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PARTNERSHIP  The Articles of Partnership must not be

kept secret among the members.


Art. 1767: Definition of Partnership  The partnership relation is not the contract
By the contract of partnership itself, but rather the result of the contract
two or more persons bind themselves to  No formality is required in setting up
contribute money, property, or industry to general partnership
a common fund, with the intention of  A partnership contract, in its essence, is a
dividing the profits among themselves. contract of agency.
 Partnership relation is fiduciary in nature.
(General Professional Partnership)
Two or more persons may also form a “Delectus Personae” – choice of person
partnership for the exercise of a
profession.  Unless otherwise provided in the
- a mere association for non- partnership agreement, no one can
business purpose become a member of the partnership
association without the consent of all the
Concept: other associates.
1. it is a contract
2. it is an association Application of the Principle of Estoppel:
3. it is a legal relation A partnership liability may be imposed upon a
4. it is a status person under principles of estoppel where he holds
5. it is an organization himself out, or permits himself to be held out, as a
6. it is an entity partner in an enterprise.
7. it is a joint undertaking
 A partnership may be created without any
Characteristic Element of Partnership: definite intention to create it. It is the
1. consensual substance and not the name of the
2. nominate arrangement, which determines the legal
3. bilateral relationship, although the designation
4. onerous adopted by the parties should be
5. commutative considered as indicative of their intention.
6. principal
7. preparatory Persons who cannot give consent to a contract of
partnership:
Essential Features of Partnership: 1. unemancipated minors
1. there must be a valid contract 2. insane or demented persons
2. two or more persons must have legal capacity to 3. deaf-mutes who do not know how to write
enter into contract 4. persons who are suffering from civil interdiction
3. there must be mutual contribution of money, 5. incompetents who are under guardianship
property, or industry to a common fund 6. between spouses; exceptions (Art. 1782)
4. the object must be lawful 7. common law spouses (Art. 1782)
5. the primary purpose must be to carry on a
business for profits and to divide the same among (a married woman may enter into contract of
the parties partnership without husband’s consent but the
husband may object under certain conditions.
 There is no prohibition against a Doctrine of Corporation by Estoppel:
partnership being a partner in another On behalf of a corporation, and those benefitted
partnership. by it, knowing it to be those acting on behalf of a
corporation and those benefitted by it, knowing it
On Corporations: to be without valid existence, are held liable as
Unless authorized by statute or by its charter, a general partners.
corporation is without capacity or power to enter
into a contract of partnership. Basis is on public  Partnership may not engage in an
policy since in a partnership the corporation would enterprise for which the law requires a
be bound by the acts of persons who are not its specific form of business organization, such
duly appointed and authorized agents and officers, as banking which only stock corporations
which would entirely inconsistent with the policy of may undertake.
the law that the corporation shall manage its own  All that is needed is PROFIT motive.
affairs separately and exclusively.
Art. 1768: Partnership, a Juridical Person
It may, however, enter into a joint venture. The partnership has a juridical personality
separate and distinct from that of each of
 A foreign corporation who entered into the partners even in case of failure to
limited partnership (merely for investment) comply with the requirements of Art. 1772,
shall not be deemed doing business in the (1).
Philippines, hence, not required to obtain a
license to do business in the Philippines.  The partners cannot be held liable for the
obligations of the partnership unless it is
Money contributed must be in legal tender. No shown that the legal fiction of a different
contribution until they have been cashed. juridical personality is being used for
fraudulent, unfair, or illegal purpose.
Property contributed may be real or personal,
corporeal or incorporeal. Hence, credit such as  To organize a partnership is not an
promissory note or other evidence of obligation or absolute right but a privilege which may
even a mere goodwill may be contributed, as they be employed only under such terms as the
are considered property. State may deem necessary to impose.

Industry means the active cooperation, the work


of the party associated, which may be either Art. 1769: Rules in Determining Existence of a
personal manual efforts or intellectual, and for Partnership
which he receives a share in the profits. 1) Except as Art, 1825, persons who are not
partners as to each other are not partners as to
third persons.
 In partnership, proof is necessary that
there be contribution of money, property,
2) Co-ownership or co-possession does not of itself
or industry to a common fund with the
establish a partnership, whether such co-owners or
intention of dividing the income or profits
co-possessors do or do not share any profits made
obtained therefrom.
by the use of the property.

