GENERAL PROVISIONS
• All present property- contribute all the
1. Define PARTNERSHIP
A partnership exists when two or more
persons agree to contribute money, property,
or industry with the understanding that there
shall be a proportionate sharing of profits and
losses among them.
Statutory Definition of Partnership: 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.
2. Characteristic elements of the
contract of partnership
a) Consensual- it is perfected by mere
consent.
b) Commutative- the contribution of
each partner is considered as the
equivalent of the contribution of the
other partners.
c) Principal- it does not depend on other
contracts for existence.
d) Bilateral- it is entered by two or more
persons.
e) Onerous- it is burdensome because
each partner must contribute.
f) Nominate- it has a special name or
designation in our law under the title
“Partnership”.
g) Preparatory- it is entered into in
preparation for another contract or
contracts.
3. Essential features of a partnership
a) There must be a valid contract
b) There must be a mutual contribution
of money, property, or industry to a
common fund
c) The partnership must be organized
for profit
d) The object must be lawful and
established for the common benefit or
interest of the partners.
e) The articles of co-partnership must
not be kept secret among members
4. Legal characteristics of partnership
a) Must have a Lawful Object/ Cause
• within the commerce of man, not
impossible
• not contrary to law, morals, good
customs, public order, or public policy
b) Parties should have legal capacity
5. Classification of partnerships
According to Object
a) Universal Partnership
property that 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.
• All Profit- comprises all the partners
may acquire b their industry or work
during the existence of the
partnership.
b) Particular Partnership- has for its
object determinate things, their use or
fruits, or specific undertaking, or the
exercise of a profession or vocation.
According to Liability
a) General Partnership- one where all
the partners are general partners. All
partners are liable up to the extent of
their separate properties after the
assets of the partnership have been
exhausted.
b) Limited Partnership- at least one
general partner and one limited
partner. A limited partner is liable only
up to the extent of his contribution.
According to Duration
a) Partnership at Will - does not fix its
term, birth and life is predicated on
the mutual desire and consent of the
partners
b) Partnership with a Fixed Term -
one where the life or period of
existence of partnership has been
agreed upon by the partners.
c) Partnership for a Particular
Undertaking- will exist until the
purpose is accomplished.
According to Representation to Others
a) Ordinary 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
b) Partnership by Estoppel- where
persons, by words spoken or written
or by conduct represent themselves
or consent to another representing
them to anyone, as partners in an
existing partnership with one or more
persons not actual partners. A
partnership not duly organized has
been recognized, it shall be
considered a partnership by
estoppel.
According to Legality of its Existence
 a) De jure- one which has complied with
all legal requirements for its creation.
b) De facto- has not complied with all
the requirements for its creation.
6. Kinds of partners
As to contribution
a) Capitalist partners- those who
contribute money or property or both
money and property to the common
fund.
b) Industrial partners- those who
contribute only their industry or labor
to the common fund.
c) Capitalist-Industrial partners-
those who contribute money or
property and industry or both money,
property and industry to the common
fund.
As to liability
a) General partners- those who can be
held liable to third persons for
partnership obligations even to the
extent of their separate property.
b) Limited partners- those who cannot
be held liable to third persons for
partnership obligations.
As to management
a) Managing partners- those who
manage actively the business or
affairs of the partnership.
b) Silent partners- those who do not
take active part in the business or
affairs of the partnership though they
share in the profits or losses.
c) Liquidating partners- those who
take charge of the winding up or
liquidation of the partnership affairs
after dissolution
As to third persons
a) Ostensible partners- those who
take active part and known to the
public as a partner in the partnership.
b) Secret partners- those whose
connection with the partnership is
known to the public.
c) Dormant partners- those who do not
take active part in the business and
are not known to the public as
partners. Thus, they are both secret
and silent partners.
As to membership
a) Real partners- those partners in an
existing legal partnership.
b) Partners by Estoppel- those who
are not really partners but represent
themselves, or consent to another or
others representing them to anyone
as partners in an existing partnership
or in one that is fictitious or apparent.
