are liable for debts incurred by or on behalf of the
PARTNERSHIP partnership. (Lim Tong Lim v. Phil. Fishing Gear
CHAPTER 1
General Provisions
Article 1767. By the contract of partnership 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.
What is a partnership?
1. A partnership is a contract where 2 or more
persons bind themselves to contribute
money, property, or industry to a common
fund, with the intention of dividing the profits
among themselves.
2. 2 or more persons may also form a
partnership for the exercise of a profession
Elements of a Partnership (Jarantilla v. Jarantilla)
1. Agreement to contribute money, property, or
industry to a common fund
2. Intent to divide the profits among the
contracting parties
Tri-Level Existence/Legal Relationships in a
Partnership Setting
1. Primarily a contractual relationship (Arts.
1767, 1771, and 1784)
2. Separate juridical personality (Art. 1768)
3. Underlying business enterprise as the
primary objective
When original partners sell their equity interests, the
original juridical person is extinguished, and the new
set of partners constituted a new partnership
arrangement with a new juridical personality. Yet the
underlying business enterprise remained the same
between the two sets of investors and the succession
of liability rule pertaining to the underlying business
enterprise must be respected. (Yu v. NLRC)
Essential Attributes of a Partnership
1. Contractual relationship
2. Bounded by attribute of “mutual agency”
3. Bounded by attribute of “delectus personae”
4. Enterprise granted separate juridical
personality
5. Partners are unlimitedly liable to partnership
debts
A partnership is deemed constituted among parties
who agree to borrow money to pursue a business and
to divide the profits that may arise therefrom, even if it
is shown that they have not contributed to any capital
of their own to a “common fund.” Their contribution
may be in the form of credit or industry, not
necessarily cash or fixed assets. Being partners, they
Industries)
Kinds of Partnerships
1. As to Object
i. Universal (Arts. 1777 to 1782) –
where the contract of partnership
encompasses expressly or impliedly
either all the present properties of
the partners or just covering all of
the profits
ii. Particular (Art. 1783) – one which
has for its object determinate
things, their use or fruits, or a
specific undertaking, or the exercise
of a profession or vocation
2. As to Duration (Art. 1785)
i. Partnership with Fixed Term
ii. Partnership for a Particular
Undertaking
iii. Partnership at Will
3. As to the Nature of the Liabilities of
Partners
i. General Partnership (Art. 1776, par.
2)
ii. Limited Partnership (Arts. 1843 to
1867)
Two Kinds of Universal Partnership
1. Universal Partnership of All Present Property
– includes all properties of each partner at
the time of constitution and profits that they
may acquire therewith; but shall not include
properties subsequently acquired by each
partner thru inheritance
2. Universal Partnership of Profits – shall
include properties that the partners may
acquire by industry or work during existence
of partnership; but shall not include movable
or immovable property which each of the
partners may possess at the time of the
celebration of contract; however, the usufruct
of the properties shall be included
Note: There is a presumption in favor of the second
kind of universal partnership of profits.
Persons prohibited from entering into universal
partnerships – those prohibited from giving each
other any donation or advantage  like spouses or
living together as husband and wife without the
benefit of marriage
Article 1768. The partnership has a juridical
personality separate and distinct from that of each of
the partners, even in case of failure to comply with the
requirements of article 1772, first paragraph.
Consequences of Partnership being a Juridical
Person
 1. Entity has legal capacity to enter into
contracts and incur obligations
2. It may acquire properties in its own name
3. It may sue and be sued in its firm name
4. It would have a domicile – place where legal
representation is established or where it
exercises its principal functions
5. It is taxed as a corporate taxpayer
6. It may be declared insolvent even if the
partners are no
7. Partnership is a person entitled to
Constitutional rights
Article 1769. In determining whether a partnership
exists, these rules shall apply:
(1) Except as provided by article 1825,
persons who are not partners as to each
other are not partners as to third persons;
(2) Co-ownership or co-possession does not
of itself establish a partnership, whether
such-co-owners or co-possessors do or do
not share any profits made by the use of the
property;
(3) The sharing of gross returns does not of
itself establish a partnership, whether or not
the persons sharing them have a joint or
common right or interest in any property from
which the returns are derived;
(4) The receipt by a person of a share of the
profits of a business is prima facie evidence
that he is a partner in the business, but no
such inference shall be drawn if such profits
were received in payment:
(a) As a debt by installments or
otherwise;
(b) As wages of an employee or
rent to a landlord;
(c) As an annuity to a widow or
representative of a deceased
partner;
(d) As interest on a loan, though the
amount of payment vary with the
profits of the business;
(e) As the consideration for the sale
of a goodwill of a business or other
property by installments or
otherwise.
A partnership must necessarily arise from a
contractual relationship.
4. Persons who are NOT partners to one
another are NOT partners as to third
persons.
i. Exception: Partnership by estoppel
(Art. 1825)
When facts proven show that purported partner never
furnished the P20,000 capital, nor rendered any help
or intervention in the management of the purported
partnership business, much less demanded an
accounting of its affairs and its earnings, there was
never intended a real partnership despite the articles
of partnership executed. All that the purported partner
did was to receive her share of P3,000 a month, and
was in accordance with the original letter of defendant
(Exh. “A”), which shows that both parties considered
themselves as lessor-lessee under a contract of
lease. (Yulo v. Yang Chiao Seng)
When family members lease out to SHELL a family lot
for the establishment of a gasoline station, and
invested the advanced rentals and deposits to allow
one of their members to use the amounts as the
registered dealer of SHELL under its of “one station,
one dealer” policy, and that the registered dealer had
accounted for the operations to the other members of
the family, there was a partnership formed, for which
the registered dealer can be compelled to execute the
covering articles of partnership, for accounting and
distribution of the shares in profits of the other
partners.(Estanislao, Jr. v. CA)
Co-ownership or Co-possession does NOT itself
establish a partnership, even when profits are
shared, in the absence of express or implied
meeting of minds to enter into a partnership.
(Navarro v. CA)
5. First element of “an agreement to contribute
money, property or industry to a common
fund,” is undoubtedly present where
petitioners have agreed to, and did,
contribute money and property to a common
fund. Second element of “intent to divide the
profits among themselves,” was present
when the facts showed that their purpose
was to engage in real estate transactions for
monetary gain and then divide the same
among themselves, displaying the character
of habituality peculiar to business
transactions engaged in for purposes of
gain.” (Evangelista v. CIR)
6. When after partition of the estate, heirs
agreed to retain the properties and income
into common enterprise and divide profits in
proportion to their shares in the inheritance,
co-ownership was converted into a
partnership. (Ona v. CIR)
7. When the only facts proven was the
existence of co-ownership between the
parties covering two isolated purchase of
parcels of land and the sharing of profits on
the subsequent sales thereof, there can be
no deduction that an unregistered
partnership has been constituted; the
transactions were isolated, the parcels
purchased were not managed or even
leased out. (Pascual v. CIR)
Article 1770. A partnership must have a lawful object
or purpose, and must be established for the common
benefit or interest of the partners.
When an unlawful partnership is dissolved by a
judicial decree, the profits shall be confiscated in favor
of the State, without prejudice to the provisions of the
Penal Code governing the confiscation of the
instruments and effects of a crime.
A partnership must be established for the
common benefit of the parties.
8. The obtaining of profit or gain from the
business to be carried on” is the very reason
for the existence of a partnership; it is the
element that distinguishes the partnership
from voluntary religious or social
organizations. (Fernandez v. de la Rosa)
Article 1771. A partnership may be constituted in any
form, except where immovable property or real rights
are contributed thereto, in which case a public
instrument shall be necessary.
Article 1772. Every contract of partnership having a
capital of three thousand pesos or more, in money or
property, shall appear in a public instrument, which
must be recorded in the Office of the Securities and
Exchange Commission.
Failure to comply with the requirements of the
preceding paragraph shall not affect the liability of the
partnership and the members thereof to third persons.
Article 1773. A contract of partnership is void,
whenever immovable property is contributed thereto,
if an inventory of said property is not made, signed by
the parties, and attached to the public instrument.
Formalities in a Contract of Partnership
GR: A partnership may be constituted in any form.
9. Exceptions:
i. Art. 1771 – where immovable
property or real rights are
contributed thereto, in which case a
public instrument is necessary
 Articles of Partnership
must appear in a public
instrument
 Will be void if inventory is
not made, signed by the
parties, and attached to
the public instrument (Art.
