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GENERAL PROVISIONS
Definition:
ART 1767. By the contract of partnership 2 or more persons bind themselves to c
ontribute:
1. money,
2. property, or
3. industry
to a common fund, with the intention of dividing the profits among themselves.
(General Professional Partnership)
Two or more persons may also form a partnership for the exercise of a pr
ofession.
* A partnership has a juridical personality of its own, distinct and separate fr
om that of each of the partners
* For TAXATION PURPOSES, partnerships, except for general professional partnersh
ips, are treated for income tax purposes as corporations and subject to tax as s
uch
Practice of Law
A partnership for the practice of law is NOT a legal entity. It is a mer
e relationship or association for a particular purpose such as public service.
It is not a partnership formed for the purpose of carrying on a trade or
business or of holding property
Thus, the use of a nom de plume, assumed or trade name in law practice i
s improper
1- In the matter of the petition for authority to continue use of firm name Sycip
, Salazar, etc./ Ozeata, Romula, etc. (92S 1)
H: Primary Characteristics w/c Distinguish the Legal Profession from Business
1. A duty of public service, of w/c emolument is a by-product, and in which one
may attain the highest eminence without making much money;
2. A relation as an officer of the court to the administration of justice involvi
ng thorough sincerity, integrity, and reliability;
3. A relation to clients in the highest fiduciary degree; and
4. A relation to colleagues in the bar characterized by candor, fairness, and u
nwillingness to resort to current business methods of advertising and encroachme
nt of their practice, or dealing directly with clients
Characteristics Elements of Partnership
1. Consensual perfected by mere consent, upon the express or implied agreement o
f the parties
2. Nominate it has a special name or designation in our law
3. Bilateral (or Multilateral) entered into by 2 or more persons and the rights
and obligations arising from them are always reciprocal
4. Onerous each party aspire to procure for himself a benefit through the giving
of something
5. Commutative undertaking of each is considered as the equivalent of that of th
e others
6. Principal does not depend upon some other contract for existence or validity
7. Preparatory entered into as a means to an end
Essential Features of a Partnership/ Requisites of Contract of Partnership:
1. There must be a valid contract (Art 1318)
a. Consent and capacity of contracting parties
b. Object which is the subject matter of the contract
c. Cause or consideration
2. The parties must have legal capacity to enter into a contract
3. There must be a mutual contribution of money, property or industry to the com
mon fund
4. The object must be lawful
5. The primary purpose must be to obtain profits and divide the same among parti
es
Valid Contract:
* No such thing as partnership created by operation of law alone
* FORM: oral or written, express or implied subject to provisions of 1771-1173 a
nd Statute of Frauds
* Articles of Partnership = customarily embody the terms of the association
* If Article of Partnership are kept secret among members, there is no legal per
sonality and the relationship will be governed by rules on co-ownership (1775)
Doctrine of Delectus Personae: (Choice of the Person/s)
* No one can be a member of the partnership w/o the consent of all the others
* REASON: fiduciary nature of the partnership relation and the liability of each
partner for the acts of the others within the scope of the partnership business
* Partners have the power but not necessarily the right to dissolve the partners
hip.
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lA partner,
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e other partners. He can bind the partnership despite objection from his co-part
ners so long as his act is necessary for carrying on the partnership business in
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As law
1.
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2. Numberofatof2least
Minimum
Requires Incorporators
persons
5 incorporators
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momentofofissuance
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execution of the
Personality
of the
certificate
contract of incorporation by the SEC
4. Powers
Can
May exercise only
any power
the powers:
provided it is not contrary to law, morals
1. Expressly granted by law
2. implied from those granted
3. incident to its existence
5. Management
When not agreed upon, every partner is an agent and can perform acts of administ
Power is vested in the Board of Directors or Trustees
ration
6. Effect of Mismanagement
A partner can sue a co-partner who mismanages
The suit against the board member who mismanages must be in the name of the corp
oration
7. Right of Succession
No Extent
Has
8.
Partners
rights
such (except
aofright
liability
limitedtopartners)
3rd personsare liable personally and subsidiarily and ev
en sometimes solidarily
Stockholders
9. Tranferability
are liable
of Interest
only to the extent of the shares subscribed by them
A partner cannot transfer his interest to make the transferee a partner w/o the
consent of ALL existing partners because the partnership is based on the princip
le of delectus personae
A stockholder has the right to transfer his shares w/o the prior consent of the
10. be
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of Existence
for any period of time as stipulated
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Law with the consent of the State
Corporation Code
Property w/c
Universal
Ownership Partnership
of Present Property
belonged of each
to All Present
Profits
of themProperty
at the time of the constitution of the par
tnership shall become COMMON property of all partners
Partners retain their ownership over their present property -- only the USUFRUCT
Profits
passes w/c
to the
from they
present
partnership
may acquire
propertyfrom the property contributed belong to the PARTNER
SHIP
Passes tocan
Ownership/
Usufruct the
Usufruct
only
partnership
pass
of to
Future
the partnership
Property BY STIPULATION. But ownership/ usufruc
t of prop subsequently acquired by inheritance, legacy or donation CANNOT BE INC
LUDED
Ownership retained by the partner
Usufruct can only belong to the firm BY STIPULATION
Fruits
Can onlyofpass
Future
to the
Property
partnership BY STIPULATION, even fruits from prop subsequen
tly acquired by inheritance, legacy or donation
Can only pass to the partnership BY STIPULATION (use & fruits granted to the fir
m refers only to that of the prop possessed by the partner at the time of the ce
lebration of the contract)
Profits from
acquired
otherbysources
industrymay become COMMON but only if there is a STIPULATION
to such
All thateffect
the partners may acquire by their industry or work during the existence
of the partnership
belongs to the partnership
Profits acquired
Retained by the partner
thru chance
(since law speaks only of profits by industry or work)
ART 1782. Persons who are prohibited from giving each other any donation or adva
ntage cannot enter into universal partnership.
? However, a husband and his wife may enter into a particular partnership or be
members thereof.
? Following donations are void: (739)
o Those made between persons who were guilty of adultery or concubinage at the t
ime of the donation
o Those made between persons found guilty of the same criminal offense, in consi
deration thereof
o Those made to a public officer or his wife, descendants, and ascendants, by re
ason of his office
Partnership With a Fixed Term one in which the term of its existence has been ag
reed upon:
1. Expressly as when there is a definite period
2. Impliedly as when a particular enterprise or transaction is undertaken
ART 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 s
pecific 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.
