CHAPTER 02
Partnership: General provisions
PARTNERSHIP
OUTLINE:
 Section 1: Obligations of the Partners
amongst Themselves
 Article 1784 to Article 1826
SECTION 1
 Relations created by a contract of partnership
1. Relations among the partners themselves
2. Relations of the partners with the
partnership
3. Relations of the partnership with third
persons
4. Relations of the partners with third
persons
ARTICLE 1784
A partnership begins from the moment of
the execution of the contract, unless it is
otherwise stipulated. (1679)
 Partnership is perfected by mere consent and
if ALL the requirements are met.
Notwithstanding the fact that the partners
have not given their contributions yet
Example:
 A and B agree to form a partnership that
will begin on December 1 and upon the
arrival of certain machinery needed by
the business. In this situation, are A and
B in already in a partnership?
 As long as the agreement remains
executory, then A and B are NOT
partnering therefore there is no
partnership yet.
 Partners may agree to form a partnership to
take effect in the future
Example:
 A and B agree to form a partnership 1.5
years later, with contributions of
P100,000.00 each. A contributes his
share early but when the time comes for
B to contribute his share, he refuses and
says he no longer wants to partake in the
partnership. Can A compel B to
contribute his share to the partnership?
NO. Because they cannot enforce the
contract since it was perfected 1.5 years
ago and the contract was only oral. Since
the contract was for 1.5 years, it was
greater than 1 year and should have
been written instead.
 The Statute of Fraud does not usually apply
but to some particular cases such as the
example above, it will.
 If the contribution is immovable property,
comply with Article 1773 otherwise the
partnership will be void.
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.
 A partnership with a fixed term/particular
undertaking is continued without express
agreement
 Rights and duties remain the same as
they were at termination.
Example:
 If A and B form a partnership to last until
December 30, 2011 and A is the
manager and they share profits 50-50
and after December 30, 2011 they
 continue with their partnership. What
happens?
 A and B retain their rights,
meaning A is still the manager
and they still share profits 50-50.
 If there was express agreement for the
term of existence, then when the term
expires, the partnership is dissolved and
becomes a partnership at will
 Continuation is when there is NO
settlement/liquidation. There must be
prima facie evidence, meaning it must be
seen on first glance.
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 the account of the partnership.
ARTICLE 1787
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.
 Suppose A, B and C are partners. A
promise to contribute a RED CAR, B
promises to contribute GOODS WORTH
P50,000.00 and C promises to contribute
P50,000.00 IN CASH on October 2011.
On October 2011, none of them comply.
What happens? A, B and C thus become
debtors to the partnership.
 Suppose B and C contribute their parts
but A does not. Can B and C ask for the
recission or annulment of the contract?
NO. If one of the partners fails to comply
with his requirements, then the others
can request for specific performance with
damages from the defaulting partner A.
 What are the obligations of A before
October 2011?
1. To contribute what he promised
2. To be held liable to answer for
eviction if the partnership is
deprived of his contribution
3. To take care of the contribution
with the diligence of a good father
of a family.
 Suppose A leased the car out and gets it
back by December 2011.
Then A must deliver the car and the fruits
(profits from lease) to the partnership
because there was a delay.
 Suppose that after A contributes the car, a
3rd person, D claims to the real owner of the
car and is able to prove so.
Then A is held liable for eviction because the
partnership is deprived for a specific thing. A
is also held liable for damages to BOTH the
partnership and to D.
 What about B? Can the partnership
determine the value of the goods he
contributed?
In Article 1787, it clearly states that the goods
SHOULD be appraised by the partnership.
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Partnership: General provisions

