Professional Documents
Culture Documents
ART. 1767. By the contract of partnership, - Any person who cannot legally give
two or more persons bind themselves to consent to a contract cannot be a partner
contribute money, property or industry to a such as :
common fund, with the intention of dividing Unemancipated minors
the profits among themselves. Insane or demented persons
Deaf-mutes who do not know how to
PROFESSION is a calling in the preparation for write
or practice of which academic learning is required Persons suffering from civil interdiction
and which has for its prime purpose the rendering Incompetents who are under
of public service. guardianships
in addition, the partner has the Liability of guilty partner for interest and
obligation: damages
- the guilty partner is liable for interest
4. to preserve said property with the and damages not from the time judicial or
diligence of a good father of a family extrajudicial demand is made but from the
pending delivery to the partnership; and time he should have complied with his
5. to indemnify the partnership for any obligation or from the time he converted
damage caused to it by the retention of the amount to his own use, as the case
the sane or by the delay in its contribution may be.
ART. 1787. When the capital or a part ART. 1789. An industrial partner cannot
thereof which a partner is bound to engage in business for himself, unless the
contribute consists of goods, their appraisal partnership expressly permits him to do so;
must be made in the manner prescribed in and if he should do so, the capitalist
the contract of partnership, and in the partners may either exclude him from the
absence of stipulation, it shall be made by firm or avail themselves of the benefits
experts chosen by the partners, and which he may have obtained in violation of
according to current prices, the subsequent this provision, with a right to damages in
changes thereof being for account of the either case.
partnership.
INDUSTRIAL PARTNER contributes his industry,
A. When contribution consist of goods labour, or services to the partnership
- appraisal of value is needed to determine how
much has been contributed
ART. 1790. Unless there is a stipulation to
B. How appraisal is made the contrary, the partners shall contribute
- as prescribed by the contract equal shares to the capital of the
- in default of the first, experts chosen by the partnership.
partners, and at current prices
General Rule: Partner shall contribute equal
C. Necessity of the Inventory Appraisal shares to the capital of the partnership
- proof is needed to determine how much goods
or money had been contributed. An inventory is
- not applicable to an industrial partner
useful
Modes of Appointing a Manager (2) None of the partners may, without the
1. appointment as manager in the articles consent of the others, make any important
of partnership alteration in the immovable property of the
2. appointment as manager made in an partnership, even if it may be useful to the
instrument other than the articles of partnership. But if the refusal of consent by
partnership or made orally the other partners is manifestly prejudicial
ART. 1801. If two or more partners have
to the interest of the partnership, the
been intrusted with the management of the
court's intervention may be sought.
partnership without specification of their
respective duties, or without a stipulation
Rule when manner of management has not
that one of them shall not act without the been agreed upon
consent of all the others, each one may
separately execute all acts of a. Generally, each partner is an agent
administration, but if any of them should b. Although each is an agent, still if the acts
oppose the acts of the others, the decision are opposed by the rest, the majority should
of the majority shall prevail. In case of a tie, prevail for the presumed intent is for all the
partners to manage as in Art. 1801;
the matter shall be decided by the partners
c. When a partner acts as an agent, it is
owning the controlling interest. understood that he acts in behalf of the firm;
therefore when he acts in his own name, he does
Applicability of the Article not bind the partnership generally
1. there are two or more managers; d. On the other hand, the authority to bind
2. there is no specification of respective the firm does not apply if somebody else had
duties; and been given authority to manage in the articles of
3. there is no stipulation requiring organization or thru other means.
unanimity ART. 1804. Every partner may associate
another person with him in his share, but
Specific Rules: the associate shall not be admitted into the
1. Each may separately execute all acts
partnership without the consent of all the
of administration;
2. except if any of the managers should other partners, even if the partner having
oppose (division of the majority of the an associate should be a manager.
managers shall prevail)
- if there is a tie, the partners owning SUBPARTNERSHIP partnership formed between
the controlling interest prevail; provided a member of a partnership and a third person for
they are also managers a division of the profits coming to him from the
partnership enterprise
- subpartnership agreements do not in any
wise affect the composition, existence, or
operations of the firm.