Obligations With Respect to Contribution of Property
1. To contribute at the beginning of the partnership or at a stipulated time, mo
ney, property or industry w/c he may have promised to contribute
2. To answer for eviction in case the partnership is deprived of the determinate
property contributed
3. To deliver the fruits or interest of what should have been delivered, w/o nee
d of demand
4. To preserve such property with the diligence of a GFOF pending delivery to th
e partnership
5. To indemnify the partnership for any damage caused to it by retention of the
same or by the delay in its contribution
Q: What if a partner fails to contribute the property he promised?
A: He becomes ipso jure a debtor of the partnership and the remedy of the o
ther partners is NOT rescission but an action for SPECIFIC PERFORMANCE with dama
ges and interest from the time he should have complied with the obligation. No d
emand necessary to put the partner in default.
If the defaulting partner is already dead, RESCISSION may prospe
r.
? There is eviction whenever by a final judgment based on a right prior to the s
ale or an act imputable to the partner, the partnership is deprived of the whole
or a part of the thing purchased
ART 1787. When the capital or a part thereof which a partner is bound to contrib
ute consists of goods, their appraisal:
1. must be made in the manner prescribed in the contract of partnership, and in
the absence of stipulation, it
2. shall be made by experts chosen by the partners, and according to current pri
ces, the subsequent changes thereof being for account of the partnership.
ART 1788. A partner who has undertaken to contribute a sum of money and fails to
do so becomes a debtor for the interest and damages from the time he should hav
e complied with his obligation.
The same rule applies to any amount he may have taken from the partnersh
ip coffers, and his liability shall begin from the time he converted the amount
to his own use.
Liability of a Partner for Failure to Return Partnership Money Received
1. Where fraudulent misappropriation committed the partner is guilty of estafa i
f he misappropriates partnership money or property received by him for a specifi
c purpose of the partnership
2. When there was failure to return this not constitute estafa, the liability of
the partner is a civil one arising from the partnership contract for a liquidat
ion of the partnership
ART 1789. An industrial partner:
1. cannot engage in business for himself, unless the partnership expressly permi
ts him to do so; and
2. if he should do so, the capitalist partners may either:
a. exclude him from the firm or
b. avail themselves of the benefits which he may have obtained in violation of t
his provision,
c. with a right to damages in either case.
Distinctions
As to:
Capitalist
Industrial
Contributes
ContributionPartner
money or property
Contributes industry
Prohibitions against engaging in business
Relative extends only to any operation w/c is of the same kind of business in w/
c the partnership
Absolute prohibited
is engaged
from engaging in any kind of business (absent any express st
ipulation for him to do so)
Consequence of engaging in prohibited business
? Bring to common funds any profits;
? Erring partner shall personally bear the loss
? may bethe
Entitle subject
capitalist
to an partners
injunctiontowrit
either:
1. exclude him from the firm
2. avail themselves of the benefits w/c he have obtained
Receives profits
Profits
1. according to the agreement or
2. pro rata to his contribution
Receivesinhis
Shares
Loss thejust
losses:
and equitable share
1. according to the stipulation as to losses or
2. agreement as to profits
3. pro rata to his contribution
Exempted as to partners but not as to 3rd persons BUT is subject to reimbursemen
t from the other partners
ART 1790. Unless there is a stipulation to the contrary, the partners shall cont
ribute equal shares to the capital of the partnership.
ART 1791. If there is no agreement to the contrary, in case of an imminent loss
of the business of the partnership, any partner who refuses to contribute an add
itional share to the capital, except an industrial partner, to save the venture,
shall he obliged to sell his interest to the other partners.
Obligation of Capitalist Partner to Contribute Additional Capital
1. General Rule a capitalist partner is not bound to contribute to the partnersh
ip more that what he agreed to contribute
2. Exception in case of imminent loss to the business and there is no agreement
to the contrary, he is under the obligation to contribute an additional share to
save the venture
3. If he refuses to contribute, he shall be obliged to sell his interest to othe
r partners
Requisites Before a Capitalist Partner May be Obliged to Sell His Interest to th
e Others:
1. There is imminent loss
2. Majority of the CP are of the opinion that an additional contribution to the
common fund would save the business
3. The CP deliberately refuses to contribute an additional share to the capital
4. There is no agreement that even in case of imminent loss, the partners are no
t allowed to contribute
? Industrial partner is exempted because he is already giving his entire industr
y
ART 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 sum also demandable,
* the sum thus collected shall be applied to the 2 credits in proportion to thei
r 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 other debtor by Art. 1252, but only if the personal cr
edit of the partner should be more onerous to him.
Obligation of Managing Partner Who Collects Debts
1. Where a 3rd party is indebted to:
a. the partnership, AND
b. the managing partner at the same time
2. Any sum received by the MP shall be applied to the 2 credits in proportion to
their amounts
3. Except where he received it for the account of the partnership
4. In w/c case the whole sum shall be applied to the partnership credit only
5. However, the 3rd party debtor is given the right to prefer payment of the cre
dit to the partner if it should be more onerous to him in accordance w/ his righ
t to application of payment
Requisites
1. There are at least 2 debts:
a. one where the collecting partner is the creditor
b. one where the partnership is the creditor
2. Both debts are demandable
3. The partner who collects is authorized to manage and actually manages the par
tnership
ART 1793. A partner who has received, in whole or in part, his share of a partne
rship credit, when the other partners have not collected theirs, shall be oblige
d, 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 on
ly.
Two debt
1793
1792
One
Applies
debtsto
only
only
anyto(firm
partner
managing
credit)
partner
Obligation of the Partner Who Receives Credit
1. Here there is only one credit in favor of the partnership
2. The partner who receives his share of the partnership credit may be the MP or
not
3. Such partner is obliged to bring to the partnership capital what he received
Requisites
1. A partner has received, in whole or in part, his share of the partnership cre
dit
2. The other partners have not collected their shares
3. The partnership debtor has become insolvent
4. Only applies while the partnership is in existence and not after it dissoluti
on
ART 1794. Every partner is responsible to the partnership for damages suffered b
y it through his fault, and he cannot compensate them with the profits and benef
its 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, unus
ual profits have been realized.
* There must first be a liquidation before a partner sues another to know the ex
tent of damages
* If negligent partner is already dead, suit for recovery may be had against his
estate
ART 1795. The risk of specific and determinate things,
1. which are not fungible,
2. contributed to the partnership so that only their use and fruits may be for t
he common benefit,
3. shall be borne by the partner who owns them.
