CHAPTER 1 General provisions
JOINT VENTURE
PARTNERSHIP
 A contract wherein 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.
Profession- is a group of men pursuing a
learned art as a common calling in the spirit
of public service
ESSENTIAL REQUISITES
 Valid contract
 Contribution of money,
property, or industry
 Organized for gain or profit
Have a lawful object or purpose, establish for
common benefit or interest
“Public instrument is necessary only where
immovable property or real rights are
contributed”.
“An oral contract of partnership is as good as a
written one”.
CHARACTERISTICS of contract of a
partnership
1. Consensual – perfected by mere
consent; had a meetings of minds.
2. Commutative – contribution of each
partner is considered as the
equivalent of the other partners.
3. Principal– does not depend on other
contract for its existence.
4. Bilateral– entered by two or more
persons.
5. Onerous– each partner must
contribute.
6. Nominate- has name in law.
7.7 Preparation-for another contract.
PARTNERSHIP VS.
Being a form of partnership, a joint venture is
generally governed by the law on
partnership.
DOCTRINE OF DELECTUS PERSONAE
“The right to choose with whom a person
wishes to associate himself”.
 Is the very foundation and essence of
partnership
DELECTUS PERSONARUM “Choice of
persons”
DELECTUS PERSONAE “Choice of the
person”
BEST EVIDENCE OF THE EXISTENCE OF A
PARTNERSHIP
Unsold goods and uncollected receivables,
which were presented to the trial court.
1768
ARTIFICIAL/JURIDICAL PERSON
Created by law and given certain legal rights
and duties of human being. The partnership
itself which is the juridical person can:
1. Acquire and possess real and personal
property
2. Incur obligations
3. Bring civil or criminal actions
1769
RULES to determine partnership exist:
 Persons who are not partners as to
each other are not partners as to third
persons.
Example: If A and B say publicly that
they are not partners, then according
to Article 1825, if they told C that they
are and C enters into a contract of
partnership with them, then A and B
are in Partnership of Estoppel
 2. The profits shall be confiscated in
 Co-ownership or co-possession does favour of the government.
not of itself establish a partnership. 3. The instruments or tools and proceeds
of the crime shall be forfeited in favour
PARTNERSHIP VS. CO-OWNERSHIP of the government.
Partnership Co-ownership 4. The contributions of the partners shall
not be confiscated unless they fall
Creation Created by Created by under no. 3.
contract contact and
law
Example: A and B are partners where A
Juridical It can be sue None contributed P100,000 in cash and B
personality or be sued contributes gambling paraphernalia. They
were raided and the gambling
Purpose For profit Common paraphernalia was confiscated, can the
enjoyment of a P100,000 also be confiscated? -No
thing or right because the P100,000 was not the reason
Profit It may be Must always for crime anyway. The state is therefore
stipulated depend on the required to return this amount on A.
upon proportionate
shares 1771
Dissolution By death or It is not “A partnership may be constituted in any
incacity of dissolved by form”
partner the death of
co-owner EXCEPTION: If real properties or real rights
in real properties are contributed regardless
Form When a real No public of the value. A public instrument is needed;
property is instrument is otherwise, the contract of partnership is void.
contributed, needed.
a public REAL RIGHTS- connected with a thing rather
instrument is than a person.
required.
PUBLIC INSTRUMENT- a document prepared
by a notary public in the presence of the
parties who sign it before witnesses.
 The sharing of gross returns does not
of itself establish a partnership. 1772
Partnerships with a capital of 3,000 or more
 The receipt by a person of a share of
must register with the SEC. Registration
the profits of a business is prima facie
requirement is not mandatory.
evidence that he is a partner in the
business PURPOSE OF REGISTRATION
1770 The registration is to set “a condition for the
“UNLAWFUL PARTNERSHIP is dissolved by a issuance of licences to engage in business or
judicial decree; profits confiscated by State”. trade.”
EFFECTS OF AN UNLAWFUL PARTNERSHIP Example: A and B promise to contribute to
their partnership money worth P10,000 each
1. The contract is void from the very
within one year from their agreement. A
beginning.
contributes early but when the time comes for the one liable. liable for the
B to contribute his share he refuses to do so. debts of the
Can A compel B to give his contributions? -No, association.
A cannot compel B to pay his contribution to
the partnership, because the contract or
agreement between two parties was purely ASSOCIATION, cannot sue because it doesn’t
oral and never really written and it has have legal personality”.
already been one year since they agreed to
their contract terms 1776
CLASSIFICATION OF PARTNERSHIP
1773 1. According to object
“A contract of partnership is void, whenever a.) Universal partnership of all
immovable property is contributed thereto, if profits.
an inventory of said property is not made, - All partners may acquire by their
signed by the parties, and attached to the work
public instrument. - Only the usufruct of the
properties of the partners
“This article was intended to protect third becomes common property.
persons”. - Less obligation because their real
and personal properties are
1774 retained by them in naked
IMMOVABLE PROPERTY ownership.

- To be acquired must be in the name of b.)Universal partnership of all

the partnership and if conveyed must present property
also be in the partnership name. - Contributes and divide the profits
among themselves.
- Inheritance, Legacy or Donation
1775 cannot be included in the
PARTNERSHIP VS ASSOCIATION stipulation, but the fruits can be
included(Art.1779)
Partnership Association - Future property cannot be
donated (Art.1779)
Juridical It has None
personality juridical 2. According to liability
personality General Partnership
Purpose It is for profit It may not be - Liable up to the extent of their
for profit separate properties after the assets of
the partnership have been exhausted.
Contribution Money, No
Limited Partnership
of members property, or contribution
- Liable only to the extent of his
industry or a although fees
contribution.
combination are usually
- Discussed in chapter 4.
of these collected to
maintain the
organization 3. According to Duration
Liability The Members are Partnership at will
partnership is individually
 - No fixed term, continued after the
termination of such term without any
express agreement.
Partnership with a fixed term
- Period of existence agreed upon by
the partners
Partnership for a particular undertaking
- Exist until the purpose is accomplished
4. According to representation to others
Ordinary Partnership
*Insert partnership meaning*
Partnership by estoppel
- Person, by words spoken or written
or by conduct, represents themselves,
as partners in an existing partnership
5. According to the legality of its existence
De Jure Partnership
- Complied with legal requirements for
its creation
De Facto Partnership
- Not complied with legal requirements
for its creation
PRESUMPTION IN FAVOR OF
UNIVERSAL PARTNERSHIP OF PROFITS
The universal partnership of profits imposes
less obligation because their real and
personal properties are retained by them in
naked ownership.