ART. 1802. In case it should have been
stipulated that none of the managing Associate of Partner
partners shall act without the consent of a. for a partner to have an associate in his
the others, the concurrence of all shall be share, consent of the other partners is not
necessary for the validity of the acts, and required;
the absence or disability of any one of them b. for the associate to become a partner,
all must consent
cannot be alleged, unless there is imminent
ART. 1805. The partnership books shall be
danger of grave or irreparable injury to the
kept, subject to any agreement between the
partnership.
partners, at the principal place of business
of the partnership, and every partner shall
When Unanimity is Required
BOBADILLA
at any reasonable hour have access to and (1) If he is wrongfully excluded from the
may inspect and copy any of them. partnership business or possession of its
property by his co-partners;
- Duty to keep true and correct books rests
on the MANAGINGOR ACTIVE PARTNER or (2) If the right exists under the terms of any
the PARTICULAR PARTNER agreement;
Duties of a partner
1. Duty to act for common benefit Principal Rights:
2. Duty to account for secret and similar a. specific partnership
profits b. interest in the partnership
3. Duty to make full disclosure of c. right to participate in the management
information belonging to partnership
ART. 1808. The capitalist partners cannot Related Rights:
engage for their own account in any a. the right to reimbursement for amounts
advanced to the partnership and to
operation which is of the kind of business in
indemnification for risks in consequence of
which the partnership is engaged, unless management;
there is a stipulation to the contrary. b. the right to access the inspection of
partnership books;
Any capitalist partner violating this c. the right to true and full information of all
prohibition shall bring to the common funds things affecting the partnership;
d. the right to formal account of partnership
any profits accruing to him from his
affairs under certain circumstances; and
transactions, and shall personally bear all e. the right to have the partnership dissolved
the losses. also under certain conditions
(2) With partnership property, by any one or PARTNERSHIP LIABILITY partners are principals
more of the partners with the consent of all to the other partners and agents for them and
the partners whose interests are not so the partnership; liable to third persons
charged or sold. INDIVIDUAL LIABILITY a partner assumes a
separate undertaking in his name with a third
party to perform a partnership contract; partner
Nothing in this Title shall be held to deprive is personally liable
a partner of his right, if any, under the
exemption laws, as regards his interest in Liability Distinguished from Losses
the partnership. (n) - an industrial partner is exempted by
law for losses but not from liability;
- third persons may sue the firm and the
- A separate creditor of a partner cannot
partners, including the industrial partners;
attach or levy upon specific partnership - partners will be personally liable only
property for the satisfaction of his credit after the assets of the partnership have
been exhausted
- Claims of partnership creditors must be ARTICLE 1817. Any stipulation against the
satisfied first before the separate creditors liability laid down in the preceding article
of the partners can be paid out of the shall be void, except as among the
interest charged partners. (n)
(2) Dispose of the good-will of the business; Where the title to real property is in the
name of one or more or all the partners, or
(3) Do any other act which would make it in a third person in trust for the
impossible to carry on the ordinary business partnership, a conveyance executed by a
of a partnership; partner in the partnership name, or in his
own name, passes the equitable interest of
(4) Confess a judgment; the partnership, provided the act is one
within the authority of the partner under
(5) Enter into a compromise concerning a the provisions of the first paragraph of
partnership claim or liability; article 1818.
(6) Submit a partnership claim or liability to Where the title to real property is in the
arbitration; name of all the partners a conveyance
executed by all the partners passes all their
(7) Renounce a claim of the partnership. rights in such property. (n)
Where title to real property is in the name A person is not bound by the act, admission,
of the partnership, a conveyance executed statement, or agreement of another of which he
by a partner, in his own name, passes the has no knowledge or to which he has not given
equitable interest of the partnership, his consent except by virtue of a particular
provided the act is one within the authority relation between them
Conditions:
BOBADILLA
- admission must concern partnership SOLIDARY LIABILITY THE ABOVE 3 ARTICLES
affairs; PROVIDE FOR THE SOLIDARY LIABILITY OF ALL
- within the scope of the authority THE PARTNERS AND THE PARTNERSHIP TO THIRD
PERSONS FOR THE PARTNERS WRONGFUL ACT
Restrictions on the rule:
a. admission made BEFORE dissolution are OR OMMISSION OR BREACH OF TRUST ACTING
binding only when the partners has authority to WHITHIN THE SCOPE OF THE FIRMS BUSINESS
act on the particular matter OR WITH AUTHORITY OF HIS CO-PARTNERS.
