Acquisition by a partnership of juridical
personality
o Partnership commences to exist upon
the execution of the partnership
contract—because it is a consensual
contract.
o partners may still stipulate date when the
partnership begins to exist.
Kinds of partnership as to duration
o for a fixed term- duration is fixed by partners.
after the date fixed, deemed dissolved.
o for a particular undertaking- certain undertaking
o at will- may be terminated at anytime. may be:
§ when partners did not agree on term or
specific undertaking
§ when undertaking have expired and the
partners continued the business. Effects:
- rights and duties remain the same as
they were at such expiration of term of the
undertaking
- the absence of settlement or
liquidation—evidence of the continuation
of the partnership
OBLIGATION OF A PARTNER WITH RESPECT
TO CONTRIBUTION
Specific things
o to deliver the property promised at
the time it was executed or date
stipulated
o to take care of the property before the
delivery (diligence of a good father
of a family)
o to be liable for damages in case of
default
o to answer for eviction incase the
partnership is deprived of the
contributed property
o to be liable for the fruits from the time
they should have been delivered
without the need of demand
Money
o to deliver the money promised at the
time it was executed or date
stipulated
o to pay interest on the amount he had
promised to contribute from the time
he should have complied with his
obligation
o to pay damages suffered by the
partnership by reason of default
Amount appropriated
o reimburse the amount taken from the
partnership coffers
o pay interest converted for his own use
from the time of conversion
o pay damages suffered by reason of the
conversion
APPRAISAL
o act or process of determining the value of a
property as of a specific date for a specific
purpose.
o appraised to be credited to the capital amount
of the partner who made the contribution
Manner of appraisal
o goods contributed shall be appraised according
to:
- manner stipulated in the contract
- absence of stipulation—made by chosen
expert according to current prices
Effects of changes subsequent to contribution
- improvement or diminution—for the
account of partnership
- decrease—shall be borne by
partnership
- increase—benefit of the partnership
RIGHTS OF PARTNERS TO ENGAGE IN A
BUSINESS OF THEIR OWN
Right of an industrial partner to engage in
business apart from the partnership
business
o cannot engage in business for himself
unless the partnership expressly
permits to do so.
o reason:
- partner must devote all his
industry to the partnership
otherwise the partnership
business would be prejudices
not only to attention that will be
divided but also the priority or
preference that may be given
to the business over the
property
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Effect if industrial partner engages without
the permission of partnership
o may avail the following remedies:
- exclude himself, with a right to
damages
- avail themselves of the benefits
obtained from the business he
engaged in, with a right to
damages
Right of capitalist partner to engage in
business apart from the partnership
business
o can engage in other business different
from the partnership business—even
without the consent of other
o cannot engage in the same business
unless there is a stipulation—reason:
deemed competing with the partnership
business
ex: computer business—restaurant= YES
computer business—computer business=
NO (unless there is a stipulation)
Effect if a CP engages in the same kind of
business without the consent of the other
o CP shall bring to the common fund any
accruing profits from his transaction
o he shall bear all the losses
- loss in his own business
- loss in the partnership business
Obligation of partners to contribute equal
shares
o oblige to contribute equally unless they
agree to contribute different amounts.
o not applied to industrial partner
(contribute services) unless a capitalist
partner at the same time.
Obligation to contribute additional capital
o in case of imminent loss, each partner
obliged to contribute additional share to
the capital to save the business.
o does not apply to: industrial partner and
capitalist partner (agreed upon to not
give additional contribution)
- if capitalist partner
refuses—obliged to sell his
interest to other partners unless
financial condition does not
permit him to do so.
Rule when payment is made by a third
person who owes separate demandable
debts to partnership or partner authorize to
collect the credits of the partnership
o partner authorized to receive payment
issues the receipt of the
partnership—payment applied in its
entirety to the partnership credit
o partner authorized to receive payment
issues his own receipt—payment
applied to two credits proportionately.
o reason: should not place his interest
ahead of that partnership
When payment is applied in its entirety to
the partner’s credit
o when debt is owed by the third person to
a partner not authorized to collect the
credits of the partnership
o when debt to the partnership is not yet
due
o when debt is owed by the third person to
a partner authorized to receive
payment is more onerous to the debtor
and the latter avails himself of the right
to apply the payment to such credit
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.
