CHAPTER 3

DISSOLUTION AND WINDING UP

Maria 0:00 – 11:16
THREE FINAL STAGES OF A PARTNERSHIP

A. DISSOLUTION (Article 1828)

– Is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on of the business.
*Due to one partner ceasing to be associated in the carrying on of the business: ibig sabihin ayaw na nang isang partner
na ipagpatuloy yung partnership, technically a change in the relationship of the partners (nung una gusto nilang
magbusiness later on isa sakanila ayaw nang magbusiness)

B. WINDING UP
– Is the process of settling the business or partnership affairs after dissolution.
*The business affairs is settled. Winding up for liquidation (incase of liquidation: binabayaran mga debts, kinocollect
mga credits and assets are liquidate (binebenta para mas madaling paghatian nang mga partners.)

C. TERMINATION
– Is the point in time after all the partnership affairs are completely wound up and
finally settled.
*All partnership affairs have been settled. Tapos na winding up: nabayaran na lahat nang utang, nacollect na lahat nang
credits, nabalik na yung capital and nakapagshare na sa surplus and mga partners. In case of termination the partneship
is no longer an ongoing concern (wala na ang partnership)

EFFECT AND CAUSES OF DISSOLUTION

PARTNERSHIP NOT TERMINATED BY DISSOLUTION (Article 1829)
– The principal significance of dissolution is that, thereafter, no new partnership business
should be undertaken, but affairs should be liquidated and distribution made to those
entitled to the partners’ interest.
*Wala na tayong bagong transaction na papasok kasi ang dapat nalang ginagawa nang partnership is to liquidate the
affairs and distribute the assets of the partnership
– The partnership continues until the winding-up is completed. Thus, dissolution refers to
the change in the partnership relation and not the actual cessation of the partnership
business.
*Until liquidation/winding up is completed nagpapatuloy paden yung partnership (buhay pa siya in so far as liquidation
or winding up of its affair is concern)

CAUSES OF DISSOLUTION
Can be majorly categorized as:
 Judicial
- In case of Judicial dissolution any of the partners even an assignee can go to court and ask the court to issue an
order dissolving the partnership.
 Extrajudicial (Art.1830)
- The help of the court is not required to dissolve the partnership even the partners can dissolve it among
themselves.
CAUSES OF EXTRAJUDICIAL DISSOLUTION (LIVIDUW) (Article 1830)
REMEMBER! L I V I D U W
 L: loss
 I: insolvency of the partners or the partnership
 V: dissolution in violation of the partnership contract
 I: civil interdiction
 D: death
 U: unlawfulness of the business
 W: causes of dissolution without violating the partnership contract (has 4 causes)

A. Without violation of the agreement between the partners.

*Dinidissolve partnership without necessarily violating the partnership contract
1. By the termination of the definite term or particular undertaking specified in the agreement.
*Pag dumating na yung term nagexpire na or the particular undertaking is accomplished the partnership is dissolve.
There is no violation of the agreement because specifically the agreement of the partners is to dissolve a partneshop
after a particular period or definite term or after the accomplishment of a particular undertaking.
2. By the express will of any partner, who must act in good faith, when no definite term or particular
undertaking is specified
*Will apply incase of a partnership at will because in ‘partnership at will’ there is no definite term or particular
undertaking which is specified. Kailan matatapos partnership at will: base on the expressed will of any partner. So if any
partner wants to terminate or dissolve the partnership and he is in good faith (remember that this is an extrajudicial
cause of dissolution) it does not violate the partnership contract WHY? Because it is a partnership at will it can end
anytime base on the will of the partner
3. 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.
*Will apply to partnership for a specified term/fixed term or partnership for a particular undertaking. Even before the
arrival of the period/the expiration of the period/ the accomplishment of the particular undertaking the partners want
to dissolve the partnership already WHY IS THERE NO VIOLATION? Because all of the partners consent to the dissolution.
SINO LANG NEED NANG CONSENT? Partners who have not assigned their interest or suffered them to be charge. This
will have to do with Art. 1813 and 1814(Assignment of interest/Charging Order or Interest). It is like a modification of
the original agreement tapos ihdidissolve nalang nila this time by the will of the partners.
4. By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the
agreement between the partners.
*If other partners did it in good faith they can expel the partners if it is provided for in the partnership agreement. The
Expulsion in Good Faith is a right given to the partners because it is conferred by agreement. It does not violate the
contract of partnership kasi kasama naman sa pinagusapan nila yon na pwedeng magexpel as long as it is done in good
faith. REASON WHY EXPULSION LEADS TO DISSOLUTION? The decrease in the membership of the partnership. Any
increase or decrease in the number of partners can lead to dissolution.
Chapter 3
11:17 – 20:59