b. admissions made AFTER dissolution are
binding only if the admissions were necessary to - Civil liability of the partnership arising
wind up the business from the wrongful acts or omissions by
ARTICLE 1821. Notice to any partner of any
any partner
matter relating to partnership affairs, and
the knowledge of the partner acting in the
-
particular matter, acquired while a partner
or then present to his mind, and the
- The act or omission is called QUASI-DELICT
knowledge of any other partner who
or TORT when it does not constitute a
reasonably could and should have
crime or felony punishable by law.
communicated it to the acting partner,
operate as notice to or knowledge of the
ARTICLE 1825. When a person, by words
partnership, except in the case of fraud on
spoken or written or by conduct, represents
the partnership, committed by or with the
himself, or consents to another
consent of that partner. (n)
representing him to anyone, as a partner in
an existing partnership or with one or more
. in general, notice to a partner is notice to the
persons not actual partners, he is liable to
partnership
any such persons to whom such
representation has been made, who has, on
Cases of Knowledge of a Partner
the faith of such representation, given
1. knowledge of a partner acting in a
particular matter acquired while a partner; credit to the actual or apparent
2. knowledge of a partner acting in a partnership, and if he has made such
particular matter then present to his mind; and representation or consented to its being
3. knowledge of any partner who reasonably made in a public manner he is liable to such
could and should have communicated it to the person, whether the representation has or
acting partner
has not been made or communicated to
ARTICLE 1822. Where, by any wrongful act
such person so giving credit by or with the
or omission of any partner acting in the
knowledge of the apparent partner making
ordinary course of the business of the
the representation or consenting to its
partnership or with the authority of his co-
being made:
partners, loss or injury is caused to any
person, not being a partner in the
(1) When a partnership liability results, he
partnership, or any penalty is incurred, the
is liable as though he were an actual
partnership is liable therefor to the same
member of the partnership;
extent as the partner so acting or omitting
(2) When no partnership liability results, he
to act. (n)
is liable pro rata with the other persons, if
any, so consenting to the contract or
ARTICLE 1823. The partnership is bound to
representation as to incur liability,
make good the loss:
otherwise separately.
Entry of a new partner into an existing (1) Without violation of the agreement
partnership between the partners:
- the newly admitted partner would be
liable as an ordinary original partner for all
partnership obligations incurred after his (a) By the termination of the definite term or
admission to the firm particular undertaking specified in the
agreement;
Liability of incoming partner for partnership (b) By the express will of any partner, who must
obligations
act in good faith, when no definite term or
1. limited to his share in partnership property
for existing obligations, unless there is stipulation particular is specified;
to the contrary;
2. extends to his separate property for (c) By the express will of all the partners who
subsequent obligations have not assigned their interests or suffered them
ARTICLE 1827. The creditors of the to be charged for their separate debts, either
partnership shall be preferred to those of before or after the termination of any specified
each partner as regards the partnership term or particular undertaking;
property. Without prejudice to this right,
the private creditors of each partner may (d) By the expulsion of any partner from the
ask the attachment and public sale of the business bona fide in accordance with such a
share of the latter in the partnership power conferred by the agreement between the
assets. (n) partners;
(7) By the civil interdiction of any partner; (2) At any time if the partnership was a
partnership at will when the interest was
(8) By decree of court under the following assigned or when the charging order was
article. (1700a and 1701a) issued. (n)
(b) Though he had not so extended credit, had ARTICLE 1835. The dissolution of the
nevertheless known of the partnership prior to partnership does not of itself discharge the
dissolution, and, having no knowledge or notice existing liability of any partner.
of dissolution, the fact of dissolution had not been
advertised in a newspaper of general circulation A partner is discharged from any existing
in the place (or in each place if more than one) at liability upon dissolution of the partnership
which the partnership business was regularly by an agreement to that effect between
carried on. himself, the partnership creditor and the
person or partnership continuing the
The liability of a partner under the first business; and such agreement may be
paragraph, No. 2, shall be satisfied out of inferred from the course of dealing between
partnership assets alone when such partner had the creditor having knowledge of the
been prior to dissolution: dissolution and the person or partnership
continuing the business.