3) The sharing of gross returns does not of itself


establish a partnership, whether or not the persons
sharing them have a joint or common right or
interest in any property from which the return is Sharing in both profits and losses is a strong
derived. presumptive evidence to establish existence of
partnership. It is a prima facie evidence of
4) The receipt by a person of a share of the profits intention to form a partnership.
of a business is prima facie evidence that he is a
partner in the business, but no such inference shall  The existence of partnership must be
be drawn if such profits were received in payment: proved and will not be presumed.

a) as a debt by installments or otherwise  The legal intention is the crux of


partnership.
b) as wages of an employee or rent to a
landlord
Some Typical Incidents of a Partnership:
c) as an annuity to a widow or 1. partners share in profits and losses
representative of a deceased partner 2. partners have equal rights or voice in the
management and conduct of the partnership
d) as an interest on a loan, though the business
amount of payment vary with the profits of 3. every partner is deemed an agent of the
the business partnership
4. all partners are personally liable for the debts pf
e) as the consideration for the sale of a the property in their separate property.
goodwill of a business or other property by 5. books of partnership shall be kept, subject to
installments or otherwise any agreement between the partners at the
principal place of business
6. a capitalist partner cannot carry on any
 In case of doubt, Art. 1769 shall apply.
competing business venture unless there is a
 Where existence is disputed, it is a factual
stipulation to the contrary while an industrial
matter to be decided on the basis of the
partner is absolutely prohibited from engaging in
circumstances.
any kind of business
7. on dissolution, the partnership is not
On Co-ownership: two or more persons may
terminated, but continues until the winding up of
become co-owners without a contract but they
partnership is completed
cannot be partners in the absence of a contract.
There must be clear intent to form a partnership.

If parties are partners, the remedy for dispute or


difference would be an action for dissolution,
termination, and accounting. In co-ownership, the
remedy would be an action for non-performance of
a contract.

Art. 147: co-ownership governs property relations


of a man and a woman who are capacitated to
marry each other live exclusively as husband and
wife without the benefit or marriage or under a
void marriage.
Partnership Labor Union
(as to purpose)
To enable its members, as principals, to conduct a For the purpose of collective bargaining or dealing
lawful business, trade, profession for pecuniary gain with employees concerning terms and conditions of
of partners, and no one may become a partner employment
without consent of all partners.
Partnership Business Trust
All members are principals and agents for each Trustee is only a principal and is not an agent. Only
other. the trustee and not the beneficiaries is empowered
to make contracts to carry on business affairs and
the only one who has legal title to the property
Partnership Co-ownership
a) created by a contract, express or implied a) created by law

b) has a juridical personality separate and distinct b) no juridical personality separate and distinct from
from that of each partner that of each partner

c) purpose is realization of profits c) purpose is common enjoyment of a thing or right

d) no limitation upon duration d) an agreement to keep thing undivided for 10


years is not allowed
e) a partner may not dispose of his individual
interest in the partnership e) co-owner may freely dispose of his individual
interest
f) in the absence of any stipulation to the contrary, a
partner may bind the partnership f) a judgment secured against only one of co-owners
will not bind other co-owners
g) death of a partner results in its dissolution
g) death of co-owner does not necessarily dissolve it
Partnership Conjugal Partnership of Gains
a) created by voluntary agreement of two or more a) arises when a man and a woman agree to such
parties property relations during the marriage

b) governed by stipulation of parties b) governed by law

c) has juridical personality c) no juridical personality

d) begins from moment of execution of contract d) commences on the date of celebration of


unless otherwise stipulated marriage

e) primary purpose to obtain profits e) purpose is to regulate property relations of


husband and wife during the marriage

f) profits are divided according to the agreement of f) shares of spouses in the profits are divided equally
partners or in proportion to their respective capital
contribution

g) management is shared equally by all the partners g) administration to both spouses jointly but
unless or more are appointed in Articles of Part husband’s decision shall prevail in case of
disagreement
h) the whole interest of partner may be disposed of h) the share of each spouse cannot be disposed of
without the consent of other partners during the marriage even with the consent of the
other
Partnership Voluntary Association
a) has juridical personality a) none