B. In violation of agreement.
Here, it happens when the circumstances do not permit a dissolution under any of the provisions of Article
1830 so bawal magdissolve ng partnership but obviously even if bawal magdissolve the partners can still
get out of the partnership kasi hindi naman pwedeng pagpilitan. Here, if the reason for getting out of the
partnership is not justifiable dito malalaglag yun in violation of the partnership agreement. It can also
apply incase of partnership for a fixed term and gusto mo nang umalis and the other partners did not
agree with your choice dito pwede mo pa ring idissolve yung partnership kasi hindi pwede ipagpilitan at
ang pinagkaiba lang niyan sa number 3 is that number 3 all of the partners consent to the dissolution even
if hindi pa tapos yung term at hindi pa naaaccomplished yung purpose or undertaking. Here, pwede
namang madissolve kahit hindi pa naaccomplished yung purpose or di pa nagexpire yung term but here
since not all of the partnership it is a violation of the partnership agreement. So here, the withdrawing
partner would be liable for damages but you cannot compel him to remain in the partnership since
partnership is based on mutual trust and confidence if ayaw na niya and cannot trust the partnership
anymore or the other partners he is allowed to get out but liable to damages.

C. Unlawfulness of the business.

Here, in case of the unlawfulness of the business, there is a supervening event which will make the lawful
business partnership unlawful, may biglang nangyari and yung biglang nangyari from lawful business
naging unlawful business so this is a ground for dissolution because the business of the partnership can
no longer continue because of illegality of the business. Let us say for example, partnership of A,B and C
they are renting a videoke machines and yung mga videoke machines na ito as of now is legal to rent up
so pwede kang magparent ng ganiyan tuwing may birthday or party. Now if suddenly there is a law that
prohibits videoke since ang dahilan is maraming namamatay pagkatapos gumamit ng video at ang sabi ng
presidente na huwag nalang nating hayaan na magvideoke yung mga tao kaya lahat ng machines ay sirain
natin. Here, the machines they have been prohibited and they are be destroyed by the government. Now,
remember here, the business in the partnership of A,B and C which is lawful has already become an
unlawful business because of the supervening event and the supervening event is the declaration na hindi
na pwede ang mga videoke. Se here, we must remember that a business that is lawful from the start
become unlawful business which is caused by a supervening event and this is a ground for dissolution of
the partnership.

D. Loss.
Here, loss of a specific thing before it is contributed to the partnership it is lost before it is delivered
remember here parang walang cinontribute yung partner na yan that is why the partnership will be
dissolved for lack of contribution. What if a partner only contributed the usufruct of thing obviously if
that is lost as well para narin siyang walang contribution usufruct na nga lang ang ibinigay niya tapos nasira
pa yung object so here loss of a specific thing and usufruct lang ang cinontribute it has the same effect as
if is the partner did not contribute anything. If the object is loss after the delivery of the partnership the
rule is different it is the partnership who will bear the risk of loss.
E. Death of any partner.
Here, a decrese in the number of partners means automatic dissolution of the partnership but kailangan
pa rin ng liquidation obviously.

