KINDS OF PARTNERS

As to Contribution

A. Capitalist Partner – Those who contributes MONEY or PROPERTY or BOTH to the

common fund.
B. Industrial Partner – Those who contributes only their INDUSTRY or LABOR or
SERVICES to common fund.
C. Capitalist-Industrial Partner – Those who contributes money or property or both
and industry to the common fund.

As to Liability

A. General Partner – Those who can be held liable to third persons for any partnership
obligation even to the extent of their SEPARATE PROPERTY.
B. Limited Partner – Those who can be held liable to third persons only up to the
extent of his contribution to the partnership.

As to Management

A. Managing Partner – Those who manage actively the business or affairs of the
partnership
B. Silent Partners – Those who do not take active part in the business or affairs of the
partnership though they share in the profits
C. Liquidating Partner – Those who take charge of the winding up or liquidation of the
partnership affairs after dissolution

As to Third Persons

A. Ostensible Partner – Those who take active part and known to the public as partner
in the partnership
B. Secret Partner – Those whose connection with the partnership is not known to the
public
C. Dormant Partner – Those who do not take active part in the business and are not
known to the public as partner. Thus they are both secret and silent partner.

As to Membership

A. Real Partner – Those partners in a valid and existing partnership

 B. Partners by Estoppel – Those who are not really partners but represents
themselves or consent to another or others representing them to anyone as
partners in an existing partnership or in one that is fictitious.

As to continuation of the business affairs after dissolution

A. Continuing Partners – Those who continue the partnership business after the
dissolution of the partnership
B. Discontinuing Partners – Those do not continue the partnership business after
dissolution of the partnership

As to the nature of membership

A. Original Partners – those who are members of the partnership from the time it was
constituted
B. Incoming Partners – those who became members of the partnership after its
establishment
C. Retiring Partners – those who withdraw from the partnership

As to state of survivorship

A. Surviving Partners – Those who continue the partnership after its dissolution by
reason of death of a partner
B. Deceased Partner – those who died while being a member of the partnership

As to the value of the contribution

A. Majority Partners – those whose contribution to the partnership represents the

controlling interest
B. Nominal Partners – those whose contribution to the partnership represents the
minority interest

OBLIGATION OF PARTNERS AMONG THEMSELVES

Art. 1784 – A partnership begins from the moment of the execution of the contract, unless it
is otherwise stipulated.

As a rule: a partnership is breath to life from the moment the contract of partnership was
executed.
Exception: when there is a stipulation on the date for the start of the partnership.

Art. 1785 – When a partnership is for a fixed term or particular undertaking is continued
after the termination of such term or particular undertaking without any express agreement,
the rights and duties of the partners remain the same as they were at such termination, so
far as it is consistent with a partnership at will.

Continuation of the business by the partners or such of them as habitually acted therein
during the term, without any settlement or liquidation of the partnership affairs, is prima
facie evidence of continuation of the partnership.

Partnership at Will

• A partnership that does not fix its term or even if originally a period for its existence
was stipulated, the partnership continued its business.
• The birth and life of a partnership at will is predicated on the mutual desire and
consent of the partners. The right of a partner to associate with whom he wishes
prevails. (Doctrine of Delectus Personae)

Art. 1786 – Every partner is a debtor of the partnership for whatever he may have promised
to contribute.

He shall also be bound for warranty in case of eviction with regard to specific and
determinate things which he may have contributed to the partnership, in the same cases
and in the same manner as the vendor is bound with respect to the vendee. He shall also be
liable for the fruits thereof from the time they should have been delivered, without need of
any demand.

Obligations of a partner with respect to contribution of property

1. To contribute at the beginning of the partnership or at the stipulated time the

money, property, or industry which he may have promised to contribute;
2. To answer for the eviction in case the partnership is deprived of the determinate
property contributed ;
3. To answer to the partnership for the fruits of the property in case of any delay, from
the date they should have been contributed up to the time of actual delivery;
4. To preserve the property with the diligence of a good father of a family pending
delivery to the partnership, and
5. To indemnify the partnership for any damage caused to it by the retention of the
 same or by the delay in its contribution

Effect of failure to contribute property promised

• 1. The partner who fails to contribute his promised contribution becomes a DEBTOR of
the partnership for the said contribution, even in the absence of any demand.

What is the remedy of other partners?

• An action for SPECIFIC PERFORMANCE is the proper remedy, with damages and
interest as the case may be.

