CHAPTER 1: GENERAL PROVISIONS OF PARTNERSHIP

Article 1767-1800

As an introduction, we need to identify yung iba’t-ibang obligations nung mga partners

with respect to the partnership and the third person. Yung third person, ayun yung mga
government, supplier, etc. Later on mas maiintindihan niyo kung anong ganap nung
third person na yon.

Yung Partners kasi they already have obligations among themselves, meaning bawat
partner ay mayroon ng katungkulan or obligations sa bawat isa. And then yung mga
partners na iyon sila yung nag c-compose or bumubuo ng partnership. So bukod doon
sa obligations nung partners among themselves, itong mga partners natin ay mayroon
ding obligations in favor of the partnership/owing to the partnership. Bukod sa
obligations nila sa bawat isa, mayroon pa sila bilang mag partners na obligations naman
nila towards the partnership. Now you have third persons, ito na yung mga clients nila,
customer nila, pede ding yung government, banks, financial institution, suppliers, etc.
So ayun sinasabi na third persons. Yung mga partners mayroon silang obligations in
favor of third person. The Partnership itself, will also have an obligations in favor of third
persons.

Yung mga relations na ito, we can group them into four;

1. Relations among the partners themselves
2. Relations of the partners with the partnership
3. Relations of the partnership with the third person
4. Relations of the partners with third person

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CHAPTER 2: OBLIGATIONS OF THE PARTNERSHIP

Section 1 - Obligations of the Partners Among Themselves

1784-1800

So article 1784 onwards ang coverage niya ay obligations of the partners among
themselves.

So sabi ng article 1784,

Article 1784

Doon muna tayo sa general rule, since there is a general rule and an exception.

Yung general rule pinapatungkulan niya kailan ba nagsisimula yung partnership or the
contract of partnership. And based of our previous discussion, our prof mentioned that
contracts are consensual. Yung partnership kasi nag-start talaga siya the moment na
nagkaroon ng meeting of minds, kahit walang physical na kontrata basta nag agree
kayo both or nag agree kayo pareho, doon na agad na build yung partnership at ayun
nga yung tinatawag na consensuality of contracts. And since the a partnership is a
contract, it is subject to that rule the contract of partnership is consensual.

So kailan nagsisimula ang partnership? Kapag nagkaroon na ng meeting of the minds

which is the perfection of the contract. EXCEPT, we have also discussed this last week,
kapag ang kanilang contribution ay more than or equal to 3,000 pesos or kung meron
kang ibang contribution like immovables or real properties in which case you also have
to make an inventory, written inventory ganon of those real properties. So kapag ito
ayun nga may malaking contributions na, hindi na sapat na meeting of the minds lang
yung contract na meron kayo, kailangan niyo ng formality, and that formality required is
a public instruments. Syempre papayag ka ba na yung nag contribute ka ng malaki sa
partnership tapos wala kayong written contract, diba hindi naman?

In any case, ang point dito is that partnership begins from the moment of the execution
of the contract, when you say execution, it is not necessary na written instrument or
contract because again, there are partnership na hindi mo naman kailangan isulat. So
how do you execute something which is not written if your connotation of the term
execution is the writing instrument. Okay so the the term execution there does not
pertain to the written instrument, unless again, there are the provisions of the
partnership law with respect to the requirement of having a public instrument will apply.
Tignan mo yon, kumbaga apply natin, kasi yung execution might pertain to the
execution of the public instrument. So to make it short, nag start yung partnership from
the moment of execution.

So, bakit ba kailangan malaman kung kailan magsimula yung partnership? Syempre
para malaman kung kailan nag a-arise yung obligations diba. Like o my obligations ka
to render this service, obligations ka to ganito ganyan, etc. Etc.

So I hope naintindihan natin yung article 1784, now let’s proceed with article 1785.

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Article 1785

Doon muna tayo sa first paragraph, diba may tatlong klase tayo ng partnership? Yung
partnership at will, fixed term and particular undertaking.

So yung partnership at will, wala itong particular date or araw kung kailan siya
matatapos, parang kung kailan niyo lang maisipan tapusin or kung kailan niyo siya
gusto tapusin, doon siya matatapos.
Then yung fixed term naman, ito naman yung may exact date siya like kunwari nag form
kayo partnership na will only last for 1 year, so ayon yung araw kung kailan
mad-dissolve yung partnership.

Almost the same din sila ni particular undertaking. Si particular undertaking naman is
halimbawa yung partnership niyo is hanggang matapos lang yung pinagagawang
building, so kapag natapos na yon, tapos na rin yung partnership niyo.

Unless ituloy niyo pa which is ayon yung tinutukoy dito sa first paragraph ng Article
1785. Na kapag ang partnership for a fixed term or undertaking ay nag continue after
the termination ng term ng partnership nila without any express agreement, yung rights
and duties pa din nila bilang mag partners will still remain the same, walang magbabago
ganun. And for the termination naman, technically, para na siyang or parang na convert
na siya into partnership at will sila kasi anytime pwede madissolved dahil wala naman
silang pinagusapan e. Parang ang nangyari itunuloy niyo yung partnership niyo and
then you, your partner/s will decide kung kailan matatapos yon. Kasi technically, tapos
na talaga siya pero dahil itunuloy niyo naging partnership at will na siya.

Now for the second paragraph of article 1785 naman, ayun nga diba tapos na talaga
dapat yung partnership pero walang settlement or liquidation of the partnership affairs
na nangyari, doon na nag a-arise yung “prima facie evidence” when we say “prima facie
evidence” ito yung “presumption” meaning kapag ayun nga, walang settlement or
liquidation na nangyari after matapos yung term nigo, doon na nagkakaroon ng
presumption na may continuation na yung partnership at yung klase ng partnership na
yon ay partnership at will na.

But let me remind you na yung partnership for a fixed term or particular undertaking ay
hindi maaaring madissolve or ma terminate hangga’t hindi natatapos yung fixed term or
yung undertaking.

Technically lahat ng partnership ay partnership at will, kasi anytime pwede mag

withdraw yung isang partner kapag ayaw na niya or kapag wala na yung fiduciary
relationship which is based on trust and confidence, kapag yung isang partner hindi na
na-feel yung trust and confidence or hindi na nakakarating sa kaniya yung fiduciary
nature, anytime pwede siya mag withdraw sa partnership and the other partner cannot
compel. Pero pwede siyang ihabla or maging liable for damages / breach of contract
especially if unjustified yung withdrawal or nag withdraw lang without any reason.

Now let’s move on with article 1786

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Article 1786

So for article 1786, yung nature ng relationship between the partner and the
partnership, yung legal tie nilang dalawa is that of a debtor and creditor relationship but
hindi ito sa lahat ng pagkakataon. Ni specified sa article na ito kung kailan considered
debtor-creditor relationship between partner and the partnership.
Bali si partners nagiging debtor siya ni partnership for the contribution which he has
promised to the partnership. Diba sa simula nga ng partnership, by definition, kailangan
mayroon kang contribution. Dito pumapasok yung unang obligation ng partner, to
contribute capital, money, property or industry. So every partner is a debtor of the
partnership for whatever he may have promised to contribute there to. So in so far as
that contribution is concerned, sa ang tingin ng batas sa relationship between the debtor
and the creditor is that: the debtors are the partners and the creditor is the partnership.

Again article 1786 first paragraph, a relationship between the partner and the
partnership in so far as the capital contributions are concerned is debtor-creditor
relationship.

Dito naman sa second paragraph, ang relationship naman nila ay seller-buyer. Nag
a-apply yung second paragraph ng Article 1786 kung ang isang partner ay nag
contribute ng specific and determinate things. For example: cars, land, equipment, etc.
In short, hindi money money yung contribution. So kapag specific and determinate
things yung contribution nung isang partner, liable niya or bound siya for warranty
againts eviction. In the same case and the same manner as the seller (vendor) is bound
with respect to the buyer (vendee). The seller will deliver the specific or determinate
things while the buyer will pay fot the price of consideration.

For example, lupa yung binebenta ni seller sasabihin niya “I’m selling you this land at
mayroon akong warranty againts eviction” meaning gina-guarentee ng seller doon sa
buyer ng lupa na magiging PEACEFUL yung possession niya doon sa lupa, parang
sinasabi ng seller na walang aagaw niyan sayo or binibigyan ni seller ng assurance si
buyer na hindi ka dyan mapapaalis. Ayon yung guarantee ni seller, mayroon siyang
warranty againts eviction. “You will not be evicted from the property that I’m selling to
you” , like habang ginagamit mo yung property na iyon, hindi yan kukunin ng bangko,
gobyerno, third persons, lahat yon malinis dahil bayad yung mortgage, taxes, yung
purchase price, at ayun yung warranty ni seller. Pero kung wala silang pag-uusap or
hindi binanggit ng problem kung meron ba or wala, you have to presume na meron.
Meron siyang warranty againts eviction.

Now how does it apply sa contract of partnership?

Diba may general rule tayo na no demand, no delay. Meaning hangga’t hindi
nagkakaroon ng judicial or extra judicial demand from the creditor, the debtor will not be
considered in legal delays. So para maging delayed, kailangan munang mag serve ni
creditor ng judicial or extra judicial demand, kung wala yung deman na yon, the debtor
cannot be considered in delays. PERO, may mga exception na ni provide sa general
rule na yon (sa no demand, no delay) at one of the exception will be article 1786.

For example: Si P ay kasali sa partnership OPQ and then P promised na magbibigay

siya ng contribution na cash worth 3M on May 3, 2021, kaso hindi nakapag bigay si P
on that day or he failed to deliver the money that he/she promised, liable na siya for
interest at yung interest na yun ay yung “fruit” mo when it comes to money.

Dahil naka state sa article 1786 yung “even without the need of demand”, kahit hindi
mag serve ng judicial demand yung partnership OPQ on May 3, considered na agad na
delay si P and tumakbo yung panahon na kailangan niyang magbayad ng interest in
favor of the partnership.

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Article 1787

So kapag mayroon kang i-c-contribute na non-cash, “goods” ang tawag doon. And
kapag naman cash yung ni contribute mo, 1787 will not apply. Dahil ang sinasagot ng
Article 1787 ay “how much capital will be credited to you?” Or magkano yung capital mo
with respect to this contribution. Kasi diba if cash ni contribute mo ang value non ay
yung mismong face value niya, halimbawa 10k yung ni contribute mo, edi automatic na
10k yung contribution mo unlike kapag non-cash like car, equipment, inventory, etc.
Now the question is how much is the capitalization with respect to these contributions?

Yung appraisal non must be made by:

First, yung tinatawag natin na agreed price or agreed value. So kahit na yung property
na ni contribute mo is worth 10M, if they agreed na ang credit niya ay 9.5M lang then
that will prevail kasi ayon yung napagkasunduan or agreed value nga. And dapat yung
agreement na yon should be reduced in the contract of partnership.

Without that valuation, kung walang agreed value anong susunod? Those made by
experts, so kailangan nung partners na mag engage doon sa services ng experts. For
example: Car yung ni contribute tas di nila alam or walang agreed value, pwede sila
mag tanong sa mga experts doon sa property na ni contribute. Pero yung magiging
desisyon nung expert titignan niyo pa rin if fair pa yung kaniyang estimate kasi baka
sobrang mababa or mataas. Check niyo yung naging basis nung expert in arriving in
that amount and based on your understanding of it, and it will be your decision if
i-accept ninyo or i-reject ninyo yung proposal nung expert. Syempre kung ikaw yung
expert isa sa mga ic-consider mo is yung current prices or kilala natin bilang Fair Market
Value.

And for the closing sentence ng 1787, any change in the fair market value will be for the
account of the partnership. Ibig sabihin, if mayroon daw increase in the value of the
property sa partnership daw mapupunta yon pero in the same way na kapag yon ay
bumaba ganon din sa partnership pa din mapupunta but the partnership will suffer.

So, I hope you understand the Article 1787.

Now let’s go to Article 1788

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Article 1788

Itong article na to is a repeatition of the previous article, mayroon tayong article about
being a debtor.

(1st paragraph)
Ang point dito sa 1788 yung partner na yun ay ituturing nating debtor, may utang siya sa
partner ship. Pero yung utang niya na yon ay kina-clarify ng 1788, will not be limited
doon sa amount na supposedly ico-contribute. That partner will also be held liable for
the payment of interest as well as for damages. Like yung damages na kaniyang dinulot
dahil sa kaniyang delay.

(2nd paragraph)
So dito naman sa second paragraph, na contribute na daw, so naging part na yon ng
common fund.

Magbibigay ulit ako example para mas madali niyo maintindihan. So from the common
fund may partner na kumuha, kunwari si X. Si X kumuha ng pera sa partnership coffers
or the common fund. Ang ginawa niya instead of using it for partnership purposes,
ginamit niya for his own use or his own benefit. Parang sinarili niya yung pera na
supposedly pagmamay-ari ng partnership. So anong mangyayari? Si X ay may liability
yo reimburse or kailangan niya ibalik yung kinuha niya at syempre kapag binalik niya
yon, from the time na kinuha niya yung pera liable siya for damages and interest. At
kung napatunayan pa na may panlolokong nagaganap or mayroong fraud involve doon
sa pag convert niya ng pera ng partnership for his own use, pwede pa siyang maging
liable for estafa dahil may convertion at fraud na nangyari.

PERO di pwedeng puro presumption lang, kailangan may proof. If ihahabla nila si X,
kailangan mapatunayan na ginamit niya yung pera ng partnership for his own use.

So basically, ang sinasabi ng Article 1788, kapag ikaw ay kumuha ng pera sa

partnership at ginamit mo ito for your own use, the you are liable to reimburse, including
the interest, damages and there’s no need for demand. Hindi mag aapply dito yung No
Demand, No Delay. You will be liable for it even if without demand being served upon
you. Your liability shall begin from the time na ni convert mo yung amount for your own
use. Then simula na agad yung counting, yung karapatan ng partnership to ask the
return of the amount, to ask for the interest and damages. No need for a demand.

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Article 1789
So, sa article 1789, it is stated that an industrial partner cannot engage in business for
himself, unless the partnership permits him to do so. Dito sa article na ‘to nagfofocus
siya sa mga industrial partners. It simply means na bawal makipag-engage sa ibang
business ang mga industrial partners habang nasa loob sila ng isang partnership,
unless pinayagan siya nung mismong partnership. So anong mangyayari kapag
sinuway ni industrial partner yung article na ito? The capitalist may either exclude him
from the firm, maaaring tanggalin siya doon sa firm na yon o avail themselves sa mga
benefits na makukuha nila sa pag violate nila ng provision na to and of course with a
right damages in either case.

For example:
A and B formed a partnership that engage in music tutorial for kids. A is the industrial
partner while B is the capitalist. So ang end ng shift ni A ay 5pm.

So sa example na to, pwede pa bang ma-engage si A na mag music tutorial after ng

5pm shift niya as a part time niya? So the answer is no, if that’s the case B can exclude
him from the firm with a right damage or he can avail for the benefits which he may
have obtained with a right to damage.

So what if, instead na music tutorial, A engaged himself to math tutorial? Wala pa rin
itong ipinagkaiba sa naunang situation. Always remember, the partnership has the
exclusive right to her industry and industrial partner is prohibited o bawal
makipag-engage sa kahit anong business unless payagan siya ng partnership.

So what if, si B naman ang nag invest as capitalist partner sa ibang music tutorial? If
that’s the case A has the same right like what B has in the previous situation. A can
exclude him from the firm with a right damage or he can avail for the benefits which he
may have obtained with a right to damage.

For the last scenario, what if, B invest as Capitalist partner sa isang cosmetic business?
If that’s the, B foes not violate the partnership with A because capitalist partners are just
prohibited from engaging in similar business only.

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Article 1790

So let’s go to Article 1790. So in this Article, it is stated that unless there is a stipulations
to the contrary, the partnership shall contribute equal shares to the capital of the
partnership.

So this is just a self explanatory. Kung walang agreement of their capital contribution, it
automatically means na equal ang magiging contribution nila. Simple as that.

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Article 1791

“read the article”

So ano nga ba ang ibig sabihin ng imminent loss? When we say imminent loss, malapit
ng mabunkrupt ang isang business, o malapit na itong magsara dahil sa pagkalugi.
So, in case of imminent loss of the partnership, hindi mandatory kay industrial partner
na magcontribute ng additional shares. So bakit hindi mandatory kay industrial partner
na magcontribute ng additional shares? It is simply because, industrial partner already
give the 100% of their industry. So nabigay na lahat ni industrial partner yung
contribution niya doon sa business n However, in the case of capitalist partner, they
have natural obligation na mag-contribute ng additional shares para maisalba yung
kanilang business unless si capitalist partner is insolvent o wala na siyang kakayahang
maglabaa ng pera para maisalba yung business or may agreement na nangyari
between the partners.

So paano naman kung ang solvent capitalist partner o yung may kakayahan namang
maglabas ng pera to make up the deficiency refuses to contribute? If this happen, they
must sell their interest to the other partners who are willing to contribute to save the
business.

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Article 1792
Sa article 1792 naman, sinasabi lang dito na pwedeng magkaroon ang isang tao ng
utang sa partner, at sa partnership at the same time. So paano raw ang magiging rules
if makakolekta si managing partner from the debtor, para mas maliwanag bigyan natin
ng example.

Let’s say na si X, Y, and Z are partners, so ito ay XYZ partnership. Tapos si X yung
managing partner. Then kunwari si A yung may utang kay X na 1M at mayron din utang
sa XYZ partnership na 3M. Now may dalwang case yan, una if nagbayad si A kay x ng
halagang 100k, nagbayad siya sa pangalan mismo ni X, pero mangyayari only 25K
pesos ang maccredit sa pangalan niya, yung 75k ay mapupunta sa partnership.
Pangalwang case naman if nagbayad si A sa XYZ partnership mismo ng 100,000, sa
XYZ mismo lang talaga maccredit yung 100,000 na yun.

So ang sinasabi sa article na to if nakacollect si managing partner dapat mahati siya sa

dalawa, kung ano yung proportion ng utang sa kanya at sa utang sa partnership, pero
pag naman sa partnership mismo nagbayad hindi mo siya pwedeng hatiin.

So kunwari, yung credit ni X ay mas malaki kaysa sa partnership. Let’s say na 20%
yung kay X then 10% lang yung sa partnership. And then nag bayad si A kay X at sabi
ni A na yung bayad niya na yon ay applied lang to X’s credit. Ang tanong, entitled pa rin
ba yung partnership to share doon sa binayad ni A?

Hindi na, kasi binigyang karapatan ang debtor na i-apply yung payment sa kung anong
utang ang more onerous.
Ito naman yung dapat nating tandaan. Mayroong TWO conditions na dapat both
present para mag apply yung Article 1792;

So una, dapat, yung dalawang utang/debts and both are due na and demandable

Pangalawa, the one collecting should be the managing partner

Otherwise, the entire amount will go to whoever collects payment from the debtor, if
hindi present yung dalawang conditions.

Okay next na tayo!

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Article 1793

Dito naman ay for example katulad lang kanina, Si A ay may utang sa XYZ partnership
pero amounting to 25,000.00. Tapos si X, na-receive na niya ‘yung share niya
amounting to 5,00.00 ahead of YZ which is yung dalwang partner pa ni X .Tapos nung
kukunin na ni Y At Z yung utang sa kanila ni A, si A was already insolvent.

In this case, X is required to share the 5,000.00 with Y at Z. Kahit na si X is given a

receipt for her share only.

Requisites for application of rule.

The requisites for the application of this article are as follows:

1. A partner has received, in whole or in part, his share of the partnership credit;
2. The other partners have not collected their shares;
3. The partnership debtor has become insolvent

So kailangan na nag apply muna itong tatlo na ito para pumasok siya dun sa example
kanina na yung natanggap ni X ay hahatiin niya sa kanilang tatlo nila Y at Z.