F. Insolvency of any partner of partnership

Here, it has the same effect it will dissolve the partnership because it can no longer satisfy yung kaniyang
obligations and probably it cannot also conduct its business dahil nga wala at kulang na sa pera. Now
incase of a solvency of a partner kaya nga yan ground for dissolution incase that the assets of the
partnership is exhausted remember that the partner will be liable using their separate property and if
wala na silang separate property ano na ang ipangsasalo nila sa partnership obligation. Here, the partner
who is insolvent has no authority to act for the partnership

G. Civil interdiction of any partner.

Here, ang pwede nalang gawin nung partner who is suffering from civil interdiction is to dispose his
property mortis causa or via last will and testament so here he cannot enter into contracts which will
dispose his property inter vivos or during his lifetime so we must rememer that walang valid consent na I
ibibigay ang partner who is usffering from civil interdiction kasi nga isa ito sa mga incapacity which is
defined by law
Part 03 – 21:00-32:36
CAUSES OF DISSOLUTION

Causes of Judicial Dissolution (Article 1831)

A. Dissolution by Judicial Decree on Application by a Partner (ILIBOG)
[I-Insanity, L-Loss, I-Incapacity, B-Breach of agreement, O-Other Circumstances, G-
Guilty of misconduct]
Take note of the term ILIBOG. Here, ILIBOG is a judicial dissolution by judicial decree
based on an application by a partner. Partner will go to court and ask for dissolution of the
partnership.

1. Insanity
Insanity on the part of one of the partners. An insane person cannot give valid consent so
dissolution may be asked from the court. Insane partner is incapacitated to contract kaya ito
nagiging ground for dissolution.

2. Incapacity
Incapacity which will affect the capability of a partner to perform partnership duties. For
example, partners who will enter government duties or partners who will go to abroad, they are
otherwise incapacitated to perform partnership obligation so this is another ground for
dissolution.

3. Misconduct and persistent breach of partnership agreement

Take note of this as to guilty of such conduct as tends to affect prejudicially the carrying
on of the business. For example, palagi siyang hindi nag-aattend ng meeting. This conduct is a
breach of the partnership agreement and also, it is prejudicially affecting the partnership.

4. Business of the partnership can only be carried on at a loss.

The business of the partnership is hopeless, kumbaga, palugi na siya. So bakit mo pa siya
itutuloy kung ‘yong purpose ng partnership is to gain profit ay hindi na pwedeng ma-achieve. If
the business of the partnership can only be carried on at a loss, this is also a ground again for
judicial dissolution.

5. A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the
business.
Connected siya with number. In here, aside from number 3, pwede ring isama yung acts
which causes conflicts of the interest as to the part of the partner and the partnership.

6. Other circumstances which render dissolution equitable.

Itong other circumstances na ito usually ‘yong reason kung bakit siya judicial, because it
will be vented out in court.
B. Dissolution by Judicial Decree on Application by a Purchaser of a partner’s interest.

1. When the specified term or particular undertaking has been terminated.

Meaning, the partnership is for a specific term or a particular undertaking. Pagka nag-
expire na ‘yong term or na-accomplish na yong particular undertaking, itong purchaser of
partner’s interest under 1813 or 1814 can ask for dissolution of the partnership in court.

2. In case of a partnership at will, at any time when the interest was assigned or when the
charging order was issued.
Iyong purchaser can ask for dissolution at any time the interest was assigned when the
charging order was issued.

Liability in Case of Dissolution (Rules of Liability in Articles 1832, 1833, and 1834)

A. General Rule (Article 1832)

- Dissolution terminates all authority of the partners to act for the partnership
You take this together with 1829. In 1829, it was said that no new business can be
transacted. However, there are time na talagang may biglang bagong business which the partners
will enter into. Ang tanong diyan, ang bagong business ba na to after dissolution has already been
taken place. Is it binding on the partnership? Is the partner allowed to enter into that kind of
transaction? If an acting partner enters into that kind of transaction, ‘yong mga co-partners ba
niya are also liable?

- Meaning, bawal na silang pumasok sa mga new transactions. That is the general rule.

