PARTNERSHIP 

Principle of Delectus Personae (choice of  persons) – a Art. 1769. In determining whether a partnership exists, these
person has the right to select  persons with whom he wants rules shall apply:
Art. 1767. By the contract of partnership two or more to be associated with in partnership. 
persons bind themselves to contribute money, property, or 1. Except as provided by Article 1825, persons who are not
industry to a common fund with the intention of dividing the Art. 1768. The partnership has a juridical personality partners as to each other are not partners as to third
profits among themselves.  separate and distinct from that of each of the partners even persons. 
in case of failure to comply with the requirements of Article
Definition  1772, first paragraph.  2. Co-ownership or co-possession does not of itself establish
Partnership is a contract whereby two or more persons bind a partnership, whether such co-ownership or co-possessors
themselves to contribute money, property or industry to a Partnership, a juridical person  do or do not share any profits made by the use of the
common fund with the intention of dividing profits among As an independent juridical person, a partnership may enter property.
themselves.  into contracts, acquire and possess property of all kinds in its
  name, as well as incur obligations and bring civil or criminal 3. The sharing of gross returns does not of itself establish a
Elements   actions. Thus, a partnership may be declared insolvent partnership, whether or not the persons sharing them have a
1. Intention to form a contract of partnership  even if the partners are not. It may enter into contracts and joint or common right or interest in any property from which
2. Participation in both profits and losses  may sue and be sued in its firm name or by its duly the returns are derived. 
3. Community of interests  authorized representative. It is sufficient that service of
summons be served on any partner.  4. The receipt by a person of a share of the profits of a
Basic Features  business is prima facie evidence that he is a partner in the 
1. Voluntary agreement  Partners cannot be held liable for the obligations of the business, but no such inference shall be drawn if such profits
2. Association for profit  partnership unless it is shown that the legal fiction of a were received in payment: 
3. Mutual contribution to a common fund  different juridical personality is being used for a fraudulent,
4. Lawful purpose or object  unfair or illegal purpose.  a. As a debt by installments or otherwise. 
5. Mutual agency of partners  b. As wages of an employee or rent to a landlord. 
6. Articles must not be kept secret  Effect of failure to comply with statutory requirements  c. As an annuity to a widow or representative of a deceased
7. Separate juridical personality  Under Art 1772   partner. 
Partnership still acquires personality despite failure to comply d. As interest on a loan, though the amount of payment vary
Characteristics   with the requirements of execution of public instrument with the profits of the business. 
1. Consensual – perfected by mere consent.  and registration of name in SEC. e. As the consideration for the sale of a goodwill of a
2. Bilateral – formed by two or more persons creating business or other property by installments or otherwise. 
reciprocal rights and obligations.  Under Arts 1773 and 1775 
3. Preparatory – entered into as a means to an end.   Partnership with immovable property contributed, if without In general, to establish the existence of a partnership, all of
4. Nominate – has a special name or designation.  requisite inventory, signed and attached to public instrument, its essential features or characteristics must be shown as
5. Onerous – contributions in the form of either money, shall not acquire any juridical personality because the being present. In case of doubt, art.1769 shall apply. This
property and/or industry must be made.  contract itself is void. This is also true for secret associations article seeks to exclude from the category of partnership
6. Commutative – the undertaking of each partner is or societies.  certain features enumerated herein which, by themselves,
considered as the equivalent of that of the others.   are not indicative of the existence of a partnership. 
7. Principal – its existence or validity does not depend on To organize a partnership not an absolute right 
some other contract.   It is but a privilege which may be enjoyed only under such Persons not partners as to each other 
terms as the State may deem necessary to impose.  Persons who are partners as between themselves are
partners as to third persons. Generally, the converse is true:
if they are not partners between themselves, they cannot be
partners as to third persons. Partnership is a matter of Sharing of gross returns not even  presumptive Burden of proof and presumption 
intention, each partner giving his consent to become  a evidence of partnership  The burden of proving the existence of a partnership rests on
partner. However, whether a partnership exists between the The mere sharing of gross returns alone  does not even the party having the affirmative of that issue. The existence
parties is a factual matter. Where parties declare they are constitute prima facie evidence of partnership, since in a  of a partnership must be proved and will not be presumed.
not partners, this, as a rule, settles the question between partnership, the partners share profits after  satisfying all of The law presumes that those acting as partners have
them. But where a person misleads third persons into the partnership’s liabilities. entered into a contract of partnership. Where the
believing that they are partners in a non-existent partnership, law presumes the existence of partnership, the burden of
they become subject to liabilities of partners (doctrine Reason for the rule  proof is on the party denying its existence. When a
of estoppel).Whether or not the parties call their relationship Partner interested in both failures and  successes; it is the partnership is shown to exist, the presumption is that it
or believe it to be a partnership is immaterial. Thus, with chance of loss or gain  that characterizes a business. Where  continues and the burden of proof is on the person asserting
the exception of partnership by estoppel, a partnership the contract requires a given portion of  gross returns to be its termination. One who alleges partnership cannot prove it
cannot exist as to third person if no contract of partnership paid over, the portion is  paid over as commission, wages, merely by evidence of an agreement using the
has been entered into between the parties themselves.  rent, etc.  term “partner”. Non-use of the term, however, is entitled to
weight. The question of whether a partnership exists is not
Co-ownership or co-possession  Where there is evidence of mutual management  always dependent upon the personal arrangement or
There is co-ownership whenever the ownership of an Where there is further evidence of mutual management and understanding of the parties. Parties intending to do a thing
undivided thing or right belongs to different persons.  control, partnership may  result.  which in law constitutes partnership are partners. 

Clear intent to derive profits from operation of business  Receipt of share in the profits strong  presumptive Legal intention is the crux of partnership. Parties may call
Co-ownership does not of itself establish the existence of a evidence of partnership  themselves partners but their contract may be judged
partnership, although it is one of its essential elements. This An agreement to share both profits  and losses tends something quite different. Conversely, parties may expressly
is true even if profits are derived from the joint ownership. strongly to establish the  existence of a partnership. It is not  state that theirs is not a partnership yet the law may
The profits must be derived from the operation of business conclusive, however, just prima facie and  may be rebutted determine otherwise on the basis of legal intent. However,
by the members of the association and not merely from by other circumstances.  courts will be influenced to some extent by what the parties
property ownership. The law does not imply a partnership call their contract. 
between co-owners because of the fact that they develop or When no such inference will be drawn 
operate a common property, since they may rightfully do this Under par. 4 of art. 1769, sharing of profits is not prima facie Tests and incidents of partnership 
by virtue of their respective titles. There must be a evidence of partnership in  the cases enumerated under In determining whether a partnership exists, it is important to
clear intent to form a partnership.  subsections (a) – (e). In these cases, the profits are not distinguish between tests or indicia and incidents of
shared as a partner but in some other respects or purpose. partnership. Only those terms of a contract upon which the
Existence of fiduciary relationship  The basic test of partnership is whether the business parties have reached an actual understanding, either
Partners have a well-defined fiduciary relationship between is carried on on behalf of the person sought to  be held expressly or impliedly, may afford a test by which
them. Co-owners do not. Should there be dispute; the liable.  to ascertain the legal nature of the contract. Some of the
remedy of partners is an action for dissolution, termination typical incidents of a partnership are: 
and accounting. For co-owners it would be one, for instance, Sharing of profits as owner  
for non performance of a contract. People can become co- It is not merely the sharing of profits, but the sharing of them 1. The partners share in profits and losses. 
owners without a contract but they cannot become partners as co-owner of the business or undertaking that makes 2. They have equal rights in the management and conduct of
without one.  one partner. Test: Does the recipient have an equal voice as the partnership business. 
proprietor in the conduct and control of the business? Does 3. Every partner is an agent of the partnership, and entitled
Persons living together without benefit of marriage   he own a share of the profits as proprietor of the business to bind the others by his acts. He may also be liable  for the
Property acquired is governed by rules on co ownership.  producing them? One must have an interest with another in entire partnership obligations. 
the profits of a business as profits. 
4. All partners are personally liable for  the debts of the Effects of an unlawful partnership  there cannot be any accounting demands of a partner for the
partnership with their  separate property except that limited  1. The contract is void and the partnership never existed in profits which  may be in his hands, nor can recovery be had. 
partners are not bound beyond the  amount of their the eyes of the law; 
investment.  2. The profits shall be confiscated in favor of the Effect of partial illegality of partnership  business 
5. A fiduciary relation exists between  the partners.  government;  Where a part of the business is legal and  part illegal, a n
6. On dissolution, the partnership is not  terminated, but 3. The instruments or tools and proceeds of the crime shall account of that which is  legal may be had. Where, w/o the 
continues until the  winding up of partnership is completed.  also be forfeited in favor of the government;  knowledge or participation of the partners, the firm’s profits in
Such incidents may be modified by  stipulation of the 4. The contributions of the partners shall  not be confiscated a lawful business has  been increased by wrongful acts, the
partners.  unless they fall  under #3.  innocent partners are not precluded as  against the guilty
partners from recovering their share of the profits. 
Similarities between a partnership and a  corporation  A partnership is dissolved by operation of  law upon the
1. Both have juridical personality separate and distinct from happening of an event which  makes it unlawful. A judicial Effect of subsequent illegality of  partnership business 
that of the individuals composing it; decree is  not necessary to dissolve an unlawful  partnership. Contract will not be nullified. Where the business for which
2. Both can only act through its agents;  However, it is advisable that  judicial decree be secured. 3rd the partnership is  formed is legal when the partnership is 
3. Both are organizations composed of an aggregate of persons who  deal w/ partnership w/o knowledge of  illegal entered into, but afterward becomes illegal,  an accounting
individuals;  purposes are protected.  may be had as to the  business transacted prior to such time.
4. Both distribute profits to those who contribute capital to
the business;  Right to return of contribution where  partnership is Community of interest between the  partners for
5. Both can only be organized where there  is a law unlawful  business purposes 
authorizing is organization;  Partners must be reimbursed the amount of  their respective The salient features of an ordinary partnership are a
6. Partnerships are taxable as corporations.  contributions. The partner  who limits himself to demanding community of interest in profits and losses, a community of
only the  amount contributed by him need not resort  to the interest  in the capital employed, and a community  of power
Art. 1770. A partnership must have a lawful object or partnership contract on which to  base his claim or action. in administration. This community of interest is the basis of
purpose, and must be established  for the common benefit or Since the purpose  for which the contribution was made has the partnership relation. However, although every 
interest of the partners. When an unlawful partnership is not come into existence, the manager or  administrator must partnership is founded on a community of interest, every
dissolved by a judicial decree, the profits shall be confiscated return it, and he who  has paid his share is entitled to recover community of interest does not necessarily constitute a
in favor of the State, without prejudice to the provisions  of it. partnership. Property used in the business may belong to
the Penal Code governing the  confiscation of the one or more partners, so that there is no joint property, other
instruments and effects  of a crime. Object or purpose of Right to receive profits where partnership  is unlawful  than joint earnings. To state that partners are co-owners of a 
partnership. Law does not permit action for obtaining  earnings from an business is to state that they have the  power of ultimate
unlawful partnership  because for that purpose, the partner control. But partners may  agree upon concentration of
The provision of the 1st paragraph reiterates 2 essential will  have to base his action upon the  partnership contract, management, leaving some of their members entirely
elements of a contract of partnership:   which is null and  without legal existence by reason of its  inactive or dormant. Only one of these  features, profit-
1. Legality of the object; and  unlawful object; and it is self-evident that  what does not sharing, seems to be absolutely essential. But a mere
2. Community of benefit or interest of the partners. The exist cannot be a cause  of action. Profits earned do not sharing of  profits of itself does not necessarily constitute a
parties possess absolute freedom to choose the transaction constitute  or represent the partner’s contribution. He  must partnership. The court must  consider all the essential
or transactions they must engage in. The only limitation is base his claim on the contract which is  void. It would be elements in light  of the facts of the particular case before 
that the object must  be lawful and for the common benefit of immoral and unjust for the  law to permit a profit from an deciding whether a partnership exists. 
the members. The illegality of the object will not be industry  prohibited by it. The courts will refuse to  recognize
presumed; it must  appear to be of the essence of the its existence, and will not lend  their aid to assist either of the Art. 1771. A partnership may be constituted in any form,
relationship.  parties  thereto in an action against each other.  Therefore, except where immovable property or real rights are
contributed thereto, in which case a public instrument shall Art. 1772. Every contract of partnership  having a capital of Where immovable property contributed,  failure to
be necessary. Form of partnership contract  three thousand pesos or  more, in money or property, shall comply w/ the following  requisites will render the
appear in  a public instrument, which must be  recorded in partnership  contract void: 
General rule  the Office of the Securities and  Exchange Commission. 1. The contract must be in a public  instrument; 
No special form required for validity or  existence of the Failure to comply  with the requirements of the preceding  2. An inventory of the property  contributed must be made,
contract of partnership. Contracts may be made orally or in paragraph shall not affect the liability of the  partnership and signed by  the parties, and attached to the public  instrument.
writing  regardless of the value of the contributions.  the members thereof to  third persons. Registration of Art. 1773 is intended  primarily to protect 3rd persons. W/ 
partnership. regard to 3rd person, a de facto  partnership or partnership
Where immovable property or real rights  are by estoppel  may exist. There is nothing to prevent  the court
contributed   Partnership with capital of P3, 000 or more from considering the  partnership agreement an ordinary 
Execution of public instruments necessary  for validity of Requirements:  contract from which the parties’ rights  and obligations to
contract of partnership. To  affect 3rd persons, the transfer of 1. The contract must appear in a public  instrument;  each other may be  inferred and enforced. 
real  property to the partnership must be duly  registered in 2. It must be recorded or registered w/  the SEC. However,
the Registry of Property.  failure to comply w/  the above requirements does not  When inventory is not required 
prevent the formation of the partnership or affect its liability An inventory is required only whenever immovable property
When partnership agreement covered by  the Statute of and  that of the partners to 3rd persons. But  any partner is is contributed. If not  contributed or if personal property, no
Frauds   granted the right bylaw  to compel each other to execute the  inventory required. 