CHAPTER 2
OBLIGATIONS of the partners
KINDS OF PARTNERS
1. As to Contribution
a.) Capitalist partners
- Contribute money or property or
both
b.) Industrial partners
- Contribute their labor or
industry/service
c.) Capitalist-industrial partners
- Contributes money, property and
industry
2. as to Liability
a.) General Partners
- Can be held liable to third persons
for partnership obligations, even
to the extent of their separate
property.
b.) Limited Partners
- Cannot held liable to third
persons
3. As to Management
a.) Managing Partners
- Manage actively the business
b) Silent Partners
- do not take active part in the
business though they share in the
profit or losses.
c.) Liquidating Partners
- take charge of the winding up or
liquidation of the partnership
affairs after dissolution.
4. as to third persons
a.) Ostensible Partners
- Take active part and known for
the public.
b.) Secret Partners
- Not known to the public
c.) Dormant Partners
- Do not take active part and not
known to the public as partners.
Both silent and secret partners.
5. As to membership
a.) Real Partners
- Existing legal right
b.) Partners by estoppel
 - Not really partners but represents
themselves to anyone as partners
6. As to continuation of the businesses
affairs after dissolution
a.) Continuing Partners
- Continue the partnership after
dissolution
b.) Discontinuing Partners
- Do not continue the business
7. As to the nature of membership
a.) Original Partners
- Members from the time of its
constitution
b.) Incoming Partners
- Members after its establishments
c.) Retiring Partners
- Withdraw from partnership
8. As to state of survivorship
a.) Surviving Partners
- Continue the partnership after the
dissolution by reason of death of a
partner
b.) Deceased Partners
- Died while being a member
9. As to the effect of expulsion
a. Expelled Partners
- Expelled from partnership for a
valid cause
b. Expelling Partners
- caused the expulsion of a
partner with a valid reason
10. As to the value of the contribution
a. Majority Partners
- Represents the majority or
controlling interest
b. Nominal Partners
- Represents the minority interest
SECTION 1 OBLIGATIONS OF
THE PARTNERS AMONG
THEMSELVES
Legal Relations created by a contract of
Partnership
1. Between partners
2. Between partners and the
partnership itself
3. Between partners and third
persons
4. Between partnership and third
person
OBLIGATIONS OF PARTNERS
 Give promised contribution
 Not to convert partnership money for
personal use
 To account and hold as trustee for any
profits derived without consent of
partners
 Not to engage same business with the
partnership
 Managing partners; credit to the
partnership the payment made by the
debtor
 Share the partnership credit when
they receive from insolvent debtor
 Pay damages
Rights of Partners
 Associate with another person in their
share
 To have access, inspect and copy
partnership books
 Demand formal account
 Ask for dissolution of the partnership
 Property rights
 specific partnership property
 interest in the partnership
participate in management
“LIMITED PARTNERS have no right to
participate in the management”.
 1784
 Partnership begins from the moment
of the execution of the contract.
Future Partnership
 Partners may stipulate some other
date for the commencement of the
partnership.
1785
Partnership with a fixed term
 Life or period of the partnership that
been agreed upon by the partners;
automatically dissolved the
partnership.
 Appraisal is necessary to determine
how much has been contributed by
the partners.
The appraisal is made by:
 Stipulation
 If there’s no stipulation, expert chosen
by the partners according to the
current prices
1788
ESSENCE OF PARTNERSHIP
Being a contract of partnership, each partner
must share in the profits and losses of the
venture.

Partnership for a particular undertaking CASES COVERED OF THE LIABILITY FOR

DAMAGES AND INTEREST
 Will exist until the purpose is
accomplished
1. Money promised by a partner is
Partnership at Will not given on time
2. Money of the partnership is
 Partnership that does not fix its term converted to partners’ own use

1789
1786
CAPITALIST PARTNER VS INDUTRIAL
Obligation of every partner PARTNER
Capitalist Industrial
1. The obligation to contribute partner partner
what had been promised
 Remedy; specific performance with Contribution Money and Industry
interest and damages. property
2. The obligation to deliver the
fruits Prohibition to Cannot Cannot
 Debtor for the interest and damages engage in other engage in engage in
from the time he should have business the same business for
complied. kind in himself
which the
3. The obligation to warrant partnership Exception:
 Specific and determinate things which is engaged if the
a partner contributed partnership
expressly
permits
1787
him to do
so.
Profits Shares in Shares in partners who refuse to
profits: profits: contribute additional
agreement agreement capital they shall be
or or he shall obliges to sell their
proportion receive interest to the other
from the such share capitalist partner who are
contribution as may be willing to contribute
just and additional capital.
equitable
“Not applicable for Industrial Partners
because they are already giving their entire
industry”.
Losses Agreement Not liable 1792
as to losses for losses.
or profits. If - If there is debt to the
there is no partnership and to the
agreement managing partner, payment
in shall be applied to both
proportion credits proportionately.
to his
contribution “Not applicable to the partner who is not
managing partner”.
OBLIGATIONS OF A MANAGING PARTNER
REMEDIES OF CAPITALIST PARTNERS WHO COLLECTS DEBT
AGAINST AN INDUSTRIAL PARTNER WHO
ENGAGED IN BUSINESS FOR HIMSELF Requisites:

1. The capitalist partners may exclude  At least 2 debts ( one

the industrial partner from the where the managing
partnership plus damages. partner is the creditor and
2. The capitalist partners may avail the other where the
themselves of the benefits which partnership is the
the industrial partner may have creditor)
obtained plus damages.  Both sums are
demandable.
1790 1793
Unless there is a stipulation to the contrary, Article 19792 vs. article 1793
the partners shall contribute equal shares
to the capital of the partnership. Art. 1792 Art. 1793
As the Two distinct Only one
1791 numbers of credits credit, in
credits favor of the
GENERAL RULE: “Capitalist partners are not partnership
bound to contribute additional capital”.
As to Applies only Applies to
EXCEPTION: applicability if the any partner
 Stipulation partner is a
 In case of imminent loss of managing
the business, the capitalist
 partner
As to The debtor The debtor
debtor’s is not has become
insolvency insolvent insolvent
1794
Mitigation of liability by the courts
 In case of partners’ extraordinary
efforts in other activities of the
partnership, unusual profits have been
realized.
