CHAPTER 1 General provisions PARTNERSHIP VS.

JOINT VENTURE

PARTNERSHIP Being a form of partnership, a joint venture is

generally governed by the law on
 A contract wherein two or more partnership.
persons bind themselves to
contribute money, property, or
industry to a common fund, with the DOCTRINE OF DELECTUS PERSONAE
intention of dividing the profits “The right to choose with whom a person
among themselves. wishes to associate himself”.

Two or more persons may also form a  Is the very foundation and essence of
partnership for the exercise of a partnership
profession.
Profession- is a group of men pursuing a DELECTUS PERSONARUM “Choice of
learned art as a common calling in the spirit persons”
of public service
DELECTUS PERSONAE “Choice of the
ESSENTIAL REQUISITES person”

 Valid contract BEST EVIDENCE OF THE EXISTENCE OF A

 Contribution of money, PARTNERSHIP
property, or industry
Unsold goods and uncollected receivables,
 Organized for gain or profit
which were presented to the trial court.
Have a lawful object or purpose, establish for
common benefit or interest
1768
“Public instrument is necessary only where ARTIFICIAL/JURIDICAL PERSON
immovable property or real rights are
contributed”. Created by law and given certain legal rights
“An oral contract of partnership is as good as a and duties of human being. The partnership
written one”. itself which is the juridical person can:
1. Acquire and possess real and personal
CHARACTERISTICS of contract of a property
partnership 2. Incur obligations
1. Consensual – perfected by mere 3. Bring civil or criminal actions
consent; had a meetings of minds. 1769
2. Commutative – contribution of each
partner is considered as the RULES to determine partnership exist:
equivalent of the other partners.
3. Principal– does not depend on other  Persons who are not partners as to
contract for its existence. each other are not partners as to third
4. Bilateral– entered by two or more persons.
persons. Example: If A and B say publicly that
5. Onerous– each partner must they are not partners, then according
contribute. to Article 1825, if they told C that they
6. Nominate- has name in law. are and C enters into a contract of
partnership with them, then A and B
7.7 Preparation-for another contract. are in Partnership of Estoppel
 2. The profits shall be confiscated in
 Co-ownership or co-possession does favour of the government.
not of itself establish a partnership. 3. The instruments or tools and proceeds
of the crime shall be forfeited in favour
PARTNERSHIP VS. CO-OWNERSHIP of the government.
Partnership Co-ownership 4. The contributions of the partners shall
not be confiscated unless they fall
Creation Created by Created by under no. 3.
contract contact and
law
Example: A and B are partners where A
Juridical It can be sue None contributed P100,000 in cash and B
personality or be sued contributes gambling paraphernalia. They
were raided and the gambling
Purpose For profit Common paraphernalia was confiscated, can the
enjoyment of a P100,000 also be confiscated? -No
thing or right because the P100,000 was not the reason
Profit It may be Must always for crime anyway. The state is therefore
stipulated depend on the required to return this amount on A.
upon proportionate
shares 1771
Dissolution By death or It is not “A partnership may be constituted in any
incacity of dissolved by form”
partner the death of
co-owner EXCEPTION: If real properties or real rights
in real properties are contributed regardless
Form When a real No public of the value. A public instrument is needed;
property is instrument is otherwise, the contract of partnership is void.
contributed, needed.
a public REAL RIGHTS- connected with a thing rather
instrument is than a person.
required.
PUBLIC INSTRUMENT- a document prepared
by a notary public in the presence of the
parties who sign it before witnesses.
 The sharing of gross returns does not
of itself establish a partnership. 1772
Partnerships with a capital of 3,000 or more
 The receipt by a person of a share of
must register with the SEC. Registration
the profits of a business is prima facie
requirement is not mandatory.
evidence that he is a partner in the
business PURPOSE OF REGISTRATION
1770 The registration is to set “a condition for the
“UNLAWFUL PARTNERSHIP is dissolved by a issuance of licences to engage in business or
judicial decree; profits confiscated by State”. trade.”
EFFECTS OF AN UNLAWFUL PARTNERSHIP Example: A and B promise to contribute to
their partnership money worth P10,000 each
1. The contract is void from the very
within one year from their agreement. A
beginning.
contributes early but when the time comes for the one liable. liable for the
B to contribute his share he refuses to do so. debts of the
Can A compel B to give his contributions? -No, association.
A cannot compel B to pay his contribution to
the partnership, because the contract or
agreement between two parties was purely ASSOCIATION, cannot sue because it doesn’t
oral and never really written and it has have legal personality”.
already been one year since they agreed to
their contract terms 1776
CLASSIFICATION OF PARTNERSHIP
1773 1. According to object
“A contract of partnership is void, whenever a.) Universal partnership of all
immovable property is contributed thereto, if profits.
an inventory of said property is not made, - All partners may acquire by their
signed by the parties, and attached to the work
public instrument. - Only the usufruct of the
properties of the partners
“This article was intended to protect third becomes common property.
persons”. - Less obligation because their real
and personal properties are
1774 retained by them in naked
IMMOVABLE PROPERTY ownership.

- To be acquired must be in the name of b.)Universal partnership of all

the partnership and if conveyed must present property
also be in the partnership name. - Contributes and divide the profits
among themselves.
- Inheritance, Legacy or Donation
1775 cannot be included in the
PARTNERSHIP VS ASSOCIATION stipulation, but the fruits can be
included(Art.1779)
Partnership Association - Future property cannot be
donated (Art.1779)
Juridical It has None
personality juridical 2. According to liability
personality General Partnership
Purpose It is for profit It may not be - Liable up to the extent of their
for profit separate properties after the assets of
the partnership have been exhausted.
Contribution Money, No
Limited Partnership
of members property, or contribution
- Liable only to the extent of his
industry or a although fees
contribution.
combination are usually
- Discussed in chapter 4.
of these collected to
maintain the
organization 3. According to Duration
Liability The Members are Partnership at will
partnership is individually
 - No fixed term, continued after the 1. As to Contribution
termination of such term without any a.) Capitalist partners
express agreement. - Contribute money or property or
both
b.) Industrial partners
Partnership with a fixed term - Contribute their labor or
- Period of existence agreed upon by industry/service
the partners c.) Capitalist-industrial partners
- Contributes money, property and
industry
Partnership for a particular undertaking
2. as to Liability
- Exist until the purpose is accomplished
4. According to representation to others a.) General Partners
- Can be held liable to third persons
Ordinary Partnership for partnership obligations, even
to the extent of their separate
*Insert partnership meaning* property.
b.) Limited Partners
Partnership by estoppel - Cannot held liable to third
- Person, by words spoken or written persons
or by conduct, represents themselves, 3. As to Management
as partners in an existing partnership
a.) Managing Partners
5. According to the legality of its existence - Manage actively the business
De Jure Partnership b) Silent Partners
- do not take active part in the
- Complied with legal requirements for business though they share in the
its creation profit or losses.
c.) Liquidating Partners
De Facto Partnership - take charge of the winding up or
- Not complied with legal requirements liquidation of the partnership
for its creation affairs after dissolution.
4. as to third persons