• Rescission or cancellation of the contract of partnership is only proper when there is

FRAUD or MISREPRESENTATION committed by the other party.

• Art. 1787 – When the capital or a part thereof which a partner is bound to contribute
consists of goods, their appraisal must be made in the manner prescribed in the
contract of partnership, and in the absence of stipulation, it shall be made by experts
chosen by the partners, and according to current prices, subsequent changes thereof
being for the account of the partnership.

How to appraise the value of the property contributed?

• 1. As stipulated by the partners;

• 2. By an expert chosen by the partners, and,
• 3. The current prices of the same property or goods.

Subsequent changes in the appraisal value of the property or goods?

• Any subsequent changes in the appraisal value of the property or goods shall be for the
account of the partnership

*** If the appraised value of the property or goods increases, the increase shall be for the
benefit of the partnership, same as with decrease in the appraised value, the decrease shall
be for the account of the partnership. (The partner who contributed the same shall not be
held liable for any decrease in the value thereof)

• Art. 1788 – A partner who has undertaken to contribute a sum of money and fails to do
 so becomes a debtor for the interest and damages from the time he should have
complied with his obligation.

The same rule applies to any amount he may have taken from the partnership coffers, and
his liability shall begin from the time he converted the amount to his own use.

Obligations with respect to contribution of money and money converted to personal use.

• 1. To contribute on the date due the amount he has promised to contribute to the
partnership;
• 2. To reimburse any amount he may have taken from the partnership coffers and
converted to his own use;
• 3. To pay the agreed interest or legal interest, if he fails to pay his contribution on time
or in case he takes any amount from the common fund and converts it to his own use,
and
• 4. To indemnify the partnership for the damages caused to it by the delay in the
contribution or the conversion of any sum for his personal benefit

• Art. 1789 – An industrial partner cannot engage in business for himself, unless the
partnership expressly permits him to do so; and if he should do so, the capitalist
partners may either exclude him from the firm or avail themselves of the benefits
which he may have obtained in violation of this provision, with right to damages in
either cases.

What or who is an INDUSTRIAL PARTNER?

The prohibition as regards Industrial partner is ABSOLUTE. It applies be it the same or of

different business as that of the partnership.

The rationale for the rule is prevent any conflict of interest between the industrial partner
and the partnership and to insure faithful compliance by said partner with his obligation.

Remedy in case of violation Art. 1789

• 1. The Capitalist partners may have the right to exclude him from the firm.
• 2. To avail themselves of the benefits which the industrial partner may have obtained
by reason of his other engagement.
 ● Art. 1790 – Unless there is a stipulation to the contrary, the partners shall contribute
equal shares to the capital.

To what kind/s of partner do Art. 1790 apply?

Art. 1791 – If there is no agreement to the contrary, in case of an imminent loss of the
business of the partnership, any partner who refuses to contribute an additional share to
the capital, except an INDUSTRIAL PARTNER, to save the venture, shall be obliged to sell his
interest to the other partner.

Obligation to contribute additional capital

As a rule, a capitalist partner is not bound to contribute to the partnership more than what
he agreed to contribute.

Exception to the rule: In case of an imminent loss of the business;

There being no stipulation against additional contribution;
The purpose of the additional contribution is to SAVE the venture.

Effect of REFUSAL to contribute additional capital?

• The Capital partner refusing to contribute additional share SHALL be OBLIGED to SELL
his interest to the other partners.

Note: The refusal or failure to contribute additional sale must not be by reason of FINANCIAL
INCAPABILITY.

Rationale for the rule

*** The refusal of the partner to contribute his additional share manifests his lack of interest
in the continuance of the partnership.

It would be unjust for him to remain as partner and reap the benefits of the efforts of the
others while he himself refuses to help.
Who is a CAPITALIST PARTNER?

• Art. 1792 – If a partner authorized to manage, collects a demandable sum, which was
owed to him in his own name, from a person who owed the partnership another sum
also demandable, the sum thus collected shall be applied to the two credits in
proportion to their amounts, even though he may have given receipt for his own credit
only; but should he have given it for the account of the partnership credit, the amount
shall be fully applied to the latter.

The provisions of this article are understood to be without prejudice to the right
granted to the debtor by article 1252, but only if the personal credit of the partner should be
more onerous to him.

Two situations contemplated by Art. 1792

1st A sum was received from a debtor who is both indebted to a partner and the partnership
and receipt was given by the partner for his own credit only.

Rule:
The sum received shall be proportionally applied to both of the credits (personal to a
partner and partnership.