An agreement to enter in a partnership at a  future time, contract in a public instrument. 
which by its terms is not to be  performed w/in a year from Importance of making inventory of real  property in a p a
the making  thereof is covered by the Statute of Frauds.  Purpose of registration  r t n e r s h i p 
Such agreement is unenforceable unless it is in writing or at Registration is necessary as a condition for  the issuance of An inventory is very important in  a partnership to how much
least evidenced by some  note or memorandum.  licenses to engage in  business and trade. In this way, the is due from each  partner to complete his share in the 
tax  liabilities of big partnerships cannot be  evaded and the common fund and how much is due to each  of them in case
Partnership implied from conduct Binding effect   public can determine more accurately their membership and of liquidation. The execution of a public instrument of 
Existence of partnership may be implied  from the acts or capital before dealing with them.  partnership would be useless if there is no  
conduct of the parties, as  well as from other declarations, inventory of immovable property  contributed because w/o its
and such  implied contract would be as binding as a  written When partnership considered registered  description and  designation, the instrument cannot be 
and express contract.  The objective of the law is to make the recorded instrument subject to inscription in the Registry  of Property, and the
open to all and to give  notice thereof to interested parties. contribution cannot  prejudice 3rd persons. 
Ascertainment of intention of parties  This objective is achieved from the date the  partnership
In determining whether a particular  transaction constitutes a papers are presented to and  left for record in the Art. 1774. Any immovable property or an  interest therein
partnership, as  between the parties, the intention as  Commission. This is the effective date of registration. If the  may be acquired in the  partnership name. Title so acquired
disclosed by the entire transaction, and  as gathered from certificate of recording is issued on a  subsequent date, it can be  conveyed only in the partnership name.  Acquisition
the facts and from the  language employed by the parties as effectively retroactives the date of presentation.  or conveyance of property by  partnership 
well  as their conduct, should be ascertained. 
Art. 1773. A contract of partnership is void, whenever Since partnership has a juridical personality of  its own, it
Conflict between intention and terms  of contract   immovable property is  contributed thereto, if an inventory of may acquire immovable property  in its own name. Title so
If the parties intend a general partnership,  they are general said  property is not made, signed by the parties,  and acquired can  be conveyed only in the partnership name. 
partners although their  purpose is to avoid the creation of attached to the public instrument.  Partnership with
such a  relation.  contribution of immovable  property  Art. 1775. Associations and societies, whose  articles are
kept secret among the  members, and wherein any one of
the  members may contract in his own name  with third
persons, shall have no juridical  personality, and shall be Partnership at will: one in w/c no time is  specified and is not 1. Capitalist partner: one who contributes  money or property
governed by the  provisions relating to co-ownership. Secret  formed for a particular  undertaking or venture and w/c may to the common  fund. 
partnerships without juridical personality  be  terminated at any time by mutual  agreement of the 2. Industrial partner: one who contributes  only his industry or
partners, or by the will of  any one partner alone; or one for a personal service.  
Partnership relations are created only by the  voluntary fixed  term or particular undertaking w/c is  continued after 3. General partner: one whose liability to 3rd persons extends
agreement of the partners. It is  essential that the partners the end of the term or  undertaking w/o express agreement.  to his separate  property. 
are fully  informed not only of the agreement but of  all Partnership with a fixed term: one w/c the  term for w/c the 4. Limited partner: one whose liability to  3rd persons is limited
matters affecting the partnership. Secret  partnerships are partnership is to exist is  fixed or agreed upon or one formed to his capital  contribution. 
not by nature  partnerships. Secret partnerships shall be  for  a particular undertaking.  5. Managing partner: one who manages  the entity. 
governed by the provisions relating to co ownership.  6. Liquidating partner: one who takes  charge of the winding
As to the legality of its existence  up of partnership  affairs upon dissolution. 
Importance of giving publicity to articles  of partnership  De jure partnership: one w/c has complied  w/ all the legal 7. Partner by estoppel: one who is not  really a partner but is
It is essential that the arts of partnership be  given publicity requirements for  its establishment.  liable as a partner  for the protection of innocent 3rd 
for the protection not only of  the members themselves but De facto partnership: one w/c has failed to  comply w/ all the persons. He is one represented as being  a partner but who
also 3rd persons from fraud and deceit. A member  who legal requirements for its  establishment.  is not so between  the partners themselves. 
transacts business for the secret  partnership in his own 8. Continuing partner: one who continues  the business of a
name becomes  personally bound to 3rd persons unaware of  As to representation to others  partnership after it  has been dissolved by reason of the 
the existence of such association.  Partnership liability may Ordinary or real partnership: one w/c  actually exists among admission of a new partner, or the  retirement, death or
still  result, however, in cases of estoppel.  the partners and also  as to 3rd persons.  expulsion of one  or more partners. 
Ostensible partnership or partnership or  partnership by 9. Surviving partner: one who remains  after a partnership
Art. 1776. As to its object, a partnership is  either universal estoppel: one w/c in reality  is not a partnership, but is has been dissolved  by the death of any partner. 
or particular. As regards the  liability of the partners, a considered a  partnership only in relation to those who,  by 10. Subpartner: one who, not being  a member of the
partnership may  be general or limited. Classifications of their conduct or admission, are  precluded to deny or partnership, contracts  w/ a partner w/reference to the
partnership. disprove its existence. latter’s  share in the partnership. 

As to extent of its subject matter   As to publicity   Other classifications  

1. Universal partnership. (Art.1777)  Secret partnership: one wherein the  existence of certain 1. Ostensible partner: one who takes  active part and known
a. Universal partnership of all present  property. (Art. 1778)  persons as partners is   to the public as a  partner. 
b. Universal partnership of profits. (Art. 1780)  not avowed or made known to the public by  any of the 2. Secret partner: one who takes an active  part in the
2. Particular partnership. (Art. 1783)  partners.  business but is not known to  be a partner by outside parties
Open or notorious partnership: one whose  existence is nor held out as a partner by the other partners.  He is an
As to liability of the partners  avowed or made known to the  public by the members of the actual partner. 
General partnership: one consisting of  general partners who firm.  3. Silent partner: one who does not take  any active part in
are liable pro rata and  subsidiary and sometimes solidarily the business although  he may be known to be a partner. 
w/ their  separate property for partnership debts.  As to purpose   4. Dormant partner: one who does not  take active part in the
Commercial or trading partnership: one  formed or the business and is  not known or held out as a partner. He 
Limited partnership: one formed by two or  more persons transaction of business.  would be both a silent and a secret  partner. 
having as members one or  more general partners and one Professional or non-trading partnership:  one formed for the 5. Original partner: one who is a member  of the partnership
or more  limited partners, the latter not being  personally exercise of a profession.  from the time of its  organization. 
liable for the obligations of the  partnership.  6. Incoming partner: a person lately, or  about to be, taken
Kinds of partners  into an existing  partnership as a member. 
As to duration  Under the Civil Code 
7. Retiring partner: one withdrawn from  the partnership; a acquired is void.  Profits from other sources (not from  Reason for presumption: universal  partnership of profits
withdrawing partner.  Art. 1777. A universal partnership may  properties contributed) will become  common property only if imposes less  obligations on the partners, since they 
refer to all the present property or to  all the profits.  there's a  stipulation. preserve the ownership of their separate  property. 
 
Art. 1778. A partnership of all present  property is that in Art. 1780. A universal partnership of profits  comprises all Art. 1782. Persons who are prohibited from  giving each
which the partners  contribute all the property which actually  that the partners may acquire  by their industry or work other any donation or  advantage cannot enter into a
belongs to them to a common fund, with  the intention of during  the existence of the partnership. Movable  or universal  partnership. Limitations upon the right to  form a
dividing the same among  themselves, as well as all the immovable property which each of the  partners may partnership
profits they  may acquire therewith.  possess at the time of the  celebration of the contract shall
continue to  pertain exclusively to each, only the  usufruct Persons who are prohibited by law to give  donations cannot
Art. 1779. In a universal partnership of all  present property, passing to the partnership.  enter into a universal  partnership for the reason that each of
the property which  belongs to each of the partners at the the  partners virtually makes a donation. To  allow it would be
time  of the constitution of the partnership  becomes the Universal partnership of profits explained  permitting them to do  indirectly what the law expressly
common property of all the  partners, as well as all the profits A universal partnership of profits is one w/c  comprises all prohibits.  A partnership formed in violation of this  article is
which  they may acquire there with. A stipulation  for the that the partners may acquire  by their industry or work null and void. Consequently, no  legal personality is
common enjoyment of any other  profits may also be made; during the  existence of the partnership and the  usufruct of acquired. A husband and  wife, however, may enter into a
but the property  which the partners may acquire  movable or immovable property  w/c each of the partners particular  partnership or be members thereof.
subsequently by inheritance, legacy or  donation cannot be may possess at the  time of the celebration of the contract. 
included in such  stipulation, except the fruits thereof.  Relevant provisions: 
Ownership of present and future property   Art. 87: Donations between spouses during  marriage void,
Universal partnership of all present  property explained  The partners retain their ownership over  their present and except moderate gifts on  occasion of family rejoicing. Also
A universal partnership of profits is one w/c  comprises all future property. What  passes to the partnership are the applies  to those living together as husband and  wife w/o
that the partners may  acquire by their industry or work profits or  income and the use or usufruct of the same.  valid                            marriage. 
during the  existence of the partnership and the  usufruct of Consequently, upon dissolution, such  property is returned to Art. 739: The following donations are void:  Those made
movable or immovable property  w/c each of the partners the partners who  own it.  between persons who are  guilty of adultery or concubinage
may possess at the  time of the celebration of the contract. at the  time of the donation (no need for  conviction;
In  this kind of partnership, the following became the Profits acquired through chance  preponderance of evidence only  required); 
common property of all the  partners:  Since the law only speaks of profits w/c  the partners may Those made between persons found guilty  of the same
Property w/c belonged to each of them at  the time of the acquire by their industry  or work, profits acquired purely by criminal offense,  inconsideration thereof; 
constitution of the  partnership;  chance  are not included. c.)Those made to a public officer or his wife,  descendants
Profits w/c they may acquire from the  property contributed.  and ascendants, by reason of  his office. 
Fruits of property subsequently acquired 
Contribution of future property  Fruits of property subsequently acquired by  the partners do Art. 1783. A particular partnership has for  its object
General rule: future properties cannot be  contributed. The not belong to  the partnership. Such profits, however, may  determinate things, their use or  fruits, or a specific
very essence of the  contract of partnership that the be included by express stipulation.  undertaking, or the  exercise of a profession or vocation. 
properties  contributed be included in the partnership 
requires the contribution of things  to be determined. The Art. 1781. Articles of universal partnership,  entered into Particular partnership explained 
position of a partner is  like that of a donor, and donations  without specification of its  nature, only constitute a A particular partnership is one w/c is  neither a universal
cannot comprehend future property. Thus,  property universal  partnership of profits. partnership of present  property nor a universal partnership
subsequently acquired by  1.inheritance; 2. Legacy; or 3.    of  profits. The fundamental difference  between a universal
Donation  cannot be included by stipulation except  the fruits Presumption in favor of universal  partnership of profits  partnership and a  particular partnership lies in the scope of 
thereof. Hence, any stipulation  including property so their subject matter or object. In the  former, the object is
vague and  indefinite, contemplating a general business  w/ 5. And shall indemnify the partnership for  any damage
some degree of continuity, while in the  latter, it is limited and Art. 1785. When a contract for a fixed term  or particular caused by the retention  of said properties or by the delay in 
well-defined, being  confined to an undertaking of a  single, undertaking is continued after  the termination of such term their contribution. 
temporary, or ad hoc nature.  or particular  undertaking without any express  agreement,
the rights and duties of the  partners remain the same as Art. 1787. When the capital or part thereof  which a partner
Business of partnership need not be  continuing in they were at  such termination, so far as is consistent  with a is bound to contribute  consists of goods, their appraisal
nature  partnership at will.  must be  made in the manner prescribed in the  contract of
The carrying on of a business of a  continuing nature is not partnership, and in the absence  of stipulation, it shall be
essential to  constitute a partnership. An agreement to  A continuation of the business by the  partners or such of made by experts  chosen by the partners, and according to 
undertake a particular piece of work or a  single transaction them as habitually acted  therein during the term, without current prices, the subsequent changes  thereof being for the
or a limited number of  transactions and immediately divide any  settlement or liquidation of the partnership  affairs, is account of the  partnership. 
the  resulting profits would seemt o fall w/in the  meaning of prima facie evidence of a  continuation of the partnership. 
the term “partnership” as used  in the law.  Art. 1788. A partner who has undertaken to  contribute a
Partnership at will is one in which no term  of existence has sum of money and fails to do  so becomes a debtor for the
Rule under American law  been fixed and which may  be terminated at the will of any interest and  damages from the time he should have 
The above is not true under the Uniform  Partnership Act w/c partners.  complied with his obligation. 
does not include joint  ventures w/c exists for a single The same rule applies to any amount he  may have taken
transaction  or a limited number of transactions.  Art. 1786. Every partner is a debtor of the  partnership for from the partnership  coffers, and his liability shall begin from
whatever he may have  promised to contribute thereto.  the  time he converted the amount to his own use. 
