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GENERAL PROVISIONS Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession. (1665a) Art. 1768. The partnership has a judicial personality separate and distinct from that of each of the partners, even in case of failure to comply with the requirements of Article 1772, first paragraph. (n) Art. 1769. In determining whether a partnership exists, these rules shall apply: (1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to third persons; (2) Co-ownership or co-possession does not of itself establish a partnership, whether such-co-owners or co-possessors do or do not share any profits made by the use of the property; (3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived; (4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment: (a) As a debt by installments or otherwise; (b) As wages of an employee or rent to a landlord; (c) As an annuity to a widow or representative of a deceased partner; (d) As interest on a loan, though the amount of payment vary with the profits of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. (n) Art. 1770. A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners. When an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of the State, without prejudice to the provisions of the Penal Code governing the confiscation of the instruments and effects of a crime. (1666a) Art. 1771. A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary. (1667a) Art. 1772. Every contract of partnership having a capital of three thousand pesos or more, in money or property, shall appear in a public instrument, which must be recorded in the Office of the Securities and Exchange Commission. Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the BY: MA. ANGELA LEONOR C. AGUINALDO ATENEO LAW 2010
partnership and the members thereof to third persons. (n) Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument. (1668a) Art. 1774. Any immovable property or an interest therein may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name. (n) 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 governed by the provisions relating to coownership. (1669) Art. 1776. As to its object, a partnership is either universal or particular. As regards the liability of the partners, a partnership may be general or limited. (1671a) Art. 1777. A universal partnership may refer to all the present property or to all the profits. (1672) Art. 1778. A partnership of all present property is that in which the partners contribute all the property which actually belongs to them to a common fund, with the intention of dividing the same among themselves, as well as all the profits which they may acquire therewith. (1673) Art. 1779. In a universal partnership of all present property, the property which belongs to each of the partners at the time of the constitution of the partnership, becomes the common property of all the partners, as well as all the profits which they may acquire therewith. A stipulation for the common enjoyment of any other profits may also be made; but the property which the partners may acquire subsequently by inheritance, legacy, or donation cannot be included in such stipulation, except the fruits thereof. (1674a) Art. 1780. A universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership. Movable or immovable property which each of the partners may possess at the time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership. (1675) Art. 1781. Articles of universal partnership, entered into without specification of its nature, only constitute a universal partnership of profits. (1676) Art. 1782. Persons who are prohibited from giving each other any donation or advantage cannot enter into universal partnership. (1677) Art. 1783. A particular partnership has for its object determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or vocation. (1678) CASE DIGESTS: ARTICLES 1767 TO 1783 1 EVANGELISTA, ET. AL. V. CIR 102 PHIL 140
as he pleases. There is nothing against one corporation being represented by another person. 2 LAGUNA TRANSPORTATION CO. it is shown that the purpose was to engage in real estate transactions for monetary gain and then divide the same among themselves because: 1. HALILI 93 PHIL 526 It is tacitly provided for in the pertinent provisions of the Civil Code in Partnership that names in a firm name of a partnership must either be those of living partners and. The properties were not used for personal consumption or residential use but were leased separately to several persons 4. The petitioners have agreed to and did contribute money and property to a common fund. as it is considered as an act of violence to do so. They created the fund purposedly 2. ANGELA LEONOR C. Where partnership venture is a failure. 4 WOODHOUSE V. 4. 3 TUAZON V. or not to do it. SUTER 27 SCRA 152 1. natural or juridical. such marriage being one of the causes provided for that purpose. for the true rule is that though a corporation has no power into a partnership.PARTNERSHIP CODAL AND CASE DIGESTS Page 2 of 16 The essential elements of a partnership are the following: 1. The heirs of a deceased partner in a law firm cannot be held liable as the old members of the creditor of a firm particularly where they are nonlawyers. THE LEYTE-SAMAR CO. insofar as the Code is concerned. in the case of non-partners. Intent to divide the profits among the contracting parties. The properties were under the management of one person Although. our NIRC includes these partnerships—with the exception only of general copartnerships—within the purview of the term corporation. it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter. in a suit in court. should be living persons who can subjected to liability. they might not suffice to establish the intent necessary to constitute a partnership. CA 133 SCRA 98 Partner who promises to contribute to partnership becomes promissory debtor of latter. On the second element. AGUINALDO ATENEO LAW 2010 . 92 SCRA 1 While it is true that a corporation once formed is conferred a juridical personality separate and distinct from the persons composing it. BOLANOS 95 PHIL 106 9 2. it is but of legal fiction introduced for the purposes of convenience and to subverve the ends of justice. V. An agreement to contribute money. 10 11 PALTING V. such contributions remained their respective separate property. It is also provided in the Code that a third person is precluded from including his name in the firm name under pain of assuming liability. Partner entitled to recover shares of profits and losses realized by venture. 18 SCRA 924 CAMPOS RUEDA AND CO. and to insure faithful compliance by said partner with his prestation. 8 COMMISSIONER OF INTERNAL REVENUE V. It entails an obligation to do. property. PACIFIC COMMERCIAL A contract to form a partnership cannot be executed. This is a very BY: MA. will be disregarded by the courts. or industry to a common fund 2. Nor could the subsequent marriage of the partners operate to dissolve it. a partner is not entitled to any commission promised by co-partner where agreement doesn’t state basis of commission. The law recognizes the individual’s freedom to do an act he has promised to do. considering the facts and circumstances of the case. Where a company is not a universal partnership—when the contributions of the partners were fixed sums of money and neither one of them was an industrial partner. 2. and when invoked in support of an end subversive of this policy. CEA 93 PHIL 100 7 A partner is not a creditor of the partnership. ETC. The first element is admittedly present in this case. The marriage of the partners doesn’t make the company a sole proprietorship when the capital contributions of the partners were separately owned and contributed by them before their marriage. SSS 107 PHIL 833 personal act of which courts may not compel compliance. IN RE: PETITION FOR AUTHORITY. SAN JOSE PETROLEUM INC. *For purposes of the tax on corporations. It thus clear clear to our mind that petitioners herein constitute a partnership. and after they were joined in wedlock. 6 1. They invested the same not only in one transaction but in a series of transactions 3. V. The concept cannot be extended to a point beyond its reasons and policy. it follows that it is not a partnership wherein spouses are forbidden to enter. and are subject to the income tax for corporations. MORAN V. the collective effect of these circumstances is such as to leave no room for doubt of the existence of said intent in petitioners herein. taken singly. 3. The contention that Gregorio Araneta Inc. ABAD SANTOS 51 SCRA 416 It is not disputed that the prohibition against an industrial partner engaging in business for himself seeks to prevent any conflict in interest between the industrial partner and the partnership. 5 EVANGELISTA V. Essence of partnership is that partners share in profits and losses. cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership is without merit. V.