2nd A sum was received from a debtor who is both indebted to a partner and the partnership
receives the sum for the account of the partnership.

Rule:
The sum received shall be solely for the account of the partnership. It shall be applied to the
partnership credit only.

Rationale for the rule

• The law safeguards the interest of the partnership by preventing the possibility of their
being subordinated by the managing partner to his own interest to the prejudice of the
other partners.

• Managing partners are vested with trust and confidence that they will put the interest
of the partnership over their own interest.

Art. 1252 an exception to Art. 1792

• Article 1252 is the right of the debtor to choose on which debt his payment shall be
applied. The debt that is more onerous or burdensome to him may be preferred.
Art. 1793 – A partner who has received, in whole or in part, his share of a partnership credit,
when the other partners have not collected theirs, shall be obliged, if the debtor should
thereafter become insolvent, to bring to the partnership capital what he received even
though he may have given receipt for his share only.

Art. 1794 – Every partner is responsible to the partnership for damages suffered by it
through his fault, and he cannot compensate them with the profits and benefits which he
may have earned for the partnership by his industry. However, the courts may equitably
lessen this responsibility if through the partner’s extraordinary efforts in other activities of
the partnership, unusual profits have been realized.
Damages suffered by the partnership cannot be offset or compensated by profits or benefits
which a partner may have earned for the partnership.

*** a partner’s industry already belongs to the partnership. Such industry was contributed
to the common fund, therefore, it already belongs to the partnership. What ever benefit
that may be derived therein already pertains to the partnership.

Exception

2nd Sentence of Art. 1794, such responsibility may be lessen if the partnership realized an
unusual profits through the extraordinary efforts of the partner.

Only the court may lessen such responsibility;

Unusual profit must be realized;
Such profit was through the extraordinary effort of the partner.

Art. 1795 – The risk of specific and determinate things, which are not fungible, contributed
to the partnership so that only their use and fruits may be for the common benefit, shall be
borne by the partner who owns them.

If the things contributed are fungible, or cannot be kept without deteriorating, or if they
were contributed to be sold, the risk shall be borne by the partnership. In the absence of
stipulation, the risk of things brought and appraised in the inventory, shall also be borne by
the partnership, and in such case the claim shall be limited to the value at which they were
appraised.

Art. 1796
The PARTNERSHIP shall be responsible to every partner for the amounts he may have
disbursed on behalf of the partnership and for the corresponding interest, from the time the
expenses are made;

it (the partnership) shall also answer to each partner for the obligations he may have
contracted in good faith in the interest of the partnership business and for risks in
consequence of its management.

ILLUSTRATION

A and B formed a partnership named AB partnership.

A bought, out of his own money, a computer set to be used by the partnership, such being
an essential equipment to run the business of the partnership.

🡪 AB Partnership is responsible to reimburse the amount disbursed by A for the purchase

of the said Computer Set.

A bought on credit a computer set from X, to be used by the partnership, such being an
essential equipment to run the business.
🡪 AB partnership is answerable for the obligation incurred by A

Art. 1797

The losses and profits shall be distributed in conformity with the agreement. If only the
share of each partner in the profits has been agreed upon, the share of each in the losses
shall be in the same proportion.

In the absence of stipulation, the share of each partner in the profits ad losses shall be in
proportion to what he may have contributed, but the industrial partner shall not be liable
for the losses. As for the profits, the industrial partner shall receive such share as may be just
and equitable under the circumstances. If besides his services he has contributed capital, he
shall also receive a share on the profits in proportion to his capital.

The essence of the partnership is the mutual and equal sharing in the profits and losses of
the venture. – “Isabelo Moran, Jr. vs. Court of Appeals”.
ILLUSTRATION (PROFIT SHARING W/ AGREEMENT)

A, B and C entered in to a contact of partnership

A = 5M

B = Industry
C = 2M worth property

They agreed to share the profits as follows:

A = 50%
B = 20%

C = 30%

After a year in the business, the partnership realized a NET profit of 200k. The distribution of
profit shall be as follows:

A = 100k (200,000 x 50%)

B = 40k (200,000 x 20%)
C = 60k (200,000 x 30%)

ILLUSTRATION (PROFIT SHARING W/O AGREEMENT)

A, B and C entered in to a contact of partnership

A = 5M
B = Industry
C = 2M worth property

After a year in the business, the partnership realized a NET profit of 200k. The distribution of
profit shall be as follows:

Since there is no agreement as to profit sharing, the share of each partner shall be
proportionate to their capital contribution. In the case given, there being an industrial
partner, his share must first be satisfied. Lets just say that A and C agreed that the just and
equitable share of B is 20k, then the capitalist partner shall share on the remaining 180k, as
follows:
A = 128.571K (5M/7M x 180k)
B = 20k (agreed upon by the partners as just and equitable share)
C = 51.429K (2M/7M x 180k)

Let’s say, aside from his industry, B also contributed 1M in cash which makes him an
Capitalist – Industrial Partner.
The profit sharing shall be as follows:

A = 112.500k (5M/8M x 180K)

C = 45K (2M/8M x 180K)
B = 42.5K
20k (as agreed by the partners to be the just and equitable share of an industrial partner)
and
22.5K (1M/8m x 180K) as Capitalist Partner

ILLUSTRATION DISTRIBUTION OF LOSSES W/ AGREEMENT

A, B and C entered in to a contact of partnership

A = 5M
B = Industry
C = 2M worth property

They agreed to share the loss as follows:

A = 50%
B = 20%
C = 30%

After a year in the business, the partnership incurred a NET loss of 100k. The distribution of
loss shall be as follows:

A = 50K (100,000 x 50%)

B = 20k (100,000 x 20%)
C = 30k (100,000 x 30%)

***Take note that generally, an industrial partner shall not be liable to losses, however, if
he agreed to share therein, it is tantamount to a waiver of his exception thereof.

Distribution of Losses without Agreement

A, B and C entered in to a contact of partnership
A = 5M
B = Industry
C = 2M worth property

After a year in the business, the partnership incurred NET loss of 100k. The distribution of
losses shall be as follows:

Since there is no agreement as to profit sharing, the share of each partner shall be
proportionate to their capital contribution. In the case given, B being an industrial partner,
shall be exonerated from sharing on losses. The distribution is as follows:

A = 71.429K (5M/7M x 100k)

B = No share
C = 28.571K (2M/7M x 100k)

*** Take note, that our law exempts and industrial partner from sharing to the losses, but it
never exempts the same with liability.

Liability = Third person

Share = Partners

Art. 1798

If the partners have agreed to intrust to a third person the designation of the share of each
one in the profits and losses, such designation may be impugned only when it is manifestly
inequitable. In no case may a partner who has begun to execute the decision of the third
person, or who has not impugned the same within a period of three months from the time
he had knowledge thereof, complain of such decision.

The designation of losses and profits cannot be intrusted to one of the partners.

Summary of rules under Art. 1798

1st – Designation as to profits and losses of partners is intrusted to a third person.

2nd – It may only be impugned or questioned by reason of it being INEQUITABLE.

3rd – Even if it is INEQUITABLE, it may no longer be questioned or impugned it such decision
has begun to be executed by a partner.

4th – The said decision may also no longer be questioned or impugned by a partner if he
have knowledge thereof for three months or more.

5th – Such designation may not be intrusted to a partner.

Art. 1799

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

Summary of the rules under Art. 1799

1st – A stipulation or agreement excluding a PARTNER from any share in the profit or losses is
VOID.
2nd – it is only the stipulation which is void, not the entire contract of partnership. Therefore
shares as to profits and losses shall be determined in accordance with the rules on sharing
without agreement.
3rd – A stipulation excluding an INDUSTRIAL PARTNER from sharing in the losses is valid.

Art. 1800

The partner who has been appointed manager in the articles of partnership may execute all
acts of administration despite the opposition of his partners, unless he should act in bad
faith; and his power is irrevocable without just or lawful cause. The vote of the partners
representing the controlling interest shall be necessary for such revocation of power.

A power granted after the partnership has been constituted may be revoked at any time.

Art. 1801

If two or more partners have been intrusted with the management of the partnership
without specification of their respective duties or without a stipulation that one of them
shall not act without the consent of all the others, each one may separately execute all acts
of administration, but if any of them should oppose the acts of the others, the decision of
the majority shall prevail.
In case of a tie, the matter shall be decided by the partners owning the controlling interest.
Summary of the rule under Art. 1801

1st – Two or more partners are manager;

There is no specification as to their respective duties;
There is no stipulation requiring unanimity, one may act without the consent of the other/s.

2nd – Each of the managing partners may separately execute all acts of administration.

3rd – If any of the managing partners should oppose the decision of the other:
a. Decision of the majority (per head) shall prevail;
b. In case of a tie, the decision of the managing partner with controlling interest shall
prevail.