1773)
ii. Art. 1772 – which provides that
"Every contract of partnership
having a capital of Three thousand
pesos or more, in money or
property, shall appear in a public
instrument, which must be recorded
in the Office of the SEC
 Articles of Partnership
must be in a public
instrument
 Registered with SEC
An instrument purporting to be the contract of
partnership which is unsigned and undated, does not
meet the public instrumentation requirements exacted
under Art. 1771, not even registrable with the SEC as
called for under Art. 1772, and which also does not
meet the inventory requirement under Art. 1773 since
the claims involve contributions of immovable
properties, does not warrant a finding that a contract
of partnership or joint venture exist. (Litonjua, Jr. v.
Litonjua, Sr.)
Registration of partnership is the best evidence to
prove the existence of the partnership among the
partners. (Heirs of Tan Eng Kee v. CA)
When there has been duly registered articles of
partnership, and subsequently the original partners
accept an industrial partner but do not register a new
partnership, and thereafter the industrial partner
retires from the business, and the original partners
continue under the same set-up as the original
partnership, then although the second partnership
was dissolved with the withdrawal of the industrial
partner, there resulted a reversion back into the
original partnership under the terms of the registered
articles of partnership. There is not constituted a new
partnership at will. (Rojas v. Maglana)
Failure to register the partnership with the SEC does
not invalidate a contract that has the essential
requisites of partnership – agreement to contribute to
a common fund and the division of profits and losses
would bring about the existence of a partnership. A
partnership may exist even if the partners do not use
the words “partner” or “partnership”. (Angeles v. SOJ)
Article 1774. Any immovable property or an interest
therein may be acquired in the partnership name. Title
so acquired can be conveyed only in the partnership
name.
Article 1775. Associations and societies, whose
articles are kept secret among the members, and
wherein any one of the members may contract in his
own name with third persons, shall have no juridical
personality, and shall be governed by the provisions
relating to co-ownership.
Article 1776. As to its object, a partnership is either
universal or particular.
As regards the liability of the partners, a partnership
may be general or limited.
Article 1777. A universal partnership may refer to all
the present property or to all the profits.
Article 1778. A partnership of all present property is
that in which the partners contribute all the property
which actually belongs to them to a common fund,
with the intention of dividing the same among
themselves, as well as all the profits which they may
acquire therewith.
Article 1779. In a universal partnership of all present
property, the property which belonged to each of the
partners at the time of the constitution of the
partnership, becomes the common property of all the
partners, as well as all the profits which they may
acquire therewith.
A stipulation for the common enjoyment of any other
profits may also be made; but the property which the
partners may acquire subsequently by inheritance,
legacy, or donation cannot be included in such
stipulation, except the fruits thereof.
Article 1780. A universal partnership of profits
comprises all that the partners may acquire by their
industry or work during the existence of the
partnership.
Movable or immovable property which each of the
partners may possess at the time of the celebration of
the contract shall continue to pertain exclusively to
each, only the usufruct passing to the partnership.
Article 1781. Articles of universal partnership,
entered into without specification of its nature, only
constitute a universal partnership of profits.
Article 1782. Persons who are prohibited from giving
each other any donation or advantage cannot enter
into universal partnership.
Article 1783. A particular partnership has for its
object determinate things, their use or fruits, or a
specific undertaking, or the exercise of a profession or
vocation.
CHAPTER 2
Obligations of the Partners
Kinds of Partners
1. Industrial and Capitalist
2. Ostensible, Nominal, and Dormant
3. Original and Incoming
4. Managing and Liquidating
5. General and Limited
6. Retiring, Surviving, and Continuing
SECTION 1
Obligations of the Partners Among Themselves
Article 1784. A partnership begins from the moment
of the execution of the contract unless it is otherwise
stipulated.
Article 1785. When a partnership for a fixed term or
particular undertaking is continued after the
termination of such term or particular undertaking
without any express agreement, the rights and duties
of the partners remain the same as they were at such
termination, so far as is consistent with a partnership
at will.
A continuation of the business by the partners or such
of them as habitually acted therein during the term,
without any settlement or liquidation of the partnership
affairs, is prima facie evidence of a continuation of the
partnership.
Article 1786. Every partner is a debtor of the
partnership for whatever he may have promised to
contribute thereto.
He shall also be bound for warranty in case of eviction
with regard to specific and determinate things which
he may have contributed to the partnership, in the
same cases and in the same manner as the vendor is
bound with respect to the vendee. He shall also be
liable for the fruits thereof from the time they should
have been delivered, without the need of any
demand.
Article 1787. When the capital or a part thereof which
a partner is bound to contribute consists of goods,
their appraisal must be made in the manner
prescribed in the contract of partnership, and in the
absence of stipulation, it shall be made by experts
chosen by the partners, and according to current
prices, the subsequent changes thereof being for
account of the partnership.
Article 1788. A partner who has undertaken to
contribute a sum of money and fails to do so becomes
a debtor for the interest and damages from the time
he should have complied with his obligation.
The same rule applies to any amount he may have
taken from the partnership coffers, and his liability
shall begin from the time he converted the amount to
his own use.
Article 1789. An industrial partner cannot engage in
business for himself, unless the partnership expressly
permits him to do so; and if he should do so, the
capitalist partners may either exclude him from the
firm or avail themselves of the benefits which he may
have obtained in violation of this provision, with a right
to damages in either case.
Article 1790. Unless there is a stipulation to the
contrary, the partners shall contribute equal shares to
the capital of the partnership.
Article 1791. If there is no agreement to the contrary,
in case of an imminent loss of the business of the
partnership, any partner who refuses to contribute an
additional share to the capital, except an industrial
partner, to save the venture, shall he obliged to sell
his interest to the other partners.
Article 1792. If a partner authorized to manage
collects a demandable sum which was owed to him in
his own name, from a person who owed the
partnership another sum also demandable, the sum
thus collected shall be applied to the two credits in
proportion to their amounts, even though he may have
given a receipt for his own credit only; but should he
have given it for the account of the partnership credit,
the amount shall be fully applied to the latter.
The provisions of this article are understood to be
without prejudice to the right granted to the other
debtor by article 1252, but only if the personal credit
of the partner should be more onerous to him.
Article 1793. A partner who has received, in whole or
in part, his share of a partnership credit, when the
other partners have not collected theirs, shall be
obliged, if the debtor should thereafter become
insolvent, to bring to the partnership capital what he
received even though he may have given receipt for
his share only.
Article 1794. Every partner is responsible to the
partnership for damages suffered by it through his
fault, and he cannot compensate them with the profits
and benefits which he may have earned for the
partnership by his industry. However, the courts may
equitably lessen this responsibility if through the
partner's extraordinary efforts in other activities of the
partnership, unusual profits have been realized.
Article 1795. The risk of specific and determinate
things, which are not fungible, contributed to the
partnership so that only their use and fruits may be for
the common benefit, shall be borne by the partner
who owns them.
If the things contribute are fungible, or cannot be kept
without deteriorating, or if they were contributed to be
sold, the risk shall be borne by the partnership. In the
absence of stipulation, the risk of the things brought
and appraised in the inventory, shall also be borne by
the partnership, and in such case the claim shall be
limited to the value at which they were appraised.
Article 1796. The partnership shall be responsible to
every partner for the amounts he may have disbursed
on behalf of the partnership and for the corresponding
interest, from the time the expense are made; it shall
also answer to each partner for the obligations he
may have contracted in good faith in the interest of
the partnership business, and for risks in
consequence of its management.
Article 1797. The losses and profits shall be
distributed in conformity with the agreement. If only
the share of each partner in the profits has been
agreed upon, the share of each in the losses shall be
in the same proportion.
In the absence of stipulation, the share of each
partner in the profits and losses shall be in proportion
to what he may have contributed, but the industrial
partner shall not be liable for the losses. As for the
profits, the industrial partner shall receive such share
as may be just and equitable under the
circumstances. If besides his services he has
contributed capital, he shall also receive a share in
the profits in proportion to his capital.
Article 1798. If the partners have agreed to intrust to
a third person the designation of the share of each
one in the profits and losses, such designation may
be impugned only when it is manifestly inequitable. In
no case may a partner who has begun to execute the
decision of the third person, or who has not impugned
the same within a period of three months from the
time he had knowledge thereof, complain of such
decision.
The designation of losses and profits cannot be
intrusted to one of the partners.
Article 1799. A stipulation which excludes one or
more partners from any share in the profits or losses
is void.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Remember:
The assignment of share does NOT make the
assignee a partner.