1785. and in the absence of stipulation. in the same cases and in the same manner as the vendor is bound with respect to the vendee. A contract of partnership is void. If there is no agreement to the contrary. 16 LOZANO V. or hearsay. their appraisal must be made in the manner prescribed in the contract of partnership. such as that of failing for more than 30 days to pay debts amounting to P1000 or more. 17 18 KIEL V. (n) Art. ESTATE OF P. so far as is consistent with a partnership at will. and according to current prices. (1682) Art. A corporation cannot enter into a partnership contract but may engage in a joint venture with others. ANGELA LEONOR C. The same rule applies to any amount he may have taken from the partnership coffers. He shall also be bound for warranty in case of eviction with regard to specific and determinate things which he may have contributed to the partnership. (1679) Art. though not in writing. a limited partnership duly organized in accordance with law has a personality distinct from that of its members. except where immovable property or real rights are contributed thereto. Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto. rumor. 180 SCRA 130 WARE BY: MA. 1789. (n) Art. 12 TAI TONG CHUACHE AND INSURANCE COMMISION 158 SCRA 336 CO.S SABERT 46 PHIL 193 AGAD V. Unless there is a stipulation to the contrary. When the capital or a part thereof which a partner is bound to contribute consists of goods. (n) Art. In order to constitute a partnership inter sese. A continuation of the business by the partners or such of them as habitually acted therein during the term. and attached to the public instrument. He shall also be liable for the fruits thereof from the time they should have been delivered. 19 AURBACH V. 1788. if inventory of said property is not made. to save the venture. unless the partnership expressly permits him to do so. any partner who refuses to contribute an additional share to the capital. 15 DELUAO V. are not competent to prove the existence of a partnership between them as against such other partner.PARTNERSHIP CODAL AND CASE DIGESTS Page 3 of 16 18 SCRA 924 In the Philippines. (1681a) Art. and his liability shall begin from the time he converted the amount to his own use. signed by the parties. in which case. with a right to damages in either case. shall he obliged to sell his interest to the other partners. in case of an imminent loss of the business of the partnership. MABATO 23 SCRA 1223 A partnership may be constituted in any form. it may be adjudged insolvent on the petition of three of its creditors although its members may not be insolvent. An industrial partner cannot engage in business for himself. a public instrument shall be necessary. COMMISSION OF INTERNAL REVENUE 166 SCRA 560 The sharing of returns doesn’t in itself establish a partnership. and if he should do so. 1787. except an industrial partner. and such a community of interest. GUTIERREZ HERMANOS 6 PHIL 100 The general manager of a general partnership has authority to employ a bookkeeper. V. 1791. and dispose of the whole property. there must be: an intent to form the same. AGUINALDO ATENEO LAW 2010 . without the need of any demand. A partner who has undertaken to contribute a sum of money and fails to do so becomes a debtor for the interest and damages from the time he should have complied with his obligation. CASTEEL 26 SCRA 475 The declarations of one partner. is prima facie evidence of a continuation of the partnership. as far as third persons are concerned as enables each party to make contract. 1786. (n) Art. 1784. without any settlement or liquidation of the partnership affairs. (n) A partnership may sue and be sued in its name or by its duly authorized representative. and if it commits an act of bankruptcy. 1790. manage the business. 14 FORTIS V. generally participating in both profits and losses. not made in the presence of his co-partner. SANITARY MANUFACTURING CO. the subsequent changes thereof being for account of the partnership. DEPAKAKIBO 107 PHIL 728 An equipment which was contributed by one of the partners to the partnership becomes the property of the partnership and as such cannot be disposed of by the party contributing the same without the consent of the partnership or the other partner. The existence of a partnership cannot be established by general reputation. 13 PASCUAL V. and a contract thus made was valid. the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision. When a partnership for a fixed term or particular undertaking is continued after the termination of such term or particular undertaking without any express agreement. the partners shall contribute equal shares to the capital of the partnership. unless it is otherwise stipulated. the rights and duties of the partners remain the same as they were at such termination. it shall be made by experts chosen by the partners. OBLIGATIONS OF THE PARTNERS OBLIGATIONS THEMSELVES OF THE PARTNERS AMONG Art. whenever immovable property is contributed thereto. A partnership begins from the moment of the execution of the contract.
when the other partners have not collected theirs. and in such case the claim shall be limited to the value at which they were appraised. 1803. the matter shall be decided by the partners owning the controlling interest. The partnership books shall be kept. (1689a) Art. Every partner is responsible to the partnership for damages suffered by it through his fault. from a person who owed the partnership another sum also demandable. the share of each partner in the profits and losses shall be in proportion to what he may have contributed. but the associate shall not be admitted into the partnership without the consent of all the other partners. contributed to the partnership so that only their use and fruits may be for the common benefit. The partnership shall be responsible to every partner for the amounts he may have disbursed on behalf of the partnership and for the corresponding interest. but if any of them should oppose the acts of the others. make any important alteration in the immovable property of the partnership. or if they were contributed to be sold. he shall also receive a share in the profits in proportion to his capital. (1687) Art. When the manner of management has not been agreed upon. As for the profits. (1690) cannot be Art. and every partner shall at any reasonable hour have access to and may inspect and copy any of them. 1799. (1685a) Art. the risk shall be borne by the partnership. 1797. (1684) Art. If the things contribute are fungible. (1695a) Art. each one may separately execute all acts of administration. AGUINALDO ATENEO LAW 2010 . The designation of losses and profits intrusted to one of the partners. In the absence of stipulation. If two or more partners have been intrusted with the management of the partnership without specification of their respective duties. the industrial partner shall receive such share as may be just and equitable under the circumstances. However. 1804. shall also be borne by the partnership. But if the refusal of consent by the other partners is manifestly prejudicial to the interest of the partnership. without prejudice to the provisions of Article 1801. 1796. the amount shall be fully applied to the latter. The losses and profits shall be distributed in conformity with the agreement. The partner who has been appointed manager in the articles of partnership may execute all acts of administration despite the opposition of his partners. but the industrial partner shall not be liable for the losses. (1686a) Art. If besides his services he has contributed capital. shall be borne by the partner who owns them. (1693a) Art. the concurrence of all shall be necessary for the validity of the acts. In case it should have been stipulated that none of the managing partners shall act without the consent of the others. 1792. The provisions of this article are understood to be without prejudice to the right granted to the other debtor by Article 1252. A power granted after the partnership has been constituted may be revoked at any time. and his power is irrevocable without just or lawful cause. Every partner may associate another person with him in his share. such designation may be impugned only when it is manifestly inequitable. ANGELA LEONOR C. (2) None of the partners may. (1691) Art. the risk of the things brought and appraised in the inventory.PARTNERSHIP CODAL AND CASE DIGESTS Page 4 of 16 Art. it shall also answer to each partner for the obligations he may have contracted in good faith in the interest of the partnership business. 1802. complain of such decision. his share of a partnership credit. if the debtor should thereafter become insolvent. 1801. the share of each in the losses shall be in the same proportion. The vote of the partners representing the controlling interest shall be necessary for such revocation of power. without the consent of the others. and for risks in consequence of its management. (n) BY: MA. the sum thus collected shall be applied to the two credits in proportion to their amounts. A stipulation which excludes one or more partners from any share in the profits or losses is void. and the absence or disability of any one of them cannot be alleged. 1805. but only if the personal credit of the partner should be more onerous to him. or cannot be kept without deteriorating. the court's intervention may be sought. A partner who has received. to bring to the partnership capital what he received even though he may have given receipt for his share only. 1798. unless he should act in bad faith. in whole or in part. In case of a tie. unusual profits have been realized. In no case may a partner who has begun to execute the decision of the third person. or who has not impugned the same within a period of three months from the time he had knowledge thereof. The risk of specific and determinate things. and he cannot compensate them with the profits and benefits which he may have earned for the partnership by his industry. If only the share of each partner in the profits has been agreed upon. If a partner authorized to manage collects a demandable sum which was owed to him in his own name. from the time the expense are made. but should he have given it for the account of the partnership credit. the courts may equitably lessen this responsibility if through the partner's extraordinary efforts in other activities of the partnership. at the principal place of business of the partnership. even though he may have given a receipt for his own credit only. (1688a) Art. the following rules shall be observed: (1) All the partners shall be considered agents and whatever any one of them may do alone shall bind the partnership. shall be obliged. or without a stipulation that one of them shall not act without the consent of all the others. 1793. If the partners have agreed to intrust to a third person the designation of the share of each one in the profits and losses. (1696) Art. In the absence of stipulation. 1800. subject to any agreement between the partners. (1694) Art. which are not fungible. the decision of the majority shall prevail. unless there is imminent danger of grave or irreparable injury to the partnership. (1692a) Art. 1795. even if the partner having an associate should be a manager. 1794. even if it may be useful to the partnership.