b) purpose for pecuniary profit b) no such objective

c) there is contribution of capital c) no contribution of capital though fee is collected

d) partnership liable for the debts of the firm d) members are individually liable for the debts of
the association
Partnership Corporation
a) created by agreement of parties a) created by law

b) may be organized by only 2 persons b) requires at least 5 incorporators

c) commences to acquire juridical personality from c) juridical personality begins from date of issuance
moment of execution of contract of partnership of certificate of incorporation by SEC

d) partnership may exercise powers authorized by d) can only exercise powers expressly granted by law
partners provided not contrary to law…etc. or implied from those granted or incident to its
existence

e) every partner is an agent of the partnership e) power to do business vested in board of directors
or trustess

f) in case of mismanagement, a partner as such can f) the suit against a member of a board of directors
sue a co-partner or trustees must be in the name of the corporation

g) partnership has no right to succession g) corporation has successional rights

h) partners are personally liable and subsidiarily for h) stockholders are liable only to the extent of the
partnership debts to third persons shares subscribed by them

i) partner cannot transfer his interest in partnership i) a stockholder has generally the right to transfer his
without consent of all other existing partners on the shares without the prior consent of other
principle of delectus personae stockholders

j) may be established for any period of time j) may not be formed for a term in excess of 50 years
stipulated by partners extendible to not more than 50 years in any one
instance

k) a ltd partnership must add the word “Limited” to k) may adopt nay firm name
its name

l) may be dissolved by the will of any or all of the l) can only be dissolved with the consent of the State
partners

m) governed by Civil Code m) governed by Corporation Code


Similarities to Corporation: 2) any one of members may contract in his
1) has a juridical personality separate and distinct own name with third persons
from that of individuals composing it.
2) can only act through agents Art. 1776: Universal or Particular Partnership;
3) composed of aggregate individuals General or limited liability
4) distributes profits to those who contribute
capital to the business Art. 1777: Universal Partnership – may refer to all
5) can be organized only when there is a law present property or to all profits
authorizing its organization
6) taxable Art. 1778: Partnership of all present property – is
that in which the partners contribute all
Art. 1770: Object or Purpose of Partnership the property which actually belongs to
A partnership must have a lawful object or them to a common fund, with the
purpose, and must be established for the intention of dividing the same among
common benefit or interest of the themselves, as well as all the profits they
partners. may acquire there with

When an unlawful partnership is dissolved Art. 1779: Universal Partnership of all Present
by a judicial decree, the profits shall be Property - property belonging to each of them at
confiscated in favor of the State, without the time of constitution of partnership and
prejudice to the provisions of the Penal profits which they may acquire from the
Code governing confiscation of the property contributed become the common
instruments and effects of a crime. property of all the partners.
-a stipulation of common enjoyment of any
Art. 1771: No required Form of partnership other profits may also be made;
contract; except where immovable EXCEPTION: but the property which the
properties or real rights are involved, they partners may acquire subsequently by
must be executed in a public instrument inheritance, legacy, or donation cannot be
for its validity included in such stipulation, except the
fruits thereof.
Art. 1772: Contract of partnership with 3000 or
more capital shall appear in public Art. 1780: Universal Partnership of Profits
instrument and recorded in SEC - comprises all that the partners may
acquire by their industry or work during
Art. 1773: Partnership with contribution of the existence of partnership
immovable property: inventory, signed by - movable or immovable property which
parties, attached to public instrument each of the partners may posses at the
time of the celebration of the contract
Art. 1774: Immovable property or interest therein shall continue to pertain exclusively to
may be acquired in the partnership name; each, only the usufruct passing to the
title can be conveyed in partnership name partnership.
 Partners retain ownership over their
Art. 1775: When associations governed by co- future and present property. What
ownership; shall no juridical personality passes to partnership are the profits,
1) Articles of Partnership kept secret to income, or usufruct.
members
Art. 1781: Articles of universal partnership entered 3) to answer to the partnership for the
into without specification of its nature only fruits of property the contribution of
constitute universal partnership of profits which he delayed
4) to preserve said property with
Art. 1782: Persons prohibited from giving any diligence of good father of the family
donation or advantage cannot enter into a 5) to indemnify the partnership for any
universal partnership damage caused to it by retention or
delay in contribution
Art. 1783: Particular Partnership has for its object REMEDY of PARTNERS: action for specific
determinate things, their use or fruits, or a performance with damages and interest
specific undertaking, or the exercise of a Rescission or Annulment of
profession or vocation. contract of partnership on account of fraud