- The right to choose with whom to associate
himself is the very foundation and essence of
the partnership. Its continued existence is, in
turn, dependent on the constancy of that
mutual resolve, along with each partner’s
capability to give it, and the absence of a
cause for dissolution provided by the law
itself. (Ortega v. CA)
SECTION 2
Property Rights of a Partner
Article 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
Property Rights of Partners
1. Co-ownership power – his rights in a specific
partnership property
2. Equity interest – his interest in a property
3. Management power – his right to participate
in management
Article 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, subject to the provisions of this
Title and to any agreement between the
partners, has an equal right with his partners
to possess specific partnership property for
partnership purposes; but he has no right to
possess such property for any other purpose
without the consent of his partners;
(2) A partner's right in specific partnership
property is not assignable except in
connection with the assignment of rights of
all the partners in the same property;
(3) A partner's right in specific partnership
property is not subject to attachment or
execution, except on a claim against the
partnership. When partnership property is
attached for a partnership debt the partners,
or any of them, or the representatives of a
deceased partner, cannot claim any right
under the homestead or exemption laws;
(4) A partner's right in specific partnership
property is not subject to legal support under
article 291.
Rights to Specific Partnership Property as Co-
owner
- Equal Right to Possess, but for partnership
purpose only (Art. 1811(1))
- Ordinarily, a partner has an equal
right to possess specific partner-
ship property for partnership
purposes. None of the partners can
possess and use the specific
partnership property other than for
“partnership purposes” (e.g., for his
own individual purpose) without the
consent of the other partners.
 - Even when a specific property can
be identified as having been
contributed by a partner to the
partnership, once contributed, it no
longer is subject to the sole will and
discretion of the contributing partner
who ceases to be the sole owner
thereof.
- When properties are contributed to
the partnership, they would belong
to the partnership as a separate
juridical personality; and that as
properties of the partnership, they
could no longer be disposed of by
the party contributing the same
without the consent or approval of
the partnership or of the other
partners
- Non-Assignable (Art. 1811(2))
- A partner cannot separately assign
his right to specific partnership
property but all of them can assign
their rights in the same property.
- A partner’s right in specific
partnership property is not
assignable because it is impossible
to determine the extent of his
beneficial interest in the property
until after the liquidation of
partnership affairs. As property of
the partnership, the same could not
be disposed of or mortgaged even
by the partner who contributed the
same without the consent or
approval of the partnership or of the
other partners.
- The law allows a retiring partner to
assign his rights in partnership
property to the partner or partners
continuing the business. (Art. 1840)
3.
- Not subject to attachment or execution (Art.
1811(3))
- Not subject to Legal Support (Art. 1811(4))
- The right of the partners to specific
partnership property is not subject
to legal support under Article 195 of
the Family Code. The reason is also
because the property belongs to the
partnership and not to the partners.
But their interest in the partnership
is, of course, subject to legal
support.
Article 1812. A partner's interest in the partnership is
his share of the profits and surplus.
Article 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.
Article 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:
(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.
In spite of Art.129 of Code of Commerce that “If the
management of the general partnership has not been
limited by special agreement to any of the members,
all shall have the power to take part in the direction
and management of the common business, and the
members present shall come to an agreement for all
contracts or obligations which may concern the
association,” such obligation is imposed by law
among the partners, that does not necessarily affect
the validity of the acts of a partner, while acting in the
ordinary course of business of the partnership, as
regards third persons without notice. The latter may
rightfully assume that the contracting partner was duly
authorized to contract for and in behalf of the firm and
that, furthermore, he would not ordinarily act to the
prejudice of his co-partners. (Goquiolay v. Sycip)
A partner is presumed to be an authorized agent for
the firm to bind it in carrying on the partnership
transaction (Munasque v. CA)
SECTION 3
Obligations of the Partners with Regard to Third
Persons
Article 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.
Rules on Partnership Name:
1. Every partnership must operate under a firm
name
2. May or may NOT include the name of one or
more partners
3. A person who allows his name to be in the
firm name shall be subject to the liability of a
partner
4. The use by the person or partnership
continuing the partnership business of the
partnership name, or the name of a
deceased partner (Art. 1840) – shall NOT of
itself make the individual property of the
deceased partner liable for any debts
contracted by such person or partnership
Article 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.
Article 1817. Any stipulation against the liability laid
down in the preceding article shall be void, except as
among the partners.
Article 1818. Every partner is an agent of the
partnership for the purpose of its business, and the
act of every partner, including the execution in the
partnership name of any instrument, for apparently
carrying on in the usual way the business of the
partnership of which he is a member binds the
partnership, unless the partner so acting has in fact
no authority to act for the partnership in the particular
matter, and the person with whom he is dealing has
knowledge of the fact that he has no such authority.
An act of a partner which is not apparently for the
carrying on of business of the partnership in the usual
way does not bind the partnership unless authorized
by the other partners.
Except when authorized by the other partners or
unless they have abandoned the business, one or
more but less than all the partners have no authority
to:
(1) Assign the partnership property in trust
for creditors or on the assignee's promise to
pay the debts of the partnership;
(2) Dispose of the good-will of the business;
(3) Do any other act which would make it
impossible to carry on the ordinary business
of a partnership;
(4) Confess a judgment;
(5) Enter into a compromise concerning a
partnership claim or liability;
(6) Submit a partnership claim or liability to
arbitration;
(7) Renounce a claim of the partnership.
No act of a partner in contravention of a restriction on
authority shall bind the partnership to persons having
knowledge of the restriction.
Article 1819. Where title to real property is in the
partnership name, any partner may convey title to
such property by a conveyance executed in the
partnership name; but the partnership may recover
such property unless the partner's act binds the
partnership under the provisions of the first paragraph
of article 1818, or unless such property has been
conveyed by the grantee or a person claiming through
such grantee to a holder for value without knowledge
that the partner, in making the conveyance, has
exceeded his authority.
Where title to real property is in the name of the
partnership, a conveyance executed by a partner, in
his own name, passes the equitable interest of the
partnership, provided the act is one within the
authority of the partner under the provisions of the first
paragraph of article 1818.
Where title to real property is in the name of one or
more but not all the partners, and the record does not
disclose the right of the partnership, the partners in
whose name the title stands may convey title to such
property, but the partnership may recover such
property if the partners' act does not bind the
partnership under the provisions of the first paragraph
of article 1818, unless the purchaser or his assignee,
is a holder for value, without knowledge.
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 the partnership, a conveyance executed by a
partner in the partnership name, or in his own name,
passes the equitable interest of the partnership,
provided the act is one within the authority of the
partner under the provisions of the first paragraph of
article 1818.
Where the title to real property is in the name of all the
partners a conveyance executed by all the partners
passes all their rights in such property.

Article 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.
Article 1821. Notice to any partner of any matter
relating to partnership affairs, and the knowledge of
the partner acting in the particular matter, acquired
while a partner or then present to his mind, and the
knowledge of any other partner who reasonably could
and should have communicated it to the acting
partner, operate as notice to or knowledge of the
partnership, except in the case of fraud on the
partnership, committed by or with the consent of that
partner.
Article 1822. Where, by any wrongful act or omission
of any partner acting in the ordinary course of the
business of the partnership or with the authority of his
co-partners, loss or injury is caused to any person, not
being a partner in the partnership, or any penalty is
incurred, the partnership is liable therefor to the same
extent as the partner so acting or omitting to act.
Article 1823. The partnership is bound to make good
the loss:
(1) Where one partner acting within the
scope of his apparent authority receives
money or property of a third person and
misapplies it; and
(2) Where the partnership in the course of its
business receives money or property of a
third person and the money or property so
received is misapplied by any partner while it
is in the custody of the partnership.
Article 1824. All partners are liable solidarily with the
partnership for everything chargeable to the
partnership under articles 1822 and 1823.
Article 1825. When a person, by words spoken or
written or by conduct, represents himself, or consents
to another representing him to anyone, as a partner in
an existing partnership or with one or more persons
not actual partners, he is liable to any such persons to
whom such representation has been made, who has,
on the faith of such representation, given credit to the
actual or apparent partnership, and if he has made
such representation or consented to its being made in
a public manner he is liable to such person, whether
the representation has or has not been made or
communicated to such person so giving credit by or
with the knowledge of the apparent partner making
the representation or consenting to its being made:
(1) When a partnership liability results, he is
liable as though he were an actual member
of the partnership;
(2) When no partnership liability results, he is
liable pro rata with the other persons, if any,
so consenting to the contract or
representation as to incur liability, otherwise
separately.
When a person has been thus represented to be a
partner in an existing partnership, or with one or more
persons not actual partners, he is an agent of the
persons consenting to such representation to bind
them to the same extent and in the same manner as
though he were a partner in fact, with respect to
persons who rely upon the representation. When all
the members of the existing partnership consent to
the representation, a partnership act or obligation
results; but in all other cases it is the joint act or
obligation of the person acting and the persons
consenting to the representation.
