PARTNERSHIP REVIEWER

University of the Philippines

PARTNERSHIP
> it is a CONTRACT whereby two or more persons (1) bind themselves
to CONTRIBUTE money, property, or industry to a COMMON UN! (2) with the
intention o" dividin# the $ROIT% amon# themselves or in order to E&ERCI%E
a $ROE%%ION

> a %TATU% and a I!UCIAR' RE(ATION subsistin# between persons
)arryin# on a business in )ommon with a view on pro"it
CHARACTERISTICS ! THE CNTRACT ! PARTNERSHIP
"C# C# $# I# AS# NP%
*+ CON%EN%UA(
> per"e)ted by mere )onsent
,+ CONTRIBUTION o" money, property or industry to a COMMON UN!
-+ ob.e)t must be a (A/U( one
0+ INTENTION o" !I1I!IN2 the $ROIT amon# the $ARTNER%
3+ 4AECTIO %OCIETATI%5
> the desire to "ormulate an ACTI1E UNION, with people amon# whom
there e6ist a mutual CONI!ENCE and TRU%T%
7+ NE/ $ER%ONA(IT'
> the ob.e)t must be "or pro"it and not merely "or the )ommon
en.oyment otherwise only a )o8ownership has been "ormed+
9O/E1ER, pe)uniary pro"it need not be the only aim, it is enou#h that
it is the prin)ipal purpose
&USINESS TRUSTS
> when )ertain persons entrust their property or money to others who
will mana#e the same "or the "ormer
RU$ES N CAPACIT' T &EC(E A PARTNER
*+ a person )apa)itated to enter into )ontra)tual relations may be)ome a
partner
,+ an UNEMANCI$ATE! MINOR CANNOT be)ome a partner UN(E%%
his parent or #uardian )onsents
-+ a MARRIE! /OMAN, )annot )ontribute )on.u#al "unds as her
)ontribution to the partnership UN(E%% she is permitted to do so by
her husband OR UN(E%% she is the administrator o" the )on.u#al
partnership, in whi)h the COURT must #ive its )onsent authority
0+ a $ARTNER%9I$ bein# a .uridi)al person by itsel" )an "orm another
partnership
3+ a COR$ORATION )annot be)ome a partner on #rounds o" publi)
poli)y
> a partner shares not only in pro"its but also in the losses o" the "irm
RU$E)
> the partnership has a $ER%ONA(IT' %E$ARATE and !I%TINCT
"rom that o" ea)h partner
CNSE*UENCES ! THE PARTNERSHIP &EIN+ A ,URI-ICA$ ENTIT'
*+ its .uridi)al personality is %E$ARATE and !I%TINCT "rom that o" ea)h
partner
,+ the partnership CAN in 2ENERA(:
A; a)<uire and possess property o" all =inds
B; in)ur obli#ations
C; brin# )ivil and )riminal a)tions
!; )an be ad.ud#ed insolvent even i" the individual members be
ea)h "inan)ially solvent
-+ unless he is #enerally sued, a partner has no ri#ht to ma=e a separate
appearan)e in )ourt, i" the partnership bein# sued is already
represented
$I(ITATINS N A$IEN PARTNERSHIP
*; i" 7>? )apital is not owned by ilipinos
> the "irm )annot a)<uire by pur)hase or otherwise A2RICU(TURA(
$hilippine lands
,; "orei#n partnership may 4lease5 lands provided the period does not e6)eed @@
years
-; "orei#n partnership may be 4MORT2A2EE%5 o" land
> period o" 3 years, renewable "or another 3 years
> they )annot pur)hase it in a "ore)losure sale
RU$ES IN CASE ! ASSCIATINS NT $AW!U$$' R+ANI.E- AS
PARTNERSHIP
*+ it possesses NO (E2A( $ER%ONA(IT'
> it )annot sue as su)h 9O/E1ER, the partners in their individual
)apa)ity CAN
,+ one who enters into a )ontra)t with a partnership as su)h )annot when
sued later on "or re)overy o" the debt, alle#e the la)= o" le#al
personality on the part o" the "irm, even i" indeed it had no personality
> E%TO$$E(
1
> whether a partnership has a .uridi)al personality or not depends on
its $ER%ONA( (A/ o" the partnership or the law o" the pla)e where the
partnership was or#aniAed
RE*UISITES !R E/ISTENCE ! PARTNERSHIP "I# C!# ,I%
*+ INTENTION to )reate a partnership
,+ COMMON UN! obtained "rom )ontributions
-+ BOINT INTERE%T% in the $ROIT%
WHAT - NT ESTA&$ISH A PARTNERSHIP
*+ mere )o8ownership or )o8possession
> even with pro"it sharin#
,+ mere sharin# o" 2RO%% returns
> even with .oint ownership o" the properties involved
RU$ES T -ETER(INE THE E/ISTENCE ! A PARTNERSHIP
*+ persons who are not partners to ea)h other are not partners as to third
persons
E&CE$TION:
> $ARTNER%9I$ B' E%TO$$E(
,+ CO8O/NER%9I$ o" a property does not itsel" establish a partnership,
even thou#h the )o8owners share in the pro"its derived "rom the
in)ident o" .oint ownership
-+ %9ARIN2 O 2RO%% RETURN% A(ONE does not indi)ate a
partnership whether or not the persons sharin# them have a .oint or
)ommon ri#ht or interest in any property "rom whi)h the returns are
derived
0+ the re)eipt o" the share in the pro"its is a stron# presumptive eviden)e
o" partnership 9O/E1ER, no su)h in"eren)e will be drawn i" su)h
pro"its were re)eived in payment
A; as a !EBT by installments or otherwise
B; as /A2E% o" an employee
C; as RENT to a landlord
!; as an ANNUIT' to a widow or representative o" a de)eased
partner
E; as INTERE%T on a (OAN, thou#h the amount o" payment
vary with the pro"its o" the business
; as the CON%I!ERATION "or the sale o" a 2OO! /I(( o" a
business or other property or otherwise
> )reditors are not partners, "or their only interest in the sharin# o"
pro"its is the re)eipt or payment o" their )redits
> in a partnership, the partners are supposed to trust and have
)on"iden)e in all the partners
PARTNERSHIP &' ESTPPE$
> I , persons not partners represent themselves as partners to
stran#ers, a partnership by estoppel results
> /9EN , persons, who are partners, in )onnivan)e with a "riend who
is not a partner in"orm a stran#er that said "riend is their partner, a partnership
by estoppel also result to the end that the stran#er should not be pre.udi)ed
RU$E) $AW!U$ &,ECT or PURPSE
> a partnership must have (A/U( OBBECT or $UR$O%E, and must
be established "or the )ommon bene"it or interest o" the partners
> it must be within the )ommen)e o" man, possible and not )ontrary to
law, morals, #ood )ustoms, publi) order or publi) poli)y
> I a partnership has %E1ERA( $UR$O%E%, one o" whi)h is
UN(A/U(, the partnership )an still validly e6ist so lon# as the ille#al purpose
)an be separated "rom the le#al purposes
> NO need "or BU!ICIA( !ECREE to dissolve an unlaw"ul partnership
> 1OI! AB INITIO
> one o" the )auses "or the dissolution o" a partnership is 4any event
which makes it unlawful for the business of the partnership to be carried on
RU$E:
> when an UN(A/U( $ARTNER%9I$ is dissolved by a .udi)ial de)ree, the
$ROIT% shall be CONI%CATE! in A1OR o" the %TATE
+0 R0
> a partnership may be )onstituted in any "orm
E/CEPTIN: $UB(IC IN%TRUMENT
*+ IMMO1AB(E $RO$ERT' is )ontributed
,+ REA( RI29T% are )ontributed
C need "or IN1ENTOR' o" IMMO1AB(E%
CC "or EECTI1IT' o" the partnership )ontra)t inso"ar as inno)ent
third persons are )on)erned the same must be RE2I%TERE! i"
REA( $RO$ERTIE% are IN1O(1E!