Indeed. (n) Art. 27 1. MATIC 68 PHIL 356 2. 25 TAI TONG CHUACHE V. Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner or of any partner under legal disability. but as the contribution which petitioner bound itself to make to the partnership and which it was under a duty to pay. Any partner shall have the right to a formal account as to partnership affairs: (1) If he is wrongfully excluded from the partnership business or possession of its property by his co-partners. while the respondent would give in addition to his industry. (n) Art. Neither it is necessary for the third person to ascertain if the managing partner with whom he contracts has previously obtained the consent of the other. with interest and any damages occasioned thereby. (3) As provided by article 1807. 1806. Rather. A third person may and has the right to presume that the partner with whom he contracts has.PARTNERSHIP CODAL AND CASE DIGESTS Page 5 of 16 Art. The capitalist partners cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged. AGUINALDO ATENEO LAW 2010 28 Where two partners receive from another a sum of money for the establishment of a business. ET. and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation. LA PROTECTORA 37 PHIL 441 While a member of a partnership isn’t liable solidarily with his fellows for its entire indebtedness. he doesn’t employ the services of the lawyer who is assigned to personally handle the case. DECEMBER 9. OCTOBER 13. the consent of his co-partner. signed the name of the partnership to the purchase money notes and added his own name as an individual. MARTINEZ V. the partners who emitted the authority were not liable on the note. the partners are entitled to their respective share in the attorney’s fees from the firm’s clients. there is no reason for such liquidation. 1988 A partnership may sue or be sued in its own name or by its duly authorized representative. FEBRUARY 29. Any capitalist partner violating this prohibition shall bring to the common funds any profits accruing to him from his transactions. DEPAKAKIBO 107 PHIL 728 23 TORRES. Every partner must account to the partnership for any benefit. (4) Whenever other circumstances render it just and reasonable. 1807. The liquidation of the partnership is not now being sought. although it was paid instead by M and Q. he wouldn’t enter into the contract. but the plaintiff didn’t thereby acquire the right to demand rescission of the partnership contract. HILL & CERON 67 PHIL 509 An equipment which was contributed by one of the partners to the partnership becomes the property of the partnership and as such cannot be disposed of by the party contributing the same without the consent of the partnership or the other partner. and shall personally bear all the losses. as they have agreed to do. Furthermore. (n) CASE DIGESTS: ARTICLES 1784 TO 1809 20 LOZANO V. undoubtedly creates an obligation between the two partners. the amount needed for general expenses and other costs. he becomes indebted to it for the remainder. the income from said project would be divided according to the stipulated percentage. he is liable with them for his aliquot part thereof. The amount sought to be recovered is not claimed as a loss or profit. 2004 When a client employs the services of a law firm. 1999 The contract manifested the intention of the parties to form a partnership. When one of the partners was authorized to buy trucks for the partnership and effected such authority. VDA DE MANGUERRA GR 149844. BACHRACH V. as the document in question contained no authority to bind them personally and in fact the notes didn’t purport to do so. or liquidation of the partnership or from any use by him of its property. 21 SANCHO V. 14 PHIL 720 Owing to the failure of a partner to pay the partnership the whole amount which he bound himself to pay. (2) If the right exists under the terms of any agreement. unless there is a stipulation to the contrary. INSURANCE COMMISSION GR 55397. ONG PONG CO. and agree . LIZARRAGA 55 PHIL 601 The stipulation in the articles of partnership that any of the 2 managing partners may contract and sign in the name of the partnership with the consent of the other. AL V. V. and it is not possible to determine whether there was a profit or loss and what is the extent thereof and the measure of the respective liability or benefit. 22 MORA ELECTRIC CO. CA GR 134559. but they were held liable in their capacity as partners. (n) Art. in the ordinary and regular course of business. ANGELA LEONOR C. conduct. 1809. 24 MIGUEL CUENCO V. which consists in asking the other’s consent before contracting for the partnership. Being a partner to the law firm. 1808. The obligation of course is not imposed upon a third person who contracts with the partnership. While it is mentioned in the appealed decision that the business produced a relevant amount. thereby assuming solidary liability with the firm. for otherwise. it doesn’t appear that the parties have made a report. he employs the entire law firm. 26 LITTON V. BY: MA. It was stated in their agreement that petitioners would contribute property to the partnership in the form of land which was to be developed into a subdivision.
Without prejudice to the preferred rights of partnership creditors under Article 1827. this action should have been brought against the partnership itself. on due application to a competent court by any judgment creditor of a partner. The interest charged may be redeemed at any time before foreclosure. 1812. the provision on a partner being an agent of a partnership is not applicable to that organization. A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the partnership. AGUINALDO ATENEO LAW 2010 . 1811. or The letters of instruction addressed by the company to the local manager of its mines. but he has no right to possess such property for any other purpose without the consent of his partners. ABAD SANTOS 51 PHIL 416 PROPERTY RIGHTS OF A PARTNER Art. COMPANIA DE MINAS DE BATAN 12 PHIL 130 (3) His right to participate in the management. and make all other orders.PARTNERSHIP CODAL AND CASE DIGESTS Page 6 of 16 to share with the latter the profits or losses that may result therefrom. However. or any other court. In case of a dissolution of the partnership. and may then or later appoint a receiver of his share of the profits. (3) A partner's right in specific partnership property is not subject to attachment or execution. or in case of a sale being directed by the court. to interfere in the management or administration of the partnership business or affairs. or which the circumstances of the case may require. or against the partners jointly and not against the appellant himself only. and by virtue thereof are bound to fulfill the contract which implies the management of the business. 1810. 33 UY V. in case of fraud in the management of the partnership. and BY: MA. entitle the assignee. or to inspect the partnership books. except on a claim against the partnership. the said two persons. (n) Art. LASALA 74 PHIL 242 An approval of statement of accounts precludes the right to further liquidation. (4) A partner's right in specific partnership property is not subject to legal support under Article 291. However. unless the latter can show the existence of fraud. or. and the accounts of the same not having been liquidated. conferred upon him authority to employ such labor as he deemed necessary in the exploitation of the company’s mines. the assignee is entitled to receive his assignor's interest and may require an account from the date only of the last account agreed to by all the partners. ANGELA LEONOR C. 30 SY-BOCO V. (n) Art. has an equal right with his partners to possess specific partnership property for partnership purposes. may charge the interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon. AL. When partnership property is attached for a partnership debt the partners. A partner's interest in the partnership is his share of the profits and surplus. cannot claim any right under the homestead or exemption laws. ET. and of any other money due or to fall due to him in respect of the partnership. or to require any information or account of partnership transactions. he instructed the plaintiff to charge them to him personally. A partner is co-owner with his partners of specific partnership property. and mistake in said appeal. 1814. SYCIP. the court which entered the judgment. (2) His interest in the partnership. 31 RED MEN V. that may be. the assignee may avail himself of the usual remedies. as the apparent administrators of the partnership. The incidents of this co-ownership are such that: (1) A partner. When the defendant told the plaintiff that he had authorized his partner to receive the goods. VETERAN ARMY 7 PHIL 685 When an organization’s constitution has a provision on how management of its affairs would be. subject to the provisions of this Title and to any agreement between the partners. (n) Art. accounts and inquiries which the debtor partner might have made. The property rights of a partner are: (1) His rights in specific partnership property. 34 ORNUM V. 32 GOQUIOLAY. the fact remains that the defendant in this case was the only one who contracted with the plaintiff in his own name. or the representatives of a deceased partner. ET. or any of them. (2) A partner's right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property. 108 PHIL 947 The right of exclusive management conferred upon a partner is a personal right and is premised on trust and confidence. by any one or more of the partners. AL V. error. 29 GARCIA RON V. directions. PUZON 79 SCRA 598 A partner in a construction venture who failed to stand by his commitment to the partnership will be ordered to reimburse to his co-partner whatever the latter invested and spent for the projects of the venture. acted as agents for the capitalist partner. deceit. 1813. but it merely entitles the assignee to receive in accordance with his contract the profits to which the assigning partner would otherwise be entitled. It terminates upon the death of the partner. (n) Art. 35 EVANGELISTA V. during the continuance of the partnership. YAP TENG 7 PHIL 12 The appellant contends that the goods having been furnished to and received by the partnership between himself and his partner. as against the other partners in the absence of agreement. may be purchased without thereby causing a dissolution: (1) With separate property.