Article 1826. A person admitted as a partner into an
existing partnership is liable for all the obligations of
the partnership arising before his admission as though
he had been a partner when such obligations were
incurred, except that this liability shall be satisfied only
out of partnership property, unless there is a
stipulation to the contrary.
Article 1827. The creditors of the partnership shall be
preferred to those of each partner as regards the
partnership property. Without prejudice to this right,
the private creditors of each partner may ask the
attachment and public sale of the share of the latter in
the partnership assets.
CHAPTER 3
Dissolution and Winding Up
Article 1828. The dissolution of a partnership is the
change in the relation of the partners caused by any
partner ceasing to be associated in the carrying on as
distinguished from the winding up of the business.
Article 1829. On dissolution the partnership is not
terminated, but continues until the winding up of
partnership affairs is completed.
Article 1830. Dissolution is caused:
(1) Without violation of the agreement
between the partners:
(a) By the termination of the definite
term or 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
is specified;
(c) By the express will of all the
partners who have not assigned
their interests or suffered them to
be charged for their separate debts,
either before or after the termination
of any specified term or particular
undertaking;
 (d) By the expulsion of any partner
from the business bona fide in
accordance with such a power
conferred by the agreement
between the partners;
(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
the business of the partnership to be carried
on or for the members to carry it on in
partnership;
(4) When a specific thing which a partner
had promised to contribute to the
partnership, perishes before the delivery; in
any case by the loss of the thing, when the
partner who contributed it having reserved
the ownership thereof, has only transferred
to the partnership the use or enjoyment of
the same; but the partnership shall not be
dissolved by the loss of the thing when it
occurs after the partnership has acquired the
ownership thereof;
(5) By the death of any partner;
(6) By the insolvency of any partner or of the
partnership;
(7) By the civil interdiction of any partner;
(8) By decree of court under the following
article. (1700a and 1701a)
Article 1831. On application by or for a partner the
court shall decree a dissolution whenever:
(1) A partner has been declared insane in
any judicial proceeding or is shown to be of
unsound mind;
(2) A partner becomes in any other way
incapable of performing his part of the
partnership contract;
(3) A partner has been guilty of such conduct
as tends to affect prejudicially the carrying on
of the business;
(4) A partner wilfully or persistently commits
a breach of the partnership agreement, or
otherwise so conducts himself in matters
relating to the partnership business that it is
not reasonably practicable to carry on the
business in partnership with him;
(5) The business of the partnership can only
be carried on at a loss;
(6) Other circumstances render a dissolution
equitable.
On the application of the purchaser of a partner's
interest under article 1813 or 1814:
(1) After the termination of the specified term
or particular undertaking;
(2) At any time if the partnership was a
partnership at will when the interest was
assigned or when the charging order was
issued.
Article 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,
(a) When the dissolution is not by
the act, insolvency or death of a
partner; or
(b) 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 article 1834.
Article 1833. Where the dissolution is caused by the
act, death or insolvency of a partner, each partner is
liable to his co-partners for his share of any liability
created by any partner acting for the partnership as if
the partnership had not been dissolved unless:
(1) The dissolution being by act of any
partner, the partner acting for the partnership
had knowledge of the dissolution; or
(2) The dissolution being by the death or
insolvency of a partner, the partner acting for
the partnership had knowledge or notice of
the death or insolvency.
Article 1834. After dissolution, a partner can bind the
partnership, except as provided in the third paragraph
of this article:
(1) By any act appropriate for winding up
partnership affairs or completing transactions
unfinished at dissolution;
(2) By any transaction which would bind the
partnership if dissolution had not taken
place, provided the other party to the
transaction:
(a) Had extended credit to the
partnership prior to dissolution and
had no knowledge or notice of the
dissolution; or
(b) Though he had not so extended
credit, had nevertheless known of
the partnership prior to dissolution,
and, having no knowledge or notice
of dissolution, the fact of dissolution
had not been advertised in a
newspaper of general circulation in
the place (or in each place if more
than one) at which the partnership
business was regularly carried on.
The liability of a partner under the first paragraph, No.
2, shall be satisfied out of partnership assets alone
when such partner had been prior to dissolution:
(1) Unknown as a partner to the person with
whom the contract is made; and
(2) So far unknown and inactive in
partnership affairs that the business
reputation of the partnership could not be
 said to have been in any degree due to his
connection with it.
The partnership is in no case bound by any act of a
partner after dissolution:
(1) Where the partnership is dissolved
because it is unlawful to carry on the
business, unless the act is appropriate for
winding up partnership affairs; or
(2) Where the partner has become insolvent;
or
(3) Where the partner has no authority to
wind up partnership affairs; except by a
transaction with one who -
(a) Had extended credit to the
partnership prior to dissolution and
had no knowledge or notice of his
want of authority; or
(b) Had not extended credit to the
partnership prior to dissolution, and,
having no knowledge or notice of
his want of authority, the fact of his
want of authority has not been
advertised in the manner provided
for advertising the fact of dissolution
in the first paragraph, No. 2 (b).
Nothing in this article shall affect the liability under
article 1825 of any person who after dissolution
represents himself or consents to another
representing him as a partner in a partnership
engaged in carrying on business.
Article 1835. The dissolution of the partnership does
not of itself discharge the existing liability of any
partner.
A partner is discharged from any existing liability upon
dissolution of the partnership by an agreement to that
effect between himself, the partnership creditor and
the person or partnership continuing the business;
and such agreement may be inferred from the course
of dealing between the creditor having knowledge of
the dissolution and the person or partnership
continuing the business.
The individual property of a deceased partner shall be
liable for all obligations of the partnership incurred
while he was a partner, but subject to the prior
payment of his separate debts.
Article 1836. Unless otherwise agreed, the partners
who have not wrongfully dissolved the partnership or
the legal representative of the last surviving partner,
not insolvent, has the right to wind up the partnership
affairs, provided, however, that any partner, his legal
representative, or his assignee, upon cause shown,
may obtain winding up by the court.
Article 1837. When dissolution is caused in any way,
except in contravention of the partnership agreement,
each partner, as against his co-partners and all
persons claiming through them in respect of their
interests in the partnership, unless otherwise agreed,
may have the partnership property applied to
discharge its liabilities, and the surplus applied to pay
in cash the net amount owing to the respective
partners. But if dissolution is caused by expulsion of a
partner, bona fide under the partnership agreement
and if the expelled partner is discharged from all
partnership liabilities, either by payment or agreement
under the second paragraph of article 1835, he shall
receive in cash only the net amount due him from the
partnership.
When dissolution is caused in contravention of the
partnership agreement the rights of the partners shall
be as follows:
(1) Each partner who has not caused
dissolution wrongfully shall have:
(a) All the rights specified in the first
paragraph of this article, and
(b) The right, as against each
partner who has caused the
dissolution wrongfully, to damages
breach of the agreement.
(2) The partners who have not caused the
dissolution wrongfully, if they all desire to
continue the business in the same name
either by themselves or jointly with others,
may do so, during the agreed term for the
partnership and for that purpose may
possess the partnership property, provided
they secure the payment by bond approved
by the court, or pay any partner who has
caused the dissolution wrongfully, the value
of his interest in the partnership at the
dissolution, less any damages recoverable
under the second paragraph, No. 1 (b) of this
article, and in like manner indemnify him
against all present or future partnership
liabilities.
(3) A partner who has caused the dissolution
wrongfully shall have:
(a) If the business is not continued
under the provisions of the second
paragraph, No. 2, all the rights of a
partner under the first paragraph,
subject to liability for damages in
the second paragraph, No. 1 (b), of
this article.
(b) If the business is continued
under the second paragraph, No. 2,
of this article, the right as against
his co-partners and all claiming
through them in respect of their
interests in the partnership, to have
the value of his interest in the
partnership, less any damage
caused to his co-partners by the
dissolution, ascertained and paid to
him in cash, or the payment
secured by a bond approved by the
court, and to be released from all
 existing liabilities of the partnership;
but in ascertaining the value of the
partner's interest the value of the
good-will of the business shall not
be considered.
Article 1838. Where a partnership contract is
rescinded on the ground of the fraud or
misrepresentation of one of the parties thereto, the
party entitled to rescind is, without prejudice to any
other right, entitled:
(1) To a lien on, or right of retention of, the
surplus of the partnership property after
satisfying the partnership liabilities to third
persons for any sum of money paid by him
for the purchase of an interest in the
partnership and for any capital or advances
contributed by him;
(2) To stand, after all liabilities to third
persons have been satisfied, in the place of
the creditors of the partnership for any
payments made by him in respect of the
partnership liabilities; and
(3) To be indemnified by the person guilty of
the fraud or making the representation
against all debts and liabilities of the
partnership.