B. As Among Partners (Articles 1832 and 1833)

- Question: If the partnership is made liable, can the other partners ask for reimbursement from the
acting partner?
- Applies only if there is partnership liability.
If it is declared partnership liability, sino ba ang may taya? Iyong partner acting lang or
yung iba pang partners?
- GENERAL RULE: The partners are still bound to each other.
Kapag ba pinasukan ng acting partner ang transaction na ito, nagkaroon ng
liability ang partnership, sino ang magtataya? The acting partner lang ba or the
other partners who did not enter the transaction? It depends if the dissolution not
by act, insolvency or death.

1. Dissolution not by act, insolvency or death

- Authority of the any partner to bind other partners is terminated immediately. If the reason of
dissolution is not by act, insolvency or death, the partners cannot bind the other partners.
Examples are: If business becomes unlawful, that reason for dissolution not by the act of
a partner, by insolvency or by death.
Other examples are: expiry of the term, accomplishment of the purpose, loss of a partnership
property, civil interdiction and decree of court.
42:35 – 51:36

LIABILITY IN CASE OF DISSOLUTION

C. AS TO THIRD PERSONS

- GENERAL RULE: The partnership is liable.

1. ACTS BINDING ON THE PARTNERSHIP

a. Transactions necessary for winding-up.
These are valid kasi In Article 1829, partners can no longer enter into new transactions. However,
transactions which are necessary for winding-up are always binding on the partnership kasi po they are trying to
liquidate the assets.

b. Transactions begun but not yet finished as of the time of dissolution.

Obviously, these are binding on the partnership because at the time these transactions occurred (or
nung nag-umpisa sila), the partnership is still an on-going concern.

c. New business with innocent third persons -

Binding rin po ito kahit na new business siya because the third person is innocent subject to
qualifications.

i. Former client with no knowledge or actual notice of dissolution.

So, if the third person is a former client with no knowledge or actual notice of the solution, the
transaction is binding on the partnership kasi kapag former client ‘yan, the law requires you to give
actual notice of dissolution to the former clients. If the notice of the dissolution is published in a
newspaper, it will not matter since pagkadating sa former client what is required is that they are
personally notified or they have actual notice of dissolution.

ii. New client who knows of the partnership but has no knowledge or notice of dissolution and the
fact of dissolution not having been published.
A transaction with a new client may be entered into and again this is binding if the new client is
an innocent third person. So here po, a new client is aware of the existence of the partnership but
he is not knowledgeable or he has no notice regarding the dissolution because the fact of dissolution
was not published. Dahil siya nga ay isang innocent third person, the good faith of the new client will
make the partnership liable.

2. ACTS NOT BINDING ON THE PARTNERSHIP

a. When dissolution is due to unlawfulness of the business.
Because the business has already become illegal, it is no longer binding on the partnership. Kapag
unlawful business, hindi lang siya partnership liability kasi yung acting partner is solely liable.

b. When the acting partner is insolvent

This is not binding on the partnership because the acting partner who is insolvent is not capacitated to
enter into contracts or dahil wala siyang legal capacity.
 c. Acting partner is not liquidating partner EXCEPT if the transaction is with –
GENERAL RULE: Acting partner is not liquidating partner

So here, ang dapat pumasok sa transactions na ito since this is for winding up, is usually ang liquidating
partner. However, the partner who enters into the transaction is not a liquidating partner. So, acting
partner is not a liquidating partner kaya this is not binding on the partnership kasi ang mga new
transactions for liquidation should always be entered into by the liquidating partner.

EXCEPTION:
i. Former client who had no knowledge or actual notice of the lack of authority.
However here, the acting partner who enters into the transaction is not the liquidating partner.
As a general rule, dapat sana hindi binding iyon—pero may exception. Except if the transaction is
again with a former client who was not personally notified of the lack of authority of the acting
partner—meaning, hindi niya alam na yung acting partner is not supposed to be liquidating the
partnership. So, because the former client is in good faith and wala talaga siyang notice of authority,
the transaction is binding.

ii. New client who has no knowledge or notice of want of authority and the fact of want of
authority not having been published.
Here, ang nakipag-transact sa client is not a liquidating partner so hindi siya authorized to enter
into a transaction which will liquidate the partnership business. But remember here that there is no
publication of the lack of authority of the acting partner who is not a liquidating partner that is why
here in number 2, it is binding on the partnership.

