ARTICLE 1828 (between dissolution and winding up) delectus personae – the right of the person kung sino

delectus personae – the right of the person kung sino yung gusto niyang ma-associate. (core factor
na consent sa partnership)
Sinasabi dito sa ARTICLE 1828 na iba si dissolution and iba rin si winding up of business.
Itong concept ng delectus personae ayaw ng ifollow ng any of the partners or some of the partners,
Dissolution - it is the change in relationship of the partners. Hindi sinabing mag-eend yung business
ayaw na nilang ma-associate to those other partners, they want to end or they want to severe that
or hindi sinabing hindi icoontinue ang business. Ang sinabi lang change of relation among the
association with the partners of the partnership. And because of the change of the relation, because
partners, kung saan yung isang partner or some of the partner chooses to severe that association
of that decision ng isang partner or some of the partners na hindi na ma-associate with the other
with the other partners.
partners, nagkakaroon ng dissolution.
 Sa dissolution nag-eend ang partnership but it does not necessarily mean na yung mga
kapag nag dissolution ang partnership hindi siya nag eend kaagad.
ibang natirang partners hindi na i-cocontinue yung business kasi gaya nga ng sabi kaya
nadidisolved ang partnership is because newly admitted partner, namatay yung isang KELAN MAG EEND ANG PARTNERSHIP? kapag nasettle na na ng lahat ng mga partner ang
partner, nagretire, nagwithdraw. Ito yung isa sa mga dahilan kung bakit na-diisolved ang partnership affairs nila.
partnership, kasi not necessarily nadidisolved siya to discontinue business but rather there’s
only a change in the relation kasi pwede naman silang magdecide na kahit nagdissolved na
yung partnership, a new partnership will be formed, that will continue the previous
partnership. BAKIT? kasi baka may namatay na partner syempre madi-disolved yan, or may
newly admitted partner syempre change of relation may nadagdagan na partner, dissolved
agad partnership, form agad sila ng new partnership kumbaga bagong articles of
partnership, bagong agreement.
 dissolution of the partnership not necessarily mean na pati yung business nila mag-eend ARTICLE 1829 – (between dissolution and termination)
kasi dissolution only means a change in a relationship, kasi pwede pa naman nilang - On dissolution, the partnership is not terminated, but continues until the winding up of
icontinue ang business, kasi pwede pa rin naman silang mag-form ng new partnership. partnership affairs is completed.
- kapag nadissolution na ang partnership hindi ito nateterminate or natatapos kasi nagkaroon
Winding up – pagsesettle lahat ng mga partnership affairs. lamang ng changes pero pwede pa rin magcontinue yung business operation kapag
nagkaroon ng dissolution, kapag ang partner nag enter pa ng mga contract pwede pa yun
kailangan mong ayusin yan kasi baka may mga utang na hindi nabayaran, kailangan yung i-proper ma-bind ng mga partners.
account yung interest ng mga partners, kailangan malaman kung kanino may mga utang, or
insolvent na ba yung partnership, kaya pa bang bayaran ang utang. All the processes that is
necessary para masettle lahat ng gusot, lahat ng kailangang ayusin when the partnership has been
dissolved.

at this point, syempre nadissolve na ang partnership (change of relation), then nagdecide sila na
winding up of business,

Termination – kapag natapos na lahat ng winding up or lahat ng partnership affairs ay nasettle na or

na wound up na.

POWER OF DISSOLUTION

ARTICLE 1830 – Automatic dissolution, no need court intervention
Sabi ni ARTICLE 1830, enumerated the ways or the instances na kung saan yung nagiging caused ng
dissolution ng isang partnership.
Dissolution is caused:
1. Without violation of agreement between the partners - wala silang nilabag na kasunduan,
kahit walang nilabag na kasunduan pwedeng madissolve ang isang partnership.
a,b,c,d ito yung dahilan or instances na kahit na walang nilabag na kasunduan pwedeng
madissolve yung partnership.
