CHAPTER 2: OBLIGATIONS OF THE PARTNERS

SECTION 2: PROPERTY RIGHTS

EXTENT OF PROPERTY RIGHTS OF A PARTNER (PRA3ID)

A. PRINCIPAL RIGHTS (SIM) (ARTICLE 1810)

1. Rights in SPECIFIC partnership property. (Article 1811)
2. INTEREST in the partnership. (Article1812)
3. Right to participate in the MANAGEMENT—of the partnership. (Article 1803)
B. RELATED RIGHTS
1. Right to reimbursement for amounts advanced to the partnership and to indemnification for risks
in consequence of management. (Article 1796)
 This is an obligation of the partnership to the partner to reimburse kung ano man yung
amounts na na-advance nung partner. And also, yung partnership has an obligation to
indemnify yung partner as a consequence of management.
2. Right to associate with another person in his share. (Article 1804)
 Pwedeng mag-appoint ng isang associate ang isang partner
3. Right of access and inspection of partnership books. (Article 1805)
 We already discussed this. Subject to inspection at reasonable hours during business days.
Also, remember that books are kept by managing partners or active partners.
4. Right to true and full information of all things affecting the partnership. (Article 1806)
5. Right to a formal account of partnership affairs under certain circumstances. (Article 1809)
 Remember yung enumeration dito, which is the WAPO—so if it’s Wrongfully excluded, if it
exists under the terms of any Agreement, if there are Profits obtained as under article 1807
and Other circumstances.
6. Right to ask for dissolution under conditions. (Article 1830 to 1831)

SPECIFIC PARTNERSHIP PROPERTY — it is a property which is specific in nature and it belongs to the
partnership.

NATURE OF A PARTNER’S RIGHT IN SPECIFIC PARTNERSHIP PROPERTY (Article 1811)

1. POSSESSION OF THE PROPERTY FOR PARTNERSHIP PURPOSES

- A partner has an equal right with his partners to possess specific partnership property for
partnership purposes.

Every partner has an equal right to possess specific partnership property but ONLY for purposes of the
partnership business.
  Halimbawa, may biniling sasakyan/kotse ang partnership. Obviously, the partnership through
the partners can possess yung kotse. But remember, only for partnership purposes— because
a partner has an equal right with the other partners to possess specific partnership property.
 If a partner uses specific partnership property for personal purposes, kung merong profit yan,
it will belong to the partnership
 But, pwedeng gamitin ang specific partnership property for personal purposes provided there
is consent from all of the other partners.

EXCEPTIONS:
 If there is a partner who is wrongfully excluded in the possession of the specific partnership
property, he can ask for formal accounting (bakit niyo ako ine-exclude? Baka may ginagawa
kayo sa property na yan)
 If there is a partner who wrongfully exclusively possess the specific partnership property, this
is also a ground for dissolution. But by agreement, pwede namang mag-possess ang mga
managing partners ng specific partnership property exclusively. So pwede namang i-
surrender ang possession ng specific partnership property pero sa mga managing partners
dapat.

2. ASSIGNMENT OF RIGHT TO THE PROPERTY

- A partner’s right in specific partnership property is NOT ASSIGNABLE EXCEPT in connection with
the assignment of rights of all the partners in the same property because it is impossible to
determine the extent of his beneficial interest in the property until after liquidation of the
partnership.

 Ang question dito ay “is the right to specific partnership property assignable?”
 This is what you have to remember:
Sa isang kotse na pag-aari ng isang partnership, for example tatlo silang owner ng kotse.
So obviously, the three of them are co-owners in specific partnership property. Dun sa
kotse na yan, yung kanilang share is indivisible share kasi hindi naman matutukoy kung
ano ang portion or share ng isang partner sa kotse—it is impossible to determine kasi nga
hindi naman natin pwedeng hatiin yumg kotse. And because it is impossible to determine
the beneficial interest of each partner in the specific partnership property or as applied
to our example, remember as a rule, it is not an assignable right.
 Kung ako si Partner A, meron akong right sa kotse na yan. But remember, kung meron akong
creditor, hindi ko pwedeng ibigay sa kaniya or i-assign sa kaniya yung right ko dun sa specific
partnership property because it is a partnership property and it is also difficult to determine
my beneficial interest in the specific partnership property.