If the things contributed:
1. are fungible, or
2. cannot be kept without deteriorating, or
3. if they were contributed to be sold,
4. the risk shall be borne by the partnership.
In the absence of stipulation, the risk of the things brought and apprai
sed in the inventory, shall also be borne by the partnership, and in such case t
he claim shall be limited to the value at which they were appraised.
ART 1797. The losses and profits shall be distributed in conformity with the agr
eement.
If only the share of each partner in the profits has been agreed upon, t
he 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 indus
trial partner shall not be liable for the losses.
As for the profits, the industrial partner shall receive such share as m
ay be just and equitable under the circumstances.
If besides his services he has contributed capital, he shall also receiv
e a share in the profits in proportion to his capital.
Rules for Distribution of Profits and Losses
1. PROFITS
a. According to agreement
b. If no agreement:
* share of each CP shall be in proportion to his contribution
* the IP shall receive such share, w/c must be satisfied first before the CP sha
ll divided the profits, as may be just and equitable under the circumstances
2. LOSES
a. According to agreement
b. If no such agreement but the contract provides for the shares of the partners
in the profits:
* losses shall be in accordance with the profit sharing ratio
* but IP shall not be liable for losses
c. If no profit sharing stipulated
* losses shall be borne by the partners in proportion to their capital contribut
ion
* the purely IP shall not be liable for losses
ART 1798. If the partners have agreed to intrust to a third person the designati
on of the share of each one in the profits and losses, such designation may be i
mpugned only when it is manifestly inequitable.
In no case may a partner:
1. who has begun to execute the decision of the third person, or
2. who has not impugned the same within a period of three months from the time h
e had knowledge thereof,
3. complain of such decision.
The designation of losses and profits cannot be intrusted to one of the
partners.
Entrusting to a 3rd Person the Share in Profits and Losses
1. The designation of the share in profits and losses may be delegated to a 3rd
person by common consent
2. This designation is generally binding on the partners UNLESS manifestly inequ
itable
3. Therefore, a partner:
a. who has begun to execute the decision of the third person, or
b. who has not impugned the same within a period of three months from the time h
e had knowledge thereof, can no longer complain
4. Reason to forestall any paralyzation of the partnership
ART 1799. A stipulation which excludes one or more partners from any share in th
e profits or losses is void.
Note
1. This only applies to a CP
2. IP not included because he cannot w/draw his capital w/c is his industry
3. It is the stipulation that is void but the partnership exists
ART 1800. The partner who has been appointed manager in the articles of partners
hip may execute all acts of administration despite the opposition of his partner
s, unless he should act in bad faith; and his power is irrevocable without just
or 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 revoke
d at any time.
2 Modes of Appointing a Manager
1. In the Articles of Partnership (AP)
a. Manager may execute all acts of administration despite the opposition of the
other partners
b. His power is revoked only:
* if he acted in bad faith
* upon just and lawful cause
* upon the vote of the partners representing the controlling interest
* (to remove him WITHOUT A CAUSE, or for an UNJUST CAUSE, there must be unanimit
y (including his own vote))
c. In case of mismanagement, the other partners may avail of the usual remedies
such as dissolution by judicial decree
2. After the Constitution of the Partnership
a. This may be revoked at any time for any cause whatsoever
b. Reason revocation is not founded on a change of the will on the part of the p
artners, the appointment not being a condition of the contract; merely a contrac
t of agency w/c may be revoked at any time
Scope of Power of the MP
1. General Rule a partner appointed as MP has:
a. all the powers of a general agent (acts of administration) as well as
b. the incidental powers necessary to carry out the object of partnership in the
transaction of its business
2. Exception when the powers of the MP are specifically restricted
ART 1801. If two or more partners have been intrusted with the management of the
partnership:
1. without specification of their respective duties, or
2. without a stipulation that one of them shall not act without the consent of a
ll the others,
3. each one may separately execute all acts of administration,
a. but if any of them should oppose the acts of the others, the decision of the
majority shall prevail.
b. In case of a tie, the matter shall be decided by the partners owning the cont
rolling interest.
Where the Respective Duties of 2 or More Managing Partners are NOT Specified
1. Rule Each one may separately perform acts of administration
2. Consequences
a. If one or more of the MP s shall oppose the acts of the others the decision of
the majority (per head) of the MP s shall prevail
b. In case of a tie the matter shall have to be decided by the vote of the partn
ers owning controlling interests
Requisites
1. 2 or more partners have been appointed as MP s
2. There is no specification of their respective duties
3. There is NO stipulation that one of them shall not act w/o the consent of the
others
ART 1802. In case it should have been stipulated that none of the managing partn
ers shall act without the consent of the others,
1. the concurrence of ALL shall be necessary for the validity of the acts, and
2. 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.
Where Unanimity of Action is Stipulated
1. General Rule - When it is stipulated that none of the MP s shall act w/o the co
nsent of the others, a unanimous consent of all the MP s shall be necessary for th
e validity of such acts
2. Exception when there is imminent danger of grave irreparable injury
a. In such case, a MP may act alone w/o the consent of the partner who:
* is absent, or
* under disability
b. But he may be later be liable for damages
3. However, the ground of imminent danger of xxx.. is NOT applicable when one of
the MP s objects to the proposed act
ART 1803. When the manner of management has NOT been agreed upon, the following
rules shall be observed:
1. All the partners shall be considered agents and whatever any one of them may
do alone shall bind the partnership, without prejudice to the provisions of Art.
1801.
2. None of the partners may, without the consent of the others, make any importa
nt alteration in the immovable property of the partnership, even if it may be us
eful 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 intervent
ion may be sought.
Rules When Manner of Management has NOT been Agreed Upon
1. All partners are considered managers and agents
a. whatever anyone of them may do alone shall bind the partnership
b. but in case of timely opposition of any partner
* the matter shall be decided by majority vote
* in case of a tie the matter shall be decided by the vote of the partners repre
senting controlling interest
2. Unanimous consent is required for alteration of immovable property
a. If the refusal to give consent by other partners is manifestly prejudicial to
the interest of the partnership the intervention of the court may be sought for
authority to make necessary alteration
b. Reason for necessity of court intervention because any alteration of immovabl
e property is an act of dominion in w/c all partners must consent
ART 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 mana
ger.
Contract of Sub-Partnership
1. A partner may associate a 3rd person w/ him in his share w/o the consent of
the other partner this 3rd person is called a SUBPARTNER
2. Subpartner
a. cannot be a member of the partnership w/o the consent of all the other partne
rs
b. therefore he does not acquire the rights of a partner nor is he liable for it
s debts
ART 1805. The partnership books shall be kept, subject to any agreement between
the partners, at the principal place of business of the partnership, and every p
artner shall at any reasonable hour have access to and may inspect and copy any
of them.