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Article 1794

So ang tatandaan lang dito is yung DAMAGES NOT GENERALLY SUBJECT TO

SET-OFF- As a general rule, yung damages kasi caused by partner sa partnership hindi
siya pwedeng macompensate or offset by the profits or benefits na ma eearn niya for
the partnership by his industry/skills niya. So in short, ginawa ang partnership to earn
profit at hindi para icompensate lang sa damages caused by the partner. Hindi kayo
nagtayo ng business just to pay sa damages. Hindi ka pumasok sa isang relationship
para maka-move on sa ex mo. GANON!
But in every rule there’s an exemption. If unusual profit derived from extraordinary effort
of the partner at fault, the court may lessen
The partner’s responsibility. Take note of the word lessen. Still hindi ito pwede
i-compensate.

Pero let’s say na, because of what happened, naghanap ng way si X para kumita ng
mas malaki ang partnership para makabawi ito. He worked overnight advertising the
XYZ restaurant. He even used his connection to network the business. Nag hire rin siya
ng artista to advertise the business. Used the radio and television. After a week, naging
hit ang business and after a month, agad nabawi ng partnership and loss na 500k

In this case, compensated na ba yung responsibility ni X?

Of course hindi pa, kasi ang sabi nga sa batas . If unusual profit derived from
extraordinary effort of the partner at fault, the court may lessen.

The partner’s responsibility for the damages. SO ibig sabihin non kahit naka 500k din
yung profit nung XYZ resto dahil sa effort ni X hindi pa rin yun ang magiging kabayaran
sa damages that he caused kasi naka note rin under art 1794 na even in this case the
partner at fault is not allowed to compensate the damages suffered by the profits
earned.

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Article 1795

Sinasabi ng Article 1795 na kung sino ang owner, siya ang magboborne ng risk.

To make things more clear, let us have this example… Ang kinontribute ni A sa
partnership is van for delivery service. Since use lang ang contribution ng van niya sa
partnership, siya pa rin ang owner nito. So if ever man na masiraan ng gulong or
mabangga yung sasakyan, the risk will rest with A. Remember, this kind of scenario will
apply only if the thing is specific and determinate.

Pero, kung ang ownership ay transferred sa partnership. Of course, the risk will be
borne by the partnership.

Maiiba rin ang usapan if the thing is FUNGIBLE. What is fungible by the way? These
are the items that are interchangeable.

If the thing contributed is fungible, kahit ‘yung use lang ang contributed, the risk will be
borne by the partnership. Imposible kasing matago nang matagal ang isang fungible
thing na hindi ma-consume or ma-impair. Kunwari bigas. Anong gagawin nila sa bigas
kung hindi icoconsume, di’ba?

Next, if the thing contributed was intended to be sold, obviously the ownership will be
transferred to the partnership. Thus, the risk will be borne by the latter.
And, the things brought and appraised in the inventory. Obviously, the risk will be borne
by the partnership. Pero syempre, limited lang sa appraised value.

Article 1796

So simple lang naman ang sinasabi dito. Sabi ni Article 1796, kung ang isang partner ay
nagbayad in behalf of the partnership… Pasimplehin na natin, like nag-imbuna ganern.
Syempre magkakaroon ng liability ang partnership to that partner na nagdisbursed.
Tandaan, magkakaroon din ito ng interest.

Next scenario, kapag naman for example, nangutang yung isang partner for the sake of
the partnership, syempre liability yon ng partnership kasi yung partnership naman yung
magbebenefit sa ginawang action nung isang partner.

Article 1797
This article talks about profits and losses ng partners.

Una, profit sharing shall be distributed according to agreement. Kung walang agreement
sa losses sharing, gagamitin natin ‘yung proportion sa profit sharing.

Pangalawa, if no agreement, the profit and losses sharing shall be proportion to the
capital contribution. Basta always remember na hindi liable si Industrial Partner sa
losses sharing. Industrial partner already contributed his/her industry. Parang ‘yun na
ang naging share niya ng loss. THE EFFORT.

And as for the profit sharing, the industrial partner shall receive a just and equitable.
Kung may capital contribution pa si industrial partner bukod sa industry niya, he/she will
also share the profits in proportion to his capital.

Article 1798

First Paragraph

In the above article, pwedeng walang agreement as to profit and loss sharing pero
dapat mag intrust sila ng third party for the profit-loss sharing. And ang pag-appoint ng
third person is dapat agreed by all the partners.

May papasok dito na third person, kunwari tayo, ayaw natin na tayo ang magdecide ng
PNL natin, kumuha tayo ng expert, kumuha tayo ng third person. So si third person
yung mag aayos ng PNL natin. Pero kung yung third person parang hindi maayos yung
pagkakahati niya dun sa profit or ratio, syempre pwede natin siyang kwestyunin, kung
hindi fair. Aside from that, lahat ng partner kailangan mag aagree dun sa third person.

Pero may right ang partners na mag complain/ impugned kung ang designation ng third
party is inequitable. Impugned- to question the validity. But the complain must be made
within three months. The reason for the short period of within three months to impugn
the designation is to prevent the paralyzation in the operations of the partnership.
For example, december sinabi nung third person na ganito ang hatian niyo sa profit,
kapag daw lumagpas ng three months, kunwari nakita mo na, na ganito lang yung
share mo and tingin mo ay hindi fair, kapag lumagpas ng three months tapos hinayaan
mo lang, tapos na execute na yung PNL niyo, hindi mo na raw siya pwedeng
kwestyunin kasi mawawalan ka na ng karapatan. So dapat kapag ganon, kapag nakita
mo na kaagad na unfair or maliit pala yung share mo sa profit, wag mo na antayin mag
three months kasi, sinasabi dito sa article na mawawalan ka na ng karapatan na
kwestyunin, di mo na mababago yon.

In addition, sa second paragraph, dapat lahat magdedecide sa PNL, hindi lang isa. The
contract cannot be left to the will of one of the contracting parties alone. That’s why it’s
called a partnership, your partner should know all your decisions and moves. You
cannot call it a partner if you decide and take action alone.

Article 1799

The very reason why the partnership exists is to earn a profit. So if one of the partners
is excluded from the share of profit, then the partnership is void. Wrong. The agreement
is void. He should not have been included as a partner if he will not be included in the
profit sharing. That is the general rule.

Sinasabi dito na, kunwari tatlo kayo, si a, b, and c, tapos mayroon kayong agreement
na “wag na natin bigyan ng profit si a”, aba hindi yon papayagan ng batas, void yung
agreement kapag ganon. Kasi dapat lahat magkakaroon ng share sa profit and losses.
If the case, the industrial partner is excluded from the share of the loss, the agreement
is valid. We already tackled this in the previous article. It seems that his share in the
loss is his effort. And one thing, he cannot withdraw his work or labor that has already
been contributed in the partnership.

Article 1800

Sa unang paragraph, unang situation ay yung mga partner ay may inappoint na

managing partners. According to this article, yung managing partner ay inappoint the
time they entered into the contract of partnership. Meaning at the time that they are
drafting or planning nung sila ay nagnenegotiate palang.

So the designation of managing partner is not part of the contract itself. Kasi
designation niya ay outside the contract of partnership. Outside of the meeting of the
minds kumbaga.

Una, ano ang mangyayari kapag may inappoint na managing partner, ano ang
kakayahan niya. Ang managing partner wether siya ay idesignate or inappoint in the
articles of incorporation or not in the articles of incorporation, mayroon siyang
kakayahan to execute all acts of administration. Pag sinabing all acts of administration
ay yung simple management of the business. And always excluded from acts of
administration yung tinatawag na acts of ownership or sometimes referred to as acts of
dominion, ito yung exact opposite ng acts of administration.

Pag administration, example ay we have this property located in quezon city,

pinaupahan natin to para mag operate ng isang restaurant or office. That is a simple act
of administration kasi the partnership will not be dispossessed of ownership over that
property, hindi siya mawawalan ng ownership kasi papaupahan mo lang naman eh. So
kayang desisyunan yan ng managing partner. Pero kapag ang decision ay patungkol na
sa pagdispose ng property, act of ownership na, hindi na pwede na si managing partner
lang ang magdedecide.

Yung authority ni managing partner to enter into acts of administration or perform acts of
administration is valid despite the opposition of his partners.

If the other partners will be able to prove that they have suspicion, or they really know
that the way that the managing partner is performing, yung kanyang authority, kahit na
yan ay simple act of administration, if they see that the managing partner is in bad faith
in the performance of his function, pwede nilang kontrahin/i-oppose. Example may
pinapaupahan kayo na property na which is considered as prime location, like along
edsa, tapos 300k dapat per month, pero yung managing partner ay pinaupahan lang
niya for 10k a month, yun pala kasi yung umuupa ay close friend niya. So he is acting in
bad faith.

If hindi present ang bad faith, yung power ng managing partner ay irrevocable or hindi
mo siya pwedeng bawiin, kunin, or tanggalin sa kanya yung designation niya as
managing partner without JUST or LAWFUL cause.

Sa “the vote of the partners representing the controlling interest shall be necessary for
sug revocation of power” naman, sinasabi dito na for example si a b c d and e ay
partners and si E ay managing partner.

Bawat partners na boboto para marevoke ang power ng managing partner ay mayroong
interest diba, like si A ay 30, B 20, C 15, D 15, and E ay 20. Syempre sa pagvvote hindi
na isasama yung managing partner. Kailangan makuha ng partners yung majority
interest/ controlling interest and that should be more than 50% not exactly 50%

CONT. OF CH. 2, S1:1801 – 1809

Article 1801– 1803 basically talks about management of Partnership

Article 1801
 ~ ang sinasabi ng article na ito ay 2 or more partners are entrusted to the management
of the partnership, isa yan sa mga requisites pangalawa:

· Without specification of duties - Hindi pwedeng may nakaassign na isang partner

sa sales, yong isa sa production, etc.,

· Without stipulation that each shall not act without the other’s consent - walang
kasunduan na dapat ‘wag mong gawin ‘to without the consent of other partner,

pwede nilang gawin lahat ng act of administration hanggat walang partner na

kumokontra, sa pag revoke naman, votes of majority will prevail (per managing head) if
nag-opposed sa isang act, pero if tie pa rin, controlling interest ng lahat ng partners will
prevail, if tie pa rin sa part na ‘to meaning may mga partners na nag-vote na 50, 50,
hindi ma-eexecute yong act na pinagdedebatehan o pinagtatalunan because walang
majority.

Article 1802

~ this basically means unanimous, kailangan magkasundo lahat ng partners para gawin
ang isang bagay or act, pero kung may imminent danger at hindi na mahihintay o hindi
matukoy ng partner if yong other partners ay absent or incapable of making decision,
kapag may imminent danger na, kailangan gawin na kung anong kailangang gawin para
ma-save ‘yong partnership

Article 1803

~ ang sinasabi sa article na ito ay if walang napagkasunduan kung paano ima-manage

‘yong partnership, walang naatasan na gawin ang isang bagay, lahat sila ay pwedeng
mag-manage, aside from that may mga rules pa na na dapat i-observe:

1. All partners are considered as the agent of the Partnership, yong act ng isang partner
ay nagbabind s apartnership

2. Unanimous Consent when it comes to immovable property, dahil pag dating sa real
properties o real rights, strict, dahil involve ang 3rd person dito, ma-aalter (meaning may
gagawin kang improvements sa immovable property) ma-aalter mo lang ‘yong
immovable property kapag may consent ka ng mga partners, kahit mag-bebenefit pa
dyan ang Partnership, kailangan mo ng consent ng mga partners, but sinasabi rin na
kapag may isang partner na walang basis sa pag-refuse o pag-oppose niya sa pag alter
ng Immovable Property, pwedeng isa korte ng ibang partners na i-convince siyang
ipa-alter na yong Immovable Property. Improvements need ng consent, but if
preservation o para lang hindi mawala sa partnership ‘yong immovable property, no
need.

Article 1804 – 1809 Talks about other obligations of the partnership among themselves

Article 1804
~ Article 1804 talks about sub-partner, for example sa partnership ABC, Si Partner A
subpartner niya si J, at inatasan niya si J muna ang kukuha nong share niya o hati sila
sa share ni A, hindi ma-aadmit si J sa partnership, unless may consent ng mga partners
at walang ring rights si J na kagaya ng rights ng mga partner, dahil subpartner lang siya.

Article 1805

~ ang sinasabi naman sa article na ‘to ay every partner has the right to inspect the
Partnership books pero at a reasonable time at the principal place of the business,
dapat iinsepect mo sa business days or business hours ng business, at pwede lang
i-inspect ng mga partner ‘yong partnership book for partnership purposes, bawal ‘yong
gamitin for espionage (spying) o magnakaw ng industry secrets

Article 1806

~ Sinasabi lang naman dito na bawal magkaron ng concealment, transparency at facts

lang dapat kasi mag-partner kayo, wala dapat tinatago sa isa’t isa, wala dapat
tinatagong transactions, debts, events at maling information relating to the partnership
kasi baka mag-cause lang ‘yan ng problema, kaya again dapat may transparency

Article 1807

Ang pinopoint out naman ng article 1807 ay partnership relationship formed in the
partnership formation is based on fiduciary, ibig sabihin na-form yan based on trust at
lahat dapat ng gagawin mo ay para sa partnership purposes at in good faith,

~ nag-aact dapat ang bawat partner for the common benefit, at dapat nadidisclose fully
yong mga profits, or information na nakaka-affect sa partnership

Article 1808

This article talks about capitalist partner, bawal ma-engage si Capitalist Partner for their
own account sa ibang business na kagaya ng sa partnership na kinabibilangan niya,
unless may permiso ng mga partners. Kapag viniolate ng capitalist partner may mga
consequences:

1. Kapag may profit siyang nakuha sa ibang business ng kagaya ng sa partnership,

ibibigay niya ‘yong profit na ‘yon sa partnership

2. kapag may loss naman, sagot niya lahat ‘yon at pangatlo maaari rin siyang maalis sa
partnership, especially if sa una pa lang may warning na siya,

Ang pinagkaiba nito sa kaninang namention ni Kyla sa Article 1789 about Industrial
Partnership, sa Industrial partner they cannot engaged on other business same man
yan sa business o hindi without the consent of other partners, kasi service yong
contribution niya, oras at labor/skill yong nilalaan niya sa partnership, so ang gusto lang
ni partnership ay dapat nakafocus lang siya sa business ng kanilang partnership, sa
Capitalist Partner naman which is 1808, itong article na ito, pwede siyang mag-engage
pero sa ibang type ng business, Ang pwede lang ay ibang business sa partnership, for
example spa yong business ng partnership at samgyupsalan naman ‘yong ibang
business ni Capitalist Partner, allowed ‘yon

Article 1809

~ Ang General Rule, hindi na entitled sa formal accounting dahil sufficient na from
Article 1805 to 1806, meron ng rule sa pag inspect ng book ng partnership at may
transparency na rin at bukod don laborious ang formal accounting, di ba kadalasan
ginagawa lang ang formal accounting kapag mag-eend na yong partnership o
ma-didissolve man, pero ayon sa Article na ito, pwedeng magformal accounting kahit
hindi pa dissolution:

· Wrongfully excluded o hindi napasama ‘yong isang partner

· Nakalagay sa Articles of Partnership, ibig sabihin sa kontrata palang ng

partnership nakalagay na na pwedeng mag formal accounting kahit di pa dissolution

· As Provided by Article 1807 o ‘yong trust na sinasabi

· Whenever circumstances render it just and reasonable, o kapag may event lang
na kinakailanagan na talagang mag formal accounting, so to be determined pa ‘yon
o subjective determination

~ ibig-sabihin lang nito ang Article 1809 ay exception na pwedeng magformal

accounting kahit ‘di pa dissolution.

Section 2 - Property Rights of a Partner

Article 1810

So lets start. Under Article 1810 The property rights of the partner are:
1. His rights in specific property;
2. His interest in the partnership; and
3. His right to participate in the management.

> Ang mga nabanggit ay specifically categorize as principal rights.

So for us to easily understand those 3 principal rights tingnan natin yung mga example.
So sa number 1, ito ay yung karapatan ni partner sa specific partnership property.
May tatlo tayong requisites sa subject.
Una, pag aari ni partnership or ni juridical person yung property ( Juridical person ang
tinutukoy ay yung corporation such as partnership) . Pangalawa, tangible things yung
tinutukoy at last ay specific in nature or determinate yung assets. (particular designation
or specification. Example: Toyota Fortuner car, Model 2018, Chasis No. 131313 with
Plate No. AAB 1516.)
Example:
Si partners A( Jhoana) ,B, ( Jeat) at C (Hannah) ay nagcontribute ng Truck, portion of
land and pera respectively sa ABC partnership na binubuo nila. Dito, lahat ng
contribution nila ay property na ni partnership. Accordingly, sila partners ay may co
ownership sa mga ito as they use it for the operation of the business. Nalaman natin na
ang concept ng co ownership ay hindi nangangahulugan na may partnership na
(Tumutukoy ito sa Article 1769, second paragraph, (2) Co-ownership or co-possession
does not of itself establish a partnership, whether such co-owners or co-processors do
or do not share any profits made by the use of the property;)
Bagamat ang bagay na ito ay isa sa mga itinuturing na essential elements of
partnership. Kaya sabi ng batas, bilang isang partner may karapatan siya sa partnership
property kahit hindi ito yung kinontribute niya. Therefore, si A( Hannah) ,B (Jeat) at
C(Jhoana) ay may rights over the truck, land at cash ng business.

2. His interest in the partnership

Lets proceed sa number 2. Kapag may contribution, may interest sila.
Example:
Ang napagkasunduan value ng land ni D( Jhoana) na kinontribute niya ay 500,000 at
300,000 naman yung truck ni E (Jeat) at 200,000 worth of cash naman kay F (Hannah).
Obviously ang interest ni D(Jhoana) sa partnership ay 50% , si E(Jeat) ay 30% at ang
natitira na 20% ay kay F(Hannah). Dito, binabase yung share nila sa profit and loss and
residual interest ng bawat isa. (refers to the interest that may accrue on an
interest-bearing account like a credit card, loan, line of credit, or mortgage).
Pero kapag industrial partner naman ay may share pa din sa profit diba kase may
agreement naman sila tungkol don. (An industrial partner cannot engage in
transactions of any class whatever, otherwise he would be subject to serious
consequences )

Lastly, the rights to participate in the management. Kapag walang stipulation kung
sino ang magiging manager, ibig sabihin lang non na lahat sila. Si partner G ( Jhoana) ,
H (Jeat), at I,(Hannah) ay pwede mag perform ng mga acts of administrations. Pero
kung may na appoint na managing partner, isa o higit pa. either sa article of partnership
or after ng constitutions ng partnership. Siya o sila ang may karapatan sa management
dahil sa mutual agreement ng lahat ng mga partners. And they must comply to various
and difference rules.

Additional info lang po dahil nasa book ito ni de leon. Dahil minsan nalilito between
partnership property and partnership capital. Para mas malinawan, may two major
differences sila.
Una sa value, ang market value ng partnership property ay nagbabago from day to day
kaya meron tayong tinatawag na revaluation of asset. Samantala, yung partnership
capital nmana ay constant lang sa paglipas ng panahon, yung amount nito ay hindi
nagbabago dahil fixed yung agreement na ginawa ng mga partners which is hindi
naapektuhan ang fluctuation sa value ng partnership property.
Example:
Maaaring bumaba or tumaas yung sa partnership property unlike sa partnership capital
na mananatiling value mula constitution ng partnership hanggang dissolution or
liquidation. Tapos mas malaki rin yung sa partnership property kase nakapaloob dito
yung mga kinontribute nila partners plus any subsequent acquisition of asset gamit
yung partnership funds or sa accounting partnership. Samantala, yung partnership
capital ito lang ang pinagsama samang individual contributions na makukuha ng mga
partners. like cash, property or services at fixed yung value dahil sa agreement. So
kung sa partnership, eto ay mas broad kaysa partnership capital.