 EXCEPTION TO THIS ONE: Pwedeng i-assign sa creditor yung right to specific partnership
property if all of the partners will consent.
 If all of the partners will consent, tapos inassign nila sa isang debtor yung specific partnership
property para pambayad ng utang, there is no problem.
 3. ATTACHMENT OR EXECUTION

- A partner’s right in specific partnership property is NOT SUBJECT to attachment or execution

EXCEPT when such property is attached for a partnership debt.

 Ang question dito ay “ Yung undivided interest ba ng isang partner sa specific partnership
property, is it subject to attachment or execution?
 Pwede bang ipa-reserve ng mga creditors yan? (Attachment) OR pwede bang ipambayad ng
utang sa execution dahil meron ng decision ang court na may utang nga itong si
debtor/partner?
 Remember the term “attachment” or “execution”, magkaiba yan.

Attachment—halimbawa, ako ay isang creditor and gusto kong maningil sa isang debtor. Magdedemanda ako
syempre, maghahanap ako ng property niya para pwedeng ipangbayad sa akin, for example a parcel of land.
So yung lupa na yan, ipapa-reserve ko—para kung sakaling nanalo ako sa case naming yung kaniyang lupa ay
pwede niyang gamitin na pangbayad sa utang niya sa akin. This is called attachment—it is to put the property
in the custody of the court para later on, pambayad doon sa utang ng debtor.

Execution—After na magkaroon ng decision sa isang case, let us say walang na-attach na property tapos
walang masingil si court mula sa debtor pero meron siyang ibang mga properties. So yung properties na yan,
pwedeng i-execute yung decision na mabayaran si creditor by selling off yung mga properties.

 Yung mga nireremata yung bahay or lupa tapos binebenta sa public auction, pambayad ng
utang yung proceeds dun sa public auction. This is called the execution.
 Kapag hindi kayo nakabayad sa utang niyo, they can get your property and sell it at public
auction because they are only trying to execute the decision of the court.

 Remember here, your partner is also indebted to another person kaya nga pinapa-attach yung
kaniyang interest sa specific partnership property ng mga creditors niya. The answer here is, not
subject to attachment or execution kasi nga undetermined ang interest mo sa isang specific
partnership property.
 For example; Ako si Partner A, may utang ako sa creditor ko. Tapos ang asset nalang na natitira sa akin
is yung undivided interest ko in the specific partnership property (e.g kotse), pwede bang i-attach yan
ng personal kong creditor? Hindi pwede, because it belongs to the partnership and my interest is
undetermined as of yet.
 However, property can be attached or executed upon if it is for partnership debt. So, kung utang ng
partnership, pwede i-attach ang partnership property.

4. LEGAL SUPPORT

- A partner’s right in specific partnership property is not subject to legal support under Article
195. (Family Code of the Philippines, Executive Order No. 209 as amended, December 13, 1989)

 Same rule. Legal support or support ng mga anak Ninyo, hindi rin pwedeng gamitin ang
specific partnership property bilang pambayad ng legal support.
 INTEREST IN THE PARTNERSHIP

NATURE OF A PARTNER’S RIGHT INTEREST IN THE PARTNERSHIP (Article 1812)

A. SHARE OF THE PROFITS AND SURPLUS

- A partner’s interest in the partnership is his share of the profits during the lifetime of the
partnership and his share in the surplus after its dissolution.