Reasonable Hours:
Reasonable hours on business days throughout the year and not merely dur
ing some arbitrary period of a few days chosen by the managing partners
Duty to Render Information:
ART 1806. Partners shall render on demand true and full information of all thing
s affecting the partnership to:
1. any partner or
2. the legal representative:
a. of any deceased partner or
b. of any partner under legal disability.
ART 1807. Every partner:
1. must account to the partnership for any benefit, and
2. hold as trustee for it any profits derived by him without the consent of the
other partners:
a. from any transaction connected with the formation, conduct, or liquidation of
the partnership or
b. from any use by him of its property.
Conditions for the application of 1807:
1. The transaction is of a kind that the partnership can legally embrace and act
upon;
2. The transaction is connected with the formation, conduct or liquidation of th
e partnership or use of the partnership property by the accused partner;
3. The transaction is of such nature that it is within the scope of the business
of the firm;
4. The transaction complained of comprehends something of value to the partnersh
ip, whether or not it is of a present or prospective value; and
5. The transaction is one that the accused partner has acted upon to his apparen
t or sole advantage without the full knowledge or consent of his other partners
? consent referred to is informed consent with knowledge of the fact necessary to
the giving of an intelligent consent
Pang Lim v. Lo Seng (42 P 282)
F: Lim and Seng were partners on a leased land. The partnership put up improveme
nts on the land which will belong to the landowner when the lease ends. Lim sold
his share to Seng. Subsequently, Lim was able to bought the land and is now ask
ing Seng to vacate.
H: Lim cannot ask Seng to vacate since Lim is in bad faith
Lim obviously desired the termination of the lease, in order to avail hi
mself of the benefits of the improvements which would go to the owner of the lan
d, as per stipulation in the lease contract. Moreover, when he sold his rights a
s a partner, this included the right to the lease. For him to now disregard the
lease, from which sale he had profited, would be most unfair, considering that h
e seeks to destroy an interest derived from himself, and for which he has alread
y received full value. Finally, one partner cannot, to the detriment of another,
apply exclusively to his own benefit the results of the knowledge and informati
on gained in the character of partner.
ART 1808. The capitalist partners cannot engage for their own account in any ope
ration which is of the kind of business in which the partnership is engaged, unl
ess there is a stipulation to the contrary.
Any capitalist partner violating this prohibition shall bring to the com
mon funds any profits accruing to him from his transactions, and shall personall
y bear all the losses.
Instances When CP is NOT Prohibited From Engaging in Business
1. When there is a stipulation to the effect
2. When the business is not similar to the partnership
3. When other partners expressly or impliedly allowed him to do so
4. When the general-capitalist partner becomes merely a limited partner in a com
petitive enterprise for after all, a limited partner does not manage
Effects of Violation
1. CP shall be under obligation to bring to the common fund any profits derived
from his transaction
2. In case of losses, CP shall bear them alone
ART 1809. Any partner shall have the right to a FORMAL account as to partnership
affairs:
1. If he is wrongfully excluded from the partnership business or possession of i
ts property by his co-partners;
2. If the right exists under the terms of any agreement;
3. As provided by article 1807;
4. Whenever other circumstances render it just and reasonable.
Right of Partner to a FORMAL Account
1. General Rule During the existence of the partnership, a partner is NOT entitl
ed to a formal account of partnership affairs
2. Exception - Art. 1809
3. Prescriptive Period
a. the right to demand accounting exists as long as the partnership lasts
b. it begins to run only upon the dissolution of the partnership when the final
accounting is done
SECTION 2
Property Rights of a Partner
ART 1810. The property rights of a partner are:
1. His rights in specific partnership property;
2. His interest in the partnership; and
3. His right to participate in the management
Extent of Property Rights of a Partner
1. PRINCIPAL Rights
a. His rights in specific partnership property
b. His interest in the partnership (partner s share in profit)
c. His right to participate in the management
2. RELATED Rights
a. To reimbursement for amounts advanced to the partnership and to indemnificati
on for risks in consequence of management
b. Of access and inspection of partnership books
c. To true and full information of all things affecting the partnership
d. To formal account of partnership affairs under certain circumstances
e. To have the partnership dissolved under certain conditions
Distinctions
Capital
Partnership
1. Its valueProperty
may vary from day to day with changes in the market value of the pa
rtnership assets
2. Includes not only the original capital contributions of the partners but all
property
1. Its value
subsequently
remains unchanged,
acquired onalthough
accountitofmay
thebepartnership,
decreased orincluding
diminished
goodwill
by un
animous consent of the partners
2. Represents the aggregate of the individual contributions made by the partners
ART 1811. A partner is co-owner with his partners of specific partnership proper
ty.
The incidents of this co-ownership are such that:
1. A partner, subject to the provisions of this Title and to any agreement betwe
en the partners, has an equal right with his partners to possess specific partne
rship property for partnership purposes; but he has no right to possess such pro
perty for any other purpose without the consent of his partners;
2. A partner's right in specific partnership property is not assignable except i
n connection with the assignment of rights of all the partners in the same prope
rty;
3. A partner's right in specific partnership property is not subject to attachme
nt or execution, except on a claim against the partnership. When partnership pro
perty is attached for a partnership debt the partners, or any of them, or the re
presentatives of a deceased partner, cannot claim any right under the homestead
or exemption laws;
4. A partner's right in specific partnership property is not subject to legal su
pport under Art. 291.
Specific Partnership Property
1. Contemplates tangible property but NOT intangible thing such as a beneficial
right to land of the public domain
2. A partner is co-owner with his partners of SPP but the rules on co-ownership
do not necessarily apply
3. Fishpond of public domain = not considered SPP because only use and enjoyment
is granted (Deluao v. Casteel)
SECTION 3
Obligations of the Partners with Regard to Third Persons
ART 1815. Every partnership shall operate under a firm name, which may or may no
t include the name of one or more of the partners.
Those who, not being members of the partnership, include their names in
the firm name, shall be subject to the liability of a partner.