RELATED RIGHTS
1. Right to reimbursement for advanced amount, so this is an obligation of the
partnership to the partner to reimburse kung ano man yung amount na naadvanced ng
isang partner, and also yung partnership has an obligation to indemnify yung partner for
the risks as a consequence in the management. (to secure against hurt, loss, or
damage.)
2. Next is, right of access and inspection of partnership books. Subject to inspection, as
reasonable hours during business days. Also, remember that books is kept by
managing partners.
3. There's also a right to true and full information of all things affecting partnership.
Sinasabi dito na every partner is bound to disclose the status of the Partnership to the
partner. Hindi porket sinabi sa article na 'on demand', tsaka ka lang mag disclose ng
information about sa status ng business. Dapat volunteer ang act na 'yan. 'Yung tipong
hindi ka pa tinatanong, sinasabi mo na agad kung ano nangyayari sa business. So ang
mangyayari, as a team lagi ang galaw niyo. Hindi pwedeng ayaw mo mag-alala ang
partner mo kaya hindi mo dinisclose. Tsaka mo lang sasabihin kapag okay na ang lahat.
Ano pa ang use ng partnership niyo, di ba?
4. Right to formal account of partnership affairs under certain circumstances. Parang
summary lang ito sa previous articles. The relation between the partners is essentially
fiduciary, that is involving trust and confidence. Kaya walang dapat ilihim sa partnership
affairs. (A formal account is necessary to the dissolution of a partnership.)
5. Right to have partnership dissolved also under certain conditions (arts. 1830-1831).
madidiscuss as we go to chapter 3.
Now, lets proceed naman sa ownership of certain property na may four list
determinants.
1. Property used by the partnership.
2. Property acquired by a partner with partnership funds.
3. Property carried in partnership books as partnership asset.
4. Other factors tending to indicate property ownership.

Property used by the partnership.

So ang sinasabi sa number one ay yung mga ginagamit na property ng mga partnership
ay pwedeng nasa kanya yung ownership or kay partners. Example is yung universal
partnership of profit. Bukod sa profit or income ang pinaghahatian ang pag gamit lang
ng mga asset ang na t-transfer.
Example: Ginagamit sa business yung truck ni J ( Keilla), pero si J pa rin ang owner
which is not unusual for individual partners na i allow niya yung property niya to be used
in the business operations. So yung intention ng mga partners whether to transfer
ownership o hindi ay yung controlling factor na makakatulong para malaman kung sino
ang nag mamayari sa specific property na in question.

Property acquired by a partner with partnership funds.

So ang sinasabi naman sa number two ay kapag inacquire ni business entity under its
name yung truck gamit ang partnership funds through a partner who acts as an agent.
Technically ang ownership ay kay partnership bilang isang juridical person that is
seperate from his owners.

Property carried in partnership books as partnership asset.

Ang sinasabi naman sa number 3 ay, kapag naka apply naman sa books ni PQR
partnership ang property, sa kanya yon.

Other factors tend to indicate property ownership.

Paano naman kapag funds na ni partnership yung ginamit pero para lang i repair or sa
maintenance ng property. Consequently, hindi ito sufficient basis evidence na si partner
ang may title dito , kundi kay partner pa din na nagpagamit lang non to be used in the
business.

Article 1811
So moving on as stated in article 1811 of the civil code. A partner is co-owner with his
partner of specific partnership property.
The incidents of this co-ownership are such that;
1. A partner, subject to the provision of this title and any agreement between the
partner, has an equal right with his partners to possess specific partnership property for
partner ship purposes; but he has no right to possess such property for any other
purpose without the consent of his partners.
2.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;
3.A partner's right in specific partnership property is not subject to attachment or
execution, except on a claim against the partnership;
4.A partner's right in specific partnership property is not subject to legal support under
art. 291.
So tulad ng nabanggit kanina na ang partner ay co owner with his partner in specific
partner property. However, yung rule regarding co ownership ay hindi actually ma
aapply.
The legal incidents of this tenancy in partnership are distinctively characteristic of the
partnership relation.

They are as follows:

Una, equal right of possession for administrative management of that specific
partnership property for partnership purposes. Basically, ang isang partner ay may
karapatan sa mga specific partnership property na gagamitin sa pag conduct ng
businesses operation.
….
Kaya kung ang VWX partnership ay may pagmamay aring property like delivery
equipment and land, lahat sila ay co owner ng mga ito pero wala ni isa sa kanila ang
may karapatang gamitin ito sa ibang bagay, or for personal matter without the consent
of his partner. Kapag may tumaliwas at ginamit ito, halimbawa yung land for his own
profit, under article 1807, he is required by the law to account all the profits na nakuha
niya mula sa paggamit ng partnership asset na ito. For instance, VWX entered an inter
contract of partnership.

Si partner V (Kenshin) ay nag contribute ng truck niya, si W( Kate) naman ay parcel of

land and 200,000 worth of cash mula kay X( Keilla). Lahat ng contributions again ay
pagmamay-ari na ni VWX partnership being a juridical person. Dito pwedeng gamitin ni
V(Kenshin), W(Kate) or X(Keilla) ang 200,000 na business fund sa pag purchase,
example, ng office supply, remember not for personal purposes. O kaya yung land for
warehouse of the partnership goods. Yunh trucks naman for deliver ng mga
commodities. Again, not for personal purposes hangga't walang consent ng ibang
partners.

Number 2 is a partners right in specific partnership property is not assignable.

Eto yung pag transfer ng rights or property ng isa o ng mga partners. Ang sabi sa article
1811. Partners Y ( Kyla) or Z ( Ara)or Z(Lyca) cannot assign his right, at any of their
contributions. Pero kung lahat silang partners ay sama samang involve, then pwede.
Dahil ang beneficial interest ni partners sa specifics partnership property ay
undeterminable until after the liquidation of partnership affairs.
Bukod pa doon ang mga primary reason for non assignability of right ay una.
Pagmamayari yon ni business firm tapos para maiwasan ang interference sa mga
outsiders sa partnership affairs at para maprotektahan ang iba pang partners as well
the partnership creditors at maiaaply ang mga partnership asset sa partnership debts.

Next, a partner's right in specific partnership property is not subject to attachment or

execution. Execution, eto daw po yung gagawin na dahil may order ni court.
Halimbawa, liquidate na daw yon or minsan binebenta sa mga public auction. Sa
attachment naman ang example ay si A (Chynna) as one of the partners ASH
partnership ay may anti debts sa personal creditor niya(Laurice). Halimbawa wala ng
cash na pambayad si A (Chynna) sabi niya, hahanap ngayon si creditor(Laurice) ng
property ni A(Chynna) tapos nalaman niya na may interest ito sa ASH partnership pero
dahil ang mga property ni A (Chynna) ay hindi icoconsider na right property ni
A(Chynna) dahil pagmamay-ari ito ni business firm. Therefor, hindi pwede i attach ni A
(Chynna) as payment kay creditor(Laurice). Pwera nalang kung complain against sa
partnership yon.
At dahil ang tinutukoy lang dito ay residual interest ng mga partners pagtapos na
mabayaran lahat ng mga debts ni partnership. Tapos may mga co owner din kase siya,
syempre di sila pwede madamay sa personal conflicts ni partner slash debtor.
Sa number 4 naman, a partner's right in specific partnership property is not subject to
legal support under art. 291. Ganon din po sa revised family code na article 195 about
doon po sa obligation ng mga relatives na maaaring magbigay ng suporta ang bawat
kamag anak sa isang kapamilya nila. Pero dito sa Article 1811, hindi pwedeng
suportahan ng kamag-anak ang isang partner sa right nito sa specific partnership
property.

Article 1812
According to Article 1812. A partner's interest in the partnership is his share of the
profits and surplus.
Doon sa example natin sa number 2 sa Article 1810, gamit yung agreed value or exact
value na kinontribute na capital malalaman ang interest ng isang partner sa partnership.
Tulad ng sabi kanina, kapag walang stipulation regarding sa sharing ng profit or loss,
ibabase sa contribution ng interest. Before, nasubukan na din natin mag compute ng
interest sa profit and loss to be distributed to the partners sa accounting for partnership
on corporation subject. Sa profit, diniscribe ko siya using lock icon. Kase nag ooperate
si business firm tapos eto yung pinaghahatian ng mga owners as effect of the
performance of business. Ibig sabihin eto yung excess or revenues na na-earn after
deducting all the expenses incurred in the operation during a certain period of time.
Usually, one accounting period.
Surplus naman kapag mas malaki ang expenditure kaysa sa revenues. Whereas yung
surplus, I describe it using an unlock icon dahil dito dissolve na ang partnership para
malaman na finally yung surplus or funds na natira pagkatapos ma satisfy ang claims sa
outside and inside creditors. Eto yung excess of the firm's assets over its liabilities,
equity din kung tawagin. Again, the profits are shared in conformity with agreement.
Otherwise in proportion to the capital contributions.
Dito sa artcle na ito, pwedeng ma assign or ma attach ang interest ni partners sa
partnership—yung profit and surplus. Unlike sa right niya sa specific partnership
property na hindi subject to attachment and assignment dahil it is impossible to
determine the extent of his beneficial interest in the property, sa pagmamay-ari rin kase
yon ni business entity. Malalaman lang ito kapag dumating yung araw ng liquidation on
that specific partners.

Article 1813
A conveyance by a partner of his whole interest in the partnership does not of itself
dissolve the partnership, or, as against the other partners in the absence of agreement,
entitle the assignee, during the continuance of the partnership, to interfere in the
management or administration of the partnership business or affairs, or to require any
information or account of partnership transactions, or to inspect the partnership books;
but it merely entitles the assignee to receive in accordance with his contract the profits
to which the assigning partner would otherwise be entitled. However, in case of fraud in
the management of the partnership, the assignee may avail himself of the usual
remedies.
In case of dissolution of the partnership, the assignee is entitled to receive his
assignor's interest and may require an account from the date only of the last account
agreed to by all the partners. (n)

Partner may assign the rights of the partnership interest to the third person na kahit
hindi idi dissolve ang partnership. Why do you think pwede i-assign ang rights of
partnership interest while hindi pwede i-assign ang right to the partnership properties?
Even without the consent of the other partners, the partner may assign his/her right of
the partnership interest.
The reason kung bakit kahit without the consent of the other partners, the assignee will
not automatically become a partner. Kase binili lang naman nila yung share and if
nagpatuloy pa rin yung partnership the assignee or conveyee does not become a
partner.
Limited lang din ang rights ni assignee to the partnership. Even if the partner who
assigned his/her partnership interest is a managing partner, so dahil nga hindi siya
partner obviously the assignee doesn't have the right to interfere with the partnership
management.
The assignee also doesn't have the right to require any information or account and to
inspect any of the partnership books.
Pero syempre may rights din naman sila. So remember the rights of the assignee as
provided by article 1813.
1. To receive in accordance with his contract the profits accruing to the assigning
partner; so the rights of the assignee is to get whatever profit na makukuha dapat ng
kanyang assignor. Whatelse?
2. To avail himself of the usual remedies provided by law in the event of fraud in the
management;
3. To receive the assignor's interest in case of dissolution; so this will refer to your
surplus after your partnerhip has been dissolved. Tatanggapin din ni assignee yan.
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. So sinasabi dito na isa din sa rights, ay to ask for an
annulment in case na yung assignee was only entered into the partnership was induced
to enter into the partnership because of the vices of consent. So again, remember yung
vices of consent is violence, intimidation, mistake, fraud and undue influence or the
assignee himself is incapacitated to give consent. Remember this is avoidable contract
thats 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.
In short, sinasabi dito na if yung isang partner e inilipat or ipinasa yung controlling
interest niya on another person or tinatawag na 3rd party e still hindi pa rin mabubuwag
yung partnership nila nung another person. For example Si Partner A( Kylene) and
Partner B(Abi) ay may partnership, tapos si B(Abi) inilipat or itrinansfer yung controlling
interest niya kay C(Kayerill) that does not mean na madidissolve na yung partnership
nila ni A.(Kylene)
And hindi dahil itrinansfer sa third party yung interest e magiging part na rin siya ng
business, or mangingialam ng mga documents and other business related na ginagawa
ng magpartner. Ang tanging rights niya lang ay ang magreceive ng profits mula dun sa
percentage ng interest na ipinasa sa kanya ng part ng partnership. At may karapatan
lang yung asignee na tignan yung partnership book if may dissolution na naganap
between the partnership ni A(Kylene)&B(Abi). For which si C(Kayerill) na yung
makakakuha nung interest ni B(Abi).
So the last topic is yung charging order and this is covered by article 1814.
Article 1814
Without prejudice to the preferred rights of the partnership creditors on due application
to a competent court by any judgement creditor of the partner, the court which entered
the interest of the debtor partner with payment of the unsatisfied amount of such
judgement debt with the interest thereon; and may then or later appoint a receiver of his
share of the profits, and of any other money due or to fall due to him in respect of the
partnership, and make all other orders, directions and accounts and inquiries which the
debtor partner might have made, or which circumstances of the case may require. The
interest charged may redeem at any time before foreclosure, or in any case of a sale
being directed by the court, may be purchase without thereby causing dissolution:
1. With separate property, by any one or more of the partners;
2. With partnership property, by any one or more of the partners with the consent of all
the partners a whose interest are not so charged or sold, nothing in this title shall be
held to deprive a partner of his right, if any, under the exemption laws, as regards his
interest in the partnership
Alam naman na natin na ang partnership and partners are separate and distinct with
each other. So kung ano ang utang ng partnership, hindi personally utang din ng
partners. And vice versa.
For example, si A (Chynna) as partner in AB partnership, may personal siyang utang
kay C (Leslie), partner sa CD partnership.
And on the other hand, si CD may utang sa AB partnership. Pwede ba sabihin ni A (
chynna) kay C (Leslie) na, "Uy, kwits na tayo ha. Same amount din naman utang ng CD
sa utang ko sa 'yo."
Of course hindi 'yun acceptable. Sa mga accountancy students like us, aware naman
siguro tayo na magkaiba ang accounting ng entity at ng partners.
Here's another example. Si A (chynna), partner sa AB, personally liable kay C (Leslie).
Since hindi makasingil si C (Leslie), tinaas niya 'to sa court and obtained a final
judgement in favor of him.
Now, what we need to remember also is the redemption of interest. Yung interest
charge may be redeemed with a separate property of any one or more of the partners.
If that time kaya pala hindi makasingil si C (Leslie) insolvent pala si A( Chynna). C (
Leslie) can ask the court for A's( Chynna’s) interest to be attached or levied upon his
debt.
C (Leslie) now will become debtor-partner. Pero before foreclosure, Si B(Lyca) and E(
Laurice) , partner also of AB, pwedeng i-purchase or i-redeem ang ineterest ni A
(Chynna) without dissolving the partnership. In this instance, si C(Leslie) magiging
judgment creditor.
(a person or company that a court of law has decided has the legal right to receive
money from another person or company)
But remember if the partnership property is used, kailangan it has the consent of all of
the partners whose interest is not yet charge or sold.

CHAPTER 2: OBLIGATION OF THE PARTNERS

Articles 1815-1827

Section 3 pertains to Obligation of the partners with regards to third person,

ofcourse when you build a partnership, your intention is to build a business para kumita
so syempre kailangan makipag transact ka sa ibang tao o sa third persons kaya
nagkakaroon ng obligations.

In the article 1815, it states that every partnership shall operate under a firm name,
which may or may not include the name of one or more partners, those who, not being
members of the partnership, include their names in the firm name, shall be subject to
liability of a partner

Mahalaga ang firm name sa isang company para may pagkakakilanlan ang isang
company at ang partnership na may distinct and separate juridical personality, in other
words, para magkaroon ng sariling indentity

So ano ba ang legal effect neto. So una Rights of the partners to choose firm name,
basically kase may freedom ang partners to choose a firm name pero may restrictions,
tulad use of misleading name, so as long as it is not identical deciptively similar sa mga
naunang entity, like for example may jollibee na tapos papangalanan mo yung entity mo
ng jullibee, so you are basically deceiving other persons or entity, another example ng
pangalan ng entity mo Shabu Labu so contradict to law yan kase parang sinabi nyo na
nagtitinda kayo ng ganon. Dito sa article 1815 sinasabi na bawal kang gumamit ng
ibang pangalan na hindi naman kasali sa partnership mo, example is ginamit mo ang
pangalan ni coco martin na kasali sa partnership para makilala agad ang entity nyo, still
that person will not acquire the rights of a partner, aside from that he will be subjected to
liability of a partner insofar as third persons without notice, so pag ang partner walang
idea na gumamit kayo ng ibang pangalan, enter in good faith yon, pero pag aware sya o
may notice sya na hindi yon partner at ginamit nyo ang pangalan, may bad faith yon.

Article 1816, All partners, including industrial ones, shall be liable pro rata with all their
property and after all the partnership assets have been exhausted, for the contracts
which may be entered into in the name and for the account of the partnership,
under its signature and by a person authorized to act for the partnership. However,
any partner may enter into a separate obligation to perform a partnership
contract. Dito magffall contractual obligations na napasok ni partnership, merong
partnership liability at individual liability. Sa partnership liability, pinasok ito sa pangalan
at sa account ng partnership at may karapatan yung isang partner na iinclude ang
partnership dito, tulad nga ng nabanggit sa first sentence. So sa second sentence
naman which is However, any partner may enter into a separate obligation to
perform a partnership contract. pumapasok ito sa individual liability, it fall under his
name only. That partner who assume separate undertaking his name to perform a
partnership contract, it will make him solely liable for a partnership contract, as we
know, kung matatandaan nyo pa sa obligation and contracts natin ano nga ulit ang
meaning ng solidary obligation?

Yung solidary obligation means each debtor is liable for the whole obligation, while each
creditor can demand the fulfillment of the obligation. So in the Nature of individual
liability of partners, sinasabi dito na the liability of partnership, in substance, is also the
liability of the partners, kase basically partnership is co-owned by the partners pero
hindi naman to authomatic na mangyayari, kase that liability could be pro rata o
subsidiary/secondary. So pro rata liability means equally, jointly or proportionately ang
liability ng partnership. Sa subsudiary naman nagiging liable ang mga partners kapag
naexhaust na ang assets ng partnership, meaning hahabulin lang sila kapag nawala na
ang assets ng partnership o nalugi na sila pero may natitira pang utang ang partnership,
unless a partner makes himself solidary liable to a partnership contract so inako na nya
yung obligations or liability ng partnership. (Next Slide)

Next is article 1817, any stipulation against the liability laid down in the preceding
article shall be void, except among partners, so for example, si A,B, and C pinagusapan
nila na si B kapag may liability ang partnership ay excluded sya. But in the eyes of the
third persons, that provision is void kase pwede pang mahabol si B ng third person
since kasali sya sa partnership, but in the eyes of A,B, and C pwede mareinverse si B.
But in the industrial partners they cannot exempt himself from the liability and if one
partner do not have the enough property to pay him then the capitalist partners must
pay for him. So sinasabi lang dito na na maaaring yung napagkasunduan ng mga
partners ay pwede sakanila but in the eyes of the law, maaaring void o walang bisa
yung mga napagusapan nila kung naviolate ang batas.

Article 1818, Every partner is an agent of the partnership for the purpose of its
business, and the act of every partner, including the execution in the partnership name
of any instrument, for apparently carrying on in the usual way the business of the
partnership of which he is a member binds the partnership, unless the partner so
acting has in fact no authority to act for the partnership in the particular matter, and the
person with whom he is dealing has knowledge of the fact that he has no such liability.
In the usual carrying way of business, mabbind si partnership ng acts ng partner, so
kung ano mang gawin ng isang partner na may kinalaman sa business nila, included na
ang iba pang partner don, kase as we know those partners are agents of partnership,
the exception is kapag ang person na yan ay walang authority to act for the partnership,
and yung person na tinransact nya for that particular matter, alam ng person na yon na
wala syang authority to do so, then it will not bind the partnership. So importante na isa
sa partner ang makipag transact pero dapat alam lahat ng partners yon or kung ibang
tao man ay kailangan may authority from the partners.