> a partnership )ontra)t is NOT CON1ERE! by the %TATUTE o"
RAU!%
2
> an A2REEMENT TO ORM a partnership does not itsel" )reate a
partnership
> when there are )onditions to be "ul"illed or when a )ertain period is to
lapse, the partnership is not )reated till a"ter the "ul"illment o" the )onditions or
the arrival o" the term and this is true even i" one o" the parties has already
advan)ed his a#reed share o" the )apital
RU$E) i" CA$ITA( is $-,>>> or more
RE*UIRE-)
*+ $UB(IC IN%TRUMENT
,+ RECOR!E! D %+E+C+
C > AI(URE TO COM$(' D shall not e""e)t the liability o" the partnership and
its members to third persons
CC > I REA( $RO$ERTIE% have been )ontributed, RE2AR!(E%% o" the
1A(UE, a publi) instrument is needed "or the attainment o" le#al personality
RE*UIRE(ENTS WHERE I((VA&$E 1 REA$ PRPERT' IS
CNTRI&UTE-
*+ $UB(IC IN%TRUMENT
,+ IN1ENTOR' D si#ned and atta)hed to the $+I+
C > applies re#ardless o" the value o" the real property
C > applies even i" only real ri#hts over the real property are
)ontributed
C > applies i" aside "rom real property, )ash or personal property is
)ontributed
> TRAN%ER o" land to the partnership must be duly 4re)orded5 in the RO! to
ma=e the trans"er e""e)tive inso"ar as third persons are )on)erned
RU$E)
> any immovable property or an interest therein maybe a)<uired in the
partnership name
> title so a)<uired )an be )onveyed only in the partnership name
>I the partnership has A(IEN%, it CANNOT O/N (AN!%, whether publi) or
private or whether a#ri)ultural or )ommer)ial E&CE$T throu#h 9ERE!ITAR'
%UCCE%%ION
$I(ITATINS N AC*UISITIN
*+ A2RICU(TURA( (AN!% D *>,0 9ECTARE%
,+ lease o" publi) lands E2RAFIN2; D ,>>> 9A%+
RU$ES I! A) articles are kept secret among the members
B) any one of the members may contract in his own name
with third persons
*+ NOT a partnership D NOT a (E2A( $ER%ON
,+ it may be sued by third person under the )ommon name it uses
-+ it )annot sue as su)h and )annot be ordinarily be a party to a )ivil
a)tion
0+ inso"ar as inno)ent third parties are )on)erned
> the parities )an be )onsidered as members o" a partnership
3+ as between themselves or inso"ar as third persons are pre.udi)ed
> only the rules o" )o8ownership must apply
E!!ECT ! CERTAIN TRANSACTINS
*+ )ontra)ts entered into by a 4partner5 in his own name may be sued
upon still by him in his individual )apa)ity, not withstandin# the
absen)e o" a partnership
,+ when two or more individuals, havin# a )ommon interests in a business
brin# a )ourt a)tion, it should be presumed that they prose)ute the
same in their individual )apa)ity as )o8owners and not in behal" o" a
partnership whi)h does not e6ist in le#al )ontemplation
C$ASSI!ICATIN ! PARTNERSHIPS
A; ACCOR!"# $O %A""&R O' CR&A$!O"
*+ ORA((' )onstituted
,+ )onstituted in a $RI1ATE IN%TRUMENT
-+ )onstituted in a $UB(IC IN%TRUMENT
0+ RE2I%TERE! D %+E+C+
B; ACCOR!"# $O OB(&C$
*+ UNI1ER%A(
,+ $ARTICU(AR
C; ACCOR!"# $O )!AB!)!$*
*+ (IMITE! $ARTNER%9I$
,+ 2ENERA( $ARTNER%9I$
!; ACCOR!"# $O )&#A)!$*
*+ (A/U( OR (E2A(
,+ UN(A/U( OR I((E2A(
E; ACCOR!"# $O +RA$!O"
*+ "or a %$ECIIC $EIO! or I&E! $ERIO!
,+ $ARTNER%9I$ AT /I((
; ACCOR!"# $O R&,R&-&"$A$!O" $O O$.&R-
*+ OR!INAR' $ARTNER%9I$
,+ $ARTNER%9I$ B' ETO$$E(
2; A- $O )&#A)!$* O' &/!-$&"C&
*+ !E BURE $ARTNER%9I$
,+ !E ACTO $ARTNER%9I$
3
9) A- $O ,+B)!C!$*
*+ %ECRET $ARTNER%9I$
,+ NOTORIOU% G O$EN $ARTNER%9I$
I) A- $O ,+R,-&
*+ COMMERCIA( G TRA!IN2
,+ $ROE%%IONA( G NON8TRA!IN2
+ENERA$ PARTNERSHIP
> one where all the partners are #eneral partners
> they are (IAB(E even with respe)t to their individual properties, a"ter the
assets o" the partnership has been e6hausted
$I(ITE- PATNERSHIP
> one where at least one partner is a #eneral partner and the others are limited
partners
> one whose liability is limited only up to the e6tent o" his )ontribution
> a partnership where all the partners are limited partners cannot e0ist as a
limited partnership
> REU%E! RE2I%TRATION
> I it )ontinuous as su)h, it will be )onsidered as a #eneral partnership and
all the partners will be #eneral partners
2IN-S ! UNIVERSA$ PARTNERSHIP
*+ $ARTNER%9I$ O A(( $RE%ENT $RO$ERT'
,+ $ARTNER%9I$ O A(( $ROIT%
3UNIVERSA$ PARTNERSHIP ! A$$ PRESENT PRPERT'
> CONTRIBUTION o"
*+ A(( the properties a)tually belon#in# to the partners
,+ the $ROIT% a)<uired with said property
> BECOME% COMMON $RO$ERT'
> E&CE$T all UTURE $RO$ERT'
> RUIT% o" UTURE $RO$ERT' D INC(U!E! I %TI$U(ATE!
U$ON
3UNIVERSA$ PARTNERSHIP ! PR!ITS
> )omprises all that the partners may a)<uire by the IN!U%TR' or /ORH o"
the partners be)ome )ommon property re#ardless o" within said pro"its were
obtained throu#h the usu"ru)t )ontributed
> &/C&,$ $RIFE% and 2IT%
RU$E:
> arti)les o" universal partnership, entered without spe)i"i)ation o" its nature,
only )onstitute a universal partnership o" $ROIT%
RU$E)
> persons who are prohibited "rom #ivin# ea)h other any donation or advanta#e
)annot enter into universal partnership
1.O:
*+ 9U%BAN! and /IE
,+ those #uilty o" A!U(TER' or CONCUBINA2E
-+ those #uilty o" the same )riminal o""ense i" the partnership was entered
into in )onsideration o" the same
> while spouses )annot enter into a universal partnership, they )an enter into a
parti)ular partnership or be members thereo"
> a universal partnership is virtually a donation to ea)h other o" the partners
properties or at least their usu"ru)t
PARTICU$AR PARTNERSHIP
> a parti)ular partnership has "or its OBBECT:
*+ !ETERNMINATE T9IN2% D their use or "ruits
,+ %$ECIIC UN!ERTAHIN2
-+ E&ERCI%E o" a $ROE%%ION or 1OCATION
&$I+ATINS ! THE PARTNERS
RU$E:
> a $ARTNER%9I$ BE2IN% "rom the moment o" the E&ECUTION o" the
CONTRACT
C > even i" )ontributions have not yet been made the "irm already e6ists, "or
partnership is a )onsensual )ontra)t
-URATIN ! PARTNERSHIP
> UN(IMITE!