WITHOUT VIOLATION OF PARTNERSHIP AGREEMENT
a. Termination/expiration of term or - Dec. 31, 2021 mag-eend ang partnership,
terminate or dissolved that is fixed term
specific undertaking – partnership was formed just for the purpose of providing services
to a certain company, that is the reason why the partnership was formed. Now, after
satisfying that service to that company to another company, kapag nasatisfy na yung
service contract nila, nasatisfy na for particular undertaking lang, then madidisolved
na yung partnership kai wala na silang purpose, that specified purpose, that particular
undertaking that was the reason why the partnership was formed in the 1 st place.
Since, that particular reason was already terminated, accomplished and finished, edi
there’s no more reason for the partnership to continue existing because the reason why
the partnership was formed at the 1st place was already gone, natapos na ang contract
bakit mo pa icocontinue ang partnership.
 may special purpose or specified purpose kung bakit ginawa or kung bakit naformed yung
partnership and since wala na yung purpose nayun wala na ring reason para mag-exist
yung partnership.
b. Upon express will of any partner if there is no term or specific undertaking AS LONG
AS PARTERS ACT IN GOOD FAITH.
 full blown partnership at will, walang condition of agreement basta ayaw ng ma-associate ng
isang partner with the other partners, dissolve na, ayaw na ng delectus personae edi
dissolve na ang partnership. TAKE NOTE: dapat you acted in good faith and walang definite
term, walang sinabi sa partnership agreement na on this date madidissolve ang partnership
wala nor dapat walang particular undertaking kumbaga wala dapat condition kundi full
blown partnership at will yan.
c. Upon the will of all the partners whose interest is not assigned or charged.
 ibig sabihin lahat ng partners magdecide or mag-agree na madissolve yung partnership.
TAKE NOTE: All partner are agree they can agree to dissolved the partnership, but may
condition na walang maapektuhan na 3rd persons, kailangan masatisfy yung condition
na dapat walang interest ng 3 rd persons na maapektuhan, because for the protection of
the 3rd persons kasi baka biglang madissolve yung partnership, so sino yung hahabulin
ng creditors, sino yung hahabulin ng mga 3 rd persons, yung mga ina-assigned ba ng
interest or yung mga chinarge ng separate debts. If ever na maapektuhan ang 3 rd
persons masettle nia yun, pwede nilang gawin either before or after the termination of
any specified term na kapag sinabi sa contract or partnership agreement na on Dec. 31,
2021 dissolve na ang partnership pero before that date palang 2020 pa lang na sinabi ng
partners na malas itong year na ito, sabi idissolve na natin itong partnership it means
pwede yun or any particular undertaking basta ang sabi walang maapektuhan or pwede
pa rin naman nian icontinue yun dapat ma-settle yung interest ng 3rd persons.
EXAMPLE:
A sold his interest to E, and B’s interest is charged to F because he borrowed P50,000 from
him. C and D are the only ones who can ask for dissolution since their interest is not
assigned or charged.
d. Expulsion bona fide of a partner (a partner is expelled in good faith in accordance with
agreement.
 right ng mga partner na alisin ang ibang partners from the partnership, and because of
that change in partnership relation kasi you remove one partner from the partnership,
so there is a change in the relation na and since there is a change in relation
magkakaroon ng dissolution but without violation of partnership agreement sinabi na in
accordance with power conferred by the agreement, so pwede kang magpatalsik ng
isang partner even without violating partnership agreement
 walang violation via agreement, pwede kang magpatalsik ng isang partner even without
violating partnership agreement.
2. Dissolution at will of any partner - due to breach of contract (may nilabag na kasunduan)
 nadidisolve yung partnership because may contravention, meron violation na ginawa
against the partnership agreement.
1. dissolution may be for any cause or reason
Example: nagdecide ang mga partners basta basta na i-end yung partnership like yung
iba umalis na kahit na hindi pa tapos yung term ng partnership contract.
