Name: Magbojos, Kristine V.

TOPIC: Conveyance of Partner’s Share; Effects (1998)

PROBLEM: Dielle, Karlo and Una are general partners in a merchandising firm. Having
contributed equal amounts to the capital, they also agree on equal distribution of whatever net
profit is realized per fiscal period. After two years of operation, however, Una conveys her whole
interest in the partnership to Justine, without the knowledge and consent of Dielle and Karlo.

1. Is the partnership dissolved? (2%)

2. What are the rights of Justine, if any, should she desire to participate in the management of
the partnership and in the distribution of a net profit of P360,000.00 which was realized after her
purchase of Una's interest? (3%)

ANSWER:
1. No. Article 1318 of the Civil Code provides that conveyance by a partner of his whole interest
in a partnership does not of itself dissolve the partnership in the absence of an agreement. In
the present case, there is no agreement made by the partners that upon conveyance of Una’s
interest to Justine, the partnership would be deemed dissolved. Hence, the partnership still
subsists.

2. Justine cannot interfere or participate in the management or administration of the partnership

business or affairs. Article 1318 of the Civil Code provides that in the absence of agreement, the
conveyance of a partner’s whole interest will entitle the assignee, during the continuance of the
partnership, to interfere in the management or administration of the partnership business or
affairs. It merely entitles the assignee to receive in accordance with his contract the profits to
which the assigning partner would otherwise be entitled. In the present case, Justine may not
participate in the management, however, she is entitled to receive the net profits to which Una
would have otherwise been entitled which is in the amount of P120,000.