SECTION II – PROPERTY consent of the

partners.
RIGHTS OF A PARTNER Assets
Included
Includes not
only the
The aggregate
of the
ART. 1810. The property rights of a partner are: original capital individual
(1) His rights in specific partnership property (2) contributions, contributions
His interest in the partnership (3) His right to but also all made by the
participate in the management. (n) property partners in
subsequently establishing or
The partner has the following rights: acquired continuing the
because of partnership.
1) Principal rights. – The property rights of a the
partner are enumerated under the law are partnership or
as follows: w/ partnership
1. Right to the ownership of partnership funds,
property. (ART. 1811) including
2. Right to his interest in the partnership
partnership. (ART. 1812); and name and
3. Right to participate in partnership goodwill.
management. (ART. 1803)
2) Related rights. – A partner has other rights 3) Ownership of certain property. - Property
which are related to the above, namely: use by the partnership – Where there is no
1. The right to reimbursement for express agreement that property used by a
amounts advanced to the partnership constitutes partnership
partnership and to indemnification property, such use does not make it
for risks in consequence of partnership property, and whether it is so
management (ART. 1796); depends on the intention of the parties, w/c
2. The right to access and inspection of may be shown by proving an express
partnership books (ART. 1805); agreement or acts of particular conduct. The
3. The right to true and full information intent of the parties is the controlling factor.
of all things affecting the partnership Property acquired by a partner with
(ART. 1806); partnership funds – Unless a contrary
4. The right to a formal account of intention appears, property acquired by a
partnership affairs under certain partner in his own name with partnership
circumstances (ART. 1809); and funds is partnership property. However, if
5. The right to have the partnership the property was acquired after dissolution
dissolved under certain conditions. but before the winding up of the partnership
(ART. 1830-1831). affairs, it would be his separate property, but
Partnership property and partnership capital he would be liable to account to the
distinguished partnership for the funds used in its
Partnership Partnership acquisition.
property capital
Changes Variable: its Constant: it ARTICLE 1811. A partner is co-owner with his
value value may remains partners of specific partnership property.
vary from day unchanged as
today w/ the amount is The incidents of this co-ownership are such
changes in fix by that:
market value agreement of (1) A partner, subject to the provisions of this
the partners Title and to any agreement between the
and is not partners, has an equal right with his partners to
affected by possess specific partnership property for
fluctuations in partnership purposes; but he has no right to
the value of possess such property for any other purpose
the without the consent of his partners;
partnership
property, (2) A partner’s right in specific partnership
although it property is not assignable except in connection
may be with the assignment of rights of all the partners
increased and in the same property;
decreased by
(3) A partner’s right in specific partnership
unanimous
property is not subject to attachment or
execution, except on a claim against the
partnership. When partnership property is
attached for a partnership debt the partners, or
any of them, or the representatives of a
deceased partner, cannot claim any right under
the homestead or exemption laws;
(4) A partner’s right in specific partnership
property is not subject to legal support under
Article 291. (n)
1. A partner, subject to the provision of this
title and any agreement between the
partner, has an equal right with his
partners to possess specific partnership
property for partnership purposes; but
he has no right to possess such property
for any other purpose without the
consent of his partners;
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;
3. A partner’s right in specific partnership
property is not subject to attachment or
execution, except on a claim against the
partnership; and
4. A partner’s right in specific partnership
property is not subject to legal support
under ART. 291 nature of a partner’s
right in specific partnership property.
 ART. 1811 contemplates tangible property
but not intangible things. A partner is a co-
owner w/ his partners of specific partnership
property, but the rules on co- ownership do
not necessarily apply. The legal incidents of
this tenancy in partnership are distinctively
characteristic of the partnership relation.
They are as follows:
1. Equal rights of possession. -
Ordinarily, a partner has an equal right
to possess specific partnership property
for partnership purposes. None of the
partner scan possesses and uses the
specific partnership property other than
for partnership purposes w/o the
consent of the other partners. Should
any of them use the property for his own
benefit, he must account, like a stranger,
to the others for the profits derived there
from or the value of his wrongful
possession or occupation.
A partner wrongfully excluded from
possession of partnership property by a
co-partner has a right to formal account
and may even apply for a judicial decree
of dissolution. On the death of a partner,
his right in specific partnership property
vests in the surviving partners. By
agreement, the right to possess specific
partnership property may surrender. In
the absence of special agreement,
however, neither partner separately
owns, or has the exclusive right of
possession of any partnership property
or any proportional part thereof.
Each has dominion over the entire
partnership property. The possession of
partnership property by one partner is
the possession of all until his possession
becomes adverse. A partner cannot
initiate title by adverse possession until
and unless he makes an adverse claim.
2. Right not assignable. - A partner
cannot separately assign his right to
specific partnership property but all of
them can assign their rights in the same
property.