Article 1839. In settling accounts between the
partners after dissolution, the following rules shall be
observed, subject to any agreement to the contrary:
(1) The assets of the partnership are:
(a) The partnership property,
(b) The contributions of the partners
necessary for the payment of all the
liabilities specified in No. 2.
(2) The liabilities of the partnership shall rank
in order of payment, as follows:
(a) Those owing to creditors other
than partners,
(b) Those owing to partners other
than for capital and profits,
(c) Those owing to partners in
respect of capital,
(d) Those owing to partners in
respect of profits.
(3) The assets shall be applied in the order
of their declaration in No. 1 of this article to
the satisfaction of the liabilities.
(4) The partners shall contribute, as provided
by article 1797, the amount necessary to
satisfy the liabilities.
(5) An assignee for the benefit of creditors or
any person appointed by the court shall have
the right to enforce the contributions
specified in the preceding number.
(6) Any partner or his legal representative
shall have the right to enforce the
contributions specified in No. 4, to the extent
of the amount which he has paid in excess of
his share of the liability.
(7) The individual property of a deceased
partner shall be liable for the contributions
specified in No. 4.
(8) When partnership property and the
individual properties of the partners are in
possession of a court for distribution,
partnership creditors shall have priority on
partnership property and separate creditors
on individual property, saving the rights of
lien or secured creditors.
(9) Where a partner has become insolvent or
his estate is insolvent, the claims against his
separate property shall rank in the following
order:
(a) Those owing to separate
creditors;
(b) Those owing to partnership
creditors;
(c) Those owing to partners by way
of contribution.
Article 1840. In the following cases creditors of the
dissolved partnership are also creditors of the person
or partnership continuing the business:
(1) When any new partner is admitted into an
existing partnership, or when any partner
retires and assigns (or the representative of
the deceased partner assigns) his rights in
partnership property to two or more of the
partners, or to one or more of the partners
and one or more third persons, if the
business is continued without liquidation of
the partnership affairs;
(2) When all but one partner retire and
assign (or the representative of a deceased
partner assigns) their rights in partnership
property to the remaining partner, who
continues the business without liquidation of
partnership affairs, either alone or with
others;
(3) When any partner retires or dies and the
business of the dissolved partnership is
continued as set forth in Nos. 1 and 2 of this
article, with the consent of the retired
partners or the representative of the
deceased partner, but without any
assignment of his right in partnership
property;
(4) When all the partners or their
representatives assign their rights in
partnership property to one or more third
persons who promise to pay the debts and
who continue the business of the dissolved
partnership;
(5) When any partner wrongfully causes a
dissolution and the remaining partners
continue the business under the provisions
of article 1837, second paragraph, No. 2,
either alone or with others, and without
liquidation of the partnership affairs;
(6) When a partner is expelled and the
remaining partners continue the business
 either alone or with others without liquidation
of the partnership affairs.
The liability of a third person becoming a partner in
the partnership continuing the business, under this
article, to the creditors of the dissolved partnership
shall be satisfied out of the partnership property only,
unless there is a stipulation to the contrary.
When the business of a partnership after dissolution is
continued under any conditions set forth in this article
the creditors of the dissolved partnership, as against
the separate creditors of the retiring or deceased
partner or the representative of the deceased partner,
have a prior right to any claim of the retired partner or
the representative of the deceased partner against the
person or partnership continuing the business, on
account of the retired or deceased partner's interest in
the dissolved partnership or on account of any
consideration promised for such interest or for his
right in partnership property.
Nothing in this article shall be held to modify any right
of creditors to set aside any assignment on the
ground of fraud.
The use by the person or partnership continuing the
business of the partnership name, or the name of a
deceased partner as part thereof, shall not of itself
make the individual property of the deceased partner
liable for any debts contracted by such person or
partnership.
Article 1841. When any partner retires or dies, and
the business is continued under any of the conditions
set forth in the preceding article, or in article 1837,
second paragraph, No. 2, without any settlement of
accounts as between him or his estate and the person
or partnership continuing the business, unless
otherwise agreed, he or his legal representative as
against such person or partnership may have the
value of his interest at the date of dissolution
ascertained, and shall receive as an ordinary creditor
an amount equal to the value of his interest in the
dissolved partnership with interest, or, at his option or
at the option of his legal representative, in lieu of
interest, the profits attributable to the use of his right
in the property of the dissolved partnership; provided
that the creditors of the dissolved partnership as
against the separate creditors, or the representative of
the retired or deceased partner, shall have priority on
any claim arising under this article, as provided article
1840, third paragraph.
Article 1842. The right to an account of his interest
shall accrue to any partner, or his legal representative
as against the winding up partners or the surviving
partners or the person or partnership continuing the
business, at the date of dissolution, in the absence of
any agreement to the contrary.
Causes for Dissolution without Violation of
Agreement
1. Termination of the definite term or particular
undertaking specified in the agreement
2. Express will of any partner in a partnership at
will acting in good faith
3. Express will of all partners
4. Expulsion of any partner bona fide
Causes for Dissolution in Violation of Agreement
- Among partners, mutual agency arises and
the doctrine of delectus personae allows
them to have the power, although not
necessarily the right, to dissolve the
partnership. However, an unjustified
dissolution by the partner can subject him to
a possible action for damages.
Causes for Dissolution by Operation of Law
1. Partnership becomes unlawful
2. Loss of specific thing
3. Death of any partner
4. Insolvency of any partner
5. Civil interdiction of any partner
Causes for Dissolution by Decree of Court
1. On application by or for a partner –
insanity/unsound mind, incapability of partner
in performing part, guilty of conduct affecting
the carrying on of business; willfully or
persistently breaches the partnership
agreement, business can only be carried on
at a loss, and other circumstances that may
render a dissolution equitable
2. At instance of purchaser of partner’s
interest – after the termination of a specified
term or undertaking, or any time the
partnership if partnership at will when the
interest was assigned or when the charging
order was issued
Effects of Dissolution
- On existence of partnership: Not
terminated but continues until the winding up
of partnership affairs is completed
- On existing liability of a partner: Does not
discharge the existing liability of any partner
- Exception: by agreement between
himself, the partnership creditor,
and the person or partnership
continuing the business
- On authority to act for partnership as
between partners: The dissolution
terminates all authority of any partner to act
for the partnership – hence the right of a
partner to bind the partnership to new
contracts or obligations is terminated upon
dissolution
- Exceptions:
 If act is necessary to wind
up partnership affairs
  If the act is to complete
transactions begun but not
then finished
 If the dissolution is caused
by the act, death, or
insolvency of a partner,
each partner is liable to his
co-partners for his share of
any liability created by any
partner acting for the
partnership in relation to
“new businesses” as if the
partnership had not been
dissolved, unless the
dissolution, being by act of
any partner, the partner
acting for the partnership
had knowledge of the
dissolution; or the
dissolution being by the
death or insolvency of a
partner, the partner acting
for the partnership had
knowledge or notice of the
death or insolvency
CHAPTER 4
Limited Partnership  partners;
Article 1843. A limited partnership is one formed by
two or more persons under the provisions of the
following article, having as members one or more
general partners and one or more limited partners.
The limited partners as such shall not be bound by the
obligations of the partnership.
Definition of a Limited Partnership:
- Formed by at least one general partner AND
one limited partner
- Who shall sign and swear to the Articles of
the Limited Partnership
- Certificate must be registered with SEC
A limited partnership that does not comply with the
registration requirements shall be treated as a general
partnership in which all the members are liable for the
partnership debts. (Jo Chung Cang v. Pacific
Commercial Co)
Article 1844. Two or more persons desiring to form a
limited partnership shall:
(1) Sign and swear to a certificate, which
shall state -
(a) The name of the partnership,
adding thereto the word "Limited";
(b) The character of the business;
(c) The location of the principal
place of business;
(d) The name and place of
residence of each member, general
and limited partners being
respectively designated;
(e) The term for which the
partnership is to exist;
( f ) The amount of cash and a
description of and the agreed value
of the other property contributed by
each limited partner;
(g) The additional contributions, if
any, to be made by each limited
partner and the times at which or
events on the happening of which
they shall be made;
(h) The time, if agreed upon, when
the contribution of each limited
partner is to be returned;
(i) The share of the profits or the
other compensation by way of
income which each limited partner
shall receive by reason of his
contribution;
( j) The right, if given, of a limited
partner to substitute an assignee as
contributor in his place, and the
terms and conditions of the
substitution;
(k) The right, if given, of the
partners to admit additional limited
(l) The right, if given, of one or more
of the limited partners to priority
over other limited partners, as to
contributions or as to compensation
by way of income, and the nature of
such priority;
(m) The right, if given, of the
remaining general partner or
partners to continue the business
on the death, retirement, civil
interdiction, insanity or insolvency of
a general partner; and
(n) The right, if given, of a limited
partner to demand and receive
property other than cash in return
for his contribution.