PRESUMPTION IN FAVOR OF a.) Ostensible Partners

UNIVERSAL PARTNERSHIP OF PROFITS - Take active part and known for
the public.
The universal partnership of profits imposes b.) Secret Partners
less obligation because their real and - Not known to the public
personal properties are retained by them in c.) Dormant Partners
naked ownership. - Do not take active part and not
known to the public as partners.
Both silent and secret partners.
CHAPTER 2
5. As to membership
OBLIGATIONS of the partners a.) Real Partners
KINDS OF PARTNERS - Existing legal right
b.) Partners by estoppel
 - Not really partners but represents - Represents the minority interest
themselves to anyone as partners
SECTION 1 OBLIGATIONS OF
6. As to continuation of the businesses THE PARTNERS AMONG
affairs after dissolution THEMSELVES
a.) Continuing Partners Legal Relations created by a contract of
- Continue the partnership after Partnership
dissolution
b.) Discontinuing Partners 1. Between partners
- Do not continue the business 2. Between partners and the
partnership itself
3. Between partners and third
persons
7. As to the nature of membership
4. Between partnership and third
a.) Original Partners person
- Members from the time of its
OBLIGATIONS OF PARTNERS
constitution
b.) Incoming Partners  Give promised contribution
- Members after its establishments  Not to convert partnership money for
c.) Retiring Partners personal use
- Withdraw from partnership  To account and hold as trustee for any
profits derived without consent of
partners
8. As to state of survivorship
 Not to engage same business with the
a.) Surviving Partners partnership
- Continue the partnership after the  Managing partners; credit to the
dissolution by reason of death of a partnership the payment made by the
partner debtor
b.) Deceased Partners  Share the partnership credit when
- Died while being a member they receive from insolvent debtor
 Pay damages

9. As to the effect of expulsion Rights of Partners

a. Expelled Partners  Associate with another person in their

- Expelled from partnership for a share
valid cause  To have access, inspect and copy
partnership books
b. Expelling Partners  Demand formal account
- caused the expulsion of a  Ask for dissolution of the partnership
partner with a valid reason  Property rights
 specific partnership property
 interest in the partnership
participate in management
10. As to the value of the contribution
“LIMITED PARTNERS have no right to
a. Majority Partners
participate in the management”.
- Represents the majority or
controlling interest
b. Nominal Partners
 1784  Appraisal is necessary to determine
how much has been contributed by
 Partnership begins from the moment the partners.
of the execution of the contract.
The appraisal is made by:
Future Partnership
 Stipulation
 Partners may stipulate some other  If there’s no stipulation, expert chosen
date for the commencement of the by the partners according to the
partnership. current prices
1785
1788
Partnership with a fixed term
ESSENCE OF PARTNERSHIP
 Life or period of the partnership that
been agreed upon by the partners; Being a contract of partnership, each partner
automatically dissolved the must share in the profits and losses of the
partnership. venture.

Partnership for a particular undertaking CASES COVERED OF THE LIABILITY FOR

DAMAGES AND INTEREST
 Will exist until the purpose is
accomplished
1. Money promised by a partner is
Partnership at Will not given on time
2. Money of the partnership is
 Partnership that does not fix its term converted to partners’ own use

1789
1786
CAPITALIST PARTNER VS INDUTRIAL
Obligation of every partner PARTNER
Capitalist Industrial
1. The obligation to contribute partner partner
what had been promised
 Remedy; specific performance with Contribution Money and Industry
interest and damages. property
2. The obligation to deliver the
fruits Prohibition to Cannot Cannot
 Debtor for the interest and damages engage in other engage in engage in
from the time he should have business the same business for
complied. kind in himself
which the
3. The obligation to warrant partnership Exception:
 Specific and determinate things which is engaged if the
a partner contributed partnership
expressly
permits
1787
him to do
so.
Profits Shares in Shares in partners who refuse to
profits: profits: contribute additional
agreement agreement capital they shall be
or or he shall obliges to sell their
proportion receive interest to the other
from the such share capitalist partner who are
contribution as may be willing to contribute
just and additional capital.
equitable
“Not applicable for Industrial Partners
because they are already giving their entire
industry”.
Losses Agreement Not liable 1792
as to losses for losses.
or profits. If - If there is debt to the
there is no partnership and to the
agreement managing partner, payment
in shall be applied to both
proportion credits proportionately.
to his
contribution “Not applicable to the partner who is not
managing partner”.
OBLIGATIONS OF A MANAGING PARTNER
REMEDIES OF CAPITALIST PARTNERS WHO COLLECTS DEBT
AGAINST AN INDUSTRIAL PARTNER WHO
ENGAGED IN BUSINESS FOR HIMSELF Requisites:

1. The capitalist partners may exclude  At least 2 debts ( one

the industrial partner from the where the managing
partnership plus damages. partner is the creditor and
2. The capitalist partners may avail the other where the
themselves of the benefits which partnership is the
the industrial partner may have creditor)
obtained plus damages.  Both sums are
demandable.
1790 1793
Unless there is a stipulation to the contrary, Article 19792 vs. article 1793
the partners shall contribute equal shares
to the capital of the partnership. Art. 1792 Art. 1793
As the Two distinct Only one
1791 numbers of credits credit, in
credits favor of the
GENERAL RULE: “Capitalist partners are not partnership
bound to contribute additional capital”.
As to Applies only Applies to
EXCEPTION: applicability if the any partner
 Stipulation partner is a
 In case of imminent loss of managing
the business, the capitalist
 partner 1. DISTRIBUTION OF PROFITS
a. According to agreement
As to The debtor The debtor b. If there is no agreement
debtor’s is not has become 1. Capitalist Partners
insolvency insolvent insolvent  Proportion on what they contributed
2. Industrial Partner
 Just and equitable under the
1794 circumstances.