committed by or with the consent of that partner. (n) Art. An admission or representation made by any partner concerning partnership affairs within the scope of his authority in accordance with this Title is evidence against the partnership. All partners. and the person with whom he is dealing has knowledge of the fact that he has no such authority. Every partnership shall operate under a firm name. except as among the partners. under the exemption laws. AGUINALDO ATENEO LAW 2010 .PARTNERSHIP CODAL AND CASE DIGESTS Page 7 of 16 (2) With partnership property. ANGELA LEONOR C. shall be liable pro rata with all their property and after all the partnership assets have been exhausted. provided the act is one within the authority of the partner under the provisions of the first paragraph of Article 1818. and the act of every partner. but the partnership may recover such property if the partners' act does not bind the partnership under the provisions of the first paragraph of Article 1818. passes the equitable interest of the partnership. Where title to real property is in the name of the partnership. AUGUST 29. in making the conveyance. except in the case of fraud on the partnership. as regards his interest in the partnership. (7) Renounce a claim of the partnership. Nothing in this Title shall be held to deprive a partner of his right. acquired while a partner or then present to his mind. which may or may not include the name of one or more of the partners. passes the equitable interest of the partnership. under its signature and by a person authorized to act for the partnership. An act of a partner which is not apparently for the carrying on of business of the partnership in the usual way does not bind the partnership unless authorized by the other partners. 1817. Where. 1818. 1816. 1815. the partners in whose name the title stands may convey title to such property. unless the purchaser or his assignee. including industrial ones. is a holder for value. without knowledge. or in a third person in trust for the partnership. A partnership cannot be formed for an illegal purpose because it is against several prohibitory laws. for the contracts which may be entered into in the name and for the account of the partnership. However. or in his own name. not being a partner in the partnership. 1822. provided the act is one within the authority of the partner under the provisions of the first paragraph of Article 1818. No act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction. unless the partner so acting has in fact no authority to act for the partnership in the particular matter. BY: MA. 1821. one or more but less than all the partners have no authority to: (1) Assign the partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership. Notice to any partner of any matter relating to partnership affairs. (2) Dispose of the good-will of the business. but the partnership may recover such property unless the partner's act binds the partnership under the provisions of the first paragraph of article 1818. Where title to real property is in the name of one or more but not all the partners. Where title to real property is in the partnership name. (5) Enter into a compromise partnership claim or liability. (3) Do any other act which would make it impossible to carry on the ordinary business of a partnership. including the execution in the partnership name of any instrument. for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership. operate as notice to or knowledge of the partnership. loss or injury is caused to any person. Except when authorized by the other partners or unless they have abandoned the business. Any stipulation against the liability laid down in the preceding article shall be void. not being members of the partnership. (n) Art. or unless such property has been conveyed by the grantee or a person claiming through such grantee to a holder for value without knowledge that the partner. by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of copartners. shall be subject to the liability of a partner. or any penalty is A partnership formed to divide a fishpond into equal parts is null and void as being against public policy. 1969 (4) Confess a judgment. and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner. the party cannot be made to execute a formal transfer of one-half of the fishpond and to secure approval of the same as agreed upon. concerning a (6) Submit a partnership claim or liability to arbitration. in his own name. 1819. a conveyance executed by a partner. Where the title to real property is in the name of one or more or all the partners. (n) Art. CASTEEL GR L-21906. include their names in the firm name. Where the title to real property is in the name of all the partners a conveyance executed by all the partners passes all their rights in such property. if any. (n) Art. has exceeded his authority. And since the contract is null and void. (n) Art. (n) Art. OBLIGATIONS OF THE PARTNERS WITH REGARD TO THIRD PERSONS Art. Every partner is an agent of the partnership for the purpose of its business. any partner may enter into a separate obligation to perform a partnership contract. by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold. (n) CASE DIGEST: ARTICLE 1810 36 DELUAO V. and the knowledge of the partner acting in the particular matter. and the record does not disclose the right of the partnership. a conveyance executed by a partner in the partnership name. 1820. Those who. any partner may convey title to such property by a conveyance executed in the partnership name. (n) Art.
When persons were partners when the debts were incurred. the partnership is liable therefor to the same extent as the partner so acting or omitting to act. JULY 7. it must be established that two or more persons bound themselves to contribute money. While the liability of partners are merely joint in transactions entered into by the partnership. 38 1. GASTRO GR 70403. he is liable to any such persons to whom such representation has been made. A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission as though he had been a partner when such obligations were incurred. All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822 and 1823. so consenting to the contract or representation as to incur liability. and misapplication of money or property of a third person received by a partner of the partnership. 1824. (n) Art. he is liable as though he were an actual member of the partnership. Payments made to the partnership. Without prejudice to this right. and they intended to divide the profits among themselves. JULY 31. 92 SCRA 1 ELMO MUNASQUE V. with respect to persons who rely upon the representation. 4. or with one or more persons not actual partners. 2. 1975 3. the parties are liable to third persons solidarily for the whole obligation if the case involves loss or injury caused to any person not a partner in the partnership. OCTOBER 3. When a person. whether the authority is real or apparent. FISHING GR 136448. 1989 If therefore. ETC. whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made: (1) When a partnership liability results. NOVEMBER 3. a partnership act or obligation results. When all the members of the existing partnership consent to the representation. they are also both liable to third persons who extended credit to the partnership. 2000 In order to constitute a partnership. except that this liability shall be satisfied only out of partnership property. 42 HEIRS OF TAN ENG KEE V. 1999 A partnership may be deemed to exist among partners who agree to borrow money to purse a business and to divide the profits and losses that may arise therefrom. its silence and failure to impugn said mortgage within a reasonable time. if any. or consents to another representing him to anyone. 39 Condonation by creditor of share in partnership debt of one partner doesn’t increase pro rate liability of other partners. (n) CASE DIGESTS: ARTICLE 1815 TO 1827 37 IN RE: PETITION FOR AUTHORITY. valid where the recipient made it appear that he and another were true partners in the partnership. 40 LIM TONG LIM V.PARTNERSHIP CODAL AND CASE DIGESTS Page 8 of 16 incurred. the private creditors of each partner may ask the attachment and public sale of the share of the latter in the partnership assets. V. (n) Art. CA GR 126881. Sort BY: MA. property. ANGELA LEONOR C. (n) Art. unless there is a stipulation to the contrary. as their contribution to such fund could be an intangible like credit or industry. CA GR L-39780. 6. Solidary liability of all partners and the partnership as a whole for the consequences of any wrongful act committed by any of the partners. the partnership was inescapably chargeable with knowledge of the mortgage executed by all the partners thereof. 1823. he is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact. 1827. (n) Art. UNITED PIONEERS GR L-22493. 1825. even if it’s shown that they have not contributed any capital of their own to a common fund. represents himself. AGUINALDO ATENEO LAW 2010 . (2) When no partnership liability results. ISLAND SALES V. (n) Art. 5. 41 SANTIAGO SYJUCO INC. otherwise separately. 1985 The fact that there was a misunderstanding between the parties doesn’t convert the partnership into a sham organization. let alone a space of more than seventeen years. who has. Joint venture of informal Particular partnership It has legal personality. but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation. NOVEMBER 11. The creditors of the partnership shall be preferred to those of each partner as regards the partnership property. or industry to a common fund. PHIL. The partnership is bound to make good the loss: (1) Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it. and if he has made such representation or consented to its being made in a public manner he is liable to such person. by words spoken or written or by conduct. and (2) Where the partnership in the course of its business receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership. When a person has been thus represented to be a partner in an existing partnership. given credit to the actual or apparent partnership. on the faith of such representation. The rationale for the solidary liability is that the law protects one who in good faith relied on the authority of a partner. brought into play the doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly unauthorized. 1826. he is liable pro rata with the other persons. as a partner in an existing partnership or with one or more persons not actual partners.
