or tools and proceeds of the crime shall be
forfeited in favour of the government.
4. The contribution of the partners shall not be confiscated as a
general rule. How about the rights of the partners to receive
the profits where the partnership is unlawful? Are the partners
entitled to receive their share in the profits? Take note, they
have no right to receive the share in the profits. Is a judicial
decree necessary to dissolve an unlawful partnership? As a
general rule, NO but if judicially made, then confiscation of the
proceeds can be lawfully effected.
Art. 1771.
GR:A partnership may be constituted in any form,
EXC: except where immovable property or real rights are contributed
thereto, in which case a public instrument shall be necessary.
No special form is required for the validity of the partnership.
Take note, a parallel rule is found at 1356 of the NCC.
Contracts shall be obligatory in whatever form it may have entered into
provided that all the essential requisites are present for its validity.
Contract of partnership, as a general rule, is not covered by the statute

of frauds since it is not necessary required to be in writing except when
there is an agreement to enter to a partnership at future time. That is not
for the validity of the contract but for the enforceability of the contract.
Registration of partnership is found under Article 1772: Partnership
with capital of three thousand or more, it must appear in a public
instrument and second, it must be recorded or registered with the SEC.
What is the purpose of this registration requirement? It is to
give notice to 3rd persons and it can be assumed that the members or the
partners themselves knew of the contents of the contract. What if there
is no registration of the said partnership? The partnership remains valid if
all the essential requisites or elements of the contract are present. The
partnership has a legal personality.
1773 provides for a partnership with a contribution of an immovable
property. The contract must be in a public instrument and an inventory of
the property contributed must be made, signed by the parties and
attached to the public instrument. The main purpose of this is to protect
3rd persons. Failure to comply with the said requirements, the partnership
is void.
1774 provides for acquisition or conveyance of property by the
partnership. This article is one of the consequences of a partnership
being a juridical entity separate and distinct from its partners.
1775 provides for the definition of a secret partnership. What is a secret
partnership? This refers to association and societies whose articles are
kept secret among the members wherein any one of the members may
contract in his own name with third person. Secret partnership is not a
partnership in the eyes of the law because it has no juridical personality.
Secret partnership are not in the nature of partnership and are governed
by the provisions of co-ownership. Can a secret partnership itself be held
liable? Can you sue a secret partnership? It cannot sue for lack of
juridical personality but it can be sued by third persons under the
common name they used. This is based on Rule 3, Sec 15 of Rules of
Court.
1776 provides for the different classifications of partnership. Please take
note.
1777 provides that a universal partnership may refer to all the present
property or of all the profits. In this kind of partnership, the following
becomes the common property of all partners:
1. Property which belongs to each of the partners at the time of
the constitution of the partnership;
2. Profits which the partners may acquire from the property
contributed.
Universal partnership of all present property is akin to an
absolute community property.
Future properties are not included in universal partnership of
all present property because what you contribute to a partnership is a
determinate thing that is already in existence. If it is future property, as a
general rule, this will not fall under the universal partnership of all
present property like inheritance, legacy or donation except by stipulation
or the fruits of the same.
1780 provides for a definition of universal partnership of profits. A
universal partnership of profits is one which comprises all that the
partners may acquire by their industry or work during the existence of
the partnership and the usufruct of movable or immovable property
which each of the partners may possess at the time of the celebration of
the contract.
In case of doubt, without specification of the nature of the partnership,