1795
RISK OF LOSS
1. Specific and determinate things
which are not fungible
 Contributed here is only the use of the
object.
2. Fungible things
 Bears the risk of loss as there was
transfer of ownership.
3. Things contributed to be sold
 Same meaning in number 2
4. Things brought and appraised in
the inventory
- Same meaning in number 2
1796
“Every partner is an agent of the partnership
for purposes of its business”.
OBLIGATIONS OF THE PARTNERSHIP TO
EVERY PARTNER
1. Refund the amounts a partner may
have disbursed on behalf of the
partnership plus the interest.
2. Contracted into in good faith and for
the risks in consequences of its
management.
1797
RULES FOR DISTRIBUTION OF PROFITS
AND LOSSES OF A PARTNERSHIP
1. DISTRIBUTION OF PROFITS
a. According to agreement
b. If there is no agreement
1. Capitalist Partners
 Proportion on what they contributed
2. Industrial Partner
 Just and equitable under the
circumstances.
2. DISTRIBUTION OF LOSSES
a. According to agreement
 Industrial partner shall not be liable
for the losses.
b. If there is no agreement
1. Capitalist Partners
 Proportion on what they contributed
2. Industrial Partners
 Not liable for the losses
1798
“Third persons designating the share of
partners in the profits or losses.”
EXCEPTION:
It is not valid and it may be questioned if it is
manifested inequitable, unless:
1. A partner execute the decision of the
third person
2. A partner not questioned the said
decision of the third person within a
period of 3 months from the time he
had knowledge.
1799
“A stipulation which excludes one more
partners from share in the profits or losses is
VOID”.
EXCEPTION: Industrial partner is not liable
unless he waived this right.
RATIONALE: Why an industrial partner is
not liable for losses?
The industrial partner cannot withdraw any
labor or industry he had already exerted. He
has already has shared in the losses in that, if
the partnership shows no profit, this means
that he has labored in vain.
 1800
“A MANAGING PARTNER of a partnership
may execute all acts of administration
including the rights to sue the debtors”.
If there is no agreement, management is
vested in all of the partners.
TWO MODES OF APPOINTMENT
1. Manager in the articles of
partnership
 POWER is irrevocable without just or
lawful cause
2. Made in an instrument other than
the articles of partnership
 Power to act may be revoked at any
time.
1801
GENERAL RULE:
Each one may separately execute all acts of
administration.
REQUISITES:
1. Two or more partners are managers
2. No specification of respective duties
3. No stipulation requiring unanimity,
one of them should not act without
the consent of all the other.
EXCEPTIONS: If any of the managers
should oppose:
1. Decision of majority
2. In case of tie, managing partner who
contributed more than 50%
controlling interest.
“The right to oppose is not given to non-
managers”.
1802
STIPULATION REQUIRING UNANIMITY OF
ACTION
GENERAL RULE:
Unanimous consent of all the managers’
partners shall be necessary for the validity of
the acts and absence or disability of any
managing partner cannot be alleged.
 None of the managing partners shall
act without the consent of the others
 This article is not applicable to third
persons
1803
RULES WHEN MANNER OF MANAGEMENT
HAS NOT BEEN AGREED UPON
1. All the partners shall be considered as
managers. If the acts of a partners
opposed by the other, the majority
shall prevail. In case if tie, then the
vote of the partners representing the
controlling interest shall prevail.
2. For important alterations in
immovable property, unanimity is
required.
1804
CONRACT OF SUB-PARTNERSHIP, the
consent of the other partners are not
required. Hence, all partners can have an
associate in his share or sub-partner.
An associate or sub-partner shall not be
admitted into the partnership w/o the
consent of all the other based on following
reasons:
a. Mutual Trust is the basis of
partnership
b. Change in membership is a
modification or novation of the
contract.
1805
“A partner is given by law the right to have
access, inspect and have a copy of the
partnership books”.
1806
WHO CAN DEMAND TRUE AND FULL
INFORMATION?
 1. Any partner
2. Legal representative of any deceased
partner
3. Legal representative of any partner
under legal disability
1807
The partners are governed by fiduciary
relationship, that is, mutual trust and
confidence.
1808
EFFECTS OF VIOLATION
1. The capitalist partner shall bring to
the common fund any profits accruing
to him
2. Capitalist partner shall bear all the
losses
1809
GENERAL RULE:
“No formal accounting is demandable until
after the dissolution of the partnership”.
EXCEPTIONS:
1. If a partner is wrongfully excluded
from the partnership business or
possession of its property by his co-
partners.
2. If the right to demand for accounting
exists under the terms of any
agreement
3. As provided by article 1807
4. Whenever other circumstances
render it just and reasonable
SECTION 2 PROPERTY
RIGHTS OF A PARTNER
1810
Property rights of a partner are:
1. His right in specific partnership
property
2. His interest in the partnership
3. His right to participate in the
management
1811
A partner is co-owner with his partners of
specific partnership property.
The incidents of this co-ownership are such
that:
1. A partner has an equal right with his
partners to possess specific
partnership property for purposes
2. A partner’s right in specific
partnership property is not
assignable.
3. A partner’s right is not subject to
attachment or execution.
4. A partner’s right is not subject to legal
support
1812
“A partner’s interest in the partnership
is his share of the profits and surplus. “
1813
EFFECTS OF CONVEYANCE BY PARTNER OF
HIS WHOLE INTEREST IN THE
PARTNERSHIP:
1. If a partner conveys his whole
interest in the partnership, it may
still subsist or it may be dissolved.
2. The assignee:
a. cannot interfere in the
management
b. cannot require information of
partnership transaction
c. cannot inspect partnership
books
1814
WHAT IS MEANT BY A “CHARGING ORDER”
UPON A PARTNER’S INTEREST IN THE
PARTNERSHIP?
 Refers to the remedy available to a
judgment creditor of a debtor-partner
to charge the interest of the latter in
the partnership by means of a court
 order purpose of satisfying the
amount of the judgment.
REDEMPTION
 The extinguishment of the charge or
attachment on the partner’s interest
in the profits.
RIGHT OF A PARTNER UNDER EXEMPTION
LAWS
A partner shall not be deprived of his
right under the exemption laws, as regards
his interest in the partnership.