the partner acting for the partnership had knowledge of the dissolution. 1831. by the express will of any partner at any time. (2) With respect to persons not partners. either before or after the termination of any specified term or particular undertaking. Art. where the circumstances do not permit a dissolution under any other provision of this article. has only transferred to the partnership the use or enjoyment of the same. (c) By the express will of all the partners who have not assigned their interests or suffered them to be charged for their separate debts. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. (1700a and 1701a) Art. Except so far as may be necessary to wind up partnership affairs or to complete transactions begun but not then finished. but continues until the winding up of partnership affairs is completed. (6) Other equitable. Where the dissolution is caused by the act. the partner acting for the partnership had knowledge or notice of the death or insolvency. 1829. dissolution terminates all authority of any partner to act for the partnership: (1) With respect to the partners: (a) When the dissolution is not by the act. (2) In contravention of the agreement between the partners. (3) By any event which makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership. (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business. or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him. BY: MA. (6) By the insolvency of any partner or of the partnership. (8) By decree of court under the following article. the creditors of the partnership must first be compensated. On dissolution the partnership is not terminated. (n) Art. (n) Art. 1832. but the partnership shall not be dissolved by the loss of the thing when it occurs after the partnership has acquired the ownership thereof. circumstances render a dissolution VILLAREAL V. ANGELA LEONOR C. 1830. AGUINALDO ATENEO LAW 2010 On the application of the purchaser of a partner's interest under Article 1813 or 1814: (1) After the termination of the specified term or particular undertaking. (4) A partner wilfully or persistently commits a breach of the partnership agreement.PARTNERSHIP CODAL AND CASE DIGESTS Page 9 of 16 partnership. when no definite term or particular is specified. Generally relates to a continuing business of various transactions of a certain kind. perishes before the delivery. JULY 14. Before the partners can be paid their shares. (n) Art. Usually limited to a single transaction though it may continue for a number of years 43 1. who must act in good faith. On application by or for a partner the court shall decree a dissolution whenever: (1) A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind. (2) At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued. (5) By the death of any partner. 1833. insolvency or death of a partner. in cases where article 1833 so requires. 1828. it is the partnership that must refund the equity of the retiring partners. (d) By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the partners. or (b) When the dissolution is by such act. (7) By the civil interdiction of any partner. in any case by the loss of the thing. insolvency or death of a partner. It has no firm name or legal personality. each partner is liable to his co-partners for his share of any liability created by any partner acting for the partnership as if the partnership had not been dissolved unless: (1) The dissolution being by act of any partner. when the partner who contributed it having reserved the ownership thereof. 2003 Since the capital was contributed to the partnership. (4) When a specific thing which a partner had promised to contribute to the partnership. (b) By the express will of any partner. or (2) The dissolution being by the death or insolvency of a partner. (2) A partner becomes in any other way incapable of performing his part of the partnership contract. (5) The business of the partnership can only be carried on at a loss. (n) Art. as declared in article 1834. Dissolution is caused: (1) Without violation of the agreement between the partners: (a) By the termination of the definite term or particular undertaking specified in the agreement. not to partners themselves as individuals. RAMIREZ GR 144214. death or insolvency of a partner. DISSOLUTION AND WINDING UP 2. .
and (2) So far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his connection with it. A partner is discharged from any existing liability upon dissolution of the partnership by an agreement to that effect between himself. (n) Art. has the right to wind up the partnership affairs. bona fide under the partnership agreement and if the expelled partner is discharged from all partnership liabilities. may do so. 1 (b). The dissolution of the partnership does not of itself discharge the existing liability of any partner. No. 2. The liability of a partner under the first paragraph. each partner. or (2) Where the partner has become insolvent. less any damages recoverable under the second paragraph. and the surplus applied to pay in cash the net amount owing to the respective partners. however. of this article. if they all desire to continue the business in the same name either by themselves or jointly with others. or the payment secured by a bond approved by the court. except by a transaction with one who: (a) Had extended credit to the partnership prior to dissolution and had no knowledge or notice of his want of authority. or (b) Had not extended credit to the partnership prior to dissolution. but subject to the prior payment of his separate debts. 1834. (3) A partner who has caused the dissolution wrongfully shall have: (a) If the business is not continued under the provisions of the second paragraph. (b) If the business is continued under the second paragraph. may obtain winding up by the court. shall be satisfied out of partnership assets alone when such partner had been prior to dissolution: (1) Unknown as a partner to the person with whom the contract is made. he shall receive in cash only the net amount due him from the partnership. unless otherwise agreed. The partnership is in no case bound by any act of a partner after dissolution: (1) Where the partnership is dissolved because it is unlawful to carry on the business. provided. the fact of his want of authority has not been advertised in the manner provided for advertising the fact of dissolution in the first paragraph. the fact of dissolution had not been advertised in a newspaper of general circulation in the place (or in each place if more than one) at which the partnership business was regularly carried on. ANGELA LEONOR C. unless the act is appropriate for winding up partnership affairs. provided they secure the payment by bond approved by the court. or pay any partner who has caused the dissolution wrongfully. as against each partner who has caused the dissolution wrongfully. Unless otherwise agreed. the value of his interest in the partnership at the dissolution. After dissolution. and in like manner indemnify him against all present or future partnership liabilities. of this article. not insolvent. (n) Art. represents himself or consents to another representing him as a partner in a partnership engaged in carrying business. to have the value of his interest in the partnership. 1835. or (b) Though he had not so extended credit. to damages breach of the agreement. either by payment or agreement under the second paragraph of Article 1835. a partner can bind the partnership. and to be . or (3) Where the partner has no authority to wind up partnership affairs. (2) The partners who have not caused the dissolution wrongfully. But if dissolution is caused by expulsion of a partner. may have the partnership property applied to discharge its liabilities. as against his co-partners and all persons claiming through them in respect of their interests in the partnership. except in contravention of the partnership agreement. 2 (b). and. less any damage caused to his co-partners by the dissolution. had nevertheless known of the partnership prior to dissolution. 1837. No. Nothing in this article shall affect the liability under Article 1825 of any person who. and. No. provided the other party to the transaction: (a) Had extended credit to the partnership prior to dissolution and had no knowledge or notice of the dissolution.PARTNERSHIP CODAL AND CASE DIGESTS Page 10 of 16 Art. ascertained and paid to him in cash. 2. winding up transactions dissolution and the person or partnership continuing the business. except as provided in the third paragraph of this article: (1) By any act appropriate for partnership affairs or completing unfinished at dissolution. that any partner. the right as against his co-partners and all claiming through them in respect of their interests in the partnership. during the agreed term for the partnership and for that purpose may possess the partnership property. the partnership creditor and the person or partnership continuing the business. all the rights of a partner under the first paragraph. 1 (b) of this article. having no knowledge or notice of dissolution. upon cause shown. When dissolution is caused in contravention of the partnership agreement the rights of the partners shall be as follows: (1) Each partner who has not caused dissolution wrongfully shall have: (a) All the rights paragraph of this article. having no knowledge or notice of his want of authority. after dissolution. No. and specified in the first (2) By any transaction which would bind the partnership if dissolution had not taken place. the partners who have not wrongfully dissolved the partnership or the legal representative of the last surviving partner. his legal representative or his assignee. The individual property of a deceased partner shall be liable for all obligations of the partnership incurred while he was a partner. AGUINALDO ATENEO LAW 2010 (b) The right. and such agreement may be inferred from the course of dealing between the creditor having knowledge of the BY: MA. When dissolution is caused in any way. No. 2. No. 1836. subject to liability for damages in the second paragraph. (n) Art.