Application of the provision: requisites
o partners agreed to divide a
partnership credit among
themselves
o partnership has not been dissolved
o partner has collected his share of
credit
o other partners have not collected their
respective shares by reason of the
debtor’s insolvency
Reason for bringing amount collected to the
capital
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 o partnership is formed for the common
benefit of the partners. the partner
who collected his share of credit
must share such benefit with the
other partners
Liability of a partner for damages suffered by
the partnership due to his fault
o partner shall be liable for the
partnership for damages suffered
through his fault
- cannot be compensated with the
profits and benefits—to ensure
that partner exercises
reasonable care and skill in
carrying out his duties
- liability—cannot be eliminated
but may equitably reduced by
courts
When partnership bears risk of loss
o fungible things or those that cannot
kept without deteriorating
o things contributed to be sold
o things brought & appraised in the
inventory, unless stipulated
When partners bears risk of loss
o not fungible
o contributed to the partnership
- use and fruits—for the common
benefit
Obligation of partnership to partners
o pay for the amounts disbursed on behalf of the
partnership with interest from the time of
expenses were made
o pay obligation which a partner may have
contracted in good faith in the interest of the
partnership business.
o to answer for risks in consequence of the
management of the partnership business.
Reason:
- each partner is an agent of the
partnership in pursuit of its business
Rules on division of profits and losses
● All capitalist partners
- profits & losses must be divided
according to their agreement
- if only profits agreed
upon—losses shall be in same
proportion as of the profits
- if no agreement—profits and
losses shall be in proportion to
their contributed capital
● there is/are industrial partners profit:
- must be divided according to their
agreement
- (IP) first receive a just and
equitable share and thereafter
(CP) shall share in the profits in
proportion to his capital
losses:
- (IP) shall not share in losses
- (CP) as follows:
* profits & losses must be divided
according to their agreement
* if only profits agreed upon—losses shall
be in same proportion as of the profits
*if no agreement—profits and losses shall
be in proportion to their contributed capital
● there is/are capitalist-industrial partner/s
profits:
- must be divided according to their
agreement
- (CIP) first receive a just and
equitable share and thereafter
(CP and ICP) shall share in the
profits in proportion to his
capital.
- ICP- share in capacity as
capital partner losses:
- according to their
agreement--(ICP) share in
his capacity as capitalist
partner
- (CP and ICP) shall share in
the losses in proportion to
his capital--(ICP) share in his
capacity as capitalist partner
ICP shall not share in the losses in his
capacity as industrial partner
Designation of share in the profits and losses
by a third person
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 o if the designation has been entrusted to
a third person— the same shall be
binding upon the partners and may be
impugned only when manifestly
inequitable.
o it can no longer be impugned:
- by a partner who began to
execute it
- by any partner if 3 months had
already lapsed from the
moment he obtained the
knowledge
Designation of share in the profits and losses
entrusted to one of the partners
o designation to one of the partners is
VOID
o reason: profits and losses must be
divided among the partner
Stipulation which excludes one or more
partners from any share in the profits or
losses is void.
Exclusion of one or more partners from
sharing in the profits and losses
o industrial partner is excluded in the
sharing of loss since the law itself
provided that IP shall not be liable in
the losses of the partnership
When a partner is granted as manager in the
articles of partnership
o scope of authority
- managing partner may execute ALL acts
despite the opposition of his partners unless he
acts in bad faith
o revocation of the appointment of the
managing partner
- with just or lawful cause
● can be revoked by vote of the partners
owning the controlling interest
- without just of lawful cause
● can be revoked only with the consent of
ALL the partners because such
revocation=novation of the partnership’s
articles
When a partner has been appointed manager
after the constitution of the partnership
**usually done through a resolution adopted by
partners
o scope of authority
- managing partner may execute all the acts but
in case of opposition, the partner owning the
control interest may resort to voting for his
removal as manager
o revocation of the authority of the
managing partner
- may be removed with or without just or lawful
cause by the vote of partners owning the
controlling interest
- reason: partner is only an agent whose
authority may be revoked by his principal
(partnership)
Two or more partners have been intrusted
with the management of the partnership
without specification of their respective
duties
Application of the provision
o two or more partners appointed as
managers
o no specification of specific duties or that
one of them shall not act without the
consent of the others
Scope of authority
o each manager may separately execute
acts of administration
Rule in case of opposition by the other
managers
o decision of the majority of the managing
partners shall prevail
o if tie—vote of the managing partners
owning the controlling interest shall
prevail
Stipulated that none of the managing
partners shall act without the consent of the
others
Application of the provision
o two or more partners appointed as
managers
o there is a stipulation that none of the
managing partners shall act without the
consent of the others
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Rules of management under provision
o concurrence or consent of ALL shall be
necessary for the validity of the acts
o absence or disability of any one of them
cannot be alleged
ex: mangoes to sell because the partnership
might be in the peak of loss. partners may
decide even one is not there
Rules when management has not been
agreed upon
o all partners shall be considered agents
of the partnership
- none of them may make any
alteration in the immovable
property of the partnership
without the consent of others
even it may be useful for the
partnership
o whatever any one of them may do alone
shall bind the partnership
o in case of opposition:
- decision of majority—prevails
- in case of tie—decision of
partners owning the controlling
interest—prevails
Right of a partner to associate another
person with him in his share
o partner may enter into agreement of
other person to associate in his share
of his personal property (only between
the partner and the associate).
o no privity of contract between the
partnership and he does not become a
partner unless the partners consent
o reason: delectus personae
Partner’s right to inspect the books
o every partner has an inherent right—to
inspect and copy the books—he is
entitled to obtain true and full infos
about the partnership affairs.