For instance, yung service na inoofer ng partnership ay garage cleaning, and here
comes the contract na ang lilinisin nila is kotse, that is not the usual way of carrying the
partnership so it will not bind the partnership, but if there is an authorization of cleaning
the car by the other partner, then it will bind the partnership. Except when authorized
by the other partners or unless they have abandoned the business, one or more but
less than all the partners have no authority to do this seven parts

1. Assign the partnership property in trust for creditors or on the assignee’s promise
to pay the debts of the partnership. So remember, hindi ito usual sa business na
iassign yung partnership property kase binibigay mo na to sa creditors and pag hindi
usual yung act it is not binding on the the partneship unless may unanimous consent of
all the partners

2. Dispose of the goodwill of the business. So one of the partners ibebenta nya yung
pangalan ng business, hindi padin to usual way of carrying a business kase binenta mo
na yung goodwill, binenta mo na yung pangalan ng business so hindi pwede yon.

3. Do any other act which would make it impossible to carry on the ordinary business of
a partnership. Like for example, nagbebenta kayo ng tubig tapos binenta mo yung
purifying machine, so ano pang gagamitn mo sa pag purify ng tubig diba so hindi din
pwede yon.

4. Confess a judgment. This is an admition of a liability, para maging binding sa

partnership, it must be again unanimous consent of the partners.

5. Enter into a compromise concerning a partnership claim or liability. So nakikipag

areglo ang partnership regarding a claim or it has a liability against it.

6. Submit a partnership claim or liability to arbitration. So arbitration parang may judge

na syang dapat ang magdecide for the merits of the claims of the partnership, so kung
liable ang partnership o pwede nyang makuha ang kanyang claim so idedecide ng
arbiter yan
7. Renounce a claim of the partnership. So in renounciation, winewave na ng
partnership yung kanyang right dun sa claim na yan kaya kailangan to ng unanimous
consent of all partners

with all this seven part dapat lahat ng partners mag agree, because this seven pertains
to act of ownership, however when such partner has authorize by the other partner or
unless there are partners have abondoned the business then the remaining partners
can do those in act of dominion or ownership.

Article 1819 Talks about the conveyance of real property so immovable property sya,
yan yung mga bahay, lupa, building that belongs to the partnership and conveyance
meaning it is sold to a buyer, article 1819 talks about the properties of the partnership, it
talks about the rules in selling real property by a partner, so may limang rule yan, the
first is the title is in the partnership name and conveyed by a partner in the name of the
partnership, nagbenta ng isang property ang isang partner at ang ginamit nyang
pangalan sa deed of sale is the name of the partnership so inshort, this partner is selling
in behaf of the partnership, so what is the general rule: the title to the third person or the
buyer passes kase remember the partnership name at ang nagbenta ay partner so
obviously yung bumili ay magkakaroon ng title kase kung sino ang may ari yun ang
nagbenta. However, the partnership has a right to recover in two cases, so una when
the act is not ordinary, so example ang business mo is water purifying station so is it
ordinary to sell land belonging to the partnership so hindi diba, so this talks about the
partnership na hindi real estate so kapag hindi ordinary pwedeng marecover ng
partnership yan, number two is when the buyer has the knowledge on the fact the the
partner seller has no authority to sell even it is in the usual course of business, so
remember that the third person or the buyer is in bad faith, so example ay nagbebenta
ka ng real estate, tapos ang buyer ay aware na ang lupa ay hindi dapat ibenta, so the
partnership can recover. Next, the title is in the partnership name and conveyed by a
partner in his own name, so here obviously may defect na, dahil ang nagbebenta ay
hindi yung may ari, so mapapaisip ka magkakaroon ba ng legal title ang buyer jan. so
the rule is walang legal title but equitable title is transferred, so equitable means
imperfect and unforciable right but it is recognized under the principles of equality and
also convertible into legal right. So pag lupa na nakapangalan sa partnership ay binenta
ni partner sa name nya then the buyer can ask the partnership to execute the other
document or parang deed of sale para yung equitable title will rippen in legal title

Third is, the title is in one or more but not all of the partners and there is no disclosure in
the right of the partnership, so yung titulo ng lupa nakapangalan sa isa, dalawa pero
hindi sa lahat ng partners and there is no indication that there is a partnership existing
on the property is owned by the partneship, so dito yung magbebenta is kung sino yung
nakapangalan sa title, so the seller is the owner, so yung title passes to third person is
meron nanamang legal title yung buyer. The next scenario is in the name of one or
more or all of the partners or in a third person ang nakapangalan sa titulo ng lupa
entrust to a partnership. And here again the sales is made by a partner in his own name
or in the name of the partneship. Pero dito may defect ulit dahil yung nagbenta
maaaring hindi sya ang may ari sa title, so only the equitable title is transferred to the
buyer but before the equitable title is transferred in the buyer, the partner acting must
acted within the scope of his authority and the transfer is usual. Lastly, the title is the
name of all the partners and the conveyance is executed by all, so dito lahat ng partners
ay lahat ng pangalan ay nasa titulo at lahat ay pumirma sa deed of sale, so obviously
legal title passes but it is not recoverable.

Article 1820 An admission or representation made by any partner concerning

partnership affairs within the scope of his authority in accordance with this Title is
evidence against the partnership. Basically sinasabi mo na partner ako ng partnership
na to. So unang admission is Admission by a partner as testifies to by a third person are
admissible in evidence against him in litigation. So parang humahabol na si partnership
with this title it is evidence againts the authority, lalo na kapag it is concerning
partnership affairs within to scope of his authority.

Admission by another partner are received against a partner if the former is acting in the
capacity of agent, admission by partner during partnership existing is binding to the
partnership pero only matter concerning to partnership affairs and made within the
scope of authority with other partner so dun palang mabbind ang partnership.

Next is Partner admission for himself ng hindi nadadamay ang partnership, then
sakanya lang ang chargeable. Last is after dissolution, admission of by a partner will
bind the partnership only if necessary to wind up partnership affairs, so dito ang
admission is not only in words but also in actions, particularly in entering the a
contractual obligations. So ayan yung admission, it does not only pertains sa pag
aadmit mong partner ka but also in action, yung pag transact mo, yung pagenter mo in
contractual obligation.

Article 1821 Basically, notice delivered to a partner is an effective communication to the

partnership (except in case of fraud) kahit hindi mo nasabi sa ibang partners. In that
case pwede mabind ang partnership. Example sinabi ng supplyer sa isang partner na
idedeliver nila yung supplies bukas dapat ready kayo to received this, now this partner
ay sinabi ito sa another partner this is an effective communication to a partneship para
kay supplier, but self notice will not bind the partnership or will not affect the partnership
in cases of fraud, like for example yung partner na sinabihan ng supplier ay sadyang
hindi sinabihan yung ibang partners sa notice na binigay ni supplier, in that case it will
not bind the partnership, but it will only bind the partner kung kanino lang sinabi ng
supplier so sya lang ang magiging liable kase sadya nyang hindi sinabi sa iba pang
partner.

Article 1822, Where, by any wrongful act or omission of any partner acting in the
ordinary course of the business of the partnership or with the authority of co- partners,
loss or injury is caused to any person, not being a partner in the partnership, or any
penalty is incurred, the partnership is liable therefor to the same extent as the partner so
acting or omitting to act. So liability arising from wrongful act or omission so nag ccause
daw ito ng liability yung mga wrongful act that could cause loss or injury not being a
partner in a partnership, so ibig sabihin sa third person nag ommit ng act and kahit yung
inosent partners ay magiging liable dito, the liability of the partner is solidary in
accordance with 1824. So for instance, si A, B and C part ng partnership tapos si A ay
nag ddrive ng company vehicle ng partnership tapos nakaasidente then liable ang
partners para dun sa incident, kase it occurs while in the performance of partnership
business and it involves property of the partnership so kahit si B at C ay hindi negligent
so the innocent partner can recover from the guilty partner who is A in this case pero
kung ginamit nya yung vehicle para sa sarili nyang lakad at nakaasident sya then sya
lang ang liable para dun sa aksidente.

Actually, the 1822, 1823, 1824 is a liability arising from partner's breach. Those also
talks about Solidarity Liability, this means whether innocent or guilty, all the partners are
solidarity liable with the partnership itself.

Article 1823, The partnership is bound to make good the loss: so it pertains into breach
of trust or misapplication of assets entrusted into the partner or partnership so ang
tawag dito sabi ni article 1824 is solidary obligation, liable si partner and partnership
solidarily. Kailangan bayaran yung loss (the partnership is bound to make good the
loss). So nahahati ito sa dalwang parts, una is the partnerhsip is bound to make good
in the loss if the one partner acting within the scope of his apparent authority receives
money then misapplies it. Next is the partneship is bound to make good the loss if the
partnership already receive money and while it is in the custody of the partnership,
anyone of the partnership misapplies the money. Ang pinagkaiba lang nung dalwa is
that si number 1, it is the collecting part who misappropriate while in number 2 it is
anyone in the partnership misappropriate. So any of this two maapply padin ang rules
which is partnership is liable solidarily in any loss

Article 1824 All partners are liable solidarily with the partnership for everything
chargeable to the partnership under articles 1822 and 1823. Sabi dito solidarily liability
ang magiging cause nito, so solidary meaning, ang debtors is liable for the whole
obligation, and sa creditors any of them could demand to fulfill the obligation. So it is not
only the partner but also the partneship is liable.
Article1825 This is the partnership by Estopel, so When a person through words written
or verbal or through acts directly represents himself as a partner in an existing
partnership and yung existing partnership na yon they did not consent or pwede din
naman na itong taong to directly represents himself as a partner in a non existing
partner. When a partnership liability results, he is liable as though he were an actual
member of the partnership. So example sa 1 is si A sinabi na partner sya sa XYZ
corporation but yung XYZ ay hindi alam na sinabi ni A na partner sya don, inshort nag
papanggap lang sya na partner sa company na yon. Remember here that A is called
partner by estopel because A directly misrepresent herself.

Next is sa number 2, When no partnership liability result, he is liable pro rata with the
other persons, if any so consenting to the contract or representation as to incure liability,
otherwise seperatey. So example dito sinabi ni B na may partnership si ni A and C kahit
wala naman talaga silang partnership at narinig ni A ito tapos hinayaan lang ni A na
sabihin ni B sa iba yon so dito consented ka na may misrepresentation mula kay B
therefor si A ay may liability on partners by Estopel. So ang liability ng partners dito ay
they are liable as general partners, also for all obligations as if they are partners but
they are not entitled to the rights of the partners.

Article 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. Remember
are duty ng incoming partners are they are liable for all the obligations of the
partnership, even if the obligation did arise before he became a partner in the
partnership, pero ang kanyang liablity is limited lang sa kanyang share sa partnership
property, kung ano lang yung cinontribute nya, hanggang dun lang ang liability nya for
obligations incurred before he became a partner, but for the obligations that incurred
subsequently, remember that he is liable even up to his separate property

Article 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. Simple lang to no, partnership creditors prefered as to
partnership assets, personal creditors are prefered as to personal assets, so kung
naniningil ang partnership creditors tapos may partnership assets, unahin muna nating
bayadan yung partnership creditors, kung may natira, dun natin babayadan yung
personal creditors ng kada partners
 Section 3 - Obligations of the Partners with Regard to Third Persons

Article 1815

CHAPTER 3: DISSOLUTION AND WINDING UP

Article 1828-1831

Article 1828 gives the definition of dissolution

Dissolution means change in the relation of the partners caused by ceasing
in carrying of business, nangyayari ito kapag may partner na tumigil or umalis na sa
partnership. Sinasabi rin ng article 1828 na ang dissolution ay magkaiba sa winding up.
Ang winding up ay ang process ng pagsesettle ng mga debts and any business affair ng
partnership after ng dissolution.

Article 1829
Dissolution doesn’t mean mageend na ang business, there is just a change in
relation of the partners, pwede pa rin itong icontinue ng mga natirang partners na
gustong magcontinue once na mabayaran and masettle na lahat ng business affairs ng
partnership.

The three final stage of partnership:

1. Dissolution - According to article 1828, it is a change in relation of the partners

caused by partner ceasing to be associated in the carrying on of the partnership.
2. Winding up - This is when partnership accounts are settled and it ends all obligation
ng partnership. Pwede rin ito ihalintulad sa liquidation.
3. Termination - after the process of winding up, the partnership is pwede na
materminate. It means tapos na or at end.

Article 1830 tells the cause of dissolution of the partnership

1. without the violation of the agreement between the partners. In this case,
dinidisolve yung partnership without necessarily violating the partnership contract
a). kapag natapos na yung fixed term or definite term na nakasulat sa agreement
or kapag accomplish na yung special understaking na naka specified sa agreement.
b). kapag ang partnership ay partnership at will and all the partner ay nag agree
na mag dissolve the pwede na magdissolve but they must act in good faith or wala
silang nilabag na kasunduan.
c). it will apply to partnerships for a specified/fixed term or partnership for a
particular undertaking. in this case, even before the expiration of the period or the
accomplishment of the particular undertaking, if gusto na ng lahat ng partners na
madissolve ang kanilang partnership, they can dissolve it without violating their
agreement dahil lahat naman sila ay pumayag na madissolve ang kanilang partnership.
In this case also, ang kailangan lang na consent ay yung galing sa partners who have
not assigned their interest or suffered them to be charged for their separate debts.
d) In this case, the other partners can expel their partners if it is provided in their
partnership agreement/contract and if they do it in good faith.

2. in contravention of agreement between the partners. The cause of dissolution in

partnership is In Violation of agreement. It happens when the circumstances do not
permit the dissolution under any of the provisions of article 1830. If the reason for
getting out of the partnership is not justifiable, example, umalis agad sa partnership
kahit hindi pa narereach yung definite term or hindi pa nagagawa yung particular
undertataking. It will fall under the violation of the partnership agreement. In this case,
the withdrawing partner will be liable for damages, but the other partner cannot compel
him to remain in the partnership because partnership is based on mutual trust and
confidence.

3. the business become unlawful. From legal business of the partnership then naging
unlawful. Example, vape shop na from the start is legal but suddenly nag announce ang
munisipyo na pinagbabawal ang pagbebenta ng vape then the business is unlawful na
and with that they can dissolve the partnership or else magiging unlawful partnership
sila.

4. loss of specific thing which a partner promise to contribute.

Note:

Loss before delivery If the specific thing to be contribute loss before it deliver to the
partnership, the partnership will be dissolve due to loss of contribution and the loss of
the specific thing will bear by the partner who promise to contribute

Example: the specific thing is a car. Geneper promise to contribute it as her contribution
to the partnership but before madeliver yon sa partnership ay nawala ito. Now, she has
no contribution and it can cause dissolution.

Loss after delivery If the specific thing to be contribute loss after it deliver to the
partnership then the partnership will not dissolve, the specific thing is in the name of the
partnership since it was deliver after mawala and since partnership has juridical
personality and pwede to mag acquire ng property under its name. The loss will bear by
the partnership.

Example: the specific thing is a car. Geneper promise to contribute it to the partnership,
after madala nung car and malagay yon as property nung partnership ay bigla itong
nawala. The partnership will not dissolve, the loss of the specific thing will be treated as
the loss of the partnership.

Loss where only the use or enjoyment contributed If the right to use/enjoyment of
the specific thing is the contribution promised by a partner then nawala, the partnership
will be dissolve and the loss will bear by the partner who promised to contribute the use
of it.

Example: the specific thing is a car. Geneper promise to contribute the right to use the
car, yung karapatan lang na gamitin yon ang ni contribute nya not the car mismo then
suddenly nawala ito, the partnership will be dissolve since the the right to use the car
lang ang contribution and nawala pa yung car so wala na syang contribution and ang
magbebear ng loss ay si partner na nagpromise na ikocontribute yung right to use the
specific thing.

5. By the death of any partner a death of a partner will automatically dissolve the
partnership.

6. by the insolvency of any partner or of the partnership kapag ang partner ang
insolvent or hindi na kayang magbayad ng personal creditor, pwedeng habulin nung
personal creditor ang partnership interest nung partner then it can cause dissolution. An
insolvent partner has no authority to act for the partnership nor the other partners to act
for him. Kapag partnership ang insolvent, partners na ang bahala na mag liquidate ng
partnership property para ipambayad sa liabilities ng partnership then dissolve ang
partnership.

7. by civil interdiction of any partner if you been civil interdict the you cannot give
valid consent in the partnership and you also have no right to manage and dispose your
property.

Example: naconvict/ convicted.

8. by decree of court kapag korte na mismo ang nagsabi na pwede na madissolve

yung partnership then dissolve na.

Article 1831. Etong mga ito yung mga instances para madissolve yung partnership
where in kapag napatunayan ng court alin man sa isa dito maglalabas sila ng order to
dissolve the partnership.

Sa pilipinas, bago mag bigay ng action ang korte, kailangan muna meron may mag file
ng kaso.

1. A partner has been declared insane in any juridical proceeding or is shown to

be unsound mind
- kapag napatunay sa korte na ang isang partner ay insane or wala na sa tamang
pag iisip ay pwede na itong tanggalin and it will cause dissolution. An insane person
cannot give valid consent and cannot enter into a contract.

2. A partner is incapable in performing his part in partnership

- hindi na kaya physically and mentally ng partner na mag perform sa
partnership.
Example: nacoma and braindead

3. A partner have been guilty of such conduct

4. A partner willfully or persistently commits a breach of a partnership agreement

- Itong 3 and 4 ay Misconduct and persistent breach of partnership agreement.
Kapag yung partner niyo ay gusto niyo ng paalisin sa partnership niyo dahil sa
misconduct niya for example palaging lasing sa trabaho at nagungupit siya sa capital ng
partnership kaso ito namang si partner ayaw pumayag, ayaw umalis at nagpupumilit
parin tapos walang tulong yung partnership agreement niyo para ma expell , then u can
go to court para ma dissolve yung partnership

5. The business of the partnership only be carried at loss

- Isa sa mga purpose ng business sa partnership is to have profit. kapag loss na
lang ang nakukuha instead of profit ay pwede itong ground sa korte for dissolution.

6. Other circumstances
Example: abandonment of business, fraud in the management of the business.

On the application of the purchaser of a partner's interest under Article 1813 or

1814:

Dito sa article 1831 binibigyan yung assignee or yung third party na nabanggit sa artcle
1813 or 1814 ng karapatan to ask for the dissolution of partnership una:

1. After the termination of the specified term or particular undertaking.

- Meaning kapag na expired na yung term nung partner or na accomplish na
yung particular undertaking itong purchaser of interest under 1813 and 1814 can ask for
dissolution.

2. At any time if the partnership was a partnership at will when the interest was
assigned or when the charging order was issued.
- Yung purchaser can ask for dissolution at anytime the interest was assigned or
may order na naibigay. Tandaan na if tayo yung partnership hindi na natin need
mahintay for order pede na tayo lumapit sa court to ask for dissolution ang kakaiba lang
dito yung assignee wala talaga siyang karapatan to ask for that kasi hindi naman talaga
siya yung partner, siya lang yung purchaser ng interest ng isang partner.

Who may petition for dissolution?