DISCHARGING LIABILITY

RULES IN DISCHARGING LIABILITY UPON DISSOLUTION (Article 1835)

- Just because the firm is dissolved does not automatically mean that the existing liability of any partner is discharged.

Ang tatandaan lang po dito is hindi madaling i-discharge ang partner from liability even if there is already
dissolution of the partnership.

HOW A PARTNER’S LIABILITY IS DISCHARGED

- There must be an agreement.

WHO MUST AGREE (in the agreement)

a. The partner concerned.

b. The other partners.
c. The creditors.
The creditors must give their consent so that yung particular partner na ito is ma-discharge siya from
liability—meaning, wala na siyang liability to third persons.

WINDING UP
MANNER OF WINDING UP (ARTICLE 1386)

a. EXTRAJUDICIAL WINDING UP
a. The partners designated in the agreement.
It is the liquidating partner who will wind up partnership affairs.

b. By the partners who have not wrongfully dissolved the partnership.

The innocent partners will extrajudicially wind up partnership affairs.

c. By the legal representative of the last surviving partner (when all the partners are already dead),
provided the last survivor was not insolvent.
Kung last surviving partner, all the partners are dead kasi nga legal representative lang siya nung last
surviving partner.

BUT: hindi lang basta legal representative of the last surviving partner. The last survivor must also be solvent.