what is it? Is it a universal partnership of all present property or a
universal partnership of profits?
Only universal partnership of profits.
That is the presumption provided by law. Why?
Because it is less onerous and imposes less obligations and the partners
retain ownership over the properties that they contribute.
1782 provides for the limitations on the right to form ownership. Those
not allowed to contribute are those persons prohibited into entering into
a universal partnership of all present property. Who are these persons?
1. Spouses including the common law;
2. Those made between persons guilty of adultery or concubinage
at the time of the donation. No need for conviction, only
preponderance of evidence is necessary;
3. Those made between persons found guilty of the same criminal
offense in consideration thereof. This requires conviction; and
4. Those made to a public officer or his wife, descendants or
ascendants by reason of his office.
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So what is a particular partnership?
Art. 1783. A particular partnership has for its object
determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation.
It is provided under art. 1783. That is the definition of a
particular partnership. Be sure to differentiate it from a universal
partnership.
What is this joint venture? Is a joint venture deemed a partnership?
Here the leading case is the Heirs of Tan EngKee v. CA.
Is it considered as a partnership?
Take note, joint ventures are generally concerned with an
isolated transaction or project as opposed to a partnership which
contemplates a general business with some continuity. Take note that
partnership has a character of continuity while joint venture refers to
isolated transactions. Moreover, a joint venture does not have a firm
name. There is no mutual agency and it does not have a separate
juridical personality.
What are the obligations of the different relations created by a contract
of partnership?
Relations created by a contract of partnership
1.) Relations among the partners themselves;
2.) Relations of the partners with the partnership;
3.) Relations of the partnership with third persons;
4.) Relations of the partners with third persons.
Art. 1784 provides for the commencement and term of a partnership
that a partnership commences at the time of the execution of the
contract unless otherwise stipulated. Take note that it is not the
registration in the SEC which gives the partnership its juridical
personality.
Under Art.1785 which provides for the continuation of the partnership
beyond its fixed term.
So if it will be asked in your exam, what is a partnership with a fixed
term?
It is a partnership one the term for which the partnership to
exist is fixed or agreed upon or one formed for a particular undertaking.
So take note, upon the expiration of such term or accomplishment of the
undertaking, what will happen to a particular partnership? It will cause its
AUTOMATIC DISSOLUTION.
What if that said partnership is continued by the partners?
Nagdatingnaang period peroicontinuenila? What kind of partnership is
created?
A partnership at will is created. Take note that in a
partnership at will, the rights and duties of the partners remain the same.
Art. 1786 provides for the obligations of the partner with respect to
contribution of property.
Take note that a partner is a debtor of the partnership for
whatever he may promised to contribute thereto. Take note sa 1 st
paragraph, there is no delivery yet of the thing he promised to
contribute. Thus, if the said partner fails to deliver the said contribution,
it makes him ipso jure a debtor of the partnership even in the absence of
demand. Take note, demand is not necessary to make him liable or a
debtor of the said partnership.
Under 2nd par., “the partner shall also be bound for warranty in
case of eviction with regard to specific and determinate things which he
may have contributed to the partnershipxx” – these refers to NON-
FUNGIBLE THINGS ha. Specific, determinate and non-fungible thing.
Take note, the same partner gives the same warranties as that of
the vendor. So anobaitongmga warranties nabinibigayng vendor under
the law?
(1) Warranty against eviction
(2) Warranty against hidden defects
(3) Warranty for ____
Finally, the partner “xxshall also be liable for the fruits thereof from
the time they should have been delivered, without the need of any
demand.” Take note, demand is not necessary to put the said partner at
fault. So he will be liable for the fruits of the property in case of delay.