Reasons for non-assignability
1. It prevents interference by outsiders in
partnership affairs;
2. It protects the right of other partners and
partnership creditors to have partnership
assets applied to firm debts;
3. It is often impossible to determine the
extent of a partner’s beneficial interest in
a particular partnership asset. Reason
for impossibility: Each partner, having a
beneficial interest in the partnership
property considered as a whole, has a
beneficial interest in each part. Where,
however, none of the above reasons
apply, an authorized assignment by a
partner of his right in specific partnership
property is void, but it may be regarded
as a valid assignment of the partner’s
interest in the partnership. The law
allows a retiring partner to assign his
rights in partnership property to the
partner(s) continuing the business.
 Right limited to share of what remains after
partnership debts has been paid Strictly
speaking, no particular partnership property
or any specific or an aliquot part thereof can
be considered the separate or individual
property of any partner. The whole of
partnership property belongs to the
partnership considered as a juridical person,
and a partner has no interest in it but his
share of what remains after all partnership
debts are paid.
 Consequently, specific partnership property
is not subject to attachment, execution,
garnishment, or injunction, w/o the consent
of all the partners except on a claim against
the partnership. For the same reason that
the property belongs to the partnership, the
partners cannot claim any right under the
homestead or exemption laws when it is
attached for partnership debts. However, a
judgment creditor may levy upon a partner’s
 interest in the partnership itself because it is
actually his property, by means of a
“charging order.”
 The right of the partners to specific
partnership property is not subject to legal
support since the property belongs to the
partnership and not to the partners.
However, their interest in the partnership is.
The method of reaching a judgment debtor’s
interest in partnership property is specifically
set forth in ART.1814.
The partners are considered co-owners of specific
partnership property if Kyungsoo, Junmyeon and
Minseok are partners who own specific property
under the partnership’s name, what are their rights?
1) They can use it for partnership business
purposes
2) They cannot use it for personal
purposes WITHOUT the consent of
others.
Why can’t Kyungsoo simply assign his right with
respect to the partnership’s property?
1) It doesn’t belong to him
2) The extent of his interest with regards to
the property cannot be determined
before dissolution.
 The partnership can altogether assign a
third party with the right to use the property
for partnership business purposes.
 The right of the partners as to the property
is not subject to attachment unless it is a
claim against the partnership due to the
reason that any one partner is not the owner
of it. Under Article 291, the specific
partnership property cannot be used as the
subject of legal support because it does not
belong to any one of the partners.
ART. 1812. A partner’s interest in the
partnership is his share of the profits and
surplus. (n)
 The article defines what the partner’s
interest in the partnership is.
 What is the partner’s interest in the
partnership?
1) DURING operations, the partner’s
interest is his share in profits and losses
2) AFTER
operations/LIQUIDATION/DISSOLUTIO
N, his interest is in the surplus of
partnership assets after all debts have
been cleared.
 Interest can be subject to attachment or
execution because it belongs to the partner,
not the partnership.
 Share of profits and surplus. – The
partner’s interest in the partnership consists
of his share in the undistributed profits
during the life of the partnership as a going
concern and his share in the undistributed
surplus after its dissolution.
o Profits - the excess of returns over
expenditure in a transaction or series
of transactions; or the net income of
the partnership for a given period.
o Surplus - the assets of the
partnership after partnership debts
and liabilities are paid and settled
and the rights of the partners among
themselves are adjusted. It is the
excess of assets over liabilities. If the
liabilities are more than the assets,
the difference represents the extent
of the loss.
ART. 1813. A conveyance by a partner of his
whole interest in the partnership does not of
itself dissolve the partner, or, as against the
other partners in the absence of agreement,
entitle the assignee, during the continuance of
the partnership, to interfere in the management
or administration of the partnership business or
affairs, or to require any information or account
of partnership transactions, or to inspect the
partnership books but it merely entitles the
assignee to receive in accordance with his
contract the profits to which the assigning
partner would otherwise be entitled.
However, in case of fraud in the management of
the partnership, the assignee may avail himself
of the usual remedies.
In case of dissolution of the partnership, 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. (n)
How can a partner convey his interest in the
partnership without getting the partnership
dissolved?
1) By selling it to a third person.
2) By donating it to a third person.
3) By using it as security on a loan from a
third person.
 No one can be compelled to be partners w/
someone else. The assignment does not
divest the assignor of his status and rights
as a partner nor operate as dissolution. The
law, however, provides the non- assigning
collaborates w/ a ground for dissolving the
partnership if they so desire.
 Remedy of other partners Dissolution of
partnership not intended. – Many
partnership agreements are made merely as
security for loans, the assigning partner
never intending to destroy the partnership
relation. If the assigning partner neglects his
duties after assignment, the other partners
 may dissolve the partnership under art.
1830. Dissolution of partnership intended –
A partner’s conveyance of his interest in the
partnership operates as dissolution of the
partnership only when it is clear that the
parties contemplated and intended the
entire withdrawal from the partnership of
such partner and the termination of the
partnership as between the partners.