C > MA' BE A2REE! U$ON
*+ E&$RE%%(' D de"inite period
,+ IM$(IE!(' D upon a)hievement o" its purpose
PARTNERSHIP AT WI$$
> a partnership wherein its )ontinued e6isten)e really depends upon the will o"
the partners or even on the will o" any o" them
2 3!"-4
*+ when there is no term, e6press or implied
4
,+ when it is )ontinued by the habitual mana#ers althou#h the period has
ended or the purpose has been a))omplished
4 I(PRTANT -UTIES ! EVER' PARTNER "C# -5!# W%
*+ duty to CONTRIBUTE what had been promised
,+ duty to !E(I1ER the RUIT% o" what should have been delivered
-+ duty to /ARRANT
RIU$ES N THE -UT' T CNTRI&UTE
*+ the )ontribution must be made at the time the partnership is entered
into UN(E%% a di""erent period is stipulated
,+ no demand is needed to put the partner in de"ault
-+ the partner must e6er)ise due dili#en)e in preservin# the property to be
)ontributed be"ore he a)tually )ontributes the same
0+ a partner who promises to )ontribute to the partnership be)omes a
promissory debtor o" the partnership
RU$ES N THE -UT' T -E$IVER THE !RUITS
*+ I property has been promised, the "ruits thereo" should also be #iven
,+ the "ruits re"erred to are those arisin# "rom the time they should have
been delivered, without a need o" any demand
-+ I the partner is in BA! AIT9, he is liable not only "or the "ruits
a)tually produ)ed, BUT also "or those that )ould have been produ)ed
0+ I MONE' 9A% BEEN $ROMI%E!, INTERE%T and !AMA2E% "rom
the time he should have )omplied with his obli#ation should be #iven
3+ NO !EMAN! is needed to put the partner in de"ault
7+ it is !E(I1ER', a)tual or )onstru)tive that TRAN%ER% O/NER%9I$
RU$ES N THE -UT' T WARRANT
*+ the warranty in )ase o" evi)tion re"ers to spe)i"i) and determinate
thin#s already )ontributed
,+ there is E1ICTION whenever by a "inal .ud#ment based on a ri#ht prior
to the sale or an a)t imputable to the partner, the partnership is
deprived o" the whole or a part o" the thin# pur)hased
RU$E WHEN CNTRI&UTIN CNSISTS ! +-S
> A$$RAI%A( o" 1A(UE is needed to determine how mu)h was
)ontributed
.O1 A,,RA!-A) %A&
*+ as $RE%CRIBE! in the CONTRACT
,+ in de"ault, by E&$ERT% )hosen by the partners, and at CURRENT
$RICE%
C> ne)essity o" the IN1ENTOR' D A$$RAI%A(
RU$E on RIS2 of $SS
> a"ter #oods have been )ontributed, the partnership bears the ris= o"
subse<uent )han#es in the value
RU$E)
> a partner who has underta=en to )ontribute a sum o" money and "ails to
do so be)omes a debtor "or the interest and dama#es "rom the time he
should have )omplied with his obli#ation
CAPITA$IST PARTNER
> one who URNI%9E% CA$ITA(
C> NOT E&EM$TE! "rom (O%%E%
C> he )an en#a#e in other business $RO1I!E! there is no )ompetition
between the partnership and his business
C> share in the pro"its a))ordin# to a#reements
IN-USTRIA$ PARTNER
> one who URNI%9E% IN!U%TR' or (ABOR
C> he is E&EM$TE! "rom (O%%E% as between the partner BUT liable to
stran#ers without pre.udi)e to reimbursement "rom the )apitalist partner
C> he CANNOT en#a#e in any other BU%INE%% /IT9OUT the e6press
CON%ENT o" the other partners, OT9ER/I%E
*+ he )an be E&C(U!E! "rom the "irm
8 plus dama#es OR
,+ the BENEIT% he obtains "rom the other businesses CAN BE
A1AI(E! o" by the other partners
- plus dama#es
> whether or not there is COM$ETITION
C> in )omputin# always loo= "or 88888> NET $ROIT%
88888> NET (O%%E%
CAPITA$IST 6 IN-USTRIA$IST PARTNER
> one who )ontributes BOT9 CA$ITA( and IN!U%TR'
+ENERA$ PARTNER
> one who is liable 4beyond5 the e6tent o" his )ontribution
$I(ITE- PARTNER
> one who is liable 4only5 to the e6tent o" his )ontribution
5
CCC> an industrial partner )an only be a #eneral partner, never a limited partner
(ANA+IN+ PARTNER
> one who mana#es a)tively the "irms a""airs
SI$ENT PARTNER
> one who does not parti)ipate in the mana#ement, thou#h he shares in the
$ROIT% or (O%%E%
$I*UI-ATIN+ PARTNER
> one who winds up or li<uidates the a""airs o" the "irm a"ter it has been
dissolved
STENSI&$E PARTNER
> one whose )onne)tion with the "irm is publi) and open
SECRET PARTNER
> one whose )onne)tion with the "irm is )on)ealed or =ept se)ret
-R(ANT PARTNER
> one who is both a se)ret Ehidden; and silent Enot mana#in#; partner
N(INA$ PARTNER
> one who is not really a partner BUT who may be)ome liable as su)h inso"ar as
third persons are )on)erned
RU$E)
> partners shall CONTRIBUTE EIUA( %9ARE% to the )apital o" the
partnership
C> it is permissible to )ontribute UNEIUA( %9ARE% I there is a stipulation
to this e""e)t
C> in the absen)e o" proo", the shares are presumed to be e<ual
CN-ITINS before a capitalist partner is obliged to sell his shares /
interest to the other partners "I$# RC# NA%
*+ i" there is IMMINENT (O%% o" the BU%INE%% o" the partnership
,+ he REU%E% to CONTRIBUTE an A!!ITIONA( %9ARE to the
CA$ITA(
-+ there is no a#reement to the )ontrary
C> IN!U%TRIA( $ARTNER I% E&EM$TE!
3RU$E if (ANA+IN+ PARTNER C$$ECTS A CRE-IT
RE*UISITES)
1. e6isten)e o" at least , debts 8888> $ARTNER%9I$
8888> $ARTNER
,+ both sums are demandable
-+ the )olle)tin# partner is the mana#in# partner
C> the sum thus )olle)ted shall be applied to the two )redits in
proportion to their amounts
RU$E)
C> where a partner receives his share in the partnership credit
CN-ITINS:
*+ a partner has re)eived his share in the partnership )redit D in whole or
in part
,+ the other partners have not )olle)ted their part o" the )redit
-+ the debtor subse<uently be)omes IN%O(1ENT
RU$E: 8 the partner shall be obli#ed to brin# to the partnership
)apital what he re)eived even thou#h he may have #iven re)eipt "or
his share only
C> !OE% NOT A$$(' when debt was )olle)ted a"ter dissolution o" the
partnership
RU$E:
C> every partner is responsible to the partnership "or dama#es su""ered by it
throu#h his "ault
C> he )annot )ompensate them with the pro"its and bene"its, whi)h he may
have earned "or the partnership by his industry

C> the )ourts may e<uitably lessen his responsibility
7RES PERIT -(IN8
3RU$ES N WH &EARS THE RIS2 ! $SS
*+ i" %$ECIIC and !ETERMINATE T9IN2% NOT UN2IB(E whose
U%URUCT is en.oyed by a "irm
6
> the $ARTNER who O/N% it bears the loss "or ownership was never
trans"erred to the "irm
,+ UN2IB(E or !ETERIORAB(E
> IRM bears the loss "or it is evident ownership was trans"erred
-+ T9IN2% CONTRIBUTE! to be %O(!