Art. 1787 provides that the appraisal of goods or property contributed is
necessary. Why is appraisal necessary? This is necessary in order to
determine how much is contributed by the partners to the said
partnership.
So how is appraisal made? It is made by:
1.) In manner prescribed by contract of partnership;
Here in #1, the value of the things to be appraised is based on
the agreement of the partners.
2.) If no stipulation, by experts chosen by the partners and according to
current prices.
Art. 1788 provides for the obligations of a capitalist partners. What are
the obligations of these capitalist partners?
(1) To contribute on the date due the amount he has undertaken
to contribute;
(2) To reimburse any amount he may have taken from the
partnership coffers and converted to his own use;
In #2, he will be liable for misappropriation if he
converts to his own use.
(3) To pay the agreed or legal interest, if he fails to pay his
contribution on time or in case he takes any amount from the
common fund and converts it to his own use;
(4) To indemnify the partnership for the damages caused to it by
the delay in the contribution or for the conversion of any sum
for his personal benefit.
Art. 1789 provides for the obligations of the industrial partner. Take
note that an industrial partner contributes what? Only his industry as a
general rule.
So what are the prohibitions against engaging in business with
regard an industrial partner?There is an absolute prohibition for the
industrial partner to engage in any kind of business as a general rule.
How about the capitalist partner? Here the prohibition is only
relative. Why? Because he is only prohibited to engage in the same kind
of business in which the partnership is engaged in.
Art. 1790 provides for the extent of contribution to the partnership
capital. The rule is that the partners shall contribute the capital of the
partnership based on their agreement. So if there is no agreement, the
rule is that the partners shall contribute equally. This provision applies
only to capitalist partner because industrial partners are not required to
contribute capital.
Art. 1791 provides for the obligations of capitalist partner to contribute
additional capital. So when does art. 1791 apply?
(1) In case of imminent loss of the business of the partnership;
(2) That majority of capitalist partners are of the opinion that an
additional contribution to the common fund would save the
business;
(3) That the capitalist partner refuses deliberately to contribute an
additional share to the capital; and
(4) There is no agreement that even in case of an imminent loss
of the business the partners are not obliged to contribute.
So what is the remedy under art. 1791 in case the capitalist partner
refuses to make additional capital? Then he is required to sell his interest.
Refusal to contribute additional funds by the said capitalist partner, then
he is required to sell his interest in order to save the partnership.
Take note the capitalist partner here who refuses to make
contribution, he should be SOLVENT. Hence, if the said capitalist partner
is insolvent, then he is not required to make additional contribution to the
capital.
Art. 1792 provides for the obligation of a managing partner to apply the
sum he collected pro-rata. So what are the requisites for the application
of art. 1792?
(1) There exists at least two debts, one where the collecting
partner is creditor, and the other, where the partnership is
creditor;
(2) Both debts are due and demandable;
(3) The partner who collects is authorized to manage and actually
manages the partnership.
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Take note art. 1792 is a mode of extinguishment of obligation which
is application of payments as provided for under art. 1252 of the Civil
Code which provides:
Art. 1252. He who has various debts of the same kind in
favor of one and the same creditor, may declare at the time of
making the payment, to which of them the same must be
applied. Unless the parties so stipulate, or when the application
of payment is made by the party for whose benefit the term
has been constituted, application shall not be made as to debts
which are not yet due.
If the debtor accepts from the creditor a receipt in which an
application of the payment is made, the former cannot
complain of the same, unless there is a cause for invalidating
the contract. (1172a)
Art. 1793 imposes an obligation on the partner who receives his share
of partnership credits. When will art. 1793 apply?
(1) That a partner has received his share in the credit;
(2) The other partners have not collected their shares; and
(3) The partnership debtor has become insolvent.
The obligation imposed here is for the partnership to bring to
collation to the said partnership the credit he has received.
Art. 1794 provides for the obligation of a partner for damages to
partnership. It imposes an obligation to every partner for damages to
partnership. So every partner is responsible to the partnership for
damages caused to the partnership.
Under art. 1794, compensation of damages will not apply. Why? It
will not apply because in compensation, it is required that the said
partner be at the same time the debtor and creditor. So here the partner
is only a debtor for the damages. Hence, he cannot compensate using his
profits and benefits earned for the partnership. However, his
responsibility as provided under art. 1794 may be mitigated by the courts
if through extra-ordinary efforts of the partner, unusual profits are
realized.
Art. 1795 provides for the rules on risk of loss of thing contributed.
Rules as to who bears the risk made by contribution. So –
(1) If the contribution is determinate and non-fungible but only the
use is contributed and the same is lost, then the one who
contributes it is liable. Why? Because of the principle of res
peruit domino.
(2) If fungible things are contributed and the same is lost, then
who bears the loss? it is the partnership who should shoulder
the risks of loss.
(3) Take note also that under art. 1795, the partnership shall also
be the one to bear the risk for items brought for sale in
inventory for appraisal for the value of which they were
appraised.
Art. 1796 provides for the responsibility of the partnership to the
partners. So what are these?
The partnership is obliged to:
(1) Refund amounts disbursed by the partner in behalf of the
partnership plus interest from time expenses made;
#1 refers to the loan extended by the partners to the
partnership.
(2) Answer for obligations the partner may have contracted in
good faith in the interest of the partnership business; and
(3) Answer for risks in consequence of its management.
So what is the rationale of the article? Because the partner is
merely the agent of the partnership. Hence, he is not personally liable as
long as he acts in good faith and within the scope of his authority.
Art. 1797 provides for the rules for distribution of profits and losses.
Distribution for profits shall be made:
(1) according to the agreement of the parties.
(2) Hence, if there is no such agreement, the share of each
capitalist partner shall be in proportion to his capital
contribution and the industrial partner shall receive such share,
which must be satisfied first before the capitalist partners.
So the industrial partners contribution here is based on quantum
meruit – what is just and equitable under the circumstances.