Rights of assignee of partner’s interest
1) To receive in accordance with his contract
the profits accruing to the assigning partner;
2) To avail himself of the usual remedies
provided by law in the event of fraud in the
management;
3) To receive the assignor’s interest in case of
dissolution;
4) To require an account of partnership affairs,
but only in case the partnership is dissolved,
and such account shall cover the period
from the date only of the last account agreed
to by all partners. The purchaser of a
partner’s interest may apply to the court for
dissolution after the termination of the
specified term or undertaking or at any time
if the partnership is one at will.
Example:
D.O. offers to buy Kai’s interest of
P50,000.00 for P1,000,000.00 and Kai agrees to
sell his interest. What happens now?
D.O. becomes the assignee and Kai becomes the
assignor but the partnership will not be dissolved
because his interest in profits and surplus is the one
being sold. Kai will also continue to be the partner
but D.O. will be the one to receive his profits. This
is similar to sub-partnerships, so the consent of
others is not required for interest to be conveyed.
 The assignee does not have any say in the
management.
Rights of the assignee
1) He shall get the assignor’s share in
profits/surplus
2) He may avail of legal remedies of the
partners in cases of fraud by the assignor
3) He can demand for an accounting upon
dissolution but only starting from the date of
the last accounting undertaken by the
partnership
4) Can ask for the dissolution of the
partnership if it has reached the end term or
anytime if the partnership is one at will,
because he is interested in the surplus. The
assignee, however, cannot become a
partner without the consent of the other
partners because it will entail a change in
the partnership’s composition.
ART. 1814. Without prejudice to the preferred
rights of a partnership creditor under Article
1827, on due application to a competent court
by any judgment creditor of a partner, the court
which entered the judgment, or any other court,
may charge the interest of the debtor partner
with payment of the unsatisfied amount of such
judgment debt with interest thereon; and may
then or later appoint a receiver of his share of
the profits, and of any other money due or to fall
due to him in respect of the partnership, and
make all other orders, directions, accounts and
inquiries which the debtor partner might have
made, or which the circumstances of the case
may require.
The interest charged may be redeemed at any
time before foreclosure, or in case of a sale
being directed by the court, may be purchased
without thereby causing dissolution:
1) With separate property, by any one or
more of the partners
2) With partnership property, by any one or
more of the partners with the consent of
all the partners whose interests are not
so charged or sold.
Nothing in this Title shall be held to deprive a
partner of his right, if any, under the exemption
laws, as regards his interest in the partnership.
(n)
 Refers to a partner who obtained a loan from
a third person and was unable to repay
such.
Application for a charging order after securing
judgement on his credit
 While a separate creditor of a partner cannot
attach or levy upon specific partnership
property for the satisfaction of his credit
because partnership assets are reserved for
partnership creditors, he can secure a
judgment on his credit and then apply to the
proper court for a “charging order”,
subjecting the interest of the debtor partner
in the partnership w/ the payment of the
unsatisfied amount of such judgment w/
interest thereon w/ the least interference w/
the partnership business and the rights of
the other partners. By virtue of the charging
order, any amount or portion thereof w/c the
partnership would otherwise pay to the
debtor-partner should instead be given to
the judgment creditor. This remedy,
however, is w/o prejudice to the preferred
rights of partnership creditors whose claims
should be satisfied first.
Availability of other remedies
 Art. 1814 have made this an exclusive
remedy so that a writ of execution will not be
proper. However, if the judgment debt
remains unsatisfied, the court may resort to
other courses of action notwithstanding the
issuance of the charging order.
 Redemption or purchase of interest
charged Redemptioner. – The interest of
the debtor- partner so charged may be
redeemed or purchased with the separate
property of any one or more of the partners,
or with partnership property but with the
consent of all the partners whose interests
are not so charged or sold.
 Redemption Price. – The value of the
partner’s interest in the partnership has no
bearing on the redemption price w/c is likely
to be lower since it will be dependent on the
amount of the unsatisfied judgment debt.
 Right of redeeming non-debtor partner. –
There deeming non-debtor partner does not
acquire absolute ownership over the debtor-
partner’s interest but holds it in trust for him
consistent w/ principles of fiduciary
relationship.
 Rights of partner under exemption laws.
- A partner cannot claim any right under the
homestead laws or exemption laws when
specific partnership property is attached for
partnership debt. With respect, however, to
the partner’s interest in the partnership as
distinguished from his interest in specific
partnership property, the partner may avail
himself of the exemption laws after
partnership debts have been paid. A
partner’s interest or share in the partnership
property is really his property.
Example:
Sehun failed to pay Baekhyun a sum of
P50,000.00, so Baekhyun files against Sehun,
knowing that Sehun, being a partner, will receive his
interest. Baekhyun wins the case but Sehun is still
unable to pay, so Baekhyun asks that Sehun’s
interest be attached so that it goes to Baekhyun and
cancels out Sehun’s debt. - Done to protect
Baekhyun’s interest - Attached interest can be
redeemed using the property of the partners or the
partnership’s property, as long as all partners
consent to this, and are given reimbursement from
the defaulting partner - Amount charged must be
sufficient to pay the loan plus legal interest.