SECTION 3 OBLIGATIONS OF
THE PARTNERS WITH
REGARD TO THIRD PERSONS
1815
REQUIREMENT OF A FIRM NAME
Firm- the name, title, or style under which a
company transacts business importance:
1. It is necessary to distinguish the
partnership which has a distinct and
separate juridical personality from
the individuals composing the
partnership
2. To distinguish it from other
partnerships
GENERAL RULE: The partners may adopt any
firm name desired
Provided:
1. It is not misleading
*Partners cannot use a name that is
to mislead the public by passing itself
off as another partnership or
corporation, or its goods or services
as those of such other company
2. Use of name of deceased partners
is allowed as long as it is indicated
that said partner is already deceased
LIABILITY FOR INCLUSION OF NAME IN
FIRM NAME
 Persons who not being partners
include their name in the firm name
do NOT ACQUIRE THE RIGHTS OF A
PARTNER but is SUBJECT TO
LIABILITY of a partner in so far as
THIRD PERSONS WITHOUT NOTICE
is concerned.
1816
LIABILITY FOR CONTRACTUAL
OBLIGATIONS OF THE PARTNERSHIP
GENERAL RULE:
After all the partnership assets have been
exhausted, all the partners, including the
industrial ones, shall be liable for all the
contracts which may have been entered into
in the name, for the account of the
partnership and under its signature and by a
person authorized to act for the partnership
EXEMPTION:
Any partner MAY ENTER INTO A SEPARATE
OBLIGATION to perform a partnership
contract.
Q: WHO SHALL BE LIABLE FOR
CONTRACTUAL OBLIGATIONS OF THE
PARTNERSHIP?
-the partnership shall shoulder the
obligations
Q: MAY 1 PARTNER MAKE ALL THE
PARTNERS LIABLE FOR THE OBLIGATION OF
THE PARTNERSHIP?
-Yes, a partner may, by entering into a
contract in the name and for the account of
the partnership hold ALL THEPARNTERS
liable for the partnership obligation.
 Reason: A partner is a PRINCIPAL WITH
RESPECT TO HIS CO-PARNTERS and at the
same times and AGENT OF THE OTHERS
AND OF THE PARTNERSHIP.
If he contracts with a 3rd person, he binds not
only the partnership but also the partners.
Just like an obligation contacted by an agent-
the principal shall be liable.
Q: MAY A PARTNER IS "personally" be
LIABLE?
-Yes. He may assume an undertaking in his
own name or bind himself solidarity with the
partnership to fulfil the obligation to a 3rd
person.
1817
“Any stipulation against the liability laid down
in the preceding article shall be void, except as
among the partners.”
* As to 3rd person, all partners are liable pro-
rata and subsidiary, but as to each other, they
are liable in proportion to their capital
contribution.
Examples:
1) A,B and C are in a partnership where C is
the industrial partner and a sum of P26,000 is
owed to D. A and B contributed P15,000 and
P5,000 respectively. How shall the debt be
shared?
Ans: As to D, the partners will share equally
in the debt left after exhausting all assets
(P6,000) so they will each have to pay P2,000
regardless of C being an industrial partner. If
C is insolvent or if B is died or if A has left the
country, the liability of the partners cannot be
increased. As to each other, they are liable in
proportion to their capital contribution, so B
and C will be reimbursed by A.
1818
PARTNER AS AGENT OF THE
PARTNERSHIP
i. Acts apparently for carrying on in the
usual way the business of the
partnership
ii. Acts not apparently for the carrying
on in the usual way of business of the
partnership
iii. Acts of ownership
iv. Acts in contravention of a restriction
on authority
*qualifies the authority of partners.
*authority must be in the usual course of
business
*transaction beyond a partner's authority is
binding if it is in the usual course of the
business because the 3rd person is assumed
to have no knowledge to 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
2) When the 3rd person had knowledge of the
lack of authority of the acting partner.
1819
*Refers to the conveyance of immovable
property
*Suppose A, B and C are partners engaged in
the buying and selling of the property and the
following situations occur:
1) A, without authority, sells land to D in the
partnership's name but D immediately sells it
to E. The land title was originally under the
partnership's name. Can the partnership
recover the land?
Ans: title passes to D, then to E. The
partnership cannot recover the land once it
has transferred to E but if the land was still
with D, they could have recovered it if the
contract was not binding.
2) What if A sells the property under his
name?
Ans: only the equitable title passes to D.
3) what if A sells the property and the land
title is registered under his name?
Ans: title passes to D because land is
registered under the partner's names. This
will hold true if A, B and C are co-owners of
the land, even if only A sold it to D.
1820
“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.”
* 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.
* Examples:
(1) Partner A borrows money from the bank
and declares that the money borrowed is for
the partnership.
ANS: This statement made by A, is enough
evidence against the partnership and the
bank may use this in case the partnership
does not pay back the money borrowed.
(2) A, B, and C are partners. A told D, a 3rd
person, that the debtor already paid this
obligation to the partnership. Is this enough
evidence against the partnership?
ANS: YES, since it concerns partnership
affairs and the partner has authority to say so.
1821
 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.
EXAMPLE:
1. A, B, and C are partners where B is the
managing partner. D, a 3rd person,
filed a case against the partners and
the partnership for some unknown
reason. Does D need to notify all of
them?
 If this is done, D just needs to
notify either A, B, or C, 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). So if A is
notified about the case, this is
considered by D as notify to
EVERYONE even if A is not a
managerial partner (since A
should communicate this to all
partners).
 1822
EXAMPLE: A, B and C formed a partnership.
One day, while C was negligently driving the
truck of the partnership to deliver goods to X
(one of their customers) C bumped the
gateway of X causing damages to the latter.
- In this case, the other partners and
the partnership are solidary liable with C.
However, the partners or the partnership can
recover from C.
1823
EXAMPLE: Where one partner acting within
the scope of his apparent authority receives
money or property of a third person and
misapplies it. A, B and C formed ABC
partnership engaged in leasing of apartment
units. Subsequently, C received from
customer X a deposit in the amount of P20,
000. If C misapplied the amount, then partner
A, B and the partnership ABC are solidarity
liable to X.
 Of course, A, B and the
partnership ABC can recover from
C.
1824
All partners are liable solidarity with
the partnership for everything
chargeable to the partnership under
Article 1822 and 1823.
