CHAPTER 2 

 Every partner is responsible for the

Art. 1767  damages caused to the partnership. He
Partnership – 2 or more persons bind cannot compensate them with
themselves to contribute money, property, or profits/benefits earned for partnership by
industry to a common fund, with the intention his industry unless proven by court that
of dividing profits among themselves.  unusual profits have been realized through
 May also form partnership for the the partner’s extraordinary efforts. 
exercise of profession  Art. 1795 
Art. 1768   The risk of specific and determinate
The partnership has a judicial personality things (not fungible) contributed shall be
separate and distinct from that of each borne by the partner who owns them. (only
partners.  their use and fruits are for the common
Art. 1789   benefit) 
 An industrial partner cannot engage in  If fungible (deteriorating or to be sold),
business for himself unless permitted to do the risk shall be borne by the partnership.
so. If he should do so, the capitalist partners (The claim shall be limited to the value at
may:  which they were appraised). 
o Exclude him from the firm  Art. 1796 
o Avail of the benefits obtained in  The partnership shall be responsible to
violation of the provision with a right to every partner he may have disbursed on
damages  behalf of the partnership (and interest)
Art. 1790  from the time expense is made. 
 The partners shall contribute equal Art. 1797 
shares unless there is a stipulation to the  Losses/profits shall be distributed in
contrary.  conformity with the agreement. If only
Art. 1791  shares in profit has been agreed upon, the
 In case of imminent loss, any partner share in losses shall be of the same
who refuses to contribute additional share proportion. 
(except industrial partner) shall be obliged  In the absence of stipulation, the share
to sell interest to other partners.  in profits/losses shall be in the proportion
Art. 1792  to what he may have contributed. 
 If a partner authorized to manage, o The industrial partner shall not be liable
collects a demandable sum owned to him for losses. 
and the partnership:  o The industrial partner shall receive
The sum shall be applied to the 2 credits in share in profit in a just and equitable
proportion to their amounts  manner. 
o If given for his own credit only, it still o If besides services capital was
must be apportioned.  contributed, he shall receive share in profits
o If given for the partnership credit, it in proportion to his capital. 
should be fully applied to it.  Art. 1798 
Art. 1793   If a third person is entrusted in the
 A partner who received his share of a designation of the shares in profits/losses,
partnership credit (in whole or in part) shall such designation may be impugned only
be obliged to bring what he received to the when it is manifestly inequitable. 
partnership capital. (If the debtor thereafter o If a partner has not impugned within 3
become insolvent).  months from the time he had knowledge
Art. 1794 
 thereof, he has no right to o None of them (without consent) may
complain/execute such decision.  make any important alteration to
Art. 1799  immovable property of the partnership
 A stipulation which excludes one or (even if useful). 
more partners from any share in o If partners’ consent/refusal is
profits/losses is void.  manifestly prejudicial, the court’s
Art. 1800  intervention may be sought. 
 The partner appointed as manager in Art. 1804 
the articles of partnership may execute acts Every partner may associate his share with
of administration despite the opposition of another person but this associate shall not be
his partners unless he should act in bad admitted to the partnership without others’
faith.  consent.  
o His power is irrevocable without just or Art. 1805 
lawful cause.   The partnership books shall be kept at
o For revocation of power, the vote of the principal place of business of the
partners representing controlling interest partnership. 
shall be necessary.   Every partner may have access. 
 A power granted after the partnership Art. 1806 
has been constituted may be revoked any Partners shall render on demand true and full
time.  information of things affecting the partnership
Art. 1801  to: 
 If two or more partners have o Any partner 
been entrusted as managers without o Legal representative of any deceased
specification of their respective duties or partner 
without stipulation that one of them shall o Partner under legal disability 
not act without the consent of all the Art. 1807 
others, each one may separately execute Every partner must account any benefit/profits
acts of administration but if any one of derived by him without the consent of others to
them opposes the acts of others, the the partnership. 
decision of the majority shall prevail. In case Art. 1808 
of tie, the matter shall be decided by The capitalist partners cannot engage in any
partners owning the controlling interest.  operation which is of the kind of business in
Art. 1802  which the partnership is engaged. (Unless there
 If stipulated that none of managers is a stipulation to the contrary) 
shall act without the consent of others, o In violation, the capitalist partner shall
concurrence of all shall be necessary for the bring to the common funds any profits from
validity of acts. The absence of any one of his transactions and shall bear all losses. 
them cannot be alleged, unless there is SECTION 2 – Property Rights of a Partner 
imminent danger of grave/irreparable injury Art. 1810 
to the partnership.  The property rights of a partner are: 
Art. 1803  o His rights in specific partnership
When the manner of management has not property 
been agreed upon:  o His interest in the partnership 
o All partners are considered agents and o His right to participate in the mgt. 
whatever one does shall bind the Art. 1811 
partnership.  A partner is co-owner with his partners of
specific partnership property. 