- Sino ba dapat yung pedeng mag ask for dissolution Dissolution of a partnership
may be decreed by the court on application either

1. by a partner or, in case he has assigned his interest

- yung partner, o di naman kaya yung nakakuha o nakabili ng interest nung
partner sa partnership
2. by his assignee.
- Yung third party or representative ng partne

CONT. ARTICLE 1832 - 1842

ART. 1832
Except so far as may be necessary to wind up partnership affairs or to complete
transactions begun but not then finished, dissolution terminates all authority of
any partner to act for the partnership:
- Sabihin na natin na ang isang partnership, nagdecide na magdissolve…
////////////// As you can see here, dissolution to liquidation. So pwede pa ba
magkaroon ng transactions between dissolution and liquidation and if
magkaroon, does these transactions still bind the partnership? So sabi sa article
na ito, dissolution terminates all authority, the moment na nadissolve yung
partnership, dissolve na rin ang authority niyo as a partner. Meaning, wala na
dapat magarise na transactions pero may exception tayo. ////////// Una, during the
winding up of the business. For example, nagrerenta lang kayo ng space for your
partnership and since dissolve na nga, hindi niyo naman pwedeng iwan yung
mga ginamit niyo during the operation kaya magaarise ang mga transactions.
Maaaring ibenta niyo yung printer, yung photocopier, etc. ///////// At pangalawa, to
complete unfinished transactions during dissolution, so hindi naman pwede na
i-ghost mo si client, di’ba? Tapusin mo yung sinimulan mo. Kahit pa dissolve na
ang partnership, kailangan niyo pa rin tapusin yon kasi the contract is prior to the
dissolution./////
- So yung dalawang binanggit ko, nageexist siya to respect the partners, syempre
as much as possible, kung talagang ayaw niyo na, tapusin niyo naman yung
sinimulan niyo nang maayos. Respect pa rin dun sa partnership na binuo and
syempre sa partners niyo. And kung wala naman act, insolvency or death, trip
niyo lang talaga na magdissolve, nararapat lang talaga na i-clear niyo yung mga
transactions, di’ba? Itong letter b and number 2, maeencounter natin siya sa mga
susunod na article, dun na lang natin siya papalawakin, so ‘wag na tayo
magpatumpik tumpik pa, let’s proceed to Article 1833.///////////////

ART. 1833
Where the dissolution is caused by the act, death or insolvency of a 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:
- Kapag nadissolve ang partnership because of ///////// act, death, or insolvency
and magkaroon ng liable yung isang partner habang ginagawa nila yung mga
mga necessary to wind up partnership affairs or complete transactions begun but
not then finished, liable ang lahat. May share pa rin yung lahat ng partners sa
liable nung isang partner as if hindi nadissolve yung partnership. ////////// So for
example, si Abad, Buccuan, at Camacho ay bumuo ng ABC Partnership but
decided to dissolve it. Between the dissolution and liquidation, /////// if may
nagarise na liability (let’s say si Buccuan ang may gawa) while winding up the
 business or completing unfinished transactions, liability na din yon ni Abad at
Camacho.////
- Para mas maintindihan natin yung exceptions ng Article 1833, let us have these
three situations and I want you to participate actively in the chat box.
Sabay-sabay tayong mag-isip at sagutin ang mga sumusunod na tanong.////////
- So first question, Buccuan told Abad that she is resigning today. The partnership
is thus dissolved. Abad entered into a contract with Deomano, who shall be
liable? So sinong liable if ever na may nagarise na liability sa contract with
Deomano. Si abad, buccuan, or both? Please type your answer in the chat box.
/////////
- Abad should be liable and dito na papasok yung una natin na exceptions.
Nagkakaroon ng change sa partnership of affairs and kung may change na
naganap, meaning, dissolve na. So kung si Buccuan ay nag-act of withdrawal
from the partnership and itong si Abad ay nagenter pa rin ng contract kahit na
alam niya na na dissolve na yung partnership… Kapag may nagarise na liability,
edi si Abad lang ang mananagot.///////
- Second question, If Buccuan texts her resignation to Abad because Abad is in
Mindanao and Abad contracts with Deomano, was her authority terminated when
the text arrived? Yes or no? Please type your answer in the chat box. ///////
- The answer is No. Abad's authority was not terminated as she had only received
a notice. Tandaan niyo, mere notice cannot terminate the authority of partners
kasi yung act na sinasabi natin here, it should be personally known by the acting
partner, hindi pwede na text text lang.////////
- And third question, If C texts A that B had died, does their authority terminate
once A gets the text message? Yes or no? Please type your answer in the chat
box.//////
- So dito papasok yung second exception and Yes, their authority is terminated
because in this case, the cause of dissolution is death. Kapag kasi yung grounds
ay due to insolvency or death, okay na yung mere notice to terminate the
authority.///////
- Now, let’s move on to Article 1834.//////

ART. 1834
- Mahaba itong Article 1834 so himay-himayin natin. Let us start with its
introductory statement. Pagkatapos daw ng dissolution, a partner can bind the
partnership. Maaari pa rin magperform ng particular act ang mga partners at
yung act na yon ang magbibind ng partnership. Except na lang daw sa sinasabi
sa third paragraph of this article which is hindi pa natin nakikita kaya dumako
muna tayo sa number 1.//////
- (1) So nabanggit ko na ‘to kanina. Kapag may mga bagay na kailangan gawin
during the winding up of the business or kailangan pa tapusin ang mga
unfinished transactions, yung mga act daw na yon binds the partnership./////
- (2) Sinasabi dito na mababind ang partnership kapag may mga transactions na
para bang as if walang dissolution na nangyari. Anu-ano nga ba yon?
- Ito yung meaning ng A and B. So kung may other party na nagpautang or
transactions prior to the dissolution and hindi siya nasabihan na nagdissolve na
 pala ito. Ang mga transactions na ito ang magbabind ng partnership since
kailangan pa ifulfill to ng partners./////
- Dito sa next, magkakaroon tayo ng classifications of partner. Active participation
means nakikisali ka sa mga ginagawa ng partnership while publicly known
means kilala ka na kasali ka dun sa partnership na yon. ////// So sinasabi dito na
yung liability should be satisfied out of partnership assets alone kapag yung
nakatransact ng other party under 2A and 2B is a secret and dormant partner,
hindi siya mageextend sa personal asset nung partner.///////
- So ang paguusapan naman natin next is kung anu-ano ba yung mga act na hindi
nagbibind sa partnership after the dissolution.//////
- Una is kung yung partnership na nadissolve is unlawful unless na lang kung yung
act na gagawin nila is appropriate for winding up partnership affairs, pero
napakarare ng case na ito kasi hindi mo naman pwedeng ireconcile yung word
na unlawful at appropriate.//////
- Pangalawa, kapag wala ng assets ang partner./////
- Pangatlo, kung yung isang partner ay hindi naman itinalagang liquidating partner
pero siya ang nagwind up ng partnership affairs. May exceptions rin tayo dito and
katulad lang siya dun sa nabanggit ko kanina… Kung may other party na
nagpautang or transactions prior to the dissolution and hindi siya nasabihan na
hindi pala siya ang liquidating partner.//////
- And, Nothing in this article shall affect the liability under article 1825 of any
person who after dissolution represents himself or consents to another
representing him as a partner in a partnership engaged in carrying on business.
- So hindi daw maaapektuhan ang Article 1825, just a recap, Article 1825 talks
about partnership by estoppel.
- Now, let’s go to Article 1835.///////

ART. 1835
The dissolution of the partnership does not of itself discharge the existing liability of any
partner.
- Tandaan natin na dissolution of the partnership doesn’t automatically mean na
nawala na rin ang liability ng partners. Siguro hindi to mag-aapply if ikaw ay
isang "Limited Partner". Pero as a general rule, hindi naman natin pwedeng
i-presume na ang isang partner ay limited. Kapag hindi natin alam kung siya ay
"limited or general", we have to presume na siya ay general partner at dahil ang
presumption natin ay isa siyang general, then the dissolution of the partnership
will not relieve him of his or her obligations. Why? Kasi kung hindi sapat yung
assets ng partnership to pay for the obligations of the partnership then the
creditors will have the right to run after the partner for his personal obligations
UNLESS he or she is insolvent.//////// Please read Ms. Sandoval.
A partner is discharged from any existing liability upon dissolution of the partnership by
an agreement to that effect between himself, the partnership creditor and the person or
partnership continuing the business; and such agreement may be inferred from the
course of dealing between the creditor having knowledge of the dissolution and the
person or partnership continuing the business.
 - Ang tinutukoy dito, is an exception to the first statement. Dito, maaari siyang
ma-discharged or ma-relieved from the liability upon dissolution of the
partnership if yung tatlong tao //// na may underline ay may agreement.. Ibig
sabihin may consent sila to the discharge ng isang particular partner.
- Kung walang express agreement, you can infer or have a presumption na
pumayag sila. So bakit? Kasi kung creditor ka and di ka pumapayag na
marelieved yung isang partner from personal liability, kokolektahan mo siya. So
kung di mo siya kinolektahan, ipagpapalagay talaga na payag ka na
madischarge siya.
- In addition, if magkaroon sila ng subsequent dealing, like nagkaharap ulit silang
tatlo tapos wala naman ganon na arrangement, pwede nilang habulin yung
concern partner like sabihin nila na "Ini-invoke namen yung first portion ng Article
1835, you are not discharge from your personal liabilities." PERO kung ‘yun nga,
nagkaharap harap na sila’t lahat pero walang invocation or paghahabol na
nangyari, then you can imply na yung partner na yon is discharged na from
personal liability.//////
- Sa third paragraph naman ang naging cause ng dissolution ng partnership ay
death nung partner. And one of the grounds for the dissolution of partnership is
the death of a partner, because obviously you can no longer associate yourself
with a dead person. So pano kung yung naiwan na partners decided to liquidate
then nalaman nila na may utang pa pala and kulang na yung pambayad nila. Ang
tanong ngayon, can the creditor run after the estate?
- Estate is yung properties na naiwan nung death person. Ito yung personal
properties niya.
- So ang sagot sa tanong na yan ay yes, the creditor can run after the estate of the
dead person. As long as that obligation was incurred while he was a partner.
- Next is Article 1836./////

ART. 1836
Unless otherwise agreed, the partners who have not wrongfully dissolved the
partnership or the legal representative of the last surviving partner, not insolvent, has
the right to wind up the partnership affairs, provided, however, that any partner, his legal
representative or his assignee, upon cause shown, may obtain winding up by the court.
(n)
- Nabanggit natin kanina yung liquidating partner. Yung liquidating partner na yan
ay designation and agreed upon by the partners usually at the time that they
entered to the contract of partnership or pwedeng mag usap sila na "Incase na
mag liquidate yung partnership then si partner B ang i-designate natin as
liquidating partner.", kumbaga para centralized yung liquidation ng partnership.
Pero what if walang ganon? Magiging void ba yung contract of partnership? The
answer is NO. Kasi diba ang validity and legality of contract of partnership is not
affected by the lack of designation ng liquidating partner.
- So sa article na to sinasabi na may solusyon pa rin if you failed to designate a
partner that will act as liquidating partner. At ang may karapatan to manage the
partnership affairs ay yung innocent partner. So kung may innocent edi may
guilty? YES! Paano nagiging guilty? ///////
 - For example: STV partnership is a partnership for a fixed term. Tapos nag-agree
sila that the partnership will be for a period of 25 years. Then, in the 5th year,
Sandoval decides to withdraw from the partnership. Again, di ba di siya pwede
i-compelled to continue with the partnership, nabanggit ‘yon last week. Kapag
ayaw niya na, ayaw niya na. Gusto niya mag withdraw despite the fact na alam
niyang good for 25 years, then siya ay tatawagin natin na guilty partner. At yung
mga walang violation sa partnership, si Tolentino and Vicena, sila ang tatawagin
natin na innocent partner. So between the guilty partner and the innocent partner,
who has the right to manage the liquidation? Syempre yung innocent partner.
- But what if the ground for the dissolution of the partnership is insolvency of the
partners? ///////
- Another example, SVT partnership and si Tolentino and Vicena ay naging
insolvent. Meaning, si Sandoval na lang yung maaaring mag manage nung
partnership affairs or yung liquidation. But if for some reason ay walang tiwala si
Tolentino and Vicena kay Sandoval. Like kineclaim nung dalawa na
mam-mismanage ni Sandoval yung liquidation then pwede sabihin nung dalwa
sa korte na "Wag po si Sandoval"... Kailangan nila i-convince yung court na hindi
m-manage ni Sandoval ng maayos yung liquidation ng partnership para yung
court na ang magliliquidate.
- Now, let’s move to Article 1837.///////

ART. 1837
- Having a partner when doing business is a big help when it comes to decision
making, sharing of liabilities and responsibilities, making it a lot lighter for both
parties, but we are all aware that it also has a lot of risks within the range of
sharing assets, especially money and success. There are countless different
reasons that can cause the dissolution of partnership and those reasons can
either be a violation of either of the two, although the partnership contract is
violated or not. In this article, we will discuss the Right of Partner to Application of
Partnership Property on Dissolution.

- Kapag ang cause ng dissolution ay hindi nagviviolate sa law or sa partnership

contract, ibig sabihin, lahat ng partners ay may karapatan sa property, sa profit,
sa pagparticipate sa pagmamanage ng partnership affairs.
- So ang tinutukoy dito sa article 1987, which is connected in my previous
statement, ay ang karapatan ng partner sa kaniyang co-partners, and sa lahat ng
mga third-party person na nagcclaim ng rights sa interests which is profit or
surplus ng partnership.
- So ano nga bang karapatan niya when dissolution happens? The partner has the
right to invoke na yung mga property ng partnership ang ibayad sa liability ng
partnership and in any case na mayroong sobra which is the surplus, it will be
converted to cash at ibabayad siya on each partners.
- So ano namang mangyayari if the cause of dissolution ng isang partnership ay
by expulsion of a partner. So meaning to say, may violation na nagawa yung
partner towards the agreement of partnership. Okay, so if at the time of
dissolution, the expelled partner is discharged from all partnership liabilities by
 either payment, kung magbabayad siya or agreement… Under the second
paragraph of article 1835 which was discussed earlier, kung ano man yung
maiiwan na net amount, yun yung ibabayad sakaniya and it shall be paid only in
cash.//////

When dissolution is caused in contravention which is pagviolate sa partnership

agreement, we can classify the partners into two, the innocent and the guilty one.

When this happen, the rights of the partners shall be as follows://///////

1. Para sa mga innocent partners o mga walang kinalaman sa nangyaring
violation/////
(a) Kapag nabayaran na lahat ng partnership liabilities using partnership
asset at may surplus pa rin, the innocent partners will receive shares in
the surplus.///////
(b) They are also entitled to recover damages which they may collects sa
mga guilty partners.///////
So sa number 2, this is also for the innocent partners. Kung ginusto pa rin ng
mga innocent partners na ipagpatuloy yung business either with the same name
or with other, they can continue to do so. This also mean that the dissolution will
not lead to liquidation.
So pag napagkasunduan nilang ituloy yung partnership,
They can acquire lahat ng asset ng partnership na naglead sa dissolution
however, they have to pay the bond or the form of insurance kung saan they
might apply it to the court and subject for approval.
Next, not because siya yung nagcause ng wrongful dissolution ibig sabihin di
niya na marerecover yung kanyang distribution, makukuha pa rin niya yon, bale
babayaran na lang sakaniya yon pero dahil nga wrongful yung dissolution,
magkakaron ng damages to be suffered by the remaining partners. In that case,
inaallow ng batas na iless yung damages doon sa original payment na ibabayad
mo sana sa guilty partner.
And, the innocent partner can recover damages to the guilty one, hindi lang para
sa mga present liabilities ng partnership kundi pati na rin sa mga future liabilities
na mag-aarise because of the wrongful dissolution./////

3. This is for the guilty partner, //////

(a) so katulad nga ng nabanggit kanina, not because siya yung nagcause ng
wrongful dissolution… ibig sabihin di niya na marerecover yung kanyang
distribution, no, makukuha pa rin niya yon but ileless doon lahat ng
damages na naicause niya sa partnership.//////
(b) If the business continued, katulad lang rin sa rights na nabanggit kanina,
pwede mong kunin yung interest mo convert into cash or you can collect
in the bond at kung ano man yang share mo na yan ay babawasan natin
ng damages na nacause mo sa partners. And also, kung ikaw man ay
na-expelled na from the partnership, he will be released sa lahat ng
existing liabilities ng partnership. But, in determining the value of the
interest ng guilty partner, hindi kasama doon ang good-will ng business.
Overall, Sinasabi sa article na ito, na sa loob ng isang partnership, bukod sa internal
agreement na meron kayo ay dapat handa kayo na managot sa kung ano man ang
ipapataw ng batas sa kasalanang ginawa ninyo. Mahalaga rin na hindi kayo lalabag sa
contract na meron kayo upang maiwasan ang ganitong klaseng ng mga pangyayari.
Let's now discuss Article 1838. ///////

ART. 1838
Where a partnership contract is rescinded on the ground of the fraud or
misrepresentation of one of the parties thereto, the party entitled to rescind is, without
prejudice to any other right, entitled://////
- Ibig sabihin ng rescinded ay cancel siya. /////// In this article, merong nanloko at
may naloko. May innocent at may guilty. So bakit may guilty?////// It is because of
fraud or misrepresentation na nag-cause ng rescission ng parnership. //////
1. For the party entitled to rescind, the lien will arise or the right of retention ng mga
innocent partners. Pero, mangyayari lang to if the innocent partner has paid third
person. Halimbawa, may fraud na nangyari at si innocent partner yung
nagbayad. Or, nagpurchase siya ng interest sa partnership. Or, para sa lahat ng
capital or advances contributed by him. Ibig sabihin lang nito, kapag lien ka,
mauuna mong makolekta lahat ng benefits over the other partner especially sa
guilty one. //////
2. Pag ikaw ay innocent partner at nagbayad ka ng partnership liabilities,
magkakaroon ng novation, magiging ikaw yung creditor since may utang sayo
yung partnership. /////
3. Lahat ng binayad ng partnership dahil sa result ng fraudulent act ng guilty partner
ay kailangang bayadan ni guilty partner. Siyempre, every guilty partner,
especially if they employed fraud or misinterpretation, they should be liable to the
damages in favor of the innocent partner. Next is Article 1839./////

Art. 1839

- Syempre if liquidation na, dito na mangyayari ang settling of accounts. Article

1839 enumerates the rules for settling accounts.//////
- Let us remember na bago ka magsettle ng accounts, kailangan mo muna alamin
kung ano ang asset ng partnership mo, dalawa yan: The partnership property
including goodwill or name, reputation, etc. and the contributions of the partners,
which are made to pay off the partnership liabilities./////
- Number 2, yung order of payment of liabilities or order of application of the
assets.
- a, bayaran daw muna yung creditors who are third persons, in short outside
creditor, of course sila yung nauuna to protect their interest and then give to
partners who are also creditors.
- B, kung may utang yung partnership dun mismo sa partners… Halimbawa, if
nagabono yung isang partner for the partnership, may right pa rin si partner na
makuha yon pero as 2nd to the third persons or creditor, hindi as a partner.
- C, give to the partners their capital na nicontribute nila.
- And d, yung share sa profit.
 - Now paano naman if yung assets nung partnership is insufficient?//////
- Sabi sa number 3, Para daw mabayaran yung liabilities, yung assets muna ng
partnership ang ipangbabayad then pag kulang pa rin, yung contributions na ng
partners ang ipangbabayad.
- Number 4, sinasabi na yung bawat partners ay required na magcontribute to
satisfy all the liabilities.////
- Number 5 is based sa Article 1797, if meron man na assignee, pwede naman
nito i-enforce yung contributions ng each partners, if it is for the benefit of the
creditors or talagang inappoint siya ng court to do so.
- Basta tatandaan lang na if a partner does not pay his or her share of the loss,
yung remaining partners ang magbabayad, pero pwede nilang kasuhan yung
non-paying partner for indemnification./////
- Article 1839 Number 6, pag sumobra namn kunwari yung binayad mo, you have
the right to enforce the contribution, kung magkano yung sumobra./////
- Number 7, kapag naman daw patay na yung isang partner, other partners must
contribute to satisfy the liabilities, So nabanggit ko na din to kanina. Yung
individual property niya, his or her estate is liable for his contribution, provided na
yung utang is incurred while he or she was still a partner.////
- Number 8, ine-emphasize dito na yung partnership creditors ay mauuna dapat
talaga na mabayaran from the partnership property////
- Number 9, kapag insolvent na yung partner or yung estate nya ang insolvent, at
mayroong mga naghahabol na creditors, anong dapat niyang gawin?
- Of course, uunahin bayaran yung separate creditors dahil ito ay personal
obligation na ng isang partner na naging insolvent, and sarili na niyang property
ang ipangbabayad. Then kasunod naman is yung partnership creditors, pwede
siyang habulin ng mga ito kung nabayaran na niya yung separate creditors niya.
Lastly is yung other partner mo naman, pwede ka rin nila habulin for their
contributions… Pag kunwari ay gusto nga nila mabawi yung nacontribute nila,
pero sila, pang 3rd pa sila sa order of priority.///// Next is article 1840.