 so yan ang tandan nyo, personal property na ng partner, sakanya na yon kasi pagka nag
dissolve yung partnership may surplus edi ididistribute yan sa mga partners isa isa. So
ngayon remember isa na ito sa personal property ng isang partner.
- Said interest can in general be assigned, attached and subject to legal support because it is personal
property.
 Kailangan din tandan, being a personal property, it can be assigned, attached and also
subject to legal support kasi nga yan na yung share mo sa profit. Kaya pwede ng idistribute
yan, to the partner it is personal property, yan na yung share mo sa surplus, again pwede
idistribute yan it is personal property.
B. EXTENT OF PARTNER’S INTEREST
- Nothing is to be considered as the share of a partner but his proportion of the residue or balance
after an account has been taken of the debts and credits, including the amount paid by the several
partners in liquidating firm debts or in making balances to the partnership, and until that occurs, it is
impossible to determine the extent of his interest.
 Remember ang partner’s interest is yung balance after all of the depts have been paid and all
of the credits have been collected.

ASSIGNMENT OF INTEREST

CONVEYANCE/ASSIGNMENT OF INTEREST IN THE PARTNERSHIP (Article 1813)

- Includes sale, donation and mortgage without causing the dissolution of the partnership.
 Baka isipin nyo this is similar to the provisions of 1804. Yung 1804 talks about an associate,
so remember an assignee and an associate is different. In 1804, what they talked about
there is an associate. So ang associate yung share ng isang partner parang shineshare lang
nya dun sa kanyang associate. So imbis na ang partner ang tatanggap ng isang share nya sa
profit, ang tatanggap ng kanyang share sa profit ay ang kanyang associate or sub-partner.
 However, conveyance or assignment of interest yung assignee actually sells donates or
mortgage yung kanyang interest in the partnership to another person.
 So here, talagang binenta na nya yung interest nya, dinonate/ pinamigay or sinangla nya sa
ibang tao. So hindi katulad sa associate “o share ka dito” “sama ka dito” “tanggapin mo lang”
ganyan.
 Ito binenta talaga nya, pinamigay talaga nya, sinangla nya talaga.
  Also in associate, will receive only a portion of the share of partner but in assignment or
conveyance yung buong interest ng isang partner in the partnership is conveyed or assigned
to the third person.

EFFECTS OF ASSIGNMENT OF INTEREST IN THE PARTNERSHIP (Article 1813)

A. If a partner conveys – assigns, sells or donates – his whole interest in the partnership – his share in
the profits and surplus – either of two things may happen:
1. The partnership may still remain; or
- Despite the selling of the interest of a partner in the partnership.
2. The partnership may be dissolved only when it is clear that the p contemplated and intended the
entire withdrawal from the partnership of such partner and the termination of the partnerships as
between the partners.
- Also it can happen that if there is an assignment of interest, the partnership maybe dissolved but
remember only when it is clear, that the partners contemplated and intended the solution kasi
winiwithdraw na nila ang kanilang entire interest from the partnership.
- Di naman kasi porke binenta ang interest or inassign ng interest, nagkakaron na ng dissolution hindi
matik yan kaya nga no. 1 the partnership may still remain.
B. The assignee or conveyee does not necessarily become a partner.
- Totoo naman to same as through with associate, binili lang naman nila yung share and if nagpatuloy
pa rin yung partnership, the assignee or conveyee does not become a partner.
C. The assignee cannot even interfere in the management.
- Dahil di nga sya partner obviously the assignee cannot even interfere in the management of the
partnership
D. The assignee cannot demand information, accounting, and inspection of partnership books.
- That is common sense pero syempre may rights din naman sila, alangan wala silang rights diba> bait
pa sila bumili ng interest.