 What if the goods appreciate/depreciate? It

will be charged to the partnership’s account.
 What will happen if C fails to comply with
his obligation? C will be liable for his
contribution plus interest and damages from
the date he was supposed to contribute. The
same rule will apply if the partners take
money from the partnership’s funds without
everyone’s consent. He will however, not be
charged for theft or estafa and his obligation
will only be to return the money he took plus
interest and damages from the time he took
the money.  When will a partner be held
criminally liable? Suppose the partners set
aside P10,000.00 for payment to one of their
creditors. A takes this amount from the fund
and is subsequently discovered to have done
so. - Then A can be charged for estafa since
he misappropriated the money ALREADY
SET ASIDE.
 If there was no agreement/stipulation, then
the partnership shall have the goods
appraised by an expert.
 What if the goods appreciate/depreciate?
It will be charged to the partnership’s
account.
 What will happen if C fails to comply with his
obligation?
C will be liable for his contribution plus
interest and damages from the date he was
supposed to contribute. The same rule will
apply if the partners take money from the
partnership’s funds without everyone’s
consent. He will however, not be charged for
theft or estafa and his obligation will only be
to return the money he took plus interest and
damages from the time he took the money.
 When will a partner be held criminally liable?
Suppose the partners set aside P10,000.00
for payment to one of their creditors. A takes
this amount from the fund and is
subsequently discovered to have done so.
 Then A can be charged for estafa
since he misappropriated the money
ALREADY SET ASIDE.
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.
 An industrial partner contributes his industry
 Partnership has the EXCLUSIVE
RIGHT to his industry
 Prohibited from the engaging in
business of ANY kind unless the
partnership has expressly permitted
him to do so.
 Example:
Suppose that a partnership is engaged in an
automobile repair shop. A is the industrial
partner (chief mechanic) and works only up
to 5PM every working day. Can he go home
and work on the partnership’s customers’
autos, even if he says it to the capitalist
partners EVERY DAY before he leaves?
The law says that there must be
EXPRESSED permission, in this situation, all
A has is IMPLIED permission. The capitalist
partners’ remedy is therefore to either: (only
one)
1. Avail of the benefits from A’s
“business”
2. Exclude A from the partnership and
demand for damages
 Capitalist partners are prohibited from
engaging in SIMILAR businesses only.
 Industrial partners have the same remedies
as capitalist partners.
ARTICLE 1790
Unless there is a stipulation to the
contrary, the partners shall contribute equal
shares to the capital of the partnership.
 The partners shall contribute to the capital of
the partnership as per their agreement,
except if there was no agreement in the first
place, in which case, they shall contribute
equally.
 Example:
A and B decide to form a partnership
and agree to contribute to the capital
in the ratio of 60:40, how much should
the partners contribute to the
partnership?
The partners shall contribute in the
ratio of 60:40, meaning if their
partnership capital is a combined total
of P10, 000.00 then A contributed P6,
000.00 and B contributed P4, 000.00.
 CHAPTER 02
Partnership: General provisions

A and B decide to form a partnership

but did not say how much the other
should contribute, how much should
each partner contribute to the
partnership?
Since the partners did not give any
sort of agreement as to the ratio of
their capital contribution, we shall
assume that they will contribute in
equal proportions, meaning if the
partnership capital is a combined total
of P10, 000.00, then each partner
contributed P5, 000.00.
 A and B decide to form a partnership but
did not say how much the other should
contribute, how much should each
partner contribute to the partnership?
Since the partners did not give any sort of
agreement as to the ratio of their capital
contribution, we shall assume that they
will contribute in equal proportions,
meaning if the partnership capital is a
combined total of P10, 000.00, then each
partner contributed P5, 000.00.
ARTICLE 1791
If there is no agreement to the contrary,
in case of 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 be obliged to sell his interest to the other
partners.
 If there is an imminent loss in the partnership,
the partner who refuses to contribute
additional funds, IF HE IS CAPABLE TO DO
SO, shall sell his share TO THE PARTNERS,
unless he is an industrial partner.
 Imminent Loss
o There is a need for the capitalist
partners to contribute additional
funds to save the partnership
o The industrial partner need not do
so because he has already given
100% of his efforts
o If the capitalist partner is WILLING
but NOT FINANCIALLY
CAPABLE, the article will NOT
apply to him because he is
already insolvent
 Selling of interest
o Refusal to contribute additional funds
to save the partnership means that
the partner no longer has any interest
in the partnership
o He should not be allowed to reap the
benefits that the other partners have
worked hard for because he had not
done anything to help anyway
o He cannot complain of being removed
from the partnership because he will
be paid what is due to him for his
share in the interest of the partnership
 Agreement that the partner need not
contribute additional funds in cases of
loss
o The capitalist partner will not be
required since it was in their
agreement in the first place.
o Note that more contribution to the
partnership capital would mean you
share more in the profits but this
should be voluntary
 Things to consider:
1. There must be an IMMINENT LOSS
2. The partner who is unwilling to
contribute must be
SOLVENT/FINANCIALLY CAPABLE
3. There was no agreement that the
partners will not have to contribute
additional funds in cases of loss
 If the purpose of additional contribution is
simply to raise capital, then this article will not
apply.
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 sums 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 debtor by Article 1252, but only if
the personal credit of that partner should be
more onerous to him. (1684)
 CHAPTER 02
Partnership: General provisions