SECTION III – OBLIGATIONS
OF THE PARTNERS AS TO
THIRD PERSONS
ART. 1815. Every partnership shall operate
under a firm name, which may or may not
include the name of one or more of the partners.
Those who, not being members of the
partnership, include their names in the firm
name, shall be subject to the liability of a
partner. (n)
 Firm names are required for partnerships
because they are juridical persons in need
of separate names so that they are
distinguishable from the partners and other
partnerships.
 The name can come from any of the
partners or third persons.
 If a third person’s name is used with his
consent, then he shall be liable as a partner
without the rights of a partner because the
partnership uses his name.
 Partnership name must be registered with
the (DTI) DEPARTMENT OF TRADE AND
INDSUTRY because if there was already
such an existing name, there might be cases
of duplication.
 You cannot choose the name of a deceased
partner as his death caused the
partnership’s dissolution.
 Requirement of the firm name Meaning of
word “firm”. – The name, title, or style
under which a company transacts business;
a partnership of two or more persons; a
commercial house. In its common
acceptation, the term implies a partnership.
The term is also used as synonymous with
“company,” “house,” and “concern.”
 Importance of having a firm name. - A
partnership must have a firm name under
which it will operate. A firm name is
necessary to distinguish the partnership,
which has a distinct and separate juridical
personality from the individuals composing
the partnership and from other partnerships
and entities.
 Right of the partners to choose firm
name. - The partners enjoy the utmost
freedom in the selection of the partnership
name. As a general rule, they may adopt
any firm name desired.
 Use of misleading name. – The partners
cannot use a name that is identical or
deceptively confusingly similar to that of any
existing partnership or corporation or to any
other name already protected by law or is
patently deceptive, confusing or contrary to
existing laws, as to mislead the public by
passing itself off as another partnership or
corporation, or its goods or services as
those of such other company.
 Liability inclusion of name in the firm
name. – Persons who, not being partners,
 include their names in the firm name do not
acquire the rights of a partner but shall be
subject to the liability of a partner insofar as
3rd Persons without notice are concerned.
Such persons become partners by estoppel.
Art. 1815 does not cover the case of a
limited partner who allows his name to be
included in the firm name, orof a person
continuing the business of a partnership
after dissolution, who uses the name of the
dissolved partnership or the name of a
deceased partner as part thereof.
Sample General and Limited Partnership
Names:
1) GENERAL: SUHO & Company
2) LIMITED: SUHO Ltd.
ART. 1816. All partners, including industrial
ones, shall be liable pro-rata with all their
property and after all the partnership assets
have been exhausted, for the contracts which
may be entered into in the name and for the
account of the partnership under its signature
and by a person authorized to act for the
partnership. However, any partner may enter
into a separate obligation to perform a
partnership contract. (n)
Article 1816 distinguished from article 1787
 Article 1816 applies in cases where third
party creditors are concerned as it falls
under the heading of section 3. “Obligations
of the Partners with Regard to Third
Persons.” Article 1797 applies only where
the issue is among the partners as it falls
under the heading of Section 1, Chapter 2,
which states: “Obligations of the Partners
Among Themselves.” The pro rata liability of
partners to third persons under Article 1816
being a clear mandate of the law, any
stipulation changing or modifying such
liability is void except as among the
partners.
 Refers to partnership obligations Article
1816 which refers to the payment of
partnership obligations arising from
contracts clearly imposes subsidiary and
joint (pro rata) liability for contractual debts
owing to third persons upon all the partners,
including industrial partners who ordinarily
are not liable for losses. The liability is
subsidiary because the partners cannot be
made answerable with their separate
property unless the partnership property has
first been exhausted.
 Pro rata liability. – Literally, pro rata liability
means proportionate distribution of liability.
In the law of obligations, the concurrence of
two or more debtors in one and the same
obligation makes it prima facie a joint (pro
rata) obligation, and the debts is presumed
divided into as many equal shares as there
are debtors and each one of them is bound
to pay only his share.
ART. 1817. Any stipulation against the liability
laid down in the preceding article shall be void,
expect as among the partners. (n)
 As to third persons, ALL partners are liable
pro-rata and subsidiary, but as to each
other, they are liable in proportion to their
capital contribution.
 Industrial partner cannot exempt himself
from liability to third persons Each one of the
industrial partners is liable to third persons
for the debts of the firm and if he has paid
such debts out of his private property during
the life of the partnership, when its affairs
are settled he is entitled to credit for the
amount so paid, and if its results that there
is not enough property in the partnership to
pay him, then the capitalist partners must
pay him. Our conclusion is that neither on
principle nor on authority can the industrial
partner be relieved from liability to third
persons for the debts of the partnership.
Examples:
1) Jongdae, Baekhyun and Chanyeol are in a
partnership where Chanyeol is the industrial
partner and a sum of P26,000.00 is owed to
Kyungsoo. Jongdae and Baekhyun
contributed P15,000.00 and P5,000.00
respectively. How shall the debt be shared?
