Note: Article 1811 contemplates tangible property but not intangible things.
A partner is a co-owner with his partners of specific
partnership property, but the rules on co-ownership do not necessarily apply. The legal incidents of this tenancy in partnership are
distinctively characteristic of the partnership relation. They are as follows:
1. Equal rights of possession – Ordinarily, a partner has an equal right to possess specific partnership property for partnership
purposes. None of the partners can possesses and uses the specific partnership property other than for partnership
purposes without the consent of the other partners.
Should any of them use the property for his own benefit, he must account, like a stranger, to the others for the
profits derived there from or the value of his wrongful possession or occupation.
A partner wrongfully excluded from possession of partnership property by a co-partner has a right to formal
account and may even apply for a judicial decree of dissolution.
The wrongful exclusive possession of a partnership property by one or more partners may be a ground for
dissolution.
By agreement, the right to possess specific partnership property may be surrendered.
2. Rights not assignable - A partner cannot separately assign his right to specific partnership property but all of them can
assign their rights in the same property.
Illustrative Example:
In Partnership ABC, Partner A, B, or C cannot assign his right to the land but all of them can assign their rights in the same
property.
Reasons for non-assignability:
It prevents interference by outsiders in partnership affairs.
It protects the right of other partners and partnership creditors to have partnership assets applied to firm debts.
It is often impossible to determine the extent of a partner’s beneficial interest in a particular partnership asset.
Reason for impossibility:
Each partner, having a beneficial interest in the partnership property considered as a whole, has a beneficial
interest in each part.
NOTE: The law allows a retiring partner to assign his rights in partnership property to the partner(s)
continuing the business.
3. Attachment or Execution - A partnership property may be subject to attachment or execution only on claim against the
partnership and not of the partners.
Illustrative Example:
In the same example above, the land is not considered the separate property of A, B, and C. It belongs to the partnership as
a juridical person and a partner has no interest in it but his share of what remains after all partnership debts are paid.
Consequently, the land is not subject to attachment or execution except a claim against partnership.
4. Legal support - in the same example above, the right of A, B, and C to the land is not subject to any legal support. But their
interest in the partnership is of course, subject to legal support.
5. Partner’s interest not a debt due from partnership - a partner is not a creditor of the partnership for the amount of his
share.
Article 1812 - A partner’s interest in the partnership is his share of the profits and surplus.
Profits: The excess of returns over expenditure in a transaction or series of transactions; or the net income of the partnership for a
given period.
Surplus: The assets of the partnership after partnership debts and liabilities are paid and settled and the rights of the partners
among themselves are adjusted. It is the excess of assets over liabilities. If the liabilities are more than the assets, the difference
represents the extent of the loss.
Article 1813 - A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the partnership, or, as
against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere
in the management or administration of the partnership business or affairs, or to require any information or account of partnership
transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his contract the
profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the management of the partnership,
the assignee may avail himself of the usual remedies. In case of a dissolution of the partnership, the assignee is entitled to receive
his assignor’s interest and may require an account from the date only of the last account agreed to by all the partners.
Rights withheld from assignee.
1. To interfere in the management.
2. To require any information or account.
3. To inspect any of the partnership book.
Note: The assignment does not divest the assignor of his status and rights as a partner nor operate as dissolution.
Rights of assignee of partner’s interest
1. To receive in accordance w/ his contract the profits accruing to the assigning partner.
2. To avail himself of the usual remedies provided by law in the event of fraud in the management.
3. To receive the assignor’s interest in case of dissolution.
4. To require an account of partnership affairs, but only in case the partnership is dissolved, and such account shall cover
the period from the date only of the last account agreed to by all partners. The purchaser of a partner’s interest may
apply to the court for dissolution after the termination of the specified term or undertaking or at any time if the
partnership is one at will.
Note: The mere assignment of a partner's interest does not dissolve the partnership.
Article 1814 - Without prejudice to the preferred rights of partnership creditors under article1827, on due application to a
competent court by any judgment creditor of a partner, the court which entered the judgment, or any other court, may charge the
interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon; and may then
or later appoint a receiver of his share of the profits, and of any other money due or to fall due to him in respect of the
partnership, and make all other orders, directions, accounts and inquiries which the debtor partner might have made, or which
the circumstances of the case may require.
The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be
purchased without thereby causing a dissolution:
(1) With separate property, by any one or more of the partners; or
(2) With partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so
charged or sold.
Nothing in this Title shall be held to deprive a partner of his right, if any, under the exemption laws, as regards his interest in the
partnership. (n)
Remedies of separate judgment creditor of a partner:
a. Application for a charging order after securing judgment on this credit.
A separate creditor of a partner cannot attach or levy upon specific partnership property for the satisfaction of his credit.
He can however secure a judgment on his credit and then apply to the court for a charging order subjecting the interest
of a debtor-partner in the partnership with the payment of the unsatisfied amount of such judgment with interest
thereon.
b. Preferred rights of partnership creditors
The claims of partnership creditors must be satisfied first before the separate creditors of the partners can be paid out of
the interest charged.
c. Availability of other remedies
Illustrative example:
Facts: Xi recovers a judgement against Rod, a member of partnership PH composed of Rod and Leni, on Rod’s individual
liability. The partnership is very profitable, and Leni is solvent, but Rody is in deep financial trouble.
Issue: May Xi attach any portion of the partnership property or execute against the same, or go after A’s share of the
partnership assets? No. Xi’s remedy is to apply for a charging order from a court against the partnership. No specific
property is attached. The partnership continues and Xi’s judgment is satisfied out of partnership assets. Under the
charging order, Rod’s share in the profits is paid to Xi until the claims of Xi are fully paid. The partnership need not be
necessarily dissolved. Leni is protected. Rod, the debtor, only suffers.