As to continuation of the business affairs
after dissolution
a) Continuing partners- those who
continue the partnership business
after the dissolution of the
partnership.
b) Discontinuing partners- those who
do not continue the partnership
business after the dissolution of the
partnership.
As to the nature of membership
a) Original partners- those who are
members of the partnership from the
time of its constitution.
b) Incoming partners- those who
became members of the partnership
after its establishment.
c) Retiring partners- those who
withdraw from the partnership.
As to state of survivorship
a) Surviving partners- those who
continue the partnership after
dissolution by reason of death of a
partner.
b) Deceased partners- those who died
while being a member of the
partnership
As to the effect of expulsion
a) Expelled partners- those who are
expelled from the partnership by the
other partners for a valid cause.
b) Expelling partners- those who
caused the expulsion of a partner for
a valid cause.
As to the value of the contribution
a) Majority partners- those whose
contribution to the partnership
represents the majority or controlling
interest.
b) Nominal partners- those whose
contribution to the partnership
represents the minority interest.
7. Requisites of a contract of partnership
with a capital of P3,000 or more in
money or property
a) The contract must appear in a public
instrument, and
b) It must be recorded or registered with
the SEC
8. Will the partnership be void if it is not
registered with the Office of the SEC
having a capital of P3,000 or more?
No, because noncompliance still renders the • As a debt by installments or
contract valid, and does not prevent the otherwise;
formation of the partnership. Article 1772 • As wages of an employee or rent to a
states that “Failure to comply with the landlord;
requirements of the preceding paragraph • As an annuity to a widow or
shall not affect the liability of the partnership representative of a deceased
and the members thereof to third persons.” partner;
• As interest on a loan, though the
9. When shall the partnership be amount of payment vary with the
considered void? profits of the business;
• When the partnership is unlawful. • As the consideration for the sale of a
• If real properties or real rights in real goodwill of a business or other
properties are contributed regardless property by installments or otherwise.
of the value, a public instrument is (n)
needed; otherwise, the contract of
partnership is void. 11. Partnership vs. co-ownership
• ARTICLE 1773. A contract of
partnership is void, whenever Partnership Co-
immovable property is contributed ownership
thereto, if an inventory of said Creation by contract by contract
property is not made, signed by the and law
parties, and attached to the public Juridical can sue and cannot sue or
instrument. (1668a) Personality be sued be sued
• When persons who are prohibited Purpose for profit common
from giving each other any donation enjoyment of
or advantage enter into universal a thing/ right
partnership, the partnership is null not
and void. necessarily
for profit
10. Rules determining the existence of a Profit may be always
partnership stipulated depend on
Rule 1: All of its essential requisites must be upon proportionate
proved. shares, any
• There must be an intention to bind stipulation to
themselves; contrary is
• There must be mutual contribution; void
• There must be a common interest or Dissolution dissolved by not dissolved
benefit in profits; death or by death or
incapacity of incapacity of
Rule 2: Except as provided by article 1825, a partner co-owner
persons who are not partners as to each Form may appear no public
other are not partners as to third persons in any form instrument is
(however, needed even
Rule 3: o-ownership or co-possession does when real if it is the
not of itself establish a partnership, whether property is object of co-
such co-owners or co-possessors do or do contributed, owenrship
not share any profits made by the use of the a public
property instrument is
required)
Rule 4: The sharing of gross returns does not
of itself establish a partnership, whether or 12. Partnership vs. joint-stock company
not the persons sharing them have a joint or 1. Minimum No. of Members
common right or interest in any property from Minimum number of members is two in a
which the returns are derived; Partnership firm. Whereas in Joint Stock
Rule 5: The receipt by a person of a share of Companies, Minimum number is two in a
the profits of a business is prima facie private company and seven in a public
evidence that he is a partner in the business, company.
but no such inference shall be drawn if such
2. Maximum No. of Members
profits were received in payment:
In a Partnership firm, maximum number of
members is 20 in general business and 10 in
banking firms. In a Joint Stock Company,
maximum number of members is 50 in a
private company and there is no maximum
limit in public company.