(2) File for record the certificate in the Office
of the Securities and Exchange Commission.
A limited partnership is formed if there has
been substantial compliance in good faith
with the foregoing requirements.
- In the partnership name, add the word
“limited”
- A limited partnership is formed if there has
been substantial compliance in good faith
with requirements mandated by law. (Jo
Chung Cang v. Pacific Commercial Co)
Article 1845. The contributions of a limited partner
may be cash or property, but not services.
Article 1846. The surname of a limited partner shall
not appear in the partnership name unless:
(1) It is also the surname of a general
partner, or
(2) Prior to the time when the limited partner
became such, the business has been carried
on under a name in which his surname
appeared.
A limited partner whose surname appears in a
partnership name contrary to the provisions of the first
paragraph is liable as a general partner to partnership
creditors who extend credit to the partnership without
actual knowledge that he is not a general partner.
Article 1847. If the certificate contains a false
statement, one who suffers loss by reliance on such
statement may hold liable any party to the certificate
who knew the statement to be false:
(1) At the time he signed the certificate, or
(2) Subsequently, but within a sufficient time
before the statement was relied upon to
enable him to cancel or amend the
certificate, or to file a petition for its
cancellation or amendment as provided in
article 1865.
Article 1848. A limited partner shall not become liable
as a general partner unless, in addition to the exercise
of his rights and powers as a limited partner, he takes
part in the control of the business.
Article 1849. After the formation of a lifted
partnership, additional limited partners may be
admitted upon filing an amendment to the original
certificate in accordance with the requirements of
article 1865.
Article 1850. A general partner shall have all the
rights and powers and be subject to all the restrictions
and liabilities of a partner in a partnership without
limited partners. However, without the written consent
or ratification of the specific act by all the limited
partners, a general partner or all of the general
partners have no authority to:
(1) Do any act in contravention of the
certificate;
(2) Do any act which would make it
impossible to carry on the ordinary business
of the partnership;
(3) Confess a judgment against the
partnership;
(4) Possess partnership property, or assign
their rights in specific partnership property,
for other than a partnership purpose;
(5) Admit a person as a general partner;
(6) Admit a person as a limited partner,
unless the right so to do is given in the
certificate;
(7) Continue the business with partnership
property on the death, retirement, insanity,
civil interdiction or insolvency of a general
partner, unless the right so to do is given in
the certificate.
General Partners have the rights and powers and be
subject to all the restrictions and liabilities of a
Partnership without Limited Partners
Article 1851. A limited partner shall have the same
rights as a general partner to:
(1) Have the partnership books kept at the
principal place of business of the
partnership, and at a reasonable hour to
inspect and copy any of them;
(2) Have on demand true and full information
of all things affecting the partnership, and a
formal account of partnership affairs
whenever circumstances render it just and
reasonable; and
(3) Have dissolution and winding up by
decree of court.
A limited partner shall have the right to
receive a share of the profits or other
compensation by way of income, and to the
return of his contribution as provided in
articles 1856 and 1857.
Article 1852. Without prejudice to the provisions of
article 1848, a person who has contributed to the
capital of a business conducted by a person or
partnership erroneously believing that he has become
a limited partner in a limited partnership, is not, by
reason of his exercise of the rights of a limited
partner, a general partner with the person or in the
partnership carrying on the business, or bound by the
obligations of such person or partnership, provided
that on ascertaining the mistake he promptly
renounces his interest in the profits of the business, or
other compensation by way of income.
Article 1853. 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 stated in the
certificate provided for in article 1844.
A person who is a general, and also at the same time
a limited partner, shall have all the rights and powers
and be subject to all the restrictions of a general
partner; except that, in respect to his contribution, he
shall have the rights against the other members which
he would have had if he were not also a general
partner.
Article 1854. A limited partner also may loan money
to and transact other business with the partnership,
and, unless he is also a general partner, receive on
account of resulting claims against the partnership,
with general creditors, a pro rata share of the assets.
No limited partner shall in respect to any such claim:
(1) Receive or hold as collateral security any
partnership property, or
(2) Receive from a general partner or the
partnership any payment, conveyance, or
release from liability if at the time the assets
 of the partnership are not sufficient to
discharge partnership liabilities to persons
not claiming as general or limited partners.
The receiving of collateral security, or payment,
conveyance, or release in violation of the foregoing
provisions is a fraud on the creditors of the
partnership.
Article 1855. Where there are several limited partners
the members may agree that one or more of the
limited partners shall have a priority over other limited
partners as to the return of their contributions, as to
their compensation by way of income, or as to any
other matter. If such an agreement is made it shall be
stated in the certificate, and in the absence of such a
statement all the limited partners shall stand upon
equal footing.
Article 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 liabilities of the partnership except liabilities to
limited partners on account of their contributions and
to general partners.
Article 1857. A limited partner shall not receive from
a general partner or out of partnership property any
part of his contributions until:
(1) All liabilities of the 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 under the provisions of
the second paragraph; and
(3) The certificate is cancelled or so
amended as to set forth the withdrawal or
reduction.
Subject to the provisions of the first
paragraph, a limited partner may rightfully
demand the return of his contribution:
(1) On the dissolution of a
partnership; or
(2) When the date specified in the
certificate for its return has arrived,
or
(3) After he has 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.
In the absence of any statement in the certificate to
the contrary or the consent of all members, a limited
partner, irrespective of the nature of his contribution,
has only the right to demand and receive cash in
return for his contribution.
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 as
required by the first paragraph, No. 1, and
the limited partner would otherwise be
entitled to the return of his contribution.
Article 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 the 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 return with interest, necessary to
discharge its liabilities to all creditors who extended
credit or whose claims arose before such return.
Article 1859. A limited partner's interest is
assignable. A 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; he is only entitled to
receive the share of the profits or other compensation
by way of income, or the return of his contribution, to
which his assignor would otherwise be entitled.

An assignee shall have the right to become a
substituted limited partner if all the members consent
thereto or if the assignor, being thereunto empowered
by the certificate, gives the assignee that right.
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 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 and which could not be ascertained
from the certificate.
The substitution of the assignee as a limited partner
does not release the assignor from liability to the
partnership under articles 1847 and 1858.
Article 1860. The retirement, death, insolvency,
insanity or civil interdiction of a general partner
dissolves the partnership, unless the business is
continued by the remaining general partners:
(1) Under a right so to do stated in the
certificate, or
(2) With the consent of all members.
Article 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.
Article 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.
Article 1863. In settling 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.
Article 1864. The certificate shall be cancelled when
the partnership is dissolved or all limited partners
cease to be such.
A certificate shall be amended when:
(1) There is a change in the name of the
partnership or in the amount or character of
the contribution of any limited partner;
(2) A person is substituted as a limited
partner;
(3) An additional limited partner is admitted;
(4) A person is admitted as a general
partner;
(5) A general partner retires, dies, becomes
insolvent or insane, or is sentenced to civil
interdiction and the business is continued
under article 1860;
(6) There is a change in the character of the
business of the partnership;
(7) There is a false or erroneous statement in
the certificate;
(8) There is a change in the time as stated in
the certificate for the dissolution of the
partnership or for the return of a contribution;
(9) A time is fixed for the dissolution of the
partnership, or the return of a contribution,
no time having been specified in the
certificate, or
(10) The members desire to make a change
in any other statement in the certificate in
order that it shall accurately represent the
agreement among them.
Article 1865. The writing to amend a certificate shall:
(1) Conform to the requirements of article
1844 as far as necessary to set forth clearly
the change in the certificate which it is
desired to make; and
(2) Be signed and sworn to by all members,
and an amendment substituting a limited
partner or adding a limited or general partner
shall be signed also by the member to be
 substituted or added, and when a limited
partner is to be substituted, the amendment
shall also be signed by the assigning limited
partner.
The writing to cancel a certificate shall be
signed by all members.
A person desiring the cancellation or
amendment of a certificate, if any person
designated in the first and second
paragraphs as a person who must execute
the writing refuses to do so, may petition the
court to order a cancellation or amendment
thereof.