b. JUDICIAL WINDING UP

-- CONTINUE--
B. JUDICIAL WINDING UP
– Under the control and direction of the court, upon proper cause that is shown to the court.
Obviously, control and direction of the court. So, ang court na ang bahala and the court
may even appoint a receiver.
APPLICATION OF PARTNERSHIP PROPERTY
In case of application of partnership property, simple lang yung meaning. Partnership
property is use to pay for the liability of the partners. Nadiscuss na’to sa 1817, gamitin muna
natin yung 1817 in relation to 1797, gamitin muna yung partnership assets, ibawas muna iyon
bago maging personally liable ang mga partners.
RIGHT OF PARTNER TO APPLICATION OF PARTNERSHIP PROPERTY ON
DISSOLUTION (Article 1837)
– The right of the partners to have the partnership property applied to discharge liabilities and the
surplus, if any, distributed in cash to the respective partners, depends on whether the dissolution
is caused without violation of the partnership agreement or in violation of the partnership
agreement.
This will talk about the right of the partners to have partnership property to applied to
discharge liabilities and kung mayroong surplus from the specific partnership property idistribute
sa partners. Anyway, it will depend in dissolution without violation or in violation of partnership.
RIGHTS WHERE DISSOLUTION NOT IN CONTRAVENTION OF AGREEMENT
So if it is not in violation in the partnership agreement, remember that the rights are:
A. To have the partnership property applied to discharge the liabilities of the partnership.
B. To have the surplus, if any, applied to pay in cash the net amount owing to the respective
partners
Kung may natira, applied to pay in cash the net amount owing to the respective partners, so
they can get yung kanilang share doon sa surplus paid in cash.
APPLICATION OF PARTNERSHIP PROPERTY
RIGHTS WHERE DISSOLUTION IN CONTRAVENTION OF AGREEMENT
If the dissolution is in violation to the partnership agreement, remember these are the
rights. Obviously, because it is in violation of the partnership agreement, there is an innocent
partner and a guilty partner. The guilty partner being the partner who wrongfully cause the
dissolution of the partnership.
A. INNOCENT PARTNERS
1. To have the partnership property applied for the payment of its liabilities and to receive in
cash his share of the surplus.
2. To be indemnified for damages caused by the partner guilty of wrongful dissolution.
 To be paid damages for caused of the guilty partner because of the wrongful dissolution.
3. To continue the business in the same name during the agreed term of the partnership, by
themselves jointly or with others.
To continue the business in the same name or yung mga innocent partners, they can do it
by themselves or pwede silang magpasok ng ibang partners.
4. To possess partnership property should they decide to continue the business, 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, and in like manner indemnify him against all present or future partnership
liabilities.
Remember, if they want to possess a specific partnership property, instead of selling it
and distributing yung mga proceeds, kailangan nilang magbayad ng mga bond approved by the
court. So in short, if they do not file a bond, they have to buy out yung interest ng guilty partner.
Remember, if they buy the interest of the guilty partner, it is less damage recoverable.
B. GUILTY PARTNERS
1. If the business is not continued by the other partners, to have the partnership property applied
to discharge its liabilities and to receive in cash his share of the surplus less damages caused by
his wrongful dissolution.
2. If the business is continued:
a. To have the value of his interest in the partnership at the time of the dissolution
ascertained and paid in cash or secured by bond approved by court.
Remember that the right of the guilty partner is to have the value of his interest in the
partnership determined and also paid in cash. Meaning, ibuy out yung kaniyang interest or kung
hindi pa babayaran ng partners yan or ng partnership it can be secured by a bond approved by
the court.
b. To be released from all existing and future liabilities of the partnership.
May right naman sila kasi nga hindi na sila kasama sa pagtuloy nung business. So, dapat
wala na siyang liability existing and future.
ANNULMENT OF PARTNERSHIP
RIGHT TO ANNUL PARTNERSHIP CONTRACT DUE TO FRAUD OR
MISREPRESENTATION (Article 1838)
In the law, remember the term use was recede. Again, mali iyan dahil hindi naman ito
rescissible contract because there is fraud or misrepresentation. Remember fraud is one of the
vices of consent. Kapag may vices of consent on the part of the one of the contract parties,
remember that the contract is voidable. So the right is not to recede but the right is to annual the
partnership contract.
– If one is induced by fraud or misrepresentation to come a partner, the contract is voidable or
annullable. (Article 1390) If the contract is annulled, the injured partner is entitled to restitution.
(Article 1398)
RIGHTS OF INJURED PARTNER WHERE PARTNERSHIP CONTRACT IS
ANNULLED
A. Right of lien or retention.
They can retain specific partnership property hanggang sila ay mabayaran nung kanilang
claim. This can also applied to surplus of the partnership property, reretain lang naman.
B. Right of subrogation.
Remember the innocent partner or the partner who was defrauded can be subrogated to the
place of creditors, magiging creditors siya ng partnership para yung kaniyang mga claims ay
mabayaran.
C. Right of indemnification
Right of indemnification by the guilty partner or yung nanloko sa innocent partner to enter on