3. Registration
Registration of a Partnership firm is not
compulsory. Registration of Joint Stock
company is compulsory.
4. Separate Legal Existence
Partnership firms has no separate legal
existence. Partnership Firm and partners are
the same. Joint Stock company has separate
legal existence. It is an artificial person
created by law.
5. Legislation
Partnership firm is regulated under the
Partnership Act, 1932. Joint Stock Company
is regulated under the Companies Act, 1956.
6. Capital
Huge capital for partnership firm cannot be
secured. There is possibility of securing huge
capital in case of Joint Stock company.
7. Liability
In a Partnership firm, liability of each partner
is unlimited, joint and several. In a Joint
Stock Company, liability of each shareholder
is limited.
8. Transfer of Shares
Transfer of shares is not possible without the
consent of all the partners in a partnership
firm. In case of pubic limited companies
shares can be transferred freely.
9. Management
Partnership Firm is managed by the partners
themselves, in general. In a Joint Stock
Company, management will be in the hands
of elected directors.
10. Audit of accounts
Audit of accounts of Partnership firm is not
necessary. Audit of accounts of Joint Stock
Company is compulsory.
11. Flexibility
The objects of the Partnership firm can be
changed easily. It is not so easy in case of a
Joint Stock Company.
12. Perpetual succession
Partnership firm has no continuous
existence. Joint Stock Company has
continuous existence.
13. Object or purpose of a partnership
Lawful Object/ Cause
• within the commerce of man, not
impossible
• not contrary to law, morals, good
customs, public order, or public policy
14. In case an unlawful partnership is
dissolved by judicial decree, how
shall the profits be appropriated?
Profits shall be confiscated in favor of the
government
15. Examples of unlawful partnerships
• A partnership formed to carry on
gambling
• A partnership formed for smuggling
purposes
• A partnership formed to furnish
houses for prostitution
• A partnership formed to create illegal
monopolies or combinations in
restraint of trade
16. Form in which a partnership shall be
constituted
General Rule: No Form is Required because
a partnership may be constituted in any form.
It may be in oral or writing.
Exception: When Real Properties or Real
Rights are contributed, it must appear in a
public instrument otherwise, it is void.
17. Can a partnership acquire immovable
property?
Yes, because it has a juridical personality
which gives it the right to acquire and
possess real or personal property.
18. Define universal partnership of all
present property
A universal partnership may refer to all the
present property or to all the profits. There
are two kinds of universal partnership: (1)
Universal partnership of all present property,
and (2) Universal partnership of profits.
19. In a universal partnership of all
present property which property
becomes the common property of all
the partners?
• All the properties actually belonging
to the partners
• The profits acquired with said
properties
20. May the partners contribute future
properties to a universal partnership
of all present property?
No, future properties such as those
properties subsequently acquired by
inheritance, legacy, or donation cannot be
contributed because:
 • Contracts regarding successional
rights cannot be made.
• A partnership demands that the
contributed things be determinate,
known, and certain.
• A partnership of all present properties
really implies a donation, and it is
well-known that generally, future
property cannot be donated.
21. Define universal partnership of profits
A universal partnership of profits comprises
all that the partners may acquire by their
industry or work during the existence of the
partnership
22. To whom shall movable or immovable
property which each of the partners
may possess at the time of the
celebration of the contract of
universal partnership of profits
pertain?
To the respective partners because
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.
23. If such movable or immovable
property shall pertain exclusively to
the partner who owns it at the time of
the celebration of the contract, what
then shall pass to the partnership?
What passes to the partnership is only the
usufruct or the use and fruits of the same.
24. Will the usufruct of properties
subsequently acquired by the
partners in a universal partnership of
profits belong to the partnership?
No, Par. 2 of Art 1780 provides that fruits of
subsequently acquired properties by
partners do not belong to the partnership.
25. How shall the partnership be treated
in case the articles of partnership fail
to specify its nature whether it is one
of “present property” or of “profits”?
It will be treated as a universal partnership of
profit. Art. 1781 states that articles of
universal partnership, entered into without
specification of its nature, only constitute a
universal partnership of profits.