2) As to Kyungsoo, the partners will share
equally in the debt left after exhausting all
assets (P6,000.00) so they will each have to
pay P2,000.00 regardless of Chanyeol
being an industrial partner. If Chanyeol is
insolvent, or if Baekhyun died, or if Jongdae
has left the country, the liability of the
partners cannot be increased.
3) As to each other, they are liable in
proportion to their capital contribution, so
Baekhyun and Chanyeol will be reimbursed
by Jongdae.
4) Jongdae, Baekhyun, Chanyeol, Kyungsoo
and Jongin are sued in court but Jongin is
later cleared of his charges. The court
orders Jongdae, Baekhyun, Chanyeol and
Kyungsoo to pay their creditor, but Chanyeol
moves to reconsider that all should be
charged, but this move was denied. Can
Jongdae, Baekhyun, Chanyeol and
Kyungsoo alone be liable for the debt?
5) According to the Supreme Court, the 4
partners cannot alone be liable for the debt
because in excluding Jongin, they have
increased the other partners’ liability, and
 this is prohibited by the law. The law states
that the liability of the partners cannot be
increased such that they shoulder the
liability of another partner.
6) What if there was an agreement that stated
Baekhyun is only liable up to P5,000.00?
How will Jongdae, Baekhyun and Chanyeol
share in their liability? The stipulation shall
be void as to third persons, so they will still
share pro-rata. Anyway, Baekhyun and
Chanyeol will be reimbursed by Jongdae,
because as among themselves, the
stipulation is valid and Chanyeol is an
industrial partner.
ART. 1818. Every partner is an agent of the
partnership for the purpose of its business, and
the act of every partner, 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, unless the
partner so acting has in fact no authority to act
for the partnership in the particular matter, and
the person with whom he is dealing has no
knowledge of the fact that he has no such
authority.
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.
Except when authorized by the other partners or
unless they have abandoned the business, one
or more but less than all the partners have no
authority to:
1) Assign the partnership property in trust
for creditors or o the assignee’s promise
to pay the debts of the partnership;
2) Dispose of the goodwill of the business;
3) Do any other act which would make
impossible to carry on the ordinary
business of a partnership;
4) Confess a judgment;
5) Enter into a compromise concerning a
partnership claim or liability;
6) Submit a partnership claim or liability to
arbitration;
7) Renounce a claim of the partnership.
No act of a partner in contravention of a
restriction on authority shall bind the
partnership to persons having knowledge of the
restriction. (n)
 Qualifies the authority of partners.
 Authority must be in the usual course of
business.
 Transactions beyond a partner’s authority is
binding if it is in the usual course of business
because the third person is assumed to
have no knowledge of his lack of authority.
When are transactions not binding?
1) When a transaction is not in the usual
course of business and has no consent from
all other partners; and
2) When the third person had knowledge of the
lack of authority of the acting partner.
ART. 1819. Where title to real property is in the
partnership name, any partner may convey title
to such property by a conveyance executed in
the partnership name; but the partnership may
recover such property unless the partner’s act
binds the partnership under the provisions of
Article 1818, 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, in making
the conveyance, has exceeded his authority.
Where title to real property is in the name of the
partnership, a conveyance executed by a
partner, in his own name, passes the equitable
interest of the partnership, provided the act is
one within the authority of the partner under the
provisions of Article 1818.
Where title to real property is in the name of one
or more but not all the partners, and the record
does not disclose the right of the partnership,
the partners in whose name the title stands may
convey title to such property, but the
partnership may recover such property if the
partner’s act does not bind the partnership
under Article 1818, unless the purchaser of his
assignee, is a holder for value without
knowledge.
Where title to real property is in the name of one
or more or all partners, or in a third person in
trust for the partnership, a conveyance
executed by a partner in the partnership name,
or in his name, passes the equitable interest of
the partnership, provided the act is one within
the authority of the partner under Article 1818.
Where title to real property is in the names of all
the partners a conveyance executed by all the
partners passes all their rights in such property.
(n)
 Refers to the conveyance of immovable
property
 Suppose Yixing, Junmyeon and Minseok
are partners engaged in the buying and
selling of property, and the following
situations occur:
1) Yixing, without authority, sells land to
Jongdae in the partnership’s name
but Jongdae immediately sells it to
Baekhyun.
 2) The land title was originally under
the partnership’s name. Can the
partnership recover the land? Title
passes to Jongdae, then to
Baekhyun. The partnership cannot
recover the land once it has
transferred to Baekhyun but if the
land was still with Jongdae, they
could have recovered it if the
contract was not binding.
3) What if Yixing sells the property
under his name? Only the equitable
title passes to Jongdae.
4) What if Yixing sells the property and
the land title is registered under his
name? Title passes to Jongdae
because land is registered under the
partner’s names. This will hold true if
Yixing, Junmyeon and Minseok are
co-owners of the land, even if only
Yixing sold it to Jongdae.