Mitigation of liability by the courts 2. DISTRIBUTION OF LOSSES

 In case of partners’ extraordinary a. According to agreement
efforts in other activities of the  Industrial partner shall not be liable
partnership, unusual profits have been for the losses.
realized. b. If there is no agreement
1795 1. Capitalist Partners
 Proportion on what they contributed
RISK OF LOSS 2. Industrial Partners
 Not liable for the losses
1. Specific and determinate things
which are not fungible 1798
 Contributed here is only the use of the
object. “Third persons designating the share of
2. Fungible things partners in the profits or losses.”
 Bears the risk of loss as there was EXCEPTION:
transfer of ownership.
3. Things contributed to be sold It is not valid and it may be questioned if it is
 Same meaning in number 2 manifested inequitable, unless:
4. Things brought and appraised in
1. A partner execute the decision of the
the inventory
third person
- Same meaning in number 2
2. A partner not questioned the said
decision of the third person within a
1796
period of 3 months from the time he
“Every partner is an agent of the partnership had knowledge.
for purposes of its business”.
1799
OBLIGATIONS OF THE PARTNERSHIP TO
EVERY PARTNER “A stipulation which excludes one more
partners from share in the profits or losses is
1. Refund the amounts a partner may VOID”.
have disbursed on behalf of the
partnership plus the interest. EXCEPTION: Industrial partner is not liable
unless he waived this right.
2. Contracted into in good faith and for
RATIONALE: Why an industrial partner is
the risks in consequences of its
not liable for losses?
management.
The industrial partner cannot withdraw any
1797
labor or industry he had already exerted. He
RULES FOR DISTRIBUTION OF PROFITS has already has shared in the losses in that, if
AND LOSSES OF A PARTNERSHIP the partnership shows no profit, this means
that he has labored in vain.
 1800 the acts and absence or disability of any
managing partner cannot be alleged.
“A MANAGING PARTNER of a partnership
may execute all acts of administration  None of the managing partners shall
including the rights to sue the debtors”. act without the consent of the others
 This article is not applicable to third
If there is no agreement, management is
persons
vested in all of the partners.
TWO MODES OF APPOINTMENT
1803
1. Manager in the articles of
RULES WHEN MANNER OF MANAGEMENT
partnership
HAS NOT BEEN AGREED UPON
 POWER is irrevocable without just or
lawful cause 1. All the partners shall be considered as
2. Made in an instrument other than managers. If the acts of a partners
the articles of partnership opposed by the other, the majority
 Power to act may be revoked at any shall prevail. In case if tie, then the
time. vote of the partners representing the
controlling interest shall prevail.
1801 2. For important alterations in
GENERAL RULE: immovable property, unanimity is
required.
Each one may separately execute all acts of
administration. 1804

REQUISITES: CONRACT OF SUB-PARTNERSHIP, the

consent of the other partners are not
1. Two or more partners are managers required. Hence, all partners can have an
2. No specification of respective duties associate in his share or sub-partner.
3. No stipulation requiring unanimity,
one of them should not act without An associate or sub-partner shall not be
the consent of all the other. admitted into the partnership w/o the
consent of all the other based on following
reasons:
EXCEPTIONS: If any of the managers
should oppose: a. Mutual Trust is the basis of
partnership
1. Decision of majority
2. In case of tie, managing partner who b. Change in membership is a
contributed more than 50% modification or novation of the
controlling interest. contract.
“The right to oppose is not given to non- 1805
managers”.
“A partner is given by law the right to have
1802 access, inspect and have a copy of the
partnership books”.
STIPULATION REQUIRING UNANIMITY OF
ACTION 1806
GENERAL RULE: WHO CAN DEMAND TRUE AND FULL
INFORMATION?
Unanimous consent of all the managers’
partners shall be necessary for the validity of
 1. Any partner 3. His right to participate in the
2. Legal representative of any deceased management
partner
3. Legal representative of any partner 1811
under legal disability A partner is co-owner with his partners of
specific partnership property.
1807
The incidents of this co-ownership are such
The partners are governed by fiduciary that:
relationship, that is, mutual trust and
confidence. 1. A partner has an equal right with his
partners to possess specific
1808 partnership property for purposes
EFFECTS OF VIOLATION 2. A partner’s right in specific
partnership property is not
1. The capitalist partner shall bring to assignable.
the common fund any profits accruing 3. A partner’s right is not subject to
to him attachment or execution.
2. Capitalist partner shall bear all the 4. A partner’s right is not subject to legal
losses support
1809 1812
GENERAL RULE: “A partner’s interest in the partnership
is his share of the profits and surplus. “
“No formal accounting is demandable until
after the dissolution of the partnership”. 1813
EXCEPTIONS: EFFECTS OF CONVEYANCE BY PARTNER OF
HIS WHOLE INTEREST IN THE
1. If a partner is wrongfully excluded
PARTNERSHIP:
from the partnership business or
possession of its property by his co- 1. If a partner conveys his whole
partners. interest in the partnership, it may
2. If the right to demand for accounting still subsist or it may be dissolved.
exists under the terms of any 2. The assignee:
agreement a. cannot interfere in the
3. As provided by article 1807 management
4. Whenever other circumstances b. cannot require information of
render it just and reasonable partnership transaction
c. cannot inspect partnership
books
SECTION 2 PROPERTY
RIGHTS OF A PARTNER
1814
1810
WHAT IS MEANT BY A “CHARGING ORDER”
Property rights of a partner are: UPON A PARTNER’S INTEREST IN THE
PARTNERSHIP?
1. His right in specific partnership
property  Refers to the remedy available to a
2. His interest in the partnership judgment creditor of a debtor-partner
to charge the interest of the latter in
the partnership by means of a court
 order purpose of satisfying the LIABILITY FOR INCLUSION OF NAME IN
amount of the judgment. FIRM NAME
REDEMPTION  Persons who not being partners
include their name in the firm name
 The extinguishment of the charge or do NOT ACQUIRE THE RIGHTS OF A
attachment on the partner’s interest PARTNER but is SUBJECT TO
in the profits. LIABILITY of a partner in so far as
RIGHT OF A PARTNER UNDER EXEMPTION THIRD PERSONS WITHOUT NOTICE
LAWS is concerned.

A partner shall not be deprived of his 1816

right under the exemption laws, as regards
his interest in the partnership. LIABILITY FOR CONTRACTUAL
OBLIGATIONS OF THE PARTNERSHIP
GENERAL RULE:
SECTION 3 OBLIGATIONS OF
THE PARTNERS WITH After all the partnership assets have been
REGARD TO THIRD PERSONS exhausted, all the partners, including the
industrial ones, shall be liable for all the
contracts which may have been entered into
1815 in the name, for the account of the
partnership and under its signature and by a
REQUIREMENT OF A FIRM NAME person authorized to act for the partnership
Firm- the name, title, or style under which a EXEMPTION:
company transacts business importance:
Any partner MAY ENTER INTO A SEPARATE
1. It is necessary to distinguish the OBLIGATION to perform a partnership
partnership which has a distinct and contract.
separate juridical personality from
the individuals composing the
partnership
2. To distinguish it from other Q: WHO SHALL BE LIABLE FOR
partnerships CONTRACTUAL OBLIGATIONS OF THE
PARTNERSHIP?