26. Persons prohibited from entering a
universal partnership
Persons who are prohibited by law to give
donations cannot enter into a universal
partnership for the reason that each of the
partners virtually makes a donation.
27. Donations that are considered void
and therefor prohibited
• Donation of future property
• Donation between legally married
spouses
• Those made between persons who
were guilty of adultery or
concubinage at the time of the
donation
• Those made between persons found
guilty of the same criminal offense, in
consideration thereof
• Those made to a public officer or his
wife, descendants, and ascendants,
by reason of his office
28. Define a particular partnership
ART. 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.
29. Can a husband and wife enter a
particular partnership?
Spouses can validly enter into a
particular partnership with each other.
30. Fundamental difference between a
universal partnership and a particular
partnership.
The fundamental difference between a
universal partnership and a particular
partnership lies in the scope of their
subject matter or object. In the former,
the object is vague and indefi nite,
contemplating a general business with
some degree of continuity, while in the
latter, it is limited and well-defi ned, being
confi ned to an undertaking of a single,
temporary, or ad hoc nature.
OBLIGATIONS OF THE PARTNERS
1. Relations created by a contract of
partnership
A contract of partnership gives rise to
at least four distinct juridical relations,
namely:
(1) Relations among the partners
themselves;
(2) Relations of the partners with the
partnership;
(3) Relations of the partnership with
third persons with whom it contracts;
and
(4) Relations of the partners with
such third persons
2. When does a partnership acquire a
separate juridical personality?
 A partnership acquires a separate
juridical personality from the moment of
the execution of the contract unless it is
otherwise stipulated.
3. What constitutes prima facie evidence
of a continuation of the partnership
after the expiration of its fixed term?
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
4. In the preceding question, is there any
change in rights and duties of the
partners?
The rights and duties of the partners
remain the same as they were at such
termination but only insofar as is
consistent with a partnership at will.
5. When is a partner considered a debtor
of the partnership?
He is considered a debtor when he
promises to contribute into the
partnership. Art. 1786 provides that
“every partner is a debtor of the
partnership for whatever he may have
promised to contribute thereto.”
6. Obligations of a partner with respect
to his promise to contribute property
(1) To contribute at the beginning of the
partnership or at the stipulated time the
money, property, or industry which he
may have promised to contribute;
(2) To answer for eviction in case the
partnership is deprived of the
determinate property contributed; and
(3) To answer to the partnership for the
fruits of the property the contribution of
which he delayed, from the date they
should have been contributed up to the
time of actual delivery. In addition, the
partner has the obligation:
(4) To preserve said property with the
diligence of a good father of a family
pending delivery to the partnership (Art.
1163.); and
(5) To indemnify the partnership for any
damage caused to it by the retention of
the same or by the delay in its
contribution. (Arts. 1788, 1170.)
7. If the capital or part thereof which a
partner is bound to contribute
consists of goods, how shall said
good be appraised?
Manner of Appraisal:
• By Stipulation; or
• In absence of stipulation, by
experts chosen by the partners
according to current prices.
8. The liabilities of the partner who has
undertaken to contribute a sum of
money and fails to do so
(1) To contribute on the date due the
amount he has undertaken to
contribute to the partnership;
(2) To reimburse any amount he may
have taken from the partnership
coffers and converted to his own use;
(3) To pay the agreed or legal
interest, if he fails to pay his
contribution on time or in case he
takes any amount from the common
fund and converts it to his own use;
and
(4) To indemnify the partnership for
the damages caused to it by the delay
in the contribution or the conversion
of any sum for his personal benefit
9. Rule in the event a partner converts
partnership money to his personal
use
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 (fund), and his liability shall begin
from the time he converted the amount to
his own use. (1682) He becomes a
debtor of the partnership for whatever he
may have promised to contribute and for
interests and damages from the time he
should have complied with his obligation.
10. May industrial partner engage in
business for himself?
No, An industrial partner cannot engage
in business for himself
11. Does this prohibition apply to a
business the same as the business of
the partnership?