Si partner A, Dec. 2020 umalis na and ang term of dissolution na nakaagay sa contract is
Jan. 2021 so that is contravention of partnership agreement yun, aalis na yung isang
partner without even finishing or reaching the fixed term as provided in the
partnership agreement . or any cause or reason or particular undertaking kumbaga
merong particular undertaking kaso yung isang partner tinamad na, iniba na ang
priority niya mas gusto niya na lang ibigay ang lahat ng attention niya sa kanyang jowa
and ang sabi niya “wala na akong time sa jowa ko, kahit pa natin tapos itong particular
undertaking aalis na ako, priority ko na ang jowa ko” yun for any cause or reason and
that is contravention of the partnership agreement.
2. power of dissolution always exists (power; not right) – TAKE NOTE: that power is not
always right. A partner can disassociate, can always severe, can always cut the
association with the other partners, you can always do that anytime and anywhere.
but that is not a right pero hindi niya pwedeng gawin basta basta iyan kasi there are
times na he can dissolve the partnership by leaving but may chances na its
contravention of the partnership agreement.
 A partner can always leave the partnership, he can always disassociate himself from the
partner but that is not a right. That power is not protected what is protected is the right
and since that is not a right like pwede niyang gawin yung power of dissolution is always
exist like anytime and anywhere even though it is contravention of the partnership
agreement. Kaya ini-specify na it is power because it can be done anytime and anywhere.
But it is not a right, hence it cannot be basta basta protected by the law.
Legal effects of dissolution (liable for damages if unjustified) – kapag nadissolved na ang
partnership in contravention ofcourse na dissolved siya because of the contravention in the
partnership agreement. WHAT ARE THE LEGAL EFFECTS? liable siya for damages but may
condition if unjustified dissolution kumbaga unjustified yung pag-alis niya sa partnership
then, that partners can be liable for damages kasi in bad faith ka. Pero kapag justify yung
pag-leave mo sa partnership like may nakita ka na kunwari may nagcacause ng fraud dito
so ito that is justifiable reason to let go the partnership and you are not liable for the
damages kapag basta basta mo lang iniwan yung partnership na dissolved yung partnership.
However, kahit na may mga parusa since the power of the dissolution always exist, hindi mo
pwedeng pilitin mag-stay ang iyong partner.
3. Business becomes unlawful – yung business mismo ng partnership ay pinagbawal mismo ng
batas.
Example: Ang business niyo ay nagbebenta ng vape sa Batangas, nagform kayo ng
partnership kayong magbabarkada. Then, suddenly yung city council nagcreate ng batas na
“bawal magbenta ng vape dito sa Batangas City then in-approved. And yung business niyo is
naging illegal or unlawful and wala kayong magagawa. So, ang effect niyan is automatic
dissolved ang partnership kasi your business becomes unlawful.
4. Specific thing promised to be contributed perishes before delivery - it talks about the
object specific thing, the object in relation to the partnership formation before the
partnership formation and after the partnership was formed or before the delivery and after
the delivery.
Loss of specific thing
 If it is lost after delivery, partnership is not dissolved. (kasi nawala yung object ng contract,
which is the cause, object, consent COC mawala ang isa jan magiging invalid ang contract,
kaya it will dissolved)
 If use is contributed, it is lost before or after delivery (it doesn’t matter when it was lost),
partnership is dissolved. (In this case hindi madidisolved ang partnership kasi nadeliver na
sa partnership, natupad na yung condition sa contract na ideliver yung object. However,
malas lang ng partnership because since the ownership of the object of the specific thing
has been transferred upon the delivery napunta na kay partnership and alam naman natin
na si partnership ay may separate juridical entity. So, yung ownership ng object nayan
napasa na sa kanya. And ownership comes with the risk of loss kung sino ang may ari niyan,
siya yung magbebear ng risk of loss. In this case, since there is a delivery already
partnership na ang may ari niyan that partnership will bear the loss, nawala yung object or
nawala yung specific thing then the partnership assumes loss pero hindi nadissolved ang
partnership kasi nadeliver na, the ownership has been transferred to the partnership.