OBLIGATIONS of the PARTNERS Art. 1787: Obligations with Respect to Contribution


of Money and Money Converted to Personal Use
Section 1: Obligations of Partners Among 1) to contribute on the date due
themselves 2) to reimburse any amount he may have
taken from partnership coffers and
Art. 1784: partnership begins at execution of converted to his own use
contract of partnership; UNLESS otherwise 3) to pay the agreed or legal interest if he
stipulated fails to pay his contribution on time
4) to indemnify the partnership for
Art. 1785: when partnership for a fixed term or damages caused by its delay
particular undertaking continued after
termination of such term or particular Art. 1789: Obligations of Industrial Partner
undertaking without any express Persmission must be express before an
agreement, the rights and duties of the Industrial partner can engage in other
partners remain the same as they were at business. If not
such termination, so far as is consistent Remedy: Action for Damages
with a partnership at will.
Art. 1790: Unless there is stipulation to the
A continuation of business by any of the contrary, partners shall contribute equal
partners as habitually acted therein during shares to the capital of partnership
the term, without any settlement or
liquidation of the partnership affairs, is the Art. 1791: If there is no agreement to the contrary,
prima facie evidence of a continuation of in case of imminent business loss of the
the partnership. business partnership, any partner who
refuses to contribute an additional share
Art. 1786: Obligation With Respect to Contribution to the capital, except the industrial
1) to contribute at the beginning of partner, to save the venture, shall be
partnership or at stipulated time obliged to sell his interest to the other
2) to answer for eviction in case partners.
partnership is deprived of determinate
property
Art. 1792: Obligation of Managing partner who - risk of loss to owner-partner
collects debt b) specific and determinate things the
a) if a partner authorized to manage ownership is transferred to partnership:
collects a demandable sum, which was - risk of loss to partnership being the
owed to him in his own name, from a owner
person who owed the partnership another c) fungible things which cannot be kept
sum also demandable, the sum thus without deteriorating even if contributed
collected shall be applied to the two only for use of partnership – risk of loss to
credits in proportion to their amounts, partnership
even though he may have given a receipt d) things contributed to be sold – risk of
for his own credit only. loss to partnership
e) things brought and appraised in the
b) But should he have given it for the inventory – risk of loss to partnership
account of the partnership credit, the
amount shall be fully applied to the latter. Art. 1796: Partnership shall be responsible to every
partner for amounts he may have
 The debtor is given the right to prefer disbursed on behalf of partnership and for
payment of credit if partner if it should corresponding interest, from the time
be more onerous to him in accordance expenses are made.
with his right to application of
payment. It shall also answer to each partner for the
obligations he may have contracted in
Art. 1793: Obligation of partner who receives share good faith in the interest of the
of partnership credit to return it to partnership business and for risks in
partnership capital should debtor becomes consequence of its management.
thereafter insolvent
Art. 1797: Distribution of Profits and Losses
Art. 1794: Every partner is responsible for the a) in conformity with agreement
partnership for damages suffered by it b) If only share of profits is agreed upon,
through his fault and he cannot the share of each in the losses shall be in
compensate them with profits and benefits the same proportion
which he may have earned for the c) in absence of stipulation, the share in
partnership by his industry. (damages not profits and losses shall be in proportion to
subject to set-off) whatever he may have been contributed.
But Industrial partner shall not be liable
However, the courts may equitably lessen for the losses.
this responsibility if through the partner’s As for the profits, he shall receive such
extraordinary efforts in other activities of share as may be just and equitable under
the partnership, unusual profits have been the circumstances.
realized. If besides services he has also contributed
capital, he shall also receive a share in the
Art. 1795: Risk of loss profits in proportion to his capital
a) Specific and determinate things which
are not fungible where only the use is
contributed:
Art. 1798: Designation by a third person of share Art. 1802: When it is stipulated that none of the
in profits and losses. managing partners shall act without the
- such designation may only be impugned consent of the others, the concurrence of
if manifestly inequitable all shall be necessary for validity of acts,
- within three months from knowledge of
designation or decision of that 3rd person and the absence of disability of any one of
can a partner complain thereof them cannot be alleged, unless there is
- the designation of losses and profits imminent danger of grave or irreparable
cannot be intrusted to one of the partners injury to the partnership.