>IRM bears the loss "or evidently the "irm was intended to be the
owner
0+ CONTRIBUTE! under A$$RAI%A(
> IRM bears the loss be)ause this has the e""e)t o" an implied sale
RU$E on RESPNSI&I$IT' of the !IR(
*+ to REUN! amounts disbursed on behal" o" the "irm plus le#al interest
"rom the time e6penses where made
,+ to AN%/ER to ea)h partner "or OB(I2ATION% he may have entered
into in #ood "aith in the interest o" the partnership, as well as the ris=s
in )onse<uen)e o" its mana#ement
C> REUN! must be made even in )ase o" "ailure o" the enterprise entered into,
provided the partner is not at "ault
C> AMOUNT !I%BUR%E! D does not re"er to the ORI2INA( CA$ITA(
3HW PR!ITS ARE -ISTRI&UTE-
*+ a))ordin# to A2REEMENT
,+ I NONE, a))ordin# to amount o" CONTRIBUTION
3HW $SSES 9re -ISTRI&UTE-
*+ a))ordin# to A2REEMENT as to losses
,+ I NONE, a))ordin# to a#reement as to $ROIT%
-+ I NONE, a))ordin# to amount o" CONTRIBUTION
C> an IN!U%TRIA( $ARTNER shall re)eive a BU%T and EIUITAB(E share in
the pro"its
3RU$E on IN-USTRIA$ PARTNERS: $IA&I$ITIES
8 may be held liable by third persons BUT he may re)over what he has paid
"rom the other )apitalist partners
CRU$E on -ESI+NATIN ;y THIR- PERSN of SHARES in PR!ITS 9n<
$SSES
C> third person is "O$ a ,AR$"&R 88> appointed to only distribute shares
C> the desi#nation o" shares by third persons may be IM$U2NE!, I it is
MANIE%T(' INEIUITAB(E
C> the desi#nation o" shares by third persons CANNOT be IM$U2NE! E1EN I
MANIE%T(' INEIUITAB(E I:
*+ the a##rieved partner has already BE2UN to E&ECUTE the de)ision
,+ the a##rieved partner has not IM$U2NE! the distribution within -
months he had =nowled#e
3RU$E I! APPINT(ENT THER THAN in the ARTIC$ES of PARTNERSHIP
*+ power to a)t may be RE1OHE! at AN' TIME with or without .ust
)ause
> REMO1A( should be done by the )ontrollin# interest
,+ E&TENT o" $O/ER
> as lon# as he remains mana#er, he )an per"orm all a)ts o" administration
BUT D i" others oppose and he persists, he )an be removed
3RU$E WHEN there 9re 2 or (RE (ANA+ERS
CN-ITINS)
*+ , or more partners are mana#ers
,+ there is no spe)i"i)ation o" respe)tive duties
-+ there is no stipulation re<uirin# UNANIMIT'
SPECI!IC RU$ES:
*+ ea)h may separately e6e)ute all a)ts o" administration
> UN(IMITE! $O/ER to A!MINI%TER
,+ I any o" the mana#ers O$$O%E
> MABORIT' RU(E
> IN CA%E O A TIE
8 persons ownin# )ontrollin# interest prevail provided they are also
mana#ers
C> ri#ht to oppose is not #iven to NON8MANA2ER%
C> O$$O%ITION should be done BEORE the a)ts produ)e le#al e""e)ts inso"ar
as third persons are )on)erned
RU$E WHEN UNANI(IT' is RE*UIRE-
*+ the CONCURRENCE o" all shall be ne)essary "or the validity o" the
a)ts
7
,+ the AB%ENCE or !I%ABI(IT' o" AN'ONE o" them CANNOT BE
A((E2E! UN(E%% there is imminent dan#er o" #rave or irreparable
in.ury to the partnership
RU$E N -UT' of THIR- PERSNS
> third persons are not re<uired to in<uire as to whether or not a partner with
whom he transa)ts has the )onsent o" all the mana#ers
*RULES to be observed when the manner of management has not been
agreed upon:
*+ all the partners are )onsidered A2ENT%
> whatever any one o" them may do alone shall not bind the partnership
,+ I the a)ts o" one are opposed by the rest, the ma.ority shall prevail
-+ when a partner a)ts in his O/N NAME, he does not bind the
partnership
0+ authority to bind the "irm does not apply i" somebody else has been
#iven authority to mana#e in the arti)les o" or#aniAation or throu#h
some other means
3+ A(TERATION% REIUIRE UNANIMIT'
8 IMMO1AB(E partnership property
8 BUT i" the re"usal to )onsent by the others is pre.udi)ial to the interest
o" the partnership
8 COURT% INTER1ENTION may be sou#ht
RU$ES on ASSCIATE of PARTNER
*+ every partner may asso)iate another person with him in his share
,+ "or a partner to have an asso)iate in his share
> )onsent o" all the other partners is NOT REIUIRE!
-+ "or the asso)iate to be)ome a partner
> A(( MU%T CON%ENT
RU$ES on PARTNERSHIP &2S
*+ =ept at the prin)ipal pla)e o" business o" the partnership
,+ at any reasonable hour, every partner shall have a))ess to and may
inspe)t and )opy any o" them
-UT' of PARTNERS T +IVE IN!R(ATIN
> #ood "aith not only re<uires that a partner should not ma=e any A(%E
CONCEA(MENT, BUT he should abstain "rom all )on)ealment
-UT' to ACCUNT "&# P# U5PJ
> every partner must account to the partnership
*+ any bene"it a)<uired
,+ any pro"its re)eived
-+ any use o" partnership property
RI+HT T -E(AN- 9 !R(A$ ACCUNT
> any partner shall have the right to a formal account as to partnership affairs
*+ i" wron#"ully e6)luded "rom partnership BU%INE%%
,+ i" wron#"ully e6)luded "rom partnership $RO$ERT' by his )o8partners
-+ i" the ri#ht e6ists under the terms o" a#reement
0+ i" the other partner re)eives other bene"its, pro"its or uses partnership
property
3+ whenever other )ir)umstan)es render it .ust and reasonable
C> the ri#ht to demand an a))ountin# e6ists as lon# as the partnership e6ists
C> pres)ription be#ins to run only upon the dissolution o" the partnership when
the "inal a))ountin# is done
PRPERT' RI+HTS ! PARTNERS "P# I# (%
*+ ri#hts in spe)i"i) $ARTNER%9I$ $RO$ERTIE%
,+ INTERE%T% in the $ARTNER%9I$
-+ ri#ht to $ARTICI$ATE in the MANA2EMENT
RU$E:
C> a partner is CO8O/NER with his partners o" %$ECIIC $ARTNER%9I$
$RO$ERT'
3> RI+HTS of 9 PARTNER in SPECI!IC PARTNERSHIP PRPERT'
*+ he has e<ual ri#hts with his partners to $O%%E%% the property BUT
only "or $ARTNER%9I$ $UR$O%E%
> he may possess su)h property "or other purposes $RO1I!E! the
other partners e6pressly or impliedly #ives their CON%ENT
,+ he CANNOT A%%I2N his ri#ht to the property E&CE$T i" all the other
partners assi#n their ri#hts in the same property
-+ his ri#ht to the property is NOT %UBBECT to ATTAC9MENT or
E&ECUTION, E&CE$T on a )laim a#ainst partnership
0+ his ri#ht to the property is NOT %UBBECT to (E2A( %U$$ORT
8
C> i" there is $ARTNER%9I$ !EBT, the spe)i"i) property )an be atta)hed
RU$E)
C> a $ARTNER% INTERE%T in the partnership is his %9ARE o" the $ROIT%
and %UR$(U%
!$ CA" B&: "A# A# $S%
*+ A%%I2NE!