a voidable contract of partnership. Right to ask for damages.
RULES FOR SETTLING ACCOUNTS
RULES FOR SETTLING ACCOUNTS (Article 1839)
A. ASSETS OF THE PARTNERSHIP
1. The partnership property including goodwill. or name reputation etc.
2. The contributions of the partners, which are made to pay off the partnership liabilities.
B. ORDER OF PAYMENT OF FIRM’S LIABILITIES/ORDER OF APPLICATION OF
THE ASSETS after the dissolution
1. First give to creditors who are strangers, otherwise they may be prejudiced.
Bayaran muna yung mga creditors who are third persons.
2. Then give to partners who are also creditors.
Meaning, pwede natin gamitin na term is inside creditors. Partners who are likewise
creditors. Kailan ba nangyayari yan? If the partners advance money on behalf of the partnership.
Example may inabonohan sila, bayaran muna yung inabonohan ng partners because with the
respect to the partnership, they are also creditors, but there right is to subordinate to the rights of
third persons who are creditors.
3. Then give to the partners their capital.
4. Lastly, the profits must be distributed.
Unahin muna raw yung capital bago yung profit.
DISSOLUTION BY CHANGE IN MEMBERSHIP
DISSOLUTION OF A PARTNERSHIP BY CHANGE IN MEMBERSHIP (Article 1840)
– When a firm is dissolved either by the admission of a new partner into an existing partnership,
by the retirement or assignment of the rights of all but one partner including their representatives
if deceased, by the retirement or death of any partner, by the assignment of the rights of all the
partners, by any wrongful cause committed by any partner or by the expulsion of any partner and
the business is continued without liquidation, the new partnership assumes the obligation of the
old partnership. Any change in membership dissolves a partnership and creates a new
partnership. The liability of a third person who joins the new partnership shall be satisfied out of
the partnership property only.
Kailan ba mangyayari yung change of membership? Simple, there is a new partner who is
admitted, there is retirement on the part of one of the partners, assignment of the rights of all but
one so lahat sila nag assign ng rights except one. Pwede rin naman na retirement or death,
assignment of the rights of all the partners or any wrongful cause committed by any partner or
expulsion. Remember na on those cases, nagkakaroon ng change in membership. But again in
case of change in membership, ang result niyan is to dissolve the partnership.
Now the question is, pwede ba nilang ipagpatuloy yung business kapag nagkaroon ng
changes sa membership? Pwede, usually tinutuloy nila yung business.
Now the question is, yung mga creditors ba ng mga dating partnership ay creditors pa rin
ng bagong partnership na itinuloy? Remember the rule is that business is continued without
liquidation, the new partnership assumes the obligation of the old partnership. So dahil na
nagkaroon ng changes in membership, nagkaroon ng dissolution. Dahil pinagpatuloy ng mga
partners it will create a new partnership. But remember nung pinagpatuloy nila, walang
liquidation, yung liability ng old partnership ay lilipat sa bagong partnership.
Remember, if nagkaroon ng incoming partners, yung kanilang liability will satisfied out
of the partnership property only or out of the contributions to the partnership only.
RIGHTS OF CREDITORS OF DISSOLVED PARTNERSHIP WHICH IS CONTINUED
– The law makes the creditors of the dissolved partnership, also creditors of the persons or
partnership continuing the business.
But it is very important that there is no liquidation, kapag naliquidate na yan, obviously
nabayaran na yung mga utang ng old partnership wala ng lilipat sa new partnership because it
has been liquidated.
RETIRING PARTNER OR LEGAL REPRESENTATIVE OF DECEASED PARTNER
RIGHTS OF RETIRING OR OF LEGAL REPRESENTATIVE OF DECEASED
PARTNER WHEN BUSINESS IS CONTINUED WITHOUT LIQUIDATION (Article
1841)
Dahil nga nagkaroon ng retirement, again there is a change in membership which causes
dissolution. Because there is death meron ulit change in membership which cause disoolution but
again in 1841 the business is continued without liquidation.
A. To have the value of the interest of the retiring partner or deceased partner in the
partnership ascertained as of the date of dissolution. (i.e., date of retirement or death)
 Ascertained muna yung value of interest ng retiring partner or deceased partner as of the
date of dissolution. Meaning date of death or retirement iyon.
B. To receive thereafter, as an ordinary creditor, an amount equal to the value of his share in
the dissolved partnership with interest, or, at his option, in lieu of interest, the profits
attributable to the use of his right.
Remember na dapat niyang tanggapin yung value ng share niya or a portion of the profits.
Magiging creditor ng partnership yung retired partner or yung legal representative ng
deceased partner.
RIGHT TO ACCOUNT
ACCRUAL OF A PARTNER’S RIGHT TO ACCOUNT OF HIS INTEREST (Article
1842)
– The right to demand an accounting of the value of his interest (Article 1812) accrues to any
partner or his legal representative after dissolution in the absence of an agreement to the
contrary.
This is a right available to a partner, yung pagdemand ng accounting na value ng
kaniyang interest. Remember the value of the interest or interest in the partnership is defined in
1812, remember yung property rights. Ito yung pangalawa. So right yung partner or his legal
representative to an accounting to the value of his interest after dissolution. Anyway, if we will
relate it to 1809 this is the general rule, right to a formal account only after dissolution of the
partnership.