GENERAL RULE: The partners may adopt any -the partnership shall shoulder the
firm name desired obligations

Provided:
1. It is not misleading Q: MAY 1 PARTNER MAKE ALL THE
*Partners cannot use a name that is PARTNERS LIABLE FOR THE OBLIGATION OF
to mislead the public by passing itself THE PARTNERSHIP?
off as another partnership or -Yes, a partner may, by entering into a
corporation, or its goods or services contract in the name and for the account of
as those of such other company the partnership hold ALL THEPARNTERS
2. Use of name of deceased partners liable for the partnership obligation.
is allowed as long as it is indicated
that said partner is already deceased
 Reason: A partner is a PRINCIPAL WITH i. Acts apparently for carrying on in the
RESPECT TO HIS CO-PARNTERS and at the usual way the business of the
same times and AGENT OF THE OTHERS partnership
AND OF THE PARTNERSHIP. ii. Acts not apparently for the carrying
on in the usual way of business of the
If he contracts with a 3rd person, he binds not partnership
only the partnership but also the partners. iii. Acts of ownership
Just like an obligation contacted by an agent- iv. Acts in contravention of a restriction
the principal shall be liable. on authority
Q: MAY A PARTNER IS "personally" be
LIABLE?
*qualifies the authority of partners.
-Yes. He may assume an undertaking in his
own name or bind himself solidarity with the *authority must be in the usual course of
partnership to fulfil the obligation to a 3rd business
person.
*transaction beyond a partner's authority is
1817 binding if it is in the usual course of the
business because the 3rd person is assumed
“Any stipulation against the liability laid down to have no knowledge to his lack of authority.
in the preceding article shall be void, except as
among the partners.” * When are transactions not binding?
* As to 3rd person, all partners are liable pro- 1) When a transaction is not in the usual
rata and subsidiary, but as to each other, they course of business and has no consent from
are liable in proportion to their capital all other partners
contribution.
2) When the 3rd person had knowledge of the
Examples: lack of authority of the acting partner.
1) A,B and C are in a partnership where C is
the industrial partner and a sum of P26,000 is
owed to D. A and B contributed P15,000 and 1819
P5,000 respectively. How shall the debt be *Refers to the conveyance of immovable
shared? property
Ans: As to D, the partners will share equally *Suppose A, B and C are partners engaged in
in the debt left after exhausting all assets the buying and selling of the property and the
(P6,000) so they will each have to pay P2,000 following situations occur:
regardless of C being an industrial partner. If
C is insolvent or if B is died or if A has left the 1) A, without authority, sells land to D in the
country, the liability of the partners cannot be partnership's name but D immediately sells it
increased. As to each other, they are liable in to E. The land title was originally under the
proportion to their capital contribution, so B partnership's name. Can the partnership
and C will be reimbursed by A. recover the land?
Ans: title passes to D, then to E. The
1818 partnership cannot recover the land once it
has transferred to E but if the land was still
PARTNER AS AGENT OF THE with D, they could have recovered it if the
PARTNERSHIP contract was not binding.
2) What if A sells the property under his  In short, notice to any of the partners
name? is notice to the partnership. (You
don’t have to notify every partner in
Ans: only the equitable title passes to D. relation to partnership affairs.)
3) what if A sells the property and the land
title is registered under his name?  Knowledge of a partner acting in a
particular manner (meaning the
Ans: title passes to D because land is partner is a managing partner), or
registered under the partner's names. This knowledge of any partner who should
will hold true if A, B and C are co-owners of have communicated it to the
the land, even if only A sold it to D. managing partner, is knowledge to
1820 the partnership.