,+ ATTAC9E!
-+ be sub.e)t to (E2A( %U$$ORT
3E!!ECTS of CNVE'ANCE ;y PARTNER of his INTEREST in the
PARTNERSHIP
*+ I he )onveys his /9O(E INTERE%T
A; partnership may still remain
B; partnership may be dissolved
C> mere )onveyan)e does not dissolve the partnership
,+ the A%%I2NEE does not ne)essarily be)ome a partner
> the A%%I2NOR is still the partner, with a ri#ht to demand a))ountin#
and settlement
-+ the A%%I2NEE CANNOT inter"ere in the MANA2EMENT or
A!MINI%TRATION o" the "irm
> the A--!#"&& CA""O$ also &%A" "I# A# I%
A; INORMATION
B; ACCOUNTIN2
C; IN%$ECTION o" partnership boo=s
CCC> while a partners INTERE%T in the "irm may be C9AR2E! or (E1IE! upon,
his INTERE%T in a spe)i"i) "irm $RO$ERT' CANNOT be atta)hed+
RI+HTS of the ASSI+NEE
*+ to #et whatever pro"its the assi#nor8partner would have obtained
,+ to avail himsel" o" the usual remedies in )ase o" "raud in the
mana#ement
-+ to as= "or ANNU(MENT o" the )ontra)t o" assi#nment I:
A; he was indu)ed to enter into it throu#h any o" the vi)es o" )onsent
OR
B; he himsel" was in)apa)itated to #ive )onsent
0+ to demand an a))ountin# BUT only i" the partnership is dissolved
PRE!ERENTIA$ RI+HTS of PARTNERSHIP CRE-ITRS
C> partnership )reditors are entitled to $RIORIT' over partnership assets,
in)ludin# the partners interest in the pro"its
CC> %E$ARATE or IN!I1I!UA( )reditors have $REERENCE in separate or
individual properties
C> when the C9AR2IN2 OR!ER is applied "or and #ranted, the )ourt may
appoint a re)eiver o" the partners share in the pro"its
> the re)eiver appointed is entitled to any relie" ne)essary to )onserve the
partnership assets "or partnership purposes
C> interest )har#ed may be redeemed at any time be"ore "ore)losure
C> A'$&R 'OR&C)O-+R& the interest may still be redeemed by 5without
causing dissolution)
*+ with separate property, by any one or more o" the partners OR
,+ with partnership property, by any one or more partners with the )onsent o" all
the partners whose interests are not so )har#ed or sold
C> )onsent o" the delin<uent partner not needed
RU$E)
> every partnership shall operate under a IRM NAME
C> the "irm name may or may not in)lude the name o" one or more o" the
partners
CC> %TRAN2ER% who in)lude their names in the "irm are liable as partners
be)ause o" E%TO$$E(, BUT do NOT have the RI29T% o" partners
CC> I a (IMITE! $ARTNER in)ludes his name in the "irm name, he has
obli#ations BUT not the ri#hts o" a #eneral partner
RU$E on $IA&I$IT' for CNTRACTUA$ &$I+ATINS
C> all partners, in)ludin# industrial ones, shall be liable pro8rata with all their
property and a"ter all the partnership assets have been e6hausted
C> NOT A$$(ICAB(E "or TORT% or CRIME% 88888> (O%%
88888> INBUR'
88888> MI%A$$RO$RIATION
CC> while an IN!U%TRIA( $ARTNER is e6empted by law "rom (O%%E% as
between the partners, he is NOT E&EM$TE! "rom liability inso"ar as third
persons are )on)erned
> he may re)over what he has paid "rom the CA$ITA(I%T partners
9
C> under the law the liability o" the partners is subsidiary and .oint NOT prin)ipal
and solidary
3RU$E on $IA&I$IT' of 9 PARTNER =ho h9s WITH-RAWN
*+ a partner who withdraws is not liable "or liabilities )ontra)ted a"ter he
has withdrawn
,+ i" his interest has not yet been paid him
> his ri#ht to the same is that o" a mere )reditor
CC> a stipulation e6emptin# liability to third persons is 1OI!
C> any partner may enter into a separate obli#ation to per"orm a partnership
)ontra)t
RU$E)
C> every partner is an 4a#ent5 o" the partnership "or the purpose o" its business
+0R05 the a)t o" every partner "or apparently )arryin# on in the U%UA( /A' the
business o" the partnership o" whi)h he is member binds the partnership
E/CEPT)
*+ i" he has NO AUT9ORIT' and
,+ the person with whom he was dealin# with 9A% HNO/(E!2E o" the "a)t that
he has no su)h authority
RU$E)
> an a)t o" a partner whi)h is not apparently "or the )arryin# on o" business o"
the partnership in the usual way does not bind the partnership UN(E%%
authoriAed by the other partners
C> a partnership is a CONTARCT o" MUTUA( A2ENC', ea)h partner a)tin# as
a prin)ipal on his own behal" and as an a#ent "or his )o8partners or the "irm
RE*UISITES on WHEN >9n 9 p9rtner &IN- the p9rtnership
*+ e6pressly or impliedly AUT9ORIFE!
,+ when he a)ts in BE9A( AN! IN T9E NAME o" the partnership
INSTANCES of I(P$IE- AUTHRI.ATIN
*+ when the other partners !O NOT OBBECT, althou#h they have
=nowled#e o" the a)t
,+ when the a)t is "or 4apparently )arryin# on in the usual way the
business o" the partnership
C> this is bindin# on the "irm even i" the partner was not really
authoriAed $RO1I!E! that the third party is in 2OO! AIT9
RU$E on UNUSUA$ ACTS
> one or more but less than all the partners .A6& "O A+$.OR!$* $O:
"AP# -+# AI# C,# EC# SA# RC%
*+ A%%I2N the $ARTNER% $RO$ERT'
,+ !I%$O%E o" 2OO!/I((
-+ do any other a)t whi)h would ma=e it impossible to )arry on the
ordinary business o" the partnership
0+ CONE%% a .ud#ment
3+ ENTER into a COM$ROMI%E
7+ %UBMIT to ARBITRATION
K+ RENOUNCE to C(AIM
3RU$ES on CNVE'ANCE of REA$ PRPERT'
78 where title to real property is in the partnership name
> any partner may )onvey title to su)h property by a )onveyan)e
e6e)uted in the partnership name
9> ,AR$"&R-.!, %A* R&CO6&R -+C. ,RO,&R$*
&/C&,$:
*+ i" the "irm is en#a#ed in the buyin# and sellin# o" land EU%UA(
BU%INE%%;
,+ i" property was )onveyed to a 9O(!ER "or 1A(UE and who
had NO HNO/(E!2E o" the partners (ACH o" AUT9ORIT'
,+ where title is in the name of the partnership and partner sold in his O1"
"A%&

> I !ONE IN U%UA( BU%INE%%
> buyer does not be)ome owner BUT ACIUIRE% EIUITAB(E
INTERE%T
> I NOT !ONE IN U%UA( BU%INE%%
> buyer does not be)ome owner and is not even entitled to e<uitable
interest
-8 where title is in the name of one or more B+$ not all the partners

> partners in whose name the title is named MA' CON1E' BUT the
$ARTNER%9I$ may RECO1ER su)h property I done not in its U%UA(
BU%INE%% E&CE$T i" he had trans"erred it to a 9older "or value
0+ when property held in trust by partner

> a sale only )onveys EIUITAB(E INTERE%T
10
:8 when title is in the name of all partners
> )onveyan)e e6e)uted by all partners possess all ri#hts o" su)h property
E*UITA&$E INTEREST
8BENEICIA( INTERE%T, BUT NOT NAHE! O/NER%9I$
3RU$E on A-(ISSIN or REPRESENTATIN (A-E ;y 9 PARTNER
> an admission by a partner is an admission against the partnersip;under the
following conditions:
*+ the admissions must )on)ern partnership a""airs
,+ must be within the s)ope o" his authority
RESTRICTINS N THE RU$E)
*+ admissions made BEORE !I%%O(UTION are bindin# only when the
partner has authority to a)t on the parti)ular matter
,+ admissions made ATER !I%%O(UTION are bindin# only i" the
admissions were ne)essary to /IN! U$ the business
-+ an admission made by a "ormer partner made a"ter he has RETIRE!