Importance of Having a Firm Name
1. To have a name under w/c the partnership will operate
2. To distinguish the partnership w/c has a separate and distinct personality fr
om:
a. the individuals composing the partnership
b. other partnerships and entities
Right of the Partners to Use a Firm Name
1. General Rule the partners enjoy utmost freedom in the selection of the partne
rship name
2. Limitations The partners cannot use a name that:
a. Is misleading as when it is identical or deceptively confusingly similar to t
hat of any existing partnership s or corporation s name
b. Includes that of a deceased partner UNLESS that firm indicates in all its com
munications that the said partner is deceased (Rule 3.02 of the Code of Professi
onal Responsibility)
Liability for Inclusion of Name in a Firm Name
1. Persons who are not partners, who include their names in the firm name (partn
ers by estoppel):
a. Do NOT acquire the rights of a partner
b. Are subject to the liability of a partner insofar as 3rd persons without noti
ce are concerned
2. Art. 1815 does NOT cover the case of a:
a. Limited partner who allows his name to be included in the firm name
b. Person continuing the business of a partnership after dissolution who uses th
e name of the dissolved partnership
ART 1816. All partners, including industrial ones, shall be liable pro rata with
all their property and after all the partnership assets have been exhausted, fo
r the contracts which may be entered into in the name and for the account of the
partnership, under its signature and by a person authorized to act for the part
nership.
However, any partner may enter into a separate obligation to perform a p
artnership contract.
Requisites to Hold Partners Liable
1. It must be a contractual obligation in the name of the partnership
2. Partnership assets must have been exhausted
3. The contract was entered into:
a. in the name of the partnership
b. for the account of the partnership
c. signed by one who is authorized to sign for the partnership
4. The partner entering the contract is authorized by the partnership
Liability for Contractual Obligations of Partnership
1. Pro rata equally or jointly (based on the number of partners) and NOT proport
ionally (on their contribution)
a) Partner has left the country or his liability condoned by creditor = cannot i
ncrease the liability of other partners
2. Subsidiary or secondary because the partners become personally liable only af
ter the partnership assets have been exhausted
3. Even the IP is liable pro rata with the CP s but he can recover the amount from
the CP s
Note
The exemption of the IP to pay LOSSES relates exclusively to the settlement
of the partnership affairs among the partners themselves and has nothing to do w
ith the LIABILITIES of the partners to 3rd persons
ART 1817. Any stipulation against the liability laid down in the preceding artic
le shall be void, except as among the partners.
A stipulation among the partners contrary to the pro rata and subsidiary
liability is:
1. VOID and of no effect insofar as it affects the rights of 3rd persons
2. VALID and enforceable only as among the partners
ART 1818. Every partner is an agent of the partnership for the purpose of its bu
siness, and
1. the act of every partner,
a. including the execution in the partnership name of any instrument,
b. for apparently carrying on in the usual way the business of the partnership o
f which he is a member
2. binds the partnership,
3. unless:
a. the partner so acting has in fact no authority to act for the partnership in
the particular matter, and
b. the person with whom he is dealing has knowledge of the fact that he has no s
uch authority.
An act of a partner which is not apparently for the carrying on of busin
ess of the partnership in the usual way does not bind the partnership unless aut
horized by the other partners.
Except when authorized by the other partners or unless they have abandon
ed the business, one or more but less than all the partners have no authority to
(Acts of Dominion):
1. Assign the partnership property in trust for creditors or on the assignee's p
romise to pay the debts of the partnership;
2. Dispose of the good-will of the business;
3. Do any other act which would make it impossible to carry on the ordinary busi
ness of a partnership;
4. Confess a judgment;
5. Enter into a compromise concerning a partnership claim or liability;
6. Submit a partnership claim or liability to arbitration;
7. Renounce a claim of the partnership.
No act of a partner in contravention of a restriction on authority shall
bind the partnership to persons having knowledge of the restriction.
Goodwill of the business:
Reasonable expectation of its continued profitable operation
Liability of Partnership for Acts of Partners
1. Acts for Apparently Carrying on in the USUAL WAY the Business of the Partners
hip (Acts of ADMINISTRATION)
a. Every partner is an agent and may execute such acts w/ binding effect on the
partnership:
* even if he has in fact no authority
* unless the 3rd person has knowledge of such lack or authority
b. In order that the partnership shall NOT be liable for a partner s acts:
* The partner so acting has NO authority
* The 3rd person KNOWS that the partner has no authority
2. Acts of Strict DOMINION or OWNERSHIP
a. For acts w/c are not apparently for carrying on the business of the partnersh
ip, the partnership is NOT bound, UNLESS
* the partner is authorized by all the other partners; or
* the other partners have abandoned the business
3. Acts in Contravention of a Restriction on Authority
a. If the partner commits these acts:
* the partnership is NOT liable to a 3rd person who has ACTUAL or PRESUMPTIVE kn
owledge of the restrictions
* w/n the acts are for apparently carrying on in the usual way the busines
s of the partnership
When the Acts of a Partner BINDS the Partnership
1. When he acts in the name of the partnership
2. When he is authorized
a. Express
b. Implied when the act of the partner is carrying on in the usual way the busin
ess of the partnership and there is silence on the part of the other partners
When the Partnership is NOT Bound by the Partner s Acts
1. When the partner has no authority, express or implied, to act in a particular
matter
2. When the 3rd person knows that the partner has NO authority to act on such ma
tter EVEN if the act is for carrying out the usual business of the partnership
ART 1819. Where title to real property is in the partnership name,
1. any partner may convey title to such property by a conveyance executed in the
partnership name;
2. but the partnership may recover such property:
a. unless the partner's act binds the partnership under Art. 1818[1], or
b. unless such property has been conveyed by the grantee or a person claiming th
rough such grantee to a holder for value without knowledge that the partner, in
making the conveyance, has exceeded his authority.
Where title to real property is in the name of the partnership,
1. a conveyance executed by a partner, in his own name,
2. passes the equitable interest of the partnership,
3. provided the act is one within the authority of the partner under Art. 1818[1
].
Where title to real property is in the name of one or more but not all t
he partners, and
1. the record does not disclose the right of the partnership,
2. the partners in whose name the title stands may convey title to such property
,
3. but the partnership may recover such property if the partners' act does not b
ind the partnership under Art. 1818[1],
4. unless the purchaser or his assignee, is a holder for value, without knowledg
e.
Where the title to real property is in the name of one or more or all th
e partners, or in a third person in trust for the partnership,
1. a conveyance executed by a partner:
a. in the partnership name, or
b. in his own name,
2. passes the equitable interest of the partnership,
3. provided the act is one within the authority of the partner under Art. 1818[1
].
Where the title to real property is in the name of all the partners a co
nveyance executed by all the partners passes all their rights in such property.