5) Land title belongs to one or more or
all of the partners or a third person in
trust for the partnership. Only the
equitable title will pass to Jongdae if
the seller had no authority to sell
such to Jongdae.
6) Yixing, Junmyeon and Minseok ALL
sell the land to Jongdae, with the
land title belonging to ALL of them.
Title passes to Jongdae because
ALL partners sell to him.
ART. 1820. An admission or representation
made by any partner concerning the partnership
affairs within the scope of his authority in
accordance with this Title is evidence against
the partnership. (n)
Anything a partner says or admits, as long as it is
concerning the partnership affairs and it is within the
scope of his authority, is sufficient evidence against
the partnership.
This article is a rule of evidence. In order that
admission/representation made can be used as
evidence, the existence of the partnership must be
established and proved first.
Example:
1) Kyungsoo, a partner, borrows money from
the bank and declares that the money
borrowed is for the partnership. This
statement, made by Kyungsoo, is enough
evidence against the partnership and the
bank may use this in case the partnership
does not pay back the money borrowed.
2) Kyungsoo, Baekhyun, and Chanyeol are
partners. A told Jongin, a third person, that
the debtor already paid his obligation to the
partnership. Is this enough evidence against
the partnership? YES, since it concerns
partnership affairs and the partner has
authority to say so.
ART. 1821. Notice to any partner of any matter
relating to partnership affairs, and the
knowledge of the partner acting in the particular
matter, acquired while a partner or then present
to his mind, and the knowledge of any other
partner who reasonably could and should have
communicated it to the acting partner, operate
his notice to or knowledge of the partnership,
except in the case of a fraud on the partnership,
committed by or with the consent of that
partner. (n)
 IN SHORT, notice to ANY of the partners is
notice to the partnership. (You don't have to
notify EVERY partner in relation to
partnership affairs).
 Knowledge of a partner acting in a particular
manner (meaning the partner is a managing
partner), or knowledge of any partner who
SHOULD HAVE communicated it to the
managing partner, is knowledge to the
partnership.
 This is so EVEN IF the non-managerial
partner does not communicate the
information, he knows regarding partnership
affairs. The partner SHOULD have
communicated this. Non-knowledge by
other partners is not a reason to evade from
obligations.
 If notice is delivered to a partner, that is an
effective communication to the partnership,
notwithstanding the failure of the partner to
communicate such notice or knowledge to
the other partners.
 Notice to partner is notice to partnership
Clearly a third person desiring to give notice
to a partnership of some matter pertaining to
the partnership business need not
communicate with all of the partners. If
notice is delivered to a partner, that is an
effective communication to the partnership.
 Knowledge before becoming partner Where
the knowledge or notice had been received
by the partner before he became a partner,
and his partners are ignorant of this, and he
is not the partner acting in the particular
matter, there is no doubt that there has been
neither knowledge of nor notice to the
partnership.
Example:
1) Sehun, Jongin, and Kyungsoo are partners
where Baekhyun is the managing partner.
Jongdae, a third person, filed a case against
the partners AND the partnership for some
unknown reason. Does Baekhyun need to
notify all of them?
 2) If this is done, Baekhyun just needs to notify
either Sehun, Jongin, or Kyungsoo, but
doesn't have to notify ALL OF THEM
(imagine if there are 100 partners, it would
be burdensome and costly to notify all 100).
3) So, if Sehun is notified about the case, that
is considered by Baekhyun as notice to
EVERYONE even if Sehun is not a
managerial partner (since Aehun should
communicate this to all partners).
4) Suppose Baekhyun wants to sell a piece of
land to the partnership and notifies Jongin
(the managing partner) about it but warns
him that the land is under litigation and there
is a possibility of the land to be claimed by
Chanyeol.
5) Jongin took the risk and purchased the land.
Later on, Chanyeol still claimed the land.
Can the partners reclaim this? Even though
ALL partners were not informed about the
litigation, the partnership cannot get the land
anymore since Jongin was informed about
it. Notice to Jongin, the acting partner, is
already notice to the partnership.
6) Suppose before Jongin became a partner,
Baekhyun was able to talk to him about the
piece of land under litigation. Later on,
Jongin became a managing partner and
purchased the land Baekhyun told him
about a long time ago. Chanyeol won the
litigation and was able to claim the land. Can
the partnership reclaim the land? The
partnership cannot get it anymore. Even if
Baekhyun was not informed WHILE he was
a partner, the information was still present in
his mind. The issue here would be: If Jongin
can still recall the conversation he had with
Baekhyun before he became a managing
partner.
7) Suppose Baekhyun informed Kyungsoo
(who is not a managing partner) about the
land under litigation. Later on, Baekhyun
sold the land to Jongin, the managing
partner, without informing him that the land
was under litigation (take note: the
information was given to Kyungsoo). Is
notice to Kyungsoo, a notice to Jongin?
YES, because Kyungsoo should have
communicated the information.