 If what is to be contributed is generic, and it is lost, there is no dissolution.
Loss where only use or enjoyment contributed - partnership dissolved
meaning usufruct, yung usufruct lang yung ibinigay or kinontribute like yung car, the right to
drive the car but the ownership still remains with the partner. Now, kapag ganito ang
 nangyari nawal yung specific thing na kung saan yung right to use lang, yung usufruct lang Example: naconvicted ka ,kapag nacivil interdiction ka it means wala ka ng karapatan to manage
ang nacontribute the affect will be the ownership will bears the risk of loss and since yung to dispose your properties, since wala ka ng karapatan basically wala ka ng consent or capacity to
right of use lang ang kinontribute the partners still owns the object, siya parin may ari nung give consent with that kapag naging civil interdicted na ang isang partner dissolved na ang
specific thing and since siya pa rin may ari ng specific thing that partner will bear the loss, partnership
siya yung mag-assume ng loss. Since, yung right of use of enjoyment ang kinontribute sa
partnership kapag nawala yung specific thing nayan the partnership is dissolved kasi nawala
8. Via decree of court –korte na mismo nagsabi na yang partnership nay an ay dissolve.
na kundi yung right to use of enjoyment na lang kinontribute nawala pa, the partnership will
dissolved.
CAUSES OF DISSOLUTION
5. Death of a partner – automatic dissolve ang partnership, kasi change ng relation of
dissolution, business affairs will only continue insofar as to it winding up. In agreement Without violation (No.1)
With violation (No.2)
 kapag walang provisions sa partnership agreement, automatic dissolution
In connection to Will Voluntary (No. 1 and 2) – sila mismo ang
 kapag may provisions sa partnership agreement na yung death, withdrawal or admission of
-yung kanilang freedom nagsabi out of their own will, out of their act na
new partner will not effect a dissolution then ito ang susundin.
madissolve na yung partnership
Involuntary (No. 3,4,5,6,7,8) – wala silang
6. Insolvency of a partner choice kasi nangyari na, dahil nangyari yung
a) Partner insolvent – his partnership interest can be claimed by his personal creditors. instances na ito wala silang choice but to
 kapag yung isang partner is personally insolvent in his personal capacity yung kanyang mga madissolve
personal creditors pwedeng habulin yung kanyang partnership interest ng kanyang mga In connection to Court Extra judicially (No.1 and 7)
personal creditors. Extra judicially - Hindi na kailangan ng
b) Partnership insolvent – kapag yung partnership mismo yung insolvent it renders partnership intervention ng korte
property in the hands of the partners liable to partnership creditor. Judicially (No. 8 in relation to 1831) – kailangan
 it means insolvent ang partnership so, yung mga properties ni partnership, yung mga ng decision, kailangan ng isang court order para
partners na ang bahala para magsettle of any accounts, of any obligations, kumbaga winding ma-dissolve yung partnership
In connection to driving cause Automatic dissolution (1830) – basta nagyari
up of affairs na insolvent na si partnership so madidisolved nayan, it’s already incapacipated
driving cause - it means galing sa judge itong mga instances na ito dissolved ang
to continue doing business kasi insolvent na siya. So that yung kanyang remaining
partnership
partnership properties, yung mga partners na ang bahala para mag settle ng accounts.
 meaning hindi na kailangan ng decision,
hindi na kailangan ng court order para
7. Civil interdiction of any partner madissolve ang partnership.
Civil interdiction as provided is (civil death). The effects are: Judicial dissolution (1831) – kailangan pa ng
court order para madissolved ang partnership.
 loss parental authority – mawawalan ka ng karapatan as a parent.
 marital authority
 you cannot manage your properties
 you cannot dispose your properties
 you cannot donate or do donation inter vivos
yung 2 mahalaga which are the management of properties and the disposition of such
 Dissolution is usually caused by change a change of relation between partners.