How about the distribution of losses?
(1) Based on the agreement of the parties.
(2) If there is no agreement, the law says it will be in accordance
with the profit sharing ration.
(3) If there is no profit-sharing stipulated, it shall be in proportion
to the capital contribution.
But take not industrial partners are not liable for the losses unless
there is a stipulation to the contrary.
Art. 1798 provides for the designation by a 3 rd person of share in profits
and losses. This iss sanctioned – this is allowed under 1798.
What is a leonic partnership? It is provided under art. 1799 which
provides that:
Art. 1799. A stipulation which excludes one or more partners
from any share in the profits or losses is void.
Take note, only that stipulation is void but the partnership
subsists because the existence of the partnership is not dependent upon
the validity of the stipulation.
Art. 1800 which provides for the rights and obligations with respect to
management. What is the general rule? The general rule is that each
partner has a right to manage the business of the partnership.
Except:
(1) When a manager is appointed in the articles of partnership.
Meaning, he was appointed at the time of the constitution of
the partnership. Take note that this managing partner who is
appointed during the constitution of the partnership, he can
perform all acts of administration unless he acted in bad faith.
His power may not be revoked unless for a just and lawful
cause and the role of the partners with controlling interest is
necessary. When you say acts of administration, these are acts
made in the ordinary course of business and the administrative
transaction.
Take note why is it that the managing partner who is
appointed in the articles of partnership, his appointment cannot be
revoked for no reason, why? Because if you revoke his power, you
are in effect changing the terms of the contract of partnership
kasinga he was appointed at the time of the constitution of the
partnership.
(2) A managing partner appointed after the constitution of the
partnership.
So if he is appointed after the constitution of the
partnership, then you may have his power revoked for a cause
or even without a cause. That is allowed.
Art. 1801provides the rule when the respective duties of 2 or more
managing partners are not specified and when unanimity of their actions
are not stipulated.
So what is the rule under art. 1801? Each one of the managing
partners may separately perform acts of administration. Why? Because
their respective duties are not specified and unanimity of action is not
necessary.
So opposite ng article 1801 is art. 1802. So 1802 baliktadlangang rule.
So under art. 1802, unanimity of action of the managing partner is
required because it is stipulated. Hence, concurrence of their decision is
necessary in order to have their acts valid. So concurrence is necessary
for validity of the acts.
Art. 1803 provides for the rules when matter of management has not
been agreed upon. So if there is no agreement as to who will be the
managing partners during the constitution of the partnership and after its
constitution, then the assumption is that all partners are managing
partners. Take note this is without prejudice to the application of art.
1801.
Under the 2nd par. of art. 1803, this simply provides that the
partners cannot simply alter an immovable property owned by the
partnership without the consent of the other partners. Why? Bakit
necessary ang consent ng other partners? Because it is not purely an act
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of administration but already of an act of ownership. So unanimity of the
consent of the other partner is necessary
Art. 1804 provides for a contract of sub-partnership. What is a contract
of sub-partnership? It is…
Art. 1804. Every partner may associate another person with
him in his share, but the associate shall not be admitted into
the partnership without the consent of all the other partners,
even if the partner having an associate should be a manager.
Take note what is granted under art. 1804 is the right to associate with
another in his share. Take note that the person na associate does not
become a member of the partnership because it requires the consent of
all the other partners based on the principle of delectus personae.
Art. 1805 provides for the right to access, copy and inspect partnership
books and that the partnership books shall be kept in the following places
in order:
(1) In accordance with the partnership agreement;
(2) If there is no agreement, then it shall be kept in the principal
place of the business of the partnership.
Take notet that each partner will have access to all the
partnership books and he is allowed to access the said
partnership books during the reasonable hours of business.
Thus, the one who is keeping the partnership books cannot
state when can it be inspected.
Art. 1806 provides for the duty of the parties inter se to render true and
full information. So that is self-explanatory that they shall render on
demand true and full information of all things affecting the partnership,
to any of the partner or a legal representative of the deceased partner or
of any partner under legal capacity.
Art. 1807 provides that a partner is accountable as a fiduciary.
Art. 1808 reiteration langng prohibition against the capitalist partner
from engaging in the same kind of business. Take note that this
prohibition is merely relative.
Art. 1809 provides for the right of a partner to formal accounting. Take
note that during the existence of the partnership, this right is not
available as a general rule because the right is already protected under
art. 1805 and 1806 of the Civil Code.Subject to following exceptions:
(1) If he is wrongfully excluded from the partnership business or
possession of its property by his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807 which refers to liquidation of
partnership;and
(4) Whenever other circumstances render it just and reasonable.
So during the existence, the right is not available subject to the following
exceptions. How about upon dissolution of the partnership? So upon
dissolutionof the partnership, a partner has a right to a formal
accounting.
AUGUST 26, 2014
We will continue with the property rights of a partner under Article 1810.
What are these?
1.) Rights in specific partnership property;
2.) Interest in partnership;
3.) Right to participate in management.
1810
Art. 1810. The property rights of a partner are:
1.) His rights in specific partnership property;
2.) His interest in the partnership; and
3.) His right to participate in the management.
Nature of partner’s right in specific partnership property. What does it
mean?