Joint venture 
While a joint venture is not a formal  partnership in the legal He shall also be bound for warranty in case  of eviction with Liability of partner for estafa 
or technical sense,  both are governed, subject to certain  regard to specific and  determinate things which he may Failure to return the money taken, there is  the element of
qualifications, practically by the same rules  or principles of have  contributed to the partnership, in the same  cases and fraudulent appropriation of  the money delivered to a partner
partnership. This is logical  since in a joint venture, like in  a in the same manner as the  vendor is bound with respect to with  specific instructions for the use of the  partnership, then
partnership, there is a community of  interest in the business the vendee.  He shall also be liable for the fruits thereof  from estafa is committed under  the Revised Penal Code. 
and a mutual right  of control and an agreement to share the time they should have been  delivered, without the need
jointly  in profits and losses.  of any demand.  Art. 1789. An industrial partner cannot  engage in any
business for himself, UNLESS  the partnership expressly
Corporation as a partner   Obligations of partners to contribute:  permits him to do  so; and if he should do so, the capitalist 
While under the Philippine Civil Code, a  joint venture is a 1. Shall deliver at the beginning of the  partnership or, if a partners may either exclude him from the  firm or avail
form of partnership w/ a  legal personality separate and different date has  been agreed upon, at the stipulated  time themselves of the benefits  which he may have obtained in
distinct from  the parties composing it, and should thus  be the properties he agreed to  contribute;  violation of  this provision, with a right to damages in  either
governed by the law of partnership,  the Supreme Court has 2. Shall answer for eviction, in case the  partnership is case. 
recognized the  distinction between these two business deprived of the  ownership of any specific property he 
forms, and has held that although a  corporation cannot contributed;  Industrial partner is one who contributes  his industry or
enter into a partnership  contract, it may, however, engage in 3. Shall answer to the partnership for the  fruits of the labor in the partnership. 
a joint  venture if the nature of the venture is  authorized by properties whose delivery he delayed from the date he
its charter.  should have contributed it up to actual delivery  without Industrial partner barred from engaging in  business
necessity of any demand; To prevent any conflict of interest between  the industrial and
Art. 1784. A partnership begins from the  moment of the 4. Shall preserve said properties with the  diligence of a good the partnership, and to ensure faithful compliance by said
execution of the contract,  unless it is otherwise stipulated. father of a family  pending their delivery to the  partnership;  partner  with his prestation. 
(1679) 
Art. 1790. Unless there is a stipulation to  the contrary, the if through the partner’s  extraordinary efforts in other risk of loss shall be for the  account of the partnership for the
partners shall contribute  equal shares to the capital of the  activities of  the partnership, unusual profits have been  latter  cannot make use of them without their  getting
partnership.  realized.  consumed or presumed. 

Art. 1791. If there is no agreement to the  contrary, in case Partner liable for damages caused the  partnership  Things contributed to be sold 
of an imminent loss of the  business of the partnership, any Art. 1794 follows the general rule of  contracts that where a If the things contributed are to be sold, the  partnership bears
partner  who refuses to contribute an additional  share to the person is at fault in  the fulfillment of his obligations he shall the risk of loss, for  obviously the partnership is the intended 
capital, except an industrial  partner, to save the venture, be  liable for the payment of damages. The  partner’s fault, owner; otherwise, the firm cannot make the  sale. 
shall be  obliged to sell his interest to the other  partners.  however, must be  determined in accordance with the 
circumstances of person, time and place.  Things brought and appraised in inventory 
Art. 1792. If a partner authorized to  manage collects a The partnership bears the risk of loss of  things brought and
demandable sum, which  was owed to him in his own name, Liquidation necessary to ascertain damages  appraised in the  inventory as this has the effect of an
from a  person who owned the partnership another  sum also It is first necessary that a liquidation of the  business thereof implied  sale thus making the partnership the owner  of said
demandable, the sum thus  collected shall be applied to the be made to the end that  the profits and losses may be things. 
two credits  in proportion to their amounts, even  though he known and  the causes of the latter and the  responsibility of
may have given a receipt for his  own credit only; but should the defendant as well as  the damages which each partner Art. 1796. The partnership shall be  responsible to every
he have given it  for the account of the partnership credit,  may have  suffered, may be determined.  partner for the  amounts he may have disbursed on behalf  of
the amount shall be fully applied to the  latter.   the partnership and for the  corresponding interest, from the
Art. 1795. The risk of specific and  determinate things, which time the  expenses are made; it shall also answer to  each
The provisions of this article are understood  to be without are not fungible,  contributed to the partnership so that only  partner for the obligations he may  have contracted in good
prejudice to the right granted  to the debtor by Art. 1252, but their use and fruits may be for the common  benefit, shall be faith in the interest  of the partnership business, and for the
only if the  personal credit of the partner should be  more borne by the partner who  owns them.  risk  inconsequence of its management. 
onerous to him. 
If the things contributed are fungible, or  cannot be kept Responsibility of the partnership to a  partner 
Requisites:  without deteriorating, or if  they were contributed to be sold, If a partner has advanced funds for the  partnership, he is
1. Two existing debts  the risk  shall be borne by the partnership. In the  absence of entitled to recover the  amounts advanced by him with
2. Both debts must be demandable 3. The one who collected stipulation, the risk of things  brought and appraised in the interest.  This must be so for the reason that a  partner is a
the debt is a  partner who is authorized to manage  and is inventory,  shall also be borne by the partnership, and  in mere agent of the partnership  and under the rules of
actually managing the  partnership  such case the claim shall be limited to the  value at which agency, an agent  who advances funds for his principal may 
they were appraised.  recover the same interest. 
Art. 1793. A partner who has received, in  whole or in part,
his share of a partnership  credit, when the other partners Risk of Specific and determinate things  Art. 1797. The profits and losses shall be  distributed in
have not  collected theirs, shall be obliged, if the  debtor The risk of specific and determinate things  which are not conformity with the  agreement. If only the share of each
should thereafter become insolvent,  to bring to the fungible, like a boat, only the  use of which is contributed, partner  in the profits has been agreed upon, the  share of
partnership capital what he  received even though he may shall be borne  by the partner as the ownership thereof is  each in the losses shall be in the  same proportion. 
have given  receipt for his share only.  not transferred to the partnership. This  follows the general In the absence of stipulation, the share of  each partner in
rule that the thing  perished with the owner.  the profits and losses shall  be in proportion to what he may
Art. 1794. Every partner is responsible to  the partnership for have  contributed, but the industrial partner shall  not be
damages suffered by it  through his fault, and he cannot Things fungible or perishable  liable for the losses. As for the  profits, the industrial partner
compensate them with the profits and  benefits which he If the things contributed are fungible or  cannot be kept shall receive  such share as may be just and equitable under
may have earned for the  partnership by his industry. without deteriorating(perishable) like wine, oil, etc., even if the circumstances. If besides his  services he has
However, the  courts may equitably lessen this  responsibility they  are contributed only for the use of the  partnership, the contributed capital, he shall  
also receive a share in the profits in  proportion to his Art. 1798. If the partners have agreed to  entrust to a third representing the controlling  interest shall be necessary for
capital.  person the designation of  such  revocation of power. A power granted after  the
the share of each one in the profits and  losses, such partnership has constituted may be revoked at any time.
Rules in profit sharing:  designation may be impugned  only when it is manifestly Each partner has a  right to an equal voice in the conduct of
1. The partners share the profits in  accordance with the ratio inequitable. In no  case may a partner who has begun to  the  partnership business. This right is not  dependent on the
established  by their contract.  execute the decision of the third person, or  who has not amount or size of the partner’s capital contribution.
2. If there is no such stipulation in the  partnership contract, impugned the same within a  period of three months from the
then:  time he  had knowledge thereof, complain of such  decision.  Appointed as manager after the  constitution of the
1. If all are capitalist partners they  have the profits in partnership 
proportion to  their capital contributions;  The designation of profits and losses cannot  be entrusted to Partner appointed in arts of partnership  may execute all acts
2. If there are capitalist as well as industrial partners, one of the partners.  of administration  notwithstanding the opposition of the other 
the industrial  partner get a share each that is  just partners, unless he should act in bad faith.  His power is
and equitable while the  capitalist partners divide the  Reason for the provision  revocable only upon just and  lawful cause and upon the vote
remainder in proportion to their  capital contributions; Admittedly, the designation of profits and  losses cannot be of the  partners representing the controlling  interest. 
and  entrusted to one of the  partners as the fulfillment of a Reason: revocation represents change in  terms of contract. 
3. If there is a capitalist-industrial  partner, he gets a contract  cannot be left to one of the contracting  parties. It In case of mismanagement: Usual remedies  allowed by
share in the  profits as an industrial partner and  an may, however, be entrusted to a  third person by common law including dissolution. 
additional share in proportion to  his capital interest. 
contribution to be  determined as in (b), above.  Appointment as manager after the  constitution of the
Art. 1799. A stipulation which excludes one  or more partnership 
Rules in loss sharing:  partners from any share in the  profits or losses is void.  Appointment may be revoked at any time  for any cause
1. The stipulation in the partnership  agreement regarding whatsoever. 
loss sharing must  be followed.  Stipulation to exclude a partner from  profits and losses
2. If there is no such agreement, but the  contract provides is void  Reason: revocation not founded on a  change of will on the
for a profit sharing  ratio, the profit sharing ratio shall also  be The law does not allow a provision in the  contract of part of the partners.  Appointment not condition of contract. It
the loss sharing ratio.  partnership excluding one or  more partners from sharing in is  merely a simple contract of agency, which  may be
3. In the absence of loss sharing and profit  sharing the profits  and losses. The reason is that a partnership  is revoked at any time. It is believed that the vote for revocation
stipulations in the contract,  then the loss shall be borne by organized for the common benefit or  interest of the must also  represent the controlling interest. 
the  partners in proportion to their capital  contributions; but a partners. 
purely industrial  partner is exempted from participation  in Scope of the power of the managing partner 
the loss.  Reason for exclusion of industrial partner  General rule: a partner appointed as manager  has all the
An industrial partner is not liable for losses  because if the powers of a general agent as well  as all the incidental
Share of industrial partner in profits and  losses  partnership fails to realize  any profits, the industrial partner powers necessary to  carry out the object of the partnership
Unless agreed upon, the industrial partner  shall receive would  have contributed his labor in vain.  Furthermore, the in  the transaction of its business. 
such share in the profits as  may be just and equitable under industrial partner cannot  withdraw the work already done by Exception: When powers of manager are specifically
the  circumstances. As for the losses, the  industrial partner him for  the partnership.  restricted. A managing partner  may not bind the partnership
is not liable. However,  under Art. 1816, if the partnership by contract  foreign to its business. 
has a  contractual debt and it cannot pay, the  industrial Art. 1800. The partner who has been  appointed manager in
partner equally with the capitalist  partners, can be the articles of the  partnership may execute all acts of the  Compensation for service rendered Partner Generally
compelled by the creditor  to pay his pro rata share out of his administration despite the opposition of his  partners, unless not entitled to  compensation, In the absence of an 
own  property or assets.  he should act in Bad faith.,  and his powers are irrevocable agreement to the contrary, each member of  the partnership
without the  just or lawful cause. The vote of the  partners assumes the duty to give his  time, attention, and skill to the 
management of its affairs, as may be  reasonably necessary managing partners shall prevail. Right to  oppose can be 1. All partners shall be considered agents  and whatever any
to the success of the  common enterprise; and for this exercised only by those  entrusted with mgt.  one of them may do  alone shall bind the partnership without 
service a  share of the profits is his only  compensation. In 2. In case of tie, matter shall be decided by  the vote of the prejudice to the provision of article 1801 
managing partnership  affairs, a partner is practically taking partners owning the  controlling interest. 
care of  his own interest or managing his own  business. In 2. None of the partners may, without the  consent of others,
the absence of any prohibition  in the arts. In partnership for REQUISITES FOR APPLICATION OF RULE  make any important  alteration in the immovable property of 
the payment  of salaries to general partners, there is nothing 1. Two or more partners have been  appointed as the partnership, even if it may be useful  to the partnership,
to prevent the partners from entering  into a collateral verbal managers;  but if there is refusal of the consent by the other  partners is
agreement to that  effect.  2. There is no specification of their   manifestly prejudicial to the  interest of the partnership, the
EXCEPTIONS: In proper cases, the law may  imply a respective duties;  court’s  intervention may be sought.
contract for compensation;  3. There is no stipulation that one of them  shall not act
1. A partner engaged by his co-partners to perform services without the consent of all  the others.  Rules when manner of the management  that has not
not required of him in  fulfilment of the duties and in capacity  agreed upon all partners considered as managers and
other than that of a partner.  ART. 1802 In case it should have been stipulated that none agents 
2. When there is extraordinary neglect on  the part of one of the managing  partner shall act  All partners shall have equal rights in the  mgmt. and conduct
partner to perform his  duties, imposing an entire burden on without the consent of the  others, the concurrence of all of partnership affairs.  All of them shall be considered mgrs.
the remaining partner.  shall be  necessary for validity of the acts, and the  absence and  agents and whatever any one of them may  do alone
3. One partner may employ the other  to do work for him or disability of any one of them  cannot be alleged, unless shall bind the partnership. If there  is timely opposition,
outside of and  independent of the co-partnership.  there is imminent  danger of grave or irreparable injury to however, the matter  shall be decided by majority vote. In
4. Partners exempted by terms of  partnership from the  partnership.  case  of tie, vote of partners representing  controlling
rendering services  may demand pay for services rendered.  interest. 