(c) Those owing to partners in respect of capital. 1839. (6) When a partner is expelled and the remaining partners continue the business either alone or with others without liquidation of the partnership affairs. the surplus of the partnership property after satisfying the partnership liabilities to third persons for any sum of money paid by him for the purchase of an interest in the partnership and for any capital or advances contributed by him. (6) Any partner or his legal representative shall have the right to enforce the contributions specified in No. (n) Art. (9) Where a partner has become insolvent or his estate is insolvent. (c) Those contribution. after all liabilities to third persons have been satisfied. to the creditors of the dissolved partnership shall be satisfied out of the partnership property only.PARTNERSHIP CODAL AND CASE DIGESTS Page 11 of 16 released from all existing liabilities of the partnership. ANGELA LEONOR C. (3) The assets shall be applied in the order of their declaration in No. to the extent of the amount which he has paid in excess of his share of the liability. but without any assignment of his right in partnership property. on account of the retired or deceased partner's interest in the dissolved partnership or on account of any consideration promised for such interest or for his right in partnership property. 1840. 2. 1838. In settling accounts between the partners after dissolution. (b) Those owing to partners other than for capital and profits. either alone or with others. the claims against his separate property shall rank in the following order: (a) Those owing to separate creditors. as follows: (a) partners. (2) When all but one partner retire and assign (or the representative of a deceased partner assigns) their rights in partnership property to the remaining partner. (5) When any partner wrongfully causes a dissolution and the remaining partners continue the business under the provisions of article 1837. but in ascertaining the value of the partner's interest the value of the good-will of the business shall not be considered. if the business is continued without liquidation of the partnership affairs. (2) The liabilities of the partnership shall rank in order of payment. and without liquidation of the partnership affairs. In the following cases creditors of the dissolved partnership are also creditors of the person or partnership continuing the business: (1) When any new partner is admitted into an existing partnership. (n) owing to partners by way of Art. 1 and 2 of this article. No. 2. either alone or with others. as provided by article 1797. entitled: (1) To a lien on. The liability of a third person becoming a partner in the partnership continuing the business. 4. Those owing to creditors other than individual property. or to one or more of the partners and one or more third persons. saving the rights of lien or secured creditors. (d) Those owing to partners in respect of profits. 1 of this article to the satisfaction of the liabilities. (b) Those owing to partnership creditors. partnership creditors shall have priority on partnership property and separate creditors on BY: MA. second paragraph. (b) The contributions of the partners necessary for the payment of all the liabilities specified in No. unless there is a stipulation to the contrary. or right of retention of. (4) When all the partners or their representatives assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partnership. subject to any agreement to the contrary: (1) The assets of the partnership are: (a) The partnership property. the following rules shall be observed. under this article. have a prior right to any claim of the retired partner or the representative of the deceased partner against the person or partnership continuing the business. (8) When partnership property and the individual properties of the partners are in possession of a court for distribution. with the consent of the retired partners or the representative of the deceased partner. 4. (3) When any partner retires or dies and the business of the dissolved partnership is continued as set forth in Nos. When the business of a partnership after dissolution is continued under any conditions set forth in this article the creditors of the dissolved partnership. (2) To stand. and (3) To be indemnified by the person guilty of the fraud or making the representation against all debts and liabilities of the partnership. (n) Art. without prejudice to any other right. (7) The individual property of a deceased partner shall be liable for the contributions specified in No. (5) An assignee for the benefit of creditors or any person appointed by the court shall have the right to enforce the contributions specified in the preceding number. the amount necessary to satisfy the liabilities. AGUINALDO ATENEO LAW 2010 . who continues the business without liquidation of partnership affairs. as against the separate creditors of the retiring or deceased partner or the representative of the deceased partner. the party entitled to rescind is. or when any partner retires and assigns (or the representative of the deceased partner assigns) his rights in partnership property to two or more of the partners. Where a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto. (4) The partners shall contribute. in the place of the creditors of the partnership for any payments made by him in respect of the partnership liabilities.
1983 48 The questioned orders of the judge are intended to wind up the partnership affairs in an orderly manner and to protect the interest of the plaintiff who is the private respondent in this case. having as members one or more general partners and one or more limited partners. Where a check issued to a partner. 5. Upon dissolution. shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or partnership. or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business. winding up. A limited partnership is one formed by two or more persons under the provisions of the following article. LIMITED PARTNERSHIP Art. CA GR 109248. thereto the word "Limited". (c) The location of the principal place of business. general and limited partners being respectively designated. Upon its dissolution. provided that the creditors of the dissolved partnership as against the separate creditors. (n) Art. YU V. in lieu of interest. and liquidation. 45 2. The respondent judge not only had jurisdiction to issue the orders. CHUA GR 143440. 2. RECENTES V. The changes in the membership of the partnership was the dissolution of the old partnership.PARTNERSHIP CODAL AND CASE DIGESTS Page 12 of 16 Nothing in this article shall be held to modify any right of creditors to set aside any assignment on the ground of fraud. 1842. JULY 29. No. he or his legal representative as against such person or partnership may have the value of his interest at the date of dissolution ascertained. is to be funded from receivables to be collected and goods to be sold by the partnership. AUGUST 15. The use by the person or partnership continuing the business of the partnership name. or the representative of the retired or deceased partner. the profits attributable to the use of his right in the property of the dissolved partnership. adding 2. ORTEGA V. A partnership that doesn’t fix the term is a partnership at will. 2001 A partnership may be constituted in any form except when immovable property or real rights are contributed thereto. JUNE 30. and the business is continued under any of the conditions set forth in the preceding article. unless otherwise agreed. 1993 1. third paragraph. or in Article 1837. COURT OF APPEALS GR 110782. Two or more persons desiring to form a limited partnership shall: (1) Sign and swear to a certificate. (n) Art. without any settlement of accounts as between him or his estate and the person or partnership continuing the business. to evidence only his share or interest in the partnership. 3. The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The right to an account of his interest shall accrue to any partner. NLRC GR 97212. SEPTEMBER 25. in the absence of any agreement to the contrary. JULY 3. 2. or the name of a deceased partner as part thereof. The limited partners as such shall not be bound by the obligations of the partnership. 1998 1. 1843. 5. partnership don’t automatically result in the termination of the legal personality of the old partnership The legal personality of a partnership persists for the limited purpose of winding up and closing of the affairs of the partnership A withdrawing partner remains liable to a third party creditor of the old partnership The new partnership is entitled to appoint and hire a new general or assistant general manager to run the affairs of the business enterprise taken over. Occurrence of events which precipitate the legal consequence of dissolution of a 3. ANGELA LEONOR C. The liquidation of the assets of the partnership following its dissolution is governed by various provisions of the CC. in which case a public instrument shall be necessary. which shall state (a) The name of the partnership. (b) The character of the business. as provided Article 1840. 4. Neither would the presence of a period for its specific duration or the statement of a particular purpose for its creation prevent the dissolution of any partnership by an act or will of a partner. the partnership continues and its legal personality is retained until the complete winding up of its business culminating in its termination. 1841. the partnership remains and continues its legal personality until the complete winding up of its business culminating in its termination. 6. at his option or at the option of his legal representative. shall have priority on any claim arising under this article. 46 BY: MA. It wouldn’t be right to let any of the parties remain in the partnership under such atmosphere of animosity. IDOS V. (n) CASE DIGESTS: ARTICLES 1828 TO 1842 44 1. 2. When any partner retires or dies. Art. second paragraph. or. CFI ZAMBOANGA GR 40504. The three final stages of a partnership are its dissolution. AGUINALDO ATENEO LAW 2010 . 1995 47 1. 4. 1844. and only when such collection and sale are realized. at the date of dissolution. he also acted prudently in the premises. the same doesn’t involve a debt of or any account due and payable to the drawer. and shall receive as an ordinary creditor an amount equal to the value of his interest in the dissolved partnership with interest. (d) The name and place of residence of each member. SUNGA CHAN V.