“An admission or representation made by any

partner concerning partnership affairs within  This is so even if the non-managerial
the scope of his authority in accordance with partner does not communicate the
this Title is evidence against the partnership.” information he knows regarding
partnership affairs. The partner
* Anything a partner says or admits, as long
should have communicated this. Non
as it is concerning the partnership affairs and
knowledge by other partners is not a
it is within the scope of his authority, is
reason to evade from obligations.
sufficient evidence against the partnership.
* This article is a rule of evidence  If notice is delivered to a partner, that
is an effective communication to the
* In order that admission/representation partnership, notwithstanding the
made can be used as evidence, the existence failure of the partner to communicate
of the partnership must be established and such notice or knowledge to the other
proved first. partners.
* Examples:
EXAMPLE:
(1) Partner A borrows money from the bank 1. A, B, and C are partners where B is the
and declares that the money borrowed is for managing partner. D, a 3rd person,
the partnership. filed a case against the partners and
the partnership for some unknown
ANS: This statement made by A, is enough reason. Does D need to notify all of
evidence against the partnership and the them?
bank may use this in case the partnership
does not pay back the money borrowed.
 If this is done, D just needs to
(2) A, B, and C are partners. A told D, a 3rd notify either A, B, or C, but doesn’t
person, that the debtor already paid this have to notify ALL OF THEM
obligation to the partnership. Is this enough (imagine if there are 100 partners,
evidence against the partnership? it would be burdensome and
costly to notify all 100). So if A is
ANS: YES, since it concerns partnership notified about the case, this is
affairs and the partner has authority to say so. considered by D as notify to
EVERYONE even if A is not a
managerial partner (since A
1821 should communicate this to all
partners).
 1822 victim. He caused P50, 000 worth of
injury to D. What can D do? D can go
EXAMPLE: A, B and C formed a partnership. to A for the full amount of P50, 000 or
One day, while C was negligently driving the from B or C. B. Can D go to B for the
truck of the partnership to deliver goods to X whole P50, 000 since B is the richest
(one of their customers) C bumped the among the partners?
gateway of X causing damages to the latter.
- In this case, the other partners and  This is allowable since the
the partnership are solidary liable with C. partners have a solidary
However, the partners or the partnership can obligation through A’s act of
recover from C. omission. B will be entitled for
reimbursement from the one
responsible, A.
1823
1825
EXAMPLE: Where one partner acting within
the scope of his apparent authority receives
money or property of a third person and •2 Things being mentioned:
misapplies it. A, B and C formed ABC 1. Partnership by estoppels
partnership engaged in leasing of apartment
units. Subsequently, C received from There is an existing partnership, and
customer X a deposit in the amount of P20, partners misrepresent themselves
000. If C misapplied the amount, then partner together with a third person.
A, B and the partnership ABC are solidarity Example
liable to X.
Suppose there is a partnership, X,
 Of course, A, B and the with partners A, B and C. D told E that
partnership ABC can recover from he is a partner of A, B and C. E verified
C. from the actual partners of X
1824 partnership if D is really a partner, A,
B and C consented. E entered in a
All partners are liable solidarity with contract with D, believing he was a
the partnership for everything partner.
chargeable to the partnership under
Article 1822 and 1823. This is partnership by estoppels
since A, B and C verified D as a
 In the following cases, partner. In this case, E can go after
obligation is pro-rata or not A, B and C.
equal, but a solidary
obligation. Any partner may
pay for the obligation (unlike 2. Partnership by estoppels
article 1816, each partner Two or more persons pretend to be
should only pay for their partners in the eyes of third persons.
share):
Example
1. When by an unlawful act or omission,
A, B and C said they were partners to
loss or injury is caused to 3rd person.
D and entered in a contract with the
“partners”. When it was time to for
Example: A, B and C are partners. A
them to pay D for their obligation,
made an act of omission with D as the
 they cannot for the reason that they better right to the partnership
are not partners. What is their property?
obligation to D?
Their obligation to D will be - In this case, D the partnership
pro-rata , as if they were partners creditor, has a better right to the
(since they are partners by partnership property. When
Estoppels) obligation to D is paid, what will
be left for the partners to share is
p4, 000. If E, the personal creditor
1826. of A, demands to be paid out of
 A new partner admitted to an existing partnership property, he will only
partnership is also liable to the get P4, 000 from it since the
obligations existing before he was priority is the partnership
admitted, but his liability only extends to creditor. The p2, 000 will be paid
his contribution to the partnership out from A’s personal property.
unless stipulated.
 A new partner is liable to his separate CHAPTER 3
property when the obligation was DISSOLUTION AND
incurred when he was already a partner. WINDING UP
1828.
Example A, B and C are the original
partners of the partnership X with  The partnership is going to end or it
contributions of P 10,000 each. X will be dissolved.
partnership owes D P 40,000. How shall But before the partners can be paid their
the debt be paid? P 34,000 will be paid to shares, the creditors of the partnership must
D out of the partnership assets, and the P first be compensated. After all the creditors
6,000 will be paid through A, B and C’s have been paid, whatever is left of the
personal assets. The P 6,000 will be partnership’s assets will become the payment
divided among the 3 original partners for the partners.
pro rata. The share to be paid out to the partners is
1827 necessarily limited to its total resources.
 Partnership creditors have better
rights to partner obligation with Dissolution
regard to partnership property.  It is the time of the partners cease to
 Personal creditors of partners carry on the business.
have better right than a  Basically means to end the
partnership creditor with regards partnership.
to personal property of the
Winding up
partner.
 Process of settling business affairs
Example: after dissolution.
1. A, B and C are partners. A  Sole purpose is to sell off stock, pay
owes E P 6,000. The off creditors, and distribute any
partnership owes D P 28,000. remaining assets to partners or
The total partnership assets shareholders.
amount to P 40,000. Who has Termination
  Point in time after all the partnership power conferred by the
affairs have been wound up. agreement;
 The partnership has been legally
2. In contravention of the agreement
ended.
between the partners, where the
Retirement circumstances do not permit a dissolution
under any other provision of this article,
 The dissociation by a partner, by the express will of any partner at any
inclusive or resignation or time;
withdrawal, from the partnership that
thereby dissolves it. 3. By any event which makes it unlawful
for business to be carried on/for the
1829 members to carry it on for the partnership;
 The partnership will not end until all 4. Loss of specific thing promised by
its affairs/debt/credits are partner before its delivery;
completed.
 Ending a partnership is a step by step 5. Death of any partner;
process. 6. Insolvency of a partner/partnership;
1. Dissolution
2. Winding up 7. Civil interdiction of any partner;
3. Termination
8. Decree of court under art 1831.

1830 Kinds of dissolution

Dissolution is caused:  Extrajudicial dissolution

1. without violation of the agreement These are numbers 1 to 7 of the above-stated

between the partners: article.
a. By termination of the definite  Judicial dissolution
term/particular undertaking
specified in the agreement; These refers to number 8 above-stated in
relation to 1831 of the New Civil Code.
b. By the express will of
any partner, who must act in
good faith, when no definite Partnership with a fixed term
term or particular undertaking
is specified;  The life or period of existence of
the partnership has been agreed
c. By the express will of all the upon by the partners.
partners who have not assigned  Has a limited life.
their interest/charged them for
Partnership for a particular undertaking
their separate debts, either
before or after the termination  It will exist until the purpose is
of any specified term or particular accomplished.
undertaking
Partnership at will
d. By the bona fide expulsion  A partnership that does not fix its
of any partner from the term.
business in accordance with
  The birth and life of a partnership 1. A partner or any of the 1 to 6
at will is predicated on the mutual grounds for judicial dissolution in the
desire and consent of the partners. first paragraph.
 The right to choose with whom a
person wishes to associate himself 2. The purchaser of a partner’s
is the very foundation and essence of interest in the partnership under
this partnership. ARTICLE 1813 or 1814 after the
termination of the specified term or
particular undertaking or of the
Civil interdiction partnership is at will when interest
was assigned or when the charging
 Deprives the offender during the order was issued.
time of his sentence of the right to
manage his property and dispose 1832
such property by any act of any Except so far as may be necessary to wind
conveyance interior vivos. up partnership affairs or to complete
transactions begun but not then finished,
1831 dissolution terminates all authority of any
partner to act for the partnership.
On application by or for a partner the
court shall decree a dissolution whenever: 1. With respect to the partners:
 When the dissolution is not by the
1. Partner declared insane in any judicial act, insolvency or death of a
proceeding or shown to be of unsound mind; partner
(Authority of partners to bind
2. Incapacity of partner to perform his part
partnership by new contract is
of the partnership contract;
immediately terminated when
3. Partner guilty of conduct prejudicial to dissolution is not due
business of partnership; to ACT, DEATH or INSOLVENCY of a
partner); or
4. Willful or persistent breach  When the dissolution is by such act,
of partnership agreement or conduct which insolvency or death of a partner, in
makes it reasonably impracticable to carry on cases where article 1833 so
partnership with him; requires.
5. Business can only be carried on at a loss; 2. With respect to persons not
partners, as declared in the article
6. Other circumstances which render 1834.
dissolution equitable.
As a rule, when a partnership is dissolved,
Upon application by purchaser of any of the partners cannot bind the
partner's interest under article 1813 or partnership.
1814:
Exceptions are those provide by ARTICLES
 After termination of specified term 1833 and 1834.
/particular undertaking.
 Anytime if partnership at will when
interest was assigned/charging 1833
order issued.
 If dissolution is caused by an act,
Who can sue for judicial dissolution? insolvency or death, then each shall
share in the liability of the
 partnership due to the actions of a  The partnership is required to have
partner, unless he had knowledge of the dissolution be announced in
an act, in solvency or death or notice general circulation newspapers of the
of the insolvency or death. place of operations. As long as they do
this, then it is sufficient notice to all
Ex. (1) B told A that he is resigning third persons. (If you don’t read broad
TODAY. The partnership is thus dissolved. sheet, that’s your fault not the
Should A enter into a contract with D, partnership)
who shall be liable?
 Liabilities shall be satisfied out of the
Ans: As among themselves, only A partnership assets alone if the partner
because he had knowledge of B’s being dealt with is a DORMANT
resignation, thus knowing that they are PARNER.
no longer a partnership.  Upon dissolution, the partnership is
no longer bound by transactions.
1. When it becomes unlawful to
Ex. (2) If B texts’ his resignation to A carry on the business
because A is in Mindanao and A contracts 2. Insolvency of a partner
with D, was his authority terminated 3. Unauthorized winding up
when the text arrived?