5. Where one partner is entrusted with  management and When unanimity of action stipulated  concurrence
devotes his whole  time and devotion at the instance of the  necessary for validity of acts  Unanimous consent required for alteration  of
other partners who are attending to  their individual business The partners may stipulate that none of the  managing immovable property 
and giving no  time or attention to the partnership  business.  partners shall act without the  consent of the others. In such The consent need not be expressed. It may  presume from
a case, the  unanimous consent of all the managing  the fact of knowledge of the  alteration without interposing
Art. 1801. If two or more partners have  been entrusted with partners shall be necessary for the validity  of their acts. This any  objection. Prohibition only applies  to immovable
the management of the  partnership without the specification consent is  so indispensable that neither absence nor  property because of the  greater importance of this kind of
of  their respective duties or without the  stipulation that one disability of any one of them may allege as  excuse to property,  and the alteration thereof must be  important. This
of them shall not act  without the consent of all others, each dispense with the requirement.  Exception: When there is would be an act of strict  dominion. If refusal to give consent
one  separately execute all acts of  administration, but if imminent danger  of grave or irreparable injury to the  is  manifestly prejudicial to the interest of  the partnership,
anyone of them  should oppose the act of each other, the  partnership then a partner may act alone  without consent of court intervention may be  sought. Consent may presume
decision of the majority shall prevail. In the  case of tie the the partner who is absent or  under disability.  from silence  (lack of opposition despite knowledge).If 
partners owning the  controlling interest shall decide the alteration is necessary for preservation of  the property,
matter.  Where the respective duties of two or more  Consent of managing partners not  necessary in routine consent of the other partners is not required. 
managing partners are not specified.  transactions 
The requirement of written authority refers  evidently to Art. 1804. Every partner may associate  another person with
Each one may separately perform acts of  formal and unusual written  contracts.  him in his share, but  the associates shall not admitted into
administration  the  partnership without the consent of all other  partners,
1. If one or more of the managing partners  shall oppose the Art. 1803. When the manner of  management has not even of the partner having an  associate should be a
acts of the others, then  the decision of the majority of the  agreed upon, the  following rules shall observed:  manager of  sub partnership nature 
The partnership formed between a  member of a that  said books state accurately the state  of accounts, but
partnership and a third  errors can be corrected.  Duty to act for common benefit 
Person for a division of the profits coming to  him from the Cannot use and apply exclusively to own  individual benefit
partnership enterprise is  termed sub partnership.  Rights with the respect to partnership  books  partnership assets or  results of knowledge and info gained
It is a partnership within a partnership and  is distinct and Books should be kept at the principal place of  business as in  character of partner. Managing partners  particularly owe
separate from the main or  principal partnership.  each partner has the right to  free access to them and to a fiduciary duty to inactive partners. 
inspect or copy  any of them at any reasonable time, even 
Right of the person associated with the  partnership’s after dissolution. Inspection rights not  absolute can be Duty begins during the formation of partnership 
share  restrained from using info  for other than partnership Principle of good faith applies not only  during partnership
Sub Partnership agreements do not  affect the composition, purposes.  but during the  negotiations leading to the formation of the 
existence, or  operations of the firm. The sub partners are  partnership. Also, a person who agreed w/  another to form a
partners interest,  Access to partnership books  partnership has the  obligation to account for commissions
Rights can be exercised at any reasonable hour. This means and  discounts received in acquiring property for  the future
However, in the absence of the mutual  assent of all the reasonable hours on business  days throughout the year and partnership. 
parties, a sub partner does   not merely during some arbitrary period of a few days
not become a member of the partnership,  even if the other chosen by the managing partners.  Duty continues even after the dissolution  of the
partners know about the  agreement. Not being a member partnership 
of  the partnership, he does not acquire the  rights of a Art. 1806. Partners shall render on demand true and full Duty of partner to act w/ utmost good faith towards his co-
partner nor is he liable for its  debts. information of all things affecting the partnership to any partners continues  throughout the entire life of the
partner or the legal representative of any deceased partner partnership  even after dissolution for whatever reason  or
Reason for the rule  or of any partner under legal disability. Duty to render whatever means, until the relationship is  terminated, i.e. the
Partnership is based on mutual trust and  confidence among information, there must be no concealment between partners winding up of partnership affairs  is completed. 
the partners. Inclusion of a new partner would be a in all matters affecting the partnership. Information must be
modification of the  original contract of partnership requiring  used only for partnership  purposes. Not just on demand but Duty to account for secret and similar profits 
unanimous consent of all the partners.  Prohibition applies the partner also has the duty of voluntary disclosure.  The duty of a partner to account as a  fiduciary operates to
even if the person associated is already a partner.  However, duty to render info does not arise with respect to prevent from making a  secret profit out of the operation of
matters appearing in partnership books since each partner the  partnership and from carrying on the  business for his
Art. 1805. The partnership books shall be  kept, subject to has the right to inspect those. Good faith not only requires private advantage or  a business in competition w/ the firm 
any agreement between the  partners, at the principal place that a partner should not make a false statement but also w/o consent of other partners. Violation  may be ground for
of the  business of the partnership, and every  partner shall that he should abstain from any false concealment.  dissolution. 
at any reasonable hour have  access to and may inspect and
copy any of  them.  Art. 1807. Every partner must account the  partnership for Duty to account for earnings accruing even after
any benefit, and hold as  trustee for it any profits derived termination of partnership 
Keeping of partnership books  from him  without the consent of the partners from  any If a partner uses info obtained by him from  the partnership
transaction connected with the  formation, conduct, or for his own account w/o the  consent of the other partners,
Partner with duty to keep partnership  books  liquidation of the  partnership or from any use by him of his  he is liable to  account for any benefit he might obtain. 
The duty to keep true and correct books  showing the firm’s property. 
accounts, such books  being at all times open to inspection Duty to make full disclosure of information  belonging to
of all  members of the firm, primarily rests on the  managing The relation between the partners  is essentially fiduciary partnership 
or active partner. It is presumed that the partners have involving trust and  confidence, each partner considered in A partner is also subject to the fiduciary  duty of undivided
knowledge of the  contents of the partnership books and law,  as he is, in fact, the confidential agent of the  others. loyalty and complete  disclosure of info of all things affecting
The duties of a partner are  analogous to those of a trustee.  the  partnership. By Information is meant  information, which
can be used for the  purposes of the partnership. Info cannot connection w/ firm regarding  business secrets and clientele 4. Right to formal account of partnership  affairs under
be used for a partner’s private gain – even after termination.  of firm to its prejudice.  certain circumstances (art.  1809). 
5. Right to have partnership dissolved also  under certain
Duty not to acquire interest or right  adverse to Art. 1809. Any partner shall have the right  to a formal conditions (arts. 1830- 1831). 
partnership  account as partnership affairs: 
If partner does, he holds it in trust for the  benefit of the 1. If he is wrongfully excluded from the  partnership business Partnership property and partnership capital
partnership and must account  to the firm for the profits of or possession of  its property by his co-partner;  distinguished
the transaction,  unless it appears that the others consented  2. If the right exists under the terms of any  agreement; 
3. Provided by article 1807; 
Partnership property Partnership capital
Art. 1808. The Capitalist partners cannot  engage for their 4. Whenever other circumstances render  it just and
own account in any  operation, which is of the kind of reasonable, Right of the  partner to a formal account.  Chang Variable: its value Constant: it remains  
business  in which the partnership is engaged, unless  there General rule: During the existence of  partnership, a partner es may vary from unchanged as the amount is
is a stipulation to the contrary. Any  capitalist partner is not entitled to a  formal account of partnership affairs.  value day today w/  changes fixed by agreement of the
violating this prohibition  shall bring to the common funds any Reason: rights of partner amply protected in  arts1805 and in market value. partners, and is not affected
profit  accruing to him from his transactions, and  shall 1806. In addition, it would  cause much inconvenience and by fluctuations in the value of
personally bear all the losses.  unnecessary  waste of time.  the partnership property, 
although it may be increased
Prohibition against partner engaging the business  Exception: In the special and unusual  situations and decreased by the value
Prohibition relative – Prohibition against  capitalist partners enumerated under art. 1809.  Right of a partner to demand of the partnership property,
to engage in business is  relative, unlike the industrial an accounting  w/o bringing about dissolution is  a necessary although it may be increased
partner who is  absolutely prohibited from engaging in any  corollary to the right to share in  profits. A formal account is a and decreased by unanimous
business for himself. Capitalist partner is  only prohibited necessary  incident to the dissolution of the  partnership.  consent of the partners.
from engaging for his own  account in any operation which is
the same as or similar to the business in which the  Art. 1810. The property rights of a partner  are:  Assets Includes not only the The aggregate of the
partnership is engaged and which is  competitive w/ said 1. His rights in specific partnership  property;  Includ original Capital contri., individual contributions made
business 2. His interest in the partnership;  ed but also all property by the partners in
3. His right to participate in the  management, extent of subsequently acquired establishing or continuing the
VIOLATION – Obligation to bring to  common fund any property rights  of a partner.  because of the partnership.
profits derived and in  case of losses, he shall bear them partnership or w/
alone.  Partners, however, by stipulation may  permit it. The Principal Rights  partnership funds,
law permits him to carry on a  business not connected or 1. Rights in specific partner property;  including partnership
competing with  that of the partnership. Law is silent on  2. Interest in partnership;  name and goodwill.
whether he can engage in the same line of  business for the 3. Right to participate in management. 
account of another.  Prohibition still applies because of
fiduciary positions imposing duties of utmost good  faith. He RELATED RIGHTS 
may not carry on any other  business in rivalry w/ the 1. Right to reimbursement for amounts  advanced to Ownership of certain property 
partnership.  partnership and to  indemnification for risks inconsequence 
of management (art. 1796).  Property use by the partnership – Where  there is no
Reason for prohibition  2. Right of access and inspection of  partnership books (art. express agreement that property  used by a partnership
Fiduciary nature of a relationship imposes an obligation of 1805).  constitutes  partnership property, such use does not  make it
utmost good faith. Rule  prevents use of info obtained in the 3. Right to true and full information of all  things affecting partnership property, and whether  it is so depends on the
course  of transaction of partnership business or  because of partnership (art. 1806).  intention of the  parties, w/c may be shown by proving an 
express agreement or acts of particular conduct. The intent use the  specific partnership property other than for  Right limited to share of what remains after partnership
of the parties is the  controlling factor.  partnership purposes w/o the consent  of the other partners. debts has been paid 
Should any of them  use the property for his own benefit, he  Strictly speaking, no particular partnership property or any
Property acquired by a partner with  partnership funds – must account, like a stranger, to the others  for the profits specific or an aliquot part  thereof can be considered the
Unless a contrary  intention appears, property acquired by a  derived therefrom or the  value of his wrongful possession separate or  individual property of any partner. The  whole of
partner in his own name w/ partnership  funds is partnership or  occupation. A partner wrongfully excluded  from partnership property belongs to  the partnership considered
property. However,  if the property was acquired after  possession of partnership property  by a co-partner has a as a juridical  person, and a partner has no interest in it  but
dissolution but before the winding up of the  partnership right to formal  account and may even apply for a  judicial his share of what remains after all  partnership debts are
affairs, it would be his separate  property but he would be decree of dissolution. On the death  of a partner, his right in paid. Consequently,  specific partnership property is not
liable to account  to the partnership for the funds used in its  specific partnership  property vests in the surviving partners. subject  to attachment, execution, garnishment, or injunction,
acquisition.  By  agreement, the right to possess specific  partnership w/o the consent of all the  partners except on a claim against
property may surrender. In the  absence of special the  partnership. For the same reason that the  property
Art. 1811. A partner is co-owner with his  partners of specific agreement, however,  neither partner separately owns, or belongs to the partnership, the  partners cannot claim any
partnership property.  The incidents of this co-ownership are has the  exclusive right of possession of any  partnership right under the  homestead or exemption laws when it is 
such  that;  property or any proportional  part thereof. Each has dominion attached for partnership debts. However, a  judgment
over  the entire partnership property. The  possession of creditor may levy upon a  partner’s interest in the partnership
1. A partner, subject to the provision of this  title and any partnership property by one  partner is the possession of all itself  because it is actually his property, by means  of a
agreement between the  partner, has an equal right with his until his  possession becomes adverse. A partner  cannot “charging order.” The right of  the partners to specific
partners  to possess specific partnership property for  initiate title by adverse possession  until and unless he partnership  property is not subject to legal support  since the
partnership purposes; but he has no right to  possess such makes an adverse claim. property belongs to the  
property for any other  purpose without the consent of his partnership and not to the partners.  However, their interest
partners;  Right not assignable - A partner cannot  separately assign in the partnership  is. The method of reaching a judgment 
2. A partner’s right in specific partnership  property is not his right to specific  partnership property but all of them can  debtor’s interest in partnership property is  specifically set
assignable except in  connection with the assignment of assign their rights in the same property.  forth in art.1814. 
rights of  all the partners in the same property; 
3. A partner’s right in specific partnership  property is not Reasons for non-assignability:  Art. 1812. A partner’s interest in the  partnership is his share
subject to attachment or  execution, except on a claim 1. It prevents interference by outsiders in  partnership of the profits and  surplus. 
against the  partnership;  affairs; 
4. A partner’s right in specific partnership property is not 2. It protects the right of other partners and partnership Share of profits and surplus – The partner’s  interest in the
subject to legal support  under art. 291 nature of a partner’s creditors to have partnership assets applied to firm  debts;  partnership consists of his  share in the undistributed profits
right in  specific partnership property  3. It is often impossible to determine the  extent of a during the  life of the partnership as a going concern  and his
partner’s beneficial interest  in a particular partnership asset. share in the undistributed surplus  after its dissolution. 