Yes, unless the partnership expressly
permits him to do so. The prohibition is
absolute and applies whether the
industrial partner is to engage in the
same business in which the partnership
is engaged or in any kind of business. It
is clear that the reason for the prohibition
exists in both cases, which is to prevent
any conflict of interest between the
 industrial partner and the partnership and
to insure faithful compliance by said
partner with his prestation.
12. The remedies available to the
partnership if an industrial partner
engages in business for himself
without the express permission of the
partnership.
Remedied of capitalist partner against an
industrial partner engaged in business for
himself
• The capitalist partner may exclude
the industrial partner from the
partnership plus damages; or
• The capitalist partner may avail
themselves of the benefits which the
industrial partner may have obtained
plus damages.
13. If A, B and C form a partnership
stipulating that the capital shall be
P150,000.00 without specifying the
share of each partner, how much shall
each partner contribute?
Unless there is a stipulation to the
contrary, partners shall contribute equal
shares to the capital of the partnership.
The case did not mention the separate
contribution of partners A, B, and C
hence, using the disputable presumption,
each partner shall contribute P50,000.
14. In case of imminent loss of the
business of the partnership, which
partners are required to contribute
additional capital to save the business
of the partnership?
As a general rule, a capitalist partner is
not bound to contribute to the partnership
more than what he agreed to contribute
but in case of an imminent loss of the
business, and there is no agreement to
the contrary, he is under obligation to
contribute an additional share to save the
venture. If he refuses to contribute, he
shall be obliged to sell his interest to the
other partners.
15. The remedy in case a capitalist
partner refuses to contribute
additional fund when he is bound to
do so
The law provides a remedy which,
incidentally, is just to both parties since the
partner who refuses to contribute is paid the
value of his interest while the other partners
are thereby relieved from the burden of
continuing their association with him in the
business
16. Which partner is not bound to
contribute additional fund despite
imminent loss of the business of the
partnership?
It is to be noted that the industrial partner is
exempted from the requirement to contribute
an additional share. Having contributed his
entire industry, he can do nothing further.
17. A and B are partners in A and
Company. A is the managing partner.
X owes A and Company P50,000.00
and A, in his personal capacity,
another sum of P50,000.00. Both
debts are due and demandable. If A
collects the amount of P50,000.00
from X, how shall such payment be
applied?
A and A and Company will share if A issued
the receipt for his own credit, then the 50,000
should be applied proportionately that is
25,000 will be applied to his own credit and
the balance of 25,000 will be applied to the
credit of the partnership.
If A issued a receipt for the credit of the
partnership, then the entire 50,000 will be
applied to the credit of the partnership.
18. The obligation of a partner who has
received in whole or in part, his share
of a partnership credit when the other
partners have not collected their
share and the partnership debtor
thereafter becomes insolvent
to bring to the partnership capital what he
received even though he may have given
receipt for his share only.
19. If the partnership suffers loss or
damage due to the fault or negligence
of a partner, who shall be
responsible?
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.
20. Can the partner who is responsible for
the damage compensate them with
the profits and benefits which he may
have earned for the partnership by his
industry?
As a general rule, the damages caused by a
partner to the partnership cannot be offset by
the profits or benefits which he may have
earned for the partnership by his industry
21. Who shall bear the risk of loss of
things contributed to the partnership?
If the things contributed 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 risks of 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.
22. Who shall be answerable for the
amounts disbursed and for the
obligations a partner may have
contracted in good faith in the interest
of the partnership business and for
risks in consequence of its
management?
ART. 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 expenses 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.
23. How shall be the profits and losses be
distributed among the partners?
Distribution of profits:
• According to the agreement
• If there is no agreement:
o Capitalist Partner- shall be in
proportion to his capital
contribution. This rule is based on
the presumed will of the partners
o Industrial Partner- just and
equitable under the
circumstances
Distribution of losses:
• According to the agreement
• If there is no agreement:
o Capitalist Partner- shall be in
proportion to his capital
contribution.
o Industrial Partner- not liable for
losses
24. Can the designation of the share of the
partners in profits and losses be
entrusted to a third person?
Yes, the designation of the share in the
profits and losses may be delegated to a third
person by common consent.