AGUINALDO ATENEO LAW 2010 Art. or (2) Prior to the time when the limited partner became such. and (3) Have dissolution and winding up by decree of court. (k) The right. A limited partner shall have the right to receive a share of the profits or other compensation by way of income. (3) Confess a judgment against the partnership. 1846. of a limited partner to substitute an assignee as contributor in his place. one who suffers loss by reliance on such statement may hold liable any party to the certificate who knew the statement to be false: (1) At the time he signed the certificate. of one or more of the limited partners to priority over other limited partners. and a formal account of partnership affairs whenever circumstances render it just and reasonable. 1848. After the formation of a lifted partnership. A person may be a general partner and a limited partner in the same partnership at the same . Art. if given. A limited partner shall not become liable as a general partner unless. when the contribution of each limited partner is to be returned. 1849. A limited partner shall have the same rights as a general partner to: (1) Have the partnership books kept at the principal place of business of the partnership. 1852. civil interdiction. 1851. (7) Continue the business with partnership property on the death. additional limited partners may be admitted upon filing an amendment to the original certificate in accordance with the requirements of Article 1865. of the partners to admit additional limited partners. unless the right so to do is given in the certificate. as to contributions or as to compensation by way of income. in addition to the exercise of his rights and powers as a limited partner. a general partner with the person or in the partnership carrying on the business. insanity or insolvency of a general partner. and to the return of his contribution as provided in Articles 1856 and 1857. (l) The right. Art. if given. (i) The share of the profits or the other compensation by way of income which each limited partner shall receive by reason of his contribution. by reason of his exercise of the rights of a limited partner. 1847. However. and at a reasonable hour to inspect and copy any of them. If the certificate contains a false statement. BY: MA. (6) Admit a person as a limited partner. or to file a petition for its cancellation or amendment as provided in Article 1865. without the written consent or ratification of the specific act by all the limited partners. 1850. is not. he takes part in the control of the business. and the nature of such priority. if given. of a limited partner to demand and receive property other than cash in return for his contribution. retirement. (4) Possess partnership property. and (n) The right. Art. a person who has contributed to the capital of a business conducted by a person or partnership erroneously believing that he has become a limited partner in a limited partnership. if given. insanity. the business has been carried on under a name in which his surname appeared. (5) Admit a person as a general partner. a general partner or all of the general partners have no authority to: (1) Do any act in contravention of the certificate. or assign their rights in specific partnership property. Art. The contributions of a limited partner may be cash or property. Without prejudice to the provisions of Article 1848. (2) Do any act which would make it impossible to carry on the ordinary business of the partnership. but within a sufficient time before the statement was relied upon to enable him to cancel or amend the certificate. 1845. (m) The right. (h) The time. (g) The additional contributions. (e) The term for which the partnership is to (f) The amount of cash and a description of and the agreed value of the other property contributed by each limited partner. Art. if any. 1853. or (2) Subsequently. (2) File for record the certificate in the Office of the Securities and Exchange Commission. A general partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners. or bound by the obligations of such person or partnership. (2) Have on demand true and full information of all things affecting the partnership. of the remaining general partner or partners to continue the business on the death. ANGELA LEONOR C. and the terms and conditions of the substitution. if agreed upon. Art. A limited partnership is formed if there has been substantial compliance in good faith with the foregoing requirements. unless the right so to do is given in the certificate.PARTNERSHIP CODAL AND CASE DIGESTS Page 13 of 16 exist. Art. for other than a partnership purpose. Art. retirement. provided that on ascertaining the mistake he promptly renounces his interest in the profits of the business. The surname of a limited partner shall not appear in the partnership name unless: (1) It is also the surname of a general partner. A limited partner whose surname appears in a partnership name contrary to the provisions of the first paragraph is liable as a general partner to partnership creditors who extend credit to the partnership without actual knowledge that he is not a general partner. or other compensation by way of income. if given. to be made by each limited partner and the times at which or events on the happening of which they shall be made. but not services. civil interdiction or insolvency of a general partner. (j) The right.