It simply means partners are considered co-owners of the specific
partnership property.
As a co-owner what are the consequences?
First, they can use only use it for partnership purposes
Second, they cannot use it for personal purposes without consent of
other partners
Under Article 1811, take note that a partner cannot simply
assign his specific right of a partnership property. Why? Because it does
not belong to him in the first place and second, that the extent of his
interest in the said partnership property cannot yet be determined during
the existence of the business of the partnership.
It cannot be determined prior its dissolution. However, the
partnership altogether can assign to a third party the right to the use of
the said property for partnership business purposes. And the right of the
partners as to the property, take note, is not subject to attachment
unless it is a claim against the partnership for the simple reason that any
one of the partners is not the owner of the said specific partnership
property. Likewise, tt cannot be subject to legal support because it does
not pertain to any of the partners.
Next Article 1812. A partner’s interest in the partnership is
his share of the profits and surplus.
Article 1812 provides that nature of partnership interest in the
said partnership.
During the operations of the business of the partnership this pertains to
his share in the profits and losses. And after its operations and during
liquidation and dissolution his interest of the partnership assets after all
the (tests?Tents?)have been cleared.
Take note that the interest of the partner here can be subject
to attachment or execution. Why? Because it belongs to the partners and
not to the said partnership.
Next under 1813 it refers to the effect of assignment of
partners whole interest in the said partnership. So! How can a partner
convey his interest without getting the partnership being dissolved?
1. By selling it to a 3rd person
2. By donating it to a 3rd person
3. By using it as a security on a loan from a 3 rd person
What are the rights withheld from the said assignee? Because
we are talking here of assigning a partner’s whole interest in the
partnership.
Rights withheld from assignee –
1.) To interfere in the management;
2.) To require any information or account;
3.) To inspect any of the partnership books.
Why? Because the assignee does not become a member of the
partnership without the consent of the other partners.
So what are given?
Rights of assignee of partner’s interest
1.) To receive in accordance w/ his contract the profits accruing to
the assigning partner;
2.) To avail himself of the usual remedies provided by law in the
event of fraud in the management; (Atty. Guerzo’s lecture: in
cases of fraud by the assignor)
3.) To receive the assignor’s interest in case of dissolution;
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4.) To require an account of partnership affairs, but only in case the
partnership is dissolved, and such account shall cover the period
from the date only of the last account agreed to by all partners.
The purchaser of a partner’s interest may apply to the court for
dissolution after the termination of the specified term or undertaking or
at any time if the partnership is one at will.
1813 is similar to sub-partnerships. That’s why the consent of all other
partners is not required for the interest of the partner to be conveyed.
6:29
Remember here that the assignee cannot become a partner without the
consent of all the other partners because if he becomes a member that
will entail a dissolution or change in membership of the said partnership.
Next under Article 1814.
Partner’s obligation to have his partners interest or his share in the
profits and surplus charge for his personal debts. This pertains to the
charging lien.
What is this charging lien?
Charging lien or charging order – this attaches the interest of
the partner. If that is issued by the court it should be through a judicial
order. Then it directs the partnership to pay any of the profits that may
be due to the judgment debtor in favor of the judgment creditor in
satisfaction of his credit. Take note ha court order. That is why it is
known as a charging order.
What are the other remedies under 1814?
Judgment creditor can also ask for appointment of a receiver to
collect the personal obligation of the said partner or the said interest of
the partner may be sold at auction or during foreclosure but it is subject
to right of redemption by the other partners with their separate property
or partnership property. So that is charging order. Take note: This
presupposes that there is already court judgment.
What are the obligations of partners with regard to 3rd persons?
Under Article 1815 regarding the requirement of a firm
name.
Art. 1815. Every partnership shall operate under a firm name,
which may or may not include the name of one or more of the
partners.
Those who, not being members of the partnership, include
their names in the firm name, shall be subject to the liability of
a partner.
This is required of partnerships because partnerships are
juridical persons that are separate from each of the partners.
In order to separate the names of the partners from the said
partnership and also in order to protect 3rd persons who will be dealing
with the partners as well as the partnership.
Under 1815 if a 3rd person’s name is used with his consent, he
should be liable as a partner with all the rights of a partner because the
partnership uses his name.
Under 2nd paragraph of 1815, Those who, not being members
of the partnership, include their names in the firm name, shall be subject
to the liability of a partner.
Another prohibition is that you cannot choose the name of the
deceased partner ha take note. Why because his death already caused
the dissolution of the previous partnership.
Under Article 1816 which provides for the liability for
contractual obligation of partnership