25. If the decision of the third person is to
be impugned, within what time shall it
be brought?
only when it is manifestly inequitable.
26. The 2 distinct ways of appointing a
partner as managing partner.
• Appointment in the articles of
partnership; or
• In an instrument other than the
articles of partnership
27. What are the rights and obligations of
a managing partner whose
appointment is contained in the
articles of co-partnership?
• If he acts in good faith, he may do all
the acts of administration despite the
opposition of his partners
• If he acts in bad faith, he cannot do
any act of administration. It must be
noted that the presumption in law is
in favor of good faith.
28. What are the powers of 2 or more
managing partners whose respective
duties are not specified?
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 tie, the
matter shall be decided by the partners
owning the controlling interest.
29. How shall management be exercised
in case it is stipulated that none of the
managing partners shall act without
the consent of the others?
The concurrence of all shall be necessary for
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.
General Rule: Unanimous consent of all the
managing partners (even if one is absent or
incapacitated) shall be necessary for the
validity of the acts.
Exception: When there is imminent danger of
grave or irreparable injury to the partnership
30. Who shall manage the partnership
incase no manner of management has
been agreed upon?
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. (1695a)
31. Can a partner associate another
person with him in his share in the
partnership without the consent of the
other partners?
ARTICLE 1804. No. Every partner may
associate another person with him in his
share, but the associate shall not be
admitted into the partnership without the
consent of all the other partners, even if
the partner having an associate should
be a manager. (1696)
32. Can the associate take part in
management?
No, unless there is a consent of all the
other partners.
33. What will the associate share with the
partner?
34. Where shall be partnership books be
kept?
at the principal place of business of the
partnership.
35. What are the rights of the partners
with respect to the books of the
partnership?
Every partner shall at any reasonable
hour have access to and may inspect and
copy any of them. A partner is given by
law the right to have access to, inspect
and copy the partnership books for the
purpose of enabling that partner to obtain
true and full information of all things
affecting the partnership. Partnership
books is an example of partnership
property and every partner is a co-owner
of specific partnership property.
36. To whom shall partners be obligated
to render 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.
37. When are partners accountable to the
partnership and are considered as
trustees for the partnership?
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.
38. Can a capitalist partner engage in
business for his own account without
the consent of the other partners?
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.
39. What is the liability of a capitalist
partner who engages in the same
business that of the partnership
without the const of the other
partners?
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.
40. Under what circumstances shall any
partner demand a formal account as
to partnership affairs?
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. (n)
PROPERTY RIGHTS OF A PARTNER
1. What are the 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.
2. As regards specific partnership
property, what relationship exists
between and among the partners?
A partner is co-owner with his partners of
specific partnership property.
3. What are the incidents of this co-
ownership?
(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. (n)
4. What is the nature of a partner’s
interest in the partnership?
A partner’s interest in the partnership is his
share of the profits and surplus.
A partner’s right in specific partnership
property belonging to the fi rm to be used for
business purposes (supra.) is to be
distinguished from a partner’s right to share
in the fi rm’s earned profits.
5. Can a partner assign his whole
interest in the partnership to another
without the consent of the other
partners?
A partner’s right in specific partnership
property is not assignable (Art. 1811[2].) but
he may assign his interest in the partnership
(Art. 1812.) to any of his co-partners or to a
third person without the consent of the other
partners, in the absence of agreement to the
contrary.
6. Will the assignee become a partner?
No, because a conveyance by a partner of
his whole interest in the partnership does not
of itself dissolve the partnership, or, 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.
7. Will the conveyance of a partner of his
whole interest in the partnership
dissolve the partnership?
If a partner conveys (assigns, sells, donates)
his whole interest in partnership, it may still
subsist (this is the general rule) or it may
dissolved (this is an exception, for example,
if the remaining partner not want to continue
the operation of the business of the
partnership)
8. What are the rights of an assignee of
a partner’s interest?