1835
Ans: No, A’s authority was not terminated  Dissolution does not discharge the
as he has only received a notice. Mere partnership and/or the partners from
NOTICE cannot terminate the authority of existing liabilities.
partners because the grounds are BY AN
ACT, and because of this it should be  Considers a case wherein a partner
PERSONALLY KNOWN by the acting was induced to join the partnership
partner. by means of fraud or
misrepresentation.

(3)The authority is terminated if the  The victim can ask for the recession
cause of dissolution is DEATH. or restitution of the contract of
1834 partnership (return of all his
contributions)
 Partners may still bind the  He has the right to the surplus for
partnership to transactions ever after certain purposes
dissolution of the transactions is with
respect to the winding up or the  He has the rights of a third person or
completion of unfinished a subrogated creditor after the
transactions. liabilities have already been paid to
 The transaction will be landing if: recollect what he paid when he
1. Credit was extended without entered into the partnership.
knowledge of the dissolution
before the dissolution.  He is entitled to be indemnified for all
2. No credit was extended but there debts ab liabilities that he paid for
was knowledge of the during his time in the partnership.
partnerships existence and none
of the dissolution.
  In order for the liability of a partner What if the partnership was dissolved due to
to discharged, the following must EXPULSION?
agree
 The partner  Suppose that A was the one expelled
 The other partners from the partnership, then he can
 The creditors only get a share in the NET PROCEEDS
of the surplus that would have
1836 originally been his.
KINDS OF WINDING UP OR LIQUIDATION
What if that partnership was dissolved due to
I. Extrajudicial VIOLATION of AGREEMENTS?
 Liquidation is done without the
intervention of the court  Determine the rights of the
INNOCENT and GUILTY parties,
Who will wind up? suppose that in this situation, A was
1. The liquidating partner or the one guilty of violation on
partners as agreed upon by all of agreement. Then B and C will be
the partners allowed the following rights;
2. The partners who have not
wrongfully dissolved the 1. Apply partnership assets to
partnership partnership liabilities and
3. The legal representative of the distribute the cash surplus among
last surviving partner who is not themselves
insolvent. 2. To e indemnified for the damages
II. Judicial that A has caused
 Liquidation is done under the control 3. To continue the business up to the
and direction of the court, upon agreed term
proper cause that is shown to the 4. The possess partnership properly
court.
While A will have the following rights:
Who will wind up?
1. The person appointed by the 1. Partners decide not to continue the
court business
a. Right to claim his share in the
1837 cash surplus, but only the net
 Supposed there is a situation where proceeds of such meaning, the
in A, B and C are in a partnership, X cash surplus less damages.
and Co., with total assets of 26,000
and liabilities amounting 20,000. If 2. Continue the business
the partnership is dissolved a. Ascertain his interest in the
WITHOUT VIOLATION OF ANY business
AGREEMENTS, naturally the b. Freedom from existing and future
liability will be cleared because the liabilities of the partnership.
partnership assets are more than
enough, and the surplus will be 1838
given to each of the partners in 3 rights of a partner who is entitled to
proportion to their interest in the rescind:
partnership or as per their
agreement. 1. Right of lien or right of retention
2. Right of subrogation
 3. Right of indemnification  Required New Contribution:
- If the partnership asset were
 Considers a case wherein a partner exhausted partners shall
was induced to join the partnership contribute the amount
by means of fraud or necessary to satisfy the
misinterpretation liabilities
 The victim can ask for the rescission  Individual Property of a Deceased
or restitution of the contract of the Partner
partnership - It shall be liable for his share
 He has the right to the surplus for of the partnership liability
certain purposes incurred while he was a
 He has the rights of a third person or partner. Take note that his
a subrogated creditor after the separate creditors have
liabilities have already been paid to preference over these
recollect what the paid when he individual properties.
entered into the partnership  Where a partners has become
 He is entitled to be indemnified for all insolvent or his estate is insolvent, the
debts and liabilities that he paid for claim against hi separate property
during his time in the partnership. shall rank:
1. Owing to separate creditors
2. Owing to partnership creditors
1839 3. Owing to partners by way of
contribution
ASSETS OF THE PARTNERSHIP
 INSOLVENY means than the assets are
a. Partnership by property
less than the liabilities
b. Contributions of the partners
necessary for the payment of all
liabilities
1840
LIABILITIES OF THE PARTNERSHIP:
ORDER OF PAYMENT  Explains the rights of creditors in case
of partnership dissolution because of
a. Owing to partnership creditors membership changes and the
other than partners business is continued without
b. Owing to partners liquidation.
c. Owing to partners in respect of
capital  The membership changes include:
d. Owing to partners in respect of
profits  Retirement
 Expulsion
 Death
- Considers the case of liquidation and  Addition
the distribution of partnership assets
 Note that the creditor of the OLD
- Liquidation is when all the assets of partnership will still be the creditor of
the partnership is converted to cash the NEW partnership, if there is still
- Total assets will include goodwill as an old partner/original partner with
well as the original contributions of partners the NEW partnership.
  The creditors will continue to be the 1843
creditor of the remaining/new
partnership in all cases except when: Limited Partnership
Is one formed by two or more persons
1. Rights are assigned to other
under the provision of the following article,
people
having as members one or more limited
2. Unless there is a promise to pay
debt from the new partners or if partners? The limited partners as such shall
the creditor can set aside the right not be bound by the obligations of the
of the new partners on the ground partnership.
of fraud
Characteristics of Limited Partnership