An assignee. unless he is also a general partner. AGUINALDO ATENEO LAW 2010 (3) After he has six months' notice in writing to all other members. or the partnership property is insufficient for their payment as required by the first paragraph. In the absence of any statement in the certificate to the contrary or the consent of all members. A substituted limited partner is a person admitted to all the rights of a limited partner who has died or has assigned his interest in a partnership. not in excess of such return with interest. Art. A limited partner shall not receive from a general partner or out of partnership property any part of his contributions until: (1) All liabilities of the partnership. 1. A limited partner may have the partnership dissolved and its affairs wound up when: (1) He rightfully but unsuccessfully demands the return of his contribution. ANGELA LEONOR C. The receiving of collateral security. a limited partner. No limited partner shall in respect to any such claim: (1) Receive or hold as collateral security and partnership property. to which his assignor would otherwise be entitled. Art. but which was not contributed or which has been wrongfully returned. Where there are several limited partners the members may agree that one or more of the limited partners shall have a priority over other limited partners as to the return of their contributions. and in the absence of such a statement all the limited partners shall stand upon equal footing. When a contributor has rightfully received the return in whole or in part of the capital of his contribution. or (2) When the date specified in the certificate for its return has arrived.PARTNERSHIP CODAL AND CASE DIGESTS Page 14 of 16 time. Art. A limited partner may receive from the partnership the share of the profits or the compensation by way of income stipulated for in the certificate. 1856. If such an agreement is made it shall be stated in the certificate. unless the return of the contribution may be rightfully demanded under the provisions of the second paragraph. necessary to discharge its liabilities to all creditors who extended credit or whose claims arose before such return. who does not become a substituted limited partner. he shall have the rights against the other members which he would have had if he were not also a general partner. either for the return of the contribution or for the dissolution of the partnership. to enforce such liabilities. An assignee shall have the right to become a substituted limited partner if all the members consent . conveyance. conveyance. The liabilities of a limited partner as set forth in this article can be waived or compromised only by the consent of all members. the partnership assets are in excess of all liabilities of the partnership except liabilities to limited partners on account of their contributions and to general partners. he is nevertheless liable to the partnership for any sum. and the limited partner would otherwise be entitled to the return of his contribution. a limited partner may rightfully demand the return of his contribution: (1) On the dissolution of a partnership. or the return of his contribution. and (2) Money or other property wrongfully paid or conveyed to him on account of his contribution. with general creditors. and (3) The certificate is cancelled or so amended as to set forth the withdrawal or reduction. A limited partner also may loan money to and transact other business with the partnership. whether from property of the partnership or that of a general partner. A limited partner's interest is assignable. Art. and also at the same time a limited partner. A limited partner is liable to the partnership: (1) For the difference between his contribution as actually made and that stated in the certificate as having been made. and (2) For any unpaid contribution which he agreed in the certificate to make in the future at the time and on the conditions stated in the certificate. or as to any other matter. 1854. if no time is specified in the certificate. Subject to the provisions of the first paragraph. No. A person who is a general. or payment. have been paid or there remains property of the partnership sufficient to pay them. except that. but a waiver or compromise shall not affect the right of a creditor of a partnership who extended credit or whose claim arose after the filing and before a cancellation or amendment of the certificate. irrespective of the nature of his contribution. Art. 1859. provided that after such payment is made. or (2) Receive from a general partner or the partnership any payment. A limited partner holds as trustee for the partnership: (1) Specific property stated in the certificate as contributed by him. (2) The consent of all members is had. a pro rata share of the assets. 1858. and. as to their compensation by way of income. or (2) The other liabilities of the partnership have not been paid. 1855. receive on account of resulting claims against the partnership. he is only entitled to receive the share of the profits or other compensation by way of income. provided that this fact shall be stated in the certificate provided for in Article 1844. has only the right to demand and receive cash in return for his contribution. 1857. or BY: MA. except liabilities to general partners and to limited partners on account of their contributions. Art. or release in violation of the foregoing provisions is a fraud on the creditors of the partnership. in respect to his contribution. or release from liability if at the time the assets of the partnership are not sufficient to discharge partnership liabilities to persons not claiming as general or limited partners. has no right to require any information or account of the partnership transactions or to inspect the partnership books. shall have all the rights and powers and be subject to all the restrictions of a general partner.
Art. Subject to any statement in the certificate or to subsequent agreement. insanity or civil interdiction of a general partner dissolves the partnership. (2) A person is substituted as a limited partner. in the order of priority as provided by law. and may appoint a receiver. The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner. death. and BY: MA. (8) There is a change in the time as stated in the certificate for the dissolution of the partnership or for the return of a contribution. On due application to a court of competent jurisdiction by any creditor of a limited partner. On the death of a limited partner his executor or administrator shall have all the rights of a limited partner for the purpose of setting his estate. The writing to amend a certificate shall: (1) Conform to the requirements of Article 1844 as far as necessary to set forth clearly the change in the certificate which it is desired to make. if any person designated in the first and second paragraphs as a person who must execute the writing refuses to do so. the amendment shall also be signed by the assigning limited partner. 1860. The substitution of the assignee as a limited partner does not release the assignor from liability to the partnership under Articles 1847 and 1848. 1861. Nothing in this Chapter shall be held to deprive a limited partner of his statutory exemption. (6) Those to general partners in respect to capital. and when a limited partner is to be substituted. the court may charge the interest of the indebted limited partner with payment of the unsatisfied amount of such claim. dies. or (10) The members desire to make a change in any other statement in the certificate in order that it shall accurately represent the agreement among them. and such power as the deceased had to constitute his assignee a substituted limited partner. limited partners share in the partnership assets in respect to their claims for capital. 1863. (4) A person is admitted as a general partner. no time having been specified in the certificate. Art. The interest may be redeemed with the separate property of any general partner. 1864. The substituted limited partner has all the rights and powers. and in respect to their claims for profits or for compensation by way of income on their contribution respectively. (9) A time is fixed for the dissolution of the partnership. The remedies conferred by the first paragraph shall not be deemed exclusive of others which may exist. (3) Those to limited partners in respect to the capital of their contributions. The retirement. or the return of a contribution. Art. directions and inquiries which the circumstances of the case may require. (4) Those to general partners other than for capital and profits. and (2) Be signed and sworn to by all members. In setting accounts after dissolution the liabilities of the partnership shall be entitled to payment in the following order: (1) Those to creditors. insolvency.PARTNERSHIP CODAL AND CASE DIGESTS Page 15 of 16 thereto or if the assignor. The certificate shall be cancelled when the partnership is dissolved or all limited partners cease to be such. it shall order the Office of the Securities and Exchange Commission where the certificate is recorded. AGUINALDO ATENEO LAW 2010 . 1862. (5) A general partner retires. A person desiring the cancellation or amendment of a certificate. If the court finds that the petitioner has a right to have the writing executed by a person who refuses to do so. 1865. An assignee becomes a substituted limited partner when the certificate is appropriately amended in accordance with Article 1865. except those liabilities of which he was ignorant at the time he became a limited partner and which could not be ascertained from the certificate. (3) An additional limited partner is admitted. The writing to cancel a certificate shall be signed by all members. unless the business is continued by the remaining general partners: (1) Under a right so to do stated in the certificate. A certificate shall be amended when: (1) There is a change in the name of the partnership or in the amount or character of the contribution of any limited partner. and is subject to all the restrictions and liabilities of his assignor. becomes insolvent or insane. or (2) With the consent of all members. and an amendment substituting a limited partner or adding a limited or general partner shall be signed also by the member to be substituted or added. to record the cancellation or amendment of the certificate. being thereunto empowered by the certificate. Art. except those to limited partners on account of their contributions. and make all other orders. ANGELA LEONOR C. (5) Those to general partners in respect to profits. may petition the court to order a cancellation or amendment thereof. (6) There is a change in the character of the business of the partnership. gives the assignee that right. (2) Those to limited partners in respect to their share of the profits and other compensation by way of income on their contributions. (7) There is a false or erroneous statement in the certificate. in proportion to the respective amounts of such claims. but may not be redeemed with partnership property. and to general partners. or is sentenced to civil interdiction and the business is continued under Article 1860. Art. Art.
is not a proper party to proceedings by or against a partnership. A limited partnership formed under the law prior to the effectivity of this Code. shall continue to be governed by the provisions of the old law. the court shall also cause to be filed for record in said office a certified copy of its decree setting forth the amendment. A limited partnership formed under the law prior to the effectivity of this Code. A certificate is amended or cancelled when there is filed for record in the Office of the Securities and Exchange Commission. except where the object is to enforce a limited partner's right against or liability to the partnership. AGUINALDO ATENEO LAW 2010 . until or unless it becomes a limited partnership under this Chapter. provided the certificate sets forth: (1) The amount of the original contribution of each limited partner.PARTNERSHIP CODAL AND CASE DIGESTS Page 16 of 16 when the certificate is to be amended. BY: MA. and the time when the contribution was made. the amended certified shall thereafter be for all purposes the certificate provided for in this Chapter. A contributor. Art. 1867. ANGELA LEONOR C. where the certificate is recorded: (1) A writing in accordance with the provisions of the first or second paragraph. (3) After the certificate is duly amended in accordance with this article. and (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. may become a limited partnership under this Chapter by complying with the provisions of Article 1844. unless he is a general partner. Art. or (2) A certified copy of the order of the court in accordance with the provisions of the fourth paragraph. 1866.
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