PROPERTY RIGHTS OF A PARTNER

1. What are the property rights of a partner?

• His rights in specific partnership property

• His interest in the partnership; and

• His right to participate in the management

2. As regards specific partnership property, what relationship exists between and

among the partners?

• Co-ownership

3. What are the incidents of this co-ownership?

• A partner has an equal right with his partners to possess specific

partnership property for partnership purposes.

• 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.

• A partner’s right in specific partnership property is not subject to

attachment or execution, except on a claim against the partnership.

4. What is the nature of a partner's interest in the partnership?

• Proportionate share in the profits during the life of the partnership as a

going concern & his share in the surplus after dissolution (share in the
profits & surplus)

5. Can a partner assign his whole interest in the partnership to another without the
consent of the other partners?

• yes. A partner can assign his whole interest in the partnership to another
without the consent of the other partners.

6. Will the assignee become a partner?

 • no. It merely entitles the assignee to receive in accordance with his
contract the profits to which the assigning partner would otherwise be
entitled

7. Will the conveyance of a partner of his whole interest in the partnership dissolve
the partnership?

• No. It does not of itself dissolve the partnership.

8. What are the rights of an assignee of a partner's interest?

(1) To receive in accordance with his contract the profits accruing to the
assigning partner.

(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.

(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 the partners.

*He may also apply to court for the dissolution of the partnership after the
termination of specified term or undertaking, or at any time.

9. What rights cannot be exercised by an assignee?

(1) To interfere in the management.

(2) To require any information or account.

(3) To inspect any of the partnership books

*The legal effect is the same as that of a partner associating another in his
share or interest.

10. Is a partner's interest in the partnership subject to attachment or execution for

his personal debts?
 A separate creditor of a partner cannot attach or levy upon specific
partnership property for the satisfaction of his credit.

He can, however, secure a judgment on his credit and then apply to the court
for a charging order subjecting the interest of the debtor-partner in the
partnership with the payment of the unsatisfied amount of such judgment
with interest thereon.

11. May the interest so charged be redeemed and with what property shall it be
redeemed?

Yes, 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.

12. What other right may a partner whose interest has been so charged avail of?

The court may resort to other courses of action if the judgment debt remains
unsatisfied, notwithstanding the issuance of the charging order.

OBLIGATIONS OF THE PARTNERS WITH REGARD TO THIRD PERSONS

1. Under what name shall every partnership operate?

• Under a firm name, which may or may not include the name of one or
more of the partners.

2 Is there any limitation as to the firm name a partnership may adopt?

• Use of misleading name

• Use of names of deceased persons

3. What is the liability of a person, who not being a partner includes his name in
the partnership's name?

• Person who not being a partner, include his name in the partnership’s
name do NOT ACQUIRE THE RIGHTS OF A PARTNER but is SUBJECT
TO THE LIABILITY OF A PARTNER in so far as third persons without
notice are concerned.

4. How are partners including industrial ones be liable for contractual obligations
of the partnership?

• All partners, including industrial ones, shall be liable pro rata with all
their property and after all the partnership assets have been exhausted

5. What is meant by subsidiary liability of the partners?

• Partners shall be personally liable only after all the partnership assets
has been exhausted.

6. What is meant by the partner's pro-rata liability?

• Partners shares equally or jointly and not proportionately which is its

literal meaning because the pro rating is based on the number of partners and
not on the amount of their contributions.

7. How do you reconcile the exception of an industrial partner from loss and his
pro-rata liability for partnership contractual obligations?

• He can recover the amount he has paid from the capitalist partners
unless there is an agreement to the contrary.

8. When is a partnership contractual obligation incurred?

• When one of the partners enter into a contract which is in the name and
for the account of the partnership and the partnership assets have been
exhausted

9. What is the effect of a stipulation among the partners contrary to the pro-rata
and subsidiary liability of the partners?

• Void and no effect insofar as it effects the rights of third persons

10. In the absence of any agreement to the contrary, who shall act as agent of the
partnership?

• In the absence of an agreement to the contrary, all partners have equal

rights in the management and conduct of the partnership business.

11. Classify the acts of a partner in the partnership.

• Acts for apparently carrying on in the usual way the business of the
partnership
• Acts of strict dominion or ownership
• Acts in contravention of a restriction on authority

12. If a partner who has no authority performs an act for apparently carrying on in
the usual member manner the business of the partnership, will such act be binding
upon the partnership?