• To receive the profits to which the
assigning partner would otherwise be
entitled;
• In case of fraud in the management
of the partnership, the assignee me
avail himself of the usual remedies
provided by law;
• In case of dissolution, to receive the
assignor's interest; and
• In case of dissolution, the assignee
may require an account from t date
only of the last account agreed to by
all the partners.
9. What rights cannot be exercised by an
assignee?
• Cannot interfere in the management
of the partnership business;
• Cannot require information or
accounting of partners transactions;
and
• Cannot inspect partnership books.
10. Is a partner’s interest in the
partnership subject to attachment or
execution for his personal debts?
No. - (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;
11. May the interest so charged be
redeemed and with what property
shall it be redeemed?
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.
12. What other right may a partner whose
interest has been so charged avail of?
Redemption, which means the
extinguishment of the charge or attachment
of the partner's interest in the profits.
Or
A partner shall not be deprived of his right
under the exemption laws, as regards his
interest in the partnership. However, a
partner, cannot avail himself of the
exemption laws insofar as his right in specific
partnership property is concerned.
OBLIGATIONS OF THE PARTNERS WITH
REGARD TO THIRD PERSONS
1. Under what name shall every
partnership operate?
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.
2. Is there any limitation as to the firm
name a partnership may adopt?
The partners may use any firm name
desired and this will be the name of that
juridical person. The partnership cannot
use an identical or deceptively
confusingly similar to that of any existing
partnership or corporation or to any other
name already protected by law or is
patently deceptive or contrary to existing
laws.
3. What is the liability of a person, who
not being a partner includes his name
in the partnership’s name?
Those who, not being members of the
partnership, include their names in the
firm name, shall be subject to the liability
of a partner.
4. How are partners including industrial
ones be liable for contractual
obligations of the 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.
5. What is meant by subsidiary liability
of the partners?
Subsidiary liability means that the
partners’ separate property may be held
liable only after the partnership creditors’
exhausted the assets of the partnership.
6. What is meant by the partner’s pro-
rata liability?
Pro-rata liability means equally or joint.
7. How do you reconcile the exception of
an industrial partner from loss and his
pro-rata liability for partnership
contractual obligations?
The industrial partner would have to pay
but he can recover the amount he has
paid from the capitalist partners unless
there is an agreement to the contrary
8. When is a partnership contractual
obligation incurred?
ART 1816 – It is incurred when the
contractual obligation is 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.
9. What is the effect of a stipulation
among the partners contrary to the
pro-rata and subsidiary liability of the
partners?
ART 1817 – A stipulation among the
partners contrary to the pro rata and
subsidiary liability is void and of no effect
insofar as it affects the rights of third
persons. It is valid and enforceable only
among the partners.
10. In the absence of any agreement to the
contrary, who shall act as agent of the
partnership?
ART 1803 – In the absence of any
agreement to the contrary, all partner
have equal rights in the management
and conduct of the partnership
business.
11. Classify the acts of a partner in the
partnership.
a. Acts apparently for carrying on in the
usual way the business of the partnership
b. Acts not apparently for carrying on in
the usual way the business of the
partnership
c. Acts of strict dominion or Ownership
 d. Acts in contravention of a restriction on
authority
12. If a partner who has no authority
performs an act for apparently
carrying on in the usual member
manner the business of the
partnership, will such act be binding
upon the partnership?
Every partner is an agent and may
execute such acts with binding effect on
the partnership even if he has in fact no
authority unless the third person has
knowledge of such lack of authority
13. Give examples for acts of strict
dominion.
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. (n)
14. When shall the partnership be bound
by any act of strict dominion?
Authorized by the other partners or
unless they have abandoned the
business
15. Under whose name may real property
owned by the partnership be
registered?
a. Partnership
b. One or more but not all the
partners
c. One or more all the partners, or in
a third person in trust for the
partnership
d. All the partners
16. Where title to real property is in the
partnership name, who may convey
title to such property?
Under the provisions of the Civil Code,
any partner may convey title to such
property involving title to real property.
17. One title is conveyed may the
partnership recover such property?
The partnership may recover such
property if the partner’s act does not bind
the partnership under the provisions of
the first paragraph of Article 1818, or
unless such property has been conveyed
by the grantee.