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 A and B are in a partnership where A is the
managing partner. C owes A a sum of
P5,000.00 and the partnership a sum of
P10,000.00. The credit to A is due on
September 1 while the partnership’s is due
on September 15, both debts are due and
demandable. A collect from C a total of
P3,000.00 only and A subsequently issues a
receipt in his name. Is the partnership entitled
to share in the P3,000.00?
Yes, but in proportion to their respective
debts so A gets P1,000.00 and the
partnership gets P2,000.00.
 Supposing there was no mention as to who
the managing partner is, will the requisites of
Article 1792 still be present?
Yes, in the absence of information relating to
the identity of the managing partner, the
assumption shall be that ALL partners are
managing partners.
 If A issues a receipt on the name of the
partnership instead, to whose credit will the
P3,000.00 be put?
The entire P3,000.00 will go to the
partnership. Supposing the credit of A carries
18% while that of the partnership carries only
10%. C pays A and says that the P3,000.00
shall be applied to A’s credit. Is the
partnership entitled to share in the P3,000.00
still? No, the debtor is given the right to apply
payment to whichever debt is more onerous.
 Things to remember:
The two conditions should be both present in
order for the Article to apply, otherwise, the
entire amount will go to whoever collects
payment from the debtor.
1. 2 debts and both are due and
demandable
2. The one collecting should be the
managing partners
ARTICLE 1793
A partner who was 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. (1685a)
 In this case, there is only ONE debt but 2 or
more debtors, both of which are partners.
Example: A and B are partners and C owes
the partnership a sum of P10,000.00. B is the
managing partner but A collects his share in
the P10,000.00 and C pays A P5,000.00 to
which A issues a receipt in his name. When
B’s turn to collect comes, C is already
insolvent. What should A do? A shall return
his P5,000.00 to the partnership and split it
with B because C has already become
insolvent.
 Take not that whoever collects doesn’t matter
as it doesn’t make a difference
 If you get your share early and the other
parties cannot get theirs because the debtor
has become insolvent, then you must return
YOUR share to the partnership so that no
one gets more than he should have.
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.
 Why compensation will not apply:
Compensation will not apply because in
compensation, you should be both a debtor
and a creditor at the same time. However,
the partner here is only a DEBTOR for
damages and he cannot compensate using
his profits and benefits earned for the
 CHAPTER 02
Partnership: General provisions

partnership because it IS HIS DUTY to do so

in the first place.
  Responsibility may be equitably mitigated
by the courts if, through extraordinary efforts
of the
 partner, unusual profits are
recognized/realized.
  Example:
 A partnership between A and B is engaged in
an autoshop business. A customer brought
his car in
 to be painted YELLOW but A bought RED
paint instead and the car is painted RED.
Damages are
 suffered by the partnership for P30,000.00
due to the repainting. Can A compensate this
loss using
 the profits he earned for the partnership?
 A cannot compensate it with the profits he
earned because it is his obligation to bring
profits in the
 first place. The responsibility of the
P30,000.00, however, may be mitigated by
the court if by other
 activities, A is able to bring about unusual or
extraordinary profits, meaning, he may be
allowed by
 the courts to pay back just P15,000.00
instead.
  Follows that if the partner is guilty of fraud
or damages, he shall be liable for that.