General Rule: All partners including industrial ones they are liable pro
rata for partnership debts. Pro rata liability meaning it is subsidiary and
joint. Pro rata is based on the number of the partners and not on the
amount capital contributions. It is only subsidiary or secondary because
they are only liable after all the partnership assets have been exhausted.
GR all liable pro rata for partnership debts.
E: 1. If there is an agreement to solidary liability
2. For torts committed
3. In case of misappropriation under Article 1823
Article 1818 refers to the power of a partner as agent of
partnership
Take note this disqualifies the authority of partners.
General Rule: In the absence of an agreement to the contrary all
partners have equal rights in the management and conduct of the
partnership business.
Thus as regards 3rd persons the law does not impose any duty for them
to make inquires as to the acting partners authority because of that
general rule.
2nd the presumption of the law, the acting partner has the authority to
bind the partnership.
What is the liability of the partnership for acts of partner?
For the usual way of carrying on the partnership – partnership
is liable.
Apparently carrying on the usual way of the business
partnership
If the partner so acting has authority and that the 3 rd person
knows that the acting partner has authority. – Acts of administration
How about acts of strict dominion?
The partnership is not bound as gen rule unless authorized by
all the other partners or unless they have abandoned the business.
How about acts in contravention to restriction on the authority
– The partnership is not liable to 3 rd persons having actual or presumptive
knowledge of the restriction regardless of whether the acts are carried on
the usual way of business of the said partnership.
1819 conveyance of immovable property belonging to the
partnership.Just memorize the rule.
If the real property is registered under the name of the
partnership and it is sold under the partnership name by any of the
partners, the rule is that it passes legal title.
2nd: If the title to the real property is registered under the name of the
partnership and a conveyance is executed by a partner in his own name
it passes equitable interest of the partnership.
Third, where the title to real property is named in one or more but not all
of the partners, and the record does not disclose the right of the
partnership, the partners in whose name title stands may convey the title
to such property. Meaning: Title is passed on.
Title to real property is in the name of one or more partners or all
partners or 3rd persons entrust for the partnership, a conveyance
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executed by a partner in the partnership name or in his name, it passes
equitable interest of the said partnership.
Article 1820
Refers to admission made by a partner in relation to your rule
on evidence.
Anything that a partners says or admits concerning partnership
affairs and within scope of his authority that is sufficient evidence against
partnership.
In order that said addition can be used as evidence in court,
the existence must be established and proved first.
1821 refers to notice to, or knowledge of, a partner of matter
affecting partnership affairs
Notice to any of the partners is notice to the partnership.
You don’t have to notify every partner in relation to partnership
affairs.
Knowledge of a partner acting in a particular manner or
knowledge of any partner who should have communicated it to the
managing partner that is knowledge to the partnership.If notice is
delivered to a partner under the law that is effective communication to
the partnership.Notwithstanding the failure of such partner to
communicate such notice or knowledge to the other partners.
It is not a defense for other partners to claim that they are not
notified if any one of the partners is notified.
1822 Liability for Torts
1823 Liability for misappropriation
1824
Liability for torts and misappropriation is solidary and not pro rata. If it is
solidary meaning any partner may pay the entire obligation.
1825 Defines a partner by estoppels. Who is a partner by estoppel?
A partner by estoppel is a person who by words spoken or written or by
conduct represents himself or consents to his representation as a part in
an existing partnership or as a partner in an apparent partnership and he
makes this representation to any one and such 3 rd person has given
credit to said representation.
Manner of representation:
Public representation or personal/non-public representation
Liability:
1st there is partnership liability when?
There is partnership liability if there is an existing partnership and when
the act is ratified by the said partnership. Meaning all the other partners
consent to the same.
When there is no partnership liability then the liability there is only pro
rata with the other persons so consenting to the contract or
representation as to incur liability otherwise the liability under 1825 is
separate.