Equitable Interest:
All interest which the partnership had, except title. That is, the benef
icial interests like use, fruits, but not the naked ownership
Effect of Conveyance of Real Property Belonging to Partnership (depending in who
se name it is registered and in whose name it is conveyed)
1. Title in partnership name; Conveyance in partnership name
a. A,B and C are partners in X partnership. A sold a parcel of land registered u
nder X to D w/o express authority
b. Effect The conveyance passes to D, BUT
* X CAN recover the property if:
:) the conveyance was not in the usual way of business, OR
:) D had knowledge of the fact that A has no authority, even if the conveyance w
as made in the usual way of business
* X CANNOT recover if D had conveyed the property to E who had no knowledge of A s
lack of actual authority in making the conveyance to D
2. Title in partnership name; Conveyance in partner s name
a. If the sale was executed by A in his own name to D
b. Effect D does NOT become the owner of the land
* He only gets the equitable interest of X
* Assuming that the selling of the land is in the usual course of business
c. D would NOT be entitled even to the equitable interest
* If the sale is NOT in the usual course of business, OR
* D had knowledge of A s lack of authority although the sale was made in the usual
course of business
3. Title in the name of 1 or more partners; Conveyance in the name of the partne
rs in whose name title stands
a. Although the land really belongs to the partnership, it is registered in the
name of A and the record does not disclose the right of X
b. If A sold the land in his own name to D, title is conveyed to D
c. Effect is the same as # 1
4. Title in the name or 1 or more or all partners or a 3rd person in trust for p
artnership; conveyance executed in partnership name or in name of partner
a. The land is in the name of A in trust for X. A sells the land to D in the nam
e of X or in A s own name
b. Effect Only the equitable interest of X will pass to D as A is a mere trustee
of the partnership
c. Rule is the same as # 2
5. Title in name of all partners; Conveyance in name of all partners
a. The land is registered in the name of A, B and C
b. Conveyance made by all partners to D will pass title to D
c. The effect would be the same although the sale is NOT is the usual course of
business
NOTE:
? Recovery is possible in the first 4 instances. In the 5th instance, title pass
es
? Conveyance includes the right to mortgage
ART 1820. An admission or representation made by any partner concerning partners
hip affairs within the scope of his authority in accordance with this Title is e
vidence against the partnership.
Effect of Admission by a Partner (Requisites)
1. The admission must be on a matter concerning partnership affairs
2. The admission made by the partner is w/in the scope of his authority
3. The admission must be made during the existence of the partnership
ART 1821.
1. Notice to any partner of any matter relating to partnership affairs, and
2. the knowledge of the partner acting in the particular matter, acquired while
a partner or then present to his mind, and
3. the knowledge of any other partner who reasonably could and should have commu
nicated it to the acting partner,
G operate as notice to or knowledge of the partnership, except in the case of fr
aud on the partnership, committed by or with the consent of that partner.
Notice to or Knowledge of a Partner, of a Matter Affecting Partnership Affairs
1. Notice to, or knowledge of any partner of any matter relating to partnership
affairs
a. operates as notice to or knowledge of the partnership and shall bind the part
nership
b. except in cases of fraud on the partnership committed by or w/ the consent of
that partner
2. Therefore when a 3rd person delivers notice to a partner that is an effective
communication to the partnership
Cases of Knowledge Knowledge of:
1. the partner acting in the particular matter acquired while a partner
2. the partner acting in the particular matter then present to his mind
3. any other partner who reasonably could and should have communicated it to the
acting partner
ART 1822. Where,
1. by any wrongful act or omission of any partner acting:
a. in the ordinary course of the business of the partnership or
b. with the authority of his co-partners,
2. loss or injury is caused to any person, not being a partner in the partnershi
p, or
3. any penalty is incurred,
G the partnership is liable therefor to the same extent as the partner so acting
or omitting to act.
ART 1823. The partnership is bound to make good the loss:
1. Where one partner acting within the scope of his apparent authority receives
money or property of a third person and misapplies it; and
2. Where the partnership in the course of its business receives money or propert
y of a third person and the money or property so received is misapplied by any p
artner while it is in the custody of the partnership.
ART 1824. All partners are liable solidarily with the partnership for everything
chargeable to the partnership under Art. 1822 and 1823.
Requisites for Liability Arising from Partner s Tort
1. The partner must be guilty of a wrongful act or omission
2. The partner must be acting:
a. in the ordinary course of business, or
b. with the authority of his co-partners even if the act is unconnected with the
business
Distinctions
Art.Liability
1. 1816 1823,
1822, refers
1824to partnership obligations
1. Liability of
2. is the
pro partnership
rata and subsidiary
arising from wrongful acts or omissions of any p
artner
2. Liability is solidary because of the rule of respondent superior
PARTNER OR PARTNERSHIP BY ESTOPPEL:
ART 1825. When a person,
1. by words spoken or written or by conduct,
2. represents himself, or consents to another representing him to anyone,
3. as a partner in an existing partnership or with one or more persons not actua
l partners,
G he is liable to any such persons to whom such representation has been made, wh
o has,
o on the faith of such representation given credit to the actual or apparent par
tnership,
G and if he has made such representation or consented to its being made in a pub
lic manner
o he is liable to such person,
o whether the representation has or has not been made or communicated to such pe
rson so giving credit by or with the knowledge of the apparent partner making th
e representation or consenting to its being made:
1. When a partnership liability results, he is liable as though he were an actua
l member of the partnership;
2. When no partnership liability results, he is liable pro rata with the other p
ersons, if any, so consenting to the contract or representation as to incur liab
ility, otherwise separately.
G When a person has been thus represented to be a partner in an existing partner
ship, or with one or more persons not actual partners,
o he is an agent of the persons consenting to such representation to bind them t
o the same extent and in the same manner as though he were a partner in fact,
o with respect to persons who rely upon the representation.
G When all the members of the existing partnership consent to the representation
,
o a partnership act or obligation results;
G but in all other cases it is the joint act or obligation of the
o person acting and
o the persons consenting to the representation.