Art. 1799: a stipulation which excludes one or Art. 1803: Rule when manner of management is
more partners from any share in profits or not agreed upon
losses is void. (allowed. Except when it 1) all the partners shall be considered
concerns third persons) agents and whatever any one of them may
do alone shall bind the partnership,
Art. 1800: Partner appointed as manager may without prejudice to the provisions of
execute all acts of administration despite Article 1801.
opposition of partners, unless he should
act in bad faith. His power irrevocable 2) none of the partners may without
without just or lawful cause. The vote of consent of others, make any important
partners representing the controlling alteration in the immovable property of
interest shall be necessary for such the partnership, even if it may be useful to
revocation of power. the partnership. But if the refusal of
consent by the other partners is manifestly
A power granted after partnership prejudicial to the interest of the
constituted may be revoked at any time. partnership, the court’s intervention may
be sought.
Manager has powers of a general agent as well as
incidental powers necessary to carry out the object Art. 1804: Contract of Subpartnership
of partnership in the transaction of the business. Every partner may associate another
person with him in his share,
In the absence of prohibition in the Articles, there
is nothing to prevent the partners to enter into a But the associate shall not be admitted
collateral verbal agreement to that effect. into the partnership without the consent
of all the other partners, even if the
Art. 1801: if two or more partners have been partner having an associate should be the
intrusted with the management of partnership manager.
without specification of respective duties, or Art. 1805: Partnership books shall be kept, subject
without stipulation that one of them shall not act to any agreement between the partners, at the
without the consent of all the others, each one
principal place of business of the
may separately execute all acts of administration,
partnership, and every partner shall at any
but if any of them should oppose the acts of the
reasonable hour have access to and may
others, the decision of majority shall prevail. In
inspect and copy any of them.
case of tie, partners owning controlling interest
shall prevail.
Art. 1806: Partners shall render on demand true 2) his interest in the partnership
and full information of all things affecting 3) his right to participate in the
the partnership to any partner or the legal management
representative of any deceased partner or
of any partner under legal disability. Related rights:
1) right to reimbursement for amounts
Art. 1807: Partner accountable as fiduciary advanced in partnership
Every partner must account to the 2) right of access and inspection of
partnership for any benefit, and hold as partnership books
trustee for it any profits derived by him 3) right to true and full information of all
without the consent of the other partners things affecting partnership
from any transaction connected with the 4) right to a formal account of
formation, conduct, or liquidation of the partnership affairs under certain
partnership or from any use by him of its circumstances
property. (secret profits) 5) right to have the partnership dissolved
also under certain conditions
Art. 1808: Prohibition against capitalist partners
The capitalist partners cannot engage for Art. 1811: Nature of Partner’s Right in Specific
their own account in any operation which Partnership Property
is of the kind of business in which the A partner is co-owner with his partners of
partnership is engaged unless there is a specific partnership property
stipulation to the contrary.
1) a partner has an equal right with his
Any capitalist partner violating this partners to possess specific
prohibition shall bring to the common partnership property for partnership
funds any profts accruing him from his purposes; But he has no right to
transactions, and shall personally bear all possess such property for any other
the losses. purpose without consent of his
partners
Art. 1809: Right to Formal Account 2) a partner’s right in specific property
Any partner shall have the right to a formal partnership is not assignable except in
account as to partnership affairs connection with the assignment of
1) if he is wrongfully excluded from the rights of all partners in the same
partnership business or possession of property.
its property by his co-partners 3) A partner’s right in specific partnership
2) if the right exists under the terms of property is not subject to attachment
any agreement or execution, except on a claim against
3) as provided by article 1807 the partnership. When the partnership
4) whenever other circumstances render property is attached for a partnership
it just and reasonable debt, the partners or any of them, or
the representatives of a deceased
Section 2: Property Rights of a Partner partner cannot claim any right under
the homestead or exemption laws
Art. 1810: Property rights of partners are: 4) A partner’s right to specific property is
1) his rights in specific partnership not subject to legal support
property
Art. 1812: a partner’s interest in the partnership is 1. On due application to a competent
his share of the profits and surplus court by any judgment creditor of a
(undistributed profit during the life of the partner, the court which entered the
partnership) judgment or any other court, may
(undistributed surplus after its dissolution) charge the interest of the debtor
partner with the payment of
Surplus – excess of assets minus the liability unsatisfied amount of such judgment
debt with interest thereon.
Art. 1813: Effect of Assignment of Partner’s Whole - court may later appoint a
interest in partnership receiver of his share of the profits,
A conveyance by a partner of his whole and of any other money due or to
interest in the partnership fall due him in respect of the
1) does not itself dissolve the partnership, partnership, and make all other
or, against other partners in the orders, directions, accounts and
absence of agreement, inquiries which the debtor partner
2) does not entitle the assignee, during might have made, or which
continuance of partnership, to circumstances of the case may
interfere in the management or require
administration of the partnership
business or affairs, or 2. Redemption
3) does not entitle to require any The interest charged may be redeemed
information or account of partnership at any time before foreclosure, or in
transactions, or to inspect the case of a sale being directed by the
partnership books. court, may be purchased without
thereby causing a dissolution
Entitlement of assignee: a) With the separate property by
1. It merely entitles the assignee to any one or more of the
receive in accordance with his contract partners
the profits to which the assigning b) With partnership property, by
partner would otherwise be entitled. any one or more of the
partners with the consent of all
2. In case of fraud in the management of the partners whose interest
partnership, the assignee may avail are not so charged or sold
himself in the usual remedies. Right of Partner under exemption laws:
a) With respect to specific partnership
3. In case of dissolution of partnership, property, partner cannot claim any right
the assignee is entitled to receive his under homestead laws or exemption laws
assignor’s interest b) With respect to partner’s interest in
partnership, partner may avail it
4. and may require an account from the
date only of the last account agreed to
by all the partners.