 In the following cases,
obligation is pro-rata or not
equal, but a solidary
obligation. Any partner may
pay for the obligation (unlike
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, B and C are partners. A
made an act of omission with D as the
victim. He caused P50, 000 worth of
injury to D. What can D do? D can go
to A for the full amount of P50, 000 or
from B or C. B. Can D go to B for the
whole P50, 000 since B is the richest
among the partners?
 This is allowable since the
partners have a solidary
obligation through A’s act of
omission. B will be entitled for
reimbursement from the one
responsible, A.
1825
•2 Things being mentioned:
1. Partnership by estoppels
There is an existing partnership, and
partners misrepresent themselves
together with a third person.
Example
Suppose there is a partnership, X,
with partners A, B and C. D told E that
he is a partner of A, B and C. E verified
from the actual partners of X
partnership if D is really a partner, A,
B and C consented. E entered in a
contract with D, believing he was a
partner.
This is partnership by estoppels
since A, B and C verified D as a
partner. In this case, E can go after
A, B and C.
2. Partnership by estoppels
Two or more persons pretend to be
partners in the eyes of third persons.
Example
A, B and C said they were partners to
D and entered in a contract with the
“partners”. When it was time to for
them to pay D for their obligation,
 they cannot for the reason that they
are not partners. What is their
obligation to D?
Their obligation to D will be
pro-rata , as if they were partners
(since they are partners by
Estoppels)
1826.
 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 A, B and C are the original
partners of the partnership X with
contributions of P 10,000 each. X
partnership owes D P 40,000. How shall
the debt be paid? P 34,000 will be paid to
D out of the partnership assets, and the P
6,000 will be paid through A, B and C’s
personal assets. The P 6,000 will be
divided among the 3 original partners
pro rata.
1827
 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. A, B and C are partners. A
owes E P 6,000. The
partnership owes D P 28,000.
The total partnership assets
amount to P 40,000. Who has
better right to the partnership
property?
- In this case, D the partnership
creditor, has a better right to the
partnership property. When
obligation to D is paid, what will
be left for the partners to share is
p4, 000. If E, the personal creditor
of A, demands to be paid out of
partnership property, he will only
get P4, 000 from it since the
priority is the partnership
creditor. The p2, 000 will be paid
out from A’s personal property.
CHAPTER 3
DISSOLUTION AND
WINDING UP
1828.
 The partnership is going to end or it
will be dissolved.
But before the partners can be paid their
shares, the creditors of the partnership must
first be compensated. After all the creditors
have been paid, whatever is left of the
partnership’s assets will become the payment
for the partners.
The share to be paid out to the partners is
necessarily limited to its total resources.
Dissolution
 It is the time of the partners cease to
carry on the business.
 Basically means to end the
partnership.
Winding up
 Process of settling business affairs
after dissolution.
 Sole purpose is to sell off stock, pay
off creditors, and distribute any
remaining assets to partners or
shareholders.
Termination
  Point in time after all the partnership
affairs have been wound up.
 The partnership has been legally
ended.
Retirement
 The dissociation by a partner,
inclusive or resignation or
withdrawal, from the partnership that
thereby dissolves it.
1829
 The partnership will not end until all
its affairs/debt/credits are
completed.
 Ending a partnership is a step by step
process.
1. Dissolution
2. Winding up
3. Termination
1830
Dissolution is caused:
1. without violation of the agreement
between the partners:
a. By termination of the definite
term/particular undertaking
specified in the agreement;
b. By the express will of
any partner, who must act in
good faith, when no definite
term or particular undertaking
is specified;
c. By the express will of all the
partners who have not assigned
their interest/charged them for
their separate debts, either
before or after the termination
of any specified term or particular
undertaking
d. By the bona fide expulsion
of any partner from the
business in accordance with
power conferred by the
agreement;
2. In contravention of the agreement
between the partners, where the
circumstances do not permit a dissolution
under any other provision of this article,
by the express will of any partner at any
time;
3. By any event which makes it unlawful
for business to be carried on/for the
members to carry it on for the partnership;
4. Loss of specific thing promised by
partner before its delivery;
5. Death of any partner;
6. Insolvency of a partner/partnership;
7. Civil interdiction of any partner;
8. Decree of court under art 1831.
Kinds of dissolution
 Extrajudicial dissolution
These are numbers 1 to 7 of the above-stated
article.
 Judicial dissolution
These refers to number 8 above-stated in
relation to 1831 of the New Civil Code.
Partnership with a fixed term
 The life or period of existence of
the partnership has been agreed
upon by the partners.
 Has a limited life.
Partnership for a particular undertaking
 It will exist until the purpose is
accomplished.
Partnership at will
 A partnership that does not fix its
term.
  The birth and life of a partnership
at will is predicated on the mutual
desire and consent of the partners.
 The right to choose with whom a
person wishes to associate himself
is the very foundation and essence of
this partnership.
Civil interdiction
 Deprives the offender during the
time of his sentence of the right to
manage his property and dispose
such property by any act of any
conveyance interior vivos.
1831
On application by or for a partner the
court shall decree a dissolution whenever:
1. Partner declared insane in any judicial
proceeding or shown to be of unsound mind;
2. Incapacity of partner to perform his part
of the partnership contract;
3. Partner guilty of conduct prejudicial to
business of partnership;
4. Willful or persistent breach
of partnership agreement or conduct which
makes it reasonably impracticable to carry on
partnership with him;
5. Business can only be carried on at a loss;
6. Other circumstances which render
dissolution equitable.
Upon application by purchaser of
partner's interest under article 1813 or
1814:
 After termination of specified term
/particular undertaking.
 Anytime if partnership at will when
interest was assigned/charging
order issued.
Who can sue for judicial dissolution?
1. A partner or any of the 1 to 6
grounds for judicial dissolution in the
first paragraph.
2. The purchaser of a partner’s
interest in the partnership under
ARTICLE 1813 or 1814 after the
termination of the specified term or
particular undertaking or of the
partnership is at will when interest
was assigned or when the charging
order was issued.
1832
Except so far as may be necessary to wind
up partnership affairs or to complete
transactions begun but not then finished,
dissolution terminates all authority of any
partner to act for the partnership.
1. With respect to the partners:
 When the dissolution is not by the
act, insolvency or death of a
partner
(Authority of partners to bind
partnership by new contract is
immediately terminated when
dissolution is not due
to ACT, DEATH or INSOLVENCY of a
partner); or
 When the dissolution is by such act,
insolvency or death of a partner, in
cases where article 1833 so
requires.