"rom the partnership is not eviden)e a#ainst the "irm
E!!ECT of NTICE to 9 PARTNER
noti)e to a partner is noti)e to the partnership
Cnoti)e to a partner, #iven while already a partner is a noti)e to the
partnership $RO1I!E! it relates to partnership a""airs
E!!ECT of 2NW$E-+E A$THU+H N NTICE WAS +IVEN)
C knowledge of the partner is also knowledge of the firm ,RO6!& $.A$:
*+ the =nowled#e was a)<uired by a partner who is a)tin# in the
parti)ular matter involvedLand
,+ the partner havin# =nowled#e, had reason to believe that the "a)t
related to a matter whi)h had some possibility o" bein# the sub.e)t o"
the partnership business AN! he was so situated that he )ould
)ommuni)ate it to the partner a)tin# on that parti)ular matter
C %ER1ICE o" $(EA!IN2% on the partner in a law "irm is also servi)e on the
whole "irm and the other partners
$SS R IN,UR'
RU$E on WRN+!U$ ACT or (ISSIN of 9 PARTNER (S$I-AR'
$IA&I$IT')
C the partnership is solidarily liable with the partner i" the wron#"ul a)t or
omission
*+ the partner is a)tin# in the ordinary )ourse o" business o" the
partnership OR
,+ with authority o" his )o8partners
C innocent partners have ri#ht to re)over "rom the #uilty partner
* When the firm and other partners not liable:
*+ i" the wron#"ul a)t or omission was NOT !ONE
A; within s)ope o" partnership business
B; with authority o" the other )o8partners
,+ i" the a)t or omission is NOT /RON2U(
-+ i" the a)t or omission, althou#h wron#"ul did not ma=e the partner
)on)ern liable
8 !AMNUN AB%IUE IN%URIA
0+ i" the wron#"ul a)t or omission was )ommitted a"ter the "irm had been
dissolved and the same was not in )onne)tion with the pro)ess o"
windin# up+
$IA&I$IT' of PARTNERSHIP for (ISAPPRPRIATIN 6 (S$I-AR'
$IA&I$IT')
*+ RECEI1IN2 $ART' MI%A$$RO$RIATE%
,+ AN' $ARTNER MI%A$$$RO$RIATE%
- money or property in )ustody o" partnership
PARTNER &' ESTPPE$
a person who represents himsel" or )onsents to another G others representin#
him to anyone as a partner either in an e6istin# partnership or in one that is
"i)titious or apparent
PARTNERSHIP &' ESTPPE$
when all the members o" the e6istin# partnership )onsent to su)h
representation o" a partner by estoppel
RU$ES AN- SITUATINS)
78 if a third person is misled and acts because of such misrepresentation
the de)eiver is a partner by estoppel
28 if the partnership consented to such misrepresentation
partnership liability results
11
<8 if the firm had not consented
no partnership liability results BUT the de)eiver is )onsidered still as
a 4partner by estoppel5 with all the obli#ations but not the ri#hts o" a
partner
=8 when a person represents himself as a partner of a "O">&/!-$&"$
partnership
NO partnership liability results BUT the de)eiver and all persons
who may have aided him in the misrepresentation are still liable
liability would be BOINT or $RO8RATA
C when althou#h there is misrepresentation, i" the third party is not de)eived,
the do)trine o" estoppel does not apply
&UR-EN of PR!
the )reditor or whoever alle#es the e6isten)e o" a partner or partnership by
estoppel has the burden o" provin# the e6isten)e o" the MI%RE$RE%ENTATION
AN! INNOCENT RE(IANCE on it
ENTR' ! A NEW PARTNER into 9n E/ISTIN+ PARTNERSHIP
RU$E)
C he shall be liable "or all the obli#ations o" the partnership BUT his liability will
e6tend only to his share in the partnership property
C his own individual property shall be e6)luded
C same liability o" a limited partner
PRE!ERENCE of PARTNERSHIP CRE-ITRS
RU$E)
C the )reditors o" the partnership shall be pre"erred to those o" su)h partner as
re#ards the partnership property
without prejudice to this right
the private )reditors o" ea)h partner may as= the atta)hment and publi) sale
o" the share o" the latter in the partnership assets
CCI a partner sells his share to a third party, BUT the "irm itsel" still remains
%O(1ENT, partnership )reditors CANNOT assail the validity o" the sale by
alle#in# that it is made in "raud o" them, sin)e they have not really been
pre.udi)ed
-ISS$UTIN AN- WIN-IN+ UP
the )han#e in the relation o" the partners )aused by any partner )ausin# to
be asso)iated in the )arryin# on o" the business
it is the point o" time the partners )ease to )arry on the business to#ether
WIN-IN+ UP
the pro)ess settlin# business a""airs a"ter dissolution
TER(INATIN
the point in time a"ter all the partnership a""airs have been wound up
RU$E N -ISS$UTIN
C on dissolution the partnership is not terminated BUT )ontinues until the
windin# up o" partnership a""airs is )ompleted
3E!!ECT on &$I+ATINS
*+ .ust be)ause a partnership is dissolved this does not ne)essarily mean
that a partner )an evade previous obli#ations entered into by the
partnership
,+ dissolution saves the "ormer partners "rom new obli#ations to whi)h
they have not e6pressly or impliedly )onsented UN(E%% the same be
essential "or windin# up
3CAUSES ! -ISS$UTIN
*+ without 1IO(ATION o" the A2REEMENT between the partners
A; TERMINATION o" the !EINITE TERM or $ARTICU(AR
UN!ERTAHIN2
B; E&$RE%% /I(( or AN' $ART' in 2OO! AIT9
E$ARTNER%9I$ by /I((;
C; E&$RE%% /I(( o" A(( o" the $ARTNER% e6)ept those who
have Einterests; A%%I2NE! or whose interests have been
Eseparate debts; C9AR2E!
!; E&$U(%ION in #ood "aith o" a member
,+ in CONTRA1ENTION o" the a#reement between the partners
by the E&$RE%% /I(( o" AN' $ARTNER at any time
-+ UN(A/U(NE%% o" the BU%INE%%
0+ (O%% D thin# promised
A; %$ECIIC T9IN2 D $ERI%9E% be"ore delivery
B; U%URUCT is lost E&CE$T i" ownership had been
trans"erred to the partnership
3+ !EAT9 o" AN' partner
7+ IN%O(1ENC' o" any partner or o" the partnership
K+ CI1I( INTER!ICTION o" any partner
M+ !ECREE o" COURT
CCC i" the )ause is not .usti"ied or no )ause was #iven, the withdrawin# partner
is liable "or !AMA2E% BUT in no )ase )an he be )ompelled to remain in the
"irm
12
C the insolven)y need not be .udi)ially de)lared, it is enou#h that the assets be
less than the liabilities
-ISS$UTIN ;y ,U-ICIA$ -ECREE WHEN A$WE-)
(I# U(# I5PP# C# P&# &$# C)
*+ partner de)lared 4insane5 in any .udi)ial pro)eedin# or is shown to be
o" UN%OUN! MIN!