 If there is dissolution, no new partnership business may be undertaken
 Upon dissolution, partnership continues until winding up and liquidation is completed.
 CAUSES OF DISSOLUTION:
1. WITHOUT VIOLATION OF AGREEMENT
a. Termination/expiration of term or specific undertaking
b. Upon express will of any partner if there is no term or specific undertaking AS LONG AS
PARTERS ACT IN GOOD FAITH.
c. Upon the will of the partners whose interest is not assigned or charged.
-Example:
A sold his interest to E, and B’s interest is charged to F because he borrowed P50,000
from him. C and D are the only ones who can ask for dissolution since their interest is not
assigned or charged.
d. Expulsion bona fide of a partner (a partner is expelled in good faith in accordance with
agreement.
e. Expulsion has the effect of decreasing the # of partners.
2. IN VIOLATION OF THE AGREEMENT
Example:
A, B, and C agreed that the term of their partnership is only until Dec. 31, 2011. A goes to
premature resignation (resigns early from partnership). No one can prevent A from
resigning, but the partners can ask for damages for not staying with the agreement.
3. When it becomes unlawful for a partnership to carry on the business or partner to carry
on his role
4. When specific thing is contributed, and before deliver, it is lost.
- If it is lost after delivery, partnership is not dissolved.
- If use is contributed, it is lost before or after delivery (it doesn’t matter when it was lost),
partnership is dissolved.
- If what is to be contributed is generic, and it is lost, there is no dissolution
 just incur loss. So, it it a ground for dissolution by decree of a court, WHY?
Kasi hindi na profit yung dinadala kundi puro loss na lang, kumbaga wala ng
primary reason para icontinue ang business nila hence it is a valid ground for
dissolution as decree by the court.
e. Other circumstances: (medyo may freedom and hindi mahigpit when it
ARTICLE 1931 – need pa ng decision ng court para madissolved ang partnership at the end. comes to dissolution)
itong mga instances which are the 1,2,3,4,5,6. Kapag yung partner mismo or a - Abandonment of the business
representative of that partner on their application itong mga instances na ito kung saan ang - Fraud
korte mag-lalabas ng isang court order to dissolved partnership. On application by or for a - Refusal to render an accounting
partner – it means there must be an pro-active filing dapat may filing muna for dissolution
bago madissolved ng korte.

On application of 3rd parties’ (who purchased or have charged a partner’s interest) right as
per Articles 1813 and 1814
1813 – purchased of the whole interest of the partner in the partnership. It is the purchase of the
whole interest ng partner sa isang partnership. Si partner yung assignor ang nagpurchase ng whole
interest nayun is the assignee.

Grounds for dissolution by decree of court (When can a partnership be dissolved

judicially?)
a. When a partner is DECLARED insane – kasi ang insane person cannot give
consent, hence hindi siya pwedeng maging partner at the 1 st place. Kasi
consent is continuing requirement to be a partner.
b. When he becomes incapable of performing his part in the partnership – like
for example brain dead na or nacoma, he cannot act for itself.
c. Misconduct and persistent breach of partnership agreement– kayong ibang
mga partners gusto iyo ng paalisin si isang partner because of his misconduct,
pero itong isang partner na ito ayaw pang umalis and because ayaw niyang
umalis then walang tulong yung partnership agreement niyo to expelled that
partner then, you can go to the court and had the partnership dissolved
because of the misconduct or persistent breach of partnership agreement.
Example: parating lasing habang nagtatrabaho sa partnership, nangungupit
sa cashier sa cash registry sa partnership. (misconduct or breach of a
partnership agreement examples)
d. The business can only be carried out on a loss – wala na sillang choice, like
ngayon pandemic if icocontinue nila ang partnership agreement nila they will

ARTICLE 1832 - it talks about the effect of the dissolution sa authority ng mga partners.
 kapag nasa process na ng dissolution of the partnership the only thing that will happen is
to wind up the affairs, to settle the accounts or to complete any transactions begun but
not then finished nung nadissolved yung partnership.