Art. 1814: Remedies of A Separate judgment


Creditor of a partner: Charging Order
Section 3: Obligations of the Partners with Regard Art. 1817: any stipulation against the liability laid
to Third Persons down in the preceding article shall be void, except
as among the partners.
Art. 1815: Requirement of a Firm Name
Every partnership shall operate under a Art. 1818: Power of Partner as Agent of
firm name, which may or may not include Partnership
the name of one or more of the partners. A. Every partner is an agent of the
partnership for the purpose of its
Those who, not being members of the business
partnership, include their names in the 1) Act of every partner in the execution of
firm name, shall be subject to the liability partnership name of any instrument
of a partner. 2) For apparently carrying on in the usual
way of business of partnership which
Art. 1816: Liability for contractual obligations of he is member
partnership BINDS the partnership
ALL partners including industrial partners UNLESS 1) partner so acting has no
shall be liable pro rata with all their authority to act for partnership in
property and after all the partnership particular matter
assets have been exhausted, for the 3) the person whom he is dealing has
contracts which may be entered into in the knowledge of the fact that he has no
name and for the account of the such authority
partnership, under its signature and by a B. An act of partner which is not
person authorized to act for the apparently for carrying on of the
partnership. However, any partner may business (acts of strict D)
enter into a separate obligation to perform - does not bind the partnership
a partnership contract. UNLESS authorized by other partners

