Article 1795 deals with RISK OF LOSS OF THINGS CONTRIBUTED

There are five cases contemplated by the present article for the determination of the risk of the
things contributed to the partnership, namely:
1. Specific and determinate things which are NOT fungible where only the use is
contributed- PARTNER - because he remains the owner of the things
2. *Fungible or CONSUMABLE things or things which cannot be kept without deteriorating
even if they are contributed only for the use of the partnership.
3. Specific and determinate things the ownership of which is transferred to the
partnership, PARTNERSHIP -being the owner
4. Things contributed to be sold - PARTNERSHIP -intended to be the owner; otherwise the
partnership could not effect the sale
5. Things brought and appraised in the inventory- PARTNERSHIP -implied sale making the
partnership owner of the said things, the price being represented by their appraised
value.
The above presuppose that the things contributed have been delivered actually or
constructively to the partnership. Before delivery, the risk of loss is borne by the partner since
he remains their owner. He is a debtor of the partnership for whatever he may have promised
to contribute. If the loss is due to the fault of any of the partners, he shall be liable for damages
to the partnership in accordance with the provision of the preceding article.

Article 1796 sets forth the Responsibility of the partnership to the partners.
In the absence of any stipulation to the contrary, every partner is an agent of the partnership
for the purpose of its business. Agent, a person who acts on behalf of the partnership.
In the absence of any stipulation to the contrary, every partner is an agent of the partnership
for the purpose of its business. Hence, the partnership has the obligation to:
1. Refund amounts disbursed by the partner in behalf of the partnership plus the
corresponding interest from the time the expenses are made (loans and advances
made by a partner to the partnership)
2. Answer for the 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.
Being a mere agent, the partner is not personally liable, provided, however, that he is free
from all fault.

Example:
The articles of a trading partnership composed of A, B and C provides that any purchase in
excess of ₽5,000.00 must first be approve by all the partners. This rules was strictly observed in
all transaction of the partnership. C made a purchase of goods our of his personal funds for
7,0000.00 without the knowledge of A and B. The partnership incurred a loss.
C is not entitled to be reimbursed for the purchase.
Article 1797 deals with Rules for distribution of profits and losses.
Distribution of profits
1. The partners share the profits according to their agreement subject to Article 1799.
2. If there is no such agreement:
a. Capitalist partner in proportion to his capital contribution. This rules is based on
the presumed will of the partners
b. The industrial partner shall receive such share, which must be satisfied first
before the capitalist partners shall divide the profits, as may be just and
equitable under the circumstances.
Distribution of losses
1. The partners share the profits according to their agreement subject to Article 1799.
2. If there is no such agreement:
a. Profit-sharing ratio except for the industrial partner
b. If no profit sharing ratio, losses shall be borne in proportion to their capital
contribution but the PURELY industrial partner shall not be liable for the losses.

Article 1798 speaks of a third person, not a partner.

The designation of the share in the profits and losses may be delegated to a third person by
common consent. Delegation to a third person follows the general rule in contracts that the
fulfillment o a contract cannot be left to the will of one of the contracting parties alone (Article
1308 and 1309)

Slide: Binding force of designation by third person

- Generally be binding unless manifestly inequitable.
- Three months within which to impugn the designation, after which he can no longer
complain.
The prohibition in the second paragraph (Article 1798) is necessary to guarantee the utmost
impartiality in the distribution of shares in the profits and losses.

The reason behind the comparatively short period of three months within which to impugn the
designation is to forestall any paralyzation in the operations of the partnership.

Article 1799 A stipulation which excludes one or more partners from any share in the profits or
losses is void.

a. Stipulation generally void, but partnership subsists.

- Profits or losses shall be apportioned as if there were no stipulation on the same.
b. Stipulation, a factor to show no partnership exists.
- Parties expressly stipulate that there shall be no liability for losses, no partnership exists.
- When it is clear that a party did not intend to share in the losses
c. Where person excluded not intended by parties to become a partner, stipulation is valid.
-where one of several persons engaged in an enterprise agreed to assist by advancing
money
d. Where person excluded from losses is industrial partner, stipulation is valid.
e. Where stipulation provides for unequal shares - stipulation is valid unless the inequality is
so gross that it is, in effect, a simulated form or attempt to exclude a partner from any share
in the profits of losses.

Stipulation exempting a partner from LOSSES should be allowed.

To declare also void an agreement which merely exempts or tends to exempt one or more
partners from sharing or contributing in the partnership losses as far as it affects the partners
alone.

As far as third persons are concerned, any agreement which tends to excuse or exclude one or
more partners from satisfying the partnership liability caused through partnership losses may
be properly declared VOID.

Article 1800 provides the rights and obligations of the partners with respect to management.

Unless the partnership agreement provides otherwise, each partner in a general partnership
has a right to an equal voice in the conduct and management of the partnership business.
Ofcourse, the partners may select a managing partner.

1. Appointment as manager in the articles of partnership.

- Execute all acts of administration and is REVOCABLE ONLY UPON JUST AND LAWFUL
CAUSE
- Revocation represents a change in the terms of the contract. It is an elementary rule
that no party to a contract can violate the law of the contract without the consent f
the others.
- In case of mismanagement, the other partners may avail of the usual remedies
allowed by law, including an application for dissolution of the partnership by a
judicial decree.
2. Appointment as manager after the constitution of the partnership
- May be REVOKED AT ANY TIME FOR ANY CAUSE, appointment not being a condition
of the contract.
- The revocation is not founded on a change of will on the part of the partners, the
appointment not being a condition of the contract.
Article 1801 deals wherein the respective duties of two or more managing partners were not
specified

Application of Rule
1. Two or more partners have been appointed as managers;
2. There is no specification of their respective duties; and
3. There is no stipulation that one of them shall not act without the consent of all the
others
TWO OR MORE MANAGING PARTNERS
1. Each one may separately perform acts of administration.
a. If one or more oppose acts of the others, the decision of the majority of the
managing partners shall prevail. The right to oppose can be exercised only by
those entrusted with the management of the partnership and not by any
partner
b. in case of ties, the matter be decided by the partner with controlling interest
(>50% of capital

When the articles of partnership do not specify the respective duties of the partners and the
limitations of management, one partner has no more powers than the others in the conduct
and management of the firm’s business. If there is a specification of the respective duties of
the managing partners, the decision of the partner concerned shall prevail subject only to the
limitation that he should act in good faith.