,+ partner be)omes INCA$AB(E o" per"ormin# his part o" the partnership
)ontra)t
-+ partner has been #uilty o" su)h CON!UCT as tends to a""e)t
pre.udi)ially the business
0+ partners $ER%I%TENT BREAC9 o" a#reement
3+ the business o" the partnership )an only be denied on at a loss
7+ other )ir)umstan)es whi)h render dissolution e<uitable
IN CASE ! PURCHASER of PARTNERS INTEREST
*+ a"ter the termination o" the spe)i"ied term or parti)ular underta=in#
,+ AT AN' TIME, i" the partnership was a 4partnership at will5 when the
interest was assi#ned or when the )har#in# ordered was issued
C proo" as to the e6isten)e o" the "irm must "irst be #iven
C even i" a partner has not yet been previously de)lared insane by the )ourt,
dissolution may be as=ed, as lon# as the insanity is duly proved in )ourt
C in a suit "or dissolution, the )ourt may appoint a RECEI1ER at its dis)retion
E!!ECTS ! -ISS$UTIN
RU$E)
C when the "irm is dissolved, a partner )an no lon#er bind the partnership
C a dissolved partnership still has the personality for the winding up of its
affairs
the "irm is still allowed to )olle)t previously a)<uired )redits
the "irm is still bound to pay o" its debts
-ISS$UTIN CAUSE- ;y A5I5-
RU$E) E%TI(( BOUN!; 6 as to ea)h partners
+0R0 where the dissolution is )aused by the ACT, IN%O(1ENC' or !EAT9 o"
a partner, ea)h partner is liable to his )o8partners "or his share o" any liability
)reated by any partner a)tin# "or the partnership
E/CEPTIN) 8 individual liabilities
*+ i" dissolution by ACT
the partner a)tin# "or the partnership 9A! HNO/(E!2E o" the
dissolution OR
,+ i" dissolution by !EAT9 or IN%O(1ENC'
the partner a)tin# "or the partnership 9A! 4=nowled#e or noti)e5 o" the
death or insolven)y
C only the partner a)tin# assumes liability
CA!TER -ISS$UTIN# 9 p9rtner >9n still 7;in<8 the PARTNERSHIP
(WU# UT# T&)
*+ By any ACT appropriate "or /IN!IN2 U$ partnership a""airs
,+ By COM$(ETIN2 transa)tions UNINI%9E! at dissolution
-+ By any TRAN%ACTION whi)h )ould bind the partnership I dissolution
had not ta=en pla)e $RO1I!E! the other party is:
A; $RE1IOU% CRE!ITOR and had NO HNO/(E!2E or
NOTICE o" the dissolution OR
B; NOT a $RE1IOU% CRE!ITOR, had NO HNO/(E!2E or
NOTICE and dissolution was NOT $UB(I%9E!
C i" there was publi)ation o" the dissolution it is presumed he already
=nows, re#ardless o" a)tual =nowled#e on non =nowled#e
WHEN is the PARTNERSHIP NT &UN-
*+ new business with third parties who are in bad "aith
,+ "irm dissolved be)ause UN(A/U( e6)ept "or a)ts o" windin# up
-+ partner who a)ted be)ame IN%O(1ENT
0+ partner not authoriAed to wind up E&CE$T i" )ustomer in #ood "aith
C i" a"ter dissolution, i" a stran#er will represent himsel" as a partner althou#h
he is not one he will be a partner by estoppel
RU$E)
C the dissolution o" the partnership does not itsel" dis)har#e the 4e6istin#
liability5 o" any partner
"&& for an A#R&&%&"$ B&$1&&"
*+ partner )on)erned
,+ other partners
-+ )reditors
RU$E:
C the IN!I1I!UA( $RO$ERT' o" a !ECEA%E! $ARTNER shall be liable "or
all obli#ations o" the partnership in)urred while he was a partner BUT sub.e)t to
prior payments o" his separate debts
13
C I there be a NO1ATION o" the O(! $ARTNER%9I$ !EBT% and su)h
novation is done a"ter one o" the partners has 4retired5 and without the )onsent
o" su)h partner
said partner )annot be held liable by )reditors who made the novation
with =nowled#e o" the "irms dissolution
E/TRA,U-UCIA$ AN- ,U-ICIA$ WIN-IN+5UP
E/TRA,U-ICIA$)
*+ by the partners who have not wron#"ully dissolved the partnership
,+ by the le#al representative o" the last survivin# partners
,U-ICIA$)
under the )ontrol and dire)tion o" the )ourt, upon proper )ause that is shown
to the )ourt
C pro"its that will a)tually enter the "irm a"ter dissolution as a )onse<uen)e o"
transa)tions already made be"ore dissolution are in)luded be)ause they are
)onsidered as pro"its e6istin# at the time o" dissolution
C any other in)ome earned a"ter the time, li=e interest or dividends on sto)=
owned by the partners or partnership at the time o" dissolution should not be
distributed as pro"its BUT as merely additional in)ome to the )apital
&ETTER RI+HTS of INNCENT PARTNERS
inno)ent partners have better ri#hts than #uilty partners and that the #uilty
partners are re<uired to indemni"y "or the dama#es )aused
C RI+HT of INCENT PARTNERS T CNTINUE the &USINESS
in essen)e this is a new partnership
)an use the same "irm name
)an as= new members to .oin
B+$ shall4 for protection of guilty partners
*+ #ive a BON! approved by the )ourt
,+ to $A' #uilty partners his interests at the time o" dissolution MINU%
!AMA2E%
C a #uilty partner who is E&C(U!E! will be indemni"ied a#ainst all present or
"uture partnership liabilities
RI+HT T +ET CASH
in )ase on non8)ontinuan)e o" the business, the interest o" the partner should
i" he desires be #iven in )ash
assets may be sold
a #uilty partner, in as)ertainin# the value o" his interest is not entitled to a
proportional share o" the value o" 2OO! /I(

RI+HTS ! INNCENT PARTNERS IN CASE of RESCISSIN ;9se< on
!RAU- AN- (ISREPRESENTATIN
*+ Ri#ht to (IEN or RETENTION %UR$(U%
CA$ITA(
A!1ANCE%
,+ Ri#ht o" %UBRO2ATION D as )reditor
-+ Ri#ht o" IN!EMNIICATION
3R-ER of PA'(ENT in WIN-IN+5UP of PARTNERSHIP $IA&I$ITIES
+ENERA$ PARTNERSHIP) "C# R# C# P%
*+ those owin# to 4)reditors5 other than partners
,+ those owin# to 4partners5 other than "or )apital or pro"its D
REIMBUR%EMENT%
-+ those owin# to partners in respe)t to CA$ITA(
0+ those owin# to partners in respe)t to $ROIT%
C I the partnership assets are insu""i)ient, the other partners must )ontribute
more money or property
PRE!ERENCE =ith RESPECT to the ASSETS
78 regarding partnership property
partnership )reditors have pre"eren)e
28 regarding individual properties of partners
individual )reditors are pre"erred
RU$E if PARTNER is INS$VENT
8 9ow IN!I1I!UA( $RO$ERT' is !I%TRIBUTE!