*** Take note that the right to oppose is exclusively given to the managing partners. By
appointing their managers, the non-managers deemed to have delegated their right to
participate in the administration of the partnership.

Art. 1802

In case it should have been stipulated that none of the managing partners shall act without
the consent of the others, the concurrence of all shall be necessary for the validity of the
acts, and the absence or disability of any one of them cannot be alleged, unless there is
imminent danger of grave or irreparable injury to the partnership.

General Rule: Concurrence of the partners is necessary to make an act valid, regardless of
their availability or disability.

Exptn: When there is an imminent danger of grave or irreparable injury to the partnership,
Concurrence may be dispensed with.

****Such stipulation is binding between the partners, third person who acted in good faith
is not bound by the same.

Question

A and B are partners in AB Partnership. It was stipulated that concurrence of them both is
necessary for the validity of an act for and in behalf of the partnership.
A without the consent of B, sold a parcel of land, registered and owned by AB Partnership in
favor of X.

B upon knowing such transaction, confronted X and compelling the latter to return the
subject property as the transaction is invalid due to his non – concurrence thereof.

Is the transaction between AB Partnership, represented by A and X valid?

May B compel X for the return of the property subject of the sale?

Art. 1803

When the manner of management has not been agreed upon, the following rules shall be
observed:
1. All of the partners shall be considered agents and whatever any one of them may do
alone shall bind the partnership, without prejudice to the provisions of 1801.
2. None of the partners may, without the consent of the others, make any important
alteration in the immovable property of the partnership, even if it may be useful to
the partnership. But if the refusal of consent by the partners is manifestly prejudicial
to the interest of the partnership, the court’s intervention may be sought.

In the absence of stipulation, all of the partners are considered managers and agents of the
partnership and their act will bind the partnership.

Art. 1801 shall apply in case of opposition of any partner as to the act of any of the partners.
*** in case of opposition, MAJORITY wins;
*** in case of a tie, vote of the partner with controlling interest shall prevail.

Consent of all the partners is necessary for any important alteration in any of immovable
property of the partnership.

Rationale:
Important alteration is an act of strict dominion, wherein ownership is a factor.

In a partnership, all of the partners share mutual ownership over the assets of the
partnership, therefore, all of the owners must concur to such alteration.
In case any partner refuses to concur, and such refusal is detrimental to the interest of the
partnership, the court may resolve.

Art. 1804

Every partner may associate another person with him in his share, but the associate shall not
be admitted into the partnership without the consent of all the other partners, even if the
partner having an associate should be a manager.

Contract of Sub-partnership – It is a contract between a PARTNER and an ASSOCIATE (third

person)
- The consent of other partners is not require.
- A sub-partner is not a partner to the partnership, without the consent of the
partners.
*** basis is DELECTUS PERSONAE
- A sub partner may not participate in the affairs of the partnership.

Art. 1805

The partnership book shall be kept, subject to any agreement between partners, at the
principal place of business of the partnership, and every partner shall at any reasonable
hour have access to and may inspect and copy any of them.

What is a reasonable hour?

Reasonable Hour is any business days throughout the year, and not merely some arbitrary
period of a few days chosen by the directors or managers.
- Antonio Pardo vs. The Hercules Lumber Co., Inc. GR No. L-22442, Aug. 1, 1924

Art. 1806

Partners shall render on demand true and full information of all things affecting the
partnership to any partner or the legal representative of any deceased partner or any of
partner under legal disability.

*** Basis is FIDUCIARY RELATIONSHIP or Mutual TRUST and CONFIDENCE in a contract of

Partnership.
Art. 1807

Every partner must account to the partnership for any benefit, and hold as trustee for it any
profits derived by him WITHOUT the consent of the other partners from any transaction
connected with the formation, conduct, or liquidation of the partnership or from any use by
him of its property.

Art. 1808

The capitalist partners cannot engage for their own account any operation which is of the
same kind of business in which the partnership is engaged, unless there is a stipulation to
the contrary.
Any capitalist partner violating this prohibition shall bring to the common funds any profits
accruing to him from his transactions, and shall personally bear all the losses.

Prohibition as to Capitalist Partner

1 – To engage in other business SIMILAR to that of the partnership.

Execption: When stipulated.

2 - The prohibition applies only to engagement on similar business as that of the

partnership. Impliedly, a capitalist partner may engage in other business, without the need
for consent, if such new engagement is not similar to the business of the partnership.

