Art. 1800.

The partner who has been appointed
manager in the articles of partnership may execute all
acts of administration despite the opposition of his
partners, unless he should act in bad faith; and his
power is irrevocable without just or lawful cause. The
vote of the partners representing the controlling
interest shall be necessary for such revocation of
power.
A power granted after the partnership has been
constituted may be revoked at any time. (1692a)
Note: Important points under this article
a.) Two distinct appointments
b.) Compensation
- Is merely a contract of agency, which
may be revoked at any time.
B. Compensation for services rendered
General rule:
- Not entitled to compensation
- Share of profits is his only compensation
Exceptions:
- When there is an express or implied
agreement

A. Two distinct cases of appointments:

1. Appointment as manager in the articles of partnership

Scope of power of managing partner

General Rule:
- Appointed manager may execute all
acts of administration, notwithstanding
the opposition of the other partners,
unless he should act in bad faith.
- His power is irrevocable, unless upon
just and lawful cause and upon vote of
ALL partners (including the partner
appointed) majority in interest.
- He has all the powers of a general
agent as well as the incidental powers
necessary to carry out the object of the
partnership in the transaction of its
business.

Exceptions:
- When the powers of the manager are
specifically restricted or expressly
withheld
- Powers to exercise are neither
necessary or incidental to carry out
the object of partnership
- Managing partner cannot make
alteration of immovable property
though it is useful to the partnership
without the consent of all the partners.

Remedy:
- In case of mismanagement,
dissolution by judicial decree

2. Appointment as manager after the constitution of the

partnership

- The power may be revoked any time

- Appointment not being a condition to a
contract.
Art. 1801. If two or more partners have been intrusted
with the management of the partnership without
specification of their respective duties, or without a
stipulation that one of them shall not act without the
consent of all the others, each one may separately
execute all acts of administration, but if any of them
should oppose the acts of the others, the decision of
the majority shall prevail. In case of a tie, the matter
shall be decided by the partners owning the
controlling interest. (1693a)
Art. 1802. In case it should have been stipulated that
none of the managing partners shall act without the
consent of the others, the concurrence of all shall be
necessary for the validity of the acts, and the absence
or disability of any one of them cannot be alleged,
unless there is imminent danger of grave or
irreparable injury to the partnership. (1694)
A. Two or more managing partners
1. Requisites for application of rule
(a) Two or more partners have been appointed
as managers;
(b) There is no specification of their respective
duties;
(c) There is no stipulation that one of them shall
not act without the consent of all the others
2. Each one (1) may separately perform acts of
administration
a. If one will oppose (timely opposition) the
acts of others, then the decision of majority
of the managing partners shall prevail
b. But in case of TIE, the decision of the
partners representing controlling in interest
shall prevail
B. Concurrence necessary for validity of acts
(Art. 1802)
1. Application of the rule:
a. When the partners should stipulate that
none of the managing partners shall act
without the consent of the others,
CONSENT OF ALL (unanimous), shall
be necessary for validity of the acts.
 Exception:
- Consent is not necessary in
routine transactions
b. Neither absence or disability of any one
of them may be alleged as excuse
 Exception:
Where there is an imminent danger or
grave or irreparable injury to the
partnership, a partner may act alone
without the consent of the partner who
is absent or under disability, without
prejudice to his liability for damages
under Art. 1794.
o Exception to the XPN:
- the exception will not apply,
when one of the managers, in
the exercise of his right to
oppose, objects to the
proposed act.
c. IMPORTANT: THIRD PERSONS
The transaction made by the managing
party with a third person is binding upon
the partnership. Obligation of the
managing partnership which consists in
asking other’s consent before
contracting for partnership , is not
imposed upon a third person who
contract with a partnership. A third
person has a right to presume that the
managing partners with whom he
contracts, has the consent of his co-
partner for otherwise he would not enter
into the contract. The reason or purpose
is to protect third person who contract
with one of the managing partners from
fraud.
Art. 1803. When the manner of management has not
been agreed upon, the following rules shall be
observed:
(1) All the partners shall be considered agents and
whatever any one of them may do alone shall bind the
partnership, without prejudice to the provisions of
Article 1801.
(2) None of the partners may, without the consent of
the others, make any important alteration in the
immovable property of the partnership, even if it may
be useful to the partnership. But if the refusal of
consent by the other partners is manifestly prejudicial
to the interest of the partnership, the court's
intervention may be sought. (1695a)
Note: Important points under this article
a.) No agreement with regard to the manner of
management
b.) Rule is subject to Article 1801 with regard to
timely opposition of any partner
c.) Alteration in the immovable property,
unanimous consent necessary
d.) Preservation of immovable, unanimous
consent not necessary.
C. Alteration in the immovable property,
unanimous consent
General rule:
- Unanimous consent is required for
alteration of immovable property.
- Such consent need not be express,
since it may be presumed from the fact
of knowledge of the alteration without
interposing any objection
- If refusal to give consent if prejudicial to
the interest of the partnership, the
intervention of the court may be sought.
- Even the managing partner cannot
make such alteration, although it is
useful to the partnership.
Exception as to UNANIMOUS consent:
- Unanimous consent or consent of others
is not required if the alteration is
necessary for the preservation of the
property.