 Responsibility may be equitably mitigated by
the courts if, through extraordinary efforts of
the partner, unusual profits are
recognized/realized.
Example:
A partnership between A and B is
engaged in an auto shop business. A
customer brought his car in to be painted
YELLOW but A bought RED paint instead
and the car is painted RED. Damages are
suffered by the partnership for
P30,000.00 due to the repainting. Can A
compensate this loss using the profits he
earned for the partnership?
A cannot compensate it with the profits
he earned because it is his obligation to
bring profits in the first place. The
responsibility of the P30,000.00,
however, may be mitigated by the court if
by other activities, A is able to bring about
unusual or extraordinary profits, meaning,
he may be allowed by the courts to pay
back just P15,000.00 instead.
 Follows that if the partner is guilty of fraud or
damages, he shall be liable for that.
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 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 risk 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.
 Refers to rules as to who bears the risks
made by contributions
 If the contribution is determinate and non-
fungible but only the use is contributed, when
it is lost, then the one who contributes it is
liable for it.
 If fungible things are contributed, the
partnership shall be the one to shoulder the
risks
 The partnership shall also be the one to bear
the risk for items brought for sale in inventory
for appraisal for 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
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 the risks in
consequence of its management. (1688a)
 Refers to the obligation of the partnership to
the partners
 The partners are merely agents so they are
not personally liable except if they are at fault
or if they exceeded their expressed authority
 Obligations of the Partnership:
1. To reimburse any amount
disbursed by the partners in
behalf of the partnership
Example:
A partnership borrows from the
bank a sum of P10,000.00 for
additional funds but cannot pay it
back when it is due to be paid
back. A pay back the P10,000.00
using his personal funds. Should
he be reimbursed by the
partnership?
Yes, the partnership should
reimburse A for the sum of
P10,000.00 PLUS legal interest
starting from the date A disbursed
the P10,000.00.
 CHAPTER 02
Partnership: General provisions

To answer for any obligation

contracted in good faith
- Example:
A partnership needs office supplies so B
contracts for P10,000.00 worth of
supplies. Who
will pay for the contract price of
P10,000.00?
The partnership shall be the one to
shoulder the cost as it was made in good
faith and B
did not overstep his authority.
If it was stated that the partners cannot
contract for more than P5,000.00 worth of
supplies
and B still contracts for P10,000.00, how
much will the partnership pay?
The partnership will only pay what was
allowed, that is, P5,000.00 and B will pay
the
remaining balance since B overstepped
his authority.
(3) To answer for risks in management
- Example:
A partnership is engaged in selling goods
and a customer keeps asking for
discounts and
an argument ensues between the
customer, C and the partner A. A gets
injured and is
brought to the hospital. Who shall
shoulder the hospital bills?
The partnership shall shoulder t

2. To answer for any obligation
contracted in good faith
Example:
A partnership needs office supplies so
B contracts for P10,000.00 worth of
supplies. Who will pay for the contract
price of P10,000.00?
The partnership shall be the one to
shoulder the cost as it was made in
good faith and B did not overstep his
authority. If it was stated that the
partners cannot contract for more
than P5,000.00 worth of supplies and
B still contracts for P10,000.00, how
much will the partnership pay?
The partnership will only pay what
was allowed, that is, P5,000.00 and B
will pay the remaining balance since
B overstepped his authority.
3. To answer for risks in
management
Example:
A partnership is engaged in
selling goods and a customer
keeps asking for discounts and an
argument ensues between the
customer, C and the partner A. A
gets injured and is brought to the
hospital. Who shall shoulder the
hospital bills? The partnership
shall shoulder the hospital bills as
it was during A’s time in managing
the business that he was injured.
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 entrust 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 entrusted 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. (1691)
 Lays out the rules in the distribution of profits
and losses
 A, B and C are partners with the following
capital contributions, P30,000.00, P20,000.00
and P10,000.00 respectively, where C is a
capitalist-industrialist partner. For one year of
their operations, their partnership had earned
net profits of P17,000.00. How shall these
profits be divided among the partners? (C is
entitled to receive P2,000.00 out of the entire
P17,000.00)
1. In accordance with any existing
agreement between the partners
as to how they shall share.
2. If there was no agreement, then
the partners shall share on a pro-
rata basis
3. The industrial partner shall get
what is JUST and EQUITABLE in
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Partnership: General provisions

the circumstances. (BONUS TO

PARTNER)