Nature of Liability: C. Acts of strict dominion


1) Pro rata – equally or jointly 1. Assign the partnership property in
2) Subsidiary – partners are liable as trust for creditors on the
guarantors in favor of partnership assignee’s promise to pay the
creditors to the extent that the assets debts of the partnership
of the firm are not sufficient to meet 2. Dispose of the goodwill of the
its obligations. business
3. Do any other act which would
 Liability v. loss make it impossible to carry on the
 Exemption of industrial partner to pay ordinary business of a partnership
losses relates to the settlement of 4. Confess a judgment
partnership affairs among partners 5. Enter into a compromise
themselves, it has nothing to do with concerning a partnership claim or
liabilities to third persons. liability
 Pwede masingil si industrial partner as 6. Submit a partnership claim or
to liability to third persons but he can liability to arbitration
get reimbursement from partners Page 7. Renounce a claim of partnership
176
 The general rule is that powers not 2) knowledge of the partner acting in the
specifically delegated in a partnership particular matter then present to his mind
agreement are presumed withheld. 3) knowledge of any other partner who
reasonably could and should have
Art. 1919: Effect of Conveyance of Real Property communicated it to the acting partner
Belonging to Partnership - operate as notice or knowledge of the
1) title in partnership name, conveyance partnership except in the case of fraud on
in partnership name. the partnership, committed by or with the
2) title in partnership name, conveyance consent of partner.
in partner’s name
3) title in name of one or more partners, Art. 1824: Gives SOLIDARY LIABILITY to Art. 1822
conveyance in name of partner or and 1823 TORTS or BREACH of TRUST
partners in whose name title stands 1) any wrongful act or omission of any
4) title in name of one or more partners partner acting in the ordinary course of
or a third person in trust for the business of the
partnership, conveyance executed in partnership or with authority of co-
partnership name or in name of partners.
partner. 2) where one partner acting within the
5) Title in name of all partners, scope of his apparent authority receives
conveyance, in name of all partners money or property of a third person and
misapplies it
Art. 1820: admission or representation made by 3) where the partnership in the course of
any partner concerning partnership affairs within its business receives money or property of
the scope of his authority in accordance with this a third person and the money or property
title is evidence against partnership so received is misapplied by any partner
while it is in custody of the partnership
- Admissions by another are received against
a party if the former is acting in the - A partner has a right to recover from the
capacity of agent of the latter. Here, guilty partner
admission of a partner made during the
existence of the partnership are binding Art. 1825: Partner by Estoppel; Partnership by
against the partnership when such Estoppel
admissions refer to matter concerning A person not a partner may become a
partnership affairs and made within the partner by estoppel and thus be held liable
scope of his authority. The partnership is to third persons as if he were a partners if
bound even if admissions harm the by his words or conduct he:
business. 1) Directly represents himself to
- After dissolution, admission made by a anyone as a partner in an
partner will bind the co-partners if existing relationship or in a
connected with the winding up of non-existing partnership
partnership affairs 2) Indirectly represents himself
by consenting to another
Art. 1821: What Operates as notice or knowledge representing him as partner in
of the partnership an existing partnership or in a
1) knowledge of the partner acting in the non-existing partnership
particular matter acquired while a partner
Liability: of partnership property. UNLESS, there is a
1) Pro Rata when: stipulation to the contrary.
a) when there is no existing
partnership and all those Where a partner gives notice of his retirement or
represented partners consented to withdrawal from the partnership, he is freed from
the representation any liability on contracts entered into thereafter,
b) not all of the partners of an but his liability on existing incomplete contracts
existing partnership consented to continues. A partner newly admitted will also be
the representation liable likewise if goods are delivered after he has
- all those who made and been admitted where the goods so delivered are in
consented to the representation is the performance of a contract made before his
joint or pro rata admission.
2) Separate Liability when:
a) no existing partnership but only Art. 1827: Preference of Partnership Creditors in
some consented to the partnership Partnership Property
b) none of the partners consented, Creditors of partnership shall be preferred
that person who represented to those of each partner as regards the
himself as partner partnership property. Without prejudice to
becomes separately liable this right, the private creditors of each
partner may ask the attachment and public
Partnership by Estoppel: If all actual partners sale of the share of the latter in the
consented to the representation, then the liability partnership assets.
of the person who represented himself to be a
partner or who consented to such representation Private creditors of each partner may ask
and the actual partners is considered a partnership the attachment and public sale of the
liability. (Partnership de facto) share of the latter in the partnership
assets.
The question of liability is not what the parties
intended by their contract but whether third
persons had a right to rely on their joint credit.

Requisites to Apply:
1) holding out of a person before contract to a
third person
2) third person must have been induced into
entering said contract by reason of such holding
out

Art. 1826: Liability of incoming partner for


partnership obligations
A person admitted as partner into an
existing partnership is liable for all
obligations of the partnership arising
before his admission as though he had
been a partner when such obligation were
incurred. – this liability is satisfied only out