18. Where title to real property is in the
name of the partnership, and a
conveyance is executed by a partner
in his own name, will title pass to the
grantee?
Where title to real property is in the name
of the partnership, a conveyance is
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.
No, the title of the real property remains
in the partnership. It is only the equitable
interest which will be transferred to the
grantee though he/she can ask for the
reformation of their contract of sale.
19. Define equitable interest.
According to the provisions of the Civil
Code, equitable interest is an interest
held by virtue of an equitable title or
claimed on equitable grounds, such as
the interest held by a trustee beneficiary.
Equitable interest or Title is one not
recognized by law but in equity alone; it
is a right or interest in property which is
imperfect and unenforceable at law but
which under well-recognized equitable
principles should and is convertible into a
legal right or title.
Equitable Interest means all the
beneficial interests in the property like the
use thereof and its fruits, but not the title
20. When may conveyance of real
property of the partnership by a
partner in his own name pass title to
the grantee?
 Conveyance of real property of the
partnership by a partner in his own name
pass title to the grantee if the latter had
no knowledge of the fact that the partner
had no authority even though the
conveyance was made in the usual way
of business
21. Where 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 and is conveyed by
a partner in his own name or in the
partnership name, will title pass to the
property?
- Art. 1819 (par. 4) - Yes, a conveyance
executed by a partner in the partnership
name, or in his name, passes the equitable
interest of the partnership, (with the partner
being a mere trustee of the partnership),
provided the act is one within the authority of
the partner under the provisions of the first
paragraph of Art. 1818
22. If real property is registered in the
names of all the partners and is
conveyed by all the partners, what
passes to the grantee?
- Art. 1819 (par. 5) - A conveyance executed
by all the partners passes all their rights in
such property.
23. When may admission or
representation made by a partner be
considered evidence against the
partnership?
- Art. 1820 - An admission or representation
made by any partner concerning partnership
affairs within the scope of his authority is
evidence against the partnership.
24. Under what cases may notice or
acknowledge of any partner of any
matter relating to partnership affairs
operate as notice to or knowledge of
the partnership?
- Art.1821
a. Knowledge of the partner acting in the
particular matter acquired while a partner.
b. Knowledge of the partner acting in the
particular matter then present in his mind.
c. Knowledge of any other partner who
reasonably could and should have
communicated it to the acting partner
25. How is a partnership tort committed?
- Art.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 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.
26. Who shall be charged liable for
partnership tort?
- ART 1822 – The partnership is liable to the
same extent as the partner acting or omitting
to act
- ART 1823 – Any partner may pay for the
obligation when:
a. When an unlawful act or omission, loss or
injury is caused to a 3rd person
b. A partner, within the scope of his authority,
receives money or property from a 3rd
person and misapplies it
c. The partnership, in its ordinary course of
business, receives money or property from a
3rd person and a partner misapplies it while
in the custody of the partnership
ART 1824 – All partners are liable solidarily
with the partnership for everything
chargeable to
27. How does a person not a partner
become a partner by estoppel?
- In Article 1825, he will be liable to third
persons as if he were a partner, when by
words or by conduct he:
a. Directly represent himself to anyone as a
partner in an existing partnership or in a non-
existing partnership.
b. Indirectly represent himself by consenting
by consenting to another representing him as
partner in an existing partnership or in a non-
existing partnership.
28. If a person is admitted as a partner
into an existing partnership, shall he
be liable for all the obligations of the
partnership incurred by the
partnership before his admission?
- Yes, he 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.

29. For obligations of the partnership

incurred after he was admitted into the
partnership, to what extend shall he
be liable?

- His liability shall be satisfied only out of

partnership property unless there is a
stipulation to the contrary.

30. In respect to partnership assets

between the partnership creditors and the
creditors of the individual partners, who
shall be preferred?

- Under the provisions of the Civil Code in

Article 1827, “The creditors of the
partnership shall be preferred to those each
partner as regards the partnership property.
In addition to that, private creditors of each
partner may ask for the attachment and
public share of the partners in the partnership
assets.