ANO BANG AUTHORITY NG MGA PARTNER KAPAG NADISSOLVED NA ANG PARTNERSHIP?
kapag in the process na yung dissolution ng partnership, ang only thing that can be done is:
Wind up the affairs or to complete any transaction na before na dissolved yung partnership was
entered into, kumbaga sinimulan na kasi that is obligations for the dissolution of partnership, so
there is compelling reason to finish the transaction. Kasi before madissolved ang partnership nanjan
na it was not entered after the partnership.
(1) With respect to the partners
(a) When the dissolution is not by the act, insolvency or death of a partner (so may condition)
(b) When the dissolution is by such act, insolvency or death of a partner, in cases where Article 1833
so requires
(2) With respect to persons not partners, as declared in Article 1834
Effect of dissolution on authority of partner
1. GR: Unless otherwise stipulated, every partner is considered the agent of the partnership
with authority bind the partnership as well as the other partners with respect to the
transaction of its business.
otherwise stipulated - lahat ng partners may authority
 Pero pagdating sa dissolution, hindi na going concern (going concern - continue parin
ang business) and the partners power of representation is confined only to acts incident
to winding up or completing transactions begun but not then finished.
Example: Jan. 2020, pumasok ka sa isang contract,then yung contract mo dun or obligation
mo is hindi pa natatapos. By, February nadissolved yung partnership, like namatay yung
isang partner, nagwithdraw, or etc. With that WILL YOU SEVERE OR RESCIND THE
CONTRACT THAT YOU ENTERED ON JANUARY? hindi, you’re obligated to continue, to
complete that transaction kasi pinasok niyo nayan e before pa madissolved ang partnership,
may obligation ka para iperform yung contract nayan and that is your obligations.
2. Qualification to the rules – qualification set forth in ART. 1833 – 1834.
 kasi may mga instances na kahit dissolution na ang partnership na dapat winding up na
lang or complete transactions may mga instances na mababind pa yung partners.
General Rule:
 When partnerships are dissolved, partners cannot engage in new business transactions
because their authority to do so terminates upon the occurrence of dissolution.
2 Cases with are Contrary to the General Rule:
(1) During the WINDING UP of Business
- Transactions relating to the winding up of business such as the liquidation of partnership
assets can be entered into because the partners’ authorities to do so shall continue.
(2) To complete unfinished transactions during dissolution
Example:
A and B are in a partnership where they have contracted with C to deliver goods in two
installments. B resigns after the first delivery is made, thus dissolving the partnership. Can A and
B cease to continue with their obligation? NO. A and B must continue on with their obligation to
complete unfinished transactions.
 If dissolution is not by an act, insolvency or death, the authority of partners as among
themselves is terminated.
Example:
A partnership was dissolved due to the expiration of the term. If C transacts with D after this
and he defaults, he will be the only one liable AS TO THE PARTNERS. If A & B are to pay D, C
shall reimburse them.

ARTICLE 1833 – the purpose of ART. 1833 is to protect the innocent partners sa kalokohan ng isang
partner na in bad faith. (papasok sa new contract e wala naman partnership kundi dissolved na, na
ang GR: is will bind the other partners bawal, na yung bad faith bawal yun hindi niya pwedeng
mabigyan ng additional obligation yung mga innocent partners.)
 may condition, yung dissolution is caused by the act (it means act ng isang partners or some
of the partners), death of insolvency ( may namatay or may partner na nabankcrupt), may
partner acted for the partnership and with the act of the partnership it binds the
partnership and the partners na as if hindi nadissolved yung partnership unless:
1. The dissolution being by act of any partner, the partner acting for the partnership had
knowledge of the dissolution.
2. The dissolution being by death or insolvency of a partner, the partner acting for the
partnership had knowledge or notice of the death or insolvency.
According to ARTICLE 1833, GR: when a partner enters into a new contract with the 3 rd persons
after the dissolution, the new contract will bind the partners. (na as if in the first place partnership
had not benn dissolved, it will bind the other partner. However, that is the GR. nambababind ang
ibang partners kapag nag enter into a new contract yung acting partner).