So take note: Partnership Liability or No Partnership Liability then liability
of said person is pro rata with the other persons otherwise their liability is
only separate.
Article 1826 liability of incoming partners for partnership obligations.
A new partner admitted to existing partnership is also liable for EXISTING
obligations before he was admitted but his liability is only limited to his
contribution to partnership unless stipulated
Said new partner liable to separate property when obligations incurred
when he was already a partner.
Article 1827 speaks of the preference of partnership creditors in
partnership property.
The rule is that partnership creditors they have better rights to partners
obligation with regard to partnership property. While the personal
creditors of partners they have better right than a partnership creditor
with regard to the personal property of the partner.
1828-30
Dissolution of a partnership is caused by a change of relation between
the partners. If there is dissolution the rule is that no new partnership
business may be undertaken. Upon dissolution the partnership continues
until winding up and liquidation is completed.
Causes: 1830
1.) Without violation of the agreement between the partners:
a.) By the termination of the definite term or particular
undertaking specified in the agreement;
b.) By the express will of any partner, who must act in
good faith, when no definite term or particular
undertaking is specified;
c.) By the express will of all the partners who have not
assigned their interests or suffered them to be
charged for their separate debts, either before or
after the termination of any specified term or
particular undertaking;
d.) By the expulsion of any partner from the business
bona fide in accordance with such a power conferred
by the agreement between the partners;
2.) In contravention of the agreement between the partners, where
the circumstances do not permit a dissolution under any other
provision of this article, by the express will of any partner at
any time;
3.) By any event which makes it unlawful for the business of the
partnership to be carried out on or for the members to carry it
on in partnership;
4.) When a specific thing, a partner had promised to contribute to
the partnership, perishes before the delivery; in any case by
the loss of the thing, when the partner who contributed it
having reserved the ownership thereof, has only transferred to
the partnership the use or enjoyment of the same; but the
partnership shall not be dissolved by the loss of the thing when
it occurs after the partnership has acquired the ownership
thereof;
5.) By the death of any partner;
6.) By the insolvency of any partner or of the partnership;
7.) By the civil interdiction of any partner;
8.) By decree of court under the following article.
1831 judicial determination as to dissolution
Art. 1831. On application by or for a partner, the court shall decree a
dissolution whenever:
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1.) A partner has been declared insane in any judicial proceeding or
is shown to be of unsound mind;
2.) A partner becomes in any other way incapable of performing his
part of the partnership contract;
3.) A partner has been guilty of such conduct as tends to affect
prejudicially the carrying on of the business;
4.) A partner willfully or persistently commits a breach of the
partnership agreement, or otherwise so conducts himself in
matters relating to the partnership business that it is not
reasonably practicable to carry on the business in partnership
with him;
5.) The business of the partnership can only be carried on at a loss;
6.) Other circumstances render a dissolution equitable;
Others: Abandonment of partnership business, fraud, refusal by any of
the partners to render accounting, on application of 3rd parties
On the application of the purchaser of a partner’s interest under Article
1813 or 1814:
1.) After the termination of the specified term or particular
undertaking;
2.) At any time if the partnership was a partnership at will when the
interest was assigned or when the charging order was
issued.
1832 Effect
GR: When a partnership is dissolved, partners cannot engage in a new
business transaction because their authority is already terminated upon
the occurrence of the dissolution.
E: 1. During the winding up of the business.
Transactions relating to the winding up of business such as liquidation of
partnership assets can be tendered into because the partner’s authority
to do so shall continue
2. To complete unfinished transactions during dissolution
Take note if the dissolution is not by an act, insolvency, or death, the
authority of the partners among themselves is terminated.
1833
Art. 1833. Where the dissolution is caused by the act, death or insolvency
of partner, each partner is liable to his co-partners for his share of any
liability created by any partner acting for the partnership as if the
partnership had not been dissolved unless:
1.) The dissolution being the act of any partner, the partner acting
for the partnership had knowledge of the dissolution; or
2.) The dissolution being by the death or insolvency of a partner, the
partner acting for the partnership had knowledge or notice
of the death or insolvency.
1834 power of partners to bind dissolved partnership to 3rd persons.
GR: partners may still bind the partnership to transactions even after
dissolution if the transactions are with respect to the winding up or the
completion of unfinished transaction.
1. Credit was extended w/o knowledge of the dissolution before its
dissolution or
2. No credit but there was knowledge of the partnership existence and
none of its dissolution Law
Take note that it requires the partnership to have the dissolution
announced in a newspaper of general circulation in its place of operation.
This is sufficient notice to all 3rd persons.
The rule is that upon dissolution the partnership is no longer bound sa 3 rd
par: (codal)
The partnership is in no case bound by any act of a partner after
dissolution:
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1.) Where the partnership is dissolved because it is unlawful to carry 2.) Those owing to partners other than for capital and profits such
on the business, unless the act is appropriate for winding up as loans given by the partners or advances for business
partnership affairs; or expenses;
2.) Where the partner has become insolvent; or 3.) Those owing for the return of the capital contributed by the
3.) Where the partner has no authority to wind up partnership partners; and
affairs, except by a transaction with one who – 4.) The share of the profits, if any, due to each partner
a.) Had extended credit to the partnership prior to
dissolution and had no knowledge or notice of his
want of authority; or
b.) Had not extended credit to the partnership prior to
dissolution, and, having no knowledge or notice of his
want of authority, the fact of his want of authority has
not been advertised in the manner provided for
advertising the fact of dissolution in the first
paragraph, No. 2.