A. No agreement with regard to the manner of

management
- In such a case, all of them shall be
considered managers and agents and
whatever anyone of them do alone shall
bind the partnership
- All partners shall have equal rights in
the management and conduct of
partnership affairs regardless of the
amount of their capital contributions or
extent of their services to the
partnership.

B. Timely opposition in relation to Article 1801

- Article 1803 is subject to the provisions
of Article 1801, that in case of timely
opposition, the acts of majority shall
prevail over the opposition of the
minority.
c. However, in case of tie, the decision of the
partners representing controlling in interest
shall prevail
 Art. 1804. Every partner may associate another
person with him in his share, but the associate shall
not be admitted into the partnership without the
consent of all the other partners, even if the partner
having an associate should be a manager. (1696)
Note: Important points under this article
a.) Contract of subpartnership
A. Contract of subpartnership
- A partner may associate another person
(third person) with him in his share without
the consent of the other partners.
- Such partnership formed is termed
subpartnership and such associate is
sometimes referred to as subpartner.
- Subpartnership is a partnership within a
partner and is distinct and separate from
the main or principal partnership.
- Subpartner does not become a member of
the partnership
- Subpartner shall be admitted only in the
partnership if is consented by all the other
parties.
Reason: Because partnership is
based on mutual trust and confidence
among partners. The inclusion of the
subpartner will in effect be a
modification of the original contract of
partnership.
- Subpartner, not being a member of the
partnership, does not acquire the rights of a
partner nor is he liable for its debts.
Art. 1805. The partnership books shall be kept, subject
to any agreement between the partners, at the
principal place of business of the partnership, and
every partner shall at any reasonable hour have access
to and may inspect and copy any of them. (n)
Note: Important points under this article
a.) Keeping of partnership books
A. Keeping of partnership books
- The books showing the firm’s accounts
are at all times open to inspection of all
member of the firm
- It is presumed that the partners have
knowledge of the accounts of the
partnership books.
- A partner is a co-owner of the
partnership properties (Art. 1811) which
include the books of the partnership.
- Partnership books should not be
removed from the principal place of
business of the partnership without the
consent of all the partners.
Art. 1806. Partners shall render on demand true and
full information of all things affecting the partnership
to any partner or the legal representative of any
deceased partner or of any partner under legal
disability. (n)
Note: Important points under this article
a.) Duty to voluntary disclose true and full
information
A. Duty to voluntary disclose true and full
information
- Under the principle of mutual trust and
confidence among partners, there must
be no concealment between them in all
matters affecting the partnership.
- “on demand” does not mean that a
partner is no obligation to make
voluntary disclosure of information
affecting partnership.
Art. 1807. Every partner must account to the
partnership for any benefit, and hold as trustee for it
any profits derived by him without the consent of the
other partners from any transaction connected with
the formation, conduct, or liquidation of the
partnership or from any use by him of its property. (n)
Note: Important points under this article
a.) Fiduciary relation involving trust and
confidence
A. Fiduciary relation involving trust and
confidence
- Relation between partners is essentially
fiduciary involving trust and confidence
- The duties of a partner are analogous to
those of a trustee:
a. Duty to act for a common benefit
 He cannot use or apply
exclusively to his own individual
benefit partnership assets or the
results of the knowledge and
information gained in the
character of partner.
b. Duty begins during the formation of
partnership
 Good faith covers not only
dealings during the partnership
but also during the negotiations
leading to the formation of the
partnership.
c. Duty continues even after
dissolution of partnership.
 Good faith towards his co-
partners continues throughout
the entire life of the partnership
even after dissolution until the
winding up of partnership affairs
is completed.
d. Duty to account for secret and
similar profits
 Violation of this may be ground
for a petition for judicial
dissolution (Art. 1831, par 1
[3,4,6]
e. Duty to account for earnings
accruing even after termination of
partnership.
f. Duty to make full disclosure of
information belonging to partnership
 Information- which can be
used for the purposes of the
partnership
g. Duty not to acquire interest or right
adverse to partnership
Art. 1808. The capitalist partners cannot engage for
their own account in any operation which is of the
kind of business in which the partnership is engaged,
unless there is a stipulation to the contrary.
Any capitalist partner violating this prohibition shall
bring to the common funds any profits accruing to him
from his transactions, and shall personally bear all the
losses. (n)
Note: Important points under this article
a.) Prohibition against capitalist partner
engaging in business
A. Prohibition against capitalist partner
engaging in business
General Rule
 Capitalist partner is prohibited
from engaging for his account
any business of the same
nature and in competition with
that of the firm since the
relationship of partners is
fiduciary and imposes upon
them the obligation of the
utmost good faith in their
dealings with one another.
 Although the law is silent on
whether capitalist partner can
engage in the same line f
business for the account of
another, it would seem that the
prohibition still applies.
 Capitalist partner violating this
prohibition shall be obliged to
bring to the common fund any
profits derived by him from his
transactions and in case of
losses, he shall bear them
alone.
Exception:
 Unless there is stipulation to the
contrary
Art. 1809. Any partner shall have the right to a formal
account as to partnership affairs:
(1) If he is wrongfully excluded from the partnership
business or possession of its property by his co-
partners;
(2) If the right exists under the terms of any
agreement;
(3) As provided by article 1807;
(4) Whenever other circumstances render it just and
reasonable. (n)
General Rule
 Partner is not entitled to a
formal account during the
existence of the partnership
 Reason:
The rights of the partner to know
partnership affairs are amply
protected in Article 1805 and
1806.
 The suit for accounting usually
is filed only when the
partnership has been dissolved.
Exception:
 If wrongfully excluded from the
partnership business
 If right exist under the terms of
agreement
 As provided by Art. 1807
 Whenever other circumstances
render it just and reasonable.
Art. 1810. The property rights of a partner are:
(1) His rights in specific partnership property;
(2) His interest in the partnership; and
(3) His right to participate in the management. (n)