Authority of partners, as among themselves to act for the partnership
EXCP:
1. The cause of dissolution is the ACT OF A PARTNER and the acting partner had KNOWLEDGE
of such dissolution. (kasi dito may bad faith which is yung naging cause ng dissolution in the
1st place is yung act ng partner and such yung partner nayun may knowledge na of the
dissolution. So, that is bad faith nayan kasi nakipag enter ka sa isang contract e alam mo ng
at the 1st place dissolve na ang partnership, hence it will not bind the partners that is
innocent, yung hindi nila alam or yung hindi kasali sa ginawang new contract na to yung mga
innocent partner, yung mga partners lang or partner na may bad faith).
 dito may actual knowledge siya, may direct account siya or direct knowledge about the
dissolution.
 if may knowledge may power
2. The cause of the dissolution is the DEATH OF INSOLVENCY of a partner and the acting
partner and KNOWLEDGE or NOTICE of the death or insolvency.
 whether knowledge or notice it will take the effect na hindi mabind yung mga innocent
partners.
Knowledge – actual knowledge, alam na alam mo yung information and other information
in regards to the news such as death and insolvency.
Notice – may idea ka lang, nasagap mo lang yung balita pero wala kang actual knowledge
about that news or issue, kumbaga nanotify ka lang.
2 ways para magkaroon ng notice:
1. may nasabi sayo or nasabi lang sayo (kasi baka chismoso ka)
2. thru mail (may nagpadala sayo ng sulat, email or letter man yan regarding to the news
or issue)

If dissolution is caused by an act, insolvency or death, then each partner shall share in the
liability of the partnership due to the actions of a partner, unless he had knowledge of an
act, insolvency or death, or notice of the insolvency or death.
Example:
1. B told A that he is resigning TODAY. The partnership is thus dissolved. Should A enter into
a contract with D, who shall be liable? As among themselves, only A because he had
knowledge of B’s resignation, thus knowing that they are no longer in a partnership.
2. If B texts his resignation to A because A is in Mindanao and A contracts with D, was his
authority terminated when the text arrived? No, A’s authority was not terminated as he
has only received a NOTICE. Mere notice cannot terminate the authority of partners
because the grounds are BY AN ACT, and because of this it should be PERSONALLY
KNOWN by the acting partner.
3. If C texts A that B had died, does their authority terminate once A gets the text message?
Their authority is terminated because in this case, the cause of dissolution is death.
Mere notice is sufficient to terminate authority if the grounds are due to the insolvency
or to the death of a partner.
 (d) Those owing to partners in respect of profits
ARTICLE 1839 – liquidation ang assumption dito, magliliquidate na yung partnership, termination
of business hindi na magcocontinue kasi liquidation na termination of partnership affairs, and
business.
- In ART. 1839, provides the guidelines on how the partnership assets will be distributed.
- so its, settling accounts na, ang assumption dito is liquidation na, winding up termination of
business. Kapag liquidation na settling of accounts, need mo pang isettle yung mga
kailangang isettle. So, with that in ARTI. 1839, has enumerated the ff. rules na it will served
as a guideline kung paano isesettle yung mga accounts subject to any agreement to the
contrary:
Liquidation and Distribution of Assets of Dissolved Partnership
1. ito na yung mga partners designated to wind up the affairs of the partnership.
ANO YUNG ORDER DESIGNATED PARTNER AS PROVIDED IN TH EPARTNERSHIP AGREEMENT? if
wala, absent of such stipulation, all of the innocent partners will have the authority to settle, to wind
up the affairs. And if namatay man silang lahat then the legal representative of last surviving
partner.
- kapag may insufficiency, need mag abono ng mga partners because that is their obligations
as being the partners/owners of the partners.