A Person NOT a Partner May Become a Partner by Estoppel When By Words or Conduct
He:
1. Directly represents himself to anyone as a partner in an existing partnership
or in a non-existing partnership (w/ one or more persons not actual partners)
2. Indirectly represents himself by consenting to another representing him as a
partner in an existing partnership or in a non-existing partnership
Note
1. The holding out as a partner may be done:
a. by the person himself, or
b. by his consent, or
c. with his knowledge
2. To hold the party liable as a partner in estoppel, the 3rd person must:
a. prove such misrepresentation, and
b. bona fide reliance by him upon it caused injury
3. Art. 1825 does NOT create a partnership as between the alleged partners, the
law only considers them as partners only insofar as it is favorable to 3rd perso
ns
Causes of Dissolution:
ART 1830. Extra-Judicial Dissolution
Dissolution is caused:
1. Without violation of the agreement between the partners:
a. By the termination of:
* the definite term or
* particular undertaking specified in the agreement;
b. By the express will of any partner,
* who must act in good faith,
* when no definite term or particular undertaking is specified;
c. By the express will of ALL the partners
* who have not assigned their interests or
* suffered them to be charged for their separate debts,
* either before or after the termination of any specified term or particular und
ertaking;
d. By the expulsion of any partner from the business
* bona fide
* in accordance with such a power conferred by the agreement between the partner
s;
2. In contravention of the agreement between the partners,
* where the circumstances do not permit a dissolution under any other provision
of this article,
* by the express will of any partner at any time (withdrawal);
3. By any event which makes it unlawful for the business of the partnership to b
e carried on or for the members to carry it on in partnership;
4. When a specific thing
a. which a partner had promised to contribute to the partnership, perishes befor
e the delivery;
b. in any case by the loss of the thing, when the partner who contributed it
* having reserved the ownership thereof,
* has only transferred to the partnership the use or enjoyment of the same;
c. but the partnership shall not be dissolved by the loss of the thing when it o
ccurs after the partnership has acquired the ownership thereof;
5. By the death of any partner;
6. By the insolvency of any partner or of the partnership;
7. By the civil interdiction of any partner;
8. By decree of court under the following article.
Under Art. 1830, Extra-judicial dissolution:
May be caused:
1) w/o violation of the agreement between the partners (#1)
a) Expiration of term or undertaking
b) In partnership at will, by express will of any partner
c) Express will or mutual assent of all partners
d) Expulsion of a partner pursuant to agreement
2) in contravention of said agreement (#2)
It may be:
1) voluntary when caused by the will of one or more or all of the partners (# 1&
2)
2) involuntary when brought about independently of the will of the partners or b
y operation of law (#3,4,5,6,7 and 8)
a) Supervening illegality
b) Loss of specific thing contributed
c) Death of a partner (w/out exception, regardless of agreement)
d) Insolvency
e) Civil interdiction of a partner
Goquiolay v. Sycip (12/10/1963)
F: partners agreed that in case of death, partnership shall continue with the de
ceased partner represented by his heirs. One of the partners died. Is his widow
general or limited partner?
H: Widow is also general partner
Lichauco v. Lichauco (33 P 350)
Partnership can still be dissolved even if the partners had agreed that
dissolution can only be had with the consent of 2/3 of the partners.
NOTE:
Under Art 1830, dissolution is automatic while under 1831, it is not the
re must be application by the partner
Insolvency here need not be judicially declared. In case of insanity
1. judicial declaration is necessary; or
2. insanity must be duly proved
Other causes of automatic dissolution: (1840)
1. new partner is admitted or
2. when a partner retires, withdraws, or is expelled from the partnership
ART 1834. After dissolution, a partner can bind the partnership, except as provi
ded in the third paragraph of this article:
1. By any act:
a. appropriate for winding up partnership affairs or
b. completing transactions unfinished at dissolution;
2. By any transaction which would bind the partnership if dissolution had not ta
ken place, provided the other party to the transaction:
a. Had extended credit to the partnership prior to dissolution and had no knowle
dge or notice of the dissolution; or
b. Though he had not so extended credit, had nevertheless known of the partnersh
ip prior to dissolution, and, having no knowledge or notice of dissolution, the
fact of dissolution had not been advertised in a newspaper of general circulatio
n in the place (or in each place if more than one) at which the partnership busi
ness was regularly carried on.
The liability of a partner under the first par 1 # 2, shall be satisfied
out of partnership assets alone when such partner had been prior to dissolution
:
1. Unknown as a partner (dormant partner) to the person with whom the contract i
s made; and
2. So far unknown and inactive in partnership affairs that the business reputati
on of the partnership could not be said to have been in any degree due to his co
nnection with it.
The partnership is in no case bound by any act of a partner after dissol
ution:
1. Where the partnership is dissolved:
a. because it is unlawful to carry on the business,
b. unless the act is appropriate for winding up partnership affairs; or
2. Where the partner has become insolvent; or
3. Where the partner has no authority to wind up partnership affairs; except by
a transaction with one who
a. Had extended credit to the partnership:
* prior to dissolution and
* had no knowledge or notice of his want of authority; or
b. Had not extended credit to the partnership:
* prior to dissolution, and,
* having no knowledge or notice of his want of authority,
* the fact of his want of authority has not been advertised in the manner provid
ed for advertising the fact of dissolution in par 1 # 2 (b).
Nothing in this article shall affect the liability under Art. 1825 of an
y person who after dissolution represents himself or consents to another represe
nting him as a partner in a partnership engaged in carrying on business. (Partne
rship by Estoppel)
After Dissolution
1) Partnership is bound:
a) Business is for winding up (par. 1 # 1)
b) Business is to complete unfinished transactions
c) Completely new business w/ 3rd parties considered innocent (par 1 #2)
2) Partnership is not bound:
a) Instances not included above like 3rd party was in bad faith
b) 3 instances under par. 3
ART 1835. The dissolution of the partnership does not of itself discharge the ex
isting liability of any partner.
A partner is discharged from any existing liability upon dissolution of
the partnership:
1. by an agreement to that effect between
a. himself,
b. the partnership creditor and
c. the person or partnership continuing the business; and
2. such agreement may be inferred from the course of dealing between:
a. the creditor having knowledge of the dissolution and
b. the person or partnership continuing the business.
The individual property of a deceased partner shall be liable for all ob
ligations of the partnership incurred while he was a partner, but subject to the
prior payment of his separate debts.
Effect of Dissolution on Partner s Existing Liability
1. General Rule the dissolution of a partnership does not of itself discharge th
e existing liability of a partner
2. Exception upon the dissolution of a partnership, a partner MAY BE RELIEVED fr
om all existing liabilities ONLY when there is an express or implied agreement b
etween:
a. the partner
b. the partnership creditor
c. the partner continuing the business
Liability of Estate of Deceased Partner
Such partner s individual property shall be subject to partnership liabili
ties but his personal creditors shall have priority
ART 1846. The surname of a limited partner shall not appear in the partnership n
ame unless:
1. It is also the surname of a general partner, or
2. Prior to the time when the limited partner became such, the business has been
carried on under a name in which his surname appeared.