Article 1840

- Ang tinutukoy naman sa article na ito is may cases daw na yung creditors ng na
dissolved na partnership ay creditors pa rin ng mga taong nagcontinue nung
business or partnership.//////
- Yung mga naka enumerate na number 1-3 sa article na ito ay halos
magkakaparehas lang ng pinupunto. It explains the rights of the creditor in case
of partnership dissolution because of membership changes and the business is
continued without liquidation. /////
- Number 4 Dito naman, for example ay may limang partners sa isang partnership
and lahat sila, in-assign yung kanilang rights in the partnership property sa isa or
dalwang third persons. Ang ibig sabihin lang nito ay yung third person na ang
magtutuloy ng business after dissolution and sila na rin ang magbabayad sa mga
creditors. Kasi kunwari, binenta na nga sayo ng ABC partnership yung business,
ikaw na rin ang magbabayad nung debts nung partnership. Kumbaga ay yung
thirdperson na ang sasalo as he or she promised. Pero syempre pag wala
 naman naganap na contract between the ABC partnership at sa third person,
walang mahahabol yung creditors sa 3rd person na yun unless the assignment
can be set aside as a fraud on creditors.//////
- (Number 5 and 6) Again ito naman ay ilang beses na nabanggit, so dalawa lang
naman ang tinitingnan natin, if itinuloy pa rin yung business after dissolution and
hindi nagliquidate, continue ang business, and as a result, yung old creditors of
the partnership ay yun pa rin ang creditors the moment na tinuloy mo yung
business. As long as nag apply yung dalawang kanina pa nababanggit.
- Overall article 1840 deals with the rights of creditors pag ganon nga na
nagkaroon ng change in membership because of RETIREMENT, EXPULSION,
DEATH or ADDITION, and business is continued. Ang pinaka purpose of this
article is to maintain the preferential rights of the old creditors to the partnership
property as against the separate creditors of the property.///////
- Next is article 1841.

ART. 1841
When any partner retires or dies, and the business is continued under any of the
conditions set forth in the preceding article, or in article 1837, second paragraph,
No. 2, without any settlement of accounts as between him or his estate and the
person or partnership continuing the business, unless otherwise agreed, he or
his legal representative as against such person or partnership may have the
value of his interest at the date of dissolution ascertained, and shall receive as an
ordinary creditor an amount equal to the value of his interest in the dissolved
partnership with interest, or, at his option or at the option of his legal
representative, in lieu of interest, the profits attributable to the use of his right in
the property of the dissolved partnership; provided that the creditors of the
dissolved partnership as against the separate creditors, or the representative of
the retired or deceased partner, shall have priority on any claim arising under this
article, as provided by article 1840, third paragraph. (n)
- Essentially parehas lang ng situation na kino-contemplate nung 1840. Yung
nagretire na partner or namatay, pwede niyang ipa-ascertained, ipa-measure,
ipasukat, yung value ng kanyang interest at the time na nadissolve yung
partnership. So si retired partner, si deceased partner or the legal representative
of the deceased partner may have or may require the continuing partnership or
the continuing business to measure yung kanyang interest in that partnership.
- Yung sa retired partner, magkano na ba yung essentially, yung balance ng capital
account ko. Parang ganon siya. Magkano na yung balance ko dyan, akin na yon.
Imeasure niyo yon, kung meron kayong ibang iincorporate like mga unrealized
gains and loss ganyan, imeasure niyo, iadjust niyo. Tapos kung magkano man
yung value ng aking interest in that partnership, ibayad niyo nalang sa akin. At
yung claim ko na yon will be, a claim of an ordinary creditor, with interest. Or if
without interest, with profits for the use of his right in the property.
- Pero, inulit uli dito sa article na to yung "provided", parehas siya nung nasa 1840.
Yung claims ng mga creditor will have priority over the claims of the retired
partner or deceased partner or representative of the deceased partner./////////
ART. 1842
Last Article. The right to an account of his interest shall accrue to any partner, or his
legal representative as against the winding up partners or the surviving partners or the
person or partnership continuing the business, at the date of dissolution, in the absence
of any agreement to the contrary. (n)
- Sinasabi ng 1842 kung kanino ike-claim ng retired partner or ng legal
representative ng deceased partner yung pag-account ng kanyang interest, yung
pag measure, or yung pag ascertain ng interest na binabanggit sa 1841. Sabi
dito, pwede mo siya i-address kay "winding up partner", "surviving partner",
or the person or the partnership “continuing” the business. Kung sino man sila
na mga tao na yon, kung sinong available, sa kanila mo iaaddress yung pag
invoke ng right mo to have the interest of the retired partner or the representative
of the deceased partner to be measured or to be ascertained, and to be paid
doon na sa kanya. And again, that right is subject to the priority claim of the
creditors.

CHAPTER 4: LIMITED PARTNERSHIP

1843-1856

Article 1843
Article 1843 provides the definition of a limited partnership. According to this article, A
limited partnership is one formed by two or more persons under the provisions of the
following article, having as members one or more general partners and one or more
limited partners. The limited partners as such shall not be bound by the obligations of
the partnership.

So himay-himayin natin yung laman ng article na ‘to, una ang sabi, A limited partnership
is one formed by two or more persons under the provisions of the following article, so
katulad nga ng napag-aralan natin noong first week ng klase, ang partnership ay
binubuo ng dalawa o higit pang mga tao, sabi nga ni judge kahit umabot pa yan ng
isang daan, okay lang dahil wala namang nakalagay sa batas na maximum limit of
number ng mga tao sa partnership.

Next, having as members one or more general partners and one or more limited
partners. In every limited partnership, dapat may at least isang general partner, so kahit
limited partnership yan, ang sabi ng batas hindi pwedeng mawalan ng general partner.
So ano kayang purpose kung bakit kailangan ng general partners? Ito ay para
maprotektahan yung mga creditors. In case na insolvent na yung partnership at wala na
silang pambayad sa mga pinagkakautangan nila, pwedeng habulin ng creditors yung
mga assets ng general partners.

Yung last sentence naman is the limited partners as such shall not be bound by the
obligations of the partnership. Ang sinasabi dito, hindi liable ang limited partners sa
liabilities and obligations ng partnership. Hindi pwedeng habulin ng creditors yung
assets ng limited partners kapag wala nang pambayad yung partnership sa utang nila.
From the word “limited” diba, kung magkano lang yung amount ng contribution ng
limited partners, ayun lang yung pagmamay-ari ng partnership. Separate ang assets ng
limited partners sa mismong partnership. Naiintindihan ba?

So ulitin ko, ang limited partnership ay binubuo ng dalawa o higit pang tao na kung saan
mayroong at least isang general partner na pwedeng habulin ng creditors in case na
wala na pambayad yung partnership sa mga utang nila, unlike sa limited partners na
limited sa contribution nila sa partnership ang pwedeng habulin ng creditors, hindi
pwedeng habulin ang kanilang private property.

Ano nga ba yung mga characteristics of limited partnership? Sa mga may book ni
Hector De Leon, pakiopen yung book niyo sa page 162 para masundan niyo rin yung
mga sinasabi ko and doon naman sa mga wala pang book, pwede kayong mag take
down notes or hindi kaya ay iopen niyo yung sinend ni judge na file and then punta kayo
sa slide no. 32, sa pinakababa sa right side. So proceed na ulit ako, As a general rule,
the characteristics of a limited partnership are as follows:

a.) A limited partnership is formed by compliance with the statutory requirements. So

bago makabuo ng limited partnership, dapat munang mag comply sa requirements ng
law.Okay, question. Ano nga ba yung mga statutory requirements na sinasabi dito?
Yung mga statutory requirements na sinasabi dito ay yung nasa Article 1844, which will
be discussed later on.

b.) One or more general partners control the business and are personally liable to
creditors. Dito naman sa second characteristic, papasok yung articles 1848 and 1850.
Ang sinasabi lang dito, hindi pwedeng mag manage ang limited partners sa operations
ng business unless he has the right to do so or napag-usapan nila na may right si
limited partner to take part in the control of the business. Ito yung sinasabi sa Article
1848. Yung sa Article 1850 naman, a general partner have all the rights and power, and
personally liable siya sa obligations ng partnership PERO may restrictions na atin
namang mapag-uusapan sa Article 1850 mamaya.

c.) One or more limited partners contribute to the capital and share in the profits but do
not participate in the management of the business and are not personally liable for
partnership obligations beyond their capital contributions. Dito naman papasok yung
articles 1845,1848, and 1856. Sabi sa Article 1845, yung limited partners ay hindi
pwedeng maging industrialist partner, ang pwede lang nilang icontribute ay money or
property, not services. Mayroon din silang share sa profit ng partnership pero hindi sila
pwedeng mangielam sa management ng business at gaya nga ng paulit-ulit kong
sinasabi, hindi rin sila liable sa obligations ng mismong partnership.

d.) The limited partners may ask for the return of their capital contributions under the
conditions prescribed by law na under ng articles 1844 and 1857. Pwede raw maibalik
yung mga nicontribute ng limited partners sa kanila kapag may consent ng lahat ng
members, nabayaran na yung liabilities ng partnership, or cancelled yung certificate.
Pero pwede ring kahit wala pang consent ng lahat ng members kung ito ay rightfully
demanded under ng provisions ng second paragraph ng Article 1857. Ididiscuss ‘yon
mamaaya ng group 3 kaya hanggang doon na lang sasabihin ko.

e.) Last characteristic is The partnership debts are paid out of common fund and the
individual properties of the general partners. Ang maaari lamang ipambayad sa utang
ng partnership ay yung common fund nila at yung separate assets or properties ng
general partners, bawal pakialaman ang separate properties ng mga limited partners.

Wala ring prohibition na nagsasabing bawal mag engage ang limited partners sa kahit
anong business. Pero kung napag-usapan nilang bawal mag engage sa iba si limited
partner, then hindi siya pwedeng mag engage.

Now, let’s proceed to the reasons and purpose of statutes authorizing formation of
limited partnerships. First is to secure capital from others for one’s business and still
retain control. Gusto nilang madagdagan ang kanilang kapital at maretain ang kanilang
control sa business, kumbaga kukuha lang sila ng additional capital from the limited
partners at dahil walang karapatan mangielam sa management ng business ang mga
limited partners, nasa kanila pa rin ang control ng business. Second is to share in profits
of a business without risk of personal liability. Dito naman, syempre hindi nga pwedeng
habulin ng creditors ang private properties ng limited partners kaya hindi maapektuhan
ang separate assets nila pero sila ay may contribution sa capital na magagamit upang
magkaroon sila ng profits. Third is to associate as partners with those having business
skills. Lastly, para maencourage yung mga may capital na makipag partner sa mga
partners na may skills or service ang nico-contribute.

Alamin naman natin ngayon kung ano nga ba ang pinagkaiba ng general and limited
partner? Una na nga rito ay ang general partners ay liable sa obligations ng partnership,
while limited partners’ liability extends only sa nacontribute niyang capital na money or
property dahil hindi nga sila pwedeng mag contribute ng services. Next, kung hindi pa
napag uusapan kung sino ang mag mamanage ng business, lahat ng general partners
ay may equal rights sa pagkontrol nito, whether he or not made contributions sa
business while yung mga limited partners ay limited lang sa naka enumerate under ng
Article 1851, bukod don ay wala na silang ibang rights sa pag mamanage ng business.
Next, ang general partners ay pwedeng mag contribute ng money, property, at services
or industry while ang limited partners ay limited sa money or property lang, bawal
services. Next is unlike the general partner, a limited partner is not a proper party to
proceedings by or against a partnership. Next, yung interest ng general partner ay hindi
pwede iassign sa iba at maging partner yung inassign niya without the consent of other
partners while the limited partners’ interests are freely assignable kung ang assignee ay
subject to qualifications uner ng Article 1859. Yung name ng general partners ay
pwedeng mag appear sa name ng business or ng partnership while as a general rule,
bawal mag appear ang name ng limited partners sa name ng partnership. Bawal mag
engage ang general partners sa ibang business na katulad ng sa kanilang partnership
while ang limited partners ay pwede if walang prohibition or hindi nila napag-uusapan.
Last, kapag nag retire, naging insolvent, insane, or namatay ang general partners,
madi-dissolve ang partnership unlike kapag sa limited partner nangyari, dahil pwedeng
ibenta ang kanyang estate ng kanyang executor or administrator.

Alamin naman natin ngayon ang differences between the general partnership and
limited partnership. As a general rule, ang general partnership ay pwedeng mabuo
under ng contract or conduct ng mga partners pero ang limited partnership, ay pwede
lamang mabuo after makapag comply sa requirements ng batas. Next ay ang general
partnership ay binubuo lamang ng general partners, kapag nagkaroon ng limited partner
doon, limited partnership na ‘yon. Yung name ng firm ng limited pppartnership should be
followed by the word “limited”. Isa pa sa mga pagkakaiba ay yung rules kapag may
dissolution and winding up ng partnership.

(Next Slide)

Article 1844
So basically, ang nilalaman ng article 1844 ay yung mga requirements na kung saan
dapat makapagcomply yung mga tao na gustong bumuo ng limited partnership. Ito yung
mga sinasabi ko kanina.

Yung una ay dapat nakalagay,at napirmahan sa certificate yung mga sumusunod:

(Read and explain)
a. Yung name ng partnership na dapat may nakalagay na “Limited” in order to
distinguish kung general partnership ba ito or limited partnership.
b. Character ng business
c. Kung saan yung location ng principal place ng business
d. Name and residence ng bawat partners
e. Kung gaano katagal mag eexist o tatakbo ang partnership
f. Kung magkano ang napagkasunduang cash contribution ng bawat limited partner
g. Yung mga karagdagang contribution na gagawin ng limited partners ay dapat
nakastate rin, at kung kailan ito gagawin or ico contribute.
h. Kapag napagkasunduan na ibabalik sa limited partner yung contribution, dapat
nakalagay kung kailan
i. Kung magkano yung marereceive na share ng limited partner sa profits ay dapat
makita rin sa certificate

(Next Slide)

j. Kung napagkasunduan nila na may right yung limited partner na mag assign ng
third person as contributor kapalit niya, pati na rin yung terms and conditions ay
dapat nakalagay sa certificate.
k. Kung napagkasunduan nila na may right yung partners na mag admit ng
karagdagang limited partners, dapat nakalagay din don
l. Yung napagkasunduan nila, id meron man, iprioritize or unahin nila yung isang
limited partner sa hatian ng profits over sa ibang limited partners
 m. Yung right ng remaining general partner kung napag-usapan nila na ipagpatuloy
ang management ng business in case na maging insane, insolvent, makulong,
mag retire or mamatay yung isang general partner.
n. At ang huli ay yung right ng limited partner, if given, na mag demand and
tumanggap ng property bukod sa cash in return for his contribution.

2. Dapat naka record yung certificate sa office ng SEC.

A limited partnership is formed when there is substantial compliance in good faith at
kapag nakaapgcomply sa lahat ng requirements under this article.

At gaya ng nasabi ko kanina, a limited partnership is not created by mere voluntary

agreement, diba sa general partnership, pwede yung under a contract or agreement
lang. For example, si J nnylyn sinabi kay Lyca na “oh buo tayo ng partnership, tutal
pareho naman nating gustong kumita, mag contribute ako ng pera tapos ikaw lupa at
building” tapos pumayag si Lyca kaya nakapag buo sila ng general partnership, sa
limited partnership, bawal yon May formal proceeding ang pagbuo ng limited
partnership which is to follow nga yung mga requirements under article 1844. It is to
give a public notice sa mga taong gustong malaman yung essential features ng
partnership. For example, yung mga potential creditors or persons dealing with the
partnership. Kung hindi nasunod ang compliance in good faith at sa mga requirements,
magiging general partnership siya at lahat ng partners ay magiging liable as general
partners.

To summarize kung ano ang sinasabi sa article 1844, mayroong dalawang requirements
to form a partnership, una ay nakalagay sa certificate lahat ng matters na naka
enumerate under the no. 1, and it should be sworn and signed by the partners. Second,
such certificate must be filed for record sa office ng Securities and Exchange
Commission.

Presumption of general partnership.

Ang presumption ng batas ang presumption sa lahat ng partnership ay general
partnership. Para masabing limited partnership yung partnership niyo, dapat maipakita
niyo na nakapag comply kayo sa requirements . If ever na matapos yung term na
nakalagay sa certificate ng limited partnership at hindi sila nakapag extend at
nakapagparenew sa SEC, yung privilege ng limited partners sa limited liability ay
mawawala. As far as third persons are concerned, ico-consider ito ng law as a general
partnership.

Article 1845
Ito yung sinasabi ko kanina sa characteristics na hindi pwedeng ang icontribute ng
limited partners ay services, dapat money or property ang contribution nila sa business.

Proceed tayo sa limited partner’s contribution. Una ay medium. Ang medium ng

contribution ng limited partner ay money at property lang, hindi pwedeng maging
service, otherwise, sila ay magiging industrial and general partner, in which case, he will
be excluded from personal liability.
Ngayon, ang tanong. “Pwede bang yung iisang tao ay parehong general at limited
partner?” Ang sagot ay yes. Sinasabi ng batas na pwedeng maging general at limited
partner ang isang partner if it is stated sa certificate na pinirmahan nila but a limited
partner may not be an industrial partner without being a general partner dahil ang
nirerequire nga ng article 1845 ay dapat ang limited partner ay capital contributor.

So magbibigay ako ng example, May limited partnership sina Aubrey, si Joy, at si

Chynna. Si Aubrey ay limited partner, nag contribute siya ng cash, si Joy ay general
partner, nag contribute siya ng cash, at si Chynna naman ay general partner din tapos
services ang contibution niya. Kahit sino sa kanila ay pwedeng maging general and
limited partner at the same time. Pwedeng ang contribution ay cash or property lang, or
both capital and services. Kung si Aubrey ay magcocontribute ng service, bukod sa
cinontribute niyang cash, siya ay magiging genera and limited partner at the same time
pero kung service lang ang nicontribute niya, walang cash, siya ay general partner lang.

Kung ang partner ay nag contribute ng capital lang, he is either a general or a limited
partner or pwede ring both, depende iyon sa agreement na nakalagay sa certificate nila.

Hindi satisfied ang law kapag ang contribution ng limited partner ay through promissory
notes, checks, bonds or by contribution partly in cash, property, checks, or notes. Pero
ang check ay tatanggapin as an actual payment in cash kung may laman talaga yung
account niya and if the check gives the general partner absolute and final control of the
amount named therein. Ito ay tinatawag na certified check or manager’s check at ito ay
tatanggapin ng batas. Yung amount ng check na nadagdag sa bank account ng general
partner ay considered as payment or contribution ng limited partner. Bakit kaya inallow
ng batas na sa bank account ng general artner mapupunta yung bayad ni limited
partner? Kasi diba nga, kung matatandaan niyo, kasama ang separate assets ni
general partner sa partnership so kung sa kanya mapupunta yung amount na binayad
ni limited partner, considered as contribution na yon sa partnership. Malinaw ba?

Next is Time. Sabi sa batas, ang contribution ng bawat limited partner ay dapat
maibigay before the formation of the limited partnership kasi nga diba nakalagay sa
Article 1844 na ilalagay nila sa certificate yung amount ng contribution ng mga limited
partners. Yung additional contributions ay pwedeng bayaran after maform ng
partnership basta naka state dapat siya sa certificate, kung ano at kailan ico-contribute.

Article 1846
Ang sinasabi lang sa article na ito ay hindi pwedeng iinclude ang surname ni limited
partner sa name ng ppartnership unless katulad ito ng surname ni general partner or
bago pa mabuo or maging effective yung limited partnership, ayon na talaga yung name
ng business.

Ngayon, ano ang magiging epekto kapag lumitaw yung name ni limited partner sa name
ng partnership? As a general rule, siya ay magiging liable personally kagaya ng general
partner sa mga creditors pero wala siyang rights ng kung anong rights ang meron ang
general partner. In other words, hindi pa rin siya pwedeng mangielam sa management
ng business.

