PARTNERSHIP

Art. 1767 Partnership is also a status of fiduciary

relationship subsisting between persons carrying on a
business in common with a view on profit.
Art. 1768 Consequence of the Partnership being a
Juridical Entity:
1. Its juridical capacity is separate and distinct from
that of each of the partners.
2. The partnership can in general:
Acquire and possess property of all
kinds
Incur obligations
Bring civil or criminal actions
Can be adjudged insolvent even if the
individual members be each financially
insolvent.
3. Unless he is personally sued, a partner has no
right to make a separate appearance in court, if
the partnership being sued if already represented.
Art. 1769 Requisites fir Existence of partnership:
1. There was intention to create a partnership
2. There was a common fund obtained from
contributions
3. There was a joint interest in the profits
Art. 1770 - (1) Lawful object or purpose
(2) Dissolved by judicial
confiscation

decree

Art. 1771 Formalities needed:

GR: no form is required, regardless of the value of the
contribution. It can be ORAL.
E: Whenever real properties or real rights in properties
are contributed, PUBLIC INSTRUMENT is needed, absence
of public instrument, the partnership is void. There must
be an INVENTORY of the immovables, signed by the
parties.
Art. 1772 capital of P3000 or more:
Should be registered in Securities and Exchange
Commission.
Note: This is not fatal if it is unregistered except if real
property has been contributed.
Art. 1773 Requisites where immovable property is
contributed:
1. There must be a public instrument regarding the
partnership
2. The inventory of the realty must be made, and
signed by the parties and attached to the public
instrument.
Art. 1774 immovable prop or an interest may be
acquired in the partnership name
Art. 1775 If articles are kept secret:
A) Not a partnership hence not a legal person
B) May be sued by third person under the common
name it uses
C) It cannot sue because it has no legal personality
D) As regard the third party is concerned, partners
can be considered a partnership; but as to
themselves only co-ownership can be applied.

Art. 1776 Object: Universal or Specific; Liability:

General or Limited
Art. 1777 Kinds of Universal Partnership:
a) Partnership of all present property
b) Partnership of all profits
Art. 1778, 1179, 1780, 1781 (see codal) Universal
Partnership of ALL PRESENT PROPERTY:
a) All the properties actually belonging to the
partners
b) The profits acquired with said properties
Art. 1782 Persons prohibited to form a universal
partnership
1) Husband and wife
2) Those guilty of adultery and concubinage
Art. 1783 PARTICULAR PARTNERSHIP
OBLIGATIONS OF THE PARTNERS AMONG
THEMSELVES
a) To give his contribution
b) Not to convert firm money or property for his own
use
c) Not to engage in unfair competition with his own
firm
d) Pay for damages caused by his fault
e) Duty to credit to the firm, payment made by a
debtor who owes him and the firm.
f) To share with other partners the share of the
partnership credit which he has received from an
insolvent firm debtor.
Rights of a partner:
a) Property rights
1) Rights in specific partnership property
2) Interest in the partnership
3) Right to participate in the management
b) Right to associate with another person in his share
c) Right to inspect and copy partnership books
d) Right to demand a formal account
e) Right to ask for the dissolution of the firm at the
proper time.
Art. 1784 - When a partnership begins:
a) GR: From the moment of the execution of the
contract
b) E: when there is contrary stipulation
Note: Intent to create future partnership: No juridical
personality yet.
Note: If no contributions has been made: the firm already
exists.
Art. 1785 Duration of Partnership:
Unlimited no time is fixed by law.
Duration may be agreed upon
expressly or impliedly.
Partnership at will:
a) 1st kind: no term, express or implied
b) 2nd kind: continued by habitual
managers
Art. 1786 Duties of Every Partner
a) duty to contribute what had been promised;
b) duty to deliver fruits of what should have been
delivered; and
c) duty to warrant

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Art. 1787 When contribution consists of goods:

Appraisal of value is needed to determine how
much has been contributed.
How APPRAISAL is made:
a) As prescribed by the contract
b) Absence of the first, by experts chosen by the
partner
Risk of loss Partnership bears the risks of
subsequent changes in their value
Art. 1788 - Rules of failure to contribute and for
conversion:
a) When money promised is not given on time;
b) When partnership money is converted to the
personal use of partner
Art. 1789 Rules re: industrial partner
Art. 1790 GR: partners shall contribute equal shares to
the capital of the partnership
E: stipulation to the contrary
Note: applies only to capitalist partners
Art. 1791 When a capitalist partner is obliged to
sell his interest to other partners:
a) If there is imminent loss of the business of the
partnership
b) And he refuses to contribute an additional share
to the capital
c) And provided further that there is no agreement
to the contrary
Note: industrial partner is exempted
Art. 1792 - Rule if managing partner collects a
credit:
a) the existence of at least two debts
b) both sums are demandable
c) the collecting partner is a managing partner
Art. 1793 one debt only, applies to any partner
Art. 1794 Why general damages cannot be offset
by benefits:
a) the partner has the DUTY to secure benefits for
the partnership; on the other hand, he has the
duty also not to be at fault
b) since both are duties, compensation should not
take place, the partner being the debtor in both
instances.
Mitigation of liability: equity may mitigate
liability of there be extraordinary efforts resulting
in unusual profits.
Need for liquidation: Before a partner sue
another for alleged fraudulent management and
resultant damages, a liquidation mist first be
effected to know the extent of damage.
Effect of death of the negligent of the
partner suit for recovery may be had against
his estate.
Art. 1795: Risk of loss:
a) Specific and determinate things (not
fungible) partner who owns it bears ownership
was never transferred to the firm. *car

b) Fungible or Deteriorable firm bears loss for

evidently, ownership was being transferred;
otherwise, use is impossible.
c) Things contributed to be sold firm bears loss
fro evidently, firm was intended to be the owner,
otherwise, a sale could not be made.
d) Contributed under appraisal - firm bears loss
because this has the effect of an implied sale.
Art.1796 Responsibility of Firm
a) To refund amounts disbursed on behalf of firm,
plus legal interest from the time expenses were
made, and not from demand.
b) To answer for each partner for obligations, he may
have entered into in good faith in the interest of
the partnership, as well as for risks in
consequence of its management.
Art. 1797 How profits are distributed:
a) According to agreement
b) If none, according to amount of contribution
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How losses are distributed:

a) According to agreement
b) If none, according to agreement as to profits
c) If none, according to amount of contribution

Industrial partners profits:

A just an equitable share
Re: Losses he can recover whatever he is made
to give them, from the other partners for he is
exempted from losses with or without stipulation.

Art. 1798 Designation by third person of shares in

profits and losses:
Can be impugned: when it is
manifestly equitable
Cannot be impugned even if
manifestly equitable:
1) If the aggrieved partner has
already begun to execute the
decision
2) Or if he has not impugned the
same within a period of three
months from the time he had
knowledge thereof.
3)
Art. 1799 a stipulation which excludes one or more
partners from any share in the profits or the losses is
void.
Art. 1800 Appointment of Manager:
a) Appointment as manager in the articles of
partnership;
b) Appointment as manager made in an instrument
other than articles of partnership or made orally.
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Re: Appointment:
a) Power is irrevocable with or without lawful
cause
Just cause controlling partners
should vote to oust him
Without cause/ unjust cause there
must be unanimity, including his own
vote.
b) Extent of power:

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If he acts in good faith he may do all

acts of administration despite the
opposition of his partners
Bad faith he cannot

c) Re: Powers
Powers of a general agent
Incidental powers needed to carry out
the objectives of the partnership
Art. 1801 Rule when there are two or more
managers:
a) Two or more partner are managers
b) There is NO specification of respective duties
c) There is NO stipulation requiring unanimity
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Each may separately execute all acts

of administration
Except if any of the managers should
oppose

Art. 1802 When unanimity is required:

*see codal
Art. 1803 Rules to be observed when manner of
management has not been agreed upon:
*see codal
Art. 1804 Associate of a partner:
For a partner to have an associate in
his share: consent of the other
partners is not required
For the associate to become a
partner: all must consent
Art. 1805 Partnership books
Art. 1806 Duty
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of partners to give information

Who can DEMAND information:
Any partner
Legal representative of a dead partner
Legal representative of any partner
under legal disability

Art. 1807 Duty to account

Art. 1808 Prohibition to capitalist partners to engage in
any operation which is of the kind of business in which the
partnership is engaged.
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Instances when there is no prohibition:

When it is expressly stipulated
Other partners expressly allow him
Other partners impliedly allow him
Company ceases to be engaged in business
He becomes a limited partner

Effect of violation:
Shall bring all the profits illegally obtained
Art. 1809 Right to demand a formal account

Art. 1811 Rights of a partner in Specific

Partnership Property: (car)
a) He has an equal right with his partners to
possess the car but only for partnership
purposes
b) He cannot assign his right in the car (except
all partner assigned their rights in the same
property)
c) His right in the car is not subject to the
attachment or execution
d) Not subject to legal support
ART. 1812 - A partners interest in the partnership is his
share of the profits and surplus
Art. 1813 Effects of conveyance by partner of his
interest in the partnership:
a) If a partner conveys (assigns, sell, donates) his
whole interest in the partnership, either of two
things may happen:
1) the partnership may still remain
2) the partnership may be dissolved
b) the assignee (conveyee) does not necessarily
become a partner. The assignor is still the partner
with a right to demand accounting and
settlement.
c) The assignee cannot even interfere in the
management or administration of the partnership
business or affairs.
d) The assignee cannot demand:
Information
Accounting
Inspection of the partnership
books
Rights of assignee
a) To get whatever profits the assignor-partner
would have obtained
b) To avail himself of the usual remedies in case
of fraud in the management
c) To ask the annulment of the contract of
assignment if he was induced to enter into it
through any of the vices of consent.
d) To demand an accounting
Art. 1814 see codal
Receivership
Redemption:
1) Charge may be redeemed or
brought at any time before
foreclosure
2) After foreclosure it may still be
bought, with separate property; or
with partnership property
OBLIGATIONS OF THE THIRD PARTNERS WITH
REGARD TO THIRD PERSONS
Art. 1815 shall operate in firm name

PROPERTY RIGHTS OF A PARTNER

Art. 1810
1)
2)
3)

his rights in specific partnership

his interest in the partnership
his right to participate in management

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b) Made AFTER DISSOLUTION binding only if

the admissions were necessary to WIND UP the
business.
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Liability of a partner who has withdrawn:

He is not liable for liabilities contracted after he
has withdrawn, for then he is no longer a partner.
If his interest has not yet been paid him, his right
to the same is that of a mere creditor.
Note: Partners are always pro rata liable; their liability is
subsidiary and not joint.

Art. 1821 Effect of Notice to a partner

a) In general, notice to a partner is notice to the
partnership that is, a partnership cannot claim
ignorance if a partner knew.
b) Notice to a partner, given while already a partner,
is a notice to the partnership, provided it relates
to partnership affairs.

Art. 1817 any stipulation against the liability laid down

in preceding article shall be void, except as among the
partners.

Note: Knowledge of the partner is also knowledge of the

firm provided:
a) The knowledge was acquired by a partner who is
acting in the particular matter involved.
b) The knowledge may have been acquired by a
partner NOT acting in the particular matter
involved.

Art. 1818 *seven acts of ownership - unsual

Where can a partner bind the partnership
a) When he is expressly authorized or impliedly
authorized
-(implied): 1) when the other partner do not
object, although they have knowledge of the car
2) when the act is for apparently carrying on
in the usual way the business of the
partnership
b) When he acts in behalf and in the name of the
partnership
When will act of the partner NOT BIND the
partnership
a) When although for apparently carrying on in
the usual way the business of the
partnership, still the partner has in fact no
authority, and the third party knows that
the partner has no authority.
b) When the act is NOT for apparently carrying
on in the usual way the business of the
partnership

Art. 1822 see codal

Art. 1823 Liability of partnership for misappropriation
Art. 1824 - see codal
Art. 1825 partner and partnership by estoppel
Art. 1826 Entry of a new partner into an existing
partnership.

See paras
Art. 1827 - see codal/paras

Art. 1819 conveyance *see codal

Equitable interest all interest which the partnership
had, except title, that is beneficial interests like use, fruits
but not naked ownership.
Art. 1820 Admission or representation made by a
partner:
a) The admission must concern partnership affairs
b) Within the scope of his authority
Rule:
a) Made BEFORE DISSOLUTION binding only
when the partner has authority to act on the
particular matter.

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