1841  It is formed by compliance in good

faith with the statutory requirements.
Rights of a Partner Who Retires/Dies and  One or more general partners control
Business Is Continued Without Any the business and are personally liable
Settlement of Accounts to creditors
1. That his interest be ascertained as of  One or more limited partners (also
dissolution date known as special partners )
2. Collect his interest in the partnership contribute to the capital and share in
plus interest or profits by the use of profits but do not participate in the
his right to these as a creditor management of the business
 The limited partners are not
personally liable for partnership
1842 obligations beyond their capital
contributions
Who has the right to an account of his
interest?  The limited partners may ask for the
return of their capital contributions
- The right to an account of his  The partnership debts are paid out of
interest shall accrue to any the common fund and the separate
partners; or his legal properties of the general partners
representative
Who has an obligation to render an 1844
account?
Essential requisites in the formation of a
1. The winding up partners limited partnership
2. Surviving Partners
3. The person or partnership continuing  The certificate of the limited
the business partnership
 The certificate of the limited
When to render an account?
partnership must be filed in the Office
- At the date of acquisition of the Securities and Exchange
except any stipulation to the Commission
contrary
1845
Chapter 4- LIMITED Contribution of a limited partner
PARTNERSHIP
 A limited partner can contribute only  The right to have dissolution and
money or property or both. Consequently, winding up by decree of court
an industrial partner can only become a  The right to receive a share of the
general partner. profits or other compensation by way
of income
1846
 The right to receive returns of his
The surname of a limited partner shall not contribution if the partnership assets
appear in the partnership name are in excess of the partnership
liabilities.
A limited partner violating this article
is liable as a general partner only to the General limited partner
partnership creditors who extend credit to
A person may be a general partner
the partnership without actual knowledge
and a limited partner in the same
that he is not a general partner.
partnership at the same time, provided
1847 that this fact shall be sated in the
certificate of limited partnership.
Liability for a false statement in the
certificate Rights of a general limited partner

The one who suffers loss by reliance His rights are those of a general
on such false statement may hold liable any partner
party in the certificate of limited partnership
Liabilities of a general limited partner
who is in the bad faith.
His liabilities are those of a general
1848
partner. Hence, as to partnership
Liabilityof a limited partner who takes creditors, he is liable up to the extent of
paer in the control of the business his separate property.

The limited partner will be laible as a Nevertheless, as regards his

general partner. However, said limited contribution, his rights are those of a
partner does not acquire the rights of general limited partner insofar as the other
partner. partners are concerned.

 Basahin ng mabuti ung libro,

intindihin lang. Kung di
Rights of a limited Partner maintindihan try nalang
 The right to have the partnership isearch sa dictionary ung
book kept at the principal place of word na nagpapagulo sa
business of the partnership, and at a pagiintindi mo.
reasonable hour to inspect and copy  Lalo na ung mga examples,
of them kahit mahaba basahin parin.
 The right to have on demand true and Madalas kasi dun natin
full information of all things affecting nagegets ung sinasabi ng
the partnership, and a formal account libro.
of partnership affairs whenever Keywords ung nakabold
circumstances render it and just and
reasonable 1854
Read and try to understand the allowable 2. Their compensation by way of
and prohibited. income; or
3. Any other matter
Allowable business transaction of a
limited partner with the partnership: 1856
 To lend money to the A limited partner may receive from the
partnership; partnership the share of the profits or the
 To transact business with compensation by way of income stipulated
the partnership; and for in the certificate; provided that after such
 To receive on account of payment is made, whether from property of
resulting claims against the the partnership or that of a general partner,
partnership, with general the partnership assets are in excess of all
creditors, a pro rata share of the liabilities of other partnership
the assets. “except" liabilities to partners on account
of their contributions and to general
Prohibited business transactions of a
partners.
limited partner with the partnership:
Share of the profits or compensation by
1. Receive or hold as collateral security
way of income of a limited partner
and partnership property;
2. Receive from a general partner or the The requirement here is that the
partnership any payment, partnership assets are in excess of all
conveyance, or release from liabilities of the partnership to third
liability if at the time assets of the persons after payment of the profits or
partnership are not sufficient to compensation by way of income of a
discharge partnership liabilities to limited partner.
persons not claiming as general or
limited partners.
Rationale: To prevent illegal competition 1857
between the limited partner and general Makakareceive lang ang limited partner
partnership creditors for the assets of the ng kanyang contribution kung:
partnership. (understand the requisites)
Note: Violation of the prohibition, as Requisites for the return of contributions
enumerated, will give rise to the disputable of a limited partner
presumption of fraud on the creditors of
the partnership. 1. All liabilities of their partnership,
except liabilities to general partners
1855 and to limited partners on account of
Read and understand. their contributions have been paid
or there remains property of the
Preference to some limited partners partnership sufficient to pay them.
2. The consent of all members is had,
Preference may be given to some limited
unless the return of the contribution
partners over other limited partners as to:
may be rightfully demanded; and
1. Return of their contributions; 3. The certificate is cancelled or so
amended as to set forth the
 withdrawal or reduction of the A limited partner holds as trustee for the
contribution. partnership:
When can the contributions of a limited 1. Specific property stated in the
partner be returned? certificate as contributed by him, but
which was not contributed or which
1. On the dissolution of a partnership
has been wrongfully returned, and
2. When the date specified in the
2. Money or other property
certificate for its return has
wrongfully paid or conveyed to him
arrived; or
on account of his contribution.
3. After he has given six months’
notice in writing to all other
members, if no time is specified in the
The liabilities of a limited partner as set forth
certificate, either for the return of the
in this article can be waived or compromised
contribution or for the dissolution of
only by the consent of all members; but a
the partnership.
waiver or compromise shall not affect the
right of a creditor of a partnership who
extended credit or whose claim arose after
When may a limited partner have the
the filing and before a cancellation or
partnership dissolved and liquidated?
amendment of the certificate, to enforce
A limited partner may have the such liabilities.
partnership dissolved and its affairs
When a contributor has rightfully received
wound up when:
the return in whole or in part of the capital
1. He rightfully but unsuccessfully of his contribution, he is nevertheless liable
demands the. Return of his to the partnership for any sum, not in
contribution, or excess of such interest, necessary to
2. The other liabilities of the partnership discharge its liabilities to all creditors who
have not been paid, or the extended credit or whose claims arose before
partnership property is insufficient such return.
for their payment and the limited
Liability of a limited partner for unpaid
partner would otherwise be entitled
contribution to the partnership
to the return of his contribution.
1. For the difference between his
1858 contribution as actually made and
A limited partner is liable to the that stated in the certificate as having
partnership: been made; and
2. For any unpaid contribution which
1. For the difference between his he agreed in the certificate to make
contribution as actually made, and in the future at the time and on the
that stated in the certificate as having conditions stated in the certificate.
been made; and
2. For any unpaid contribution which Read the example.
he agreed in their certificate to Liability of a limited partner as a trustee
make in the future at the time and on to the partnership
the conditions stated in the certificate.
 1. Specific property stated in the transactions or to inspect the
certificate as contributed by him, partnership books.
but which was not contributed or  An assignee shall have the right to
which has been wrongfully become a substituted limited
returned, and partner if all the members consent
2. Money or other property thereto or if the assignor.
wrongfully paid or conveyed to him  An assignee becomes a substituted
on account of his contribution. limited partner when the certificate is
appropriately amended in
Liabilities of a limited partner may be
accordance with article 1865.
waived
 The substituted limited partner has
The requisites are: all the rights and powers, and is to
subject to all the restrictions and
1. With the consent of all ther other
liabilities of his assignor. Except
partners;
those liabilities of which he was
2. The waiver or compromise shall
ignorant at the time he became a
not affect ther right of partnership
limited partner.
creditors who extended credit or
 The substitution of the assignee as a
whose claim arose after the filing and
limited partner does not release the
before a cancellation or amendment
assignor from the liability to the
of the certificate.
partnership under articles 1847
Liability of a limited partner despite and 1858.
return of his contribution
Rights of an assignee of a limited partner
A limited partner is nevertheless liable to
1. An assignee is only entitled to
the partnership for any sum necessary to
receive the share of the profits or
discharge its liabilities to all creditors who
other compensation by way of
extended credit or whose claims arose before
income, or their return of his
such return. However, the liability of that
contribution.
limited partner is up to the extent of his
2. An assignee acquires all the rights
contribution.
of the limited partner only when he
Read the example. becomes a substituted limited
partner.
Note: An assignee, who does not become a
1859 substituted limited partner has no right to
A limited partner's interest is assignable. require any information or account of the
partnership transactions or to inspect the
Substituted limited partner- is a person partnership books.
admitted to all the rights of a limited
partner who has died or has assigned his Assignee become a substituted limited
interest in a partnership. partner