2. With respect to persons not
partners, as declared in the article
1834.
As a rule, when a partnership is dissolved,
any of the partners cannot bind the
partnership.
Exceptions are those provide by ARTICLES
1833 and 1834.
1833
 If dissolution is caused by an act,
insolvency or death, then each shall
share in the liability of the
 partnership due to the actions of a
partner, unless he had knowledge of
an act, in solvency or death or notice
of the insolvency or death.
Ex. (1) B told A that he is resigning
TODAY. The partnership is thus dissolved.
Should A enter into a contract with D,
who shall be liable?
Ans: As among themselves, only A
because he had knowledge of B’s
resignation, thus knowing that they are
no longer a partnership.
Ex. (2) If B texts’ his resignation to A
because A is in Mindanao and A contracts
with D, was his authority terminated
when the text arrived?
Ans: No, A’s authority was not terminated
as he has only received a notice. Mere
NOTICE cannot terminate the authority of
partners because the grounds are BY AN
ACT, and because of this it should be
PERSONALLY KNOWN by the acting
partner.
(3)The authority is terminated if the
cause of dissolution is DEATH.
1834
 Partners may still bind the
partnership to transactions ever after
dissolution of the transactions is with
respect to the winding up or the
completion of unfinished
transactions.
 The transaction will be landing if:
1. Credit was extended without
knowledge of the dissolution
before the dissolution.
2. No credit was extended but there
was knowledge of the
partnerships existence and none
of the dissolution.
 The partnership is required to have
the dissolution be announced in
general circulation newspapers of the
place of operations. As long as they do
this, then it is sufficient notice to all
third persons. (If you don’t read broad
sheet, that’s your fault not the
partnership)
 Liabilities shall be satisfied out of the
partnership assets alone if the partner
being dealt with is a DORMANT
PARNER.
 Upon dissolution, the partnership is
no longer bound by transactions.
1. When it becomes unlawful to
carry on the business
2. Insolvency of a partner
3. Unauthorized winding up
1835
 Dissolution does not discharge the
partnership and/or the partners from
existing liabilities.
 Considers a case wherein a partner
was induced to join the partnership
by means of fraud or
misrepresentation.
 The victim can ask for the recession
or restitution of the contract of
partnership (return of all his
contributions)
 He has the right to the surplus for
certain purposes
 He has the rights of a third person or
a subrogated creditor after the
liabilities have already been paid to
recollect what he paid when he
entered into the partnership.
 He is entitled to be indemnified for all
debts ab liabilities that he paid for
during his time in the partnership.
  In order for the liability of a partner
to discharged, the following must
agree
 The partner
 The other partners
 The creditors
1836
KINDS OF WINDING UP OR LIQUIDATION
I. Extrajudicial
 Liquidation is done without the
intervention of the court
Who will wind up?
1. The liquidating partner or
partners as agreed upon by all of
the partners
2. The partners who have not
wrongfully dissolved the
partnership
3. The legal representative of the
last surviving partner who is not
insolvent.
II. Judicial
 Liquidation is done under the control
and direction of the court, upon
proper cause that is shown to the
court.
Who will wind up?
1. The person appointed by the
court
1837
 Supposed there is a situation where
in A, B and C are in a partnership, X
and Co., with total assets of 26,000
and liabilities amounting 20,000. If
the partnership is dissolved
WITHOUT VIOLATION OF ANY
AGREEMENTS, naturally the
liability will be cleared because the
partnership assets are more than
enough, and the surplus will be
given to each of the partners in
proportion to their interest in the
partnership or as per their
agreement.
What if the partnership was dissolved due to
EXPULSION?
 Suppose that A was the one expelled
from the partnership, then he can
only get a share in the NET PROCEEDS
of the surplus that would have
originally been his.
What if that partnership was dissolved due to
VIOLATION of AGREEMENTS?
 Determine the rights of the
INNOCENT and GUILTY parties,
suppose that in this situation, A was
the one guilty of violation on
agreement. Then B and C will be
allowed the following rights;
1. Apply partnership assets to
partnership liabilities and
distribute the cash surplus among
themselves
2. To e indemnified for the damages
that A has caused
3. To continue the business up to the
agreed term
4. The possess partnership properly
While A will have the following rights:
1. Partners decide not to continue the
business
a. Right to claim his share in the
cash surplus, but only the net
proceeds of such meaning, the
cash surplus less damages.
2. Continue the business
a. Ascertain his interest in the
business
b. Freedom from existing and future
liabilities of the partnership.
1838
3 rights of a partner who is entitled to
rescind:
1. Right of lien or right of retention
2. Right of subrogation
 3. Right of indemnification
 Considers a case wherein a partner
was induced to join the partnership
by means of fraud or
misinterpretation
 The victim can ask for the rescission
or restitution of the contract of the
partnership
 He has the right to the surplus for
certain purposes
 He has the rights of a third person or
a subrogated creditor after the
liabilities have already been paid to
recollect what the paid when he
entered into the partnership
 He is entitled to be indemnified for all
debts and liabilities that he paid for
during his time in the partnership.
1839
ASSETS OF THE PARTNERSHIP
a. Partnership by property
b. Contributions of the partners
necessary for the payment of all
liabilities
LIABILITIES OF THE PARTNERSHIP:
ORDER OF PAYMENT
a. Owing to partnership creditors
other than partners
b. Owing to partners
c. Owing to partners in respect of
capital
d. Owing to partners in respect of
profits
- Considers the case of liquidation and
the distribution of partnership assets
- Liquidation is when all the assets of
the partnership is converted to cash
- Total assets will include goodwill as
well as the original contributions of partners
 Required New Contribution:
- If the partnership asset were
exhausted partners shall
contribute the amount
necessary to satisfy the
liabilities
 Individual Property of a Deceased
Partner
- It shall be liable for his share
of the partnership liability
incurred while he was a
partner. Take note that his
separate creditors have
preference over these
individual properties.
 Where a partners has become
insolvent or his estate is insolvent, the
claim against hi separate property
shall rank:
1. Owing to separate creditors
2. Owing to partnership creditors
3. Owing to partners by way of
contribution
 INSOLVENY means than the assets are
less than the liabilities
1840
 Explains the rights of creditors in case
of partnership dissolution because of
membership changes and the
business is continued without
liquidation.