2. The liabilities of the partnership shall rank in order of payment, as follows : (there’s an
hierarchy, kung alin muna ang kailangang isatisfy yung claims. Yung partnership assets need
munang kumbaga may certain hierarchy kung alin muna ang need isatisfy na claims):
(a) Those owing to creditors other than partners – sila yung may priority sa partnership assets.
(b) Those owing to partners other than for capital and profits – tawag jan is loan to partners it
means the partners and the partnership having separate personality, pwedeng magpa-utang sila sa
isa’t isa. In this case, si partnership nangutang kay partner so the term is loan to the partners.
(c) Those owing to partners in respect of capital – based yun sa capital nila
3. Right of a partner where assets insufficient
insufficiency – kung saan mas mataas yung partnership liabilities as compared to the
partnership assets. It means hindi kayang masatisfy yung partnership assets yung pambayad
sa partnership liabilities and with that the partners being the owners of the business are
basically the guarantors to such liabilities hence, they will need to cover or abono to satisfy
those partnership liabilities kasi may insufficiency.
WHAT IS THE RIGHTS OF THE PARTNERS?
- need ng magcontribute ng mga partners or need na nilang mag abono.
- May instances na yung insolvent partner kung saan kapag may insufficiency sa partnership
assets since insolvent yung partner nayun hindi na siya pwedeng makabigay pa ng
contribution. Ang gagawin is yung ibang partners sila na yung mag aabono sa insufficiency
ng insolvent partner.
- Any partner can’t pay, other partners will cover. Latter have right to indemnification. (need
din nilang mag abono. Syempre, pwede nilang haulin si insolvent partners afterwards may
capability siyang makapag bayad). Latter have right to indemnification. (Syempre nag
abono sila kailangan maindemnify sila ng insolvent partner later on if capable na siyang
magbayad ng utang niya).
4. Liability of deceased partners individual property yung estate niya
- contribution necessary to satisfy the liabilities of the partnership incurred while he was a
partner. (kahit mamatay si deceased partner, yung estate niya it will still liable to the
partnership liabilities lalo na kapag insufficient yung partnership assets to satisfy the
partnership liabilities. Yung estate ni deceased partner magcocontribute din siya.
5. Priority to payment of partnership creditors/partners creditors. (may dalawang types of
creditors, creditor ng partnership and creditor ng partners in their individual capacity.)
- Partnership property and individual property under court possession for distribution (sino
ang may priority sa partnership property, sino ang may priority sa personal property ng
partner. Sabi ng batas:
- Partnership property ang may priority jan; Priority are partnership creditors
- Individual Property; Personal creditors of partners
 6. Distribution of property of insolvent partner (meaning yung personal asset niya cannot
satisfy his personal liabilities kaya naging insolvent siya)
The distribution of property niya ang priority are:
a. to separate creditors (kapag may natira pa it will go to partnership creditors or kapag
nasatify na)
b. partnership creditors (kapag may natira pa is mapupunta na sa to those owing to other
partner by way of contribution)
c. to those owing to other partner by way of contribution (yung insufficnecy which is the
indemnification kasi nakinabang ka naki abono yung ibang partners, so need mong isauli
yan need mong iindemnify yan)
insolvent na nga yung partner, papabayaran mo pa? hindi agad paabayarin, if nakabawi bawi na sa
buhay niya so meaning may capability na siyang magbayad na then tsaka niya babayaran itong ibang
partners na nag abono sa kanyang insufficiency. So, hindi naman siya agad agad babayaran kung
anong meron lang siya ngayon yun yung ididistribute later on kapag nakabawi na sa buhay
babayaran niya yung remaining liabilities niya.

 Considers the case of liquidation and the distribution of partnership assets

 Liquidation is when all the assets of the partnership is converted to cash.
 Total assets will include GOODWILL as well as the original CONTRIBUTIONS of the
partners.
 Order of payment during liquidation:
(1) 3rd persons/outside creditors
(2) Partner creditors (partners who have claims)
(3) Normal partners (all partners)
(a) In accordance with the agreement
(b) In proportion to their contribution