Note: Important points under this article

a.) Extent of the property rights of the partner
b.) Partnership property and partnership capital
c.) Ownership of certain property

A. Extent of the property rights of the partner

1.) Principal rights (Art. 1810)
a. His rights in specific partnership
property;
b. His interest in the partnership; and
c. His right to participate in the
management.

2.) Related rights

a. Right to reimbursement for amounts
advanced to the partnership ( Art. 1796)
b. Right of access and inspection of
partnership books (Art. 1805)
c. Right to true and full information of all
things affecting the partnership ( Art.
1806)
d. Right to formal account of partnership
affairs ( Art. 1809)
e. Right to have the partnership dissolved
also under certain conditions. ( Art.
1830- 1831)

B. Partnership property and partnership capital

Partnership property Partnership capital

Value is variable since Value is constant sine

the value of partnership its value remains
assets may vary from unchanged (fixed by the
day-to-day with changes agreement) and is not
in the market value affected by fluctuations
in the value of
partnership property.
Assets included not only Represents the
the original capital aggregate of the
contribution, but all individual
subsequently acquired on
account of the
partnership

C. Ownership of certain property

- Property used by the partnership
 If there is no express agreement
that the property used by the
partnership constitutes
partnership property, such use
does not make it partnership
property. Whether it so,
depends on the intent of the
parties.
Art. 1811. A partner is co-owner with his partners of B. Legal incidents of co-ownership of partners
specific partnership property. in partnership property
1. A partner has an equal right to possess
The incidents of this co-ownership are such that: specific partnership properties for
partnership purposes.
(1) A partner, subject to the provisions of this Title and  Should any of them use the
to any agreement between the partners, has an equal property for personal benefits,
right with his partners to possess specific partnership he must account to the others
property for partnership purposes; but he has no right the profits derived therefrom.
to possess such property for any other purpose  The right of the dead partner in
without the consent of his partners; specific partnership property
best in the surviving partners
(2) A partner's right in specific partnership property is not in the legal partnership
not assignable except in connection with the 2. Right to specific partnership is not
assignment of rights of all the partners in the same assignable
property;  It is impossible to determine the
extend of his beneficial interest
(3) A partner's right in specific partnership property is in the property until after the
not subject to attachment or execution, except on a liquidation of partnership affairs
claim against the partnership. When partnership  Reason for non-assignability
property is attached for a partnership debt the - To prevent interference
partners, or any of them, or the representatives of a of outsiders in
deceased partner, cannot claim any right under the partnership.
homestead or exemption laws; - To protect the right of
other partners and
(4) A partner's right in specific partnership property is partnership creditors
not subject to legal support under Article 291. (n)
3. Right in specific partnership is not
subject to attachment or execution
Note: Important points under this article
a.) Nature of the partner’s right in specific 4. Partnership property attached for
partnership property partnership debt
b.) Legal incidents of co-ownership of partners in  Property belong to the
partnership property partnership, thus the partners
- A partner has an equal right to possess cannot claim any right under the
specific partnership properties for homestead or exemption laws
partnership purposes. when it is attached for
- Right to specific partnership is not partnership debts
assignable 5. Right in specific partnership is not
- Right in specific partnership is not subject to legal support under the