 The membership changes include:
 Retirement
 Expulsion
 Death
 Addition
 Note that the creditor of the OLD
partnership will still be the creditor of
the NEW partnership, if there is still
an old partner/original partner with
the NEW partnership.
  The creditors will continue to be the
creditor of the remaining/new
partnership in all cases except when:
1. Rights are assigned to other
people
2. Unless there is a promise to pay
debt from the new partners or if
the creditor can set aside the right
of the new partners on the ground
of fraud
1841
Rights of a Partner Who Retires/Dies and
Business Is Continued Without Any
Settlement of Accounts
1. That his interest be ascertained as of
dissolution date
2. Collect his interest in the partnership
plus interest or profits by the use of
his right to these as a creditor
1842
Who has the right to an account of his
interest?
- The right to an account of his
interest shall accrue to any
partners; or his legal
representative
Who has an obligation to render an
account?
1. The winding up partners
2. Surviving Partners
3. The person or partnership continuing
the business
When to render an account?
- At the date of acquisition
except any stipulation to the
contrary
Chapter 4- LIMITED
PARTNERSHIP
1843
Limited Partnership
Is one formed by two or more persons
under the provision of the following article,
having as members one or more limited
partners? The limited partners as such shall
not be bound by the obligations of the
partnership.
Characteristics of Limited Partnership
 It is formed by compliance in good
faith with the statutory requirements.
 One or more general partners control
the business and are personally liable
to creditors
 One or more limited partners (also
known as special partners )
contribute to the capital and share in
profits but do not participate in the
management of the business
 The limited partners are not
personally liable for partnership
obligations beyond their capital
contributions
 The limited partners may ask for the
return of their capital contributions
 The partnership debts are paid out of
the common fund and the separate
properties of the general partners
1844
Essential requisites in the formation of a
limited partnership
 The certificate of the limited
partnership
 The certificate of the limited
partnership must be filed in the Office
of the Securities and Exchange
Commission
1845
Contribution of a limited partner
 A limited partner can contribute only
money or property or both. Consequently,
an industrial partner can only become a
general partner.
1846
The surname of a limited partner shall not
appear in the partnership name
A limited partner violating this article
is liable as a general partner only to the
partnership creditors who extend credit to
the partnership without actual knowledge
that he is not a general partner.
1847
Liability for a false statement in the
certificate
The one who suffers loss by reliance
on such false statement may hold liable any
party in the certificate of limited partnership
who is in the bad faith.
1848
Liabilityof a limited partner who takes
paer in the control of the business
The limited partner will be laible as a
general partner. However, said limited
partner does not acquire the rights of general
partner.
Rights of a limited Partner
 The right to have the partnership
book kept at the principal place of
business of the partnership, and at a
reasonable hour to inspect and copy
of them
 The right to have on demand true and
full information of all things affecting
the partnership, and a formal account
of partnership affairs whenever
circumstances render it and just and
reasonable
 The right to have dissolution and
winding up by decree of court
 The right to receive a share of the
profits or other compensation by way
of income
 The right to receive returns of his
contribution if the partnership assets
are in excess of the partnership
liabilities.
General limited partner
A person may be a general partner
and a limited partner in the same
partnership at the same time, provided
that this fact shall be sated in the
certificate of limited partnership.
Rights of a general limited partner
His rights are those of a general
partner
Liabilities of a general limited partner
His liabilities are those of a general
partner. Hence, as to partnership
creditors, he is liable up to the extent of
his separate property.
Nevertheless, as regards his
contribution, his rights are those of a
limited partner insofar as the other
partners are concerned.
 Basahin ng mabuti ung libro,
intindihin lang. Kung di
maintindihan try nalang
isearch sa dictionary ung
word na nagpapagulo sa
pagiintindi mo.
 Lalo na ung mga examples,
kahit mahaba basahin parin.
Madalas kasi dun natin
nagegets ung sinasabi ng
libro.
Keywords ung nakabold
1854
Read and try to understand the allowable
and prohibited.
Allowable business transaction of a
limited partner with the partnership:
 To lend money to the
partnership;
 To transact business with
the partnership; and
 To receive on account of
resulting claims against the
partnership, with general
creditors, a pro rata share of
the assets.
Prohibited business transactions of a
limited partner with the partnership:
1. Receive or hold as collateral security
and partnership property;
2. Receive from a general partner or the
partnership any payment,
conveyance, or release from
liability if at the time assets of the
partnership are not sufficient to
discharge partnership liabilities to
persons not claiming as general or
limited partners.
Rationale: To prevent illegal competition
between the limited partner and general
partnership creditors for the assets of the
partnership.
Note: Violation of the prohibition, as
enumerated, will give rise to the disputable
presumption of fraud on the creditors of
the partnership.
1855
Read and understand.
Preference to some limited partners
Preference may be given to some limited
partners over other limited partners as to:
1. Return of their contributions;
2. Their compensation by way of
income; or
3. Any other matter
1856
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; provided that after such
payment is made, whether from property of
the partnership or that of a general partner,
the partnership assets are in excess of all
the liabilities of other partnership
“except" liabilities to partners on account
of their contributions and to general
partners.
Share of the profits or compensation by
way of income of a limited partner
The requirement here is that the
partnership assets are in excess of all
liabilities of the partnership to third
persons after payment of the profits or
compensation by way of income of a
limited partner.
1857
Makakareceive lang ang limited partner
ng kanyang contribution kung:
(understand the requisites)
Requisites for the return of contributions
of a limited partner
1. All liabilities of their partnership,
except liabilities to general partners
and to limited partners on account of
their contributions have been paid
or there remains property of the
partnership sufficient to pay them.
2. The consent of all members is had,
unless the return of the contribution
may be rightfully demanded; and
3. The certificate is cancelled or so
amended as to set forth the
 withdrawal or reduction of the
contribution.
When can the contributions of a limited
partner be returned?
1. On the dissolution of a partnership
2. When the date specified in the
certificate for its return has
arrived; or
3. After he has given six months’
notice in writing to all other
members, if no time is specified in the
certificate, either for the return of the
contribution or for the dissolution of
the partnership.
When may a limited partner have the
partnership dissolved and liquidated?
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, or
2. The other liabilities of the partnership
have not been paid, or the
partnership property is insufficient
for their payment and the limited
partner would otherwise be entitled
to the return of his contribution.
1858
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 their certificate to
make in the future at the time and on
the conditions stated in the certificate.