Article 1847

(Next Slide)
Sinasabi lang dito sa article 1847 na kung may false statement na nakalagay sa
certificate, yung guilty partner will be liable sa consequences and loss. Kung sino yung
nakalagay sa certificate na may false statement, siya ay magiging liable lalo na kung
alam nilang mali ang nakalagay sa statement pero pinirmahan pa rin nila at hindi sila
nakapag request na icancel ang certificate within a sufficient time. (Requisites) Hindi
sinasabi ng article na ito na ang guilty partner shall be liable as general partner, ito ay
penalty lamang para sa mga guilty partners (Nature of liability)

For example, si Jeatrix ay limited partner pero ang nakalagay sa certificate na

pinirmahan niya ay siya ay general partner, alam niyang mali ito pero pumirma pa rin
siya at hindi nag file ng petition to cancel the certificate, ngayon dumating yung time na
naging insolvent si general partner at hinahabol siya ng creditors dahil ang nakalagay
nga sa certificate ay general partner siya, hindi naman alam ng creditors na limited
partner pala siya, hindi niya pwedeng iraise at sabihin na siya ay limited partner para
lang matakasan yung liability sa creditors kasi may ebidensya na nga e, itatanggi mo pa
e may pirma mo, ibig sabihin nag agree ka. Si Jeatrix ay liable lang sa mga innocent
person pero hindi sa co-partners niya na alam rin na may false statement kasi diba
syempre, partner ka e, bakit mo pinirmahan kung alam mong may mali na nakalagay?

Article 1848
Ang sinasabi dito sa article 1848, hindi liable si limited partner as general partners
unless may right siya to control the business.

Liability of limited partner for participating in management of partnership

1. Liability as a general partner - under Article 1848, ang limited partner ay liable lang as
a general partner for the partnership’s obligation if nainvolve siya sa management ng
business ng partnership. His abstinence from the participation sa transaction ng
business ng partnership is essential to his exemption mula sa liability for the debts of
the firm once na naging insolvent yung general partner. The bare grant of apparent
control to a limited partner is not enough to make him liable as a general partner kung
hindi naman siya nag participate sa pagco-control or pagma-manage ng partnership.
2. Existing limited partnership contemplated - yung article 1848 ay nag a-apply lang sa
existing limited partnerships, hindi siya mag a-apply sa limited partnerships na buwag
na at hindi rin magiging liable si limited partnership for taking part in the management
of the firm if he settled it after mabuwag ng partnership.

Active management of partnership business contemplated

Ang sinasabi ng batas na ang maituturing na active participation sa management sa
business ay once you took control of the business, hindi kasali dito ang pagbibigay ng
advice or suggestions and opinions ng mga limited partners sa general partners at nasa
general partners ‘yon kung susundin nila or hindi. Hindi ipinagkakait ng batas ang rights
ng limited partnerships to make suggestions or express their options as to the
advisability of certain transactions. Magiging liable lang as general partners ang limited
partners if for example, the business of the partnership is carried on by a board of
directors chosen by the limited partner or nakalagay sa contract ng parties na ang
innapoint ng limited partner ang magiging managing partner ng firm.

(Next Slide)

Article 1849
Sinasabi lang ng article 1865 na pwedeng mag dagdag at mag admit ng bagong limited
partners after maform ang partnership and such partner may be admitted upon filing an
amendment to the original certificate in accordance with the requirements of Article
1865.

Nirerequire ng batas na dapat there is a proper amendment to the certificate, it must be

signed and sworn to by all of the partners, including new limited partners and must be
filed in SEC.

Article 1850
Isa rin ito sa mga sinasabi ko sa characteristic kanina na a general partner have all the
rights and power, subject to restrictions and personally liable siya sa obligations ng
partnership without limited partners pero kung walang written consent or ratrification ng
mga sumusunod na specific acts by al the limited partners, the general partner have no
authority to do such acts: (read and explain)
1. Bawal silang gumawa ng anumang pagkilos na labag sa nakalagay sa certificate.
Ito ay violation ng agreement ng partners na nakasulat sa certificate
2. Bawal silang gumawa ng anumang pagkilos na makakaapekto at magpapahinto
sa pagpapatuloy ng business. Ito ay makakasama at makakaapekto sa interests
ng limited partners.
3. Confess a judgment against the partnership
4. Possess partnership property or assign their rights in specific partnership
property, for other than a partnership purpose; Ito ay makakasama rin sa
interests ng partners.
5. Bawal mag admit ng person as a general manager. This act is based on the
highly fiduciary nature of the partnership relation.
6. Gayundin ang pagbabawal sa pag aadmit ng tao as limited partner unless
nakalagay sa certificate na pwede. Ang partnership ay dapat fiduciary in nature,
dapat may tiwala ang partners sa iaadmit nilang partners kaya hindi pwedeng
basta-basta mag admit si general partner kung wala namang written consent ng
mga limited partners.
7. At wala silang karapatan to continue the business if namatay, nag retire, naging
insolvent o insane ang general partner unless binigyan sila ng karapatan sa
certificate. Any of these events would result to a partnership dissolution.

(Next Slide)
Rights, powers, and liabilities of general partner.
1. Right of control/unlimited personal liability - Katulad lang din ng sa ordinaryong
partnership ang general partner sa limited partnership. He is vested with the
entire control of the partnership’s business and mayroon siya ng lahat ng rights
and power and is liable to all the liabilities and restrictions of partner in a
partnership without limited partners. Pwedeng habulin ng creditors yung personal
properties niya once na hindi na sapat ang assets ng partnership pambayad ng
utang.
2. Acts of administration/acts of strict dominion - as a general rule, a general
partner may bind the partnership by any act of administration pero wala siyang
power na gawin yung mga specific acts na naka enumerate under article 1850.
ANg mga acts na ito ay tinatawag na acts of strict dominion or ownership and
according sa article 1818, these acts are beyond the scope of authority of a
general partner.
3. Other limitations - walang rights ang mga general partners to bind the limited
partners beyond their contribution in the partnership. Wala rin silang power to act
for the firm beyond the purpose and scope of the partnership nor change the
nature of the business without the consent of limited partners.

For example, ako, si Leslie at si judge ay bumuo ng limited partnership, and yes,
nakapag comply kami sa lahat ng requirements. Ako ay general partner tapos si Leslie
at si Judge ay limited partners. Ang nature ng business namin ay service. Hindi
pwedeng magbenta ako bigla ng hollow blocks kung ang purpose ng partnership namin
ay service lalo na kung hindi alam ni Leslie at ni Judge na nagbebenta pala ako ng
hollow blocks gamit ang name ng partnership. Ngayon, kung napagkasunduan namin
na “oh sige, idagdag natin ‘to bukod sa service”, pwede na ‘yon.

Article 1851
Ang sinasabi lang sa article na ito ay may rights yung mga limited partner katulad ng
general partner
1. to have the partnership books kept sa principal place ng business at i-inspect or
kopyahin alinman dito pero sa loob lang ng working hours.
2. Pwede rin silang mag demand ng full information ng lahat ng nakakaapekto sa
partnership and a formal account ng partnership affairs
3. Pwedeng sa pamamagitan ng korte, ipadissolve nila ang partnership.
Limited partners should also have the right to receive his share in profits dahil nag
contribute siya sa business e, nagamit yon ng partnership to operate its business.
Nakinabang yung partnership, so in return, dapat may share yung limited partners sa
profit nito.

Rights, in general, of a limited partner

Yung powers ng mga limited partners ay sobrang limited compared sa mga general
partners, the limited partners cannot take part in the control of the business. Ngayon
dahil wala nga silang control sa business, in order to protect their interest in the firm,
binigyan sila ng batas ng karapatan to compel the partners to account.
(Next Slide)

Article 1852
Dito nangyayari yung mga instances na akala ng partner ay limited partner siya pero
naging general partner pala siya and he is liable sa liabilities ng partnership. This article
provides an exemption for them if nung nalaman niya na hindi pala siya limited partner,
he renounces his interest sa share of profits of the partnership and other way of
compensation by way of income. Ang sinasabi sa article na ito, dapat inosente ka para
maexcept ka sa pagiging liable as a general partner.

Status of partner where there is failure to create limited partnership

Ang sinasabi dito, if there is a failure to comply with article 1844, na nagsasabing a
limited partnership is formed where there has been substantial compliance in good faith
with the requirements, magiging ineffective yung privilege ng limited partners sa limited
liability.

Status of person erroneously believing himself to be a limited partner.

1. Conditions for exemption from liability as a general partner - exempted lang sa
pagiging liable as a general partner yung partner kapag nameet yung mga
sumusunod na conditions:
a. Nung nalaman niyang hindi pala siya limited partner, he instantly
renounces his interest in the share of profits ng business or other
compensation by way of income.
b. Hindi nakalagay or hindi kasali yung surname niya sa name ng
partnership dahil as a general rule ng article 1846, surname lang ng
general partners ang pwedeng kasama sa name ng partnership, bawa
ang name ng limited partnership so kung for example, limited partner ka
pero nakita mo yung surname mo sa name ng partnership, alam mong
general partner ka at hinayaan mo lang siya, hindi ka kasali sa exception
under this article.
c. Hindi ka dapat nag participate sa pag ma-manage ng business.

If nameet mo yung mga conditions na ‘to, then article 1852 exempts you from being
liable as a general partner.

2. Necessity of renouncing his interest - dapat before maging liable ng partnership sa

third persons, narenounce mo na yung interest mo. For example, by selling it sa general
partner pero hindi necessary na irenounce niya yung interest niya if there are no
creditors that prejudiced.

(Next Slide)

Article 1853
Ang sinasabi sa article na ito, ang isang partner ay pwedeng maging general partner
and limited partner at the same time if it is stated sa certificate. They have all the rights
and power and be subjected to all the restrictions of a general partner except sa
pagkakaroon ng right against the other members dahil magkakaroon lang siya nito if
limited partner lang siya, hindi general partner. In other words, a person who is both a
general and limited partner is not relieved from personal liability to third persons for
partnership debt pero he is entitled to recover from the general partners the amount ng
binayaran niya sa third persons, and sa pag se-settle ng accounts after dissolution,
dapat siyang iprioritize over the general partners in return of his contribution.

Article 1854
Sinasabi sa article na ito na pwedeng magpautang sa partnership, makipag transact sa
other businesses with it, and makatanggap on account ng pro rata share or fair share of
the partnership assets with general creditors ang mga limited partners if hindi rin sila
general partners. However, yung mga limited partners is prohibited to receive or hold
collateral security and partnership property, bawal rin silang makatanggap ng kahit
anong payment, conveyance, or release from liability if it will prejudice the right of third
persons. Kapag niviolate ang prohibitions na ito, mag a-arise ito sa disputable
presumption of fraud on the creditors of the partnership.

(Next Slide)

Loan and other business transactions with limited partners

1. Allowable transactions - under this article, limited partners are not prohibited sa
mga sumusunod:
a. Grant loans to the partnership
b. Transacting other business with it, and
c. Receiving a pro rata share or fair share of the partnership assets with
general creditors
2. Prohibited transactions - under this article, limited partners are prohibited sa mga
sumusunod:
a. Receiving or holding collateral security any partnership property or yung assets
na nipledged ng nangungutang as security for his loan. For example, yung titulo
ng bahay, atm card, o rehistro ng sasakyan.
b. Bawal din silang makatanggap ng kahit anong payment, conveyance, or release
from liability if it will prejudice the right of third persons.
3. Preferential rights of third persons - palaging may preferential rights ang third persons
as long as partnership assets are concerned in view of natural tendency of the partners
to give preference to each other.
For example, si Arabela, si Hannah, at si Chynna ay general partners tapos si Leslie ay
limited partner. Yung total assets ng partnership ay nag amount sa 20,000. Yung
partnership ay may utang kay Leslie ng 5,000 at kay Kayerill na third person creditor ng
25,000.

Since kulang yung pambayad ng partnership sa utang nito kay Leslie at Kayerill, hindi
muna mababayaran si Leslie dahil kapag siya ang inunang bayaran, mag a-arise ito as
fraud kay Kayerill. Gano’n din ang magiging presumption kung si Leslie naman ang may
utang sa partnership pero hinayaan siyang hindi na magbayad ng utang. However, hindi
prohibited si Leslie na bumili ng partnership property kung ang purpose naman nito is to
generate cash to help them pay the partnership liabilities to the third persons.

Ang sinasabi lang dito is dapat unahing bayaran ang third persons bago ang partners.

Article 1855
Sinasabi sa article na ito na kung maraming limited partners, pwedeng irioritize ang
isang limited partner over the other limited partners if ganon ang napag agreehan nila
and dapat nakastate ito sa certificate, if walang statement na nakalagay sa certificate,
equal lang yung pag rereturn ng contributions sa mga limited partners, walang
ip-priority.

Article 1856
Ang sinasabi sa article na ito, yung mga limited partners ay makakareceive ng share of
profits nila after mabayaran lahat ng utang ng partnership sa third persons. Dapat
iprioritize na bayaran ang third persons bago ang partners.

Compensation of limited partner by way of income

1. Excess of partnership assets over partnership liabilities - ang sinasabi lang dito,
matatanggap lang ng limited partners yung share nila sa profit after mabayaran
lahat ng utang ng partnership sa third persons, ip-prioritize nilang bayaran ang
third persons sa pagbabayad ng utang over sa utang ng limited partners.
2. Preferential rights of partnership creditors - sa pag dedetermine ng utang ng
partnership, hindi kasali dito ang utang sa limited partners for their contributions
or yung shares nila sa profit at utang sa general partners. Yung liabilities sa mga
limited partners other than sa share nila sa profit ay subject to preferential rights
of partnership creditors na siyang pinoprotektahan ng article 1854.

SUMMARY:
ARTICLE 1843: Limited liability lang si limited partner. Kung ano lang yung contribution
nya, yun lang yung pwedeng kunin or habulin. Hindi pwedeng habulin yung personal or
private property nila unlike sa general partner. Wala ring prohibition si limited partner na
mag engage sa kahit anong business.

ARTICLE 1844: Limited partnership is not created by mere voluntary agreement.

Requirements must be followed so that public notice may be given to all who desire to
know the essential features of partnership. It is formed when there is substantial
compliance in good faith with the requirements set in this article. Kapag hindi sinunod,
then magiging general partnership sya.

ARTICLE 1845: Limited partners cannot contribute services. Pero a partner can be a
limited and general partner at the same time but it should be stated sa certificate
provided in article 1844. Contribution of limited partners must be made before formation,
additional contributions can be made later on.
ARTICLE 1846: Bawal malagay sa partnership name yong surname ni Limited Partner
unless:
(1) May kapangalan siya na General Partner
(2) Bago pa dumating si Limited Partner, kapangalan na niya talaga yong partnership
Pero kapag nilabag niya yung sinasabi ng Article 1846, magiging liable na siya as
General Partner sa mga creditors na walang actual knowledge na Limited Partner ka
lang at hindi General Partner

ARTICLE 1847: Kapag nagkaroon ng loss at dahil yon sa false statement na nakalagay
sa certificate, at yong mga taong nakakaalam ng false statement na yon ay pinabayaan
lang or di nila pinacancel o magkaroon man lang ng amendments, they will be held
liable
(1) Sa pag-sign pa lang niya ng certificate alam na niyang may false statement
(2) Noong una hindi niya alam na may false statement pero kalaunan nalaman niya rin
kaagad at hindi siya nag file ng petition to cancel it

ARTICLE 1848: Ang Limited Partner, may limited liability lang at limited control sa
partnership, pero kung nakialam siya or nag took siya ng part in the control of the
business, then he/she will be held liable as a General Partner.

ARTICLE 1849: Pagkatapos na mabuo ang limited partnership ay maari paring

magdagdag ng limited partner. Ito ay pinapayagan ng batas basta may proper
amendment at consent ng mga existing partners. Siyempe importante din na lahat ng
pirma ng partners kasali ang bagong limited partner ay mai-include sa papeles na ipapa
register sa SEC.

ARTICLE 1850: May rights and power yung mga general partners to be subjected to
the restrictions and liabilities or obligations of a partnership without limited partners pero
wala siyang power to do the specific acts enumerated under this article if walang written
consent or at least ratrification ng lahat ng limited partners.

ARTICLE 1851: Ang sinasabi lang sa article na ito ay kung anong rights ang meron ang
general partners, ganon din ang limited partners except for having the rights to control
and manage the business.

ARTICLE 1852: This article provides an exemption for being liable as general partners
sa mga partners na nag akalang limited partners sila pero general pala if… nung
nalaman niya na hindi pala siya limited partner, he renounces his interest sa share of
profits of the partnership and other way of compensation by way of income or binenta
niya ito sa general partnership. Ang sinasabi sa article na ito, dapat inosente ka para
maexcept ka sa pagiging liable as a general partner.

ARTICLE 1853: Ang sinasabi sa article na ito, ang isang partner ay pwedeng maging
general partner and limited partner at the same time if it is stated sa certificate. A
person who is both a general and limited partner is not relieved from personal liability to
third persons for partnership debt pero he is entitled to recover from the general
partners the amount ng binayaran niya sa third persons, and sa pag se-settle ng
accounts after dissolution, dapat siyang iprioritize over the general partners in return of
his contribution.

ARTICLE 1854: Sinasabi sa article na ito na pwedeng magpautang sa partnership,

makipag transact sa other businesses with it, and makatanggap on account ng pro rata
share or fair share of the partnership assets with general creditors ang mga limited
partners if hindi rin sila general partners. However, yung mga limited partners is
prohibited to receive or hold collateral security and partnership property, bawal rin silang
makatanggap ng kahit anong payment, conveyance, or release from liability if it will
prejudice the right of third persons. Kapag niviolate ang prohibitions na ito, mag a-arise
ito sa disputable presumption of fraud on the creditors of the partnership.

ARTICLE 1855: Sinasabi sa article na ito na kung maraming limited partners, pwedeng
iprioritize ang isang limited partner over the other limited partners if ganon ang napag
agreehan nila and dapat nakastate ito sa certificate, if walang statement na nakalagay
sa certificate, equal lang yung pag rereturn ng contributions sa mga limited partners,
walang ip-priority.

ARTICLE 1856: Ang sinasabi sa article na ito, yung mga limited partners ay
makakareceive ng share of profits nila after mabayaran lahat ng utang ng partnership
sa third persons.

CONT. OF CHAPTER 4: 1857-1867

Article 1857 discuss kung paano mababawi ng limited partner yung contribution niya sa
partnership, BUT of course merong condition or requisites na kailangan munang
masatisfy.

1. Kailangan yung mga utang ng partnership ay nabayaran na or kung hindi man e

enough na yung partnership assets para mabayaran lahat ng liabilities ng partnership
sa third persons or sa creditor. So kung gagamitin natin yung example kanina, may
investment akong 100k sa group 3 partnership and yung partnership ay may worth 1M
na asset, kaso at the same time meron itong 500k na utang sa creditor. Sinasabi sa first
requisites e kailangan bayaran muna ng partnership yung utang sa creditor before
makuha pabalik yung contribution niya. Since diba kung maaalala niyo yung discussion
natin last last week, isa dun sa nabanggit ng mga reporter ay kailangan munang
bayaran yung mga creditor before the partners.

2., the consent of all the members (general man or limited) has been obtained except
when the return may be rightfully demanded; dito naman, if nagdisolve na yung
partnership or stipulated sa certificate kung kailan niya marereceive o kaya may fixed
term na nakasaad sa certificate then it is rightfully demanded. Gamitin ulit natin yung
example kanina, meron akong cinontribute na 100k diba, and nakasaad sa certificate na
sa 2023 ko pa siya pwede mabawi, therefore sa 2023 ko pa talaga siya makukuha kahit
na anong pilit ko since yun yung napag-usapan na term. and for the last condition,
certificate is cancelled or so amended as to set forth the withdrawal or reduction of the
contribution. so dito naman, since meron nga silang certificate na ginawa once na
naggawa silang partnership yung certificate na yon or the article 1844 ay kailangan
macancel bago makuha yung contribution. Since kapag nawalan na ng bisa yung
certificate diba magkakaroon na sila ng karapatan na kuhanin yung return of
contribution. Mas maiintidihan niyo to mamaya sa article 1864 since ididiscuss ko doon
paano masasabi kung icacancel or iaammend lang yung certificate.

magtungo naman tayo sa article 1857 second paragraph. When limited partner may
demand return:
Una, on the dissolution of the partnership syempre if dissolve na yung partnership
may karapatan na talaga siya na magreceive ng contribution niya. Gaya nga ng sabi ni
Hannah sa report nila may liquidation na mangyayari once na madissolve yung
partnership, therefore lahat ng contribution na binigay mo e mapapunta sayo in cash
form. Yes! Cash form unless nakapaloob sa exception yung reason mo para makuha
kung ano ba talaga yung inicontribute mo.