Where partnership books are kept
o books shall be kept at the principal
place of business unless there is a
stipulation to keep it elsewhere
Time of inspection
o at reasonable hours on any business
day throughout the year
Partners’ obligation to render information
o each partner has an obligation to render
true and full information of all things
affecting the partnership in view that
they are founded on mutual trust and
confidence, making them incumbent to
disclose matters affecting the
partnership between them
Partners’ obligation in respect to benefits or
profits
o every partner has an obligation to
account and hold as trustee for the
partnership without the consent of other
partners from:
- any transaction connected wt
information, conduct or
liquidation of partnership
- any use by him of partnership
property
ex: gamit ng truck ng partnership to render
service for personal use—yung profit must
account for the partnership kasi yung truck is
property of the latter (unless with the partners
consent)
Accounting
o statement showing the financial
transactions and dealings of the
partnership and status of its assets
Partner’s right to a formal account of
partnership affairs
o any partner shall have the rights to a
formal account of partnership affairs in
the following cases:
- 1-4 in the provision
- 3: 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.
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Property rights of a partner
o Right in specific partnership property
- refers not only to those
contributed but also to those
properties
acquired/made/manufactured
by the partnership itself
o Interest in the partnership
- partner’s interest in the
partnership in his share of
profits and surplus
o Right to participate in the management
- unless agreed upon, each partner
has an equal rights to manage
and conduct the partnership
business:
- reason: each one is an agent of
the partnership
Right in specific partnership property
o partner is a co-owner wt his partners of
specific partnership property= tenancy
in partnership
o only a co-owner of the ENTIRE
partnership property but not the SOLE
owner of any part of it.
o the co-ownership has the following
incident:
- each partner has equal right to
possess and use property only
for partnership purposes unless
others consent
- right in specific property is not
assignable
- right in specific property is not
subject to attachment or
execution
- right in specific property is not
subject to legal support
Partners’ interest in the partnership
o partner’s interest=his economic interest
in the firm
o consist of share in his profits and surplus
o surplus—funds and other assets of the
partnership after it has been dissolved
and liabilities has been settled.
Conveyance of partner’s interest
o partner may voluntarily assign, sell,
donate or convey his interest in the
partnership to a third person—no
alienation of interest
o assignment does not support to transfer
an interest in the partnership but only
a future contingent right to a portion of
the residue as the assignor may
become entitled to receive by virtue of
his proportionate interest in capital
Effects of conveyance of partner’s interest
o conveyance does not itself dissolve the
partnership
o transferring partner shall continue to be
a partner and shall enjoy the rights and
be subject to the liabilities of a partner
o assignee or transferee does not become
a partner unless others consent. but he
has no right to:
- interfere in the management of the
business
- require any info of partnership
transaction
- inspect the books
Rights of assignee
o receive profit to which the assigning
partner would otherwise be entitled
o avail himself of the usual remedies in
case of fraud in the management
o if dissolved: require an account from the
date only of the last account agreed to
by all the partners
Charging of a partner’s interest
o judgment creditor may ask the court to
issue a charging order
o partnership creditors enjoy preference
over a partner’s property rights
including his interest in the
partnership.
o individual partner’s judgment creditor
will receive payment only after
partnership liabilities have been
satisfied
Appointment of a receiver and other orders
o in issuing the charging order, the court
may:
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 - appoint a receiver of the
partner’s share of the profits
and of any other due or to fall
due to him in respect of the
partnership
- make all other orders, directions,
accounts or inquiries which the
debtor partner might have
made, or which the
circumstances of the case may
require

Redemption of the interest charged

o redemption—payment due in order to
discharge the lien on the interest
charged.
o interest charged may be redeemed at
any time before foreclosure or in case
of sale directed to court:
- wt separate property of any one
or more of the other partners
- wt partnership property by any
one or more of the partners wt
the consent of all the partners
whose interest are not so
charged or sold

Availment by a partner of exemption laws

o the partner whose interest is charge
may avail himself of the exemption
laws since such interest is his personal
property