A limited partner holds as trustee for the
partnership:
1. Specific property stated in the
certificate as contributed by him, but
which was not contributed or which
has been wrongfully returned, and
2. Money or other property
wrongfully paid or conveyed to him
on account of his contribution.
The liabilities of a limited partner as set forth
in this article can be waived or compromised
only by the consent of all members; 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, to enforce
such liabilities.
When a contributor has rightfully received
the return in whole or in part of the capital
of his contribution, he is nevertheless liable
to the partnership for any sum, not in
excess of such interest, necessary to
discharge its liabilities to all creditors who
extended credit or whose claims arose before
such return.
Liability of a limited partner for unpaid
contribution 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.
Read the example.
Liability of a limited partner as a trustee
to the partnership
 1. Specific property stated in the
certificate as contributed by him,
but which was not contributed or
which has been wrongfully
returned, and
2. Money or other property
wrongfully paid or conveyed to him
on account of his contribution.
Liabilities of a limited partner may be
waived
The requisites are:
1. With the consent of all ther other
partners;
2. The waiver or compromise shall
not affect ther right of partnership
creditors who extended credit or
whose claim arose after the filing and
before a cancellation or amendment
of the certificate.
Liability of a limited partner despite
return of his contribution
A limited partner is nevertheless liable to
the partnership for any sum necessary to
discharge its liabilities to all creditors who
extended credit or whose claims arose before
such return. However, the liability of that
limited partner is up to the extent of his
contribution.
Read the example.
1859
A limited partner's interest is assignable.
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.
 An assignee, who does not become a
substituted limited partner, has no
right to require any information or
account of the partnership
transactions or to inspect the
partnership books.
 An assignee shall have the right to
become a substituted limited
partner if all the members consent
thereto or if the assignor.
 An assignee becomes a substituted
limited partner when the certificate is
appropriately amended in
accordance with article 1865.
 The substituted limited partner has
all the rights and powers, and is to
subject to all the restrictions and
liabilities of his assignor. Except
those liabilities of which he was
ignorant at the time he became a
limited partner.
 The substitution of the assignee as a
limited partner does not release the
assignor from the liability to the
partnership under articles 1847
and 1858.
Rights of an assignee of a limited partner
1. An assignee is only entitled to
receive the share of the profits or
other compensation by way of
income, or their return of his
contribution.
2. An assignee acquires all the rights
of the limited partner only when he
becomes a substituted limited
partner.
Note: An assignee, who does not become a
substituted limited partner has no right to
require any information or account of the
partnership transactions or to inspect the
partnership books.
Assignee become a substituted limited
partner
The requisites are:
1. All the partners must consent.
2. The certificate of limited partner
must be amended
 3. Must be registered in the Securities
and Exchange Commission.
Rights and liabilities of a substituted
limited partner
1. The substituted limited partner has
all the rights and powers.
Exception: except those liabilities of
which he was ignorant at the time he
became a limited partner.
2. The substitution of the assignee as a
limited partner does not release the
assignor form liability to persons
who suffered damage by reliance
on a false statement.
1860
The retirement, death, insolvency, insanity or
civil interdiction of a GENERAL PARTNER
DISSOLVES THE PARTNERSHIP, unless the
business is continued by REMAINING
GENERAL PARTNERS:
1) Under a right so to do stated in the
certificate, or
2) With the CONSENT of all members.
Note: The article speaks ONLY of GENERAL
PARTNERS and did not INCLUDE a LIMITED
PARTNER.
1861
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, and such power as the
deceased had to constitute his assignee a
substituted limited partner.
The estate of a deceased limited partner shall
be liable for all his liabilities as a limited
partner.
1862
On due application to a court of competent
jurisdiction by any creditor of a limited
partner, the court may charge the interest of
the indebted limited partner with payment of
the unsatisfied amount of such claim, and
may appoint a receiver, and make all other
orders, directions and inquiries which the
circumstances of the case may require.
The interest may be redeemed with the
separate property of any general partner, but
may not be redeemed with partnership
property.
The remedies conferred by the first
paragraph shall not be deemed exclusive of
others which may exist.
Nothing in this Chapter shall be held to
deprive a limited partner of his statutory
exemption.
1863
In setting accounts after dissolution the
liabilities of the partnership shall be entitled
to payment in the following order:
(1) THOSE TO CREDITORS, in the ORDER of
PRIORITY as provided BY LAW, EXCEPT
those to limited partners on account of their
contributions, and to general partners;
(2) Those to limited partners in respect to
their share of the profits and other
compensation by way of income on their
contributions;
(3) Those to limited partners in respect to the
capital of their contributions;
(4) Those to general partners other than for
capital and profits;
(5) Those to general partners in respect to
profits;
(6) Those to general partners in respect to
capital.
Subject to any statement in the certificate or
to subsequent agreement, limited partners
share in the partnership assets in respect to
their claims for capital, and in respect to their
claims for profits or for compensation by way
of income on their contribution respectively,
in proportion to the respective amounts of
such claims.
1864
CANCELLATION OF THE CERTIFICATE OF
LIMITED PARTNERSHIP
 When the partnership id dissolved
 When all limited partners cease to be
limited partners. Take note that the
composition of a limited partnership
is that there should be at least one
general partner and at least one
limited partner.
NOTE: In all other cases, ONLY
AMENDMENT of the certificate of limited
partnership is required.
1865
REQUIREMENTS FOR AMENDMENT:
 It must be in writing as far as
necessary to set forth clearly the
change in the certificate which it is
desired to make
 It must be signed and sworn to by all
members
 The certificate of limited partnership,
as amended, must be filed for record
in the office of the Securities and
Exchange Commission.
REQUIREMENT FOR CANCELLATION:
*The same requirements for amendment
1866
GENERAL RULE:
A limited partner not a proper party to
proceedings by or against a partnership
because he does not take control nor
participate in the management of the
business of the partnership.
EXCEPTION:
Where the object is to enforce a limited
partner’s right against or liability to the
partnership.
1867
A limited partnership formed under the law
prior to the effectively of this Code, may
become a limited partnership under this
Chapter by complying with the provisions of
Article 1844, provided the certificate sets
forth:
(1) The amount of the original contribution of
each limited partner, and the time when the
contribution was made; 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.
A limited partnership formed under the law
prior to the effectively of this Code, until or
unless it becomes a limited partnership under
this Chapter, shall continue to be governed by
the provisions of the old law.