If the court finds that the petitioner has a right to have
the writing executed by a person who refuses to do
so, it shall order the Office of the Securities and
Exchange Commission where the certificate is
recorded, to record the cancellation or amendment of
the certificate; and when the certificate is to be
amended, the court shall also cause to be filed for
record in said office a certified copy of its decree
setting forth the amendment.
A certificate is amended or cancelled when there is
filed for record in the Office of the Securities and
Exchange Commission, where the certificate is
recorded:
(1) A writing in accordance with the
provisions of the first or second paragraph,
or
(2) A certified copy of the order of the court
in accordance with the provisions of the
fourth paragraph;
(3) After the certificate is duly amended in
accordance with this article, the amended
certified shall thereafter be for all purposes
the certificate provided for in this Chapter.
Article 1866. A contributor, unless he is a general
partner, is not a proper party to proceedings by or
against a partnership, except where the object is to
enforce a limited partner's right against or liability to
the partnership.
Article 1867. A limited partnership formed under the
law prior to the effectivity 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 effectivity 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.
CASES
Agad v. Mabato
Facts:
Petitioner Mauricio Agad claims that he and defendant
Severino Mabato are partners in a fishpond business
to which they contributed P1,000 each. As managing
partner, Mabato yearly rendered the accounts of the
operations of the partnership. However, for the years
1957-1963, defendant failed to render the accounts
despite repeated demands.
Petitioner filed a complaint against Mabato to which a
copy of the public instrument evidencing their
partnership is attached. Aside from the share of profits
(P14,000) and attorney’s fees (P1,000), petitioner
prayed for the dissolution of the partnership and
winding up of its affairs. Mabato denied the existence
of the partnership alleging that Agad failed to pay his
P1,000 contribution. He then filed a motion to dismiss
on the ground of lack of cause of action. The lower
court dismissed the complaint finding a failure to state
a cause of action predicated upon the theory that the
contract of partnership is null and void, pursuant to
Art. 1773 of our Civil Code, because an inventory of
the fishpond referred in said instrument had not been
attached thereto.
Issue: W/N Article 1773 is applicable
Held:
No. The Court held that the partnership was
established "to operate a fishpond", not to "engage in
a fishpond business". Moreover, none of the partners
contributed either a fishpond or a real right to any
fishpond. Their contributions were limited to the sum
of P1,000 each. The operation of the fishpond
mentioned in the public instrument was for the
purpose of the partnership. Neither said fishpond nor
a real right thereto was contributed to the partnership
or became part of the capital thereof, even if a
fishpond or a real right thereto could become part of
its assets. The Court ruled that Article 1773 of the
Civil Code inapplicable in this case.
Obillos v. CIR
Facts:
Jose Obillos, Sr. bought two lots with areas of 1,124
and 963 square meters of located at Greenhills, San
Juan, Rizal. The next day he transferred his rights to
his four children, the petitioners, to enable them to
build their residences. The Torrens titles issued to
them showed that they were co-owners of the two
lots. In 1974, or after having held the two lots for more
than a year, the petitioners resold them to the Walled
City Securities Corporation and Olga Cruz Canada for
the total sum of P313,050. They derived from the sale
a total profit of P134, 341.88 or P33,584 for each of
them. They treated the profit as a capital gain and
paid an income tax on one-half thereof or of P16,792.
The Commissioner of Internal Revenue required the
four petitioners to pay corporate income tax on the
total profit of P134,336 in addition to individual income
tax on their shares thereof.
Issue: W/N the petitioners had indeed formed a
partnership or joint venture and thus liable for
corporate tax
Held:
The Supreme Court held that the petitioners should
not be considered to have formed a partnership just
because they allegedly contributed P178,708.12 to
buy the two lots, resold the same and divided the
profit among themselves. They were co-owners pure
and simple. The petitioners were not engaged in any
joint venture by reason of that isolated transaction.
Article 1769(3) of the Civil Code provides that "the
sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them
have a joint or common right or interest in any
property from which the returns are derived". There
must be an unmistakable intention to form a
partnership or joint venture.
Pascua v. CIR
Facts:
Issue:
Held:
Litonjua Jr. v. Litonjua
Facts:
Aurelio Litonjua, Jr. and Eduardo Litonjua, Sr. are
brothers. Aurelio filed a suit against Eduardo and
Robert Yang for specific performance and accounting.
Aurelio alleged that he and Eduardo entered into a
joint venture (JV)/partnership agreement in the theater
business which expanded into other industries like
shipping and real estate; that Yang is their “partner” in
the business; that the JV/Partnership agreement was
contained in a Memorandum, which was attached to
the complaint, whereby Eduardo allegedly will give
P1M or 10% equity in consideration of Aurelio’s
contribution of his industry. The Memorandum states
that “whatever is left in the corporation, I will make
sure that you get ONE MILLION PESOS or ten
percent equity, whichever is greater. We two will
gamble the whole thing of what I have and what you
are entitled to”; that subsequently, their relationship
turned sour and so Eduardo registered the properties
of the JV to the other parties , in fraud of him.
Eduardo and Yang denied under oath the material
allegations, arguing that Aurelio had no cause of
action against them. RTC ruled in favor of Aurelio. But
was reversed by CA in favor of Eduardo and Yang
and dismissed the case on the ground that the alleged
partnership is void or legally inexistent.
Issue: Whether petitioner and respondent Eduardo
are partners in the theatre, shipping and realty
business, as one claims but which the other denies
Held
No. A partnership exists when two or more persons
agree to place their money, effects, labor, and skill in
lawful commerce or business, with the understanding
that there shall be a proportionate sharing of the
profits and losses between them. A contract of
partnership is defined by the Civil Code as one where
two or more persons bound themselves to contribute
money, property, or industry to a common fund with
the intention of dividing the profits among themselves.
A joint venture, on the other hand, is hardly
distinguishable from, and may be likened to, a
partnership since their elements are similar, i.e.,
community of interests in the business and sharing of
profits and losses. Being a form of partnership, a joint
venture is generally governed by the law on
partnership.
In the case at bar, Aurelio’s contributions, if any,
consisted of immovable and real rights which was his
supposed share in the family business and his
industry Aurelio argues that: a. The Memorandum is
an actionable document conferring rights upon Aurelio
to the share in the JV. The Court ruled that the
Memorandum is defective as (1) it is unsigned and
undated which means that it did not meet the public
instrumentation requirements under Art. 1771; (2)
being unsigned and that the alleged partnership
involves more than P3,000 in money or property, it
cannot be presented for notarization, let alone be
registered with SEC, that the purported JV is legally
inexistent, produces no effect whatsoever and cannot
be the source of any contractual or legal right. b. in
addition contract-validating inventory requirement
under Article 1773 applies as long real property or
real rights are initially brought into the partnership.
Aurelio argues that the immovables in question were
not contributed but were acquired after the formation
of the supposed partnership. According to the Court,
Aurelio himself admitted contributing his share which
was already owned even before the execution of the
Memorandum c. Assuming that the Memorandum is
ineffective or null as a partnership document, it
nevertheless created demandable rights. It may be
considered as an innominate contract. The Court
ruled that this was only an afterthought by Aurelio. His
act of changing his original theory is an impermissible
practice by the Rules of Court and is an implied
admission that the very theory/claim he had in the first
place (i.e. partnership) is erroneous The Court ruled
that the nature of the contract is a promise not to be
performed within one year from contract execution
covered by Statute of Frauds under Art.1403 (2)(a).
Aurelio has not sufficiently established the legal
vinculum where he sourced his right to drag Yang into
the fray.
Ortega v. CA
Facts:
The law firm of ‘BITO, MISA, & LOZADA’ was duly
formed and registered with the SEC, following several
amendments in leadership and management.
However, 8 years into the partnership, Misa wrote to
Bito and Lozada, saying that he wishes to withdraw
from the firm, and that he wants to liquidate his
participation. He cites interpersonal conflict with the
partners for his reason to leave, saying that the
management does not reflect the way he wants it to
be done. 
Misa then filed a petition with the SEC to dissolve and
liquidate the partnership. The Hearing Officers said
that Misa’s withdrawal did not dissolve the
partnership, but the SEC en banc said that it did. SEC
en banc ruled as such because their partnership is a
partnership at will. Bito and Lozada brought it up with
the CA, but during the pendency, they unfortunately
died. Eventually, the CA affirmed the resolution,
saying that it is a partnership at will, and that good
faith and bad faith does not matter.  by the person authorized to make use thereof.”