 In cases (4), (6) and (7), the partnership
can't file action for damages against
Baekhyun since the "partnership had
knowledge" about the litigation but the
partners still took the risk of buying the land.
ART. 1822. Where, 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 his co-partner, loss or
injury is caused to any person, not being a
partner in the partnership, or any penalty is
incurred, the partnership is liable therefore to
the same extent as the partner so acting or
omitting to act. (n)
 Partner liable for wrongful act of a partner
The partners are liable for the negligent
operation of a vehicle by a partner, acting in
the course of business, which results in a
traffic accident.
 If he is driving a partnership-owned vehicle
for purposes of his own, the acting partner
alone is liable it is not a partnership tort.
 Partnership may proceed against negligent
partner Where a partnership is liable to a
third person, there is a right of indemnity
against the partner whose negligence
caused the injuries.
ART. 1823. The partnership is bound to make
good the loss:
1) Where one partner acting within the
scope of his apparent authority receives
money or property of a third person and
misapplies it; and
2) Where the partnership in the course of its
business receives money or property of
a third person and the money or property
so received is misapplied by any partner
while it is in the custody of the
partnership. (n)
Partnership bound by partner’s breach of trust. The
partnership is liable for the conversion
(misappropriation) of money or property entrusted
to the partnership by a third person. The effect
under ART. 1824 is the same whether by the
partnership and subsequently misappropriated by a
partner.
ART. 1824. All partners are liable solidarily with
the partnership for everything chargeable to the
partnership under Articles 1822 and 1823. (n)
 Law imposes solidary liability. The law
imposes solidary liability upon the partners
and the partnership in cases of torts and
acts of conversion by a partner as provided
in Art. 1824. It may be stated that the liability
of a partner for a debt of the partnership
depends upon whether the debts is
contractual, or it arises from tort or
conversion. If it arises from contract, the
liability is subsidiary and pro rata; if it arises
from tort or conversion, the liability is
solidary.
 Business partners solidarily liable Arts. 1711
and 1712 of the New Civil Code and Sec. 2
of the Workmen’s Compensation Act
reasonably indicate that in compensation
cases, the liability of business partners
should be merely joint and not solidary, and
one of them happens to be insolvent, the
 amount awarded to the dependents of the
deceased employee would only be partially
satisfied, which is evidently contrary to the
intent and purpose of the law to give full
protection to the employee.
In the following cases, obligation is not pro-rata or
equal, but a solidary obligation. Any partner MAY
pay for the obligation (Unlike in article 1816, each
partner should only pay for their SHARE):
1) When by an unlawful act or omission, loss
or injury is caused to 3rd person.
Example:
a. Kai, Baekhyun, and Chanyeol are
partners. Kai made an act of
omission with Kyungsoo as the
victim. He caused P50,000 worth of
injury to Kyungsoo. What can
Kyungsoo do? He can go to Kai for
the full amount of P50,000 OR
FROM Baekhyun OR Chanyeol.
b. Can Kyungsoo go to Baekhyun for
the whole P50,000 since Baekhyun
is the richest among the partners?
This is allowable since the partners
have a solidary obligation through
Kai’s act of omission. Baekhyun will
be entitled for reimbursement from
the one responsible, Kai. - Any one
of Kai, Baekhyun, OR Chanyeol, or
all partners including the partnership
can pay without prejudice to the
rights of partners to get
reimbursement from the one
responsible for the crime
2) A partner, within the scope of his authority,
receives money or property from a third
person and misapplies it.
Example:
A partnership is engaged in a
pawnshop business. D.O., a third person,
pawned his watch to Kai and Kai sells it.
Who is liable for the watch? All partners are
solidarily liable to D.O. since Kai misapplies
the watch received from D.O.
3) The partnership, in its ordinary course of
business, receives money or property from
a 3rd person and a partner misapplies it
while in the custody of the partnership.
Example:
The partnership is engaged in a
pawnshop business where it received a
watch from D to be pawned. The watch is
placed in the partnership VAULT. B, a
partner, gets the watch from the vault and
sells it. Who is liable for the watch? All
partners are solidarily liable.
ART. 1825. When a person, by words spoken or
written or by conduct, represents himself, or
consents to another representing him to
anyone, as a partner in an existing partnership
or with one or more persons not actual partners,
he is liable to any such persons to whom such
representation has been made, who has, on the
faith of such representation, given credit to the
actual or apparent partnership, and if he has
made such representation or consented to its
being made in a public manner he is liable to
such person, 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 consent to its being made:
1) When a partnership liability results, he is
liable as though he were an actual
member of the partnership;
2) When no partnership liability results, he
is liable pro rata with the other persons,
if any, so consenting to the contract or
representation as to incur liability,
otherwise separately.
When a person has been thus represented to be
a partner in an existing partnership, or with one
or more persons not actual partners, 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, with respect to persons who rely
upon the representation. When all the members
of the existing partnership consent to the
representation, a partnership act or obligation
results; but in all other cases it is the joint act or
obligation of the person acting and the persons
consenting to the representation. (n)
 Estoppel. – A preclusion, in law, which
prevents a man from alleging or denying a
fact, in consequence of his own previous
act, allegation, or denial of a contrary tenor.