RIGHTS OF THE ASSIGNEE (Article 1813)

A. To get whatever profits the assignor-partner would have obtained.

- The rights of an assignee is to get whatever profits na makukuha dapat ng kanyang assignor.
B. To avail himself of the usual remedies in case of fraud in the management.
C. To receive the assignor-partners’ interest in case of dissolution.
- So this will refer to your surplus after the partnership has been dissolve, tatanggapin din ng assignee
yan.
D. To ask for annulment of the contract of assignment if he was induced to enter into it thru any of the
vices of consent or if he himself was incapacitated to give consent.
- To ask for annulment in case na itong assignee was only entered into the partnership was induced
to enter the partnership because of any vices of consent (violence, intimidation, mistake, fraud, and
undue influence) or the assignee himself is incapacitated to give consent.
 - Remember this is a voidable contract, that’s why annulment is available as a remedy to the assignee
whose only reason for entering into the contract is because of the inducement or because of the
vices of consent or because of incapacity.
E. To demand an accounting but only if indeed the partnership is dissolved, but…. Then, the account
can cover the period only from the date of the last accounting which has been agreed to by all the
partners.
- The assignee also has the rights to demand an accounting when the partnership was already
dissolved but remember the account can cover/should cover only the date from the last accounting
which has been agreed to by all the partners. So from dun lang magsisimula up to present.

CHARGING ORDER

APPLICATION FOR CHARGING ORDER (Article 1814)

- A separate creditor of a partner cannot attach or levy upon specific partnership property for the
satisfaction of his credit. He can, however, secure a judgment on his credit and then apply to the
court for a charging order subjecting the interest of the debtor-partner in the partnership with the
payment of the unsatisfied amount of such judgement with interest thereon.
 Remember in 1814, bago ka mag apply ng charging order, the first thing you have to do if you
are the creditor of a partner, so itong partner sa isang partnership let us say A is a partner in
ABC partnership. Si A meron syang personal na utang saaken, so let us say ako ang creditor, let
us say also na itong si A wala na syang mga personal properties but let us say also na ang
partnership ay float, okay naman sya may kinikita sya. So kung ako itong personal creditor ni A
na isang partner, ano ang pwede kong gawin?
 Syempre, obviously para makasingil ako kailangan kong mag demanda, now if nanalo na ko sa
kaso ko kung saan sinisingil ko si A who is a debtor partner edi meron na kong judgement. Now
if I already secured a judgement, remember doon sa court na nag issue ng judgement na yon, I
can apply for charging order. So yung charging order na yon, it will subject the interest of the
debot-partner in the partnership with payment of unsatisfied amount of the judgement in my
favor.
 So ang mangyayare jan, lahat ng profits that is supposed to be received by A from the
partnership ay mapupunta na sake (creditor) kasi nga merong charging order, so his interest in
the partnership is charged. Kaya yung iba ang tawag nila sa charging order is charging interest
because yung interest ng isang partner will be charge to pay for his personal debt to me.

 What you have to remember here in charging order is you have to relate it with Article 1827, in
1827 tandaan natin na pagka partnership property ang preferred jan is partnership creditors. So
kahit na may charging order yung interest ni A, kung may sariling creditors ang partnership,
yung mga creditors muna ng partnership ang unang babayaran using yung interest ni A sa
partnership before babayaran yung personal utang ni A saakin, because of the charging order.
REDEMPTION OF INTEREST (Article 1814)

- Charging order can be redeemed.

- The interest charged may be redeemed with the separate property of any one or more of the
partners, or with partnership property but with the consent of all partners whose interests are not
so charged or sold.
 Yung the interest charged may be redeemed with the separate property of any one or more
of the partners, so para nga naman huminto na yung pagtanggap ko ng profit na share ni A
from the partnership. Pwedeng iredeem nalang nila yung interest ni A, kumbaga tinubos
nila yung interest ni A mula saaken. Kaya ang pwede nilang ipantubos jan remember is the
separate property of any one or more of the partners. They will help A out, si B tsaka si C,
pwede nilang tubusin yung interest nya mula saaken by using their separate property.

 Also pwede naman yung partnership ang tumubos sa interest ni A nan aka sangla saaken
(creditor) but remember if it is the partnership or partnership property is used, kailangan it
has the consent of all of the partners whose interest are not yet charged or sold.