Art. 1811 contemplates tangible property  but not intangible Reason for impossibility: Each partner, having a  beneficial
things. A partner is a co owner w/ his partners of specific  interest in the partnership  property considered as a whole, Profits: the excess of returns over  expenditure in a
partnership property, but the rules on co ownership do not has a  beneficial interest in each part. Where,  however, transaction or series of  transactions; or the net income of
necessarily apply. The  legal incidents of this tenancy in none of the above reasons  apply, an authorized assignment the  partnership for a given period. 
partnership  are distinctively characteristic of the  partnership by a  partner of his right in specific  partnership property is
relation. They are as follows:  void, but it may be regarded as a valid assignment of  the Surplus: the assets of the partnership after  partnership
partner’s interest in the partnership. The law allows a retiring debts and liabilities are paid  and settled and the rights of the
Equal rights of possession - Ordinarily, a  partner has an partner to assign his rights in partnership property  to the partners  among themselves are adjusted. It is the  excess of
equal right to possess  specific partnership property for  partner(s) continuing the  business.  assets over liabilities. If the  liabilities are more than the
partnership purposes. None of the partners can possess and assets, the  difference represents the extent of the loss. 
 partnership relation. If the assigning partner  neglects his 2. With partnership property, by any one  or more of the
Art.1813. A conveyance by a partner by his  whole interest duties after assignment,  the other partners may dissolve partners with the consent of all the partners whose interests
in the partnership does not  of itself dissolve the partnership, the  partnership under art. 1830.  are not so charged or sold,  nothing in this title shall be held
or, against  the other partners in the absence of  agreement, Dissolution of partnership intended – A  partner’s to deprive a partner of his right, if any,  under the exemption
entitle the assignee, during the  continuance of the conveyance of his interest in the  partnership operates as laws, as regards  his interest in the partnership. 
partnership, to interfere in the management or administration dissolution of the  partnership only when it is clear that the 
of the  partnership business or affairs, or to require  any parties contemplated and intended the  entire withdrawal Application for a charging order after  securing
information or account of the  partnership transactions, or to from the partnership of  such partner and the termination of judgement on his credit 
inspect the  partnership books; however it merely entitles the the partnership as between the partners.  While a separate creditor of a partner  cannot attach or levy
assignee to receive the  accordance with his contract, the upon specific  partnership property for the satisfaction of  his
profits to  which the assigning partner would  otherwise be Rights of assignee of partner’s interest credit because partnership assets are  reserved for
entitled.  1. To receive in accordance w/ his contract  the profits partnership creditors, he can  secure a judgment on his
accruing to the assigning partner;  credit and then  apply to the proper court for a “charging 
In case of fraud in the management of the  partnership, the 2. To avail himself of the usual remedies provided by law in order”, subjecting the interest of the debtor  partner in the
assignee may avail himself  of the usual remedies. In case of the event of fraud in the management;  partnership w/ the payment  of the unsatisfied amount of
dissolution  of the partnership, the assignee is entitled to  3. To receive the assignor’s interest in case  of dissolution;  such judgment  w/ interest thereon w/ the least  interference
receive his assignor’s interest and may  require an account 4. To require an account of partnership  affairs, but only in w/ the partnership business  and the rights of the other
from the date only of  the last account agreed to by all case the partnership  is dissolved, and such account shall  partners.  By virtue of the charging order, any amount  or
partners.  Effect of assignment of partner’s whole  interest in cover the period from the date only of  the last account portion thereof w/c the partnership  would otherwise pay to
partnership.  agreed to by all  partners. The purchaser of a partner’s  the debtor-partner  should instead be given to the judgment 
interest may apply to the court for  dissolution after the creditor. This remedy, however, is w/o  prejudice to the
A partner’s right in specific partnership  property is not termination of the  specified term or undertaking or at any  preferred rights of  partnership creditors whose claims
assignable but he may assign his interest in the partnership time if the partnership is one at will.  should  be satisfied first. 
to any of his  co-partners or to a third Person irrespective  of
the consent of the other partners, in the  absence of Art. 1814. Without prejudice to the preferred rights of the Availability of other remedies 
agreement to the contrary.  partnership creditors  on due application to a competent Art. 1814 have made this an exclusive remedy so that a writ
court by any judgement creditor of the partner, the  court of execution will not  be proper. However, if the judgment
Rights withheld from assignee  which entered the interest of the  debtor partner with debt  remains unsatisfied, the court may resort to  other
1. To interfere in the management.  payment of the  unsatisfied amount of such judgement debt  courses of action notwithstanding the  issuance of the
2. To require any information or account.  with the interest thereon; and may then or  later appoint a charging order. 
3. To inspect any of the partnership books.  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
No one can be compelled to be partners w/  someone else. make all other orders, directions and  accounts and inquiries Redemption or purchase of interest charged 
The assignment does not  divest the assignor of his status which the debtor  partner might have made, or which  Redemptioner – The interest of the debtor partner so
and rights  as a partner nor operate as dissolution.  The law, circumstances of the case may require. The  interest charged may be redeemed or  purchased w/ the separate
however, provides the non assigning collaborates w/ a charged may redeem at any time  before foreclosure, or in property of any  one or more of the partners, or w/ 
ground  for dissolving the partnership if they  so desire.  any case of a sale  being directed by the court, may be  partnership property but w/ the consent of  all the partners
purchase without thereby causing  dissolution:  whose interests are not so  charged or sold. 
Remedy of other partners 
Dissolution of partnership not intended – Many 1. With separate property, by any one or  more of the Redemption Price – The value of  the partner’s interest in
partnership agreements are made  merely as security for partners;  the partnership has  no bearing on the redemption price w/c
loans, the assigning  partner never intending to destroy the 
is  likely to be lower since it will be dependent  on the The partners enjoy the utmost freedom in  the selection of persons under Article 1816 being a clear mandate of the law,
amount of the unsatisfied judgment  debt.  the partnership name.  any stipulation changing or modifying such liability is void
As a general rule, they may adopt any firm  name desired.  except as among the partners. 
Right of redeeming non-debtor partner – There deeming
non-debtor partner does  not acquire absolute ownership Use of misleading name – The partners  cannot use a Refers to partnership obligations 
over the  debtor-partner’s interest but holds it in trust for him name that is identical or  deceptively confusingly similar to Article 1816 which refers to the payment of partnership
consistent w/ principles of  fiduciary relationship.  that  of any existing partnership or corporation or  to any obligations arising from contracts clearly imposes subsidiary
other name already protected by law  or is patently and joint (pro rata) liability for contractual debts owing to third
Rights of partner under exemption laws  deceptive, confusing or  contrary to existing laws, as to persons upon all the partners, including industrial partners
A partner cannot claim any right under the homestead laws mislead the  public by passing itself off as another  who ordinarily are not liable for losses. The liability is
or exemption laws when specific partnership property is partnership or corporation, or its goods or  services as those subsidiary because the partners cannot be made answerable
attached for partnership debt. W/ respect, however, to the of such other company.  with their separate property unless the partnership property
partner’s interest in the partnership as  distinguished from his has first been exhausted.
interest in specific partnership property, the partner may Liability inclusion of name in the firm name  – Persons
avail himself of the exemption laws after  partnership debts who, not being partners, include  their names in the firm Pro rata liability – Literally, pro rata liability means
have been paid. A  partner’s interest or share in the name do not acquire  the rights of a partner but shall be proportionate distribution of liability. In the law of obligations,
partnership property is really his property.  subject  to the liability of a partner insofar as 3rd Persons the concurrence of two or more debtors in one and the same
without notice are concerned. Such  persons become obligation makes it prima facie a joint (pro rata) obligation,
Art. 1815. Every partnership shall operate  under a firm partners by estoppel. Art. 1815 does not cover the case of a and the debts is presumed divided into as many equal
name, which may or may not  include the name of one or limited  partner who allows his name to be included  in the shares as there are debtors and each one of them is bound
more of the  partners, those who, not being members of  the firm name, or of a person continuing  the business of a to pay only his share.
partnership, include their names in the  firm name, shall be partnership after  dissolution, who uses the name of the 
subject to liability of a  partner  dissolved partnership or the name of  a deceased partner as Art. 1817. Any stipulation against the liability laid down in the
part thereof.  preceding article shall be void, except as among the
Requirement of the firm name  partners. 
Meaning of word “firm” – The name, title,  or style under Art. 1816. All partners, including industrial ones, shall be
which a company transacts  business; a partnership of two liable pro rata with all their property and after all the Industrial partner cannot exempt himself from liability to
or more  persons; a commercial house. In its  common partnership assets have been exhausted, for the contracts third persons 
acceptance, the term implies a  partnership. The term is also which may be entered into in the name and for the account Each one of the industrial partners is liable to third persons
used as synonymous with “company,” “house,” and  of the partnership, under its signature and by a person for the debts of the firm and if he has paid such debts out of
“concern.”  authorized to act for the partnership. However, any partner his private property during the life of the partnership, when its
may enter into a separate obligation to perform a partnership affairs are settled he is entitled to credit for the amount so
contract.  paid, and if its results that there is not enough property in the
Importance of having a firm name  partnership to pay him, then the capitalist partners must pay
A partnership must have a firm name under  which it will Article 1816 distinguished from article 1787 him. Our conclusion is that neither on principle nor on
operate. A firm name is  necessary to distinguish the Article 1816 applies in cases where third party creditors are authority can the industrial partner be relieved from liability to
partnership,  which has a distinct and separate juridical  concerned as it falls under the heading of section 3. third persons for the debts of the partnership.
personality from the individuals composing  the partnership “Obligations of the Partners with Regard to Third Persons.”   
and from other  partnerships and entities.  Article 1797 applies only where the issue is among the Art. 1818. Every partner is an agent of the partnership for
partners as it falls under the heading of Section 1, Chapter 2, the purpose of its business, and the act of every partner,
Right of the partners to choose a firm name  which states: “Obligations of the Partners Among including the execution in the partnership name of any
Themselves.” The pro rata liability of partners to third instrument, for apparently carrying on in the usual way the
business of the partnership of which he is a member binds the act is one within the authority  of the partner under the delivered to a partner, that is an effective communication to
the partnership, unless the partner so acting has in fact no provisions of the first paragraph of Article 1818.  the partnership. 
authority to act for the partnership in the particular matter,
and the person with whom he is dealing has knowledge of Where title to real property is in the name of one or more but Knowledge before becoming partner 
the fact that he has no such liability. An act of a partner not all the partners, and the record does not disclose the Where the knowledge or notice had been received by the
which is not apparently for the carrying on of business of the right of the partnership, the partners in whose name the title partner before he became a partner, and his partners are
partnership in the usual way does not bind the partnership stands may convey title to such property, but the partnership ignorant of this, and he is not the partner acting in the
unless authorized by the other partners.  may recover such property if the partners’ act does not bind particular matter, there is no doubt that there has been
Except when authorized by the other partners or unless they the partnership under the provisions of the first paragraph of neither knowledge of nor notice to the partnership. 
have abandoned the  business, one or more but less than all Article 1818, unless the purchaser or his assignee, is a
the partners have no authority to:  holder for value, without knowledge.  Art. 1822. Where, by any wrongful act or omission of any
partner acting in the ordinary course of the business of the
1. Assign the partnership property in trust for creditors or on Where the title to real property is in the name of one or more partnership or with the authority of co partners, loss or injury
the assignee’s promise to pay the debts of the partnership.  or all the partners, or in a third person in trust for is caused to any person, not being a partner in the
2. Dispose of the goodwill of the business.  the partnership, a conveyance executed by a partner in the partnership, or any penalty is incurred, the partnership is
3. Do any other act which would make it impossible to carry partnership name, or in his own name, passes the equitable liable therefor to the same extent as the partner so acting or
on the ordinary business of a partnership.  interest of the partnership, provided the act is one within the omitting to act. 
4. Confess a judgment.  authority of the partner under the provisions of the first
5. Enter into a compromise concerning a partnership claim or paragraph of Article 1818.  Partner liable for wrongful act of a partner 
liability.  The partners are liable for the negligent operation of a
6. Submit a partnership claim or liability to arbitration.  Where the title to real property is in the  name of all the vehicle by a partner, acting in the course of business, which
7. Renounce a claim of the partnership.  partners a conveyance  executed by all the partners passes results in a traffic accident. 
all their  rights in such property.  If he is driving a partnership-owned vehicle for purposes of
No act of a partner in contravention of a restriction on his own, the acting partner alone is liable it is not a
authority shall bind the partnership to persons having Art. 1820. An admission or representation made by any partnership tort. 
knowledge of the restriction.  partner concerning partnership affairs within the scope of his
authority in accordance with this Title is evidence against the Partnership may proceed against negligent partner 
Art. 1819. Where title to real property is in the partnership partnership.  Where a partnership is liable to a third person, there is a right
name, any partner may convey title to such property by a of indemnity against the partner whose negligence caused
conveyance executed in the partnership name; but the Art. 1821. Notice to any partner of any matter relating to the injuries. 
partnership may recover such property unless the partner's partnership affairs, and the knowledge of the partner acting
act binds  the partnership under the provisions of the  in the particular matter, acquired while a partner or then Art. 1823. The partnership is bound to make good the loss: 
first paragraph of article 1818, or unless such property has present to his mind, and the knowledge of any other partner
been conveyed by the grantee or a person claiming through who reasonably could and should have communicated it to 1. Where one partner acting within the  scope of his apparent
such grantee to a holder for value without knowledge that the the acting partner, operate as notice to or knowledge of the  authority receives  money or property of a third person  and
partner, in making the conveyance, has exceeded his partnership, except in the case of fraud on the partnership, misapplies it.
authority.  committed by or with the consent of that partner.  2. Where the partnership in the course of  its business
receives money or property  of a third person and the money
Where title to real property is in the name  of the partnership, Notice to partner is notice to partnership  or  property so received is misapplied by  any partner while it
a conveyance executed  by a partner, in his own name, Clearly a third person desiring to give notice to a partnership is in the custody of  the partnership. 
passes the  equitable interest of the partnership, provided of some matter pertaining to the partnership business need
not communicate with all of the partners. If notice is Partnership bound by partner’s breach of  trust 
The partnership is liable for the conversion  communicated to such person so  giving credit by or with the A newly admitted partner is liable for obligations of the
(misappropriation) of money or property  entrusted to the knowledge of  the apparent partner making the  partnership at the time of his admission. The obligation of the
partnership by a third  person. The effect under Article 1824 representation or consenting to its being  made: incoming partner shall be satisfied only out of partnership
is the  same whether by the partnership and  subsequently property. This is not a harsh rule because the incoming
misappropriated by a partner.   1. When a partnership liability results, he is liable as though partner “partakes of the benefit of the partnership property,
he were an actual member of the partnership.  and an established business. He has every means of
Art. 1824. All partners are liable solidarily  with the obtaining full knowledge of protecting himself, because he
partnership for everything  chargeable to the partnership 2. When no partnership liability results, he  is liable pro rata may insist on the liquidation or settlement of existing
under  Articles 1822 and 1823.  with the other persons,  if any, so consenting to the contract partnership debts. On the other hand, the creditors have no
or  representation as to incur liability,  otherwise separately.  means of protecting themselves. 