Issue: 1) W/N it is a partnership at will and 2) W/N
good faith matters
Held:
On the first, the Court ruled that their partnership is a
partnership at will. By definition, a partnership at will
does not fix its term. Just because the Articles of
Partnership puts a PURPOSE, does not mean the
term is fixed as the fulfillment of such purpose. The
Court ruled: “The right to choose with whom a person
wishes to associate himself is the very foundation and
essence of that partnership.” 
On the second, the Court said that good faith matters.
A partnership at will is predicated on the mutual desire
and consent of the partners. Therefore, if a partner
wants to withdraw, it must be with good faith. An
unjustified dissolution can subject him to possible
damages. Finally, on the third, the Court concludes
that given the situation of the firm when Misa decided
to leave, he was not in bad faith.   Thus, Elmo filed a complaint for the payment of sum
De los Reyes v. Lukban
Facts:
Teodoro delos Reyes filed a case against Vicente
Lukban and Espiridion Borja to recover from them
payment for the merchandise they bought on credit by
the firm, Lukban & Borja from the plaintiff's ship
supply store named La Industria. A judgment was
rendered, on which the defendant firm was ordered to
pay the sum of P1,086.65 with interest thereon
amounting to P1,102.95. Esperidion Borja paid
P522.69. Teodoro delos Reyes later on brought a suit
against Lukban & Borja to recover the sum of P853,
the remaining unpaid balance plus legal interest.
Defendant Lukban contended that he is not liable, he
was merely an industrial partner in the firm and it was
Borja who furnished the capital. As it was proven on
trial that the partnership has no more remaining
property, as it is already insolvent, the court held that
Borja and Lukban jointly and severally liable to pay
the sum to delos Reyes.
Issue: Is a creditor entitled to collect individually from
the partners the amount of the debt that the dissolved
partnership owed at the time of its dissolution?
Held:
Yes. The creditor has the right to recover from the
partners thereof in the manner provided by the Code
of Commerce (now the CC). Art. 127 of the Code of
Commerce provides: "All the members of the general
co-partnership, be they or be they not managing
partners of the same, are personally and severally
liable with all their properties for the results of the
transactions made in the name and for the account of
the partnership, under the signature of the latter, and
Munasque v. CA
Facts:
Elmo entered into a contract with Tropical for the
remodeling of its Cebu branch building in behalf of the
partnership of “Galan and Muñasque.” Tropical gave
Elmo the FIRST CHECK (7k). Elmo endorsed it to
Galan and it was deposited in their joint account.
However, the proceeds were spent by Galan for his
personal use so when the SECOND CHECK was
given, Elmo refused to endorse it to Galan. 
Galan informed Tropical about the “misunderstanding”
between him and Elmo so Tropical changed the name
of the payee to “Galan and Associates.” a. Because
of this, Galan was able to encash the check. As a
result, Elmo faced financial difficulties in finishing the
construction project. He could have used the 13k
given by Tropical (which is with Galan). Elmo
shouldered the construction at his own expense.
of money and damages against Galan, Tropical, and
Ramon seeking to recover the amounts in the first and
second checks.
RTC held them solidarily liable instead to the
Hardware Company and Blue Diamond and absolved
Tropical of liability. It was subsequently affirmed by
the CA modifying only the liability from solidary to
JOINT.
Issue: W/N a partnership existed between Elmo and
Galan
Held:
YES. Here, Elmo entered into the renovation contract
on behalf of the partnership of “Galan and
Muñasque.” There is no evidence showing that the
partnership was not a genuine one. If there was a
misunderstanding, it does not convert the partnership
to a sham organization. Moreover, Elmo received the
1st payment and endorsed it in favor of Galan. Tropical
has a right to presume that Elmo and Galan were true
partners. Thus, the payments made to the partnership
were valid payments.  the principal specifically authorizing the performance
While the liability of the partners is merely joint in
transactions entered into by the partnership, a third
person who transacted with said partnership can hold
the partners solidarily liable for the whole obligation if
the case of the third person falls under Articles 1822
or 1823. The obligation is solidary, because the law
protects him, who in good faith relied upon the
authority of a partner (real or apparent). That is why
under Article 1824 of the Civil Code all partners,
whether innocent or guilty, as well as the legal entity
which is the partnership, are solidarily liable.
Tropical had every reason to believe that a
partnership existed between the petitioner and Galan
and no fault or error can be imputed against it for
making payments to "Galan and Associates" and
delivering the same to Galan because as far as it was
concerned, Galan was a true partner with real
authority to transact on behalf of the partnership with
which it was dealing. However. as between the
partners Muñasque and Galan, justice also dictates
that Muñasque be reimbursed by Galan for the
payments made by the former representing the
liability of their partnership to herein intervenors, as it
was satisfactorily established that Galan acted in bad
faith in his dealings with Muñasque as a partner.
Patrimonio v. Gutierrez
Facts:
Patrimonio and Gutierrez entered into a business
venture. To cover expenses, Patrimonio entrusted
several pre-signed blank checks to Gutierrez with the
specific instruction not to fill them out without prior
notification to and approval by Patrimonio. However,
without Patrimonio’s knowledge and consent,
Gutierrez secured a P200,000 loan from Marasigan
and simultaneously delivered to the latter one of the
pre-signed checks with the blank portions filled out.
When Marasigan deposited the check, it was
dishonored. Consequently, Marasigan filed a criminal
case for violation of B.P. 22 against Patrimonio while
Patrimonio filed herein Complaint for the Nullity of
Loan and Recovery of Damages against Gutierrez
and Marasigan.
Issue: Whether the contract of loan granted by
Marasigan to Patrimonio, through Gutierrez, may be
nullified for being void. 
Held:
The Court ruled in the affirmative. Under Article 1878
paragraph 7, a special power of authority is required
before an agent can loan or borrow money on behalf
of the principal. Said provision does not state that the
authority be in writing. The requirement under Article
1878 refers to the nature of the authorization and
NOT to its form. There must be a clear mandate from
of the act.
Here, it was not shown that Patrimonio authorized
Gutierrez to borrow money in behalf of him.
Furthermore, that Patrimonio entrusted the blank pre-
signed checks to Gutierrez is not legally sufficient
since the authority to enter into a loan can never be
presumed.
Realubit v. Jaso, et al.
Facts:
The case arose when Josefina Realubit entered into
joint venture agreement with Francis Eric Amaury
Biondo for the operation of an ice manufacturing
business; Josefina is the industrial partner while
Biondo is the capitalist partner. Later, Biondo
transferred all his rights and interest in favour of Eden
Jaso (Eden) as evidenced in the Deed of Assignment.
The spouses Jaso demanded from Josefina an
accounting and inventory of the partnership as well as
the remittances of the portion of their profits. Jaso
filed an action for specific performance, accounting,
examination, audit and inventory of assets and
properties due to Josefina’s failure to comply with the
first demand.
Issue: W/N the assignment of right made Eden a
partner and corollary, whether the spouses Jaso has
the right to order Josefina to render an accounting of
the business.
Held:
No. A conveyance by a partner of his whole interest in
the partnership does not 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
contracts the profits to which the assigning partners
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 the 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. The assignment
does not purport to transfer an interest in the
partnership, but only a future contingent right to a
portion of the ultimate residue as the assignor may
become entitled to receive by virtue of his
proportionate interest in the capital." Here, Although
Eden did not, moreover, become a partner as a
consequence of the assignment and/or acquire the
right to require an accounting of the partnership
business, the CA correctly granted her prayer for
dissolution of the joint venture conformably with the
right granted to the purchaser of a partner's interest
under Article 1831 of the Civil Code.

Guy v. Atty. Gacott

Facts:
Atty. Gacott purchased 2 transreceivers from QSC
though Medestomas. Due to major defects, Gacott
returned the transreceivers to QSC Medestomas
promised a replacement in two weeks but it was not
met. Gacott ended up filing a complaint against QSC
and Medestomas for damages. The trial court ruled in
his favor. During the execution stage, Gacott learned
that QSC is not a corporation but a general
partnership. In its articles, Guy was the General
Manager. The Sheriff, to execute the judgment ended
up attaching Guy’s car.

Issue: W/N Guy is solidarily liable with the partnership

for damages arising from the breach of contract of
sale with Gacott

Held:
No, Guy is not solidarily liable with the partnership. In
the spirit of fair play, it is a better rule that a partner
must first be impleaded before he could be prejudiced
by the judgment against the partnership. Without any
showing that Guy himself acted maliciously on behalf
of the company, causing damage or injury to the
complainant, then he and his personal properties
cannot be made directly and solely accountable for
the liability of QSC, the judgment debtor, because he
was not a party to the case.