Effects of violation:

1. The Capitalist partner shall bring to the common fund any profits accruing to him;
and
2. The Capitalist partner shall bear all the losses.

Art. 1809

Any partner shall have the right to a formal account as to partnership affairs:
1. If he is wrongfully excluded from the partnership business or possession of its
 property by his co-partners;
2. If the right exists under the terms of any agreement;
3. As provided under Art. 1807;
4. Whenever other circumstances render it just and reasonable.

PROPERTY RIGHTS OF A PARTNER

Art. 1810

The property rights of a partner are:

1. His rights in a specific partnership property;
2. His interest in the partnership; and
3. His right to participate in the management.

Property right over a partnership property

- Any and all contribution which a partner contributed to the common fund and
ownership thereto pertains to the partnership, is co-owned by the partners.

Interest in the partnership

- Each and every partner has an interest over the partnership, proportionate to their
capital contribution.

Right to participate in the management

- In the absence of stipulation, every partner is a manager and agent of the

partnership.

Art. 1811

- A partner is co-owner with his partners of specific partnership property.

The incidents of this co-ownership are such that:

 1. A partner, subject to the provisions of this title and to any agreement between the
partners, has an equal right with his partners to possess specific partnership property
for partnership 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. When partnership property is attached
for a partnership debt the partners, or any of them, or the representatives of a deceased
partner, cannot claim any right under the homestead or exemption laws;

4. A partner’s right in specific partnership property is not subject to legal support under Art.
291.

Art. 1812

- A partner’s interest in the partnership is his share of the profits and surplus.

What is profit?

- it is the excess of returns over expenditures in a transaction or series of transactions;

or the net income of the partnership for a given period of time.
(Websters’ 3rd Int. Dict., p. 1811)

What is Surplus?

- Refers to the assets of the partnership after partnership debts and liabilities are paid
and settled and the rights of the partners among themselves are adjusted.

It is the excess of assets over liabilities.

Art. 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 a 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)

Summary of the rules under Art. 1813

1. If a partner conveys his WHOLE interest in the partnership, it may still subsist or it
may be dissolved.
2. The Assignee:
a. Cannot interfere in the management of he partnership business;
b. Cannot require information or accounting of partnership transaction;
c. Cannot inspect partnership books.

Rights of the assignee

1. To receive the profits to which the assigning partner would otherwise be entitled;
2. In case of fraud in the management of the partnership, the assignee may avail himself of
the usual remedies provided by law;
3. In case of dissolution, to receive the assignor’s interest;
4. In case of dissolution, the assignee may require an account from the date only of the last
account agreed to by all partners.

Art. 1814

Without prejudice to the preferred rights of partnership creditors under Article 1827, on due
application to a competent court by any judgment creditor of a partner, the court which
entered the judgment, or any other court, may charge the interest of the debtor partner
with payment of the unsatisfied amount of such judgment debt with 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,
accounts and inquiries which the debtor partner might have made, or which the
circumstances of the case may require.
The interest charged may be redeemed at any time before foreclosure, or in case of a sale
being directed by the court, may be purchased without thereby causing a dissolution:
(1) With separate property, by any one or more of the partners; or
(2) With partnership property, by any one or more of the partners with the
consent of all the partners whose interests 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.

Charging Order

- It refers to the remedy available to a judgment creditor of a debtor-partner to charge

the interest of the latter in the partnership by means of a court order for the purpose
of satisfying the amount of judgment.

Example

A and B are partners in AB Partnership. A, in his personal capacity obtained a loan with X.

In case A defaulted on his debt and X obtained a favorable judgment, the latter may ask the
court that the interest of A in AB Partnership be charged (attached) for the payment of his
credit together with interest, if there be any.

Redemption of interest charged

1. Before Foreclosure
- the interest charged may be redeemed at any time before foreclosure;

2. After Foreclosure
- it may still be purchased without thereby causing a dissolution:
a. With separate property of a partner;
b. With partnership property with the consent of all the partners whose interest are
not so charged or sold

Example

A, B and C are partners in ABC Partnership.

In his personal capacity, A obtained a loan with X. Upon failure to pay, X obtained a favorable
judgment. Thereafter, X asked the court to charged the interest of A with ABC Partnership,
which the court granted.

Remedy under Art. 1814

B and C may purchase the interest of A with their SEPARATE property, or

B and C may purchase the interest of A with the partnership property, provided all of the
partners whose interest are not charged or sold give their consent.