Law imposes solidary liability 
The law imposes solidary liability upon the  partners and the When a person has been thus represented  to be a partner Art. 1827. The creditors of the partnership shall be preferred
partnership in cases of  torts and acts of conversion by a in an existing partnership, or  with one or more persons not to those of each partner as regards the partnership property.
partner as  provided in Art. 1824. It may be stated that  the actual  partners, he is an agent of the persons  consenting to Without prejudice to this right, the private creditors of each
liability of a partner for a debt of the  partnership depends such representation to bind  them to the same extent and in partner may ask for the attachment and public sale of the
upon whether the debt is contractual or it arises from tort or  the same  manner as though he were a partner in fact,  with share of the latter in the partnership assets. 
conversion. If it arises from contract, the  liability is subsidiary respect to persons who rely upon the  representation. When
and pro rata; if it arises  from tort or conversion, the liability all the members of  the existing partnership consent to the  Art. 1828. The dissolution of a partnership  is the change in
is  solidary.  representation, a partnership act or  obligation results; but in the relation of the partners  caused by any partner ceasing to
all other cases it is  the joint act or obligation of the person  be  associated in the carrying on as  distinguished from the
Business partners solidarily liable  acting and the persons consenting to the  representation.  winding up of the business. 
Arts. 1711 and 1712 of the New Civil Code  and Sec. 2 of the
Workmen’s Compensation  Act reasonably indicate that in  Estoppel – A preclusion, in law, which prevents a man from Art. 1829. On dissolution the partnership is  not terminated,
compensation cases, the liability of business  partners alleging or denying a fact, in consequence of his own but continues until the  winding up of partnership affairs is 
should be merely joint and not  solidary, and one of them previous act, allegation, or denial of a contrary tenor.  completed. 
happens to be  insolvent, the amount awarded to the 
dependents of the deceased employee  would only be Person bound by his representation  “Dissolution,” “Winding up,” and  “Termination”
partially satisfied, which is  evidently contrary to the intent A person who holds himself out as a partner in a business, explained 
and  purpose of the law to give full protection to  the or consents to his being so held out, is liable on contracts Dissolution, winding up, and termination  should not be
employee.  made with third persons who deal with the persons carrying confused because they are  distinct terms in law. Dissolution 
on the business on the faith of the representation. He is “designates the point in time when the  partners cease to
Art. 1825. When a person, by words spoken  or written or by stopped to deny the apparent agency.  carry on the business  together: termination is the point in
conduct, represents  himself, or consents to another  time  when all partnership affairs are wound up;  winding up
representing him to anyone, as a partner in  an existing Art. 1826. A person admitted as a partner into an existing is the process of settling  partnership affairs after
partnership or with one or more  persons not actual partners, partnership is liable for all the obligations of the partnership dissolution.” 
he is liable to  any such persons to whom such  arising before his admission as though he had been a
representation has been made, who has, on  the faith of partner when such obligations were incurred, except that this Art. 1830. Dissolution is caused: 
such representation, given  credit to the actual or apparent liability shall be satisfied only out of partnership property, 1. Without violation of the agreement  between the partners: 
partnership,   unless there is a stipulation to the contrary. a. By the termination of the definite  term or particular
and if he has made such representation or  consented to its undertaking  specified in the agreement. 
being made in a public  manner he is liable to such person, Incoming partner liable for existing obligations 
whether  the representation has or has not been  made or
 b. By the express will of any partner,  who must act in 1. After the termination of the specified  term or particular
good faith, when  no definite term or particular is  Partnership ceased upon expiration of  term; no more undertaking. 
specified.  juridical personality  2. At any time if the partnership was a  partnership at will
c. By the express will of all the  partners who have A partnership having ceased to exist since  1959, the when the interest  was assigned or when the charging order
not assigned  their interests or suffered them to  be partnership has no more juridical  personality nor capacity to was issued. 
charged for their separate debts,  either before or sue and be sued. (Reynolds Philippine Corporation vs.
after the  termination of any specified term or  Court  of appeals, G.R. No. 36187, Jan. 17, 1989)  Who may petition for dissolution 
particular undertaking.  Dissolution of a partnership may be decreed by the court on
d. By the expulsion of any partner  from the business Effect of Withdrawal before expiration of the term application either (1) by a partner or, in case he has
bona fide in  accordance with such a power  Under Article 1830, even if there is a  specified term, one assigned his interest, (2) by his assignee.
conferred by the agreement  between the partners  partner causes its  dissolution by expressly withdrawing  
2. In contravention of the agreement  between the partners, even  before the expiration of the period, with or  without Art. 1832. Except so far as may be  necessary to wind up
where the circumstances do not permit a dissolution under justifiable cause. Of course, if the  cause is not justified or no partnership affairs or  to complete transactions begun but
any other provision of this article, by the express will of any cause was given,  the withdrawing partner is liable for  not  then finished, dissolution terminates all  authority of any
partner at any time.  damages but in no case can he be  compelled to remain in partner to act for the  partnership: 
3. By any event which makes it unlawful  for the business of the firm. With his withdrawal, the number of members 1. With respect to the partners 
the partnership to  be carried on or for the members to  carry decreased, hence, the dissolution. And in  whatever way we a. When the dissolution is not by the  act, insolvency
it on in partnership.  view the situation, the  conclusion is inevitable that the or death of a  partner. 
4. When a specific thing which a partner  had promised to partners  were to be guided in the liquidation of the  b. When the dissolution is by such act,  insolvency or
contribute to the  partnership, perishes before the  delivery; partnership by the provisions of its duly  registered articles of death of a partner, in  cases where article 1833 so
in any case by the loss of the  thing, when the partner who  partnership. (Roxas vs.  Maglana, G.R. L-30616, Dec. 10, requires. 
contributed it having reserved the  ownership thereof, has 1990)  2. With respect to persons not partners,  as declared in
only transferred  to the partnership the use or enjoyment  of article 1834.
the same; but the partnership shall  not be dissolved by the Art. 1831. On application by or for a partner  the court shall
loss of the thing  when it occurs after the partnership has  decree a dissolution  whenever:  General Rule 
acquired the ownership thereof.  1. A partner has been declared insane in any judicial If the cause of dissolution is not by act,  death, or insolvency
5. By the death of any partner.  proceeding or is shown to be of unsound mind.  of a partner, the  authority ceases immediately.
6. By the insolvency of any partner or of  the partnership.  2. A partner becomes in any other way incapable of
7. By the civil interdiction of any partner.  performing his part of the partnership contract.  Exception 
8. By decree of court under the following article. 3. A partner has been guilty of such  conduct as it tends to For the purposes of winding-up partnership affairs.
prejudicially affect  the carrying on of the business. 
4. A partner willfully or persistently  commits a breach of the Art. 1833. Where the dissolution is caused by the act, death
Causes of dissolution in general  partnership agreement, or otherwise so conducts himself in or insolvency of a partner, each partner is liable to his co-
Generally, a partnership may be dissolved  by causes: matters relating to the partnership business that it is not  partners for  his share of any liability created by any partner
(1) without violation of the agreement between the partners; reasonably practicable to carry on the  business in acting for the partnership as if the partnership had not been
or (2) in contravention of the agreement. Other specific partnership with him.  dissolved unless: 
causes are; (3) an event which makes the business of the 5. The business of the partnership can only be carried on at 1. The dissolution being by act of any partner, the partner
partnership unlawful; (4) loss of a specific thing which a loss.  acting for the partnership had knowledge of the dissolution. 
a partner had promised to contribute to the partnership; (5) 6. Other circumstances render a dissolution equitable.  2. The dissolution being by the death or insolvency of a
the death of a partner; (6) the insolvency of any partner or of partner, the partner acting for the partnership had knowledge
the partnership itself; (7) civil interdiction of any partner; and On the application of the purchaser of a  partner's interest or notice of the death or insolvency. 
lastly (8) by judicial decree.  under Article 1813 or 1814: 
General Rule  1. Where the partnership is dissolved  because it is unlawful creditor having knowledge of  the dissolution and the person
If the cause of dissolution is the death, act,  or insolvency of to carry on the  business, unless the act is appropriate  for or  partnership continuing the business.
a partner, authority of a  partner to bind ceases upon the winding up partnership affairs. 
knowledge  of the dissolution.  2. Where the partner has become insolvent.  The individual property of a deceased  partner shall be liable
3. Where the partner has no authority to  wind up partnership for all obligations of  the partnership incurred while he was a 
If dissolution is caused by the act of one of the parties, co- affairs; except by a  transaction with one who —  partner, but subject to the prior payment of  his separate
partners are also liable to  contribute towards a liability as if a. Had extended credit to the  partnership prior to debts. 
no  dissolution has happened, provided that  there is no dissolution and  had no knowledge or notice of his 
notice or the partner does not have knowledge of the want of authority.  General Rule 
dissolution.  b. Had not extended credit to the  partnership prior to Dissolution of a partnership does not itself  discharge the
dissolution,  and, having no knowledge or notice  of existing liability of any  partner. 
Art. 1834. After dissolution, a partner can  bind the his want of authority, the fact of  his want of authority
partnership, except as provided in the third paragraph of this has not been  advertised in the manner provided  for Exception 
article:  advertising the fact of  dissolution in the first A partner can be discharged from any  existing liability upon
1. By any act appropriate for winding up  partnership affairs paragraph,  No. 2 (b).  dissolution of the  partnership provided that there is an 
or completing  transactions unfinished at dissolution.  Nothing in this article shall affect the  liability under article agreement between the partnership  creditor and the person
2. By any transaction which would bind  the partnership if 1825 of any person  who after dissolution represents himself or partners  continuing the business. 
dissolution had not  taken place, provided the other party to or  consents to another representing him as a  partner in a
the transaction:  partnership engaged in carrying  on business.  *Individual properties of the deceased  partner shall be liable
a. Had extended credit to the  partnership prior to to all obligations of  the partnership made while he was a 
dissolution and  had no knowledge or notice of the  General Rule  partner. 
dissolution.  Dissolution terminates the authority of the  partners to bind
b. Though he had not so extended  credit, had partnership. Art. 1836. Unless otherwise agreed, the  partners who have
nevertheless known of  the partnership prior to not wrongfully dissolved the partnership or the legal
dissolution,  and, having no knowledge or notice  of Exceptions  representative  of the last surviving partner, not insolvent,
dissolution, the fact of  dissolution had not been Any act appropriate for winding-up  partnership affairs or has the right to wind up the partnership  affairs, provided,
advertised  in a newspaper of general  circulation in completing  transactions unfinished at dissolution  however, that any partner, his legal representative or his
the place (or in each place if more than one) at which  assignee, upon cause shown, may obtain winding up by the
the partnership business was  regularly carried on. If third persons that transacted had no  actual knowledge of court.
The liability of a partner under the first  paragraph,  the dissolution. *Persons extending credit prior to dissolution
are entitled to notice of  dissolution. If they had no notice or Who may wind up Partnership Affairs? Partner designated in
No. 2, shall be satisfied out of partnership assets alone when knowledge of dissolution, they may hold the retired partner the agreement. In absence of agreement, the party that did 
such partner  had been prior to dissolution:  for obligations made by continuing partners after dissolution.  not wrongfully dissolved the partnership. 
1. Unknown as a partner to the person with whom the If all partners died, the legal representative  of the last
contract is made.  Art. 1835. The dissolution of the  partnership does not of surviving partner provided that  the partner is not insolvent. 
2. So far unknown and inactive in  partnership affairs that the itself discharge the  existing liability of any partner. 
business reputation of the partnership could not  be said to Winding up of a dissolved partnership may be done 
have been to any degree due  to his connection with it.  A partner is discharged from any existing  liability upon Extrajudicially by the partners themselves. Judicially under
dissolution of the partnership  by an agreement to that effect the control of a competent  court.  