A limited partner whose surname appears in a partnership name contrary t
o the provisions of the first paragraph is liable as a general partner to partne
rship creditors who extend credit to the partnership without actual knowledge th
at he is not a general partner.
ART 1847. If the certificate contains a false statement, one who suffers loss by
reliance on such statement may hold liable any party to the certificate who kne
w the statement to be false:
1. At the time he signed the certificate, or
2. Subsequently, but within a sufficient time before the statement was relied up
on to enable him to cancel or amend the certificate, or to file a petition for i
ts cancellation or amendment as provided in Art. 1865.
Any Partner to the Certificate Containing a False Statement is Liable Provided t
he Following Requisites are Present:
1. He knew the statement to be false:
a. at the time he signed the certificate
b. after he signed, and he had sufficient time to cancel or amend it or file a p
etition for its cancellation or amendment but he failed to do so
2. The person seeking to enforce liability has relied upon the false statement i
n transacting business w/ the partnership
3. The person suffered loss as a result of reliance upon such false statements
Note
Liability under Art. 1847 is a civil case for damages, the guilty party shall no
t be liable as a GP
ART 1848. A limited partner shall not become liable as a general partner unless,
in addition to the exercise of his rights and powers as a limited partner, he t
akes part in the control of the business.
2 Instances Where a LP May be Held Liable as a GP
1. When he allows his surname to be used in the firm name
2. When he takes part in the control of the business
ART 1849. After the formation of a lifted partnership, additional limited partne
rs may be admitted upon filing an amendment to the original certificate in accor
dance with the requirements of Art. 1865.
ART 1850. A general partner shall have all the rights and powers and be subject
to all the restrictions and liabilities of a partner in a partnership without li
mited partners.
However, without the written consent or ratification of the specific act
by all the limited partners, a general partner or all of the general partners h
ave no authority to:
1. Do any act in contravention of the certificate;
2. Do any act which would make it impossible to carry on the ordinary business o
f the partnership;
3. Confess a judgment against the partnership;
4. Possess partnership property, or assign their rights in specific partnership
property, for other than a partnership purpose;
5. Admit a person as a general partner;
6. Admit a person as a limited partner, unless the right so to do is given in th
e certificate;
7. Continue the business with partnership property on the death, retirement, ins
anity, civil interdiction or insolvency of a general partner, unless the right s
o to do is given in the certificate.
Powers of General Power
1. With regard to
a. Acts of Administration no distinction as that of a General Partnership
b. Acts or Ownership written consent or ratification of all limited is required
2. GP who violates the requirement imposed is liable for damages to the LP
ART 1851. A limited partner shall have the same rights as a general partner to:
1. Have the partnership books kept at the principal place of business of the par
tnership, and at a reasonable hour to inspect and copy any of them;
2. Have on demand true and full information of all things affecting the partners
hip, and a formal account of partnership affairs whenever circumstances render i
t just and reasonable; and
3. Have dissolution and winding up by decree of court.
A limited partner shall have the right:
1. to receive a share of the profits or other compensation by way of income, and
2. to the return of his contribution as provided in Art. 1856 and 1857.
ART 1860. The retirement, death, insolvency, insanity or civil interdiction (DRI
CI) of a general partner dissolves the partnership, unless the business is conti
nued by the remaining general partners:
1. Under a right so to do stated in the certificate, or
2. With the consent of all members.
ART 1861. On the death of a limited partner his executor or administrator shall
have all the rights of a limited partner for the purpose of setting his estate,
and such power as the deceased had to constitute his assignee a substituted limi
ted partner.
The estate of a deceased limited partner shall be liable for all his lia
bilities as a limited partner.
f This right is not available in a general partnership.
ART 1862. On due application to a court of competent jurisdiction by any credito
r of a limited partner, the court may charge the interest of the indebted limite
d partner with payment of the unsatisfied amount of such claim, and may appoint
a receiver, and make all other orders, directions and inquiries which the circum
stances of the case may require.
The interest:
1. may be redeemed with the separate property of any general partner, but
2. may not be redeemed with partnership property.
The remedies conferred by the first paragraph shall not be deemed exclus
ive of others which may exist.
Nothing in this Chapter shall be held to deprive a limited partner of hi
s statutory exemption.
In a general partnership, the interest of a partner subjected to a charging orde
r may be redeemed with:
1. property of a GP
2. partnership property w/ consent of all the partners
ART 1863. In settling accounts after dissolution, the liabilities of the partner
ship shall be entitled to payment in the following order:
1. Those to creditors, in the order of priority as provided by law, except those
to limited partners on account of their contributions, and to general partners
2. Those to limited partners in respect to their share of the profits and other
compensation by way of income on their contributions;
3. Those to limited partners in respect to the capital of their contributions;
4. Those to general partners other than for capital and profits;
5. Those to general partners in respect to profits;
6. Those to general partners in respect to capital.
Subject to any statement in the certificate or to subsequent agreement,
limited partners share in the partnership assets in respect to their claims for
capital, and in respect to their claims for profits or for compensation by way o
f income on their contribution respectively, in proportion to the respective amo
unts of such claims.
f In a general partnership, the claims of the GP in respect of capital enjoy pre
ference over those in respect of profits
Causes for Dissolution of Limited Partnership
1. Misconduct of GP
2. Fraud practiced on the LP by GP
3. Retirement, death, etc of GP
4. When all LP cease to be such
5. Expiration of term for w/c it was to exist
6. Mutual consent of the partners before expiration of the original term
ART 1864. The certificate shall be cancelled when:
1. the partnership is dissolved or
2. all limited partners cease to be such.
A certificate shall be amended when:
1. There is a change in the name of the partnership or in the amount or characte
r of the contribution of any limited partner;
2. A person is substituted as a limited partner;
3. An additional limited partner is admitted;
4. A person is admitted as a general partner;
5. A general partner retires, dies, becomes insolvent or insane, or is sentenced
to civil interdiction and the business is continued under article 1860;
6. There is a change in the character of the business of the partnership;
7. There is a false or erroneous statement in the certificate;
8. There is a change in the time as stated in the certificate for the dissolutio
n of the partnership or for the return of a contribution;
9. A time is fixed for the dissolution of the partnership, or the return of a co
ntribution, no time having been specified in the certificate, or
10. The members desire to make a change in any other statement in the certificat
e in order that it shall accurately represent the agreement among them.
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Partnership Reviewer
emily zen chua