Second, upon the arrival of the date specified in the certificate for the return
connected to dun sa second condition na inexplain ko kanina, sinasabi lang dito na
kapag dumating na yung agreed fixed term na nakalagay sa certificate saka niya lang
makukuha yung contribution na binigay niya. for example si Lyca at si Laurice nagform
ng partnership at based sa certificate nila makukuha pa ni Lyca yung contribution niya
after 3 years, then after 3 pa niya talaga yon makukuha kasi nakasaad siya sa
certificate.

and lastly, If no term is specified, after six months’ notice in writing to all other
partners. dito naman, since walang agreement or walang nakasaad sa certificate
kailangan mong magbigay ng notice sa other members at kung after 6 months e
nasabihan mo na sila at wala namang tumutol then may karapatan ka na para makuha
yung contribution mo.

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Right of limited partner to cash in return for contribution:
Limited partner has only the right to demand and receive cash for his contribution. Ito
yung sinasabi ko kanina nung dinidiscuss ko yung about sa dissolution. Sinasabi dito na
once na umayaw ka or gusto mo na umalis sa partnership yumg cinontribute mo hindi
na yon yung mapapabalik sayo kundi cash na. So meaning, kahit na property, kotse or
anything na ginagamit sa business aside from cash yung inicontribute ng limited
partner, generally cash lang yung pwede niyang idemand. Pero since general rule yung
cash lang ang pwedeng idemand, of course merong exception dito
so the exceptions are:
1. when there is stipulation to the contrary in the certificate; meaning if nakasaad sa
certificate na si Leslie magcocontribute siyang building para may magamit yung
partnership pero napagkasunduan nila sa certificate na once ayaw niya na babawiin
niya yung building therefore, ang mapapabalik sa kanya ay yung building since ayon
yung napagkasunduan sa certificate of partnership. Hindi pwedeng tumanggi yung
ibang partner na hindi pwede, cash lang dapat mapabalik sayo, kasi kami cash lang din
napabalik samin, since nakastate siya mismo sa partnership.

2. where all the partners consent to the return other than in the form of cash. dito naman
kahit wala sa certificate kaso pumayag yung mga partners mo na ibalik yung
contribution mo then kahit pa property pa yung iniambag mo makukuha mo pa rin siya.
Example si Reynamae nagcontribute ng kotse tapos nadissolve yung business nila,
nung sinabi niya sa mga partner niya na kukunin niya yung kotse na cinontribute niya at
pumayag naman lahat, then makukuha niya yung kotse niya kahit wala yon sa
certificate nila.

NEXT is When limited partner may have partnership dissolved by decree (LET US
DEFINE FIRST WHAT IS DECREE, decree means court, meaning yung korte na mismo
yung magsasabi whether the partnership will be dissolved.)

kailan pedeng magfile ng petition yung limited partner para madissolve yung
partnership?
1. dissolution by judicial decree
a. kapag tinanggihan ng other members yung demand niyang ibalik yung
contribution kahit na nagawa niya na naman yung nakasaad sa paragraph 1 and 2.
b. kung hindi pa nababayaran yung liabilities ng partnership or kung hindi sapat
yung partnership asset na magbayad. So dito, may karapatan yung limited partner na
magfile ng petition.
2. dissolution by the partners- dito naman kapag napagkasunduan na mismo ng mga
partners na itigil na yung business therefore madidissolve na siya but the problem here
is if may isang hindi sumang-ayon, kinakailangan na lumapit sila sa korte at hayaan na
ang korte na yung magdecide whether magdidissolve ba yung partnership or hindi.

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Article 1858 is about the liabilities of limited partner sa partnership at as a trustee for the
partnership. So kapag sinasabi nating trustee, ibig sabihin nito ay katiwala, so ano nga
ba yung liabilities bilang katiwala sa partnership or ano yung responsibility kumbaga.
Pagtuunan natin ng pansin yung to the partnership na sinasabi:
1. for the difference between his contribution as actually made and that stated in the
certificate as havin been made; for example limited partner ako ng partnership at ang
sabi ko sa certificate e magcocontribute akong 100,000 thousand, kaso 90,000 pa lang
yung pera ko, ibig sabihin liable or may pagkakautang ako sa partnership na 10,000
kasi 100,000 yung sinabi kong icocontribute ko.
Next is for any unpaid contribution which he agreed in the certificate to make in the
future time. eto naman yung mga additional contribution na sinabi mong icocontribute
mo after magform ng partnership. OF COURSE LIABLE KA DON KASI NAG AGREE
KA NA ICOCONTRIBUTE MO YON IN THE FUTURE. For example nagcontribute ka ng
laptop while finoform yung partnership tapos habang ginagawa yung certificate
nagyabang ka pa na by next month ang icocontribute mo naman ay machine therefore
liable ka na tuparin yon kasi ibinida mo na na magcocontribute ka ng machine.
Next is limited partner as a trustee for the partnership:
una, Specific property stated in the certificate as contributed by him, but which was not
contributed or which has been wrongfully returned. for example sabi ni Kyla,
magcocontribute akong kotse, habang hindi pa yon totally nadadala sa partnership as a
trustee kailangan niya yon ingatan kasi sinabi niya na na icocontribute niya yon kaya
liable siya kung masira yon habang hindi niya pa totally nicocontributE OR HABANG
HINDI PA TOTALLY UNDER SA PARTNERSHIP yung kotse.

Pangalawa, Money or other property wrongfully paid or conveyed to him on account of

his contribution. so, dito wrongfully niya nareceive therefore liable siya na alagaan at
ingatan yon para pagbalik sa partnership nasa proper condition pa rin.

The liabilities of a limited partner may be waived given that the following
requisites are made:
1. it is made with the consent of all partners. Of course kapag pumayag lahat ng
partners mo pwede ng idisregard yung liabilities mo. diba kanina hinalimbawa ko na
may utang pa akong 10,000 sa partnership kasi 90,000 lang yung actual na nabigay ko,
pero since pumayag yung mga partner ko na huwag ko na ibigay yung 10,000 na
kulang ko therefore, mababaliwala na yung utang kong 10k kahit pa nakasaad sa
certificate na 100,000 dapat. Since partnership is all about meeting of the minds at
agreement diba, kaya kahit indicated sa certificate pero napagkasunduaan niyo namang
lahat na baliwalain na lang then wala na yung utang na yon. Next is
2. it does not prejudice partnership creditors who extended credit or whose claims
arose before the cancellation of the certificate. dito naman ang sinasabi dito ay dapat
walang 3rd party na maaagrabyado. Walang creditor na hindi mababayaran. So if
nagpaplano pa lang kayong icancel na yung certificate at may biglang sumulpot na
creditor ng partnership dapat mabayaran muna yon bago mabaliwala yung
pagkakautang mo

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Liability for return of contribution lawfully received.

a limited partnership is nevertheless liable to the partnership for the return of
contribution lawfully received by him to pay creditors who extended credit or whose
claim arose before such return. However, the liability of that limited partner is up to the
extent of his contribution. Dito nman kunwari naibalik na sayo lahat ng cinontribute mo
as in lahat. sinasabi dito na kahit na nabalik na sayo yung perang cinontribute mo kaso
biglang may sumulpot na another creditor na nagcclaim na may utang pang dapat
bayaran, therefore ubligado ka na bayaran yon gamit yung contribution na binalik sayo
since priority na mabayaran muna yung creditors ng partnership, hindi ka pwedeng
tumanggi na hindi magbayad na kesyo iyo yon or naibalik na tapos babawiin. Take note
lang na yung ibabalik ng partner na pera kung may sumulpot na creditor e hanggang sa
kung magkano lang yung cinontribute niya.

ARTICLE 1859 One thing that we must know sa article 1859 is that it talks about 2
different people.
THE ASSIGNEE OF THE LIMITED PARTNER AND SUBSTITUTED LIMITED
PARTNER.

A limited partner's interest is assignable..

- meaning pwede niyang iassign yung interest niya sa ibang tao w/o the consent of
other member since isa rin siyang contributor.

ano naman yung sinasabing substituted limited partner?

A substituted limited partner is a person admitted to all the rights of a limited partner
who has died or has assigned his interest in a partnership.
- from the word itself siya yung magrereplace kay limited partner ibig sabihin if namatay
or nagdecide siyang gusto niyang ilipat yung interest, si substituted limited partner yung
papalit sa kanya at magiging new member ng partnership.

An assignee, who does not become a substituted limited partner, has no right to require
any information or account of the partnership transactions or to inspect the partnership
books; he is only entitled to receive the share of the profits or other compensation by
way of income, or the return of his contribution, to which his assignor would otherwise
be entitled.
- kung natatandaan nyo yung discussion about the assignee and assignor of general
partnership same lang din sila, wala pa ring karapatan yung assignee na pakialaman
yung partnership books and transactions na ginagawa nung business.
An assignee shall have the right to become a substituted limited partner if all the
members consent there to or if the assignor, being there unto empowered by the
certificate, gives the assignee that right.

- sinasabi dito na may chance si assignee na maging substituted limited partner. pano?
una, kailan ofcourse na lahat ng member ay payag na mapabilang siya. and to further
explain according nga sa article 1844
j. The right, if given, of a limited partner to substitute an assignee as contributor in his
place, and the terms and conditions of the substitution. MEANING, MAY POWER YUNG
LIMITED PARTNER NA GAWING SUBSTITUTE YUNG ASSIGNEE KUNG
GUGUSTUHIN NIYA.

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ARTICLE 1860
"The retirement, death, insolvency, insanity or civil interdiction of a general partner
dissolves the partnership, unless the business is continued by the remaining general
partners:
-this provides that retirement, death, insolvency, insanity or civil interdiction or civil death
kung tatawagin once na nag occur sa general partner. ang general rule ay madidissolve
yung partnership,,,,, unless pipiliin ng natitirang general partner na ituloy yung
partnership. may dalwang condition para matuloy yung partnership
(1) kapag stated sa certificate nila or sa book of partnership nila or
(2) if lahat ng natitirang partner general man or limited ay pumayag, then tuloy ang
partnership pero we must take note na kung yung pangalan ng partnership ay about sa
names ng mga general partner including the deceased then kailangan macancel yung
certificate at magchange sila ng name na hindi kasama yung deceased

ARTICLE 1861
"On the death of a limited partner his executor or administrator shall have all the rights
of a limited partner for the purpose of setting his estate, and such power as the
deceased had to constitute his assignee a substituted limited partner.
-basically ang sinasabi dito ay once na mamaatay yung limited partner may karapatan
yung administator or kung sino ang iaassign ng court. sa estate niya para malipat yung
assets and liabilities ng deceased. and take note that executor or administrator have the
power na mag-assign ng substituted limited partner sa asignee.

The estate of a deceased limited partner shall be liable for all his liabilities as a limited
partner." of course, since priority nga ang creditor, kailangan munang bayaran lahat ng
creditor using the asset of the deceased person.

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ART. 1862.
it pertains to personal creditor of a limited partner IN HIS PERSONAL CAPACITY.

may rights si creditor na habulin yung assets at interest ni limited partner sa partnership.
gaya nga ng sabi sa first line, the creditor of a limited partner may apply to the proper
court for an order charging the limited partner's interest in the partnership for the
payment of any unsatisfied amount of his claim. for example si leslie na limited partner
ni lyca at laurice nangutang kay reynamae, kaso ayaw magbayad ni leslie, so si
reynamae meron siyang rights na magfile ng charging order sa korte na yung assets na
cinontribute ni leslie ay sa kanya na para mabayaran yung utang sa kanya.

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ARTICLE 1863, THIS TALKS ABOUT DISSOLUTION, and distribution once dissolved.
"In settling accounts after dissolution the liabilities of the partnership shall be entitled to
payment in the following order:
(1) Those to creditors,paulit ulit na nga tong binabanggit kanina, third party creditor
should be the priority kapag magbabayad na ng utang
(2) limited partners in respect sa share of the profits and other compensation by way of
income on their contributions; or simply yung kita nila.
(3) limited partners in respect sa cinontribute nilang capital
(4) Those to general partners other than for capital and profits;
(5) Those to general partners in respect to profits
(6) Those to general partners in respect to capital.
kung mapapansin niyo mas maraming bawas sa general partner. mas lugi kung tutuusin
kung pagbabasihan sa pagbayad ng liablitiy once na dissolve. but we must also take
note na yung general partner lang yung nag-aadminister nung partnership since si
limited partner ay parang shareholder lang. Kung lumubog ng sobra sa pagkakautang
yung partnership ang pinakamalmado ay si General partner kasi kahit yung personal
assets niya pwedeng magalaw unlike sa limited liability na kung ano lang ang
inicontribute yun lang mawawala sa kanya

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On article 1864, matutunan natin kung kailan iaammend ang certificate at kung kailan
ito icacancel. Ammend means babaguhin or aayusin and cancel means cancel, or
ipagsasawalang bisa yung certificate.

A certificate shall be amended when: So yung nakapaloob dito ay yung mga situation
na kung saan magkakaroon lang ng changes sa partnership pero hindi ibig sabihin e
macacancel na siya.
(1) Una, There is a change in the name of the partnership or in the amount or character
of the contribution of any limited partner; kunwari ang una kong cinontribute is 100M,
tapos nung nag expire yung partnership nagbago yung isip ko, and ginawa kong 300M
yung contribution then that does not mean na makakacancel na yung certificate but
rather magkakaroon lang ng changes. Pasok din dito yung changes sa name, kunwari
abc
(2) A person is substituted as a limited partner; ayan napaliwanag na naman yan
kanina, considered as new member na sila kaya need baguhin
(3) An additional limited partner is admitted;
(4) A person is admitted as a general partner;
(5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil
interdiction, and the business is continued under article 1860;
nadiscuss natin 'to sa article 1860 wherein kapag nga naisipan nung other general
members na ipagpatuloy yung business at lahat naman ng member ay umagree
therefore magkakaroon lang ng changes sa certificate.
(6) There is change in the character of the business of the partnership;

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(7) There is a false or erroneous statement in the certificate; kumbaga may nakasaad
sa certificate na wala naman sa napag-usapan
(8) There is a change in the time as stated in the certificate for the dissolution of the
partnership or for the return of a contribution;
(9) A time is fixed for the dissolution of the partnership, or the return of a
contribution, no time having been specified in the certificate; dito naman if gusto
mo ituloy yung business nyong may fixed term
(10) and lastly, The members desire to make a change in any other statement in the
certificate in order that it shall accurately represent the agreement among them.
so if kunwari nagkaroon ng disagreement tapos may gustong baguhin sa certificate then
magkakaroon din ng changes or ma-aammend yung certificate.

1) The certificate shall be cancelled, not merely amended:

a) When the partnership is dissolved other than by reason of the expiration of the term
of the partnership; kung matatandaan niyo sa article 1830, sinabi don yung mga
possible cause kung paano madidissolve ang partnership so meaning macacancel siya
kapag kapag willingly umayaw na yung partner or yung buong members,by expulsion of
another member, if naging unlawful yung partnership, nagretire or naging insolvent
yung general partner and many more reasons. EXCEPT NA LANG TALAGA KUNG
PIPILIIN NG MGA MEMBERS NA IPAGPATULOY SIYA

b) When all the limited partners cease to be such. A limited partnership cannot exist as
such if there are no more limited partners. (1843)
diba hindi naman talaga maccreate yung limited partnership kung aayaw na or
magcecease na yung mga limited partner.

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ARTICLE 1865
dito sa article 1865 about naman siya sa writing ng certificate of partnership kung may
changes or kung icacancel ba, included dito yung requirements, anong conditions and
such.
The writing to amend a certificate shall:
(1) Una, kailangan muna magconform dun sa requirements na gustong magkaroon ng
changes, halimbawa kung yung changes na gustong gawin ng partnership ay magpalit
ng name ng partnership, therefore kailangan niya ulit magpasa ng mga certificate na
naglalaman ng bagong pangalan nung partnership. Yung mga requirements na paper
ay makikita sa article 1844 dipende sa kung ano yung gustong ayusin ng mga members

(2) Be signed and sworn to by all members, and an amendment substituting a limited
partner or adding a limited or general partner shall be signed also by the member to be
substituted or added, and when a limited partner is to be substituted, the amendment
shall also be signed by the assigning limited partner. So dito kailangan lahat ng
members magsign at manumpa na pumapayag sila sa mga pagbabago na naganap.
Including yung substituted limited partner at asignee if ever na magkakaroon.

The writing to cancel a certificate shall be signed by all members.

A person desiring the cancellation or amendment of a certificate, if any person

designated in the first and second paragraphs as a person who must execute the writing
refuses to do so, may petition the court to order a cancellation or amendment thereof.
kailangan lahat ng members maglagay ng consent nila para macancel yung certificate
and kapag may mga member na ayaw pumayag na maammend or macancel yung
certificate then pwede silang pumunta sa korte para magfile ng petition para macancel
yung certificate.

Kapag yung korte napatunayan na dapat nga macancel yung certificate or maammend
then pwede kang pumunta sa office of the security and exchange commission or SEC
para ayusin yung papers na kailangan.
Take note na hindi lang for ammendment yung need ng SEC, kailangan din magfile for
cancellation and dito hindi need yung approval ng SEC. pumayag man yan or hindi
macacancel ang certificate.

Again ang requirements para ma-ammend yung certificate ay:

1. It must be in writing at need attach yung gustong baguhin
2. Be signed and sworn by all the members at kung may substituted limited partner
kailangan din nito pumirma
3. The certificate of limited partnership, as amended, must be filed for record in the
Office of the SEC
At para naman macancel ang certficate of partnership ang requirements ay:
1. It must be in writing
2. It must be signed and sworn to by all members
3. It must be filed for record in the Office of the SEC

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ART. 1866. ang pinakasinasabi lang ng art. 1866 ay hindi macoconsider as proper party,
kumbaga yung limited partner ay contributor lang, nag invest lang siya kasi hindi naman
siya naghahandle ng business diba. kagaya nga nung sa example sa video, kahit
walang gawin yung nagcontribute may papasok pa rin sa kanyang passive income dahil
nagkakaroon ng kita yung ininvest niya. also, yung liability niya ay sa partnership lang
and not sa creditor. kaya kung mabaon sa utang yung partnership e wala na siyang
kinalaman pano babayaran yon.

THEREFORE ANG GENERAL RULE A limited partner is not a proper party to

proceedings by or against a partnership because he does not take control nor
participate in the management of the business of the partnership

PERO OF COURSE MAY EXCEPTION PA RIN:

so kailan nga ba cinoconsider na proper party anf limited partner:
idefine muna natin ano yung proper party, proper party ay may karapatan na magfile ng
petition.

(1) The limited partner may maintain an action in his own name where the object
is to enforce his individual rights against the partnership and to recover
damages for violation of such right.
(2) An action at law may be maintained by creditors of a firm against a limited partner to
account for and restore sums withdrawn by him from the capital of the firm with
outstanding debts on a voluntary dissolution. Same lang sa first paragraph ng article
1866 na magiging proper party lang if usaping rights or liabilities.

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ART. 1867. States that a limited partnership formed under the law prior to the effectivity
of this Code, may become a limited partnership under this Chapter by complying
with the provisions of Article 1844, provided the certificate sets forth:

sinasabi lang dito na magiging limited partnership kung macomply ng partners or

mailagay sa certificate nila yung amount of original contribution and kung kailan binigay
yung contribution na yon. At kung yung partnership na nabuo ay nagawa na bago pa
'tong new civil code then ang mag go-govern pa rin dito ay yung old law.