The partnership is in no case bound by any  act of a partner between  himself, the partnership creditor and the  person or *Managing partner or winding-up partner  has the right to sell
after dissolution:  partnership continuing the  business; and such agreement firm property even after  the life of the partnership has
may be  inferred from the course of dealing  between the expired. 
 to liability for damages in  the second paragraph, No. 1. To a lien on, or right of retention of, the  surplus of the
Art. 1837. When dissolution is caused in any  way, except in 1 (b), of  this article.  partnership property after satisfying the partnership liabilities
contravention of the  partnership agreement, each partner, b. If the business is continued under  the second to third persons for any sum  of money paid by him for the
as  against his co-partners and all persons  claiming through paragraph, No. 2, of this article, the right as against purchase of an interest in the partnership and for any capital
them in respect of their  interests in the partnership, unless  his co partners and all claiming through  them in or advances contributed by him. 
otherwise agreed, may have the  partnership property respect of their interests in  the partnership, to have 2. To stand, after all liabilities to third  persons have been
applied to discharge  its liabilities, and the surplus applied to the value  of his interest in the partnership,  less any satisfied, in the  place of the creditors of the partnership  for
pay  in cash the net amount owing to the  respective damage caused to his co partners by the dissolution,  any payments made by him in  respect of the partnership
partners. But if dissolution is  caused by expulsion of a ascertained and paid to him in cash,  or the payment liabilities. 
partner, bona fide  under the partnership agreement and if secured by a bond  approved by the court, and to be  3. To be indemnified by the person guilty  of the fraud or
the  expelled partner is discharged from all  partnership released from all existing liabilities  of the partnership; making the  representation against all debts and  liabilities of
liabilities, either by payment or  agreement under the second but in  ascertaining the value of the  partner's interest the partnership. 
paragraph of  article 1835, he shall receive in cash only  the the value of the  good-will of the business shall not 
net amount due him from the  partnership.  be considered.  Right of partner to rescind contract of partnership 
When dissolution is caused in contravention  of the If one is induced by fraud or misrepresentation to become a
partnership agreement the rights of  the partners shall be as Rights of partners upon dissolution  partner, the contract is voidable. If the contract is annulled,
follows:  1. Dissolution is caused without violation  of the agreement.  the injured party is entitled to  restitution. Here, the fraud or
1. Each partner who has not caused  dissolution wrongfully 2. In contravention of the agreement.  misrepresentation vitiates consent. However, until the
shall have:  partnership contract is annulled by a proper action in court,
a. All the rights specified in the first paragraph of this If partnership is dissolved without  violation of the the partnership relations exist and the defrauded partner is
article.  agreement  liable for all  obligations to third persons. 
b. The right, as against each partner  who has 1. All partners may have the property sold for payment of 1. Right of injured partner where partnership contract
caused the dissolution  wrongfully, to damages partnership liabilities.  rescinded
breach of  the agreement.  2. If there is surplus, after paying the liabilities of the firm, it 2. Right of retention of partnership  property 
2. The partners who have not caused the  dissolution shall be given in cash to the partners.  3. Right to be subrogated in place of  creditors of
wrongfully, if they all desire to continue the business in the partnership 
same  name either by themselves or jointly  with others, may If the partnership was dissolved in contravention of the 4. Right to be indemnified by the guilty partner against all
do so, during the  agreed term for the partnership and for  agreement  liabilities of the partnership. 
that purpose may possess the  partnership property, 1. The remaining partners have the right to sell partnership
provided they  secure the payment by bond approved  by the property to pay the partnership’s liabilities and the surplus  is Art. 1839. In settling accounts between the  partners after
court, or pay any partner who  has caused the dissolution distributed to the remaining partners  as well.  dissolution, the following  rules shall be observed, subject to
wrongfully,  the value of his interest in the  partnership at the 2. As against the guilty partner for the dissolution of the any  agreement to the contrary: 
dissolution, less any  damages recoverable under the partnership, the remaining partners have the right to  recover 1. The assets of the partnership are: 
second  paragraph, No. 1 (b) of this article, and  in like damages for breach.  a. The partnership property. 
manner indemnify him against all  present or future 3. The remaining partners may also continue the business b. The contributions of the partners necessary for the
partnership liabilities. up to end of the  stipulated term of the partnership.  payment of all the liabilities specified in No. 2. 
3. A partner who has caused the  dissolution wrongfully shall 2. The liabilities of the partnership shall  rank in order of
have:  Art. 1838. Where a partnership contract is  rescinded on the payment, as follows: 
a. If the business is not continued  under the ground of the fraud or  misrepresentation of one of the a. Those owing to creditors other than  partners. 
provisions of the second  paragraph, No. 2, all the parties  thereto, the party entitled to rescind is,  without b. Those owing to partners other than  for capital and
rights of a  partner under the first paragraph,  subject prejudice to any other right, entitled:  profits. 
c. Those owing to partners in respect  of capital. 
 d. Those owing to partners in respect  of profits.  2. Those owing to partners other than for capital and profits who promise to pay the  debts and who continue the
3. The assets shall be applied in the order of their such as loans given  by the partners or advances for business  of the dissolved partnership.
declaration in No. 1 of this article to the satisfaction of the business expenses  5. When any partner wrongfully causes a  dissolution and the
liabilities.  3. Those owing for the return of the  capital contributed by remaining partners  continue the business under the 
4. The partners shall contribute, as  provided by article 1797, the partners  provisions of article 1837, second  paragraph, No. 2, either
the amount  necessary to satisfy the liabilities.  4. The share of the profits, if any, due to  each partner  alone or with  others, and without liquidation of the 
5. An assignee for the benefit of creditors or any person partnership affairs. 
appointed by the court shall have the right to enforce the Order of application of partner who  become insolvent or 6. When a partner is expelled and the remaining partners
contributions specified in the preceding number.  his estate is insolvent, the claims against his separate continue the business either alone or with others  without
6. Any partner or his legal representative shall have the right property  liquidation of the partnership affairs. The liability of a third
to enforce the  contributions specified in No. 4, to the  extent 1. Those owing to separate creditors  person becoming a partner in the partnership continuing the 
of the amount which he has paid in excess of his share of 2. Those owing to partnership creditors  business, under this article, to the creditors  of the dissolved
the liability.  3. Those owing to partners by way of  contribution partnership shall be  satisfied out of the partnership property 
7. The individual property of a deceased  partner shall be only, unless there is a stipulation to the contrary. 
liable for the  contributions specified in No. 4.  Liability of deceased partner’s  individual property   When the business of a partnership after  dissolution is
8. When partnership property and the  individual properties The individual property of a deceased  partner shall be liable continued under any conditions set forth in this article
of the partners are  in possession of a court for distribution,  for his share of the  contributions necessary to satisfy the  the creditors of the dissolved partnership, as  against the
partnership creditors shall have priority  on partnership liabilities of the partnership incurred while  he was a partner.  separate creditors of the retiring  or deceased partner or the
property and separate  creditors on individual property, representative of the deceased partner, have a prior right  to
saving  the rights of lien or secured creditors.  Art. 1840. In the following cases creditors of  the dissolved any claim of the retired partner or the representative of the
partnership are also creditors  of the person or partnership deceased partner against the person or partnership
9. Where a partner has become insolvent  or his estate is continuing the  business:  continuing the business, on account of the retired or
insolvent, the claims  against his separate property shall 1. When any new partner is admitted into  an existing deceased partner's interest in the dissolved partnership or on
rank  in the following order:  partnership, or when any  partner retires and assigns (or the  account of any consideration promised for such interest or 
a. Those owing to separate creditors.  representative of the deceased partner  assigns) his rights in for his right in partnership property. 
b. Those owing to partnership  creditors.  partnership  property to two or more of the  partners, or to
c. Those owing to partners by way of contribution.  one or more of the  partners and one or more third  persons, Nothing in this article shall be held to  modify any right of
if the business is continued  without liquidation of the creditors to set aside  any assignment on the ground of
Rules for settling accounts between the partners   partnership affairs.  fraud. 
1. The assets of the partnership  2. When all but one partner retire and  assign (or the
2. Liabilities of the partnership  representative of a  deceased partner assigns) their rights  in The use by the person or partnership  continuing the
3. Application of assets  partnership property to the  remaining partner, who business of the partnership  name, or the name of a
4. Contribution by the partners  continues the business without liquidation of  partnership deceased partner as  part thereof, shall not of itself make
affairs, either alone or with others.  the  individual property of the deceased partner  liable for
Assets of the partnership   3. When any partner retires or dies and  the business of the any debts contracted by such  person or partnership. 
1. Partnership property  dissolved partnership is continued as set forth in  Nos. 1 and
2. The contributions of the partners  necessary for the 2 of this article, with the  consent of the retired partners or Dissolution of a partnership by change of  members 
payment of all  liabilities  the  representative of the deceased  partner, but without any Causes 
assignment of his right in partnership property.  1. New partner is admitted 
Order of application of the assets  4. When all the partners or their  representatives assign their 2. Partner retires 
1. Those owing to partnership creditors  rights in  partnership property to one or more  third persons 3. Partner dies 
4. Partner withdraws 
5. Partner is expelled from partnership  When a partner retires from the partnership,  he is entitled to
assigned to make new assignee  acquiring all rights of 
6. Other partners assign their rights to sole remaining the payment of what may  be due to him after liquidation. 
partner the limited partner
partner 
7. All the partners assign their rights in partnership property Exception  His name may appear in Name not included  in firm name
to third persons. *Any change in membership dissolves a No liquidation needed when there is  settlement as to what the firm  name
partnership and creates a new one *When a business of a the retiring partner shall receive. 
dissolved partnership is continued by former or without new Prohibited from No prohibition
partners, the old creditors are creditors of the person or Art. 1842. The right to an account of his interest shall accrue engaging in a business
partnership that is continuing the business.  to any partner, or his legal representative as against the like partnership’s
winding up partners or the surviving partners or the person
Art. 1841. When any partner retires or dies, and the or partnership continuing the business, at the date of His retirement, His retirement, insolvency and 
business is continued under any of  the conditions set forth dissolution, in the absence of any agreement to the insolvency and death death does not  dissolve the
in the preceding article, or in article 1837, second contrary.  dissolves the partnership partnership
paragraph,  No. 2, without any settlement of accounts as
between him or his estate and the person or partnership Right to demand an accounting of  partnership affairs
Characteristics of limited partnership 
continuing the  business, unless otherwise agreed, he or his  must be directed against 
1. Must be formed in accordance with the  requirements of
legal representative as against such person or partnership 1. Winding-up partners 
the law. 
may have the value of his interest at the date of 2. Surviving partners 
2. There must be one or more general  partners who control
dissolution ascertained, and shall receive as an 3. The person the partnership continuing  the business 
the management  of the business. 
ordinary creditor an amount equal to the value of his interest
3. There must be one or more limited  partners contributing
in the dissolved partnership with interest, or, at his option or Art. 1843. A limited partnership is one  formed by two or
to the capital and sharing in the profits but have nothing  to
at the option of  his legal representative, in lieu of interest, more persons under the  provisions of the following article,
do with the management. 
the profits attributable to the use of his right in the property of having as  members one or more general partners and  one
4. Obligations of the partnership must be  paid out of the
the dissolved partnership; Provided, That the creditors of  the or more limited partners. The limited  partners as such shall
common fund and in the separate properties of the general 
dissolved partnership as against the separate creditors, or not be bound by the  obligations of the partnership. 
partners. 
the representative of the retired or deceased partner, shall
have priority on any claim arising under this  article, as
General partner  Limited partner Art. 1844. Two or more persons desiring to  form a limited
provided article 1840, third paragraph. 
partnership shall: 
Personally liable for Liability extends only to his capital 1. Sign and swear to a certificate, which shall state — 
Rights of retiring of properties of  deceased, partner partnership obligations contribution. a. The name of the partnership, adding thereto the
when business continued 
word "Limited". 
To have the value of the interest of  the retiring partner or Have equal right in No share in  management of  b. The character of the business. 
deceased partner in  the partnership determined as of the management of partnership. c. The location of the principal place of business. 
date  of dissolution.  partnership d. The name and place of residence of each member,
general and limited  partners being
To receive thereafter, as an ordinary creditor, an amount May contribute money, May contribute  money and
respectively designated. 
equal to the value of  his share in the dissolved partnership property or industry property
e. The term for which the partnership is to exist. 
with  interest, or, at his option, in place of  interest, the profits
Proper party to Not proper party to proceedings f. The amount of cash and a description of and the
attributable to the use  of his right. 
proceedings agreed value of the other property contributed  by
each limited partner. 
General Rule 
Interest cannot be Interest is assignable with
 g. The additional contributions, if any, to be made by Limited partners can only contribute money  and property 1. He knew the statement to be false at  the time he signed
each limited partner and the times at which or events and cannot contribute  services to the partnership to protect  the certificate,  or subsequently, but having sufficient  time to
on  the happening of which they shall  be made. persons dealing with the firms with frauds.  cancel or amend it or file a  petition for its cancellation or 
h. The time, if agreed upon, when the contribution of amendment, he failed to do so. 
each limited partner  is to be returned.  Art. 1846. The surname of a limited partner  shall not appear 2. The person seeking to enforce liability  has relied upon the
i. The share of the profits or the other  compensation in the partnership name unless:  false statement in  transacting business with the 
by way of income  which each limited partner shall  partnership. 
receive by reason of his contribution.  1. It is also the surname of a general partner.  3. The person suffered loss as a result of  reliance upon such
false statements. 
j. The right, if given, of a limited  partner to substitute 2. Prior to the time when the limited  partner became such,
an assignee as  contributor in his place, and the  the business had been carried on under a name in which  his ART. 1848. A limited partner shall become liable as a
terms and conditions of the substitution.  surname appeared.  general partner unless, in addition to the exercise of his
k. The right, if given, of the partners to  admit rights and powers as a limited partner, he takes part in  the
additional limited partners.  A limited partner whose surname appears  in a partnership control of the business. 
l. The right, if given, of one or more of  the limited name contrary to the  provisions of the first paragraph is
partners to priority over other limited partners, as to  liable as a general partner to partnership creditors  who Limited partner has no control in business 
contributions or as to  compensation by way of extend credit to the partnership  without actual knowledge A limited partner is excluded from any  active voice in the
income, and the nature of such priority.  that he is not a  general partner.  control of the affairs of  the firm. 
m. The right, if given, of the remaining  general
partner or partners to  continue the business on the Limited partner’s surname is not included  in the firm Limited partner cannot perform acts of administration 
death,  retirement, civil interdiction,  insanity or name provided these circumstances  Limited partners may not perform any act  of administration
insolvency of a general  partner.  1. If the surname of general partner is the  same with limited with respect to the  interests of the partnership, not even in
n. The right, if given, of a limited  partner to demand partner’s  the  capacity of agents of the managing  partners. 
and receive  property other than cash in return  for his 2. If the limited partner’s surname was included and was
contribution.  carried on the new partnership  ART. 1849. After the formation of a limited  partnership,
*If the limited partner’s surname was included in the firm additional limited partners may be admitted upon filing an
2. File for record of the certificate in the  Office of the name, he is liable as a general partner. amendment to the original certificate in accordance with the
Securities and Exchange Commission.    requirements of Article 1865. 
Art. 1847. If the certificate contains a false  statement, one
A limited partnership is formed if there has  been substantial who suffers loss by reliance  on such statement may hold The writing to amend a certificate 
compliance in good faith  with the foregoing requirements.  liable any  party to the certificate who knew the  statement to 1. Shall conform to the requirements of Article 1844 as far as
be false:  necessary to set forth clearly the change in the certificate
Qualifications of limited partnership  1. At the time he signed the certificate.  which it is desired to make. 
1. The partners must sign and swear to a  certificate of 2. Subsequently, but within a sufficient time before the 2. Be signed and sworn to by all members, and an
limited partnership  statement was relied upon to enable him to cancel or amend amendment substituting a limited partner. 