Vfvv

 The same rules shall apply for losses in the
partnership’s operations; however, the
industrial partner shall not share in the losses
as there is no way for him to retract his
industry and in the event of losses, his efforts
would have been for vain and it can thus be
said that he has already shared.
 What is the legal effect of having a stipulation
that excludes a partner from sharing in the
profits or losses?
Under Article 1799, the stipulation shall be
void because there must be mutual sharing
of profits and losses.
 Can the partners appoint a 3rd person to
designate the division of their profits and
losses?
Yes, and they will not be allowed to question
his decisions unless the designation of
shares is manifestly inequitable.
 2 cases where partners ABSOLUTELY
cannot question designated shares by the
3rd parties:
1. When a partner begins to execute
the 3rd party’s decision
2. When complaints are raised
AFTER three months from the
point of knowledge of the
designation
 Can the partners designate one of
themselves to distribute profits or losses?
No, the law prohibits this situation because
there may be disparities when it comes to the
distribution of net profits.
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 and 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 any time.
(1692a)
 2 Kinds of Managing Partners:
1. Appointed DURING the Constitution
of the Partnership
 May execute all administrative acts
unless he acted in bad faith. His
power may not be revoked unless
there is a JUST and LAWFUL cause
and the vote of the partners with
controlling interest
 Even if there are objections as to his
decisions coming from the partners,
his authority will prevail UNLESS he
has acted in bad faith
 Acts of administration: ordinary
business and administrative
transactions
 Why can he note be revoked for no
reason? Because if you revoke his
power, you are in effect changing the
terms of the contract of partnership
2. Appointed AFTER the Constitution of
the Partnership
 May have his power revoked with
or without cause
 Decided upon by those partners
who own controlling interest in the
partnership
ARTICLE 1801
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Partnership: General provisions

If two or more partners have been

entrusted with the management of the
partnership without specification of their
respective duties, or without stipulation that one
of them shall not act without the consent of 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 tie, the matter
shall be decided by the partners owning the
controlling interest.

respective duties, or without stipulation that one
of them shall not act without the consent of 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 tie, the matter
shall be decided by the partners owning the
controlling interest.
 Assume that A, B, C and D are all managing
partners. A appoints E as a secretary but B
objects to this. Is the appointment of E valid?
Yes, since majority votes are first counted by
head. If C&D were the ones to object, and
they owned a combined total of 51% of
partnership interest, then the appointment will
not be valid. However, if B was still the one
who objected and he owns 51% of
partnership interest, the appointment will still
be valid because majority votes are first
counted by head.
 If the partnership cannot make a decision
and ends up in a tie (head count and
interest), then the partnership is to be
dissolved. This will be the only remedy,
unless one of the other partners will relent.
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. (1694)
 This is a case wherein two partners, A and B,
stipulate that one cannot act without the
consent of the other. Thus, there must
always be concurrence between the two
before any transactions may be entered into,
the absence of the other’s consent shall not
be used as an excuse.
 Illustrative Case: A sold to B, one of the
managing partners of Partnership X, the
other being C, a certain number of mining
claims without the consent of C. In an action
by A to recover the unpaid balance of the
purchase price against Partnership X, C
claims that the contract is not binding upon
the partnership for the reason that under the
articles of partnership, there is a stipulation
that one of the partners cannot bind the firm
by a written contract without the consent of
others. Is the transaction made by B binding
upon the partnership?
According to the Supreme Court, the
stipulation applies only to B and C. A has the
right to assume that B was authorized to
complete the transaction. Therefore, the
partnership is liable, and since B violated the
terms of contract between himself and C, he
is required to reimburse C for the amount C
will be paying A on behalf of the partnership,
the reason being, it would be unfair to C who
had no knowledge of B’s transaction to have
to pay when he never agreed anyway.
 The only instance in which a partner may
transact without concurrence is when there is
imminent danger of grave or irreparable
damage to the partnership if he does not do
so. However, the party involved must be able
to prove so else he shall become liable for
what he has done.
 Example: A and B are in a partnership where
they sell fruits, B notices that the fruits in the
warehouse are starting to rot so, without
consent of A, he sells them. This will be
alright because if the fruits rot, then it would
have been bad on the part of the partnership.
ARTICLE 1803
When the manner of management has not been
agreed upon, the following rules shall be
observed:
 All of 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.
 CHAPTER 02
Partnership: General provisions