 An assignee, who does not become a The requisites are:

substituted limited partner, has no 1. All the partners must consent.
right to require any information or 2. The certificate of limited partner
account of the partnership must be amended
 3. Must be registered in the Securities On due application to a court of competent
and Exchange Commission. jurisdiction by any creditor of a limited
partner, the court may charge the interest of
Rights and liabilities of a substituted
the indebted limited partner with payment of
limited partner
the unsatisfied amount of such claim, and
1. The substituted limited partner has may appoint a receiver, and make all other
all the rights and powers. orders, directions and inquiries which the
Exception: except those liabilities of circumstances of the case may require.
which he was ignorant at the time he
The interest may be redeemed with the
became a limited partner.
separate property of any general partner, but
2. The substitution of the assignee as a
may not be redeemed with partnership
limited partner does not release the
property.
assignor form liability to persons
who suffered damage by reliance The remedies conferred by the first
on a false statement. paragraph shall not be deemed exclusive of
others which may exist.
Nothing in this Chapter shall be held to
1860 deprive a limited partner of his statutory
The retirement, death, insolvency, insanity or
exemption.
civil interdiction of a GENERAL PARTNER
DISSOLVES THE PARTNERSHIP, unless the 1863
business is continued by REMAINING
GENERAL PARTNERS: In setting accounts after dissolution the
liabilities of the partnership shall be entitled
1) Under a right so to do stated in the to payment in the following order:
certificate, or
2) With the CONSENT of all members. (1) THOSE TO CREDITORS, in the ORDER of
PRIORITY as provided BY LAW, EXCEPT
Note: The article speaks ONLY of GENERAL those to limited partners on account of their
PARTNERS and did not INCLUDE a LIMITED contributions, and to general partners;
PARTNER.
(2) Those to limited partners in respect to
their share of the profits and other
1861 compensation by way of income on their
contributions;
On the DEATH of a LIMITED PARTNER his
executor or administrator shall HAVE all the (3) Those to limited partners in respect to the
rights of a limited partner for the purpose of capital of their contributions;
setting his estate, and such power as the
deceased had to constitute his assignee a (4) Those to general partners other than for
substituted limited partner. capital and profits;

The estate of a deceased limited partner shall (5) Those to general partners in respect to
be liable for all his liabilities as a limited profits;
partner. (6) Those to general partners in respect to
1862 capital.
Subject to any statement in the certificate or because he does not take control nor
to subsequent agreement, limited partners participate in the management of the
share in the partnership assets in respect to business of the partnership.
their claims for capital, and in respect to their
EXCEPTION:
claims for profits or for compensation by way
of income on their contribution respectively, Where the object is to enforce a limited
in proportion to the respective amounts of partner’s right against or liability to the
such claims. partnership.
1864 1867
CANCELLATION OF THE CERTIFICATE OF A limited partnership formed under the law
LIMITED PARTNERSHIP prior to the effectively of this Code, may
become a limited partnership under this
 When the partnership id dissolved
Chapter by complying with the provisions of
 When all limited partners cease to be
Article 1844, provided the certificate sets
limited partners. Take note that the
forth:
composition of a limited partnership
is that there should be at least one (1) The amount of the original contribution of
general partner and at least one each limited partner, and the time when the
limited partner. contribution was made; and
NOTE: In all other cases, ONLY (2) That the property of the partnership
AMENDMENT of the certificate of limited exceeds the amount sufficient to discharge its
partnership is required. liabilities to persons not claiming as general
or limited partners by an amount greater
1865
than the sum of the contributions of its
REQUIREMENTS FOR AMENDMENT: limited partners.
 It must be in writing as far as A limited partnership formed under the law
necessary to set forth clearly the prior to the effectively of this Code, until or
change in the certificate which it is unless it becomes a limited partnership under
desired to make this Chapter, shall continue to be governed by
 It must be signed and sworn to by all the provisions of the old law.
members
 The certificate of limited partnership,
as amended, must be filed for record
in the office of the Securities and
Exchange Commission.
REQUIREMENT FOR CANCELLATION:
*The same requirements for amendment

1866
GENERAL RULE:
A limited partner not a proper party to
proceedings by or against a partnership