R-ER ! PRE!ERENCE)
*+ IN!I1I!UA( or %E$ARATE CRE!ITOR%
,+ $ARTNER%9I$ CRE!ITOR%
-+ those owin# to other partners by way o" )ontribution
CWhen creditors of the dissolved partnership are also creditors of the
partnership continuing business:
*+ new partner is admitted without li<uidation
,+ a partner retires and assi#ns his ri#hts I the business is )ontinued
without li<uidation o" the partnership a""airs
-+ all but one partner retire without li<uidation
0+ when all partner assi#n their ri#ht to a person who will assume their
debt
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3+ a"ter wron#"ul dissolution, remainin# partners )ontinue the business
without li<uidation
7+ when partner e6pelled and remainin# partners )ontinue the business
without li<uidation
C liability o" third person be)omin# a partner in the partnership )ontinuin# the
business to the )reditors o" the dissolved partnership shall be satis"ied out o" the
partnership property ON('
2+R+ D when a partner retires, he is entitled what is due him a"ter li<uidation
BUT no li<uidation is needed i" there is already a settlement at the date o"
dissolution
,URISPRU-ENCE
&ASTI-A vs0 (EN.I
C arti)les o" asso)iation by whi)h , or more persons obli#ate themselves to
pla)e in a )ommon "und any property, industry, or any o" these thin#s, in order
to obtain pro"it, shall be COMMERCIA(
&R,A vs0 A--ISN
C a survivin# husband may "orm a partnership with the heirs o" the de)eased
wi"e "or the mana#ement and )ontrol o" the )ommunity property
BUT in the absen)e o" the "ormalities pres)ribed by the Civil Code,
=nowled#e o" the e6isten)e o" the new partnership or )ommunity o" property
must at least be brou#ht home to third persons dealin# with the survivin#
husband in re#ard to the )ommunity real property in order to bind them by the
)ommunity a#reement
2IE$ vs0 SA&ERT
C the de)larations o" one partner, not made in the presen)e o" his )o8partner,
are not )ompetent to prove the e6isten)e o" a partnership between them as
a#ainst su)h partner
C the e6isten)e o" a partnership )annot be established by #eneral reputation,
rumor or hearsay
EVEN+E$ISTA vs0 C0I0R0
C By the )ontra)t o" partnership , or more persons bind themselves to
)ontribute money, property, or industry to a )ommon "und, with the intention o"
dividin# the pro"its amon# themselves
ESSENTIA$ E$E(ENTS of 9 PARTNERSHIP
*+ an a#reement to CONTRIBUTE money, property, or industry to a
COMMON UN!
,+ intent to divide the pro"its amon# the )ontra)tin# parties
C when our internal Revenue Code in)ludes 4partnerships5 amon# the entities
sub.e)t to the ta6 on 4)orporations5, said )ode whi)h are not ne)essarily
4partnerships5 in the te)hni)al sense o" the term
C PARTNERSHIPS 6 in)ludes a %'N!ICATE, 2ROU$, $OO(, BOINT
1ENTURE, or other unin)orporated or#aniAation, throu#h or by the means o"
whi)h any business, "inan)ial operation, or venture is )arried on
C a .oint venture need not be underta=en in any o" the standard "orms,
or in )on"ormity with the usual re<uirements o" the law on partnerships, in order
that one )ould be deemed )onstituted "or purposes o" the TA& on )orporations
PASCUA$ vs0 C0I0R0
C )o8ownership or )o8possession does not itsel" establish a partnership,
whether su)h )o8owners or )o8possessors do or do not share any pro"its made
by the use o" the property
C the sharin# o" #ross returns does not itsel" establish a partnership, within the
persons sharin# them have a .oint or )ommon ri#ht or interest in any property
"rom whi)h the returns are derived
C aside from the circumstances of profit; the presence of other elements
constituting partnership is necessary; such as:
*+ the )lear intent to "orm a partnership
,+ the e6isten)e o" a .uridi)al personality di""erent "rom that o" the
individual partners AN!
-+ the "reedom to trans"er or assi#n any interest in the property by one
with the )onsent o" the others
C an isolated transa)tion whereby , or more persons )ontribute "unds to buy
)ertain real estate "or pro"it in the absen)e o" other )ir)umstan)es showin# a
)ontrary intention )annot be )onsidered a partnership
C persons who )ontribute property or "unds "or a )ommon enterprise and
a#ree to share the #ross returns o" that enterprise in proportion to their
)ontribution, BUT who severally retain the title to their respe)tive )ontribution,
are not thereby rendered partners
they have no )ommon sto)= or )apital and no )ommunity o" interest as
prin)ipal proprietors in the business itsel" whi)h the pro)eeds derived
C a .oint pur)hase o" land, by two does not )onstitute a )o8partnership in
respe)t thereto, NOR does an a#reement to share the pro"its and losses on the
sale o" land )reate a partnership
C in or<er to >onstit?te 9 PARTNERSHIP INTER SESE there @?st ;e)
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A; an intent to "orm the same
B; #enerally parti)ipatin# in both pro"its and losses AN!
C; su)h a )ommunity o" interest, as "ar as third persons are
)on)erned as enables ea)h party to ma=e a )ontra)t, mana#e
the business, and dispose o" the whole property
C the )ommon ownership o" property does not itsel" )reate a partnership
between the owners, thou#h they may use it "or the purpose o" ma=in# #ains
AN! they may without be)omin# partners, a#ree amon# themselves as to the
mana#ement and use o" su)h property and the appli)ation o" the pro)eeds
there"rom
C the sharin# o" returns does not in itsel" establish a partnership within the
persons sharin# therein have a .oint or )ommon ri#ht or interest in the property
there @?st ;e)
*+ )lear intent to "orm a partnership
,+ the e6isten)e o" a .uridi)al personality di""erent "rom the individual
partners AN!
-+ the "reedom o" ea)h party to trans"er or assi#n the whole property
-UTERTE vs0 RA$$S
C an a#reement between , persons to operate a )o)=pit, by whi)h one is to
)ontribute his servi)es and the other to provide the )apital, the pro"its to be
divided between them, )onstitutes a partnership
-E$UA vs0 CASTEE$
C a )ontra)t o" partnership to e6ploit a "ishpond pendin# its award to any
<uali"ied party or appli)ant is 1A(I! BUT a )ontra)t o" partnership to divide the
"ishpond a"ter su)h award is I((E2A(
C one o" the )auses o" dissolution is D any event whi)h ma=e it unlaw"ul "or the
business o" the partnership to be )arried on or "or the members to )arry it on in
partnership
C0I0R0 vs0 SUTER
C a UNI1ER%A( $ARTNER%9I$ re<uires either that the ob.e)t o" the
asso)iation be:
*+ all the present property o" the partners as )ontributed by them to the
)ommon "und OR
,+ all that the partners may a)<uire by their industry or wor= durin# the
e6isten)e o" the partnership
C the subse<uent marria#e o" the partners )ould not operate to dissolve the
partnership be)ause it is not one o" the )auses provided "or dissolution by law
with re#ards to limited partnerships
C partnership has distin)t and separate personality "rom that o" its partners
C a husband and wi"e may not enter into a )ontra)t o" #eneral )o8partnershipG
UNI1ER%A( partnership
ACA- vs0 (A&AT
C a partnership may be )onstituted in any "orm E&CE$T where immovable
property or real ri#hts are )ontributed thereto, in whi)h )ase a publi) instrument
shall be ne)essary
C A CNTRACT of PARTNERSHIP is VI-
whenever immovable property is )ontributed thereto, i" 4inventory5 o"
said property is not made, si#ned by the parties and atta)hed to the publi)
instrument
EVAN+E$ISTA vs0 A&A- SANTS
C an IN!U%TRIA( $ARTNER )annot en#a#e in BU%INE%% OR 9IM%E(,
UN(E%% the partnership e6pressly permits him to do so
I 9E %9OU(! !O %O, the )apitalist partners may either:
*+ E&C(U!E him "rom the "irm OR
,+ A1AI( themselves o" the bene"its whi)h he may have obtained in
violation o" this provision
with a ri#ht to !AMA2E% in either )ase
C the prohibition a#ainst an industrial partner en#a#in# in business "or himsel"
see=s to prevent any )on"li)t o" interest between the industrial partner and the
partnership and to ensure "aith"ul )omplian)e by said partner with his prostation
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