 Person bound by his representation. - A
person who hold himself out as a partner in
a business, or consents to his being so held
out, is liable on contracts made with third
persons who deal with the persons carrying
on the business on the faith of the
representation. He is stopped to deny the
apparent agency.
Two things being mentioned:
1) PARTNERSHIP by estoppels. - There is an
existing partnership, and partners
misrepresent themselves together with a
third person.
Example:
a) Suppose there is a partnership, EXO-
SKY, with partners Kai, Sehun, and
Chanyeol. Jongdae told Baekhyun that
 he is a partner of Kai, Sehun, and
Chanyeol. Baekhyun verified from the
actual partners of EXO-SKY partnership
if Jongdae is really a partner, Kai,
Sehun, and Chanyeol consented.
Baekhyun entered in a contract with
Jongdae, believing he was a partner.
This is partnership by estoppels since
Kai, Sehun, and Chanyeol verified
Jongdae as a partner. In this case,
Baekhyun can go after Kai, Sehun, and
Chanyeol
b) Suppose only Kai and Sehun
consented, is there a partnership by
estoppels? There will be no partnership
by estoppels since only Kai and Sehun,
not all partners, consented to Jongdae’s
misrepresentation.
2) PARTNERS by estoppels. - Two or more
persons pretend to be partners in the eyes
of third persons.
Example:
Kai, Sehun, and Chanyeol said they were
partners to Jongdae and entered in a
contract with the three partners. When it was
time for them to pay Jongdae for their
obligation, they cannot for the reason that
they are not partners. What is their
obligation to Jongdae? Their obligation to
Jongdae will be pro rata, as if they were
partners (since they are partners by
estoppels)
ART. 1826. A person admitted as a partner into
an existing partnership is liable for all the
obligation of the partnership arising before his
admission as though he had been a partner
when such obligation were incurred, except that
this liability shall be satisfied only out of
partnership property, unless there is a
stipulation to the contrary. (n)
 Incoming partner liable for existing
obligations A newly admitted partner is liable
for obligations of the partnership at the time
of his admission. The obligation of the
incoming partner shall be satisfied only out
of partnership property. This is not a harsh
rule because the incoming partner “partakes
of the benefit of the partnership property,
and an established business. He has every
means of obtaining full knowledge of
protecting himself, because he may insist on
the liquidation or settlement of existing
partnership debts. On the other hand, the
creditors have no means of protecting
themselves.
 A new partner admitted to an existing
partnership is also liable to the obligations
existing before he was admitted, but his
liability only extends to his contribution to the
partnership UNLESS stipulated.
 A new partner is liable to his separate
property when the obligation was incurred
when he was already a partner.
Example:
Xiumin, Baekhyun, and Chen are the
original partners of the partnership EXO-
CBX with contributions of P10,000.00 each.
EXO-CBX partnership owes Chanyeol
P40,000.00. Later on, Kyungsoo entered the
partnership and contributed P4,000.00. How
shall the debt be paid? P34,000.00 will be
paid to Chanyeol out of the partnership
assets, and the P6,000 will be paid through
Xiumin, Baekhyun, and Chen’s personal
assets. The P6,000.00 will be divided
among the three original partners pro rata.
ART. 1827. The creditors of the partnership shall
be preferred to those of each partner as regards
the partnership property. Without prejudice to
this right, the private creditors of each partner
may ask for the attachment and public sale of
the share of the latter in the partnership assets.
(n)
Partnership creditors have BETTER RIGHTS to
partner obligation WITH REGARD TO
PARTNERSHIP PROPERTY.
Personal creditors of partners have BETTER
RIGHT than a partnership creditor with regards to
PERSONAL PROPERTY of the partner.
Example:
1) Suho, Lay, and Chen are partners. Suho
OWES Minseok P6,000.00. The
PARTNERSHIP OWES Sehun P28,000.00.
The total partnership assets amount to
P40,000.00. Who has better right to the
partnership property? In this case, Sehun,
the partnership creditor, has a better right to
the partnership property. When obligation to
Sehun is paid, what will be left for the
partners to share is P4,000.00. If Minseok,
the personal creditor of Suho, demands to
be paid out of partnership property, he will
only get P4,000.00 from it since the priority
is the partnership creditor. The P2,000.00
will be paid out from Suho’s personal
property.
2) If total partnership assets are only
P28,000.00, and the liability of the
partnership is P40,000, how shall the debt
be paid? Suho, Lay, and Chen will have to
pay Minseok P6,000.00 each.
3) If Suho only had P6,000.00 of personal
property, who will have the better right to
this? Suho’s priority is his personal creditor,
Minseok. So Sehun cannot collect Suho’s
share of P4,000.00. Sehun cannot, also,
increase the obligation of the other partners
to be able to collect their debt.