 A partner has an equal right with his  Make orders, directions, accounts and
partners to possess specific partnership inquiries which the debtor partner may
property for partnership purposes but not have 
for any other purpose without his partners' The interest charged may be redeemed at any
consent.  time before foreclosure without thereby
 A partner's right in specific partnership causing a dissolution: 
property is not assignable except in  With separate property 
connection with the assignment of rights of  With partnership property with the
all partners.  consent of the partners whose interests are
 A partner's right in specific partnership not charged/sold 
property is not subject to SECTION 3 – Obligations of the Partners with
attachment/execution except on a claim regard to Third Persons 
against partnership.  Art. 1815 
 A partner's right in specific partnership Every partnership shall operate under a firm
property is not subject to legal support.  name, which may or may not include the name
Art. 1812  of 1 or more of the partners. 
A partner's interest in the partnership is his Non-members who include their names in the
share of the profits and surplus.  firm name shall be subject to the liability of a
Art. 1813  partner. 
A conveyance by a partner of his whole Art. 1816 
interest in the partnership does not of itself All partners shall be liable pro rata with all their
dissolve the partnership or entitle the assignee property and after partnership assets have been
to:  exhausted, for contracts entered into in the
 Interfere in the name of the partnership. However, any partner
management/administration of may enter into a separate obligation to perform
partnership's affairs  a partnership contract. 
 Require any info./transactions  Art. 1817 
 Inspect partnership books  Any stipulation against the liability laid down in
o It merely entitles the assignee to the preceding article shall be void except among
receive profits. However in case of fraud in partners. 
the mgt. of partnership, the assignee may Art. 1818 
avail the usual remedies.   Every partner is an agent of the partnership for
o In dissolution of partnership, the the purpose of its business. The act of every
assignee is entitled to receive his assignor's partner carrying on in the usual way the
interest and account from the date of the business of the partnership binds the
last account agreed by all partners.  partnership unless: 
Art. 1814   The partner has no authority to act for
On due application to a competent court by the partnership 
any judgment creditor of a partner, the court  The person with whom he is dealing has
which entered the judgment may:  knowledge that he has no authority. 
 Charge the interest of the debtor An act of a partner which is not for the carrying
partner with payment of the unsatisfied on the business of the partnership in the usual
amount of such judgment debt  way does not bind the partnership unless
 Appoint a receiver of his share of the authorized by partners. 
profits    
Except when authorized/abandoned by the
partners, one or more but less than all
partners have no authority to: 
 Assign the partnership property in trust partnership, a conveyance by a partner in
for creditors  the partnership name/in his own
 Dispose the goodwill of the business  name, passes the equitable interest of the
 Do act that would make it impossible to partnership, provided the act is one within
carry on the ordinary business of a the authority of the partner. 
partnership   Where the title to real property is in
 Confess a judgment  the name of all partners, a conveyance by
 Enter into a compromise concerning a all the partners passes all their rights in such
partnership claim/liability  property. 
 Submit a partnership claim/liability to Art. 1820 
arbitration  An admission/representation made by any
 Renounce a claim of the partnership  partner concerning partnership affairs within
  the scope of his authority is evidence against
No act of a partner in contravention of the the partnership. 
restriction on authority shall bind the Art. 1821 
partnership to persons having knowledge of Notice to any partner relating partnership
such restriction.  affairs, and the knowledge of the partner acting
Art. 1819  in a particular matter, and the knowledge of any
 Where title to real property is in other partner who could and should have
the partnership name, any partner may communicated it to the acting partner, operate
convey title executed in the partnership's as notice to or knowledge of the partnership,
name; but the partnership may recover except in the case of fraud on the partnership. 
such property unless:  Art. 1822 
o The partner's act binds the Where loss/injury is caused to any person by
partnership  wrong act/omission of any partner acting in the
o Property has been conveyed by ordinary course of business of the
the grantee to a holder of value without partnership/with the authority of co-partners,
knowledge that the partner has the partnership is liable to the same extent as
exceeded his authority  the partner acting/omitting to act. 
 Where title to real property is in Art. 1823 
the partnership name, a conveyance The partnership is bound to make good the
executed by a partner, in his own loss: 
name, passes the equitable interest of the  Where one partner acting within the
partnership provided the act is one within scope of his authority receives
the authority of the partner.  money/property of a third person and
 Where title to real property is in misapplies it 
the name of one or more but not all  Where the partnership in the course of
partners, the partners in whose name the its business receives money/property is
title stands may convey title to such misapplied by any partner while it is in the
property, but the partnership may recover custody of the partnership 
such property if the partner's act does not Art. 1824 
bind the partnership unless the All partners are liable solitarily with the
purchaser/assignee is a holder for value, partnership for everything chargeable to the
without knowledge.  partnership under Articles 1822 and 1823. 
 Where the title to real property is in
the name of one or more or all the
partners or in a third person in trust for