 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)

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)
 If there is no agreement as to who will be the
managing partners, during constitution and
after constitution of the partnership, then the
assumption shall be that ALL the partners are
managing partners, without prejudice to
Article 1801, meaning Article 1801 will then
apply to their case.
 The second paragraph of this article provides
that the partners cannot simply alter
immovable property owned by the
partnership without the consent of the other
partners because this is NOT an act of
administration but of OWNERSHIP.
 Note that consent here is no qualified, so it
may be expressed or it may be implied.
 Example:
Suppose A, B, C and D are in a partnership
where the managing partner is not specified
and A decides to put up a warehouse in a
piece of land owned by the partnership
without consent of other partners because he
believes it to be useful and beneficial to the
partnership. His partners come over, once
the warehouse is finished, to look at it and
did not object to its existence. Was this valid?
Yes, since the partners did not object, then
there is IMPLIED consent. Since consent
was never qualified in the article, it is
assumed that implied consent is enough.
Suppose before A builds the warehouse, he
asks for the consent of the other partners,
who refuse to give it.
When A tries to convince them and asks why
they refuse to give consent, they simply say
that they do not want it to be there, making
their objection manifestly prejudicial,
meaning, there is really no reason for their
objection, what then, is the remedy of A in
this situation? A may bring the matter to
court. If the court finds the other partners of
having no solid reason to object, it may
compel the other partners to give their
consent.
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. (1696)
 Refers to SUBPARTNERSHIP
 A, B and C are in a partnership wherein A is
the managing partner. A enters into a
contract with D that states D will receive 50%
of A’s share in partnership profits. Can A do
this even without the consent of the other
partners?
Yes, because a sub-partnership will not affect
the composition of the partnership and D will
not be able to interfere with the partnership’s
management anyway.
 When are you required to share your
partnership profits with 3rd persons?
When you contract with 3rd persons because
perhaps in some past event you needed
money and they provided you with it, and in
your contract, it was agreed upon that you
will share in the partnership profits. The 3rd
person can also opt to receive ALL profits.
 Can D become a partner without the consent
of the other partners, if he associates with the
managing partner?
No, D would need to get the consent of all
partners because this would change the
partnership composition.
ARTICLE 1805
The partnership books shall be kept,
subject to any agreement between the partners,
at the principal place of business of the
 CHAPTER 02
Partnership: General provisions

partnership, and every partner shall at any

reasonable hour have access to and may inspect
and copy any of them. (n)
 The partnership books shall be kept in
the following places, in order:
(1) In accordance with partnership
agreements
(2) If there were no agreements, then the
partnership books shall be kept in the
principal place of
business of the partnership (ex:
headquarters)
 Each partner will have access to ALL
partnership books.
 When will the partner be allowed to access the
partnership books?
reasonable hour has access to and may inspect
and copy any of them. (n)

 The partnership books shall be kept in the

following places, in order:
1. In accordance with partnership
agreements
2. If there were no agreements, then the
partnership books shall be kept in the
principal place of business of the
partnership (ex: headquarters)

 Each partner will have access to ALL

partnership books.

 When will the partner be allowed to access

the partnership books?

The partner is allowed to access partnership

books during REASONABLE HOURS OF
BUSINESS (8am-5pm), according to the law.
The one who is keeping the partnership
books cannot state when it can be inspected.