2. Must file for record the certificate in  the office of the the certificate, or to file a petition for its cancellation or
Securities and  Exchange Commission  amendment as provided in article 1865.  ART. 1850. A general partner shall all have  the rights and
powers and be subject to all  the restrictions and liabilities of
Art. 1845. The contributions of a limited  partner may be Liability for false statement in certificate  a partner in  a partnership without limited partners. However,
cash or property, but not services.  Under this provision, any partner to  the certificate containing without the written consent or  ratification of the specific act
a false statement  is liable provided the following requisites  by all the  limited partners, a general partner or all of  the
are present:  general partners have no authority to: 
1. Do any act in contravention of the  certificate.  business conducted by a person or partnership erroneously
2. Do any act which would make it  impossible to carry on the believing that he has become a limited partner in a limited The receiving of collateral security, or a  payment,
ordinary business of the partnership.  partnership, is  not, by reason of his exercise of the rights  of conveyance, or release in  violation of the foregoing
3. Confess a judgement against the partnership.  a limited partner, a general partner with the person or in the provisions is a  fraud on the creditors of the partnership. 
4. Possess partnership property, or assign their rights in partnership carrying on the business, or bound by the
specific partnership property, for other than a partnership obligations of such person or partnership; provided that on Loans and business transactions with  limited partners 
purpose.  ascertaining the mistake he promptly renounces his interest A limited partner is allowed to loan money  to the firm;
5. Admit a person as a general partner.  in the profits of the business, or other compensation by way transact other business with the  partnership, and receive a
6. Admit a person as a limited partner, unless the right to do of income.  pro rata share in  the assets with general creditors. 
so is given in the certificate. 
7. Continue the business with partnership property on the Conditions for exemption from liability  Limited partner not allowed to hold collateral security 
death, retirement, insanity, civil interdiction or insolvency of a 1. Prompt renunciation of interest and/or income upon A limited partner may not receive partnership property as
general partner, unless the right to do so is given in the ascertaining the mistake.  collateral security.
certificate. 2. Non-inclusion of limited partner’s name in the firm name. 
3. Non-participation in the management of the business.  ART. 1855. Where there are several limited  partners the
Powers of general partner in limited  partnership  members may agree that one  or more of the limited partners
The general partner shall have all the rights and powers and ART. 1853. A person may be a general partner and a limited shall have a  priority over other limited partners as to  the
be subject to all the restrictions and liabilities of a partner in partner in the same partnership at the same time, provided return of their contributions, as to their  compensation by way
a partnership without limited partners.  that this fact shall be stated in the certificate provided for in of income, or as to  any other matter. If such an agreement is
Article 1844.  made it shall be stated in the certificate, and  in the absence
ART. 1851. A limited partner shall have the  same rights as a of such a statement all the  limited partners shall stand upon
general partner to:  A person who is a general, and also at the  same time a equal  footing. 
1. Have the partnership books kept at the  principal place of limited partner, shall have all  the rights and powers and be
business of the partnership, and at a reasonable hour  to subject to all  restrictions of a general partner; except  that, in ART. 1856. A limited partner may receive  from the
inspect and copy any of them.  respect to his contribution, shall  have the rights against the partnership the share of the  profits or the compensation by
2. Have on demand true and full  information of all things other members  which he would have had if he were not  way of  income stipulated for in the certificate;  provided, that
affecting the  partnership, and a formal account of  also a general partner.  after such payment is made,  whether from the property of
partnership affairs whenever  circumstances render it just the  partnership or that of a general partner, the  partnership
and reasonable.  ART. 1854. A limited partner also may loan money to and assets are in excess of all  liabilities of the partnership except
3. Have dissolution and winding up by decree of court.  transact other business with the partnership and unless he is liabilities to limited partners on account of their  contributions
also a general partner, receive on account of resulting claims and to general partners. 
A limited partner shall have the right to  receive a share of against the partnership, with general creditors, a pro rata
the profit or other compensation by way of income and to the share of the assets. No limited partner shall in respect to any ART. 1857. A limited partner shall not  receive from a
return of his contribution as provided in Articles 1856 and such claim:  general partner or out of  partnership property any part of his 
1857.  contributions until: 
1. Receive or hold as collateral security  any partnership 1. All liabilities of the partnership, except liabilities to general
Rights of limited partner  property.  partners and to limited partners on account of their
It has less rights than a general partner. It  may exercise 2. Receive from a general partner or the partnership any contributions, have been paid or there remains property of
rights similar to a general partner.   payment, conveyance, or release from liability, if at the time the partnership  sufficient to pay them. 
the assets of the partnership are not  sufficient to discharge 2. The consent of all members is had, unless the return of
ART. 1852. Without prejudice to the provisions of Article partnership  liabilities to persons not claiming as general or the contribution may be rightfully demanded under the
1848, a person who has contributed to the capital of a limited partners.  provisions of the second paragraph. 
3. The certificate is cancelled or so amended as to set forth ART. 1859. A limited partner’s interest is  assignable. 
the withdrawal or reduction.  Limited partner to receive cash 
It will be noted that the limited partner has a right to demand A substitute limited partner is a person  admitted to all the
Subject to the provisions of the first  paragraph, a limited and receive cash only in return for his contribution even rights of a limited  partner who has died or has assigned his 
partner may rightfully demand the return of his contribution:  when he contributed property.  interest in a partnership. 
1. On the dissolution of a partnership. 
2. When the date specified in the  certificate for its return has ART. 1858. A limited partner is liable to the partnership:  An assignee, who does not become a  substituted limited
arrived.  1. For the difference between his contribution as actually partner, has no right to  require any information or account of
3. After he has given six months’ notice in writing to all other made and that stated in the certificate as having been the  partnership transactions or to inspect the  partnership
members, if no time  is specified in the certificate, either for made.  books; he is only entitled to  receive the share of the profits
the return of the contribution or for the  dissolution of the 2. For any unpaid contribution which he agreed in the or other  compensation by way of income, or the  
partnership.  certificate to make in the future at the time and on the return of his contribution, to which his  assignor would
conditions stated in the certificate.  otherwise be entitled. 
In the absence of any statement in the  certificate to the
contrary or the consent of  all members, a limited partner, A limited partner holds a trustee for the partnership:  An assignee shall have the right to become  a substituted
irrespective of the nature of his contribution, has only  the 1. Specific property stated in the certificate as contributed by partner if all the members  consent thereto or if the assignor,
right to demand and receive cash in  return for his him, but  which was not contributed or which has been being  thereunto empowered by the certificate,  gives the
contribution.  wrongfully returned.  assignee that right. 
2. Money or other property wrongfully  paid or conveyed to
A limited partner may have the partnership dissolved and its him on account of  his contribution.  An assignee becomes a substituted limited  partner when the
affairs wound up when:  certificate is  appropriately amended in accordance with 
1. He rightfully but unsuccessfully  demands the return of his The liabilities of a limited partners as set  forth in this article Article 1865. 
contribution.  can be waived or  compromised only by the consent of all 
2. The other liabilities of the partnership  have not been paid, members; but a waiver or compromise shall  not affect the The substituted limited partner has all the  rights and powers,
or the partnership property is insufficient for their  payment right of a creditor of a  partnership who extended credit or and is subject to all the  restrictions and liabilities of his
as required by the first  paragraph, No. 1, and the limited whose  claim arose after the filling and before a  cancellation assignor,  except those liabilities of which he was  ignorant at
partner would otherwise be entitled to the return of his or amendment of the  certificate, to enforce such liabilities.  the time he became a limited  partner and which could not be
contribution.  ascertained  for the certificate. 
When a contributor has rightfully received  the return in
Conditions of a limited partner entitled to return of his whole or in part of the capital  of his contribution, he is The substitution of the assignee as a limited  partner does
contribution  nevertheless liable  to the partnership for any sum, not in  not release the assignor from  liability to the partnership,
1. All liabilities of the partnership have been paid or there are excess of such return with interest,  necessary to discharge under article  1847 and 1858. 
assets sufficient to pay partnership liabilities.  its liabilities to all  creditors who extended credit or whose 
2. The consent of all the partners is obtained.  claims arose before such return.  Limited partner’s interest assignable 
3. The certificate is cancelled or so amended as to set forth A limited partner’s interest in the  partnership is assignable.
the withdrawal or reduction of the contribution.  Limited partner liable to partnership for sum returned  The assignee,  however, of a limited partner’s interest  does
A limited partner whose contribution has  been rightfully not necessarily become a substituted  limited partner. 
When a limited partner may demand return  returned is still liable to the  partnership for an amount not in
1. The partnership is dissolved  excess of  the sum returned plus interest as may be  ART. 1860. The retirement, death,  insolvency, insanity or
2. The date specified for its return has  arrived  necessary to pay the claims of persons who  extended credit civil interdiction of a  general partner dissolves the
3. If no term is specified, after six months’ notice in writing to or whose claims arose  before the return.  partnership,  unless the business is continued by the 
all other partners.  remaining general partners: 
1. Under a right to do so stated in the  certificate.  3. Those to limited partners in respect to the capital of their 1. Conform to the requirements of article 1844 as far as
2. With the consent of all members.  contributions.  necessary to set forth clearly the change in the
4. Those to general partners other than for capital and certificate which it is desired to make. 
It must be observed that the death, etc., of a general partner profits.  2. Be signed and sworn to by all members, and an
dissolves the partnership  while the death of a limited partner 5. Those to general partners in respect to profits.  amendment substituting a limited partner or adding a limited
does  not cause the dissolution of the firm, unless  there is 6. Those to general partners in respect to capital.  or general partner shall be signed also by  the member to be
only one limited partner.  substituted or added, and when a limited partner is to  be
Subject to any statement in the certificate or to subsequent substituted, the amendment shall  also be signed by the
ART. 1861. On the death of a limited  partner his executor or agreement, limited partners share in the partnership assets assigning limited partner. 
administrator shall  have all the rights of a limited partner for  in respect to their claims for capital, and in respect to their
the purpose of settling his estate, and such  power as the claims for profit or for compensation by way of income on The writing to cancel a certificate shall be  signed by all
deceased had to constitute his  assignee a substituted their contribution respectively, in proportion to the respective members. 
limited partner. amounts of such claims.
  A person desiring the cancellation or  amendment of a
The estate of a deceased limited partner  shall be liable for Art. 1864. The certificate shall be cancelled  when the certificate, if any person  designated in the first and second 
all his liabilities as a  limited partner.  partnership is dissolved or all  limited partners cease to be paragraphs as a person who must execute  the writing
such.  refuses to do so, may petition  the court to order a
ART. 1862. On due application to a court of  competent A certificate shall be amended when:  cancellation or  amendment thereof. 
jurisdiction by any creditor of a  limited partner, the court may 1. There is a change in the name of the partnership or in the
charge the  interest of the indebted limited partner  with amount or character of the contribution of any limited If the court finds that the petitioner has a  right to have the
payment of the unsatisfied amount of  such claim, and may partner.  writing executed by a  person who refuses to do so, it shall
appoint a receiver, and  make all other orders, directions, 2. A person is substituted as a limited  partner.  order  the Office of the Securities and Exchange 
and  inquiries which the circumstances of the  case may 3. An additional limited partner is  admitted.  Commission where the certificate is  recorded, to record the
require.  4. A person is admitted as a general  partner.  cancellation or amendment of the certificate; and when  the
5. A general partner retires, dies, becomes insolvent or certificate is to be amended, the court  shall also cause to be
The interest may be redeemed with the  separate property of insane, or is sentenced to civil interdiction and the business filed for record in said  office a certified copy of its decree
any general partner,  but may not be redeemed with is  continued under article 1860.  setting  forth the amendment. 
partnership  property.  6. There is a change in the character of the business of the
partnership.  A certificate is amended or cancelled when  there is filed for
The remedies conferred by the first  paragraph shall not be 7. There is a false or erroneous statement in the certificate.  record in the Office of the  Securities and Exchange
deemed exclusive of  others which may exist.  8. There is a change in the time as stated in the certificate Commission, where  the certificate is recorded: 
for the dissolution of  the partnership or for the return of a 1. A writing in accordance with the  provisions of the first or
ART. 1863. In settling accounts after dissolution the liabilities contribution.  second  paragraph. 
of the partnership shall be entitled to payment in the 9. A time is fixed for the dissolution of the  partnership, or the 2. A certified copy of the order of the court in accordance
following order:  return of a  contribution, no time having been specified in the with the provisions of the fourth paragraph. 
1. Those to creditors, in the order of  priority as provided by certificate.  3. After the certificate is duly amended in  accordance with
law, except those to limited partners on account of their 10. The members desire to make a change  in any other this article, the  amended certificate shall thereafter be  for all
contributions, and to general partners.  statement in the certificate  in order that it shall accurately  purposes the certificate provided  for in this Chapter. 
2. Those to limited partners in respect to their share of the represent the agreement among them. 
profits and other compensation by way of income on their A certificate is considered cancelled or amended when
contributions.  Art. 1865. The writing to amend a  certificate shall:  there is filed for record 
1. A writing to amend the certificate; or 
2. A certified copy of the order of the court in the event of an
unjustified  refusal of a partner to sign the writing. 

Art. 1866. A contributor, unless he is a  general partner, is

not a proper party to proceedings by or against a
partnership, except where the object is to enforce a  limited
partner's right against or liability to  the partnership. 

Art. 1867. 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: 
1. The amount of the original contribution  of each limited
partner, and the time  when the contribution was made. 
2. That the property of the partnership  exceeds the amount
sufficient to  discharge its liabilities to persons not  claiming
as general or limited partners  by an amount greater than the
sum of  the contributions of its limited partners. 

A limited partnership formed under the law  prior to the

effectiveness of this Code, until or  unless it becomes a
limited partnership  under this Chapter, shall continue to be 
governed by the provisions of the old law.