Yes

13. Give examples for acts of strict dominion.

A. Assign the partnership property in trust for the creditors or on the

assignee's promise to pay the debts of the partnership

B. Dispose of the goodwill of the business

C. Do any other act which would make it impossible to carry on th ordinary

business of a partnership

D. Confess a judgment

E. Enter into a compromise concerning a partnership claim or liability

F. Submit a partnership claim or liability to arbitration

G. Renounce a claim of the partnership

14. When shall the partnership be bound by any act of strict dominion?

when act is authorized by all the other partners or when they have
abandoned the business

15. Under whose name may real property owned by the partnership be registered?

A. The partnership

B. One or more but not all the partners

C. One or more or all the partners, or in a third person in trust for the
partnership

D. All the partners

16. Where title to real property is in the partnership name, who may convey title to
such property?

Any partner may convey title to such property

17. One title is conveyed may the partnership recover such property?

no. If it has been conveyed by grantee to a holder for value and without
notice or knowledge that the partner, in making the conveyance, had
exceeded his authority

18. Where title to real property is in the name of the partnership, and a conveyance
is executed by a partner in his own name, will title pass to the grantee?

no. He gets only the equitable interest of X & Co, assuming that the sale is
in the usual course of business of the partnership

19. Define equitable interest.

Equitable interest or title is one not duly recognized by law but in equity
alone; it is a right or interest in property which is imperfect and
unenforceable at law but which under well-recognized equitable principles
should and is convertible into a legal right or title.
20. When may conveyance of real property of the partnership by a partner in his
own name pass title to the grantee?

No. What will pass is the equitable interest of the partnership, assuming it’s
the usual course of business of the partnership. Grantee would not be entitled
even to the equitable interest if: (1) it’s not the usual course of business of
partnership, (2) grantee has no knowledge of partner’s lack of authority
although sale was made in the usual course of the business.

21. Where title to real property is in the name of one or more or all the partners, or
in a third person in trust for the partnership and is conveyed by a partner in his own
name or in the partnership name, will title pass to the property?

No. What will pass is the equitable interest of the partnership, provided the
act is one within the authority of the partner under the provisions of the first
paragraph of Art. 1818.

22. If real property is registered in the names of all the partners and is conveyed by
all the partners, what passes to the grantee?

Where the title to real property is in the names of all the partners, a
conveyance executed by all the partners passes all their rights in such
property.

23. When may admission or representation made by a partner be considered

evidence against the partnership?

(1) The admission of a partner made during the existence of the

partnership are binding against the partnership (and co-partners) when such
admissions refer to a matter concerning partnership affairs and made within
the scope of his authority.

(2) After dissolution, admission made by a partner will bind the

partnership only if necessary to wind up partnership affairs.

24. Under what cases may notice or acknowledge of any partner of any matter
relating to partnership affairs operate as notice to or knowledge of the partnership?
 (1) Knowledge of the partner acting in the particular matter acquired
while a partner.

(2) Knowledge of the partner acting in the particular matter then present
to his mind.

(3) Knowledge of any other partner who reasonably could and should
have communicated it to the acting partner.

*Except in the case of a fraud on the partnership, committed by or with the

consent of that partner.

25. How is a partnership tort committed?

ART. 1823. The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his apparent authority receives
money or property of a third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or
property of a third person and the money or property so received is misapplied by
any partner while it is in the custody of the partnership. (n)

26. Who shall be charged liable for partnership tort?

ART. 1824. All partners are liable solidarily with the partnership for everything
chargeable to the partnership.

27. How does a person not a partner become a partner by estoppel?

A person not a partner may become a partner by estoppel, and thus be held liable to
third persons as if he were a partner, when by words or by conduct he:

(a) Directly represents himself to anyone as a partner in an existing partnership

or in anon-existing partnership (with one or more persons not actual partners); or

(b) Indirectly represents himself by consenting to another representing him as

partner in an existing partnership or in a non-existing partnership.
28. If a person is admitted as a partner into an existing partnership, shall he be
liable for all the obligations of the partnership incurred by the partnership before
his admission?

He is liable for all obligations existing at the time of his admission as though he
was already a partner when such obligations were incurred. For such obligations,
his liability is limited to his share in the partnership property, unless there is a
stipulation to the contrary.

29. For obligations of the partnership incurred after he was admitted into the
partnership, to what extend shall he be liable?

For all obligations accruing subsequent to the admission of the new partner, all the
partners are liable with their separate properties.

30. In respect to partnership assets between the partnership creditors and the
creditors of the individual partners, who shall be preferred?

ART. 1827. The creditors of the partnership shall be preferred to those of each
partner as regards the partnership property.