Last paragraph: he is liable as partner by estoppel

Any person who after dissolution represents himself or consents to

another representing him as a partner in a partnership engaged in
carrying in business.

Effect of dissolution 1835

Effect of dissolution on partner’s existing liability

GR: The dissolution of a partnership does not of itself discharge the

partnership or any of the partner’s existing liability.

E: agreement to that effect between himself by partnership creditor and

other partners

1836 refers to the 2nd stage which is the winding up stage: who can
wind up partnership affairs?

1. Whoever is assigned in the agreement

2. Partners who did wrongfully caused the dissolution

3. Legal rep of the last surviving partner who is not insolvent

4. The court in a judicial winding up of partnership affairs

1837 just read that. Lengthy.Di daw importante.

1838 consider a case wherein a partner he was induced to join the said
partnership by means of fraud or misrepresentation. What is the remedy
granted by law?

The said partner can ask for the recission of the contract or the
restitution meaning the return of his contribution. Take note the said
partner is also entitled to the surplus for certain purposes. He is also
entitled to be indemnified for all debts and liabilities that he paid for
during the partnership as well as the rights of 3 rd persons or a subrogated
creditor after the liabilities have already been paid to recollect what he
paid when he entered the said partnership.

1839

Art. 1839. In settling accounts between the partners after dissolution, the
following rules shall be observed, subject to any agreement to the
contrary:

What are the assets of a partnership?

Partnership property and contribution of the partners necessary for the

payment of all its liabilities.

Just memorize the order of application of assets:

Order of application of the assets:

1.) Those owing to partnership creditors;