subject to attachment or execution Family code
- Partnership property attached for  Because the property belongs
partnership debt cannot be claimed to the partnership and not to the
excused under homestead or exemption partners.
laws.
- Right in specific partnership is not
subject to legal support under the
Family code

A. Nature of the partner’s right in specific

partnership property
- A partner is a co-owner with his specific
partnership property, but the rules on
co-ownership does not necessarily
apply.

- Article 1811 contemplates tangible

property but not intangible things.

Art. 1812. A partner's interest in the partnership is his
share of the profits and surplus. (n)
Note: Important points under this article
a.) Partnership interest
b.) Distinction between profits and surplus
A. Partnership interest
-consist of his proportionate share in the
undistributed profits during the life of the
partnership and his share in the undistributed
surplus after its dissolution
B. Distinction between profits and surplus
1. Profit- the net income of the partnership for
a given period of time
2. Surplus- assets of the partnership after
partnership debts and liabilities are paid and
settled and the rights of the partners among
themselves are adjusted.
Art. 1813. A conveyance by a partner of his whole
interest in the partnership does not of itself dissolve
the partnership, 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 a 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)
Note: Important points under this article
a.) Effect of assignment of partner’s whole
interest
b.) Rights of the assignee
c.) The prohibitions for the assignee
d.) Remedy of other partners
A. Effect of assignment of partner’s whole
interest
- Assignment does not divest the assignor
of his status and rights as partner nor
operate as dissolution of the
partnership.
B. Rights of the assignee
- to receive in accordance with his
contract the profits accruing to the
assigning partner
- to avail the usual remedies provided by
law in the event of fraud in the
management
- to receive the assignor’s interest in case
of dissolution
- to require an account of partnership
affairs, but only in case the partnership
dissolved.
C. The prohibitions for the assignee
- to interfere in themanagemenet
- to require any information or account
- to inspect any of the partnership books.
D. Remedy of other partners
- Other partners may dissolve the
partnership if after the assignment, the
assigning party neglects his partnership
duties.
Art. 1814. Without prejudice to the preferred rights of
partnership creditors 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 a dissolution:
B. Redemption
- Other partners may redeem or purchase
the charged interest of debtor partner
before the foreclosure or before the
expiration of the redemption period fixed
by the court.
- Charged interest may be redeemed or
purchased:
 with the property of any one or
more of the partners; or
 With partnership property, but
with consent of all the partners
whose interest are not so
charged or sold.

(1) With separate property, by any one or more of the

partners; or
(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)

Note: Important points under this article

a.) Remedies of a creditor of a partner
1. Request for charging order
2. Appointment of the receiver
b.) Redemption

A. Remedies of a creditor of a partner

- The separate creditor of a partner
cannot levy upon or attach specific
property of a partner for the satisfaction
of the credit, since such partnership
properties are reserved for partnership
creditors.
- The remedy of the separate creditor of a
partner is to apply for charging order
subjecting the interest of the debtor
partner in the partnership.
- Note that, this is without prejudice to the
preferred rights of the partnership
creditors under Art. 1827, that the
claims of partnership creditors must be
satisfied first before the separate
creditors of the partners can be paid out
of the interest charged.
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)

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)