(1) Unknown as a partner to the person with
whom the contract is made; and The individual property of a deceased
partner shall be liable for all obligations of
(2) So far unknown and inactive in the partnership incurred while he was a
partnership affairs that the business partner, but subject to the prior payment of
reputation of the partnership could not be his separate debts. (n)
said to have been in any degree due to his
connection with it. Dissolution ordinarily does not discharge existing
liability of partners, otherwise, creditors would be
prejudiced, particularly if a partner will just
The partnership is in no case bound by any withdraw anytime from the firm
act of a partner after dissolution:
BOBADILLA
ARTICLE 1836. Unless otherwise agreed, the (2) The partners who have not caused the
partners who have not wrongfully dissolved dissolution wrongfully, if they all desire to
the partnership or the legal representative continue the business in the same name
of the last surviving partner, not insolvent, either by themselves or jointly with others,
has the right to wind up the partnership may do so, during the agreed term for the
affairs, provided, however, that any partner, partnership and for that purpose may
his legal representative or his assignee, possess the partnership property, provided
upon cause shown, may obtain winding up they secure the payment by bond approved
by the court. (n) by the court, or pay any partner who has
caused the dissolution wrongfully, the value
MANNERS OF WINDING-UP of his interest in the partnership at the
dissolution, less any damages recoverable
EXTRAJUDICIAL under the second paragraph, No. 1 (b) of
- by the partners themselves without this article, and in like manner indemnify
intervention of court
him against all present or future
JUDICIAL partnership liabilities.
- under the control and direction of the
court, upon proper cause that is shown to (3) A partner who has caused the
the court; dissolution wrongfully shall have:
(1) The assets of the partnership are: (b) Those owing to partnership creditors;
(2) When all but one partner retire and The use by the person or partnership
assign (or the representative of a deceased continuing the business of the partnership
partner assigns) their rights in partnership name, or the name of a deceased partner as
property to the remaining partner, who part thereof, shall not of itself make the
continues the business without liquidation individual property of the deceased partner
of partnership affairs, either alone or with liable for any debts contracted by such
others; person or partnership. (n)
(3) When any partner retires or dies and the ARTICLE 1841. When any partner retires or
business of the dissolved partnership is dies, and the business is continued under
continued as set forth in Nos. 1 and 2 of any of the conditions set forth in the
this article, with the consent of the retired preceding article, or in article 1837, second
partners or the representative of the paragraph, No. 2, without any settlement of
deceased partner, but without any accounts as between him or his estate and
assignment of his right in partnership the person or partnership continuing the
property; business, unless otherwise agreed, he or his
legal representative as against such person
(4) When all the partners or their or partnership may have the value of his
representatives assign their rights in interest at the date of dissolution
partnership property to one or more third ascertained, and shall receive as an
persons who promise to pay the debts and ordinary creditor an amount equal to the
who continue the business of the dissolved value of his interest in the dissolved
partnership; partnership with interest, or, at his option
(5) When any partner wrongfully causes a or at the option of his legal representative,
dissolution and the remaining partners in lieu of interest, the profits attributable to
continue the business under the provisions the use of his right in the property of the
of article 1837, second paragraph, No. 2, dissolved partnership; provided that the
either alone or with others, and without creditors of the dissolved partnership as
liquidation of the partnership affairs; against the separate creditors, or the
representative of the retired or deceased
(6) When a partner is expelled and the partner, shall have priority on any claim
remaining partners continue the business arising under this article, as provided
either alone or with others without article 1840, third paragraph. (n)
liquidation of the partnership affairs.
The liability of a third person becoming a General Rule:
BOBADILLA
- when a partner retires from the firm he (a) The name of the partnership, adding
is entitled to the payment of what may be thereto the word Limited;
due him after liquidation
- but no liquidation is needed when
(b) The character of the business;
there already is a settlement as to what
the retiring partner shall receive
ARTICLE 1842. The right to an account of his (c) The location of the principal place of
interest shall accrue to any partner, or his business;
legal representative as against the winding
up partners or the surviving partners or the (d) The name and place of residence of each
person or partnership continuing the member, general and limited partners being
business, at the date of dissolution, in the respectively designated;
absence of any agreement to the contrary.
(n) (e) The term for which the partnership is to
exist;
Accrual of right
- at the date of dissolution in the absence (f) The amount of cash and a description of
of any contrary agreement and the agreed value of the other property
contributed by each limited partner;
Person liable to render an account
Action against
- winding up partners (g) The additional contributions, if any, to
- surviving partners be made by each limited partner and the
- person in partnership continuing the times at which or events on the happening
business of which they shall be made;
Prescription
(h) The time, if agreed upon, when the
- begins to run only upon the dissolution
of the partnership when the final contribution of each limited partner is to be
accounting is done returned;